— Net Sales Increased 2.6% and Base Business
Net Sales Increased 2.5% for the Third Quarter of 2022 —
B&G Foods, Inc. (NYSE: BGS) today announced financial
results for the third quarter and first three quarters of 2022.
Summary
Third Quarter of 2022
First Three Quarters of
2022
(In millions, except per share
data)
Change vs.
Change vs.
Amount
Q3 2021
Amount
First 3Q 2021
Net Sales
$
528.4
2.6
%
$
1,539.8
3.7
%
Base Business Net Sales 1
$
527.5
2.5
%
$
1,538.0
3.8
%
Diluted EPS 1
$
(0.83)
(359.4)
%
$
(0.51)
(146.4)
%
Adj. Diluted EPS 1
$
0.31
(43.6)
%
$
0.67
(55.0)
%
Net Loss 1
$
(59.6)
(387.2)
%
$
(35.7)
(149.4)
%
Adj. Net Income 1
$
22.3
(38.5)
%
$
47.3
(51.4)
%
Adj. EBITDA 1
$
80.2
(16.6)
%
$
207.3
(24.0)
%
Guidance for Full Year Fiscal 2022
- Net sales reaffirmed at a range of $2.10 billion to $2.14
billion.
- Adjusted EBITDA revised to a range of $290 million to $300
million.
- Adjusted diluted earnings per share revised to a range of $0.90
to $1.00.
Commenting on the results, Casey Keller, President and Chief
Executive Officer of B&G Foods, stated, “B&G Foods’ third
quarter performance improved sequentially as pricing actions
continued to catch up to inflationary cost increases. Margins
improved from the second quarter, with additional pricing covering
roughly 80% of commodity and cost inflation. We are on track to
deliver a solid fourth quarter with full pricing actions
implemented and improved trends on our core spices & seasonings
business.”
Financial Results for the Third Quarter of 2022
Net sales for the third quarter of 2022 increased $13.4 million,
or 2.6%, to $528.4 million from $515.0 million for the third
quarter of 2021. The increase was primarily due to increases in net
pricing and the impact of product mix, partially offset by volume
declines primarily due to price elasticity and supply chain
challenges in the third quarter of 2022.
Base business net sales for the third quarter of 2022 increased
$13.0 million, or 2.5%, to $527.5 million from $514.5 million for
the third quarter of 2021. The increase in base business net sales
for the third quarter of 2022 was driven by an increase in net
pricing and the impact of product mix of $75.5 million, or 14.7% of
base business net sales, partially offset by a decrease in unit
volume of $61.3 million and the negative impact of foreign currency
of $1.2 million.
Net sales of Crisco increased $27.3 million, or 38.3%; net sales
of Clabber Girl increased $5.5 million, or 26.6%; net sales of
Cream of Wheat increased $3.1 million, or 20.4%; and net sales of
Ortega increased $1.0 million, or 2.6%, for the third quarter of
2022, as compared to the third quarter of 2021. Net sales of Green
Giant (including Le Sueur) decreased $17.7 million, or 12.6%; net
sales of the Company’s spices & seasonings2 decreased $6.1
million, or 6.5%; and net sales of Maple Grove Farms decreased $0.6
million, or 2.9%, for the third quarter of 2022, as compared to the
third quarter of 2021. The decrease in spices & seasonings was
driven in part by comparisons against a strong third quarter of
2021 for the Company’s spices & seasonings and supply chain
challenges during the third quarter of 2022, partially offset by
the positive impact of recent product launches. Compared to the
third quarter of pre-pandemic 2019, net sales of the Company’s
spices & seasonings increased $4.2 million, or 5.1%. Base
business net sales of all other brands in the aggregate increased
$0.5 million, or 0.5%, for the third quarter of 2022, as compared
to the third quarter of 2021.
Gross profit was $105.8 million for the third quarter of 2022,
or 20.0% of net sales. Excluding the negative impact of $2.2
million of acquisition/divestiture-related expenses and
non-recurring expenses included in cost of goods sold during the
third quarter of 2022, the Company’s gross profit would have been
$108.0 million, or 20.4% of net sales. Gross profit was $105.7
million for the third quarter of 2021, or 20.5% of net sales.
Excluding the negative impact of a $14.1 million accrual for the
estimated present value of a multi-employer pension plan withdrawal
liability in connection with the sale and closure of the Company’s
Portland, Maine manufacturing facility, and $2.8 million of
acquisition/divestiture-related expenses and non-recurring expenses
included in cost of goods sold during the third quarter of 2021,
the Company’s gross profit would have been $122.6 million, or 23.8%
of net sales.
During the third quarter of 2022, the Company’s gross profit was
negatively impacted by input cost inflation, including materially
increased costs for raw materials and transportation. The Company
expects input cost inflation will continue to have a significant
industry-wide impact during the remainder of fiscal 2022 and into
fiscal 2023. The Company is attempting to mitigate the impact of
inflation on its gross profit by locking in prices through
short-term supply contracts and advance commodities purchase
agreements and by implementing cost saving measures. The Company
also announced list price increases in 2021 and again during the
first, second, third and fourth quarters of 2022. However,
increases in the prices the Company charges its customers generally
lag behind rising input costs. As such, the Company did not fully
offset the incremental costs that it faced in the third quarter of
2022 and may not fully offset the incremental costs that the
Company is facing and expects to continue to face in the remainder
of fiscal 2022 and beyond.
