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B&G Foods' (BGS) Sale of Back to Nature to Enhance Structure
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B&G Foods, Inc. (BGS - Free Report) is focused on enhancing its business structure by concentrating on core areas with greater potential. Moving on these lines, the company inked a deal to sell its Back to Nature brand to Barilla America.
Apart from improving the structure, the deal is likely to help B&G Foods lower its long-term debt. The divestiture is expected to be concluded in the first quarter of 2023.
B&G Foods has been battling cost inflation like many other industry players. In the third quarter of 2022, the adjusted gross profit of $108 million declined 11.9% year over year from $122.6 million in the year-ago period.
Moreover, the adjusted gross margin contracted 340 basis points (bps) to 20.4%. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses. This Zacks Rank #5 (Strong Sell) company expects input cost inflation to bear a significant impact industry-wide for the remainder of fiscal 2022 and fiscal 2023.
However, BGS is on track to mitigate the impacts of inflation on the gross margin by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. Nonetheless, these actions may not fully offset supplementary cost headwinds through the rest of fiscal 2022 and beyond.
In the third quarter of 2022, SG&A expenses escalated by 2.4% to $47.5 million on higher general and administrative expenses, selling expenses and consumer marketing expenses, partially negated by a decline in acquisition/divestiture-related and non-recurring expenses. Adjusted EBITDA dipped 16.6% to $80.2 million due to industry-wide input cost inflation and supply-chain woes, somewhat offset by elevated pricing. The adjusted EBITDA margin contracted 370 bps to 15.2% in the third quarter of 2022.
B&G Foods lowered its adjusted EBITDA view for fiscal 2022 to the $290-$300 million band compared to the $300-$320 million band mentioned earlier. It reported $358 million in fiscal 2021. Adjusted earnings per share (EPS) in fiscal 2022 are envisioned to be 90 cents to $1.00 versus the $1.08-$1.28 band stated before. In fiscal 2021, the company reported an EPS of $1.88.
Nonetheless, management expects to maintain the momentum in demand for its products. For fiscal 2022, management anticipates net sales in the range of $2.1-$2.14 billion. In fiscal 2021, net sales amounted to $2,056.3 million ($2.06 billion).
Shares of the company have declined 33.2% in the past three months against the industry’s growth of 9.4%.
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial-year sales suggests an increase of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8% on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
McCormick, a manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC delivered an earnings surprise of 6.2% in the last reported quarter.
The Zacks Consensus Estimate for McCormick’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.
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B&G Foods' (BGS) Sale of Back to Nature to Enhance Structure
B&G Foods, Inc. (BGS - Free Report) is focused on enhancing its business structure by concentrating on core areas with greater potential. Moving on these lines, the company inked a deal to sell its Back to Nature brand to Barilla America.
Apart from improving the structure, the deal is likely to help B&G Foods lower its long-term debt. The divestiture is expected to be concluded in the first quarter of 2023.
B&G Foods, Inc. Price and Consensus
B&G Foods, Inc. price-consensus-chart | B&G Foods, Inc. Quote
What Else to Know?
B&G Foods has been battling cost inflation like many other industry players. In the third quarter of 2022, the adjusted gross profit of $108 million declined 11.9% year over year from $122.6 million in the year-ago period.
Moreover, the adjusted gross margin contracted 340 basis points (bps) to 20.4%. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses. This Zacks Rank #5 (Strong Sell) company expects input cost inflation to bear a significant impact industry-wide for the remainder of fiscal 2022 and fiscal 2023.
However, BGS is on track to mitigate the impacts of inflation on the gross margin by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advance commodities purchase agreements. Nonetheless, these actions may not fully offset supplementary cost headwinds through the rest of fiscal 2022 and beyond.
In the third quarter of 2022, SG&A expenses escalated by 2.4% to $47.5 million on higher general and administrative expenses, selling expenses and consumer marketing expenses, partially negated by a decline in acquisition/divestiture-related and non-recurring expenses. Adjusted EBITDA dipped 16.6% to $80.2 million due to industry-wide input cost inflation and supply-chain woes, somewhat offset by elevated pricing. The adjusted EBITDA margin contracted 370 bps to 15.2% in the third quarter of 2022.
B&G Foods lowered its adjusted EBITDA view for fiscal 2022 to the $290-$300 million band compared to the $300-$320 million band mentioned earlier. It reported $358 million in fiscal 2021. Adjusted earnings per share (EPS) in fiscal 2022 are envisioned to be 90 cents to $1.00 versus the $1.08-$1.28 band stated before. In fiscal 2021, the company reported an EPS of $1.88.
Nonetheless, management expects to maintain the momentum in demand for its products. For fiscal 2022, management anticipates net sales in the range of $2.1-$2.14 billion. In fiscal 2021, net sales amounted to $2,056.3 million ($2.06 billion).
Shares of the company have declined 33.2% in the past three months against the industry’s growth of 9.4%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks are The Chef's Warehouse (CHEF - Free Report) , Conagra Brands (CAG - Free Report) and McCormick & Company (MKC - Free Report) .
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial-year sales suggests an increase of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8% on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
McCormick, a manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC delivered an earnings surprise of 6.2% in the last reported quarter.
The Zacks Consensus Estimate for McCormick’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.