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B&G Foods (BGS) Q4 2025 Earnings Call Transcript

DATE

Tuesday, March 3, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Casey Keller
• Executive Vice President & Chief Financial Officer — Bruce C. Wacha

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RISKS

• Tariff costs negatively affected adjusted EBITDA and gross profit by $4.4 million in the quarter and $9.5 million for 2025, with delays in full pricing recovery in some customer segments.
• Noncash impairment charges of $34.8 million for Green Giant intangibles, $26 million for Victoria and McCann's brands, and $28.5 million for assets held for sale contributed to quarterly and annual net losses.
• Input costs for soybean oil have started to increase, and "any kind of conflict in the Middle East or anything" could exacerbate volatility in raw materials.
• Executive Vice President & Chief Financial Officer Bruce C. Wacha said, "guidance reflects what we know today and, for example, does not factor in significant changes in inflation, tariff policies, or the potential impact the escalation of the conflicts in Eastern Europe," indicating exposure to macro and geopolitical risks.

TAKEAWAYS

• Net sales -- $539.6 million, a decrease of 2.2%, primarily due to divestitures totaling $16.4 million in the quarter.
• Base business net sales -- Increased by $4.4 million, or 0.8%, to $539.6 million, driven by higher pricing and product mix, with volume gains from a 53rd week.
• Adjusted EBITDA -- $84.7 million, representing 15.7% of net sales; negatively impacted by $4.4 million in tariff costs and $1 million lost from divested brands.
• Net loss -- $15.2 million, or $0.19 per diluted share, mainly due to pretax noncash impairment charges on intangible assets.
• Adjusted net income -- $22.8 million, or $0.28 per diluted share.
• Gross profit margin -- 22.7%; adjusted gross profit margin of 23%, up from 21.5% and 22.2% in the prior year’s fourth quarter, respectively.
• Cost of goods sold as % of net sales -- Improved by 1.2 percentage points, attributed to productivity initiatives.
• Spices and Flavor Solutions net sales -- Increased 4.2% to $106.1 million, with higher volumes, pricing, and product mix.
• Spices and Flavor Solutions segment adjusted EBITDA -- Decreased by $2.9 million, or 11.1%, due to tariff impact and higher raw material costs.
• Frozen & Vegetables segment adjusted EBITDA -- Increased by $2.8 million, supported by lower crop costs and productivity gains.
• Tariff costs -- $4.4 million in the quarter and $9.5 million for 2025, with about half the quarterly impact in the Spices and Flavor Solutions unit.
• Net sales and adjusted EBITDA guidance (2026) -- $1.655 billion–$1.695 billion for net sales and $265 million–$275 million for adjusted EBITDA, based only on closed transactions.
• Base business growth guidance (2026) -- Expected improvement of 0.4%, with year-to-date base business net sales through February up approximately 4%.
• Co-pack sales to Seneca Foods -- Projected to add about $80 million in revenue for 2026 after the Green Giant U.S. frozen divestiture; annualized run-rate guidance of $100 million.
• Net debt at year-end -- $1.912 billion, down from $1.994 billion at the prior year-end; pro forma debt expected to fall below 6.25x covenant-adjusted EBITDA after pending transactions.
• Cash provided by operating activities -- $95.4 million in the quarter, up from $80.3 million, despite an $11.5 million deposit for the pending College Inn and Kitchen Basics acquisition.
• Green Giant U.S. frozen sale proceeds -- $63.2 million in cash received, with proceeds used to fund the College Inn and Kitchen Basics acquisition.
• Divestitures -- U.S. Green Giant frozen business divested; Canadian Green Giant business pending regulatory approval; Don Pepino, Sclafani, and Le Sueur U.S. brands sold in 2025.
• Pending acquisition -- College Inn and Kitchen Basics broth businesses from Del Monte Foods scheduled to close by March, expected to bring "incremental sales and adjusted EBITDA at healthy margins."

