Earnings call transcript Q4 2022

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Operator

Good afternoon, and welcome to the B&G Foods Fourth 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. Please go ahead, ma'am.

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

of them. statements therefore Before part upon are be of performance formal and not reliance everyone our includes should placed today begin I need guarantees discussion we remind forward-looking undue not to remarks, that the statements. These future

We B&G filings Form a our future a as the any to no results refer and more XX-K new to events of undertakes could or result otherwise. Foods operating that obligation of revise on forward-looking you and publicly Report statements, Annual Foods B&G or information, financial discussion subsequent whether impact for SEC future risks condition. company's detailed update

today's business be measures, and diluted are also base references financial adjusted making the measures measures Reconciliations earnings most directly adjusted provided to will earnings net EBITDA, financial comparable release. We to adjusted GAAP net these of income, on today's the financial in non-GAAP share sales. per call

for thoughts results, will discuss various our quarter fiscal then will remarks results begin XXXX. the opening highlights financial the for fiscal selected guidance of outlook the XXXX and fourth business and and the and affected that Casey beyond. Bruce for factors call and his remainder concerning XXXX with fiscal discuss our our

would I turn to call Casey. now like to the over

Casey Keller

recovery Net year at adjusted and a quarter thank of EBITDA fiscal with versus plus strong with sales XX.X% quarter inflation today X% our and increased for costs sales Sarah, demonstrates actions net XXXX pricing year. Good as us to as afternoon. Fourth fourth percentage we compared call. Thank last you XX% expected. covering last all cumulative and joining for you, earnings quarter performance

QX historically levels. XXXX. gross wheat cost improved QX quarter first increasing This sales in of comparability, remains to a is percentage corn items XXXX, high Excluding at versus profit in XX.X% XX.X% the affecting as that of net still

In still addition, moderated warehousing last from year. last highs although transportation costs freight summer above

pricing actions in contributed $XX.X to pricing increases input product total million cost fully Net $XX.X In in in quarter compared recovered in for million realization following final QX. August inflation Pricing. October. QX implemented the XXXX and price mix including

than Volume. QX in volume to sales net reflecting XX.X% of channel sales grew and against increases driven the significant QX by service offset in low volume half improved in in and following business customer Green sales increases. performance. seasonal were elasticity service higher $XX particular, the pack volumes QX approximately dollar declines year-over-year cans price relatively resilient QX. plus fall a seasoning's were inflation, and the partly driven Giant by price exit production In improvement More in profit of were million levels. spices In the total, the declines

distribution behind isolated Customer situations. service. from December variant becoming and network. impacted reaching stage and and issues during At service in levels infill XX% co-pack service the materials the Supply were than are by rates in those the Last supply year, over quarter disruptions COVID availability some availability, less December. Omicron this more but XX% remain supply improved

environment a are moderating and across by inflationary the the requirements. QX and against portfolio, But of performance, up across lagged pressure of key In cost constant encouraged seasonings pricing inflationary we the customer totality, our Ukraine higher with lead XXXX rising following that to reflecting year business. recovery spices the challenging, adhere pricing fiscal increases rapidly the and to was inputs particularly war of margin time catch and costs implementing commodities, actions results

cetera. biggest new inflation at In X% glass, fiscal et plus five to lower with on year expect continue currently rates, estimated to XX, the we tomatoes, at but pressures

raised categories have we versus cost seen commodity XXXX. actions oil, to only levels against in the on we broader far, in fiscal costs, corn, from key have required XXXX. higher fiscal but commodities, cetera year selectively declines not year Again, average example, for wheat, key prices significant et soybean recover So input

modified on also a to have our We approach basis. pricing on Crisco more to quarterly customers costs market with adjust accurately

increase alternatives. Finally, price elasticity the to down some economy margin is estimated tightens and the to as somewhat trade on cheaper consumers

XXXX As offset a pricing result, year-over-year we as previously inflation, demonstrate first recovery implemented particularly continued the actions expect half. to fiscal year in margin

expected are offset volume X% to divestures by excluding X% sales, plus less driven by pricing at to benefits Net cities. increase

to XXXX projected year, We guidance half price while discuss declines expect costs gross year in will reflect dollars. also fiscal oil in soybean moderate that sales the margin detail. growth be more maintaining impacted lower on second the by will Crisco Bruce of

from of are proceeds on Foods make The Back continuing Nature Barilla outside prepayment B&G B&G were a margin partial early The lower of variable step portfolio. loan. our brand the progress January sale to we reshaping Further, to is a the Back was term in Foods fragmented small as to rate of exit divesture portfolio snacks to future the the make the used of to to completed that Corp. Nature proactive

reviewing We focus and debt. divestiture the to are reduce actively other portfolio possibilities and sharpen leverage

track flavor on the specialty and up and units, and they meals, Finally, remains largely four frozen solutions, to and transition and business are running. spices vegetables,

accountability focus making. improved and drive portfolio supply platforms As build acquisition margins, better to and leadership down stronger working for and unit the Business and push to demand and clarify management manage discussed plans. units improve growth is these decision future

be expect to year. performance a financial We unit in to share position business this later

for performance call outlook year. over the will I now for and on more detail Thank quarterly the you the Bruce to and turn

