B&G Foods, Inc. (NYSE: BGS) today announced financial
results for the second quarter and first two quarters of 2011,
reporting strong net sales and earnings growth.
Second Quarter 2011 Financial Highlights (vs. year-ago
quarter where applicable):
- Net sales increased 6.9% to $129.4
million
- Net income increased 48.3% to $12.6
million
- Adjusted net income* increased 36.6% to
$12.9 million
- Diluted earnings per share increased
44.4% to $0.26
- Adjusted diluted earnings per share*
increased 36.8% to $0.26
- EBITDA* increased 8.2% to $30.3
million
- Fiscal 2011 EBITDA guidance reaffirmed
at a range of $125.0 million to $128.0 million
David L. Wenner, President and Chief Executive Officer of
B&G Foods, stated, “We are very pleased with the continued
strong momentum in top and bottom line results, even after
factoring in the benefit of the late Easter holiday. We remain
confident that we will deliver full-year results within our
previously announced EBITDA guidance of $125.0 to $128.0 million,
with third quarter price increases and on-going cost reductions
efforts expected to offset the cost increases we will experience in
the second half of 2011.”
Financial Results for the Second Quarter of 2011
Net sales for the second quarter of 2011 increased 6.9% to
$129.4 million from $121.1 million for the second quarter of 2010.
This $8.3 million increase was attributable to an increase in unit
volume of $11.3 million offset by a net decrease in pricing of $1.7
million and an increase in coupon expenses of $1.3 million. Net
sales of the Company’s Don Pepino and Sclafani brands, which were
acquired during the fourth quarter of 2010, contributed $3.5
million to the overall unit volume increase for the second
quarter.
Gross profit for the second quarter of 2011 increased 7.0% to
$42.2 million from $39.4 million in the second quarter of 2010.
Gross profit expressed as a percentage of net sales increased 0.1
percentage points to 32.6% for the second quarter of 2011 from
32.5% in the second quarter of 2010. The increase in gross profit
expressed as a percentage of net sales was primarily attributable
to a sales mix shift to higher margin products. This mix shift
offset the net decrease in pricing and slightly higher input costs.
Operating income increased 8.3% to $26.3 million for the second
quarter of 2011, from $24.3 million in the second quarter of
2010.
Net interest expense for the second quarter of 2011 decreased
$2.6 million or 23.5% to $8.3 million from $10.9 million for the
second quarter of 2010. The decrease in net interest expense for
the second quarter was primarily attributable to the termination of
an interest rate swap causing a reduction in the effective interest
rate on $130.0 million of term loan borrowings from 7.0925% to
2.31% and the elimination of the unfavorable fair market value
adjustment relating to the interest rate swap.
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was $12.6 million, or $0.26 per
diluted share, for the second quarter of 2011, as compared to
reported net income of $8.5 million, or $0.18 per diluted share,
for the second quarter of 2010. The Company’s adjusted net income
for the second quarter of 2011 was $12.9 million, and adjusted
diluted earnings per share was $0.26, as compared to adjusted net
income of $9.4 million and adjusted diluted earnings per share of
$0.19 for the second quarter of 2010.
For the second quarter of 2011, EBITDA increased 8.2% to $30.3
million from $28.0 million for the second quarter of 2010.
Financial Results for the First Two Quarters of 2011
Net sales for the first two quarters of 2011 increased 5.9% to
$260.8 million from $246.3 million for the first two quarters of
2010. This $14.5 million increase was attributable to an increase
in unit volume of $17.2 million offset by a net decrease in pricing
of $1.5 million and an increase in coupon and slotting expenses of
$1.2 million. Net sales of the Company’s Don Pepino and Sclafani
brands, which were acquired during the fourth quarter of 2010,
contributed $7.1 million to the overall unit volume increase for
the first two quarters of 2011.