Selling, general and administrative expenses increased $1.1
million, or 2.4%, to $47.5 million for the third quarter of 2022
from $46.4 million for the third quarter of 2021. The increase was
composed of increases in general and administrative expenses of
$1.1 million, selling expenses of $0.7 million and consumer
marketing expenses of $0.3 million, partially offset by a decrease
in acquisition/divestiture-related and non-recurring expenses of
$1.0 million. Expressed as a percentage of net sales, selling,
general and administrative expenses remained flat at 9.0% for the
third quarter of 2022 and the third quarter of 2021.
During the third quarter of 2022, the Company recorded pre-tax,
non-cash charges of $103.6 million for the impairment of assets
held for sale. See “Impairment of Assets Held for Sale” below.
Net interest expense increased $5.3 million, or 19.7%, to $31.9
million for the third quarter of 2022 from $26.6 million in the
third quarter of 2021. The increase was primarily attributable to
higher interest rates on the Company’s variable rate borrowings and
additional borrowings on the Company’s revolving credit facility
during the third quarter of 2022, as compared to the third quarter
of 2021.
The Company’s net loss was $59.6 million, or $0.83 per diluted
share, for the third quarter of 2022, compared to net income of
$20.7 million, or $0.32 per diluted share, for the third quarter of
2021. The Company’s adjusted net income for the third quarter of
2022 was $22.3 million, or $0.31 per adjusted diluted share,
compared to adjusted net income of $36.2 million, or $0.55 per
adjusted diluted share, for the third quarter of 2021. The
Company’s net loss for the third quarter of 2022 was primarily
attributable to the non-cash charges for the impairment of assets
held for sale discussed below under “Impairment of Assets Held for
Sale.” The decreases in adjusted net income and adjusted diluted
earnings per share were primarily attributable to industry-wide
input cost inflation and supply chain disruptions, and, in the case
of adjusted diluted earnings per share, the approximately 6.5
million shares of common stock sold by the Company through the
Company’s at-the-market (ATM) equity offering program beginning in
the third quarter of last year, partially offset by increases in
net pricing.
For the third quarter of 2022, adjusted EBITDA was $80.2
million, a decrease of $16.0 million, or 16.6%, compared to $96.2
million for the third quarter of 2021. The decrease in adjusted
EBITDA was primarily attributable to industry-wide input cost
inflation and supply chain disruptions, partially offset by
increases in net pricing. Adjusted EBITDA as a percentage of net
sales was 15.2% for the third quarter of 2022, compared to 18.7% in
the third quarter of 2021.
Financial Results for the First Three Quarters of
2022
Net sales for the first three quarters of 2022 increased $55.3
million, or 3.7%, to $1,539.8 million from $1,484.5 million for the
first three quarters of 2021. The increase was primarily due to
increases in net pricing and the impact of product mix, partially
offset by volume declines primarily due to price elasticity and
supply chain challenges in the first three quarters of 2022.
Base business net sales for the first three quarters of 2022
increased $55.8 million, or 3.8%, to $1,538.0 million from $1,482.2
million for the first three quarters of 2021. The increase in base
business net sales was driven by increases in net pricing and the
impact of product mix of $132.2 million, or 8.9% of base business
net sales, partially offset by a decrease in unit volume of $74.5
million and the negative impact of foreign currency of $1.9
million.
Net sales of Crisco increased $61.7 million, or 32.9%; net sales
of Clabber Girl increased $10.6 million, or 19.0%; net sales of
Cream of Wheat increased $9.0 million, or 18.8%; and net sales of
Maple Grove Farms increased $1.9 million, or 3.1% in the first
three quarters of 2022, as compared to the first three quarters of
2021. Net sales of the Company’s spices & seasonings2 decreased
$25.4 million, or 8.6%; net sales of Green Giant (including Le
Sueur) decreased $8.3 million, or 2.2%; and net sales of Ortega
decreased $0.5 million, or 0.4%; in the first three quarters of
2022, as compared to the first three quarters of 2021. The decrease
in spices & seasonings was driven in part by comparisons
against the very strong first three quarters of 2021 for the
Company’s spices & seasonings and supply chain challenges
during the first three quarters of 2022, partially offset by the
positive impact of recent product launches. Compared to the first
three quarters of 2019, net sales of the Company’s spices &
seasonings increased $20.1 million, or 8.1%. Base business net
sales of all other brands in the aggregate increased $6.8 million,
or 2.0%, for the first three quarters of 2022, as compared to the
first three quarters of 2021.
Gross profit was $283.5 million for the first three quarters of
2022, or 18.4% of net sales. Excluding the negative impact of $6.6
million of acquisition/divestiture-related expenses and
non-recurring expenses included in cost of goods sold during the
first three quarters of 2022, the Company’s gross profit would have
been $290.1 million, or 18.8% of net sales. Gross profit was $335.0
million for the first three quarters of 2021, or 22.6% of net
sales. Excluding the negative impact of a $14.1 million accrual for
the estimated present value of a multi-employer pension plan
withdrawal liability in connection with the sale and closure of the
Company’s Portland, Maine manufacturing facility, $3.6 million of
acquisition/divestiture-related expenses, and $5.1 million of
amortization of acquisition-related inventory fair value step-up
and non-recurring expenses included in cost of goods sold during
the first three quarters of 2021, the Company’s gross profit would
have been $357.8 million, or 24.1% of net sales.
