Q4 2023 B&G Foods Inc Earnings Call
Participants
AJ Schwabe; Associate Corporate Strategy And Business Development; B&G Foods Inc
Kenneth Keller; President, Chief Executive Officer, Director; B&G Foods Inc
Bruce Wacha; Chief Financial Officer, Executive Vice President - Finance; B&G Foods Inc
Andrew Lazar; Analyst; Barclays
William Reuter; Analyst; Bank of America
Karru Martinson; Analyst; Jefferies
Connor Rattigan; Analyst; Consumer Edge Research
David Palmer; Analyst; EVERCORE ISI
Presentation
Operator
Good day and welcome to the B&G Foods fourth quarter and fiscal 2023 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 AJ Schwabe, Associate Corporate Strategy and Business Development for B&G Foods. AJ?
AJ Schwabe
Good afternoon and thank you for joining us. With me today are Casey Keller, our Chief Executive Officer; and Bruce Wacha, our Chief Financial Officer. You can access detailed financial information on the quarter and full year in the earnings release we issued today, which is available at the Investor Relations section at b&gfoods.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 net income, adjusted diluted earnings per share, adjusted gross profit, adjusted gross profit percent percentage, 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.
Casey 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 fiscal 2024 and beyond. Bruce will then discuss our financial results for the fourth quarter and fiscal 2023 and our guidance for fiscal 2024. I would now like to turn the call over to Casey.
Kenneth Keller
Good afternoon. Thank you, AJ, and thank you all for joining us today for our fourth quarter and fiscal 2023 earnings call.
B&G Foods fourth-quarter results were solid, slightly exceeding expectations. Base business net sales, which exclude net sales of the divested Green Giant U.S. canned vegetable and back to major businesses were essentially flat. But for the impact of lower Crisco oil commodity pricing year over year in addition, base business volume in the aggregate across the portfolio was slightly up for the quarter, stabilizing for the first periods and six significant pricing actions in fiscal year 22. Profit margins also demonstrated steady progress. Adjusted gross profit percentage increased 130 basis points versus last year to 21.9%, reflecting pricing recovery of higher costs and productivity savings. Adjusted EBITDA as a percentage of net sales was flat to last year at 15%, with adjusted gross profit improvement offset by the reinstatement of the short-term management incentive accrual in G&A expenses versus zero in fiscal year 22 with fourth quarter results, B&G Foods delivered fiscal year 23 net sales of $2.062 billion and adjusted EBITDA of $318 million, well within our revised guidance, reflecting the divesture of Green Giant U.S. canned vegetables in November. Bruce will provide more details on quarter four and fiscal year 23 results. Stepping back, we achieved several critical milestones in fiscal year 23 on the journey to reshape and strengthen B&G Foods. First, margin recovery after historic inflation pressure in fiscal year 22. Margins recovered strongly in fiscal year 23 behind pricing actions and productivity efforts. Adjusted gross profit percentage increased 280 basis points year over year from 19.4% to 22.2% in fiscal year 23. Adjusted EBITDA as a percentage of net sales increased 150 basis points to 15.4% in fiscal year 23. Going forward, input cost inflation has moderated to low single digits and in some cases such as soybean oil has come down from historic highs. Number two, portfolio shaping. We divested the low margin working capital intensive businesses of Back to Nature, cookie crackers and Green Giant U.S. canned vegetables both did not fit with our future portfolio focus and were strained to deliver adequate cash flow against the leverage model. As previously disclosed, we expect to divest additional business and brands over the next year to focus the portfolio for future success and intend to use the proceeds to pay down debt.
Third, cash flow and working capital, net cash from operations improved dramatically increasing from 6 million last year to $248 million in fiscal year '23. These results were driven by better operating performance and margin recovery and critically by significant improving improvement in working capital.
Inventories in fiscal year '23 declined by $157 million, down from $726 million last year to $569 million at year end, reflecting the divesture of the seasonal Green Giant US can business lower Crisco soybean oil costs and efficiencies in base business, inventory levels while delivering higher service for debt and leverage.
