Del Monte Foods reported net sales for the second quarter fiscal 2012 of $994.3 million compared to $940.9 million in the second quarter fiscal 2011, an increase of 5.7 percent. New pet products volume growth and list pricing actions net of trade spend were the primary drivers of the increase.
Operating income declined from $148.0 million in the prior year period to $107.1 million. The decrease in operating income reflects the impact of higher operating costs and SG&A (primarily due to severance-related costs, amortization of intangibles and other expenses related to the merger). List pricing actions net of trade spend contributed positively to operating income.
Adjusted EBITDA declined 7.7 percent to $158.9 million compared to $172.1 million in the prior year. The drivers of the decline in Adjusted EBITDA are similar to those for operating income, except for SG&A. In calculating Adjusted EBITDA, SG&A is lower year-over-year because it does not include the severance-related expenses, amortization of intangibles and other expenses related to the merger.
“While the macro environment remained challenging and input cost inflation was high, we delivered strong topline results,” said Dave West, CEO of Del Monte Foods in a prepared statement. “Our new products, particularly Kibbles ‘n Bits Bistro Meals and Milo’s Kitchen, along with our list pricing actions, contributed significantly to our results. The lag between price realization and input cost inflation impacted our bottom line, but we are on track to deliver on our productivity initiatives in fiscal 2012. We will continue our long-term efforts in becoming a more consumer focused company through foundational research and brand building efforts, along with building strategies to more effectively align with our customers.”
Consumer products net sales were $524.7 million, an increase of 3.3 percent from net sales of $507.7 million in the second quarter fiscal 2011. The increase in consumer products net sales was primarily due to non-retail volume growth and list pricing actions net of trade spend.
Consumer products operating income declined from $74.4 million in second quarter fiscal 2011 to $51.6 million in the second quarter fiscal 2012, or 30.6 percent. The decline was primarily driven by higher packaging and other operating costs. This was partially offset by list pricing actions net of trade spend.
Consumer products Adjusted EBITDA declined from $81.0 million in the second quarter fiscal 2011 to $70.7 million in the second quarter fiscal 2012, or 12.7 percent. The drivers of the decline in Adjusted EBITDA are similar to those for consumer products operating income.
Pet products net sales were $469.6 million, an increase of 8.4 percent from net sales of $433.2 million in the prior year period. The increase in Pet Products net sales was primarily driven by new product volume growth and list pricing actions net of trade spend.
Pet products operating income decreased from $92.7 million in the second quarter fiscal 2011 to $79.5 million in the second quarter fiscal 2012, or 14.2 percent. The decrease was primarily driven by higher ingredient costs and SG&A (primarily due to amortization of intangibles, severance-related costs and other expenses related to the merger). These were partially offset by list pricing actions net of trade spend.
Pet products Adjusted EBITDA decreased from $102.1 million in the second quarter fiscal 2011 to $100.5 million in the second quarter fiscal 2012, or 1.6 percent. The drivers of the decline in Adjusted EBITDA are similar to those for Pet Products operating income, except for SG&A. In calculating Adjusted EBITDA, SG&A is lower year-over-year because it does not include the severance-related expenses, amortization of intangibles and other expenses related to the merger.
Net sales for the six months ended October 30, 2011 were $1,770.5 million compared to $1,745.5 million for the prior year period, an increase of 1.4 percent. The increase was driven by new pet products volume growth and list pricing actions net of trade spend.
Operating income declined from $267.4 million in the prior year period to $156.4 million, or 41.5 percent. The decrease in operating income reflects the impact of higher operating costs and SG&A (primarily due to severance-related costs, amortization of intangibles and other expenses related to the merger). List pricing actions net of trade spend contributed positively to operating income.
Adjusted EBITDA declined 18.7 percent to $260.1 million compared to $319.9 million in the prior year period. The drivers of the decline in adjusted EBITDA are similar to those for operating income, except for SG&A. In calculating Adjusted EBITDA, SG&A is lower year-over-year because it does not include the severance-related expenses, amortization of intangibles and other expenses related to the merger.
