B&G Foods, Inc.

Good day, and welcome to the B&G Foods fourth quarter and fiscal 2025 earnings call. Today's call, which is being recorded, is scheduled to last about one hour, including remarks by B&G's food management and a question and answer session. I would 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 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, 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 fiscal 2026 and beyond. Bruce will then discuss our financial results for the fourth quarter in fiscal 2025 and our guidance for fiscal 2026. 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 2025 earnings call. Today, I will cover an update on our portfolio reshaping, including the recent divestiture and upcoming planned acquisition. An overview of fourth quarter performance, Bruce will cover more detailed financial results, And finally, the outlook for fiscal year 2026. Portfolio reshaping. Yesterday, we announced the divestiture of the green giant U.S. frozen business to Seneca Foods Corporation, a significant milestone in the reshaping and restructuring of the B&G Foods portfolio. This is the largest piece in our portfolio transformation that should result in stronger focus, simplification, greater synergies, and higher margins across the core shelf-stable business lines. The green giant frozen business simply has not been the right fit for P&G Foods, with seasonal production, a different temperature state, geographic complexity, and higher working capital intensity. Previously, we announced the divestiture of our Canadian green giant business in canned and frozen vegetables. That divestiture requires Canadian regulatory approval and is currently under review. Subject to regulatory approval and other customary closing conditions, we expect to close during Q2 fiscal year 26. Finally, we also recently announced the acquisition of the College Inn and Kitchen Basics broth and stock businesses from Del Monte Foods. That transaction is expected to close by the end of March. The broth and stock category is attractive, maintains good margins, and has grown low to mid single digits over the past year. Like the spices and seasoning category, broths have been propelled by the growth in the fresh perimeter of the store as a critical component for the preparation and cooking of fresh meals and soups. The collagen and kitchen basics brands have relevant, well-known equities, strong distribution presence, and high-quality products. The net result of these divestitures and acquisition, when completed, will deliver a more focused portfolio that is expected to generate positive adjusted EBITDA growth, stronger cash flows, lower working capital intensity, reduced leverage, and higher gross and adjusted EBITDA margins. Bruce will provide more details on each of these transactions later. Q4 results. The fourth quarter continued momentum from the third quarter with modest improvement in base business net sales trends. Q4 base business net sales which excludes the impact of divestitures in the 53rd week, were down approximately 2.4%, compared to down 2.7% in the third quarter. Fourth quarter adjusted EBITDA was $84.7 million, slightly down versus last year on a reported basis, driven by the impact of divestitures and tariff costs. Some of the key drivers. The divestiture of the Don Pepino and Sclafani businesses in May, and the Le Sur U.S. canned peas brand in August removed approximately $16.4 million of net sales and $1 million in adjusted EBITDA from Q4. The spices and flavor solutions business unit grew net sales plus 4.2% in Q4, benefiting from the growth in fresh food and proteins, as well as strength in our club and food service channels. Segment-adjusted EBITDA was impacted by tariffs which are now being recovered through pricing. Tariff costs were approximately 4.4 million in Q4 and 9.5 million throughout fiscal year 25. We announced pricing actions during Q3 to recover these costs beginning in Q4, although full pricing reflection with some customers took longer than expected within the quarter. The frozen and vegetables business unit delivered strong segment-adjusted EBITDA recovery, plus $2.8 million as new crop pack costs came in favorable to last year's wheat crop and our Mexico facility achieved productivity gains. Q4 also benefited from the implementation of our back half cost savings initiative. Cost of goods sold, COGS, as a percentage of net sales improved approximately 120 basis points versus last year behind incremental productivity efforts. Fiscal year 26 outlook. Our current outlook for fiscal year 26 reflects continued improvement in the core business trends and the impact of the Green Giant U.S. frozen divester. Lots of changes and more to come with the closing of the pending Green Giant Canada divester and collagen and kitchen basics acquisition. But we are creating a stronger, focused, more profitable B&G Foods. Our current guidance range for fiscal year 26 is $1.655 to $1.695 billion in net sales and $265 to $275 million in adjusted EBITDA. The key assumptions. We expect base business trends on the remaining core meals, spices and flavor solutions, and specialty businesses to improve plus 0.4% versus last year. So far, Q1 trends are off to a strong start, with year-to-date base business net sales performance through February growing roughly 4%. The green giant U.S. frozen divestiture removes approximately $203 million in net sales year-over-year. That will be partially offset by approximately $80 million in revenue from March through year-end from COPAC sales from our Mexico facility, based on our arrangement with Seneca to retain manufacturing in Irapuato. The adjusted EBITDA impact of this divestiture is expected to be at least neutral, as we restructure costs to reflect the exit of the business. We have also reflected the impact of both the 53rd week and the divestitures of Don Pepino-Slefani and LeSueur U.S. during fiscal year 25, representing approximately $38.4 million in net sales and $5.4 million in adjusted EBITDA. Further, the pending divestiture of Green Giant Canada and the pending acquisition of the College Inn and Kitchen Basics broth business have not been reflected in our guidance. We will update fiscal year 26 guidance after those transactions have closed, but expect Canada to be neutral from an adjusted EBITDA impact and the broth and stock acquisition to deliver incremental sales and adjusted EBITDA at healthy margins. Looking forward, fiscal year 26 is poised to be a transformational year with a more focused, higher margin, and stable portfolio. Once divesters and closing transaction services have been completed, we expect continued improvement in base business trends towards the long-term algorithm of 1%. Further, we will also become a less complex, more efficient, and leaner company behind a simpler portfolio, restructuring operations to right-size overheads and focus resources and investment behind the core categories and brands in spices and seasonings, meals, and baking staples. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and outlook for fiscal 2026.

Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. Despite a challenging start to the year, we had strong momentum in our business throughout the year to finish fiscal 2025 on a positive note. For the fourth quarter of 2025, we generated $539.6 million in net sales, a net loss of $15.2 million, or 19 cents per diluted share, adjusted net income of $22.8 million, or $0.28 for adjusted diluted share, $84.7 million in adjusted EBITDA, and adjusted EBITDA as a percentage of net sales of 15.7%. For fiscal 2025, we generated $1.829 billion in net sales, a net loss of $43.3 million, or $0.54 for diluted share, adjusted net income of $41.3 million, or 51 cents, per adjusted diluted share, $272.2 million in adjusted EBITDA, and 14.9% of adjusted EBITDA as a percentage of net sales. The company's net loss for the fourth quarter and fiscal 2025 were primarily attributable to pre-tax non-cash impairment charges to intangible assets and assets held for sale. During fiscal 2025, the company recorded pre-tax non-cash impairment charges of $34.8 million to related intangible trademark and customer relationship assets for the Green Giant brand in the fourth quarter and $26 million related to indefinite life intangible trade assets for the Victoria and McCann's brands during the third quarter of 2025. In addition, the company recorded a pre-tax non-cash impairment charge for assets held for sale for the pending Green Giant Canada divestiture of $27.8 million in the third quarter of 2025 and an additional $.7 million in the fourth quarter. Further details regarding the impairments are included in our earnings release and 10-K. As a reminder, we were very busy during fiscal 2025 from an M&A perspective, and we have already added to that activity in fiscal 2026. 2025 M&A activity includes the divestiture of Don Pepino and Squifani brands during the second quarter, the divestiture of LeSour U.S. brand during the third quarter, and our entry into an agreement during the fourth quarter to divest Green Giant Canada, which subject to regulatory approval in Canada and other customary closing conditions, is expected to close during the second quarter of 2026. 2026 M&A activity includes our previously announced entry into an agreement in January to acquire the College Inn and Kitchen Basics brands from Del Monte Foods. The acquisition has already received bankruptcy court approval and subject to customary closing conditions and the simultaneous closing of two other bankruptcy sales unrelated to B&G Foods or the broth and stock business by Del Monte Foods. It is expected to close before the end of March. We are very excited to add these two well-known broth and stock brands to our portfolio. In addition, just yesterday, we signed, closed, and announced an agreement to sell the green giant U.S. frozen business to Seneca Foods. We received approximately $63.2 million in proceeds from the Green Giant U.S. frozen business, which we will use together with the proceeds from the previously completed divestitures to fund the collagen and kitchen basics acquisition. In effect, we are using the sale proceeds from a Green Giant U.S. frozen business that recently was approximately break-even at best on RP&L to partially fund the acquisition of the more profitable collagen and kitchen basics business. The Green Giant U.S. frozen sale included in our frozen vegetable manufacturing operations in Yuma, Arizona, but it did not include our frozen vegetable manufacturing operations in Iropuato, Mexico. In connection with the sale, we have entered into a COPAC agreement with Seneca Foods pursuant to which we will continue to produce certain Green Giant frozen products for sale by B&G Foods to Seneca Foods. We expect net sales under the COPAC agreement of approximately $100 million per year, and we expect to make a modest profit on such COPAC sales. As Casey said, we believe that Seneca is the right owner for the brand. Seneca is one of North America's leading providers of packaged vegetables, and it has the focus to best serve the millions of consumers that regularly enjoy Green Giant products. Seneca has also now reunited the Green Giant brand for both frozen and shelf-stable products. As we review our fourth quarter and fiscal 2025 results, we will highlight the comparative differences that result from the divestitures of the Don Pepino, Scalfani, and LeSore U.S. brands, which we own for all of fiscal 2024, but only parts of fiscal 2025. And as a reminder, the divestiture of Green Giant Canada and the acquisition of College Inn and Kitchen Basics have not yet closed. Additionally, the Green Giant U.S. frozen brand closed yesterday. As a result, these three transactions did not impact our fourth quarter or our fiscal 2025 results. Net sales for