Good day, and welcome to the B&G Food, Inc. First Quarter 2026 Financial Results Content Today's call, which is being recorded, is scheduled to last about one hour, including remarks by B&G Foods management and the question and answer session. I would now like to turn the call over to A.J. Schwab, Senior Associate, Corporate Strategy and Business Development for B&G Foods. A.J., please go ahead.

Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer, and Bruce Wacca, 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. 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, based 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. 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. 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.

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, an overview of first quarter performance, Bruce will cover more detailed financial results, and finally, the outlook for fiscal year 2026. Portfolio Defenders. The first quarter witnessed major progress in our efforts to reshape the B&G Foods portfolio. We completed the divestor of the green giant US frozen business to Seneca Foods Corporation on March 2nd. 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 first quarter includes the final two months of the green giant U.S. 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. 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 U.S. 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 six times. Further, we previously announced the divestor of Green Giant Canada, 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. 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. Quarter one, 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, benefiting from the growth in fresh fruit and proteins as well as strength in the club and food service channels. Pregnant Adjusted EBITDA was up plus 13.1% versus quarter one fiscal year 25 behind strong volume and pricing growth. 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. Quarter one 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 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. The key assumptions. The current outlook for fiscal year 26 reflects the addition of the collagen and kitchen basics brands. The impact of the Green Giant U.S. Frozen divestor was built into our previous guidance, as well as the year-over-year impact of the Don Pepino and LeSueur U.S. investors in fiscal year 25. We expect fiscal year 26-based business and net sales trends on the remaining core meals, spices and flavor solutions and specialty businesses to modestly improve versus last year. Quarter one trends were a strong start for the year against a lower base in quarter one 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 quarter four of fiscal year 25. 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 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. Looking forward, fiscal year 26 is poised to be a transformational year, with a more focused, higher margin, and stable portfolio once divestors and closing transition services have been completed. 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, 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. Our financial performance was very strong in January as we lapped prior year inventory de-stockings and we then demonstrated continued momentum in the business throughout the remainder of the quarter 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 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 I will provide more details on the transactions later in the call but in effect we use the net proceeds from the divesture of the marginally profitable green giant u.s. frozen business to partially fund the acquisition of the more profitable collagen and kitchen basics business 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. 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 divestures of the Don Papino and Lesor brands, 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 EBITDA. However, because Green 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. For the first quarter of 2026, we generated $408.9 million in net sales, a net loss of $32.5 million, or 41 cents per diluted share, adjusted net income of $6.8 million, or 8 cents per adjusted diluted share, adjusted EBITDA of $57.6 million, and adjusted EBITDA of a percentage of net sales of 14.1%. The company's net loss for the first quarter was primarily attributable to a $36.3 million non-cash loss on sale of assets, a $5.8 million non-cash loss on disposals and impairment of PP&A, as well as certain acquisition divestor-related and non-recurring expenses. Details regarding the impairments and other adjustments are included in our earnings release issue today and our 10-Q that will be filed later this week. Net sales for the first quarter of 2026 decreased by $16.5 million, or 3.9%, to $408.9 million from $425.4 million for the first quarter of 2025. The decrease was primarily attributable to the Green Giant U.S. Frozen, Lasore U.S., 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 March 2, 2026 with the acquirer of the Green Giant U.S. Frozen business, and a partial month of net sales for the collagen and kitchen basics brand. Net sales of our Green Giant U.S. Frozen business, which we owned for only two months during the first quarter of 2026, contributed $27.2 million less net sales during the first quarter of 2026 compared to the first quarter of 2025. Net sales of the Don Pepino and Lesor 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. Partially offsetting the impact of these divestitures were one month of sales for the new green giant U.S. Frozen Contract Manufacturing Agreement, which contributed $8.5 million 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 19, 2026, which contributed $2.9 million to the company's net sales for the first quarter of 2026. 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. 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. Gross profit was $79.9 million for the first quarter of 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 the first quarter of 2025, or 21.2% of net sales. And adjusted gross profit was $90.6 million, or 21.3% of net sales. 