B&G Foods Reports Financial Results for Fourth Quarter and Full Year 2021

PARSIPPANY, N.J.–(BUSINESS WIRE)–B&G Foods, Inc. (NYSE: BGS) today announced financial results for the fourth quarter and full year 2021. Results for fiscal 2021 reflect the impact of one fewer reporting week compared to fiscal 2020. Fiscal 2021 contained 52 weeks and fiscal 2020 contained 53 weeks, with the extra week in fiscal 2020 occurring in the third quarter. The fourth quarters of 2021 and 2020 each contained 13 weeks.

• Net sales increase for full year fiscal 2021 was driven by an extra eleven months of net sales of the Crisco brand, partially offset by comparisons against the extraordinary demand during the first three quarters of fiscal 2020 resulting from the COVID-19 pandemic, one fewer reporting week in fiscal 2021, and industry-wide supply chain disruptions resulting from the COVID-19 Omicron variant.
• Net income and adjusted diluted earnings per share for the full year were negatively impacted by $16.1 million of cash and non-cash charges during the third quarter relating to the closure and pending sale of the Company’s Portland, Maine manufacturing facility and $23.1 million of non-cash impairment charges during the fourth quarter relating to four of the Company’s smaller brands, and, in the case of adjusted diluted earnings per share, the ATM equity offering described below. ²
• Gross margin was negatively impacted by industry-wide input cost inflation, partially offset by cost savings initiatives and list price increases, which generally lag behind rising input costs.
• Sold 3,695,706 shares of common stock pursuant to the Company’s ATM equity offering program for gross proceeds of $112.5 million, or $30.44 per share, during the third and fourth quarters of 2021, of which, 3,624,915 shares were sold during the fourth quarter.

Guidance for Full Year Fiscal 2022

• Net sales range of $2.070 billion to $2.125 billion.
• Adjusted EBITDA range of $358 million to $368 million.
• Adjusted diluted earnings per share range of $1.70 to $1.85.

Commenting on the results, Casey Keller, President and Chief Executive Officer of B&G Foods, stated, “We successfully managed through the challenges of inflation and supply chain disruptions from the Omicron variant during the fourth quarter, delivering growth behind the Crisco acquisition. While we expect continued inflationary pressure and supply chain constraints in fiscal 2022, the overall supply chain is recovering from the Omicron surge and we have implemented pricing actions to recover higher costs. Demand remains elevated as consumers continue to cook and bake more at home relative to pre-pandemic levels, and fiscal year 2022 is off to a good start.”

Financial Results for the Fourth Quarter of 2021

Net sales for the fourth quarter of 2021 increased $61.6 million, or 12.1%, to $571.8 million from $510.2 million for the fourth quarter of 2020. The increase was primarily due to an extra two months of Crisco net sales, partially offset by supply chain disruptions resulting from the COVID-19 Omicron variant. An extra two months of net sales of Crisco, acquired on December 1, 2020, contributed $68.0 million to the Company’s net sales for the fourth quarter of 2021. Net sales for the fourth quarter of 2021 were 21.6% higher than pre-pandemic net sales for the fourth quarter of 2019. On a two-year compound annual growth basis, fourth quarter net sales increased 10.3%.

Base business net sales for the fourth quarter of 2021 decreased $5.4 million, or 1.1%, to $503.6 million from $509.0 million for the fourth quarter of 2020. The decrease in base business net sales for the fourth quarter of 2021 reflected a decrease in unit volume of $33.8 million, partially offset by an increase in net pricing and the impact of product mix of $27.4 million, or 5.4% of base business net sales, and the positive impact of foreign currency of $1.0 million. Base business net sales for the fourth quarter of 2021 were 0.4% lower than pre-pandemic base business net sales for the fourth quarter of 2019. On a two-year compound annual growth basis, relative to pre-pandemic levels, fourth quarter base business net sales decreased 0.2%.

Net sales of Green Giant (including Le Sueur) increased $6.3 million, or 3.9%; net sales of Maple Grove Farms increased $0.7 million, or 3.4%; and net sales of Cream of Wheat increased $0.2 million, or 1.0%, for the fourth quarter of 2021 as compared to the fourth quarter of 2020. Primarily as a result of the tough comparisons against the fourth quarter of 2020 due to the COVID-19 pandemic, net sales of the Company’s spices & seasonings³ decreased $12.1 million, or 13.6%; net sales of Clabber Girl decreased $3.6 million, or 12.8%; and net sales of Ortega decreased $2.8 million, or 7.7%, for the fourth quarter of 2021 as compared to the fourth quarter of 2020. Base business net sales of all other brands in the aggregate increased $5.9 million, or 3.8%, for the fourth quarter of 2021.

