B&G Foods, Inc. (NYSE: BGS) today announced financial
results for the third quarter and first three quarters of 2023.
Summary
Third Quarter of 2023
First Three Quarters of
2023
(In millions, except per share
data)
Change vs.
Change vs.
Amount
Q3 2022
Amount
First 3Q 2022
Net Sales
$
502.7
(4.9
)%
$
1,484.2
(3.6
)%
Base Business Net Sales 1
$
502.7
(3.0
)%
$
1,483.7
(1.4
)%
Diluted EPS
$
(1.11
)
(33.7
)%
$
(0.94
)
(84.3
)%
Adj. Diluted EPS 1
$
0.27
(12.9
)%
$
0.69
3.0
%
Net Loss
$
(82.7
)
(38.9
)%
$
(68.8
)
(92.8
)%
Adj. Net Income 1
$
20.5
(8.0
)%
$
50.3
6.4
%
Adj. EBITDA 1
$
80.4
0.2
%
$
231.2
11.5
%
Debt Refinancing and Equity Issuance Summary
- During the third quarter of 2023:
- Issued and sold 6,332,846 shares of common stock under the
Company’s ATM equity offering program for an average price per
share of $11.90, or gross proceeds of $75.3 million.
- Repurchased $20.2 million aggregate principal amount of 5.25%
senior notes due 2025 in open market purchases at an average
discounted repurchase price of 96.92% plus accrued and unpaid
interest. As of the end of the third quarter, $855.4 million
aggregate principal amount of the 5.25% senior notes due 2025
remained outstanding.
- Completed an offering of $550.0 million aggregate principal
amount of 8.00% senior secured notes due 2028 at a price of
99.502%.
- During the first month of the fourth quarter of 2023:
- Completed the redemption of $555.4 million aggregate principal
amount of 5.25% senior notes due 2025. As of November 8, 2023,
$300.0 million aggregate principal amount of the 5.25% senior notes
due 2025 remain outstanding.
Sale of the Green Giant U.S. Shelf-Stable Product
Line
- As announced in a separate press release issued today, the
Company has sold its Green Giant U.S. shelf‑stable product line to
Seneca Foods Corporation, effective today. The sale does not
include Green Giant frozen, Green Giant Canada or the Le Sueur
brand. See “Sale of Green Giant U.S. Shelf-Stable Product Line”
below.
- In connection with the sale, the Company recorded pre-tax,
non-cash charges of $132.9 million during the third quarter of
2023. See “Impairment of Assets Held for Sale” below.
Guidance for Full Year Fiscal 2023
- Net sales revised to a range of $2.05 billion to $2.07
billion.
- Adjusted EBITDA reaffirmed at a range of $310 million to $330
million.
- Adjusted diluted earnings per share revised to a range of $0.93
to $1.13.
Commenting on the results, Casey Keller, President and Chief
Executive Officer of B&G Foods, stated, “Our third quarter
results continued strong margin recovery, with adjusted EBITDA as a
percentage of net sales increasing 80 basis points versus last year
to 16.0%. Overall, we remain on track to deliver adjusted EBITDA
within our previously issued guidance range of $310 to $330
million,” stated Casey Keller, President and Chief Executive
Officer of B&G Foods. “Further, we announced today the
divestiture and sale of our Green Giant U.S. canned vegetable
product line to Seneca Foods, a critical step in our continuing
efforts to reshape the B&G Foods portfolio for future focus and
valuation growth.”
Financial Results for the Third Quarter of 2023
Net sales for the third quarter of 2023 decreased $25.7 million,
or 4.9%, to $502.7 million from $528.4 million for the third
quarter of 2022. The decrease was primarily attributable to a
decrease in unit volume and the Back to Nature divestiture. Net
sales of Back to Nature, which the Company divested on January 3,
2023, and therefore not part of the Company’s fiscal 2023 results,
were $10.2 million during the third quarter of 20222.
Base business net sales for the third quarter of 2023 decreased
$15.6 million, or 3.0%, to $502.7 million from $518.3 million for
the third quarter of 2022. The decrease in base business net sales
was driven by a decrease in unit volume of $13.2 million, the
negative impact of foreign currency of $1.3 million, and a decrease
in net pricing and the impact of product mix of $1.1 million, or
0.2% of base business net sales.
Net sales of Clabber Girl increased $8.1 million, or 31.5%; net
sales of the Company’s spices & seasonings3 increased $5.3
million, or 6.1%; and net sales of Maple Grove Farms increased $0.5
million, or 2.4%. Net sales of Crisco decreased $16.1 million, or
16.4%; net sales of Green Giant (including Le Sueur) decreased
$13.2 million, or 10.7%; net sales of Ortega decreased $1.7
million, or 4.3%; and net sales of Cream of Wheat decreased $0.6
million, or 3.5%, for the third quarter of 2023, as compared to the
third quarter of 2022. Base business net sales of all other brands
in the aggregate increased $2.1 million, or 2.2%, for the third
quarter of 2023, as compared to the third quarter of 2022.
Gross profit was $113.8 million for the third quarter of 2023,
or 22.6% of net sales. Excluding the negative impact of $0.3
million of acquisition/divestiture-related expenses and
non-recurring expenses included in cost of goods sold during the
third quarter of 2023, the Company’s gross profit would have been
$114.1 million, or 22.7% of net sales. Gross profit was $105.8
million for the third quarter of 2022, or 20.0% of net sales.
