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B&G Foods (BGS) Q1 Earnings Miss Estimates, EPS View Lowered
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B&G Foods, Inc. (BGS - Free Report) reported mixed first-quarter fiscal 2022 numbers, wherein the bottom line missed the Zacks Consensus Estimate and declined year over year. However, the top line increased year over year and surpassed the consensus mark.
The company benefited from higher demand and pricing. However, increased input cost inflation, mainly due to the Ukraine war, and continued supply-chain headwinds weighed on the gross margin. Management’s recent pricing initiatives are likely to recover escalated costs in the second half of fiscal 2022.
B&G Foods concluded the closure and divestiture of its Portland, ME manufacturing facility in the first quarter of 2022. Also, in a separate press release, management announced that it acquired the frozen vegetable manufacturing operations of Growers Express, LLC. Growers Express produces, packages, manufactures and sells frozen vegetable products, mainly Green Giant Riced Veggies and Green Giant Veggie Spirals. This move is likely to enhance the operations of the Green Giant brand.
The company posted adjusted earnings of 34 cents per share, which missed the Zacks Consensus Estimate of 39 cents. The bottom line tumbled 34.6% from the year-ago quarter’s adjusted earnings of 52 cents per share. The downside was a result of industry-wide inflation in input costs and supply-chain bottlenecks. This was somewhat compensated by list price elevation, lower trade spending and a net benefit in the quarter related to gains from the sale of the Portland, ME manufacturing facility (partly negated by costs associated with the closure of the facility and the shift in manufacturing operations).
Net sales of $532.4 million increased 5.4% year over year, mainly due to pricing efforts and a favorable product mix. This was somewhat offset by soft volumes stemming from supply-chain hurdles due to the Omicron variant and price elasticity. The top line came ahead of the Zacks Consensus Estimate of $510 million.
Base business net sales advanced 5.6% to $532.2 million due to an increase in net pricing and a favorable product mix. Also, a positive impact of foreign currency rates was an upside. These were partially countered by a fall in the unit volume.
Net sales of Crisco, Back to Nature, Clabber Girl, Ortega, Green Giant (including Le Sueur), Cream of Wheat and Maple Grove Farms rose 36.2%, 32.1%, 20.5%, 9.3%, 2.4%, 15.5% and 6%, respectively. Net sales of spices & seasonings declined by 14.7% due to tough year-over-year comparisons and supply-chain woes. Base net sales of all other brands in the aggregate jumped 3.7%.
The adjusted gross profit came in at $101.3 million compared with $117.8 million in the year-ago period. The adjusted gross margin of 19% contracted by 430 basis points (bps). The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
The company expects the input cost inflation to have a considerably industry-wide effect in the remainder of fiscal 2022. BGS is on track to mitigate the impact of inflation by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. That being said, these may not fully offset additional cost headwinds in the remaining part of fiscal 2022.
SG&A expenses declined by 7% to $46.8 million. As a percentage of net sales, SG&A expenses improved by 1.2 percentage points to 8.8%. Adjusted EBITDA decreased by 16.2% to $77.9 million due to the same factors impacting adjusted earnings per share (EPS). The adjusted EBITDA margin contracted by 380 bps to 14.6%.
Image Source: Zacks Investment Research
Other Updates
B&G Foods concluded the quarter with cash and cash equivalents of $41.5 million, long-term debt of $2,281.2 million and total shareholders’ equity of nearly $914 million.
Guidance
Management raised its net sales guidance for fiscal 2022 while lowering its view for adjusted EBITDA and the bottom line.
For fiscal 2022, management now anticipates net sales in the range of $2.1-$2.14 billion, up from the previous forecast 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 $348-$358 million compared with the $358-$368 million range forecast earlier and $358 million recorded in fiscal 2021. Adjusted EPS in fiscal 2022 is envisioned to be nearly in the band of $1.65-$1.75 now, down from the $1.70-$1.85 band projected before. In fiscal 2021, the metric came in at $1.88.
Management expects to keep witnessing solid consumer demand for its products. However, management expects to keep seeing significant cost inflation for inputs, such as ingredients, packaging and transportation due to factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor. Although B&G Foods 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, other waves or variants of the pandemic, the operation of manufacturing facilities, the company’s ability to procure ingredients and other raw materials and supply-chain status, among others, may impact BGS’ performance.
This Zacks Rank #4 (Sell) company’s shares have dropped 9.5% in the past three months against the industry’s growth of 4.3%.
Sysco, which engages in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy) at present. Shares of Sysco have jumped 5.3% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and EPS suggests growth of 30.4% and 120.1%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.
McCormick, the manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. Shares of McCormick have dipped 5% in the past three months.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of nearly 5% and 3.9%, respectively, from the year-ago reported figure. MKC has a trailing four-quarter earnings surprise of around 1.3%, on average.
Inter Parfums, which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently carries a Zacks Rank #2. Shares of Inter Parfums have dropped 16.7% in the past three months.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 12.5% and 10.3%, respectively, from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 46.7%, on average.
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B&G Foods (BGS) Q1 Earnings Miss Estimates, EPS View Lowered
B&G Foods, Inc. (BGS - Free Report) reported mixed first-quarter fiscal 2022 numbers, wherein the bottom line missed the Zacks Consensus Estimate and declined year over year. However, the top line increased year over year and surpassed the consensus mark.
