Press Release

Annie's Reports First Quarter Fiscal 2013 Financial Results

BERKELEY, Calif., July 24, 2012 /PRNewswire/ -- Annie's, Inc. (NYSE: BNNY), a leading natural and organic food company, today announced financial results for the first quarter of fiscal 2013 ended June 30, 2012.

First Quarter Highlights:

  • Achieves net sales increase of 20% to $34.3 million
  • Reports adjusted net income of $2.1 million, or $0.12 per adjusted diluted share

For the first quarter of fiscal 2013, Annie's reported net sales of $34.3 million, an increase of 20% over the first quarter of fiscal 2012. Net income for the first quarter of fiscal 2013 was $2.1 million as compared to net income of $1.8 million reported in the first quarter of the prior year.

Adjusted net income1 for the first quarter of fiscal 2013 was $2.1 million, or $0.12 per adjusted diluted share, based on 17.6 million shares outstanding.  This compares to adjusted net income of $2.0 million, or $0.12 per adjusted diluted share, based on 16.5 million shares outstanding in the first quarter of fiscal 2012.  The year over year decline in adjusted net income was primarily related to increased SG&A costs. Annie's completed its Initial Public Offering on April 2, 2012, increasing shares outstanding by 950,000 in the first quarter of fiscal 2013 as compared to the first quarter of the prior year. Adjusted net income excludes the impact of $13,000 and $518,000 non-cash charge related to the change in the fair value of the convertible preferred stock warrant liability in the first quarter of fiscal 2013 and 2012, respectively and benefit of $332,000 related to an increase in the tax rate applied for deferred tax assets due to an increase in the federal and state tax rates in the first quarter of fiscal 2012.

"We are pleased with our strong growth and overall financial performance in our business.  Consumption trends remain strong as more consumers seek healthy food options for their families," commented John Foraker, CEO of Annie's.  "We are encouraged by the progress of our mainline initiative in grocery channels, as well as consumer reception to our new products. We are successfully executing our near-term plan, and remain confident in our long-term growth opportunities."

Conference Call Information for Today, July 24, 2012

Annie's will host a conference call and live webcast today, July 24, 2012 at 2:00 p.m. PT (5:00 p.m. ET).  The conference call can be accessed by dialing 1-877-941-1427, or 1-480-629-9664 (outside the U.S. and Canada). A live webcast will be available on the Investor Relations page of Annie's corporate website at www.annies.com and via replay beginning approximately two hours after the completion of the call for 90 days. An audio replay of the call will also be available to all interested parties beginning at approximately 5:00 p.m. PT today, July 24, 2012 until 11:59 p.m. PT on Friday, August 3, 2012, by dialing 1-800-406-7325, or 1-303-590-3030 (outside the U.S. and Canada) and entering pass code 4552872#.

1 Adjusted net income and adjusted diluted shares are non-GAAP financial measures in this press release and must be read in context with the disclosure and reconciling tables set forth below. See "Non-GAAP Financial Measures."

About Annie's 
Annie's (NYSE: BNNY) is a natural and organic food company that offers great-tasting products in large packaged food categories. Annie's products are made without artificial flavors and synthetic colors and preservatives regularly used in many conventional packaged foods. Today, Annie's offers over 125 products which are present in over 25,000 retail locations in the United States and Canada. Founded in 1989, Annie's is committed to operating in a socially responsible and environmentally sustainable manner. For more information, visit www.annies.com.

Forward-looking Statements

Certain statements in this press release, including Annie's statements regarding consumption trends remain strong as more consumers seek healthy food options for their families and confidence in our long-term growth opportunities are "forward-looking statements." Further, statements in this press release that are not historical facts, including, without limitation, statements that relate to Annie's industry, business, business strategy, goals and expectations concerning its market position, future operations, margins, profitability, growth and other financial and operating information, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by words like "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek" and similar terms or phrases. The forward-looking statements contained in this press release are based on management's current expectations and are subject to uncertainty and changes in circumstances and are subject to significant risks. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include those disclosed in "Risk Factors" in our Form 10-K for fiscal 2012 filed with the U.S. Securities and Exchange Commission on June 8, 2012.  Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

Non-GAAP Financial Measures

Adjusted net income, EBITDA, adjusted EBITDA and adjusted diluted shares are not financial measures prepared in accordance with U.S. generally accepted accounting principles, or GAAP. As used in this press release: adjusted net income represents net income plus certain non-recurring charge (benefit) as set forth above; EBITDA represents net income plus interest expense, provision for income taxes, and depreciation and amortization; adjusted EBITDA represents EBITDA plus management fees, stock-based compensation and change in fair value of convertible preferred stock warrant liability; and adjusted diluted shares represent weighted average shares of common stock outstanding used in computing diluted earnings per share plus conversion of weighted average convertible preferred stock on an "as-if" converted basis.

