Q2 2024 B&G Foods Inc Earnings Call

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unknown: Good day and welcome to the B&G Foods Inc. second quarter 2024 financial results conference 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 Schwabe, Senior Associate, Corporate Strategy and Business Development for B&G Foods. AJ?

Speaker Change: Good day and welcome to the P&G Foods, Inc. Second quarter 2024 financial results Conference call.

Speaker Change: Today's call is being recorded is scheduled to last about one hour, including remarks by P&G Foods' management and the question and answer session.

Speaker Change: I would now like to turn the call over to AJ Schwab senior associate corporate strategy and business development for <unk> foods a J.

Speaker Change: Okay.

AJ Schwabe: 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 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 reliance should not be placed upon them.

Speaker Change: Good afternoon, and thank you for joining us.

Speaker Change: 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 in the earnings release, we issued today, which is available at the Investor Relations section of BGC with <unk> Dot com.

AJ Schwabe: 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 non-GAAP financial measures such as Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Gross Profit, Adjusted Gross Profit Percentage, and Base Business Net Sales.

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

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

Speaker Change: We refer you to <unk>. 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.

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

Speaker Change: We will also be making references on today's call to the non-GAAP financial measures adjust.

Speaker Change: Adjusted EBITDA segment adjusted EBITDA adjusted.

Adjusted net income.

Speaker Change: Adjusted diluted earnings per share.

Speaker Change: Adjusted gross profit adjusted gross profit percentage and base business net sales.

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

AJ Schwabe: Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. 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 the remainder of fiscal 2024. Bruce will then discuss our financial results for the second quarter of 2024 and our guidance for fiscal 2024. I would now like to turn the call over to Casey.

Speaker Change: 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 the remainder of fiscal 2024.

Speaker Change: Bruce will then discuss our financial results for the second quarter of 2024, 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 second quarter 2024 earnings call. Q2 results. Second quarter net sales of $444.6 million and adjusted EBITDA of $64 million were in line with expectations, excluding Crisco, whose net sales were impacted by lower net pricing to reflect a decrease in soybean oil costs. Base business net sales decreased by approximately 1.5% compared to the year-ago period. Base business trends improved relative to the first quarter, but we continue to experience softer trends in the center of the store, consistent with the rest of the industry.

Casey Keller: Good afternoon. Thank you a J and thank you all for joining us today for our second quarter 2024 earnings call.

Casey Keller: Food service sales also declined 3%, but much less than in Q1 and more consistent with overall restaurant traffic patterns. Net sales for the highest-margin spices and flavor solutions business unit increased by 4.9% versus last year. Q2 adjusted EBITDA of $64 million decreased by $4.5 million compared to the second quarter of 2023.

Bruce Walker: Q2 results second quarter, net sales of $444 $6 million and adjusted EBITDA of $64 million were in line with expectations.

Bruce Walker: Excluding chriscoe, whose net sales were impacted by lower net pricing to reflect the decrease in soybean oil costs.

Bruce Walker: Base business net sales decreased by approximately one 5% compared to the year ago period.

Bruce Walker: Base business trends improved relative to the first quarter, but we continued to experience softer trends in the center of the store consistent with the rest of the industry.

Bruce Walker: Foodservice sales also declined 3%, but much less than in Q1 and more consistent with overall restaurant traffic patterns.

Bruce Walker: Net sales for the highest margin spices in flavor solutions business unit increased by four 9% versus last year.

Bruce Walker: Q2, adjusted EBITDA of $64 million decreased by $4 $5 million compared to the second quarter of 2023.

unknown: The Green Giant U.S. shelf-stable product line represented approximately $2 million of the year-over-year decline, with foreign exchange from Mexico operations on the Green Giant frozen business representing another $2 million. Adjusted EBITDA as a percentage of net sales for the second quarter was 14.4%, down slightly from the prior year period. In quarter two, we continue to see moderating inflation and some favorability in transportation and warehousing. Corporate central expenses were also down in quarter two versus last year, reflecting a moderation in insurance and other fixed costs.

Bruce Walker: The green giant shelf stable product line represented approximately $2 million of the year over year decline.

Bruce Walker: With foreign exchange for our Mexico operations on our Green giant frozen business, representing another two 2 million.

Bruce Walker: Adjusted EBITDA as a percentage of net sales for the second quarter was 14, 4% down slightly from the prior year period.

Bruce Walker: In quarter, two we continued to see moderating inflation and some favorability in transportation and warehousing.

Bruce Walker: Corporate Central expenses were also down in quarter, two versus last year, reflecting a moderation in insurance and other fixed costs.

unknown: Segment reporting. As of the first quarter, B&G Foods is reporting results by operating segment, providing greater visibility into the underlying performance of the company's four operating business units. Spices and Flavor Solutions

Bruce Walker: Segment reporting.

Bruce Walker: As in the first quarter P&G foods is reporting results by operating segments, providing greater visibility into the underlying performance of the company's four operating business units.

Bruce Walker: Spices in flavor solutions second quarter net sales increased four 9%.

unknown: Second quarter net sales increased 4.9%, with segment adjusted EBITDA up 5.9% versus the second quarter of fiscal year 23. This segment remains B&G Foods' highest segment-adjusted EBITDA as a percentage of net sales. B&G Foods is a leader in spices and seasonings, and we continue to see healthy trends in the overall category. However, food service sales declines moderated this quarter to reflect overall restaurant trends. We also launched a new line of licensed seasoning and grilling blends under the Four Sixes brand, featured in the Yellowstone TV franchise. Overall, customer service levels have been restored from some isolated issues in fiscal year 23. Meals

Bruce Walker: With segment adjusted EBITDA up five 9% versus the second quarter of fiscal year 'twenty three.

Bruce Walker: This segment remains P&G foods highest segment adjusted EBITDA as a percentage of net sales.

Bruce Walker: <unk> foods is a leader in spices, and seasonings and we continued to see healthy trends in the overall category.

Bruce Walker: Foodservice sales declines moderated this quarter to reflect overall restaurant trends. We also launched a new line of site license seasoning and grilling blends under the <unk> brand featured in the Yellowstone television franchise.

Bruce Walker: Overall customer service levels have been restored from some isolated issues in fiscal year 'twenty three.

unknown: The key components of this business unit are Mexican meals, Ortega Las Palmas, and hot breathics, cream of wheat, McCann's, and Maple Grove Farms syrups. The meal segment increased Quarter 2 segment adjusted EBITDA by 3.9%, although net sales were down approximately 5.5%. We've made good progress on controlling costs and driving productivity in this segment. Skinny Girl Salad Dressings Continued High Growth Behind New Items, Increased Capacity, and Expanded Distribution

Speaker Change: Meals the key components of this business unit at our Mexican meals Ortega, Las Palmas, and hot <unk> cream of wheat, Mccann's Maple Grove farms tariffs the.

Speaker Change: EMEA segment increased quarter to segment adjusted EBITDA by three 9%, although net sales were down approximately five 5%.

Speaker Change: We have made good progress on controlling costs and driving productivity in this segment.

Speaker Change: <unk> salad dressing is continued high growth behind new items increased capacity and expanded distribution.

unknown: Ortega Net Sales were impacted by competitive activity from Taco Bell in the taco category, although we have a strong pipeline of channel and product innovation in the back half of this year. Food service sales and syrup were also down behind weak trends in a major syrup customer. However, customer service levels have remained strong at over 99%.

Speaker Change: <unk> net sales were impacted by competitive activity from Taco Bell and the Taco category, Although we have a strong pipeline of channel and product innovation in the back half of this year.

Speaker Change: Foodservice sales in <unk> were also down behind weak trends in our major <unk> customer.

Speaker Change: Customer service levels have remained strong at over 99%.

