August 4, 2022

B&G Foods Reports Financial Results for Second Quarter 2022

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— Net Sales Increased 3.1% and Base Business Net Sales Increased 3.2% for the Second Quarter of 2022 —

PARSIPPANY, N.J.--(BUSINESS WIRE)--Aug. 4, 2022-- B&G Foods, Inc. (NYSE: BGS) today announced financial results for the second quarter and first two quarters of 2022.

Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter of 2022

 

First Two Quarters of 2022

(In millions, except per share data)

 

 

Change vs.

 

 

 

Change vs.

 

 

Amount

 

Q2 2021

 

Amount

 

First 2Q 2021

Net Sales

 

$

479.0

 

3.1

%

 

$

1,011.4

 

4.3

%

Base Business Net Sales 1

 

$

478.3

 

3.2

%

 

$

1,010.4

 

4.4

%

Diluted EPS 1

 

$

0.00

 

(100.0)

%

 

$

0.34

 

(57.0)

%

Adj. Diluted EPS 1

 

$

0.07

 

(82.9)

%

 

$

0.36

 

(61.7)

%

Net Income 1

 

$

0.3

 

(99.0)

%

 

$

23.9

 

(53.5)

%

Adj. Net Income 1

 

$

5.1

 

(81.0)

%

 

$

25.0

 

(59.1)

%

Adj. EBITDA 1

 

$

54.1

 

(35.4)

%

 

$

127.1

 

(28.1)

%

Guidance for Full Year Fiscal 2022

  • Net sales reaffirmed at a range of $2.10 billion to $2.14 billion.
  • Adjusted EBITDA revised to a range of $300 million to $320 million.
  • Adjusted diluted earnings per share revised to a range of $1.08 to $1.28.

Commenting on the results, Casey Keller, President and Chief Executive Officer of B&G Foods, stated, “During the second quarter, B&G Foods experienced continued pressure from inflation ahead of recovering pricing actions. Within the quarter, we saw improvement in June results from early pricing realization behind June list price increases. Looking forward, we expect to return to prior year adjusted EBITDA performance in the back half of the year as pricing actions catch up to and recover cost increases. Although we expect some inflation into 2023, we are cautiously optimistic that the spikes in major commodity and input costs have peaked or moderated.”

Financial Results for the Second Quarter of 2022

Net sales for the second quarter of 2022 increased $14.6 million, or 3.1%, to $479.0 million from $464.4 million for the second quarter of 2021. The increase was primarily due to increases in net pricing and the impact of product mix, partially offset by volume declines primarily due to price elasticity and supply chain challenges in the second quarter of 2022.

Base business net sales for the second quarter of 2022 increased $14.7 million, or 3.2%, to $478.3 million from $463.6 million for the second quarter of 2021. The increase in base business net sales for the second quarter of 2022 was driven by an increase in net pricing and the impact of product mix of $20.5 million, or 4.4% of base business net sales, partially offset by a decrease in unit volume of $5.0 million and the negative impact of foreign currency of $0.8 million.

Net sales of Crisco increased $13.4 million, or 22.9%; net sales of Green Giant (including Le Sueur) increased $6.2 million, or 5.9%; net sales of Cream of Wheat increased $3.1 million, or 21.5%; net sales of Clabber Girl increased $1.5 million, or 8.7%; and net sales of Maple Grove Farms increased $1.2 million, or 6.1%, for the second quarter of 2022, as compared to the second quarter of 2021. Net sales of Ortega decreased $5.1 million, or 12.3%, and net sales of the Company’s spices & seasonings2 decreased $4.2 million, or 4.2%, for the second quarter of 2022, as compared to the second quarter of 2021. The decrease in spices & seasonings was driven in part by comparisons against a very strong second quarter of 2021 for the Company’s spices & seasonings and supply chain challenges during the second quarter of 2022, partially offset by the positive impact of recent product launches. Compared to the second quarter of pre-pandemic 2019, net sales of the Company’s spices & seasonings increased $13.9 million, or 17.1%. Base business net sales of all other brands in the aggregate decreased $1.4 million, or 1.5%, for the second quarter of 2022, as compared to the second quarter of 2021.

