— Increases Fiscal 2014 Guidance —
B&G Foods, Inc. (NYSE:BGS) today announced financial results
for the first quarter of 2014.
Highlights (vs. year-ago quarter where applicable):
- Net sales increased 15.7% to $198.1
million
- Net cash provided by operating
activities increased 34.2% to $31.0 million
- Adjusted EBITDA* increased 1.7% to
$46.5 million
- Increased quarterly dividend rate 3.0%
to $0.34 per share beginning with the April 30, 2014 quarterly
payment
- Following quarter end, announced an
agreement to acquire Specialty Brands of America, which is expected
to generate on an annualized basis after being fully integrated
into B&G Foods net sales of approximately $85.0 million and
adjusted EBITDA of approximately $20.0 million
- Increased adjusted EBITDA guidance for
fiscal year 2014 to a range of approximately $209.0 million to
$214.0 million, assuming that the Specialty Brands acquisition
closes in April 2014
- Established an adjusted diluted
earnings per share guidance range of approximately $1.59 to $1.65
for fiscal year 2014
______________________________________
* 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.
David L. Wenner, President and Chief Executive Officer of
B&G Foods, stated, “Our very strong cash flow performance in
the face of base business volume declines was encouraging and was
the result of our recent acquisitions and our Continuous
Improvement cost reduction efforts. Our base business net sales for
the quarter were negatively impacted by general volume weakness in
the industry, unusually severe weather in the Northeast and the
late Easter holiday. However, we continue to believe that our base
business volume will rebound by year end and we remain focused on
growing both our base business and the brands we acquired last
year. In addition, we believe that our acquisition of Specialty
Brands, which is expected to close later this month, will be
immediately accretive to our earnings per share and free cash flow
and will help position B&G Foods for continued growth in 2014
and beyond.”
Financial Results for the First Quarter of 2014
Net sales for the first quarter of 2014 increased 15.7% to
$198.1 million from $171.2 million for the first quarter of 2013.
Net sales of Pirate Brands, which B&G Foods acquired in July
2013, contributed $20.4 million to the overall increase, net sales
of the Rickland Orchards brand, acquired in October 2013,
contributed $8.6 million to the overall increase and net sales of
the TrueNorth brand, acquired in May 2013, contributed $5.8 million
to the overall increase. Net sales for B&G Foods’ base business
decreased $7.9 million, or 4.6%, attributable to unit volume and
net price decreases of $5.2 million and $2.7 million,
respectively.
Gross profit for the first quarter of 2014 increased 10.0% to
$64.7 million from $58.8 million in the first quarter of 2013.
Gross profit expressed as a percentage of net sales decreased 1.8
percentage points to 32.6% for the first quarter of 2014 from 34.4%
in the first quarter of 2013, primarily attributable to a net price
decrease of $2.7 million and an increase in distribution costs.
Operating income decreased 3.5% to $38.8 million for the first
quarter of 2014, from $40.2 million in the first quarter of
2013.
Selling, general and administrative expenses increased $6.1
million, or 36.9%, to $22.6 million for the first quarter of 2014
from $16.5 million for the first quarter of 2013. This increase was
primarily due to increases in consumer marketing of $3.8 million,
selling expenses of $1.3 million (including increases of $0.7
million for brokerage expenses and $0.4 million for salesperson
compensation), acquisition-related transaction costs of $0.7
million and warehousing expenses of $0.6 million, partially offset
by a decrease in all other expenses of $0.3 million.
Net interest expense for the first quarter of 2014 increased
$1.3 million or 14.0% to $11.1 million from $9.8 million for the
first quarter of 2013. The increase in net interest expense for the
first quarter was primarily attributable to an increase in the
Company’s average debt outstanding.
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was $17.8 million, or $0.33 per
diluted share, for the first quarter of 2014, as compared to
reported net income of $19.6 million, or $0.37 per diluted share,
for the first quarter of 2013. The Company’s adjusted net income
for the first quarter of 2014, which excludes the after tax impact
of acquisition-related transaction costs, was $18.3 million, or
$0.34 per adjusted diluted share. There were no adjustments to net
income for the first quarter of 2013.
For the first quarter of 2014, adjusted EBITDA, which excludes
the impact of acquisition-related transaction costs, increased 1.7%
to $46.5 million from $45.7 million for the first quarter of
2013.
Specialty Brands of America Acquisition
On April 3, 2014, B&G Foods entered into an agreement to
acquire Specialty Brands of America, Inc. for approximately $155
million in cash, subject to certain closing and post-closing
adjustments. B&G Foods projects that following the acquisition,
Specialty Brands will generate on an annualized basis after being
fully integrated into B&G Foods net sales of approximately
$85.0 million and adjusted EBITDA of approximately $20.0
million.
Specialty Brands is a leading packaged foods company with a
portfolio of strong and differentiated brands. Specialty Brands’
largest brand is Bear Creek Country Kitchens. Bear Creek is the
leading brand of hearty dry soups in the United States. Bear Creek
also offers a line of savory pasta dishes and hearty rice dishes.
