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DATE

Wednesday, Nov. 5, 2025, at 4:30 p.m. ET

CALL PARTICIPANTS

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

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TAKEAWAYS

  • Net Sales -- down 4.7%, with base business net sales down 2.7% excluding divestitures.
  • Adjusted EBITDA -- $70.4 million adjusted EBITDA, flat year-over-year on a reported basis, but higher excluding divested businesses.
  • Gross Profit -- $99 million gross profit, representing 22.5% of net sales, compared to 22.2% in the prior year.
  • Adjusted Diluted EPS -- $0.15 adjusted diluted earnings per share.
  • SG&A Reduction -- SG&A overhead decreased by $2 million through restructuring actions. SG&A margin was 10.2% versus 10% previously.
  • Cost Savings Initiatives -- $10 million in second-half cost savings, with an annual run rate target of $15 million to $20 million.
  • Segment Performance: Spices and Seasonings -- segment adjusted EBITDA declined $2.1 million due to tariff and commodity cost pressures; pricing actions to offset tariffs take effect in November.
  • Segment Performance: Frozen and Vegetables -- Segment adjusted EBITDA improved by $3 million, supported by favorable crop pack costs and Mexico facility productivity gains.
  • Segment Performance: Meals.
  • Segment Performance: Specialty (excluding Don Pepino and Sclafani) -- Net sales declined 4.5%, largely due to Crisco’s $4.1 million sales drop (split evenly between lower pricing and lower volume); segment adjusted EBITDA was flat.
  • Tariff Impact -- Adjusted EBITDA was reduced by $3.5 million, with $2.2 million attributed to the Spices and Flavor Solutions unit adjusted EBITDA; year-to-date tariff impact totals $5.1 million.
  • Divestitures -- Don Pepino, Sclafani, and LeSour U.S. divestitures removed $10.3 million of net sales and $3.2 million in adjusted EBITDA; Green Giant Canada divestiture announced, pending regulatory approval.
  • Leverage and Debt -- Consolidated leverage ratio was 6.88x at quarter-end; guidance is for reduction to consolidated leverage ratio of 6x within 6-9 months through divestitures and cash flow application to debt.
  • Interest Expense -- Net interest expense was $37.3 million, due to lower net debt, lower rates, and a $700,000 gain on debt extinguishment.
  • 2025 Guidance -- Net sales guidance narrowed to $1.82 billion to $1.84 billion, with adjusted EBITDA of $273 million to $280 million, and adjusted EPS of $0.50 to $0.58.
  • Fifty-Third Week Benefit -- The additional week is projected to add 2%-3% to fourth quarter sales.
  • Pricing Actions -- Yeah. And on average, Andrew, these price increases to reflect tariffs are kind of in the low to single mid digits? Got it." according to Bruce Wacha.
  • Working Capital -- Unfavorable working capital had a temporary negative effect due to inventory commitments tied to divestitures, with $23 million in inventory for Don Pepino and Sclafani reimbursed in the fourth quarter.
  • Portfolio Reshaping -- Strategic plan underway to divest Green Giant U.S. Frozen, aiming for a simplified, higher-margin enterprise built around the Spices and Seasonings, Meals, and Baking Staples categories.

SUMMARY

B&G Foods (BGS +24.75%) management implemented targeted pricing strategies to offset $3.5 million in tariff-driven cost increases, primarily impacting the Spices and Flavor Solutions business, with effects beginning in the fourth quarter. The company executed portfolio restructuring by divesting several brands, including Don Pepino, Sclafani, and LeSour U.S, and announced the sale of Green Giant Canada, with regulatory approval pending. A fifty-third fiscal week is forecasted to contribute 2%-3% sales growth in the fourth quarter, partially moderating a projected 2%-3% decline in base business net sales, excluding divestitures.