Speaker Change: Specialty.

unknown: The Specialty Segment's key objective is to maintain strong, stable cash flow and profit dollars with a primary focus on baking staples, about 70% of business unit sales, with leading number one brands such as Crisco Oil & Shortening, Clobber Girl Baking Powder, Grandma's Molasses, etc. Based on our CRISCO commodity pricing model, quarter two net sales for Specialty were down mostly behind lower soybean oil pricing We believe soybean oil prices have largely stabilized in the near term and expect that the level of year-over-year decline will decrease in the back half.

Speaker Change: The specialty segments key objective is to maintain strong stable cash flow and profit dollars with a primary focus on baking staples about 70% of business unit sales with leading number one brands such as Crystal oil is shortening clabber girl baking powder grandma's molasses et cetera.

unknown: The Specialty Segment adjusted EBITDA was down modestly, 3%, reflecting slight delays in getting some customers to reflect lower oil pricing on all Crisco SKUs, which has now been rectified. The Specialty Segment continues to deliver strong customer service at 98.5%.

Speaker Change: Based on our Chriscoe commodity pricing model quarter, two net sales for specialty were down mostly behind lower soybean oil pricing versus last year reflected through to customers.

Speaker Change: We believe that soybean oil prices have largely stabilized in the near term and expect that the level of year over year decline will decrease in the back half.

Speaker Change: Specialty segment, adjusted EBITDA was down modestly 3%.

Speaker Change: Reflecting slight delays in getting some customers to reflect lower oil pricing on all Chriscoe Skus, which has now been rectified.

Speaker Change: The specialty segment continues to deliver strong customer service at 98, 5%.

unknown: Frozen and Vegetables. The Frozen and Vegetables business unit includes the U.S. Green Giant frozen business, the Canadian Green Giant frozen and canned businesses, a major portion of our company's Consolidated Canada sales, and the Le Seur canned vegetable product line. Net sales, excluding the impact of the U.S. green giant canned divestiture, were down 2.3%, an improvement from the first quarter trend, but still sluggish behind negative overall category trends. The premium price Lasseur Petit Peas can business is showing strong growth in Q2 and year-to-date versus last year.

Speaker Change: Frozen vegetables, the frozen vegetables business unit includes the U S Green giant frozen business, the Canadian Green giant frozen and can businesses.

Speaker Change: A major portion of our company's consolidated candidate sales.

Speaker Change: <unk> canned vegetable product line.

Speaker Change: <unk> net sales include excluding the impact of the U S. Green giant canned divestiture were down two 3% an improvement from the first quarter trend, but still sluggish behind negative overall category trends.

Speaker Change: The premium price the serve the T Pan the TPS can business is showing strong growth in Q2 and year to date versus last year.

unknown: Frozen vegetables segment adjusted EBITDA was down significantly, but it reflected the loss of the U.S. green giant shelf stable business, $2 million, and the impact of foreign exchange, another $2 million, from the transfer of finished goods to the U.S. in Mexican pesos. This segment remains our lowest segment adjusted EBITDA margin business. This fall, we plan to launch a strong innovation pipeline of veggie ramen and premium sides. Meanwhile, customer service levels have remained strong in this segment.

Speaker Change: Frozen and vegetable segment adjusted EBITDA was down significantly, but reflected the loss of the U S Green giant shelf stable business $2 million and the impact of foreign exchange another $2 million from the transfer of finished goods to the U S and Mexican pesos.

Speaker Change: This segment remains our lowest segment adjusted EBITDA margin business.

Speaker Change: This fall we plan to launch a strong innovation pipeline of veggie, Robyn and premium sides.

Speaker Change: Customer service levels have remained strong in this segment.

Bruce Wacha: Portfolio Shaping, B&G Foods is continuing the reshaping and restructuring of our portfolios to sharpen focus, improve margins and cash flow, and maximize future value creation. The divestiture of the Green Giant U.S. canned vegetable business was completed last fall, following the sale of the Back to Nature brand in January 2023. As discussed last quarter, we are conducting a strategic review of the frozen and remaining canned vegetable businesses for a possible divestiture and sale of some or all of the assets in the frozen and vegetables business unit.

Speaker Change: Portfolio shaping.

Speaker Change: <unk> foods is continuing the reshaping and restructuring of our portfolio to sharpen focus improve margin and cash flow and maximize future value creation. The divestiture of the green giant canned vegetable business was completed last fall following the sale of the back to nature brand in January 2023.

Speaker Change: As discussed last quarter, we are conducting a strategic review of the frozen and remaining <unk> businesses for a possible divesture and sale of some or all of the assets in the frozen vegetables business unit.

Bruce Wacha: Green Giant remains a strong brand with broad awareness and distribution, and the frozen vegetables category is on trend with health and dietary trends. It just may not be the right fit with B&G Foods' focus and capabilities, particularly since there are no plans to add more assets to the frozen portfolio, given the opportunities in our core shelf-stable businesses and overall capital constraints. As previously disclosed, we have been evaluating and working on other smaller divestors that represent around 10% of total company net sales. That process, with some lesser brands, is moving forward. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and outlook for the remainder of the year.

Speaker Change: Green giant remains a strong brand with broad awareness and distribution in the frozen vegetables category is on trend with health and dietary trends. It just may not be the right fit with BMG foods focus and capabilities.

Speaker Change: Particularly since there are no plans to add more assets in the frozen portfolio given the opportunities in our core shelf stable businesses and overall capital constraints.

Speaker Change: As previously disclosed we have been evaluating and working on other smaller divestitures that represent around 10% of total company net sales.

Speaker Change: That process with some lesser brands is moving forward.

Speaker Change: Thank you and I will now turn the call over to Bruce for more detail on our quarterly performance and outlook for the remainder of the year.

Bruce Wacha: Thank you, Casey. Good afternoon, everyone.

Bruce Walker: Thank you Casey good afternoon, everyone as a reminder, and before I get into our results we sold our green giant U S shelf stable product line last fall.

Bruce Wacha: As a reminder, and before I get into our results, we sold our Green Giant U.S. shelf-stable product line last fall, and so we are lapping the second quarter of 2023 results, which included Green Giant U.S. shelf-stable net sales of $13.7 million and approximately $2 million of contributions. In the second quarter of 2024, we generated $444.6 million in net sales, and approximately $64 million in adjusted EBITDA Adjusted EBITDA is a percentage of net sales of 14.4%, and $0.08 in adjusted diluted earnings per share.

Bruce Walker: So we are lapping second quarter of 2023 results, which included Green Giant U S shelf stable net sales of $13 7 million and approximately $2 million of contribution.

Speaker Change: In the second quarter of 2024, we generated $444 6 million and net sales approximately $64 million and adjusted EBITDA adjusted EBITDA as a percentage of net sales, a 14, 4% and eight and adjusted diluted earnings per share.

Bruce Wacha: Base business net sales, which excludes the Green Giant U.S. Shell Stable product line, decreased by $11.3 million, or 2.5%, in the second quarter of 2024 compared to the second quarter of 2023. $1.8 million or 0.4 points 0.4 percentage points of the base business net sales decline was driven by lower net prices; $9.3 million, or just under 2 percentage points of the decline, was driven by decreased volume, and a little bit less than $200,000 of the decline was driven by unfavorable FX.

Speaker Change: Base business net sales, which excludes the green giant U S shelf stable product line decreased by $11 3 million or two 5% in the second quarter of 2024 compared to the second quarter of 2023.

Bruce Walker: $1 8 million or four points four percentage points of the base business net sales decline.

Speaker Change: It was driven by lower net pricing.

Bruce Walker: $9 3 million or just under two percentage points of the decline was driven by decreased volumes and a little bit less than $200000 of the decline was driven by unfavorable FX.

Bruce Wacha: Net sales of our Crisco brand decreased by $4.6 million for the second quarter of 2024 as compared to the second quarter of 2023, primarily as a result of our commodity pricing model for the brand, which drove a decline in net pricing of approximately $6.5 million to reflect lower soybean oil commodity costs, partially offset by an increase in volume of approximately $2 million. Excluding the Crisco brand, base business net sales decreased by $6.7 million, or 1.5%, in the second quarter of 2024 compared to the second quarter of 2023.

