Inventure Foods, Inc. announced on September 12 that it has reached a definitive agreement to sell its frozen food business to Oregon Potato Company (OPC) for $50 million in cash. The transaction, which is expected to close this month, includes the Rader Farms and Willamette Valley Fruit Company brands as well as certain assets, rights and properties related to its frozen fruits, vegetable blends, beverages, and frozen desserts operations.
“This is a significant second step under our strategic and financial business review. We intend to use the proceeds from the transaction to further reduce our debt and improve our overall financial flexibility in order to allow us to focus on continuing to grow our leading snack business as we finalize our strategic review,” commented Terry McDaniel, chief executive officer of Phoenix, Arizona-headquartered Inventure Foods.
Proceeds from the transaction, net of transaction costs, will be used to repay in full the indebtedness under the company’s revolving credit facility with Wells Fargo Bank, National Association and the other lenders, as well as to pay down indebtedness under its term loan facility with BSP Agency, LLC and the other lenders, as required under such credit facilities.
Frank Tiegs, president of Oregon Potato Company, remarked: “We look forward to completing the acquisition of the Rader Farms and Willamette Valley Fruit brands and believe they will be a strong complement to our existing potato, vegetable and fruit business.”
OPC is a grower and processor of potatoes, vegetables and fruits, operating plants in Washington, Oregon and Idaho. Each facility is supported by locally owned farms. As a private grower, the Boardman, Oregon-headquartered company has complete operational control from farming through processing.
About Inventure Foods
With manufacturing facilities in Arizona, Indiana, Washington, and Oregon, Inventure Foods is a marketer of specialty food products sold in “better-for-you” and “indulgent categories” under a variety of company owned and licensed brand names, including Boulder Canyon Foods, Jamba, TGI Fridays, Nathan’s Famous, Vidalia Brands, Poore Brothers, Tato Skins and Willamette Valley Fruit Company and Rader Farms.
Among products in the Rader Farms range are raspberries, blueberries, strawberries, dark sweet cherries, and mixed fruit and vegetable smoothie component packs. Rader’s processing plant in Lynden, Washington, is situated near the Canadian border in Whatcom County, where approximately 75% of the USA’s raspberries are processed.
Earlier this year Inventure Foods sold its Fresh Frozen Foods unit to The Pictsweet Company, a family-owned grower and processor of frozen vegetables, for approximately $23.7 million. With operations in Jefferson and Thomasville, Georgia, it ships branded frozen vegetables, fruits and biscuits to retail markets, foodservice distributors and industrial customers throughout North America.
Consolidated net revenues for Inventure Foods decreased 12.2% to $101.0 million for the six months ended July 1, 2017, compared to $115.0 million in the prior year period. Snack segment net revenues increased 8.5% and frozen products segment net revenues decreased 29.5%.
Frozen Results Disappoint
Net revenues for the frozen products segment during the second quarter of 2017 decreased 31.7% to $20.7 million, compared to $30.3 million in the prior year period, primarily as a result of reduced private label sales distribution and a frozen berry market price decrease, as well as a reduction in Jamba at-home smoothie sales. Q2 gross profit was $3.6 million, compared to $4.3 million in the prior year period, and as a percentage of net revenues increased 330 basis points to 17.4% compared to 14.1%. The significant improvement in the frozen segment gross margin was driven by fewer purchases of higher priced frozen berries in addition to reduced 2016 harvest fruit prices.
Net revenues of $44.2 million for the six months ended July 1 were $44.2 million, down from $62.6 million in the prior year period. Gross profit for the first half of 2017 was $8.3 million compared to $9.1 million in the prior year period, and as a percentage of net revenues increased 440 basis points to 18.9% compared to 14.5% in the prior year period. The significant improvement in the frozen products segment gross margin was driven by a fewer purchases of higher priced frozen berries in addition to reduced 2016 harvest fruit prices.
