— Delivers Strong Growth in Sales and
Earnings —
— Increases Full Year Guidance —
B&G Foods, Inc. (NYSE:BGS) today announced financial results
for the first quarter of 2016.
Highlights (vs. year-ago quarter where applicable):
- Net sales increased 62.6% to $353.0
million
- Base business net sales* decreased 2.2%
or $4.8 million
- Net income increased 69.7% to $33.2
million
- Adjusted net income* increased 88.0% to
$38.6 million
- Diluted earnings per share increased
55.6% to $0.56
- Adjusted diluted earnings per share*
increased 71.1% to $0.65
- Adjusted EBITDA* increased 79.4% to
$89.6 million for the quarter
- Guidance for full year fiscal 2016:
- Net sales guidance increased to a range
of $1.39 billion to $1.42 billion
- Adjusted EBITDA guidance increased to a
range of $310.0 million to $320.0 million
- Adjusted diluted earnings per share
guidance increased to a range of $2.05 to $2.15
“The first quarter was extremely positive on many levels,
particularly with respect to B&G Foods’ profitability, and
as a result we have increased our 2016 guidance for net sales,
adjusted EBITDA and adjusted diluted earnings per share. To date,
our acquisition of Green Giant is turning out to be even more
profitable than initially anticipated, a major driver of our
favorable results in the first quarter. The Green Giant
transition is well under way and on schedule and the Green Giant
innovation pipeline is growing. We are more excited than ever about
bringing Green Giant back to prominence and I believe we have the
plan and the team to make that happen,” said Robert C. Cantwell,
President and Chief Executive Officer of
B&G Foods.
__________
* 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,” “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 2016
Net sales for the first quarter of 2016 increased $135.9
million, or 62.6%, to $353.0 million from $217.1 million for the
first quarter of 2015. Net sales of Green Giant, acquired on
November 2, 2015, and net sales of Mama Mary’s, acquired on
July 10, 2015, contributed $130.2 million and $10.5 million,
respectively, to the Company’s net sales for the quarter.
Base business net sales for the first quarter of 2016 decreased
$4.8 million, or 2.2%, to $212.3 million from $217.1 million for
the first quarter of 2015. The $4.8 million decrease was
attributable to a decrease in unit volume of $4.8 million, or 2.2%,
and the negative impact of currency fluctuations on foreign sales
of approximately $0.3 million, or 0.2%, partially offset by an
increase in net pricing of $0.3 million, or 0.2%.
Gross profit for the first quarter of 2016 increased $48.5
million, or 72.0%, to $115.9 million from $67.4 million for the
first quarter of 2015. Gross profit expressed as a percentage of
net sales increased to 32.8% in the first quarter of 2016 from
31.0% in the first quarter of 2015, an increase of 1.8 percentage
points. The increase in gross profit percentage was primarily
driven by the acquisition of Green Giant, which benefited from
lower than anticipated trade spend and input costs, particularly
from the Green Giant manufacturing facility in Irapuato,
Mexico, as well as greater than anticipated synergies with the
Company’s base business. Gross profit percentage was also
positively impacted by decreased costs for commodities, packaging
and distribution for the base business. Gross profit percentage,
excluding the results of Green Giant, increased 0.4 percentage
points.
Selling, general and administrative expenses increased $16.8
million, or 73.5%, to $39.6 million for the first quarter of 2016
from $22.8 million for the first quarter of 2015. The increase was
primarily due to the Green Giant acquisition, which resulted
in $15.7 million of incremental expenses for the first quarter. The
overall $16.8 million increase was attributable to increases in
consumer marketing of $9.2 million, selling expenses of $2.5
million (related primarily to a $2.7 million increase in brokerage
expenses, partially offset by a $0.2 million decrease in
salesperson compensation and other selling expenses),
acquisition-related expenses of $2.2 million, warehousing expenses
of $1.6 million (which includes $0.5 million of distribution
restructuring expenses) and other expenses of $1.4 million
(primarily related to compensation). Expressed as a percentage of
net sales, selling, general and administrative expenses increased
0.7 percentage points to 11.2% for the first quarter of 2016 from
10.5% for the first quarter of 2015 because the increases in
selling, general and administrative expenses resulted primarily
from the recent acquisitions that also resulted in increased net
sales.
Net interest expense for the first quarter of 2016 increased
$7.6 million, or 65.8%, to $19.1 million from $11.5 million in the
first quarter of 2015. The increase was primarily attributable to
additional borrowings used to fund the Green Giant acquisition.
