— Delivers Strong Growth in Sales and Earnings —
— Increases Full Year Guidance —
Highlights (vs. year-ago quarter where applicable):
“The Green Giant business continues to exceed our profitability
expectations, and as a result we have increased our full year guidance
for adjusted EBITDA and adjusted diluted earnings per share. We expect
to successfully complete the transition of the Green Giant business
into our sales and distribution infrastructure by the end of the third
quarter. During the transition services period we have reinforced our
already very strong and dedicated workforce with a large collection of
very talented and motivated individuals who we believe will not only
help us “awaken the Green Giant” and bring the brand back to
prominence through innovation, operational excellence and consumer
awareness, but will also restore our base business to a growth
trajectory in 2017,” said
____________________ |
||
* |
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 Second Quarter of 2016
Net sales increased
Base business net sales for the second quarter of 2016 decreased
Gross profit increased
Selling, general and administrative expenses increased
Net interest expense increased
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was
For the second quarter of 2016, adjusted EBITDA (which excludes the
impact of acquisition-related expenses, the non-cash intangible asset
impairment charge and related loss on disposal of inventory, loss on
product recall and distribution restructuring expenses), increased 79.3%
to
Financial Results for the First Two Quarters of 2016
Net sales increased
Base business net sales for the first two quarters of 2016 decreased
Gross profit increased
Selling, general and administrative expenses increased
Net interest expense increased
The Company’s reported net income under GAAP was
For the first two quarters of 2016, adjusted EBITDA (which excludes the
impact of acquisition-related expenses, the amortization of
acquisition-related inventory step-up, the non-cash intangible asset
impairment charge and related loss on disposal of inventory, loss on
product recall and distribution restructuring expenses), increased 79.3%
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 3150649. 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 and without the impact of discontinued 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-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); intangible asset impairment charges and related asset write-offs; 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 second quarter and first two 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, innovation, and Green Giant and base
business growth. 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
B&G Foods, Inc. and Subsidiaries | |||||||||||||||
Consolidated Balance Sheets | |||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
July 2, 2016 |
January 2, 2016 | ||||||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 107,568 | $ | 5,246 | |||||||||||
Trade accounts receivable, net | 71,243 | 69,712 | |||||||||||||
Inventories | 262,742 | 312,880 | |||||||||||||
Prepaid expenses and other current assets | 25,633 | 67,517 | |||||||||||||
Income tax receivable | 14,370 | 2,514 | |||||||||||||
Deferred income taxes | 5,209 | 5,292 | |||||||||||||
Total current assets | 486,765 | 463,161 | |||||||||||||
Property, plant and equipment, net of accumulated depreciation of $157,790 and $146,337 | 163,743 | 163,642 | |||||||||||||
Goodwill | 472,545 | 473,145 | |||||||||||||
Other intangibles, net | 1,430,165 | 1,442,340 | |||||||||||||
Other assets | 3,240 | 1,332 | |||||||||||||
Total assets | $ | 2,556,458 | $ | 2,543,620 | |||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Trade accounts payable | $ | 38,562 | $ | 49,593 | |||||||||||
Accrued expenses | 30,179 | 31,233 | |||||||||||||
Current portion of long-term debt | 1,140 | 33,750 | |||||||||||||
Income tax payable | 2,933 | — | |||||||||||||
Dividends payable | 26,316 | 20,292 | |||||||||||||
Total current liabilities |
99,130 | 134,868 | |||||||||||||
Long-term debt | 1,545,999 | 1,697,771 | |||||||||||||
Other liabilities | 3,077 | 3,212 | |||||||||||||
Deferred income taxes | 285,795 | 250,084 | |||||||||||||
Total liabilities | 1,934,001 | 2,085,935 | |||||||||||||
Stockholders’ equity: | |||||||||||||||
Preferred stock, $0.01 par value per share. Authorized 1,000,000
shares; no |
— | — | |||||||||||||
Common stock, $0.01 par value per share. Authorized 125,000,000
shares; |
627 | 580 | |||||||||||||
Additional paid-in capital | 263,978 | 162,568 | |||||||||||||
Accumulated other comprehensive loss | (12,828 | ) | (12,696 | ) | |||||||||||
Retained earnings | 370,680 | 307,233 | |||||||||||||
Total stockholders’ equity | 622,457 | 457,685 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 2,556,458 | $ | 2,543,620 | |||||||||||
B&G Foods, Inc. and Subsidiaries | |||||||||||||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Second Quarter Ended | First Two Quarters Ended | ||||||||||||||||||||||||||||
