— Provides Update Regarding Impact and
Expected Future Impact of COVID-19 on the Company —
B&G Foods, Inc. (NYSE: BGS) today announced financial
results for the first quarter of 2020 and provided an update as to
how the COVID-19 pandemic is impacting the Company.
First Quarter 2020 Financial Summary (vs. First Quarter
2019 where applicable):
- Net sales increased 8.9% to $449.4 million
- Base business net sales1 increased 4.3% to $430.5 million
- Diluted earnings per share increased 69.2% to $0.44
- Adjusted diluted earnings per share1 increased 4.5% to
$0.46
- Net income increased 67.3% to $28.1 million
- Adjusted net income1 increased 0.6% to $29.2 million
- Adjusted EBITDA1 increased 6.4% to $80.7 million
Update Regarding Impact and Expected Future Impact of
COVID-19 on the Company Business Impact. Commenting on the
impact the COVID-19 pandemic has had on the Company, Kenneth G.
Romanzi, President and Chief Executive Officer of B&G Foods,
stated, “The onset of the terrible COVID-19 pandemic and the
resultant stay-at-home orders throughout the country drove
significant changes in consumers’ lives requiring them to cook and
eat at home. This drove a significant increase in consumption
across our portfolio of brands beginning in mid-March that has
continued into early May. As a result, we had a very positive first
quarter that was ahead of our expectations and have strong momentum
entering the second quarter.”
“Consistent with our core values, the health and safety of our
employees and the quality and safety of our products have been, and
continue to be, our highest priorities. At B&G Foods, we have
implemented a wide range of precautionary measures at our
manufacturing facilities and other work locations in response to
COVID-19. We have also been working closely with our supply chain
partners and our customers to ensure that we can continue to
provide uninterrupted service. Thanks to the tremendous efforts of
our employees, especially those throughout our supply chain, our
ability to serve our customers has not, to date, been materially
impacted. Our employees are our true heroes and we are very proud
of how they are performing through this crisis.”
Precautionary measures that B&G Foods has taken to protect
its employees, customers, suppliers and other business partners,
and to maintain the Company’s ability to supply food products,
include, among many others, the following:
- the establishment of a COVID-19 task force consisting of
Company executives and other members of senior management;
- social distancing and the required wearing of face masks at all
manufacturing locations and the installation of plexiglass barriers
at spots where line workers must work in close proximity;
- enhanced sanitization procedures at all manufacturing and other
work locations;
- screening of all employees, including temperature checks,
before entering manufacturing facilities;
- quarantining for at least 14 days (with pay) of all employees
who may have been exposed to COVID-19 or who are exhibiting any
symptoms of COVID-19;
- manufacturing plant shutdowns for sanitization upon any
COVID-19 positive test;
- the notification of manufacturing employees of any COVID-19
positive tests at their manufacturing location and the quarantining
for at least 14 days (with pay) any employee who may have had
contact with the employee who tested positive;
- instituting a work from home policy for office workers until at
least June 1, 2020; and
- constant communication with the Company’s customers and supply
chain partners.
1 Please see “About Non-GAAP Financial Measures and Items
Affecting Comparability” below for the definition of the non-GAAP
financial measures “adjusted diluted earnings per share,” “adjusted
net income,” “EBITDA,” “adjusted EBITDA” and “base business net
sales,” as well as information concerning certain items affecting
comparability and reconciliations of the non-GAAP terms to the most
comparable GAAP financial measures.
Mr. Romanzi also stated, “We have rewarded our dedicated
employees at our manufacturing facilities by increasing wages for
hourly employees by $2.00 per hour from March 30 through at least
May 22 and providing supervisors and managers with bonuses of up to
$500 per employee.”
“We continue to monitor the latest guidance from the CDC, FDA
and other federal, state and local authorities regarding COVID-19
and will continue to support our employees and our communities and
do our part to keep our nation supplied with food during this
difficult time.”
