Sovos Brands Reports First Quarter 2022 Financial Results
Sovos Brands, Inc. (SOVO) reported a 10.9% increase in net sales for Q1 2022, reaching $209.9 million, driven by strong volume growth in core product categories like sauce and yogurt. Despite this sales growth, net income fell to $4.1 million from $11.7 million a year prior, marking a 65.4% decline. Adjusted EBITDA decreased by 22.3% to $27.6 million, highlighting pressures from inflation and supply chain issues. Sovos maintained its full-year net sales guidance of $800-$815 million and adjusted EBITDA guidance of $116-$122 million.
- Net sales increased by 10.9% to $209.9 million.
- Strong growth in Rao's sauce with nearly 30% increase in dollar and unit consumption.
- Household penetration for Rao's reached 14.0%, up 290 basis points.
- Cash from operating activities improved to $11.2 million from $2.3 million year-over-year.
- Net income dropped by 65.4% to $4.1 million.
- Adjusted EBITDA decreased by 22.3%, leading to a margin decline of 560 basis points.
- Gross profit fell to $53.9 million, a decrease of 12.7% from the prior year.
- Increased total debt to $481.7 million, resulting in a net debt to adjusted EBITDA ratio of 3.8x.
First Quarter Net Sales Increase
Net Income of
Adjusted EBITDA of
LOUISVILLE, Colo., May 04, 2022 (GLOBE NEWSWIRE) -- Sovos Brands, Inc. (“Sovos Brands” or the “Company”) (Nasdaq: SOVO), the fastest-growing food company of scale in the United States, today reported financial results for its first quarter ended March 26, 2022.
Highlights:
- Net sales were
$209.9 million , a10.9% increase over the prior year period, driven by continued strength in volume growth across core categories – sauce, yogurt and frozen - Total Rao’s household penetration grew over 290 basis points versus prior year to
14.0% as sauce and frozen entrees continue to realize substantial distribution growth1; - Rao’s sauce increased dollar and unit consumption by nearly
30% , continuing to meaningfully outpace the category2 - noosa and Michael Angelo’s delivered solid, mid-single digit dollar consumption growth, supported by superior velocity growth relative to respective categories2
- Net income was
$4.1 million or$0.04 per diluted share; adjusted net income3 was$13.8 million or$0.14 per diluted share - Adjusted EBITDA3 was
$27.6 million , a$7.9 million or22.3% decrease over the prior year period; Adjusted EBITDA margin3 was13.2% , a 560-basis point reduction versus the prior year period, as double-digit growth in volume was offset by intensifying inflationary pressures, increased logistical constraints, higher slotting related to strong noosa frozen yoghurt gelato acceptance, and public company costs - Maintaining full year 2022 net sales and adjusted EBITDA guidance ranges of
$800 -$815 million and$116 -$122 million , respectively
“Against a robust year-ago sales comparison of over
Mr. Lachman continued, “As inflationary pressures and supply chain disruptions intensified throughout the quarter, market dynamics dictate further action. In order to help offset these inflationary pressures we have announced further pricing actions, while continuing to execute against our robust pipeline of productivity initiatives. Despite the volatile operating environment, we remain confident in our ability to deliver on our financial targets in 2022 and stakeholder value-creation over the long-term.”
| 13 Weeks Ended | ||||||||
| March 26, 2022 | March 27, 2021 | Change | ||||||
| Net sales ($ millions) | $ | 209.9 | $ | 189.4 | 10.9 | % | ||
| Net income ($ millions) | $ | 4.1 | $ | 11.7 | (65.4 | )% | ||
| Adjusted net income | $ | 13.8 | $ | 20.8 | (33.7 | )% | ||
| Diluted EPS | $ | 0.04 | $ | 0.15 | (73.7 | )% | ||
| Adjusted diluted EPS3 | $ | 0.14 | $ | 0.27 | (48.2 | )% | ||
| Adjusted EBITDA3($ millions) | $ | 27.6 | $ | 35.6 | (22.3 | )% | ||
| Adjusted EBITDA margin3(%) | 13.2 | % | 18.8 | % | (560 | ) bps | ||
First Quarter 2022 Results
Net sales of
Gross profit of
Total operating expenses of
Operating income was
Net income was
Adjusted EBITDA3 of
Balance Sheet and Cash Flow Highlights
As of March 26, 2022, the end of the first quarter, cash and cash equivalents were
Cash from operating activities for the first quarter was
Fiscal 2022 Outlook
The Company is maintaining fiscal year guidance, inclusive of a 53rd week, as follows:
| Net sales | ||
| Adjusted EBITDA |
The Company’s outlook assumes no significant disruption from the COVID-19 pandemic and that inflationary pressures will be partially absorbed by pricing actions and productivity improvements.
