B&G Foods Reports Strong Net Sales and Earnings Growth for Fourth Quarter and Full-Year 2012
B&G Foods Reports Strong Net Sales and Earnings Growth for Fourth Quarter and Full-Year 2012
PARSIPPANY, N.J.--(BUSINESS WIRE)-- B&G Foods, Inc. (NYS: BGS) today announced financial results for the fourth quarter and full-year 2012.
Highlights:
Net sales increased 15.8% to $173.7 million for the quarter and 16.5% to $633.8 million for the year
Net income increased 17.9% to $59.3 million for the year
Adjusted net income* increased 25.6% to $66.7 million for the year
Diluted earnings per share increased 15.4% to $1.20 for the year
Adjusted diluted earnings per share* increased 23.9% to $1.35 for the year.
Adjusted EBITDA1 increased 20.0% to $44.0 million for the quarter and 28.9% to $169.0 million for the year
The Company expects to deliver 2013 adjusted EBITDA of $178.0 million to $182.0 million
David L. Wenner, President and Chief Executive Officer of B&G Foods, stated, "Our business set company records in net sales, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA for the fourth quarter and for the full year 2012 as we executed very well on the Culver Specialty Brands acquisition. Pricing gains continued to be strong and offset much of the volume weakness caused by industry trends and the effects of Hurricane Sandy. The New York Style and Old London acquisition completed in the quarter adds an exciting new element to our portfolio."
Financial Results for the Fourth Quarter of 2012
Net sales for the fourth quarter of 2012 increased 15.8% to $173.7 million from $150.0 million for the fourth quarter of 2011. Net sales of the Culver Specialty Brands, which B&G Foods acquired at the end of November 2011, contributed $15.7 million and net sales of the New York Style and Old London brands, which B&G Foods acquired at the end of October 2012, contributed $8.4 million to the Company's overall increase during the fourth quarter. For B&G Foods' base business, a sales price increase of $2.8 million offset by a $3.2 million unit volume decrease resulted in a net sales decrease of $0.4 million.
Gross profit for the fourth quarter of 2012 increased 20.7% to $59.5 million from $49.3 million in the fourth quarter of 2011. Gross profit expressed as a percentage of net sales increased 1.3 percentage points to 34.2% in the fourth quarter of 2012 from 32.9% in the fourth quarter of 2011, attributable to a sales mix shift to higher margin products (primarily due to the Culver Specialty Brands acquisition) and pricing gains of $2.8 million, partially offset by commodity and packaging cost increases. Operating income increased 20.8% to $37.4 million in the fourth quarter of 2012 from $31.0 million in the fourth quarter of 2011.
Net interest expense for the fourth quarter of 2012 and the fourth quarter of 2011 remained consistent at $11.8 million.
The Company's reported net income under U.S. generally accepted accounting principles (GAAP) was $9.6 million, or $0.18 per diluted share, for the fourth quarter of 2012, as compared to reported net income of $12.3 million, or $0.25 per diluted share, for the fourth quarter of 2011. The Company's adjusted net income for the fourth quarter of 2012 was $17.0 million, or $0.32 per adjusted diluted share, for the fourth quarter of 2012, as compared to adjusted net income of $14.7 million, or $0.30 per adjusted diluted share, for the fourth quarter of 2011.
Adjusted EBITDA, which for the fourth quarter of 2012 excludes the impact of transaction costs related to the New York Style and Old London acquisition and for the fourth quarter of 2011 excludes the impact of transaction costs related to the Culver Specialty Brands acquisition, increased 20.0% to $44.0 million from $36.7 million.
Financial Results for Full-Year 2012
Net sales for fiscal 2012 increased 16.5% to $633.8 million from $543.9 million for fiscal 2011. Net sales of the Culver Specialty Brands contributed $81.0 million and net sales of New York Style and Old London contributed $8.4 million to the Company's overall increase. Net sales for the base business increased $0.5 million, with a sales price increase of $13.1 million offset by a $12.6 million unit volume decline.
Gross profit for fiscal 2012 increased 25.6% to $223.3 million from $177.8 million in fiscal 2011. Gross profit expressed as a percentage of net sales increased 2.5 percentage points to 35.2% in fiscal 2012 from 32.7% in fiscal 2011, attributable to a sales mix shift to higher margin products (primarily due to the Culver Specialty Brands acquisition) and pricing gains of $13.1 million, partially offset by commodity and packaging cost increases. Operating income increased 31.3% to $149.0 million in fiscal 2012 from $113.5 million in fiscal 2011.
Net interest expense for fiscal 2012 increased $11.0 million or 30.0% to $47.7 million from $36.7 million in fiscal 2011 attributable to an increase in indebtedness to finance the Culver Specialty Brands acquisition, and an additional $2.8 million of amortization of deferred debt financing costs and bond discount relating to the acquisition financing.
