PARSIPPANY, N.J. — The acquisition and integration of Green Giant buoyed B&G Foods, Inc.’s earnings and sales for the second quarter of fiscal 2016, ended July 2. With a robust line of new products set to be introduced in mid- to late-August and a significant marketing spend planned for later this year, the company expects the momentum to continue.
|Robert Cantwell, president and c.e.o. of B&G Foods|
“…Green Giant volume came in as expected in the second quarter, and the profitability of the brand continues to surpass our initial expectations, partly due to the timing of advertising and marketing spend,” said Robert Cantwell, president and chief executive officer, during a conference call to discuss second-quarter results on July 28. “In the 30-plus years I have been part of the B&G Foods family, I have never witnessed the speed with which our team went from product idea to commercialization to customer acceptance like I’ve seen on our new Green Giant innovation.
“By the beginning of September, we anticipate launching four new vegetable platforms with 15 new items. So far customer acceptance of our new Green Giant products has been above and beyond our initial expectations, with those customers who have accepted the products accepting an average of 12 items each.”
Mr. Cantwell declined to elaborate on the new products, saying the company would formally introduce them in August.
For the quarter, B&G Foods earned $30,251,000, equal to 48c per share on the common stock, and an increase compared with the second quarter of fiscal 2015 when earnings were $18,748,000, or 33c per share.
With the Green Giant business in the fold, company sales for the quarter rose dramatically to $306,376,000 compared with $193,645,000 during the same time of the previous year.
Mr. Cantwell also announced the discontinuation of Rickland Orchards, the snack brand the company acquired in 2013 for $57.5 million. Sales had declined steadily since the acquisition, and in 2014 B&G Foods took a $22 million impairment charge against the business.
Excluding Green Giant and the discontinued Rickland Orchards brand, B&G’s “base business,” which includes such brands as TrueNorth, Ortega, Cream of Wheat and others, experienced a decline in sales.
“ … Our base business net sales were down $2.5 million or 1.3% quarter over quarter,” Mr. Cantwell said. “The decrease was primarily driven by two brands — TrueNorth and New York Style, which together decreased by $3.4 million.”
During the second half of 2016, one of management’s goals is to get TrueNorth back on track. High almond prices drove up the retail price of the brand’s products, which negatively affected sales. With almond prices moderating, the company expects to begin to bring consumers back to the brand.
Sales of the Ortega brand were flat during the second quarter, according to the company.
“We still saw an impact in April from lapping last year’s restocking of shelves following the fourth-quarter 2014 recall,” Mr. Cantwell said. “However, May and June came back strong, and we expect Ortega to perform well for the remainder of the year as we continue to see positive consumer trends for the brand.”
Two brands that saw sales increases during the quarter were Pirate Brands and Cream of Wheat, with sales rising 8.9% and 5.8%, respectively. The strength behind Pirate Brands has been increasing distribution and effective marketing programs, Mr. Cantwell said.
“Cream of Wheat continued its upward sales trend in the second quarter, reporting a net sales increase of 5.8%, which was driven by our To-Go cup products, as well as growth in the brand’s traditional stove-top offerings,” he said. “We continue to innovate with this iconic brand and anticipate rolling out new products and flavors in 2017.”
For the first six months of fiscal 2016, B&G Foods’ net income totaled $63,447,000, or $1.04 per share, and an increase compared with the previous year when net income was $38,315,000, or 69c per share.
Sales for the period were $659,354,000, compared with $410,767,000 the year prior.