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B&G Foods Reports Financial Results for Second Quarter 2021

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PARSIPPANY, N.J., August 05, 2021--(BUSINESS WIRE)--B&G Foods, Inc. (NYSE: BGS) today announced financial results for the second quarter and first two quarters of 2021.

Executive Summary (vs. Second Quarter of 2020 and vs. Second Quarter 2019 for two-year annual compound growth rates, where applicable):

  • Net sales decreased 9.4% to $464.4 million and base business net sales decreased 20.8%, driven by comparisons against the extraordinary demand and pantry loading at the height of the COVID-19 pandemic during the second quarter of 2020, partially offset by the Crisco acquisition.

  • Net sales and base business net sales for the second quarter of 2021 were 25.1% and 7.1% higher than pre-pandemic net sales and base business net sales for the second quarter of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, second quarter net sales increased 11.8% and base business net sales increased 3.5%.

  • Diluted earnings per share decreased 45.7% to $0.38. On a two-year compound annual growth basis, second quarter diluted earnings per share increased 16.5%.

  • Adjusted diluted earnings per share1 decreased 42.3% to $0.41. On a two-year compound annual growth basis, second quarter adjusted diluted earnings per share increased 5.0%.

  • Net income decreased 45.3% to $24.6 million. On a two-year compound annual growth basis, second quarter net income increased 16.0%.

  • Adjusted net income1 decreased 41.2% to $27.1 million. On a two-year compound annual growth basis, second quarter adjusted net income increased 5.0%.

  • Adjusted EBITDA1 decreased 18.3% to $83.8 million. On a two-year compound annual growth basis, second quarter adjusted EBITDA increased 8.7%.

  • Adjusted EBITDA before COVID-19 expenses1 decreased 20.5% to $85.0 million. On a two-year compound annual growth basis, second quarter adjusted EBITDA before COVID-19 expenses increased 9.4%.

  • Net sales guidance reaffirmed at a range of $2.05 billion to $2.10 billion.

Commenting on the results, Casey Keller, President and Chief Executive Officer of B&G Foods, stated, "We are pleased with the Company’s performance in the second quarter, and our prospects for the remainder of the year. The second quarter was expected to be the most challenging to lap from a comparative perspective given that the second quarter of 2020 occurred at the height of pantry loading and stocking during the COVID-19 pandemic. However, as expected, our net sales performance has remained elevated relative to 2019. When we look at the consumer trends that accelerated during the early stages of the pandemic—including an increase in cooking, baking and eating at home—trends which we expect may be longer term, our brands are well positioned to continue to capitalize on these opportunities."

________________________

1

Please see "About Non-GAAP Financial Measures and Items Affecting Comparability" below for the definition of the non-GAAP financial measures "adjusted diluted earnings per share," "adjusted net income," "EBITDA," "adjusted EBITDA," "adjusted EBITDA before COVID-19 expenses" and "base business net sales," as well as information concerning certain items affecting comparability and reconciliations of the non-GAAP terms to the most comparable GAAP financial measures.

Mr. Keller continued, "Another significant impact coming out of the pandemic is inflation at unprecedented levels across the economy, including the food industry. We are seeing inflation on key input costs across our portfolio. We identified the risks of inflation early and have initiated price increases and cost savings initiatives to offset these costs. While the impact of pricing and cost savings may lag behind the rising input costs, we expect our margins to remain fairly stable in the long term."

"Lastly, I’m pleased to report that as of earlier this week, the integration of the Crisco brand is substantially complete and we have assumed full responsibility for the operation of the business. Crisco is a tremendous addition to the B&G Foods portfolio."

Financial Results for the Second Quarter of 2021

Net sales for the second quarter of 2021 decreased $48.1 million, or 9.4%, to $464.4 million from $512.5 million for the second quarter of 2020. The decrease was primarily due to comparisons against the extraordinary demand and pantry loading at the height of the COVID-19 pandemic during the second quarter of 2020, partially offset by the Crisco acquisition. Net sales of Crisco, acquired on December 1, 2020, contributed $58.4 million to the Company’s net sales for the quarter. Net sales for the second quarter of 2021 were 25.1% higher than pre-pandemic net sales for the second quarter of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, second quarter net sales increased 11.8%.

