[Management View]
B&G Foods reported a sequential improvement in performance in fiscal Q2 2025, yet continued to face year-over-year declines in net sales and adjusted EBITDA due to segment-specific pressures and inflationary factors. Management completed two significant divestitures during the quarter, with proceeds targeted toward deleveraging and strategic portfolio simplification. Updated financial guidance primarily reflects the removal of these discontinued operations, incremental cost savings plans, and uncertainties posed by tariffs and foreign exchange.

[Outlook]
Fiscal 2025 guidance revised to net sales of $1.83 billion to $1.88 billion, adjusted EBITDA of $273 million to $283 million, and adjusted EPS of $0.50 to $0.60. The frozen and vegetables segment is expected to turn profitable in the second half (Q3 and Q4), supported by improved pricing, crop cost trends, and operational productivity. Management plans staged price increases to mitigate adverse cost impacts from tariffs, recognizing only partial near-term relief.

[Financial Performance]
Net sales: $424.4 million, a decrease of 4.5% YoY.
Adjusted EBITDA: $58 million, down 9.3% YoY.
Specialty segment: Base business net sales decreased by 7.1%, adjusted EBITDA improved by 3%.
Trade promotion spend: Increased by 120 basis points compared to fiscal Q2 2024.
Cash flow from operations: $17.8 million, up from $11.3 million in fiscal Q2 2024.
Net debt: Reduced to $1.957 billion, further decrease to just above $1.9 billion pro forma for the LeSueur US sale.

[Q&A Highlights]
Question 1: Bruce, I think you mentioned that the core business was expected to be down 1% to 2%. Is that your organic sales interpretation of what you put forward as the revenue for the second half? So down 1% to 2% versus?
Answer: Yeah. So base business excluding the divestitures. To be kind of midpoint of our guidance is down about 1% after then adding, we call it $15 million to $20 million or pick $16 million as the benefit for the fifty-third week, which will be in our fourth quarter.

Question 2: What would be I mean, we look at current trends, the multiyear versus you know, it does look like the comparisons get that much easier versus what we have seen lately. In other words, it looks like we are down five-ish in the MULO plus data.
Answer: Yeah. So the low end of our guidance is, like, a down two, 3%. And if you think about where our performance has been this year, you know, we were down 10.5% first quarter, which is terrible. On a base business, we are down 4.2% in the second quarter. We had pretty good stabilization towards the tail end of the second quarter in July. You know, starting right for the third quarter. So you know, that is about where we expect to come out. I mean, July early August are more in the minus 2% range. Got it. And I mean, just so we are seeing the improvement already happening in the early part of the third quarter.

Question 3: You had mentioned some targeted pricing actions and other kind of tariff mitigation efforts. Just wondering if you can kind of give us a sense of how much of those tariff impacts you think you will be able to mitigate through some of those actions and how retailers have been responding to some of these price increases.
Answer: Yeah. So we have not disclosed the dollar amounts. The vast majority of our area of exposure on tariffs is our spices and flavor solutions. So you think particularly garlic and black pepper. Anybody who is buying black pepper and garlic in the world are buying them from China and Vietnam. So B&G and all of our competitors, people will take price against those. There may be some risk on an interim you know, how much tariffs slip through your P&L before you got the benefit of that. But you have also seen other people in the space talk about taking price. The other primary area of concern for us is steel cans. And like everybody else, you know, our expectation is we are going to have to take price.

Question 4: I guess, as we think about I guess, the guide down for the year and then, obviously, implied H2, maybe how much of the guide down was driven by some of those divestitures versus to meet the expectations.
Answer: Yeah. It is primarily the divestitures. Almost all the divestitures.

Question 5: So then the outlook for H2, it is still kind of in line with how you were thinking about it. I guess. After the Q1 results?
Answer: Yes.

Question 6: I have got a couple. So the first I do not think I explicitly heard any EBITDA given I heard the $36 million of sales for LeSueur. Did you provide an EBITDA number that I did not hear?
Answer: We did not.

Question 7: And is that I guess, that is something you are not going to be providing.
Answer: No. It is a sale to a private company. You know, typically, do not end up giving that out.

Question 8: Did I hear correctly that your net debt went from $1.936 billion to a little over $1.9 billion? So I guess the proceeds there are somewhere in the $35 million range. Is that right?
Answer: No. No. I think you maybe misheard that. Actually, if you go into our queue, there is a subsequent event where it walks through the net proceeds. It is about $59 million with the benefit of a small, small working capital adjustment in our favor.

