Pinnacle Foods Inc. Reports Strong Fiscal Q3 Results Company Now Expects EPS at the High End of its Previous Guidance Range for the Year

PARSIPPANY, N.J., Nov. 13, 2013 /PRNewswire/ -- Pinnacle Foods Inc. (NYSE: PF) today reported another quarter of strong growth in net earnings and diluted earnings per share, excluding items affecting comparability, and now expects pro forma diluted EPS for fiscal 2013 to be at the high end of its previous guidance range of $1.53 to $1.57

Consolidated net sales in the third quarter ended September 29, 2013 increased approximately 1% versus year-ago, driven by a 2% increase in net sales for the Company's North America Retail business, which is comprised of the Birds Eye Frozen and Duncan Hines Grocery segments. 

Diluted earnings per share in the third quarter of 2013 increased to $0.35, compared to diluted earnings per share of $0.11 in the year-ago period.  Excluding items affecting comparability, on a pro forma basis which is described in the accompanying reconciliation tables, diluted earnings per share advanced 38% to $0.36, compared to diluted earnings per share of $0.26 in the year-ago period.

Commenting on the results, Pinnacle Foods Chief Executive Officer Bob Gamgort stated, "The third quarter results demonstrate the success of our strategy of Reinvigorating Iconic Brands through focused investment spending, strong productivity results and maintaining a lean and efficient organization structure.  We achieved solid net sales growth in our North America retail business, and we expanded our margins and EPS meaningfully in the quarter.  We are confident that our programs for the balance of the year appropriately address continuing challenges in the industry." 

Third Quarter Consolidated Results
Net sales in the third quarter of 2013 increased 0.8% to $572.5 million, compared to net sales of $567.9 million in the third quarter of 2012. This performance reflected growth in North America Retail, driven by the Duncan Hines Grocery segment, partially offset by planned lower sales in the Company's Specialty Foods segment.

North America Retail net sales increased 2.2% to $482.2 million in the third quarter of 2013, compared to $471.6 million in the year-ago period, almost entirely due to volume/mix growth of 2.1%.  Fueling the growth in net sales were the Company's Leadership Brands, most notably Birds Eye® Vegetables, Vlasic® pickles and Log Cabin® and Mrs. Butterworth's® syrups.

Adjusted EBITDA on a pro forma basis advanced 11% to $107.9 million in the third quarter of 2013, compared to $97.2 million in the third quarter of 2012.  This performance reflected a 220 basis point increase in gross margin, due to favorable product mix and productivity, which collectively more than offset modest input cost inflation. Also contributing to the gross margin growth was the benefit in the current quarter of the expected insurance recovery of expenses related to a voluntary Aunt Jemima product recall in 2012.  Adjusted EBITDA is a Non-GAAP measure defined below under "Non-GAAP Financial Measures," and is reconciled to net earnings in the tables that accompany this release. 

Earnings before interest and taxes (EBIT) advanced 42% versus year-ago to $84.9 million in the third quarter of 2013, compared to $59.9 million in the third quarter of 2012.  Excluding items affecting comparability, EBIT on a pro forma basis increased approximately 13% to $88.2 million in the third quarter of 2013, compared to $78.4 million in the year-ago period, due to the growth in gross profit, partially offset by higher marketing investment behind the Company's Leadership Brands and increased administrative expenses.   

Net earnings in the third quarter advanced to $40.7 million, or $0.35 per diluted share, compared with net earnings of $9.9 million, or $0.11 per diluted share, in the year-ago period.  Excluding items affecting comparability, on a pro forma basis, net earnings for the third quarter increased to $42.4 million, or $0.36 per diluted share, compared to net earnings of $30.5 million, or $0.26 per diluted share, in the year-ago period.

Net cash provided by operating activities advanced significantly in the third quarter of 2013 to $29.6 million, compared to a net operating cash outflow of $5.3 million in the year-ago period.

Third Quarter Segment Results

Birds Eye Frozen
Net sales for the Birds Eye Frozen segment increased 0.8% to $258.0 million in the third quarter of 2013, compared to $256.0 million in the year-ago period.  This performance reflected higher volume/mix of 0.4% and a 0.3% decline in net pricing, as well as a 0.7% benefit from the aforementioned insurance recovery.  The sales performance in the quarter was largely driven by growth of Birds Eye® vegetables, including Birds Eye® Recipe Ready®, introduced last quarter, and Birds Eye Voila!® complete bagged meals, offset by declines for Mrs. Paul's® and Van de Kamp's® seafood, Hungry Man® dinners and Celeste® pizza.

