Sovos sales up, Birch Benders deal boosts expenses

LOUISVILLE — Sovos Brands Inc. (Nasdaq: SOVO), a formerly California-based food-brand company that last year planted its headquarters flag in Louisville, saw its sales jump double-digits in the second quarter, but expenses related to its acquisition of Denver waffle mix maker Birch Benders LLC also pushed its net loss upward. 

Net sales were $197.4 million, a 22.0% increase over the same period last year.

That was enough to excite Wall Street, which bid up the price of Sovos’ stock more than 7% in early trading Thursday. 

Sovos’ net loss was $30.3 million or 30 cents per diluted share. That’s up from a loss of $1.3 million in the second quarter of 2021.

“Total operating expenses of $88.7 million increased by $45.0 million or 103.1% versus the prior year period, largely reflecting the non-cash impairment of goodwill related to the Birch Benders acquisition,” Sovos’ quarterly report said. 

“I am excited to announce another quarter of double-digit, top line growth, which was driven by strong advances in both volume and pricing,” Sovos CEO Todd Lachman said in a prepared statement. “Given robust first half organic growth of 16%, combined with confidence in our second half plans, we are raising our full year sales guidance. Growth remains our top priority, and we will support our brands with investments behind sales, marketing, innovation, supply chain and other necessary capabilities to drive future share gains for our ‘one-of-a-kind’ brands. We continue to implement pricing and productivity initiatives to counter inflationary pressures, and are confident that we can improve our margins and continue to create value over the long-term for our stakeholders.”

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