Gross profit was $101.9 million for the fourth quarter of 2021, or 17.8% of net sales. Excluding the negative impact of $10.8 million of acquisition/divestiture-related expenses and non-recurring expenses included in cost of goods sold during the fourth quarter of 2021, the Company’s gross profit would have been $112.7 million, or 19.7% of net sales. 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 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.

During the fourth 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 will continue to have a significant industry-wide impact during fiscal 2022. 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 also announced list price increases in 2021 and again during the first quarter of 2022, and, where appropriate, has reduced trade promotions to its customers for certain of the Company’s products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company did not fully offset the incremental costs that it faced in the fourth quarter of fiscal 2021 and may not fully offset the incremental costs that the Company is facing and expects to continue to face in fiscal 2022.

Selling, general and administrative expenses decreased $6.2 million, or 10.5%, to $52.3 million for the fourth quarter of 2021 from $58.5 million for the fourth quarter of 2020. The decrease was composed of decreases in acquisition/divestiture-related and non-recurring expenses of $2.7 million, general and administrative expenses of $1.9 million, selling expenses of $1.1 million, consumer marketing expenses of $0.4 million and warehousing expenses of $0.1 million. Expressed as a percentage of net sales, selling, general and administrative expenses improved by 2.4 percentage points to 9.1% for the fourth quarter of 2021, compared to 11.5% for the fourth quarter of 2020.

Net interest expense increased $2.3 million, or 9.3%, to $26.6 million for the fourth quarter of 2021 from $24.3 million in the fourth quarter of 2020. The increase was primarily attributable to an increase in average long-term debt outstanding during the fourth quarter of 2021 as compared to the fourth 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 fourth quarter of 2021.

The Company’s net loss was $4.8 million, or $0.07 per diluted share, for the fourth quarter of 2021, compared to net income of $12.2 million, or $0.19 per diluted share, for the fourth quarter of 2020. The Company’s adjusted net income for the fourth quarter of 2021 was $26.3 million, or $0.39 per adjusted diluted share, compared to $22.8 million, or $0.35 per adjusted diluted share, for the fourth quarter of 2020. The net loss and diluted loss per share for the fourth quarter were primarily attributable to non-cash impairment charges to trademarks for the Static Guard, SnackWell’s, Molly McButter and Farmwise brands of $23.1 million in the aggregate during the fourth quarter of fiscal 2021, partially offset by the positive impact of the Crisco acquisition. The increases in adjusted net income and adjusted diluted earnings per share for the fourth quarter were primarily attributable to the positive impact of the Crisco acquisition, partially offset by the negative impact of industry-wide input cost inflation and supply chain disruptions.

For the fourth quarter of 2021, adjusted EBITDA was $85.1 million, an increase of $11.8 million, or 16.0%, compared to $73.3 million for the fourth quarter of 2020. The increase in adjusted EBITDA was primarily attributable to the positive impact of the Crisco acquisition, partially offset by industry-wide input cost inflation and supply chain disruptions. Adjusted EBITDA as a percentage of net sales was 14.9% for the fourth quarter of 2021, compared to 14.4% in the fourth quarter of 2020.

For the fourth quarter of 2021, adjusted EBITDA before COVID-19 expenses¹ was $85.5 million, an increase of $7.9 million, or 10.1%, compared to $77.6 million for the fourth quarter of 2020. COVID-19 expenses were $0.4 million and $4.3 million for the fourth quarter of 2021 and the fourth quarter of 2020, respectively. Adjusted EBITDA before COVID-19 expenses as a percentage of net sales was 14.9% for the fourth quarter of 2021, compared to 15.2% in the fourth quarter of 2020.

