B&G Foods, Inc. Aktie

Hello, and welcome to the Annual Meeting of Stockholders of B&G Foods. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Casey Keller, President, Chief Executive Officer and a Director of B&G Foods. Mr. Keller, the floor is yours.

Good morning. I'm Casey Keller, President, Chief Executive Officer and Director of B&G Foods. On behalf of the directors and officers of B&G Foods, I'd like to welcome you to our Annual Meeting of Stockholders. We appreciate your attendance, your interest and most importantly, your support of B&G Foods.

We're holding this Annual Meeting of Stockholders in an audio-only virtual format, which has the benefit of improving meeting efficiency and reducing costs.

I will act as Chairman of this meeting. And at this time, I would like to call this Annual Meeting of Stockholders to order.

I would first like to introduce each of the other current directors of the company who are in attendance today. Steve Sherrill, the Chair of the Board; DeAnn Brunts; Debra Martin Chase; Chuck Marcy, Rob Mills; Dennis Mullen; Cheryl Palmer; Alf Poe; and Dave Wenner. Each of us is also standing for reelection.

I would now like to introduce the following Executive Vice Presidents of B&G Foods, Bruce Wacha, Executive Vice President of Finance and Chief Financial Officer; Eric Hart, Executive Vice President of Human Resources and Chief Human Resources Officer; Scott Lerner, Executive Vice President and General Counsel, Secretary and Chief Compliance Officer; Martin Schoch, Executive Vice President of Supply Chain; John Ozgopoyan, Executive Vice President of Sales. Scott Lerner will act as the Secretary of this meeting.

Also in attendance are Jay Green and Lauren Smith of KPMG, the company's independent registered public accounting firm.

The stated items of business for this meeting are: one, the election of 10 directors to serve until the 2027 Annual Meeting of Stockholders; two, an advisory vote on the executive compensation commonly referred to as a say-on-pay vote; and three, the ratification of the appointment of KPMG as our independent registered public accounting firm.

To have an orderly meeting, after the proposals are presented, I will ask if there are any questions or comments. I ask that you restrict your remarks to the proposals that are before us. Stockholders may submit questions by clicking on the Q&A tab on the meeting center site.

Time has been allotted later in the meeting for any appropriate questions you may have concerning the company. Please review and adhere to the rules of conduct that are posted on the meeting center site.

We will now proceed with the voting on the proposals. If you have voted your shares in advance of the meeting by one of the methods described in the proxy materials for the meeting, there is no need to vote those shares during the meeting. If you have not already voted your shares in advance of the meeting, you may vote by following the instructions on the meeting site. An industry solution has been agreed to that we expect will allow the vast majority of beneficial owners, those stockholders whose shares are held in the name of a broker, bank or other nominee, to vote their shares during the meeting using the control number received with their voting instructions form. Please note, however, that this option is not available to all beneficial owners, and the inability to provide this option to any or all beneficial owners in no way impacts the validity of today's meeting.

For those beneficial owners who do not have this option, you will not be able to vote your shares electronically during the meeting today, unless you have obtained a proxy executed in your favor from the institution that holds your shares and have previously submitted a proxy to Computershare and received a confirmation of your registration with a control number from Computershare in accordance with procedures described in the proxy statement. Your vote must be cast before the polls are closed.

The polls will be closed at the end of the general discussion and my CEO report to stockholders. Again, please be assured that there will be an opportunity later in the meeting for stockholders to ask general questions regarding the company.

We will now begin the formal business of this meeting. Mr. Lerner, will you present -- will you please present the notice of meeting.

I present to this meeting an affidavit of Computershare, the transfer agent for the company's common stock, which states that the Notice of Annual Meeting was mailed on April 10, 2026, to all holders of record of the company's common stock as of the close of business on March 24, 2026. The notice of meeting and the affidavit will be filed with the records of the company.

The report of the Inspector of Election certifies that there are in attendance at the annual meeting or by proxy, stockholders entitled to cast at least the majority of the votes which all stockholders are entitled to cast.

Thank you, Secretary. In view of that report, I declare that a quorum is present and the meeting is duly constituted. We are now ready to proceed with the transaction of business.

The Board of Directors has appointed Kerri Shenkin of Computershare to act as inspector of election for this meeting. The inspector is in attendance and has taken her oath of office, which I direct to be filed with the minutes of this meeting. Inspector has a list of stockholders of the company indicating the name, address and number of shares held by each holder of the company's common stock as of the record date certified by the company's transfer agent. The secretary will file a copy of the list of stockholders with the records of the company.

We will now have the presentation of the 3 proposals before the meeting, each of the proposals described in the proxy statement previously made available to you. Stockholders who have questions specifically relating to the 3 proposals may submit them now. And after I finish summarizing the proposals, we will answer those questions.

Proposal #1 is the election of 10 directors to serve until the 2027 Annual Meeting of Stockholders. The company has an advanced notice bylaw provision. Accordingly, all nominations are closed. As set forth in the proxy statement, the Board of Directors has previously nominated for reelection each of the current members of the Board.

Proposal #2 concerns an advisory vote on executive compensation, commonly referred to as a say-on-pay vote.

And Proposal #3 concerns the ratification of the selection of KPMG as the company's independent registered public accounting firm for the year ending January 2, 2027.

As we have received no questions specifically relating to the proposals, we will proceed to the opening of the polls. Mr. Keller?

I declare the polls now open for voting on all proposals. If you have voted your shares in advance of the meeting by one of the methods described in the proxy materials for the meeting, there is no need to vote those shares during the meeting. If you have not already voted your shares or wish to change your vote, you may do so now by clicking on the Vote tab on the meeting center site.

[Voting]

While stockholders are voting, I will now present the Chief Executive Officer's report to the stockholders.

Before I begin my remarks, I would like to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. I refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition. The company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise.

I will also refer to the non-GAAP financial measures, adjusted EBITDA, base business net sales and segment adjusted EBITDA. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in the earnings press release that we issued for fiscal year 2025 and the first quarter of 2026, both of which may be found in the Investor Relations section of our website, bgfoods.com.

Having dispensed with that, thank you all for joining us this morning. We very much appreciate your interest and continued investment in B&G Foods.

Fiscal 2025 was a challenging year for both B&G Foods and the broader packaged foods industry. We continue to see softness in center store categories evolving consumer purchasing patterns and the negative impact of tariffs. Despite these headwinds, we made meaningful progress towards our long-term goals of reshaping our portfolio and reducing leverage.

In fiscal 2025, net sales were $1.829 billion, a decrease of 5.4%. The year-over-year decline primarily reflects lower base business net sales and the divestitures of Don Pepino and Sclafani in the second quarter of fiscal 2025 and Le Sueur U.S. in the third quarter of fiscal 2025, partially offset by the impact of a 53rd week in the fourth quarter of fiscal 2025.

Adjusted EBITDA declined 7.9% to $272.2 million, driven by lower base business net sales, higher raw material costs, including tariffs, and the divestitures I just mentioned. These pressures were partially offset by lower net interest expense and continued cost discipline.

Our fourth quarter 2025 results showed improving underlying trends. Base business net sales increased 0.8% versus the fourth quarter of 2024, driven by net pricing, volume growth, product mix and the 53rd week.

Fourth quarter adjusted EBITDA was $84.7 million, slightly down versus last year due to the impact of divestitures and tariff costs.

Our Spices & Flavor Solutions business delivered the strongest performance, with net sales up 4.2% in the quarter versus the fourth quarter of fiscal 2024.

Our first quarter 2026 results demonstrated continued improvement in base business net sales trends. Q1 2026 base business and sales grew 2.8% versus last year to $365.2 million as compared to $355.2 million for the first quarter of 2025. Net sales for the first quarter of 2026 decreased by $16.5 million or 3.9% to $408.9 million from $425.4 million for the first quarter of 2025. The decrease was primarily attributable to the Green Giant U.S. frozen, Le Sueur U.S. and Don Pepino divestitures, partially offset by an increase in base business net sales, 1 month of net sales from the co-manufacturing agreement the company entered into on March 2, 2026, with the acquirer of the Green Giant U.S. frozen business and a partial month of net sales for the College Inn and Kitchen Basics brands.

Adjusted EBITDA for the first quarter was $57.6 million or 14.1% of net sales compared to $59.1 million or 13.9% in the first quarter of 2025.

We remain committed to reshaping and restructuring our portfolio to sharpen focus, simplify our portfolio, improve margins and cash flow and maximize future value creation. This is a very high priority for our company and critical to our future strategic direction and risk profile.

The endgame is to create a more highly focused B&G Foods with adjusted EBITDA as a percentage of net sales approaching 20%, increase cash flow generation, lower net leverage, a more efficient cost structure and clear synergies within the portfolio, and ultimately, to build a stable platform that can be the foundation for future-focused M&A growth.

We reached a major milestone in March 2026 with the sale of the Green Giant U.S. frozen business to Seneca Foods. As previously announced, B&G Foods maintains ownership of its frozen vegetable manufacturing operations in Irapuato, Mexico, and has entered into a co-pack agreement with the acquirer of the Green Giant U.S. frozen business pursuant to which B&G Foods will continue to produce certain Green Giant frozen vegetable products in Irapuato, Mexico. This divestiture is the largest step in our portfolio transformation to date.

We also entered into an agreement to sell our Green Giant and Le Sueur frozen and shelf-stable product lines in Canada to Nortera Foods, which is expected to close in the second quarter of 2026, subject to regulatory approval in Canada and customary closing conditions.

We continue to review our remaining portfolio for potential divestitures of noncore assets. At the same time, we recently closed the acquisition of the College Inn and Kitchen Basics broth and stock businesses from Del Monte Foods. The broth and stock category is attractive, maintains good margins and has grown low to mid-single digits over the past year. Like the spices & seasonings category, broth have been propelled by the growth in the fresh perimeter of the store as a critical component for the preparation and cooking of fresh meals and soups. The College Inn and Kitchen Basics brands have relevant well-known brand equity, strong distribution presence and high-quality products.

The net results of the divestitures in fiscal 2025 and Q1 2026 and acquisition will deliver a more focused portfolio that is expected to generate positive EBITDA growth, stronger cash flows, lower working capital intensity, reduced leverage and higher gross and adjusted EBITDA margins.

We are committed to reducing leverage and balance sheet risk. And in fiscal 2025, we took decisive steps to advance this priority. In addition to the divestitures noted above, we also amended our credit agreement in fiscal 2025 to enhance covenant flexibility and repaid and repurchased a portion of our long-term debt to improve our consolidated leverage ratio. Through these steps, combined with disciplined capital allocation and improved cash generation, we reduced our net debt to $1.912 billion at the end of the fourth quarter of 2025 compared to $1.994 billion at the end of the fourth quarter of 2024 and $2.023 billion at the end of the fourth quarter of 2023.

In our 21 years as a publicly held company, we have proven our commitment to creating stockholder value by consistently paying a cash dividend. We have paid a dividend every quarter since our initial public offering. We have been able to maintain our dividend policy year after year by growing net sales and adjusted EBITDA over the past 21 years at compound annual growth rates of 7.9% and 6.7%, respectively.

During 2025, we returned $60.6 million of cash to our stockholders in the form of dividends. Following the completion of the Don Pepino, Le Sueur U.S. and Green Giant U.S. divestitures and the College Inn and Kitchen Basics acquisition, our Board has concluded that adjustment to our intended dividend rate was appropriate.

As previously announced during our earnings call, and beginning with the dividend declared on May 11, 2026, and payable on July 30, 2026, to record holders as of June 30, 2026, our Board reduced our dividend by 50% to $0.095 per quarter or $0.38 per share per annum. On an annualized basis, reduction in dividend is expected to make available an additional $30 million of cash that we intend to use to repay long-term debt and for other business purposes, and which we expect will further accelerate the reduction in our leverage ratio. Although Board has reduced the dividend rate under B&G Foods' dividend policy, the Board reaffirmed the policy itself. B&G Foods' dividend policy reflects a basic judgment that its stockholders are better served when B&G Foods distributes a substantial portion of its cash available to pay dividends instead of retaining it in the business.

We continue to advance our corporate social responsibility efforts and sustainability goals. Our corporate social responsibility report, which is available on the responsibility page of our website, bgfoods.com, includes disclosures regarding the steps we have been taking over the years to enhance our corporate social responsibility efforts and to minimize our impact on the environment, including our sustainability goals and the progress we have been making to achieve those goals.

A highlight of our CSR program is our philanthropic partnership with America's Grow-a-Row, a not-for-profit organization that grows and gleans fresh, healthy fruits and vegetables that are donated to those suffering from hunger or living in areas that lack reliable access to fresh, affordable produce. As a leading manufacturer of high-quality, well-known brand -- food brands, we believe we can make a difference in the community by supporting causes and organizations that promote food security and education to ensure those in need have safe access to nutritious foods.

Beginning in 2023, we have made annual donations of $250,000 to America's Grow-a-Row, which results in the planting, growing, harvesting and distribution of 1.25 million servings per year of fresh produce to communities in need across the United States. In addition, during the harvest season in New Jersey, we hold volunteer days at America's Grow-a-Row, in which our employees help harvest fresh produce that is donated to those in need.

Looking ahead, fiscal 2026 is poised to be a transformational year for B&G Foods. With a more focused, higher margin and more stable portfolio, we expect continued improvement in base business trends towards our long-term objective of 1% annual base business growth, supplemented by acquisition growth. We will also become a less complex, more efficient and leaner company as we simplify our portfolio and rightsize operations to focus resources on our core categories.

Our long-term priorities remain clear: improving base business net sales trends of the core business to the long-term objective of plus 1%, reshaping the portfolio for future growth, stability, higher margins and cash flows, and reducing our net leverage below 5.5x through divestitures and excess cash flow to facilitate strategic acquisitions.

Overall, the B&G Foods team responded well to the challenges of 2025, and we remain focused on our critical priorities. As we execute our transformation, we remain guided by our core values: passion for what we do, our commitment to food safety and quality, diversity and inclusion, integrity and accountability, our customer and consumer focus, our commitment to the safety and health of our employees and our belief in collaboration and empowerment.

With a more focused portfolio, a stronger balance sheet and improving base business trends, we are confident in the path ahead and committed to driving our business forward in 2026.

Thank you very much for attending our Annual Meeting of Stockholders today and for your continued support of B&G Foods. This concludes my prepared remarks.

Now we will return to the business of the meeting. Since everyone has had the opportunity to vote, the polls are now closed. While the votes cast and proxies are being counted, I now invite stockholders to ask any questions you may have about the company.

We received a question from a stockholder noting the share price performance over the last 2 years and looking to know what the company is doing to return the stock price to growth?

Thank you for the question. I think, primarily, we are focused on some of the priorities that we talked about. First and foremost, strengthening our core brands and our core businesses back to a 1% base business net sales growth in the first quarter of 2026. We were able to get to a 2.8% growth. So we're making progress towards that goal. We expect to be -- to have a positive net base sales growth in the full year of 2026.

The second thing that we're focused on is reshaping our portfolio to ensure that we have brands and businesses that are achieving that kind of 1% net sales base business growth and also provide stable cash flow, stable EBITDA margins, stable EBITDA delivery over time. You just saw us execute what I would consider one of our portfolio-shaping efforts, which was selling the Green Giant U.S. frozen business, which was extremely low margin, high working capital intensity, very complex, and use the proceeds from that transaction to partially fund the transaction of the acquisition of College Inn and Kitchen Basics broth and stock businesses, which are nicely profitable, good EBITDA margins, reasonable working capital intensity, and we expect -- and are in growing categories within the center store grocery business.

As we have received no further questions, the next item on the agenda is the report of the inspector.

The Inspector of Election has tabulated the votes cast at this meeting electronically or by proxy with respect to the election of directors and has preliminarily reported that the director nominees have received between 85% and 94% of the votes cast, and accordingly, they are elected as directors of the company. In addition, the say-on-pay proposal received approximately 85% of the votes cast. And the proposal to ratify the appointment of KPMG has received approximately 96% of the votes cast.

Accordingly, all of these proposals are approved. The full and final details of the votes cast will be contained in the written report of the inspector, which may be examined by any stockholder and will be filed with the records of the company.

In addition, as required by SEC rules, the company will file a current report on Form 8-K later this week or early next week to report the details of the votes cast. Mr. Keller?

I want to thank all of you for attending today's meeting and for the interest you have shown in B&G Foods. There being nothing further to come before the meeting, I declare this meeting adjourned.

This concludes the meeting. You may now disconnect.

Good day, and welcome to the B&G Foods, Inc. First Quarter 2026 Financial Results Conference Call. Today's call, which is being recorded, is scheduled to last about 1 hour, including remarks by B&G Foods management and the question-and-answer session. I would now like to turn the call over to AJ Schwabe, Senior Associate, Corporate Strategy and Business Development for B&G Foods. AJ, please go ahead.

Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer; and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter in the earnings release we issued today, which is available at the Investor Relations section of bgfoods.com.

Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer you to B&G Foods' most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial condition.

B&G Foods undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We will also be making references on today's call to the non-GAAP financial measures, adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit percentage, base business net sales and segment adjusted expenses. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release.

Casey will begin the call with opening remarks and discuss various factors that affected our results, selected business highlights and his thoughts concerning the outlook for the remainder of fiscal 2026 and beyond. Bruce will then discuss our financial results for the first quarter of 2026 and our revised guidance for fiscal 2026. I would now like to turn the call over to Casey.

Good afternoon. Thank you, AJ, and thank you for joining us today for our first quarter 2026 earnings call. Today, I will cover an update on our portfolio reshaping, including the recent divestiture and acquisition, an overview of first quarter performance, Bruce will cover more detailed financial results; and finally, the outlook for fiscal year 2026.

Portfolio divestitures. The first quarter witnessed major progress in our efforts to reshape the B&G Foods portfolio. We completed the divestiture of the Green Giant U.S. frozen business to Seneca Foods Corporation on March 2. This is the largest piece in our portfolio transformation that is resulting in stronger focus, simplification, greater synergies and higher margins across the B&G Foods portfolio. The first quarter includes the final 2 months of the Green Giant U.S. Frozen business within B&G.

In addition, we completed the acquisition of the College Inn and Kitchen Basics broth and stock businesses from Del Monte Foods on March 19. These key brands are a much stronger fit with our current shelf-stable portfolio and play in a growing category that is driven by the expansion of the fresh store perimeter.

The impact of these two transactions will create positive EBITDA and higher margins on our portfolio, replacing the low-margin Green Giant U.S. frozen business with a more profitable and stable broth and stock business. These transactions were also critical in reducing our pro forma net leverage ratio in Q1 to almost 6x.

Further, we previously announced the divestiture of Green Giant Canada, the final component of the Green Giant divestitures. That transaction requires Canadian regulatory approval and remains under review. Subject to regulatory approval and other customary closing conditions, we expect to close during Q2 of fiscal year '26. Q1 results. The first quarter demonstrated significant improvement in base business net sales trends relative to a lower Q1 in fiscal year '25, impacted by some trade inventory reductions.

Quarter one base business net sales grew plus 2.8% versus last year. Some of the key drivers. The Spices & Flavor Solutions business unit grew Q1 net sales plus 9.1% versus last year, benefiting from the growth in fresh food and proteins as well as strength in the club and foodservice channels. Segment adjusted EBITDA was up plus 13.1% versus quarter one fiscal year '25 behind strong volume and pricing growth.

The Frozen & Vegetables business unit in the first 2 months of Q1 delivered a recovery in segment adjusted EBITDA from a net loss in segment adjusted EBITDA in Q1 last year behind higher volumes, lower trade spend and lower manufacturing costs.

Quarter one continued to benefit from the implementation of our cost savings and restructuring initiatives. Unallocated central overheads were down almost $2 million from last year. We will continue to remove direct costs associated with the Green Giant business and restructure central costs to reflect divestitures.

Fiscal year '26 outlook. The updated guidance range for fiscal year '26 is increased to $1.735 billion to $1.775 billion in net sales and $275 million to $290 million in adjusted EBITDA. The key assumptions. The current outlook for fiscal year '26 reflects the addition of the College Inn and Kitchen Basics brands.

The impact of the Green Giant U.S. Frozen divesture was built into our previous guidance as well as the year-over-year impact of the Don Pepino and Le Sueur U.S. divestitures in fiscal year '25. We expect fiscal year '26 base business and net sales trends on the remaining core meals, Spices & Flavor Solutions and specialty businesses to modestly improve versus last year.

Quarter one trends were a strong start for the year against a lower base in quarter one fiscal year '25, but are expected to be flat to slightly down for the remainder of fiscal year '26, recognizing the impact of the 53rd week in quarter four of fiscal year '25. A key financial risk we are watching closely is the price of oil, which impacts both transportation costs and the price of soybean oil given its market relationship to biofuels. We expect these costs to come down from current highs but remain elevated year-over-year. If oil and fuel costs continue at high levels, we will evaluate pricing actions to cover significantly higher input costs.

Finally, the pending divestiture of Green Giant Canada has not been reflected in our guidance. We will update fiscal year '26 guidance when that transaction closes, but expect the divestiture of Green Giant Canada to be relatively neutral from an adjusted EBITDA impact.

Looking forward, fiscal year '26 is poised to be a transformational year with a more focused, higher-margin and stable portfolio once divestitures and closing transition services have been completed. We expect continued improvement in base business net sales trends towards the long-term algorithm of 1%.

