B&G Foods Q1 2025 Earnings Report

B&G Foods EPS Results

• Actual EPS: $0.04
• Consensus EPS: $0.16
• Beat/Miss: Missed by -$0.12
• One Year Ago EPS: $0.18

B&G Foods Revenue Results

• Actual Revenue: $425.40 million
• Expected Revenue: $459.40 million
• Beat/Miss: Missed by -$34.00 million
• YoY Revenue Growth: -10.50%

B&G Foods Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 4:30PM ET

B&G Foods (NYSE:BGS) is a holding company, which engages in the manufacture, sale, and distribution of shelf-stable frozen food, and household products in the U.S., Canada, and Puerto Rico. It operates through the following segments: Specialty, Meals, Frozen & Vegetables, and Spices & Flavor Solutions. The Specialty segment includes, among others, the Crisco, Clabber Girl, Bear Creek, Polaner, Underwood, B&G, Grandma’s, New York Style, Don Pepino, Sclafani, B&M, Baker’s Joy, Regina, TrueNorth, Static Guard, SugarTwin and Brer Rabbit brands. The Meals segment focuses on the Ortega, Maple Grove Farms, Cream of Wheat, Las Palmas, Victoria, Mama Mary’s, Spring Tree, McCann’s, Carey’s and Vermont Maid brands. The Frozen & Vegetables segment consists of Green Giant and Le Sueur brands. The Spices & Flavor Solutions segment offers Dash, Spice Islands, Weber, Ac’cent, Tone’s, Trappey’s, Durkee and Wright’s brands. Its products include frozen and canned vegetables, hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, and wine vinegar. Its brands include Back to Nature, Bear Creek, Cream of Wheat, Green Giant, Mrs. Dash, and Ortega. The company was founded in 1889 and is headquartered in Parsippany, NJ.

B&G Foods Q1 2025 Earnings Call Transcript

Key Takeaways

• Company’s Q1 net sales were down 10.5% and adjusted EBITDA fell by $15.9 million, driven by softer consumption trends (–6% in Q1, improving to –2% in April) and retailer destocking.
• The US frozen Green Giant business accounted for about two-thirds of the EBITDA decline, as B&G increased short-term promotions and faced higher seasonal pack costs from crop issues in core lines.
• Fiscal 2025 guidance has been lowered to net sales of $1.86 billion–$1.91 billion and adjusted EBITDA of $280 million–$290 million, with expected consumption trends of –2% to flat in H2 and the benefit of a partial 53rd week.
• B&G Foods is implementing cost-saving measures targeting $10 million in full-year savings (and a run rate of $15 million–$20 million) through productivity, COGS efficiencies, trade spend rationalization and SG&A cuts.
• The company is accelerating its portfolio reshaping by evaluating divestitures of the frozen and canned vegetable businesses to focus on core shelf-stable categories, aiming for ~20% EBITDA margins, lower leverage near 5× and debt reduction.

Presentation

[Operator]

Good day, and welcome to the B G Foods First Quarter twenty twenty five Earnings Call. Today's call, which is being recorded, is scheduled to last about one hour, included remarks by B and G Foods management and the question and answer session. I would now like to turn the call over to A. J. Schwab, Senior Associate, Corporate Strategy and Business Development for B and G Foods.

[Operator]

A. J?

[AJ Schwabe, Senior Associate, Corporate Strategy and Business Development at B&G Foods]

Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter in the earnings release we issued today, which is available at the Investor Relations section of bgfoods.com. Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them.

[AJ Schwabe, Senior Associate, Corporate Strategy and Business Development at B&G Foods]

We refer you to B and G Foods' most recent annual report on Form 10 ks and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial condition. B and G Foods undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. We will also be making references on today's call to the non GAAP financial measures adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit percentage, base business net sales and segment adjusted expenses. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. Casey will begin the call with opening remarks and discuss various factors that affected our results, selected business highlights and his thoughts concerning the outlook for the remainder of fiscal twenty twenty five.