  • Casey Keller emphasized commitment to reducing leverage to five times long-term and identified 1% base business net sales growth as the central objective.
  • Bruce Wacha clarified, It is not it is yes. That $55 to $65 is a good proxy for the sales price. Assuming and it is somewhat dictated by inventory. And so assuming that we closed with inventory levels where we are in September. It is kind of where that lays out.
  • Foodservice and private label collectively account for 21%-22% of sales, with foodservice trends flat to slightly positive
  • Despite industry concern over possible SNAP program disruptions, management stated, we have not seen any impact so far to date in our shipment.
  • Input cost inflation projections for early 2026 are 1.5%-2% prior to tariffs, with planned pricing and productivity initiatives expected to more than offset this rate.
  • Guidance does not yet incorporate the impact of the Green Giant Canada divestiture, which remains subject to regulatory closure.

INDUSTRY GLOSSARY

  • SG&A: Selling, General, and Administrative expenses; includes overhead costs such as corporate salaries, marketing, and warehousing.
  • Pack Season: Period when agricultural products (such as vegetables) are harvested and processed for inventory buildup.
  • Fifty-Third Week: Additional accounting week in some fiscal years, adding incremental sales and expenses beyond a standard 52-week year.
  • Tariffs: Import duties imposed by governments on specific commodities, influencing input costs and pricing actions.
  • Divestiture: Sale or disposition of an asset, business unit, or brand, often for portfolio realignment or deleveraging purposes.

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 the remainder of fiscal 2025. Bruce will then discuss our financial results for 2025 and our updated guidance for fiscal 2025. I would now like to turn the call over to Casey.

Casey Keller: Good afternoon. Thank you, AJ. And thank you all for joining us today for our third quarter 2025 earnings call. 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 wheat crop and our Mexico facility achieved strong productivity gains.

The Spices and 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 LeSour U.S. Canned Peas 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, Inc. 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 2026. 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. REGINA is a strong brand in a good category but is not the right fit for the B&G Foods, Inc. 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 Pepinos, Sclafani, and Lassore divestitures will create a more highly focused B&G Foods, Inc. which we believe will lead to adjusted EBITDA as a percentage of net sales approaching 20%, increased cash flow generation, a lower leverage ratio closer to five times, and a more efficient cost structure. We expect the fourth quarter to show continued improvement. The fifty-third week is expected to add 2% to 3% sales growth in Q4. A partial week benefit. Excluding the impact of the fifty-third 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 vegetables 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 and narrowed guidance for fiscal year 2025 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 committing 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 6.88 times. We expect to reduce our consolidated leverage ratio to six times within the next six to nine 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 2026 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 right-size overheads, and focus resources and investments 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 2025.

Bruce Wacha: Thank you, Casey. 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 foodservice, as well as the validation of our cost savings initiatives. As a reminder, we divested the Don Pepino and Sclafani brands in May and then the LeSour brand in the United States on August 1. As a result, our third quarter financial results this year exclude Don Pepino and Sclafani for the full quarter and LeSour U.S. for approximately two of the three months of the quarter.

Last week, we announced the agreement to sell our Green Giant and LeSour frozen and shelf-stable product lines in Canada to Norterra Foods, subject to regulatory approval in Canada and the satisfaction of customary closing conditions. We expect the transaction to close in 2025 or 2026. Because the Canadian transaction has not 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 2025.

For 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 2025 decreased by $21.8 million or 4.7% to $439.3 million from $461.1 million for 2024. Base business net sales, which exclude the net sales for the Don Pepino, Sclafani, and LeSour U.S. brands for both periods, decreased by $11.9 million or 2.7% in 2025 compared to 2024. $12.9 million or 290 basis points of the decline in base business net sales was driven by lower volumes and $300,000 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 Spices and Flavors 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 and club and our foodservice business. Spices and Flavor Solutions segment adjusted EBITDA was down by $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 to help offset these cost increases. Our spices and 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 $600,000 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 2025 as compared to 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 2024.

