Heinz (NYSE:HNZ) is probably one of the most efficiently run public companies and continues to "remove clutter" and "squeeze out cost" to improve cash management and balance sheet performance.

While many food companies such as General Mills (NYSE:GIS), ConAgra (NYSE:CAG), Campbell Soup (NYSE:CPB), and Kellogg (NYSE:K) have wrestled with rising commodity prices and the low-carb diet craze, Heinz has tightened its focus and become even more efficient. The company spun off noncore brands such as pet food, tuna, and baby food to Del Monte (NYSE:DLM), and its 50 companies currently have No. 1 or No. 2 brands in 200 countries.

The company's first-quarter earnings release highlights the strides Heinz has made to fully leverage its assets. Earnings of $0.55 per share were right on target with expectations, and sales of just more than $2 billion exceeded forecasts by 2% and last year's number by 5.7%, primarily because of strong North American volume growth in such brands as Ore-Ida frozen potatoes. Heinz reiterated its expectation of full-year fiscal 2005 net sales growth of 2% to 3% and earnings in the range of $2.32 to $2.42 per share.

The real story at Heinz is its balance sheet and working capital management. The company's cash conversion cycle, which measures the time it takes from sale to actual receipt of cash, was reduced another 12 days in the quarter (on top of an 11-day improvement in the previous year). Operating free cash flow was $148 million in the quarter, and the company expects this number to balloon to $800 million to $1 billion for fiscal 2005. In addition, Heinz was able to reduce its net debt by $320 million.

You have to be impressed with Heinz's operating efficiency and tightened product focus. The company has also made a substantial effort to be proactive in response to diet trends and commodity price shifts. The shares, which are trading at a healthy 15.5 times expected earnings of $2.36 per share for fiscal 2005, are a little pricey relative to the company's high single-digit growth rate but should be seen as attractive for conservative income investors because of its 3.07% dividend yield.

Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.