During the first three quarters of 2022, the Company’s gross
profit was negatively impacted by higher than expected input cost
inflation, including materially increased costs for raw materials
and transportation. The Company expects input cost inflation will
continue to have a significant industry-wide impact during the
remainder of fiscal 2022 and into fiscal 2023. The Company is
attempting to mitigate the impact of inflation on its gross profit
by locking in prices through short-term supply contracts and
advance commodities purchase agreements and by implementing cost
saving measures. The Company also announced list price increases in
2021 and again during the first, second, third and fourth quarters
of 2022. However, increases in the prices the Company charges its
customers generally lag behind rising input costs. As such, the
Company did not fully offset the incremental costs that it faced in
the first three quarters of 2022 and may not fully offset the
incremental costs that the Company is facing and expects to
continue to face in the remainder of fiscal 2022 and beyond.
Selling, general and administrative expenses decreased $5.3
million, or 3.7%, to $138.6 million for the first three quarters of
2022 from $143.9 million for the first three quarters of 2021. The
decrease was composed of decreases in
acquisition/divestiture-related and non-recurring expenses of $5.3
million, consumer marketing expenses of $2.1 million and
warehousing expenses of $2.0 million, partially offset by increases
in selling expenses of $3.3 million and general and administrative
expenses of $0.8 million. Expressed as a percentage of net sales,
selling, general and administrative expenses improved by 0.7
percentage points to 9.0% for the first three quarters of 2022, as
compared to 9.7% for the first three quarters of 2021.
During the first quarter of 2022, the Company completed the
closure and sale of its Portland, Maine manufacturing facility. The
Company recorded a gain on the sale of the Portland property, plant
and equipment of $7.1 million during the first quarter of 2022. The
positive impact during the quarter of the gain on sale was
partially offset by approximately $2.2 million of expenses incurred
during the quarter relating to the closure of the facility and the
transfer of manufacturing operations.
During the third quarter of 2022, the Company recorded pre-tax,
non-cash charges of $103.6 million for the impairment of assets
held for sale. See “Impairment of Assets Held for Sale” below.
Net interest expense increased $8.3 million, or 10.3%, to $88.6
million for the first three quarters of 2022 from $80.3 million in
the first three quarters of 2021. The increase was primarily
attributable to higher interest rates on the Company’s variable
rate borrowings, additional borrowings on the Company’s revolving
credit facility during the first three quarters of 2022 as compared
to the first three quarters of 2021 and a $1.6 million fee for an
amendment to the Company’s credit agreement.
The Company’s net loss was $35.7 million, or $0.51 per diluted
share, for the first three quarters of 2022, compared to net income
of $72.2 million, or $1.10 per diluted share, for the first three
quarters of 2021. The Company’s adjusted net income for the first
three quarters of 2022 was $47.3 million, or $0.67 per adjusted
diluted share, compared to adjusted net income of $97.3 million, or
$1.49 per adjusted diluted share, for the first three quarters of
2021. The Company’s net loss for the first three quarters of 2022
was primarily attributable to the non-cash charges for the
impairment of assets held for sale discussed below under
“Impairment of Assets Held for Sale.” The decreases in adjusted net
income and adjusted diluted earnings per share were primarily
attributable to industry-wide input cost inflation and supply chain
disruptions, and, in the case of adjusted diluted earnings per
share, the approximately 6.5 million shares of common stock sold by
the Company through the Company’s at-the-market (ATM) equity
offering program beginning in the third quarter of last year,
partially offset by increases in net pricing and a benefit during
the first three quarters of $4.9 million resulting from the gain on
sale of the Portland, Maine manufacturing facility, net of expenses
relating to the closure of the facility and the transfer of
manufacturing operations.
For the first three quarters of 2022, adjusted EBITDA was $207.3
million, a decrease of $65.6 million, or 24.0%, compared to $272.9
million for the first three quarters of 2021. The decrease in
adjusted EBITDA was primarily attributable to industry-wide input
cost inflation and supply chain disruptions, partially offset by
increases in net pricing. Adjusted EBITDA as a percentage of net
sales was 13.5% for the first three quarters of 2022, compared to
18.4% in the first three quarters of 2021.
Impairment of Assets Held for Sale
In connection with the Company’s previously announced transition
to a business unit structure, the Company has decided to divest its
Back to Nature business, which is no longer core to the Company’s
overall business or long-term strategy. The Company is actively
seeking to sell the Back to Nature business. As a result, the
Company reclassified $109.9 million of indefinite-lived trademark
intangible assets, $29.5 million of goodwill, $11.0 million of
finite-lived customer relationship intangible assets and $7.4
million of inventories to assets held for sale. The Company then
measured the assets held for sale at the lower of their carrying
value or fair value less anticipated costs to sell and recorded
pre-tax, non-cash impairment charges of $103.6 million during the
third quarter of 2022.
