Net Sales of $95 million for Third Quarter, a
40% Increase Over Prior Year
Third Quarter Organic Net Sales Growth of Over
9%
Company Revises Full Year Fiscal 2017
Outlook
Amplify Snack Brands, Inc. (“Amplify” or the “Company”)
(NYSE:BETR), a leading marketer and manufacturer of branded
better-for-you snack food products, today reported financial
results for the 13 and 39 weeks ended September 30, 2017.
13 Weeks Ended September 30, 2017 Highlights
- Net sales were $94.9 million, an
increase of 39.5% year-over-year
- Organic net sales increase of 9.4%
year-over-year
- Gross profit was $35.9 million,
representing 37.9% of net sales
- Net income was $0.7 million, or $0.01
per fully diluted share
- Adjusted net income (non-GAAP) was $5.0
million, or $0.07 per fully diluted share
- Adjusted EBITDA (non-GAAP) was $20.9
million, representing 22.0% of net sales
39 Weeks Ended September 30, 2017 Highlights
- Net sales were $283.1 million, an
increase of 55.4% year-over-year
- Organic net sales increase of 8.6%
year-over-year
- Gross profit was $109.7 million,
representing 38.8% of net sales
- Net income was $2.4 million, or $0.03
per fully diluted share
- Adjusted net income (non-GAAP) was
$15.3 million, or $0.20 per fully diluted share
- Adjusted EBITDA (non-GAAP) was $63.6
million, representing 22.5% of net sales
“During the quarter, we continued to drive strong growth and
profitability and, while our quarterly results did not meet our
expectations, we made good progress on our strategic initiatives
across our business and believe we are well positioned for the
future,” said Tom Ennis, Amplify’s President and Chief Executive
Officer. “In the face of a difficult environment in food retail, we
believe we can be a trusted partner for our customers to help drive
growth as we deepen our strategic relationships with them. During
the quarter, we continued to make key investments in our leading
better-for-you brands increasing consumer engagement initiatives,
adding talented team members, executing against our operational
improvement and cost reduction initiatives and enhancing our
systems and processes to support strong future growth and
profitability. Furthermore, our brands continue to perform well and
we are particularly encouraged by the performance of our new
product innovations. Looking ahead, we remain excited about the
significant potential of our portfolio of brands and believe we
have the right people, processes and plans to achieve the growth
and profitability we know we are capable of over the next several
years.”
13 Weeks Ended September 30, 2017
Net sales for the 13 weeks ended September 30, 2017 increased
39.5% to $94.9 million compared to $68.0 million for the three
months ended September 30, 2016. The increase in net sales
primarily reflects the addition of Tyrrells’ international
portfolio of brands, which the Company did not own for the full
quarter of the prior year period, and growth from our SkinnyPop
brand. On an organic basis the company grew net sales by 9.4% for
the period. Foreign currency exchange had an immaterial impact on
the Company’s operating results for the 13 weeks ended September
30, 2017.
Gross profit was $35.9 million for the 13 weeks ended September
30, 2017, or 37.9% of net sales, compared to $32.3 million, or
47.6% of net sales for the three months ended September 30, 2016.
The decrease in gross margin percentage for the 13 weeks ended
September 30, 2017 was primarily due to the acquisition of
Tyrrells, increased promotional activity and to a lesser extent
increased net sales mix from the Oatmega and Paqui brands and new
SkinnyPop innovation, all of which have lower gross margin profiles
than the SkinnyPop ready-to-eat products.
SG&A was $20.5 million for the 13 weeks ended September 30,
2017 as compared to $24.9 million for the three months ended
September 30, 2016. Net income was $0.7 million, or $0.01 per fully
diluted share, for the 13 weeks ended September 30, 2017 as
compared to net income of $1.6 million, or $0.02 per fully diluted
share, for the three months ended September 30, 2016. Adjusted net
income, which is a non-GAAP financial measure used by the Company
that makes certain adjustments to net income calculated under GAAP,
was $5.0 million, or $0.07 per fully diluted share, for the 13
weeks ended September 30, 2017 as compared to adjusted net income
of $9.0 million for the three months ended September 30, 2016, or
$0.12 per fully diluted share.
