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B&G Foods (BGS) Q4 Earnings Lag Estimates: Input Costs High
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B&G Foods, Inc. (BGS - Free Report) reported fourth-quarter fiscal 2021 numbers, wherein both the top and bottom lines missed the respective Zacks Consensus Estimate. However, both the metrics increased year over year.
The company continued to see higher demand for its products as consumers are cooking and baking at home. However, B&G Foods has been battling significant input cost inflation and supply-chain headwinds. It expects these hurdles to persist in fiscal 2022. Management is focused on undertaking pricing and saving initiatives to counter inflation, though its effectiveness is yet to be seen.
Quarterly Highlights
The company posted adjusted earnings of 39 cents per share, which missed the Zacks Consensus Estimate of 42 cents. However, the bottom line grew 11.4% from the year-ago quarter’s reported figure.
Net sales of $571.8 million increased 12.1% year over year, mainly due to gains from the Crisco buyout (acquired on Dec 1, 2020). An additional two months of net sales from Crisco contributed $68 million to net sales. This was somewhat offset by supply-chain hurdles stemming from the Omicron variant. Net sales increased 21.6% compared with pre-pandemic levels (the fourth quarter of 2019). On a two-year compound annual growth basis, net sales increased 10.3% in the quarter under review. The top line fell short of the Zacks Consensus Estimate of $585 million.
Base business net sales declined 1.1% to $503.6 million, reflecting a unit volume decline of $33.8 million. This was somewhat offset by an increase in net pricing and a favorable product mix to the tune of $27.4 million. Also, a positive impact of foreign currency rates was an upside. On a two-year compound annual growth basis compared with pre-pandemic levels, base business net sales dipped 0.2%.
Net sales of Ortega, Clabber Girl and spices & seasonings declined 7.7%, 12.8% and 13.6%, respectively. However, net sales of Green Giant (including Le Sueur), Cream of Wheat and Maple Grove Farms rose 3.9%, 1% and 3.4%, respectively. Sales of all other brands in the aggregate jumped 3.8%.
Adjusted gross profit came in at $112.7 million compared with $108.8 million in the year-ago period. Adjusted gross margin of 19.7% contracted 160 basis points (bps). The fourth-quarter 2021 gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
This Zacks Rank #4 (Sell) company expects the input cost inflation to have a considerably industry-wide effect in fiscal 2022. BGS is on track to mitigate the impact of inflation by undertaking cost-saving initiatives, increasing list prices as well as locking in prices via short-term supply contracts and advance commodities purchase agreements. That being said, these may not fully offset additional cost headwinds.
SG&A expenses declined 10.5% to $52.3 million. As a percentage of net sales, SG&A expenses improved 2.4 percentage points to 9.1%. Adjusted EBITDA increased 16% to $85.1 million due to gains from Crisco’s acquisition, somewhat negated by input cost inflation and supply-chain hurdles. Adjusted EBITDA margin contracted 50 bps to 14.4%.
Image Source: Zacks Investment Research
Other Updates
B&G Foods concluded the quarter with cash and cash equivalents of $33.7 million, long-term debt of $2,267.8 million and total shareholders’ equity of $920.3 million.
Guidance
For fiscal 2022, management anticipates net sales in the range of $2.07-$2.125 billion. In fiscal 2021, net sales amounted to $2,056.3 million (nearly $2.06 billion). The company expects adjusted EBITDA for fiscal 2022 in the range of $358-$368 million compared with $358 million recorded in fiscal 2021. Adjusted earnings per share (EPS) in fiscal 2022 are envisioned to be nearly in the band of $1.70-$1.85. In fiscal 2021, the metric came in at $1.88.
Management expects to keep witnessing solid consumer demand for its products compared with pre-pandemic levels (in 2019). However, management expects to keep seeing significant cost inflation for inputs, such as ingredients, packaging and transportation. Although the company is undertaking various revenue-enhancing and cost-control measures, it is yet to be seen how effective these initiatives turn out. Apart from this, other pandemic-related factors, such as the duration of social distancing and stay-at-home trends, operation of manufacturing facilities, the company’s ability to procure ingredients and other raw materials and supply-chain status among others, may impact the performance.
B&G Foods’ shares have dropped 3.9% in the past three months compared with the industry’s decline of 3.4%.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen, and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy). Shares of Pilgrim’s Pride have moved down 14.2% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year EPS suggests growth of 16.2% from the year-ago reported number. PPC has a trailing four-quarter earnings surprise of 24.9%, on average.
Tyson Foods, a renowned meat products company, carries a Zacks Rank #2 (Buy) at present. Shares of Tyson Foods have risen almost 20% in the past six months.
The Zacks Consensus Estimate for Tyson Foods’ current financial-year sales and EPS suggests growth of 9.5% and 2.9%, respectively, from the year-ago reported number. TSN has a trailing four-quarter earnings surprise of 32.2%, on average.
Flowers Foods, the producer and marketer of packaged bakery products, currently carries a Zacks Rank #2. Shares of Flowers Foods have jumped 13.6% in the past six months.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and EPS suggests growth of 7.2% and 3.2%, respectively, from the year-ago reported figure. FLO has a trailing four-quarter earnings surprise of 9%, on average.
