About six months after leading the launch of a new company name and major new product line for Royal Hawaiian Orchards, formerly ML Macadamia Orchards, company president and CEO Dennis Simonis was ousted by the company’s board of directors.
Simonis had been CEO of the Hilo-based mac nut company since December 2004 and was let go June 5, according to a document filed with the U.S. Securities and Exchange Commission.
Simonis was replaced by John Kai, a Hilo financial planner and member of Royal Hawaiian Orchards’ board of directors. Kai, a member of the company’s board since June 2004, was named interim president. Kai has been president of Pinnacle Investment Group LLC in Hilo since 1999, president of Pinnacle Media Group LLC since 2002, and branch manager of First Allied Securities since 2010.
Kai said the board wanted the company to move in a different direction, but that it would continue to develop its new retail line of macadamia products.
Last November, ML Macadamia Orchards LP, Hawaii’s largest macadamia nut producer, was acquired by the Wyoming-based investment firm Crescent River LLC, and the company announced it would begin manufacturing and marketing its own line of macadamia nut-based food products under the new Royal Hawaiian Orchards brand. It was the company’s first venture into the retail end of the macadamia nut business.
Costs associated with the start-up are affecting the company’s revenue, however, Kai said.
Royal Hawaiian Orchards reported a net loss of $628,000 for the first quarter of 2013 on revenues of $2 million, attributed to startup, development and other costs of rolling out the company’s new products, which amounted to $522,000. Lower-than-normal first quarter macadamia nut production due to persistent drought conditions in the Ka‘u growing areas of the Big Island also resulted in an additional loss, the company reported.
Those first quarter 2013 losses followed a net income loss of $499,000 for the year in 2012, according to the company’s annual SEC filing. Kai said product development costs also affected the bottom line in 2012.
Despite the losses, new product “sales have gone very well,” Kai said. “We’re picking up stores on the mainland.” He said the new non-GMO, gluten-free, even kosher-certified nut products are being received well in mainland markets.
“This is the direction we’re continuing on … to keep that production line going. That’s our primary focus, to grow our business and the industry.” Royal Hawaiian Orchards now owns or leases about 5,070 acres of macadamia nut orchards on the Island of Hawaii.
Kai also wants to focus on revitalizing the Hawaii Macadamia Nut Association to benefit the island industry. “Anything I can do to help the company,” he said.
But the association’s current president, David Rietow, is skeptical. Before the breakup of C. Brewer, the association operated on an annual budget of up to $170,000 provided voluntarily by macadamia nut growers and processors to support the industry, Rietow said. Since then Hershey Foods and several Australian companies acquired Mauna Loa and Mac Farms at various time but haven’t contributed to the association.
“Dennis (Simonis) said, ‘well, if the big boys won’t play, neither can I,’” said Rietow, and now “the association is pretty much inactive. There’s no commitment. John (Kai) can throw some money at it but unless everybody participates it’s not going to work.”
Kai said at this time there is no search being conducted for a successor to Simonis, who was also removed from the company’s board of directors. Kai said the company is “grateful for the years of service and dedication to the industry” that Simonis contributed. Simonis could not be reached for comment.
The board just “had come to a decision to move the company in a different direction” Kai said. “Since I’m in Hilo, I was the logical choice to take over.” Kai’s father was head of sales and marketing for the Hawaiian Holiday Macadamia Nut Co. in Hamakua in the 1970s. “First my father was in the business and here I am. I’m excited.”