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. Across our internal manufacturing network, our factory employees are working hard, with seven of our ten internal manufacturing facilities increasing output during the first quarter of 2026 when compared to 2025 volumes. 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. 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. Selling general and administrative expenses increased by $1.1 million, or 2.2%, to $50.2 million for the first quarter of 2026, from $49.1 million for the first quarter of 2025. The increase was comprised of an increase in acquisition, divestor-related, and nonrecurring expenses of $6.4 million, inclusive of an increase of $1.9 million for disposals and impairments of PP&A, partially offset by decreases in general and administrative expenses of $3.9 million and warehousing expenses of $1.4 million. 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. 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 the first quarter of 2026, compared to $59.1 million, or 13.9%, in the first quarter of 2025. The Lesor, U.S., and Don Pepino 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. 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 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, or one cent per diluted share for the first quarter of 2025. The net loss for the quarter of 2026 was primarily driven by a loss on sale of assets of $36.3 million in connection with the divestiture of the green giant U.S. frozen business, $5.8 million for non-cash disposals and impairments of PP&A, as well as an increase in acquisition, divestor-related, and other non-recurring costs. 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. 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 the first quarter. Net sales for spices and flavor solutions increased by $8.3 million, or 9.1%, in the first quarter of 2026, to $100.1 million from $91.7 million in the first quarter of 2025. 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, or 13.1%, in the first quarter of 2026 compared to the first quarter of 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 U.S. frozen business. net sales for meals increased by 0.9 million dollars or 0.9 percent in the first quarter of 2026 to 107.1 million dollars from 106.1 million dollars for the first quarter of 2025 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 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. Meal's 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 meal's cost of goods that were driven in part by the divestiture of the green giant U.S. frozen business. 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. Net sales for specialty decreased by $3.6 million, or 2.7%, in the first quarter of 2026, to $130.8 million from $134.4 million in the first quarter of 2025. The decrease was primarily due to the divestiture of the Don Pepino business, which generated $3.5 million of net sales in the first quarter of 2025. Based business net sales for specialty were essentially flat for the quarter. Specialty segment EBITDA decreased by $7.4 million in the first quarter of 2026 compared to the first quarter of 2025. The decrease was primarily due to the Don Pepino divesture, unfavorable cost comparisons in certain raw materials, manufacturing expenses, the impact of tariffs, and increased allocations to specialty costs of goods that were driven in part by the divesture of the Green Giant U.S. frozen business. 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 Lessor U.S. and Green Giant U.S. frozen divestitures and the impact of our new contract manufacturing agreements for the Green Giant U.S. frozen business. We are pleased to report that net sales of Green Giant Canada remained strong and increased by $4.2 million, or 16.4 percent, to $30.1 million for the first quarter of 2026, compared to $25.9 million for the first quarter of 2025. Separately, the new contract manufacturing agreements for Green Giant U.S. Frozen generated $8.5 million in net sales for the quarter during its first month of operation following our sale of the Green Giant U.S. 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 the first quarter of 2026. Net debt to perform an adjusted EBITDA before share-based compensation and extraordinary tariffs was 6.07 times at the end of the first quarter of 2026, compared to 6.57 times at the end of the fourth quarter of 2025. As discussed on previous earnings crawls, 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 six times 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 the second quarter, and which we expect will reduce net leverage by another quarter of a turn or so once it closes. Additionally, as announced by press release today and beginning with the dividend declared today and payable on July 30, 2026 to record holders as of June 30, 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, LeSore U.S. and Green Giant U.S. divestitures and the College Inn and Kitchen Basics acquisition, our board has concluded that an adjustment to our intended dividend rate was appropriate. 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. In other words, our guidance reflects the expected impacts of the Don Pepino, LeSore U.S., and Green Giant U.S. Frozen divestitures, the commencement of the Green Giant U.S. Frozen Contract Manufacturing Agreement, and the College Inn and Kitchen Basics acquisition. But 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. 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. 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. 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. And based on this guidance, we expect adjusted diluted earnings per share to be in a range of 57.5 to 67.5 cents per share. 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 million to $45 million, amortization expense to $17 to $19 million, dollars. Cash taxes of approximately five million dollars or less, an 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. Now I will turn the call back over to Casey for further remarks.

