B&G Foods Reports Financial Results for First Quarter 2023
Summary
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First Quarter of 2023 |
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(In millions, except per share data) |
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Change vs. |
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Amount |
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Q1 2022 |
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Net Sales |
$ |
511.8 |
|
(3.9) |
% |
Base Business Net Sales 1 |
$ |
511.4 |
|
(1.2) |
% |
Diluted EPS |
$ |
0.05 |
|
(85.3) |
% |
Adj. Diluted EPS 1 |
$ |
0.27 |
|
(6.9) |
% |
Net Income |
$ |
3.4 |
|
(85.6) |
% |
Adj. Net Income 1 |
$ |
19.1 |
|
(3.9) |
% |
Adj. EBITDA 1 |
$ |
82.4 |
|
12.9 |
% |
Guidance Reaffirmed for Full Year Fiscal 2023
-
Net sales reaffirmed at a range of
$2.13 billion $2.17 billion -
Adjusted EBITDA reaffirmed at a range of
$310 million $330 million -
Adjusted diluted earnings per share reaffirmed at a range of
$0.95 $1.15
Commenting on the results, Casey Keller, President and Chief Executive Officer of B&G Foods, stated, “First quarter results demonstrated continued pricing recovery against inflationary costs, with both adjusted gross margin and adjusted EBITDA margin significantly above the first quarter of last year. Base business net sales (which excludes net sales from the recently divested Back to Nature brand) were slightly below last year’s elevated demand from Omicron partial lockdowns, but up
Financial Results for the First Quarter of 2023
Net sales for the first quarter of 2023 decreased
Base business net sales for the first quarter of 2023 decreased
Net sales of the Company’s spices & seasonings2 increased
Gross profit was
During fiscal 2022, 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 will continue to have a significant industry-wide impact during the remainder of fiscal 2023. The Company has been 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 also announced several rounds of list price increases in 2021, 2022 and during the first quarter of 2023. However, the effective date of increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company did not fully offset the incremental costs that it faced in fiscal 2022. However, during the fourth quarter of 2022, the Company began to more fully realize the benefits of previously announced list price increases. This trend continued during the first quarter of 2023, with the impact of previously announced list price increases the primary driver of a recovery in gross profit, which as described above, increased during the first quarter of 2023 as compared to the first quarter of 2022.
Selling, general and administrative expenses decreased
Net interest expense increased
The Company’s net income was
For the first quarter of 2023, adjusted EBITDA was
Full Year Fiscal 2023 Guidance
B&G Foods reaffirmed its net sales guidance for fiscal 2023 at a range of
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); loss 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, May 4, 2023 to discuss first 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 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, 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), loss 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 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 and to net cash provided by operating activities, is included below for the first quarter 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 income, 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.
- 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
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, adjusted diluted earnings per share, inflation and commodity prices, and the Company’s overall expectations for the remainder of fiscal 2023 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 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,
B&G Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
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April 1, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
35,898 |
|
$ |
45,442 |
Trade accounts receivable, net |
|
162,441 |
|
|
150,019 |
Inventories |
|
700,882 |
|
|
726,468 |
Assets held for sale |
|
— |
|
|
51,314 |
Prepaid expenses and other current assets |
|
32,425 |
|
|
37,550 |
Income tax receivable |
|
5,200 |
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|
8,024 |
Total current assets |
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936,846 |
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1,018,817 |
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Property, plant and equipment, net |
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311,784 |
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317,587 |
Operating lease right-of-use assets |
|
68,240 |
|
|
65,809 |
Finance lease right-of-use assets |
|
2,626 |
|
|
2,891 |
Goodwill |
|
619,256 |
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|
619,241 |
Other intangible assets, net |
|
1,782,952 |
|
|
1,788,157 |
Other assets |
|
20,790 |
|
|
19,088 |
Deferred income taxes |
|
9,949 |
|
|
10,019 |
Total assets |
$ |
3,752,443 |
|
$ |
3,841,609 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
|
|
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Trade accounts payable |
$ |
131,316 |
|
$ |
127,809 |
Accrued expenses |
|
67,797 |
|
|
64,137 |
Current portion of operating lease liabilities |
|
15,664 |
|
|
14,616 |
Current portion of finance lease liabilities |
|
1,051 |
|
|
1,046 |
Current portion of long-term debt |
|
— |
|
|
50,000 |
Income tax payable |
|
1,136 |
|
|
309 |
Dividends payable |
|
13,720 |
|
|
13,617 |
Total current liabilities |
|
230,684 |
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|
271,534 |
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Long-term debt, net of current portion |
|
2,281,464 |
|
|
2,339,049 |
Deferred income taxes |
|
302,870 |
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|
288,712 |
Long-term operating lease liabilities, net of current portion |
|
52,966 |
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51,727 |
Long-term finance lease liabilities, net of current portion |
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1,530 |
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1,795 |
Other liabilities |
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21,110 |
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20,626 |
Total liabilities |
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2,890,624 |
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2,973,443 |
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Stockholders’ equity: |
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Preferred stock, |
|
— |
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— |
Common stock, |
|
722 |
|
|
717 |
Additional paid-in capital |
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— |
|
|
— |
Accumulated other comprehensive loss |
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(4,189) |
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(9,349) |
Retained earnings |
|
865,286 |
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|
876,798 |
Total stockholders’ equity |
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861,819 |
|
|
868,166 |
Total liabilities and stockholders’ equity |