[AJ Schwabe, Senior Associate, Corporate Strategy and Business Development at B&G Foods]

Bruce will then discuss our financial results for the first quarter twenty twenty five and our revised guidance for fiscal twenty twenty five. I would now like to turn the call over to Casey.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Good afternoon. Thank you, AJ, and thank you all for joining us today for our first quarter twenty twenty five earnings call. Today, I will cover an overview of first quarter results and the key drivers Bruce will cover more specific financial results and outlook for the remainder of fiscal year twenty twenty five actions to improve performance and EBITDA delivery and an update on our portfolio reshaping efforts. Q1 results. The first quarter results reflect the challenging environment in the packaged foods industry at the start of 2025, after relatively solid performance in the fourth quarter of twenty twenty four.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Net sales in quarter one twenty twenty five were down minus 10.5%, driven by a major decline in January of almost 20% versus last year. Net sales trends improved throughout the quarter and continued to improve in April and early May. Adjusted EBITDA was down $15,900,000 to a large extent reflecting the lower net sales in the quarter and increased costs and investment in the Green Giant U. S. Business.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Some of the key drivers of first quarter performance were consumption trends. Like other packaged food center store peers, B and G Foods consumption trends have not yet stabilized following the high inflation and consumer reaction over the past couple of years. Across measured and unmeasured channels, our consumption was approximately minus 6% in the quarter one period. We expect the trends will improve in the back half as we lap negative comps from the middle of last year. The trends are also starting to improve with April consumption minus 2% across the portfolio.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Retailer inventories. During January and February, P and G Foods significantly undershipped consumption across major retailers. Many retailers reduced weeks of supply by almost two weeks and cleared remaining fall merchandising stock more rapidly than in previous years. We estimate the net sales impact was roughly $15,000,000 in quarter one. Easter timing shift.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

In 2025, Easter fell in late April versus March in 2024. Easter merchandising principally on the Green Giant and Christopher brands was shipped and executed in April against Easter performance in March. We estimate the net sales impact to be approximately $8,000,000 in quarter one, shifting into Q2. Green Giant. The U.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

S. Frozen Green Giant business drove approximately two thirds of the total B and G adjusted EBITDA decline versus last year. The frozen and vegetable business unit segment EBITDA declined $9,300,000 in the first quarter. During Q1, we increased short term promotion investment to support the brand and meet key retailer needs. In addition, seasonal pack costs were high, reflecting crop issues on core Vespa lines, predominantly corn and peas.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Fiscal year twenty twenty five outlook. We are seeing improving trends in April and early May net sales and volumes, but because of the slow start in quarter one and a more gradual recovery in consumption trends, we are revising both net sales and adjusted EBITDA guidance down for fiscal year twenty twenty five. The net sales range is now 1,860,000,000.00 to $1,910,000,000 with adjusted EBITDA at $280,000,000 to $290,000,000 Our expectation is that underlying net sales and consumption trends improved to minus 2% to flat in the second half, with the benefit of a partial fifty third week in the fourth quarter. We continue to see uncertainty in the near term on center store trends, but fully expect to lap the impact of changing consumer behaviors in food purchases following high inflation. For adjusted EBITDA, we have lowered the range by $10,000,000 for fiscal year twenty twenty five based largely upon the decline in the first quarter.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

However, we have also implemented efforts to reduce operating and overhead costs in the third and fourth quarters, which we expect to deliver $10,000,000 in projected savings for this year, with an annual run rate of 15,000,000 to $20,000,000 These include additional productivity and cost of goods sold, trade and market spending efficiencies, accelerated SG and A savings and discretionary spending cuts. We also forecast some favorability from the Mexican peso foreign exchange on the portion of the Green Giant business manufactured in Mexico. Portfolio shaping. B and D Foods remains committed to reshaping and restructuring our portfolio to sharpen focus, simplify our portfolio, improve margins and cash flow, and maximize future value creation. This is a very high priority for the company and critical to our future strategic direction and risk profile.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

The end game is to create a more highly focused B and G Foods with adjusted EBITDA as a percentage of net sales approaching 20%, increased cash flow generation, lower leverage closer to five times, a more efficient cost structure and clear synergies within the portfolio. And ultimately, to build a stable platform that can be the foundation for future focused M and A growth in our core business lines, principally spices and seasonings, Mexican meal preparation and baking staples. As previously discussed, we have been evaluating the frozen and remaining canned vegetable businesses for a possible divestiture and sale of some or all of the assets in the frozen and vegetable business unit. Green Giant remains a strong brand with broad awareness and distribution, and the frozen vegetable category is on trend with health and dietary trends. It just may not be the right fit with B and G Foods focus and capabilities, particularly since there are no plans to add more assets in the frozen portfolio, given the opportunities in our core shelf stable businesses and overall capital constraints.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

