B&G Foods Reports Second Quarter 2013 Financial Results

B&G Foods Reports Second Quarter 2013 Financial Results

— Increases Fiscal 2013 Guidance —

PARSIPPANY, N.J.--(BUSINESS WIRE)-- B&G Foods, Inc. (NYS: BGS) today announced financial results for the second quarter and first two quarters of 2013.


Highlights (vs. year-ago quarter where applicable):

  • Net sales increased 8.3% to $160.9 million
  • Operating income increased 3.2% to $36.2 million
  • Net loss was $1.4 million, after giving effect to $18.7 million of after-tax charges related to debt refinancing and acquisition-related transaction costs
  • Adjusted net income* increased 8.0% to $17.3 million
  • Loss per share was $0.03, after giving effect to $0.36 per share of after-tax charges related to debt refinancing and acquisition-related transaction costs
  • Adjusted diluted earnings per share* remained consistent at $0.33
  • Adjusted EBITDA* increased 7.0% to $42.4 million
  • Adjusted EBITDA guidance increased to a range of $187.0 million to $191.0 million for the full year based primarily on the recent Pirate Brands acquisition

Commenting on the results, David L. Wenner, President and Chief Executive Officer of B&G Foods, stated, "The second quarter was a very successful quarter for B&G Foods. In May we completed the acquisition of the TrueNorth brand and in June we entered into an agreement to buy Pirate Brands, a leader in the all-natural snack foods category. During the second quarter we also issued $700 million of senior notes at the very favorable interest rate of 4.625% and early in the third quarter increased our revolver capacity by $100.0 million. We used the proceeds from the refinancing to retire our 7.625% senior notes, repay our tranche B term loans and to fund the Pirate Brands acquisition, which closed early in the third quarter. We believe that by improving our debt profile, we are in a very strong position to continue to pursue accretive acquisitions."

Mr. Wenner continued, "The quarter left our net sales volumes for our base business slightly positive for the first half of the year. We continue to grow the brands most important to us; Tier I brands were up for both the quarter and the first half. Declines in other areas centered primarily on weak second quarter foodservice sales and continued weakness in certain Northeast retail customers."

_________________

* 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.

Financial Results for the Second Quarter of 2013

Net sales for the second quarter of 2013 increased $12.3 million or 8.3% to $160.9 million from $148.6 million for the second quarter of 2012. Net sales of the New York Style and Old London brands, which B&G Foods acquired at the end of October 2012, contributed $10.9 million to the overall increase, and net sales of the TrueNorth brand, which B&G Foods acquired at the beginning of May 2013, contributed $3.2 million to the overall increase. Net sales for B&G Foods' base business decreased $1.8 million, or 1.2%, attributable to net price decrease of $0.6 million and a unit volume decrease of $1.2 million.

Gross profit for the second quarter of 2013 increased 7.6% to $55.7 million from $51.8 million in the second quarter of 2012. Gross profit expressed as a percentage of net sales decreased 0.2 percentage points to 34.6% for the second quarter of 2013 from 34.8% in the second quarter of 2012. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to the effect of the New York Style and Old London acquisition and the TrueNorth acquisition and a net price decrease of $0.6 million, partially offset by a sales mix shift to higher margin products. Operating income increased 3.2% to $36.2 million for the second quarter of 2013, from $35.1 million in the second quarter of 2012.

Net interest expense for the second quarter of 2013 decreased $1.8 million or 15.4% to $10.0 million from $11.9 million for the second quarter of 2012. The decrease in net interest expense in the second quarter of 2013 was primarily attributable to the refinancing of the Company's long-term debt, including the issuance of 4.625% senior notes, the repurchase of 7.625% senior notes, and the repayment of tranche B term loans.

As a result of $18.7 million of after tax charges relating to the refinancing and acquisition-related transaction costs, the Company reported a net loss under U.S. generally accepted accounting principles (GAAP) of $1.4 million, or $0.03 per share, for the second quarter of 2013. This compares to reported net income of $16.0 million, or $0.33 per diluted share, for the second quarter of 2012. The Company's adjusted net income for the second quarter of 2013, which excludes the refinancing charges and acquisition-related transaction costs, was $17.3 million, or $0.33 per adjusted diluted share. There were no adjustments to net income for the second quarter of 2012.

For the second quarter of 2013, adjusted EBITDA, which excludes the impact of acquisition-related transaction costs, increased 7.0% to $42.4 million from $39.6 million for the second quarter of 2012. There were no adjustments to EBITDA for the second quarter of 2012.

Financial Results for the First Two Quarters of 2013

Net sales for the first two quarters of 2013 increased $26.1 million or 8.5% to $332.1 million from $306.0 million for the first two quarters of 2012. Net sales of the New York Style and Old London brands, which we acquired at the end of October 2012, contributed $22.2 million to the overall increase, and net sales of the TrueNorth brand, which we acquired at the beginning of May 2013, contributed $3.2 million to the overall increase. Net sales from the Company's base business increased $0.7 million, or 0.2%, attributable to a unit volume increase of $1.2 million and a net price decrease of $0.5 million.

Gross profit for the first two quarters of 2013 increased 5.5% to $114.5 million from $108.6 million in the first two quarters of 2012. Gross profit expressed as a percentage of net sales decreased 1.0 percentage point to 34.5% in the first two quarters of 2013 from 35.5% in the first two quarters of 2012. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to the effect of the New York Style and Old London acquisition and the TrueNorth acquisition, a net price decrease of $0.5 million and a sales mix shift to lower margin products. Operating income increased 4.4% to $76.5 million in the first two quarters of 2013, from $73.3 million in the first two quarters of 2012.

