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April 28, 2016
— Delivers Strong Growth in Sales and Earnings —
— Increases Full Year Guidance —
Highlights (vs. year-ago quarter where applicable):
“The first quarter was extremely positive on many levels, particularly
with respect to B&G Foods’ profitability, and as a result we have
increased our 2016 guidance for net sales, adjusted EBITDA and adjusted
diluted earnings per share. To date, our acquisition of Green Giant
is turning out to be even more profitable than initially anticipated, a
major driver of our favorable results in the first quarter. The Green Giant
transition is well under way and on schedule and the Green Giant
innovation pipeline is growing. We are more excited than ever about
bringing Green Giant back to prominence and I believe we have the
plan and the team to make that happen,” said
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| * | Please see “About Non-GAAP Financial Measures and Items Affecting Comparability” below for the definition of the non-GAAP financial measures “adjusted net income,” “adjusted diluted earnings per share,” “base business net sales,” “EBITDA” and “adjusted EBITDA,” 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 First Quarter of 2016
Net sales for the first quarter of 2016 increased
Base business net sales for the first quarter of 2016 decreased
Gross profit for the first quarter of 2016 increased
Selling, general and administrative expenses increased
Net interest expense for the first quarter of 2016 increased
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was
For the first quarter of 2016, adjusted EBITDA (which excludes the
impact of the amortization of acquisition-related inventory step-up, the
impact of the loss on product recall, other acquisition-related expenses
and distribution restructuring expenses), increased 79.4% to
Guidance
Conference Call
A replay of the call will be available two hours after the call and can
be accessed by dialing (877) 870-5176 or (858) 384-5517 for
international callers; the password is 5604425. The replay will be
available from
About Non-GAAP Financial Measures and Items Affecting Comparability
“Adjusted net income,” “adjusted diluted earnings per share,” “base business net sales” (net sales without the impact of acquisitions until the acquisitions are included in both comparable periods), “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-related expenses, gains and losses (which may include third party fees and expenses, integration, restructuring and consolidation expenses and amortization of acquisition-related inventory fair value step-up); loss on product recalls, including customer refunds, selling, general and administrative expenses and the impact on cost of sales; and distribution restructuring expenses) 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,” “adjusted diluted earnings per share,” and “base business net sales,” which are calculated as reported net income, reported diluted earnings per share and reported net sales adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to reported net income, diluted earnings per share and net sales to eliminate the items identified above. 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, 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 first quarters of 2016 and 2015, 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 and cash flows.
About
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 adjusted diluted earnings per share; B&G Foods’ overall
expectations for fiscal 2016; and B&G Foods’ expectations regarding Green Giant,
including, without limitation, B&G Foods’ expectations as to transition
timing, profitability and innovation. 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
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B&G Foods, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) |
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| April 2, 2016 | January 2, 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 65,180 | $ | 5,246 | ||||
| Trade accounts receivable, net | 72,584 | 69,712 | ||||||
| Inventories | 260,517 | 312,880 | ||||||
| Prepaid expenses and other current assets | 58,488 | 67,517 | ||||||
| Income tax receivable | — | 2,514 | ||||||
| Deferred income taxes | 5,224 | 5,292 | ||||||
| Total current assets | 461,993 | 463,161 | ||||||
| Property, plant and equipment, net of accumulated depreciation of $152,067 and $146,337 | 162,629 | 163,642 | ||||||
| Goodwill | 473,145 | 473,145 | ||||||
| Other intangibles, net | 1,438,932 | 1,442,340 | ||||||
| Other assets | 1,895 | 1,332 | ||||||
| Total assets | $ | 2,538,594 | $ | 2,543,620 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 41,772 | $ | 49,593 | ||||
| Accrued expenses | 39,133 | 31,233 | ||||||
| Current portion of long-term debt | — | 33,750 | ||||||
| Income tax payable | 4,412 | — | ||||||
| Dividends payable | 26,309 | 20,292 | ||||||
| Total current liabilities | 111,626 | 134,868 | ||||||
| Long-term debt | 1,545,825 | 1,697,771 | ||||||