Further, we will also become a less complex, more efficient and leaner company behind a simplified portfolio, restructuring operations to rightsize overheads and focus resources and investment behind the core categories and brands in spices and seasonings, meals and baking staples. Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and outlook for the remainder of fiscal 2026.

Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. As we highlighted on our last call, we had a fast start to the year. Our financial performance was very strong in January as we lap prior year inventory destockings, and we then demonstrated continued momentum in the business throughout the remainder of the quarter, particularly within our Spices & Flavor Solutions business unit. Meanwhile, we remained active on the M&A front with the divestiture of our Green Giant U.S. frozen business and the establishment of our Green Giant U.S. frozen contract manufacturing business at our frozen vegetable manufacturing facility in Mexico with about a month to go in the quarter.

And then the closing of our acquisition of the College Inn and Kitchen Basics broth and stocks business with about 2 weeks to go in the quarter. I will provide more details on the transactions later in the call, but in effect, we used the net proceeds from the divestiture of the marginally profitable Green Giant U.S. frozen business to partially fund the acquisition of the more profitable College Inn and Kitchen Basics business. And we are very pleased with our divestiture and acquisition counterparts on both of these transactions. I'm happy to report that both transitions are proceeding relatively smoothly.

As we review our first quarter 2026 results, we will highlight the comparative differences that result from this 2026 activity as well as from the divestitures of the Don Pepino and Le Sueur brands, which we own for only parts of fiscal 2025. Because the divestiture of Green Giant Canada has not yet closed, there was no impact to our net sales or adjusted EBITDA. However, because Green Giant Canada is classified as an asset held for sale for accounting purposes, the pending divestiture does impact how the Green Giant Canada assets are carried on our balance sheet and within certain line items of our P&L.

For the first quarter of 2026, we generated $408.9 million in net sales, a net loss of $32.5 million or $0.41 per diluted share, adjusted net income of $6.8 million or $0.08 per adjusted diluted share, adjusted EBITDA of $57.6 million and adjusted EBITDA as a percentage of net sales of 14.1%.

The company's net loss for the first quarter was primarily attributable to a $36.3 million noncash loss on sale of assets, a $5.8 million noncash loss on disposals and impairment of PP&E as well as certain acquisition divestiture-related and nonrecurring expenses. Details regarding the impairments and other adjustments are included in our earnings release issued today and our 10-Q that will be filed later this week.

Net sales for the first quarter of 2026 decreased by $16.5 million or 3.9% to $408.9 million from $425.4 million for the first quarter of 2025. The decrease was primarily attributable to the Green Giant U.S. Frozen, Le Sueur U.S. and Don Pepino divestitures, partially offset by an increase in base business net sales, 1 month of net sales from the contract manufacturing agreement the company entered into on March 2, 2026, with the acquirer of the Green Giant U.S. frozen business and a partial month of net sales for the College Inn and Kitchen Basics brands.

Net sales of our Green Giant U.S. frozen business, which we owned for only 2 months during the first quarter of 2026, contributed $27.2 million less net sales during the first quarter of 2026 compared to the first quarter of 2025. Net sales of the Don Pepino and Le Sueur businesses, which we divested in 2025 and are therefore not part of our first quarter 2026 results were $10.6 million during the first quarter of 2025. Partially offsetting the impact of these divestitures were 1 month of sales for the new Green Giant U.S. frozen contract manufacturing agreement, which contributed $8.5 million of net sales in the first quarter of 2026 and a partial month of net sales for the College Inn and Kitchen Basic brands acquired on March 19, 2026, which contributed $2.9 million to the company's net sales for the first quarter of 2026.

Base business net sales for the first quarter of 2026 increased by $9.9 million or 2.8% to $365.1 million as compared to $355.2 million for the first quarter of 2025. The increase in base business net sales was driven by increases in volume that contributed $6.6 million or 1.9%, an increase in net pricing and the impact of product mix of $1.6 million or 0.5% and the impact of foreign currency of $1.7 million or 0.5 percentage points.

Gross profit was $79.9 million for the first quarter of 2026 or 19.5% of net sales and adjusted gross profit was $84.6 million or 20.7% of net sales. Gross profit was $90.1 million for the first quarter of 2025 or 21.2% of net sales, and adjusted gross profit was $90.6 million or 21.3% of net sales.

The first quarter of 2026 marked a somewhat different story than our experiences in 2025. Today, we are seeing resiliency in our volumes with modest recovery in many of our brands as compared to the more negative sales trends that we experienced in 2025. Across our internal manufacturing network, our factory employees are working hard with seven of our 10 internal manufacturing facilities increasing output during the first quarter of 2026 when compared to 2025 volumes.

Additionally, two of the three facilities that did not increase year-over-year volumes during the first quarter are currently ahead of our budget volumes for those factories for the year-to-date period. However, input costs, which excluding the impact of tariffs were largely benign in 2025, are beginning to show some signs of inflationary pressure in recent months. We will be watching these trends for any signs of sustained inflationary pressures and when appropriate, we will consider implementing pricing actions to protect our profitability.

Selling, general and administrative expenses increased by $1.1 million or 2.2% to $50.2 million for the first quarter of 2026 from $49.1 million for the first quarter of 2025. The increase was comprised of an increase in acquisition, divestiture-related and nonrecurring expenses of $6.4 million, inclusive of an increase of $1.9 million for disposals and impairments of PP&E, partially offset by decreases in general and administrative expenses of $3.9 million and warehousing expenses of $1.4 million.

Expressed as a percentage of net sales, selling, general and administrative expenses increased by 0.7 percentage points to 12.3% for the first quarter of 2026 as compared to 11.6% for the first quarter of 2025. We are following these costs closely, and we are proactively taking steps to reduce our ongoing SG&A commitments to better reflect the size of our business going forward as we work to minimize the impact of any stranded costs on our ongoing overhead structure due to the impact of the recent divestitures.

We generated $57.6 million in adjusted EBITDA or 14.1% of net sales in the first quarter of 2026 compared to $59.1 million or 13.9% in the first quarter of 2025. The Le Sueur, U.S. and Don Pepino businesses contributed nearly $1 million to segment adjusted EBITDA during the first quarter of 2025. Net interest expense decreased by $2 million or 5.1% to $35.8 million for the first quarter of 2026 from $37.8 million for the first quarter of 2025.

The reduction of net interest expense was primarily attributable to a reduction in average long-term debt outstanding during the first quarter of 2026 relative to average long-term debt outstanding during the first quarter of 2025. Depreciation and amortization was $15 million in the first quarter of 2026 compared to $16.8 million in the first quarter of 2025.

We had a net loss of $32.5 million or $0.41 per diluted share for the first quarter of 2026 compared to net income of $0.8 million or $0.01 per diluted share for the first quarter of 2025. The net loss for the quarter of 2026 was primarily driven by a loss on sale of assets of $36.3 million in connection with the divestiture of the Green Giant U.S. frozen business, $5.8 million for noncash disposals and impairments of PP&E as well as an increase in acquisition, divestiture-related and other nonrecurring costs.

We had adjusted net income of $6.8 million or $0.08 per adjusted diluted share in the first quarter of 2026. In the first quarter of 2025, we had adjusted net income of $3.4 million or $0.04 per adjusted diluted share. Adjustments to our EBITDA and net income are described further in our earnings release. I would now like to touch on results by business unit for the first quarter.

Net sales for Spices & Flavor Solutions increased by $8.3 million or 9.1% in the first quarter of 2026 to $100.1 million from $91.7 million in the first quarter of 2025. The increase was primarily due to higher volumes across Spices & Flavor Solutions business unit, coupled with higher net pricing and product mix.

Spices & Flavor Solutions segment EBITDA increased by $3.4 million or 13.1% in the first quarter of 2026 compared to the first quarter of 2025. The increase in segment adjusted EBITDA was largely driven by increased volumes and to a lesser extent, by increased pricing that largely offset the impact of increased tariff costs. and other input costs as well as increased allocations to spices cost of goods that were driven in part by the divestiture of the Green Giant U.S. frozen business.

Net sales for Meals increased by $0.9 million or 0.9% in the first quarter of 2026 to $107.1 million from $106.1 million for the first quarter of 2025. The acquisition of the College Inn and Kitchen Basics brands added approximately $2.9 million of net sales during our first 2 weeks of ownership in the business. Meals net sales also benefited from the higher net pricing and improved product mix, which were offset in part by modestly lower volumes across the business units.

Meals segment adjusted EBITDA decreased by approximately $5 million, primarily driven by the impact of unfavorable cost comparisons in certain raw materials and manufacturing expenses as well as increased allocations to Meals cost of goods that were driven in part by the divestiture of the Green Giant U.S. frozen business. These incremental costs were offset in part by increased net pricing and the impact of product mix.

We also made investments in certain brands in the Meals portfolio, such as Ortega, where we increased trade spending and marketing expenses during the first quarter of 2026 to help drive improved sales performance throughout the remainder of the year.

Net sales for Specialty decreased by $3.6 million or 2.7% in the first quarter of 2026 to $130.8 million from $134.4 million in the first quarter of 2025. The decrease was primarily due to the divestiture of the Don Pepino business, which generated $3.5 million of net sales in the first quarter of 2025. Base business net sales for Specialty were essentially flat for the quarter.

Specialty segment EBITDA decreased by $7.4 million in the first quarter of 2026 compared to the first quarter of 2025. The decrease was primarily due to the Don Pepino divestiture, unfavorable cost comparisons in certain raw materials, manufacturing expenses, the impact of tariffs and increased allocations to specialty cost of goods that were driven in part by the divestiture of the Green Giant U.S. frozen business.

Financial performance for the Frozen & Vegetable unit during the first quarter of 2026 and the first quarter of 2025 are not comparable due to the impact of the Le Sueur U.S. and Green Giant U.S. frozen divestitures and the impact of our new contract manufacturing agreements for the Green Giant U.S. frozen business.

We are pleased to report that net sales of Green Giant Canada remained strong and increased by $4.2 million or 16.4% to $30.1 million for the first quarter of 2026 compared to $25.9 million for the first quarter of 2025.

Separately, the new contract manufacturing agreements for Green Giant U.S. Frozen generated $8.5 million in net sales for the quarter during its first month of operation following our sale of the Green Giant U.S. frozen business. This contract manufacturing arrangement has a cost-plus structure and is expected to provide a modest but stable profit stream going forward.

Now I will spend a little time on our balance sheet, which has also improved in the first quarter of 2026. Net debt to pro forma adjusted EBITDA before share-based compensation and extraordinary tariffs was 6.07x at the end of the first quarter of 2026 compared to 6.57x at the end of the fourth quarter of 2025. As discussed on previous earnings calls, we are continuing to reduce leverage.

We expect to remain on track to reduce net debt to pro forma adjusted EBITDA before share-based compensation and extraordinary tariffs to approximately 6x or less by the midpoint of this year, supported in part by the divestiture of the Green Giant Canada business, which subject to regulatory approval in Canada, we expect to be completed during the second quarter and which we expect will reduce net leverage by another 0.25 of a turn or so once it closes.

Additionally, as announced by press release today, beginning with the dividend declared today and payable on July 30, 2026, to record holders as of June 30, 2026, our Board of Directors has reduced our dividend by 50% to $0.095 per quarter or $0.38 per share per annum. In our 21 years as a publicly held company, we have proven our commitment to creating stockholder value by consistently returning a meaningful portion of our excess cash to stockholders in the form of a cash dividend.

Following the completion of the Don Pepino, Le Sueur U.S. and Green Giant U.S. divestitures and the College Inn and Kitchen Basics acquisition, our Board has concluded that an adjustment to our intended dividend rate was appropriate. On an annualized basis, the reduction in dividend is expected to provide an additional $30 million or so, which we intend to use to repay long-term debt and for other business purposes, which we expect will further accelerate the reduction in our leverage ratio.

Before I get to our updated 2026 guidance, I would like to remind the audience that we continue to live in unpredictable times. Our 2026 guidance reflects what we know today and for example, does not factor in significant changes in inflation, tariff policies or the potential impact of escalation in the conflicts in Eastern Europe, the Middle East or Latin America could have on our results.

Please note that our guidance reflects the expected impacts only of acquisitions and divestitures that have already closed. In other words, our guidance reflects the expected impacts of the Don Pepino, Le Sueur U.S. and Green Giant U.S. frozen divestitures, the commencement of the Green Giant U.S. frozen contract manufacturing agreement and the College Inn and Kitchen Basics acquisition. But our guidance does not reflect the expected impact from the pending Green Giant Canada divestiture because that divestiture has not yet closed.

Our guidance also does not take into account any upcoming potential refinancing or other capital markets transactions. Also, as a reminder, our guidance reflects that fiscal 2026 has 1 fewer week than fiscal 2025, which had a 53rd week. While we love the benefit of the 53rd week in our fiscal 2025 results, we will lap that benefit or approximately $18 million of net sales during fiscal 2026.

As a result and as noted in our earnings release, we expect fiscal 2026 net sales in the range of $1.735 billion to $1.775 billion, adjusted EBITDA in the range of $275 million to $290 million and adjusted EBITDA as a percentage of net sales in the range of approximately 15.8% to 16.3%. And based on this guidance, we expect adjusted diluted earnings per share to be in a range of $0.575 to $0.675 per share.

Additionally, we expect for full year 2026, interest expense of $152.5 million to $157.5 million, including cash interest of $145 million to $150 million, depreciation expense of $40 million to $45 million, amortization expense of $17 million to $19 million, cash taxes of approximately $5 million or less, an effective tax rate of 26% to 27% and CapEx will likely be at the lower end of our $30 million to $35 million target. Now I will turn the call back over to Casey for further remarks.

Thank you, Bruce. In closing, B&G Foods is making real progress against our long-term goals, improving the base business net sales trends of the core business to the long-term range of flat to plus 1%, reshaping the portfolio through divestitures and acquisitions for future growth, stability, higher margins and cash flows and reducing our net leverage ratio below [ 5.5x ] through divestitures and excess cash flow to facilitate strategic acquisitions. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator?

[Operator Instructions] The first question comes from the line of Andrew Lazar with Barclays.

First thing, excluding the portfolio changes since the last time you provided guidance, curious how the outlook changes for the year, if at all, because it's harder to track that. And then it still seems like underlying consumption for the tracked channel data was down close to maybe mid-single digit in the quarter. And I think you mentioned you're expecting it to be flat to slightly down for the rest of the year. So just trying to get a sense for those things first off.

Yes. So basically, our guidance is updated just to reflect the College Inn and Kitchen Basics acquisition. Our prior guidance included the other divestitures around Green Giant U.S. Frozen, Don Pepino, Sclafani and the Le Sueur brand. So really, the only change is the result of adding in the College Inn and Kitchen Basics acquisition.

What -- when we talk about base business net sales or organic net sales, it's not just the tracked consumption data, it's our total portfolio, which would include our business in foodservice and private label brand business, in Canada, our Canada business untracked. And that's probably our tracked channels now represent less than 60% of our portfolio. And we've seen pretty strong growth in our spices private label business, our spices, foodservice business, our other foodservice businesses, Canada is growing.

Our industrial business has performed well. We also have private label business in baking powder and other things. So when we say our organic business is going to be roughly flat, we mean the composite of both our measured channels and our tracked channels -- our tracked channels and our unmeasured channels.

Yes, okay. And then do the portfolio changes you've made in the past few quarters, do you think make it harder or easier or neither to sort of execute pricing if and when needed, should the industry have to deal with another round of inflation going forward? And maybe you can get into a little bit where you're sort of covered and for how long on some of your key inputs?

Yes. So we don't break out all of that publicly. I mean we're covered for a decent portion of this year on input costs just through our normal forward purchases. From an ability to take price, the divestitures, we've eliminated the Green Giant U.S. frozen business, which we think is a great business, just not the right one for us. doesn't really impact one way or the other, the rest of the business. It was a different business for us. We still have about 50 brands. We're still very relevant. We think our brands are relevant, and we'll continue to take action as needed.

I think, Andrew, the key input we're watching is oil and soybean oil because there is a real relationship between soybean oil and crude oil because of its use as a biofuel. So that's the one we're watching pretty closely. It's up north of $0.70 a pound. So very high. And we are covered reasonably long. But obviously, if oil prices stay where they are, we're going to need to take some action as I expect the industry will just because of the rising input costs.

Next question comes from the line of Scott Marks with Jefferies.

I wanted to just follow up quickly on something that Andrew asked just in terms of the kind of flattish outlook for the rest of the year. Can you just help us understand a little bit how you're thinking about that in terms of price versus volume versus mix and across the different segments, just what we should be thinking about?

Yes. We haven't really broken out price mix on a forward basis before. We're encouraged with the progress that we made in the first quarter in terms of stabilizing volumes, whether you see that in our net sales with a little bit of net sales growth driven by volumes or even in our consumption data where the -- for the portion that does track those channels where it's improved. We think this year is going to be a little bit less forgiving from a top line standpoint than the prior year.

Okay. Understood.

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

Okay. Understood. And then just in terms of the decision around the dividend, just wondering if you can help us understand why was the 50% reduction the right number? And how do you feel just in terms of the flexibility it gives you to do what you need to do with some of that increased cash?

Sure. It certainly generates another $30 million on an annualized basis in cash -- excess cash relative to where we were before. As we've said all along, as we went down the journey through evaluating the Green Giant business and the disposal of it, we would continue to reevaluate the dividend on a go-forward basis. It's very important to the company. It's something that we've been doing for a long period of time, and we think it is the right thing for shareholders. It just has to be at the right level, reflecting where we are from a cash generation standpoint.

I think the important principle for us is in today's interest rate environment, we would like to have excess cash, 50% of -- at least 50% of that going towards debt reduction and the other 50% dividend. So this is trying to get that in balance because we believe that the interest rate environment that we're in now, we need to be continuing to pay down debt. That's the right thing for us, and that's the right thing for shareholders.

Next question comes from the line of Robert Moskow with TD Cowen.

I just wanted to make sure I understood the comments on cost. It sounds like soybean oil is really the only thing that's really jumping on you. But are there other elements? You mentioned oil costs. Does that flow through your logistics, your packaging? And is your pricing power on those elements of your structure less clear?

Yes, it does flow through both on logistics and on some packaging. And just like everybody else in the industry, we're waiting and watching to see these higher, more elevated costs for energy stick, right? And probably just like everybody else in the industry, we're evaluating and determining whether or not it makes sense to protect margins with pricing initiatives to offset that.

I think our biggest concern right now is the price of soybean oil. It's quite elevated on a historical level. So that's the one we're watching closely because it is largely -- and from a Crisco oil standpoint, it is the majority of the cost.

Yes. I think you've changed the business effectively to be able to price up and down for that. But -- but the other elements, I think, are a little trickier because passing through logistics cost is sometimes tougher, I think, with retailers historically, maybe that's changing. But is there any way to put some numbers to this, Bruce, where like if you have $100 per barrel oil, like how much inflation would you expect to be incremental to your business? And if you can tell to me without soybean oil, maybe that's even simpler?

Yes. We don't, but I would point out, despite some skepticism, I think in 2017 or 2018, when transportation costs went haywire, we took price based on fuel cost and transportation and logistics and then again, in 2022, 2023. And so yes, it won't be perfect. We're also looking deep into productivity initiatives and continuous improvement to help cover costs. But yes, our expectation would be if these costs stay elevated permanently or relatively permanently, we would expect to take price to cover a significant portion of that.

Okay. Last question. You have the College Inn business now and Kitchen Basics. Any surprises in your first couple of weeks of owning it, positive or negative?

Yes. I think right now, we've been very focused on ensuring that the plans in the business are solid. We had some visibility of that before, but we've kind of taken over most of the selling of that as quickly as possible, even within the first month now. So it's key that we have the right plans for promotion, customer support in the fall, and that's what we've been really focused on. You can imagine that the Del Monte bankruptcy and transition, obviously, probably didn't get the highest attention from the business. So we're just trying to shore that up. So I don't think there's any big surprises. We're also launching a couple of SKUs that were sort of holds in the portfolio and trying to accelerate that process as well. But so far, so good. But as you can imagine, getting our hands around it quickly is really our goal.

And Rob, the other thing just to keep in mind, I don't know if we talked about this after our last call, when we first looked at this business, it's like College Inn, #2 Northeast regional brand, generates cash, stable. We were -- that's what first intrigued us. And as we spent time on the acquisition, we learned a little bit more about the category and the category dynamics. Casey talked about this on our last call. This is actually a category that's been doing pretty well despite some of the other center store trends. And some of the appeal of what's going on in the perimeter is helping driving sales here.

And then also with this Kitchen Basics business, it's a grower, right? This was the innovator brand of 10 years, 20 years ago, but it's continuing to travel down on that path and grow. And we're really excited to get both of these businesses into the portfolio.

Next question comes from the line of William Reuter with Bank of America.

So on the price increases that you potentially would take, I'm wondering if you've kind of alerted some customers that this may have to take place. And I guess I feel like when we are in a situation like this where -- well, the war is unlikely or the conflict is unlikely to go on in perpetuity. When a price rises for a short period of time, I think those discussions maybe are a little more challenging. So I guess, have you started to alert them? And what has the feedback been?