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was $33.2 million, or $0.56 per
diluted share, for the first quarter of 2016, as compared to
reported net income of $19.6 million, or $0.36 per diluted share,
for the first quarter of 2015. The Company’s adjusted net income
for the first quarter of 2016, which excludes the after-tax impact
of loss on extinguishment of debt, the amortization of
acquisition-related inventory step-up, other acquisition-related
expenses and distribution restructuring expenses, was $38.6
million, or $0.65 per adjusted diluted share. 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.
For the first quarter of 2016, adjusted EBITDA (which excludes
the impact of the amortization of acquisition-related inventory
step-up, the impact of the loss on product recall, other
acquisition-related expenses and distribution restructuring
expenses), increased 79.4% to $89.6 million from $49.9 million for
the first quarter of 2015.
Guidance
B&G Foods increased full year 2016 guidance for net sales to
a range of $1.39 billion to $1.42 billion, adjusted EBITDA to a
range of $310.0 million to $320.0 million and adjusted diluted
earnings per share to a range of $2.05 to $2.15.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
April 28, 2016. 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) 713-3594 for U.S. callers or (913) 312-0951 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 5604425. The replay will be
available from April 28, 2016 through May 12, 2016. 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), “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 and amortization of acquisition-related
inventory fair value step-up); loss on product recalls, including
customer refunds, selling, general and administrative expenses and
the impact on cost of sales; and distribution restructuring
expenses) 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,” and “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 2016 and 2015, 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 and 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 and frozen 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, Green Giant, JJ
Flats, Joan of Arc, Las Palmas, Le Sueur, MacDonald’s,
Mama Mary’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’
net sales, adjusted EBITDA and adjusted diluted earnings per share;
B&G Foods’ overall expectations for fiscal 2016; and B&G
Foods’ expectations regarding Green Giant, including, without
limitation, B&G Foods’ expectations as to transition timing,
profitability and innovation. 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)
April 2, 2016 January 2, 2016
Assets Current assets: Cash and cash equivalents $ 65,180 $
5,246 Trade accounts receivable, net 72,584 69,712 Inventories
260,517 312,880 Prepaid expenses and other current assets 58,488
67,517 Income tax receivable — 2,514 Deferred income taxes
5,224 5,292 Total current assets 461,993
463,161 Property, plant and equipment, net of accumulated
depreciation of $152,067 and $146,337 162,629 163,642 Goodwill
473,145 473,145 Other intangibles, net 1,438,932 1,442,340 Other
assets 1,895 1,332 Total assets $
2,538,594 $ 2,543,620
Liabilities and
Stockholders’ Equity Current liabilities: Trade accounts
payable $ 41,772 $ 49,593 Accrued expenses 39,133 31,233 Current
portion of long-term debt — 33,750 Income tax payable 4,412 —
Dividends payable 26,309 20,292 Total
current liabilities 111,626 134,868 Long-term debt 1,545,825
1,697,771 Other liabilities 2,346 3,212 Deferred income taxes
259,927 250,084 Total liabilities
1,919,724 2,085,935 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; 62,640,242 and 57,976,744 shares
issued and outstanding as of April 2, 2016 and January 2, 2016 626
580 Additional paid-in capital 288,269 162,568 Accumulated other
comprehensive loss (10,454 ) (12,696 ) Retained earnings
340,429 307,233 Total stockholders’ equity
618,870 457,685
Total liabilities and stockholders’
equity
$ 2,538,594 $ 2,543,620
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per share
data)
(Unaudited)
First Quarter Ended April 2, April 4,
2016 2015 Net sales $ 352,978 $ 217,122 Cost of goods
sold 237,063 149,725 Gross profit 115,915
67,397 Operating expenses: Selling, general and
administrative expenses 39,638 22,848 Amortization expense
3,408 2,673 Operating income 72,869 41,876
Other income and expenses: Interest expense, net 19,135 11,539 Loss
on extinguishment of debt 2,836 — Other income (1,929 )
— Income before income tax expense 52,827 30,337 Income tax
expense 19,631 10,770 Net income $ 33,196
$ 19,567 Weighted average shares outstanding: Basic
59,001 53,759 Diluted 59,103 53,800 Basic and diluted
earnings per share $ 0.56 $ 0.36 Cash dividends declared per
share $ 0.42 $ 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 2, April
4, 2016 2015 Net income $ 33,196 $ 19,567
