— Generates Net Cash Provided by Operating Activities of $104.8
Million for the First Two Quarters of 2018 —
B&G Foods, Inc. (NYSE:BGS) today announced financial results for the
second quarter and first two quarters of 2018.
Executive Summary (vs. year-ago quarter where applicable):
-
Net sales increased 7.4% to $388.4 million
-
Base business net sales1 increased 3.1% to $370.2 million
-
Diluted earnings per share decreased 63.6% to $0.12
-
Adjusted diluted earnings per share1 decreased 7.3% to $0.38
-
Adjusted EBITDA1 decreased 4.7% to $74.4 million
-
Net cash provided by operating activities increased to $104.8 million
for the first two quarters of 2018 from $19.8 million in the first two
quarters of 2017
-
Updated guidance for full year fiscal 2018:
-
Net sales range of $1.73 billion to $1.75 billion
-
Adjusted EBITDA range of $345.0 million to $355.0 million
-
Adjusted diluted earnings per share range of $2.05 to $2.15
-
Repurchased $18.5 million of common stock at an average price of
$26.65 per share
-
Prepaid $25.0 million of term loans
-
Completed the acquisition of the McCann’s brand of premium
Irish oatmeal early in the third quarter
“We had very strong top line growth in the second quarter, with our net
sales up 7.4% and our base business net sales up 3.1%, which is
outpacing our initial expectations for the full year,” stated Robert C.
Cantwell, President and Chief Executive Officer of B&G Foods.
Mr. Cantwell continued, “Net sales of Green Giant frozen products
grew by 19.7%, the fifth consecutive quarter of double digit growth.
Pirate Brands also had a strong quarter, with net sales up 54.6%. Other
key brands in our portfolio, including Cream of Wheat, Ortega
and Victoria, also performed well during the first half of the
year.
We generated $74.4 million of adjusted EBITDA in the second quarter, a
decrease of $3.8 million compared to the second quarter of last year,
which was expected due primarily to industry wide increases in freight
costs, and the timing of our price increases, which were not fully
implemented until late in the quarter. Supportive of our full year
guidance, we expect to see the full benefit of our price increases and
additional benefit from our cost savings initiatives in the second half
of the year. In addition, we believe the rate of increase in freight
costs has begun to moderate.”
Financial Results for the Second Quarter of 2018
Net sales increased $26.7 million, or 7.4%, to $388.4 million for the
second quarter of 2018 from $361.7 million for the second quarter of
2017. Net sales of Back to Nature, acquired on October 2, 2017,
contributed $17.6 million to the Company’s overall net sales for the
second quarter of 2018.
Base business net sales increased $11.0 million, or 3.1%, to $370.2
million from $359.2 million for the second quarter of 2017. The $11.0
million increase was attributable to an increase in net pricing of $4.3
million, or 1.2%, and unit volume of $6.7 million.
Net sales of Green Giant frozen increased $13.9 million, or
19.7%, compared to the second quarter of 2017. This growth was driven by Green
Giant frozen innovation products. Net sales of Pirate Brands
increased by 54.6%, largely due to the timing of promotional activities
and increased distribution. This performance was offset, in part, by Green
Giant shelf stable, whose net sales decreased 36.5%.
Gross profit was $81.2 million for the second quarter of 2018 compared
to $104.6 million for the second quarter of 2017. Gross profit expressed
as a percentage of net sales decreased to 20.9% in the second quarter of
2018 from 28.9% in the second quarter of 2017. Gross profit as a
percentage of net sales was 26.1% for the quarter, excluding the
negative impact of $20.1 million of non-recurring expenses, including
the non-cash accounting impact of the Company’s inventory reduction
plan, and acquisition-related expenses, including Back to Nature integration
expenses. Gross profit percentage was also negatively impacted by
industry-wide and anticipated increases in freight expenses, partially
offset by procurement savings, a decrease in warehousing expenses and an
increase in net pricing.
