B&G Foods, Inc. (NYSE: BGS) today announced financial
results for the second quarter and first two quarters of 2023.
Summary
Second Quarter of 2023
First Two Quarters of
2023
(In millions, except per share
data)
Change vs.
Change vs.
Amount
Q2 2022
Amount
First 2Q 2022
Net Sales
$
469.6
(1.9
)
%
$
981.5
(3.0
)
%
Base Business Net Sales 1
$
469.5
0.1
%
$
980.9
(0.6
)
%
Diluted EPS
$
0.15
nm
%
$
0.19
(44.1
)
%
Adj. Diluted EPS 1
$
0.15
114.3
%
$
0.41
13.9
%
Net Income
$
10.6
4,022.3
%
$
14.0
(41.6
)
%
Adj. Net Income 1
$
10.7
108.7
%
$
29.8
19.3
%
Adj. EBITDA 1
$
68.5
26.4
%
$
150.8
18.6
%
Guidance for Full Year Fiscal 2023
- Net sales revised to a range of $2.110 billion to $2.130
billion.
- Adjusted EBITDA reaffirmed at a range of $310 million to $330
million.
- Adjusted diluted earnings per share reaffirmed at a range of
$0.95 to $1.15.
Commenting on the results, Casey Keller, President and Chief
Executive Officer of B&G Foods, stated, “Second quarter results
demonstrated strong profit and margin recovery, with gross profit
as a percentage of net sales increasing by more than 500 basis
points over the second quarter of last year. Further, we continued
to drive stronger cash flow and improve the balance sheet with
steady reduction in our net leverage.”
Financial Results for the Second Quarter of 2023
Net sales for the second quarter of 2023 decreased $9.4 million,
or 1.9%, to $469.6 million from $479.0 million for the second
quarter of 2022. The decrease was primarily attributable to the
Back to Nature divestiture. Net sales of Back to Nature, which the
Company divested on January 3, 2023, and therefore not part of the
Company’s fiscal 2023 results, were $9.8 million during the second
quarter of 20222.
Base business net sales for the second quarter of 2023 increased
$0.4 million, or 0.1%, to $469.5 million from $469.1 million for
the second quarter of 2022. The increase in base business net sales
was driven by an increase in net pricing and the impact of product
mix of $54.1 million, or 11.5% of base business net sales, largely
offset by a decrease in unit volume of $52.1 million and the
negative impact of foreign currency of $1.6 million.
Net sales of Clabber Girl increased $8.3 million, or 43.7%; net
sales of Maple Grove Farms increased $0.6 million, or 2.9%; and net
sales of Cream of Wheat increased $0.3 million, or 1.9%, for the
second quarter of 2023, as compared to the second quarter of 2022.
Net sales of the Company’s spices & seasonings3 decreased $6.4
million, or 6.7%; net sales of Green Giant (including Le Sueur)
decreased $4.9 million, or 4.4%; net sales of Crisco decreased $4.8
million, or 6.7%; and net sales of Ortega decreased $0.2 million,
or 0.5%, for the second quarter of 2023, as compared to the second
quarter of 2022. Base business net sales of all other brands in the
aggregate increased $7.5 million, or 7.8%, for the second quarter
of 2023, as compared to the second quarter of 2022.
Gross profit was $102.3 million for the second quarter of 2023,
or 21.8% of net sales. Excluding the negative impact of $0.4
million of acquisition/divestiture-related expenses and
non-recurring expenses included in cost of goods sold during the
second quarter of 2023, the Company’s gross profit would have been
$102.7 million, or 21.9% of net sales. Gross profit was $76.5
million for the second quarter of 2022, or 16.0% of net sales.
Excluding the negative impact of $2.3 million of
acquisition/divestiture-related expenses and non-recurring expenses
included in cost of goods sold during the second quarter of 2022,
the Company’s gross profit would have been $78.8 million, or 16.5%
of net sales.