| Other liabilities | 2,346 | 3,212 | ||||||
| Deferred income taxes | 259,927 | 250,084 | ||||||
| Total liabilities | 1,919,724 | 2,085,935 | ||||||
| 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; 62,640,242 and 57,976,744 shares issued and outstanding as of April 2, 2016 and January 2, 2016 | 626 | 580 | ||||||
| Additional paid-in capital | 288,269 | 162,568 | ||||||
| Accumulated other comprehensive loss | (10,454 | ) | (12,696 | ) | ||||
| Retained earnings | 340,429 | 307,233 | ||||||
| Total stockholders’ equity | 618,870 | 457,685 | ||||||
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Total liabilities and stockholders’ equity |
$ | 2,538,594 | $ | 2,543,620 | ||||
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B&G Foods, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) |
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| First Quarter Ended | ||||||||
| April 2, | April 4, | |||||||
| 2016 | 2015 | |||||||
| Net sales | $ | 352,978 | $ | 217,122 | ||||
| Cost of goods sold | 237,063 | 149,725 | ||||||
| Gross profit | 115,915 | 67,397 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | 39,638 | 22,848 | ||||||
| Amortization expense | 3,408 | 2,673 | ||||||
| Operating income | 72,869 | 41,876 | ||||||
| Other income and expenses: | ||||||||
| Interest expense, net | 19,135 | 11,539 | ||||||
| Loss on extinguishment of debt | 2,836 | — | ||||||
| Other income | (1,929 | ) | — | |||||
| Income before income tax expense | 52,827 | 30,337 | ||||||
| Income tax expense | 19,631 | 10,770 | ||||||
| Net income | $ | 33,196 | $ | 19,567 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 59,001 | 53,759 | ||||||
| Diluted | 59,103 | 53,800 | ||||||
| Basic and diluted earnings per share | $ | 0.56 | $ | 0.36 | ||||
| Cash dividends declared per share | $ | 0.42 | $ | 0.34 | ||||
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B&G Foods, Inc. and Subsidiaries Reconciliation of EBITDA and Adjusted EBITDA to Net Income and to Net Cash Provided by Operating Activities (In thousands) (Unaudited) |
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| First Quarter Ended | ||||||||
| April 2, | April 4, | |||||||
| 2016 | 2015 | |||||||
| Net income | $ | 33,196 | $ | 19,567 | ||||
| Income tax expense | 19,631 | 10,770 | ||||||
| Interest expense, net | 19,135 | 11,539 | ||||||
| Depreciation and amortization | 9,004 | 6,544 | ||||||
| Loss on extinguishment of debt | 2,836 | — | ||||||
| EBITDA(1) | 83,802 | 48,420 | ||||||
| Acquisition-related expenses | 2,232 | 39 | ||||||
| Amortization of acquisition-related inventory step-up | 3,074 | — | ||||||
| Loss on product recall | — | 1,467 | ||||||
| Distribution restructuring expenses | 474 | — | ||||||
| Adjusted EBITDA(1) | 89,582 | 49,926 | ||||||
| Income tax expense | (19,631 | ) | (10,770 | ) | ||||
| Interest expense, net | (19,135 | ) | (11,539 | ) | ||||
| Acquisition-related expenses | (2,232 | ) | (39 | ) | ||||
| Loss on product recall | — | (1,467 | ) | |||||
| Distribution restructuring expenses | (474 | ) | — | |||||
| Deferred income taxes | 9,854 | 4,619 | ||||||
| Amortization of deferred financing costs and bond discount | 1,468 | 879 | ||||||
| Amortization of acquisition-related inventory step-up | (3,074 | ) | — | |||||
| Share-based compensation expense | 1,098 | 1,183 | ||||||
| Excess tax benefits from share-based compensation | (343 | ) | (518 | ) | ||||
| Changes in assets and liabilities, net of effects of business combinations | 66,736 | 6,407 | ||||||
| Net cash provided by operating activities | $ | 123,849 | $ | 38,681 | ||||
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| (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 our 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 our consolidated balance sheets and related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows. We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization and loss on extinguishment of debt. We define adjusted EBITDA as EBITDA adjusted for cash and non-cash acquisition-related expenses, gains and losses (which may include third party fees and expenses, integration, restructuring and consolidation expenses and amortization of acquired inventory fair value step-up); loss on product recalls, including customer refunds, selling, general and administrative expenses and the impact on cost of sales; and distribution restructuring expenses. Management believes that it is useful to eliminate net interest expense, income taxes, depreciation and amortization, loss on extinguishment of debt, acquisition-related expenses, gains and losses, loss on product recalls and distribution restructuring expenses 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 and adjusted EBITDA in our business operations to, among other things, 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 and adjusted EBITDA because we believe they are useful indicators of our historical debt capacity and ability to service debt and because covenants in our credit agreement and our senior notes indenture contain ratios based on these measures. As a result, internal management reports used 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 an alternative to operating income or 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 costs and expenses for depreciation and amortization, interest and related expenses, loss on extinguishment of debt, acquisition-related expenses, gains and losses and income taxes, loss on product recalls and distribution restructuring expenses. 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 our performance against our peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts. | ||