We present adjusted net income, EBITDA, adjusted EBITDA and adjusted diluted shares because we believe these measures provide additional metrics to evaluate our operations and, when considered with both our GAAP results and the reconciliation to net income, provide a more complete understanding of our business than could be obtained absent this disclosure. We use adjusted net income, EBITDA and adjusted EBITDA, together with financial measures prepared in accordance with GAAP to assess our operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our core operating performance and to compare our performance to that of our peers and competitors. We also believe that these non-GAAP financial measures are useful to investors in assessing the operating performance of our business without the effect of the non-cash and non-recurring items described above. In addition, we use adjusted diluted shares because immediately prior to the closing of the Company's IPO, all of the shares of convertible preferred stock automatically converted into shares of common stock. Adjusted net income, EBITDA, adjusted EBITDA and adjusted diluted shares should not be considered in isolation or as alternatives to GAAP measures and do not purport to be alternatives to either net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

The following tables provide a reconciliation of adjusted net income, EBITDA and adjusted EBITDA to net income, which is the most directly comparable GAAP financial measure.

 

Annie's, Inc.

Reconciliation of Net Income to Adjusted Net Income

(unaudited)

(in thousands)





Three Months Ended June 30,





2012


2011










Net Income


$ 2,131


$ 1,812



     Change in fair value of convertible preferred stock warrant liability


13


518



     Revaluation of deferred tax assets


-


(332)










Adjusted Net Income


$ 2,144


$ 1,998


    

 

Annie's, Inc.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

(unaudited)

(in thousands)











 Three Months Ended June 30, 





2012


2011










Net Income


$ 2,131


$ 1,812



  Interest expense


40


18



  Provision for income taxes


1,474


971



  Depreciation and amortization


200


152










EBITDA


3,845


2,953



  Management fees


-


150



  Stock-based compensation


216


106



 Change in fair value of convertible preferred stock warrant liability


13


518










Adjusted EBITDA


$ 4,074


$ 3,727


The following table reconciles the number of adjusted diluted shares outstanding to diluted shares outstanding.

Annie's, Inc.


Reconciliation of Weighted Average Shares of Common Stock Outstanding Used in Computing Diluted Net Income Per Share Attributable to Common Stockholders to Weighted Average Shares of Common Stock Used in Computing Adjusted Diluted Net Income Per Share Attributable to Common Stockholders







(unaudited)





 Three Months Ended June 30, 





2012


2011










Weighted average shares of common stock outstanding used in computing
     diluted net income per share attributable to common stockholders


17,600,908


1,236,410



Weighted average convertible preferred shares outstanding on an if

     converted basis


-


15,221,571



Weighted average shares of common stock outstanding used in computing
     adjusted diluted net income per share attributable to common stockholders


17,600,908


16,457,981


 

   

Annie's, Inc.

Consolidated Statements of Operations


(unaudited)


(in thousands, except share and per share amounts)





Three Months Ended June 30,





2012


2011










Net sales


$      34,293


$      28,610



Cost of sales


20,486


17,022










          Gross profit


13,807


11,588



Operating expenses:







     Selling, general and administrative 


10,211


8,303










Income from operations 


3,596


3,285



Interest expense 


(40)


(18)



Other income (expense), net 


49


(484)










Income before provision for income taxes


3,605


2,783



Provision for income taxes


1,474


971










Net income


$        2,131


$        1,812

















Net income attributable to common stockholders


$        2,131


$             54










Net income per share attributable to common stockholders
     —Basic


$          0.13


$          0.12



     —Diluted


$          0.12


$          0.04










Weighted average shares of common stock outstanding used in computing net income per share attributable to common

  stockholders
          —Basic


16,936,007


464,994



          —Diluted


17,600,908


1,236,410

















Adjusted Net Income







Net Income


$        2,131


$        1,812



     Change in fair value of convertible preferred stock warrant liability


13


518



     Revaluation of deferred tax assets


-


(332)










