Q4 2023 B&G Foods Inc Earnings Call

Good day, and welcome to the P&G foods fourth quarter and fiscal 2023 earnings call.

Operator: Good day and welcome to the B&G Foods fourth quarter and fiscal 2023 earnings call. Today's call, which is being recorded, is scheduled to last about one hour, including remarks by B&G Foods management and the question and answer session. I would now like to turn the call over to AJ Schwab, Associate Director of Corporate Strategy and Business Development for B&G Foods.

Today's call, which is being recorded is scheduled to last about one hour, including remarks by being G suite management and the question and answer session.

I would now like to turn the call over to Ed.

Ed: Jay swap associated corporate strategy and business development for PNG switch Hey, Jay.

Ed: Yeah.

Ed: Good afternoon, and thank you for joining us.

AJ Schwab: Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer, and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter and full year in the earnings release we issued today, which is available in 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, undue reliance should not be placed on them.

Ed: With me today are Casey Keller, our Chief Executive Officer, and Bruce Walker, Our Chief Financial Officer.

Ed: You can access detailed financial information on the quarter and full year in the earnings release, we issued today, which is available at the Investor Relations section of BG Foods Dot com.

Before we begin our formal remarks I need to remind everyone that part of the discussion today includes forward looking statements.

Ed: These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them.

Ed: We refer you to P&G food 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.

AJ Schwab: 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 conditions. 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, Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Gross Profit, Adjusted Gross Profit Percentage, and Base Business Net Sale. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release.

Ed: <unk> undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise.

Ed: We will also be making references on today's call to the non-GAAP financial measures adjusted EBITDA adjusted net income adjusted diluted earnings per share adjusted gross profit adjusted gross profit percent percentage and base business net sales.

Ed: Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release.

AJ Schwab: 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 2024 and beyond. Bruce will then discuss our financial results for the fourth quarter and fiscal 2023 and our guidance for fiscal 2024. I would now like to turn the call over to Casey. Good afternoon.

Ed: 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 2020 for BR.

Ed: Bruce will then discuss our financial results for the fourth quarter and fiscal 2023, and our guidance for fiscal 2024.

Ed: I would now like to turn the call over to Casey.

Casey Keller: Good afternoon. Thank you a J and thank you all for joining us today for our fourth quarter and fiscal 2023 earnings call.

Casey Keller: Thank you, AJ. And thank you all for joining us today for our fourth quarter and fiscal 2023 earnings call. B&G Foods fourth-quarter results were solid, slightly exceeding expectations. Base business net sales, which exclude net sales of the divested green giant U.S. canned vegetable and back-to-nature businesses, were essentially flat, but for the impact of lower Crisco oil commodity pricing year over year. In addition, base business volume in the aggregate across the portfolio was slightly up for the quarter, stabilizing for the first period since the significant pricing actions in fiscal year 22. Profit margins also demonstrated steady progress. Adjusted gross profit percentage increased 130 basis points versus last year to 21.9 percent, reflecting pricing recovery of higher costs and productivity savings.

Casey Keller: P&G foods fourth quarter results were solid slightly exceeding expectations.

Casey Keller: Base business net sales, which exclude net sales of the divested green giant canned vegetable and back to nature businesses were essentially flat, but for the impact of lower chriscoe oil commodity pricing year over year.

Casey Keller: In addition base business volume in the aggregate across the portfolio was slightly up for the quarter.

Casey Keller: <unk> for the first period since the significant pricing actions in fiscal year 'twenty two.

Casey Keller: Profit margins also demonstrated steady progress adjust.

Adjusted gross profit percentage increased 130 basis points versus last year to 21, 9%.

Casey Keller: Reflecting pricing recovery of higher cost and productivity savings.

Casey Keller: Adjusted EBITDA as a percentage of net sales was flat to last year at 15%, with adjusted gross profit improvement offset by the reinstatement of the short-term management incentive accrual in G&A expenses versus zero in fiscal year 22, with fourth quarter results. B&G Foods delivered fiscal year 23 net sales of $2.062 billion and adjusted EBITDA of $318 million, well within our revised guidance reflecting the divestiture of Green Giant U.S. canned vegetables in November. Bruce will provide more details on Quarter 4 and Fiscal Year 23 results.

Casey Keller: Adjusted EBITDA as a percentage of net sales was flat to last year at 15%.

Casey Keller: With adjusted gross profit improvement offset by the reinstatement of the short term management incentive accrual and G&A expenses versus zero in fiscal year 'twenty two.

Casey Keller: With fourth quarter results <unk> foods delivered fiscal year 'twenty three net sales of two point <unk> 2 billion and adjusted EBITDA of $318 million well within our revised guidance, reflecting the divestiture of green giant canned vegetables in November.

Bruce will provide more details on quarter, four and fiscal year 'twenty three results.

Bruce C. Wacha: Stepping back we achieved several critical milestones in fiscal year 'twenty three on the journey to reshape and strengthen <unk> foods.

Casey Keller: Stepping back, we achieved several critical milestones in fiscal year 23 on the journey to reshape and strengthen B&G Foods. First, margin recovery. After historic inflation pressure in fiscal year 22, margins recovered strongly in fiscal year 23 behind pricing actions and productivity efforts. Adjusted gross profit percentage increased 280 basis points year-over-year from 19.4% to 22.2% in fiscal year 23. Adjusted EBITDA as a percentage of net sales increased 150 basis points to 15.4% in fiscal year 23. Going forward, input cost inflation has moderated to low single digits and, in some cases, such as soybean oil, has come down from historic highs. Number two, portfolio shaping. We divested the low-margin, working capital-intensive businesses of back-to-nature cookie crackers and green giant U.S. canned vegetables. Both did not fit with our future portfolio focus and were strained to deliver adequate cash flow against the leverage model.

Bruce C. Wacha: First margin recovery.

Bruce C. Wacha: After our historic inflation pressure in fiscal year 'twenty two margins recovered strongly in fiscal year, 'twenty, three behind pricing actions and productivity efforts.

Bruce C. Wacha: Adjusted gross profit percentage increased 280 basis points year over year from 19, 4% to 22, 2% in fiscal year 'twenty three.

Bruce C. Wacha: Adjusted EBITDA as a percentage of net sales increased to 150 basis points to 15, 4% in fiscal year 'twenty three.

Bruce C. Wacha: Going forward input cost inflation has moderated to low single digits and in some cases, such as soybean oil has come down from historic highs.

Bruce C. Wacha: Number two portfolio shaping we.

Bruce C. Wacha: We divested the low margin working capital intensive businesses of back to nature of cookies, crackers, and Green giant U S canned vegetables.

Bruce C. Wacha: Did not fit with our future portfolio focus and were strained to deliver adequate cash flow against the leverage model.

Casey Keller: As previously disclosed, we expect to divest additional businesses and brands over the next year to focus the portfolio for future success and intend to use the proceeds to pay down debt. Third, cash flow and working capital. Net cash from operations improved dramatically, increasing from $6 million last year to $248 million in FY23. These results were driven by better operating performance and margin recovery and, critically, by a significant improvement in working capital. Inventories in fiscal year 23 declined by $157 million, down from $726 million last year to $569 million at year-end, reflecting the divestiture of the seasonal Green Giant U.S. canned business, lower Crisco soybean oil costs, and efficiencies in base business inventory levels while delivering higher service. Fourth, debt and leverage. During fiscal year 23, B&G Foods reduced net debt by $335 million, primarily using improved cash flow and the proceeds from divestors to pay down debt.

Bruce C. Wacha: As previously disclosed we expect to divest additional business and brands over the next year to focus the portfolio for future success.

Bruce C. Wacha: And intend to use the proceeds to pay down debt.

Bruce C. Wacha: Yeah.

Bruce C. Wacha: Third cash flow and working capital.

Bruce C. Wacha: Net cash from operations improved dramatically increasing from $6 million last year to $248 million in fiscal year 'twenty three.

Bruce C. Wacha: These results were driven by better operating performance and margin recovery and critically by significant improving improvement in working capital inventories.

Bruce C. Wacha: Inventories in fiscal year, 'twenty, three declined by $157 million down from $726 million last year to $569 million at year end.

Bruce C. Wacha: Reflecting the divestiture of the seasonal green giant canned business, lower chriscoe, soybean oil costs and efficiencies and base business inventory levels, while delivering higher service.

Bruce C. Wacha: Yes.

Bruce C. Wacha: Fourth debt and leverage during fiscal year, 'twenty, three <unk> foods' reduced net debt by $335 million.

Bruce C. Wacha: Primarily using improved cash flow and the proceeds from divestitures to pay down debt.

Casey Keller: As a result, B&G Foods' pro-forma adjusted net leverage ratio, as calculated per our credit agreement, decreased from 7.62 times at fiscal year 22's end to 6.32 times by the end of fiscal year 23. We are making excellent progress towards returning to our long-term range of 4.5 to 5.5 times. The expectation is to further close that gap in fiscal year 23-4 through additional divestors and paying down debt with excess cash flow. Five, Crisco pricing model. During the first quarter of fiscal year 23, we implemented a new commodity price, based on the pricing model on Crisco with our customers.

Bruce C. Wacha: As a result, P&G foods pro forma adjusted net leverage ratio as calculated per our credit agreement decreased from 762 times at fiscal year 'twenty two and.

Bruce C. Wacha: 2632 times by the end of fiscal year 'twenty three.

Bruce C. Wacha: We are making excellent progress towards returning to our long term range of four five to five five times.

Bruce C. Wacha: The expectation is to further close that gap in fiscal year 'twenty three four through additional divestitures and paying down debt with excess cash flow.

Bruce C. Wacha: Five chriscoe pricing model during the first quarter fiscal year 2003, we implemented a new commodity priced.

Bruce C. Wacha: Pricing model on Chris go with our customers.

Casey Keller: Prices for Crisco products move quarterly to reflect the volatility in soybean and vegetable oil inputs and match market pricing with actual oil costs. The result has been stable gross profit dollars and cash flow for Crisco in a volatile market, particularly over the past two years. As discussed, we do expect to see some up and down movement on Crisco net sales results based on changes in oil pricing without any impact on the bottom line. And last, Spices and Seasonings, representing approximately 18% of our portfolio, the core high-margin spices and seasonings business, increased net sales by 2.2 percent. Trends were particularly strong when the food service and members marked Sam's Label business, which largely serves out-of- The core retail branded trends, Dash, Weber, Spice Islands, etc., are improving and have recovered from temporary service and production issues in our Ankeny factory. We have also strengthened our innovation and new product pipeline, launching new licensed seasoning and grilling blends under the Buffalo Trace, Fireball, and Southern Comfort brands, which are performing very well in initial distribution.

Bruce C. Wacha: Prices for Chriscoe products move quarterly to reflect the volatility in soybean and vegetable oil inputs and match market pricing with actual oil cost the.

Bruce C. Wacha: The result has been stable gross profit dollars and cash flow for Chris go in a volatile market, particularly over the past two years.

Bruce C. Wacha: As discussed we do expect to see some up and down movement on Chriscoe net sales results based on changes in oil pricing without any impact on the bottom line.

Bruce C. Wacha: And last spices, and seasonings, representing approximately 18% of our portfolio the core high margin spices and seasoning business ink.

Bruce C. Wacha: Increased net sales by two 2%.

Bruce C. Wacha: Trends were particularly strong on the foodservice and members Mart Sams label business.

Bruce C. Wacha: Which largely served out of home and small business customers.

Bruce C. Wacha: The core retail branded trends Dash Weber Spice Islands, etcetera are improving and have recovered from temporary service and production issues in our Ankeny factory.

We are also strengthen our innovation and new product pipeline launching new license seasoning and grilling blends under the Buffalo trace firewalls, and southern comfort brands, which are preparing forming very well and initial distribution.

Bruce C. Wacha: Overall, we are pleased with the performance in the fourth quarter and the recovery of the <unk> foods business in fiscal year 'twenty three.

Casey Keller: Overall, we are pleased with the performance in the fourth quarter and the recovery of the B&G Foods business in fiscal year 23. There's clearly more work to do, but our team has made significant progress toward creating a stronger, more valuable B&G Foods. Bruce will discuss specific guidance, but our focus in fiscal year 24 is to generate slight top line and low single-digit bottom line growth on the base business, which excludes the divested Green Giant U.S. canned vegetable business, and further reshape the business through strategic divestors to focus the long-term portfolio for higher margins and valuation growth. We continue to evaluate existing businesses that have lower margins and cash flow, higher working capital complexity, or do not fit with our core capabilities and business unit structure.

Bruce C. Wacha: There is clearly more work to do but our team has made significant progress towards creating a stronger more valuable <unk> foods.

Bruce C. Wacha: Bruce will discuss specific guidance, but our focus in fiscal year 'twenty four is too.

Bruce C. Wacha: Generate slight topline and low single digit bottom line growth on the base business, which excludes the divested green giant canned vegetable business.

Bruce C. Wacha: Further reshape the business through strategic divestitures to focused our long term portfolio for higher margins and valuation growth.

Bruce C. Wacha: We continue to evaluate existing businesses that have lower margin and cash flow higher working capital complexity or do not fit with our core capabilities and business unit structure.

Casey Keller: Reducing net debt and leverage through divestiture proceeds and strong excess cash flows. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and results for the year. Thank you, Casey. Good afternoon, everyone.

Bruce C. Wacha: Reduced net debt and leverage through divestiture proceeds and strong excess cash flows.

Bruce C. Wacha: Thank you and I will now turn the call over to Bruce for more detail on our quarterly performance and results for the year.

Bruce C. Wacha: Thank you Casey good afternoon, everyone.

Bruce C. Wacha: Thank you for joining us on our fourth quarter and fiscal year 2023 earnings call. As you can see, we had another strong quarter, and we finished the year largely in line with our guidance. As we explained at the outset of the year, we expected to see large year-over-year increases in Adjusted EBITDA and Adjusted EBITDA as a percentage of net sales in the first two quarters of the year, followed by a more modest increase in adjusted EBITDA and adjusted EBITDA as a percentage of net sales in the third quarter. And for the fourth quarter, we expected similar performance to the prior year before accounting for the This is essentially how the year played out for us.

Bruce C. Wacha: For joining us on our fourth quarter and fiscal year 2023 earnings call.

Bruce C. Wacha: As you can see we had another strong quarter and we finished the year largely in line with our guidance.

Bruce C. Wacha: As we explained at the outset of the year, we expected to see large year over year increase in.

Bruce C. Wacha: And adjusted EBITDA, and adjusted EBITDA as a percentage of net sales in the first two quarters of the year.

Bruce C. Wacha: Followed by a more modest increase in adjusted EBITDA and adjusted EBITDA as a percentage of net sales in the third quarter.

Bruce C. Wacha: And for the fourth quarter, we expected similar performance to the prior year before accounting for the divestiture of Green Giant U S shelf stable product line.

Bruce C. Wacha: This is essentially how the year played out for us.

Bruce C. Wacha: In fiscal 2023, we generated $2.062 billion in net sales and $318 million in adjusted EBITDA. Adjusted EBITDA is a percentage of net sales of 15.4% and adjusted diluted earnings per share of 99%.

Bruce C. Wacha: In fiscal 2023, we generated $2 $62 billion in net sales $318 million and adjusted EBITDA adjusted EBITDA as a percentage of net sales of 15, 4% and adjusted diluted earnings per share of <unk> 99.

Bruce C. Wacha: Base business net sales, which excludes net sales from the back to nature brand and the Green Giant U S shelf stable product line decreased by approximately $30 million or one 5% in fiscal 2023 compared to the year ago period base.

Bruce C. Wacha: Base business net sales, which excludes net sales from the Back to Nature brand and the Green Giant U.S. shelf-stable product line, decreased by approximately $30 million, or 1.5%, in fiscal 2023 compared to the year-ago period. Base business net sales include a benefit of $93.3 million from pricing and the impact of product. This was offset by negative impacts of $5.1 million from FX and $118.2 million from volume. And the pricing helped, particularly in our results in the early part of the year. For fiscal 2023, adjusted EBITDA increased by $17 million, or 5.7%, compared to $301 million for fiscal 2022. Adjusted EBITDA as a percentage of net sales was 15.4% for fiscal 2023 compared to 13.9% for fiscal 2022.

Bruce C. Wacha: Base business net sales include a benefit of $93 $3 million from pricing and the impact of product mix.

Bruce C. Wacha: This was offset by negative impacts of $5 1 million from FX and $118 2 million from volumes.

Bruce C. Wacha: And the pricing helped particularly in our results in the early part of the year for fiscal 2023, adjusted EBITDA increased by $17 million or five 7% compared to $301 million for fiscal 2022.

Bruce C. Wacha: Adjusted EBITDA as a percentage of net sales was 15, 4% for fiscal 2023 compared to 13, 9% for fiscal 2022.

Bruce C. Wacha: For the fourth quarter of 2023, we generated $578.1 million in net sales and $86.8 million in adjusted EBITDA. Adjusted EBITDA as a percentage of net sales of 15% and adjusted diluted earnings per share of 30%, base business net sales increased by $13.3 million or 2.3% in the fourth quarter of 2023 compared to the prior year. The decrease in base business net sales in the fourth quarter was largely driven by a decrease in net pricing and the impact of product mix of $15.9 million, or 2.8% of base business net sales. The decrease in pricing was in part a product of our Crisco commodity pricing model that we have instituted, coupled with modest increases in promotional trade spending in other areas of the portfolio where it made sense. The impact of foreign currency was also a slight drag on net sales, contributing to another $0.3 million of the decline.

Bruce C. Wacha: For the fourth quarter of 2023, we generated $578 1 million in net sales $86 8 million in adjusted EBITDA.

Bruce C. Wacha: Adjusted EBITDA as a percentage of net sales of 15% and adjusted diluted earnings per share of <unk> 30.

Bruce C. Wacha: Base business net sales.

Bruce C. Wacha: Creased by $13 3 million or two 3% in the fourth quarter of 2023 compared to the prior year.

Bruce C. Wacha: The decrease in base business net sales in the fourth quarter was largely driven by a decrease in net pricing and the impact of product mix of $15 9 million or two 8% of these business net sales.

Bruce C. Wacha: The decrease in pricing was in part a product of our Chriscoe commodity pricing model that we have instituted coupled with modest increases in promotional trade spending in other areas of the portfolio, where it made sense.

Bruce C. Wacha: The impact of foreign currency was also a slight drag on net sales.

Bruce C. Wacha: Contributing to another $3 million of the decline.

Bruce C. Wacha: These were partially offset by an increase in unit volume of $2 9 million for the quarter.

Bruce C. Wacha: These were partially offset by an increase in unit volume of $2.9 million for the quarter. We are obviously encouraged by the improving volume story that we are now seeing, although we are closely monitoring the tradeoffs between pricing, promotional strategy, and volumes, as well as current consumption. I will now highlight the performance of some of our larger brands. Clapper Girl had incredibly strong momentum coming into the holiday bake season, and similar to its performance all year long, Clapper didn't disappoint.

Bruce C. Wacha: We are obviously encouraged by the improving volume story that we are now seeing although we are closely monitoring the tradeoffs between pricing promotional strategy and volumes as well as the current consumption trends.

Speaker Change: I will now highlight.

Speaker Change: The performance of some of our larger brands.

Speaker Change: Clabber girl had incredibly strong momentum coming into the holiday peak season, and similar to its performance all year long collaborate didn't disappoint.

