BGS - Earnings call transcript Q2 2022

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Operator

Good day and welcome to the B&G Foods Second Quarter 2022 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 Sarah Jarolem, Senior Director of Corporate Strategy and Business Development for B&G Foods. Sarah?

Sarah Jarolem

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

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

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

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

Casey Keller

joining Good you, you earnings quarter and call. afternoon. for today all Sarah, our us for second thank Thank

Simply last experienced of QX year recovering caught sales increased QX, from price difficult. versus quarter have continued goods to XX.X% X.X% net higher actions at sold. not million, decline our EBITDA the we second our flowing cost $XX.X The Total prior pricing actions. was yet inflation a pressure into put year. with to Similar adjusted inflation ahead up of to

saw May some after June Within early the implemented results additional realizations pricing improvement behind to improvements mid-July in and in we tough pricing April, starting across we with from a quarter actions the see further portfolio. in expect June,

are Some Giant key XX%, last Pricing, quarterly the perspectives on plus benefits, yielding the and have times. XXXX, inspection the are in price taking results. months, market plus increases Green in with Crisco the but below of X% half implemented effective been of We first effect just customer slightly million fiscal required pricing – expectations. the initial year in lead realized benefit $XX.X the couple

news impacted portfolio XX label. although the elasticity elasticities service bottles in conversions, by Downsized to are is a at the is $X.XX forthcoming XX in bottles category the impact July impacting a and The year-over-year and P&L sales levels $XXX year the few at inflation new to increase. sold projected cost which million or overall increase elevated work goods longer in over below of through pricing trade on new Crisco spices as versus costs issues up and our costs, customer QX in still levels. pre-pandemic XXXX and seasonings action shipments example both are recovered XX% and converting double utility now was of is pandemic spices ounce diesel to weeks, QX down consumers addition, Despite brands X.X fuel and well last The XX% mix portfolio trend, packs latest Crisco shortages before early now. culprit freight costs most the Customer a and have historical and we digits facility. down projected delays B&G’s to price were and as the $XXX shelf our the took QX volume modestly transportation the Retail now the spices service The inventories levels. conversion seasonings, driven seasonings closer against on our that is and in and total results. Spices roughly started in increase shipping good as increased and rapidly. Key private drivers recent have category to contraction costs seeing to covered and reduced Ankeny the significantly across taco improved bottle covering in Ortega for over up million Inflation, and on energy July. with versus also seasonings recent were levels. have demand X.X now the with last and at In shell labor disruptions to supply shell some packs. well packs. related to

also in are month trends We recent seeing most improved results.

forward adjusted up we costs. pricing expect return Looking to year to performance half the in last behind catching back to EBITDA

XX% the QX pricing and is half year-over-year year-over-year cover projected pricing covered pricing projected inflation in QX pricing XX% realization inflation. to at total of of flow first about looking is timing of actual total fully XXXX, Specifically costs and against cover inflation. to year-over-year rising approximately

pricing expected QX benefit service pricing is and below QX challenges to year against stabilized implemented to in last actions Delta QX the with last costs. than EBITDA higher with more full recovery compared As rising costs adjusted and a XXXX. against Omicron year result, And be

business to recent X. me changes let announced create talk August about Now shift gears effective the a unit structure to we

expectations categories acquisitions, of one, the the making and will the units deliver to B&G and platforms the clarity portfolio. financial clear accountability, growth within broad business the that and parts two, run for decision may that managed over the resource fragmented and B&G Foods define and these The exit improving we and for will cash brands of future changes performance. multifunctional Two, Foods more and flow focus and to portfolio, efficiency down making the closely grow, established time. responsibility complex businesses are We speed we brands and push

investors BU the structure input will higher For and cost. and Three, decisions business priorities recover consumer-facing effective with and accelerating including over deeper to seasonings, to the BU portfolio. and Foods’ visibility the month, and more unit. external high are, key to understanding inflationary We financial able and the In a each current in structure, the performance to spices and last approximately drivers cetera. to analysts be for B&G provide they formation Dash, announced et margin of of implement environment, into insights broad sales, Spice representing improving Islands, and improve productivity drive With strong the product-specific player Foods four visibility the Weber, brands, units the XX% pricing, seasonings example, two net number time us B&G relative to and cost in brand the a of we spices and portfolio of expect performance the moving make composition of category.

