Q1 2026 B&G Foods Inc Earnings Call

May 12, 2026

Operator: Good day, and welcome to the B&G Foods, Inc. Q1 2026 Financial Results Conference Call. Today's call, which is being recorded, is scheduled to last about 1 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, B&G Foods. AJ, please go ahead.

Speaker #1: Good day and welcome to the B&G Foods, Inc. Q4, 2026 financial results conference call. Today's call, which is being recorded, is scheduled to last about 1 hour, including remarks by B&G Foods' management and the question-and-answer session.

Speaker #1: I would now like to turn the call over to AJ Schwab, Senior Associate, Corporate Strategy and Business Development for B&G Foods. AJ, please go ahead.

Speaker #2: 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.

AJ Schwabe: Good afternoon, and thank you for joining us. With me today are KC 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 at 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 upon them. 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 condition. 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.

Speaker #2: 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 BGFoods.com.

Speaker #2: 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, underreliance should not be placed upon them.

Speaker #2: We refer you to B&G Foods' most recent annual report on Form 10-K and subsequent SEC filings for more detailed discussion of the risks that could impact our company's future operating results and financial condition.

Speaker #2: 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, segment-adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit percentage, base business net sales, and segment-adjusted expenses.

AJ Schwabe: We will also be making references on today's call to the non-GAAP financial measures, adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit per, percentage, base business net sales, and segment adjusted expenses. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. KC 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 2026 and beyond. Bruce will then discuss our financial results for Q1 of 2026 and our revised guidance for fiscal 2026. I would now like to turn the call over to KC.

Speaker #2: 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 2026 and beyond.

Speaker #2: Bruce will then discuss our financial results for the first quarter of 2026 and our revised guidance for fiscal 2026. I would now like to turn the call over to Casey.

Speaker #3: Good afternoon. Thank you, AJ. And thank you for joining us today for our first quarter 2026 earnings call. Today, I will cover an update on our portfolio reshaping, including the recent investor and acquisition.

Casey Keller: Good afternoon. Thank you, AJ Schwabe. Thank you for joining us today for our Q1 2026 earnings call. Today I will cover an update on our portfolio reshaping, including the recent divestiture and acquisition, an overview of Q1 performance, Bruce Wacha will cover more detailed financial results, and finally, the outlook for fiscal year 2026. Portfolio divestitures. The Q1 witnessed major progress in our efforts to reshape the B&G Foods portfolio. We completed the divestiture of the Green Giant US Frozen business to Seneca Foods Corporation on 2 March. This is the largest piece in our portfolio transformation that is resulting in stronger focus, simplification, greater synergies, and higher margins across the B&G Foods portfolio. The Q1 includes the final 2 months of the Green Giant US Frozen business within B&G Foods.

Speaker #3: An overview of first quarter performance, Bruce will cover more detailed financial results, and finally, the outlook for fiscal year 2026. Portfolio investors: the first quarter witnessed major progress in our efforts to reshape the B&G Foods portfolio.

Speaker #3: We completed the divesture of the green giant US frozen business to Seneca Foods Corporation on March 2nd. This is the largest piece in our portfolio transformation that has resulted in stronger focus and simplification, greater synergies, and higher margins across the B&G Foods portfolio.

Speaker #3: The first quarter includes the final two months of the green giant US frozen business within B&G. In addition, we completed the acquisition of the collagen and kitchen basics broth and stock businesses from Del Monte Foods on March 19th.

Casey Keller: We completed the acquisition of the collagen and Kitchen Basics broth and stock businesses from Del Monte Foods on 19 March. These key brands are a much stronger fit with our current shelf stable portfolio and play in a growing category that is driven by the expansion of the fresh store perimeter. The impact of these two transactions will create positive EBITDA and higher margins on our portfolio, replacing the low-margin Green Giant US Frozen business with a more profitable and stable broth and stock business. These transactions were also critical in reducing our pro forma net leverage ratio in Q1 to almost 6x. We previously announced the divestiture of Green Giant Canada, the final component of the Green Giant divestitures. That transaction requires Canadian regulatory approval and remains under review.

Speaker #3: These key brands are a much stronger fit with our current shelf-stable portfolio and play in a growing category that is driven by the expansion of the fresh store perimeter.

Speaker #3: The impact of these two transactions will create positive EBITDA and higher margins on our portfolio. Replacing the low-margin green giant US frozen business with a more profitable and stable broth and stock business.

Speaker #3: These transactions were also critical in reducing our pro forma net leverage ratio in Q1 to almost six times. Further, we previously announced the divesture of green giant Canada.

Speaker #3: The final component of the green giant divestors. That transaction requires Canadian regulatory approval and remains under review. Subject to regulatory approval and other customary closing conditions, we expect to close during Q2 of fiscal year 26.

Casey Keller: Subject to regulatory approval and other customary closing conditions, we expect to close during Q2 of fiscal year 2026. Q1 results. The Q1 demonstrated significant improvement in base business net sales trends relative to a lower Q1 in fiscal year 2025, impacted by some trade inventory reductions. Q1 base business net sales grew +2.8% versus last year. Some of the key drivers. The Spices & Flavor Solutions business unit grew Q1 net sales +9.1% versus last year, benefiting from the growth in fresh food and proteins, as well as strength in the club and food service channels. Segment adjusted EBITDA was up +13.1% versus Q1 fiscal year 2025, behind strong volume and pricing growth.

Speaker #3: Q1 results. The first quarter demonstrated significant improvement in base business net sales trends, relative to a lower Q1 in fiscal year 25, impacted by some trade inventory reductions.

Speaker #3: Q1 base business net sales grew plus 2.8% versus last year. Some of the key drivers. The spices and flavor solutions business unit grew Q1 net sales plus 9.1% versus last year.

Speaker #3: Benefiting from the growth in fresh food and proteins, as well as strength in the club and food service channels. Segment-adjusted EBITDA was up plus 13.1% versus Q1 fiscal year 25, behind strong volume and pricing growth.

Speaker #3: The frozen and vegetables business unit in the first two months of Q1 delivered a recovery in segment-adjusted EBITDA from a net loss in segment-adjusted EBITDA in Q1 last year, behind higher volumes, lower trade spend, and lower manufacturing costs.

Casey Keller: The frozen vegetables business unit in the first 2 months of Q1 delivered a recovery, a recovery in segment adjusted EBITDA from a net loss in segment adjusted EBITDA in Q1 last year behind higher volumes, lower trade spend, and lower manufacturing costs. Q1 continued to benefit from the implementation of our cost savings and restructuring initiatives. Unallocated central overheads were down almost $2 million from last year. We will continue to remove direct costs associated with the Green Giant business and restructure central costs to reflect the divestitures. Fiscal year 2026 outlook. The updated guidance range for fiscal year 2026 is increased to $1.735 to 1.775 billion in net sales and $275 to 290 million in adjusted EBITDA. The key assumptions.

Speaker #3: Q1 continued to benefit from the implementation of our cost savings and restructuring initiatives. Unallocated central overheads were down almost $2 million from last year.

Speaker #3: We will continue to remove direct costs associated with the Green Giant business and restructure central costs to reflect divestors. Fiscal year '26 outlook: The updated guidance range for fiscal year '26 is increased to $1.735 billion to $1.775 billion in net sales and $275 million to $290 million in adjusted EBITDA.

Speaker #3: The key assumptions: The current outlook for fiscal year 2026 reflects the addition of the Collagen and Kitchen Basics brands. The impact of the Green Giant U.S. frozen divestiture was built into our previous guidance, as well as the year-over-year impact of the Don Pepino and Lascer U.S. divestitures in fiscal year 2025.

Casey Keller: The current outlook for fiscal year 2026 reflects the addition of the College Inn and Kitchen Basics brands. The impact of the Green Giant US frozen divestiture was built into our previous guidance, as well as the year-over-year impact of the Don Pepino and Le Sueur US divestitures in fiscal year 2025. We expect fiscal year 2026 base business and net sales trends on the remaining core meals, Spices & Flavor Solutions, and specialty businesses to modestly improve versus last year. Q1 trends were a strong start for the year against a lower base in Q1 fiscal year 2025, but are expected to be flat to slightly down for the remainder of fiscal year 2026, recognizing the impact of the 53rd week in Q4 of fiscal year 2025.

Speaker #3: We expect fiscal year 26 base business and net sales trends on the remaining core meals, spices, and flavor solutions, and specialty businesses to modestly improve versus last year.

Casey Keller: We expect fiscal year 2026 base business and net sales trends on the remaining core meals, Spices & Flavor Solutions, and specialty businesses to modestly improve versus last year. Q1 trends were a strong start for the year against a lower base in Q1 fiscal year 2025, but are expected to be flat to slightly down for the remainder of fiscal year 2026, recognizing the impact of the 53rd week in Q4 of fiscal year 2025.

Speaker #3: Q1 trends were a strong start for the year against a lower base in Q1 fiscal year '25, but are expected to be flat to slightly down for the remainder of fiscal year '26, recognizing the impact of the 53rd week in Q4 of fiscal year '25.

Speaker #3: A key financial risk we are watching closely is the price of oil. Which impacts both transportation costs and the price of soybean oil, given its market relationship to biofuels.

Casey Keller: A key financial risk we are watching closely is the price of oil, which impacts both transportation costs and the price of soybean oil, given its market relationship to biofuels. We expect these costs to come down from current highs but remain elevated year-over-year. If oil and fuel costs continue at high levels, we will evaluate pricing actions to cover significantly higher input costs. Finally, the pending divestiture of Green Giant Canada has not been reflected in our guidance. We will update fiscal year 2026 guidance when that transaction closes, but expect the divestiture of Green Giant Canada to be relatively neutral from an adjusted EBITDA impact. Looking forward, fiscal year 2026 is poised to be a transformational year with a more focused, higher margin, and stable portfolio once divestitures and closing transition services have been completed.

Speaker #3: We expect these costs to come down from current highs, but remain elevated year over year. If oil and fuel costs continue at high levels, we will evaluate pricing actions to cover significantly higher input costs.

Speaker #3: Finally, the pending divesture of green giant Canada has not been reflected in our guidance. We will update fiscal year 26 guidance when that transaction closes, but expect the divesture of green giant Canada to be relatively neutral from an adjusted EBITDA impact.

Speaker #3: Looking forward, fiscal year 26 is poised to be a transformational year, with a more focused, higher-margin, and stable portfolio. Once divestors and close closing transaction services have been completed.

Speaker #3: We expect continued improvement in base business net sales trends towards the long-term algorithm of 1%. Further, we will also become a less complex, more efficient, and leaner company behind a simplified portfolio.