The improvements in gross profit and gross profit as a
percentage of net sales were driven by an increase in net pricing
as compared to the second quarter of 2022 and the impact of
moderating input cost inflation and lower transportation and
warehousing costs. During the fourth quarter of 2022, the Company
began to more fully realize the benefits of previously announced
list price increases. This trend continued during the first and
second quarters of 2023, with the impact of previously announced
list price increases the primary driver of recoveries in gross
profit and gross profit as a percentage of net sales.
Selling, general and administrative expenses increased $3.7
million, or 8.3%, to $47.9 million for the second quarter of 2023
from $44.2 million for the second quarter of 2022. The increase was
composed of increases in general and administrative expenses of
$3.0 million, consumer marketing expenses of $2.0 million, selling
expenses of $0.6 million, and warehousing expenses of $0.1 million,
partially offset by a decrease in acquisition/divestiture-related
and non-recurring expenses of $2.0 million. Expressed as a
percentage of net sales, selling, general and administrative
expenses increased by 1.0 percentage points to 10.2% for the second
quarter of 2023, as compared to 9.2% for the second quarter of
2022.
Net interest expense increased $5.9 million, or 19.6%, to $35.8
million for the second quarter of 2023 from $29.9 million for the
second quarter of 2022. The increase was primarily attributable to
higher interest rates on the Company’s variable rate borrowings,
partially offset by a reduction in average long-term debt
outstanding of $49.2 million and the $0.8 million gain on
extinguishment of debt described below. The reduction in average
long-term debt outstanding in the second quarter of 2023 as
compared to the second quarter of 2022 resulted primarily from the
Company’s use of $50.0 million of the gross proceeds of the Back to
Nature divestiture and an additional $71.0 million of cash on hand
to make aggregate prepayments of $121.0 million principal amount of
term loans during the first quarter of 2023, as well as the
Company’s repurchase of $24.4 million aggregate principal amount of
its 5.25% senior notes due 2025 in open market purchases at an
average discounted repurchase price of 95.74% of such principal
amount plus accrued and unpaid interest during the second quarter
of 2023, partially offset by an increase in average revolver
borrowings outstanding of approximately $77.9 million.
The Company’s net income was $10.6 million, or $0.15 per diluted
share, for the second quarter of 2023, compared to net income of
$0.3 million, or $0.00 per diluted share, for the second quarter of
2022. The Company’s adjusted net income for the second quarter of
2023 was $10.7 million, or $0.15 per adjusted diluted share,
compared to adjusted net income of $5.1 million, or $0.07 per
adjusted diluted share, for the second quarter of 2022.
For the second quarter of 2023, adjusted EBITDA was $68.5
million, an increase of $14.4 million, or 26.4%, compared to $54.1
million for the second quarter of 2022. The increase in adjusted
EBITDA was primarily attributable to the improvement in gross
profit described above. Adjusted EBITDA as a percentage of net
sales was 14.6% for the second quarter of 2023, compared to 11.3%
for the second quarter of 2022.
Financial Results for the First Two Quarters of 2023
Net sales for the first two quarters of 2023 decreased $29.9
million, or 3.0%, to $981.5 million from $1,011.4 million for the
first two quarters of 2022. The decrease was primarily attributable
to the Back to Nature divestiture, partially offset by the Yuma
acquisition. Net sales of Back to Nature, which the Company
divested on January 3, 2023, and therefore not part of the
Company’s fiscal 2023 results, were $24.2 million during the first
two quarters of 20222. An additional four months of net sales from
the Yuma acquisition, which was completed on May 5, 2022,
contributed an incremental $0.6 million to the Company’s net sales
for the first two quarters of 2023.
Base business net sales for the first two quarters of 2023
decreased $6.0 million, or 0.6%, to $980.9 million from $986.9
million for the first two quarters of 2022. The decrease in base
business net sales was driven by a decrease in unit volume of
$119.6 million and the negative impact of foreign currency of $3.6
million, largely offset by an increase in net pricing and the
impact of product mix of $117.3 million, or 11.9% of base business
net sales.
