Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• B&G Foods Inc (NYSE:BGS) reported fourth-quarter net sales of $551.6 million and adjusted EBITA of $86.1 million, which were in line or slightly above expectations.
• The spices and flavor solutions business unit showed strong performance with a 5% increase in net sales compared to the fourth quarter of the previous year.
• Margins improved in the fourth quarter, with an adjusted gross profit percentage of 22.2% compared to 21.9% in the fourth quarter of 2023.
• The company is committed to reshaping its portfolio to improve margins and cash flow, aiming for adjusted EBITA as a percentage of net sales to approach 20%.
• B&G Foods Inc (NYSE:BGS) reduced its net debt to $1.994 billion at the end of the fourth quarter of 2024, down from $2.05 billion at the end of the third quarter of 2024.

Negative Points

• B&G Foods Inc (NYSE:BGS) reported a net loss of $222.4 million for the fourth quarter, primarily due to pre-tax, non-cash impairment charges to intangible assets.
• Base business net sales decreased by 3.3% for fiscal year 2024 compared to fiscal year 2023.
• The company faces continued uncertainty in the near term on center store trends, with sales and consumption declines in early 2025.
• Foreign currency impacts, particularly related to the Mexican peso, negatively affected costs at the Green Giant manufacturing facility in Mexico.
• The frozen and vegetables segment experienced a decline in adjusted EBITA due to increased pack costs and the negative impact of foreign currency.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with BGS.

Q: What does the impairment charge on Green Giant frozen imply about the value potential suitors may ascribe to the business? A: The impairment charge is driven by accounting and business performance rather than indicating the expected value in a potential sale. The value was previously carried at over $600 million, which is unlikely to be achieved in a sale. - Bruce Walka, CFO

Q: Can you explain the $10 to $15 million benefit from a 53rd week and why it seems lower than expected? A: The 53rd week accounts for about three days, which is why the benefit is smaller than the typical 2% top-line increase. - Bruce Walka, CFO

Q: Do you think the current headwinds in the packaged food industry are more structural or temporary? A: The current headwinds are seen as temporary reactions by consumers to higher prices. Once consumers adjust their purchase patterns, the market should stabilize, although not necessarily returning to pre-adjustment levels. - Casey Keller, CEO

Q: How are you planning to manage your three focus segments: spices, specialty, and meals? A: The spices and flavor solutions segment is expected to grow with strong margins. The meals segment, particularly the Mexican platform, is poised for growth with innovation and marketing. The specialty segment will be managed for margins and cash flow rather than top-line growth. - Casey Keller, CEO

Q: What is the impact of potential tariffs on products shipped from Mexico to the US? A: The impact would primarily be on Green Giant frozen vegetables produced in Mexico. While modeling is being done to prepare for potential tariffs, it's too early to speculate on the exact impact. - Casey Keller, CEO and Bruce Walka, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.