We are also evaluating divestitures of other non core business in the portfolio with any proceeds from divestitures used to pay down debt. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and outlook for the remainder of fiscal year 2025.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. As you can see, despite a reasonably strong finish to 2024, we had a very challenging start to 2025. For the first quarter of twenty twenty five, we generated $425,400,000 in net sales, dollars 59,100,000.0 in adjusted EBITDA, 13.9% adjusted EBITDA as a percentage of net sales and $04 in adjusted diluted earnings per share.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

The cadence of our year start deserves more context than usual regarding our monthly net sales performance as compared to the prior year periods. January and February were especially challenging, with February showing improvement versus January. We experienced a similar retailer destocking phenomenon that many in the industry peers have reported at the start of the year. During this period, we undershipped versus our consumption in retail track channels. March demonstrated progress despite the Easter holiday shift to April, with net sales down approximately 5%.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

As an encouraging preview of what may lie ahead, April has begun to show signs of the stabilization we've anticipated with net sales down only 2%. This improvement was driven in part by strong performance from Green Giant in both the frozen and shelf stable categories. Overall, net sales for the first quarter of twenty twenty five decreased by $49,800,000 or 10.5% to $425,400,000 from $475,200,000 for the first quarter of twenty twenty four. Base business net sales, which for this quarter largely match our net sales, decreased by $49,900,000 or 10.5% in the first quarter of twenty twenty five compared to the first quarter of twenty twenty four. '40 '2 point '4 million dollars or 8.9 percentage points of the decline in base business net sales was driven by lower volumes.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Dollars 5,500,000.0 or 1.2 percentage points of the decline was driven by a decrease in net pricing and the impact of product mix. And approximately $2,000,000 or 0.4 percentage points was driven by the negative impact of foreign currency. Net sales for frozen and vegetables and Crisco accounted for approximately 44% of the decline in our net sales for the quarter. Net sales of frozen vegetables decreased by $11,800,000 or 11.2 percent. Reduced volumes, particularly in January and February, drove approximately one half of the decline.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Additionally, we significantly increased our promotional trade spending to support Green Giant to start the year. Given the soft category trends, we implemented a targeted promotional pricing investment with key retail partners, which we subsequently expanded following the supply chain challenges experienced by a competitor. While this promotional pricing decision temporarily impacted our net sales and P and L in the short term, it allowed us to strengthen our relationships with valued customers, while also delivering meaningful price relief to consumers during the challenging period. With similar pacing trends to overall B and G Foods, our frozen and vegetables business showed sequential monthly improvement during the quarter. Net sales of frozen and vegetables decreased only slightly or approximately 1% for the month of March.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Frozen and Vegetables then had a strong Easter holiday with April net sales up mid single digits for both our frozen and shelf stable products. And despite the challenging consumer environment in The U. S, our frozen and vegetables business has performed exceptionally well in Canada, driving mid single digit net sales growth for the first quarter, despite a nearly $2,000,000 negative impact from currency translation into our consolidated results. Net sales for our Crisco brand decreased by $10,000,000 or 15.4% for the first quarter of twenty twenty five as compared to the first quarter of twenty twenty four, as the category continues to reset prices and input costs stabilize. Approximately half of the decline for Crisco was driven by lower net pricing and product mix, and approximately half of the decline was driven by lower volumes.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Gross profit for our overall business was $90,100,000 for the first quarter of twenty twenty five or 21.2% of net sales. Adjusted gross profit, which excludes the negative impact of $05,000,000 of acquisition divestiture related expenses and nonrecurring expenses, included in our cost of goods sold for the first quarter was $90,600,000 or 21.3% of net sales. Gross profit was $108,900,000 in the first quarter of twenty twenty four or 22.9% of net sales. Adjusted gross profit, which excludes the negative impact of 1,000,000 of acquisition divestiture related expenses and non recurring expenses included in cost of goods sold during the first quarter of twenty twenty four was $109,900,000 or 23.1% of net sales. Promotional trade spend, which is captured in our net sales line, increased by approximately 175 basis points in the first quarter of twenty twenty five as compared to the first quarter of twenty twenty four, as we continue to invest in our brands and attempt to reflect lower prices on shelf to consumers.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

