— Net Cash Provided by Operating Activities
Increased to $246.4 Million for the First Two Quarters of 2020
—
B&G Foods, Inc. (NYSE: BGS) today announced financial
results for the second quarter and first two quarters of 2020 and
provided an update as to how the COVID-19 pandemic is impacting the
Company.
Second Quarter 2020 Financial Summary (vs. Second Quarter
2019 where applicable):
- Net sales increased 38.1% to $512.5 million
- Base business net sales1 increased 33.9% to $496.9 million
- Diluted earnings per share increased 150.0% to $0.70
- Adjusted diluted earnings per share1 increased 86.8% to
$0.71
- Net income increased 146.1% to $44.9 million
- Adjusted net income1 increased 87.6% to $46.0 million
- Adjusted EBITDA1 increased 44.6% to $102.6 million
- Net cash provided by operating activities for the first two
quarters of 2020 increased to $246.4 million
“At B&G Foods we remain committed to the health and safety
of our employees and doing our part to keep our nation supplied
with food during this difficult time,” stated Kenneth G. Romanzi,
President and Chief Executive Officer of B&G Foods. Mr. Romanzi
continued, “Thanks to the tremendous efforts of our employees, we
were able to achieve both of these goals during the second quarter.
We had an outstanding second quarter in terms of net sales, net
income, adjusted EBITDA and cash flow as our portfolio of brands
served consumers very well as they continued to cook and eat more
at home.”
“We continue to take a wide range of precautionary measures at
our manufacturing facilities and other work locations in response
to COVID-19. And, although we are operating in a very challenging
environment, our employees have done a fantastic job ensuring that
our supply chain has been able to meet an unprecedented increase in
demand for our products.”
Mr. Romanzi, continued, “During the second half of the year, we
remain focused on working closely with our supply chain partners
and our customers to ensure that we can continue to provide
uninterrupted service and meet the increased demand resulting from
the pandemic. At the same time, we will continue our new product
innovation and other brand building efforts as we look to turn some
of this pandemic-related increase in demand into long-term growth
opportunities for our brands.”
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.
Financial Results for the Second Quarter of 2020
Net sales for the second quarter of 2020 increased $141.3
million, or 38.1%, to $512.5 million from $371.2 million for the
second quarter of 2019. The increase was primarily attributable to
materially increased net sales resulting from increased demand for
the Company’s products due to the COVID-19 pandemic. The Company’s
net sales also benefited from the Clabber Girl and Farmwise
acquisitions, which were completed on May 15, 2019 and February 19,
2020, respectively. An additional one and one-half months of net
sales of Clabber Girl and an additional three months of net sales
of Farmwise contributed $15.0 million and $0.6 million,
respectively, to the Company’s net sales for the second quarter of
2020.
Base business net sales1 for the second quarter of 2020
increased $125.7 million, or 33.9%, to $496.9 million from $371.2
million for the second quarter of 2019. The increase in base
business net sales reflected an increase in unit volume of $111.7
million and an increase in net pricing (inclusive of the impact of
the Company’s 2019 list price increases, the trade spend
optimization program the Company initiated in 2019, and a
temporarily lower trade spend environment) of $15.3 million, or
4.1% of base business net sales, partially offset by the negative
impact of foreign currency of $1.3 million.
Net sales of Green Giant (including Le Sueur) increased $51.2
million, or 45.4%; net sales of the Company’s spices &
seasonings2 increased $17.4 million, or 21.4%; net sales of Ortega
increased $12.8 million, or 37.4%; net sales of Cream of Wheat
increased $6.3 million, or 54.0%; and net sales of Maple Grove
Farms increased $0.2 million, or 1.5%, for the second quarter of
2020 as compared to the second quarter of 2019. Net sales of all
other brands in the aggregate increased $37.8 million, or 33.3%,
for the second quarter of 2020.
