US: B&G Foods profits up but share stumble

By Dean Best | 13 February 2014

B&G Foods, the US food group behind brands including Molly McButter cheese and sprinkles TrueNorth snacks, saw its shares tumble today (13 February) despite higher profits.

The company booked fourth-quarter net income of US$18.8m for the three months to 28 December, compared to $9.6m a year earlier.

B&G's bottom line was boosted by lapping a fourth quarter of 2012 that included losses on the extinguishment of debt.

Adjusted earnings for the quarter, which stripped out the impact of the debt charge and M&A costs, were $20.7m, or $0.39 per share.

However, a poll of analysts by Thomson Reuters showed Wall Street forecast adjusted earnings of $0.44.

A jump in sales helped push up B&G's operating income in the fourth quarter. Operating income was $39.9m, up from $37.4m a year ago.

Net sales increased 21.8% to $211.5m, boosted by the company's recent acquisitions.

President and CEO David Wenner said 2013 had been "an exciting and dynamic year for our company".

He said: "We completed three strategic acquisitions during the year and once again set company records in net sales, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA. Despite industry wide volume weakness, our base business remained relatively stable, with net sales declining less than 1% for the year, while acquisitions brought overall net sales growth for the year to a 14.4% increase."

Shares in B&G were down 6.71% at $28.63 at 10:11 ET today.

Show the press release
B&G Foods Reports Financial Results for Fourth Quarter and Full-Year 2013

PARSIPPANY, N.J.--(BUSINESS WIRE)--Feb. 12, 2014-- B&G Foods, Inc. (NYSE:BGS) today announced financial results for the fourth quarter and full-year 2013.

Highlights (vs. prior year quarter and full year where applicable):

  • Net sales increased 21.8% to $211.5 million for the quarter and 14.4% to $725.0 million for the year
  • Net income increased 96.6% to $18.8 million for the quarter due in part to a loss on extinguishment of debt experienced in the prior year quarter
  • Net income decreased 11.7% to $52.3 million for the year primarily due to 2013 loss on extinguishment of debt and acquisition related transaction costs of $23.9 million, net of tax
  • Adjusted net income1 increased 21.8% to $20.7 million for the quarter and 14.3% to $76.3 million for the year
  • Diluted earnings per share increased 94.4% to $0.35 for the quarter and decreased 18.3% to $0.98 for the year
  • Adjusted diluted earnings per share* increased 21.9% to $0.39 for the quarter and 5.9% to $1.43 for the year
  • Adjusted EBITDA* increased 13.7% to $50.0 million for the quarter and 8.9% to $184.0 million for the year
  • The Company expects to deliver 2014 adjusted EBITDA of $198.0 million to $203.0 million

David L. Wenner, President and Chief Executive Officer of B&G Foods, stated, “2013 was an exciting and dynamic year for our Company. We completed three strategic acquisitions during the year and once again set Company records in net sales, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA. Despite industry wide volume weakness, our base business remained relatively stable, with net sales declining less than one percent for the year, while acquisitions brought overall net sales growth for the year to a 14.4% increase.”

________________________________

* 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 Fourth Quarter of 2013

Net sales for the fourth quarter of 2013 increased 21.8% to $211.5 million from $173.7 million for the fourth quarter of 2012. Net sales of Pirate Brands, which B&G Foods acquired in July 2013, contributed $16.0 million to the overall increase, net sales of the Rickland Orchards brand, acquired in October 2013, contributed $12.9 million to the overall increase, net sales of the TrueNorth brand, acquired in May 2013, contributed $4.5 millionto the overall increase and October 2013 net sales of the New York Style and Old London brands, acquired at the end of October 2012, contributed $2.9 million to the overall increase. Net sales for B&G Foods’ base business increased $1.5 million, or 0.9%, attributable to a unit volume increase of $4.3 million offset by a net price decrease of $2.8 million.

Gross profit for the fourth quarter of 2013 increased 12.9% to $67.1 million from $59.5 million in the fourth quarter of 2012. Gross profit expressed as a percentage of net sales decreased 2.5 percentage points to 31.7% for the fourth quarter of 2013 from 34.2% in the fourth quarter of 2012, primarily attributable to a net price decrease of $2.8 million, a sales mix shift to lower margin products and an increase in distribution costs. Operating income increased 6.7% to $39.9 million for the fourth quarter of 2013, from $37.4 million in the fourth quarter of 2012.

Selling, general and administrative expenses increased $3.9 million, or 19.7%, to $23.9 million for the fourth quarter of 2013 from $20.0 million for the fourth quarter of 2012. This increase was primarily due to increases in consumer marketing of $1.5 million, selling expenses of $1.2 million (including increases of $0.7 million for salesperson compensation and $0.4 million for brokerage expenses), acquisition-related transaction costs of $1.8 million and warehousing expenses of $1.1 million, partially offset by a $1.5 million gain relating to a legal settlement and a decrease in all other expenses of $0.2 million.