Adjusted EBITDA, which is a non-GAAP financial measure used by
the Company that makes certain adjustments to net income calculated
under GAAP, increased 3.7% to $20.9 million for the 13 weeks ended
September 30, 2017 from $20.1 million for the three months ended
September 30, 2016, primarily reflecting higher net sales and gross
profit, partially offset by higher Adjusted SG&A (non-GAAP). As
a percentage of net sales, Adjusted EBITDA was 22.0% for the 13
weeks ended September 30, 2017 as compared to 29.6% in the three
months ended September 30, 2016. The decrease in Adjusted EBITDA as
a percentage of net sales was primarily due to the addition of
Tyrrells and strategic investments in consumer marketing activities
to drive brand awareness and trial, as well as investments in
infrastructure and personnel.
39 Weeks Ended September 30, 2017
Net sales for the 39 weeks ended September 30, 2017 increased
55.4% to $283.1 million, compared to $182.2 million for the nine
months ended September 30, 2016. The increase in net sales reflects
the addition of Oatmega and Tyrrells’ international portfolio of
brands, which the Company did not own during the full prior year
period, strong growth from SkinnyPop product innovation, as well as
new distribution and increased velocity of the Paqui brand.
Gross profit for the 39 weeks ended September 30, 2017 increased
$16.4 million to $109.7 million, or 38.8% of net sales, compared to
$93.3 million, or 51.2% of net sales for the nine months ended
September 30, 2016. The decrease in gross margin percentage for the
39 weeks ended September 30, 2017 was primarily due to the
acquisition of Tyrrells and increased promotional activity as
compared to the prior year period. To a lesser extent, gross margin
was impacted by the increased net sales mix from the Oatmega and
Paqui brands, and new SkinnyPop innovation, all of which have lower
gross margin profiles than the SkinnyPop ready-to-eat products.
SG&A was $63.3 million for the 39 weeks ended September 30,
2017 as compared to $50.2 million for the nine months ended
September 30, 2016. Net income was $2.4 million, or $0.03 per fully
diluted share, for the 39 weeks ended September 30, 2017 as
compared to net income of $18.8 million, or $0.25 per fully diluted
share, for the nine months ended September 30, 2016. Adjusted net
income, which is a non-GAAP financial measure used by the Company
that makes certain adjustments to net income calculated under GAAP,
was $15.3 million, or $0.20 per fully diluted share, based on 76.9
million diluted shares outstanding for the 39 weeks ended September
30, 2017, compared to adjusted net income of $30.4 million for the
nine months ended September 30, 2016, or $0.24 per fully diluted
share, based on 75.1 million diluted shares outstanding.
Adjusted EBITDA, which is a non-GAAP financial measure used by
the Company that makes certain adjustments to net income calculated
under GAAP, increased 3.5% to $63.6 million for the 39 weeks ended
September 30, 2017 from $61.4 million for the nine months ended
September 30, 2016, primarily reflecting higher net sales and gross
profit, partially offset by higher Adjusted SG&A (non-GAAP). As
a percentage of net sales, Adjusted EBITDA was 22.5% for the 39
weeks ended September 30, 2017 as compared to 33.7% in the nine
months ended September 30, 2016. The decrease in Adjusted EBITDA as
a percentage of net sales was primarily due to the addition of the
Tyrrells and Oatmega brands and strategic investments in consumer
marketing activities to drive brand awareness and trial, as well as
investments in infrastructure and personnel.
Segment Review
North America: For the 13 weeks ended September 30, 2017,
North America segment net sales and operating income were $63.5
million and $19.5 million, respectively. This compares with North
America segment net sales and operating income of $59.5 million and
$19.4 million, respectively for the three months ended September
30, 2016.
