Sovos Brands, Inc. (“Sovos Brands” or the “Company”) (Nasdaq:
SOVO), one of the fastest-growing food companies of scale in the
United States, today reported financial results for its second
quarter ended July 1, 2023.
Second Quarter Highlights:
- Net sales of $217.6 million increased 10.2% year-over-year
- Organic net sales growth of 16.3% was driven by 8.9% volume and
7.4% pricing growth1
- Rao’s net sales of $154.9 million increased 29.3%
year-over-year
- Rao’s sauce dollar consumption grew 31.5% year-over-year driven
by a 180-basis point increase in household penetration to 13.8% and
27.4% distribution growth2
- Rao’s franchise continued to expand its presence outside of
sauce, with combined dollar consumption for the frozen, soup, and
pasta categories up 38.0% year-over-year2
- Gross margin increased 460-basis points to 32.5%; Adjusted
gross margin3 increased 450-basis points to 32.5%
- Net income was $5.4 million or $0.05 per diluted share;
adjusted net income3 was $17.4 million or $0.17 per diluted
share
- Adjusted EBITDA3 of $35.2 million grew 36.9%
year-over-year
- Marketing and R&D increased a combined 35.6%
year-over-year, supporting our growth as we seek to capitalize on
the whitespace ahead for our brands
“We are pleased to report another quarter of sector-leading,
volume-led 16% organic net sales growth and 37% adjusted EBITDA
growth,” commented Todd Lachman, President and Chief Executive
Officer. “Rao’s broad-based momentum drove our growth in the
quarter, benefiting most notably from 31% consumption growth in
sauce that was driven by continued household penetration gains and
distribution growth.”
Campbell Soup Company (“Campbell”) Merger
AnnouncementIn a separate press release issued earlier
today, Sovos Brands announced a definitive agreement to be acquired
by Campbell Soup Company for $23 per share, representing a total
enterprise value of approximately $2.7 billion.
“I am pleased to announce that Sovos Brands will be joining the
Campbell family, a leading packaged food business aligned with our
vision of bringing consumers delicious food for joyful living,”
commented Mr. Lachman. “When we started Sovos Brands, our ambition
was to create a one-of-a-kind, high-growth food company – I am
incredibly proud of what we have built, and the value created for
all stakeholders. I want to thank the incredibly talented and
passionate team at Sovos Brands, which has been instrumental in
building one of the fastest growing food companies of scale in the
industry today.”
Summary of Reported (GAAP) and Adjusted3
Results
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13 Weeks Ended |
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26 Weeks Ended |
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July 1, 2023 |
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June 25, 2022 |
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Change |
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July 1, 2023 |
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June 25, 2022 |
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|
Change |
Net sales ($ millions) |
$ |
217.6 |
|
$ |
197.4 |
|
|
|
10.2 |
% |
|
$ |
470.4 |
|
$ |
407.4 |
|
|
|
15.5 |
% |
Net income (loss) ($
millions) |
$ |
5.4 |
|
$ |
(30.3 |
) |
|
|
117.8 |
% |
|
$ |
13.2 |
|
$ |
(26.2 |
) |
|
|
150.5 |
% |
Net income (loss) margin
(%) |
|
2.4 |
% |
|
(15.3 |
) |
% |
|
1770 |
bps |
|
|
2.8 |
% |
|
(6.4 |
) |
% |
|
920 |
bps |
Adjusted net income3 |
$ |
17.4 |
|
$ |
12.7 |
|
|
|
37.3 |
% |
|
$ |
35.6 |
|
$ |
26.5 |
|
|
|
34.3 |
% |
Diluted EPS |
$ |
0.05 |
|
$ |
(0.30 |
) |
|
|
116.7 |
% |
|
$ |
0.13 |
|
$ |
(0.26 |
) |
|
|
150.0 |
% |
Adjusted diluted EPS3 |
$ |
0.17 |
|
$ |
0.13 |
|
|
|
30.8 |
% |
|
$ |
0.35 |
|
$ |
0.26 |
|
|
|
34.6 |
% |
Adjusted EBITDA3($
millions) |
$ |
35.2 |
|
$ |
25.7 |
|
|
|
36.9 |
% |
|
$ |
71.1 |
|
$ |
53.3 |
|
|
|
33.4 |
% |
Adjusted EBITDA
margin3(%) |
|
16.2 |
% |
|
13.0 |
|
% |
|
320 |
bps |
|
|
15.1 |
% |
|
13.1 |
|
% |
|
200 |
bps |
Summary of Reported and Organic1 Net
Sales Growth – Second Quarter and Year-to-Date 2023
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13 Weeks Ended July 1, 2023 |
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ReportedNet Sales |
|
|
M&A |
|
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OrganicNet Sales |
|
|
Organic Net Sales GrowthKey
Drivers |
|
|
|
% Change |
|
|
Contribution |
|
|
% Change1 |
|
|
Volume |
|
|
Price |
|
Rao’s |
|
29.3 |
|
% |
|
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% |
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29.3 |
|
% |
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noosa |
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0.9 |
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% |
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% |
|
0.9 |
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% |
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Michael Angelo’s |
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(23.4 |
) |
% |
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|
% |
|
(23.4 |
) |
% |
|
|
|
|
|
|
Total Net
Sales |
|
10.2 |
|
% |
|
6.1 |
% |
|
16.3 |
|
% |
|
8.9 |
% |
|
7.4 |
% |
|
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|
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|
26 Weeks Ended July 1, 2023 |
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|
|
ReportedNet Sales |
|
|
M&A |
|
|
OrganicNet Sales |
|
|
Organic Net Sales GrowthKey
Drivers |
|
|
|
% Change |
|
|
Contribution |
|
|
% Change1 |
|
|
Volume |
|
|
Price |
|
Rao’s |
|
33.8 |
|
% |
|
|
% |
|
33.8 |
|
% |
|
|
|
|
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|
noosa |
|
4.3 |
|
% |
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% |
|
4.3 |
|
% |
|
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Michael Angelo’s |
|
(14.4 |
) |
% |
|
|
% |
|
(14.4 |
) |
% |
|
|
|
|
|
|
Total Net
Sales |
|
15.5 |
|
% |
|
6.2 |
% |
|
21.7 |
|
% |
|
12.5 |
% |
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9.2 |
% |
Second Quarter 2023 Results
Net sales of $217.6 million increased 10.2% year-over-year.
