B&G Foods Reports Financial Results for Third Quarter 2024
Summary
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Third Quarter of 2024 |
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First Three Quarters of 2024 |
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(In millions, except per share data) |
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Change vs. |
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Change vs. |
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Amount |
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Q3 2023 |
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Amount |
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First 3Q 2023 |
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$ |
461.1 |
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(8.3) |
% |
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$ |
1,380.9 |
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(7.0) |
% |
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Base Business |
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$ |
461.1 |
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(4.4) |
% |
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$ |
1,381.0 |
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(3.8) |
% |
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Diluted EPS |
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$ |
0.09 |
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108.1 |
% |
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$ |
(0.37) |
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60.6 |
% |
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Adj. Diluted EPS 1 |
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$ |
0.13 |
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(51.9) |
% |
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$ |
0.39 |
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(43.5) |
% |
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Net Income (Loss) |
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$ |
7.5 |
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109.0 |
% |
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$ |
(28.8) |
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58.1 |
% |
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Adj. Net Income 1 |
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$ |
10.1 |
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(50.6) |
% |
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$ |
31.1 |
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(38.2) |
% |
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Adj. EBITDA 1 |
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$ |
70.4 |
|
(12.5) |
% |
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$ |
209.3 |
|
(9.5) |
% |
Guidance for Full Year Fiscal 2024
-
Net sales revised to a range of
$1.920 billion to$1.950 billion . -
Adjusted EBITDA revised to a range of
$295 million to$305 million . -
Adjusted diluted earnings per share revised to a range of
$0.67 to$0.77 .
Commenting on the results,
Financial Results for the Third Quarter of 2024
Net sales for the third quarter of 2024 decreased
Base business net sales for the third quarter of 2024 decreased
Gross profit was
Selling, general and administrative expenses decreased
Net interest expense increased
The Company’s net income was
For the third quarter of 2024, adjusted EBITDA was
Financial Results for First Three Quarters of 2024
Net sales for the first three quarters of 2024 decreased
Base business net sales for the first three quarters of 2024 decreased
Gross profit was
Selling, general and administrative expenses decreased
In connection with the Company’s transition from one reporting segment to four reporting segments during the first quarter of 2024, the Company reassigned assets and liabilities, including goodwill, between the reporting segments and completed a goodwill impairment test both prior to and subsequent to the change. The goodwill impairment test resulted in the Company recognizing pre‑tax, non-cash goodwill impairment charges of
Net interest expense increased
The Company had a net loss of
The Company’s adjusted net income for the first three quarters of 2024 was
For the first three quarters of 2024, adjusted EBITDA was
Redemption of Remaining 5.25% Senior Notes due 2025
On
Segment Results(2)
Historically, the Company operated in a single industry segment. However, beginning with the first quarter of 2024, the Company now operates in, and has begun reporting results by, four business segments. This change stemmed from the Company’s recent formation and the evolution of the Company’s four business units: Specialty, Meals, Frozen & Vegetables and Spices & Flavor Solutions, which are further described below. Prior period segment results in this earnings press release have been recast to reflect the change from one single operating segment to four operating segments.
Specialty — includes, among others, the Crisco, Clabber Girl,
Meals — includes, among others, the Ortega,
Frozen & Vegetables — includes the Green Giant and Le Sueur brands.
Spices & Flavor Solutions — includes, among others, the Dash, Weber, Spice Islands, Tone’s, Ac’cent, Trappey’s, Durkee and Wright’s brands.
Specialty Segment Results
Specialty segment results were as follows (dollars in thousands):
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Third Quarter
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First Three Quarters
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$ Change |
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% Change |
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$ Change |
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% Change |
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Specialty segment net sales |
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$ |
160,991 |
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$ |
178,706 |
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$ |
(17,715 |
) |
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(9.9 |
)% |
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$ |
462,344 |
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$ |
495,166 |
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$ |
(32,822 |
) |
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(6.6 |
)% |
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Specialty segment adjusted EBITDA |
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$ |
41,311 |
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$ |
44,019 |
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$ |
(2,708 |
) |
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(6.2 |
)% |
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$ |
110,191 |
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$ |
113,209 |
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$ |
(3,018 |
) |
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(2.7 |
)% |
For the third quarter and first three quarters of 2024, the decrease in Specialty segment net sales was primarily due to lower Crisco pricing, driven by decreased commodity costs, coupled with modest declines in volumes across the business unit in the aggregate. The decrease in Specialty segment adjusted EBITDA for the third quarter and first three quarters of 2024 was primarily due to lower volumes, partially offset by decreased costs in certain raw materials and improvements in freight costs.
