B&G Foods, Inc.

Good day and welcome to the B&G Foods third quarter 2021 earnings call. Today's call, which is being recorded, is scheduled to last about one hour, including remarks by B&G Foods management and the question and answer session. I would now like to turn the call over to Sarah Jerlam, Senior Director of Corporate Strategy and Business Development for B&G Foods. Sarah?

Good afternoon and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer, and Bruce Waka, our Chief Financial Officer. You can access detailed financial information on the quarter in the earnings release 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 the parts of this discussion today include forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer you to B&G Foods' most recent annual report on Form 10-K, and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial condition. P&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, adjusted EBITDA before COVID-19 expenses, adjusted net income, adjusted diluted earnings per share, and base business net sales. 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 2021. Bruce will then discuss our financial results for the third quarter, as well as expectations for 2021. I would now like to turn the call over to Casey.

Good afternoon. Thank you, Sarah. And thank you all for joining us today for our third quarter earnings call. The company's performance in the third quarter was strong. Base business net sales, which excludes Crisco, grew at plus 9.2% versus the same period two years ago, accelerating from plus 7% in Q2. With the addition of Crisco, our Q3 2021 net sales are ahead of last year's COVID period. Bruce will talk categories and brands later, but we are generally seeing strength across the portfolio. Most of our key categories performed well when compared to 2019's pre-pandemic third quarter results. Net sales of Green Giant and Spices and Seasonings were up double digits compared to 2019. Net sales of Ortega and Las Palmas, our two leading Mexican food brands, were up high single digits compared to 2019. Our baking brands also had a strong performance for the quarter compared to 2019, led by Crisco, Clapper Girl, Baker's Joy, et cetera. While demand was strong, resulting in elevated sales, we were also managing through many of the same challenges to supply chain and costs that have plagued the industry. Inflation in full year 2021 is in the mid-single digits, with the second half increasing to a double-digit increase across the portfolio. As discussed last call, inflation on Crisco is significantly higher than the base portfolio given the major increases in soybean and canola oil. We have responded with significant price increases, where appropriate raising list prices and or optimizing trade to directly offset higher input costs. While we did act early to identify and address inflationary pressures, the majority of our price increases are effective in the second half, with the largest increase on CRISCO effective at the end of September. We project continued inflationary pressure into first half 2022 and will price to recover year-over-year cost increases. Additionally, we are driving aggressive cost optimization efforts to offset continued inflation. From a supply standpoint, we continue to deal with shortages in packaging materials, freight delays, and contract manufacturing capacity. However, overall customer service levels are improving in recent weeks, aided by lifting allocations on Green Giant SKUs with the new crop pack. Our goal is to manage our business to stable, steady margins. For the current portfolio, The goal is roughly an 18% adjusted EBITDA margin with pricing and productivity actions recovering cost pressures on margins. Longer term, our goal is to improve to a 20% adjusted EBITDA margin with accretive M&A, efficiencies, and some base business organic growth. In the near term, inflation will make that more challenging, but we believe that is the right target for this business. During the third quarter, we successfully completed the integration of Crisco, and I want to congratulate our team for a smooth transition. Crisco is our second largest acquisition, and we are happy with the performance year-to-date under our ownership, despite some volatility in commodity prices. In August, we also announced that we reached an agreement to sell our Portland, Maine, manufacturing facility. We expect the sale to close during Q1 2022. While shutting a factory is never an easy decision, it became clear the 100-year-old Portland facility had reached the end of its useful life and was no longer cost competitive. The site will become the future home of the Rue Institute at Northeastern University, which is a great outcome for the Portland community. We also continue to make investments in our existing facilities, including a new high-tech automated line in the Ankeny Iowa Spices and Seasonings facility, as well as new lines in our Herlock, Maryland, and Yadkinville, North Carolina facilities to increase our capacity for Ortega taco sauces and taco shells, respectively. So finally, after four months in the business, I wanted to share the key priorities and choices that we, the B&G team, are laser-focused on. First, managing B&G foods effectively through the current inflationary and pricing environment. Second, improving organic growth performance beyond COVID recovery. Third, focusing on brands and categories where we have the capability, scale, and right to win in terms of both resources and structure. Fourth, making disciplined acquisitions that are creative to our portfolio and fit with our core expertise in center store dry distribution. Fifth, accelerating cost savings and productivity efforts to eliminate non-value-added costs and strengthen margins. So more to come on those in future calls and discussions, including specific plans and updates. I will now turn the call over to Bruce for a more detailed discussion of the quarter. Bruce?