B&G Foods (BGS) Misses Earnings Estimates; Lowers Outlook - Analyst Blog

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B&G Foods, Inc.'s ( BGS ) second-quarter 2014 adjusted earnings per share of 33 cents per share missed the Zacks Consensus Estimate of 39 cents by 15.4%.

B&G Foods Inc - Quarterly EPS (BNRI) | FindTheBest

Quarterly earnings remained flat year on year. Earnings remained soft in the quarter owing to weakness in prices of the base business, soft margins and increase in expenses. Also the acquisitions made since May 2013 (Pirate Brands, Specialty Brands, the Rickland Orchards brand and the TrueNorth brand) pressurized the short term cost and efficiencies; thereby hurting earnings. The disappointing second quarter 2014 resulted in about 2% decline in share price on Jul 17.

Revenues and Margins

Total revenue of this packaged foods company increased 26.1% year over year to $202.9 million as it benefited from solid sales of some of its brands. Total revenue surpassed Zacks Consensus Estimate of $177 million by 14.6%.

The increase in net sales was driven by solid sales of acquired brands, Pirate Brands, Specialty Brands, the Rickland Orchards brand and the TrueNorth brand. Other existing brands such as Ortega, Maple Grove Farms of Vermont also performed well during the quarter.

Net sales of the company's base business increased 1.1% as the volume increase was offset by price declines. During the quarter, volumes of the base business increased 2.8%, whereas net price decreased 1.7%.

Gross margin declined 350 basis points (bps) to 31.1% due to lower pricing in the base business, higher distribution costs and a shift in mix towards lower margin products.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8.8% to $46.1 million during the quarter. However, adjusted EBITDA, as a percentage of net sales, declined 300 bps year over year to 22.7% owing to higher expenses.

Selling, general and administrative expenses as a percentage of net sales rose 170 basis points to 12.5% due to an increase in consumer marketing selling cost, acquisition, and warehousing expenses.

Fiscal 2014 Outlook

B&G Foods reduced its guidance for fiscal 2014 to account for added expenses associated with its aggressive acquisition strategy.

The food company reduced full year 2014 adjusted EBITDA expectation by 2.4% to a range of $204.0 million to $209.0 million compared to the prior expected range of $209.0 million to $214.0 million. Adjusted earnings per share for fiscal 2014 are expected in a range of $1.54 to $1.60 lower than the prior guidance of $1.59 to $1.65.

B&G Foods currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the packaged goods sector include BRF S.A. ( BRFS ), Treehouse Foods, Inc. ( THS ) and Pinnacle Foods Inc. ( PF ). While BRF and Treehouse Foods sport a Zacks Rank #1 (Strong Buy). Pinnacle Foods holds a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BGS , PF , BRFS , THS

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