B&G Foods, Inc. (NYSE: BGS, BGF), a manufacturer and
distributor of high-quality, shelf-stable foods, today announced
financial results for the thirteen weeks ended September 27, 2008
(third quarter of 2008) and the thirty-nine weeks ended September
27, 2008 (first three quarters of 2008). Financial Results for the
Third Quarter of 2008 Net sales for the third quarter of 2008
decreased 0.4% to $116.5 million from $117.0 million for the
thirteen weeks ended September 29, 2007 (third quarter of 2007).
Price increases that we recently implemented improved net sales by
$4.7 million during the third quarter of 2008. These pricing gains,
however, were offset by a decrease in net sales of $5.2 million
attributable to a unit volume decline. A substantial portion of the
unit volume decline was attributable to (1) the poor maple syrup
crop in Canada in 2008 that resulted in an industry-wide shortfall
of maple syrup and (2) a management decision to eliminate
unprofitable sales to certain customers of private label pickles
and peppers. Net sales of our Maple Grove Farms pure maple syrup
and our private label pickles and peppers declined in the third
quarter of 2008 by $1.4 million and $0.2 million, respectively. In
the case of pure maple syrup, this decline was attributable to the
unit volume decline partially offset by pricing gains. Gross profit
for the third quarter of 2008 decreased 19.7% to $30.7 million from
$38.3 million in the third quarter of 2007. Gross profit expressed
as a percentage of net sales decreased 6.3% to 26.4% for the third
quarter of 2008 from 32.7% in the third quarter of 2007. The
decrease in gross profit expressed as a percentage of net sales was
primarily attributable to increased costs for wheat, maple syrup,
corn, packaging, transportation and sweeteners, partially offset by
$4.7 million in sales price increases. Operating income decreased
19.5% to $16.2 million for the third quarter of 2008 from $20.2
million in the third quarter of 2007. Net income was $2.9 million
for the third quarter of 2008 compared to $4.8 million for the
third quarter of 2007. Earnings per share of Class A common stock
decreased to $0.08 for the third quarter of 2008 from $0.13 for the
third quarter of 2007. For the third quarter of 2008, EBITDA (see
�About Non-GAAP Financial Measures� below) decreased 16.2% to $20.1
million from $24.0 million for the third quarter of 2007. Financial
Results for the First Three Quarters of 2008 Net sales for the
first three quarters of 2008 increased 3.9% to $352.0 million from
$339.0 million in the comparable period of fiscal 2007. We
completed the Cream of Wheat acquisition in late February 2007.
Excluding the impact of the Cream of Wheat acquisition (which
positively impacted net sales by $10.0 million), and the
termination of a temporary co-packing arrangement (which negatively
impacted net sales by $0.8 million), net sales increased $3.8
million or 1.2% during the first three quarters of 2008. Price
increases that we recently implemented improved net sales by $5.3
million during the first three quarters of 2008. These pricing
gains, however, were offset by a decrease in net sales of $1.5
million attributable to a unit volume decline. A substantial
portion of the unit volume decline was attributable to (1) the poor
maple syrup crop in Canada in 2008 that resulted in an
industry-wide shortfall of maple syrup and (2) a management
decision to eliminate unprofitable sales to certain customers of
private label pickles and peppers. For the first three quarters of
2008, net sales of our Maple Grove Farms pure maple syrup increased
by $0.3 million as pricing gains offset the unit volume decline.
Net sales of our private label pickles and peppers declined in the
first three quarters of 2008 by $0.4 million. Gross profit for the
first three quarters of 2008 decreased 8.4% to $99.2 million from
$108.3 million in the comparable period of last year. Gross profit
expressed as a percentage of net sales decreased 3.7% to 28.2% in
the first three quarters of 2008 from 31.9% in the comparable
period of fiscal 2007. The decrease in gross profit expressed as a
percentage of net sales was primarily attributable to increased
costs for wheat, maple syrup, corn, packaging, transportation and
sweeteners, partially offset by $5.3 million in sales price
increases. Operating income decreased 9.8% to $54.5 million during
the first three quarters of 2008, compared to $60.4 million in the
comparable period of fiscal 2007. Net income was $10.8 million for
the first three quarters of 2008 compared to $12.7 million for the
comparable period of fiscal 2007. For the first three quarters of
2008, earnings per share of Class A common stock was $0.29. During
the first three quarters of 2007, B&G Foods had two classes of
common stock and computed earnings per share under the two class
method. As a result, it is not meaningful to compare earnings per
share for the first three quarters of 2008 to the first three
quarters of 2007. For the first three quarters of 2008, EBITDA
decreased 6.0% to $65.9 million from $70.1 million for the first
three quarters of 2007. Guidance Excluding the impact of $0.8
million in severance and termination charges the Company expects to
incur in the fourth quarter of 2008 related to its previously
announced workforce reduction, B&G Foods projects that its
fourth quarter EBITDA will be relatively flat as compared to its
fourth quarter of 2007 EBITDA of $24.3 million and that its full
year 2008 EBITDA will be within the range of $90 to $91 million.