Net sales of Clabber Girl increased $14.8 million, or 37.0%; net
sales of the Company’s spices & seasonings3 increased $2.1
million, or 1.1%; and net sales of Maple Grove Farms increased $1.2
million, or 2.8%, in the first two quarters of 2023 as compared to
the first two quarters of 2022. Net sales of Green Giant (including
Le Sueur) decreased $14.9 million, or 6.0%; net sales of Crisco
decreased $11.4 million, or 7.6%; net sales of Ortega decreased
$4.3 million, or 5.5%; and net sales of Cream of Wheat decreased
$0.1 million, or 0.1%, in the first two quarters of 2023, as
compared to the first two quarters of 2022. Base business net sales
of all other brands in the aggregate increased $6.6 million, or
3.2%, for the first two quarters of 2023, as compared to the first
two quarters of 2022.
Gross profit was $216.5 million for the first two quarters of
2023, or 22.1% of net sales. Excluding the negative impact of $1.1
million of acquisition/divestiture-related expenses and
non-recurring expenses included in cost of goods sold during the
first two quarters of 2023, the Company’s gross profit would have
been $217.6 million, or 22.2% of net sales. Gross profit was $177.8
million for the first two quarters of 2022, or 17.6% of net sales.
Excluding the negative impact of $4.4 million of
acquisition/divestiture-related expenses and non-recurring expenses
included in cost of goods sold during the first two quarters of
2022, the Company’s gross profit would have been $182.2 million, or
18.0% of net sales.
The improvements in gross profit and gross profit as a
percentage of net sales were driven by an increase in net pricing
as compared to the first two quarters of 2022 and the impact of
moderating input cost inflation and lower transportation and
warehousing costs. During the fourth quarter of 2022, the Company
began to more fully realize the benefits of previously announced
list price increases. This trend continued during the first two
quarters of 2023, with the impact of previously announced list
price increases the primary driver of recoveries in gross profit
and gross profit as a percentage of net sales.
Selling, general and administrative expenses increased $3.6
million, or 3.9%, to $94.6 million for the first two quarters of
2023 from $91.0 million for the first two quarters of 2022. The
increase was composed of increases in general and administrative
expenses of $5.2 million and consumer marketing expenses of $1.8
million, partially offset by decreases in
acquisition/divestiture-related and non-recurring expenses of $1.5
million, warehousing expenses of $1.4 million, and selling expenses
of $0.5 million. Expressed as a percentage of net sales, selling,
general and administrative expenses increased by 0.6 percentage
points to 9.6% for the first two quarters of 2023, as compared to
9.0% for the first two quarters of 2022.
Net interest expense increased $18.5 million, or 32.6%, to $75.2
million for the first two quarters of 2023 from $56.7 million for
the first two quarters of 2022. The increase was primarily
attributable to higher interest rates on the Company’s variable
rate borrowings, as well as the accelerated amortization of
deferred debt financing costs relating to the prepayments described
below, partially offset by a reduction in average long-term debt
outstanding of $12.9 million and the $0.8 million gain on
extinguishment of debt during the second quarter of 2023 described
below. The reduction in average long-term debt outstanding in the
first two quarters of 2023 as compared to the first two quarters of
2022 resulted primarily from the Company’s use of $50.0 million of
the gross proceeds of the Back to Nature divestiture and an
additional $71.0 million of cash on hand to make aggregate
prepayments of $121.0 million principal amount of term loans during
the first quarter of 2023 as well as the Company’s repurchase of
$24.4 million aggregate principal amount of its 5.25% senior notes
due 2025 in open market purchases at an average discounted
repurchase price of 95.74% of such principal amount plus accrued
and unpaid interest during the second quarter of 2023, partially
offset by an increase in average revolver borrowings outstanding of
approximately $77.8 million.
The Company’s net income was $14.0 million, or $0.19 per diluted
share, for the first two quarters of 2023, compared to net income
of $23.9 million, or $0.34 per diluted share, for the first two
quarters of 2022. Net income and diluted earnings per share for the
first two quarters of 2023 were negatively impacted by the net
negative impact on income tax expense of $14.7 million, or $0.21
per share, resulting from the Back to Nature divestiture. The
Company’s adjusted net income for the first two quarters of 2023
was $29.8 million, or $0.41 per adjusted diluted share, compared to
adjusted net income of $25.0 million, or $0.36 per adjusted diluted
share, for the first two quarters of 2022.