Excluding the negative impact of $2.2 million of
acquisition/divestiture-related expenses and non-recurring expenses
included in cost of goods sold during the third quarter of 2022,
the Company’s gross profit would have been $108.0 million, or 20.4%
of net sales.
The improvements in gross profit and gross profit as a
percentage of net sales were driven by an increase in net pricing
relative to input costs as compared to the third quarter of 2022,
the moderation of input cost inflation and lower transportation and
warehousing costs. Beginning in the fourth quarter of 2022, the
Company has realized the benefits of previously announced list
price increases, which has contributed to the Company’s recovery in
gross profit and gross profit as a percentage of net sales through
the third quarter of 2023.
Selling, general and administrative expenses increased $0.7
million, or 1.4%, to $48.2 million for the third quarter of 2023
from $47.5 million for the third quarter of 2022. The increase was
composed of increases in general and administrative expenses of
$3.2 million and consumer marketing expenses of $0.3 million,
partially offset by decreases in warehousing expenses of $1.3
million, acquisition/divestiture-related and non-recurring expenses
of $1.2 million and selling expenses of $0.3 million. Expressed as
a percentage of net sales, selling, general and administrative
expenses increased by 0.6 percentage points to 9.6% for the third
quarter of 2023, as compared to 9.0% for the third quarter of
2022.
In connection with the Company’s sale of assets relating to the
Green Giant U.S. shelf-stable product line during the fourth
quarter of 2023, the Company recorded pre-tax, non-cash charges of
$132.9 million during the third quarter of 2023. See “Impairment of
Assets Held for Sale” below.
Net interest expense increased $4.0 million, or 12.5%, to $35.9
million for the third quarter of 2023 from $31.9 million for the
third quarter of 2022. The increase was primarily attributable to
higher interest rates on the Company’s variable rate borrowings,
partially offset by a reduction in average long‑term debt
outstanding as compared to the third quarter of 2022 and the $0.6
million gain on extinguishment of debt described below.
The Company’s net loss was $82.7 million, or $1.11 per diluted
share, for the third quarter of 2023, compared to a net loss of
$59.6 million, or $0.83 per diluted share, for the third quarter of
2022. The Company’s net loss for the third quarter of 2023 was
primarily attributable to the non-cash charges for the impairment
of assets held for sale discussed below under “Impairment of Assets
Held for Sale.” The Company’s net loss for the third quarter of
2022 was primarily attributable to the non-cash charges for the
impairment of assets held for sale in connection with the Back to
Nature divestiture. The Company’s adjusted net income for the third
quarter of 2023 was $20.5 million, or $0.27 per adjusted diluted
share, compared to adjusted net income of $22.3 million, or $0.31
per adjusted diluted share, for the third quarter of 2022.
For the third quarter of 2023, adjusted EBITDA was $80.4
million, an increase of $0.2 million, or 0.2%, compared to $80.2
million for the third quarter of 2022. The increase in adjusted
EBITDA was primarily attributable to the improvement in gross
profit described above. Adjusted EBITDA as a percentage of net
sales was 16.0% for the third quarter of 2023, compared to 15.2%
for the third quarter of 2022.
Financial Results for the First Three Quarters of
2023
Net sales for the first three quarters of 2023 decreased $55.6
million, or 3.6%, to $1,484.2 million from $1,539.8 million for the
first three quarters of 2022. The decrease was primarily
attributable to the Back to Nature divestiture and a decrease in
unit volume and the negative impact of foreign currency, which were
largely offset by an increase in net pricing and the impact of
product mix. Net sales of Back to Nature, which the Company
divested on January 3, 2023, and therefore not part of the
Company’s fiscal 2023 results, were $34.4 million during the first
three quarters of 20222.
Base business net sales for the first three quarters of 2023
decreased $21.4 million, or 1.4%, to $1,483.7 million from $1,505.1
million for the first three quarters of 2022. The decrease in base
business net sales was driven by a decrease in unit volume of
$132.8 million and the negative impact of foreign currency of $4.8
million, largely offset by an increase in net pricing and the
impact of product mix of $116.2 million, or 7.7% of base business
net sales.
Net sales of Clabber Girl increased $23.0 million, or 34.8%; net
sales of the Company’s spices & seasonings3 increased $7.3
million, or 2.7%; and net sales of Maple Grove Farms increased $1.7
million, or 2.7%, in the first three quarters of 2023 as compared
to the first three quarters of 2022. Net sales of Green Giant
(including Le Sueur) decreased $28.1 million, or 7.6%; net sales of
Crisco decreased $27.6 million, or 11.1%; net sales of Ortega
decreased $5.9 million, or 5.1%; and net sales of Cream of Wheat
decreased $0.7 million, or 1.2%, in the first three quarters of
2023, as compared to the first three quarters of 2022. Base
business net sales of all other brands in the aggregate increased
$8.9 million, or 2.9%, for the first three quarters of 2023, as
compared to the first three quarters of 2022.
Gross profit was $330.4 million for the first three quarters of
2023, or 22.3% of net sales. Excluding the negative impact of $1.4
million of acquisition/divestiture-related expenses and
non-recurring expenses included in cost of goods sold during the
first three quarters of 2023, the Company’s gross profit would have
been $331.8 million, or 22.3% of net sales. Gross profit was $283.5
million for the first three quarters of 2022, or 18.4% of net
sales. Excluding the negative impact of $6.6 million of
acquisition/divestiture-related expenses and non-recurring expenses
included in cost of goods sold during the first three quarters of
2022, the Company’s gross profit would have been $290.1 million, or
18.8% of net sales.