the fourth quarter of 2025 decreased by $12 million, or 2.2%, to $539.6 million from $551.6 million for the fourth quarter of 2024. The decrease was primarily attributable to the divestitures of the Don Pepino, Sclafani, and LeSore U.S. brands, which collectively generated $16.4 million in the fourth quarter of 2024. Base business net sales for the fourth quarter of 2025 increased by $4.4 million or 0.8%, to $539.6 million, as compared to $535.2 million for the fourth quarter of 2024. The increase in base business net sales was driven by an increase in net pricing and the impact of product mix of $2.8 million, or 0.5%, and an increase in volume of $1.9 million, 0.4% of base business net sales. which was offset in part by the negative impact of foreign currency of $0.3 million. Base business volumes were positively impacted by the 53rd week that occurred in our fourth quarter of 2025. Gross profit was $122.7 million for the fourth quarter of 2025, or 22.7% of net sales. And adjusted gross profit was $123.9 million or 23% of net sales. Gross profit was $118.7 million for the fourth quarter of 2024, or 21.5% of net sales. And adjusted gross profit was $122.3 million, or 22.2% of net sales. Input cost inflation was largely benign in the fourth quarter of 2025, much as it was throughout the earlier portion of the year. with parts of our portfolio experiencing somewhat higher costs and other parts of the portfolio having somewhat lower costs. Across their manufacturing network, we had factories that experienced both positive and negative absorption variances throughout the year, while we once again drove efficiency and savings across our network through our continuous improvement efforts that helped offset declines in volumes. Tariffs negatively impacted our gross profit and adjusted gross profit by approximately $4.4 million during the fourth quarter of 2025 and $9.5 million for the year. Approximately half of the tariffs, or $2.3 million during the fourth quarter and $5.4 million for the year, impacted our spices and flavors solutions business unit and the remainder spread across the other BU's. Selling, general, and administrative expenses increased by $3.7 million, or 7.3%, to $54 million for the fourth quarter of 2025 from $50.3 million for the fourth quarter of 2024. The increase was comprised of increases in general and administrative expenses of $2.3 million, acquisition divestiture-related and non-recurring expenses of $1.2 million, and selling expenses of $1.1 million, partially offset by decreases in consumer marketing expenses of $.9 million. Expressed as a percentage of net sales, selling general and administrative expenses increased by .9 percentage points to 10% for the fourth quarter of 2025, compared to 9.1% for the fourth quarter of 2024. We generated $84.7 million in adjusted EBITDA, or 15.7% of net sales for the fourth quarter of 2025, compared to $86.1 million, or 15.6% in the fourth quarter of 2024. The LeSore, US, Don Pepino, and Sclafani brands contributed approximately $1 million to adjusted EBITDA during the fourth quarter of 2024. And as I mentioned previously, Tariffs negatively impacted our fourth quarter 2025 adjusted EBITDA by approximately $4.4 million. Net interest expense decreased by $0.8 million or 2.1% to $38.8 million for the fourth quarter of 2025 from $39.6 million for the fourth quarter of 2024. Depreciation and amortization was $16.1 million for the fourth quarter of 2025, which is largely in line with the $16.9 million for the fourth quarter of 2024. We had adjusted net income of $22.8 million, or 28 cents per diluted share, in the fourth quarter of 2025. In the fourth quarter of 2024, we had adjusted net income of $24.6 million, or 31 cents per adjusted diluted share. Adjustments to our EBITDA net income are described further in our earnings release. I would now like to touch base on the results by business unit for the fourth quarter. Net sales for specialty decreased by $6.5 million, or 3%, in the fourth quarter of 2025 to $210.2 million from $216.7 million in the fourth quarter of 2024. The decrease was primarily due to the divestiture of Don Pepino and Sclafani brands, which generated $4 million in the fourth quarter of 2024 and by the impact of lower Crisco pricing. Specialty segment adjusted EBITDA decreased by $4.2 million, or 7%, in the fourth quarter of 2025 compared to the fourth quarter of 2024. The decrease was primarily due to the divestiture of the Don Pepino and Sclafani brands, as well as unfavorable cost comparisons in certain raw materials, manufacturing expenses, and the impact of tariffs. Net sales for meals increased by $1.3 million, or 1.1%, in the fourth quarter of 2025 to $124.2 million from $122.9 million in the fourth quarter of 2024. The