B&G Foods Is Maintained at Equal-Weight by Barclays

B&G Foods, Inc. BGS posted third-quarter 2024 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Both net sales and earnings experienced year-over-year declines.

Sales were impacted by the divestiture of the Green Giant U.S. shelf-stable product line (divested on Nov. 8, 2023), lower unit volumes and consumer purchasing patterns, influenced by high food inflation. However, the Spices and Flavor Solutions business showed positive trends, representing an offset to the overall sales decline.

B&G Foods remains committed to reshaping and optimizing its portfolio to enhance focus, improve margins and cash flow, and maximize long-term value creation.

B&G Foods’ Quarterly Performance: Key Metrics and Insights

B&G Foods posted adjusted earnings of 13 cents per share, which missed the Zacks Consensus Estimate of 20 cents. Also, the bottom line slumped 52% from 27 cents in the prior-year quarter.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

B&G Foods, Inc. Price, Consensus and EPS Surprise

B&G Foods, Inc. price-consensus-eps-surprise-chart | B&G Foods, Inc. Quote

Net sales of $461.1 million declined 8.3% year over year due to the divestiture of the Green Giant U.S. shelf-stable product line, a decline in unit volumes and the negative impact of foreign currency. This was partially offset by higher net pricing and the impacts of product mix. Net sales missed the Zacks Consensus Estimate of $473 million.

Base business net sales declined 4.4% to $461.1 million due to lower unit volumes and currency headwinds, partially mitigated by elevated net pricing and an improved product mix.

The adjusted gross profit of $102.4 million decreased from $114.1 million in the year-ago period. The adjusted gross margin contracted 50 basis points (bps) to 22.2%.

SG&A expenses declined 4.6% to $46 million due to lower consumer marketing costs, reduced warehousing expenses, lower selling costs and acquisition/divestiture-related and non-recurring expenses, partly offset by elevated general and administrative expenses. As a percentage of net sales, SG&A expenses increased 0.4 percentage points to 10%.

Adjusted EBITDA fell 12.5% to $70.4 million, due to lower base business net sales, the impact of the Green Giant U.S. shelf-stable divestiture and currency on the cost of goods sold for products manufactured at BGS’ Green Giant facility in Mexico. The adjusted EBITDA margin contracted 70 bps to 15.3%.

Decoding B&G Foods’ Segmental Performance

Specialty: Net sales was $161 million, down 9.9% year over year. The decline was due to the lower pricing of Crisco (stemming from decreased commodity costs) as well as lower overall volumes.

Meals: Net sales of $111.6 million dipped 3.9% year over year due to lower volumes, partly made up by elevated net pricing and product mix.

Frozen & Vegetables: Net sales was $89.2 million, down 19.7% year over year. The downtick was due to the divestiture of Green Giant U.S. shelf-stable products and lower volumes.

Spices & Flavor Solutions: Net sales was $99.3 million, up 2.6% year over year due to improved volumes and growth in the fresh fruit perimeter within grocery.

B&G Foods’ Financial Health Snapshot

B&G Foods exited the quarter with cash and cash equivalents of $54.7 million, net long-term debt of nearly $1,814 million and total shareholders’ equity of $755.3 million. In the nine months ended Sept. 28, 2024, net cash provided by operating activities was $50.6 million.

Sneak Peek Into BGS’s Outlook

B&G Foods has revised its outlook downward, indicating a slower-than-expected recovery in center store trends and the broader consumer environment. The company anticipates a slow recovery and stabilization in fiscal 2025, with sequential improvement expected between the first and second halves of the year.

For fiscal 2024, management now anticipates net sales in the band of $1.920-$1.950 billion compared with the earlier view of $1.945-$1.970 billion. In fiscal 2023, net sales amounted to $2,062.3 million ($2.06 billion).

The company now anticipates adjusted EBITDA in the range of around $295-$305 million compared with $300-$315 million projected earlier. BGS recorded an adjusted EBITDA of $318 million in fiscal 2023.

Adjusted earnings per share (EPS) for fiscal 2024 are envisioned to be between 67 cents and 77 cents, lower than the earlier guided range of 70-90 cents. In fiscal 2023, the company posted an adjusted EPS of 99 cents.

This Zacks Rank #3 (Hold) stock has risen 4.6% in the past three months compared with the industry growth of 0.2%.