The improvements in gross profit and gross profit as a
percentage of net sales were driven by an increase in net pricing
relative to input costs as compared to the first three quarters of
2022, the moderation of input cost inflation and lower
transportation and warehousing costs. Beginning in the fourth
quarter of 2022, the Company has realized the benefits of
previously announced list price increases, which has contributed to
the Company’s recovery in gross profit and gross profit as a
percentage of net sales through the third quarter of 2023.
Selling, general and administrative expenses increased $4.2
million, or 3.1%, to $142.8 million for the first three quarters of
2023 from $138.6 million for the first three quarters of 2022. The
increase was composed of increases in general and administrative
expenses of $8.3 million and consumer marketing expenses of $2.1
million, partially offset by decreases in warehousing expenses of
$2.8 million, acquisition/divestiture-related and non-recurring
expenses of $2.6 million and selling expenses of $0.8 million.
Expressed as a percentage of net sales, selling, general and
administrative expenses increased by 0.6 percentage points to 9.6%
for the first three quarters of 2023, as compared to 9.0% for the
first three quarters of 2022.
In connection with the Company’s sale of assets relating to the
Green Giant U.S. shelf-stable product line during the fourth
quarter of 2023, the Company recorded pre-tax, non-cash charges of
$132.9 million during the third quarter of 2023. See “Impairment of
Assets Held for Sale” below.
Net interest expense increased $22.5 million, or 25.4%, to
$111.1 million for the first three quarters of 2023 from $88.6
million for the first three quarters of 2022. The increase was
primarily attributable to higher interest rates on the Company’s
variable rate borrowings, as well as the accelerated amortization
of deferred debt financing costs relating to long-term debt
prepayments, partially offset by a reduction in average long-term
debt outstanding, a $0.8 million gain on extinguishment of debt
during the second quarter of 2023 and the $0.6 million gain on
extinguishment of debt during the third quarter of 2023 described
below.
The Company’s net loss was $68.8 million, or $0.94 per diluted
share, for the first three quarters of 2023, compared to a net loss
of $35.7 million, or $0.51 per diluted share, for the first three
quarters of 2022. The Company’s net loss for the first three
quarters of 2023 was primarily attributable to the non-cash charges
for the impairment of assets held for sale discussed below under
“Impairment of Assets Held for Sale” and the net negative impact on
income taxes of $14.7 million, or $0.21 per share, resulting from
the Back to Nature divestiture. The Company’s net loss for the
first three quarters of 2022 was primarily attributable to non-cash
charges for the impairment of assets held for sale in connection
with the Back to Nature divestiture. The Company’s adjusted net
income for the first three quarters of 2023 was $50.3 million, or
$0.69 per adjusted diluted share, compared to adjusted net income
of $47.3 million, or $0.67 per adjusted diluted share, for the
first three quarters of 2022.
For the first three quarters of 2023, adjusted EBITDA was $231.2
million, an increase of $23.9 million, or 11.5%, compared to $207.3
million for the first three quarters of 2022. The increase in
adjusted EBITDA was primarily attributable to the improvement in
gross profit described above. Adjusted EBITDA as a percentage of
net sales was 15.6% for the first three quarters of 2023, compared
to 13.5% for the first three quarters of 2022.
Sale of Green Giant U.S. Shelf-Stable Product Line
As announced in a separate press release issued today, the
Company has sold assets relating to the Green Giant U.S.
shelf-stable product line to Seneca Foods Corporation, effective
today. In connection with the sale, the Company, which will retain
ownership of the Green Giant trademarks, will license the Green
Giant brand name to Seneca Foods. The sale does not include Green
Giant frozen, Green Giant Canada or the Le Sueur brand. The Company
intends to use the net proceeds from the sale for the repayment of
long-term debt. The terms of the transaction were not
disclosed.
Impairment of Assets Held for Sale
In connection with the sale of assets relating to the Company’s
Green Giant U.S. shelf-stable product line, the Company
reclassified $115.3 million of indefinite-lived trademark
intangible assets, $82.3 million of inventories and $4.1 million of
finite-lived customer relationship intangible assets to assets held
for sale as of the end of the third quarter of 2023. The Company
then measured the assets held for sale at the lower of their
carrying value or fair value less the estimated costs to sell, and
recorded pre-tax, non-cash impairment charges of $132.9 million
during the third quarter of 2023.
Debt and Equity Refinancing
At-The-Market (ATM) Equity Offering Program. During the third
quarter of 2023, the Company sold 6,332,846 shares of its common
stock under its ATM equity offering program. For the quarter, the
Company generated $75.3 million in gross proceeds, or $11.90 per
share, from the sales and paid commissions to the sales agents of
approximately $1.5 million and incurred other fees and expenses of
less than $0.1 million. The net proceeds of the ATM sales were used
as described below. As of November 8, 2023, 3,667,154 shares of the
Company’s common stock remain authorized and available for issuance
and sale of the ATM equity offering program.
