B&G Foods Reports Second Quarter 2013 Financial Results

22 Jul 2013 --- B&G Foods, Inc. announced financial results for the second quarter and first two quarters of 2013.

Highlights (vs. year-ago quarter where applicable):
- Net sales increased 8.3% to $160.9 million
- Operating income increased 3.2% to $36.2 million
- Net loss was $1.4 million, after giving effect to $18.7 million of after-tax charges related to debt refinancing and acquisition-related transaction costs
- Adjusted net income* increased 8.0% to $17.3 million
- Loss per share was $0.03, after giving effect to $0.36 per share of after-tax charges related to debt refinancing and acquisition-related transaction costs
- Adjusted diluted earnings per share* remained consistent at $0.33
- Adjusted EBITDA increased 7.0% to $42.4 million
- Adjusted EBITDA guidance increased to a range of $187.0 million to $191.0 million for the full year based primarily on the recent Pirate Brands acquisition

Commenting on the results, David L. Wenner, President and Chief Executive Officer of B&G Foods, stated, “The second quarter was a very successful quarter for B&G Foods. In May we completed the acquisition of the TrueNorth brand and in June we entered into an agreement to buy Pirate Brands, a leader in the all-natural snack foods category. During the second quarter we also issued $700 million of senior notes at the very favorable interest rate of 4.625% and early in the third quarter increased our revolver capacity by $100.0 million. We used the proceeds from the refinancing to retire our 7.625% senior notes, repay our tranche B term loans and to fund the Pirate Brands acquisition, which closed early in the third quarter. We believe that by improving our debt profile, we are in a very strong position to continue to pursue accretive acquisitions.”

Mr. Wenner continued, “The quarter left our net sales volumes for our base business slightly positive for the first half of the year. We continue to grow the brands most important to us; Tier I brands were up for both the quarter and the first half. Declines in other areas centered primarily on weak second quarter foodservice sales and continued weakness in certain Northeast retail customers.”

Financial Results for the Second Quarter of 2013

Net sales for the second quarter of 2013 increased $12.3 million or 8.3% to $160.9 million from $148.6 million for the second quarter of 2012. Net sales of the New York Style and Old London brands, which B&G Foods acquired at the end of October 2012, contributed $10.9 million to the overall increase, and net sales of the TrueNorth brand, which B&G Foods acquired at the beginning of May 2013, contributed $3.2 million to the overall increase. Net sales for B&G Foods’ base business decreased $1.8 million, or 1.2%, attributable to net price decrease of $0.6 million and a unit volume decrease of $1.2 million.

Gross profit for the second quarter of 2013 increased 7.6% to $55.7 million from $51.8 million in the second quarter of 2012. Gross profit expressed as a percentage of net sales decreased 0.2 percentage points to 34.6% for the second quarter of 2013 from 34.8% in the second quarter of 2012. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to the effect of the New York Style and Old London acquisition and the TrueNorth acquisition and a net price decrease of $0.6 million, partially offset by a sales mix shift to higher margin products. Operating income increased 3.2% to $36.2 million for the second quarter of 2013, from $35.1 million in the second quarter of 2012.

Net interest expense for the second quarter of 2013 decreased $1.8 million or 15.4% to $10.0 million from $11.9 million for the second quarter of 2012. The decrease in net interest expense in the second quarter of 2013 was primarily attributable to the refinancing of the Company’s long-term debt, including the issuance of 4.625% senior notes, the repurchase of 7.625% senior notes, and the repayment of tranche B term loans.

As a result of $18.7 million of after tax charges relating to the refinancing and acquisition-related transaction costs, the Company reported a net loss under U.S. generally accepted accounting principles (GAAP) of $1.4 million, or $0.03 per share, for the second quarter of 2013. This compares to reported net income of $16.0 million, or $0.33 per diluted share, for the second quarter of 2012. The Company’s adjusted net income for the second quarter of 2013, which excludes the refinancing charges and acquisition-related transaction costs, was $17.3 million, or $0.33 per adjusted diluted share. There were no adjustments to net income for the second quarter of 2012.

For the second quarter of 2013, adjusted EBITDA, which excludes the impact of acquisition-related transaction costs, increased 7.0% to $42.4 million from $39.6 million for the second quarter of 2012. There were no adjustments to EBITDA for the second quarter of 2012.

Financial Results for the First Two Quarters of 2013

Net sales for the first two quarters of 2013 increased $26.1 million or 8.5% to $332.1 million from $306.0 million for the first two quarters of 2012. Net sales of the New York Style and Old London brands, which we acquired at the end of October 2012, contributed $22.2 million to the overall increase, and net sales of the TrueNorth brand, which we acquired at the beginning of May 2013, contributed $3.2 million to the overall increase. Net sales from the Company’s base business increased $0.7 million, or 0.2%, attributable to a unit volume increase of $1.2 million and a net price decrease of $0.5 million.

Gross profit for the first two quarters of 2013 increased 5.5% to $114.5 million from $108.6 million in the first two quarters of 2012. Gross profit expressed as a percentage of net sales decreased 1.0 percentage point to 34.5% in the first two quarters of 2013 from 35.5% in the first two quarters of 2012. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to the effect of the New York Style and Old London acquisition and the TrueNorth acquisition, a net price decrease of $0.5 million and a sales mix shift to lower margin products. Operating income increased 4.4% to $76.5 million in the first two quarters of 2013, from $73.3 million in the first two quarters of 2012.

Net interest expense for the first two quarters of 2013 decreased $4.0 million or 17.0% to $19.8 million from $23.9 million in the first two quarters of 2012. The decrease in net interest expense in the first two quarters of 2013 was primarily attributable to the refinancing of the Company’s long-term debt, including the issuance of 4.625% senior notes, the repurchase of 7.625% senior notes, and the repayment of tranche B term loans.

After taking into account $18.7 million of after tax charges relating to the refinancing and acquisition-related transaction costs, the Company’s reported net income under U.S. GAAP was $18.2 million, or $0.34 per diluted share, for the first two quarters of 2013, as compared to reported net income of $32.8 million, or $0.68 per diluted share, for the first two quarters of 2012. The Company’s adjusted net income for the first two quarters of 2013, which excludes the refinancing charges and acquisition-related transaction costs, was $36.9 million, and adjusted diluted earnings per share was $0.70. There were no adjustments to net income for the first two quarters of 2012.

For the first two quarters of 2013, adjusted EBITDA increased 7.1% to $88.0 million from $82.2 million for the first two quarters of 2012. There were no adjustments to EBITDA for the first two quarters of 2012.