The increased promotional trade spend drove the majority of the decrease in net pricing in our sales line as well as the majority of the decrease in our gross profit and adjusted gross profit as a percentage of net sales. Our material labor and overhead costs, when measured against gross sales, were essentially flat during the first quarter as compared to the first quarter of last year. Input cost inflation, as measured by raw material costs across our basket of inputs and in our factories, has remained mostly modest thus far in 2025, outside of some categories such as black pepper, garlic, olive oil, tomatoes, core vegetables, and cans, which have remained elevated. We are obviously watching closely for any increased signs of inflation throughout the trade and tariff negotiations. While we haven't yet seen the benefit of more normal or favorable U.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

S. Dollar to Mexican peso exchange rate flows into our P and L this year, we still expect to see some benefit in the back half of the year. However, currency remains a potential wildcard given the current macroeconomic environment and the political uncertainty regarding tariffs. Selling, general and administrative expenses increased by 500,000 or 1.1% to $49,100,000 for the first quarter of twenty twenty five from $48,600,000 for the first quarter of twenty twenty four. The increase was composed of increases in acquisition, divestiture related and non recurring expenses of $4,200,000 and general and administrative expenses of $500,000 partially offset by decreases in consumer marketing expenses of $3,300,000 and selling expenses of $900,000 Expressed as a percentage of net sales, selling, general and administrative expenses increased by 1.4 percentage points to 11.6% for the first quarter of twenty twenty five as compared to 10.2% for the first quarter of twenty twenty four.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

As I mentioned earlier, we generated $59,100,000 in adjusted EBITDA or 13.9% of net sales in the first quarter of twenty twenty five compared to $75,000,000 or 15.8% of net sales in the first quarter of twenty twenty four. The decrease in adjusted EBITDA as a percentage of net sales was primarily due to our increased investment in promotional trade spend. After removing the impact of trade, adjusted EBITDA margins were more comparable year over year. Net interest expense remained flat at $37,800,000 for the first quarter of twenty twenty five as compared to the first quarter of twenty twenty four. Depreciation and amortization was $16,800,000 in the first quarter of twenty twenty five, which is largely in line with $17,200,000 for the first quarter of last year.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

We had adjusted net income of $3,400,000 or $04 per adjusted diluted share in the first quarter of twenty twenty five. In the first quarter of twenty twenty four, we had adjusted net income of $14,400,000 or $0.18 per adjusted diluted share. Adjustments to our EBITDA and net income are described further in our earnings release. I would now like to touch on our results by business unit for the first quarter. Net sales for Specialty decreased by $20,300,000 or 13.1% in the first quarter of twenty twenty five to $134,400,000 from $154,700,000 in the first quarter of twenty twenty four.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

The decrease in Specialty segment sales was primarily driven by a combination of lower net pricing and decreased volumes across the Specialty business unit in the aggregate. Specialty segment adjusted EBITDA decreased by $3,700,000 or 9.9% in the first quarter of twenty twenty five. The decrease was primarily due to a decrease in net sales, which was offset in part by an increase in segment adjusted EBITDA as a percentage of net sales. Net sales for meals decreased by $13,900,000 or 11.6% in the first quarter of twenty twenty five to $106,100,000 from $120,000,000 for the first quarter of twenty twenty four. The decrease was primarily due to a decrease in volumes across the Meals business unit in the aggregate, coupled with a decrease in net pricing and product mix.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Meals segment adjusted EBITDA decreased by approximately $700,000 as lower net sales were largely offset by an increase in segment adjusted EBITDA as a percentage of net sales. Net sales for frozen and vegetables were down by $11,800,000 or 11.2% in the first quarter of twenty twenty five compared to the first quarter of twenty twenty four. As I mentioned earlier, a significant portion of the decline was driven by the impact of our investments in pricing, increased promotional trade spend, and the timing shift of Easter. Meanwhile, frozen and vegetables in Canada performed quite well, with net sales up mid single digits for the quarter. Frozen and Vegetables segment adjusted EBITDA was negative $1,500,000 for the first quarter of twenty twenty five compared to $7,800,000 for the year ago quarter.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Approximately $6,000,000 of the decline was driven by increased trade spend that was targeted and temporary, and nearly $2,000,000 from increased seasonal pack costs on core vegetable products, including corn on the cob and peas. The remainder of the decrease was driven by lower net sales. Looking ahead for frozen and vegetables, we anticipate significant cost improvements in the upcoming production cycle compared to the previous pack season. We expect these production costs to benefit positively and impact our financial performance beginning in the fourth quarter of this year. Net sales for Spices and Flavor Solutions decreased by $3,800,000 or 4% in the first quarter of twenty twenty five to $91,700,000 from $95,600,000 in the first quarter of twenty twenty four.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