Casey Keller: We expect continued improvement in base business net sales trends towards the long-term algorithm of 1%. We will also become a less complex, more efficient, and leaner company behind a simplified portfolio, restructuring operations to right-size overheads and focus resources and investment behind the core categories and brands in spices and seasonings, meals, and baking staples. 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 fiscal 2026. Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. As we highlighted on our last call, we had a fast start to the year.

Speaker #3: Restructuring operations to right-size overheads and focus resources and investment behind the core categories and brands in spices and seasonings, meals, and baking staples. 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 fiscal 2026.

Speaker #3: Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. As we highlighted on our last call, we had a fast start to the year.

Bruce Wacha: Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. As we highlighted on our last call, we had a fast start to the year.

Speaker #3: Our financial performance was very strong in January, as we lapped prior-year inventory destockings, and we then demonstrated continued momentum in the business throughout the remainder of the quarter.

Bruce Wacha: Our financial performance was very strong in January as we lapped prior year inventory destockings. We then demonstrated continued momentum in the business throughout the remainder of the quarter, particularly within our Spices & Flavor Solutions business unit. Meanwhile, we remained active on the M&A front with the divestiture of our Green Giant US Frozen business and the establishment of our Green Giant US Frozen contract manufacturing business at our frozen vegetable manufacturing facility in Mexico with about a month to go in the quarter. The closing of our acquisition of the College Inn and Kitchen Basics broths and stocks business with about two weeks to go in the quarter.

Speaker #3: Particularly within our spices and flavor solutions business unit. Meanwhile, we remained active on the M&A front, with the divesture of our green giant US frozen business and the establishment of our green giant US frozen contract manufacturing business at our frozen vegetable manufacturing facility in Mexico, with about a month to go in the quarter.

Speaker #3: And then the closing of our acquisition of the collagen and kitchen basics broths and stocks business, with about two weeks to go in the quarter.

Speaker #3: I will provide more details on the transactions later in the call, but in effect, we used the net proceeds from the divesture of the marginally profitable green giant US frozen business to partially fund the acquisition of the more profitable collagen and kitchen basics business.

Bruce Wacha: I will provide more details on the transactions later in the call, but in effect, we use the net proceeds from the divestiture of the marginally profitable Green Giant US Frozen business to partially fund the acquisition of the more profitable College Inn and Kitchen Basics business. We are very pleased with our divestiture and acquisition counterparts on both of these transactions. I am happy to report that both transitions are proceeding relatively smoothly. As we review our Q1 2026 results, we will highlight the comparative differences that result from this 2026 activity, as well as from the divestitures of the Don Pepino and Le Sueur brands, which we owned for only parts of fiscal 2025. Because the divestiture of Green Giant Canada has not yet closed, there was no impact to our net sales or adjusted EBITDA.

Speaker #3: And we are very pleased with our divesture and acquisition counterparts on both of these transactions. I am happy to report that both transitions are proceeding relatively smoothly.

Speaker #3: As we review our first quarter 2026 results, we will highlight the comparative differences that result from this 2026 activity as well as from the divestors of the Don Peppino and Lacer brands.

Speaker #3: Which we own for only parts of fiscal 2025. Because the divesture of green giant Canada has not yet closed, there was no impact to our net sales or adjusted giant Canada is classified as an asset held for sale for accounting purposes, the pending divesture does impact how the green giant Canada assets are carried on our balance sheet and within certain line items of our P&L.

Bruce Wacha: However, because Green Giant Canada is classified as an asset held for sale for accounting purposes, the pending divestiture does impact how the Green Giant Canada assets are carried on our balance sheet and within certain line items of our P&L. For Q1 2026, we generated $408.9 million in net sales, a net loss of $32.5 million or $0.41 per diluted share, adjusted net income of $6.8 million or $0.08 per adjusted diluted share, adjusted EBITDA of $57.6 million, and adjusted EBITDA as a percentage of net sales of 14.1%. The company's net loss for Q1 was primarily attributable to a $36.3 million non-cash loss on sale of assets.

Speaker #3: For the first quarter of 2026, we generated 408.9 million dollars in net sales, a net loss of 32.5 million dollars or 41 cents per deleted share, adjusted net income of 6.8 million dollars or 8 cents per adjusted deleted share, adjusted EBITDA of 57.6 million dollars, and adjusted EBITDA as a percentage of net sales of 14.1%.

Speaker #3: The company's net loss for the first quarter was primarily attributable to a 36.3 million dollar non-cashed loss on sale of assets, a 5.8 million dollar non-cashed loss on disposals, and impairment of PP&A as well as certain acquisition divesture-related and non-recurring expenses.

Bruce Wacha: A $5.8 million non-cash loss on disposals and impairment of PP&E, as well as certain acquisition divestiture-related and non-recurring expenses. Details regarding the impairments and other adjustments are included in our earnings release issued today and our Form 10-Q that will be filed later this week. Net sales for Q1 2026 decreased by $16.5 million, or 3.9% to $408.9 million from $425.4 million for Q1 2025.

Speaker #3: Details regarding the impairments and other adjustments are included in our earnings release issued today and our 10-Q that will be filed later this week.

Speaker #3: Net sales for the first quarter of 2026 decreased by 16.5 million dollars or 3.9% to 408.9 million dollars, from 425.4 million dollars for the first quarter of 2025.

Speaker #3: The decrease was primarily attributable to the green giant US frozen Lacer US and Don Peppino divestitors partially offset by an increase in base business net sales one month of net sales from the contract manufacturing agreement the company entered into on March 2nd, 2026, with the acquirer of the green giant US frozen business and a partial month of net sales for the collagen and kitchen basics brands.

Bruce Wacha: The decrease was primarily attributable to the Green Giant US Frozen, Le Sueur US, and Don Pepino divestitures, partially offset by an increase in base business net sales, one month of net sales from the contract manufacturing agreement the company entered into on 2 March 2026 with the acquirer of the Green Giant US Frozen business and a partial month of net sales for the College Inn and Kitchen Basics brands. Net sales of our Green Giant US Frozen business, which we owned for only 2 months during Q1 2026, contributed $27.2 million less net sales during Q1 2026 compared to Q1 2025.

Speaker #3: Net sales of our green giant US frozen business, which we own for only two months during the first quarter of 2026, contributed 27.2 million dollars less net sales during the first quarter of 2026 compared to the first quarter of 2025.

Speaker #3: Net sales of the Don Peppino and Lacer businesses, which we divested in 2025 and are therefore not part of our first quarter 2026 results, were $10.6 million during the first quarter of 2025.

Bruce Wacha: Net sales of the Don Pepino and Le Sueur businesses, which we divested in 2025 and are therefore not part of our Q1 2026 results, were $10.6 million during Q1 2025. Partially offsetting the impact of these divestitures were one month of sales for the new Green Giant US Frozen contract manufacturing agreement, which contributed $8.5 million of net sales in Q1 2026, and a partial month of net sales for the College Inn and Kitchen Basics brands acquired on 19 March 2026, which contributed $2.9 million to the company's net sales for Q1 2026.

Speaker #3: Partially offsetting the impact of these divestitors were one month of sales for the new green giant US frozen contract manufacturing agreement, which contributed 8.5 million dollars of net sales in the first quarter of 2026 and a partial month of net sales for the collagen and kitchen basic brands acquired on March 19th, 2026, which contributed 2.9 million dollars to the company's net sales for the first quarter of 2026.

Speaker #3: Base business net sales for the first quarter of 2026 increased by $9.9 million, or 2.8%, to $365.1 million as compared to $355.2 million for the first quarter of 2025.

Bruce Wacha: Base business net sales for Q1 2026 increased by $9.9 million or 2.8% to $365.1 million as compared to $355.2 million for Q1 2025. The increase in base business net sales was driven by increases in volume that contributed $6.6 million or 1.9%, an increase in net pricing, and the impact of product mix of $1.6 million or 0.5%, and the impact of foreign currency of $1.7 million or 0.5 percentage points.

Speaker #3: The increase in base business net sales was driven by increases in volume that contributed 6.6 million dollars or 1.9%, an increase in net pricing and the impact of product mix of 1.6 million dollars or 0.5%, and the impact of foreign currency of 1.7 million dollars or 0.5 percentage points.

Speaker #3: Gross profit was 79.9 million dollars for the first quarter of 2026 or 19.5% of net sales and adjusted gross profit was 84.6 million dollars or 20.7% of net sales.

Bruce Wacha: Gross profit was $79.9 million for Q1 2026 or 19.5% of net sales, and adjusted gross profit was $84.6 million or 20.7% of net sales. Gross profit was $90.1 million for Q1 2025 or 21.2% of net sales, and adjusted gross profit was $90.6 million or 21.3% of net sales. The Q1 2026 marked a somewhat different story than our experiences in 2025. Today, we are seeing resiliency in our volumes with modest recovery in many of our brands as compared to the more negative sales trends that we experienced in 2025.

Speaker #3: Gross profit was 90.1 million dollars for the first quarter of 2025 or 21.2% of net sales and adjusted gross profit was 90.6 million dollars or 21.3% of net sales.

Speaker #3: The first quarter of 2026 marked a somewhat different story than our experiences in 2025. Today, we are seeing resiliency in our volumes with modest recovery in many of our brands as compared to the more negative sales trends that we experienced in 2025.

Speaker #3: Across our internal manufacturing network, our factory employees are working hard with seven of our 10 internal manufacturing facilities increasing output during the first quarter of 2026 when compared to 2025 volumes.

Bruce Wacha: Across our internal manufacturing network, our factory employees are working hard with 7 of our 10 internal manufacturing facilities increasing output during Q1 2026 when compared to 2025 volumes. Additionally, 2 of the 3 facilities that did not increase year-over-year volumes during Q1 are currently ahead of our budget volumes for those factories for the year-to-date period. However, input costs, which excluding the impact of tariffs were largely benign in 2025, are beginning to show some signs of inflationary pressure in recent months. We will be watching these trends for any signs of sustained inflationary pressures, and when appropriate, we will consider implementing pricing actions to protect our profitability.

Speaker #3: Additionally, two of the three facilities that did not increase year over year volumes during the first quarter are currently ahead of our budget volumes for those factories for the year to date period.

Speaker #3: However, input costs which excluding the impact of tariffs were largely benign in 2025 are beginning to show some signs of inflationary pressure in recent months.

Speaker #3: We will be watching these trends for any signs of sustained inflationary pressures and when appropriate, we will consider implementing pricing actions to protect our profitability.

Speaker #3: Selling general and administrative expenses increased by 1.1 million dollars or 2.2% to 50.2 million dollars for the first quarter of 2026 from 49.1 million dollars for the first quarter of 2025.

Bruce Wacha: Selling, general, and administrative expenses increased by $1.1 million or 2.2% to $50.2 million for Q1 2026 from $49.1 million for Q1 2025. The increase was comprised of an increase in acquisition, divestiture-related, and non-recurring expenses of $6.4 million, inclusive of an increase of $1.9 million for disposals and impairments of PP&E, partially offset by decreases in general and administrative expenses of $3.9 million and warehousing expenses of $1.4 million.