Bruce C. Wacha: Net sales of Klaver increased by $8.2 million, or 26.3%, in the fourth quarter of 2023 as compared to the fourth quarter of 2022. Net sales of Clover Girl benefited from both pricing and increased volumes during the quarter. Net sales of Maple Grove Farms increased by about $0.7 million, or 3.4%. Our spices and seasonings continue to benefit from improved supply chain performance and new product launches. Finishing the year with a solid quarter, net sales of the company's spices and seasonings increased by $0.7 million, or 0.8%, in the fourth quarter of 2023 as compared to the fourth quarter of 2022. As Casey mentioned earlier in the call, we are very excited about the prospects for these new partnership brand launches coming out of our spices and seasonings, which include the Licensed Seasoning Products, Einstein's Everything Bagel, Einstein's Avocado Toast, and Sazerac Weber Flavors Buffalo Trace, Fireball, and Southern Comfort.

Speaker Change: Net sales of <unk> increased by $8 2 million or 26, 3% in the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Speaker Change: Net sales of Clabber girl benefited from both pricing and increased volumes during the quarter.

Speaker Change: Net sales of Maple Grove farms increased by about <unk> 7 million or three 4%.

Speaker Change: Our spices and seasonings continued to benefit from improved supply chain performance and new product launches, finishing the year with a solid quarter net sales of the company's spices and seasonings increased by zero point $7 million.

Speaker Change: <unk>, 8% in the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Speaker Change: As Casey mentioned earlier on the call. We are very excited about the prospects for these new partnership brand launches coming out of our spices and seasonings business, which includes the license seasoning products Einstein's everything bagel.

Speaker Change: Signs avocado toast and SaaS, <unk> Weber flavors, Buffalo traced firewall and southern comfort.

Speaker Change: We have also have a robust pipeline and expect to be able to announce additional new and exciting products.

While net sales of Chriscoe decreased by $10 6 million or eight 7% in the fourth quarter of 2023, when compared to the prior year period. This was largely expected due to favorable input cost relief and the execution of our commodity pricing model, which allowed us to reduce pricing to our customers.

Bruce C. Wacha: We also have a robust pipeline and expect to be able to announce additional new and exciting products. While net sales of Crisco decreased by $10.6 million, or 8.7%, in the fourth quarter of 2023 when compared to the prior year period, this was largely expected due to favorable input cost relief and the execution of our commodity pricing model, which allowed us to reduce pricing to our customers and still maintain profit dollars. As a result of the lower pricing, we are starting to see a nice recovery in Crisco Vanya. Increased volumes for Crisco contributed to 1.8 million dollars in net sales or 1.5 percent in the fourth quarter of 2023 compared to the fourth quarter of 2022. We expect this trend to continue throughout 2024, with lower pricing leading to an improved volume recovery for Crisco throughout the year. However, our Green Giant business was not immune to the category-wide industry challenges seen throughout 2023 in the shelf-stable and frozen vegetable stack. Net sales of Green Giant, including Lassure, but excluding the divested Green Giant U.S.

Speaker Change: And still maintain profit dollars.

Speaker Change: As a result of the lower pricing, we are starting to see a nice recovery in Chriscoe volumes, Inc.

Speaker Change: Increased volumes for Chriscoe contributed to $1 $8 million to net sales or one 5% in the fourth quarter of 2023 compared to the fourth quarter of 2022.

Speaker Change: We expect this trend to continue throughout 2024 with lower pricing, leading to an improved volume recovery for Chris go throughout the year.

Speaker Change: Our green giant business was not immune to the category wide industry challenges seen throughout 2023, and the shelf stable and frozen vegetables.

Speaker Change: Net sales of green giant, including lessor, but excluding the divested green giant U S shelf stable product line decreased by $5 2 million or four 4%.

Speaker Change: We expect more favorable industry trends in the category during 2024.

Speaker Change: And quite frankly, we expect much more favorable trends for our business.

Speaker Change: The goal is to get this brand back to being the industry leader from an innovation perspective and to generate category leading growth rates like we did before the pandemic.

Speaker Change: The Hot breakfast style is another category that is still seeing some normalization and its post pandemic trends.

Speaker Change: Net sales of cream of wheat were approximately $78 5 million.

Bruce C. Wacha: The Shell Stable product line decreased by $5.2 million or 4.4%. We expect more favorable industry trends in the category during 2024. And quite frankly, we expect much more favorable trends for our business. The goal is to get this brand back to being the industry leader from an innovation perspective and to generate category-leading growth rates like we did before the pandemic. The hot breakfast style is another category that is still seeing some normalization in its post-pandemic trends.

Speaker Change: In 2023, which was well ahead of the pre pandemic levels that had been consistently in the $60 million to $70 million range annually.

Speaker Change: Although 2023 net sales were somewhat lower than fiscal 2022 annual net sales of $81 4 million.

Speaker Change: In the fourth quarter of 2023 net sales of cream of wheat decreased by $2 2 million or 9% compared to the prior year.

Bruce C. Wacha: Net sales of cream of wheat were approximately $78.5 million in 2023, which was well ahead of the pre-pandemic levels that had been consistently in the $60-70 million range annually. However, 2023 net sales were somewhat lower than fiscal 2022 annual net sales of $81.4 million. In the fourth quarter of 2023, net sales of cream of wheat decreased by $2.2 million, or 9% compared to the prior year. Net sales of Ortega decreased by $0.3 million, or 1%, in the fourth quarter of 2023 as compared to the fourth quarter of 2022. Ortega finished the quarter with some momentum despite a challenging year.

Speaker Change: Net sales.

Speaker Change: <unk> of Ortega decreased by <unk> $3 million or 1% in the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Speaker Change: <unk> finished the quarter with some momentum despite a challenging year.

Speaker Change: While Q4 net sales were down 1% they were up approximately 9% in the month of November and another 6% in December compared to the prior year periods.

Speaker Change: Taco sauces Green Chiles and seasoning mixes led the way for the brand driving positive performance in the back half of the fourth quarter.

Speaker Change: Taco shells and Taco kits continue to be somewhat challenged.

Speaker Change: Ortega began the year with a tough comp relative to prior year and some softness in shells and kits as well as pricing elasticity driven volume declines in some skus, where we took pricing.

Speaker Change: These factors combined with the general post Covid category, New amortization helped caused much of the declines.

Bruce C. Wacha: While Q4 net sales were down 1%, they were up approximately 0.9% in the month of November and another 0.6% in December compared to the prior year. Taco sauces, green chilies, and seasoning mixes led the way for the brand, driving top positive performance in the back half of the fourth quarter. Taco shells and taco kits continue to be somewhat challenged.

Speaker Change: Total net sales for <unk> were $147 9 million in fiscal 2023 down from 150, $454 3 million in fiscal 2022.

Speaker Change: But also up substantially from pre pandemic 2019, net sales of $144 million.

Speaker Change: Yeah.

Speaker Change: Base business net sales of all other brands in the aggregate decreased by $4 6 million or three 5% for the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Bruce C. Wacha: Ortega began the year with a tough comp relative to the prior year and some softness in shelves and kits, as well as pricing-elasticity-driven volume declines and some skews where we took prices. These factors, combined with the general post-COVID category normalization, helped cause much of the decline. Total net sales for Ortega were $147.9 million in fiscal 2023, down from $154.3 million in fiscal 2022 but also up substantially from pre-pandemic 2019 at sales of $140.4 million. Base business net sales of all other brands in the aggregate decreased by $4.6 million or 3.5% for the fourth quarter of 2023 as compared to the fourth quarter of 2022. Gross profit was $125.2 million for the fourth quarter of 2023, or 21.7% of net sales. Adjusted gross profit was $126.8 million, or 21.9% of net sales.

Speaker Change: Sure.

Gross profit was $125 2 million for the fourth quarter of 2023 or 21, 7% of net sales.

Speaker Change: Adjusted gross profit was $126 8 million or 21, 9% of net sales.

Speaker Change: Gross profit was $126 1 million in the fourth quarter of 2022 or 22% of net sales.

Speaker Change: Adjusted gross profit was $128 6 million or 26% of net sales.

Speaker Change: Adjusted gross profit increased by approximately 130 basis points in the fourth quarter of 2023 compared to last year's fourth quarter.

Speaker Change: The improvement in gross profit percentage was largely driven by a moderation in input costs and logistics inflation.

Speaker Change: This represents a continued turnaround compared to the first half of fiscal 2022, where we suffered from the severe industry wide input cost inflation, which led to large declines in our gross profit and margins.

Bruce C. Wacha: Gross profit was $126.1 million in the fourth quarter of 2022, or 20.2% of net sales. Adjusted gross profit was $128.6 million, or 20.6% of net sales. Adjusted gross profit increased by approximately 130 basis points in the fourth quarter of 2023 compared to last year's fourth quarter. The improvement in gross profit percentage was largely driven by a moderation in input costs and logistics inflation. This represents a continued turnaround compared to the first half of fiscal 2022, where we suffered from severe industry-wide input cost inflation, which led to large declines in our gross profit and margin. Selling general and administrative expenses increased by $1.3 million, or 2.7%, to $53.2 million for the fourth quarter of 2023 from $51.9 million for the fourth quarter of 2022. The increase was composed of increases in general and administrative expenses.

Selling general and administrative expenses increased by $1 3 million or two 7% to $53 2 million for the fourth quarter of 2023 from $51 9 million.

Speaker Change: For the fourth quarter of 2022.

Speaker Change: The increase was composed of increases in general and administrative expenses of $5 8 million.

Speaker Change: And consumer marketing expenses of <unk> 9 million.

Speaker Change: Partially offset by decreases in warehousing expenses of $2 6 million.

Speaker Change: Selling expenses of $2 3 million and.

Speaker Change: And acquisition and divestiture related and nonrecurring expenses of <unk> 5 million.

Speaker Change: Expressed as a percentage of net sales selling general and administrative expenses increased by 90 basis points to nine 2% for the fourth quarter of 2023 as compared to eight 3% for the fourth quarter of 2022.

Speaker Change: The increase in general and administrative costs was largely driven by modest inflation in wages insurance and other professional services as well as an increase in short term management incentive accruals as annual bonuses were rewarded for fiscal 2022 due to the shortfall in performance in fiscal 2020.

Speaker Change: Two.

Speaker Change: As I mentioned earlier, we generated $86 8 million and adjusted EBITDA for the fourth quarter of 2023 compared to $93 6 million in the fourth quarter of 2022.

Bruce C. Wacha: $5.8 million, and consumer marketing expenses of $0.9 million, partially offset by decreases in warehousing expenses of $2.6 million, selling expenses of $2.3 million, and acquisition divestor-related and non-recurring expenses of $0.5 million. Expressed as a percentage of net sales, selling, general, and administrative expenses increased by 90 basis points to 9.2% for the fourth quarter of 2023, as compared to 8.3% for the fourth quarter of 2022 The increase in general and administrative costs was largely driven by modest inflation in wages, insurance, and other professional services, as well as an increase in short-term management incentive accruals, as no annual bonuses were rewarded for fiscal 2022 due to the shortfall in performance in fiscal 2022.

Speaker Change: Fourth quarter 2023, adjusted EBITDA benefited from the moderation in industry wide input cost inflation and logistics inflation that have plagued the industry since the fourth quarter of 2021.

Speaker Change: Which were offset in part by the modestly higher G&A costs as well as the impact of divestitures.

Speaker Change: Fourth quarter of 2022 included a full quarter of profits from back to nature brand and the green giant use shelf stable product line.

Speaker Change: While the fourth quarter of 2023 had no benefit from back to nature, and approximately five and $1 five weeks of benefit from Green giant use shelf stable business.

Speaker Change: Adjusted EBITDA as a percentage of net sales was 15% in the fourth quarter of 2023 in line with the 15% in the fourth quarter of 2022.

Bruce C. Wacha: As I mentioned earlier, we generated $86.8 million in adjusted EBITDA for the fourth quarter of 2023, compared to $93.6 million in the fourth quarter of 2022. Fourth quarter 2023 adjusted EBITDA benefited from the moderation in industry-wide input cost inflation and logistics inflation that have plagued the industry since the fourth quarter of 2021, which were offset, in part, by the modestly higher G&A costs, as well as the impact of The fourth quarter of 2022 included a full quarter of profits from Back to Nature and the Green Giant U.S. shelf-stable product line, while the fourth quarter of 2023 had no benefit from Back to Nature and approximately five and one-half weeks of benefit from Green Giant U.S. shelf stable.

Speaker Change: Net interest expense was $40 2 million in the fourth quarter of 2023 compared to $36 3 million in the fourth quarter of 2022.

Speaker Change: The increase was primarily attributable to higher interest rates on our borrowings and a <unk> $5 million loss on extinguishment of debt.

Speaker Change: Partially offset by a reduction in our average debt outstanding.

Speaker Change: Depreciation and amortization was $17 million in the fourth quarter of 2023 compared to $19 5 million in the fourth quarter of last year.

Speaker Change: We generated 30 and adjusted diluted earnings per share in the fourth quarter of 2023 compared to 40 last year.

Speaker Change: We remain very encouraged by the progress we have made over the past year in terms of restoring our P&L.

Speaker Change: And perhaps even more impressive than our P&L improvements was the progress that we made in the improvement of our cash flows and our balance sheet.

Speaker Change: We generated $92 $1 million of net cash from operations in the fourth quarter of 2023.

Bruce C. Wacha: Adjusted EBITDA as a percentage of net sales was 15% in the fourth quarter of 2023, in line with the 15% in the fourth quarter of 2022. Net interest expense was $40.2 million in the fourth quarter of 2023, compared to $36.3 million in the fourth quarter of 2022. The increase was primarily attributable to higher interest rates on our borrowings and a $0.5 million loss on extinguishment of debt, partially offset by a reduction in our average debt outstanding. Depreciation and amortization was $17 million in the fourth quarter of 2023 compared to $19.5 million in the fourth quarter of last year. We generated $0.30 in adjusted diluted earnings per share in the fourth quarter of 2023 compared to $0.40 last year. We remain very encouraged by the progress we have made over the past year in terms of restoring our P&L. And perhaps even more impressive than our P&L improvements was the progress that we made in the improvement of our cash flows and our balance sheet. We generated $92.1 million in net cash from operations in the fourth quarter of 2023 and $247.8 million in the full 12 months of fiscal 2023.

Speaker Change: And $247 $8 million in the full 12 months of fiscal 2023.

Speaker Change: This compares to $54 4 million in net cash from operations generated in the fourth quarter of 2022.

Speaker Change: And just $6 million during the full 12 months of 2022.

Speaker Change: Increased operating profits improved margins and a more favorable working capital were the primary drivers of improved cash flows from operations.

Speaker Change: Which was offset in part by increased interest expense.

Speaker Change: We finished the year with approximately $569 million in inventory and fiscal 2023 compared to $726 5 million in inventory at the end of last year.

Speaker Change: Approximately $90 million of the reduction was due to our focus on supply chain efficiencies and a moderation in input costs.

Speaker Change: The remainder came from the sale of the Green Giant U S shelf stable product line, which as we mentioned previously was highly capital intensive and came with large seasonal swings in working capital.

Speaker Change: We reduced net debt by more than $335 million. During the course of fiscal 2023 to $2 2 billion at the end of the year down from $2 $36 billion at the end of fiscal 2022.

Speaker Change: We also reduced pro forma adjusted net leverage ratio as defined in our credit agreement to approximately six three times at the end of fiscal 2023 compared to seven six times at the end of fiscal 2022.

Speaker Change: We expect to continue to reduce our net debt and pro forma adjusted net leverage ratio throughout fiscal 2024 and beyond as we diligently work toward achieving our long term target of four 5% to five five times.

Bruce C. Wacha: This compares to $54.4 million in net cash from operations generated in the fourth quarter of 2022 and just $6 million during the full 12 months of 2020. Increased operating profits, improved margins, and a more favorable working capital were the primary drivers of improved cash flows from operations, which was offset, in part, by increased... We finished the year with approximately $569 million in inventory in fiscal 2023, compared to $726.5 million in inventory at the end of last year. Approximately 90 million dollars of the reduction was due to our focus on supply chain efficiencies and a moderation in input. The remainder came from the sale of the Green Giant U.S. self-stable product line, which, as we mentioned previously, was highly capital intensive and came with large seasonal swings in working capital. We reduced net debt by more than $335 million during the course of fiscal 2023 to $2.02 billion at the end of the year, down from $2.36 billion at the end of fiscal 2022.

Speaker Change: Now as a reminder, before we get to our fiscal 2024 guidance. We are still living in a highly unpredictable times, we have two major military complex going on in the world that are far reaching global implications.

Speaker Change: We also have separate but ongoing disruptions in both important canal zones that impacted the global supply chain.

Speaker Change: Although we are not immune from the challenges that these issues present, we are happy to have a much simpler operational footprint than many of our larger packaged food peers.

Speaker Change: For <unk> foods, though M&A will have an impact on our numbers. We have now fully lapped the sale of back to nature, but we still have to lap the sale of the green giant U S shelf stable product lines.

Speaker Change: As we mentioned on our prior call the Green Giant U S shelf stable product line had approximately 75% to $85 million.

Speaker Change: And annual net sales and low double digit contribution margins.

Speaker Change: The business had approximately $65 million and net sales under our watch in fiscal 2023 that we need to lap this year.

Bruce C. Wacha: We also reduced the pro forma adjusted net leverage ratio, as defined in our credit agreement, to approximately 6.3 times at the end of fiscal 2023, compared to 7.6 times at the end of fiscal 2022. We expect to continue to reduce our net debt and the pro forma adjusted net leverage ratio throughout fiscal 2024 and beyond as we diligently work toward achieving our long-term target of 4.5 to 5.5%. Now, as a reminder, before we get to our fiscal 2024 guidance, we are still living in highly unpredictable times. We have two major military conflicts going on in the world that have far-reaching global implications.

Speaker Change: It is also worth noting that while the majority of the heavy lifting in our adjusted EBITDA margin and dollar recovery has already happened, we still do expect to see some modest improvements going forward in 2024.

Speaker Change: So based on what we know today, we expect 2024 net sales of $1.

Speaker Change: 975 to $2 820 billion.

Speaker Change: Our net sales guidance is generally in line with our long term guidance of <unk> to 2% base business topline growth after adjusting for the removal of the green Giant U S shelf stable product line, which we sold in November other nonrecurring sales and an estimated $15 million reduction in net sales of <unk>.

Bruce C. Wacha: We also have separate but ongoing disruptions in both important canal zones that have affected the global supply chain. Although we are not immune from the challenges that these issues present, we are happy to have a much simpler operational footprint than many of our larger packaged food peers. For B&G Foods, though, M&A will have an impact on our numbers. We have now fully lapped the sale of Back to Nature, but we still have to lap the sale of the Green Giant U.S. shelf-stable product. As we mentioned on our prior call, the Green Giant U.S. shelf-stable product line had approximately $75 to $85 million in annual net sales and a low double-digit contribution. The business had approximately $65 million in net sales under our watch in fiscal 2023 that we need to lap up.

Speaker Change: Due to anticipated lower oil input costs and a corresponding reduction in our chriscoe net selling prices.

Speaker Change: We expect adjusted EBITDA to be in a range of $305 to $325 million. This range largely reflects the elimination of approximately $8 million to $10 million.

Of adjusted EBITDA due to the recent sale of our Green giant shelf.

Speaker Change: Shelf stable product line.

Speaker Change: Based on this adjusted EBITDA guidance range, we expect adjusted EBITDA as a percentage of net sales to remain at approximately 15%.

Speaker Change: And based on this guidance, we expect adjusted diluted earnings per share to be in the range of 80 to one dollar.

Additionally, we expect for full year 2024.

Speaker Change: Interest expense of $145 to $150 million include.