Sovos Brands cannot provide a reconciliation between its forecasted adjusted EBITDA and a forecasted net income without unreasonable effort due to the inherent difficulty of forecasting and providing reliable estimates for certain items. These items may reside outside the Company’s control and vary greatly between periods and could significantly impact future financial results. For more information regarding the use of non-GAAP measures, please see discussion provided under Non-GAAP Financial Information in this press release and the Company’s public filings.
Footnotes:
(1) Source: Household penetration refers to data reported by IRI All Outlet for the 52-week period ended March 27, 2022 and is compared to the 52-week period ended March 28, 2021.
(2) Source: Market performance refers to dollar sales and velocity growth rates as reported by IRI MULO in the 13-week period ended March 27, 2022.
(3) EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expense, adjusted net income, and adjusted diluted EPS are non-GAAP measures. For additional information, including a reconciliation of adjusted results to the most directly comparable measures presented in accordance with GAAP, see the Non-GAAP Financial Information and Reconciliation of Non-GAAP Financial Measures sections of this release.
Earnings Conference Call Details
The Sovos management team will host a conference call and webcast at 4:30 p.m. ET today to discuss the results. The webcast will be available on the Investor Relations section of the Company’s website at ir.sovosbrands.com. Investors may also dial in to the live call using 855-493-3518 and entering the access code 5555697. The webcast will be archived and available for replay.
About Sovos Brands, Inc.
Sovos Brands, Inc. is a consumer-packaged food company focused on acquiring and building disruptive growth brands that bring today’s consumers great tasting food that fits the way they live. The Company’s product offerings include a variety of pasta sauces, dry pasta, soups, frozen entrées, yogurts, pancake and waffle mixes, other baking mixes, and frozen waffles, all of which are sold in the United States under the brand names Rao’s, Michael Angelo’s, noosa, and Birch Benders. All Sovos Brands’ products are built with authenticity at their core, providing consumers with one-of-a-kind food experiences that are genuine, delicious, and unforgettable. The Company is headquartered in Louisville, Colorado. For more information on Sovos Brands and its products, please visit www.sovosbrands.com.
Contacts
Investors:
Joshua Levine
IR@sovosbrands.com
Media:
Lauren Armstrong
media@sovosbrands.com
Non-GAAP Financial Information
In addition to the Company’s results which are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company believes the following non-GAAP measures presented in this press release and/or discussed on the related teleconference call are useful in evaluating its operating performance: EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, adjusted net income, diluted earnings per share from adjusted net income, adjusted operating expenses, adjusted income tax expense and adjusted effective tax rate. We define EBITDA as net income before net interest expense, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for impairment of goodwill and intangible assets, transaction and integration costs, IPO readiness, non-cash equity-based compensation, supply chain optimization and non-recurring costs. EBITDA margin is determined by calculating the percentage EBITDA is of net sales. Adjusted EBITDA margin is determined by calculating the percentage Adjusted EBITDA is of net sales. Adjusted net income, adjusted operating expenses, adjusted income tax (expense) benefit and adjusted effective tax rate consists of net income, total operating expenses, reported income tax expense and reported effective tax rate before impairment of goodwill and intangible assets, transaction and integration costs, IPO readiness, non-cash equity-based compensation, supply chain optimization, non-recurring costs, acquisition amortization and tax-related adjustments that we do not consider in our evaluation of our ongoing operating performance from period to period as discussed further below. Diluted earnings per share from adjusted net income is determined by dividing adjusted net income by the weighted average diluted shares outstanding. Non-GAAP financial measures are included in this release because they are key metrics used by management to assess our operating performance. Management believes that non-GAAP financial measures are helpful in highlighting performance trends because non-GAAP financial measures eliminate non-recurring and unusual items and non-cash expenses, which we do not consider indicative of ongoing operational performance. Our presentation of non-GAAP financial measures should not be construed to imply that our future results will be unaffected by these items. By providing these non-GAAP financial measures, management believes we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.
EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, adjusted net income, diluted earnings per share from adjusted net income, adjusted operating expenses, adjusted income tax expense and adjusted effective tax rate are not defined under GAAP. Our use of the terms EBITDA, Adjusted EBITDA, EBITDA margin, Adjusted EBITDA margin, adjusted net income and diluted earnings per share from adjusted net income, adjusted operating expenses, adjusted income tax expense and adjusted effective tax rate may not be comparable to similarly titled measures of other companies in our industry and are not measures of performance calculated in accordance with GAAP. Our presentation of non-GAAP financial measures is intended as supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. Non-GAAP financial measures should not be considered as alternatives to operating income, net income, earnings per share, net sales or any other performance measures derived in accordance with GAAP, or as measures of operating cash flows or liquidity.
Forward-Looking Statements
This press release and the earnings call referencing this press release contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding Sovos Brands’ market opportunity, anticipated growth, and future financial performance, including management’s outlook for the fiscal year ending December 31, 2022 and longer-term. These forward-looking statements are based on Sovos Brands’ current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause Sovos Brands’ actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement.
The risks and uncertainties referred to above include inflation, including our vulnerability to decreases in the supply of and increases in the price of raw materials, packaging and fuel, and labor, manufacturing, distribution and other costs, and our inability to offset increasing costs through cost savings initiatives or pricing; supply disruptions, including increased costs and potential adverse impacts on distribution and consumption; geopolitical tensions, including relating to Ukraine; competition in the packaged food industry and our product categories; our inability to accurately forecast pricing elasticities and the resulting impact on volume growth and/or distribution gains; the COVID-19 pandemic and associated effects; our inability to maintain our workforce; our inability to identify, consummate or integrate new acquisitions or realize the projected benefits of acquisitions; our inability to effectively manage our growth; our inability to successfully introduce new products or failure of recently launched products to meet expectations or remain on-shelf; our inability to expand household penetration and successfully market our products; erosion of the reputation of one or more of our brands; issues with the major retailers, wholesalers, distributors and mass merchants on which we rely, including if they give higher priority to other brands or products, perform poorly or declare bankruptcy; our vulnerability to the impact of severe weather conditions, natural disasters and other natural events on our manufacturing facilities, co-packers or raw material suppliers; failure by us or third-party co-packers or suppliers of raw materials to comply with food safety, environmental or other laws or regulations, or new laws or regulations; our dependence on third-party distributors and third-party co-packers, including one co-packer for the substantial majority of our Rao’s Homemade sauce products; failure to protect, or litigation involving, our tradenames or trademarks and other rights; our level of indebtedness under our First Lien Credit Agreement, which as of March 26, 2022 was
These risks and uncertainties are more fully described in Sovos Brands’ filings with the Securities and Exchange Commission (the “SEC”), including in the section entitled “Risk Factors” in its Annual Report on Form 10-K for the fiscal year ended December 25, 2021, and other filings and reports that Sovos Brands may file from time to time with the SEC. Moreover, Sovos Brands operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for management to predict all risks, nor can Sovos Brands assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements Sovos Brands may make. In light of these risks, uncertainties and assumptions, Sovos Brands cannot guarantee that future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Forward-looking statements represent managements’ beliefs and assumptions only as of the date of this press release. Sovos Brands disclaims any obligation to update forward-looking statements except as required by law.