Meals Segment Results
Meals segment results were as follows (dollars in thousands):
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Third Quarter
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First Three Quarters
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$ Change |
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% Change |
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$ Change |
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% Change |
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2024 |
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2023 |
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2024 |
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2023 |
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Meals segment net sales |
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$ |
111,582 |
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$ |
116,148 |
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$ |
(4,566 |
) |
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(3.9 |
)% |
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$ |
339,502 |
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$ |
352,240 |
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$ |
(12,738 |
) |
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(3.6 |
)% |
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Meals segment adjusted EBITDA |
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$ |
23,253 |
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$ |
25,696 |
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$ |
(2,443 |
) |
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(9.5 |
)% |
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$ |
72,793 |
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$ |
74,958 |
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$ |
(2,165 |
) |
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(2.9 |
)% |
For the third quarter and first three quarters of 2024, the decrease in Meals segment net sales was primarily due to a decrease in volumes across the Meals portfolio in the aggregate, partially offset by an increase in net pricing and product mix. The decrease in Meals segment adjusted EBITDA was primarily due to a decrease in net sales and increased costs for certain raw materials, partially offset by improvements in freight costs.
Frozen & Vegetables Segment Results
Frozen & Vegetables segment results were as follows (dollars in thousands):
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Third Quarter Ended |
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First Three Quarters Ended |
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$ Change |
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% Change |
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$ Change |
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% Change |
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2024 |
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2023 |
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2024 |
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2023 |
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Frozen & Vegetables segment net sales |
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$ |
89,181 |
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$ |
111,056 |
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$ |
(21,875 |
) |
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(19.7 |
)% |
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$ |
285,648 |
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$ |
345,024 |
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$ |
(59,376 |
) |
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(17.2 |
)% |
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Frozen & Vegetables segment adjusted EBITDA |
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$ |
1,159 |
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$ |
4,430 |
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$ |
(3,271 |
) |
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(73.8 |
)% |
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$ |
12,797 |
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$ |
25,659 |
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$ |
(12,862 |
) |
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(50.1 |
)% |
For the third quarter and first three quarters of 2024, the decrease in Frozen & Vegetables segment net sales was primarily due to the Green Giant
Spices & Flavor Solutions Segment Results
Spices & Flavor Solutions segment results were as follows (dollars in thousands):
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Third Quarter
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First Three Quarters
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$ Change |
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% Change |
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$ Change |
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% Change |
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2024 |
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2023 |
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2024 |
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2023 |
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Spices & Flavor Solutions segment net sales |
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$ |
99,319 |
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$ |
96,824 |
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$ |
2,495 |
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2.6 |
% |
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$ |
293,392 |
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$ |
291,755 |
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$ |
1,637 |
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0.6 |
% |
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Spices & Flavor Solutions segment adjusted EBITDA |
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$ |
28,509 |
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$ |
30,072 |
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$ |
(1,563 |
) |
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(5.2 |
)% |
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$ |
84,825 |
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$ |
86,865 |
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$ |
(2,040 |
) |
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(2.3 |
)% |
For the third quarter and first three quarters of 2024, the increase in Spices & Flavor Solutions segment net sales was primarily due to increased volumes across the Spices & Flavor Solutions portfolio in the aggregate. The decrease in Spices & Flavor Solutions segment adjusted EBITDA was primarily due to increases in trade spending and raw material costs, and product mix, partially offset by an increase in net sales and improvements in freight costs.