EBIT for the Birds Eye Frozen segment increased approximately 6% to $45.0 million in the third quarter of 2013, compared to $42.4 million in third quarter of 2012.   Excluding items affecting comparability, EBIT advanced approximately 11% to $47.9 million, largely due to higher gross profit driven by productivity in excess of inflation, as well as the benefit of the aforementioned insurance recovery, partially offset by higher marketing investment.

Duncan Hines Grocery
Net sales for the Duncan Hines Grocery segment advanced 4.0% to $224.2 million in the third quarter of 2013, compared to $215.6 million in the year-ago period, almost entirely due to growth in volume/mix.  This performance reflected higher sales of Vlasic® pickles, Mrs. Butterworth's® and Log Cabin® syrups, Duncan Hines® baking mixes and frostings,  Comstock® and Wilderness® pie and pastry fruit fillings and the Company's Canadian business.  Partially offsetting these positive drivers were lower sales of canned meat.

EBIT for the Duncan Hines Grocery segment advanced 45% to $38.3 million in the third quarter of 2013, compared to $26.3 million in the year-ago period.  Excluding items affecting comparability in both periods, EBIT advanced approximately 10% to $37.5 million, reflecting higher gross profit due to increased volume and favorable mix, lower commodity costs and productivity savings, partially offset by higher marketing investment.

Specialty Foods
Net sales for the Specialty Foods segment declined approximately 6% to $90.3 million in the third quarter of 2013, compared to $96.3 million in the third quarter of 2012.  This performance largely reflected planned lower sales of private label canned meat.

EBIT for the Specialty Foods segment increased to $8.0 million in the third quarter of 2013, compared to $0.5 million in the third quarter of 2012.  Excluding items affecting comparability in both periods, EBIT increased approximately 10% to $8.3 million, largely due to higher gross profit stemming from favorable mix and productivity savings in excess of inflation.

Nine Months Consolidated Results
Consolidated net sales for the first nine months of 2013 declined 1.1% to $1.75 billion, compared to net sales of $1.77 billion in the year-ago period.  This performance primarily reflected the planned exit of low-margin, unbranded Specialty businesses, partially offset by net sales growth of 0.7% for the Company's North America Retail businesses. 

Pinnacle's retail consumption, as measured by IRI, outpaced the performance of its composite categories, which declined by approximately 1% versus year-ago for the nine months ended September 29, 2013. 

Adjusted EBITDA on a pro forma basis advanced 12.6% to $305.0 million in the first nine months of 2013, compared to $270.9 million in the year-ago period. 

Excluding items affecting comparability in both periods, EBIT increased 15.2% to $247.3 million in the first nine months of 2013, compared to EBIT of $214.6 million in the year-ago period.  On the same basis, net earnings advanced 62% to $115.7 million, or $0.99 per diluted share, compared to net earnings of $71.3 million, or $0.61 per diluted share, in the year-ago period.

Net cash provided by operating activities increased significantly in the first nine months of 2013 to $141.7 million, compared to $62.4 million in the year-ago period.

Outlook
Given the Company's strong performance through the first nine months of 2013, Pinnacle strengthened its pro forma EPS outlook for 2013 and now expects to be at the high end of its previous EPS guidance range of $1.53 to $1.57 for the full year, excluding items affecting comparability.  This updated guidance continues to include $0.01 to $0.02 accretion in the fourth quarter from the recently-acquired Wish-Bone business and a diluted weighted average share count for the year of 116.5 million.

Conference Call Information
The Company will host an investor conference call on Wednesday, November 13, 2013 at 9:30AM (ET) to discuss the results of the quarter.  To access the call, investors and analysts can dial (866) 793-1344 in the U.S. and Canada or (703) 639-1315 from outside the U.S. and Canada and reference conference name:  Pinnacle Foods Q3 Earnings Call.  A replay of the call will be available, beginning November 13, 2013 at 1:00 PM (ET) until November 30, 2013, by dialing (888) 266-2081 in the U.S. and Canada or (703) 925-2533 from outside the U.S. and Canada and referencing Access Code 1607445.  Access to a live audio webcast and replay of the event will be available in the Investor Center of the Company's corporate website at www.pinnaclefoods.com.

