B&G Foods, Inc. (BGS) Earnings

Management highlights

### Portfolio Reshaping Transactions - Completed the divestiture of Green Giant U.S. frozen business to Seneca Foods Corporation on March 2, 2026, the largest component of the company's portfolio transformation. Only the final two months of Q1 2026 include this business in B&G's results. - Completed the acquisition of the College Inn (referred to as 'collagen' in the call transcript) and Kitchen Basics broth and stock businesses from Del Monte Foods on March 19, 2026. These brands align well with B&G's core shelf-stable portfolio and operate in a growing category supported by perimeter fresh food expansion. - The pending divestiture of Green Giant Canada, the final Green Giant divestiture, remains under Canadian regulatory review and is expected to close in Q2 FY26, subject to customary closing conditions. - Net proceeds from the Green Giant U.S. frozen divestiture partially funded the College Inn/Kitchen Basics acquisition. This portfolio swap replaces a low-margin business with a more profitable, stable business, and reduced the pro forma net leverage ratio to ~6x at the end of Q1. ### Overall Q1 2026 Operational Performance - Total GAAP net sales were $408.9 million, a 3.9% decrease YoY, driven by divestitures completed in 2025 and 2026, partially offset by base business growth and partial contributions from new acquired and contract manufacturing businesses. - Base business net sales grew 2.8% YoY to $365.1 million, with volume contributing 1.9% growth, net pricing/mix contributing 0.5% growth, and foreign exchange contributing 0.5% growth. - Reported net loss was $32.5 million (41 cents per diluted share), driven by $36.3 million in non-cash loss on asset sale, $5.8 million in non-cash PP&E impairment/disposal losses, and transaction-related non-recurring costs. Adjusted net income was $6.8 million (8 cents per diluted share), up from $3.4 million (4 cents per diluted share) in Q1 2025. - Adjusted EBITDA was $57.6 million (14.1% of net sales), slightly down from $59.1 million (13.9% of net sales) YoY. - Unallocated central overheads decreased by almost $2 million YoY, and the company continues to restructure overhead to reflect the smaller post-divestiture portfolio. - Seven of 10 internal manufacturing facilities increased output YoY in Q1, and two of the three facilities with lower output are still ahead of year-to-date budget volumes. - The Board of Directors reduced the quarterly dividend by 50% to $0.095 per share ($0.38 annualized), effective for the dividend payable July 30, 2026. This generates ~$30 million in additional annual cash flow earmarked for debt repayment to accelerate leverage reduction. ### Long-Term Strategic Goals - Improve core base business net sales trends to a long-term target of flat to +1% growth. - Reshape the portfolio to deliver higher margins, more stable cash flow, and stronger growth. - Reduce net leverage to below 5.5x to support future strategic activity.

Guidance

- Updated full FY26 net sales guidance is $1.735 billion to $1.775 billion, and adjusted EBITDA guidance is $275 million to $290 billion, up from prior guidance to reflect the addition of the recently closed College Inn/Kitchen Basics acquisition; all prior divestitures (Green Giant U.S. frozen, Don Pepino, LeSore U.S.) were already included in previous guidance. - Adjusted diluted EPS guidance for FY26 is 57.5 to 67.5 cents per share, with adjusted EBITDA margin expected to be 15.8% to 16.3%. - Guidance excludes the impact of the pending Green Giant Canada divestiture, which management expects to be relatively neutral to adjusted EBITDA; guidance will be updated after the transaction closes. - The guidance accounts for one fewer week in FY26 (FY25 had a 53rd week), which reduces FY26 net sales by ~$18 million relative to FY25. Core base business net sales for the remainder of FY26 is expected to be flat to slightly down after a strong Q1 vs. the low Q1 2025 base. - Full-year FY26 interest expense is projected to be $152.5 to $157.5 million, depreciation $40 to $45 million, amortization $17 to $19 million, cash taxes ~$5 million or less, effective tax rate 26% to 27%, and CapEx expected to come in at the lower end of the prior $30 to $35 million target range. - Management expects net leverage to fall to ~6x or below by mid-2026, with the Green Giant Canada divestiture expected to reduce leverage by an additional 0.25x after closing.