Speaker #3: The increase was comprised of an increase in acquisition divestiture-related and non-recurring expenses of 6.4 million dollars inclusive of an increase of 1.9 million dollars for disposals and impairments of PP&A partially offset by decreases in general and administrative expenses of 3.9 million dollars and warehousing expenses of 1.4 million dollars.

Speaker #3: Expressed as a percentage of net sales, selling general and administrative expenses increased by 0.7 percentage points to 12.3% for the first quarter of 2026 as compared to 11.6% for the first quarter of 2025.

Bruce Wacha: Expressed as a percentage of net sales, selling, general, and administrative expenses increased by 0.7 percentage points to 12.3% for Q1 2026, as compared to 11.6% for Q1 2025. We are following these costs closely, and we are proactively taking steps to reduce our ongoing SG&A commitments to better reflect the size of our business going forward as we work to minimize the impact of any stranded costs on our ongoing overhead structure due to the impact of the recent divestitures. We generated $57.6 million in adjusted EBITDA, or 14.1% of net sales in Q1 2026, compared to $59.1 million or 13.9% in Q1 2025.

Speaker #3: We are following these costs closely and we are proactively taking steps to reduce our ongoing SG&A commitments to better reflect the size of our business going forward as we work to minimize the impact of any stranded costs on our ongoing overhead structure due to the impact of the recent divestitors.

Speaker #3: We generated 57.6 million dollars in adjusted EBITDA or 14.1% of net sales in the first quarter of 2026 compared to 59.1 million dollars or 13.9% in the first quarter of 2025.

Speaker #3: The Lacer US and Don Peppino businesses contributed nearly $1 million to segment adjusted EBITDA during the first quarter of 2025. Net interest expense decreased by $2 million, or 5.1%, to $35.8 million for the first quarter of 2026 from $37.8 million for the first quarter of 2025.

Bruce Wacha: The Le Sueur US and Don Pepino businesses contributed nearly $1 million to segment adjusted EBITDA during Q1 2025. Net interest expense decreased by $2 million or 5.1% to $35.8 million for Q1 2026 from $37.8 million for Q1 2025. The reduction of net interest expense was primarily attributable to a reduction in average long-term debt outstanding during Q1 2026 relative to average long-term debt outstanding during Q1 2025. Depreciation and amortization was $15 million in Q1 2026, compared to $16.8 million in Q1 2025.

Speaker #3: The reduction of net interest expense was primarily attributable to a reduction in average long-term debt outstanding during the first quarter of 2026 relative to average long-term debt outstanding during the first quarter of 2025.

Speaker #3: Depreciation and amortization was 15 million dollars in the first quarter of 2026 compared to 16.8 million in the first quarter of 2025. We had a net loss of 32.5 million dollars or 41 cents per diluted share for the first quarter of 2026 compared to net income of 0.8 million dollars or 1 cent per diluted share for the first quarter of 2025.

Bruce Wacha: We had a net loss of $32.5 million, or $0.41 per diluted share for Q1 2026, compared to net income of $0.8 million or $0.01 per diluted share for Q1 2025. The net loss for Q1 2026 was primarily driven by a loss on sale of assets of $36.3 million in connection with the divestiture of the Green Giant US Frozen business, $5.8 million for non-cash disposals and impairments of PP&E, as well as an increase in acquisition, divestiture-related, and other non-recurring costs. We had adjusted net income of $6.8 million, or $0.08 per adjusted diluted share in Q1 2026.

Speaker #3: The net loss for the quarter of 2026 was primarily driven by a loss on sale of assets of 36.3 million dollars in connection with the divestiture of the Green Giant US frozen business, 5.8 million dollars for non-cash disposals and impairments of PP&A, as well as an increase in acquisition divestiture-related and other non-recurring costs.

Speaker #3: We had adjusted net income of $6.8 million, or $0.08 per adjusted diluted share, in the first quarter of 2026. In the first quarter of 2025, we had adjusted net income of $3.4 million, or $0.04 per adjusted diluted share.

Bruce Wacha: In Q1 2025, we had adjusted net income of $3.4 million, or $0.04 per adjusted diluted share. Adjustments to our EBITDA and net income are described further in our earnings release. I would now like to touch on results by business unit for Q1. Net sales for Spices & Flavor Solutions increased by $8.3 million or 9.1% in Q1 2026 to $100.1 million from $91.7 million in Q1 2025. The increase was primarily due to higher volumes across Spices & Flavor Solutions business unit, coupled with higher net pricing and product mix.

Speaker #3: Adjustments to our EBITDA on net income are described further in our earnings release. I would now like to touch on results by business unit for the first quarter.

Speaker #3: Net sales for spices and flavor solutions increased by 8.3 million dollars or 9.1% in the first quarter of 2026 to 100.1 million dollars from 91.7 million dollars in the first quarter of 2025.

Speaker #3: The increase was primarily due to higher volumes across spices and flavor solutions business unit coupled with higher net pricing and product mix. Spices and flavor solutions segment EBITDA increased by 3.4 million dollars or 13.1% in the first quarter of 2026 compared to the first quarter of 2025.

Bruce Wacha: Spices & Flavor Solutions segment EBITDA increased by $3.4 million, or 13.1% in Q1 2026 compared to Q1 2025. The increase in segment adjusted EBITDA was largely driven by increased volumes and to a lesser extent by increased pricing that largely offset the impact of increased tariff costs and other input costs, as well as increased allocations to Spices cost of goods that were driven in part by the divestiture of the Green Giant US Frozen business. Net sales for Meals increased by $0.9 million, or 0.9% in Q1 2026 to $107.1 million from $106.1 million for Q1 2025.

Speaker #3: The increase in segment adjusted EBITDA was largely driven by increased volumes and to a lesser extent by increased pricing that largely offset the impact of increased tariff costs.

Speaker #3: And other input costs as well as increased allocations to spices cost of goods that were driven in part by the divestiture of the Green Giant US frozen business.

Speaker #3: Net sales for meals increased by $0.9 million, or 0.9%, in the first quarter of 2026 to $107.1 million from $106.1 million for the first quarter of 2025.

Speaker #3: The acquisition of the collagen and kitchen basics brands added approximately 2.9 million dollars of net sales during our first two weeks of ownership in the business.

Bruce Wacha: The acquisition of the College Inn and Kitchen Basics brands added approximately $2.9 million of net sales during our first 2 weeks of ownership in the business. Meals net sales also benefited from the higher net pricing and improved product mix, which were offset in part by modestly lower volumes across the business unit. Meals segment adjusted EBITDA decreased by approximately $5 million, primarily driven by the impact of unfavorable cost comparisons in certain raw materials and manufacturing expenses, as well as increased allocations to Meals cost of goods that were driven in part by the divestiture of the Green Giant US Frozen business. These incremental costs were offset in part by increased net pricing and the impact of product mix.

Bruce Wacha: The acquisition of the College Inn and Kitchen Basics brands added approximately $2.9 million of net sales during our first two weeks of ownership in the business. Meals net sales also benefited from the higher net pricing and improved product mix, which were offset in part by modestly lower volumes across the business unit. Meals segment adjusted EBITDA decreased by approximately $5 million, primarily driven by the impact of unfavorable cost comparisons in certain raw materials and manufacturing expenses, as well as increased allocations to Meals cost of goods that were driven in part by the divestiture of the Green Giant US Frozen business. These incremental costs were offset in part by increased net pricing and the impact of product mix.

Speaker #3: Meals net sales also benefited from the higher net pricing and improved product mix which were offset in part by modestly lower volumes across the business unit.

Speaker #3: Meals segment adjusted EBITDA decreased by approximately $5 million, primarily driven by the impact of unfavorable cost comparisons in certain raw materials and manufacturing expenses, as well as increased allocations to Meals cost of goods that were driven in part by the divestiture of the Green Giant U.S. frozen business.

Speaker #3: These incremental costs were offset in part by increased net pricing and the impact of product mix. We also made investments in certain brands in the meals portfolio such as Ortega, where we increased trade spending and marketing expenses during the first quarter of 2026 to help drive improved sales performance throughout the remainder of the year.

Bruce Wacha: We also made investments in certain brands in the Meals portfolio, such as Ortega, where we increased trade spending and marketing expenses during Q1 2026 to help drive improved sales performance throughout the remainder of the year. Net sales for specialty decreased by $3.6 million, or 2.7% in Q1 2026 to $130.8 million from $134.4 million in Q1 2025. The decrease was primarily due to the divestiture of the Don Pepino business, which generated $3.5 million of net sales in Q1 2025. Base business net sales for specialty were essentially flat for the quarter.

Speaker #3: Net sales for specialty decreased by 3.6 million dollars or 2.7% in the first quarter of 2026 to 130.8 million dollars from 134.4 million dollars in the first quarter of 2025.

Speaker #3: The decrease was primarily due to the divestiture of the Don Peppino business which generated 3.5 million dollars of net sales in the first quarter of 2025.

Speaker #3: Base business net sales for specialty were essentially flat for the quarter. Specialty segment EBITDA decreased by 7.4 million dollars in the first quarter of 2026 compared to the first quarter of 2025.

Bruce Wacha: Specialty segment EBITDA decreased by $7.4 million in Q1 2026 compared to Q1 2025. The decrease was primarily due to the Don Pepino divestiture, unfavorable cost comparisons in certain raw materials, manufacturing expenses, the impact of tariffs, and increased allocations to Specialty cost of goods that were driven in part by the divestiture of the Green Giant US frozen business. Financial performance for the frozen and vegetables unit during Q1 2026 and Q1 2025 are not comparable due to the impact of the Le Sueur US and Green Giant US frozen divestitures and the impact of our new contract manufacturing agreements for the Green Giant US frozen business.

Speaker #3: The decrease was primarily due to the Don Pepino divestiture, unfavorable cost comparisons in certain raw materials, manufacturing expenses, the impact of tariffs, and increased allocations to specialty cost of goods that were driven in part by the divestiture of the Green Giant U.S. frozen business.

Speaker #3: Financial performance for the frozen and vegetable unit during the first quarter of 2026 and the first quarter of 2025 are not comparable due to the impact of the Lesor US and Green Giant US frozen divestitures and the impact of our new contract manufacturing agreements for the Green Giant US frozen business.

Speaker #3: We are pleased to report that net sales of Green Giant Canada remain strong and increased by 4.2 million dollars or 16.4% to 30.1 million dollars for the first quarter of 2026 compared to 25.9 million dollars for the first quarter of 2025.