About Pinnacle Foods Inc.
In more than 85% of America households, consumers reach for Pinnacle Foods brands. Pinnacle Foods is a Top 1000 Company as ranked by Fortune Magazine. We are a leading producer, marketer and distributor of high-quality branded food products, which have been trusted household names for decades.  Headquartered in Parsippany, NJ, our business employs an average of 4,400 employees. We are a leader in the shelf stable and frozen foods segments and our brands hold the #1 or #2 market position in 10 of the 12 major categories in which they compete. Our Duncan Hines Grocery Division manages brands such as Duncan Hines® baking mixes and frostings, Vlasic® and Vlasic® Farmer's Garden® shelf-stable pickles, Wish-Bone® and Western® salad dressings, Mrs. Butterworth's® and Log Cabin® table syrups, Armour® canned meats, Brooks® and Nalley® chili and chili ingredients, Duncan Hines® Comstock® and Wilderness® pie and pastry fruit fillings and Open Pit® barbecue sauces. Our Birds Eye Frozen Division manages brands such as Birds Eye®, Birds Eye Steamfresh®, C&W®, McKenzie's®, and Freshlike® frozen vegetables, Birds Eye Voila!® complete bagged frozen meals, Van de Kamp's® and Mrs. Paul's® frozen prepared seafood, Hungry-Man® frozen dinners and entrées, Aunt Jemima® frozen breakfasts, Lender's® frozen and refrigerated bagels, and Celeste® frozen pizza. Our Specialty Foods Division manages Tim's Cascade Snacks®, Hawaiian® kettle style potato chips, Erin's® popcorn, Snyder of Berlin® and Husman's® snacks in addition to our food service and private label businesses. Further information is available at http://www.pinnaclefoods.com

Forward Looking Statements
This release may contain statements that predict or forecast future events or results, depend on future events for their accuracy or otherwise contain "forward-looking information." The words "estimates," "expects," "contemplates," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "may," "should," and variations of such words or similar expressions are intended to identify forward-looking statements. These statements are made based on management's current expectations and beliefs concerning future events and various assumptions and are not guarantees of future performance. Actual results may differ materially as a result of various factors, some of which are beyond our control, including but not limited to: general economic and business conditions, deterioration of the credit and capital markets, industry trends, our substantial leverage and changes in our leverage, interest rate changes, changes in our ownership structure, competition, the loss of any of our major customers or suppliers, changes in demand for our products, changes in distribution channels or competitive conditions in the markets where we operate, costs of integrating acquisitions, loss of our intellectual property rights, fluctuations in price and supply of raw materials, seasonality, our reliance on co-packers to meet our manufacturing needs, availability of qualified personnel, changes in the cost of compliance with laws and regulations, including environmental laws and regulations, and the other risks and uncertainties detailed in our final prospectus filed with the Securities and Exchange Commission on March 28, 2013 and subsequent reports filed with the Securities and Exchange Commission. There may be other factors that may cause our actual results to differ materially from the forward-looking statements.  We assume no obligation to update the information contained in the presentation.


 


PINNACLE FOODS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(thousands, except per share data)








Three months ended


Nine months ended



September 29,
2013


September 23,
2012


September 29,
2013


September 23,
2012

Net sales


$

572,455



$

567,905



$

1,754,480



$

1,773,425


Cost of products sold


415,052



438,564



1,297,808



1,376,251


Gross profit


157,403



129,341



456,672



397,174


Operating expenses









Marketing and selling expenses


40,866



38,336



134,002



130,540


Administrative expenses


25,304



21,349



93,189



66,089


Research and development expenses


2,709



2,677



7,825



8,211


Other expense (income), net


3,606



7,084



45,096



25,280


Total operating expenses


72,485



69,446



280,112



230,120


Earnings before interest and taxes


84,918



59,895



176,560



167,054


Interest expense


19,595



44,462



107,878



154,601


Interest income


23



4



68



105


Earnings before income taxes


65,346



15,437



68,750



12,558


Provision for income taxes


24,661



5,559



35,108



3,701


Net earnings


$

40,685



$

9,878



$

33,642



$

8,857











Net earnings per share









Basic


$

0.35



$

0.12



$

0.32



$

0.11


Weighted average shares outstanding- basic


115,590



81,218



103,921



81,237


Diluted


$

0.35



$

0.11



$

0.32



$

0.10


Weighted average shares outstanding- diluted


116,348



86,445



105,978



86,461


Dividends declared


$

0.18



$



$

0.36



$


 

PINNACLE FOODS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

(thousands of dollars)






September 29,
2013


December 30,
2012

Current assets:




Cash and cash equivalents

$

110,403



$

92,281


Accounts receivable, net of allowances of $5,707 and $5,149, respectively

168,916



143,884


Inventories

394,328



358,051


Other current assets

7,266



11,862


Deferred tax assets

121,181



99,199


Total current assets

802,094



705,277


Plant assets, net of accumulated depreciation of $283,426 and $244,694, respectively