Bruce Walker: Net sales of our Chriscoe brand decreased by $4 6 million for the second quarter of 2024 as compared to the second quarter of 2023, primarily as a result of our commodity pricing model for the brand.

Speaker Change: Which drove a decline in net pricing of approximately $6 5 million to reflect lower soybean oil commodity costs, partially offset by an increase in volume of approximately $2 million.

Bruce Walker: Leading the Chriscoe brand base business net sales decreased by $6 $7 million or one 5% in the second quarter of 2024 compared to the second quarter of 2023.

Bruce Wacha: Gross profit was $92 million for the second quarter of 2024, or approximately 20.7% of net sales. Adjusted gross profit, which excludes the negative impact of $1.2 million of acquisition divestiture related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2024, was $93.2 million, or 21% of net sales. Gross profit was $102.3 million for the second quarter of 2023, or 21.8% of net sales. Adjusted gross profit, which excludes the negative impact of $0.4 million of acquisition divestiture-related expenses and non-recurring expenses included in cost of goods sold during the second quarter of 2023, was $102.7 million, or 21.9% of net sales.

Bruce Walker: Gross profit was $92 million for the second quarter of 2024.

Bruce Walker: Or approximately 27% of net sales.

Bruce Walker: Adjusted gross profit, which excludes the negative impact of $1 2 million of acquisition divestiture related expenses and nonrecurring expenses.

Bruce Walker: Included in cost of goods sold during the second quarter of 2024 was $93 2 million or 21% of net sales.

Bruce Walker: Gross profit was $102 3 million for the second quarter of 2023 or 21, 8% of net sales.

Bruce Walker: Adjusted gross profit, which excludes the negative impact of $4 million of acquisition divestiture related expenses and non recurring expenses included in cost of goods sold during the second quarter of 2023 was $102 $7 million or 21, 9% of net sales.

Bruce Wacha: While we are continuing to see input cost inflation with regard to material costs across our basket of inputs and in our factories, the cost increases have mostly been modest thus far this year. Helping to mitigate those cost increases are continued favorability in some of the areas that saw the most extreme input cost inflation in 2022 and 2023, such as soybean oil, cans, and logistics, as well as through our continuous improvement efforts and cost-savings initiatives in our factory.

Speaker Change: While we are continuing to see input cost inflation with regards to material costs across our basket of inputs and in our factories. The cost increases have mostly been modest thus far this year.

Bruce Walker: Helping to mitigate those cost increases are continued favorability in some of the areas that saw the most extreme input cost inflation in 2022, and 2023, such as soybean oil cans and logistics.

Bruce Walker: As well as through our continuous improvement efforts and cost savings initiatives in our factories.

Bruce Wacha: Selling general and administrative expenses decreased by $4.8 million, or 9.9%, to $43.1 million for the second quarter of 2024 from $47.9 million for the second quarter of 2023. The decrease was composed of decreases in consumer marketing expenses of $3.4 million, selling expenses of $1.9 million, and warehousing expenses of $0.1 million, partially offset by an increase in general and administrative costs of $0.6 million, expressed as a percentage of net sales selling general and administrative expenses improved by 0.5 percentage points to 9.7 percent for the second quarter of 2024, as compared to 10.2% for the second quarter of 2023.

Bruce Walker: Selling general and administrative expenses decreased by $4 8 million for.

Bruce Walker: For nine 9% to $43 1 million for the second quarter of 2024.

Bruce Walker: From $47 $9 million for the second quarter of 2023.

Bruce Walker: The decrease was composed of decreases in consumer marketing expense of $3 4 million selling expenses of $1 9 million and warehousing expenses of $1 1 million.

Bruce Walker: Partially offset by an increase in general and administrative costs of $6 million.

Bruce Walker: Expressed as a percentage of net sales selling general and administrative expenses improved by five percentage points to nine 7% for the second quarter of 2024.

Bruce Walker: As compared to 10, 2% for the second quarter of 2023.

Bruce Wacha: As I mentioned earlier, we generated approximately $64 million in adjusted EBITDA, or 14.4% of net sales, in the second quarter of 2024, compared to $68.5 million, or 14.6%, in the second quarter of 2023. Approximately $2 million of the decrease in adjusted EBITDA for the quarter was the result of the divestiture of the Green Giant U.S. shelf-stable product line, which we sold last fall. An additional $2 million or so of the adjusted EBITDA decline resulted from the negative impact of foreign currency on our cost of goods sold for our Green Giant frozen business that were manufactured in Mexico.

Bruce Walker: As I mentioned earlier, we generated approximately $64 million and adjusted EBITDA of 14, 4% of net sales in the second quarter of 2024.

Bruce Walker: Compare to $68 5 million or 14, 6% in the second quarter of 2023.

Bruce Walker: Approximately $2 million of the decrease in adjusted EBITDA for the quarter was the result of the divestiture of the Green Giant U S shelf stable product line, which we sold last fall.

Bruce Walker: An additional $2 million or so of the adjusted EBITDA decline resulted.

Bruce Walker: It resulted from the negative impact of foreign currency on our cost of goods sold for our green giant frozen business that were manufactured in Mexico.

Bruce Wacha: The remainder of the decline was largely driven by a decline in our net sales, a modest increase in our raw material costs, and some negative mix. Net interest expense was $37.8 million in the second quarter of 2024 compared to $35.8 million in the second quarter of 2023. The increase was primarily due to higher interest rates on our long-term debt during the second quarter of 2024 compared to the second quarter of 2023, partially offset by a reduction in average long-term debt outstanding during the second quarter of 2024 compared to the second quarter of 2023.

Bruce Wacha: The second quarter of 2024 net interest expense also includes half a million dollars of non-cash expense due to the accelerated amortization of financing fees that resulted from the early retirement of approximately $22 million principal amount of long-term debt during the quarter, whereas the year-ago period included an $800,000 gain on extinguishment of debt.

Bruce Wacha: Depreciation and amortization was $17.3 million in the second quarter of 2024, which is in line with $17.3 million in the second quarter of last year. We had net income of $3.9 million, or $0.05 per diluted share, and adjusted net income of $6.6 million, or $0.08 per diluted share, in the second quarter of 2024 compared to $10.6 million, or $0.15 per deleted share, and adjusted net income of $10.7 million, or $0.15 per deleted share, in the second quarter of last year.

Bruce Walker: Depreciation and amortization was $17 3 million in the second quarter of 2024, which is in line with the $17 3 million in the second quarter of last year.

Bruce Walker: We had net income of $3 9 million or <unk> <unk> per diluted share and adjusted net income of $6 6 million or <unk> <unk> per diluted share.

Bruce Walker: In the second quarter of 2024, compared to $10 6 million or <unk> 15 per diluted share and adjusted net income of $10 7 million or <unk> 15.

Bruce Walker: Per diluted share in the second quarter of last year.

Bruce Wacha: Adjustments to our EBITDA on net income are described further in our earnings release. Now, I'd like to touch on the results by business unit. Net sales for specialty decreased by $7.2 million, or 4.7%, in the second quarter of 2024 to $146.6 million from $153.8 million in the second quarter of 2023. The decrease was primarily due to lower Crisco pricing, driven by decreased commodity costs.

Bruce Walker: Adjustments to our EBITDA and net income are described further in our earnings release.

Bruce Walker: Now I'd like to touch on the results by business unit.

Bruce Walker: Okay.

Bruce Walker: Net sales for specialty decreased by $7 2 million or four 7% in the second quarter of 2024 to $146 $6 million.

Bruce Walker: $153 8 million in the.

Bruce Walker: Quarter of 2023.

Bruce Walker: The decrease was primarily due to lower chriscoe pricing driven by decreased commodity costs, coupled with modest declines in volumes across the rest of the business.