Bruce Wacha: We are pleased to report that net sales of Green Giant Canada remain strong and increased by $4.2 million, or 16.4% to $30.1 million for Q1 2026, compared to $25.9 million for Q1 2025. Separately, the new contract manufacturing agreements for Green Giant US Frozen generated $8.5 million in net sales for the quarter during its first month of operation following our sale of the Green Giant US frozen business. This contract manufacturing arrangement has a cost-plus structure and is expected to provide a modest but stable profit stream going forward. Now, I will spend a little time on our balance sheet, which has also improved in Q1 2026.

Speaker #3: Separately, the new contract manufacturing agreements for Green Giant US frozen generated 8.5 million dollars in net sales for the quarter during its first month of operation following our sale of the Green Giant US frozen business.

Speaker #3: This contract manufacturing arrangement has a cost-plus structure and is expected to provide a modest but stable profit stream going forward. Now I will spend a little time on our balance sheet which is also improved in the first quarter of 2026.

Speaker #3: Net debt to performance adjusted EBITDA before share-based compensation and extraordinary tariffs was 6.07 times at the end of the first quarter 2026 compared to 5.6 excuse me, 6.57 times at the end of the fourth quarter of 2025.

Bruce Wacha: Net debt to pro forma adjusted EBITDA before share-based compensation and extraordinary tariffs was 6.07x at the end of Q1 2026, compared to, excuse me, 6.57x at the end of Q4 2025. As discussed on previous earnings calls, we are continuing to reduce leverage. We expect to remain on track to reduce net debt to pro forma adjusted EBITDA before share-based compensation and extraordinary tariffs to approximately 6x or less by the midpoint of this year, supported in part by the divestiture of the Green Giant Canada business, which, subject to regulatory approval in Canada, we expect to be completed during Q2 and which we expect will reduce net leverage by another quarter of a turn or so once it closes.

Speaker #3: As discussed on previous earnings calls, we are continuing to reduce leverage we expect to remain on track to reduce net debt to performance adjusted EBITDA before share-based compensation and extraordinary tariffs to approximately six times or less by the midpoint of this year.

Speaker #3: Supported in part by the divestiture of the Green Giant Canada business which subject to regulatory approval in Canada we expect to be completed during the second quarter and which we expect will reduce net leverage by another quarter of a turn or so once it closes.

Speaker #3: Additionally, as announced by press release today and beginning with the dividend declared today and payable on July 30th, 2026, the record holders as of June 30th.

Bruce Wacha: Additionally, as announced by press release today, beginning with the dividend declared today and payable on 30 July 2026 to record holders as of 30 June 2026, our board of directors has reduced our dividend by 50% to $0.095 per quarter or $0.38 per share per annum. In our 21 years as a publicly held company, we have proven our commitment to creating stockholder value by consistently returning a meaningful portion of our excess cash to stockholders in the form of a cash dividend. Following the completion of the Don Pepino, Le Sueur US, and Green Giant US divestitures, and the College Inn and Kitchen Basics acquisition, our board has concluded that an adjustment to our intended dividend rate was appropriate.

Speaker #3: 2026 our board of directors has reduced our dividend by 50% to nine and a half cents per quarter or 38 cents per share per annum.

Speaker #3: In our 21 years as a publicly held company we have proven our commitment to creating stockholder value by consistently returning a meaningful portion of our excess cash to stockholders in the form of a cash dividend.

Speaker #3: Following the completion of the Don Peppino Lesor US and Green Giant US divestitures and the collagen and kitchen basics acquisition our board has concluded that an adjustment to our intended dividend rate was appropriate.

Speaker #3: On an annualized basis, the reduction in dividend is expected to provide an additional $30 million or so, which we intend to use to repay long-term debt and for other business purposes. We expect this will further accelerate the reduction in our leverage ratio.

Bruce Wacha: On an annualized basis, the reduction in dividend is expected to provide an additional $30 million or so, which we intend to use to repay long-term debt and for other business purposes, which we expect will further accelerate the reduction in our leverage ratio. Before I get to our updated 2026 guidance, I would like to remind the audience that we continue to live in unpredictable times. Our 2026 guidance reflects what we know today and, for example, does not factor in significant changes in inflation, tariff policies, or the potential impact of escalation in the conflicts in Eastern Europe, the Middle East, or Latin America could have on our results. Please note that our guidance reflects the expected impacts only of acquisitions and divestitures that have already closed.

Speaker #3: Before I get to our updated 2026 guidance I would like to remind the audience that we continue to live in times. Our 2026 guidance reflects what we know today and for example does not factor in significant changes in inflation tariff policies or the potential impact of escalation in the complex in Eastern Europe the Middle East or Latin America could have on our results.

Speaker #3: Please note that our guidance reflects the expected impacts only of acquisitions and divestitures that have already closed. In other words our guidance reflects the expected impacts of the Don Peppino Lesor US and Green Giant US frozen divestitures the commencement of the Green Giant US frozen contract manufacturing agreement and the collagen and kitchen basics acquisition.

Bruce Wacha: In other words, our guidance reflects the expected impacts of the Don Pepino, Le Sueur US, and Green Giant US frozen divestitures, the commencement of the Green Giant US frozen contract manufacturing agreement, and the College Inn and Kitchen Basics acquisition. Our guidance does not reflect the expected impact from the pending Green Giant Canada divestiture because that divestiture has not yet closed. Our guidance also does not take into account any upcoming potential refinancing or other capital markets transactions. As a reminder, our guidance reflects that fiscal 2026 has one fewer week than fiscal 2025, which had a 53rd week. While we love the benefit of the 53rd week and our fiscal 2025 results, we will lap that benefit or approximately $18 million of net sales during fiscal 2026.

Speaker #3: What our guidance does not reflect the expected impact from the pending Green Giant Canada divestiture because that divestiture has not yet closed. Our guidance also does not take into account any upcoming potential refinancing or other capital markets transactions.

Speaker #3: Also, as a reminder, our guidance reflects that fiscal 2026 has one fewer week than fiscal 2025, which had a 53rd week. While we love the benefit of the 53rd week and our fiscal 2025 results, we will lap that benefit—or approximately $18 million of net sales—during fiscal 2026.

Speaker #3: As a result and as noted in our earnings release we expect fiscal 2026 net sales in the range of 1.735 billion to 1.775 billion dollars.

Bruce Wacha: As a result, as noted in our earnings release, we expect fiscal 2026 net sales in the range of $1.735 billion to $1.775 billion, adjusted EBITDA in the range of $275 million to $290 million, and adjusted EBITDA as a percentage of net sales in the range of approximately 15.8% to 16.3%. Based on this guidance, we expect adjusted diluted earnings per share to be in a range of $0.575 to $0.675 per share.

Bruce Wacha: As a result, as noted in our earnings release, we expect fiscal 2026 net sales in the range of $1.735 billion to 1.775 billion, adjusted EBITDA in the range of $275 million to $290 million, and adjusted EBITDA as a percentage of net sales in the range of approximately 15.8% to 16.3%. Based on this guidance, we expect adjusted diluted earnings per share to be in a range of $0.575 to $0.675 per share.

Speaker #3: Adjusted EBITDA in the range of 275 to 290 million dollars. And adjusted EBITDA as a percentage of net sales in the range of approximately 15.8 to 16.3 percent.

Speaker #3: And based on this guidance we expect adjusted diluted earnings per share to be in a range of 57 and a half to 67 and a half cents per share.

Speaker #3: Additionally we expect for full year 2026 interest expense of 152 and a half to 157 and a half million dollars including cash interest of 145 to 150 million dollars.

Bruce Wacha: Additionally, we expect for full year 2026 interest expense of $152.5 to $157.5 million, including cash interest of $145 to 150 million. Depreciation expense of $40 to 45 million. Amortization expense of $17 to 19 million. Cash taxes of approximately $5 million or less. An effective tax rate of 26% to 27%. CapEx will likely be at the lower end of our $30 to 35 million target. Now, I will turn the call back over to Casey for further remarks.

Speaker #3: Depreciation expense of 40 million to 45 million dollars. Amortization expense to 17 to 19 million dollars. Cash taxes of approximately 5 million dollars or less and effective tax rate of 26 to 27 percent and CapEx will likely be at the lower end of our 30 to 35 million dollar target.

Speaker #3: Now I will turn the call back over to Casey for further remarks.

Speaker #2: Thank you Bruce. In closing B&G Foods is making real progress against our long-term goals. Improving the base business net sales trends of the core business to the long-term range of flat to plus 1 percent.

Casey Keller: Thank you, Bruce. In closing, B&G Foods is making real progress against our long-term goals. Improving the base business net sales trends of the core business to the long-term range of flat to +1%. Reshaping the portfolio through divestitures and acquisitions for future growth, stability, higher margins, and cash flows. Reducing our net leverage ratio below 5 times through divestitures and excess cash flow to facilitate strategic acquisitions. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator?

Speaker #2: Reshaping the portfolio through divestitures and acquisitions for future growth. Stability higher margins and cash flows. And reducing our net leverage ratio below 5.5 times through divestitures and excess cash flow to facilitate strategic acquisitions.

Speaker #2: This concludes our remarks and now we would like to begin the Q&A portion of our call. Operator?

Speaker #3: Thank you. We will now be conducting a question and answer session. If you would like to ask a question please press star one on your telephone keypad.

Operator: Thank you. We will now be conducting a question-and-answer session. The first question comes from the line of Andrew Lazar with Barclays. Please go ahead.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove a question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #3: The first question comes from the line of Andrew Lazar with Barclays. Please go ahead.

Speaker #4: Great. Thanks so much. Good afternoon.

Andrew Lazar: Great. Thanks so much. Good afternoon.

Speaker #2: Andrew how are you?

Casey Keller: Andrew, how are you?

Speaker #4: Good. Good. first thing excluding the the portfolio changes since the the last time you provided guidance I'm curious how how the outlook changes for the year if at all because it's just it's harder to track that.

Andrew Lazar: Good. Good. First thing, excluding the portfolio changes since the last time you provided guidance, I am curious how the outlook changes for the year, if at all, because it's just, it's harder to track that. It still seems like underlying consumption per the track channel data was down, you know, close to maybe mid-single digit in the quarter. I think you mentioned you're expecting it to be flat to slightly down for the rest of the year. Just trying to get a sense for those things, first off.

Speaker #4: And then still seems like underlying consumption per per the track channel data was down you know close to maybe mid single digit in the quarter.

Speaker #4: And I think you mentioned you're expecting it to be flat to slightly down for the rest of the year. So just trying to get a sense for those things first off.

Speaker #2: Yeah. So yeah so I yeah basically our guidance is updated just just to reflect the collagen and kitchen basics acquisition. Our you know our prior guidance included the other divestitures around the Green Giant US frozen Don Peppino Swafani and the Lesor brand.

