Home / Business / B&G Foods Inc (BGS) Q1 2021 Earnings Call Transcript

B&G Foods Inc (BGS) Q1 2021 Earnings Call Transcript

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B&G Foods Inc(NYSE:BGS)

Q1 2021 Earnings Call

May 11, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the B&G Foods First Quarter 2021 Earnings Call. Today’s call which is being recorded is scheduled to last about one hour including remarks by B&G Foods management and the question-and-answer session.

I would now like to turn the call over to Sarah Jarolem, Senior Director of Corporate Strategy and Business Development for B&G Foods. Sarah?

Sarah JarolemSenior Director of Corporate Strategy and Business Development

Good afternoon and thank you for joining us. With me today are Dave Wenner, our Interim President and Chief Executive Officer; and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter in the earnings release we issued today which is available at the Investor Relations section at bgfoods.com.

Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. We refer you to B&G Foods most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our Company’s future operating results and financial condition. B&G Foods undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

We will also be making references on today’s call to the non-GAAP financial measures, adjusted EBITDA, adjusted EBITDA before COVID-19 expenses, adjusted net income, adjusted diluted earnings per share, and base business net sales. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today’s earnings release.

Dave will begin the call with opening remarks and discuss various factors that affected our results, selected business highlights and his thoughts concerning the outlook for the remainder of fiscal 2021. Bruce will then discuss our financial results for the first quarter as well as expectations for 2021.

I would now like to turn the call over to Dave.

David L. WennerInterim President, Chief Executive Officer and Director

Thank you, Sarah. Good afternoon, everyone and thank you for joining us today on the first quarter earnings call. Assessing our results for the quarter my overall comment is that the quarter played out much as we expected. In total, we achieved record first quarter net sales of $505.1 million, a 12.4% increase from Q1 2020. Net sales in our base business, which excludes the Crisco acquisition completed in December, were approximately $447 million, virtually flat versus first quarter 2020 at a modest 0.6% decline. Within that number, US base business net sales were up 2.1% while international base business net sales were down 31.8%. Virtually all of that Green Giant sales in Canada due to severe allocation of the brands there.

Compared to fiscal 2019 our base business net sales, which for purposes of the two-year comparison also exclude Clabber Girl and Farmwise net sales increased $16.6 million or 4% for the quarter. Our $447 million of base business net sales were supplemented by the $58 million of Crisco net sales, bringing our total net sales up to the $505 million figure. Adjusted EBITDA for the quarter also set a first quarter record at $92.9 million a 15.2% increase, a result of solid base business volume and earnings and a fulsome Crisco benefit in our first few months of ownership. Those are the highlights.

I’ll turn the call over to Bruce now for more detailed comments on the quarterly performance, after which I will add additional color on our performance. Bruce?

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

Thank you, Dave. Good afternoon everyone. As Dave just discussed, we had very strong financial performance during our first quarter, delivering Company record first quarter net sales and adjusted EBITDA. We reported net sales of $505.1 million in the first quarter, an increase of $55.7 million or 12.4% compared to the prior year first quarter and an increase of nearly $95 million or 22.4% compared to the first quarter of 2019.

As you know, the Crisco acquisition closed on December 1, 2020 providing us with a full quarter of net sales in the first quarter. Crisco generated approximately $58.1 million in net sales for the quarter, which is slightly ahead of our internal model. Base business net sales, which excludes the benefit of Crisco, were essentially flat to last year’s first quarter, were down 0.6%. Excluding the benefit of Crisco, net sales were up approximately $34.4 million or 8.3% from Q1 2019, approximately $17.7 million of which was due to the May 2019 acquisition of Clabber Girl and the February 2020 Farmwise acquisition and approximately $16.7 million of which was due to base business net sales growth.

We generated adjusted EBITDA before COVID-19 expenses of $95.8 million in the first quarter of 2021, an increase of $15 million or 18.5%. During the first quarter of 2021, we incurred approximately $2.9 million in incremental COVID-19 costs at our manufacturing facilities, which primarily included temporary enhanced competition for our manufacturing employees, compensation we continue to pay the manufacturing employees while in quarantine, and expenses related to the precautionary health and safety measures.

As discussed in our fourth quarter and full year 2020 call, we expect to see a continued reduction in these costs, which averaged $1.5 million per month during the height of the pandemic. Inclusive of these costs, we reported adjusted EBITDA of $92.9 million which is an increase of $12.2 million or 15.2% compared to last year’s first quarter.

Adjusted EBITDA before COVID-19 expenses as a percentage of net sales was 19% in the first quarter of 2021. Adjusted EBITDA as a percentage of net sales was 18.4%. Adjusted EBITDA before COVID-19 expenses as a percentage of net sales and adjusted EBITDA as a percentage of net sales were 18% in the first quarter of 2020 as COVID-19 expenses did not fully kick in until the second quarter of 2020. We reported $0.52 in adjusted diluted earnings per share in the first quarter of 2021 an increase of $0.06 per share or 13% compared to the prior year first quarter.

Leading our brand performance were Spices & Seasonings. Net sales of our spices and seasonings including our legacy brand such as Ac’cent and Dash and the brands we acquired in 2016 such as Tone’s and Weber were up by $30 million or 41.2% for the quarter. Net sales of spices and seasonings were up by $17.1 or 20% compared to the first quarter of 2019. Net sales of spices and seasonings reached $397.7 million for the 12 months ended March 2021.

The retail side of this business continues to show a momentum that began last summer as more and more Americans began to fully embrace cooking and seasoning their meals at home, a trend which continues in 2021. The foodservice side of this business has also begun to show some momentum with a budding recovery in the away from home channel as many Americans have begun to emerge from a year or more of lockdowns and shelter at home safety precautions.

Despite the recovery, foodservice net sales of spices and seasonings remain below pre-pandemic levels for the quarter, but did have an increase for the month of March. Other major brands contributing to the net sales growth include Maple Grove Farms, Las Palmas and Ortega. Maple Grove Farms generated approximately $20.7 million in net sales during the first quarter of 2021 an increase of $2.3 million or 12.1% compared to Q1 2020, and an increase of $2.8 million or 15.5% compared to Q1 2019.

