PARSIPPANY, N.J. — (BUSINESS WIRE) — B&G Foods, Inc. (NYSE: BGS) today announced financial results for the second quarter and first two quarters of 2021.
Executive Summary (vs. Second Quarter of 2020 and vs. Second Quarter 2019 for two-year annual compound growth rates, where applicable):
- Net sales decreased 9.4% to $464.4 million and base business net sales decreased 20.8%, driven by comparisons against the extraordinary demand and pantry loading at the height of the COVID-19 pandemic during the second quarter of 2020, partially offset by the Crisco acquisition.
- Net sales and base business net sales for the second quarter of 2021 were 25.1% and 7.1% higher than pre-pandemic net sales and base business net sales for the second quarter of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, second quarter net sales increased 11.8% and base business net sales increased 3.5%.
- Diluted earnings per share decreased 45.7% to $0.38. On a two-year compound annual growth basis, second quarter diluted earnings per share increased 16.5%.
- Adjusted diluted earnings per share1 decreased 42.3% to $0.41. On a two-year compound annual growth basis, second quarter adjusted diluted earnings per share increased 5.0%.
- Net income decreased 45.3% to $24.6 million. On a two-year compound annual growth basis, second quarter net income increased 16.0%.
- Adjusted net income1 decreased 41.2% to $27.1 million. On a two-year compound annual growth basis, second quarter adjusted net income increased 5.0%.
- Adjusted EBITDA1 decreased 18.3% to $83.8 million. On a two-year compound annual growth basis, second quarter adjusted EBITDA increased 8.7%.
- Adjusted EBITDA before COVID-19 expenses1 decreased 20.5% to $85.0 million. On a two-year compound annual growth basis, second quarter adjusted EBITDA before COVID-19 expenses increased 9.4%.
- Net sales guidance reaffirmed at a range of $2.05 billion to $2.10 billion.
Commenting on the results, Casey Keller, President and Chief Executive Officer of B&G Foods, stated, “We are pleased with the Company’s performance in the second quarter, and our prospects for the remainder of the year. The second quarter was expected to be the most challenging to lap from a comparative perspective given that the second quarter of 2020 occurred at the height of pantry loading and stocking during the COVID-19 pandemic. However, as expected, our net sales performance has remained elevated relative to 2019. When we look at the consumer trends that accelerated during the early stages of the pandemic—including an increase in cooking, baking and eating at home—trends which we expect may be longer term, our brands are well positioned to continue to capitalize on these opportunities.”
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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.
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Mr. Keller continued, “Another significant impact coming out of the pandemic is inflation at unprecedented levels across the economy, including the food industry. We are seeing inflation on key input costs across our portfolio. We identified the risks of inflation early and have initiated price increases and cost savings initiatives to offset these costs. While the impact of pricing and cost savings may lag behind the rising input costs, we expect our margins to remain fairly stable in the long term.”
“Lastly, I’m pleased to report that as of earlier this week, the integration of the Crisco brand is substantially complete and we have assumed full responsibility for the operation of the business. Crisco is a tremendous addition to the B&G Foods portfolio.”
Financial Results for the Second Quarter of 2021
Net sales for the second quarter of 2021 decreased $48.1 million, or 9.4%, to $464.4 million from $512.5 million for the second quarter of 2020. The decrease was primarily due to comparisons against the extraordinary demand and pantry loading at the height of the COVID-19 pandemic during the second quarter of 2020, partially offset by the Crisco acquisition. Net sales of Crisco, acquired on December 1, 2020, contributed $58.4 million to the Company’s net sales for the quarter. Net sales for the second quarter of 2021 were 25.1% higher than pre-pandemic net sales for the second quarter of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, second quarter net sales increased 11.8%.
Base business net sales for the second quarter of 2021 decreased $106.6 million, or 20.8%, to $405.9 million from $512.5 million for the second quarter of 2020. The decrease in base business net sales for the second quarter of 2021 reflected a decrease in unit volume of $115.4 million, partially offset by an increase in net pricing and the impact of product mix of $6.2 million and the positive impact of foreign currency of $2.6 million. Base business net sales for the second quarter of 2021 were 7.1% higher than pre-pandemic base business net sales for the second quarter of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, second quarter base business net sales increased 3.5%.
