B&G Foods Earnings Call: Mixed Outlook with Strategic Moves

B&G Foods ((BGS)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for B&G Foods presented a mixed outlook, reflecting both positive strides and ongoing challenges. While the company showed improvements in adjusted EBITDA and benefited from cost-saving initiatives, it faced hurdles with declining net sales and the impact of divestitures. The ongoing tariff issues also posed a significant challenge. However, the progress in divestiture strategy and growth in the Spices & Seasonings segment are positive signs.

Improved Adjusted EBITDA Performance

The third quarter demonstrated significant improvement in adjusted EBITDA delivery, with sequential improvement in base business net sales trends. Adjusted EBITDA was reported at $70.4 million, which remained flat compared to last year on a reported basis but showed an increase year-over-year when excluding the impact of divestitures.

Cost Savings Initiatives

B&G Foods benefited from a $10 million cost savings initiative, which resulted in a reduction of SG&A overhead by $2 million from the previous year. Additionally, the cost of goods sold improved by 40 basis points compared to last year, showcasing the company’s commitment to enhancing operational efficiency.

Divestiture Strategy Progress

The company announced the divestiture of their Canadian Green Giant business and is evaluating the divestiture of their Green Giant U.S. frozen business. These strategic moves are expected to create a more focused B&G Foods, enhancing cash flow generation and reducing the leverage ratio.

Spices & Seasonings Growth

The Spices & Seasonings business unit experienced a net sales growth of 2.1% in Q3. This growth was driven by an increase in fresh food and proteins, along with strength in the club and foodservice channels, highlighting a bright spot in the company’s portfolio.

Decline in Net Sales and Base Business Net Sales

The third quarter saw net sales of $439.3 million, a decline of 4.7% compared to last year, with base business net sales down by 2.7%. This decline underscores the challenges B&G Foods faces in maintaining sales momentum amidst a shifting market landscape.

Impact of Divestitures

The divestiture of the Don Pepino and Sclafani business in May and the Le Sieur U.S. canned peas brand in August removed approximately $10.3 million of net sales and $3.2 million in adjusted EBITDA from Q3. These divestitures are part of the company’s strategy to streamline operations and focus on core areas.

Tariff Challenges

Tariffs have impacted B&G Foods’ portfolio, reducing adjusted EBITDA in Q3 by nearly $3.5 million, with 60% of this impact affecting the Spices & Flavor Solutions business. This highlights the external pressures the company is navigating in the current economic environment.

Increased Promotional Trade Spend

Promotional trade spend increased by approximately 110 basis points in Q3 compared to last year. However, it was sequentially favorable to year-over-year increases observed in the first and second quarters of 2025, indicating a strategic approach to managing promotional activities.

Forward-Looking Guidance

During the earnings call, B&G Foods provided updated guidance for fiscal year 2025, projecting net sales between $1.82 billion and $1.84 billion and adjusted EBITDA of $273 million to $280 million. The company aims to improve cash flow generation and reduce the leverage ratio to 6x within the next nine months. Additionally, a 53rd week sales growth impact of 2% to 3% is anticipated in the fourth quarter. Cost efficiency initiatives are expected to yield $15 million to $20 million in annual savings, with plans to improve base business net sales trends towards 1% growth and reduce leverage to approximately 6x by mid-2026.

In conclusion, B&G Foods’ earnings call reflected a balanced sentiment, acknowledging both achievements and challenges. The company’s focus on cost savings, strategic divestitures, and growth in specific segments like Spices & Seasonings are positive indicators. However, the decline in net sales and the impact of tariffs remain areas of concern. The forward-looking guidance suggests a strategic path towards improving financial health and operational focus.