Bruce Wacha: With modest declines in volumes across the rest of the business unit and the aggregate, which were offset in part by higher Crisco volumes, the specialty segment adjusted even decreased by a million dollars or 3.1% in the second quarter of 2024 compared to the second quarter of 2023. Net sales for meals decreased by $6.3 million, or 5.5%, to $107.9 million from $114.1 million for the second quarter of 2023.

Bruce Walker: Business unit in the aggregate.

Bruce Walker: Which were offset in part by higher Chriscoe volumes.

Bruce Walker: Specialty segment, adjusted EBITDA decreased by $1 million or three 1% in the second quarter of 2024 compared to the second quarter of 2023.

Bruce Wacha: The decrease was primarily due to lower volumes across the business unit, partially offset by a modest increase in net price. The meal segment adjusted even increased by $900,000 or 3.9% compared to the second quarter of 2023. Excluding the impact of the divestiture of the Green Giant U.S. shelf-stable product line, which we sold last fall, net sales for frozen and vegetables decreased by $2.4 million, or 2.6%, compared to the second quarter of 2023. Frozen and vegetable segment adjusted EBITDA decreased by $7 million compared to the second quarter of 2023.

Bruce Wacha: Approximately $2 million of the decline was due to the divestiture of the Green Giant U.S. shelf-stable product line, approximately $2 million from the negative impact of foreign currency, and the remainder from a decrease in net sales, increases in material costs, and some unfavorable products. Net sales for spices and flavor solutions increased by $4.6 million, or 4.9%, in the second quarter of 2024 to $98.5 million from $93.9 million in the second quarter of 2023. The increase was primarily due to higher volumes across the business unit.

Bruce Wacha: The prices and flavor solutions segment adjusted EBITDA increased by $1.5 million, or 5.9%, in the second quarter of 2024 compared to the second quarter of 2023. Now moving on to our balance sheet. As you likely saw, we were busy in the capital markets this summer.

Susan: Susan flavor solutions segment, adjusted EBITDA increased by $1 5 million or five 9% in the second quarter of 2024 compared to the second quarter of 2023.

Bruce Walker: Now moving onto our balance sheet as you likely saw we were busy in the capital markets. This summer in late June we launched a three part financing effort, which included a $475 million revolver, a $450 million term loan and a $250 million add on to our existing.

Bruce Wacha: In late June, we launched a three-part financing effort, which included a $475 million revolver, a $450 million term loan, and a $250 million add-on to our existing, senior secured notes due 2028. The transaction was priced in late June but did not close until early July, and thus is not reflected on the face of our second quarter financial statement. Instead, they will be reflected in our third-quarter financial statement. Further details regarding the refinancing transactions have previously been disclosed in a press release and 8K filings and are described in the footnotes to the financial statements that we filed earlier today as part of our 10-Q.

Bruce Walker: <unk> senior secured notes due 2028.

Bruce Walker: The transactions priced in late June, but did not close until early July and thus are not reflected on the face of our second quarter financial statements.

Bruce Walker: Instead, they will be reflected in our third quarter financial statements.

Bruce Walker: Further details regarding the refinancing transactions have previously been disclosed by press release, and 8-K filings and are described in the footnotes to the financial statements that we filed earlier today as part of our 10-Q.

Bruce Wacha: After giving effect to the recently completed refinancing and our planned repurchase or redemption by the end of fiscal 2024 of our remaining $265 million of five and a quarter notes due 2025, which we expect to fund with cash from operations in Mirabal-Bhadra, we will have successfully pushed into the future the maturity dates for the majority of our long-term debt, with our nearest maturity being our five-and-a-quarter senior notes due September And finally, as we noted in our earnings press release, we are revising our fiscal 2024 guidance to $1.945 billion to $1.97 billion for net sales.

Bruce Walker: After giving effect to the recently completed refinancing and our planned repurchase of redemption by the end of fiscal 2024 of our remaining $265 million a.

Bruce Walker: A five and a quarter notes due 2025.

Bruce Wacha: $300 to $315 million for adjusted EBITDA and $0.70 to $0.90 for adjusted diluted earnings per share. We believe that the revised guidance better reflects the continued industry-wide challenges in consumer activity, which has dampened volumes in both retail consumption and food service channels. We do expect continued volume improvement throughout the year in our sales to retail customers and less of a drag on net pricing as we lap our increased trade promotional spending in Q3 of this year.

Bruce Wacha: Our net sales guidance is based on our first half 2024 net sales of approximately $920 million and projected base business net sales growth for the second half of 2024, which excludes approximately $36 million of 2023 net sales from the Green Giant U.S. shelf-stable business, in a range of approximately negative 2% to plus 5%, plus 0.5%. Additionally, we expect full year 2024. Net interest expense of $150 to $155 million, including cash interest expense of $143 to $148 million, depreciation expense of $47.5 to $52.5 million, amortization expense of $20 to $22 million, an effective tax rate of 26 to 27%, and CapEx of $30 to $35 million.

Bruce Walker: But full year 2024.

Bruce Walker: Net interest expense of $150 million to $155 million, including cash interest expense of $143 million to $148 million.

Bruce Walker: Depreciation expense of 47, 5% to $52 $5 million.

Bruce Walker: Amortization expense of $20 million to $22 million and effective tax rate of 26% to 27% and capex of $30 million to $35 million.

Bruce Wacha: Over the long term, we continue to expect to use approximately 50% of our excess cash to pay dividends and the remaining 50% to pay down debt. Now, I will turn the call back over to Casey for further remarks.

Bruce Walker: Over the long term, we continue to expect to use approximately 50% of our excess cash to pay dividends and the remaining 50% to pay down debt.

Bruce Walker: Now I will turn the call back over to Casey for further remarks.

Casey Keller: Thank you, Bruce. In closing, B&G Foods is laser focused on a few critical priorities. One, improving the base business net sales trends of the core business to the long-term objective of plus one to two percent. Two, reshaping the portfolio for future growth, stability, higher margins, and cash flows, as well as structuring key platforms for future acquisition growth. And three, reducing leverage below 5.5 times through divestitures and excess cash flow to facilitate strategic acquisitions.

Casey Keller: Thank you Bruce and closing P&G foods is laser focused on a few critical priorities.

Casey Keller: One improving the base business net sales trends of our core business to the long term objective of plus 1% to 2%.

Casey Keller: To reshaping the portfolio for future growth stability higher margins and cash flows as well as structuring key platforms for future acquisition growth.

Bruce Walker: And three reducing leverage below five five times through divestitures and excess cash flow to facilitate strategic acquisitions.

Casey Keller: Our second quarter results demonstrated improving trends from the first quarter with base business net sales, excluding Crisco, moderating at minus 1.5% and food service sales showing more consistent declines with restaurant industry trends. We expect the gradual improvement to continue in the back half. Furthermore, we are prioritizing efforts to reshape and clarify the portfolio and are actively reviewing and working on possible divestitures, including our ongoing strategic review of our frozen and vegetables business. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator?

unknown: Thank you. And at this time, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. And our first question will come from Andrew Lazar with Barclays. Please go ahead.

Andrew Lazar: Good afternoon, Andrew. How are you doing?

unknown: have been as a category, one of the sort of better, or highlights, if you will, or better growing categories in the sort of center. You're seeing some of the benefits of that as well. The theory is, as more consumers look to do a little more scratch cooking, you know, items around the perimeter of the store. As they look to sort of stretch the food budget, they need to flavor, you know, what they cook. And in your results, I guess you're seeing some of that. Similar trend, right? Spicy. Spicy. Very spicy.

Casey Keller: Yeah, no, that is what we're seeing in our business right now. And I think it's tied to what you mentioned. We see growth in the perimeter store or in the fresh, or the fresh produce or the fresh, you know, proteins. And we know that spices and seasonings are one of the ways that people flavor prepare those.

Casey Keller: Strong based on its kind of correlation to the perimeter sales.

