Inventure Foods, Inc. (Nasdaq: SNAK), a leading specialty food manufacturer, today reported financial results for the third quarter ending September 25, 2010, highlighted by the Company's net revenue growth of 13.8%, driven by increased Healthy/Natural sales as a result of strong brand investment in this category.
Q3 2010 Financial Results Overview
Inventure generated net revenues of $34.1 million for the third quarter of 2010, up $4.1 million, or 13.8%, compared to net revenues of $29.9 million for the same period in 2009.
Snack division net revenue was $22.4 million, up 7.4% from the prior year, driven primarily by an 89.5% revenue increase for Boulder Canyon(TM) Natural Foods. T.G.I. Friday's(R) and BURGER KING(TM) sales trends were an improvement over recent quarters with flat sales for BURGER KING(TM) and a 1.7% reduction for T.G.I. Friday's(R). This reflects the increased support primarily in the C-Store channel which has been negatively affected by the economy in the first half of 2010.
In the Rader Farms(R) division, net revenue was $11.7 million, an increase of 28.6% over the prior year. This increase was primarily attributable to the continued strength of Jamba(TM), which recorded net revenue of $1.9 million ($2.4 million gross revenue). Excluding Jamba(TM), Rader sales were up 7.4% representing strong growth on the base business.
Consolidated net income for the quarter was $1.2 million, or $0.07 per diluted share, versus $1.3 million, or $0.07 per diluted share last year. The company benefitted from a year long R&D tax credit review which resulted in a gain of $0.3 million based on a look-back of R&D activity over the last several years.
Consolidated EBITDA was $2.6 million or 7.5% of net revenue for the quarter. A table reconciling EBITDA to net income is presented at the end of the condensed consolidated financial statements included in this release.
Other key financial highlights included:
- Gross profit of $7.1 million, or 20.7% of net revenue, up 5.0% in dollars and down 1.8 percentage points versus the prior year. The gross profit margin shortfall was primarily attributable to the increased price of blueberries during the harvest season as well as the slotting fee investment for Jamba(TM), which should only impact gross profit in the short term.
- SG&A was $5.4 million, an increase of $1.2 million or 27.2% versus last year as a result of continued aggressive investment against both Boulder and Jamba(TM).
- Consolidated operating income of $1.6 million versus $2.4 million a year ago.
2010 Year-to-Date Revenue, EPS, and EBITDA
Through the first nine months of 2010, Inventure reported net revenues of $100.4 million compared to $93.1 million for the first nine months of 2009, a 7.8% increase. Diluted earnings per share year-to-date were $0.21 versus $0.18 during the same period in 2009, a gain of 16.7%. EBITDA for the first nine months of 2010 was $9.1 million, an increase of 6.4% versus last year.
Management Commentary and Future Outlook
"We are very pleased to announce another strong quarter of revenue growth driven by our Healthy/Natural category which grew 40.1%,"said Terry McDaniel, Chief Executive Officer of Inventure Foods. "Our sustained focus on developing innovative Healthy/Natural products enabled a net revenue growth of 13.8% for the quarter. The Jamba(TM) Smoothies roll-out gained strength with net sales of $1.9 million, and gross sales of $2.4 million. We are now in over 6,000 retail stores and growing. Early results have been very encouraging and we will be determining next steps to further our launch in the fourth quarter. Our Rader business continues to grow showing a 7.4% increase excluding Jamba(TM). Boulder continues to do very well with an increase of 89.5% over the same period last year, driven in part by the continued success of our Rice and Bean product as well as by a significant increase in marketing investment, and strong support from major retailers."
"We continue to invest in our business as evidenced by SG&A expenditures which are up by $1.2 million versus third quarter last year to support brand growth. Although this did impact third quarter earnings, we are confident that investing now will reap benefits for our future growth. The $3.4 million investment in our Bluffton plant is complete and we are already beginning to produce products on this new extrusion line. Investments made in our Goodyear plant to increase capacity by 32% are on track to be completed by the end of this year, which will add new kettles and packaging machines and improve overall plant efficiencies."
McDaniel concluded, "Our focus remains consistent from that of prior quarters - continued investment in both the Jamba(TM) and Boulder brands while stabilizing T.G.I. Friday's(R) and BURGER KING(TM). While private label snack sales were down for the quarter, we expect several new private label customers to support growth during the remainder of the year. Our strong brand investment allows Inventure Foods to position itself for continued robust revenue and earnings growth."
