Yahoo Finance

Bruce Wacha

Thank you, Casey. Good afternoon, everyone. Thank you for joining us today. We will try to be efficient with everyone's time so that you can all get out to vote this evening if you haven't done so already.
I will start with a quick housekeeping item. Last year's third quarter results included the Green Giant Us Shelf Stable product line which we sold the Seneca last November green giant us shelf stable contributed approximately $20.3 million of net sales and approximately $2 million in contribution to last year's third quarter. Results in the third quarter of 2024 we generated $461.1 million in net sales.
$70.4 million in adjusted EBITDA adjusted EBITDA is a percentage of net sale [0.3%]and 13¢ in adjusted diluted earnings per share base business net sales which exclude the green giant us shelf stable product line decreased by $21.3 million or 4.4% in the third quarter of 2024. Compared to the third quarter of 2023.
The decline in base business net sales is comparable to our consumption data as per Nielsen which showed a decline of approximately 5% for the 13 weeks ended September 28th, 2024. $22.6 million. Of the decline in base business net sales or 4.7% points of the decline was driven by lower volumes and $0.4 million or 0.1% points were driven by the negative impact of foreign currency.
These impacts were offset in part by the benefit of $1.7 million or 0.4% points of positive net price and product mix.
Net sales for our Crisco brand decreased by $9.4 million for the third quarter of 2024 as compared to the third quarter of 2023. Largely as a result of our commodity pricing model for the brand, which resulted in a net pricing decline of approximately $3.5 million to reflect lower soybean oil commodity costs coupled with a decrease in volume of approximately $5.9 million excluding the Crisco brand. Base business net sales decreased by $11.9 million or 3% in the third quarter of 2024. Compared to the third quarter of 2023 gross profit was $102.3 million for the third quarter of 2024 or 22.2% of net sales adjusted gross profit, which excludes the negative impact of $0.1 million of acquisition, divestiture related expenses and non-recurring expenses included in cost of goods sold during the third quarter of 2024 was $102.4 million or 22.2% of net sales gross product. gross profit was $113.8 million for the third quarter of 2023 or 22.6% of net sales adjusted gross profit, which excludes the negative impact of $0.3 million of acquisition, divestiture related expenses and non-recurring expenses included in the cost of goods sold during the third quarter of 2023 was $114.1 million or 22.7% of net sales.
While we are continuing to see input cost inflation with regards to raw material costs across our basket of inputs and in our factories, the cost increases have continued to be mostly modest thus far this year.
However, we are still seeing elevated costs in some categories such as black pepper, garlic, olive oil and tomatoes and foreign currency is negatively impacting our costs at our green giant manufacturing facility in Mexico helping to mitigate those cost increases.
Our continued favorability in some areas that saw the most extreme input cost inflation in 2022 and 2023 such as soybean oil cans and logistics, as well as through our continuous improvement, productivity efforts and cost savings initiatives in our factories.
Selling general and administrative expenses decreased by $2.2 million or 4.6% to $46 million for the third quarter of 2024 from $48.2 million for the third quarter of 2023.
The decrease was composed of decreases in consumer marketing expenses of $1.2 million warehouses, expenses of $0.9 million selling expenses of $0.8 million and acquisition, divesture related and non-recurring expenses of $0.6 million partially offset by an increase in general and administrative costs of $1.3 million expressed as a percentage of net sales selling general and administrative expenses increased by approximately 0.4% points to 10% for the third quarter of 2024. As compared to 9.6% for the third quarter of 2023.
As I mentioned earlier, we generated approximately $70.4 million of adjusted EBITDA or 15.3% of net sales in the third quarter of 2024. Compared to $80.4 million or 16%. In the third quarter of 2023 approximately $2 million of the decrease in adjusted EBITDA for the quarter was the result of the divestiture of the green giant US shelf stable product line which we sold last fall, an additional $1.5 million or so of the adjusted EBITDA decline resulted from the negative impact of foreign currency relative to the impact in the year ago period on our cost of goods sold for the portion of our green giant frozen vegetables that are produced in our manufacturing facility in Mexico.
The remainder of the decline was largely driven by the decline in our net sales and a modest increase in our raw material costs.
Net interest expense was $42.2 million in the third quarter of 2024 compared to $35.9 million in the third quarter of 2023.
The increase was primarily driven by approximately $3.1 million of charges related to our recent financing as well as the impact of higher interest rates on our long term debt during the third quarter of 2024. Compared to the third quarter of 2023.