Specialty Brands also offers Spring Tree, Cary’s and MacDonald’s
pure maple syrups and pancake syrups, New York Flatbreads and
Canoleo margarine.
B&G Foods intends to fund the acquisition with borrowings
under its existing revolving credit facility. B&G Foods expects
the acquisition to close in April 2014, subject to the satisfaction
of customary closing conditions.
Guidance
B&G Foods increased its adjusted EBITDA guidance for fiscal
2014 to a range of approximately $209.0 million to $214.0 million.
B&G Foods also set its adjusted diluted earnings per share
guidance for fiscal 2014 at a range of $1.59 to $1.65. In each
case, this guidance assumes, among other things, that the Specialty
Brands acquisition closes in April 2014.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
April 16, 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) 468-2440 for U.S. callers or (719) 325-2448 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
9819268. The replay will be available from April 16, 2014
through April 30, 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
first quarters of 2014 and 2013, 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 related to the
planned acquisition of Specialty Brands and the timing thereof; the
expected impact of the acquisition, including without limitation,
the growth potential of Specialty Brands and the expected impact on
B&G Foods’ earnings per share growth, net sales, adjusted
EBITDA and free cash flow; and B&G Foods’ adjusted EBITDA,
adjusted diluted earnings per share, volume and growth 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)
Assets March 29, 2014 December 28, 2013
Current assets: Cash and cash equivalents $ 17,004 $ 4,107
Trade accounts receivable, net 55,442 62,763 Inventories 103,495
101,251 Prepaid expenses and other current assets 7,069 8,079
Income tax receivable 383 3,422 Deferred income taxes 1,963
2,115 Total current assets 185,356 181,737
Property, plant and equipment, net of
accumulated depreciation of $118,265 and $114,685
108,923
110,374
Goodwill 320,317 319,292 Other intangibles, net 840,894 844,141
Other assets 27,556 28,799 Total assets
$ 1,483,046 $ 1,484,343
Liabilities and
Stockholders’ Equity Current liabilities: Trade accounts
payable $ 29,857 $ 42,638 Accrued expenses 23,962 19,189 Current
portion of long-term debt 22,500 26,250 Dividends payable
18,241 17,637
Total current liabilities
94,560 105,714 Long-term debt 852,178 844,635 Other
liabilities 8,972 8,692 Deferred income taxes 150,885
146,939 Total liabilities 1,106,595 1,105,980
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; 53,649,687
and 53,445,910 shares issued and
outstanding as of March 29, 2014 and
December 28, 2013
536 534 Additional paid-in capital 163,443 183,113 Accumulated
other comprehensive loss (2,492 ) (2,471 ) Retained earnings
214,964 197,187 Total stockholders’ equity
376,451 378,363 Total liabilities and
stockholders’ equity $ 1,483,046 $ 1,484,343
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per share
data)
(Unaudited)
First Quarter Ended March 29, 2014
March 30, 2013 Net sales $ 198,140 $ 171,194
Cost of goods sold 133,471 112,382 Gross profit
64,669 58,812 Operating expenses: Selling, general and
administrative expenses 22,603 16,508 Amortization expense
3,247 2,067 Operating income 38,819 40,237 Other
expenses: Interest expense, net 11,142 9,773 Income
before income tax expense 27,677 30,464 Income tax expense
9,900 10,830 Net income $ 17,777 $ 19,634 Weighted
average shares outstanding: Basic 53,650 52,715 Diluted 53,707
52,942 Basic and diluted earnings per share $ 0.33 $ 0.37
Cash dividends declared per share $ 0.34 $ 0.29
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)
First Quarter Ended March 29, 2014
March 30, 2013 (in thousands) Net income $ 17,777 $
19,634 Income tax expense 9,900 10,830 Interest expense, net 11,142
9,773 Depreciation and amortization 6,895
5,420 EBITDA(1) 45,714 45,657 Acquisition-related
transaction costs 741 — Adjusted EBITDA
46,455 45,657 Income tax expense (9,900 ) (10,830 ) Interest
expense, net (11,142 ) (9,773 ) Deferred income taxes 4,094 4,742
Amortization of deferred financing costs and bond discount 1,044
1,175 Share-based compensation expense 565 670 Acquisition-related
transaction costs (741 ) — Excess tax benefits from share-based
compensation (2,383 ) (4,349 ) Acquisition-related contingent
consideration expense, including interest accretion 232 — Changes
in assets and liabilities 2,779 (4,185 ) Net
cash provided by operating activities $ 31,003 $ 23,107
(1)
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)
First Quarter Ended March 29, 2014
March 30, 2013 Reported net income $ 17,777 $ 19,634
Acquisition-related transaction costs, net of tax 476
— Adjusted net income $ 18,253 $ 19,634 Adjusted diluted earnings
per share $ 0.34 $ 0.37
ICR, Inc.Investor Relations:Don Duffy, 866-211-8151orMedia
Relations:Matt Lindberg, 203-682-8214
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