Gross profit was $134.1 million for the second quarter of 2020,
or 26.2% of net sales. Excluding the negative impact of $0.5
million of acquisition/divestiture-related and non-recurring
expenses during the second quarter of 2020, the Company’s gross
profit would have been $134.6 million, or 26.3% of net sales. Gross
profit was $91.9 million for the second quarter of 2019, or 24.7%
of net sales. Excluding the negative impact of $4.9 million of
acquisition/divestiture-related and non-recurring expenses during
the second quarter of 2019, which includes expenses relating to the
trailing non-cash accounting impact of the Company’s 2018 inventory
reduction plan, the Company’s gross profit would have been $96.8
million, or 26.0% of net sales.
Selling, general and administrative expenses increased $4.4
million, or 11.3%, to $44.3 million for the second quarter of 2020
from $39.9 million for the second quarter of 2019. The increase was
composed of increases in general and administrative expenses of
$4.7 million and selling expenses of $2.7 million, partially offset
by decreases in acquisition/divestiture-related and non-recurring
expenses of $2.7 million, warehousing expenses of $0.2 million and
consumer marketing expenses of $0.1 million. Expressed as a
percentage of net sales, selling, general and administrative
expenses improved by 2.0 percentage points to 8.7% for the second
quarter of 2020, compared to 10.7% for the second quarter of
2019.
Net interest expense increased $1.6 million, or 7.2%, to $24.8
million for the second quarter of 2020 from $23.2 million in the
second quarter of 2019. The increase was primarily attributable to
an increase in average long-term debt outstanding during the second
quarter of 2020 as compared to the second 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 a $100.0 million revolver draw made by the Company in
March 2020, which was subsequently repaid in May and June 2020.
The Company’s net income was $44.9 million, or $0.70 per diluted
share, for the second quarter of 2020, compared to net income of
$18.3 million, or $0.28 per diluted share, for the second quarter
of 2019. The Company’s adjusted net income1 for the second quarter
of 2020 was $46.0 million, or $0.71 per adjusted diluted share,
compared to $24.5 million, or $0.38 per adjusted diluted share, for
the second quarter of 2019.
2
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.
For the second quarter of 2020, adjusted EBITDA was $102.6
million, an increase of $31.6 million, or 44.6%, compared to $71.0
million for the second quarter of 2019. The increase in adjusted
EBITDA was primarily attributable to the positive impact of
increased base business unit volume on the Company’s net sales as a
result of the COVID-19 pandemic, as well as increased net sales due
to an extra one and one-half months of net sales of Clabber Girl in
the second quarter of 2020. Adjusted EBITDA as a percentage of net
sales was 20.0% for the second quarter of 2020, compared to 19.1%
in the second quarter of 2019.
Financial Results for the First Two Quarters of 2020
Net sales for the first two quarters of 2020 increased $178.0
million, or 22.7%, to $961.9 million from $783.9 million for the
first two quarters of 2019. The increase was primarily attributable
to materially increased net sales in March through June 2020 (as
compared to March through June 2019) resulting from increased
demand for the Company’s products due to the COVID-19 pandemic. The
Company’s net sales also benefited from the Clabber Girl and
Farmwise acquisitions, which were completed on May 15, 2019 and
February 19, 2020, respectively. An additional four and one-half
months of net sales of Clabber Girl and an additional four and
one-half months of net sales of Farmwise contributed $33.7 million
and $0.8 million, respectively, to the Company’s net sales for the
first two quarters of 2020.
Base business net sales for the first two quarters of 2020
increased $143.5 million, or 18.3%, to $927.4 million from $783.9
million for the first two quarters of 2019. The increase in base
business net sales reflected an increase in unit volume of $119.9
million and an increase in net pricing (inclusive of the impact of
the Company’s 2019 list price increases, the trade spend
optimization program the Company initiated in 2019, and a
temporarily lower trade spend environment) of $24.5 million, or
3.1% of base business net sales, partially offset by the negative
impact of foreign currency of $0.9 million.