SOVOS BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except for share and per share data)
(Unaudited)
| 13 Weeks Ended | ||||||||
| March 26, 2022 | March 27, 2021 | |||||||
| Net sales | $ | 209,933 | $ | 189,371 | ||||
| Cost of sales | 156,025 | 127,629 | ||||||
| Gross profit | 53,908 | 61,742 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 33,915 | 33,433 | ||||||
| Depreciation and amortization | 7,203 | 7,190 | ||||||
| Total operating expenses | 41,118 | 40,623 | ||||||
| Operating income | 12,790 | 21,119 | ||||||
| Interest expense | 6,022 | 5,367 | ||||||
| Income before income taxes | 6,768 | 15,752 | ||||||
| Income tax expense | (2,711 | ) | (4,040 | ) | ||||
| Net income | $ | 4,057 | $ | 11,712 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.04 | $ | 0.16 | ||||
| Diluted | $ | 0.04 | $ | 0.15 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 100,892,547 | 74,058,447 | ||||||
| Diluted | 101,262,103 | 76,867,992 | ||||||
SOVOS BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except for par value and share data)
(Unaudited)
| March 26, 2022 | December 25, 2021 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 70,149 | $ | 66,154 | ||||
| Accounts receivable, net | 82,802 | 70,729 | ||||||
| Inventories | 49,856 | 51,615 | ||||||
| Prepaid expenses and other current assets | 7,339 | 6,685 | ||||||
| Total current assets | 210,146 | 195,183 | ||||||
| Property and equipment, net | 67,534 | 62,671 | ||||||
| Operating lease right-of-use assets | 15,068 | 15,672 | ||||||
| Goodwill | 437,451 | 437,451 | ||||||
| Intangible assets, net | 457,845 | 464,655 | ||||||
| Other long-term assets | 2,243 | 2,299 | ||||||
| TOTAL ASSETS | $ | 1,190,287 | $ | 1,177,931 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 42,577 | $ | 37,254 | ||||
| Accrued expenses | 50,831 | 51,757 | ||||||
| Current portion of long-term debt | 93 | 98 | ||||||
| Current portion of long-term lease liabilities | 3,285 | 3,216 | ||||||
| Total current liabilities | 96,786 | 92,325 | ||||||
| Long-term debt, net of debt issuance costs | 481,652 | 481,420 | ||||||
| Deferred income taxes | 77,282 | 76,976 | ||||||
| Long-term operating lease liabilities | 16,505 | 17,302 | ||||||
| Other long-term liabilities | 431 | 421 | ||||||
| TOTAL LIABILITIES | 672,656 | 668,444 | ||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred Stock | — | — | ||||||
| Common Stock | 101 | 101 | ||||||
| Stockholder's note receivable | — | — | ||||||
| Additional paid-in-capital | 563,313 | 559,226 | ||||||
| Accumulated deficit | (45,783 | ) | (49,840 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 517,631 | 509,487 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,190,287 | $ | 1,177,931 | ||||
SOVOS BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
(Unaudited)
| 13 Weeks Ended | ||||||||
| March 26, 2022 | March 27, 2021 | |||||||
| Operating activities | ||||||||
| Net income | $ | 4,057 | $ | 11,712 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 9,555 | 9,379 | ||||||
| Equity-based compensation expense | 4,087 | 561 | ||||||
| Deferred income taxes | 306 | 2,764 | ||||||
| Amortization of debt issuance costs | 316 | 575 | ||||||
| Non-cash operating lease expense | 603 | 536 | ||||||
| Provision for excess and obsolete inventory | 484 | 70 | ||||||
| Loss on disposal of property and equipment | — | 54 | ||||||
| Other | (6 | ) | 122 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (12,065 | ) | (23,292 | ) | ||||
| Inventories | 1,275 | (9,394 | ) | |||||
| Prepaid expenses and other current assets | (1,043 | ) | (251 | ) | ||||
| Other long-term assets | (10 | ) | 396 | |||||
| Accounts payable | 4,896 | 7,193 | ||||||
| Accrued expenses | (538 | ) | 2,534 | |||||
| Other long-term liabilities | 10 | 4 | ||||||
| Operating lease liabilities | (728 | ) | (632 | ) | ||||
| Net cash provided by operating activities | 11,199 | 2,331 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (7,180 | ) | (1,367 | ) | ||||
| Net cash used in investing activities | (7,180 | ) | (1,367 | ) | ||||
| Financing activities | ||||||||
| Repayments of capital lease obligations | (24 | ) | (19 | ) | ||||
| Proceeds from stockholder's note receivable | — | 6,000 | ||||||
| Net cash provided by (used in) financing activities | (24 | ) | 5,981 | |||||