Organic net sales growth1 of 16.3% was driven by 8.9% volume and
7.4% price. Results reflect another robust performance from the
Rao’s brand, which grew 29.3% year-over-year. Rao’s net sales
growth was primarily attributable to strong consumption growth,
most notably from Rao’s sauce which benefitted from household
penetration gains and accelerated distribution and velocity growth
rates as compared to the prior quarter.
Gross profit of $70.7 million increased 28.5% versus the prior
year period. Gross margin was 32.5% versus 27.9% in the prior year
period. Adjusted gross profit3 of $70.7 million increased 28.0%
versus the prior year period supported by volume growth, pricing,
and productivity. Adjusted gross margin3 was 32.5%, reflecting a
450-basis point increase versus the prior year period, benefiting
from pricing and productivity, as well as favorable mix driven by
sauce growth.
Total operating expenses of $53.6 million decreased 39.5% versus
the prior year period, as the second quarter of 2022 included the
non-cash impairment of goodwill related to the Birch Benders
acquisition. Adjusted operating expenses3 of $38.5 million
increased by $6.0 million, or 18.3%, versus the prior year period,
reflecting 35.6% year-over-year growth of combined marketing and
R&D investments.
Net interest expense was $8.7 million compared to $5.7 million
in the prior year period due to higher interest rates.
Net income was $5.4 million, 2.4% of net sales, or $0.05 per
diluted share. This compared to a net loss of $(30.3) million, or
$(0.30) per diluted share in the prior year period. Adjusted net
income3 was $17.4 million, or $0.17 per diluted share, as compared
to adjusted net income of $12.7 million or $0.13 per diluted share
in the prior year period.
Adjusted EBITDA3 of $35.2 million increased 36.9% versus the
prior year period, benefitting from 28.0% growth for adjusted gross
profit and modest G&A leverage while reinvesting meaningfully
into marketing and R&D. Adjusted EBITDA margin3 was 16.2%, up
320-basis points versus the prior year period.
Balance Sheet and Cash Flow Highlights
As of July 1, 2023, cash and cash equivalents were $169.6
million and total debt was $482.9 million, resulting in a net debt
to last twelve months adjusted EBITDA3 ratio of 2.3x.
Cash from operating activities was $34.6 million in the 26-week
period ended July 1, 2023, an $18.3 million increase as compared to
the prior year period. Higher cash flow was driven by improved
profitability. Year-to-date capital expenditures were $3.6
million.
Fiscal 2023 Outlook
Due to the pending acquisition, Sovos Brands will not be
providing further updates to forward-looking guidance for 2023.
Footnotes: (1) Organic net sales and organic net sales growth
are defined as reported net sales or reported net sales growth
excluding, when they occur, the impact of a 53rd week of shipments,
acquisitions and divestitures. For discussions of fiscal 2023
results, organic net sales growth excludes the impact of the Birch
Benders divestiture and the 53rd week in the prior year.
(2) Source: Market performance refers to dollar sales and unit
growth rates as reported by Circana MULO in the 13-week period
ended July 2, 2023. Household penetration refers to data reported
by Circana All Outlet for the 52-week period ended July 2, 2023
compared to the 52-week period ended July 3, 2022.
(3) Adjusted gross profit, adjusted gross margin, adjusted
operating expense, adjusted operating income, EBITDA, adjusted
EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted
diluted EPS are non-GAAP measures. For additional information,
including a reconciliation of adjusted results to the most directly
comparable measures presented in accordance with GAAP, see the
Non-GAAP Financial Information and Reconciliation of Non-GAAP
Financial Measures sections of this release.
Earnings Conference Call Details
Due to the pending acquisition, Sovos Brands will not be holding
its earnings call previously scheduled for August 9, 2023. Press
release materials are available publicly on the Investor Relations
section of the Company’s website at ir.sovosbrands.com.
About Sovos Brands, Inc.Sovos Brands, Inc. is a
consumer-packaged food company focused on acquiring and building
disruptive growth brands that bring today’s consumers great tasting
food that fits the way they live. The Company’s product offerings
include a variety of pasta sauces, dry pasta, soups, frozen
entrées, frozen pizza and yogurts, all of which are sold in North
America under the brand names Rao’s, Michael Angelo’s and noosa.
All Sovos Brands’ products are built with authenticity at their
core, providing consumers with one-of-a-kind food experiences that
are genuine, delicious, and unforgettable. The Company is
headquartered in Louisville, Colorado. For more information on
Sovos Brands and its products, please visit
www.sovosbrands.com.
ContactsInvestors: Joshua
Levine IR@sovosbrands.com
Media:Lauren Armstrong
media@sovosbrands.com
Non-GAAP Financial Information
In addition to the Company’s results which are determined in
accordance with generally accepted accounting principles in the
United States (“GAAP”), the Company believes the following non-GAAP
measures presented in this press release are useful in evaluating
its operating performance: EBITDA, Adjusted EBITDA, EBITDA margin,
Adjusted EBITDA margin, adjusted gross profit, adjusted gross
margin, adjusted operating expenses, adjusted operating income,
adjusted income tax (expense), adjusted effective tax rate,
adjusted net income, and diluted earnings per share from adjusted
net income. We define EBITDA as net income (loss) before net
interest expense, income tax (expense) benefit, depreciation and
amortization. We define Adjusted EBITDA as EBITDA adjusted for
non-cash equity-based compensation costs, non-recurring costs, gain
(loss) on foreign currency contracts, supply chain optimization
costs, impairment of goodwill, transaction and integration costs
and IPO readiness costs. EBITDA margin is determined by calculating
the percentage EBITDA is of net sales. Adjusted EBITDA margin
is determined by calculating the percentage Adjusted EBITDA is
of net sales. Adjusted gross margin is determined by calculating
the percentage adjusted gross profit is of net sales. Adjusted
gross profit, adjusted operating expenses, adjusted operating
income, adjusted income tax (expense) and adjusted effective tax
rate, and adjusted net income consist of gross profit, total
operating expenses, operating income (loss), reported income tax
(expense) benefit, reported effective tax rate and net income
(loss) before non-cash equity-based compensation costs,
non-recurring costs, gain (loss) on foreign currency contracts,
supply chain optimization costs, impairment of goodwill,
transaction and integration costs, IPO readiness costs, acquisition
amortization and tax-related adjustments that we do not consider in
our evaluation of our ongoing operating performance from period to
period as discussed further below. Diluted earnings per share from
adjusted net income is determined by dividing adjusted net income
by the weighted average diluted shares outstanding. Non-GAAP
financial measures are included in this release because most are
key metrics used by management to assess our operating performance.
