B&G Foods, Inc. Q2 FY2025 earnings call

• Q2 results showed sequential improvement after a challenging Q1, with net sales at $424.4 million, down 4.5% vs last year. Adjusted EBITDA was $58 million, down $5 million. - Completed divestitures of Don Pepino, Scalfani, and Le Sueur brands. - Fiscal year 2025 outlook expects back half improvement, flat to slightly positive net sales with year-over-year growth in adjusted EBITDA. - Expect 53rd week to add 2%-3% net sales growth in Q4. - Additional savings and productivity efforts to deliver $10 million incremental adjusted EBITDA growth in Q3 and Q4. - U.S. frozen vegetables business expected to turn profitable in back half.

In the second quarter, the Frozen and Vegetables business unit had net sales down $2.6 million or 2.8% compared to the prior year, with segment adjusted EBITDA down $6.5 million due to higher true-up costs on last year's weak crop. The Specialty business unit experienced net sales declines of 8% primarily from lower Crisco oil pricing, but segment adjusted EBITDA improved by 3%. Meals had net sales decline by $3.8 million or 3.5%, but segment adjusted EBITDA increased by $1.8 million or 7.7%. Spices and Flavor Solutions saw net sales decline by less than $2 million or 2 percentage points, but bore significant tariff exposure.

• Revised fiscal 2025 guidance: net sales $1.83 billion to $1.88 billion, adjusted EBITDA $273 million to $283 million, adjusted EPS $0.50 to $0.60. - Back half expected to show solid improvement, base business net sales projected down 1%-2% excluding 53rd week. - Expect $10 million incremental adjusted EBITDA growth in Q3 and Q4 from savings and productivity efforts. - Plan to reduce leverage to 6x within 12 months using divestiture proceeds and excess cash.

• Tariffs on spices (garlic, black pepper) and steel cans pose risks, with potential lag in pricing recovery. - Currency fluctuations, especially for Green Giant business due to macroeconomic and political uncertainty. - Retailer lead times on price changes affecting timing of tariff recovery.

Q: David Palmer asked about core business trends and guidance.

A: Bruce Wacha responded that base business ex divestitures is expected to be down midpoint 1%, with 53rd week adding 2%-3% net sales growth in Q4.

Q: Scott Marks inquired about tariff mitigation and retailer response.

A: Bruce C. Wacha stated that most tariff exposure is in spices, with pricing actions to recover tariffs but lag due to retailer lead times. Kenneth Charles Keller added that they are implementing pricing actions to recover tariffs with some lag.

Q: William Reuter asked about EBITDA for divested brands and net debt.

A: Bruce C. Wacha said EBITDA for divested brands not provided, and net debt was affected by divestitures with proceeds including favorable working capital adjustment.

Q: Robert Moskow asked about spice and seasonings business performance.

A: Kenneth Charles Keller said results not in line with expectations, with some private label and food service components, and expecting targeted pricing to recover tariff impact in back half.

Q: Hale Holden asked about Le Sueur Canada brand size and tariff pricing recovery.

A: Kenneth Charles Keller said Le Sueur Canada is smaller, and partial tariff recovery expected in Q4 with full recovery in 2026. Bruce C. Wacha mentioned ongoing strategic reviews for divestitures.

Q: Karru Martinson asked about divestiture scale and Green Giant Canada.

A: Kenneth Charles Keller said give or take on divestiture scale, Green Giant is #1 brand in Canada for frozen and shelf stable. Bruce C. Wacha added Green Giant has over $100 million sales in Canada.

Q: Carla Casella Hodulik asked about trade spend and inventory from divestitures.

A: Kenneth Charles Keller said trade spend increase expected to be smaller in second half due to lapping prior year efforts. Bruce C. Wacha explained $59 million purchase price for Le Sueur included favorable working capital adjustment.