Selling, general and administrative expenses decreased $6.3 million, or
14.5%, to $37.3 million for the second quarter of 2018 from $43.6
million for the second quarter of 2017. The decrease was composed of a
decrease in acquisition-related and non-recurring expenses of $5.8
million and reduced consumer marketing expenses of $2.3 million,
partially offset by other increases of $1.8 million. Expressed as a
percentage of net sales, selling, general and administrative expenses
improved by 2.4 percentage points to 9.6% for the second quarter of 2018
compared to 12.0% for the second quarter of 2017.
Net interest expense increased $5.6 million, or 25.5%, to $27.6 million
for the second quarter of 2018 from $22.0 million in the second quarter
of 2017. The increase was primarily attributable to additional
borrowings made in the fourth quarter of 2017 to fund the Back to
Nature acquisition and in the second and fourth quarters of 2017 in
connection with the Company’s senior notes offerings.
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was $8.0 million, or $0.12 per diluted
share for the second quarter of 2018, as compared to reported net income
of $22.1 million, or $0.33 per diluted share, for the second quarter of
2017. The Company’s adjusted net income for the second quarter of 2018,
which excludes the after-tax impact of loss on extinguishment of debt,
acquisition-related and non-recurring expenses and the non-cash
accounting impact of the Company’s inventory reduction plan, was $25.1
million, or $0.38 per adjusted diluted share. The Company’s adjusted net
income for the second quarter of 2017, which excludes the after-tax
impact of loss on extinguishment of debt and acquisition-related and
non-recurring expenses, was $27.6 million, or $0.41 per adjusted diluted
share.
For the second quarter of 2018, adjusted EBITDA, which excludes
acquisition-related and non-recurring expenses and the non-cash
accounting impact of the Company’s inventory reduction plan, was $74.4
million, a decrease of 4.7%, or $3.8 million, compared to $78.2 million
for the second quarter of 2017. Adjusted EBITDA as a percentage of net
sales was 19.2% for the second quarter of 2018.
Financial Results for the First Two Quarters of 2018
Net sales increased $46.1 million, or 6.0%, to $820.1 million for the
first two quarters of 2018 from $774.0 million for the first two
quarters of 2017. Net sales of Back to Nature, acquired on
October 2, 2017, contributed $37.7 million to the Company’s overall net
sales for the first two quarters of 2018.
Base business net sales increased $12.1 million, or 1.6%, to $781.3
million from $769.2 million for the first two quarters of 2017. The
$12.1 million increase was attributable to an increase in net pricing of
$5.5 million, or 0.7%, and unit volume of $6.7 million.
Net sales of Green Giant frozen for the first two quarters of
2018 increased $24.6 million, or 15.9%, compared to the first two
quarters of 2017. This growth was driven by Green Giant frozen
innovation products. Other brands that performed well during the first
two quarters include Pirate Brands, whose net sales increased 10.3%, Victoria,
whose net sales increased 7.5%, Cream of Wheat, whose net sales
increased 4.9%, Static Guard, whose net sales increased 28.7%,
and Ortega, whose net sales increased by 1.3%. This performance
was offset, in part, by Green Giant shelf stable, whose net sales
decreased 19.8%, Las Palmas, whose net sales decreased 10.2%, Bear
Creek Country Kitchens, whose net sales decreased 8.1%, and Mama
Mary’s, whose net sales decreased 7.3%.
Gross profit was $184.5 million for the first two quarters of 2018
compared to $225.8 million for the first two quarters of 2017. Gross
profit expressed as a percentage of net sales decreased to 22.5% in the
first two quarters of 2018 from 29.2% in the first two quarters of 2017.
Gross profit as a percentage of net sales was 26.9% for the first two
quarters, excluding the negative impact of $36.2 million of
non-recurring expenses, including the non-cash accounting impact of the
Company’s inventory reduction plan, and acquisition-related expenses,
including Back to Nature integration expenses. Gross
profit percentage was also negatively impacted by industry-wide and
anticipated increases in freight expenses, partially offset by
procurement savings, a decrease in warehousing expenses and an increase
in net pricing.
