Pinnacle Foods Inc. Reports Q2 2018 Results
Company Reaffirms Full-Year EPS Guidance
Parsippany, NJ, August 2, 2018 - Pinnacle Foods Inc. (NYSE: PF) today reported its financial results for the second quarter ended July 1, 2018 and reaffirmed its guidance for Adjusted diluted earnings per share (EPS) for the year of $2.85 to $2.95.
Diluted EPS in the second quarter of 2018, including items affecting comparability1, increased to $0.47 versus $0.16 in the year-ago period. Excluding items affecting comparability, Adjusted diluted EPS advanced 11.3% to $0.59, compared to $0.53 in the year-ago period.
Net sales for the second quarter declined 0.4% (excluding the impact of Easter timing, net sales increased 1.1%) as continued momentum in the Frozen and Boulder segments was offset by declines in the Grocery and, to a lesser extent, Specialty segments. These results translated into in-market consumption growth of 0.9% in the quarter and composite market share that was even with the year-ago period2.
Commenting on the results, Pinnacle Foods Chief Executive Officer Mark Clouse stated, “Our overall second quarter result was consistent with our expectations despite an increasingly challenging operating environment. We delivered 140bps of Adjusted gross margin expansion in the quarter, even as inflation - particularly freight - remained a headwind for the entire industry. Looking forward, while we expect inflation will remain elevated, we remain confident in our ability to deliver our EPS guidance for the year.”
Referring to the Company’s pending acquisition by Conagra Brands, announced June 27th, 2018, Clouse further commented, “We are very proud of what we have built at Pinnacle and the shareholder returns we have delivered. We are also extremely excited about the potential of a combined Conagra Brands and Pinnacle Foods. The cost synergies of the combination alone are compelling but the growth potential of the broader portfolio of iconic brands also represents powerful possibilities”
Second Quarter Consolidated Results
Net sales in the second quarter of 2018 decreased 0.4% to $741.8 million, compared to net sales of $744.6 million in the year-ago period. This performance reflected net price realization of 1.4%, favorable foreign currency exchange of 0.1% and the negligible net impact from the AJ Exit3, more than offset by a 1.5% impact from the phasing of Easter and lower volume/mix of 0.5%.
Gross profit in the second quarter of 2018 increased 29.0% versus the year-ago period to $211.5 million, or 28.5% of net sales, compared to gross profit of $163.9 million, or 22.0% of net sales, in 2017. This performance reflected the favorable impact of items affecting comparability versus the year-ago period, the lapping of the Discrete Items4 and strong productivity. Partially offsetting these growth drivers were input cost inflation, which was primarily driven by higher transportation costs, and, to a lesser extent, higher outsourcing costs related to innovation. Adjusted gross profit increased 4.6% to $212.6 million and, as a percentage of net sales, Adjusted gross profit margin increased approximately 140 basis points to 28.7%.
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.
4 Discrete items include the costs associated with the AJ Exit as well as the accelerated manufacturing investments that were incurred, beginning May 2017
The following information was filed by Pinnacle Foods Inc. (PF) on Thursday, August 2, 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.