Good day, and welcome to the B&G Foods 1/3 1/4 2022 earnings call. Today's call, which is being recorded, is scheduled to last about 1 hour, including remarks by B&G Foods management and the question and answer session. I would now like to turn the call over to Sarah Giral-Peterson, Senior Director of Corporate Strategy and Business Development for B&G Foods. Please go ahead. Good afternoon, and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer, and Bruce Wacha, our Chief Financial Officer. You can access detailed financials on the 1/4 in the earnings release we issued today, which is available at the investor relations section of bgfoods.com. Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer you to B&G Foods annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial conditions. B&G Foods undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We will also be making references on today's call to the non-GAAP financial measures, adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, and base business net sales. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. Casey will begin the call with opening remarks and discuss various factors that affected our results, selective business highlights, and his thoughts concerning the outlook for the remainder of fiscal 2022 and beyond. Bruce will then discuss our financial results for the 1/3 1/4 of 2022 and our guidance for full year fiscal 2022. I would now like to turn the call over to Casey. Good afternoon. Thank you, Sarah, and thank you all for joining us today for our 1/3 1/4 earnings call. Third 1/4 performance improved sequentially as pricing actions covered more of the inflationary costs. Net sales increased 2.6% versus last year, with adjusted EBITDA margin at 15.2% compared to 11.3% in Q2. Adjusted gross profit margin improved to 20.4%, down 340 basis points versus last year, compared to Q2 at 16.5%, which was down 760 basis points versus last year. Some key perspectives on the results. Inflation. Total fiscal year 2022 input cost inflation impact remains at +20%. This is the first 1/4 in fiscal year 2022 that has not worsened. In addition, freight, transportation and warehousing costs have moderated from last summer, although still significantly higher than last year. Pricing. In total, pricing realization contributed $75.5 million in Q3, compared to only $20.5 million in Q2. Net pricing actions recovered in excess of 80% of inflation in the 1/4, with full recovery expected in Q4 behind final fiscal year 2022 price increases implemented in August and on October 3rd. Volume. Sales results were slightly below our expectations and impacted by volume declines on Green Giant canned vegetables and spices and seasonings. Green Giant declines were driven by the exit of a low to no profit business in the dollar channel and higher elasticity following summer price increases. We are seeing some recovery during the fall promotion season. On spices and seasonings, trends reflected distribution losses from supply and service issues in Q1 and Q2, and a general slowdown of category trends post-pandemic. We are now recovering distribution in key accounts behind improved service, with very strong spice and seasoning sales in October. Supply, customer service and fill rates improved during the 1/3 1/4, reaching over 93% by the 1/4's end. We are on track to deliver between 94%-95% customer fill rates in Q4. Some supply issues still remain behind materials availability, but those are becoming more isolated situations. Looking forward, we are on track for stronger Q4 delivery, expecting net sales to grow mid-single digits with adjusted EBITDA at or above last year. Q4 projections are based on full pricing actions, moderating costs, and comparisons to the COVID, Omicron service and shipping disruptions last December across several production and distribution facilities. As discussed, we have been implementing pricing actions to recover inflationary input costs as fast as possible during fiscal year 2022. By October, all current year pricing increases were sold through and effective, catching up to known costs for the remainder of the year. For fiscal year 2023, we expect inflation to continue, but at a much lower rate, currently estimated at +4%-5%, with the biggest pressures on tomatoes, glass, etc. So far, we have not seen significant declines on key commodities, for example, soybean oil, corn, wheat, etc., from average cost levels in fiscal year 2022. Again, we expect to raise prices to recover higher input costs, but with a more surgical approach against key commodity categories versus the broader actions required in fiscal year 2022. In terms of elasticities, we project that price elasticities will increase modestly as the economy tightens next year and some consumers trade down on the margin to cheaper alternatives. Further, we will be taking additional steps to manage cash flow and reduce debt in the near term. Although our leverage ratio will improve with stronger EBITDA flow in Q4 and early fiscal year 2023, the debt level at $2.4 billion is too high in a rising interest rate environment, with interest expenses on short-term debt increasing significantly. Working capital needs have also increased over the past year with higher inventory valuations as a result of cost inflation. At this point, we are taking actions to manage the capital structure that Bruce will address in more detail later, but at a high level include revising our dividend payout rate to return a substantial portion of free cash flow to shareholders, but directing a significant remainder to reduce debt obligations. Completing divestitures of Non-Core businesses to generate proceeds to pay down debt and reduce leverage, we are actively seeking to sell the Back to Nature brand and have initiated strategic review to identify other potential divestitures that will shape the B&G Foods portfolio for future focus and strength. Finally, I am encouraged by the start of the four business units, spices and seasonings, meals, frozen and vegetables, and specialty. As discussed, these units are intended to clarify portfolio focus and future platforms and push accountability down to improve management and decision-making. Although early days, we are already building stronger plans, identifying margin improvement opportunities, making faster decisions, and more closely integrating demand and supply. I am confident this structure will sharpen our focus, build critical capabilities, and deliver improved sales and margin performance over time. 