cetera, expansion to on Grove Chief as has category This the of a with McCann’s led solid casual well Palmas, growing Cream B&G XX% at-home driven long through approximately aspirations new Our Foods’ strong grow by organically business will acquisition. Commercial breakfast the with unit this breakfast the capitalizing B&G’s net digits, are formerly Mexican Jordan sales, product be portfolio in This and low and to B&G’s add occasions term, Greenberg, Meals, position Las Ortega, as by foundation of lunch and working. positions Maple and Officer. in dinner Wheat, unit a representing elevated remote single Farms.

mid-single and Our aspirations in positions this grow in to add and specific digits the targeted subcategories new to to are business build low- scale organically occasions.

search. announce will approximately XX% Initially with and vegetables an and Sueur positions supply of the on of to shelf-stable consolidation. Giant frozen behind President economic appointment expect shortly the B&G’s net the representing this Le focus improving model unit’s following brands. in the We be and through Meals Green vegetables Frozen external sales

experience frozen innovation For productivity, to category. enhancements B&G’s unit approximately Specialty, including example, other the better our are Director be and a brands, shelf-stable, position consistent in Longer strong a Crisco, with Clabber of portfolio on category the et brands. formerly by center-of-store Giant, unit aspirations a This frozen of Kristen with baking representing mid-single who acquisition, has low- sales behind extensive cetera. term, Girl, the this Green Joy, to XX% grow Growers at net led Thompson, design. Marketing category digits, will the and on savings Baker’s

on Our has and sales business and sales portfolio B&G’s Officer, experience Customer who roles I’m unit food personally Chief finance in career. and Schum, expectations our and earlier This focus in unit the costs. cash operations by through additional for operating flow maintain excited this structure. to strengthen with her Ellen performance unit had are will led trends heavy be reasonably formerly margin to stable

already going in and are the transition outlook decisions the in next through and months. see and We startup working But can first the bigger and weeks, year. in faster I more for sharper focus, the Thank call underway detail come. days organization new couple performance on more now and Bruce remainder to the better the you. the I to And much of for over actions, will quarterly turn and

Bruce Wacha

afternoon, Good everyone. Thank you, Casey.

And portfolio. discussed, was increases by impacted across quarter Casey heavily first portions of like input second challenging. it As extreme our much was our large the cost just quarter,

second increases executed have the the of is be of not thus late continued opportunities those demand to benefit upside efficiency of the relative it our that we are categories. price pre-pandemic are chain seeing the continued that of based quarter, margins particularly still showed supply to increases Our still have signs has yielding in in to improvement, timing some due but levels We’ve cost recovered increases large price certain and but to we compressed. limited fully

these elasticity and seen elasticity June line compression largely on level overall moderation so margin the have drag, We initiatives believe have Based pricing financial in we trust of of of with modest but commodity seeing our are monthly our are that the in forecasts. performance. performance, and the far terms costs, execution we our been in in the some some effects

optimistic rest the to with regards cautiously the are of We year.

primarily Volume Volume net lower by the Net chain increase. net million increased Price $XXX million sales accounted product negatively of were FX driven coupled for than modest sales adjusted and the of and of negligible for During supply EBITDA million a challenges XXXX, and we of at with $XX.X the rates mix impact. second $XX.X million. XXXX normal declines by declines increases second generated quarter million impacted $X elasticity. X.X%. net of $XX.X quarter fill sales or sales

to pricing We will monitor so to our impact models elasticities negative elasticity far, of our from expectations. remain historical But encouraged relative modest, resulting initiatives. we that remain and brands our continue to the measure current

increased Net Crisco Crisco Green or two cost of sizeable increased and our brands, by increase the of during pricing Crisco. driven particularly help XX.X%. million input volumes to cost majority and benefited soybean levels net Giant $XX.X extreme implemented canola increases, Net for for to largest sales price fact, oil which increases. despite quarter, from the contributed offset of In we oil sales the

