B&G Foods, Inc. (NYSE:BGS) today announced financial results
for the fourth quarter and full-year 2013.
Highlights (vs. prior year quarter and full year where
applicable):
- Net sales increased 21.8% to $211.5
million for the quarter and 14.4% to $725.0 million for the
year
- Net income increased 96.6% to $18.8
million for the quarter due in part to a loss on extinguishment of
debt experienced in the prior year quarter
- Net income decreased 11.7% to $52.3
million for the year primarily due to 2013 loss on extinguishment
of debt and acquisition related transaction costs of $23.9 million,
net of tax
- Adjusted net income1 increased 21.8% to
$20.7 million for the quarter and 14.3% to $76.3 million for the
year
- Diluted earnings per share increased
94.4% to $0.35 for the quarter and decreased 18.3% to $0.98 for the
year
- Adjusted diluted earnings per share*
increased 21.9% to $0.39 for the quarter and 5.9% to $1.43 for the
year
- Adjusted EBITDA* increased 13.7% to
$50.0 million for the quarter and 8.9% to $184.0 million for the
year
- The Company expects to deliver 2014
adjusted EBITDA of $198.0 million to $203.0 million
David L. Wenner, President and Chief Executive Officer of
B&G Foods, stated, “2013 was an exciting and dynamic year for
our Company. We completed three strategic acquisitions during the
year and once again set Company records in net sales, adjusted net
income, adjusted diluted earnings per share and adjusted EBITDA.
Despite industry wide volume weakness, our base business remained
relatively stable, with net sales declining less than one percent
for the year, while acquisitions brought overall net sales growth
for the year to a 14.4% increase.”
________________________________
* Please see “About Non-GAAP Financial Measures and Items
Affecting Comparability” below for the definition of the terms
adjusted net income, adjusted diluted earnings per share, EBITDA
and adjusted EBITDA, as well as information concerning certain
items affecting comparability and reconciliations of the non-GAAP
terms adjusted net income, adjusted diluted earnings per share,
EBITDA and adjusted EBITDA to the most comparable GAAP financial
measures.
Financial Results for the Fourth Quarter of 2013
Net sales for the fourth quarter of 2013 increased 21.8% to
$211.5 million from $173.7 million for the fourth quarter of 2012.
Net sales of Pirate Brands, which B&G Foods acquired in July
2013, contributed $16.0 million to the overall increase, net sales
of the Rickland Orchards brand, acquired in October 2013,
contributed $12.9 million to the overall increase, net sales of the
TrueNorth brand, acquired in May 2013, contributed $4.5 million to
the overall increase and October 2013 net sales of the
New York Style and Old London brands, acquired at
the end of October 2012, contributed $2.9 million to the overall
increase. Net sales for B&G Foods’ base business increased $1.5
million, or 0.9%, attributable to a unit volume increase of $4.3
million offset by a net price decrease of $2.8 million.
Gross profit for the fourth quarter of 2013 increased 12.9% to
$67.1 million from $59.5 million in the fourth quarter of 2012.
Gross profit expressed as a percentage of net sales decreased 2.5
percentage points to 31.7% for the fourth quarter of 2013 from
34.2% in the fourth quarter of 2012, primarily attributable to a
net price decrease of $2.8 million, a sales mix shift to lower
margin products and an increase in distribution costs. Operating
income increased 6.7% to $39.9 million for the fourth quarter of
2013, from $37.4 million in the fourth quarter of 2012.
Selling, general and administrative expenses increased $3.9
million, or 19.7%, to $23.9 million for the fourth quarter of 2013
from $20.0 million for the fourth quarter of 2012. This increase
was primarily due to increases in consumer marketing of $1.5
million, selling expenses of $1.2 million (including increases of
$0.7 million for salesperson compensation and $0.4 million for
brokerage expenses), acquisition-related transaction costs of $1.8
million and warehousing expenses of $1.1 million, partially offset
by a $1.5 million gain relating to a legal settlement and a
decrease in all other expenses of $0.2 million.
