2014

Inventure Foods Reports Fourth Quarter and Fiscal Year 2012 Results Record annual net revenue and EPS; Borrowings decreased $8.1 million

PHOENIX, Feb. 28, 2013 /PRNewswire/ -- Inventure Foods, Inc. (Nasdaq: SNAK), a leading specialty food marketer and manufacturer, today reported financial results for the fourth quarter and year ended December 29, 2012 highlighted by record annual net revenues of $185.2 million and annual fully diluted earnings per share of $0.38

Two factors impacted the comparability of the Company's 2012 fourth quarter and fiscal year as compared to the 2011 fourth quarter and fiscal year.  First, the fourth quarter of 2011 contained an additional reporting week.  Inventure's fiscal year ends on the Saturday closest to December 31, which periodically results in a 53 week year.  The fourth quarter and fiscal year ended December 29, 2012 contained 13 weeks and 52 weeks respectively, compared to the fourth quarter and fiscal year ended December 31, 2011, which contained 14 weeks and 53 weeks respectively.  Second, the sale of the DSD business, which was effective November 5, 2012, impacted net revenues as the Company no longer sells third-party partner brands and sells company-owned brands to the new distributor at a lower cost.  

Fourth Quarter Highlights

For the fourth quarter of 2012 compared to the fourth quarter of 2011:

  • Adjusted for comparability, net revenues increased approximately 8.5%
  • Gross profit increased 15.2% to $8.9 million.
  • Gross margin increased 310 basis points to 20.4%.
  • Completed a new distribution agreement with Snyder's-Lance, including the sale of the DSD business, resulting in a gain of $1.1 million during the quarter.
  • Diluted earnings per share were $0.12 or $0.08 excluding the gain on the sale of the DSD business.
  • EBITDA increased 88.6% to $5.0 million.  Excluding the gain on the sale of the DSD business, Adjusted EBITDA increased 47.5% to $3.9 million, or 9.1% of net revenues.  A table reconciling Adjusted EBITDA to net income is presented at the end of the consolidated financial statements included in this release.

Full Year Highlights

For the full year 2012 compared to the full year 2011:

  • Adjusted for comparability, net revenues increased approximately 17.2%.
  • Gross profit increased 22.4% to $36.9 million.
  • Gross margin increased 130 basis points to 19.9%.
  • Record diluted earnings per share totaled $0.38 or $0.34 excluding the gain on the sale of the DSD business.
  • EBITDA increased 74.0% to $17.1 million.  Excluding the gain on the sale of the DSD business, Adjusted EBITDA increased 62.8% to $16.0 million, or 8.7% of net revenues. 
  • Borrowings decreased $8.1 million during the year.

Quarter Overview

Consolidated net revenues for the fourth quarter were $43.5 million, a decrease of 2.1%, compared to $44.5 million during the prior-year period.  Adjusted for comparability, net revenues increased 8.5%.  Net revenues during the fourth quarter of 2012 were supported by a 10.3% growth, or 21.0% increase on a comparable week basis, in the healthy/natural portfolio over the prior-year period.  Gross profit increased 15.2% to $8.9 million, compared to $7.7 million in the prior-year period.  Gross profit margin improved 310 basis points to 20.4% from 17.3% last year, primarily in the Snack segment as a result of operational efficiencies, favorable materials costs, and the Company benefited from the sale of our lower margin DSD business.  Selling, general and administrative expenses remained relatively consistent with the prior year at 14.1% of net revenues.  Net income increased 218.8% to $2.4 million, while fully diluted earnings per share were $0.12, and EBITDA increased 88.6%, to $5.0 million, or 11.6% of net revenues.  Excluding the gain on the sale of the DSD business, net income grew 123.6%, totaling $1.7 million, while fully diluted earnings per share were $0.08 and Adjusted EBITDA increased 47.5% to $3.9 million, or 9.1% of net revenues. 

Snack segment net revenues of $21.5 million in the quarter were down 13.6%, compared to $24.9 million during the prior-year period.  Adjusted for comparability, Snack segment net revenues decreased 3.1%.  On a comparable basis, T.G.I. Friday's® net revenues decreased 9.2% during the quarter, partially offset by a 33.1% increase in sales of premium private label products.  On a comparable basis, Boulder Canyon sales were up 9.8% in the fourth quarter.