Base business net sales for the second quarter of 2021 decreased $106.6 million, or 20.8%, to $405.9 million from $512.5 million for the second quarter of 2020. The decrease in base business net sales for the second quarter of 2021 reflected a decrease in unit volume of $115.4 million, partially offset by an increase in net pricing and the impact of product mix of $6.2 million and the positive impact of foreign currency of $2.6 million. Base business net sales for the second quarter of 2021 were 7.1% higher than pre-pandemic base business net sales for the second quarter of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, second quarter base business net sales increased 3.5%.

Net sales of Maple Grove Farms increased $2.2 million, or 11.7%, and net sales of the Company’s spices & seasonings2 increased $0.7 million, or 0.7%, for the second quarter of 2021 as compared to the second quarter of 2020. Net sales of Green Giant (including Le Sueur) decreased $58.4 million, or 35.6%; net sales of Clabber Girl decreased $8.9 million, or 33.5%; net sales of Ortega decreased $5.9 million, or 12.7%; and net sales of Cream of Wheat decreased $3.8 million, or 20.8%, for the second quarter of 2021 as compared to the second quarter of 2020. Net sales of all other brands in the aggregate decreased $32.5 million, or 23.0%, for the second quarter of 2021.

Net sales for the second quarter of 2021 for spices & seasonings, Ortega, Cream of Wheat, Maple Grove Farms and Clabber Girl were each higher than the net sales for such brands during pre-pandemic second quarter of 2019. Spices & seasonings2 net sales were higher than second quarter of 2019 net sales by $18.1 million, or 22.2%; Ortega by $6.9 million, or 20.0%; Cream of Wheat by $2.5 million, or 21.9%; Maple Grove Farms by $2.4 million, or 13.4%; and Clabber Girl3 by $1.1 million, or 12.5%. Net sales of Green Giant (including Le Sueur) were lower than net sales for the second quarter of 2019 by $7.2 million, or 6.4%. Net sales of all other brands in the aggregate were higher by $2.6 million, or 2.7%, compared to the second quarter of 2019.

Gross profit was $111.6 million for the second quarter of 2021, or 24.0% of net sales. Excluding the negative impact of $0.4 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2021, the Company’s gross profit would have been $112.0 million, or 24.1% of net sales. Gross profit was $134.1 million for the second quarter of 2020, or 26.2% of net sales. Excluding the negative impact of $0.5 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2020, the Company’s gross profit would have been $134.6 million, or 26.3% of net sales.

________________________

2

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.

3

Compares net sales of Clabber Girl from May 15, 2021 through July 3, 2021 versus May 15, 2019 through June 29, 2019. Clabber Girl was acquired on May 15, 2019.

During the second quarter of 2021, the Company’s gross profit was negatively impacted by higher than expected input cost inflation, including materially increased costs for raw materials and transportation. The Company expects input cost inflation to be materially higher in the second half of 2021 than it was in the second half of 2020. The Company is attempting to mitigate the impact of inflation on the Company’s gross profit by locking in prices through short-term supply contracts and advance commodities purchase agreements and by implementing cost saving measures. The Company has also announced list price increases and has reduced trade promotions to its customers for certain of its products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company does not expect to fully offset the incremental costs that the Company is facing in fiscal 2021 and expects continued cost inflation in fiscal 2022.

Selling, general and administrative expenses increased $2.8 million, or 6.2%, to $47.1 million for the second quarter of 2021 from $44.3 million for the second quarter of 2020. The increase was composed of increases in warehousing expenses of $4.6 million, acquisition/divestiture-related and non-recurring expenses of $1.9 million and consumer marketing expenses of $0.3 million, partially offset by decreases in selling expenses of $2.5 million and general and administrative expenses of $1.5 million. The increase in warehousing expenses was primarily driven by the Crisco acquisition and customer fines related to COVID-19 shortages and delays. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 1.4 percentage points to 10.1% for the second quarter of 2021, compared to 8.7% for the second quarter of 2020.

Net interest expense increased $1.9 million, or 7.5%, to $26.7 million for the second quarter of 2021 from $24.8 million in the second quarter of 2020. The increase was primarily attributable to an increase in average long-term debt outstanding during the second quarter of 2021 as compared to the second quarter of 2020, primarily as a result of incremental borrowings the Company made in the fourth quarter of 2020 to fund the Crisco acquisition and related fees and expenses. The increase in net interest expense was partially offset by a lower effective cost of borrowing during the second quarter of 2021.

