B&G was positive about outlook for Q4 and for 2015

B&G was positive about outlook for Q4 and for 2015

US food group B&G Foods made a US$4m loss in the third quarter of 2014 as it booked impairment charges on Rickland Orchards, a snack bar business it bought last year.

The loss was included in a mixed set of results from B&G, which also cut its forecast for annual adjusted EBITDA.

For the three months to 27 September, B&G ran up a net loss of $4.4m, compared to income of $15.6m in the third quarter of 2013.

The company generated EBITDA of $11.2m, down sharply from the $43.6m it made a year earlier.

It booked an impairment charge of $34.2m after it wrote off inventory of raw materials and finished goods related to Rickland Orchards.

"The impairment and other charges related to last year's Rickland Orchards acquisition reflect obviously disappointing sales results in that brand, primarily in the warehouse club channel," president and CEO David Wenner said.

Group sales increased 15.2% to $209m, boosted by recent acquisitions, although B&G said there was a 1.4% rise in "base business" volumes.

B&G booked adjusted EBITDA of $49.5m for the quarter, up 7% on the year. However, it reduced its forecast for adjusted EBITDA by 1% to around $202-206m.

Wenner added: "We believe that B&G Foods' overall business is headed in the right direction in both volume and pricing going into the fourth quarter and fiscal 2015."

Show the press release
B&G Foods Reports Third Quarter 2014 Financial Results

— Company Updates Fiscal 2014 Guidance —

PARSIPPANY, N.J.--(BUSINESS WIRE)--Oct. 21, 2014-- B&G Foods, Inc. (NYSE:BGS) today announced financial results for the third quarter and first three quarters of 2014.

Highlights (vs. year-ago quarter where applicable):

  • Net sales increased 15.2% to $209.0 million
  • Base business net sales volume increased $2.4 million, or 1.4%
  • Base business net sales increased $1.0 million, or 0.6%
  • Net loss was $4.4 million due to significant non-cash impairment charges to intangible assets, a related loss on the disposal of inventory, and acquisition-related transaction costs
  • Adjusted net income* increased 9.5% to $20.5 million
  • Adjusted diluted earnings per share* increased 8.6% to $0.38
  • Adjusted EBITDA* increased 7.5% to $49.5 million
  • Due to further reduced net sales expectations for Rickland Orchards, the Company recognized non-cash impairment charges to intangible assets of $22.2 million, net of tax, and a $1.9 million loss, net of tax, on the related disposal of inventory, which are treated as items affecting comparability
  • The Company updated its guidance for fiscal year 2014:
    • Adjusted EBITDA guidance decreased approximately 1.0% to a range of $202.0 million to $206.0 million
    • Adjusted diluted earnings per share guidance remains at $1.54 to $1.60 for the full year

Commenting on the results, David L. Wenner, President and Chief Executive Officer of B&G Foods, stated, “We were very pleased with the performance of Pirate Brands during the third quarter. One of our largest and most important businesses, Pirate Brands experienced a 38.9% net sales gain for the quarter, primarily in warehouse clubs. We were equally encouraged by volume gains in our overall base business and a reduction in the rate of price declines to 26% of that seen in the first half of the year. The impairment and other charges related to last year’s Rickland Orchards acquisition reflect obviously disappointing sales results in that brand, primarily in the warehouse club channel. However, we believe that B&G Foods’ overall business is headed in the right direction in both volume and pricing going into the fourth quarter and fiscal 2015.”

____________________________________________________________

* Please see “About Non-GAAP Financial Measures and Items Affecting Comparability” below for the definition of the terms adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA, as well as information concerning certain items affecting comparability and reconciliations of the non-GAAP terms adjusted net income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA to the most comparable GAAP financial measures.

Financial Results for the Third Quarter of 2014

Net sales for the third quarter of 2014 increased $27.6 million or 15.2% to $209.0 million from $181.4 million for the third quarter of 2013. Net sales of Specialty Brands, acquired in April 2014, contributed $22.1 million to the overall increase and net sales of the Rickland Orchards brand, acquired in October 2013, contributed $4.5 millionto the overall increase. Net sales for B&G Foods’ base business increased $1.0 million, or 0.6%, attributable to a unit volume increase of $2.4 million, or 1.4%, partially offset by a net price decrease of $1.4 million, or 0.8%.