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B&G Foods (BGS) Q4 Earnings Lag Estimates: Input Costs High
B&G Foods, Inc. (BGS - Free Report) reported fourth-quarter fiscal 2021 numbers, wherein both the top and bottom lines missed the respective Zacks Consensus Estimate. However, both the metrics increased year over year.
The company continued to see higher demand for its products as consumers are cooking and baking at home. However, B&G Foods has been battling significant input cost inflation and supply-chain headwinds. It expects these hurdles to persist in fiscal 2022. Management is focused on undertaking pricing and saving initiatives to counter inflation, though its effectiveness is yet to be seen.
Quarterly Highlights
The company posted adjusted earnings of 39 cents per share, which missed the Zacks Consensus Estimate of 42 cents. However, the bottom line grew 11.4% from the year-ago quarter’s reported figure.
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 $571.8 million increased 12.1% year over year, mainly due to gains from the Crisco buyout (acquired on Dec 1, 2020). An additional two months of net sales from Crisco contributed $68 million to net sales. This was somewhat offset by supply-chain hurdles stemming from the Omicron variant. Net sales increased 21.6% compared with pre-pandemic levels (the fourth quarter of 2019). On a two-year compound annual growth basis, net sales increased 10.3% in the quarter under review. The top line fell short of the Zacks Consensus Estimate of $585 million.
Base business net sales declined 1.1% to $503.6 million, reflecting a unit volume decline of $33.8 million. This was somewhat offset by an increase in net pricing and a favorable product mix to the tune of $27.4 million. Also, a positive impact of foreign currency rates was an upside. On a two-year compound annual growth basis compared with pre-pandemic levels, base business net sales dipped 0.2%.
Net sales of Ortega, Clabber Girl and spices & seasonings declined 7.7%, 12.8% and 13.6%, respectively. However, net sales of Green Giant (including Le Sueur), Cream of Wheat and Maple Grove Farms rose 3.9%, 1% and 3.4%, respectively. Sales of all other brands in the aggregate jumped 3.8%.
Adjusted gross profit came in at $112.7 million compared with $108.8 million in the year-ago period. Adjusted gross margin of 19.7% contracted 160 basis points (bps). The fourth-quarter 2021 gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
This Zacks Rank #4 (Sell) company expects the input cost inflation to have a considerably industry-wide effect in fiscal 2022. BGS is on track to mitigate the impact of inflation by undertaking cost-saving initiatives, increasing list prices as well as locking in prices via short-term supply contracts and advance commodities purchase agreements. That being said, these may not fully offset additional cost headwinds.
SG&A expenses declined 10.5% to $52.3 million. As a percentage of net sales, SG&A expenses improved 2.4 percentage points to 9.1%. Adjusted EBITDA increased 16% to $85.1 million due to gains from Crisco’s acquisition, somewhat negated by input cost inflation and supply-chain hurdles. Adjusted EBITDA margin contracted 50 bps to 14.4%.
Image Source: Zacks Investment Research
Other Updates
B&G Foods concluded the quarter with cash and cash equivalents of $33.7 million, long-term debt of $2,267.8 million and total shareholders’ equity of $920.3 million.
Guidance
For fiscal 2022, management anticipates net sales in the range of $2.07-$2.125 billion. In fiscal 2021, net sales amounted to $2,056.3 million (nearly $2.06 billion). The company expects adjusted EBITDA for fiscal 2022 in the range of $358-$368 million compared with $358 million recorded in fiscal 2021. Adjusted earnings per share (EPS) in fiscal 2022 are envisioned to be nearly in the band of $1.70-$1.85. In fiscal 2021, the metric came in at $1.88.
Management expects to keep witnessing solid consumer demand for its products compared with pre-pandemic levels (in 2019). However, management expects to keep seeing significant cost inflation for inputs, such as ingredients, packaging and transportation. Although the company is undertaking various revenue-enhancing and cost-control measures, it is yet to be seen how effective these initiatives turn out. Apart from this, other pandemic-related factors, such as the duration of social distancing and stay-at-home trends, operation of manufacturing facilities, the company’s ability to procure ingredients and other raw materials and supply-chain status among others, may impact the performance.
B&G Foods’ shares have dropped 3.9% in the past three months compared with the industry’s decline of 3.4%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks are Pilgrim’s Pride (PPC - Free Report) , Tyson Foods (TSN - Free Report) and Flowers Foods (FLO - Free Report) .
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen, and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy). Shares of Pilgrim’s Pride have moved down 14.2% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year EPS suggests growth of 16.2% from the year-ago reported number. PPC has a trailing four-quarter earnings surprise of 24.9%, on average.
Tyson Foods, a renowned meat products company, carries a Zacks Rank #2 (Buy) at present. Shares of Tyson Foods have risen almost 20% in the past six months.
The Zacks Consensus Estimate for Tyson Foods’ current financial-year sales and EPS suggests growth of 9.5% and 2.9%, respectively, from the year-ago reported number. TSN has a trailing four-quarter earnings surprise of 32.2%, on average.
Flowers Foods, the producer and marketer of packaged bakery products, currently carries a Zacks Rank #2. Shares of Flowers Foods have jumped 13.6% in the past six months.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and EPS suggests growth of 7.2% and 3.2%, respectively, from the year-ago reported figure. FLO has a trailing four-quarter earnings surprise of 9%, on average.