Net interest expense for the fourth quarter of 2013 decreased
$0.9 million or 7.6% to $10.9 million from $11.8 million for the
fourth quarter of 2012. The decrease in net interest expense in the
fourth quarter of 2013 was primarily attributable to the
refinancing of the Company’s long-term debt during the second
quarter of 2013, including the issuance of 4.625% senior notes, the
repurchase of 7.625% senior notes, and the repayment of tranche B
term loans.
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was $18.8 million, or $0.35 per
diluted share, for the fourth quarter of 2013, as compared to
reported net income of $9.6 million, or $0.18 per diluted share,
for the fourth quarter of 2012. The Company’s adjusted net income
for the fourth quarter of 2013, which excludes the after tax impact
of acquisition-related transaction costs, was $20.7 million, or
$0.39 per adjusted diluted share. The Company’s adjusted net income
for the fourth quarter of 2012, which excludes the after tax impact
of loss on extinguishment of debt and acquisition-related
transaction costs, was $17.0 million, or $0.32 per adjusted diluted
share.
For the fourth quarter of 2013, adjusted EBITDA, which excludes
the impact of acquisition-related transaction costs, increased
13.7% to $50.0 million from $44.0 million for the fourth quarter of
2012.
Financial Results for Full-Year 2013
Net sales for fiscal 2013 increased 14.4% to $725.0 million from
$633.8 million for fiscal 2012. An additional ten months of net
sales of the New York Style and Old London brands contributed $36.5
million to the overall increase, net sales of Pirate Brands,
contributed $32.6 million to the overall increase, net sales of the
TrueNorth brand contributed $13.0 million to the overall increase
and net sales of the Rickland Orchards brand contributed $12.9
million to the overall increase. Net sales for the Company’s base
business decreased $3.8 million, or 0.6%, attributable to a net
price decrease of $6.7 million partially offset by a unit volume
increase of $2.9 million.
Gross profit for fiscal 2013 increased 8.8% to $242.9 million
from $223.3 million in fiscal 2012. Gross profit expressed as a
percentage of net sales decreased 1.7 percentage points to 33.5%
for fiscal 2013 from 35.2% in fiscal 2012. The decrease in gross
profit expressed as a percentage of net sales was primarily
attributable to a net price decrease of $6.7 million, a sales mix
shift to lower margin products and an increase in distribution
costs. Operating income increased 3.3% to $154.0 million for fiscal
2013, from $149.0 million in fiscal 2012.
Selling, general and administrative expenses increased $12.8
million, or 19.4%, to $79.0 million in fiscal 2013 from $66.2
million in fiscal 2012. The increase is primarily due to increases
in consumer marketing of $4.3 million, selling expenses of $3.5
million (including increases of $1.9 million for salesperson
compensation and $1.2 million for brokerage expenses),
acquisition-related transaction costs of $4.8 million and
warehousing expenses of $1.9 million, partially offset by a $1.5
million gain relating to a legal settlement and a decrease in all
other expenses of $0.2 million.
Net interest expense for fiscal 2013 decreased $5.9 million or
12.3% to $41.8 million from $47.7 million in fiscal 2012. The
decrease in net interest expense in fiscal 2013 was primarily
attributable to the refinancing of the Company’s long-term debt
during the second quarter of 2013.
After taking into account $23.9 million of after tax charges
relating to loss on extinguishment of debt and acquisition-related
transaction costs, the Company’s reported net income under U.S.
GAAP was $52.3 million, or $0.98 per diluted share, for fiscal
2013, as compared to reported net income of $59.3 million, or $1.20
per diluted share, for fiscal 2012. The Company’s adjusted net
income for fiscal 2013, which excludes the after tax impact of loss
on extinguishment of debt and acquisition-related transaction
costs, was $76.3 million, and adjusted diluted earnings per share
was $1.43. The Company’s adjusted net income for fiscal 2012, which
excludes the after tax impact of loss on extinguishment of debt and
acquisition-related transaction costs, was $66.7 million, and
adjusted diluted earnings per share was $1.35.