increase was primarily due to the impact of higher net pricing and improved product mix, offset in part by modestly lower volumes across the meals business unit. Meals segment adjusted EBITDA increased by approximately $3.8 million, primarily driven by the impact of higher net pricing and improved product mix, favorable cost comparisons in certain raw materials and manufacturing expenses, which offset the impact of tariffs. Net sales for frozen and vegetables, excluding the impact of the LeSore U.S. divestiture, were up by $1.3 million, or 1.4%. The LeSore U.S. brand generated $12.4 million in the fourth quarter of 2024. Frozen and vegetable segment adjusted EBITDA increased by $2.8 million in the fourth quarter of 2025 compared to the fourth quarter of 2024. primarily driven by favorable raw material, manufacturing, and foreign currency comparisons. The impact of tariffs on the frozen and vegetable business unit were marginal in the fourth quarter. Net sales for spices and flavor solutions increased $4.3 million, or 4.2%, in the fourth quarter of 2025 to $106.1 million from $101.8 million last in the fourth quarter of 2024. The increase was primarily due to higher volumes across the spices and flavor solutions business unit, coupled with higher net pricing and product mix. Spices and flavor solutions segment adjusted EBITDA decreased by $2.9 million, or 11.1%, in the fourth quarter of 2025 compared to the fourth quarter of 2024. The decrease And segment-adjusted EBITDA was largely driven by a combination of tariffs, as well as by increases in raw material costs, such as black pepper and garlic, and the impact of unfavorable absorption. These negative impacts were offset in part by the positive benefits of higher net pricing and improved product mix. Now I will spend a little time on our cash flows and balance sheet. Net cash provided by operating activities was strong in the fourth quarter of 2025, with $95.4 million in the fourth quarter of 2025 compared to $80.3 million in the fourth quarter of 2024. Further, net cash provided by operating activities in the fourth quarter and fiscal year 2025 was negatively impacted by our $11.5 million deposit paid in connection with the pending College Inn and Kitchen Basics acquisition. Our balance sheet has also improved. We reduced our net debt to $1.912 billion at the end of the fourth quarter of 2025 compared to $1.994 billion at the end of fourth quarter 2024 and $2.023 billion at the end of fourth quarter 2023. We also reduced our net debt to pro forma covenant adjusted EBITDA to 6.57 at the end of the fourth quarter of 2025. Pro forma for the divestiture of the Green Giant U.S. frozen business, and if we include the $11.5 million cash deposit for the acquisition of the College Inn and Kitchen Basics brand, our net debt would have been approximately $1.835 billion, and our net debt to pro forma covenant adjusted EBITDA would have been a little bit less than 6.25 times. I am very pleased to report that we expect to remain on track to reduce our net debt to perform a covenant-adjusted EBITDA to nearly 6.0 times by the midpoint of this year. As a reminder, we continue to live in unpredictable times. Our 2026 guidance reflects what we know today and, for example, does not factor in significant changes in inflation, tariff policies, or the potential impact of escalation of the conflicts in Eastern Europe, the Middle East, or Latin America could have on our results. We are also only including the impacts of acquisitions and divestitures that have already closed in our guidance. Net sales and adjusted EBITDA for the Don Pepino, Scolfani, LeSore US, and Green Giant US frozen brands are excluded from our guidance from 2026 because we no longer own them, even though all of these brands were included in at least part of our fiscal 2025 results. Similarly, the pending divestiture of Green Giant Canada and the pending acquisition of the College Inn and Kitchen Basics brands are not factored into our 2026 guidance because these transactions have not yet closed. In addition, our guidance reflects that fiscal 2026 has one fewer week than fiscal 2025, which had a 53rd week. While we love the benefit of the 53rd week in our fiscal 25 results, we will lap that benefit or approximately $18 million in net sales during fiscal 2026. As a result, and as noted in our earnings release, we expect fiscal 2026 net sales in the range of $1.655 billion to $1.695 billion, adjusted EBITDA in the range of $265 to $275 million, and adjusted EBITDA as a percentage of net sales in the range of approximately 16 to 16.5%. And based on this guidance, we expect adjusted diluted earnings per share to be in a range of 55 to 65 cents. Now I will turn the call back over to Casey for further remarks.

