B&G Foods ((BGS)) has held its Q4 earnings call. Read on for the main highlights of the call.
The latest earnings call from B&G Foods presented a mixed sentiment. While there were notable improvements in specific segments such as Spices & Flavor Solutions and general margin enhancements, the call was overshadowed by significant impairment charges that led to a net loss. The reduction in debt and strategic focus were positive highlights, but challenges like sales decline in base businesses and foreign currency impacts were also notable.
Sequential Improvement in Q4
The fourth quarter results showed a sequential improvement with net sales reaching $551.6 million and adjusted EBITDA of $86.1 million, aligning with or slightly surpassing expectations. This performance indicates a positive trend in the company’s financial health.
Spices & Flavor Solutions Growth
The Spices & Flavor Solutions business unit achieved a commendable 5% increase in net sales in Q4 2024 compared to the previous year. This growth was driven by higher volumes and improved net pricing, showcasing the segment’s robust performance.
Improved Margins
There was an improvement in the adjusted gross profit percentage, which rose to 22.2% in Q4 2024 from 21.9% in Q4 2023. Additionally, adjusted EBITDA as a percentage of net sales increased to 15.6% from 15%, reflecting better operational efficiency.
Debt Reduction
B&G Foods successfully reduced its net debt to $1.994 billion by the end of Q4 2024. This was achieved by redeeming $265 million of senior notes, leaving the company with no near-term maturities and a stronger financial position.
Net Loss Due to Impairment Charges
The company reported a net loss of $222.4 million in Q4 2024, primarily due to pretax non-cash impairment charges of $320 million related to intangible trademark assets. This significant charge overshadowed other positive aspects of the earnings report.
Decline in Base Business Net Sales
Base business net sales decreased by 3.3% for fiscal year 2024 compared to the previous year. Excluding Crisco, net sales saw a slight decline of 0.4% in Q4 2024 compared to Q4 2023, indicating challenges in maintaining sales momentum.
Foreign Currency Impact
The fiscal 2024 results were negatively impacted by approximately $8.5 million due to foreign currency fluctuations, particularly related to the Mexican peso, highlighting the challenges of operating in international markets.
Challenges in Frozen & Vegetables Segment
The Frozen & Vegetables segment faced difficulties, with net sales decreasing by $2.5 million in Q4 2024 compared to the previous year. Segment adjusted EBITDA also decreased by $4.7 million, partly due to foreign currency impacts.
Forward-Looking Guidance
During the earnings call, B&G Foods provided guidance for fiscal year 2025, projecting net sales between $1.89 billion and $1.95 billion. Adjusted EBITDA is expected to be between $290 million and $300 million, with a percentage of net sales anticipated to remain around 15% to 15.5%. The company also expects a benefit from a 53rd week in fiscal 2025, contributing an additional $10 million to $15 million in net sales.
In summary, B&G Foods’ latest earnings call reflected a mixed sentiment with both positive strides and notable challenges. While the company showed improvements in specific segments and reduced its debt, the significant impairment charges and sales declines in certain areas posed challenges. Looking ahead, the company has set a cautiously optimistic guidance for fiscal 2025, aiming for stable growth and operational efficiency.