B&G Foods Reports Second Quarter 2013 Financial Results

  B&G Foods Reports Second Quarter 2013 Financial Results

                      — Increases Fiscal 2013 Guidance —

Business Wire

PARSIPPANY, N.J. -- July 18, 2013

B&G Foods, Inc. (NYSE: BGS) today announced financial results for the second
quarter and first two quarters of 2013.

Highlights (vs. year-ago quarter where applicable):

  *Net sales increased 8.3% to $160.9 million
  *Operating income increased 3.2% to $36.2 million
  *Net loss was $1.4 million, after giving effect to $18.7 million of
    after-tax charges related to debt refinancing and acquisition-related
    transaction costs
  *Adjusted net income* increased 8.0% to $17.3 million
  *Loss per share was $0.03, after giving effect to $0.36 per share of
    after-tax charges related to debt refinancing and acquisition-related
    transaction costs
  *Adjusted diluted earnings per share* remained consistent at $0.33
  *Adjusted EBITDA^* increased 7.0% to $42.4 million
  *Adjusted EBITDA guidance increased to a range of $187.0 million to $191.0
    million for the full year based primarily on the recent Pirate Brands
    acquisition

Commenting on the results, David L. Wenner, President and Chief Executive
Officer of B&G Foods, stated, “The second quarter was a very successful
quarter for B&G Foods. In May we completed the acquisition of the TrueNorth
brand and in June we entered into an agreement to buy Pirate Brands, a leader
in the all-natural snack foods category. During the second quarter we also
issued $700 million of senior notes at the very favorable interest rate of
4.625% and early in the third quarter increased our revolver capacity by
$100.0 million. We used the proceeds from the refinancing to retire our 7.625%
senior notes, repay our tranche B term loans and to fund the Pirate Brands
acquisition, which closed early in the third quarter. We believe that by
improving our debt profile, we are in a very strong position to continue to
pursue accretive acquisitions.”

Mr. Wenner continued, “The quarter left our net sales volumes for our base
business slightly positive for the first half of the year. We continue to grow
the brands most important to us; Tier I brands were up for both the quarter
and the first half. Declines in other areas centered primarily on weak second
quarter foodservice sales and continued weakness in certain Northeast retail
customers.”

_________________

* Please see “About Non-GAAP Financial Measures and Items Affecting
Comparability” below for the definition of the terms adjusted net income,
adjusted diluted earnings per share, EBITDA and adjusted EBITDA, as well as
information concerning certain items affecting comparability and
reconciliations of the non-GAAP terms adjusted net income, adjusted diluted
earnings per share, EBITDA and adjusted EBITDA to the most comparable GAAP
financial measures.

Financial Results for the Second Quarter of 2013

Net sales for the second quarter of 2013 increased $12.3 million or 8.3% to
$160.9 million from $148.6 million for the second quarter of 2012. Net sales
of the New York Style and Old London brands, which B&G Foods acquired at the
end of October 2012, contributed $10.9 million to the overall increase, and
net sales of the TrueNorth brand, which B&G Foods acquired at the beginning of
May 2013, contributed $3.2 million to the overall increase. Net sales for B&G
Foods’ base business decreased $1.8 million, or 1.2%, attributable to net
price decrease of $0.6 million and a unit volume decrease of $1.2 million.

Gross profit for the second quarter of 2013 increased 7.6% to $55.7 million
from $51.8 million in the second quarter of 2012. Gross profit expressed as a
percentage of net sales decreased 0.2 percentage points to 34.6% for the
second quarter of 2013 from 34.8% in the second quarter of 2012. The decrease
in gross profit expressed as a percentage of net sales was primarily
attributable to the effect of the NewYork Style and Old London acquisition
and the TrueNorth acquisition and a net price decrease of $0.6 million,
partially offset by a sales mix shift to higher margin products. Operating
income increased 3.2% to $36.2 million for the second quarter of 2013, from
$35.1 million in the second quarter of 2012.

Net interest expense for the second quarter of 2013 decreased $1.8 million or
15.4% to $10.0 million from $11.9 million for the second quarter of 2012. The
decrease in net interest expense in the second quarter of 2013 was primarily
attributable to the refinancing of the Company’s long-term debt, including the
issuance of 4.625% senior notes, the repurchase of 7.625% senior notes, and
the repayment of tranche B term loans.

As a result of $18.7 million of after tax charges relating to the refinancing
and acquisition-related transaction costs, the Company reported a net loss
under U.S. generally accepted accounting principles (GAAP) of $1.4 million, or
$0.03 per share, for the second quarter of 2013. This compares to reported net
income of $16.0 million, or $0.33 per diluted share, for the second quarter of
2012. The Company’s adjusted net income for the second quarter of 2013, which
excludes the refinancing charges and acquisition-related transaction costs,
was $17.3 million, or $0.33 per adjusted diluted share. There were no
adjustments to net income for the second quarter of 2012.

