BGS - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the B&G Foods Third Quarter 2021 Earnings Call. Today's call, which is being recorded, is scheduled to last about one hour, including remarks by B&G Foods management and the question-and-answer session. I would now like to turn the call over to Ms. Sarah Jarolem, Senior Director of Corporate Strategy and Business Development for B&G Foods. Sarah?

Sarah Jarolem

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

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

placed the statements. performance, begin we be Form These Foods’ publicly you XX-K should not impact or of discussion our future filings that statements or statements, forward-looking update therefore, refer undertakes remarks, financial a a could the of undue discussion not operating to remind future more I Foods results and Report are them. Before of need revise today and to of events any and detailed reliance recent future subsequent formal most as new SEC information, everyone on company's our We part upon includes condition. otherwise. whether forward-looking that guarantees B&G to the result obligation risks B&G for Annual no

call XXXX. the Casey. now the discuss the that as for to various We expenses, then of will for adjusted I the call before concerning results net and our for Reconciliations results, today's of business affected EBITDA Bruce call the to the measures outlook business EBITDA, like begin financial GAAP adjusted adjusted as discuss be third in selected financial and opening factors COVID-XX on the base non-GAAP remarks would well earnings financial most provided to release. net turn thoughts with highlights earnings per his directly today's measures, income, fiscal sales. diluted expectations share, measures making over our and to quarter, comparable financial these adjusted will also remainder references are Casey will XXXX.

Casey Keller

call. which from X% Crisco, Base And quarter plus Sarah. grew net for sales, X.X% versus in company's third for today in our period you, joining excludes two quarter business Thank third plus was accelerating QX. all you strong. ago, us the The same thank earnings performance afternoon. Good the at years

pre-pandemic addition of strength Bruce well and of results. will food spices digits Giant of Las sales compared to sales XXXX the net we up compared seasonings Net generally digits categories quarter two our seeing ahead brands, leading portfolio. XXXX’s year's third high the categories up With Mexican QX key brands Most when sales compared Net of of were Crisco, later, single and COVID are last Green to across our but period. talk are double to & Palmas performed Ortega XXXX. were and are XXXX.

brands also baking Girl, had to the Our Clabber Baker's for performance etcetera. Crisco, XXXX, compared Joy, a led by quarter strong

demand was strong, elevated resulting While in sales.

many through in the have year the half to of is managing a increasing double Inflation also single in mid costs to XXXX chain industry. the supply increase and plagued portfolio. that same with across are the We challenges digits, full second digit the

As canola major discussed significantly base soybean Crisco higher and the the on portfolio, given is call, increases than oil. last inflation in

or and with significant where directly increases, We appropriate prices trade list higher optimizing costs. input have responded price to raising offset

and pressure identify the with half, effective we’ll cost and the the Crisco price year-over-year We recover did inflationary largest increases. in on address we to first to pressures, increases into the of half are While price of accurately at effective second majority continued project September. increase our inflationary end XXXX

delays packaging cost materials, continued with efforts freight shortages a Additionally, to and to in we're capacity. inflation. standpoint, optimization aggressive From manufacturing contract continue we driving supply deal offset

SKU However, pack. the with service overall in on improving allocations Green crop levels lifting recent customer are by aided Giant new weeks,

to business is manage steady to margins. our goal Our stable

is EBITDA more In that business. believe growth. pressures on but will the margin to near current EBITDA make improve with that term, actions our we goal creative margin, portfolio, adjusted and pricing XX% a inflation recovering Longer organic this goal M&A, and target XX% productivity efficiencies a for an challenging, the the to business adjusted cost For term, roughly base is is margins. some with the right

third we despite manufacturing reached under successfully year the with the quarter, commodity an And to our our want that we transition. also Crisco. and agreement smooth for our of performance I Maine In prices. team congratulate in to the date announced happy facility. Crisco ownership, our some During completed integration is we largest August, acquisition, second a are to sell volatility we Portland,

We expect close sale QX XXXX. the during to

became its decision, become useful competitive. will Portland is University, the year outcome community. factory the the of is and life had Institute it home the clear Portland XXX the never old was reached a The site Northeastern facility at which future an shutting Roux no cost great for a While of easy end longer

seasonings and in make Yadkinville including automated existing Iowa and Hurlock, We high investments our facilities, are Carolina Sauces line to capacity Taco facility, lines that as also well Ortega Maryland increase Shells Ankeny, respectively. as for continue to new spices a facilities in the and Taco North new tech our

wanted So priorities focused choices key are four we and share in finally, months that after -- on. the team laser the to business, I B&G the

costs margins, third, that pricing scale recovery; now the discussion in turn improving and the our dry beyond in where call the acquisitions including future updates. expertise specific categories B&G performance Bruce core plans environment; on managing distribution;, those calls to a to value win more I for Foods through will disciplined COVID to of capabilities, fourth, strengthen resources our quarter. savings fifth, over in and are current on accelerating First, to come organic store portfolio; discussions, effectively detailed and Bruce? creative second, with right to the focusing and efforts and centre making and so productivity brands added non structure; terms more have both cost and and and we inflationary eliminate and growth of