Bruce Wacha

everyone. Good quarter earnings fourth for fiscal Thank Casey. on afternoon, and our joining XXXX call. you, you us Thank

year. quarter the of otherwise had see, the can onset we we inflation the plague you that As faced primary inflation fairly year The challenges and year. the strong the of continued fourth to to a challenging throughout finish to an inflation, us at remainder

from were much of inflationary pressures inflationary any war, But than first put anticipated to the we outlook for when pressures XXXX. greater these our expected due Ukraine the outbreak us part the in together of beginning. We the

involved help fierce resulted from to these the the of the but in advanced inflation, structural requirements much increases delays Pricing primary and from notice limited year. costs combat offset inflation The fully it flowed price was was for tool beginning to the custom customer our of implementing ability our the year. into numbers

second and financial Our pricing though, extremely our weighted model was first was earnings challenged. quarters back-half calls, in our in discussed as previous so and performance the we

quarter we shoots set fourth up as quarter catch for to nice our was This green pace of quarter third variant also began pricing moderate actions, with inflation impacted relatively pricing costs. which which a difficult, when the COVID. the benign chain a year moderation a of us, from supply in dynamic from by disruption our at negatively to began to the the Omicron The was and looking began but XXXX and closing of in inflation of pace the comparison month of benefited see the up fourth

sales, earnings we million million share. fiscal million and diluted billion in and in $XXX.X $X.XX $X.XX EBITDA, of diluted per $XX.X adjusted adjusted fourth we net net generated In of EBITDA generated adjusted $XXX XXXX XXXX, quarter in per In sales, $X.XXX adjusted in share. the in earnings

and we $XXX.X year to per period, Our $X.XX dollars $XX.X adjusted prior when in fourth million share. XXXX earnings quarter the in generated compares adjusted sales, million net favorably diluted EBITDA in

to XXXX. the than XXXX, brands. sales full Net sales quarter by quarter the $XXX overall Crisco, Foods XX.X% beneficiary of to of largest million fourth highlight our year more net Crisco now will performance in increased as this of $XXX to some we pricing of expected Net of net in late $XX.X B&G the it XXXXas in in larger compared sales acquired compared portfolio million, or of sales increased million, or Crisco deliver XXXX. fourth XXXX, and I fiscal XX.X% annually, of the million $XX.X generated year. when was for the

and net Net Cream down, compared XXXX, or model. XX.X% or While or as Net fiscal year generally we were of Foods fourth up quarter, Girl our another year. to deliver to had XXXX $XX.X sales Clabber and of acquisition B&G margins in costs increased XX.X% able last are quarter manage by Crisco the that fourth were million the of ownership. increased Wheat million increased profit XXXX. to million, under $XX.X $X line with significantly, the dollars XX% great of for in for million or for Clabber's sales fiscal and $X.X compared the to sales quarter year, by XX% are

by Net $X.X Ortega of $X.X million, for quarter or by fiscal for increased and X% year. or the XX.X% sales the million, increased

performance finished to Ortega, to investments in challenging to of first prior X.X% supply following the or plagued appear $X.X by fiscal by be sales which year compared year half, negative XXXX. was year which the had strong Our prior Maple chain compared quarter paying Maple a period. million, finish half the in when second Farms Grove of the increased off fourth or million, Grove XXXX X% compared to $X.X up year. the a

seasonings and a last quarter were of of of compared quarter the down the start, had Our sales year had performance seasonings strong of business XXXX up the with and supply Net throughout which been much the chain had challenges spices spices also plagued peak finish. and year. just the to XX.X% X.X% the finished spices the fourth and $XX seasonings million, to in $XX.X XXXX. compared million XXXX Despite prior or or fourth year slow

decreased the a $XX.X fourth fiscal nine prior by of represents million or as by somewhat improvement sales performance the year, the quarter third Green back fourth quarter of of quarters, X.X%. from relative XXXX were Fourth fiscal and had compared million $XX.X the of Le shortfall. to quarter the for fourth quarter Giant procurements in months in fourth Net huge X.X% Net to in which or turnaround decreased declining sales Green Sueur including although half the our challenged showed third quarter of Giant of XXXX. both XXXX the

brands down of On compared million, were X.X% $XX.X sales of to year. Base fiscal XXXX quarter XXXX. a by for other basis and to net to fourth increased of the aggregate when fourth of or net sales Green for Giant all XXXX fiscal business or year compared in prior $XX.X XX.X% XXXX the increased million by full compared X.X% quarter or as the the million, $XX.X

included during XXXX. $XXX.X was of million million net the of $XXX.X profit impact divestiture sold of expenses profit expenses divestiture fourth XXXX gross during was profit quarter excluding of expenses the for of million would million would cost sold Gross sales, quarter sales. goods of nonrecurring acquisition, including net gross and of of quarter quarter excluding fourth goods XX.X% $X.X profit net the The sales, XXXX been sales. net negative or $XXX.X of or of impact of have XX.X% of of acquisition, of fourth company's for cost related in have and XX.X% the related company's million, or the the been The Gross negative fourth million $XX.X or expenses, XXXX. nonrecurring the $XXX.X XX.X%

gross a Gross up of profit The XXXX expenses of the three saw as a prior percentage approximately sales, improved net fourth year fourth basis of XXX the significant basis points acquisition, divestiture, related in percentage excluding excluding XXX which compared of was of turnaround periods. expenses quarter divestiture impact profit quarter. represent nonrecurring year, from to points first as year's acquisition, a the last down quarters margins impact compared nonrecurring net the and the the of and sales, to