During fiscal year 23, B&G Foods reduced net debt by $335 million, primarily using improved cash flow and the proceeds from divestitures to pay down debt. As a result, B&G Foods' pro forma adjusted net leverage ratio as calculated per our credit agreement decreased from 7.62 times at fiscal year '22 and to 6.32 times by the end of fiscal year '23.
We are making excellent progress towards returning to our long-term range of 4.5 to 5.5 times. The expectation is to further close that gap in fiscal year '23, four through additional divestitures and paying down debt with excess cash flow five Crisco pricing model. During the first quarter, fiscal year '23, we implemented a new commodity price based pricing model on Crisco with our customers' prices for Crisco products move quarterly to reflect the volatility in soybean and vegetable oil inputs and match market pricing with actual oil costs.
The result has been stable. Gross profit dollars and cash flow for Crisco in a volatile market, particularly over the past two years. As discussed, we do expect to see some up and down movement on Crisco net sales results based on changes in oil pricing without any impact on the bottom line.
And last, spices and seasonings representing approximately 18% of our portfolio. The core high margin spices and seasoning business increased net sales by 2.2%. Trends were particularly strong on the food service and Member's Mark Sam label business, which largely serve out of home and small business customers, the core retail branded trends, dash Weber, Spice Islands, et cetera, are improving and have recovered from temporary service and production issues in our Ankeny factory. We have also strengthened our innovation and new product pipeline launching new license seasoning and grilling blends under the Buffalo trace fireball and Southern Comfort brands, which are preparing performing very well in initial distribution.
Overall, we are pleased with the performance in the fourth quarter and the recovery of the B&G Foods business in fiscal year '23. There's clearly more work to do, but our team has made significant progress toward creating a stronger, more valuable B&G Foods. Bruce will discuss specific guidance, but our focus in fiscal year '24 is to generate slight top line and low single digit bottom line growth on the base business, which excludes the divested Green Giant US canned vegetable business, further reshape the business through strategic divestitures to focus the long-term portfolio for higher margins and valuation growth we continue to evaluate existing businesses that have lower margin and cash flow, higher working capital complexity or do not fit with our core capabilities and business unit structure, reduced net debt and leverage through divestiture proceeds and strong excess cash flows.
Thank you. And I will now turn the call over to Bruce for more detail on the quarterly performance and results for the year.
Bruce Wacha
Thank you, Casey. Good afternoon, everyone. Thank you for joining us on our fourth quarter and fiscal year 2023 earnings call.
As you can see, we had another strong quarter, and we finished the year largely in line with our guidance. As we explained at the outset of the year, we expected to see large year-over-year increase in adjusted EBITDA and adjusted EBITDA as a percentage of net sales in the first two quarters of the year, followed by a more modest increase in adjusted EBITDA and adjusted EBITDA as a percentage of net sales in the third quarter and for the fourth quarter, we expected similar performance to the prior year before accounting for the divestiture of Green Giant US shelf-stable product lines this is essentially how the year played out for us.
In fiscal 2023, we generated $2.062 billion in net sales, $318 million in adjusted EBITDA adjusted EBITDA as a percentage of net sales of 15.4% and adjusted diluted earnings per share of $0.99. Base business net sales, which excludes net sales from the Back to Nature brand and the Green Giant U.S. shelf-stable product line decreased by approximately $30 million, or 1.5% in fiscal 2023 compared to the year-ago period.
Base business net sales include a benefit of $93.3 million from pricing and the impact of product mix. This was offset by negative impacts of $5.1 million from FX and $118.2 million from volumes. And the pricing helped, particularly in our results in the early part of the year.
