PARSIPPANY, N.J. — A shift to selling higher margin products and slightly lower input costs helped B&G Foods, Inc. record net income of $13,305,000, equal to 28c per share on the common stock, during the first quarter ended April 2. The results are a significant improvement over the same period of the previous year when the company’s net income was $326,000, or 1c per share.
Sales for the first quarter of fiscal 2011 were $131,405,000, up 5% from sales of $125,182,000 in the same period of fiscal 2010.
Net sales of B&G’s Don Pepino and Sclafani brands, which the company acquired during the fourth quarter of 2010 contributed $3.6 million to the overall unit volume increase for the first quarter of 2011. Net sales of the company’s Ortega, Cream of Wheat and B&M products increased by $1.8 million, $900,000 and $500,000, respectively.
“Our business maintained strong momentum coming out of record breaking fiscal 2010, and produced another outstanding quarter in the first quarter of 2011,” said David L. Wenner, president and chief operating officer, in a conference call with financial analysts on April 26. “In fact, our $33 million EBITDA was the highest quarterly EBITDA ever achieved by B&G Foods, a remarkable accomplishment.”
Mr. Wenner said new product development continues to support B&G’s brands.
“Our healthy product initiative in Ortega, which includes whole grain taco shells, whole wheat tortillas, and now a whole grain-whole wheat taco shell, tortilla dinner kit was key in driving growth in the brand,” he said. “Cream Of Wheat growth was greatly aided by the very successful Cinnabon Instant Cream Of Wheat product. As predicted in our last call, this product is on track to account for as much as 1% of our overall net sales in 2011, its first year of distribution, and it appears to be lifting sales of other instant products as well.”
Despite the earnings and sales success during the quarter, Mr. Wenner said rising input costs remain a concern for the company. As an example, he said fuel surcharges today are 50% higher than at this time last year, which was the peak for 2010.
“The seemingly relentless pressure on almost all major commodities is beginning to ripple through all agricultural costs, pushing up future prices for minor and major inputs,” he said. “So far, the effect on B&G Foods is minor and manageable, but we do believe it makes further margin expansion in 2011 more challenging.
“The price increase we announced for Sept. 1 is intended to offset cost increases that we expect to see in the latter part of this year. As 2012 costs become better defined, we will probably need to take further pricing as of January 1 as well.
“An example of the ever-changing situation is the cost of beans used in our B&M line. A few months ago we estimated a 30% cost increase this fall, driven mainly by the higher costs of corn and wheat which, of course, competes for the same acreage. Today, we estimate the increase will be closer to 50%. That estimate will almost certainly change in the next four to five months before the crop is harvested, but in what direction is anyone's guess.”