Blue Buffalo’s financial results showed growth and tax benefits in the fourth quarter of fiscal year 2017. Blue Buffalo also released their full year results. In FY17, Blue Buffalo’s net sales increased US$124.8 million, or 10.9 percent, to US$1,274.6 million, primarily driven by volume growth.
This may be the last earnings news directly from Blue Buffalo. The pet food company plans to no longer release financial guidance statements after Blue Buffalo’s purchase by General Mills.
Effect of tax reform on Blue Buffalo
The Tax Cuts and Jobs Act of 2017 increased Blue Buffalo’s net income for both the three and twelve months ended December 31, 2017 by US$5.4 million. The tax law change that most affected Blue Buffalo in 2017 was the remeasurement of deferred taxes in connection with the reduction in the corporate statutory income tax rate from 35 percent to 21 percent.
Fourth Quarter of 2017 Compared to Fourth Quarter of 2016
Net sales increased US$41.9 million, or 14.2 percent, to US$337.0 million, driven primarily by volume growth. Net sales of dry foods increased US$25.9 million, or 10.8 percent, to US$265.9 million while net sales of Wet Foods, Treats and Other Products increased US$16.0 million, or 28.9 percent, to US$71.1 million.
Gross profit increased US$19.9 million, or 15.1 percent, to US$151.9 million and gross margin was 45.1 percent, up 40 bps compared with 44.7 percent in the fourth quarter of 2016. The increase in gross margin was driven primarily by favorable product mix and supply chain efficiencies, which were partially offset by higher distribution costs.
Blue Buffalo’s fiscal year 2017 compared to 2016
Net sales of dry foods increased US$79.3 million, or 8.5 percent, to US$1,013.5 million, while net sales of Wet Foods, Treats and Other Products increased US$45.5 million, or 21.1 percent, to US$261.1 million. Gross profit increased US$73.4 million, or 14.2 percent, to US$589.1 million and gross margin was 46.2 percent, up 130 bps compared with 44.9 percent in 2016.