Bruce C. Wacha: It is also worth noting that while the majority of the heavy lifting in our adjusted EBITDA, margin, and dollar recovery has already happened, we still do expect to see some modest improvements going forward in 2024. So, based on what we know today, we expect 2024 net sales of $1.975 to $2.020 billion. Our net sales guidance is generally in line with our long-term guidance of 0 to 2% based on business top-line growth after adjusting for the removal of the Green Giant U.S. Shell Stable product line, which we sold in November, other non-recurring sales, and an estimated $15 million reduction in net sales of Crisco due to anticipated lower oil input costs and a corresponding reduction in our Crisco net selling. We expect the Justity Bazaar to be in a range of $305 to $325 million.

Speaker Change: Including cash interest of $138 million to $143 million.

Speaker Change: Depreciation expense of 47, 5% to $52 5 million.

Speaker Change: Amortization expense of $20 million to $22 million.

Speaker Change: An effective tax rate of 26% to 27%.

Speaker Change: And capex of $35 million to $40 million.

Speaker Change: We expect to use a little bit less than 50% of our excess cash to pay our dividend and the remaining 50% to 60% to pay down debt.

Speaker Change: And now I will turn the call back over to Casey for further remarks.

Casey Keller: Thank you Bruce.

Casey Keller: In closing our quarter four and fiscal 2023 results demonstrated strong progress with improved margins stabilizing volumes stronger cash flows and a reduction in leverage.

We remain on track to further improve the business in fiscal 2024 and beyond.

Casey Keller: We have also made significant progress against reshaping the portfolio through our focused M&A strategy, including the divestiture of two businesses the back to nature brand and the Green Giant U S shelf stable business that are not core to the <unk> foods of the future.

Bruce C. Wacha: This range largely reflects the elimination of approximately $8 to $10 million of adjusted EBITDA due to the recent sale of our Green Giant U.S. shelf-stable product. Based on this Adjusted EBITDA guidance range, we expect Adjusted EBITDA as a percentage of net sales to remain at approximately 15%. And based on this guidance, we expect adjusted diluted earnings per share to be in a range of 80 cents to a

Speaker Change: This concludes our remarks and now we would like to begin the Q&A portion of our call.

Speaker Change: Operator.

Thank you we will now be conducting a question and answer session.

Speaker Change: So ask a question. Please press Star then one on your telephone keypad.

Speaker Change: Jason will indicate your line is in the question queue.

Speaker Change: You May press Star and then <unk>.

Speaker Change: Please like to remove your question from the queue.

Speaker Change: For participants using speaker equipment.

Bruce C. Wacha: Additionally, we expect for full year 2024 interest expense of $145 to $150 million, including cash interest of $138 to $143 million, with an appreciation expense of $47.5 to $52.5 million, amortization expense of $20 to $22 million, an effective tax rate of 26 to 27 percent, and CapEx of $35 to $40 million. We expect to use a little bit less than 50% of our excess cash to pay our dividend and the remaining 50-60% to pay down debt. And now, I will turn the call back over to Casey for further remarks. Thank you, Bruce.

Speaker Change: The comprehensive focusing stocky.

Speaker Change: We also request that you keep to one question and one follow up question.

Speaker Change: The first question, we have is from Andrew Lazar of Barclays. Please go ahead.

Andrew Lazar: Good afternoon, Casey and Bruce.

Andrew Lazar: Okay, Alright, Andrew.

Andrew Lazar: First off I guess.

Andrew Lazar: Base business growth expectation as.

Andrew Lazar: As you mentioned for 24, I think is roughly flattish.

Speaker Change: And I'm trying to get a sense of how you see that playing out for the year, both from a volume and a price standpoint, I think you mentioned.

Speaker Change: Another $15 million impact from negative pricing for the year for just the Chriscoe pass through pricing model, if I got that right. So thats about maybe down a percent. So does that assume that volume is probably up a percent or so for.

Speaker Change: For the year I want to make sure I have that right I think specific to Chris go.

Casey Keller: In closing, our Quarter 4 and Fiscal 2023 results demonstrated strong progress, with improved margins, stabilizing volumes, stronger cash flows, and a reduction in leverage. We remain on track to further improve the business in fiscal 2024 and beyond. We have also made significant progress toward reshaping the portfolio through our focused M&A strategy, including the divestiture of two businesses, the Back to Nature brand and the Green Giant U.S. shelf-stable business that are not core to B&G Foods of the future. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator?

Speaker Change: Okay.

Speaker Change: Could there be some additional.

Speaker Change: Negative pricing activities, such that I'm trying to get a sense of what you think pricing looks like and just how positive your bias patient is.

Speaker Change: Yes, so just just let's address these separately so for Chris go as we've said over the past year or so we've put in place a pricing model, where we interact with our customers quarterly and.

Speaker Change: Based on where input costs are we adjust price.

Speaker Change: We think about how last year played out in.

Speaker Change: Input costs were still high from the 2022 levels at the beginning of the year and overtime came down and so quarterly we were reducing price for Chris go.

Speaker Change: We will be lapping those higher prices for Chris go for the first half to three quarters of this year.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would like to remove your question from the queue.

Speaker Change: Which will then mean, assuming everything was perfect margins would be the same from a dollar standpoint sales would be down margins would be up from a percent standpoint pricing would come down for Chris go and we actually think we get a little volume elasticity benefit and that's kind of what we're seeing for <unk> today.

Speaker Change: And then if you look at the base business, yes, but if you look at the base business, excluding the divestitures and excluding the impact of Chris go we're basically saying, we're going to be flat to slightly up.

Andrew Lazar: For participants using speaker equipment, it may be necessary to pick up a handset before pressing the star keys. We also request that you answer one question and one follow-up question. The first question we have is from Andrew Lazar of Barclays; please go ahead. Good afternoon, Casey and Bruce. First off, I guess your base business growth expectation, as you mentioned, for 2024, is roughly flat. And I'm trying to get a sense of how you see that playing out for the year, both from a volume and a price standpoint. I think you mentioned another $15 million impact from negative pricing for the year for just the Crisco pass-through pricing model, if I got that right. So that's about maybe down a percent. So does that assume that volume is probably up a percent or so for the year? I just want to make sure I have that right.

Speaker Change: And that will be probably on both volume and pricing.

Speaker Change: So those two will be kind of running more closely together and if I think about the flow of that.

Speaker Change: We still are kind of coming out of that trends, improving but I would expect the expected. The first half of the year is a little bit below that in the second half is a little bit better than that.

Speaker Change: How we kind of see it playing out right now and we are seeing kind of volumes and pricing stabilize and we don't have a lot of growth planned from pricing other than the other than the movement of Chris go which is kind of irrelevant to the bottom line.

Speaker Change: Got it that's helpful and then.

Speaker Change: Your guidance, obviously at the midpoint on EBITDA margin suggests like you said some some additional modest improvement and obviously there was a big jump up in margins in 'twenty three versus 22, EBITDA margins, though still still well below where they were just a couple of years ago. So I'm trying to get a sense of maybe what what would impede.

Casey Keller: Specific to Crisco. Okay, so could there be some additional negative pricing activities such as I'm trying to get a sense of what you think pricing looks like and just how positive you're buying expectations are. Yeah, so just let's address these separately. So for Crisco, as we said, over the past year or so, we put in place a pricing model where we interact with our customers quarterly. And based on where input costs are, we adjust prices; we think about how last year played out. Info costs were still high from the 2022 levels at the beginning of the year and, over time, came down, and so, quarterly, we were reducing prices for Crisco. We will be lapping those higher prices for Crisco for the first half, and the three quarters of this year, which will then mean, assuming everything was perfect, margins would be the same from a dollar standpoint, sales would be down, margins would be up from a percent standpoint, and pricing would come down for Crisco, and we actually think we get a little volume elasticity benefit, and that's kind of what we're seeing for Cri

Speaker Change: More significant.

Speaker Change: EBITDA margin improvement as we go forward.

Speaker Change: Is it is it something just in the portfolio Thats changed versus where you were a couple of years ago or what would it take to get back to those levels, if thats, even a reasonable expectation at some point.

Speaker Change: Well I mean, Andrew our goal is to get back to 80% to 20%. So that's what we want to that's what we're driving to and I think it's going to take a couple of things. So one is one is M&A divesting businesses that are low margin.

Speaker Change: A lot of working capital intensity.

Continued productivity. We so we've started on that productivity savings journey, we've got that kind of going this is going to be our second year, where we're really focused on it. So we see some improvement from that and then the third thing for me would be.

Speaker Change: As Chris go oil pricing comes down we will get some benefit on margin from that is.

Speaker Change: Ironically as sales come down, but the same gross profit we're going to improve our margins on the cristal business, just because of that compression of oil pricing. So those three things together.

Speaker Change: That's where we're trying to hit to get back to 18% to 20%, but it's going to take those three things working together to get there and if you think about some of that drag cases, describing on Chriscoe bigger example for that brand, but to the same degree across a lot of the rest of our portfolio when costs were rapidly rising.

Casey Keller: And then if you look at the base business, but if you look at the base business, excluding the divestors and excluding the impact of Crisco, you know, we're basically saying we're going to be flat to slightly up and that that will probably be on both volume and price. So, those two will be kind of running more closely together. And if I think about the flow of that, you know, we still are kind of coming out of that, and trends are improving, but I would expect that the first half of the year is a little bit below that, and the second half is a little bit better than that. And that's how we kind of see it playing out right now.

Speaker Change: We took price to protect profit dollars, which just the algebra suggests lower margins as a percent just that's when the.

Speaker Change: The math works Chriscoe.

Speaker Change: Chris <unk> being the most extreme example of that yet right.

Speaker Change: Alright, thanks, so much I'll pass it on.

Speaker Change: Yes.

Speaker Change: The next question. We have is from William Reuter of Bank of America. Please go ahead.

William Michael Reuter: Good afternoon.

William Michael Reuter: My first question.

On the topic.

Casey Keller: And we are seeing volumes and pricing stabilize. And we don't have a lot of growth plans from pricing, you know, other than the movement of Crisco, which is kind of irrelevant to the bottom line. Got it.

William Michael Reuter: Sorry, I've got an echo on the topic of.

William Michael Reuter: Future additional asset sales.

William Michael Reuter: I wasn't aware that you were still actively pursuing these.

William Michael Reuter: Is this new or have you been continuing to pursue over the last handful of months and quarters.

Casey Keller: That's helpful. And then your guidance, obviously, at the midpoint on EBITDA margins suggests, like you said, some additional modest improvement. And obviously, there was a big jump in margins in 23 versus 22, but EBITDA margins, though, still fell below where they were just a couple of years ago.

William Michael Reuter: And I don't know if <unk> any sense of magnitude on what types of assets Youre looking at.

Speaker Change: Sure So our M&A process.

Speaker Change: We turned and we will tend to be a long term net acquire but we are reshaping the portfolio and as part of that there is some things that are going to come out. So we sold two businesses that we felt were not a fit to the portfolio that we want to run in the future and over the long term, there's probably a couple of other things there is nothing that we're at.

Casey Keller: So I'm trying to get a sense of maybe what would impede more significant EBITDA margin improvement as we go forward. Is it something just in the portfolio that's changed versus where you were a couple of years ago? Or what would it take to get back to those levels if that's even a reasonable expectation at some point?

Speaker Change: Active in the market in terms of running a process for right now.

Speaker Change: So theres a little bit of a stay tuned and when its appropriate to talk about it we'll talk about likely what you will see is other things that maybe are not a.

Casey Keller: Well, I mean, Andrew, our goal is to get back to 18 to 20%. So that's what we want to, and that's what we're driving toward. And I think it's going to take a couple of things.

Speaker Change: Fit for us or that could be a better fit for other people.

Speaker Change: Got it that's helpful and then.

Speaker Change: And the answer to a previous question you mentioned that you werent expecting to take much pricing. This year I don't know if I heard you explicitly what your outlook is for input costs and let's exclude Chris goes from SaaS to pasture model, but for the remainder of the products. What's your outlook on where they should be this year versus last year or any other sources of he.

Casey Keller: So one is M&A, divesting businesses that are low margin, a lot of working capital intensity, and continued productivity. So we've started on that, you know, productivity savings journey. We've got that kind of going.

Casey Keller: This is going to be our second year where we're really focused on it, so hopefully, we see some improvement from that. And then the third thing for me would be, you know, as Crisco oil pricing comes down, we will get some benefit on margin from that. As, you know, ironically, as sales come down, but the same gross profit, we're going to improve our margins on the Crisco business just because of that compression of oil prices. So those three things together, that's where we're trying to hit, to get back to 18% to 20%. But it's going to take those three things working together to get there.

Speaker Change: Their inflation or deflation.

Speaker Change: I think what we're seeing right now in our input costs and obviously this is still early in the air and we're still trying to projected fully but I'm seeing something more in the 1% to 2% range, 1% to 2% and in terms of input cost inflation, probably on the lower end of that range right now as I see it but.

Speaker Change: Maybe a little bit in freight and transportation, but I think it's probably more in line with that range. So.

Speaker Change: I feel like right now our job is to get.

Speaker Change: Get the business back stabilize on volumes.

Speaker Change: Not take as much pricing as we have over the past year, but drive productivity to offset that inflation and then maybe give us a little bit of margin improvement that's our focus right now.

Casey Keller: And if you think about some of that drag, what Casey is describing for Crisco, a bigger example for that brand, but to the same degree across a lot of the rest of our portfolio when costs were rapidly rising, we took Price to Protect Profit Dollars, which just the algebra suggests lower margins as a percent, just that's not a matter, with Crisco being the most extreme example of that.

Speaker Change: Got it perfect. There may be some selective places, where we're going to take price, where we might have a big jump in one particular small commodity input.

Speaker Change: That's going to be very very selective.

Speaker Change: Got it very helpful. That's all for me. Thank you.

Speaker Change: The next question, we have is from <unk> Martinson of Jefferies <unk> Company. Please go ahead.

Martinson: Good afternoon.

Martinson: What has been the kind of the competitive response in terms of your peers, we constantly keep hearing about the consumer trading down too.

Casey Keller: Right. Okay. Thanks so much.

Andrew Lazar: I'll pass it on. Yeah. The next question we have is from William Reuter of Bank of America. Please go ahead.

William Michael Reuter: Good afternoon. My first question on the topic of future additional asset sales, I wasn't aware that you were still actively pursuing these. I guess, is this new or have you been continuing to pursue over the last handful of months and quarters? And I don't know, any sense of magnitude or what types of assets you're looking at?

Martinson: Private label the give back on pricing the elasticity that you referenced are you.

Martinson: Are you seeing that sustained shift in terms of the competing products for your categories.

Martinson: I mean, it really depends on the category honestly, because we have the pass through model loan Chriscoe, we're actually seeing volumes increasing on that business. So.

Casey Keller: So our M&A process, you know, and we tend and will tend to be a long-term net acquirer, but we are reshaping the portfolio. And as part of that, there's some things that are going to come out. So we've sold two businesses that we felt were not a fit to the portfolio that we want to run in the future and over the long term. There are probably a couple other things.

Martinson: We're seeing a pickup in our unit sales as a result of bringing the price back down to reflect the lower oil commodity cost pricing, so even though the.

Martinson: The percentage gap to private label might be the same the absolute gap has come down and the absolute price point has come down so on that one we're kind of moving where wed expect to in terms of our share performance.

Martinson: I would say, there's a couple of other places, where we've seen inflation drive up pricing and even though we try to maintain our percentage gaps of private label.

Casey Keller: There's nothing that we're active in the market in terms of running a product right now. So there's a little bit of stay tuned, and when it's appropriate to talk about it, we'll talk about likely what you will see is other things that maybe are not a good fit for us or that could be a better fit for others. Got it. That's helpful.

Martinson: At the higher absolute price points that are just maybe a couple of categories like canned vegetables. We're out of now but that was one where we were seeing a little bit of that dynamic but for.

Martinson: For the most part we watch the gap to private label pretty closely and we try and manage to that so that we don't have a lot of pressure from <unk>.

Casey Keller: And then in the answer to a previous question, you mentioned that you weren't expecting to take much pricing this year. I don't know if I heard explicitly what your outlook is for input costs, and let's exclude Crisco since that's the pass-through model, but for the remainder of the products, what's your outlook on where they should be this year versus last year, or any other sources of either inflation or deflation? I think what we're seeing right now in our input costs, and obviously, this is still early in the year, and we're still trying to project it fully, but I'm seeing something more in the 1% to 2% range, 1% to 2% high end, in terms of input cost inflation, probably on the lower end of that range right now, as I see it, but maybe a little bit in freight and transportation, but I think it's probably more in line with that range.

Martinson: Trade down or we maintained the same relative position in the marketplace.

Speaker Change: Okay, and when we look at the kind of the implied cash flow guidance here for the year with $71 million or so for the dividend.

Speaker Change: With $300 million maturity in 2025.

Speaker Change: We've kind of $230 million.

Speaker Change: You would need to refinance is that to be.

Speaker Change: Paid off through the asset sales or how would you look at addressing that.

Speaker Change: So for the remaining stub on the 2020 fives. The base case assumption is it's a combination of cash from operations.

Speaker Change: And revolver draw and keep in mind, we've got a revolver. So we've got plenty of capacity there.

Speaker Change: I think there is there is always.

Speaker Change: <unk> around potential refinancing as part of a broader refinancing in.

Speaker Change: The market is hospitable when it makes sense to us to.

Casey Keller: So I feel like right now, our job is to get the business back stabilized on volumes, not take as much pricing as we have over the past year, but drive productivity to offset that inflation and then maybe give us a little bit of margin improvement. That's our focus right now. There may be some selected places where we're going to take prices where we might have a big jump in one particular small commodity input, but that's going to be very, very selective.

Speaker Change: To the extent that we have any more asset divestitures.

Speaker Change: There is money coming in the door from that as well and so I think theres a couple of things, but I would use as the base case, what we laid out to investors ample cash from operations coupled with.

Speaker Change: Liquidity from the revolver.

Speaker Change: Thank you very much appreciate it.

Speaker Change: The next question we have vishal.

Vishal: That's again of consumer edge research. Please go ahead.

Vishal: Hey, guys good afternoon.

William Michael Reuter: Very helpful. All right. That's all for me.

Vishal: Afternoon.

Vishal: So correct me, if I'm wrong, but it sounds like Youre industry registered positive base business volume growth in the quarter. So that was quite a bit ahead of what we saw in the track data.

Karru Martinson: Thank you. The next question we have is from Karru Martinson of Jefferies Company. Please go ahead.

Casey Keller: Good afternoon. What has been the kind of competitive response from your peers? We constantly keep hearing about the consumer trading down to private label, the give back in pricing, the elasticity that you referenced. Are you seeing that sustained shift in terms of competing products in terms of your categories? I mean, it really depends on the category.

Speaker Change: Can you help us understand what drove that differential and.

Speaker Change: Looking ahead to 2020 or how we should sort of think about volume trends over the course of the year, maybe there any items.

Speaker Change: We should keep in mind in terms of divergences versus track data.

Speaker Change: Yes, so first of all in the fourth quarter, we saw a small growth in volume so I want to be careful that we don't we.

Speaker Change: We don't over call that one, but honestly, we celebrated getting stable volume trends on the business after the past year coming off to all the inflationary pricing.

Casey Keller: Honestly, because we have the pass-through model on Crisco, we're actually seeing volumes increasing on that business. So, you know, we're seeing, you know, a pickup in our unit sales as a result of bringing the price back down to reflect the lower oil commodity cost pricing. So, you know, even though the, you know, the percentage gap to private label might be the same, the absolute gap has come down, and the absolute price point has come down. So, on that one, we're kind of moving where we'd expect to in terms of our share performance. You know, I would say, you know, there's a couple of other places where we've seen inflation drive up pricing and even though we try to maintain our percentage gaps of private label, you know, at the higher absolute price points, and maybe a couple categories like, well, canned vegetables, you know, we're out of now. But that was one where we were seeing a little bit of that dynamic.