The Company’s net income was $24.6 million, or $0.38 per diluted share, for the second quarter of 2021, compared to net income of $44.9 million, or $0.70 per diluted share, for the second quarter of 2020. The Company’s adjusted net income for the second quarter of 2021 was $27.1 million, or $0.41 per adjusted diluted share, compared to $46.0 million, or $0.71 per adjusted diluted share, for the second quarter of 2020.

For the second quarter of 2021, adjusted EBITDA was $83.8 million, a decrease of $18.8 million, or 18.3%, compared to $102.6 million for the second quarter of 2020. Adjusted EBITDA as a percentage of net sales was 18.0% for the second quarter of 2021, compared to 20.0% in the second quarter of 2020.

For the second quarter of 2021, adjusted EBITDA before COVID-19 expenses was $85.0 million, a decrease of $21.9 million, or 20.5%, compared to $106.9 million for the second quarter of 2020. COVID-19 expenses of $1.2 million and $4.3 million for the second quarter of 2021 and the second quarter of 2020, respectively, primarily included temporary enhanced compensation for the Company’s manufacturing employees, compensation the Company continued to pay manufacturing employees while in quarantine (which was incremental to the compensation the Company paid to the manufacturing employees who produced the Company’s products while others were in quarantine), and expenses relating to other precautionary health and safety measures. Adjusted EBITDA before COVID-19 expenses as a percentage of net sales was 18.3% for the second quarter of 2021, compared to 20.9% in the second quarter of 2020.

Financial Results for the First Two Quarters of 2021

Net sales for the first two quarters of 2021 increased $7.6 million, or 0.8%, to $969.5 million from $961.9 million for the first two quarters of 2020. The increase was primarily due to the Crisco acquisition, largely offset by comparisons against the extraordinary demand and pantry loading at the height of the COVID-19 pandemic during the last four months of the first two quarters of 2020. Net sales of Crisco, acquired on December 1, 2020, contributed $116.5 million to the Company’s net sales for the first two quarters. Net sales for the first two quarters of 2021 were 23.7% higher than pre-pandemic net sales for the first two quarters of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, net sales for the first two quarters of 2021 increased 11.2%.

Base business net sales1 for the first two quarters of 2021 decreased $109.1 million, or 11.3%, to $852.8 million from $961.9 million for the first two quarters of 2020. The decrease in base business net sales for the first two quarters of 2021 reflected a decrease in unit volume of $125.2 million, partially offset by an increase in net pricing and the impact of product mix of $12.8 million and the positive impact of foreign currency of $3.3 million. Base business net sales for the first two quarters of 2021 were 5.5% higher than pre-pandemic base business net sales for the first two quarters of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, base business net sales for the first two quarters of 2021 increased 2.7%.

Net sales of the Company’s spices & seasonings2 increased $30.7 million, or 17.9%, and net sales of Maple Grove Farms increased $4.3 million, or 11.9%, in the first two quarters of 2021, as compared to the first two quarters of 2020. Net sales of Green Giant (including Le Sueur) decreased $84.4 million, or 26.2%; net sales of Clabber Girl decreased $10.1 million, or 22.5%; net sales of Ortega decreased $5.8 million, or 6.8%; and net sales of Cream of Wheat decreased $4.5 million, or 12.2%, in the first two quarters of 2021, as compared to the first two quarters of 2020. Net sales of all other brands in the aggregate decreased $39.3 million, or 14.9%, for the first two quarters of 2021.

Net sales for the first two quarters of 2021 for spices & seasonings, Ortega, Maple Grove Farms, Cream of Wheat and Clabber Girl were each higher than the net sales for such brands during the pre-pandemic first two quarters of 2019. Spices & seasonings2 net sales were higher than first two quarters of 2019 net sales by $35.2 million, or 21.1%; Ortega by $8.5 million, or 11.9%; Maple Grove Farms net sales by $5.1 million, or 14.5%; Cream of Wheat by $3.3 million, or 11.4%; and Clabber Girl3 by $1.1 million, or 12.5%. Net sales of Green Giant (including Le Sueur) were lower than net sales for the first two quarters of 2019 by $10.9 million, or 4.4%. Net sales of all other brands in the aggregate were higher by $0.8 million, or 0.3%, compared to the first two quarters of 2019.