The Company's reported net income under U.S. GAAP was $59.3 million, or $1.20 per diluted share, for fiscal 2012, as compared to reported net income of $50.2 million, or $1.04 per diluted share, for fiscal 2011. The Company's adjusted net income for fiscal 2012 was $66.7 million, and adjusted diluted earnings per share was $1.35, as compared to adjusted net income of $53.1 million and adjusted diluted earnings per share of $1.09 for fiscal 2011.
Adjusted EBITDA, which for fiscal 2012 excludes the impact of transaction costs related to the New York Style and Old London acquisition and for fiscal 2011 excludes the impact of transaction costs related to the Culver Specialty Brands acquisition, increased 28.9% to $169.0 million from $131.1 million.
Guidance
Adjusted EBITDA for fiscal 2013 is expected to be approximately $178.0 million to $182.0 million. Capital expenditures for fiscal 2013 are expected to be approximately $13.0 million. Cash interest expense for fiscal 2013 is expected to be approximately $35.0 million.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today, February 14, 2013. The call will be webcast live from B&G Foods' website at www.bgfoods.com under "Investor Relations—Company Overview." The call can also be accessed live over the phone by dialing (888) 455-2263 for U.S. callers or (719) 325-2448 for international callers.
A replay of the call will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the password is 3747979. The replay will be available from February 14, 2013 through February 28, 2013. Investors may also access a web-based replay of the call at the Investor Relations section of B&G Foods' website, www.bgfoods.com.
About Non-GAAP Financial Measures and Items Affecting Comparability
"Adjusted net income," "adjusted diluted earnings per share," "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 acquisition-related transaction costs, which include outside fees and expenses and restructuring and consolidation costs of acquisitions incurred in fiscal 2012 and 2011) are "non-GAAP financial measures." A non-GAAP financial measure is a numerical measure of financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in B&G Foods' consolidated balance sheets and related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows. Non-GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. The Company's non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
The Company uses "adjusted net income" and "adjusted diluted earnings per share," which are calculated as reported net income and reported diluted earnings per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to reported net income and diluted earnings per share to eliminate the items identified below. 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 charges associated with unrealized gains or losses on the Company's interest rate swap, gains or losses on extinguishment of debt and acquisition-related transaction costs, management does not consider these costs 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 fiscal 2012 and 2011, along with the components of EBITDA and adjusted EBITDA. Also included below are reconciliations of the non-GAAP terms adjusted net income and adjusted diluted earnings per share to reported net income and reported diluted earnings per share.
About B&G Foods, Inc.
B&G Foods and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, shelf-stable foods across the United States, Canada and Puerto Rico. Based in Parsippany, New Jersey, B&G Foods' products are marketed under many recognized brands, including Ac'cent, B&G, B&M, Baker's Joy, Brer Rabbit, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril's, Grandma's Molasses, JJ Flats, Joan of Arc, Las Palmas, Maple Grove Farms of Vermont, Molly McButter, Mrs. Dash, New York Style, Old London, Ortega, Polaner, Red Devil, Regina, Sa-són, Sclafani, Sugar Twin, Trappey's, Underwood, VermontMaid and Wright's. B&G Foods also sells and distributes two branded household products, Static Guard and Kleen Guard.
Forward-Looking Statements
Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements."The forward-looking statements contained in this press release include, without limitation, statements related to B&G Foods' expectations regarding adjusted EBITDA, capital expenditures and cash interest expense for 2013.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 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.
* Please see "About Non-GAAP Financial Measures and Items Affecting Comparability" below for the definition of the terms adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA, as well as information concerning certain items affecting comparability and reconciliations of the non-GAAP terms adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA to the most comparable GAAP financial measures.