in general $X.X to $XX.X million decrease quarter expenses XXXX. acquisition, the was dollars. for fourth reductions million and million expenses expenses million by marketing general $XX.X offset by warehouse of expenses the X.X% composed partially and of of related administrative XXXX of $X.X $X.X of decreased of in consumer Selling, of expenses for million selling from divestiture The million and and or quarter of X.X administrative and fourth increases million $X.X expenses nonrecurring $X.X million

administrative to X.X% by was industry to XXXX. a of pricing increase XXXX, as finally of to the EBITDA for and primarily which percentage the $XX.X in Expressed as fourth for generated our adjusted XXXX, to in and points general wide sales, expenses compared to the in EBITDA quarter selling quarter fourth the inflation. caught input adjusted fourth fourth of percentage logistics The XXXX. X.X costs We of of net X.X% initiatives, attributable improved million quarter $XX.X million up quarter in compared

sales. in variant. Omicron by XXXX of XXXX. in XX% of only fourth in first EBITDA favorably Additionally, quarter of net we adjusted was XX.X% in Fourth the had compared quarter to year impacted quarter XXXX, and year, of EBITDA XXXX the COVID net of fourth sales to percentage adjusted compared a to the which negatively fourth relatively strong the the XXXX, had a EBITDA that as of Adjusted the was which a the as was quarter year-over-year quarter percentage finish and increases

fourth from year, compared for of prior first EBITDA adjusted three represent million had quarters turnaround a expense of the primary net expense interest driver million as was XXXX. nearly Interest decrease well margins compared an increase rate currently periods. of to for the in in as to was an $XX.X quarter increase $XX.X the sales is which of as percentage The a in tied XXX increase the outstanding of XXXX, in points our improved quarter the in which LIBOR, LIBOR. The fourth debt, to the significant basis variable a year

to per $X.XX million last the quarter compared prior year. the generated XXXX We fourth in dollars to of diluted in the in $XX.X Depreciation of million of share fourth and amortization quarter year. quarter in in was fourth adjusted compared $X.XX earnings $XX.X XXXX, the

share with our XXXX, the to of in year. finish certainly had very While our challenges we happy are we

and were the reminder, of challenging. quarters most a As XXXX our first second

began quarter third show to The improvement.

of Our to that was we course over fourth work the cost of the chain pressure the organization the supply adapted of a year, culmination faced. and we our quarter on part of and as responded challenges hard lot the

we our beyond. optimistic cautiously and look outlook XXXX As for we are about forward,

expected to half that drags to cost lap third fourth have many XXXX in in we favourability most greatest XXXX. believe to our the the that fourth will XXXX of improvement XXXX regards We the as the quarter first expect year the similar and XXXX. as XXXX look of compared show We quarter in quarter modest versus a the from to is of

the on to XXXX be know to range $X.XX know $XXX diluted today, to net With to that based range don't for sales adjusted and earnings billion, to lived three fully in expect years, set share $XXX last be and adjusted in in what we million next million we have of uncertain billion world of the of challenges an EBITDA $X.XX the per of we be. said, what we $X.XX. But a $X.XX will

coupled Our year environment, declines with levels elevated throughout the guidance pricing assumes benefit volume throughout modest the cost more modest portfolio. and inflation and

and is the is that have to inflationary up costs. economy still we the being believe we turbulent, given pressures that escalation of the and pricing last the catch the worst While opportunity finally unlike seen year,

$XX.X $XX $XXX $XX of depreciation million, cash interest of to to we expect Additionally, XX.X% $XX million for of $XX to million including full to and $XXX effective to $XXX million. $XX million, expense million million to XXXX million year expense interest $XXX million, CapEx tax amortization expense million XX.X% of of and rate of

In our that addition, the a factors lead guidance level that to downside elasticity, optimization that annual well discussed result of risks face, key we upside factors efforts. already to may either have the includes our additional or given elasticity to could any risk increases we our trade report, price spend executed, in as a as as of

of inflationary we very in at certain costs, we we world, the still the a still levels input for pressures live unexpected. pause uncertain are seeing least in while in and that are a And expect hoping we

are label We our promotional activity levels watching in the key trends. private also categories closely and

of reduce that will XXXX improve believe We balance to announced favorable our combination trends, our a better reduction help with a sheet. performance in capital coupled operating the leverage November, efforts more our and working last dividend and drive in

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

Casey Keller

reduction we QX a are progress portfolio in demonstrated making B&G and pricing with and Thank Foods inflationary you, costs, Bruce. recovery closing, In covering leverage. around and turn results to strengthen performance. positive

the with focused clarity to greater have with first implemented the divestiture, and manage in Nature business Back portfolio portfolio step infrastructure reshaping completed also the accountability. a We and brand the to

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

Operator

sir. [Operator Lazar Barclays. Thank you, first Instructions] is have ahead. from Andrew go from The question we Please

Andrew Lazar

afternoon. good Great,

Casey Keller

Good afternoon, Andrew.