Senior Note Repurchases. During the third quarter of 2023, the
Company repurchased $20.2 million aggregate principal amount of its
5.25% senior notes due 2025 in open market purchases at an average
discounted repurchase price of 96.92% of such principal amount plus
accrued and unpaid interest, which resulted in a pre-tax gain in
the third quarter of 2023 of $0.6 million, net of the accelerated
amortization of deferred debt financing costs of $0.1 million. As
of September 30, 2023, $855.4 million aggregate principal amount of
the 5.25% senior notes due 2025 remained outstanding.
Offering of Senior Secured Notes; Partial Redemption of Senior
Notes. On September 26, 2023, the Company completed a private
offering of $550.0 million aggregate principal amount of 8.00%
senior secured notes due 2028 in a transaction exempt from
registration under the Securities Act of 1933, as amended. The
senior secured notes were issued at a price of 99.502%. The Company
used the proceeds of the senior secured notes offering, together
with a portion of the proceeds of the ATM equity offering program
sales described above, and cash on hand to redeem $555.4 million
aggregate principal amount of the Company’s 5.25% senior notes due
2025 on October 12, 2023 (the fourth quarter of 2023), and pay
related fees and expenses. Following the partial redemption of the
5.25% senior notes due 2025, $300.0 million aggregate principal
amount of the 5.25% senior notes due 2025 remain outstanding.
Full Year Fiscal 2023 Guidance
B&G Foods revised its net sales guidance for fiscal 2023 to
a range of $2.05 billion to $2.07 billion, reaffirmed its adjusted
EBITDA guidance at a range of $310 million to $330 million, and
revised its adjusted diluted earnings per share guidance to a range
of $0.93 to $1.13.
B&G Foods provides earnings guidance only on a non-GAAP
basis and does not provide a reconciliation of the Company’s
forward-looking adjusted EBITDA and adjusted diluted earnings per
share guidance to the most directly comparable GAAP financial
measures because of the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliations, including adjustments that could be made for
deferred taxes; acquisition/divestiture-related expenses, gains and
losses (which may include third-party fees and expenses,
integration, restructuring and consolidation expenses, amortization
of acquired inventory fair value step-up and gains and losses on
the sale of certain assets); gains and losses on extinguishment of
debt; impairment of assets held for sale; impairment of intangible
assets; non-recurring expenses, gains and losses; and other charges
reflected in the Company’s reconciliation of historic non-GAAP
financial measures, the amounts of which, based on past experience,
could be material. For additional information regarding B&G
Foods’ non-GAAP financial measures, see “About Non-GAAP Financial
Measures and Items Affecting Comparability” below.
Conference Call
B&G Foods will hold a conference call at 4:30 p.m. ET today,
November 8, 2023 to discuss third quarter 2023 financial results.
The live audio webcast of the conference call can be accessed at
www.bgfoods.com/investor-relations. A replay of the webcast will be
available following the conference call through the same link.
About Non-GAAP Financial Measures and Items Affecting
Comparability
“Adjusted net income” (net income (loss) adjusted for certain
items that affect comparability), “adjusted diluted earnings per
share,” (diluted earnings (loss) per share adjusted for certain
items that affect comparability), “base business net sales” (net
sales without the impact of acquisitions until the acquisitions are
included in both comparable periods and without the impact of
discontinued or divested brands), “EBITDA” (net income (loss)
before net interest expense, income taxes, and depreciation and
amortization) and “adjusted EBITDA” (EBITDA as adjusted for cash
and non-cash acquisition/divestiture-related expenses, gains and
losses (which may include third-party fees and expenses,
integration, restructuring and consolidation expenses, amortization
of acquired inventory fair value step-up and gains and losses on
the sale of certain assets), gains and losses on extinguishment of
debt, impairment of assets held for sale, and non-recurring
expenses, gains and losses) 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 generally accepted accounting principles in the
United States (GAAP) in B&G Foods’ consolidated balance sheets
and related consolidated statements of operations, comprehensive
loss, 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 non-GAAP financial measures to adjust for
certain items that affect comparability. 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 these items that affect comparability, management does
not consider these items 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 (used in) operating activities, is
included below for the third quarter and first three quarters of
2023 and 2022, along with the components of EBITDA and adjusted
EBITDA. Also included below are reconciliations of the non-GAAP
terms adjusted net income, adjusted diluted earnings per share and
base business net sales to the most directly comparable measure
calculated and presented in accordance with GAAP in the Company’s
consolidated balance sheets and related consolidated statements of
operations, comprehensive loss, changes in stockholders’ equity and
cash flows.
End Notes
- Please see “About Non-GAAP Financial Measures and Items
Affecting Comparability” below for the definition of the non-GAAP
financial measures “base business net sales,” “adjusted diluted
earnings per share,” “adjusted net income ,” “EBITDA” and “adjusted
EBITDA,” as well as information concerning certain items affecting
comparability and reconciliations of the non-GAAP terms to the most
comparable GAAP financial measures.
- Excludes net sales of certain Back to Nature products not part
of the divestiture that the Company will soon transition to another
brand name.
- Includes the spices & seasoning brands acquired in the
fourth quarter of 2016, as well as the Company’s legacy spices
& seasonings brands, such as Dash and Ac’cent, and spices &
seasonings products launched by the Company and sold under
license.
About B&G Foods, Inc.