Bruce Wacha

everyone. Good Casey. Thank afternoon, you,

Net year, be elevated closely create financial a we our tracking a challenging are strong had we sales mentioned, operating despite to performance quarter, to XXXX. to in of plan to the third Casey pre our showing that we growth, assumptions fiscal we and the for acceleration continue annual during budget go last pandemic as compared XXXX numbers. used an and when Similar initial year, set for As year net sales environment. our to very our the through are

the year, be continue quite Americans still net of sales compared work year's the with in we to also eating year extra our to similar an impact to have we last normal, sales only those As last that the have not during But last home way trends we the balance we to are year's quarter, of not increase through more week a expect that much industry-wide upside seeing are similar to period at third approaching XXXX. more we quarter. the of more coincided entirely not chain that input impact robust unrelated adjusting otherwise than inflation they of Separately, frequently The but is we of third more would and pantry enhanced height with but cost as demand. to a COVID-XX result that, be pandemic. after of the that also Crisco, served no and result this longer supply early laughing days of has challenges, some for the loading catch a did the pre-pandemic, the

our could that of for higher, stocks this out brands, absent sales be certain of means For some items.

plus everybody costs in cutting like possible virtually and across we viability have our structure. are portfolio. to up of of margins portfolio double all ensure cost sales, transportation, typically are most the expect continue long increasing napkins which industry, but And products manufacturing like what digits. the oils, protect relative cases canola For to from where a and margin mid-single many extreme up aggressively Input and we we be generally the challenged our for certain appropriate, profitability are digits brands, our products price food term were for with to soybean,

COVID-XX primarily Crisco $XXX generated when XXXX well Now, period EBITDA XXXX adjusted reported for share which of of both prior Based sales, $XXX.X XX.X%, net sales expenses EBITDA net up $X.XX. XX.X% adjusted excludes by million, of time in December XXXX. earnings and of sales EBITDA million and sales quarter Adjusted the decreased ahead net $XX.X of to the our XXXX. compared of forecast sales in $XX.X X.X% for third Net million. Adjusted percentage the million, for business which of pre-pandemic or of or quarter, from XXXX million We QX XX.X%. in sales quarter XXXX, million per million, understanding million, $XX.X or as Crisco ahead from diluted $XX.X third our net XXXX before QX a of was of COVID-XX of before and up XXXX, net we under $XXX acquired same after highlights. ownership. third was $XX.X quarter expenses, the the

the sales, our $XX week in $XX.X which of due increase by XXXX of little performance spend in an million previous included As comparing extra unit QX in inclusive of million of of price third benefit a not million. offset week list benefited an volume, XXXX bit the enhanced trade for XXrd approximately XXXX, are base and optimization, from increases when a our The comparisons estimate also decline $XX.X only a driven of timing negative COVID-XX by by net quarter XXXX to we net reminder, part to is sales mix. our benefit which portfolio but in the pricing,

$XX.X cumulative compound sales. to net pre-pandemic a excludes $X.X business net primarily annual Base compared X.X% year-to-date pricing two-year representing million of over rate XXXX, net which up Crisco X.X% benefit million. the is added Foreign exchange a of index approximately On benefit. growth basis, of our sales, were

increases, of share and factory share $X.XX the supply These our to term locking net comparing brands addition QX price costs, share through spend chain per in and Adjusted had transportation prior decrease volumes QX compared XXXX one in by with the of The prices and Our materials, XXXX, fewer year's and adjusted to growth short XXXX. $XX labor contracts, XXXX base initiatives, XXXX in sales when QX of was input reporting $X.XX offset We Crisco commodities the in XXXX. million compared XX.X% week. QX our QX, when per QX to and $X.XX X.X% of million continued $X.X or was quarter third driven EBITDA sequential XXXX. relative $XX.X third adjusted including an largely the reduction to the business and quarter, materially costs but in represents raw sales this in in coupled The business performance versus million, with base for quarters. generated second increase costs, EBITDA of this to decrease year diluted spending, in majority XXXX net the other agreements, declined period, in to year per first coupled trade purchase portfolio. compared growth key or the a were in acceleration savings advanced versus optimization of higher part lowest increases cost in warehouse implementing by costs in

lows However, when million week versus approximately net to two-thirds for If sales XXXX $X.X quarter the York increases QX New years. substantial of the recording million increase QX decline were an in brands and will performance Ortego of which Demand to the declines remain taco our that the $X of to upside today. to continue previously, compared XXXX brands XX.X%, chain XXXX. third third in been XXXX. brand is production. higher. In spices comparing time, our in The quarter shells, Ortega early X.X%, capacity and at as third that And sales limitations sauces. when of net unlimited supply of believe Ortega, or even of we unable a were seasonings million, our resulted and increased meet third up XXXX. demand to for of recall, million quarter other in X.X% Las XXXX the X.X% quarter of lead for XXXX you and kept taco resulted manufacturing to that compared said fewer taco as XXXX, had salsa in represent Net the and one chain representing QX very we added an have of Palmas of and industry $XX.X where quarter net sauce, business, majority when or compared $X.X had some may Ortega Shells brands we million XXXX last sales invest sauce, QX XXXX, continue Net category year increase and million seasonings $X.X in to sales compared we Las seasonings will third was would in by this And to Casey Palmas from sales this compared back Last supply on of increase a strong. in growth for capacity, to tomato style, or to XXXX. were of cases, like compared In XXXX. cases, that fully $X.X were and an or increase of like see point recently to a year when the the prior constraints for of we to of for net wide nature and an of was quarter the an sales harbinger when third

and brands Our of Las XXXX, and million, versus seasonings company legacy brands our million capacity. for our Net sales Seasonings Palmas QX of QX year, manufacturing the in less spices sales the compared Net have or constraints, little one primarily leading by this such as quarter. the XX.X% acquired of is for we outran Weber such seasonings $XX.X $XX large sales to fortunately resolved supply down continues our and a by than capacity The be portfolio. helps issues accent XX% to Dash, drivers which spices as increase our that including & & shortfall the XXXX. approximately driven net and of been Spices of demand our to and bit Tones as approximately were total were account XXXX.