The decrease was primarily due to a decline in volumes across the Spices and Flavor Solutions business unit in the aggregate. Performance was softer than we typically expect for the portfolio, although our foodservice and private label brands performed reasonably well for the quarter. Spices and Flavor Solutions segment adjusted EBITDA decreased by $2,400,000 or 8.4% in the first quarter of twenty twenty five compared to the first quarter of twenty twenty four. The decrease in segment adjusted EBITDA was largely driven by decreases in net sales, increases in raw material costs such as black pepper and garlic, and the negative impact of product mix. Now moving to our consolidated cash flow and balance sheet.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Cash flow was quite strong for the quarter. We generated $52,700,000 in net cash from operations during Q1 of twenty twenty five versus $35,100,000 in Q1 twenty twenty four. We reduced our debt to $1,967,000,000 at the end of the first quarter twenty twenty five compared to $1,994,000,000 at the fourth quarter twenty twenty four and $2,012,000,000 at the end of the first quarter twenty twenty four. While we have no updates on the capital markets front, as a reminder, approximately 35% of our long term debt is tied to floating interest rates or for us, SOFR. 100 basis point rate reduction would be expected to reduce our interest expense by approximately $7,000,000 Given the soft start of the year and the heightened economic uncertainty due to among other things the ongoing trade and tariff negotiations, we are reducing our fiscal twenty twenty five guidance range.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

We now expect net sales of $1,860,000,000 to $1,910,000,000 adjusted EBITDA of $280,000,000 to $290,000,000 and adjusted earnings per share of $0.55 to $0.65 Our updated guidance accounts for a modestly softer economic environment that may impact consumer spending patterns. It also reflects our expectation that our top line will continue to stabilize and that our input costs will remain relatively consistent. In addition, our guidance also assumes a cost reduction plan we have implemented will produce approximately $10,000,000 of cost savings during the remainder of the year. Given the uncertainty in the political economic environment and rapidly evolving negotiations regarding tariffs and retaliatory tariffs, our guidance does not reflect the potential impacts of the recently imposed and threatened tariffs by The U. S.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

And retaliatory actions taken or threatened by other countries in response, or the potential for additional tariffs, trade barriers, or retaliatory actions by The U. S. Or other countries. For perspective, more than 90% of our net sales are to customers in The United States, and the remainder are primarily to customers in Canada. Approximately 80% to 85% of our products, ingredients, and raw materials are sourced in The United States, Canada and Mexico.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

The majority of our non North American sourced products are sourced from Asian countries, particularly within our spices and flavor solutions business unit, such as black pepper, which is primarily sourced in Vietnam, and garlic, which is primarily sourced in China. Many of these imported spices are classified as unavailable natural resources, which we believe may ultimately qualify for reduced or zero tariff rates. Additionally, we expect for full year 2025, interest expense of $147,500,000 to $152,500,000 including cash interest of 142,500,000.0 to $147,500,000 depreciation expense of $47,500,000 to $52,500,000 amortization expense of $20,000,000 to $22,000,000 an effective tax rate of 26% to 27% and CapEx of 30,000,000 to $35,000,000 Now, I will turn the call back over to Casey for further remarks.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Thank you, Bruce. To close, B and G Foods continues to remain laser focused on the critical priorities: improving the base business net sales trends of our core business to the long term objective of plus 1% reshaping the portfolio for future growth, stability, higher margins and cash flows, as well as structuring key platforms for future acquisition growth and reducing leverage below 5.5 times through divestitures and excess cash flow to facilitate strategic acquisitions. This concludes our remarks, and now we would like to begin the Q and A portion of our call. Operator?