B&G Foods projects that its full year 2009 EBITDA will be
within the range of $95 to $98 million. David L. Wenner, President
and Chief Executive Officer of B&G Foods, stated, �The third
quarter was clearly a difficult quarter for our Company, but as our
fourth quarter 2008 and full year 2009 guidance implies, we believe
an anomaly in our performance. Unique events such as an
unprecedented surge in the cost of wheat and the failure of the
2008 maple syrup crop in Canada adversely affected third quarter
results. As we entered the fourth quarter, those issues have for
the most part been resolved and our business has been returning to
an operating level more consistent with our expectations. Our
outlook for price and cost in 2009 is very positive as compared to
2008 and is reflected in our guidance.� Stock and Debt Repurchase
Plan The Company also announced that its Board of Directors has
authorized a stock and debt repurchase program for the repurchase
of up to $10.0 million of the Company�s Class A common stock and/or
8% senior notes over the next twelve months. Under the
authorization, the Company may purchase shares of Class A common
stock and/or senior notes from time to time in the open market or
in privately negotiated transactions in compliance with the
applicable rules and regulations of the Securities and Exchange
Commission. Mr. Wenner remarked, �Even in this challenging cost
environment, we feel very confident about our business, our
continued ability to generate strong cash flows from operations and
our growth opportunities. We are pleased to be able to deliver
value to our stockholders through our regular quarterly dividend at
the new rate of $0.68 per share of Class A common stock per annum.
As I stated last week, we hope that our stockholders will view the
new dividend rate as sustainable in the long term, and consistent
with the Company�s desire to provide stockholders with an
attractive and reliable return on their investment.� Mr. Wenner
continued, �We also remain committed to our acquisition strategy
and continue to pursue accretive acquisitions subject to the
availability of financing. However, given the deflated price of our
Class A common stock and that our senior notes are currently
trading at a substantial discount to face value, we believe that at
this time the use of our cash on hand to repurchase shares of Class
A common stock and/or senior notes represents another attractive
investment opportunity for us and is consistent with our commitment
to enhance stockholder value. Any senior notes we are able to buy
at a discount represent a de-leveraging opportunity, improving the
capital structure of our company.� The timing and amount of such
repurchases, if any, will be at the discretion of management, and
will depend on available cash, market conditions and other
considerations. Therefore, there can be no assurance as to the
number of shares, if any, that will be repurchased under the stock
and debt repurchase program, or the aggregate dollar amount of the
shares or principal amount of senior notes, if any, repurchased.
The Company may discontinue the program at any time. Any shares
repurchased pursuant to the stock repurchase program will be
cancelled. Likewise, any senior notes repurchased will be
cancelled. The Company currently has 36,796,988 shares of Class A
common stock outstanding, 19,719,657 of which trade separately and
17,077,331 of which trade as part of EISs. The Company currently
has $240.0 million principal amount of senior notes outstanding. In
general, the Company�s credit agreement prohibits the Company from
repurchasing its 12% senior subordinated notes. Conference Call and
Webcast with Slides B&G Foods will hold a live conference call
and webcast at 4:30 p.m. ET today, October 30, 2008. The call can
be accessed live over the phone by dialing (888) 715-1402 or for
international callers by dialing (913) 312-1481. The call will also
be webcast live over the Internet from the Investor Relations
section of B&G Foods� website at www.bgfoods.com under
�Investor Relations�Company Overview.� B&G Foods will post a
slide presentation on the Company�s Investor Relations site to
accompany the prepared remarks. A replay of the call will be
available one hour after the call and can be accessed by dialing
(888) 203-1112 or (719) 457-0820 for international callers. The
password is 4452942. The replay will be available from October 30,
2008 through November 6, 2008. The webcast replay and slide
presentation can also be accessed from the Investor Relations
section of B&G Foods� website at www.bgfoods.com under
�Investor Relations�Event Calendar.� About Non-GAAP Financial
Measures EBITDA (net income before net interest expense, income
taxes, depreciation and amortization) is a �non-GAAP (Generally
Accepted Accounting Principles) financial measure.� A non-GAAP
financial measure is defined as 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 and cash
flows. Non-GAAP financial measures should not be considered in
isolation or as a substitute for the most directly comparable GAAP
measures. A reconciliation of EBITDA with net income and net cash
provided by operating activities is included below for the third
quarter and first three quarters of 2008 and the third quarter and
first three quarters of 2007, along with the components of EBITDA.