Net sales of Maple Grove Farms increased $2.2 million, or 11.7%, and net sales of the Company’s spices & seasonings2 increased $0.7 million, or 0.7%, for the second quarter of 2021 as compared to the second quarter of 2020. Net sales of Green Giant (including Le Sueur) decreased $58.4 million, or 35.6%; net sales of Clabber Girl decreased $8.9 million, or 33.5%; net sales of Ortega decreased $5.9 million, or 12.7%; and net sales of Cream of Wheat decreased $3.8 million, or 20.8%, for the second quarter of 2021 as compared to the second quarter of 2020. Net sales of all other brands in the aggregate decreased $32.5 million, or 23.0%, for the second quarter of 2021.
Net sales for the second quarter of 2021 for spices & seasonings, Ortega, Cream of Wheat, Maple Grove Farms and Clabber Girl were each higher than the net sales for such brands during pre-pandemic second quarter of 2019. Spices & seasonings2 net sales were higher than second quarter of 2019 net sales by $18.1 million, or 22.2%; Ortega by $6.9 million, or 20.0%; Cream of Wheat by $2.5 million, or 21.9%; Maple Grove Farms by $2.4 million, or 13.4%; and Clabber Girl3 by $1.1 million, or 12.5%. Net sales of Green Giant (including Le Sueur) were lower than net sales for the second quarter of 2019 by $7.2 million, or 6.4%. Net sales of all other brands in the aggregate were higher by $2.6 million, or 2.7%, compared to the second quarter of 2019.
Gross profit was $111.6 million for the second quarter of 2021, or 24.0% of net sales. Excluding the negative impact of $0.4 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2021, the Company’s gross profit would have been $112.0 million, or 24.1% of net sales. Gross profit was $134.1 million for the second quarter of 2020, or 26.2% of net sales. Excluding the negative impact of $0.5 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2020, the Company’s gross profit would have been $134.6 million, or 26.3% of net sales.
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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.
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Compares net sales of Clabber Girl from May 15, 2021 through July 3, 2021 versus May 15, 2019 through June 29, 2019. Clabber Girl was acquired on May 15, 2019.
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During the second quarter of 2021, 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 to be materially higher in the second half of 2021 than it was in the second half of 2020. The Company is attempting to mitigate the impact of inflation on the Company’s gross profit by locking in prices through short-term supply contracts and advance commodities purchase agreements and by implementing cost saving measures. The Company has also announced list price increases and has reduced trade promotions to its customers for certain of its products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company does not expect to fully offset the incremental costs that the Company is facing in fiscal 2021 and expects continued cost inflation in fiscal 2022.
Selling, general and administrative expenses increased $2.8 million, or 6.2%, to $47.1 million for the second quarter of 2021 from $44.3 million for the second quarter of 2020. The increase was composed of increases in warehousing expenses of $4.6 million, acquisition/divestiture-related and non-recurring expenses of $1.9 million and consumer marketing expenses of $0.3 million, partially offset by decreases in selling expenses of $2.5 million and general and administrative expenses of $1.5 million. The increase in warehousing expenses was primarily driven by the Crisco acquisition and customer fines related to COVID-19 shortages and delays. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 1.4 percentage points to 10.1% for the second quarter of 2021, compared to 8.7% for the second quarter of 2020.
Net interest expense increased $1.9 million, or 7.5%, to $26.7 million for the second quarter of 2021 from $24.8 million in the second quarter of 2020. The increase was primarily attributable to an increase in average long-term debt outstanding during the second quarter of 2021 as compared to the second quarter of 2020, 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 increase in net interest expense was partially offset by a lower effective cost of borrowing during the second quarter of 2021.
The Company’s net income was $24.6 million, or $0.38 per diluted share, for the second quarter of 2021, compared to net income of $44.9 million, or $0.70 per diluted share, for the second quarter of 2020. The Company’s adjusted net income for the second quarter of 2021 was $27.1 million, or $0.41 per adjusted diluted share, compared to $46.0 million, or $0.71 per adjusted diluted share, for the second quarter of 2020.
For the second quarter of 2021, adjusted EBITDA was $83.8 million, a decrease of $18.8 million, or 18.3%, compared to $102.6 million for the second quarter of 2020. Adjusted EBITDA as a percentage of net sales was 18.0% for the second quarter of 2021, compared to 20.0% in the second quarter of 2020.
