Pinnacle Foods Inc. Reports Q1 2018 Results
Company Reaffirms Full-Year Guidance
Parsippany, NJ, May 3, 2018 - Pinnacle Foods Inc. (NYSE: PF) today reported its financial results for the first quarter ended April 1, 2018 and reaffirmed its guidance for Adjusted diluted earnings per share (EPS) for the year.
Diluted EPS in the first quarter of 2018, including items affecting comparability1 increased to $0.48 versus $0.19 in the year-ago period. Excluding items affecting comparability, Adjusted diluted EPS advanced 14.0% to $0.57, compared to $0.50 in the year-ago period.
Net sales in the first quarter of 2018 advanced 1.7% versus year-ago (excluding the AJ Exit2, net sales expanded 4.3%), led by growth in the Company’s Frozen segment. In-market performance3 was also robust, with retail consumption growing 3.5% in the quarter (5.1% excluding Aunt Jemima) and market share advancing 0.4 share points versus year-ago, marking the Company’s 16th consecutive quarter of share growth.
Commenting on the results, Pinnacle Foods Chief Executive Officer Mark Clouse stated, “Our start to 2018 was very much in-line with our expectations, with Adjusted diluted EPS growth of 14% in the quarter. The exceptionally strong retail consumption and market share performance that we have experienced over the past several quarters has continued into 2018. This translated to robust net sales growth in the first quarter, with the Frozen segment up an impressive 7.5%. Looking forward, we expect gross margin growth starting in Q2 and continuing over the balance of the year and we continue to have conviction in our EPS guidance for the year, which would represent our sixth consecutive year of outpacing our long-term algorithm and delivering significant shareholder value.”
First Quarter Consolidated Results
Net sales in the first quarter of 2018 increased 1.7% to $778.8 million, compared to net sales of $766.1 million in the year-ago period. Strong underlying growth was driven by volume/mix of 2.7%, net price realization of 0.7% and favorable foreign currency translation of 0.1%. The earlier timing of Easter added an additional 0.8% of growth. Partially offsetting these growth drivers was the impact of the AJ Exit, which negatively impacted the quarter by 2.6%.
Gross profit in the first quarter of 2018 decreased 2.0% versus year-ago to $206.4 million, or 26.5% of net sales, compared to gross profit of $210.6 million, or 27.5% of net sales, in the prior year period. This performance reflected the favorable impact versus year-ago of items affecting comparability, along with productivity and the impact of higher net sales. More than offsetting these growth drivers were input cost inflation, which was primarily driven by higher transportation costs, and higher outsourcing costs related to innovation. Adjusted gross profit declined 3.1% to $211.2 million and, as a percentage of net sales, Adjusted gross profit margin declined approximately 130 basis points to 27.1%, essentially in-line with expectations.
Earnings before interest and taxes (EBIT) advanced 4.0% to $115.7 million, or 14.9% of net sales, compared to $111.2 million, or 14.5% of net sales, in the prior year period. This performance largely reflected the lower operating expenses in the first quarter of 2018, resulting from the planned phasing of marketing and advertising spending to align with innovation launches, as well as items affecting comparability in the prior year period. Adjusted EBIT
1 Adjusted financial metrics used throughout this release exclude items affecting comparability and are non-GAAP measures. Please see reconciliation to GAAP measures in the financial tables that accompany this release.
2 Aunt Jemima exit, including the Recall, of certain retail and foodservice breakfast products (the AJ Exit), initiated in May 2017.
3 In-market performance (retail consumption; market share) based on Pinnacle’s IRI custom category definitions, period ending April 1, 2018.
The following information was filed by Pinnacle Foods Inc. (PF) on Thursday, May 3, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.