Full Year Fiscal 2024 Guidance
Conference Call
About Non-GAAP Financial Measures and Items Affecting Comparability
“Adjusted net income” (net income (loss) adjusted for certain items that affect comparability), “adjusted diluted earnings per share” (diluted earnings (loss) 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 (loss) before net interest expense, income taxes, and depreciation and amortization), “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 the sale of certain assets), gains and losses on extinguishment of debt, impairment of assets held for sale, impairment of intangible assets, and non-recurring expenses, gains and losses), “segment adjusted EBITDA” (adjusted EBITDA for operating segments), “adjusted gross profit” (gross profit adjusted for acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold) and “adjusted gross profit percentage” (gross profit as a percentage of net sales adjusted for acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold) 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 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, segment adjusted EBITDA and reconciliations of EBITDA, adjusted EBITDA and segment adjusted EBITDA to net income (loss) and, in the case of EBITDA and adjusted EBITDA, to net cash provided by operating activities, is included below for the third quarter and first three quarters of 2024 and 2023, along with the components of EBITDA, adjusted EBITDA and segment adjusted EBITDA. 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 (loss), changes in stockholders’ equity and cash flows.
End Notes
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(1) |
Please see “About Non-GAAP Financial Measures and Items Affecting Comparability” above for the definition of the non-GAAP financial measures “base business net sales,” “adjusted diluted earnings per share,” “adjusted net income ,” “EBITDA,” “adjusted EBITDA,” “segment adjusted EBITDA,” “adjusted gross profit” and “adjusted gross profit percentage,” 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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(2) |
Segment net sales and segment adjusted EBITDA are the primary measures used by the Company’s chief operating decision maker (CODM) to evaluate segment operating performance and to decide how to allocate resources to segments. The Company’s CODM is the Company’s chief executive officer. Segment adjusted EBITDA excludes unallocated corporate items, depreciation and amortization, acquisition/divestiture-related and non-recurring expenses, impairment of intangible assets, gains and losses on sales of assets, interest expense, and income tax expense or benefit. Unallocated corporate items consist of centrally managed corporate functions, including selling, marketing, procurement, centralized administrative functions, insurance, and other similar expenses not directly tied to segment operating performance. Depreciation and amortization expenses are neither maintained nor available by operating segment, as the Company’s manufacturing, warehouse, and distribution activities are centrally managed. These items that are centrally managed at the corporate level, and therefore excluded from the measure of segment adjusted EBITDA, are reviewed by the CODM. Expenses that are managed centrally but can be attributed to a segment, such as warehousing and transportation expenses, are generally allocated based on sales. |
About
Based in
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’ expectations regarding net sales, adjusted EBITDA and adjusted diluted earnings per share and B&G Foods’ overall expectations for the remainder of 2024 and beyond, including expectations as to trends gradually improving and stabilizing into the first half of 2025. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of
.
Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
54,694 |
|
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$ |
41,094 |
|
Trade accounts receivable, net |
|
159,986 |
|
|
|
143,015 |
|
Inventories |
|
618,093 |
|
|
|
568,980 |
|
Prepaid expenses and other current assets |
|
41,916 |
|
