B&G Foods reports Q3 earnings of US$12.1M, rising 30.2% year-over-year amid sales price increases implemented on Sept. 1

Nevin Barich

PARSIPPANY, New Jersey , October 25, 2011 (press release) –
B&G Foods, Inc. (NYSE:BGS - News) today announced financial results for the third quarter and first three quarters of 2011, reporting strong net sales and earnings growth.

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

* Net sales increased 6.3% to $133.0 million
* Net income increased 30.2% to $12.1 million
* Adjusted net income* increased 25.5% to $12.4 million
* Diluted earnings per share increased 31.6% to $0.25
* Adjusted diluted earnings per share* increased 25.0% to $0.25
* EBITDA* increased 7.7% to $31.1 million
* Fiscal 2011 EBITDA guidance increased to a range of $127.0 million to $129.0 million

David L. Wenner, President and Chief Executive Officer of B&G Foods, stated, “We are very pleased that the business continued to produce strong, consistent improvement in net sales, net income, earnings per share and EBITDA in the face of rapidly increasing costs. We saw the beginning of the benefit from sales price increases implemented on September 1st, but a positive sales mix also helped maintain margins. Given the overall health of the business and consistently strong cash generation, the Board of Directors saw fit to increase the quarterly dividend last Tuesday by 9.5%.”

Financial Results for the Third Quarter of 2011

Net sales for the third quarter of 2011 increased 6.3% to $133.0 million from $125.1 million for the third quarter of 2010. This $7.9 million increase was attributable to an increase in unit volume and pricing of $6.9 million and $0.1 million and a decrease in coupon and slotting expenses of $0.9 million. Net sales of the Company’s Don Pepino and Sclafani brands, which were acquired during the fourth quarter of 2010, contributed $3.4 million to the overall unit volume increase for the third quarter.

Gross profit for the third quarter of 2011 increased 5.8% to $41.5 million from $39.2 million in the third quarter of 2010. Gross profit expressed as a percentage of net sales decreased 0.1 percentage points to 31.2% for the third quarter of 2011 from 31.3% in the third quarter of 2010. The decrease in gross profit expressed as a percentage of net sales was primarily attributable to an increase in commodity and distribution costs partially offset by a sales mix shift to higher margin products. Operating income increased 7.8% to $27.1 million for the third quarter of 2011, from $25.1 million in the third quarter of 2010.

Net interest expense for the third quarter of 2011 decreased $2.0 million or 19.5% to $8.3 million from $10.3 million for the third quarter of 2010. The decrease in net interest expense for the third 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 7.09% to 2.33% 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 $12.1 million, or $0.25 per diluted share, for the third quarter of 2011, as compared to reported net income of $9.3 million, or $0.19 per diluted share, for the third quarter of 2010. The Company’s adjusted net income for the third quarter of 2011 was $12.4 million, and adjusted diluted earnings per share was $0.25, as compared to adjusted net income of $9.8 million and adjusted diluted earnings per share of $0.20 for the third quarter of 2010.

For the third quarter of 2011, EBITDA increased 7.7% to $31.1 million from $28.9 million for the third quarter of 2010.

Financial Results for the First Three Quarters of 2011

Net sales for the first three quarters of 2011 increased 6.0% to $393.9 million from $371.5 million for the first three quarters of 2010. This $22.4 million increase was attributable to an increase in unit volume of $24.0 million, offset by a decrease in pricing of $1.4 million and an increase in coupon expenses of $0.2 million. Net sales of the Company’s Don Pepino and Sclafani brands, which were acquired during the fourth quarter of 2010, contributed $10.6 million to the overall unit volume increase for the first three quarters of 2011.

Gross profit for the first three quarters of 2011 increased 6.5% to $128.5 million from $120.6 million in the first three quarters of 2010. Gross profit expressed as a percentage of net sales increased 0.1 percentage points to 32.6% in the first three quarters of 2011 from 32.5% in the first three 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 partially offset by higher input and distribution costs and a reduction in sales prices. Operating income increased 8.8% to $82.5 million in the first three quarters of 2011, from $75.8 million in the first three quarters of 2010.

Net interest expense for the first three quarters of 2011 decreased $7.0 million or 22.0% to $24.9 million from $31.9 million in the first three quarters of 2010. The decrease in net interest expense for the first three 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 7.09% to 2.33% 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 $38.0 million, or $0.78 per diluted share, for the first three quarters of 2011, as compared to reported net income of $18.1 million, or $0.37 per diluted share, for the first three quarters of 2010. The Company’s adjusted net income for the first three quarters of 2011 was $38.4 million, and adjusted diluted earnings per share was $0.79, as compared to adjusted net income of $29.6 million and adjusted diluted earnings per share of $0.61 for the first three quarters of 2010.

For the first three quarters of 2011, EBITDA increased 8.7% to $94.5 million from $86.9 million for the first three quarters of 2010.

Guidance

EBITDA for fiscal 2011 is expected to be approximately $127.0 million to $129.0 million. Capital expenditures for fiscal 2011 are expected to be approximately $11.0 million.

Increase in Quarterly Dividend Rate

On October 18, 2011, the Company announced that its Board of Directors has increased the Company’s quarterly dividend rate from $0.21 per share of common stock to $0.23 per share of common stock. The first quarterly dividend at the new rate will be payable on January 30, 2012 to shareholders of record as of December 30, 2011.

Conference Call

B&G Foods will hold a webcast and conference call at 4:30 p.m. ET today, October 25, 2011. The call will be webcast live from B&G Foods’ website at www.bgfoods.com under “Investor Relations—Company Overview.” The call can also be accessed live over the phone by dialing (888) 300-2343 for U.S. callers or (719) 457-2631 for international callers.

A replay of the call will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the password is 2488217. The replay will be available from October 25, 2011, through November 5, 2011. Investors may also access a web-based replay of the call at the Investor Relations section of B&G Foods’ website, www.bgfoods.com.

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 three 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, Vermont Maid and Wright’s.

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