B&G Foods(US:BGS)2024-02-28 00:19Financial Data and Key Metrics Changes - Total net sales for fiscal 2023 were $2.062 billion, with adjusted EBITDA of $318 million, reflecting a 5.7% increase compared to fiscal 2022 [20][109] - Adjusted EBITDA as a percentage of net sales increased to 15.4% in fiscal 2023 from 13.9% in fiscal 2022 [109] - Adjusted diluted earnings per share for fiscal 2023 was $0.99, down from $0.40 in the previous year [6][20] Business Line Data and Key Metrics Changes - Net sales of Cream of Wheat were approximately $78.5 million in 2023, lower than fiscal 2022's $81.4 million but above pre-pandemic levels [3] - Ortega's net sales decreased to $147.9 million in fiscal 2023 from $154.3 million in fiscal 2022, but were up from $140.4 million in 2019 [4] - Clabber Girl's net sales increased by $8.2 million or 26.3% in Q4 2023 compared to Q4 2022, driven by both pricing and increased volumes [111] Market Data and Key Metrics Changes - The spices and seasonings business, representing approximately 18% of the portfolio, saw a 2.2% increase in net sales [134] - Green Giant's net sales, excluding the divested U.S. shelf-stable product line, decreased by $5.2 million or 4.4% [141] - Base business net sales decreased by $13.3 million or 2.3% in Q4 2023 compared to the prior year, largely due to decreased net pricing [110] Company Strategy and Development Direction - The company is focused on reshaping its portfolio through strategic divestitures, having sold Back to Nature and Green Giant U.S. canned vegetables, which were deemed non-core [99][100] - The company aims to reduce net debt and leverage through divestiture proceeds and strong excess cash flows, targeting a long-term leverage ratio of 4.5 to 5.5 times [7][135] - A new commodity-based pricing model for Crisco has been implemented to stabilize gross profit dollars amid volatile input costs [100] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilizing volumes and improving margins, despite ongoing global supply chain challenges [117] - Input cost inflation is expected to moderate to low single digits, with a focus on maintaining productivity to offset inflation [16][38] - The company anticipates slight top-line growth and low single-digit bottom-line growth for fiscal 2024, excluding divested businesses [18][146] Other Important Information - Selling, general and administrative expenses increased by 90 basis points to 9.2% in Q4 2023 compared to 8.3% in Q4 2022, driven by inflation in wages and increased management incentive accruals [5] - Net cash from operations improved significantly, increasing from $6 million in fiscal 2022 to $248 million in fiscal 2023 [133][116] - The company expects adjusted EBITDA for fiscal 2024 to be in the range of $305 million to $325 million [8] Q&A Session Summary Question: What is the outlook for base business growth in 2024? - Management expects base business growth to be roughly flat, with slight improvements anticipated in volume and pricing [11][60] Question: What factors could impede significant EBITDA margin improvement? - Management indicated that a combination of divestitures, productivity improvements, and managing input costs will be necessary to achieve margin targets of 18% to 20% [34][61] Question: How is the competitive landscape affecting pricing and volume? - Management noted that while there is pressure from private label competition, they are focused on maintaining their market position and managing pricing effectively [158] Question: What is the strategy for addressing upcoming debt maturities? - The company plans to utilize excess cash flow and proceeds from asset sales to manage debt obligations [159] Question: How is the company managing input cost inflation? - Management highlighted a new pricing model for Crisco that adjusts prices based on input costs, which has helped stabilize profit margins [100][92]