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 the year. Thank you, Casey. Good afternoon, everyone. As Casey just discussed, while our 1/3 1/4 was not without challenges, we believe that we are finally nearing the inflection point from a performance standpoint. Sales remain strong and are benefiting from pricing. Costs remain elevated, but are beginning to stabilize. Margins are still lower than where we would like them to be, but are now improving rather than deteriorating. Sequentially, we have seen approximately 250 basis points of improvements in both our gross profit as a percentage of net sales and our adjusted EBITDA as a percentage of net sales in the 1/3 1/4 as compared to the first half of the year. While we are still not where we would like to be, we are confident that we are moving in the right direction, and we expect further improvement in the fourth 1/4 of this year and additional recovery in 2023. During the 1/3 1/4 of 2022, we generated net sales of $528.4 million, adjusted EBITDA of $80.2 million, and adjusted diluted earnings per share of $0.31. Net sales for 1/3 1/4 2022 increased $13.4 million or 2.6%. Price increases coupled with product mix increased net sales by approximately $75.5 million, which was offset by volume declines of $61.3 million and the negative impact of FX of $1.2 million. Volume declines were driven by a combination of supply chain challenges, which has continued to improve over the course of the year, but are still not fully back to normal across the entire portfolio and elasticity. We knew that we needed to take price just like everybody else in our industry, and as uncomfortable as that may be at times, we fully expect to see some levels of elasticity-driven volume declines. We are closely monitoring our volumes by brand and evaluating volume losses against the pricing model that we constructed to better evaluate the impact of elasticity. Net sales of Crisco, the biggest beneficiary of pricing in the portfolio, increased by $27.3 million or 38.3% for the 1/3 1/4 of fiscal 2022 as compared to the 1/3 1/4 of 2021. Net sales of Crisco are now up by $61.7 million or 32.9% for the first 3 quarters of the year compared to last year. Crisco, which was expected to deliver $270 million in net sales annually when we acquired it in late 2020, is now on pace to generate more than $350 million of net sales this year. While costs are up significantly and margins are down, we continue to expect Crisco to deliver profit dollars that are generally in line with our acquisition model. Clabber Girl also performed well. Net sales increased by $5.5 million, or 26.6% in the 1/3 1/4 of 2022 as compared to the 1/3 1/4 of last year. Clabber Girl is having a strong year, with net sales up $10.6 million or 19% for the first 3 quarters of the year as compared to last year. Net sales of Cream of Wheat increased by $3.1 million, or 20.4% for the 1/4, and $9 million or 18.8% for the Year-To-Date period. Net sales of Ortega increased by $1 million or 2.6% for the 1/4. Ortega is recovering nicely from the supply chain challenges that hurt performance earlier this year. Through the first 3 quarters of the year, net sales of Ortega are nearly flat or down just $0.5 million or 0.4% compared to last year. Maple Grove Farms decreased $0.6 million or 2.9% in the 1/3 1/4 of 2022 compared to 2021. Our spices and seasonings business, which have been plagued with supply chain challenges throughout the first half of the year and is lapping peak 2021 performance earlier this year, also showed improvements in the 1/3 1/4. Net sales of spices and seasonings were down $6.1 million or 6.5% in the 1/3 1/4 of 2022 as compared to the prior year. This compares favorably to performance during the first half of the year, when net sales were down $19.3 million or 9.5% as compared to the prior year period. Although we are still lapping strong Q3 2021 prices for spices and seasonings, our fill rates have improved as factory performance has continued to normalize, which has helped sales. Performance for spices and seasonings has also benefited from the launches of Cinnamon Toast Crunch Cinnadust Seasoning Blend, Snickers Shakers Seasoning Blend, Twix Shakers Seasoning Blend, and Einstein Bros. Bagels Everything Bagel Seasoning licensing partnerships, which have also been very well received in retail. Compared to pre-pandemic 2019, net sales of the company's spices and seasonings increased by $20.1 million or 8.1% through the first 3 quarters of 2022. Net sales of Green Giant, including Le Sueur, decreased by $17.7 million or 12.6% for the 1/3 1/4 of fiscal 2022 as compared to the 1/3 1/4 of 2021. Green Giant is somewhat challenged this year, although some of the performance in the 1/3 1/4 was related to timing and a portion also related to our decision to walk away from certain low margin business in the discount channel that became problematic in this year's cost environment. On a Year-To-Date basis, despite the soft 1/3 1/4 performance, net sales at Green Giant are down just $8.3 million or 2.2% as compared to last year. Base business net sales in all other brands in the aggregate increased by $0.5 million or 0.5% for the 1/3 1/4 of 2022 as compared to the 1/3 1/4 of 2021. Gross profit was $105.8 million for the 1/3 1/4 of 2022 or 20% of net sales. Excluding the negative impact of $2.2 million of acquisition divestiture-related expenses and non-recurring expenses included in cost of goods sold during the 1/3 1/4 of 2022, gross profit would have been $108 million or 20.4% of net sales. Gross profit was $105.7 million for the 1/3 1/4 of 2021 or 20.5% of net sales. Excluding the negative impact of a $14.1 million accrual for the estimated present value of a multi-employer pension plan withdrawal liability in connection with the sale and closure of the company's Portland, Maine manufacturing facility and $2.8 million of acquisition divestiture-related expenses and non-recurring expenses included in cost of goods sold during the 1/3 1/4 of 2021, gross profit would have been $122.6 million or 23.8% of net sales. Similar to the first 2 quarters of 2022, 1/3 1/4 gross profit was negatively impacted by input cost inflation. However, our efforts to mitigate this inflation have been more effective in the 1/3 1/4. Largely driven by our price increases, which we have taken throughout the year, as well as cost containment measures, including our strategy of locking in costs with forward purchasing, coupled with product weight outs or downsizing and other productivity measures that we have executed