Aurora Foods, a producer and marketer of leading food brands, today reported that it posted a profit in the Q4 that ended 31 December 2001, behind significant volume growth in each of its business segments.
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Net income for the quarter was US$2.4m, compared with a net loss of US$5.4m in the same quarter a year ago. For the full year 2001, Aurora’s net loss of US$17.6m improved by US$50.7m from the prior year.
James T. Smith, chairman and CEO: “Aurora’s return to profitability in the Q4 is further proof that our business-building strategies are sound.
“Just 18 months ago, the company consolidated itself in St. Louis and began to reinvent its business. Since then, the company has made steady improvement, and today’s report of profitability – the first in over eight quarters – is an important milestone in Aurora’s turnaround and resurgence.”
The company reported that unit volume was up 8.7% in the Q4, compared with the year-ago period, with strong growth in all three Aurora business segments of retail, foodservice and other channels. Consistent with unit-volume growth, net sales grew a strong 5.2% to US$289.9m in the quarter, compared with US$275.7m in the same period a year ago. The company also said that most of its retail brands grew their volume in the Q4, led by Duncan Hines, Aunt Jemima frozen breakfast and Mrs. Paul’s seafood.
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By GlobalDataStrong Cost-Effectiveness Reduces Spending
Aurora said its cost-effectiveness program continued to be a major driver of its turnaround. The total cost to deliver a case to a customer, which includes freight, warehousing, and fixed/variable manufacturing, decreased by 4.9% versus year ago for a savings of US$0.43 per case.
The company also reported that it has completed the conversion of its St. Elmo, Illinois, facility, which it purchased in August 2001, and is now producing Aurora’s three syrup brands – Log Cabin, Mrs. Butterworth’s and Country Kitchen. The use of this facility for both distribution and manufacturing is expected to save Aurora at least US$5m in 2002, and US$8m on an annualized basis.
Other Key Aurora Highlights
* Adjusted EBITDA, or earnings before interest, taxes, depreciation, amortization and other special items, grew to US$48.1m in the Q4, an increase of 1.0% from the year-ago quarter. This was below earlier projections, primarily reflecting increasing marketing spending to strengthen important brand-building initiatives.
* Consistent with increased support behind its brand franchises, four-week IRI (Information Resources, Inc.) unit consumption ending 30 December 2001, was up 8.9% versus year ago, in sharp contrast to the across-the-board declines reported by IRI for most other food companies.
* Earnings per share increased to US$0.03 in the quarter, compared with a loss of US$0.08 per share in the same period a year ago.
* The company reported that market shares are continuing to improve. In the company’s seven retail business categories, most recent three-month (period ending 1/27/02) IRI unit shares are above year ago in five categories, down in one category, and unchanged in one category. Given that the company has an even stronger growth rate at Wal-Mart, which is not included in IRI, Aurora’s consumption increases are even higher than those reported by IRI.
Full-Year 2001 Results and 2002 Outlook
For the year, Aurora reported a net loss of US$17.6m, an improvement of US$50.7m versus the year-ago loss of US$68.3m.
Aurora delivered strong improvement in each quarter of the year. Net sales grew 3.6% in 2001 to US$1,036.1m. Unit volume was up 5.2% for the year, and the growth rate accelerated in each successive quarter throughout 2001. Adjusted EBITDA for the year was US$163.2m, up 6.9% from 2000. The company indicated that it expects to continue these same growth rates in 2002.
“We are very pleased with our 2001 results,” said Smith. “Although EBITDA was below our original expectations, we believe that at this time in our development it is more important to invest behind our brands to solidify and grow their market positions. Our savings programs are coming on strong, and this is providing the funding opportunities that we can use to strengthen our brands and ensure they have stronger platforms on which to base future growth. Aurora is a company of great brands, and we believe that when they are properly supported, they can grow profitably. This was especially true in the Q4 when we increased spending, generating increased consumption, which was a key driver in our return to profitability.
“Aurora Foods has been growing stronger all year. Topline sales and market shares improved versus year ago in all four quarters. While we still have a great many opportunities before us, our results this year give us continued confidence that the plans we have put in place are fundamentally right, and if they are executed well by our constantly improving organization, we expect more good news to come.”