X.X% Girl another Clabber of net increasing Giant we from XX.X%. Girl price during Green with mentioned, the by Cream by demand had volumes brand’s also during Cream the sales. and as the or continued quarter increases. sales or part volume, had net Clabber increases million million growth of benefited had Net sales However, of across modest $X.X by sales Wheat in quarter, strong quarter. also also of portfolio. increased in significant by for driven X.X% Wheat strong price Net frozen Crisco $X.X Net by XX.X%. driven the increased $X.X Green million versus or down stable and sales up margin of that exited X.X%. quarter. million other sales decline last or down of on in low and products business or fall. quarter $X.X $X.X the private driven $X.X taco exit label shelf net by was a or million Net Ortega million decreased XX.X%. Ortega ago of year were were our were in Giant of Giant the unprofitable Green shell products largely hand we sales The

by Farms Grove quarter sales sales is increasing relative million up have And and of or two XXXX or another sales. our with and X.X% spices QX However, factors. to sales similar X.X%. off $X.X compared $X.X first elevated Ortega Net the driven second pre-pandemic to levels quarter the were had in to primarily net performance to million net quarter. seasonings strong Maple was continues

compared year improved performance quarter second as quarters the chain was category. year spices year’s elevated. had supply quite of on with which ability keep throughout peak performance levels. lower X.X% of million impact or significant last challenging or constraints, the last of lapping XXXX profit the in remain million XX.X%, profit was of our $X.X sales. Separately, by progressively for have or the was than demand quarter First, XXXX to for still and net levels the up produce net or $XX.X XXXX XXXX of while down second to one Gross that it were levels up million a seasonings and Gross Spices second $XX.X to were was million compared but sales. $XXX.X XX% pre-pandemic XX% quarter

During was it second the XXXX, in profit in by of the which quarter extreme of was in negatively adjusted inflation, second XXXX higher was quarter XXXX. of cost the input quarter gross than many cases first impacted

Our inflation expectation remainder is of will that XXXX. impact have the significant input cost to continue fiscal during industry-wide

the are we see some to it’s of moderation the inflation. that beginning levels in signs of categories seen Although, several highest of

contracts locking inflation we advanced calls, implementing cost supply prices have been As a able purchase savings by short-term commodities also measures. and agreements by on of of discussed to and through mitigate portion impact the in previous

including We optimization when possible SKUS. layouts increases were pricings trade price justified, are and also for executing initiatives, product list certain various

lag pricing rising costs. initiatives these However, generally input the behind

As offset all quarter in or to administrative quarter of improved decrease adjusted related, we the million. the inflation million million was second increases of in $X.X to million, offset to EBITDA of and second such, faced decreased in XXXX, for month of expenses in to $X.X million, $X.X X.X of in general compared warehousing of of divestiture million unable XXXX. XXXX, of to costs of as expenses million $X.X adjusted a third by administrative compared second acquisition quarter that second second $XX.X and we sales, expect of points of of of improvement decrease the and EBITDA this for in of million the $X.X second recovery selling, of expenses net and XXXX. and to expenses EBITDA as X.X% and Selling, expenses non-recurring fourth chain and in to compared were increases. selling in We primarily percentage sales the of as percentage second The $XX.X million the by Expressed $XX.X compared marketing of million consumer fiscal incremental general quarter and year. margin supply to year. last the begin generated We a industry-wide XX.X% to of see administrative increases general the decreases input cost offset fuel quarter in attributable cost for the June in did Adjusted quarter expenses to the composed in were fully of XXXX. see quarters the X.X% by in costs partially $XX.X expenses partially XXXX, and $X.X The percentage was disruptions. net was in XXXX, price challenges XXXX. and XX% quarter These freight list XX.X% quarter by second

costs in that of spending, efforts. higher and in The compared million of the expense promotional the had credit by on borrowing expense our million that although, we the be million our coupled quarter prior $XX.X $X.X trade in needed pricing Interest costs. of our $XX.X in portfolio, share during fuel in primary in year. the increased quarter The for also challenging XXXX. the spiked delayed diluted were in in also compared $XX.X the We other freight to in XXXX, taking per borrowing increased adjusted of second the second one-time affected implementation quarter driver was compared for during second achieved the and quarter to had to transportation the of the million June six last the compared with than on payment months revolver earnings the $X.XX Depreciation quarter the drivers July input generated which be a XXXX, from discussed for and worse million the slight to costs the for impacted second our Net to XXXX, $XX.X some challenging million some completed X, that to in factory slightly increased relative protect six was downsizing of with the increase $X.XX to expense prior costs to price quarter programs expected. facility. effect. months and to amortization year, we quarter had loan. also the we plan was our price ended gratification modestly As increase second was interest led last with call, primary $XX.X initiatives second performance during quarter going ended delay term we year. was cash for quarter to quarter a a in Interest the Crisco XXXX. to and in tremendous coupled million benefits across increases of was with X, operations list $XX XXXX, last industry-wide energy was And July our amendment

