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Annie's Posts 3rd Quarter Fiscal 2014 Financial Results

February 18, 2014

Annie's, Inc., a natural and organic food company, announced financial results for its third quarter of fiscal 2014 ended December 31, 2013.

"Our results reflected continued top-line strength and accelerating momentum in consumption, driven by growing brand awareness, expansion in our mainline distribution, and the success of our new products," said John Foraker, CEO of Annie's. "Consumers continue to adopt natural and organic food into their lifestyles and are demanding greater transparency in food labeling, which are important and positive trends for us."

"Earnings in the quarter reflected an improved gross margin trend versus the second quarter, as well as significant investments in our brand and the expansion of our talent base to help us meet the needs of our rapidly growing business. We expect solid adjusted earnings per share growth in the fourth quarter, despite tight supply conditions in the organic wheat market, the timing of certain productivity projects and a later Easter holiday this year. Importantly, our authentic and trusted brand, the additions we are making to our team and our deep innovation pipeline position us well for fiscal 2015 and beyond," concluded Foraker.

In a release on February 12, the Company reported that for the third quarter, Annie's reported net sales of $46.2 million. Excluding the benefit to net sales from the pizza recall, primarily related to insurance recoveries, adjusted net sales increased 21.7 percent to $46.1 million. Net sales growth in the third quarter was led by strength in meals, which benefited from continued base business strength and new product introductions, especially in mac & cheese.

EBITDA for the quarter was $5.2 million, with adjusted EBITDA increasing 8.2 percent year-over-year to $5.6 million. Adjusted EBITDA growth was driven by strong net sales growth, partially offset by a lower adjusted gross margin percentage year-over-year, resulting from higher commodity costs and inventory obsolescence. Adjusted selling, general and administrative expenses improved slightly as a percentage of adjusted net sales, as investments in marketing and headcount growth were supported by leverage from the strong sales growth.

Net income for the quarter was $2.8 million, or $0.16 per diluted share, as compared to $1.4 million, or $0.08 per diluted share, in the third quarter of fiscal 2013. Adjusted net income was $2.9 million, or $0.17 per diluted share, as compared to adjusted net income of $2.7 million, or $0.15 per diluted share, in the third quarter of fiscal 2013.

The company updated its fiscal 2014 financial outlook to reflect:

-Adjusted net sales growth of 19.0 percent to 19.5 percent (narrowed within prior guidance range)

-Adjusted EBITDA of $29 million to $30 million (updated from approximately $31 million)

-Adjusted diluted EPS of $0.92 to $0.93 (updated from the lower end of $0.97 to $1.01)

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