Net Sales of $101.0 Million in Second
QuarterCompany Revises Full Year Fiscal 2017 OutlookAnnounces Ben
Clarke to Join Board of Directors
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 26 weeks ended July 1, 2017.
13 Weeks Ended July 1, 2017 Highlights
- Net sales were $101.0 million, an
increase of 68.7% year-over-year
- Gross profit was $38.5 million,
representing 38.1% of net sales
- Net income was $1.2 million, or $0.02
per fully diluted share
- Adjusted net income (non-GAAP) was $6.0
million, or $0.08 per fully diluted share
- Adjusted EBITDA (non-GAAP) was $22.6
million, representing 22.4% of net sales
26 Weeks Ended July 1, 2017 Highlights
- Net sales were $188.2 million, an
increase of 64.8% year-over-year
- Gross profit was $73.8 million,
representing 39.2% of net sales
- Net income was $1.7 million, or $0.02
per fully diluted share
- Adjusted net income (non-GAAP) was
$10.3 million, or $0.13 per fully diluted share
- Adjusted EBITDA (non-GAAP) was $42.7
million, representing 22.7% of net sales
“We are pleased with the continued growth and momentum across
our portfolio of better-for-you brands. SkinnyPop’s ready-to-eat
offering and compelling new product innovation fueled velocity and
distribution gains and we benefited from growth in our Paqui and
Oatmega brands, in spite of ongoing challenges in the U.S. food
retail environment. Our International team continued to make good
progress on the improvement of our operating performance during the
second quarter, although we continue to expect it to take time for
us to return to the rate of growth and profitability we know the
business is capable of achieving. Although we are encouraged by our
first half performance, success of our new innovation and
international momentum, we are updating our annual outlook for 2017
to reflect the continued near-term market headwinds we are
experiencing in the U.K. and continued softness in U.S. Food. We
are in the right space, with the right brands with plenty of
whitespace and runway ahead of us for continued profitable growth.
We remain committed to executing on our strategic initiatives to
drive sales growth, profitability and value for our shareholders,”
said Tom Ennis, Amplify’s President and Chief Executive
Officer.
13 Weeks Ended July 1, 2017
Net sales for the 13 weeks ended July 1, 2017 increased 68.7% to
$101.0 million compared to $59.9 million for the three months ended
June 30, 2016. The increase in net sales reflects the addition of
Tyrrells’ international portfolio of brands and Oatmega, which we
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. In addition, the 13 weeks
ended July 1, 2017 benefited from strong promotions at key accounts
within the SkinnyPop ready-to-eat (“RTE”) line. Foreign currency
exchange had an immaterial impact on the Company’s operating
results for the 13 weeks ended July 1, 2017.
Gross profit was $38.5 million, or 38.1% of net sales, compared
to $32.5 million, or 54.4% of net sales for the three months ended
June 30, 2016. The decrease in gross margin percentage for the 13
weeks ended July 1, 2017 was primarily due to the acquisition of
Tyrrells and to a lesser extent 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 RTE
products. The 13 weeks ended July 1, 2017 was also a more heavily
promoted period compared to the prior year period.
SG&A was $21.0 million compared to $14.3 million for the
three months ended June 30, 2016. Net income was $1.2 million, or
$0.02 per fully diluted share, compared to net income of $8.8
million, or $0.12 per fully diluted share, for the three months
ended June 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 $6.0 million,
or $0.08 per fully diluted share, compared to adjusted net income
of $11.3 million for the three months ended June 30, 2016, or $0.15
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 3.9% to $22.6 million from $21.7 million for
the three months ended June 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 22.4% compared to 36.3% in the three months ended June 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.
26 Weeks Ended July 1, 2017
Net sales for the 26 weeks ended July 1, 2017 increased 64.8% to
$188.2 million, compared to $114.2 million for the six months ended
June 30, 2016. The increase in net sales reflects the addition of
Tyrrells’ international portfolio of brands and Oatmega, which we
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 26 weeks ended July 1, 2017 increased $12.8
million to $73.8 million, or 39.2% of net sales, compared to $61.0
million, or 53.4% of net sales for the six months ended June 30,
2016. The decrease in gross margin was primarily due to the
acquisition of Tyrrells 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 RTE products.
SG&A was $42.8 million compared to $25.4 million for the six
months ended June 30, 2016. Net income was $1.7 million, or $0.02
per fully diluted share, compared to net income of $17.2 million,
or $0.23 per fully diluted share, for the six months ended June 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 $10.3 million, or $0.13 per fully
diluted share, based on 76.8 million diluted shares outstanding,
compared to adjusted net income of $21.4 million for the six months
ended June 30, 2016, or $0.29 per fully diluted share, based on
74.8 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 3.4% to $42.7 million from $41.3 million for
the six months ended June 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 22.7% compared to 36.2% in the six months ended June 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 July 1, 2017, North
America segment net sales and operating income were $69.6 million
and $22.1 million, respectively. This compares with North America
segment net sales and operating income of $59.9 million and $22.1
million, respectively for the three months ended June 30, 2016.