Gross profit was $76.5 million for the second quarter of 2022, or 16.0% of net sales. Excluding the negative impact of $2.3 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2022, the Company’s gross profit would have been $78.8 million, or 16.5% of net sales. Gross profit was $111.6 million for the second quarter of 2021, or 24.0% of net sales. Excluding the negative impact of $0.4 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2021, the Company’s gross profit would have been $112.0 million, or 24.1% of net sales.

During the second quarter of 2022, 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 will continue to have a significant industry-wide impact during the remainder of fiscal 2022. 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 also announced list price increases in 2021 and again during the first and second quarters of 2022. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company did not fully offset the incremental costs that it faced in the second quarter of 2022 and may not fully offset the incremental costs that the Company is facing and expects to continue to face in the remainder of fiscal 2022.

Selling, general and administrative expenses decreased $2.9 million, or 6.1%, to $44.2 million for the second quarter of 2022 from $47.1 million for the second quarter of 2021. The decrease was composed of decreases in warehousing expenses of $2.2 million, consumer marketing expenses of $0.8 million, general and administrative expenses of $0.4 million, and acquisition/divestiture-related and non-recurring expenses of $0.4 million, partially offset by an increase in selling expenses of $0.9 million. Expressed as a percentage of net sales, selling, general and administrative expenses improved by 0.9 percentage points to 9.2% for the second quarter of 2022, as compared to 10.1% for the second quarter of 2021.

Net interest expense increased $3.2 million, or 12.1%, to $29.9 million for the second quarter of 2022 from $26.7 million in the second quarter of 2021. The increase was primarily attributable to a $1.6 million fee for an amendment to the Company’s credit agreement, and a higher effective cost of borrowing and additional borrowings on the Company’s revolving credit facility during the second quarter of 2022, as compared to the second quarter of 2021.

The Company’s net income was $0.3 million, or $0.00 per diluted share, for the second quarter of 2022, compared to net income of $24.6 million, or $0.38 per diluted share, for the second quarter of 2021. The Company’s adjusted net income for the second quarter of 2022 was $5.1 million, or $0.07 per adjusted diluted share, compared to $27.1 million, or $0.41 per adjusted diluted share, for the second quarter of 2021. The decreases in net income, diluted earnings per share, adjusted net income and adjusted diluted earnings per share were primarily attributable to industry-wide input cost inflation and supply chain disruptions, and, in the case of diluted earnings per share and adjusted diluted earnings per share, the approximately 6.5 million shares of common stock sold by the Company through the Company’s at-the-market (ATM) equity offering program after the second quarter of last year, partially offset by increases in net pricing.

For the second quarter of 2022, adjusted EBITDA was $54.1 million, a decrease of $29.7 million, or 35.4%, compared to $83.8 million for the second quarter of 2021. The decrease in adjusted EBITDA was primarily attributable to industry-wide input cost inflation and supply chain disruptions, partially offset by increases in net pricing. Adjusted EBITDA as a percentage of net sales was 11.3% for the second quarter of 2022, compared to 18.0% in the second quarter of 2021.

Financial Results for the First Two Quarters of 2022

Net sales for the first two quarters of 2022 increased $41.9 million, or 4.3%, to $1,011.4 million from $969.5 million for the first two quarters of 2021. The increase was primarily due to increases in net pricing and the impact of product mix, partially offset by volume declines primarily due to price elasticity and supply chain challenges in the first two quarters of 2022 resulting from the COVID-19 Omicron variant.

Base business net sales for the first two quarters of 2022 increased $42.7 million, or 4.4%, to $1,010.4 million from $967.7 million for the first two quarters of 2021. The increase in base business net sales was driven by increases in net pricing and the impact of product mix of $56.7 million, or 5.9% of base business net sales, partially offset by a decrease in unit volume of $13.2 million and the negative impact of foreign currency of $0.8 million.