in our factories. As a result, we have seen sequential improvements in margins with adjusted gross profit excluding adjustments as a percentage of net sales in the 1/3 1/4, increasing by approximately 240 basis points when compared to the first 2 quarters of the year. Selling, general, and administrative expenses increased by $1.1 million or 2.4% to $47.5 million for the 1/3 1/4 of 2022 from $46.4 million for the 1/3 1/4 of 2021. The increase was composed of increases in general and administrative expenses of $1.1 million, selling expenses of $0.7 million, and consumer marketing expenses of $0.3 million, partially offset by a decrease in acquisition divestiture related and non-recurring expenses of $1 million. Expressed as a percentage of net sales, selling, general, and administrative expenses remained flat at 9% for the 1/3 1/4 of 2022 and the 1/3 1/4 of 2021. We generated $80.2 million in adjusted EBITDA in the 1/3 1/4 of 2022 compared to $96.2 million in the 1/3 1/4 of 2021. The decrease in adjusted EBITDA was primarily attributable to industry-wide input cost inflation and supply chain disruptions. These cost challenges were partially offset by list price increases, locking in costs through forward purchasing, product weight outs or downsizing, and other productivity measures in our factories. Adjusted EBITDA as a percentage of net sales was 15.2% in the 1/3 1/4 of 2022, compared to 18.7% in the 1/3 1/4 of 2021. However, similar to the sequential improvements that we saw in gross profit as a percentage of net sales, adjusted EBITDA as a percentage of net sales in the 1/3 1/4 improved by 260 basis points when compared to the first 2 quarters of 2022. Interest expense was $31.9 million for the 1/3 1/4 of 2022, compared to $26.6 million in the 1/3 1/4 of 2021. The primary driver for the increase in interest expense was an increase in our variable rate debt, which is currently tied to LIBOR. Interest expense was also modestly affected by increased borrowing during the 1/4 relative to last year. Depreciation and amortization was $20.8 million in the 1/3 1/4 of 2022, compared to $20.7 million in the 1/3 1/4 of last year. We generated $0.31 in adjusted diluted earnings per share in the 1/3 1/4 of 2022, compared to $0.55 in the prior year. While our performance was solid in the 1/4, it was a little bit light of where we wanted to be. We still feel good about our ability to turn the corner in the fourth 1/4 and get even closer to historical margin dollars, but we think that it's prudent to tighten our guidance somewhat at this point. We continue to expect net sales of $2.1 billion-$2.14 billion, and we now expect adjusted EBITDA to be in a range of $290 million-$300 million. Our updated guidance reflects our continued belief that while we have not fully returned to normal, we have seen the worst of the escalation in inflationary pressures and that pricing is finally catching up to costs. Additionally, we expect for full year fiscal 2022 interest expense of $122.5 million-$127.5 million, including cash interest of $117.5-$122.5 million. Depreciation expense of $57.5-$62.5 million. Amortization expense of $20.5-$22.5 million. An effective tax rate of 26%-27% and CapEx of $35 million. Key factors that could lend to either upside or downside to our guidance include the level of elasticity that we face, given the price increases that we have already executed, as well as any additional elasticity as a result of our trade spend optimization efforts. While we are hoping for at least a pause in the levels of inflationary pressures that we are seeing in certain input costs, we still live in a very uncertain world. While many of our costs for the year are largely locked in at this point, there are still some costs, such as transportation costs that have an immediate impact on our P&L. Also, as Casey mentioned earlier, our supply chain situation and customer fill rates are improving and are expected to be a tailwind for the remainder of the year. There are obviously no guarantees in this world, and as we saw last year with the Omicron COVID variant, we must still expect the unexpected. Finally, while it's still a little premature to provide a full outlook for 2023, we continue to believe that net sales will benefit from price, and thus net sales growth will likely be at the high end or exceed our Long-Term growth algorithm. We also continue to expect that adjusted EBITDA will be up above our 2022 finish, but still not at our 2021 level. When we think about our adjusted EBITDA and the question of when adjusted EBITDA returns to its historical level, we also must think about this in the context of our dividend policy. We have long held a commitment to create stockholder value by consistently paying a generous dividend to our stockholders, and we remain committed to our policy of returning to our stockholders in the form of dividend, a substantial portion of our cash in excess of operating needs, interest and principal payments on our indebtedness and capital expenditures sufficient to maintain our properties and other assets. However, our dividend policy was built on an assumption that we would use roughly half of our excess cash to pay the dividend and roughly half of our excess cash to reduce debt. In the current environment of high inflation and rising interest rates, however, our adjusted EBITDA has temporarily declined while interest expense has risen substantially, resulting in a dividend payment that now consumes substantially all of our excess cash. The model has been further strained by the increased costs that flowed into our inventory over the past 2 years, resulting in significant revolver draws to fund our working capital needs. While we expect working capital to be a modest benefit over the next year or 2, allowing us to reduce debt as costs stabilize, that has not been the case in 2021 and 2022. Therefore, we and our board of directors determined that it was prudent to reexamine our dividend rate in light of the current inflationary environment and our current cash flows and working capital needs. The result is a right sizing of the dividend to better reflect the current environment. Beginning with the dividend payment declared yesterday and payable on January 30, 2023, the current intended dividend rate for our common stock has been reduced from $1.90 per share per annum to $0.76 per share per annum. Based upon the new current intended dividend rate of $0.76 per share and our current number of outstanding shares, we expect our aggregate dividend payments in fiscal 