Dividends
Including the dividend payment that the Company made in the
fourth quarter on October 31, 2022, the Company paid quarterly
dividends of $133.4 million in fiscal 2022. As announced in a
separate press release the Company issued today, beginning with the
dividend payment declared on November 8, 2022 and payable on
January 30, 2023, the current intended dividend rate for the
Company’s common stock has been reduced from $1.90 per share per
annum to $0.76 per share per annum. Based upon the new current
intended dividend rate of $0.76 per share per annum and the current
number of outstanding shares, the Company expects the Company’s
aggregate dividend payments in fiscal 2023 to be approximately
$54.5 million.
Full Year Fiscal 2022 Guidance
B&G Foods reaffirmed its net sales guidance for full year
fiscal 2022 at a range of $2.10 billion to $2.14 billion. B&G
Foods revised its full year fiscal 2022 adjusted EBITDA guidance to
a range of $290 million to $300 million, and adjusted diluted
earnings per share to a range of $0.90 to $1.00.
B&G Foods continues to see strong consumer demand for its
products. The Company has also seen, and expects to continue to
see, significant cost inflation for various inputs, including
ingredients, packaging, transportation and labor attributable to a
number of factors, including the COVID-19 pandemic, the war in
Ukraine, climate and weather conditions, supply chain disruptions
(including raw material shortages) and labor shortages. The Company
has initiated various revenue enhancing activities (including list
price increases and trade spend initiatives) and cost savings
initiatives to offset these costs but there can be no assurance at
this point of the ultimate effectiveness of these activities and
initiatives. The Company’s management is not able to fully estimate
the impact COVID-19, industry-wide supply chain disruptions, cost
inflation and the Company’s cost inflation mitigation efforts will
have on the Company’s results for the remainder of fiscal 2022 and
beyond, and the Company’s guidance should be read in this context.
The ultimate impact of the COVID-19 pandemic on the Company’s
business will depend on many factors, including, among others: how
long social distancing and stay-at-home and work-from home policies
and recommendations remain in effect; whether, and the extent to
which, additional waves or variants of COVID-19 will affect the
United States and the rest of North America; the Company’s ability
to continue to operate its manufacturing facilities, maintain its
supply chain without material disruption, procure ingredients,
packaging and other raw materials when needed; the extent to which
macroeconomic conditions resulting from the pandemic and the pace
of the subsequent recovery may impact consumer eating and shopping
habits; and the extent to which consumers continue to work remotely
and how that may impact consumer habits.
B&G Foods provides earnings guidance only on a non-GAAP
basis and does not provide a reconciliation of the Company’s
forward-looking adjusted EBITDA and adjusted diluted earnings per
share guidance to the most directly comparable GAAP financial
measures because of the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliations, including adjustments that could be made for
deferred taxes; acquisition/divestiture-related expenses, gains and
losses (which may include third party fees and expenses,
integration, restructuring and consolidation expenses, amortization
of acquired inventory fair value step-up and gains and losses on
the sale of certain assets); loss on extinguishment of debt;
impairment of assets held for sale; non-recurring expenses, gains
and losses; and other charges reflected in the Company’s
reconciliation of historic non-GAAP financial measures, the amounts
of which, based on past experience, could be material. For
additional information regarding B&G Foods’ non-GAAP financial
measures, see “About Non-GAAP Financial Measures and Items
Affecting Comparability” below.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
November 9, 2022 to discuss third quarter 2022 financial results.
The live audio webcast of the conference call can be accessed at
www.bgfoods.com/investor-relations. A replay of the webcast will be
available following the conference call through the same link.
About Non-GAAP Financial Measures and Items Affecting
Comparability
“Adjusted net income” (net income (loss) adjusted for certain
items that affect comparability), “adjusted diluted earnings per
share,” (diluted earnings (loss) per share adjusted for certain
items that affect comparability), “base business net sales” (net
sales without the impact of acquisitions until the acquisitions are
included in both comparable periods and without the impact of
discontinued or divested brands), “EBITDA” (net income (loss)
before net interest expense, income taxes and depreciation and
amortization) and “adjusted EBITDA” (EBITDA as adjusted for cash
and non-cash acquisition/divestiture-related expenses, gains and
losses (which may include third party fees and expenses,
integration, restructuring and consolidation expenses, amortization
of acquired inventory fair value step-up and gains and losses on
the sale of certain assets), loss on extinguishment of debt,
impairment of assets held for sale, and non-recurring expenses,
gains and losses) 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 generally accepted accounting principles in the
United States (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 non-GAAP financial measures to adjust for
certain items that affect comparability. 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 that affect comparability, 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 (loss)
and to net cash provided by operating activities, is included below
for the third quarter and first three quarters of 2022 and 2021,
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, changes in stockholders’ equity and cash
flows.
End Notes
- Please see “About Non-GAAP Financial Measures and Items
Affecting Comparability” below for the definition of the non-GAAP
financial measures “base business net sales,” “adjusted diluted
earnings per share,” “adjusted net income,” “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.
