B&G Foods' (BGS) Shares Lose On Q4 Earnings, Revenue Miss

B&G Foods, Inc. (NYSE:BGS) reported lower-than-expected results for the fourth quarter of 2017.

Adjusted earnings of 57 cents missed the Zacks Consensus Estimate of 59 cents by 3.4%. The bottom line, however, increased 96.6% from the prior-year quarter on improved margins.

The company completed a year of running Green Giant and integrated three acquisitions including the spices and seasonings business, Victoria premium pasta sauce business and the Back to Nature business.

Shares of the company have lost 9.5% in after-hours trading on Feb 27.

Let’s delve deeper into the numbers.

Revenue Discussion

Total revenues of $473.3 million lagged the consensus estimate of $490.4 million by 3.5%, but increased 14.5% year over year. The upside was favored by an increase in unit volume, partially offset by a decrease in net pricing.

The increase in unit volume was primarily driven by an additional six weeks of net sales at the spices & seasonings business. It was also favored by additional four weeks and three months of net sales at Victoria and Back to Nature businesses, respectively.

Net sales at the company’s Base business totaled $380.9 million, a mere 0.3% decline from the year-ago quarter.

Net sales of Green Giant frozen products rose 23.4% year over year favored by innovative product launches, whereas, that of Pirate Brands increased 11.4% due to efficient promotional events and distribution gains. The net sales growth in these brands was somewhat offset by weak consumption trends in shelf-stable and maple syrup products. Heightened competition also partially marred revenue growth.

B&G Foods, Inc. Price, Consensus and EPS Surprise

Operating Highlights

Gross profit margin in the fourth quarter was 21.4%, a decline of 440 basis points (bps) year over year. The downside was primarily due to increased expenses in warehousing and distribution. A decrease in net pricing also partially affected gross profit margin.

Selling, general and administrative expenses increased 0.4% to $59 million from the prior-year quarter, primarily due to acquisition-related expenses.

The company reported net income of $129.9 million in the fourth quarter of 2017, up from $13.6 million in the fourth quarter of 2016. The upside was driven by a tax benefit.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 10.5% to $68.9 million during the quarter.

Balance Sheet

B&G Foods ended the quarter with cash and cash equivalents of $206.5 million, as of Dec 30, 2017, compared with $28.8 million as of Dec 31, 2016. Long-term debt amounted to $2.2 billion at the end of 2017, compared with $1.7 billion at the end of 2016.

2018 Guidance

The company expects net sales to be roughly in the range of $1.720-$1.755 billion. Adjusted EPS is expected in the range of $2.05 to $2.25.

Management expects Adjusted EBITDA to be approximately $347.5 million to $365 million in 2018.

Zacks Rank & Peer Releases

B&G Foods carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hershey (NYSE:HSY) reported fourth-quarter 2017 adjusted earnings per share of $1.03, missing the Zacks Consensus Estimate of $1.06 by 2.8%. Earnings declined 12% from the year-ago figure of $1.17.

Kellogg’s (NYSE:K) fourth-quarter 2017 adjusted earnings of 96 cents per share came in line with the Zacks Consensus Estimate. The bottom line increased 5.5% year over year banking on higher operating profit and lower restructuring charges.

Kraft Heinz’s (NYSE:K) fourth-quarter 2017 adjusted earnings per share of 90 cents missed the Zacks Consensus Estimate of 96 cents. Also, the bottom line declined 1.1% from the year-ago figure on higher effective tax rate.

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