Net interest expense for the first two quarters of 2013 decreased $4.0 million or 17.0% to $19.8 million from $23.9 million in the first two quarters of 2012. The decrease in net interest expense in the first two quarters of 2013 was primarily attributable to the refinancing of the Company's long-term debt, including the issuance of 4.625% senior notes, the repurchase of 7.625% senior notes, and the repayment of tranche B term loans.

After taking into account $18.7 million of after tax charges relating to the refinancing and acquisition-related transaction costs, the Company's reported net income under U.S. GAAP was $18.2 million, or $0.34 per diluted share, for the first two quarters of 2013, as compared to reported net income of $32.8 million, or $0.68 per diluted share, for the first two quarters of 2012. The Company's adjusted net income for the first two quarters of 2013, which excludes the refinancing charges and acquisition-related transaction costs, was $36.9 million, and adjusted diluted earnings per share was $0.70. There were no adjustments to net income for the first two quarters of 2012.

For the first two quarters of 2013, adjusted EBITDA increased 7.1% to $88.0 million from $82.2 million for the first two quarters of 2012. There were no adjustments to EBITDA for the first two quarters of 2012.

Guidance

Primarily to take into account the expected impact of the Pirate Brands acquisition, B&G Foods increased its adjusted EBITDA guidance for fiscal 2013 to a range of approximately $187.0 to $191.0 million.

Conference Call

B&G Foods will hold a conference call at 4:30 p.m. ET today, July 18, 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 (877) 723-9520 for U.S. callers or (719) 325-4784 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 1569952. The replay will be available from July 18, 2013 through August 1, 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 (loss) 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) 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 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 (loss) and reported diluted earnings (loss) per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to reported net income (loss) and diluted earnings (loss) 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 acquisition-related transaction costs and gains or losses on extinguishment of debt, 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 (loss) and to net cash provided by operating activities is included below for the second quarter and first two quarters of 2013 and 2012, 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 (loss) and reported diluted earnings (loss) per share.

About B&G Foods, Inc.

B&G Foods and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, branded 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, Molly McButter, Mrs Dash, New York Style, Old London, Original Tings, Ortega, Pirate's Booty, Polaner, Red Devil, Regina, Sa-són, Sclafani, Smart Puffs, Sugar Twin, Trappey's, TrueNorth, Underwood, Vermont Maid 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' adjusted EBITDA expectations for fiscal 2013 and ability to pursue accretive acquisitions. 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 Form 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)

 
AssetsJune 29, 2013December 29, 2012
 
Current assets:
Cash and cash equivalents$202,407$19,219
Trade accounts receivable, net44,89043,357
Inventories103,94289,757
Prepaid expenses and other current assets6,2795,326
Income tax receivable6,4984,262
Deferred income taxes 2,100  2,175 
Total current assets366,116164,096
 

Property, plant and equipment, net of accumulated depreciation of $107,317 and $100,625

107,069

104,746

Goodwill268,008267,940
Other intangibles, net641,873637,196
Other assets 20,194  17,990 
Total assets$1,403,260 $1,191,968 
 
Liabilities and Stockholders' Equity
 
Current liabilities:
Trade accounts payable$28,237$25,050
Accrued expenses14,73523,610
Current portion of long-term debt43,20040,375
Dividends payable 15,333  15,243 
Total current liabilities101,505104,278
 
Long-term debt821,422597,314
Other liabilities4,4068,038
Deferred income taxes 127,446  121,163 
Total liabilities1,054,779830,793
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; 52,873,364 and 52,560,765 shares issued and outstanding as of June 29, 2013 and December 29, 2012529526
Additional paid-in capital195,781226,900
Accumulated other comprehensive loss(10,874)(11,095)
Retained earnings 163,045  144,844 
Total stockholders' equity 348,481  361,175 
Total liabilities and stockholders' equity$1,403,260 $1,191,968 
 
    

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)


(Unaudited)

 
Thirteen Weeks EndedTwenty-six Weeks Ended
June 29, 2013  June 30, 2012June 29, 2013  June 30, 2012
 
Net sales$160,882$148,612$332,076$305,951
Cost of goods sold 105,185  96,856 217,567 197,370
Gross profit55,69751,756114,509108,581
 
Operating expenses:
Selling, general and administrative expenses17,31814,62933,82631,269
Amortization expense 2,156  2,023 4,223 4,045
Operating income36,22335,10476,46073,267
 
Other expenses:
Interest expense, net10,03011,86219,80323,851
Loss on extinguishment of debt 28,478   28,478 
(Loss) income before income tax (benefit) expense(2,285)23,24228,17949,416
Income tax (benefit) expense (852) 7,216 9,978 16,612
Net (loss) income$(1,433)$16,026 18,201 32,804
 
Weighted average shares outstanding:
Basic52,86348,37652,78948,207
Diluted52,86348,72452,90248,523
 
Basic and diluted earnings per share$(0.03)$0.33$0.34$0.68
 
Cash dividends declared per share$0.29$0.27$0.58$0.54
 
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B&G Foods, Inc. and Subsidiaries

Reconciliation of EBITDA and Adjusted EBITDA to Net Income (Loss) and to Net Cash Provided by

Operating Activities


(In thousands)

(Unaudited)

 
Thirteen Weeks EndedTwenty-six Weeks Ended
June 29, 2013  June 30, 2012June 29, 2013  June 30, 2012
 
Net (loss) income$(1,433)$16,026$18,201$32,804
Income tax (benefit) expense(852)7,2169,97816,612
Interest expense, net10,03011,86219,80323,851
Depreciation and amortization5,5994,47311,0198,914
Loss on extinguishment of debt 28,478    28,478   
EBITDA(1)41,82239,57787,47982,181
Acquisition-related transaction costs 534    534   
Adjusted EBITDA42,35639,57788,01382,181
Income tax benefit (expense)852(7,216)(9,978)(16,612)