— Reaffirms Full Year 2019 Guidance —
First Quarter 2019 Financial Summary:
Guidance Reaffirmed for Full Year Fiscal 2019
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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. | |
“Our net sales benefited from
Financial Results for the First Quarter of 2019
Base business net sales for the first quarter of 2019 increased
Net sales of all Green Giant products in the aggregate (including
Net sales of New York Style increased
Gross profit was
Selling, general and administrative expenses decreased
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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 Mrs. Dash and Ac’cent. Excludes net sales of French’s® seasoning mixes, which the Company discontinued during the third quarter of 2018. |
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Net interest expense decreased
There was no loss on extinguishment of debt for the first quarter of
2019, compared to a loss on extinguishment of debt for the first quarter
of 2018 of
The Company’s net income was
For the first quarter of 2019, adjusted EBITDA was
Primarily as a result of the Company’s inventory reduction plan and the
divestiture of Pirate Brands, partially offset by the acquisition of McCann’s,
the Company reduced inventory from
Full Year Fiscal 2019 Guidance
For fiscal 2019, net interest expense is expected to be approximately
Stock Repurchase Program
In
The timing and amount of stock repurchases under the program, if any, will be at the discretion of management, and will depend on a variety of factors, including price, available cash, general business and market conditions and other investment opportunities. Therefore, there can be no assurance as to the number or aggregate dollar amount of shares, if any, that will be repurchased under the program. The Company may discontinue the program at any time. Any shares repurchased pursuant to the program will be retired.
Under the prior authorization, the Company repurchased and retired from
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 5176039. 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 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 first quarter of 2019 and 2018, 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 the benefits the Company expects to
achieve from cost savings initiatives and sales price increases. 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,” “assumes,” “could,” “should,”
“estimates,” “potential,” “seek,” “predict,” “may,” “will” or “plans”
and similar references to future periods to be uncertain and
forward-looking. Factors that may affect actual results include, without
limitation: the Company’s substantial leverage; the effects of rising
costs for the Company’s raw materials, packaging and ingredients; crude
oil prices and their impact on distribution, packaging and energy costs;
the Company’s ability to successfully implement sales price increases
and cost saving measures to offset any cost increases; intense
competition, changes in consumer preferences, demand for the Company’s
products and local economic and market conditions; the Company’s
continued ability to promote brand equity successfully, to anticipate
and respond to new consumer trends, to develop new products and markets,
to broaden brand portfolios in order to compete effectively with lower
priced products and in markets that are consolidating at the retail and
manufacturing levels and to improve productivity; the risks associated
with the expansion of the Company’s business; the Company’s possible
inability to identify new acquisitions or to integrate recent or future
acquisitions or the Company’s failure to realize anticipated revenue
enhancements, cost savings or other synergies; tax reform and
legislation, including the effects of the U.S. Tax Cuts and Jobs Act;
the Company’s ability to access the credit markets and the Company’s
borrowing costs and credit ratings, which may be influenced by credit
markets generally and the credit ratings of the Company’s competitors;
unanticipated expenses, including, without limitation, litigation or
legal settlement expenses; the effects of currency movements of the
Canadian dollar and the Mexican peso as compared to the U.S. dollar; the
effects of international trade disputes, tariffs, quotas, and other
import or export restrictions on the Company’s international
procurement, sales and operations; future impairments of the Company’s
goodwill and intangible assets; the Company’s ability to successfully
implement a new enterprise resource planning (ERP) system; the Company’s
ability to protect information systems against, or effectively respond
to, a cybersecurity incident or other disruption; the Company’s
sustainability initiatives and changes to environmental laws and
regulations; and other factors that affect the food industry generally.