Gross profit was $229.4 million for the first two quarters of 2021, or 23.7% of net sales. Excluding the negative impact of $5.9 million of acquisition/divestiture-related expenses, the amortization of acquisition-related inventory fair value step-up and non-recurring expenses included in cost of goods sold during the first two quarters of 2021, the Company’s gross profit would have been $235.3 million, or 24.3% of net sales. Gross profit was $239.0 million for the first two quarters of 2020, or 24.8% of net sales. Excluding the negative impact of $2.8 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the first two quarters of 2020, the Company’s gross profit would have been $241.8 million, or 25.1% of net sales.

During the first two quarters of 2021, the Company’s gross profit was negatively impacted by higher than expected input cost inflation, including materially increased costs for raw materials and transportation. The Company expects input cost inflation to be materially higher in the second half of 2021 than it was in the second half of 2020. The Company is attempting to mitigate the impact of inflation on its gross profit by locking in prices through short-term supply contracts and advance commodities purchase agreements and by implementing cost saving measures. The Company has also announced list price increases and has reduced trade promotions to its customers for certain of its products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company does not expect to fully offset the incremental costs that it is facing in fiscal 2021 and expects continued cost inflation in fiscal 2022.

Selling, general and administrative expenses increased $13.2 million, or 15.6%, to $97.5 million for the first two quarters of 2021 from $84.3 million for the first two quarters of 2020. The increase was composed of increases in warehousing expenses of $8.7 million, consumer marketing expenses of $4.3 million and acquisition/divestiture-related and non-recurring expenses of $3.8 million, partially offset by decreases in selling expenses of $3.3 million and general and administrative expenses of $0.3 million. The increase in warehousing expenses was primarily driven by the Crisco acquisition and customer fines related to COVID-19 shortages and delays. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 1.3 percentage points to 10.1% for the first two quarters of 2021, compared to 8.8% for the first two quarters of 2020.

Net interest expense increased $2.8 million, or 5.5%, to $53.7 million for the first two quarters of 2021 from $50.9 million in the first two quarters of 2020. The increase was primarily attributable to an increase in average long-term debt outstanding during the first two quarters of 2021 as compared to the first two quarters of 2020, primarily as a result of incremental borrowings the Company made in the fourth quarter of 2020 to fund the Crisco acquisition and related fees and expenses. The increase in net interest expense was partially offset by a lower effective cost of borrowing during the first two quarters of 2021.

The Company’s net income was $51.4 million, or $0.79 per diluted share, for the first two quarters of 2021, compared to net income of $73.0 million, or $1.14 per diluted share, for the first two quarters of 2020. The Company’s net income in the first two quarters of 2020 benefited from a discrete tax benefit of $2.3 million related to the U.S. CARES Act. The Company’s adjusted net income for the first two quarters of 2021, which excludes, among other things, the impact of the discrete tax benefit received in the first quarter of 2020, was $61.2 million, or $0.94 per adjusted diluted share, compared to $75.3 million, or $1.17 per adjusted diluted share, for the first two quarters of 2020.

For the first two quarters of 2021, adjusted EBITDA was $176.7 million, a decrease of $6.6 million, or 3.6%, compared to $183.3 million for the first two quarters of 2020. Adjusted EBITDA as a percentage of net sales was 18.2% for the first two quarters of 2021, compared to 19.1% in the first two quarters of 2020.

For the first two quarters of 2021, adjusted EBITDA before COVID-19 expenses was $180.8 million, a decrease of $6.9 million, or 3.7%, compared to $187.7 million for fiscal 2020. COVID-19 expenses of $4.1 million and $4.4 million for the first two quarters of 2021 and the first two quarters of 2020, respectively, included temporary enhanced compensation for the Company’s manufacturing employees, compensation the Company continued to pay manufacturing employees while in quarantine (which was incremental to the compensation the Company paid to the manufacturing employees who produced the Company’s products while others were in quarantine), and expenses relating to other precautionary health and safety measures. Adjusted EBITDA before COVID-19 expenses as a percentage of net sales was 18.6% for the first two quarters of 2021, compared to 19.5% in the first two quarters of 2020.

Full Year Fiscal 2021 Guidance

B&G Foods reaffirmed its net sales guidance for full year fiscal 2021. Net sales, which will be positively impacted by a full twelve months of ownership of the Crisco brand, are expected to be approximately $2.05 billion to $2.10 billion.