Based in Parsippany, New Jersey, B&G Foods and its
subsidiaries manufacture, sell and distribute high-quality, branded
shelf-stable and frozen foods across the United States, Canada and
Puerto Rico. With B&G Foods’ diverse portfolio of more than 50
brands you know and love, including B&G, B&M, Bear Creek,
Cream of Wheat, Crisco, Dash, Green Giant, Las Palmas, Le Sueur,
Mama Mary’s, Maple Grove Farms, New York Style, Ortega, Polaner,
Spice Islands and Victoria, there’s a little something for
everyone. For more information about B&G Foods and its brands,
please visit www.bgfoods.com.
Forward-Looking Statements
Statements in this press release that are not statements of
historical or current fact constitute “forward-looking statements.”
The forward-looking statements contained in this press release
include, without limitation, statements related to B&G Foods’
expectations regarding net sales, adjusted EBITDA and adjusted
diluted earnings per share, and the Company’s overall expectations
for the remainder of fiscal 2023 and beyond, and expectations
regarding the use of proceeds from the sale of the Green Giant U.S.
shelf-stable product line and the Company’s efforts to reshape its
portfolio for future focus and valuation growth. 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,” “projects,” “intends,” “anticipates,” “assumes,”
“could,” “should,” “estimates,” “potential,” “seek,” “predict,”
“may,” “will” or “plans” and similar references to future periods
to be uncertain and forward-looking. Factors that may affect actual
results include, without limitation: the Company’s substantial
leverage; the effects of rising costs for and/or decreases in
supply of the Company’s commodities, ingredients, packaging, other
raw materials, distribution and labor; crude oil prices and their
impact on distribution, packaging and energy costs; the Company’s
ability to successfully implement sales price increases and cost
saving measures to offset any cost increases; intense competition,
changes in consumer preferences, demand for the Company’s products
and local economic and market conditions; the Company’s continued
ability to promote brand equity successfully, to anticipate and
respond to new consumer trends, to develop new products and
markets, to broaden brand portfolios in order to compete
effectively with lower priced products and in markets that are
consolidating at the retail and manufacturing levels and to improve
productivity; the ability of the Company and its supply chain
partners to continue to operate manufacturing facilities,
distribution centers and other work locations without material
disruption, and to procure ingredients, packaging and other raw
materials when needed despite disruptions in the supply chain or
labor shortages; the impact pandemics or disease outbreaks, such as
the COVID-19 pandemic, may have on the Company’s business,
including among other things, the Company’s supply chain,
manufacturing operations or workforce and customer and consumer
demand for the Company’s products; the Company’s ability to recruit
and retain senior management and a highly skilled and diverse
workforce at the Company’s corporate offices, manufacturing
facilities and other locations despite a very tight labor market
and changing employee expectations as to fair compensation, an
inclusive and diverse workplace, flexible working and other
matters; the risks associated with the expansion of the Company’s
business; the Company’s possible inability to identify new
acquisitions or to integrate recent or future acquisitions or the
Company’s failure to realize anticipated revenue enhancements, cost
savings or other synergies from recent or future acquisitions; the
Company’s ability to successfully complete the integration of
recent or future acquisitions into the Company’s enterprise
resource planning (ERP) system; tax reform and legislation,
including the effects of the Infrastructure Investment and Jobs
Act, U.S. Tax Cuts and Jobs Act and the U.S. CARES Act, and future
tax reform or legislation; the Company’s ability to access the
credit markets and the Company’s borrowing costs and credit
ratings, which may be influenced by credit markets generally and
the credit ratings of the Company’s competitors; unanticipated
expenses, including, without limitation, litigation or legal
settlement expenses; the effects of currency movements of the
Canadian dollar and the Mexican peso as compared to the U.S.
dollar; the effects of international trade disputes, tariffs,
quotas, and other import or export restrictions on the Company’s
international procurement, sales and operations; future impairments
of the Company’s goodwill and intangible assets; the Company’s
ability to protect information systems against, or effectively
respond to, a cybersecurity incident, other disruption or data
leak; the Company’s ability to successfully implement the Company’s
sustainability initiatives and achieve the Company’s sustainability
goals, and changes to environmental laws and regulations; and other
factors that affect the food industry generally, including: recalls
if products become adulterated or misbranded, liability if product
consumption causes injury, ingredient disclosure and labeling laws
and regulations and the possibility that consumers could lose
confidence in the safety and quality of certain food products;
competitors’ pricing practices and promotional spending levels;
fluctuations in the level of the Company’s customers’ inventories
and credit and other business risks related to the Company’s
customers operating in a challenging economic and competitive
environment; and the risks associated with third-party suppliers
and co-packers, including the risk that any failure by one or more
of the Company’s third-party suppliers or co-packers to comply with
food safety or other laws and regulations may disrupt the Company’s
supply of raw materials or certain finished goods products or
injure the Company’s reputation. 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 the Company’s most
recent Annual Report on Form 10-K and in its subsequent reports on
Forms 10-Q and 8-K. Investors are cautioned not to place undue
reliance on any such forward-looking statements, which speak only
as of the date they are made. B&G Foods undertakes 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
(In thousands, except share
and per share data)
(Unaudited)
September 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
359,926
$
45,442
Trade accounts receivable, net
154,679
150,019
Inventories
644,060
726,468
Assets held for sale
68,823
51,314
Prepaid expenses and other current
assets
44,123
37,550
Income tax receivable
9,100
8,024
Total current assets
1,280,711
1,018,817
Property, plant and equipment, net
302,572
317,587
Operating lease right-of-use assets
68,688
65,809
Finance lease right-of-use assets
2,097
2,891
Goodwill
619,221
619,241
Other intangible assets, net
1,653,008
1,788,157
Other assets
20,262
19,088
Deferred income taxes
10,291
10,019
Total assets
$
3,956,850
$
3,841,609
Liabilities and Stockholders’
Equity
Current liabilities:
Trade accounts payable
$
182,191
$
127,809
Accrued expenses
72,380
64,137
Current portion of operating lease
liabilities
15,213
14,616
Current portion of finance lease
liabilities
1,063
1,046
Current portion of long-term debt
555,439
50,000
Income tax payable
1,704
309
Dividends payable
14,938
13,617
Total current liabilities
842,928
271,534
Long-term debt, net of current portion
1,929,144
2,339,049
Deferred income taxes
268,903
288,712
Long-term operating lease liabilities, net
of current portion
53,785
51,727
Long-term finance lease liabilities, net
of current portion
996
1,795
Other liabilities
20,455
20,626
Total liabilities
3,116,211
2,973,443
Stockholders’ equity:
Preferred stock, $0.01 par value per
share. Authorized 1,000,000 shares; no shares issued or
outstanding
—
—
Common stock, $0.01 par value per share.