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) | ||||||||||
March 30, | December 29, | |||||||||
2019 | 2018 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 11,284 | $ | 11,648 | ||||||
Trade accounts receivable, net | 162,774 | 151,707 | ||||||||
Inventories | 375,393 | 401,355 | ||||||||
Prepaid expenses and other current assets | 21,130 | 19,988 | ||||||||
Income tax receivable | 1,521 | 1,398 | ||||||||
Total current assets | 572,102 | 586,096 | ||||||||
Property, plant and equipment, net | 282,546 | 282,553 | ||||||||
Operating lease right-of-use assets | 37,536 | — | ||||||||
Goodwill | 584,435 | 584,435 | ||||||||
Other intangibles, net | 1,591,078 | 1,595,569 | ||||||||
Other assets | 1,136 | 1,206 | ||||||||
Deferred income taxes | 5,350 | 4,940 | ||||||||
Total assets | $ | 3,074,183 | $ | 3,054,799 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Current liabilities: | ||||||||||
Trade accounts payable | $ | 126,208 | $ | 140,000 | ||||||
Accrued expenses | 66,914 | 55,660 | ||||||||
Operating lease liabilities, current portion | 9,124 | — | ||||||||
Income tax payable | 33,276 | 31,624 | ||||||||
Dividends payable | 31,016 | 31,178 | ||||||||
Total current liabilities | 266,538 | 258,462 | ||||||||
Long-term debt | 1,636,754 | 1,635,881 | ||||||||
Deferred income taxes | 239,881 | 235,902 | ||||||||
Long-term operating lease liabilities, net of current portion | 31,304 | — | ||||||||
Other liabilities | 22,587 | 24,505 | ||||||||
Total liabilities | 2,197,064 | 2,154,750 | ||||||||
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; 65,297,607 and 65,638,701 shares |
653 | 656 | ||||||||
Additional paid-in capital | 75,001 | 116,339 | ||||||||
Accumulated other comprehensive loss | (21,882 | ) | (23,502 | ) | ||||||
Retained earnings | 823,347 | 806,556 | ||||||||
Total stockholders’ equity | 877,119 | 900,049 | ||||||||
Total liabilities and stockholders’ equity | $ | 3,074,183 | $ | 3,054,799 | ||||||
B&G Foods, Inc. and Subsidiaries | ||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
First Quarter Ended | ||||||||||||||||||||
March 30, | March 31, | |||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Net sales | $ | 412,734 | $ | 431,729 | ||||||||||||||||
Cost of goods sold | 324,655 | 328,373 | ||||||||||||||||||
Gross profit | 88,079 | 103,356 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling, general and administrative expenses | 38,297 | 42,568 | ||||||||||||||||||
Amortization expense | 4,491 | 4,609 | ||||||||||||||||||
Operating income | 45,291 | 56,179 | ||||||||||||||||||
Other income and expenses: | ||||||||||||||||||||
Interest expense, net | 23,074 | 28,306 | ||||||||||||||||||
Loss on extinguishment of debt | — | 2,778 | ||||||||||||||||||
Other income | (258 | ) | (2,054 | ) | ||||||||||||||||
Income before income tax expense | 22,475 | 27,149 | ||||||||||||||||||
Income tax expense | 5,684 | 6,602 | ||||||||||||||||||
Net income | $ | 16,791 | $ | 20,547 | ||||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 65,587 | 66,518 | ||||||||||||||||||
Diluted | 65,617 | 66,715 | ||||||||||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 0.26 | $ | 0.31 | ||||||||||||||||
Diluted | $ | 0.26 | $ | 0.31 | ||||||||||||||||
Cash dividends declared per share | $ | 0.475 | $ | 0.465 | ||||||||||||||||
B&G Foods, Inc. and Subsidiaries | ||||||||
Items Affecting Comparability | ||||||||
Reconciliation of EBITDA and Adjusted EBITDA to Net Income and to Net Cash Provided by Operating Activities | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
First Quarter Ended | ||||||||
March 30, | March 31, | |||||||
2019 | 2018 | |||||||
Net income | $ | 16,791 | $ | 20,547 | ||||
Income tax expense | 5,684 | 6,602 | ||||||
Interest expense, net | 23,074 | 28,306 | ||||||
Depreciation and amortization | 13,863 | 13,064 | ||||||
Loss on extinguishment of debt(1) | — | 2,778 | ||||||
EBITDA(2) | 59,412 | 71,297 | ||||||
Acquisition/divestiture-related and non-recurring expenses(3) | 3,696 | 3,269 | ||||||
Inventory reduction plan impact(4) | 12,722 | 14,850 | ||||||
Adjusted EBITDA(2) | 75,830 | 89,416 | ||||||
Income tax expense | (5,684 | ) | (6,602 | ) | ||||
Interest expense, net | (23,074 | ) | (28,306 | ) | ||||
Acquisition/divestiture-related and non-recurring expenses(3) | (3,696 | ) | (3,269 | ) | ||||
Inventory reduction plan impact(4) | (12,722 | ) | (14,850 | ) | ||||
Write-off of property, plant and equipment | 1 | 21 | ||||||
Deferred income taxes | 3,575 | 4,821 | ||||||
Amortization of deferred financing costs and bond discount | 873 | 1,545 | ||||||
Share-based compensation expense | 580 | 838 | ||||||
Changes in assets and liabilities, net of effects of business combinations | 14,661 | 30,130 | ||||||
Net cash provided by operating activities | $ | 50,344 | $ | 73,744 | ||||
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(1) | Loss on extinguishment of debt for the first quarter of 2018 included the write-off of deferred debt financing costs and unamortized discount of $2.4 million and $0.4 million, respectively, relating to the prepayment of outstanding borrowings under 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, 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. | ||
