BGS - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the B&G Foods Fourth Quarter 2018 Earnings Call. Today’s call is being recorded.

You can access detailed financial information on the quarter and the full year in the company’s earnings release issued today, which is available at the Investor Relations section of bgfoods.com.

Before the company begins its 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. impact the subsequent recent more-detailed SEC the that to Form report discussion you operating risks and future XX-K filings could refer company’s financial annual most on of results We and company’s condition. the for a no undertakes update publicly whether to forward-looking information, future or of a result obligation new any events statements, company The revise as or otherwise. EBITDA, adjusted diluted be making and net to earnings financial measures, call earnings share references the income, net share, today’s also adjusted on will base adjusted company sales. diluted The per per EBITDA, non-GAAP business Reconciliations of in directly measures these today’s financial GAAP provided most measures to are comparable the earnings release. financial and call Bob Cantwell, remarks. President Officer will Chief with current opening begin the the company’s Executive financial XXXX. the guidance results well it’s the as for will Wacha, Bruce Chief company’s Financial quarter, for company’s Officer the then discuss concerning that, selected the Romanzi, April the this year, Executive President that highlights discuss Chief business company’s and and outlook of and affected Ken After factors thoughts for various XXXX the will beyond. results, Officer, effective company’s his I to Bob. the conference over would turn like to

Bob Cantwell

afternoon, in us to it initial is offering not, today dating earnings today. XXnd B&G our joining thank consecutive you or my back call bond Believe with Good XXXX. for Foods

and again B&G Sherrill Foods times ultimately required a some of you private when were were several XXXX. public changed by we Lee. or Overtime, then went in years pickle owned Sara Company know, and Rosser, ownership I simpler BRS. life firm we our Bruckman, by the And and ago. Life standalone equity As changed was back a XX joined lot basically We then. pepper company

at the brands. time diverse million time acquisitions EBITDA of IPO $XXX.X our my sales We $X.X portfolio $XXX.X and $XX.X grown since to the of tremendously We at through B&G million and XX and over and million Foods from billion net today. the adjusted increased nearly building have IPO, and

billion we Our to went $XXX.X market today. when million and million $X.X public, and were cap $X.X value compared $XXX.X and billion enterprise

also company. have paid in almost dividends a drawing million public to $XXX shareholders as We our time

challenges core to financial principles we While cash unyielding remained on return steady form M&A of of shareholders had returns the time, a and committed in been focus have and there our over cash of shareholder creative flows dividends. through generating to our

my As in in be we Directors early July announced from late Officer Director has President, a I of role – as XXXX, B&G Romanzi will Chief Board Foods’ in as April. retiring with B&G of January, plan appointed successor. In and established in succession Foods accordance my Executive Ken

a since Ken B&G all We marketing XXXX. transition been effectively firmly sales, and in and for late to smooth intents and purposes, of committed have has operations been Foods charge

company, to be the an over lead look I’ll I call grow remain good its and So in finance portion the I like and to who as hands come. team to the of to already know the transactions. watching current in that expect role will continue company is then advisory large Ken, would transition both turn Bruce, to retiring involved complete. part I forward for Q&A the also now and at company while as CEO, to actively remains M&A in shareholder a on I And corporate the and with to call. management years the

Bruce Wacha

done Bob, tenure. and to me generous afternoon. your all this and your for Good you mentoring during thank hiring for organization introduction for build you’ve that

very EPS; the our well there unfortunately did which things that and performance. are side, important our adjusted adjusted on we two EBITDA we in of measures many missed While depressed XXXX, margin

operating despite for X% $XXX by than provided at the from a for cash reduction approximately We net We very a the net in million year the approximately by year plan $XXX inventory healthy the generating line activities our year, for more quarter and top the our million year. came million base Our year challenging in target, during industry. to for sales million more expected. as today. strong business $XXX inventory very grow beginning reducing environment nailed had than for our the nearly $XXX We to cash X.X% generation of

our by the billion to We almost of for $XXX little also a million year reduced billion start the bit at year long-term of $X.X debt $X.X from the today.

the large to debt our our also by in Pirate cash we’re Brands flow, helped sale part In pay during efforts, down year. of the addition

for of $XXX.X earnings per of share $X.XX. was brand years company and and paid As sold million XXXX that a items After earnings in XXXX, the adjusted sales comparability $XXX net per for brand diluted price release, $X.X record than a adjusted in double then we acquired In for five share ago. $XXX.X our million, company EBITDA described more reminder, certain this million billion, for generated was million in the diluted earnings record XXXX we our adjusting our is $XXX and EBITDA affecting of we $X.XX.

adjusted net fourth $X.XX, $XXX.X $XXX.X diluted share million, generated per XXXX, our are we Ken diluted have you million, us these disappointed of the sales earnings with place of EBITDA $XX.X per that quarter action we of confident of plan grow walk to in makes EBITDA $X.XX. business of million adjusted While earnings that share expectations that the we In an in will shortly, and through numbers, XXXX.

compared after of Brands. the represents million sales of the to of increase for $X an adjusting $XXX.X Pirate net of Our quarter sale fourth million XXXX

net time under frozen led the for same Green performed the the increased brands sales X.X%. sales grew quarter, core million time our first or well very the X% million in sales $X.X during shelf approximately $X.X by approximately who’s by both at growth the and products by net ownership. Ortega or quarter, quarter net during nearly stable Giant, Our seeing in

by New Farms Wheat approximately York or grew million million Style Grove $X.X million of approximately by or X.X%. X.X%. Maple grew Cream or X.X%. by grew $X.X $X.X approximately

