B&G Foods (NYSE:BGF)
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B&G Foods, Inc. (NYSE: BGS, BGF), a manufacturer and distributor of
high-quality, shelf-stable foods, today announced financial results for
the thirteen and fifty-two weeks ended December 29, 2007.
Financial Results for the Fourth Quarter
Net sales for the thirteen weeks ended December 29, 2007 (fourth quarter
of 2007) increased $21.2 million or 19.0% to $132.4 million from $111.2
million for the thirteen weeks ended December 30, 2006 (fourth quarter
of 2006). The Cream of Wheat acquisition accounted for $20.0
million of the net sales increase offset by a decrease in net sales of
$0.6 million relating to the termination of a temporary co-packing
arrangement. The remaining $1.8 million of the net sales increase
related to increases in sales price and unit volume. Net sales of Cream
of Wheat products for the fourth quarter of 2007 increased $2.4
million, or 13.8%, as compared to net sales during the fourth quarter of
2006 under the brand’s prior owner.
Gross profit for the fourth quarter of 2007 increased 38.8% to $39.7
million from $28.6 million in the fourth quarter of 2006. Gross profit
expressed as a percentage of net sales increased 4.3% to 30.0% for the
fourth quarter of 2007 from 25.7% in the fourth quarter of 2006. The
increase in gross profit expressed as a percentage of net sales was due
to the positive effect of the Cream of Wheat acquisition.
Operating income increased 48.2% to $20.7 million for the fourth quarter
of 2007, from $14.0 million in the fourth quarter of 2006.
Net income increased 80.1% to $5.2 million for the fourth quarter of
2007 compared to $2.9 million for the fourth quarter of 2006. Earnings
per share of Class A common stock was $0.14 for the fourth quarter of
2007. Earnings per share of Class A common stock was negatively impacted
by $0.01 due to a $0.5 million accrual ($0.3 million, net of tax) during
the fourth quarter relating to the special bonus awards discussed below.
Prior to the third quarter of 2007, B&G Foods had two classes of common
stock outstanding, and computed earnings per share under the two class
method. As a result, it is not meaningful to compare earnings per share
for the fourth quarter of 2007 to the fourth quarter of 2006 or fiscal
2007 to fiscal 2006.
For the fourth quarter of 2007, EBITDA (see “About
Non-GAAP Financial Measures” below) increased
51.0% to $24.3 million from $16.1 million for the fourth quarter of 2006.
David L. Wenner, Chief Executive Officer of B&G Foods, stated, “Our
company had an outstanding quarter, setting company records in every
metric including net sales, net income and EBITDA. These results –
for the fourth quarter of 2007 and for all of fiscal 2007 –
testify to our successful integration of the Cream of Wheat
business and the stability of our base business in a challenging cost
environment.”
Financial Results for Fiscal 2007
Net sales increased $60.0 million or 14.6% to $471.3 million for fiscal
2007 from $411.3 million for fiscal 2006. The Cream of Wheat
acquisition accounted for $54.2 million of the net sales increase offset
by a decrease in net sales of $3.0 million relating to the termination
of a temporary co-packing arrangement. The remaining $8.8 million of the
net sales increase related to increases in sales price and unit volume.
Net sales of Cream of Wheat products for fiscal 2007 (which
includes two months of net sales under the brand’s
prior owner) increased $3.8 million, or 6.1%, as compared to net sales
during fiscal 2006 under the brand’s prior
owner.
Gross profit increased $33.7 million or 29.6% to $148.0 million in
fiscal 2007 from $114.3 million in fiscal 2006. Gross profit expressed
as a percentage of net sales increased 3.6% to 31.4% in fiscal 2007 from
27.8% in fiscal 2006. The increase in gross profit expressed as a
percentage of net sales was due to the positive effect of the Cream
of Wheat acquisition. Operating income increased 33.0% to $81.2
million during fiscal 2007, compared to $61.0 million in the comparable
period of fiscal 2006.
Net income increased 54.0% to $17.8 million for fiscal 2007 compared to
$11.6 million for fiscal 2006. For fiscal 2007, earnings per share of
Class A common stock was $0.62. Earnings per share of Class A common
stock was negatively impacted by $0.04 due to a $1.9 million accrual
($1.2 million, net of tax) for special bonus awards to be paid in March
2008 to certain executive officers and members of our senior management
in recognition of their contributions to the successful completion of
the Cream of Wheat acquisition and the Class A common stock
offering.