For fiscal 2023, adjusted EBITDA increased by $17 million or 5.7% compared to $301 million for fiscal 2022. Adjusted EBITDA as a percentage of net sales was 15.4% for fiscal 2023 compared to 13.9% for fiscal 2022. For the fourth quarter of 2023, we generated 578.1 million in net sales, $86.8 million in adjusted EBITDA. Adjusted EBITDA as a percentage of net sales of 15% and adjusted diluted earnings per share of $0.3.
Base business net sales decreased by $13.3 million or 2.3% in the fourth quarter of 2023 compared to the prior year. The decrease in base business net sales in the fourth quarter was largely driven by a decrease in net pricing and the impact of product mix of $15.9 million or 2.8% of base business net sales. The decrease in pricing was in part a product of our Crisco commodity pricing model that we have instituted, coupled with modest increases in promotional trade spending in other areas of the portfolio where it made sense, the impact of foreign currency was also a slight drag on net sales contributing to another 0.3 million of the decline.
These were partially offset by an increase in unit volume of 2.9 million for the quarter. We are obviously encouraged by the improving volume story that we are now seeing, although we are closely monitoring the trade-off between pricing, promotional strategy and volumes as well as the current consumption trends I will now highlight three the performance of some of our larger brands.
Clabber Girl had incredibly strong momentum coming into the holiday peak season and similar to its performance all year long Clabber didn't disappoint. Net sales of Clabber increased by $8.2 million, or 26.3% in the fourth quarter of 2023, as compared to the fourth quarter of 2022. Net sales of Clabber Girl benefited from both pricing and increased volumes during the quarter.
Net sales of Maple Grove Farms increased by about $0.7 million or 3.4%. Our spices and seasonings continue to benefit from improved supply chain performance and new product launches finishing the year with a solid quarter net sales of the company's spices and seasonings increased by $0.7 million, or 0.8% in the fourth quarter of 2023, as compared to the fourth quarter of 2022.
As Casey mentioned earlier on the call, we are very excited about the prospects for these new partnership brand launches coming out of our spices & seasonings business, which includes the license seasoning products, Einstein's, everything bagel, fine science, avocado toast and Sandra Weber flavors, Buffalo, Trace, fireball and Southern Comfort.
We also have a robust pipeline and expect to be able to announce additional new and exciting products, while net sales of Crisco decreased by $10.6 million or 8.7% in the fourth quarter of 2023 when compared to the prior year period. This was largely expected due to favorable input cost relief and the execution of our commodity pricing model, which allowed us to reduce pricing to our customers and still maintain profit dollars as a result of the lower pricing, we are starting to see a nice recovery in Crisco volumes, increased volumes for Crisco contributed to $1.8 million to net sales or 1.5% in the fourth quarter of 2023 compared to the fourth quarter of 2022. We expect this trend to continue throughout 2024 with lower pricing leading to an improved volume recovery for Crisco throughout the year, our Green Giant business was not immune to the category wide industry challenges seen throughout 2023 in the shelf-stable and frozen vegetable sets. Net sales of Green Giant, including Lifecore, but excluding the divested Green Giant U.S. shelf-stable product line decreased by $5.2 million or 4.4%. We expect more favorable industry trends in the category during 2024. And quite frankly, we expect much more favorable trends for our business. The goal is to get this brand back to being the industry leader from an innovation perspective and to generate category-leading growth rates. We did before the pandemic. The hot breakfast bio is another category that is still seeing some normalization in its post pandemic trends. Net sales of premium, we were approximately $78.5 million in 2023, which was well ahead of the pre-pandemic levels that had been consistently in the $60 million to $70 million range annually, although 2023 net sales were somewhat lower than fiscal 