Yahoo Finance B&G Foods (BGS) Stock Dips Despite Q1 Earnings & Sales Beat
B&G Foods, Inc. BGS posted first-quarter fiscal 2023 results, wherein both the top and bottom lines declined year over year while beating the Zacks Consensus Estimate. The company’s shares fell 3.4% in the after-market trading session on May 4.
Results reflect gains from continued pricing recovery amid cost inflation. The company expects input cost inflation to have a considerable industry-wide effect in the remaining parts of fiscal 2023. However, B&G Foods has been focused on undertaking efforts to counter inflation.
To this end, BGS has been locking in prices via short-term supply deals, undertaking advanced commodities purchase agreements and adopting solid cost-saving initiatives. Apart from these, it unveiled several list price increases in 2021, 2022 and the first quarter of 2023.
Key Highlights
B&G Foods posted adjusted earnings of 27 cents per share, which beat the Zacks Consensus Estimate and our estimate of 26 cents. However, the bottom line decreased 6.9% 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 $511.8 million declined 3.9% year over year, mainly due to the divestiture of Back to Nature (concluded on Jan 3, 2023), somewhat compensated by the Yuma buyout (concluded on May 5, 2022). The top line missed the Zacks Consensus Estimate of $528 million and our estimate of $530.3 million.
Base business net sales dipped 1.2% to $511.4 million due to a fall in the unit volume and currency headwinds. These were partially offset by net pricing gains and a favorable product mix.
Delving Deeper
Net sales of spices & seasonings, Clabber Girl and Maple Grove Farms rose 9.6%, 31%, and 2.7%, respectively. However, net sales of Green Giant (including Le Sueur), Crisco and Cream of Wheat declined by 7.3%, 8.4% and 1.7%, respectively. Base net sales of all the other brands in the aggregate slipped 0.8%.
The adjusted gross profit of $114.9 million increased from $103.4 million in the year-ago period. The adjusted gross margin expanded 300 basis points (bps) to 22.4%. The benefits of pricing helped counter cost inflation.
SG&A expenses dipped by 0.2% to $46.7 million on reduced consumer marketing expenses, selling expenses and warehousing expenses. These were largely negated by elevated general and administrative expenses and acquisition/divestiture-related and non-recurring expenses. As a percentage of net sales, SG&A expenses escalated 0.3 percentage points to 9.1%.
Adjusted EBITDA jumped 12.9% to $82.4 million due to a higher gross profit. The adjusted EBITDA margin increased 240 bps to 16.1% in the first quarter of 2023.
Other Updates
B&G Foods ended the quarter with cash and cash equivalents of $35.9 million, long-term debt of $2,281.5 million and total shareholders’ equity of $861.8 million.
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 between 95 cents and $1.15. In fiscal 2022, the company posted an adjusted EPS of $1.08.
Shares of this Zacks Rank #3 (Hold) company have increased 13.6% in the past three months compared with the industry’s growth of 5.9%.
Solid Food Stocks
Some better-ranked food stocks are Lamb Weston LW, General Mills GIS and Conagra Brands CAG.
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 116.8% from the year-ago reported number.
General Mills, a food and beverage product company, currently has a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the corresponding year-ago reported figures.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests an increase of 7.1% and 16.5%, respectively, from the year-ago reported number.
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