- Includes the spices & seasoning brands acquired in the
fourth quarter of 2016, as well as the Company’s legacy spices
& seasonings brands, such as Dash and Ac’cent, and spices &
seasonings products launched by the Company and sold under
license.
About B&G Foods, Inc.
Based in Parsippany, New Jersey, B&G Foods and its
subsidiaries manufacture, sell and distribute high-quality, branded
shelf-stable and frozen foods across the United States, Canada and
Puerto Rico. With B&G Foods’ diverse portfolio of more than 50
brands you know and love, including Back to Nature, B&G,
B&M, Bear Creek, Cream of Wheat, Crisco, Dash, Green Giant, Las
Palmas, Le Sueur, Mama Mary’s, Maple Grove Farms, New York Style,
Ortega, Polaner, Spice Islands and Victoria, there’s a little
something for everyone. For more information about B&G Foods
and its brands, please visit www.bgfoods.com.
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 net sales, adjusted EBITDA, adjusted diluted
earnings per share, consumer demand, input cost inflation, list
price increases, cost savings initiatives, the ability of the
Company to recover higher costs in the fourth quarter of 2022 and
beyond through pricing actions, the Company’s overall expectations
for the remainder of fiscal 2022 and beyond, the potential sale of
the Back to Nature business, and the Company’s current intended
dividend rate. 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,” “assumes,” “could,” “should,”
“estimates,” “potential,” “seek,” “predict,” “may,” “will” or
“plans” and similar references to future periods to be uncertain
and forward-looking. Factors that may affect actual results
include, without limitation: the continuing impact of the COVID‑19
pandemic on the Company’s business, including, without limitation,
the ability of the Company and its supply chain partners to
continue to operate manufacturing facilities, distribution centers
and other work locations without material disruption, and to
procure ingredients, packaging and other raw materials when needed
despite disruptions in the supply chain or labor shortages, the
duration of social distancing and stay-at-home and work-from-home
policies and recommendations, and whether, and the extent to which,
additional waves or variants of COVID-19 will affect the United
States and the rest of North America, and the extent to which
macroeconomic conditions resulting from the pandemic and the pace
of the subsequent recovery may impact consumer eating and shopping
habits; the Company’s substantial leverage; the effects of rising
costs for and/or decreases in supply of the Company’s commodities,
ingredients, packaging, other raw materials, distribution and
labor; crude oil prices and their impact on distribution, packaging
and energy costs; the Company’s ability to successfully implement
sales price increases and cost saving measures to offset any cost
increases; intense competition, changes in consumer preferences,
demand for the Company’s products and local economic and market
conditions; the Company’s continued ability to promote brand equity
successfully, to anticipate and respond to new consumer trends, to
develop new products and markets, to broaden brand portfolios in
order to compete effectively with lower priced products and in
markets that are consolidating at the retail and manufacturing
levels and to improve productivity; the Company’s ability to
recruit and retain senior management and a highly skilled and
diverse workforce at the Company’s corporate offices, manufacturing
facilities and other locations despite a very tight labor market
and changing employee expectations as to fair compensation, an
inclusive and diverse workplace, flexible working and other
matters; the risks associated with the expansion of the Company’s
business; the Company’s possible inability to identify new
acquisitions or to integrate recent or future acquisitions or the
Company’s failure to realize anticipated revenue enhancements, cost
savings or other synergies from recent or future acquisitions; the
Company’s ability to successfully complete the integration of
recent or future acquisitions into the Company’s enterprise
resource planning (ERP) system; tax reform and legislation,
including the effects of the Infrastructure Investment and Jobs
Act, U.S. Tax Cuts and Jobs Act and the U.S. CARES Act, and future
tax reform or legislation; the Company’s ability to access the
credit markets and the Company’s borrowing costs and credit
ratings, which may be influenced by credit markets generally and
the credit ratings of the Company’s competitors; unanticipated
expenses, including, without limitation, litigation or legal
settlement expenses; the effects of currency movements of the
Canadian dollar and the Mexican peso as compared to the U.S.