Net sales of Crisco increased $34.4 million, or 29.6%; net sales of Green Giant (including Le Sueur) increased $9.5 million, or 4.0%; net sales of Cream of Wheat increased $5.9 million, or 18.1%; net sales of Clabber Girl increased $5.1 million, or 14.6%; and net sales of Maple Grove Farms increased $2.5 million, or 6.0% in the first two quarters of 2022, as compared to the first two quarters of 2021. Net sales of the Company’s spices & seasonings2 decreased $19.3 million, or 9.5%; and net sales of Ortega decreased $1.4 million, or 1.8%; in the first two quarters of 2022, as compared to the first two quarters of 2021. The decrease in spices & seasonings was driven in part by comparisons against the very strong first two quarters of 2021 for the Company’s spices & seasonings and supply chain challenges during the first two quarters of 2022, partially offset by the positive impact of recent product launches. Compared to the first two quarters of 2019, net sales of the Company’s spices & seasonings increased $15.9 million, or 9.5%. Base business net sales of all other brands in the aggregate increased $6.1 million, or 2.8%, for the first two quarters of 2022, as compared to the first two quarters of 2021.

Gross profit was $177.8 million for the first two quarters of 2022, or 17.6% of net sales. Excluding the negative impact of $4.4 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the first two quarters of 2022, the Company’s gross profit would have been $182.2 million, or 18.0% of net sales. Gross profit was $229.4 million for the first two quarters of 2021, or 23.7% of net sales. Excluding the negative impact of $5.9 million of acquisition/divestiture-related expenses, the amortization of acquisition-related inventory fair value step-up and non-recurring expenses included in cost of goods sold during the first two quarters of 2021, the Company’s gross profit would have been $235.3 million, or 24.3% of net sales.

During the first two quarters of 2022, 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 will continue to have a significant industry-wide impact during the remainder of fiscal 2022. 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 also announced list price increases in 2021 and again during the first and second quarters of 2022. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company did not fully offset the incremental costs that it faced in the first two quarters of 2022 and may not fully offset the incremental costs that the Company is facing and expects to continue to face in the remainder of fiscal 2022.

Selling, general and administrative expenses decreased $6.5 million, or 6.6%, to $91.0 million for the first two quarters of 2022 from $97.5 million for the first two quarters of 2021. The decrease was composed of decreases in acquisition/divestiture-related and non-recurring expenses of $4.4 million, consumer marketing expenses of $2.4 million, warehousing expenses of $2.1 million, and general and administrative expenses of $0.2 million, partially offset by an increase in selling expenses of $2.6 million. Expressed as a percentage of net sales, selling, general and administrative expenses improved by 1.1 percentage points to 9.0% for the first two quarters of 2022, as compared to 10.1% for the first two quarters of 2021.

During the first quarter of 2022, the Company completed the closure and sale of its Portland, Maine manufacturing facility. The Company recorded a gain on the sale of the Portland property, plant and equipment of $7.1 million during the first quarter of 2022. The positive impact during the quarter of the gain on sale was partially offset by approximately $2.2 million of expenses incurred during the quarter relating to the closure of the facility and the transfer of manufacturing operations.

Net interest expense increased $3.0 million, or 5.7%, to $56.7 million for the first two quarters of 2022 from $53.7 million in the first two quarters of 2021. The increase was primarily attributable to a $1.6 million fee for an amendment to the Company’s credit agreement, and a higher effective cost of borrowing and additional borrowings on the Company’s revolving credit facility during the first two quarters of 2022, as compared to the first two quarters of 2021.

The Company’s net income was $23.9 million, or $0.34 per diluted share, for the first two quarters of 2022, compared to net income of $51.4 million, or $0.79 per diluted share, for the first two quarters of 2021. The Company’s adjusted net income for the first two quarters of 2022 was $25.0 million, or $0.36 per adjusted diluted share, compared to $61.2 million, or $0.94 per adjusted diluted share, for the first two quarters of 2021. The decreases in net income, diluted earnings per share, adjusted net income and adjusted diluted earnings per share were primarily attributable to industry-wide input cost inflation and supply chain disruptions, and, in the case of diluted earnings per share and adjusted diluted earnings per share, the approximately 6.5 million shares of common stock sold by the Company through the Company’s at-the-market (ATM) equity offering program after the second quarter of last year, partially offset by increases in net pricing and a benefit during the first two quarters of $4.9 million resulting from the gain on sale of the Portland, Maine manufacturing facility, net of expenses relating to the closure of the facility and the transfer of manufacturing operations.