One fourth second of cycle. until XXXX. the the net of combination that during The $XX.X inventory plan is million in million inventory, our the million in was in inventory our $XXX.X $XXX.X of are it pack at the increased million was in million is was the compared at normal costs the coupled year. decrease quarter $XX.X of of with increase input the increase end compared driven in $XXX.X of end second quarter to the carried primary drivers prior business XXXX operations the cash inflation, the a beginning cost to for from quarter XXXX annual increased end Inventory as of of and including the the by sold

well of of the with appears need are what what to peaking of beginnings currently weeks in some pressures level of the regards to very we inflationary be the up not to to this by reversion a a were many than in encouraged and we ratcheted disappointed could While of year. and our these while earlier performance this thus anticipate that greater impact we levels that did have a costs, year costs expected on see recent these

hit soybean at level level include million to which peak in of Corn year. diesel start a compared $X.XX $XX.XX of per April in gallon we oil, year. a a a months, $XX.X have the generated the start generate to per XXXX We the the to in $XXX six and April of net benefit $X.XX that of freight with at hit March year. as regards compared level of per worse, the pound per we benefit $X.XX examples remain bushel earlier our beginning discussed net June factory peak of the and today, Some approximately in of year. cost Unfortunately, gotten pricing than the $X.XX track we peak certain more And the peak the last call. pound of compared to $X.XX at $X.XX in side million reached Through commodity has fuel hit compared costs. a start at to $X.XX earnings the gallon from per at inputs, of highlighted particularly on to

drivers As the incremental of to adjusted versus inflation last reflect million the prior of the guidance When our million EBITDA down anticipated flat of today, million. to incremental back in to reduction $XX year, then of an expect back our guidance we net looking compared third guidance reaffirmation range will to we billion half and in sales quarter. in material primary include year factory million costs, a for know what reduction costs $X.X a the revising anticipated up guidance fourth million a and adjusted to energy, a as an the year, to $XXX EBITDA of $XX and which quarter our are include the $XX $X.XX half $XXX be our in to result, to cost we for fuel at The billion to freight in estimates.

expect We executing. XXXX, expect performance In as the downside XXXX. the point an in level year we elasticity XXXX. we of face that Key levels EBITDA up expect full as adjusted costs and better of be to than increases that to that factors year and lend that given we to the catches the half have in finally be that inflection adjusted fiscal quarter fourth the the could additional the our either in first we saw executed include process as improved upside price are case after to well any to through that guidance EBITDA increases already pricing the of we changes, that price or reflect we

modest far, levels So elasticity relatively seen we drag. of have

that at Obviously, for Additionally, we we negative are and inflation are to costs. a in certain of an would locked in pause plan relief effect, additional favorable largely are would of a point. costs wave the least levels year hoping in seeing have input at pressures for cost any of the input be although, many our inflationary this

and is the stresses fill a be are supply see customer chain operate also supply chain. But still and volatile of stresses the to expected remainder for global Our situation seen and we world are rates a year. the improving that in to on tailwind continue may

to interest expense to Additionally, of million, million, to XX% $XXX.X expense million of million. expense to million. $XX $XXX.X million, and cash XX% of $XXX.X we including $XX.X to $XX.X expense amortization of tax million and $XX.X CapEx $XX.X expect rate million of effective of million $XXX.X Depreciation interest

Casey call further remarks. over Now, I back the will to for turn

Casey Keller

sufficient input but operating second impact the gross Bruce. you, recovery, and rising some offset pricing of not showed margin quarter costs. In to summary, Thank the inflationary

fielded implemented the recover XXXX. are have cost We half positions, pricing actions are sufficient which back to in of through projected that and/or flowing now

Operator? the and running stronger we and with remarks. making focus, and business. And improved to would towards now unit up the driving business performance portion begin are on concludes we rapid like the and our structure of our organization, speed, progress This Q&A Finally, call. greater