Las Palmas generated $10.7 million in net sales during the first quarter of 2021, an increase of $0.2 million or 1.8% compared to Q1 2020 and an increase of $1.3 million or 14.4% compared to Q1 2019. Ortega generated $39 million in net sales during the first quarter of 2021, an increase of $0.2 million or 0.4% compared to Q1 2020 and an increase of $1.7 million or 4.6% compared to Q1 2019.

Green Giant, which was one of the largest beneficiaries of COVID-19 pandemic buying of the past year in our portfolio had approximately $639 million in net sales during fiscal 2020, an increase of $112.2 million or 21.3% compared to the prior year. As we discussed during our last earnings call, Green Giant, as well its competitor brands will have supply constraints until we reach the new pack season later this year. As a result, we were forced to make tough decisions and place the brand on allocation with our customers, which will limit sales of Green Giant products until this year’s third quarter, so that we don’t sell out before the pack season. Primarily as a result of those decisions, Green Giant net sales were just $132.5 million in the quarter, a decrease of $25.9 million or 16.4% compared to the prior year quarter.

However demand for Green Giant remained strong and we expect a strong second half of the year and we expect full year net sales of Green Giant products to exceed the brand’s fiscal 2019 net sales of approximately $525 million. While demand has remained strong, and that sales have generally remained elevated when compared to fiscal 2019, many of our other brands were unable to surpass Q1 2020 net sales. Cream of Wheat for example generated $18.2 million in net sales during the first quarter of 2021, a decrease of $0.7 million or 4% compared to Q1 2020, but an increase of $0.8 million or 4.3% compared to Q1 2019.

Clabber Girl generated $17.4 million in net sales during the first quarter of 2021 a decrease of $1.3 million or 6.8% compared to Q1 2020, but significantly greater than the estimated $15 million or so of net sales generated during the Q1 2019 period under prior ownership. Our gross profit was $117.8 million for the first quarter of 2021 or 23.3% of net sales. Excluding the negative impact of approximately $5.5 million of acquisition divestiture related expenses, the amortization of acquisition related inventory, fair value step up, and non-recurring expenses included in the cost of goods sold, our gross profit would have been $123.3 million or 24.4% of net sales.

Gross profit was $104.9 million for the first quarter of 2020 or 23.3% of net sales. Excluding the negative impact of approximately $2.3 million of acquisition divestiture related expenses and non-recurring expenses included in cost of goods sold, our gross profit would have been $107.2 million or 23.9% of sales. As discussed on our fourth quarter and full year call, we are certainly seeing inflationary pressures in 2021. So far this year, the first quarter has largely played out as expected with low to mid single-digit inflation on a blended basis across our basket of goods with significant increases in agricultural products and commodity relate input costs, as well as corrugated steel and aluminum.

We are also seeing meaningful increases in freight costs and COVID-19 related customer fines. Our procurement policy has led us to be somewhat aggressive when covering costs in a rising environment and we have locked in costs for many of our inputs through the first three quarters of the year. We have also continued to be aggressive with our cost-cutting initiatives and we are taking revenue enhancing actions across many of the brands that have been impacted by cost inflation when appropriate in attempt to maintain margins.

Selling, general and administrative expenses for the year were $50.4 million or 10% of net sales. This compares to $40 million or 8.9% for the prior year. The dollar increase in SG&A is primarily composed of an incremental $4 million investment in consumer marketing, $1.9 million in incremental acquisition related costs, and non-recurring expense, which primarily relate to the acquisition and integration of the Crisco brand and $4.1 million in increased warehousing costs. The increase in warehousing costs was primarily driven by the Crisco acquisition and COVID-19 related customer funds.

General and administrative expenses increased by $1.3 million. These costs were partially offset by decreased selling expenses of $0.9 million. As I mentioned earlier, we generated $95.8 million dollars in adjusted EBITDA before COVID-19 expenses and after the inclusion of $2.9 million of COVID-19 expenses adjusted EBITDA of $92.9 million. This compares to adjusted EBITDA before COVID-19 expenses of $80.8 million in Q1 2020 and $75.8 million in Q1 2019. We generated $0.52 in adjusted diluted earnings per share in the first quarter of 2021 compared to $0.46 per share in Q1 2020 and $0.44 per share in Q1 2019. We remain very encouraged by these trends.

We had another strong quarter of cash from operations, although it was impacted by the timing of one of our semiannual interest payments and the payout of increased incentive compensation related to the Company’s 2020 performance. Net cash provided by operating activities was $26 million during the first quarter of 2021 compared to $57.6 million during Q1 2020.

The majority of the decrease was driven by the timing of an approximately $24 million interest payment for 2025 notes on April 1, which happened to fall into our first quarter for this year and our second quarter last year. The remainder of the decrease was driven by a $12.6 million increase in incentive compensation paid in cash as a result of the Company’s very strong performance in fiscal 2020 relative to the prior year.

Our consolidated leverage ratio, as defined by our credit agreement, and which is calculated on a pro forma and net debt basis, was 5.23 times and remains within our long-term leverage target of 4.5 to 5.5 times and well below our credit agreement covenant threshold of 7 times. We are reaffirming our 2021 sales guidance that we provided in March as we continue to expect Company record net sales of $2.05 billion and $2.1 billion in fiscal 2021 inclusive of the benefit of a full year of the Crisco acquisition.

From a pacing perspective, we knew that we had a head start in the first quarter of this year with exceptional performance in the months of January and February that would be coupled with a final month of March that would come in well short of last year when we were at the beginning of the COVID-19 shutdown and related pantry loading. And that is exactly how the quarter played out.

Crisco is purely incremental for us at this stage and is performing in line with our expectations. For the second quarter we expect something similar with our base business net sales to trend much closer to our 2019 net sales than our 2020 net sales, may be low to mid single-digit percentage points higher than what we experienced in 2019. Crisco will again be purely incremental for us in the second quarter.

Historically, Crisco generated about 20% of its full year net sales in the April to June period. And as we discussed earlier, we expect 2021% to present us with a different set of challenges and opportunities than we had last year. Demand for our products remain elevated, but not quite as high as during the pandemic. With the exception of Green Giant and certain of our other brands, we are also in a much better position from a supply standpoint across most of our portfolio than we were late last year, which should enable us to meet much of this demand.

