B&G Foods, Inc.

Good day, and welcome to the B&G Foods first quarter 2025 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 A.J. Schwab, Senior Associate, Corporate Strategy and Business Development for B&G Foods. A.J.? ?

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 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, 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, 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 2025. Bruce will then discuss our financial results for the first quarter 2025 and our revised 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 first quarter 2025 earnings call. Today, I will cover an overview of first quarter results and the key drivers. Bruce will cover more specific financial results. An outlook for the remainder of fiscal year 2025. Actions to improve performance in 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 2024. Net sales in quarter one 2025 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 $15.9 million to a large extent reflecting the lower net sales in the quarter and increased costs and investment in the green giant U.S. business. Some of the key drivers of first quarter performance were consumption trends. Like other packaged food center store peers, B&G Foods' consumption trends have not yet stabilized following the high inflation and consumer reaction over the past couple 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% to 3% across the portfolio. Retailer inventories. During January and February, B&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 million in quarter one. Easter timing shift. 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 this year against Easter performance in March last year. We estimate the net sales impact to be approximately $8 million in quarter one, shifting into Q2. Green Giants. The U.S. frozen green giant business drove approximately two-thirds of the total BNG-adjusted EBITDA decline versus last year. The frozen and vegetable business unit segment EBITDA declined $9.3 million 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 vegetable lines predominantly corn and peas. Fiscal year 25 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 25. The net sales range is now $1.86 to $1.91 billion, with adjusted EBITDA at $280 to $290 million. Our expectation is that underlying net sales and consumption trends improve to minus 2% to flat in the second half, with the benefit of a partial 53rd 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 million for fiscal year 25, based largely upon the decline in the first quarter. However, we have also implemented efforts to reduce operating and overhead costs in the third and fourth quarters, which we expect to deliver $10 million in projected savings for this year, with an annual run rate of $15 to $20 million. These include additional productivity in cost of goods sold, trade and market spending efficiencies, accelerated SG&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&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 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 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&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. We are also evaluating divesters of other non-core business in the portfolio with any proceeds from divesters 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. Thank you, Casey.