comparability adjusting as negative affecting of of witnessed strong a increases losses, of expressed of XXXX. by accounted fourth by impacted impact quarter. fourth percentage the our a Gross and for sales $XX.X increased the after of sales as the XX.X% quarter company by sales, fourth net in of generated the we in spices to Gross canned net million XX%. offset primarily by profit other gain million, in other were Dash, bit such anticipated Outside just the profit of XX.X% sales All procurement event seasonings was of of and has selling, as industry-wide than promotional $X.X savings in $XX.X turnaround Pirate an partially this I quarter $XX.X After well excluding and for that sale which elevated percentage & quarter Gross one or for we for general benefit of affect was savings, as quarter, the from quarter, benefited distribution expenses that release, spices in of for percentage a vegetable product in as XX increase Our October. expenses approximately the Mrs. mentioned $X.X Expressed initiatives. of net items million more cereal, Brands million acquired of as driver juices Pirate we sale X.X%, by Pirate the million X.X%. $XX.X of Ac’cent freight to $XX.X for general comparability for of a generated the little million a in we the costs The decrease & resulted a EBITDA. XXXX. on SKUs for $X.X certain expenses costs XXXX. in certain the XX% Brands after customers for the from as of sales detailed to fourth of by as to fourth where million of Nature, impacted quarter and we XXXX. administrative Back Gross largest or of from in $XX.X freight decrease and sale Pirate sales items XXXX quarter offset a related well negative the the in with three XX.X% a aggregate, business was like a some including profit $X.X and profit release. a by or improved the EBITDA in aggregate and a of to as $X to in $XXX.X mix, percentage of decreased net warehousing affecting with fourth negatively XXXX, quarter the We increases a the Brands first quarter the expenses fourth Victoria profit were net or net quarter and with and decreased million we with fourth key points was and $X.X quarter associated the million XXXX. items or had XQ the in million excluding mix acquisition/divestiture-related million of that record the we the net during pricing. cost price $XX.X the in Brands, trimmed EBITDA $XX.X growing was comparability the the administrative or unprofitable entirely decrease some is negatively XXXX. million adjusted business year, soups, of brands quarters seasonings during X.X%. due shortfall described more which million million quarter, our of in negative third in business of during brands and similar XXXX a product of XXXX XX.X% down from promotional basis the timing XXXX shift with brands to Selling, in for Gross and million was quarter fourth earnings late primary decrease unable earnings in to a Due our large expenses. adjusted

benefit million we were adjusted quarter while so of expectations for these This was third stable, to incremental or due for $XXX million. five incremental of our the prior to $XX During our period of base bottom benefits. an versus conference full EBITDA million fourth to to $XX achieve year outlined factors. EBITDA achieve adjusted the target quarter our call, the primarily remains business Unfortunately, year we our unable

we impacted but approximately planned we during that step which more the promotion very but for. business our $XX the brands, million achieved last our quarter. get in illustrates in margins. list benefit the our but pricing sold million from benefit their our that deals our and are trade in base April, supported do to on we $X.X achieve we hope volume quarter. we that captured direction, implemented price than the spending First, we $XX the negatively expect our to we million Customer from We right sufficient reduction unable less hit increases to that for well, full support promotional planned, was required trade target positive to for which than on A

Second.

sales bottom we While grew our to sufficiently the end volume guidance. achieve of

Some Giant gains the to promotional were a our business, spend by business. Green rest base of canned which have of lower our driven higher these profile than margin and tends

the to and achieve net end gains Our $X mix driven high in margin higher EBITDA our ability further our hit our our of million opportunity. adjusting costing margin the inability quarter to loss adjusted our EBITDA brands some with to target of he by contributed lower limited sales for volume targets

than tariffs, caused us primarily $X to $X million savings procurement more driven by million Third anticipated.

was not historical the levels while million we’d hoped quarter. million these benefits for to flat $X freight some million our manage hit initiatives, our the for that $XXX of finally, fourth and cost adjusted by a or costs to to in identified did savings so process, inventory Forth, some of in course wrote and elevated And remained $X million we the in $X the we in that we during compared achieve inventory down quarter. the EBITDA reduction whole

M&A $X.X remain finished our debt. remain at maintaining we and. policy As approximately our in firmly positioned pro net opportunistically the previously, to I and We to end reduced EBITDA approximately the to with billion to year. committed net mentioned the well pursue debt forma We X.Xx dividend adjusted of year

share commitment consecutive towards by dividend represents in price, per since dividends quarterly dividend Our our year directors X.X%. At yesterday’s of dividend reaffirmed board policy current IPO stock a of XXth XXXX. closing per declaring our yield $X.XX its yesterday of our

$XXX dividends. During our in approximately shareholders XXXX, we paid million

the and repurchased of board X by or have year. a million at of million during million $XX.XX, common per We $XX.X price or million of shares our year currently our the of quarter shares. retired addition, under bringing average In repurchase program approved share common stock the for an total of XXX,XXX stock stock we $XX.X stock authorization $X.X repurchase approximately last million directors to $XX common of

for bit than remind Pirate like include $XX.X XXXX. I of that Before net would three little Brands, we XXXX to fiscal million. a guidance results of our everyone move sales our to quarters more

in expect we X.XXX our X.XXX net of growth model. to XXXX, X% For billion sales or to billion inline the topline to X% be with range long-term

$XXX including EBITDA interest amortization to which $XX adjusted than sale adjusted $XX XXXX per to $XX cash earnings million. mid to share expect the Based of on of million million approximately $X effects to million. expense amortization And guidance in We $XX.X of million range. $XXX tax Cash approximately tax million XX.X%. with interest CapEx our expense $XX and be year. $XX million be effective $X. anticipate of expense Depreciation million. Adjusted $XX.X approximately taxes, Net to approximately $XX expense and less Pirate million of gain million interest on million, $X.X of from of is expense for we EBITDA last rate to excluding finally, of a line point the million $X.XX of Brands to

We $XXX million. EBITDA on gain the Pirates CapEx, cash Brand to adjusted effects approximately excluding the expect cash tax and our taxes interest from be less after sale that

Asset to expect be net our EBITDA to X.Xx acquisitions, debt next at of adjusted end the we to year. X.Xx

quarterly annual it Pirate typically provide made guidance quarter we for only provide of thought typically the guidance to the first provide guidance of not sale do Brands. sense and XXXX. Although We that given

divestiture $XX.X of and us produce million of Brands plus adjusted during of our the impact million which for of EBITDA In addition ownership sale $XX to net three quarters approximately in the of XXXX. Pirate

for the to year. remainder the $X incremental expect also outlook pressure the a quarter, see inflationary We million of with during of consistent our

of increases Our until for be our price end of quarter. not the after XXXX, in the will first sales the effective cost majority savings initiatives

quarter million, the to all timing into account, expect the of Taking of $X.XX. shifts net the million this XXXX adjusted $XXX small first EBITDA of due million net diluted we sales some see in of $X.XX $XX expect adjusted $XXX EPS to to of that of sales to we the quarter Additionally, XXXX second quarter to from year, in first to $XX and million XXXX.

