US: Del Monte moves into profit in Q1

Del Monte Corporation: Announcement Highlights

For the first quarter fiscal 2013:

Net sales increased 5.8%

Pet Products sales increased 8.6% due to new product and existing product volume growth

Consumer Products sales increased 2.4% due to list pricing actions net of trade spend

Operating income declined 7.1% from $49.3 million to $45.8 million mainly due to increased marketing costs and costs associated with closure of the Kingsburg, California facility

Other income of $25.8 million comprised primarily of gains on commodity hedging contracts

Adjusted EBITDA1 increased 12.3% to $113.6 million from $101.2 million

Total net debt was $3,619.6 million as of July 29, 2012

Announced Pet pricing actions of approximately 5-7% across most of the portfolio, effective November 2012

Del Monte Foods Three Months Ended July 29, 2012

Del Monte Foods today reported net sales for the first quarter fiscal 2013 of $821.1 million compared to $776.2 million for the three months ended July 31, 2011, an increase of 5.8%. New and existing product volumes drove the increase. List pricing actions net of trade spend also contributed positively to net sales.
1 Reflects "EBITDA" and "Consolidated EBITDA" as calculated pursuant to the Company's 7.625% Notes Indenture and credit agreements, respectively. Please refer to the reconciliation of non-GAAP financial measures located at the end of this press release.

Operating income declined 7.1% from $49.3 million in the prior year period to $45.8 million. The decrease was primarily driven by increased marketing costs and costs associated with the closure of the Company's Kingsburg, California facility. The decline was partially offset by the positive impact of the topline and list pricing actions net of trade spend.

Other income of $25.8 million for the three months ended July 29, 2012 was comprised primarily of gains on commodity hedging contracts, partially offset by losses on interest rate swaps. The gains on commodity hedging contracts recorded in the quarter, the cash portion of which are reflected in Corporate Adjusted EBITDA, partially offset both ingredient cost increases seen in cost of products sold and ingredient cost increases that we expect to see in future quarters.

Adjusted EBITDA increased 12.3% to $113.6 million compared to $101.2 million in the prior year period. Cash benefits from economic hedge positions are reflected in Corporate Adjusted EBITDA as noted above. The positive impact of the topline, partially offset by increased operating and marketing costs, contributed to the increase. In calculating Adjusted EBITDA, the adjustment for cash benefits from economic hedge positions is calculated pursuant to the Company's 7.625% Notes Indenture and credit agreements, respectively.

"The Company's first quarter results reflect strong topline momentum," said Dave West, CEO of Del Monte Foods. "Recent Pet Product launches such as Meow Mix Tender Centers and Meow Mix Paté Toppers contributed strongly to the topline. We remain focused on generating long-term growth by investing behind our brands in both Pet and Consumer, as well as driving innovation. In order to partially offset dramatic input cost increases caused by the severe drought conditions in the U.S., we recently announced pricing actions of approximately 5-7% across most of the Pet Products portfolio."

Original source: Del Monte Foods