Thank you, Bruce. In closing, B&G Foods is making strong progress against our long-term goals. Improving the base business net sales trends of the core business towards the long-term objective of plus 1 percent. Reshaping the portfolio for future growth, stability, higher margins, and cash flows. And finally, reducing leverage below 5.5 times through divesters and excess cash flow to facilitate strategic acquisitions. Next, I'm excited about the future of our portfolio and P&G Foods in fiscal year 2026 and beyond. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator?

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster.

And the first question will come from Scott Marks with Jefferies.

Please go ahead.

Hey, good afternoon, all. Thanks very much for taking our questions. You know, first thing I wanted to touch upon, if I heard you correctly, kind of in the prerecorded remarks, I think I heard that base business net sales were down 2.4%, you know, excluding acquisitions and 53rd week. which I believe is roughly in line with what you posted in the prior quarter. I think we've heard from some of your peers about maybe a more challenging consumer environment out there. So maybe if you can just help us understand what was it about the quarter that allowed you to kind of maintain the cadence of sales quarter over quarter and how you're thinking about that heading into this year.

I think we're expecting that our base business net sales will continue to improve. I mean, it was a slight or a modest improvement in Q4 versus Q3. So we went in Q3 from 2.7%, negative 2.7% to negative 2.4% in quarter four. We've seen progress on some of our brands and businesses. Spices and Seasonings in particular has been pretty resilient and posting some good numbers We've had growth in our Canadian business. We've had growth in our food service business. We've had growth in the kind of concentrated private label business that we have. So part of what we're seeing is a gradual improvement in our kind of U.S. food retail consumption, and it's gradual. And then just some strength in our other parts of our business, which represent probably 35% of our portfolio in those non-measured channels. So I mean, I'm expecting to have it get a little bit stronger in 2026. You know, long-term, you know, our aspiration is get to 1% growth. And I think we're moving towards that, but not there yet. So we want to continue to track that, make sure that our plans on our key brands and core brands, you know, and post the green giant investor, make sure that our plans on those brands are strong enough to continue to drive progress.

Appreciate the color there. Thank you for that. Next question would just be, you know, kind of along the same vein. I think we've heard from some of your Packitude peers about the need to kind of reinvest a little bit to support some of the brands, you know, at the shelf with the consumer. Just wondering if you can share maybe how you're thinking about, you know, brand support in 2026 relative to what you've been doing to this point.