Casey Keller: Yeah. Basically, our guidance is updated just to reflect the College Inn and Kitchen Basics acquisition. Our, you know, our prior guidance included the other divestitures around the Green Giant US frozen, Don Pepino, Sclafani, and the Le Sueur brand. The really, the only change is the result of adding in the College Inn and Kitchen Basics acquisition. When we talk about base business net sales or organic net sales, it's not just the tracked consumption data, it's our total portfolio, which would include our business in food service, in private label brand business in Canada, our Canada business on track. That's probably our track channels now represent less than 60% of our portfolio. We've seen pretty strong growth in our spices private label business, our spices food service business, our other food service businesses.

Speaker #2: So the really the only change is the result of adding in the collagen and kitchen basics acquisition. what when we talk about base business net net sales or organic net sales it's not just the tracked consumption data.

Casey Keller: When we talk about base business net sales or organic net sales, it's not just the tracked consumption data, it's our total portfolio, which would include our business in food service, in private label brand business in Canada, our Canada business on track. That's probably our track channels now represent less than 60% of our portfolio. We've seen pretty strong growth in our spices private label business, our spices food service business, our other food service businesses.

Speaker #2: It's our total portfolio. Which would include our business in food service in private label brand business in Canada our Canada business untracked and that's probably probably our track channels now represent less than 60 percent of our portfolio.

Speaker #2: And we've seen pretty strong growth in our spices private label business our spices food service business our other food service businesses Canada's been Canada's growing our industrial business that performed well.

Casey Keller: Canada is growing. Our industrial business have performed well. We also have private label business in baking powder and other things. When we say our organic business is gonna be roughly flat, we mean the composite of both our measured channels and our tracked channels. Our tracked channels and our unmeasured channels.

Speaker #2: We also have private label business in baking powder and other things. So, when we say our organic business is going to be roughly flat, we mean the composite of both our measured channels and our tracked channels.

Speaker #2: I mean our track channels and our unmeasured channels.

Andrew Lazar: Okay. Then, do the portfolio changes you've made the past few quarters, do you think make it harder or easier or neither to sort of execute pricing if and when needed, should the industry have to deal, you know, with another round of inflation going forward? Maybe you can get into a little bit where you're sort of covered and for how long on some of your key inputs.

Speaker #4: Okay. And then do the portfolio changes you've made the past few quarters do you think make it harder or easier or or neither to sort of execute pricing if and when needed should the industry have to deal you know with another round of inflation going forward?

Andrew Lazar: Then, do the portfolio changes you've made the past few quarters, do you think make it harder or easier or neither to sort of execute pricing if and when needed, should the industry have to deal, you know, with another round of inflation going forward? Maybe you can get into a little bit where you're sort of covered and for how long on some of your key inputs.

Speaker #4: And and maybe you can get into a little bit where you're sort of covered and and for how long on some of your your key inputs.

Speaker #2: Yeah. So we don't break out a+all of that publicly. I mean we're we're covered for a decent portion of this year. On input costs just just through our normal forward purchases.

Casey Keller: Yeah. We don't break out all of that publicly. I mean, we're covered for a decent portion of this year on input costs just through our normal forward purchases. From an ability to take price, the divestitures, you know, we've eliminated the Green Giant US frozen business, which we think is a great business, just not the right one for us. It doesn't really impact one way or the other the rest of the business. It was a different business for us. You know, we still have about 50 brands. We're still very relevant. We think our brands are relevant and, you know, we'll continue to take action as needed.

Speaker #2: from a from an ability to take price of the divestitures you know we we've eliminated the Green Giant US frozen business which we think is a great business just not the right one for us.

Speaker #2: Doesn't really impact one way or the other the rest of the business. It was a different business for us. You know, we still have about fifty brands.

Speaker #2: We're still very relevant we think our brands are relevant and you know we'll continue to take action as needed.

Speaker #4: Thank you.

Andrew Lazar: Thank you.

Speaker #2: I mean I think a I think Andrew the the key input we're watching is is oil and and soybean oil. Because there is a real relationship between soybean oil and and crude oil because of its use as a biofuel.

Casey Keller: I mean, I think, Andrew, the key input we're watching is oil and soybean oil because there is a real relationship between soybean oil and crude oil because of its use as a biofuel. That's the one we're watching pretty closely. It's up, you know, north of $0.70 a pound, so very high. You know, we are covered reasonably long, obviously, if oil prices stay where they are, we're gonna need to take some action, as I expect the industry will, just because of the rising input costs.

Speaker #2: So that's the one we're watching pretty closely. It's up, you know, north of seventy cents a pound. So, very high, and you know, we are covered reasonably long.

Speaker #2: but obviously if oil prices stay where they are we're gonna need to take some action as I expect the industry will just because of the rising input costs.

Andrew Lazar: Yep. Yep. Makes sense. Thanks so much.

Speaker #4: Yep. Yep. Makes sense. Thanks so much.

Speaker #3: Thank you. Next question comes from the line of Scott Marks with Jeffrey's. Please go ahead.

Operator: Thank you. Next question comes from the line of Scott Marks with Jefferies. Please go ahead.

Speaker #5: Hey good afternoon guys. Thanks for taking our questions. wanted to just follow up quickly on something that Andrew asked just in terms of you know the the the kind of flattish outlook for the rest of the year.

Scott Marks: Hey, good afternoon, guys. Thanks for taking the questions. Wanted to just follow up quickly on something that Andrew asked just in terms of, you know, the kind of flattish outlook for the rest of the year. Can you just help us understand a little bit how you're thinking about that in terms of price versus volume versus mix and, you know, across the different segments, just what we should be thinking about? Yeah, we haven't really broken out price mix on a forward basis before.

Speaker #5: Can you just help us understand a little bit how you're thinking about that in terms of of price versus volume versus mix and you know across the different segments just just what we should be thinking about?

Speaker #2: Yeah. We we haven't really broken out price mix on a forward basis before. you know we're encouraged with the progress that we made in the first quarter in terms of stabilizing volumes.

Casey Keller: Yeah, we haven't really broken out price mix on a forward basis before.

Bruce Wacha: You know, we're encouraged with the progress that we made in Q1 in terms of stabilizing volumes, whether you see that in our net sales with a little bit of net sales growth driven by volumes or even in our consumption data where the for the portion that does track those channels where it's improved. You know, we think this year is gonna be a little bit less forgiving from a top-line standpoint than the prior year.

Speaker #2: Whether you see that in our net sales with a little bit of net sales growth driven by volumes or even in our consumption data where the for the portion that does track those channels where it's improved.

Speaker #2: you know we we we think this year is gonna be a little bit less forgiving from a top line standpoint than the prior year.

Scott Marks: Okay. Understood.

Speaker #2: I mean when you look at base business organic net sales you also have to take into account that we did have a fifty-third week in the fourth quarter last year.

Bruce Wacha: When you look at the base business.

Scott Marks: Go.

Scott Marks: -organic net sales, you also have to take into account that we did have a 53rd week in Q4 last year. You know, we'll obviously have 1 less week in this year's Q4 than last year.

Bruce Wacha: -organic net sales, you also have to take into account that we did have a 53rd week in Q4 last year. You know, we'll obviously have 1 less week in this year's Q4 than last year.

Speaker #2: So, you know, we'll obviously have one less week in this year's fourth quarter than last year.

Speaker #5: Okay. Understood. Thanks for that. and then just in terms of the decision around the dividend just wondering if you can help us understand why was the the fifty percent reduction the the right number and and how do you feel just in terms of the the flexibility it gives you to to do what what you need to do with with some of that increased cash?

Scott Marks: Okay. Understood. Thanks for that. Then, just in terms of the decision around the dividend, just wondering if you can help us understand why was the 50% reduction the right number? And how do you feel just in terms of the flexibility it gives you to do what you need to do with some of that, increased cash?

Speaker #2: Sure. It certainly generates, you know, another $30 million on an annualized basis in cash from, you know, excess cash relative to where we were before.

Bruce Wacha: Sure. It certainly generates, you know, another $30 million on an annualized basis in cash from, you know, excess cash relative to where we were before. As we said all along as we went down the journey, through evaluating the Green Giant business and the disposal of it, well, you know, we would continue to reevaluate the dividend on a go-forward basis. It is very important to the company. It's something that we've been doing for a long period of time, and we think it is the right thing for shareholders. It just has to be the right level, reflecting, you know, where we are from a cash generation standpoint.

Speaker #2: as we've said all along as as we went down the journey through evaluating the Green Giant business and the disposal of it we'll you know w+we we would continue to reevaluate the dividend on a go-forward basis.

Speaker #2: It's very important to the company. it's something that we've been doing for a long period of time and we think it is the right thing for shareholders.

Speaker #2: It just has to be the right level r+reflecting you know where we are from a cash generation standpoint.

Speaker #4: I I think the important principle for us is you know in today's interest rate environment we would like to have excess cash you know fifty percent of at least fifty percent of that going towards debt reduction.

Casey Keller: I think the important principle for us is, you know, in today's interest rate environment, we would like to have excess cash, you know, at least 50% of that going towards debt reduction and the, you know, the other 50% dividends. This is trying to get that in balance because we believe that in the interest rate environment that we're in now, we need to be continuing to pay down debt. That's the right thing for us, and that's the right thing for shareholders.

Speaker #4: And the you know other fifty percent dividends. So this is trying to get that imbalance because we believe that the interest rate environment that we're in now we need to be continuing to pay down debt.

Speaker #4: That's the right thing for us and that's the right thing for shareholders.

Speaker #5: Understood. Thanks very much, I'll pass it on.

Scott Marks: Understood. Thanks very much. I'll pass it on.

Speaker #3: Thank you. Next question comes from the line of Robert Moscow with TD Cobham. Please go ahead.

Operator: Thank you. Next question comes from the line of Robert Moskow with TD Cowen. Please go ahead.

Robert Moskow: I just wanted to make sure I understood the comments on cost. It sounds like soybean oil is really the only thing that's really jumping on you. Are there other elements? You mentioned oil costs. Does that flow through your logistics, your packaging? Is your pricing power on those elements of your structure, you know, less clear?

Speaker #6: hey I just wanted to to make sure I I understood the comments on cost. I+it sounds like soybean oil is really the only thing that's really jumping on you.

Speaker #6: But are there—are there other elements? You mentioned oil costs. Does that flow through your logistics, your packaging? And is your pricing power on those elements of your structure, you know, less clear?

Speaker #2: Y+yes. It it does flow through both on logistics and on some packaging. And just like everybody else in the industry we're we're waiting and watching to see do do these higher more elevated costs for energy stick right?

Bruce Wacha: Yes, it does flow through both on logistics and on some packaging. Just like everybody else in the industry, we're waiting and watching to see, do these higher, more elevated costs for energy stick, right? Probably just like everybody else in the industry, you know, we're evaluating and determining whether or not it makes sense to protect margins with pricing initiatives to offset that.