Gross profit for the first two quarters of 2011 increased 6.9%
to $87.0 million from $81.4 million in the first two quarters of
2010. Gross profit expressed as a percentage of net sales increased
0.3 percentage points to 33.4% in the first two quarters of 2011
from 33.1% in the first two quarters of 2010. The increase in gross
profit expressed as a percentage of net sales was primarily
attributable to a sales mix shift to higher margin products and
slightly reduced input costs offset by a reduction in sales prices
and increased coupon and slotting expenses. Operating income
increased 9.3% to $55.4 million in the first two quarters of 2011,
from $50.7 million in the first two quarters of 2010.
Net interest expense for the first two quarters of 2011
decreased $5.0 million or 23.2% to $16.5 million from $21.5 million
for in the first two quarters of 2010. The decrease in net interest
expense for the first two quarters was primarily attributable to
the termination of the interest rate swap causing a reduction in
the effective interest rate on $130.0 million of term loan
borrowings from 7.0925% to 2.31% and the elimination of the
unfavorable fair market value adjustment relating to the interest
rate swap.
The Company’s reported net income under U.S. GAAP was $25.9
million, or $0.53 per diluted share, for the first two quarters of
2011, as compared to reported net income of $8.8 million, or $0.18
per diluted share, for the first two quarters of 2010. The
Company’s adjusted net income for the first two quarters of 2011
was $26.1 million, and adjusted diluted earnings per share was
$0.54, as compared to adjusted net income of $19.8 million and
adjusted diluted earnings per share of $0.41 for the first two
quarters of 2010.
For the first two quarters of 2011, EBITDA increased 9.1% to
$63.3 million from $58.0 million for the first two quarters of
2010.
Guidance
EBITDA for fiscal 2011 is expected to be approximately $125.0
million to $128.0 million. Capital expenditures for fiscal 2011 are
expected to be approximately $11.0 million.
Conference Call
B&G Foods will hold a webcast and conference call at 4:30
p.m. ET today, July 26, 2011. 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 (877) 419-6594 for U.S. callers or (719)
325-4810 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
4762334. The replay will be available from July 26, 2011,
through August 3, 2011. 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” and
“EBITDA” (net income before net interest expense, income taxes,
depreciation and amortization and loss on extinguishment of debt)
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 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 charges associated with unrealized gains or losses on the
Company’s interest rate swap 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.
A reconciliation of EBITDA to net income and to net cash
provided by operating activities is included below for the first
two quarters of 2011 and 2010, along with the components of 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, shelf-stable
foods across the United States, Canada and Puerto Rico. B&G
Foods’ products include hot cereals, fruit spreads, canned meats
and beans, spices, seasonings, hot sauces, wine vinegar, maple
syrup, molasses, salad dressings, Mexican-style sauces, taco shells
and kits, salsas, pickles, peppers and other specialty food
products. B&G Foods competes in the retail grocery, food
service, specialty, private label, club and mass merchandiser
channels of distribution. Based in Parsippany, New Jersey, B&G
Foods’ products are marketed under many recognized brands,
including Ac’cent, B&G, B&M, Brer Rabbit, Cream of
Rice, Cream of Wheat, Don Pepino, Emeril’s, Grandma’s Molasses,
Joan of Arc, Las Palmas,
Maple Grove Farms of Vermont, Ortega, Polaner,
Red Devil, Regina, Sa-són, Sclafani, Trappey’s, Underwood, Vermont
Maid and Wright’s.
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’
expectations regarding cost, the Company’s ability to successfully
implement sales price increases and cost reduction efforts, and
EBITDA and capital expenditures for fiscal 2011. 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 Annual
Report on Form 10-K for fiscal 2010 filed on March 1, 2011.
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.
* Please see “About Non-GAAP Financial Measures and Items
Affecting Comparability” below for definitions of the terms
adjusted net income, adjusted diluted earnings per share and
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 and EBITDA to the
most comparable GAAP financial measures.