dollar; the effects of international trade disputes, tariffs,
quotas, and other import or export restrictions on the Company’s
international procurement, sales and operations; future impairments
of the Company’s goodwill and intangible assets; the Company’s
ability to protect information systems against, or effectively
respond to, a cybersecurity incident or other disruption; the
Company’s ability to successfully implement the Company’s
sustainability initiatives and achieve the Company’s sustainability
goals, and changes to environmental laws and regulations; the
Company’s ability to successfully transition the operations of the
Portland, Maine manufacturing facility to third-party
co-manufacturing facilities and existing Company manufacturing
facilities without significant disruption in production or customer
service, and the Company’s ability to achieve anticipated
productivity improvements and cost savings; the Company’s ability
to find a buyer for the Back to Nature business and successfully
complete a sale of the business for net sale proceeds sufficient to
avoid a further impairment of the assets held for sale or a loss on
the sale of assets; and other factors that affect the food industry
generally, including: recalls if products become adulterated or
misbranded, liability if product consumption causes injury,
ingredient disclosure and labeling laws and regulations and the
possibility that consumers could lose confidence in the safety and
quality of certain food products; competitors’ pricing practices
and promotional spending levels; fluctuations in the level of the
Company’s customers’ inventories and credit and other business
risks related to the Company’s customers operating in a challenging
economic and competitive environment; and the risks associated with
third-party suppliers and co-packers, including the risk that any
failure by one or more of the Company’s third-party suppliers or
co-packers to comply with food safety or other laws and regulations
may disrupt the Company’s supply of raw materials or certain
finished goods products or injure the Company’s reputation. 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)
October 1,
January 1,
2022
2022
Assets
Current assets:
Cash and cash equivalents
$
60,064
$
33,690
Trade accounts receivable, net
175,702
145,281
Inventories
805,188
609,794
Assets held for sale
54,245
3,256
Prepaid expenses and other current
assets
42,401
38,151
Income tax receivable
11,817
4,284
Total current assets
1,149,417
834,456
Property, plant and equipment, net
325,890
341,471
Operating lease right-of-use assets
69,565
65,166
Finance lease right-of-use assets
3,155
—
Goodwill
619,095
644,871
Other intangible assets, net
1,793,034
1,927,119
Other assets
14,004
6,916
Deferred income taxes
9,414
8,546
Total assets
$
3,983,574
$
3,828,545
Liabilities and Stockholders’
Equity
Current liabilities:
Trade accounts payable
$
228,248
$
129,861
Accrued expenses
72,677
66,901
Current portion of operating lease
liabilities
15,038
12,420
Current portion of finance lease
liabilities
1,040
—
Income tax payable
3
2,557
Dividends payable
34,043
32,548
Total current liabilities
351,049
244,287
Long-term debt
2,418,090
2,267,759
Deferred income taxes
284,038
310,641
Long-term operating lease liabilities, net
of current portion
55,032
55,607
Long-term finance lease liabilities, net
of current portion
2,058
—
Other liabilities
31,733
29,997
Total liabilities
3,142,000
2,908,291
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; 71,670,232 and 68,521,651 shares
issued and outstanding as of October 1, 2022 and January 1, 2022,
respectively
717
685
Additional paid-in capital
—
3,547
Accumulated other comprehensive loss
(24,642)
(18,169)
Retained earnings
865,499
934,191
Total stockholders’ equity
841,574
920,254
Total liabilities and stockholders’
equity
$
3,983,574
$
3,828,545
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per
share data)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
October 1,
October 2,
October 1,
October 2,
2022
2021
2022
2021
Net sales
$
528,396
$
514,965
$
1,539,768
$
1,484,474
Cost of goods sold
422,635
409,300
1,256,222
1,149,425
Gross profit
105,761
105,665
283,546
335,049
Operating (income) and expenses:
Selling, general and administrative
expenses
47,519
46,409
138,556
143,864
Amortization expense
5,427
5,396
16,009
16,231
Gain on sales of assets
—
—
(7,099)
—
Impairment of assets held for sale
103,625
—
103,625
—
Operating income (loss)
(50,810)
53,860
32,455
174,954
Other (income) and expenses:
Interest expense, net
31,874
26,630
88,617
80,312
Other income
(1,846)
(1,130)
(5,533)
(3,338)
Income (loss) before income tax expense
(benefit)
(80,838)
28,360
(50,629)
97,980
Income tax expense (benefit)
(21,255)
7,613
(14,958)
25,804
Net income (loss)
$
(59,583)
$
20,747
$
(35,671)
$
72,176
Weighted average shares outstanding:
Basic
71,670
64,845
70,068
64,735
Diluted
72,018
65,493
70,440
65,371
Earnings (loss) per share:
Basic
$
(0.83)
$
0.32
$
(0.51)
$
1.11
Diluted
$
(0.83)
$
0.32
$
(0.51)
$
1.10
Cash dividends declared per share
$
0.475
$
0.475
$
1.425
$
1.425
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Net Income
(Loss) to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
October 1,
October 2,
October 1,
October 2,
2022
2021
2022
2021
Net income (loss)
$
(59,583)
$
20,747
$
(35,671)
$
72,176
Income tax expense (benefit)
(21,255)
7,613
(14,958)
25,804
Interest expense, net
31,874
26,630
88,617
80,312
Depreciation and amortization
20,766
20,728
61,065
61,257
EBITDA(1)
(28,198)
75,718
99,053
239,549
Acquisition/divestiture-related and
non-recurring expenses(2)
4,785
6,388
9,575
14,217
Gain on sale of assets, net of facility
closure costs(3)
—
—
(4,928)
—
Amortization of acquisition-related
inventory step-up(4)
—
—
—
5,054
Accrual for multi-employer pension plan
withdrawal liability(5)
—
14,056
—
14,056
Impairment of assets held for sale(6)
103,625
—
103,625
—
Adjusted EBITDA(1)
$
80,212
$
96,162
$
207,325
$
272,876
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Net Cash
Provided by (Used in) Operating Activities to EBITDA and Adjusted
EBITDA
(In thousands)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
October 1,
October 2,
October 1,
October 2,