Net interest expense for the fourth quarter of 2013 decreased $0.9 million or 7.6% to $10.9 million from $11.8 million for the fourth quarter of 2012. The decrease in net interest expense in the fourth quarter of 2013 was primarily attributable to the refinancing of the Company’s long-term debt during the second quarter of 2013, including the issuance of 4.625% senior notes, the repurchase of 7.625% senior notes, and the repayment of tranche B term loans.

The Company’s reported net income under U.S. generally accepted accounting principles (GAAP) was $18.8 million, or $0.35 per diluted share, for the fourth quarter of 2013, as compared to reported net income of $9.6 million, or $0.18 per diluted share, for the fourth quarter of 2012. The Company’s adjusted net income for the fourth quarter of 2013, which excludes the after tax impact of acquisition-related transaction costs, was $20.7 million, or $0.39 per adjusted diluted share. The Company’s adjusted net income for the fourth quarter of 2012, which excludes the after tax impact of loss on extinguishment of debt and acquisition-related transaction costs, was $17.0 million, or $0.32 per adjusted diluted share.

For the fourth quarter of 2013, adjusted EBITDA, which excludes the impact of acquisition-related transaction costs, increased 13.7% to $50.0 million from $44.0 million for the fourth quarter of 2012.

Financial Results for Full-Year 2013

Net sales for fiscal 2013 increased 14.4% to $725.0 million from $633.8 million for fiscal 2012. An additional ten months of net sales of the New York Style and Old London brands contributed $36.5 million to the overall increase, net sales of Pirate Brands, contributed $32.6 million to the overall increase, net sales of the TrueNorthbrand contributed $13.0 million to the overall increase and net sales of the Rickland Orchards brand contributed$12.9 million to the overall increase. Net sales for the Company’s base business decreased $3.8 million, or 0.6%, attributable to a net price decrease of $6.7 million partially offset by a unit volume increase of $2.9 million.

Gross profit for fiscal 2013 increased 8.8% to $242.9 million from $223.3 million in fiscal 2012. Gross profit expressed as a percentage of net sales decreased 1.7 percentage points to 33.5% for fiscal 2013 from 35.2% in fiscal 2012. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to a net price decrease of $6.7 million, a sales mix shift to lower margin products and an increase in distribution costs. Operating income increased 3.3% to $154.0 million for fiscal 2013, from $149.0 million in fiscal 2012.

Selling, general and administrative expenses increased $12.8 million, or 19.4%, to $79.0 million in fiscal 2013 from $66.2 million in fiscal 2012. The increase is primarily due to increases in consumer marketing of $4.3 million, selling expenses of $3.5 million (including increases of $1.9 million for salesperson compensation and$1.2 million for brokerage expenses), acquisition-related transaction costs of $4.8 million and warehousing expenses of $1.9 million, partially offset by a $1.5 million gain relating to a legal settlement and a decrease in all other expenses of $0.2 million.

Net interest expense for fiscal 2013 decreased $5.9 million or 12.3% to $41.8 million from $47.7 million in fiscal 2012. The decrease in net interest expense in fiscal 2013 was primarily attributable to the refinancing of the Company’s long-term debt during the second quarter of 2013.

After taking into account $23.9 million of after tax charges relating to loss on extinguishment of debt and acquisition-related transaction costs, the Company’s reported net income under U.S. GAAP was $52.3 million, or$0.98 per diluted share, for fiscal 2013, as compared to reported net income of $59.3 million, or $1.20 per diluted share, for fiscal 2012. The Company’s adjusted net income for fiscal 2013, which excludes the after tax impact of loss on extinguishment of debt and acquisition-related transaction costs, was $76.3 million, and adjusted diluted earnings per share was $1.43. The Company’s adjusted net income for fiscal 2012, which excludes the after tax impact of loss on extinguishment of debt and acquisition-related transaction costs, was$66.7 million, and adjusted diluted earnings per share was $1.35.

Adjusted EBITDA, which excludes acquisition-related transaction costs, increased 8.9% to $184.0 million in fiscal 2013 from $169.0 million for fiscal 2012.

Guidance

Adjusted EBITDA for fiscal 2014 is expected to be approximately $198.0 million to $203.0 million. Capital expenditures for fiscal 2014 are expected to increase to approximately $20.0 million as the result of the planned installation of additional production lines in the Company’s Yadkinville, North Carolina facility to improve efficiency and manufacturing capacity. Cash interest expense for fiscal 2014 is expected to be approximately$38.5 million.

Conference Call

B&G Foods will hold a conference call at 4:30 p.m. ET today, February 12, 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 (888) 471-3840 for U.S. callers or (719) 325-2161 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 7113672. The replay will be available from February 12, 2014 through February 26, 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.

Original source: B&G Foods

Sectors: Canned food, Condiments, dressings & sauces, Dairy, Dried foods, Financials, Snacks, World foods

Companies: B&G Foods

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