PHOENIX, Nov. 02, 2016 (GLOBE NEWSWIRE) -- Inventure Foods, Inc. reported financial results for the third quarter and nine months ended September 24, 2016.
Third Quarter 2016 Highlights:
- Boulder Canyon net revenues increased 8.6%
- Jamba net revenues increased 8.6%
- Rader Farms branded net revenues increased 37.2%
- Snack products segment gross margin increased 300 basis points to 17.7%
(All comparisons above are to the third quarter of fiscal 2015)
“Although our business continued to face certain challenges, our efforts to drive improvement across key areas of our business resulted in increased revenues for our Boulder Canyon, Jamba, and Rader Farms brands,” said Terry McDaniel, Chief Executive Officer of Inventure Foods. “Additionally, we achieved margin expansion of approximately 300 basis points in the Snack products segment, as a result of the strategic investments we made to increase kettle capacity at our Bluffton, Indiana facility to meet strong consumer demand.”
Mr. McDaniel continued, “Our management team continues to evaluate opportunities for growth, increased productivity, operational improvements, and in turn profitability expansion. Our team remains focused on expanding distribution of our frozen and snack product portfolios to drive sales, strengthen our business, and drive long-term value creation for our shareholders.”
Third Quarter Fiscal 2016
Consolidated net revenues decreased 4.8% to $66.5 million, compared to $69.9 million in the third quarter of the prior year. Frozen products segment net revenues decreased 6.2% and snack products segment net revenues decreased 2.8%, which is discussed further under “Segment Review” below.
Gross profit was $7.9 million, compared to $8.7 million in the third quarter of 2015. This decrease in gross profit was attributable to a $1.5 million decrease in the frozen products segment, partially offset by an increase of $0.7 million in the snack products segment, which is discussed further under “Segment Review” below.
Selling, general and administrative (“SG&A”) expenses were $9.2 million for the third quarter of 2016. Excluding the $0.6 million of product recall expenses recorded in SG&A in the third quarter of 2015, adjusted SG&A expenses* increased $0.6 million and as a percentage of net revenues increased 140 basis points to 13.8% compared to 12.4% in the third quarter of 2015 as a result of increased legal fees associated with the Company’s previously announced strategic and financial review and other legal matters.
Interest expense was $2.4 million for the third quarter of 2016, an increase of $0.6 million, compared to $1.7 million in the prior-year period as a result of increased borrowings and higher interest rates.
Net loss was $(2.6) million, or $(0.13) loss per share, for the third quarter of 2016, compared to net loss of $(1.7) million, or $(0.09) loss per share, for the prior-year period. Excluding the costs associated with the product recall in 2015, adjusted net loss* was $(1.0) million, or $(0.05) adjusted diluted loss per share*, in the third quarter of 2015.
EBITDA* for the third quarter of 2016 was $0.6 million, compared to adjusted EBITDA* of $2.4 million for the third quarter of 2015. EBITDA for the third quarter of 2015 was adjusted to exclude product recall expenses, net of insurance recoveries, of $1.0 million.
Year-to-Date Fiscal 2016
Consolidated net revenues decreased 3.9% to $205.6 million for the nine months ended September 24, 2016, compared to $213.9 million in the prior-year period. Frozen products segment net revenues decreased 1.6% and snack products segment net revenues decreased 7.1%.
Net loss was $(3.9) million, or $(0.20) diluted loss per share, for the first nine months of 2016, compared to net loss of $(18.3) million, or $(0.94) diluted loss per share, in the prior-year period. Excluding the costs of the product recall and the impairment of an intangible asset, adjusted net loss* was $(0.1) million, or $(0.00) adjusted diluted earnings per share*, for the first nine months of 2015.
EBITDA* was $6.7 million for the first nine months of 2016, compared to adjusted EBITDA* of $9.0 million in the prior-year period. Adjusted net loss* and adjusted EBITDA* for the first nine months of 2015 was adjusted to exclude product recall expenses, net of insurance recoveries, of $18.9 million, pre-tax, and an intangible asset impairment of $9.3 million, pre-tax.