SUMMARY

B&G Foods (NYSE:BGS) completed the sale of its Green Giant U.S. frozen business, receiving $63.2 million and entering a co-pack agreement with Seneca Foods projected to deliver $80 million in 2026 revenue. Adjusted EBITDA guidance for 2026 is $265 million–$275 million, with net sales expected between $1.655 billion and $1.695 billion, excluding the pending Green Giant Canada divestiture and College Inn and Kitchen Basics acquisition. Announced portfolio changes are designed to improve growth, cash flows, and reduce leverage, with pro forma net debt targeted below 6.25x covenant-adjusted EBITDA after transaction closings. Base business net sales trends are showing early growth in 2026, up 4% year-to-date through February, building confidence in management's plan to achieve 0.4% growth for the year. Pending M&A activity, supply chain cost trends, and tariff exposures could influence guidance once transactions close.

• President & Chief Executive Officer Casey Keller stated the combined divestitures and College Inn acquisition "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."
• In the quarter, the Meals business segment grew net sales by 1.1% and segment adjusted EBITDA by $3.8 million, primarily due to improved pricing and cost efficiencies.
• Selling, general, and administrative expenses in the quarter increased by $3.7 million, or 7.3%, mainly from acquisition/divestiture and administrative costs.
• Bruce C. Wacha projected that "we are going to reduce our leverage by about 50 basis points" as a direct result of the latest portfolio reshaping transactions.

INDUSTRY GLOSSARY

• Co-pack agreement: A contract in which a manufacturer produces products for a third party under agreed commercial terms, often maintaining ownership of facilities and supply access.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding certain items such as noncash charges and restructuring costs, providing a measure of core operational profitability.
• Covenant adjusted EBITDA: Adjusted EBITDA figure used for credit agreement compliance, which may include further add-backs or pro forma adjustments for acquisitions or divestitures.
• Base business net sales: Net sales from ongoing operations, excluding the impact of divested or acquired businesses and one-time items like an extra fiscal week.

Full Conference Call Transcript

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 will now turn the call over to Casey.

Casey Keller: Good afternoon. Thank you, AJ. 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 in the reshaping and restructuring of the B&G Foods, Inc. 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, Inc., 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 2026. Finally, we also recently announced the acquisition of the College Inn and Kitchen Basics broth and stock businesses from Del Monte Foods. That transaction is expected to close by 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, broths 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 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 and the 53rd week, were down approximately 2.4%, compared to down 2.7% in the third quarter. Fourth quarter adjusted EBITDA was $84,700,000, 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 Don Pepino and Sclafani businesses in May and the Le Sueur U.S. canned peas brand in August removed approximately $16,400,000 of net sales and $1,000,000 in adjusted EBITDA from Q4. The Spices and Flavor Solutions business unit grew net sales 4.2% in Q4, 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, which are now being recovered through pricing. Tariff costs were approximately $4,400,000 in Q4 and $9,500,000 throughout fiscal year 2025. 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, up $2,800,000, as new crop pack costs came in favorable to last year's wheat 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 2026 outlook. Our current outlook for fiscal year 2026 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 College Inn and Kitchen Basics acquisition. But we are creating a stronger, focused, more profitable B&G Foods, Inc. Our current guidance range for fiscal year 2026 is $1,655,000,000 to $1,695,000,000 in net sales and $265,000,000 to $275,000,000 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 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 $203,000,000 in net sales year over year. That will be partially offset by approximately $80,000,000 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 2025, representing approximately $38,400,000 in net sales and $5,400,000 in adjusted EBITDA.

Further, the pending divestiture of Green Giant Canada and the pending acquisition of the College Inn and Kitchen Basics broth business have not been reflected in our guidance. We will update fiscal year 2026 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 2026 is poised to be a transformational year with a more focused, higher margin, and stable portfolio. Once divestitures and close-closing transaction services have been completed, we expect continued improvement in base business trends toward 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 right-size 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.