These increases were offset in part due to lower average debt outstanding in the quarter. Relative to the prior year quarter, depreciation and amortization was $17.2 million in the third quarter of 2024 which is in line with the $17.3 million. In the third quarter of last year, we had net income of $7.5 million or 9%per diluted share and adjusted net income of $10.1 million or 3 % per diluted share. In the third quarter of 2024.
In the third quarter of 2023 we had a net loss of $82.7 million or a $1.11 per diluted share and adjusted net income of $20.5 million or 27% per adjusted diluted share.
Adjustments to our EBITDA and our net income are described further in our earnings release.
I would now like to touch on the results by business unit net sales for specialty decreased by $17.7 million or 9.9% in the third quarter of 2024 to $161 million from $178.7 million in the third quarter of 2023.
The decrease was primarily due to lower Crisco pricing driven by decreased commodity costs coupled with modest declines in volumes across the business unit in the aggregate specialty segment adjusted EBITDA decreased by $2.7 million or 6.2% in the third quarter of 2024 compared to the third quarter of 2023 net sales for meals decreased by $4.5 million or 3.9% in the third quarter of 2024 to $111.6 million from $116.1 million for the third quarter of 2023.
The decrease was primarily due to lower volumes across the business unit partially offset by a modest increase in net pricing and product mix.
Meal segment adjusted EBITDA decreased by $2.4 million or 9.5% compared to the third quarter of 2023 frozen and vegetable net sales, excluding the impact of the green giant Us shelf stable product line, divestiture were down by $1.6 million or 1.7% of versus the prior year segment adjusted EBITDA decreased by $3.2 million compared to the third quarter of 2023.
Approximately $2 million of the decline was due to the divesture of the green giant US shelf stable product line and an additional $1.5 million or so from the negative impact of foreign currency relative to the prior year period on our cost of goods sold for the portion of our green giant frozen vegetable products produced at our manufacturing facility in Mexico, excluding these amounts segment adjusted EBITA increased marginally in the third quarter as compared to the prior year, net sales for spices and flavor solutions increased by $2.5 million or 2.6% in the third quarter of 2024 to $99.3 million from $96.8 million in the third quarter of 2023.
The increase was primarily due to higher volumes across the business unit, spices and flavor solutions segment adjusted EBITDA decreased by $1.6 million or 5.2% in the third quarter of 2024 compared to the third quarter of 2023. The decrease in segment adjusted EBITA was largely driven by a combination of an increase in trade spending and product mix and increases in raw material costs such as black pepper and garlic.
Now moving on to our balance sheet, as you likely saw, we continue to update our balance sheet following the refinancing of our revolver. Our term loan B and an add on senior secured note offering this summer in October 2024. Shortly after the end of the third quarter, we then redeemed the remaining $265 million of senior notes due April 2025 following these moves, we no longer have any near term maturities with our closest maturity being our senior notes due 2027.
Additionally, we now have just over 35% of our long term debt tied to floating rates or so, a 50 basis point decrease in rates would reduce our interest expense by approximately 3.5 to $4 million on an annualized rate.
Similarly, 100 basis point reduction would be expected to reduce our interest expense by 7 to $8 million.
Further details regarding the refinancing transactions have previously been disclosed by press release and 8 K filings and are described in the footnotes to the financial statements that we filed earlier today as part of our 10-Q and finally, as noted in our earnings press release, we are revising our fiscal 2024 guidance to 1.92 billion to 1.95 billion for net sales, 295 to $305 million for adjusted EBITDA and 67¢ to 77¢ for adjusted diluted earnings per share at the midpoint. Our net sales guidance is based on our first three quarters of 2024 net sales of approximately $1.381 billion and projected base business net sales decline of approximately 2 to 3% for the final quarter of 2024 which is a similar trend to what we saw in the third quarter, we believe that the revised guidance better reflects the continued industry, wide challenges and consumer activity which has dampened volumes in both retail consumption and food service channels.
As a reminder, the green giant us shelf stable business line that we sold last year contributed approximately $15.9 million in net sales to last year's fourth quarter.
Additionally, we expect for full year 2024 interest expense of 152.5 million to $157.5 million including cash interest expense of 145.5 million to $150.5 million depreciation expense of 47.5 to $52.5 million amortization expense of 20 to $22 million an effective tax rate of 26 to 27% and CapEx of 30 to $35 million.
And while we are not providing guidance for fiscal 2025 at this point, we do expect trends to gradually improve and stabilize in the first half of 2025 as we lap the consumer reaction to higher prices.
Now, I will turn the call back over to Casey for further remarks.

