Strength in snacks buoyed B&G Foods, Inc. during a rocky quarter for its base business, which fell 4.6% on volume declines and lower pricing.
“We were not satisfied with the result of the actions taken and continue to work to find the right balance of pricing and other methods to defend our franchises,” said David Wenner, president, chief executive officer and director, during an April 16 call with financial analysts. “Although it’s easy to conclude that this activity is not constructive for the brands or the categories involved, there is no sign that competitive pricing pressure will ease anytime soon.”
The company’s recent snack acquisitions, which include Pirate’s Brands, TrueNorth, Rickland Orchards, New York Style and Old London, contributed more than $45 million in sales for the quarter, driven by recent innovation and distribution gains. B&G Foods broadened its Pirate’s Booty line by adding four macaroni and cheese products made with organic pasta. The company also introduced Fruity Booty, a sweet raspberry variety of the brand’s puffed snacks.
Additionally, TrueNorth nut clusters, which had minimal retail distribution when B&G Foods acquired it last May, is expected to gain supermarket distribution in several major retailers within the next few months, and the Rickland Orchards brand of Greek yogurt-covered bars and snack bites is entering retail distribution in mass merchants and major retailers, Mr. Wenner said.
Despite noted challenges for B&G’s center-of-store businesses, which include Mrs. Dash, Cream of Wheat and Ortega, the company departed from its pattern of purchasing snack brands when it agreed to acquire Specialty Brands of America, Inc. in early April for $155 million. The transaction adds such products as Bear Creek dry soup mixes, New York Flatbreads, and Cary’s pancake syrup to B&G’s portfolio.
“This business is clearly more typical of the acquisitions we have done in the past than our recent snack acquisitions,” Mr. Wenner said. “Margins are excellent, working capital requirements low, and free cash flow healthy. … There are significant opportunities for S.G.&A. synergies in the business, as well as long-term manufacturing opportunities.”
For the first quarter ended March 29, the company had net income of $17,777,000, equal to 33c per share on the common stock, which compared with $19,634,000, or 37c per share, in the same prior-year period.
Net sales totaled $198,140,000, up 16% from $171,194,000 in the first quarter of the year before.
“Our focus remains on execution against our base business, as well as the new acquisitions, both top and bottom line,” Mr. Wenner said. “While this past quarter was somewhat disappointing for our base business, we are convinced that the underlying strength of the business will come through as the year proceeds.”