Financial Impact to Date. The Company had a strong first
quarter of 2020, driven by an out-sized March as the COVID-19
pandemic had a significant impact on consumer behavior. After a
slow start in the first part of the quarter, the Company began to
see a significant increase in net sales in the second half of March
2020 as the COVID-19 pandemic reached the United States and
consumers began pantry loading and increasing their at-home
consumption as a result of increased social distancing and
stay-at-home mandates.
Increases in net sales by the Company to supermarkets, mass
merchants, warehouse clubs, wholesalers and e-commerce customers
have more than offset declines at foodservice customers.2 This
trend has continued in April, with the Company’s net sales in April
2020 increasing more than $70 million, or more than 60%, as
compared to net sales in April 2019.
As reflected above, the pandemic has to date had a positive
impact on the Company’s operating results and therefore the
Company’s net cash provided by operating activities. However, out
of an abundance of caution, the Company made a revolver draw of
$100.0 million in mid-March 2020 under the Company’s $700.0 million
revolving credit facility. As a result, the Company ended the first
quarter of 2020 with cash and cash equivalents of $127.1 million.
Net of letters of credit of $1.6 million, the Company has remaining
available borrowing capacity under its revolving credit facility of
$598.4 million.
Guidance. Although B&G Foods’ management believes
that B&G Foods’ net sales and adjusted EBITDA for full year
fiscal 2020 will materially exceed the full year fiscal 2020 net
sales and adjusted EBITDA guidance provided by management when the
Company reported fiscal 2019 results in February 2020, the
Company’s management is unable to fully estimate the impact the
COVID-19 pandemic will have on the Company’s second quarter, third
quarter and full year fiscal 2020 results and therefore is unable
at this time to provide guidance for the remainder of 2020. The
ultimate impact of the COVID-19 pandemic on the Company’s business
will depend on many factors, including, among others, the duration
of social distancing and stay-at-home mandates and whether a second
or third wave 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 and maintain its supply chain without
material disruption, and the extent to which macroeconomic
conditions resulting from the pandemic and the pace of the
subsequent recovery may impact consumer eating habits.
2 For fiscal 2019, the Company’s net sales to foodservice
customers represented approximately 13% of the Company’s overall
net sales.
Financial Results for the First Quarter of 2020 Net sales
for the first quarter of 2020 increased $36.7 million, or 8.9%, to
$449.4 million from $412.7 million for the first quarter of 2019.
The increase was attributable to the Clabber Girl acquisition and
materially increased net sales in March (as compared to March 2019)
resulting from increased demand for the Company’s products due to
the COVID-19 pandemic. Net sales of Clabber Girl, which was
acquired on May 15, 2019 and therefore not part of the Company’s
first quarter of 2019 results, contributed $18.7 million to the
Company’s net sales for the first quarter of 2020.
Base business net sales for the first quarter of 2020 increased
$17.8 million, or 4.3%, to $430.5 million from $412.7 million for
the first quarter of 2019. The increase in base business net sales
reflected an increase in net pricing (inclusive of list price
increases announced in 2019 and promotional trade spend
optimization) of $9.2 million, or 2.2% of base business net sales,
an increase in unit volume of $8.2 million and the positive impact
of foreign currency of $0.4 million.
Net sales of Green Giant (including Le Sueur) increased $22.2
million, or 16.3%; net sales of Cream of Wheat increased $1.5
million, or 8.7%; net sales of Ortega increased $1.5 million, or
4.1%; and net sales of Maple Grove Farms increased $0.5 million, or
3.0%, in the first quarter of 2020, as compared to the first
quarter of 2019. Net sales of the Company’s spices &
seasonings3 decreased $12.9 million, or 15.0%, for the first
quarter of 2020 as compared to the first quarter of 2019. Net sales
of all other brands in the aggregate increased $5.0 million, or
4.0%, for the first quarter of 2020.
Gross profit was $104.9 million for the first quarter of 2020,
or 23.3% of net sales. Excluding the negative impact of $2.3
million of acquisition/divestiture-related and non-recurring
expenses during the first quarter of 2020, the Company’s gross
profit would have been $107.2 million, or 23.9% of net sales. Gross
profit was $88.1 million for the first quarter of 2019, or 21.3% of
net sales. Excluding the negative impact of $13.1 million of
acquisition/divestiture-related and non-recurring expenses during
the first quarter of 2019, which includes expenses relating to the
non-cash accounting impact of the Company’s 2018 inventory
reduction plan, the Company’s gross profit would have been $101.2
million, or 24.5% of net sales.