July 2, | July 4, | July 2, | July 4, | ||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||
Net sales | $ | 306,376 | $ | 193,645 | $ | 659,354 | $ | 410,767 | |||||||||||||||||||||
Cost of goods sold | 196,661 | 131,637 | 433,724 | 281,362 | |||||||||||||||||||||||||
Gross profit | 109,715 | 62,008 | 225,630 | 129,405 | |||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | 33,886 | 19,197 | 73,524 | 42,045 | |||||||||||||||||||||||||
Amortization expense | 3,362 | 2,673 | 6,770 | 5,346 | |||||||||||||||||||||||||
Impairment of intangible assets | 5,405 | — | 5,405 | — | |||||||||||||||||||||||||
Operating income | 67,062 | 40,138 | 139,931 | 82,014 | |||||||||||||||||||||||||
Other income and expenses: | |||||||||||||||||||||||||||||
Interest expense, net | 18,426 | 11,062 | 37,561 | 22,601 | |||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 2,836 | — | |||||||||||||||||||||||||
Other income | (371 | ) | — | (2,300 | ) | — | |||||||||||||||||||||||
Income before income tax expense | 49,007 | 29,076 | 101,834 | 59,413 | |||||||||||||||||||||||||
Income tax expense | 18,756 | 10,328 | 38,387 | 21,098 | |||||||||||||||||||||||||
Net income | $ | 30,251 | $ | 18,748 | $ | 63,447 | $ | 38,315 | |||||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||||||||
Basic | 62,646 | 56,627 | 60,823 | 55,193 | |||||||||||||||||||||||||
Diluted | 62,872 | 56,683 | 60,988 | 55,241 | |||||||||||||||||||||||||
Basic and diluted earnings per share | $ | 0.48 | $ | 0.33 | $ | 1.04 | $ | 0.69 | |||||||||||||||||||||
Cash dividends declared per share | $ | 0.42 | $ | 0.34 | $ | 0.84 | $ | 0.68 | |||||||||||||||||||||
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) | ||||||||||||||||||||||||||
Second Quarter Ended | First Two Quarters Ended | |||||||||||||||||||||||||
July 2, | July 4, | July 2, | July 4, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
Net income | $ | 30,251 | $ | 18,748 | $ | 63,447 | $ | 38,315 | ||||||||||||||||||
Income tax expense | 18,756 | 10,328 | 38,387 | 21,098 | ||||||||||||||||||||||
Interest expense, net | 18,426 | 11,062 | 37,561 | 22,601 | ||||||||||||||||||||||
Depreciation and amortization | 9,154 | 6,832 | 18,158 | 13,376 | ||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 2,836 | — | ||||||||||||||||||||||
EBITDA(1) | 76,587 | 46,970 | 160,389 | 95,390 | ||||||||||||||||||||||
Acquisition-related expenses | 1,699 | 23 | 3,931 | 62 | ||||||||||||||||||||||
Amortization of acquisition-related inventory step-up | — | — | 3,074 | — | ||||||||||||||||||||||
Impairment of intangible assets | 5,405 | — | 5,405 | — | ||||||||||||||||||||||
Loss on disposal of inventory | 791 | — | 791 | — | ||||||||||||||||||||||
Loss on product recall | — | 401 | — | 1,868 | ||||||||||||||||||||||
Distribution restructuring expenses | 474 | — | 948 | — | ||||||||||||||||||||||
Adjusted EBITDA(1) | 84,956 | 47,394 | 174,538 | 97,320 | ||||||||||||||||||||||
Income tax expense | (18,756 | ) | (10,328 | ) | (38,387 | ) | (21,098 | ) | ||||||||||||||||||
Interest expense, net | (18,426 | ) | (11,062 | ) | (37,561 | ) | (22,601 | ) | ||||||||||||||||||
Acquisition-related expenses | (1,699 | ) | (23 | ) | (3,931 | ) | (62 | ) | ||||||||||||||||||
Loss on product recall | — | (401 | ) | — | (1,868 | ) | ||||||||||||||||||||
Distribution restructuring expenses | (474 | ) | — | (948 | ) | — | ||||||||||||||||||||
Deferred income taxes | 25,813 | 4,614 | 35,667 | 9,233 | ||||||||||||||||||||||
Amortization of deferred financing costs and bond discount | 1,314 | 877 | 2,782 | 1,756 | ||||||||||||||||||||||
Amortization of acquisition-related inventory step-up | — | — | (3,074 | ) | — | |||||||||||||||||||||
Share-based compensation expense | 2,018 | 1,334 | 3,116 | 2,517 | ||||||||||||||||||||||
Excess tax benefits from share-based compensation | — | — | (343 | ) | (518 | ) | ||||||||||||||||||||
Changes in assets and liabilities, net of effects of business combinations | 2,078 | (13,524 | ) | 68,814 | (7,117 | ) | ||||||||||||||||||||
Net cash provided by operating activities | $ | 76,824 | $ | 18,881 | $ | 200,673 | $ | 57,562 |
____________________ |
||
(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); intangible asset impairment charges and related asset write-offs; 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, non-cash intangible asset impairment charges and related asset write-offs; 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 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 costs and expenses for depreciation and amortization, interest and related expenses, loss on extinguishment of debt, acquisition-related expenses, gains and losses, income taxes, intangible asset impairment charges and related asset write-offs, 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. |
||
B&G Foods, Inc. and Subsidiaries | |||||||||||||||||||||
Items Affecting Comparability — Reconciliation of Adjusted Information to GAAP Information | |||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Second Quarter Ended | First Two Quarters Ended | ||||||||||||||||||||
