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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: A1111 who wrote (71157)	9/18/2022 11:07:30 AM
From: E_K_S	Respond to of 78670

Re: BGS dividend Management has supported their high dividend since 2019. BGS did come out earlier this year that 2022 earnings would be lower in Q2 & Q3 (due to inflated expenses especially transportation) and would normalize by Q4 2022. They had rolled over and extended much of their debt in 2020 & 2021 when rates were low. However, were drawing on their credit facility in 2022 as they consolidated some operations, sold off a facility and basically working on making their processing facilities more efficient. This was a pretty big move in restructuring their capital assets mainly from earlier acquisitions in 2018-2021 period. I am not sure if they enter into long term supply agreements w/ farmers for their produce. What they have been doing the last few years is introducing new family friendly packaged products, getting retailers to commit to more shelf space and coordinating processing/delivery using a more sophisticated ordering system. They consolidated down to one or two main processing/distribution facilities that s/d reduce operating expenses. These new products are supposed to have higher margins. I believe the debt roll over was out 4 years (maybe 5) so FCF (w/ efficiencies) must support new debt amount as well as help pay down the revolver. We will see as there are a lot of moving parts w/ inflation causing higher SG&A. Not sure BGS has much pricing power for their retail products.

To: A1111 who wrote (71157)	9/18/2022 1:33:01 PM
From: Elroy	Respond to of 78670

What are your thoughts on future dividend payments? I don't have any special insights beyond what management has said. They seem committed to the dividend. Someone else wrote that they cut it in a previous recession. My hunch is they will try to retain it as long as possible, but that's just my hunch. As long as they issue stock in their at the money program, it seems like they can retain the dividend. I undedstand that's not as desirable as paying the dividend out of operating profits, but it makes it easier for them to maintaint the dividend during a tough period (like now), whereas other companies without an at the money stock offering program would be more eager to cut it. Based on their last report, Q2 2022 should be an EPS low, and Q3 2022 should be a leverage (debt to EBITDA) high. So if things from Q4 2022 on are improving, hopefully that makes it less likely that they cut the dividend. My hope is buy now near the lows, and in two years business is back to sorta normal, and the stock is at about $30 paying the same dividend as now. It's not guaranteed, but it seems like a reasonable future outcome.