Operator

you. Thank Instructions] [Operator

of your from Please comes proceed with Lazar Barclays. question. first with Our the Andrew question line

Andrew Lazar

mix Great. maybe out price Because benefit able to at versus pricing decelerated from was? which quite mix just in quarter to first putting been where quarter, confusing it obviously what the think the overall is I in you guess, price break start much. X.X%, surprising we I that more mix, look off, Thanks obviously from price was are like you’ve a if second so into bit given, up just place. or Bruce, the and was

that’s mix I pricing but a you because some trying actually you about is talked to or that just the handle of trade had that on know whether maybe to to accelerating. of promotions get So, that see protect, better

Bruce Wacha

have We as the between as perfect part, the of and price promotional split to is it, increases. protect the a if price and don’t Yes. that mix the some of well price but trade some points

Andrew Lazar

then… So

Bruce Wacha

pricing mix a number. It’s

So, that then one of happens is, too. things the when a down, spices have & seasonings going we effect on goes mix

Andrew Lazar

Okay.

So, in that that the you’re the is mix quarter, I think look half still the I’m if about even to the fairly price assuming look maybe back that terms year, we digits, if as way back mix equation? dramatically. half in think maybe we the the expecting of And into right last at get of to double it line, accelerates of price

Bruce Wacha

of benefit half pricing to lot the about more June, back as the of price a implementation. year going half on call, increases talked There’s And and back were year. Yes. last a price lot July this our From be in that the were of year we sizable the a standpoint? even

Casey Keller

close year. disclosed I think, the $XXX to Andrew we’re expecting, that total pricing in kind million And we for of

million, year-to-date we’ve so And $XX gotten $XX million.

the back taken. all actions expect acceleration in behind of that that’s been the we have So

Andrew Lazar

to I want XXXX? I half want Got heard. it, to you that sure And XXXX Or be be was could would then similar make I heard EBITDA right. and this, just one make you heard – I XXXX? I sure but it to want sure suggest of just I it. make I to said Did back the last think it,

Bruce Wacha

that Yes, correct. is

would continued of half be XXXX, in what we’re would We and that stronger that what closer levels XXXX first XXXX. a in seeing we today, and EBITDA based on normalization expect EBITDA, imply saw to

Andrew Lazar

Got it.

very much. Thanks Okay.

Operator

you [Operator Martinson the next with question proceed Please with comes of from line Jefferies. your question. Instructions] Our Thank Karru

Karru Martinson

do think elasticity? sustainability When your post far the look at so increases you’ve the you kind that and private you does now, price price that the afternoon. and that on will positive gap go into the where seen on label, of where stand Good trends dovetails product between questions of and

Casey Keller

dramatically obviously answer had that. one going Crisco, Casey. the brands Yes, most take vary and let’s but has just this is to big pricing I’ll between this is product the which mean, lines, going I on.

elasticity carefully, our and look label. measure pretty private we we So, to at gap

X.X, So, was And in increase, in to seeing we that but now that our that the increased range. couple X.XX, label prior the X.X to bit, more which were is June, now up elasticity to seeing probably range. I’ve in began come the the last private since little probably period it think know And again. with gap increase X.X increase, I to last in we the private a noticed price last weeks, X.X labels we’re last in this

back year. Crisco expect the half half. more is the make private elasticity to that impact trade to we to but think that the it label, where consumers large X.X we do down seen assumption that And haven’t yet. the our X.X in the to of So bit I will effect little in relative mean, decision that we’ve modeled that, prices elasticity go that back in higher stay we there will may just is a some be

Karru Martinson

the guys you the September to at that what’s on look ratio when square trying then XXXX, that there? maintain the of recovery And eight of will that Is credit for thinking are EBITDA or cautious leverage with that overly the kind front XXXX. you being times that of I amendment looking in just was through

Bruce Wacha

assets flows give want potentially as we generate cautious. the investors. of combination to select overly just ourselves equation, delever natural the well we for that And the the that. EBITDA Being through Yeah. And time of to cash growth as part

Karru Martinson

Thank you very much, it. guys. Appreciate

Operator

you. Thank

Reuter question Bank of next from with your comes the of America. with question. Please proceed William Our line

William Reuter

for something on at your this dividend, of reducing consider given order leverage Hi is you in leverage time a guess, my Is you period to this first question pretty bring to I staying that is level? elevated. committed the are that down would or