Selling, general and administrative expenses decreased $12.3 million, or
13.3%, to $79.8 million for the first two quarters of 2018 from $92.1
million for the first two quarters of 2017. The decrease was composed of
a decrease in acquisition-related and non-recurring expenses of $11.2
million, reduced consumer marketing expenses of $4.1 million and reduced
warehousing expenses of $0.7 million, partially offset by other
increases of $3.7 million. Expressed as a percentage of net sales,
selling, general and administrative expenses improved by 2.3 percentage
points to 9.7% for the first two quarters of 2018 compared to 12.0% for
the first two quarters of 2017.
Net interest expense increased $14.3 million, or 34.3%, to $55.9 million
for the first two quarters of 2018 from $41.6 million in the first two
quarters of 2017. The increase was primarily attributable to additional
borrowings made in the fourth quarter of 2017 to fund the Back to
Nature acquisition and in the second and fourth quarters of 2017 in
connection with the Company’s senior notes offerings.
The Company’s reported net income under U.S. generally accepted
accounting principles (GAAP) was $28.5 million, or $0.43 per diluted
share for the first two quarters of 2018, as compared to reported net
income of $54.8 million, or $0.82 per diluted share, for the first two
quarters of 2017. The Company’s adjusted net income for the first two
quarters of 2018, which excludes the after-tax impact of loss on
extinguishment of debt, acquisition-related and non-recurring expenses
and the non-cash accounting impact of the Company’s inventory reduction
plan, was $61.5 million, or $0.92 per adjusted diluted share. The
Company’s adjusted net income for the first two quarters of 2017, which
excludes the after-tax impact of loss on extinguishment of debt,
acquisition-related and non-recurring expenses, acquisition-related
inventory step-up, and loss on sale of assets, was $66.1 million, or
$0.99 per adjusted diluted share.
For the first two quarters of 2018, adjusted EBITDA, which excludes
acquisition-related and non-recurring expenses and the non-cash
accounting impact of the Company’s inventory reduction plan, was $163.9
million, a decrease of 3.7%, or $6.3 million, compared to $170.2 million
for the first two quarters of 2017. Adjusted EBITDA as a percentage of
net sales was 20.0% for the first two quarters of 2018.
Guidance
B&G Foods revised its guidance for full year 2018. Net sales are
expected to be approximately $1.73 billion to $1.75 billion, adjusted
EBITDA is expected to be approximately $345.0 million to $355.0 million
and adjusted diluted earnings per share is expected to be approximately
$2.05 to $2.15. The full year 2018 net sales guidance includes the
impact of the new FASB revenue recognition standard, which the Company
estimates will reduce net sales in 2018 by approximately $21.5 million.2
B&G Foods provides earnings guidance only on a non-GAAP basis and does
not provide a reconciliation of the Company’s forward-looking adjusted
EBITDA and adjusted diluted earnings per share guidance to the most
directly comparable GAAP financial measures because of the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliations, including adjustments that could be
made for deferred taxes; loss on extinguishment of debt;
acquisition-related and non-recurring expenses, gains and losses; the
non-cash accounting impact of the Company’s inventory reduction plan;
restructuring expenses; gains and losses on the sale of assets and other
charges reflected in the Company’s reconciliation of historic non-GAAP
financial measures, the amounts of which, based on past experience,
could be material. For additional information regarding B&G Foods’
non-GAAP financial measures, see “About Non-GAAP Financial Measures and
Items Affecting Comparability” below.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today, August 2,
2018. The call will be webcast live and can be accessed at www.bgfoods.com/investor-relations.
The call can also be accessed live over the phone by dialing (888)
394-8218 for U.S. callers or (323) 701-0225 for international callers.
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 532010. The replay will be
available from August 2, 2018 through August 16, 2018. Investors may
also access a web-based replay of the call at www.bgfoods.com/investor-relations.
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, 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 “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 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 and cash
flows.
About B&G Foods, Inc.