We highlighted our concerns about inflation during our last earnings call and these concerns are certainly proving out as we are seeing inflation across a number of key input costs, including certain agricultural products, other commodity products such as oils as well as packaging and freight. As in prior years, our experience and expectation is that we will manage these costs through a combination of revenue enhancing initiatives including pricing and trade spend optimization where appropriate, as well as certain cost saving activities to preserve our margin profile and our cash flows. As a result, we expect to generate adjusted EBITDA as a percentage of net sales of approximately 18% to 18.5%, which is generally consistent with our performance in the recent fiscal years.

I’ll now turn the call back over to Dave for further remarks.

David L. WennerInterim President, Chief Executive Officer and Director

Thank you, Bruce. As I said at the beginning of the call, the quarter played out much as we expected with substantial sales gains in the first 10 weeks and then tough comparisons in the last few. The last two weeks of Q1 2020 essentially saw four weeks of normal sales volume compressed into two as COVID-19 driven panic buying commenced. Nearly all of our brands benefited from this phenomenon as consumers loaded their pantries with anything and everything and our case especially canned goods and frozen vegetables. So it is no surprise that the most challenging comparison we have for the quarter is in the canned goods brands.

As Bruce described, the largest dollar decline we saw in quarter-to-quarter sales was in Green Giant, down 16.4%. Virtually all of that happened in the final two weeks of the quarter, making total brand sales for the full quarter similar to the first quarter of 2019. An additional handicap is that we have supply constraints on the canned side of the Green Giant brand due to unprecedented demand late last year, but even with those constraints we expect brand sales to continue to track to 2019 levels until the new crop arrives.

Excluding the Green Giant brand and the remarkable swing in that brand, net sales for the remainder of our base business increased by 8.1% over first quarter 2020. Sales remained broadly strong, especially in areas such as baking and spicing and seasonings. Foodservice sales strengthened as well helping the overall performance.

First quarter was our first full quarter of ownership of the Crisco brand and we were very pleased with its performance. At $58.1 million in net sales it is tracking to our expectations and margins were accretive to our overall results. We do face temporary cost challenges with the brands as the cost of oils used in the products has more than doubled since this time last year. But we view these very high levels as an anomaly that the market will work through over time. Meanwhile we own what we see as an iconic brand that fits well with our portfolio of products related to baking at home and revitalize consumer behavior. With the addition of Crisco, we estimate that our baking at home brands will be approximately 20% of our net sales.

While much of our businesses started shifting back to more normal performance, one area where we see continuation of new consumer behavior is in e-commerce. While there are no complete or precise measures of net sales through this means, we are able to estimate that retail sales of our brands these various e-commerce venues grew by over 60% to $50 million in the first quarter. At this point we estimate that e-commerce retail sales for the full year will continue to grow at that rate and reach $275 million this year.

I should emphasize that this is not necessarily growth in our factory sales, but instead a noteworthy shift in how consumers are buying our products. We are investing significantly in this area to ensure that we are well represented in the phenomenon which shows no signs of leveling off in the near future. If anything, retailers are upping the ante with one recent article citing plans for two-hour delivery of orders to consumer’s homes.

Our household penetration has grown substantially in the past year and is up almost 10 percentage points versus 12 months ago. At the same time, consumer purchase frequency and size has also grown. Our job is to retain these new and revitalized consumers as the pandemic eases. We believe the potential to do that exists, primarily because work from home is here to stay in one form or another.

Our own experience as we return to normalcy is that employees want flexibility in their schedules and work days. Given that, we are orienting our marketing to reinforcing behavior adopted during the pandemic. An example is, the new website integrated for our baking demands, bakingathome.com where consumers can find a wealth of recipes and baking tips, many of course featuring B&G Foods brands. Similar efforts will be taking place across the business as we use the efficiency and cost effectiveness of social media to reach consumers.

Although encouraging as first quarter results are, there are certainly risks and unknowns to deal with for the remainder of 2021. Rising costs are a significant issue and one that will not be resolved anytime soon. As Bruce noted, freight costs have increased steadily. Capacity issues in the trucking industry in both labor and equipment will continue for the foreseeable future. Packaging and raw materials have seen widespread cost increases as well.

We have insulated ourselves in many cases with forward buying positions, but even with these in place, we have also had to announce pricing and manage our trade spending to compensate for these cost pressures. Some of these increases are already in effect and others will take effect of shortly. On the positive side, we are seeing reduced expenses related to COVID-19 as vaccination of our workforce expands. While this was a $2.9 million negative in the first quarter, we should save much of the $13.3 million we spent on COVID-19 related measures in the last three quarters of 2020. As we continue to grow larger, we are investing more resources toward meeting our responsibilities as a corporate citizen. The Corporate Social Responsibility Committee of the Board of Directors is charged with the overall direction of these efforts and has initiated a broad array of efforts in diversity, equity, and inclusion, as well as environmental and sustainability.

During the first quarter we worked with the Culinary Institute of America to establish a scholarship program for diverse students. The program will fully support tuition for five students as they pursue careers in the food industry. This effort joins the extensive work B&G Foods is already doing with St. Jude Children’s Research Hospital.

We are also developing further programs around environmental and sustainability goals at our manufacturing facilities and distribution centers and are working toward increasing our public disclosures regarding our environmental and sustainability programs and goals. With the pandemic easing, we are working hard to return to the B&G Foods of old, a company that delivered steady reliable results on a regular basis with exceptional margins and strong free cash flow. That is the model that has served our shareholders well over the years and delivered superior returns.

I stated started my remarks by stating that the first quarter played out much as we expected and that’s very encouraging, but we do expect second quarter to be the most challenging quarter of the year and the largest unknown. Our net sales increased by 38% in the second quarter of 2020 over 2019, reflecting the height of the pandemic pantry loading. We obviously won’t match that increase, but we believe that our business will perform favorably versus fiscal 2019 and continue to produce solid results.

As a final note, I would mention that a press release went out just before this call introducing everyone to my replacement, since I am in fact the Interim CEO of the Company, Casey Keller, who as you will read in the press release is extremely well qualified and well rounded and should do a fantastic job leading the Company when he starts next month. We are all looking forward to welcoming Casey here and I hope to return over a company that is raring to go when he arrives.

