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PARSIPPANY, NJ — B&G Foods Inc. Reports Fiscal 2024 Results and Strategic Review Developments
B&G Foods Inc., a leading packaged food company based in Parsippany, New Jersey, has recently disclosed disappointing results for fiscal 2024. The company is also in the process of concluding a strategic review that may lead to the divestiture of its frozen and canned vegetable assets, which prominently feature the Green Giant and Le Sueur brands.
Since initiating the strategic review in May, B&G Foods has been actively reassessing its product portfolio. At that time, the company noted that the potential divestiture of its vegetable assets could involve multiple transactions. Notably, B&G acquired the Green Giant and Le Sueur brands from General Mills Inc. in a significant cash deal valued at $765 million in late 2015. In November 2023, B&G Foods sold the Green Giant U.S. canned vegetable business to Seneca Foods Corp., following the earlier divestiture of the Back to Nature plant-based snacks brand in December 2022.
During a conference call with analysts on February 25, Kenneth Keller, the President and CEO of B&G Foods, shared insights on the strategic review. He stated, “As previously discussed, we are finalizing the strategic review of the frozen and remaining canned vegetable businesses for a possible divestiture and sale of some or all of the assets in the frozen and vegetables business unit.” Keller emphasized that while Green Giant remains a strong brand with substantial market awareness and distribution, its alignment with B&G Foods’ core focus and capabilities is under scrutiny. He noted, “There are no plans to add more assets in the frozen portfolio, given the opportunities in our core shelf-stable businesses and overall capital constraints.”
The fiscal 2024 fourth quarter results revealed a significant impairment charge of $320 million related to intangible trademark assets for the Green Giant, Victoria, Static Guard, and McCann’s brands. This followed a goodwill impairment charge of $70.6 million for the Frozen & Vegetables unit in the first quarter.
Keller reiterated B&G Foods’ commitment to restructuring its portfolio to enhance focus, simplify operations, improve margins and cash flow, and maximize future value creation. “This is a very high priority for the company and critical to our future strategic direction and risk profile. The endgame is to create a more highly focused B&G Foods,” he stated. He further elaborated on the company’s objective to establish a more efficient cost structure, foster clear synergies within the portfolio, and ultimately create a stable platform for future mergers and acquisitions.
In the fourth quarter, net sales in the Frozen & Vegetables segment experienced a decline of 14%, totaling $110.1 million, while annual sales fell by 16% to $395.79 million. The decrease primarily resulted from the divestiture of the Green Giant U.S. canned vegetables business, alongside declines in net pricing and volume. Additionally, the company noted the adverse effects of foreign currency fluctuations on the cost of goods sold for products manufactured at the Green Giant facility in Mexico.
Keller characterized the Green Giant brand as facing more challenges compared to other segments of B&G’s portfolio. “It’s not that we struggle with high costs in that business, because we don’t have a lot of infrastructure in frozen and we’re not planning to add any more frozen assets,” he explained. He acknowledged the necessity for investments in innovation within the frozen segment but indicated that it remains the lowest-margin business in the portfolio and is therefore under strategic review.
For fiscal 2024, B&G Foods reported a substantial loss of $251.3 million, a stark increase from the $66.2 million loss incurred in 2023. This decline was largely attributed to the impairment charge and costs associated with acquisitions and divestitures. Adjusted net earnings for the year amounted to $55.7 million, equating to 70 cents per share, compared to $73.9 million, or 99 cents per share, in the previous year. The result was consistent with Wall Street’s consensus adjusted earnings forecast.
As the fiscal year concluded, B&G Foods recorded a fourth-quarter loss of $222.4 million, primarily due to the impairment charge, contrasting with net income of $2.6 million, or 3 cents per share, in the prior year. Adjusted net earnings for the quarter were $24.6 million, or 31 cents per share, slightly up from $23.5 million, or 30 cents per share, in the same quarter a year earlier. Analysts had projected quarterly adjusted earnings per share of 31 cents.
TD Cowen analyst Robert Moskow commented on the state of B&G Foods, noting that the company is still a work in progress, struggling with a portfolio of growth-challenged brands and a heavily leveraged balance sheet. “Their frozen vegetable business (21% of sales) remains under strategic review, and they continue to describe as much as 10% of additional sales as candidates for divestiture,” he stated.
During fiscal 2024, B&G Foods achieved total net sales of $1.93 billion, representing a 6.3% decline from $2.06 billion in fiscal 2023. This downturn was primarily linked to the loss of sales from the Green Giant divestiture. The base business net sales decreased by 3.3% year over year, reflecting a 2.6% drop in unit volume and a 0.7% decline in pricing/mix, along with adverse foreign exchange impacts. Fourth-quarter net sales decreased by 4.6% to $551.6 million, with base business sales dipping 1.9% due to a decrease in unit volume.
In contrast, the Spices & Flavor Solutions segment emerged as a bright spot for B&G, with net sales rising by 5% to $101.8 million, driven by higher unit volume and improved pricing/mix. For the fiscal year, this segment experienced a sales increase of 1.7% to $395.2 million.
Keller acknowledged that fiscal 2024 was challenging for both B&G Foods and the broader packaged food industry, citing shifting consumer purchasing patterns in response to persistent inflation. However, he pointed out the positive trends in the spices and seasoning business, which have benefited from the growth of fresh produce and proteins.
Looking ahead to fiscal 2025, B&G Foods projects net sales between $1.89 billion and $1.95 billion, with adjusted EBITDA anticipated to range from $290 million to $300 million. The company estimates adjusted diluted earnings per share to fall between 65 cents and 75 cents. Prior to B&G’s fiscal 2024 report, analysts had projected the company’s 2025 adjusted earnings per share at 67 cents.
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