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Why Does B&G Foods Plan to Offer 3,750,000 Shares?

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Price movement

B&G Foods (BGS) has a market cap of $3.2 billion. Its stock rose by 0.04% to close at $51.09 per share on August 8, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -0.87%, 5.4%, and 49.1%, respectively, on the same day. BGS is trading 5.8% above its 20-day moving average, 9.8% above its 50-day moving average, and 33.6% above its 200-day moving average.

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Related ETF and peers

The Guggenheim Multi-Asset Income ETF (CVY) invests 0.35% of its holdings in B&G Foods. The ETF tracks the Zacks Multi-Asset Income Index. The index aims to outperform the Dow Jones US Select Dividend Index using US stocks, ADRs (American depositary receipts), REITs, MLPs, closed-end funds, preferred stocks, and royalty trusts. The YTD price movement of CVY was 9.4% on August 8.

The market caps of BGS’s competitors are as follows:

  • General Mills (GIS): $42.5 billion
  • The J.M. Smucker Company (SJM): $17.8 billion
  • TreeHouse Foods (THS): $5.9 billion

Latest news on B&G Foods

B&G Foods is planning to offer 3,750,000 shares of its common stock and will use the net proceeds from this offering for general corporate purposes, repayments of long-term debt, or possible acquisitions. It will grant the underwriters, which include Barclays Capital, RBC Capital Markets, and Bank of America/Merrill Lynch, a period of 30 days to purchase up to 550,000 additional shares of common stock.

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B&G Foods’ performance in 2Q16

B&G Foods reported 2Q16 net sales of $306.4 million, a rise of 58.3% compared to net sales of $193.6 million in 2Q15. The company’s gross profit margin and operating income rose by 11.8% and 67.3%, respectively, in 2Q16, compared to the prior year’s corresponding period. It reported impairment of intangible assets of $5.4 million in 2Q16.

The company’s net income and EPS (earnings per share) rose to $30.3 million and $0.48, respectively, in 2Q16, compared to $18.7 million and $0.33, respectively, in 2Q15. It reported 2Q16 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $85.0 million and $0.57, respectively, which represent rises of 79.3% and 67.7%, respectively, compared to 2Q15.

B&G Foods’ inventories fell by 16.0%, and its trade accounts receivable rose by 2.2% in 2Q16, compared to 4Q15. It reported cash and cash equivalents of $107.6 million in 2Q16, compared to $5.2 million in 4Q15. Its current ratio rose to 4.9x, and its DE (debt-to-equity) ratio fell to 3.1x in 2Q16, compared to current and DE ratios of 3.4x and 4.6x, respectively, in 4Q15.

Projections

The company has made the following projections for 2016:

  • net sales in the range of $1.39 billion–$1.42 billion
  • adjusted EBITDA in the range of $317.0 million–$327.0 million
  • adjusted EPS in the range of $2.11–$2.21

In the next article in this series, we’ll discuss Archer Daniels Midland Company.

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