QX in getting in that is be the spices third part early we year will alleviated XXXX, XXXX, coming When phenomenon sales $XX.X quite for approximately or lapping strong and & year's also this quarter some quarter. quarter in of this seasonings spices of comparing million capacity a better, additional were While are last net increased by seasonings or in we fourth expect we massive and XX.X%. have on & by

and XX.X% of in generated pack through caught largely QX compared $XX.X the well The XXXX and off beginning now when season, of half down result Giant third $XX Green XXXX the of supply XX.X% fully to performance sales or acceleration net Giant. today. second are XXXX, continuing XXXX. in an which up the quarter We QX third is is for million on the or million $XXX.X quarter of compared when to million Green

compared net of holiday Giant Farms, and quarter was in up QX December, XX.X% $X.X of healthy sales net Among strength million million XXXX. for generated down season expect the for We up $XXX.X Green quarter sales in sales XX.X% QX X.X% Similarly, to of million a continued quarter or in Cream X.X% or to gross generated large net XXXX. the sales. XXXX, or profit Maple year. QX Grove which Wheat, $X.X from of third we which QX or Assuming and the $X.X was down our $XX.X this through net million for XXXX in quarter or $XX.X brands, $X.X November to other for fourth million but X.X% generated XXXX the compared million compared million

divestiture-related net million third XX.X% quarter of $X.X of million during net quarter pension we manufacturing million and of expect of or plan profit and the million Excluding Portland incur sold a multi-employer included or during gross of facility in the divestiture cost upon would of of of XX.X% sales. non-recurring the goods been our present profit including in acquisition been estimated third for million related liability impact expenses, expenses, $XXX.X have accrual withdrawal or to $XXX $XX.X $XXX.X the of goods have quarter gross XXXX impact third excluding of sales. XX.X% of would value net of XXXX, of the sold cost million of closing negative for $X.X XXXX, profit sales, was the the acquisition, Gross non-recurring a that

profit input than XXXX, was gross and factory expected of quarter for cost higher increased including third by inflation, impacted negatively materially raw the materials, costs During expenses transportation.

in We of supply cost mitigate inflation locking agreements, by for advanced contracts the gross attempted to impact commodities on have by measures. savings short-term purchases profits prices and and implementing

increases relative. for is and also promotions list impressed been short executed result As certain call, have trade term pressed that products. margins we discussed on the price The earlier reduced –

X% by ago continue we acquisition was the which almost sales. with Portland $XX.X levels for increase our entirely primarily general acquisition fourth related warehousing coupled this its by $X.X and and time. $XX.X and driven by margin of expenses, were prior net business relative expenses we the of in was quarter adjusted of and decreases million adjusted one weak costs and driver financed So our of the As sale XXXX. general in with our to short-term. adjusted expense do year, in $X.X combination third to recall, was last million $X.X Crisco, QX XXXX, you incremental may shortages increase Selling EBITDA little a currently increase over million primarily which, of of X% to of efforts million The million, or $X.X generate expect or The to and and million and by in mentioned the and percent. million costs $XX.X $X.X $XX.X quarter the and administrative $X.X million acquisition incremental of a up interest, a less expenses to expenses, This the quarter in was expenses in and $XX.X Crisco. are to and the quarter. the third expense historic Crisco quarter. acquisition of the compares driven driven million, to XXXX. in XXXX XXXX. million a brand early expense compared finds in The and quarter and may $XX.X $XX.X costs also amortization for million the the two expect or than marketing generated SG&A in quarter million million $XX.X loans compared to was in administrative in quarter customer integration Crisco costs a COVID-XX X.X% primary expense to revolver in warehousing million to its little trend return entirety X.X% before COVID-XX in interest compared EBIT delays. relate Interest $X.X the $XX.X were reporting third earlier, I of the into increase than fewer $XXX.X while year in EBITDA to of in quarters DA This the year-over-year $XX.X million And dollar as compared The or million These revolver and in selling million consumer draw we of XXXX, three and million partially year's business year. quarter expenses Amortization XXXX, of primarily the QX, compared is of in the Depreciation for facility. third us third non-recurring in less year's third in was term last last to quarter third loans. offset term profile Depreciation

expected for effective $X.XX an this rate We the of earnings XX.X% for XXXX tough in COVID to compared items to XX at expect in of billion tax a digit quarter. a against encouraged including continuing margins to to to adjusted we per what base some to cost and factory sales an taxes to following last million the $XXX amortization record increase million, of mid XX.X%. share generate by year. supply EBITDA of materials, to XXXX million $X.XX $XX net increased to this adjusted we $X.X these expense due tax per discussed expense of to raw We quarter, costs, chain with third the Also of effective Interest compared We inflation, XXXX. million, XXXX expense $X.XX share expect input of Despite to the are $XXX quarter $XXX QX achieve sales a compared tax challenge in to of $XX pandemic, higher high will due including for diluted tracking to to for mid we increase business million $XX compared back XXXX. and single the -- in the full warehouse also to cost interest ongoing year, third to to transportation turn still single $X.XX million approximately $XXX XXXX. for discrete an company year similar digit the of and quarter $XXX XX.X% trends. third quarter, in to representing net expect million, year's cash last sales rate year's and comparisons mid higher XX.X% in net further while effective over costs, to now And generated little year by share remain of than million year $XXX million the adjusted EBITDA rate I'll remarks. billion million, approximately challenges QX, remain for XXXX in driven $XX of and call and Casey to depreciation per XX% XX% we