For the first two quarters of 2023, adjusted EBITDA was $150.8
million, an increase of $23.7 million, or 18.6%, compared to $127.1
million for the first two quarters of 2022. The increase in
adjusted EBITDA was primarily attributable to the improvement in
gross profit described above. Adjusted EBITDA as a percentage of
net sales was 15.4% for the first two quarters of 2023, compared to
12.6% for the first two quarters of 2022.
Senior Note Repurchases
During the second quarter of 2023, the Company repurchased $24.4
million aggregate principal amount of its 5.25% senior notes due
2025 in open market purchases at an average discounted repurchase
price of 95.74% of such principal amount plus accrued and unpaid
interest, which resulted in a pre-tax gain in the second quarter of
2023 of $0.8 million, net of the accelerated amortization of
deferred debt financing costs of $0.2 million. As of July 1, 2023,
$875.6 million aggregate principal amount of the 5.25% senior notes
due 2025 remained outstanding.
Full Year Fiscal 2023 Guidance
B&G Foods revised its net sales guidance for fiscal 2023 to
a range of $2.110 billion to $2.130 billion, reaffirmed its
adjusted EBITDA guidance at a range of $310 million to $330
million, and reaffirmed its adjusted diluted earnings per share
guidance at a range of $0.95 to $1.15.
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); gains and losses on extinguishment of
debt; impairment of assets held for sale; impairment of intangible
assets; 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,
August 3, 2023 to discuss second quarter 2023 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 adjusted for certain items
that affect comparability), “adjusted diluted earnings per share,”
(diluted earnings 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 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), gains and losses 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 and to
net cash provided by operating activities, is included below for
the second quarter and first two quarters of 2023 and 2022, 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.
- Excludes net sales of certain Back to Nature products not part
of the divestiture that the Company will soon transition to another
brand name.
- 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.
nm – Not meaningful.
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 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 and adjusted
diluted earnings per share, and the Company’s overall expectations
for the remainder of fiscal 2023 and beyond. 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 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 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 impact pandemics or disease outbreaks, such as
the COVID-19 pandemic, may have on the Company’s business,
including among other things, the Company’s supply chain,
manufacturing operations or workforce and customer and consumer
demand for the Company’s products; 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, other disruption or data
leak; 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; 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)
July 1,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
42,772
$
45,442
Trade accounts receivable, net
142,841
150,019
Inventories
674,682
726,468
Assets held for sale
—
51,314
Prepaid expenses and other current
assets
41,451
37,550
Income tax receivable
12,810
8,024
Total current assets
914,556
1,018,817
Property, plant and equipment, net
308,405
317,587
Operating lease right-of-use assets
64,600
65,809
Finance lease right-of-use assets
2,362
2,891
Goodwill
619,399
619,241
Other intangible assets, net
1,778,097
1,788,157
Other assets
20,816
19,088
Deferred income taxes
10,472
10,019
Total assets
$
3,718,707
$
3,841,609
Liabilities and Stockholders’
Equity
Current liabilities:
Trade accounts payable
$
136,308
$
127,809
Accrued expenses
61,461
64,137
Current portion of operating lease
liabilities
15,274
14,616
Current portion of finance lease
liabilities
1,057
1,046
Current portion of long-term debt
—
50,000
Income tax payable
3,346
309
Dividends payable
13,735
13,617
Total current liabilities
231,181
271,534
Long-term debt, net of current portion
2,245,630
2,339,049
Deferred income taxes
302,943
288,712
Long-term operating lease liabilities, net
of current portion
49,683
51,727
Long-term finance lease liabilities, net
of current portion
1,263
1,795
Other liabilities
21,644
20,626
Total liabilities
2,852,344
2,973,443
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; 72,291,573 and 71,668,144 shares