Kenneth Keller

Thank you Bruce. In closing B&G Foods is laser focused on the few critical priorities first, improving the base business, net sales trends of the core business to the long term objective of plus 1 to 2% two reshaping the portfolio for future growth, stability, higher margins and cash flow as well as structuring key platforms for future acquisition growth.
Third, reducing leverage below 5.5 times through divestitures and excess cash flow to facilitate strategic acquisitions in the future.
This concludes our remarks and now we would like to begin the Q&A portion of our call operator.

Question and Answer Session

Operator

(Operator Instructions) Andrew Lazar with Barclays.

Andrew Lazar

Great, thanks. Good afternoon Bruce Casey and Andrew. Maybe to start off. And I recall that in the, in the second quarter, I think sales results came in better than the consumption data would have would have implied. And I think you chalked it up to sort of better results at the time in untracked channels and and Canada. And now obviously you talked a bit about destocking, that was a one point headwind to base business sales, I guess in looking back. Do you think there was some sort of inventory stocking that might have occurred in the second quarter by shipping ahead of, sort of consumption or was that not really a factor? Do you think.

Bruce Wacha

So? Just as a reminder, we're probably 75% or so, you know, us traditional grocery maybe a little bit less than that. But we've got, you know, Canadian sales and we've got our food service in our industrial business in our first quarter, we had a little bit, we called out food service and, and we called out some of that was timing. We saw some of that swing into the second quarter as a benefit. And so the first quarter and second quarter kind of made sense. Third quarter, I think there is Casey alluded to it. You know, we saw some of our key customers, you know, from what we've been told, took inventory down. We think we saw that in July and it impacted the quarter. For sure.

Kenneth Keller

I mean, we could read, you know, warehouse and inventories and pos so we, we kind of know what's going on in, you know, that, that impact, you know, I think you probably heard it from others, but we, we definitely saw that, you know, predominantly in July, but even a little bit in, in August, I mean, relative to consumption, you know, as Bruce said, really, we're less than 70% you can track in our, in our consumption there's a lot of other moving parts around Canada food service, industrial untracked channels. So it's really hard to pinpoint that number to our overall total. So I would just, you know, just kind of take that as a take that as a directional indicator but not really, you can't match it up and kind of add the different pieces together to get the total if that helps Andrew.

Andrew Lazar

Yeah. No, I appreciate it. And then your comments on looking for the business to sequentially improve and stabilize in the first half. Certainly not inconsistent, right? With others that have made comments on on next year being a below algorithm sort of growth here. But I was wondering if there were any other actions maybe on the cost side perhaps that you could take to sort of or are taking to sort of blunt the the weaker sales, you know, for a while just give them more leverage stands and things of that nature.