Management believes that non-GAAP financial measures are helpful in
highlighting performance trends because non-GAAP financial measures
eliminate non-recurring and unusual items and non-cash expenses,
which we do not consider indicative of ongoing operational
performance. Our presentation of non-GAAP financial measures should
not be construed to imply that our future results will be
unaffected by these items. By providing these non-GAAP financial
measures, management believes we are enhancing investors’
understanding of our business and our results of operations, as
well as assisting investors in evaluating how well we are executing
our strategic initiatives.
EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin,
adjusted gross profit, adjusted gross margin, adjusted operating
expenses, adjusted operating income, adjusted income tax (expense),
adjusted effective tax rate, adjusted net income and diluted
earnings per share from adjusted net income are not defined under
GAAP. Our use of the terms EBITDA, Adjusted EBITDA, EBITDA margin,
Adjusted EBITDA margin, adjusted gross profit, adjusted gross
margin, adjusted operating expenses, adjusted operating income,
adjusted income tax (expense), adjusted effective tax rate,
adjusted net income and diluted earnings per share from adjusted
net income may not be comparable to similarly titled measures of
other companies in our industry and are not measures of performance
calculated in accordance with GAAP. Our presentation of non-GAAP
financial measures is intended to provide supplemental measures of
our performance that are not required by, or presented in
accordance with, GAAP. Non-GAAP financial measures should not be
considered as alternatives to operating income (loss), net income
(loss), earnings (loss) per share, net sales or any other
performance measures derived in accordance with GAAP, or as
measures of operating cash flows or liquidity.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to statements regarding Sovos Brands’ market opportunity,
anticipated growth, and future financial performance, including
management’s outlook for the fiscal year ending December 30, 2023
and longer-term. Certain statements in this press release regarding
the proposed transaction with Campbell, including any statements
regarding the expected timetable for completing the proposed
transaction, benefits of the proposed transaction, future
opportunities, future financial performance and any other
statements regarding future expectations, beliefs, plans,
objectives, financial conditions, assumptions or future events or
performance that are not historical facts are “forward-looking”
statements made within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements are based
on Sovos Brands’ current assumptions, expectations and beliefs and
are subject to substantial risks, uncertainties, assumptions, and
changes in circumstances that may cause Sovos Brands’ actual
results, performance, or achievements to differ materially from
those expressed or implied in any forward-looking statement.
With respect to the proposed transaction with Campbell, these
risks and uncertainties also include, but are not limited to:
failure to obtain the required vote of the Company’s stockholders;
the timing to consummate the proposed transaction; the risk that a
condition to closing of the proposed transaction may not be
satisfied or that the closing of the proposed transaction might
otherwise not occur; the risk that a regulatory approval that may
be required for the proposed transaction is not obtained or is
obtained subject to conditions that are not anticipated; the
diversion of management time on transaction-related issues; and
risk that the transaction and its announcement could have an
adverse effect on the Company’s ability to retain customers and
retain and hire key personnel. Other important factors that could
cause actual results to differ materially from those in the
forward-looking statements include regional, national or global
political, economic, business, competitive, market and regulatory
conditions and the following: our dependence on third-party
distributors and third-party co-packers, including one co-packer
for the substantial majority of our Rao’s Homemade sauce products;
adverse consequences of the actions of the major retailers,
wholesalers, distributors and mass merchants on which we rely,
including if they give higher priority to other brands or products,
take steps to maintain or improve their margins by, among other
things, raising the on-shelf prices of our products or imposing
surcharges on us, or if they perform poorly or declare bankruptcy;
inflation, including our vulnerability to decreases in the supply
of and increases in the price of raw materials, packaging, fuel,
labor, manufacturing, distribution and other costs, and our
inability to offset increasing costs through cost savings
initiatives or pricing; supply disruptions, including increased
costs and potential adverse impacts on distribution and
consumption; our inability to expand household penetration and
successfully market our products; competition in the packaged food
industry and our product categories; consolidation within the
retail environment may allow our customers to demand lower pricing,
increased promotional programs and increased deductions and
allowances, among other items; our inability to successfully
introduce new products or failure of recently launched products to
meet expectations or remain on-shelf; our inability to accurately
forecast pricing elasticities and the resulting impact on volume
growth and/or distribution gains; failure by us or third-party
co-packers or suppliers of raw materials to comply with labeling,
food safety, environmental or other laws or regulations, or new
laws or regulations; our vulnerability to the impact of severe
weather conditions, natural disasters and other natural events such
as herd, flock and crop diseases on our manufacturing facilities,
co-packers or raw material suppliers; our inability to effectively
manage our growth; fluctuations in currency exchange rates could
adversely affect our results of operations and cash flows;
geopolitical tensions, including relating to Ukraine; our inability
to maintain our workforce; our inability to identify, consummate or
integrate new acquisitions or realize the projected benefits of
acquisitions; erosion of the reputation of one or more of our
brands; our inability to protect ourselves from cyberattacks;
failure to protect, or litigation involving, our tradenames or
trademarks and other rights; our ability to effectively manage
interest rate risk, including through the use of hedges and other
strategies or financial products; the effects of climate change and
adherence to environmental, social and governance demands; a change
in assumptions used to value our goodwill or our intangible assets,
or the impairment of our goodwill or intangible assets; our level
of indebtedness under our Amended First Lien Credit Agreement,
which as of July 1, 2023 was $480.8 million, and our duty to comply
with covenants under our Amended First Lien Credit Agreement; the
COVID-19 pandemic and associated effects; and the interests of our
majority stockholder may differ from those of public
stockholders.