Question 9: In terms of your availability today, or at the end of the quarter on your ABL, including any sort of financial covenants that may exist for maintenance. Can you share with us what that number would be?
Answer: So we do not have an ABL. We have got a cash flow revolver. And the primary covenant on that is a maintenance leverage test, which is now seven and a half times.

Question 10: I guess I was wondering if you include that interest coverage as well as the leverage covenant, what the availability would be?
Answer: Yeah. It is just math. I do not have it in front of me, but you should just be able to run where we finished the quarter, which is probably just under seven times, probably closer to six eight, six eight and change. Pro forma for LeSueur. So you got basically point seven turns of leverage of cushion.

Question 11: Do you have any comments about the flavor solutions part of your business, spice and seasonings? Like, is it in line with your expectations? Or a little light? Like, I would have thought that cooking at home would be a real tailwind for these brands. And, you know, are you seeing that in the business? Or are you seeing some elasticity there as well?
Answer: In our spices and seasonings business, we are and flavor solutions is what we call it, I would say that the results are not quite in line with our expectations. We would expect to be seeing that business stable to up slightly. So we are not quite seeing the you know, the tailwind that we would like to see. You know, there are a lot of pieces to that business. There is, you know, some private label members mark. There is some food service business. So there are different performances, and then the branded retail business. But, you know, I think we should be seeing that business, you know, slightly positive.

Question 12: Are there any changes you can make to your sourcing to try to like, either find less expensive raw materials to mitigate the spice and seasonings tariffs? Or different suppliers? Or is that not possible?
Answer: I mean, yes, we are doing that. So we are looking at alternative sourcing on some of the spices, but honestly, most of the spices come from countries that have tariffs on them already. It does not really matter where you move them. So there is some work that we have done to mitigate that. You know, we have tried to source, you know, China is probably our most vulnerable position with, you know, garlic and onions. China supplies 80% of the world's garlic. There are not a lot of other options. California does not even come close to meeting the needs. And there is really no other available sourcing in the United States. But, you know, we have found, like, some other small sources of onion and garlic that we have been able to move outside of China. 30% tariffs is kind of our highest right now. But I am not sure that we can really get out of most of these tariffs. We will need to price for them. There will be some mitigating actions that we can do, but there will also and there are also probably be some offsetting productivity. But at the end of the day, you know, spices are grown in the climates where they can be grown. They cannot be grown in the United States. They are really unavailable natural resources in the United States. And so I am hoping over time that you know, that realization will help, you know, some of the trade negotiations and that, you know, just like coffee and cocoa cannot be sourced in the United States, spices have the same footprint. So we will see over time. But right now, we are just counting on what the prevailing tariffs are and building that into our models.

Question 13: Can you remind us the L'Oreal Canada brand? Is that smaller or larger than the US brand?
Answer: It is smaller.

Question 14: Following on the Spices comment, would the expectation be you can catch up to pricing in the fourth quarter to get back to sort of historical margins? Or do you think it will take you into '26?
Answer: I think it will take us to '26 to get back to fully recover the impact of tariffs, but I think we will partially cover them in the Q4 timeframe. It is just a lead time of, you know, retailer pricing actions. That we will have to manage. And some of our and by the way, some of our food service and private label contracts also have only specific windows where we can price. So we will have to kind of work through those timelines.

Question 15: In the disclosure in the queue around the sore and the expectation for a potential write down in the third quarter seems to imply that we could get more asset sale announcements by the end of the third quarter. Is that the right interpretation?
Answer: Yeah. At some point this year. And look. We made a point of talking to a strategic review last year and that in our mind was always expectation probably happened Q2 2025. LeSueur is the first piece. Right? And we are in conversations with some logical strategic buyers for each of the pieces, and we are moving along. But M&A takes time, and it is not always easy to predict the timing, but sort of moving forward in these. If that is your question.

Question 16: Just for a mathematical housekeeping, so if Green Giant was or frozen vegetables was $396 million of sales last year, we take out the LeSueur. Is what we are looking at for potential divestitures about $360 million kind of remaining of sales?
Answer: Give or take.

Question 17: And how much of that is just in Canada? You said LeSueur is smaller. The Green Giant in Canada, would assume is smaller as well.
Answer: No. No. Green Giant. Yeah. Green Giant is the number one brand in Canada. So it is kind of disproportionately larger than US business. Oh, yeah. On the so it is about a 100 plus million dollars of sales in Canada. And in Canada, by the way, includes both frozen and shelf-stable. Yeah. So canned vegetable cans are still up there as it is frozen. The frozen bit is in it is the number one brand in both those categories. You know, in the US, we are just US frozen and under Green Giant and know, we are the number two brand.