[Operator]

We will now begin the question and answer session.

[Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies]

Just

[Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies]

back on some of the tariff considerations. Can you give us a sense just for maybe how that impacts your potential sale of Frozen? Is it essentially put it on hold till there's better clarity there? What are some of the maybe ripple effects? And if the reciprocal tariffs kick in that are on pause or if the pause tariffs of any kind could come through, is there any concerns with things like what that could mean for debt covenants or I mean, some of the ways we can do the math, the magnitude can get a little big.

[Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies]

Help us just understand maybe how you're contingency planning and thinking about that.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Yeah, so part one, we don't typically comment on any ongoing M and A discussions. Obviously, we've made it clear the business units under strategic review. From a tariff perspective, at least with regards to that business, everything Green Giant World is compliant under USMCA from a manufacturing in Mexico and moving to The US. Our Canadian business, for Green Giant at least, is almost entirely made in Canada, and so there's no real impacts there. Obviously, like everybody else, we're watching the news and trying to do as best as we can to understand what the implications are and when these negotiations are finished.

[Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies]

And so just to follow-up, if they were reinstated or instated and you end up facing the tariffs that are paused, but that you could identify. Can you give a sense of what magnitude that is? Have you been able to put a number on it? Or help us understand what that could look like?

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Yeah, I don't think most people could put a number on it because they change every day. We're watching like everybody else. Certainly, we would look at different parts of our business and have an understanding of what the competitive set looks like, but it's hard to predict where tariffs are going go right now.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

As we talked in the script, in our comments, the largest potential risk is in our spices business, coming from China, Southeast Asia, Vietnam, etcetera. That's the biggest risk. Some of those are on pause, China is obviously in negotiation, so those are the ones we just can't predict. What is the final rate in China, we don't know. It was as high as 150% at one point, now it's come down.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

So the risk is significant, but we're confident that negotiations will continue and that the things on pause will be negotiated as well. We know there's a lot of progress in Vietnam, etcetera. So, I mean, honestly, from a Mexico standpoint, we're not that worried because it appears that as long as you're NAFTA or USMCA compliant, that we should be fine going forward. And so I don't think that will have any major impact on our Green Giant business.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

And the other thing to keep in mind with our spice business is virtually everybody that buys the products that we manufacture in spice, whether it's garlic or black pepper, they're buying from the same regions and so that would be kind of an industry phenomenon rather than a unique B and G sourcing phenomenon.

[Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies]

Okay, that's helpful color. I'll pass it on. Thanks.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Thank you.

[Operator]

Our next question comes from Robert Moskow with TD Cowen. Please go ahead. Hi,

[Robert Moskow, Managing Director at TD Cowen]

afternoon. So the stock reaction today was more dramatic than I expected. And I'm just wondering if has led to any kind of discussions internally about accelerating your portfolio changes or accelerating cost reduction programs? I know it's only twelve hours of reaction, but wanted to get your reaction, please.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Honestly, we were already accelerating. I mean, this isn't news to us today, I mean, we were already looking at how do we accelerate our portfolio shaping efforts, and we've been working pretty diligently on that. I obviously can't comment on it, but that's been a major focus for us to make the changes in the portfolio that we think are necessary for the long term. And what I talked today about the cost reduction efforts, 10,000,000 this year, run rate of fifteen to twenty million, we've been working on that for a few months now to get those implemented this year, and we were already trying to drive those pretty fast and hard. So today gives me more conviction that we've got to move those things as fast as possible, but we were already doing that, We were already pushing the accelerator on both those efforts pretty hard.

[Robert Moskow, Managing Director at TD Cowen]

Okay. And maybe

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

to add guess the other the only other thing I would say, Rob, is that the other piece of this is, as we reshape the portfolio, we will take some pretty significant actions to right size our cost structure as we divest businesses. So that's another effort that's being planned that's probably part of a larger restructuring.

[Robert Moskow, Managing Director at TD Cowen]

Got it. And I wanted to try to drill down to the negative 2% you called out in April as a consumption trend. Is that a clean number or are there any Easter elements that make it maybe stronger because of the later Easter?

