Company Delivers 33% Net Sales Growth in
the Quarter;
Cash Operating Income Increases to $11.8
Million;
Maintains 2012
Outlook
Smart Balance, Inc. (Nasdaq:SMBL) today announced its financial
results for the first quarter ended March 31, 2012. For the first
quarter of 2012, net sales increased 32.8% to $79.3 million, and
cash operating income increased 8.3% to $11.8 million. Earnings per
share were $0.06, versus $0.07 last year, excluding certain
non-cash one-time items.
Regarding its 2012 outlook, the Company continues to expect net
sales in the $320 million to $330 million range, gross margin in
the 42% to 44% range and cash operating income in the $46 million
to $48 million range.
Commenting on the results, Chairman and Chief Executive Officer
Stephen Hughes stated, "Our results were in-line with our
expectations. In the quarter our three growth platforms - Glutino,
Earth Balance and Smart Balance Milk – continued to report strong
consumption trends, and our core Smart Balance spreads and grocery
categories had solid bottom-line results, as we manage these
businesses to deliver consistent profit."
Commenting further on the quarter Mr. Hughes stated, "While the
addition of Glutino contributed a significant portion of our sales
growth in the quarter, we had a number of positive developments in
our base business this quarter, which experienced sales growth of
approximately 7%. Our spreads and grocery businesses reported
approximately 2% sales growth. Earth Balance continued to perform
well, with 31% sales growth. Finally, our Smart Balance Milk
national distribution efforts resulted in sales growth of 65%."
Regarding Glutino, Mr. Hughes commented, "In the quarter, while
reduction of distributor inventory impacted our sales to customers,
sell-through of Glutino sales at all retail channels, remains
strong at 25% growth on average. Inventory levels at the end of the
first quarter stabilized and, as a result, we expect Glutino sales
growth to more closely track retail sales going forward."
2012 First Quarter Results
Net sales in the first quarter of 2012 increased 32.8% to $79.3
million, compared to net sales of $59.7 million in the first
quarter of 2011. This performance primarily reflected the
acquisition of Glutino which represented $15.2 million of net sales
in the quarter. In addition, the Company's base business,
which increased 7.4%, was positively impacted by higher selling
prices, partially offset by lower volume.
In the spreads category, sales increased 1.0% driven by the
positive net impact of pricing activity in the category, volume
growth from Earth Balance®, offset by volume declines from Smart
Balance® and Bestlife™.
Sales of Smart Balance® milk increased 65.4% in the quarter, due
to incremental distribution gains at retail, higher volume from
existing customers, and lower couponing compared to the same period
last year. Sales of the Company's grocery products increased
8.3% versus the year-ago first quarter, reflecting higher prices
for oil and peanut butter, partially offset by lower volume.
The Company's Earth Balance® portfolio continued to perform well
in the first quarter, registering a sales gain of 31.4% versus
year-ago. This gain was primarily driven by growth of Earth
Balance® spreads, as these products continue to gain new
distribution in the grocery channel. In addition, the natural
channel continued to benefit from recent product launches,
including MindfulMayo™, Organic Coconut Spread and Earth Balance®
Coconut & Peanut Spread. Finally, Earth Balance® Soy Milk
continues to benefit from the expansion of distribution in the
natural channel.
Glutino represented approximately 26 points of the consolidated
net sales growth. When compared to the same period last year,
Glutino sales increased 4.1%. The growth in the quarter was
negatively impacted by a change in the Company's promotional
strategy from off-invoice to performance-based; the effect of which
reduces inventory levels at its distributors in the near-term but
improves efficiency of trade spend in the long-term. Glutino
sales across its retail channels, nevertheless, continue to be
strong with average growth of 24.8% in the quarter. Beginning
in April, Glutino inventories at distributors have stabilized and
order patterns are more closely tracking retail sales.
Gross profit in the first quarter of 2012 was $35.1 million, or
44.2% of net sales, compared with gross profit of $28.4 million, or
47.5% of net sales in the first quarter of 2011. While higher
selling prices more than offset the impact of commodity costs, the
acquisition of Glutino, and the overall mix shift to lower margin
products in the base business resulted in lower gross margin in the
quarter. For the full year, the Company continues to expect gross
margin to be in the 42% to 44% range.
Operating income increased 4.2% to $7.5 million in the first
quarter, compared to operating income of $7.2 million in the first
quarter of 2011, excluding one-time items. Included in the
2012 first quarter was a one-time benefit related to the adjustment
of a restructuring charge of $0.1 million and forfeiture of certain
non-vested stock options of $0.2 million. Included in the 2011
first quarter was a one-time benefit related to the forfeiture of
certain non-vested stock options of $0.4 million.
Cash operating income increased 8.3% to $11.8 million in the
first quarter compared to $10.9 million in the prior year's
quarter. The table below provides a reconciliation of operating
income to cash operating income, a non-GAAP measure.