For the first two quarters of 2022, adjusted EBITDA was $127.1 million, a decrease of $49.6 million, or 28.1%, compared to $176.7 million for the first two quarters of 2021. The decrease in adjusted EBITDA was primarily attributable to industry-wide input cost inflation and supply chain disruptions, partially offset by increases in net pricing. Adjusted EBITDA as a percentage of net sales was 12.6% for the first two quarters of 2022, compared to 18.2% in the first two quarters of 2021.

Credit Agreement Amendment

As previously announced, during the second quarter of 2022, the Company completed an amendment to its senior secured credit facility to temporarily increase the maximum consolidated leverage ratio permitted under its revolving credit facility. The Company’s maximum consolidated leverage ratio (defined as the ratio, determined on a pro forma basis, of consolidated net debt, as of the last day of any period of four consecutive fiscal quarters to adjusted EBITDA (as defined in the credit agreement) before share-based compensation for such period), increased from 7.00 to 1.00 to 7.50 to 1.00 for the quarter ending July 2, 2022, and then will increase to 8.00 to 1.00 for the quarter ending October 1, 2022 through the quarter ending September 30, 2023. The maximum consolidated leverage ratio will decrease to 7.50 to 1.00 for the quarter ending December 30, 2023 before returning to 7.00 to 1.00 for the quarters ending March 30, 2024 and thereafter. In connection with the amendment, the Company paid a $1.6 million fee to its lenders.

At-The-Market (ATM) Equity Offering Program

During the second quarter of 2022, the Company sold 2,739,568 shares of common stock under its previously announced ATM equity offering program, For the quarter, the Company generated $63.2 million in gross proceeds, or $23.08 per share, from the sales and paid commissions to the sales agents of approximately $1.3 million and incurred other fees and expenses of approximately $0.1 million. Since the inception of the ATM equity offering program during the third quarter of 2021, the Company has sold an aggregate of 6,547,627 shares of common stock and generated $179.0 million in gross proceeds, or $27.34 per share, and paid commissions to the sales agents of approximately $3.6 million and incurred other fees and expenses of approximately $0.5 million.

The Company has used the net proceeds from shares sold under the ATM equity offering program to repay revolving credit loans, to pay offering fees and expenses, and for general corporate purposes. The Company intends to use the net proceeds from any future sales of its common stock under the ATM offering for general corporate purposes, which could include, among other things, repayment, refinancing, redemption or repurchase of long-term debt or possible acquisitions.

Full Year Fiscal 2022 Guidance

B&G Foods reaffirmed its net sales guidance for full year fiscal 2022 at a range of $2.10 billion to $2.14 billion. B&G Foods revised its full year fiscal 2022 adjusted EBITDA guidance to a range of $300 million to $320 million, and adjusted diluted earnings per share to a range of $1.08 to $1.28.

B&G Foods continues to see strong consumer demand for its products. The Company has also seen, and expects to continue to see, significant cost inflation for various inputs, including ingredients, packaging, transportation and labor attributable to a number of factors, including the COVID-19 pandemic, the war in Ukraine, climate and weather conditions, supply chain disruptions (including raw material shortages) and labor shortages. The Company has initiated various revenue enhancing activities (including list price increases and trade spend initiatives) and cost savings initiatives to offset these costs but there can be no assurance at this point of the ultimate effectiveness of these activities and initiatives. The Company’s management is not able to fully estimate the impact COVID-19, industry-wide supply chain disruptions, cost inflation and the Company’s cost inflation mitigation efforts will have on the Company’s results for the remainder of fiscal 2022, and the Company’s guidance should be read in this context. The ultimate impact of the COVID-19 pandemic on the Company’s business will depend on many factors, including, among others: how long social distancing and stay-at-home and work-from home policies and recommendations remain in effect; whether, and the extent to which, additional waves or variants of COVID-19 will affect the United States and the rest of North America; the Company’s ability to continue to operate its manufacturing facilities, maintain its supply chain without material disruption, procure ingredients, packaging and other raw materials when needed; the extent to which macroeconomic conditions resulting from the pandemic and the pace of the subsequent recovery may impact consumer eating and shopping habits; and the extent to which consumers continue to work remotely even after the pandemic subsides and how that may impact consumer habits.