For the second quarter of 2013, adjusted EBITDA, which excludes the impact of
acquisition-related transaction costs, increased 7.0% to $42.4 million from
$39.6 million for the second quarter of 2012. There were no adjustments to
EBITDA for the second quarter of 2012.

Financial Results for the First Two Quarters of 2013

Net sales for the first two quarters of 2013 increased $26.1 million or 8.5%
to $332.1 million from $306.0 million for the first two quarters of 2012. Net
sales of the New York Style and Old London brands, which we acquired at the
end of October 2012, contributed $22.2 million to the overall increase, and
net sales of the TrueNorth brand, which we acquired at the beginning of May
2013, contributed $3.2 million to the overall increase. Net sales from the
Company’s base business increased $0.7 million, or 0.2%, attributable to a
unit volume increase of $1.2 million and a net price decrease of $0.5 million.

Gross profit for the first two quarters of 2013 increased 5.5% to $114.5
million from $108.6 million in the first two quarters of 2012. Gross profit
expressed as a percentage of net sales decreased 1.0 percentage point to 34.5%
in the first two quarters of 2013 from 35.5% in the first two quarters of
2012. The decrease in gross profit expressed as a percentage of net sales was
primarily attributable to the effect of the New York Style and Old London
acquisition and the TrueNorth acquisition, a net price decrease of $0.5
million and a sales mix shift to lower margin products. Operating income
increased 4.4% to $76.5 million in the first two quarters of 2013, from $73.3
million in the first two quarters of 2012.

Net interest expense for the first two quarters of 2013 decreased $4.0 million
or 17.0% to $19.8 million from $23.9 million in the first two quarters of
2012. The decrease in net interest expense in the first two quarters of 2013
was primarily attributable to the refinancing of the Company’s long-term debt,
including the issuance of 4.625% senior notes, the repurchase of 7.625% senior
notes, and the repayment of tranche B term loans.

After taking into account $18.7 million of after tax charges relating to the
refinancing and acquisition-related transaction costs, the Company’s reported
net income under U.S. GAAP was $18.2 million, or $0.34 per diluted share, for
the first two quarters of 2013, as compared to reported net income of $32.8
million, or $0.68 per diluted share, for the first two quarters of 2012. The
Company’s adjusted net income for the first two quarters of 2013, which
excludes the refinancing charges and acquisition-related transaction costs,
was $36.9 million, and adjusted diluted earnings per share was $0.70. There
were no adjustments to net income for the first two quarters of 2012.

For the first two quarters of 2013, adjusted EBITDA increased 7.1% to $88.0
million from $82.2 million for the first two quarters of 2012. There were no
adjustments to EBITDA for the first two quarters of 2012.

Guidance

Primarily to take into account the expected impact of the Pirate Brands
acquisition, B&G Foods increased its adjusted EBITDA guidance for fiscal 2013
to a range of approximately $187.0 to $191.0 million.

Conference Call

B&G Foods will hold a conference call at 4:30 p.m. ET today, July 18, 2013.
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 (877) 723-9520 for U.S. callers or (719) 325-4784 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 1569952. The replay will be available from July
18,2013 through August 1, 2013. 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,” “EBITDA” (net
income (loss) before net interest expense, income taxes, depreciation and
amortization and loss on extinguishment of debt) and “adjusted EBITDA” (EBITDA
as adjusted for acquisition-related transaction costs) 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 (loss) and reported
diluted earnings (loss) per share adjusted for certain items that affect
comparability. These non-GAAP financial measures reflect adjustments to
reported net income (loss) and diluted earnings (loss) 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 acquisition-related transaction costs 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.

Additional information regarding EBITDA and adjusted EBITDA, and a
reconciliation of EBITDA and adjusted EBITDA to net income (loss) and to net
cash provided by operating activities is included below for the second quarter
and first two quarters of 2013 and 2012, along with the components of EBITDA
and adjusted EBITDA. Also included below are reconciliations of the non-GAAP
terms adjusted net income and adjusted diluted earnings per share to reported
net income (loss) and reported diluted earnings (loss) per share.

About B&G Foods, Inc.

