Overall I didn't see much that wasn't anticipated. The earnings were right at the estimate, their FY 09 EBITDA guidance range was reaffirmed and narrowed to $100.0 to $102.0 million. This seems like a lowball figure to me. I saw nothing in the announcement that would indicate a lower EBITDA for q4 than q3. Margin improvement was seen from better input costs (especially syrup), price increases, and better effectiveness in their marketing efforts.
Most interesting statements in the announcement were:
"The combination of the equity offering and the partial redemption of our senior subordinated notes will reduce our leverage by an amount equal to nearly a full year of EBITDA, and will do so with a minimal impact on earnings per share and free cash flow,” said Robert C. Cantwell, Executive Vice President and Chief Financial Officer."
"As of October 3, 2009, the Company had $13.5 million available for future repurchases of Class A common stock and/or senior notes under the stock and debt repurchase plan."
---Seems to me that if this were the case, they would be better off using these funds to call more of the BGS. I guess they want the flexibility in case the shares dip.
Finally for the BGF holders,
As a result, the last day of trading of the EISs on the New York Stock Exchange under the symbol “BGF” was October 26, 2009. When the market opened on October 27, 2009, those shares of Class A common stock represented by the EISs, began trading on the New York Stock Exchange under the symbol “BGS
Did anyone listen live to the conference call? Best of Luck...
The earning were inline with consensus but the revenue number beat both consensus and the street high estimates.
The big picture was that retail products (80%+ of their business) are doing very well overall and are up double digits. Their comment was that the trend of cooking at home is very strong. On the other hand, their food service segment (<20% of their business) was down double-digits. Their view is that the restaurant industry has not seen the worst of it, yet. I'm thinking of shorting a little SYY on this info.
Specific successes were Ortega (their biggest brand) which was up double-digits and gaining share from the #3 brand in the category. The Sponge Bob (Ortega and Cream of Wheat) products are doing particularly well and they plan to add a new Cream of Wheat product to go into dollar stores later this year. The Polaner sugar free products drove a 20% increase for that brand, even ahead of any advertising efforts. I don't think anybody asked if that was just a stocking/inventory effect due to it being a new product so I'd be wary of that. But they did say that the uniqueness of this new product led to placement of Polaner with retailers that hadn't carried the brand at all before which is obviously extremely positive.
All the brands did OK except for B&M beans and B&G pickles. They were both down and they attributed it to poor weather in the northeast (where the brands do most of their sales) and them possibly needing to look at adjusting their B&M promotional pricing to be more inline with their competitor, Bush.
Walmart's SKU reduction effort has helped B&G in some areas by removing competition (syrup) but hurt in others where they have had their products removed from shelves. Overall they are growing with Walmart but the rate of growth is slower overall due to the SKU reductions. They said that WalMart was pretty much done with additional reductions so most of the impact was already felt in this last quarter.
Input costs have come down and they expect them to continue coming down in several categories (beans was the example given). The question was asked if they would need to lower price as a result. They said price wouldn't need to be reduced as much as the reduction of input costs (because they didn't raise price as much when the costs were going up) so this should continue to be a tailwind for them in the coming quarters.
Just finished listening to the replay. The Ortega line was outstanding! Of interest, I think I heard Cream of Wheat was up 8%.
You gave a good recap. One item though.
On the B&M beans and B&G pickles, what I remember hearing was that it was a combination of poor weather, (vendor allowance strategy and/competition vs. Bushes) and a rationalization of their new warehousing. They said both were doing very well until the weather turned cool/wet in the northeast this summer. On the warehousing I seem to remember that as it was rationalized they had an absolute decrease in stockages. On a positive note, they said that the new PA facility was already having a positive impact on shipping costs.
I was also interested in the number of questions concerning the WMT SKU reduction initiative. My impression was that management said it was having mixed results with some brands being the beneficiaries (from competitors being dropped) and others loosing out (such as Joan of Arc) being on the fringe in other WMT outlets.
I was also interested in the sharp rise in share based/productivity employee compensation.