B&G Foods continues to see strong consumer demand for its products relative to pre-pandemic 2019. The Company has also seen and expects to continue to see significant cost inflation for various inputs, including ingredients, packaging and transportation. The Company has initiated various revenue enhancing activities (including list price increases and trade spend initiatives) and cost savings initiatives to offset these costs but there can be no assurance at this point of the ultimate effectiveness of these activities and initiatives. Because the Company’s management is not able to fully estimate the impact COVID-19, cost inflation and the Company’s cost inflation mitigation efforts will have on the Company’s results for the remainder of fiscal 2021, the Company is unable at this time to provide more detailed guidance for full year fiscal 2021. The ultimate impact of the COVID-19 pandemic on the Company’s business will depend on many factors, including, among others: how long social distancing and stay-at-home and work-from home policies and recommendations remain in effect; whether, and the extent to which, additional waves or variants of COVID-19 will affect the United States and the rest of North America; the Company’s ability to continue to operate its manufacturing facilities, maintain its supply chain without material disruption, procure ingredients, packaging and other raw materials when needed; the extent to which macroeconomic conditions resulting from the pandemic and the pace of the subsequent recovery may impact consumer eating and shopping habits; and the extent to which consumers continue to work remotely even after the pandemic subsides and how that may impact consumer habits.

Conference Call

B&G Foods will hold a conference call at 4:30 p.m. ET today, August 5, 2021 to discuss second quarter 2021 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 adjusted for certain items that affect comparability), "adjusted diluted earnings per share," (diluted earnings 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 before net interest expense, income taxes, depreciation and amortization and loss on extinguishment of debt), "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 sale of assets) and non-recurring expenses, gains and losses) and "adjusted EBITDA before COVID-19 expenses" (adjusted EBITDA as adjusted for COVID-19 expenses) 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 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 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses, and a reconciliation of EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses to net income and to net cash provided by operating activities, is included below for the second quarter and first two quarters of 2021 and 2020, along with the components of EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses. 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 income, changes in stockholders’ equity and cash flows.

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 Back to Nature, 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, consumer trends, input cost inflation, list price increases, trade spend initiatives, margins, customer service levels for Crisco, and the Company’s overall expectations for the remainder of fiscal 2021 and beyond. 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 impact of the COVID-19 pandemic on the Company’s business, including, without limitation, 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; whether and when the Company will be able to realize the expected financial results and accretive effect of the Crisco acquisition, and how customers, competitors, suppliers and employees will react to the acquisition; the Company’s substantial leverage; the effects of rising costs for the Company’s raw materials, packaging and ingredients; 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 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 U.S. Tax Cuts and Jobs Act and the U.S. CARES Act; 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 or other disruption; the Company’s sustainability initiatives and changes to environmental laws and regulations; and other factors that affect the food industry generally. 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)

July 3,

January 2,

2021

2021

Assets

Current assets:

Cash and cash equivalents

$

40,322

$

52,182

Trade accounts receivable, net

121,849

132,935

Inventories

533,631

492,804

Prepaid expenses and other current assets

44,370

43,619

Income tax receivable

10,019

15,761

Total current assets

750,191

737,301

Property, plant and equipment, net

355,833

371,854

Operating lease right-of-use assets

38,704

32,216

Goodwill

645,070

644,747

Other intangible assets, net

1,961,498

1,971,326

Other assets

5,598

5,948

Deferred income taxes

4,521

4,178

Total assets

$

3,761,415

$

3,767,570

Liabilities and Stockholders’ Equity

Current liabilities:

Trade accounts payable

$

119,578

$

126,537

Accrued expenses

58,120

77,460

Current portion of operating lease liabilities

9,801

11,034

Income tax payable

123

101

Dividends payable

30,792

30,520

Total current liabilities

218,414

245,652

Long-term debt

2,325,908

2,334,086

Deferred income taxes

305,013

293,121

Long-term operating lease liabilities, net of current portion

31,802

23,959

Other liabilities

38,673

38,875

Total liabilities

2,919,810

2,935,693

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; 64,825,078 and 64,252,859 shares issued and outstanding as of July 3, 2021 and January 2, 2021, respectively

648

643

Additional paid-in capital

Accumulated other comprehensive loss

(31,556

)

(35,594

)