Segment performance

1. Spices and Flavor Solutions: Net sales increased 9.1% year-over-year (YoY) to $100.1 million, contributing approximately 24.5% of total Q1 2026 net sales. Segment adjusted EBITDA rose 13.1% YoY to $29.3 million, driven by higher volumes and net pricing that offset increased input and tariff costs. 2. Meals: Net sales increased 0.9% YoY to $107.1 million, contributing approximately 26.2% of total Q1 2026 net sales. The recently acquired College Inn and Kitchen Basics brands contributed $2.9 million in partial-month net sales. Segment adjusted EBITDA decreased $5 million YoY, pressured by unfavorable raw material and manufacturing costs, and higher cost allocations following the Green Giant divestiture, partially offset by higher net pricing and product mix improvements. 3. Specialty: Net sales decreased 2.7% YoY to $130.8 million, contributing approximately 32% of total Q1 2026 net sales. The decrease was almost entirely driven by the 2025 divestiture of the Don Pepino business, which contributed $3.5 million in Q1 2025 net sales; base business net sales were flat. Segment adjusted EBITDA decreased $7.4 million YoY due to the Don Pepino divestiture, unfavorable input costs, tariffs, and higher cost allocations post-Green Giant divestiture. 4. Frozen and Vegetable: The segment is not comparable YoY due to the Green Giant U.S. frozen and LeSore U.S. divestitures. Green Giant Canada (pending divestiture, held for sale) delivered net sales of $30.1 million, up 16.4% YoY. The new Green Giant U.S. frozen contract manufacturing business generated $8.5 million in net sales in its first month of operation, with a cost-plus structure expected to deliver modest stable profits. The pre-divestiture two months of Green Giant U.S. frozen operations delivered a segment adjusted EBITDA recovery from a net loss in Q1 2025, driven by higher volumes, lower trade spend, and lower manufacturing costs.

Risks & headwinds

- Sustained elevated crude oil prices pose significant input cost risk: high oil prices raise transportation/logistics costs, packaging costs, and drive higher soybean oil prices via the biofuel market connection. Soybean oil is currently trading above 70 cents per pound, near 2022 spike levels, far above year-ago levels. - If oil and soybean oil costs remain at current elevated levels, the company will need to implement broad pricing actions to protect margins, which carries consumer demand elasticity risk, particularly if key retail price thresholds are crossed. - Persistent inflationary pressure on other raw material and input costs could squeeze margins if pricing actions do not fully offset higher costs. - Geopolitical conflicts in Eastern Europe, the Middle East, and Latin America could escalate and disrupt supply chains or further increase energy and input costs. - Changes to tariff policies could increase input costs. - Stranded overhead costs from recent divestitures could pressure profitability if cost reduction efforts do not fully offset reduced scale. - Post-divestiture cost reallocations have pressured near-term segment EBITDA across remaining business units.

Analyst Q&A

• Q: Excluding portfolio changes, how has the FY26 outlook changed, and why is your base business outlook flat to slightly down when tracked channel consumption data shows mid-single-digit declines? Can portfolio changes impact your ability to implement pricing if needed? /

  A: The only update to guidance is adding the impact of the recently closed College Inn/Kitchen Basics acquisition; all prior portfolio changes were already reflected. Less than 60% of B&G's current portfolio is included in standard third-party tracked consumption data, which excludes large growing segments: food service (13-15% of sales), private label (~12% of sales, growing strongly), and Green Giant Canada. Strong growth in these untracked segments offsets declines in tracked measured channels, resulting in a full portfolio flat to slightly down outlook. Divestiture of Green Giant U.S. frozen does not impact B&G's ability to implement pricing across the remaining portfolio, and the company is hedged for a portion of 2026 input costs via forward purchases. Management is most closely watching oil and soybean oil prices, and will take industry-wide pricing action if costs stay elevated.

• Q: Why was a 50% dividend cut the right size, and what flexibility does it provide? /

  A: The annualized 50% cut generates ~$30 million in extra annual cash flow. In the current high interest rate environment, B&G's board aims to allocate ~50% of excess cash flow to debt reduction and 50% to dividends, and the cut aligns the dividend with this target balance. Accelerated debt reduction will speed leverage reduction, which benefits long-term shareholder value, fitting the company's post-portfolio reshaping goals.

• Q: With tracked U.S. consumption down 4% in Q1 and 7.5% in April, what gap should we account for between tracked data and B&G's full portfolio flat growth target? Is energy-driven inflation harder to price through to retailers than other cost increases? /

  A: Tracked data covers less than 60% of B&G's post-divestiture portfolio; the 40% untracked portion is growing at a mid-single-digit rate, which offsets low single-digit declines in tracked channels to deliver full portfolio flat growth. Recent consumption data is also distorted by year-over-year Easter timing shifts. B&G does not need tracked channels to turn fully positive to hit its target. Energy-driven inflation pricing discussions are never easy, as retailers face the same cost pressures. B&G has already absorbed some cost increases via productivity and cost savings, and only needs to implement pricing if oil stays well above $100 per barrel long-term. If prices stay elevated, the whole industry will need to pass through costs, and B&G has a history of successfully implementing fuel/transportation related pricing.

• Q: Now that you have completed major portfolio reshaping, are you done pruning and adding brands, or will more portfolio changes come? How does consumer budget pressure impact your ability to take price? /

  A: B&G will continue to evaluate portfolio shifts to hold higher margin, higher cash flow businesses that fit B&G's core shelf-stable capabilities. The company will continue to divest assets that are a better fit for other owners and use proceeds to acquire better aligned, higher performing brands, so further portfolio changes are expected. B&G's mainstream grocery portfolio sees mixed impacts from consumer budget pressure: some trade down is possible, but there is also a benefit from consumers eating out less and shifting to affordable at-home meals, which plays to B&G's strengths. Management is not planning broad-based price increases currently; only soybean oil and sustained high energy costs would trigger necessary pricing actions, and those would be implemented as needed.