AUSTIN, TEXAS — Executives at Amplify Snack Brands are “very excited” about the potential to leverage the company’s expanded portfolio, especially in light of strong sales and earnings growth during the third quarter.
Net income in the third quarter ended Sept. 30 totaled $1,645,000, equal to 2c per share on the common stock, which compared with a loss of $2,989,000 in the same period a year ago. Net sales increased 48% to $67,982,000, up from $45,914,000 a year ago.
Amplify attributed the increase in sales to solid growth of the SkinnyPop brand, new distribution of the Paqui brand and the addition of the Oatmega brand. In addition, the Tyrrells international portfolio of brands that the company acquired on Sept. 2 contributed $8.6 million to net sales during the third quarter.
|Tom Ennis, president and c.e.o. of Amplify Snack Brands|
“We are very pleased to have completed the Tyrrells acquisition in the third quarter,” said Tom Ennis, president and chief executive officer. “Through this transaction, we diversified our better-for-you snack food offerings, expanded our geographic presence and gained a highly-talented international team as well as in-house manufacturing capabilities. Strong brand sales gains continued in the quarter despite a more challenging market backdrop, and we experienced certain transitory operational execution issues that impacted our results. Amplify is now a much stronger and more diversified company, and we’ve proactively taken steps to sharpen execution going forward. We remain very excited about the significant potential we have to leverage our newly expanded portfolio of terrific better-for-you brands to drive continued sales growth, profitability and value for our shareholders.”
For the nine months ended Sept. 30, net income was $18,815,000, or 25c per share, up sharply from $5,475,000, or 7c per share, in the same period a year ago. Net sales increased 32% to $182,193,000 from $137,543,000.
The company updated its full-year outlook to reflect its year-to-date performance, and now expects net sales of $268 million to $272 million, up from an earlier projection of $260 million to $270 million. Adjusted EBITDA now is expected to total $84 million to $86 million, down from $92 million to $96 million.
Following the release of the earnings, New York-based Credit Suisse lowered its ratings on Amplify to neutral and lowered its target price to $13 per share from $18.
“Amplify missed its 3Q expectations and guided down its forecast for 2016 significantly,” Robert Moskow, research analyst with Credit Suisse, wrote in a Nov. 14 report. “Although the Skinny brand’s sales growth remains robust (+23%), the company suffered through a series of execution missteps that will require bigger investments and cause profit margin dilution in 2017. In addition, the intensifying competitive landscape raises serious concerns about the sustainability of the growth rate domestically and in the U.K. market, where the newly acquired Tyrells business also faced near-term headwinds.”Mr. Moskow said Credit Suisse has lowered its 2016 and 2017 sales estimates to $271 million and $399 million, and its EBITDA estimates to $84 million and $116 million, respectively.