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B&G Foods Reports Strong Net Sales and Earnings Growth for Fourth Quarter and Full Year 2020

— Net Sales Increased 18.5% and Base Business Net Sales Increased 14.7% for Full Year 2020 —

—Net Cash Provided by Operating Activities Increased to $281.5 Million for Full Year 2020—

PARSIPPANY, N.J.–(BUSINESS WIRE)–B&G Foods, Inc. (NYSE: BGS) today announced financial results for the fourth quarter and full year 2020, which include the favorable impact of continued strong demand for the Company’s products due to the ongoing COVID-19 pandemic and an extra reporting week in fiscal 2020 as compared to fiscal 2019, as well as the impact of the Crisco acquisition, which was completed on December 1, 2020.

Fourth Quarter 2020 Financial Summary (vs. Fourth Quarter 2019 where applicable):

  • Net sales increased 8.5% to $510.2 million
  • Base business net sales1 increased 2.5% to $482.2 million
  • Diluted earnings per share increased 18.8% to $0.19
  • Adjusted diluted earnings per share1 increased 25.0% to $0.35
  • Net income increased 18.6% to $12.2 million
  • Adjusted net income1 increased 28.1% to $22.8 million
  • Adjusted EBITDA1 increased 5.6% to $73.3 million
  • Adjusted EBITDA before COVID-19 expenses1 increased 11.7% to $77.6 million
  • Net cash provided by operating activities increased to $49.2 million from $45.2 million
  • Completed the acquisition of the iconic Crisco brand on December 1, 2020 – transition and integration is on track

Full Year 2020 Financial Summary (vs. Full Year 2019 where applicable):

  • Net sales increased 18.5% to $1,967.9 million
  • Base business net sales increased 14.7% to $1,904.9 million
  • Diluted earnings per share increased 74.4% to $2.04
  • Adjusted diluted earnings per share increased 37.8% to $2.26
  • Net income increased 72.8% to $132.0 million
  • Adjusted net income increased 37.0% to $146.0 million
  • Adjusted EBITDA increased 19.4% to $361.2 million
  • Adjusted EBITDA before COVID-19 expenses increased 23.9% to $374.8 million
  • Net cash provided by operating activities increased to $281.5 million from $46.5 million2

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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.

2

Excluding the negative tax impact of the gain on sale from the Pirate Brands divestiture, the Company’s net cash provided by operating activities for fiscal 2019 would have been approximately $120.4 million. See footnote (7) on page 11 of this earnings release.

Guidance for Full Year Fiscal 2021:

  • Net sales range of $2.05 billion to $2.10 billion

Commenting on the results, David L. Wenner, Interim President and Chief Executive Officer of B&G Foods, stated, “It would be a gross understatement to say that 2020 was a year like no other year; COVID-19 brought an incredible amount of suffering, inconvenience and, unfortunately, death with it. It’s humbling that our company benefitted from such tragedy, and at the same time a tribute to our employees, working in the midst of a pandemic, that we were able to respond as well as we did to the increased needs of consumers as they coped with COVID-19 and the resultant quarantines.”

“For the year, our net sales increased 18.5% to $1.968 billion and adjusted EBITDA increased 19.4% to $361.2 million. The remarkable increase slowed in the fourth quarter but demand for our products remains elevated and through the first two months of fiscal 2021, we have had a strong start to the year.”

“In late fiscal 2020, we completed the acquisition of the iconic Crisco brand of oils and shortening and the transition and integration are on track. Consistent with our acquisition strategy, the acquisition has been immediately accretive to our earnings per share and free cash flow.”

Mr. Wenner concluded, “I’d like to thank our employees, all of whom have made this company successful in an extremely challenging year, and in particular to the workers who have been on the front lines in our manufacturing facilities, distribution centers and offices on a daily basis and also to those employees working remotely, making sure we can supply the food that consumers need. Without their dedicated efforts we could not have reached the company records that we set in fiscal 2020.”

Financial Results for the Fourth Quarter of 2020

Net sales for the fourth quarter of 2020 increased $40.0 million, or 8.5%, to $510.2 million from $470.2 million for the fourth quarter of 2019. The increase was primarily attributable to the Crisco acquisition, net pricing and increased demand for the Company’s products due to the COVID-19 pandemic. This was partially offset by supply chain constraints for certain of the Company’s products as a result of increased demand as well as inventory building by retailers and other customers in the third quarter of 2020 in anticipation of increased COVID-19 restrictions in the fourth quarter. The Company’s net sales benefited $28.1 million from acquisitions, including $27.8 million from the Crisco acquisition, which was completed on December 1, 2020.

Base business net sales for the fourth quarter of 2020 increased $12.0 million, or 2.5%, to $482.2 million from $470.2 million for the fourth quarter of 2019. The increase in base business net sales reflected an increase in net pricing and the impact of product mix of $11.7 million, or 2.5% of base business net sales, an increase in unit volume of $0.2 million, and the positive impact of foreign currency of $0.1 million.

