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B&G Foods (BGS) Gains Almost 15% on Q4 Earnings & Sales Beat

Shares of B&G Foods, Inc. BGS rallied 14.5% in the after-market trading session on Feb 28 as the company posted solid fourth-quarter fiscal 2022 results. Both the top and bottom lines increased year over year and comfortably beat the Zacks Consensus Estimate.

The company benefited from its supply recovery and pricing actions, which caught up with cost inflation. Also, a moderation in cost inflation aided margins, which are likely to continue witnessing a year-over-year recovery in fiscal 2023.  

B&G Foods posted adjusted earnings of 40 cents per share, which cruised past the Zacks Consensus Estimate and our estimate of 23 cents. The bottom line increased 2.6% from the year-ago quarter.

Net sales of $623.2 million advanced 9% year over year, mainly due to pricing gains and a favorable product mix. This was somewhat offset by soft volumes stemming from price elasticity. The top line beat the Zacks Consensus Estimate of $586 million and our estimate of $588.4 million.

Base business net sales advanced 8.9% to $622.8 million due to net pricing gains and a favorable product mix. These were partially countered by a fall in the unit volume and currency headwinds.

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

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

Delving Deeper

Net sales of Crisco, spices & seasonings, Cream of Wheat, Clabber Girl, Ortega and Maple Grove Farms rose 15.9%, 17.4%, 26.1%, 28.8%, 10.4% and 6.6%, respectively. However, net sales of Green Giant (including Le Sueur) declined by 6.9%. Base net sales of all the other brands in the aggregate rose 12.1%.

The adjusted gross profit of $128.6 million increased from $112.7 million in the year-ago period. The adjusted gross margin expanded 90 basis points (bps) to 20.6%. The pace of input cost inflation moderated in the fourth quarter, wherein the company started getting more benefits from its prior list price hikes. This helped fuel the gross margin.

SG&A expenses dipped by 0.9% to $51.9 million on lower acquisition/divestiture-related and non-recurring expenses and reduced consumer marketing expenses, partly negated by higher general and administrative expenses, selling expenses and warehousing expenses. As a percentage of net sales, SG&A expenses decreased 0.8 percentage points to 8.3%.

Adjusted EBITDA jumped 10% to $93.6 million due to elevated pricing, which countered industry-wide input cost inflation and supply-chain woes. The adjusted EBITDA margin increased 10 bps to 15% in the fourth quarter of 2022.

Other Updates

B&G Foods ended the quarter with cash and cash equivalents of $45.4 million, long-term debt of around $2,339 million and total shareholders’ equity of $868.2 million.

The company declared a quarterly cash dividend of 19 cents per share, payable on May 1, 2023, to shareholders of record as of Mar 31.

Guidance

For fiscal 2023, management anticipates net sales in the band of $2.13-$2.17 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 to be 95 cents to $1.15. In fiscal 2022, the company posted an adjusted EPS of $1.08. Management’s guidance excludes results for the Back to Nature business, which was divested on the first business day of fiscal 2023.

Shares of this Zacks Rank #4 (Sell) company have dropped 38.2% in the past six months compared to the industry’s growth of 2.4%.

Solid Food Stocks

Some better-ranked food stocks are Conagra Brands CAG, Lamb Weston LW and Post Holdings POST.

Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.

Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.

The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and EPS suggests an increase of 19.3% and 89.9%, respectively, from the year-ago reported number.

Post Holdings, which operates as a consumer-packaged goods company, currently sports a Zacks Rank #1. POST has a trailing four-quarter earnings surprise of 34.8%, on average.

The Zacks Consensus Estimate for Post Holdings’ current fiscal-year EPS suggests an increase of 111.3% from the year-ago reported number.

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