About B&G Foods, Inc. B&G Foods and its subsidiaries
manufacture, sell and distribute a diverse portfolio of
high-quality, shelf-stable foods across the United States, Canada
and Puerto Rico. B&G Foods� products include hot cereals, fruit
spreads, canned meats and beans, spices, seasonings, marinades, hot
sauces, wine vinegar, maple syrup, molasses, salad dressings,
Mexican-style sauces, taco shells and kits, salsas, pickles,
peppers and other specialty food products. B&G Foods competes
in the retail grocery, food service, specialty, private label, club
and mass merchandiser channels of distribution. Based in
Parsippany, New Jersey, B&G Foods� products are marketed under
many recognized brands, including Ac�cent, B&G,�B&M, Brer
Rabbit, Cream of Rice, Cream of Wheat, Emeril�s, Grandma�s
Molasses, Joan of Arc, Las Palmas, Maple�Grove�Farms�of�Vermont,
Ortega, Polaner, Red Devil, Regina, Sa-s�n, Trappey�s, Underwood,
Vermont Maid and Wright�s. 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 our expectations regarding costs
and pricing for the fourth quarter of 2008 and full year 2009; our
expectations regarding the cost of wheat and maple syrup; and our
expectations regarding EBITDA for the fourth quarter of 2008 and
full year 2008 and 2009. 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� or �plans� to be uncertain and forward-looking. 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 our
Annual Report on Form 10-K for fiscal 2007 filed on March 6, 2008.
We undertake 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 (Dollars in thousands, except per share
data) (Unaudited) � � Assets September 27, 2008 December 29, 2007 �
Current assets: Cash and cash equivalents $ 31,899 $ 36,606 Trade
accounts receivable, net 38,414 42,362 Inventories 95,688 93,181
Prepaid expenses 3,174 3,556 Income tax receivable 597 569 Deferred
income taxes � 648 � � 648 � Total current assets 170,420 176,922 �
Property, plant and equipment, net of accumulated depreciation of
$62,201 and $55,679 52,878 49,658 Goodwill 253,353 253,353
Trademarks 227,220 227,220 Customer relationship intangibles, net
117,930 122,768 Net deferred debt issuance costs and other assets �
15,102 � � 17,669 � Total assets $ 836,903 � $ 847,590 � �
Liabilities and Stockholders� Equity � Current liabilities: Trade
accounts payable $ 30,045 $ 32,126 Accrued expenses 20,314 21,894
Dividends payable � 7,801 � � 7,797 � Total current liabilities
58,160 61,817 � Long-term debt 535,800 535,800 Other liabilities
6,872 6,376 Deferred income taxes � 74,463 � � 68,962 � Total
liabilities 675,295 672,955 � Stockholders� equity: Preferred
stock, $0.01 par value per share. Authorized 1,000,000 shares; no
shares issued or outstanding � � Class A common stock, $0.01 par
value per share. Authorized 100,000,000 shares; 36,796,988 and
36,778,988 shares issued and outstanding as of September 27, 2008
and December 29, 2007 368 368 Class B common stock, $0.01 par value
per share. Authorized 25,000,000 shares; no shares issued or
outstanding � � Additional paid-in capital 179,308 202,197
Accumulated other comprehensive loss (4,685 ) (3,718 ) Accumulated
deficit � (13,383 ) � (24,212 ) Total stockholders� equity �
161,608 � � 174,635 � Total liabilities and stockholders� equity $
836,903 � $ 847,590 � B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations (Dollars in thousands, except
per share data) (Unaudited) � Thirteen Weeks Ended � Thirty-nine
Weeks Ended September 27,2008 � September 29,2007 September 27,2008
� September 29,2007 � Net sales $ 116,515 $ 117,003 $ 352,041 $
338,952 Cost of goods sold � 85,778 � 78,725 � 252,816 � 230,668 �
Gross profit 30,737 38,278 99,225 108,284 � Operating expenses:
Sales, marketing and distribution expenses 10,813 13,114 34,563
37,184 General and administrative expenses 2,067 3,374 5,307 6,802
Amortization expense�customer relationships � 1,613 � 1,612 � 4,838
� 3,888 � Operating income 16,244 20,178 54,517 60,410 � Other
expenses: Interest expense, net � 11,562 � 12,374 � 37,041 � 40,028
