- B&G Foods' net sales increased 4.1% to $422.6 million compared to $406.1 million from that time period last year, according to the company's most recent earnings report. Despite missing net sales expectations, the company saw a 14% jump in Green Giant frozen sales.
- The company's gross profit was $115 million for the third quarter — a drop compared to $120.9 million for the third quarter of 2017. However, net cash from operating activities increased to $139.1 million for the first three quarters of 2018, up from $7.5 million from that time period last year.
- Robert C. Cantwell, president and CEO of B&G Foods, said in a statement that the "third quarter results benefited from continued top line growth, strong margins, strong cash flow generation and increased earnings per share despite a challenging operating environment for food companies."
B&G Foods saw big M&A activity this quarter, but not what many anticipated from the acquisition-hungry food giant. Earlier this month, it closed on the $420 million sale of Pirate Brands to Hershey, and paid off long-term debt with the money. Still adjusting from that sale, the company had to change its sales expectations for the year.
The company’s base business net sales this quarter — now adjusted to exclude Pirate Brands — decreased $1 million to $376.5 million from the third quarter of 2017. B&G Foods had acquired Pirate Brands in 2013 for $195 million and the sale to Hershey, which was finalized this month, showed a big return on invested capital for shareholders. The deal also represented more than quadruple the brand's net sales of $92.1 million from the last year. The company said it now expects full-year net sales of about $1.7 billion.
"In addition to providing us with the opportunity to generate a substantial return on our invested capital and to better optimize our balance sheet, the sale of Pirate Brands also represents a strategic decision to simplify our portfolio, enabling us to better focus on what we do best: drive center-of-store grocery brands and frozen vegetables," Bruce C. Wacha, executive vice president of finance and chief financial officer, said in the earnings call, according to a transcript.
Sales for the company was led by Green Giant frozen foods, which produced its sixth consecutive quarter of double-digit growth. After purchasing Green Giant in 2015 from General Mills for $765 million, B&G added several new products, which have paid off.
Net sales of Green Giant frozen increased $11.1 million to $90.3 million in the third quarter, driven by Green Giant Veggie Spirals — launched earlier this year — as well as continued consumer demand for Green Giant Veggie Tots, Green Giant Riced Veggies and Green Giant Mashed Cauliflower. Additionally, sales benefited from the roll out of Green Giant Cauliflower Pizza Crusts and Little Green Sprout’s Organics, which started shipping to stores in September.
But B&G has a lot more brands in its portfolio than just Green Giant. Two years ago, the company completed a $70 million cash acquisition of Victoria Fine Foods. This quarter, Victoria — a top brand in the premium pasta sauce category — led sales among the company’s other large brands. Net sales of Victoria increased $2.2 million, or 23.3%, in the quarter.
But B&G isn't done growing its portfolio. This quarter, the company bought McCann’s Irish Oatmeal for $32 million in cash. And as a serial acquirer, B&G is looking out for future opportunities. Cantwell said on the earnings call that with a clean balance sheet following the Pirate Brands deal, B&G is well positioned to pursue its finance-driven acquisition strategy.
"As our long-term investors know, we have always been an acquisition-driven business and that has generally meant that we are growing through acquisitions," Cantwell said. "That is still our intention."