B&G Foods, Inc. 2026 Q2 Earnings Call

A.J.? Good afternoon, and thank you for joining us.

With me today is Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter 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' most recent 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 condition. 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, segment Adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit percentage, base business net sales, and segment adjusted expenses. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. Bruce 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 2026 and beyond. I would now like to turn the call over to Bruce.

Thank you, A.J. Good afternoon, everyone. Thank you for joining us today. I'm going to cover a number of topics on our call this afternoon, which will include our change in CEO and why we are so excited to have Rob Mills join our executive leadership team at B&G Foods. Our portfolio reshaping efforts, which consists of the divestitures of low-margin, working capital intensive business, including Green Giant U.S. Frozen, Le Sorex U.S. Shelf Stable, and the Don Pepino brand over the past 12 months. The establishment of our Green Giant U.S. Frozen contract manufacturing business, which we expect to provide a modest but consistent contribution to Adjusted EBITDA and cash flows, as well as the acquisition of the higher margin cash generative College Inn and Kitchen Basics brands.

Our second quarter results, which demonstrate our ability to grow Adjusted EBITDA and net cash provided by operating activities despite a challenging industry backdrop. An update on our fiscal 2026 guidance, which we are reaffirming at previous levels across net sales, Adjusted EBITDA, and adjusted diluted earnings per share. While it is taking time to implement this portfolio reshaping, and we are still evolving today, we can see the green shoots as our business results continue to improve, and we continue to better position ourselves for a more steady and more balanced financial performance in the future. Before I move on to our performance in the second quarter, I'd like to take a moment to comment on our CEO transition and the appointment of Rob Mills as our Chief Executive Officer.

Having served on our board of directors for the past eight years, Rob brings a unique combination of deep knowledge of our company and extensive operating experience. He understands our brands, our customers, our opportunities, and importantly, the challenges that we need to address. This familiarity significantly reduces the traditional transition period for a new CEO and positions Rob to move quickly, establish clear priorities, and accelerate the actions necessary to improve execution, strengthen the business, and create sustainable shareholder value. Rob's experience is particularly well-aligned with what B&G Foods needs at this point in our evolution. He joins us from Tractor Supply Company, where he has held senior executive leadership roles spanning strategy, digital commerce, technology, and business operations with direct P&L accountability.

During his tenure, Rob helped lead large-scale transformation and growth initiatives across a complex multi-billion-dollar public company while building deep experience in digital, data, AI, productivity, and operating execution. Rob also brings extensive M&A and corporate development experience, including evaluating, acquiring, and integrating businesses. This combination gives Rob a broad perspective on organic and inorganic value creation, disciplined capital allocation, and active portfolio management. Rob comes into this role with a strong sense of urgency and a clear understanding of B&G Foods.

During his first 90 days, he intends to spend considerable time with our employees, customers, business partners, and shareholders, listening and developing an even deeper understanding of the challenges and opportunities in front of us. His eight years on our board provide an important head start, allowing him to use this period not simply to learn the business, but to quickly establish priorities and begin translating these priorities into action. Rob's immediate focus will be on strengthening execution, maximizing the potential of our core brands, improving productivity and cash generation, and accelerating the strategies that can return the business to sustainable growth. Rob is excited about the future of B&G Foods and the opportunity to build upon the strength of our brands while bringing new capabilities and greater speed to the organization, and so am I.

We believe that his experience in digital transformation, data, and AI can help us modernize how we operate, better understand and serve our customers, consumers, and improve decision making and identify new opportunities for growth and productivity. Rob is also looking forward to engaging directly with the analyst and investor community in the months and years ahead and sharing more about his priorities and vision for B&G Foods. We believe that Rob has the right combination of institutional knowledge, operating experience, strategic leadership, M&A expertise, and transformation capabilities to move quickly, make disciplined decisions, and accelerate value creation for our shareholders. We are very excited to have Rob as part of the B&G Foods family. Rob will be joining our third quarter earnings call in November. Now back to the quarter.

For the second quarter of 2026, we generated $383.3 million in net sales, a net loss of $4 million, or $0.05 per diluted share, adjusted net income of $4.9 million, or $0.06 per adjusted diluted share, Adjusted EBITDA of $60.4 million, and Adjusted EBITDA as a percentage of net sales of 15.8%. As we review our second quarter 2026 results, we will highlight the impact of our various M&A transactions, which include the divestitures of the Don Pepino and Le Sore US brands in the summer of 2025, and the divestiture of the Green Giant US Frozen business in early March 2026. Simultaneous with the Green Giant US Frozen divestiture, we commenced the contract manufacturing business, pursuant to which we produce Green Giant US Frozen products at our vegetable manufacturing facility in Mexico on behalf of the new owner of the Green Giant US Frozen business.

In addition, we acquired the College Inn and Kitchen Basics brands in late March of 2026. Unless otherwise noted, the three divestitures are included in our Q2 2025 financials, but not our Q2 2026 financials. While the new contract manufacturing business and the acquired brands are included in our Q2 2026 financials, but not our Q2 2025 financials. Because the divestiture of the Green Giant Canada has not yet closed, there is no impact to our net sales or Adjusted EBITDA. However, because Green Giant Canada is classified as an asset held for sale for accounting purposes, the pending divestiture does impact how Green Giant Canada assets are carried on our balance sheet and within certain line items of our P&L. We expect the Green Giant Canada divestiture to close during the third quarter and look forward to providing an update after the divestiture has been completed.

Net sales for the quarter of 2026 decreased by $41.1 million, or 9.7%, to $383.3 million, from $424.4 million for the second quarter of 2025. The decrease was primarily attributable to the Green Giant US Frozen, Le Sore US Shelf Stable, and Don Pepino brand divestitures, partially offset by incremental net sales from the Green Giant US Frozen contract manufacturing business and the acquisition of the College Inn and Kitchen Basics brands. Net sales of divested brands contributed approximately $68 million to Q2 2025 net sales. Net sales of acquired brands, plus the contract manufacturing business, contributed approximately $37 million in net sales during the second quarter of 2026. Base business net sales for the second quarter of 2026 decreased by $10.2 million, or 2.9%, to $346.3 million as compared to $356.5 million for the second quarter of 2025.

The decrease in base business net sales was driven by a decrease in volume of $15.5 million, or 4.3% of base business net sales, partially offset by an increase in net pricing and product mix of $5.1 million, or 1.4% of base business net sales, and the positive impact of foreign currency of $0.2 million, or 0.1%, of net sales. The timing of the 4th of July holiday cost us about one and a half shipping days in the quarter, or approximately $5 million-$7 million of net sales in the second quarter of 2026. For the year to date period, base business net sales are on track with our plan, and we are essentially flat or up $0.2 million to $711.4 million for the first two quarters of 2026 from $711.2 million for the first two quarters of 2025.