� Income before income tax expense 4,682 7,804 17,476 20,382 Income
tax expense � 1,792 � 2,958 � 6,647 � 7,725 � Net income $ 2,890 $
4,846 $ 10,829 $ 12,657 � � Earnings per share calculations: Basic
and diluted distributed earnings per share: Class A common stock $
0.21 $ 0.21 $ 0.64 $ 0.72 Basic and diluted earnings (loss) per
share: Class A common stock $ 0.08 $ 0.13 $ 0.29 $ 0.49 Class B
common stock $ � $ � $ � $ (0.23 ) B&G Foods, Inc. and
Subsidiaries Reconciliation of EBITDA to Net Income and to Net Cash
Provided by Operating Activities (Dollars in thousands) (Unaudited)
� Thirteen Weeks Ended Thirty-nine Weeks Ended September 27,2008 �
September 29,2007 September 27,2008 � September 29,2007 (Dollars in
thousands) Net income $ 2,890 $ 4,846 $ 10,829 $ 12,657 Income tax
expense 1,792 2,958 6,647 7,725 Interest expense, net 11,562 12,374
37,041 40,028 Depreciation and amortization � 3,887 � � 3,843 � �
11,420 � � 9,706 � EBITDA 20,131 24,021 65,937 70,116 Income tax
expense (1,792 ) (2,958 ) (6,647 ) (7,725 ) Interest expense, net
(11,562 ) (12,374 ) (37,041 ) (40,028 ) Deferred income taxes 2,042
3,102 6,087 6,944 Amortization of deferred financing costs 792 792
2,376 2,397 Write off of deferred debt issuance costs � � � 1,769
Unrecognized gain on interest rate swap (1,514 ) � (1,514 ) � Other
76 � 76 � Stock-based compensation expense 152 � 510 � Changes in
assets and liabilities, net of effects of business combination �
8,108 � � (3,213 ) � (1,258 ) � (12,273 ) Net cash provided by
operating activities $ 16,433 � $ 9,370 � $ 28,526 � $ 21,200 � (1)
� EBITDA is a measure used by management to measure operating
performance. EBITDA is defined as net income before net interest
expense, income taxes, depreciation, and amortization. Management
believes that it is useful to eliminate net interest expense,
income taxes, depreciation and amortization because it allows
management to focus on what it deems to be a more reliable
indicator of ongoing operating performance and our ability to
generate cash flow from operations. We use EBITDA in our business
operations, among other things, to evaluate our operating
performance, develop budgets and measure our performance against
those budgets, determine employee bonuses and evaluate our cash
flows in terms of cash needs. We also present EBITDA because we
believe it is a useful indicator of our historical debt capacity
and ability to service debt and because covenants in our credit
facility and the indentures governing the senior notes and the
senior subordinated notes contain ratios based on these measures.
As a result, internal management reports used during monthly
operating reviews feature the EBITDA metric. However, management
uses this metric 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 this measure as its only measure of
operating performance and liquidity. � EBITDA is not a recognized
term under GAAP and does not purport to be an alternative to
operating income or net income as an indicator of operating
performance or any other GAAP measure. EBITDA is not a complete net
cash flow measure because EBITDA is a measure of liquidity that
does not include reductions for cash payments for an entity's
obligation to service its debt, fund its working capital, capital
expenditures and acquisitions, if any, and pay its income taxes and
dividends, if any. Rather, EBITDA is a potential indicator of an
entity's ability to fund these cash requirements. EBITDA also is
not a complete measure of an entity's profitability because it does
not include costs and expenses for depreciation and amortization,
interest and related expenses and income taxes. Because not all
companies use identical calculations, this presentation of EBITDA
may not be comparable to other similarly titled measures of other
companies. However, EBITDA can still be useful in evaluating our
performance against our peer companies because management believes
this measure provides users with valuable insight into key
components of GAAP amounts.
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