2022 annual net sales of $81.4 million in the fourth quarter of 2023. Net sales of premium, we decreased by $2.2 million or 9% compared to the prior year. Net sales of Ortega decreased by $0.3 million or 1% in the fourth quarter of 2023 as compared to the fourth quarter of 2022. Ortega finished the quarter with some momentum despite a challenging year. While Q4 net sales were down 1%, they were up approximately 0.9% in the month of November and another 0.6% in December compared to the prior year period. Taco sauces, green, Chili's and seasonings mixes led the way for the brand driving top positive performance in the back half of the fourth quarter. Taco shells and Taco kits continue to be somewhat challenged. Ortega began the year with a tough comp relative to prior year and some softness in shells and kits as well as pricing elasticity driven volume declines and some skews that where we took pricing these factors combined with the general post COVID category normalization help cause much of the declines. Total net sales for Tegal were 147.9 million in fiscal 2023, down from 154 $54.3 million in fiscal 2022, but also up substantially from pre pandemic 2018. Net sales of 140.4 million base business net sales of all other brands in the aggregate decreased by $4.6 million or 3.5% for the fourth quarter of 2023 as compared to the fourth quarter of 2022. Gross profit was $125.2 million for the fourth quarter of 2023 or 21.7% of net sales. Adjusted gross profit was $126.8 million or 21.9% of net sales gross profit was $126.1 million in the fourth quarter of 2022 or 20.2% of net sales. Adjusted gross profit was $128.6 million or 20.6% of net sales. Adjusted gross profit increased by approximately 130 basis points in the fourth quarter of 2023 compared to last year's fourth quarter. The improvement in gross profit percentage was largely driven by a moderation in input costs and logistics inflation. This represents a continued turnaround compared to the first half of fiscal 2022, where we suffered from the severe industry-wide input cost inflation, which led to large declines in our gross profit and margin selling general and administrative expenses increased by $1.3 million or 2.7% to $53.2 million for the fourth quarter of 2023 from $51.9 million for the fourth quarter of 2022. The increase was composed of increases in general and administrative expenses of $5.8 million and consumer marketing expenses of $0.9 million, partially offset by decreases in warehousing expenses of $2.6 million, selling expenses of 2.3 million, an acquisition and divestiture related nonrecurring expenses of $0.5 million expressed as a percentage of net sales. Selling, general and administrative expenses increased by 90 basis points to 9.2% for the fourth quarter of 2023 as compared to 8.3% for the fourth quarter of 2022. The increase in general and administrative costs was largely driven by modest inflation in wages, insurance and other professional services, as well as an increase in short-term management incentive accruals as no annual bonuses were rewarded for fiscal 2022 due to the shortfall in performance in fiscal 2022. As I mentioned earlier, we generated $86.8 million in adjusted EBITDA for the fourth quarter of 2023 compared to $93.6 million in the fourth quarter of 2020 to Q4 2023. Adjusted EBITDA benefited from the moderation in industry-wide input cost inflation and logistics inflation that have plagued the industry since the fourth quarter of 2021, which were offset in part by the modestly higher G&A costs as well as the impact of divestitures.
Fourth quarter of 2022 included a full quarter of profits from Back to Nature brand and the Green Giant U.S. shelf-stable product line. While the fourth quarter of 2023 had no benefit from Back to Nature and approximately five and 1.5 weeks of benefit from Green Giant U.S. shelf-stable business.
Adjusted EBITDA as a percentage of net sales was 15% in the fourth quarter of 2023, in line with the 15% in the fourth quarter of 2022. Net interest expense was $40.2 million in the fourth quarter of 2023 compared to $36.3 million in the fourth quarter of 2022. The increase was primarily attributable to higher interest rates on our borrowings and a $0.5 million loss on extinguishment of debt, partially offset by reduction and our average debt outstanding.
