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 weeks ended June 28, 2008 (second quarter of 2008) and the
twenty-six weeks ended June 28, 2008 (first two quarters of 2008).
Financial Results for the Second Quarter of 2008
Net sales for the second quarter of 2008 increased 0.8% to $119.2
million from $118.2 million for the thirteen weeks ended June 30, 2007
(second quarter of 2007). The increase in net sales of $1.0 million was
due to an increase in unit volume.
Gross profit for the second quarter of 2008 decreased 10.1% to $33.6
million from $37.3 million in the second quarter of 2007. Gross profit
expressed as a percentage of net sales decreased 3.4% to 28.2% for the
second quarter of 2008 from 31.6% in the second quarter of 2007. The
decrease in gross profit expressed as a percentage of net sales was
primarily attributable to increased spending on trade promotions and
increased costs for wheat, maple syrup, corn, packaging, transportation
and sweeteners. Operating income decreased 13.7% to $18.6 million for
the second quarter of 2008 from $21.5 million in the second quarter of
2007.
Net income was $3.5 million for the second quarter of 2008 compared to
$3.7 million for the second quarter of 2007. Earnings per share of Class
A common stock was $0.10 for the second quarter of 2008. During the
second 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
second quarter of 2008 or the first two quarters of 2008 to the second
quarter of 2007 or the first two quarters of 2007. For the second
quarter of 2008, EBITDA (see “About Non-GAAP
Financial Measures” below) decreased 10.0% to
$22.4 million from $25.0 million for the second quarter of 2007.
David L. Wenner, Chief Executive Officer of B&G Foods, stated, “The
second quarter was a very challenging quarter for our company with cost
increasing, particularly in maple syrup, more quickly than we could
raise pricing to compensate. We believe that cost, while still higher,
will be more predictable in the second half of fiscal 2008 and that our
pricing actions will be better able to offset cost increases going
forward.”
Financial Results for the First Two Quarters of 2008
Net sales for the first two quarters of 2008 increased 6.1% to $235.5
million from $221.9 million in the comparable period of fiscal 2007.
Excluding the impact of the Cream of Wheat acquisition and the
termination of a temporary co-packing arrangement, net sales increased
$4.5 million or 2.0% due to increases in sales price and unit volume.
The Cream of Wheat acquisition, which was completed in late
February 2007, accounted for $9.9 million of the net sales increase
offset by a decrease in net sales of $0.8 million relating to the
termination of the temporary co-packing arrangement.
Gross profit for the first two quarters of 2008 decreased 2.2% to $68.5
million from $70.0 million in the comparable period of last year. Gross
profit expressed as a percentage of net sales decreased 2.4% to 29.1% in
the first two quarters of 2008 from 31.5% in the comparable period of
fiscal 2007. The decrease in gross profit expressed as a percentage of
net sales was primarily attributable to increased spending on trade
promotions and increased costs for wheat, maple syrup, corn, packaging,
transportation and sweeteners. Operating income decreased 4.9% to $38.3
million during the first two quarters of 2008, compared to $40.2 million
in the comparable period of fiscal 2007.
Net income was $7.9 million for the first two quarters of 2008 compared
to $7.8 million for the comparable period of fiscal 2007. For the first
two quarters of 2008, earnings per share of Class A common stock was
$0.22. For the first two quarters of 2008, EBITDA decreased 0.6% to
$45.8 million from $46.1 million for the first two quarters of 2007.
Conference Call
B&G Foods will hold a webcast and conference call at 4:30 p.m. ET today,
July 28, 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) 599-4858 or for international callers by dialing (913)
312-1432.
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 4445017. The replay will be
available from July 28, 2008 through August 4, 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 second quarter and first
two quarters of 2008 and the second quarter and first two quarters of
2007, along with the components of EBITDA.
About B&G Foods, Inc.