With that, we will conclude our remarks and we would like to begin the Q&A portion of the call. Operator?

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Andrew Lazar with Barclays. Please proceed with your question.

Andrew LazarBarclays — Analyst

Good evening. How are you doing Dave and Bruce?

David L. WennerInterim President, Chief Executive Officer and Director

Hey, Andrew.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

Good afternoon.

Andrew LazarBarclays — Analyst

Good afternoon. So a couple of things, first I wanted to start off just with the new CEO announcement. I think Dave, you have mentioned here and there that the focus in terms of the skill set you were looking for in a new CEO is getting back to sort of the may be what has been B&G’s core DNA right around focus around margin, cash flow, capital allocation and such. And so I’m trying to get a sense of what you saw and the Board saw in Casey and his skill set and how you see it sort of fitting that mantra as opposed to just a pure like classical marketer that perhaps some other food companies have been more interested in? And then I have a follow-up.

David L. WennerInterim President, Chief Executive Officer and Director

I wouldn’t say that Casey is just a classical marketer. You know, he has had full P&L responsibility in a number of companies and certainly in the interview process showed a thorough understanding of the operations part of the business as well as marketing and sales, and I think he brings an international flavor to the business that we really haven’t had before. So that should be an interesting aspect of his background.

I was fascinated to hear that he actually runs a store door business with supermarkets and things like that which, you know to run a company that does that kind of thing you need to be a pretty strong operations guy as well as a marketing guy. So that was certainly — we certainly considered all of that. We understood that that was a very strong need in the Company and we felt Casey could deliver that.

Andrew LazarBarclays — Analyst

And then, I may have missed this, if I did, I’m sorry. Did you say what you expected sort of full year inflation to look like? So it sounded like you’ve got decent visibility for the first three quarters in terms of what you’ve locked in, so there is still some exposure in 4Q. But knowing what you’ve got ahead of you for the first three quarter, can you give us a sense of what that sort of all in on average inflation looks like. As I think first quarter was up, I think it was low single digits, how does that track from here?

David L. WennerInterim President, Chief Executive Officer and Director

Well, it should stay fairly much at low single digits in the first part of the year just because we’ve locked in a lot of our purchasing positions, but the wild card really is how much are things going to continue to ramp up and what’s going to happen when those positions run out and what will the effect of the new crop on things like commodities be? Freight we think for instance which is a very big inflator will actually, all things being equal, start leveling off as we get to the last three, four months of the year because we saw those increases last year in the final quarter. So I think that’s the good news if you want call it that, but commodities to me is a wildcard.

The packaging industry just continues to get worse, and so even when you have purchasing hedges and things like, those run out sooner or later and it really is a matter of how does it play out in the final four or five months of the year what will happen, and I don’t think anybody knows. My personal opinion on the agricultural commodity side is that this is more than a one year phenomenon, that this crop is not going to fix the problem even if it’s a good crop, and that we will see elevated costs going into 2022.

Andrew LazarBarclays — Analyst

Thanks for that and then just lastly would be, I think you mentioned that base business sales in the first quarter versus 2019 were up about 4%. You anticipate sort of low single-digit or may be a little better base business sales versus 2019 in 2Q.

David L. WennerInterim President, Chief Executive Officer and Director

Yeah.

Andrew LazarBarclays — Analyst

And then, yes, right. If I’ve done the math right, in the full year sales expectation suggests base business growth, again on a two-year basis up may be closer to 10% or so, so that suggests kind of a ramp up an acceleration in the back half on a two-year basis. May be you can go through what gives you confidence that’s going to happy again? I assume some of that is capacity constraints lifting for Green Giant, but we would love to hear your thoughts on that if I could?

David L. WennerInterim President, Chief Executive Officer and Director

Yes, it is not just Green Giant. There are a number of brands, especially in the meal solutions type of brands like Ortega and a few other places where we still have capacity constraints. So we do expect sales to expand as we fix those things and we will have them fixed mid-summer or so. So we expect to be able to meet some of the demand that we are still unable to meet. And of course, Green Giant is huge in the whole thing. I mean the $25 million decline we saw in Green Giant in the first quarter could have been a much better number, haven’t been able to not have allocation on the canned goods side and even on the frozen side in some areas. So we definitely have unmet demand and that will help.

The other thing that should play out is the fourth quarter actually was a fairly flat quarter to 2019. So to the extent we can exceed 2019 in the fourth quarter, that should help a lot in terms of upping the performance as we go forward. And we really work very constrained in the fourth quarter. The way the year played out last year was, the inventory positions we had helped tremendously in the second quarter to meet the huge demand we saw, but them we started having capacity issues in the third quarter and the fourth quarter, and hopefully we can flip that around as the year plays out here.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

And Andrew, Crisco purely incremental all the way through up until December of last year, so also adds a substantial number to that and very much tracking in line with our expectations and our plan?

Andrew LazarBarclays — Analyst

Thank you.

Operator

Our next question comes from the line of William Reuter with Bank of America. Please proceed with your question.

William ReuterBank of America — Analyst

Hi, good afternoon. My first question is, the 18% to 18.5% EBITDA margin, I think that’s for fiscal year 2021 in total. I guess, I’m making sure that that’s the, OK. Does that — do you have any, I guess when you were just speaking about some of these agricultural commodity inflation challenges, it sounds like you think those are going to go into the fourth quarter as well. Is that what’s priced into those margins, because I guess I was impressed at the margin declines weren’t better, weren’t higher given the inflation we’re seeing.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

Yeah, the margins would be inclusive of those cost increases.

David L. WennerInterim President, Chief Executive Officer and Director

Yeah, we have taken price. We continue to examine our trade promotions to increase net pricing if you will out of that. We do have a decent cost reduction effort under way that should help mitigate some of the cost increases we’re seeing and we reserve the right to increase price further depending on how different costs go. We’re seeing more of that in the industry and I think you’re going to continue to see it just because it’s — the drumbeat continues on cost increases and it just seems to be getting worse.

William ReuterBank of America — Analyst

The low to mid single digit inflation that you are expecting I guess for the remainder of the year or for the next couple quarters, if you had not had hedges in place, do you know on a spot basis what that would be?

