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Mixed 3Q Results And Guidance
The company reported non-GAAP adjusted earnings per share of $0.12, flat with the year-ago period, even as net sales surged up 48.1 percent to $68 million. The company clarified that the Tyrrells international portfolio, which it acquired on September 2, 2016, added $8.6 million to the top line. The company missed on the bottom line but bettered Street expectations on the top line.
Looking forward, the company lowered its adjusted EBITDA guidance but upwardly revised its revenue guidance.
The company clarified in its earnings call that the sub-par EBITDA expectations reflected lower-than-expected volumes related to missing retailer reset windows for innovation and other products in the second half of the year.
Sell-Side Analysts Trim Ratings
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With the mixed earnings and guidance, sell-side analysts were quick to pounce on the stock. Credit Suisse and Oppenheimer were among the Wall Street firms that lowered their ratings on the shares of the company, with the former citing execution missteps and the latter weaker-than-envisioned earnings potential. Even ahead of the earnings, Wall Street's views were muted.
Execution Missteps Credit Suisse Highlighted
- Sales, excluding Tyrrells, missed estimates and the sales beat was facilitated by the early closing of Tyrrells acquisition.
- Gross margin drop due to weak volume, higher trade promotion and the company's inability to realize efficiencies with co-packers.
- Management's shortsightedness in overlooking the sales force missing the merchandising reset window at retail customers to slot in new products like microwaveable Skinny popcorn and Skinny popcorn cakes.
- Additional spending on trade and consumer marketing in response to aggressive competitive actions.
Accordingly, Credit Suisse lowered its rating on Amplify Snack to Neutral from Outperform and lowered its price target to $13 from $18, as it went about reducing revenue and EBITDA estimate for 2018.
Oppenheimer Put Off By Weak Earnings Potential
Oppenheimer believes the earnings miss was due to execution issues. Given the 3Q miss and more significant execution issues, the firm forecasts a more muted earnings trajectory than it modeled last week.
Although the firm sees significant potential in the company's brands, it is not too sanguine about the shares moving meaningfully higher in the near term, given the current backdrop and a cloudier earnings outlook next year. Premised on the updated views on the earnings power, the firm reduced its estimates for the company.
As such, Oppenheimer downgraded shares of Amplify Snack to Perform from Outperform, while it removed its $17 price target.
Performance In The Space
- Amplify Snack closed Tuesday down 24.29 percent at $10.19, but was up 1.08 percent to $10.30 in Wednesday's pre-market session.
- Kellogg Company (NYSE: K) shares closed up 1.2 percent on Tuesday at $73.40. Prior to Wednesday's open, the stock was down 1.19 percent at 1.19.
- PepsiCo, Inc. (NYSE: PEP) closed Tuesday trading up 0.45 percent at $101.85. At last check in Wednesday's pre-market, shares were up 0.04 percent at $101.89.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.