2023 to be approximately $55 million. By comparison, including the dividend payment that we made in the fourth 1/4 on October 31, 2022, we will have paid quarterly dividends of $133.4 million in 2022. We believe that the combination of better operating performance in 2023, coupled with more favorable working capital trends and the reduction in our dividend, will help drive our efforts to reduce leverage and improve our balance sheet. Earlier on the call, Casey mentioned that in conjunction with our transition to a business unit organization structure, we are continuing to review our portfolio to ensure that we focus on brands that are consistent with the strategies of each business unit going forward. This review will influence the types of brands that we want to buy. It will also influence which brands we decide to keep and which we seek to divest. One of the brands that we have been focused on already is Back to Nature. This is a brand that made sense for B&G Foods to acquire when we were attempting to build our snacking portfolio. However, given our current focus, we now believe that there are better owners for Back to Nature than B&G Foods. As a result, we are actively looking to sell the brand and have therefore reclassified the assets of the Back to Nature business as assets held for sale on our balance sheet. Following this reclassification and consistent with the accounting requirements, we then measured the book value of the assets held for sale compared to the estimated fair value less anticipated cost to sell, and recorded a pre-tax non-cash impairment charge of $103.6 million during the 1/3 1/4 of 2022. You can find additional information about the impairment charges in our earnings release in 10-Q for the 1/3 1/4. We believe that a sale of Back to Nature and possibly other brands that may be a better fit in someone else's portfolio will help accelerate our efforts to reduce our debt. We will provide further portfolio updates as appropriate in the coming quarters. Now, I will turn the call back over to Casey for further remarks. Thank you, Bruce. In summary, the 1/3 1/4 showed continued pricing recovery, offsetting roughly 80% of the gross margin impact of rising inflationary input and operating costs. We have implemented all pricing actions to fully recover projected costs in fiscal year 2022 and expect the fourth 1/4 to show continued improvement. Further, we are taking actions to improve our capital structure in a rising interest rate and inflationary environment, including divesting Non-Core assets to improve portfolio focus and reduce debt, and lowering the dividend to a more sustainable level that continues to provide a strong yield to our shareholders. This concludes our remarks, and now we would like to begin the Q&A portion of our call. Operator? Thank you. If you would like to ask a question, please press star one on your telephone keypad now. You'll be placed into a queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question, please press star one on your phone now. We will hear first from Andrew Lazar with Barclays Capital. Great. Thanks very much. I appreciate the questions. Maybe to start off, you mentioned, I guess, if I compare sort of your pricing contribution and the volume impact, right? The volume impact's been much more severe, it seems, than most of your peers in response to pretty similar pricing. You called out 2 specific aspects, right? The Green Giant piece, and spices and seasonings, capacity constraints. If we were to sort of take those out of the equation for a minute, I guess, what are you seeing more broadly across the rest of the portfolio on elasticity? Is it greater than kind of what we're seeing for peers and how does that sort of affect the potential for what may be needed in terms of incremental pricing as we go forward? I guess there's 2 ways I'd talk about this, Andrew. First, if you look at our results in the 1/3 1/4, I do believe the volume declines, some of them are not related to elasticity. The spices and seasonings is really recovering distribution that we lost in the supply disruptions of the first 1/4 and the second 1/4. It's not really a pricing elasticity issue, and that was a big chunk of the volume decline. I would say that on some other businesses, we are seeing elasticities that are marginally higher than we forecast, but not dramatically higher. For instance, Crisco, which would have the largest movements, you know, we initially, I think when we first started pricing, we're seeing elasticities in the 0.5 range. I would say in the last 1/4, they were more like 0.7, 0.6-0.7. You know, we're actually measuring this at a store level, so we can see exactly what it is. I think going forward, we are expecting that it could increase a little bit to, like, 0.8. That would be kind of a dimensionalization of how we think about it. I do believe, you know, if I don't, you know, I can't really comment on other people's portfolios, do I? I do believe we operate to some extent in categories with a higher private label presence. We will see a little bit higher elasticities, but greater than maybe other categories and, you know, our brand positions, et cetera. I would say, though, that relative to historical levels, you know, we're still seeing relatively low elasticities. In a couple of cases, our pricing is maybe moving faster than competition or private label, but we might have a period in Q3, like on the Green Giant canned business, where our pricing was a little bit ahead. You might see some slightly higher elasticities, but we expect, you know, as pricing moves in the entire category that will normalize. The bottom line is, I think if you looked at our business in Q3, the volume impact is not really being driven totally by the elasticities, and we expect, particularly in the spice and seasoning business, to have it recover in Q4. Got it. As we think about the new dividend rate, sort of capital spending that you anticipate, some of the working capital release that you hopefully get next year and EBITDA that could be sort of between, you know, 21 and sort of 22 levels, I guess where could we see leverage go, call it by, you know, the end of next year? Some of this is gonna be dependent on divestitures, right? Assuming some level of divestiture activity as well, I mean, is there a you know, where are you sort of trying to target where you think you can reasonably get to with some of these actions, into sort of late next year? Certainly down from where it is. It's hard to answer that question without