We certainly have discussed soybean oil. So I mean, I think that's -- and we've had those discussions with the volatility in that commodity over the last 5 years. So that's not something that's new to us, looking at how do we move the cost of soybean oil and vegetable oil up and down with the price. So we have that kind of agreement with the marketplace and how we move. And that's been the pattern, too, in that market. So yes, those discussions have taken place.

In terms of fuel and transportation logistics, we're not really having those conversations yet. I think they're feeling it themselves, our customers. So I think we will start having those conversations, but we wanted to see where this played out before we would have any further conversations because this isn't something that we would -- these fuel costs move so much on a spot basis that we want to make sure that we've got a longer-term trend before we do anything.

But again, we have covered some of that increase in our forecast, in our outlook. So we've already expected that fuel is going to be higher. It's just a question of how high it stays, to be honest. So -- and that's what we're watching pretty closely.

Packaging, honestly, longer-term packaging resin contracts that frank -- we really haven't seen increases hit us yet because those are sort of 6-month, 12-month contracts. So we'll need to see where oil shakes out longer term as an input cost in our packaging.

Got it. Yes. I guess does your guidance imply that raw materials kind of remain where they are? Or does it imply that they come down to more reasonable or rational levels over a longer period of time?

I guess what we've done is we've -- let's take fuel. We've assumed that it comes down a little bit from where it is today, but certainly higher than what we initially entered our year with our assumptions entering the year.

Got it. Okay. I guess just one last one for me. Your organic sales growth, which has been solid. I guess how much of this is driven by new product innovations versus just underlying growth of some of the products or the categories that you're participating in there?

We don't -- I don't really have a split on that. There is some element of innovation that is driving that, some new items that have gone in. So for instance, on Cream of Wheat, we've launched protein varieties. So there is some growth coming from that. There's also growth coming just from volume increases or category growth.

We've got some businesses that are performing very nicely. There's also -- as I said before, our foodservice business has been growing. Our channel -- our customer channel mix in foodservice has been positive. We do have some private label business predominantly in spices and in baking powder, and those have been performing very well. So yes, I think it's a combination of things that's driving our growth.

Yes. And the other thing to throw in there, so as Casey is saying spices, we're seeing some nice category growth. We're seeing some nice channel growth. We also have, we think, one of the best spice manufacturing facilities in North America, and we've been investing in that and building out our capabilities. So we've got incremental capacity that we didn't have a couple of years ago that's helping to support some of this growth as well. So not necessarily product innovation, but the ability to manufacture and produce product and sell it.

Next question comes from the line of David Palmer with Evercore ISI.

I just wanted to ask you a follow-up question on consumption data versus what you are seeing in your all channel consumption and maybe what we should be assuming to see in the -- what we use in terms of if we use Circana includes supposedly Costco and Amazon, pretty broad set. Right now, I see down 4% for the quarter, down 7.5% for April for B&G Foods. And I'm just wondering like when we're looking forward and trying to match up this consumption, what would equate to your flat consumption assumption, what sort of gap should we be thinking about there? And do you need this consumption that we're tracking to get better to get to that? How should we think about that?

I think, look, the -- and I know this is hard for you guys to see and track, but post Green Giant, U.S. Frozen Green Giant, we're even less measured than we were before. So if you think about our business, you look at the tracked measured data, if you're using Circana or you're using Nielsen or whatever, IRI, that's probably covering less than 60% of our universe right now. There are big swaths that are not just untracked channels, but they are different channels. So our foodservice business has been positive. And that's probably in the neighborhood of 13% to 15% of our portfolio right now, total sales.

Our private label businesses are probably over -- well over 10%, approaching, I don't know, 12%, 13% of our portfolio, and those have been growing nicely. Our Canadian business, which isn't in obviously, most of the U.S. databases is also growing in the first quarter. So what -- when you try and project it out, we need our measured channels to get better by some amount, but we don't need them to flip totally to positive that we expect them to gradually improve over time.

So we don't need -- I mean, we continue to see strong growth in those other unmeasured channels that should continue, foodservice, our private label businesses, et cetera. But we do want to see some improvement in our measured channel data, and that's what we're working against.

Just roughly speaking, maybe the decline rate in the consumption that we see would be down low single digits and you can get a few points from nonmeasured? Or do you think the gap...

We're probably getting mid-single-digit growth from the -- some of those nonmeasured channels.

Yes. And the other thing that's really messy in the most recent consumption data is the shift in Easter timing year-over-year.

Yes. No doubt.

That's also a complexity, I think you have to factor in because the most recent data would be comparing against the Easter period last year.

And by the way, when you're saying mid-single digits from the non-measured, are you talking about mid-single-digit contribution to growth from the 40%? Or are you talking about that non-measured to 40% growing at mid-single-digit rate?

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

Yes. That's pretty good. And then I guess one of the -- like just philosophical things that you've seen multiple cycles before, very experienced executive in dealing with energy-related inflation. I wonder -- I remember these periods of energy-related inflation in its many forms in packaging, distribution and what have you that it just -- it was particularly tough when it came to pricing power and those discussions with retailers. It felt different weird that they were dealing with the same type of pressures in those -- do you think that's the case? Do you feel like that, that is that something we should brace for? It's just a much different type of pricing discussion with that type of inflation?

Never easy. Yes. I mean -- and it is a hard discussion. It is a hard discussion with retailers, but that's why I think what we are hearing from us is that we've covered a fair amount of increase in energy inputs. We've been able to cover that through productivity, cost savings, other efforts. If it stays -- let's -- if oil stays north of $100 a barrel or whatever, I mean, we're going to have to think about it. I think that's going to be an impact for our customers. It's going to be an impact for us, the industry. So we're expecting it to stay higher. It's a question of how high it stays before it becomes a really, really serious issue in terms of cost. But so far, we've been able to kind of manage it and manage an increase. But I think we would expect it to come down below $100 over time, assuming that Iran and Strait of Hormuz and are open and oil flows again and the market ease. I mean I think there was a lag effect on all those things happening, but we just need to keep watching it because if it stays at well over $100 a barrel, I think everybody has a problem, everybody.

Next question comes from the line of Karru Martinson with Jefferies Company.

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

I don't know about all consumers running out of money. I guess you're just talking about pressure on them. But look, there's a balancing act. I mean, we think with our portfolio, we are mass mainstream regular way grocery for a good portion of our business, and we may see some trade down there. But we also expect to see some trade down benefit of people going out to eat as well, which pushes them into the categories that we're selling. We're meals, we're affordable. We think this plays to our strength, but it doesn't mean that it's easy. It's a tough world.

I think we're not really talking about pricing, we would only look at pricing related to any oil cost, take soybean oil aside, if we believe that it was going to stay this elevated for an extended period of time. So I mean my hope is that we can cover the increase we got that we have planned, we can cover that with our own internal cost savings, productivity and other efforts.

Soybean oil is a different conversation that we need -- the commodity is up dramatically from a year ago. We as an industry, we will just have to take price. And I'm expecting that the industry will see that. But beyond that -- beyond those two things, I mean, we're not really -- we don't really see the need to take pricing on our portfolio. It's really those two components, what -- how high does energy stay, which would not be a significant increase in price or on the soybean oil, if it stays where it is in the $0.75 a pound range, that's dramatically higher than where we were buying it last year at $0.50 a pound. So that one -- but we already have that kind of pegged as a commodity that has to go up and down. So I don't really think you should think about broad actions on our portfolio right now unless we see energy costs staying elevated for a really extended period of time.

Okay. And just lastly, in terms of the portfolio, certainly pruning some here, adding some stronger performers. Do you feel like that we're where we want to be with the portfolio? Are there still opportunities to take some brands out or to add others?

Yes. I think we don't normally comment on M&A activity, but I think the concept of what you're talking about, we will continue to evaluate. As we reshape our portfolio, we want to have strong businesses that generate higher margins, stronger cash flow. So we'll always look at opportunities in our portfolio to make shifts like we just did to take Green Giant, divest it to a buyer that is a better fit with their capabilities and everything and then buy businesses with those proceeds that generate higher cash flow, higher margins and frankly, just fit better within our capabilities. So yes, we will continue to look at those opportunities.

We have time for one more question. The next question comes from the line of Carla Casella with JPMorgan.

I know you've got a lot of questions on soybean costs. But I'm just trying to dial back to like 2022, '23 when we saw the spikes, you talked about a resistance level where consumers really change their buying behaviors. Are we -- I think it was like a $5 level that you gave at retail. And I'm just wondering kind of how close we are to that now? And if you're seeing any resistance already? Or is this more just a fear as we go into the back half?

Well, we haven't taken any pricing moves yet. But you're right, we would try and stay below key price thresholds if we took pricing action. We'd work towards that on how we could price and effectively manage the key thresholds because we know consumers have a response. Like on the core size, $5 threshold is something we try and manage to. So we will look at that consideration and try and manage the price elements and work with our customers to try and keep the prices at the right threshold so that we don't get a high elasticity effect if we cross those. But we haven't taken pricing yet. So we're looking at where soybean oil stays. And right now, it's at -- it's close to the levels that it reached in '22.

Okay. Great. And then on the 2027 bond maturity, how far ahead of maturity do you typically like to be in terms of refinancing? Are you okay going current? Do you think that could hurt your ratings? Any thoughts there?

I think as we typically have, we generally expect to refinance our debt before it goes current. I don't think where we are today in this cycle is vastly different from probably four or five other maturities that we've refinanced since I've been here.

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

Thank you.

Good day, and welcome to the B&G Foods Fourth Quarter and Fiscal 2025 Earnings Call. Today's call, which is being recorded is scheduled to last about 1 hour, including remarks by B&G's food management and the question-and-answer session.

I would like to turn the call over to AJ Schwabe, Senior Associate, Corporate Strategy and Business Development for B&G Foods. A.J.?

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

You can access detailed financial information on the quarter and full year in the earnings release we issued today, which is available at the Investor Relations section of bgfoods.com. Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them.

We refer you to B&G Foods' most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial condition. B&G Foods undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We will also be making references on today's call to the non-GAAP financial measures, adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted diluted earnings per share adjusted gross profit, adjusted gross profit percentage, base business net sales and segment adjusted expenses.

Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. Casey will begin the call with opening remarks and discuss various factors that affected our results, selected business highlights and his thoughts concerning the outlook for fiscal 2026 and beyond. Bruce will then discuss our financial results for the fourth quarter and fiscal 2025 and our guidance for fiscal 2026.

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

Good afternoon. Thank you, A.J., and thank you all for joining us today for our fourth quarter 2025 earnings call. Today, I will cover an update on our portfolio reshaping, including the recent divestiture and upcoming planned acquisition. An overview of fourth quarter performance, Bruce will cover more detailed financial results and finally, the outlook for fiscal year 2026.

Portfolio reshaping. Yesterday, we announced the divestiture of the Green Giant U.S. Frozen business to Seneca Foods Corporation. A significant milestone stone in the reshaping and restructuring of the B&G Foods portfolio. This is the largest piece in our portfolio transformation that should result in stronger focus, simplification, greater synergies and higher margins across the core shelf-stable business lines. The Green Giant frozen business simply has not been the right fit for B&G Foods with seasonal production, a different temperature state geographic complexity and higher working capital intensity. Previously, we announced the divestiture of our Canadian Green Giant business in canned and frozen vegetables. That divestiture requires Canadian regulatory approval and is currently under review. Subject to regulatory approval and other customary closing conditions, we expect to close during Q2 fiscal year '26.

Finally, we also recently announced the acquisition of the collagen and Kitchen Basics broth and stock businesses from Del Monte Foods. That transaction is expected to close by the end of March. The broth and stock category is attractive, maintains good margins and has grown low to mid-single digits over the past year. Like the spices and seasoning category, broth have been propelled by the growth in the fresh perimeter of the store as a critical component for the preparation and cooking of fresh meals and soups.

The collagen and Kitchen Basics brands have relevant well-known equities, strong distribution presence and high-quality products. The net result of these divestitures and acquisition, when completed, will deliver a more focused portfolio that is expected to generate positive adjusted EBITDA growth, stronger cash flows, lower working capital intensity, reduced leverage and higher gross and adjusted EBITDA margins.

Bruce will provide more details on each of these transactions later. Q4 results, the fourth quarter continued momentum from the third quarter with modest improvement in base business net sales trends. Q4 base business net sales, which excludes the impact of divestitures in the 53rd week, were down approximately 2.4% compared to down 2.7% in the third quarter. Fourth quarter adjusted EBITDA was $84.7 million, slightly down versus last year on a reported basis, driven by the impact of divestitures and tariff costs. Some of the key drivers. The divestiture of the [ DampepinoSlofani ] businesses in May and the Laser U.S. Can Ps brand in August removed approximately $16.4 million of net sales and $1 million in adjusted EBITDA from Q4.

The Spices & Flavor Solutions business unit grew net sales plus 4.2% in Q4, benefiting from the growth in fresh food and proteins as well as strength in our club and food service channels. Segment adjusted EBITDA was impacted by tariffs, which are now being recovered through pricing. Tariff costs were approximately $4.4 million in Q4 and $9.5 million throughout fiscal year '25. We announced pricing actions during Q3 to recover these costs beginning in Q4, although full pricing reflection with some customers took longer than expected within the quarter.

The frozen and vegetables business unit delivered strong segment adjusted EBITDA recovery plus $2.8 million as new crop pack costs came in favorable to last year's weak crop and our Mexico facility achieved productivity gains. Q4 also benefited from the implementation of our back half cost savings initiative. Cost of goods sold, COGS as a percentage of net sales improved approximately 120 basis points versus last year behind incremental productivity efforts.

Fiscal year '26 outlook. Our current outlook for fiscal year '26 reflects continued improvement in the core business trends and the impact of the Green Giant U.S. Frozen divestiture. Lots of changes and more to come with the closing of the pending Green Giant Canada divestiture and collagen and Kitchen Basics acquisition. But we are creating a stronger, focused, more profitable B&G Foods. Our current guidance range for fiscal year '26 is $1.655 billion to $1.695 billion in net sales and $265 million to $275 million in adjusted EBITDA. The key assumptions, we expect base business trends on the remaining core meals, spices and flavor solutions and specialty businesses to improve plus 0.4% versus last year. So far, Q1 trends are off to a strong start with year-to-date base business net sales performance through February growing roughly 4%. The Green Giant U.S. Frozen divestiture removes approximately $203 million in net sales year-over-year. That will be partially offset by approximately $80 million in revenue from March through year-end from co-pack sales from our Mexico facility based on our arrangement with Seneca to retain manufacturing in Irapuato. The adjusted EBITDA impact of this divestiture is expected to be at least neutral as we restructure costs to reflect the exit of the business.

We have also reflected the impact of both the 53rd week and the divestitures of Don Pepino Sclafani and Le Sueur U.S. during fiscal year '25, representing approximately $38.4 million in net sales and $5.4 million in adjusted EBITDA. Further, the pending divestiture of Green Giant Canada and the pending acquisition of the collagen and Kitchen Basics broth business have not been reflected in our guidance. We will update fiscal year '26 guidance after those transactions have closed, but expect Canada to be neutral from an adjusted EBITDA impact and the broth and stock acquisition to deliver incremental sales and adjusted EBITDA at healthy margins.

Looking forward, fiscal year '26 is poised to be a transformational year with a more focused, higher-margin and stable portfolio. Once divestitures and closing transaction services have been completed. We expect continued improvement in base business trends towards the long-term algorithm of 1%. Further, we will also become a less complex, more efficient and leaner company behind a simpler portfolio, restructuring operations to rightsize overheads and focus resources and investment behind the core categories and brands in spices and seasonings, meals and baking staples.

Thank you. And I will now turn the call over to Bruce for more detail on the quarterly performance and outlook for fiscal 2026.

Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. Despite a challenging start to the year, we had strong momentum in our business throughout the year to finish fiscal 2025 on a positive note.

For the fourth quarter of 2025, we generated $539.6 million in net sales, a net loss of $15.2 million or $0.19 per diluted share, adjusted net income of $22.8 million or $0.28 per adjusted diluted share. $84.7 million in adjusted EBITDA and adjusted EBITDA as a percentage of net sales of 15.7%. For fiscal 2025, we generated $1.829 billion in net sales, a net loss of $43.3 million or $0.54 per diluted share, adjusted net income of $41.3 million or $0.51 per adjusted diluted share, $272.2 million in adjusted EBITDA and 14.9% of adjusted EBITDA as a percentage of net sales.

The company's net loss for the fourth quarter and fiscal 2025 were primarily attributable to pretax noncash impairment charges to intangible assets and assets held for sale. During fiscal 2025, the company recorded pretax noncash impairment charges of $34.8 million to related intangible trademark and customer relationship assets for the Green Giant brand in the fourth quarter and $26 million related to indefinite life intangible trade assets for the Victoria and McCann's brands during the third quarter of 2025.

In addition, the company recorded a pretax noncash impairment charge for assets held for sale for the pending Green Giant Canada divestiture of $27.8 million in the third quarter of 2025 and an additional $0.7 million in the fourth quarter. Further details regarding the impairments are included in our earnings release and 10-K. As a reminder, we were very busy during fiscal 2025 from an M&A perspective and we have already added to that activity in fiscal 2026. 2025 M&A activity includes the divestiture of Don Pepino and Squifani brands during the second quarter, the divestiture of Le Sueur U.S. brand during the third quarter and our entry into an agreement during the fourth quarter to divest Green Giant Canada, which subject to regulatory approval in Canada, and other customary closing conditions, is expected to close during the second quarter of 2026. 2026 M&A activity includes our previously announced entry into an agreement in January to acquire the Collagen and Kitchen Basics brands from Del Monte Foods.

The acquisition has already received bankruptcy court approval and subject to customary closing conditions and the simultaneous closing of 2 other bankruptcy sales unrelated to B&G Foods or the Broth in stock business by Del Monte Foods. It is expected to close before the end of March. We are very excited to add these 2 well-known Braten stock brands to our portfolio. In addition, just yesterday, we signed, closed and announced an agreement to sell the Green Giant U.S. Frozen business the Seneca Foods. We received approximately $63.2 million in proceeds from the Green Giant U.S. frozen business, which will use together with the proceeds from the previously completed divestitures to fund the Collegen and Kitchen Basics acquisition.

In effect, we are using the sale proceeds from a Green Giant U.S. Frozen business that recently was approximately breakeven at best on our P&L to partially fund the acquisition of the more profitable Collagen and Kitchen Basics business. The Green Giant U.S. Frozen sale included in our frozen vegetable manufacturing operations in Yuma, Arizona, but it did not include our frozen vegetable manufacturing operations in Erato, Mexico.

In connection with the sale, we have entered into a co-pack agreement with Seneca Foods pursuant to which we will continue to produce certain [indiscernible] frozen products for sale by B&G Foods to Seneca Foods. We expect net sales under the Copec agreement of approximately $100 million per year, and we expect to make a modest profit on such co-pack sales.

As Casey said, we believe that Seneca is the right owner for the brand. Seneca is 1 of North America's leading providers of packaged vegetables, and it has the focus to best serve the millions of consumers that regularly enjoy Green Giet products. Seneca has also now reunited the Green Giant brand for both frozen and shelf-stable products. As we review our fourth quarter and fiscal 2025 results, we will highlight the comparative differences that result from the divestitures of the Don Pepino Sclafani and Le Sueur U.S. brands, which we own for all of fiscal 2024, but only parts of fiscal 2025 and as a reminder, the divestiture of Green Giant Canada and the acquisition of Collagen and Kitchen Basics have not yet closed.

Additionally, the Green Giant U.S. Frozen brand closed yesterday. As a result, these 3 transactions did not impact our fourth quarter or our fiscal 2025 results. Net sales for the fourth quarter of 2025 decreased by $12 million or 2.2% to $539.6 million from $551.6 million for the fourth quarter of 2024. The decrease was primarily attributable to the divestitures of the Don Pepino Sclafani and Le Sueur U.S. brands, which collectively generated $16.4 million in the fourth quarter of 2024.

Base business net sales for the fourth quarter of 2025 increased by $4.4 million or 0.8% to $539.6 million as compared to $535.2 million for the fourth quarter of 2024. The increase in base business net sales was driven by an increase in net pricing and the impact of product mix of $2.8 million or 0.5% and an increase in volume of $1.9 million, 0.4% of base business net sales, which was offset in part by the negative impact of foreign currency of $0.3 million.

Base business volumes were positively impacted by the 53rd week that occurred in our fourth quarter of 2025. Gross profit was $122.7 million for the fourth quarter of 2025 or 22.7% of net sales and adjusted gross profit was $123.9 million or 23% of net sales. Gross profit was $118.7 million for the fourth quarter of 2024 or 21.5% of net sales and adjusted gross profit was $122.3 million or 22.2% of net sales.

Input cost inflation was largely benign in the fourth quarter of 2025, much as it was throughout the earlier portion of the year with parts of our portfolio experiencing somewhat higher costs and other parts of the portfolio having somewhat lower costs. Across their manufacturing network, we have factories that experienced both positive and negative absorption variances throughout the year, while we once again drove efficiency and savings across our network through our continuous improvement efforts that helped offset declines in volumes.

Tariffs negatively impacted our gross profit and adjusted gross profit by approximately $4.4 million during the fourth quarter of 2025 and $9.5 million for the year. Approximately half of the tariffs or $2.3 million during the fourth quarter and $5.4 million for the year impacted our Spices & Flavor Solutions business unit and the remainder spread across the other BUs.

