Sovos Brands: Reports Second Quarter 2023 Financial Results

Louisville / CO. (sob) Sovos Brands Inc., one of the fastest-growing food companies of scale in the United States, reported financial results for its second quarter ended July 01, 2023. Second Quarter Highlights:

• Net sales of USD 217.6 million increased 10.2 percent year-over-year
• Organic net sales growth of 16.3 percent was driven by 8.9 percent volume and 7.4 percent pricing growth
• Rao’s net sales of USD 154.9 million increased 29.3 percent year-over-year
  • Rao’s sauce dollar consumption grew 31.5 percent year-over-year driven by a 180-basis point increase in household penetration to 13.8 percent and 27.4 percent distribution growth
  • Rao’s franchise continued to expand its presence outside of sauce, with combined dollar consumption for the frozen, soup, and pasta categories up 38.0 percent year-over-year
• Gross margin increased 460-basis points to 32.5 percent; Adjusted gross margin increased 450-basis points to 32.5 percent
• Net income was USD 5.4 million or USD 0.05 per diluted share; adjusted net income was USD 17.4 million or USD 0.17 per diluted share
• Adjusted Ebitda of USD 35.2 million grew 36.9 percent year-over-year
• Marketing and R+D increased a combined 35.6 percent year-over-year, supporting our growth as we seek to capitalize on the whitespace ahead for our brands

«We are pleased to report another quarter of sector-leading, volume-led 16 percent organic net sales growth and 37 percent adjusted Ebitda growth,» said Todd Lachman, President and Chief Executive Officer. «Rao’s broad-based momentum drove our growth in the quarter, benefiting most notably from 31 percent consumption growth in sauce that was driven by continued household penetration gains and distribution growth.»

Campbell Soup Company Merger Announcement

In a separate press release Sovos Brands announced a definitive agreement to be acquired by Campbell Soup Company for USD 23 per share, representing a total enterprise value of approximately USD 2.7 billion. «I am pleased to announce that Sovos Brands will be joining the Campbell family, a leading packaged food business aligned with our vision of bringing consumers delicious food for joyful living,» commented Lachman. «When we started Sovos Brands, our ambition was to create a one-of-a-kind, high-growth food company – I am incredibly proud of what we have built, and the value created for all stakeholders. I want to thank the incredibly talented and passionate team at Sovos Brands, which has been instrumental in building one of the fastest growing food companies of scale in the industry today.»