Executive Summary (vs. Second Quarter of 2020 and vs. Second Quarter 2019 for two-year annual compound growth rates, where applicable):
Commenting on the results,
________________________
1 |
|
Please see “About Non-GAAP Financial Measures and Items Affecting Comparability” below for the definition of the non-GAAP financial measures “adjusted diluted earnings per share,” “adjusted net income,” “EBITDA,” “adjusted EBITDA,” “adjusted EBITDA before COVID-19 expenses” and “base business net sales,” as well as information concerning certain items affecting comparability and reconciliations of the non-GAAP terms to the most comparable GAAP financial measures. |
“Lastly, I’m pleased to report that as of earlier this week, the integration of the Crisco brand is substantially complete and we have assumed full responsibility for the operation of the business. Crisco is a tremendous addition to the
Financial Results for the Second Quarter of 2021
Net sales for the second quarter of 2021 decreased
Base business net sales for the second quarter of 2021 decreased
Net sales of
Net sales for the second quarter of 2021 for spices & seasonings, Ortega, Cream of Wheat,
Gross profit was
________________________
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 Dash and Ac’cent. |
3 |
|
Compares net sales of Clabber Girl from |
During the second quarter of 2021, the Company’s gross profit was negatively impacted by higher than expected input cost inflation, including materially increased costs for raw materials and transportation. The Company expects input cost inflation to be materially higher in the second half of 2021 than it was in the second half of 2020. The Company is attempting to mitigate the impact of inflation on the Company’s gross profit by locking in prices through short-term supply contracts and advance commodities purchase agreements and by implementing cost saving measures. The Company has also announced list price increases and has reduced trade promotions to its customers for certain of its products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company does not expect to fully offset the incremental costs that the Company is facing in fiscal 2021 and expects continued cost inflation in fiscal 2022.
Selling, general and administrative expenses increased
Net interest expense increased
The Company’s net income was
For the second quarter of 2021, adjusted EBITDA was
For the second quarter of 2021, adjusted EBITDA before COVID-19 expenses was
Financial Results for the First Two Quarters of 2021
Net sales for the first two quarters of 2021 increased
Base business net sales1 for the first two quarters of 2021 decreased
Net sales of the Company’s spices & seasonings2 increased
Net sales for the first two quarters of 2021 for spices & seasonings, Ortega,
Gross profit was
During the first two quarters of 2021, the Company’s gross profit was negatively impacted by higher than expected input cost inflation, including materially increased costs for raw materials and transportation. The Company expects input cost inflation to be materially higher in the second half of 2021 than it was in the second half of 2020. The Company is attempting to mitigate the impact of inflation on its gross profit by locking in prices through short-term supply contracts and advance commodities purchase agreements and by implementing cost saving measures. The Company has also announced list price increases and has reduced trade promotions to its customers for certain of its products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company does not expect to fully offset the incremental costs that it is facing in fiscal 2021 and expects continued cost inflation in fiscal 2022.
