B&G Foods net sales for Q4 increased $104.3 million, 43.8%
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Net sales of Green Giant (which includes the Le Sueur brand), acquired on November 2, 2015, and net sales of Mama Mary’s, acquired on July 10, 2015, contributed $106.2 million and $9.9 million, respectively, to the company’s net sales for the quarter.
The fourth quarter of 2015 contained 13 weeks and the fourth quarter of 2014 contained 14 weeks, which negatively impacted the fourth quarter of 2015 on a comparative basis.
B&G Foods estimates that the additional week in the fourth quarter of 2014 contributed approximately $15 million of incremental net sales in the fourth quarter of 2014. Customer refunds related to the Ortega and Las Palmas recall negatively impacted fourth quarter of 2014 net sales by $4.1 million.
Comparable base business net sales for Q4 decreased $0.6 million, or 0.3%, to $225.3 from $225.9 for the fourth quarter of 2014. The $0.6 million 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 $31.6 million, or 55.3%, to $88.6 million from $57 million for the fourth quarter of 2014. Gross profit expressed as a percentage of net sales increased to 25.9% in the fourth quarter of 2015 from 24.0% in the fourth quarter of 2014.
Selling, general and administrative expenses increased $12.6 million, or 52.6%, to $36.6 million for the fourth quarter of 2015 (which includes $5.7 million of incremental operating expenses related to Green Giant) from $24 million for the fourth quarter of 2014.
B&G Foods’s reported net income under U.S. generally accepted accounting principles (GAAP) was $11 million, or $0.19 per diluted share, for the fourth quarter of 2015, as compared to reported net income of $11.5 million, or $0.21 per diluted share, for the fourth quarter of 2014.
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 $0.43 per adjusted diluted share.
B&G Foods’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 $0.39 per adjusted diluted share.
For the fourth quarter of 2015, adjusted EBITDA (which excludes the impact of the amortization of acquisition-related inventory step-up, the impact of the loss on product recall, other acquisition-related expenses and the related loss on disposal of inventory, and distribution restructuring expenses), increased 29.2% to $67.4 million from $52.1 million for the fourth quarter of 2014.
Financial results for the full year 2015
Net sales for fiscal 2015 increased $118.4 million, or 14.0%, to $966.4 million from $848 million for fiscal 2014. Net sales of Green Giant, acquired on November 2, 2015, contributed $106.2 million to the overall increase, and net sales of Mama Mary’s, acquired on July 10, 2015, contributed $18.4 million.
Additional months of ownership of Specialty Brands, which was acquired on April 23, 2014, contributed $23.1 million to fiscal 2015 net sales.
Fiscal 2015 contained 52 weeks and fiscal 2014 contained 53 weeks, which negatively impacted fiscal 2015 on a comparative basis. The company estimates that the additional week in the fourth quarter of 2014 contributed approximately $15 million of incremental net sales in 2014.
Net sales for fiscal 2015 were also negatively impacted by the Rickland Orchards brand, whose net sales decreased by $17.2 million compared to fiscal 2014, a continuation of the weakness that caused B&G Foods to impair the brand’s trademark and customer relationship assets in 2014.
Customer refunds related to the Ortega and Las Palmas recall negatively impacted fiscal 2015 net sales by $1.2 million and fiscal 2014 net sales by $4.1 million.
Comparable base business net sales for fiscal 2015 increased $0.2 million, or less than 0.1%, to $815.9 million from $815.7 million for fiscal 2014. The $0.2 million increase was attributable to an increase in net pricing of $12.3 million, or 1.5%, offset by a decrease in unit volume of $12.1 million, or 1.5%.
Gross profit for fiscal 2015 increased $41.8 million, or 16.9%, to $289.6 million from $247.8 million for fiscal 2014. Gross profit expressed as a percentage of net sales increased to 30.0% in fiscal 2015 from 29.2% in fiscal 2014.
The 0.8 percentage point increase resulted primarily from price increases, partially offset by $6.1 million of non-cash amortization of the step-up of inventory acquired in the Green Giant acquisition.
The increase in fiscal 2015 gross profit percentage was also attributable to the negative impact that the fourth quarter of 2014 product recall and write-off of certain raw material and finished goods inventory used in the production of Rickland Orchards products had on gross profit percentage in fiscal 2014.
Selling, general and administrative expenses increased $12.9 million, or 13.9%, to $105.9 million for fiscal 2015 (which includes $5.7 million of incremental operating expenses related to Green Giant) from $93 million for fiscal 2014.
Expressed as a percentage of net sales, selling, general and administrative expenses remained flat at 11.0% for fiscal 2015.
Net interest expense for fiscal 2015 increased $4.5 million, or 9.8%, to $51.1 million from $46.6 million in fiscal 2014. The increase was primarily attributable to additional borrowings used to fund the Green Giant acquisition.
B&G Foods’s reported net income under GAAP was $69.1 million, or $1.22 per diluted share, for fiscal 2015, as compared to $41 million, or $0.76 per diluted share, for fiscal 2014.
The company’s adjusted net income for fiscal 2015, which excludes the acquisition-related adjustment to deferred taxes, and the after-tax impact of the amortization of acquisition-related inventory step-up, other acquisition-related expenses, distribution restructuring expenses and the loss on product recall was $86.8 million, or $1.53 per adjusted diluted share.
The company’s adjusted net income for fiscal 2014, which excludes the after-tax impact of the loss on product recall, loss on extinguishment of debt, acquisition-related expenses, the non-cash impairment charges to Rickland Orchards intangible assets and the related loss on disposal of inventory, and a non-cash gain relating to the Rickland Orchards earn-out, was $77.1 million, or $1.44 per adjusted diluted share.
For fiscal 2015, adjusted EBITDA, which excludes the impact of the amortization of acquisition-related inventory step-up, the impact of the loss on product recall, other acquisition-related expenses, the non-cash impairment charges to Rickland Orchards intangible assets and the related loss on disposal of inventory, the non-cash gain relating to an earn-out and distribution restructuring expenses, increased 12.2% to $217.8 million from $194.1 million for fiscal 2014.
For full year 2016, net sales is expected to be approximately $1.38 billion to $1.42 billion, adjusted EBITDA is expected to be approximately $294 million to $304 million and adjusted diluted earnings per share is expected to be $1.98 to $2.09. ■