Our company was here, so I got to Right spend some quality time with them. Perfect. All right. Welcome back, everybody, and hope everybody is staying engaged in what I know a very long day, but hopefully a really, really productive one. For our last fireside of today, we are going to welcome back to our stage B&G Foods. With us today are newly appointed President and CEO, Rob Mills, and CFO, Bruce Wacha. Thank you both for joining us. Thank you. And congratulations, Rob. Thank you. Yeah. Maybe a good place to start, perhaps a natural place to start, is your decision to step into the CEO role. You have served on the B&G Foods board for the past eight years, so unlike many incoming CEOs, you already have a fairly deep understanding of the company's brands, capabilities, and challenges. What ultimately attracted you to the opportunity. As you move from the boardroom into the CEO seat, I guess, where do you think the greatest disconnect may exist between sort of B&G Foods' underlying potential and its recent performance? Yeah. So, I was on the B&G Foods board for about eight and a half years. Been in the role for four weeks now. What I will say is fundamentally, I think the strategy is on track. I had the opportunity to oversee the governance and then move into the execution of running the day-to-day operation. To me, that's what excited me, because I saw tons of opportunities with B&G Foods. When I think about the first four weeks, we have really put a lot of focus on going brand by brand and understanding where are there opportunities to either grow the brand, stabilize the brand, or is there investments or fundamentally something that we have to do transformational with the brand. I would kind of sum it up into four areas. One is there's an opportunity around profitable consumption. Over the last couple of years, it feels like the organization has gotten distracted and was not putting the place or the focus on consumption. How do we shift our energy to profitable consumption? I think the team's done a great job of reshaping the portfolio. That's never ending, and that will continue to go on. But with that, how do we ensure that we're sharper on our priorities, drive better execution, and then ultimately look at how do we drive EBITDA expansion, margin improvement through different type of initiatives. All those are the things that makes me really excited about taking on this role. But it's going to be about execution, speed of delivery, a sense of urgency, and then leveraging my background, coming from a retailer and knowing the retailer mindset as well as the digital mindset. How do you lean in to use data to make faster decisions? And having been on the board for a number of years, you presumably had a role in helping shape and overseeing the company's existing strategy. Now that you're responsible for executing it day to day, which elements of that strategy do you believe remain fundamentally right? And where do you think a different approach, maybe greater urgency or a higher level of accountability may be required? Yeah. So once again, I think the team's done a really good job of managing the portfolio. There's been a lot of changes over the last three years to strengthen our portfolio with the divestiture of Green Giant, cost, looking at our SG&A, right-sizing of the organization, all the above. And once again, that's going to be an ongoing effort that we're always going to look at. When I think about areas that we're going to double down on, it is going to be looking at how do we look and spend our marketing dollars. So today, we really take the approach of major programs. I don't believe for a mid-size cap company we need to. What we need to do is really focus on clear priorities and how we're executing with great focus and taking the dollars that we have and really putting them to work for us. And through retail media, through digital, all the above, how we could hone in and really drive around brand awareness, equity, and then more importantly, contribute to the retailers around their digital strategy as well. There's a little bit of a strategy shift there that will occur. The last component, it is going to be about operational excellence. What I mean by that, I know that's a buzzy word, but it is about how we run our plants and our manufacture with strong productivity, labor standards that ultimately will improve our cost structure. But how do we drive volume back into the plants that will improve the profitability of our products and our plant operations? As you think about the next 12- 18 months, what are the sort of two or three operational or financial metrics that you think will matter most in assessing whether the business is beginning to move in the right direction? Is the immediate priority stabilizing branded retail consumption, improving cash generation, reducing leverage, or do those objectives need to progress more or less simultaneously? Yeah. So, there's going to be a lot of parallel efforts here to keep a focus on where we need to go. It's going to be really four key. One, profitable consumption, both for tracked as well as non-tracked metrics. We've over-indexed and kind of changed our messaging over the past couple of years to really focus on non-track, and we have to win in both. So consumption, profitable. EBITDA, how do we continue to grow and expand our EBITDA, which ultimately then leads into how we could pay down debt, deleverage at a faster rate, and have a clear path to deacceleration of our deleverage position. Lastly, our brand awareness which ties right back into consumption. Do we have relevant brands? Are we priced right? Are we selling at the