| Cash and cash equivalents | ||||||||
| Net increase in cash and cash equivalents | 3,995 | 6,945 | ||||||
| Cash and cash equivalents at beginning of period | 66,154 | 37,026 | ||||||
| Cash and cash equivalents at end of period | $ | 70,149 | $ | 43,971 | ||||
SOVOS BRANDS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in thousands)
(Unaudited)
| 13 Weeks Ended | ||||||||
| (In thousands) | March 26, 2022 | March 27, 2021 | ||||||
| Net income | $ | 4,057 | $ | 11,712 | ||||
| Interest | 6,022 | 5,367 | ||||||
| Income tax expense | (2,711 | ) | (4,040 | ) | ||||
| Depreciation and amortization | 9,555 | 9,379 | ||||||
| EBITDA | 22,345 | 30,498 | ||||||
| Transaction and integration costs(1) | — | 3,170 | ||||||
| Initial public offering readiness(2) | 220 | 1,145 | ||||||
| Non-cash equity-based compensation(3) | 4,087 | 561 | ||||||
| Supply chain optimization(4) | 592 | — | ||||||
| Non-recurring costs(5) | 377 | 185 | ||||||
| Adjusted EBITDA | $ | 27,621 | $ | 35,559 | ||||
| EBITDA margin | 10.6 | % | 16.1 | % | ||||
| Adjusted EBITDA margin | 13.2 | % | 18.8 | % | ||||
| (1) Consists of transaction costs and certain integration costs associated with the Birch Benders Acquisition as well as costs associated with incomplete potential acquisitions and substantial one-time costs related to a large, uncompleted transaction. There are no costs for the 13 weeks ended March 26, 2022. For the 13 weeks ended March 27, 2021, these costs are included in total operating expenses. (2) Consists of costs associated with preparing for an IPO and other professional fees associated with building the organizational infrastructure to support a public company environment. For all periods presented, these costs are included in total operating expenses. (3) Consists of non-cash equity-based compensation expense associated with the grant of equity-based compensation provided to officers, directors and employees. For all periods presented, these costs are included in total operating expenses. (4) Consists of write-downs associated with packaging optimization and a strategic initiative to move co-packaging production from an international supplier to a domestic supplier. For the 13 weeks ended March 26, 2022, all costs are included in cost of sales. There are no costs for the 13 weeks ended March 27, 2021. (5) Consists of costs related to ERP conversion costs related to integrating acquisitions and professional fees related to organizational optimization. For all periods presented, these costs are included in total operating expenses. |
SOVOS BRANDS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(amounts in thousands)
(Unaudited)
| 13 Weeks Ended | ||||||||
| (In thousands) | March 26, 2022 | March 27, 2021 | ||||||
| Selling, general and administrative | $ | 33,915 | $ | 33,433 | ||||
| Depreciation and amortization | 7,203 | 7,190 | ||||||
| Total operating expenses | 41,118 | 40,623 | ||||||
| Transaction and integration costs(1) | — | (3,170 | ) | |||||
| Initial public offering readiness(2) | (220 | ) | (1,145 | ) | ||||
| Non-cash equity-based compensation(3) | (4,087 | ) | (561 | ) | ||||
| Non-recurring costs(4) | (377 | ) | (185 | ) | ||||
| Total adjusted operating expenses | $ | 36,434 | $ | 35,562 | ||||
| (1) Consists of transaction costs and certain integration costs associated with the Birch Benders Acquisition as well as costs associated with incomplete potential acquisitions and substantial one-time costs related to a large, uncompleted transaction. (2) Consists of costs associated with preparing for an IPO and other professional fees associated with building the organizational infrastructure to support a public company environment. (3) Consists of non-cash equity-based compensation expense associated with the grant of equity-based compensation provided to officers, directors and employees. (4) Consists of costs related to ERP conversion costs related to integrating acquisitions and professional fees related to organizational optimization. |
SOVOS BRANDS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in thousands, except share and per share data)
(Unaudited)
| 13 Weeks Ended | ||||||||
| (In thousands) | March 26, 2022 | March 27, 2021 | ||||||
| Net income | $ | 4,057 | $ | 11,712 | ||||