giving you our 2023 EBITDA guidance number. Mm-hmm. You know, we should certainly expect to see working capital not be as punishing as it was the last 2 years, and so you should see, you know, some nice debt repayment. It's hard for me to give you a leverage target without giving you an EBITDA number. Yeah. Okay. Last thing- Look, I mean, Andrew, the only thing I would say is, you know, our Long-Term leverage range that we wanna be in, 4.5-5.5, we're not gonna get there. But I think we can get down closer to the low sixes. Mm-hmm Maybe even 6. I mean, that would be my goal, if we can get to that point within the next 12 months or so. Got it. Last thing for me would be just as you think about, you know, the characteristics or the filter that you're using to sort of determine what businesses maybe would be a better fit for someone else than for you as you go through this portfolio, how do you sort of think about that? Is it businesses with better growth, you know, patterns, profitability patterns, where you know certain categories that you're just like with the snack piece that you're like, "That's just not where we're gonna be"? How are you thinking through that as you go through the portfolio review? It's a little bit of all of the above. I mean, certainly, you know, the expectation isn't we're gonna go sell all of our great brands. I mean, think about when we sold Pirate's Booty. It was a great brand, but we got a really good price. As a result of that, we just really weren't in snacks in any kind of way that made sense. You think about other things like Back to Nature, sort of doesn't really fit in what we're doing anymore. There are certainly some older businesses that we could look at and see if we could monetize those at a level that makes sense and, you know, maybe someone that makes a lot more sense for. I think it's a You look at the portfolio, you look at the business units, and you look and say, does this make sense in the current construct with where we're looking to spend money to invest in the brand and build the business? I think, you know, if you think about our business units, Andrew, we're trying to set up platforms. The platform to me is a place where we think we can build capabilities where it fits and longer term fits with our core competencies, where we have sales and profit growth potential and also M&A platforms, where if we acquire businesses, we can bring them in, we can wrap them into our infrastructure and run them well, and they fit with what we do best. You know, some of the business like snacking, you know, cookie, cracker is just not where we've built a capability. It's a small business. It's just not, you know, something that we're gonna build scale in. It doesn't play to our core strengths of, you know, kind of dry warehouse distribution, so and, you know, longer shelf life products. I think, you know, we're trying to set up the platforms where we wanna drive the growth. The criteria are, you know, pretty consistent, I think, across, you know, where we think we have the strengths and where we can drive future growth and valuation. Great. Thanks so much. Yep. Our next question comes from Carla Casella with JPMorgan Chase. Hi, thank you for taking my questions. Did you get the EBITDA from the Back to Nature business? Did not. Any sense for whether it's higher or lower margin or does it generate EBITDA? It generates EBITDA. Really not fair to give a margin number out. Okay. I know you renegotiated covenants. What's your comfort level with those? Just your thoughts on you mentioned you have too much debt given the current rate environment, and I know your term loan's now more expensive than your bonds. Does that make you look at, you know, pay down differently than you would have in the past? Are you focusing on the term loan versus refinancing or paying down bonds? Always looking and seeing what we can do to optimize and in the world that we're living in, that theoretically could change every week, with some of the moves that we've seen. We're always looking. Bonds are. Okay, great. the majority of 2025, so we still have a little bit of time before we have to do anything there. Okay. Your covenant levels, you're comfortable with those? No more renegotiations? Yeah, we negotiated them to a certain level for a reason. Okay, great. Thank you. We'll move next to Hale Holden with Barclays Capital. Hey, thanks for all the detail there, Bruce. I had a quick question on just Back to Nature. Last time I saw sales on it was sort of ±$60 million. Is that sort of still the right ZIP code? It's probably been about $50 million for the last few years. Early on when we bought it was closer to $60 million. There was some really low margin business like cereals, juice boxes that we exited, and it's been kinda comparable levels since then. The business had performed fine during the pandemic, but didn't really get a big lift, like some of the things like, you know, canned vegetables or canned beans or canned meat. It's kinda just had, you know, decent performance, just not the right business for us over the long term now. Just as a quick Follow-Up on that, I mean, deleveraging is all about multiples, right? If you were not gonna get a sale price that was deleveraging or below kinda where your current leverage is on a tax-adjusted basis, is that still something you would consider? In this case or in any case? I guess in this case or in any case, 'cause the company historically has not sold assets for, you know, because the multiples or because the cash flow is worth more to you. I was wondering how you feel about that one. Yeah. Certainly in this case, our expectation would be that we'd be selling this at a price that would allow us to de-lever. Given the size, it's probably really not gonna move the needle too much. But it would be, you know, our view is we can sell this for certainly more than our leverage ratio is. As we look at other things in the portfolio, you know, there's a matter of fit, there's a matter of growth profile, margin profile, capital intensity. But absolutely, there's also a concept of what do we think we could sell it for? Who are the likely buyers? Is that something that's gonna allow us to de-lever? All of those factor into our portfolio review. Got it. I just had one last question on spices. We saw the announcement from McCormick that they were gonna put out more of a value line, and I was wondering. I know your spice profile is a little bit different, so I was wondering if that's a competitive threat or something that you would