2022
2021
2022
2021
Net cash provided by (used in) operating
activities
$
(69,535)
$
(53,179)
$
(48,408)
$
12,786
Income tax expense (benefit)
(21,255)
7,613
(14,958)
25,804
Interest expense, net
31,874
26,630
88,617
80,312
Gain on sales of assets
(19)
(30)
7,094
—
Deferred income taxes
27,945
(3,524)
27,415
(14,894)
Amortization of deferred debt financing
costs and bond discount/premium
(1,184)
(1,155)
(3,530)
(3,444)
Share-based compensation expense
(736)
(1,103)
(2,984)
(3,228)
Changes in assets and liabilities, net of
effects of business combinations
108,337
100,466
149,432
142,213
Impairment of assets held for sale(6)
(103,625)
—
(103,625)
—
EBITDA(1)
(28,198)
75,718
99,053
239,549
Acquisition/divestiture-related and
non-recurring expenses(2)
4,785
6,388
9,575
14,217
Gain on sale of assets, net of facility
closure costs(3)
—
—
(4,928)
—
Amortization of acquisition-related
inventory step-up(4)
—
—
—
5,054
Accrual for multi-employer pension plan
withdrawal liability(5)
—
14,056
—
14,056
Impairment of assets held for sale(6)
103,625
—
103,625
—
Adjusted EBITDA(1)
$
80,212
$
96,162
$
207,325
$
272,876
_________________________
(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 the Company’s 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 the Company’s consolidated balance sheets and related
consolidated statements of operations, comprehensive income,
changes in stockholders’ equity and cash flows. The Company defines
EBITDA as net income (loss) before net interest expense, income
taxes and depreciation and amortization. The Company defines
adjusted EBITDA as EBITDA adjusted for cash and non-cash
acquisition/divestiture-related expenses, gains and losses (which
may include third party fees and expenses, integration,
restructuring and consolidation expenses, amortization of acquired
inventory fair value step-up, and gains and losses on the sale of
certain assets); loss on extinguishment of debt; impairment of
assets held for sale; and non-recurring expenses, gains and
losses.
Management believes that it is
useful to eliminate these items because it allows management to
focus on what it deems to be a more reliable indicator of ongoing
operating performance and the Company’s ability to generate cash
flow from operations. The Company uses EBITDA and adjusted EBITDA
in the Company’s business operations to, among other things,
evaluate the Company’s operating performance, develop budgets and
measure the Company’s performance against those budgets, determine
employee bonuses and evaluate the Company’s cash flows in terms of
cash needs. The Company also presents EBITDA and adjusted EBITDA
because the Company believes they are useful indicators of the
Company’s historical debt capacity and ability to service debt and
because covenants in the Company’s credit agreement and the
Company’s senior notes indentures contain ratios based on these
measures. As a result, reports used by internal management 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
alternatives to operating income (loss), net income (loss) 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 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 certain costs and expenses and gains and losses
described above. 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 the Company’s performance against the Company’s peer
companies because management believes these measures provide users
with valuable insight into key components of GAAP amounts.
(2)
Acquisition/divestiture-related
and non-recurring expenses for the third quarter and first three
quarters of 2022 of $4.8 million and $9.6 million, respectively,
primarily includes acquisition and integration expenses for the
acquisition of the frozen vegetable manufacturing operations of
Growers Express, LLC, which was completed on May 5, 2022 (which the
Company refers to as the “Yuma acquisition”) and the Crisco
acquisition. Acquisition/divestiture-related and non-recurring
expenses for the third quarter and first three quarters of 2021 of
$6.4 million and $14.2 million, respectively, primarily includes
acquisition and integration expenses for the Crisco acquisition and
certain cost savings initiatives.
(3)
During the first quarter of 2022,
the Company completed the closure and sale of its Portland, Maine
manufacturing facility. The Company recorded a gain on the sale of
the Portland property, plant and equipment of $7.1 million during
the first quarter of 2022. The positive impact during the quarter
of the gain on sale was partially offset by approximately $2.2
million of expenses incurred during the quarter relating to the
closure of the facility and the transfer of manufacturing
operations, resulting in a net benefit of $4.9 million from the
gain on sale.
(4)
For the first three quarters of
2021, amortization of acquisition-related inventory step-up of $5.1
million relates to the purchase accounting adjustments made to
inventory acquired in the Crisco acquisition.
(5)
During the third quarter of 2021,
the Company reached an agreement to sell its Portland, Maine
manufacturing facility. In connection with the sale and closure of
the facility, the Company incurred a multi-employer pension plan
withdrawal liability payable over 20 years in installments of
approximately $0.9 million per year. As of October 1, 2022, the
multi-employer pension plan withdrawal liability has a remaining
estimated present value of approximately $13.6 million.
(6)
In connection with the Company’s
previously announced transition to a business unit structure, the
Company has decided to divest its Back to Nature business, which is
no longer core to the Company’s overall business or long-term
strategy. The Company is actively seeking to sell the Back to
Nature business. As a result, the Company reclassified $109.9
million of indefinite-lived trademark intangible assets, $29.5
million of goodwill, $11.0 million of finite-lived customer
relationship intangible assets and $7.4 million of inventories to
assets held for sale. The Company then measured the assets held for
sale at the lower of their carrying value or fair value less
anticipated costs to sell and recorded pre-tax, non-cash impairment
charges of $103.6 million during the third quarter of 2022.
