PARSIPPANY, NJ. — B&G Foods, Inc. is actively seeking to sell its Back to Nature business, which the company said is no longer core to its overall business or long-term strategy. As a result, the company recorded impairment charges of $103.6 million in the recent quarter.
Casey Keller, president and chief executive officer, said the company has initiated a strategic review to identify other potential divestitures following its recent restructuring into four business units, which include spices and seasonings, meals, frozen and vegetables, and specialty.
B&G Foods acquired Back to Nature Foods Co. for approximately $162.5 million five years ago. Then a joint venture between Brynwood Partners VI LP and Mondelez International, the business included Back to Nature and Snackwell’s brands, spanning cookies, cakes, pretzels, popcorn, nuts and trail mix, granola, cereals, soups and juices.
“This is a brand that made sense for B&G Foods to acquire when we were attempting to build our snacking portfolio,” said Bruce C. Wacha, chief financial officer at B&G Foods, during a Nov. 3 conference call to discuss third-quarter earnings. “However, given our current focus, we now believe that there are better owners for Back to Nature than B&G Foods. As a result, we are actively looking to sell the brand and have therefore reclassified the assets of the Back to Nature business as assets held for sale on our balance sheet.”
B&G Foods sustained a loss of $59.6 million in the third quarter ended Oct. 1, which compared with net income of $20.7 million in the prior-year period. Excluding special items, adjusted net income declined 39% to $22.3 million. The decrease in earnings was attributed to increased costs for raw materials and transportation.
Net sales were $528.4 million, up 2.6% from $515 million the year before. The increase in sales was attributed to increases in net pricing and the impact of product mix, partially offset by volume declines due to price elasticity and supply chain challenges.
“In summary, the third quarter showed continued pricing recovery, offsetting roughly 80% of the gross margin impact of rising inflationary input and operating costs,” Mr. Keller said. “We have implemented all pricing actions to fully recover projected costs in fiscal year ‘22 and expect the fourth quarter to show continued improvement. Further, we are taking actions to improve our capital structure in a rising interest rate and inflationary environment, including divesting noncore assets to improve portfolio focus and reduce debt and lowering the dividend to a more sustainable level that continues to provide a strong yield to our shareholders.”
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