For the 26 weeks ended July 1, 2017, North America segment net
sales and operating income were $129.7 million and $43.1 million,
respectively. This compares with North America segment net sales
and operating income of $114.2 million and $42.5 million,
respectively for the six months ended June 30, 2016.
International: For the 13 weeks ended July 1, 2017,
International segment net sales and operating loss were $31.3
million and $0.5 million, respectively.
For the 26 weeks ended July 1, 2017, International segment net
sales and operating loss were $58.5 million and $1.7 million,
respectively.
Balance Sheet and Cash Flow
As of July 1, 2017, the Company had cash and cash equivalents of
$12.8 million and net availability under its $50.0 million
revolving line of credit of $43.6 million. Net debt, as defined
under the Company’s credit facility, represents outstanding
indebtedness less cash and cash equivalents, was $595.6 million as
of July 1, 2017, compared to $610.3 million as of April 1, 2017.
The decrease was primarily attributable to $12 million of debt
paydown driven by EBITDA generation and improved working capital
management during the 13 weeks ended July 1, 2017. Amplify’s
leverage ratio as calculated under the Company’s credit facility
was 6.2x trailing twelve month EBITDA at July 1, 2017. The Company
remains committed to reducing its long-term 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 $385 million to $400
million
- Adjusted EBITDA of $92 million to $100
million
- Cash and non-cash interest expense of
approximately $43 million to $45 million
- Effective tax rate (non-GAAP) of 37% to
39%
- Adjusted EPS (non-GAAP) of $0.35 to
$0.43
- Fully diluted share count of
approximately 77.0 million shares
- Foreign currency exchange rate of 1.28
USD:GBP in the second half of 2017
As a result of the timing of planned distribution and sales
gains across the Company’s business segments, it expects the rate
of year-over-year growth for both sales and profitability to
increase as the year progresses. Although the Company plans to
invest more heavily in marketing behind its North America and
International brands in the third quarter, it expects continued
margin improvement in the second half of 2017 relative to the first
half of 2017.
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 at this time.
Appointment of New Director to Amplify Board
The Company also announced today the appointment of Ben Clarke
to its Board of Directors, effective as of September 1, 2017. Ben
has previously served as the Chief Executive Officer of U.K.-based
Burton’s Biscuits and as an executive with Kraft Foods Inc. Most
recently Ben had been serving as an International advisor to
Amplify.
“We are pleased to announce that Ben Clarke has agreed to join
the Amplify Board of Directors. Ben is a seasoned executive and has
significant experience navigating the UK food retail landscape
through his prior leadership experience at Burton’s and Kraft and
has already been an invaluable member of the Amplify team. We look
forward to Ben joining our Board of Directors.”
Conference Call and Webcast
The Company will host a conference call with members of the
executive management team to discuss these results today, Tuesday,
August 8, 2017 at 7:30 a.m. Central time (8:30 a.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, August 22, 2017, by dialing 844-512-2921 from the U.S., or
412-317-6671 from international locations, and entering
confirmation code 13666813.
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”, “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. 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, interest expense 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)
July 1, 2017 December
31, 2016 Assets (unaudited) Current assets: Cash and
cash equivalents $ 12,761 $ 10,323 Accounts receivable, net 44,080
42,852 Inventories 23,250 18,250 Other current assets 5,471
7,804 Total current assets 85,562 79,229 Property, plant and
equipment, net 65,741 45,884 Other assets: Goodwill 149,480 151,953
Intangible assets, net 575,082 559,996 Other non-current assets
1,028 1,178
Total assets $
876,893 $ 838,240 Liabilities and
Shareholders’ Equity Current liabilities: Accounts payable and
accrued liabilities $ 53,353 $ 45,087 Senior term loan- current
portion 5,940 5,936 Tax receivable obligation- current portion
7,114 7,114 Notes payable, net- current portion 4,832 991 Other
current liabilities 2,640 908 Total current
liabilities 73,879 60,036 Long-term liabilities: Senior term loan,