rate that we expect? And to me, it's a cylinder, it's a flywheel that ultimately will grow better profitability, more sales, and de-leverage us at a faster rate. I know one of the more difficult aspects of evaluating B&G Foods is the divergence, which you touched on just before, between measured retail trends and the total base business. I think roughly 40% of the portfolio now sits outside traditional measured channels. In areas such as food service, Canada, private brand spices have generally performed better. But measured branded retail consumption remains challenged. How do you assess the underlying health of the business when those two pieces are moving so differently? Which one should investors view as the better leading indicator of future performance? Yeah. So it's pretty simple. We have to win in both. As you noted, we are doing extremely well in kind of the non-track channels, clubs, dollar, web, Canada, private label, et cetera. This is an area that the team's focused on over the last couple of years, and it's a key part of our strategy, and it will continue to be a key part of our strategy, especially when you look at plant utilization and where we can continue to take market share. With that being said, retail is the core of what our brands exist for, and we have underperformed there. We have to have a greater sense of urgency. We have to make sure our capital and our resource dollars, so allocation is going to be really key to the critical brands that will help accelerate our growth in that, and specifically around consumption. And then more importantly, how do we take some of the smaller brands and play into that and lean into it for maybe just really small incremental dollars where we could have some wins? A great example of Grandma's, it is typically used for baking. We are very strong within the baking category, but is there extensions now into other seasons? So think about Easter or Father's Day for grilling, et cetera. So for very minimal marketing dollars, how do you actually shift that and drive more occasion using that brand with using better insights around marketing and marketing data? After base business sales increased 2.8% in the first quarter, supported by positive volume, they declined 2.9% in the second as volume fell 4.3%. Some of that reflected the holiday shipping calendar, but you also acknowledge that performance in the retail branded portfolio needs to improve. What do you see as the principal causes of that deterioration? How much is attributable to the consumer and category environment versus B&G specific issues around assortment, distribution, pricing, or execution? Yeah. So, hey, the whole category, the whole industry is under a lot of pressure, and the consumer is, too. And I am a firm believer, own what you can control and make sure we execute that very well. And that is where we need to double down. I think when it comes to pricing and having clear pricing architecture strategies for some of our brands, that is an opportunity for us. In some cases, we might be raising price. In other cases, we might need to look at a price decrease to balance both the EBITDA as well as sales and driving overall consumption. I would not say there is a silver bullet for one, and you are not going to see a major transformation that will occur or a big project that is going to solve this. It is all about being hyper-focused, clear priorities for the team that somewhat has been distracted over the last couple of years for various reasons. But on what brands we are going to invest in, where we are going to double down, and how do we drive that consumption? Yeah. Andrew, just another piece because you mentioned it. We had a pretty strong first quarter. Second quarter from a sales standpoint, there were some timing nuances. But through the first six months, we are flat on a base business concept. Through eight months, we are actually up a little bit on a base business concept. We are tracking very comfortably to where our guidance is at $1.735 billion- $1.775 billion, which is premised on being kind of flattish at a base. We are on track for that. One of the things that we want to make sure people understand is there may be this concept of a malaise in the center of store. We are performing from a top-line standpoint. There are pieces that are performing better. There are pieces that need some work as you asked and as Rob answered. But I think we are making progress in terms of stabilizing that top line. Thank you for that. And just one last to add on to that. We don't fundamentally believe that the center store is dead. We absolutely feel like there are challenges and there's been some decreases, but we could do better. You look at College Inn and Kitchen Basics, which by the way, I'm very excited and I think that's another great example of how we're leveraging our making smart investment decisions and the teams have done a great job. But those categories, those brands are very much alive and well in the center store. Packaged food volumes overall have been challenged now for longer than I think most companies in the industry or investors initially expected. As you evaluate B&G's portfolio, how do you distinguish between brands experiencing maybe more cyclical pressure from a constrained consumer and brands that maybe have a more structural relevance or competitiveness issue. Does that distinction change how willing you are to invest behind Harvest or potentially exit an asset? To me, that is the number one question for all our brands. We have to go brand by brand and understand, is it structural or is it a moment in time? Is it macro? More importantly, what's