Bruce C. Wacha: 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 $539,600,000 in net sales, a net loss of $15,200,000, or $0.19 per diluted share, adjusted net income of $22,800,000, or $0.28 per adjusted diluted share, $84,700,000 in adjusted EBITDA, and adjusted EBITDA as a percentage of net sales of 15.7%.

For fiscal 2025, we generated $1,829,000,000 in net sales, a net loss of $43,300,000, or $0.54 per diluted share, adjusted net income of $41,300,000, or $0.51 per adjusted diluted share, $272,200,000 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 $34,800,000 related to intangible trademark and customer relationship assets for the Green Giant brand in the fourth quarter and $26,000,000 related to indefinite-life intangible trade assets for the Victoria and McCann's brands during 2025.

In addition, the company recorded a pretax noncash impairment charge for assets held for sale for the pending Green Giant Canada divestiture of $27,800,000 in 2025 and an additional $700,000 in the fourth quarter. Further details regarding the impairments are included in our earnings release and 10-Ks. 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 Sclafani brands during the second quarter, the divestiture of the 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 2026. 2026 M&A activity includes our previously announced entry into an agreement in January to acquire the College Inn 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 two other bankruptcy sales unrelated to B&G Foods, Inc. or the broth and stock business by Del Monte Foods, is expected to close before March. We are very excited to add these two well-known broth and 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 to Seneca Foods. We received approximately $63,200,000 in proceeds from the Green Giant U.S. frozen business, which we will use together with the proceeds from the previously completed divestitures to fund the College Inn 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 College Inn and Kitchen Basics business. The Green Giant U.S. frozen sale included our frozen vegetable manufacturing operations in Yuma, Arizona, but it did not include our frozen vegetable manufacturing operations in Irapuato, 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 Green Giant frozen products for sale by B&G Foods, Inc. to Seneca Foods.

We expect net sales under the co-pack agreement of approximately $100,000,000 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 one 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 Giant 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 owned 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 College Inn and Kitchen Basics have not yet closed. Additionally, the Green Giant U.S. frozen brand closed yesterday. As a result, these three transactions did not impact our fourth quarter or our fiscal 2025 results. Net sales for the fourth quarter of 2025 decreased by $12,000,000, or 2.2%, to $539,600,000 from $551,600,000 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 $16,400,000 in the fourth quarter of 2024. Base business net sales for the fourth quarter of 2025 increased by $4,400,000, or 0.8%, to $539,600,000, as compared to $535,200,000 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 $2,800,000, or 0.5%, and an increase in volume of $1,900,000, or 0.4% of base business net sales, which was offset in part by the negative impact of foreign currency of $300,000. Base business volumes were positively impacted by the 53rd week in 2025.

Gross profit was $122,700,000 for the fourth quarter of 2025, or 22.7% of net sales, and adjusted gross profit was $123,900,000, or 23% of net sales. Gross profit was $118,700,000 for the fourth quarter of 2024, or 21.5% of net sales, and adjusted gross profit was $122,300,000, 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 our manufacturing network, we had 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 $4,400,000 during the fourth quarter of 2025 and $9,500,000 for the year. Approximately half of the tariffs, or $2,300,000 during the fourth quarter and $5,400,000 for the year, impacted our Spices and Flavor Solutions business unit, and the remainder spread across the other BUs.

Selling, general, and administrative expenses increased by $3,700,000, or 7.3%, to $54,000,000 for the fourth quarter of 2025 from $50,300,000 for the fourth quarter of 2024. The increase was comprised of increases in general and administrative expenses of $2,300,000, acquisition/divestiture-related and nonrecurring expenses of $1,200,000, and selling expenses of $1,100,000, partially offset by decreases in consumer marketing expenses of $900,000. 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 $84,700,000 in adjusted EBITDA, or 15.7% of net sales, for the fourth quarter of 2025 compared to $86,100,000, or 15.6%, in the fourth quarter of 2024. The Le Sueur U.S., Don Pepino, and Sclafani brands contributed approximately $1,000,000 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 $4,400,000. Net interest expense decreased by $800,000, or 2.1%, to $38,800,000 for the fourth quarter of 2025 from $39,600,000 for the fourth quarter of 2024. Depreciation and amortization was $16,100,000 for the fourth quarter of 2025, which is largely in line with the $16,900,000 for the fourth quarter of 2024.

