1. By: Xue Jun Feng June ,Gautam Singh, Jeff Lorden & Karan Dhir
| FIN579-REAL CLIENT MANAGED PORTFOLIO |
Presented Oct 31, 2017 By Gautam Singh, Karan Dhir, Jeff Lorden, and Xue Jun Feng (June)
By: Xue Jun Feng June ,Gautam Singh, Jeff Lorden & Karan Dhir

2. Table of Contents Section 1 Share Market Prospect Section 2
Industry Analysis
Section 3
Company Overview
Section 4
Key Positioning Themes
Section 5
Financial Analysis
Section 6
Valuation & Recommendation

3. Share Market Prospects
Portfolio Weightage By Cost
Market Trading Overview
In USD Mn, except per share amounts
Revenue
1,518
1,668
1,757
EBITDA
317
361
389
EPS
1.52
1.91
2.25
EV/Revenue
2.6x
2.4x
2.3x
EV/EBITDA
12.5x
10.9x
10.2x
P/E
21.3x
17.0x
14.4x
Net Debt/EBITDA
5.6x
4.9x
4.5x
Source: Thumbnail Sketch
Source: Capital IQ (As of 30 Oct 2017)
LTM Share Price Performance
S&P 400 Packaged foods subindustry - Standard and Poor's Midcap Packaged Foods Index is a capitalization-weighted index. The index was developed with a base level of 100 as of December 31, 1990.The parent index is MID. This is a GICS Level 4 Sub-Industry group. Intraday values calculated by Bloomberg and not supported by S&P
Earnings surprise (lower than estimate)
Earnings surprise (Higher than estimate) but weak guidance
Earnings lower by 26% from est
Oct-17
Source: Bloomberg

4. The Company’s Performance is Affected by Three Main Factors
Market Impact
Demographic Impact
M&A Impact

5. Packaged Food Market is Over $2 Trn globally…
$19,210Mn-$373,422Mn
$8,269Mn-$18,886Mn
$4,058Mn-$7,799Mn
0-$3,575Mn
Global Market Size
$2,063,325Mn
Not Illustrated
Global Packaged Food Industry Has Been Growing at an Exponential Rate
Source: Euromonitor International

6. …And Stands To Grow at Healthy Rate in North America
Global Market Size
Regional Comparison
USD Bn
USD Bn
CAGR 4.9%
Source: Euromointor International
Source: Euromointor International
Market Size of USA
USA Population
USD Bn
USD Mn
CAGR 0.8%
CAGR 3.3%
Source: Euromointor International
Source: Euromointor International

7. The Demographics in US Are Providing Tailwinds For The Industry
Market Impact
Demographic Impact
M&A Impact

8. …As The Target Customers Make up Large Population Base Whose Food Expenditure Stands to Increase
Consumer Price Index
Consumer Expenditure Real growth
Target audience
As of 2016
Income Classification
31 Mil
20 Mil
37 Mil
68 Mil
106 Mil
Source: Euromointor International; Deloitte US FMI & GMA report

9. The Fragmented Market And The Potential to Capitalize on Economies of Scales is Giving Rise to Market Consolidation
Market Impact
Demographic Impact
M&A Impact

10. Where The Strategic Players are Acquiring Smaller Players to Leverage on Synergies…
Trend of the Multiples and Closed deals
Source: Food for thought 2017, William Blair
 Breakdown of targets in market
Source: Food for thought 2017, William Blair

11. Porter’s Five Forces Analysis
Threat of New Entrants
(Low)
Competitive Rivalry
Huge competition leading to price wars
Consolidation/M&A to increase market size to give more competition
Threat of New Entrants
Raw materials required are accessible easily
No policies to restrict entry.
Require Strong distribution network
Substitute Products
Brand oriented market
Product differentiation by understanding core needs of customers
No switching cost
Competitive Rivalry
(Medium to High)
Bargaining Power of Customers (Low)
Threat of Substitute Products (Low to Medium)
Bargaining Power of Suppliers
Low supplier dependency due to volume purchase
Abundant suppliers available to provide substitute inputs
Bargaining Power of Customers
Even distribution between large and small players
Limiting power by innovating new products
Bargaining Power of Suppliers (Low)