Bruce Wacha

there’s dividend current time, policy. change in no the At

William Reuter

input anticipate at these those be year, given seen next levels that going Okay. year? cost from some to to think on your And if do basis year-over-year, next for have of year-over-year were costs a you remain when some higher you outlook are you be then that in they their they will current about peaks, declines lower or

Casey Keller

look Casey. – is If at the we this

look that’s now of Maybe overall, of what of little expectations the glass, which inflation volatile to periods months inputs. that But our those modeling first go talked year. we we’re next so that will we’re And year, kind lower X% costs inputs X% So big XX% if we we some certain to paperboard, seeing the we this tomatoes, about in six some in us in a total range, the the over have inflation in seeing this down think right big versus something expectation been about in some rising at is components, commodity and are et year currently markets. that stabilize, year, have maybe in allow have would next year-over-year cetera. bit, even rapidly

would that against to price drive to So neutral. make savings we X%, cost X% intend to which and

William Reuter

Got sense. it. Thank makes That you.

Operator

you. Thank

of Our next question. JPMorgan. Casella the question line your Carla Please with comes from proceed with

Carla Casella

you supply about seeing the of chain of kind can supply them where issues you’re one when us expect the to talk on and resolve? just Hi biggest you chain,

Bruce Wacha

said, improved I on dramatically I were to the the months lot. end were quarter, had be disruptions. end a XX% pretty material service approaching that Ankeny. think so seasoning the supply first the And confident and had that we positions. key We problems. the year, we And progress. beginning closer think we’ll three labor of of significant XX% six the levels I spice in of service feel continue last now on we’ve XX% business. that of shortages in like big service think some facility had our at we year, facilities, below levels the picture had make the to is we We we’ll a Yeah, were some we in even levels At to service few by level, and the our the some We our

terms far shortages I months in we’re We’ve and that material Omicron of production of the to. and but full getting the to there, shortages, far I’d been to things, but want our manageable. more we’re back Some become pretty driven and the kind now able say to we’ve staffing were, have where variant of we by recover operating labor other as ago. factories And those six been We’ll versus smoothly. running all probably so here it’s XX we said, so

Carla Casella

you Okay, the It the great. peak And covenant you peak? EBITDA like you feel near I debt. to do be were sounds near did should you raised or mean, then quarter? you leverage When like on trough expect or say, leverage you’re we level what your –

Casey Keller

Yes, our you pattern. the in is see to seasonal Giant. Green pack for due normal in leverage third coming peak that’s probably quarter, And the

So this year. no difference

Carla Casella

an know costs, you at give us if transport? give don’t labor is figures? I us of could then, you can your if And any material great. versus ballpark and packaging Okay, update much it look you on versus the How raw

Casey Keller

and corn lot part Not would a wheat I Crisco number our we of inflation. part its input paper commodity no biggest with the share freight is is clearly products. the of talking material and things is of input board, it the are soybean up. lion Exactly, oil also challenge would soybean, cost But yes. as a but and significant on about and driver a the But cost, say side, disclosed, input our packaging you’re of commodity when fuel right. the say I of obviously

Carla Casella

promote of any are seeing to Okay. or elasticities. are consumer you getting pickup Retailers category And to one you then the just any environment? where talk more. a any pressure seeing starting particular promotional more about you’re Are in in more

Casey Keller

we around the kind maybe is more patterns now potentially of normal a we resumption period. deflation. of less What inflation or on promotional I promotion the is kind impact right from – post see of think the see what in pandemic

So about by a back and promotions, retailers. think we’re kind XXXX of of lot scaled XXXX

We’re core much SKUs, some and focusing of as not display feature the on activity. doing

resumption a seeing normal pattern. We’re of that

back mean, to has frankly normal. think just coming that’s I activity year, because So, promotion increased but we’re this I

Carla Casella

much. so Thanks great. Okay,

Casey Keller

Thank you.

Operator

you. Thank

Our your the live. Research your comes from line line question with with Eric question. next Larson Partners. Eric, of Please proceed is Seaport

line is the Moskow Our your proceed with next Robert question Credit with from Please of question. Suisse.

