B&G Foods looks likely to offload the remaining Green Giant business before the year-end as it cut sales and EBITDA guidance to reflect two other disposals.
“We expect additional divestitures in the future to further focus the portfolio and reduce leverage,” president and CEO Casey Keller told analysts this week as he discussed second-quarter results, which included a 4.2% decline in “base” business sales.
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Keller added that B&G Foods will “continue to evaluate and pursue the potential divestiture of the Green Giant branded business”.
Having sold the shelf-stable portion of the Green Giant business in the US in 2023 – essentially canned vegetables – the frozen portfolio in both the US and Canada was put up for review in May 2024.
What is now left is the Green Giant frozen brand in the US and the frozen and shelf-stable component in Canada, Keller clarified.
“At some point this year,” was how CFO Bruce Wacha responded when asked for an idea of timing on further asset sales, confirming B&G Foods is in talks with “strategic buyers”.
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By GlobalDataGreen Giant is now the only brand left in the company’s frozen and vegetables business unit following the disposal – announced this week – of the Le Sueur line of sweet peas, green beans and carrots to McCall Farms.
The division, including Le Sueur, generated $396m in sales last year out of a group total of $1.93bn. With Le Sueur now out of the equation, the B&G Foods team was asked if a Green Giant disposal would translate to a roughly $360m loss in sales.
“Give or take,” Wacha said.
CEO Keller added: “Green Giant is the number one brand in Canada, so it’s disproportionately larger than the US business. About $100-plus million of sales in Canada.”
Aside from Le Sueur, B&G Foods had announced the sale of its Don Pepino and Sclafani sauces and canned tomatoes brands to investor-linked Violet Foods in May, depleting sales for its speciality division in the current reporting quarter ended on 28 June.
As a result of those two divestitures, full-year group sales, EBITDA and EPS guidance has been cut for the second time in fiscal 2025 and does not yet reflect the Le Sueur disposal.
Sales are now expected in the range of $1.83-1.88bn, compared to the revised $1.86-1.91bn outlook provide in May at the first-quarter results stage. It was originally $1.89-1.95bn.
Adjusted EBITDA is envisaged at $273-283m, from $289-290m and $290-300m, respectively.
For adjusted diluted ESP, the new guide has been set at $0.50-60 from $0.55-0.65 and $0.65-0.75.
“The divestiture of the Don Pepino and Sclafani brands during the latter part of the quarter removed approximately $1.4m of net sales and some modest profit,” Keller said.
“The end game is to create a more highly focused B&G Foods with adjusted EBITDA as a percentage of net sales approaching 20%.”
There is some way to go to achieve that target with the metric sitting at 13.8% across the first half of fiscal 2025 compared to 15.1% a year earlier.
“Our updated guidance continues to account for a modestly softer economic environment that has impacted consumer spending patterns,” CFO Wacha said.
“It also reflects our expectation that our top-line will continue to stabilise and that our input costs will remain relatively consistent outside of any surprises resulting from the ongoing tariff negotiations.”
B&G Foods also expects to reap around $10m in adjusted EBITDA costs savings in the second half, translating to an annual run rate of about $15-20m.
As a whole, the business took an adjusted EBITDA hit from tariffs of $1.6m in the second quarter, $1m of which fell on the spices and flavour solutions business unit due to imports of garlic and onions from China, and black pepper from Vietnam.
“We are planning to execute targeted pricing to recover incremental tariffs with some lag until fully negotiated and implemented,” Wacha said. “The other primary area of concern for us is steel cans, and like everybody else, our expectation is we’re going to have to take price.”
