— Reaffirms Full Year 2015 Guidance
—
B&G Foods, Inc. (NYSE:BGS) today announced financial results
for the first quarter of 2015.
Highlights (vs. year-ago quarter where applicable):
- Net sales increased 9.6% to $217.1
million
- Comparable base business net sales,*
which excludes the impact of acquisitions and the
Rickland Orchards shortfall described below, increased $4.5
million, or 2.4%
- Net income increased 10.1% to $19.6
million
- Adjusted net income* increased 12.5% to
$20.5 million
- Diluted earnings per share increased
9.1% to $0.36
- Adjusted diluted earnings per share*
increased 11.8% to $0.38
- Adjusted EBITDA* increased 7.5% to
$49.9 million
- The Company reaffirmed its expectation
to deliver 2015 full-year adjusted EBITDA of $196.0 million to
$202.0 million, adjusted diluted earnings per share of $1.48 to
$1.55 and net sales of $860.0 million to $880.0 million
Commenting on the results, Robert C. Cantwell, President and
Chief Executive Officer of B&G Foods, stated, “The Company
achieved strong growth in the first quarter, with overall net sales
increasing 9.6%. Our base business excluding the impact of
acquisitions and the Rickland Orchards shortfall grew 2.4%. We were
able to achieve this with increased pricing of $3.6 million along
with solid growth in 17 of our brands, including Ortega and
Pirate’s Booty. For the remainder of 2015, we expect to continue to
see positive year-over-year results. The trends in pricing and
volume seen in the first quarter are expected to continue
throughout 2015, along with continued growth in adjusted EBITDA. I
am confident about our future and achieving our full-year guidance
for 2015.”
_____________________________
* Please see “About Non-GAAP Financial Measures and Items
Affecting Comparability” below for the definition of the non-GAAP
financial measures “adjusted net income,” “adjusted diluted
earnings per share,” “base business net sales,” “comparable base
business net sales,” “EBITDA” and “adjusted EBITDA,” as well as
information concerning certain items affecting comparability and
reconciliations of the non-GAAP terms to the most comparable GAAP
financial measures.
Financial Results for the First Quarter of 2015
Net sales for the first quarter of 2015 increased 9.6% to $217.1
million from $198.1 million for the first quarter of 2014. Net
sales of Specialty Brands, acquired in April 2014, contributed
$22.0 million to the overall increase.
Net sales were negatively impacted by the Rickland Orchards
brand, whose net sales decreased by $7.6 million compared to the
first quarter of 2014, a continuation of the weakness that caused
the Company to impair the brand’s trademark and customer
relationship intangible assets in 2014. Comparable base business
net sales, which excludes the impact of the Rickland Orchards
shortfall, increased $4.5 million, or 2.4%, for the first quarter
of 2015. The increase was attributable to increases in net pricing
and unit volume of $3.6 million and $0.9 million, respectively.
Gross profit for the first quarter of 2015 increased $2.7
million, or 4.2%, to $67.4 million from $64.7 million in the first
quarter of 2014. Gross profit expressed as a percentage of net
sales decreased to 31.0% for the first quarter of 2015 from 32.6%
in the first quarter of 2014. The 1.6 percentage point decrease was
partially due to customer refunds in the first quarter of 2015
relating to the Ortega and Las Palmas recall announced in
November 2014, which reduced gross profit margin for the first
quarter of 2015 by approximately 0.7 percentage points. Excluding
the impact of the customer refunds, gross profit expressed as a
percentage of net sales was approximately 31.7%. The remaining
gross profit shortfall of 0.9 percentage points was attributable to
a sales mix shift to lower margin products, an increase in
distribution costs and the negative impact of the Canadian exchange
rate, which reduced gross profit margin by approximately 1.5
percentage points, 0.8 percentage points and 0.3 percentage points,
respectively. This reduction was partially offset by the comparable
base business net sales price increase of 1.7 percentage points
described above.
Selling, general and administrative expenses increased $0.2
million to $22.8 million for the first quarter of 2015 from $22.6
million in the first quarter of 2014. During the first quarter of
2015, net sales increased, resulting in approximately $1.1 million
of additional selling and administrative expenses. Selling, general
and administrative expenses were also impacted by increases in
warehousing expenses of $0.8 million, compensation expenses of $0.6
million and other administrative expenses of $0.6 million. These
increases were almost entirely offset by decreases in consumer
marketing of $2.2 million and acquisition-related expenses of $0.7
million. Expressed as a percentage of net sales, selling, general
and administrative expenses decreased from 11.4% to 10.5%.
Net interest expense for the first quarter of 2015 increased
$0.4 million, or 3.6%, to $11.5 million from $11.1 million for the
first quarter of 2014. The increase in net interest expense in the
first quarter of 2015 was primarily attributable to an increase in
the Company’s average debt outstanding due to the Company’s
Specialty Brands acquisition in April 2014.