driving? What's the household penetration? What are the trends in the brand? What are the trends in the category? Are we priced correctly? Is there innovation? Ultimately, through this process that we're going through, you're going to see us make a decision and there's going to be specific brands or categories, baking could be a great example, we're going to double down and because we can win, we have that right to win in that category. It's something that we can control, and we could execute well, where there might be different trends, within certain other categories or products that we'll pull away from. Spices and flavor solutions has been one of the better performing parts of the portfolio at different points, supported by food service, club, and private brand relationships, as well as investments in manufacturing capacity. At the same time, measured branded trends have been more mixed, including some distribution shifting from brands such as Tone's and Weber into partner brand products. How do you think about the right long-term balance between growing the branded private brand and food service pieces of the business, particularly given the different margin and brand equity implications of each? Private label plays a big part of our spice portfolio. Ultimately, it's doing great. It's having strong growth. We believe that private label within some of those categories makes a lot of sense. It drives up productivity, so there's an offset to the margin. At the same time, we feel that we could double down and look at our branded products and compete very successfully with them. I think it's going to be a balance between where are we going to go deeper in and how we look at private label pricing and having a strong pricing architecture for each of the brands and the categories is what's going to allow us to win there. Because College Inn and Kitchen Basics were acquired in March, the upcoming fall and winter period will certainly represent the first meaningful peak season under B&G Foods ownership. I guess, what have you learned during the integration so far? Where have you needed to repair or rebuild capabilities following the prior owner's bankruptcy process, and what will you be watching to assess whether the first full season has been successful? This business is extremely promotional, I'm sure everyone's aware. As we enter this season, broths are in stock, are bought all year round. Q4 is an area that you see heavy seasonal promotion. We feel like we're priced right with the right promotions going into this season. For College Inn, it's number two brand in the Northeast, and we have to defend and maintain that position. Some of it might come with our pricing and architecture and how we're thinking about promotional opportunities associated with that brand. What I would say with Kitchen Basics, it's a premium brand. It has grown under our watch over the last few months. We also see a tremendous opportunity to expand that and potentially take the brand into other categories. Second quarter adjusted EBITDA margin improved despite the sales decline, but the quarter also benefited from portfolio mix, SG&A reduction, and a tariff refund. If we strip away, I guess, some of those discrete and transitional items, how would you characterize the underlying earnings power of the current portfolio, and what are the most important drivers of sustainable margin expansion from here? Yeah. Certainly the second quarter, we had a lot of puts and takes. There were good guys that you mentioned. There was also some investments in price that we made in some of our key brands. I think that's the margin structure. Those positives, some of the risks around costs, around freight, fuel, et cetera, those are all baked into our guidance for the year. We're tracking just like we are on sales. We're tracking to that guidance from an EBITDA standpoint. Feel pretty comfortable with that. You've indicated that at least some of the tariff refund or other favorability may be reinvested behind the business. Given the need to stabilize branded retail trends, how do you determine the appropriate balance between reinvesting upside to improve demand and allowing it to flow through to EBITDA and cash flow, particularly when leverage and interest expense remain elevated? Yeah. There's a portion of that where it's going to pay for itself, and so we've got to drive some sales with those investments around, whether it's pricing or marketing. There's certainly a portion of trying to manage to a full year EBITDA number, and so you've got some flexibility in there to make trade-offs. They're not all in the same brand, and they're not all in the same sectors, and so you'll see some of our performances across business units. There's a mix, but together they're kind of working. Okay. A lot of the equity conversation centers around improving the top line. From a credit perspective, the more immediate focus remains leverage and refinancing risk. You've discussed getting leverage closer to 6x, and ultimately below that level. With the 2031 refinancing now completed at a meaningfully higher interest rate than the debt it replaced, how are you thinking about the next several turns of deleveraging from here, and what leverage level do you believe is necessary before B&G Foods can once again access capital markets, maybe on more attractive terms? What gives you the confidence in your ability to get there? Yeah. We are striving to get back to that 4.5-5.5 times leverage ratio. We made pretty good progress last year bringing leverage down. The divestitures of the various pieces of Green Giant have helped that, as have more stable performance. From