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Pinnacle’s Q3 bolstered by North America retail biz


Pinnacle Foods reported a 1% increase in consolidated net sales for the third quarter ended Sept. 29 compared to the year-ago quarter, bolstered by the company’s North America retail business, which is made up of the Birds Eye Frozen and Duncan Hines Grocery segments and which increased 2%.

"The third quarter results demonstrate the success of our strategy of reinvigorating iconic brands through focused investment spending, strong productivity results and maintaining a lean and efficient organization structure,” said Pinnacle Foods CEO Bob Gamgort. “We achieved solid net sales growth in our North America retail business, and we expanded our margins and EPS meaningfully in the quarter. We are confident that our programs for the balance of the year appropriately address continuing challenges in the industry."

North America Retail net sales increased 2.2% to $482.2 million in the quarter, compared to $471.6 million in the year-ago period, almost entirely due to volume/mix growth of 2.1%. Fueling the growth in net sales were the company's leadership brands, most notably Birds Eye vegetables, Vlasic pickles and Log Cabin and Mrs. Butterworth's syrups.

Net earnings in the third quarter advanced to $40.7 million, or $0.35 per diluted share, compared with net earnings of $9.9 million, or $0.11 per diluted share, in the year-ago period.

Net sales for the Birds Eye Frozen segment increased 0.8% to $258 million in the quarter, compared to $256 million in the year-ago period. Sales were largely driven by growth of Birds Eye vegetables, including Birds Eye Recipe Ready, introduced last quarter, and Birds Eye Voila! complete bagged meals, offset by declines for Mrs. Paul's and Van de Kamp's seafood, Hungry Man dinners and Celeste pizza.

Net sales for the Duncan Hines Grocery segment advanced 4% to $224.2 million in the quarter, compared to $215.6 million in the year-ago period. This performance reflected higher sales of Vlasic pickles, Mrs. Butterworth's and Log Cabin syrups, Duncan Hines baking mixes and frostings, Comstock and Wilderness pie and pastry fruit fillings and the company's Canadian business. Partially offsetting these positive drivers were lower sales of canned meat.

The company’s Specialty Foods segment did not fare as well. Net sales for the segment declined approximately 6% to $90.3 million in the quarter, compared to $96.3 million in the third quarter of 2012. This performance largely reflected planned lower sales of private label canned meat.

Given Pinnacle’s strong performance in the first nine months of 2013, it has decided to strengthen its pro forma EPS outlook for 2013 and now expects to be at the high end of its previous EPS guidance range of $1.53 to $1.57 for the full year, excluding items affecting comparability. This updated guidance continues to include $0.01 to $0.02 accretion in the fourth quarter from the recently acquired Wish-Bone business and a diluted weighted average share count for the year of 116.5 million.

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