Casey Keller

Bruce. you, Thank

at XXXX that Q&A implement year, begin said remarks. And call. we the the an and we against XXXX. a beginning offset digit to as actions we mid for continue extra pricing of in concludes call, I the of Operator? to the to week despite quarter the to portion As track deliver This single to now our remain would we had our the like growth portfolio. demand strong target inflation COVID-XX on elevated high and set We lapping fairly in a QX

Operator

will first Please question [Operator with Instructions] take Andrew you. from Barclays. the go line I the ahead. Lazar of Thank

Andrew Lazar

Thanks Great. so much. afternoon. Good

Casey Keller

afternoon, Good Andrew.

Andrew Lazar

is XX%. full year and In what over guidance guess first think for about XX%, XXXX. implies two Couple about basis, been again, And rate I was thinking I up a versus off, EBITDA that on think I things, of the XQ. in growth just year two-year implied think XQ I XQ,

obviously, growth basis two-year a on accelerates. So, think you

and a environment That'd chain be easier pretty generally terms rather you've costs, the speaking, trying when things than disruption talked of, a the first in supply much the tougher, question, the I just else get please. I'm guess, like and that? behind everybody and and to about, labor as rationale industry, sense of getting So probably acceleration in somewhat

Casey Keller

of numbers. some to I that, which then is I'll some can Bruce actions, really in so thing I Andrew think pricing here lead mean, QX, are September, Yeah, significant but late – which increases number talk fielded But a remember pretty one obviously and very were the we of end of pricing, effective in October. our and portfolio not which of becoming becoming September, actions, until effective are in this also pricing biggest the is took the cost quarter, and middle

say I guess costs the I but pricing the would So in started our one that of into P&L QX. thing coming coming are is in QX, flow real in big flows of mostly

So supply did think, bit flow the down I in little and of, that's most weeks, how service to most our issues get go I And some some better. our a say QX, from of issues recent a QX. change we've QX terms from the supply the would QX QX in our our supply – But of little to a we levels in in of significant are past. customer have started service disruptions, maybe and beginning the bit -- a recover rates, some went our supply of of

now. basically of crop which on Green the the off is, the obviously, we've business Green new been for Giant, allocation, big can One on we've which things Giant taken months

now So demand ship to for able we're that. to

But out – see first expect in I out know, you gradual starting I little in supply but improvement in have quarter. And the issues of of you them. quarter. not some fourth bit pointed be So, some going correctly the that, to know, we're woods to the we'll and a you the we're think a better getting then better, lot that get

Bruce Wacha

last And Green year's Andrew, allocation. can fourth quarter, a just reminder, was as during actually Giant on

the we last be where so lapping period then acquisition we ourselves. obviously, December X. on year, closed on And a restricted would we And Crisco

we have year's fourth it months. in last so all one that three for But in month in we of would results our And have quarter.

Andrew Lazar

price pricing, that. P&L trying in Right. XQ. I get we’re in XQ in, become increase in was that to then effective lot that is the up a sense think said about in sort I'm quarter That's price better X% XXXX. to into think a look of in starting the for helpful. piece, No how overall going about you more pricing. Obviously, price And we this of of thanks year-over-year might

sense X% in a steps how much saw this the we quarter? of that that For up from that

Casey Keller

you're going fourth a the to way Yeah, the actions our I of think see in effective is quarters step trade. pricing take, in big because the up we're

the the – September half is on and So, is increase Crisco XX. Crisco significant probably Crisco effective

know, what XX. We our the lead September QX, became into but that – effective on because that's we of customers you oil it So, is. the that got saw by P&L required flowing it costs time

be other also our October. the higher of categories Some cost input will effective in middle of

So, you know, will three pricing and those, the carry of into for XXXX quarters obviously that year.

Andrew Lazar

quarter-over-quarter, have from thanks get a times again, I thus just how you then maybe just quick the funds or least how early, that, so perfect. out, of some levered comment right on it's seven the see dividend flexibility Yeah, And sort sense, you're up, borrowed the and such, at on, sheet a trying just and and additional lastly, much. may to balance so nearly far, think maybe but you're seeing of play elasticity

Casey Keller

X.XX not times, on to a calculation, covenants, leverage think. seven and our different actually times, I Yeah, based close

is Just a the third couple the really quarter reminders, of finish of pack is, plan.

demand plan And rest at think we suffered. this the as think be demand we didn't strong when where the products, some year, extraordinary as have, of about of we lean year, side. and tail so plan, our about And the into issues of and station, continues kicks the we that some usually Last shelf-stable plan. one and didn't to for part we inventory, year's that for our have as is Giant, to third enough Giant inventory, of some year, to incredibly last the quarter heavy restore that for to we in go you working Green pack leaned on inventory end was it leverage year of the the this particularly on was when the in capital that far Green a had pack result, the but

safety, stock lower standpoint, and So more. a lean bit starting little from in a we were then

had we're quarter. side, seeing. accelerating, that's on the the satisfy the And the end last the or we to of second So Green expectation. of whereas were fumes trends on we our year, the of that's particularly shelf-stable the demand end part And that Giant at are why the capacity running on at on