Gross profit for the third quarter of 2014 increased $1.8 million, or 2.9%, to $63.1 million from $61.3 million for the third quarter of 2013. Gross profit expressed as a percentage of net sales decreased to 30.2% for the third quarter of 2014 from 33.8% in the third quarter of 2013. The 3.6 percentage point decrease was to a large extent attributable to the write-off of certain raw material and finished goods inventory in connection with theRickland Orchards impairment, which reduced gross profit margin by approximately 1.4 percentage points. The remaining 2.2 percentage point decrease was attributable to a sales mix shift to lower margin products, an increase in distribution costs and the base business net price decrease described above, as well as the effect of the Canadian exchange rate, which reduced gross profit margin by approximately 0.9 percentage points, 0.7 percentage points and 0.6 percentage points, respectively.

Selling, general and administrative expenses decreased $0.1 million, or 0.5%, to $21.2 million for the third quarter of 2014 from $21.3 million for the third quarter of 2013. This decrease was due to decreases in acquisition-related transaction costs of $1.3 million, consumer marketing of $0.2 million and other expenses of$0.4 million, offset by increases in selling expenses of $1.1 million (including an increase of $0.9 million for brokerage expenses) and warehousing expenses of $0.7 million. Expressed as a percentage of net sales, selling, general and administrative expenses decreased 1.6 percentage points to 10.1% for the third quarter of 2014 from 11.7% for the third quarter of 2013.

Net interest expense for the third quarter of 2014 increased $0.5 million or 4.4% to $11.6 million from $11.1 million for the third quarter of 2013. The increase was primarily attributable to an increase in the Company’s average debt outstanding due to the Company’s recent acquisitions.

The Company’s reported net loss under U.S. generally accepted accounting principles (GAAP) was $4.4 million, or $0.08 per share, for the third quarter of 2014, as compared to net income of $15.4 million, or $0.29 per diluted share, for the third quarter of 2013. The Company’s adjusted net income for the third quarter of 2014, which excludes the after tax impact of acquisition-related transaction costs, the non-cash impairment charges toRickland Orchards intangible assets and the related loss on disposal of inventory, was $20.5 million, or $0.38 per adjusted diluted share. The Company’s adjusted net income for the third quarter of 2013, which excludes the after tax impact of refinancing charges and acquisition-related transaction costs, was $18.7 million, or $0.35 per adjusted diluted share.

For the third quarter of 2014, adjusted EBITDA, which excludes the impact of acquisition-related transaction costs, the non-cash impairment charges and the related loss on disposal of inventory, increased 7.5% to $49.5 million from $46.0 million for the third quarter of 2013.

Financial Results for the First Three Quarters of 2014

Net sales for the first three quarters of 2014 increased $96.6 million or 18.8% to $610.0 million from $513.4 million for the first three quarters of 2013. An additional six months of net sales of Pirate Brands, which B&G Foods acquired in July 2013, contributed $40.7 million to the overall increase, net sales of Specialty Brands, acquired in April 2014, contributed $33.5 million to the overall increase, net sales of the Rickland Orchardsbrand, acquired in October 2013, contributed $20.3 million to the overall increase and an additional four months of net sales of the TrueNorth brand, acquired in May 2013, contributed $7.2 million to the overall increase. Net sales for the Company’s base business decreased $5.1 million, or 1.0%, attributable to a net price decrease of$6.8 million, or 1.3%, partially offset by a unit volume increase of $1.7 million, or 0.3%.

Gross profit for the first three quarters of 2014 increased $15.0 million, or 8.5%, to $190.8 million from $175.8 million for the first three quarters of 2013. Gross profit expressed as a percentage of net sales decreased to 31.3% in the first three quarters of 2014 from 34.2% in the first three quarters of 2013. The 2.9 percentage point decrease was primarily attributable to the base business net price decrease described above as well as the effect of the Canadian exchange rate, a sales mix shift to lower margin products, an increase in distribution costs and the write-off of inventory in connection with the Rickland Orchards impairment, which reduced gross profit margin by approximately 0.9 percentage points, 0.8 percentage points, 0.7 percentage points and 0.5 percentage points, respectively.

Selling, general and administrative expenses increased $14.0 million, or 25.4%, to $69.1 million for the first three quarters of 2014 from $55.1 million for the first three quarters of 2013. This increase was primarily due to increases in consumer marketing of $5.0 million, selling expenses of $4.5 million (including increases of $2.8 million for brokerage expenses and $0.8 million for salesperson compensation), acquisition-related transaction costs of $3.6 million, warehousing expenses of $1.8 million and other expenses of $0.1 million, offset by a decrease in compensation expenses of $1.0 million. Expressed as a percentage of net sales, our selling, general and administrative expenses increased 0.6 percentage points to 11.3% for the first three quarters of 2014 from 10.7% for the first three quarters of 2013.