Net sales of Cream of Wheat increased $2.7 million, or 16.1%; net sales of Ortega increased $2.5 million, or 7.3%; net sales of Maple Grove Farms increased $2.1 million, or 12.2%; net sales of the Company’s spices & seasonings3 increased $2.1 million, or 2.4%; and net sales of Green Giant (including Le Sueur) increased $0.9 million, or 0.6%, for the fourth quarter of 2020 as compared to the fourth quarter of 2019. Net sales of Green Giant in the fourth quarter of 2020 were negatively impacted by industry-wide supply-chain constraints for shelf-stable vegetable products, which caused the Company to place products on allocation with customers to ensure continued supply throughout the year. Net sales of Victoria decreased $0.6 million, or 4.7% for the fourth quarter of 2020 as compared to the fourth quarter of 2019, primarily as a result of the shift of a key promotional event from the fourth quarter of 2019 to the third quarter of 2020. Net sales of all other brands in the aggregate increased $2.3 million, or 1.5%, for the fourth quarter of 2020.

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3

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.

Gross profit was $106.7 million for the fourth quarter of 2020, or 20.9% of net sales. Excluding the negative impact of $2.1 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 fourth quarter of 2020, the Company’s gross profit would have been $108.8 million, or 21.3% of net sales. Gross profit was $94.4 million for the fourth quarter of 2019, or 20.1% of net sales. Excluding the negative impact of $2.6 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 fourth quarter of 2019, which includes the Company’s gross profit would have been $97.0 million, or 20.6% of net sales.

Selling, general and administrative expenses increased $14.0 million, or 31.5%, to $58.5 million for the fourth quarter of 2020 from $44.5 million for the fourth quarter of 2019. The increase was composed of increases in consumer marketing expenses of $4.5 million, acquisition/divestiture-related and non-recurring expenses of $3.8 million, warehousing expenses of $2.3 million, selling expenses of $1.8 million and general and administrative expenses of $1.6 million. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 2.0 percentage points to 11.5% for the fourth quarter of 2020, compared to 9.5% for the fourth quarter of 2019.

Net interest expense decreased $3.4 million, or 12.3%, to $24.3 million for the fourth quarter of 2020 from $27.7 million in the fourth quarter of 2019. The decrease was primarily attributable to a lower effective interest rate on our long-term debt. Net interest expense is expected to increase in fiscal 2021, 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 Company’s net income was $12.2 million, or $0.19 per diluted share, for the fourth quarter of 2020, compared to net income of $10.3 million, or $0.16 per diluted share, for the fourth quarter of 2019. The Company’s adjusted net income for the fourth quarter of 2020 was $22.8 million, or $0.35 per adjusted diluted share, compared to $17.8 million, or $0.28 per adjusted diluted share, for the fourth quarter of 2019.

For the fourth quarter of 2020, adjusted EBITDA was $73.3 million, an increase of $3.8 million, or 5.6%, compared to $69.5 million for the fourth quarter of 2019. The increase in adjusted EBITDA was primarily attributable to increased net sales for the reasons described above. Adjusted EBITDA as a percentage of net sales was 14.4% for the fourth quarter of 2020, compared to 14.8% in the fourth quarter of 2019.

For the fourth quarter of 2020, adjusted EBITDA before COVID-19 expenses was $77.6 million, an increase of $8.1 million, or 11.7%, compared to $69.5 million for the fourth quarter of 2019. COVID-19 expenses of $4.3 million for the fourth quarter of 2020 primarily include temporary enhanced compensation for the Company’s manufacturing employees, compensation the Company continues to pay manufacturing employees while in quarantine (which is incremental to the compensation the Company pays to the manufacturing employees who produce the Company’s products while others are 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 15.2% for the fourth quarter of 2020, compared to 14.8% in the fourth quarter of 2019.

Financial Results for the Full Year Fiscal 2020

Net sales for fiscal 2020 increased $307.5 million, or 18.5%, to $1,967.9 million from $1,660.4 million for fiscal 2019. The increase was primarily attributable to materially increased net sales beginning in March (as compared to prior year) resulting from increased demand for the Company’s products due to the COVID-19 pandemic, partially offset by supply chain constraints for certain of the Company’s products as a result of increased demand. The Company’s net sales also benefited from acquisitions and from one extra reporting week in fiscal 2020 (which occurred in the third quarter) compared to fiscal 2019. Acquisitions benefited the Company’s net sales in fiscal 2020 by $63.0 million, which primarily includes $33.7 million of net sales from an additional seven and one-half months of Clabber Girl net sales and $27.8 million of net sales from one month of Crisco net sales. The Clabber Girl acquisition closed on May 15, 2019 and the Crisco acquisition closed on December 1, 2020. The Company estimates that the additional week in fiscal 2020 contributed approximately $35.0 million to the Company’s net sales.

Base business net sales for fiscal 2020 increased $244.5 million, or 14.7%, to $1,904.9 million from $1,660.4 million for fiscal 2019. The increase in base business net sales reflected an increase in unit volume of $209.8 million and an increase in net pricing (inclusive of the impact of the Company’s 2019 list price increases, the trade spend optimization program the Company initiated in 2019, and a temporarily lower trade spend environment in the industry during the first half of the year) and the impact of product mix of $35.8 million, or 2.2% of base business net sales, partially offset by the negative impact of foreign currency of $1.1 million.