We had adjusted net income of $22,800,000, or $0.28 per diluted share, in the fourth quarter of 2025. In the fourth quarter of 2024, we had adjusted net income of $24,600,000, or $0.31 per adjusted diluted share. Adjustments to our EBITDA and 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 $6,500,000, or 3%, in the fourth quarter of 2025 to $210,200,000 from $216,700,000 in the fourth quarter of 2024.

The decrease was primarily due to the divestiture of the Don Pepino and Sclafani brands, which generated $4,000,000 in the fourth quarter of 2024, and by the impact of lower Crisco pricing. Specialty segment adjusted EBITDA decreased by $4,200,000, 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 material and manufacturing expenses and the impact of tariffs. Net sales for Meals increased by $1,300,000, or 1.1%, in the fourth quarter of 2025 to $124,200,000 from $122,900,000 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 $3,800,000, primarily driven by the impact of higher net pricing and improved product mix and 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 $1,300,000, or 1.4%. The Le Sueur U.S. brand generated $12,400,000 in the fourth quarter of 2024.

Frozen and Vegetables segment adjusted EBITDA increased by $2,800,000 in the fourth quarter of 2025 compared to the fourth quarter of 2024, primarily driven by favorable raw material, manufacturing, and foreign currency comparisons. The impact of tariffs on the Frozen and Vegetables business unit were marginal in the fourth quarter. Net sales for Spices and Flavor Solutions increased $4,300,000, or 4.2%, in the fourth quarter of 2025 to $106,100,000 from $101,800,000 in the fourth quarter of 2024. The increase was primarily due to higher volumes across the Spices and Flavor Solutions business unit, coupled with higher net pricing and product mix.

Spices and Flavor Solutions segment adjusted EBITDA decreased by $2,900,000, 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 $95,400,000 in the fourth quarter of 2025 compared to $80,300,000 in the fourth quarter of 2024. Further, net cash provided by operating activities in the fourth quarter of and fiscal year 2025 was negatively impacted by our $11,500,000 deposit paid in connection with the pending College Inn and Kitchen Basics acquisition. Our balance sheet has also improved. We reduced our net debt to $1,912,000,000 at the end of 2025, compared to $1,994,000,000 at the end of 2024 and $2,023,000,000 at the end of fourth quarter 2023. We also reduced our net debt to pro forma covenant adjusted EBITDA to 6.57x at the end of 2025.

Pro forma for the divestiture of the Green Giant U.S. frozen business and if we include the $11,500,000 cash deposit for the acquisition of the College Inn and Kitchen Basics brands, our net debt would have been approximately $1,835,000,000 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 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 the escalation of the conflicts 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 for 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 College Inn 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 loved the benefit of the 53rd week in our fiscal 2025 results, we will lap that benefit of approximately $18,000,000 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 $1,655,000,000 to $1,695,000,000, adjusted EBITDA in the range of $265,000,000 to $275,000,000, 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.

Casey Keller: Thank you, Bruce. In closing, B&G Foods, Inc. 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 am excited about the future of our portfolio and B&G Foods, Inc. 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: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star then 2. And at this time, we will pause momentarily to assemble our roster. And the first question will come from Scott Michael Marks with Jefferies. Please go ahead.

Scott Michael Marks: Hey, good afternoon, all. Thanks very much for taking our questions. You know, the first thing I wanted to touch upon, if I heard you correctly, kind of in the prerecorded remarks, I think I heard that base business net sales were down 2.4% excluding acquisitions and 53rd week, which I believe is roughly in line with what you posted in the prior quarter. I think we 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, you know, the cadence of sales quarter over quarter and how you are thinking about that heading into this year?