Selling, general and administrative expenses increased
Net interest expense increased
The Company’s net income was
For the first two quarters of 2021, adjusted EBITDA was
For the first two quarters of 2021, adjusted EBITDA before COVID-19 expenses was
Full Year Fiscal 2021 Guidance
Conference Call
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), “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) and non-recurring expenses, gains and losses) and “adjusted EBITDA before COVID-19 expenses” (adjusted EBITDA as adjusted for COVID-19 expenses) are “non-GAAP financial measures.” A non-GAAP financial measure is a numerical measure of financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in
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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses, and a reconciliation of EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses to net income and to net cash provided by operating activities, is included below for the second quarter and first two quarters of 2021 and 2020, along with the components of EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses. 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’ expectations regarding net sales, consumer trends, input cost inflation, list price increases, trade spend initiatives, margins, customer service levels for Crisco, and the Company’s overall expectations for the remainder of fiscal 2021 and beyond. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of
|
|||||||
|
|
|
|
|
|
||
|
|
|
|
||||
|
2021 |
|
2021 |
||||
Assets |
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
40,322 |
|
|
$ |
52,182 |
|
Trade accounts receivable, net |
|
121,849 |
|
|
|
132,935 |
|
Inventories |
|
533,631 |
|
|
|
492,804 |
|
Prepaid expenses and other current assets |
|
44,370 |
|
|
|
43,619 |
|
Income tax receivable |
|
10,019 |
|
|
|
15,761 |
|
Total current assets |
|
750,191 |
|
|
|
737,301 |
|
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
355,833 |
|
|
|
371,854 |
|
Operating lease right-of-use assets |
|
38,704 |
|
|
|
32,216 |
|
|
|
645,070 |
|
|
|
644,747 |
|
Other intangible assets, net |
|
1,961,498 |
|
|
|
1,971,326 |
|
Other assets |
|
5,598 |
|
|
|
5,948 |
|
Deferred income taxes |
|
4,521 |
|
|
|
4,178 |
|
Total assets |
$ |
3,761,415 |
|
|
$ |
3,767,570 |
|
|
|
|
|
|
|
||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
||
Trade accounts payable |
$ |
119,578 |
|
|
$ |
126,537 |
|
Accrued expenses |
|
58,120 |
|
|
|
77,460 |
|
Current portion of operating lease liabilities |
|
9,801 |
|
|
|
11,034 |
|
Income tax payable |
|
123 |
|
|
|
101 |
|
Dividends payable |
|
30,792 |
|
|
|
30,520 |
|
Total current liabilities |
|
218,414 |
|
|
|
245,652 |
|
|
|
|
|
|
|
||
Long-term debt |
|
2,325,908 |
|
|
|
2,334,086 |
|
Deferred income taxes |
|
305,013 |
|
|
|
293,121 |
|
Long-term operating lease liabilities, net of current portion |
|
31,802 |
|
|
|
23,959 |
|
Other liabilities |
|
38,673 |
|
|
|
38,875 |
|
Total liabilities |
|
2,919,810 |
|
|
|
2,935,693 |
|
|
|
|
|
|
|
||
Stockholders’ equity: |
|
|
|
|
|
||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
648 |
|
|
|
643 |
|
Additional paid-in capital |
|
— |
|
|
|
— |
|
Accumulated other comprehensive loss |
|
(31,556 |
) |
|
|
(35,594 |
) |
Retained earnings |
|
872,513 |
|
|
|
866,828 |
|
Total stockholders’ equity |
|
841,605 |
|
|
|
831,877 |
|
Total liabilities and stockholders’ equity |
$ |
3,761,415 |
|
|
$ |
3,767,570 |
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Second Quarter Ended |
|
First Two Quarters Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net sales |
$ |
464,375 |
|
|
$ |
512,539 |
|
|
$ |
969,509 |
|
|
$ |
961,909 |
|
Cost of goods sold |
|
352,785 |
|
|
|
378,438 |
|
|
|
740,125 |
|
|
|
722,892 |
|
Gross profit |
|
111,590 |
|
|
|
134,101 |
|
|
|
229,384 |
|
|
|
239,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
47,076 |
|
|
|
44,347 |
|
|
|
97,455 |
|
|
|
84,320 |
|
Amortization expense |