512,351



493,666


Tradenames

1,603,992



1,603,992


Other assets, net

161,423



155,558


Goodwill

1,441,495



1,441,495


Total assets

$

4,521,355



$

4,399,988






Current liabilities:




Short-term borrowings

$

1,065



$

2,139


Current portion of long-term obligations

19,436



30,419


Accounts payable

180,055



137,326


Accrued trade marketing expense

38,920



44,571


Accrued liabilities

106,675



119,269


Dividends payable

21,354




Total current liabilities

367,505



333,724


Long-term debt (includes $48,004 and $63,097 owed to related parties, respectively)

1,968,907



2,576,386


Pension and other postretirement benefits

93,090



100,918


Other long-term liabilities

24,802



28,705


Deferred tax liabilities

530,148



471,529


Total liabilities

2,984,452



3,511,262


Commitments and contingencies




Shareholders' equity:




Pinnacle preferred stock: $.01 per share, 50,000,000 shares authorized, none issued




Pinnacle common stock: par value $.01 per share, 200,000,000 shares authorized;
    issued and outstanding 117,220,795 and 81,210,672, respectively

1,172



812


Additional paid-in-capital

1,325,835



696,512


Retained earnings

244,410



252,955


Accumulated other comprehensive loss

(34,514)



(61,553)


Total shareholders' equity

1,536,903



888,726


Total liabilities and shareholders' equity

$

4,521,355



$

4,399,988






 



PINNACLE FOODS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(thousands of dollars)




Nine months ended


September 29,
2013


September 23,
2012

Cash flows from operating activities




Net earnings

$

33,642



$

8,857


Non-cash charges (credits) to net earnings




Depreciation and amortization

57,683



68,542


Amortization of discount on term loan

720



669


Amortization of debt acquisition costs

3,378



6,745


Call premium on note redemptions

34,180



14,255


Refinancing costs and write off of debt issuance costs

19,668



17,482


Amortization of deferred mark-to-market adjustment on terminated swaps



444


Change in value of financial instruments

(192)



(2,002)


Equity-based compensation charge

5,616



725


Pension expense, net of contributions

(6,756)



(8,924)


Gain on sale of assets held for sale

(3,627)




Other long-term liabilities

(494)



3,210


Other long-term assets



(601)


Deferred income taxes

33,226



2,637


Changes in working capital




Accounts receivable

(25,275)



(5,974)


Inventories

(36,160)



(66,822)


Accrued trade marketing expense

(5,556)



3,853


Accounts payable

41,746



14,198


Accrued liabilities

(10,464)



4,340


Other current assets

392



750


Net cash provided by operating activities

141,727



62,384


Cash flows from investing activities




Capital expenditures

(62,722)



(49,796)


Proceeds from sale of plant assets

6,853



570


Net cash used in investing activities

(55,869)



(49,226)


Cash flows from financing activities




Net proceeds from issuance of common stock

624,258




Repurchases of equity

(191)



(846)


Dividends paid

(20,831)




Proceeds from bank term loans

1,625,925



842,625


Proceeds from notes offerings

350,000




Repayments of long-term obligations

(1,732,071)



(625,172)


Repurchase of notes

(899,180)



(373,255)


Proceeds from short-term borrowings

2,408



1,216


Repayments of short-term borrowings

(3,481)



(2,364)


Borrowings under revolving credit facility



5,000


Repayments of revolving credit facility



(5,000)


Repayment of capital lease obligations

(2,320)



(2,803)


Debt acquisition costs

(12,491)



(17,414)


Change in bank overdrafts



19,327


Net cash used in financing activities

(67,974)



(158,686)


Effect of exchange rate changes on cash

238



388


Net change in cash and cash equivalents

18,122



(145,140)


Cash and cash equivalents - beginning of period

92,281



151,031


Cash and cash equivalents - end of period

$

110,403



$

5,891






Supplemental disclosures of cash flow information:




Interest paid

$

91,577



$

138,622


Interest received

69



105


Income taxes paid

2,998



1,933


Non-cash investing and financing activities:




New capital leases

2,030



1,549


Dividends payable

21,354




Non-GAAP Financial Measures
Pinnacle Foods Inc. uses the following non-GAAP financial measures as defined by the Securities and Exchange Commission in our financial communications.  These non-GAAP financial measures should be considered in addition to the GAAP reported measures and should not be considered replacements for the GAAP measures.