Robert Moskow

Hi. you. Thank

Casey Keller

Rob. Hi,

Robert Moskow

different or increase like they you’re right? of than up, what be? I what profile, the Did didn’t thought other cost far about companies caused more so than guess, XQ, it delay I lot did And What you in like reporting here And which you cost talked lot talking have food most occur like that also about estimate. stabilizing your XQ. companies a was catch are a pretty thought that happened your said you versus pricing well. would it in reporting some so, It’s that that? I seemed your think initiatives that a is regarding came was prior if to costs. the XQ think you more materially out would do

Casey Keller

pretty increase of attached driver on largely the and it were we that we referring which So Crisco. a glowing a took to that But flow and we system, half. had the for pricing first just that we downside real of And – some to the inventory the was expected we kind that there. close was to the for got We longer through. implementation, had there also pricing got delay within for price to the through

Robert Moskow

Right.

Casey Keller

Crisco what depends the what company the on trough us challenges have quarter probably of implement on we Crisco Certainly the us, we at I also portfolio the from we’re was companies, the of a in were guess answer lot Crisco then addition near quarter that stabilization. it that’s in mean, be honest. for way seen this. that cost or We to we mean, where relative is just to And real that would other the the and driving comparing is. it on side, a think, let’s I certainly, we’ve able cost the was we and is disconnect some with I the of I increase rapid challenge portfolio the coming, price. saw the their inflection that to but when side of was XX% a Yes. look, point. the knew

dramatic six in last largest over commodities were we the those. the that of a – sensitive – certain portfolio that’s to we the to these some extremely increases very have unfortunately wheat is so We portfolio increases now just largest have now sensitive the and a months, soybean corn, oil,

we’re to we’re that at about think commodity longer Crisco we in to got something but term sensitivity to – the So me is terms historic going level. that of product,

luck we’ll bit start to the come months, see So in this little future with year. a crop that off of with a decent

Bruce Wacha

is, on to so was June but for and was, normal, the I us, much and actually, really encouraged May were challenging, was wouldn’t were but June issue the closer to April, normal And an that Crisco positive we April, performance. is say May that see

Robert Moskow

mentioned oil much soybean Yes. Bruce, is you now. $X.XX soybean oil, lower but

quarter little with that benefit does an So the that a $X.XX of Or in get mean third do and live you kind from while? that fourth? you immediate for

Bruce Wacha

at can’t not XX way through probably whole it $X.XX we’re the we we’re before just bottle. the a quite it, buy year to oil but can whole Well, covered and actually period, the weeks XX between to agree works is through have now we we as once sell we

largely the to it, we’re covered it, you year. So the rest because oil, for refine so got to got process deodorize got the to of you you

of set to we oil bit cover but were of of it product. right cost fourth get our more in able kind the So quarter and $X.XX for in at quarter cover but market $X.XX the in when had to the the of also in range. JFM, times largely first to in any year, in down the next because the to now of soybean benefit we’re needs, we low- go lead of that dipped happens the kind the year mid-XXs rest little And the a we’ll

Robert Moskow

the clarity. Okay. I got you Thanks now. for

Operator

Thank you.

David from question. Evercore. Our comes proceed the with Please question Palmer of with next your line

David Palmer

Okay, thanks.

now example, up forward? realization IRI, per Is unit you like run organic with rate increases pricing double-digit see Just pricing those of that portfolio that your gotten for us wide. you a you tracking scanner you’ve of a results the expect the of question to for that’s type in data, in going would that price it of kind actually looks

Casey Keller

hit Yes. I brand increases Yes, that you’d that by obviously up probably see really mean, by and see kind showing that but June And in and it – product latest you some varies July. of would up. see you’d yes. with the that of category, showing

David Palmer

I there something your us wrestling of that? Right, took power. through right. just Yes. some I’ve a and data. a finally some degree of other that with but you categories? of were with pace the it It the to dynamic of One competitors it category in what tracking your to that did a words, fact that to is faster, said, we while it to accelerate getting just, major out on thoughts is there for in seemed other reason plays wonder take, been realization as the commingle it’s things mistake a for out and in pricing Is in Any that? there price that pricing your And get

Casey Keller

No.

face we we’re is with promotion. categories in what as think I kind of

promoted to We have retailers, have contracts kind so we of price protect with points.