Andrew Lazar

I fiscal lost or okay, numbers. of Nature? growth so XXXX that's, $XX with okay. Back you year year, think net million guess does would sales to fiscal X but XXXX in X then the to start to it organic of an number is Got to for and Nature mentioned Yes, X% to base I the sale both the off, guidance from Back be X% organic incorporate that year that sales that sorry, the out the

type light still the year trying the better volume have of versus in I'm breaks guess additional benefit get that, the you any of that sense I color in can on a guess give So how you'll offset. pricing that to best or terms of us from this down net

had obviously pricing You XX% XQ. in benefit

more comps lap I'm get you You least volume some a I still, the how play And the dynamic. also, have trying price. OpEx stage. pricing to to this first in know, start on as it's know half sense easier at at significant you you before somewhat to said out

Casey Keller

think to that will I I a we soybean get pricing benefit we we on X%. because will expect oil of down. Yes, to X% that Crisco have lower as costs in get mean, -- benefit part that But plan we prices offset when go pricing

go we soybean and will year. costs remember them move So to and year adjust move over expect as back the of year, oil to half prices commodity downward, particularly we retailers the

benefit will typical of there gross Crisco. dollars, know with our margin will commodity But preserve So our offset have little pricing business but net a effect, of a a to plan kind bit you profile. is pricing sales

we Omicron home last heavy The variant, fairly other and impact behind the things. other is demand kind boosting and had demand people year the that staying first the we, quarter, of the

reports. may in be company most you've offset a And we the flowing think seen -- I first but and other a the yes, first in that peer get down. demand of benefit little pricing was that's bit that So the quarter a through of bit expect in to little quarter, volume the

will pricing the volume which expect. by look, offset that have down offset by X% down, probably mean, soybean decline, pricing as benefit we So, X% costs modest what is Crisco we oil go I to yield going

Andrew Lazar

gross level. couple year-over-year Okay, Fourth margin forecast? as the can your go, for long quarter, pandemic and obviously, sort at to such XXXX, XX% through in EBITDA the obviously, a there's prior outlook you to we that of into think recovery of margin. closer to to XXXX margins, and think built a sort to know were and you but gross you see that's in I then even XXXX, way recovery years get ago, do what the started least finally XX% gross

Casey Keller

ahead, go Yes, ahead. go

Bruce Wacha

Yes, to comparable We're going the movement forecasts moving going be to there I direction, we're be back margins don't we see that toward for year. going not the it's was that get EBITDA XXXX. in in going the way say directionally give to to gross going to margin you're the and to all typically but

the if this about right. higher, of structural, speaking, you some And business we of profit sales dollars generally but for Crisco, million generating is $XXX that are business that is think the example, bought,

does, you what when the profit margin about that, compress same an your dollars. generating to so margins, of algebra them, compression, And going just think amount it's though you're standpoint even that to structural from just

We protect have but that had same impact to price, some to smaller as brands categories, dollars. in of much across our price we portfolio, maybe but not in and way a the take

Casey Keller

to you've got with say but our said, we base the and the dollars XXXX to profit gross the profit same, that sales to. And dollars you're Andrew, margins that of a obviously, the higher expect pricing won't we as Bruce actions, way in recover gross is XXXX had most then because comparing easiest that that, be

Andrew Lazar

you that get first, there's sort review, all that you're go of a the Green it, more we know, on. or before thing, sort think, it's of to little one Yep, in And in had gaining said, kind be way, couple kind last divestitures that's going could far. you of Casey, profitability portfolio resulted Giant, call. significant be you sort to on scale. through of frozen so But whether just then more asset and of more on that's as clarity to a require you've you that this larger in you business a smaller and on either probably But would to know helpful. it started improve I all And going make you're to out if of start all

discovery, trying on state I'm one that guess that sense I fits sort leaning, we of in of you're how portfolio journey a into temperature Thanks get much. to thoughts, are way So in sort the if going where you've of forward? other new that and where or got of business so the

Casey Keller

mean, the and we the of improve I where we I trying and think core is profile exercise growth can build Yes, prospects platforms reshaping business our are of business, obviously and the core to can where the acquire value. also margin portfolio an we also

still jury to we in do our really working the on come the I detail, Giant. mean, on that the are in to longer-term, it working portfolio There is set jury, we want about still for up reshaping that on business. evaluating internally. we're platforms future. an so but talk well, the So in as discussion out are more of are I to it's we of on our frozen, lot the working to that. other things a not, reshaping We're kind actively portfolio to scale active me but improve not We're it's Green having can't

Andrew Lazar

you. Thank

Operator

from next Hale Holden The question Please from you. we is have ahead. Barclays. Thank go

Hale Holden

us questions. Thank were that dollar rate sale, quick two occurred the after to you. I variable what you Can the paydown just the Back Nature had give amounts?

Bruce Wacha

year. to Yes, term loan we the down this paid million far so $XX

Hale Holden

label, the watching or versus may Bruce. or across think adjust pricing a you pricing which segments susceptible have they is, Great, brands not And elasticity pricing where are you, thank question time? as about versus you're have to and volume to most do of you kind look private may portfolio, you second closely, over you think the most the discussion,

Casey Keller

label category. share, a mean, seeing when and an something I are the can Green are competitors private that's of side, competitors about what a watching market that's less you on Giant it's the value-add branded think clearly what doing the like doing think I area always where combination. we're

we price. some, there's where sensitivity that's some took area definitely there an there's and So

So in so that's from vegetable and have brand obviously great. increased the for and But going Crisco one the one shortening. because It's we oil, the standpoint amount area one. brand on only the is to another prices reason. of watch what's it's still was

one So its examples different sides category. there's commodity two positioning coin, the on of

the one, a with it that there's you but lesser pricing, is other of across lot to brand, The everything. and have degree portfolio a the

Hale Holden

Great, very I appreciate thank you much. it.