Kenneth Keller

Yeah, I mean we're attacking costs in a couple different ways. So first, I would say, you know, we have active productivity efforts to help us kind of drive margin improvement cover inflation and also offset any weakness in the portfolio. So that, that those productivity efforts are ramping up, they will be higher next year, probably closer to 3%. You know of net sales and 3% of COGS in terms of our overall efforts you saw, we were we are effectively reducing SG&A expenses in the quarter. So we have, you know, an effort and some focus on how do we reduce our kind of, you know, overhead costs and our fixed cost, you know, given the lower sales, I would say Andrew, the biggest thing that we, you know, are looking at is is concurrent with divestures. We will do some restructuring activity in our, in our cost profile to make sure that as we divest businesses, we look not only to take out proportional costs but also ways to get more efficient with a more focused portfolio. So that's probably one of the biggest things that we've already started, you know, evaluating.

Andrew Lazar

last quick thing would be, I think you mentioned that fourth quarter, probably a similar base business trend to what we saw in the third quarter. And I guess, you know, certainly, I think a lot, a lot of food companies are hoping anyway, we'll have to see how it plays out to at least continue to see some sequential improvement, you know, as we move through the sort of final quarter of the calendar year. I'm just curious why maybe maybe you're just trying to be thoughtful and prudent about your expectations but why we wouldn't expect to at least see some continued sequential improvement in the environment. Thanks. So much.

Kenneth Keller

we're expecting some but you know, not, not that much and it's mostly prudence because every time we believe that maybe we're lapping some of these things, it's probably taking longer in the recovery process. So I think, you know, we said the base business net sales were down, you know, X critical pricing impact X, the green giant investor are down 3% in Q3. We're projecting between minus two and minus 3% in Q4. So a little bit of improvement, but I think we're just being cautious in terms of how fast we believe the consumer will come back or really more likely, when do we lap some of the behavior changes that we saw in the wake of the high inflation in the center store food categories. When do those get lapped in terms of their year, your impact in consumer buying patterns. And so we're just being cautious and I think that's, that's prudent at this point. When we start seeing some indications that things are starting to improve, then I think we'll, we'll start calling it out. But you know, to date, we haven't really seen a lot of evidence of that through the third quarter.

Andrew Lazar

Thanks so much.

Operator

Michael Lavery with Piper Sandler & Co

Michael Lavery

With your question.
Thank you. Good evening.

Bruce Wacha

Hey Michael.

Michael Lavery

You called out some of the, the currency pressure in in frozen and vegetables and I just want to make sure I understand that. Right. Is that just transactional? Is there a translational piece to it? A and do you have any idea? I mean, I guess nobody knows, but is there any preparation you can do for potential tariff risk? Have you thought about that and have any thoughts there?

Bruce Wacha

Yeah. So, so part one on the foreign currency, this is, this is really, you know, the exchange rate between us dollar and Mexican peso. It's actually normalized relative to the five year average over the last number of weeks or a couple of months. But we lapped a period where the Mexican Peso was, was pretty strong relative to where it's been in the past and certainly stronger this year. Relative to where it was last year that impacts really our core frozen business for Green Giant. It's those products that are manufactured on there and that's transaction, that's not translation. And, and so that compressed margins and that impacted that as far as tariffs, you know, it's election day, we're really not going to get into the to the election. We're obviously paying attention.

Michael Lavery

Okay. That's helpful and just on the guidance, you've narrowed it, of course, but below the line still, it's a pretty decent window at, at a 10¢ range. Is there anything in particular to keep an eye on there that you would say is more volatile or it sounds like the tax rates coming in still around where you thought and you should have a line of sight on, on the, the interest expense, I guess just what's you know, the, the range of outcomes there that, that makes it feel a little bit wide.

Bruce Wacha

Yeah, if you just simply took our EBITDA range high to low and then use the interest expense, the depreciation and the amortization and our tax rate, you, you get those EPS numbers.

Michael Lavery

Okay. That's helpful. Thanks.

Operator

William Reuter with Bank of America.

Bruce Wacha

Proceed with your question.

William Reuter

Hi, good evening. So I was just wondering if you could discuss how your performance was versus a private label during the quarter, I guess maybe private label trends in general.