have to little I talking, better Casey a comes have say that total pricing cost future against to unit been and projecting pricing. them. on get would increases that business I as a we how is faster at having get in. pricing capability in designing – of do I say about. lot do this, on here, to bit overall mutes would would This that I of we’re better effect we and the get fast sometimes Crisco, talking So what better as that. going something the say well we’re to is again That structure, which we’re is driving on

have about It’s think it with of these so much to the commodity with a to operate $X.XX. the Bruce and a in lead quickly. coffee. to going cents times not can’t We is normal that said when we we’re cost, that, just, product move to that went commodity have like normal to $X.XX with We more treat lead a that times. Because kind more like in commodity negotiate our the probably of and retailers from pricing more try

David Palmer

is then comparison visibility decent you home have on this people have year Do year. COVID stocked you seems inventoriable, you getting into last have you That to the growth like, noted stuff. historic getting perhaps feel its sometime a better, like there. that at perhaps And tough I Yes. ultimate rates in question they type spices, just to the back and one grilling the up category, more an where were that be on

Casey Keller

the kind we July. half supply are of the was the issues improve we our of caused What problems in had seasonings the in of of Frankly, is quarter, in in that, think which first production we will where that, some own But distribution problems category. some now year improving seeing the first in back back. their already were and spices, contraction trend half trends losses, kind which seeing the we’re getting temporary problems

research either to of of in spices, this So to expect we see of now – research people or kind but more seeing. steadily, and category expect we’re that and growth big like see recover lot that’s seasonings stabilize. know we possibility of to planning don’t year, then, the business our it we’re we don’t kind from And to that are planning, the maybe spices, continue make are home, a the recession more now kind consumer of meals given use at

the I we encouraged was what low single I’m said as and seasonings digits. the to that, forward So, able and portfolio, and on deliver long-term, some that that the still, growth in spices go we’ll we’ll be

I think it’s, obviously that good growth And good think margin and I have there. good we capabilities there’s in category.

Bruce Wacha

think performance this had, strongest even that a more laughing contributes and quarter was canned to the of the so spices we’re, I the than actually back mind, on the reaction as and and some the different category, issue And spice of delayed canned category some then in we or COVID and first of it. we at of XXXX. almost before second year, the in other those thing a response we a Dave, a little back in sales the something it like is vegetables and us in pattern in you meat, thought a financials spike was to you And keep got seasonings spices from for look products, bit a see COVID

David Palmer

you Thank very much.

Operator

Thank you.

Our the question. your with next Please Edge. is of line Rattigan with proceed Consumer question from Connor

Connor Rattigan

the question. Good afternoon. Thanks for

I commodities, going if a a bit far environment, I strategy but mean, goes pullback, the commodity it’s pricing guess current like the know just I I as of we or in pricing see seen like as given forward, those So oil guess, we’ve year the the premature to coverage, some begin couple maybe that would around impacts closer when soybean conversations seen, to weeks. make full with especially you’re last Later strategy in the tougher? we’ve retailers your in really

Casey Keller

big I so fielded through. the against Well, we kind all increases, don’t, we’ve sold mean, that’s already pricing commodity kind largely the of fielded of been and

much down retailers So, I comes around, with where if will below be the discussions think the it now. commodity is

discussions the down take are, We real the we’ll not those costs we several be that pricing. what it’s about off point to not prices will and to down. But and next can the of on really next market other benefit take, market, But depending quarter soybean things spot first from going the cost to today. so that, that commodity basis with our you we down, in predominantly add start the over a those have terms to far we They’re on where of actually we’ll oil it. got conversations far And in that reflect when where have, when conversations on does Crisco honestly retailers, months, goes. It’s will get comes way where the we mean when on from have possibly basis. where to are Crisco year. prices I about, we’re the the But market off even, probably the would if with it’s think, that

Connor Rattigan

All helpful. That’s right. on. much. was so Thank you That very

Operator

I’d are to closing over turn this comments. like floor for There Casey to Keller further the time. at questions no

Casey Keller

us. you Thank for all joining

was said, and all against, feel in to pretty quarter, but we dealing next you place of confident to I difficult pricing As we’ll actions questions that appreciate that recover with. unusual inflation the Thank environment a have quarter. this the I we’re we talk you. kind the

Operator

teleconference. today’s This concludes

this participation your at you a day. disconnect have and wonderful Thank may for your You time. lines

B&G Foods (BGS) 5 Aug 222022 Q2 Earnings call transcript