B&G Foods, Inc. BGS reported mixed third-quarter fiscal 2022 numbers, wherein the bottom line was in line with the Zacks Consensus Estimate, while sales missed the same. Meanwhile, earnings declined year over year and sales improved. The company benefited from higher demand and pricing, offset by increased input cost inflation and continued supply-chain headwinds.

Management reiterated its net sales guidance for fiscal 2022, while lowering its view for adjusted EBITDA and the bottom line due to cost inflation.

Net sales of $528.4 million increased 2.6% year over year mainly due to pricing gains and a favorable product mix. This was somewhat offset by soft volumes stemming from supply-chain hurdles and price elasticity. The top line missed the Zacks Consensus Estimate of $531 million and our estimate of $537 million.

Base business net sales advanced 2.5% to $527.5 million, owing to net pricing gains and a favorable product mix. These were partially countered by a fall in the unit volume and currency headwinds.

Net sales of Crisco, Cream of Wheat, Clabber Girl and Ortega rose 38.3%, 20.4%, 26.6% and 2.6%, respectively. However, net sales of Green Giant (including Le Sueur), Maple Grove Farms and spices & seasonings declined by 12.6%, 2.9% and 6.5%, respectively. Base net sales of all the other brands in the aggregate rose 0.5%.

The company expects the input cost inflation to bear a significant impact industry-wide for the remainder of fiscal 2022 and in fiscal 2023. BGS is on track to mitigate the impacts of inflation on the gross margin by undertaking cost-saving initiatives, increasing list prices, and locking in prices via short-term supply contracts and advance commodities purchase agreements. Nonetheless, these actions may not fully offset the supplementary cost headwinds through the rest of fiscal 2022 and beyond.

Impairment of Assets Held for Sale

In connection with the Company’s previously announced transition to a business unit structure, the Company has decided to divest its Back to Nature business, which is no longer core to the Company’s overall business or long-term strategy. The Company is actively seeking to sell the Back to Nature business. As a result, the Company reclassified $109.9 million of indefinite-lived trademark intangible assets, $29.5 million of goodwill, $11.0 million of finite-lived customer relationship intangible assets and $7.4 million of inventories to assets held for sale. The Company then measured the assets held for sale at the lower of their carrying value or fair value less anticipated costs to sell and recorded pre-tax, non-cash impairment charges of $103.6 million during the third quarter of 2022.