Adjusted EBITDA, which excludes acquisition-related transaction
costs, increased 8.9% to $184.0 million in fiscal 2013 from $169.0
million for fiscal 2012.
Guidance
Adjusted EBITDA for fiscal 2014 is expected to be approximately
$198.0 million to $203.0 million. Capital expenditures for fiscal
2014 are expected to increase to approximately $20.0 million as the
result of the planned installation of additional production lines
in the Company’s Yadkinville, North Carolina facility to improve
efficiency and manufacturing capacity. Cash interest expense for
fiscal 2014 is expected to be approximately $38.5 million.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
February 12, 2014. The call will be webcast live from B&G
Foods’ website at www.bgfoods.com under “Investor Relations—Company
Overview.” The call can also be accessed live over the phone by
dialing (888) 471-3840 for U.S. callers or (719) 325-2161 for
international callers.
A replay of the call will be available one hour after the call
and can be accessed by dialing (877) 870-5176 or
(858) 384-5517 for international callers; the password is
7113672. The replay will be available from February 12, 2014
through February 26, 2014. Investors may also access a web-based
replay of the call at the Investor Relations section of B&G
Foods’ website, www.bgfoods.com.
About Non-GAAP Financial Measures and Items Affecting
Comparability
“Adjusted net income,” “adjusted diluted earnings per share,”
“EBITDA” (net income before net interest expense, income taxes,
depreciation and amortization and loss on extinguishment of debt)
and “adjusted EBITDA” (EBITDA as adjusted for acquisition-related
transaction costs, which include outside fees and expenses,
contingent consideration expense and restructuring and
consolidation costs of acquisitions) are “non-GAAP financial
measures.” A non-GAAP financial measure is a numerical measure of
financial performance that excludes or includes amounts so as to be
different than the most directly comparable measure calculated and
presented in accordance with GAAP in B&G Foods’ consolidated
balance sheets and related consolidated statements of operations,
comprehensive income, changes in stockholders’ equity and cash
flows. Non-GAAP financial measures should not be considered in
isolation or as a substitute for the most directly comparable GAAP
measures. The Company’s non-GAAP financial measures may be
different from non-GAAP financial measures used by other
companies.
The Company uses “adjusted net income” and “adjusted diluted
earnings per share,” which are calculated as reported net income
and reported diluted earnings per share adjusted for certain items
that affect comparability. These non-GAAP financial measures
reflect adjustments to reported net income and diluted earnings per
share to eliminate the items identified below. This information is
provided in order to allow investors to make meaningful comparisons
of the Company’s operating performance between periods and to view
the Company’s business from the same perspective as the Company’s
management. Because the Company cannot predict the timing and
amount of acquisition-related transaction costs and gains or losses
on extinguishment of debt, management does not consider these costs
when evaluating the Company’s performance or when making decisions
regarding allocation of resources.
Additional information regarding EBITDA and adjusted EBITDA, and
a reconciliation of EBITDA and adjusted EBITDA to net income and to
net cash provided by operating activities is included below for the
fourth quarter and full year of fiscal 2013 and 2012, along with
the components of EBITDA and adjusted EBITDA. Also included below
are reconciliations of the non-GAAP terms adjusted net income and
adjusted diluted earnings per share to reported net income and
reported diluted earnings per share.
About B&G Foods, Inc.
B&G Foods and its subsidiaries manufacture, sell and
distribute a diversified portfolio of high-quality, branded
shelf-stable foods across the United States, Canada and Puerto
Rico. Based in Parsippany, New Jersey, B&G Foods’
products are marketed under many recognized brands, including
Ac’cent, B&G, B&M, Baker’s Joy, Brer Rabbit, Cream of
Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril’s,
Grandma’s Molasses, JJ Flats, Joan of Arc, Las Palmas,
Maple Grove Farms, Molly McButter, Mrs. Dash, New York
Style, Old London, Original Tings, Ortega, Pirate’s Booty,
Polaner, Red Devil, Regina, Rickland Orchards, Sa-són, Sclafani,
Smart Puffs, Sugar Twin, Trappey’s, TrueNorth, Underwood,
Vermont Maid and Wright’s. B&G Foods also sells and
distributes two branded household products, Static Guard and
Kleen Guard.