These risks and uncertainties are more fully described in Sovos
Brands’ filings with the Securities and Exchange Commission (the
“SEC”), including in the section entitled “Risk Factors” in its
Annual Report on Form 10-K for the fiscal year ended December 31,
2022, and other filings and reports that Sovos Brands may file from
time to time with the SEC. Moreover, Sovos Brands operates in a
very competitive and rapidly changing environment. New risks emerge
from time to time. It is not possible for management to predict all
risks, nor can Sovos Brands assess the impact of all factors on its
business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements Sovos Brands may make.
In light of these risks, uncertainties and assumptions, Sovos
Brands cannot guarantee that future results, levels of activity,
performance, achievements, or events and circumstances reflected in
the forward-looking statements will occur. Forward-looking
statements represent managements’ beliefs and assumptions only as
of the date of this press release. Sovos Brands disclaims any
obligation to update forward-looking statements except as required
by law.
Additional Information and Where to Find It
This press release does not constitute an offer to buy or sell
or the solicitation of an offer to buy or sell any securities or a
solicitation of any vote or approval. This press release relates to
a proposed acquisition of the Company by Campbell. In connection
with this transaction, the Company will file relevant materials
with the SEC. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE
URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS THAT MAY BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Any definitive proxy statement(s) (when available) will be mailed
to stockholders of the Company. Investors and security holders will
be able to obtain free copies of these documents (when available)
and other documents filed with the SEC by the Company through the
website maintained by the SEC at http://www.sec.gov. Copies of the
documents filed with the SEC by the Company will be available free
of charge on the Company’s website at https://sovosbrands.com or by
contacting the Company by email at IR@sovosbrands.com or by mail at
168 Centennial Parkway, Suite 200, Louisville, CO 80027.
Participants in the Solicitation
The Company, its directors and certain of its executive officers
may be considered participants in the solicitation of proxies from
the Company’s stockholders in connection with the proposed
transaction. Information about the directors and executive officers
of the Company is set forth in its Annual Report on Form 10-K for
the year ended December 31, 2022, which was filed with the SEC on
March 8, 2023, its Proxy Statement for its 2023 Annual Meeting of
Stockholders , which was filed with the SEC on April 27, 2023, its
Quarterly Report on Form 10-Q for the quarter ended April 1, 2023,
which was filed with the SEC on May 10, 2023, and in other
documents filed with the SEC by the Company and its officers and
directors.
These documents can be obtained free of charge from the sources
indicated above. Additional information regarding the participants
in the proxy solicitations and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the proxy statement and other relevant materials in
connection with the transaction to be filed with the SEC when they
become available.
SOVOS BRANDS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Amounts in thousands, except for share and per
share data)(Unaudited)
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|
|
|
|
|
|
|
|
13 Weeks Ended |
|
26 Weeks Ended |
|
|
July 1, 2023 |
|
June 25, 2022 |
|
July 1, 2023 |
|
June 25, 2022 |
Net sales |
|
$ |
217,635 |
|
|
$ |
197,433 |
|
|
$ |
470,426 |
|
|
$ |
407,366 |
|
Cost of sales |
|
|
146,928 |
|
|
|
142,410 |
|
|
|
328,907 |
|
|
|
298,435 |
|
Gross
profit |
|
|
70,707 |
|
|
|
55,023 |
|
|
|
141,519 |
|
|
|
108,931 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
47,633 |
|
|
|
39,449 |
|
|
|
91,047 |
|
|
|
73,364 |
|
Depreciation and amortization |
|
|
6,004 |
|
|
|
7,200 |
|
|
|
11,984 |
|
|
|
14,403 |
|
Impairment of goodwill |
|
|
— |
|
|
|
42,052 |
|
|
|
— |
|
|
|
42,052 |
|
Total operating
expenses |
|
|
53,637 |
|
|
|
88,701 |
|
|
|
103,031 |
|
|
|
129,819 |
|
Operating income (loss) |
|
|
17,070 |
|
|
|
(33,678 |
) |
|
|
38,488 |
|
|
|
(20,888 |
) |
Interest expense, net |
|
|
8,678 |
|
|
|
5,713 |
|
|
|
17,379 |
|
|
|
11,735 |
|
Income (loss) before
income taxes |
|
|
8,392 |
|
|
|
(39,391 |
) |
|
|
21,109 |
|
|
|
(32,623 |
) |
Income tax (expense)
benefit |
|
|
(3,003 |
) |
|
|
9,106 |
|
|
|
(7,874 |
) |
|
|
6,395 |
|
Net income (loss) |
|
$ |
5,389 |
|
|
$ |
(30,285 |
) |
|
$ |
13,235 |
|
|
$ |
(26,228 |
) |
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
(0.30 |
) |
|
$ |
0.13 |
|
|
$ |
(0.26 |
) |
Diluted |
|
$ |
0.05 |
|
|
$ |
(0.30 |
) |
|
$ |
0.13 |
|
|
$ |
(0.26 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
101,265,446 |
|
|
|
100,897,815 |
|
|
|
101,225,835 |
|
|
|
100,895,181 |
|
Diluted |
|
|
103,271,838 |
|
|
|
100,897,815 |
|
|
|
102,389,768 |
|
|
|
100,895,181 |
|
SOVOS BRANDS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)(Unaudited)
|
|
|
|
|
|
|
|
|