Kenneth Keller

I mean, we, I think as I said before, we, we look at private label really category by category. I mean, there's some categories where it's developed and we have, you know, kind of relative positions to private label and in other places, it's really not a factor. So I would say the biggest the biggest areas that we look at are in frozen vegetables where we have seen some strength in private label, particularly on the kind of the core base vegetable business and, and I think, you know, you would have seen the rest of the category including Birds Eye have the same issue that frozen, the frozen, you know, private label vegetable business is, you know, probably taken a little bit of share from the branded competitors on the premium priced business is, you know, where, you know, you have SFT or where you also have some business, some sides premium sides, season spice of sides that business, you know, has been fine. And you know, we, you know, that's there's really not a lot of private label competition in that, but on the core kind of basic vegetables, we've seen private label be relatively stronger than it than it was during the pandemic. The the second place is really Crisco and, you know, vegetable oil and in particular, and on that business, you know, Honestly, we haven't really seen a lot of inroads from private label. The the bigger issue has been, we just trying to, you know, hold their position in the marketplace, relative private label. They've actually come in with aggressive pricing that has hurt us a little bit, but it hurt private label more in the share data. So that's not really impacting us that much. At least from a private label standpoint, it's more about a little bit more aggressive competitive activity from a sort of a number two brand trying to stay in position. And that, that's really the main ones that we look at, you know, clabber girl baking powder, you know, we, we do a lot of the private label business, so not really a big impact in terms of how it moves relative to our position.
But those are really the two categories that we track closely.

William Reuter

Understood. Thank you very much. And then, you know, I guess you touched on on commodity prices and kind of how that impacted your gross margins. But I guess, I was wondering how you expect commodity prices to to impact your margins going forward and maybe any expectations you may have in 25. Thank you.

Bruce Wacha

And keep in mind we don't have we don't typically provide guidance for the forward year on this earnings call. We'll do that following the fourth quarter results from an input cost standpoint, you know, we're, we're 1 2% input cost inflation so far this year is kind of where we are and it feels like next year, it'll be something similar, but we'll obviously update as we get more information. And do our fourth quarter results.

Kenneth Keller

I think we disclosed in our, you know, in our earnings, the comments that right now what we're seeing kind of isolated inflation in a few categories, we may even have that, that is, you know, offsetting some deflation and some others. But right now we're seeing the most pressure on pepper and garlic, which are obviously pretty critical to our spices portfolio, spices seasonings portfolio. And we're also seeing some pressure in olive oil and a little bit on tomatoes. So those would be the big areas, but there are other areas, you know, where we're seeing a little bit of deflationary impact. But the net is what Bruce just said is probably, you know, 1% 1.5%. That's what we see right now and that's, that's probably what we're looking forward into.

William Reuter

Understood. Thank you very much.

Operator

Robert Moskow with TD Cowen.

Robert Moskow

Hi. Thanks. Just wondering if you could comment on the competitive intensity that you're seeing. You know, I don't remember you mentioning West end last quarter. So it sounds like that's new and then, you know, you also have intensity increasing in, in Mexican. So, you know, if, if these, if this persists into next year, would you expect your, your business to continue to decline or do you think, you know, there, there needs to be more spending on those categories in order to, to hold on to your, your share, you know, you've talked about sequential improvement. But does that, does that also entail sequential improvement on these two categories? And then I also had a question about hot cereal because I would imagine quicker is going to, to try to become more aggressive on their oatmeal business at some point. You know, at once they restore capacity. So wanted to know if, if you consider that a risk as well.

Bruce Wacha

And, and sorry. So Rob, are you talking about in the context of like a permanent shift or you talking about ebbs and flows?

Robert Moskow

Well, I, I guess what I'm asking is, you know, for a, as you head into 2025 I would imagine that it's still going to be tough in, in Mexican, still going to be tough in vegetable oil. Like, do you foresee those two categories, stabilizing and returning to growth?
And can you do that, given the resources you put against them or do you need more resources? I'll start with that question, I guess.