Question 18: When you are looking at divestitures, you mentioned in conversation, is the objective to try to do this all at once, or will it kind of continue to be these smaller sales as we move assets off the balance or off the balance sheet.
Answer: Yeah. It is unlikely that it is all going to be at once. You know, the LeSueur transaction signed and closed. That was done on Friday. Cash in the bank.

Question 19: On you mentioned trade spend and timing with Easter. In general, are you seeing a dramatic change in trade spend as you look to planning for third quarter and back half and are any categories particularly either promotional or asking for more trade spend?
Answer: I think we will probably see an increase in trade spend in the back half of the year, but nowhere near the levels of the first half increase. We have seen, you know, promotional spend become a little bit more competitive and merchandising become a little bit more competitive out there. And we have, you know, we have done what we need to stay competitive. Some of that trade spend is also reflecting lower prices like on Crisco and some other things where we have year-over-year declines in the commodity and we price to that. But I would expect that, you know, we have a much smaller increase in trade spend year-over-year in the back half because we had started to kind of kick up our promotion efforts back to kind of pre-COVID levels last fall. And so we will be lapping that this year. So I do not think you will see it. You know, if we were up, I do not remember, like, a 130, 140 basis points in the first half, we will not be up anywhere near that level in the second half.

Question 20: The inventory related to the LeSueur that comes out in third quarter, is that the $59 million?
Answer: No. So $59 million was effectively the purchase price, which included we have not disclosed it, but it included a favorable work capital adjustment. So part of, you know, we have talked about this over time. Like, these are two nice little businesses. Well, Don Pepino and LeSueur. They are both profitable. They are both packed plan businesses where you are buying a year's worth of inventory, and then you are selling it through. And typically in an M&A transaction, you are doing things on, like, an average inventory basis. That has movement this year. Don Pepino, we sold before the pack. LeSueur, we sold after the pack. And so we got a little bit of a benefit, but we got a real price for both transactions. You know, reasonable multiples when they are both delevering on a ratio basis.

Question 21: Given the changes in the business from the asset sales, has your mix of foodservice overall changed dramatically? Food service versus retail?
Answer: Only in the sense that LeSueur was an all branded retail business. And then relatively small portfolio. Yeah. And then Don Pepino was probably a split, but it is like $15 million of sales. So it probably does not really move the needle, but, yeah, we would be lower in service today than slightly lower end. But not. Yeah. Certainly not anything that we change our competitiveness in that category. Very, very little change overall.

Question 22: Your commentary about the asset sale when it was announced and the proceeds, can you just talk about the flexibility you have in terms of reinvesting the proceeds? If it is a working capital adjustment, is it still considered proceeds under the definition?
Answer: Yeah. This is all going to go to debt reduction.

[Sentiment Analysis]
The tone of the management was cautiously optimistic, focusing on strategic divestitures and cost-saving measures to stabilize the business. Analysts showed concern about the impact of tariffs and the ability to mitigate these costs through pricing actions.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|---------------------------|-----------------|-----------------|------------------|
| Net Sales | $424.4 million | $444.6 million | -4.5% |
| Adjusted EBITDA | $58 million | $63.9 million | -9.3% |
| Cash Flow from Operations | $17.8 million | $11.3 million | +57.5% |
| Net Debt | $1.957 billion | $2.022 billion | -3.2% |

[Risks and Concerns]
- Tariff costs increased by $1.6 million in adjusted EBITDA, primarily in the spices and flavor solutions business.
- Exposure to China sourcing of garlic and onion, with limited alternatives and risks to margin from further tariff or supply disruption.
- Uncertainties posed by tariffs and foreign exchange.
- Political environment and rapidly evolving negotiations regarding tariffs and retaliatory tariffs.

[Final Takeaway]
B&G Foods faced a challenging Q2 2025 with declines in net sales and adjusted EBITDA. However, management's strategic divestitures and cost-saving measures are expected to stabilize the business in the second half of the year. The company remains focused on reshaping its portfolio, improving margins, and reducing leverage. Tariff mitigation efforts and targeted pricing actions are crucial to managing cost impacts, with partial relief expected in the near term. Investors should monitor the company's progress in executing its divestiture strategy and managing external cost uncertainties.