12. Company Overview Business Financial Snapshot
Founded in 1996, B&G Foods, Inc. manufactures, sells, and distributes a portfolio of shelf-stable, and frozen food and household products
10 manufacturing facilities with extensive third party co-packers and global sourcing
As on 2017, Net sales comprises of Frozen(21%), Snacks(12%) & Dry Grocery(67%)
The company has disciplined acquisition strategy by focusing on acquiring branded retail products at accretive multiples
Few known brands – Green giant, Ortega, Cream wheat, Bear Creek
Source: Investor’s Presentations
All Figures in USD Mn except per share items
Source: Annual Report
Revenue Mix
Shareholdings
$500Mn +
$100Mn +
$50Mn - $100Mn
<$50Mn
Source: Investors presentation
Source: Morningstar

13. Experienced Management Has Optimized Operations With Clear Growth Strategies
Robert C. Cantwell
President, CEO and Director
STRENGTHS (+)
With B&G since 1983
38 Years of industry experience
Chairman's Advisory Council of the Grocery Manufacturers Association
-Existing distribution networks
-Domestic market is large
-Improving trends in healthy foods market
-Strong historical dividend trends
Amy J. Chiovari
Corporate Controller and Interim CFO
WEAKNESS (-)
With B&G since 1996
24 Years of industry experience
Certified Public Accountant
Responsible for finance and accounting
-Concentration with Buyers (Walmart 24%)
-Small business
-Low debt rating
William F. Herbes
EVP Operations
OPPORTUNITIES (+)
With B&G since 2009
Over 24 Years of industry experience
Responsible for manufacturing, distribution, supply chain, purchasing and planning
-Growing Demand
-Strong growth rates
-Going global
-Tie up with restaurants
Bruce Wacha- Executive vice president corporate strategy and business development, a lot of experience but just join in august 2017
Bruce C. Wacha
EVP of Corporate Strategy and Business Devp.
THREATS (–)
Joined B&G in2017
15 Years of industry experience
Previous investment banker experience in food, beverage and consumer products
-Increasing rates of interest
-External business risks
-Dependent on M&A
Source: Annual Reports

14. Green Giant Acquisition
Narrow Economic Moat
B&G Foods has a unique ability of integrating its acquisitions successfully and generate synergies
Cost Advantage
Network Effects
Combination of good capital allocation and long-term cost cutting allows B&G’s acquisitions to be very profitable
Leveraging on seismic shift from conventional food to more healthy options 
Good relationships with leading supermarkets eg. Walmart, Target & etc.
The Depth Provided by Company’s Moats Provides Stable ROIC To The Investors
Green Giant Acquisition
Product Recall 1
Source: Bloomberg

15. Investment Thesis Significant Market Opportunity in Healthy Eating
Rapidly Growing & Profitable
Proven M&A Strategy

16. Consumer is Shifting Towards Eating Healthy….
Evolving Value Drivers
Demographics of Traditional vs Evolving
Transparency
Evolving drivers are equally important across regions
Transparency
Price
Health & Wellness
Safety
Taste
Social Impact
…Across Age Groups…
Convenience
Experience
…and Still Highly Relevant Across Income Groups
“Evolving” consumers say they prefer evolving value drivers
Traditional Drivers (taste, price convenience)
Evolving Drivers (health & wellness, safety, social impact, experience)
Source: Deloitte Report

17. Evolving driver consideration in purchase by category (% of consumers)
…And With Green Giant Acquisition B&G Has Made “Giant” Stride in Healthy Eating Industry
Forward Thinking Will Make the Most of The New Normal
Consumers Willing To Pay More for “Healthier” Products
Niche Brands
The New Normal
Evolving
Purchase Drivers
Small Regional & Ethnic Brands
Traditional Big Food
Traditional
Low
Consumer Demand
High
Source: Deloitte Report
Source: Deloitte Report
Evolving driver consideration in purchase by category (% of consumers)
Sources:
Fresh Prepared Meals
Breakfast
Frozen ala carte Items
Frozen Dinner Meals
Baking
Canned Goods
Meat, Fish, poultry
Deli Items
Dry Goods
Non-Alcoholic Beverage
Bread / Fresh Bakery
Fresh Fruits & Vegetables
Dressing/ Spread
Snacks/ Sweets
Dairy
Alcoholic Beverages
Source: Euromonitor International & Deloitte