July 1, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
169,625 |
|
|
$ |
138,654 |
|
Accounts receivable, net |
|
|
67,891 |
|
|
|
87,695 |
|
Inventories, net |
|
|
107,553 |
|
|
|
92,602 |
|
Prepaid expenses and other current assets |
|
|
8,708 |
|
|
|
11,974 |
|
Total current assets |
|
|
353,777 |
|
|
|
330,925 |
|
Property and equipment,
net |
|
|
62,024 |
|
|
|
64,317 |
|
Operating lease right-of-use
assets |
|
|
12,107 |
|
|
|
13,332 |
|
Goodwill |
|
|
395,399 |
|
|
|
395,399 |
|
Intangible assets, net |
|
|
340,335 |
|
|
|
351,547 |
|
Other long-term assets |
|
|
2,392 |
|
|
|
3,279 |
|
TOTAL
ASSETS |
|
$ |
1,166,034 |
|
|
$ |
1,158,799 |
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
Accounts payable |
|
$ |
47,155 |
|
|
$ |
49,264 |
|
Accrued expenses |
|
|
55,467 |
|
|
|
69,571 |
|
Current portion of long-term debt |
|
|
80 |
|
|
|
99 |
|
Current portion of long-term operating lease liabilities |
|
|
3,205 |
|
|
|
3,308 |
|
Total current liabilities |
|
|
105,907 |
|
|
|
122,242 |
|
Long-term debt, net of debt issuance costs |
|
|
482,824 |
|
|
|
482,344 |
|
Deferred income taxes |
|
|
62,502 |
|
|
|
63,644 |
|
Long-term operating lease liabilities |
|
|
12,545 |
|
|
|
14,063 |
|
Other long-term liabilities |
|
|
550 |
|
|
|
483 |
|
TOTAL LIABILITIES |
|
|
664,328 |
|
|
|
682,776 |
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY: |
|
|
|
|
|
|
Preferred Stock |
|
|
— |
|
|
|
— |
|
Common Stock |
|
|
101 |
|
|
|
101 |
|
Additional paid-in-capital |
|
|
589,591 |
|
|
|
577,664 |
|
Accumulated deficit |
|
|
(90,056 |
) |
|
|
(103,291 |
) |
Accumulated other comprehensive income |
|
|
2,070 |
|
|
|
1,549 |
|
TOTAL STOCKHOLDERS’
EQUITY |
|
|
501,706 |
|
|
|
476,023 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
1,166,034 |
|
|
$ |
1,158,799 |
|
SOVOS BRANDS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Amounts in thousands)(Unaudited)
|
|
|
|
|
|
|
|
|
26 Weeks Ended |
|
|
July 1, 2023 |
|
June 25, 2022 |
Operating activities |
|
|
|
|
|
|
Net income (loss) |
|
$ |
13,235 |
|
|
$ |
(26,228 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
17,033 |
|
|
|
19,380 |
|
Equity-based compensation expense |
|
|
11,927 |
|
|
|
8,634 |
|
Loss on foreign currency contracts |
|
|
198 |
|
|
|
497 |
|
Non-cash interest expense |
|
|
390 |
|
|
|
— |
|
Deferred income taxes |
|
|
(1,309 |
) |
|
|
(10,701 |
) |
Amortization of debt issuance costs |
|
|
633 |
|
|
|
633 |
|
Non-cash operating lease expense |
|
|
1,225 |
|
|
|
1,216 |
|
Provision for excess and obsolete inventory |
|
|
1,885 |
|
|
|
224 |
|
Impairment of goodwill |
|
|
— |
|
|
|
42,052 |
|
Other |
|
|
— |
|
|
|
(6 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable, net |
|
|
19,804 |
|
|
|
(3,171 |
) |
Inventories, net |
|
|
(16,835 |
) |
|
|
(25,234 |
) |
Prepaid expenses and other current assets |
|
|
(1,272 |
) |
|
|
2,077 |
|
Other long-term assets |
|
|
(55 |
) |
|
|
(30 |
) |
Accounts payable |
|
|
(2,067 |
) |
|
|
12,405 |
|
Accrued expenses |
|
|
(8,656 |
) |
|
|
(3,864 |
) |
Other long-term liabilities |
|
|
68 |
|
|
|
20 |
|
Operating lease liabilities |
|
|
(1,621 |
) |
|
|
(1,630 |
) |
Net cash provided by operating activities |
|
|
34,583 |
|
|
|
16,274 |
|
Investing activities |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(3,571 |
) |
|
|
(9,730 |
) |
Net cash (used in) investing
activities |
|
|
(3,571 |
) |
|
|
(9,730 |
) |
Financing activities |
|
|
|
|
|
|
Repayments of capital lease obligations |
|
|
(41 |
) |
|
|
(47 |
) |
Net cash (used in) financing
activities |
|
|
(41 |
) |
|
|
(47 |
) |
Net increase in cash and cash equivalents |
|
|
30,971 |
|
|
|
6,497 |
|
Cash and cash equivalents at beginning of period |
|
|
138,654 |
|
|
|
66,154 |
|
Cash and cash
equivalents at end of period |
|
$ |
169,625 |
|
|
$ |
72,651 |
|
SOVOS BRANDS,
INC.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
26 Weeks Ended |
(In thousands) |
|
July 1, 2023 |
|
% of Net sales |
|
June 25, 2022 |
|
% of Net sales |
|
July 1, 2023 |
|
% of Net sales |
|
June 25, 2022 |
|
% of Net sales |
Net income
(loss) (1) |
|
$ |
5,389 |
|
|
2.4 |
|
% |
|
$ |
(30,285 |
) |
|
(15.3 |
) |
% |
|
$ |
13,235 |
|
|
2.8 |
|
% |
|
$ |
(26,228 |
) |
|
(6.4 |
) |
% |
Interest expense, net |
|
|
8,678 |
|
|
4.0 |
|
|
|
|
5,713 |
|
|
2.9 |
|
|
|
|
17,379 |
|
|
3.7 |
|
|
|
|
11,735 |
|
|
2.9 |
|
|
Income tax (expense) benefit |
|
|
(3,003 |
) |
|
(1.4 |
) |
|
|
|
9,106 |
|
|
4.6 |
|
|
|
|
(7,874 |
) |
|
(1.7 |
) |
|
|
|
6,395 |
|
|
1.6 |
|
|
Depreciation and amortization |
|
|
8,564 |
|
|
3.9 |
|
|
|
|
9,825 |
|
|
5.0 |
|
|
|
|
17,033 |
|
|
3.6 |
|
|
|
|
19,380 |
|
|
4.8 |
|
|
EBITDA(1) |
|
|
25,634 |
|
|
11.7 |
|
|
|
|
(23,853 |
) |
|
(12.1 |
) |
|
|
|
55,521 |
|
|
11.8 |
|
|
|
|
(1,508 |
) |
|
(0.4 |
) |
|
Non-cash equity-based compensation(2) |
|
|
6,419 |
|
|
3.0 |
|
|
|
|
4,547 |
|
|
2.3 |
|
|
|
|
11,927 |
|
|
2.6 |
|
|
|
|
8,634 |
|
|
2.1 |
|
|
Non-recurring costs(3) |
|
|
1,807 |
|
|
0.9 |
|
|
|
|
2,023 |
|
|
1.0 |
|
|
|
|
2,034 |
|
|
0.4 |
|
|
|
|
2,400 |
|
|
0.6 |
|
|
Loss on foreign currency contracts(4) |
|
|
331 |
|
|
0.2 |
|
|
|
|
497 |
|
|
0.3 |
|
|
|
|
198 |
|
|
0.0 |
|
|
|
|
497 |
|
|
0.1 |
|
|
Supply chain optimization(5) |
|
|
— |
|
|
0.0 |
|
|
|
|
202 |
|
|
0.1 |
|
|
|
|
128 |
|
|
0.0 |
|
|
|
|