Casey Keller: I think we are expecting that our base business net sales will continue to improve. I mean, it was a slight or a modest improvement in Q4 versus Q3. So we went in Q3 from negative 2.7% to negative 2.4% in Q4. You know, we have seen progress on some of our brands and businesses. You know, Spices and Seasonings, in particular, has been pretty resilient and posting some good numbers. We have had growth in our Canadian business. We have had growth in our foodservice business. We have had growth in, you know, the kind of concentrated private label business that we have.

So, you know, part of what we are seeing is a gradual improvement in our U.S. food retail consumption, and it is 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 am expecting it to get a little bit stronger in 2026. You know, long term, our aspiration is to get to 1% growth. And I think we are moving towards that, but not there yet.

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

Scott Michael Marks: Appreciate the color there. Thank you for that. Next question would just be, you know, kind of along the same vein. I think we have heard from some of your packaged food peers about the need to kind of reinvest a little bit to support some of the brands at the shelf with the consumer. Just wondering if you can share maybe how you are thinking about brand support in 2026 relative to what you have been doing to this point?

Casey Keller: I think we will probably spend a very similar amount in 2026 that we did in 2025. Obviously, we will have a different portfolio, so we will not have the Green Giant business anymore. We have in our plans focused the spending more against some of our core big brands, so Ortega, Crisco, etcetera. So I think what you are going to see from us is probably an increase in spending on a few brands, but net overall, we are probably going to have it be flat or maybe slightly up in our marketing spend. And it is really brand by brand that we are looking at it. Where do we need to be more competitive?

Where do we need 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 are looking at it that way. But, you know, overall, I think we recognize in some of our categories, it is a more competitive environment, and we are going to have to up our game, and we are focusing the resources on places where we need to do.

Scott Michael Marks: 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 have seen versus how much of it have you seen sustained through the quarter?

Casey Keller: We were, you know, our sales were up in both January and February. I think there are really two factors. One is the weather. So, you know, a couple of winter storms, you know, colder temperatures throughout January, late January and February. You know, our portfolio is all around baking staples and, you know, Crisco, Grandma's, Clabber Girl, dry soups, you know, Bear Creek. What we have seen is that weather is causing consumption growth or purchasing growth in those baking staples businesses where people are baking more at home during the colder weather. So that is 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, you know, in January, 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 are also lapping that as well. So that is what is driving the 4%, but, obviously, you know, 4% on our core business trends gives me a lot of confidence that we are heading towards that base business number of about 0.4% for fiscal year 2026. We are off to a fast start with two months.

Scott Michael Marks: Appreciate the color. I will pass it on. Thank you.

Operator: The next question will come from Robert Bain Moskow with TD Securities. Please go ahead.

Victor Ma: Hi. This is Victor Ma on for Rob, and thank you for the question. So I just wanted to ask about the balance sheet. Where should we expect leverage to end up after you complete the Green Giant Canada sale? And then if you can give some color about where that kind of shakes out after you close College Inn. Yeah, those are the big drivers towards the approaching 6x net leverage by mid-summer that I referenced earlier.

Bruce C. Wacha: We are on our way to that 4.5x to 5.0x long-term target, but we still have some more work to do. But as a reminder, with the Green Giant transactions, U.S. and Canada, we are selling businesses that do not make any EBITDA for proceeds. We are effectively taking similar proceeds, turning around, and funding the acquisition of the College Inn and Kitchen Basics business that generates pretty nice EBITDA, as we described in the press release when we announced those. So we are 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 standpoint. Yeah.

I mean, the net of all those acquisitions, I mean those divestitures, the Green Giant divestitures both in Canada and U.S. frozen, and the College Inn and Kitchen Basics acquisition, we are going to reduce our leverage by about 50 basis points. That is what we are projecting.

