B&G Foods, Inc. (BGS)

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B&G Foods, Inc. (BGS)

Q2 2009 Earnings Call

July 28, 2009 4:30 pm ET

Executives

David Wenner – President & CEO

Bob Cantwell - CFO

Analysts

Reza Vahabzadeh – Barclays Capital

Brian Hunt – Wells Fargo

Andrew Lazar – Barclays Capital

Ed Aaron – RBC Capital Markets

Andrew Kleinberg – Glickenhaus

Nick Edney – Adar Investment Management


Presentation

Operator

Good afternoon ladies and gentlemen. Welcome to the B&G Foods, Inc. second quarter 2009 financial results conference call. (Operator Instructions) I would now like to turn the conference over to David Wenner, Chief Executive Officer of B&G Foods; please go ahead sir.

David Wenner

Good afternoon everyone and welcome to the B&G Foods second quarter fiscal 2009 conference call. You can access detailed financial information on the quarter in our earnings release issued today available on our website at www.bgfoods.com and in our Quarterly Report on Form 10-Q that we have filed with the SEC today.

Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them.

We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

We will also be making reference on today's call for the non-GAAP financial measure, net income as adjusted, earnings per share as adjusted, and EBITDA. Reconciliations to these measures to the most directly comparable GAAP measures are provided in today's press release.

We will start the call by having our CFO Bob Cantwell to discuss financial results for the quarter and then the amendment to our senior secured credit facility that we proposed to our lenders. After Bob’s remarks I’ll discuss the various factors that affected our quarterly results, selected business highlights, and our updated thoughts concerning the remainder of fiscal 2009.

Bob Cantwell

Thank you David, net sales increased $3.7 million or 3.1% to $122.9 million for the second quarter of 2009, compared to $119.2 million for the second quarter of 2008. Excluding net sales of Maple Grove Farms pure maple syrup products, net sales for the second quarter increased $4.3 million or 4%.

This $4.3 million increase was attributable to sales price increases of $8.5 million, partially offset by a decrease in unit volume of $4.2 million. Net sales of Maple Grove Farms pure maple syrup products decreased by $0.6 million consisting of a unit volume decline of $1.4 million partially offset by sales price increases of $0.8 million.

Our 10-Q has additional disclosure on individual brand performance during the second quarter. Gross profit increased $3.3 million or 9.9% to $36.9 million for the second quarter from $33.6 million for the second quarter of 2008. Gross profit expressed as a percentage of net sales increased 1.8 percentage points to 30% in the second quarter from 28.2% in the second quarter of 2008.

The increase in gross profit expressed as a percentage of net sales was primarily attributable to increased sales prices of $9.3 million partially offset by the increased costs for beans and packaging and an increased accrual for performance based compensation.

Sales, marketing and distribution expenses decreased $0.6 million or 4.6% to $10.9 million for the second quarter compared to $11.5 million for the second quarter of 2008. This decrease was primarily due to a decrease in consumer marketing and trade spending of $1.2 million, and selling expense of $0.1 million offset by an increase in warehousing expense of $0.4 million and an increased accrual for performance based compensation of $0.4 million.

Expressed as a percentage of net sales, sales, marketing and distribution expenses decreased to 8.9% in the second quarter from 9.6% in the second quarter of 2008. General and administrative expenses increased $0.6 million or 31.7% to $2.5 million for the second quarter compared to $1.9 million in the second quarter of 2008.

This increase resulted primarily from an increased accrual for performance based compensation of $0.8 million partially offset by decreases in other expenses. Operating income increased 17.4% to $21.8 million for the second quarter from $18.6 million in the second quarter of 2008.

Net interest expense decreased $0.8 million to $12.1 million for the second quarter from $12.9 million in the second quarter of 2008. Of this decrease $1.1 million consist of non-cash adjustments to net interest expense relating to our interest rate swap.

Excluding the impact of items effecting comparability relating to the interest rate swap, the company’s net income for the second quarter of 2009 was $5.4 million or $0.15 per share, a 52% increase as compared to net income for the second quarter of 2008 of $3.5 million or $0.10 per share.

Including items effecting comparability, the company experienced net income for the second quarter of 2009 of $6 million or $0.17 per share. For the first two quarters of 2009 excluding the impact of items effecting comparability relating to the interest rate swap, the company’s net income was $12 million or $0.33 per share, a 51% increase as compared to net income for the first two quarters of 2008 of $7.9 million or $0.22 per share.

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