Selling, general and administrative expenses increased by $3.7 million or 7.3% to $54 million for the fourth quarter of 2025 from $50.3 million for the fourth quarter of 2024. The increase was comprised of increases in general and administrative expenses of $2.3 million, acquisition divestiture-related and nonrecurring expenses of $1.2 million and selling expenses of $1.1 million, partially offset by decreases in consumer marketing expenses of $0.9 million.

Expressed as a percentage of net sales, selling, general and administrative expenses increased by 0.9 percentage points to 10% for the fourth quarter of 2025 compared to 9.1% for the fourth quarter of 2024. We generated $84.7 million in adjusted EBITDA or 15.7% of net sales for the fourth quarter of 2025 compared to $86.1 million or 15.6% in the fourth quarter of 2024. The Le Sueur U.S., Don Pepino Sclafani brands contributed approximately $1 million to adjusted EBITDA during the fourth quarter of 2024. And as I mentioned previously, tariffs negatively impacted our fourth quarter 2025 adjusted EBITDA by approximately $4.4 million.

Net interest expense decreased by $0.8 million or 2.1% to $38.8 million for the fourth quarter of 2025 from $39.6 million for the quarter -- fourth quarter of 2024. Depreciation and amortization was $16.1 million for the fourth quarter of 2025 which is largely in line with the $16.9 million for the fourth quarter of 2024.

We had adjusted net income of $22.8 million or $0.28 per diluted share in the fourth quarter of 2025. In the fourth quarter of 2024, we had adjusted net income of $24.6 million or $0.31 per adjusted diluted share. Adjustments to our EBITDA net income are described further in our earnings release. I would now like to touch base on the results by business unit for the fourth quarter. Net sales for Specialty decreased by $6.5 million or 3% in the fourth quarter of 2025 to $210.2 million from $216.7 million in the fourth quarter of 2024. The decrease was primarily due to the divestiture of Don Pepino and Sclafani brands, which generated $4 million in the fourth quarter of 2024. And by the impact of lower Crisco pricing. Specialty segment adjusted EBITDA decreased by $4.2 million or 7% in the fourth quarter of 2025 compared to the fourth quarter of 2024. The decrease was primarily due to the divestiture of the Don Pepino and Sclafani brands as well as unfavorable cost comparisons in certain raw materials, manufacturing expenses and the input impact of tariffs.

Net sales for Meals increased by $1.3 million or 1.1% in the fourth quarter of 2025 to $124.2 million from $122.9 million in the fourth quarter of 2024. The increase was primarily due to the impact of higher net pricing and improved product mix, offset in part by modestly lower volumes across the meals business unit. Meals segment adjusted EBITDA increased by approximately $3.8 million, primarily driven by the impact of higher net pricing and improved product mix, favorable cost comparisons in certain raw materials and manufacturing expenses, which offset the impact of tariffs. Net sales for frozen and vegetables, excluding the impact of the Le Sueur U.S. divestiture, were up by $1.3 million or 1.4%.

The Le Sueur U.S. brand generated $12.4 million in the fourth quarter of 2024. Frozen and vegetables segment adjusted EBITDA increased by $2.8 million in the fourth quarter of 2025 compared to the fourth quarter of 2024. The primarily driven by favorable raw material, manufacturing and foreign currency comparisons. The impact of tariffs on the frozen and vegetable business unit were marginal in the fourth quarter.

Net sales for spices and Flavor Solutions increased $4.3 million or 4.2% in the fourth quarter of 2025 to $106.1 million from $101.8 million in the fourth quarter of 2024. The increase was primarily due to higher volumes across the Spices & Flavor Solutions business unit, coupled with higher net pricing and product mix. Spices & Flavor Solutions segment adjusted EBITDA decreased by $2.9 million or 11.1% in the fourth quarter of 2025 compared to the fourth quarter of 2024. The decrease in segment adjusted EBITDA was largely driven by a combination of tariffs as well as by increases in raw material costs, such as black pepper and garlic and the impact of unfavorable absorption. These negative impacts were offset in part by the positive benefits of higher net pricing and improved product mix.

Now I will spend a little time on our cash flows and balance sheet. Net cash provided by operating activities was strong in the fourth quarter of 2025 with $95.4 million in the fourth quarter of 2025 compared to $80.3 million in the fourth quarter of 2024. Further, net cash provided by operating activities in the fourth quarter and fiscal year 2025 was negatively impacted by our $11.5 million deposit paid in connection with the pending Collagen and Kitchen Basics acquisition.

Our balance sheet has also improved. We reduced our net debt to $1.912 billion at the end of the fourth quarter of 2025 compared to $1.994 billion at the end of fourth quarter of 2024. And $2.023 billion at the end of fourth quarter 2023. We also reduced our net debt to pro forma covenant adjusted EBITDA to 6.57% at the end of the fourth quarter of 2025. Pro forma for the divestiture of the Green Giant U.S. Frozen business and if we include the $11.5 million cash deposit for the acquisition of the Collagen and Kitchen Basics brand, our net debt would have been approximately $1.835 billion and our net debt to pro forma covenant adjusted EBITDA would have been a little bit less than 6.25x.

I am very pleased to report that we expect to remain on track to reduce our net debt to pro forma covenant adjusted EBITDA to nearly 6.0x by the end -- or excuse me, by the midpoint of this year. As a reminder, we continue to live in unpredictable times. Our 2026 guidance reflects what we know today and, for example, does not factor in significant changes in inflation, tariff policies or the potential impact of escalation of the conflict in Eastern Europe, the Middle East or Latin America could have on our results. We are also only including the impacts of acquisitions and divestitures that have already closed in our guidance. net sales and adjusted EBITDA for the Don Pepino Sclafani, Le Sueur U.S. and Green Giant U.S. Frozen brands, are excluded from our guidance from 2026. Because we no longer own them, even though all of these brands were included in at least part of our fiscal 2025 results.

Similarly, the pending divestiture of Green Giant Canada and the pending acquisition of the Collagen and Kitchen Basics brands are not factored into our 2026 guidance because these transactions have not yet closed. In addition, our guidance reflects that fiscal 2026 has one fewer week than fiscal 2025, which had a 53rd week. While we love the benefit of the 53rd week in our fiscal '25 results, we will lap that benefit or approximately $18 million in net sales during fiscal 2026.

As a result and as noted in our earnings release, we expect fiscal 2026 net sales in the range of $1.655 billion to $1.695 billion, adjusted EBITDA in the range of $265 million to $275 million and adjusted EBITDA as a percentage of net sales in the range of approximately 16% to 16.5%. And based on this guidance, we expect adjusted diluted earnings per share to be in a range of $0.55 to $0.65.

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

Thank you, Bruce. In closing, B&G Foods is making strong progress against our long-term goals, improving the base business net sales trends of the core business towards the long-term objective of plus 1%, reshaping the portfolio for future growth, stability, higher margins and cash flows; and finally, reducing leverage below 5.5x through divestitures and excess cash flow to facilitate strategic acquisitions.

Net, I'm excited about the future of our portfolio and B&G Foods in fiscal year 2026 and beyond. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator?

[Operator Instructions] And the first question will come from Scott Marks with Jefferies.

First thing I wanted to touch upon, if I I heard you correct the kind of in the prerecorded remarks, I think I heard that base business net sales were down 2.4% and excluding acquisitions and 53rd week, which I believe is roughly in line with what you posted in the prior quarter. I think we've heard from some of your peers about maybe a more challenging consumer environment out there. So maybe if you can just help us understand what was it about the quarter that allowed you to kind of maintain the cadence of sales quarter-over-quarter and how you're thinking about that heading into this year?

I think we're expecting that our base business net sales will continue to improve. I mean it was a slight or modest improvement in Q4 versus Q3. So we went in Q3 from 2.7% and negative 2.7% to negative 2.4% in quarter 4. We've seen progress on some of our brands and businesses. spices and seasonings, in particular, has has been pretty resilient and posting some good numbers. We've had growth in our Canadian business.

We've had growth in our foodservice business. We've had growth in the kind of concentrated private label business that we have. So part of what we're seeing is a gradual improvement in our kind of U.S. food retail consumption, and it's gradual and then just some strength in our other parts of our business, which represent probably 35% of our portfolio in those nonmeasured channels. So I mean I'm expecting to get -- to have it get a little bit stronger in 2026. Long term, our aspiration is to get to a 1% growth. And I think we have we're moving towards that, but not there yet.

So we want to continue to track that, make sure that our plans on our key brands and core brands and post the Green Giant divestiture make sure that our plans and those brands are strong enough to continue to drive progress.

Appreciate the color there. Next question would just be kind of along the same vein, I think we've heard from some of your package peers about the need to kind of reinvest a little bit support some of the brands at the shelf with the consumer. Just wondering if you can share maybe how you're thinking about brand support in 2026 relative to what you've been doing to this point?

I think we've got -- we will probably do -- we'll probably spend a very similar amount in 2026 that we did in 2025. Obviously, we'll have a different portfolio, so we won't have the Green Giant business anymore. We have, in our plans, focused to spending more against some of our core big brands. So Ortega, Crisco, et cetera. So I think what you're going to see from us is probably an increase in spending on a few brands. But net, overall, we're probably going to have -- be flat or maybe slightly up in our marketing spend. And it's really brand by brand that we're looking at it.

Where do we need to be more competitive, where do we need to spend? Where do we need to up our game in innovation? Where do we need to do more against the consumer, where do we need to do more on a digital front -- so we're looking at it that way. But overall, I think we recognize in some of our categories, it is a more competitive environment, and we're going to have to up our game and we're focusing the resources on places where we need to do it.

Appreciate it. And then if I could just sneak in one more. I think I heard the comment on there that quarter-to-date base business trends were up 4%. Just wondering how much of that may have been driven by pantry loading ahead of some of the winter storms we've seen versus how much of it have you seen kind of sustained through the quarter?

We were -- our sales were up in both January and February. I think there's really 2 factors. One is the weather -- so a couple of winter storms, colder temperatures throughout January, late January and February. Our portfolio is all around baking staples and Crisco, grandma, Colabor girl, dry soups, Bear Creek. What we've seen is that weather is causing consumption growth or purchasing growth in those baking staples business where people are baking more at home during a colder weather.

So that's one thing. And you definitely saw that during the winter storm periods, and you see strength in our baking Staples business as a result of that I think the second thing is we lapped at the -- in the end of January last year, we lapped a pretty significant amount of trade inventory reduction, I think just like the rest of the CPG industry or the packaged foods industry. So we're also lapping that as well.

So that's what's driving the 4%, but obviously, 4% on our core business trends gives me a lot of confidence that we're heading towards that base business number of -- that we said about 0.4% for fiscal year '26. We're off to a fast start with 2 months.

Your next question will come from Rob Moskow with TD Securities.

This is Victor Ma on for Rob Moskow. So I just wanted to ask about the balance sheet. Where should we expect leverage to end up after you complete the Green Chin Canada sale? And then if you can give some color about where that kind of shapes up after you closed collagen?

Yes. Those are the big drivers towards the approaching 6x net leverage by mid-summer that I referenced earlier. We're on our way to that 4.5 to 5.5x long-term target, but we still have some more work to do. But as a reminder, with the Green Giant transactions, both U.S. and Canada, we're selling businesses that don't make any EBITDA for proceeds. We're effectively taking similar proceeds turning around and funding the acquisition of the Collagen and Kitchen Basics business that generate pretty nice EBITDA as we described in the press release when we announced those.

So we're really excited to get those transactions done, actually buying something, adding EBITDA and actually additive to our leverage from a going in the right direction.

Yes. I mean the net of all those acquisitions -- I mean, those divestitures, the Green Giant divestitures, both in Canada and the U.S. frozen and the Collagen and Kitchen Basics acquisition, we're going to reduce our leverage by about 50 basis points. That's -- that's what we're projecting.

It seems that our questioner has disconnected. We're going to move on to our next question, and that will be from William Reuter with Bank of America.

So I want to make sure I understand the business that's going to be remaining as part of the Green Giant U.S. transaction. I thought that case, you said there was going to be $80 million of sales remaining. But then Bruce, I thought you said there'd be $100 million remaining. I guess, first, can you clarify that difference?

Yes. So the difference is Casey is talking about effectively incremental in 2026 as we think about that. And that's the $83 million or so. The $100 million is a run rate annual basis. Just the difference in timing of 10 months versus a full 12-month ongoing.

Got it. And is it your expectation that you will continue to run these businesses for the long term, I guess, do you want to continue to run those? Or is there a requirement for you to continue to supply Seneca for some period of time?

So with this manufacturing facility, TBD, we entered into a multiyear relationship with them as a co-packer. We've known them for a long time. We think we've got a great relationship with them, and they've been a great partner to us. We think we can create value here. both for us and for Seneca by running these facilities. But it's also possible that we monetize them at some point in the future if it makes more sense for somebody else.

Got it. And I guess my last question is around the same topic. I feel like the Green Giant U.S. business has been 1 of the challenges here over the last several years. And you said you expect it will be modestly profitable -- is there any fear that the agreement as is put in place could result in losses?

No. No. We're basically getting a tolling and management fee on the business cost plus. Yes. So we'll be fine. And at the end of the day, Seneca is the right owner for this business. So what was marginally profitable for us at best will be a profitable business for them. They're in this space. This is what they do. They're the right owners. Unfortunately, for us, it just wasn't the right business for us.

Your next question will come from Hale Holden with Barclays.

Just one follow-up on Bills. Is your expectation on the Mexico plant to just supply Seneca? Or would you go out and try to come in for other people there?

Our expectation is to build that business and have other customers as well. We think there's a real value creation opportunity here for us.

Got it. And then so had previously sort of implied that maybe the dividend might be readdressed or thought about once all the transactions are completed. Is that still the time line to think about as of mid-June or would it be sooner?

Yes. I mean, look, our Board approves or not a dividend every quarter. As you said, we haven't completed all of the transactions. So I guess stay tuned.

Great. And then my last question is on the spices business quarter-to-date, -- have you sort of gotten all that pricing back with the elasticity that you expected? Like sort of would we see that wash out in the first quarter? Or does it take longer?

Yes. So are you talking about like pricing around tariffs?

Pricing around tariffs to recover the EBITDA loss in the fourth quarter?

Yes, we should be really by like December of 2025. So if you think about our fourth quarter, tariffs started to hit us back in April liberation Day, and they were really elevated levels for a lot of things in the tariff in the spice portfolio, that was the highest exposure we had as an organization. Those tariffs were in full effect in the fourth quarter, some at lower levels than they were, but in full effect. But our pricing didn't go into effect really until kind of the middle of November. We should be covered on a go-forward basis, but we were not covered, as you noted in the full fourth quarter.

So you would have seen the pricing really implemented in different channels, November or December. And so we're just now kind of reading actual elasticities, but we built in some expectation of elasticity with those pricing, but it's pretty small. I mean, the increases on spices and seasonings SKUs weren't really much more than low single to mid-single digits. So we'll see some impact, but it won't be that big and we've already kind of factored that into our projections.

Your next question will come from Karru Martinson with Jefferies.

Just on the broth business of kind of $18 million, $22 million of EBITDA, is there a seasonality to that EBITDA contribution as it comes into our P&L.

Probably skewed like a lot of the stuff we have towards that winter for different reasons, but subseason. I mean it's a good solid throughout the year, but probably the bulk of the sales are in the winter months.

Q4, Q1, it has a winter seasonality, baking seasonality, holiday seasonality trend to it. But I mean I think when we guide, when we close it, we'll we'll provide some color and guidance on the flow of the business.

Okay. And my apologies, you were breaking up just a little bit. On the tariff impact, is there any expectation that the changes in the tariff here? Will result in changes in pricing? Or is it thought that you keep the pricing that you have and see what happens down the road with all the other moving parts?

I mean we certainly have to see what happens with the tariffs before we do anything.

But right now, we're largely maintaining the pricing on things that could potentially change. Spice is it's fairly well known because those have sort of the -- an exclusion around unavailable natural resources. So we are managing those pretty carefully. But I mean, my expectation, to be honestly, from a planning standpoint, is there will be some volatility in this -- but we need to expect that current tariff rates will stay in place roughly across our portfolio.

Okay. And then just lastly, kind of the big picture with the capital structure goes current in September. What are the plans there?

I'd assume we have more debt pay down and some refinancing between now and sort of before maturity, certainly.

Our next question will come from Eli Lab with BMO Capital.

I'm just trying to reconcile because I think I may have missed your numbers. So I think you said that pro forma you expect debt to be 1840. Is that correct?

I think I said 1835, but...

Okay. So 1835 -- and then...

I'm rounding.

Okay. No problem. And then the leverage would be $6.3 million -- so that against that translates into, let's say, around $290 million of pro forma EBITDA. Is that correct? So after the sales and the acquisition, that's the new.

Yes. So just a couple of things. So I was using round numbers, as I said, approximately 6.25%. And the 1 piece that you are missing. So within our covenant adjusted EBITDA is our EBITDA. It's also pro forma for acquisitions, divestitures as well as noncash compensation. And so there's a couple of moving pieces between if you think about the $272 million, $273 million for 2025 and the $290 million that you're Algebra is suggesting, there's a couple of things to get there. But we used it off of a trailing number.

Would you be able to kind of massage that for us the divestitures and the acquisition and the denominator that we should think about?

Well, you're getting the right number. I'm not trying to be difficult. No, no. We've got a public adjusted EBITDA, right? And so the difference is various adjustments for some of the divestitures that we made last year, right? On a Green Giant U.S. frozen, it's neutral to and we're not impacting yet for the Canada business, although that is also neutral and the broth business. So your math is right. And like I said, there's adjustments -- you see it in our numbers. They're pretty consistent what they normally are. We add back noncash comp so to most companies when thinking about leverage calculations.

Your next question will come from William Reuter with Bank of America.

Just 2 follow-ups. I think the first question that was asked was kind of how are you able to do so much better than the industry? Because I do think that, that is something which we're you seem to be experiencing. Do you think that your innovation has been better than maybe if we were to just take the packaged branded consumer food companies have done over the last year?

I think we got a lot of the same challenges that the industry have, but we do have a slightly different portfolio mix, right? And so if you think about a lot of the portfolio shaping that Casey has kind of pushed over the last couple of years. We're eliminating things like Green Giant that's been a drag in our business. We're focused very heavily on our spice business that has better trends and access to some of the other channels that are growing. So I don't know. I still think it's a tough world. Don't get me wrong, but we're doing our best.

I mean the way I'd answer it is just look at our portfolio, in measured Nielsen data in the U.S. We have a 35%, maybe a little bit higher split in other businesses and other channels that aren't really measured -- and that's where we're seeing a lot of growth. And if I just kind of top line that for you, we're seeing the same challenges in the Nielsen grocery world, food world that I think everybody else has seen. We're getting better in some of our businesses, and we're making improvements, but it's still pretty challenging.

So I don't want to kid you that it's not challenging. The strength in our business has been we have a couple -- we have a couple of private label businesses in spices and seasonings in baking powder that have been very strong. The trends on those have been very strong. They are profitable businesses for us. but the trends have been really strong. We also have a foodservice business that has been growing, and that's a fairly significant chunk -- heavily weighted towards spices and seasonings, but we have other businesses in that an industrial business behind baking powder, spaces. And then we have Canada, which although it doesn't make money, has been growing. The Green Giant frozen vegetable business and [indiscernible] business in Canada has been growing. So that is that's kind of the math of why you're maybe seeing some better trends in our total portfolio because of channel development, then maybe you'll hear from other purely branded food focused manufacturers. If that helps, that helps.

Yes. That does help. And then I guess the outlook for input costs in fiscal year '26. What type of inflation are you seeing? Are there any areas that concern you?

It's relatively modest across the portfolio. So there'll be inflation. We'll look to cover it as needed, whether it's a little bit of price and some productivity initiatives. But this -- so far, there's nothing like that 2022, '23, where we had like double-digit inflation.

I would say the only area we're kind of watching closely is soybean oil. We've seen a little bit of increase in soybean oil. We tend to try and recover that. but it has been increasing over the last couple of months. And I'm concerned about soybean oil and the disruption of any kind of conflict in the Middle East or anything.

Last time we had a conflict in the start of the conflict in Ukraine in '22, we saw soybean oil shoot up. So I'm not concerned. I'm not really concerned yet, but that's one we're really watching because we have seen a little bit of creep up.

And this will conclude our question-and-answer session as well as our conference call for today. Thank you for your participation. You may now disconnect.

Good day, and welcome to the B&G Foods, Inc. Third Quarter 2025 Financial Results Conference Call. Today's call, which is being recorded is scheduled to last about 1 hour, including remarks by B&G Foods management and the question-and-answer session.

I would now like to turn the call over to AJ Schwabe, Senior Associate, Corporate Strategy and Business Development for B&G Foods. Thank you, and over to you.

Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer; and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter in the earnings release we issued today, which is available at the Investor Relations in bgfoods.com.

Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer you to B&G Foods' most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial condition. B&G Foods undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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

Casey will begin the call with opening remarks and discuss various factors that affected our results, selected business highlights and his thoughts concerning the outlook for the remainder of fiscal 2025. Bruce will then discuss our financial results for the third quarter of 2025 and our updated guidance for fiscal 2025.

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

Good afternoon. Thank you, AJ, and thank you all for joining us today for our third quarter 2025 earnings call.

