B&G Foods(US:BGS)2022-11-10 01:35Financial Data and Key Metrics Changes - Net sales increased by 2.6% year-over-year to $528.4 million in Q3 2022, with adjusted EBITDA of $80.2 million and adjusted diluted earnings per share of $0.31, down from $0.55 in the prior year [17][30]. - Adjusted EBITDA margin improved to 15.2% compared to 11.3% in Q2 2022, although it decreased from 18.7% in Q3 2021 [28][30]. - Gross profit was $105.8 million, representing 20% of net sales, a slight decrease from 20.5% in Q3 2021 [23][24]. Business Line Data and Key Metrics Changes - Crisco's net sales increased by 38.3% to $27.3 million in Q3 2022, with year-to-date sales up 32.9% [18]. - Clabber Girl's net sales rose by 26.6% in Q3 2022, while Cream of Wheat increased by 20.4% [19]. - Green Giant's net sales decreased by 12.6% in Q3 2022, attributed to exiting low-margin businesses and pricing elasticity [21][22]. Market Data and Key Metrics Changes - The spices and seasonings business saw a decline of 6.5% in Q3 2022, although this was an improvement from a 9.5% decline in the first half of the year [20]. - Customer service and fill rates improved to over 93% by the end of Q3, with expectations to reach 94% to 95% in Q4 [9]. Company Strategy and Development Direction - The company is focusing on divesting non-core businesses, including the Back to Nature brand, to improve portfolio focus and reduce debt [12][43]. - A new business unit structure has been implemented to enhance accountability and decision-making, with expectations for improved sales and margin performance [13][42]. - The company plans to take a more surgical approach to pricing in 2023, targeting specific commodities experiencing inflation [10]. Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures are expected to continue but at a lower rate of 4% to 5% in 2023, with a focus on managing cash flow and reducing debt [11][41]. - The company anticipates stronger Q4 performance, with net sales growth projected in the mid-single digits and adjusted EBITDA expected to be at or above last year [9][31]. - Management expressed confidence in recovering distribution in key accounts and improving customer fill rates [9][34]. Other Important Information - The dividend payout rate has been revised from $1.90 to $0.76 per share annually, reflecting the current cash flow environment [40]. - A non-cash impairment charge of $103.6 million was recorded for the Back to Nature brand during Q3 2022 [43]. Q&A Session Summary Question: Pricing contribution and volume impact - Management indicated that volume declines were not solely due to pricing elasticity, with significant impacts from supply chain disruptions and strategic business exits [48][52]. Question: Dividend rate and capital spending - Management confirmed that the new dividend rate reflects current cash flows and working capital needs, with a focus on optimizing debt repayment [60][39]. Question: Back to Nature sales and margin - The Back to Nature brand has generated approximately $50 million in sales, but management believes it is not a long-term fit for the company [62]. Question: Shelf space and competitive response - Management stated that most lost shelf space is being regained, with ongoing efforts to restore distribution and improve sales in the spices and seasonings category [80].