Kenneth Keller

I think that we have started putting more resources against the, those two, those two that you're talking about where we've seen more competitive active. They also happen to be two pretty important businesses in our portfolio. You know, Crisco is really, I think is a short term pricing issue where, you know, we has just gotten aggressive kind of going into this season, which is why we didn't necessarily call it out in August. We hadn't necessarily seen where they were going, but I think that's probably a seasonal play. You know, I think we will remain price competitive, you know, you know, as we move into next year, we're not going to, we're not going to allow ourselves not to be price competitive in the marketplace on Ortega. Yeah, I think this is, you know, this is what the third time that Taco Bell has made kind of pushes into the, into the Mexican category. And, you know, we've got some pretty strong innovation and plans to, you know, going into next year. We, we're putting a little bit more money and resourcing behind that business. The trends in the category are good. It just happens that we are now splitting it along with old El Paso with a third player who's made some inroads in distribution.
And so I don't expect that pressure to increase next year, but I think we'll be stronger in terms of pushing back on it and stronger in terms of our innovation and distribution pipeline. So the answer to your question is, you know, we expect to improve the trends on those businesses next year relative to the competitive activity we've seen recently and we are putting more resourcing and effort behind those businesses.

Robert Moskow

Okay. And hot cereal. Do you, do you think you need to do, prepare for something if quicker you know, puts more effort against it?

Kenneth Keller

And we don't see a ton of, you know, correlation with cream of wheat. And in Quicker, we just don't. So that business, you know, I think we examine over time where that price point is and everything, but we don't see a lot of substitution between cream of wheat and Quicker. So we don't really look at that. I mean, we have a very small business in McCann's that, you know, might be impacted by that. But you know, we're, we're feeling okay about our plans on that business. We launched a stand up pouch and some other things. So, no,I don't think we're necessarily focused on that.

Robert Moskow

Got it makes sense. Thank you.

Operator

Thank you.
Hale Holden with Barclays

Hale Holden

Thank you. I just had two on the specialty margin decline in the quarter. Is that all the less pressure in Crisco or other other brands in that portfolio that are seeing some margin declines or pressure?

Bruce Wacha

Yes. Actually in in West sales were down more than than profits.

Kenneth Keller

Crisco.

Bruce Wacha

Sorry and.

Kenneth Keller

Specialty, you said.

Bruce Wacha

Yeah, sorry in specialty net sales were down more than margins, you know. So, so when you think about that in the context of Crisco sales were down, some of this is input costs coming down and us reflecting lower input cost is lower pricing is sort of how we pledged in the model. And you kind of see that in the numbers this quarter.

Hale Holden

Okay.
And then the second question I had was based on your, you're kind of like a longer term thoughts for 25 with you know, volumes normalizing through the first half. Does that also include food service. I know you guys are in some pretty specific categories in food service. And I was wondering if that was in that or if that was just the grocery brands.

Kenneth Keller

That was an overall company view. We, we're actually saying, we're not really saying in the first half, it's, it's going to get positive. We're saying it's going to improve over the course of 2025 Between the first half of the second half, I would expect that we'll see some normalization by the second half of 2025.
But , we would, we would expect at this point, you know, and we don't, you know, we're not the experts, but, you know, if I look at the food industry, traffic projections, we would expect it to say, you know, a little bit negative into the first half of next year based on, you know, what I see from [technomic] and other other sources.

Hale Holden

Okay. Thank you. I appreciate it.

Operator

Thank you.
David Palmer with Evercore ISI International Ltd.

David Palmer

Thanks. Good evening. I wanted to ask a question on actually, I had a little bit of a different view on on your trends going into the fourth quarter being down a few percent in that quarter. It's, it seems consistent with the multi year trend that we saw this quarter. So it, I, I don't blame you for guiding that way based on the consumption data and, and if we keep that multi year trend the same going into the first quarter, it actually looks like it would be a lot better, like up 2%. I is, is that how you see it? Do you see those comparisons just internally as, as being that much easier going into the first quarter, that, that seems reasonable to base case that you would be up consumption and, organic sales in the first quarter.