For the 39 weeks ended September 30, 2017, North America segment
net sales and operating income were $193.2 million and $62.6
million, respectively. This compares to North America segment net
sales and operating income of $173.7 million and $61.9 million,
respectively for the nine months ended September 30, 2016.
International: For the 13 weeks ended September 30, 2017,
International segment net sales and operating income were $31.4
million and $0.3 million, respectively. This compares to
International segment net sales and operating income of $8.5
million and $0.6 million, respectively for the three months ended
September 30, 2016, during which we acquired the Tyrrells portfolio
of brands on September 2, 2016.
For the 39 weeks ended September 30, 2017, International segment
net sales and operating loss were $89.9 million and $1.4 million,
respectively. This compares to International segment net sales and
operating income of $8.5 million and $0.6 million, respectively for
the nine months ended September 30, 2016.
Balance Sheet and Cash Flow
As of September 30, 2017, the Company had cash and cash
equivalents of $8.3 million and net availability under its $50.0
million revolving line of credit of $40.7 million. Net debt, as
defined under the Company’s credit facility, represents outstanding
indebtedness less cash and cash equivalents, was $602.1 million as
of September 30, 2017, compared to $595.6 million as of July 1,
2017. The increase was primarily attributable to additional capital
expenditures during the period to fund growth and cost savings
initiatives during the 13 weeks ended September 30, 2017. Amplify’s
leverage ratio as calculated under the Company’s credit facility
was 6.0x trailing twelve month EBITDA at September 30, 2017. The
Company remains committed over the long-term to reducing its net
leverage to under 4.5x of Consolidated EBITDA, as defined under the
Company’s credit facility.
Outlook
The Company updated its full year 2017 guidance to reflect its
year-to-date results and current view on the remainder of the year.
For the full year 2017 the Company now expects the following:
- Net sales of $375 million to $379
million
- Adjusted EBITDA of $84 million to $86
million
- Cash and non-cash interest expense of
approximately $44 million to $45 million
- Effective tax rate (non-GAAP) of
approximately 38%
- Adjusted EPS (non-GAAP) of $0.25 to
$0.27
- Fully diluted share count of
approximately 77.0 million shares
- Capital expenditures of $23 million to
$25 million
The Company has not reconciled its expected Adjusted EBITDA to
net income or Adjusted EPS to earnings per share under “Outlook”
because it has not finalized calculations for several factors
necessary to provide the reconciliations, including net income and
income tax expense. In addition, certain items that impact net
income and other reconciling metrics are out of the Company’s
control and/or cannot be reasonably predicted, which are included
in reported GAAP results, including foreign exchange impacts, mark
to market adjustments, and costs related to one-time items that may
have significant impact to reported GAAP results.
Conference Call and Webcast
The Company will host a conference call with members of the
executive management team to discuss these results today, Tuesday,
November 7, 2017 at 3:30 p.m. Central time (4:30 p.m. Eastern
time). Investors interested in participating in the live call can
dial 877-407-9039 from the U.S. International callers can dial
201-689-8470.
In addition, the call will be broadcast live over the Internet
hosted at the “Investor Relations” section of the Company's website
at http://amplifysnackbrands.com. The webcast will be archived for
30 days. A telephone replay will be available approximately two
hours after the call concludes and will be available through
Tuesday, November 21, 2017, by dialing 844-512-2921 from the U.S.,
or 412-317-6671 from international locations, and entering
confirmation code 13671886.
About Amplify Snack Brands, Inc.
Headquartered in Austin, Texas, Amplify Snack Brands is a high
growth snack food company focused on developing and marketing
products that appeal to consumers’ growing preference for
Better-For-You (BFY) snacks. Our brands SkinnyPop®, Tyrrells®,
Paqui®, Oatmega®, Lisa’s® Chips, The Wholesome Food CompanyTM, and
Thomas ChipmanTM embody our BFY mission of “snacking without
compromise” and have amassed a loyal customer base across a wide
range of food distribution channels in the United States, United
Kingdom, Canada, Europe and Australia. For additional information,
please visit: http://amplifysnackbrands.com.
