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B&G Foods, Inc. (BGS - Free Report) lowered its guidance for fiscal 2023 on posting third-quarter results, wherein the top and bottom lines declined year over year, and sales fell short of the Zacks Consensus Estimate.
In a separate press release, management unveiled the sale of its Green Giant U.S. shelf stable product line to Seneca Foods Corporation, with the transaction taking effect immediately. The divestiture does not encompass Green Giant frozen products, Green Giant Canada or the Le Sueur brand. BGS plans to utilize the net proceeds from this sale to repay long-term debt. The company’s shares appreciated 3.3% in the after-market trading session on Nov 9.
Delving Deeper
B&G Foods posted adjusted earnings of 27 cents per share, which beat the Zacks Consensus Estimate of 23 cents. However, the bottom line decreased 12.9% from the year-ago quarter.
Net sales of $502.7 million declined 4.9% year over year, mainly due to the divestiture of Back to Nature (concluded on Jan 3, 2023) and lower unit volumes. The top line missed the Zacks Consensus Estimate of $504 million.
Base business net sales dipped 3% to $502.7 million due to a fall in the unit volume, currency headwinds, reduced net pricing and the effects of the product mix.
Net sales of spices & seasonings, Clabber Girl and Maple Grove Farms rose 6.1%, 31.5%, and 2.4%, respectively. However, net sales of Green Giant (including Le Sueur), Crisco, Ortega and Cream of Wheat declined by 10.7%, 16.4%, 4.3% and 3.5%, respectively. Base net sales of all other brands in the aggregate rose 2.2%.
The adjusted gross profit of $114.1 million increased from $108 million in the year-ago period. The adjusted gross margin expanded 230 basis points (bps) to 22.7%. The gross margin expansion was backed by increased net pricing (relative to input costs), reduced transportation and warehousing costs and moderation of input cost inflation.
SG&A expenses escalated 1.4% to $48.2 million due to higher general and administrative expenses and consumer marketing costs, somewhat negated by lower warehousing expenses, acquisition/divestiture-related and non-recurring expenses and selling costs. As a percentage of net sales, SG&A expenses escalated 0.6 percentage points to 9.6%.
Adjusted EBITDA rose 0.2% to $80.4 million due to a higher gross profit. The adjusted EBITDA margin increased 80 bps to 16% in the third quarter. Our model suggested a 9.6% decline in adjusted EBITDA and a 110-bps contraction in the adjusted EBITDA margin.
Other Updates
B&G Foods ended the quarter with cash and cash equivalents of $359.9 million, long-term debt of $1,929.1 million and total shareholders’ equity of $840.6 million.
Guidance
For fiscal 2023, management anticipates net sales in the band of $2.05-$2.07 billion compared with the earlier view of $2.11-$2.13 billion. In fiscal 2022, net sales amounted to $2,163 million ($2.16 billion).
The company anticipates adjusted EBITDA in the range of around $310-$330 million, whereas it reported $301 million in fiscal 2022.
Adjusted earnings per share (EPS) in fiscal 2023 are envisioned between 93 cents and $1.13, down from the prior view of 95 cents to $1.15. In fiscal 2022, the company posted an adjusted EPS of $1.08.
Shares of this Zacks Rank #5 (Strong Sell) company have slumped 29.9% in the past three months compared with the industry’s decline of 9.6%.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) , a packaged bakery food products company, currently has a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales suggests growth of 6.7% from the corresponding year-ago reported figure.
The Kraft Heinz Company (KHC - Free Report) , a food and beverage products company, currently carries a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 9.9%, on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal-year earnings suggests growth of 5.8% from the corresponding year-ago reported figure.
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B&G Foods (BGS) Cuts View Despite Q3 Earnings Beat: What's More?
B&G Foods, Inc. (BGS - Free Report) lowered its guidance for fiscal 2023 on posting third-quarter results, wherein the top and bottom lines declined year over year, and sales fell short of the Zacks Consensus Estimate.
In a separate press release, management unveiled the sale of its Green Giant U.S. shelf stable product line to Seneca Foods Corporation, with the transaction taking effect immediately. The divestiture does not encompass Green Giant frozen products, Green Giant Canada or the Le Sueur brand. BGS plans to utilize the net proceeds from this sale to repay long-term debt. The company’s shares appreciated 3.3% in the after-market trading session on Nov 9.
Delving Deeper
B&G Foods posted adjusted earnings of 27 cents per share, which beat the Zacks Consensus Estimate of 23 cents. However, the bottom line decreased 12.9% from the year-ago quarter.
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 $502.7 million declined 4.9% year over year, mainly due to the divestiture of Back to Nature (concluded on Jan 3, 2023) and lower unit volumes. The top line missed the Zacks Consensus Estimate of $504 million.
Base business net sales dipped 3% to $502.7 million due to a fall in the unit volume, currency headwinds, reduced net pricing and the effects of the product mix.
Net sales of spices & seasonings, Clabber Girl and Maple Grove Farms rose 6.1%, 31.5%, and 2.4%, respectively. However, net sales of Green Giant (including Le Sueur), Crisco, Ortega and Cream of Wheat declined by 10.7%, 16.4%, 4.3% and 3.5%, respectively. Base net sales of all other brands in the aggregate rose 2.2%.
The adjusted gross profit of $114.1 million increased from $108 million in the year-ago period. The adjusted gross margin expanded 230 basis points (bps) to 22.7%. The gross margin expansion was backed by increased net pricing (relative to input costs), reduced transportation and warehousing costs and moderation of input cost inflation.
SG&A expenses escalated 1.4% to $48.2 million due to higher general and administrative expenses and consumer marketing costs, somewhat negated by lower warehousing expenses, acquisition/divestiture-related and non-recurring expenses and selling costs. As a percentage of net sales, SG&A expenses escalated 0.6 percentage points to 9.6%.
Adjusted EBITDA rose 0.2% to $80.4 million due to a higher gross profit. The adjusted EBITDA margin increased 80 bps to 16% in the third quarter. Our model suggested a 9.6% decline in adjusted EBITDA and a 110-bps contraction in the adjusted EBITDA margin.
Other Updates
B&G Foods ended the quarter with cash and cash equivalents of $359.9 million, long-term debt of $1,929.1 million and total shareholders’ equity of $840.6 million.
Guidance
For fiscal 2023, management anticipates net sales in the band of $2.05-$2.07 billion compared with the earlier view of $2.11-$2.13 billion. In fiscal 2022, net sales amounted to $2,163 million ($2.16 billion).
The company anticipates adjusted EBITDA in the range of around $310-$330 million, whereas it reported $301 million in fiscal 2022.
Adjusted earnings per share (EPS) in fiscal 2023 are envisioned between 93 cents and $1.13, down from the prior view of 95 cents to $1.15. In fiscal 2022, the company posted an adjusted EPS of $1.08.
Shares of this Zacks Rank #5 (Strong Sell) company have slumped 29.9% in the past three months compared with the industry’s decline of 9.6%.
3 Appetizing Picks
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). LW delivered an earnings surprise of 46.2% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) , a packaged bakery food products company, currently has a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales suggests growth of 6.7% from the corresponding year-ago reported figure.
The Kraft Heinz Company (KHC - Free Report) , a food and beverage products company, currently carries a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 9.9%, on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal-year earnings suggests growth of 5.8% from the corresponding year-ago reported figure.