|
|
41,747 |
|
Income tax receivable |
|
7,818 |
|
|
|
7,988 |
|
Total current assets |
|
882,507 |
|
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|
802,824 |
|
|
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Property, plant and equipment, net |
|
278,310 |
|
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|
302,288 |
|
Operating lease right-of-use assets |
|
59,753 |
|
|
|
70,046 |
|
Finance lease right-of-use assets |
|
1,038 |
|
|
|
1,832 |
|
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|
548,675 |
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|
619,399 |
|
Other intangible assets, net |
|
1,612,146 |
|
|
|
1,627,836 |
|
Other assets |
|
25,011 |
|
|
|
23,484 |
|
Deferred income taxes |
|
10,975 |
|
|
|
15,581 |
|
Total assets |
$ |
3,418,415 |
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$ |
3,463,290 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Trade accounts payable |
$ |
175,739 |
|
|
$ |
123,778 |
|
Accrued expenses |
|
60,545 |
|
|
|
83,217 |
|
Current portion of operating lease liabilities |
|
18,085 |
|
|
|
16,939 |
|
Current portion of finance lease liabilities |
|
996 |
|
|
|
1,070 |
|
Current portion of long-term debt |
|
265,392 |
|
|
|
22,000 |
|
Income tax payable |
|
1,834 |
|
|
|
475 |
|
Dividends payable |
|
15,041 |
|
|
|
14,939 |
|
Total current liabilities |
|
537,632 |
|
|
|
262,418 |
|
|
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|
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Long-term debt, net of current portion |
|
1,813,961 |
|
|
|
2,023,088 |
|
Deferred income taxes |
|
247,175 |
|
|
|
267,053 |
|
Long-term operating lease liabilities, net of current portion |
|
41,910 |
|
|
|
53,724 |
|
Long-term finance lease liabilities, net of current portion |
|
— |
|
|
|
726 |
|
Other liabilities |
|
22,430 |
|
|
|
20,818 |
|
Total liabilities |
|
2,663,108 |
|
|
|
2,627,827 |
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Stockholders’ equity: |
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|
|
|
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Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
792 |
|
|
|
786 |
|
Additional paid-in capital |
|
8,368 |
|
|
|
46,990 |
|
Accumulated other comprehensive (loss) income |
|
(10,106 |
) |
|
|
2,597 |
|
Retained earnings |
|
756,253 |
|
|
|
785,090 |
|
Total stockholders’ equity |
|
755,307 |
|
|
|
835,463 |
|
Total liabilities and stockholders’ equity |
$ |
3,418,415 |
|
|
$ |
3,463,290 |
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
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Third Quarter Ended |
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First Three Quarters Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Net sales |
$ |
461,073 |
|
|
$ |
502,734 |
|
|
$ |
1,380,886 |
|
|
$ |
1,484,185 |
|
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Cost of goods sold |
|
358,728 |
|
|
|
388,896 |
|
|
|
1,077,623 |
|
|
|
1,153,835 |
|
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Gross profit |
|
102,345 |
|
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|
113,838 |
|
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|
303,263 |
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|
330,350 |
|
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Operating expenses: |
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Selling, general and administrative expenses |
|
45,988 |
|
|
|
48,197 |
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|
137,728 |
|
|
|
142,798 |
|
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Amortization expense |
|
5,110 |
|
|
|
5,197 |
|
|
|
15,333 |
|
|
|
15,649 |
|
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Impairment of goodwill |
|
— |
|
|
|
— |
|
|
|
70,580 |
|
|
|
— |
|
|
Loss on sales of assets |
|
— |
|
|
|
— |
|
|
|
135 |
|
|
|
85 |
|
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Impairment of assets held for sale |
|
— |
|
|
|
132,949 |
|
|
|
— |
|
|
|
132,949 |
|
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Operating income (loss) |
|
51,247 |
|
|
|
(72,505 |
) |
|
|
79,487 |