Bruce Wacha

And higher in have predominant on say flow thing, to inflationary where because the inventories that, is higher working there's the an only up capital. the adjustment our other have that obviously we -- going that's inventory our QX Andrew cost we're going probably in into I'd that costs step

which the So costs. in step the in the higher inflationary that as nicely took valuation of a green very selling And it's starting we're inventory giant the we fourth in quarter. against it's that pack pack, up our frankly, the

Andrew Lazar

Thank so much. you both

Operator

will next Reuter Your America. of question go of the from Bank Please ahead. with William line come

William Reuter

afternoon. Good

Bruce Wacha

afternoon. Good

William Reuter

of prices for time. Given these lot these in over of the inputs, guess some I doing volatility started that? in year, them of with some a locking next coming have terms down you your of maybe

in So, guess take comfort trying has of risk I I them? what to, some your been guess with

Bruce Wacha

Really on the category. depends

we example. are we're mid And cans, portfolio the digits. oils, we said, seeing think some inflation the some Casey so think single there's are some for things But as is there about really of extreme, areas so Crisco, that where of a about lot

increases. And some -- heavier of in locking those we make to a price out of we bit areas are those little price sure

Casey Keller

see and what can when most we on are want forward or going in the oil, we what soybean way what they're you we will is, much, can we it they think we are I we press is, with when contracting we increase -- say as it we volatile will to the think And prices like down. coverage at coverage do we we we increasing. they decrease as look honestly, commodities lock -- know,

now, But what's on pound. oil. nobody this per So necessarily right at say, to going knows we're really oil XXs happen mid soybean current, would not coverage on soybean price increasing I

bought forward better were saw because coverage lower? we contracted year, the of we is half yeah, half increasing prices before So increasing, which coverage the costs we why or first the of of kind in but prices, had increased we lower was for at year, we when had this it we first had when rates,

William Reuter

if then Yeah, yourself bit with you and additional Yeah, consider the to was in a still would M&A? uncertainty that the that extremely sense. opportunistic, would be something to is down to get Or in market, would you was your leverage market consider there there near relative future? all you does little that no, leverage want a to the continuing number regard And pursuing help. makes the before elevated in

Casey Keller

look the we've M&A, got your evaluate it. funded leverage and it very So or opportunities of to be our increasing both evaluating to context. you at in that it into and then how answer transaction if goal. would leverage, standpoint question obvious going X.Xx have mix today, X.Xx from anything our have either comes would purchase on current something focused is to that’s the a the the structured price a so sized we to were in be valuation from modest relatively wasn't also M&A, to And to leverage we're that we getting When to at and a it

Bruce Wacha

below, question down second is, next like to the leverage we the below or get And first would term X at year. and near of in answer quarter the

William Reuter

to And you. good others. very hear. Thank to pass I'll Great,

Operator

Your comes go light with Lavery Michael next question Sandler. Piper Please of ahead. from

Michael Lavery

good you. evening. Thank

Bruce Wacha

Hey Michael.

Michael Lavery

seen what and maybe expect about anything as next shifts of the we flag the far, be on Just versus you bit little out you're for of [indiscernible] maybe back some wanted you to think mix but watching please, taking would should others, some categories or, can just any few a price the mix quarters? touch related just which modeling come mix can the or so to or pricing you from we to in pricing that dynamics, you've

Bruce Wacha

Yeah.

days. it so said, I say businesses answer on we early some some significant sizable early are we it's think forecast. we're in early based September, seeing I I to of talk input is originally And on, is, know, effective it we pretty it. But costs. Because think didn't on lower October. than elasticity. I Andrew, I on we it's would call, in increases the about the last becoming important these about increases elasticity days But probably But taking talked

and a elasticities that We're food. of originally branded industry then we seen lower businesses label other And model elasticities, in now we've seeing our categories. bit expected. elasticities bit many So private seen movement higher words, we that little little frankly lot have than in moving but other and lower we what of a

Michael Lavery

unusual quarter on surprises on, have Okay, the moment. most volatility touched just the also some to fourth some clearly it's and It's historically of been got some back that's helpful. quarter outlook. the And or at Andrew implied fourth of tends quarter a like that

to years. the know, how cushion out you maybe reasons -- about competence prior So I you're think can to us laid of the or your to what numbers? is you're what of there level just some And, your the pointing you're relative build might be but in in conservatism help numbers, what understand sort of to you've

Bruce Wacha

going the to mean, obviously, in numbers still To for for what's guidance it fourth we appropriate quarter. And numbers the there's felt in this give fourth thought and make the year into confident guidance we're We on your sure those dynamics hadn't terms to world until and a we year. I gave going COVID. of territory uncharted quarter. EBITDA to the do had so for an this this question quarter enough implies we was in the answer

Ken Romanzi

there's One little which I October is And thing good a in feel a Okay. start other is, provided two things. to fourth would think, we guidance, consensus. says we to I say the quarter. is the upside off the

Michael Lavery

Thanks great. so Okay, much.