Net sales of Green Giant (including Le Sueur) increased $73.5
million, or 29.5%; net sales of Ortega increased $14.3 million, or
20.0%; net sales of Cream of Wheat increased $7.8 million, or
26.9%; net sales of the Company’s spices & seasonings2
increased $4.5 million, or 2.7%; and net sales of Maple Grove Farms
increased $0.8 million, or 2.3%, in the first two quarters of 2020,
as compared to the first two quarters of 2019. Net sales of all
other brands in the aggregate increased $42.6 million, or 18.4%,
for the first two quarters of 2020.
Gross profit was $239.0 million for the first two quarters of
2020, or 24.8% of net sales. Excluding the negative impact of $2.8
million of acquisition/divestiture-related and non-recurring
expenses during the first two quarters of 2020, the Company’s gross
profit would have been $241.8 million, or 25.1% of net sales. Gross
profit was $179.9 million for the first two quarters of 2019, or
23.0% of net sales. Excluding the negative impact of $18.0 million
of acquisition/divestiture-related and non-recurring expenses
during the first two quarters of 2019, which includes expenses
relating to the trailing non-cash accounting impact of the
Company’s 2018 inventory reduction plan, the Company’s gross profit
would have been $197.9 million, or 25.2% of net sales.
Selling, general and administrative expenses increased $6.1
million, or 7.9%, to $84.3 million for the first two quarters of
2020 from $78.2 million for the first two quarters of 2019. The
increase was composed of increases in general and administrative
expenses of $6.4 million and selling expenses of $4.7 million,
partially offset by decreases in acquisition/divestiture-related
and non-recurring expenses of $3.8 million, warehousing expenses of
$0.6 million and consumer marketing expenses of $0.6 million.
Expressed as a percentage of net sales, selling, general and
administrative expenses improved by 1.2 percentage points to 8.8%
for the first two quarters of 2020, compared to 10.0% for the first
two quarters of 2019.
Net interest expense increased $4.6 million, or 10.0%, to $50.9
million for the first two quarters of 2020 from $46.3 million in
the first two quarters of 2019. The increase was primarily
attributable to an increase in average long-term debt outstanding
during the first two quarters of 2020 as compared to the first two
quarters 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 a $100.0 million revolver draw made by the
Company in March 2020, which was subsequently repaid in May and
June 2020.
The Company’s net income was $73.0 million, or $1.14 per diluted
share, for the first two quarters of 2020, compared to net income
of $35.0 million, or $0.53 per diluted share, for the first two
quarters of 2019. The Company’s adjusted net income for the first
two quarters of 2020 was $75.3 million, or $1.17 per adjusted
diluted share, compared to $53.5 million, or $0.82 per adjusted
diluted share, for the first two quarters of 2019.
For the first two quarters of 2020, adjusted EBITDA was $183.3
million, an increase of $36.5 million, or 24.9%, compared to $146.8
million for the first two quarters of 2019. The increase in
adjusted EBITDA was primarily attributable to the positive impact
of increased base business unit volume on the Company’s net sales
as a result of the COVID-19 pandemic, as well as increased net
sales due to an extra four and one-half months of Clabber Girl in
the first two quarters of 2020. Adjusted EBITDA as a percentage of
net sales was 19.1% for the first two quarters of 2020, compared to
18.7% in the first two quarters of 2019.