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%. Reshaping the portfolio through divestors and acquisitions for future growth, stability, higher margins, and cash flows. And reducing our net leverage ratio below 5.5 times through divestors 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.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove the questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question comes from the line of Andrew Laza with Barclays.

Great. Thanks so much. Good afternoon. Andrew, how are you? First thing, excluding the portfolio changes since the last time you provided guidance, I'm curious how the outlook changes for the year, if at all, because it's harder to track that. And then it still seems like underlying consumption per the track channel data was down, you know, close to maybe mid-single digit in the quarter. 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.

Yeah, so basically our guidance is updated just to reflect the collagen and kitchen basics acquisition. Our prior guidance included the other divestors around the Green Giant, U.S. Frozen, Don Papino, Sufani, and the LeSueur brand. So really the only change is the result of adding in the collagen 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 business, in Canada, our Canada business on tracked. And that's probably our track channels now represent less than 60% of our portfolio. And we've seen pretty strong growth in our spices private label business, our spices food service business, our other food service businesses. Canada is growing. Our industrial business has performed well. 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 track channels, our track channels and our unmeasured channels.

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

Yeah, so 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 to the divestors, you know, we've eliminated the green giant U.S. 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 you know we'll continue to take action as needed thank you I mean I think I think Andrew that the key input we're watching is it's oil and and soybean oil because there is a real relationship between soybean oil and and crude oil because of It's used as a biofuel, so that's the one we're watching pretty closely. It's up north of 70 cents a pound, so very high, and we are covered reasonably long, but obviously if oil prices stay where they are, we're going to need to take some action, as I expect the industry will, just because of the rising input costs. Yeah, makes sense. Thanks so much.

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

Hey, good afternoon, guys. Thanks for taking your questions. I 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. You know, we're encouraged with the progress that we made in the first quarter 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 for the portion that does track those channels where it's improved. You know, we think this year is going to be a little bit less forgiving from a top-line standpoint than the prior year.

I think when you look at safe business, organic net sales, you also have to take into account that we did have a 53rd week in the fourth quarter last year. So, you know, we'll obviously have one less week in this year's fourth quarter than last year.

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 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 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've said all along, as we went down the journey through evaluating the Green Giant business and the disposal of it, you know, we would continue to reevaluate the dividend on a go-forward basis. 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, it just has to be at the right level reflecting, you know, where we are from a cash generation standpoint.

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, 50% of, at least 50% of that going towards debt reduction and the other 50% dividends. So this is trying to get that in balance because we believe that 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.

Understood.

Thanks very much. I'll pass it on.

Thank you. Next question comes from the line of Robert Mosko with TD Corbin. Please go ahead.

Hey, 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, but are there other elements? You mentioned In 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?

Yes, it does flow through both on logistics and on some packaging. And just like everybody else in the industry, we're waiting and watching to see, do these higher, more elevated costs for energy stick, right? 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.

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

So that's the one we're watching closely because it is largely, from a Crisco oil standpoint, it is the majority of the cost. yeah and i think 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 because you know passing through logistics costs is sometimes tougher i think with retailers historically 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 and if you can tell it to me without soybean oil maybe that's

even simpler yeah we don't but you know I would point out and despite some skepticism I think in 2017 or 2018 when transportation costs went haywire we took price based on based on fuel costs and transportation logistics and then again in 2022-2023. And so, yeah, it won't be perfect. You know, we're also, you know, looking deep into productivity initiatives and continuous improvement to help cover costs.

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. okay thanks last question um you have the college in business now and kitchen basics any surprises in your your first couple of weeks of owning it positive or negative yeah i think right now we've been very focused on ensuring that um the plans and the business are solid um you know we had some visibility of that before we've kind of taken over most of the selling of that as quickly as possible, even within the first month now. 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 really focused on. You can imagine that the 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. So I don't think there's any big surprises. 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. But so far, so good. But as you can imagine, getting our hands around it quickly is really our goal.

And 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 two Northeast regional brand, generates cash, stable. That's what first intrigued us. And 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 and, you know, some of the appeal of what's going on in the perimeter is helping driving sales here. And then also with this kitchen basics business, it's a grower, right? This was the innovator brand of you know 10 20 years ago but it's continuing to travel down on that path and growing and we're really excited to get both of these businesses into the portfolio yep makes sense thank you thank you next question comes on the line of William Reuter the Bank of America please go back hey Bill Good afternoon.

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 may have to take place. And 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 think those discussions maybe are a little more challenging. So I guess have you started to alert them, and what has the feedback done?

We certainly have discussed soybean oil. So, you know, I mean, I think that's – and we've had those discussions with the volatility in that commodity over the last, you know, five years. So 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. 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. 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. I think they're feeling it themselves, our customers. So I think we will start having those conversations. But, you know, we wanted to see where this played out before we would have any further conversations, because, 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. But, you know, again, we have covered some of that increase in our forecast, in our outlook. So we've already expected that fuel is going to be higher. It's just a question of how high it stays, to be honest. And that's what we're watching pretty closely. Packaging, honestly, longer-term packaging, resin contracts that we really haven't seen increases hit us yet because those are sort of six-month, 12-month contracts. So we'll need to see where oil shakes out longer-term as an input cost in our packaging.

