Boulder Brands taking frozen forward

by Monica Watrous
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Distribution gains for Evol and Udi’s frozen products helped drive the company’s net sales up 5% in the recent quarter.

BOULDER, COLO. — While so many frozen food brands are losing steam, Boulder Brands, Inc. is leading what its executives call a “frozen revolution.” Distribution gains for Evol and Udi’s frozen products helped drive the company’s net sales up 5% in the recent quarter, offsetting continued declines for Glutino and Smart Balance brands.

“We have a tremendous opportunity to continue to revolutionize and revitalize the freezer with two brands that appeal to millennials,” Stephen Hughes, chief executive officer, said during a May 7 earnings call with financial analysts. “Legacy frozen food brands continue to see steep declines, and retailers are actively looking for brands that appeal to younger consumers. We expect to continue to expand distribution on Evol and Udi’s frozen foods, to capitalize on and lead this frozen revolution.”

For the first quarter ended March 31, Boulder Brands had net income of $1,817,000, equal to 3c per share on the common stock, up from $473,000, or 1c per share, in the prior-year period. Net sales grew 5% to $129,000,000, which compared with $122,852,000 the year before.

After sustaining a loss of $127,076,000 in fiscal 2014, Boulder has homed in on six strategies to stabilize the business and return to growth. One strategy, internally known as “Frozen Forward,” involves the company’s goal to grow the Udi’s and Evol brands in frozen foods and freezer sets across all channels. Innovation and product renovation are key priorities for Boulder, whose recent launches in the frozen category include Udi’s sweet potato ravioli and Evol street tacos with sweet potato, black beans and goat cheese. New frozen entrees under the Evol banner include sriracha chicken, portabella and goat cheese ravioli, roasted cauliflower with brussels sprouts and whole grains, and quinoa with roasted vegetables.

“And we are in the early stages of our exciting launch into the gluten-free frozen entrees and handhelds,” Mr. Hughes said. “Evol will continue to have solid distribution gains, and we expect continued increases in the coming quarters for both Udi’s and Evol frozen entrees and handhelds, as retailers complete 2015 category review and resets. Most major retailers reset frozen food departments between July and early October.”

Net sales for the company’s Natural segment, which include Evol, Udi’s and Glutino, advanced nearly 8% to $79 million, driven by net sales increases of 45% and 16% for Evol and Udi’s, respectively. Gross profit for the segment was $25.2 million, up from $24.1 million the year before.

Net sales for the company’s Balance segment, which includes Earth Balance, Smart Balance and Level, increased 1.1% to $50 million, driven by a 14% sales increase for Earth Balance and the impact of the timing of Easter. Gross profit was $24.4 million, up from $23.2 million.

For 2015, management continues to expect net sales to be in the range of $550 million to $560 million, or 6% to 8% growth over the prior year, and adjusted earnings before interest, taxes, depreciation and amortization to be in the range of $78 million to $82 million.

After releasing its quarterly earnings on May 7, Boulder’s share price advanced nearly 11% from the previous close of $9.01.
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