— Provides Full Year 2020 Guidance —
Third Quarter 2020 Financial Summary (vs. Third Quarter 2019 where applicable):
Commenting on the results,
Guidance for Full Year Fiscal 2020 (excluding the impact of the pending Crisco acquisition):
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
Base business net sales1 for the third quarter of 2020 increased
Net sales of Green Giant (including Le Sueur) increased
Gross profit was
Selling, general and administrative expenses increased
Net interest expense increased
The Company’s net income was
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
Financial Results for the First Three Quarters of 2020
Net sales for the first three quarters of 2020 increased
Base business net sales for the first three quarters of 2020 increased
Net sales of Green Giant (including Le Sueur) increased
Gross profit was
Selling, general and administrative expenses increased
Net interest expense increased
The Company’s net income was
For the first three quarters of 2020, adjusted EBITDA was
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
Full Year Fiscal 2020 Guidance
For fiscal 2020, net sales are expected to be approximately
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.
Agreement to Acquire the Crisco Brand
On
Conference Call
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 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
Based in
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
|
|||||
Consolidated Balance Sheets |
|||||
(In thousands, except share and per share data) |
|||||
(Unaudited) |
|||||
|
|
|
|
|
|
|
|
|
|
||
|
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 |
|
|
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, |
|
— |
|
|
— |
Common stock, |
|
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 |
|
|||||||||||
Consolidated Statements of Operations |
|||||||||||
(In thousands, except per share data) |
|||||||||||
(Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
||||||||
|
|
|
|
|
|
|
|
||||
|
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 |
|
||||||||||||
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 |
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
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 |
|
(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 |
|
(4) |
The Company’s divestiture of Pirate Brands during the fourth quarter of 2018 resulted in a gain on sale during 2018 of approximately |
|
||||||||||||
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 |
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
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 |
|
(3) |
Interest expense for the third quarter and first three quarters of 2020 includes the accelerated amortization of deferred debt financing costs of |
|
(4) |
The first three quarters of 2020 includes a |
|
||||||||||||
Items Affecting Comparability |
||||||||||||
Reconciliation of Base Business |
||||||||||||
(In thousands) |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
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 |
|
(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. |
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