PARSIPPANY, N.J. — B&G Foods, Inc. is planning “aggressive” innovation for the year ahead in an effort to resuscitate several of its struggling brands, including Cream of Wheat and Ortega. Robert Cantwell, president and chief executive officer, said a challenging center-of-the-store environment hampered revenues in the recent fiscal year. Following the release of financial results, B&G Foods shares trading on the New York Stock Exchange were down by as much as 7% from the previous close of $46.90.
|Robert Cantwell, president and c.e.o. of B&G Foods|
“Although there are no easy answers, we do plan to stabilize our base business in 2017,” Mr. Cantwell said during a Feb. 23 earnings call with financial analysts. “Among other things, we’ve restructured internally in an attempt to put proper focus on all brands and groups of brands in our portfolio. We also intend to be much more aggressive with new products that truly satisfy changing consumer preferences.”
Forthcoming launches include new instant Cream of Wheat products and new Ortega products with simple and high-quality ingredients “that we expect will bring new users to the category and brand,” Mr. Cantwell said.
“We also plan to launch new Pirate’s Booty line extensions in the second quarter,” he said. “Finally, Bear Creek is expected to launch a number of new items during the third quarter, including a new line of products in a new category.”
Net income for the year ended Dec. 31, 2016, was $109,425,000, equal to $1.73 per share on the common stock, up from $69,090,000, or $1.22 per share, in the prior fiscal year. Net sales were $1,391,257,000, up from $966,358,000. The acquisitions of Green Giant, Mama Mary’s, the spices and seasonings business of ACH Food Companies and Victoria Fine Foods contributed $448.4 million in sales.
Net income for the fourth quarter was $13,568,000, or 20c per share, up from $10,960,000, or 19c, in the year-ago period. Net sales were $413,656,000, up from $342,291,000. Acquisitions contributed $77.9 million to fourth-quarter sales.
The company’s base business net sales decreased 2.1% for the year and 1.6% in the quarter, driven in part by a challenging competitive environment for its syrup brands and a sharp decline in TrueNorth net sales due to commodity-driven price increases and lower consumer demand.
Another issue during the fourth quarter related to the transition of the Green Giant brand from General Mills. B&G Foods experienced an inventory shortfall during the month of October that equaled approximately $13 million in lost sales.
“We have overcome this transition issue, and during November and December Green Giant net sales grew $2.9 million versus last year,” Mr. Cantwell said. “Also, during the four weeks ended Jan. 28, 2017, Green Giant continued the positive momentum, gaining a 0.4% market share in the frozen category. We expect to launch additional new Green Giant products in the second half of 2017 and are committed to supporting the brand with full marketing support.
“For 2017 we expect Green Giant to generate approximately $530 million to $540 million in net sales versus $506.7 million in net sales in 2016.”
For fiscal year 2017, the company expects net sales in the range of $1.64 billion to $1.68 billion with adjusted EBITDA in the range of $360 million to $375 million, which represents a 12% to 16% increase over fiscal 2016 adjusted EBITDA of $322 million.
“We have a lot of new products in a lot of our brands, where we didn’t really have that in 2016 and most of 2015,” Mr. Cantwell said. “We reemphasized innovation here, and the innovation is oriented more to better for you, cleaner labels, etc.…“It’s making noise and making new news in the category. We really didn’t do that in 2016 and for most of 2015, but we are launching a bunch of new items and a bunch of subsets in a number of categories that we hope will move the needle.”