$ |
3,752,443 |
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$ |
3,841,609 |
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
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First Quarter Ended |
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April 1, |
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April 2, |
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|
2023 |
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2022 |
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Net sales |
$ |
511,814 |
|
$ |
532,407 |
Cost of goods sold |
|
397,578 |
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|
431,119 |
Gross profit |
|
114,236 |
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|
101,288 |
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Operating (income) and expenses: |
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Selling, general and administrative expenses |
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46,729 |
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46,840 |
Amortization expense |
|
5,241 |
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|
5,223 |
Loss (gain) on sales of assets |
|
85 |
|
|
(7,099) |
Operating income |
|
62,181 |
|
|
56,324 |
|
|
|
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|
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Other (income) and expenses: |
|
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|
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Interest expense, net |
|
39,435 |
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|
26,802 |
Other income |
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(921) |
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|
(1,839) |
Income before income tax expense |
|
23,667 |
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|
31,361 |
Income tax expense |
|
20,252 |
|
|
7,705 |
Net income |
$ |
3,415 |
|
$ |
23,656 |
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Weighted average shares outstanding: |
|
|
|
|
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Basic |
|
71,779 |
|
|
68,630 |
Diluted |
|
71,795 |
|
|
69,017 |
|
|
|
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|
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Earnings per share: |
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Basic |
$ |
0.05 |
|
$ |
0.34 |
Diluted |
$ |
0.05 |
|
$ |
0.34 |
|
|
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|
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Cash dividends declared per share |
$ |
0.190 |
|
$ |
0.475 |
B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
|
|
|
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|
|
|
|
|
First Quarter Ended |
||||
|
|
April 1, |
|
April 2, |
||
|
|
2023 |
|
2022 |
||
Net income |
|
$ |
3,415 |
|
$ |
23,656 |
Income tax expense |
|
|
20,252 |
|
|
7,705 |
Interest expense, net |
|
|
39,435 |
|
|
26,802 |
Depreciation and amortization |
|
|
18,018 |
|
|
19,825 |
EBITDA(1) |
|
|
81,120 |
|
|
77,988 |
Acquisition/divestiture-related and non-recurring expenses (income)(2) |
|
|
1,160 |
|
|
(87) |
Loss (gain) on sales of assets, net of facility closure costs(3) |
|
|
85 |
|
|
(4,928) |
Adjusted EBITDA(1) |
|
$ |
82,365 |
|
$ |
72,973 |
B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability
Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
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First Quarter Ended |
||||
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April 1, |
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April 2, |
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2023 |
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2022 |
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Net cash provided by operating activities |
|
$ |
69,527 |
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$ |
25,231 |
Income tax expense |
|
|
20,252 |
|
|
7,705 |
Interest expense, net |
|
|
39,435 |
|
|
26,802 |
(Loss) gain on sales of assets(3) |
|
|
(93) |
|
|
7,113 |
Deferred income taxes |
|
|
(15,019) |
|
|
(2,913) |
Amortization of deferred debt financing costs and bond discount/premium |
|
|
(3,648) |
|
|
(1,169) |
Share-based compensation expense |
|
|
(927) |
|
|
(1,090) |
Changes in assets and liabilities, net of effects of business combinations |
|
|
(28,407) |
|
|
16,309 |
EBITDA(1) |
|
|
81,120 |
|
|
77,988 |
Acquisition/divestiture-related and non-recurring expenses (income)(2) |
|
|
1,160 |
|
|
(87) |
Loss (gain) on sales of assets, net of facility closure costs(3) |
|
|
85 |
|
|
(4,928) |
Adjusted EBITDA(1) |
|
$ |
82,365 |
|
$ |
72,973 |
B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted Earnings per Share
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
Thirteen Weeks Ended |
||||
|
April 1, |
|
April 2, |
||
|
2023 |
|
2022 |
||
Net income |
$ |
3,415 |
|
$ |
23,656 |
Acquisition/divestiture-related and non-recurring expenses (income)(2) |
|
1,160 |
|
|
(87) |
Loss (gain) on sales of assets, net of facility closure costs(3) |
|
85 |
|
|
(4,928) |
Tax adjustment(4) |
|
14,736 |
|
|
— |
Tax effects of non-GAAP adjustments(5) |
|
(305) |
|
|
1,229 |
Adjusted net income |
$ |
19,091 |
|
$ |
19,870 |
Adjusted diluted earnings per share |
$ |
0.27 |
|
$ |
0.29 |
___________________________________
| (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 income, changes in stockholders’ equity and cash flows. The Company defines EBITDA as net income 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); loss on extinguishment of debt; impairment of assets held for sale; impairment of intangible assets; and non-recurring expenses, gains and losses. |
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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. |
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EBITDA and adjusted EBITDA 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 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. |
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(2) |
Acquisition/divestiture-related and non-recurring expenses for the first quarter of 2023 of |
|
(3) |
During the first quarter of 2023, the Company completed the Back to Nature divestiture and recorded a loss on the sale of |
|
(4) |
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 tax expense by |
|
(5) |
Represents the tax effects of the non-GAAP adjustments listed above, assuming a tax rate of |
B&G Foods, Inc. and Subsidiaries
Items Affecting Comparability
Reconciliation of Net Sales to Base Business Net Sales(1)
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
First Quarter Ended |
||||
|
April 1, |
|
April 2, |
||
|
2023 |
|
2022 |
||
Net sales |
$ |
511,814 |
|
$ |
532,407 |
Net sales from acquisitions(2) |
|
(427) |
|
|
— |
Net sales from discontinued or divested brands(3) |
|
30 |
|
|
(14,640) |
Base business net sales |
$ |
511,417 |
|
$ |
517,767 |
__________________________
| (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 quarter of 2022. The Yuma acquisition was completed on May 5, 2022. |
|
(3) |
For the first quarter 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 first quarter 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/20230504006013/en/
Investor Relations:
ICR, Inc.
Dara Dierks
866.211.8151
Media Relations:
ICR, Inc.
Matt Lindberg
203.682.8214
Source: B&G Foods, Inc.