B&G Foods and its subsidiaries manufacture, sell and distribute a
diverse 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)
Assets
June 28, 2008
December 29, 2007
Current assets:
Cash and cash equivalents
$
24,086
$
36,606
Trade accounts receivable, net
37,569
42,362
Inventories
99,283
93,181
Prepaid expenses
2,894
3,556
Income tax receivable
301
569
Deferred income taxes
648
648
Total current assets
164,781
176,922
Property, plant and equipment, net of accumulated depreciation of
$59,954 and $55,679
54,369
49,658
Goodwill
253,353
253,353
Trademarks
227,220
227,220
Customer relationship intangibles, net
119,543
122,768
Net deferred debt issuance costs and other assets
15,670
17,669
Total assets
$
834,936
$
847,590
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable
$
27,817
$
32,126
Accrued expenses
16,363
21,894
Dividends payable
7,801
7,797
Total current liabilities
51,981
61,817
Long-term debt
535,800
535,800
Other liabilities
6,274
6,376
Deferred income taxes
73,205
68,962
Total liabilities
667,260
672,955
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; 36,796,988 and 36,778,988 shares issued and
outstanding as of June 28, 2008 and December 29, 2007
368
368
Class B common stock, $0.01 par value per share. Authorized
25,000,000 shares; no shares issued or outstanding
—
—
Additional paid-in capital
186,957
202,197
Accumulated other comprehensive loss
(3,376
)
(3,718
)
Accumulated deficit
(16,273
)
(24,212
)
Total stockholders’ equity
167,676
174,635
Total liabilities and stockholders’ equity
$
834,936
$
847,590
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended
Twenty-six Weeks Ended
June 28, 2008
June 30, 2007
June 28, 2008
June 30, 2007
Net sales
$
119,184
$
118,204
$
235,526
$
221,949
Cost of goods sold
85,626
80,881
167,038
151,943
Gross profit
33,558
37,323
68,488
70,006
Operating expenses:
Sales, marketing and distribution expenses
11,461
12,566
23,750
24,070
General and administrative expenses
1,882
1,598
3,240
3,428
Amortization expense—customer
relationships
1,612
1,613
3,225
2,276
Operating income
18,603
21,546
38,273
40,232
Other expenses:
Interest expense, net
12,908
15,529
25,479
27,654
Income before income tax expense
5,695
6,017
12,794
12,578
Income tax expense
2,165
2,280
4,855
4,767
Net income
$
3,530
$
3,737
7,939
7,811
Earnings per share calculations:
Basic and diluted distributed earnings per share:
Class A common stock
$
0.21
$
0.30
$
0.42
$
0.52
Basic and diluted earnings (loss) per share:
Class A common stock
$
0.10
$
0.17
$
0.22
$
0.38
Class B common stock
$
—
$
(0.13
)
$
—
$
(0.14
)
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
Twenty-six Weeks Ended
June 28, 2008
June 30, 2007
June 28, 2008
June 30, 2007
(Dollars in thousands)
Net income
$
3,530
$
3,737
$
7,939
$
7,811
Income tax expense
2,165
2,280
4,855
4,767
Interest expense, net
12,908
15,529
25,479
27,654
Depreciation and amortization
3,844
3,405
7,533
5,863
EBITDA
22,447
24,951
45,806
46,095
Income tax expense
(2,165
)
(2,280
)
(4,855
)
(4,767
)
Interest expense, net
(12,908
)
(15,529
)
(25,479
)
(27,654
)
Deferred income taxes
1,868
1,766
4,045
3,842
Amortization of deferred financing costs
792
832
1,584
1,605
Write off of deferred debt issuance costs
—
1,769
—
1,769
Stock-based compensation expense
358
—
358
—
Changes in assets and liabilities, net of effects of business
combination
(9,273
)
(4,496
)
(9,366
)
(9,060
)
Net cash provided by operating activities
$
1,119
$
7,013
$
12,093
$
11,830
(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.