Pinnacle Foods Finance LLC Reports Fiscal 2011 Second Quarter Results
MOUNTAIN LAKES, N.J. (August 10, 2011)--Pinnacle Foods Finance LLC announced its financial results for the second quarter ended June 26, 2011. Net sales were $602 million compared to $576 million in last year’s second quarter. Net earnings were $7 million compared to $14 million in the second quarter last year. For the first six months of 2011, net sales were $1.21 billion compared to $1.23 billion in last year’s first six months. Net earnings were $27 million compared to $18 million in the first six months last year.
Pinnacle’s Chief Executive Officer, Bob Gamgort said, “We are pleased with our strong sales growth in the second quarter, which reflects enhanced consumer marketing programs, successful new product introductions and the shift in Easter timing. For the quarter, we grew or held market share on brands representing 72% of our product contribution. Input cost inflation caused our gross margin to decline in the quarter, however we implemented pricing actions to offset the impact going forward.”
Second Quarter 2011
Net sales were $602 million in the second quarter of 2011 compared to $576 million in last year’s second quarter, a 4.5% increase. Net sales in our North American retail businesses increased 7%, excluding the impact of the exited Birds Eye® Steamfresh® meals and U. S. Swanson® meals businesses. We experienced strong growth in Birds Eye® Steamfresh® vegetables, Birds Eye® Voila!® complete bagged meals, Duncan Hines® baking mixes and frostings, as well as Van de Kamp’s® and Mrs. Paul’s® frozen seafood.
Earnings before interest and taxes (EBIT) were $59 million in the second quarter of 2011, compared to $70 million a year ago. EBIT was positively impacted by higher sales volumes, pricing actions and productivity improvements, but these were offset by the incremental advertising investment of approximately $8 million, as well as higher commodity costs. Consolidated EBITDA, as defined in our borrowing agreements, was $100 million in the second quarter of 2011 compared to $116 million in the second quarter of 2010. Consolidated EBITDA is defined below under “Non-GAAP Financial Matters.”
Earnings were positively impacted by lower interest expense, the result of last year’s strong cash flow which allowed us to make a voluntary bank debt prepayment of $73 million in December 2010 and lower interest rates from our refinancing in August 2010. This year’s quarterly tax rate was negative 9% which was the result of states’ legislative changes enacted during the quarter.
First Six Months 2011
Net sales were $1.21 billion in the first six months of 2011 compared to $1.23 billion in last year’s first six months, a 2.0% decrease. Net sales in our North American retail businesses were basically flat, excluding the impact of the exited Birds Eye® Steamfresh® meals and U. S. Swanson® meals businesses. We experienced strong growth in Birds Eye® Steamfresh® vegetables, Birds Eye® Voila!® complete bagged meals, Van de Kamp’s® and Mrs. Paul’s® frozen seafood, Log Cabin® syrups, Armour® canned meat and Nalley® chili. Contributing to the year to date sales increase in these brands were our first quarter launches of our innovative new products, including Birds Eye® Voila!®Family Size complete bagged meals, Birds Eye® Steamfresh® Family Size vegetables, Hungry-Man® frozen dinner Pub Favorites varieties of Honey Bourbon chicken and Popcorn chicken, and Van de Kamp’s® and Mrs. Paul’s® 90 calories fish fillets, as well as the introduction of a complete line of Swanson® Skillet meals in Canada. In the second quarter, we also introduced Aunt Jemima® Oatmeal pancakes and Lenders® Thin bagels.
Earnings before interest and taxes (EBIT) were $144 million in the first six months of 2011, compared to $133 million a year ago. The EBIT reflects the net sales decline, including our first quarter new distribution investment of $6 million, as well as higher commodity costs, offset by improved productivity and pricing, as well as the step up of inventories in 2010. Consolidated EBITDA, as defined in our borrowing agreements, was $207 million in the first six months of 2011 compared to $243 million in the first six months of 2010, as detailed below.
Six month earnings were positively impacted by lower interest expense, as mentioned above. This year’s tax rate was 31%. Net cash provided by operating activities in the first six months of 2011 was negatively impacted by the required pre-build of inventories associated with our previously announced plant closings.
Conference Call Information
We will hold a conference call on Thursday, August 11, 2011 at 2:00PM (ET) to discuss results for the quarter ended June 26, 2011.
To access the call, you can dial (866) 227-1582 and reference conference name: Pinnacle Foods Q2 Earnings Call. A replay of the call will be available beginning August 11, 2011 at 5:30 PM (ET) until August 31, 2011 by dialing 1-888-266-2081 and referencing Access Code 1544194.
About Pinnacle Foods Finance LLC
Millions of times a day in more than 85% of American households, consumers reach for Pinnacle Foods’ brands. We are a leading producer, marketer and distributor of high-quality branded food products, which have been trusted household names for decades. Headquartered in Mountain Lakes, NJ, our approximately $2.5 billion business employs more than 4,500 people in 21 sites around North America. We are a leader in the shelf stable and frozen foods segments and our brands hold the #1 or #2 market position in 8 out of 12 major category segments in which they compete. Our Birds Eye Frozen Division brands consist primarily of Birds Eye® vegetables, Birds Eye Steamfresh® vegetables, Birds Eye Viola!® meals, C&W® vegetables and McKenzie’s® vegetables, Freshlike® vegetables, Aunt Jemima® frozen breakfasts, Swanson® and Hungry-Man® dinners and entrees, Van de Kamp’s® and Mrs. Paul’s® seafood, Lender’s® bagels and Celeste® frozen pizza. Our Duncan Hines Grocery Division manages brands such as Duncan Hines® baking mixes and frostings, Vlasic® pickles, peppers, and relish, Mrs. Butterworth’s® and Log Cabin® syrups, Armour® canned meats, Nalley® and Brooks® chili and chili ingredients, and Open Pit® barbecue sauces. Our Specialty Food group manages Tim’s Cascade Snacks®, Snyder of Berlin® and Husman’s®. Further information is available at www.pinnaclefoods.com.