Speaker #2: And and probably just like everybody else in the industry you know we're evaluating and determining whether or not it makes sense to protect margins with pricing initiatives to offset that.

Speaker #5: Okay. And and just.

Robert Moskow: Okay.

Casey Keller: I think our biggest concern right now is the price of soybean oil. It's quite elevated on a historical level, that's the one we're watching closely 'cause it is largely, and from a Crisco oil standpoint, it is the majority of the cost.

Speaker #2: I I think our our biggest concern right now is is the is the price of soybean oil. It's quite elevated on a historical level.

Speaker #2: So that's the one we're watching closely 'cause it is largely in from a Crisco oil standpoint it is the majority of the cost.

Speaker #6: Yeah. And I I think you've you've changed the business effectively to be able to price up and down for that. But but the other elements I think are a little trickier 'cause you know passing through logistics costs is sometimes tougher I think with retailers historically.

Robert Moskow: Yeah. I think you've changed the business effectively to be able to price up and down for that. But the other elements I think are a little trickier 'cause, you know, passing through logistics costs is sometimes tougher, I think, with retailers historically. Maybe that's changing. Is there any way to put some numbers to this, Bruce, where like if you have a $100 per barrel oil, like how much inflation would you expect to be incremental to your business? If you can tell it to me without soybean oil, maybe that's even simpler.

Speaker #6: Maybe that's changing. But is there any way to put some numbers to this Bruce where like if you have a hundred dollar per barrel oil like how much inflation would you expect to be incremental to your business?

Speaker #6: And if you can tell it to me without soybean oil, maybe that's even simpler.

Speaker #2: Yeah. We we don't. But you know I I would point out and despite some skepticism I think in two thousand seventeen or two thousand eighteen when transportation costs went haywire we took price based on based on fuel costs and transportation logistics.

Bruce Wacha: We don't, but, you know, I would point out, despite some skepticism, I think in 2017 or 2018 when transportation costs went haywire, we took price based on fuel costs and transportation logistics. Again in 2022, 2023. It won't be perfect. You know, we're also, you know, looking deep into productivity initiatives and continuous improvement to help cover costs. Our expectation would be if these costs stay elevated, you know, permanently or relatively permanently, you know, we would expect to take price to cover, you know, a significant portion of that.

Speaker #2: And then again in two thousand twenty-two two thousand twenty-three and so y+yeah it would it won't be perfect. you know we're we're also you know looking deep into productivity initiatives and continuous improvement to help cover costs.

Speaker #2: But yeah, our expectation would be, if these costs stay elevated, you know, permanently or relatively permanently, you know, we would expect to take price to cover, you know, a significant portion of that.

Speaker #5: Okay, thanks. Last question—you have the collagen business now and Kitchen Basics. Any surprises in your first couple of weeks of owning it?

Robert Moskow: Okay. Thanks. Last question. You have the College Inn business now and Kitchen Basics, any surprises in your first couple of weeks of owning it, positive or negative?

Speaker #5: Positive or negative?

Speaker #4: Yeah. I think right now we've been very focused on ensuring that the plans and the business are solid. you know we had some visibility of that before but we've kinda taken over most of the selling of that as quickly as possible even within the first month now.

Casey Keller: Yeah. I think, right now we've been very focused on ensuring that the plans and the business are solid. You know, we had some visibility of that before, but we've kind of taken over most of the selling of that as quickly as possible, even within the first month now. It's key that we have the right plans for, you know, promotion, customer support in the fall, and that's what we've been really focused on. You can imagine that Del Monte bankruptcy and transition, you know, obviously probably didn't get the highest attention from the business. We're just trying to shore that up. I don't think there's any big surprises.

Speaker #4: so it's key that we have the right plans for you know promotion customer support in the fall and that's what we've been w+really focused on.

Speaker #4: You can imagine that that Del Monte bankruptcy and transition you know obviously probably didn't get the highest attention from the business. So we're just trying to shore that up.

Speaker #4: So I don't think there's any big surprises. you know we we're ax you know we're we're we're a+also launching a couple of SKUs that we're sort of holes in the portfolio and trying to accelerate that process as well.

Casey Keller: You know, you know, we're also launching a couple of SKUs that were sort of holes in the portfolio and trying to accelerate that process as well. So far so good. As you can imagine, getting our hands around it quickly is really our goal.

Speaker #4: But so far, so good. But as you can imagine, getting our hands around it quickly is really our goal.

Speaker #2: Yeah. And and Rob the the other thing just to keep in mind and I don't I don't know if we talked about this after our last call.

Bruce Wacha: Rob, the other thing just to keep in mind, I don't know if we talked about this after our last call. You know, when we first looked at this business, it's like College Inn, you know, number 2 Northeast regional brand, generates cash, stable. That's what first intrigued us. As we spent time on the acquisition, we learned a little bit more about the category and the category dynamics. Casey talked about this on our last call. This is actually a category that's been doing pretty well, despite some of the other center store trends. You know, some of the appeal of what's going on in the perimeter is helping driving sales here. Then also with this Kitchen Basics business, it's a grower, right?

Speaker #2: You know when we first looked at this business it's like collagen you know number two Northeast regional brand generates cash stable. We were that that's what first intrigued us.

Speaker #2: And as we spent time on the acquisition we learned a little bit more about the category and the category d+dynamics. Casey talked about this on our last call.

Bruce Wacha: Casey talked about this on our last call. This is actually a category that's been doing pretty well, despite some of the other center store trends. You know, some of the appeal of what's going on in the perimeter is helping driving sales here. Then also with this Kitchen Basics business, it's a grower, right?

Speaker #2: This is actually a category that's been doing pretty well, despite some of the other center store trends. And, you know, some of the appeal of what's going on in the perimeter is helping drive sales here.

Speaker #2: And then also with this Kitchen Basics business it's a grower right? This this was the innovator brand of you know ten twenty years ago but it's continuing to travel down on that path and growing and we're we're really excited to get both of these businesses into the portfolio.

Bruce Wacha: This was the innovator brand of, you know, 10, 20 years ago, but it's continuing to travel down on that path and grow and we're really excited to get both of these businesses into the portfolio.

Speaker #6: Yep. Makes sense. Thank you.

Robert Moskow: Yep. Makes sense. Thank you.

Speaker #4: Yep.

Casey Keller: Yep.

Speaker #3: Thank you. Next question comes from the line of William Reuter with Bank of America. Please go ahead.

Operator: Thank you. Next question comes from the line of William Reuter with Bank of America. Please go ahead.

Speaker #2: Hey Bill.

William Reuter: Hey, Bill.

Casey Keller: Hey, Bill.

Speaker #7: Good afternoon. Hey so on the price increases that you potentially would take I'm wondering if you've kind of alerted some customers that you know that this this may have to take place.

William Reuter: Good afternoon. Hey. On the price increases that you potentially would take, I'm wondering if you've kind of alerted some customers that, you know, that this may have to take place. I guess I feel like when we are in a situation like this, where well, the war is unlikely or the conflict is unlikely to go on in perpetuity. You know, when a price rises for a short period of time, I expect those discussions maybe are a little more challenging. I guess, have you started to alert them? What is the feedback then?

Speaker #7: And I guess I feel like when we are in a situation like this where clear well the war is unlikely or the conflict is unlikely to go on in perpetuity you know when when some when a price rises for a short period of time I think those discussions maybe are a little more challenging.

Speaker #7: So I guess have you started to alert them and what has the feedback been?

Speaker #4: I think we've certainly have discussed you know soybean oil. So you know I mean I think that's and and we've had those discussions with the volatility in that commodity over the last you know five years.

Casey Keller: I think we certainly have discussed, you know, soybean oil. You know, I mean, I think that's. We've had those discussions with the volatility in that commodity over the last, you know, 5 years. That's not something that's new to us. You know, looking at, you know, how do we move the cost of soybean oil and vegetable oil up and down with the price. We have that kind of agreement, you know, with the marketplace and how we move. You know, that's been the pattern too in that, in that market. Yes, those discussions have taken place. You know, in terms of fuel and transportation logistics, you know, we're not really having those conversations yet. I think they're, you know, they're feeling it themselves, our customers.

Speaker #4: So that's that's not something that's new to us. You know looking at you know how do we move the cost of soybean oil and vegetable oil up and down with the price.

Speaker #4: So we have that kind of agreement, you know, with the marketplace and how we move. And you know, that's been the pattern too in that market.

Speaker #4: So, yes, those discussions have taken place. You know, in terms of fuel and transportation logistics, you know, we're not really having those conversations yet.

Speaker #4: I think they're you know they're they're feeling it themselves our customers. So I think we will start having those those conversations. But you know we wanted to see how where this played out before we would have any further conversations because we'd you know we'd this isn't something that we would this this these fuel costs move so much on the spot basis that we wanna make sure that we've got a longer-term trend before before we do anything.

Casey Keller: I think we will start having those conversations, but, you know, we want to see where this played out before we would have any further conversations because we've, you know, this isn't something that we would these fuel costs move so much on a spot basis that we want to make sure that we've got a longer-term trend before we do anything. You know, again, we have covered some of that increase in our forecast, in our outlook. We've already expected that fuel is going to be higher. It's just a question of how high it stays, to be honest. That's what we're watching pretty closely.

Speaker #4: But you know again we have covered some of that increase in our forecast in our outlook so we we've already expected that fuel is gonna be higher it's just a question of how high it stays to be honest.

Speaker #4: So and that's what we're watching pretty closely. Packaging honestly longer longer-term packaging resin contracts that rank we really haven't seen increases hit us yet because those are sort of you know six six-month twelve-month contracts.

William Reuter: Got it. Yep.

William Reuter: Packaging, honestly, longer-term packaging resin contracts. We really haven't seen increases hit us yet because those are sort of, you know, 6-month, 12-month contracts. We'll need to see where, you know, oil shakes out longer term as an input cost in our packaging.

Casey Keller: Packaging, honestly, longer-term packaging resin contracts. We really haven't seen increases hit us yet because those are sort of, you know, 6-month, 12-month contracts. We'll need to see where, you know, oil shakes out longer term as an input cost in our packaging.

Speaker #4: So we'll need to see where, you know, oil shakes out longer-term as an input cost in our packaging.

Speaker #5: Got it. Yeah. I guess those are guidance implied that raw materials kind of remain where they are, or does it imply that they come down to more, you know, reasonable or rational levels over a longer period of time?

William Reuter: Got it. Yeah. I guess, does your guidance imply that raw materials kind of remain where they are, or does it imply that they come down to more, you know, reasonable or rational levels over a longer period of time?

Casey Keller: I guess what we've done is we've, you know, let's take, you know, fuel. We've assumed that it comes down a little bit from where it is today, but certainly higher than what we initially entered our year with, our assumptions entering the year.

