Aurora Foods Inc. (NYSE: AOR), a leading producer and marketer of premium branded food products such as Duncan Hines® and Mrs. Paul’s®, today announced improved operating performance for its first quarter ended March 31, 2001. Aurora made significant advances on its strategy to increase sales of key products, reduce costs, and enhance marketing support for its core brands.
Driven by top-line revenue increases in many brands and continued cost improvements, EBITDA grew 21.8% to $35.0 million during the first quarter 2001 compared to adjusted EBITDA* of $28.8 million in the year ago quarter.
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While Aurora’s net sales for the first quarter rose just 0.6% to $283.6 million versus the same period a year ago, the Company’s two largest businesses — Duncan Hines Baking Mixes and Frozen Seafood — posted net sales growth of 12.0% and 14.5%, respectively, compared to the first quarter 2000. Both the Van de Kamp® and Mrs. Paul’s seafood brands had a strong Lent, and Duncan Hines showed strong growth in four out of five product categories. Excluding frozen Lender’s® bagels, a business where consumption has lagged, Aurora’s net sales would have risen 3.1% and total unit volume would have increased 5.4% compared to the same period a year ago.
Aurora also announced that its cost effectiveness program is producing the expected results. The Company’s marketing spending per case during the first quarter was almost 8% lower than a year ago, even though volume was above year ago levels. Aurora also has redirected more of its spending to the consumer. First quarter advertising as a percentage of consumer spending more than doubled compared to the same period a year ago. Cost of goods sold per case has also improved 4.1% compared to a year ago, which is significant given the size of the Company’s brand volumes.
“We are very pleased with our continued performance improvement,” said James T. Smith, President and Chief Executive Officer of Aurora Foods. “We are confident that our business plan — which emphasizes increased sales, reduced costs and enhanced marketing support — is gaining traction and will deliver long-term value.”
Mr. Smith continued, “We are seeing continued momentum with nine of our 16 business categories in our last four week share period showing absolute dollar consumption growth versus the year ago period.” He also noted that Aurora expects to launch seven new products in the next three months.
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By GlobalDataThe Company reported a narrower loss in the first quarter 2001 of $7.8 million or $0.11 per share compared to the net loss of $28.6 million or $0.43 per share in the year ago period. Excluding the non-recurring after-tax charge of $12.2 million for a change in an accounting principle, the net loss for the first quarter 2000 was $16.4 million. On this basis, Aurora’s first quarter 2001 net loss represents an improvement of over 50%.
The Company also reported that first quarter 2001 results were free of special charges. Inventories and receivables in the first quarter declined $11.6 million and $24.2 million, respectively, from year-end 2000 levels. Aurora reiterated that it expects full year EBITDA to be in the $175 million to $180 million range, a 15% to 18% year-over-year improvement. Adjusted EBITDA for 2000 is defined as EBITDA plus other financial, legal, and accounting expenses, transition expenses, and the cumulative effect of a change in accounting.
Attached are Aurora’s financial tables for its first quarter 2001, as well as IRI/Nielsen dollar consumption and share trends.
About Aurora Foods
Aurora Foods Inc., which is based in St. Louis, is a leading producer and marketer of premium branded food products including Duncan Hines® baking mixes, Log Cabin® and Mrs. Butterworth’s® syrup, Lender’s® bagels, Van de Kamp’s® and Mrs. Paul’s® frozen seafood, Aunt Jemima® frozen breakfast products, Celeste® frozen pizza and Chef’s Choice® skillet meals. Aurora’s products can be found in all Retail classes of trade, and Foodservice, and command strong positions in their respective categories and/or markets.
Statements contained in this press release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from the forward-looking statements contained in this release and that may affect the Company’s prospects in general are described in the Company’s filings with the Securities and Exchange Commission.
AURORA FOODS INC.
CONSOLIDATED
BALANCE SHEETS
(IN THOUSANDS)
March 31, December 31,
2001 2000
ASSETS:
Cash & cash equivalents $3,078 $525
Accounts receivable, net 96,996 121,193
Accounts receivable sold (18,580) (38,565)
Inventories 92,691 104,319
Prepaid expenses and other assets 8,773 6,496
Current deferred tax assets 19,675 17,133
Total current assets 202,633 211,101
Property, plant and equipment, net 234,098 239,107
Deferred tax asset 41,239 40,045
Goodwill and other intangible
assets, net 1,259,041 1,268,942
Other assets 33,530 35,091
Total assets $1,770,541 $1,794,286
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current portion of senior secured
term debt $32,926 $32,926
Accounts payable 49,386 50,456
Accrued liabilities 84,764 87,840
Total current liabilities 167,076 171,222
Senior secured term debt 502,433 510,665
Senior secured revolving debt
facility 160,000 160,000
Senior subordinated notes 401,779 401,837
Other liabilities 2,567 5,848
Total liabilities 1,233,855 1,249,572
Commitments and contingent liabilities
Stockholders’ equity
Preferred stock 37 37
Common stock 741 741
Paid-in capital 685,091 685,091
Promissory notes (191) (227)
Accumulated deficit (148,992) (140,928)
Total stockholders’ equity 536,686 544,714
Total liabilities and stockholders’
equity $1,770,541 $1,794,286
AURORA FOODS INC.
