This is a summary of the second quarter fiscal 2008 earnings call conducted by B&G Foods, Inc. (BSG: chart) on July 28, 2008.
Management:
CEO: David Wenner
Executive VP and CFO: Bob Cantwell
Key Investor Issues:
- Gross profit for the second quarter of 2008 decreased 10.1% to $33.6 million from $37.3 million in the second quarter of 2007.
- Net sales increased 0.8% to $119.2 million from $118.2 million for the thirteen weeks ended June 30, 2007 (second quarter of 2007).
- The increase in net sales of $1.0 million was due to an increase in unit volume.
- Net income was $3.5 million for the second quarter of 2008 compared to $3.7 million for the second quarter of 2007.
Second Quarter Highlights:
- Net sales increased $1 million or 0.8% to $119.2 million for the second quarter of 2008, compared to $118.2 million for the second quarter of 2007.
- Net sales of Maple Grove Farms, Ortega and B&M increased $2.3 million, $1.5 million and $1.1 million.
- These increases were partially offset by a reduction in net sales of Cream of Wheat, Sa-són, Polaner and B&G of $1.8 million, $0.6 million, $0.6 million and $0.5 million respectively.
Gross profit decreased $3.7 million for the second quarter of 2008 or 10.1% to $33.6 million from $37.3 million in the second quarter of 2007.
Gross profit expressed as a percentage of net sales decreased 3.4% to 28.2% for the second quarter of 2008 from 31.6% in the second quarter of 2007. This decrease in gross profit expressed as a percentage in net sales was primarily due to increased spending on trade promotions and increased cost for wheat, maple syrup, corn, packaging, transportation and sweeteners.
Sales, marketing and distribution expenses decreased $1.1 million or 8.8% to $11.5 million for the second quarter, compared to $12.6 million a year ago.
This decrease was primarily due to a decrease in consumer marketing of $0.7 million and a decrease in selling expenses of $0.6 million, offset by an increase in warehousing expense of $0.2 million. These expenses expressed as a percentage of net sales decreased to 9.6% in the second quarter of 2008 from 10.6% in the second quarter of 2007.
General and administrative expenses increased $0.3 million or 17.8% to $1.9 million for the second quarter of 2008, compared to $1.6 million last year.
Excluding the impact of $800,000 insurance reimbursement received in the second quarter of 2007, general and administrative expenses decreased $0.5 million in the second quarter of 2008 as compared to the second quarter of 2007. This decrease primarily was the result of a decrease in professional fees of $0.3 million and compensation expense of $0.3 million.
Operating income decreased 13.7% to $18.6 million for the second quarter of 2008 from $21.5 million in the second quarter of 2007.
- Net interest expense decreased $2.6 million or 16.9% to $12.9 million for the second quarter of 2008, from $15.5 million in the second quarter of 2007.
- Interest expense for the second quarter of 2007 included a write-off of deferred financing cost of $1.8 million relating to the prepayment of $100 million of term loan borrowings with a portion of the proceeds of the company’s public offering of Class A common stock in May 2007.
- Average debt outstanding was approximately $66.7 million lower for the second quarter of 2008, as compared to the second quarter of 2007.
EBITDA decreased 10% to $22.4 million for the second quarter of 2008, compared to $25 million in the second quarter of 2007.
- Earnings per share of Class A common stock was $0.10 for the second quarter of 2008.
- Capital expenditures for the second quarter of 2007 were $2.6 million and are $9 million year-to-year.
During the second half of 2008, the company expects to incur an additional of $2 million in capital expenditures for a total of $11 million.
This compares to capital expenditures spending of $7.8 million in the second half of 2007 for a full year total of $14.2 million in 2007.
The company finished the second quarter of 2008 with $24.1 million of cash compared to $36.6 million at the end of 2007.
