Carla Casella: Yes, I think that’s pretty consistent. We were just trying to get more of a sense whether it’s coming from the retailers pulling it or the manufacturers pushing it. And it sounds like from others we’ve talked to as well, that it’s both — just on the — if you were to sell frozen, how is that business it’s a different supply chain kind of. I mean, is that integrated at all with your existing network for distribution or facilities?
Bruce Wacha: So from a manufacturing standpoint, no, we’ve got 2 main manufacturing facilities for Green Giant, which is one in Mexico and 1 in Arizona. A fair amount of that is still co-packed. So there might be overlap in some relationships, but it’s completely different from the manufacturing [indiscernible].
Kenneth Keller: No actually like, distribution, distribution logistics and manufacturing is completely distinct from the rest of that business, from the rest of the company.
Carla Casella: Okay, great. And then working capital, just you did give some color on it. And I noticed that your payable days are a little bit higher Is that a timing issue? Or is there any other working capital timing issues we should consider to the remainder of the year?
Kenneth Keller: I think it will all balance out. The couple of pieces that will be a little bit different, right, as we exited the Green Giant canned business. And by the way, I think maybe you’re confusion in rolling up the numbers, if you’re looking at our K for the sales. We sold part of the shelf stable business, but not all of it, right? We sold the U.S. part of the shelf-stable business called Green Giant, but not the Canada piece. So that’s probably just the small gap.
Operator: Your next question is from Hale Holden from Barclays.
Hale Holden: I had 2. On the food service decline, I missed it if you gave sort of an aggregate percentage of what that was down across the portfolio, but it sounded like mid-single digits. Is that the way to think about it?
Kenneth Keller: No, it’s actually more like somewhere like 12%, 13%.
Bruce Wacha: No, no. Sorry, 12%, 13% — the decline is 12% to 13%.
Kenneth Keller: Yes. On — and it’s about 14% of our sales.
Hale Holden: And then for the guide, as you took the reduction for the year, is — are you just sort of running that for, or do you assume that it stabilizes towards the back half of the year?
Bruce Wacha: It’s probably going to be a little bit challenged throughout the year, hopefully not that bad. The real way to look at our top line guidance is we have first quarter rate, so we know what that is. And then if you were to take the remainder of our business for the last 3 quarters of the year, as a reminder, the Green Giant canned business that we sold was about $65 million of sales, so you stripped that out. There’s another $10 million of pricing around Crisco normalization, we think. And so you take that core base business for the remaining 3 quarters of the year, and we’re assuming up or down percent give or take.
Hale Holden: Okay. And my second question was when companies put divisions up for review, lots of different things can happen over a long or short time horizon, but this is an asset that you’ve been thinking about for some time, I think. And I was wondering, in a sale process, what inning are you in? Or I don’t want to pin you down on a time line, but is a short, medium and long-term kind of process to get to the other side of it?
Bruce Wacha: I’m going to politely duck that question and just say M&A is not predictable. The commentary in the press release says we’re evaluating strategic review of the business, and we’ll move forward and update as appropriate.
Kenneth Keller: We have been working on the redebusiness before now.
Hale Holden: Okay. I might have given you so many [buckets] first but now i understand.
Operator: Your next question is from Rob Dickerson from Jefferies.
Robert Dickerson: Great. Bruce, just curious, we were talking about the divestment potential Green Giant frozen, probably not complete shock here. We’ve talked $400 million in revenue, the margin profile and then, let’s say, like maybe sort of some predictable, there could be another 10% or smaller brands, et cetera. But like at some point, the EBITDA does kind of add up a little bit kind of relative to just what you’re paying on the dividend.
And I feel like this always comes up with B&G and it also leverage, so I’m just curious, like as we all think about kind of the portfolio reshaping and divestment potential like how do you kind of want us then to be thinking about just overall capital structure? If you were to sell these specific brands and businesses, clearly, you get the cash in, that’s multiple contingent — but at the same time, you would, I guess, the theory still have like less free cash flow generation, absent future acquisitions. So kind of be comprehensive in the question, just to give you an opportunity to kind of talk about the capital structure a little bit. That’s all I have.