Net sales of Green Giant (including Le Sueur) increased $112.2 million, or 21.3%; net sales of the Company’s spices & seasonings3 increased $30.9 million, or 9.2%; net sales of Ortega increased $17.9 million, or 12.7%; net sales of Cream of Wheat increased $12.9 million, or 21.6%; net sales of Victoria increased $11.3 million, or 26.4%; and net sales of Maple Grove Farms increased $6.1 million, or 8.7%, in fiscal 2020, as compared to fiscal 2019. Net sales of all other brands in the aggregate increased $53.2 million, or 11.0%, for fiscal 2020.

Gross profit was $481.7 million for fiscal 2020, or 24.5% of net sales. Excluding the negative impact of $5.0 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 fiscal 2020, the Company’s gross profit would have been $486.7 million, or 24.7% of net sales. Gross profit was $383.1 million for fiscal 2019, or 23.1% of net sales. Excluding the negative impact of $22.0 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 fiscal 2019, which includes expenses related to the trailing non-cash accounting impact of the Company’s 2018 inventory reduction plan, the Company’s gross profit would have been $405.1 million, or 24.4% of net sales.

Selling, general and administrative expenses increased $25.5 million, or 15.8%, to $186.2 million for fiscal 2020 from $160.7 million for fiscal 2019. The increase was composed of increases in general and administrative expenses of $10.7 million, selling expenses of $8.2 million, consumer marketing expenses of $7.7 million and warehousing expenses of $2.0 million, partially offset by a decrease in acquisition/divestiture-related and non-recurring expenses of $3.1 million. Expressed as a percentage of net sales, selling, general and administrative expenses improved by 0.2 percentage points to 9.5% for fiscal 2020, compared to 9.7% for fiscal 2019.

Net interest expense increased $3.5 million, or 3.6%, to $101.6 million for fiscal 2020 from $98.1 million in fiscal 2019. The increase was primarily attributable to the following factors: (1) additional interest expense of $1.5 million resulting from one extra week in the third quarter of 2020, (2) the accelerated amortization of $1.1 million of deferred debt financing costs resulting from the Company’s voluntary partial prepayment of tranche B term loans in the third quarter of 2020, and (3) an increase in average long-term debt outstanding during fiscal 2020 as compared to fiscal 2019. Net interest expense is expected to increase in fiscal 2021 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 Company’s net income was $132.0 million, or $2.04 per diluted share, for fiscal 2020, compared to net income of $76.4 million, or $1.17 per diluted share, for fiscal 2019. The Company’s adjusted net income for fiscal 2020 was $146.0 million, or $2.26 per adjusted diluted share, compared to $106.6 million, or $1.64 per adjusted diluted share, for fiscal 2019.

For fiscal 2020, adjusted EBITDA was $361.2 million, an increase of $58.7 million, or 19.4%, compared to $302.5 million for fiscal 2019. The increase in adjusted EBITDA was primarily attributable to increased net sales for the reasons described above. Adjusted EBITDA as a percentage of net sales was 18.4% for fiscal 2020, compared to 18.2% in fiscal 2019.

For fiscal 2020, adjusted EBITDA before COVID-19 expenses was $374.8 million, an increase of $72.3 million, or 23.9%, compared to $302.5 million for fiscal 2019. COVID-19 expenses of $13.5 million for fiscal 2020 include temporary enhanced compensation for the Company’s manufacturing employees, compensation the Company continues to pay manufacturing employees while in quarantine (which is incremental to the compensation the Company pays to the manufacturing employees who produce the Company’s products while others are 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 19.0% for fiscal 2020, compared to 18.2% in fiscal 2019.

Full Year Fiscal 2021 Guidance

For fiscal 2021, net sales will be positively impacted by an additional eleven months of ownership of the Crisco brand, and are expected to be approximately $2.05 billion to $2.10 billion.

B&G Foods continues to see strong consumer demand for its products and expects to see commensurate elevated levels of net sales throughout fiscal 2021. However, the Company’s management is not able to fully estimate the impact COVID-19 will have on the Company’s fiscal 2021 results and therefore is unable at this time to provide more detailed guidance for 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 mandates and recommendations remain in effect; whether additional waves 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 despite unprecedented demand in the food industry; 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, March 2, 2021 to discuss fourth quarter and full year 2020 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), non-recurring expenses, gains and losses and the non-cash accounting impact of the Company’s inventory reduction plan) 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 fourth quarter and full year 2020 and 2019, 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, 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’ net sales and overall expectations for fiscal 2021 and beyond, and B&G Foods’ expectations regarding the Crisco acquisition. 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.

Contacts

Investor Relations:

ICR, Inc.

Dara Dierks

866.211.8151

Media Relations:

ICR, Inc.

Matt Lindberg

203.682.8214

 

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