Income tax expense 19,631 10,770 Interest expense, net 19,135
11,539 Depreciation and amortization 9,004 6,544 Loss on
extinguishment of debt 2,836 —
EBITDA(1) 83,802 48,420 Acquisition-related expenses 2,232 39
Amortization of acquisition-related inventory step-up 3,074 — Loss
on product recall — 1,467 Distribution restructuring expenses 474
— Adjusted EBITDA(1) 89,582 49,926 Income tax expense
(19,631 ) (10,770 ) Interest expense, net (19,135 ) (11,539 )
Acquisition-related expenses (2,232 ) (39 ) Loss on product recall
— (1,467 ) Distribution restructuring expenses (474 ) — Deferred
income taxes 9,854 4,619 Amortization of deferred financing costs
and bond discount 1,468 879 Amortization of acquisition-related
inventory step-up (3,074 ) — Share-based compensation expense 1,098
1,183 Excess tax benefits from share-based compensation (343 ) (518
) Changes in assets and liabilities, net of effects of business
combinations 66,736 6,407 Net cash
provided by operating activities $ 123,849 $ 38,681
__________
(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
and losses (which may include third party fees and expenses,
integration, restructuring and consolidation expenses and
amortization of acquired inventory fair value step-up); loss on
product recalls, including customer refunds, selling, general and
administrative expenses and the impact on cost of sales; and
distribution restructuring expenses. 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, loss on product
recalls and distribution restructuring expenses 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, loss on product recalls and distribution
restructuring expenses. 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
2, April 4, 2016 2015 Reported net income
$ 33,196 $ 19,567 Loss on extinguishment of debt, net of tax(1)
1,784 — Acquisition-related expenses, net of tax 1,404 25
Distribution restructuring expenses, net of tax(2) 298 —
Acquisition-related inventory step-up, net of tax(3) 1,934 — Loss
on product recall, net of tax(4) — 946 Adjusted net
income $ 38,616 $ 20,538 Adjusted diluted earnings per share $ 0.65
$ 0.38
__________
(1) Loss on extinguishment of debt for the first quarter
2016 includes the write-off of deferred debt financing costs and
unamortized discount of $2.2 million and $0.6 million,
respectively, relating to the repayment of $40.1 million aggregate
principal amounts of our tranche A term loans and $109.9 million
aggregate principal amount of our tranche B term loans. (2)
Distribution restructuring expenses for the first quarter 2016
includes expenses relating to our transitioning of the operations
of our three primary distribution centers to a third party
logistics provider. We expect this transition and the incurrence of
related distribution restructuring expenses to be completed during
the first half of 2016. (3)
Acquisition-related inventory step-up for
the first quarter of 2016 relates to the purchase accounting
adjustments made to the finished goods inventory acquired in the
Green Giant acquisition.
(4)
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. A
significant majority of the costs of this recall were incurred in
the fourth quarter of 2014. 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.
B&G Foods, Inc. and
Subsidiaries
Items Affecting Comparability —
Reconciliation of Base Business Net Sales to Reported Net
Sales
(In thousands)
(Unaudited)
First Quarter Ended
April 2, April 4, 2016 2015 Reported
net sales $ 352,978 $ 217,122 Net sales from acquisitions(1)
(140,640 ) — Base business net sales 212,338
217,122
__________
(1)
Reflects net sales for Green Giant and
Mama Mary’s for the first quarter of 2016 for which there is no
comparable period of net sales during the same period in 2015.
Green Giant was acquired on November 2, 2015, and Mama Mary’s was
acquired on July 10, 2015.
(2) Base business net sales is a non-GAAP financial measure
used by management to measure operating performance. We define base
business net sales as our net sales excluding the impact of
acquisitions until the net sales from such acquisitions are
included in both comparable periods. The portion of current period
net sales attributable to recent acquisitions for which there is no
corresponding period in the comparable period of the prior year is
excluded. For each acquisition, the excluded period starts at the
beginning of the most recent fiscal period being compared and ends
on the first anniversary of the acquisition date. Management has
included this financial measure because it provides useful and
comparable trend information regarding the results of our business
without the effect of the timing of acquisitions.
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Investor Relations:ICR, Inc.Dara Dierks, 866-211-8151orMedia
Relations:ICR, Inc.Matt Lindberg, 203-682-8214
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