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|
38,869 |
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Other (income) and expenses: |
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Interest expense, net |
|
42,166 |
|
|
|
35,859 |
|
|
|
117,799 |
|
|
|
111,108 |
|
|
Other income |
|
(1,046 |
) |
|
|
(962 |
) |
|
|
(3,134 |
) |
|
|
(2,819 |
) |
|
Income (loss) before income tax expense (benefit) |
|
10,127 |
|
|
|
(107,402 |
) |
|
|
(35,178 |
) |
|
|
(69,420 |
) |
|
Income tax expense (benefit) |
|
2,663 |
|
|
|
(24,661 |
) |
|
|
(6,341 |
) |
|
|
(647 |
) |
|
Net income (loss) |
$ |
7,464 |
|
|
$ |
(82,741 |
) |
|
$ |
(28,837 |
) |
|
$ |
(68,773 |
) |
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Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||
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Basic |
|
79,164 |
|
|
|
74,428 |
|
|
|
78,965 |
|
|
|
72,815 |
|
|
Diluted |
|
79,404 |
|
|
|
74,428 |
|
|
|
78,965 |
|
|
|
72,815 |
|
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Earnings (loss) per share: |
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|
|
|
||||
|
Basic |
$ |
0.09 |
|
|
$ |
(1.11 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.94 |
) |
|
Diluted |
$ |
0.09 |
|
|
$ |
(1.11 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.94 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash dividends declared per share |
$ |
0.19 |
|
|
$ |
0.19 |
|
|
$ |
0.57 |
|
|
$ |
0.57 |
|
Reconciliation of Segment Adjusted EBITDA to Net Income (Loss)
(In thousands)
(Unaudited)
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|||||||
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Specialty |
|
$ |
160,991 |
|
$ |
178,706 |
|
|
$ |
462,344 |
|
|
$ |
495,166 |
|
|
Meals |
|
|
111,582 |
|
|
116,148 |
|
|
|
339,502 |
|
|
|
352,240 |
|
|
Frozen & Vegetables |
|
|
89,181 |
|
|
111,056 |
|
|
|
285,648 |
|
|
|
345,024 |
|
|
Spices & Flavor Solutions |
|
|
99,319 |
|
|
96,824 |
|
|
|
293,392 |
|
|
|
291,755 |
|
|
Total net sales |
|
|
461,073 |
|
|
502,734 |
|
|
|
1,380,886 |
|
|
|
1,484,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Segment adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Specialty |
|
|
41,311 |
|
|
44,019 |
|
|
|
110,191 |
|
|
|
113,209 |
|
|
Meals |
|
|
23,253 |
|
|
25,696 |
|
|
|
72,793 |
|
|
|
74,958 |
|
|
Frozen & Vegetables |
|
|
1,159 |
|
|
4,430 |
|
|
|
12,797 |
|
|
|
25,659 |
|
|
Spices & Flavor Solutions |
|
|
28,509 |
|
|
30,072 |
|
|
|
84,825 |
|
|
|
86,865 |
|
|
Total segment adjusted EBITDA |
|
|
94,232 |
|
|
104,217 |
|
|
|
280,606 |
|
|
|
300,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Unallocated corporate expenses |
|
|
23,863 |
|
|
23,813 |
|
|
|
71,272 |
|
|
|
69,471 |
|
|
Adjusted EBITDA |
|
$ |
70,369 |
|
$ |
80,404 |
|
|
$ |
209,334 |
|
|
$ |
231,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Depreciation and amortization |
|
$ |
17,157 |
|
$ |
17,282 |
|
|
$ |
51,709 |
|
|
$ |
52,586 |
|
|
Acquisition/divestiture-related and non-recurring expenses |
|
|
919 |
|
|
1,716 |
|
|
|
4,289 |
|
|
|
3,912 |
|
|
Impairment of goodwill |
|
|
— |
|
|
— |
|
|
|
70,580 |
|
|
|
— |
|
|
Loss on sales of assets, net of facility closure costs |
|
|
— |
|
|
— |
|
|
|
135 |
|
|
|
85 |
|
|
Impairment of assets held for sale |
|
|
— |
|
|
132,949 |
|
|
|
- |
|
|
|
132,949 |
|
|
Interest expense, net |
|
|
42,166 |
|
|
35,859 |
|
|
|
117,799 |
|
|
|
111,108 |
|
|
Income tax expense (benefit) |
|
|
2,663 |
|
|
(24,661 |
) |
|
|
(6,341 |
) |
|
|
(647 |
) |
|
Net income (loss) |
|
$ |
7,464 |
|
$ |
(82,741 |
) |
|
$ |
(28,837 |
) |
|
$ |
(68,773 |
) |
Items Affecting Comparability
Reconciliation of Net Income (Loss) to EBITDA(1) and Adjusted EBITDA(1)
(In thousands)
(Unaudited)
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|||||||
|
Net income (loss) |
|
$ |
7,464 |
|
$ |
(82,741 |
) |
|
$ |
(28,837 |
) |
|
$ |
(68,773 |
) |
|
Income tax expense (benefit) |
|
|
2,663 |
|
|
(24,661 |
) |
|
|
(6,341 |
) |
|
|
(647 |
) |
|
Interest expense, net(2) |
|
|
42,166 |
|
|
35,859 |
|
|
|
117,799 |
|
|
|
111,108 |
|
|
Depreciation and amortization |
|
|
17,157 |
|
|
17,282 |
|
|
|
51,709 |
|
|
