B&G Foods announced financial results for the third quarter and first three quarters of 2015. Net sales increased $4.3 million, or 2.1%, to $213.3 million from $209 million for Q3 2014.
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Net sales of the Mama Mary’s brand, acquired in July 2015, contributed $8.5 million to the company’s net sales for the quarter.
Negatively impacting the company’s net sales for the quarter was a $3.4 million decrease in net sales for Rickland Orchards compared to the third quarter of 2014, a continuation of the weakness that caused the company to impair the brand’s trademark and customer relationship intangible assets in 2014.
Comparable base business net sales, which excludes the impact of the Mama Mary’s acquisition and the Rickland Orchards shortfall, decreased $0.8 million, or 0.4%, in the third quarter of 2015. The $0.8 million decrease was attributable to a decrease in unit volume of $4.5 million, partially offset by an increase in net pricing of $3.7 million (due to increases in list prices and reduced promotional activity).
Gross profit for the third quarter of 2015 increased $8.5 million, or 13.5%, to $71.6 million from $63.1 million for the third quarter of 2014. Gross profit expressed as a percentage of net sales increased to 33.6% in the third quarter of 2015 from 30.2% in the third quarter of 2014.
The 3.4 percentage point increase resulted primarily from price increases and lower delivery costs, partially offset by minor cost increases in commodities and packaging and the negative impact of the Canadian exchange rate on the company’s net sales to Canada.
The increase in gross profit percentage year over year was also favorably impacted by the third quarter 2014 charge to cost of goods sold of approximately $3.0 million relating to a write-off of certain raw material and finished goods inventory used in the production of Rickland Orchards products.
Selling, general and administrative expenses increased $6.1 million, or 29.0%, to $27.3 million for the third quarter of 2015 from $21.2 million for the third quarter of 2014.
This increase was primarily due to increases in acquisition-related expenses of $2.1 million, warehousing expenses of $1.8 million (primarily related to restructuring activity) selling expenses of $0.8 million (including an increase of $0.9 million for salesperson compensation, slightly offset by a decrease in brokerage expenses) and other expenses of $1.5 million (primarily related to compensation).
These increases were slightly offset by a decrease of $0.1 million of consumer marketing expenses. Expressed as a percentage of net sales, selling, general and administrative expenses increased 2.7 percentage points to 12.8% for the third quarter of 2015 from 10.1% for the third quarter of 2014.
Net interest expense for the third quarter of 2015 decreased $0.3 million, or 2.7%, to $11.3 million from $11.6 million in the third quarter of 2014. The decrease was primarily attributable to a decrease in the company’s average debt outstanding.
The company’s reported net income under U.S. generally accepted accounting principles (GAAP) was $19.8 million, or $0.34 per diluted share, for the third quarter of 2015, as compared to reported net loss of $4.4 million, or $0.08 per diluted share, for the third quarter of 2014.
The company’s adjusted net income for the third quarter of 2015, which excludes the after tax impact of acquisition-related expenses and distribution restructuring expenses, was $22.7 million, or $0.39 per adjusted diluted share.
The company’s adjusted net income for the third quarter of 2014, which excludes the after tax impact of acquisition-related expenses, the non-cash impairment charges to Rickland Orchards intangible assets and the related loss on disposal of inventory, was $20.5 million, or $0.38 per adjusted diluted share.
For the third quarter of 2015, adjusted EBITDA, which excludes the impact of acquisition-related expenses, distribution restructuring expenses, the non-cash impairment charges to Rickland Orchards intangible assets and the related loss on disposal of inventory, increased 7.4% to $53.1 million from $49.5 million for the third quarter of 2014. ■