Pinnacle Foods to Exit Certain Non-Strategic Aunt Jemima Frozen Breakfast Products
Company Reaffirms Full Year 2017 Guidance
PARSIPPANY, N.J., May 08, 2017 (GLOBE NEWSWIRE) -- Pinnacle Foods Inc. (NYSE:PF) today announced that, in connection with the Company’s ongoing portfolio strategic assessment and margin roadmap, it has decided to exit certain low-margin and non-strategic Aunt Jemima® frozen breakfast products sold to retail and foodservice customers, following the Company’s voluntary recall last week.
In making the announcement, the Company reaffirmed its guidance for Adjusted Diluted EPS in the range of $2.55 to $2.60 for the full-year of 2017. The reaffirmed guidance includes costs associated with recalling the product, which is largely an impact to the second quarter, as well as the impact of foregone net sales approximating $45 million and the corresponding earnings, which will be spread over the balance of the year. Offsetting these impacts is the updated benefit to the Company’s Adjusted Effective Tax Rate (ETR), resulting from its adoption of the new accounting standard for stock-based compensation expense. The Adjusted ETR for the year is now estimated in the range of 33.5% to 34.0%, representing a benefit versus year-ago of approximately $0.10 to Adjusted Diluted EPS, versus the $0.05 previously expected.
Commenting on the announcement, Pinnacle Foods Chief Executive Officer Mark Clouse stated, “The decision to exit these products now was the appropriate action for Pinnacle. It is consistent with our plans to enhance the on-going margin of the Company and focus our efforts and investments on more profitable growth opportunities longer term. While the timing of this exit was accelerated by the voluntary recall we initiated last week, these items are low-margin, non-strategic SKUs that we expected to exit at some point in the foreseeable future. The benefit we now expect from the lower Adjusted ETR this year is forecasted to offset this business decision, enabling us to reaffirm our guidance for 2017.”
The specific Aunt Jemima frozen retail products being exited reflect 16 SKUs across frozen waffles, frozen french toast slices and frozen pancakes. In addition, the Company is exiting select frozen breakfast items sold to foodservice customers. Frozen Aunt Jemima retail products that the Company will continue to market represent higher-margin and more differentiated items, including mini pancakes, french toast sticks, breakfast entrees and Griddle Poppers. The Company makes, distributes and markets Aunt Jemima frozen breakfast products under a trademark license agreement with The Quaker Oats Company.
The Company anticipates a non-cash charge of approximately $50-$60 million for the write-down of both the tangible and intangible assets associated with the exit. This charge, along with severance and other expenses associated with the exit, are expected to occur in the second quarter and will be treated as items affecting comparability.
Non-GAAP Financial Measures
Forecasted Adjusted Diluted EPS and Adjusted ETR metrics provided above are non-GAAP measures as defined by the Securities and Exchange Commission in its financial communications. These non-GAAP financial measures should be considered as supplements to the GAAP reported measures, should not be considered replacements for, or superior to, the GAAP measures and may not be comparable to similarly named measures used by other companies. The Company does not provide guidance for the most directly comparable GAAP measures, and we similarly cannot provide a reconciliation of these metrics to the comparable GAAP metrics without unreasonable effort due to the unavailability of reliable estimates for certain items, such as non-cash gains or losses resulting from mark-to-market adjustments of hedging activities and foreign currency impacts. These items are not within our control and may vary greatly between periods and could significantly impact future financial results.
Investor Relations Contact:
Sr. Vice President, Investor Relations
Pinnacle Foods Inc.
About Pinnacle Foods Inc.
Pinnacle Foods Inc. (NYSE:PF) is a leading manufacturer, marketer and distributor of high-quality branded food products with a mission of unleashing brand potential. With annual sales in excess of $3 billion, our portfolio includes well-known brands competing in frozen, refrigerated and shelf-stable formats, such as Birds Eye, Birds Eye Voila!, Duncan Hines, Earth Balance, EVOL, gardein, Glutino, Hungry-Man, Log Cabin, Udi’s, Vlasic, andWish-Bone, along with many others. The company is headquartered in Parsippany, NJ and has nearly 5,000 employees across the U.S. and Canada. For more information, please visit www.pinnaclefoods.com.
This release may contain statements that predict or forecast future events or results, depend on future events for their accuracy or otherwise contain "forward-looking information." The words "estimates," "expects," "contemplates," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "may," "should," and variations of such words or similar expressions are intended to identify forward-looking statements. These statements are made based on management's current expectations and beliefs concerning future events and various assumptions and are not guarantees of future performance. Actual results may differ materially as a result of various factors, some of which are beyond our control, including but not limited to: general economic and business conditions, deterioration of the credit and capital markets, industry trends, our leverage and changes in our leverage, interest rate changes, changes in our ownership structure, competition, the loss of any of our major customers or suppliers, changes in demand for our products, changes in distribution channels or competitive conditions in the markets where we operate, costs of integrating acquisitions, loss of our intellectual property rights, fluctuations in price and supply of raw materials, seasonality, our reliance on co-packers to meet our manufacturing needs, availability of qualified personnel, changes in the cost of compliance with laws and regulations, including environmental laws and regulations, and the other risks and uncertainties detailed in our filings, including our Form 10-K, with the Securities and Exchange Commission on February 23, 2017. There may be other factors that may cause our actual results to differ materially from the forward-looking statements. We assume no obligation to update the information contained in this announcement except as required by applicable law.