I think we will probably spend a very similar amount in 2026 that we did in 2025. Obviously, we'll have a different portfolio, so we won't have the green giant business anymore. We have in our plans focused the spending more against some of our core big brands. So Ortega, Crisco, et cetera. So I think what you're going to see from us is probably an increase in spending on a few brands. But net overall, we're probably going to be flat or maybe slightly up in our marketing spend. And it's really brand by brand that we're looking at it. Where do we need to be more competitive? Where do we need to spend? Where do we need to up our game in innovation? Where do we need to do more against the consumer? Where do we need to do more on a digital front? So we're looking at it that way. But, you know, overall, I think, you know, we recognize in some of our categories, it is a more competitive environment and we're going to have to, you know, up our game and we're focusing the resources on places where we need to do it.

Appreciate it. And then if I could just sneak in one more, I think I heard the comment on there that quarter to date based business trends were up 4%. Just wondering how much of that may have been driven by, pantry loading ahead of some of the winter storms we've seen versus how much of it have you seen sustained through the quarter?

Our sales were up in both January and February. I think there's really two factors. One is the weather. A couple of winter storms, colder temperatures throughout January, late January and February. Our portfolio is all around baking staples and you know, Crisco, Grandma's, Clabber Girl, at Dry Soups, you know, Bear Creek. What we've seen is that, you know, that weather is, you know, causing consumption growth or purchasing growth in those baking staples business where people are baking more at home during a colder weather. So that's one thing. And you definitely saw that during the winter storm periods. And you see strength in our baking staples business as a result of that. I think the second thing is we lapped at the, you know, in the end of January last year, we lapped a pretty significant amount of trade inventory reduction, I think, just like the rest of the CPG industry or the packaged foods industry. So we're also lapping that as well. So that's what's driving the 4%, but obviously, you know, 4% on our core business trend is It gives me a lot of confidence that we're heading towards that base business number that we set about 0.4% for fiscal year 26. We're off to a fast start with two months.

I appreciate the call. I'll pass it on. Thank you.

The next question will come from Rob Moscow with TD Securities. Please go ahead.

Hi, this is Victor Ma on for Rob Moscow, and thank you for the question. So I just wanted to ask about the balance sheet. Where should we expect leverage to end up after you complete the Greenshine Canada sale? And then if you can give some color about where that kind of shakes up after you close collagen?

Yeah, those are the big drivers towards the approaching six times net leverage by midsummer that I referenced earlier. We're on our way to that 4.5 to 5.5 times long-term target, but we still have some more work to do. But as a reminder, with the Green Giant transactions, both U.S. and Canada, we're selling businesses that don't make any EBITDA for proceeds. We're effectively taking similar proceeds, turning around and funding the acquisition of the College Inn and Kitchen Basics business that generate pretty nice EBITDA, as we described in the press release when we announced those. So we're really excited to get those transactions done. Actually buying something, adding EBITDA, and actually additive to our leverage from going in the right direction.

I mean, the net of all those acquisitions, I mean, those divestitures, the Green Giant divestitures, both in Canada and the U.S., Frozen, and the College in the Kitchen Basics acquisition, we're going to reduce our leverage by about 50 basis points. That's what we're projecting.

Okay. It seems that our questioner has disconnected.

We're going to move on to our next question, and that will be from William Reuter with Bank of America. Please go ahead.

Good afternoon. Hi. So I want to make sure I understand the business that's going to be remaining as part of the Green Giant U.S. transaction. I thought that Casey said there was going to be $80 million of sales remaining, but then, Bruce, I thought you said there would be $100 million remaining. I guess, first, can you clarify that difference?

Yeah. So the difference is Casey is talking about effectively incremental in 2026, as we think about that. And that's the $83 million or so. The 100 is a run rate annual basis.

Just the difference in timing of, you know, 10 months versus a full 12-month ongoing. Got it.

And is it your expectation that you will continue to run these businesses for the long term? I guess, do you want to continue to run those or is there a requirement for you to continue to supply Seneca for some period of time?

So with this manufacturing facility? Yeah. TBD, we entered into a multi-year contract. relationship with them as a co-packer. We've known them for a long time. We think we've got a great relationship with them and they've been a great partner to us. We think we can create value here both for us and for Seneca by running these facilities, but it's also possible that we monetize them at some point in the future if it makes more sense for somebody else.

Got it. And I guess my last question is around the same topic. I feel like the green giant U.S. business has been one of the challenges here over the last several years. And you said you expect it will be modestly profitable. Is there any fear that the agreement as it's put in place could result in losses?