Bruce Wacha

Of 25.

Kenneth Keller

I mean, I think we see that we begin to lap in the first quarter, some tougher, you know, last year, some tougher consumption trends.
So we, we do expect in, you know, moving into 2025 that we get better sequentially in the 1st and 2nd quarters or actually a composite of the 1st and 2nd quarters in the first half, we do expect to get better than where we are in the Q3 and what we're talking about in Q4 right now. So we do see that we don't see getting all the way to kind of flat or positive until the second half of the year. But it's all about, I think when we lap some of these consumer trends and consumer environment and some of the consumer behaviors that we've been seeing in terms of trade down. That we began to see in the first quarter significantly. A lot of last year.
That helps.

Bruce Wacha

Yeah. No, it.

David Palmer

Does. I think there's, and, and in the, some of the previous answers you touched on things that you're going to do or the areas that you're going to try to pursue. Improvement. Ortega was one.
I'm just, maybe, could you just kind of rank your top three or four areas where you, you're going to be applying the most energy or you just see the most, the most improvement happening that we should be tracking?

Kenneth Keller

Yeah, I think, I think, well, number one is spices and flavor solutions or spices and seasonings. You know, it, it was up last quarter, it's up this quarter Q3.
And you know, we feel pretty good about the trend line of the business even going into next year and it's just tracking the growth of the perimeter of the store, fresh proteins, you know, which are up now, I think because the relative pricing spread of packaged and frozen foods has come down. So we believe that business is a nice growth business and you hear we going to talk about it, but we have the same thing going on our business. We've got a good positive sales trend there. So that's the number one and you know, we've launched some good innovation there. So that's, one we're pushing pretty hard on second we've got a much stronger innovation pipeline on our Ortega business. we are the Taco sauce leader. We've got some new things coming into the market. We've got a lot of good plans there. We're kind of beginning to spend back on marketing on the Ortega brand. So that would be, you know, kind of an area Mexican, the Mexican category that we're going to, we're going to push on and we've got strong plans, you know, Crisco, I think it's all about making sure that we have, you know, the right pricing in the marketplace relative to the cost of oil or soybean oil. And that's and then also making sure that we're supporting, you know, our shortening business, Crisco, shortening business with, you know, a lot with lots of, you know, recipes and digital outreach and influencers around baking and other things. So those are probably the biggest areas, you know, we're focused on next year, obviously, frozen and vegetables. In terms of the green giant frozen portfolio, we need to continue to drive the right price points on our, you know, kind of core vegetables and sauce line, but we need to have successful innovation coming to marketplace. And right now, we are introducing new premium sides that have gone well in our past launches and we're also launching new Ramen Based products that are coming into the marketplace this fall and, and next spring depending on the customer resets. So those are the big areas that we're focused on and those are big businesses for us, innovation driven business for us with strong brand positions. So that's kind of where we're focused to see the improvement. But I think there's also a general improvement in the overall trends in the center store in terms of consumer buying habits and purchasing patterns. I mean, we've just seen a lot of kind of reactionary behavior from consumers this year as they looked at, you know, high inflation, what percentage of their income they were laying out in food and grocery stores. And we've just seen them take different actions like trade down in sizes, run down their home pantries or home inventories, not restock. So I just, I I think we start to lap some of that as well, but from our standpoint, we get focus on what we control, which is those big brands where we need strong plans in the marketplace.

Bruce Wacha

No, that's great color. Thank you.
Thanks, Dave.

Operator

Karru Martinson with Jefferies LLC

Karru Martinson

Good afternoon. We certainly saw the slow down in July for a number of companies but kind of post labor Day. We saw the, the snap back. Is that one week reduction, something that you're still seeing carrying through the fourth quarter? Are you, are you seeing your retailer side to adjust that.

