For a food company reporting a second quarter loss of $3.3 million and no earnings on net sales of $117.7 million (down 10.4% from the equivalent period in 2014), shares of Boulder Brands Inc. stock fared pretty well on August 6. The closing quote on the Nasdaq exchange in New York was $8.82, up $1.32 or 17.6% from previous day trading. During the past year the stock has declined 34% in value.
The spike could have had something to do with an announcement suggesting the company may be up for sale. A press release issued on Thursday morning, headlined “Bounder Brands to Explore Strategic Alternatives to Enhance Shareholder Value,” revealed that a financial advisor has been engaged to review “received inquiries from a number of qualified parties that expressed interest in discussing a potential transaction…”
The Boulder, Colorado, USA-headquartered company’s independent directors will oversee the review so that management can continue to fully concentrate on ongoing initiatives, increase operational efficiencies, improve financial performance and bolster the position of its brands and business. The “health and wellness” platform of brands includes EVOL frozen burritos, entrees, snacks and breakfast items; Glutino and Udi’s Gluten Free products; Smart Balance heart-healthy, dairy-free spreads; the Earth Balance range of plant-based offerings; and the Level Life Foods label for diabetes-friendly products.
Meanwhile, the board of directors has decided to suspend its search for a permanent chief executive officer while it undertakes this process.
Second quarter results were broken out as follows:
Natural Segment
- Net sales for the Natural segment decreased 1.9% to $78.6 million, compared to $80.1 million in the equivalent period during 2014. The company’s gluten-free brands – Udi’s and Glutino – reported net sales growth of 4.6% and a decline of 18.9%, respectively. EVOL’s net sales increased 7.9% as the line lapped strong distribution gains in the like period last year.
Brand profit for the Natural segment decreased 23.9% to $9.6 million in Q2 from $12.6 million in last year’s second quarter. This was primarily due to lower gross margin, which was the result of higher overall trade rates and a negative mix impact from the segment’s lower margin frozen category. In addition, moderate short-term yield losses were experienced in the bread line and lingering issues in its frozen storage facility had an impact.
Balance Segment
- Net sales for the Balance segment decreased 23.7% to $39.1 million, compared to $51.3 million in the second quarter of 2014. Excluding an adjustment for certain reserves for Level Life Foods, net sales for the Balance segment decreased 20.5% to $40.8. Earth Balance reported a net sales increase of 9.8% in the second quarter of 2015.
Brand profit for the Balance segment, excluding the Level Life Foods adjustment, decreased 25.2% to $13.8 million in the second quarter, primarily impacted by the lower gross margin.
The company’s operating loss was $6.9 million in Q2, compared to operating income of $8.6 million in the second quarter of 2014.
“Our second quarter results demonstrate the need to invest more effectively in marketing and innovation to improve trends. Our organization is committed to being more balanced in customer and consumer marketing, more efficient in managing our brands and products, and more effective in our overall cost structure,” said Jim Leighton, interim chief executive and chief operating officer.
Leighton assumed the top position after former CEO Steve Hughes resigned in June following a shape drop in the company’s stock value and an announcement that second quarter sales results would decline by 5% to 7%. Since his arrival Boulder Brands’ salaried workforce has been cut by 15% and its organization has been restructured to “better align functional teams, improve operational effectiveness and deliver improved and consistent results.”