Forward-Looking Statements
Statements in this press release that are not statements of
historical or current fact constitute “forward-looking statements.”
The forward-looking statements contained in this press release
include, without limitation, statements related to B&G Foods’
adjusted EBITDA, capital expenditures and cash interest expense
expectations for fiscal 2014. Such forward-looking statements
involve known and unknown risks, uncertainties and other unknown
factors that could cause the actual results of B&G Foods to be
materially different from the historical results or from any future
results expressed or implied by such forward-looking statements. In
addition to statements that explicitly describe such risks and
uncertainties readers are urged to consider statements labeled with
the terms “believes,” “belief,” “expects,” “projects,” “intends,”
“anticipates” or “plans” to be uncertain and forward-looking. The
forward-looking statements contained herein are also subject
generally to other risks and uncertainties that are described from
time to time in B&G Foods’ filings with the Securities and
Exchange Commission, including under Item 1A, “Risk Factors” in the
Company’s most recent Annual Report on Form 10-K and in its
subsequent reports on Forms 10-Q and 8-K. Investors are cautioned
not to place undue reliance on any such forward looking statements,
which speak only as of the date they are made. B&G Foods
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
B&G Foods, Inc. and
Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per
share data)
(Unaudited)
December 28, 2013 December 29, 2012
Assets Current assets: Cash and cash equivalents $ 4,107 $
19,219 Trade accounts receivable, less allowance for doubtful
accounts and discounts of $1,081 and $831 in 2013 and 2012,
respectively 62,763 43,357 Inventories 101,251 89,757 Prepaid
expenses and other current assets 8,079 5,326 Income tax receivable
3,422 4,262 Deferred income taxes 2,115 2,175
Total current assets 181,737 164,096 Property, plant
and equipment, net 110,374 104,746 Goodwill 319,292 267,940 Other
intangibles, net 844,141 637,196 Other assets 28,799
17,990 Total assets $ 1,484,343 $ 1,191,968
Liabilities and Stockholders’ Equity
Current liabilities: Trade accounts payable $ 42,638 $ 25,050
Accrued expenses 19,189 23,610 Current portion of long-term debt
26,250 40,375 Dividends payable 17,637 15,243
Total current liabilities 105,714 104,278 Long-term
debt 844,635 597,314 Other liabilities 8,692 8,038 Deferred income
taxes 146,939 121,163 Total liabilities
1,105,980 830,793 Commitments and contingencies
Stockholders’ equity: Preferred stock, $0.01 par value per share.
Authorized 1,000,000 shares; no shares issued or outstanding — —
Common stock, $0.01 par value per share. Authorized 125,000,000
shares; 53,445,910 and 52,560,765 issued and outstanding as of
December 28, 2013 and December 29, 2012, respectively 534 526
Additional paid-in capital 183,113 226,900 Accumulated other
comprehensive loss (2,471 ) (11,095 ) Retained earnings
197,187 144,844 Total stockholders’ equity
378,363 361,175 Total liabilities and
stockholders’ equity $ 1,484,343 $ 1,191,968
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per share
data)
(Unaudited)
Fourth Quarter Ended Year Ended December
28, December 29, December 28,
December 29, 2013 2012
2013 2012 Net sales $ 211,547 $ 173,706 $