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; 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 certain assets); loss on extinguishment of debt; non-recurring expenses, gains and losses; 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 4, 2022 to discuss second quarter 2022 financial results. The live audio webcast of the conference call can be accessed at www.bgfoods.com/investor-relations. A replay of the webcast will be available following the conference call through the same link.

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 and depreciation and amortization) 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 the sale of certain assets), loss on extinguishment of debt, and non-recurring expenses, gains and losses) 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 United States (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 second quarter and first two quarters of 2022 and 2021, 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.

End Notes

  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 diluted earnings per share,” “adjusted net income,” “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 fourth quarter of 2016, as well as the Company’s legacy spices & seasonings brands, such as Dash and Ac’cent, and spices & seasonings products launched by the Company and sold under license.

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, Bear Creek, Cream of Wheat, Crisco, Dash, Green Giant, Las Palmas, Le Sueur, Mama Mary’s, Maple Grove Farms, New York Style, Ortega, Polaner, 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’ expectations regarding net sales, adjusted EBITDA, adjusted diluted earnings per share, consumer demand, input cost inflation, list price increases, cost savings initiatives, the ability of the Company to recover higher costs in the second half of 2022 through pricing actions, and the Company’s overall expectations for the remainder of fiscal 2022 and beyond. 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 continuing impact of the COVID‑19 pandemic on the Company’s business, including, without limitation, the ability of the Company and its supply chain partners to continue to operate manufacturing facilities, distribution centers and other work locations without material disruption, and to procure ingredients, packaging and other raw materials when needed despite disruption in the supply chain or labor shortages, the duration of social distancing and stay-at-home and work-from-home policies and recommendations, and whether, and the extent to which, additional waves or variants of COVID-19 will affect the United States and the rest of North America, and the extent to which macroeconomic conditions resulting from the pandemic and the pace of the subsequent recovery may impact consumer eating and shopping habits; the Company’s substantial leverage; the effects of rising costs for the Company’s commodities, ingredients, packaging, other raw materials, distribution and labor; 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 Company’s ability to recruit and retain senior management and a highly skilled and diverse workforce at the Company’s corporate offices, manufacturing facilities and other locations despite a very tight labor market and changing employee expectations as to fair compensation, an inclusive and diverse workplace, flexible working and other matters; 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 from recent or future acquisitions; the Company’s ability to successfully complete the integration of recent or future acquisitions into the Company’s enterprise resource planning (ERP) system; tax reform and legislation, including the effects of the Infrastructure Investment and Jobs Act, U.S. Tax Cuts and Jobs Act and the U.S. CARES Act, and future tax reform or legislation; 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 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; the Company’s ability to successfully transition the operations of the Portland, Maine manufacturing facility to third-party co-manufacturing facilities and existing Company manufacturing facilities without significant disruption in production or customer service, and the Company’s ability to achieve anticipated productivity improvements and cost savings; 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.

B&G Foods, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

July 2,

 

January 1,

 

2022

 

2022

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

43,026

 

 

$

33,690

 

Trade accounts receivable, net

 

149,168

 

 

 

145,281

 

Inventories

 

667,668

 

 

 

609,794

 

Assets held for sale

 

—

 

 

 

3,256

 

Prepaid expenses and other current assets

 

42,261

 

 

 

38,151

 

Income tax receivable

 

14,637

 

 

 

4,284

 

Total current assets

 

916,760

 

 

 

834,456

 

 

 

 

 

 

 

Property, plant and equipment, net

 

336,429

 

 

 

341,471

 

Operating lease right-of-use assets

 

73,230

 

 

 

65,166

 

Finance lease right-of-use assets

 

3,420

 

 

 

—

 

Goodwill

 

649,105

 

 

 

644,871

 

Other intangible assets, net

 

1,920,656

 

