B&G Foods, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Q1 2025 net sales declined 10.5% due to factors like retailer inventory adjustments, Easter timing shift (net sales impact ~$8M shifting to Q2), and challenges in the Green Giant U.S. business.
• Revised fiscal 2025 net sales guidance to $1.86 billion to $1.91 billion and adjusted EBITDA to $280 million to $290 million, lower than prior guidance.
• Implemented cost reduction efforts targeting $10 million in savings in 2025 with an annual run rate of $15 million to $20 million, including productivity in COGS, trade/market spending efficiencies, and SG&A savings.
• Ongoing portfolio reshaping efforts, including evaluating divestiture of the Frozen & Vegetables business unit and other non-core businesses to sharpen focus, improve margins, and maximize future value.

Segment Performance

• Frozen & Vegetables: Net sales decreased by $11.8 million (11.2%) in Q1 2025. Segment adjusted EBITDA was negative $1.5 million in Q1 2025 vs. $7.8 million in Q1 2024. Key drivers included increased promotional trade spend and high seasonal pack costs. Canadian Frozen & Vegetables had mid-single digit net sales growth.
• Crisco: Net sales decreased by $10 million (15.4%) in Q1 2025. Decline was driven by lower net pricing, product mix, and volumes.
• Specialty: Net sales decreased by $20.3 million (13.1%) in Q1 2025. Segment adjusted EBITDA decreased by $3.7 million.
• Meals: Net sales decreased by $13.9 million (11.6%) in Q1 2025. Segment adjusted EBITDA decreased by approximately $0.7 million.
• Spices and Flavor Solutions: Net sales decreased by $3.8 million (4%) in Q1 2025. Segment adjusted EBITDA decreased by $2.4 million.

Guidance

• Revised fiscal 2025 net sales range: $1.86 billion to $1.91 billion.
• Adjusted EBITDA range revised: $280 million to $290 million, down $10 million from prior guidance.
• Assumes a modestly softer economic environment, input costs remaining consistent, and $10 million cost savings from implemented cost reduction efforts.

Risks

• Tariff Uncertainties: Significant risks in Spices business sourced from China, Vietnam, etc., with tariffs changing daily and negotiations ongoing.
• Currency Fluctuations: Fluctuating Mexican Peso exchange rates impact the Green Giant U.S. business, though Canada business is mostly unaffected by USMCA compliance.
• Consumer Behavior Uncertainty: Uncertainty in center store trends and consumer behavior recovery post-high inflation, leading to ongoing challenges in net sales and EBITDA.

Question and Answer

• Q: About tariff considerations and potential sale of frozen. A: No comment on ongoing M&A discussions. Watching tariffs, with Mexico business mostly compliant with USMCA.
• Q: Stock reaction and portfolio changes. A: Already accelerating portfolio shaping and cost reduction efforts, with $10 million in cost savings targeted for 2025.
• Q: April consumption trend and inventory deload. A: Slight Easter help in April consumption trend, inventory deload mostly occurred in January and February.
• Q: Retailer inventory reduction and consumer behavior. A: Inventory reductions likely permanent, consumer behavior recovery gradual with lapping of negative comps expected mid-year.
• Q: ABL, inventory reset, and promotion decision. A: Revolver not fully drawn unless acquisition, inventory deload due to destocking, promotion decision in Green Giant frozen business to be competitive.