Forward-Looking Statements
This press release contains certain “forward-looking” statements
regarding our performance, including in the section titled
“Outlook.” “Forward-looking” statements generally relate to future
events or our future financial or operating performance. In some
cases, you can identify “forward-looking” statements because they
contain words such as “may”, “will”, “should”, “expects”, “plans”,
“anticipates”, “could”, “intends”, “target”, “projects”,
“contemplates”, “believes”, “estimates”, “forecasts”, “predicts”,
“potential” or “continue” or the negative of these words or other
similar terms or expressions that concern our expectations,
strategy, plans or intentions. “Forward-looking” statements are
subject to known and unknown risks and uncertainties and are based
on potentially inaccurate assumptions that could cause actual
results to differ materially from those expected or implied by the
“forward-looking” statements. If any such risks or uncertainties
materialize or if any of the assumptions prove incorrect, our
results could differ materially from the results expressed or
implied by the “forward-looking” statements we make.
The important factors that could cause actual results to differ
materially from those in any “forward-looking” statements include,
but are not limited to, the following: (i) changes in consumer
preferences and discretionary spending may have a material adverse
effect on our brand loyalty, net sales, results of operations and
financial condition, (ii) we rely on sales to a limited number of
distributors and retailers for the substantial majority of our net
sales, and the loss of one or more such distributors or retailers
may harm our business, (iii) sales of a limited number of SkinnyPop
products and flavors contributed all of our historical
profitability and cash flow and a reduction in the sale of our
SkinnyPop products would have a material adverse effect on our
ability to remain profitable and achieve future growth, and (iv)
our ability to successfully integrate the Tyrrells business and our
other recent acquisitions with our existing operations.
Further information on these and other factors that could affect
our financial results and the “forward-looking” statements in this
press release are included in our Annual Report on Form 10-K for
the year ended December 31, 2016 and our Quarterly Reports on Form
10-Q, as filed with the Securities and Exchange Commission (“SEC”)
and in other filings we will make with the SEC from time to time,
particularly under the caption Risk Factors.
You should not place undue reliance upon “forward-looking”
statements as predictions of future events. Amplify has based the
“forward-looking” statements contained in this press release on its
current expectations and projections about future events and trends
that it believes may affect its business, financial condition,
results of operations and prospects. The “forward-looking”
statements made in this press release relate only to events as of
the date on which the statements are made. Amplify undertakes no
obligation to publicly update or revise any “forward-looking”
statements, whether as a result of new information, future events
or otherwise, except as may be required by law.
Non-GAAP Measures
In order to aid understanding of Amplify’s business performance,
it has presented results in conformity with accounting principles
generally accepted in the United States (“GAAP”) and has also
presented Adjusted SG&A, Adjusted EBITDA and Adjusted net
income and the corresponding earnings per share, which are non-GAAP
measures that are explained and reconciled to the comparable GAAP
measures in the tables included in this release.
Management believes that Adjusted SG&A, Adjusted EBITDA and
Adjusted net income and the corresponding earnings per share, which
are non-GAAP measurements, are meaningful to investors because they
provide a view of the Company with respect to ongoing operating
results. Adjusted EBITDA and Adjusted net income are not and should
not be considered alternatives to net income or any other figure
calculated in accordance with GAAP, or as an indicator of operating
performance. These adjustments eliminate certain costs and
benefits, including general and administrative costs associated
with equity awards granted to certain executive officers, employees
and directors in conjunction with their compensation, non-recurring
transaction and integration costs related to acquisitions and other
investments, and costs related to the hiring of executive officers.
