— Provides Full Year 2020 Guidance —
B&G Foods, Inc. (NYSE: BGS) today announced financial
results for the third quarter and first three quarters of 2020,
which include the favorable impact of continued strong demand for
the Company’s products due to the ongoing COVID-19 pandemic and an
extra reporting week in the third quarter and first three quarters
of 2020 as compared to the third quarter and first three quarters
of 2019.
Third Quarter 2020 Financial Summary (vs. Third Quarter
2019 where applicable):
- Net sales increased 22.0% to $495.8 million
- Base business net sales1 increased 21.9% to $495.4 million
- Diluted earnings per share increased 50.0% to $0.72
- Adjusted diluted earnings per share1 increased 37.0% to
$0.74
- Net income increased 50.6% to $46.8 million
- Adjusted net income1 increased 37.4% to $47.9 million
- Adjusted EBITDA1 increased 21.3% to $104.6 million
Commenting on the results, Kenneth G. Romanzi, President and
Chief Executive Officer of B&G Foods, stated, “During the
quarter, B&G Foods continued to benefit from very strong demand
for our products as a result of the ongoing COVID-19 pandemic. Our
portfolio of brands and products are very well-suited for the stay
at home, work at home, cook and eat at home world. Thanks to the
tremendous efforts of our employees, to date we have been able to
keep our employees safe, avoid material disruptions to our supply
chain and capitalize on the unprecedented increase in demand. We
expect to see continued strong demand for our products throughout
the fourth quarter and into 2021.” Mr. Romanzi continued, “We are
also very excited to be adding the Crisco brand of oils and
shortening to our family of brands and expect to close the Crisco
acquisition during the fourth quarter. Consistent with our
acquisition strategy, the acquisition is expected to be immediately
accretive to our earnings per share and free cash flow.”
Guidance for Full Year Fiscal 2020 (excluding the impact
of the pending Crisco acquisition):
- Net sales range of $1.950 billion to $1.970 billion
- Adjusted EBITDA range of $360.0 million to $370.0 million
- Adjusted diluted earnings per share range of $2.30 to
$2.40
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 Third Quarter of 2020
Net sales for the third quarter of 2020 increased $89.5 million,
or 22.0%, to $495.8 million from $406.3 million for the third
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, as well as one
extra week in the third quarter of fiscal 2020 compared to the
third quarter of fiscal 2019. The Company estimates that the
additional week in the third quarter of 2020 contributed
approximately $35.0 million to the Company’s net sales for the
quarter. The Company’s net sales also benefited from the Farmwise
acquisition, which was completed on February 19, 2020. Net sales of
Farmwise contributed $0.4 million to the Company’s net sales for
the third quarter of 2020.
Base business net sales1 for the third quarter of 2020 increased
$89.1 million, or 21.9%, to $495.4 million from $406.3 million for
the third quarter of 2019. The increase in base business net sales
reflected an increase in unit volume of $89.8 million, partially
offset by a slight decrease in net pricing of $0.4 million, or 0.1%
of base business net sales, and the negative impact of foreign
currency of $0.3 million.
Net sales of Green Giant (including Le Sueur) increased $37.9
million, or 31.5%; net sales of the Company’s spices &
seasonings2 increased $24.3 million, or 29.5%; net sales of
Victoria increased $6.3 million, or 55.9%; net sales of Maple Grove
Farms increased $3.2 million, or 18.2%; net sales of Cream of Wheat
increased $2.4 million, or 17.2%; and net sales of Ortega increased
$1.0 million, or 3.0%, for the third quarter of 2020 as compared to
the third quarter of 2019. Net sales of all other brands in the
aggregate increased $14.0 million, or 11.1%, for the third quarter
of 2020.
Gross profit was $136.0 million for the third quarter of 2020,
or 27.4% of net sales. Excluding the negative impact of $0.1
million of acquisition/divestiture-related and non-recurring
expenses during the third quarter of 2020, the Company’s gross
profit would have been $136.1 million, or 27.5% of net sales. Gross
profit was $108.8 million for the third quarter of 2019, or 26.8%
of net sales. Excluding the negative impact of $1.5 million of
acquisition/divestiture-related and non-recurring expenses during
the third 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 $110.3
million, or 27.2% of net sales.
