BGS Q2 Deep Dive: Portfolio Restructuring and Margin Pressures Shape Outlook

August 12, 2025 at 23:05 PM EDT

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Packaged foods company B&G Foods (NYSE: BGS) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 4.5% year on year to $424.4 million. The company’s full-year revenue guidance of $1.86 billion at the midpoint came in 0.5% below analysts’ estimates. Its non-GAAP profit of $0.04 per share was $0.02 below analysts’ consensus estimates.

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B&G Foods (BGS) Q2 CY2025 Highlights:

Revenue: $424.4 million vs analyst estimates of $429.6 million (4.5% year-on-year decline, 1.2% miss)
Adjusted EPS: $0.04 vs analyst estimates of $0.06 ($0.02 miss)
Adjusted EBITDA: $57.98 million vs analyst estimates of $60.63 million (13.7% margin, 4.4% miss)
Adjusted EPS guidance for the full year is $0.55 at the midpoint, missing analyst estimates by 3.1%
EBITDA guidance for the full year is $278 million at the midpoint, below analyst estimates of $280.2 million
Operating Margin: 5.2%, down from 9.9% in the same quarter last year
Market Capitalization: $332.8 million

StockStory’s Take

B&G Foods’ second quarter was marked by weaker-than-expected sales and profit, with management attributing the underperformance to ongoing challenges in its frozen and vegetables business, increased trade spend, and the timing of key holidays. CEO Kenneth Charles Keller pointed to higher costs related to last year’s poor crop yields, particularly for corn and peas, as well as elevated promotional spending tied to Easter falling later in the quarter. The company also noted that lower pricing for Crisco oil, in line with its commodity-based pricing model, contributed to revenue declines. Management acknowledged that the impact of these factors resulted in a cautious tone, with CFO Bruce Wacha stating, “While we are not satisfied with today’s results, we are pleased with the continued progress relative to our challenging start to 2025.”

Looking ahead, B&G Foods’ updated guidance reflects both the impact of recent portfolio divestitures and ongoing macro headwinds, including tariffs and input cost volatility. Management expects cost reduction initiatives and anticipated improvements in the frozen segment to support a return to year-over-year EBITDA growth in the second half, even as base business net sales are projected to remain flat to slightly down. CEO Kenneth Charles Keller emphasized the company’s focus on streamlining operations, stating, “We are committed to reducing leverage and balance sheet risk,” and outlined plans to deploy divestiture proceeds toward debt reduction. However, management cautioned that the full recovery from tariff impacts, especially in the spices and flavor solutions business, may not occur until sometime in 2026.

Key Insights from Management’s Remarks

Management cited higher crop costs, increased promotional spending, and divestiture-related portfolio changes as primary drivers of Q2 performance, while emphasizing ongoing efforts to streamline operations and improve profitability.

Frozen and vegetables headwinds: The frozen and vegetables unit faced elevated costs from last year’s crop shortfall, especially in corn and peas, and was further impacted by increased promotional spending and the end of a key retail discount program. Management expects many of these pressures to ease in the second half of the year.
Crisco and specialty declines: Net sales in the specialty business were significantly affected by lower Crisco oil pricing, reflecting falling input costs for soybean oil. Although revenue declined, segment EBITDA improved due to better raw material costs for brands like Crisco and Clabber Girl.
Portfolio divestitures: B&G Foods completed the sale of its Don Pepino, Sclafani, and Le Sueur U.S. brands during the quarter, aiming to create a more focused portfolio and reduce working capital requirements. Management indicated that proceeds from these sales will be used to reduce debt and streamline the business.
Trade spend and promotional activity: The company saw an increase in trade spending, partly due to the timing of Easter and efforts to maintain competitiveness on shelf. Management expects the year-over-year growth in promotional spend to moderate in the second half as prior-year comparisons normalize.
Tariff and commodity cost exposure: Elevated tariffs, particularly on imported garlic and black pepper, weighed on margins in the spices and flavor solutions business. Management is pursuing targeted pricing actions and alternative sourcing, but noted that full recovery from tariff impacts may extend into 2026.

Drivers of Future Performance

Management’s outlook centers on further portfolio simplification, margin recovery initiatives, and managing ongoing tariff-related headwinds.

Frozen segment profitability recovery: The company expects its U.S. frozen vegetables segment to return to profitability in the second half, benefiting from improved crop costs, production efficiencies in its Mexican facility, and a partial offset from favorable foreign exchange. Management sees these improvements as key to stabilizing EBITDA.
Tariff mitigation and pricing actions: B&G Foods is implementing targeted price increases to offset the cost impact from tariffs, particularly in its spices and flavor solutions segment. However, management acknowledged that there will be a lag before these actions are fully effective due to retailer lead times and contract structures, with some recovery extending into 2026.
Divestiture proceeds and debt reduction: The company plans additional asset sales to further focus its portfolio and reduce leverage. Management stated that proceeds from recent and future divestitures will go directly toward debt repayment, aiming to bring net leverage down by at least a full turn within the next year.

Catalysts in Upcoming Quarters

In the coming quarters, StockStory analysts will be tracking (1) the pace and financial impact of further asset divestitures, (2) progress toward margin recovery in the frozen and spices segments as cost-saving and pricing actions take hold, and (3) the effectiveness of tariff mitigation strategies in maintaining profitability. The company’s ability to reduce leverage and stabilize core sales will also be critical signposts.

B&G Foods currently trades at $4.17, in line with $4.13 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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