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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite efforts to reshape the portfolio, B&G Foods faces declining sales across multiple segments and a significant drop in EBITDA. The Q&A revealed uncertainty about tariffs and promotional strategies, and management's evasive responses raised concerns. While debt reduction and strong cash flow are positives, the overall sentiment is negative due to weak financial performance and lack of clear guidance.
Net Sales $425,400,000 (down $49,800,000 or 10.5% year-over-year); decline driven by lower volumes and promotional trade spending.
Adjusted EBITDA $59,100,000 (down $15,900,000 year-over-year); decline primarily due to lower net sales and increased costs.
Adjusted EBITDA as a percentage of net sales 13.9% (down from 15.8% year-over-year); decrease attributed to increased promotional trade spend.
Adjusted Net Income $3,400,000 or $0.04 per adjusted diluted share (down from $14,400,000 or $0.18 per adjusted diluted share year-over-year); decline due to lower adjusted EBITDA.
Gross Profit $90,100,000 or 21.2% of net sales (down from $108,900,000 or 22.9% year-over-year); decrease driven by increased promotional trade spend.
Selling, General and Administrative Expenses $49,100,000 (up $500,000 or 1.1% year-over-year); increase due to acquisition-related expenses.
Cash Flow from Operations $52,700,000 (up from $35,100,000 year-over-year); strong cash flow performance.
Debt $1,967,000,000 (down from $2,012,000,000 year-over-year); reduction in debt reflects improved cash flow management.
Interest Expense $37,800,000 (flat year-over-year); stable interest expense despite changes in debt levels.
Depreciation and Amortization $16,800,000 (down from $17,200,000 year-over-year); largely consistent with prior year.
Base Business Net Sales $425,400,000 (down $49,900,000 or 10.5% year-over-year); decline driven by lower volumes and pricing.
Net Sales for Frozen and Vegetables $11,800,000 (down 11.2% year-over-year); decline attributed to increased promotional spending and lower volumes.
Net Sales for Crisco $10,000,000 (down 15.4% year-over-year); decline driven by lower volumes and pricing.
Net Sales for Specialty $134,400,000 (down $20,300,000 or 13.1% year-over-year); decrease driven by lower pricing and volumes.
Net Sales for Meals $106,100,000 (down $13,900,000 or 11.6% year-over-year); decline primarily due to decreased volumes.
Net Sales for Spices and Flavor Solutions $91,700,000 (down $3,800,000 or 4% year-over-year); decrease driven by lower volumes and raw material costs.
Net Sales Guidance: Revised net sales range for fiscal year 2025 is now $1,860,000,000 to $1,910,000,000.
Adjusted EBITDA Guidance: Adjusted EBITDA guidance for fiscal year 2025 is revised down to $280,000,000 to $290,000,000.
Portfolio Restructuring: B&G Foods is committed to reshaping its portfolio to improve margins and cash flow, focusing on core business lines such as spices and seasonings.
Cost Reduction Efforts: Implemented cost reduction plans expected to save approximately $10,000,000 this year, with a run rate of $15,000,000 to $20,000,000.
Promotional Trade Spend: Increased promotional trade spending to support brands, particularly Green Giant, impacting net sales and EBITDA.
Divestiture Plans: Evaluating divestitures of non-core businesses, including frozen and canned vegetable businesses, to focus on core operations.
Net Sales Decline: Net sales in Q1 2025 were down 10.5%, primarily due to a significant decline in January of almost 20%. This decline was attributed to consumption trends not stabilizing post-inflation and retailer inventory reductions.
Retailer Inventory Reduction: Retailers reduced weeks of supply by almost two weeks, leading to an estimated net sales impact of approximately $15 million in Q1.
Easter Timing Shift: The shift of Easter from March 2024 to late April 2025 resulted in an estimated net sales impact of about $8 million in Q1, affecting merchandising and sales.
Increased Costs and Investment: Adjusted EBITDA decreased by $15.9 million, largely due to lower net sales and increased costs associated with the Green Giant U.S. business.
Tariff and Trade Risks: Ongoing trade and tariff negotiations pose significant risks, particularly for the spices business sourced from China and Southeast Asia, with potential tariff rates fluctuating significantly.
Economic Uncertainty: The company anticipates a modestly softer economic environment impacting consumer spending patterns, which has led to a reduction in fiscal year 2025 guidance.
Cost Reduction Efforts: The company has implemented cost reduction plans expected to yield approximately $10 million in savings for the year, with a run rate of $15 million to $20 million.
Foreign Exchange Risks: Currency fluctuations, particularly with the Mexican peso, remain a potential wildcard affecting financial performance.
Portfolio Restructuring Risks: The company is evaluating divestitures of non-core businesses, which could impact future cash flow and leverage.
Portfolio Reshaping: B&G Foods is committed to reshaping and restructuring its portfolio to sharpen focus, simplify operations, improve margins and cash flow, and maximize future value creation. This includes evaluating divestitures of non-core businesses, particularly in frozen and canned vegetables.
Cost Reduction Efforts: The company has implemented efforts to reduce operating and overhead costs, expecting to deliver $10 million in projected savings for the year, with an annual run rate of $15 million to $20 million.
Future M&A Growth: B&G Foods aims to build a stable platform for future focused M&A growth in core business lines, including spices, seasonings, Mexican meal preparation, and baking staples.
Net Sales Guidance: Revised net sales guidance for fiscal year 2025 is now $1.86 billion to $1.91 billion.
Adjusted EBITDA Guidance: Adjusted EBITDA guidance for fiscal year 2025 is revised down to $280 million to $290 million.
Consumption Trends: Expectations for underlying net sales and consumption trends to improve to between -2% to flat in the second half of the year.
CapEx Guidance: Forecasted capital expenditures for fiscal year 2025 are between $30 million to $35 million.
Interest Expense Guidance: Expected interest expense for the full year 2025 is between $147.5 million to $152.5 million.
Cost Reduction Plan: B&G Foods has implemented a cost reduction plan expected to deliver approximately $10,000,000 in savings for fiscal year 2025, with an annual run rate of $15,000,000 to $20,000,000.
Portfolio Restructuring: The company is committed to reshaping its portfolio, which may include divestitures of non-core businesses, with proceeds used to pay down debt.
Shareholder Return Strategy: B&G Foods aims to improve adjusted EBITDA as a percentage of net sales to approach 20%, increase cash flow generation, and reduce leverage closer to five times.
Dividends: None
Share Buyback Program: None
The earnings call summary presents a mixed picture. Basic financial performance and market strategy show stability with expected EBITDA growth and leverage reduction. However, guidance is modestly softer, and there are concerns about divestitures and leverage targets. The Q&A highlights uncertainties in divestitures, inflation, and elasticity impacts, which temper optimism. Without strong catalysts like new partnerships or record revenues, the overall sentiment is neutral, suggesting minimal stock price movement.
The earnings call reveals several concerning factors: a decline in adjusted net income, reduced guidance for net sales and EBITDA, and ongoing challenges with tariffs and divestitures. The Q&A section highlights uncertainties, such as vague responses on financial specifics and challenges in tariff mitigation. While there are efforts to stabilize and improve in the back half, the overall sentiment remains cautious, with divestitures and debt reduction being the focus. These factors suggest a negative market reaction in the short term.
Despite efforts to reshape the portfolio, B&G Foods faces declining sales across multiple segments and a significant drop in EBITDA. The Q&A revealed uncertainty about tariffs and promotional strategies, and management's evasive responses raised concerns. While debt reduction and strong cash flow are positives, the overall sentiment is negative due to weak financial performance and lack of clear guidance.
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