Selling, general and administrative expenses increased $5.3
million, or 13.9%, to $43.4 million for the third quarter of 2020
from $38.1 million for the third quarter of 2019. The increase was
composed of increases in consumer marketing expenses of $3.8
million, general and administrative expenses of $2.7 million,
selling expenses of $1.8 million and warehousing expenses of $0.3
million, partially offset by a decrease in
acquisition/divestiture-related and non-recurring expenses of $3.3
million. Expressed as a percentage of net sales, selling, general
and administrative expenses improved by 0.6 percentage points to
8.8% for the third quarter of 2020, compared to 9.4% for the third
quarter of 2019.
Net interest expense increased $2.2 million, or 9.4%, to $26.4
million for the third quarter of 2020 from $24.2 million in the
third quarter of 2019. The increase was primarily attributable to
(1) additional interest expense of $1.5 million resulting from one
extra week in the third quarter of 2020 and (2) the accelerated
amortization of $1.1 million of deferred debt financing costs
resulting from the Company’s voluntary partial prepayment of
tranche B term loans. These increases were partially offset by a
reduction in average long-term debt outstanding during the quarter,
primarily due to the voluntary partial prepayment of $75.0 million
of tranche B term loans in August 2020.
The Company’s net income was $46.8 million, or $0.72 per diluted
share, for the third quarter of 2020, compared to net income of
$31.1 million, or $0.48 per diluted share, for the third quarter of
2019. The Company’s adjusted net income1 for the third quarter of
2020 was $47.9 million, or $0.74 per adjusted diluted share,
compared to $34.9 million, or $0.54 per adjusted diluted share, for
the third 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 third quarter of 2020, adjusted EBITDA was $104.6
million, an increase of $18.4 million, or 21.3%, compared to $86.2
million for the third 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 one extra week in the
third quarter of fiscal 2020 compared to the third quarter of
fiscal 2019. Adjusted EBITDA as a percentage of net sales was 21.1%
for the third quarter of 2020, compared to 21.2% in the third
quarter of 2019.
Financial Results for the First Three Quarters of
2020
Net sales for the first three quarters of 2020 increased $267.5
million, or 22.5%, to $1,457.7 million from $1,190.2 million for
the first three quarters of 2019. The increase was primarily
attributable to materially increased net sales in March through
September 2020 (as compared to March through September 2019)
resulting from increased demand for the Company’s products due to
the COVID-19 pandemic. The Company’s net sales also benefited from
one extra week in the first three quarters of 2020 and the Clabber
Girl and Farmwise acquisitions, which were completed on May 15,
2019 and February 19, 2020, respectively. The Company estimates
that the additional week in the third quarter of 2020 contributed
approximately $35.0 million to the Company’s net sales for the
first three quarters of 2020. An additional four and one-half
months of net sales of Clabber Girl and an additional seven and
one-half months of net sales of Farmwise contributed $33.7 million
and $1.2 million, respectively, to the Company’s net sales for the
first three quarters of 2020.
Base business net sales for the first three quarters of 2020
increased $232.6 million, or 19.5%, to $1,422.8 million from
$1,190.2 million for the first three quarters of 2019. The increase
in base business net sales reflected an increase in unit volume of
$209.7 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 in the industry during
the first half of the year) of $24.1 million, or 2.0% of base
business net sales, partially offset by the negative impact of
foreign currency of $1.2 million.
Net sales of Green Giant (including Le Sueur) increased $111.3
million, or 30.1%; net sales of the Company’s spices &
seasonings2 increased $28.8 million, or 11.6%; net sales of Ortega
increased $15.3 million, or 14.4%; net sales of Victoria increased
$11.9 million, or 37.5%; net sales of Cream of Wheat increased
$10.2 million, or 23.7%; and net sales of Maple Grove Farms
increased $4.0 million, or 7.5%, in the first three quarters of
2020, as compared to the first three quarters of 2019. Net sales of
all other brands in the aggregate increased $51.1 million, or
15.1%, for the first three quarters of 2020.
Gross profit was $375.0 million for the first three quarters of
2020, or 25.7% of net sales. Excluding the negative impact of $2.8
million of acquisition/divestiture-related and non-recurring
expenses during the first three quarters of 2020, the Company’s
gross profit would have been $377.8 million, or 25.9% of net sales.
