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Inventure Group Inc. Reports Operating Results (10-Q)

November 04, 2011 | About:
10qk

10qk

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Inventure Group Inc. (SNAK) filed Quarterly Report for the period ended 2011-09-24.

Inventure Foods Inc. has a market cap of $73.9 million; its shares were traded at around $4.07 with a P/E ratio of 23.9 and P/S ratio of 0.5. Inventure Foods Inc. had an annual average earning growth of 82.3% over the past 5 years.

Highlight of Business Operations:

Gross profit for the quarter decreased $0.7 million or 9.7% to $6.4 million, and decreased as a percentage of net revenues to 17.1% for the quarter ended September 24, 2011 as compared to 20.8% in the third quarter of 2010. Snack products segment gross profit of $4.3 million decreased $0.4 million or 8.3% and decreased as a percentage of net revenues to 18.5% as compared to 21.1% in 2010. The decrease is primarily attributable to our effort to work through capacity constraints at the Goodyear plant during the facilitys ongoing capital improvements program. This included higher outsourced production costs and increased labor costs primarily due to overtime. In addition, we had increases in our revenue reduction coupon spending to promote Boulder Canyon growth. The frozen products segment gross profit of $2.1 million was down $0.3 million or 12.4%, and decreased as a percentage of net revenues to 14.8% from 20.3%. The overall decrease in gross profit dollars and margin for the quarter are primarily attributable to the impact of an $1.8 million, or 62.8%, increase in slotting fees, trade spending, and coupon expense, nearly all of which continue to support the Jamba® and Boulder Canyon brands.

Selling, general and administrative (SG&A) expenses were $6.6 million or 17.6% of net revenues for the quarter ended September 24, 2011, an increase of $1.1 million and up 1.5 percentage points from 16.1% of net revenues when compared to the third quarter of 2010. The increase in SG&A expenses for the quarter were almost entirely driven by increased sales and marketing expenses supporting Jamba® and Boulder Canyon through additional marketing, sampling and sales commission expense.

For the nine months ended September 24, 2011 net revenues increased $17.4 million or 17.3% to $117.8 million compared to $100.4 million in the previous year. Snack product segment net revenues were $70.1 million, up 8.2% over prior years net revenues, led by growth in our Boulder Canyon (up 23.9%), T.G.I.Fridays®(up 11.4%), and private label products (up 46.8%), primarily driven by both pricing and volume increases, and partially offset by declines in our smaller non strategic brands. Frozen product segment net revenues were $47.6 million, up 33.9% over prior years net revenues. This increase was primarily driven by the national roll-out of our Jamba® smoothies. Jamba® totaled $11.6 million in net revenues for the first nine months of 2011, compared to $2.6 million in the previous year. Excluding Jamba® net revenues, the frozen products segment net revenue was up 9.3% for the first nine months 2011.

Gross profit for the nine months ended September 24, 2011 was $22.4 million, or 19.0% of net revenues, compared to $21.9 million, or 21.8% of net revenues, for the prior year. Snack products segment gross profit of $13.9 million increased $1.2 million or 9.0% and increased as a percentage of net revenues to 19.9% as compared to 19.7% in 2010. Snack products segment gross profit growth for the first nine months was driven primarily by strong volumes in our more profitable brands and channels, and partially offset by our effort to work through capacity constraints at the Goodyear plant during the facilitys ongoing capital improvements program. This included higher outsourced production costs and increased labor costs primarily due to overtime. The frozen products segment gross profit of $8.5 million was down $0.6 million or 6.6%, and decreased as a percentage of net revenues to 17.8% from 25.5%. The decrease in gross profit dollars and margin for the first nine months of 2011 are primarily attributable to our increased spending on trade promotion, slotting fees and coupon expense supporting the Jamba® national rollout. The frozen products segment was also impacted by the higher cost of berries relative to the prior year, which benefited from the exceptional 2009 berry harvest.

Net cash provided by operating activities was $0.1 million for the nine months ended September 24, 2011 and $3.9 million for the nine months ended September 25, 2010. The overall $3.8 million decrease was primarily a result of our $8.8 million incremental increase in inventory in the first nine months of 2011, which was $14.6 million compared to $5.8 million in the same period in 2010. We elected to take advantage of purchasing higher quantities of lower cost fresh berries in order to reduce our frozen berry purchase requirements. In addition, we incurred increases in accounts receivable of $3.4 million in the first nine months of 2011, compared to $1.6 million in the same period in 2010, which were attributable to our net revenue growth. The $8.8 million year-over-year increase in inventory was the primary driver of the $8.2 million year over year increase in accounts payable and accrued liabilities.

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