B&G Foods, Inc.

Good day, and welcome to the B&G Foods fourth quarter and fiscal 2023 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 AJ Schwab, Associate Corporate Strategy and Business Development for B&G Foods. AJ?

Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer, and Bruce Wacca, our Chief Financial Officer. You can access detailed financial information on the quarter and full year 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. 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. B&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 net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit percentage, 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 fiscal 2024 and beyond. Bruce would then discuss our financial results for the fourth quarter and fiscal 2023, and our guidance for fiscal 2024. I would now like to turn the call over to Casey.

Good afternoon. Thank you, AJ. And thank you all for joining us today for our fourth quarter and fiscal 2023 earnings call. B&G Foods' fourth quarter results were solid, slightly exceeding expectations. Base business net sales, which exclude net sales of the divested green giant U.S. canned vegetable and back-to-nature businesses, were essentially flat, but for the impact of lower Crisco oil commodity pricing year over year. In addition, base business volume in the aggregate across the portfolio was slightly up for the quarter, stabilizing for the first period since the significant pricing actions in fiscal year 22. Profit margins also demonstrated steady progress. Adjusted gross profit percentage increased 130 basis points versus last year to 21.9%, reflecting pricing recovery of higher costs and productivity savings. Adjusted EBITDA as a percentage of net sales was flat to last year at 15%, with adjusted gross profit improvement offset by the reinstatement of the short-term management incentive accrual in G&A expenses versus zero in fiscal year 22. With fourth quarter results, B&G Foods delivered fiscal year 23 net sales of $2.062 billion in and adjusted EBITDA of $318 million, well within our revised guidance reflecting the divestiture of Green Giant U.S. canned vegetables in November. Bruce will provide more details on Quarter 4 and Fiscal Year 23 results. Stepping back, we achieved several critical milestones in Fiscal Year 23 on the journey to reshape and strengthen B&G Foods. First, margin recovery. After historic inflation pressure in fiscal year 22, margins recovered strongly in fiscal year 23 behind pricing actions and productivity efforts. Adjusted gross profit percentage increased 280 basis points year over year from 19.4 percent to 22.2 percent in fiscal year 23. Adjusted EBITDA as a percentage of net sales increased 150 basis points to 15.4 percent in fiscal year 23. Going forward, input cost inflation has moderated to low single digits, and in some cases, such as soybean oil, has come down from historic highs. Number two, portfolio shaping. We divested the low-margin, working capital-intensive businesses of back-to-nature cookie crackers and green giant U.S. canned vegetables. Both did not fit with our future portfolio focus and were strained to deliver adequate cash flow against the leverage model. As previously disclosed, we expect to divest additional business and brands over the next year to focus the portfolio for future success and intend to use the proceeds to pay down debt. Third, cash flow and working capital. Net cash from operations improved dramatically, increasing from $6 million last year to $248 million in fiscal year 23. These results were driven by better operating performance and margin recovery and critically by significant improvement in working capital. Inventories in fiscal year 23 declined by $157 million, down from $726 million last year to $569 million at year end, reflecting the divestiture of the seasonal green giant U.S. canned business, lower Crisco soybean oil costs, and efficiencies in base business inventory levels while delivering higher service. Fourth, debt and leverage. During fiscal year 23, B&G Foods reduced net debt by $335 million, primarily using improved cash flow and the proceeds from divestors to pay down debt. As a result, B&G Foods pro forma adjusted net leverage ratio, as calculated per our credit agreement, decreased from 7.62 times at fiscal year 22 end to 6.32 times by the end of fiscal year 23. We are making excellent progress towards returning to our long-term range of 4.5 to 5.5 times. The expectation is to further close that gap in fiscal year 23-4 through additional divesters and paying down debt with excess cash flow. Five, Crisco pricing model. During the first quarter fiscal year 23, we implemented a new commodity pricing model on Crisco with our customers. Prices for Crisco products move quarterly to reflect the volatility in soybean and vegetable oil inputs and match market pricing with actual oil costs. The result has been stable gross profit dollars and cash flow for Crisco in a volatile market, particularly over the past two years. As discussed, we do expect to see some up and down movement on Crisco net sales results based on changes in oil pricing without any impact on the bottom line. And last, spices and seasonings. Representing approximately 18% of our portfolio, the core high-margin spices and seasoning business increased net sales by 2.2%. Trends were particularly strong on the food service and members mark Sam's label business, which largely serve out-of-home and small business customers. The core retail branded trends, Dash, Weber, Spice Islands, et cetera, are improving and have recovered from temporary service and production issues in our Ankeny factory. We have also strengthened our innovation and new product pipeline, launching new licensed seasoning and grilling blends under the Buffalo Trace, Fireball, and Southern Comfort brands, which are performing very well in initial distribution. Overall, we are pleased with the performance in the fourth quarter and the recovery of the B&G Foods business in fiscal year 23. There is clearly more work to do, but our team has made significant progress toward creating a stronger, more valuable B&G Foods. Bruce will discuss specific guidance, but our focus in fiscal year 24 is to generate slight top-line and low single-digit bottom-line growth on the base business, which excludes the divested green giant U.S. canned vegetable business. Further reshape the business through strategic divesters to focus the long-term portfolio for higher margins and valuation growth. We continue to evaluate existing businesses that have lower margin and cash flow and higher working capital complexity, or do not fit with our core capabilities and business unit structure. Reduce net debt and leverage through divestiture proceeds and strong excess cash flows. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and results for the year.