794 |
|
|
0.2 |
|
|
Impairment of goodwill(6) |
|
|
— |
|
|
0.0 |
|
|
|
|
42,052 |
|
|
21.3 |
|
|
|
|
— |
|
|
0.0 |
|
|
|
|
42,052 |
|
|
10.3 |
|
|
Transaction and integration costs(7) |
|
|
975 |
|
|
0.4 |
|
|
|
|
59 |
|
|
0.0 |
|
|
|
|
1,313 |
|
|
0.3 |
|
|
|
|
59 |
|
|
0.0 |
|
|
Initial public offering readiness(8) |
|
|
— |
|
|
0.0 |
|
|
|
|
164 |
|
|
0.1 |
|
|
|
|
— |
|
|
0.0 |
|
|
|
|
384 |
|
|
0.1 |
|
|
Adjusted
EBITDA(1) |
|
$ |
35,166 |
|
|
16.2 |
|
% |
|
$ |
25,691 |
|
|
13.0 |
|
% |
|
$ |
71,121 |
|
|
15.1 |
|
% |
|
$ |
53,312 |
|
|
13.1 |
|
% |
(1) Net income
(loss) as a percentage of net sales is also referred to as net
income margin. EBITDA and Adjusted EBITDA as a percentage of net
sales are also referred to as EBITDA margin and Adjusted EBITDA
margin. (2) Consists
of non-cash equity-based compensation expense associated with the
grant of equity-based compensation provided to officers,
non-employee directors and
employees. (3) Consists
of costs for professional fees related to organizational
optimization and capital markets
activities. (4) Consists
of unrealized loss on foreign currency
contracts. (5) Consists
of write-downs associated with packaging optimization and a
strategic initiative to move co-packaging production from an
international supplier to a domestic
supplier. (6) Consists
of expenses for impairment of
goodwill. (7) Consists
of costs associated with the divestiture of the Birch Benders brand
and certain related assets, and costs associated with potential
transactions, including the pending
Merger. (8) Consists
of costs associated with building the organizational infrastructure
to support a public company environment. |
SOVOS BRANDS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
|
|
(In thousands, except share and per share
data) |
|
July 1, 2023 |
|
|
|
Gross profit |
|
Operating expenses |
|
Operating income |
|
Interest expense, net |
|
Income tax (expense) |
|
Net income |
|
As reported (GAAP) |
|
$ |
70,707 |
|
$ |
53,637 |
|
|
$ |
17,070 |
|
$ |
8,678 |
|
$ |
(3,003 |
) |
|
$ |
5,389 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash equity-based compensation(1) |
|
|
— |
|
|
(6,419 |
) |
|
|
6,419 |
|
|
— |
|
|
— |
|
|
|
6,419 |
|
|
Non-recurring costs(2) |
|
|
— |
|
|
(1,807 |
) |
|
|
1,807 |
|
|
— |
|
|
— |
|
|
|
1,807 |
|
|
Loss on foreign currency contracts(3) |
|
|
— |
|
|
(331 |
) |
|
|
331 |
|
|
— |
|
|
— |
|
|
|
331 |
|
|
Supply chain optimization(4) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
Transaction and integration costs(6) |
|
|
— |
|
|
(975 |
) |
|
|
975 |
|
|
— |
|
|
— |
|
|
|
975 |
|
|
Acquisition amortization(8) |
|
|
— |
|
|
(5,606 |
) |
|
|
5,606 |
|
|
— |
|
|
— |
|
|
|
5,606 |
|
|
Tax effect of adjustments(9) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
(2,957 |
) |
|
|
(2,957 |
) |
|
One-time tax (expense) items(10) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
(134 |
) |
|
|
(134 |
) |
|
As adjusted |
|
$ |
70,707 |
|
$ |
38,499 |
|
|
$ |
32,208 |
|
$ |
8,678 |
|
$ |
(6,094 |
) |
|
$ |
17,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted (% of net sales) |
|
|
32.5 |
%(11) |
|
17.7 |
|
% |
|
14.8 |
% |
|
4.0 |
% |
|
(2.8 |
) |
% |
|
8.0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.05 |
|
|
Adjusted Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.17 |
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted for net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,271,838 |
|
|
Diluted for adjusted
net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,271,838 |
|
|
SOVOS BRANDS,
INC.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
|
|
(In thousands, except share and per share
data) |
|
June 25, 2022 |
|
|
|
Gross profit |
|
Operating expenses |
|
Operating income (loss) |
|
Interest expense, net |
|
Income tax (expense) benefit |
|
Net income (loss) |
|
As reported (GAAP) |
|
$ |
55,023 |
|
$ |
88,701 |
|
|
$ |
(33,678 |
) |
|
$ |
5,713 |
|
$ |
9,106 |
|
|
$ |
(30,285 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash equity-based compensation(1) |
|
|
— |
|
|
(4,547 |
) |
|
|
4,547 |
|
|
|
— |
|
|
— |
|
|
|
4,547 |
|
|
Non-recurring costs(2) |
|
|
— |
|
|
(2,023 |
) |
|
|
2,023 |
|
|
|
— |
|
|
— |
|
|
|
2,023 |
|
|
Loss on foreign currency contracts(3) |
|
|
— |
|
|
(497 |
) |
|
|
497 |
|
|
|
— |
|
|
— |
|
|
|
497 |
|
|
Supply chain optimization(4) |
|
|
202 |
|
|
— |
|
|
|
202 |
|
|
|
— |
|
|
— |
|
|
|
202 |
|
|
Impairment of goodwill(5) |
|
|
— |
|
|
(42,052 |
) |
|
|
42,052 |
|
|
|
— |
|
|
— |
|
|
|
42,052 |
|
|
Transaction and integration costs(6) |
|
|
— |
|
|
(59 |
) |
|
|
59 |
|
|
|
— |
|
|
— |
|
|
|
59 |
|
|
Initial public offering readiness(7) |
|
|
— |
|
|
(164 |
) |
|
|
164 |
|
|
|
— |
|
|
— |
|
|
|
164 |
|
|
Acquisition amortization(8) |
|
|
— |
|
|
(6,810 |
) |
|
|
6,810 |
|
|
|
— |
|
|
— |
|
|
|
6,810 |
|
|
Tax effect of adjustments(9) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(3,091 |
) |
|
|
(3,091 |
) |
|
One-time tax (expense) items(10) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(10,276 |
) |
|
|
(10,276 |
) |
|
As adjusted |
|
$ |
55,225 |
|
$ |
32,549 |
|
|
$ |
22,676 |
|
|
$ |
5,713 |
|
$ |
(4,261 |
) |
|
$ |
12,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted (% of net sales) |
|
|
28.0 |
%(11) |
|
16.5 |