Speaker Change: What we are.

Speaker Change: What we're trying to do.

Speaker Change: Move forward is to kind of get that same trend line small growth in volume in in 2024, yes. The difference between the measured data attract data and what you guys are seeing is there is a lot of things I mean, theres channel coverage, that's not complete with what we do we sell to.

We have businesses that are selling to.

Speaker Change: Other foodservice outlets, particularly in Spice and seasonings business in some cases in <unk>, we have some private label business that we're selling it's not tracked in your data.

Speaker Change: We're a heavy player in private label in.

Speaker Change: The baking powder.

Speaker Change: Business. So there is a lot of our business you don't see in the track data. So it's hard to really look at attracting and directly translated to our sales results because we're participating in.

Speaker Change: We're participating in foodservice business, we're participating in some some private label manufacturing we're participating in some other businesses that we do with other kinds of customers.

Speaker Change: It's a difficult thing to translate it directly but obviously, we look at everything pretty closely in terms of what the trends are.

Speaker Change: So I guess just following up on that would it be fair to say that that the I guess, maybe the non track businesses are outperforming what you are seeing at retail.

Bruce C. Wacha: But, you know, for the most part, we watch the gap to private label pretty closely. And we try and manage that so that we don't have a lot of pressure from, you know, trade down, or we maintain the same relative position in the marketplace. Okay, and when we look at the kind of implied cash flow guidance here for the year with the 70 million or so for the dividend, when it was $300 million maturity in 2025, we've got $230 million that we would need to refinance.

Speaker Change: I mean for sure we're seeing the foodservice businesses in the past year outperforming trends in retail and honestly I think thats a crop that would that would be not just us you would see that in other businesses as well so.

Speaker Change: <unk>.

Speaker Change: That was the opposite.

Speaker Change: During the pandemic now we've seen a kind of flip back to where foodservice growth has outpaced retail growth I expect that to normalize this year at some point honestly I expect both of those.

Speaker Change: That trend that kind of stable get to more stable trends year over year.

Speaker Change: But that obviously depends a lot of economic conditions, whether or not we hit a recession or something that could change that dynamic, but right now we're kind of seeing those to come back in balance in terms of consumer behavior and trends.

Karru Martinson: Is that to be paid off through asset sales, or how would you look at addressing that? So for the remaining stub on the 2025s, the base case assumption is it's a combination of cash from operations and RevolverDraw. And keep in mind, we've got a big revolver, so we've got plenty of capacity. I think there are always options around potential refinancing as part of a broader refinancing. www.larryweaver.com Thank you very much. I appreciate it.

Speaker Change: Okay makes total sense.

Speaker Change: And then just as a quick follow up Bruce in your prepared remarks.

Bruce C. Wacha: Units of increases in promotional and trade spend in certain parts of the business I guess could you anything a little more specific as far as maybe what brands those impacted and I guess what type of lift you might have seen from that and then just overall if you were happy with what you saw.

Speaker Change: I don't think we're necessarily going to talk about the specifics on the on the brand promotional strategy, but this is.

Connor Rattigan: The next question we have is from Connor Rattigan of Consumer Edge Research. Please go ahead. Hey guys, good afternoon.

Speaker Change: And a way to improve volumes I think we're seeing this across many of our.

Casey Keller: So, correct me if I'm wrong, but it sounds like you registered positive base business volume growth in the quarter. And that was quite a bit ahead of what we saw in the track data. I guess, could you maybe help us understand what drove that differential? And looking ahead to 2024, how should we sort of think about volume trends over the course of the year? And maybe there are any items we should keep in mind in terms of divergences versus track data?

Speaker Change: Competing or just peer group, where people are increasing promotional spend I think it's been somewhat rational.

Speaker Change: But spend is still lower than it was pre pandemic.

Speaker Change: Can it be higher than it was last year the year before but it's still sort of normal.

Speaker Change: And we expect to get some volume benefits and I think you do see that.

Speaker Change: Yes, I mean for the most part we put trade spend in to businesses, because we're going back to more normal.

Speaker Change: Promotion patterns, we do see volume left behind that and we watch that pretty carefully and if we don't see volume lift from it we change.

Casey Keller: Yeah, so first of all, you know, in the fourth quarter, we saw, you know, a small growth in volume, so I want to be careful that we don't, you know, we don't over call that one. But honestly, we kind of celebrated getting stable volume trends on the business after the past year coming off all the inflationary pricing. So, what we're, you know, what we're trying to move forward with is to kind of get that same trend line, you know, small growth and volume in 2024. Yeah, the difference between the measured data, the track data, and what you guys are seeing is there a lot of things. I mean, there's channel coverage that's not complete with what we do.

Speaker Change: But for the most part that's been successful play and as Bruce said, we're not all the way back to where we were pre pandemic. So we're kind of moving back there over time as I think most players in the food industry are.

Speaker Change: As normal promotion patterns in merchandising patterns resume.

Speaker Change: Alright sounds good thank you.

Speaker Change: The next question we have is from Hale Holden of Barclays. Please go ahead.

Hale Holden: Hey afternoon. Thank you. So we're excited to try the firewall season by the way.

Hale Holden: Yeah.

Hale Holden: Yes.

Hale Holden: Drink too much of it with the seasoning.

Hale Holden: Yes.

Hale Holden: Right.

Hale Holden: On advantage myself out of life here so.

Hale Holden: Yeah.

Hale Holden: That $5 million.

Hale Holden: Extinguishment costs in the quarter did you buy some bonds back Carlos.

Casey Keller: We sell to, we have businesses that are selling to other food service outlets, particularly the spices and seasonings business, and in some cases, in syrups; we have some private label business that we're selling that's not tracked in your data. So we are a heavy player in the private label business in the baking powder business. So there's a lot of our business you don't see in the tracking data. So it's hard to really look at the track data and directly translate it to our sales results because we're participating in, you know, we're participating in the food service business, we're participating in some, you know, some private label manufacturing, we're participating in some other businesses that we do with other kinds of customers. So it's, it's, it's a difficult thing to translate it directly.

Hale Holden: Term loan pay down yeah. It's just all the refinancing stuff that we did kind of back half of last year.

Hale Holden: Okay.

Speaker Change: And then the second question I had was.

Speaker Change: As you are thinking about divestitures in the market.

Speaker Change: I mean, you've obviously been talking about it for six.

Speaker Change: Six 912 months in various forms and I was wondering if you have seen the market improve our seller standpoint.

Speaker Change: Or multiples come up or more interest in the pipeline.

Speaker Change: I think there is certainly chatter that sounds like there should be more activity I would've told you the same thing six months ago or a year ago, but.

Speaker Change: But I think as.

Speaker Change: As the.

Speaker Change: Financing environment starts to stabilize we're going to see more activity, we probably have seen some some nice little brand deals get done we saw two of our deals get done I think it's fine I don't think it's shut down its just not.

Casey Keller: But obviously, we look at everything pretty closely in terms of what the trends are. So I guess just following up on that, would it be fair to say that, I guess maybe the non-track businesses are outperforming what you're seeing at retail? I mean, for sure, we've seen food service businesses in the past year outperforming trends in retail. And honestly, I think that would be not just us.

Speaker Change: Gangbusters like it was a few years ago, but it should be fine.

Speaker Change: Okay, great. Thank you very much.

Speaker Change: Okay.

Speaker Change: The next question, we have just from David Palmer of Evercore ISI. Please go ahead.

Casey Keller: You would see that in other businesses as well. So, you know, we, you know, we, that was the opposite during the pandemic, but now we've seen it kind of flip back to where food service growth has outpaced retail growth. I expect that to normalize this year at some point. Honestly, I expect both of those trends to kind of stabilize and get to more stable trends year over year. But that obviously depends on a lot of economic conditions, whether or not we hit a recession or something that could change that dynamic. But right now, we're kind of seeing those two come back in balance in terms of consumer behavior and trends. And then just as a quick follow-up, Bruce, in your prepared remarks, you noted some increases in promotional and trade spend in certain parts of the business. Could you maybe be a little more specific as far as maybe what brands those impacted and I guess what type of lift you might have seen from that spend and, overall, if you were happy with what you saw?

David Palmer: Thanks, Hey, guys.

David Palmer: Yes.

David Palmer: Inventory declined in the quarter, obviously with the divestiture.

David Palmer: I'm wondering how I always ask you about free cash flow conversion, but.

David Palmer: I wonder how much.

David Palmer: The inventory change will happen.

David Palmer: In 'twenty, four and where you see free cash flow conversion settling in of EBITDA going forward.

Speaker Change: Yes, so I think the inventory reduction.

Speaker Change: In 'twenty.

Speaker Change: <unk> 23 from both the sale of Green giant canned vegetables, and honestly base business improvement coming off the inflationary cycle and the supply shortages. We did a lot of reduction in this year. So in the future I wouldn't expect to see that kind of magnitude of change obviously a divestiture.

Speaker Change: Would impact that but in terms of our base business and the organic kind of trends I'm looking for kind of a 2% to 3% continuous improvement trend line as we get better in terms of our operations and our demand supply integration.

Bruce C. Wacha: I don't think we're necessarily going to talk about the specifics of the brand promotional strategy, but this is, You know, again, a way to improve volumes. I think we're seeing this across many of our competing or just peer groups where people are increasing promotional spend. I think it's been somewhat rational, but spend is still lower than it was pre-pandemic. So it's going to be higher than it was last year or the year before, but it's still sort of normal. And we expect to get some volume benefits, and I think you will see that. Yeah, I mean, for the most part, when we put trade spend into businesses, because we're going back to more normal, you know, promotion patterns, we do see volume lift behind that. And we watch that pretty carefully. And if we don't see volume lift from it, we change it. But for the most part, that's been successful playing.

Speaker Change: That's kind of our expectation. So you will see some benefit from reducing working capital, but nothing to the magnitude you saw this year look at our look our long term perspective, and I think we said this before is that we want enough excess cash that half of it can be used to pay the dividends and half of it can be used to pay down debt and that's where we're driving that's where we are.

Driving so that we have we have the ability to kind of reduce debt year on year out with our excess cash flow.

Speaker Change: I think in the past you might've had a 60% of EBITDA type target is that yet.

Speaker Change: Give or take that so I mean, if you think about the midpoint of our guidance range call it $315 million of adjusted EBITDA.

Speaker Change: Throw in $5 million to $10 million.

Speaker Change: Noncash share based comp is sort of your baseline and then.

Casey Keller: As Bruce said, we're not all the way back to where we were pre-pandemic, so we're kind of moving back there, you know, over time, as I think most players in the food industry are, as normal promotion patterns and merchandising patterns resume. Sounds good.

Speaker Change: Again, we gave guidance on the call but.

Speaker Change: Cash interest at the mid point about $140 million cash taxes have been bouncing around $30 million, a year capex of $35 $40 million.

Casey Keller: Casey talk to.

Connor Rattigan: Thank you. The next question we have is from Hal Holden of Barclays. Please go ahead.

Modest certainly not what we had last year, but modest levels of inventory reductions slash working capital improvement you could see a number that's 110 $125 million or so in excess cash.

Hal Holden: Hi, afternoon. Thank you. I'm super excited to try the Fireball seasoning, by the way.

Bruce C. Wacha: Don't drink too much of it with the seasoning. I'm trying to age myself out of life here. Bruce, the half-million-dollar debt-extinguishment cost in the quarter, did you buy some bonds back, or was that a term loan pay-down? Yeah, it's just all the refinancing stuff that we did in the back half of last year. And then the second question I had was, you know, as you think about divestitures in the market, if you, I mean, you've obviously been talking about it for six, nine, twelve months in various forms, and I was wondering if you have seen the market improve from a seller standpoint, or multiples come up, or more interest in the pipeline. I think there's certainly chatter that sounds like there should be more activity.

Casey Keller: Before dividends, if you get the benefit of working capital in there in dividends about 60 million Bucks.

Speaker Change: That's all helpful and just just a question on Chris' comments.

Speaker Change: Sure.

Speaker Change: You said you were expecting profit dollars from Chris got it remained pretty steady this year, which is great to hear and going forward. What do you think will be your biggest watch outs for that businesses that brand's profitability is.

Is there a level of volatility of soybean oil that makes keeping profit steady much more difficult or their price thresholds, where trade down accelerates and what are the things that would kind of throw you off the horse so to speak on keeping profit steady for Chris go.

Bruce C. Wacha: I would have told you the same thing six months ago or a year ago, but I think it is... as the funding and environment start to stabilize. We're going to see more activity. We probably have seen some nice little brand deals get done. You know, we saw two of our deals get done. I think it's fine. I don't think it's shut down. It's just not gangbusters like it was a few years ago, but it should be fine. Okay, great. Thank you very much. The next question we have is from David Palmer of Ivacor ISI. Please go ahead.

Speaker Change: Yes, I think it's our ability to just pass through the oil costs and so far we've been doing that I mean, if you were to talk to me in 2022 I would have said.

Chris: The risk was much higher but since January kind of January 1st quarter of last year, we implemented this pass through model with customers and they like it they like it or we come to them.

Chris: Every quarter and say here's what the oil costs here, so we're going to price to relative to that and they have been pretty good about reflecting that in the pricing and so it's been successful so to as a strategy to maintain our gross profit dollars.

David Palmer: Thanks, guys. Inventory declined in the quarter, obviously, with the divestiture. I'm wondering how, I always ask you about free cash flow conversion, but I wonder how much the inventory change will happen in 2024 and where you see free cash flow conversion settling in terms of EBITDA going forward. Yeah, so I think, you know, the inventory reduction in 23 from both the sale of Green Giant and U.S. Canned Vegetables and honestly, base business improvement coming off the inflationary cycle and the supply shortages, So, in the future, I wouldn't expect to see that kind of magnitude change.

Chris: I would say the only thing that I worry about is it soybean oil goes back up to I don't know 80.

Chris: Then we're going to we're going to pass that through and take pricing up Unfortunately at that level, we see the absolute dollar gap to private label growing percentage the same but the absolute dollar gap and so we see some risk to the volume trend the business with that kind of commodity structure I mean look Fortunately right now soybean oil prices last time.

Chris: I checked are kind of in the <unk> 45 per pound range, which is well down from where it was last year and well down from the high of 80 <unk>.

Casey Keller: Obviously, a divestiture would impact that. But in terms of our base business and organic kind of trends, I'm looking for kind of a 2% to 3% continuous improvement trend line as we get better in terms of our operations and our demand supply integration. That's kind of our expectation.

Chris: That we saw probably 18 to 24 months ago. So.

Chris: That's really the big risk I mean, the only other thing we watch is we have a shortening business.

Chris: Which is a key a key part of that whole chriscoe business outside of the oil those shortening we look at the long term household penetrations on the household penetration on that business just.

Casey Keller: So, you will see some benefit, you know, from reducing working capital, but nothing to the magnitude you saw this year. Look, our long-term perspective, and I think we said this before, is that we want enough excess cash that half of it can be used to pay dividends, and half of it can be used to pay down debt. And that's where we're driving.

Chris: Just to make sure people are still baking cooking frying at the same levels.

Speaker Change: That's great. Thank you.

Speaker Change: Ladies and gentlemen, just a final reminder, if you would.

Speaker Change: I'd like to ask a question Youre welcome to today's Tyler.

Speaker Change: Right.

Speaker Change: We will postpone let's see if we have any other questions.

Speaker Change: There are no further questions at this time I would.

Speaker Change: I'd like to turn the floor back over to Kelcey Kintner for closing comments.

Casey Keller: That's where we're driving so that we have, you know, we have the ability to kind of reduce debt year in, year out with our excess cash flow. I think in the past, you might have had a 60% of EBITDA type target, is that? Yeah, give or take that.

Kelcey Kintner: Okay. Thank you all for joining us today for the fourth quarter earnings call, obviously reach out if we want to talk anything.

Kelcey Kintner: I appreciate your attention and look we're pleased with the results in the fourth quarter, but obviously, we have more work to do in 2004 to get this business in the shape we want it.

Bruce C. Wacha: So, I mean, if you think about the midpoint of our guidance range, call it $315 million of adjusted EBITDA, throw in $5-$10 million of non-cash or share-based comp as sort of your baseline. And then, again, we gave guidance on the call, but cash interest at the midpoint is about $140 million. Cash taxes have been bouncing around $30-plus million a year, and CapEx at $35-$40 million. Casey talked to me about modest, certainly not what we had last year, but modest levels of inventory reductions slash working capital improvement. You could see a number that's $110-$125 million or so in excess cash before dividends, you know, if you get the benefit of working capital in there, and dividends are about $60 million.

Speaker Change: Thank you very much.

Speaker Change: Ladies and gentlemen, this concludes today's conference.

Speaker Change: Thank you for joining US you may now disconnect your lines.

Speaker Change: Yes.

Speaker Change: Okay.

David Palmer: So that's all helpful and just a question on Crisco. It's your... You said you were expecting profit dollars from Crisco to remain pretty steady this year, which is great to hear. And going forward, what do you think will be your biggest watchouts for that business? That brand's profitability is... Is there a level of volatility in soybean oil that makes keeping profit steady much more difficult? Or are there price thresholds where trade down accelerates?

Speaker Change: Okay.

Speaker Change: Yes.

Casey Keller: What are things that would kind of throw you off the horse, so to speak, on keeping profit steady for Christmas? Yeah, I think it's our ability to just pass through the oil costs. And so far, we've been doing that. I mean, if you had talked to me in 2022, I would have said that, you know, the risk was much higher. But since, you know, January, the beginning of January, the first quarter of last year, we implemented this pass-through model with customers, and they like it.

Speaker Change: [music].

Casey Keller: They like it. We come to them, you know, every quarter and say, here's what the oil costs; here's what we're going to price relative to that. And we, you know, they've been pretty good about reflecting that in the pricing. And so it's been successful.

Casey Keller: So it's a strategy to maintain our gross profit dollars. The, I would say the only thing I worry about is if soybean oil goes back up to, I don't know, 80 cents a gallon, then, you know, we're going to pass that through and take prices up. You know, unfortunately, at that level, we see the absolute dollar gap to private label growing by the same percentage, but to get the absolute dollar gap. And so we see, you know, some risk to the volume trend of the business with that kind of commodity structure. I mean, look, fortunately, right now, soybean oil prices, the last time I checked, are kind of in the 45 cents per pound range, which is well down from where they were last year and well down from the high of 80 cents that we saw probably 18 to 24 months ago. So, I mean, that's really the big risk.

David Palmer: I mean, the only other thing we watch is we have a shortening business, you know, which is, you know, which is a key, a key part of that whole Crisco business outside of oil. We look at the long-term household penetration of that business, just to make sure people are still baking, cooking, and frying at the same level. That's great, thank you. Ladies and gentlemen, just a final reminder, if you would like to ask a question, you're welcome to press star and then 1. We'll all pause for a moment to see if we have any other questions. There are no further questions at this time. I would like to turn the call back over to Kasey Keller for closing comments.

Operator: And thank you all for joining us today for the fourth quarter earnings call. Obviously, reach out if we want to talk about anything. I appreciate your attention. Look, we're pleased with the results in the fourth quarter, but obviously, we have more work to do in 24 hours to get this business in the shape we want it. So, thank you very much. Ladies and gentlemen, this concludes today's conference. Thank you for joining us. You may now disconnect your line. Copyright 2021 Mooji Media Ltd. All Rights Reserved.