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was $19.6 million, or $0.36 per
diluted share, for the first quarter of 2015, as compared to
reported net income of $17.8 million, or $0.33 per diluted share,
for the first quarter of 2014. The Company’s adjusted net income
for the first quarter of 2015, which excludes the after tax impact
of the loss on product recall and acquisition-related expenses, was
$20.5 million, or $0.38 per adjusted diluted share. The Company’s
adjusted net income for the first quarter of 2014, which excludes
the after tax impact of acquisition-related expenses, was $18.3
million, or $0.34 per adjusted diluted share.
For the first quarter of 2015, adjusted EBITDA, which excludes
the impact of the loss on product recall and acquisition-related
expenses, increased 7.5% to $49.9 million from $46.5 million for
the first quarter of 2014.
Guidance
B&G Foods reaffirmed full-year 2015 guidance ranges for
adjusted EBITDA of $196.0 million to $202.0 million, adjusted
diluted earnings per share of $1.48 to $1.55 and net sales of
$860.0 million to $880.0 million.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
April 23, 2015. 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) 778-8861 for U.S. callers or (913) 312-1491 for
international callers.
A replay of the call will be available two hours after the call
and can be accessed by dialing (877) 870-5176 or
(858) 384-5517 for international callers; the password is
1993577. The replay will be available from April 23, 2015
through May 7, 2015. 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,”
“base business net sales” (net sales without the impact of
acquisitions until the acquisitions are included in both comparable
periods), “comparable base business net sales” (base business net
sales, excluding the Rickland Orchards shortfall), “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 cash and non-cash
acquisition-related expenses, gains and losses (which may include
third party fees and expenses, integration, restructuring and
consolidation expenses); intangible asset impairment charges and
related asset write-offs; gains or losses related to changes in the
fair value of contingent liabilities from earn-outs; and loss on
product recalls, including customer refunds, selling, general and
administrative expenses and the impact on cost of sales 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,” “adjusted diluted
earnings per share,” “base business net sales” and “comparable base
business net sales,” which are calculated as reported net income,
reported diluted earnings per share and reported net sales adjusted
for certain items that affect comparability. These non-GAAP
financial measures reflect adjustments to reported net income,
diluted earnings per share and net sales to eliminate the items
identified above. 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 these items,
management does not consider these items 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 fiscal 2015 and 2014, along with the components
of EBITDA and adjusted EBITDA. Also included below are
reconciliations of the non-GAAP terms adjusted net income, adjusted
diluted earnings per share, base business net sales and comparable
base business net sales to the most directly comparable measure
calculated and presented in accordance with GAAP in the Company’s
consolidated balance sheets and related consolidated statements of
operations, comprehensive income and cash flows.
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, Bear Creek Country
Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice,
Cream of Wheat, Devonsheer, Don Pepino, Emeril’s,
Grandma’s Molasses, JJ Flats, Joan of Arc,
Las Palmas, MacDonald’s, Maple Grove Farms, Molly McButter,
Mrs. Dash, New York Flatbreads, New York Style,
Old London, Original Tings, Ortega, Pirate’s Booty, Polaner,
Red Devil, Regina, Rickland Orchards, Sa-són, Sclafani,
Smart Puffs, Spring Tree, Sugar Twin, Trappey’s, TrueNorth,
Underwood, Vermont Maid and Wright’s. B&G Foods also sells
and distributes Static Guard, a household product brand.
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, adjusted diluted earnings per share,
net sales, pricing and volume, and overall expectations for
fiscal 2015. 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 April 4, 2015 January 3, 2015
Current assets: Cash and cash equivalents $ 23,670 $ 1,490
Trade accounts receivable, net 55,786 55,925 Inventories 107,020
106,557 Prepaid expenses and other current assets 12,829 14,830
Income tax receivable 5,145 14,442 Deferred income taxes
3,157 3,275 Total current assets 207,607
196,519
Property, plant and equipment, net of
accumulated depreciation of $132,991 and $129,253
115,495
116,197
Goodwill 370,539 370,424 Other intangibles, net 945,222 947,895
Other assets 17,500 18,318 Total assets
$ 1,656,363 $ 1,649,353
Liabilities and
Stockholders’ Equity Current liabilities: Trade accounts
payable $ 26,278 $ 38,052 Accrued expenses 25,529 17,644 Current
portion of long-term debt 20,625 18,750 Dividends payable
18,278 18,246
Total current liabilities
90,710 92,692 Long-term debt 1,011,527 1,007,107 Other
liabilities 6,100 7,352 Deferred income taxes 208,776
204,207 Total liabilities 1,317,113 1,311,358
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; 53,758,649 and 53,663,697
shares issued and outstanding as of April 4, 2015 and January 3,
2015 538 537 Additional paid-in capital 92,021 110,349 Accumulated
other comprehensive loss (11,019 ) (11,034 ) Retained earnings
257,710 238,143 Total stockholders’