Adjusted Net Income


$        2,144


$        1,998










Adjusted diluted net income per share


$          0.12


$          0.12










Weighted average shares of common stock outstanding used in

  computing diluted net income per share attributable to common

  stockholders


17,600,908


1,236,410



Weighted average convertible preferred shares outstanding on an if

  converted basis


-


15,221,571










Weighted average used in computing adjusted diluted net income
  per share


17,600,908


16,457,981
























Net income


$        2,131


$        1,812



Less:







     Undistributed income attributable to convertible preferred
     stockholders


-


1,758










Net income attributable to common stockholders


$        2,131


$             54


          

Annie's, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)












June 30,


March 31,





2012


2012



ASSETS







CURRENT ASSETS:







     Cash


$   5,102


$         562



     Accounts receivable, net


7,388


11,870



     Inventory


14,596


10,202



     Deferred tax assets


1,995


1,995



     Income tax receivable


2,870


164



     Prepaid expenses and other current assets


1,604


1,252










          Total current assets


33,555


26,045



Property and equipment, net 


4,888


4,298



Goodwill


30,809


30,809



Intangible assets, net 


1,161


1,176



Deferred tax assets, long-term


4,504


4,650



Deferred initial public offering costs


-


5,343



Other non-current assets


103


108










         Total assets 


$ 75,020


$    72,429










LIABILITIES, CONVERTIBLE PREFERRED STOCK AND







     STOCKHOLDERS' EQUITY (DEFICIT)







CURRENT LIABILITIES:







     Accounts payable 


$   1,185


$         861



     Related-party payable 


-


1,305



     Accrued liabilities 


4,304


7,452










          Total current liabilities 


5,489


9,618



     Credit facility


-


12,796



     Convertible preferred stock warrant liability 


-


2,157



     Other non-current liabilities 


956


921










          Total liabilities 


6,445


25,492










Convertible preferred stock


-


81,373










STOCKHOLDERS' EQUITY (DEFICIT):







Preferred stock


-


-



Common stock


17


1



Additional paid-in capital 


105,256


4,392



Accumulated deficit 


(36,698)


(38,829)










Total stockholders' equity (deficit)


68,575


(34,436)










Total liabilities, convertible preferred stock and stockholders' equity (deficit)


$ 75,020


$    72,429


 

    

Annie's, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)












Three Months Ended June 30,





2012


2011



CASH FLOWS FROM OPERATING ACTIVITIES:







     Net Income


$   2,131


$  1,812



Adjustments to reconcile net income to net cash provided by (used in)
     operating activities:







     Depreciation and amortization


200


152



     Stock-based compensation


216


106



     Allowances for trade discounts and other


-


(670)



     Inventory reserves


(112)


-



     Excess tax benefit from stock-based compensation


(4,201)


-



     Accretion of imputed interest on purchase of intangible asset


35


-



     Change in fair value of convertible preferred stock warrant liability


13


518



     Amortization of deferred financing costs


5


8



     Deferred taxes


146


(332)



     Changes in operating assets and liabilities:







          Accounts receivable, net


4,482


5,017



          Inventory


(4,282)


(7,146)



          Income tax receivable


164


-



          Prepaid expenses, other current and non-current assets


(352)


(61)



          Accounts payable


284


(5,611)



          Related-party payable


(1,305)


47



          Accrued expenses and other non-current liabilities


3,526


(515)










          Net cash provided by (used in) operating activities


950


(6,675)










CASH FLOWS FROM INVESTING ACTIVITIES:







     Purchase of property and equipment


(735)


(380)










          Net cash used in investing activities


(735)


(380)










CASH FLOWS FROM FINANCING ACTIVITIES:







     Proceeds from credit facility


735


20,198



     Payments to credit facility


(13,531)


(16,774)



     Proceeds from common shares issued in initial public offering,
          net of issuance costs


11,146


-



     Net repurchase of stock options


-


(602)



     Excess tax benefit from stock-based compensation


4,201


-



     Proceeds from exercises of stock options


1,774


-










          Net cash provided by financing activities


4,325


2,822










NET INCREASE (DECREASE) IN CASH


4,540


(4,233)










CASH—Beginning of period


562


7,333










CASH—End of period


$   5,102


$  3,100










NONCASH INVESTING AND FINANCING ACTIVITIES:







     Purchase of property and equipment funded through

       accounts payable


$        40


$        -



     Conversion of convertible preferred stock into common stock


$ 81,373


$        -


 

CONTACT:  

Erica Abrams
510-558-7595
415-217-5864
ir@annies.com                                   

SOURCE Annie’s, Inc.