724,973 $ 633,812 Cost of goods sold 144,399 114,223
482,050 410,469 Gross profit 67,148 59,483 242,923
223,343 Operating expenses: Selling, general and
administrative expenses 23,946 20,006 79,043 66,212 Amortization
expense 3,276 2,059 9,884 8,126
Operating income 39,926 37,418 153,996 149,005 Other
expenses: Interest expense, net 10,913 11,815 41,813 47,660 Loss on
extinguishment of debt — 10,431 31,291
10,431 Income before income tax expense 29,013 15,172 80,892 90,914
Income tax expense 10,221 5,613 28,549
31,654 Net income $ 18,792 $ 9,559 $ 52,343 $ 59,260
Weighted average shares outstanding: Basic 53,398 52,154 52,998
49,239 Diluted 53,660 52,602 53,182 49,557 Earnings per
share: Basic $ 0.35 $ 0.18 $ 0.99 $ 1.20 Diluted $ 0.35 $ 0.18 $
0.98 $ 1.20 Cash dividends declared per share $ 0.33 $ 0.29
$ 1.23 $ 1.10
B&G Foods, Inc. and
Subsidiaries
Reconciliation of EBITDA and Adjusted
EBITDA to Net Income and to Net Cash Provided by
Operating Activities
(In thousands)
(Unaudited)
Fourth Quarter Ended Year Ended December
28, December 29, December 28,
December 29, 2013 2012
2013 2012 Net income $ 18,792 $ 9,559 $ 52,343
$ 59,260 Income tax expense 10,221 5,613 28,549 31,654 Interest
expense, net 10,913 11,815 41,813 47,660 Depreciation and
amortization 7,075 5,410 24,077 18,853 Loss on extinguishment of
debt (1) — 10,431 31,291
10,431 EBITDA (2) 47,001 42,828 178,073 167,858
Acquisition-related transaction costs 2,999
1,159 5,932 1,159 Adjusted
EBITDA (2) 50,000 43,987 184,005 169,017 Income tax expense (10,221
) (5,613 ) (28,549 ) (31,654 ) Interest expense, net (10,913 )
(11,815 ) (41,813 ) (47,660 ) Deferred income taxes 8,737 4,328
20,800 15,295 Amortization of deferred financing costs and bond
discount 1,082 1,257 4,400 5,028 Acquisition-related transaction
costs (2,999 ) (1,159 ) (5,932 ) (1,159 ) Share-based compensation
expense 666 877 3,935 3,777 Excess tax benefits from share-based
compensation — — (4,192 ) (8,031 ) Acquisition-related contingent
consideration expense, including interest accretion 208 — 208 —
Changes in assets and liabilities, net of effects of business
combinations 9,457 15,170
(17,952 ) (4,085 ) Net cash provided by operating activities
$ 46,017 $ 47,032 $ 114,910 $ 100,528
(1)
Fiscal 2013 loss on extinguishment of debt
includes costs relating to our repurchase of $248.5 million
aggregate principal amount of 7.625% senior notes and our repayment
of $222.2 million aggregate principal amount of tranche B term
loans, including the repurchase premium and other expenses of $20.2
million, the write-off of deferred debt financing costs of $8.3
million and the write-off of unamortized discount of $2.8 million.
Fourth quarter and full year fiscal 2012 loss on extinguishment of
debt includes costs relating to our partial redemption of $101.5
million aggregate principal amount of 7.625% senior notes,
including the repurchase premium and other expenses of $7.7
million, the write-off of deferred debt financing costs of $1.5
million and the write-off of unamortized discount of $0.5 million.
Loss on extinguishment during the fourth quarter and full year
fiscal 2012 also includes costs related to the amendment and
restatement of our credit agreement, including the write-off of
deferred debt financing costs of $0.4 million, unamortized discount
of $0.1 million and other expenses of $0.2 million.