 

 

1,927,119

 

Other assets

 

7,171

 

 

 

6,916

 

Deferred income taxes

 

10,151

 

 

 

8,546

 

Total assets

$

3,916,922

 

 

$

3,828,545

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Trade accounts payable

$

164,118

 

 

$

129,861

 

Accrued expenses

 

65,631

 

 

 

66,901

 

Current portion of operating lease liabilities

 

15,222

 

 

 

12,420

 

Current portion of finance lease liabilities

 

1,034

 

 

 

—

 

Income tax payable

 

16

 

 

 

2,557

 

Dividends payable

 

34,043

 

 

 

32,548

 

Total current liabilities

 

280,064

 

 

 

244,287

 

 

 

 

 

 

 

Long-term debt

 

2,292,139

 

 

 

2,267,759

 

Deferred income taxes

 

312,778

 

 

 

310,641

 

Long-term operating lease liabilities, net of current portion

 

58,459

 

 

 

55,607

 

Long-term finance lease liabilities, net of current portion

 

2,320

 

 

 

—

 

Other liabilities

 

30,981

 

 

 

29,997

 

Total liabilities

 

2,976,741

 

 

 

2,908,291

 

 

 

 

 

 

 

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; 71,670,346 and 68,521,651 shares issued and outstanding as of July 2, 2022 and January 1, 2022, respectively

 

717

 

 

 

685

 

Additional paid-in capital

 

29,632

 

 

 

3,547

 

Accumulated other comprehensive loss

 

(19,170

)

 

 

(18,169

)

Retained earnings

 

929,002

 

 

 

934,191

 

Total stockholders’ equity

 

940,181

 

 

 

920,254

 

Total liabilities and stockholders’ equity

$

3,916,922

 

 

$

3,828,545

 

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

First Two Quarters Ended

 

July 2,

 

July 3,

 

July 2,

 

July 3,

 

2022

 

2021

 

2022

 

2021

Net sales

$

478,965

 

 

$

464,375

 

 

$

1,011,372

 

 

$

969,509

 

Cost of goods sold

 

402,468

 

 

 

352,785

 

 

 

833,587

 

 

 

740,125

 

Gross profit

 

76,497

 

 

 

111,590

 

 

 

177,785

 

 

 

229,384

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (income) and expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

44,197

 

 

 

47,076

 

 

 

91,037

 

 

 

97,455

 

Amortization expense

 

5,359

 

 

 

5,399

 

 

 

10,582

 

 

 

10,835

 

Gain on sales of assets

 

—

 

 

 

—

 

 

 

(7,099

)

 

 

—

 

Operating income

 

26,941

 

 

 

59,115

 

 

 

83,265

 

 

 

121,094

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income and expenses:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

29,941

 

 

 

26,713

 

 

 

56,743

 

 

 

53,682

 

Other income

 

(1,848

)

 

 

(1,117

)

 

 

(3,687

)

 

 

(2,208

)

Income (loss) before income tax expense (benefit)

 

(1,152

)

 

 

33,519

 

 

 

30,209

 

 

 

69,620

 

Income tax expense (benefit)

 

(1,408

)

 

 

8,968

 

 

 

6,297

 

 

 

18,191

 

Net income

$

256

 

 

$

24,551

 

 

$

23,912

 

 

$

51,429

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

69,904

 

 

 

64,777

 

 

 

69,267

 

 

 

64,680

 

Diluted

 

70,286

 

 

 

65,410

 

 

 

69,652

 

 

 

65,310

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

—

 

 

$

0.38

 

 

$

0.35

 

 

$

0.80

 

Diluted

$

—

 

 

$

0.38

 

 

$

0.34

 

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.475

 

 

$

0.475

 

 

$

0.950

 

 

$

0.950

 

B&G Foods, Inc. and Subsidiaries

Items Affecting Comparability

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

First Two Quarters Ended

 

 

July 2,

 

July 3,

 

July 2,

 

July 3,

 

 

2022

 

2021

 

2022

 

2021

Net income

 

$

256

 

 

$

24,551

 

$

23,912

 

 

$

51,429

Income tax expense (benefit)