Speaker Change: [music].

Operator: No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. Copyright 2019 Mooji Media Ltd. All Rights Reserved.

AJ Schwab: No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. www.larryweaver.com, Good day and welcome to the B&G Foods fourth quarter and fiscal 2023 earnings call. Today's call, which is being recorded, is scheduled to last about one hour, including remarks by B&G Foods management and a question and answer session. I would now like to turn the call over to AJ Schwab, Associate Director of Corporate Strategy and Business Development for B&G Foods. AJ?

AJ Schwab: Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer, and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter and full year in the earnings release we issued today, which is available in 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 undue reliance should not be placed on them.

AJ Schwab: 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 conditions. 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, Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Gross Profit, Adjusted Gross Profit Percentage, and Based Business Net Sales. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release.

Casey Keller: 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 2024 and beyond. Bruce will then discuss our financial results for the fourth quarter and fiscal 2023 and our guidance for fiscal 2024. I would now like to turn the call over to Casey.

Casey Keller: Good afternoon, thank you AJ, and thank you all for joining us today for our fourth quarter and fiscal 2023 earnings call. B&G Foods' fourth quarter results were solid, slightly exceeding expectations. Base business net sales, which exclude net sales of the divested Green Giant U.S. canned vegetable and back-to-nature businesses, were essentially flat, but for the impact of lower Crisco oil commodity pricing year over year. In addition, base business volume in the aggregate across the portfolio was slightly up for the quarter, stabilizing for the first period since the significant pricing actions in fiscal year 22. Profit margins also demonstrated steady progress.

Casey Keller: Adjusted gross profit percentage increased 130 basis points versus last year to 21.9 percent, reflecting pricing recovery of higher costs and productivity savings. Adjusted EBITDA, as the percentage of net sales, was flat to last year at 15 percent, with adjusted gross profit improvement offset by the reinstatement of the short-term management incentive accrual in G&A expenses versus zero in fiscal year 22, with fourth quarter results. B&G Foods delivered fiscal year 23 net sales of $2.062 billion and adjusted EBITDA of $318 million, well within our revised guidance reflecting the divestiture of Green Giant U.S. canned vegetables in November. Bruce will provide more details on Quarter 4 and Fiscal Year 23 results.

Speaker Change: [music].

Casey Keller: Stepping back, we achieved several critical milestones in fiscal year 23 on the journey to reshape and strengthen B&G Foods. First, margin recovery. After historic inflation pressure in fiscal year 22, margins recovered strongly in fiscal year 23 behind pricing actions and productivity efforts. Adjusted gross profit percentage increased 280 basis points year-over-year from 19.4% to 22.2% in fiscal year 23. Adjusted EBITDA as the percentage of net sales increased 150 basis points, to 15.4%, in fiscal year 23. Going forward, input cost inflation has moderated to low single digits and, in some cases, such as soybean oil, has come down from historic highs. Number two, portfolio shaping. We divested into low-margin, working capital-intensive businesses of back-to-nature cookie crackers and Green Giant U.S. canned vegetables. Both did not fit with our future portfolio focus and were strained to deliver adequate cash flow against the leverage model.

Speaker Change: Today's call, which is being recorded.

Speaker Change: To last about one hour, including remarks by being G suite management and the question and answer session.

Speaker Change: I would now like to turn the call over to.

Speaker Change: Ajay Schwab associate corporate strategy and business development for PNG switch Hey, Jay.

Ajay Schwab: Good afternoon, and thank you for joining us.

Ajay Schwab: With me today are Casey Keller, our Chief Executive Officer, and Bruce Walker, Our Chief Financial Officer.

Speaker Change: You can access detailed financial information on the quarter and full year in the earnings release, we issued today, which is available at the Investor Relations section of <unk> Foods Dot com.

Ajay Schwab: Before we begin our formal remarks I need to remind everyone that part of the discussion today includes forward looking statements.

Ajay Schwab: These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them.

Ajay Schwab: Yes.

Ajay Schwab: We refer you to BMG food 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.

Casey Keller: As previously disclosed, we expect to divest additional businesses and brands over the next year to focus the portfolio for future success and intend to use the proceeds to pay down debt. Third, cash flow and working capital. Net cash from operations improved dramatically, increasing from $6 million last year to $248 million in FY23. These results were driven by better operating performance and margin recovery and, critically, by a significant improvement in working capital. Inventories in fiscal year 23 declined by $157 million, down from $726 million last year to $569 million at year-end, reflecting the divestiture of the seasonal Green Giant U.S. canned business, lower Crisco soybean oil costs, and efficiencies in base business inventory levels while delivering higher service. Fourth, debt and leverage. During fiscal year 23, B&G Foods reduced net debt by $335 million, primarily using improved cash flow and the proceeds from divestors to pay down debt.

Ajay Schwab: <unk> undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise.

Ajay Schwab: We will also be making references on today's call to the non-GAAP financial measures adjusted EBITDA adjusted net income adjusted diluted earnings per share adjusted gross profit adjusted gross profit percent percentage and base business net sales.

Ajay Schwab: Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release.

Ajay Schwab: 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 2020 for BR.

Casey Keller: As a result, B&G Foods' pro-forma adjusted net leverage ratio, as calculated per our credit agreement, decreased from 7.62 times at fiscal year 22's end to 6.32 times by the end of fiscal year 23. We are making excellent progress towards returning to our long-term range of 4.5 to 5.5 times. The expectation is to further close that gap in fiscal year 23-4 through additional divestors and paying down debt with excess cash flow. Five, Crisco pricing model. During the first quarter of fiscal year 23, we implemented a new commodity price, based on the pricing model on Crisco with our customers.

Ajay Schwab: Bruce will then discuss our financial results for the fourth quarter and fiscal 2023, and our guidance for fiscal 2024.

Ajay Schwab: I would now like to turn the call over to Casey.

Casey Keller: Good afternoon. Thank you a J and thank you all for joining us today for our fourth quarter and fiscal 2023 earnings call.

Casey Keller: P&G foods fourth quarter results were solid slightly exceeding expectations.

Casey Keller: Base business net sales, which exclude net sales of the divested green giant canned vegetable and back to nature businesses were essentially flat, but for the impact of lower chriscoe oil commodity pricing year over year.

Casey Keller: Prices for Crisco products move quarterly to reflect the volatility in soybean and vegetable oil inputs and match market pricing with actual oil costs. The result has been stable gross profit dollars and cash flow for Crisco in a volatile market, particularly over the past two years. As discussed, we do expect to see some up and down movement on Crisco net sales results based on changes in oil prices without any impact on the bottom line. And last, Spices and Seasonings. Representing approximately 18% of our portfolio, the core high-margin spice and seasoning business increased net sales by 2.2 percent. Trends were particularly strong when the food service and members marked Sam's Label business, which largely serves out-of-home and small business customers. The core retail branded trends, Dash, Weber, Spice Islands, etc., are improving and have recovered from temporary service and production issues in our Ankeny factory. We have also strengthened our innovation and new product pipeline, launching new licensed seasoning and grilling blends under the Buffalo Trace, Fireball, and Southern Comfort brands, which are performing very well in initial distribution.

Casey Keller: In addition base business volume in the aggregate across the portfolio was slightly up for the quarter stabilizing for the first period since the significant pricing actions in fiscal year 'twenty two.

Casey Keller: Profit margins also demonstrated steady progress.

Casey Keller: Adjusted gross profit percentage increased 130 basis points versus last year to 21, 9%.

Casey Keller: Reflecting pricing recovery of higher cost and productivity savings.

Casey Keller: Adjusted EBITDA as a percentage of net sales was flat to last year at 15% with adjusted gross profit improvement offset by the reinstatement of the short term management incentive accrual and G&A expenses versus zero in fiscal year 'twenty two.

Casey Keller: With fourth quarter results.

Casey Keller: <unk> foods delivered fiscal year 'twenty three net sales of two point <unk> 2 billion and adjusted EBITDA of $318 million.

Casey Keller: Well within our revised guidance, reflecting the divestiture of green giant canned vegetables in November.

Casey Keller: Bruce will provide more details on quarter, four and fiscal year 'twenty three results.

Speaker Change: Stepping back we achieved several critical milestones in fiscal year 'twenty three on the journey to reshape and strengthen P&G foods.

Casey Keller: Overall, we are pleased with the performance in the fourth quarter and the recovery of the B&G Foods business in fiscal year 23. There is clearly more work to do, but our team has made significant progress toward creating a stronger, more valuable B&G Foods. Bruce will discuss specific guidance, but our focus in fiscal year 24 is to generate slight top-line and low single-digit bottom-line growth on the base business, which excludes the divested green giant U.S. canned vegetable business, and further reshape the business through strategic divestors to focus the long-term portfolio for higher margins and valuation growth. We continue to evaluate existing businesses that have lower margins and cash flow, higher working capital complexity, or do not fit with our core capabilities and business unit structure.

Speaker Change: First margin recovery.

Casey Keller: After our historic inflation pressure in fiscal year 'twenty two margins recovered strongly in fiscal year, 'twenty, three behind pricing actions and productivity efforts.

Casey Keller: Adjusted gross profit percentage increased 280 basis points year over year from 19, 4% to 22, 2% in fiscal year 'twenty three.

Casey Keller: Adjusted EBITDA as a percentage of net sales increased to 150 basis points to 15, 4% in fiscal year 'twenty three.

Casey Keller: Going forward input cost inflation has moderated to low single digits and in some cases, such as soybean oil has come down from historic highs.

Casey Keller: Number two portfolio shaping.

Casey Keller: We divested the low margin working capital intensive businesses of back to nature of cookies, crackers, and Green giant U S canned vegetables.

Casey Keller: Reducing net debt and leverage through divestiture proceeds and strong excess cash flows. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and results for the year. Thank you, Casey. Good afternoon, everyone.

Casey Keller: Both did not fit with our future portfolio focus and were strained to deliver adequate cash flow against the leverage model.

Casey Keller: As previously disclosed we expect to divest additional business and brands over the next year to focus the portfolio for future success.

Bruce C. Wacha: Thank you for joining us on our fourth quarter and fiscal year 2023 earnings call. As you can see, we had another strong quarter, and we finished the year largely in line with our guidance. As we explained at the outset of the year, we expected to see large year-over-year increases in Adjusted EBITDA and Adjusted EBITDA as a percentage of net sales in the first two quarters of the year, followed by a more modest increase in adjusted EBITDA and adjusted EBITDA as a percentage of net sales in the third quarter. And for the fourth quarter, we expected similar performance to the prior year before accounting for the This is essentially how the year played out for us.

Casey Keller: And intend to use the proceeds to pay down debt.

Casey Keller: Third cash flow and working capital.

Casey Keller: Net cash from operations improved dramatically increasing from $6 million last year to $248 million in fiscal year 'twenty three.

Casey Keller: These results were driven by better operating performance and margin recovery and critically by significant improving improvement in working capital.

Casey Keller: Inventories in fiscal year, 'twenty, three declined by $157 million down from $726 million last year to $569 million at year end.

Casey Keller: Reflecting the divestiture of the seasonal green giant canned business, lower chriscoe, soybean oil costs and efficiencies and base business inventory levels, while delivering higher service.

Bruce C. Wacha: In fiscal 2023, we generated $2.062 billion in net sales and $318 million in adjusted EBITDA. Adjusted EBITDA is a percentage of net sales of 15.4% and adjusted diluted earnings per share of 99%.

Casey Keller: Yes.

Casey Keller: Fourth debt and leverage during fiscal year, 'twenty, three <unk> foods' reduced net debt by $335 million.

Casey Keller: Primarily using improved cash flow and the proceeds from divestitures to pay down debt.

Bruce C. Wacha: Base business net sales, which excludes net sales from the Back to Nature brand and the Green Giant U.S. shelf-stable product line, decreased by approximately $30 million, or 1.5%, in fiscal 2023 compared to the year-ago period. Base business net sales include a benefit of $93.3 million from pricing and the impact of product. This was offset by negative impacts of $5.1 million from FX and $118.2 million from volume. And the pricing helped, particularly in our results in the early part of the year. For fiscal 2023, adjusted EBITDA increased by $17 million, or 5.7%, compared to $301 million for fiscal 2022. Adjusted EBITDA as a percentage of net sales was 15.4% for fiscal 2023 compared to 13.9% for fiscal 2022.

Casey Keller: As a result, P&G foods pro forma adjusted net leverage ratio as calculated per our credit agreement decreased from 762 times at fiscal year 'twenty two and.

Casey Keller: 2632 times by the end of fiscal year 'twenty three.

Casey Keller: We are making excellent progress towards returning to our long term range of four five to five five times.

Casey Keller: The expectation is to further close that gap in fiscal year 'twenty three four through additional divestitures and paying down debt with excess cash flow.

Casey Keller: Five chriscoe pricing model during the first quarter fiscal year 2003, we implemented a new commodity priced.

Casey Keller: That pricing model on Chris go with our customers.

Casey Keller: Prices for Chriscoe products move quarterly to reflect the volatility in soybean and vegetable oil inputs and match market pricing with actual oil costs the.

Casey Keller: The result has been stable gross profit dollars and cash flow for Chris go in a volatile market, particularly over the past two years.

Casey Keller: As discussed we do expect to see some up and down movement on Chriscoe net sales results based on changes in oil pricing without any impact on the bottom line.

Casey Keller: And last spices, and seasonings, representing approximately 18% of our portfolio the core high margin spices and seasoning business ink.

Casey Keller: Increased net sales by two 2%.

Casey Keller: Trends were particularly strong on the foodservice and members Mart Sams label business.

Bruce C. Wacha: For the fourth quarter of 2023, we generated $578.1 million in net sales and $86.8 million in adjusted EBITDA. Adjusted EBITDA as a percentage of net sales of 15% and adjusted diluted earnings per share of 36%, base business net sales increased by $13.3 million or 2.3% in the fourth quarter of 2023 compared to the prior year. The decrease in base business net sales in the 4th quarter was largely driven by a decrease in net pricing and the impact of product mix of $15.9 million, or 2.8% of base business net sales. The decrease in pricing was in part a product of our Crisco commodity pricing model that we have instituted, coupled with modest increases in promotional trade spending in other areas of the portfolio where it made sense. The impact of foreign currency was also a slight drag on net sales, contributing to another $0.3 million of the decline.

Casey Keller: Which largely served out of home and small business customers.

Casey Keller: The core retail branded trends Dash Weber Spice Islands, etcetera are improving and have recovered from temporary service and production issues in our Ankeny factory.

Casey Keller: We are also strengthen our innovation and new product pipeline launching new license seasoning and grilling blends under the Buffalo trace firewall and southern comfort brands, which are preparing performing very well and initial distribution.

Casey Keller: Overall, we are pleased with the performance in the fourth quarter and the recovery of the <unk> foods business in fiscal year 'twenty three.

Casey Keller: Clearly more work to do but our team has made significant progress towards creating a stronger more valuable <unk> foods Bruce.

Casey Keller: Bruce will discuss specific guidance, but our focus in fiscal year 'twenty four is too Jeff.

Bruce C. Wacha: <unk> slight topline and low single digit bottom line growth on the base business, which excludes the divested green giant canned vegetable business.

Casey Keller: Further reshape the business through strategic divestitures to focused our long term portfolio for higher margins and valuation growth.

Casey Keller: We continue to evaluate existing businesses that have lower margin and cash flow higher working capital complexity or do not fit with our core capabilities and business unit structure.

Bruce C. Wacha: These were partially offset by an increase in unit volume of $2.9 million for the quarter. We are obviously encouraged by the improving volume story that we are now seeing, although we are closely monitoring the tradeoffs between pricing, promotional strategy, and volumes, as well as current consumption. I will now highlight the performance of some of our larger brands. Clabber Girl had incredibly strong momentum coming into the holiday bake season, and similar to its performance all year long, Clabber didn't disappoint.

Casey Keller: Reduce net debt and leverage through divestiture proceeds and strong excess cash flows.

Casey Keller: Thank you and I will now turn the call over to Bruce for more detail on our quarterly performance and results for the year.

Bruce C. Wacha: Thank you Casey good afternoon, everyone.

Bruce C. Wacha: Thank you for joining us on our fourth quarter and fiscal year 2023 earnings call.

Bruce C. Wacha: As you can see we had another strong quarter and we finished the year largely in line with our guidance as.

Bruce C. Wacha: As we explained at the outset of the year, we expected to see large year over year increase.

Bruce C. Wacha: Net sales of Klaver increased by $8.2 million, or 26.3%, in the fourth quarter of 2023 as compared to the fourth quarter of 2022. Net sales of Clover Girl benefited from both pricing and increased volumes during the quarter. Net sales of Maple Grove Farms increased by about $0.7 million, or 3.4%. Our spices and seasonings continue to benefit from improved supply chain performance and new product launches. Finishing the year with a solid quarter, net sales of the company's spices and seasonings increased by $0.7 million, or 0.8%, in the fourth quarter of 2023 as compared to the fourth quarter of 2022. As Casey mentioned earlier in the call, we are very excited about the prospects for these new partnership brand launches coming out of our spices and seasonings, which include the licensed seasoning products, Einstein's Everything Bagel, Einstein's Avocado Toast, and Sazerac Weber Flavors Buffalo Trace, Fireball, and Southern Comfort.

Bruce C. Wacha: And adjusted EBITDA, and adjusted EBITDA as a percentage of net sales in the first two quarters of the year.

Bruce C. Wacha: Followed by a more modest increase in adjusted EBITDA and adjusted EBITDA as a percentage of net sales in the third quarter.

Bruce C. Wacha: And for the fourth quarter, we expected similar performance to the prior year before accounting for the divestiture of Green Giant U S shelf stable product line.

Bruce C. Wacha: This is essentially how the year played out for us.

Bruce C. Wacha: In fiscal 2023, we generated $2 $62 billion in net sales $318 million and adjusted EBITDA adjusted EBITDA as a percentage of net sales of 15, 4% and adjusted diluted earnings per share of <unk> 99.

Bruce C. Wacha: Base business net sales, which excludes net sales from the back to nature brand and the Green Giant U S shelf stable product line decreased by approximately $30 million or one 5% in fiscal 2023 compared to the year ago period base.

Bruce C. Wacha: Base business net sales include a benefit of $93 $3 million from pricing and the impact of product mix.

Bruce C. Wacha: This was offset by negative impacts of $5 1 million from FX and $118 2 million from volumes.

Bruce C. Wacha: We also have a robust pipeline and expect to be able to announce additional new and exciting products. While net sales of Crisco decreased by $10.6 million, or 8.7%, in the fourth quarter of 2023 when compared to the prior year period, this was largely expected due to favorable input cost relief and the execution of our commodity pricing model, which allowed us to reduce pricing to our customers and still maintain profit dollars. As a result of the lower pricing, we are starting to see a nice recovery in Crisco Vanya. Increased volumes for Crisco contributed to $1.8 million in net sales, or 1.5%, in the fourth quarter of 2023 compared to the fourth quarter of 2022. We expect this trend to continue throughout 2024 with lower pricing leading to an improved volume recovery for Crisco throughout the year. However, our green giant business was not immune to the category-wide industry challenges seen throughout 2023 in the shelf-stable and frozen vegetable stack. Net sales of Green Giant, including Lassure, but excluding the divested Green Giant U.S.

Bruce C. Wacha: And the pricing helped particularly in our results in the early part of the year for fiscal 2023, adjusted EBITDA increased by $17 million or five 7% compared to $301 million for fiscal 2022.

Bruce C. Wacha: Adjusted EBITDA as a percentage of net sales was 15, 4% for fiscal 2023 compared to 13, 9% for fiscal 2022.

