Yahoo Finance B&G Foods Inc (BGS) Q2 2024 Earnings Call Highlights: Navigating Challenges with Strategic ...
Net Sales: $444.6 million for Q2 2024.
Adjusted EBITDA: $64 million, representing 14.4% of net sales.
Base Business Net Sales: Decreased by approximately 1.5% excluding Crisco.
Spices & Flavor Solutions Net Sales: Increased by 4.9% year-over-year.
Meals Segment Adjusted EBITDA: Increased by 3.9% despite a 5.5% decrease in net sales.
Specialty Segment Net Sales: Decreased by 4.7% to $146.6 million.
Frozen & Vegetables Segment Net Sales: Decreased by 2.6% excluding divestitures.
Gross Profit: $92 million, or 20.7% of net sales.
Adjusted Gross Profit: $93.2 million, or 21% of net sales.
SG&A Expenses: Decreased by 9.9% to $43.1 million.
Net Income: $3.9 million or $0.05 per diluted share.
Adjusted Net Income: $6.6 million or $0.08 per diluted share.
Net Interest Expense: $37.8 million, up from $35.8 million in Q2 2023.
Depreciation and Amortization: $17.3 million, consistent with the prior year.
Fiscal 2024 Guidance: Net sales of $1.945 billion to $1.97 billion; Adjusted EBITDA of $300 million to $315 million; Adjusted EPS of $0.70 to $0.90.
Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Net sales for the Spices & Flavor Solutions business unit increased by 4.9% compared to last year, indicating strong performance in this segment.
The Meals segment saw an increase in segment adjusted EBITDA by 3.9%, showing improved cost control and productivity.
B&G Foods Inc (NYSE:BGS) reported a decrease in corporate central expenses, reflecting a moderation in insurance and other fixed costs.
The company has successfully refinanced its long-term debt, pushing maturity dates further into the future, which improves financial stability.
B&G Foods Inc (NYSE:BGS) is actively reshaping its portfolio to focus on higher-margin and cash flow-generating segments, such as spices and seasonings.
Negative Points
Base business net sales decreased by approximately 1.5% compared to the previous year, excluding Crisco.
Adjusted EBITDA for Q2 decreased by $4.5 million compared to the second quarter of 2023.
Foodservice sales declined by 3%, reflecting ongoing challenges in the restaurant industry.
The Frozen & Vegetables segment experienced a significant decline in adjusted EBITDA, partly due to foreign exchange impacts.
Net interest expense increased due to higher interest rates on long-term debt, impacting overall profitability.
Q & A Highlights
Q: Spices and seasonings have been strong, while meals and center store parts of the portfolio have been weaker. What is driving this dynamic? A: Kenneth Keller, President and CEO, explained that the growth in spices and seasonings is tied to increased consumer interest in fresh produce and proteins, which require flavoring. The center store prepared food market has been weaker, but scratch baking remains stable. The fluctuations in the baking segment are mainly due to commodity pricing on Crisco.
Q: Can you characterize the current promotional environment and its impact on pricing? A: Kenneth Keller noted that promotional levels returned to near pre-pandemic levels last year, and they do not anticipate increasing promotional spending further. The expectation is for less of a drag from pricing in the second half of the year, particularly as they lap previous Crisco pricing actions.
Q: How is the strategic review of the frozen business progressing, and what level of interest have you seen? A: Kenneth Keller stated that while they disclosed the evaluation of the Green Giant frozen business due to its size and recognition, they prefer not to provide quarterly updates on the process due to its fluid nature and early stage.
Q: Is there an opportunity to further reduce inventory levels in the coming quarters? A: Kenneth Keller confirmed that while significant inventory reduction has already been achieved, they expect continued improvement, albeit at a more moderate pace, as much of the easy lifting has been completed.
Q: How are non-tracked channels performing compared to tracked channels? A: Kenneth Keller mentioned that about 70% of their sales are captured by Nielsen, with the remaining 30% in non-tracked channels like food service and industrial sales. The Canadian business and some untracked retail channels have performed reasonably well, with food service showing moderate declines consistent with industry trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