David L. WennerInterim President, Chief Executive Officer and Director

No, I don’t think I’ve ever looked at that because it would be just too ugly to look at frankly. I mean, oil alone for Crisco, we have insulated ourselves from the cost of oil which is by far the biggest piece of the cost of goods of that line. We’ve insulated ourselves from that caused doubling, not entirely but to a great degree and that’s a huge number, that’s tens of millions of dollars.

William ReuterBank of America — Analyst

Okay, and then just lastly from me, with regard to Green Giant being on allocation and the supply disruption there, have there been any conversations with customers where you feel like they have reallocated shelf space based upon the supply chain challenges?

David L. WennerInterim President, Chief Executive Officer and Director

No, not reallocated shelf space, no.

William ReuterBank of America — Analyst

Good to hear. Okay, I’ll pass to others. Thank you.

Operator

Our next question comes from the line of Karru Martinson with Jefferies. Please proceed with your question.

Oliver GrossmanJefferies — Analyst

This is actually Oliver Grossman on for Karru. I was wondering if you could expand on your outlook for the foodservices business as we start to see the easing of restrictions and higher vaccination rates?

David L. WennerInterim President, Chief Executive Officer and Director

I mean we’re pleasantly surprised at how much it has recovered so far, but it’s one of those things you’re feeling your way through as far as how much the restaurants are going to open up, how fast consumers are going to switch to going out to eat. I don’t think we have any magic crystal ball that tells us exactly what going to happen there. Like I said, we’re encouraged by how it’s gone. I think, do we think it’s going to be fully recovered toward the end of the year, that’s certainly possible, but there’s all sorts of — I mean it is not even all about just economic conditions and I really think it is about the restrictions that government places on these things too.

Oliver GrossmanJefferies — Analyst

Okay. And then what are you seeing on the M&A front? I was wondering, are valuations in line with what you’ve seen historically?

David L. WennerInterim President, Chief Executive Officer and Director

No. A lot of what we see is people taking the sales from the COVID-19 bomb which is significant in a lot of cases and applying a very significant multiple to them, and then saying, oh and by the way I’m going to continue to grow like that going forward and so we’re very patient acquirers and we will wait for the market to get back to reality before we would execute on something like that.

Oliver GrossmanJefferies — Analyst

Okay, sounds good. And then just lastly, what are your thoughts on the current capital structure given that the five in the quarter of 25s are callable in June?

David L. WennerInterim President, Chief Executive Officer and Director

Yeah, we love our current capital structure right now and we are benefiting with the substantial first portion in term loan and a little bit revolver that are very, very low rates, just given where LIBOR is. And regards our two tranches of bonds, one of which you mentioned is callable. We are fine with the capital structure until we do something different.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

Yes, it would be nice if there were closer in so the call premium wasn’t so high and I’d love to do some long term financing at these rates, but the premium is too high at this point.

Oliver GrossmanJefferies — Analyst

Okay. Thank you very much. I’ll pass it on.

Operator

Our next question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.

Michael LaveryPiper Sandler — Analyst

Thank you, good afternoon.

David L. WennerInterim President, Chief Executive Officer and Director

Hi, Michael.

Michael LaveryPiper Sandler — Analyst

Just wondering if you could give a little more color on how you are positioned for input costs and I guess, specifically can you start with just some of your assumptions for what sounds like mostly the fourth quarter on what you’re planning stance is that supports the 18% to 18.5%? Is it that you revert from the hedges to the current spot prices, do you make any prediction about where they go, how should we think about your approach there?

David L. WennerInterim President, Chief Executive Officer and Director

I think the assumption is that we will be able to save or price to hold our own depending on where it goes. I don’t pretend to know where it’s going to go in the last three, four months of the year, because I don’t know what the crops are going to be on the case of commodities. I don’t know what demand is going to be for packaging. There are so many unknowns, and I think we’re looking at it and saying, we will continue to execute on savings and we will continue to execute on pricing and trade as we need to, to hold our margins.

Michael LaveryPiper Sandler — Analyst

So I just want to make sure from here and that currently, your obviously visibility of the costs that you’ve hedged and locked in. And then after those beyond that you’re assuming no headwinds that you can, it is just a manageable environment, is that right?

David L. WennerInterim President, Chief Executive Officer and Director

Yeah, but we’re assuming that there is going to be elevated costs throughout the remainder of the year. Bruce?

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

Yes, like I said, the only thing that we’re looking at and saying, well, we are going to be flat on our last year results is freight. I mean we don’t think freight is going to expand beyond where it was in the fourth quarter of last year and so that will give us a good year-to-year comparison from that point of view and hopefully that’s one where economics one on one might work. And as people get higher wages and can make more money doing trucking, there will be more trucking capacity come on. I can see that solving it’s self a lot more quickly than I see commodities solving themselves right now.

Michael LaveryPiper Sandler — Analyst

Okay, and the second question is I guess flows right out of that, because if I’m hearing you right, you are assuming the elevated cost, but with offsets from savings and pricing, it is — are your pricing assumptions higher and if the Green Giant allocation is worse than you had been expecting and it would seem to suggest a reduction in your sales guidance, is the offset that keeps you whole from the pricing, from a greater level of pricing to cover the stronger inflation?

David L. WennerInterim President, Chief Executive Officer and Director

Well, Green Giant allocation isn’t worse than we expected. It’s actually a little better than we expected and we’re easing the allocation and we’re getting very close to the first of the crops. So peas come in, in June and that’s one of the bigger lines that we sell in the brand. So we don’t foresee as I said earlier. We even with allocation we thought Green Giant will be at the 2019 level and we’re easing the allocation more quickly than we thought we would, so the demand situation is clearing up from that y point of view. Part of that is because we reduced trade promotions and actually are demitting more profitable sales from that point of view. So I don’t really see that as compromising our forecast.

Michael LaveryPiper Sandler — Analyst

Okay, that’s helpful. May be just to sort of clarified the thinking on the top line, is there more pricing assumed in your guide, and if so, how do you think about the elasticity, and related to that of demand, and is it just a weird environment with stimulus and things that make it maybe even hard to predict or just better than normal?