Bruce C. Wacha: For the fourth quarter of 2023, we generated $578 $1 million in net sales $86 8 million in adjusted EBITDA.

Bruce C. Wacha: Adjusted EBITDA as a percentage of net sales of 15% and adjusted diluted earnings per share of <unk> 30.

Bruce C. Wacha: Base business net sales.

Bruce C. Wacha: Decreased by $13 3 million or two 3% in the fourth quarter of 2023 compared to the prior year.

Bruce C. Wacha: The decrease in base business net sales in the fourth quarter was largely driven by a decrease in net pricing and the impact of product mix of $15 9 million or two 8% of these business net sales.

Bruce C. Wacha: The decrease in pricing was in part a product of our chriscoe commodity pricing model that we have instituted.

Bruce C. Wacha: The Shell Stable product line decreased by $5.2 million or 4.4%. We expect more favorable industry trends in the category during 2024. And quite frankly, we expect much more favorable trends for our business. The goal is to get this brand back to being the industry leader from an innovation perspective and to generate category-leading growth rates like we did before the pandemic. The hot breakfast dial is another category that is still seeing some normalization in its post-pandemic trends.

Bruce C. Wacha: Coupled with modest increases in promotional trade spending in other areas of the portfolio, where it made sense.

Bruce C. Wacha: The impact of foreign currency was also a slight drag on net sales.

Bruce C. Wacha: Contributing to another $3 million of the decline.

Bruce C. Wacha: These were partially offset by an increase in unit volume of $2 9 million for the quarter.

Bruce C. Wacha: We are obviously encouraged by the improving volume story that we are now seeing although we are closely monitoring the tradeoffs between pricing promotional strategy and volumes as well as the current consumption trends.

Speaker Change: I will now highlight.

Bruce C. Wacha: Net sales of cream of wheat were approximately $78.5 million in 2023, which was well ahead of the pre-pandemic levels that had been consistently in the $60-70 million range annually. However, 2023 net sales were somewhat lower than fiscal 2022 annual net sales of $81.4 million. In the fourth quarter of 2023, net sales of cream of wheat decreased by $2.2 million, or 9% compared to the prior year. Net sales of Ortega decreased by $0.3 million, or 1%, in the fourth quarter of 2023 as compared to the fourth quarter of 2022. Ortega finished the quarter with some momentum despite a challenging year. While Q4 net sales were down 1%, they were up approximately 0.9% in the month of November and another 0.6% in December compared to the prior year. Taco sauces, green chilies, and seasoning mixes led the way for the brand, driving top positive performance in the back half of the fourth quarter. Taco shells and taco kits continue to be somewhat challenging.

Speaker Change: The performance of some of our larger brands.

Speaker Change: Clabber girl had incredibly strong momentum coming into the holiday peak season, and similar to its performance all year long collaborate didn't disappoint net.

Speaker Change: Net sales of <unk> increased by $8 2 million or 26, 3% in the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Speaker Change: Net sales of Clabber girl benefited from both pricing and increased volumes during the quarter.

Speaker Change: Net sales of Maple Grove farms increased by about <unk> 7 million or three 4%.

Speaker Change: Our spices and seasonings continued to benefit from improved supply chain performance and new product launches, finishing the year with a solid quarter net sales of the company's spices and seasonings increased by zero point $7 million.

Speaker Change: Or 0.8% in the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Speaker Change: As Casey mentioned earlier on the call. We are very excited about the prospects for these new partnership brand launches coming out of our spices and seasonings business, which includes the license seasoning products Einstein's everything bagel, Einstein's avocado toast and SaaS <unk> Weber flavors, Buffalo traced firewall and southern comfort.

Bruce C. Wacha: Ortega began the year with a tough comp relative to the prior year and some softness in shells and kits, as well as pricing elasticity-driven volume declines in some SKUs where we took pricing. These factors, combined with the general post-COVID category normalization, helped cause much of the decline. Total net sales for Ortega were $147.9 million in fiscal 2023, down from $154.3 million in fiscal 2022 but also up substantially from pre-pandemic 2019 at sales of $140.4 million. Base business net sales of all other brands in the aggregate decreased by $4.6 million or 3.5% for the fourth quarter of 2023 as compared to the fourth quarter of 2022. Gross profit was $125.2 million for the fourth quarter of 2023, or 21.7% of net sales. Adjusted gross profit was $126.8 million, or 21.9% of net sales.

Speaker Change: We have also have a robust pipeline and expect to be able to announce additional new and exciting products.

Speaker Change: While net sales of <unk> decreased by $10 6 million or eight 7% in the fourth quarter of 2023, when compared to the prior year period. This was largely expected due to favorable input cost relief and the execution of our commodity pricing model, which allowed us to reduce pricing to our customers.

Speaker Change: And still maintain profit dollars.

Speaker Change: As a result of the lower pricing, we are starting to see a nice recovery in chriscoe volumes.

Speaker Change: Increased volumes for Chriscoe contributed to $1 $8 million to net sales or one 5% in the fourth quarter of 2023 compared to the fourth quarter of 2022.

Speaker Change: We expect this trend to continue throughout 2024 with lower pricing, leading to an improved volume recovery for Chris go throughout the year.

Speaker Change: Our green giant business was not immune to the category wide industry challenges seen throughout 2023, and the shelf stable and frozen vegetables.

Speaker Change: Net sales of green giant, including <unk>, but excluding the divested green giant U S shelf stable product line decreased by $5 2 million or four 4%.

Bruce C. Wacha: Gross profit was $126.1 million in the fourth quarter of 2022, or 20.2% of net sales. Adjusted gross profit was $128.6 million, or 20.6% of net sales. Adjusted gross profit increased by approximately 130 basis points in the fourth quarter of 2023 compared to last year's fourth quarter. The improvement in gross profit percentage was largely driven by a moderation in input costs and logistics inflation. This represents a continued turnaround compared to the first half of fiscal 2022, where we suffered from severe industry-wide input cost inflation, which led to large declines in our gross profit and margin. Selling general and administrative expenses increased by $1.3 million, or 2.7%, to $53.2 million for the fourth quarter of 2023 from $51.9 million for the fourth quarter of 2022. The increase was composed of increases in general and administrative expenses.

Speaker Change: We expect more favorable industry trends in the category during 2024 and.

Speaker Change: And quite frankly, we expect much more favorable trends for our business.

Speaker Change: The goal is to get this brand back to being the industry leader from an innovation perspective and to generate category leading growth rates like we did before the pandemic.

Speaker Change: The Hot breakfast style is another category that is still seeing some normalization and its post pandemic trends net sales of cream of wheat were approximately $78 5 million in.

Speaker Change: In 2023, which was well ahead of the pre pandemic levels that had been consistently in the $60 million to $70 million range annually.

Speaker Change: <unk> 2023, net sales were somewhat lower than fiscal 2022 annual net sales of $81 4 million.

Speaker Change: In the fourth quarter of 2023 net sales of cream of wheat decreased by $2 2 million or 9% compared to the prior year.

Speaker Change: Net sales of Ortega decreased by <unk> $3 million or 1% in the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Bruce C. Wacha: $5.8 million, and consumer marketing expenses of $0.9 million, partially offset by decreases in warehousing expenses of $2.6 million, selling expenses of $2.3 million, and acquisition divestiture-related and non-recurring expenses of $0.5 million. Expressed as a percentage of net sales, selling, general, and administrative expenses increased by 90 basis points to 9.2% for the fourth quarter of 2023, as compared to 8.3% for the fourth quarter of 20 The increase in general and administrative costs was largely driven by modest inflation in wages, insurance, and other professional services, as well as an increase in short-term management incentive accruals, as no annual bonuses were rewarded for fiscal 2022 due to the shortfall in performance in fiscal 2022.

Speaker Change: Ortega finished the quarter with some momentum despite a challenging year.

Speaker Change: While Q4 net sales were down 1% they were up approximately.

Speaker Change: <unk>, 9% in the month of November and another 6% in December compared to the prior year periods.

Speaker Change: Taco sauces Green Chiles and seasoning mixes led the way for the brand driving positive performance in the back half of the fourth quarter Taco shells and Taco kits continue to be somewhat challenged.

Speaker Change: Ortega began the year with a tough comp relative to prior year and some softness in shells and kits as well as pricing elasticity driven volume declines in some skus, where we took pricing.

Speaker Change: These factors combined with the general post Covid category, new amortization helped cause much of the declines.

Speaker Change: Total net sales for <unk> were $147 9 million in fiscal 2023 down from 150, $454 3 million in fiscal 2022.

Bruce C. Wacha: As I mentioned earlier, we generated $86.8 million in adjusted EBITDA for the fourth quarter of 2023, compared to $93.6 million in the fourth quarter of 2022. Fourth quarter 2023 adjusted EBITDA benefited from the moderation in industry-wide input cost inflation and logistics inflation that have plagued the industry since the fourth quarter of 2021, which were offset, in part, by the modestly higher G&A costs, as well as the impact of The fourth quarter of 2022 included a full quarter of profits from Back to Nature and the Green Giant U.S. shelf-stable product line, while the fourth quarter of 2023 had no benefit from Back to Nature and approximately five and one-half weeks of benefit from Green Giant U.S. self-stabilization.

Speaker Change: But also up substantially from pre pandemic 2019, net sales of $144 million.

Speaker Change: Base business net sales of all other brands in the aggregate decreased by $4 6 million or three 5% for the fourth quarter of 2023 as compared to the fourth quarter of 2022.

Speaker Change: Yeah.

Speaker Change: Gross profit was $125 2 million for the fourth quarter of 2023 or 21, 7% of net sales.

Speaker Change: Adjusted gross profit was $126 8 million or 21, 9% of net sales.

Speaker Change: Gross profit was $126 1 million in the fourth quarter of 2022 or 22% of net sales.

Speaker Change: Adjusted gross profit was $128 6 million or 26% of net sales.

Bruce C. Wacha: Adjusted EBITDA as a percentage of net sales was 15% in the fourth quarter of 2023, in line with the 15% in the fourth quarter of 2022. Net interest expense was $40.2 million in the fourth quarter of 2023 compared to $36.3 million in the fourth quarter of 2022. The increase was primarily attributable to higher interest rates on our borrowings and a $0.5 million loss on extinguishment of debt, partially offset by a reduction in our average debt outstanding. Depreciation and amortization was $17 million in the fourth quarter of 2023 compared to $19.5 million in the fourth quarter of last year. We generated $0.30 in adjusted diluted earnings per share in the fourth quarter of 2023 compared to $0.40 last year. We remain very encouraged by the progress we have made over the past year in terms of restoring our P&L, and perhaps even more impressive than our P&L improvements was the progress that we made in the improvement of our cash flows and our balance sheet. We generated $92.1 million in net cash from operations in the fourth quarter of 2023 and $247.8 million in the full 12 months of fiscal 2023.

Speaker Change: Adjusted gross profit increased by approximately 130 basis points in the fourth quarter of 2023 compared to last year's fourth quarter.

Speaker Change: The improvement in gross profit percentage was largely driven by a moderation in input costs and logistics inflation.

Speaker Change: This represents a continued turnaround compared to the first half of fiscal 2022, where we suffered from the severe industry wide input cost inflation, which led to large declines in our gross profit and margins.

Speaker Change: Selling general and administrative expenses increased by $1 3 million or two 7% to $53 2 million for the fourth quarter of 2023 from $51 9 million for the fourth quarter of 2022.

Speaker Change: The increase was composed of increases in general and administrative expenses of $5 8 million and.

Speaker Change: <unk> marketing expenses of <unk> nine.

Speaker Change: $9 million.

Speaker Change: Partially offset by decreases in warehousing expenses of $2 6 million.

Speaker Change: Selling expenses of $2 $3 million.

Speaker Change: And acquisition and divestiture related and nonrecurring expenses of <unk> 5 million.

Speaker Change: Expressed as a percentage of net sales selling general and administrative expenses increased by 90 basis points to nine 2% for the fourth quarter of 2023 as compared to eight 3% for the fourth quarter of 2022.

Bruce C. Wacha: This compares to $54.4 million in net cash from operations generated in the fourth quarter of 2022 and just $6 million during the full 12 months of 2020. Increased operating profits, improved margins, and a more favorable working capital were the primary drivers of improved cash flows from operations, which was offset in part by increased. We finished the year with approximately $569 million in inventory in fiscal 2023, compared to $726.5 million in inventory at the end of last year. Approximately 90 million dollars of the reduction was due to our focus on supply chain efficiencies and a moderation in input. The remainder came from the sale of the Green Giant U.S. self-stable product line, which, as we mentioned previously, was highly capital intensive and came with large seasonal swings in working capital. We reduced net debt by more than $335 million during the course of fiscal 2023 to $2.02 billion at the end of the year, down from $2.36 billion at the end of fiscal 2022.

Speaker Change: The increase in general and administrative costs was largely driven by modest inflation in wages insurance and other professional services as well as an increase in short term management incentive accruals as annual bonuses were rewarded for fiscal 2022 due to the shortfall in performance in fiscal 2022.

Speaker Change: Yes.

Speaker Change: As I mentioned earlier, we generated $86 8 million and adjusted EBITDA for the fourth quarter of 2023 compared to $93 6 million in the fourth quarter of 2022.

Speaker Change: Fourth quarter 2023, adjusted EBITDA benefited from the moderation in industry wide input cost inflation and logistics inflation that has plagued the industry since the fourth quarter of 2021.

Speaker Change: Which were offset in part by the modestly higher G&A costs as well as the impact of divestitures.

Speaker Change: Fourth quarter of 2022 included a full quarter of profits from back to nature brand and the Green Giant U S shelf stable product line.

Speaker Change: While the fourth quarter of 2023 had no benefit from back to nature, and approximately five and $1 five weeks of benefit from Green Giant U S shelf stable business.

Bruce C. Wacha: We also reduced the pro forma adjusted net leverage ratio as defined in our credit agreement to approximately 6.3 times at the end of fiscal 2023 compared to 7.6 times at the end of fiscal 2022. We expect to continue to reduce our net debt and pro forma adjust the net leverage ratio throughout fiscal 2024 and beyond as we diligently work toward achieving our long-term target of 4.5 to 5.5%. Now, as a reminder, before we get to our fiscal 2024 guidance, we are still living in highly unpredictable times. We have two major military conflicts going on in the world that have far-reaching global implications.

Speaker Change: Adjusted EBITDA as a percentage of net sales was 15% in the fourth quarter of 2023 in line with the 15% in the fourth quarter of 2022.

Speaker Change: Net interest expense was $40 2 million in the fourth quarter of 2023 compared to $36 3 million in the fourth quarter of 2022.

Speaker Change: The increase was primarily attributable to higher interest rates on our borrowings and a <unk> $5 million loss on extinguishment of debt.

Speaker Change: Partially offset by a reduction in our average debt outstanding.

Speaker Change: Depreciation.

Speaker Change: <unk> and amortization was $17 million in the fourth quarter of 2023 compared to $19 5 million in the fourth quarter of last year.

Bruce C. Wacha: We also have separate but ongoing disruptions in both important canal zones that have affected the global supply chain. Although we are not immune from the challenges that these issues present, we are happy to have a much simpler operational footprint than many of our larger packaged food peers. For B&G Foods, though, M&A will have an impact on our numbers. We have now fully lapped the sale of Back to Nature, but we still have to lap the sale of the Green Giant US shelf-stable product. As we mentioned on our prior call, the Green Giant U.S. shelf-stable product line had approximately $75 to $85 million in annual net sales and a low double-digit contribution.

Speaker Change: We generated 30 and adjusted diluted earnings per share in the fourth quarter of 2023 compared to 40 last year.

Speaker Change: We remain very encouraged by the progress we have made over the past year in terms of restoring our P&L.

Speaker Change: And perhaps even more impressive than our P&L improvements was the progress that we made in the improvement of our cash flows and our balance sheet.

Speaker Change: We generated $92 $1 million of net cash from operations in the fourth quarter of 2023 and.

Speaker Change: And $247 $8 million in the full 12 months of fiscal 2023.

Speaker Change: This compares to $54 4 million in net cash from operations generated in the fourth quarter of 2022.

Bruce C. Wacha: The business had approximately $65 million in net sales under our watch in fiscal 2023 that we need to lapse. It is also worth noting that while the majority of the heavy lifting in our adjusted EBITDA margin and dollar recovery has already happened, we still do expect to see some modest improvements going forward in 2024. So based on what we know today, we expect 2024 net sales of $1.975 to $2.020 billion. Our net sales guidance is generally in line with our long-term guidance of 0-2% base business top-line growth after adjusting for the removal of the Green Giant U.S. shelf-stable product line, which we sold in November, other non-recurring sales, and an estimated $15 million reduction in net sales of Crisco due to anticipated lower oil We expect Adjusted EBITDA to be in a range of $305 to $325 million.

Speaker Change: And just $6 million during the full 12 months of 2022.

Speaker Change: Increased operating profits improved margins and a more favorable working capital were the primary drivers of improved cash flows from operations.

Speaker Change: Which was offset in part by increased interest expense.

Speaker Change: We finished the year with approximately $569 million in inventory and fiscal 2023 compared to $726 5 million in inventory at the end of last year.

Speaker Change: Approximately $90 million of the reduction was due to our focus on supply chain efficiencies and a moderation in input costs.

Speaker Change: The remainder came from the sale of the Green giant use shelf stable product line, which as we mentioned previously was highly capital intensive and came with large seasonal swings in working capital.

Speaker Change: We reduced net debt by more than $335 million. During the course of fiscal 2023 to $2 2 billion at the end of the year down from $2 $36 billion at the end of fiscal 2022.

Speaker Change: We also reduced pro forma adjusted net leverage ratio as defined in our credit agreement to approximately six three times at the end of fiscal 2023 compared to seven six times at the end of fiscal 2022.

Bruce C. Wacha: This range largely reflects the elimination of approximately $8 to $10 million of adjusted EBITDA due to the recent sale of our Green Giant U.S. shelf-stable product. Based on this Adjusted EBITDA guidance range, we expect Adjusted EBITDA as a percentage of net sales to remain at approximately 15%. And based on this guidance, we expect adjusted diluted earnings per share to be in a range of 80 cents to a

Speaker Change: We expect to continue to reduce our net debt and pro forma adjusted net leverage ratio throughout fiscal 2024 and beyond as we diligently work toward achieving our long term target of four 5% to five five times.

Speaker Change: Now as a reminder, before we get to our fiscal 2024 guidance, we are still living in a highly unpredictable times.

Bruce C. Wacha: Additionally, we expect for full year 2024 interest expense of $145 to $150 million, including cash interest of $138 to $143 million, appreciation expense of $47.5 to $52.5 million, amortization expense of 20 to 22 million dollars, an effective tax rate of 26 to 27 percent, and CapEx of $35 to $40 million. We expect to use a little bit less than 50% of our excess cash to pay our dividend and the remaining 50-60% to pay down debt. And now, I will turn the call back over to Casey for further remarks. Thank you, Bruce.

Speaker Change: Two major military complex going on in the world that are far reaching global implications. We also have separate but ongoing disruptions in both important canal zones that impacted the global supply chain.

Speaker Change: Although we are not immune from the challenges that these issues present, we are happy to have a much simpler operational footprint than many of our larger packaged food peers.

Speaker Change: For <unk> foods, though M&A will have an impact on our numbers. We have now fully lapped the sale of back to nature, but we still have to lap the sale of the green giant U S shelf stable product line.

Speaker Change: As we mentioned on our prior call the Green Giant U S shelf stable product line had approximately 75% to $85 million.

Speaker Change: And annual net sales and low double digit contribution margins.