Speaker #4: Well we I guess what we've done is we've you know let's take let's take you know fuel. We've assumed that it it comes down a little bit from where it is today but certainly higher than what we initially entered our year with.

Speaker #4: Our assumptions entering the year.

Speaker #5: Got it. Okay. I guess just one last one for me your your organic sales growth which has been solid. I guess how much of this is driven by new product innovations versus just underlying growth of some of the products or the categories that you're participating in there?

William Reuter: Got it. Okay. I guess just one last one for me, your organic sales growth, which has been solid. I guess how much of this is driven by new product innovations versus just underlying growth of some of the products or the categories that you're participating in there?

Speaker #4: I mean we don't I don't really have a split on that. There is some element of there is some element of innovation that is that is driving that some new items that have gone in you know.

Casey Keller: I mean, I don't really have a split on that. There is some element of innovation that is driving that, some new items that have gone in. You know, for instance, on Cream of Wheat, we've launched protein varieties. There is some growth coming from that. There's also, you know, growth coming just from volume increases or category growth. You know, we've got some businesses that are performing very nicely. There's also, you know, as I said before, our food service business has been growing. You know, our channel, our customer channel mix and food service has been positive. You know, we do have some private label business, you know, predominantly in spices and in baking powder, and those have been performing very well.

Speaker #4: So for instance on cream of wheat we've launched protein varieties. So there is some growth coming from that. there's also you know growth coming just from volume increases or category category you know growth.

Speaker #4: You know we've got some businesses that are performing very nicely. there's also you know as I said before our food service business has been growing.

Speaker #4: you know m our our our channel our customer channel mix in food service has been positive. you know we do have some private label business you know predominantly in spices and in baking powder and those have been performing very well.

Speaker #4: So yeah I think it's a combination of things that's driving our growth.

Casey Keller: Yeah, I think it's a combination of things that's driving our growth.

Speaker #2: Yeah. And the oth the other thing to throw in there so so as Casey's saying spices we're seeing some nice category growth. We're seeing some nice channel growth.

Bruce Wacha: Yeah. The other, the other thing to throw in there, as Casey is saying, spices, we're seeing some nice category growth. We're seeing some nice channel growth. We also have, you know, we think one of the best spice manufacturing facilities in North America, and we've been investing in that and building out our capabilities. We've got incremental capacity that we didn't have a couple of years ago that's helping to support some of this growth as well. Not necessarily product innovation, but the ability to manufacture and produce product, and sell it.

Speaker #2: w+we also have a you know we think one of the best spice manufacturing facilities in North America and we've been investing in that and building out our capabilities.

Speaker #2: So w+we've got incremental capacity that we didn't have a couple years ago that's helping to support some of this growth as well. So not necessarily product innovation but the ability to manufacture and produce product and sell it.

Speaker #6: Great. I'll pass to others. Thank you.

William Reuter: Great. I'll pass to others. Thank you.

Speaker #3: Thank you. Next question comes from the line of David Palmer with Evercore ISI. Please go ahead.

Operator: Thank you. Next question comes from the line of David Palmer with Evercore ISI. Please go ahead.

Speaker #8: Thanks. what just wanted to ask you a follow-up question on on consumption data versus what you are seeing in your all channel consumption. and and and maybe what we should be assuming to see in a in the all what we use in terms of if we use Circana includes supposedly Costco and Amazon.

David Palmer: Thanks. Just wanted to ask you a follow-up question on consumption data versus what you are seeing in your all channel consumption. And maybe what we should be assuming to see in the all what we use in terms of if we use Circana, includes supposedly Costco and Amazon, pretty broad set. You know, right now I see down 4% for the quarter, down 7.5% for April, for B&G Foods. And I'm just wondering, like, when we're looking forward and trying to match up in this consumption, what would equate to your flat consumption assumption? You know, what sort of gap should we be thinking about there? And do you need this consumption that we're tracking to get better to get to that?

Speaker #8: Pretty broad set. You know right now I see down four percent for the quarter. Down seven and a half percent for April. for B&G Foods.

Speaker #8: And I'm just wondering, when we're looking forward and trying to match up in that, this consumption—what would equate to your flat consumption assumption?

Speaker #8: You know what sort of gap should we be thinking about there and do do you need the all this consumption that we're tracking to get better to get to that?

Speaker #8: You know, how should we think about that?

David Palmer: You know, how should we think about that?

Casey Keller: Yeah. I think, look, the, I know this is hard for you guys to see and track, but, you know, post Green Giant, US Frozen Green Giant, we're even less measured than we were before. If you think about our business, you know, you look at the tracked measured data, if you're using Circana or you're using Nielsen or whatever, IRI, you know, that's probably covering less than 60% of our universe right now. There are big swaths that are not just untracked channels, but they're different channels. Our food service business has been positive. That's probably in the neighborhood of 13% to 15% of our portfolio right now, total sales.

Speaker #4: Yeah. I think look the the and I know this is hard for you guys to see and track but you know post-green giant US frozen green giant we're even less measured than we were before.

Speaker #4: So if you think about our business you know you look at the tracked measured data. If you're using Circana or you're using Nielsen or whatever IRI you know that that's probably covering less than sixty percent of our universe right now.

Speaker #4: There are big swaths that are not just untracked channels but there are different channels. So foods our food service business has been positive. And that's that's probably in the neighborhood of thirteen to fifteen percent of our portfolio right now total sales.

Speaker #4: You know our private label businesses are probably over are well over ten percent approaching I don't know twelve thirteen percent of our portfolio. And those have been growing nicely.

Casey Keller: You know, our private label businesses are probably are well over 10% approaching, I don't know, 12%, 13% of our portfolio. Those have been growing nicely. Our Canadian business, which isn't in, obviously, most of the US databases, is also growing in Q1. You know, when you try and, you know, project it out, we need our measured channels to get better by some amount, but we don't need them to flip totally to positive, that we expect them to gradually improve, you know, over time. I mean, we continue to see, you know, strong growth in those other unmeasured channels that should continue, food service, our private label businesses, et cetera. We do wanna see some improvement in our measured channel data, and that's what we're working against.

Speaker #4: Our Canadian business which isn't in obviously most of the US databases is also growing in the first quarter. So it you know what when you try and you know project it out we need our measured channels to get better by some me amount.

Speaker #4: But we don't need them to flip totally to positive that we expect them to gradually improve. You know over time. So we don't need a I mean we we we continue to see you know strong growth in those other unmeasured channels that that should continue.

Speaker #4: Food service our private label businesses etcetera. But we do wanna see some improvement in our measured channel data and that's what we're working against.

Speaker #8: Th+just roughly speaking of you it may be you know the decline rate in the consumption that we see would be down low single digits and you can get a few points from non-measured or do you think the gap.

David Palmer: Just roughly speaking of maybe, you know, the decline rate in the consumption that we see would be down low single digits, and you can get a few points from non-measured.

Casey Keller: We're probably getting.

Speaker #4: We're getting we're probably getting we're probably getting mid-single digit growth from the those some of those non-measured channels. Yeah. And the other the other the other thing that's really messy in the most recent consumption data is the shift in Easter timing year over year.

Casey Keller: We're probably getting.

David Palmer: Sorry

Casey Keller: we're probably getting mid-single digit growth from some of those non-measured channels. Yeah. The other thing that's really messy in the most recent consumption data is the shift in Easter timing year over year.

Speaker #8: Yeah. No doubt.

David Palmer: Yeah.

Casey Keller: Um, so-

Speaker #4: so yeah. That's that's also a a complexity I think you have to factor in 'cause the most recent data would be comparing against the Easter period last year.

David Palmer: No doubt.

Casey Keller: That's also a complexity I think you have to factor in because the most recent data would be comparing against the Easter period last year.

Speaker #8: And by the way when you're saying mid-single digit from the non-measured are you talking about mid-single digit contribution to growth from the forty percent or are you talking about that that non-measured of forty growing at mid-single digit rate?

David Palmer: By the way, when you're saying mid-single digit from the non-measured, are you talking about mid-single digit contribution to growth from the 40%, or are you talking about that non-measured of 40 growing at mid-single digit rate?

Speaker #4: I'm talking at the non-measured forty growing at mid-single digit rate.

Casey Keller: I'm talking at the non-measured 40 growing at mid-single digit rates.

Speaker #8: Yeah. That's pretty good. I and then I I guess one of the like just to philosophical things y+y that you know you've you've seen multiple cycles before or experienced executive in in dealing with energy-related inflation.

David Palmer: Yeah. That's pretty good. Then I guess one of the, like, just philosophical things you know, you've seen multiple cycles before, very experienced executive in dealing with energy-related inflation. I remember these periods of energy-related inflation, in its many forms in packaging, distribution, and what have you, that it was particularly tough when it came to pricing power and those discussions with retailers. It felt different, weirder, that they were dealing with the same type of pressures in those. Do you think that's the case? Do you feel like that is that something we should brace for? It's just a much different type of pricing discussion with that type of inflation?

Speaker #8: I I wonder I I I remember these periods of of energy-related inflation in its many forms and packaging distribution and what have you that it just there was a it was particularly tough with when it came to pricing power and those discussions.

Speaker #8: With retailers. It felt it felt different weirder that they were dealing with the same type of pressures and those do do do you think that that's the case?

Speaker #8: Do you feel like that that is is that is that something we should brace for? It's just a much different type of pricing discussion with that type of inflation?

Speaker #4: Never easy. Yeah. I mean and and it is a hard discussion. It is a hard discussion with retailers but that's why what I think what we you're hearing from us is that we've covered you know a fair amount of increase in energy inputs.

Casey Keller: Never easy. Yeah. I mean, it is a hard discussion. It is a hard discussion with retailers, but that's why what I think what we are hearing from us is that we've covered, you know, a fair amount of increase in energy inputs. We've been able to cover that through productivity, cost savings, other efforts. If it stays, if oil stays north of $100, you know, a barrel or whatever, I mean, that we're gonna have to think about it. I think that's gonna be an impact for our customers. It's gonna be an impact for us, the industry. We're expecting it to stay higher. It's the question of how high it stays before it becomes, you know, a really, really serious issue in terms of cost.

Speaker #4: We've been able to cover that through productivity cost savings other efforts. If it stays let's if oil stays north of a hundred dollars you know a barrel or whatever I mean w that we're gonna have to think about it.

Casey Keller: If it stays, if oil stays north of $100, you know, a barrel or whatever, I mean, that we're gonna have to think about it. I think that's gonna be an impact for our customers. It's gonna be an impact for us, the industry. We're expecting it to stay higher. It's the question of how high it stays before it becomes, you know, a really, really serious issue in terms of cost.

Speaker #4: Isn't I think that's gonna be an impact for our customers. It's gonna be an impact for us the industry so I we're expecting it to stay higher.