Operator

next have David question we The go ahead. Please from Evercore is ISI. from Palmer

David Palmer

Thanks.

on question versus you shipments quick the in a consumption. consumption well? expect versus Would Just spread the to shipment be positive as quarter first

Casey Keller

the is, think we last seeing you're January, probably were will our time that, ops I in Well, quarter you shutdowns. in the year, know, you to a know, effect what of for that period day I partially consumption a January the mean, seeing, February first last of is the and shift closed. consumption comparison hard to profile. We're example, early we kind eventually Omicron

stuff of the in seeing improve we've half of now environment at of trends come kind in that February, as Omicron know, our kind closure year January, last are stay we consumption February. early through back You office home

it in half like think quarter, little get through on but tougher positive pricing early we'll a part think, of have So I back will flow quarter. the will we when in comp of side the said, first I a better of the I bit a more expect

David Palmer

expect would first I as in shipments your the well? were ahead you quarter, in Right? quarter of dynamic the a mean, Is fourth consumption. that

Casey Keller

about trouble warehouse quarter, In thought No. towards year, the outs. we you fourth first The shipping sorry, the in the of I'm remember system. asked carrier We had quarter. and quarter Omicron the of end we call call fourth outs, because call reason, had outs I our distribution last

end We of quarter XXXX. have not trouble So we the shipping towards did in the of XXXX. end had towards any shipping the trouble QX in

supply we was -- fully were functioning. network So, distribution and basically our

think why a in I overall. was still that's main consumption in consumption reasonably strong you difference but difference QX, So QX and shipments slight have the in

David Palmer

you have year. Omicron And disruption from That that would… of don't last any

Casey Keller

demand the and was in January disruption. saw a in early we what from No, February surge Omicron

home with from moved it demand problem move of demand stay and So kind supply consumption elevated food issue. for to at a a a it's of to an

last demand elevated had we So year.

David Palmer

Got it, and the…

Casey Keller

was going We year, shipping we had of last less problem. had also problems on. demand had we in the but early supply of QX and a part elevated There service

David Palmer

like Yes, no, disruptions consumption last to sound it that's clearly case. if above your year because I'm just wondering be year, shipments those of the this be going but doesn't would

Casey Keller

shipping profiles -- I this think disruption consumption don't have we'll to because going you I be don't closer year, on. the

David Palmer

measure Yes. just price Measure elasticity witnessing similar about wrapping up I'm for price recent wanted levels in we to that to elasticity price levels elasticity you data? are follow another Do expect in question I remain to on XXXX. channel? channel the And there. just

business? much temporary we things your elasticity price thoughts that? and are levels parts You we're When Green some something there elasticity Maybe that's seeing at the know, what forward? Any looks in those on? going about Thanks. that is of of look higher is the Giant, spices it causing going like price the

Casey Keller

what first of of hangover have less think price it service we couldn't the think half I -- we where vegetable seasonings are so is supply of and and and issues on on some do frozen that call side. can Green that side, I elasticity that period, the so believe also slightly It's businesses, issue. Spice obviously some I normally commodity had on really don't we rebuilding forecasting the the of of but still think one Crisco from we the particularly XXXX Yes, of by number the, impact are distribution varies an Giant, I a category. elasticity that an we elasticity. I higher that's kind

the become little higher same, dollar the below absolute consumers growing but little the in even if be bit. spread X what velocities more is a the the past a as we bit than label is prices. expect We spread private higher will And sensitive percentage see to

lab we little but are XXXX. So, pricing tissues, bit expecting still some see higher positive expect in to help? a that benefit Did

David Palmer

step we with it taking you where that or we're measures Green with seeing spices on happening what pricing outside there was the out was was Yes, anything there of were that particular here? were Giant or causing category was

Casey Keller

I first again, than of that us. business in so think lot there. a the a for business explanations half, very to chain. mean, that had us a a was year, different their a probably XXXX. know great spices Green more to little it's challenging bit spices for and had And that category. fourth year finish Canada I supply was the us, there's exaggerated the don't been the challenges in Certainly public It at for commoditized sometimes start year which, a much is different was they've more phenomenal and in a for Those a XXXX, pretty least, but different quarter, three has large but strong spice trends, in we company slow spices. quarters a XXX% XXXX were first Giant lap about even

not blends spices more and It's business And our remember is in other Z. an really things. A to

So the doesn't, year as we don't difficulty had kind it last it and I you I rebuild had se said we supply quarters kind quarter. that And in was distribution we it saw fourth last of first supplying. that which had in of the happening believe second problems was to some of and

we've to getting supply and me, what think and and So you're it's now more performance, QX business, of that happening and loss it's mean, excuse I our distribution in projected XXXX. then is recovering service and I around seeing all portfolio. back which

David Palmer

Thank you.

Operator

Piper is question from Sandler. go Please The next Michael ahead. from you. Thank Lavery we have

Michael Lavery

Thank you. Good afternoon.