David L. WennerInterim President, Chief Executive Officer and Director

I guess we’re counting on our competitors price as well, which would help solve any elasticity issues, but you know we have pricing in place on a broad array of products that’s going to take place in June. We’ve already done pricing on Green Giant and the Underwood brands early on this year because of cost. Crisco, we did pricing on and it was effective just a couple weeks ago. So we anticipated that and took that and announced that early this year. So we’ve been pretty proactive on the pricing front and as things develop we would certainly continue to be and I’d be surprised if our competition didn’t follow or leave hopefully.

Michael LaveryPiper Sandler — Analyst

All right. Thanks so much. Yep.

Operator

Our next question comes from the line of Ken Zaslow with Bank of Montreal. Please proceed with your question.

Ken ZaslowBank of Montreal — Analyst

Good afternoon, everyone.

David L. WennerInterim President, Chief Executive Officer and Director

Hi, Ken.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

Good afternoon.

Ken ZaslowBank of Montreal — Analyst

I just have two questions, one is when you in allocation and then you get your crop back, how easy is it to get your shelf space back? What happens to your shelf space? What is the process to which you get back?

David L. WennerInterim President, Chief Executive Officer and Director

I’m not sure what shelf space you’re referring to. I mean we’ve lost small amounts of distribution here and there, mostly because we discontinued products to make our manufacturing more efficient where we had shortages. I would expect the retailers would be more than happy to let us pay them slotting to put those products back in if they were reducing selling products. But from a Green Giant perspective, we’re not suggesting that we put people on allocation and then therefore went dark on the shelf and lost shelf space. The purpose of the allocation was so that didn’t happen.

Ken ZaslowBank of Montreal — Analyst

Okay, so your shelf space is completely unchanged at that point

David L. WennerInterim President, Chief Executive Officer and Director

No, I wouldn’t go as far as to say it is completely unchanged. As I said we have actually in some brands discontinued some products, flanking products if you will, so that we could make enough of the large selling, larger volume products and maintain sales on the most important products. In the case of Green Giant as Bruce said, the allocation was purely intended. If we let retailers buy unconstrained, we would have had several months of nothing on the shelf. This way we maintain a shell presence. So I think we did the allocation to prevent that scenario that you are referring to.

Ken ZaslowBank of Montreal — Analyst

I see, OK. And then the second thing is, on the commodity side, you said two different points, and I’m not sure which one you believe. You said that it’s an anomaly that you can reverse, but then you said that it may last beyond this year. How do you think about it? Is it an anomaly or how do you think about it going into not just this year, but going into, once you have headed for a loss, how do I think about that?

David L. WennerInterim President, Chief Executive Officer and Director

You can think about it as I said this would be multi-year, I think and this is me, and if I knew everything about commodities, I’d be home trading commodities instead of doing this. But I think that the crop this year is not going to completely solve the problem. But if you look at the history of things like soy and corn and oil and things like that, this kind of thing happens every 8-10 years and it takes a year or two of good crops to shake it out back to normalized levels.

There is a long-term normalized level of pricing in the market for these kind of commodities. Shortages drive those up and then may drive it up for more than one year, but at the end of the day it is an anomaly that rights itself and gets to a more normal level, which was the assumption when we bought Crisco for instance is that this business is going to have costs of this level because on average over 20 years that’s the level they’ve been.

Ken ZaslowBank of Montreal — Analyst

Perfect. Thank you very much.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

When you talk about that inflation, there is obviously different pieces. There is the agricultural piece, there is the freight piece, there is packaging and so things have cycles.

Ken ZaslowBank of Montreal — Analyst

Okay. Thank you.

Operator

Our next question comes from the line of Jenna Giannelli with Goldman Sachs. Please proceed with your questions.

Jenna GiannelliGoldman Sachs — Analyst

Hi, thanks so much. I just had a follow-up question around your cost reduction efforts. Can you just speak a little bit more to the nature of some of those efforts, is it headcount, is it marketing related? And are you thinking of them as sort of more permanent and structural or may be just kind of temporary to help offset some of the inflationary pressures? And then I have a follow-up, thanks.

David L. WennerInterim President, Chief Executive Officer and Director

It is very much oriented toward manufacturing and distribution. We’re not looking at headcount right now, but it is all about rationalizing where we manufacture products. We’ve repatriated some products into our facilities. A good example would be Las Palmas. We used to co-pack the enchilada sauces, the red and green enchilada sauces there in our factory in Maryland now.

It’s our factory and we reduced costs in doing it, lowered the operating cost of the total plant in doing that. We consolidated some facilities and will continue to do that. We’ve in the case of transportation in response to the higher freight rates we’ve started using more intermodal and we were unable to do that last year simply because everything was rush, rush, rush, get it to the consumer or the customers as fast as you can.

Now with things slowing down some, we can do better in terms of using intermodal which is a significant cost savings. It’s a variety of things, but very much oriented toward manufacturing and distribution. Marketing is not going to be cut. Our plan is to spend as much marketing this year as we spent last year. As I said in the call in the script we are orienting more of it toward e-commerce than we did last year.

Jenna GiannelliGoldman Sachs — Analyst

All right, thanks for that color. And then I just had one more on the kind of product innovation pipeline, just can you speak to that, how it might compare to 2021 things may be a little bit more and so it will and so it will fall in terms of innovation and is that perhaps an opportunity to drive sales higher this year whether it is mix or more value add products, just how you see that evolving in 2021? And that’s it, thank you.

David L. WennerInterim President, Chief Executive Officer and Director

Sure. There will be increased innovation in 2021, first because a lot of the innovation we had slated for 2020 is rolling into 2021, either in terms of absolutely launching at it all or expanding the distribution which was very modest in 2020 as most retailers were not resetting shelves and were not really accepting new products. So, there’s a lot of things that are rolling in from last year and there’s innovation that was in the works to do in 2021 that will be done as well. We’re looking at something that would generate probably 3% to 4% of sales if it succeeds in terms of incremental selling with innovation this year.

Jenna GiannelliGoldman Sachs — Analyst

Thank you.

David L. WennerInterim President, Chief Executive Officer and Director

Yep.

Operator

And our next question comes from the line of David Palmer with Evercore ISI. Please proceed with your question.

David PalmerEvercore ISI — Analyst

Thanks, just a clarification on I think it was Andrew’s earlier question on revenue guidance. That back half improvement in your organic sales trends ex-Crisco, is that basically canned Green Giant coming back and that’s basically it or is there another factor to that giving you confidence in that improvement in the second half? And I have a follow-up.