Full Year Fiscal 2020 Guidance
Although B&G Foods’ management continues to believe 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 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, maintain its supply chain without
material disruption, procure ingredients, packaging and other raw
materials when needed despite unprecedented demand in the food
industry, and the extent to which macroeconomic conditions
resulting from the pandemic and the pace of the subsequent recovery
may impact consumer eating habits.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
July 30, 2020 to discuss second 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 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 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, ability to provide uninterrupted service and meet the
increased demand resulting from the pandemic, and the Company’s
plans to continue new product innovation and other brand building
efforts to promote long-term growth opportunities. 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 and the U.S. CARES 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)
June 27,
December 28,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
181,200
$
11,315
Trade accounts receivable, net
141,216
143,908
Inventories
356,803
472,187
Prepaid expenses and other current
assets
34,434
25,449
Income tax receivable
4,196
8,934
Total current assets
717,849
661,793
Property, plant and equipment, net
283,827
304,934
Operating lease right-of-use assets,
net
35,925
38,698
Goodwill
598,860
596,391
Other intangible assets, net
1,606,164
1,615,126
Other assets
3,017
3,277
Deferred income taxes
6,180
7,371
Total assets
$
3,251,822
$
3,227,590
Liabilities and Stockholders’
Equity
Current liabilities:
Trade accounts payable
$
122,887
$
114,936
Accrued expenses
58,780
55,659
Current portion of operating lease
liabilities
10,946
9,813
Current portion of long-term debt
4,500
5,625
Income tax payable
2,297
454
Dividends payable
30,476
30,421
Total current liabilities
229,886
216,908
Long-term debt
1,874,442
1,874,158
Deferred income taxes
268,962
254,339
Long-term operating lease liabilities, net
of current portion
28,003
31,997
Other liabilities
33,380
37,646
Total liabilities
2,434,673
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; 64,160,453 and 64,044,649 shares
issued and outstanding as of June 27, 2020 and December 28, 2019,
respectively
642
640
Additional paid-in capital
—
—
Accumulated other comprehensive loss
(44,057
)
(31,894
)
Retained earnings
860,564
843,796
Total stockholders’ equity
817,149
812,542
Total liabilities and stockholders’
equity
$
3,251,822
$
3,227,590
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per
share data)
(Unaudited)
Second Quarter Ended
First Two Quarters
Ended
June 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net sales
$
512,539
$
371,197
$
961,909
$
783,931
Cost of goods sold
378,438
279,330
722,892
603,985
Gross profit
134,101
91,867
239,017
179,946
Operating expenses:
Selling, general and administrative
expenses
44,347
39,856
84,320
78,153
Amortization expense
4,739
4,601
9,462
9,092
Operating income
85,015
47,410
145,235
92,701
Other income and expenses:
Interest expense, net
24,849
23,179
50,888
46,253
Other income
(701
)
(525
)
(1,154
)
(783
)
Income before income tax expense
60,867
24,756
95,501
47,231
Income tax expense
15,956
6,505
22,498
12,189
Net income
$
44,911
$
18,251
$
73,003
$
35,042
Weighted average shares outstanding:
Basic
64,130
65,341
64,088
65,464
Diluted
64,410
65,391
64,247
65,504
Earnings per share:
Basic
$
0.70
$
0.28
$
1.14
$
0.54
Diluted
$
0.70
$
0.28
$
1.14
$
0.53
Cash dividends declared per share
$
0.475
$
0.475
$
0.950
$
0.950
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)
Second Quarter Ended
First Two Quarters
Ended
June 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net income
$
44,911
$
18,251
$
73,003
$
35,042
Income tax expense
15,956
6,505
22,498
12,189
Interest expense, net
24,849
23,179
50,888
46,253
Depreciation and amortization
15,385
14,557
30,919
28,420
EBITDA(1)
101,101
62,492
177,308
121,904
Acquisition/divestiture-related and
non-recurring expenses(2)
1,497
4,823
5,980
8,519
Inventory reduction plan impact(3)
—
3,660
—
16,382
Adjusted EBITDA(1)
102,598
70,975
183,288
146,805
Income tax expense
(15,956
)
(6,505
)
(22,498
)
(12,189
)
Interest expense, net
(24,849
)
(23,179
)
(50,888
)
(46,253
)
Acquisition/divestiture-related and
non-recurring expenses(2)
(1,497
)
(4,823
)
(5,980
)
(8,519
)
Inventory reduction plan impact(3)
—
(3,660
)
—
(16,382
)
Write-off of property, plant and
equipment
(63
)
12
(61
)
13
Deferred income taxes
(116
)
3,665
14,281
7,240
Amortization of deferred debt financing
costs and bond discount
901
872
1,799
1,745
Share-based compensation expense
3,821
1,384
4,244
1,964
Changes in assets and liabilities, net of
effects of business combinations
123,949
(72,239
)
122,181
(57,578
)
Net cash provided by (used in) operating
activities(4)
$
188,788
$
(33,498
)
$
246,366
$
16,846
(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 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 second quarter and first two
quarters of 2020 of $1.5 million and $6.0 million, respectively,
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
second quarter and first two quarters of 2019 of $4.8 million and
$8.5 million, respectively, primarily includes acquisition and
integration expenses for the Clabber Girl acquisition, 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
second quarter and first two quarters of 2019, inventory reduction
plan impact of $3.7 million and $16.4 million, respectively,
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.