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Yeah, I think there's maybe a little bit of Easter help in that number, but I think, you know, even the underlying number before Easter benefits is improving versus what we were seeing in the, early part of the first quarter and then towards the end of last year in the fourth quarter. So we are seeing some improvement in that trend. It's gradual, and I don't we really didn't expect a significant change because we don't lap the sort of the negative comps till the middle of the year. We weren't really expecting a lot of change, but it's encouraging us, we're seeing a little bit of light in the consumption trends, but we need to see more. We need to see it continue.

[Robert Moskow, Managing Director at TD Cowen]

Okay, can I ask one more? The $50,000,000 of inventory deload, did the vast majority of that happen in January or was it kind of spread No,

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

I think I said 15, one-five, just to make it 15, sorry. 15, one-five, yeah. That I would say most of that most of that occurred in January at the end of the month, and some of it in February.

[Robert Moskow, Managing Director at TD Cowen]

Okay.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

But, you know, we saw we our, you know, our volumes kinda our shipments pretty low in the very end of the month, in January.

[Robert Moskow, Managing Director at TD Cowen]

Got it. Okay. Thanks so much.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Yep. Thanks, Rob.

[Operator]

The next question comes from Scott Marks with Jefferies. Please go ahead.

[Scott Marks, Equity Research Analyst at Jefferies]

Hey, good afternoon, guys. Thanks so much for taking our questions. The first thing I wanted to ask about is this retailer inventory reduction. Is there any expectation of recouping some of that lost volume, whether it's during the Easter period or later in the year?

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

I don't think so. I think this was a permanent reduction. We typically see some of this reduction from the fall period happen more gradually than it did this year. We could see maybe some smoothing out of that effect this year, but I mean, our assumption right now is that they've taken the weeks down and 80% of that will stick, as they try and operate more efficiently and operate with lower inventories just like we're doing. So, I mean, it was a little bit of a surprise to us in terms of what happened and how much they took out, but I think our operating assumption right now is that they're trying to be more efficient, and we need to kind of plan that those inventory reductions are largely permanent, or they will operate with more weeks of supply, and maybe some of it will come back, just a small portion.

[Scott Marks, Equity Research Analyst at Jefferies]

Got it. And then I think there was also a comment that you made in the prepared remarks about kind of fully lapping this changing consumer behavior at some point. I think we've kind of heard thoughts from others around the industry that this would have happened a bit sooner after the initial kind of inflationary shock from a couple of years ago. So I'm just curious if you can kind of speak to maybe what kind of gives you that confidence that that can happen? Because I think more recently, we've heard about some declining consumer sentiment from some of your peers.

[Scott Marks, Equity Research Analyst at Jefferies]

So just trying to gauge how you're thinking about the consumer right now, when maybe some of those behaviors will shift back. Thanks.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Yeah, I don't think there's a point in time where we laugh everything, all consumer behavior. I think it's been it's kind of it will be a gradual process, but what we see in our own brands and categories, and obviously our categories operate differently, particularly Crisco with prices moving up and down quite a bit, We believe that we're lapping the larger negative comps in our business and categories in the middle of this year, so call it the start of the third quarter, and that we're looking at that and saying is that kind of a demarcation when we begin to see less negative comps because we're already lapping the first round of consumer behavior changes and everything else. So we're going to watch this pretty closely. It's encouraging to me, we're seeing a little bit of signs in our recent weeks that maybe we've, maybe that some of the declines will begin to lessen, but it's that simple. It's like looking at kind of the year over year trends and when do we hit those points where we saw some significant declines.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

But I don't think it's a point in time, think it's phased in terms of different categories and when people reacted to different price points and when prices actually changed in different categories.

[Scott Marks, Equity Research Analyst at Jefferies]

Got it, thanks for the thoughts. I'll pass it on.

[Operator]

Our next question comes from William Reuter with Bank of America. Please go ahead. Hi, Bill.

[William Reuter, Analyst at Bank of America]

Hi. Good afternoon. I've got just a couple of questions. The first on your ABL, are there any constraints on your ability to borrow the full amount based upon the credit agreement covenants or do you have access to the entirety of it?

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

So it's actually not an ABL, it's a cash flow revolver.