Segment Review
The Company has two reportable segments: frozen products and snack products. The frozen products segment includes frozen fruits, vegetables, beverages and desserts, for sale primarily to grocery stores, club stores and mass merchandisers. The snack products segment includes manufactured potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded product for sale primarily to snack food distributors and retailers.
Frozen Products Segment: Net revenues for the third quarter of 2016 decreased 6.2% to $37.9 million, compared to $40.5 million in the prior-year period. This decrease was driven by lower revenues for the Company’s most significant frozen berry product due to reduced sales distribution and a market price decrease, which was partially offset by increased net revenues for frozen vegetables and branded frozen fruit as compared to the prior-year period. For the third quarter of 2016, gross profit was $2.9 million, compared to $4.4 million in the prior-year period. For the third quarter of 2016, adjusted frozen products segment gross profit* was $2.9 million compared to $4.8 million, and as a percentage of net revenues decreased 430 basis points to 7.6% compared to 11.9%, excluding $0.4 million of product recall expenses, net of insurance recoveries, recorded in cost of revenues in the third quarter of 2015. This decrease in gross margin was primarily driven by the Company’s frozen fruit products as a result of packing higher priced purchased fruit remaining from 2015 purchase commitments, as well as sales pricing pressure attributable to decreasing market prices as compared to the prior-year period. The frozen products segment gross margin decline was also due to incremental costs incurred in our Fresh Frozen business to enhance product testing and improve manufacturing operations implemented throughout the second half of 2015.
Net revenues during the nine months ended September 24, 2016 were $124.7 million, a decrease of 1.6%, from $126.7 million in the prior-year period, primarily as a result of lower revenues for the Company’s most significant frozen berry product due to reduced sales distribution and a market price decrease, which was partially offset by increased net revenues for frozen vegetables and branded frozen fruit as compared to the prior-year period. For the nine months ended September 24, 2016, gross profit was $12.0 million compared to $(0.5) million in the prior-year period. For the first nine months of 2016, adjusted frozen products segment gross profit* was $12.0 million compared to $16.3 million, and as a percentage of net revenues decreased to 9.7% compared to 12.9% in the prior year, excluding $16.8 million of product recall expenses, net of insurance recoveries, recorded in cost of revenues in the first nine months of 2015. This decrease in frozen products segment gross margin was attributable to incremental costs incurred in the Fresh Frozen business to enhance product testing and improve manufacturing operations, as well as pricing pressure for the Company’s frozen fruit products attributable to decreasing market prices as compared to the prior-year period.
Snack Products Segment: Net revenues during the third quarter of 2016 decreased 2.8% to $28.6 million, compared to $29.4 million in the prior-year period, primarily driven by a decline in production of products for third parties and increased trade promotional investments to support future growth, partially offset by increased Boulder Canyon net revenues. For the third quarter of 2016, gross profit was $5.1 million compared to $4.3 million, and as a percentage of net revenues increased 300 basis points to 17.7%, compared to 14.7% in prior-year period, primarily due to increased capacity eliminating the need for co-packers used in the prior year to supplement production. The increased capacity also allows for improved efficiency and overhead absorption. The snack products segment gross margin was also negatively affected by product and sales channel mix.
Net revenues during the nine months ended September 24, 2016 were $81.0 million, a 7.1% decrease from $87.2 million in the prior-year period. This decrease was driven by a decline in production of product for third parties and license brand net revenues, partially offset by a slight increase in Boulder Canyon net revenues. Gross profit for the nine months ended September 24, 2016 was $15.0 million, compared to $13.5 million in the prior-year period, and as a percentage of net revenues increased 300 basis points to 18.5% compared to 15.5% in the prior-year period, primarily due to increased capacity eliminating the need for co-packers used in the prior year to supplement production. The increased capacity also allowed for improved efficiency and overhead absorption. The snack products segment gross margin was also negatively affected by product and sales channel mix. Full report.