an acquisition standpoint, we had an opportunity with College Inn and Kitchen Basics to buy those at really attractive multiples through the bankruptcy process, where they are actually deleveraging transactions. We need to bring our leverage down, but we're also focused on investing in the business. If you look at our senior secured debt and our term loan, those are trading at pretty reasonable levels, and so we think we still have access to the high-yield markets. We've been issuing high-yield debt since the mid-1990s. We expect to continue. Part of that means that there's always a maturity. So, we'll handle our 2028 maturity, and then we'll have a 2029 maturity. It's sort of the nature of the capital structure and always will be. When you think about the company's normalized free cash flow over the next 12-18 months, which we estimate will be positive, how do you consider the need to reinvest to drive growth, fund the dividend, position yourself to be able to absorb higher interest costs when the 8% 2028 notes come up for refinancing at the go current point? We're all pulling for lower rates, but what happens if the current status quo continues? Look, we're going to have to just continue to drive towards better performance. There is a little bit of walk and chew gum, and so you're highlighting all very valid priorities for us of reducing debt, of maintaining our ratios, paying interest expense. We think our equity investors appreciate the dividend, and so we're trying to do it all. We think we're in a much better situation now than where we were last year at this point in time. Sure. We've strung together four or five pretty reasonable quarters in a row from a performance standpoint. How critical is it to get the final Green Giant sale in Canada done? Do you have a timeline to resolution? Would you keep it if needed? Will that business require maybe a working capital investment this year that affects normalized cash flow? Yeah. We're in a process. We have a buyer. There's a regulatory review process. We're hoping to get to a completion of that by the end of the year. It's been delayed. It's frustrating. We still think it's a good transaction for all parties involved, including the consumers in Canada. If we don't sell that business, we'll run it better. We think there are other buyers for the business, so we'll drive to a conclusion. But it is the number one brand in Canada for canned vegetables and for frozen vegetables, so we think it's a valuable asset. I think there's a number of options, but certainly, we have a transaction we'd like to complete. Rob, your background includes digital commerce, technology, data, and large-scale transformation capabilities that B&G Foods has specifically highlighted as relevant to its next phase. Where do you see the most practical opportunities to apply those capabilities within B&G Foods, whether in demand forecasting, revenue growth management, supply chain planning, customer analytics? How quickly could they begin to have a measurable financial impact? Yeah. First thing, I'm not trying to turn B&G into a tech company, which, hey, throw out the word AI, it might help the stock a little bit. But with that being said, I am a firm believer in technology and data could help accelerate and address business challenges. With that being said, it's about using data and using that data to drive speed and make more effective decisions. Those discussions are well underway about how do we start putting that a part of our DNA. Measurable outcomes will come with time as you start seeing performance improve over and over. What I will say is I feel like we have a good foundation in place with the data that we have, but we could accelerate our thinking, especially around marketing, the consumer insights, and more importantly, even the different channels, and using that data to help influence innovation, pricing decisions, and overall just consumption, which is our primary goal. One possible challenge for B&G is the company still manages a broad collection of smaller brands across multiple categories, customers, and channels. Does the organization currently have the right structure and capabilities to manage that complexity effectively, do you think? Are there opportunities maybe to simplify decision-making or concentrate resources behind sort of fewer priorities? Yeah. I think this is B&G's number one opportunity, or within the top five, no doubt. Complexity is not necessarily bad unless it starts slowing you down. I do think we have created structures in place that at times has created us a level of inefficiency, especially with how we're running plants, as well as our marketing spend and the efficiency of how we're using our dollars to drive new customer acquisition. Those are areas that we are definitely focused on as we're going through brand reviews, and more importantly, just the fundamentals of the organization, what needs to change. B&G Foods has already made, obviously, substantial progress in reshaping the portfolio, including divesting several lower-margin and more working capital-intensive assets while acquiring College Inn and Kitchen Basics. As you assess the portfolio with sort of fresh eyes, at least in the CEO role, how close are the [inaudible] the portfolio you ultimately want to own? What characteristics will determine whether a brand is viewed as sort of a core growth platform, a cash-generating asset, or a candidate for divestiture? Yeah. Through my eyes, and feel free, Bruce, to chime in here. One, it has to have relevance with the consumer. It has to be on trend. It has to be priced appropriately. More importantly, we have to be able