Operator

Please from go Jefferies. comes the Karru Your question of ahead. line next with Martinson

Karru Martinson

Good afternoon.

rest the terms how capacity? for of year the and of And co-packe have that terms XXXX? you what we are that In are securing looking in pressures, of of types into the contracts the

Bruce Wacha

specific category we having that not on would try last we're Our I a in agreements. what contracts been term get the or suppliers, the co-packing. But depending honoring environment we've me, commitments. months product supply six the and that those longer Honestly, always excuse we're that will usually vary say COVID, in

has demand basically are typically surgeon get So, have they've had how negotiate their overall -- meet can we trying shortages they're what to labor they're frequently, our reduced we cases, much In I mean, they from ability. which available. their themselves, some to customers. trying of And

asking bigger term and really that was that work that commitments. had business. our to meet have I have through said So to we've of It's to manufacturing, kind tell longer for. are tend you contract some everything on nature And They come back agreements we on an a and environment. But, we individual will basis. of I just back they in case-by-case us it's basis. this to But can't

our seeing way capacity coming quarter. are the We in fourth more

with who starting we're available better to our manufacturers are feel meet other dealing on or shortages from our or problems we items, full have of a key So have can't things about we labor the still some some suppliers certain capacity contract they but needs.

Karru Martinson

labor, labor terms on guys facilities where needs? are for your And on meeting you in of the

Casey Keller

some would a have that we I we understaffed. say, facilities are

to not want. get we're everything that So staffing able or we full

just not it's the environment, the near of in. pull So, just us not for available hiring to the availability there's -- there's candidates

to able full we're other Tone's in hard be. to But And we plan, Spices, everybody But, ourselves and of back have trying about making get different we get full probably shifts to Ankeny, in four industry like shortages. with very I to some facilities by things. you that three dealing staffing the facilities want at now, to overtime and our right we're Yadkinville read North where incentives different labor this So the our staffing now. we're Carolina, things and get Right the and up is recruit like staffing. the offering some some really other schedules full changes understaffed with up to and to very, almost think where to be

facilities say full I understaffed. have it. be am just But severely So not would about concerned to would it's We're the something we have we're staffing I through. levels we at to like manage where we at. don't

Karru Martinson

very Thank pretty It’s much, guys. good. you

Casey Keller

Karru. Thanks

Bruce Wacha

Thanks Karru.

Operator

Your from with question Carla Casella Please JPMorgan. next the line comes ahead. of go

Carla Casella

be curious you I'm sense much as that warning, how cost as products? a your increased great. is can how for the give, in that would much built the and of your if short but sounds Or just any It us extra you're stock of can sequentially any into details you just keeping I'm well Hi. inventory it significantly just give actually everything, like

Casey Keller

three Yeah. There's that. really parts to

terms increased increased in Last million. context. by $XXX This $X.X it third of through year, million. quarter, we about inventory Just by the we year

quarter, about COVID we we the for the numbers. able and kind the And the And of second worried in really tail of first were on the were inventory we due not had, year, those the last sitting quarter the fulfill pricing reasons that's end to problems. So context and of inventory. most for sales really that, to the

we numbers what on for inventory. kind talked we're our specific we've we was the the And the inflation COVID what of full was year loading peak to inflation in that of days have broken so the down COVID. But, up had here. new of the expect plan, certainly And of inventory. seeing and the that versus liquidated of terms build in in pack PAC to a inventory year, Giant. what restore for of then don't early at I lot This and we Green that we had some

also we some where But also give should bought up we inflation in areas of that large to year. end some increases. you then, on that's got PAC there's the those us context. think the costs make we've plan. load early bought purchases supply we're we for coming, have concerns to of the And that kind get And the around typically of sure we we and plan. So chain, ahead the And quantity other inventory through that of

living inventory the that quarter normally this in. but peak given for year And third like it in world of level is, the higher we're year, even the so just

Casey Keller

that-- simplify To

Bruce Wacha

I'm sorry.

Casey Keller

from unit that of simplify value I because and more than -- This pack only needs inflation than the our half is -- get inventory had cost terms the a half to going up Giant a really -- on Casey, little more increases just allocation. increases The year Green cost meet the inventory. full we would last the the pack of of of answer. business say didn't in on from we the to go are in higher

not which in of year, is then which the wanted the pretty we this know of last unit. we XX% much the at you quarter big Crisco the what a end And of business change year. have the did got addition we So, three year-over-year

-- cost really on only is really else step just are changes, inflation. those help? everything So, that the we're up unit Does

Carla Casella

it that will release of but of be of the a quarters? some over may -- that fourth for Yes, sounds some release does. several it pack lot like quarter, Giant And will Green

Casey Keller

of do third is, you you and as Yes, typically happens from in into of where Giant, as down quarter the first second And quarter we've see what quarter the the sell fairly decrease that's going in Green continue US done typically the -- beginning pack. the into to if a to inventory the look, -- quarter, nice historically, deleveraging. that fourth significant well M&A outside then

Carla Casella

Is Okay. And coming is terms on sale? what that in? then expect the held just should main cash sale, that one assets million that for facility proceeds that we in $X.X of of other the

Bruce Wacha

just that's Yes, value. relative the to

ultimately flow price process that's our that sale haven't probably We was. And what disclosed financials. will the something through

to there do the sale not some a so in and at the and number, not price but agreement, disclose that certainly today. that So, transparency time we signed did we the position

Carla Casella

did much or out how how some -- the you sales? say but quantification? And you the I much that quantify significant, kind heard great. you any took did of Okay, stocks give of

Bruce Wacha

not. did We

Carla Casella

you. Thank Okay.