B&G Foods, Inc. and Subsidiaries
Consolidated Balance Sheets (In thousands, except share
and per share data) (Unaudited) Assets
July 2, 2011 January 1, 2011 Current assets:
Cash and cash equivalents $ 101,531 $ 98,738 Trade accounts
receivable, net 30,070 34,445 Inventories 89,905 74,563 Prepaid
expenses 1,724 1,715 Income tax receivable 4,410 171 Deferred
income taxes 1,514 5,439 Total current
assets 229,154 215,071 Property, plant and equipment, net of
accumulated depreciation of $85,571 and $80,862
60,198
60,812
Goodwill 253,744 253,744 Other intangibles, net 328,725 332,001
Other assets 9,409 10,095 Total assets
$ 881,230 $ 871,723
Liabilities and
Stockholders’ Equity Current liabilities: Trade accounts
payable $ 23,535 $ 15,531 Accrued expenses 25,733 25,584 Interest
rate swap — 12,012 Dividends payable 10,063
8,099 Total current liabilities 59,331 61,226
Long-term debt 477,908 477,748 Other liabilities 1,810 4,232
Deferred income taxes 104,534 97,932
Total liabilities 643,583 641,138 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; 47,918,033 and 47,639,924 shares issued and outstanding as
of July 2, 2011 and January 1, 2011 479 476 Additional paid-in
capital 182,398 201,770 Accumulated other comprehensive loss (6,475
) (7,002 ) Retained earnings 61,245 35,341
Total stockholders’ equity 237,647
230,585 Total liabilities and stockholders’ equity $ 881,230
$ 871,723
B&G Foods, Inc.
and Subsidiaries Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
July 2, 2011 July 3, 2010 July 2, 2011
July 3, 2010 Net sales $ 129,453 $ 121,145 $
260,858 $ 246,327 Cost of goods sold 87,284 81,747
173,822 164,901 Gross profit 42,169 39,398 87,036
81,426 Operating expenses: Selling, general and
administrative expenses 14,194 13,463 28,344 27,515 Amortization
expense 1,637 1,612 3,276 3,225
Operating income 26,338 24,323 55,416 50,686 Other expenses:
Interest expense, net 8,341 10,898 16,531 21,520 Loss on
extinguishment of debt — — — 15,224
Income before income tax expense 17,997 13,425 38,885 13,942 Income
tax expense 5,398 4,932 12,981 5,123
Net income $ 12,599 $ 8,493 25,904 8,819
Weighted average shares outstanding: Basic 47,906 47,625 47,944
47,526 Diluted 48,637 48,450 48,668 48,197 Earnings per
share: Basic $ 0.26 $ 0.18 $ 0.54 $ 0.19 Diluted $ 0.26 $ 0.18 $
0.53 $ 0.18 Cash dividends declared per share $ 0.21 $ 0.17
$ 0.38 $ 0.34
B&G Foods, Inc. and
Subsidiaries Reconciliation of EBITDA to Net Income and to
Net Cash Provided by Operating Activities (In thousands)
(Unaudited) Thirteen Weeks Ended Twenty-six
Weeks Ended July 2, 2011 July 3, 2010
July 2, 2011 July 3, 2010 Net income $
12,599 $ 8,493 $ 25,904 $ 8,819 Income tax expense 5,398 4,932
12,981 5,123 Interest expense, net (1) 8,341 10,898 16,531 21,520
Depreciation and amortization 3,972 3,698 7,926 7,357 Loss on
extinguishment of debt (2) — — —
15,224 EBITDA (3) 30,310 28,021 63,342 58,043
Income tax expense (5,398 ) (4,932 ) (12,981 ) (5,123 ) Interest
expense, net (8,341 ) (10,898 ) (16,531 ) (21,520 ) Deferred income
taxes 1,724 2,652 10,120 2,759 Amortization of deferred financing
costs and bond discount 500 500 1,000 1,015 Unrealized loss on
interest rate swap — 1,046 — 1,349 Realized gain on interest rate
swap — — (612 ) — Reclassification to net interest expense for
interest rate swap 424 424 847 847 Share-based compensation expense
1,157 1,007 1,872 1,470 Excess tax benefits from share-based
compensation — — (1,117 ) (330 ) Changes in assets and liabilities
(5,861 ) 3,799 (19,759 ) 4,985
Net cash provided by operating activities $ 14,515 $
21,619 $ 26,181 $ 43,495 (1) Net
interest expense in the first two quarters of 2011 includes a
benefit relating to the realized gain on an interest rate swap, and
in the second quarter and first two quarters of 2011, a charge for
the reclassification of the amount recorded in accumulated other
comprehensive loss related to the swap. Net interest expense in
second quarter and first two quarters of 2010 includes a charge
relating to the unrealized loss on the interest rate swap and a
charge for the reclassification of the amount recorded in
accumulated other comprehensive loss related to the swap. See