Financial Results for the Full Year Fiscal 2021

Net sales for fiscal 2021 increased $88.4 million, or 4.5%, to $2,056.3 million from $1,967.9 million for fiscal 2020. The increase was primarily due to the Crisco acquisition, largely offset by comparisons against the extraordinary demand resulting from the COVID-19 pandemic during fiscal 2020, one fewer reporting week in fiscal 2021 compared to fiscal 2020, and supply chain disruptions in the fourth quarter of 2021 resulting from the COVID-19 Omicron variant. The Company estimates that the additional week in the third quarter of 2020 contributed approximately $35.0 million to the Company’s net sales for fiscal 2020. An extra eleven months of net sales of Crisco, acquired on December 1, 2020, contributed $255.7 million to the Company’s net sales for fiscal 2021. Net sales for fiscal 2021 were 23.8% higher than pre-pandemic net sales for fiscal 2019. On a two-year compound annual growth basis, net sales for fiscal 2021 increased 11.3%.

Base business net sales¹ for fiscal 2021 decreased $162.1 million, or 8.3%, to $1,798.1 million from $1,960.2 million for fiscal 2020. The decrease in base business net sales reflected a decrease in unit volume of $222.6 million, partially offset by an increase in net pricing and the impact of product mix of $54.3 million, or 2.8% of base business net sales, and the positive impact of foreign currency of $6.2 million. Base business net sales for fiscal 2021 were 5.2% higher than pre-pandemic base business net sales for fiscal 2019. On a two-year compound annual growth basis, base business net sales increased 2.6%.

Net sales of the Company’s spices & seasonings³ increased $4.6 million, or 1.2%, and net sales of Maple Grove Farms increased $4.5 million, or 5.9%, in fiscal 2021, as compared to fiscal 2020. Primarily as a result of the tough comparisons against fiscal 2020 due to the COVID-19 pandemic, one fewer reporting week in fiscal 2021 compared to fiscal 2020, and supply chain disruptions, net sales of Green Giant (including Le Sueur) decreased $95.1 million, or 14.9%; net sales of Clabber Girl decreased $17.9 million, or 18.4%; net sales of Ortega decreased $7.1 million, or 4.5%; and net sales of Cream of Wheat decreased $5.5 million, or 7.6%, in fiscal 2021, as compared to fiscal 2020. Base business net sales of all other brands in the aggregate decreased $45.6 million, or 8.3%, for fiscal 2021.

Net sales for fiscal 2021 for spices & seasonings, Green Giant, Ortega, Maple Grove Farms, Cream of Wheat and Clabber Girl were each higher than the net sales for such brands during pre-pandemic fiscal 2019. Spices & seasonings³ net sales were higher than fiscal 2019 net sales by $35.5 million, or 10.5%; Green Giant (including Le Sueur) by $17.1 million, or 3.3%; Ortega by $10.8 million, or 7.6%; Maple Grove Farms by $10.6 million, or 15.1%; Cream of Wheat by $7.4 million, or 12.4%; and Clabber Girl⁴ by $0.4 million, or 0.7%. Base business net sales of all other brands in the aggregate were higher by $4.1 million, or 0.9%, compared to fiscal 2019.

Gross profit was $437.0 million for fiscal 2021, or 21.3% of net sales. Excluding the negative impact of a $13.9 million accrual for the present value of a multi-employer pension plan withdrawal liability in connection with the closure and pending sale of the Company’s Portland, Maine manufacturing facility, $14.6 million of acquisition/divestiture-related and non-recurring expenses, and $5.1 million of amortization of acquisition-related inventory fair value step-up included in cost of goods sold, during fiscal 2021, the Company’s gross profit would have been $470.6 million, or 22.9% of net sales. 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.

During fiscal 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 will continue to have a significant industry-wide impact during fiscal 2022. 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 also announced list price increases in 2021 and again during the first quarter of 2022, and, where appropriate, has reduced trade promotions to its customers for certain of the Company’s products. However, increases in the prices the Company charges its customers generally lag behind rising input costs. As such, the Company did not fully offset the incremental costs that it faced in fiscal 2021 and may not fully offset the incremental costs that the Company is facing and expects to continue to face in fiscal 2022.

Selling, general and administrative expenses increased $10.0 million, or 5.4%, to $196.2 million for fiscal 2021 from $186.2 million for fiscal 2020. The increase was composed of increases in warehousing expenses of $12.0 million, acquisition/divestiture-related and non-recurring expenses of $4.3 million and consumer marketing expenses of $2.7 million, partially offset by decreases in selling expenses of $6.0 million and general and administrative expenses of $3.0 million. The increase in warehousing expenses was primarily driven by the Crisco acquisition and customer fines related to COVID-19 shortages and delays, partially offset by one fewer reporting week in fiscal 2021 compared to fiscal 2020. Expressed as a percentage of net sales, selling, general and administrative expenses remained flat at 9.5% for fiscal 2021 as compared to fiscal 2020.

