Key Points
Smart acquisitions and asset sales are bolstering B&G Foods' margins.
Management is prioritizing cash flow production and debt reduction.
Shares of B&G Foods (NYSE:BGS) surged 38% on Wednesday after the packaged goods maker lifted its full-year financial targets.
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Strengthening profitability
B&G Foods' net sales grew 4.7% year over year to $20.5 million in the third quarter.
The food distributor's revenue was boosted by its acquisitions of the College Inn and Kitchen Basics brands in March.
Excluding acquisitions and divestitures, the company's base business net sales rose 5% to $404.6 million, driven by a 6% increase in volume.
B&G Foods is working to cut costs to bolster its profitability. The divestiture of its lower-margin Green Giant U.S. frozen business helped its adjusted gross margin improve to 24.2% from 22.5% in the year-ago quarter.
B&G Foods' adjusted net income, in turn, jumped 52% to $17.8 million, or $0.21 per share. That topped Wall Street's expectations, which had called for per-share profits of $0.15.
A focus on free cash flow
B&G Foods now expects full-year net sales of $1.76 billion to $1.8 billion in 2026, with adjusted earnings per share of $0.575 to $0.675.
CEO Rob Mills said B&G Foods will continue to prioritize its cost-saving programs to boost cash flow and pay down debt.
"We are taking deliberate actions to strengthen B&G Foods, improve financial flexibility, and position our company for sustainable long-term performance," Mills said.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.