Based in Parsippany, New Jersey, B&G Foods and its subsidiaries
manufacture, sell and distribute high-quality, branded shelf-stable and
frozen foods across the United States, Canada and Puerto Rico. With
B&G Foods’ diverse portfolio of more than 50 brands you know and love,
including Back to Nature, B&G, B&M, Cream of Wheat,
Green Giant, Las Palmas, Le Sueur, Mama Mary’s,
Maple Grove Farms, Mrs. Dash, New York Style,
Ortega, Pirate’s Booty, Polaner, SnackWell’s,
Spice Islands and Victoria, there’s a little
something for everyone. For more information about B&G Foods and its
brands, please visit www.bgfoods.com.
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 and overall expectations for
fiscal 2018, including the timing and extent to which the Company may
see the benefit of price increases and cost savings measures and the
Company’s expectations as to freight expenses. 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. 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
our 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 Securities and Exchange
Commission, including under Item 1A, “Risk Factors” in the Company’s
most recent Annual Report on Form 10-K and in its subsequent reports on
Forms 10-Q and 8-K. Investors are cautioned not to place undue
reliance on any such forward-looking statements, which speak only as of
the date they are made. B&G Foods undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
1 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.
2 In May 2014, the Financial Accounting Standards Board
(FASB) issued authoritative guidance related to new accounting
requirements for the recognition of revenue from contracts with
customers. The Company adopted this guidance and the related amendments
as of the beginning of the Company’s fiscal 2018, applying the full
retrospective transition approach to all contracts. Based on the
Company’s comprehensive assessment of the new guidance, the Company has
concluded that the adoption does not have a significant impact to the
Company’s core revenue generating activities. However, the adoption
resulted in a change in presentation of certain trade and consumer
promotion expenses, specifically in-store display incentives also
referred to as marketing development funds. In-store display incentives
or marketing development funds were previously recorded within selling,
general and administrative expenses in the Company’s consolidated
statements of operations. Upon the adoption of the new guidance, this
expense will not meet the specific criteria within the new guidance of
providing a “distinct” good or service, and therefore, is required to be
presented as a reduction of the Company’s net sales. The Company
currently anticipates that the impact of this change will result in a
reduction of net sales and selling, general and administrative expenses
by approximately $21.5 million during 2018, the first year of adoption,
with no impact to net income.
B&G Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
|
|
|
June 30,
|
|
December 30,
|
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
62,840
|
|
$
|
206,506
|
Trade accounts receivable, net
|
|
|
137,147
|
|
|
141,392
|
Inventories
|
|
|
446,273
|
|
|
501,849
|
Prepaid expenses and other current assets
|
|
|
24,371
|
|
|
20,054
|
Income tax receivable
|
|
|
