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B&G Foods Acquired ACH Food Companies’ Business

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Nov. 28 2016, Updated 6:04 p.m. ET

Price movement

B&G Foods (BGS) rose 5.5% to close at $43.25 per share during the fourth week of November 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 5.5%, -8.9%, and 27.3%, respectively, on November 25, 2016.

BGS is trading 3.6% above its 20-day moving average, 5.4% below its 50-day moving average, and 1.8% above its 200-day moving average.

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Related ETF and peers

The Vanguard Small-Cap ETF (VB) invests 0.11% of its holdings in BGS. The YTD price movement of VB was 17.5% on November 25.

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

  • General Mills (GIS) — $36.8 billion
  • The J.M. Smucker Company (SJM) — $14.7 billion
  • TreeHouse Foods (THS) — $3.9 billion

Latest news on BGS

In a press release on November 21, 2016, B&G Foods reported, “B&G Foods, Inc. [BGS] announced that effective today it has completed the acquisition of the spices and seasonings business of ACH Food Companies, Inc., a leading supplier of spices and seasonings to retail and food service customers, for $365 million in cash, subject to a customary adjustment based upon inventory at closing. B&G Foods expects the acquisition to be immediately accretive to its earnings per share and free cash flow.”

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The release also said, “B&G Foods projects that after the acquisition is fully integrated the acquired business will generate on an annualized basis net sales in the range of $220.0 million to $225.0 million, adjusted EBITDA [earnings before interest, tax, depreciation, and amortization] in the range of $38.0 million to $40.0 million and adjusted diluted earnings per share in the range of $0.26 to $0.28.”

Performance of B&G Foods in 3Q16

B&G Foods reported 3Q16 net sales of $318.2 million, a rise of 49.2% compared to its net sales of $213.3 million in 3Q15. The company’s gross profit margin and operating margin rose 270 basis points and 240 basis points, respectively, in 3Q16 compared to 3Q15.

BGS’s net income and EPS (earnings per share) rose to $32.4 million and $0.50, respectively, in 3Q16, compared to $19.8 million and $0.34, respectively, in fiscal 3Q15. It reported adjusted EPS of $0.56 in 3Q16, a rise of 43.6% compared to 3Q15.

BGS’s inventories and trade accounts receivable rose 9.1% and 30.0%, respectively, in 3Q16 compared to 4Q15. It reported cash and cash equivalents of $240.6 million in 3Q16, compared to $5.2 million in 4Q15.

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Quarterly dividend

B&G Foods has declared a quarterly cash dividend of $0.47 per share on its common stock. This dividend will be paid on January 30, 2017, to shareholders of record on December 30, 2016.

Projections

B&G Foods has made its projections for 2016:

  • net sales in the range of $1.38 billion–$1.40 billion
  • adjusted EBITDA in the range of $322.0 million–$328.0 million
  • adjusted EPS in the range of $2.11–$2.17

Next, we’ll look at Verifone Systems (PAY).

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