Gross profit was $288.7 million for the first three quarters of
2019, or 24.3% of net sales. Excluding the negative impact of $19.5
million of acquisition/divestiture-related and non-recurring
expenses during the first three 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 $308.2 million, or 25.9% of net sales.
Selling, general and administrative expenses increased $11.4
million, or 9.8%, to $127.7 million for the first three quarters of
2020 from $116.3 million for the first three quarters of 2019. The
increase was composed of increases in general and administrative
expenses of $9.1 million, selling expenses of $6.4 million and
consumer marketing expenses of $3.2 million, partially offset by
decreases in acquisition/divestiture-related and non-recurring
expenses of $7.0 million and warehousing expenses of $0.3 million.
Expressed as a percentage of net sales, selling, general and
administrative expenses improved by 1.1 percentage points to 8.7%
for the first three quarters of 2020, compared to 9.8% for the
first three quarters of 2019.
Net interest expense increased $6.9 million, or 9.8%, to $77.3
million for the first three quarters of 2020 from $70.4 million in
the first three quarters of 2019. The increase was primarily
attributable to the following factors: (1) additional interest
expense of $1.5 million resulting from one extra week in the third
quarter of 2020, (2) the accelerated amortization of $1.1 million
of deferred debt financing costs resulting from the Company’s
voluntary partial prepayment of tranche B term loans, and (3) an
increase in average long-term debt outstanding during the first
three quarters of 2020 as compared to the first three quarters of
2019.
The Company’s net income was $119.8 million, or $1.86 per
diluted share, for the first three quarters of 2020, compared to
net income of $66.1 million, or $1.01 per diluted share, for the
first three quarters of 2019. The Company’s adjusted net income for
the first three quarters of 2020 was $123.2 million, or $1.91 per
adjusted diluted share, compared to $88.4 million, or $1.35 per
adjusted diluted share, for the first three quarters of 2019.
For the first three quarters of 2020, adjusted EBITDA was $287.9
million, an increase of $54.9 million, or 23.5%, compared to $233.0
million for the first three 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 three quarters of 2020, and one extra week in the third
quarter of fiscal 2020 compared to the third quarter of fiscal
2019. Adjusted EBITDA as a percentage of net sales was 19.8% for
the first three quarters of 2020, compared to 19.6% in the first
three quarters of 2019.
Fiscal Quarter Calendar Clarification
Typically, the Company’s fiscal quarters and fiscal year consist
of 13 and 52 weeks, respectively, ending on the Saturday closest to
December 31 in the case of the Company’s fiscal year and fourth
fiscal quarter, and on the Saturday closest to the end of the
corresponding calendar quarter in the case of the Company’s fiscal
quarters. As a result, a 53rd week is added to the Company’s fiscal
year every five or six years. The Company’s fiscal year ending
January 2, 2021 (fiscal 2020) contains 53 weeks. Generally when
this occurs, the Company’s fourth fiscal quarter contains 14 weeks.
However, based upon a third quarter end date of October 3, 2020
(the Saturday closest to September 30) and a fourth quarter end
date of January 2, 2021 (the Saturday closest to December 31), for
fiscal 2020, the third quarter contained 14 weeks and the fourth
quarter will contain 13 weeks. Fiscal 2019 contained 52 weeks and
each quarter of 2019 contained 13 weeks.
Full Year Fiscal 2020 Guidance
For fiscal 2020, net sales are expected to be approximately
$1.950 billion to $1.970 billion, adjusted EBITDA is expected to be
approximately $360.0 million to $370.0 million and adjusted diluted
earnings per share is expected to be approximately $2.30 to $2.40.
For fiscal 2020, capital expenditures are expected to be
approximately $40.0 million to $45.0 million.
The Company’s full year fiscal 2020 guidance excludes the impact
of the pending acquisition of the Crisco brand, which is expected
to close in the fourth quarter of 2020.
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; loss on extinguishment of debt;
acquisition/divestiture-related and non-recurring expenses, gains
and losses; gains and losses on the sale of assets 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.