earlier, we and with XXXX. mentioned disappointed our profits I margins As are in expect XXXX we better and

from by million our bit the the well of $X estimated get more $XXX forecast. cash net to $XX XXXX million However, And call driven by million I industry-wide strong million well in growth pressures would we to largely activities. in our was able like excluding the a million And we little as drop offset generated XXXX. adjusted we committed our XXXX and XXXX cost adjusted sale remain year had with results, $XXX EBITDA, that Pirate This the in as turn our as not was Ken were to give perspective $XX after EBITDA from $XXX over very roadmap savings to to inflationary to initiative fully the on versus our decline Brands. million in Ken? in to Despite operating our price a from nearly increases drop dividend in as flow to acquisition now strategy. cash impact

Ken Romanzi

in company you, me Bruce. things done Thank the all for to And you’ve the so this years. B&G much terrific for thank thank your reins Bob, your leadership the XX you Foods of past And confidence for you wonderful over and take great you’ve built.

am operator. of drive employees a our over a to strategy, the B&G CEO known and acquisition profile excited and to the was us committed shareholders. can-do Pirate’s for activity. this to many pleasantly to innovation, live terrific We successful when its B&G lean and is excited the good program, come realizing solid and Simply the with in entire of reputation and a the up helm company’s And with results. vegetable truly me multi-year category to of fronts you Foods. of B&G on value. I year B&G to a as continue ago little best-in-class value for food capital leading significant I year challenge Foods of been make I XXXX growth sale type of Foods Green on and I’ve I’m M&A nurse market cost the I build we joined industry here by Giant with shareholder partner reawakening assimilated strategy environment. and generating but and I’m by of our task But, well I’m cash. the put, surprised expectations. initiating take so companies, of to as dedication EBITDA Booty expectations lot succeeding margin a to very about of consumption a extent a are confident culture been difference in advise because You’ve disappointed continue are its honored a brand core sales value very driving had savings to in its as the real We adjusted our creation highlighted growth, and a and mentor into Foods frozen a great

Our and just past were from year freight. many expected than overcome expectations earnings inflation more this input factors far margins. not across able weigh due results were lower We our to resurgence costs the to than

cost the of we’re top. new hope for were assaults start we going our was in last realization the To we’re significant less trade net the were just across to results drive taking price redouble in efforts pricing at leaders to productivity While to to and too promotion these among and we both program going April, through gain yield forward, savings unable last our we going year. fronts

we’re $X offset The core making Sales reduction in inflationary in announced cost to a retire earlier part and disciplines senior issued Marketing, be plans we management together leaner we’re as are Vanessa of to focused our release press to companywide will our expense inputs. against or functional the changes and seen The $X reduce to program, earnings have expected other with I Maskal, G&A release, ongoing XXXX. and company highlight later. that annual million team more may million by leadership Vice you XXXX April of restructuring As President Executive approximately today our

been you our nearly of a of for Vanessa has know, member many decades. management two As key team

leadership, Executive for the $XXX time Vice We Green President hired thank and the years at Nabisco be research company, running Vice from to billion our been partner many strategic as Officer. Erich missed. quality, us annual sales During have over a our of time reins solid the efforts. of whom Greenberg, B&G at Erich his company. growth the Executive will Fritz to presence Bill Vice will architect become key from Chief managing has grown reawakening certainly are all our roughly her of Her veteran Vanessa more she Schum will Ocean team. President industry with planning veteran, oversee and veteran Organization we her initiatives. Foods Foods our than and Chief and Ellen an President team longtime Vanessa B&G as and Operations be Ellen and Sales and to grow then. last appointments. joins will evolve team built pick and today. and work U.S. over to can a will joining and the he’s the dedication $X.X team Retail over Officer of years. we development B&G operations, valuable since of continue will And all our Ellen Herbes, We be addition our Erich Chain We Officer long as years. a key Foods the Giant, million I’ve have leadership hard the and customer Executive following Supply Vice President worked integration with Spray her responsible our Executive and behind and acquisition Jordan with all up Customer July finally A marketing, relationships and become for confident our Commercial Chief reorganized and

have into HR, place legal the our pricing With costs of of a be with program. delivering productivity the new on of and the This leadership, am strong XXXX to focused management solid list and more appointments aggressive be plan, will and these in goal last new I than existing leadership today rooted our core X% team future. operations, successful plan financial confident leadership a year right ramp coupled brand in our growth intensely team we up

and we biggest challenge cost different. was be side expect in equation Our XXXX to on the XXXX of no the

in a cost million $XX increase than of we’ve inflation but million pace continue outside million saving freight XXXX, in more up $XX expect moderate costs to an in Following our freight at initiatives. more to $XX before XXXX,

and activity EBITDA, wages, in packaging the increases XXXX, price of of in spend. cost our to business, $XX input fell savings inflation of prices cost our portfolio small across reduction short increasing from we will pillars successfully of but grow we a last cost realization savings $XX targeted trade much driven pressures expect in rest ingredients, have and the spring, we’ve In promotional cost list for combat adjusted these pension base of million XXXX our the expense. also we this much from XXXX. another of price five weighted approximately XXXX increases Last inflationary approximately four trade million the the April, list plan of two first ourselves program months to core increase year, on toward of our brands another pricing To implemented the over more We from are position promotional increases of Further, approximately our commenced more and is our The reductions brands. we will supporting are same-store our benefit goods, initiatives we that news pricing can and included savings Canada wraparound still we’ve much we’re profitability. and good the strongly become than promotions we’re there. ourselves, have on well, costs last in $XX price as that there not to but to while And we million not which until go XXXX. spring. they’re we opportunities. increase counting They’re these effect revise will pricing $XX at, our in did in our continuing pricing is many $XX in, $XX may customers million projections get remained we efficient, includes to this are productivity The get easy million year bad prove to to expect can but financial year, more not convinced we benefit we All we’ve it our net upside to them, If this of improve impact, in into million annualized effective limited of year. it which benefited our by pricing by in model. to news