Casey Keller: And so we've seen that kind of flavor solutions kind of part of the market continue to be strong, based on its kind of correlation to perimeter sales. And we've seen more weakness in the center store, you know, the kind of prepared food market that you referenced during our meal. So, you know, I think, you know, people have, in terms of baking, we've seen scratch baking stay relatively stable over time. So people learn to bake during the pandemic, and they've kind of continued that habit.

Casey Keller: And we've seen more weakness in the center store.

Casey Keller: Prepared food market.

Speaker Change: You referenced in our meals so.

Speaker Change: I think people have.

Speaker Change: And in terms of baking, we've seen scratch baking stay relatively stable.

Speaker Change: Over time, some people learn to bake in the in the pandemic and they've kind of continue that habit, it's not growing but it's kind of staying stable and so our shortening baking powder business and everything has been pretty consistent the fluctuations in that business are all around the commodity pricing on chriscoe behind soybean oil so yes.

Casey Keller: It's not growing, but it's kind of staying stable. And so our shortening and baking powder business, and everything has been pretty consistent. You know, the fluctuations in that business are all around commodity pricing for Crisco behind soybean oil. So, yeah, I think that is what we're seeing right now in our business. But from our standpoint, if people begin to make more fresh food at home, we make enough in terms of the things that flavor it or enable people to bake from scratch that will ride just fine in that portfolio.

Speaker Change: That is what we're seeing right now.

Speaker Change: In our business, but from our standpoint as people begin to make more fresh food at home, we make enough in terms of the things that flavor it or enable people to bake from scratch that will ride just fine in that portfolio.

Casey Keller: And you operate in a lot of different categories, obviously. Some are going to be more promotional than others by nature, others less so. I guess, could you characterize what you're sort of seeing broadly? But maybe outside of that, what are you seeing from sort of a promotional perspective? I guess some confidence that pricing can be less of a drag.

Speaker Change: And then your operating you're operating a lot of different categories. Obviously in the store and some are going to be more promotional than others by nature others less so.

Casey Keller: So, I think beyond just the Crisco pricing differential year over year, which, you know, we expect to not be as significant in the back half as it was in the first half, we started to return to, sort of, not quite, but almost pre-pandemic promotional levels last year at the end of Q3. So we begin to lap that at the end of Q3 and Q4 of this year, and we don't see the need to increase from where we moved to last year in terms of rate spend or promotional depth. So what we're saying is we don't expect to have a promotional dip in the third and fourth quarters that would show us spending at a higher promotional rate than we did last year.

Casey Keller: Last thing real quick, and there's probably not much more you can say on it, but in terms of the strategic review around frozen, I guess how is that progressing or has a more or less similar amount of interest, perhaps, than you might have expected. Anything that you can say around it, understanding that there's sensitivity there. Thanks. Yeah, and Andrew, I think the sensitivity there.

Casey Keller: Yeah, and Andrew, I think the sensitivity is that we try not to comment on M&A. I think, as we discussed on our last call, because of the size of Green Giant and the, you know, the kind of name recognition, it made sense for us to at least disclose that we were evaluating the process, but our goal is not to get into a, you know, quarterly update on where we are in the process. It's just too fluid. It's early in the process, and there are a lot of things going on in the process. Yep, I got it.

William Reuter: Our next question will come from William Reuter with Bank of America.

William Reuter: Good afternoon. My first question is: inventory has continued to decline on a year-over-year basis. Is there opportunity to reduce your inventory levels further over the next handful of quarters or into next year?

unknown: So certainly on a year-over-year basis, you see it in the balance sheet. We significantly reduced our inventory from where it was at the beginning of last year, and so we're going to have favorable profitability for a good portion of this year. As we get into the back half of the year, our expectation is to still drive favorability, but a lot of the easy lifting is probably done. So, very much, we expect to continue to reduce inventory from that kind of post-pandemic.

unknown: You should see continuous improvement in our inventory levels; we'll show that, but more at a continuous improvement level versus the big year-over-year decline driven by exiting the canned vegetable business. Got it. And then, similarly, there was destocking by your food service customers earlier this year. Has that process now been completed, and do you feel like your sales trends will align with their kind of sell-through and what we're kind of seeing more broadly from food service?

Speaker Change: Similarly, there was destocking by your foodservice customers earlier. This year is that process now been completed and you feel like Youre. Your sales trends will align with their kind of sell through and what we're kind of seeing more broadly from from foodservice.

Speaker Change: That's the case.

unknown: And that's certainly what our Q2 trend shows.

Speaker Change: And that's certainly what our Q2 trend shows.

Speaker Change: Okay.

unknown: Just lastly, in terms of non-tracked channels, a lot of times, the trends there, I guess, over the last six or nine months, have been better, I think, than those for tracked channels. What percentage of your sales are through non-tracked channels, and how have those done versus tracked channels? And I'm referring more to Nielsen.

Speaker Change: Just lastly in terms of non tracked channels a lot of times the trends there.

Speaker Change: I guess over the last six or nine months have been better I think than in tracked channels. What percentage of your sales are through non tracked channels and how are those done versus tracked channels and I'm, referring more towards just kind of Nielsen.

unknown: Yeah, so Nielsen is only capturing about 70% of our total sales. We obviously have food service and industrial sales which aren't captured by Nielsen. There's probably about 5% that is untracked retail channels that Nielsen doesn't cover. And then we have a Canadian business; about 10% of our business that's not covered by Nielsen data in the U.S. So yeah, so 70% kind of correlates to Nielsen; 30% is outside. So, you know, we've, you know, Canada had a reasonably strong quarter.

Speaker Change: Yeah, So Nielsen only it's capturing about 70% of our total sales.

Speaker Change: We have obviously foodservice and industrial sales, which are captured by Nielsen.

Speaker Change: There is probably about 5% that is untracked retail channels that Nielsen doesn't cover and then we have a Canadian business about 10% of our business. It's not covered by the Nielsen data in the U S.

Speaker Change: So yes, so 70% is kind of correlates to Nielsen 30% is outside.

Speaker Change: And.

Speaker Change: So we've.

Speaker Change: Canada had a reasonably strong quarter.

unknown: You know, our food service industrial business was slightly down, as we've talked about, but not down that much, you know, a much more moderate kind of decline consistent with the industry. And, you know, we've continued to perform reasonably well in one or two customers that are tracked by Ailson reasonably well.

unknown: Got it. That's all for me. Thank you. Thank you.

Rob Dickerson: Our next question will come from Rob Dickerson with Jeffreys.

Rob Dickerson: Great, thanks so much. I guess a couple of questions. This first question is kind of related to the cadence for the rest of the year, you know, as we think through kind of the updated guide, you know, Q3 relative to Q4, should we be thinking these are kind of fairly similar year over year, or just more of a sequential improvement relative to what we're seeing in Q-Tel.

unknown: Maybe a slight bias towards a sequential improvement, but we always looked at the first half of this year and the second half of this year as two pieces. The first half would be challenged from a top line trend, and the second half would show improvement. I think we still expect that to be the case. You know, our back half guide is to a base business down to plus 0.5 versus earlier in the year when we were thinking plus one, minus one. And then just as a reminder, we did sell Green Giant's US Can business last year. And so there's about a $36 million drag from a non-profit business.

unknown: Okay, okay, cool. Um, and then I guess just on the margin piece, you know, gross margin was a little lighter than expected in the quarter. I mean, clearly, you know, you had a great Q2 last year. And then, at the same time, sales came down a little bit for the year. You lowered the high end of your EBITDA range a little bit, but the low end stays the same. So again, just kind of a cycle level.

unknown: We saw it come down a little bit in Q1, but it was up a little bit year over year in Q1. Should we still be thinking maybe gross margin could be up a little bit in the back half? And then it also sounds like SG&A, instead of maybe being up a little bit for the year, given wages, has maybe flattened out a little bit. And then with that, just one quick add.