issued and outstanding as of July 1, 2023 and December 31, 2022,
respectively
723
717
Additional paid-in capital
—
—
Accumulated other comprehensive loss
384
(9,349
)
Retained earnings
865,256
876,798
Total stockholders’ equity
866,363
868,166
Total liabilities and stockholders’
equity
$
3,718,707
$
3,841,609
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations (In thousands,
except per share data) (Unaudited)
Second Quarter Ended
First Two Quarters
Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Net sales
$
469,637
$
478,965
$
981,451
$
1,011,372
Cost of goods sold
367,361
402,468
764,939
833,587
Gross profit
102,276
76,497
216,512
177,785
Operating (income) and expenses:
Selling, general and administrative
expenses
47,872
44,197
94,601
91,037
Amortization expense
5,211
5,359
10,452
10,582
Loss (gain) on sales of assets
—
—
85
(7,099
)
Operating income
49,193
26,941
111,374
83,265
Other (income) and expenses:
Interest expense, net
35,814
29,941
75,249
56,743
Other income
(936
)
(1,848
)
(1,857
)
(3,687
)
Income (loss) before income tax expense
(benefit)
14,315
(1,152
)
37,982
30,209
Income tax expense (benefit)
3,762
(1,408
)
24,014
6,297
Net income
$
10,553
$
256
$
13,968
$
23,912
Weighted average shares outstanding:
Basic
72,237
69,904
72,008
69,267
Diluted
72,380
70,286
72,087
69,652
Earnings per share:
Basic
$
0.15
$
—
$
0.19
$
0.35
Diluted
$
0.15
$
—
$
0.19
$
0.34
Cash dividends declared per share
$
0.190
$
0.475
$
0.380
$
0.950
B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability Reconciliation of Net
Income to EBITDA and Adjusted EBITDA (In thousands)
(Unaudited)
Second Quarter Ended
First Two Quarters
Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Net income
$
10,553
$
256
$
13,968
$
23,912
Income tax expense (benefit)
3,762
(1,408
)
24,014
6,297
Interest expense, net(1)
35,814
29,941
75,249
56,743
Depreciation and amortization
17,286
20,474
35,304
40,299
EBITDA(2)
67,415
49,263
148,535
127,251
Acquisition/divestiture-related and
non-recurring expenses(3)
1,036
4,877
2,196
4,790
Loss (gain) on sales of assets, net of
facility closure costs(4)
—
—
85
(4,928
)
Adjusted EBITDA(2)
$
68,451
$
54,140
$
150,816
$
127,113
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)
Second Quarter Ended
First Two Quarters
Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Net cash provided by (used in) operating
activities
$
62,850
$
(4,104
)
$
132,377
$
21,127
Income tax expense (benefit)
3,762
(1,408
)
24,014
6,297
Interest expense, net(1)
35,814
29,941
75,249
56,743
Gain on extinguishment of debt(1)
786
—
786
—
(Loss) gain on sales of assets(4)
(84
)
—
(177
)
7,113
Deferred income taxes
(78
)
2,383
(15,097
)
(530
)
Amortization of deferred debt financing
costs and bond discount/premium
(1,036
)
(1,177
)
(4,684
)
(2,346
)
Share-based compensation expense
(2,374
)
(1,158
)
(3,301
)
(2,248
)
Changes in assets and liabilities, net of
effects of business combinations
(32,225
)
24,786
(60,632
)
41,095
EBITDA(2)
67,415
49,263
148,535
127,251
Acquisition/divestiture-related and
non-recurring expenses(3)
1,036
4,877
2,196
4,790
Loss (gain) on sales of assets, net of
facility closure costs(4)
—
—
85
(4,928
)
Adjusted EBITDA(2)
$
68,451
$
54,140
$
150,816
$
127,113
B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability Reconciliation of Net
Income to Adjusted Net Income and Adjusted Diluted Earnings per
Share (In thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended
Twenty-six Weeks Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Net income
$
10,553
$
256
$
13,968
$
23,912
Gain on extinguishment of debt(1)
(786
)
—
(786
)
—
Acquisition/divestiture-related and
non-recurring expenses(3)
1,036
4,877
2,196
4,790
Loss (gain) on sales of assets, net of
facility closure costs(4)
—
—
85
(4,928
)
Credit agreement amendment fee(5)
—
1,600
—
1,600
Tax adjustment(6)
—
—
14,736
—
Tax effects of non-GAAP adjustments(7)
(61
)
(1,587
)
(366
)
(358
)
Adjusted net income
$
10,742
$
5,146
$
29,833
$
25,016
Adjusted diluted earnings per share
$
0.15
$
0.07
$
0.41
$
0.36
_____________________________
(1)
Net interest expense for the
second quarter and first two quarters of 2023 was reduced by $0.8
million as a result of a gain on extinguishment of debt related to
the Company’s repurchase of $24.4 million aggregate principal
amount of its 5.25% senior notes due 2025 in open market purchases
at an average discounted repurchase price of 95.74% of such
principal amount plus accrued and unpaid interest, which resulted
in a pre-tax gain of $0.8 million, net of the accelerated
amortization of deferred debt financing costs of $0.2 million.
