B&G Foods reports strong growth in Q2

B&G Foods reports strong growth in Q2

B&G Foods, Inc. announced financial results for the second quarter and first two quarters of 2011, reporting strong net sales and earnings growth.


B&G Foods, Inc. (NYSE: BGS) announced financial results for the second quarter and first two quarters of 2011, reporting strong net sales and earnings growth.

Second Quarter 2011 Financial Highlights (vs. year-ago quarter where applicable):

Net sales increased 6.9% to $129.4 million

Net income increased 48.3% to $12.6 million

Adjusted net income* increased 36.6% to $12.9 million

Diluted earnings per share increased 44.4% to $0.26

Adjusted diluted earnings per share* increased 36.8% to $0.26

EBITDA* increased 8.2% to $30.3 million

Fiscal 2011 EBITDA guidance reaffirmed at a range of $125.0 million to  $128.0 million

David L. Wenner, President and Chief Executive Officer of B&G Foods, stated, "We are very pleased with the continued strong momentum in top and bottom line results, even after factoring in the benefit of the late Easter holiday. We remain confident that we will deliver full-year results within our previously announced EBITDA guidance of $125.0 to $128.0 million, with third quarter price increases and on-going cost reductions efforts expected to offset the cost increases we will experience in the second half of 2011."

Financial Results for the Second Quarter of 2011

Net sales for the second quarter of 2011 increased 6.9% to $129.4 million from $121.1 million for the second quarter of 2010. This $8.3 million increase was attributable to an increase in unit volume of $11.3 million offset by a net decrease in pricing of $1.7 million and an increase in coupon expenses of $1.3 million. Net sales of the Company's Don Pepino and Sclafani brands, which were acquired during the fourth quarter of 2010, contributed $3.5 million to the overall unit volume increase for the second quarter.

Gross profit for the second quarter of 2011 increased 7.0% to $42.2 million from $39.4 million in the second quarter of 2010. Gross profit expressed as a percentage of net sales increased 0.1 percentage points to 32.6% for the second quarter of 2011 from 32.5% in the second quarter of 2010. The increase in gross profit expressed as a percentage of net sales was primarily attributable to a sales mix shift to higher margin products. This mix shift offset the net decrease in pricing and slightly higher input costs. Operating income increased 8.3% to $26.3 million for the second quarter of 2011, from $24.3 million in the second quarter of 2010.

Net interest expense for the second quarter of 2011 decreased $2.6 million or 23.5% to $8.3 million from $10.9 million for the second quarter of 2010. The decrease in net interest expense for the second quarter was primarily attributable to the termination of an interest rate swap causing a reduction in the effective interest rate on $130.0 million of term loan borrowings from 7.0925% to 2.31% and the elimination of the unfavorable fair market value adjustment relating to the interest rate swap.

The Company's reported net income under U.S. generally accepted accounting principles (GAAP) was $12.6 million, or $0.26 per diluted share, for the second quarter of 2011, as compared to reported net income of $8.5 million, or $0.18 per diluted share, for the second quarter of 2010. The Company's adjusted net income for the second quarter of 2011 was $12.9 million, and adjusted diluted earnings per share was $0.26, as compared to adjusted net income of $9.4 million and adjusted diluted earnings per share of $0.19 for the second quarter of 2010.

For the second quarter of 2011, EBITDA increased 8.2% to $30.3 million from $28.0 million for the second quarter of 2010.

Financial Results for the First Two Quarters of 2011

Net sales for the first two quarters of 2011 increased 5.9% to $260.8 million from $246.3 million for the first two quarters of 2010. This $14.5 million increase was attributable to an increase in unit volume of $17.2 million offset by a net decrease in pricing of $1.5 million and an increase in coupon and slotting expenses of $1.2 million. Net sales of the Company's Don Pepino and Sclafani brands, which were acquired during the fourth quarter of 2010, contributed $7.1 million to the overall unit volume increase for the first two quarters of 2011.

Gross profit for the first two quarters of 2011 increased 6.9% to $87.0 million from $81.4 million in the first two quarters of 2010. Gross profit expressed as a percentage of net sales increased 0.3 percentage points to 33.4% in the first two quarters of 2011 from 33.1% in the first two quarters of 2010. The increase in gross profit expressed as a percentage of net sales was primarily attributable to a sales mix shift to higher margin products and slightly reduced input costs offset by a reduction in sales prices and increased coupon and slotting expenses. Operating income increased 9.3% to $55.4 million in the first two quarters of 2011, from $50.7 million in the first two quarters of 2010.

Net interest expense for the first two quarters of 2011 decreased $5.0 million or 23.2% to $16.5 million from $21.5 million for in the first two quarters of 2010. The decrease in net interest expense for the first two quarters was primarily attributable to the termination of the interest rate swap causing a reduction in the effective interest rate on $130.0 million of term loan borrowings from 7.0925% to 2.31% and the elimination of the unfavorable fair market value adjustment relating to the interest rate swap.

The Company's reported net income under U.S. GAAP was $25.9 million, or $0.53 per diluted share, for the first two quarters of 2011, as compared to reported net income of $8.8 million, or $0.18 per diluted share, for the first two quarters of 2010. The Company's adjusted net income for the first two quarters of 2011 was $26.1 million, and adjusted diluted earnings per share was $0.54, as compared to adjusted net income of $19.8 million and adjusted diluted earnings per share of $0.41 for the first two quarters of 2010.

For the first two quarters of 2011, EBITDA increased 9.1% to $63.3 million from $58.0 million for the first two quarters of 2010.

Guidance

EBITDA for fiscal 2011 is expected to be approximately $125.0 million to $128.0 million. Capital expenditures for fiscal 2011 are expected to be approximately $11.0 million.

About Non-GAAP Financial Measures and Items Affecting Comparability

"Adjusted net income," "adjusted diluted earnings per share" and "EBITDA" (net income before net interest expense, income taxes, depreciation and amortization and loss on extinguishment of debt) 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 GAAP in B&G Foods' consolidated balance sheets and related consolidated statements of operations 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 "adjusted net income" and "adjusted diluted earnings per share," which are calculated as reported net income and reported diluted earnings per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to reported net income and diluted earnings per share to eliminate the items identified below. 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 charges associated with unrealized gains or losses on the Company's interest rate swap and gains or losses on extinguishment of debt, management does not consider these costs when evaluating the Company's performance or when making decisions regarding allocation of resources.

A reconciliation of EBITDA to net income and to net cash provided by operating activities is included below for the first two quarters of 2011 and 2010, along with the components of EBITDA. Also included below are reconciliations of the non-GAAP terms adjusted net income and adjusted diluted earnings per share to reported net income and reported diluted earnings per share.

About B&G Foods, Inc.

B&G Foods and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, shelf-stable foods across the United States, Canada and Puerto Rico. B&G Foods' products include hot cereals, fruit spreads, canned meats and beans, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, taco shells and kits, salsas, pickles, peppers and other specialty food products. B&G Foods competes in the retail grocery, food service, specialty, private label, club and mass merchandiser channels of distribution. Based in Parsippany, New Jersey, B&G Foods' products are marketed under many recognized brands, including Ac'cent, B&G, B&M, Brer Rabbit, Cream of Rice, Cream of Wheat, Don Pepino, Emeril's, Grandma's Molasses, Joan of Arc, Las Palmas, Maple Grove Farms of Vermont, Ortega, Polaner, Red Devil, Regina, Sa-són, Sclafani, Trappey's, Underwood, VermontMaid and Wright's.

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