The Company’s calculation of Adjusted SG&A, Adjusted EBITDA and
Adjusted net income and the corresponding earnings per share may
differ from methods used by other companies. Management believes
that these non-GAAP measurements are important to help gain an
understanding of the Company's overall operating results in the
periods presented. Such non-GAAP measurements are not recognized in
accordance with GAAP and should not be viewed as an alternative to
GAAP measures of performance. We have not reconciled our expected
Adjusted EBITDA to net income or Adjusted EPS to earnings per share
under “Outlook” because we have not finalized our calculations of
several factors necessary to provide the reconciliations, including
net income and income tax expense. In addition, certain items that
impact net income and other reconciling metrics are out of our
control and/or cannot be reasonably predicted at this time.
Amplify Snack Brands, Inc. and Consolidated
Subsidiaries Consolidated Balance Sheets (in
thousands) September 30, 2017 December 31,
2016 Assets (unaudited) Current assets: Cash and cash
equivalents $ 8,311 $ 10,323 Accounts receivable, net of allowances
of $12,849 and
$9,261, respectively
45,345 42,852 Inventories 26,960 18,250 Prepaid expenses and other
current assets 8,643 7,804 Total current assets
89,259 79,229 Property, plant and equipment, net 68,037 45,884
Other assets: Goodwill 177,714 151,953 Intangible assets, net
551,218 559,996 Other non-current assets 1,160 1,178
Total assets $ 887,388 $ 838,240
Liabilities and Shareholders’ Equity Current liabilities:
Accounts payable and accrued liabilities $ 48,149 $ 45,087 Senior
term loan- current portion 5,162 5,936 Tax receivable obligation-
current portion 7,114 7,114 Notes payable, net- current portion
4,801 991 Other current liabilities 1,211 908 Total
current liabilities 66,437 60,036 Long-term liabilities: Senior
term loan, net 570,095 571,576 Revolving credit facility, net 8,417
7,210 Notes payable, net 1,986 6,678 Net deferred tax liabilities
62,752 54,890 Tax receivable obligation 81,905 81,905 Other
long-term liabilities 6,612 4,211 Total long-term
liabilities 731,767 726,470 Total shareholders’ equity
89,184 51,734
Total liabilities and shareholders’
equity $ 887,388 $ 838,240
Amplify Snack Brands, Inc. and
Consolidated Subsidiaries Consolidated Statements of
Operations For the 13 Weeks and 39 Weeks Ended September 30,
2017 and Three and Nine Months Ended September 30, 2016
(unaudited, in thousands, except share and per share data)
13 Weeks Ended
September 30, 2017
Three Months Ended
September 30, 2016
39 Weeks Ended
September 30, 2017
Nine Months Ended
September 30, 2016
Net sales $ 94,864 $ 67,982 $ 283,056 $ 182,193 Cost of
sales 58,948 35,646 173,365
88,891
Gross profit 35,916
32,336 109,691 93,302 Operating expenses:
Sales and marketing 10,914 8,903 33,230 22,551 General and
administrative 9,594 15,971 30,100 27,688
Loss (gain) on change in fair value of
contingent consideration
431 (505 ) 549 (505 ) Total
operating expenses 20,939 24,369 63,879
49,734
Operating income 14,977
7,967 45,812 43,568 Interest expense 11,329
5,636 33,307 11,788 Other expense (income), net 102
(3,121 ) (789 ) (3,121 ) Income before income taxes
3,546 5,452 13,294 34,901 Income tax expense 2,872
3,807 10,906 16,086
Net
income $ 674 $ 1,645
$ 2,388 $ 18,815
Earnings per share:
Basic and diluted $ 0.01
$ 0.02 $ 0.03 $
0.25 Weighted average common shares
outstanding:
Basic 76,739,354 75,455,047
76,752,323 75,032,287
Diluted 76,794,326
75,557,760 76,920,915
75,094,446
Amplify Snack Brands, Inc. and Consolidated Subsidiaries
Reconciliation of GAAP Net Income to Adjusted EBITDA and
Adjusted Net Income (in thousands) 13 Weeks