No. We're basically getting a tolling and management fee on the business. So we'll be fine. And at the end of the day, Seneca is the right owner for this business, so what was marginally profitable for us at best will be a profitable business for them. They're in this space. This is what they do. They're the right owners. Unfortunately for us, it just wasn't the right business for us. Great.

All right. I'll pass to others. Thank you.

The next question will come from Hal Holden with Barclays. Please go ahead.

Hey, good afternoon. Just one follow-up on bills. Is your expectation on the Mexico plant to just supply Seneca, or would you go out and now try to come in for other people there?

No, our expectation is to build that business and have other customers as well. We think there's a real value creation opportunity here for us.

Got it. And then... Bruce, you had previously sort of implied that maybe the dividend might be readdressed or thought about once all the transactions are completed. Is that still the timeline to think about? So mid-June or would it be sooner?

Yeah, I mean, look, our board approves or not a dividend every quarter. As you said, we haven't completed all of the transactions, so I guess stay tuned.

Great. And then my last question is on the – On the spices business, quarter to date, have you sort of gotten all that pricing back with the elasticity that you expected? Like sort of would we see that wash out in the first quarter or does it take longer?

Yeah, so are you talking about like pricing around tariffs?

Pricing around tariffs to recover even a loss in the fourth quarter, yep.

Yeah, we should be really by like December of 2025. So if you think about our fourth quarter, Tariffs started to hit us back in April, Liberation Day, and they were really elevated levels for a lot of things in the Spice portfolio. That was the highest exposure we had as an organization. Those tariffs were in full effect in the fourth quarter, some at lower levels than they were, but in full effect. But our pricing didn't go into effect really until kind of the middle of November. We should be covered on a go-forward basis. But we were not covered, as you noted, in the full fourth quarter.

So you would have seen the pricing really implemented in different channels, November, December. And so we're just now kind of reading actual elasticities. But we built in some expectation of elasticity with those pricing. But it's pretty small. I mean, the increases on spices and seasonings skews weren't really much more than low single to mid single digits. So we'll see some impact, but it won't be that big. And we've already kind of factored that into our projections.

Thank you, Casey. I appreciate it.

Your next question will come from Carew Martinson with Jefferies. Please go ahead.

Good afternoon. Hey, I'm doing all right. Just on the broth business, that was kind of 18, 22 million of EBITDA. Is there a seasonality to that EBITDA contribution as it comes into our P&L?

Probably skewed like a lot of the stuff we have towards that winter for different reasons. But soup season, I mean, it's a good solid throughout the year, but probably the bulk of the sales are in the winter months.

Q4, Q1. It has a winter seasonality, baking seasonality. holiday seasonality, you know, trend to it. But I mean, I think when we guide, when we close it, we'll provide some color and guidance on the flow of the business.

Okay. And my apologies, you were breaking up just a little bit. On the tariff impact, is there any expectation that the changes in the tariff here will result in changes in pricing or is it uh, thought that you keep the pricing that you have and, and see what happens down the road with all the other moving parts.

I mean, we certainly have to see what happens with the tariffs before we do anything.

Right now we're, you know, we're large, you know, we're largely maintain the pricing on things that could potentially change. Um, Spices, you know, it's fairly well known because those have, you know, sort of an exclusion around unavailable natural resources. So, you know, we are managing those pretty carefully. But, I mean, my expectation, to be honest, from a planning standpoint is there will be some volatility in this. But we need to expect that current tariff, you know, rates will stay in place roughly, you know, across our portfolio.

Okay. And, Jen, just lastly, kind of the big picture with the capital structure goes current in September. What are the plans there?

I'd assume we have, you know, more debt paid out and some refinancing between now and sort of before maturity, certainly, you know.

Thank you very much. Appreciate it.

Yep. Again, if you have a question, please press star and then one. Our next question will come from Eli Lapp with BMO Capital. Please go ahead.

Thanks. I'm just trying to reconcile because I think I may have missed your number. So I think you said that pro forma you expect debt to be 1.840. Is that correct?

I think I said 1.835.

Okay, so 1.835. Yeah, I'm rounding. Okay, no problem. And then the leverage would be 6.3. So I guess that translates into, let's say, around 290 million of pro forma EBITDA. Is that correct? So after the sales and the acquisition, that's the new number?