David L. WennerInterim President, Chief Executive Officer and Director

Well, the Green Giant definitely will hopefully turn from a negative to a positive, especially in the last quarter of the year, where it didn’t perform very well and was part of the reason we were basically flat to 2019. But we’re very encouraged by what’s going on in the portfolio.

As Bruce was saying, our seasonings businesses is just rocking and rolling. Our baking business is doing extremely well, and our meal solutions types of brands like Ortega, like Las Palmas, like Bear Creek will we would hope do even better as we saw some of the bottlenecks we had in those brands. We are not able to meet the demand in some areas in those brands. So, there’s a lot of positives as we look at the rest of the year. Now, I’m not saying we are going to match 2020. Second quarter is a tough quarter from a 2020 point of view. Our sales in second quarter were up now darn near 50% in the quarter and you’re just not going to match the kind of performance, but we should do well versus 2019.

David PalmerEvercore ISI — Analyst

Thank you, for that. And a question on free cash flow, just to how we should be thinking about free cash flow conversion this year after Crisco, any thoughts on that?

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

In terms of actual guidance number we didn’t have, but it should be pretty strong.

David PalmerEvercore ISI — Analyst

And I was thinking just perhaps a percentage of EBITDA, yes.

David L. WennerInterim President, Chief Executive Officer and Director

Yes, I mean, it won’t be a big year of inventory increase and taxes from a cash tax we’re usually pretty efficient. It should be typical B&G strong cash from operations and what we like to produce.

David PalmerEvercore ISI — Analyst

Great, and then just one just general comment, there is obviously people that invest in the food states that saw the 2017/’18 cycle of inflation and wonder if it’s foolish to think that things are going to be different this time in terms of inflation cycle. Perhaps you can talk about that Dave a little bit, about why if it does feel different now in terms of price receptivity in perhaps preserving gross margins and over time perhaps with a little bit of a timing risk and why that would be different than 2017 and 2018?

David L. WennerInterim President, Chief Executive Officer and Director

I think this inflation cycle is broader and deeper than what you saw a few years ago. That was not a — this is pretty dramatic, and it doesn’t seem to be any, having any hope of abating any time soon. So I just, in fact every article I read it is just getting worse. I mean now the latest one I red was wood pulp is now a problem and they are going to have to increase prices in toilet paper and thinks like that.

It is kind of remarkable because I don’t — we didn’t have supply issues before COVID and now suddenly we have broad supply issues and monitor part of it, certainly in agriculture a lot of it is driven by demand from China and places like that. So I just think it’s a much broader, deeper, inflationary cycle that is not going to go away very quickly and that is making the conversations with retail different. Well, no retailers likes you to come in with a price increase, let me say that.

But usually they also have one of their people responsible for purchasing private label and all that with them sort of is a logic check for what you’re telling them, and I think they’re hearing from their own people that, yes, this is a problem, and then what they’re telling you is right. And we’ve actually had one customer ask us, can you take positions for me on my private label oil business because we need coverage. So I just you know it’s as I said customers don’t like price increases, but the reality is a very strong reality right now.

David PalmerEvercore ISI — Analyst

Okay, thank you.

Operator

Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your questions.

Rob DickersonJefferies — Analyst

Great, thanks so much. Lot of questions have been asked, I’ll keep it short. I guess just your commentary today, a lot of its kind of that 2019 level earliest reference to Q2 2019. I feel like historically at least in the base business it seems like maybe Q2 there is some seasonality, like Q2 usually comes in a little bit lower relative to Q1. It is beginning to sell velocity with that. So like when I look at Q2 2019 that came in a little bit relative to Q1 2019, but obviously like we’re lapping the big Q2 from last year. So as we think about that Q1 to Q2 like do you want us all to kind of go back to that kind of more traditional seasonality cadence that we usually see from Q1 to Q2 or is there other stuff in there, let’s say that may not cause that standard cadence?

David L. WennerInterim President, Chief Executive Officer and Director

No, I think it is appropriate to say it is going to be, the sales are going to pace more similar to 2019. I mean, if you talk about 2019 first because that’s the last normal we had. I mean you can’t even start from 2020 and say, OK well, here I can make judgments versus 2020. You can’t. It was just some extraordinary a year that you have to go back to worse and firm ground I can stand on to start doing this. And I think 2019 and the pace of sales of 2019 is probably as good a place as any.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

And as we said earlier on the call expectation would be that Q2 looks like 2019 probably low to mid single digits as a percentage higher, plus Crisco. Crisco, typically that period is about 20% of a full year’s net sales, and EBITDA margins, I think we’re telling you are generally going to look similar than what they have in the past.

David L. WennerInterim President, Chief Executive Officer and Director

And it’s a little bit of an informed decision, because we have four weeks under our belt.

Rob DickersonJefferies — Analyst

Right. Got it, OK, cool. And then just in terms of the SG&A line, I know you’ve called out some COVID costs and fines from retailers, but kind of overall for SG&A, SG&A was almost flattish let’s say relative to Q4. Is there anything within that SG&A line that would cause SG&A to kind of be up or down as we got to speaking to the near-term because again traditionally sometimes it is up, sometimes it is down on a sequential basis just trying to get a feel as to some of the levers you can pull, they also potentially the SG&A related such that SG&A may have been up a little bit in Q1, but maybe it gets better as we get through the year?

David L. WennerInterim President, Chief Executive Officer and Director

Well, SG&A was up in Q1 to some degree because versus in 2019 we hadn’t done a lot of accruals for incentive bonuses and long-term incentives and things like that. And we basically accrued at target levels in 2020 and that’s worth a couple million dollars year-to-year difference, so that’s one factor.

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

And then advertising and marketing, we’re going to be flat is the dictation on a full year basis, but the pacing of that is a little bit different. And so if you look last year, we’re higher in the first quarter this year than we were last year. We will be higher in the second quarter this year than we were last year. And to get to the same number, then it’s a little bit of lower, so the pacing will be a little more even this year whereas last year was backend weighed.