Selling, general and administrative expenses increased $1.7
million, or 4.4%, to $40.0 million for the first quarter of 2020
from $38.3 million for the first quarter of 2019. The increase was
composed of increases in selling expenses of $2.0 million and other
general and administrative expenses of $1.7 million, partially
offset by decreases in acquisition/divestiture-related and
non-recurring expenses of $1.2 million, consumer marketing expenses
of $0.5 million and warehousing expenses of $0.3 million. Expressed
as a percentage of net sales, selling, general and administrative
expenses improved by 0.4 percentage points to 8.9% for the first
quarter of 2020, compared to 9.3% for the first quarter of
2019.
Net interest expense increased $2.9 million, or 12.8%, to $26.0
million for the first quarter of 2020 from $23.1 million in the
first quarter of 2019. The increase was primarily attributable to
an increase in average long-term debt outstanding during the first
quarter of 2020 as compared to the first quarter of 2019, primarily
as a result of borrowings made during the last three quarters of
fiscal 2019 primarily to fund the Clabber Girl acquisition, to pay
cash taxes resulting from the 2018 gain on sale of Pirate Brands
and to fund the repurchase of shares of the Company’s common stock
as part of the Company’s stock repurchase program, and the $100.0
million revolver draw made by the Company in March 2020 described
above.
The Company’s net income was $28.1 million, or $0.44 per diluted
share, for the first quarter of 2020, compared to net income of
$16.8 million, or $0.26 per diluted share, for the first quarter of
2019. The Company’s adjusted net income for the first quarter of
2020 was $29.2 million, or $0.46 per adjusted diluted share,
compared to $29.1 million, or $0.44 per adjusted diluted share, for
the first quarter of 2019.
For the first quarter of 2020, adjusted EBITDA was $80.7
million, an increase of $4.9 million, or 6.4%, compared to $75.8
million for the first quarter of 2019. The increase in adjusted
EBITDA was primarily attributable to the positive impact of the
COVID-19 pandemic on the Company’s net sales, as well as the
acquisition of Clabber Girl in the second quarter of 2019. Adjusted
EBITDA as a percentage of net sales was 18.0% for the first quarter
of 2020, compared to 18.4% in the first quarter of 2019.
3 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.
Conference Call B&G Foods will hold a conference call
at 4:30 p.m. ET today, May 5, 2020 to discuss first quarter 2020
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, depreciation and
amortization and loss on extinguishment of debt) 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 sale of
assets), non-recurring expenses, gains and losses and the non-cash
accounting impact of the Company’s inventory reduction plan) are
“non-GAAP financial measures.” A non-GAAP financial measure is a
numerical measure of financial performance that excludes or
includes amounts so as to be different than the most directly
comparable measure calculated and presented in accordance with GAAP
in B&G Foods’ consolidated balance sheets and related
consolidated statements of operations, comprehensive income,
changes in stockholders’ equity and cash flows. Non-GAAP financial
measures should not be considered in isolation or as a substitute
for the most directly comparable GAAP measures. The Company’s
non-GAAP financial measures may be different from non-GAAP
financial measures used by other companies.
The Company uses 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 first quarter of 2020 and 2019, 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.
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, Cream of Wheat, 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’ net sales,
adjusted EBITDA and overall expectations for fiscal 2020 and
beyond, including statements related to the future impact of the
COVID-19 pandemic on the Company’s business and financial results.