net 570,065 571,576 Revolving credit facility, net 4,845 7,210
Notes payable, net 1,919 6,678 Net deferred tax liabilities 62,682
54,890 Tax receivable obligation 81,905 81,905 Other liabilities
6,307 4,211 Total long-term liabilities 727,723
726,470 Total shareholders’ equity 75,291 51,734
Total liabilities and shareholders’ equity $
876,893 $ 838,240
Amplify Snack Brands, Inc. and
Consolidated Subsidiaries
Consolidated Statements of
Operations
For the Thirteen Weeks and Twenty-Six
Weeks Ended July 1, 2017 and
Three and Six Months Ended June 30,
2016
(unaudited, in thousands, except share
and per share data)
Thirteen Weeks EndedJuly 1,
2017
Three Months EndedJune 30,
2016
Twenty-Six Weeks EndedJuly 1,
2017
Six Months EndedJune 30,
2016
Net sales $ 100,974 $ 59,866 $ 188,192 $ 114,211 Cost of
goods sold 62,509 27,318 114,417
53,245
Gross profit 38,465 32,548
73,775 60,966 Operating expenses: Sales and marketing
11,891 7,969 22,316 13,648 General and administrative 9,149 6,285
20,506 11,717
Loss on change in fair value of contingent
consideration
118 - 118 - Total
operating expenses 21,158 14,254 42,940
25,365
Operating income 17,307
18,294 30,835 35,601 Interest expense 11,005
3,126 21,978 6,152 Other income, net (613 ) -
(891 ) - Income before income taxes 6,915 15,168 9,748
29,449 Income tax expense 5,729 6,400
8,034 12,279
Net income $ 1,186
$ 8,768 $ 1,714 $
17,170 Earnings per share:
Basic and diluted
$ 0.02 $ 0.12 $
0.02 $ 0.23 Weighted average
common shares
outstanding:
Basic 76,761,585
74,798,232 76,758,859
74,818,584 Diluted 76,839,818
74,847,862 76,838,408
74,846,083
Amplify Snack Brands, Inc. and
Consolidated Subsidiaries
Reconciliation of GAAP Net Income to
Adjusted EBITDA and Adjusted Net Income
(in thousands)
Thirteen Weeks EndedJuly 1,
2017
Three Months EndedJune 30,
2016
Twenty-Six Weeks EndedJuly 1,
2017
Six Months EndedJune 30,
2016
Net income $ 1,186 $
8,768 $ 1,714 $ 17,170 Non-GAAP
adjustments: Interest expense 11,005 3,126 21,978 6,152 Income tax
expense 5,729 6,400 8,034 12,279 Depreciation expense 1,671 168
3,585 275 Amortization of intangible assets 1,816 1,091 3,599 2,154
Equity-based compensation expense (343 ) 1,090 1,401 2,169
Loss on change in fair value of contingent
consideration
118
-
118
-
Loss on exit activity (1) - 190 Foreign currency gains (615 ) -
(1,083 ) -
Transaction-related expenses: Acquisition-related
expenses (2) 1,728 474 2,578 474 Executive recruitment (3) 291 -
579 - Equity offering-related expenses (4) -
615 - 615
Adjusted EBITDA $
22,586 $ 21,732 $ 42,693
$ 41,288 Less: Interest expense 11,005 3,126 21,978
6,152 Depreciation expense 1,671 168
3,585 275
Adjusted net income before taxes
9,910 18,438 17,130 34,861 Adjusted
income tax expense 3,907 7,136 6,810
13,499
Adjusted net income $
6,003 $ 11,302 $ 10,320
$ 21,362 Adjusted earnings per
share- diluted $ 0.08 $ 0.15
$ 0.13 $ 0.29 Weighted
average common shares
outstanding- diluted
76,839,818 74,847,862
76,838,408 74,846,083 (1)
Represents a loss recorded in connection with our entry into a
sublease. (2) Includes legal, accounting and consulting fees
along with severance expenses and integration costs incurred in
connection with corporate M&A-related activities. (3)
Represents fees paid to help conduct our search for executive
leadership and board of director personnel. (4) 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)
Thirteen Weeks EndedJuly 1,
2017
Three Months EndedJune 30,
2016
Twenty-Six Weeks EndedJuly 1,
2017
Six Months EndedJune 30,
2016
SG&A $ 21,040 $
14,254 $ 42,822 $ 25,365 Less:
Depreciation expense (247 ) (66 ) (503 ) (116 ) Amortization of
intangible assets (1,816 ) (1,091 ) (3,599 ) (2,154 ) Equity-based
compensation expense 343 (1,090 ) (1,401 ) (2,169 )
Transaction-related expenses: Acquisition-related expenses
(1) (1,728 ) (474 ) (2,578 ) (474 ) Executive recruitment (2) (291
) -- (579 ) -- Equity offering-related expenses (3) --
(615 ) -- (615 )
Adjusted
SG&A $ 17,301 $ 10,918
$ 34,162 $ 19,837
(1) Includes legal, accounting and consulting fees
along with severance expenses and integration costs incurred in
connection with corporate M&A-related activities. (2)
Represents fees paid to help conduct our search for executive
leadership 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/20170808005521/en/
Amplify Snack Brands, Inc.Josh Gittler,
512-640-8377jgittler@amplifysnacks.comorICRKatie Turner,
646-277-1228katie.turner@icrinc.com
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