For the second quarter of 2021, adjusted EBITDA before COVID-19 expenses was $85.0 million, a decrease of $21.9 million, or 20.5%, compared to $106.9 million for the second quarter of 2020. COVID-19 expenses of $1.2 million and $4.3 million for the second quarter of 2021 and the second quarter of 2020, respectively, primarily included temporary enhanced compensation for the Company’s manufacturing employees, compensation the Company continued to pay manufacturing employees while in quarantine (which was incremental to the compensation the Company paid to the manufacturing employees who produced the Company’s products while others were 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 18.3% for the second quarter of 2021, compared to 20.9% in the second quarter of 2020.
Financial Results for the First Two Quarters of 2021
Net sales for the first two quarters of 2021 increased $7.6 million, or 0.8%, to $969.5 million from $961.9 million for the first two quarters of 2020. The increase was primarily due to the Crisco acquisition, largely offset by comparisons against the extraordinary demand and pantry loading at the height of the COVID-19 pandemic during the last four months of the first two quarters of 2020. Net sales of Crisco, acquired on December 1, 2020, contributed $116.5 million to the Company’s net sales for the first two quarters. Net sales for the first two quarters of 2021 were 23.7% higher than pre-pandemic net sales for the first two quarters of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, net sales for the first two quarters of 2021 increased 11.2%.
Base business net sales1 for the first two quarters of 2021 decreased $109.1 million, or 11.3%, to $852.8 million from $961.9 million for the first two quarters of 2020. The decrease in base business net sales for the first two quarters of 2021 reflected a decrease in unit volume of $125.2 million, partially offset by an increase in net pricing and the impact of product mix of $12.8 million and the positive impact of foreign currency of $3.3 million. Base business net sales for the first two quarters of 2021 were 5.5% higher than pre-pandemic base business net sales for the first two quarters of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, base business net sales for the first two quarters of 2021 increased 2.7%.
Net sales of the Company’s spices & seasonings2 increased $30.7 million, or 17.9%, and net sales of Maple Grove Farms increased $4.3 million, or 11.9%, in the first two quarters of 2021, as compared to the first two quarters of 2020. Net sales of Green Giant (including Le Sueur) decreased $84.4 million, or 26.2%; net sales of Clabber Girl decreased $10.1 million, or 22.5%; net sales of Ortega decreased $5.8 million, or 6.8%; and net sales of Cream of Wheat decreased $4.5 million, or 12.2%, in the first two quarters of 2021, as compared to the first two quarters of 2020. Net sales of all other brands in the aggregate decreased $39.3 million, or 14.9%, for the first two quarters of 2021.
Net sales for the first two quarters of 2021 for spices & seasonings, Ortega, Maple Grove Farms, Cream of Wheat and Clabber Girl were each higher than the net sales for such brands during the pre-pandemic first two quarters of 2019. Spices & seasonings2 net sales were higher than first two quarters of 2019 net sales by $35.2 million, or 21.1%; Ortega by $8.5 million, or 11.9%; Maple Grove Farms net sales by $5.1 million, or 14.5%; Cream of Wheat by $3.3 million, or 11.4%; and Clabber Girl3 by $1.1 million, or 12.5%. Net sales of Green Giant (including Le Sueur) were lower than net sales for the first two quarters of 2019 by $10.9 million, or 4.4%. Net sales of all other brands in the aggregate were higher by $0.8 million, or 0.3%, compared to the first two quarters of 2019.
Gross profit was $229.4 million for the first two quarters of 2021, or 23.7% of net sales. Excluding the negative impact of $5.9 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 first two quarters of 2021, the Company’s gross profit would have been $235.3 million, or 24.3% of net sales. Gross profit was $239.0 million for the first two quarters of 2020, or 24.8% of net sales. Excluding the negative impact of $2.8 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the first two quarters of 2020, the Company’s gross profit would have been $241.8 million, or 25.1% of net sales.
During the first two quarters of 2021, 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 to be materially higher in the second half of 2021 than it was in the second half of 2020. The Company is 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 has also announced list price increases and has reduced trade promotions to its customers for certain of its products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company does not expect to fully offset the incremental costs that it is facing in fiscal 2021 and expects continued cost inflation in fiscal 2022.
