B&G Foods Inc. (BGS, Financial) and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, branded shelf-stable foods across the U.S., Canada and Puerto Rico. Based in Parsippany, New Jersey, B&G Foods’ products are marketed under many recognized brands, including Ac’cent, B&G, B&M, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Cream of Rice, Cream of Wheat, etc.
It reported decent fourth-quarter results and is poised to grow. The year 2015 marked a year of solid, disciplined financial performance. The company entered the frozen food category and is better positioned to meet today’s consumers’ needs through innovation and enhanced marketing.
Fourth-quarter results
Net sales for the fourth quarter of 2015 increased by $104.3 million, or 43.8%, and were $342.3 million ($238.0 million during the prior year quarter). Net sales of Green Giant (which includes the Le Sueur brand), acquired on Nov. 2, 2015, and net sales of Mama Mary’s, acquired on July 10, 2015, contributed $106.2 million and $9.9 million to the company’s net sales for the quarter.
Comparable base business net sales for the fourth quarter of 2015 decreased by $600,000, or 0.3%, and were $225.3 ($225.9 during the prior-year quarter). The $600,000 decrease was attributable to a decrease in unit volume of $1.7 million, or 0.7%, offset by an increase in net pricing of $1.1 million, or 0.5%.
Gross profit for the fourth quarter of 2015 increased by $31.6 million, or 55.3%, and was $88.6 million (which was $57.0 million during the prior year quarter). Gross profit expressed as a percentage of net sales increased to 25.9% in the fourth quarter of 2015 (which was 24.0% in the prior year quarter).
Selling, general and administrative expenses increased by $12.6 million, or 52.6%, and were $36.6 million for the fourth quarter of 2015 ($24 million during the prior-year quarter). This increase was primarily due to increases in general and administrative expenses of $4.8 million (primarily consisting of increases in accruals for performance-based compensation), selling expenses of $3.3 million (including an increase of $1.6 million for salesperson compensation and a $1.5 million increase in brokerage expenses), acquisition-related expenses of $2 million, warehousing expenses of $1.3 million (primarily consisting of $1.5 million of distribution restructuring expenses) and consumer marketing of $1.2 million.
Expressed as a percentage of net sales, selling, general and administrative expenses increased 0.6 percentage points and was 10.7% for the fourth quarter of 2015 (which was 10.1% during the prior year quarter).
Net interest expense for the fourth quarter of 2015 increased by $5.2 million, or 43.3%, and was $17.3 million (which was $12.1 million during the prior-year quarter).
The company’s reported net income under generally accepted accounting principles (GAAP) was $11.0 million, or 19 cents per diluted share, for the fourth quarter of 2015 (which was $11.5 million, or 21 cents per diluted share, during the prior-year quarter). The company’s adjusted net income for the fourth quarter of 2015, which excludes an acquisition-related adjustment to deferred taxes, and the after-tax impact of the amortization of acquisition-related inventory step-up, other acquisition-related expenses and distribution restructuring expenses was $25 million, or 43 cents per adjusted diluted share. The company’s adjusted net income for the fourth quarter of 2014, which excludes the after-tax impact of the Rickland Orchards loss on disposal of inventory, the loss on product recall, and acquisition-related expenses, was $21.2 million, or 39 cents per adjusted diluted share.
For the fourth quarter of 2015, adjusted EBITDA increased by 29.2% and was $67.4 million ($52.1 million during the prior year quarter).
Dividends
The company announced that its board of directors has increased the company’s quarterly cash dividend rate by 20% from 35 cents per share of common stock to 42 cents per share of common stock. On an annualized basis, the dividend increases from $1.40 per share to $1.68 per share. The quarterly dividend declared today is payable on May 2 to shareholders of record as of March 31.
At the closing market price of the common stock on Feb. 22, the new dividend rate represents an annualized yield of 4.5%. This is the 46th consecutive quarterly dividend declared by the board of directors since B&G Foods’ initial public offering in October 2004.
2016 guidance
The company expects the following:
- Net sales is expected to be in the range of $1.38 billion to $1.42 billion.
- Adjusted EBITDA is expected to be in the range of $294 million to $304 million.
- Adjusted diluted earnings per share is expected to be between $1.98 and $2.09.
Focus
- Quality.
- Convenience.
- Positioning in the marketplace.
- Improving competitive position.
- Expanding growth opportunities.
- Ensuring that it has the capabilities to improve competitive position and expand growth.
- Maintaining credibility through results.
On a concluding note
B&G Foods continued to set company records in several key measures of financial performance in fiscal 2015. Despite the difficult industry conditions, the company was able to achieve growth.
The company has an exciting lineup of new products. The company’s strategy has generated remarkable results for nearly two decades, the first as a private company and the last decade as a public company. It is plans to launch low-cost products and has an impressive bottom line.
This company is leading in the prepared foods sector. Investors may add this company to their portfolios.
Disclosure: I do not hold any position in the company.
