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B&G Foods’s Earnings Beat Consensus Estimates in 2Q15

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EPS rose by 3% in 2Q15

B&G Foods (BGS) reported 2Q15 EPS (earnings per share) of $0.34, which beat analysts’ estimates by 3%. The consensus estimate for the company’s 3Q15 EPS was $0.38. We’ll have to wait to find out if B&G Foods will beat estimates this quarter, too. Over the next five years, the analysts who follow the company are expecting its earnings to grow at an average annual rate of 10%. This year, analysts are forecasting an earnings increase of 3.5% over last year’s earnings. Analysts expect next year’s earnings to grow 4.7% over this year’s forecasted earnings.

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Forward guidance

B&G Foods increased its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) guidance for fiscal 2015 to a range of $199–$204 million and its net sales guidance to a range of $875–$885 million. It included the expected impact of the recently completed acquisition of Mama Mary’s in this guidance. B&G Foods also decreased its diluted EPS guidance for fiscal 2015 to a range of $1.44–$1.50, primarily due to an additional 4.2 million shares outstanding following the company’s 2Q15 public offering.

Management overview of 2Q15

Robert C. Cantwell, president and chief executive officer of B&G Foods, stated, “During the quarter, the company achieved strong growth in adjusted net income of 8.4% and adjusted EBITDA of 2.8%. We also continued our internal efforts to expand our adjusted EBITDA margin through reduced promotional spending and cost reductions, increasing our adjusted EBITDA margin 1.8 percentage points to 24.5%. The quarter also included a successful equity offering that reduced our net leverage and provided liquidity for acquisitions.”

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Outlook for 3Q15

The company began its third quarter with the announcement of the acquisition of Mama Mary’s, a leading brand of shelf-stable pizza crusts that fits very well in the company’s existing portfolio of products such as Don Pepino pizza sauce. It is consistent with the company’s continued commitment to pursue accretive acquisitions.

During 2Q15, the company also entered into a strategic partnership with DSC Logistics, which will provide warehousing and distribution management services at B&G Foods’s three primary distribution centers.

The company expected the first of the three distribution centers to transition during the third quarter of 2015. After all three have transitioned by the end of the second quarter of 2016, B&G Foods will achieve cost savings of ~$8 million per year. The company remains encouraged by the improvements seen in its already very strong adjusted EBITDA margin and seems confident it can achieve its updated full-year guidance for 2015.

B&G Foods’s competitors in the industry include Archer Daniels Midland (ADM), Campbell’s Soup (CPB), and ConAgra Foods (CAG). The companies reported EPS of $0.62, $0.22, and -$2.68, respectively, in their last reported quarter. The First Trust Consumer Staples Alpha DEX Fund (FXG) invests 1.9% of its portfolio in the CPB stock.

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