Casey Keller

Michael. Hey,

Michael Lavery

headwind might into guess, good maybe you into any elevated a tomorrow, off, where that's where thinking can benefits SNAP I give a year? And of how specifically, you be takes, sense cases maybe on just how the your you've the down technically there course any of us even are that [ph] factored thinking puts a guidance? on With but consumers it'd potentially benefit? your And and others trading give factored rolling

Casey Keller

historically not us. our just on of factored driven kind some Yes, honest, year, to benefits lower think income consumer we tricky forecasts I higher are label commodity in SNAP tried mean, where on. for elasticities I little is have that But we It's more haven't more tie of you net, price private expecting our know into it. something penetration. base historically why we've to middle we which I sensitivity, know, be really businesses, we've up next follow our commented people bit a

some sensitivity higher a element price from around So I saw little XXXX. but what think more factored talking that we that bit you're in of in overall it's and we've elasticity about,

Michael Lavery

when how that's implications be some and trade the for unpack how difficult close helpful. look to little not could you And potentially that achieve bit share can Okay, be? just or and of that optimization, might a may remarks, may the what you touched potential prepared on the to end

Casey Keller

promotion on returns the that, the this in the think We're performance better our XXXX and efficiency stronger getting which not and to, that productivity do past towards ensure reducing at run customers. working on trade been I spending it make an lifts effort year, that that appropriate we've it optimize to of just look we're basis, a, on moving percentage take as trying of with events trade, stronger returns but performance a we're our producing events. kind is we we're sure for to ongoing to a and is for

efficiency. in haven't, to really understand opinion, have adjust promotion our drive we most we not and my enough, Historically, done plans that, to analysis,

you're think So reduction I trade a to our don't spend. going in see

performance spending to that drive, that lift do see have. an You're we hopefully optimization going off will better and the

Michael Lavery

spending be the most that, to is given trade just there levels? upside of that Could pre-COVID below still industry

Casey Keller

think is of I we're using. events readjusting, I event the types levels. get upside and spending back mean, the if we've to way doing that can we're closer we've we're to There, vehicles money stronger and by to what spending our get come, the look, with me spending brought, pre-COVID trade I performance we

spend me to trying to the is efficient of a more trade get, spending and that upside the program So optimizing performance.

Michael Lavery

Okay. Thank That's helpful. you.

Operator

The you. Credit Suisse. from question have ahead. Thank is from next Robert go Please Moskow we

Bruce Wacha

Hey birthday. Rob. Happy

Robert Moskow

pricing it's lower through flow in and on have able it high go and Crisco appreciate think just half? now Oh, right? gives follow-up. of going you to and a oil to going and lower you in what better kind I to What on, they my to, and that's Is Or be you, are half? question to on lower prices very just kind it's you going the really vegetable then then Bruce. you're of, I is way had that back because it, spend it visibility So it, heartwarming. back the now

Bruce Wacha

it's prices. don't think we the know that really, saw don't is, why I reason we Rob. know but We certain, saying look, we're for

the as If you year just are oil, fourth think cents about probably above prices we in $X.XX had those, the down to going last $X.XX market, we were, we kind quarter. of pound a soybean a moderating pound on

kind lower, stay we Now experiencing be kind our go little where think big where quarters fourth maybe we the mid of expect particular. low market will we we're below means the in and price and pound, the XXs was probably just know back or says bit per it get we to as intelligence the we last third last pricing, into it year of that to before a moves half where, those in there year, and were the in which down

Robert Moskow

demand are and and Okay. up no put peers chains gain your And guide. really than equipment different but to concerned digitize heard also pretty up efficiencies the really think about more investing supply lot supply be we keeping at then, not more that a may I investments? in chain their companies to these it conference volatile And, making I Are low, was in wanted it's, keep up-to-date with a capacity, environment. that your just you with for automate to not no know It's CAGNY just about in CapEx CapEx, your XXXX.

Bruce Wacha

the so through is manufacturers. of So made pieces XX% it couple roughly you or I co-packers business think our have contract or is, that remember to call

time over XXXX. our were ERP fair probably We JDE the to you from a CapEx factories. dollar a there little spending when implementing less want demand of point, about so the is our in XXXX, back way, process it you in bit And think sales, of then from we about percentage think systems. it's probably to where terms if similar were that then And

$XX of there a annually years get was couple And so million that elevated spend to plus that done. was probably

spend pretty us you're projects about. away to that going what dollar comparable thinking a with, so line in continue And of capacity Taco the both a projects some Sauce more on there. of probably that but XXXX, where kind had Even amount, of allowed from Taco kind we did around those to increased spend still parts of Shell we a large Ortega, XXXX, on we

And a so there spend like having disagree don't to, you're Taco with JDE project this comment a are than to about. year other it big not line. examples your what Shell with regards offsets need there's or talking some potentially I of

Casey Keller

improve focused our see also of I capital effectiveness from with we and what will say more because software software I operations that, the our and things. enhancements, to coming BI would implementation of This doing is systems. the shifting we inventory capacity be to on big kind pulling operations additions. planning other ERP are and, planning our enhancements, a we mean, planning opportunity levels supply down year,

that's So upgrade of a capital and a time standpoint. our shifting focus where becoming larger from we're attention and

Robert Moskow

Okay Thank you. very good.

Casey Keller

Thanks.

Operator

next have, ahead. Rob Dickerson from Please go we question it's The from Jefferies.

