B&G Foods Cuts Dividend in Half as Refinancing Swaps 5.25% Coupon for 11%
The packaged-foods maker halved its quarterly payout to $0.38 a share, saving roughly $31 million annually as it absorbs an 11% coupon on $475 million in new senior notes.
B&G Foods Inc. (BGS) reported first-quarter net sales of $408.9 million, down 3.9% from a year earlier, as divestitures of its Green Giant U.S. frozen, Le Sueur U.S. and Don Pepino brands more than offset underlying growth in its remaining portfolio.
The top-line decline masked a healthier picture in the company's base business, where net sales rose 2.8% to $365.1 million on volume gains of 1.9%, modest pricing and a favorable foreign-currency tailwind. Adjusted EBITDA slipped 2.5% to $57.6 million, though the margin widened slightly to 14.1% from 13.9% of net sales, suggesting the smaller revenue base carried roughly the same earnings power.
Spices & Flavor Solutions drove the quarter, posting a 9.1% sales increase and a 13.1% jump in adjusted EBITDA on higher volumes and pricing, even as garlic, black pepper and tariff costs weighed on the segment. Frozen & Vegetables swung to $4.6 million of adjusted EBITDA from a $1.5 million loss a year ago, a $6.1 million improvement helped by lower raw-material costs and a co-manufacturing agreement that partially replaced revenue lost in the Green Giant U.S. divestiture. Green Giant Canada added a bright spot with a 16.4% sales increase.
Elsewhere, results were weaker. Specialty adjusted EBITDA plunged 22.1%, dragged by the Don Pepino divestiture and higher input costs. Meals adjusted EBITDA fell 20.1% despite essentially flat sales, as elevated raw-material expenses, manufacturing costs and heavier trade spending eroded profitability. Companywide, adjusted gross margin narrowed to 20.7% from 21.3% on higher raw-material and manufacturing costs.
The quarter's most consequential move came on the balance sheet. B&G Foods completed a $475 million offering of 11.00% senior notes due 2031, upsized from the initial proposal, to retire all $509.3 million of 5.25% notes maturing in 2027. The refinancing effectively doubled the coupon on the company's long-term debt and will meaningfully increase interest expense in coming quarters, though net interest fell 5.1% in the first quarter because the new notes had not yet replaced the old ones. Total net leverage stood at 6.1 times last-twelve-month covenant-adjusted EBITDA of $323 million; on an as-adjusted secured basis, leverage was 4.6 times.
To shore up cash flow, the board cut the quarterly dividend 50%, to $0.38 a share from $0.76, a reduction expected to save about $30.8 million annually, with proceeds directed toward debt paydown. The company also completed its $110 million acquisition of the College Inn and Kitchen Basics broth and stock brands on March 19, projecting annualized sales of $110 million to $120 million and adjusted EBITDA of $18 million to $22 million at roughly a 5.5 times multiple.
Management revised full-year fiscal 2026 guidance to net sales of $1.735 billion to $1.775 billion, adjusted EBITDA of $275 million to $290 million and adjusted diluted earnings of $0.575 to $0.675 a share. The outlook reflects a smaller, more leveraged company navigating higher borrowing costs and input inflation while leaning on its spices business and new broth brands to stabilize earnings.