|
% |
|
11.5 |
|
% |
|
2.9 |
% |
|
(2.2 |
) |
% |
|
6.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.30 |
) |
|
Adjusted Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.13 |
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted for net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,897,815 |
|
|
Diluted for adjusted
net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,321,056 |
|
|
SOVOS BRANDS,
INC.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended |
|
(In thousands, except share and per share
data) |
|
July 1, 2023 |
|
|
|
Gross profit |
|
Operating expenses |
|
Operating income |
|
Interest expense, net |
|
Income tax (expense) |
|
Net income |
|
As reported (GAAP) |
|
$ |
141,519 |
|
$ |
103,031 |
|
|
$ |
38,488 |
|
$ |
17,379 |
|
$ |
(7,874 |
) |
|
$ |
13,235 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash equity-based compensation(1) |
|
|
— |
|
|
(11,927 |
) |
|
|
11,927 |
|
|
— |
|
|
— |
|
|
|
11,927 |
|
|
Non-recurring costs(2) |
|
|
— |
|
|
(2,034 |
) |
|
|
2,034 |
|
|
— |
|
|
— |
|
|
|
2,034 |
|
|
Loss on foreign currency contracts(3) |
|
|
— |
|
|
(198 |
) |
|
|
198 |
|
|
— |
|
|
— |
|
|
|
198 |
|
|
Supply chain optimization(4) |
|
|
128 |
|
|
— |
|
|
|
128 |
|
|
— |
|
|
— |
|
|
|
128 |
|
|
Transaction and integration costs(6) |
|
|
150 |
|
|
(1,163 |
) |
|
|
1,313 |
|
|
— |
|
|
— |
|
|
|
1,313 |
|
|
Acquisition amortization(8) |
|
|
— |
|
|
(11,212 |
) |
|
|
11,212 |
|
|
— |
|
|
— |
|
|
|
11,212 |
|
|
Tax effect of adjustments(9) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
(4,334 |
) |
|
|
(4,334 |
) |
|
One-time tax (expense) benefit items(10) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
(155 |
) |
|
|
(155 |
) |
|
As adjusted |
|
$ |
141,797 |
|
$ |
76,497 |
|
|
$ |
65,300 |
|
$ |
17,379 |
|
$ |
(12,363 |
) |
|
$ |
35,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted (% of net sales) |
|
|
30.1 |
%(11) |
|
16.3 |
|
% |
|
13.9 |
% |
|
3.7 |
% |
|
(2.6 |
) |
% |
|
7.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.13 |
|
|
Adjusted Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.35 |
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted for net
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,389,768 |
|
|
Diluted for adjusted
net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,389,768 |
|
|
SOVOS BRANDS,
INC.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended |
|
|
|
(In thousands, except share and per share
data) |
|
June 25, 2022 |
|
|
|
Gross profit |
|
Operating expenses |
|
Operating income (loss) |
|
Interest expense, net |
|
Income tax (expense) benefit |
|
Net income (loss) |
|
As reported (GAAP) |
|
$ |
108,931 |
|
$ |
129,819 |
|
|
$ |
(20,888 |
) |
|
$ |
11,735 |
|
$ |
6,395 |
|
|
$ |
(26,228 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash equity-based compensation(1) |
|
|
— |
|
|
(8,634 |
) |
|
|
8,634 |
|
|
|
— |
|
|
— |
|
|
|
8,634 |
|
|
Non-recurring costs(2) |
|
|
— |
|
|
(2,400 |
) |
|
|
2,400 |
|
|
|
— |
|
|
— |
|
|
|
2,400 |
|
|
Loss on foreign currency contracts(3) |
|
|
— |
|
|
(497 |
) |
|
|
497 |
|
|
|
— |
|
|
— |
|
|
|
497 |
|
|
Supply chain optimization(4) |
|
|
794 |
|
|
— |
|
|
|
794 |
|
|
|
— |
|
|
— |
|
|
|
794 |
|
|
Impairment of goodwill(5) |
|
|
— |
|
|
(42,052 |
) |
|
|
42,052 |
|
|
|
— |
|
|
— |
|
|
|
42,052 |
|
|
Transaction and integration costs(6) |
|
|
— |
|
|
(59 |
) |
|
|
59 |
|
|
|
— |
|
|
— |
|
|
|
59 |
|
|
Initial public offering readiness(7) |
|
|
— |
|
|
(384 |
) |
|
|
384 |
|
|
|
— |
|
|
— |
|
|
|
384 |
|
|
Acquisition amortization(8) |
|
|
— |
|
|
(13,619 |
) |
|
|
13,619 |
|
|
|
— |
|
|
— |
|
|
|
13,619 |
|
|
Tax effect of adjustments(9) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(5,451 |
) |
|
|
(5,451 |
) |
|
One-time tax (expense) benefit items(10) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(10,276 |
) |
|
|
(10,276 |
) |
|
As adjusted |
|
$ |
109,725 |
|
$ |
62,174 |
|
|
$ |
47,551 |
|
|
$ |
11,735 |
|
$ |
(9,332 |
) |
|
$ |
26,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted (% of net sales) |
|
|
26.9 |
%(11) |
|
15.3 |
|
% |
|
11.7 |
|
% |
|
2.9 |
% |
|
(2.3 |
) |
% |
|
6.5 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.26 |
) |
|
Adjusted Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.26 |
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted for net
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,895,181 |
|
|
Diluted for adjusted
net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,053,289 |
|
|
(1) Consists of non-cash equity-based
compensation expense associated with the grant of equity-based
compensation provided to officers, non-employee directors and
employees. (2) Consists of costs for professional
fees related to organizational optimization and capital markets
activities.(3) Consists of unrealized loss on
foreign currency contracts.(4) Consists of
write-downs associated with packaging optimization and a strategic
initiative to move co-packaging production from an international
supplier to a domestic supplier.(5) Consists of
expenses for impairment of goodwill.(6) Consists
of costs associated with the divestiture of the Birch Benders brand
and certain related assets and costs associated with potential
transactions, including the pending Merger.