Casey Keller: In closing, our Quarter 4 and Fiscal 2023 results demonstrate strong progress, with improved margins, stabilizing volumes, stronger cash flows, and a reduction in leverage. We remain on track to further improve the business in fiscal 2024 and beyond. We have also made significant progress toward reshaping the portfolio through our focused M&A strategy, including the divestiture of two businesses, the Back to Nature brand and the Green Giant U.S. shelf-stable business that are not core to B&G Foods of the future. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator?

Speaker Change: The business had approximately $65 million.

Speaker Change: And net sales under our watch in fiscal 2023 that we need to lap this year.

Speaker Change: It is also worth noting that while the majority of the heavy lifting in our adjusted EBITDA margin and dollar recovery has already happened, we still do expect to see some modest improvements going forward in 2024.

Speaker Change: So based on what we know today, we expect 2024 net sales of one nine.

Speaker Change: <unk> 75 to $2 820 billion.

Speaker Change: Our net sales guidance is generally in line with our long term guidance of zero to 2% base business topline growth after adjusting for the removal of the green Giant U S shelf stable product line, which we sold in November other nonrecurring sales and an estimated $15 million reduction in net sales of Frisco.

Speaker Change: Due to anticipated lower oil input costs and a corresponding reduction in our chriscoe net selling prices.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you'd like to remove your question from the queue.

Speaker Change: We expect adjusted EBITDA to be in a range of $305 to $325 million. This range largely reflects the elimination of approximately $8 million to $10 million.

Speaker Change: Of adjusted EBITDA due to the recent sale of our Green giant shelf.

Speaker Change: Shelf stable product line.

Speaker Change: Based on this adjusted EBITDA guidance range, we expect adjusted EBITDA as a percentage of net sales to remain at approximately 15%.

Andrew Lazar: For participants using speaker equipment, it may be necessary to pick up a handset before pressing the star keys. We also request that you get to one question and one follow-up question. The first question we have is from Andrew Lazar of Barclays; please go ahead. Good afternoon, Casey and Bruce.

Speaker Change: And based on this guidance, we expect adjusted diluted earnings per share to be in a range of 80 to $1.

Speaker Change: Additionally, we expect for full year 2024.

Speaker Change: Interest expense of $145 to $150 million.

Speaker Change: Including cash interest of $138 million to $143 million.

Casey Keller: First off, I guess your base business growth expectation, as you mentioned, for 2024, is roughly flat. And I'm trying to get a sense of how you see that playing out for the year, both from a volume and a price standpoint. I think you mentioned another $15 million impact from negative pricing for the year for just the Crisco pass-through pricing model, if I got that right. So that's about maybe down a percent. So does that assume that volume is probably up a percent or so for the year? I just want to make sure I have that right.

Speaker Change: Depreciation expense of 47, 5% to $52 5 million.

Speaker Change: Amortization expense of $20 million to $22 million.

Speaker Change: An effective tax rate of 26% to 27%.

Speaker Change: And capex of $35 million to $40 million.

Speaker Change: We expect to use a little bit less than 50% of our excess cash to pay our dividend and the remaining 50% to 60% to pay down debt.

Speaker Change: And now I will turn the call back over to Casey for further remarks.

Casey Keller: Thank you Bruce.

Casey Keller: In closing our quarter four and fiscal 2023 results demonstrated strong progress with improved margins stabilizing volumes stronger cash flows and a reduction in leverage.

Casey Keller: Specific to Crisco. Okay, so could there be some additional negative pricing activities such as that? I'm trying to get a sense of what you think pricing looks like and just how positive you're buying expectations are. Yeah, so just let's address these separately. So for Crisco, as we've said, over the past year or so, we put in place a pricing model where we interact with our customers quarterly. And based on where input costs are, we adjust prices; we think about how last year played out. Info costs were still high from the 2022 levels at the beginning of the year and, over time, came down, and so, quarterly, we were reducing prices for Crisco.

Casey Keller: We remain on track to further improve the business in fiscal 2024 and beyond.

Casey Keller: We have also made significant progress against reshaping the portfolio through our focused M&A strategy, including the divestiture of two businesses, but back to nature brand and the Green Giant U S shelf stable business that are not core to the <unk> foods of the future.

Speaker Change: This concludes our remarks and now we would like to begin the Q&A portion of our call.

Casey Keller: Operator.

Speaker Change: Thank you we will now be conducting a question and answer session.

Speaker Change: So ask a question. Please press star and then one on your telephone keypad.

Speaker Change: Jason will indicate your line is in the question queue.

Speaker Change: You May press Star and then.

Speaker Change: Please like to remove your question from the queue.

Jason: For participants using speaker equipment may be necessary to be comprehensive focusing stock Keith.

Casey Keller: We will be lapping those higher prices for Crisco for the first half, and the three quarters of this year, which will then mean, assuming everything was perfect, margins would be the same from a dollar standpoint, sales would be down, margins would be up from a percent standpoint, and pricing would come down for Crisco, and we actually think we get a little volume elasticity benefit, and that's kind of what we're seeing for Cri And then if you look at the base business, but if you look at the base business, excluding the divestors and excluding the impact of Crisco, you know, we're basically saying we're going to be flat to slightly up and that that will probably be on both volume and price. So, those two will be kind of running more closely together.

Jason: We also request that you keep to one question and one follow up question.

Jason: The first question, we have is from Andrew Lazar of Barclays. Please go ahead.

Andrew Lazar: Good afternoon, Casey and Bruce.

Andrew Lazar: Okay Andrew.

Andrew Lazar: Good first off I guess your base.

Andrew Lazar: Base business growth expectation.

Andrew Lazar: As you mentioned for 24, I think is roughly flattish.

Andrew Lazar: And I'm trying to get a sense of how you see that playing out for the year, both from a volume and a price standpoint, I think you mentioned.

Andrew Lazar: Another $15 million impact from negative pricing for the year for just the Chriscoe pass through pricing model, if I got that right. So thats about maybe down a percent. So does that assume that volume is probably up a percent or so for.

Casey Keller: And if I think about the flow of that, you know, we still are kind of coming out of that, and trends are improving, but I would expect that the first half of the year is a little bit below that, and the second half is a little bit better than that. And that's how we kind of see it playing out right now. And we are seeing volumes and pricing stabilize, and we don't have a lot of growth plans from pricing, you know, other than the movement of Crisco, which is kind of irrelevant to the bottom line.

Andrew Lazar: For the year I, just want make sure I have that right I think specific to Chris go.

Andrew Lazar: Okay.

Speaker Change: Could there be some additional.

Andrew Lazar: Negative pricing activities, such that I'm trying to get a sense of what you think pricing looks like and just how positive your patient is.

Speaker Change: So just let's address these separately so for Chriscoe as we've said over the past year or so we've put in place a pricing model, where we interact with our customers quarterly and.

Andrew Lazar: That's helpful. And then your guidance, obviously, at the midpoint on EBITDA margins suggests, like you said, some additional modest improvement. And obviously, there was a big jump in margins in 23 versus 22, but EBITDA margins, though, still fell below where they were just a couple of years ago.

Speaker Change: And based on where input costs are we adjust price.

Speaker Change: We think about how last year played out <unk>.

Speaker Change: Input costs were still high from the 2022 levels at the beginning of the year and overtime came down.

Speaker Change: And so quarterly we were reducing price where chriscoe.

Speaker Change: We will be lapping those higher prices for Chris go for the first half to three quarters of this year.

Casey Keller: So I'm trying to get a sense of maybe what would impede more significant EBITDA margin improvement as we go forward. Is it something just in the portfolio that's changed versus where you were a couple of years ago? Or what would it take to get back to those levels if that's even a reasonable expectation at some point?

Speaker Change: Which will then mean, assuming everything was perfect margins would be the same from a dollar standpoint sales would be down margins would be up from a percent standpoint pricing would come down for Chris go and we actually think we get a little volume elasticity benefit and that's kind of what we're seeing for <unk> today.

Speaker Change: Yes.

Casey Keller: Well, I mean, Andrew, our goal is to get back to 18 to 20%. So that's what we want to, and that's what we're driving toward. And I think it's going to take a couple of things.

Speaker Change: If you look at the base business, but if you look at the base business, excluding the divestitures and excluding the impact of Chriscoe, We're basically saying, we're going to be flat to slightly up and that will be probably on both volume and pricing.

Casey Keller: So one is M&A, divesting businesses that are low margin. A lot of working capital intensity, and continued productivity. So we've started on that, you know, productivity savings journey. We've got that kind going. This is going to be our second year where we're really focused on it.

Speaker Change: Those two will be kind of running more closely together and if I think about the flow of that.

Speaker Change: We still are kind of coming out of that trends, improving but I would expect the expected the first half.

Speaker Change: The year is a little bit below that in the second half is a little bit better than that.

Casey Keller: So we see some improvement from that. And then the third thing for me would be, you know, as Crude oil pricing comes down, we will get some benefit on margin from that. As, you know, ironically, as sales come down, but with the same growth in profit, we're going to improve our margins on the Crisco business just because of that compression of oil prices. So those three things together, that's where we're trying to head, to get back to 18% to 20%. But it's going to take those three things working together to get there.

Speaker Change: How we kind of see it playing out right now and we are seeing kind of volumes and pricing has stabilized and we don't have a lot of <unk>.

Speaker Change: Growth plan from pricing other than the other than the movement of Chris go which is kind of irrelevant to the bottom line got.

Speaker Change: Got it that's helpful and then.

Speaker Change: Your guidance, obviously at the midpoint on EBITDA margin suggests like you said some some additional modest improvement and obviously there was a big jump up in margins in 'twenty three versus 22, EBITDA margins, though still still well below where they were just a couple of years ago. So I'm trying to get a sense of maybe what what would impede.

Casey Keller: And if you think about some of that drag, what Casey is describing for Crisco, a bigger example for that brand, but to the same degree across a lot of the rest of our portfolio when costs were rapidly rising, we took Price to Protect Profit Dollars, which just the algebra suggests lower margins as a percent, just that's on that. Crisco being the most extreme example of that.

Speaker Change: More significant.

Speaker Change: EBITDA margin improvement as we go forward.

Speaker Change: Is it is it something just in the portfolio Thats changed versus where you were a couple of years ago or what would it take to get back to those levels. If that's even a reasonable expectation at some point.

Speaker Change: Andrew our goal is to get back to 80% to 20%. So that's what we want to that's what we're driving to and I think it's going to take a couple of things. So one is one is M&A divesting businesses that are low margin.

Andrew Lazar: Right. Okay. Thanks so much.

William Michael Reuter: I'll pass it on. Yeah. The next question we have is from William Reuter of Bank of America. Please go ahead.

Speaker Change: A lot of working capital intensity.

Speaker Change: Continued productivity. So we've started on that productivity savings journey, we've got that kind of going this is going to be our second year, where we're really focused on it. So we see some improvement from that and then the third thing for me would be.

Casey Keller: Good afternoon. My first question on the topic of future additional asset sales, I wasn't aware that you were still actively pursuing these. I guess, is this new or have you been continuing to pursue over the last handful of months and quarters? And I don't know, any sense of magnitude or what types of assets you're looking at?

Speaker Change: As Chris go oil pricing comes down we will get some benefit on margin from that is ironic.

Speaker Change: Ironically as sales come down, but the same gross profit we're going to improve our margins on the chriscoe business, just because of that compression of oil pricing.

Casey Keller: So our M&A process, you know, and we tend and will tend to be a long-term net acquirer, but we are reshaping the portfolio. And as part of that, there's some things that are going to come out. So we've sold two businesses that we felt were not a fit to the portfolio that we want to run in the future and over the long term. There are probably a couple other things.

Speaker Change: Those three things together.

Speaker Change: That's where we're trying to hit to get back to 18% to 20%, but it's going to take those three things working together to get there and if you think about some of that drag will cases, describing on Chriscoe bigger example for that brand, but to the same degree across a lot of the rest of our portfolio when costs were rapidly rising.

Speaker Change: We took price to protect profit dollars.

Speaker Change: Which just the algebra suggests lower margins as a percent just thats when the.

Casey Keller: There's nothing that we're active in the market in terms of running a product right now. So there's a little bit of stay tuned, and when it's appropriate to talk about it, we'll talk about likely what you will see is other things that maybe are not a good fit for us or that could be a better fit for other companies. Got it. That's helpful.

Speaker Change: Math works.

Speaker Change: Chris <unk> being the most extreme example of that yet.

Speaker Change: Right. Okay. Thanks, so much I'll pass it on.

Speaker Change: Yes.

Speaker Change: The next question. We have is from William Reuter of Bank of America. Please go ahead.

William Michael Reuter: Good afternoon.

William Michael Reuter: My first question on.

William Michael Reuter: On the topic.

William Michael Reuter: Sorry, I've got an echo on the topic of.

William Michael Reuter: Future additional asset sales.

William Michael Reuter: And then, in the answer to a previous question, you mentioned that you weren't expecting to take much pricing this year. I don't know if I heard explicitly what your outlook is for input costs, and let's exclude Crisco since that's the pass-through model, but for the remainder of the products, what's your outlook on where they should be this year versus last year, or any other sources of either inflation or deflation? I think what we're seeing right now in our input costs, and obviously this is still early in the year and we're still trying to project it fully, but I'm seeing something more in the 1% to 2% range, 1% to 2% on the high end in terms of input cost inflation, probably on the lower end of that range right now as I see it, but maybe a little bit in freight and transportation, but I think it's probably more in line with that range.

William Michael Reuter: I wasn't aware that you were still actively pursuing these.

William Michael Reuter: I guess is this new or have you been continuing to pursue over the last handful of months and quarters.

William Michael Reuter: And I don't know if <unk> any sense of magnitude on what types of assets Youre looking at.

William Michael Reuter: Sure.

William Michael Reuter: Our M&A process.

William Michael Reuter: We turned and we will tend to be a long term net acquire.

William Michael Reuter: But we are reshaping the portfolio and as part of that there is some things that are going to come out. So we sold two businesses that we felt were not a fit to the portfolio that we want to run in the future and over the long term, there's probably a couple of other things theres nothing that were active in the market in terms of running a process.

William Michael Reuter: For right now.

William Michael Reuter: So theres a little bit of a stay tuned and when its appropriate to talk about it we'll talk about likely what you will see is other things that maybe are not.

William Michael Reuter: So I feel like right now our job is to get the business back stabilized on volumes, not take as much pricing as we have over the past year, but drive productivity to offset that inflation and then maybe give us a little bit of margin improvement. That's our focus right now. There may be some selected places where we're going to take prices, where we might have a big jump in one particular small commodity input, but that's going to be very, very selective.

William Michael Reuter: Fit for us or that could be a better fit for other people.

Speaker Change: Got it that's helpful and then.

William Michael Reuter: And the answer to a previous question you mentioned that you werent expecting to take much pricing. This year I don't know if I heard explicitly what your outlook is for input costs and let's exclude Chris goes from SaaS to pasture model, but for the remainder of the products. What's your outlook on where they should be this year versus last year or any other sources of <unk>.

Karru Martinson: Very helpful. All right. That's all for me.

William Michael Reuter: Inflation or deflation.

Casey Keller: Thank you. The next question we have is from Karru Martinson of Jeffrey's Company. Please go ahead.

Speaker Change: I think what we're seeing right now in our input costs and obviously this is still early in the air and we're still trying to projected fully but I'm seeing something more in the 1% to 2% range, 1% to 2% and in terms of input cost inflation, probably on the lower end of that range right now as I see it but.

Casey Keller: Good afternoon. What has been the kind of competitive response in terms of your peers? We constantly keep hearing about consumers trading down to private label, the give back in pricing, and the elasticity that you referenced. Are you seeing that sustained shift in terms of competing products in your categories? I mean, it really depends on the category, honestly. Because we have the pass-through model on Crisco, we're actually seeing volumes increasing on that business. So, you know, we're seeing a pickup in our unit sales as a result of bringing the price back down to reflect the lower oil commodity cost pricing. So, you know, even though the, you know, the percentage gap to private label might be the same, the absolute gap has come down, and the absolute price point has come down.

William Michael Reuter: Maybe a little bit in freight and transportation, but I think it's probably more in line with that range. So.

William Michael Reuter: I feel like right now our job is to <unk>.

William Michael Reuter: Get the business back stabilize on volumes.

William Michael Reuter: Not take as much pricing as we have over the past year, but drive productivity to offset that inflation and then maybe give us a little bit of margin improvement.

William Michael Reuter: That's our focus right now.

Speaker Change: Got it perfect. There may be some selected places, where we're going to take price, where we might have a big jump in one particular small commodity input, but that's going to be very very selective.

Speaker Change: Got it very helpful. That's all for me. Thank you.

Speaker Change: The next question we have is from Mark.

Mark: Question of Jefferies <unk> Company. Please go ahead.

Casey Keller: So, on that one, we're kind of moving, you know, where we'd expect to in terms of our share performance. But, you know, I would say, there's a couple of other places where we've seen, you know, inflation drive up pricing. And even though we try to maintain our percentage gaps of private label, you know, at the higher absolute price points, and maybe in just maybe a couple categories like, well, canned vegetables, well, you know, we're out of now. But that was one where we were seeing a little bit of that dynamic.

Mark: Good afternoon.

Mark: What has been the kind of the competitive response in terms of your peers, we constantly keep hearing about the consumer trading down too.

Mark: Private label, the give back on pricing the elasticity that you referenced.

Mark: Are you seeing that sustained shift in terms of the competing products for your categories.

Mark: I mean, it really depends on the category honestly, because we have the pass through model loan Chriscoe, we're actually seeing volumes increasing on that business. So.

Speaker Change: We're seeing a pickup in our unit sales as a result of bringing the price back down to reflect the lower oil commodity cost pricing, so even though the <unk>.

Bruce C. Wacha: But, you know, for the most part, we watch the gap to private label pretty closely. And we try and manage that so that we don't have a lot of pressure from, you know, trade down, or we maintain the same relative position in the marketplace. Okay, and when we look at the kind of implied cash flow guidance here for the year with the 70 million or so for the dividend, when it was $300 million maturity in 2025, that leaves kind of $230 million that we would need to refinance. Is that to be paid off through asset sales, or how would you look at addressing that? So for the remaining stub on the 2025s, the base case assumption is that it's a combination of cash from operations and RevolverDraw. And keep in mind, we've got a big revolver, so we've got plenty of capacity. I think there are always options around potential refinancing as part of a broader refinancing. www.larryweaver.com Thank you very much. I appreciate it.

Speaker Change: Percentage gap to private label might be the same the absolute gap has come down and the absolute price point has come down so on that one we're kind of moving where we'd expect to in terms of our share performance.

Speaker Change: I would say, there's a couple of other places, where we've seen inflation drive up pricing and even though we try to maintain our percentage gaps to private label.

Speaker Change: At the higher absolute price points that are just maybe a couple of categories like canned vegetables. We're out of now but that was one where we were seeing a little bit of that dynamic but.

Speaker Change: For the most part we watch the gap to private label pretty closely and we try and match of that so that we don't have a lot of pressure from <unk>.

Speaker Change: Trade down or we maintain the same relative position in the marketplace.

Speaker Change: Okay, and when we look at the.

Speaker Change: The implied cash flow guidance here for the year with $71 million or so for the dividend.

Speaker Change: When you were $300 million maturity in 2025.

Speaker Change: We've kind of $230 million.

Speaker Change: That way you would need to refinance is that to be.

Speaker Change: Paid off through the asset sales or how would you look at addressing that.

Speaker Change: So for the remaining stub on the 2020 fives. The base case assumption is it's a combination of cash from operations.

