PARSIPPANY, NJ. — B&G Foods Inc. posted weak fiscal 2024 results and said it’s winding down a strategic review that may result in the sale of its frozen and canned vegetables assets, which include the Green Giant and Le Sueur brands.
B&G had announced the review back in May as the Parsippany-based packaged food company continued to reassess its product portfolio, noting at the time that a divestiture of vegetable assets could entail one or more transactions. B&G acquired the Green Giant and Le Sueur frozen and canned vegetables brands from General Mills Inc. in late 2015 via a $765 million cash deal. Then in November 2023, B&G sold the Green Giant US canned vegetable business to Seneca Foods Corp. after having divested the Back to Nature plant-based snacks brand in December 2022.
“As previously discussed, we are finalizing the strategic review of the frozen and remaining canned vegetable businesses for a possible divesture and sale of some or all of the assets in the frozen and vegetables business unit,” Kenneth Keller, president and chief executive officer, told analysts in a Feb. 25 conference call. “Green Giant remains a strong brand with broad awareness and distribution, and the frozen vegetables category is on trend with health and dietary trends. It may not be the right fit with B&G Foods’ focus and capabilities, particularly since 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.”
In the fiscal 2024 fourth quarter, B&G said it recorded a $320 million impairment charge related to intangible trademark assets for the Green Giant, Victoria, Static Guard and McCann’s brands. That followed a goodwill impairment charge of $70.6 million for the Frozen & Vegetables unit in the first quarter.
“B&G Foods remains committed to reshaping and restructuring our portfolio to sharpen focus, simplify our portfolio, improve margins and cash flow, and maximize future value creation,” Keller said. “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 added that the company aims to develop “a more efficient cost structure and clear synergies within the portfolio and, ultimately, to build a stable platform that can be the foundation for future focused M&A growth.”
Net sales in the Frozen & Vegetables segment fell 14% to $110.1 million in the fourth quarter and by 16% to $395.79 million for the year. B&G noted that the decrease stemmed mainly from the divestiture of the Green Giant US canned vegetables business and from declines in net pricing and volume. Results also reflected the negative impact of foreign currency on the cost of goods sold for products made at the Green Giant manufacturing facility in Mexico, the company said.
B&G Foods said the strategic review of its Frozen & Vegetables segment also includes its Le Sueur canned vegetables business.
| Photo: ©JETCITYIMAGE – STOCK.ADOBE.COM“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 said. “That has been a business that, we do invest behind innovation because you need to do that in the frozen business, but it’s our lowest-margin business in the portfolio. And it hasn’t been the place that we would want to put the most investment in. It’s under strategic review, so we’re looking at whether or not that’s really part of our future portfolio.”
For fiscal 2024, B&G sustained a loss of $251.3 million compared with a loss of $66.2 million in 2023. The drop mainly reflected the impact of the impairment charge and acquisition/divestiture-related costs, the company said. Adjusted net earnings came in at $55.7 million, equal to 70¢ per share on the common stock, versus $73.9 million, or 99¢ per share, a year earlier. The result was in line with Wall Street’s consensus adjusted earnings forecast of 70¢ per share.
B&G closed out the year with a fourth-quarter loss of $222.4 million, largely due to the impairment charge, compared with net income of $2.6 million, or 3¢ per share, a year ago. Adjusted net earnings were $24.6 million, or 31¢ per share, versus $23.5 million, or 30¢ per share, in the prior-year period. Analysts, on average, had projected quarterly adjusted EPS of 31¢.
“B&G Foods is still a work in progress, with a portfolio of growth-challenged brands and a debt-laden balance sheet (6.5x leverage),” TD Cowen analyst Robert Moskow said in a Feb. 26 research note. “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. By our math, they will need to sell assets at a multiple above 7x to reduce leverage. However, it looks like it has been tough to find buyers. The company announced a $320 million impairment charge on the trademarks of Green Giant, Victoria, Static Guard and McCann’s in 4Q.”
Full-year net sales for B&G totaled $1.93 billion, down 6.3% from $2.06 billion in fiscal 2023, which B&G attributed primarily to loss of sales from the Green Giant divestiture. Base business net sales decreased 3.3% year over year, reflecting declines of 2.6% in unit volume and 0.7% in pricing/mix as well as a negative impact from foreign exchange. Fourth-quarter net sales declined 4.6% to $551.6 million, with base business sales dipping 1.9% on a 2.2% decrease in unit volume, a negative impact from foreign exchange and a 0.4% uptick in pricing/mix.
The Spices & Flavor Solutions segment provided a bright spot for B&G, with net sales up 5% to $101.8 million on higher unit volume and net pricing/mix. For fiscal 2024, the business saw net sales rise 1.7% to $395.2 million. Decreased unit volume pulled down the top line in the Meals segment, where net sales fell by 1.9% to $122.9 million in the fourth quarter and by 3.2% to $462.4 million for the year. Net sales in the Specialty business were down by 4.6% in the quarter to $216.7 million and by 6% for the year to $679.1 million, which B&G attributed mainly to lower Crisco pricing amid decreased soybean oil costs, as well as to declined volumes across the segment.
“Twenty-twenty four was a more difficult year for both B&G Foods and the packaged food industry, with consumers continuing to adjust purchase patterns in the wake of higher inflation in recent years and prices for food and other consumer goods that remain elevated,” Keller said. “The exception has been our spices and seasoning business, which has shown positive trends in the last several quarters, influenced by the growth of fresh produce and proteins in the perimeter of the grocery store.”
For fiscal 2025, B&G projects net sales of $1.89 billion to $1.95 billion, adjusted EBITDA of $290 million to $300 million, and adjusted diluted EPS of 65¢ to 75¢. Before B&G’s fiscal 2024 report, analysts on average had forecast the company’s 2025 adjusted EPS at 67¢.
