— Net Sales Increased 3.3% and Base Business Net Sales Increased 0.9% for Full Year 2018 —
— Net Cash Provided by Operating Activities Increased to $209.5 Million for Full Year 2018 —
Fourth Quarter 2018 Financial Highlights (vs. Fourth Quarter 2017):
Full Year 2018 Financial Highlights (vs. Full Year 2017):
Guidance for Full Year Fiscal 2019
Guidance for First Quarter of 2019
Mr. Cantwell continued, “Looking forward in 2019, we expect to see continued benefits from our cost savings initiatives, which we plan to enhance in 2019, as well as the full year impact of our 2018 price increases and a partial year impact of an additional round of price increases for 2019 that we have already communicated to our customers and that we expect to realize beginning towards the end of the second quarter. While we are disappointed in our 2018 profitability, we are confident that the actions we are now taking will enable us to achieve our full year 2019 guidance.”
“We remain committed to our business model, which is premised on high margin brands, a lean cost structure, strong excess cash generation, and growth through accretive acquisitions. Our very strong cash flow generation continues to support our growth by acquisition strategy, as well as our longstanding policy of returning a substantial portion of our excess cash to our shareholders in the form of dividends.”
Financial Results for the Fourth Quarter of 2018
Net sales decreased
Base business net sales for the fourth quarter of 2018 increased
Net sales of all Green Giant products in the aggregate (including
Net sales of Ortega increased
Gross profit was
Selling, general and administrative expenses decreased
During the fourth quarter of 2018, the Company completed the sale of
Pirate Brands to The
Net interest expense decreased
During the fourth quarter of 2018, the Company prepaid the entire
remaining
The Company’s net income was
For the fourth quarter of 2018, EBITDA was
For the fourth quarter of 2018, adjusted EBITDA was
As part of the Company’s inventory reduction plan, it reduced inventory
from
Financial Results for the Full Year Fiscal 2018
Net sales increased
Base business net sales increased
Net sales of Green Giant frozen increased
Net sales of Ortega increased
Gross profit was
Selling, general and administrative expenses decreased
As discussed above, during fiscal 2018 the Company recognized a pre-tax
gain on the Pirate Brands sale of
Net interest expense increased
As a result of the prepayment of long-term debt described above, the
Company recognized a loss on extinguishment of debt of
The Company’s net income for fiscal 2018 was
For fiscal 2018, EBITDA was
For fiscal 2018, adjusted EBITDA was
As part of the Company’s inventory reduction plan, it reduced inventory
during fiscal 2018 from
Full Year and First Quarter Fiscal 2019 Guidance
For fiscal 2019, net sales are expected to be approximately
For fiscal 2019, net interest expense is expected to be approximately
For the first quarter of 2019, net sales are expected to be
approximately
Conference Call
A replay of the call will be available two hours after the call and can
be accessed by dialing (844) 512-2921 for U.S. callers or (412) 317-6671
for international callers; the password is 3551079. The replay will be
available from
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 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 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 fourth quarter and full year of 2018 and 2017, 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, adjusted diluted earnings per share, cash interest payment, cash
taxes, capital expenditure, cash flow and overall expectations for
fiscal 2019, including our goal of marching towards
_____________________
1 Please see “About Non-GAAP Financial Measures and Items Affecting Comparability” below for the definition of the non-GAAP financial measures “base business net sales,” “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 to the most comparable GAAP financial measures.
2 Includes the spices & seasoning brands acquired in the fall of 2016, as well as the Company’s legacy spices & seasonings brands such as Mrs. Dash and Ac’cent.