16,712
|
|
|
16,794
|
Total current assets
|
|
|
687,343
|
|
|
886,595
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation of
$217,518 and $200,664
|
|
|
271,955
|
|
|
272,192
|
Goodwill
|
|
|
652,143
|
|
|
649,292
|
Other intangibles, net
|
|
|
1,739,102
|
|
|
1,748,220
|
Other assets
|
|
|
1,479
|
|
|
1,617
|
Deferred income taxes
|
|
|
3,091
|
|
|
3,122
|
Total assets
|
|
$
|
3,355,113
|
|
$
|
3,561,038
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
115,595
|
|
$
|
122,358
|
Accrued expenses
|
|
|
37,301
|
|
|
48,067
|
Income tax payable
|
|
|
140
|
|
|
139
|
Dividends payable
|
|
|
31,318
|
|
|
30,922
|
Total current liabilities
|
|
|
184,354
|
|
|
201,486
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
2,073,874
|
|
|
2,217,574
|
Other liabilities
|
|
|
25,998
|
|
|
24,881
|
Deferred income taxes
|
|
|
243,873
|
|
|
236,278
|
Total liabilities
|
|
|
2,528,099
|
|
|
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; 65,932,291 and 66,499,044 shares issued and outstanding as
of June 30, 2018 and December 30, 2017
|
|
|
659
|
|
|
665
|
Additional paid-in capital
|
|
|
186,745
|
|
|
266,789
|
Accumulated other comprehensive loss
|
|
|
(23,034)
|
|
|
(20,756)
|
Retained earnings
|
|
|
662,644
|
|
|
634,121
|
Total stockholders’ equity
|
|
|
827,014
|
|
|
880,819
|
Total liabilities and stockholders’ equity
|
|
$
|
3,355,113
|
|
$
|
3,561,038
|
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
|
|
|
|
Second Quarter Ended
|
|
First Two Quarters Ended
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
2017((1))
|
|
2018
|
|
|
2017((1))
|
Net sales
|
|
$
|
388,378
|
|
$
|
361,676
|
|
$
|
820,107
|
|
|
$
|
773,983
|
Cost of goods sold
|
|
|
307,205
|
|
|
257,119
|
|
|
635,578
|
|
|
|
548,207
|
Gross profit
|
|
|
81,173
|
|
|
104,557
|
|
|
184,529
|
|
|
|
225,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
37,272
|
|
|
43,586
|
|
|
79,840
|
|
|
|
92,106
|
Amortization expense
|
|
|
4,609
|
|
|
4,265
|
|
|
9,218
|
|
|
|
8,737
|
Operating income
|
|
|
39,292
|
|
|
56,706
|
|
|
95,471
|
|
|
|
124,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
27,607
|
|
|
21,998
|
|
|
55,913
|
|
|
|
41,645
|
Loss on extinguishment of debt
|
|
|
546
|
|
|
1,045
|
|
|
3,324
|
|
|
|
1,163
|
Other expense (income)
|
|
|
388
|
|
|
(1,269)
|
|
|
(1,666
|
)
|
|
|
(3,866)
|
Income before income tax expense
|
|
|
10,751
|
|
|
34,932
|
|
|
37,900
|
|
|
|
85,991
|
Income tax expense
|
|
|
2,775
|
|
|
12,871
|
|
|
9,377
|
|
|
|
31,166
|
Net income
|
|
$
|
7,976
|
|
$
|
22,061
|
|
$
|
28,523
|
|
|
$
|
54,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
66,307
|
|
|
66,482
|
|
|
66,412
|
|
|
|
66,478
|
Diluted
|
|
|
66,354
|
|
|
66,711
|
|
|
66,535
|
|
|
|
66,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share
|
|
$
|
0.12
|
|
$
|
0.33
|
|
$
|
0.43
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.475
|
|
$
|
0.465
|
|
$
|
0.940
|
|
|
$
|
0.930
|
(1) Net sales, gross profit, selling, general and administrative
expenses, operating income and other expense (income) have been adjusted
as a result of our retrospective adoption of new accounting standards
relating to revenue recognition and the presentation of net periodic
pension cost and net periodic postretirement benefit cost. The
adjustments described above had no impact on net income or earnings per
share.