David L. WennerInterim President, Chief Executive Officer and Director

Yeah, I mean, and when you look at the EBITDA swings year-to-year that was about $9 million of these kind of factors in the first quarter that wasn’t in 2019 EBITDA. One is the marketing as Bruce said, we spent about $4 million more in 2021 than we did in 2020. I misspoke and said 2019, I’m sorry. 2020 the comps another couple of million dollars and then the COVID expenses of $2.8 million which really is more in our manufacturing and distribution and to some extent SG&A, but more in the cost of goods area, but that was $2.8 million.

So it is a better part of $9 million of things that we incurred in 2021 first quarter that we didn’t incur in 2020, all of which will fade away as the year goes on, because we’re still at normalized levels of marketing. Compensation will come back. The accruals were much heavier in the latter part of the year than they were in the early part of the year last year and the COVID expenses are bleeding down rapidly as people get vaccinated.

Rob DickersonJefferies — Analyst

Got it. Perfect. Thank you so much.

David L. WennerInterim President, Chief Executive Officer and Director

Yeah.

Operator

We have time for one last question and that comes from Eric Larson with Seaport Global Securities. Please proceed with your question.

Eric LarsonSeaport Global Securities — Analyst

Yeah, thanks. Good afternoon everyone. I will make this truly quick. One question, maybe you’ve answered part of this, but obviously your inventories are depleted for sure at Green Giant and I’m curious if you are able to actually get more acreage planted this year, procure some higher supplies, rebuild those inventories and then with that being said are there other product lines your shipment, will your shipments be still greater right now versus rebuild take away because you’ve got to rebuild some of this retail, and then what’s the cash impact? Obviously that’s probably been a cash tailwind, whereas if you start rebuilding those inventories it might be a bit of a headwind. So if there a way characterize that whole idea or concept it would be great? Thanks.

David L. WennerInterim President, Chief Executive Officer and Director

Okay, that was not a short question, but on the Green Giant front we don’t contract the acreage, our co-packer does. But we have certainly worked with the co-packer to envision rebuilding the inventories to appropriate levels as the crops come in and that would imply more acreage. Where will it end up, only God knows, because it’s so depending on things like weather that we’re hoping there’s a good crop, but frankly we haven’t had a good crop on the Green Giant side for three years, but we’re kind of hoping we do this year that would help a lot.

There really isn’t is a lot of pipeline to be done and most of the products we’re talking about we’re short of capacity on, yes, there is some inventory that needs to be rebuilt, but not remarkably a lot, because there are products that we’re making everyday unlike the seasonal pack. You you’re going to see an increase in inventory on Green Giant at the end of the year all things being equal, but there’s also a lot of work being done to reduce inventory in a lot of other areas, because that’s another area of opportunity for us to free up working capital. And we would hope that we would end the year, as Bruce said earlier at least flat year-over-year.

Eric LarsonSeaport Global Securities — Analyst

Okay, thank you, Dave.

David L. WennerInterim President, Chief Executive Officer and Director

Yeah.

Operator

We’ll take one more question from Ryan Bell with Consumer Edge Research. Please proceed with your question.

Ryan BellConsumer Edge Research — Analyst

Great, thanks for sorting in. I know you touched upon this a little bit in your prepared remarks, could you highlight some of the initiatives that you’ve taken to retain the incremental households and kind of talk about the important incremental work from home in terms of longetivity of expectations around the increases?

David L. WennerInterim President, Chief Executive Officer and Director

Well, we’ve done and got a lot of work with a company called Numerator to try and very specifically identify who these households are and try and reach them through social media and other means to communicate with them. And as I said, we’re really trying to use social media and the internet and websites and things like that to provide people with solutions. I’ve been working for a long time and I’m trying to get used to the whole work from home kind of thing that has really blossomed in the last year, but there is no doubt the sentiment in our office workforce is that people want to have x number of days a week that they can work from home and that implies they are going to eat at home, they are going to cook at home and implies continued demand that will be higher than it was pre-COVID.

And so we just need to make sure that we are part of that with our brands like Ortega, like Bear Creek, like Green Giant and all of our seasonings that are used in cooking at home and we’re digging as hard as we can to figure out OK, how do we do that? And e-commerce is a good example of how you do that, because these people are using e-commerce to buy the products more and more. So you want to be first and foremost on the retailers sites that they go to, to order the products and you want to work with that part of the business. You want to work with all the various delivery services and everything to go out and pick those orders from the retailers, that to me is how you how you track the household penetration and hopefully hold serve with it.

Ryan BellConsumer Edge Research — Analyst

Thanks, that’s helpful. And in terms of your expectations private label landscape over the balance of 2021, do you have any comments on that?

David L. WennerInterim President, Chief Executive Officer and Director

I really don’t know what private label is going to do. You know as a branded business we are working as hard as we can to have them not do well, but I’m frankly a little surprised that how badly private label has done during the COVID era. People have come back to brands and that makes us very happy. Hopefully, we can prove to them that that was the right decision.

Ryan BellConsumer Edge Research — Analyst

Okay, thanks a lot. That’s it from me.

David L. WennerInterim President, Chief Executive Officer and Director

Yeah.

Operator

All right. I’d like to hand the call back to management for closing remarks.

David L. WennerInterim President, Chief Executive Officer and Director

Okay, thank you. I appreciate everyone’s interest in the Company. We think we had a very solid first quarter with very good results given the added expenses I talked about that will mitigate as the year goes on. It’s certainly a challenging on comps the last year and as I said before, we’re trying to just use the firm footing of 2019 and make progress versus that as we go through the year. Again, thank you very much for your interest and support.

Operator

[Operator Closing Remarks]

Duration: 73 minutes

Call participants:

Sarah JarolemSenior Director of Corporate Strategy and Business Development

David L. WennerInterim President, Chief Executive Officer and Director

Bruce C. WachaExecutive Vice President of Finance and Chief Financial Officer

Andrew LazarBarclays — Analyst

William ReuterBank of America — Analyst

Oliver GrossmanJefferies — Analyst

Michael LaveryPiper Sandler — Analyst

Ken ZaslowBank of Montreal — Analyst

Jenna GiannelliGoldman Sachs — Analyst

David PalmerEvercore ISI — Analyst

Rob DickersonJefferies — Analyst

Eric LarsonSeaport Global Securities — Analyst

Ryan BellConsumer Edge Research — Analyst

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