Overall, 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 LeSour U.S. brand for both periods, declined by $5.4 million or 0.7% 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 cycle past 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, Inc., gross profit for 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 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 on our net sales line, increased by approximately 110 basis points in 2025 versus 2024. Sequentially favorable to year-over-year increases of 178 basis points in 2025 and 120 basis points in 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 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 canned. 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 and 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 2025 from $46 million from 2024. The decrease was composed of a decrease in consumer marketing expenses of $1.8 million, general administrative expenses of $600,000, warehousing expenses of $500,000, and selling expenses of $300,000, partially offset by an increase in acquisition divestiture and non-recurring 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 2025 compared to $70.4 million or 15.3% of net sales in 2024. The divestiture of the Don Pepino, Sclafani, and LeSour U.S. brands during 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 2025 compared to $42.2 million for 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 $700,000 during 2025 compared to a loss on extinguishment of debt of $1.9 million during 2024.

We repurchased an additional $20 million aggregate principal amount of 5.25% senior notes due 2027 and open market purchases during 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 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 2025. In 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 2025. These included an unfavorable working capital comparison due in large part to the LeSour U.S. divestiture and the timing of our inventory purchases during tax season.

Prior to the closing date of the divestiture, which had a negative impact on our net cash from operations during 2025 but increased the purchase price we received for the LeSour U.S. divestiture, then had a positive impact on our net cash provided by investing activities during the quarter. Also, pursuant to our transition services agreement for the 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 2025 compared to 2024 as a result of the June 2024 refinancing of our five and a quarter 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 6.88 times in 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 six times 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 LeSour 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 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 do not align with the focus that we have laid out for the B&G Foods, Inc. 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 LeSour brand 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 the Green Giant and LeSour brands in Canada, given that the transaction is 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 fifty-third 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 $147.2 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 six times or less by 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 return the call back to Casey for further remarks.

Casey Keller: Thank you, Bruce. In closing, B&G Foods, Inc. 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, and reducing leverage closer to five times 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? Thank you.

Operator: We will now begin the question and answer session. To ask a question, you may press star and then one 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. At this time, we will pause momentarily to assemble our roster. We have the first question from the line of Andrew Lazar from Barclays. Please go ahead.

Andrew Lazar: Hey, 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. So maybe what are you seeing in the fourth quarter and maybe the broader environment that has sort of caused this shift?

Casey Keller: Yeah, I think on sales guidance, what we did was narrow 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 are doing is reflecting the impact of the divestitures fully and also we have 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 are kind of projecting that into Q3. K. Not q in the Q4. Sorry. In the Q4.

Andrew Lazar: Yep. Got it. And then I know it is a little early still because more of the pricing in the spices and flavorings business is still going to flow through. But so far, what have you seen in that segment around volume elasticity with respect to some of the pricing that you have taken?

Casey Keller: I mean, we have taken it literally. So it is only been out and we do not have really consumption data yet for it. Because most of that pricing hit kind of at the October. We were expecting, you know, some elasticity, but not a huge amount. I mean, think we are projecting more like, you know, 0.5, 0.6 and we will be able to measure that within a couple weeks now. But we have seen other manufacturers take spice increases, price increases behind tariffs and commodity costs without a significant effect. Yeah.

And the pricing that we took for spices on the commodity costs earlier this year kinda went through and, you know, we had a pretty good third quarter performance for spices. So as Casey said, we think that we should be fine.

Andrew Lazar: Yeah. And on average, Andrew, these price increases to reflect tariffs are kind of in the low to single mid digits? Got it.

Operator: Thank you. We have the next question from the line of Scott Marks from Jefferies. Please go ahead.

Scott Marks: Hey. Good afternoon. Thanks for taking our questions. Thing I wanted to ask about, you noted that you are 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 three segments? And then further, how should we be thinking about the building blocks for getting back to that 1% number in 2026? Thanks.

