B+G Foods: announces financial results for Q3/2013

Parsippany / NJ. (bgs) B+G Foods Inc. announced financial results for the third quarter and first three quarters of 2013. Highlights versus year-ago quarter where applicable: net sales increased 17,6 percent to 181,4 million USD; net income decreased 9,2 percent to 15,4 million USD due to loss on extinguishment of debt and acquisition related transaction costs of 3,4 million USD, net of tax; adjusted net income increased 10,8 percent to 18,7 million USD; adjusted Ebitda increased 7,3 percent to 46,0 million USD; adjusted Ebitda guidance remains at 187,0 million USD to 191,0 million USD for the full year.

President and Chief Executive Officer David L. Wenner: «Our business saw continued strong growth in net sales, net income and adjusted Ebitda during the third quarter. Putting acquisition growth aside, our base business net sales followed industry trends and declined for the quarter. Given current trends in the packaged foods industry, we expect growth in our base business to be challenging during the fourth quarter of 2013. We are taking actions to improve sales trends in our base business through new product introductions and selected pricing adjustments and are confident base business net sales will rebound and return to our more typical modest growth during 2014. Meanwhile, our recent acquisitions in snacks appear to be more on trend with changing consumer consumption patterns and we expect significant growth from Pirate´s Booty, Rickland Orchards, New York Style and TrueNorth in fourth quarter 2013 and beyond».

Financial Results for the Third Quarter of 2013

Net sales for the third quarter of 2013 increased 17,6 percent to 181,4 million USD from 154,2 million USD for the third quarter of 2012. Net sales of Pirate Brands, which B+G Foods acquired at the beginning of July 2013, contributed 16,5 million USD to the overall increase, net sales of the New York Style and Old London brands, which B+G Foods acquired at the end of October 2012, contributed 11,4 million USD to the overall increase and net sales of the TrueNorth brand, which B+G Foods acquired at the beginning of May 2013, contributed 5,4 million USD to the overall increase. Net sales for B+G Foods´ base business decreased 6,1 million USD or 3,9 percent, attributable to a net price decrease of 3,5 million USD and a unit volume decrease of 2,6 million USD.

Gross profit for the third quarter of 2013 increased 10,8 percent to 61,3 million USD from 55,3 million USD in the third quarter of 2012. Gross profit expressed as a percentage of net sales decreased 2,1 percentage points to 33,8 percent for the third quarter of 2013 from 35,9 percent in the third quarter of 2012. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to a net price decrease of 3,5 million USD and a sales mix shift to lower margin products. Operating income decreased 1,9 percent to 37,6 million USD for the third quarter of 2013, from 38,3 million USD in the third quarter of 2012.

Selling, general and administrative expenses increased 6,3 million USD or 42,4 percent, to 21,3 million USD for the third quarter of 2013 from 14,9 million USD for the third quarter of 2012. This increase was primarily due to increases in consumer marketing and selling expenses of 3,5 million USD (of which 1,6 million USD was due to timing of planned marketing spending), acquisition-related transaction costs of 2,4 million USD and other expenses of 0,4 million USD.

Net interest expense for the third quarter of 2013 decreased 0,9 million USD or 7,5 percent to 11,1 million USD from 12,0 million USD for the third quarter of 2012. The decrease in net interest expense in the third 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 percent senior notes, the repurchase of 7,625 percent 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 15,4 million USD or 0,29 USD per diluted share, for the third quarter of 2013, as compared to reported net income of 16,9 million USD or 0,35 USD per diluted share, for the third quarter of 2012. The Company´s adjusted net income for the third quarter of 2013, which excludes the impact of acquisition-related transaction costs and loss on extinguishment of debt, was 18,7 million USD or 0,35 USD per adjusted diluted share. There were no adjustments to net income for the third quarter of 2012.

For the third quarter of 2013, adjusted Ebitda, which excludes the impact of acquisition-related transaction costs, increased 7,3 percent to 46,0 million USD from 42,8 million USD for the third quarter of 2012. There were no adjustments to Ebitda for the third quarter of 2012.

Financial Results for the First Three Quarters of 2013

Net sales for the first three quarters of 2013 increased 53,3 million USD or 11,6 percent to 513,4 million USD from 460,1 million USD for the first three quarters 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 33,6 million USD to the overall increase, net sales of Pirate Brands, which B+G Foods acquired at the beginning of July 2013, contributed 16,5 million USD to the overall increase and net sales of the TrueNorth brand, which B+G Foods acquired at the beginning of May 2013, contributed 8,5 million USD to the overall increase. Net sales from the Company´s base business decreased 5,3 million USD or 1,2 percent, attributable to a net price decrease of 3,9 million USD and a unit volume decrease of 1,4 million USD.

Gross profit for the first three quarters of 2013 increased 7,3 percent to 175,8 million USD from 163,9 million USD in the first three quarters of 2012. Gross profit expressed as a percentage of net sales decreased 1,4 percentage points to 34,2 percent for the first three quarters of 2013 from 35,6 percent in the first three quarters of 2012. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to a net price decrease of 3,9 million USD and a sales mix shift to lower margin products. Operating income increased 2,2 percent to 114,1 million USD for the first three quarters of 2013, from 111,6 million USD in the first three quarters of 2012.

Selling, general and administrative expenses increased 8,9 million USD or 19,2 percent, to 55,1 million USD for the first three quarters of 2013 from 46,2 million USD for the first three quarters of 2012. The increase is due to increases in consumer marketing and selling expenses of 5,1 million USD (of which 2,2 million USD was due to timing of planned marketing spending), acquisition-related transaction costs of 2,9 million USD, warehousing expenses of 0,8 million USD and other expenses of 0,1 million USD.

Net interest expense for the first three quarters of 2013 decreased 4,9 million USD or 13,8 percent to 30,9 million USD from 35,8 million USD in the first three quarters of 2012. The decrease in net interest expense in the first three quarters of 2013 was primarily attributable to the refinancing of the Company´s long-term debt during the second quarter of 2013.

After taking into account 22,1 million USD of after tax charges relating to the refinancing and acquisition-related transaction costs, the Company´s reported net income under U.S. GAAP was 33,6 million USD or 0,63 USD per diluted share, for the first three quarters of 2013, as compared to reported net income of 49,7 million USD or 1,02 USD per diluted share, for the first three quarters of 2012. The Company´s adjusted net income for the first three quarters of 2013, which excludes the refinancing charges and acquisition-related transaction costs, was 55,7 million USD and adjusted diluted earnings per share was 1,05 USD. There were no adjustments to net income for the first three quarters of 2012.

For the first three quarters of 2013, adjusted Ebitda, which excludes acquisition-related transaction costs, increased 7,2 percent to 134,0 million USD from 125,0 million USD for the first three quarters of 2012. There were no adjustments to Ebitda for the first three quarters of 2012.

Guidance

B+G Foods reaffirmed its adjusted Ebitda guidance for fiscal 2013 to a range of approximately 187,0 million USD to 191,0 million USD.