For the fiscal 2007, EBITDA increased 36.9% to $94.5 million from $69.0
million for fiscal 2006.
Conference Call
B&G Foods will hold a webcast and conference call at 4:30 p.m. ET today,
March 6, 2008. The call will be webcast live over the Internet from the
Investor Relations section of B&G Foods’
website at www.bgfoods.com under “Investor
Relations—Company Overview.”
Participants should follow the instructions provided on the website for
the download and installation of audio applications necessary to join
the webcast. The call can also be accessed live over the phone by
dialing (888) 686-9704 or for international callers by dialing (913)
312-0850.
A replay of the call will be available one hour after the call and can
be accessed by dialing (888) 203-1112 or (719) 457-0820 for
international callers. The password is 2927248. The replay will be
available from March 6, 2008 through March 13, 2008.
About Non-GAAP Financial Measures
EBITDA (net income before net interest expense, income taxes,
depreciation and amortization) is a “non-GAAP
(Generally Accepted Accounting Principles) financial measure.”
A non-GAAP financial measure is defined as 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 and cash flows.
Non-GAAP financial measures should not be considered in isolation or as
a substitute for the most directly comparable GAAP measures. A
reconciliation of EBITDA with net income and net cash provided by
operating activities is included below for the fourth quarter and fiscal
2007 and the fourth quarter and fiscal 2006, along with the components
of EBITDA.
About B&G Foods, Inc.
B&G Foods and its subsidiaries manufacture, sell and distribute a
diversified portfolio of high-quality, shelf-stable foods across the
United States, Canada and Puerto Rico. B&G Foods’
products include hot cereals, fruit spreads, canned meats and beans,
spices, seasonings, marinades, hot sauces, wine vinegar, maple syrup,
molasses, salad dressings, Mexican-style sauces, taco shells and kits,
salsas, pickles, peppers and other specialty food products. B&G Foods
competes in the retail grocery, food service, specialty, private label,
club and mass merchandiser channels of distribution. Based in
Parsippany, New Jersey, B&G Foods’
products are marketed under many recognized brands, including Ac’cent,
B&G, B&M, Brer Rabbit, Cream of Rice, Cream of Wheat, Emeril’s,
Grandma’s Molasses, Joan of Arc, Las Palmas,
Maple Grove Farms of Vermont, Ortega, Polaner, Red Devil, Regina, Sa-són,
Trappey’s, Underwood, Vermont Maid and
Wright’s.
Forward-Looking Statements
Statements in this press release that are not statements of
historical or current fact constitute “forward-looking
statements.” 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,” “intends,”
“anticipates” or “plans”
to be uncertain and forward-looking. 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 our Annual Report on Form 10-K for fiscal 2007 filed on March 6, 2008.
We undertake 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
(Dollars in thousands, except per share data)
(Unaudited)
December 29,2007
December 30,2006
Assets
Current assets:
Cash and cash equivalents
$
36,606
$
29,626
Trade accounts receivable, less allowance for doubtful accounts and
discounts of $745 in 2007 and $568 in 2006, respectively
42,362
31,090
Inventories
93,181
78,269
Prepaid expenses
3,556
3,246
Income tax receivable
569
516
Deferred income taxes
648
2,574
Total current assets
176,922
145,321
Property, plant and equipment, net
49,658
40,269
Goodwill
253,353
198,076
Trademarks
227,220
200,220
Customer relationship intangibles, net
122,768
14,369
Net deferred debt issuance costs and other assets
17,669
17,950
Total assets
$
847,590
$
616,205
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable
32,126
21,520
Accrued expenses
21,894
16,520
Dividends payable
7,797
4,240
Total current liabilities
61,817
42,280
Long-term debt
535,800
430,800
Other liabilities
6,376
4,972
Deferred income taxes
68,962
62,666
Total liabilities
672,955
540,718
Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 1,000,000
shares; no shares issued or outstanding
—
—
Class A common stock, $0.01 par value per share. Authorized
100,000,000 shares; 36,778,988 and 20,000,000 shares issued and
outstanding as of December 29, 2007 and December 30, 2006
368
200
Class B common stock, $0.01 par value per share. Authorized
25,000,000 shares; no shares issued or outstanding as of December
29, 2007 and 7,556,443 shares issued and outstanding as of December
30, 2006
—
76
Additional paid-in capital
202,197
119,152
Accumulated other comprehensive loss
(3,718
)
(1,904
)
