B&G Foods, Inc.

Good day and welcome to B&G Food fourth quarter and fiscal 2024 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 Schaub, Senior Associate, Corporate Strategy and Business Development for B&G Foods. Please go ahead.

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 issue 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, under-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, segment 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 2025 and beyond. Bruce will then discuss our financial results for the fourth quarter and fiscal 2024 and our guidance for fiscal 2025. 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 year 2024 earnings call. Today, I will cover an overview of fourth quarter results. Bruce will cover more specific financial results. Perspective on full year 2024 performance. guidance moving into fiscal year 2025, and an update on our portfolio shaping efforts. Quarter four results. The fourth quarter results showed sequential improvement versus prior quarters in fiscal year 2024. Fourth quarter net sales of $551.6 million and adjusted EBITDA of $86.1 million were in line or slightly above expectations. Excluding Crisco, whose net sales were impacted by lower net pricing to reflect a decrease in soybean oil costs, base business net sales decreased by only 0.4% compared to the year-ago period, an improvement from prior quarters. The strongest sales performance was in our spices and flavor solutions business unit, with fourth quarter net sales up 5% versus the fourth quarter of last year. Margins were also relatively improved in quarter four. Adjusted growth profit percentage for the fourth quarter was 22.2% compared to 21.9% in the fourth quarter of 2023. Adjusted EBITDA as a percentage of net sales improved to 15.6% from 15% in the fourth quarter of 2023. This reflects modest or no inflation on most input costs, with a few exceptions in black pepper, olive oil, et cetera. Margins are also benefiting from increased efforts on productivity and cost savings across our business teams. Fiscal year 24 performance. Fiscal year 24 was a more difficult year for both B&G Foods and the packaged food industry, with consumers continuing to adjust purchase patterns in the wake of higher inflation in recent years and prices for food and other consumer goods that remain elevated. The exception has been our spices and seasoning business, which has shown positive trends in the last several quarters, influenced by the growth of fresh produce and proteins in the perimeter of the grocery store. In fiscal year 24, base business net sales declined 3.3% versus fiscal year 23, or approximately 2.5%, excluding the net effect of approximately $15 million of lower Crisco oil pricing to reflect lower soybean oil costs with no gross profit impact attributable to the Crisco commodity pricing model. Adjusted EBITDA was down minus 7.1% versus fiscal year 23, but down only 2%, excluding the approximately $8 million impact of the green giant U.S. shelf-stable divestiture in fiscal year 23, and the approximately $8.5 million foreign currency impacts related to the Mexican peso in fiscal year 24 relative to fiscal year 23 on the green giant frozen vegetables produced and packed in Mexico and shipped into the U.S. Fiscal year 25 guidance. We continue to see uncertainty in the near term on center store trends with sales and consumption declines in January and February 2025 relative to last year. but we fully expect to eventually lap the impact of changing consumer behaviors in food purchases. For fiscal year 25, we are projecting a net sales range of $1.89 billion to $1.95 billion. This assumes some improvement in our base business net sales trend, with the bottom of the range consistent with the base business trend in fiscal year 24. We expect that trend to be lower in the first half and improve in the second half as we begin to lap the consumer reactions to the inflationary food environment. Net sales will also benefit from the partial impact of a 53rd week in fiscal year 25. Fiscal year 25 adjusted EBITDA is expected to be in the range of $290 to $300 million, reflecting flat to slightly down net sales, the partial impact of a 53rd week, and the possible recovery of foreign exchange from the Mexican peso. Portfolio shaping. B&G 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. The end game is to create a more highly focused B&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&A growth. As previously discussed, we are finalizing the strategic review of the frozen and remaining canned vegetable businesses for a possible divestiture and sale of some or all of the assets in the frozen and vegetables business unit. Green Giant remains a strong brand with broad awareness and distribution, and the frozen vegetables category is on trend with health and dietary trends. It may not be the right fit with B&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. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly and full-year performance and the outlook for fiscal 2025.