(7) Consists of costs associated with building the
organizational infrastructure to support a public company
environment. (8) Amortization costs associated
with acquired trade names and customer
lists.(9) Tax effect was calculated using the
Company's adjusted annual effective tax
rate.(10) Represents the removal of the tax effect
of impairment of goodwill, removal for remeasurement of deferred
taxes related to intangibles for changes in deferred rate, the
removal of the tax effect of non-deductible transaction costs and
the removal of the excess tax benefits related to equity-based
compensation vesting.(11) Adjusted gross margin as
a percentage of net sales is also referred to as adjusted gross
margin.
SOVOS BRANDS,
INC.RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
(In thousands) |
|
July 1, 2023 |
|
|
June 25, 2022 |
|
|
July 1, 2023 |
|
|
June 25, 2022 |
|
Reported income tax (expense) benefit |
|
$ |
(3,003 |
) |
|
|
$ |
9,106 |
|
|
|
$ |
(7,874 |
) |
|
|
$ |
6,395 |
|
|
Non-cash equity-based compensation(1) |
|
|
— |
|
|
|
|
(703 |
) |
|
|
|
— |
|
|
|
|
(703 |
) |
|
Non-recurring costs(2) |
|
|
(542 |
) |
|
|
|
(440 |
) |
|
|
|
(597 |
) |
|
|
|
(440 |
) |
|
Loss on foreign currency contracts(3) |
|
|
— |
|
|
|
|
(121 |
) |
|
|
|
— |
|
|
|
|
(121 |
) |
|
Supply chain optimization(4) |
|
|
— |
|
|
|
|
(195 |
) |
|
|
|
(31 |
) |
|
|
|
(195 |
) |
|
Impairment of goodwill(5) |
|
|
— |
|
|
|
|
(10,276 |
) |
|
|
|
— |
|
|
|
|
(10,276 |
) |
|
Transaction and integration costs(6) |
|
|
(310 |
) |
|
|
|
401 |
|
|
|
|
(310 |
) |
|
|
|
(15 |
) |
|
Initial public offering readiness(7) |
|
|
— |
|
|
|
|
(99 |
) |
|
|
|
— |
|
|
|
|
(447 |
) |
|
Acquisition amortization(8) |
|
|
(2,239 |
) |
|
|
|
(1,934 |
) |
|
|
|
(3,551 |
) |
|
|
|
(3,530 |
) |
|
Adjusted income tax
(expense) |
|
$ |
(6,094 |
) |
|
|
$ |
(4,261 |
) |
|
|
$ |
(12,363 |
) |
|
|
$ |
(9,332 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported effective tax
rate |
|
|
35.8 |
|
% |
|
|
23.1 |
|
% |
|
|
37.3 |
|
% |
|
|
19.6 |
|
% |
Non-cash equity-based compensation(1) |
|
|
— |
|
|
|
|
0.1 |
|
|
|
|
— |
|
|
|
|
0.3 |
|
|
Non-recurring costs(2) |
|
|
(1.7 |
) |
|
|
|
0.1 |
|
|
|
|
(1.5 |
) |
|
|
|
0.2 |
|
|
Loss on foreign currency contracts(3) |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
0.1 |
|
|
Supply chain optimization(4) |
|
|
— |
|
|
|
|
— |
|
|
|
|
(0.1 |
) |
|
|
|
0.1 |
|
|
Impairment of goodwill(5) |
|
|
— |
|
|
|
|
1.5 |
|
|
|
|
— |
|
|
|
|
4.2 |
|
|
Transaction and integration costs(6) |
|
|
(1.0 |
) |
|
|
|
(0.1 |
) |
|
|
|
(0.8 |
) |
|
|
|
— |
|
|
Initial public offering readiness(7) |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
0.2 |
|
|
Acquisition amortization(8) |
|
|
(7.2 |
) |
|
|
|
0.3 |
|
|
|
|
(9.1 |
) |
|
|
|
1.4 |
|
|
Adjusted effective tax
rate |
|
|
25.9 |
|
% |
|
|
25.0 |
|
% |
|
|
25.8 |
|
% |
|
|
26.1 |
|
% |
(1) Tax effect adjustment of non-cash
equity-based compensation expense associated with the grant of
equity-based compensation provided to officers, non-employee
directors and employees.(2) Tax effect adjustment
of professional fees related to organizational optimization and
costs for capital markets activities.(3) Tax
effect adjustments of unrealized loss on foreign currency
contracts.(4) Tax effect adjustments of
write-downs associated with packaging optimization and a strategic
initiative to move co-packaging production from an international
supplier to a domestic supplier.(5) Tax effect
adjustment of impairment of goodwill.(6) Tax
effect adjustment of costs associated with the divestiture of the
Birch Benders brand and certain related assets and costs associated
with potential transactions, including the pending Merger.
(7) Tax effect adjustment of costs associated with
building the organizational infrastructure to support a public
company environment. (8) Tax effect adjustment of
amortization costs associated with acquired trade names and
customer lists.
Sovos Brands (NASDAQ:SOVO)
Historical Stock Chart
From Apr 2024 to May 2024
Sovos Brands (NASDAQ:SOVO)
Historical Stock Chart
From May 2023 to May 2024