Selling, general and administrative expenses increased $13.2 million, or 15.6%, to $97.5 million for the first two quarters of 2021 from $84.3 million for the first two quarters of 2020. The increase was composed of increases in warehousing expenses of $8.7 million, consumer marketing expenses of $4.3 million and acquisition/divestiture-related and non-recurring expenses of $3.8 million, partially offset by decreases in selling expenses of $3.3 million and general and administrative expenses of $0.3 million. The increase in warehousing expenses was primarily driven by the Crisco acquisition and customer fines related to COVID-19 shortages and delays. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 1.3 percentage points to 10.1% for the first two quarters of 2021, compared to 8.8% for the first two quarters of 2020.
Net interest expense increased $2.8 million, or 5.5%, to $53.7 million for the first two quarters of 2021 from $50.9 million in the first two quarters of 2020. The increase was primarily attributable to an increase in average long-term debt outstanding during the first two quarters of 2021 as compared to the first two quarters of 2020, 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 increase in net interest expense was partially offset by a lower effective cost of borrowing during the first two quarters of 2021.
The Company’s net income was $51.4 million, or $0.79 per diluted share, for the first two quarters of 2021, compared to net income of $73.0 million, or $1.14 per diluted share, for the first two quarters of 2020. The Company’s net income in the first two quarters of 2020 benefited from a discrete tax benefit of $2.3 million related to the U.S. CARES Act. The Company’s adjusted net income for the first two quarters of 2021, which excludes, among other things, the impact of the discrete tax benefit received in the first quarter of 2020, was $61.2 million, or $0.94 per adjusted diluted share, compared to $75.3 million, or $1.17 per adjusted diluted share, for the first two quarters of 2020.
For the first two quarters of 2021, adjusted EBITDA was $176.7 million, a decrease of $6.6 million, or 3.6%, compared to $183.3 million for the first two quarters of 2020. Adjusted EBITDA as a percentage of net sales was 18.2% for the first two quarters of 2021, compared to 19.1% in the first two quarters of 2020.
For the first two quarters of 2021, adjusted EBITDA before COVID-19 expenses was $180.8 million, a decrease of $6.9 million, or 3.7%, compared to $187.7 million for fiscal 2020. COVID-19 expenses of $4.1 million and $4.4 million for the first two quarters of 2021 and the first two quarters of 2020, respectively, included temporary enhanced compensation for the Company’s manufacturing employees, compensation the Company continued to pay manufacturing employees while in quarantine (which was incremental to the compensation the Company paid to the manufacturing employees who produced the Company’s products while others were 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 18.6% for the first two quarters of 2021, compared to 19.5% in the first two quarters of 2020.
Full Year Fiscal 2021 Guidance
B&G Foods reaffirmed its net sales guidance for full year fiscal 2021. Net sales, which will be positively impacted by a full twelve months of ownership of the Crisco brand, are expected to be approximately $2.05 billion to $2.10 billion.
B&G Foods continues to see strong consumer demand for its products relative to pre-pandemic 2019. The Company has also seen and expects to continue to see significant cost inflation for various inputs, including ingredients, packaging and transportation. The Company has initiated various revenue enhancing activities (including list price increases and trade spend initiatives) and cost savings initiatives to offset these costs but there can be no assurance at this point of the ultimate effectiveness of these activities and initiatives. Because the Company’s management is not able to fully estimate the impact COVID-19, cost inflation and the Company’s cost inflation mitigation efforts will have on the Company’s results for the remainder of fiscal 2021, the Company is unable at this time to provide more detailed guidance for full year 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 policies and recommendations remain in effect; whether, and the extent to which, additional waves or variants 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; 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, August 5, 2021 to discuss second quarter 2021 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) and non-recurring expenses, gains and losses) and “adjusted EBITDA before COVID-19 expenses” (adjusted EBITDA as adjusted for COVID-19 expenses) are “non-GAAP financial measures.
Contacts
Investor Relations:
ICR, Inc.
Dara Dierks
866.211.8151
Media Relations:
ICR, Inc.
Matt Lindberg
203.682.8214
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principal amount of senior notes due 2032 (the “New Notes”). The New Notes will be senior unsecured obligations of NRG and will be guaranteed by each of NRG’s current and future subsidiaries that guarantee indebtedness under NRG’s credit agreement. The New Notes are being issued under NRG’s Sustainability-Linked Bond Framework, which sets out certain sustainability targets, including reducing greenhouse gas emissions.