to co-pack it or manufacture it to the needs of the customers. It has to have a growth path by ensuring that we're putting the right investment behind it, that we're confident that you're going to see the growth that we're expecting. With that being said, there are plenty of brands out there that does not need a lot of investment that generates a lot of cash. We'll continue to leverage those brands to generate the cash and then drive a level of innovation to introduce new brands that will hopefully just enhance the category. I look at the work that we've done on College Inn and Kitchen Basics. This is a great example where I think we've leveraged and made a smart investment. We've brought in two brands at a lower multiple that's able to be accretive on day one to our overall margin structure, and it is an on-trend demand with that consumer. We need more of those, but the smaller brands, there's clearly opportunities there to take them and help accelerate or to generate more cash out of them. Yeah. Andrew, the big lift for us from a portfolio review rationalization strategic review is Green Giant. We're closing days of that. That was a big effort from a total portfolio reshaping. I think over time, we still expect to be a net acquirer. Looking for other College Inn, Kitchen Basics, Clabber Girl type transactions where we can add an attractive brand in categories that we think have pretty reasonable characteristics. As far as divestitures, we're realists. We're an M&A vehicle. We will always be reviewing our portfolio if there's an opportunity, either because it's a smaller brand and it's more relevant for somebody else to own than us- to make those decisions. Or several years ago, we had a very nice snack business that we sold at a big multiple. Those are opportunistic, but options as well. With branded retail volumes still under pressure, how are you thinking about fixed cost absorption across the manufacturing network? Do you believe the current footprint is appropriately sized for the post-divestiture portfolio, or could further network optimization, co-man opportunities or private brand volume be needed to improve utilization and returns? Yeah. So one of the things to keep in mind is, it's not perfect math, but we're about 50/50 between self-manufactured and contract manufacturing. In some cases, volume loss, particularly if it's not good margin or it's not profitable, if it's a co-pack business, it's not as alarming or concerning. Where we have factories, we've got some. So take a dozen factories. We've got some like our spice facility where we are continuing to invest in new equipment and new lines to be able to boost production and meet demand because it's a growing category, and it's a factory that's appropriately stretched. Sure. We have some where we're looking at other opportunities to bring in-house, where we can drive volumes and improve absorption in the math across those for the brands that are competing. So it's a little bit of a mix. Just a reminder again, for B&G Foods, we're heading towards a flattish year from the sales. It's not a sales decline year. As a reminder, we're half contract manufacturing, half self. Yeah. Over the last 18 months, B&G Foods has simultaneously pursued divestitures and acquisition, debt reduction, a dividend reset. As we move beyond the Green Giant portfolio review and what may be more normalized or stable environment for the company, can you walk us through the capital allocation framework from here? Specifically, how do investors think about the relative priority of debt reduction, acquisitions, reinvestment and protecting the dividend, particularly while leverage remains elevated? Yeah. We have always looked at things as an EBITDA less CapEx, cash interest and cash taxes. For us, that math has to work. Historically, there was about a 50% allocation of that EBITDA less CapEx, cash taxes and cash dividends or cash interest for dividends and half for debt reduction. With the recent dividend change, that is probably more a third for the dividend and two-thirds for debt reduction. Okay. Got it. Maybe a good way to wrap up. One of the arguments in favor of the recent portfolio transformation is that while the company may be somewhat smaller, the resulting portfolio should be more cash generative, less working capital intensive and more stable. As you sit here today, I guess how much better is the quality of B&G's free cash flow maybe compared to where it was before the Green Giant review began? And where do you still see opportunities to improve cash conversion further? The problem with Green Giant, it is a fabulous brand. It is iconic. Number two in the U.S. for canned and frozen, number one in Canada. The problem with that business for us is we are not an agricultural company. There is a heavy seasonal pack where if you timed it perfectly, you were buying all of your inventory at the end of the pack season, and you were timing it such that you sold that inventory and finished on fumes for the next pack season. We never really got that perfectly. It is not really what we are. There are seasonal businesses where we have, there is a build. There is a build for College Inn and Kitchen Basics, but it is much smaller. It is product with a longer shelf life. For us, we think our cash flow, our working capital cycle is very much improved. Part of the reason around Green Giant strategic review was cash. It was getting out of that vicious working capital cycle. Yeah. Okay, good. All right. Maybe that is a good place to wrap it up in here. Please join us over in the breakout, and please join me in thanking Rob and Bruce for being here today. Thank you.