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Adjusted Net
Income and Adjusted Diluted Earnings per Share to Net Income
(Loss)
(In thousands, except per
share data)
(Unaudited)
Thirteen Weeks Ended
Thirty-nine Weeks
Ended
October 1,
October 2,
October 1,
October 2,
2022
2021
2022
2021
Net income (loss)
$
(59,583)
$
20,747
$
(35,671)
$
72,176
Acquisition/divestiture-related and
non-recurring expenses(1)
4,785
6,388
9,575
14,217
Gain on sale of assets, net of facility
closure costs(2)
—
—
(4,928)
—
Amortization of acquisition-related
inventory step-up(3)
—
—
—
5,054
Credit agreement amendment fee(4)
—
—
1,600
—
Accrual for multi-employer pension plan
withdrawal liability(5)
—
14,056
—
14,056
Impairment of assets held for sale(6)
103,625
—
103,625
—
Tax effects of non-GAAP adjustments(7)
(26,560)
(5,009)
(26,919)
(8,165)
Adjusted net income
$
22,267
$
36,182
$
47,282
$
97,338
Adjusted diluted earnings per share
$
0.31
$
0.55
$
0.67
$
1.49
__________________________
(1)
Acquisition/divestiture-related
and non-recurring expenses for the third quarter and first three
quarters of 2022 primarily includes acquisition and integration
expenses for the Yuma and Crisco acquisitions.
Acquisition/divestiture-related and non-recurring expenses for the
third quarter and first three quarters of 2021 primarily includes
acquisition and integration expenses for the Crisco acquisition and
certain cost savings initiatives.
(2)
During the first quarter of 2022,
the Company completed the closure and sale of its Portland, Maine
manufacturing facility. The Company recorded a gain on the sale of
the Portland property, plant and equipment of $7.1 million during
the first quarter of 2022. The positive impact during the quarter
of the gain on sale was partially offset by approximately $2.2
million of expenses incurred during the quarter relating to the
closure of the facility and the transfer of manufacturing
operations, resulting in a net benefit of $4.9 million from the
gain on sale.
(3)
For the first three quarters of
2021, amortization of acquisition-related inventory step-up of $5.1
million (or $3.8 million, net of tax) relates to the purchase
accounting adjustments made to inventory acquired in the Crisco
acquisition.
(4)
During the second quarter of
2022, the Company paid a fee of $1.6 million (or $1.2 million, net
of tax) to amend its senior secured credit agreement to temporarily
increase the maximum consolidated leverage ratio permitted under
the Company’s revolving credit facility.
(5)
During the third quarter of 2021,
the Company reached an agreement to sell its Portland, Maine
manufacturing facility. In connection with the sale and closure of
the facility, the Company incurred a multi-employer pension plan
withdrawal liability payable over 20 years in installments of
approximately $0.9 million per year. As of October 1, 2022, the
multi-employer pension plan withdrawal liability has a remaining
estimated present value of approximately $13.6 million.
(6)
In connection with the Company’s
previously announced transition to a business unit structure, the
Company has decided to divest its Back to Nature business, which is
no longer core to the Company’s overall business or long-term
strategy. The Company is actively seeking to sell the Back to
Nature business. As a result, the Company reclassified $109.9
million of indefinite-lived trademark intangible assets, $29.5
million of goodwill, $11.0 million of finite-lived customer
relationship intangible assets and $7.4 million of inventories to
assets held for sale. The Company then measured the assets held for
sale at the lower of their carrying value or fair value less
anticipated costs to sell and recorded pre-tax, non-cash impairment
charges of $103.6 million during the third quarter of 2022.
(7)
Represents the tax effects of the
non-GAAP adjustments listed above assuming a tax rate of 24.5%.
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Base
Business Net Sales(1) to Net Sales
(In thousands)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
October 1,
October 2,
October 1,
October 2,
2022
2021
2022
2021
Net sales
$
528,396
$
514,965
$
1,539,768
$
1,484,474
Net sales from acquisitions(2)
(876)
—
(1,518)
—
Net sales from discontinued brands(3)
20
(464)
(267)
(2,282)
Base business net sales
$
527,540
$
514,501
$
1,537,983
$
1,482,192
__________________________
(1)
Base business net sales is a
non-GAAP financial measure used by management to measure operating
performance. The Company defines base business net sales as the
Company’s net sales excluding (1) the net sales of acquisitions
until the net sales from such acquisitions are included in both
comparable periods and (2) net sales of discontinued or divested
brands. 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. For discontinued or divested
brands, the entire amount of net sales is excluded from each fiscal
period being compared. The Company has included this financial
measure because management believes it provides useful and
comparable trend information regarding the results of the Company’s
business without the effect of the timing of acquisitions and the
effect of discontinued or divested brands.
(2)
Reflects net sales from the Yuma
acquisition, for which there is no comparable period of net sales
during the third quarter and first three quarters of 2021,
respectively. The Yuma acquisition was completed on May 5,
2022.
(3)
Reflects net sales of the
SnackWell’s and Farmwise brands, which have been
discontinued.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005978/en/
Investor Relations: ICR, Inc. Dara Dierks 866.211.8151 Media
Relations: ICR, Inc. Matt Lindberg 203.682.8214
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