(2)
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 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); gains and losses on extinguishment of debt;
impairment of assets held for sale; impairment of intangible
assets; 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, 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 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.
(3)
Acquisition/divestiture-related
and non-recurring expenses for the second quarter and first two
quarters of 2023 of $1.0 million (or $0.8 million, net of tax) and
$2.2 million (or $1.7 million, net of tax), respectively, primarily
includes acquisition and integration expenses for the Crisco
acquisition and 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 divestiture-related expenses for the Back to
Nature divestiture. Acquisition/divestiture-related and
non-recurring expenses for the second quarter and first two
quarters of 2022 of $4.9 million (or $3.7 million, net of tax) and
$4.8 million (or $3.6 million, net of tax), respectively, primarily
includes acquisition and integration expenses for the Crisco and
Yuma acquisitions, and certain cost savings initiatives.
(4)
During the first quarter of 2023,
the Company completed the Back to Nature divestiture and recorded a
loss on the sale of $0.1 million. 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 (or $3.7
million, net of tax) from the gain on sale.
(5)
During the second quarter of
2022, the Company paid a fee of $1.6 million (or $1.2 million, net
of tax) to amend the Company’s senior secured credit agreement to
temporarily increase the maximum consolidated leverage ratio
permitted under the Company’s revolving credit facility.
(6)
As a result of the Back to Nature
divestiture, the Company incurred a capital loss for tax purposes,
for which the Company recorded a deferred tax asset during the
first quarter of 2023. A valuation allowance has been recorded
against this deferred tax asset, which negatively impacted the
Company’s first quarter of 2023 income tax expense by $14.7
million, or $0.21 per share.
(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 Net Sales
to Base Business Net Sales(1) (In thousands)
(Unaudited)
Second Quarter Ended
First Two Quarters
Ended
July 1,
July 2,
July 1,
July 2,
2023
2022
2023
2022
Net sales
$
469,637
$
478,965
$
981,451
$
1,011,372
Net sales from acquisitions(2)
(123
)
—
(550
)
—
Net sales from discontinued or divested
brands(3)
1
(9,856
)
31
(24,496
)
Base business net sales
$
469,515
$
469,109
$
980,932
$
986,876
(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 first month of the second quarter of 2022 and the first
four months of the first two quarters of 2022. The Yuma acquisition
was completed on May 5, 2022.
(3)
For the second quarter and first
two quarters of 2022, reflects net sales of the Back to Nature
brand, which was sold on January 3, 2023, and net sales of the
SnackWell’s and Farmwise brands, which have been discontinued. For
the second quarter and first two quarters of 2023, reflects a net
credit paid to customers relating to the discontinued brands.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803139920/en/
Investor Relations: ICR, Inc. Dara Dierks 866.211.8151
Media Relations: ICR, Inc. Matt Lindberg 203.682.8214
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