Accumulated deficit
(24,212
)
(42,037
)
Total stockholders’ equity
174,635
75,487
Total liabilities and stockholders’ equity
$
847,590
$
616,205
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended
Fifty-two Weeks Ended
December 29,
2007
December 30,
2006
December 29,
2007
December 30,
2006
Net sales
$
132,384
$
111,207
$
471,336
$
411,306
Cost of goods sold
92,648
82,576
323,316
297,053
Gross profit
39,736
28,631
148,020
114,253
Operating expenses:
Sales, marketing and distribution expenses
14,500
11,812
51,684
45,343
General and administrative expenses
2,880
2,632
9,682
7,688
Gain on sale of property, plant and equipment
—
—
—
(525
)
Amortization expense—customer
relationships
1,613
189
5,501
731
Operating income
20,743
13,998
81,153
61,016
Other expenses:
Interest expense, net
12,660
10,685
52,688
43,481
Income before income tax expense
8,083
3,313
28,465
17,535
Income tax expense
2,915
444
10,640
5,962
Net income
$
5,168
$
2,869
17,825
11,573
Earnings per share calculations:
Basic and diluted distributed earnings per share:
Class A common stock
$
0.21
$
0.21
$
0.92(1
)
$
0.85
Basic and diluted earnings (loss) per share:
Class A common stock
$
0.14
$
0.16
$
0.62
$
0.65
Class B common stock
$
—
$
(0.05
)
$
(0.30
)
$
(0.20
)
(1) "Distributed earnings" differs from actual per share amounts
paid as dividends as the earnings per share computation under GAAP
requires the use of the weighted average rather than the actual
number of shares outstanding.
B&G Foods, Inc. and Subsidiaries
Reconciliation of EBITDA to Net Income and to Net Cash Provided
by Operating Activities
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
Fifty-two Weeks Ended
December 29,
2007
December 30,
2006
December 29,
2007
December 30,
2006
Net income
$
5,168
$
2,869
$
17,825
$
11,573
Income tax expense
2,915
444
10,640
5,962
Interest expense, net
12,660
10,685
52,688
43,481
Depreciation and amortization
3,592
2,121
13,298
7,984
EBITDA(1)
24,335
16,119
94,451
69,000
Income tax expense
(2,915
)
(444
)
(10,640
)
(5,962
)
Interest expense, net
(12,660
)
(10,685
)
(52,688
)
(43,481
)
Deferred income taxes
2,379
1,255
9,323
6,165
Amortization of deferred debt issuance costs
793
708
3,190
2,830
Gain on sale of property, plant and equipment
—
—
—
(525
)
Write off of deferred debt issuance costs
—
—
1,769
—
Changes in assets and liabilities, net of effects of business
combination
917
7,642
(11,356
)
4,744
Net cash provided by operating activities
$
12,849
$
14,595
$
34,049
$
32,771
(1) EBITDA is a measure used by management to measure operating
performance. EBITDA is defined as net income before net interest
expense, income taxes, depreciation, and amortization. Management
believes that it is useful to eliminate net interest expense, income
taxes, depreciation and amortization 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 in our business operations, among other
things, to 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 because we believe it is a useful indicator of our
historical debt capacity and ability to service debt and because
covenants in our credit facility and the indentures governing the
senior notes and the senior subordinated notes contain ratios based
on these measures. As a result, internal management reports used
during monthly operating reviews feature the EBITDA metric. However,
management uses this metric 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 this measure as its only measure of
operating performance and liquidity.
EBITDA is not a recognized term under GAAP and does not purport to
be an alternative to operating income or net income as an indicator
of operating performance or any other GAAP measure. EBITDA is not a
complete net cash flow measure because EBITDA is a measure of
liquidity that does not include reductions for cash payments for an
entity's obligation to service its debt, fund its working capital,
capital expenditures and acquisitions, if any, and pay its income
taxes and dividends, if any. Rather, EBITDA is a potential indicator
of an entity's ability to fund these cash requirements. EBITDA also
is not a complete measure of an entity's profitability because it
does not include costs and expenses for depreciation and
amortization, interest and related expenses and income taxes.
Because not all companies use identical calculations, this
presentation of EBITDA may not be comparable to other similarly
titled measures of other companies. However, EBITDA can still be
useful in evaluating our performance against our peer companies
because management believes this measure provides users with
valuable insight into key components of GAAP amounts.