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

To: Elroy who wrote (72380)	2/20/2023 3:33:18 PM
From: E_K_S	1 Recommendation Recommended By Lance Bredvold Read Replies (2) \| Respond to of 78715

BGS & Return Of Capital - Lots of Hidden Value in their Brands I think it is important to understand exactly what BGS is doing to extract Value and set up the company for growth in the future. Several key events have taken place in 2021 which I feel has structured BGS for (1) future growth, (2) consolidation in their Warehouse & Production Logistics that may/could result in expanded margins and (3) selling non-core subsidiary divisions and returning that capital back to shareholders. In June 2021, a new CEO was appointed ( B&G Foods Selects Kenneth C. “Casey” Keller as its Next President and CEO) which brought in excellent experience to reshape BGS for the next decade. Casey served as president and CEO of JDE Peet’s NV, a $7 billion global coffee and tea company; Prior to that, served as global president of the Wm. Wrigley Jr. Company, a subsidiary of Mars, Inc., served as president of Alberto Culver USA from 2008 and also H.J. Heinz Company in both the United States and Europe. In August 2021: B&G Foods Announces Sale of Portland, Maine Manufacturing Facility — Manufacturing of B&M, Underwood and certain other brands will move to third party co-manufacturing facilities and existing B&G Foods manufacturing facilities May 2022: B&G Foods Acquires Frozen Vegetable Manufacturing Operations of Growers Express — Acquisition Expected to Reduce Supply Chain Risk and Reduce Costs for Certain Green Giant® Frozen Products Dec 2022: B&G Foods sells Back To Nature to Barilla as part of broader portfolio reshaping The sale of snack brand Back To Nature to Barilla Group by B&G Foods for an undisclosed sum marks the next phase in B&G’s reorganization intended to clarify the company’s focus, pay-off debt as interest rates rise and lower its dividend to a more sustainable level while still providing strong yield to its shareholders. --------------------------------------------------------------------------------- I believe the company has elected to classify a portion of those proceeds from their Dec 2022 sales as ROC to the shareholder. Their "Back To Nature" brand has significant trademark value above & beyond the cost of the capital assets sold. That may have been why the $1.90/share dividend paid as ROC, back to the shareholders. The remaining proceeds were used to pay down debt as reflected in their Quarterly FCF ( link to Quarterly Free Cash Flow). Notice the unusually high debt paydown in June 2022-Q2 and then again in Sept. 2022-Q3. I expect a similar amount for Q4 2022 & Q1 2023. The company' EBITDA for the last 5 years has has averaged 23% of their Revenues except 2022 which was only 15% (perhaps due to Covid). --------------------------------------------------------------------------------- The key things I will be watching are to see if the new CEO can in fact (1) continue to pay down debt from their FCF and (2) expand margins from more efficient processing & logistic systems. Remember BGS owns 58 unique 'Brands' with their largest in Jolly Green Giant Vegetables. Other include: Clabber Girl, Crisco, McCann's Oatmeal, Cream of Wheat & many more. I like the moves from the new CEO and I expect more to come in 2023-2024. I noticed that this CEO has a vast experience of selling companies that he has managed to much larger conglomerates. BGS has a market cap of only $894 million down from $2.3 Billion only two years ago BUT Revenues have increased every year for the last 5 years (except in 2019). I see this as an excellent Value hold especially w/ the experience of this new CEO. Up side potential a 3 bagger ($36/share) vs down side maybe 30% ($9/share). I plan to add more shares in size on any sell off and/or new moves by the CEO.