B&G Foods, Inc. and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(In thousands, except share and per share data) | ||||||||
(Unaudited) | ||||||||
December 29, | December 30, | |||||||
2018 | 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 11,648 | $ | 206,506 | ||||
Trade accounts receivable, net | 151,707 | 141,392 | ||||||
Inventories | 401,355 | 501,849 | ||||||
Prepaid expenses and other current assets | 19,988 | 20,054 | ||||||
Income tax receivable | 1,398 | 16,794 | ||||||
Total current assets | 586,096 | 886,595 | ||||||
Property, plant and equipment, net | 282,553 | 272,192 | ||||||
Goodwill | 584,435 | 649,292 | ||||||
Other intangibles, net | 1,595,569 | 1,748,220 | ||||||
Other assets | 1,206 | 1,617 | ||||||
Deferred income taxes | 4,940 | 3,122 | ||||||
Total assets | $ | 3,054,799 | $ | 3,561,038 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 140,000 | $ | 122,358 | ||||
Accrued expenses | 55,660 | 48,067 | ||||||
Income tax payable | 31,624 | 139 | ||||||
Dividends payable | 31,178 | 30,922 | ||||||
Total current liabilities | 258,462 | 201,486 | ||||||
Long-term debt | 1,635,881 | 2,217,574 | ||||||
Other liabilities | 24,505 | 24,881 | ||||||
Deferred income taxes | 235,902 | 236,278 | ||||||
Total liabilities | 2,154,750 | 2,680,219 | ||||||
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; 65,638,701 and 66,499,044 |
656 | 665 | ||||||
Additional paid-in capital | 116,339 | 266,789 | ||||||
Accumulated other comprehensive loss | (23,502 | ) | (20,756 | ) | ||||
Retained earnings | 806,556 | 634,121 | ||||||
Total stockholders’ equity | 900,049 | 880,819 | ||||||
Total liabilities and stockholders’ equity | $ | 3,054,799 | $ | 3,561,038 | ||||
B&G Foods, Inc. and Subsidiaries | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Fourth Quarter Ended | Fiscal Year Ended | |||||||||||||||
December 29, | December 30, | December 29, | December 30, | |||||||||||||
2018 |
2017(1) |
2018 |
2017(1) |
|||||||||||||
Net sales | $ | 458,055 | $ | 466,353 | $ | 1,700,764 | $ | 1,646,387 | ||||||||
Cost of goods sold | 408,123 | 372,493 | 1,351,264 | 1,205,809 | ||||||||||||
Gross profit | 49,932 | 93,860 | 349,500 | 440,578 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 47,562 | 51,951 | 167,389 | 183,448 | ||||||||||||
Amortization expense | 4,491 | 4,609 | 18,343 | 17,611 | ||||||||||||
(Gain) loss on sale of assets(2) | (176,386 | ) | — | (176,386 | ) | 1,608 | ||||||||||
Operating income | 174,265 | 37,300 | 340,154 | 237,911 | ||||||||||||
Other income and expenses: | ||||||||||||||||
Interest expense, net | 24,489 | 26,765 | 108,334 | 91,784 | ||||||||||||
Loss on extinguishment of debt | 9,811 | — | 13,135 | 1,163 | ||||||||||||
Other (income) expense | (613 | ) | 966 | (3,592 | ) | (3,098 | ) | |||||||||
Income before income tax expense (benefit) | 140,578 | 9,569 | 222,277 | 148,062 | ||||||||||||
Income tax expense (benefit)(3) | 28,654 | (120,339 | ) | 49,842 | (69,401 | ) | ||||||||||
Net income | $ | 111,924 | $ | 129,908 | $ | 172,435 | $ | 217,463 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 65,827 | 66,497 | 66,145 | 66,487 | ||||||||||||
Diluted | 65,934 | 66,687 | 66,255 | 66,706 | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 1.70 | $ | 1.95 | $ | 2.61 | $ | 3.27 | ||||||||
Diluted | $ | 1.70 | $ | 1.95 | $ | 2.60 | $ | 3.26 | ||||||||
Cash dividends declared per share | $ | 0.475 | $ | 0.465 | $ | 1.890 | $ | 1.860 |
_____________________ | ||
(1) | Net sales, gross profit, selling, general and administrative expenses, operating income and other (income) expense have been adjusted as a result of the Company’s retrospective adoption of new accounting standards relating to revenue recognition and the presentation of net periodic pension cost and net periodic post-retirement benefit cost. The Company also reclassified a $1.6 million pre-tax loss on sale of assets for fiscal 2017 from selling, general and administrative expenses to loss on sale of assets. The adjustments described above had no impact on net income or earnings per share. | |
(2) |
During the fourth quarter of 2018, the Company completed the sale of Pirate Brands to The Hershey Company. The sale resulted in a pre-tax gain of $176.4 million. During 2017, the Company sold to a third-party co-packer its Le Sueur, Minnesota research center, including the seed technology assets, property, plant and equipment. The Company acquired the research center and related assets on November 2, 2015, as part of the Green Giant acquisition. The sale resulted in a $1.6 million pre-tax loss on sale of assets. |