product five and California buckets. the After September. cost to first quarter which general expected expect cost opened five offset XXXX, inflation second combat and implement distribution of the manufacturing, to savings. logistics, assumption complete XX in packaging to initiatives that center in just to year. in million are full to we benefit year cost large our of we fourth initiatives the XXXX of saving drive million in Our in million these XXXX, expect some and falls the costs $X quarter. and to West XXXX, logistics, $XX late in yielded began four, three help One Fontana, under In million see administrative. selling another last inflation our to $XX procurement, is Coast we of two, to $X cost in million the savings, million growing program a In review structure only $XX That to

million to expected the closer improving relocating him, plus we similar beloved these along also transporting the reduce a in the Pirate are were miss went bulky to service. we model, network materials $X with a logistics cost product addition, to savings, way of the In these and million storing supply transporting savings customers expected our expense grocery has expect our during added which more in to our relocation is products our million In distribution products of when yield Cookie flagship Food this year. in of In benefit of produce manufacturing, many a our higher similar frozen $X effective $X we real SnackWell’s process year. miles we earnings where sales Furthermore, move of product. realigning and as Pirate’s arrangements, One while our now cost automation frozen In side Booty some of that our several of dry Cakes. total, remainder we and the logistics will of customer expect to arrangements in than Devil’s our significantly a procurement, we million our facilities with to the sold several production co-manufacturing and example renegotiated while our portfolio. to cost relocating have of $X to benefits Hershey, freight win-win we warehouse some team locations. will is

I in $X expected recent part in at look is but Giant to lastly, our G&A innovation packaging at to weight have right the and serious supporting Pirate a lineup. structure with Brand And taken Pirate and million senior our mentioned as divestiture. as look from expenses we product cost then positions are With appropriate before, hard some in preferred XXXX. level, where $X.X not to in have to eliminated yield million to management ability one relocation taken will rightsizing only we’ve another product dedicated leaner benefits size portfolio. we’ve packaging, savings We’ve in due business. yield our So add manufacturing partner frozen Booty a that also savings to a These organization costs were the at the to our reducing $X also retirements but result Green also expected and and the our a consumer product management improvement begun operate

these annual these mentioned, the cost mid expenses and year year million employees on reduce full an offset increased $X year-on-year actions will G&A previously of pension expenses. increases we costs by expect our approximately I merit and savings added As impact and salary expected In should structure from XXXX basis. XXXX

intention long our not efficient. business our term. us more will more well structure the is believe to as as over Now we shrink effective Rather, new make leaner our

efforts selling with the hires in fact, and on our in sales less brokers. relying channel In organization grocery investing third-party with to some key several direct key our we’re support customers club

pricing is we So are term list growth to that inflationary consistent cost rooted objective zero top our pressures X% XXXX higher savings in are in XXXX both and with the plan initiatives by To then obtain XXXX. aggressive expect in growth. long more of sales line these pillars supported of

center Our Much X.X% maintain to of giving fall up consumers fourth their consumption from fill X.X%. XXXX the growth. will quarter. not January are X.X% in with $XXX innovation our build continuing consumption shopping basis. good remain store momentum XXXX Giant million has our momentum, retail our quarter in consecutive annual in strong of XXXX partners And quarter or the double sales Evidence and a our of products consumption frozen growth. The fifth the sales. expectations momentum of in the the driven and retail double XXXX year since digit continued that in on now that in by brands for surpassed on Fourth Green strong regular baskets consistent be are digit range up at and

Pizza vegetables last Green of began rollout Little the outside in their Giant also Giant fall the Giant As launching will innovating only year. vegetable new of as Protein and products organic with the continue their vegetables. helping brand before, half We diet Cauliflower frozen we more frozen shipping vegetables and Green discussed this Green category of vegetable first in traditional but made we Green not vegetables consumers in get see the by Crust, Bowls future, Sprout’s

XXXX innovation another follow get expect for that on fall of of with a We slated start round XXXX. head to to the

to ramp and zero summary, our strategy of broader more our that’s the B&G our multi-year up X% plan. of long-term of In our with XXXX Sales growth program. saving reliable objective pricing remain growth, cost as our like next So to value portion to the CEO consistent and stated Foods, also current substantial to dividends would available M&A I we key of shareholder focused our very emphasize as cash paying a of our policy shareholders. pay to on create to we leverage remain a and committed

McCann’s we But for position balancing able million, Our a $XXX terrific allowing side the Oatmeal. also the sale acquisition of remain acquisitions. Brands volume providing our were major active opportunistic was with of for us to transaction return the in XXXX Irish better on to and Pirate more

U.S. Tree Cream of Grove on two Farms Now today, molasses; maple the our breakfast strategic, of leaders for in Xx looking Wheat adding strong With and largest already a us, by the syrup Brer was side Spring for over accretive and the while McCann’s for Rabbit pure of it leverage was Maple hot Grandma’s. smaller and are portfolio of actively commenced we lineup little Scott Lerner, long-term that to closely General as Counsel assist the we we’re And Q&A more M&A and myself, I’d the of key hopefully efforts many advisor excited come. begin new acquisitions. retain concludes exciting years our and us will our remarks to company, our Bruce, like a very in to our portion and now working Operator? with win brands for to This Bob call. to

Operator

you. our Burnette Please Instructions] will Thank ahead. [Operator Research. take Citi question with We first go Cornell from

Cornell Burnette

lot. Good a Thanks evening, everyone.

look kind And but a was into the out much sales could those the canned than it kind seems the get the of when year, different thought of and quarter. by guidance you against at bit wanted at you growth to of and in fourth of of where have you wanted is to better laid Green and death the in what EBITDA of a similar delta you the also that talk here be. you kind skis drove went insight down or thought the ahead negative way the I you that what of and when somewhere is for year. look really mix; it then just pieces impacts happened, Just of you on wide negative that’s the some products mortem, maybe expected, Giant did little your post kind got the this about of you the line little jump rest bit supposed wasn’t as you look cuts sales margin, It back I in little to went the of and know, for a perhaps a when the thousand just just perhaps when having achieved just last where terms terms secondly, was where the there base, to at when base look And rest as quarter?