Frozen segment net revenues, which include Jamba® All Natural Smoothies, totaled $22.0 million for the quarter, an increase of 12.6% over the prior-year period.  Adjusted for comparability, Frozen segment net revenues increased 23.7%.   Net revenues for the Frozen segment, excluding Jamba, increased 13.4% for the quarter due to continued growth in branded and private label frozen fruit sales.  On a comparable week basis, Jamba sales increased 15.1% over the prior year-period to $2.6 million

Full Year Overview

Consolidated net revenues for the year ended December 29, 2012 were $185.2 million, an increase of 14.1%, compared to $162.2 million during the prior-year period.  Adjusted for comparability, net revenues increased 17.2%.  This revenue growth was largely driven by a 26.8%, or 30.0% on a comparable week basis, growth in the healthy/natural portfolio.  Gross profit increased 22.4% to $36.9 million, compared to $30.1 million in the prior-year period.  Net income increased 164.4% to $7.4 million, while fully diluted earnings per share were $0.38, and EBITDA for the full year increased 74.0% to $17.1 million, or 9.3% of net revenues.  Excluding the gain on the sale of the DSD business, net income grew 139.5% to $6.7 million, while fully diluted earnings per share totaled $0.34 and Adjusted EBITDA increased 62.8% to $16.0 million

Snack segment net revenues were $94.4 million, a decrease of 0.7% from last year.  Adjusted for comparability, Snack segment net revenues increased 2.1% for the year.  Adjusted for comparability, T.G.I. Friday's and premium private label sales increased 3.5% and 20.4%, respectively, and Boulder Canyon sales were relatively flat in 2012.

Frozen segment net revenues totaled $90.8 million in the current year, an increase of 35.2%, or 38.8% on a comparable basis, from the prior year.  Adjusted for comparability, net revenues for the Frozen segment, excluding Jamba, increased 49.4% during 2012 due to continued growth in branded and private label frozen fruit sales.  Jamba net revenues for the full year 2012 totaled $13.8 million, and were relatively flat in 2012 on a comparable week basis. 

Management Commentary & Future Outlook

"We communicated a strategic vision beginning in 2011 that included key investments in our facilities, brands and also our operations," said Terry McDaniel, Chief Executive Officer of Inventure Foods, Inc.  "As we close out 2012, a year of double-digit growth in year-over-year net revenues as well as new records for annual net revenues and earnings, we remain encouraged by our team's delivery of our strategic plan.  Our results are a testament to the diversity of our brand portfolio and the distribution channels for each of our brands.  We are also excited that this success has not gone unrecognized, having been named as one of the best small companies in America by Forbes magazine. Additionally, Consumer Reports recently awarded our Boulder Canyon Hummus chip product with its highest rating, while our Nathan's Famous Honey Mustard Crinkle-Cut Fries received the 'Best New Product' award by Convenience Store News."

"As we look forward, we will continue to make the necessary investments to strengthen our brand portfolios," continued McDaniel.  "We've made significant strides in building our healthy/natural portfolio and remain optimistic as we expand existing channels.  Our ability to provide consumers innovative and first-to-market products is further underscored by our recent announcement of the exclusive licensing agreement with Seattle's Best Coffee to market and manufacture a healthier and affordable line of delicious, at-home frozen coffee drinks."

"2012 was a year of solid execution on our strategic plan, which has positioned us well to reap the benefits and further expand our base business throughout this coming year.  Our consistent revenue and earnings growth over the past several years also provide further indication that our Company and our strategy remain on track to deliver sustainable long-term growth for our shareholders," McDaniel concluded.

Conference Call

Inventure Foods' executive management team will host a conference call today at 11 a.m. ET to discuss the Company's fourth quarter and full year 2012 results and comment on its future outlook. To participate in the conference call, please call (877) 853-7702 toll-free, or (408) 940-3848 for international callers. A live webcast of the call will also be available at www.inventurefoods.com and will be archived for one year following today's event.

About Inventure Foods, Inc.

With manufacturing facilities in Arizona, Indiana and Washington, Inventure Foods, Inc. (Nasdaq: SNAK) is a marketer and manufacturer of specialty food brands in better-for-you and indulgent categories under a variety of Company owned and licensed brand names, including Boulder Canyon Natural Foods®, Jamba®, Rader Farms®, T.G.I. Friday's®, Nathan's Famous®, Vidalia Brands®, Poore Brothers®, Tato Skins® and Bob's Texas Style®. For further information about Inventure Foods, please visit www.inventurefoods.com.

Statements contained in this press release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that may cause actual results to differ from the forward-looking statements contained in this press release and that may affect the Company's prospects in general include, but are not limited to, general economic conditions, increases in cost or availability of ingredients, packaging, energy and employees, price competition and industry consolidation, ability to execute strategic initiatives, product recalls or safety concerns, disruptions of supply chain or information technology systems, customer acceptance of new products and changes in consumer preferences, food industry and regulatory factors, interest rate risks, dependence upon major customers, dependence upon existing and future license agreements, the possibility that we will need additional financing due to future operating losses or in order to implement the Company's business strategy, acquisition and divestiture-related risks, the volatility of the market price of the Company's common stock, and such other factors as are described in the Company's filings with the Securities and Exchange Commission.