Retained earnings

872,513

866,828

Total stockholders’ equity

841,605

831,877

Total liabilities and stockholders’ equity

$

3,761,415

$

3,767,570

B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

Second Quarter Ended

First Two Quarters Ended

July 3,

June 27,

July 3,

June 27,

2021

2020

2021

2020

Net sales

$

464,375

$

512,539

$

969,509

$

961,909

Cost of goods sold

352,785

378,438

740,125

722,892

Gross profit

111,590

134,101

229,384

239,017

Operating expenses:

Selling, general and administrative expenses

47,076

44,347

97,455

84,320

Amortization expense

5,399

4,739

10,835

9,462

Operating income

59,115

85,015

121,094

145,235

Other income and expenses:

Interest expense, net

26,713

24,849

53,682

50,888

Other income

(1,117

)

(701

)

(2,208

)

(1,154

)

Income before income tax expense

33,519

60,867

69,620

95,501

Income tax expense

8,968

15,956

18,191

22,498

Net income

$

24,551

$

44,911

$

51,429

$

73,003

Weighted average shares outstanding:

Basic

64,777

64,130

64,680

64,088

Diluted

65,410

64,410

65,310

64,247

Earnings per share:

Basic

$

0.38

$

0.70

$

0.80

$

1.14

Diluted

$

0.38

$

0.70

$

0.79

$

1.14

Cash dividends declared per share

$

0.475

$

0.475

$

0.950

$

0.950

B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability
Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Before COVID-19 Expenses to Net Income and to Net Cash Provided by Operating Activities
(In thousands)
(Unaudited)

Second Quarter Ended

First Two Quarters Ended

July 3,

June 27,

July 3,

June 27,

2021

2020

2021

2020

Net income

$

24,551

$

44,911

$

51,429

$

73,003

Income tax expense

8,968

15,956

18,191

22,498

Interest expense, net

26,713

24,849

53,682

50,888

Depreciation and amortization

20,238

15,385

40,529

30,919

EBITDA(1)

80,470

101,101

163,831

177,308

Acquisition/divestiture-related and non-recurring expenses(2)

3,319

1,497

7,829

5,980

Amortization of acquisition-related inventory step-up(3)

5,054

Adjusted EBITDA(1)

83,789

102,598

176,714

183,288

COVID-19 expenses(4)

1,199

4,289

4,090

4,439

Adjusted EBITDA before COVID-19 expenses(1)

84,988

106,887

180,804

187,727

Income tax expense

(8,968

)

(15,956

)

(18,191

)

(22,498

)

Interest expense, net

(26,713

)

(24,849

)

(53,682

)

(50,888

)

Acquisition/divestiture-related and non-recurring expenses(2)

(3,319

)

(1,497

)

(7,829

)

(5,980

)

Amortization of acquisition-related inventory step-up(3)

(5,054

)

Net gain on sales and disposals of property, plant and equipment

(4

)

(63

)

(30

)

(61

)

Deferred income taxes

5,182

(116

)

11,370

14,281

Amortization of deferred debt financing costs and bond discount/premium

1,148

901

2,289

1,799

Share-based compensation expense

1,402

3,821

2,125

4,244

Changes in assets and liabilities, net of effects of business combinations

(12,572

)

123,949

(41,747

)

122,181

Net cash provided by operating activities

$

39,945

$

188,788

$

65,965

$

246,366

________________________

(1)

EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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 income, changes in stockholders’ equity and cash flows. The Company defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization and loss on extinguishment of debt. 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 assets); and non-recurring expenses, gains and losses, including severance and other expenses relating to the separation of the Company’s former chief executive officer in fiscal 2020 and a workforce reduction in fiscal 2019. The Company defines adjusted EBITDA before COVID-19 expenses as adjusted EBITDA adjusted for COVID-19 expenses.

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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses are not recognized terms under GAAP and do not purport to be alternatives to operating income, net income or any other GAAP measure as an indicator of operating performance. EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses are not complete net cash flow measures because EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses are two potential indicators of an entity’s ability to fund these cash requirements. EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses may not be comparable to other similarly titled measures of other companies. However, EBITDA, adjusted EBITDA and adjusted EBITDA before COVID-19 expenses 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)

Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2021 of $3.3 million and $7.8 million, respectively, primarily includes acquisition and integration expenses for the Crisco and Clabber Girl acquisitions, and certain cost savings initiatives. Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2020 of $1.5 million and $6.0 million, respectively, primarily includes acquisition and integration expenses for the Clabber Girl and Farmwise acquisitions, and severance and other expenses primarily relating to a workforce reduction in fiscal 2019 and certain cost savings initiatives.