18. B&G: Buy and Grow?! Acquisition to drive growth in healthy eating
Acquisition of Back to Nature
B&G Foods has transformed its portfolio through accretive acquisitions and shifting portfolio to be more on-trend with consumers (by providing better-for-you frozen vegetables, spices & seasonings, premium pasta sauces and upon completion of the Back to Nature acquisition, cookies, crackers, granola and other items).
Pioneer in the better-for-you snack foods category
The brand’s product offerings include Non-GMO Project Verified, organic and gluten free product.
Source: Investor Presentation
Source: Investor Presentation
“Better –For-You”
Acquisition of Green Giant
First brand to announce the introduction of a frozen spiralizer vegetable
Made from 100% vegetables
No Sauce or Seasoning
Gluten Free
Source: Investor Presentation
Source: Investor Presentation

19. Greenblatt Comparison of Packaged Food Industry Players
B&G Foods’ Returns Were Artificially Depressed Due to The Green Giant Acquisition…
Greenblatt Comparison of Packaged Food Industry Players
Source: Bloomberg

20. LTM Adjusted EBITDA Margin LTM FCF/Adjusted EBITDA
…As Historically B&G Has Been Providing Industry Leading Margins While Generating Healthy Cash…
LTM Adjusted EBITDA Margin
Mean:16.7%
Source: Investor’s Presentations
LTM FCF/Adjusted EBITDA
Mean:79.6%
Source: Investor’s Presentations

21. …And Has Been Able to Make Significant Shareholder Returns
Last 10 years shareholder return
Mean:231.7%
Source: Investor’s Presentations
10 year Annual Dividend Yield
Mean:2.5%
Source: Investor’s Presentations

22. The Synergies Realized From Acquisitions Have Provided BGS With Various Growth Opportunities
Acquisition to drive growth in healthy eating
Net Sales: 1,660Mn
Net Sales: 1,390Mn
Net Sales: 129Mn
Acquisition to drive growth in healthy eating
Focused Acquisition Policy
2017
Branded food products with defensible market positions
Focus on acquiring brands at accretive multiples
EPS accretive year 1
Generate costs of at least 50% of adjusted EBITDA acquired
Approximately 60% of FCF deployed to dividends
Approximately 40% FCF typically deployed for deleveraging
2016
2015
2014
2013
2012
2011
Commitment to Winning Strategy
2010
Committed to enhance growth through accretive acquisitions
Targeting leverage between ~4.5x and ~5.5x on net debt/adjusted EBITDA over long-term
Acquisition strategy has allowed for increased dividends over time
Committed to maintaining dividend policy
Continue to reinvest in acquired brands
2007
2006
2003
1999
1998
Source: Investor’s Presentations

23. Operating Income Margin
B&G Foods With its Inorganic Growth Strategy has been Able to Sustain Significant Shareholder Returns…
Optimized operations and prudent financial practices ensure strong returns to its shareholders
Return on Equity
Return on Assets
Source: Annual Reports
Source: Annual Reports
Operating Income Margin
Interest Burden
Tax Burden
Asset Turnover
Leverage Ratio
ROE
18%
70%
62%
0.5x
4.5x × =
Source: Annual Reports
DuPont Analysis (FY16)

24. …And Maintain Strong Balance Sheet With Stable Cash Generation
Debt-To-Assets Ratio
EBITDA Margin
Source: Annual Reports
Source: Annual Reports
Net Income Margin
Free Cash Flows & FCF/Sales
In USD Mn
15.3%
9.9%
19.0%
17.5%
9.3%
11.8%
14.1%
14.4%
16.1%
Source: Annual Reports
Source: Annual Reports

25. Weighted Average Cost of Capital-Goal Post Approach7%
12%
The low Beta for the company, yielded failed to capture the market risk. Hence Goal post approach was used as shown 8% 9%
10%
11%
61.5
45.6
34.3
25.8
Perpetual Growth Rate (g)=3.0%

26. Public Company Comparables: Discounted Cash Flow Analysis:
Football Field Chart
Public Company Comparables:
Discounted Cash Flow Analysis:
Implied Share Price Range $32-$34, thus worthwhile to keep on watch list