|
5,399 |
|
|
|
4,739 |
|
|
|
10,835 |
|
|
|
9,462 |
|
Operating income |
|
59,115 |
|
|
|
85,015 |
|
|
|
121,094 |
|
|
|
145,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income and expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
26,713 |
|
|
|
24,849 |
|
|
|
53,682 |
|
|
|
50,888 |
|
Other income |
|
(1,117 |
) |
|
|
(701 |
) |
|
|
(2,208 |
) |
|
|
(1,154 |
) |
Income before income tax expense |
|
33,519 |
|
|
|
60,867 |
|
|
|
69,620 |
|
|
|
95,501 |
|
Income tax expense |
|
8,968 |
|
|
|
15,956 |
|
|
|
18,191 |
|
|
|
22,498 |
|
Net income |
$ |
24,551 |
|
|
$ |
44,911 |
|
|
$ |
51,429 |
|
|
$ |
73,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
64,777 |
|
|
|
64,130 |
|
|
|
64,680 |
|
|
|
64,088 |
|
Diluted |
|
65,410 |
|
|
|
64,410 |
|
|
|
65,310 |
|
|
|
64,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
$ |
0.38 |
|
|
$ |
0.70 |
|
|
$ |
0.80 |
|
|
$ |
1.14 |
|
Diluted |
$ |
0.38 |
|
|
$ |
0.70 |
|
|
$ |
0.79 |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash dividends declared per share |
$ |
0.475 |
|
|
$ |
0.475 |
|
|
$ |
0.950 |
|
|
$ |
0.950 |
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Second Quarter Ended |
|
First Two Quarters Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net income |
|
$ |
24,551 |
|
|
$ |
44,911 |
|
|
$ |
51,429 |
|
|
$ |
73,003 |
|
Income tax expense |
|
|
8,968 |
|
|
|
15,956 |
|
|
|
18,191 |
|
|
|
22,498 |
|
Interest expense, net |
|
|
26,713 |
|
|
|
24,849 |
|
|
|
53,682 |
|
|
|
50,888 |
|
Depreciation and amortization |
|
|
20,238 |
|
|
|
15,385 |
|
|
|
40,529 |
|
|
|
30,919 |
|
EBITDA(1) |
|
|
80,470 |
|
|
|
101,101 |
|
|
|
163,831 |
|
|
|
177,308 |
|
Acquisition/divestiture-related and non-recurring expenses(2) |
|
|
3,319 |
|
|
|
1,497 |
|
|
|
7,829 |
|
|
|
5,980 |
|
Amortization of acquisition-related inventory step-up(3) |
|
|
— |
|
|
|
— |
|
|
|
5,054 |
|
|
|
— |
|
Adjusted EBITDA(1) |
|
|
83,789 |
|
|
|
102,598 |
|
|
|
176,714 |
|
|
|
183,288 |
|
COVID-19 expenses(4) |
|
|
1,199 |
|
|
|
4,289 |
|
|
|
4,090 |
|
|
|
4,439 |
|
Adjusted EBITDA before COVID-19 expenses(1) |
|
|
84,988 |
|
|
|
106,887 |
|
|
|
180,804 |
|
|
|
187,727 |
|
Income tax expense |
|
|
(8,968 |
) |
|
|
(15,956 |
) |
|
|
(18,191 |
) |
|
|
(22,498 |
) |
Interest expense, net |
|
|
(26,713 |
) |
|
|
(24,849 |
) |
|
|
(53,682 |
) |
|
|
(50,888 |
) |
Acquisition/divestiture-related and non-recurring expenses(2) |
|
|
(3,319 |
) |
|
|
(1,497 |
) |
|
|
(7,829 |
) |
|
|
(5,980 |
) |
Amortization of acquisition-related inventory step-up(3) |
|
|
— |
|
|
|
— |
|
|
|
(5,054 |
) |
|
|
— |
|
Net gain on sales and disposals of property, plant and equipment |
|
|
(4 |
) |
|
|
(63 |
) |
|
|
(30 |
) |
|
|
(61 |
) |
Deferred income taxes |
|
|
5,182 |
|
|
|
(116 |
) |
|
|
11,370 |
|
|
|
14,281 |
|
Amortization of deferred debt financing costs and bond discount/premium |
|
|
1,148 |
|
|
|
901 |
|
|
|
2,289 |
|
|
|
1,799 |
|
Share-based compensation expense |
|
|
1,402 |
|
|
|
3,821 |
|
|
|
2,125 |
|
|
|
4,244 |
|
Changes in assets and liabilities, net of effects of business combinations |
|
|
(12,572 |
) |
|
|
123,949 |
|
|
|
(41,747 |
) |
|
|
122,181 |
|
Net cash provided by operating activities |
|
$ |
39,945 |
|
|
$ |
188,788 |
|
|
$ |
65,965 |
|
|
$ |
246,366 |
|
________________________
(1) |
|
EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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 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. 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); and non-recurring expenses, gains and losses, including severance and other expenses relating to the separation of the Company’s former chief executive officer in fiscal 2020 and a workforce reduction in fiscal 2019. The Company defines adjusted EBITDA before COVID-19 expenses as adjusted EBITDA adjusted for COVID-19 expenses. |
|
|