Authorized 125,000,000 shares; 78,624,419 and 71,668,144 shares
issued and outstanding as of September 30, 2023 and December 31,
2022, respectively
786
717
Additional paid-in capital
60,455
—
Accumulated other comprehensive loss
(3,117
)
(9,349
)
Retained earnings
782,515
876,798
Total stockholders’ equity
840,639
868,166
Total liabilities and stockholders’
equity
$
3,956,850
$
3,841,609
B&G Foods, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per
share data)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
September 30,
October 1,
September 30,
October 1,
2023
2022
2023
2022
Net sales
$
502,734
$
528,396
$
1,484,185
$
1,539,768
Cost of goods sold
388,896
422,635
1,153,835
1,256,222
Gross profit
113,838
105,761
330,350
283,546
Operating (income) and expenses:
Selling, general and administrative
expenses
48,197
47,519
142,798
138,556
Amortization expense
5,197
5,427
15,649
16,009
Loss (gain) on sales of assets
—
—
85
(7,099
)
Impairment of assets held for sale
132,949
103,625
132,949
103,625
Operating income (loss)
(72,505
)
(50,810
)
38,869
32,455
Other (income) and expenses:
Interest expense, net
35,859
31,874
111,108
88,617
Other income
(962
)
(1,846
)
(2,819
)
(5,533
)
Loss before income tax benefit
(107,402
)
(80,838
)
(69,420
)
(50,629
)
Income tax benefit
(24,661
)
(21,255
)
(647
)
(14,958
)
Net loss
$
(82,741
)
$
(59,583
)
$
(68,773
)
$
(35,671
)
Weighted average shares outstanding:
Basic
74,428
71,670
72,815
70,068
Diluted
74,428
72,018
72,815
70,440
Loss per share:
Basic
$
(1.11
)
$
(0.83
)
$
(0.94
)
$
(0.51
)
Diluted
$
(1.11
)
$
(0.83
)
$
(0.94
)
$
(0.51
)
Cash dividends declared per share
$
0.190
$
0.475
$
0.570
$
1.425
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Net Loss to
EBITDA(1) and Adjusted EBITDA(1)
(In thousands)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
September 30,
October 1,
September 30,
October 1,
2023
2022
2023
2022
Net loss
$
(82,741
)
$
(59,583
)
$
(68,773
)
$
(35,671
)
Income tax benefit
(24,661
)
(21,255
)
(647
)
(14,958
)
Interest expense, net(2)
35,859
31,874
111,108
88,617
Depreciation and amortization
17,282
20,766
52,586
61,065
EBITDA(1)
(54,261
)
(28,198
)
94,274
99,053
Acquisition/divestiture-related and
non-recurring expenses(3)
1,716
4,785
3,912
9,575
Loss (gain) on sales of assets, net of
facility closure costs(4)
—
—
85
(4,928
)
Impairment of assets held for sale(5)
132,949
103,625
132,949
103,625
Adjusted EBITDA(1)
$
80,404
$
80,212
$
231,220
$
207,325
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Net Cash
Provided by (Used In) Operating Activities to EBITDA(1) and
Adjusted EBITDA(1)
(In thousands)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
September 30,
October 1,
September 30,
October 1,
2023
2022
2023
2022
Net cash provided by (used in) operating
activities
$
23,304
$
(69,535
)
$
155,681
$
(48,408
)
Income tax benefit
(24,661
)
(21,255
)
(647
)
(14,958
)
Interest expense, net(2)
35,859
31,874
111,108
88,617
Gain on extinguishment of debt(2)
582
—
1,368
—
(Loss) gain on sales of assets(4)
(598
)
(19
)
(775
)
7,094
Deferred income taxes
34,037
27,945
18,940
27,415
Amortization of deferred debt financing
costs and bond discount/premium
(1,007
)
(1,184
)
(5,691
)
(3,530
)
Share-based compensation expense
(2,151
)
(736
)
(5,452
)
(2,984
)
Changes in assets and liabilities, net of
effects of business combinations
13,323
108,337
(47,309
)
149,432
Impairment of assets held for sale
(132,949
)
(103,625
)
(132,949
)
(103,625
)
EBITDA(1)
(54,261
)
(28,198
)
94,274
99,053
Acquisition/divestiture-related and
non-recurring expenses(3)
1,716
4,785
3,912
9,575
Loss (gain) on sales of assets, net of
facility closure costs(4)
—
—
85
(4,928
)
Impairment of assets held for sale(5)
132,949
103,625
132,949
103,625
Adjusted EBITDA(1)
$
80,404
$
80,212
$
231,220
$
207,325
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Net Loss to
Adjusted Net Income and Adjusted Diluted Earnings per Share
(In thousands, except per
share data)
(Unaudited)
Thirteen Weeks Ended
Thirty-nine Weeks
Ended
September 30,
October 1,
September 30,
October 1,
2023
2022
2023
2022
Net loss
$
(82,741
)
$
(59,583
)
$
(68,773
)
$
(35,671
)
Gain on extinguishment of debt(2)
(582
)
—
(1,368
)
—
Acquisition/divestiture-related and
non-recurring expenses(3)
1,716
4,785
3,912
9,575
Loss (gain) on sales of assets, net of
facility closure costs(4)
—
—
85
(4,928
)
Impairment of assets held for sale(5)
132,949
103,625
132,949
103,625
Credit agreement amendment fee(6)
—
—
—
1,600
Tax adjustment related to Back to Nature