|
52,586 |
|
|
EBITDA(1) |
|
|
69,450 |
|
|
(54,261 |
) |
|
|
134,330 |
|
|
|
94,274 |
|
|
Acquisition/divestiture-related and non-recurring expenses(3) |
|
|
919 |
|
|
1,716 |
|
|
|
4,289 |
|
|
|
3,912 |
|
|
Impairment of goodwill(4) |
|
|
— |
|
|
— |
|
|
|
70,580 |
|
|
|
— |
|
|
Loss on sales of assets, net of facility closure costs |
|
|
— |
|
|
— |
|
|
|
135 |
|
|
|
85 |
|
|
Impairment of assets held for sale(5) |
|
|
— |
|
|
132,949 |
|
|
|
— |
|
|
|
132,949 |
|
|
Adjusted EBITDA(1) |
|
$ |
70,369 |
|
$ |
80,404 |
|
|
$ |
209,334 |
|
|
$ |
231,220 |
|
Items Affecting Comparability
Reconciliation of Net Cash Provided by Operating Activities to EBITDA(1) and Adjusted EBITDA(1)
(In thousands)
(Unaudited)
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
Net cash provided by operating activities |
|
$ |
4,156 |
|
|
$ |
23,304 |
|
|
$ |
50,566 |
|
|
$ |
155,681 |
|
|
Income tax expense (benefit) |
|
|
2,663 |
|
|
|
(24,661 |
) |
|
|
(6,341 |
) |
|
|
(647 |
) |
|
Interest expense, net(2) |
|
|
42,166 |
|
|
|
35,859 |
|
|
|
117,799 |
|
|
|
111,108 |
|
|
Impairment of goodwill(4) |
|
|
— |
|
|
|
— |
|
|
|
(70,580 |
) |
|
|
— |
|
|
(Loss) gain on extinguishment of debt(2) |
|
|
(1,938 |
) |
|
|
582 |
|
|
|
(1,938 |
) |
|
|
1,368 |
|
|
Loss on sales of assets |
|
|
— |
|
|
|
(598 |
) |
|
|
(258 |
) |
|
|
(775 |
) |
|
Deferred income taxes |
|
|
1,810 |
|
|
|
34,037 |
|
|
|
16,968 |
|
|
|
18,940 |
|
|
Amortization of deferred debt financing costs and bond discount/premium |
|
|
(1,329 |
) |
|
|
(1,007 |
) |
|
|
(4,537 |
) |
|
|
(5,691 |
) |
|
Share-based compensation expense |
|
|
(2,400 |
) |
|
|
(2,151 |
) |
|
|
(6,795 |
) |
|
|
(5,452 |
) |
|
Changes in assets and liabilities, net of effects of business combinations |
|
|
24,322 |
|
|
|
13,323 |
|
|
|
39,446 |
|
|
|
(47,309 |
) |
|
Impairment of assets held for sale(5) |
|
|
— |
|
|
|
(132,949 |
) |
|
|
— |
|
|
|
(132,949 |
) |
|
EBITDA(1) |
|
|
69,450 |
|
|
|
(54,261 |
) |
|
|
134,330 |
|
|
|
94,274 |
|
|
Acquisition/divestiture-related and non-recurring expenses(3) |
|
|
919 |
|
|
|
1,716 |
|
|
|
4,289 |
|
|
|
3,912 |
|
|
Impairment of goodwill(4) |
|
|
— |
|
|
|
— |
|
|
|
70,580 |
|
|
|
— |
|
|
Loss on sales of assets, net of facility closure costs |
|
|
— |
|
|
|
— |
|
|
|
135 |
|
|
|
85 |
|
|
Impairment of assets held for sale(5) |
|
|
— |
|
|
|
132,949 |
|
|
|
— |
|
|
|
132,949 |
|
|
Adjusted EBITDA(1) |
|
$ |
70,369 |
|
|
$ |
80,404 |
|
|
$ |
209,334 |
|
|
$ |
231,220 |
|
Items Affecting Comparability
Reconciliation of Net Income (Loss) to Adjusted Net Income(6) and Adjusted Diluted Earnings per Share(6)
(In thousands, except per share data)
(Unaudited)
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
Net income (loss) |
|
$ |
7,464 |
|
|
$ |
(82,741 |
) |
|
$ |
(28,837 |
) |
|
$ |
(68,773 |
) |
|
Loss (gain) on extinguishment of debt(2) |
|
|
1,938 |
|
|
|
(582 |
) |
|
|
1,938 |
|
|
|
(1,368 |
) |
|
Debt financing costs(7) |
|
|
1,140 |
|
|
|
— |
|
|
|
1,140 |
|
|
|
— |
|
|
Acquisition/divestiture-related and non-recurring expenses(3) |
|
|
919 |
|
|
|
1,716 |
|
|
|
4,289 |
|
|
|
3,912 |
|
|
Impairment of goodwill(4) |
|
|
— |
|
|
|
— |
|
|
|
70,580 |
|
|
|
— |
|
|
Loss on sales of assets, net of facility closure costs |
|
|
— |
|
|
|
— |
|
|
|
135 |
|
|
|
85 |
|
|
Accelerated amortization of deferred debt financing costs(8) |
|
|
— |
|
|
|
— |
|
|
|
456 |
|
|
|
— |
|
|
Impairment of assets held for sale(5) |
|
|
— |
|
|
|
132,949 |
|
|
|
— |
|
|
|
132,949 |
|
|
Tax adjustment related to Back to Nature divestiture(9) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,736 |
|
|
Tax true-up(10) |
|
|
(351 |
) |
|
|
— |
|
|
|
646 |
|
|
|
— |
|
|
Tax effects of non-GAAP adjustments(11) |
|
|
(979 |
) |
|
|
(30,846 |
) |
|
|
(19,240 |
) |
|
|
(31,213 |
) |
|
Adjusted net income(6) |
|
$ |
10,131 |
|
|
$ |
20,496 |
|
|
$ |
31,107 |
|
|
$ |
50,328 |
|
|
Adjusted diluted earnings per share(6) |
|
$ |
0.13 |
|
|
$ |
0.27 |
|
|
$ |
0.39 |
|
|
$ |
0.69 |
|
| _________________________ | |
|
(1) |
