US: Pinnacle sees jump in Q1 earnings
- EBIT increases to $90.1m, up 11.7% YOY
- Sales up 5% to $644m
- Net earnings up 64%
- Sale to Hillshire Brands expected to close in September
Pinnable sale to Hillshire expected to close this Autumn
Pinnacle Foods has booked higher earnings on increased sales and lower interest expenses.
The US food group said today (14 May) that EBIT rose 11.7% in the first quarter to 30 March. Sales increased 5% in the period. Gains were underpinned by a strong performance from its Duncan Hines grocery segment, which saw sales and EBIT rise by 16.6% and 45% respectively.
Net earnings rose 64% thanks to lower interest charges as well as the improved operating performance.
The group, which entered into a takeover agreement to Hillshire Brands earlier this week, said that it expects the transaction to close in September. The deal is pending regulatory approval and shareholder backing.
|Company Reaffirms Guidance for Double-Digit EPS Growth for the Full Year
PARSIPPANY, N.J., May 14, 2014 /PRNewswire/ -- Pinnacle Foods Inc. (NYSE: PF) today reported its financial results for the first quarter ended March 30, 2014 and reaffirmed its guidance for double-digit EPS growth for the year.
Consolidated net sales in the first quarter ended March 30, 2014 increased 5% versus year-ago, largely reflecting the benefit of the Wish-Bone acquisition, partially offset by the unfavorable impacts of a later Easter in 2014 and a decline in sales at the Company's Specialty Foods division. Net sales for North America Retail, which is comprised of the Birds Eye Frozen and Duncan Hines Grocery segments, increased 7.6% versus year-ago, fueled by the benefit of Wish-Bone.
GAAP diluted earnings per share increased 21% to $0.35 in the first quarter of 2014, compared to $0.29 in the year-ago period. Excluding items affecting comparability, on a pro forma basis which is described in the accompanying reconciliation tables, diluted earnings per share advanced approximately 6% to $0.36, compared to diluted earnings per share of $0.34 in the year-ago period.
Commenting on the results, Pinnacle Foods Chief Executive Officer Bob Gamgort stated, "We are pleased with our performance in the quarter and continue to expect 2014 to be another year of double-digit EPS growth. Our focus on driving margin improvement through productivity and enhanced product mix, while maintaining our lean operating structure and driving strong free cash flow, continued to serve us well during a quarter in which the industry continued to be pressured for growth. Despite the industry headwinds, we again outpaced the performance of our composite categories, driving another quarter of market share growth."
On May 12, 2014, Pinnacle announced that it signed a definitive agreement for the sale of the Company to Hillshire Brands for a combination of cash and Hillshire common stock. The transaction, which is subject to customary regulatory and shareholder approvals, is expected to close by the end of September 2014.
First Quarter Consolidated Results
North America Retail net sales increased 7.6% to $559.2 million in the first quarter of 2014, compared to $519.7 million in the year-ago period, reflecting an 8.7% benefit from Wish-Bone and slightly higher volume/mix of 0.1%, including the unfavorable impact of the Easter shift. Also impacting the comparison were lower net pricing of 0.8% related to higher new product introductory costs and unfavorable foreign currency translation of 0.4%.
Adjusted EBITDA on a pro forma basis advanced 9.1% to $113.1 million in the first quarter of 2014, compared to $103.7 million in the first quarter of 2013. This performance reflected the growth in net sales and gross margin expansion of 70 basis points, driven by the combined benefit of productivity and improved product mix in excess of inflation. Partially offsetting this growth were increased administrative expenses, largely reflecting higher equity-based compensation expense. Adjusted EBITDA is a Non-GAAP measure defined below under "Non-GAAP Financial Measures," and is reconciled to net earnings in the tables that accompany this release.
Earnings before interest and taxes (EBIT) advanced approximately 12% versus year-ago to $90.1 million in the first quarter of 2014, compared to $80.7 million in the first quarter of 2013. Excluding items affecting comparability, EBIT on a pro forma basis increased approximately 10% to $92.7 million in the first quarter of 2014, compared to $84.4 million in the year-ago period.
Net earnings in the first quarter advanced to $40.7 million, or $0.35 per diluted share, compared with net earnings of $24.8 million, or $0.29 per diluted share, in the year-ago period. Excluding items affecting comparability, on a pro forma basis, net earnings for the first quarter increased approximately 7% to $42.3 million, or $0.36 per diluted share, compared to net earnings of $39.5 million, or $0.34per diluted share, in the year-ago period. This performance primarily reflected the growth in EBIT, partially offset by higher interest expense associated with debt assumed to fund the Wish-Bone acquisition. The unfavorable impact of the Easter shift approximated $0.02 per diluted share in the quarter.
Net cash provided by operating activities advanced significantly in the first quarter of 2014 to $94 million, compared to $68 million in the year-ago period, largely reflecting the growth in Earnings before income taxes.
First Quarter Segment Results
Birds Eye Frozen
EBIT for the Birds Eye Frozen segment declined approximately 4% to $46.7 million in the first quarter of 2014, compared to $48.9 million in first quarter of 2013. Excluding items affecting comparability, EBIT declined approximately 5% to $47.1 million, largely due to commodity and logistics cost inflation and the impact of the Easter shift, partially offset by productivity and timing of marketing investment.
Duncan Hines Grocery
EBIT for the Duncan Hines Grocery segment advanced 45% to $42.7 million in the first quarter of 2014, compared to $29.4 million in the year-ago period. Excluding items affecting comparability, EBIT advanced approximately 41% to $44.8 million, largely due to the benefit of Wish-Bone, favorable commodity prices and productivity, partially offset by the impact of the Easter shift.
EBIT for the Specialty Foods segment decreased to $7.1 million in the first quarter of 2014, compared to $8.2 million in the first quarter of 2013, primarily reflecting the lower sales of private label canned meat in a heightened competitive bidding environment.
Fiscal Year 2014 Outlook
Original source: Pinnacle Foods
A frozen pizza is a ready-made pizza that consumers can store in their refrigerators and consume as and when required. The shelf life of a frozen pizza is approximately 4-6 months, if stored in a free...
Canned food products refer to processed food items that are available in airtight suitable metal cans with added preservatives. Short cooking time, long shelf life, and easy storage are some of the fa...
- Danone's global push for Danonino – interview
- How Hormel Foods can benefit from Justin's
- Colian hungry for international growth - interview
- The balancing act at Amy's Kitchen - interview
- How discounters unsettling Australia's food sector
- Nestle sets new savings target
- US food labels to include "added sugars" info
- ConAgra focusing on core with Spicetec sale
- Premier takes control of powders JV Knighton
- Kraft Heinz to expand US plant