|
(3) | Fiscal 2017 periods include the revaluation of the Company’s deferred income taxes as a result of the U.S. Tax Cuts and Jobs Act. | |
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) | ||||||||||||||||
Fourth Quarter Ended | Fiscal Year Ended | |||||||||||||||
December 29, | December 30, | December 29, | December 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 111,924 | $ | 129,908 | $ | 172,435 | $ | 217,463 | ||||||||
Income tax expense (benefit) | 28,654 | (120,339 | ) | 49,842 | (69,401 | ) | ||||||||||
Interest expense, net | 24,489 | 26,765 | 108,334 | 91,784 | ||||||||||||
Depreciation and amortization | 13,706 | 12,888 | 53,639 | 49,172 | ||||||||||||
Loss on extinguishment of debt(1) | 9,811 | — | 13,135 | 1,163 | ||||||||||||
EBITDA(2) | 188,584 | 49,222 | 397,385 | 290,181 | ||||||||||||
Acquisition/divestiture-related and non-recurring expenses(3) | 17,227 | 15,604 | 26,863 | 35,745 | ||||||||||||
Inventory reduction plan impact(4) | 29,041 | — | 66,320 | — | ||||||||||||
Amortization of acquisition-related inventory step-up(5) | — | 830 | — | 2,380 | ||||||||||||
Loss on disposal of inventory(6) | — | 3,287 | — | 3,287 | ||||||||||||
(Gain) loss on sale of assets(7) | (176,386 | ) | — | (176,386 | ) | 1,608 | ||||||||||
Adjusted EBITDA(2) | 58,466 | 68,943 | 314,182 | 333,201 | ||||||||||||
Income tax (expense) benefit | (28,654 | ) | 120,339 | (49,842 | ) | 69,401 | ||||||||||
Interest expense, net | (24,489 | ) | (26,765 | ) | (108,334 | ) | (91,784 | ) | ||||||||
Acquisition/divestiture-related and non-recurring expenses | (17,227 | ) | (15,604 | ) | (26,863 | ) | (35,745 | ) | ||||||||
Inventory reduction plan impact(4) | (29,041 | ) | — | (66,320 | ) | — | ||||||||||
Amortization of acquisition-related inventory step-up(5) | — | (830 | ) | — | (2,380 | ) | ||||||||||
Write-off of property, plant and equipment | 832 | 101 | 931 | 208 | ||||||||||||
Deferred income taxes | (17,990 | ) | (115,604 | ) | (1,494 | ) | (80,525 | ) | ||||||||
Amortization of deferred financing costs and bond discount | 872 | 1,549 | 5,282 | 5,812 | ||||||||||||
Share-based compensation expense | (321 | ) | 331 | 3,025 | 4,615 | |||||||||||
Changes in assets and liabilities, net of effects of business combinations | 127,945 | (2,198 | ) | 138,889 | (165,004 | ) | ||||||||||
Net cash provided by operating activities | $ | 70,393 | $ | 30,262 | $ | 209,456 | $ | 37,799 |
_____________________ | ||
(1) | Loss on extinguishment of debt for fiscal 2018 includes the write-off of deferred debt financing costs and unamortized discount of $11.1 million and $2.0 million, respectively, relating to the prepayment of outstanding borrowings under the tranche B term loans. Fiscal 2017 includes the write-off of deferred debt financing costs and unamortized discount of $0.9 million and $0.2 million, respectively, relating to the prepayment of all outstanding borrowings under the tranche A term loans and less than $0.1 million relating to the refinancing of the Company’s tranche B term loans. | |
(2) | 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 United States 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; 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. | ||
(3) |
Acquisition/divestiture-related and non-recurring expenses for fiscal 2018 of $26.9 million primarily include divestiture expenses for the Pirate Brands sale and acquisition and integration expenses for the McCann’s, Green Giant, spices & seasonings, Victoria and Back to Nature acquisitions. Acquisition/divestiture-related and non-recurring expenses for fiscal 2017 of $35.7 million primarily include acquisition and integration expenses for the Green Giant, spices & seasonings, Victoria and Back to Nature acquisitions, severance and hiring costs, a non-recurring interest charge relating to the refinancing of the Company’s credit agreement and a non-recurring startup surcharge paid to a co-packer. |
|
(4) | Inventory reduction plan impact relates to the Company’s 2018 inventory reduction plan. For the fourth quarter of 2018, the inventory reduction plan impact of $29.0 million includes $19.4 million of fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in the fourth quarter of 2018 and $9.6 million for the underutilization of the Company’s manufacturing facilities as the Company reduced inventory during the implementation of the inventory reduction plan. | |
