CINCINNATI – AdvancePierre Foods reported a 78 percent jump in net income for the third quarter ended Oct. 1, 2016.
Net income for the quarter was $22,445 million or $0.29 per diluted share, compared to $12,636 million, or $0.19 per diluted share reported in the third quarter of 2015.
Net sales for the period, however, retreated 3.3 percent to $393,654 million compared with $407,170 million reported in the year-ago quarter. AdvancePierre attributed the decline to the company’s elimination of lower-margin business in its Industrial segment, which reduced net sales by $14.0 million. Also driving the decline in sales was “strategic price and trade spending investments to reflect lower raw material costs, which reduced net sales by $8.8 million.”
Net sales increased by $9.3 million, excluding the impact of Industrial segment volume, volume and mix in the company’s three core segments, including sales volume growth of 0.7 percent, the company said.
Adjusted EBITDA advanced 15.4 percent to $79.0 million compared to $68.4 million for the third quarter of 2015.
“We are pleased to report another quarter of strong financial performance, driven by continuing execution of APF Way productivity initiatives, including our dynamic pricing model, and improvement in the mix of our business” John Simons, president and CEO, said in a statement. “As demonstrated in these results as well as our recently announced strategic acquisition of Allied Specialty Foods, we are delivering on our commitments to invest in our core business to continue improving our portfolio mix, and adding accretive acquisitions to accelerate our future growth.”
On a segment basis, net sales in the Foodservice segment eased 4.7 percent to $222.6 million compared to $233.5 million reported a year ago. A 2.2 percent decline in volume, unfavorable mix and a reduction in net pricing weighed on sales in the segment, the company explained.
“The volume decline was attributable primarily to fruit cup sales in our schools sub-channel and slower restaurant traffic affecting our national chain and street customers, partially offset by growth in school sandwich and protein categories,” the company said.
Operating income for the segment climbed 18 percent to $45.0 million, compared to $38.1 million for the third quarter of 2015. The company attributed the result to productivity savings and net price realization of raw material deflation, partially offset by the impact of lower volume and mix effects.
The Convenience segment reported an 11.7 percent increase in net sales to $56.5 million in the third quarter, compared to $50.6 million reported a year ago. Volumes increased 12.6 percent while favorable mix increased 3.3 percent to partially offset net pricing reductions of 4.2 percent, the company said. New product launches and increased distribution drove volume growth.
Third-quarter operating income in the segment was $9.5 million, an increase of 41.6 percent, compared to $6.7 million in the year-ago quarter. Favorable volume and mix, productivity saving and net price realization of raw material deflation helped results, according to the company.
Net sales for the Industrial segment dropped 43.5 percent to $20.0 million compared to $35.4 million for the third quarter in 2015 on lower volume and a reduction in net pricing of 3.9 percent. Favorable mix partially offset the impact.
Operating income in the segment increased to $1.0 million from a reported loss of $0.2 million, reflecting the exit of unprofitable business and productivity savings, the company said.
Guidance for the full year includes net sales in the range of $1.545 billion to $1.575 billion, including volume growth of 2.0 percent to 2.5 percent in the company’s three core segments. AdvancePierre expects adjusted EBITDA in the range of $290 million to $295 million and adjusted diluted net income per share in the range of $1.65 to $1.75. The company also expects to pay a quarterly dividend of $0.14 per share in the fourth quarter, subject to approval by the board of directors.