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 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; the Company’s
substantial leverage; the effects of rising costs for the Company’s
raw materials, packaging and ingredients; 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 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; tax reform
and legislation, including the effects of the U.S. Tax Cuts and
Jobs Act; 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 successfully
complete the implementation of additional modules and the
integration and operation of a new enterprise resource planning
(ERP) system; the Company’s ability to protect information systems
against, or effectively respond to, a cybersecurity incident or
other disruption; the Company’s sustainability initiatives and
changes to environmental laws and regulations; and other factors
that affect the food industry generally. 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)
March 28,
December 28,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
127,068
$
11,315
Trade accounts receivable, net
200,563
143,908
Inventories
399,189
472,187
Prepaid expenses and other current
assets
25,815
25,449
Income tax receivable
19,087
8,934
Total current assets
771,722
661,793
Property, plant and equipment, net
289,640
304,934
Operating lease right-of-use assets,
net
38,313
38,698
Goodwill
599,557
596,391
Other intangible assets, net
1,610,404
1,615,126
Other assets
3,191
3,277
Deferred income taxes
5,957
7,371
Total assets
$
3,318,784
$
3,227,590
Liabilities and Stockholders’
Equity
Current liabilities:
Trade accounts payable
$
102,629
$
114,936
Accrued expenses
59,179
55,659
Current portion of operating lease
liabilities
10,806
9,813
Current portion of long-term debt
4,500
5,625
Income tax payable
1,728
454
Dividends payable
30,457
30,421
Total current liabilities
209,299
216,908
Long-term debt
1,974,861
1,874,158
Deferred income taxes
268,854
254,339
Long-term operating lease liabilities, net
of current portion
30,513
31,997
Other liabilities
38,970
37,646
Total liabilities
2,522,497
2,415,048
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; 64,120,497 and 64,044,649 shares
issued and outstanding as of March 28, 2020 and December 28, 2019,
respectively
641
640
Additional paid-in capital
—
—
Accumulated other comprehensive loss
(45,947
)
(31,894
)
Retained earnings
841,593
843,796
Total stockholders’ equity
796,287
812,542
Total liabilities and stockholders’
equity
$
3,318,784
$
3,227,590
B&G Foods, Inc. and
Subsidiaries Consolidated Statements of Operations (In thousands,
except per share data) (Unaudited)
First Quarter Ended
March 28,
March 30,
2020
2019
Net sales
$
449,370
$
412,734
Cost of goods sold
344,454
324,655
Gross profit
104,916
88,079
Operating expenses:
Selling, general and administrative
expenses
39,973
38,297
Amortization expense
4,723
4,491
Operating income
60,220
45,291
Other income and expenses:
Interest expense, net
26,039
23,074
Other income
(453
)
(258
)
Income before income tax expense
34,634
22,475
Income tax expense
6,542
5,684
Net income
$
28,092
$
16,791
Weighted average shares outstanding:
Basic
64,047
65,587
Diluted
64,084
65,617
Earnings per share:
Basic
$
0.44
$
0.26
Diluted
$
0.44
$
0.26
Cash dividends declared per share
$
0.475
$
0.475
B&G Foods, Inc. and
Subsidiaries Items Affecting Comparability Reconciliation of EBITDA
and Adjusted EBITDA to Net Income and to Net Cash Provided by
Operating Activities (In thousands) (Unaudited)
First Quarter Ended
March 28,
March 30,
2020
2019
Net income
$
28,092
$
16,791
Income tax expense
6,542
5,684
Interest expense, net
26,039
23,074
Depreciation and amortization
15,534
13,863
EBITDA(1)
76,207
59,412
Acquisition/divestiture-related and
non-recurring expenses(2)
4,483
3,696
Inventory reduction plan impact(3)
—
12,722
Adjusted EBITDA(1)
80,690
75,830
Income tax expense
(6,542
)
(5,684
)
Interest expense, net
(26,039
)
(23,074
)
Acquisition/divestiture-related and
non-recurring expenses(2)
(4,483
)
(3,696
)
Inventory reduction plan impact(3)
—
(12,722
)
Write-off of property, plant and
equipment
2
1
Deferred income taxes
14,397
3,575
Amortization of deferred debt financing
costs and bond discount
898
873
Share-based compensation expense
423
580
Changes in assets and liabilities, net of
effects of business combinations
(1,768
)
14,661
Net cash provided by operating
activities
$
57,578
$
50,344
(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 United
States 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,
depreciation and amortization and loss on extinguishment of debt
(see (1) above). 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 assets); non-recurring expenses, gains
and losses, including severance and other expenses relating to a
workforce reduction; and the non-cash accounting impact of the
Company’s inventory reduction plan. 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 two potential
indicators of an entity’s ability to fund these cash requirements.