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 the Company’s financial performance that excludes or includes amounts so as to be different from 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 (loss), changes in stockholders’ equity and cash flows. The Company defines EBITDA as net income (loss) before net interest expense, income taxes, and depreciation and amortization. The Company defines adjusted EBITDA as EBITDA 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 the sale of certain assets); gains and losses on extinguishment of debt; impairment of assets held for sale; impairment of intangible assets; and non-recurring expenses, gains and losses. |
|
|
Management believes that it is useful to eliminate these items because it allows management to focus on what it deems to be a more reliable indicator of ongoing operating performance and the Company’s ability to generate cash flow from operations. The Company uses EBITDA and adjusted EBITDA in the Company’s business operations to, among other things, evaluate the Company’s operating performance, develop budgets and measure the Company’s performance against those budgets, determine employee bonuses and evaluate the Company’s cash flows in terms of cash needs. The Company also presents EBITDA and adjusted EBITDA because the Company believes they are useful indicators of the Company’s historical debt capacity and ability to service debt and because covenants in the Company’s credit agreement and the Company’s senior notes indentures contain ratios based on these measures. As a result, reports used by internal management 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 alternatives to operating income (loss), net income (loss) or any other GAAP measure as an indicator of operating performance. 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 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 certain costs and expenses and gains and losses described above. 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 the Company’s performance against the Company’s peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts. |
|
(2) |
Net interest expense for the third quarter and first three quarters of 2024 includes a loss on extinguishment of debt of |
|
(3) |
Acquisition/divestiture-related and non-recurring expenses for the third quarter and first three quarters of 2024 of |
|
(4) |
In connection with the Company’s transition from one reporting segment to four reporting segments during the first quarter of 2024, the Company reassigned assets and liabilities, including goodwill, between the reporting segments and completed a goodwill impairment test both prior to and subsequent to the change. The goodwill impairment test resulted in the Company recognizing pre‑tax, non-cash goodwill impairment charges of |
|
(5) |
In connection with the divestiture of the Company’s Green Giant |
|
(6) |
Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures used by management to measure operating performance. The Company defines adjusted net income and adjusted diluted earnings per share as net income (loss) and diluted earnings (loss) per share adjusted for certain items that affect comparability. These non-GAAP financial measures reflect adjustments to net income (loss) and diluted earnings (loss) per share to eliminate the items identified in the reconciliation above. 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, management does not consider these items when evaluating the Company’s performance or when making decisions regarding allocation of resources. |
|
(7) |
Debt financing costs for the third quarter and first three quarters of 2024 reflects the portion of debt financing costs incurred in connection with the Company’s refinancing of the Company’s senior secured credit facility that is included in net interest expense for the third quarter and first three quarters of 2024. Of the |
|
(8) |
Net interest expense for the first three quarters of 2024 includes the accelerated amortization of deferred debt financing costs of |
|
(9) |
As a result of the Back to Nature divestiture, the Company incurred a capital loss for tax purposes, for which the Company recorded a deferred tax asset during the first quarter of 2023. A valuation allowance has been recorded against this deferred tax asset, which negatively impacted the Company’s first quarter of 2023 income taxes by |