B&G Foods and its subsidiaries manufacture, sell and distribute a diversified
portfolio of high-quality, branded shelf-stable foods across the United
States, Canada and Puerto Rico. Based in Parsippany, NewJersey, B&GFoods’
products are marketed under many recognized brands, including Ac’cent, B&G,
B&M, Baker’sJoy, Brer Rabbit, Cream of Rice, Cream of Wheat, Devonsheer, Don
Pepino, Emeril’s, Grandma’sMolasses, JJFlats, Joan of Arc, Las Palmas, Maple
Grove Farms, Molly McButter, MrsDash, NewYork Style, OldLondon, Original
Tings, Ortega, Pirate’s Booty, Polaner, Red Devil, Regina, Sa-són, Sclafani,
SmartPuffs, Sugar Twin, Trappey’s, TrueNorth, Underwood, Vermont Maid and
Wright’s. B&GFoods also sells and distributes two branded household products,
StaticGuard and Kleen Guard.

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’ adjusted EBITDA expectations for fiscal 2013
and ability to pursue accretive acquisitions. 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” or “plans” to be uncertain and forward-looking. 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 Form 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&GFoods 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)
                                                             
Assets                                     June 29, 2013     December 29, 2012
                                                             
Current assets:
Cash and cash equivalents                  $ 202,407         $   19,219
Trade accounts receivable, net               44,890              43,357
Inventories                                  103,942             89,757
Prepaid expenses and other current           6,279               5,326
assets
Income tax receivable                        6,498               4,262
Deferred income taxes                       2,100             2,175      
Total current assets                         366,116             164,096
                                                             
Property, plant and equipment, net of
accumulated depreciation of $107,317         107,069             104,746
and $100,625
Goodwill                                     268,008             267,940
Other intangibles, net                       641,873             637,196
Other assets                                20,194            17,990     
Total assets                               $ 1,403,260      $   1,191,968  
                                                             
Liabilities and Stockholders’ Equity
                                                             
Current liabilities:
Trade accounts payable                     $ 28,237          $   25,050
Accrued expenses                             14,735              23,610
Current portion of long-term debt            43,200              40,375
Dividends payable                           15,333            15,243     
Total current liabilities                    101,505             104,278
                                                             
Long-term debt                               821,422             597,314
Other liabilities                            4,406               8,038
Deferred income taxes                       127,446           121,163    
Total liabilities                            1,054,779           830,793
Commitments and contingencies
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;
52,873,364 and 52,560,765 shares             529                 526
issued and outstanding as of June 29,
2013 and December 29, 2012
Additional paid-in capital                   195,781             226,900
Accumulated other comprehensive loss         (10,874   )         (11,095    )
Retained earnings                           163,045           144,844    
Total stockholders’ equity                  348,481           361,175    
Total liabilities and stockholders’        $ 1,403,260      $   1,191,968  
equity
                                                                            

                                                 
B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)
                                                      
                    Thirteen Weeks Ended              Twenty-six Weeks Ended
                    June 29, 2013   June 30,        June 29,     June 30,
                                      2012            2013           2012
                                                                     
Net sales           $  160,882        $  148,612      $  332,076     $ 305,951
Cost of goods         105,185         96,856         217,567      197,370
sold
Gross profit           55,697            51,756          114,509       108,581
                                                                     
Operating
expenses:
Selling,
general and            17,318            14,629          33,826        31,269
administrative
expenses
Amortization          2,156           2,023          4,223        4,045
expense
Operating              36,223            35,104          76,460        73,267
income
                                                                     
Other expenses:
Interest               10,030            11,862          19,803        23,851
expense, net
Loss on
extinguishment        28,478          —              28,478       —
of debt
(Loss) income
before income          (2,285   )        23,242          28,179        49,416
tax (benefit)
expense
Income tax
(benefit)             (852     )       7,216          9,978        16,612
expense
Net (loss)          $  (1,433   )     $  16,026         18,201       32,804
income
                                                                     
Weighted
average shares
outstanding:
Basic                  52,863            48,376          52,789        48,207
Diluted                52,863            48,724          52,902        48,523
                                                                     
Basic and
diluted             $  (0.03    )     $  0.33         $  0.34        $ 0.68
earnings per
share
                                                                     
Cash dividends
declared per        $  0.29           $  0.27         $  0.58        $ 0.54
share
                                                                       

                                                   
B&G Foods, Inc. and Subsidiaries

Reconciliation of EBITDA and Adjusted EBITDA to Net Income (Loss) and to Net Cash
Provided by

Operating Activities

(In thousands)

(Unaudited)
                                                        
                        Thirteen Weeks Ended            Twenty-six Weeks Ended
                        June 29,      June 30,        June 29,      June 30,
                        2013            2012            2013            2012
                                                                        