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B&G Foods, Inc. and Subsidiaries Items Affecting Comparability — Reconciliation of Adjusted Information to GAAP Information (In thousands, except per share data) (Unaudited) |
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| First Quarter Ended | ||||||||
| April 2, | April 4, | |||||||
| 2016 | 2015 | |||||||
| Reported net income | $ | 33,196 | $ | 19,567 | ||||
| Loss on extinguishment of debt, net of tax(1) | 1,784 | — | ||||||
| Acquisition-related expenses, net of tax | 1,404 | 25 | ||||||
| Distribution restructuring expenses, net of tax(2) | 298 | — | ||||||
| Acquisition-related inventory step-up, net of tax(3) | 1,934 | — | ||||||
| Loss on product recall, net of tax(4) | — | 946 | ||||||
| Adjusted net income | $ | 38,616 | $ | 20,538 | ||||
| Adjusted diluted earnings per share | $ | 0.65 | $ | 0.38 | ||||
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| (1) | Loss on extinguishment of debt for the first quarter 2016 includes the write-off of deferred debt financing costs and unamortized discount of $2.2 million and $0.6 million, respectively, relating to the repayment of $40.1 million aggregate principal amounts of our tranche A term loans and $109.9 million aggregate principal amount of our tranche B term loans. | |
| (2) | Distribution restructuring expenses for the first quarter 2016 includes expenses relating to our transitioning of the operations of our three primary distribution centers to a third party logistics provider. We expect this transition and the incurrence of related distribution restructuring expenses to be completed during the first half of 2016. | |
| (3) |
Acquisition-related inventory step-up for the first quarter of 2016 relates to the purchase accounting adjustments made to the finished goods inventory acquired in the Green Giant acquisition. |
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| (4) |
On November 14, 2014, we announced a voluntary recall for certain Ortega and Las Palmas products after learning that one or more of the spice ingredients purchased from a third party supplier contained peanuts and almonds, allergens that are not declared on the products’ ingredient statements. A significant majority of the costs of this recall were incurred in the fourth quarter of 2014. The cost impact of this recall during the first quarter of 2015 was $1.5 million, of which $0.8 million was recorded as a decrease in net sales related to customer refunds; $0.5 million was recorded as an increase in cost of goods sold primarily related to costs associated with product retrieval, destruction charges and customer fees; and $0.2 million was recorded as an increase in selling, general, and administrative expenses related to administrative costs. |
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B&G Foods, Inc. and Subsidiaries Items Affecting Comparability — Reconciliation of Base Business Net Sales to Reported Net Sales (In thousands) (Unaudited) |
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| First Quarter Ended | ||||||||||
| April 2, | April 4, | |||||||||
| 2016 | 2015 | |||||||||
| Reported net sales | $ | 352,978 | $ | 217,122 | ||||||
| Net sales from acquisitions(1) | (140,640 | ) | — | |||||||
| Base business net sales | 212,338 | 217,122 | ||||||||
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| (1) |
Reflects net sales for Green Giant and Mama Mary’s for the first quarter of 2016 for which there is no comparable period of net sales during the same period in 2015. Green Giant was acquired on November 2, 2015, and Mama Mary’s was acquired on July 10, 2015. |
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| (2) | Base business net sales is a non-GAAP financial measure used by management to measure operating performance. We define base business net sales as our net sales excluding the impact of acquisitions until the net sales from such acquisitions are included in both comparable periods. 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. Management has included this financial measure because it provides useful and comparable trend information regarding the results of our business without the effect of the timing of acquisitions. | |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160428006891/en/
Source:
Investor Relations:
ICR, Inc.
Dara Dierks, 866-211-8151
or
Media
Relations:
ICR, Inc.
Matt Lindberg, 203-682-8214