Reconciliation of
Operating Income to Cash Operating Income – First Quarter |
|
$ in Millions |
2012 |
2011 |
|
|
|
Operating Income (GAAP) |
$ 7.8 |
$ 7.6 |
|
|
|
Less non-cash and one-time items : |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
1.5 |
1.8 |
Depreciation and amortization |
2.6 |
1.5 |
One-time items |
(0.1) |
-- |
Non-cash/one-time items |
4.0 |
3.3 |
|
|
|
Cash Operating Income |
$ 11.8 |
$ 10.9 |
Net income in the first quarter of 2012 was $3.7 million, or
$0.06 per share, compared with net income of $3.5 million, or $0.06
per share, in the year-ago quarter. The 2012 quarter was favorably
impacted by the adjustment of a restructuring charge of $0.1
million and $0.1 million related to the forfeiture of certain
non-vested stock options after-tax. The 2011 quarter was
unfavorably impacted by a net charge of $0.7 million, or $0.01 per
share, related to the forfeiture of certain non-vested stock
options associated with restructuring actions. Excluding these
items, net income in the first quarter of 2012 was $3.5 million
compared to $4.2 million in 2011.
Reconciliation of Items
Affecting Net Income and Earnings Per Share (EPS) – First
Quarter |
|
|
Net Income ($
Millions) |
EPS ($ Per share) |
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
Reported |
$ 3.7 |
$ 3.5 |
$ 0.06 |
$ 0.06 |
Less non-cash and one-time items: |
|
|
|
|
Forfeiture of certain stock options |
(0.1) |
0.7 |
(0.00) |
0.01 |
Restructuring |
(0.1) |
-- |
(0.00) |
0.00 |
Non-cash/one-time items |
(0.2) |
0.7 |
(0.00) |
0.01 |
|
|
|
|
|
Adjusted |
$ 3.5 |
$ 4.2 |
$ 0.06 |
$ 0.07 |
|
|
|
|
|
Footnotes
1 All references to market share are based on U.S. mass-market
dollar volume according to The Nielsen Company (an independent
research entity) for the 12-week period ending March 17, 2012,
unless otherwise noted.
Forward-looking Statements
Statements made in this press release that are not historical
facts, including statements about the Company's plans, strategies,
beliefs and expectations, are forward-looking and subject to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. These statements may include use of the words
"expect", "anticipate", "plan", "intend", "project", "may",
"believe" and similar expressions. Forward-looking statements
speak only as of the date they are made, and, except for the
Company's ongoing obligations under the U.S. federal securities
laws, the Company undertakes no obligation to publicly update any
forward-looking statement, whether to reflect actual results of
operations, changes in financial condition, changes in general
economic or business conditions, changes in estimates, expectations
or assumptions, or circumstances or events arising after the
issuance of this press release. Actual results may differ
materially from such forward-looking statements for a number of
reasons, including those risks and uncertainties set forth in the
Company's filings with the SEC and the Company's ability to:
- maintain and grow those revenues derived from our Smart
Balance® buttery spread products from which we generate a
substantial portion of our revenues;
- maintain margins during periods of commodity cost
fluctuations;
- introduce and expand distribution of our new products;
- meet marketing and infrastructure needs;
- respond to changes in consumer demand;
- respond to adverse publicity affecting the Company or
industry;
- maintain our performance during difficult economic
conditions;
- comply with regulatory requirements;
- maintain existing relationships with and secure new
customers;
- continue to rely on third party distributors, manufacturers and
suppliers;
- successfully integrate and operate the Glutino business
and realize the expected benefits of the Glutino acquisition;
- operate outside of the U.S.;
- successfully maintain relationships with the co-packers for our
Glutino® and Gluten-Free Pantry® products;
- grow net sales in a competitive environment and with
increasingly price sensitive consumers; and
- maintain volume in light of price increases stemming from rises
in commodity costs.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States
("GAAP").
The Company uses the terms "cash operating income" and "net
income and earnings per share (EPS) excluding non-cash and one-time
charges" as non-GAAP measures. The Company believes that these
measures better explain its profitability and performance
consistent with the way the investor and securities analysts
evaluate our Company in the competitive environment in which we
operate. Cash operating income is defined as operating income
excluding depreciation, amortization of intangibles, restructuring,
stock based compensation expense and other one-time items. The
Company believes that the exclusion of both non-cash and one-time
charges, provide a better reflection of the operating profitability
of the Company, and strongly compliment the Company's planning and
forecasting models used in providing investors and securities
analysts with important supplemental information regarding the
Company's underlying profitability and operating
performance. However, non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, the company's
results prepared in accordance with GAAP. In addition, the
non-GAAP measures the Company uses may differ from non-GAAP
measures used by other companies. We have included in this press
release reconciliations of cash operating income to operating
income and of net income and EPS excluding non-cash and one-time
items to net income and EPS, in each case as calculated in
accordance with GAAP.
About Smart Balance, Inc.