Depreciation and amortization was $17 million in the fourth quarter of 2023 compared to $19.5 million in the fourth quarter of last year. We generated $0.3 and adjusted diluted earnings per share in the fourth quarter of 2023 compared to $0.4 last year. We remain very encouraged by the progress we have made over the past year in terms of restoring our P&L and perhaps even more impressive that our P&L improvements was the progress that we made in the improvement of our cash flows and our balance sheet. We generated $92.1 million in net cash from operations in the fourth quarter of 2023 and $247.8 million in the full 12 months of fiscal 2023 This compares to $54.4 million in net cash from operations generated in the fourth quarter of 2022 and just $6 million during the full 12 months of 2022, increased operating profits, improved margins and a more favorable working capital were the primary drivers of improved cash flows from operations, which was offset in part by increased interest expense. We finished the year with approximately $569 million in inventory in fiscal 2023 compared to $726.5 million in inventory at the end of last year. Approximately $90 million of the reduction was due to our focus on supply chain efficiencies and a moderation in input costs. The remainder came from the sale of the Green Giant U.S. shelf-stable product line, which as we mentioned previously, was highly capital intensive. It came with large seasonal swings in working capital. We reduced net debt by more than $335 million during the course of fiscal 2023 to $2.02 billion at the end of the year, down from $2.36 billion at the end of fiscal 2022. We also reduced pro forma adjusted net leverage ratio as defined in our credit agreement to approximately 6.3 times at the end of fiscal 2023 compared to 7.6 times at the end of fiscal 2022. We expect to continue to reduce our net debt and pro forma adjusted net leverage ratio throughout fiscal 2024 and beyond, as we diligently work toward achieving our long-term target 4.5 to 5.5 times.
Now as a reminder, before we get to our fiscal 2024 guidance, we are still living in a highly unpredictable times. We have two major military conflicts going on in the world that have far-reaching global implications. We also have separate but ongoing disruptions in both important Canal zones that impacted the global supply chain. Although we are not immune from the challenges that these issues present, we are happy to have a much simpler operational footprint than many of our larger packaged food peers for B&G Foods, though M&A will have an impact on our numbers. We have now fully lapped the sale of Back to Nature, but we still have to lap the sale of the Green Giant U.S. shelf-stable product line as we mentioned on our prior call, the Green Giant U.S. shelf-stable product line had approximately $75 million to $85 million in annual net sales and low double digit contribution margin business had approximately $65 million in net sales under our watch in fiscal 2023 that we need to lap this year. It is also worth noting that while the majority of the heavy lifting in our adjusted EBITDA margin and dollar recovery has already happened. We still do expect to see some modest improvements going forward in 2024 based on what we know today, we expect 2024 net sales of $1.975 billion to $2.020 billion. Our net sales guidance is generally in line with our long-term guidance of 0% to 2% base business top-line growth after adjusting for the removal of the Green Giant U.S. shelf-stable product line, which we sold in November other nonrecurring sales and an estimated $15 million reduction in net sales of Crisco due to anticipated lower oil input costs and a corresponding reduction in our Crisco net selling prices. We expect adjusted EBITDA to be in a range of 305 to $325 million. This range largely reflects the elimination of approximately $8 million to $10 million of adjusted EBITDA due to the recent sale of our Green Giant U.S. shelf-stable product line. Based on this adjusted EBITDA guidance range, we expect adjusted EBITDA as a percentage of net sales to remain at approximately 15%. And based on this guidance, we expect adjusted diluted earnings per share to be in a range of $0.8 to $1. Additionally, we expect for full year 2024 interest expense of 145 to $150 million, including cash interest of $138 million to $143 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 $35 million to $40 million. We expect to use a little bit less than 50% of our excess cash to pay our dividend and the remaining 50% to 60% to pay down debt.
And now I will turn the call back over to Casey for further remarks.
Kenneth Keller
Thank you, Bruce. In closing our Q4 and fiscal 2023 results demonstrate strong progress with improved margins, stabilizing volumes, stronger cash flows and a reduction in leverage. We remain on track to further improve the business in fiscal 2024 and beyond. We have also made significant progress against reshaping the portfolio through our focused M&A strategy, including the divestiture of two businesses, the Back to Nature brand and the Green Giant U.S. shelf-stable business that are not core to the B&G Foods of 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, Barclays.
