PARSIPPANY, N.J. — Green Giant is proving more profitable than expected for B&G Foods, Inc., which acquired the business from General Mills, Inc. in November 2015. For the first quarter ended April 2, B&G Foods net income was $33,196,000, equal to 56c per share on the common stock, up 70% from $19,567,000, or 36c per share, in the same period of the prior year. Adjusted net income advanced 88% to $38,616 million. Net sales increased 63% to $352,978,000 from $217,122,000.
|Robert C. Cantwell, president and c.e.o. of B&G Foods|
“When we modeled (Green Giant), the belief coming out of the box is the EBITDA margins are going to be in the high-teens, you know, 18%, 19%,” said Robert C. Cantwell, president and chief executive officer of B&G Foods, during an April 28 earnings call with financial analysts. “As we’ve gotten into it and have, for example, run this plant in Mexico, we’re seeing much lower cost coming out of that facility on what we’re doing versus what has kind of been historic General Mills kind of allocations to that facility. And just overall in our plan, we’re just making a lot more money coming out of that plant, and we are seeing synergies.”
With Green Giant on board, B&G Foods has become bigger and more meaningful to suppliers and customers, he said.
“From a synergy point of view, we are truly seeing synergies in the power of us just being a $1.4 billion company when we call on a glass guy or a can guy or a film guy, any kind of packaging, we’re a lot more meaningful to them across the board,” Mr. Cantwell said. “…the one thing that shows is being a little bigger really makes a difference, and it kind of took us to the next level with our vendors and with our customers. Being bigger, we’re more meaningful. We doubled our business at Wal-Mart, for example. This business at Wal-Mart is $150 million. We were $150 million at Wal-Mart prior to that…
“We’re a meaningful supplier to a number of our other customers, and it’s getting us better customer calls. You know, we were always good at that, we’re now bigger and more meaningful, and they are very willing to talk to us about this brand, Green Giant, and we’ve been able to parlay that in talking about some of our other brands, too.”
As measured by sales, Green Giant has performed slightly below expectations thus far, Mr. Cantwell said.
“I think when we announced the transaction, we said Green Giant could deliver about $550 million for us,” he said. “Green Giant in the first two months of our ownership, November, December of our last year-end, really had a very difficult time kind of volume-wise, kind of worse than we thought it would get to and worse than where the seller guided us to a little bit. So, we’ve internally taken our goal on Green Giant down … we’re at a number for Green Giant of about $510 million to $520 million.”
With robust innovation and marketing plans in place, however, the company is confident in growing the business.
“We do see a lot of opportunities in the second half of the year as we expect to get some distribution and have gotten some new distribution on existing core items going in third quarter,” Mr. Cantwell said. “But we think some real positives are to come on some of the new innovation that we hope to get accepted here and start shipping in August and September.”Based on strong performance, the company has raised its guidance for the full year. B&G Foods now expects net sales in the range of $1.39 billion to $1.42 billion, up from the previously stated target of $1.38 billion to $1.42 billion, and adjusted EBITDA of $310 million to $320 million, up from $294 million to $304 million.