Third Quarter 2011 Financial Results
Inventure generated net revenue of $37.5 million for the third quarter, an increase of 10.1%, or $3.4 million, versus the prior-year third quarter. Snack division net revenue posted a 4.8% increase over the same quarter a year ago to $23.5 million, which was led by a 10.3% increase in net revenues for Boulder Canyon Natural Foods™ products, and a 60.3% increase in Private Label products. Net revenues for T.G.I.Friday's® and BURGER KING™ were virtually flat for the quarter. These items were partially offset by declines in the Company's other smaller brands.
Frozen division net revenue, which includes Jamba® All-Natural Smoothies, totaled $14.0 million for the quarter, up 20.3% over the prior year quarter. Excluding Jamba®, Frozen division net revenues increased 10.3% for the quarter. Jamba® net revenues for the quarter totaled $3.3 million ($5.1 million gross), which continue to meet the Company's expectations.
Consolidated net loss for the quarter was $0.2 million, or a $0.01 loss per fully diluted share, compared to consolidated net income of $1.2 million, or $0.07 per fully diluted share, during the third quarter of 2010.
Consolidated EBITDA for the quarter totaled $1.0 million, a decrease of 61.2% compared to the third quarter of last year. A table reconciling EBITDA to net income (loss) is presented at the end of the consolidated financial statements included in this release.
Other third quarter financial highlights include:
- Gross profit of $6.4 million, or 17.1% of net revenues, was down 9.7% in dollars and down 375 basis points compared to the same period last year. Gross profit dollars and margin were impacted by a $1.8 million, or 62.8%, increase in slotting fees, trade advertising, and coupon expenses, nearly all of which continue to support the Jamba® and Boulder Canyon™ brands. Snack division gross margins were lower as the Company worked through capacity constraints at its Goodyear plant as part of the facility's ongoing capital improvements program.
- Selling, General and Administrative (SG&A) expenses totaled $6.6 million for the quarter, or 17.6% of net revenues, an increase of $1.1 million and 155 basis points compared to last year. This increase is attributable to the Company's continued Jamba® and Boulder Canyon™ investment, including increases in sampling, marketing and commission expenditures.
Through the first nine months of 2011, Inventure reported a 17.3% increase in net revenues of $117.8 million, compared to $100.4 million for the first nine months of 2010. Fully diluted earnings per share for the first nine months of 2011 were $0.11 versus $0.21 during the same period in 2010, a decrease of 47.6%. EBITDA for the first nine months of 2011 was $7.2 million, a decrease of 21.4% versus last year.
Management Commentary and Future Outlook
"I am pleased with our overall execution during the third quarter, as we continued to deliver net revenue growth in both our Snack and Frozen divisions,"said Terry McDaniel, Chief Executive Officer of Inventure Foods. "Although our third quarter results delivered negative earnings, we executed a number of significant planned initiatives which are in line with our expectations.
"Our decision earlier this year to roll-out our Jamba® At-Home Smoothies nationally has involved the significant strategic expenditures necessary for an effective launch. Our continued investment in Jamba® has increased overall ACV to 55%, up significantly from 30% just last quarter, and delivered gross revenue of $5.1 million for the quarter and $15.4 million year to date. We also continue to roll out our most recent flavor, Caribbean Passion, which has been met with great response from retailers. Given the strong retail reception thus far, we will begin shipping our fifth item in the line, Orange Dream Machine, during the fourth quarter. Our Jamba® Smoothies were recently recognized in "Every Day with Rachel Ray"magazine as the best make at home smoothie product. We increased our consumer and public relations efforts in support of the launch and should see further expansion for the brand both in existing customers and new customers.
"Our Snack division revenues and margins experienced constrained capacity during the quarter, as we shut down the Goodyear plant on several occasions to install newer and more efficient equipment. I am pleased to report that the first two phases of the installation are now complete, and we expect improvement going forward. Our Boulder Canyon™ brand continued to grow with a 10% net revenue increase, despite a large retail consumer program shifting from the third quarter last year to the fourth quarter of this year, and despite production shortages due to the Goodyear effort. In addition, we continued to develop our premium private label program, with 60% net revenue growth.
"We remain focused on delivering innovative products in line with consumer trends. We are very encouraged by the trade's strong interest in our recent release of Nathan's Famous® branded snacks, and we are pleased with the initial metrics on our Boulder Canyon Garden Select Vegetable Crisps. We also have several exciting extrusion product initiatives underway for 2012."
McDaniel concluded: "I am pleased with the execution to date of our strategic plan in 2011, and we should be seeing the payback of our investments in the near term."