Bruce Wacha

Yes.

our can The is Green is have of Green the business sales margins. the I So, dollars margin gotten the question, for cylinders, issue EBITDA kind on as it for Giant all core quarter, would’ve worked of the They’re much would’ve million opposed fire that sales. fourth hit first our base on of Had we net extra unfortunately, quarter. that, that of we a had we we think in higher that’s to profitable answer. or target the your all B&G been the that brands better. right with end low higher And hit done them, way the we Giant couple had

first your the our a fourth of the Pirates coming like look quarter year out. fourth exception quarter lot answer this and question, with – think last I year really

and a was the year, pretty $X added year, quarter to dollars than just probably flat $XX We bit that a unfortunately do procurement in in and was Pirates. So the the were these the get of of to margin We million, fourth the cadence quarter stability limited better lower at than to more a going upside, people pricing. removing Pirates whereas after of areas hoping and saw up. of That little came we’ve through if shortfall we the in that did really do that then last better. side fourth and million call And couple tariffs a expecting were from of said, should of that to we dimes story have off bit similar as those the terms as business, but on to but earlier the a a think with as that outlined after of held rest the million better We little that. nickels far some line some terms hit freight, were the we we We came is off just quarter. that. expect were

Cornell Burnette

risks what through XXXX? see coming pricing your promoted and the so at to part pose that guidance, hey, do guard kind XXXX, pricing way list and Kind up of the didn’t And the when of a do look then similar you kind just does have were you that, in if well prices how kind and you’ve what would’ve but fine, of because more side on pricing of to anticipated. on go doesn’t of, type And way of side. that it you the you something you come along you forward outlined maybe wonder set you here against was the happen where

XXXX? what’s So versus XXXX in different

Ken Romanzi

Hi, on we and in of this why A to is points. price. the Ken. one, we as Yes. see the could get traction well quarter, Number promotion trade couple in earlier the starting felt we year as million reason fourth $XX list savings were

We we continue So continued can that. we the trade. felt see didn’t

as there’s a lot in promotion to expect, trade savings. variability might So you trying get

repeat order For is list. saying to as XXXX, going all we’re not get I to in we’re in pricing that, do to mentioned,

we we are We benefits but promotion taking don’t the actions, trade even our in projection. have can we think get there,

try trade. our we’re to to to to and efficient going going get we’re continue on rely financials So on list to more in deliver the

weren’t saw instance, just replicate for quarter. in able past pricing to some So, fourth we on trade second promotion in reduction. We the nice this quarter,

going our into until replicate in can projections. trade, put not we’re reliable it savings So more we to

Cornell Burnette

you. along. Okay, thank I’ll pass it

Ken Romanzi

like And we pricing year this business, in we do And that. we’re that Back past to this aren’t Nature and we’re going to Canada didn’t going for didn’t and adding instance, take off pricing and do we take to more spices year.

less more against we because So did we’re more than even business. last – taking year or

Operator

Instructions] will Jefferies. our question Please go We ahead. Martinson from take next [Operator Karru with

Karru Martinson

promotions your landscape Evening. the actions. to this covering It’s a Was to been time a response that changed wanted retailers? you competitive with Good wish pushback role well or guys you on Bob, from pricing the just just I there there. I the the you and transition. long in was in ask about

Bob Cantwell

necessarily retailers. volume not on really trade at really from much I pushback When you It’s deal promotion, you’re rate. sell what and how the going reduce saying to

rates, you’re what deal to to to volume on estimate as going than so on we is sell a And versus change how We full you’re sell just it price an we going volume more how sold projected. while much lot much always deal. volume

year, but I is in to there. this some, experience the said, as is there which the get bullish efficiencies So after we know the earlier it us. more reliable the trying trying elusive – we’re that dive proved – to company, first what really – really fourth what we a we’re We We until really to model, as to we’re saw trade. a are time started quarter gave us in in get

find prove but to the see again, plan continue until to in going to trade, it So going not bottom can we’re it productivity a in we’re results. with it and on we line the rely

Karru Martinson

in Okay. inflation do terms out And this the to you through how feel trying pass some is that seeing? of environment that there we’re of

Ken Romanzi

were first it on we never even easy, We with lead food see early. for last little first it we or our very bit a but we chin got kind us Pricing we because is the company of a were maybe announce year. this amongst – year as easier to

pricing. everybody We’re about talking just in everybody, now about of amongst

so because in easy, across early lot this where was year, last companies the of year year freight. mostly it but are never And and a it’s inputs up got the Board, we’ve cost the

across it’s Now partners including in and cardboard the inputs. it’s everybody’s packaging it’s private and who goods retail our of seeing material it it all see inputs, it’s costs steel all their those label because and

including our So our it, brands. everybody’s experience with retailers own

Karru Martinson

just lastly from And and lot Okay. been certainly M&A on divestures guys. there’s the front, then coming of of some the a expected big

secure be assets? to leverage process the where of some and wanting willing these accretive, is to thought as to there take about talked size but would to you guys a You’ve be

Bob Cantwell

right So it’s right got but EBITDA. in debt deal. higher been have net the target for the willing we’re that typically deal, instances to to we’ve be Xx when X.Xx There to to go been

to so we’re continue going look. be and to opportunistic And

We’re encouraged there out looking. and we’re by divestitures the stories rumor of

Karru Martinson

much, very guys. you Thank

Ken Romanzi

But going very what we’re to be to disciplined continue also valuation. in

for company are, whether us and to us some businesses. So there that. for I’ll be – hear I they to because for very the we creative committed out not evaluate a expectations things company, this of to will This be and is overpay committed there valuation be

Bob Cantwell

accretive At run the day, the that’s the be always to work and we’ve got business. has the to of flow it’s and end math how cash

Operator

We Wells with will Hunt question Please ahead. go from take our Brian next Fargo.

