B&G Foods announced financial results for the second quarter of 2016. Net sales increased $112.8 million, or 58.2%, to $306.4 million from $193.6 million for Q2 2015.
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Net sales of Green Giant, acquired on November 2, 2015, and net sales of Mama Mary’s, acquired on July 10, 2015, contributed $107.2 million and $8.9 million, respectively, to the Company’s net sales for the quarter.
Base business net sales for the second quarter of 2016 decreased $2.5 million, or 1.3%, to $190.1 million from $192.6 million for the second quarter of 2015.
The $2.5 million decrease was attributable to a decrease in unit volume of $1.6 million, or 0.8%, a decrease in net pricing of $0.7 million, or 0.3%, and the negative impact of currency fluctuations on foreign sales of approximately $0.2 million, or 0.1%.
Gross profit increased $47.7 million, or 76.9%, to $109.7 million for the second quarter of 2016 from $62.0 million for the second quarter of 2015. Gross profit expressed as a percentage of net sales increased to 35.8% in the second quarter of 2016 from 32.0% in the second quarter of 2015, an increase of 3.8 percentage points.
The increase in gross profit percentage was primarily driven by the acquisition of Green Giant, which benefited from lower than anticipated trade expense and input costs, particularly from the Green Giant manufacturing facility in Irapuato, Mexico, as well as greater than anticipated synergies with the Company’s base business.
Gross profit percentage, excluding the results of Green Giant, decreased 0.7 percentage points.
Selling, general and administrative expenses increased $14.7 million, or 76.5%, to $33.9 million for the second quarter of 2016 from $19.2 million for the second quarter of 2015. The increase was primarily due to the Green Giant acquisition, which resulted in $13.9 million of incremental expenses for the second quarter.
The overall $14.7 million increase was attributable to increases in consumer marketing of $5.5 million, selling expenses of $3.2 million (which includes a $2.4 million increase in brokerage expenses and a $0.8 million increase in salesperson compensation), general and administrative expenses of $2.6 million (primarily related to compensation), acquisition-related expenses of $1.7 million, and warehousing expenses of $1.7 million (which includes $0.5 million of distribution restructuring expenses).
Expressed as a percentage of net sales, selling, general and administrative expenses increased 1.1 percentage points to 11.0% for the second quarter of 2016 from 9.9% for the second quarter of 2015.
Net interest expense increased $7.3 million, or 66.6%, to $18.4 million for the second quarter of 2016 from $11.1 million in the second quarter of 2015. The increase was primarily attributable to additional borrowings used to fund the Green Giant acquisition.
The company’s reported net income under U.S. generally accepted accounting principles (GAAP) was $30.3 million, or $0.48 per diluted share, for the second quarter of 2016, as compared to reported net income of $18.7 million, or $0.33 per diluted share, for the second quarter of 2015.
he company’s adjusted net income for the second quarter of 2015, which excludes the after tax impact of the loss on product recall and acquisition-related expenses, was $19.0 million, or $0.34 per adjusted diluted share.
For the second quarter of 2016, adjusted EBITDA increased 79.3% to $85.0 million from $47.4 million for the second quarter of 2015. ■
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