  • North America Retail Net Sales
  • Adjusted Gross Profit
  • Adjusted EBITDA
  • Adjusted Earnings before Interest and Taxes (Adjusted EBIT)
  • Adjusted interest expense, net
  • Adjusted net earnings
  • Adjusted earnings per share

North America Retail Net Sales
North America Retail Net Sales is the sum of the net sales of the Birds Eye Frozen segment and the net sales of the Duncan Hines Grocery segment.  We refer to this to measure net sales performance of our retail focused branded business in contrast to our Specialty Foods segment where over the last several years we have de-emphasized certain low margin foodservice and private label businesses.

Items Impacting Gross Profit and Earnings

Adjusted Gross Profit

Adjusted gross profit is defined as gross profit before accelerated depreciation related to restructuring activities, certain non-cash items, acquisition, merger and other restructuring charges and other adjustments.  We believe that the presentation of Adjusted gross profit is useful to investors because it is consistent with our definition of Adjusted EBITDA (defined below), a measure frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. In addition, we also use targets based on Adjusted gross profit as one of the components used to evaluate our management's performance.

Adjusted EBITDA
The Company's metric of Adjusted EBITDA, which is used in creating targets for the bonus and equity portions of our compensation plans, is equivalent to Covenant Compliance EBITDA under our debt agreements.

Pinnacle believes that the presentation of Adjusted EBITDA provides investors with useful information, as it is important in measuring covenant compliance in accordance with the financial covenants and determining our ability to engage in certain transactions in compliance with our debt facilities and it is a metric used internally by our Board of Directors and senior management.

Adjusted EBITDA is a non-GAAP measure and may not be comparable to similarly named measures used by other companies.  You should not consider Adjusted EBITDA as an alternative to operating or net earnings (loss), determined in accordance with GAAP, as an indicator of Pinnacle's operating performance, or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows, or as a measure of liquidity.

Adjusted EBITDA is defined as earnings (loss) before interest expense, taxes, depreciation and amortization ("EBITDA"), further adjusted to exclude non-cash items, non-recurring items and other adjustment items permitted in calculating Adjusted EBITDA under the Senior Secured Credit Facility and the indentures governing the Senior Notes.

EBITDA and Adjusted EBITDA do not represent net earnings or (loss) or cash flow from operations as those terms are defined by Generally Accepted Accounting Principles ("GAAP") and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. In particular, the definitions of Adjusted EBITDA in the Senior Secured Credit Facility and the indentures allow us to add back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net earnings or loss. However, these are expenses that may recur, vary greatly and are difficult to predict. While EBITDA and Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, they are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation.

Our ability to comply with the financial covenants and engage in certain transactions in compliance with our debt agreements in future periods will depend on events beyond our control, and we cannot assure you that we will meet those ratios. A breach of any of these covenants in the future could result in a default under, or an inability to undertake certain activities in compliance with, the Senior Secured Credit Facility and the indentures governing the Senior Notes, at which time the lenders could elect to declare all amounts outstanding under the Senior Secured Credit Facility to be immediately due and payable. Any such acceleration would also result in a default under the indentures governing the Senior Notes.

Adjusted Earnings Before Interest and Taxes (Adjusted EBIT)

Adjusted Earnings before Interest and Taxes is provided because Pinnacle believes it is useful information in understanding our EBIT results by improving the comparability of year-to-year results.

Adjusted Interest Expense, Net

Adjusted interest expense, net is provided to assist the reader by eliminating mark to market adjustments and the charges which result from refinancing activities.

Adjusted Net Earnings
Adjusted Earnings Per Share

Adjusted net earnings and the related adjusted earnings per share are provided to present the reader with the after-tax impact of Adjusted EBIT and Adjusted interest expense, net in order to improve the comparability and understanding of the related GAAP measures.

 


Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the three months ended September 29, 2013

(thousands, except per share amounts)


Reported


Acquisition,








IPO and






Three Months Ended


Merger and


Other




Adjusted


Refinancing


Public


Proforma


September 29,


Other Restructuring


Non-Cash


Other


September 29,


Interest


Company


September 29,


2013


Charges (2)


Items (3)


Adjustments


2013


Adjustments


Costs (1)


2013

Net sales

$

572,455



$



$



$



$

572,455



$



$



$

572,455


Gross profit

$

157,403



$

(388)



$

(225)



$



$

156,790





$



$

156,790


% of net sales

27.5

%








27.4

%






27.4

%

















Earnings before interest and taxes

$

84,918



$

1,112



$

1,985



$



$

88,015





$

200



$

88,215


















Interest expense, net

$

19,572



$



$

(256)