|
(10) |
Tax true-up for the third quarter and first three quarters of 2024 relates to return to provision adjustments in the |
|
(11) |
Represents the tax effects of the non-GAAP adjustments listed above, assuming a tax rate of 24.5%. |
Items Affecting Comparability
Reconciliation of
(In thousands)
(Unaudited)
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||
|
Net sales |
|
$ |
461,073 |
|
$ |
502,734 |
|
|
$ |
1,380,886 |
|
$ |
1,484,185 |
|
|
Net sales from discontinued or divested brands(2) |
|
|
— |
|
|
(20,312 |
) |
|
|
106 |
|
|
(48,520 |
) |
|
Base business net sales(1) |
|
$ |
461,073 |
|
$ |
482,422 |
|
|
$ |
1,380,992 |
|
$ |
1,435,665 |
|
| _________________________ | |
| (1) |
Base business net sales is a non-GAAP financial measure used by management to measure operating performance. The Company defines base business net sales as the Company’s net sales excluding (1) the net sales of acquisitions until the net sales from such acquisitions are included in both comparable periods and (2) net sales of discontinued or divested brands. The portion of current period net sales attributable to recent acquisitions for which there is no corresponding period in the comparable period of the prior year is excluded. For each acquisition, the excluded period starts at the beginning of the most recent fiscal period being compared and ends on the first anniversary of the acquisition date. For discontinued or divested brands, the entire amount of net sales is excluded from each fiscal period being compared. The Company has included this financial measure because management believes it provides useful and comparable trend information regarding the results of the Company’s business without the effect of the timing of acquisitions and the effect of discontinued or divested brands. |
|
(2) |
For the third quarter and first three quarters of 2023, reflects net sales of the Green Giant |
Items Affecting Comparability
Reconciliation of Gross Profit to Adjusted Gross Profit(1) and
Gross Profit Percentage to Adjusted Gross Profit Percentage(1)
(In thousands, except percentages)
(Unaudited)
|
|
|
Third Quarter Ended |
|
First Three Quarters Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
Gross profit |
|
$ |
102,345 |
|
|
$ |
113,838 |
|
|
$ |
303,263 |
|
|
$ |
330,350 |
|
|
Acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold(2) |
|
|
130 |
|
|
|
297 |
|
|
|
2,321 |
|
|
|
1,353 |
|
|
Adjusted gross profit(1) |
|
$ |
102,475 |
|
|
$ |
114,135 |
|
|
$ |
305,584 |
|
|
$ |
331,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Gross profit percentage |
|
|
22.2 |
% |
|
|
22.6 |
% |
|
|
22.0 |
% |
|
|
22.3 |
% |
|
Acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold as a percentage of net sales |
|
|
0.0 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
|
0.1 |
% |
|
Adjusted gross profit percentage(1) |
|
|
22.2 |
% |
|
|
22.7 |
% |
|
|
22.1 |
% |
|
|
22.3 |
% |
| _________________________ | |
|
(1) |
Adjusted gross profit and adjusted gross profit percentage are non-GAAP financial measures used by management to measure operating performance. The Company defines adjusted gross profit as gross profit adjusted for acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold and adjusted gross profit percentage as gross profit percentage (i.e., gross profit as a percentage of net sales) adjusted for acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold. These non-GAAP financial measures reflect adjustments to gross profit and gross profit percentage to eliminate the items identified in the reconciliation above. 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, management does not consider these items when evaluating the Company’s performance or when making decisions regarding allocation of resources. |
|
(2) |
Acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold for the third quarter and first three quarters of 2024 of |
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