Operator

line the Seaport ahead. of Research from go come will question next Partners. Larson Eric Please Your with

Eric Larson

the question. Yes, taking thanks. Thanks for

again, both now look the rebuilding dynamic? your it's to continues you low? the consumption? you don't of shelf have again is, real that a that And we And but I have some takeaway, stable, pretty retail guess, surprise question, question I on shipping ahead is really my kind there should strong, you So, they this retailer whole are that at Giant. us. year? Are you how Are inventories? that of demand And Or retail demand inventory, inventory is still enough risk Green guess is particularly still

Bruce Wacha

all nice run we inventory. this heavy through it in sold but we've that sales year. Like extra we into that that said, conscious of we was the made. product, confident But to add a of So, if leaned out got we'd would sell-through We're have, I pretty to inventory, be hate pack. an all a problem come our that

Casey Keller

retailers the have heavily. they'll business, a this I mean, really rebuild inventory, this side of the our a in isn't that category is of frozen lot that don't

was we're in little very solid but demand fourth quarter of what on is part first seeing bit the nicely a re-piping, there pretty -- late in September shifting and of quarter. the timeframe, for Giant, Green So, first we're probably the

end as of and additional some we in the in the we expect QX. we -- pack Bruce sell-through through that that get said, consistently. always the spring. get So, we to sell the The pack do inventory at it We -- pretty

a the So next we'll have but lot in have do, going some to several will the vegetable categories that back manage spring things to for of coming we're quarters.

Eric Larson

And about Thanks. Okay. this. on help bit talked little have a me out And may you this.

do capacity to as Ortega is out one you've or line that stood ability demand that but the constrained modestly and you're meet your there still several I demand. than was product know that got others have and that I only stronger think think Is things labor others? shortages such I the are that Ortega, where you that, for yet

Casey Keller

the sales are to -- hard XXXX. we because when levels have, at to and they're compared you've got complain that it's when especially There

And where some but that there brands, of some the have on meet brand-by-brand areas enough demand. basis, to we a don't are

Spices be snap area just one. and more product. if get one, be fingers a And could so be we where another lot our and you Palmas Las we a get nice Ortega have would could We sales, can't. lift. would would seasonings

up So where can't product. even up the Crisco early Nature, that for as reference there just where areas sprays. could to get product example various But Guard, there's They other get that to struggling compared Style, business for the we be Static York more them was sales. to There were on sprays sprays are Static more. reasons Guard. we sales robust Back access just Crisco Canisters, Crisco to New are sales could get XXXX. a

so And

Bruce Wacha

Canisters.

Casey Keller

where on wish brand-by-brand varies just overall It's you product. around, find sales just you can had but more you brand-by-brand areas

Bruce Wacha

Yes.

Guard, cases there's that Crisco sprays, spices that liners have where we're as have constraints supplies, full two talked And real Static packaging caps of this just constraints, we year. crop for we caps there's or and kind allocation, and like materials think about some agreed and the is a for I we then seasonings. off working through. canisters in to we One

to investing and So meet new But demand. we're on Ortega. taco lines on we're able Ortega, in that shells taco sauce

and now. be where our line will able in quarter. support should be next first spices by seasoning we can additional the And a quarter. support the and be to those we on going So coming capacity new demand chef facility line a that have And all to coming on into

have maintain do we to we're -- supplies. in investments full material have trying new shortages work through to we But So also capacity.

Eric Larson

Ken Okay. Zaslow Bank Great. Your Montreal. That's next of ahead. come helpful. go from Please Thank with question Operator you. will

Ken Zaslow

Good everyone. evening

Casey Keller

Ken. Hey,

Ken Zaslow

you talk in I at Giant, are to that the seem it's don't you've it? really a thought but sense from than growth about more start market there whatever there little And at which investing doesn't I'm the brands rate aggressively a kind I Green out might just rather something, think businesses, process to your the you assessment? know, actually certain it When going get that we're past, into gives One, I more but holding aggressively. through the bit we out the of brands like would our is and that about is thinking, little a that And kind assume was we cleared a segmenting and wanted them in and of be way least, fair head bit get when years, that are hey, certain to of us. behind actually reading get this, capacity, others? that there clarification is I spend a on never grades it table the seven five, be, just

Helmy Eltoukhy

I is framework think right. your

some do work that's would we those focus say for good the the now, months. believe, are by kind believe out first organic get categories after and brand, where I So, but and now of into we at, and by businesses. can capabilities, have the not that where several the brands we only growth that We're of by, category, we I'm dug having that business doing looking our

We have good assets. businesses believe And value. a that, to also add where can platforms we future, those can us we be for acquire

But And still working it talk what a the stability. of then in a there growth. manage we've that top across, so we've to have got businesses say of expertise the business clear I'll going categories strength. one grow a intensity business because going seasonings, in can for of going we're can very businesses. categories. those and but through good spices, successful a think not seasonings, channels. of inorganic – look that that can business organically, businesses we to we going it's behind a there's that are proven in And we're been some can think nice what I there say, retail we businesses. And branded about and It's is clear portfolio line those and of not those maintain, all great gotten spices margin. to And to these that are where energy very today, bottom resources, try we're a I'm And it's there's that procurement asset, lot we're kind we a and area. But grow, that. we We've work to We've some future successfully, and also I in it's bring to the other going definition we're I very, are. put of think,

of sure some to going structure the and growth, not want and make algorithm But decide that acquire this. we resources you behind. run, the and portfolio. out put and – of And to will of we're some not value. more and we're of give to we're So where only and line focus, to grow organic we point, But expect not at and that grow to suffice lot then kind and platform guys that portfolio lot I to trying the say that, a lot just get we then a find stabilize. a can mean, lean we put come we really well, resource growth to to this kind we top me, of invest, of pick mean specificity of around and want ourselves where that that but And part to, parts going a

