PARSIPPANY, NY. — B&G Foods, Inc. in January completed the sale of its Back to Nature business. The divestment represented a strategic departure from the snack aisle.
“We’re no longer in snacks in a big way,” said Bruce C. Wacha, chief financial officer, during a May 4 conference call to discuss first-quarter results. “It's not a priority for us. So, a smallish cookie and cracker business, even though it's a really nice business, just isn't a fit for us.”
Efforts to reshape the portfolio continue, with a focus on spices and seasonings, meals, frozen foods and vegetables, and specialty foods. Executives are “actively evaluating” additional divestitures to sharpen the company’s focus and reduce debt, said Kenneth C. Keller, president and chief executive officer.
“We will probably divest businesses in the future,” Mr. Keller said. “But obviously, we’re not going to fire-sale. So, we’re going to be deliberate about when and how we do it. But it is aligned with the strategy of what categories and portfolio pieces we want to stay in in the longer term and which ones we don’t feel we have enough scale or enough capabilities to stay in.”
Net income for the first quarter ended April 1 was $3.4 million, equal to 5¢ per share on the common stock, down 86% from $23.7 million, or 34¢, in the prior-year period. Results were negatively impacted by income tax expense of $14.7 million resulting from the divestiture of the Back to Nature business. Adjusted net income was $19.1 million, down from $19.8 million.
Net sales declined 3.9% to $511.8 million from $532.4 million the year before. The decrease was attributed to the Back to Nature divestiture, partially offset by the acquisition of Yuma.
Base business net sales, which excludes the divested business, eased 1.2% to $511.4 million from $517.8 million, driven by a decrease in unit volume and the unfavorable impact of foreign currency translation, which were partially offset by increases in net pricing and the impact of product mix.
“Net sales were mixed across the portfolio,” Mr. Wacha said. “Among our largest brands, Clabber Girl had the best performance in the first quarter of 2023, and net sales were up by $6.5 million, or 31%, compared to the year-ago period. Clabber Girl is seeing strength across all of its product lines, including baking powder, baking soda and cornstarch and channels, including branded retail, private label and industrial.
“Our spices and seasonings business also had very strong net sales performance for the first quarter of 2023 with our various spices and seasonings brands, including Dash, Tone’s and Weber and others increasing by $8.4 million, or 9.6%, in the aggregate compared to the year-ago period. Our spices and seasonings business has largely recovered from the supply chain challenges that we faced for much of last year, and we are very much looking forward to enjoying growth in this business again.”
Cream of Wheat sales were relatively flat with the prior-year quarter. Green Giant sales declined $9.9 million, or 7.3%, from the year-ago period, Mr. Wacha said, noting “profitability of this business has seen a nice recovery following our pricing initiatives.”
Ortega sales fell $4.2 million, or 9.7%, compared to last year; however, consumption increased 2.4% for the quarter, Mr. Wacha said.
“Crisco has seen the highest levels of inflationary pressure out of all of our brands and is therefore the brand where we have taken the highest levels of pricing,” Mr. Wacha said. “Net sales have been positive on this brand throughout much of our ownership as the benefits from pricing have more than offset any elasticity-driven volume shortfalls over the past few years. In the first quarter of this year, however, pricing began to have a greater impact on volumes. Fortunately, with the cost for the underlying commodity coming down, we have been able to increase our promotional activity, and we are already seeing improved volume performance in the recent consumption data. Our profitability on Crisco has remained robust despite movements in the underlying commodity.”Management reaffirmed its full-year forecast for net sales of $2.13 billion to $2.17 billion.