Casey Keller: Yeah. I think well, first off, you know, we said about Q4, we will still have the Green Giant Canada business and the U.S. Frozen Green Giant business in these in those trend lines that we talked about. So when I said Q3 was minus 2.7%, and what we are 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 cannot close it until we get regulatory approval from Canada and we are assuming 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 are looking at the other three 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 do not want to give you a specific number now because it is all dependent on things happening. But I would expect more stable performance from the spice and seasonings business we are seeing growing. That category has actually been growing. And we were up 2% in Q3.

Meals, you know, is down just a little bit, but you know, we just starting to see some improvements in our Ortega and other trends. You know, our baking staples business, you know, has probably been a little bit weaker. Some of that is due to lower oil pricing on Crisco that we have reflected in market. And that is part of the sales degradation. But if I take those three businesses, I think you are going to see more stable trends on the top line. I would hope that would be part of our that is going to be part of our track towards getting to a flat to up 1% over time.

Scott Marks: Got it. 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 foodservice 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 are seeing there as it relates to consumer or customer demand relative to more traditional retail channels. Thanks.

Casey Keller: Yeah. And I will give you an answer overall in our portfolio. I mean, we could talk more specifically about spices. But in total, our foodservice business is about 13% to 14% of our portfolio. And we have seen pretty stable trends in that business. So we have not really seen declines. We have seen sort of flat to modest growth in our foodservice business, is a lot of spices business going to different restaurant outlets through distributors. And we also have a syrup business going to prefix out, you know, establishment. So that business has been relatively stable.

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

So I mean, I hope that answers the question, but that is we have seen some relative stability or strength in those two areas of our business. Probably relative to the center store packaged goods branded side.

Scott Marks: That is helpful. Appreciate the answer. So pass it on.

Operator: Thank you. We have the next question from the line of Robert Moskow from TD Cowen. Please go ahead.

Robert Moskow: Hi. Thank you. Two questions. You know, the six times 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 have exited the, you know, the Canadian side and then LeSour, like, does it make it easier to market the remaining U.S. business to potential buyers? And then a follow-up.

Bruce Wacha: Yeah. So on the leverage piece, and we walked through this on our second call core. We were talking about a full turn of deleveraging. About half of that was coming from the divestiture of the various Green Giant pieces. LeSour, Canada, and then U.S. And so I think that is 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 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 will still have things like Crisco and Clabber that have a seasonal bake season, you know, where we build inventory in the third quarter and sell it, but it will not 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 is part one. Your second question around does the divestiture of LeSour and the signed agreement still to close for Canada, does that impact the sale of the remaining business or does it make it easier? Not really. They are distinct conversations with logical strategic partners on all pieces.

But this is two out of the three or three out of the four if you go back and include the can business that we sold to Seneca about a year and a half ago.

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

Casey Keller: I think it is too soon to know whether it will matter. You know, my expectation is that if let us say, you know, 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 have heard Walmart and others talk about that. But I think that is 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 impact.

I cannot it is 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 think this is just a temporary phenomenon until this gets resolved.

Bruce Wacha: 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 have not seen any impact so far to date in our shipment.

Robert Moskow: Got it. Alright. Very good. Thank you.

Operator: Thank you. We have the next question from the line of William Reuter from Bank of America. Please go ahead.

William Reuter: Good afternoon. I just have a couple. The first, in terms of your outlook, to get to the six times leverage target, is there any expectation there that you will be gaining or losing any shelf space over that period?

Casey Keller: Other than what we have sold? Other than the divested businesses, you mean? Yeah. Yeah. What there could be any business wins that you kind of see on the horizon, or, alternatively, if there are businesses that you are having to respond to RFPs to maintain your shelf space.

Bruce Wacha: So the six times assumes that we hit our model for 2025 and kinda preliminary 2026 thoughts. I guess that would include any performance for those businesses that we anticipate. But we have not done a further probability waiting by, you know, inches of shelf space, if that is what you are asking.