Dave Cook

Brian. for on Cook Dave It’s afternoon. Good

at structural nichier brands to promotional point? guess more have touch too trade this packaged support, just or indicative kind again. that compete on food the early of to I label more Just this is environment you a with you in tell these to and brands wanting the where heavily that change private promote fear have any to of

Bob Cantwell

one price thing, There The investment of price last community remind nobody from had in to in we point maybe some $XX price. but because a benefited time about $XX year in Ken talk told picture, were was increases going the million, we raise XXXX. to little seven at can million people, skepticism just this big more bit years. We’ve raised five, really

we wanted So I to. so just we issue there don’t as know I’d was doing structural didn’t a say much as that’s that us preventing from get

Ken Romanzi

cost a go – tremendous increase a is we amount of that of through breakdown that, of what a paperwork customers a through and structure list Yes. add a that price showing us lot would I by put and justification. our amount And say tremendous phases increase to to prove we deserve to of our price

cost input while because the inflations. show so prove So it’s be to much done, there’s work simple, we it out pretty

savings to full much Trade customer So in not like garnered we on on few garner much how forecast much able deals if said increase. of to how our the we sell promotion again or it’s going does promotion. to very more quarter. a in a the the pay delicate doing versus but of savings a we understand fourth on buy the customers think more before, support do tried to of trade that. and to am of And promotion, to heavy much I price, promotion. said forecasting That relatively would, it’s a am on gets more than like they being how were and you we going terms I sell price at I promoted exercises better and much reducing were before, list able price you’re And simple relatively to easy, going that it’s brands I lot some

don’t if you happen is to a and a we the like the to do it’s because, while point The that to almost won’t hot adjust front give a you problem up. secondary think And the not ad changing can force buy retailer tell page price the the harder to list easier don’t than of is midst almost too forecast how costly, find happy, Walt on promotion versus because us we you in it’s you on customer in promotional is promotion. promotion increases So models good Disney to going be strategy can want because to want what’s it’s going they reducing can’t tremendously much list. or very have display price the promotional allowances. What out non-promotion you

Ken Romanzi

deal, more allowances I promotional could can but promotional XX%, out on buy XX% savings. they if that allowance by almost that wipe reduce

a our has frankly of as a of to my is we’re a better model. quite trade it’s make on trying significant pricing promotion that a savings part pretty company sight first again, big at because, So item, we get time, really it’s a big forecasting line more to

Dave Cook

you the guess, in that’s Okay. I then easy Giant what that’s think or is guess shelf driving what do And turnaround stable. Green that, comparisons or – mostly I innovation that?

Bob Cantwell

they on believe in with up. we on were still Giant and some in brand was distribution people that our Walmart. overlapped found Simple cans retailers. of calls, value plans of is previous effective basically we promotional else our Partly we Walmart in because at mentioned answer someplace it as Walmart on couldn’t Giant we it consumption Green loss Green find so our outside there’s Green But Giant,

was business our So of Walmart. outside up

losses, our and can since can any to in grew year our And Walmart the grow so channels impact not Giant this when business some business. on overlap our we’re business distribution we Green our distribution, in gaining loss started expect we to overlapping

business, it’s sword a that forecast margin right to mix because lower double-edged and got is of business. the we but a still margin Now positive that’s just growing a that in terms

it’s both going So we the is through on not Giant frozen expect grow shelf shelf on stable and side, the XXXX to in and innovation. stable, all distribution nicely Green

Dave Cook

on on more with acquisitions. everything heavily out. at you’re are looking I fair Is lastly versus large then aggressive cost you acquisitions leadership rolling to And plate, you’re small guys you savings and your at acquisitions? Okay. smaller it equally have guess or looking assume changes, large

Bruce Wacha

I would work. we’re and say math to looking has

Dave Cook

much. Thank very you

Ken Romanzi

Yes.

down. slow leadership are not to Our that changes going

that new, one people have person’s acquisition. that people really are a are other already stable good the existing have in We – worked people who and existence we that and on are

So on amongst I – we’ve that people at earlier. who standpoint, from that had looking leadership acquisitions are are a outlined involved leadership the the already who new team

Operator

our with Bank William go We question Reuter will from America. take next Please ahead. of

William Reuter

Hi.

quarter you second increases, competitors that your talked When as they of competitors should Firstly, to a think well? you to have your guys increases through have talked customers margins. your in help your message that’s those, about the be to of price talked about terms what you going about? consistent you’ve Some them amongst pushing price do

Ken Romanzi

talking who companies, with companies, for specific increases. getting other food into shipping stores. Without companies I press. people what’s care that and in packaged personal are example, people think And is can I selling out there are public grocery conversations things and follow household the customers about majority in Most price think you

William Reuter

really helped sounds that products Giant fourth but mean of And product strong sales I that I’m it Green little some – would a in your not remarks so in you weaker. can like were weakness sales, other sure prepared I guess then Okay. these quarter higher those guess, bit the to the what of margin if sales products? heard attribute do the I

Ken Romanzi

we I say just We get weakness, grew base don’t our we business. it’s didn’t that above. again, growth know, incremental I’d over and the sales, grew

full think when X.X X. about fourth our base quarter business year, and we you up were and So

performance, the hoping that solid just we get good were didn’t So we incremental for. growth

William Reuter

then lastly from And just Okay. me.

them to year product I selling some would of the going some years you sales? in that’s guess imagine try next, How I work that evolve and increasing products. do two customers, e-commerce say, to, over let’s of talked your you’ve terms or As will continue think your to

Bob Cantwell

time. it’s to think I going take

for that We’re on is couple people as and continue like to percent do. well. grow our most a job than business over certainly less of we It’s do our position grow to focused It’s going e-commerce. things to time

Ken Romanzi

of with it in retailers good on the solution. do mainline great work not – are and the And you very one from TV and that solution. up, Walmart of is pick basket it’s a online we go who offering that, thing advertising they all closely to add just and turn actually they the see delivery big I’d full about very terms mean, all all have – and provide is shopping some I

piece we’ll of to the but of more that in a their big much work playing be doing with that does, up business. player some Walmart digital we’re to do with the large way to online, shopping work the small solutions. to Amazon, full little also we’re that in very basket aggressive ready It’s retailers of catch when them the take does with a on with to So, are and bit and so it and like online we’re getting available very committed in continue players continuing on when still the all terms of Kroger we’re there assets going key off our business and a right –

William Reuter

all That’s from me. Thank Great. you.

Operator

Bank take our next from question We Montreal. with Ken of will Zaslow

Ken Zaslow

everyone. afternoon, good Well,

Bob Cantwell

Ken. Hey,

Ken Zaslow

I you guess. semi-retirement, congrats your I on and well wish Bob,

Bob Cantwell

Thanks.