 


INVENTURE FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME






Quarter Ended


Twelve Months Ended


    December 29,

2012


    December 31,

2011


 December 29,

2012


December 31,

2011


(unaudited)


(unaudited)


(unaudited)


(unaudited)

Net revenues

$       43,542,299


$       44,464,066


$     185,179,427


$     162,232,418

Cost of revenues

34,670,013


36,764,776


148,287,408


132,098,490

     Gross profit

8,872,286


7,699,290


36,892,019


30,133,928

Selling, general & administrative expenses

6,133,413


6,254,986


25,547,728


24,924,343

     Operating income

2,738,873


1,444,304


11,344,291


5,209,585

Gain on sale of DSD business

(1,101,320)


-


(1,101,320)


-

Interest expense, net

150,937


239,863


764,066


884,910

          Income before income taxes

3,689,256


1,204,441


11,681,545


4,324,675

Income tax provision

1,325,188


462,858


4,232,911


1,507,838

     Net income

$         2,364,068


$            741,583


$         7,448,634


$         2,816,837









Earnings per common share:








     Basic

$                  0.12


$                  0.04


$                  0.40


$                  0.16

     Diluted

$                  0.12


$                  0.04


$                  0.38


$                  0.15

Weighted average number of common shares:








     Basic

19,074,588


18,212,534


18,821,495


18,109,548

     Diluted

19,683,937


19,274,115


19,573,533


19,198,868

 

 

INVENTURE FOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



     December 29,

2012


December 31,

2011


(unaudited)



Assets




Current assets: 




    Cash and cash equivalents    

$               419,480


$               664,488

    Accounts receivable, net allowance

17,547,036


15,741,758

    Inventories

27,071,004


31,682,080

    Deferred income tax asset

1,029,830


766,805

    Other current assets

1,323,296


1,526,818

        Total current assets

47,390,646


50,381,949





Property and equipment, net

34,050,806


33,182,331

Goodwill

11,616,225


11,616,225

Trademarks and other intangibles, net

2,009,849


2,033,160

Other assets

826,348


761,258

    Total assets

$          95,893,874


$          97,974,923





Liabilities and Shareholders' Equity




Current liabilities:




    Accounts payable

$          12,178,221


$          14,891,297

    Accrued liabilities

8,414,607


9,531,942

    Current portion of long-term debt

1,646,175


3,025,011

        Total current liabilities

22,239,003


27,448,250





Long-term debt, less current portion

6,897,321


8,595,109

Line of credit

10,117,149


15,183,910

Deferred income tax liability

3,967,812


3,550,560

Interest rate swaps

766,218


843,635

Other liabilities

807,123


743,909

    Total liabilities

44,794,626


56,365,373





Shareholders' equity:




Common stock

195,711


186,312

Additional paid-in capital

29,660,227


27,675,786

Accumulated other comprehensive loss

(377,801)


(425,025)

Retained earnings

22,092,306


14,643,672


51,570,443


42,080,745





Less: treasury stock

(471,195)


(471,195)

Total shareholders' equity

51,099,248


41,609,550

Total liabilities and shareholders' equity

$          95,893,874


$          97,974,923

INVENTURE FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RECONCILIATION








Quarter Ended


Twelve Months Ended


December 29,

2012


December 31, 

2011


December 29, 

2012


December 31,

2011

Reconciliation – Net Income to Adjusted EBITDA:

(unaudited)


(unaudited)


(unaudited)


(unaudited)

Net income

$         2,364,068


$            741,583


$         7,448,634


$         2,816,837

      Interest, net

150,937


239,863


764,066


884,910

      Income tax provision

1,325,188


462,858


4,232,911


1,507,838

      Depreciation

1,204,339


1,220,669


4,677,637


4,601,582

      Amortization of intangible assets

2,499


10,500


23,311


42,000

EBITDA(1)

$           5,047,031


$           2,675,473


$         17,146,559


$           9,853,167

Adjustment:








      Gain on sale of DSD business

(1,101,320)


-


(1,101,320)


-

Adjusted EBITDA(1)

$         3,945,711


$          2,675,473


$        16,045,239


$          9,853,167


(1) Adjusted EBITDA is adjusted to exclude the gain on the sale of the DSD business. EBITDA is presented as a supplemental performance measure and is not intended as an alternative to net income or any other measure calculated in accordance with generally accepted accounting principles. We define Adjusted EBITDA as net income from continuing operations plus (i) net interest expense, (ii) income tax provision, (iii) depreciation, and (iv) amortization of intangible assets, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. This further adjustment is reconciled above. In evaluating Adjusted EBITDA, you should be aware that in the future, we may incur expenses that are the same, or are similar to some of the adjustments in the presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Because of the inherent limitations of Adjusted EBITDA as an analytical tool, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Further, EBITDA may not be comparable to similarly titled measures used by other companies.

SOURCE Inventure Foods, Inc.



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