Inventure Foods, Inc., a specialty food maker and marketer, reported financial results for the fourth quarter and year ending Dec., 31, 2011, highlighted by 32 percent net revenue growth and fully diluted earnings per share (EPS) of $0.04 for the quarter.
Inventure's fiscal year ends on the Saturday closest to Dec.31, which periodically results in a 53 week year. The fourth quarter and fiscal year ended Dec. 31, 2011 contained 14 weeks and 53 weeks respectively, compared to the fourth quarter and fiscal year ended Dec. 25, 2010, which contained 13 weeks and 52 weeks, respectively.
Inventure generated net revenue for the quarter ending Dec. 31, 2011 of $44.5 million, an increase of 32.3 percent versus the prior year fourth quarter, attributable to double-digit gains in both the snack and frozen divisions. Excluding the extra reporting week, net revenues for the quarter were $41.1 million, an increase of 22.3 percent.
Snack division net revenues for the quarter totaled $24.9 million, an increase of 20.6 percent compared to the prior year fourth quarter. T.G.I. Friday's® led the division with strong sales growth of 34.0 percent, while Boulder Canyon Natural Foods™ was up 20.1 percent, and private label increased 11.7 percent. These gains were partially offset by declines in the company's other smaller brands.
Frozen division net revenues, which include Jamba® All Natural Smoothies, totaled $19.5 million, an increase of 51.1 percent from the prior year period. Excluding Jamba®, frozen division sales increased 41.3 percent for the fourth quarter. Jamba® net revenues for the quarter totaled $2.4 million ($3.5 million gross), compared to net revenues of $0.8 million ($1.2 million gross) in the fourth quarter of last year.
Consolidated net income for the quarter was $0.7 million, or $0.04 per fully diluted share, compared to consolidated net income of $0.6 million, or $0.03 per fully diluted share, during the fourth quarter of 2010. Results for 2010 include a charge for the write-off of $0.6 million of old trademarks. Excluding the write-off, 2010 EPS would have been $0.05 per fully diluted share.
Consolidated Adjusted EBITDA for the quarter was $2.7 million, or 6.0 percent of net revenue, a decrease of 3.2 percent and down 220 basis points compared to the fourth quarter of last year. A table reconciling Adjusted EBITDA to net income is presented at the end of the condensed consolidated financial statements included in this release.
Other fourth quarter financial highlights include:
Gross profit of $7.7 million or 17.3 percent of revenues, was up 7.6 percent in dollars, but declined 400 basis points compared to last year. The gross margin decline was primarily affected by higher costs of goods sold in our frozen division, generated by our standard fourth quarter inventory revaluations, which were applied to higher berry inventories compared to prior year as we strategically procured additional fresh berries during the quarter to meet increased demand. Gross profit was also affected by a $1.5 million, or 37 percent increase, in above-the-line spending such as slotting fees, coupons, and trade promotions, which supported Jamba® and Boulder Canyon™.
Selling, general and administrative (SG&A) expenses were $6.3 million, or 14.1 percent of revenues, an increase of $0.8 million and decrease of 220 basis points compared to the year-ago period, excluding the trademark write-off discussed earlier. The increase in dollars was primarily due to continued investments in both Jamba® and Boulder Canyon™, including marketing, sampling, and commission expenses.
Net revenues for the year ending Dec. 31, 2011 totaled $162.2 million, an increase of 21.1 percent compared to 2010. Excluding the extra reporting week, net revenues for the fiscal year were $158.9 million, an increase of 18.6 percent.
Snack division net revenues were $95.1 million, an increase of 11.2 percent from last year. Improved results included an increase in Boulder Canyon™ net revenues of 23.3 percent, T.G.I. Friday's® net revenues of 17.3 percent, and private label net revenues of 36.6 percent.
Frozen division net revenues totaled $67.2 million, an increase of 38.5 percent from last year. Excluding Jamba®, frozen division net revenues for the year were up 17.9 percent, reflecting continued growth in both existing and new customers. Jamba® net revenues were $14.0 million ($18.9 million gross) for the year.
Consolidated net income for the year was $2.8 million, or $0.15 per fully diluted share, compared to $4.5 million, or $0.24 per fully diluted share, in 2010. Excluding the trademark write-offs, EPS in 2010 was $0.26 on a fully diluted basis.
Consolidated Adjusted EBITDA totaled $9.9 million, a decrease of 17.2 percent over last year.
Other full-year financial highlights include:
Gross profit of $30.1 million, or 18.6 percent of revenues, a dollar increase of $1.1 million and decrease of 310 basis points compared to last year.
SG&A expenses totaled $24.9 million, or 15.4 percent of revenues, a dollar increase of $3.2 million and decrease of 80 basis points compared to the prior year. Excluding the 2010 trademark write-off, SG&A increased $3.8 million, or a decrease of 30 basis points.
"2011 was a very important year for Inventure Foods, with several planned investments made towards our anticipated future growth," said Terry McDaniel, CEO of Inventure Foods in a prepared statement. "While we did not experience earnings growth this year due to the investment required to properly support the national launch of our Jamba® smoothies, we continued to deliver net revenue growth in both of our divisions, while executing the quality strategic investments in our brands, plants and people needed to support and strengthen our position for the new year. We finished the year with strong momentum by delivering a net revenue increase of 32 percent in the fourth quarter and posting gains in both our snack and frozen divisions. In the snack division, we were able to grow T.G.I. Friday's® 34 percent through the successful execution of several large retail programs. Our Boulder Canyon™ products continue to benefit from recognition in consumer and trade media, supported by new offerings in the portfolio which resulted in 20% growth for the brand. In addition, the fourth quarter launch of our Nathan's Famous® Crinkle Cut Fry has been met with strong acceptance from our customer base."
McDaniel continued, "In the Frozen Division, we continue to execute the national roll-out of our Jamba® Smoothies, achieving an ACV of 61 percent (as of 1/22/12), up from 20 percent last year. Our success has enabled us to expand the offering and include our newest flavor, Orange Dream Machine®, which began shipping during the quarter. We will also be launching new smoothie flavors during 2012. The Rader Farms base business continues to grow, with 41 percent net revenue growth for the quarter which was primarily a result of volume growth. Operationally, we froze a record number of local berries to augment our recently completed crop harvest, which we expect will yield positive benefits in 2012. We continue to be well positioned to meet increasing demand for our Frozen products line.
"During the fourth quarter, we continued to make meaningful investments in supporting each of our growth initiatives. Our increase in SG&A dollars reflect our strategic effort to properly support the Jamba® and Boulder Canyon™ brands for future growth. Overall, 2011 represents the strongest consumer investment in our brands, and we eagerly anticipate the results these investments should bring well into 2012."
McDaniel concluded, "In a year of economic uncertainty, Inventure Foods continued to grow revenue and strategically position itself to leverage the growth our brands enjoyed in 2011. We continue to build upon our momentum and the strategic investments we believe will best deliver quality growth and shareholder value in the coming fiscal year."