For fiscal 2018, the inventory reduction plan impact of $66.3 million includes $51.1 million of fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in fiscal 2018 and $15.2 million for the underutilization of the Company’s manufacturing facilities as the Company reduced inventory during the implementation of the inventory reduction plan. | ||
(5) |
Amortization of acquisition-related inventory step-up for fiscal 2017 of $2.4 million relates to the purchase accounting adjustments made to the finished goods inventory acquired in the Back to Nature acquisition and spices & seasonings acquisition that the Company completed on October 2, 2017 and November 21, 2016, respectively. |
|
(6) | During the fourth quarter of 2017, the Company recorded a pre-tax loss on disposal of inventory of $3.3 million related to the write-off of discontinued and expired inventory from recent acquisitions. | |
(7) |
During the fourth quarter of 2018, the Company completed the Pirate Brands sale. The sale resulted in a pre-tax gain of $176.4 million. During fiscal 2017, the Company sold to a third-party co-packer its Le Sueur, Minnesota research center, including the seed technology assets, property, plant and equipment. The Company acquired the research center and related assets on November 2, 2015, as part of the Green Giant acquisition. The sale resulted in a $1.6 million pre-tax loss on sale of assets. |
|
B&G Foods, Inc. and Subsidiaries | ||||||||||||||||
Items Affecting Comparability — Reconciliation of Adjusted Information to GAAP Information | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Fourth Quarter Ended | Fiscal Year Ended | |||||||||||||||
December 29, | December 30, | December 29, | December 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 111,924 | $ | 129,908 | $ | 172,435 | $ | 217,463 | ||||||||
Non-recurring adjustment to deferred income taxes(1) | — | (109,641 | ) | — | (109,641 | ) | ||||||||||
Loss on extinguishment of debt, net of tax(2) | 7,611 | 120 | 10,190 | 847 | ||||||||||||
Acquisition/divestiture-related and non-recurring expenses, net of tax(3) | 13,278 | 13,915 | 20,754 | 26,497 | ||||||||||||
Inventory reduction plan impact, net of tax(4) | 22,530 | — | 51,451 | — | ||||||||||||
Amortization of acquisition-related inventory step-up, net of tax(5) | — | 765 | — | 1,733 | ||||||||||||
Loss on disposal of inventory, net of tax(6) | — | 2,393 | — | 2,393 | ||||||||||||
(Gain) loss on sale of assets, net of tax(7) | (133,172 | ) | 166 | (133,172 | ) | 1,171 | ||||||||||
Tax true-ups(8) | 121 | — | 650 | — | ||||||||||||
Adjusted net income | $ | 22,292 | $ | 37,626 | $ | 122,308 | $ | 140,463 | ||||||||
Adjusted diluted earnings per share | $ | 0.34 | $ | 0.57 | $ | 1.85 | $ | 2.12 |
_____________________ | ||
(1) | Non-recurring adjustment to deferred income taxes for fiscal 2017 relates to the revaluation of the Company’s deferred income taxes as a result of the U.S. Tax Cuts and Jobs Act. | |
(2) | Loss on extinguishment of debt for fiscal 2018 includes the write-off of deferred debt financing costs and unamortized discount of $8.6 million, net of tax, and $1.6 million, net of tax, respectively, relating to the prepayment of outstanding borrowings under the tranche B term loans. Fiscal 2017 includes the write-off of deferred debt financing costs and unamortized discount of $0.7 million, net of tax, and $0.1 million, net of tax, respectively, relating to the prepayment of all outstanding borrowings under the tranche A term loans and less than $0.1 million, net of tax, relating to the refinancing of the Company’s tranche B term loans. | |
(3) |
Acquisition/divestiture-related and non-recurring expenses for fiscal 2018 primarily includes divestiture expenses for the Pirate Brands sale and acquisition and integration expenses for the McCann’s, Green Giant, spices & seasonings, Victoria and Back to Nature acquisitions. Acquisition/divestiture-related and non-recurring expenses for fiscal 2017 primarily includes acquisition and integration expenses for the Green Giant, spices & seasonings, Victoria and Back to Nature acquisitions, severance and hiring costs, a non-recurring interest charge relating to the refinancing of the Company’s credit agreement and a non-recurring startup surcharge paid to a co-packer. |
|
(4) | Inventory reduction plan impact relates to the Company’s 2018 inventory reduction plan. For the fourth quarter of 2018, the inventory reduction plan impact of $29.0 million (or $22.5 million net of taxes) includes $19.4 million of fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in the fourth quarter of 2018 and $9.6 million for the underutilization of the Company’s manufacturing facilities as the Company reduced inventory during the implementation of the inventory reduction plan. | |