unknown: You know, it does sound like, you know, spice and seasoning is growing more quickly, right? It's the higher... Like, are there other offsets that just kind of came through Q2 that caused that? So a couple things. I'll try to get them all.

unknown: We give guidance on an EBITDA basis, and you know the implied EBITDA margin. Our guidance expects, you know, suggests somewhere between flat and somewhere up from last year's EBITDA margins in the back half of the year. Nothing Herculean, just sort of like a little bit of an increase.

unknown: If you think about gross margin and SG&A so far this year and EBITDA margins on a year-to-date basis, we're basically flat through the first six months of the year or the quarter on an EBITDA margin. I think we're within 20 basis points, and we had these flip gross margin SG&A. Gross margin was down a little bit in the second quarter, but, as you remember, it was up a little bit in the first quarter, and I think it's flat on a, you know, year-to-date basis versus the prior year period, and SG&A went in the opposite direction.

unknown: So some of this, I think is timing. The other thing to keep in mind is there is a little bit of noise from the Green Giant business that we sold, and then the other piece of that is we manufacture the majority, not all of, but the majority of our U.S. frozen business for Green Giant out of our facility in Mexico, and we've got a drag the way it works out, currency, and translation. That was about two, two and a half million dollars of an impact in the second quarter. It's probably something similar in the first quarter, and that obviously impacts the gross margin a little bit.

unknown: And so far, the pesos, you know, kind of come back up. So we think that that impact will be less in the back half of the year. Okay, perfect.

Speaker Change: That impact will be less in the back half of the year.

unknown: Okay, perfect. All right, great. I'll pass it on. Thank you.

Speaker Change: Okay, perfect Alright, great I'll pass it on thank you.

Rob: Thank you Rob.

Rob: Okay.

Karru Martinson: The next question comes from Karru Martinson with Jeffreys. Please go ahead.

Mark <unk>: Next question comes from Mark <unk> with Jefferies. Please go ahead.

Karru Martinson: Good afternoon. I just wanted to get a sense of the competitive environment. You know, certainly have read about more promotions, but it doesn't sound like we're going to be excessively promotional in the second half. But I was also curious about your comments on the prepared meals thing. Ortega was being challenged by Taco Bell, and if there are others, what's feeding that?

Mark: Good afternoon.

Mark: Good to get a sense on the competitive environment certainly have read about the more promotions. It doesn't sound like we're going to be excessively promotional in the second half, but I was also curious on to your comments on the prepared meals, saying Ortega was being challenged by Taco Bell and if there are others.

Speaker Change: Kind of what's feeding that.

Casey Keller: I think in this particular case of Ortega, we've seen Taco Bell come in with a lot of new items and drive, you know, new distribution. And I feel like we're pretty competitive now. We've got some new kinds of sauces and taco items coming in during the back half of the year, but it's just another competitor or entrant coming back in. They've tried before and kind of retreated, but this time, they're pushing again and pushing new items.

Speaker Change: I think in this particular case of Ortega, we've seen Taco Bell come in with a lot of new items and drive new distribution in.

Speaker Change: I feel like we're pretty competitive now we've got some new kind of sources and.

Speaker Change: And Taco items coming in in the back half of the year, but it's just another competitor entrant.

Speaker Change: Coming back in.

Speaker Change: They've tried before and kind of retreated, but this time that they're pushing again in pushing new items. So.

Casey Keller: So you've seen both us and Old El Paso get impacted a little bit by the entry of a new competitor in the taco shell, taco sauce, taco kit area, and taco seasonings. But, you know, I think we're going to hold up just fine. And I think you're going to see improved trends on the Ortega business in the back half. Okay, and then in terms of promotions, you know, what I was trying to say before is that we brought promotion, you know, spending, and promotional levels up last year at the back half of 23. At the end of Q3 and Q4, because we have a lot of baking promotional seasonalally, or baking and fall promotional seasonalally.

Speaker Change: You've seen both us and old El Paso get impacted a little bit by the entry of a of a <unk>.

Speaker Change: Of a new competitor in that Taco shell Taco sauce, Taco kit area talking to seasonings.

Speaker Change: I think we're going to hold up just fine and I think youre going to see improved trends on the Ortega business in the back half.

Speaker Change: Okay, and then in terms of in terms of promotions.

Casey Keller: So we're going to lap that. So we're already kind of back to where we were in terms of promotion intensity at pre-pandemic levels and at the end of 23, and we'll lap that this year, but I don't see us going beyond where we are now in terms of promotion intensity pre-pandemic. I think we'll stay right there. And we believe we're competitive with that kind of spend rate.

Casey Keller: Okay, and then when we look at spices and seasonings, is kind of that licensed line extension the model for growth there, or are there products that you're developing on your own?

Casey Keller: I think a combination of both. We like the licensed model where we think we have the right properties, like the four sixes, which I think is a great way for us to get into the seasoning blend business that's designed to kind of enhance proteins and, you know, kind of in a Western barbecue kind of style. So, we like licensed brands where they bring relevant equity and properties to our portfolio and put us in spaces that we're not really competing in that well.

Casey Keller: So, you'll continue to see some of that, but we will also look at ways to kind of either extend our current brands, drive our current brands, or even maybe launch new items that aren't necessarily licensed properties. For example, we like the spice and seasoning category. We think it's good long-term growth. We think it's good margins. We've built up our capabilities there in development and culinary, and it's a place that we want to focus on the long term, both organic and possibly inorganic. Thank you very much.

unknown: Thank you very much, guys; I appreciate it.

Michael Lavery: Our next question comes from Michael Lavery with Piper Sandler. Go ahead. Thank you.

Casey Keller: You're a little bit better aligned with food service traffic now, but can you give us a sense of maybe how you're exposed there and just you know if you've got pockets that are particularly better or worse than some of the general trends and just how to think about translating some of the read-through from bigger companies into how it affects you guys? Yeah, I mean, obviously, Michael is dependent on, you know, the portfolio.

Casey Keller: Our portfolio is about half spices and seasonings. So, you know, mostly sold through distributors. So, you know, we've tracked pretty closely in the second quarter to restaurant traffic trends. We have a food service business with a major customer that's not healthy, so we've seen a little bit of a decline there, but not that significant. So, you know, I think overall our portfolio is kind of tracking with, you know, restaurant traffic patterns, you call it, we read in Technomics and other places, kind of somewhere in the 2 to 4% range, depending on the customer profile.

Casey Keller: And that's kind of what we think our business will continue to reflect for the remainder of the year until we see a turnaround in kind of restaurant trends, because we're just going to reflect what traffic and, you know, traffic is doing in those channels. We're just supplying those channels with, you know, back-end ingredients and components. Yeah, no, that's helpful. And then just on the, I know that's really complicated to give any update at all, and Andrew touched on some of the frozen divestiture, but for some of the smaller brands that you touched on as well, would you kind of need to bundle those to avoid some of the dis-synergies?

Casey Keller: Could you sell, you know, one-offs here and there? Is that too much complexity or, you know, distraction? Just how do you think about how that process is going, and does it have to take a certain shape?

Casey Keller: Yeah, it's potentially a little bit of all of the above. So far, what we've sold has been one-offs, but you know, there could be other things and other ways that it could happen. It's very situation-dependent. I mean, if you look at the business, we've already

Casey Keller: I mean, if you look at the businesses we've already divested, you know, the Green Giant Canned Vegetable business kind of had its own supply for that business. And then the Back to Nature business was a, you know, contract-packed business that was kind of isolated itself. So we'll have a combination, as Bruce says, but, you know, a lot of our products we can carve out pretty easily without having a lot of... structural structural issues or absorb center or overhead problems.

Carla Casea: Our next question comes from Carla Casea with J.P. Morgan.

Carla Casea: Hi, thank you. On that asset sale of Green Giant shelf, is there any stranded cost left from that that would work its way out over the next, I guess, year or two? Or is that all behind you? Yeah, no.