Ken Zaslow

through look, the is all about B&G did again, looks to all these growth algorithm and transcript through or say, to go is like When When they let’s case this, was can the cost to muted just beyond and project, your this change offset cost to big our accelerate rework the algorithm you how XXXX think business Ken, is of now there when and the doing a I think that? start previously it go savings, Foods. off I structure growth initiative about the we I challenges hey have but actually

Bob Cantwell

at creation we’ve saying the Well, and of value overreach past a our companies acquisitions what bottom of line through top we’re not terms from look on double right come and in so a has line now line creative pretty trying If achievement to digit with top base – growth growth. been business. consistent

right. So top line savings, exactly growth, modest the you’re cost

of We’re level. as cost costs just well food inflations not, now pricing have to for terms up right we savings in we’ve deflation in back there retail at as input, the ramped many was both because years,

structure our bad So idea inflations to structure reduce a now can our inflations improving margin. we’ll control, we more but gets under work where back, on cost it’s have never cost because when efficient

with hope down more So doing implementing to more we’ll in the maintain get just we’re margins longer lifting the margins in and this and asset some of of short just all we again term, going to our of road longer in at. have to heavy of they our we we’re cost the and a multi-year be the ideas be what ideas improve take terms savings effort rationalization sharing term to

Ken Zaslow

we it, a you’re second a stock doesn’t How acquisition an close when you is, that like what these get how buying back status. seem year. justify stock? to you would My get close do purchasing at even second argue return you would making do when believe And question by stopped I it that would your levels your

Bob Cantwell

is, that share accretion part creation from I we’re we have authorization think We’ve continuing it. the could shares, in during share I place. look open And we’re get also M&A to of so buyback a value the So and and backs is we’ll both, point answer at a and windows. looking we buy bought at

the We’re on also business. growing focused

we going an sense, does sense, buy to will an consideration. It doing not We’re there’s opportunity that doesn’t to take but into also make make stretch something acquisition. if that

Ken Zaslow

you. Thank Okay.

Operator

Michael Gallo ahead. question Please our King. take from will next with go We C.L.

Michael Gallo

at question. a after best to When very obviously good had overall opportunity picture you year. you this noon. Bigger look good your the Hi, Ken. price Pirate portfolio, at the

happy portfolio the that that the today with a have divestiture brands might And or of of move that to you to Your all perhaps a kind the and think quite make XXX% are small you’ll look Is in Thanks. there a the out sense continue along. about portfolio? sense them. just make brands Don’t where underperformed you used bucket and you of few have? bolt brands you clearly there’s in at

Ken Romanzi

Pirates will us we’re mean, for sell look sale. to like I our some times when and nothing But wants someone listen. if Yes. there to earnings, into come was brands, either. you XX But pay ready

some trading want of at. these brands, in So, below don’t we’re a we be to by decretive what selling brand

selling very have EBITDA. careful off to we So, be about

do outsize have to don’t it. willing that, we’ll for But that’s someone’s if pay so why we growth. And

Giant. some growth, upside believe We have upside that’s Green in to are on McCann’s believe and aren’t Nature. there But We algorithm X% very fantastic We that growth the a its modest our we line. top in why brands have and Victoria. Back its and X% to categories

and it’s wanted So to a to this declining a nicely board, brands portfolio there’ll will algorithm. several planning grow we X% strategic had term with for become brands we through it’s where like session to Green are really and like – and like, amongst my we we stable to X% forward a test brands new, long and portfolio some that’ll been to me don’t our Many we’ve be bunch have manage conviction a being Giant. on they in of going how the take this portfolio manage us and

Michael Gallo

Thank you.

Operator

We Please will take with next go JP our question Morgan. Casella Carla from ahead.

Carla Casella

to answered. most is the the run the clarify, Hi, when should by the that this basis just you year? or $XX a you, $XX million that to bottom been you what should cost of fall an have have your finished But questions year line to time my rate million, on savings,

Bob Cantwell

are an there, throughout this lot builds we’re just year. those what it again, programs of the inflationary because many That’s this from implemented on pressures. because year year a hitting actually that’s are offsetting So there and annual, planning is

all So savings. XX not they’re not full they’re months year,

Carla Casella

the net that net of the is cost? And number, increased Okay.

Bob Cantwell

Sorry.

So the should year. you is, cost way should savings year. look outlined this the should What’s the we’ve pricing at with this for be benefit be

the should guidance make in we we where costs. some outlined inflationary provided. sense? Does that also adjusted to in Then of to that us our pressure well see input XXX freight both as take We that XXX EBITDA in as

Carla Casella

you. And my Thank answered. questions it great. Yes, That’s were does. all

Operator

We go our Larson will Group. next Please take Eric question Research Buckingham from with ahead.

Eric Larson

afternoon to both been time. long together good luck Yes, and good We’ve everyone you, Bob. a

fourth $XX when benefit think I you don’t is, a quarter look at don’t you benefit. question million my I – a So here net to first $XX pricing. that’s that’s the talk think about million a from net

I the look So promotion the went get is is quarter of a on here ease. of guess when pay brands much started a the that the When this checkbook your which self-inflicted looks it’s was him, some coming too more promoted bit sounds it question I you problem… this with at the in side, to didn’t of fourth – it piece he you had little quarter, probably interesting. empty, the particularly in, to on is like But been lift bills the you’ve like

Ken Romanzi

Eric, I’m going one for to cut off just second. you

quarter, So to promotion here We was that $X the on were and a of just that hoped forecast, going we little earlier. missed million. maybe lists $XX fourth anticipated million. we in our we benefit had combination to over where got be and We bit benefit from pricing,

up $X million, we pricing we So actually million. benefited by forecast missed our $X all from a in but

Okay, makes does that sense.

Eric Larson

Yes.

Okay.

[indiscernible] through as is, – of and issue to on is and question a, referring forecasting announced promotion annualized generally basis. it it’s requires it next you the was annual work earlier a kind advancing you that Ken then So planning

XXXX? too the – you this in are this that procedures I place the so is how could, guess happen have again is why what your high, number’s you So put right? way, in promotion mean, best run don’t I

Ken Romanzi

Yes.

