US natural and organic food group Annie's has booked a drop in net profit in its third quarter.
Earnings in the three months to the end of December dropped to US$1.4m compared to $2.2m last year. Annie's blamed the decline on charges from its recall of pizzas last month. Operating profit amounted to $2.3m, down from $3.7m last year.
However, net sales were up at $36.3m from $30.8m last year.
"Annie's expects to recover a substantial portion of the recall-related costs from its product recall insurance and it may seek to recover additional costs from the third-party flour mill," the company said.
PRESS RELEASE
ANNIE'S REPORTS THIRD QUARTER FISCAL 2013 FINANCIAL RESULTS
BERKELEY, Calif., Feb. 11, 2013 /PRNewswire/ -- Annie's, Inc. (NYSE: BNNY), a leading natural and organic food company, today announced financial results for its third quarter of fiscal 2013.
Third Quarter Highlights:
Net sales, including a $1.6 million reduction in net sales related to the pizza recall, were $36.3 million, an increase of 17.7% for the third quarter; net income, including $0.7 million inventories write-off, was $1.4 million, or $0.08 per diluted share
Adjusted net sales* increased 22.7% to $37.9 million for the third quarter; adjusted net income* was $2.7 million, or $0.15 per adjusted diluted share*
For the third quarter of fiscal 2013, Annie's reported net sales, including the impact of a reduction in net sales of $1.6 million due to the voluntary recall of Certified Organic and Made with Organic Pizza products, of $36.3 million, an increase of 17.7% over the third quarter of fiscal 2012. Net income attributable to common stockholders, including $0.7 million in additional cost of sales for inventories write-off, in the third quarter of fiscal 2013 was $1.4 million as compared to $2.2 million in the third quarter of the prior year.
Excluding the recall-related charges, Annie's reported adjusted net sales of $37.9 million, an increase of 22.7% over the third quarter of fiscal 2012. Adjusted net income, excluding the recall-related charges, for the third quarter of fiscal 2013 was $2.7 million, or $0.15 per adjusted diluted share, based on 17.8 million shares outstanding. This represents an increase of 23.1% over adjusted net income of $2.2 million, or $0.14 per adjusted diluted share, based on 16.3 million shares outstanding for the third quarter of fiscal 2012.
"We again delivered overall strong financial results and continue to make important investments to support and drive future growth," commented John Foraker, CEO of Annie's. "Consumption trends remain robust and the outlook for natural and organic foods remains strong. Our key growth strategies around mainline aisle placement, securing deeper distribution, increasing brand awareness and driving innovation continue to deliver strong results. Our organization responded well during our recent voluntary product recall of frozen pizza products, and we are moving aggressively to regain momentum in this important growth initiative. Overall, we executed well during the quarter and are looking forward to continued improvements and further growth in the fourth quarter and throughout our next fiscal year, fiscal 2014. We are excited about the opportunities ahead."
As a result of the voluntary product recall, Annie's recorded charges that negatively impacted net sales and net income for the third quarter of fiscal 2013. Annie's expects to recover a substantial portion of the recall-related costs from its product recall insurance and it may seek to recover additional costs from the third-party flour mill. Any recovery would be recorded to offset the charges once recovery is probable. Such recovery is expected to occur and be recorded in future quarters. Annie's is including adjusted financial measures in this press release to provide better visibility into its normal operating results by isolating the effects of the recall. Annie's expects the effects of the recall to continue to be reflected in its financial statements over the next few quarters.
* Adjusted net sales, adjusted net income and adjusted diluted shares are non-GAAP financial measures and must be read with the important information about these measures and the full reconciliation to the most comparable GAAP measures set forth below.
Conference Call Information for Today, February 11, 2013
Annie's will host a conference call and live webcast today, February 11, 2013 at 2:00 p.m. PT (5:00 p.m. ET). The conference call can be accessed by dialing 1-877-941-4774, or 1-480-629-9760 (outside the U.S. and Canada). A live webcast will be available on the Investor Relations page of Annie's corporate website at www.annies.com and via replay beginning approximately two hours after the completion of the call for 90 days. An audio replay of the call will also be available to all interested parties beginning at approximately 5:00 p.m. PT today, February 11, 2013 until 11:59 p.m. PT on Monday, February 18, 2013, by dialing 1-800-406-7325, or 1-303-590-3030 (outside the U.S. and Canada) and entering pass code 4588179#.
About Annie's
Annie's (NYSE: BNNY) is a natural and organic food company that offers great-tasting products in large packaged food categories. Annie's products are made without artificial flavors and synthetic colors and preservatives regularly used in many conventional packaged foods. Today, Annie's offers over 125 products and is present in over 25,000 retail locations in the United States and Canada. Founded in 1989, Annie's is committed to operating in a socially responsible and environmentally sustainable manner. For more information, visit www.annies.com.