Andrew Lazar
Good afternoon. Casey, numbers are that they are good, good. I'm first off I guess you're from base business growth expectation. And as you mentioned, for 24, I think, is roughly flattish. And I'm trying to get a sense of how you see that playing out for the year both from a volume and a price standpoint. And I think you mentioned another $15 million impact from negative pricing for the year for the Crisco pass through pricing model. If I got that, right. So that's about maybe down 1%. So does that assume that volume is probably up a percent or so for the year?
Kenneth Keller
So I'll make sure I have that right. I think specific to Crisco.
Andrew Lazar
Okay. So could there be some additional negative pricing activities such that I'm trying to get a sense of what you think pricing looks like and just how positive your value-add business?
Bruce Wacha
Yes. So just let's address these separately. So for Crisco, as we've said over the past year or so, we put in place a pricing model where we interact with our customers quarterly and based on where input costs are, we adjust price? If we think about it last year played out, input costs were still high from the 2022 levels at the beginning of the year and overtime came down. And so quarterly, we were reducing price for Crisco. We will be lapping those higher prices for Crisco for the first half to three quarters of this year, which will then mean assuming everything was perfect, margins would be the same from a dollar standpoint, sales would be down margins would be up from a percent standpoint, pricing would come down for Crisco. And we actually think we get a little volume elasticity benefit and that's kind of what we're seeing for Crisco today.
And then if you look at the base business, yes. But if you look at the base business, excluding the divestitures and excluding the impact of Crisco, we're basically saying we're going to be flat to slightly up, and that will be probably on both volume and pricing. So those two will be kind of running more closely together and if I think about the flow that we still are kind of coming out of that and trends improving, but I would expect the expected the first half of the year is a little bit below that in the second half is a little bit better than that. And that's how we kind of see it playing out right now. And we are seeing new kind of volumes and pricing stabilize. And we don't have a lot of growth planned from pricing other than the other than the movement of Crisco, which is kind of irrelevant to the bottom line data.
Andrew Lazar
That's helpful. And then your guidance, obviously at the midpoint on EBITDA margin suggests like you said some some additional modest improvement. And obviously there was a big jump up in margins in '23 versus '22 EBITDA margins. Are those still still below where they were just a couple of years ago? So I'm trying to get a sense of maybe what would impede some more significant EBITDA margin improvement as we go forward? Or is it is it something just in the portfolio that's changed versus where you were a couple of years ago? Or what would it take to get back to those levels if that's even a reasonable expectation at some point?
Kenneth Keller
Well, I mean, Andrew, our goal is to get back to 18% to 20%. So that's what we want to. That's what we're driving to. And I think it's going to take a couple of things. So one is one is M&A divesting businesses that are low margin, a lot of working capital intensity, continued productivity. We so we've started on that productivity savings journey. We've got that kind of going this is going to be our 2nd year where we're really focused on it. So we see some improvement from that.
And then the third thing for me would be as Crisco oil pricing comes down, we will get some benefit on margin from that is ironically, as sales come down, but the same gross profit, we're going to improve our margins on the Crisco business just because of that compression of oil pricing. So those three things together, we that's where we're trying to hit to get back to 18% to 20% but it's going to take those three things working together to get there.
Bruce Wacha
And if you think about some of that drag with Casey's describing it on Crisco, bigger example for that brand, but to the same degree, across a lot of the rest of our portfolio. When costs were rapidly rising, we took price to protect profit dollars, which just the algebra suggests lower margins as a percent. That's the math works.
Kenneth Keller
You've got Crisco being the most extreme example of that yet.
Andrew Lazar
Right. Okay. Thanks so much. I'll pass it on.
Operator
William Reuter, Bank of America.
William Reuter
Good afternoon. My first question, I'm on the topic. Sorry, I've got an echo on the topic of ARM as for future additional asset sales, I wasn't aware that you were still actively pursuing these, I guess is this new or have you been continuing to pursue over the last handful of months and quarters. And I don't know if it's any sense of magnitude or what types of assets you're looking at.