| Transaction and integration costs(1) | - | 3,170 | ||||||
| Initial public offering readiness(2) | 220 | 1,145 | ||||||
| Non-cash equity-based compensation(3) | 4,087 | 561 | ||||||
| Supply chain optimization(4) | 592 | — | ||||||
| Non-recurring costs(5) | 377 | 185 | ||||||
| Acquisition amortization(6) | 6,809 | 6,810 | ||||||
| Tax effect of adjustments(7) | (2,360 | ) | (2,790 | ) | ||||
| Adjusted net income | $ | 13,782 | $ | 20,793 | ||||
| Earnings per share: | ||||||||
| Diluted | $ | 0.04 | $ | 0.15 | ||||
| Adjusted diluted | $ | 0.14 | $ | 0.27 | ||||
| Weighted average shares outstanding: | ||||||||
| Diluted for net income | 101,262,103 | 76,867,992 | ||||||
| Diluted for adjusted net income | 101,262,103 | 76,867,992 | ||||||
| (1) Consists of transaction costs and certain integration costs associated with the Birch Benders Acquisition as well as costs associated with incomplete potential acquisitions and substantial one-time costs related to a large, uncompleted transaction. There are no costs for the 13 weeks ended March 26, 2022. For the 13 weeks ended March 27, 2021, these costs are included in total operating expenses. (2) Consists of costs associated with preparing for an IPO and other professional fees associated with building the organizational infrastructure to support a public company environment. For all periods presented, these costs are included in total operating expenses. (3) Consists of non-cash equity-based compensation expense associated with the grant of equity-based compensation provided to officers, directors and employees. For all periods presented, these costs are included in total operating expenses. (4) Consists of write-downs associated with packaging optimization and a strategic initiative to move co-packaging production from an international supplier to a domestic supplier. For the 13 weeks ended March 26, 2022, all costs are included in cost of sales. There are no costs for the 13 weeks ended March 27, 2021. (5) Consists of costs related to ERP conversion costs related to integrating acquisitions and professional fees related to organizational optimization. For all periods presented, these costs are included in total operating expenses. (6) Amortization costs associated with acquired trade names and customer lists. (7) Tax effect was calculated using the Company’s adjusted annual effective tax rate. |
SOVOS BRANDS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(dollar amounts in thousands)
(Unaudited)
| 13 Weeks Ended | ||||||||
| (In thousands) | March 26, 2022 | March 27, 2021 | ||||||
| Reported income tax expense | $ | (2,711 | ) | $ | (4,040 | ) | ||
| Transaction and integration costs(1) | (416 | ) | (779 | ) | ||||
| Initial public offering readiness(2) | (349 | ) | (284 | ) | ||||
| Non-recurring costs(3) | — | (46 | ) | |||||
| Acquisition amortization(4) | (1,595 | ) | (1,681 | ) | ||||
| Adjusted income tax expense | $ | (5,071 | ) | $ | (6,830 | ) | ||
| Reported effective tax rate | 40.0 | % | 25.7 | % | ||||
| Transaction and integration costs(1) | (2.3 | ) | (0.3 | ) | ||||
| Initial public offering readiness(2) | (1.9 | ) | (0.1 | ) | ||||
| Non-recurring costs(3) | — | — | ||||||
| Acquisition amortization(4) | (8.9 | ) | (0.6 | ) | ||||
| Adjusted effective tax rate | 26.9 | % | 24.7 | % | ||||
| (1) Tax effect adjustment of transaction costs and certain integration costs associated with the Birch Benders Acquisition as well as costs associated with incomplete potential acquisitions and substantial one-time costs related to a large, uncompleted transaction. (2) Tax effect adjustment of costs associated with preparing for an IPO and other professional fees associated with building the organizational infrastructure to support a public company environment. (3) Tax effect adjustment of costs related to ERP conversion costs related to integrating acquisitions and professional fees related to organizational optimization. (4) Tax effect adjustment of amortization costs associated with acquired trade names and customer lists. |
FAQ
What were Sovos Brands' Q1 2022 net sales figures?
How did Sovos Brands' net income change in Q1 2022?
What is the adjusted EBITDA for Sovos Brands in Q1 2022?
What is Sovos Brands' guidance for net sales in 2022?
How has inflation affected Sovos Brands' financials?