$XX we we pricing $XX when got to when about like it, last our of think that. benefit. So million plan anticipated year, million you million We $XX laid out

at price more in from budget come have heavily basis XXXX, our we on on explain can or and going increases. is good is missed actually As process felt much trade we the through in out we to number. that going list were as based we for thought the promotional fourth we benefit year along, budgeted better that. what pretty And plan not we is were quarter we’re a rolls What looking price spend and that a so earlier

as To of be you’re that referring will So plan. avoid that a heavy a plan opposed to. it risk combo list to

So I the through thought guess I you plan say and we we that we that’s that hear created.

Eric Larson

Okay.

let’s second. final build question flow the $XXX your last talk to annually and a is, commitment for million So got Again, the dividend you’ve cash year.

reduction. lot What you the for the lot because to now issues a prepared again, cash a really flow when your dividend. year right it should be through from your of of there at were benefited me pay inventory hand free going ability through You comments, walk this and were

Bob Cantwell

Yes.

from $XXX excess million with we payments. of dividend should before cash dividends about benefit year $XXX this million So

Eric Larson

I’ll We’ll out to of offline. that get the take Thanks. details I’ll later just Okay. offline. – figure that how

Operator

our next from ahead. question Lasar take will We Please Barclays. with go Andrew

Andrew Lasar

such Good today that you we One here. me with, actions around afternoon everybody. Ken, is got pricing, balance a and course to think the start lot you’ve discussed – number when cost of things as CEO urgency as on sense let of a elect the of structure of well.

of of would kind but Some of reasonable think EBITDA you senior that sight will, Is be – you’re of think in be putting out a for are how range right? to the be to you’re goals achievable, the flexibility it With little for XXXX achievable. And think I sort from and right building on haven’t hook wanted. talking couple as if the played around, that a is, where you’ll for management take way And and that any the it’s happened, better sort You’re because a to to some it’s out, changes. year XXXX. a XXXX you if that have things outside than within that you about? us some or number to built about you average in maybe to line bridge can control your of have way bit able through the on, you of or years flexibility, we’ve last whether years gone seen – things that, when

Okay.

Ken Romanzi

can bake – put is achieve. do in we we everything to not try we’ll Well feel

I in a past. lot in the think we baked

we’re like it on we’re than from that we more actually So, in, what trade and not we promotion on get anything I taking we but we are after not savings, shared. said, cost baking savings going feel some, pricing, in can

that, some these slippage. there’s wouldn’t numbers show up in more internal our So but so of things, than

slip a So adjusted we tried number. to give

as are the if beyond combat more can’t I the inflation. on those say areas, So that really sales two doesn’t upside shared a sales huge and range we

the So would promotion two the lists other going you our when between cost but to to not pricing we savings buckets and why, that’s three going grow, solve grow we’re promotion. breakout to trade want big are business and is and inflation, that’s which and why pricing trade

what say So up that more our I in sharing executing total things would than on financial way that we’re we’re doing bridge. the is we’re

under can and believer here. a over am new I’m promise deliver. over deliver, totally we promising, So I not in it’s like

the we margins us, it I’ve So we’ll that a forecast. hurt and fourth we we to can Green particularly And we you realistic Walmart when think have on year in I now achieve year business, back learn able understanding quarter lost cans. been can achieve, we’re next what it more now, One have in. Giant the the what think about

And on of that. in forecast so the margin implications all

in to I that. forecast. and can business learning be more think little forward We’re how bit a I have And – more we our a stable going reliable do we think now

Bob Cantwell

food that major thing that going going just two the that be a add suggesting knock was think the reminder, industry up of you the a when years, there in XXXX to quarter industry-wide. just were beginning And frayed aftermath to that, don’t fourth to the think as last other to about two was going in to hurricanes was anybody come packaged I of

inflation. And So of beginning that was was the kind of a that unknown. big

beginning of not in and of costs talking last environment even was talking lower on was a were across the earlier, there the freight, really that the inflationary the board deflation. about time are Ken price deflationary of but year, down. still coming concept for some And pressures folks still because As either we’re

but that changes It’s from of last there’s XXXX. inflationary we predicting last our over years two working to to think do we’re best job can, been felt don’t as anticipate I so years, as people the were that two a industry in wide pressures lot said, the And in the that, Ken as we phenomenon. an

Andrew Lasar

that stronger an competitive in Green like innovation they your notion won’t the in I if And market you’re maybe largest of at around Frozen much going fall case level things missed then happen of as in of again, own around do next what planned mentioned that, you with anticipating but that. for also portfolio timeframe this till this, of you likelihood bring were then will doubt to some flexibility, its you – around that knowledge frozen recently. veggies No forward apologize going you’ve And you competitors you’re Thanks budgeting and building wave and it, right expecting Okay. forward. but feel had have through more its that taking I to the prudence look with rejiggering at that right innovation. ample going of specifically Giant that and another freezer response the a way of resets the know maybe all really you

Bob Cantwell

Yes.

competitor a category brand that from name than door change frozen. on by that owned into is us was standpoint the competitive is on owned a that a the and was Our feeling that the bigger very still while company category. our in by much that’s on focused largest And company larger more

a better going to to are are a assumptions that know be competitor competitor. in don’t standpoint. formidable before that changed formal I lot’s So They continue our

Ken Romanzi

question, be but But we answer products retailers our realistic, easy your to have either, want task that an to very were you new new early. a It’s products. know, trying forecasting we not lead few

of many and fourth has back things XXXX want want embedded in we’re actually trying they we to And quarter them and to introduce them we’re hold launch so to. as them planning the not what as been already as by

Andrew Lasar

it. Great. appreciate Thanks. I

Ken Romanzi

new a to always products deliverable. gamble it’s So on going what

got as be we’ve trying We’re feel lead and that endorsement to as based on have below from new on we retailers. all And forecasting with much it’s of we the products. reasonable can the that as

Operator

any Romanzi, or time over questions. I’d the you additional conference for like have the all That’s back Mr. for we closing remarks. to to turn

Ken Romanzi

it’s our joining. on to and all look year. a you. progress reporting Again, privilege an Thank to for Thank throughout and B&G honor forward we you lead the

Operator

concludes This you today’s call. for your participation. Thank

You disconnect. may now

B&G Foods (BGS) 27 Feb 192018 Q4 Earnings call transcript