 

 

(1,408

)

 

 

8,968

 

 

6,297

 

 

 

18,191

Interest expense, net

 

 

29,941

 

 

 

26,713

 

 

56,743

 

 

 

53,682

Depreciation and amortization

 

 

20,474

 

 

 

20,238

 

 

40,299

 

 

 

40,529

EBITDA(1)

 

 

49,263

 

 

 

80,470

 

 

127,251

 

 

 

163,831

Acquisition/divestiture-related and non-recurring expenses(2)

 

 

4,877

 

 

 

3,319

 

 

4,790

 

 

 

7,829

Gain on sale of assets, net of facility closure costs(3)

 

 

—

 

 

 

—

 

 

(4,928

)

 

 

—

Amortization of acquisition-related inventory step-up(4)

 

 

—

 

 

 

—

 

 

—

 

 

 

5,054

Adjusted EBITDA(1)

 

$

54,140

 

 

$

83,789

 

$

127,113

 

 

$

176,714

B&G Foods, Inc. and Subsidiaries

Items Affecting Comparability

Reconciliation of Net Cash Provided by (Used in) Operating Activities to EBITDA and Adjusted EBITDA

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

First Two Quarters Ended

 

 

July 2,

 

July 3,

 

July 2,

 

July 3,

 

 

2022

 

2021

 

2022

 

2021

Net cash provided by (used in) operating activities

 

$

(4,104

)

 

$

39,945

 

 

$

21,127

 

 

$

65,965

 

Income tax (expense) benefit

 

 

1,408

 

 

 

(8,968

)

 

 

(6,297

)

 

 

(18,191

)

Interest expense, net

 

 

(29,941

)

 

 

(26,713

)

 

 

(56,743

)

 

 

(53,682

)

Gain on sales of assets

 

 

—

 

 

 

(4

)

 

 

(7,113

)

 

 

(30

)

Deferred income taxes

 

 

(2,383

)

 

 

5,182

 

 

 

530

 

 

 

11,370

 

Amortization of deferred debt financing costs and bond discount/premium

 

 

1,177

 

 

 

1,148

 

 

 

2,346

 

 

 

2,289

 

Share-based compensation expense

 

 

1,158

 

 

 

1,402

 

 

 

2,248

 

 

 

2,125

 

Changes in assets and liabilities, net of effects of business combinations

 

 

(24,786

)

 

 

(12,572

)

 

 

(41,095

)

 

 

(41,747

)

EBITDA(1)

 

 

49,263

 

 

 

80,470

 

 

 

127,251

 

 

 

163,831

 

Acquisition/divestiture-related and non-recurring expenses(2)

 

 

4,877

 

 

 

3,319

 

 

 

4,790

 

 

 

7,829

 

Gain on sale of assets, net of facility closure costs(3)

 

 

—

 

 

 

—

 

 

 

(4,928

)

 

 

—

 

Amortization of acquisition-related inventory step-up(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,054

 

Adjusted EBITDA(1)

 

$

54,140

 

 

$

83,789

 

 

$

127,113

 

 

$

176,714

 

________________________

(1)

EBITDA and adjusted EBITDA are non-GAAP financial measures used by management to measure operating performance. A non-GAAP financial measure is defined as a numerical measure of 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 and depreciation and amortization. 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 certain assets); loss on extinguishment of debt; and non-recurring expenses, gains and losses.

 

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 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.

 
(2)

Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2022 of $4.9 million and $4.8 million, respectively, primarily includes acquisition and integration expenses for the acquisition of the frozen vegetable manufacturing operations of Growers Express, LLC, which was completed on May 5, 2022 (which the Company refers to as the “Yuma acquisition”) and the Crisco acquisition, and certain cost savings initiatives. Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2021 of $3.3 million and $7.8 million, respectively, primarily includes acquisition and integration expenses for the Crisco and Clabber Girl acquisitions, and certain cost savings initiatives.