William Reuter: Got it. Okay. But we but our forecast would factor in how we see, you know, distribution wins and losses across our innovation launches and any cutting any cut of slower moving items. In our forecast always includes those kind of projections.

Bruce Wacha: Got it. And then given you have been successful with the three divestitures so far, are you fairly certain that you are going to be able to come to an agreement with a buyer on the Green Giant U.S. sale? Within the time frame that you have put laid out?

Casey Keller: Not really fair to comment on that other than, you know, we are making progress on getting these transactions done and you know, we certainly laid out what we thought made sense from a timeline and you know, that is where we are.

William Reuter: Got it. Okay. And then lastly for me, you laid out the timing of the six times net leverage mid next year. A couple times, you touched upon the five times. Is that kind of a longer-term goal, or is there a timeline associated with that we should be thinking about?

Bruce Wacha: We have not put out a timeline, but it is very much a longer-term goal and Casey will remind me of that every quarter.

Casey Keller: I mean, our long-term leverage, you know, goal has between 4.5 and 5.5. So I mean, that is the midpoint and I think would actually reflect the right kind of risk.

William Reuter: Got it. Okay. All very helpful. Thank you.

Operator: Thank you. We have the next question from the line of David Palmer from Evercore ISI. Please go ahead.

David Palmer: Thanks. I just wanted to hey. Hey, Bruce. Casey, I wanted to ask you guys about the organic sales numbers. You mentioned food service, roughly flat, and the private label business sounds like it is up mid single digits. Might get us close to where we are when we adjust our consumption numbers, get you close to the numbers that you had, but it still feels like I might be down, you know, four to 5% versus the under 3% decline that you showed and you are guiding to as well for the fourth quarter. So I am just trying to think about, like, other reasons why that would be different.

Is there any shipment dynamics, other non-measured channels that are happening?

Casey Keller: No. I mean, I think it is really simple. There is about 35% to 40% of our portfolio that is unmeasured by Nielsen U.S. data. So I mean, if I just give you the numbers, Canada is about 7% to 8%. Food service is about 13% to 14%, private label is around 7% to 8%, we have an industrial business also that is about 5%. And there are unmeasured customers in the U.S., Costco, etcetera. Is about 3%. So again, it is more than just the food service and private label business I talked about. So you do all that math and it kinda gets you to that base business trend roughly. That 2% to 3% kinda base business trend.

David Palmer: So your assumption on like, basically, back part of the year is that your consumption all channel, obviously, not that would it would not be even captured by Surcana either. Would be would be also down two to 3%. Fair to say?

Casey Keller: Yeah. But that but that would move across food service and channels, and then it would include our private label business. You know, we have a very strong club private label spice business that is been growing very rapidly. So it would it assumes that we are 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.

Bruce Wacha: And Dave, the other part where you might be missing if you are thinking about fourth quarter, just a reminder, this is the fifty-third week and it is in our fourth quarter this year. And so we have talked a number of times, referenced either 15 to 20 or 16 to $18 million. But there will be some benefit which is also is also impacting as factored into our guide.

Casey Keller: Which kind of offsets the business trend, the two of those kind of offset each to get to roughly flattish. Net sales in the fourth quarter.

David Palmer: Great, thank you for all that. That was great. And with regard to the tariffs language you had in the release, just it seems like it is dated language that you are not including all the tariffs in there.

Bruce Wacha: It is kinda we can only include what we know. Yeah.

Casey Keller: Right? It is going of the Supreme Court. We price for all known existing tariffs.

Bruce Wacha: But you know, these negotiations are yeah. And certainly guided for it too. I would assume.

Casey Keller: Yep. Yes.

David Palmer: Have you talked about the inflation inclusive of tariffs that you are expecting call it, into the first half of 2026? Have you talked about that?

