PARSIPPANY, N.J.--(BUSINESS WIRE)--B&G Foods, Inc. announced financial results for the first quarter of 2016.
Highlights (vs. year-ago quarter where applicable):
- Net sales increased 62.6% to $353.0 million
- Base business net sales* decreased 2.2% or $4.8 million
- Net income increased 69.7% to $33.2 million
- Adjusted net income* increased 88.0% to $38.6 million
- Diluted earnings per share increased 55.6% to $0.56
- Adjusted diluted earnings per share* increased 71.1% to $0.65
- Adjusted EBITDA* increased 79.4% to $89.6 million for the quarter
- Guidance for full year fiscal 2016:
o Net sales guidance increased to a range of $1.39 billion to $1.42 billion
o Adjusted EBITDA guidance increased to a range of $310.0 million to $320.0 million
o Adjusted diluted earnings per share guidance increased to a range of $2.05 to $2.15
“The first quarter was extremely positive on many levels, particularly with respect to B&G Foods’ profitability, and as a result we have increased our 2016 guidance for net sales, adjusted EBITDA and adjusted diluted earnings per share. To date, our acquisition of Green Giant is turning out to be even more profitable than initially anticipated, a major driver of our favorable results in the first quarter. The Green Giant transition is well under way and on schedule and the Green Giant innovation pipeline is growing. We are more excited than ever about bringing Green Giant back to prominence and I believe we have the plan and the team to make that happen,” said Robert C. Cantwell, President and Chief Executive Officer of B&G Foods.
Net sales for the first quarter of 2016 increased $135.9 million, or 62.6%, to $353.0 million from $217.1 million for the first quarter of 2015. Net sales of Green Giant, acquired on November 2, 2015, and net sales of Mama Mary’s, acquired on July 10, 2015, contributed $130.2 million and $10.5 million, respectively, to the Company’s net sales for the quarter.
Financial Results for the First Quarter of 2016
Base business net sales for the first quarter of 2016 decreased $4.8 million, or 2.2%, to $212.3 million from $217.1 million for the first quarter of 2015. The $4.8 million decrease was attributable to a decrease in unit volume of $4.8 million, or 2.2%, and the negative impact of currency fluctuations on foreign sales of approximately $0.3 million, or 0.2%, partially offset by an increase in net pricing of $0.3 million, or 0.2%.
Gross profit for the first quarter of 2016 increased $48.5 million, or 72.0%, to $115.9 million from $67.4 million for the first quarter of 2015. Gross profit expressed as a percentage of net sales increased to 32.8% in the first quarter of 2016 from 31.0% in the first quarter of 2015, an increase of 1.8 percentage points. The increase in gross profit percentage was primarily driven by the acquisition of Green Giant, which benefited from lower than anticipated trade spend and input costs, particularly from the Green Giant manufacturing facility in Irapuato, Mexico, as well as greater than anticipated synergies with the Company’s base business. Gross profit percentage was also positively impacted by decreased costs for commodities, packaging and distribution for the base business. Gross profit percentage, excluding the results of Green Giant, increased 0.4 percentage points.
Selling, general and administrative expenses increased $16.8 million, or 73.5%, to $39.6 million for the first quarter of 2016 from $22.8 million for the first quarter of 2015. The increase was primarily due to the Green Giant acquisition, which resulted in $15.7 million of incremental expenses for the first quarter. The overall $16.8 million increase was attributable to increases in consumer marketing of $9.2 million, selling expenses of $2.5 million (related primarily to a $2.7 million increase in brokerage expenses, partially offset by a $0.2 million decrease in salesperson compensation and other selling expenses), acquisition-related expenses of $2.2 million, warehousing expenses of $1.6 million (which includes $0.5 million of distribution restructuring expenses) and other expenses of $1.4 million (primarily related to compensation). Expressed as a percentage of net sales, selling, general and administrative expenses increased 0.7 percentage points to 11.2% for the first quarter of 2016 from 10.5% for the first quarter of 2015 because the increases in selling, general and administrative expenses resulted primarily from the recent acquisitions that also resulted in increased net sales.
Net interest expense for the first quarter of 2016 increased $7.6 million, or 65.8%, to $19.1 million from $11.5 million in the first quarter of 2015. The increase was primarily attributable to additional borrowings used to fund the Green Giant acquisition.
The Company’s reported net income under U.S. generally accepted accounting principles (GAAP) was $33.2 million, or $0.56 per diluted share, for the first quarter of 2016, as compared to reported net income of $19.6 million, or $0.36 per diluted share, for the first quarter of 2015. The Company’s adjusted net income for the first quarter of 2016, which excludes the after-tax impact of loss on extinguishment of debt, the amortization of acquisition-related inventory step-up, other acquisition-related expenses and distribution restructuring expenses, was $38.6 million, or $0.65 per adjusted diluted share. The Company’s adjusted net income for the first quarter of 2015, which excludes the after tax impact of the loss on product recall and acquisition-related expenses, was $20.5 million, or $0.38 per adjusted diluted share.
For the first quarter of 2016, adjusted EBITDA (which excludes the impact of the amortization of acquisition-related inventory step-up, the impact of the loss on product recall, other acquisition-related expenses and distribution restructuring expenses), increased 79.4% to $89.6 million from $49.9 million for the first quarter of 2015.
Guidance
B&G Foods increased full year 2016 guidance for net sales to a range of $1.39 billion to $1.42 billion, adjusted EBITDA to a range of $310.0 million to $320.0 million and adjusted diluted earnings per share to a range of $2.05 to $2.15.
