PHILADELPHIA — Increased volume, wider margins and improved profitability were indicated in second-quarter results of Tasty Baking Co. Additionally, the company was optimistic about its rapidly approaching, long anticipated move to new anchor production facilities in Philadelphia.

Net income at Tasty in the quarter ended June 27 was $2,345,000, equal to 27c per share on the common stock, up from $75,000, or 1c per share, during the second quarter last year.

Results in the 2009 quarter included a $2.1 million after-tax gain related to the termination of the company’s post-retirement life insurance plan. Results in both the 2009 and 2008 quarters included after tax accelerated depreciation of $800,000.

Sales were $78,532,000, up 9% from $72,180,000.

The sales gain benefited from higher selling prices and higher volumes, particularly for Tasty’s family pack products.

"This is the third consecutive quarter in which we drove sales growth in both the route and non-route components of our business," said Charles P. Pizzi, president and chief executive officer of Tasty Baking Co. "We continued to expand market share in our core markets and generated favorable margin improvements compared to the prior year period. While commodity costs remain at relatively high levels, we were pleased to see some improvement in key ingredients and packaging costs in the second quarter of 2009 versus the second quarter of last year."

Gross margin in the second quarter widened to 34.5% from 27.7%, and adjusted EBITDA more than doubled to $7.2 million from $3.5 million.

Mr. Pizzi was hopeful about the transition to the company’s new flagship facilities in the Philadelphia Navy Yard. Corporate headquarters were moved there in the spring. The second phase includes a 345,500-square-foot baking plant, distribution center and warehouse, to be fully operational by June 2010.

"With regards to the new bakery project, we are ahead of schedule and within budget," Mr. Pizzi said. "We expect to begin our methodical line-by-line production transition in the fourth quarter of 2009 and remain excited about the anticipated start of production. We recognize, however, that we must continue to focus on successfully growing the business and building the brand while at the same time planning the transition to the new facility."

In the 26 weeks ended June 27, net income was $2,274,000, or 27c per share, compared with a loss of $884,000 in the first half of 2008. Net sales were $155,461,000, up 10% from $141,473,000.