Bruce Wacha: Yes. And I’m going to talk a little bit of that other than to say we are committed to a dividend. We are talking about potentially a couple of more smallest divestitures and a potential larger one. Certainly, that would accelerate from a capital structure or deleveraging and bring us down closer to that 4.5x to 5.5x that we want to get to. And as part of that, thinking through proceeds and what the right capital structure looks like, I think it’s a little bit early say exactly what that will be and when, but we are committed to a dividend and we’re very much contributed to bringing our leverage down.
Robert Dickerson: All right. Good enough. I’ll pass it on.
Operator: [Operator Instructions] Your next question is from David Palmer from Evercore.
David Palmer: I’m curious just on the announced strategic review and potential sale. It does feel like, to Rob’s point before, it does feel like there’s a long time coming and for you to put it on under review now. I’m just wondering why this communication now? And is there something about the timing that seems right for you to do this method of selling it now in this announcement. And then separately, I just wonder if you’ve done the pro forma math, how much better of a company would be in GB, not just with this — the canned and the rest of the canned and the frozen business, but also the sale of the 10% to 15%, you’re also contemplating the sale like how much better of a company would this be? What does that do to your pro forma maybe historic revenue growth rates and margin structure.
Bruce Wacha: Sure. So a couple of things in there, right? And part one, this is our first quarter with our new business user or segment results. We’ve been talking about getting to this stage for some time and sort of Casey has made a point that he came on board talking about the strategy and how we wanted to run the business and grow the business going forward and what areas we want to invest in and what areas are maintained and drive cash. And so this is a natural culmination of that reorg of the business into segments and our first time reporting segment results. And I think the whole concept here is improving the business. And so you’re asking the right questions.
Obviously, we’re not in a position to disclose the outcome. But certainly, you can see by the margins, we will improve our margin profile from an inventory standpoint. This is a more inventory and working capital intensive business. a little bit more seasonality less so since we already got rid of the canned business with more seasonality the working capital. And we certainly would anticipate accelerating our deleveraging of the business. And at the end of the day, we want to get back to strong commitment to the dividend, using those free cash flows for a combination of paying a dividend and reducing leverage and going back to acquiring businesses that make sense for us and fit in our portfolio with a different strategy for each business unit that Casey has outlined.
Kenneth Keller: I think in simple terms, we want to get to a company that’s capable of growing at 1%, maybe 2% on the top line. We want to get to a company that has closer to a 20% EBITDA margin. We want to get to a company that has stronger cash conversion. And we want a company with clear platforms that we can acquire on and drive value. And that’s what we’re trying to do. And that’s what this announcement and discussion is today. How do we get to that? We are pretty clear in those 3 other business units that we have platforms. We’re pretty clear that we can get to that kind of performance that we’re talking about, in terms of growth and margins. And this — I think it’s just the culmination of a lot of work to say what’s the right structure long term for us to go back and acquire and build?
Bruce Wacha: Green Giant is obviously a great brand, it’s iconic. At a point in time, it was 1 of the fastest growing brands in the grocery store. It’s just very different from a lot of the other things that we own from a profile standpoint and we want to be a focused business in this case.
David Palmer: I want to just ask a follow-up. That’s all great color, by the way. I wanted to follow up on the food service side. I mean, the industry was obviously pretty lousy in restaurants in the first quarter. Volume or traffic was down 2% as an industry in the first quarter. Your number, I think you said down 12, 13 or so percent. That’s obviously not equivalent, but how much worse on a volumetric basis than the industry were you? And where did — why would it be worse? I’m not really sure.
Kenneth Keller: I think it’s just — I mean, we see traffic numbers, at least from our customer base a little bit lower than what you just quoted. So I think this is all really timing about people adjusting inventories. I mean you think about spices, right? So how much people are maintaining inventory at our distributors, et cetera. So I just think it’s a timing issue. It’s reflecting the general slowdown. I’m — we’re going to keep watching it to see what we think the longer-term trend is. But I think we’re going to have — and we have a tough comp, I think, in the first quarter versus last year. But we think we’ll be down in the second quarter, probably a little bit better in the third and the fourth based on the trend analysis we’re seeing.
David Palmer: Yes. I mean I guess you’ll probably over-indexed some players that had a really rough — I mean there were some chains out there that had rough going. And maybe offline.
Kenneth Keller: One or 2 changes that we do directly that had much worse number. So it is what it is.
Bruce Wacha: Yes. The other part, I mean, is some of this — some of our food services markets through large distributors and sometimes that can be a little bit lumpy as opposed to following [Indiscernible].