$



$

19,316



$





$

19,316


Provision for income taxes

$

24,661



$

434



$

1,371



$



$

26,466



$



$

78



26,544


% effective tax rate

37.7

%








38.5

%






38.5

%

















Net earnings

$

40,685



$

678



$

870



$



$

42,233



$



$

122



$

42,355


















Diluted net earnings per share

$

0.35









$

0.36







$

0.36


Diluted weighted average outstanding shares

116,348









116,348







116,348


















Adjusted EBITDA (Non GAAP - See separate discussion and tables)















EBIT

$

84,918



$

1,112



$

1,985



$



$

88,015





$

200



$

88,215


Depreciation

15,786









15,786







15,786


Amortization

3,872









3,872







3,872


EBITDA

$

104,576



$

1,112



$

1,985



$



$

107,673





$

200



$

107,873



















LTM EBITDA









$

458,134

























(1) Reflects Adjusted Statements of Operations amounts, assuming IPO and 2013 Refinancing occurred on the first day of Fiscal 2013.
(2) Represents a +$2.9MM gain on sale of the Tacoma, WA location, restructuring charges of ($2.8MM), employee severance ($0.8MM), along with IPO related and other expenses ($0.4MM).
(3) Represents non-cash equity-related compensation charges ($2.3MM) along with unrealized mark-to-market gains +$0.3MM resulting from hedging activities.

 

Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the three months ended September 23, 2012

(thousands, except per share amounts)


Reported


Acquisition,














Three Months Ended


Merger and


Other




Adjusted


IPO


Public


Proforma


September 23,


Other Restructuring


Non-Cash


Other


September 23,


Interest


Company


September 23,


2012


Charges (2)


Items (3)


Adjustments (4)


2012


Adjustments (1)


Costs (1)


2012

Net sales

$

567,905



$



$



$



$

567,905



$



$



$

567,905


Gross profit

$

129,341



$

16,810



$

(3,075)



$



$

143,076





$



$

143,076


% of net sales

22.8

%








25.2

%






25.2

%

















Earnings before interest and taxes

$

59,895



$

17,518



$

(2,967)



$

4,658



$

79,104





$

(750)



$

78,354


















Interest expense, net

$

44,458



$



$

(265)



$

(2,641)



$

41,552



$

(12,167)



$



$

29,385


Provision for income taxes

$

5,559



$

6,744



$

(1,040)



$

2,810



$

14,073



$

4,684



$

(289)



$

18,468


% effective tax rate

36.0

%








37.5

%






37.7

%

















Net earnings

$

9,878



$

10,774



$

(1,662)



$

4,489



$

23,479



$

7,483



$

(461)



30,501



















Diluted net earnings per share

$

0.11









$

0.27







$

0.26


Diluted weighted average outstanding shares

86,445









86,445



30,955





117,400



















Adjusted EBITDA (Non GAAP - See separate discussion and tables)















EBIT

$

59,895



$

17,518



$

(2,967)



$

4,658



$

79,104





$

(750)



$

78,354


Depreciation

22,607



(7,678)







14,929







14,929


Amortization

3,879









3,879







3,879


EBITDA

$

86,381



$

9,840



$

(2,967)



$

4,658



$

97,912





$

(750)



$

97,162



















(1) Proforma data reflects Adjusted Statements of Operations amounts, assuming IPO occurred on the first day of Fiscal 2012.
(2) Adjusted EBITDA represents restructuring charges related to plant closures ($9.8MM), principally our Millsboro, Delaware facility.
(3) Represents unrealized mark-to-market gains +$3.1MM resulting from hedging activities and non-cash equity-related compensation charges.
(4) Represents premiums paid on the redemption/repurchase of Senior Notes ($3.5MM) and management/advisory fees and expenses paid to an affiliate of Blackstone ($1.2MM).