(3) |
Acquisition/divestiture-related and non-recurring expenses for the first quarter of 2019 of $3.7 million primarily include divestiture expenses for the Pirate Brands sale and severance and other expenses relating to a workforce reduction. Acquisition/divestiture-related and non-recurring expenses for the first quarter of 2018 of $3.3 million primarily included acquisition and integration expenses for the Green Giant, spices & seasonings, Victoria and Back to Nature acquisitions. |
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(4) | For the first quarter of 2019, inventory reduction plan impact of $12.7 million includes the underutilization of the Company’s manufacturing facilities as the Company reduced inventory during the implementation of an inventory reduction plan. For the first quarter of 2018, the inventory reduction plan impact of $14.9 million included fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in the first quarter of 2018 as part of the Company’s inventory reduction plan. | |
B&G Foods, Inc. and Subsidiaries | ||||||||||
Items Affecting Comparability | ||||||||||
Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings per Share to Net Income | ||||||||||
(In thousands, except per share data) | ||||||||||
(Unaudited) | ||||||||||
First Quarter Ended | ||||||||||
March 30, | March 31, | |||||||||
2019 | 2018 | |||||||||
Net income | $ | 16,791 | $ | 20,547 | ||||||
Loss on extinguishment of debt, net of tax(1) | — | 2,102 | ||||||||
Acquisition/divestiture-related and non-recurring expenses, net of tax(2) | 2,761 | 2,474 | ||||||||
Inventory reduction plan impact, net of tax(3) | 9,505 | 11,238 | ||||||||
Adjusted net income | $ | 29,057 | $ | 36,361 | ||||||
Adjusted diluted earnings per share | $ | 0.44 | $ | 0.55 | ||||||
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(1) | Loss on extinguishment of debt for the first quarter of 2018 included the write-off of deferred debt financing costs and unamortized discount of $1.8 million, net of tax, and $0.3 million, net of tax, respectively, relating to the prepayment of outstanding borrowings under the Company’s tranche B term loans. | |
(2) |
Acquisition/divestiture-related and non-recurring expenses for the first quarter of 2019 primarily include divestiture expenses for the Pirate Brands sale and severance and other expenses relating to a workforce reduction. Acquisition/divestiture-related and non-recurring expenses for the first quarter of 2018 primarily included acquisition and integration expenses for the Green Giant, spices & seasonings, Victoria and Back to Nature acquisitions. |
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(3) | For the first quarter of 2019, inventory reduction plan impact of $12.7 million (or $9.5 million net of taxes) includes the underutilization of the Company’s manufacturing facilities as the Company reduced inventory during the implementation of an inventory reduction plan. For the first quarter of 2018, the inventory reduction plan impact of $14.9 million (or $11.2 million net of taxes) included fixed manufacturing, warehouse and other corporate overhead costs associated with inventory purchased and converted into finished goods in fiscal 2017 and sold in the first quarter of 2018 as part of the Company’s inventory reduction plan. | |
B&G Foods, Inc. and Subsidiaries | |||||||||||||||||||||
Items Affecting Comparability | |||||||||||||||||||||
Reconciliation of Base Business Net Sales to Net Sales | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
First Quarter Ended | |||||||||||||||||||||
March 30, | March 31, | ||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
Net sales | $ | 412,734 | $ | 431,729 | |||||||||||||||||
Net sales from acquisitions(1) | (3,269 | ) | — | ||||||||||||||||||
Net sales of non-branded IQF bulk rice products(2) | — | (578 | ) | ||||||||||||||||||
Net sales from divested and discontinued brands(3) | — | (21,828 | ) | ||||||||||||||||||
Base business net sales(4) | $ | 409,465 | $ | 409,323 | |||||||||||||||||
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(1) |
Reflects net sales for McCann’s for the first quarter of 2019. McCann’s was acquired on July 16, 2018. |
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(2) |
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. The Company discontinued the sale of non-branded IQF bulk rice products during the fourth quarter of 2018. |
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(3) | Reflects net sales of Pirate Brands and French’s® seasoning mixes. The Company completed the divestiture of Pirate Brands on October 17, 2018. The Company discontinued the sale of French’s products during the third quarter of 2018 following the expiration of a licensing agreement. | |
(4) | 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 2 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. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190502005876/en/
Source:
Investor Relations:
ICR, Inc.
Dara Dierks
866.211.8151
Media Relations:
ICR, Inc.
Matt Lindberg
203.682.8214