Today, I will cover an overview of third quarter performance, Bruce will cover more detailed financial results; an update on recent divestitures and future portfolio, and the outlook for Q4 and beyond.

Q3 results. The third quarter demonstrated significant improvement in adjusted EBITDA delivery with sequential improvement in base business net sales trends. Q3 net sales of $439.3 million finished minus 4.7% versus last year, although base business net sales, which excludes the impact of divestitures were down minus 2.7%. Third quarter adjusted EBITDA was $70.4 million, flat versus last year on a reported basis, but up year-over-year, excluding the impact of divestitures.

Some of the key drivers. Q3 benefited from the implementation of our back-half $10 million cost savings initiative. SG&A overhead was down $2 million from last year as a result of specific restructuring actions. Cost of goods sold, or COGS, as a percentage of net sales improved 40 basis points versus last year behind incremental productivity efforts. The frozen and vegetables business unit delivered strong segment adjusted EBITDA recovery in Q3, plus $3 million as new crop pack costs came in favorable to last year's weak crop and our Mexico facility achieved strong productivity gains.

The Spices & Seasonings business unit grew net sales plus 2.1% in Q3, benefiting from the growth in fresh food and proteins as well as strength in our club and foodservice channels. Segment adjusted EBITDA was impacted by tariffs with targeted pricing implemented to recover those costs in Q4.

The divestiture of the Don Pepino and Sclafani business in May and the Laure U.S. Can Ps brand in August, removed approximately $10.3 million of net sales and $3.2 million in adjusted EBITDA from Q3.

Portfolio divestitures. B&G Foods continued strong progress in reshaping and restructuring our portfolio in the third quarter. Last week, we announced the divestiture of our Canadian Green Giant business in canned and frozen vegetables. That divestiture is subject to Canadian regulatory approval and is expected to close late in the fourth quarter or during Q1 fiscal year '26.

Further, we continue to evaluate and pursue the divestiture of our Green Giant U.S. frozen business, the last part of the frozen and vegetables business unit. Green Giant is a strong brand in a good category, but is not the right fit for the B&G portfolio -- B&G Foods portfolio with seasonal production, a different temperature state, geographic complexity and higher working capital intensity.

These Green Giant divestitures, along with the recently completed Don Pepino, Sclafani and Le Sieur divestitures will create a more highly focused B&G Foods, which we believe will lead to adjusted EBITDA as a percentage of net sales approaching 20% and increased cash flow generation, a lower leverage ratio closer to 5x, a more efficient cost structure and clear synergies within our portfolio.

Fiscal year '25 outlook. We expect the fourth quarter to show continued improvement versus the first half fiscal year '25 trend; flat net sales, excluding the divestitures with year-over-year growth in adjusted EBITDA. The key assumptions behind our latest guidance. The 53rd week is expected to add 2% to 3% sales growth in Q4, a partial week benefit. Excluding the impact of the 53rd week, base business net sales are projected to be down approximately 2% to 3% in Q4, consistent with the trend in Q3. We expect to realize additional savings in Q4 as part of the incremental $10 million cost efficiency initiative launched earlier this year with an annual run rate of approximately $15 million to $20 million in savings. These include additional productivity in COGS, trade and market spending efficiencies, accelerated SG&A savings and discretionary spending cuts.

The U.S. frozen vegetable business is expected to continue to show improved adjusted EBITDA performance behind more favorable crop pack costs and strong productivity in our Mexico manufacturing facility. We have executed targeted pricing to recover incremental tariffs at existing levels, which become effective for most customers starting in November. As a result, we have revised a narrow guidance for fiscal year '25 to $1.82 billion to $1.84 billion in net sales and $273 million to $280 million in adjusted EBITDA, which reflects the impact of recently completed divestitures and the base business trends.

Finally, we are committed to reducing leverage and balance sheet risk. In the third quarter, typically the high point of our seasonal inventory pack, our consolidated leverage ratio was 6.88x. We expect to reduce our consolidated leverage ratio to 6x within the next 9 months by using divestiture proceeds and excess cash generated through improved EBITDA performance and lower working capital needs to reduce long-term debt.

Looking forward, fiscal year '26 is poised to be a transformational year with a more focused, higher-margin and stable portfolio. Once divestitures and post-closing transition services have been completed. We expect continued improvement in base business trends towards the long-term algorithm of 1%. Further, we will also become a less complex, more efficient and leaner company behind a simplified portfolio, restructuring operations to rightsize overheads and focus resources and investments behind the core categories and brands in Spices & Seasonings, meals and baking staples.

Thank you, and I will now turn the call over to Bruce for more detail on the quarterly performance and outlook for the remainder of fiscal 2025.

Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. I am pleased to report that despite a challenging consumer backdrop, we had a reasonably strong third quarter, driven by a mix of continued strength in some channels such as club and food service as well as the validation of our cost savings initiatives.

As a reminder, we divested the Don Pepino, Sclafani brands at the end of May and then the Le Sieur brand in the United States on August 1 of this year. As a result, our third quarter financial results this year exclude Don Pepino and Sclafani for the full quarter and Le Sieur U.S. for approximately 2 of the 3 months of the quarter.

Last week, we announced the agreement to sell our Green Giant and Le Sieur frozen and shelf-stable product lines in Canada to Nortera Foods, subject to regulatory approval in Canada and the satisfaction of customary closing conditions. We expect the transaction to close in the fourth quarter of 2025 or the first quarter of 2026.

Because the Canadian transaction has not yet closed, it did not impact our financial results for the third quarter. Although when reviewing our 10-Q, you will notice that the business has been designated as an asset held for sale on our balance sheet as of the end of the third quarter of 2025.

For the third quarter of 2025, we generated $439.3 million in net sales, $70.4 million in adjusted EBITDA, 16% adjusted EBITDA as a percentage of net sales and $0.15 in adjusted diluted earnings per share. Overall, net sales for the third quarter of 2025 decreased by $21.8 million or 4.7% to $439.3 million from $461.1 million for the third quarter of 2024.

Base business net sales, which excludes the net sales for the Don Pepino Sclafani and Le Sieur U.S. brands for both periods, decreased by $11.9 million or 2.7% in the third quarter of 2025 compared to the third quarter of 2024. $12.9 million or 290 basis points of the decline in base business net sales was driven by lower volumes and $0.3 million or less than 10 basis points of the decline was driven by foreign exchange. The decline was offset in part by $1.3 million or 30 basis points of benefit from an increase in net pricing and the impact of product mix.

Our Spice & Flavor Solutions business unit led our top line performance for the third quarter, with net sales up by $2.1 million or 2.1%. Driving the performance was continued growth for our partner, brand in club and our foods business. Spices & Flavor Solutions segment adjusted EBITDA was down by approximately $2.1 million for the third quarter as a result of higher raw material costs and tariffs primarily on Chinese garlic and black pepper, that is sourced from Vietnam as well as cinnamon and onions.

Much like our peers in the industry, we have executed pricing actions to help offset these cost increases. Our Spices & Flavor Solutions business unit began to see the benefit of pricing to offset certain commodity increases in July, and we expect to begin to see additional benefit to offset tariffs beginning this month.

Our Meals business unit had reasonable top line performance for the quarter despite its concentration in a still challenged retail grocery environment. Net sales for Meals decreased by $1.6 million or 1.4% for the third quarter. However, Meal segment adjusted EBITDA increased by approximately $0.6 million for the quarter.

We continue to see softness for our specialty business unit. Base business net sales for specialty, which excludes net sales for the Don Pepino and Sclafani brands for both periods decreased by approximately $7 million or 4.5% for the third quarter of 2025 as compared to the third quarter of 2024. Nearly 60% of that decline was driven by Crisco.

Crisco net sales were down by $4.1 million for the third quarter, with approximately half of the decrease as a result of lower net pricing that was reduced in part to reflect lower input costs for soybean oil and half driven by lower volume. Despite the decline in net sales, Crisco segment adjusted EBITDA was flat for the third quarter as compared to the third quarter of 2024.

Overall, Specialty segment adjusted EBITDA was down $3.6 million or 8.7% for the quarter, including the negative drag from lapping third quarter 2024 profits from the Don Pepino and Sclafani brands. Base business net sales for our frozen and vegetables business unit, which excludes net sales for the Le Sieur U.S. brand for both periods, declined by $5.4 million or 6.7% for the third quarter as compared to the third quarter of last year. However, frozen and vegetables segment adjusted EBITDA increased by $3 million as we will pass the expensive 2024 crop season and unfavorable peso exchange rates.

Green Giant is also benefiting from productivity improvements and cost savings initiatives in our Mexican manufacturing facility.

Overall, for B&G Foods, gross profit for the third quarter of 2025 was $99 million or 22.5% of net sales. Adjusted gross profit was $98.8 million or 22.5% of net sales. Gross profit for the third quarter of 2024 was $102.3 million or 22.2% of net sales. Adjusted gross profit was $102.4 million or 22.2% of net sales.

Promotional trade spend, which is captured in our net sales line, increased by approximately 110 basis points in the third quarter of 2025 versus the third quarter of 2024, sequentially favorable to year-over-year increases of 178 basis points in the first quarter of 2025 and 120 basis points in the second quarter of 2025. While we continue to invest in our brands and reduce prices on shelf for consumers, we must also balance this with managing our profitability.

Our material labor and overhead costs improved by nearly 100 basis points as a percentage of gross sales during the third quarter of 2025 as compared to the third quarter of last year. Material labor and overhead costs were favorable by 40 basis points as a percentage of net sales.

Input cost inflation as measured by raw material costs across the basket of inputs in our factories has remained modest thus far in 2025, except for elevated costs in black pepper, garlic, olive oil, tomatoes, core vegetables and cans. We continue to closely monitor inflation amid ongoing trade and tariff negotiations.

Tariffs again pressured our portfolio, reducing adjusted EBITDA in the third quarter by nearly $3.5 million, approximately 60% or $2.2 million of this impacted our Spices & Flavor Solutions business unit. Year-to-date tariff impact totals negative $5.1 million.

Selling, general and administrative costs decreased by $1.4 million or 3% to $44.6 million for the third quarter of 2025 from $46 million from the third quarter of 2024. The decrease was composed of a decrease in consumer marketing expenses of $1.8 million, general and administrative expenses of $0.6 million, warehousing expenses of $0.5 million, and selling expenses of $0.3 million, partially offset by an increase in acquisition, divestiture and nonrecurring expenses of $1.8 million.

Selling, general and administrative expenses as a percentage of net sales was 10.2%, approximately flat when compared to 10% for the prior year period.

We generated $70.4 million in adjusted EBITDA or 16% of net sales in the third quarter of 2025 compared to $70.4 million or 15.3% and of net sales in the second quarter of 2024. The divestiture of the Dan Pepino, Sclafani and Le Sieur U.S. brands during the second and third quarters of 2025, negatively impacted third quarter adjusted EBITDA by approximately $3.2 million.

Net interest expense decreased by $4.9 million to $37.3 million for the third quarter of 2025 compared to $42.2 million for the third quarter of 2024. The decrease in interest expense was primarily driven by a decrease in net debt and the benefits of lower interest rates on our variable rate debt as well as a net gain on the extinguishment of debt of $0.7 million during the third quarter of 2025 compared to a loss on extinguishment of debt of $1.9 million during the third quarter of 2024.

We repurchased an additional $20 million aggregate principal amount of 5.25% senior notes due 2027 in open market purchases during the third quarter of 2025, taking us to a year-to-date total of $40.7 million aggregate principal amount of repurchases and an average discounted purchase price of 92.94% or a discount to principal amount of approximately $2.9 million.

Depreciation and amortization was $16.6 million in the third quarter of 2025, which is largely in line with $17.2 million in the third quarter of last year. Adjusted net income increased to $11.7 million or $0.15 per adjusted diluted share in the third quarter of 2025. In the third quarter of 2024, we had adjusted net income of $10.1 million or $0.13 per adjusted diluted share. Adjustments to our EBITDA and net income are detailed further in our earnings release.

Now moving to our consolidated cash flows and balance sheet. We continue to expect cash flows to be strong this year, but there are some discrete items that negatively impacted net cash from operations in the third quarter of 2025. These included and unfavorable working capital comparison due in large part to the Le Sieur U.S. divestiture and the timing of our inventory purchases during pack season prior to the closing date of the divestiture which had negative impact on our net cash from operations during the third quarter of 2025, but increased the purchase price we received for the Le Sieur U.S. divestiture, which then had a positive impact to our net cash provided by investing activities during the quarter.

Also pursuant to our transition services agreement for Don Pepino and Sclafani divestiture, we purchased inventory during the third quarter for those brands for which we were reimbursed by the new owner in the fourth quarter. Net cash from operations was also negatively impacted by the timing of cash interest payments made during the third quarter of 2025 and compared to the third quarter of 2024 as a result of the June 2024 refinancing of our 5.25% notes due 2025.

We have reduced our net debt to $1.984 billion, and our consolidated leverage ratio as calculated pursuant to our credit agreement to 6.88x in the third quarter of 2025, despite being at our seasonal peak for net debt and inventory. As we roll off the typically heavy third quarter inventory pack build, we expect leverage to improve going into the fourth quarter of this year, and we remain on track to reduce our consolidated leverage ratio to approximately 6x by mid-2026. And as a reminder, approximately 35% to 40% of our long-term debt is tied to floating interest rates or SOFR. A 100 basis point reduction to SOFR would be expected to reduce our interest expense by approximately $7 million to $7.5 million.

As Casey mentioned earlier, we continue to make progress on our portfolio reshaping efforts, as evidenced by last week's announcement regarding Green Giant Canada and the Don Pepino, Sclafani and Le Sieur U.S. divestitures that we completed earlier this year during the second and third quarters. These divestitures are continued examples of the strategy that we believe will make us a more focused and ultimately a stronger company, while also helping us to reduce debt and eliminate heavy seasonal pack businesses from our portfolio. While these are great brands that will do well for their new owners, they don't align with the focus that we have laid out for the B&G Foods of the future.

Green Giant Canada generates approximately $100 million in annual net sales in U.S. dollars, but minimal adjusted EBITDA to our P&L. The divestitures of Don Pepino, Sclafani and Le Sieur brands in the U.S. were factored into our fiscal 2025 guidance that we provided during the second quarter earnings call. We are not yet adjusting our guidance to reflect the pending divestiture of Green Giant and Le Sieur brands in Canada, given that the transaction has not yet closed.

We are largely holding our fiscal 2025 guidance to the levels previously provided. However, given the still challenging consumer environment, we are revising and narrowing our top line guidance to $1.82 billion to $1.84 billion, adjusted EBITDA of $273 million to $280 million and adjusted earnings per share guidance of $0.50 to $0.58.

Our guidance continues to account for a modestly soft economic environment that has persistently impacted consumer spending patterns. It reflects our expectation that our top line will continue to stabilize, combined with the benefit of the 53rd week, that modest pricing around tariffs will offset the majority of these costs and that material input costs will remain relatively consistent.

In addition, our guidance incorporates our cost reduction plans, which remain on track to produce the anticipated $10 million of cost savings that we have targeted for the second half of this year. We live in an uncertain world, however, and so the risks to our guidance include increased challenges in an already difficult consumer environment, a greater-than-expected negative volume impact as the result of our pricing initiatives to offset tariffs, trade negotiations and the potential impact of any increased or retaliatory tariffs, a softer-than-expected holiday season or any destocking or other inventory management by our retail customers.

Additionally, we expect for full year 2025 interest expense of $147.5 million to $152.5 million, including cash interest expense of $142.5 million to $147.5 million; depreciation expense of $47.5 million to $52.5 million; amortization expense of $20 million to $22 million, an effective tax rate of 26% to 27%; and CapEx will likely be at the lower end of our $30 million to $35 million target.

And as we mentioned on our last call, we are committed to reducing our consolidated leverage ratio, which we expect to reduce to approximately 6x or less by the second quarter of 2026 through the successful execution of our divestiture strategy, continued stabilization of our adjusted EBITDA, our excess cash generation and continued improvements in working capital.

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

Thank you, Bruce. In closing, B&G Foods remains focused on a few critical priorities: improving the base business net sales trends of our core business to the long-term objective of 1%; reshaping the portfolio for future growth, stability, higher margins and cash flows as well as structuring key platforms for future acquisition growth; reducing leverage closer to 5x through divestitures and exit cash flow to facilitate strategic acquisitions.

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

[Operator Instructions] We have the first question from the line of Andrew Lazar from Barclays.

Maybe first off, Casey, third quarter sales came in a bit better than at least consensus was looking for. As you mentioned, you sort of lowered the midpoint of our full year sales guidance and the low end is a bit below the previous low end that you had. So maybe what are you seeing in the fourth quarter and maybe the broader environment that has sort of caused this shift?

Yes. I think on sales guidance, we -- mostly what we did was narrowed the range down to $20 million from the previous $50 million range. We brought the bottom end down a little bit, not much. I think all we're doing is reflecting the impact of the divestitures fully. And also, we've kind of kept the base business net sales trends consistent with what we were seeing in Q3. So that the improvement that we saw in Q3 versus Q1, Q2, we're kind of projecting that into Q3 -- into Q4, sorry, into Q4.

Got it. And then I know it's a little early still because more of the pricing in the Spices & Flavorings business is still going to flow through. But so far, what have you seen in that segment around buying elasticity with respect to some of the pricing that you've taken?

I mean, we've just taken it literally, so it's only been out -- we don't have really consumption data yet for it because most of that pricing hit kind of at the end of October. We were expecting some elasticity, but not a huge amount. I mean, I think we're projecting more like 0.5, 0.6 and we'll be able to measure that within a couple of weeks now. But we've seen other manufacturers take spice increases, price increases behind tariffs and commodity costs without a significant effect.

Yes. And the pricing that we took for spices on the commodity costs earlier this year kind of went through and we had a pretty good third quarter performance for spices. As Casey said, we think that we should be fine.

Yes. And on average, Andrew, these price increases to reflect tariffs are kind of in the low to single mid-digits.

We have the next question from the line of Scott Marks from Jefferies.

First thing I wanted to ask about, you noted that you're expecting kind of the base business performance in Q4 to be kind of in line with Q3. If we strip out the impact from the Green Giant U.S. business and the frozen vegetable business, how should we be thinking about that for the remaining 3 segments? And then further, how should we be thinking about the building blocks for getting back to that 1% number in 2026?

Yes. So I think -- well, first off, what we said about Q4, we will still have the Green Giant Canada business and the U.S. frozen Green Giant business in those trend lines that we talked about. So when I said Q3 was minus 2.7% and what we're projecting into Q4 is minus 2% to 3%, we will still have the Green Giant pieces in there because, remember, even though we announced Canada, we can't close it until we get regulatory approval from Canada, and we're assuming that, that business remains in the portfolio for the fourth quarter.

I think as we go forward, once we are able to complete divestitures around Green Giant, if we're looking at the other 3 business units, my expectation would be that those top line trends would be better because Green Giant has been probably a little bit more of our difficult comparisons over the last couple of years. So I don't want to give you a specific number now because it's all dependent on things happening. But I would expect more stable performance from the Spice & Seasoning business, we're seeing growing. That category has actually been growing, and we were up 2% in Q3. Meals is down just a little bit, but we are starting to see some improvements in our take and other trends.

Our Baking & Staples business has probably been a little bit weaker. Some of that is due to the lower oil pricing on Crisco that we've reflected in market, and that's part of the sales degradation. But if I take those 3 businesses, I think you're going to see more stable trends on the top line. I would hope that would be part of our -- that's going to be part of our track towards getting to a flat to up 1% over time.

Got it. I appreciate the answer there. Second question for me is just as we think about that spices business, I know you mentioned kind of the strength in the food service and club business there. Just wondering if you can remind us how big is that business for you and maybe what are the trends that you're seeing there as it relates to consumer or customer demand relative to more traditional retail channels.

Yes. And I'll give you an answer overall in our portfolio. I mean we could talk more specifically about spices. But in total, our food service business is about 13% to 14% of our portfolio. And we've seen pretty stable trends in that business. So we haven't really seen declines. We've seen flat to modest growth in our foodservice business, which is a lot of spices business going to different restaurant, outlets through distributors, and we also have a syrup business going to going to [indiscernible] establishment. So that business has been relatively stable.

Our private label business, we do have one -- we have one large business in the club channel in private label that is a good business, profitable business and has had very strong growth trends. So we've seen our private label business actually doing pretty well in addition to our foodservice channels. That's about foods -- I mean, private label in total is about 8% of our total sales, and that's been kind of a little bit of a growth that's been driving some mid-single-digit growth for us.

So I mean, I hope that answers the question, but that's -- we've seen some relative stability or strength in those 2 areas of our business, probably relative to the center store packaged goods branded side.

We have the next question from the line of Robert Moskow from TD Cowen.

Two questions. The 6x leverage target by mid-next year, Casey and Bruce. So can I assume that assumes that you will exit the rest of Green Giant? And then now that you've exited the Canadian side and then Le Sieur, like does it make it easier to market the remaining U.S. business to potential buyers? And then I have a follow-up.

Yes. So on the leverage piece -- and we walked through this on our second quarter call. We were talking about a full turn of deleveraging. About half of that was coming from the divestiture of the various Green Giant pieces, Le Sieur Canada and then U.S. And so I think that's the answer to your first question. The rest was stabilization of EBITDA, excess cash and working capital management.