have to compete for shelf space on. I mean, they're certainly the big player in the industry. They have a different portfolio strategy than us and, you know, let them answer questions on their strategy. We play in a couple different areas and a couple different brands and categories, and so we have a different strategy than they do, and, you know, we're perfectly happy with that. We don't really have an entry in that segment. I mean, our portfolio is more blends, salt-free. We have Spice Islands, which would be an A-to-Z, but more in the premium segment. I mean, we don't have a direct line that's in that value space. Great. That was what I needed. Thank you very much. I appreciate it. As a reminder, if you'd like to ask a question, you may signal by pressing star one at this time. We will take our next question from Rob Dickerson with Jefferies. Good afternoon. Last 1/4, I think we had talked to that we'd realize about 85% offsets on the inflation and then kind of 100% in the fourth 1/4. I thought I heard you say we were kind of at 80. Is that just the timing aspect of when those prices went in, or are you seeing a greater than expected inflationary push out there? I mean, the actual number, I was just speaking around that the actual number is like 83%-84%. Okay. I said in excess of 80, so, you know, it's pretty close. I would say, you know, we had, like we talked at the beginning, a little bit more volume softness, maybe slightly more elasticity than what we modeled, but pretty close. I think we're on track with what we expect for Q4. When you look at that volume softness, I mean, where is that volume going? Is it transitioning into private label, or is there a competitive response out there? I think the volume softness that we talked about, it's really the 2 significant drivers are, you know, Green Giant canned vegetables. That's I think the biggest piece of volume is that we exited a discount channel or dollar business that was looking to be no profit for us in this inflationary environment, so we dropped that distribution. So that's one. In canned vegetables also, our pricing moved probably earlier than either private label or the Del Monte. So we're a little bit ahead of the curve, which caused a little volume softness, but, you know, we fully expect category pricing is gonna move. On the spice and seasonings business, it was really frankly, it's really mostly related to, we had significant disruptions in our factory in the Q1 period during Omicron. At the time, we couldn't support, you know, kind of sales or distribution, so we had to kinda, like, you know, some of our distribution got pulled back, and we're just now kind of getting it back in with full service and capability. Like I said, spice and seasoning, I'm not as worried about because I can already see the 1/4 to date, the October numbers, and they're pretty strong. You know, they're growing. So that one I'm less worried about. The Green Giant, you know, we wanna keep watching that trend on pricing pretty closely. Okay. When you referenced next year, call it inflation of 4%-5%, tomatoes, glass and other things, is there another round of pricing that's coming, or did that October price increase that you guys put in, you know, account for that future inflation? No, the October price increase was really just to cover the current fiscal year 2022 cost run. The new cost increases that we expect to come in next year of that 4%-5%, we will have to execute new pricing, but it won't be that broad. It'll be on things that are really sensitive to the major commodity movements. Because what we're seeing is a lot of commodities have stabilized or a lot of input costs have stabilized. There's a few isolated ones like tomatoes because of the drought in the West Coast that are up significantly. Tomatoes are up 30%-40%. And then glass continues to be short in the industry, so we know anything in a glass jar or bottle is gonna have some cost increases. We'll be much more surgical next year about where we take pricing to recover the significant inputs. We won't have to do anything broadly in the line. It'll be against the product lines that are really experiencing the cost increases. Thank you very much, guys. Appreciate it. Thanks, Greg. We will move next to William Reuter with Bank of America. Hi. When you guys were responding to the previous question about leverage, and I know that you didn't wanna provide something that would give us, you know, what EBITDA guidance would be for next year, but it did sound like you're hoping that through divestitures plus business improvements, that next year you guys could be down to a 6x range and then with a longer-term target of 4.5-5.5. Was that the message we were supposed to take from that? We want to decline from where we are now. We wanna get below 7 first. We wanna try and get into the 6s, even the low 6s, if possible. I think that's what you heard from us. We're not gonna probably be able to get down to our Long-Term range. All that will depend on, you know, we expect working capital needs will be lower. We expect EBITDA flows to improve. We'll have some divestitures that will hopefully help us de-lever as well. All those things, you know, happening, depending on what degree they happen, will drive how much progress we can make. Understood. Are there certain assets that are off the table in terms of looking at? I guess, is there other scenarios where you could end up selling, you know, really large components of the business if there were buyers out there that would decrease leverage really meaningfully, you know, far below six times? Yeah, I think at the end of the day, it's kinda hard to comment on M&A before it's happened. Certainly, we are financially driven. We've always been financially driven, so I think we'll evaluate things based on opportunities and based on value and valuation and what the financial impact is. Certainly, we're very much interested in what our portfolio is gonna look like when we're done with all of that, and we're very focused on having a portfolio that's consistent with the business unit strategies that Casey laid out and something that we're gonna wanna run as a public company. Got it. Yeah, I know that. We'll evaluate fit pretty strongly in terms of where we wanna go. We're not just gonna do this for just purely deleveraging. It's gonna be about our strategy and shaping the portfolio against the businesses that we can grow, that we can create platforms for, we can add value, get synergies. You know, we'll be focused on that as much as we