 

Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the nine months ended September 29, 2013

(thousands, except per share amounts)



Reported


Acquisition,








IPO and







Nine Months Ended


Merger and


Other




Adjusted


Refinancing


Public


Proforma



September 29,


Other Restructuring


Non-Cash


Other


September 29,


Interest


Company


September 29,



2013


Charges (2)


Items (3)


Adjustments (4)


2013


Adjustments (1)


Costs (1)


2013

Net sales

$

1,754,480



$



$



$



$

1,754,480



$



$



$

1,754,480


Gross profit

$

456,672



$

3,756



$

109



$



$

460,537





$



$

460,537


% of net sales

26.0

%








26.2

%






26.2

%


















Earnings before interest and taxes

$

176,560



$

12,218



$

5,336



$

53,361



$

247,475





$

(200)



$

247,275



















Interest expense, net

$

107,810



$



$

(256)



$

(22,467)



$

85,087



$

(25,763)





$

59,324


Provision for income taxes

$

35,108



$

4,588



$

2,121



$

20,513



$

62,330



$

10,048



$

(78)



72,300


% effective tax rate

51.1

%








38.4

%






38.5

%


















Net earnings

$

33,642



$

7,630



$

3,471



$

55,315



$

100,058



$

15,715



$

(122)



$

115,651



















Diluted net earnings per share

$

0.32









$

0.94







$

0.99


Diluted weighted average outstanding shares

105,978









105,978



10,634





116,612



















Adjusted EBITDA (Non GAAP - See separate discussion and tables)















EBIT

$

176,560



$

12,218



$

5,336



$

53,361



$

247,475





$

(200)



$

247,275


Depreciation

46,067









46,067







46,067


Amortization

11,616









11,616







11,616


EBITDA

$

234,243



$

12,218



$

5,336



$

53,361



$

305,158





$

(200)



$

304,958



















LTM EBITDA









$

458,134

























(1) Reflects Adjusted Statements of Operations amounts, assuming IPO and 2013 Refinancing occurred on the first day of Fiscal 2013.
(2) Represents restructuring charges related to plant closures ($6.6MM), principally our Millsboro, Delaware facility, employee severance ($3.7MM), consulting and business optimization expenses related to the expansion of headquarter direct sales coverage for retail ($3.6MM), along with IPO related and other expenses ($1.2MM), partially offset by a +$2.9MM gain on sale of the Tacoma, WA facility.
(3) Represents non-cash equity-related compensation charges ($5.5MM) along with unrealized mark-to-market gains resulting from hedging activities +$0.2MM.
(4) Represents premiums paid on the redemption of Senior Notes ($34.2MM) and management/advisory fees and expenses paid to an affiliate of Blackstone ($19.2MM) which includes the termination of the Blackstone management fee agreement as a result of the IPO.

 

Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the nine months ended September 23, 2012

(thousands, except per share amounts)



Reported


Acquisition,















Nine Months Ended


Merger and


Other




Adjusted


IPO


Public


Proforma



September 23,


Other Restructuring


Non-Cash


Other


September 23,


Interest


Company


September 23,



2012


Charges (2)


Items (3)


Adjustments (4)


2012


Adjustments (1)


Costs (1)


2012

Net sales

$

1,773,425



$



$



$



$

1,773,425



$



$



$

1,773,425


Gross profit

$

397,174



$

25,586



$

(1,996)



$

2,555



$

423,319





$



$

423,319


% of net sales

22.4

%








23.9

%






23.9

%


















Earnings before interest and taxes

$

167,054



$

30,104



$

(1,368)



$

21,019



$

216,809





$

(2,250)



$

214,559



















Interest expense, net

$

154,496



$



$

(90)



$

(17,481)



$

136,925



$

(36,501)



$



$

100,424


Provision for income taxes

$

3,701



$

11,590



$

(492)



$

14,822



$

29,621



$

14,053



$

(866)



$

42,808


% effective tax rate

29.5

%








37.1

%






37.5

%


















Net earnings

$

8,857



$

18,514



$

(786)



$

23,678



$

50,263



$

22,448



$

(1,384)



71,327



















Diluted net earnings per share

$

0.10









$

0.58







$

0.61


Diluted weighted average outstanding shares

86,461









86,461



30,939





117,400



















Adjusted EBITDA (Non GAAP - See separate discussion and tables)















EBIT


$

167,054



$

30,104



$

(1,368)



$

21,019



$

216,809





$

(2,250)



$

214,559


Depreciation

56,895



(12,231)







44,664







44,664


Amortization

11,647









11,647







11,647


EBITDA

$

235,596



$

17,873



$

(1,368)



$

21,019



$

273,120





$

(2,250)



$

270,870



















(1) Proforma data reflects Adjusted Statements of Operations amounts, assuming IPO occurred on the first day of Fiscal 2012.
(2) Adjusted EBITDA represents restructuring charges related to plant closures ($14.7MM), due diligence investigations and other special projects ($1.4MM), along with employee severance and other acquisition related expenses.
(3) Represents unrealized mark-to-market gains +$2.0MM resulting from hedging activities and non-cash equity-related compensation charges.
(4) Represents premiums paid on the redemption/repurchase of Senior Notes ($14.3MM), management/advisory fees and expenses paid to an affiliate of Blackstone ($3.5MM) costs of retrieving and destroying the products covered by the product recall of Aunt Jemima ($3.2MM).