(4)
The Company’s divestiture of
Pirate Brands during the fourth quarter of 2018 resulted in a gain
on sale during 2018 of approximately $176.4 million. The gain on
sale negatively impacted the Company’s income taxes for 2019 by
approximately $73.9 million, which includes a cash tax payment the
Company made during the second quarter of 2019 of $44.7 million and
a cash tax benefit the Company otherwise would have expected to
receive of approximately $29.2 million. Excluding the negative tax
impact of the gain on sale, the Company’s net cash provided by
operating activities for the second quarter and first two quarters
of 2019 would have been approximately $40.4 million and $90.7
million, respectively.
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)
Second Quarter Ended
First Two Quarters
Ended
June 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net income
$
44,911
$
18,251
$
73,003
$
35,042
Acquisition/divestiture-related and
non-recurring expenses, net of tax(1)
1,130
3,578
4,515
6,320
Inventory reduction plan impact, net of
tax(2)
—
2,715
—
12,154
Tax benefit(3)
—
—
(2,258
)
—
Adjusted net income
$
46,041
$
24,544
$
75,260
$
53,516
Adjusted diluted earnings per share
$
0.71
$
0.38
$
1.17
$
0.82
(1)
Acquisition/divestiture-related
and non-recurring expenses for the second quarter and first two
quarters 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
second quarter and first two quarters of 2019 primarily includes
acquisition and integration expenses for the Clabber Girl
acquisition, 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
second quarter and first two quarters of 2019, inventory reduction
plan impact of $3.7 million (or $2.7 million net of taxes) and
$16.4 million (or $12.2 million net of taxes), respectively,
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 two quarters of 2020
includes a $2.3 million tax benefit associated with the U.S. CARES
Act, which was recorded during the first quarter of 2020.
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Base
Business Net Sales to Net Sales
(In thousands)
(Unaudited)
Second Quarter Ended
First Two Quarters
Ended
June 27,
June 29,
June 27,
June 29,
2020
2019
2020
2019
Net sales
$
512,539
$
371,197
$
961,909
$
783,931
Net sales from acquisitions(1)
(15,614
)
—
(34,530
)
—
Base business net sales(2)
$
496,925
$
371,197
$
927,379
$
783,931
(1)
Includes one and one-half months
of net sales for Clabber Girl in the second quarter of 2020, and
four and one-half months of net sales for Clabber Girl in the first
two quarters of 2020, for which there was no comparable period of
net sales in the second quarter of 2019 or the first two quarters
of 2019, respectively. Also includes net sales for Farmwise for the
second quarter and first two quarters 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/20200730005980/en/
Investor Relations: ICR, Inc. Dara Dierks 866.211.8151
Media Relations: ICR, Inc. Matt Lindberg 203.682.8214
B and G Foods (NYSE:BGS)
Historical Stock Chart
From Aug 2024 to Sep 2024
B and G Foods (NYSE:BGS)
Historical Stock Chart
From Sep 2023 to Sep 2024