New platforms include Birds Eye Signature Skillets frozen meals, featuring such ingredients as prime rib and shitake mushrooms, for consumers seeking a better-for-you restaurant experience at home, and Birds Eye Steamfresh Veggie Made, a line of side dishes made from vegetables, such as cauliflower, as a convenient, low-carbohydrate alternative to rice.
The company also has expanded its line of Steamfresh Flavor Full frozen vegetables with four new varieties, including three potato offerings, and introduced eight new varieties of Hungry-Man frozen meals, six of which have a premium positioning.
|Mark Clouse, CEO of Pinnacle Foods|
Strong sales of Pinnacle Foods’ frozen products contributed to revenue growth in the recent quarter. Net earnings in the third quarter ended Sept. 25 were $52,353,000, equal to 45 cents per share on the common stock, up from $48,098,000, or 41 cents per share, in the prior-year period. Net sales increased more than 19 percent to $758,821,000 from $636,287,000, largely reflecting the benefit of the Boulder Brands acquisition.
The company’s North America retail net sales increased 0.8 percent in the quarter, led by a 4.1 percent increase in net sales for the Birds Eye Frozen segment, which offset a 3 percent decline in net sales for the Duncan Hines Grocery segment.
EBIT for the Duncan Hines Grocery segment advanced 8.8 percent to $48.1 million, driven by strong productivity and items affecting comparability, partially offset by input cost inflations and the impact of unfavorable mix. Net sales fell to $249.5 million, as declines for Vlasic pickles, Log Cabin and Mrs. Butterworth’s syrups and Duncan Hines baking products offset strong growth of Wish-Bone salad dressings and continued solid performance of Armour canned meat.
While the company has made progress in such challenged categories as salad dressings and portions of baking, Pinnacle Foods continues to faces headwinds in pickles and syrups, both of which came under significant competitive activity in the quarter, Clouse said.
“We remain confident that we can continue to apply our playbook on marketing and in-store execution, to effectively manage this entire portfolio, enabling us to continue to deliver strong consistent results including meaningful gross margin growth, solid top line performance and healthy share expansion, just as we did in Q3,” he said.
EBIT for Boulder Brands was $16.1 million, including acquisition-related fees and integration expenses. The segment contributed net sales of $120.9 million in the quarter, including the unfavorable impact of stock-keeping unit (sku) rationalization. Retail consumption advanced for the Glutino, Udi’s, Earth Balance and Evol brands, offset by a decline for Smart Balance.
“In terms of synergies we continue to expect to achieve the two-year savings of $30 million that we communicated at the time of the acquisition and continue to build visibility to incremental savings beginning in 2018,” Clouse said. “In addition, you'll recall that last quarter, we increased our 2015 to 2017 adjusted EBITDA growth target for Boulder from 50 percent to 65 percent.”
EBIT for the Specialty Foods segment declined to $6.3 million from $7.8 million, due to net sales decline and a non-cash tradename impairment charge. Net sales fell 3.4 percent to $79.4 million, reflecting the expected decline for the private label canned meat business.
For the balance of the year, the company has increased its guidance for adjusted diluted eps to a range of $2.13 to $2.15, which represents the high end of its previous $2.10 to $2.15 range and marks year-over-year growth of 11 percent to 12 percent.