The company benefited from higher demand and pricing. However, increased input cost inflation, mainly due to the Ukraine war, and continued supply-chain headwinds weighed on the gross margin. Management’s recent pricing initiatives are likely to recover escalated costs in the second half of fiscal 2022.
B&G Foods concluded the closure and divestiture of its Portland, ME manufacturing facility in the first quarter of 2022. Also, in a separate press release, management announced that it acquired the frozen vegetable manufacturing operations of Growers Express, LLC. Growers Express produces, packages, manufactures and sells frozen vegetable products, mainly Green Giant Riced Veggies and Green Giant Veggie Spirals. This move is likely to enhance the operations of the Green Giant brand.
B&G Foods, Inc. Price, Consensus and EPS Surprise
B&G Foods, Inc. price-consensus-eps-surprise-chart | B&G Foods, Inc. Quote
Quarterly Highlights
The company posted adjusted earnings of 34 cents per share, which missed the Zacks Consensus Estimate of 39 cents. The bottom line tumbled 34.6% from the year-ago quarter’s adjusted earnings of 52 cents per share. The downside was a result of industry-wide inflation in input costs and supply-chain bottlenecks. This was somewhat compensated by list price elevation, lower trade spending and a net benefit in the quarter related to gains from the sale of the Portland, ME manufacturing facility (partly negated by costs associated with the closure of the facility and the shift in manufacturing operations).
Net sales of $532.4 million increased 5.4% year over year, mainly due to pricing efforts and a favorable product mix. This was somewhat offset by soft volumes stemming from supply-chain hurdles due to the Omicron variant and price elasticity. The top line came ahead of the Zacks Consensus Estimate of $510 million.
Base business net sales advanced 5.6% to $532.2 million due to an increase in net pricing and a favorable product mix. Also, a positive impact of foreign currency rates was an upside. These were partially countered by a fall in the unit volume.
Net sales of Crisco, Back to Nature, Clabber Girl, Ortega, Green Giant (including Le Sueur), Cream of Wheat and Maple Grove Farms rose 36.2%, 32.1%, 20.5%, 9.3%, 2.4%, 15.5% and 6%, respectively. Net sales of spices & seasonings declined by 14.7% due to tough year-over-year comparisons and supply-chain woes. Base net sales of all other brands in the aggregate jumped 3.7%.
The adjusted gross profit came in at $101.3 million compared with $117.8 million in the year-ago period. The adjusted gross margin of 19% contracted by 430 basis points (bps). The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
The company expects the input cost inflation to have a considerably industry-wide effect in the remainder of fiscal 2022. BGS is on track to mitigate the impact of inflation by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. That being said, these may not fully offset additional cost headwinds in the remaining part of fiscal 2022.
SG&A expenses declined by 7% to $46.8 million. As a percentage of net sales, SG&A expenses improved by 1.2 percentage points to 8.8%. Adjusted EBITDA decreased by 16.2% to $77.9 million due to the same factors impacting adjusted earnings per share (EPS). The adjusted EBITDA margin contracted by 380 bps to 14.6%.
Image Source: Zacks Investment Research
Other Updates
B&G Foods concluded the quarter with cash and cash equivalents of $41.5 million, long-term debt of $2,281.2 million and total shareholders’ equity of nearly $914 million.
Guidance
Management raised its net sales guidance for fiscal 2022 while lowering its view for adjusted EBITDA and the bottom line.
For fiscal 2022, management now anticipates net sales in the range of $2.1-$2.14 billion, up from the previous forecast 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 $348-$358 million compared with the $358-$368 million range forecast earlier and $358 million recorded in fiscal 2021. Adjusted EPS in fiscal 2022 is envisioned to be nearly in the band of $1.65-$1.75 now, down from the $1.70-$1.85 band projected before. In fiscal 2021, the metric came in at $1.88.
Management expects to keep witnessing solid consumer demand for its products. However, management expects to keep seeing significant cost inflation for inputs, such as ingredients, packaging and transportation due to factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor. Although B&G Foods 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, other waves or variants of the pandemic, the operation of manufacturing facilities, the company’s ability to procure ingredients and other raw materials and supply-chain status, among others, may impact BGS’ performance.
This Zacks Rank #4 (Sell) company’s shares have dropped 9.5% in the past three months against the industry’s growth of 4.3%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks are Sysco Corporation (SYY - Free Report) , McCormick & Company (MKC - Free Report) and Inter Parfums (IPAR - Free Report) .
Sysco, which engages in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy) at present. Shares of Sysco have jumped 5.3% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and EPS suggests growth of 30.4% and 120.1%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.
McCormick, the manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. Shares of McCormick have dipped 5% in the past three months.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of nearly 5% and 3.9%, respectively, from the year-ago reported figure. MKC has a trailing four-quarter earnings surprise of around 1.3%, on average.
Inter Parfums, which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently carries a Zacks Rank #2. Shares of Inter Parfums have dropped 16.7% in the past three months.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 12.5% and 10.3%, respectively, from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 46.7%, on average.