For fiscal 2018, the inventory reduction plan impact of $66.3 million (or $51.5 million net of taxes) includes $51.1 million of fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in fiscal 2018 and $15.2 million for the underutilization of the Company’s manufacturing facilities as the Company reduced inventory during the implementation of the inventory reduction plan. | ||
(5) |
Amortization of acquisition-related inventory step-up for fiscal 2017 relates to the purchase accounting adjustments made to the finished goods inventory acquired in the Back to Nature acquisition and spices & seasonings acquisition that the Company completed on October 2, 2017 and November 21, 2016, respectively. |
|
(6) | During the fourth quarter of 2017, the Company recorded a loss on disposal of inventory related to the write-off of discontinued and expired inventory from recent acquisitions. | |
(7) |
During the fourth quarter of 2018, the Company completed the Pirate Brands sale. The sale resulted in a gain of $133.2 million, net of tax. During fiscal 2017, the Company sold to a third-party co-packer its Le Sueur, Minnesota research center, including the seed technology assets, property, plant and equipment. The Company acquired the research center and related assets on November 2, 2015, as part of the Green Giant acquisition. The sale resulted in a $1.2 million loss on sale of assets, net of tax. |
|
|
||
(8) | Tax true-ups for fiscal 2018 reflects prior year foreign tax expense true-up and impact of enacted state rate changes. | |
B&G Foods, Inc. and Subsidiaries | ||||||||||||||||
Items Affecting Comparability — Reconciliation of Base Business Net Sales to Net Sales | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Fourth Quarter Ended | Fiscal Year Ended | |||||||||||||||
December 29, | December 30, | December 29, | December 30, | |||||||||||||
2018 |
2017(1) |
2018 |
2017(1) |
|||||||||||||
Net sales | $ | 458,055 | $ | 466,353 | $ | 1,700,764 | $ | 1,646,387 | ||||||||
Net sales from acquisitions(2) | (3,168 | ) | — | (60,193 | ) | — | ||||||||||
Net sales of non-branded IQF bulk rice products(3) | (188 | ) | (1,609 | ) | (1,494 | ) | (8,518 | ) | ||||||||
Net sales from divested brands(4) | (2,054 | ) | (19,328 | ) | (74,853 | ) | (87,705 | ) | ||||||||
Base business net sales(5) | $ | 452,645 | $ | 445,416 | $ | 1,564,224 | $ | 1,550,164 |
_____________________ | ||
(1) | Prior period net sales have been adjusted as a result of the Company’s retrospective adoption of the new accounting standard relating to revenue recognition. | |
(2) |
Reflects net sales for Back to Nature for the first three quarters of 2018 and net sales of McCann’s for the fourth quarter and fiscal 2018. Back to Nature was acquired on October 2, 2017 and McCann’s was acquired on July 16, 2018. |
|
(3) |
Reflects net sales of the Company’s non-branded individually quick frozen (IQF) bulk rice products, which is a product line the Company acquired as part of the Green Giant acquisition, and which the Company is excluding from net sales for the purposes of calculating base business net sales because the Company does not consider the non-branded IQF bulk rice products to be part of its core business or material. |
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(4) | Reflects net sales of Pirate Brands. The Company completed the Pirate Brands sale on October 17, 2018. | |
(5) | 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 at least one full quarter of net sales from such acquisitions are included in both comparable periods, (2) net sales of discontinued or divested brands and (3) net sales of the Company’s IQF bulk rice products, see footnote 3 above. The portion of current period net sales attributable to recent acquisitions for which there is not at least one full quarter of net sales 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 last day of the quarter in which the first anniversary of the date of acquisition occurs, and the period from the date of acquisition to the end of the quarter in which the acquisition occurred. For discontinued or divested 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 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 was modified in the first quarter of 2018 to exclude net sales of the Company’s IQF bulk rice products, as described in footnote 3 above. | |
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Source:
Investor Relations:
ICR, Inc.
Dara Dierks
866.211.8151
Media Relations:
ICR, Inc.
Matt Lindberg
203.682.8214