Ken Zaslow

packaged about more think this? stable? the than When opportunity keeping and about you Do leave there's an to it EBITDA to for you accelerate plateau appreciate or that, Just think your line here your see. of growth And begin that do it food the else when And that somewhere it is, milestone part XX% time. how I'll to I margin I you to segment then other – you akin thoughts? there, frame I'll of you is to companies is think rather and top is go? your those a second leave kind XX% XX%

Helmy Eltoukhy

I Yeah, take topic, the let's believe. on I – the think – on growth,

were we we total can I of some, see where out and gotten Mexican do Ortega, grow? in portfolio platform growth in of to personally And at at closer to – gotten want I the in more I this little nice believe more X% we choice to get we we've to we've do how growth future really we like do started say, the about that. being past that. the looking with would that zero. can in signaled we capacity. organic think full where I the we opportunity we've some where mean, traction I some growth And we can grow? do that, get to And get look not So a kind of want it. And to manage even by very low areas X% that

we a been. we're we yet. have are? I can than stronger we Do think But into get think do I I'm get get not Yes. sure other to yes, I the think – CPGs I little going better up some where bit where So growth? can

plans way. And, we're on that speak. now Let's working and it algorithms, as on working put we those and that

goal and from -- On I begin time, in profile. to next show margin to think a several I mix is it about to very and The of on the the us which there margins, that with growing businesses, kind get getting the we margin some the margin or our acquisitions XX% accretive I think for need our what me, up is really at over improving are move it's right thinking improvement years to XX% see possible.

be So endpoint, good I the it's couple of XX% but the years. not work for a think the would us next goal in towards to

Ken Zaslow

you, Thank guys. it. appreciate I

Operator

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

David Palmer

IRI it's with pricing change reasons lots one a question basis presumably near that, there. and the obviously increased Green that good And the is data taking some teens shipments term, the quarter, on Thanks. another down in looking the here for going data, but you like mid Giant, to as year the will be in on last

sort your doing IRI be seeing what we If the plan the data should in of improvement? is, what What in coming you're months?

Casey Keller

We've to looking -- Yes. business nice we're on starting been to happen so seeing growth the relative XXXX.

do build expect Green against showing last you bit So Giant that muddy, two-year-ago little growing I a base see and expect is that's kind XXXX how it, start versus quarter. from a Year-over-year us But the we I well. that trends base. as in of what better how grow think fourth but to in should will we're looking year at

David Palmer

that Where seeing Got I'm it. --

Bruce Wacha

to be benefits Giant Green just And was Yes. the from and clear, the had of one categories biggest COVID. that brands

those And where really so, until allocation. you are we of the hard some to numbers to on lap get period

David Palmer

Yeah.

last Okay. frozen we're X%, seeing On XX the down in years, it two weeks.

can above two-year So back that. -- versus to is you your positive thinking get

Bruce Wacha

you most getting even to where at I the if -- recent think about just we're were look expecting there. And it quarter, In weeks fourth positive. turn the

David Palmer

of pricing mid bit COGS it breaking having that category? other how has to inflation if a you was inflation, does that were pass you're something sort overall as you're was of a And category some more What thinking single inflation I terms the Got digits. COGS a is that's type the the the areas also a it. in that there it -- through cost the And your of of strategy, But inflation? that rate, double some where out you by core little up if And about of Crisco, think say digits. mentioned COGS pricing categories? about there's plus specifically, where

Casey Keller

on average full of inflation we're Yes, I what for said. clarify of I actual I year think seeing, X%. costs mean, the our about two answers actually may XXXX in

where lower If year first the use of second it's in we’re in of average, a our half our lot digit teens more costs hadn’t on double you is covered look me. the at where inflation the half cost it, -- low year, and probably and the on low of commodities, Then escalated the yet.

think to So about have costs this flow P&L year. I think you into of the our have how come

so going looking next let's inflation But low low we into it X%. inflation, we're teens, yes, quite how on single in forward, average, digit, I And how that's double And it's going at So we look view it's think continue way. put different that year, by at digits, the it. that's to low category. product

that. So and based on we -- price

with our that on pricing we individual actually retailers on costs we and products lines. see to price product recover So our work

Crisco Oil of so we had Xx cost increase the a going of from significant where the basically because would where be it ago. year Canola place the is was most And

and terms inflation that’s Crisco, so is to in account, of highest pricing category. highest our recover. have, that looking pricing at category It’s we also our on our plans, So take into

David Palmer

Thank you.

Operator

back any questions or closing to time. management over are It further the conference turn remarks. no this appears I'll additional at for comments there

Casey Keller

attention all forward We for you discussions and to in Thank being to talking look and you call. the operator, thanks thank future you, for your today. on and calls

Operator

and may Ladies participation you your for now gentlemen, concludes and lines. disconnect call. this Thank today's your you

B&G Foods (BGS) 5 Nov 212021 Q3 Earnings call transcript