Operator: It seems that our questioner has disconnected. We are going to move on to our next question, and that will be from William Michael Reuter with Bank of America. Please go ahead.

William Michael Reuter: Good afternoon. I want to make sure I understand the business that is going to be remaining as part of the Green Giant U.S. transaction. I thought that Casey said there was going to be $80,000,000 of sales remaining, but then, Bruce, I thought you said there would be $100,000,000 remaining. I guess, first, can you clarify that difference?

Bruce C. Wacha: Yeah. So the difference is Casey is talking about effectively incremental in 2026 as we think about that, and that is the $80,000,000 or so. The $100,000,000 is a run-rate annual basis, just the difference in timing of, you know, 10 months versus a full 12 months ongoing.

William Michael Reuter: Got it. And is it your expectation that you will continue to, you know, 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?

Casey Keller: So with this manufacturing facility, TBD. We entered into a multiyear relationship with them as a co-packer. We have known them for a long time. We think we have got a great relationship with them, they have 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 is also possible that we monetize them at some point in the future if it makes more sense for somebody else.

William Michael Reuter: Got it. And I guess my last question is around the same topic. I feel like, you know, the Green Giant U.S. business has been one 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 it is put in place could result in losses?

Bruce C. Wacha: Yeah. No. We are basically managing the fee on the business. It is a cost-plus. Yeah. So we will 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 are in this space. This is what they do. They are the right owners. Unfortunately for us, it just was not the right business for us.

William Michael Reuter: Great. Alright. I will pass to others. Thank you.

Operator: The next question will come from Hale Holden with Barclays. Please go ahead.

Hale Holden: Hey, good afternoon. Just one follow-up on Bill’s. Is your expectation on the Mexico plant to just supply Seneca, or would you go out and now try to co-pack for other people there?

Casey Keller: No. Our expectation is to build that business and have other customers as well. We think there is a real value creation opportunity here for us.

Hale Holden: Got it. And then you, in proportionate, previously sort of implied that maybe the dividend might be readdressed or thought about once all the transactions are completed. Is that still the timeline to think about, so mid-June, or would it be sooner?

Bruce C. Wacha: Yeah. Yeah. I mean, look, our board approves or not a dividend every quarter. As you said, we have not completed all of the transactions, so I guess stay tuned.

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

Casey Keller: Yeah. So are you talking about, like, pricing around tariffs?

Hale Holden: Pricing around tariffs to recover the EBITDA loss in the fourth quarter.

Casey Keller: Yep. Yeah. We should be, 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 did not go into effect really until kind 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 in November and December, and so we are just now kind of reading actual elasticities, but we built in some expected elasticity with those pricing. But it is pretty small. I mean, the increases on Spices and Seasonings SKUs were not really much more than low single to mid-single digits. So you will see some impact, but it will not be that big. And we have already kind of factored that into our projections.

Hale Holden: Thank you, Casey. I appreciate it.

Operator: Your next question will come from Karru Martinson with Jefferies. Please go ahead.

Karru Martinson: I am doing alright. Just on the broth business, I was kind of at $18.2 million of EBITDA. Is there a seasonality to that EBITDA contribution as it comes into your P&L?

Casey Keller: Probably skewed, like a lot of the stuff we have, towards that winter for different reasons. But soup season, I mean, it is solid throughout the year, but probably, you know, the bulk of the sales are in the winter months. Q4, Q1. Yeah. You know, 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 will provide some color and guidance on the flow of the business.

Karru Martinson: 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 a thought that you keep the pricing that you have and see what happens down the road with all the other moving parts?

Casey Keller: I mean, we certainly have to see what happens with the tariffs before we do anything. But right now, we are largely maintaining the pricing on things that could potentially change. Spices, you know, it is fairly well known because those have, you know, sort of an exclusion around unavailable natural resources. So, you know, we are managing those pretty carefully. But my expectation, to be honest, 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.

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

Bruce C. Wacha: I would assume we have more debt paydown and some refinancing between now and before maturity, certainly. You know, thank you very much. Appreciate it.

