Inventure Foods, Inc., a leading specialty food marketer and manufacturer, today reported financial results for the third quarter ended September 28, 2013.
Quarter Overview
Consolidated net revenues for the 2013 third quarter were $54.5 million, an increase of 17.0% compared to the prior year, or an increase of 19.7% adjusting for the prior year sale of Inventure's DSD business. The increase in net revenues for the quarter was largely driven by a 20.8% increase in the healthy/natural portfolio over the prior-year period. Gross profit increased $0.6 million to $10.1 million, compared to $9.5 million in the prior year. Gross profit margin declined 190 basis points to 18.4% from 20.3% last year, primarily due to a decrease in sales of T.G.I.Friday's products. Selling, general and administrative expenses of $6.4 million remained relatively consistent to the prior year expense of $6.5 million, but decreased 230 basis points as a percentage of net sales compared to prior year. Net income increased $0.4 million to $2.1 million compared to $1.7 million in the prior year. Consolidated EBITDA increased 26.3% to $5.2 million, or 9.6% of net revenues.
Frozen segment net revenues increased 20.5% to $27.5 million. Net revenues for frozen berries increased 33.0% for the quarter due to continued sales growth of branded frozen fruit, primarily due to the addition of Willamette Valley Fruit Company. Net revenues from frozen beverages decreased 33.8% compared to prior year, largely due to decreased Jamba sales in the Club channel and slower growth of the frozen beverage category.
Snack segment net revenues of $27.0 million were up 13.6%, or 18.8% excluding the impact of the sale of the DSD business. Boulder Canyon Natural Foods net revenues increased 27.5%, offset by an 18.6% decrease in sales of T.G.I. Friday's. Net revenues of co-packed products increased almost 9 times over the prior year with the addition of the new co-packing agreement earlier this year.
Year-to-Date Overview
Consolidated net revenues for the nine months ended September 28, 2013 were $156.7 million. Consolidated net revenues increased 10.7%, or 12.7% adjusting for the prior year sale of the DSD business. The year-to-date increase in net revenues was largely driven by an 18.2% increase in the healthy/natural portfolio. Gross profit remained relatively consistent with the prior-year period at $28.0 million and decreased 190 basis points compared to prior year. Net income decreased 9.3% to $4.6 million, compared to net income of $5.1 million in the prior year. Fully diluted earnings per share for the first nine months of 2013 were $0.23, versus $0.26 during the same period in 2012. Consolidated EBITDA decreased 1.8% to $11.9 million, or 7.6% of net revenues.
Management Commentary & Future Outlook
"We are pleased with another quarter of record net revenues, realizing double-digit growth in both our healthy/natural and indulgent portfolios," said Terry McDaniel, Chief Executive Officer of Inventure Foods, Inc. "Our healthy/natural products represented 63% of net revenues and sales growth of 20.8%. The strength of our frozen fruit business allows us to consistently perform well against industry averages in the category, with a 33% increase in the quarter versus the prior year. The addition of Willamette Valley Fruit Company to our family of brands has also proven to be a great operations play, adding to the growth of our frozen berry business in the third quarter. When coupled with our planned acquisition of Fresh Frozen Foods, we create a formidable presence in the frozen business that we believe can drive solid sales and profit growth into the future."
"Our Boulder Canyon brand continued its strong performance, growing 27.5% over last year, its fourth consecutive quarter of growth, reflecting the successful launch of several new products this year. In frozen beverages, we also continue to gain market share with our Jamba-At-Home smoothies with the introduction of the Green Fusion flavor and our recently introduced Seattle's Best Frozen Coffee Blends. The overall frozen beverage category has dropped over the last two quarters, but we are pleased with our sell through and anticipate continued share gains in our market-leading Jamba products and the introduction of our new Seattle's Best Coffee branded products."
"Our indulgent portfolio had net revenues of $20.2 million, up 17.7% from prior year, on a comparable basis. This growth was driven by strong contributions from our co-packing and premium private label businesses as well as continued growth of our Vidalia brand. This growth helped to offset continued softness in our T.G.I. Friday's brand, which was down 18.6% for the quarter. We remain committed to the return to growth of this important product line, and have been making progress by launching several new products during the year with more slated for the fourth quarter and early 2014."
McDaniel concluded, "We believe that the investments we have made so far this year in our brands, product assortment, facilities and strategic acquisitions will continue to position us well for driving shareholder value."