 
(3)

During the first quarter of 2022, the Company completed the closure and sale of its Portland, Maine manufacturing facility. The Company recorded a gain on the sale of the Portland property, plant and equipment of $7.1 million during the first quarter of 2022. The positive impact during the quarter of the gain on sale was partially offset by approximately $2.2 million of expenses incurred during the quarter relating to the closure of the facility and the transfer of manufacturing operations, resulting in a net benefit of $4.9 million from the gain on sale.

 
(4)

For the first two quarters of 2021, amortization of acquisition-related inventory step-up of $5.1 million relates to the purchase accounting adjustments made to inventory acquired in the Crisco acquisition.

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-six Weeks Ended

 

 

July 2,

 

July 3,

 

July 2,

 

July 3,

 

 

2022

 

2021

 

2022

 

2021

Net income

 

$

256

 

 

$

24,551

 

 

$

23,912

 

 

$

51,429

 

Acquisition/divestiture-related and non-recurring expenses(1)

 

 

4,877

 

 

 

3,319

 

 

 

4,790

 

 

 

7,829

 

Gain on sale of assets, net of facility closure costs(2)

 

 

—

 

 

 

—

 

 

 

(4,928

)

 

 

—

 

Amortization of acquisition-related inventory step-up(3)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,054

 

Credit agreement amendment fee(4)

 

 

1,600

 

 

 

—

 

 

 

1,600

 

 

 

—

 

Tax effects of non-GAAP adjustments(5)

 

 

(1,587

)

 

 

(813

)

 

 

(358

)

 

 

(3,156

)

Adjusted net income

 

$

5,146

 

 

$

27,057

 

 

$

25,016

 

 

$

61,156

 

Adjusted diluted earnings per share

 

$

0.07

 

 

$

0.41

 

 

$

0.36

 

 

$

0.94

 

________________________

(1)

Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2022 primarily includes acquisition and integration expenses for the Yuma and Crisco acquisitions, and certain cost savings initiatives. 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.

 

(2)

During the first quarter of 2022, the Company completed the closure and sale of its Portland, Maine manufacturing facility. The Company recorded a gain on the sale of the Portland property, plant and equipment of $7.1 million during the first quarter of 2022. The positive impact during the quarter of the gain on sale was partially offset by approximately $2.2 million of expenses incurred during the quarter relating to the closure of the facility and the transfer of manufacturing operations, resulting in a net benefit of $4.9 million from the gain on sale.

(3)

For the first two quarters of 2021, amortization of acquisition-related inventory step-up of $5.1 million (or $3.8 million, net of tax) relates to the purchase accounting adjustments made to inventory acquired in the Crisco acquisition.

(4)

During the second quarter of 2022, the Company paid a fee of $1.6 million (or $1.2 million, net of tax) to amend its senior secured credit agreement to temporarily increase the maximum consolidated leverage ratio permitted under the Company’s revolving credit facility.

(5)

Represents the tax effects of the non-GAAP adjustments listed above assuming a tax rate of 24.5%.

B&G Foods, Inc. and Subsidiaries

Items Affecting Comparability

Reconciliation of Base Business Net Sales(1) to Net Sales

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

First Two Quarters Ended

 

 

July 2,

 

July 3,

 

July 2,

 

July 3,

 

 

2022

 

2021

 

2022

 

2021

Net sales

 

$

478,965

 

 

$

464,375

 

 

$

1,011,372

 

 

$

969,509

 

Net sales from acquisitions(2)

 

 

(642

)

 

 

—

 

 

 

(642

)

 

 

—

 

Net sales from discontinued brands(3)

 

 

(48

)

 

 

(816

)

 

 

(287

)

 

 

(1,818

)

Base business net sales

 

$

478,275

 

 

$

463,559

 

 

$

1,010,443

 

 

$

967,691

 

________________________
(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)

Reflects net sales from the Yuma acquisition, for which there is no comparable period of net sales during the second quarter and first two quarters of 2021, respectively. The Yuma acquisition was completed on May 5, 2022.

(3)

Reflects net sales of the SnackWell’s and Farmwise brands, which have been discontinued.

 

Investor Relations:
ICR, Inc.
Dara Dierks
866.211.8151

Media Relations:
ICR, Inc.
Matt Lindberg
203.682.8214

Source: B&G Foods, Inc.