Net interest expense for the first three quarters of 2014 increased $3.6 million or 11.8% to $34.5 million from$30.9 million for the first three quarters of 2013. The increase was primarily attributable to the increase in the Company’s average debt outstanding attributable to the Company’s recent acquisitions.

The Company’s reported net income under GAAP was $29.5 million, or $0.55 per diluted share, for the first three quarters of 2014, as compared to $33.6 million, or $0.63 per diluted share, for the first three quarters of 2013. The Company’s adjusted net income for the first three quarters of 2014, which excludes the after tax impact of refinancing charges, acquisition-related transaction costs, the non-cash impairment charges to Rickland Orchardsintangible assets and the related loss on disposal of inventory, and a non-cash gain relating to the Rickland Orchards earn-out, was $56.3 million, or $1.05 per adjusted diluted share. The Company’s adjusted net income for the first three quarters of 2013, which excludes the after tax impact of refinancing charges and acquisition-related transaction costs, was $55.7 million, and adjusted diluted earnings per share was $1.05.

For the first three quarters of 2014, adjusted EBITDA, which excludes the impact of acquisition-related transaction costs, the non-cash impairment charges and the related loss on disposal of inventory, and the non-cash gain relating to the earn-out, increased 6.0% to $142.0 million from $134.0 million for the first three quarters of 2013.

Guidance

B&G Foods decreased its adjusted EBITDA guidance for fiscal 2014 by approximately 1.0% to a range of $202.0 million to $206.0 million. However, B&G Foods reaffirmed its adjusted diluted earnings per share guidance for fiscal 2014 at a range of $1.54 to $1.60.

Conference Call

B&G Foods will hold a conference call at 4:30 p.m. ET today, October 21, 2014. The call will be webcast live from B&G Foods’ website at www.bgfoods.com under “Investor Relations—Company Overview.” The call can also be accessed live over the phone by dialing (800) 263-8506 for U.S. callers or (719) 325-2133 for international callers.

A replay of the call will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the password is 5000512. The replay will be available from October 21, 2014 through November 4, 2014. Investors may also access a web-based replay of the call at the Investor Relations section of B&G Foods’ website, www.bgfoods.com.

About Non-GAAP Financial Measures and Items Affecting Comparability

“Adjusted net income,” “adjusted diluted earnings per share,” “EBITDA” (net income (loss) before net interest expense, income taxes, depreciation and amortization and loss on extinguishment of debt) and “adjusted EBITDA” (EBITDA as adjusted for cash and non-cash acquisition-related expenses, gains and losses (which may include third party fees and expenses, integration, restructuring and consolidation expenses), intangible asset impairment charges and related asset write-offs, and gains or losses related to changes in the fair value of contingent liabilities from earn-outs) are “non-GAAP financial measures.” A non-GAAP financial measure is a numerical measure of financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in B&G Foods’ consolidated balance sheets and related consolidated statements of operations, comprehensive income, 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 “adjusted net income” and “adjusted diluted earnings per share,” which are calculated as reported net income (loss) and reported diluted earnings (loss) per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to reported net income (loss) and diluted earnings (loss) per share to eliminate the items identified below. 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 acquisition-related transaction costs, intangible asset impairment charges and related asset write-offs, non-cash gains or losses on contingent earn-out consideration and gains or losses on extinguishment of debt, management does not consider these costs 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 (loss) and to net cash provided by operating activities is included below for the third quarter and first three quarters of 2014 and 2013, along with the components of EBITDA and adjusted EBITDA. Also included below are reconciliations of the non-GAAP terms adjusted net income and adjusted diluted earnings per share to reported net income (loss) and reported diluted earnings (loss) per share.

About B&G Foods, Inc.

B&G Foods and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, branded shelf-stable foods across the United States, Canada and Puerto Rico. Based in Parsippany, New Jersey, B&G Foods’ products are marketed under many recognized brands, including Ac’centB&GB&MBaker’s Joy,Bear Creek Country Kitchens, Brer RabbitCanoleo, Cary’s, Cream of RiceCream of WheatDevonsheerDon PepinoEmeril’sGrandma’s MolassesJJ FlatsJoan of ArcLas PalmasMacDonald’s, Maple Grove FarmsMolly McButterMrs. DashNew York Flatbreads, New York StyleOld LondonOriginal Tings, OrtegaPirate’s Booty,PolanerRed DevilReginaRickland Orchards, Sa-sónSclafaniSmart Puffs, Spring Tree, Sugar Twin,Trappey’sTrueNorthUnderwoodVermont Maid and Wright’s. B&G Foods also sells and distributes two branded household products, Static Guard and Kleen Guard.

Original source: B&G Foods