Net (loss) income       $ (1,433  )     $ 16,026        $ 18,201        $ 32,804
Income tax                (852    )       7,216           9,978           16,612
(benefit) expense
Interest expense,         10,030          11,862          19,803          23,851
net
Depreciation and          5,599           4,473           11,019          8,914
amortization
Loss on
extinguishment of        28,478        —             28,478        —       
debt
EBITDA^(1)                41,822          39,577          87,479          82,181
Acquisition-related      534           —             534           —       
transaction costs
Adjusted EBITDA           42,356          39,577          88,013          82,181
Income tax benefit        852             (7,216  )       (9,978  )       (16,612 )
(expense)
Interest expense,         (10,030 )       (11,862 )       (19,803 )       (23,851 )
net
Deferred income           1,452           2,469           6,194           6,622
taxes
Amortization of
deferred financing        1,118           1,257           2,293           2,514
costs and bond
discount
Acquisition-related       (534    )       —               (534    )       —
transaction costs
Share-based
compensation              1,490           1,289           2,160           2,029
expense
Excess tax benefits
from share-based          151             130             (4,198  )       (7,988  )
compensation
Changes in assets        (18,286 )      (4,829  )      (22,471 )      (3,095  )
and liabilities
Net cash provided
by operating            $ 18,569       $ 20,815       $ 41,676       $ 41,800  
activities
                                                                                  

      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 our 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 our consolidated balance sheets and related consolidated
      statements of operations, comprehensive income, changes in stockholders’
      equity and cash flows. We define EBITDA as net income (loss) before net
      interest expense, income taxes, depreciation and amortization and loss
      on extinguishment of debt. We define adjusted EBITDA as EBITDA adjusted
      for acquisition-related transition costs, which include outside fees and
      expenses and restructuring and consolidation costs of acquisitions.
      Management believes that it is useful to eliminate net interest expense,
      income taxes, depreciation and amortization, loss on extinguishment of
      debt and acquisition-related transition costs because it allows
(1)  management to focus on what it deems to be a more reliable indicator of
      ongoing operating performance and our ability to generate cash flow from
      operations. We use EBITDA and adjusted EBITDA in our business operations
      to, among other things, evaluate our operating performance, develop
      budgets and measure our performance against those budgets, determine
      employee bonuses and evaluate our cash flows in terms of cash needs. We
      also present EBITDA and adjusted EBITDA because we believe they are
      useful indicators of our historical debt capacity and ability to service
      debt and because covenants in our credit facility and our senior notes
      indenture contain ratios based on these measures. As a result, internal
      management reports used 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.
      
      EBITDA and adjusted EBITDA are not recognized terms under GAAP and do
      not purport to be an alternative to operating income or net income
      (loss) as an indicator of operating performance or any other GAAP
      measure. 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 two 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 costs and expenses for depreciation and
      amortization, interest and related expenses, loss on extinguishment of
      debt, acquisition-related transaction costs and income taxes. 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 our performance against our peer
      companies because management believes these measures provide users with
      valuable insight into key components of GAAP amounts.
      

                                                    
B&G Foods, Inc. and Subsidiaries

Items Affecting Comparability — Reconciliation of Adjusted Information to GAAP
Information

(In thousands)

(Unaudited)
                                                         
                         Thirteen Weeks Ended            Twenty-six Weeks
                                                         Ended
                         June 29, 2013   June 30,      June 29,   June 30,
                                           2012          2013         2012
Reported net (loss)      $  (1,433  )      $  16,026     $ 18,201     $ 32,804
income
Loss on
extinguishment of           18,397            —            18,397       —
debt, net of tax^(1)
Acquisition-related
transaction costs,         345             —           345         —
net of tax
Adjusted net income      $  17,309        $  16,026     $ 36,943     $ 32,804
Adjusted diluted
earnings per share       $  0.33          $  0.33       $ 0.70       $ 0.68
^(2)
                                                                        

_____________________

        Loss on extinguishment of debt for the second quarter of 2013 includes
        costs relating to our repurchase of $218.3 million aggregate principal
        amount of 7.625% senior notes and our repayment of $222.2 million
(1)   aggregate principal amount of tranche B term loans, including the
        repurchase premium and other expenses of $17.9 million, the write-off
        of deferred debt financing costs of $7.9 million and the write-off of
        unamortized discount of $2.6 million. During the second quarter of
        2012, we did not have any loss on extinguishment of debt.
        
        For the second quarter of 2013, 238,931 shares of common stock
        issuable upon the achievement of performance goals in connection with
(2)     share-based compensation awards have not been included in the
        calculation of diluted weighted average shares because the effect
        would be antidilutive on diluted loss per share.
        

Contact:

ICR, Inc.
Investor Relations:
Don Duffy, 866-211-8151
or
Media Relations:
Matt Lindberg, 203-682-8214
 
Press spacebar to pause and continue. Press esc to stop.