On a go-forward basis, after all of the strategic review of Green Giant is completed, assuming we no longer own the business, there will be significantly less working capital swings between quarters. So we'll still have things like Crisco and Clabber that have a seasonal bake season where we build inventory in the third quarter and sell it, but it won't be as extreme as the pack plan for Green Giant, which is why you see inventory high now, but it always comes down in the fourth quarter and then kind of continues. So that's part one.

Your second question around does the divestiture of Le Sieur and the signed agreement still to close for Canada, does that impact the sale of the remaining business sort of to make it easier? Not really. They are distinct conversations with logical strategic partners on all pieces. But this is 2 out of the 3 or 3 out of the 4, if you go back and include the can business that we sold to Seneca about 1.5 years ago.

Okay. Got it. And then a follow-up. There's a lot of noise in the press about the NAP cutbacks. And then -- and also, just like this immediate disruption related to the government shutdown. It's not just the press, I guess it's really happening in many states. So have you seen any early signs of that impacting grocery sales in your categories? Or is it just too soon to know whether it will matter?

I think it's too soon to know whether it will matter. My expectation is that if, let's say, the shutdown continues and SNAP benefits are get cut in half for any extended period of time that there could be some impact from that. I mean, I've heard Walmart and others talk about that. But I think that's going to be a temporary effect until the government gets back up in operation and SNAP benefits are restored. So yes, I do expect there might be a temporary might be a temporary impact. I can't -- it's too hard to figure out exactly how much given the way consumers were spending and how much of their SNAP benefits are actually receiving. But I don't -- I think this is just a temporary phenomenon until this gets resolved.

Yes. And Rob, just to reiterate on that, we typically try not to talk too much on inter-quarter performance. But certainly, with regards to SNAP and any impact, we haven't seen any impact so far to date in our shipments.

We have the next question from the line of William Reuter from Bank of America.

I just have a couple. The first, in terms of your outlook to get to the 6x leverage target, is there any expectation there that you will either be gaining or losing any shelf space over that period?

Other than what we've sold? Other than the divested businesses, you mean? Yes.

Yes, whether there could be any business wins that you kind of see on the horizon or alternatively if there are businesses that you're having to respond to RFPs to maintain your shelf space?

So the 6x assumes that we hit our model for 2025 and kind of preliminary 2006 thoughts. I guess that would include any performance for those businesses that we anticipate. But we haven't done a further probability weighting by like inches of shelf space, if that's what you're asking.

But our forecast would factor in how we see distribution wins and losses across our innovation launches and at any cut of slower moving items. Our forecast always includes those kind of projections.

Got it. And then given you have been successful with the 3 divestitures so far, are you fairly certain that you're going to be able to come to an agreement with the buyer on the Green Giant U.S. sale within the time that you laid out?

Not really fair to comment on that other than we're making progress on getting these transactions done. And we certainly laid out what we thought made sense from a time line, and that's where we are.

Got it. Okay. And then lastly for me. You laid out the timing of the 6x net leverage mid next year. a couple of times you touched upon the 5x. Is that kind of a longer-term goal? Or is there a time line associated with that we should be thinking about?

We haven't put out a time line, but it's very much a longer-term goal. And Casey will remind me of that every quarter.

I mean our long-term leverage goal is between 4.5% and 5.5%. So I mean that's the midpoint, and I think would that reflect the right kind of risk.

We have the next question from the line of David Palmer from Evercore ISI.

I just wanted to ask you guys about the organic sales numbers. You mentioned foodservice roughly flat and the private label business sounds like it's up mid-single digits. That might get us close to where we are -- when we adjust our consumption numbers get close to the numbers that you had, but it still feels like I might be down 4% to 5% versus the under 3% decline that you showed and you're guiding to as well for the fourth quarter. So I'm just trying to think about like other reasons why that would be different. Is there any shipment dynamics, other nonmeasured channels that are happening?

No. I mean I think it's really simple. There's about 35% to 40% of our portfolio that's unmeasured by Nielsen U.S. data. So I mean, if I just give you the numbers, Canada is about 7% to 8%. Foodservice is about 13% to 14%. Private label is around 7% to 8%. We have an industrial business also that's about 5%. And there's unmeasured customers in the U.S., Costco, et cetera, it's about 3%. So it's more than just the food service and private label business I talked about. So you do all that math, and it kind of gets you to that base business trend roughly the 2% to 3% kind of base business trend.

So your assumption on like basically this back part of the year is that your consumption all channel, obviously not that it wouldn't be even captured by Circana either would be also down 2% to 3%. Fair to say.

Yes, but that would move across foodservice and channels. And then it would include our private label business. We have a very strong club private label spice business that's been growing very rapidly. So it would -- it assumes that we're kind of static in terms of our performance in the fourth quarter that we were in the third quarter across measured and unmeasured kind of channels and businesses.

And Dave, the other part where you might be missing if you're thinking about fourth quarter, just a reminder, this is the 53rd week, and it's in our fourth quarter this year. And so we've talked a number of times, referenced either $15 million to $20 million or $16 million to $18 million, but there'll be some benefit, which was also impacting is factored into our guidance.

Which kind of offsets the base business trends. Two of those kind of offset each other to get to roughly flattish net sales in the fourth quarter.

Great. That was great. And with regard to the tariffs language you had in the release, just it seems like it's dated language that you're not including all the tariffs in there.

We can only include what we know, right? It's going to one of the Supreme Court.

We price for all known existing tariffs. But these negotiations are...

And certainly guided for it too, I would assume.

Yes.

Is there -- have you talked about the inflation, inclusive of tariffs that you're expecting, call it, into the first half of '26? Have you talked about that?

I mean we're seeing outlook, Dave. I wouldn't want to tell you that we've actually finalized our projections, but we're kind of seeing 1.5% to 2% input cost inflation before tariffs. But that's a very early number, probably mostly driven by packaging.

I think our key thing is similar to 2025, we haven't seen anything that suggests a big uptick in inflation based on our basket of inputs.

And our strategy for that would be that we expect the price to recover tariffs, which we've already done. And that's been implemented. We will look at final inflation assumptions and projections when we get pretty close to the new year. But it's a combination of some targeted pricing where we have significant increases in certain commodities as well as productivity efforts that would offset that -- more than offset that rate of inflation in very low single digits.

We have the next question from the line of Hale Holden from Barclays.

I just had three very quick clarifications. Bruce, I really appreciate the working capital talk through that you did on the inventory swings. Can you give me a sense of what the baking business will be 3Q to 4Q in terms of percentage of inventory because I just don't really have a baseline on what that flowback for you would be?

For our existing business. Like the Crisco and Clabber, we haven't disclosed that. Probably directionally, you can think about what our sales breakdown is by quarter for those businesses. And I do think we disclosed that for both businesses to have a rough impact of the swings, not perfect.

There's a little bit of a -- there's a small prebuild in advance of baking season.

Okay. The spices pricing that you're talking about on tariffs is the second one from the summer? Or was there 1 at the end of the summer? Or is it the first one?

Yes. So what we did just in a couple of pieces of the spice portfolio, is we put pricing in effect to offset increases in commodity costs. So nontariff-related stuff that we knew was coming this year, particularly black pepper and garlic. And then separately, and that was pretty small, modest. I think we talked about it...

Yes, in July.

We talked a little bit about it on our second quarter earnings call. We've since followed up across the board where we needed to for tariffs to take price. And that's really an end of October, early November phenomenon.

When it's effective.

Got it. And then my last question is the $55 million to $60 million in charges that you outlined for Canada, is that a good proxy for the sale price or a bad proxy?

It's not -- yes, that $55 million to 65 million is a good proxy for the sales price, assuming -- and it's somewhat dictated by inventory. And so assuming that we closed with inventory levels where we are in September. -- is kind of where that lays out.

We have the next question from the line of Carla Casella from JPMorgan.

You talked about working capital anomaly in third quarter related to -- I think it was Lee -- did you say how much was moved in the third quarter that you will be reimbursed that you were reimbursable in the fourth quarter?

Yes. So the 2 pieces for working capital around inventory were Laure the U.S. business that we sold. And we bought -- it's pack season. It's a little bit nuanced, the ins and outs, but we bought about $20 million of inventory for a business that we no longer own. About half of that ended up finding its way into higher pricing on the transaction and floating as a benefit in cash from investing. Then there's another $2 million, $3 million of inventory that we bought for the Don Pepino and Sclafani brands on behalf of the new owners that they reimbursed us for in the fourth quarter. That was a temporary hurt in the third quarter numbers.

Okay. So it's like a $2 million to $3 million that you were paid in fourth quarter that hurt third quarter?

Yes, for Don Pepino, and then another $20 million that we spent on the business that we no longer own for Le Sieur and we -- the interest of -- because we did a refinancing last year. And so that ended up moving an interest payment from what was October into September. And that's about, I think, a $7 million to $10 million swing there.

Okay. Great. Any early thoughts in terms of the broader refinancing for the capital structure as we start to get closer to the first maturity?

No. I mean we continue to think that at some point, when it makes sense and it's appropriate we'll look to refinance those 2027 notes, obviously, watching the market, and we'll pick an opportune time.

And do you have additional secured capacity?

I think that the notes will be refinanced as unsecured. Not secured.

Okay. Great. And then just one follow-up. You mentioned that pricing effect went into effect for customers in November. I mean you passed on to retailer, so it's going into the consumer like on shelves in November. And I'm wondering if you've seen any change in elasticity since then?

I mean most of the pricing has taken place in the last couple of weeks, and we don't really have kind of market-based scanner data yet, but we'll watch it pretty closely.

Ladies and gentlemen, this concludes our question-and-answer session. The conference has now concluded. Thank you for attending to this presentation. You may now disconnect.

All right. If we could our seats, we'll kick off our next session here with B&G Foods. So welcome back, everybody. With us today are CEO, Casey Keller; and CFO, Bruce Wacha. Welcome back to both of you.

Thank you.

Thank you.

Thanks for being here.

Casey, maybe a good time -- a good place to sort of kick it off is -- sort of a state of the union as you reflect upon how the company has transformed since you've taken over. What's top of mind as you continue to try and navigate through this sort of elongated period of uncertainty?

The elongated period of uncertainty? I like that. So I'd say that the state of the union is we're getting better. If I think about some of the elements that we need to really manage with this company in terms of transforming it and turning it around. Number one is the portfolio restructuring and getting down to a core portfolio that we think we should be in long term. So -- as we've talked about many times, we've sold off several assets. We sold out the Back to Nature cookie cracker getting out of the snack business. We sold off some of the vegetable assets that were high working capital intensity, high inventory, seasonal packs, everything else. So Green Giant canned vegetables in the U.S.

Most recently, the Le Sueur business, also the Don Pepino and Sclafani fresh pack tomato businesses in New Jersey. So we are making progress, making divestitures. Obviously, the big pieces that still need to happen are the rest of the Green Giant assets, both the U.S. frozen Green Giant business and the Canadian Green Giant business, which would be both canned vegetables and frozen. I think we're making good progress on those. We've disclosed that they're under review. But candidly, that we're in advanced discussions. And I think those could be 2025 transactions if things go well, but you never know, obviously.

These are pretty central to our transformation. Green Giant has been probably our most challenged piece of our portfolio. Our economics have never looked good. It's very low-margin business, high working capital intensity, probably double the inventory intensity of any other business that we have. And it's probably -- it's been our laggard in terms of our performance. The category has been troubled. Private label has been an issue in that business. And we just have subscale economics. We don't have the depth of frozen business to be able to support our own distribution or network or even our own R&D capabilities.

So it just -- it's not a business that fits with the rest of our portfolio. It doesn't have any synergies almost in anything. It's added a lot of complexity. And I think it's central to transforming our company to a much simpler company, a much more focused company in spices & seasonings, in Meals and in Baking Staples. Those businesses have a lot of synergies. Those businesses we know how to run. Those businesses have higher margins. Those businesses have better cash flows. So we will be a stronger operation once that is done. And so getting there, making progress.

The other piece is just looking at the core performance of those remaining businesses, ex Green Giant, I'm starting to see some progress. If I think about our total company really tough first quarter with down 9%, a lot of that being driven by kind of customer inventory reductions. Second quarter down 4%. So third quarter, for the first 2 months, down between 1% and 2%. So it's getting better. It's getting better. We're seeing some improvement in our consumption data. I know we're probably 60%, you can read in measured channels, 40% not. So it doesn't exactly correlate, but we're seeing a little bit of progress there, not as much as I'd like to be honest with you. I mean, I'd like to see us get even lower, closer to 0 in terms of our consumption of sellout data.

We've taken some actions on some of our businesses. We've had a couple of businesses that competitive entries, the Ortega business with Taco Bell coming in, Siete coming in. We've done some much stronger actions to kind of defend against that. And I feel that we're making progress there. Our Ortega sauce business is healthy and growing. Spices & seasonings, we've kind of refocused down the core business of Dash and Weber, making good progress in terms of turning those businesses around. We got distracted with a bunch of small license opportunities. I think we're not the right things for us to do.

So I think even with the dynamics of the hangover from the COVID and inflation, I think we're starting to lap some of those effects, but then on some of the things that we can control on our own business in a more competitive environment, I think we're doing a better job, innovating and doing things. So we're getting there. We're getting there, candidly, maybe a little slower on the restructure -- the portfolio restructuring they'd like. And it's been kind of an elongated recovery in terms of the consumer. I'd like to see that go faster, but we are making progress. So we are making progress.

That's great, great and very helpful background. I guess on the consumer sort of at a high level, how would you describe where the consumer is today maybe relative to where it's been over the past couple of years? Is uncertainty still driving greater conservatism? Or are you finally starting to see maybe some green shoots in consumer sentiment?

I think what's happening is that we're beginning to lap some of the changes in behavior. So the trade down behavior, the resurgence of private label post COVID, the shock -- sticker shock of the higher pricing and the inflation. I think we're starting to lap some of the behavior changes related to that. I think it's going to take another 6 months for us to kind of fully get through that. But I'm encouraged that -- I mean there was some contraction of the center store. They went on for a while. We're beginning to lap some of that as well. But we're I don't see -- I think consumers still -- their budgets are still a little bit tight, particularly in the middle and the low side. And they're continuing the behaviors that they did before. But I don't see that there -- they're doing new things that they're continuing to trade down more and more and more. I think we're just lapping some of the initial reactions to the higher pricing and their constrained budgets.

So I'm optimistic that we'll get through it. I mean, we'll get back to more of a steady state in terms of the center store. But it's been longer to recover on that than I would have expected. But I'm not seeing any new behaviors that would indicate to me that things are going to get worse. I think I'm just beginning to see a slow recovery, slower than we'd like.

Yes. Great. It's been a few years now since we announced the formation of sort of the 4 business units, spices & seasonings, Meals, Frozen & Vegetables and Specialty. I guess how does that reorganization benefited the company since it was first implemented?

And I think -- a couple of ways. So first, let's push accountability down for managing the P&L and managing the business. And I think -- it's hard to look at the period of time that the business units were formed and what's really happened because it's been an incredibly volatile environment. But I think we are managing those businesses better. We're making better decisions about where we should be playing, where we should not be playing. We're starting to get some breakthroughs in innovation on some of these businesses. In some cases, like in spices & seasonings, I think we took a little bit of a wrong approach. Now we're kind of fixing it and getting back but it's pushed the accountability down the business. We're making better decisions. We're making much faster decisions, and we're making better P&L decisions.

If you look at ex Green Giant, which has had its own problems, despite kind of some of the top line issues in the company, we're not doing badly on the bottom line. We're doing -- we're making smart decisions about how we manage costs, how we manage pricing. Our productivity, honestly, one of the biggest things that the business units have brought is a multifunctional coordination of our productivity efforts. So bringing COGS down. Our margins are starting to improve. We're managing whatever inflation we have, plus covering some of the margin improvement.

So -- and right now, I think we're at like 3.5% of COGS in terms of our productivity efforts, which is a long way from when we started the business units probably less than 1. So I think it's yielding benefits. Hard to look at the complexity of the last couple of years and say, you can see it fully in the results, but I do believe it's working.

Great. And maybe just by background, you can remind the audience what role you expect for each of those business units to sort of play within the portfolio? And maybe the time frame which you'd anticipate each of these units reaching sort of their full potential. And obviously, as you talked about, there have been some more dynamic times for the company in the past couple of years.

So spices & seasonings, I think, is kind of our jewel. It's highest-margin business. It's in a category that's showing some pretty good dynamics, 2% to 3% in the last year or 2. Tied to the fresh protein, the fresh perimeter of the store in terms of labor enhancement. We struggled a little bit at the beginning of this year, didn't get quite the results we wanted. But if I'm looking at the third quarter, we're starting to see better results in our first 2 months of the quarter, getting better top line performance. We're refocusing on our core brands, Weber, Dash, other things. Our private label Member Smart business has been strong.

So I feel like we're getting to the point on spices & seasonings that we should be seeing kind of consistent top line growth in the low single digits. It's happening, and I think we'll continue to see it happening. Some challenges on that business from tariffs because that's probably our main exposure. So we're sourcing most of our spices from overseas, obviously, not really available here in the United States, China, Garlic; Black Pepper, Vietnam. So we're taking pricing actions to do that. And so far, it looks like most of the industry is doing that because everybody is sourcing in the same place. But I think spices & seasonings, you'll see good improvement in the top line. And as we get through the pricing to manage the tariffs, we should be strong on the bottom line, too.

Meals, on the Meals business unit, I'm expecting that business to be kind of 1% kind of growth business. We're in the Taco category with Ortega, which should be a little bit higher growth, but Meals overall, Mexican meals, Ortega, Las Palmas should be a little bit -- should be good growth, low single-digit growth. And then if you look at the other part of meals, the concentration is really in the hot breakfast. So Cream of Wheat, McCann's’ Irish Oatmeal, and Maple Grove Farms, Pure Maple syrup, I mean the combination of those, I would expect meals to be about a 1% grower over time with some stronger performance on the Mexican side, maybe some more static kind of top line on the hot breakfast side.

Ortega has been a little bit of a journey for us because there's been a lot of competition entering that category, traditionally, with Old El Paso and us. And then Taco Bell has kind of made a big entry into that category, a resurgence in that category over the last couple of years. Siete came in kind of Taco seasoning recently, but we've got some good plans. We're fighting back and I'm seeing better and better sell-out trends on that business. So I think we're getting there on that one.

Baking Staples, look, this is -- the baking staples are what we call specialty business unit. This is kind of our mature cash flow management business, maintain margins, and we've been doing a good job with that. So the profitability has been very steady on that business. Crisco has been a little bit of a challenge managing the volatility in the soybean oil prices as we brought prices down on Crisco to reflect lower soybean oil costs. It's been slower to get reflected than we like, but we've maintained kind of profitability and margins.

And so I think we've done a reasonable job of managing the cost and the gross profit of that unit, and you can see it in the results. Clabber Girl has been a good performer for us in terms of baking powder. So that business, we kind of expect to be flat, flattish but maintain good margins, good cash flow, good EBITDA. And so far, we've been delivering that. So that's kind of the expectations. And we'll talk about Green Giant because we've already talked about that, that's been a big drag on our portfolio. So as we kind of get that out of the business, we should be seeing the other 3 businesses kind of more stable performance.

Yes. And on that point, when you're sort of fully through maybe the more significant asset optimization moves that you're planning to make. I guess, what does the remaining business look like? Like what's your expectation around the type of growth you're looking for, both top line and call it, EBITDA?

I think our longer-term algorithm is to get 1% across the remaining portfolio between spices & seasonings, Meals and Baking Staples and Specialty. So we'd expect to get 1% on the top line. Good cost management, get ladder that down to 2% in the bottom line. So just to get sort of a stable platform that if we can get our leverage down and get back to something around 4.5% to 5.5% leverage range, we can go back into the M&A game, make more disciplined acquisitions, more focused acquisitions in some of those core categories where we can add value and do some things and get synergies. I mean that's kind of the vision.

So we're not going to -- 1%, 2% is not going to drive huge valuation growth, but getting our business back to the point where we can do smart M&A, which is what our history has been, right? If you take a look at B&G, what have we done successfully. Honestly, if you look at spices & seasonings, that's probably the prime example. We bought 3 businesses over time, built up a spices & seasonings portfolio. We've got a strong asset. We run that business well. We've got good margins. It's a combination of consolidation of 3 different acquisitions, different size, scale. That's the model. The model is we go and do that. We buy more spices & seasonings business. We buy another Baking Staples business. That's how I see us driving B&G going forward and driving valuation.

But being smart about it and making sure that we're buying things that we can add value to that will have synergies that we just don't buy and bolt-on, drop administrative synergies, we need to do more than that. We need to get more in the P&L. We need to be more focused in terms of our...

And B&G has a history, if we go back a ways of doing that actually very successfully. So...

I kind of got away with that with frozen to be honest with you.

Right. Right. You recently announced an amendment of your senior secured revolving credit facility, which temporarily increases your maximum consolidated leverage ratio from 7:1 to 7.5:1. But leverage is obviously still a topic of concern for investors when it comes to B&G. But net debt to EBITDA is still approaching 7x. I think on your second quarter earnings call last month, you mentioned that you believe you can reduce net leverage down by a full turn to maybe 6x in 12 months' time. How much of that is predicated, I guess, on further asset sales using free cash flow to pay down debt versus using free cash flow? And can you talk through your plans to address the '27 and '28 bond and loan maturities.