Speaker #4: It's a question of how high it stays. before it becomes you know a really really serious issue in in terms of cost. But so far we've been able to kind of manage it and manage an increase.

Casey Keller: So far, we've been able to kind of manage it and manage an increase. I think we would expect it to come down below $100 over time, assuming that, you know, Iran and the Strait of Hormuz and are open and, you know, oil flows again and, you know, the market ease. I mean, I think there was a lag effect on all those things happening, but, you know, we just need to keep watching it, because if it stays at well over $100 a barrel, I think everybody has a problem. Everybody.

Speaker #4: But I think we would expect it to come down below a hundred dollars over time assuming that you know Iran and the Straits of Hormuz and all the open and you know oil flows again and you know the markets ease.

Speaker #4: I mean, I think there was a lag effect on all those things happening, but, you know, we just need to keep watching it, because if it stays at well over $100 a barrel, I think everybody has a problem.

Speaker #4: Everybody.

Speaker #8: Yep. Thanks for the thoughts.

David Palmer: Yeah. Thanks for the thoughts.

Speaker #4: Yep.

Casey Keller: Yep.

Speaker #9: Thank you. Next question comes on the line of Karu Martinson with Jeffrey's Company. Please go ahead.

Operator: Thank you. Next question comes from the line of Kara Martinson with Jefferies company. Please go ahead.

Speaker #10: Good afternoon. one of your competitors talks about the consumer especially on the low end running out of money by the end of the month.

Kara Martinson: Good afternoon. One of your competitors talks about the consumer, especially on the low end, running out of money by the end of the month. I'm suddenly kind of wondering, you know, how do we square that with, you know, the ability to take price in this environment?

Karru Martinson: Good afternoon. One of your competitors talks about the consumer, especially on the low end, running out of money by the end of the month. I'm suddenly kind of wondering, you know, how do we square that with, you know, the ability to take price in this environment?

Speaker #10: I'm I'm sending wondering at you how do we square that with you know ability to take price in this environment?

Speaker #4: I don't know about all consumers running out of money. I guess you're just talking about pressure on them, but look, there's a balancing act.

Casey Keller: I don't know about all consumers running out of money. I guess you're just talking about pressure on them. Look, there's a balancing act. I mean, we think with our portfolio. We are mass mainstream, you know, regular way grocery for a good portion of our business, and we may see some trade down there. We also expect to see some trade down benefit of people going out to eat less as well, which pushes them into the categories that we're selling. You know, we're meals, we're affordable. We think this plays to our strength, but doesn't mean that it's easy. It's a tough world.

Bruce Wacha: I don't know about all consumers running out of money. I guess you're just talking about pressure on them. Look, there's a balancing act. I mean, we think with our portfolio. We are mass mainstream, you know, regular way grocery for a good portion of our business, and we may see some trade down there. We also expect to see some trade down benefit of people going out to eat less as well, which pushes them into the categories that we're selling. You know, we're meals, we're affordable. We think this plays to our strength, but doesn't mean that it's easy. It's a tough world.

Speaker #4: I mean, we think with our portfolio we are mass mainstream, you know, regular way grocery for a good portion of our business. And we may see some trade down there.

Speaker #4: but we also expect to see some trade down benefit of people going out to eat less as well which pushes them into the categories that we're selling.

Speaker #4: You know we're meals we're affordable. we we think this plays to our strength but do+doesn't mean that it's easy. It's a tough world.

Speaker #10: You know, I think we're not really talking about, you know, our pricing. You know, we would only look at pricing related to any oil costs.

Casey Keller: I think we're not really talking about pricing, you know, we would only look at pricing related to any oil costs, take soybean oil aside, if we believe that it was gonna stay this elevated for an extended period of time. I mean, my hope is that we can cover, you know, the increase that we have planned, hopefully, we can cover that with our own internal cost savings, productivity, and other efforts. Soybean oil is a different conversation that, you know, we need, you know, the commodity is up dramatically from a year ago. We, as an industry, you know, we will just have to take price, and I'm expecting that the industry will see that.

Speaker #10: Take soybean oil aside. If if we believe that it was gonna stay this elevated for an extended period of time. So I mean my hope is that we can cover you know the increase we got that we've that we have planned we how we can cover that with our own internal cost savings productivity and other efforts.

Speaker #10: Soybean oil's a different conversation that you know w+we we need we you know the the commodity is up dramatically from a year ago. We as an industry you know we will just have to take price and every and I'm expecting that the industry will see that.

Speaker #10: But beyond that beyond those two things I mean we're not really we don't really see the need to take pricing on our portfolio. It's really those two components.

Casey Keller: Beyond that, beyond those two things, I mean, we don't really see the need to take pricing on our portfolio. It's really those two components. How high does energy stay, which, you know, would not be a significant increase in price or, on the soybean oil, if it stays where it is in the $0.75 a pound range, that's dramatically higher than where we were buying it last year at $0.50 a pound. You know, that one, we already have that kind of pegged as a commodity that has to go up and down. I don't really think you should think about broad actions on our portfolio right now unless we see energy costs staying elevated for a really extended period of time.

Speaker #10: What how high does energy stay? Which you know would not be a significant increase in price. Or o+on the soybean oil if it stays where it is in the seventy-five cents a pound range that that's dramatically higher than where we are buying it last year in the at fifty.

Speaker #10: So, cents a pound. So you know, so that one—but we already have that kind of pegged as a commodity that has to go up and down.

Speaker #10: So, I don't really think you should think about broad actions on our portfolio right now unless we see energy costs staying elevated for a really extended period of time.

Speaker #9: Okay. And just lastly in terms of the portfolio certainly pruning some here adding some stronger performers. Do you feel like that we're where we wanna be with the portfolio?

Kara Martinson: Okay. Just lastly, in terms of the portfolio, certainly pruning some here, adding some stronger performers, do you feel like that we're where we wanna be with the portfolio, or are there still opportunities to take some brands out or to add others?

Karru Martinson: Okay. Just lastly, in terms of the portfolio, certainly pruning some here, adding some stronger performers, do you feel like that we're where we wanna be with the portfolio, or are there still opportunities to take some brands out or to add others?

Speaker #9: Are there still opportunities to take some brands out, or to add others?

Speaker #10: Yeah. I think you know we don't normally comment on M&A activity but I think the concept of what you're talking about we will continue to evaluate.

Casey Keller: Yeah, I think, you know, we don't normally comment on M&A activity, but I think the concept of what you're talking about, we will continue to evaluate. You know, as we reshape our portfolio, you know, we want to have strong businesses that generate higher margins, stronger cash flows. We'll always look at opportunities in our portfolio to make shifts like we just did to, you know, take Green Giant, divest it to a, to a buyer that it's a better fit with their capabilities and everything, and then buy businesses with those proceeds that generate higher cash flow, higher margins, and frankly, just fit better within our capabilities. Yes, we will continue to look at those opportunities.

Speaker #10: Can you know can you know as we sh reshape our portfolio you know we want to have strong businesses that generate higher margins stronger cash flows.

Speaker #10: So we'll always look at opportunities in our portfolio to make shifts like we just did. To you know take green giant divested to a to a buyer that it's a better fit with their capabilities and everything.

Speaker #10: And then buy businesses with those proceeds that generate higher cash flow higher margins. And frankly just fit better within our capabilities. So yes we will continue to look at those opportunities.

Speaker #9: Thank you very much guys. Appreciate it.

Kara Martinson: Thank you very much, guys. Appreciate it.

Karru Martinson: Thank you very much, guys. Appreciate it.

Speaker #11: Thank you. We have time for one more question. The next question comes from the line of Carla Casella with JP Morgan. Please go ahead.

Operator: Thank you. We have time for one more question. The next question comes from the line of Carla Casella with JPMorgan. Please go ahead.

Speaker #12: Hi. Thanks for taking the the question. I know you've gotten a lot of questions on soybean. costs but I'm just trying to dial back to like two thousand twenty-two twenty-three when we saw the spikes you talked about a resistance level where consumers really changed their buying behaviors.

Carla Casella: Hi. Thanks for taking the question. I know you've gotten a lot of questions on soybean costs, but I'm just trying to dial back to, like, 2022, 2023 when we saw the spikes. You talked about a resistance level where consumers really changed their buying behaviors. Are we, I think it was, like, a $5 level that you gave at retail, and I'm just wondering kinda how close we are to that now and if you're seeing any resistance already, or is this more just a fear as we go into the back half?

Speaker #12: Are we—I think it was like a five-dollar level that you gave at retail? And I'm just wondering kind of how close we are to that now, and if you're seeing any resistance already, or is this more just a fear as we go into the back half?

Speaker #10: Well we haven't taken any pricing moves yet but you know you're right we would try and stay below key price thresholds if we took pricing action.

Casey Keller: Well, we haven't taken any pricing moves yet, but, you know, you're right. We would try and stay below key price thresholds if we took pricing action. We'd work towards that on, you know, how we could price and effectively manage the key thresholds because we know consumers have a response. Like, on the quarter size, a $5 threshold is something we try and manage to. We will look at that consideration and try and manage the price elements and work with our customers to try and keep the prices at the right thresholds so that we don't get a high elasticity effect if we cross those. We haven't taken pricing yet. You know, we're looking at where soybean oil stays, and right now it's close to the levels that it reached at in 2022.

Speaker #10: We'd we'd work towards that on you know how we could price and effectively manage to key thresholds because we know consumers have a response.

Speaker #10: Like on the the core size five dollar threshold is is something we try and manage to. So we will look at that that consideration and try and manage the price elements and work with our customers to try and keep the prices at the right thresholds so that we don't get a high elasticity effect if we cross those.

Speaker #10: But we haven't taken pricing yet. You know we're so we we're looking at we're we're looking at where soybean oil stays. And right now it's at it's close to the levels that it reached at in in twenty-two.

Speaker #12: Okay, great. And then on the 2027 bond maturity, how far ahead of maturity do you typically like to be in terms of refinancing?

Carla Casella: Okay, great. On the 2027 bond maturity, how far ahead of maturity do you typically like to be in terms of refinancing? Are you okay going current? Do you think that could hurt your ratings? Any thoughts there?

Speaker #12: Are you okay going current? Do you think that could hurt your ratings? Any thoughts there?

Bruce Wacha: I think as we typically have, we generally expect to refinance our debt before it goes current. I don't think where we are today in this cycle is vastly different from, you know, probably 4 or 5 other maturities that we've refinanced since I've been here.

Speaker #10: I I think as we typically have we generally expect to refinance our debt before it goes current. I I don't think where we are today in this cycle is vastly different from you know probably four or five other maturities that we've refinanced since I've been here.

Speaker #11: Thank you. This concludes our today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: Thank you. This concludes our today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Casey Keller: Thank you. Seeing a lot of questions on.