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?

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.

Got it. 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?

I have a split on that. There is some element of innovation that is driving that, some new items that have gone in. 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, you know, 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. So, yeah, I think it's a combination of things that's driving our growth.

Yeah, and the other thing to throw in there, so as Casey's 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 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. Great.

I'll pass the answers. Thank you.

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

I 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 what we use in terms of if we use Circona. It includes supposedly Costco and Amazon, a pretty broad set. 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? You know, how should we think about that?

I think, look, and I know this is hard for you guys to see and track, but, you know, post-Green Giant, U.S. frozen Green Giant, we're even less measured than we were before. So if you think about our business, you know, you look at the tracked measured data, if you're using Serkana 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. So our food service business has been positive, and that's probably in the neighborhood of 13% to 15% of our portfolio right now, total sales. You know, our private label businesses are probably well over 10%, approaching, I don't know, 12%, 13% of our portfolio, and those have been growing nicely. Our Canadian business, which isn't in, obviously, most of the U.S. databases, is also growing in the first quarter. So, you know, when you try and 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. We expect them to gradually improve, you know, over time. So we don't need to – 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. But we do want to see some improvement in our measure channel data, and that's what we're working against.

Just roughly speaking, 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?

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

Yeah, no doubt.

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.

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 40% or are you talking about that non-measured of 40% growing at mid-single-digit rate?

I'm talking at the non-measured 40% growing at mid-single-digit rate.

Yeah, that's pretty good. And then I guess one of the, like, just philosophical things that, you know, you've seen multiple cycles before, very experienced executives in dealing with energy-related inflation. I wonder – I remember these periods of energy-related inflation in its many forms in packaging, distribution, and what have you. 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. Do you think that's the case? Do you feel like that is – is that something we should brace for? or is it just a much different type of pricing discussion with that type of inflation?

Never easy. Yeah, I mean, and it is a hard discussion. It is a hard discussion with retailers, but that's why I think what you're 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, And we're going to have to think about it. I think that's going to be an impact for our customers. Is it going to be an impact for us, the industry? So we're expecting it to stay higher. It's a question of how high it stays before it becomes, you know, a really, really serious issue in terms of cost. But so far we've been able to kind of manage it and manage an increase. But I think we would expect it to come down below $100 over time, assuming that, you know, Iran and straight to our moves and open and, you know, oil flows again and, you know, the market sees. 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.

Yep. Thanks for the thoughts.

Thank you. Next question comes from the line of Karu Martinson with Jeffrey's Company. Please go ahead.

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

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. 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. 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. You know, we're meals. We're affordable. We think this plays to our strength, but it doesn't mean that it's easy. It's a tough world.

You know, I think we're not really talking about, you know, pricing, you know, we would only look at pricing related to any oil costs. Take soybean oil aside if we believe that it was going to 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 have planned. I hope we can cover that with our own internal cost savings, productivity, and other efforts. Green 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. But 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. offensive so you know so that that one but we already have that kind of pegged as a commodity that has to go up and down 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 okay and just lastly in terms of the portfolio uh certainly pruning some here adding some stronger performers, do you feel like that we're where we want to be with the

portfolio? Are there still opportunities to take some brands out or to add others?

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. Can, you know, as we reshape our portfolio, you know, we want to have strong businesses that generate higher margins, stronger cash flows. So We'll always look at opportunities in our portfolio to make shifts like we just did, to take Green Giant, divest it 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. So, yes, we will continue to look at those opportunities. Thank you very much, guys. Appreciate it.

Thank you. We have time for one more question. The next question comes from the line of Carla Casella with J.P. Morgan. Please go ahead.

Thanks for taking the question. I know you've got a lot of questions on soybean costs, but I'm just trying to dial back to, like, 2022, 23, 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 up 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?

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. And 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. Like on the core size, $5 threshold is something we try and manage to. So 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 because we don't get a high elasticity effect if we cross those.

But we haven't taken pricing yet. you know we're so we were looking at we're looking at where soybean oil stays and right now it's at it's close to the levels that it reached it in in 22 okay great and then 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?

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 four or five other majorities that we've refinanced since I've been here.

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

Thank you.