Casey Keller: I mean, we are seeing outlooks, Dave. I would not want to tell you that we have actually finalized our projections, but we are kind of seeing 1.5% to 2% input cost inflation before tariffs. That is a very early number. Probably mostly driven by packaging,

Bruce Wacha: And I think our key thing is similar to 2025, we have not seen anything that suggests a big uptick in inflation based on our basket of inputs.

Casey Keller: And our strategy for that would be that we expect the price to recover tariffs. Which we have already done. And that is been implemented. We will look at final inflation assumptions and projections when we get pretty close to the New Year. But it is a combination of some targeted pricing where we have commodities. As well as productivity efforts that would offset that. More than offset that rate of inflation in very low single digits. Great. Thank you.

Operator: Thank you. We have the next question from the line of Hale Holden from Barclays. Please go ahead.

Hale Holden: Thank you. Good afternoon, fellows. 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 would be 3Q to 4Q in terms of percentage of inventory? Because I just do not really have a baseline on what that flowback for you would be.

Bruce Wacha: For our existing business?

Hale Holden: Yeah. Like the Crisco and Clabber, we have not disclosed that.

Bruce Wacha: Okay. Probably, directionally, you can think about what our sales breakdown is by quarter for those businesses. And I do think we disclose that for both businesses. That they have not, you know, a rough impact of the swings. Not perfect, but yeah. It is a little bit of a there is a small pre-build in advance of baking season. Yeah.

Hale Holden: Okay. The spices pricing that you are talking about on tariffs, is this the second one from the summer? Or was there one at the end of the summer, or is this the first one?

Bruce Wacha: Yeah. So what we did just in a couple pieces of the SPICE portfolio is we put pricing in effect to offset increases in commodity costs. So non-tariff 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 a little in July. Yeah. In July. We talked a little bit about it on our on our second quarter earnings call. We have since followed up across the board where we needed to for tariffs to take price. And that is really an October, early November phenomenon. When it is effective. Yeah.

Hale Holden: 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?

Bruce Wacha: It is not it is yes. That $55 to $65 is a good proxy for the sales price. Assuming and it is somewhat dictated by inventory. And so assuming that we closed with inventory levels where we are in September. It is kind of where that lays out.

Hale Holden: Thank you so much. I appreciate it.

Operator: Yep. Thank you. We have the next question from the line of Carla Casella from JPMorgan. Please go ahead.

Carla Casella: Hi. Great. Thank you. You talked about working capital anomaly in third related to, I think it was LeSour. Did you say how much was moved into third quarter that you will be reimbursed that you were reimbursed for in fourth quarter?

Bruce Wacha: Yeah. So two pieces for working capital around inventory, were LeSour the U.S. business that we sold. And we bought, it is pack season, it is 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 float in as a benefit and cash from investing. Then there is another $23 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.

Carla Casella: Okay. So it is like a $2 to $3 million that you were paid in fourth quarter that hurt third quarter?

Bruce Wacha: Yeah. For Don Pepino and then another $20 million that we spent on the business that we no longer earn. Own for LeSour.

Casey Keller: And we the interest delta, because we did a refinancing. Last year. And so that ended up moving an interest payment from what was October into September. And that is about I think a $7 to $10 million swing there.

Carla Casella: 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?

Bruce Wacha: No, I mean we continue to think that at some point when it makes sense and it is appropriate, you know, we will look to refinance those 2027 notes. Obviously watching the market we will pick an opportune time.

Carla Casella: And do you have additional secured capacity?

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

Carla Casella: Okay. Okay. Great. And then just one follow-up. You mentioned that pricing went into effect for customers. In November. Meaning, you passed on to retailers, so it is going into the consumer. Like, shelves in November. And I am wondering if you have seen any change in elasticity since then.

Bruce Wacha: No. I mean, most of pricing, you know, took has taken place in the last couple of weeks, and we do not really have, you know, kind of market-based scanner data yet, but we will watch it pretty closely.

Carla Casella: Okay. Great. That is all I have. Thank you.

Bruce Wacha: Thanks, Carla.

Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Casey Keller: Thank you.