divestiture(7)
—
—
14,736
—
Tax effects of non-GAAP adjustments(8)
(30,846
)
(26,560
)
(31,213
)
(26,919
)
Adjusted net income
$
20,496
$
22,267
$
50,328
$
47,282
Adjusted diluted earnings per share
$
0.27
$
0.31
$
0.69
$
0.67
____________________________
(1)
EBITDA and adjusted EBITDA are non-GAAP
financial measures used by management to measure operating
performance. A non-GAAP financial measure is defined as a numerical
measure of the Company’s financial performance that excludes or
includes amounts so as to be different from the most directly
comparable measure calculated and presented in accordance with GAAP
in the Company’s consolidated balance sheets and related
consolidated statements of operations, comprehensive loss, changes
in stockholders’ equity and cash flows. The Company defines EBITDA
as net income (loss) before net interest expense, income taxes, and
depreciation and amortization. The Company defines adjusted EBITDA
as EBITDA adjusted for cash and non-cash
acquisition/divestiture-related expenses, gains and losses (which
may include third-party fees and expenses, integration,
restructuring and consolidation expenses, amortization of acquired
inventory fair value step-up, and gains and losses on the sale of
certain assets); gains and losses on extinguishment of debt;
impairment of assets held for sale; impairment of intangible
assets; and non-recurring expenses, gains and losses.
Management believes that it is useful to
eliminate these items because it allows management to focus on what
it deems to be a more reliable indicator of ongoing operating
performance and the Company’s ability to generate cash flow from
operations. The Company uses EBITDA and adjusted EBITDA in the
Company’s business operations to, among other things, evaluate the
Company’s operating performance, develop budgets and measure the
Company’s performance against those budgets, determine employee
bonuses and evaluate the Company’s cash flows in terms of cash
needs. The Company also presents EBITDA and adjusted EBITDA because
the Company believes they are useful indicators of the Company’s
historical debt capacity and ability to service debt and because
covenants in the Company’s credit agreement and the Company’s
senior notes indentures contain ratios based on these measures. As
a result, reports used by internal management during monthly
operating reviews feature the EBITDA and adjusted EBITDA metrics.
However, management uses these metrics 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 these
measures as its only measures of operating performance and
liquidity.
EBITDA and adjusted EBITDA are not
recognized terms under GAAP and do not purport to be alternatives
to operating income (loss), net income (loss) or any other
GAAP measure as an indicator of operating performance. EBITDA and
adjusted EBITDA are not complete net cash flow measures because
EBITDA and adjusted EBITDA are measures of liquidity that do not
include reductions for cash payments for an entity’s obligation to
service its debt, fund its working capital, capital expenditures
and acquisitions and pay its income taxes and dividends. Rather,
EBITDA and adjusted EBITDA are potential indicators of an entity’s
ability to fund these cash requirements. EBITDA and adjusted EBITDA
are not complete measures of an entity’s profitability because they
do not include certain costs and expenses and gains and losses
described above. Because not all companies use identical
calculations, this presentation of EBITDA and adjusted EBITDA may
not be comparable to other similarly titled measures of other
companies. However, EBITDA and adjusted EBITDA can still be useful
in evaluating the Company’s performance against the Company’s peer
companies because management believes these measures provide users
with valuable insight into key components of GAAP amounts.
(2)
Net interest expense for the third quarter
and first three quarters of 2023 were reduced by $0.6 million and
$1.4 million, respectively, as a result of gains on extinguishment
of debt related to the Company’s repurchases of $20.2 million
aggregate principal amount and $44.6 million aggregate principal
amount, respectively, of its 5.25% senior notes due 2025 in open
market purchases during the third quarter and first three quarters
of 2023 at discounted repurchase prices, net of the accelerated
amortization of deferred debt financing costs of $0.1 million and
$0.3 million, respectively, for the third quarter and first three
quarters of 2023.