CONSOLIDATED
INCOME STATEMENTS
(Dollars and shares in thousands)
Three Months Ended March 31,
2001 2000
Net sales $283,592 $282,008
Cost of goods sold (133,934) (138,402)
Gross profit 149,658 143,606
Brokerage, distribution and marketing
expenses:
Brokerage and distribution (32,913) (33,963)
Trade promotions (53,524) (54,401)
Consumer marketing (19,005) (17,971)
Total brokerage, distribution
and marketing expenses (105,442) (106,335)
Amortization of goodwill and other
intangibles (11,201) (10,751)
Selling, general and administrative
expenses (15,733) (14,577)
Other financial, legal and accounting
expenses — (9,601)
Transition expenses — (1,365)
Total operating expenses (132,376) (142,629)
Operating income 17,282 977
Interest expense, net (27,870) (24,371)
Amortization of deferred financing
expense (867) (708)
Other bank and financing expenses (37) (87)
Loss before income taxes and
cumulative effect of
change in accounting (11,492) (24,189)
Income tax benefit 3,735 7,740
Net loss before cumulative effect
of change in accounting (7,757) (16,449)
Cumulative effect of change in
accounting, net of tax $5,722 — (12,161)
Net loss (7,757) (28,610)
Preferred dividends (307) —
Net loss available to common
stockholders $(8,064) $(28,610)
Basic and diluted loss per share
available to common stockholders:
Loss before cumulative effect of
change in accounting $(0.11) $(0.25)
Cumulative effect of change in
accounting, net of tax — (0.18)
Net loss available to common
stockholders $(0.11) $(0.43)
Weighted average number of shares
outstanding 74,124 67,050
EBITDA (1) $35,037 $17,803
ADJUSTED EBITDA (2) $35,037 $28,769
(1) EBITDA represents earnings before interest, taxes, depreciation and
amortization.
(2) Adjusted EBITDA represents earnings before interest, taxes,
depreciation and amortization and before the accounting change, other
financial, legal and accounting expenses, and transition expenses.
Certain reclassifications have been made to the prior year amounts to
conform to the current year presentation.
AURORA FOODS INC.
CONSOLIDATED
CASH FLOW STATEMENT
(IN THOUSANDS)
Three Months Ended March 31,
2001 2000
Cash from operations:
Net loss $(7,757) $(28,610)
Adjustments to reconcile net loss
to cash from operations:
Depreciation and amortization
expense 18,564 17,484
Deferred income taxes (3,735) (7,365)
Cumulative effect of change in
accounting, net of tax — 12,161
Other 4 —
Changes to operating assets and
liabilities:
Receivables 24,197 (7,494)
Accounts receivable sold (19,985) —
Inventories 11,628 5,016
Prepaid expenses and other
current assets (2,277) (1,373)
Accounts payable (1,377) (36,572)
Accrued expenses (3,075) (6,556)
Other non-current liabilities (3,206) (244)
Net cash provided by (used in)
operations 12,981 (53,553)
Cash flows from investing activities:
Asset additions (2,232) (3,536)
Changes to other non-current assets
and liabilities — (1,640)
Payment for acquisition of
businesses — (36)
Net cash (used for) investment
activities (2,232) (5,212)
Cash (used for) provided by financing
activities:
Proceeds from senior secured
revolving and term debt — 65,000
Repayment of borrowings (8,232) (5,759)
Capital contributions, net of
officer promissory notes 36 —
Debt issuance and equity raising
costs — (132)
Net cash (used for) provided by
financing activities (8,196) 59,109
Net change in cash 2,553 344
Beginning cash and cash equivalents 525 315
Ending cash and cash equivalents $3,078 $659
AURORA FOODS DOLLAR MARKET SHARES
THROUGH 3-18-01
Past 6 Past 3 Past 1
Months Months Month
Van de Kamps 23.0% 23.8% 25.0%
Mrs. Paul’s 16.3% 16.9% 17.9%
Total Seafood 39.3% 40.7% 42.9%
AJ Breakfast 13.8% 13.8% 13.4%
Frozen Pizza 2.9% 3.0% 3.1%
Chef’s Choice 12.6% 12.9% 13.4%
Lender’s 30.6% 30.7% 31.9%
Log Cabin 16.9% 17.0% 18.0%
Mrs. Buttersworth 11.6% 11.3% 11.3%
Total Syrups 28.5% 28.3% 29.3%
Duncan Hines 18.6% 19.5% 20.3%
Aurora IRI/Nielsen Dollar Consumption
Past 4 Weeks-thru 3/18/01
% Increase Vs. Year Ago
1. Prepared Fish + 6.0%
2. Frozen Prepared Non-Fish (e.g. Shrimp) + 101.7%
Total Prepared Seafood + 15.0%
3. Frozen Waffles (14.0%)
4. Frozen Pancakes + 22.4%
5. Frozen French Toast ( 4.8%)
6. Frozen Pizza ( 0.3%)
7. Frozen Skillet Meals ( 6.1%)
8. Frozen Bagels (15.4%)
9. Refrigerated Bagels + 12.0%
10. Fresh Bagels + 0.8%
11. Syrup (12.8%)
12. Cake Mix + 16.9%
13. RTS Frosting + 32.1%
14. Brownie Mix + 22.2%
15. Muffin Mix (10.5%)
16. Cookie Mix + 14.0%