Operator: Yep. Again, if you have a question, please press star then 1. Our next question will come from Eli Lapp with BMO Capital. Please go ahead.

Eli Lapp: Thanks. I am just trying to reconcile because I think I may have missed your number. So I think you said that pro forma, you expect debt to be $1,840,000,000. Is that correct?

Bruce C. Wacha: I think I said $1,835,000,000, but—

Operator: Okay. So $1,835,000,000.

Eli Lapp: Okay. No problem. And then the leverage would be 6.3x. So that gets—that translates into, let us say, around $290,000,000 of pro forma EBITDA. Is that correct? So after the sales and the acquisition, that is the new nominal?

Bruce C. Wacha: So just a couple things. I was using round numbers. I said 6.25x. And the one piece that you are missing: within our covenant adjusted EBITDA is our EBITDA. It is also pro forma for acquisitions and divestitures, as well as noncash compensation.

Eli Lapp: And so there are a couple moving pieces between—

Bruce C. Wacha: If you think about the $272,000,000–$273,000,000 for 2025 and the $290,000,000 that your algebra is suggesting, there are a couple things to get there. But we used it off of a trailing number.

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

Bruce C. Wacha: Well, you are getting to the right number. I am not trying to be difficult. We have a public adjusted EBITDA, right? And so the difference is various adjustments for some of the divestitures that we made last year. On Green Giant U.S. frozen, it is neutral to EBITDA. And we are 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 are adjustments. You see it in our numbers. They are pretty consistent with what they normally are. We add back noncash comp, as do most companies when thinking about leverage calculations.

Operator: Okay. Okay. Thank you. Yep. Your next question will come from William Michael Reuter with Bank of America. Please go ahead.

Casey Keller: Bill, welcome back.

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

Bruce C. Wacha: I think we have got a lot of the same challenges that the industry has, 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 years, we are eliminating things like Green Giant that have been a drag in our business. Do not get me wrong, but, you know, we are doing our best. I mean, the way I would answer it is just, you know, look at our portfolio. You know, 65% 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 are not really measured, and that is where we are seeing a lot of growth. And, you know, if I just kind of top-line that for you, we are seeing the same challenges in the Nielsen grocery world, food world, that I think everybody else is seeing. We are getting better in some of our businesses, and we are making improvements. But it is still pretty challenging. So I do not want to kid you that it is not challenging.

The strength in our business has been, you know, 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 is a fairly significant chunk, heavily weighted towards spices and seasonings. But, you know, we have other businesses in that. Industrial business behind baking powder, spices. And then we have Canada, which although it does not make money, has been growing. The Green Giant frozen vegetable business and canned veg business in Canada has been growing.

So that is kind of the math of why you are maybe seeing some better trends in our total portfolio because of channel development than maybe you hear from other purely branded, food-focused manufacturers, if that helps.

William Michael Reuter: Yep. That does help. And then I guess, the outlook for input costs in fiscal year 2026, what type of inflation are you seeing? Are there any areas that concern you?

Casey Keller: It is relatively modest across the portfolio. So there will be inflation. You know, we will look to cover it as needed, whether it is a little bit of price and some productivity initiatives. But so far, you know, there is nothing like 2022–2023 where we had double-digit inflation. I would say the only area we are kind of watching closely is soybean oil. We have seen a little bit of increase in soybean oil. You know, we tend to try and recover that. But it has been increasing over the last couple of months. And, you know, I am concerned about soybean oil in the disruption of any kind of conflict in the Middle East or anything.

Last time, you know, we had the start of the conflict in Ukraine in 2022, we saw soybean oil shoot up. So I am not overly concerned yet, but that is one we are really watching because we have seen a little bit of creep up.

William Michael Reuter: Got it. Alright. Very helpful. Thank you. That is all.

Bruce C. Wacha: Yep. Cool.

Operator: Thanks. 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.

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