Agreement to Acquire the Crisco Brand
On October 26, 2020, B&G Foods announced that it had entered
into an agreement to acquire the Crisco brand of oils and
shortening from The J. M. Smucker Co. for approximately $550.0
million in cash, subject to a post-closing adjustment based upon
inventory at closing. As part of the acquisition, B&G Foods is
also acquiring a manufacturing facility and warehouse in
Cincinnati, Ohio. The asset purchase agreement includes an
agreement for Smucker to provide certain transition services
associated with the acquired business for up to nine to twelve
months following closing. Subject to regulatory approval and the
satisfaction of customary closing conditions set forth in the asset
purchase agreement, B&G Foods expects the acquisition to close
during the fourth quarter of 2020.
B&G Foods projects that in 2021, the acquired business will
continue to benefit from increased demand due to the COVID-19
pandemic and generate annual net sales of approximately $270.0
million, adjusted EBITDA in the range of $65.0 million to $70.0
million and adjusted diluted earnings per share in the range of
$0.45 to $0.50. Because the acquisition will be structured as an
asset purchase, B&G Foods expects to realize approximately
$75.0 million in tax benefits on a net present value basis. At the
midpoint of B&G Foods’ 2021 projected adjusted EBITDA for the
business, the acquisition represents a purchase price multiple of
approximately 8.1 times adjusted EBITDA (or 7.0 times adjusted
EBITDA net of expected tax benefits).
B&G Foods expects to fund the acquisition and related fees
and expenses with cash on hand and revolving loans under its
existing credit facility.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
November 5, 2020 to discuss third 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 third quarter and first three 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 B&G Foods’ net
sales, adjusted EBITDA, adjusted diluted earnings per share,
capital expenditure and overall expectations for fiscal 2020 and
beyond; B&G Foods’ expectations regarding the planned
acquisition of the Crisco brand and the timing and financing
thereof; the expected impact of the planned acquisition, including,
without limitation, the expected impact on B&G Foods’ earnings
per share, net sales, adjusted EBITDA and free cash flow, and the
expected tax benefits of the acquisition. 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)
October 3,
December 28,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
56,967
$
11,315
Trade accounts receivable, net
163,713
143,908
Inventories
476,275
472,187
Prepaid expenses and other current
assets
37,603
25,449
Income tax receivable
18,063
8,934
Total current assets
752,621
661,793
Property, plant and equipment, net
283,046
304,934
Operating lease right-of-use assets,
net
33,336
38,698
Goodwill
598,860
596,391
Other intangible assets, net
1,601,429
1,615,126
Other assets
2,853
3,277
Deferred income taxes
6,760
7,371
Total assets
$
3,278,905
$
3,227,590
Liabilities and Stockholders’
Equity
Current liabilities:
Trade accounts payable
$
185,362
$
114,936
Accrued expenses
45,681
55,659
Current portion of operating lease
liabilities
10,731
9,813
Current portion of long-term debt
—
5,625
Income tax payable
21,971
454
Dividends payable
30,520
30,421
Total current liabilities
294,265
216,908
Long-term debt
1,804,586
1,874,158
Deferred income taxes
274,795
254,339
Long-term operating lease liabilities, net
of current portion
25,509
31,997
Other liabilities
36,374
37,646
Total liabilities
2,435,529
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; 64,252,859 and 64,044,649 shares
issued and outstanding as of October 3, 2020 and December 28, 2019,
respectively
643
640
Additional paid-in capital
—
—
Accumulated other comprehensive loss
(39,177)
(31,894)
Retained earnings
881,910
843,796
Total stockholders’ equity
843,376
812,542
Total liabilities and stockholders’
equity
$
3,278,905
$
3,227,590
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per
share data)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
October 3,
September 28,
October 3,
September 28,
2020
2019
2020
2019
Net sales
$
495,759
$
406,311
$
1,457,668
$
1,190,242
Cost of goods sold
359,733
297,530
1,082,625
901,515
Gross profit
136,026
108,781
375,043
288,727
Operating expenses:
Selling, general and administrative
expenses
43,395
38,112
127,715
116,265
Amortization expense
4,735
4,729
14,197
13,821
Operating income
87,896
65,940
233,131
158,641
