By Alan Hatfield
Sovos Brands, Inc. (Nasdaq: SOVO) yesterday reported double-digit top line growth amid a challenging inflationary environment for a number of related costs.
Net sales in the first quarter rose 10.9% from a year earlier to $209.9 million, with the Rao’s brand leading the charge at 20% growth and positive contributions from the Michael Angelo’s and noosa brands.
Incremental raw material, packaging, logistics, and labor costs saw gross profit decrease to $53.9 million, or 12.7% lower versus the prior year, including higher slotting to support acceptance of the new line of noosa frozen yogurt gelato products. The decrease was partially offset by productivity initiatives rolled out by management.
Adjusted net income came in at $13.8 million, a decrease of 33.7% versus the prior year, spurred by aforementioned inflationary pressures, higher logistical costs, and greater slotting. Adjusted diluted earnings per share followed suit, coming in at $0.14 per share compared to $0.27 per share in the same period last year, notably impacted by a 31.7% increase year-on-year increase in the number of diluted shares outstanding as a result of the company’s September 2021 IPO.
“Against a robust year-ago sales comparison of over 40% net sales growth and unprecedented supply chain headwinds, I am pleased to announce another quarter of double-digit, top line growth, driven by continued, volume-led strength in our core businesses,” Todd Lachman, President and Chief Executive Officer, said in a statement. “With growth our top priority, we remain focused on growing household penetration via expanding distribution and awareness.”