Yes. So Andrew, as you said on the second quarter earnings call, we referenced our leverage just under 7x today and talked about a path to bring it down to about 6x or so in the next 12 months. There's call it, 4 pieces to that. There's about a half a turn of leverage that we expect to come out with the culmination of the strategic review of Green Giant, AKA divesting that business. There's about 1/3 of a turn of deleveraging that comes from running the business better, hitting the midpoint of our guidance for EBITDA. It should take about 1/3 of a turn off of our leverage. And then about 0.1 to 0.2 of a turn from both just excess cash. So excess cash, EBITDA, less CapEx, cash interest, cash taxes and after dividends and then another 0.1 to 0.2 of a turn for continued optimization in our working capital and inventory, which we've been bringing down over time.

Yes, great.

As far as the debt stack, we're -- regular way issuer in the high-yield markets. We have been for the last 25 years. And so we've got a debt stack that looks not that different than what it would have looked like 10 years ago or 15 years ago. We do have a 2027 maturity. Those become current in fall of 2026. I think it's reasonable to expect us to refinance those in the regular way high-yield markets at some point that makes sense over the next 12 months.

Got it. Great. In regards to the dividend, you've been able to maintain it at its current level, right, despite some of the leverage concerns. I guess what's driving your confidence that the current dividend level is the right one?

Yes. So a couple of things. So since we've been a public company, B&G has always paid a dividend. It's probably always paid a little bit of a higher dividend than the industry average to reward investors, to hold our stock while they wait for the next M&A event to create alpha.

No different here. The Board expects management to run the business to support a dividend. And I think it's reasonable to expect them to continue to do so. We do set our dividend policy quarterly from an approval process. But the Board generally expects a longer-term view than just what is the next quarter. And so with everything that we have going on with the business today around strategic review and capital structure, I think it's reasonable to understand that the Board is going to look at the business post strategic review and post capital structure and say, what is the right excess cash ratio to support a dividend and what's the right ongoing dividend.

Yes. All right. Your long-term EBITDA margin target is 18% to 20%, which the company is able to achieve back in '19 and 2020. However, implied EBITDA margin for '25, I think it's closer to around 15%, which is only slightly below where EBITDA margin has been over each of the past 2 years. Can you remind investors what have been the biggest drivers of the EBITDA margin contraction from your long-term target down to the mid-teens range the past couple of years? And could margin get worse before it gets better? And how are you thinking about both the steps and the time line it will take to get back to that sort of longer-term range?

Yes. There are two things that really drove that margin down. So part one, the first 2 years of COVID were phenomenal for a packaged food manufacturer, terrible for society, but we had outsized sales and margins were pretty consistent with where they were pre-COVID. And then we had 2 years of supply chain disruption, input cost inflation. And then ultimately, massive cost increases, which led to massive price increases.

Generally speaking, the price increase is protected dollar profit, not margins. And so we margin down as sales went up due to pricing to protect dollars. So part one, we had inflation. We took price as best as we could, but we got margin down as a result of that.

Part two is Green Giant, our frozen and vegetables business has had margin deterioration. It is volatile. It's in the agricultural industry. And so there's good crop, bad crop. And it's also had higher costs, particularly around logistics. If you just use simple math and extract that business from our portfolio, you would get a margin that's backed around that 20% EBITDA margin area that we'd like to be.

Great. Maybe shifting to some closer in topics, and you touched on this a little bit earlier, Casey. Organic sales in the first half were down about 7%, though did sequentially improve from down 10% in the first quarter, down 4% in the second quarter. Your guidance implies sort of organic sales in the back half, maybe down low single-digit range. Can you talk about what you're seeing in the market that sort of gives you some of the confidence you should be able to achieve that sort of sequential improvement you're looking for in the back half? And I know you talked about the first 2 months of this quarter were even better than that. So it seems like you're on your way.

I think -- so what we're looking at is, obviously, our sell-out data, our shipments and sales for the first 2 months are in line with where we expected. So that's always the first confidence for me that we're actually getting there. So -- and we need to see continued improvement even going into the fourth quarter. And the only other thing I'd remind you is we have a 53rd week in the fourth quarter. So we have an extra week, which is part of our part of the reason how we'll get to kind of a flat or positive performance in the back half.

So -- and we're watching our sell-out consumption data pretty closely. What -- the 60% that we measure just to see what's going on there. As I said, some improvement but not as much as I'd like to see, and we're watching that week by week to see if we're getting that sequential improvement that we expect. Honestly, I don't really worry about July, August too much because that's really our low seasonality. We're getting into our big seasonality with the fall baking and some of the other even Green Giant has a little bit of a seasonality effect in the fall.

So it's going to be really important that we see kind of sell-out data improving in that period. So -- but look, our sell-out data -- I mean our sell-in data looks good, our sell-out data is improving. We'll keep watching it, but the 53rd week will help. So I'm feeling more and more confident.

We also have a dynamic in terms of EBITDA in the business of the frozen business had a -- we had some really bad crop issues that led to costs being in the back half of last year and then the first half of this year. So we had crop issues on corn. We had crop issues on peas. So those look like those crops are coming in very favorably this year. So we'll have better cost year-over-year plus we had kind of 4x with the Mexican peso kind of hurting us last year through the first half of this year, should be moderating in the back half year-over-year. So we've got quite a bit of shift in our frozen and vegetable business going on from the bottom line. The other thing we did, we put up kind of a $10 million cost challenge into the back half of this year.

So Q3 and Q4, we've kind of cut costs, improved productivity from our original plans. We've got some restructuring that we've done in the company to save overhead costs. So we've got some things that are helping improve the profitability in the back half, which is what we really want to see as well, not just top line performance. We also want to see that shift in the frozen and the $10 million cost challenge coming through in the P&L, which we're starting to see.

Got it. Got it. In spices & seasonings, it's a segment, as you mentioned, that is expected to be most impacted by tariffs, given certain ingredients are largely imported from Asia. I guess given some of the softer trends in the segment of late, and you explained kind of why that is, how would you characterize your ability to maybe take some strategic pricing to cover some of this tariff-driven inflation? And I guess, how concerned are you about consumer elasticities if you were to put through some incremental pricing? Obviously, your largest competitor is going to be doing some of that as we move through the latter part of this year to do their best to sort of mitigate. Where are you on that sort of that continuum?

We're taking pricing to recover tariff costs in the spices & seasonings business. The only other place that we have significant exposure is in steel cans, and we're also taking pricing to recover those costs. So we've released those things. We're in discussions and negotiations with customers on those. So I feel like we've got the right approach as in the spices & seasonings category. This is not just us, this is the -- all the entire category is facing this. It looks like the lead competitor has already moved in some cases. So I think the plan to execute pricing is underway. And it will just be a matter of timing, getting through all the negotiations and the lead times to get things set relative to how our costs are coming in.

So tariffs on spices & seasonings are really our biggest issue. It's China 30%. It's Vietnam, black pepper. This is probably the biggest piece of the exposure we have. So if we can manage it in spices & seasonings, I feel pretty comfortable that we'll get through it all. I don't know what's going to happen in the future, we kind of waited and I think everybody waited until all this tariff negotiations settled down. I mean if we had taken pricing 2 months ago, we would have been at 54% in China. So 30%. So it's been a little volatile, but I think it's kind of at least steady state for a little bit here.

I'm personally hoping that we get to a point and when we get through all these tariff negotiations that the unavailable natural resources argument that coffee, cocoa, spices, we begin to see some relief around that. But at this point, I think we decided we got to move forward. And we got to go with -- we're starting to incur cost behind the current tariffs. So we need to start recovering that. And then over time, we'll look at -- do we get some relief on that front and be able to back off some of this pricing action. But right now, it's -- that's not in sight.

Yes. Your Meal segment over time is expected to grow sales low single digit. It hasn't been able to deliver that really since you sort of reporting at the segment level. What gives you the confidence over the longer term? This is still a segment that can kind of consistently deliver modest sales growth? And how core valuable is Ortega and other, we'll call it, the ethnic brands to the future plans in that space?

Yes. I mean -- so the biggest lag on us being able to get to positive sales growth has largely been Ortega. Las Palmas is growing nicely. Actually, Maple Grove Farms syrup has started to grow nicely. Creme of Wheat has been pretty steady. So really, it's about Ortega. And Ortega has been -- and I think you probably even heard this with Old El Paso. It's just new competition coming in, more competitive environment, slicing the pie up a little bit more. We've -- we're defending our turf. We're doing the right things. We've innovated in sauces. Our sauces business is kind of healthy and growing. We've had -- we've taken some hits in terms of our shelves and kits and some of the ancillary things.

The other piece, frankly, half of the decline in Ortega is because we lost the whole Chili's crop from South America last year. So we had literally no supply. And we're the only -- we're the game in town, the only game in town. So we lost probably $5 million of sales because we had no ability to service that business. And we will get back in because Walmart is holding the slot and everything once the new crop comes through.

So Ortega has been a struggle, supply, competition. But I think we've got new innovation coming on shelves that will strengthen our position. We have -- we're launching a Cheez-It license [ to sell ] in the cheese taco shell category. We have new green sauces coming on in Ortega and sauces. We've got some [indiscernible] kits coming in. We've got some new things that are hitting. We've got some strong innovation. So I think you'll see Ortega beginning to improve. We broadened the distribution of our sauce business across channels. So it's getting there. It's just been a tough period with supply and competition.

Got it. To get to the midpoint of our EBITDA guidance for the full year, we would require EBITDA to be up about 3% in the back half of the year, which will represent a pretty meaningful inflection relative to the EBITDA declines of 21% and 9% in each of the first 2 quarters. So what sort of visibility do you have towards achieving this inflection? And sort of what are the key drivers of doing so?

Yes, sure. So the two big positive drivers. Part one, Casey mentioned, Green Giant. So we had a bunch of one-offs that impacted us the back half of last year and the front half of this year, particularly around weather-related crop, bad crop last year, and then also currency, we manufacture and in Mexico. So we basically manufacture in pesos and the U.S. dollar peso got out of whack for a period of time. Both of those we expect to be better. We kind of know that they're better because of when crop and product is made. And so we should have some favorability in the back half on Green Giant from a margin and profit standpoint.

Also, Casey talked about the $10 million cost savings challenge. We know where most of that is because it's fairly straightforward. It's cost savings, and we've already executed and actioned a fair amount of that. And so pretty good visibility on those. There's bad guys, of course, we talked about it on our earnings calls. Both of those initiatives were about $8 million to $10 million between Green Giant and then the cost savings. We obviously know we've got bad guys as well around tariffs, around input cost inflation, favorability in some categories, a little bit of a drag in others. But on the balance, we feel pretty comfortable that we should be flat to up in the back half of the year.

And can you expand a little bit on what sort of actions specifically you're taking as part of that plan to save the incremental $10 million in the back half? And I guess, how sustainable are those efforts as we look past '25 and into '26 and beyond?

So the components of the $10 million that are flowing to the P&L now, we actually can start seeing it in our numbers now. But -- so first, we increased our productivity efforts from 3% to 3.5%. And so we're starting to see that incremental 0.5% flow into our back half costs. So it's -- if you think about 0.5% of our COGS of $1 billion, it's pretty substantial. It's pretty substantial. So -- and we're not counting on all of that flowing in this year because of the timing of when we're shipping inventory and deferrals and all that. But we are expecting some of that, and we're seeing it kind of in the projections.

The second thing that we looked at was we did pare back on -- we have conducted some restructuring. So we have restructured some of our operations. We got rid of a few central functions. We've [ RFPed ] some of our other kind of services and other things. We're looking to the future of what our company might look like ex Green Giant, and we began to restructure some of that in advance of that. These things are all sustainable -- that those will be ongoing cost savings.

We also went into our trade, our trade spending because our trade spending has kind of creeped up over the last couple of years and looked at how do we get some efficiency out of the trade spend. And we've kind of pared back our back half plans, cut some inefficient spend and done some other things have been able to see that. In some cases, we've looked hard at our marketing, where is it working, where is it not working and cut back some of the things that we didn't think were effective and preserved marketing spend where we really needed it. So these are pretty tangible actions that we can see and we can see them kind of flowing in the P&Ls in the forecast. And they're the right things to do. I would say about 1/3 of it is coming from restructuring, about 1/3 of it is coming from productivity and about 1/3 of it is coming from just -- from a trade spend efficiencies and some other things.

It sounds like you're trying to get ahead of any potential stranded costs that might come about as a result of a frozen divestiture. Okay. Maybe last thing is sort of as we sit here today, and I think...

That's the other thing we haven't really talked about, about, but Green Giant added so much complexity to our company. Mexico operations, Canada selling operation that -- when we get out of that, we have a disproportionate amount of costs trapped in managing that business. So we've got a program mapped out of what we would look like without it. And we've kind of just moved that forward with some of these cost savings.

Good. As we sit here today, what do you see as the biggest risk and/or opportunities for just the year to come in either better or worse than sort of currently expected?

You're talking about 2025?

Yes, '25.

I mean I think the biggest -- the two risks that we're watching pretty closely are how fast do we recover the top line. So as our -- there is a sellout consumption data improving and getting down into the closer and closer to stable, or closer and closer to low single-digit decline. I mean I want to see that. Number one, I think that's a risk of how fast that happens. The other one is tariffs. So we've executed the pricing. We've released it. We're in the discussion with customers. It's really the -- how long it takes us to get it implemented and relative to how fast they had tariff costs come in. I think those are -- should be fairly closely aligned or maybe just a little bit of gap between them. But let's say, we have some issues with getting that pricing through in a couple of big customers that might be a little bit of a risk to what we're doing. But I feel pretty confident, as Bruce and I are talking about, we see the EBITDA improvement versus year-over-year. On the frozen vegetable, the cost savings challenges, we feel pretty confident about that. It's really that top line and making sure that our top line trends are recovering and stabilizing and that we're seeing -- and that we're seeing the pricing get reflected to cover tariffs.

Great. Good. I think that's a great place to cut it off. We're out of time. Please join us over in the breakout session. And please join me in thanking Casey and Bruce for being here.

Good day, everyone, and welcome to the B&G Foods Second Quarter 2025 Earnings Call. Today's call, which is being recorded, is scheduled to last about 1 hour, including remarks by B&G Foods management and the question-and-answer session. At this time, I'd like to turn the call over to AJ Schwabe, Senior Associate, Corporate Strategy and Business Development for B&G Foods. AJ?

Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer; and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter in the earnings release we issued today, which is available at the Investor Relations section of bgfoods.com. .

Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer you to B&G Foods' most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial condition.

B&G Foods undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We will also be making references on today's call to the non-GAAP financial measures, adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit percentage, base business net sales and segment adjusted expenses. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release.

Casey will begin the call with opening remarks and discuss various factors that affected our results. Selected business highlights and his thoughts concerning the outlook for the remainder of fiscal 2025. Bruce will then discuss our financial results for the second quarter of 2025 and our revised guidance for fiscal 2025.

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

Good afternoon. Thank you, AJ, and thank you all for joining us today for our second quarter 2025 earnings call. Today, I will cover an overview of second quarter performance. Bruce will cover more detailed financial results, recent divestitures and portfolio shaping efforts, and the outlook for the remainder of fiscal year 2025.

Q2 results. The second quarter demonstrated sequential improvement in trend and performance after a challenging quarter 1. Q2 net sales of $424.4 million finished 4.5% down versus last year, with base business down 4.2%. Q2 adjusted EBITDA was $58 million, down $5 million or 9.3% versus last year. Some of the key drivers. Almost all of the adjusted EBITDA decline was driven by the frozen and vegetables business unit with segment adjusted EBITDA down $6.5 million versus last year behind higher true-up costs on last year's weak crop, specifically corn and peas, higher trade spend from Easter April timing and the end of the Walmart rollback to improve core velocities.

These costs will lap and are expected to reverse in the second half. The specialty business unit experienced significant net sales declines, 8% primarily behind lower Crisco oil pricing year-over-year, consistent with our pricing model. Segment adjusted EBITDA improved by 3%. The divestiture of the Don Pepino and Scalpeni brands during the latter part of the quarter removed approximately $1.4 million of net sales and some modest profit.

Portfolio divestitures. B&G Foods is making good progress in reshaping and restructuring our portfolio to sharpen focus, simplify the business, improve margins and cash flow and maximize future value creation. The end game is to create a more highly focused B&G Foods with adjusted EBITDA as a percentage of net sales approaching 20%, increased cash flow generation, lower leverage closer to 5x and a more efficient cost structure and clear synergies within the portfolio.

During the second quarter, we completed 2 key divestitures. First, the Don Pepino and Scalfani divestiture signed and closed in May. This is the tomato processing business with about $14 million in annual net sales with a dedicated factory. Second, the Le Sueur U.S. Can Ps divestiture signed and closed last Friday. Le Sueur has approximately $36 million in annual net sales in the U.S. with a premium position in canned vegetables. Both businesses have relatively high working capital needs, highly seasonal production and were isolated in terms of the rest of the B&G Foods portfolio, particularly after the divestiture of the Green Giant U.S. canned vegetable business in late 2023.

We expect additional divestitures in the future to further focus the portfolio and reduce leverage. Beyond Le Sueur, we continue to evaluate and pursue the potential defense of the Green Giant branded business in U.S. frozen and Canadian frozen and shelf stable. The remaining businesses in the frozen and vegetables business unit. Fiscal year '25 outlook. We expect the back half of fiscal year '25 Q3, Q4 to show solid improvement versus the first half trend, flat to slightly positive in net sales with year-over-year growth in adjusted EBITDA. The key assumptions behind the latest estimate.

The 53rd week is expected to add plus 2% to 3% net sales growth in Q4, a partial week benefit. Excluding the impact of the 53rd week, base business net sales are projected to be down approximately 1% to 2% in the second half. July and early August net sales are consistent with that expectation improving from the Q2 trend. As discussed last quarter, additional savings and productivity efforts are on track to deliver an incremental $10 million in adjusted EBITDA growth in Q3 and Q4 with an annual run rate of approximately $15 million to $20 million. These include additional productivity in COGS, trade and market spending efficiencies, accelerated SG&A savings and discretionary spending cuts.

The U.S. frozen vegetables business is expected to turn profitable, roughly a plus $8 million to $10 million increase in segment adjusted EBITDA versus last year behind more favorable crop costs, foreign exchange benefit on the portion of the Green Giant business manufactured in Mexico and strong productivity in the Irapuato manufacturing facility. We have assumed tariffs at current levels with some possible mitigation through U.S. trade negotiation deals, alternative sourcing or classification of spices as unavailable natural resources.

We are planning to execute targeted pricing to recover incremental tariffs with some lag until fully indicated and implemented. The largest exposure remains China sourcing of garlic and onion. We are also adjusting guidance primarily to reflect the impact of our 2 recently completed divestitures. Bruce will provide more detail.

Finally, we are committed to reducing leverage and balance sheet risk. We expect to reduce leverage to 6x within the next 12 months by using divestiture proceeds and excess cash that we generate through improved adjusted EBITDA performance and lower working capital needs to repay or repurchase long-term debt. Thank you. And I will now turn the call over to Bruce for more detail on the quarterly performance and outlook for the remainder of fiscal 2025.

Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. While we are not satisfied with today's results, we are pleased with the continued progress relative to our challenging start to 2025. For the second quarter of 2025, we generated $424.4 million in net sales, $58 million in adjusted EBITDA and 13.7% adjusted EBITDA as a percentage of net sales and $0.04 in adjusted diluted earnings per share.

Overall, net sales for the second quarter of 2025 decreased by $20.2 million or 4.5% to $424.4 million from $444.6 million for the second quarter of 2024. Base business net sales, which exclude the Doncapino and Squafani brands that were sold at the end of May decreased by $18.7 million or 4.2% in the second quarter of 2025 compared to the second quarter of 2024.

$14.3 million or 3.2 percentage points of the decline in base business net sales was driven by lower volumes. $4 million or 0.9 percentage points of the decline was driven by a decrease in net pricing and the impact of product mix and $0.4 million or 0.1 percentage points were driven by the negative impact of foreign currency. Approximately $5 million of the decline in net sales in the quarter was driven by Crisco, and nearly half of that was driven by net pricing, which was reduced in large part to reflect lower input costs for soybean oil.

As we have highlighted since acquiring this business, our goal for [indiscernible] cash flows, regardless of movements in commodity oil prices, and that continues to be what we have done here. Outside of Crisco, the sequential improvement in net sales performance was generally broad-based against the portfolio and the business units. Base business net sales for specialty, which does not include net sales for the Don Pepino and Sclafani brands decreased by $10.2 million or 7.1% during the second quarter of 2025.

If we remove the impact of Crisco, base business net sales for Specialty decreased by $5.3 million or approximately 6.6%. Despite the lower sales during the second quarter of 2025, specialty segment adjusted EBITDA was up modestly for the quarter at plus nearly $1 million or 3%. And despite a modest inflationary environment, specialty benefited from lower raw material costs for certain brands, including soybean oil for Crisco and phosphates and corn starch for [indiscernible].

Similarly, meals has reasonably solid performance despite soft net sales performance. Net sales of meals declined by $3.8 million or 3.5%, disappointing for this business unit but still an improvement from its first quarter performance. Nonetheless, segment adjusted EBITDA was up by $1.8 million or 7.7% for the second quarter of 2025 compared to the prior year period.