(2)
EBITDA and adjusted EBITDA are non-GAAP
financial measures used by management to measure operating
performance. A non-GAAP financial measure is defined as a numerical
measure of our financial performance that excludes or includes
amounts so as to be different than the most directly comparable
measure calculated and presented in accordance with GAAP in our
consolidated balance sheets and related consolidated statements of
operations, comprehensive income, changes in stockholders’ equity
and cash flows. We define EBITDA as net income before net interest
expense, income taxes, depreciation and amortization and loss on
extinguishment of debt. We define adjusted EBITDA as EBITDA
adjusted for acquisition-related transaction costs, which include
outside fees and expenses, contingent consideration expense and
restructuring and consolidation costs of acquisitions. Management
believes that it is useful to eliminate net interest expense,
income taxes, depreciation and amortization, loss on extinguishment
of debt and acquisition-related transaction costs because it allows
management to focus on what it deems to be a more reliable
indicator of ongoing operating performance and our ability to
generate cash flow from operations. We use EBITDA and adjusted
EBITDA in our business operations to, among other things, evaluate
our operating performance, develop budgets and measure our
performance against those budgets, determine employee bonuses and
evaluate our cash flows in terms of cash needs. We also present
EBITDA and adjusted EBITDA because we believe they are useful
indicators of our historical debt capacity and ability to service
debt and because covenants in our credit agreement and our senior
notes indenture contain ratios based on these measures. As a
result, internal management reports used during monthly operating
reviews feature the EBITDA and adjusted EBITDA metrics. However,
management uses these metrics in conjunction with traditional GAAP
operating performance and liquidity measures as part of its overall
assessment of company performance and liquidity and therefore does
not place undue reliance on these measures as its only measures of
operating performance and liquidity.
EBITDA and adjusted EBITDA are not recognized terms under
GAAP and do not purport to be an alternative to operating income or
net income as an indicator of operating performance or any other
GAAP measure. EBITDA and adjusted EBITDA are not complete net cash
flow measures because EBITDA and adjusted EBITDA are measures of
liquidity that do not include reductions for cash payments for an
entity’s obligation to service its debt, fund its working capital,
capital expenditures and acquisitions and pay its income taxes and
dividends. Rather, EBITDA and adjusted EBITDA are two potential
indicators of an entity’s ability to fund these cash requirements.
EBITDA and adjusted EBITDA are not complete measures of an entity’s
profitability because they do not include costs and expenses for
depreciation and amortization, interest and related expenses, loss
on extinguishment of debt, acquisition-related transaction costs
and income taxes. Because not all companies use identical
calculations, this presentation of EBITDA and adjusted EBITDA may
not be comparable to other similarly titled measures of other
companies. However, EBITDA and adjusted EBITDA can still be useful
in evaluating our performance against our peer companies because
management believes these measures provide users with valuable
insight into key components of GAAP amounts.
B&G Foods, Inc. and
Subsidiaries
Items Affecting Comparability —
Reconciliation of Adjusted Information to GAAP Information
(In thousands, except per share
data)
(Unaudited)
Fourth Quarter Ended Year Ended December
28, December 29, December 28,
December 29, 2013 2012
2013 2012 Reported net income $ 18,792 $ 9,559 $
52,343 $ 59,260 Loss on extinguishment of debt, net of tax(1) —
6,707 20,120 6,707 Acquisition-related transaction costs, net of
tax 1,928 745 3,814 745 Adjusted net
income $ 20,720 $ 17,011 $ 76,277 $ 66,712 Adjusted diluted
earnings per share $ 0.39 $ 0.32 $ 1.43 $ 1.35
_____________________
(1)
Loss on extinguishment of debt for the
full-year 2013 includes costs relating to our repurchase of $248.5
million aggregate principal amount of 7.625% senior notes and our
repayment of $222.2 million aggregate principal amount of tranche B
term loans, including the repurchase premium and other expenses of
$20.2 million, the write-off of deferred debt financing costs of
$8.3 million and the write-off of unamortized discount of $2.8
million. Loss on extinguishment of debt for the fourth quarter and
full-year fiscal 2012 includes costs relating to our partial
redemption of $101.5 million aggregate principal amount of our
7.625% senior notes, including the repurchase premium and other
expenses of $7.7 million, the write-off of deferred debt financing
costs of $1.5 million and the write-off of unamortized discount of
$0.5 million. Loss on extinguishment during fiscal 2012 also
includes costs related to the amendment and restatement of our
credit agreement, including the write-off of deferred debt
financing costs of $0.4 million, unamortized discount of $0.1
million and other expenses of $0.2 million.
ICR, Inc.Investor Relations:Don Duffy, 866-211-8151orMedia
Relations:Matt Lindberg, 203-682-8214
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