can get some deleveraging out of it. Perfect. Just lastly for me, I know you mentioned that you lost some shelf space in spices and seasonings. Did you get all of it back, or was some of that permanently lost? I guess, was there any other shelf space that you guys lost, permanently as a result of low fill rates earlier in the year? I think most of it we're getting back. It's just happening on different time frames. You know, some of it was just we were out of stock, so we're just now getting back into the shelf from an out-of-stock situation. In other cases, you know, retailers kind of temporarily replaced us, and we're working our way back in to get our, you know, individual items back in where we couldn't service it. In other cases, you know, that there might have been longer term losses, but we've gone in and sold in the new planograms and mods and been able to get most of that back. So I feel pretty confident, like I said, that we're on the right track, getting spice and seasonings growing again. As I said, you know, the fourth 1/4 start looks pretty good. Perfect. That's all for me. Thank you. Thank you. Once again, it's star one if you'd like to ask a question. Our next question will come from Eric Larson from Seaport Research Partners. Yeah. Thanks, guys. Thanks for taking my question. We've talked a lot about pricing, and that's been kind of the center of discussion, but you haven't really given us an idea of sort of what kind of productivity you have this year. That's also probably has to help you somewhat, at least limit some of your pricing. What is your productivity, you know, contribution this year, and how much could you expect to have? You know, I don't want guidance per se, but will productivity play an important role again in 2023 as well? Yeah. We do have a productivity program. I think this year it's kinda hard to separate a couple of impacts. Productivity has had, you know, I'd say in pure cost savings, we have delivered, you know, probably around 1% in productivity. But we've also had a lot of engineering effort against doing some down weight and downsizing. Think about Crisco, the some of the Green Giant box products. A lot of our productivity efforts went towards, you know, changing our packaging size and configurations and managing through all that. I think that's probably, you know, we're through most of that now, so we're gonna direct that effort to pure cost savings. I would say next year my goal would be to get us up to at least 2% pure productivity. We've got you know, our business units are now working against that harder to try and find value engineering and product reengineering, you know, opportunities. I wanna grow this over time, but next year I would say we're gonna get up to probably more of a 2% run rate versus this year at a 1% with a lot of packaging reduction activity. One other thing to mention. We've talked previously when we were talking about pricing of getting to a $200 million plus number for the year. You know, with the benefit of the 1/3 1/4, a lot of this was back half weighted, but we're at something north of $130 million in benefit already through 3 quarters and feel very comfortable with that target for the full year. With an October 3 price increase, I'm guessing that you probably won't get the full benefit of that in the fourth 1/4. Maybe by first 1/4 next year you'll get that full benefit. If you kind of look at your pricing less the kind of loss of volume, et cetera, have you been able to actually cover your gross profit dollars in terms of your cost increases, or are you still short on a dollar basis? I'd rather hear more about the dollars than the% margin. I mean, that's the 83%-84% number in the 1/3 1/4 that I quoted before. expectation that you're covering that by the fourth 1/4. Yeah. Okay. Got it. Thank you. Thank you. The 10.3% price increase honestly was kind of a smaller. You know, so I think we're gonna get 80%-90% of the benefit of that in the fourth 1/4. Okay, perfect. Thank you for clarifying that. Thanks. Our next question comes from Kenneth Zaslow with Bank of Montreal. Hey, good evening, guys. Hey, Kenneth. Hey. I guess my first question is, as you said during the call that the veggie oil business is actually on par relative to your base case or your business case. My question is, when I think about your total reduction of guidance from the very beginning, which I think was like $60-something million reduction, where was that from? If it wasn't at all related to Crisco in any way and it was all related to the base business. Is that the way to think about it? It's both. You know, so I guess the point from a Crisco perspective, there was a lot of cost increases. There have been a lot of price increases. It is still performing, and our expectation is that that business is still gonna perform in line with our model. On a this year basis, you know, we saw margin compression across the portfolio. Yeah. Some areas more than others. Crisco, I would say, you know, we are getting back to delivering against the model, acquisition model in the 1/3 1/4, but we were not there in the first 2 quarters. Yeah. Because costs were moving faster than pricing. We now feel confident that pricing. Oh, so just to- Yeah. Yeah. I misunderstood you. I thought you said it hit your business case for the acquisition. It didn't, it is starting to hit that versus where it did. It's starting to. The run rates are starting to return to that. It hit it in 2021, but in the first 2 quarters of 2022 we had a little depression, but we're now on a run rate basis kind of getting back. Yeah. The real challenge was 2 of the months in the second 1/4 were really bad, where costs escalated, and we were not able to raise price fast enough. What happens in 2023 if there's another sizable increase in veggie oil prices as more renewable diesel comes online? I think there's another slotting of renewable diesel. Can you be proactive and be ahead of that? Do you have to wait for the pricing of vegetable oil to go up? How do you think about that as you do that on- Yeah. Our goal is to be tighter from a pricing standpoint than we were this year. I think with all of the price increases that we've had and cost increases on Crisco, we've done a pretty good job at covering that with the exception of April and May of this year, which is really where a lot of the pain on a Year-To-Date basis is. If costs increase and, you know, not so long ago people were talking about relief on vegetable oil. You know, costs increase, we're gonna be as aggressive as