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
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net income
|
|
$
|
7,976
|
|
|
$
|
22,061
|
|
|
$
|
28,523
|
|
|
$
|
54,825
|
|
Income tax expense
|
|
|
2,775
|
|
|
|
12,871
|
|
|
|
9,377
|
|
|
|
31,166
|
|
Interest expense, net
|
|
|
27,607
|
|
|
|
21,998
|
|
|
|
55,913
|
|
|
|
41,645
|
|
Depreciation and amortization
|
|
|
13,343
|
|
|
|
12,329
|
|
|
|
26,407
|
|
|
|
24,547
|
|
Loss on extinguishment of debt(1)
|
|
|
546
|
|
|
|
1,045
|
|
|
|
3,324
|
|
|
|
1,163
|
|
EBITDA(2)
|
|
|
52,247
|
|
|
|
70,304
|
|
|
|
123,544
|
|
|
|
153,346
|
|
Acquisition-related and non-recurring expenses
|
|
|
1,623
|
|
|
|
7,851
|
|
|
|
4,892
|
|
|
|
13,693
|
|
Inventory reduction plan impact(3)
|
|
|
20,576
|
|
|
|
—
|
|
|
|
35,426
|
|
|
|
—
|
|
Amortization of acquisition-related inventory step-up(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,550
|
|
Loss on sale of assets(5)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,608
|
|
Adjusted EBITDA(2)
|
|
|
74,446
|
|
|
|
78,155
|
|
|
|
163,862
|
|
|
|
170,197
|
|
Income tax expense
|
|
|
(2,775
|
)
|
|
|
(12,871
|
)
|
|
|
(9,377
|
)
|
|
|
(31,166
|
)
|
Interest expense, net
|
|
|
(27,607
|
)
|
|
|
(21,998
|
)
|
|
|
(55,913
|
)
|
|
|
(41,645
|
)
|
Acquisition-related and non-recurring expenses
|
|
|
(1,623
|
)
|
|
|
(7,851
|
)
|
|
|
(4,892
|
)
|
|
|
(13,693
|
)
|
Inventory reduction plan impact(3)
|
|
|
(20,576
|
)
|
|
|
—
|
|
|
|
(35,426
|
)
|
|
|
—
|
|
Write-off of property, plant and equipment
|
|
|
8
|
|
|
|
105
|
|
|
|
29
|
|
|
|
105
|
|
Deferred income taxes
|
|
|
2,690
|
|
|
|
9,712
|
|
|
|
7,511
|
|
|
|
19,992
|
|
Amortization of deferred financing costs and bond discount
|
|
|
1,431
|
|
|
|
1,464
|
|
|
|
2,976
|
|
|
|
2,795
|
|
Amortization of acquisition-related inventory step-up
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,550
|
)
|
Share-based compensation expense
|
|
|
1,759
|
|
|
|
2,059
|
|
|
|
2,597
|
|
|
|
3,202
|
|
Changes in assets and liabilities, net of effects of business
combinations
|
|
|
3,307
|
|
|
|
(31,444
|
)
|
|
|
33,437
|
|
|
|
(88,413
|
)
|
Net cash provided by operating activities
|
|
$
|
31,060
|
|
|
$
|
17,331
|
|
|
$
|
104,804
|
|
|
$
|
19,824
|
|
(1) For the second quarter of 2018 includes the write-off of deferred
debt financing costs and unamortized discount of $0.4 million and $0.1
million, respectively, relating to the prepayment of outstanding
borrowings under the tranche B term loans. For the first two quarters of
2018 includes the write-off of deferred debt financing costs and
unamortized discount of $2.8 million and $0.5 million, respectively,
relating to the prepayment of outstanding borrowings under the tranche B
term loans. For the second quarter and first two quarters of 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
repayment of all outstanding borrowings under the tranche A term loans
and less than $0.1 million relating to the refinancing of our 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 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 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, amortization of acquired inventory fair value step-up, and
gains and losses on the sale of assets), non-recurring expenses and the
non-cash accounting impact of our inventory reduction plan. Management
believes that it is useful to eliminate net interest expense, income
taxes, depreciation and amortization, loss on extinguishment of debt,
acquisition-related and non-recurring expenses, gains and losses, and
the non-cash accounting impact of our inventory reduction plan 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 indentures 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 (loss) 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 and
non-recurring expenses, gains and losses, the non-cash accounting impact
of our inventory reduction plan and income taxes. 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.
(3) Relates to the allocation of certain fixed manufacturing, warehouse
and other corporate overhead costs associated with inventory purchased
and converted into finished goods in fiscal 2017 and sold in the second
quarter and first two quarters of 2018 as part of our inventory
reduction plan.
(4) Relates to the purchase accounting adjustments made to the finished
goods inventory acquired in the spices & seasonings acquisition that we
completed on November 21, 2016.
