B&G Foods (NYSE:BGS) used its fourth-quarter earnings call to outline a major shift in its portfolio as the company exits parts of its Green Giant vegetable business and prepares to add new broth and stock brands, while also reporting modestly improved base business sales trends and reaffirming its focus on reducing leverage.
Portfolio reshaping: Green Giant exits and a pending broth acquisition
Chief Executive Officer Casey Keller said the company’s “largest piece” of portfolio transformation was the divestiture of the Green Giant U.S. Frozen business to Seneca Foods Corporation, which was announced the prior day. Keller described the frozen business as “simply not” the right fit for B&G Foods due to seasonal production, a different temperature state, geographic complexity, and higher working capital intensity.
Management said the broth and stock transaction has received bankruptcy court approval and is expected to close before the end of March, subject to customary closing conditions and the simultaneous closing of two other Del Monte bankruptcy sales unrelated to B&G Foods or the broth business. Keller characterized broth and stock as an attractive category with good margins that has grown low- to mid-single digits over the past year, and said it has benefited from meal preparation trends similar to those in spices and seasonings.
B&G Foods also reiterated that it previously announced the divestiture of its Canadian Green Giant business in canned and frozen vegetables, which remains subject to Canadian regulatory approval and is currently under review. The company expects to close that transaction during the second quarter of fiscal 2026, subject to customary conditions.
Green Giant U.S. Frozen sale includes co-pack arrangement in Mexico
Wacha said the Green Giant U.S. Frozen sale included the company’s frozen vegetable manufacturing operations in Yuma, Arizona, but did not include its frozen vegetable manufacturing operations in Irapuato, Mexico. In connection with the sale, B&G Foods entered into a co-pack agreement with Seneca under which B&G Foods will continue producing certain Green Giant frozen products for Seneca.
Wacha said the co-pack agreement is expected to generate approximately $100 million per year in net sales on a run-rate basis, with “a modest profit” on those sales. In response to questions on the call, management clarified that the company’s fiscal 2026 outlook reflects roughly $80 million of co-pack-related revenue from March through year-end, versus $100 million on an annualized basis.
Management also indicated the company expects to build the Mexico plant co-pack business over time and pursue other customers beyond Seneca. Asked whether the arrangement could become loss-making, management described it as a “cost plus” structure with a tolling and management fee, saying, “We’ll be fine.”
Fourth-quarter results: modest sales decline and tariff pressure
For the fourth quarter of fiscal 2025, Wacha reported:
- Net sales of $539.6 million, down 2.2% from $551.6 million a year earlier.
- A net loss of $15.2 million, or $0.19 per diluted share.
- Adjusted net income of $22.8 million, or $0.28 per adjusted diluted share.
- Adjusted EBITDA of $84.7 million, representing 15.7% of net sales.
Wacha said the quarterly sales decline was primarily due to divestitures of the Don Pepino and Sclafani brands (completed in the second quarter) and the Le Sueur U.S. brand (completed in the third quarter). Those divested brands collectively generated $16.4 million of net sales in the fourth quarter of 2024 and contributed about $1 million of adjusted EBITDA that quarter.
On a base business basis, net sales rose. Wacha reported that fourth-quarter base business net sales increased 0.8% year over year, driven by higher net pricing and product mix and a small increase in volume, partially offset by foreign currency. He noted that base business volumes benefited from a 53rd week that fell in the fourth quarter of fiscal 2025.
Gross profit improved to 22.7% of net sales (23.0% on an adjusted basis). Management said input cost inflation was “largely benign,” while efficiency and continuous improvement efforts helped offset volume declines across the manufacturing network.
Tariffs were a key headwind. Wacha said tariffs reduced gross profit and adjusted gross profit by about $4.4 million in the quarter and $9.5 million for the year. About half of the tariff impact was concentrated in the Spices & Flavor Solutions unit.
Selling, general and administrative expenses increased 7.3% to $54.0 million, driven by higher G&A, acquisition/divestiture-related and non-recurring costs, and selling expenses, partly offset by lower consumer marketing expenses.
Business unit performance: gains in meals and sales growth in spices
By segment, B&G Foods reported mixed results for the fourth quarter:
- Specialty: net sales fell 3.0% to $210.2 million, primarily due to the Don Pepino and Sclafani divestiture and lower Crisco pricing. Segment adjusted EBITDA declined 7%, reflecting divestitures, cost comparisons in certain raw materials and manufacturing, and tariffs.
- Meals: net sales increased 1.1% to $124.2 million on higher net pricing and improved mix, partly offset by modestly lower volumes. Segment adjusted EBITDA rose by about $3.8 million due to pricing/mix and favorable cost comparisons, offsetting tariffs.
- Frozen & Vegetables: excluding Le Sueur U.S., net sales rose 1.4%. Segment adjusted EBITDA increased by $2.8 million, driven by favorable raw material, manufacturing, and foreign currency comparisons. Management said the tariff impact here was marginal.
- Spices & Flavor Solutions: net sales increased 4.2% to $106.1 million on higher volumes and improved pricing/mix. Segment adjusted EBITDA declined 11.1%, largely due to tariffs, higher raw material costs (including black pepper and garlic), and unfavorable absorption, partly offset by pricing/mix.
Guidance: fiscal 2026 sales down on divestiture and fewer weeks, margins expected to rise
Management issued fiscal 2026 guidance of $1.655 billion to $1.695 billion in net sales and $265 million to $275 million in adjusted EBITDA, implying adjusted EBITDA margin of roughly 16% to 16.5%. The company also guided to adjusted diluted EPS of $0.55 to $0.65.
Keller said the outlook assumes continued improvement in base business trends in the remaining core portfolio, with the company expecting base business trends to improve by 0.4% year over year. He added that year-to-date base business net sales through February were up roughly 4%, citing strength in January and February. Management attributed the early-year strength to colder weather benefiting baking staples and soups, along with lapping prior-year trade inventory reductions.
The guidance reflects a roughly $203 million year-over-year net sales reduction from the Green Giant U.S. Frozen divestiture, partially offset by co-pack revenue. Management also noted fiscal 2026 will have one fewer week than fiscal 2025, which they said represented about $18 million of net sales.
Importantly, the company said its fiscal 2026 guidance does not include the pending Green Giant Canada divestiture or the pending College Inn and Kitchen Basics acquisition; management said it would update guidance after those transactions close.
On the balance sheet, Wacha said net debt ended the quarter at $1.912 billion, down from $1.994 billion a year earlier. He also discussed pro forma leverage metrics incorporating the Green Giant U.S. Frozen divestiture and the $11.5 million cash deposit paid in connection with the pending broth acquisition, and said the company expects to remain on track to reduce net debt to pro forma covenant adjusted EBITDA to “nearly 6.0 times” by the midpoint of the year.
About B&G Foods (NYSE:BGS)
B&G Foods, Inc is a packaged foods holding company that develops, markets and distributes a diversified portfolio of branded shelf-stable and frozen food products. Headquartered in Parsippany, New Jersey, the company serves retail and foodservice customers across the United States and Canada. Through its network of manufacturing facilities, third-party co-packers and distribution partners, B&G Foods supplies grocery chains, mass merchandisers, club stores and e-commerce platforms.
The company’s product portfolio spans multiple categories, including vegetables, beans, soups, sauces and condiments, snacks, cereals and refrigerated or frozen offerings.