Connor Rattigan: The next question we have is from Connor Rattigan of Consumer Edge Research. Please go ahead. Hey guys, good afternoon.

Speaker Change: And revolver drawn keep in mind, we've got a big revolvers. So we've got plenty of capacity there.

Casey Keller: So, correct me if I'm wrong, but it sounds like you registered positive base business volume growth in the quarter. So that was quite a bit ahead of what we saw in the track data. I guess, could you maybe help us understand what drove that differential?

Speaker Change: I think theres always.

Speaker Change: <unk> options around potential refinancing as part of a broader refinancing it.

Speaker Change: If the market is hospitable and it makes sense to us to.

Speaker Change: To the extent that we have any more asset divestitures.

Casey Keller: And looking ahead to 2024, how we should sort of think about volume trends over the course of the year, and if maybe there are any items we should keep in mind in terms of divergences versus track data. Yeah, so first, you know, in the fourth quarter, we saw, you know, a small growth in volume. So I want to be careful that we don't, you know, we don't, you know, over call that one.

Speaker Change: There is money coming in the door from that as well and so I think theres a couple of things, but I would use as the base case, what we laid out to investors ample cash from operations coupled with.

Speaker Change: Liquidity from the revolver.

Speaker Change: Thank you very much I appreciate it.

Speaker Change: The next question we have vishal.

Vishal: That's again of consumer edge research. Please go ahead.

Vishal: Hey, guys good afternoon.

Vishal: Afternoon.

Vishal: So correct me, if im wrong, but it sounds like Youre industry registered positive base business volume growth in the quarter. So that was quite a bit ahead of what we saw in the track data.

Casey Keller: But honestly, we kind of celebrated getting stable volume trends on our business after the past year coming off all the inflationary pricing. What we're, you know, what we're trying to move forward is to kind of get that same trend line, you know, small growth in volume, in 2024. Yeah, the difference between the measured data, tracking data, and what you guys are seeing is there a lot of things. I mean, there's channel coverage that's not complete with what we do.

Speaker Change: Can you help us understand what drove that differential and look.

Vishal: Looking ahead to 2020 or how we should sort of think about volume trends over the course of the year, maybe there any items.

Vishal: We should keep in mind in terms of divergences versus track data.

Speaker Change: Yes, so first of all in the fourth quarter, we saw a small growth in volume so I want to be careful that we don't we.

Vishal: We don't over call that one, but honestly, we celebrated getting stable volume trends on the business after the past year coming off all the inflationary pricing.

Casey Keller: We sell to, we have businesses that are selling to, other food service outlets, particularly in the spices and seasonings business, and in some cases in syrups, we have some private label business that we're selling that's not tracked in your data. So we are a heavy player in the private label business in the baking powder business. So there's a lot of our business you don't see in the track data. So it's hard to really look at the track data and directly translate it to our sales results because we're participating in, you know, we're participating in the food service business, we're participating in some, you know, some private label manufacturing, we're participating in some other businesses that we do with other kinds of customers. So it's, it's, it's a difficult thing to translate it directly.

Vishal: What we are.

Vishal: What we're trying to move forward is to kind of get that same trend line small growth in volume in in 2024, yes. The difference between the measured data attract data and what you guys are seeing is there is a lot of things I mean, theres channel coverage, that's not complete with what we do we sell to.

Vishal: We have businesses that are selling to.

Vishal: Other foodservice outlets, particularly in spices and seasonings business in some cases in <unk>, we have some private label business that we're selling it's not tracked in your data. So we're a heavy player in private label in.

Vishal: In the baking powder.

Vishal: Business. So there's a lot of our business you don't see in the tracked data. So it's hard to really look at attracting and directly translated to our sales results because we're participating in.

Casey Keller: But obviously, we look at everything pretty closely in terms of what the trends are. So I guess just following up on that, would it be fair to say that, I guess maybe the non-track businesses are outperforming what you're seeing at retail? I mean, for sure, we've seen food service businesses in the past year outperforming trends in retail. And honestly, I think that would be not just us.

Vishal: We're participating in foodservice business, we're participating in some some private label manufacturing we're participating in some other businesses that we do with other kinds of customers.

Vishal: It's a difficult thing to translate it directly but obviously, we look at everything pretty closely in terms of what the trends are.

Speaker Change: So I guess just following up on that would it be fair to say that that the I guess, maybe the non tracked businesses are outperforming what youre seeing at retail.

Casey Keller: You would see that in other businesses as well. So, you know, we, you know, we, that was the opposite during the pandemic, but now we've seen it kind of flip back to where food service growth has outpaced retail growth. I expect that to normalize this year at some point. Honestly, I expect both of those trends to kind of stabilize and get to more stable trends year over year. But that obviously depends on a lot of economic conditions, whether or not we hit a recession or something that could change that dynamic. But right now, we're kind of seeing those two come back in balance in terms of consumer behavior and trends. Okay. It makes total sense.

Speaker Change: I mean for sure we're seeing the foodservice businesses in the past year outperforming trends in retail and honestly I think that's across that would that would be not just us you would see that in other businesses as well.

Speaker Change: So we.

Speaker Change: That was the opposite.

Speaker Change: During the pandemic now we've seen a kind of flip back to where foodservice growth has outpaced retail growth I expect that to normalize this year at some point honestly I expect both of those that trend that kind of stable more stable trends year over year.

Speaker Change: But that obviously depends a lot of economic conditions, whether or not we.

Speaker Change: We hit a recession or something that could change that dynamic, but right now we're kind of seeing those to come back in balance in terms of consumer behavior and trends.

Speaker Change: Okay makes total sense.

Bruce C. Wacha: And then just as a quick follow-up, Bruce, in your prepared remarks, you noticed some increases in promotional and trade spend in certain parts of the business. Could you maybe be a little more specific as far as maybe what brands those impacted and I guess what type of list you might have seen from that spend and, overall, if you were happy with what you saw? I don't think we're necessarily going to talk about the specifics of the brand promotional strategy, but this is, You know, again, a way to improve volumes. I think we're seeing this across many of our competing or just peer groups where people are increasing promotional spend. I think it's been somewhat rational, but spend is still lower than it was pre-pandemic. So it's going to be higher than it was last year or the year before, but it's still sort of normal.

Speaker Change: And then just as a quick follow up Bruce in your prepared remarks, you noted some increases in promotional and trade spend in certain parts of the business I guess could you anything a little more specific as far as I mean, maybe what brands those impacted and I guess, what type of lift you might have seen from that.

Speaker Change: Just overall, if you were happy with what you saw.

Bruce C. Wacha: I don't think we're necessarily going to talk about the specifics on the on the brand promotional strategy, but this is.

Bruce C. Wacha: And a way to improve volumes I think we're seeing this across many of our.

Bruce C. Wacha: Competing or just peer group, where people are increasing promotional spend I think it's been somewhat rational.

Bruce C. Wacha: But spend is still lower than it was pre pandemic.

Bruce C. Wacha: Going to be higher than it was last year the year before but it's still sort of normal.

Casey Keller: And we expect to get some volume benefits, and I think you do see that. Yeah, I mean, for the most part, when we put trade spend in to businesses, because we're going back to more normal, you know, promotion patterns, we do see volume lift behind that. And we watch that pretty carefully. And if we don't see volume lift from it, we change. But for the most part, that's been a successful play.

Bruce C. Wacha: And we expect to get some volume benefits and I think you do see that.

Bruce C. Wacha: Yes, I mean for the most part we put trade spend in to businesses, because we're going back to more normal.

Bruce C. Wacha: Promotion patterns, we do see volume lift behind that and we watch that pretty carefully and if we don't see volume lift from it we change.

But for the most part that's been successful play and as Bruce said, we're not all the way back to where we were pre pandemic. So we're kind of moving back there over time as I think most players in the food industry are.

Connor Rattigan: As Bruce said, we're not all the way back to where we were pre-pandemic, so we're kind of moving back there, you know, over time, as I think most players in the food industry are, as normal promotion patterns and merchandising patterns resume. Alright, sounds good.

Bruce C. Wacha: As normal promotion patterns in merchandising patterns resume.

Speaker Change: Alright sounds good thank you.

Hal Holden: Thank you. The next question we have is from Hal Holden of Barclays. Please go ahead. Hi, afternoon. Thank you. I'm super excited to try the Fireball seasoning, by the way. Don't drink too much of it with the seasoning.

Speaker Change: The next question we have is from Hale Holden of Barclays. Please go ahead.

Hale Holden: Hey afternoon. Thank you. So we're excited to try the firewall season by the way.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Drink too much of it with the seasoning.

Bruce C. Wacha: I'm trying to age myself out of life here. Bruce, the half-million-dollar debt-extinguishment cost in the quarter, did you buy some bonds back, or was that a term loan pay-down? Yeah, it's just all the refinancing stuff that we did back in the second half of last year. And then the second question I had was, you know, as you think about divestitures in the market, if you, I mean, you've obviously been talking about it for six, nine, twelve months in various forms, and I was wondering if you had seen the market improve from a seller standpoint, or multiples come up, or more I think there's certainly chatter that sounds like there should be more activity. But I would have told you the same thing six months ago or a year ago.

Speaker Change: Yes.

Speaker Change: Try not to age myself out of life here so.

Speaker Change: Yeah.

Speaker Change: First the $5 million debt extinguishment costs in the quarter did you buy some bonds back or was it <unk>.

Speaker Change: Loan Paydown, yes, it's just all the refinancing stuff that we did kind of back half of last year.

Speaker Change: Okay.

Speaker Change: And then the second question I had was.

Speaker Change: As you're thinking about divestitures in the market.

Speaker Change: If you have any.

Speaker Change: You've obviously been talking about it for six.

Speaker Change: Six 912 months in various forms and I was wondering if you have seen the market improve our seller standpoint.

Speaker Change: Our multiple has come up for more interest in the pipeline.

Speaker Change: I think theres, certainly chatter that sounds like there should be more activity I would have told you. The same thing six months ago or a year ago, but.

Bruce C. Wacha: But I think is that... [inaudible] Financing and the environment start to stabilize. We're going to see more activity. We probably have seen some nice little brand deals get done. You know, we saw two of our deals get done. I think it's fine. I don't think it's shut down. It's just not gangbusters like it was a few years ago, but it should be fine. Okay, great. Thank you very much. The next question we have is from David Palmer of Evercore ISI. Please go ahead.

Speaker Change: But I think as.

Speaker Change: As the.

Speaker Change: Financing environment starts to stabilize we're going to see more activity, we probably have seen some some nice little brand deals get done we saw two of our deals get done I think it's fine I don't think it's shut down its just not.

Speaker Change: Gangbusters like it was a few years ago, but it should be fine.

Speaker Change: Okay, great. Thank you very much.

Speaker Change: Okay.

Speaker Change: The next question, we have is from David Palmer of Evercore ISI. Please go ahead.

David Palmer: Thanks, guys. Inventory declined in the quarter, obviously, with the divestiture. I'm wondering how, I always ask you about free cash flow conversion, but I wonder how much the inventory change will happen in 2024 and where you see free cash flow conversion settling in terms of EBITDA going forward. Yeah, so I think, you know, the inventory reduction in 2023 from both the sale of Green Giant and U.S. Canned Vegetables and honestly, base business improvement coming off the inflationary cycle and the supply shortages So, in the future, I wouldn't expect to see that kind of magnitude of change. However, obviously, a divestiture would impact that. But in terms of our base business and organic kind of trends, I'm looking for kind of a 2% to 3% continuous improvement trend line as we get better in terms of our operations and our demand supply integration. That's kind of our expectation.

Speaker Change: Thanks.

Speaker Change: Guys.

David Palmer: Inventory declined in the quarter, obviously with the divestiture.

David Palmer: I'm wondering how I always ask you about free cash flow conversion, but what I'm.

David Palmer: I wonder how much.

David Palmer: The inventory change will happen in 'twenty, four and where you see free cash flow conversion settling in of EBITDA going forward.

David Palmer: Yes, so I think the inventory reduction.

David Palmer: <unk>.

David Palmer: <unk> 23 from both the sale of Green giant canned vegetables, and honestly base business improvement coming off the inflationary cycle.

David Palmer: And the supply shortages, we did a lot of reduction in this year. So in the future I wouldn't expect to see that kind of magnitude of change obviously a divestiture.

David Palmer: Impact that but in terms of our base business and the organic kind of trends I'm looking for kind of a 2% to 3% continuous improvement trend line as we get better in terms of our operations and our demand supply integration.

David Palmer: That's kind of our expectation. So you will see some benefit from reducing working capital, but nothing to the magnitude you saw this year.

Casey Keller: So, you will see some benefit, you know, from reducing working capital, but nothing to the magnitude you saw this year. Look, our long-term perspective, and I think we said this before, is that we want enough excess cash that half of it can be used to pay dividends, and half of it can be used to pay down debt. And that's where we're driving.

Look our long term perspective, and I think we said this before is that we want enough excess cash that half of it can be used to pay the dividends and half of it can be used to pay down debt and that's where we're driving that's why we're driving so that we have we have the ability to kind of reduce debt year on year out with our excess cash flow.

Casey Keller: That's where we're driving so that we have, you know, we have the ability to kind of reduce debt year in, year out with our excess cash flow. I think in the past, you might have had a 60% of EBITDA type target, is that? Yeah, give or take that.

David Palmer: I think in the past you might have had a 60% of EBITDA.

David Palmer: Target is that yet.

David Palmer: Give or take that so I mean, if you think about the midpoint of our guidance range call it $315 million of adjusted EBITDA.

Casey Keller: So, I mean, if you think about the midpoint of our guidance range, call it $315 million of adjusted EBITDA, throw in $5-$10 million of non-cash or share-based comp as sort of your baseline. And then, again, we gave guidance on the call, but cash interest at the midpoint is about $140 million. Cash taxes have been bouncing around $30-plus million a year, and CapEx at $35-$40 million. Casey talked to me about modest, certainly not what we had last year, but modest levels of inventory reductions slash working capital improvement. You could see a number that's $110-$125 million or so in excess cash before dividends, you know, if you get the benefit of working capital in there, and dividends are about $60 million.

David Palmer: Throw in $5 million to $10 million.

David Palmer: Noncash share based comp is sort of your baseline and then.

David Palmer: Again, we gave guidance on the call but.

Cash interest at the midpoint about $140 million cash taxes have been bouncing around $30 million, a year capex of $35 $40 million.

David Palmer: <unk> talked to.

David Palmer: Modest certainly not what we had last year, but modest levels of inventory reductions flash working capital improvement you could see a number that's 110 $125 million or so.

David Palmer: And excess cash.

Before dividends, if you get the benefit of working capital in there in dividends about 60 million Bucks.

Bruce C. Wacha: That's all helpful, and just a question on Crisco. It's your... You said you were expecting profit dollars from Crisco to remain pretty steady this year, which is great to hear. And going forward, what do you think will be your biggest watchouts for that business? That brand's profitability is... Is there a level of volatility in soybean oil that makes keeping profit steady much more difficult? Or are there price thresholds where trade down accelerates? What are things that would kind of throw you off the horse, so to speak, about keeping profit steady for Christmas?

David Palmer: That's all helpful and just just a question on Chris' comments Youre.

David Palmer: You said you were expecting profit dollars from Chris got it remained pretty steady this year, which is which is great to hear and going forward. What do you think will be your biggest watch outs for that businesses that brand's profitability is.

David Palmer: Is there a level of volatility of soybean oil that makes keeping profit steady much more difficult or their price thresholds, where trade down accelerates and what are the things that would kind of throw you off the horse so to speak on keeping profit steady for Chris go.

Casey Keller: Yeah, I think it's our ability to just pass through the oil costs. And so far, we've been doing that. I mean, if you had talked to me in 2022, I would have said that, you know, the risk was much higher. But since, you know, January, kind of January, the first quarter of last year, we implemented this pass-through model with customers, and they like it. They love it.

Speaker Change: Yes, I think it's our ability to just pass through the oil costs and so far we've been doing that I mean, if you were to talk to me in 2022 I would have said.

Chris: The risk was much higher but since January kind of January 1st quarter of last year, we implemented this pass through model with customers.

Chris: Like it they like it or we come to them.

Casey Keller: We come to them, you know, every quarter and say, here's what the oil costs; here's what we're going to price relative to that. And we, you know, they've been pretty good about reflecting that in the pricing. And so it's been successful.

Chris: Every quarter and say, here's what the well costs here, so we're going to price to relative to that and they have been pretty good about reflecting that in the pricing and so it's been successful.

Casey Keller: So it's a strategy to maintain our gross profit dollars. I would say the only thing I worry about is if soybean oil goes back up to, I don't know, 80 cents a gallon, then, you know, we're going to pass that through and take prices up. You know, unfortunately, at that level, we see the absolute dollar gap, the private label growing, percentage the same, but the absolute dollar gap. And so we see, you know, some risk to the volume trend of the business with that kind of commodity structure. I mean, look, fortunately, right now, soybean oil prices, last time I checked, are kind of in the 45 cents per pound range, which is well down from where they were last year and well down from the high of 80 cents that we saw probably 18 to 24 months ago.

Chris: Strategy to maintain our gross profit dollars.

Chris: I would say the only things I worry about is it soybean oil goes back up to I don't know 80.

Chris: Then we're going to we're going to pass that through and take pricing up.

Chris: Unfortunately at that level, we see the absolute dollar gap to private label growing percentage the same but the absolute dollar gap and so we see some risk to the volume trend the business with that kind of commodity structure. I mean look Fortunately right now soybean oil prices last time, I checked or kind of end up <unk> 45 per pound range, which is.

Well down from where it was last year and well down from a high of 80.

Chris: We saw probably 18 to 24 months ago, So I mean thats.

Casey Keller: So, I mean, that's really the big risk. I mean, the only other thing we watch is we have a shortening business, you know, which is, you know, which is a key part of that whole Crisco business outside of the oil. We look at the long-term household penetration on that, household penetration on that business, just to make sure people are still baking, cooking, and frying at the same level.

Chris: That's really the big risk I mean, the only other thing we watch is we have a shortening business.

Chris: Which is a key a key part of that whole chriscoe business outside of the oil those shortening we look at the long term household penetrations on the household penetration on that business.

Chris: Just to make sure people are still baking cooking frying at the same levels.

Casey Keller: That's great, thank you. Ladies and gentlemen, just a final reminder, if you would like to ask a question, you're welcome to press star and then 1. We'll pause for a moment to see if we have any other questions. There are no further questions at this time. I would like to turn the call back over to Kasey Keller for closing comments. And thank you all for joining us today for the fourth quarter earnings call. Obviously, reach out if we want to talk about anything. I appreciate your attention. Look, we're pleased with the results in the fourth quarter, but obviously, we have more work to do in 24 hours to get this business in the shape we want it. So, thank you very much. Ladies and gentlemen, this concludes today's conference. Thank you for joining us. You may now disconnect your line.

Speaker Change: That's great. Thank you.

Speaker Change: Ladies and gentlemen, just a final reminder, if you would like to ask a question Youre welcome today's star.

Speaker Change: One.

Speaker Change: We will postpone let's see if we have any other questions.

Speaker Change: There are no further questions at this time I would like to turn the floor back over to Jesse Kinner for closing comments.

Jesse Kinner: Thank you all for joining us today for the fourth quarter earnings call, obviously reach out if we want to talk anything.

Jesse Kinner: I appreciate your attention.

Jesse Kinner: Pleased with the results in the fourth quarter, but obviously, we have more work to do in 2004 to get this business in the shape, we want it. So thank you very much.

Speaker Change: Ladies and gentlemen, this concludes today's conference.

Speaker Change: Thank you for joining US you may now disconnect your lines.