(5) During the first two quarters of 2017, we sold to a third-party
co-packer our Le Sueur, Minnesota research center, including the seed
technology assets, property, plant and equipment. We 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 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)
|
|
|
|
Second Quarter Ended
|
|
First Two Quarters Ended
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net income
|
|
$
|
7,976
|
|
$
|
22,061
|
|
$
|
28,523
|
|
$
|
54,825
|
Loss on extinguishment of debt, net of tax(1)
|
|
|
412
|
|
|
654
|
|
|
2,514
|
|
|
727
|
Acquisition-related and non-recurring expenses, net of tax
|
|
|
1,223
|
|
|
4,911
|
|
|
3,697
|
|
|
8,565
|
Inventory reduction plan impact, net of tax(2)
|
|
|
15,508
|
|
|
—
|
|
|
26,746
|
|
|
—
|
Acquisition-related inventory step-up, net of tax(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
970
|
Loss on sale of assets, net of tax(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,006
|
Adjusted net income
|
|
$
|
25,119
|
|
$
|
27,626
|
|
$
|
61,480
|
|
$
|
66,093
|
Adjusted diluted earnings per share
|
|
$
|
0.38
|
|
$
|
0.41
|
|
$
|
0.92
|
|
$
|
0.99
|
(1) For the second quarter of 2018 includes the write-off of deferred
debt financing costs and unamortized discount of $0.4 million and $0.1
million, respectively, relating to the prepayment of outstanding
borrowings under the tranche B term loans. For the first two quarters of
2018 includes the write-off of deferred debt financing costs and
unamortized discount of $2.8 million and $0.5 million, respectively,
relating to the prepayment of outstanding borrowings under the tranche B
term loans. For the second quarter and first two quarters of 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
repayment of all outstanding borrowings under the tranche A term loans
and less than $0.1 million relating to the refinancing of our tranche B
term loans.
(2) Relates to the allocation of certain fixed manufacturing, warehouse
and other corporate overhead costs associated with inventory purchased
and converted into finished goods in fiscal 2017 and sold in the second
quarter and first two quarters of 2018 as part of our inventory
reduction plan.
(3) Relates to the purchase accounting adjustments made to the finished
goods inventory acquired in the spices & seasonings acquisition that we
completed on November 21, 2016.
(4) During the first two quarters of 2017, we sold to a third-party
co-packer our Le Sueur, Minnesota research center, including the seed
technology assets, property, plant and equipment. We 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 loss on sale
of assets.
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
|
|
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net sales
|
|
$
|
388,378
|
|
|
$
|
361,676
|
|
|
$
|
820,107
|
|
|
$
|
773,983
|
|
Net sales from acquisitions(1)
|
|
|
(17,622
|
)
|
|
|
—
|
|
|
|
(37,662
|
)
|
|
|
—
|
|
Net sales of non-branded IQF bulk rice products(2)
|
|
|
(559
|
)
|
|
|
(2,498
|
)
|
|
|
(1,137
|
)
|
|
|
(4,825
|
)
|
Base business net sales(3)
|
|
$
|
370,197
|
|
|
$
|
359,178
|
|
|
$
|
781,308
|
|
|
$
|
769,158
|
|
- -
(1) Reflects net sales for Back to Nature for the second quarter
and first two quarters of 2018. Back to Nature was acquired on
October 2, 2017.
(2) Reflects net sales of our non-branded individually quick frozen
(IQF) bulk rice products, which is a product line we acquired as part of
the Green Giant acquisition, and which we are excluding from
reported net sales for the purposes of calculating base business net
sales because we do not consider the non-branded IQF bulk rice products
to be part of our core business or material.
(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 at
least one full quarter of net sales from acquisitions are included in
both comparable periods, (2) net sales of discontinued brands, and (3)
net sales of our IQF bulk rice business, 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 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.
The definition of base business net sales set forth above, as it relates
to acquisitions, was modified in the fourth quarter of 2017. Under the
Company’s previous definition of base business net sales, for each
acquisition, the excluded period started at the beginning of the most
recent fiscal period being compared and ended on the first anniversary
of the acquisition date. The Company believes that it is more useful to
measure base business net sales on a full quarter basis. The definition
of base business net sales set forth above was modified in the first
quarter of 2018 to exclude net sales of our IQF bulk rice business.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180802005821/en/
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