(3)
Acquisition/divestiture-related and
non-recurring expenses for the third quarter and first three
quarters of 2023 of $1.7 million (or $1.3 million, net of tax)
and $3.9 million (or $3.0 million, net of tax), respectively,
primarily includes acquisition and integration expenses for
the Crisco acquisition and divestiture-related expenses for the
Back to Nature divestiture.
Acquisition/divestiture-related and non‑recurring expenses for the
third quarter and first three quarters of 2022 of $4.8 million
(or $3.6 million, net of tax) and $9.6 million (or $7.2
million, net of tax), respectively, primarily includes acquisition
and integration expenses for the Crisco acquisition and the
acquisition of the frozen vegetable manufacturing operations of
Growers Express, LLC, which was completed on May 5, 2022
(which the Company refers to as the “Yuma acquisition”).
(4)
During the first quarter of 2023, the
Company completed the Back to Nature divestiture and recorded a
loss on the sale of $0.1 million. During the first quarter of
2022, the Company completed the closure and sale of its Portland,
Maine manufacturing facility. The Company recorded a gain on the
sale of the Portland property, plant and equipment of $7.1 million
during the first quarter of 2022. The positive impact during the
quarter of the gain on sale was partially offset by approximately
$2.2 million of expenses incurred during the quarter relating to
the closure of the facility and the transfer of manufacturing
operations, resulting in a net benefit of $4.9 million (or
$3.7 million, net of tax) from the gain on sale.
(5)
In connection with the sale of assets
relating to the Company’s Green Giant U.S. shelf-stable product
line during the fourth quarter of 2023, the Company reclassified
$115.3 million of indefinite-lived trademark intangible assets,
$82.3 million of inventories and $4.1 million of finite-lived
customer relationship intangible assets to assets held for sale as
of the end of the third quarter of 2023. The Company then measured
the assets held for sale at the lower of their carrying value or
fair value less the estimated costs to sell and recorded pre-tax,
non-cash impairment charges of $132.9 million (or $100.4 million,
net of tax) during the third quarter of 2023.
In connection with the Company’s decision
to sell its Back to Nature business, the Company reclassified
$109.9 million of indefinite-lived trademark intangible assets,
$29.5 million of goodwill, $11.0 million of finite-lived customer
relationship intangible assets and $7.3 million of inventories to
assets held for sale during fiscal 2022. During the third quarter
of 2022, the Company measured the assets held for sale at the lower
of their carrying value or fair value less anticipated costs to
sell and recorded pre-tax, non-cash impairment charges of $103.6
million (or $78.2 million, net of tax). On January 3, 2023, the
Company completed the sale of the Back to Nature business.
(6)
During the second quarter of 2022, the
Company paid a fee of $1.6 million (or $1.2 million, net of tax) to
amend the Company’s senior secured credit agreement to temporarily
increase the maximum consolidated leverage ratio permitted under
the Company’s revolving credit facility.
(7)
As a result of the
Back to Nature divestiture, the Company incurred a
capital loss for tax purposes, for which the Company recorded a
deferred tax asset during the first quarter of 2023. A valuation
allowance has been recorded against this deferred tax asset, which
negatively impacted the Company’s first quarter of 2023 income
taxes by $14.7 million, or $0.21 per share.
(8)
Represents the tax effects of the non-GAAP
adjustments listed above, assuming a tax rate of 24.5%.
B&G Foods, Inc. and
Subsidiaries
Items Affecting
Comparability
Reconciliation of Net Sales to
Base Business Net Sales(1)
(In thousands)
(Unaudited)
Third Quarter Ended
First Three Quarters
Ended
September 30,
October 1,
September 30,
October 1,
2023
2022
2023
2022
Net sales
$
502,734
$
528,396
$
1,484,185
$
1,539,768
Net sales from acquisitions(2)
—
—
(550
)
—
Net sales from discontinued or divested
brands(3)
9
(10,146
)
40
(34,642
)
Base business net sales(1)
$
502,743
$
518,250
$
1,483,675
$
1,505,126
____________________________
(1)
Base business net sales is a non-GAAP
financial measure used by management to measure operating
performance. The Company defines base business net sales as the
Company’s net sales excluding (1) the net sales of acquisitions
until the net sales from such acquisitions are included in both
comparable periods and (2) net sales of discontinued or divested
brands. The portion of current period net sales attributable to
recent acquisitions for which there is no corresponding period in
the comparable period of the prior year is excluded. For each
acquisition, the excluded period starts at the beginning of the
most recent fiscal period being compared and ends on the first
anniversary of the acquisition date. For discontinued or divested
brands, the entire amount of net sales is excluded from each fiscal
period being compared. The Company has included this financial
measure because management believes it provides useful and
comparable trend information regarding the results of the Company’s
business without the effect of the timing of acquisitions and the
effect of discontinued or divested brands.
(2)
Reflects net sales from the Yuma
acquisition, for which there is no comparable period of net sales
during the first four months of the first three quarters of 2022.
The Yuma acquisition was completed on May 5, 2022.
(3)
For the third quarter and first three
quarters of 2022, reflects net sales of the Back to Nature brand,
which was sold on January 3, 2023, and net sales of the
SnackWell’s and Farmwise brands, which have been discontinued. For
the third quarter and first three quarters of 2023, reflects a net
credit paid to customers relating to the discontinued brands.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108876692/en/
Investor Relations: ICR, Inc. Dara Dierks 866.211.8151
Media Relations: ICR, Inc. Matt Lindberg 203.682.8214
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