Yeah. So just a couple things. So I was using round numbers. I said approximately six and a quarter. And the one piece that you are missing. So within our... Covenant Adjusted EBITDA is our EBITDA. It's also performer for acquisitions, divestitures, as well as non-cash compensation. And so there's a couple moving pieces between, if you think about the 272, 273 for 2025 and the 290 that your algebra is suggesting, there's a couple things to get there. But we used it off of a trailing number.

Would you be able to kind of massage that for us, the divestitures and the acquisition and the denominator that we should think about?

Well, you're getting the right number. I'm not trying to be difficult.

Oh, no, no, that's fine.

We've got a public adjusted EBITDA, right? And so the difference is various adjustments for some of the divestitures that we made last year. On a green giant U.S. frozen, it's neutral to EBITDA. And we're not impacting yet for the Canada business, although that is also neutral, and the broth business. So your math is right. And like I said, there's adjustments. You see it in our numbers. They're pretty consistent with what they normally are. We add back non-cash comp to most companies when thinking about leverage calculations.

Okay. Okay. Thank you.

Yep. The next question will come from William Reuter with Bank of America. Please go ahead.

Welcome back. Hi. Just two follow-ups. I think the first question that was asked was kind of how are you able to do so much better than the industry? Because I do think that that is something which you seem to be experiencing. Do you think that your innovation has been better than maybe if we were to just take the packaged, branded consumer food companies have done over the last year?

I think we got a lot of the same challenges that the industry have, but we do have a slightly different portfolio mix, right? And so if you think about a lot of the portfolio shaping that Casey has kind of pushed over the last couple years, we're eliminating things like Green Giant that's been a drag in our business. You know, we're focused very heavily on our spice business that has better trends and access to some of the other channels that are growing. So, I don't know. I still think it's a tough world. Don't get me wrong. But, you know, we're doing our best.

I mean, the way I'd answer it is just, you know, look at our portfolio. You know, 65% in measured Nielsen data in the U.S. You know, we have a 35, maybe a little bit higher split in other businesses and other channels that aren't really measured. And that's where we're seeing a lot of growth. And, you know, if I just, you know, kind of top-lined that for you, We're seeing the same challenges in the Nielsen grocery world, food world, that I think everybody else is seeing. We're getting better in some of our businesses and we're making improvements, but it's still pretty challenging. So I don't want to kid you that it's not challenging. The strength in our business has been, you know, we have a couple of private label businesses in spices and seasonings, you know, in baking powder that have been very strong. You know, the trends on those have been very strong. They are profitable businesses for us, but the trends have been really strong. We also have a food service business that has been growing, and that's a fairly significant chunk. You know, heavily weighted towards spices and seasonings, but, you know, we have other businesses in that. An industrial business behind, you know, baking powders, spices. And then we have Canada, which, although it doesn't make money, you know, has – The green giant frozen vegetable business and canned vegetable business in Canada has been growing. So that's kind of the math of why you're maybe seeing some better trends in our total portfolio because of channel development than maybe you hear from other purely branded food-focused manufacturers, if that helps.

Yep. That does help. And then I guess the outlook for input costs in fiscal year 26, what type of inflation are you seeing? Are there any areas that concern you?

It's relatively modest across the portfolio. So there'll be inflation. You know, we'll look to cover it as needed, whether it's a little bit of price and some productivity initiatives. But this so far, you know, is nothing like that 2010. 22, 23, where we had like double digit inflation.

I would say the only area we're kind of watching closely is soybean oil. We've seen a little bit of increase in soybean oil. You know, we tend to try and recover that, but it has been increasing over the last couple of months. And, you know, I'm concerned about soybean oil and the disruption of any, you know, kind of conflict in the Middle East or anything. Last time, you know, we had a conflict in the start of the conflict in Ukraine in 22, we saw soybean oil shoot up. So, I'm not concerned. I'm not overly concerned yet, but that's one we're really watching because we have seen a little bit of creep up.

Got it. All right. Very helpful. Thank you. That's all.

Yep. Cool. Thanks.

And this will conclude our question and answer session as well as our conference call for today. Thank you for your participation. You may now disconnect.