Smart Balance, Inc. (Nasdaq:SMBL) is committed to providing
superior tasting, solution-driven products in every category it
enters. The company's health and wellness platform consists of
four brands that target specific consumer needs: Smart Balance
for heart healthier diets; Glutino for gluten-free diets; Earth
Balance for plant-based diets; and Bestlife for weight
management. The company markets the Smart Balance line of
products, which avoids trans-fats naturally and balances fats
and/or reduces saturated fats, such as Smart Balance® Buttery
Spreads and Enhanced Milks. The company's Glutino brand is a
trusted pioneer and leader in the gluten-free category, with a wide
variety of great-tasting gluten-free foods consumers trust across a
number of product categories, such as Glutino® Pretzel Twists and
Breakfast Bars. The company markets the Earth
Balance line of non-GMO plant-based products, which include
Earth Balance® Buttery Spreads, Nut Butters and Soy Milks. The
company also markets weight management products under
the Bestlife brand, which include Bestlife™ Buttery
Spreads and Sticks. For more information about Smart Balance,
Inc., please visit www.smartbalance.com.
SMART BALANCE, INC. AND
SUBSIDIARIES |
Consolidated Balance
Sheets |
(In thousands, except share and
per share data) |
|
|
|
|
March 31, |
December 31, |
|
2012 |
2011 |
|
(unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 6,328 |
$ 7,959 |
Accounts receivable, net of allowance of:
$388 (2012) and $343 (2011) |
20,345 |
20,030 |
Accounts receivable - other |
1,683 |
1,124 |
Inventories |
16,417 |
15,698 |
Prepaid taxes |
1,390 |
981 |
Prepaid expenses and other assets |
3,453 |
2,149 |
Deferred tax asset |
4,535 |
5,299 |
Total current assets |
54,151 |
53,240 |
Property and equipment, net |
16,105 |
13,804 |
Other assets: |
|
|
Goodwill |
266,809 |
266,598 |
Intangible assets, net |
183,112 |
183,822 |
Deferred costs, net |
2,520 |
2,690 |
Other assets |
1,516 |
1,478 |
Total other assets |
453,957 |
454,588 |
Total assets |
$ 524,213 |
$ 521,632 |
Liabilities and Stockholders'
Equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued
expenses |
$ 36,260 |
$ 40,358 |
Income taxes payable |
217 |
217 |
Current portion of long-term debt |
5,151 |
9,150 |
Total current liabilities |
41,628 |
49,725 |
Long-term debt |
100,813 |
93,815 |
Deferred tax liability |
50,664 |
51,474 |
Contract payable |
2,750 |
4,125 |
Other liabilities |
1,026 |
877 |
Total liabilities |
196,881 |
200,016 |
|
|
|
Commitment and contingencies |
|
|
Stockholders' equity |
|
|
Common stock, $.0001 par value,
250,000,000 shares authorized; 62,631,217 and 62,630,683 issued in
2012 and 2011, respectively and 58,940,554 and 58,940,020
outstanding in 2012 and 2011, respectively |
6 |
6 |
Additional paid in capital |
540,992 |
539,432 |
Accumulated deficit |
(197,264) |
(200,967) |
Accumulated other comprehensive loss, net
of tax |
(807) |
(1,260) |
Treasury stock, at cost (3,690,663 shares
in 2012 and 2011) |
(15,595) |
(15,595) |
Total stockholders' equity |
327,332 |
321,616 |
Total liabilities and stockholders'
equity |
$ 524,213 |
$ 521,632 |
|
|
|
SMART BALANCE, INC. AND
SUBSIDIARIES |
Consolidated Statements
of Operations and Comprehensive Income |
(Unaudited) |
(In thousands, except share and
per share data) |
|
|
|
Three Months
Ended |
|
March 31, |
|
2012 |
2011 |
Net sales |
$ 79,291 |
$ 59,722 |
Cost of goods sold |
44,211 |
31,350 |
Gross profit |
35,080 |
28,372 |
|
|
|
Operating expenses: |
|
|
Marketing |
6,805 |
5,501 |
Selling |
6,803 |
5,150 |
General and administrative |
13,716 |
10,128 |
Total operating expenses |
27,324 |
20,779 |
Operating income |
7,756 |
7,593 |
|
|
|
Other income (expense): |
|
|
Interest expense |
(1,160) |
(790) |
Other (expense) income, net |
(458) |
654 |
Total other (expense) |
(1,618) |
(136) |
Income before income taxes |
6,138 |
7,457 |
Provision for income taxes |
2,435 |
3,914 |
Net income |
$ 3,703 |
$ 3,543 |
|
|
|
Earnings per share: |
|
|
Basic |
$ 0.06 |
$ 0.06 |
Diluted |
$ 0.06 |
$ 0.06 |
|
|
|
Weighted average shares outstanding: |
|
|
Basic |
58,940,044 |
59,891,323 |
Diluted |
59,314,358 |
59,892,031 |
|
|
|
Net income |
$ 3,703 |
$ 3,543 |
Other comprehensive income, net of tax: |
|
|
Foreign currency translation
adjustment |
453 |
— |
Other comprehensive income |
453 |
— |
Comprehensive income |
$ 4,156 |
$ 3,543 |
CONTACT: Carole Buyers, CFA
Senior Vice President Investor Relations &
Business Development
Smart Balance, Inc.
cbuyers@smartbalance.com
303-652-0521 x152
Boulder Brands, Inc. (MM) (NASDAQ:SMBL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Boulder Brands, Inc. (MM) (NASDAQ:SMBL)
Historical Stock Chart
From Jul 2023 to Jul 2024