B&G Foods Inc (BGS) Reports Mixed Q3 Results Amid Portfolio Reshaping Efforts
Q3 net sales decreased by 4.9% year-over-year to $502.7 million; adjusted EBITDA margin improved to 16.0%.
Diluted EPS showed a significant loss of $1.11, while adjusted diluted EPS was $0.27.
Adjusted net income for Q3 stood at $20.5 million, down 8.0% from the previous year.
B&G Foods divests Green Giant U.S. shelf-stable product line, aiming to focus on portfolio growth and valuation.
On November 8, 2023, B&G Foods Inc (NYSE:BGS) released its financial results for the third quarter and the first three quarters of 2023, revealing a mixed performance with net sales declines but improved adjusted EBITDA margins. The company also announced the strategic divestiture of its Green Giant U.S. shelf-stable product line to Seneca Foods, marking a significant step in its efforts to reshape its portfolio for future growth.
Financial Performance Overview
B&G Foods reported a decrease in net sales for Q3 2023 by 4.9% to $502.7 million compared to the same period last year. The decline was primarily due to a decrease in unit volume and the divestiture of the Back to Nature brand. Adjusted for certain items, the company's adjusted net income for Q3 was $20.5 million, or $0.27 per adjusted diluted share, a decrease of 8.0% from Q3 2022.
For the first three quarters of 2023, net sales decreased by 3.6% to $1,484.2 million, while adjusted net income increased slightly to $50.3 million, or $0.69 per adjusted diluted share. Adjusted EBITDA for the first three quarters rose by 11.5% to $231.2 million.
Margin Improvements and Cost Management
Gross profit for Q3 2023 was $113.8 million, or 22.6% of net sales, showing an improvement from 20.0% of net sales in the same quarter of the previous year. This improvement was attributed to increased net pricing relative to input costs, moderated input cost inflation, and lower transportation and warehousing costs.
Selling, general, and administrative expenses saw a slight increase of 1.4% to $48.2 million for Q3 2023, mainly due to higher general and administrative expenses.
Strategic Divestitures and Debt Management
The divestiture of the Green Giant U.S. shelf-stable product line is part of B&G Foods' strategy to optimize its portfolio. The company intends to use the proceeds from the sale for the repayment of long-term debt. Additionally, B&G Foods has been active in managing its debt profile, including repurchasing senior notes and issuing new senior secured notes.
Outlook for Fiscal 2023
B&G Foods revised its net sales guidance for fiscal 2023 to a range of $2.05 billion to $2.07 billion and reaffirmed its adjusted EBITDA guidance at a range of $310 million to $330 million. The company also revised its adjusted diluted earnings per share guidance to a range of $0.93 to $1.13.
President and CEO Casey Keller commented on the results, stating,
Our third quarter results continued strong margin recovery, with adjusted EBITDA as a percentage of net sales increasing 80 basis points versus last year to 16.0%. Overall, we remain on track to deliver adjusted EBITDA within our previously issued guidance range of $310 to $330 million,
and highlighted the divestiture as a critical step in reshaping the company's portfolio.
For a more detailed analysis and further information, investors and analysts can access the full earnings report and join the conference call hosted by B&G Foods.
For comprehensive financial tables and a reconciliation of non-GAAP financial measures, please refer to the full earnings release.
Value investors and those interested in B&G Foods Inc's financials can find more in-depth analysis and data on GuruFocus.com.
Explore the complete 8-K earnings release (here) from B&G Foods Inc for further details.
This article first appeared on GuruFocus.
