AdvancePierre Foods gets off to a good start

by Keith Nunes
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AdvancePierre Foods brands and products
 AdvancePierre Foods recorded positive earnings for the second quarter of fiscal 2016.

CINCINNATI — On the heels of its successful initial public offering this past July, AdvancePierre Foods Holdings, Inc. recorded positive earnings for the second quarter of fiscal 2016, ended July 2. Driving the earnings performance was sales growth in the company’s core categories and cost savings from AdvancePierre’s productivity program called the APF Way.

Net income for the quarter was $64,134,000, equal to 97c per share on the common stock, and an improvement when compared against the same period of the year prior when net income totaled $2,258,000, or 3c per share.

Sales for the quarter fell to $370,687,000 from $391,878,000 the previous year.

John Simon, AdvancePierre Foods
John Simons, president and c.e.o. of AdvancePierre

“During the second quarter, our core business segments delivered year-over-year volume growth of 3.2%, generally in line with our expectations, and in many cases, faster than our measurable categories,” said John Simons, president and chief executive officer, during a conference call with financial analysts on Aug. 10.

While the overall business performed well, one area where the company was challenged was in food service, Mr. Simons said. Food service sales volume for the quarter lagged the year prior by approximately 4% due to Philly cheesesteak demand lagging in some instances, delayed delivery of U.S. Department of Agriculture-donated commodity beef raw materials to be used in the production of products for school nutrition programs, and a slowdown in sales at a national chain account.

“ … our business, particularly in the food service segment, possesses a degree of choppiness reflective of seasonality in the schools channel, ebbs and flows in order patterns consequent to pricing actions, and other aspects associated with the restaurant business,” Mr. Simons said. “The good news is that, as we have continued to deploy our pricing strategy and targeted customer investments we anticipate a reversal of these trends later in the second half of this year.

AdvancePierre Foods Philly cheese steak sandwich
Food service sales volume for the quarter lagged due to Philly cheesesteak demand lagging in some instances.

“We expect street volume will see a return to prior levels as our Philly initiatives take hold, especially with what we call our Value Philly, and as our price decreases or pass through to our operators, schools volume will benefit from additional commodity beef trucks being deployed, promising 2016-2017 school year commercial bid results, and new business in chicken. Our national chain account volume will grow from a pipeline delivering more than 10 new customers and 2 million lbs of annualized new business.”

Net income for the first six months of the year was $80,698,000, or $1.22 per share, and an increase compared with the second quarter of the previous year when net income was $12,787,000.

Sales for the first half slipped to $765,182,000 from $818,387,000 the year prior.

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