B&G Foods’ Quarterly Report on Form 10-Q filed with the SEC on
July 26, 2011 for additional details. (2) During the first
two quarter of 2011, we did not extinguish any debt. Loss on
extinguishment of debt for the first two quarters of 2010 includes
costs relating to our repurchase of senior notes and senior
subordinated notes during the first quarter of 2010, including the
repurchase premium and the write-off of deferred debt financing
costs. See our Quarterly Report on Form 10-Q filed with the SEC on
July 26, 2011 for additional details. (3) EBITDA is a
non-GAAP financial measure 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, changes in stockholders’ equity and comprehensive
income, and cash flows. We define EBITDA as net income before net
interest expense, income taxes, depreciation and amortization and
loss on extinguishment of debt. Management believes that it is
useful to eliminate net interest expense, income taxes,
depreciation and amortization and loss on extinguishment of debt
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 in our
business operations, among other things, to 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 because we
believe it is a useful indicator of our historical debt capacity
and ability to service debt and because covenants in our credit
facility and our senior notes indenture contain ratios based on
this measure. As a result, internal management reports used during
monthly operating reviews feature the EBITDA metric. However,
management uses this metric 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 this measure as its only measure of
operating performance and liquidity. EBITDA is not a
recognized term under GAAP and does not purport to be an
alternative to operating income or net income as an indicator of
operating performance or any other GAAP measure. EBITDA is not a
complete net cash flow measure because EBITDA is a measure of
liquidity that does 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 is a potential indicator of an entity’s
ability to fund these cash requirements. EBITDA is not a complete
measure of an entity’s profitability because it does not include
costs and expenses for depreciation and amortization, interest and
related expenses, loss on extinguishment of debt and income taxes.
Because not all companies use identical calculations, this
presentation of EBITDA may not be comparable to other similarly
titled measures of other companies. However, EBITDA can still be
useful in evaluating our performance against our peer companies
because management believes this measure provides 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) (Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
July 2, 2011 July 3, 2010 July 2, 2011
July 3, 2010 Reported net income $ 12,599 $ 8,493 $
25,904 $ 8,819 Loss on extinguishment of debt, net of tax(1) — — —
9,591
Non-cash adjustments on interest rate
swap, net of tax(2)
271
926
150
1,383
Adjusted net income $ 12,870 $ 9,419 $ 26,054 $ 19,793 Adjusted
diluted earnings per share $ 0.26 $ 0.19 $ 0.54 $ 0.41
(1) During the first two quarters of 2011, B&G Foods did
not extinguish any debt. Loss on extinguishment of debt for the
first two quarters of 2010 includes costs relating to the Company’s
repurchase and redemption of $69.5 million aggregate principal
amount of senior subordinated notes and $240.0 million aggregate
principal amount of senior notes during the first quarter of 2010.
See B&G Foods’ Quarterly Report on Form 10-Q filed with the SEC
on July 26, 2011 for additional details. (2) The first two
quarters of 2011 includes a realized gain on interest rate swap and
in the second quarter and first two quarters of 2011, a
reclassification from accumulated other comprehensive loss to
interest expense, net on interest rate swap. The second quarter and
first two quarters of 2010 includes an unrealized loss on interest
rate swap and a reclassification from accumulated other
comprehensive loss to interest expense, net on interest rate swap.
See B&G Foods’ Quarterly Report on Form 10-Q filed with the SEC
on July 26, 2011 for additional details.
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