July 2, | July 4, | July 2, | July 4, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Reported net income | $ | 30,251 | $ | 18,748 | $ | 63,447 | $ | 38,315 | |||||||||||||
Non-recurring adjustment to deferred taxes(1) | 564 | — | 564 | — | |||||||||||||||||
Loss on extinguishment of debt, net of tax(2) | — | — | 1,784 | — | |||||||||||||||||
Acquisition-related expenses, net of tax | 1,069 | 15 | 2,473 | 40 | |||||||||||||||||
Distribution restructuring expenses, net of tax(3) | 298 | — | 596 | — | |||||||||||||||||
Acquisition-related inventory step-up, net of tax(4) | — | — | 1,934 | — | |||||||||||||||||
Impairment of intangible assets, net of tax(5) | 3,400 | — | 3,400 | — | |||||||||||||||||
Loss on disposal of inventory, net of tax(5) | 498 | — | 498 | — | |||||||||||||||||
Loss on product recall, net of tax(6) | — | 259 | — | 1,205 | |||||||||||||||||
Adjusted net income | $ | 36,080 | $ | 19,022 | $ | 74,696 | $ | 39,560 | |||||||||||||
Adjusted diluted earnings per share | $ | 0.57 | $ | 0.34 | $ | 1.22 | $ | 0.72 |
____________________ |
||
(1) |
Non-recurring adjustment to deferred taxes for the second quarter and first two quarters of 2016 relates to a true-up of deferred taxes resulting from our decision during the second quarter of 2016 to discontinue the Rickland Orchards brand and the related impairment of intangible assets. |
|
(2) | Loss on extinguishment of debt for the first two quarters 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. | |
(3) | Distribution restructuring expenses for the second quarter and first two quarters of 2016 includes expenses relating to our transitioning of the operations of our three primary shelf-stable distribution centers and a new fourth primary shelf stable distribution center in the United States to a third party logistics provider. We expect this transition and the incurrence of related distribution restructuring expenses to be completed during the third quarter of 2016. | |
(4) |
Acquisition-related inventory step-up for the first two quarters of 2016 relates to the purchase accounting adjustments made to the finished goods inventory acquired in the Green Giant acquisition. |
|
(5) |
During the second quarter of 2016, we discontinued the Rickland Orchards brand because there was not sufficient demand to warrant continued production. Accordingly, we wrote off the related intangible assets and recorded non-cash impairment charges to amortizable trademarks and customer relationship intangibles of $4.5 million and $0.9 million, respectively, which are recorded in “Impairment of intangible assets” in our consolidated statement of operations for the second quarter of 2016. We also recorded a charge to cost of goods sold of approximately $0.8 million in connection with the write-off of raw material and finished goods inventory used for the Rickland Orchards brand. |
|
(6) |
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 second quarter of 2015 was $0.4 million, which was recorded as a decrease in net sales related to customer refunds. The cost impact of this recall during the first two quarters of 2015 was $1.9 million, of which $1.2 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. |
|
B&G Foods, Inc. and Subsidiaries | |||||||||||||||||||||||||
Items Affecting Comparability — Reconciliation of Base Business Net Sales to | |||||||||||||||||||||||||
Reported Net Sales | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Second Quarter Ended | First Two Quarters Ended | ||||||||||||||||||||||||
July 2, | July 4, | July 2, | July 4, | ||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
Reported net sales | $ | 306,376 | $ | 193,645 | $ | 659,354 | $ | 410,767 | |||||||||||||||||
Net sales from acquisitions(1) | (116,115 | ) | — | (256,755 | ) | — | |||||||||||||||||||
Net sales of Rickland Orchards(2) | (158 | ) | (1,047 | ) | (528 | ) | (2,115 | ) | |||||||||||||||||
Base business net sales (3) | $ | 190,103 | $ | 192,598 | $ | 402,071 | $ | 408,652 | |||||||||||||||||
___________________ |
||
(1) |
Reflects net sales for Green Giant and Mama Mary’s for the second quarter and first two quarters 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. |
|
(2) |
Reflects all net sales for Rickland Orchards for each period presented. Rickland Orchards was discontinued during the second quarter of 2016. |
|
(3) | 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 (1) the impact of acquisitions until the net sales from such acquisitions are included in both comparable periods and (2) net sales of discontinued 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 brands, the entire amount of net sales is excluded from each fiscal period being compared. 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 and the effect of discontinued brands. | |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160728006552/en/
Source:
Investor Relations:
ICR, Inc.
Dara Dierks, 866-211-8151
or
Media
Relations:
ICR, Inc.
Matt Lindberg, 203-682-8214