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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses are not complete net cash flow measures because EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses are two potential indicators of an entity’s ability to fund these cash requirements. EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses may not be comparable to other similarly titled measures of other companies. However, EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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. |
(2) |
|
Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2021 of |
(3) |
|
For the first two quarters of 2021, amortization of acquisition-related inventory step-up of |
(4) |
|
COVID-19 expenses of |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended |
|
First Two Quarters Ended |
|||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|||||
Net income |
|
$ |
24,551 |
|
$ |
44,911 |
|
$ |
51,429 |
|
$ |
73,003 |
|
Acquisition/divestiture-related and non-recurring expenses, net of tax(1) |
|
|
2,506 |
|
|
1,130 |
|
|
5,911 |
|
|
4,515 |
|
Tax benefit(2) |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,258 |
) |
Amortization of acquisition-related inventory step-up, net of tax(3) |
|
|
— |
|
|
— |
|
|
3,816 |
|
|
— |
|
Adjusted net income |
|
$ |
27,057 |
|
$ |
46,041 |
|
$ |
61,156 |
|
$ |
75,260 |
|
Adjusted diluted earnings per share |
|
$ |
0.41 |
|
$ |
0.71 |
|
$ |
0.94 |
|
$ |
1.17 |
|
________________________
(1) |
|
Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2021 primarily includes acquisition and integration expenses for the Crisco and Clabber Girl acquisitions, and certain cost savings initiatives. Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2020 primarily includes acquisition and integration expenses for the Clabber Girl and Farmwise acquisitions, and severance and other expenses primarily relating to a workforce reduction in fiscal 2019 and certain cost savings initiatives. |
(2) |
|
The first two quarters of 2020 includes a |
(3) |
|
For the first two quarters of 2021, amortization of acquisition-related inventory step-up of
|
|
||||||||||||||
2021 Compared to 2020 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Second Quarter Ended |
|
First Two Quarters Ended |
||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||
Net sales |
|
$ |
464,375 |
|
|
$ |
512,539 |
|
$ |
969,509 |
|
|
$ |
961,909 |
Net sales from acquisitions(2) |
|
|
(58,442 |
) |
|
|
— |
|
|
(116,698 |
) |
|
|
— |
Base business net sales |
|
$ |
405,933 |
|
|
$ |
512,539 |
|
$ |
852,811 |
|
|
$ |
961,909 |
2021 Compared to 2019 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Second Quarter Ended |
|
First Two Quarters Ended |
||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
2021 |
|
2019 |
|
2021 |
|
2019 |
||||||
Net sales |
|
$ |
464,375 |
|
|
$ |
371,197 |
|
$ |
969,509 |
|
|
$ |
783,931 |
Net sales from acquisitions(3) |
|
|
(66,731 |
) |
|
|
— |
|
|
(142,534 |
) |
|
|
— |
Base business net sales |
|
$ |
397,644 |
|
|
$ |
371,197 |
|
$ |
826,975 |
|
|
$ |
783,931 |
________________________
(1) |
|
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 the net sales from such acquisitions are included in both comparable periods and (2) net sales of discontinued or divested brands. The portion of current period net sales attributable to recent acquisitions for which there is no corresponding period in the comparable period of the prior year is excluded. For each acquisition, the excluded period starts at the beginning of the most recent fiscal period being compared and ends on the first anniversary of the acquisition date. For discontinued or divested brands, the entire amount of net sales is excluded from each fiscal period being compared. The Company has included this financial measure because management believes 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. |
(2) |
|
Primarily reflects |
(3) |
|
Primarily reflects (a) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210805006087/en/
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