Inventure Foods, Inc. reported financial results for the second quarter ended June 29, 2013. Net revenues increased 11.8 percent compared to 2012, to a record $53.7 million, or 14.3 percent adjusting for the prior year sale of the company's direct store delivery (DSD) business. Diluted earnings per share were $0.07, compared to $0.08, as a result of increased brand investments and acquisition costs. The newly acquired Willamette Valley Fruit Co. (WVFC) added $1.0 million in net revenues. Seattle's Best Coffee® frozen coffee blends launch contributed $2.0 million to gross revenues.
The increase in net revenues for the quarter was largely driven by a 16.9 percent increase in the healthy/natural portfolio over the prior-year period. Gross profit remained relatively consistent with the prior year at $9.1 million. Gross profit margin declined 220 basis points to 17.0 percent from 19.2 percent last year, primarily due to increased brand support, partially attributable to the Seattle's Best Coffee® launch and a decrease in sales of T.G.I.Friday's® products. Selling, general and administrative expenses increased $0.5 million from the prior year primarily due to increased sampling expenses in the current period for the Seattle's Best Coffee® and T.G.I.Friday's® products and acquisition costs associated with the purchase of WVFC. Net income decreased $0.2 million to $1.4 million compared to $1.6 million in the prior year. Consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased 9.6 percent to $3.6 million, or 6.7 percent of net revenues.
Frozen segment net revenues increased 20.4 percent to $27.9 million, which includes $1.0 million in sales from WVFC since this business was acquired. Net revenues for frozen berries increased 16.8 percent for the quarter due to continued sales growth of branded frozen fruit, complemented by the addition of WVFC. Net revenues from frozen beverages also contributed to the Frozen segment growth with an increase of 40.9 percent over the prior year driven by the addition of the Seattle's Best Coffee frozen coffee blends.
Snack segment net revenues of $25.8 million were up 3.8 percent, or 8.4 percent excluding the impact of the sale of the DSD business. Boulder Canyon Natural Foods®, private label and co-packed products net revenues increased 10.1 percent, 36.8 percent and 244.4 percent, respectively, offset by a 17.8 percent decrease in sales of T.G.I. Friday's.
Consolidated net revenues for the six months ended June 29, 2013 were $102.2 million, which includes $1.0 million in revenues from WVFC. Consolidated net revenues increased 7.6 percent, or 10.1 percent adjusting for the prior year sale of the DSD business. The year-to-date increase in net revenues was largely driven by a 16.9 percent increase in the healthy/natural portfolio. Gross profit decreased 3.2 percent to $18.0 million, compared to $18.5 million in the prior-year period. Net income decreased 26.4 percent to $2.5 million, compared to net income of $3.3 million in the prior year. Fully diluted earnings per share for the first six months of 2013 were $0.13, versus $0.17 during the same period in 2012. Consolidated EBITDA decreased 16.3 percent to $6.7 million, or 6.5 percent of net revenues.
"We are pleased with double-digit net revenue growth across the vast majority of our brand portfolio during the second quarter," said Terry McDaniel, chief executive officer of Inventure Foods, Inc. "Our healthy/natural portfolio continues to track strongly in the marketplace and provided for 65 percent of net revenues during the quarter. In addition, the healthy/natural portfolio net revenues increased 16.9 percent in the quarter versus the prior year, attributable to strong performance in our frozen fruit products, continued increases in our Boulder Canyon brand, as well as favorable results in our frozen beverage businesses. Our Jamba® At-Home smoothies benefited from the successful launch of the Green Fusion flavor, and our market share in the category continues to increase. During its first full quarter in the market, our new Seattle's Best Coffee Frozen Coffee Blends contributed $2.0 million in gross revenue, with increased distribution slated for the second half of the year. Additionally, this quarter marked the third consecutive quarter of increased net revenues for our Boulder Canyon brand as we continued to execute our product and channel growth plan."
"Our indulgent portfolio was up 3.5 percent, or 9.7 percent adjusted for the prior year sale of our DSD business. Although our T.G.I.Friday's brand was down 17.8 percent for the quarter, we have a strong lineup of new products and strong merchandising activity designed to improve the performance of this important brand for the second half. The decrease in our T.G.I.Friday's products was offset by an increase of 10.9 percent in sales of other licensed snack brands and an increase in our private label business. Finally, production has started under our new co-packing agreement with a prominent snack food company, and we signed a second co-packing agreement with a top-tier consumer packaged goods company utilizing our new filled technology which started shipping at the end of June. This remains a complementary and growing part of our business and is a direct result of our investments in our Bluffton facility."
"The completion of our Willamette Valley acquisition during the quarter was an important milestone. We believe the synergies from combining Willamette's berry processing capabilities with our Frozen segment operations will increase our ability to meet the growing consumer demand for frozen fruit."
McDaniel concluded: "We believe our investments in the first half in our brands, facilities and recent acquisition will pay dividends in the second half of the year."