we can and as fast as we can to nail those cost increases with price increases. We've seen an ability so far to pass price on. Expectation is, you know, we're gonna do as good of a job as we can going forward. We are shifting our approach on Crisco pricing, by the way. We're moving to more of a kinda quarterly commodity-based pricing model with our retailers so that we will have. You know, we'll kinda go actually take an average market cost and then price to that with the retailers, on a kind of a forward basis. I think you're gonna see us. We're moving our pricing structure and how we manage it to try and to get much tighter against the actual costs running through the P&L than we were this year, which we got kinda shocked by the Ukraine war situation and everything went out of whack. I'm pretty confident we're gonna move to a better model this in fiscal year 2023 with our retailers. Okay. My second question is, I think you said that all your pricing has caught up to your commodity inflation, and it's covered that. When I think about 2023, 2024, how come your recovering EBITDA won't be quicker if your pricing has caught up to the inflation. Is it still just the challenges on supply chain? You know, what's the discrepancy between that if you were able to catch all your pricing? I'll leave it there, and I appreciate your time. Yeah. I think the biggest part of that, Kenneth, is it's still a very uncertain world. There's been massive cost increases. We've taken price. We've been fairly aggressive taking price. It's hard to sit back right now and say, "Hey, we're gonna take our margin dollars back up to where they were in 2021 or 2020, in 2023." It's a lot. We wanna be appropriately cautious on that. Great. I appreciate it, guys. Thank you. Yep. Thanks. Your next question comes from Robert Moskow with Credit Suisse. Hi, thank you. You're not alone in terms of spice and seasonings companies having problems with supply chain, and I just wanted to know, maybe give a little more detail on what were the core reasons for it. I mean, was it hard to get spices from overseas, like hard to get the raw materials? Was it labor, or was it capacity constraints? Why is it better now? It's probably a mix of capacity, labor, and some other issues. The biggest driver when you really think about the spices and seasonings category is the massive uptick in sales and demand that we had on a broad scale with COVID. Kinda reacted 6-8 months after the beginning of COVID, and the category just got really big. Where we thought we had a lot of excess capacity, suddenly we were running up into capacity constraints, and that was exacerbated by, you know, a tough labor market for a little while. COVID happened to hit some areas harder during the Omicron phase than it did at the height of the pandemic for some factory disruption. It was kind of a perfect storm. Yeah, for us, it was really December through March of last year. We, you know, number one, we had a big, our plant in Iowa, we had a lot of Call-Outs. We had a lot of Omicron infections. We were understaffed. The labor market was really tight. You know, we were having trouble with some, you know, getting even availability of some materials, packaging, those things. Our service levels fell down, you know, below 80% in the first 1/4. That was where we were. We're just recovering from that, and now we're up in the mid-90s. We feel, you know, we are back in service. We're able to kinda supply the business. We went through a period where we were not able to do it, and that was really a tough trough to dig out of because we, you know, we went low on safety stocks, started cutting customers. I think we're now back in business, and so I feel we're on the right track. Yeah. Part of that was just weird dynamic. When we bought that business, that factory, state-of-the-art factory, we always said we had excess capacity there. You know, part of the M&A strategy became, let's buy more things in spices and seasonings, because we've got a lot of capacity in the factory. The reality is, the way the category grew, you know, 2021 and during 2022, the sales demand was so much bigger than what we were able to, even in a normal environment, provide, coupled with then we had challenges from a, you know, as Casey outlined from COVID and disruption and labor. We were 10% understaffed at that plant in January because of the tight labor market and then we had 20% Call-Outs because of Omicron. I mean, just that's what happened. We had some material shortages, and it all compounded, but we're back in business. We're running well. We're fully staffed, and we've got what we need to kinda service the business now. Okay. Well, my Follow-Up is, you know, now that you're taking steps to kinda rejigger the capital structure, you know, I've noticed that your CapEx spending is well below your peers on a% of sales basis, and you are bringing up, you know, the fact that you bumped up against capacity levels here in spice and seasonings. Will there be any thinking internally on increasing investment behind the business or at least in the areas of the business that really need it? Yeah, I mean, I would say number one, my perspective on the capital is it's really not that far off of our peers because you gotta consider that half of our product lines, half of our sales are co-manufactured, where we're not really, you know, spending the capital. So we're spending capital on half of our product lines and our own assets. On that basis, we're not too far off. We're not too far off. At least my experience in the food industry. I would say that we will invest where we need capacity. So we have invested in some new lines at Ankeny in the spices business, particularly in some of our food service and chef bottles and other places. You know, we have invested in capacity on taco sauce, on Ortega. We will invest in capacity where we need it. I mean, right now, I don't think there's a lot of places that we necessarily need to build additional capacity. You know, but there will be some minor investments to do that over time. When we cross a threshold where we need to do it, we will invest, even if it means going above our current capital. Okay. Thank you. Thanks, Robert. This concludes our question and answer session. I'd like to turn the call back to Casey Keller for closing remarks. Thank you everyone for joining us. I appreciate all the questions, and we will talk to you next 1/4. Thank you. This concludes today's conference call. Thank you for attending. The host has ended this call. Goodbye.