[William Reuter, Analyst at Bank of America]

Sorry, yes, I said that So

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

if you think about the way those two work, the ABL, we're going to be limited by what's our inventory, etc. Here we've got some covenants, but we also are less reliant on our revolver today than we were in the past around working capital following the sale of the Green Giant can business. So we'll still have some swings around the holidays, but not nearly as big. And then separately, really that revolver was sized for acquisition, so I wouldn't anticipate fully drawing on that revolver unless we were buying something.

[William Reuter, Analyst at Bank of America]

Okay, can you share what's available today?

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

I mean, a couple hundred million dollars drawn at the $475,000,000 revolver.

[William Reuter, Analyst at Bank of America]

Right. Okay. And then, with regard to the the timing of the late January reductions, of inventory, I think a lot of retailers reset reset their shelves around that period of time. Were there any shelf based losses as part of those resets?

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

Actually, reset shelves kind of on a phased approach by category across the year. There's not a lot of we don't really see a specific point in time that they do multiple categories. So, it was really around how are they managing their weeks of supply. There are some resets, one or two in our categories in March, but I don't think that was really the impact. It was making some decisions to pull down inventories on categories and run with lower level supply and maybe even take out seasonal merchandising from the fall, seasonal inventory faster than you typically see.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Yeah, Casey said, our commentary is more around destocking rather than reset, which impacted us. Yeah, yeah.

[William Reuter, Analyst at Bank of America]

Got it. And then just lastly, the decision to promote a little bit more, I mean, was that decision based upon either retailers that were going to reduce your shelf space or maybe that, you know, given these elevated promotions that you've gained more. Can you talk a little bit about the decision to make the promotions that clearly hit EBITDA in the quarter?

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

I mean, it's largely in the Green Giant frozen business, and number one, I think we determined that we needed to get sharper price points and promotions to be competitive in the category, because we saw other people promoting and being more aggressive, and so we decided to respond to be able to do that. And we also felt that we needed to make sure that our volumes were moving more quickly and our velocities were increasing, and we saw that happen. So this was really a decision to make sure that we're competitive, make sure that our business was healthy, And as I said, it was a short term decision in that period of time that now we've kind of pulled back on some of those trade investments, but I'm encouraged that our actual our business on The US frozen net sales was up positive in April after we pulled back on the trade investment. Some of that was Easter merchandising, but we've continued to see good trends on that business. But we made a short term decision to get competitive against some pretty aggressive promotion activity.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

And we suffered a little bit in the fourth quarter, probably by not responding aggressively enough, and we did that in the first quarter. And as I said, I'm encouraged by the trends as we pull back that trade investment that our business is healthy.

[William Reuter, Analyst at Bank of America]

Got it. All right, that's all very helpful. Thank you.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Thanks, Bill.

[Operator]

Thank you. Our next question comes from Karru Martinson with Jefferies. Please go ahead.

[Analyst]

Hi. Thanks for taking my question. This is Bastiana on for Karru. On the frozen and vegetable segment, what will be the run rate for promo moving forward? And with the pressures that you've seen in Green Giant, has that brand's performance influenced how you and your potential suitors are looking at valuation?

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

So, again, from an M and A standpoint, we wouldn't comment on that. As far as promotional run rate, as Casey said, we leaned in a little bit harder in the first quarter just given the challenging backdrop from a category standpoint. We think that we had really good performance from a top line in response to that, particularly in March and April, but we don't necessarily disclose our promotional rates or cadence on a go forward basis.

[Kenneth C. Keller, President, Chief Executive Officer and Director at B&G Foods]

I think we will resume more normal kind of trade promotion spending rates for the remainder of the year. This was investment we put in to be competitive, but we're feeling like right now our plans are competitive.

[Operator]

Thank you. This concludes our question and answer session and our conference. Thank you for attending today's presentation. You may now disconnect.

[Bruce Wacha, CFO & Executive VP of Finance at B&G Foods]

Great. Thank

Participants

Executives

• AJ Schwabe, Senior Associate, Corporate Strategy and Business Development
• Kenneth C. Keller, President, Chief Executive Officer and Director
• Bruce Wacha, CFO & Executive VP of Finance

Analysts

• Michael Lavery, Senior Equity Research Analyst at Piper Sandler Companies
• Robert Moskow, Managing Director at TD Cowen
• Scott Marks, Equity Research Analyst at Jefferies
• William Reuter, Analyst at Bank of America
• Analyst