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B&G Foods (BGS) Looks Troubled: High Input Cost a Key Concern
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B&G Foods, Inc. (BGS - Free Report) has been troubled by escalated cost headwinds, which are likely to persist in fiscal 2022. The company lowered its adjusted EBITDA and adjusted earnings per share (EPS) guidance for the fiscal when it reported second-quarter results. Let’s delve deeper.
Cost Headwinds Persist
B&G Foods has been battling cost inflation like many other industry players. In the second quarter of 2022, the company’s gross profit came in at $78.8 million compared with $112 million in the year-ago period. The adjusted gross margin contracted from 24.1% to 16.5% in the quarter under review. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
The company expects input cost inflation to have a considerably industry-wide effect in the remainder of fiscal 2022. Management expects to keep seeing significant cost inflation for inputs, such as ingredients, packaging, labor and transportation, due to factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor.
Management is on track to mitigate the impact of inflation by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advanced commodities purchase agreements. That being said, these may not fully offset additional cost headwinds in the remaining part of fiscal 2022.
On its second-quarter 2022 call, management stated that apart from cost inflation, other pandemic-related factors, such as the duration of social distancing and stay-at-home trends, other waves or variants of the pandemic, the operation of manufacturing facilities, the company’s ability to procure ingredients and other raw materials and supply-chain status, among others, may impact the company’s performance.
Image Source: Zacks Investment Research
Q2 Earnings & Lowered Guidance
For the second quarter of fiscal 2022, B&G Foods posted adjusted earnings of 7 cents per share, which missed the Zacks Consensus Estimate of 27 cents. The bottom line tumbled 82.9% from the year-ago quarter’s figure. The downside was a result of industry-wide inflation in input costs and supply-chain bottlenecks, together with the impact of stock worth $6.5 million sold by the company via an at-the-market equity offering program.
The company expects adjusted EBITDA for fiscal 2022 in the range of $300-$320 million compared with the $348-$358 million range forecast earlier and the $358 million recorded in fiscal 2021. Adjusted EBITDA is expected to decline year over year in the third quarter and be flat to up in the fourth quarter. Adjusted EPS in fiscal 2022 is envisioned to be nearly in the band of $1.08-$1.28 now, down from the $1.65-$1.75 band projected before. In fiscal 2021, the metric came in at $1.88.
Although B&G Foods is undertaking various revenue-enhancing (like pricing and trade spend efforts) and cost-control measures, it is yet to be seen how effective these initiatives turn out. Shares of this Zacks Rank #4 (Sell) company have tumbled 7.6% in the past three months compared with the industry’s dip of 0.5%.
Chef’s Warehouse, a distributor of specialty food products in the United States, currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales suggests growth of 40.7% from the year-ago reported number.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of almost 2% and 1.5%, respectively, from the corresponding year-ago reported figures.
Celsius Holdings, which develops, processes, markets, distributes and sells functional drinks and liquid supplements, carries a Zacks Rank #2 at present. Celsius Holdings delivered an earnings surprise of 50% in the last reported quarter.
The Zacks Consensus Estimate for CELH’s current financial-year sales suggests growth of 97.3% from the year-ago period’s reported figure.
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B&G Foods (BGS) Looks Troubled: High Input Cost a Key Concern
B&G Foods, Inc. (BGS - Free Report) has been troubled by escalated cost headwinds, which are likely to persist in fiscal 2022. The company lowered its adjusted EBITDA and adjusted earnings per share (EPS) guidance for the fiscal when it reported second-quarter results. Let’s delve deeper.
Cost Headwinds Persist
B&G Foods has been battling cost inflation like many other industry players. In the second quarter of 2022, the company’s gross profit came in at $78.8 million compared with $112 million in the year-ago period. The adjusted gross margin contracted from 24.1% to 16.5% in the quarter under review. The gross margin was hurt by greater-than-anticipated input cost inflation. This includes escalated raw materials and transportation expenses.
The company expects input cost inflation to have a considerably industry-wide effect in the remainder of fiscal 2022. Management expects to keep seeing significant cost inflation for inputs, such as ingredients, packaging, labor and transportation, due to factors like the pandemic, the Ukraine war, weather conditions, supply-chain hurdles and the shortage of labor.
Management is on track to mitigate the impact of inflation by undertaking cost-saving initiatives, increasing list prices and locking in prices via short-term supply contracts and advanced commodities purchase agreements. That being said, these may not fully offset additional cost headwinds in the remaining part of fiscal 2022.
On its second-quarter 2022 call, management stated that apart from cost inflation, other pandemic-related factors, such as the duration of social distancing and stay-at-home trends, other waves or variants of the pandemic, the operation of manufacturing facilities, the company’s ability to procure ingredients and other raw materials and supply-chain status, among others, may impact the company’s performance.
Image Source: Zacks Investment Research
Q2 Earnings & Lowered Guidance
For the second quarter of fiscal 2022, B&G Foods posted adjusted earnings of 7 cents per share, which missed the Zacks Consensus Estimate of 27 cents. The bottom line tumbled 82.9% from the year-ago quarter’s figure. The downside was a result of industry-wide inflation in input costs and supply-chain bottlenecks, together with the impact of stock worth $6.5 million sold by the company via an at-the-market equity offering program.
The company expects adjusted EBITDA for fiscal 2022 in the range of $300-$320 million compared with the $348-$358 million range forecast earlier and the $358 million recorded in fiscal 2021. Adjusted EBITDA is expected to decline year over year in the third quarter and be flat to up in the fourth quarter. Adjusted EPS in fiscal 2022 is envisioned to be nearly in the band of $1.08-$1.28 now, down from the $1.65-$1.75 band projected before. In fiscal 2021, the metric came in at $1.88.
Although B&G Foods is undertaking various revenue-enhancing (like pricing and trade spend efforts) and cost-control measures, it is yet to be seen how effective these initiatives turn out. Shares of this Zacks Rank #4 (Sell) company have tumbled 7.6% in the past three months compared with the industry’s dip of 0.5%.
Consumer Staple Stocks Worth a Look
Some better-ranked stocks are The Chef's Warehouse (CHEF - Free Report) , General Mills, Inc. (GIS - Free Report) and Celsius Holdings (CELH - Free Report) .
Chef’s Warehouse, a distributor of specialty food products in the United States, currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales suggests growth of 40.7% from the year-ago reported number.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of almost 2% and 1.5%, respectively, from the corresponding year-ago reported figures.
Celsius Holdings, which develops, processes, markets, distributes and sells functional drinks and liquid supplements, carries a Zacks Rank #2 at present. Celsius Holdings delivered an earnings surprise of 50% in the last reported quarter.
The Zacks Consensus Estimate for CELH’s current financial-year sales suggests growth of 97.3% from the year-ago period’s reported figure.