Other income and expenses:
Interest expense, net
26,430
24,152
77,318
70,405
Other income
(702)
(59)
(1,856)
(842)
Income before income tax expense
62,168
41,847
157,669
89,078
Income tax expense
15,355
10,759
37,853
22,948
Net income
$
46,813
$
31,088
$
119,816
$
66,130
Weighted average shares outstanding:
Basic
64,217
65,081
64,133
65,336
Diluted
64,801
65,103
64,434
65,370
Earnings per share:
Basic
$
0.73
$
0.48
$
1.87
$
1.01
Diluted
$
0.72
$
0.48
$
1.86
$
1.01
Cash dividends declared per share
$
0.475
$
0.475
$
1.425
$
1.425
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)
Third Quarter Ended
First Three Quarters
Ended
October 3,
September 28,
October 3,
September 28,
2020
2019
2020
2019
Net income
$
46,813
$
31,088
$
119,816
$
66,130
Income tax expense
15,355
10,759
37,853
22,948
Interest expense, net
26,430
24,152
77,318
70,405
Depreciation and amortization
15,589
15,122
46,508
43,542
EBITDA(1)
104,187
81,121
281,495
203,025
Acquisition/divestiture-related and
non-recurring expenses(2)
423
5,111
6,403
13,630
Inventory reduction plan impact(3)
—
—
—
16,382
Adjusted EBITDA(1)
104,610
86,232
287,898
233,037
Income tax expense
(15,355)
(10,759)
(37,853)
(22,948)
Interest expense, net
(26,430)
(24,152)
(77,318)
(70,405)
Acquisition/divestiture-related and
non-recurring expenses(2)
(423)
(5,111)
(6,403)
(13,630)
Inventory reduction plan impact(3)
—
—
—
(16,382)
Write-off of property, plant and
equipment
—
76
(61)
89
Deferred income taxes
5,587
8,382
19,868
15,622
Amortization of deferred debt financing
costs and bond discount
1,965
873
3,764
2,618
Share-based compensation expense
2,817
999
7,061
2,963
Changes in assets and liabilities, net of
effects of business combinations
(86,834)
(72,057)
35,347
(129,635)
Net cash provided by (used in) operating
activities(4)
$
(14,063)
$
(15,517)
$
232,303
$
1,329
(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 third quarter and first three
quarters of 2020 of $0.4 million and $6.4 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
third quarter and first three quarters of 2019 of $5.1 million and
$13.6 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 first three
quarters of 2019, inventory reduction plan impact of $16.4 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.
(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 first three quarters of 2019 would have been
approximately $75.2 million.
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)
Third Quarter Ended
First Three Quarters
Ended
October 3,
September 28,
October 3,
September 28,
2020
2019
2020
2019
Net income
$
46,813
$
31,088
$
119,816
$
66,130
Acquisition/divestiture-related and
non-recurring expenses, net of tax(1)
319
3,794
4,834
10,119
Inventory reduction plan impact, net of
tax(2)
—
—
—
12,162
Accelerated amortization of deferred debt
financing costs(3)
808
—
808
—
Tax benefit(4)
—
—
(2,258)
—
Adjusted net income
$
47,940
$
34,882
$
123,200
$
88,411
Adjusted diluted earnings per share
$
0.74
$
0.54
$
1.91
$
1.35
(1)
Acquisition/divestiture-related and
non-recurring expenses for the third quarter and first three
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
third quarter and first three 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 first three
quarters of 2019, inventory reduction plan impact of $16.4 million
(or $12.2 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)
Interest expense for the third quarter and
first three quarters of 2020 includes the accelerated amortization
of deferred debt financing costs of $1.1 million (or $0.8 million
net of taxes), resulting from the Company’s voluntary partial
prepayment of tranche B term loans.
(4)
The first three 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)
Third Quarter Ended
First Three Quarters
Ended
October 3,
September 28,
October 3,
September 28,
2020
2019
2020
2019
Net sales
$
495,759
$
406,311
$
1,457,668
$
1,190,242
Net sales from acquisitions(1)
(376)
—
(34,906)
—
Base business net sales(2)
$
495,383
$
406,311
$
1,422,762
$
1,190,242
(1)
Includes four and one-half months of net
sales for Clabber Girl in the first three quarters of 2020, for
which there was no comparable period of net sales in the first
three quarters of 2019. Also includes net sales for Farmwise for
the third quarter and first three 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/20201105006030/en/
Investor Relations: ICR, Inc. Dara Dierks 866.211.8151
Media Relations: ICR, Inc. Matt Lindberg 203.682.8214
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