EBITDA and adjusted EBITDA are not complete measures of an entity’s
profitability because they do not include 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 first quarter of 2020 of $4.5 million primarily includes
acquisition and integration expenses for the Clabber Girl and
Farmwise acquisitions, and severance and other expenses primarily
relating to a 2019 workforce reduction and certain other cost
savings initiatives. Acquisition/divestiture-related and
non-recurring expenses for the first quarter of 2019 of $3.7
million primarily includes transition expenses for the Pirate
Brands sale and severance and other expenses primarily relating to
a workforce reduction.
(3) Inventory reduction plan impact relates to the Company’s
2018 inventory reduction plan. For the first quarter of 2019,
inventory reduction plan impact of $12.7 million includes the
trailing non-cash accounting impact of the underutilization of the
Company’s manufacturing facilities in 2018 as the Company reduced
inventory during the implementation of the inventory reduction
plan.
B&G Foods, Inc. and
Subsidiaries Items Affecting Comparability Reconciliation of
Adjusted Net Income and Adjusted Diluted Earnings per Share to Net
Income (In thousands, except per share data) (Unaudited)
First Quarter Ended
March 28,
March 30,
2020
2019
Net income
$
28,092
$
16,791
Acquisition/divestiture-related and
non-recurring expenses, net of tax(1)
3,385
2,761
Inventory reduction plan impact, net of
tax(2)
—
9,505
Tax benefit(3)
(2,258
)
—
Adjusted net income
$
29,219
$
29,057
Adjusted diluted earnings per share
$
0.46
$
0.44
(1) Acquisition/divestiture-related and non-recurring expenses
for the first quarter of 2020 primarily includes acquisition and
integration expenses for the Clabber Girl and Farmwise
acquisitions, and severance and other expenses primarily relating
to a 2019 workforce reduction and certain other cost savings
initiatives. Acquisition/divestiture-related and non-recurring
expenses for the first quarter of 2019 primarily includes
transition expenses for the Pirate Brands sale and severance and
other expenses primarily relating to a workforce reduction.
(2) Inventory reduction plan impact relates to the Company’s
2018 inventory reduction plan. For the first quarter of 2019,
inventory reduction plan impact of $12.7 million (or $9.5 million
net of taxes) includes the trailing non-cash accounting impact of
the underutilization of the Company’s manufacturing facilities in
2018 as the Company reduced inventory during the implementation of
the inventory reduction plan.
(3) The first quarter of 2020 includes a $2.3 million tax
benefit associated with the U.S. CARES Act.
B&G Foods, Inc. and
Subsidiaries Items Affecting Comparability Reconciliation of Base
Business Net Sales to Net Sales (In thousands) (Unaudited)
First Quarter Ended
March 28,
March 30,
2020
2019
Net sales
$
449,370
$
412,734
Net sales from acquisitions(1)
(18,916
)
—
Base business net sales(2)
$
430,454
$
412,734
(1) Includes net sales for Clabber Girl and Farmwise for the
first quarter of 2020. Clabber Girl was acquired on May 15, 2019
and Farmwise was acquired on February 19, 2020.
(2) 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.
The definition of base business net sales set forth above, as it
relates to acquisitions, was modified during the third quarter of
2019 from the definition the Company had most recently used. Under
the Company’s most recent prior definition of base business net
sales, for each acquisition, the excluded period started at the
beginning of the most recent fiscal period being compared and ended
on the last day of the quarter in which the first anniversary of
the date of acquisition occurred. The Company believes that it is
more useful to measure base business net sales on a partial quarter
basis based upon the actual period of comparable ownership instead
of adjusting for an entire quarter.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005985/en/
Investor Relations: ICR, Inc. Dara Dierks 866.211.8151
Media Relations: ICR, Inc. Matt Lindberg 203.682.8214
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