Casey Keller: Yeah, not really. I mean, the business itself, from just the business and the product line, it's pretty straightforward. It was, you know, U.S. business. Canned vegetables 100% Co-Packed. Right, so you pretty much airlift that and take it away.

unknown: And then did you think about any resources that were working directly in that business too? Okay, great. Did you confirm availability on your Revolving Credit Facility post the financing that closed after the quarter end?

unknown: Sorry, in what sense?

unknown: I guess you paid down some of the revolver after quarter end, but you also downsized it. I'm just wondering how much of it was available today if it was at the end of the quarter you announced 600 million, about 605 available. Yeah, so I would suggest just going into the debt offering docs, and I think we footnoted appropriately what was drawn and available based on closing dates. Perfect. Okay.

Speaker Change: I'm just wondering how much of it is available.

Speaker Change: Today, if it was at the end of the quarter, you announced $600 million about 605 available yes.

Speaker Change: Suggest just go into the debt offering docs and I think we've footnoted appropriately what was.

Speaker Change: What was drawn and available based on closing dates.

unknown: And then on the ramen, I missed the timing you said of that offering, and I'm just wondering if you could, I mean, what's the shelf kind of placement you've got on it? Any kind of either numbers or percentage gained you can point to?

Speaker Change: Perfect, Okay, and then on the Raman.

Speaker Change: What I missed the timing you said of that offering and I'm just wondering if you I mean.

Speaker Change: What's the shelf kind of placement you've got on any kind of.

Speaker Change: Either numbers or percentage gains you can point to.

unknown: It's going in this fall, so we'll start shipping shortly. We've had good reception and reception from customers, but I don't think you'll see it on the shelf until the fall based on when customers set their frozen cases.

Speaker Change: It's going it's going into this fall so.

Speaker Change: We will start shipping shortly we've had good acceptance.

Speaker Change: Reception from customers, but I don't think youll see it on shelf until the fall based on when customers set their frozen cases.

unknown: Okay, um, you know, it's a ramen vegetable kind of dish, but it will start shipping it within the next couple months. Okay.

Speaker Change: Okay.

Bob: Hi, Bob it's a raman vegetable kind of.

Bob: Dish, but.

Bob: It will start shipping it within the next couple of months.

unknown: Okay, great. I look forward to trying it. Thanks a lot.

Bob: Okay, Great look forward to trying it.

Speaker Change: Thanks, a lot.

Bob: Thank you.

David Palmer: Our next question comes from David Palmer with Evercore ISI. Please go ahead.

Bob: Our next question comes from David Palmer with Evercore ISI. Please.

David Palmer: Please go ahead.

David Palmer: Thanks. I wanted to talk about, you know, what your vision would be for the business in the long term in terms of what sorts of businesses fit within B&G. And I know, you know, there's going to be reticence to talk about categories or brands, but I'm really talking about the types of things that would work inside B&G. You know, there was a wave of acquisitions a long time ago where the company was trying to grow with snacks and Frozen.

I wanted to talk about what your vision.

David Palmer: Would be for the business long term in terms of what sorts of businesses fit within P&G and I know.

Speaker Change: Theres going be reticent to talk about categories or brands that I'm really talking about the types of things that would work inside <unk>. There was a wave of acquisitions long ago, where the company was trying to gross up with snacks and frozen.

David Palmer: And then now those businesses are gone or soon to be gone. So they were kind of rejected from the shell that is B&G. So I'm wondering, what do you think? Does it work from what you've seen and where you might want to get bigger.

David Palmer: And now those businesses are gone or soon to be gone. So they were kind of rejected.

Speaker Change: From the shell that is <unk>. So I'm wondering what do you think.

Does work from what you've seen and where you might want to get bigger.

Casey Keller: Yeah, I think it's pretty. We've talked about this before, but I think it's relatively clear looking at our business where we've been successful over time and where we have a good margin structure and cash flows. And so I like, first and foremost, the spices and seasonings in our business. If you look at our margin, it's a high margin.

Speaker Change: Yes, I think it's pretty.

Speaker Change: I mean, we've talked about this before but I think it's for us.

Speaker Change: It's relatively clear looking at our business, where we've been successful over time, and where we have good margin structure and cash flows.

David Palmer: And so I like first and foremost the spices and seasonings in business.

Speaker Change: If you look at our margin it's high margin, we actually improved our segment EBITDA margin year over year in the quarter too we had good growth on that business.

Casey Keller: We actually improved our segment even to a margin year over year in the second quarter. We had good growth in that business. I think that's a business that we want to focus on organically, but more importantly, we would want to look over time to add additional acquisitions. We have a great asset in our Iowa facility. We've got good capabilities.

David Palmer: I think thats a business that we want to focus on organically, but more importantly, we would want to look over time to add additional.

Speaker Change: Acquisitions, we have a great asset in our <unk> facility.

Speaker Change: Good capabilities, we've kind of built up our.

Casey Keller: We've kind of built up our culinary and R&D capability there, so that's one business that I see as a strong future for B&G. Also, the specialty business, which is, as I think I said in my comments, 70% baking staples, with, you know, kind of number one brands that are in pretty stable trends in those categories. We've done a good job of managing, you know, Clabber Girl, and Crisco, even with some of the, you know, kind of volatility in this, in commodity pricing. We've done a great job of managing the profitability and the cash flow in those businesses.

Culinary and R&D capability there. So that's one business that I see as a strong future for <unk>.

Speaker Change: Also the specialty business, which is I think I said in my comments is 70% baking staples.

Speaker Change: <unk> kind of number one brands that pretty stable trends in those categories. We've done a good job of managing Clabber girl, Chris go even with some of the.

Speaker Change: Kind of volatility in this in the commodity pricing, we've done a great job of managing their profitability and the cash flow in those businesses I think we would be interested in picking up additional baking staples are.

Casey Keller: I think we would be interested in picking up additional baking staples or, you know, some shelf-stable baking products where we could easily fit into that portfolio, get synergies, and maintain, you know, good margins, and stable cash flow. And then, I think, lastly, meals. We've talked about that. I do think longer-term meals is a good place for us to be. We kind of are centered in two places; Mexican food. I do believe Mexican meals will grow in terms of at-home consumption.

Speaker Change: Shelf stable baking products, where we could easily fit into that portfolio gets synergies and maintain good margin stable stable cash flow.

Speaker Change: And then I think lastly meals, we've talked about that I do think longer term meals is a good place for us to be we kind of are centered in two places Mexican meals I do but I believe Mexican meals will grow in terms of at home consumption. We're seeing those trends going you know people, making different types of Mexican meals.

Casey Keller: We're seeing those trends going, you know, people making different types of Mexican meals. You know, I think our portfolio, Las Palmas Ortega, is well founded there, but I think there are lots of opportunities to look at other Mexican, you know, at home sauces and other meal preparation items that we would consider buying over time. So I, I think those

Speaker Change: I think our portfolio Las Palmas Ortega is well founded there, but I think theres lots of opportunities to look at other Mexican at home sauces, and other meal preparation items that we would consider buying over time so.

Speaker Change: I think those.

Casey Keller: Those three business units remaining after the frozen business, which we said we had a question about or under review, whether that really fits with us long term. I think those are three places that we should be able to drive organic growth but, more importantly, be good platforms for acquisitions. If we decided to buy something outside of those three, we would certainly look at it, but I would want to make sure that it fits our capabilities.

Speaker Change: Of those three business units remaining after the frozen business, which we said we have a question around or under review, whether that really fits with us long term.

Speaker Change: I think those are the three places that we should be able to drive organic growth, but more importantly be good platforms for acquisitions, if we decided to buy something outside of those three.

Speaker Change: We have certainly looked at it but I would want to make sure that it fits our capabilities it fits our ability.

Casey Keller: It fits our ability to distribute it. You know, less like we said, Frozen is not a place that we want to scale up to drive costs down. Refrigerated, you know, would probably be a place that would be hard for us to get into.

Speaker Change: The distributed.