B&G Foods, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) | ||||||||
December 29, 2012 | December 31, 2011 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 19,219 | $ | 16,738 | ||||
Trade accounts receivable, less allowance for doubtful accounts and discounts of $831 and $723 in 2012 and 2011 | 43,357 | 39,476 | ||||||
Inventories | 89,757 | 82,666 | ||||||
Prepaid expenses and other current assets | 5,326 | 7,119 | ||||||
Income tax receivable | 4,262 | 2,529 | ||||||
Deferred income taxes | 2,175 | 1,696 | ||||||
Total current assets | 164,096 | 150,224 | ||||||
Property, plant and equipment, net | 104,746 | 61,930 | ||||||
Goodwill | 267,940 | 262,827 | ||||||
Other intangibles, net | 637,196 | 634,522 | ||||||
Other assets | 17,990 | 23,420 | ||||||
Total assets | $ | 1,191,968 | $ | 1,132,923 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 25,050 | $ | 24,427 | ||||
Accrued expenses | 23,610 | 26,719 | ||||||
Current portion of long-term debt | 40,375 | 9,750 | ||||||
Dividends payable | 15,243 | 10,971 | ||||||
Total current liabilities | 104,278 | 71,867 | ||||||
Long-term debt | 597,314 | 710,357 | ||||||
Other liabilities | 8,038 | 9,409 | ||||||
Deferred income taxes | 121,163 | 105,743 | ||||||
Total liabilities | 830,793 | 897,376 | ||||||
Commitments and contingencies | ||||||||
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; 52,560,765 and 47,700,132 issued and outstanding as of December 29, 2012 and December 31, 2011, respectively | 526 | 477 | ||||||
Additional paid-in capital | 226,900 | 159,916 | ||||||
Accumulated other comprehensive loss | (11,095 | ) | (10,430 | ) | ||||
Retained earnings | 144,844 | 85,584 | ||||||
Total stockholders' equity | 361,175 | 235,547 | ||||||
Total liabilities and stockholders' equity | $ | 1,191,968 | $ | 1,132,923 | ||||
B&G Foods, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) | ||||||||||||
Fourth Quarter Ended | Year Ended | |||||||||||
December 29, 2012 | December 31, 2011 | December 29, 2012 | December 31, 2011 | |||||||||
Net sales | $ | 173,706 | $ | 149,998 | $ | 633,812 | $ | 543,866 | ||||
Cost of goods sold | 114,223 | 100,708 | 410,469 | 366,090 | ||||||||
Gross profit | 59,483 | 49,290 | 223,343 | 177,776 | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative expenses | 20,006 | 16,549 | 66,212 | 57,618 | ||||||||
Amortization expense | 2,059 | 1,766 | 8,126 | 6,679 | ||||||||
Operating income | 37,418 | 30,975 | 149,005 | 113,479 | ||||||||
Other expenses: | ||||||||||||
Interest expense, net | 11,815 | 11,821 | 47,660 | 36,675 | ||||||||
Loss on extinguishment of debt | 10,431 | — | 10,431 | — | ||||||||
Income before income tax expense | 15,172 | 19,154 | 90,914 | 76,804 | ||||||||
Income tax expense | 5,613 | 6,899 | 31,654 | 26,561 | ||||||||
Net income | $ | 9,559 | $ | 12,255 | 59,260 | 50,243 | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 52,154 | 47,712 | 49,239 | 47,856 | ||||||||
Diluted | 52,602 | 48,665 | 49,557 | 48,541 | ||||||||
Earnings per share: | ||||||||||||
Basic | $ | 0.18 | $ | 0.26 | $ | 1.20 | $ | 1.05 | ||||
Diluted | $ | 0.18 | $ | 0.25 | $ | 1.20 | $ | 1.04 | ||||
Cash dividends declared per share | $ | 0.29 | $ | 0.23 | $ | 1.10 | $ | 0.86 | ||||
B&G Foods, Inc. and Subsidiaries Reconciliation of EBITDA to Net Income and to Net Cash Provided by Operating Activities (In thousands) (Unaudited) | |||||||||||||||
Fourth Quarter Ended | Year Ended | ||||||||||||||
December 29, 2012 | December 31, 2011 | December 29, 2012 | December 31, 2011 | ||||||||||||
Net income | $ | 9,559 | $ | 12,255 | $ | 59,260 | $ | 50,243 | |||||||
Income tax expense | 5,613 | 6,899 | 31,654 | 26,561 | |||||||||||
Interest expense, net(1) | 11,815 | 11,821 | 47,660 | 36,675 | |||||||||||
Depreciation and amortization | 5,410 | 4,265 | 18,853 | 16,229 | |||||||||||
Loss on extinguishment of debt(2) | 10,431 | — | 10,431 | — | |||||||||||
EBITDA(3) | 42,828 | 35,240 | 167,858 | 129,708 | |||||||||||
Acquisition-related transaction costs | 1,159 | 1,418 | 1,159 | 1,418 | |||||||||||
Adjusted EBITDA(3) | 43,987 | 36,658 | 169,017 | 131,126 | |||||||||||
Income tax expense | (5,613 | ) | (6,899 | ) | (31,654 | ) | (26,561 | ) | |||||||
Interest expense, net(1) | (11,815 | ) | (11,821 | ) | (47,660 | ) | (36,675 | ) | |||||||
Acquisition-related transaction costs | (1,159 | ) | (1,418 | ) | (1,159 | ) | (1,418 | ) | |||||||
Deferred income taxes | 4,328 | 882 | 15,295 | 13,529 | |||||||||||
Amortization of deferred financing costs and bond discount | 1,257 | 751 | 5,028 | 2,251 | |||||||||||
Realized gain on interest rate swap(1) | — | — | — | (612 | ) | ||||||||||
Reclassification to net interest expense for interest rate swap(1) | — | 2,399 | — | 3,669 | |||||||||||
Share-based compensation expense | 877 | 1,401 | 3,777 | 4,098 | |||||||||||
Excess tax benefits from share-based compensation | — | 70 | (8,031 | ) | (1,047 | ) | |||||||||
Changes in assets and liabilities, net of effects of business combinations | 15,170 | 10,717 | (4,085 | ) | (16,327 | ) | |||||||||
Net cash provided by operating activities | $ | 47,032 | $ | 32,740 | $ | ||||||||||