 


Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted Segment Amounts (unaudited)

For the three and nine months ended September 29, 2013 and September 23, 2012

(thousands)



Three Months Ended


Nine Months Ended



September 29,


September 23,


September 29,


September 23,



2013


2012


2013


2012

Net sales - Reported









Birds Eye Frozen


$

257,973



$

255,950



$

794,464



$

787,603


Duncan Hines Grocery


224,214



215,637



690,243



687,225


North America Retail


482,187



471,587



1,484,707



1,474,828


Specialty Foods


90,268



96,318



269,773



298,597


Total


$

572,455



$

567,905



$

1,754,480



$

1,773,425




















Earnings before interest & taxes - Reported








Birds Eye Frozen


$

45,009



$

42,356



$

130,462



$

109,509


Duncan Hines Grocery


38,265



26,347



97,399



77,136


Specialty Foods


8,026



539



21,087



12,680


Unallocated corporate expenses

(6,382)



(9,347)



(72,388)



(32,271)


Total


$

84,918



$

59,895



$

176,560



$

167,054




















Adjustments (Non GAAP - See separate table)









Birds Eye Frozen


$

2,866



$

869



$

7,013



$

11,798


Duncan Hines Grocery


(791)



7,625



6,815



14,832


Specialty Foods


232



6,997



612



7,527


Unallocated corporate expenses

790



3,718



56,475



15,598


Total


$

3,097



$

19,209



$

70,915



$

49,755




















Earnings before interest & taxes - Adjusted (Non GAAP -
 See separate discussion and tables)









Birds Eye Frozen


$

47,875



$

43,225



$

137,475



$

121,307


Duncan Hines Grocery


37,474



33,972



104,214



91,968


Specialty Foods


8,258



7,536



21,699



20,207


Unallocated corporate expenses


(5,592)



(5,629)



(15,913)



(16,673)


Total


$

88,015



$

79,104



$

247,475



$

216,809











 

Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted Segment Amounts (unaudited)

Supplemental Schedule of Adjustments Detail

For the three and nine months ended September 29, 2013 and September 23, 2012 

(millions)



Adjustments to Earnings Before Interest and Taxes



Three Months Ended


Nine Months Ended



September 29,


September 23,


September 29,


September 23,



2013


2012


2013


2012

Birds Eye Frozen









Restructuring charges


$

1.6



$

2.0



$

3.5



$

6.8


Non-cash equity-related compensation


0.9



0.1



1.8



0.3


Employee severance


0.4





1.8



0.4


Unrealized mark-to-market (gain)/loss


(0.2)



(1.7)



(0.1)



(0.9)


Blackstone management/advisory fees




0.6





1.6


Aunt Jemima product recall costs








3.2


Other


0.2



(0.1)





0.4


Total Birds Eye Frozen


$

2.9



$

0.9



$

7.0



$

11.8











Duncan Hines Grocery









Restructuring charges


$

1.2



$

8.2



$

6.7



$

12.8


Non-cash equity-related compensation


0.7



0.1



1.5



0.4


Employee severance


0.3





1.6



0.5


Unrealized mark-to-market (gain)/loss


(0.1)



(0.9)



(0.1)



(1.0)


Blackstone management/advisory fees




0.4





1.8


Gain on sale of the Tacoma, WA location


(2.9)





(2.9)




Other




(0.2)





0.3


Total Duncan Hines Grocery


$

(0.8)



$

7.6



$

6.8



$

14.8











Specialty Foods









Restructuring charges


$



$

7.3



$



$

7.3


Non-cash equity-related compensation


0.1





0.3




Employee severance


0.1





0.3




Unrealized mark-to-market (gain)/loss




(0.5)





(0.1)


Blackstone management/advisory fees




0.2





0.1


Other








0.2


Total Specialty Foods


$

0.2



$

7.0



$

0.6



$

7.5











Unallocated Corporate Expenses









Non-cash equity-related compensation


$

0.6



$



$

1.9



$


Premiums paid on redemption of Senior Notes




3.5



34.2



14.3


Termination of Blackstone management/advisory agreement






19.2




Other


0.2



0.2



1.2



1.3


Total Unallocated Corporate Expenses


$

0.8



$

3.7



$

56.5



$

15.6





























 

SOURCE Pinnacle Foods Inc.



RELATED LINKS
http://www.pinnaclefoods.com

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