B&G Foods is reportedly poised to divest its remaining Green Giant division before the year concludes, following a revised outlook on sales and EBITDA in light of recent asset sales.
In a recent discussion with analysts regarding second-quarter performance, President and CEO Casey Keller highlighted a 4.2% dip in base business sales. “We expect additional divestitures in the future to further focus the portfolio and reduce leverage,” he stated.
Keller further elaborated that the company will “continue to evaluate and pursue the potential divestiture of the Green Giant branded business.” In 2023, B&G sold the shelf-stable aspect of the Green Giant brand in the U.S., which primarily consists of canned vegetables. Subsequently, the frozen portfolio in both the U.S. and Canada was put under review in May 2024.
Currently, the remaining assets include the Green Giant frozen brand in the U.S. and both frozen and shelf-stable segments in Canada. CFO Bruce Wacha confirmed that discussions with “strategic buyers” are underway, hinting at a timeline for further asset sales later this year.
With the recent sale of the Le Sueur line, which included sweet peas, green beans, and carrots to McCall Farms, Green Giant stands as the sole brand within B&G’s frozen and vegetable division. The divestiture of Le Sueur, which generated $396 million in sales last year, raised speculation about the potential financial impact of a Green Giant sale, with Wacha acknowledging it could lead to a loss of approximately $360 million in sales.
Keller pointed out that Green Giant is a dominant brand in Canada, making up over $100 million of sales there, significantly outweighing its U.S. counterpart. Additionally, B&G Foods recently offloaded its Don Pepino and Sclafani sauces and canned tomatoes brands to Violet Foods, further limiting the sales spectrum of their specialty division.
Consequently, the company has revised its full-year sales, EBITDA, and EPS guidance for fiscal 2025 for the second time, which does not yet incorporate the impact of Le Sueur’s sale. Sales projections now range between $1.83 billion and $1.88 billion, down from earlier forecasts of $1.86 billion to $1.91 billion. Adjusted EBITDA expectations have also been lowered to $273 million to $283 million.
In terms of adjusted diluted EPS, the guidance has shifted to a range of $0.50 to $0.60, as opposed to the previously estimated $0.55 to $0.65. Keller noted, “The divestiture of the Don Pepino and Sclafani brands during the latter part of the quarter removed approximately $1.4 million of net sales and some modest profit.”
The ultimate aim for B&G Foods is to streamline operations and push adjusted EBITDA as a percentage of net sales closer to 20%. However, current figures show it at only 13.8% for the first half of fiscal 2025, down from 15.1% the previous year.
CFO Wacha remarked, “Our updated guidance continues to account for a modestly softer economic environment that has impacted consumer spending patterns.” He added that the company anticipates stabilization in its top line and consistency in input costs, barring unexpected developments from ongoing tariff negotiations.
B&G Foods is also expecting to secure around $10 million in adjusted EBITDA cost savings in the second half of the year, leading to an annual run rate of approximately $15 million to $20 million. In the second quarter, the business faced an adjusted EBITDA setback of $1.6 million due to tariffs, primarily affecting the spices and flavor solutions segment.
Moreover, Wacha emphasized plans to implement targeted pricing strategies to offset tariff impacts, particularly concerning steel cans, indicating an expected necessity for price adjustments as well.