(3)

For the first two quarters of 2021, amortization of acquisition-related inventory step-up of $5.1 million relates to the purchase accounting adjustments made during the first quarter of 2021 to inventory acquired in the Crisco acquisition.

(4)

COVID-19 expenses of $1.2 million and $4.1 million for the second quarter and first two quarters of 2021, respectively, and $4.3 million and $4.4 million for the second quarter and first two quarters of 2020, respectively, primarily included temporary enhanced compensation for the Company’s manufacturing employees; compensation the Company continued to pay manufacturing employees while in quarantine (which was incremental to the compensation the Company paid to the manufacturing employees who produced the Company’s products while others were in quarantine); and expenses relating to other precautionary health and safety measures.

B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability
Reconciliation of Adjusted Net Income and Adjusted Diluted Earnings per Share to Net Income
(In thousands, except per share data)
(Unaudited)

Second Quarter Ended

First Two Quarters Ended

July 3,

June 27,

July 3,

June 27,

2021

2020

2021

2020

Net income

$

24,551

$

44,911

$

51,429

$

73,003

Acquisition/divestiture-related and non-recurring expenses, net of tax(1)

2,506

1,130

5,911

4,515

Tax benefit(2)

(2,258

)

Amortization of acquisition-related inventory step-up, net of tax(3)

3,816

Adjusted net income

$

27,057

$

46,041

$

61,156

$

75,260

Adjusted diluted earnings per share

$

0.41

$

0.71

$

0.94

$

1.17

________________________

(1)

Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2021 primarily includes acquisition and integration expenses for the Crisco and Clabber Girl acquisitions, and certain cost savings initiatives. Acquisition/divestiture-related and non-recurring expenses for the second quarter and first two quarters of 2020 primarily includes acquisition and integration expenses for the Clabber Girl and Farmwise acquisitions, and severance and other expenses primarily relating to a workforce reduction in fiscal 2019 and certain cost savings initiatives.

(2)

The first two quarters of 2020 includes a $2.3 million tax benefit associated with the U.S. CARES Act, which was recorded during the first quarter of 2020.

(3)

For the first two quarters of 2021, amortization of acquisition-related inventory step-up of $5.1 million (or $3.8 million, net of tax) relates to the purchase accounting adjustments made during the first quarter of 2021 to inventory acquired in the Crisco acquisition.

B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability
Reconciliation of Base Business Net Sales(1) to Net Sales
(In thousands)
(Unaudited)

2021 Compared to 2020

Second Quarter Ended

First Two Quarters Ended

July 3,

June 27,

July 3,

June 27,

2021

2020

2021

2020

Net sales

$

464,375

$

512,539

$

969,509

$

961,909

Net sales from acquisitions(2)

(58,442

)

(116,698

)

Base business net sales

$

405,933

$

512,539

$

852,811

$

961,909

2021 Compared to 2019

Second Quarter Ended

First Two Quarters Ended

July 3,

June 29,

July 3,

June 29,

2021

2019

2021

2019

Net sales

$

464,375

$

371,197

$

969,509

$

783,931

Net sales from acquisitions(3)

(66,731

)

(142,534

)

Base business net sales

$

397,644

$

371,197

$

826,975

$

783,931

________________________

(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)

Primarily reflects $58.4 million and $116.5 million of net sales for Crisco for the second quarter and first two quarters of 2021, respectively, for which there is no comparable period of net sales during the second quarter and first two quarters of 2020, respectively. The Crisco acquisition closed on December 1, 2020.

(3)

Primarily reflects (a) $58.4 million and $116.5 million of net sales for Crisco for the second quarter and first two quarters of 2021, respectively, and (b) $8.1 million, or one and one-half months of net sales for Clabber Girl in the second quarter of 2021, and $25.5 million, or four and one-half months of net sales for Clabber Girl in the first two quarters of 2021, in case for which there is no comparable period of net sales during the second quarter and first two quarters of 2019, respectively. The Crisco acquisition closed on December 1, 2020 and the Clabber Girl acquisition closed on May 15, 2019.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805006087/en/

Contacts

Investor Relations:
ICR, Inc.
Dara Dierks
866.211.8151

Media Relations:
ICR, Inc.
Matt Lindberg
203.682.8214