equity 339,250 337,995 Total
liabilities and stockholders’ equity $ 1,656,363 $ 1,649,353
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per share
data)
(Unaudited)
First Quarter Ended April 4, 2015
March 29, 2014 Net sales $ 217,122 $ 198,140
Cost of goods sold 149,725 133,471 Gross profit
67,397 64,669 Operating expenses: Selling, general and
administrative expenses 22,848 22,603 Amortization expense
2,673 3,247 Operating income 41,876 38,819 Other
expenses: Interest expense, net 11,539 11,142 Income
before income tax expense 30,337 27,677 Income tax expense
10,770 9,900 Net income $ 19,567 $ 17,777 Weighted
average shares outstanding: Basic 53,759 53,650 Diluted 53,800
53,707 Basic and diluted earnings per share $ 0.36 $ 0.33
Cash dividends declared per share $ 0.34 $ 0.34
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 April 4, 2015
March 29, 2014 Net income $ 19,567 $ 17,777 Income
tax expense 10,770 9,900 Interest expense, net 11,539 11,142
Depreciation and amortization 6,544 6,895
EBITDA(1) 48,420 45,714 Acquisition-related expenses 39 741
Loss on product recall 1,467 — Adjusted
EBITDA(1) 49,926 46,455 Income tax expense (10,770 ) (9,900 )
Interest expense, net (11,539 ) (11,142 ) Acquisition-related
expenses (39 ) (741 ) Loss on product recall (1,467 ) — Deferred
income taxes 4,619 4,094 Amortization of deferred financing costs
and bond discount 879 1,044 Share-based compensation expense 1,183
565 Excess tax benefits from share-based compensation (518 ) (2,383
) Acquisition-related contingent consideration expense, including
interest accretion — 232 Changes in assets and liabilities
6,407 2,779 Net cash provided by operating
activities $ 38,681 $ 31,003
(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 from 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 cash and non-cash acquisition-related expenses, gains
or losses (which may include third party fees and expenses,
integration, restructuring and consolidation expenses); intangible
asset impairment charges and related asset write-offs; gains or
losses related to changes in the fair value of contingent
liabilities from earn-outs; and loss on product recalls, including
customer refunds, selling, general and administrative expenses and
the impact on cost of sales. Management believes that it is useful
to eliminate net interest expense, income taxes, depreciation and
amortization, loss on extinguishment of debt, acquisition-related
expenses, gains and losses, non-cash intangible asset impairment
charges and related asset write-offs, gains or losses related to
changes in the fair value of contingent liabilities from earn-outs
and loss on product recalls 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 or any other GAAP measure as an indicator of operating
performance. 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 expenses, gains and
losses and income taxes, intangible asset impairment charges and
related asset write-offs, gains or losses related to changes in the
fair value of contingent liabilities from earn-outs and loss on
product recalls. 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 April 4 2015
March 29, 2014 Reported net income $ 19,567 $ 17,777
Acquisition-related expenses, net of tax 25 476 Loss on product
recall, net of tax 946 — Adjusted net income $ 20,538
$ 18,253 Adjusted diluted earnings per share $ 0.38 $ 0.34
_____________________
(1)
On November 14, 2014, we announced a
voluntary recall for certain Ortega and Las Palmas products after
learning that one or more of the spice ingredients purchased from a
third party supplier contained peanuts and almonds, allergens that
are not declared on the products’ ingredient statements. The cost
impact of this recall during the first quarter of 2015, was $1.5
million, of which $0.8 million was recorded as a decrease in net
sales related to customer refunds; $0.5 million was recorded as an
increase in cost of goods sold primarily related to costs
associated with product retrieval, destruction charges and customer
fees; and $0.2 million was recorded as an increase in selling,
general, and administrative expenses related to administrative
costs. The charges we recorded are based upon costs incurred to
date and management’s estimates of costs that have yet to be
incurred. As of April 4, 2015, accounts receivables in our
unaudited consolidated balance sheet includes a $0.5 million
reserve relating to the recall and prepaid expenses include a $5.0
million receivable for expected insurance recoveries relating to
the recall.
B&G Foods, Inc. and
Subsidiaries
Items Affecting Comparability —
Reconciliation of Base Business Net Sales and Comparable Base
Business Net Sales
(In thousands)
(Unaudited)
First Quarter Ended April 4, 2015
March 29, 2014 Reported net sales $ 217,122 $ 198,140
Net sales from acquisitions(1) (22,044 ) —
Base business net sales $ 195,078 $ 198,140 Net sales of Rickland
Orchards(2) (1,068 ) (8,647 ) Comparable base
business net sales $ 194,010 $ 189,493
_____________________
(1)
For the first quarter of 2015, net sales
of Specialty Brands, acquired in April 2014, contributed $22.0
million to our overall net sales increase.
(2)
Net sales were negatively impacted by the
Rickland Orchards shortfall in the first quarter of 2015, a
continuation of the weakness that caused the Company to impair the
brand’s trademark and customer relationship intangible assets in
2014.
ICR, Inc.Investor Relations:Don Duffy, 866-211-8151orMedia
Relations:Matt Lindberg, 203-682-8214
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