Kenneth Keller

I think we've seen that reduction, whether it's, you know, depending on the retailer a couple days or maybe even a few up to a week, we've seen that kind of carry forward, but we didn't see further inventory reduction in the August September time frame. We said we saw them kind of hold and the only behavior change we're seeing this year is that, they probably putting, they're forcing less inventory out early in the season and letting it kind of flow through. And we're seeing that in our numbers. So they, you know, on Crisco oil, they may not, I mean, they may not order as many pallets out, you know, to force out in the stores, but we're seeing stronger pull through later, you know, in the season as they begin to smell through all that merchandise that they have at the, at the promoted price points, that's a little bit of a shift from what we saw last year. And I think it's kind of an inventory management, you know, play for most of our retailers, but in the end, I think it nets out to zero.
But we just, we just have, you know, a little bit less of, you know, flow up front and more kind of consistent throughout the quarter in our merchandizing, you know, volume if that, if that helps you. Yeah.

Karru Martinson

And then when we look at the kind of the slower environment, you know, what, what is the impact in terms of valuations? And when you guys look at your, you know, potential divestiture program?

Bruce Wacha

So sorry, don't, didn't quite understand the question.

Karru Martinson

Just to say like in a in a slow environment, are you seeing kind of contraction on potential M&A multiples as you look to, you know, right size your portfolio?

Bruce Wacha

Yeah. No, no comment.

Karru Martinson

Alrighty, had to try. Thank you very.

Kenneth Keller

Much.

Operator

Thank you.
Carla Cosella with JP Morgan.

Carla Casella

Hi, thank you. You mentioned you redeemed the 25 notes after quarter end, which is great love to see that. Can you see where the revolver is pro forma for that?

Bruce Wacha

So, so just purely, I mean, what I what I would do is I think we have $40 million drawn at the end of the third quarter on the revolver. So you'll see that in our balance sheet in the queue and the press release and $265 million of notes. So just pure simplicity, just subtract 265 from the notes at 265 to the revolver and that's your number.

Carla Casella

Perfect. Okay. And then it sounds like from the inventory customer kind of rebalancing on the customers rebalancing on the inventory side. It sounds like working capital should be, you know, sources of cash as we go through the final quarter. Which I guess would be, would be typical but should be, should it be an outsized source this quarter as you, as you rebalance inventory levels in the trade?

Bruce Wacha

Yeah. So thinking about, I think the comment earlier in the conversation was around retailer inventories as opposed to B and GS inventories. Although, people are all behaving similarly. Last year for us was outsized inventory reduction. This year, you know, overall we're looking for more modest levels of inventory reduction. And you'll see that. For example, if you look at our third quarter, inventory versus inventory, it was, it was adjusted to be like for like. we're down a little bit, you know, modest but nowhere near the magnitude that we were during the course of 2023 3rd quarter is our peak from a public reporting inventory period. And then we typically, as you said, we'll reduce inventory during the course of the fourth quarter is just the natural flow of the business. Probably not as extreme anymore without the can business as it was in the past. But, but still definitely a reduction in inventory during the fourth quarter. Fourth quarter is usually our best quarter from a cash from operations.

Carla Casella

Okay. And then one just on, on the West. And I know you've got a lot of questions on this already. But do, does we have similar like pricing contracts with customers or because of their pressure. Is it causing customers to come back to you to renegotiate how you price oils, meaning cost plus versus how much gets passed through. In timing.

Bruce Wacha

Yeah, it's really less about that. I think it's just in the context of during 2022 and a portion of 2023 prices going haywire and everybody taking price up. Right. We both raised price. And we both lowered price this year. They've been a little bit more aggressive, you know, we saw lower info costs. So therefore we've all reflected that on shelf. They've been a little bit more aggressive in their promotional strategy than us, but directionally, we, we've both taken price down as we should because costs came down.

Carla Casella

Okay, great. That's all I have. Thank you.

Operator

Thank you and ladies and gentlemen, we have reached the end of the question and answer session and this also concludes today's conference. You may disconnect your lines at this time and thank you for your participation.