Speaker Change: Less like we said frozen is not a place that we want to scale up to drive costs down refrigerated.

Speaker Change: Refrigerated, we'd probably a place that would be hard for us to get into so I would want to stay in.

Casey Keller: So I would want to stay in, you know, the categories that we know how to manage that may be adjacent to some of the categories where we have selling synergies, distribution synergies, other places. But we might, you know, create, you know, another business unit to manage that if we acquire things over time. So that's kind of a longer-term view of where we're going. But that's the vision of, you know, what I see us shaping up with the divestiture activity.

Speaker Change: The categories that we know how to manage that may be adjacent to some of the categories, where we are selling synergies distribution synergies other places, but we might create.

Speaker Change: Another business unit to manage that if we acquire things in over time, So that's kind of a more longer term view of where we're going.

Speaker Change: But but that's the vision.

Speaker Change: What I see is shaping up with the.

Speaker Change: The divestiture activity.

unknown: Yeah, and would you say those three? By the way, that's a very helpful answer. I really appreciate that. Would you say those three?

Speaker Change: And would you say those three by the way that's a very helpful answer I really appreciate that would you those three I know thats, probably not a an unabridged answer and thats, probably not everything that you would think its core but like just those three.

unknown: I know that's probably not an unabridged answer. That's probably not everything that you would think is core. But like just those three mega platforms that you mentioned, how much of your business do you think is encapsulated with those currently? Over half?

Speaker Change: Mega platforms that you mentioned how much of your business do you think is encapsulated with those currently over <unk>.

Casey Keller: 70, 75%, on the from a sales basis higher on an EBITDA basis and higher on a cash flow basis.

Speaker Change: 70, 75%.

Speaker Change: Okay.

Speaker Change: From a sales basis higher on a on an EBITDA basis.

Speaker Change: Higher on a cash flow basis.

David Palmer: And thanks. I mean, what you said, I think it was in the release about food service. Food service was a little bit better than it was in the first quarter for a lot of companies, but food service is actually getting worse. So I'm just wondering, maybe what are you seeing with your particular food service accounts and what are you seeing out there for food service looking into the second half?

Speaker Change: Okay. Thanks.

Speaker Change: You said.

Speaker Change: I think it was in the.

Speaker Change: Release at Foodservice.

Speaker Change: Foodservice, who was a little bit better.

Speaker Change: Then it was in the first quarter for a lot of.

Speaker Change: Companies foodservice, it's actually getting worse. So I'm just wondering maybe what are you seeing with your particular foodservice accounts.

Speaker Change: Accounts and what are you seeing out there from foodservice looking into the second half.

Casey Keller: I mean, the one thing to remember, which we highlighted last quarter, was... We had some challenges, but some of that was timing, right, and some of that was unique to one or two customers.

Speaker Change: I mean, the one thing to remember, which we highlighted last quarter was.

Speaker Change: We had some challenges, but some of that was timing and some of that was unique to one or two customers.

Casey Keller: You know, I think we see that our business should largely track what we expect. You know, restaurant and food service traffic trends overall, and what we see is kind of, you know, I've seen different numbers, but, you know, call it minus 2 to minus 4%. And people are sort of projecting for the rest of the year. I mean, who knows in a recessionary environment if that would get worse, but that's kind of what we expect.

Speaker Change: I think we see that our business, which should largely track what we expect.

Speaker Change: Restaurant and foodservice traffic trends to.

Speaker Change: To be overall, and what we see as kind of I've seen different numbers, but call. It minus two to minus 4% and people are sort of projecting out for the for.

Speaker Change: For the rest of the year.

Speaker Change: Who knows.

Speaker Change: In a recessionary environment.

Speaker Change: We'd get worse, but thats kind of what we expect.

Casey Keller: And right now, our trends are kind of mirroring that in terms of restaurant traffic. We call it minus 3% in Q2. That's what I think we're gonna see for the near future unless something changes, but that's kind of what we see and what we read in the industry data. Yeah.

Speaker Change: Right now our trends are kind of mirroring that in.

Speaker Change: Terms of restaurant traffic.

Speaker Change: Minus 3% call it minus 3% in Q2.

Speaker Change: That's what I think we're going to see for the for the near future.

Speaker Change: Until until something changes.

Speaker Change: Kind of what we see and what what we read in the industry data.

David Palmer: Yeah, no, I think a lot of people were thinking that the second app would be better because of comparisons, and I think those expectations might be fading a bit. So, you know, I don't think there are many people thinking it'll necessarily get worse, but I'll leave it there. Thank you.

Speaker Change: Yeah, No I think a lot of people were thinking that the second half would be better because the comparisons and I think those those expectations might be fading event. So I don't think theres, many people to handle necessarily get worse, but I'll leave it there. Thank you.

unknown: And our final question will come from Robert Moskow with TD.

Speaker Change: And our final question will come from Robert Moskow with TD Cowen. Please go ahead.

Robert Moskow: Hey, Rob. Hi.

Robert Moskow: Hey, Ray Hi, Ivy.

unknown: I have a glass half empty and a glass half full question. So I think I'm gonna just do the glass half full. What's in the glass, Rob?

Robert Moskow: Glass half empty and a glass half full question. So I think I'm going to just do the glass half full question.

Robert Moskow: What's in the glass Rob.

Speaker Change: Yeah.

Speaker Change: Yes.

Robert Moskow: It's pretty late, so I don't want to, and I'm covering bourbon stocks, so maybe we should talk about that.

Speaker Change: It's pretty light, so I don't want to and uncovered so.

Speaker Change: So maybe nine o'clock, some rather but exactly but honestly if you look at Nielsen tracking data and just look at overall grocery sales.

Speaker Change: We're getting about all of it who's selling it it is starting to show some signs of acceleration I think it's up about 3% in the last four weeks.

Speaker Change: And.

Speaker Change: It's a clear sign I would argue of consumers going back to the grocery store trying to save money.

Speaker Change: And you can see foodservice being down a lot so.

Speaker Change: Are you I havent heard much about that in your outlook for the back half of the year I know you had easy comps, but do you.

Speaker Change: Could you be so bold as to say hey.

Speaker Change: Hey, there could be a better environment, a better backdrop overall in grocery retail in the back half because of that.

Speaker Change: As well as the easier comparisons.

unknown: Yeah, so I think our guidance is somewhat based on that, which is, you know, more favorable in the second half of this year than the first half. But we obviously took it down a little bit to suggest some caution.

Speaker Change: So I think our guidance is somewhat based on that which is more favorable back half of this year than the first half.

Speaker Change: We obviously took it down a little bit to suggest some caution.

unknown: We do have, on the high end, a little bit of growth. Right. So I don't disagree with what you're saying.

Speaker Change: We do have at the high end a little bit of growth.

unknown: I think if you went back to earlier this year, when most of us were talking and giving guidance, I think there was an expectation that that recovery was going to happen sooner. I think we're seeing signs of it. Would have just loved it to be a little bit sooner, but that's what we're seeing. That's the glass half full. Okay, all right, you and

Speaker Change: So don't disagree with what you are saying I think if you went back to earlier this year.

Speaker Change: When most of US were talking and giving guidance I think there was an expectation that that recovery was going to happen sooner I think we're seeing signs of it.

Speaker Change: Would just love to be a little bit sooner, but that's what we're seeing that's the glass half full.

unknown: And this will conclude the question and answer session for today. Ladies and gentlemen, the conference has now ended. Thank you for joining us, and you may now disconnect.

unknown: Okay, all right, you and me both. All right, thanks a lot. Yep, yep, thank you. And this will conclude the question and answer session for today. Ladies and gentlemen, the conference has now ended. Thank you.

Speaker Change: Okay, Alright, you and me both alright, thanks a lot.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: And this will conclude the question and answer session for today, ladies and gentlemen. The conference has now ended thank you for all joining and you may now disconnect.

Speaker Change: Yeah.

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Speaker Change: Okay.

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