Bruce Wacha
Sure. So our M&A process and we tend and we will tend to be a long term net acquire, but we are reshaping the portfolio. And as part of that, there's some things that are going to come out. So we've sold two businesses that we felt were not a fit to the portfolio that we want to run in the future. And over the long term, there's probably a couple of other things. There's nothing that we're active in the market in terms of running a process for right now. So there's a little bit of stay tuned. And when it's appropriate to talk about it. We'll talk about likely. What you will see is other things that maybe are not a good fit for us or that could be a better fit for other people got it.
William Reuter
That's helpful. And then in the answer to a previous question, you mentioned that you weren't expecting to take much pricing this year. I don't know if I heard explicitly what your outlook is for input costs? And let's exclude Crisco since that's the pass-through model. But for the remainder of the products, what's your outlook on where they should be this year versus last year or any other sources of either inflation or deflation?
Kenneth Keller
I think what we are seeing right now in our input costs, and obviously this is still early in the year, and we're still trying to project it fully, but I'm seeing something more in the 1% to 2% range, 1% to 2% high end in terms of input cost inflation probably on the lower end of that range right now, as I see it, but low, maybe a little bit in freight and transportation. But I think it's probably more in line with that range. So I'm I feel like you know right now, our job is to get the business back, stabilize on volumes, not take as much pricing as we have over the past year, but drive productivity to offset that inflation. And then maybe give us a little bit of margin improvement. That's our focus right now kind of profit or maybe some selective places where we're going to take price where we might have a big jump in one particular small commodity input, but that's going to be very, very selective kind of.
William Reuter
Very helpful. That's all for me. Thank you.
Operator
Karru Martinson, Jefferies Company.
Karru Martinson
Good afternoon. What has been the kind of the competitive response in terms of your peers, we constantly keep hearing about the consumer trading down to private label, the give back and pricing. The elasticity that you referenced are you seeing that sustained shift in terms of competing products for your categories?
Kenneth Keller
I mean, it really depends on the category, honestly, because we have the pass-through model on Crisco. We're actually seeing volumes increasing on that business. So we're seeing a pickup in our unit sales as a result of being bring the price back down to reflect the lower oil commodity cost pricing. So even though the percentage gap to private label might be the same, the absolute gap has come down and the absolute price point has come down. So on that one we're kind of moving where we'd expect to in terms of our share performance, I would say there's a couple of other places where we've seen inflation drive up pricing and even though we tried to maintain our percentage gaps of private label at the higher absolute price points. And I just maybe a couple of categories like canned vegetables will wear out of now, but that was one where we were seeing a little bit dynamic. But for the most part, we watch the gap to private label pretty closely, and we tried to manage that so that we don't have a lot of pressure from trade down or we maintain the same relative position in the marketplace.
Okay. And when we look at the kind of implied cash flow guidance here for the year with a 70 million or so for the dividend.
Karru Martinson
When you have $300 million maturity in 2025, would it leave kind of $230 million that we would need to refinance that to be paid off through the asset sales? Or how would you look at addressing that?
Bruce Wacha
So for the remaining stub on the 2025. The base case assumption is it's a combination of cash from operations and revolver drawn. Keep in mind, we've got a big revolver so we've got plenty of capacity there. I think there's always options around potential refinancing as part of a broader refinancing if the market is hospitable and it makes sense to us to the extent that we have any more asset divestitures, there's money coming in the door from that as well. And so I think there's a couple of things, but I would use as the base case, what we laid out to investors ample cash from operations coupled with liquidity from the revolver.
Thank you very much.
Karru Martinson
Appreciate it.
Operator
Connor Rattigan, Consumer Edge Research.