Cream of Wheat returned to growth in the quarter after the supply issues earlier this year and we had strong performance from some of our other unsung heroes in the portfolio, such as Las Palmas and Chelada sauce, Skinnygirl dressings as well as Spring Tree and Vermont [indiscernible] syrups.

Net sales of frozen and vegetables also improved this quarter. After being down double digits in the first quarter, net sales were down just $2.6 million or 2.8% and in the second quarter of 2025 compared to the prior year. Net sales for the Le Sueur brand in the U.S. and our entire portfolio of products in Canada increased for the quarter as compared to the prior year quarter. Additionally, the U.S. frozen business continues to stabilize after a tough start to the year. We are proud to highlight that volumes increased for frozen and vegetables in the aggregate during Q2 2025 despite tough but improving category dynamics.

After a year of challenge around raw material pack costs and an unfavorable foreign exchange dynamic for frozen vegetable product made in our Mexican manufacturing facility, we are pleased to report that this year's pack appears to be significantly favorable when compared to last year's pack. Negative foreign exchange impacts have moderated, and we are expecting a better cost environment for the business unit and a return to profitability in the back half of the year.

Spices and Flavor Solutions also had a comparably strong second quarter of 2025. Net sales for the business unit declined by a little bit less than $2 million or 2 percentage points in the second quarter compared to the prior year period. About half of the decline was driven by timing, net pricing and mix within our Foodservice business and the remainder was driven by modestly softer volumes. Unlike our other center store businesses, spices and Flavor Solutions saw material increases in commodity costs, particularly for Black Pepper and garlic.

Separately, our spices business also bore the brunt of our exposure to tariffs, about $1 million of the $1.6 million of total tariff exposure for B&G Foods in the quarter. As we prepare for the back half of the year, we expect to manage these cost challenges through continued productivity initiatives in our Spices and Flavor Solutions factory along with targeted pricing where appropriate. Gross profit for our overall B&G Foods business was $87 million for the second quarter of 2025 or 20.5% of net sales.

Adjusted gross profit, which excludes the negative impact of $2.1 million of acquisition divestor related expenses and nonrecurring expenses, including cost of goods sold during the second quarter of 2025 was $89.1 million or 21% of net sales. Gross profit was $92 million for the second quarter of 2024 or 20.7% of net sales. Adjusted gross profit, which excludes the negative impact of $1.2 million of acquisition, divestiture-related expenses and nonrecurring expenses included in the cost of goods sold during the second quarter of 2024, was $93.2 million or 21% of net sales.

Our material labor and overhead costs when measured and gross sales were favorable by approximately 100 basis points during the second quarter of 2025 as compared to the second quarter of last year. Promotional trade spend, which is captured in our net sales line increased by approximately 120 basis points in the second quarter of 2025 as compared to the second quarter of 2024, as we continue to invest in our brands and attempt to reflect lower prices on shelf for consumers.

The increase in promotional trade spend was also driven in part by the timing of Easter which was in April 2025 compared to March 2024. Input cost inflation, as measured by raw material costs across our basket of inputs and in our factories has remained modest, mostly modest this year thus far in 2025, outside of some categories such as Black Pepper, garlic, olive oil, tomatoes, core vegetables and cans, which have been elevated.

We continue to closely monitor inflation throughout the trade and tariff negotiations. And as I mentioned earlier, increased tariffs cost us approximately $1.6 million in adjusted EBITDA during the quarter and a little bit more than $1 million of that in the Spices and Flavor Solutions business unit. While we haven't seen the full benefit of a more normal or favorable U.S. dollar to Mexican peso exchange rate flow into our P&L this year, we still expect to see some benefit in the back half of the year. However, currency remains a potential wildcard for our Green Giant business given the current macroeconomic environment and the political uncertainty regarding tariffs.

Selling, general and administrative expenses increased by $4.1 million or 9.4% to $47.2 million for the second quarter of 2025 from $43.1 million for the second quarter of 2024. The increase was composed of increases in consumer marketing expenses of $2.2 million and acquisition divestor related and nonrecurring expenses of $2.8 million, partially offset by decreases in warehousing expenses of $800,000 and selling expenses of $100,000. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 1.4 percentage points to 11.1% for the second quarter of 2025 as compared to 9.7% for the second quarter of 2024.

As I mentioned earlier, we generated $58 million in adjusted EBITDA or 13.7% of net sales in the second quarter of 2025 compared to $63.9 million or 14.4% of net sales in the second quarter of 2024. Net interest expense decreased by $2 million to $35.8 million for the second quarter of 2025 as compared to $37.8 million for the second quarter of 2024. The decrease in interest expense was primarily driven by a book gain on the extinguishment of debt during the second quarter of 2025 as a result of our repurchase of $20.7 million aggregate principal amount or 5.25% senior notes due 2027 in open market purchases and an average discount repurchase price of 89.98% of principal amount. Plus accrued and unpaid interest, net of the accelerated amortization of deferred debt financing costs.

Depreciation and amortization was $16.7 million in the second quarter of 2025, which is largely in line with the $17.3 million in the second quarter of last year. We had adjusted net income of $2.9 million or $0.04 per adjusted diluted share in the second quarter of 2025. In the second quarter of 2024, we had adjusted net income of $6.6 million or $0.08 per adjusted diluted share. Adjustments to our EBITDA and net income are described further in our earnings release.

Now moving on to our consolidated cash flow and balance sheet. Cash flow continues to be strong this year. We generated $17.8 million in net cash from operations during Q2 2025 versus $11.3 million in Q2 2024. On a year-to-date basis, we generated $70.6 million of net cash from operations during the first half of 2025 versus $46.4 million during the first half of 2024. We have also reduced our net debt to $1.957 billion at the end of the second quarter of 2025. Pro forma for the sale of Le Sueur, U.S. net was reduced to a little bit more than $1.9 billion at the end of Q2 2025.

And as a reminder, net debt was $1.994 billion at the end of fourth quarter 2024 and $2.022 billion at the end of second quarter 2024. As a reminder, approximately 35% of our long-term debt is tied to floating interest rates or SOFR. A 100 basis point reduction would be expected to reduce our interest expense by nearly $7 million annually.

As Casey mentioned earlier, we continue to make progress on our portfolio reshaping efforts. Our recent divestitures of the Don Pepino and Sclafani bands in May. And now the Le Sueur brand in the U.S. last week are continued examples of the strategy that we believe will make us a more focused and ultimately a stronger business while also helping us to reduce debt and eliminate heavy seasonal pack businesses from our portfolio.

We think that the new owners for both of these divested businesses will do well. They are great brands. but they are not in line with the focus that we have laid out for the B&G Foods of the future.

The Don Pepino and Sclafani brands contributed approximately $14 million in net sales over the trailing 12 months through May 2025 and approximately $9 million in net sales in June through December 2024. Although small, the brand is profitable, particularly in the back half of the year. The [indiscernible] brand in the U.S. contributed approximately $36 million in net sales over the trailing 12 months through June 2025 and approximately $19 million in net sales in August through December 2024. Like the Don Pepino and Sclafani brands, Lacour U.S. is also a profitable little brand that we believe will do well for its new owner.

As a result of these divestitures, we have revised our fiscal year 2025 guidance to remove their previously expected contribution for the remainder of the year. We now expect net sales of $1.83 billion to $1.88 billion, adjusted EBITDA of $273 million to $283 million and adjusted earnings per share of $0.50 to $0.60 for fiscal 2025. Our updated guidance continues to account for a modestly softer economic environment that has impacted consumer spending patterns.

It also reflects our expectation that our top line will continue to stabilize and that our input costs will remain relatively consistent outside of any surprises resulting from the ongoing tariff negotiations. In addition, our guidance incorporates our cost reduction plans, which we expect will produce approximately $10 million of cost savings in the second half of the year. Given the uncertainty in the political environment and the rapidly evolving negotiations regarding tariffs and retaliatory tariffs, our guidance does not reflect all of the potential impacts of the recently imposed and threatened tariffs in the U.S. and retaliatory actions taken or threatened by other countries in response or the potential for additional tariffs, trade barriers or retaliatory actions by the U.S. or other countries.

As a reminder, more than 90% of our net sales are to customers in the U.S. and the remainder are primarily to customers in Canada. Approximately 80% to 85% of our products ingredients and raw materials are sourced in the United States, Canada and Mexico. The majority of our non-North American source products, ingredients and raw materials, particularly within our Spices and Flavor Solutions business unit, originate in Asian countries, including Black Pepper, which is primarily sourced in Vietnam and garlic, which is primarily sourced in China.

Additionally, we expect for full year 2025, interest expense of $147.5 million to $152.5 million, including cash interest of $142.5 million to $147.5 million. Depreciation expense of $47.5 million to $52.5 million; amortization expense of $20 million to $22 million, an effective tax rate of 26% to 27% and CapEx of $30 million to $35 million. We are also committed to reducing our net debt and our net leverage ratio over the next 12 months. We expect to reduce our pro forma net leverage ratio by at least a full turn from just under 7x today to less than 6x by the end -- or by this time next year.

Through the successful execution of our divestiture strategy, stabilization of our adjusted EBITDA, our excess cash generation and continued improvements in working capital. Now I will return the call back over to Casey for further remarks.

Thank you, Bruce. In closing, B&G Foods continues to remain laser focused on a few critical priorities. Number one, improving the base business net sales trends of our core business to the long-term objective of plus 1%. Two, reshaping the portfolio for future growth, stability, higher margins and cash flows as well as structuring key platforms for future acquisition growth. And third, reducing leverage closer to 5x through divestitures and excess cash flow to facilitate strategic acquisitions.

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

[Operator Instructions] Our first question today comes from David Palmer from Evercore ISI.

Bruce, I think you mentioned that the core business was expected to be down 1% to 2%. I think is that your organic sales interpretation of what you put forward is the revenue for the second half so down 1% to 2% versus.

Yes, base business ex the divestitures, to be kind of midpoint of our guidance is down about 1% after that adding we call it $15 million to $20 million or pick $16 million as the benefit for the 53rd week, which will be in our fourth quarter.

What would be -- when we look at current trends, the multiyear versus -- it does look like the comparisons get that much easier versus what we've seen lately. In other words, you were looks like we're down 5-ish in the MULO data. And I know you have some improvement that you're hoping to get in frozen, maybe spices, I don't know. But help us get comfortable with that sort of guidance versus the type of trend you see now going forward?

Yes. So the low end of our guidance is like a down 2%, 3% and if you think about where our performance has been this year, we were down 10.5% first quarter, which is terrible. On a base business were down 4.2% in the second quarter. we had pretty good stabilization towards the tail end of the second quarter in July, starting right for the third quarter. So that's about where we expect to come out. .

I mean July and early August are more in the minus 2% range.

Got it. And just...

So we're seeing the improvement already happening in the early part of the third quarter. .

But Dave, I do agree that generally there is a correlation between the consumption data that we use Nielsen and our shipments, we expect to see that continue to get less unfavorably or better, however you want to view it. .

I mean we believe that at some point, we're going to lap the the negatives and the consumer behavior changes in our business, plus we know we can see on some of our business, we have pretty strong plans. So we've just got to see it stabilize, and we're kind of projecting some improvement in the back half trend.

Yes. And I mean, just for what it's worth in the IRI, the sircona-MULO+ data showing minus 5% in the last 4 weeks and the last 12 weeks ending that we see, but maybe that you're seeing more up-to-date data than we are.

We also have a custom database. We would be a little better than that.

Our next question comes from Scott Marks from Jefferies. .

First thing I want to ask about, you mentioned some targeted pricing actions and other kind of tariff mitigation efforts. Just wondering if you can kind of give us a sense of how much of those tariff impacts you think you'll be able to mitigate through some of those actions and how retailers have been responding to some of these price increases?

Yes. So we have not disclosed the dollar amounts. The vast majority of our area of exposure on tariffs is our spices and flavor solutions. So you think particularly garlic and black pepper, anybody who's buying black pepper and garlic in the world are buying them from China and Vietnam. So B&G and all of our competitors and people will take price against those. -- there may be some risk on an interim, how much tariffs flip through your P&L before you got the benefit of that. But you've also seen other people in the space talk about taking price. The other primary area of concern for us is kind of steel cans. And like everybody else, our expectation is we're going to have to take price.

I think in this fiscal year, we are implementing a negotiating pricing actions to recover the tariffs. There will be some lag between when we start paying the tariff costs and our input costs and when the pricing becomes effective just because of retailer lead times on price changes, but we expect to price for most of the tariff impact and in some cases, will offset a little bit with productivity and cost savings efforts. .

Okay. Understood. And then maybe, I guess, as we think about I guess, the guide down for the year and then obviously implied H2. Maybe how much of the guide down was driven by some of those divestitures versus

Yes, it's primarily the divestitures.

Almost all the divestitures.

Okay. So then the outlook for H2 is still kind of in line with how you were thinking about it, I guess? -- after the Q1 results.

Yes. .

[Operator Instructions SP1 Our next question comes from William Reuter from Bank of America.

I've got a couple -- so the first, I don't think I explicitly heard any EBITDA given I heard the $36 million of sales for Le Sueur. Did you provide an EBITDA number that I didn't hear .

We did not. .

Okay. And is that -- I guess that something you're not going to be providing?

No. So sale to a private company. Typically, we don't end up giving that out.

Okay. And did I hear correctly that your net debt went from $1.936 to a little over 1.9%. So I guess the proceeds there are somewhere in the $30-ish or $35 million range. Is that right?

No. No. I think you maybe misheard that. Actually, if you go into our Q, there's a subsequent event where it walks through the net proceeds it's about $59 million with the benefit of a small working capital adjustment in our favor.

Okay. I guess I hadn't seen the [indiscernible] yet. And then Okay. Cool. And then just lastly for me. In terms of your availability today or at the end of the quarter on your ABL, including any sort of financial covenants that may exist for maintenance -- can you share with us what that number would be?

So we don't have an ABL. We've got a cash flow revolver and the primary covenant on that is a maintenance leverage test, which is now 7.5x.

Yes. Sorry, that's the second quarter and really, I've used the wrong term. But yes, no, I guess I was wondering if you include that interest coverage as well as the leverage covenant the availability would be? .

Yes. It's just math. I don't have it in front of me, but you should just be able to run where we finished the quarter, which is probably just under probably equal sort of 68 change pro forma for Le Sueur. So you got basically 0.7 turns of leverage of Cushing.

Our next question comes from Robert Moscow from TD Cowen.. .

I might have missed it, but could you have any comments about the flavor solutions part of your business, spice and seasonings, I guess is it in line with your expectations or a little light. Like I would have thought that cooking at home would be a real tailwind for these brands. And are you seeing that in the business? Or are you seeing some elasticity there as well?

Our spices & seasonings business, with spices flavor solutions is what we call it. I would say that the results are not quite in line with our expectations. We would expect to be seeing that business stable to up slightly. So we're not quite seeing the the tailwind that we would like to see. There's a lot of pieces to that business. There's some private label members Mark. There's some food service business. So there's different different performances and then there's the branded retail business. But I think we should be seeing that business slightly positive in the back half and that would be more in line with what we'd expect because we are seeing the category getting some benefit from it's tied to the perimeter and the growth of proteins, fresh proteins in the store.

We do -- that is where we predominantly have tariff impact. So then that's where we'll be doing some pricing kind of targeted pricing to recover. So I would expect to see some pricing benefit as well.

Okay. Are there any changes you can make to your sourcing to try to either find less expensive raw materials to mitigate the spice and seasonings tariffs or different suppliers? Or is that possible?

I mean, yes, we are doing that. So we are looking at alternative sourcing on some of the spaces. But honestly, most of the spices come from countries that have tariffs on them already. It doesn't really matter where you move them. So there is some work that we've done to mitigate that. We've tried to source -- China is probably our most vulnerable position with garlic and onion and China supplies 80% of the world's garlic. There's not a lot of other options. California doesn't even come close to meeting the needs. And there's really no other available sourcing in the United States. But we have found like some other small sources of onion and garlic that we've been able to move outside of China 30% tariffs, which is kind of our highest right now. But I'm not sure that we can really get out of most of these tariffs. We'll need to price for them.

There will be some mitigating actions that we could do, but there will also -- and there will also probably be some offsetting productivity -- but at the end of the day, spices are growing in the climates where they can be grown. They can't be grown in the United States. They're really unavailable natural resources in the United States. And so I'm hoping over time that that realization will help some of the trade negotiations and that just like coffee and cocoa can't be sourced in the United States, Spices at the same footprint. So we'll see over time -- but right now, we're just counting on what the prevailing tariffs are and building that into our models.

Our next question comes from Hale Holden from Barclays.

I got 2 really quick ones. Can you remind us the Le Sueur Canada brand? Is that smaller or larger than the U.S. brand?

It's smaller.

Smaller. And following on the spices comment. Would the expectation be you can catch up the pricing in the fourth quarter to get back to sort of historical margins? Or do you think it will take you in '26.

I think it will take us in '26 to get back to fully recover the impact of tariffs, but I think we will partially cover them in the Q4 time frame. It's just a lead time of retailer pricing actions. -- that we'll have to manage. And some of our -- and by the way, some of our food service and drive label contracts also have only specific windows where we can price. So we'll have to kind of work through those time lines. .

And then last question I had was in the disclosure in the Q around Le Sueur and the expectation for a potential write-down in the third quarter seems to imply that we could get more asset sale announcements by the end of the third quarter. Is that the right interpretation? .

Yes, at some point this year. And look, we made a point of talking to a strategic review last year -- and that, in our mind, was always expectation probably happened in 2025. Le Sueur is the first piece, right? And we're in conversations with some logical strategic buyers for each of the pieces, and we're moving along, but M&A takes time, and it's not always easy to predict the timing, but we're sort of moving forward of these, if that's your question. .

Our next question comes from Karru Martinson from Jefferies.

Just from a mathematical housekeeping. So if Green Giant was -- or frozen vegetables was $396 million of sales last year. take out the Le Sueur -- is what we're looking at for potential divestitures about $360 million kind of remaining of sales.

Give or take. Give or take. And how much of that is just in Canada, you said Le Sueur is smaller. The Green Giant in Canada, I would assume is smaller as well.

No, no. Green Giant, Green Giant is the #1 brand in Canada. So it's kind of disproportionately larger than the U.S. business.

On the -- so it's about $100-plus million of sales in Canada. .

And in Canada, by the way, includes both frozen and shelf stable. So canned vegetable, cans are still up there as it's frozen the frozen bit.It's the #1 brand in both those categories. In the U.S., we are just U.S. frozen under Green Giant, and we're the #2 brand. .

Okay. And then when you're looking at divestitures, you mentioned in conversations. Is the objective to try to do this all at once? Or will it kind of continue to be these smaller sales as we move assets off the balance sheet?

Yes, it's unlikely that it's all going to be at once. The Le Sueur transaction signed and closed, that was done on Friday cash in the bank. .

[Operator Instructions] Our next question comes from Carla Casella from JPMorgan.

On -- you mentioned trade spend and timing with Easter. In general, are you seeing a dramatic change in trade spend if you look to planning for a third quarter and back half? And or any categories, particularly either promotional or asking for more trade spend?

I think there's -- we will probably see an increase in trade spend in the back half of the year, but not -- nowhere near the levels of the first half increase. We've seen promotional spend become a little bit more competitive and merchandising become a little bit more competitive out there, and we've done what we need to, to stay competitive. Some of that trade spend is also reflecting lower prices like on Crisco and some other things where we have year-over-year declines in the commodity, and we priced to that, but I would expect that we have a much smaller increase in trade spend year-over-year in the back half because we had started to kind of kick up our promotion efforts back to kind of pre-COVID levels last fall. And so we'll be lapping that this year. So I think you'll see it if we were up, I don't remember, like 130, 140 basis points in the first half, we won't be up anywhere near that level in the second half.

Okay. Great. And then the inventory related to Laser that comes out in the third quarter, is that $59 million?

No. So $59 million was effectively the purchase price which included -- we haven't disclosed it, but included a favorable working capital adjustment. So part of -- we've talked about this over time. Like these are 2 nice little businesses both Bompapino and Le Sueur, they're both profitable. They are both pack plan businesses where you're buying a year's worth of inventory and then you're selling it through. And typically, in an M&A transaction, you're doing things on like an average inventory basis that has movement this year. Dompopina we sold before the pack, so we sold after the pack. And so we got a little bit of a benefit. But we got a real price for both transactions reasonable multiples and they're both delevering on a ratio basis.

Okay. That's great. And then just given the changes in the business and the asset sales, how has your mix of foodservice overall changed dramatically? Food service versus retail?

Only in the sense that Lear was all branded retail business.

Relatively small. The portfolio .

And then Don Pepino is probably a split, but it's like $15 million of sales. So it probably doesn't really move the needle. But yes, we'd be lower food service today than slightly lower end, but not -- certainly not anything that might change our competitiveness in that category.

Very little change overall.

Okay. And then your commentary about the asset sale when it was announced in the proceeds. Can you just talk about the flexibility you have in terms of reinvesting the proceeds? If it's a working capital adjustment? Is it still considered proceeds under the definition.

Yes, it's all going to go to debt reduction. .

I was just going to say, ladies and gentlemen, that does conclude today's question-and-answer session as well as our conference call. We thank you for attending today's presentation. You may now disconnect your lines.