Rob Dickerson

much. so thanks Great,

you like absolute on I sorry, dollars? QX clarify, QX. think actual, comment I heard of question say that to QX kind Bruce, probably, to EBITDA look clarification made that, respect was with Just Is like

Bruce Wacha

or misheard misspoken. I think sorry, you Yes, I must have maybe

last expectation bad I and So QX. pretty our was than worse this QX year, is year QX QX were actually think

we'll favorability really built probably lapping little from, recovery XXXX And in lapping, just and some better about third quarter when bit first second quarter XXXX bad getting be in the some XXXX. think we a so from EBITDA and than quarter performance have of XXXX should from

more material go degree wouldn't was you pretty in a should quarter QX the of the in first And same relatively But fourth good to XXXX, won't meaning it. expectations lap then upside have QX of the and upside to in similar XXXX, look probably some kind this I standpoint, in quarter we But of particularly probably when and quarter be from fourth around as margin in margin expect quarter the QX QX. XXXX pretty had second a good we the year. normal

Rob Dickerson

then come there's And also system. seeing, that some it. but And optimization guess Perfect. strategy, share you Got to realize constraints realize right? supply I that been you're the just back what kind optimizing it. trade we're Okay. this I not vis-à-vis trends you It's reducing said that earlier, you're of in trade the that to

just of curious, point of XXXX, is obviously we a regain I'm like, assuming categories. So think in trade I'm program through like those share, the least some kind of, optimizing forward as at

you're optimizing bit a That's supported maybe as might and Thanks. be any maybe think you So it. trade history. provide they're you areas the just additional of if color how to to relative kind where more

Bruce Wacha

levels want windows. we it's that are as, we're sure promoting promoting think lift we We I that getting we're that to Yes, competitive we're simple make in being, make as that at, want to spending. that key from the sure and right

Ortega, some in key, like, we're, merchandising on, businesses be the promotion and our So of Giant, and windows. we Crisco Green competitive will windows

what We most kind where about, learning performance our we're effective. we're will adjust on based of

more effective, promoting before, expect spending. and that we make and at right places. and got sure that the want we're that really make make And competition competitive be said doing, I want to merchandising we've coming price to going to behind we're that the and lift reduce points, to able to I drive do just right spend it we're relative in think existing off As points to we're we don't And We that efficiency this promotion want we're sure to programs. label, in inflationary doing. is, what the we which our private environment, well price we're planned key to

Rob Dickerson

great. right, you. All Thank

Operator

Thank have you. The Jefferies. Karru Please ahead. next from Martinson is from question we go

Karru Martinson

Crisco at you response rationale bringing from of on your, are? what and you you the are the are terms look pushback the the retailers you for When seeing on afternoon. pricing? where in pricing, part down Is that getting competitive Good of

Casey Keller

more we No, it I treating are think actually commodity with Crisco like because we're retailers good situation. on in a place pricing a

down. quarter priced moving basis up quarterly a to we'll on And costs. actual on reflect once up say, we we and go to them costs and, trailing, the here's approach, told that on pricing believe or market oil based the them down have what we and adjust at to be so we we, we, So a need we Crisco

managing way a like in more it treating coffee commodity pure like we're retailers. with So the we're

driving they're and label pricing thing And things. we're quite, transparency the driving happy they're and other pretty decisions what that and their same because there's how that. doing to the private And visibility with is they're with more

moved that XXXX. last, very end So it's at just, to we've in model of the the

price way way that of new. operating We carrying XXXX. managing we're That'll pricing in for which that most that's moving also different our of gross moving volatile levels. will correlation us that be with and different of XXXX, this or way is oil at I weren't believe into allowing of soybean kind cleaner to a in price XXXX. preserve dollars we me, margin be kind is, something are is this and our a market up the a a excuse with So This oil down in

Karru Martinson

we we then Okay. should in it. the, I'm Nature we overall we And say the is and what potential at range assets capital additional and the generated maturities look the if for be missed beyond? the the structure at Did sorry when divestiture thinking XXXX I the, look about to then what that as for dollar divestiture, and Back

Casey Keller

was was amount. dollar a to reasonable earthshattering actually not what Back amount Yes. the didn't disclose for It We Nature.

really going hard dollar to activity M&A of to future is what be. going forward, the amount I think predict

on think are what we're that for I divesting think we're in is the things primary focus less of that portfolio. the business core, shaping primary We're focus greater the buying will good and thing what and direction good at greater potentially we us on moving at, units, the be driver.

additional will a be force think, high I the the is portfolio opportunistically primary from great. But driving in really, optimization. going benefit that think reducing be rate to is I interest environment, debt

Karru Martinson

very thank you much and right appreciate it. and All

Operator

from Casella The you. Please ahead. JPMorgan. is question we go Carla Thank from next have

Carla Casella

couple a is just – This follow-ups. of sorry, Okay.

