B&G Foods, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Q3 Results: Net sales were $439.3 million, down 4.7% y-o-y; base business net sales (excluding divestitures) were down 2.7%. Adjusted EBITDA was $70.4 million, flat y-o-y excluding divestitures.
• Portfolio Divestitures: Divested Don Pepino, Sclafani, and Le Sieur U.S. brands in Q3; announced divestiture of Canadian Green Giant (subject to regulatory approval); evaluating divestiture of Green Giant U.S. frozen business.
• Cost Savings: Implemented a $10 million cost savings initiative, with SG&A down $2 million and COGS as a percentage of net sales improving by 40 basis points.
• Fiscal 2025 Outlook: Revised net sales guidance to $1.82 billion to $1.84 billion and adjusted EBITDA to $273 million to $280 million. Aim to reduce consolidated leverage ratio to 6x within 9 months using divestiture proceeds and excess cash.

Segment Performance

• Frozen & Vegetables: Base business net sales declined by $5.4 million or 6.7% in Q3, but segment adjusted EBITDA increased by $3 million due to more favorable crop pack costs and strong productivity in the Mexico facility.
• Spices & Seasonings: Net sales grew +2.1% in Q3, but segment adjusted EBITDA was down approximately $2.1 million due to higher raw material costs and tariffs. Pricing actions were implemented to offset these costs.
• Meals: Net sales decreased by $1.6 million or 1.4% in Q3, but segment adjusted EBITDA increased by approximately $0.6 million.
• Specialty: Base business net sales decreased by approximately $7 million or 4.5% in Q3, with Crisco contributing significantly to the decline. Segment adjusted EBITDA was down $3.6 million or 8.7%.

Guidance

• Revised net sales for fiscal 2025 to $1.82 billion to $1.84 billion and adjusted EBITDA to $273 million to $280 million.
• Expect Q4 to show continued improvement vs H1 2025, with 53rd week adding 2%-3% sales growth. Base business net sales projected to be down ~2%-3% in Q4.
• Aim to reduce consolidated leverage ratio to 6x within the next 9 months by using divestiture proceeds and excess cash from improved EBITDA and lower working capital needs.

Risks

• Challenges in the consumer environment.
• Greater-than-expected negative volume impact from pricing initiatives to offset tariffs.
• Trade negotiations and potential increased/retaliatory tariffs.
• Soft holiday season or retail inventory management issues.

Question and Answer

• Q: Andrew Lazar from Barclays asks about Q4 sales and broader environment causing guidance shift.

A: Kenneth Keller responds that sales guidance was narrowed due to reflecting divestitures fully and keeping base business net sales trends consistent with Q3.

• Q: Scott Marks from Jefferies asks about base business performance in Q4 excluding Green Giant and Frozen & Vegetables.

A: Kenneth Keller states expected more stable performance from Spices & Seasoning, Meals, and Baking Staples businesses.

• Q: Robert Moskow from TD Cowen asks about leverage target and Green Giant divestitures.

A: Bruce Wacha explains leverage target assumes completion of divestitures and stabilization of EBITDA, excess cash, and working capital.

• Q: William Reuter from Bank of America asks about shelf space and Green Giant U.S. sale timeline.

A: Bruce Wacha and Kenneth Keller mention forecast includes distribution wins/losses and progress on Green Giant U.S. divestiture.

• Q: David Palmer from Bank of America asks about organic sales and all-channel performance.

A: Kenneth Keller explains base business trend includes measured and unmeasured channels, with 53rd week adding sales growth in Q4.

• Q: Hale Holden from Barclays asks about spices pricing and Canada sale proxy.

A: Bruce Wacha and Kenneth Keller discuss spices pricing implementation and Canada sale proxy related to inventory.

• Q: Carla Casella from JPMorgan asks about working capital anomaly in Q3.

A: Bruce Wacha explains inventory purchases for divested brands and reimbursement in Q4.