Net interest expense increased $5.3 million, or 5.2%, to $106.9 million for fiscal 2021 from $101.6 million in fiscal 2020. The increase was primarily attributable to an increase in average long-term debt outstanding during fiscal 2021 as compared to fiscal 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 fiscal 2021, as well as one fewer reporting week in fiscal 2021 compared to fiscal 2020.

The Company’s net income was $67.4 million, or $1.02 per diluted share, for fiscal 2021, compared to net income of $132.0 million, or $2.04 per diluted share, for fiscal 2020. The Company’s net income in fiscal 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 fiscal 2021 was $123.7 million, or $1.88 per adjusted diluted share, compared to $146.0 million, or $2.26 per adjusted diluted share, for fiscal 2020. The decreases in net income, diluted earnings per share, adjusted net income and adjusted diluted earnings per share were primarily attributable to comparisons against the extraordinary demand resulting from the COVID-19 pandemic during fiscal 2020, industry-wide input cost inflation, one fewer reporting week in fiscal 2021 compared to fiscal 2020, supply chain disruptions, and the impact of the discrete tax benefit received in the first quarter of 2020, partially offset by the positive impact of the Crisco acquisition. Net income and diluted earnings per share were also negatively impacted by (a) $16.1 million of cash and non-cash charges during the third quarter relating to the closure and pending sale of the Company’s Portland, Maine manufacturing facility, which includes a $13.9 million accrual for the present value of a multi-employer pension plan withdrawal liability payable over 20 years, and (b) by $23.1 million of non-cash impairment charges in the aggregate during the fourth quarter to trademarks for the Static Guard, SnackWell’s, Molly McButter and Farmwise brands.

For fiscal 2021, adjusted EBITDA was $358.0 million, a decrease of $3.2 million, or 0.9%, compared to $361.2 million for fiscal 2020. The decrease in adjusted EBITDA was primarily attributable to comparisons against the extraordinary demand during fiscal 2020 resulting from the COVID-19 pandemic, industry-wide input cost inflation and supply chain disruptions, and one fewer reporting week in fiscal 2021 compared to fiscal 2020, partially offset by the positive impact of the Crisco acquisition. Adjusted EBITDA as a percentage of net sales was 17.4% for fiscal 2021, compared to 18.4% in fiscal 2020.

For fiscal 2021, adjusted EBITDA before COVID-19 expenses was $362.6 million, a decrease of $12.2 million, or 3.2%, compared to $374.8 million for fiscal 2020. COVID-19 expenses were $4.7 million and $13.5 million for fiscal 2021 and fiscal 2020, respectively. Adjusted EBITDA before COVID-19 expenses as a percentage of net sales was 17.6% for fiscal 2021, compared to 19.0% in fiscal 2020.

At-The-Market Equity Offering Program

During fiscal 2021, the Company sold 3,695,706 shares of common stock under its previously announced “at-the-market” (ATM) equity offering program, 3,624,915 of which were sold during the fourth quarter. The Company generated $112.5 million in gross proceeds, or $30.44 per share, from the sales and paid commissions to the sales agents of approximately $2.2 million and incurred other fees and expenses of approximately $0.4 million.

The Company used the net proceeds from shares sold under the ATM equity offering program during fiscal 2021 to repay revolving credit loans, to pay offering fees and expenses, and for general corporate purposes. The Company intends to use the net proceeds from any future sales of its common stock under the ATM offering for general corporate purposes, which could include, among other things, repayment, refinancing, redemption or repurchase of long-term debt or possible acquisitions.

Full Year Fiscal 2022 Guidance

For fiscal 2022, net sales are expected to be approximately $2.070 billion to $2.125 billion, adjusted EBITDA is expected to be approximately $358 million to $368 million, and adjusted diluted earnings per share are expected to be approximately $1.70 to $1.85.

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. The Company’s management is not able to fully estimate the impact COVID-19, industry-wide supply chain disruptions, cost inflation and the Company’s cost inflation mitigation efforts will have on the Company’s results for fiscal 2022, and the Company’s guidance should be read in this context. 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, March 1, 2022 to discuss fourth 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 (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)

Contacts

Investor Relations:

ICR, Inc.

Dara Dierks

866.211.8151

Media Relations:

ICR, Inc.

Matt Lindberg

203.682.8214

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