Ended
September 30, 2017
Three Months Ended
September 30, 2016
39 Weeks Ended
September 30, 2017
Nine Months Ended
September 30, 2016
Net income $ 674 $ 1,645
$ 2,388 $ 18,815 Non-GAAP adjustments:
Interest expense 11,329 5,636 33,307 11,788 Income tax expense
2,872 3,807 10,906 16,086 Depreciation expense 1,804 539 5,389 814
Amortization of intangible assets 1,827 1,279 5,426 3,433
Equity-based compensation expense 1,152 1,803 2,553 3,972 Loss on
exit activity (1) -- -- 190 -- Loss on extinguishment of debt --
1,100 -- 1,100 Loss (gain) on change in fair value of
contingent consideration
431
(505
)
549
(505
)
Foreign currency losses (gains) (2) 224 (4,221 ) (859 ) (4,221 )
Transaction-related expenses: Acquisition-related expenses
(3) 425 9,024 3,003 9,498 Executive recruitment (4) 121 -- 700 --
Equity offering-related expenses (5) -- --
-- 615
Adjusted EBITDA $
20,859 $ 20,107 $ 63,552
$ 61,395 Less: Interest expense 11,329 5,636 33,307
11,788 Depreciation expense 1,804 539
5,389 814
Adjusted net income before
taxes 7,726 13,932 24,856 48,793
Adjusted income tax expense 2,695 4,919
9,525 18,418
Adjusted net income
$ 5,031 $ 9,013 $
15,331 $ 30,375
Adjusted earnings per share- diluted $ 0.07
$ 0.12 $ 0.20 $
0.24 Weighted average common shares
outstanding- diluted
76,794,326 75,557,760
76,920,915 75,094,446 (1)
Represents a loss recorded in connection with our entry into a
sublease. (2) Foreign currency gains for the three and nine
months ended September 30, 2016, include a realized gain of
approximately $3.6 million associated with the settlement of a
forward currency exchange contract in September 2016, which was
entered into in connection with our acquisition of Tyrrells. The
remaining foreign currency losses (gains) for all periods presented
primarily relate to the remeasurement of intercompany loans.
(3) Includes severance and integration costs, as well as legal,
accounting and consulting fees incurred in connection with
corporate M&A-related activities. (4) Represents fees
paid to help conduct our search for executive leadership and board
of director personnel. (5) Includes legal, accounting,
printing and filing fees paid in connection with the our secondary
equity public offering, which closed in May 2016.
Amplify Snack Brands, Inc.
Reconciliation of GAAP Selling and Marketing and General and
Administrative (“SG&A”) Expenses to Adjusted SG&A
Expenses (In thousands) 13 Weeks Ended
September 30, 2017
Three Months Ended
September 30, 2016
39 Weeks Ended
September 30, 2017
Nine Months Ended
September 30, 2016
SG&A $ 20,508 $
24,874 $ 63,330 $ 50,239 Less:
Depreciation expense (255 ) (91 ) (758 ) (207 ) Amortization of
intangible assets (1,827 ) (1,279 ) (5,426 ) (3,433 ) Equity-based
compensation expense (1,152 ) (1,803 ) (2,553 ) (3,972 )
Transaction-related expenses: Acquisition-related expenses
(1) (425 ) (9,024 ) (3,003 ) (9,498 ) Executive recruitment (2)
(121 ) -- (700 ) -- Equity offering-related expenses (3) --
-- -- (615 )
Adjusted
SG&A $ 16,728 $ 12,677
$ 50,890 $ 32,514
(1) Includes severance and integration costs, as well as
legal, accounting and consulting fees incurred in connection with
corporate M&A-related activities. (2) Represents fees
paid to help conduct our search for executive leadership and board
of director personnel. (3) Includes legal, accounting,
printing and filing fees paid in connection with the our secondary
equity public offering, which closed in May 2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171107006485/en/
Investors:Amplify Snack Brands, Inc.Josh Gittler,
512-640-8377jgittler@amplifysnacks.comorICRKatie Turner,
646-277-1228katie.turner@icrinc.com
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