Just a target. leverage comment on your

additional sales? mid-Xs potential by timing getting about that sense for asset You this that? the And Any end of include year. trajectory any further of to talked or does

Bruce Wacha

we the actual that. think I commenting an down work to we've we're towards inside we got bring be don't is, substantially. and set to expect year. this ratio that I on of, what leverage need target mean Yes. do Not to it number really a for we going

can divestitures. result plan paying down a portfolio get That have EBITDA, moves increasing that We in to there just by be enhanced any debt. organically,

we're to how targets investors, that But not it's That's amount for not raise. a the where set proceeds expectation run in to of an we want we're business and not the expect again, we setting we're to necessarily. that planning world and divestiture

Carla Casella

base And that you low-margin then at remaining Green on a more exited level more of of we can Green shelf-stable this where another of are Great. there a the Or the margin you the Okay. mentioned How go? Giant account. you're much product Giant? that is comfortable profile to with

Casey Keller

any a any Green don't profile. were into But was on other most lot kind our have we have that a coming I think improving innovations our we mean last Giant fall. improving focus focus. other primary I this That's driving market. profitability our of exited dollar our new part, our account low-margin exits think mix, the we don't I I particular Giant. in of of for on channel Green business profitability, changes money the been that are weren't making we on distribution active at the of improving mean, they accounts we

keep terms it to of And want see and maintaining the in stable the we our volume and and going just maintain On profile a to on we're place We that don't a business, stability. vegetable keep margins can about canned is business, it's grow. business margin it steady.

Carla Casella

tougher which of the us of then within year, oil pricing? more in passing you can growth the you of to You your And pricing, any can Okay. kind kind give behind sales reduced the of kind of Great. you through some guidance guidance? granularity thoughts more terms brands versus Any that the give expect for mentioned costs. granularity Crisco lapping kind are of the those lead into

Bruce Wacha

give don't forecast I typically brand Yes. we think per se.

and over not things on in to see to imagine category, is there. & time, I'm number would give you certainly, it. our seasonings expectation think, growth a a I higher spices going that's rate like

and are an when where imagine starts costs a pricing normalize you if earlier, come in therefore, a about hard hesitate that, would that a really I going to down brand-by-brand price in a Outside of try comes give where Crisco, on environment we are numbers actual we down input said and to growth As to to costs being year basis. think driver little down. bit, you

Carla Casella

Okay. a Are to less retailers there We've And for inventory last Any less Retailer because about stock. any carrying seem inventory? That's one that need of heard one. more just bit safety then great. little having there? comments levels. carry retailers the

there. So your thoughts

Casey Keller

kind levels. in typical our our seen the permanent we pattern bit, they we mean retailer have any inventories any a of several big their seen of little pulling kind of months. seen haven't or last down year-end, permanent a inventories we've We but adjustments stock a reduction I haven't in in

Carla Casella

Okay, great. you. Thank

Operator

final from have Seaport ahead. Eric go Thank we Please Larson you. from is The question Research.

Eric Larson

so in wishes for Yes, thanks guys. birthday for me? me no Thanks squeezing

Bruce Wacha

today birthday Eric? Is your

Eric Larson

ago. weeks [indiscernible]. two No,

Bruce Wacha

Happy belated birthday.

Eric Larson

All right.

guess maybe I weeks thanks. wiser Rob. older weeks much I’m So and than two that two

Bruce Wacha

said You not that us.

Eric Larson

Happy birthday Rob by the way.

cash. is So anyway on my question

fourth for cash what much see year, inventories in net a year And capital vegetable your pretty always And little off is exactly starts happened meaningfully not working use I as in third year don't – as of so your is and your all quarter And your I I it for come quarter. working up quarter seasonally at look you before. your number know still about of thing. that sort fourth full pack in biggest because fourth XX%. the the quarter. the build capital to with the When this

give work -- maybe – half, for be a here? your do for maybe high-cost you've some me oil it? maybe you'd kind got But Can feel first half, like cash first first second how maybe to of of have quarter, your flow off will you inventories you the second to however, characterize

Bruce Wacha

XXXX, not right? talking XXXX, You're

Eric Larson

Correct. Correct. XXXX.

Bruce Wacha

XXXX for was saw our compression. we both XXXX costs from Obviously, theme, came benefited that overarching and that through margin flowed We pricing, up the but inventory. So significantly. pretty input

do Fourth good good, reasonable. that year's good. as quarter, pretty always you quarter fourth was so as have it quarter usually is third pretty fourth And is year's quarter not prior seasonality This but where pretty rough. was pretty the

have $XXX phenomenon that had don't to We in inventory. years increases in year. row But expect over two this we've of a million

some but capital from have standpoint, to a expect favorability. favorability We working modest,

should from whole drain capital math be bit cash at working this so a be a of instead a a year being of the better. And make benefit little will operations neutral, lot least or which

the look just being plus the years, operations, year if because just from hurt those And imagine basis, imagine capital full you what or was on last two cash numbers million higher that's a working at from. $XXX

Eric Larson

Okay.

to that basis comment be favorably characterize least you're year. a It's not it year this on it's necessarily full -- full or the trying at a your and you're so should – it half And second compare – won't year, not benefit. first as you it's

Bruce Wacha

XXX%, Yes. cash. use plus the of

Eric Larson

Okay, all right.

good. Sounds

Operator

gentlemen, are questions would closing now further Thank go sir. back to and time. floor you. ahead, Please no turn like for there at Casey to this comments. over the I Ladies Keller

Casey Keller

your We Thank you all attention. appreciate joining today. us for

you. Thank As we XXXX. kind costs. showed we had in of to we've talked, strong fourth recovery quarter, a forward covering into which good pricing year inflationary And look getting fiscal our

Operator

that gentlemen, Thank for sir. then conference. and Ladies today's us. concludes you, Thank you joining

You disconnect lines. may your now

B&G Foods (BGS) 28 Feb 232022 Q4 Earnings call transcript