Connor Rattigan
Hey, guys, good afternoon. Afternoon. So correct me if I'm wrong, but it sounds like your industry registered positive base business volume growth in the quarter. That was quite a bit ahead of what we saw in the tracked data. I guess. Could you maybe help us understand what drove that differential and looking ahead to 2024, how we should sort of think about volume trends over the course of the year? And if maybe there are any items we should keep in mind in terms of divergences versus TrackNet?
Kenneth Keller
Yes. So first of all, in the fourth quarter, we saw a small gain growth in volume. So I want to be careful that we don't we don't over call that one. But honestly, we kind of celebrated getting stable volume trends on our on the business after the past year.
Coming off to all the inflationary pricing, what we what we are, what we're trying to is to move forward is to kind of get that same trend line, small growth in volume in 2024?
Yes, the difference between the measured data track data and what you guys are seeing is there's a lot of things. I mean, there's channel coverage that's not complete with what we do we sell to we have businesses that are selling to other foodservice outlets, particularly the spices & seasonings business. In some cases and syrups. We have some private label business that we're selling that's not tracked in your data. So we are a heavy player in private label in the baking powder milk business. So there's a lot of our business. You don't see in the tracked data. So it's hard to really look at attracting and directly translated to our sales results because we're participating in, you know, we're participating in foodservice business we're participating in some some private-label manufacturing. We're participating in some other businesses that we do with other kinds of customers. So it's a difficult thing to translate it directly. But obviously, we look at everything pretty closely in terms of what the trends are.
Connor Rattigan
So I guess just following up on that, would it be fair to say that that the I guess maybe the non-tracked businesses are outperforming what you're seeing at retail.
Kenneth Keller
I mean, for sure, we're seeing the foodservice businesses in the past year, outperforming trends in retail. And honestly, I think that the growth that would that would be not just us. You would see that in other businesses as well. So we and we that was the opposite during the pandemic. Now we've seen a kind of flip back to where foodservice growth has outpaced retail growth. I expect that to normalize this year at some point, honestly, I expect both of those that trend to kind of stable to get to more stable trends year over year. But that obviously depends on a lot of economic conditions, whether or not we hit a recession or something that could change that dynamic. But right now, we're kind of seeing those to come back in balance in terms of consumer behavior and trends.
Connor Rattigan
Perfect. Makes total sense. And then just as a quick follow up, Bruce, in your prepared remarks, you noted some increases in promotional and trade spend in certain parts of the business. I guess could you maybe be a little more specific as far as maybe what brands those impacted and I guess what type of lift you might have seen from that spend? And just overall, if you were happy with what you saw. I don't think we're necessarily going to talk about the specifics on the brand promotional strategy, but this is again in a way to improve volumes. I think we're seeing this across many of our competing or just peer group where people are increasing promotional spend. I think it's been somewhat rational, but spend is still lower than it was pre-pandemic. So it's going to be higher than it was last year or the year before, but it's still sort of normal and we expect to get some volume benefits and I think you do see that.
Bruce Wacha
Yes. I mean, for the most part, when we put trade spend in two businesses because we're going back to more normal promotion patterns, we do see volume lift behind that, and we watch that pretty carefully and we don't see volume lift from it. We change. But for the most part, that's been successful plan as Bruce said, we're not all the way back to where we were pre-pandemic. So we're kind of moving back there over time. As I think most players in the food industry are I mean as normal promotion patterns and merchandising patterns resume.
Connor Rattigan
All right. Sounds good. Thank you.
Operator
Hale Holden, Barclays.
Hey, afternoon. Thank you super excited with the firewall season by the way, but okay, so I don't know quite how to make too much of that with the seasoning of trying to hedge myself out of life here. So first at the half million dollar debt extinguishment costs in the quarter, did you buy some bonds back or was a term loan paydown yet? Just all the refinancing stuff that we did kind of back half of last year.
Bruce Wacha
Okay. And then the second question I had was on how you're thinking about divestures in the market. If you I mean, you've obviously been talking about it for six, nine, 12 months in various forms. And I was wondering if you've seen the market improve as the seller standpoint or multiples come up or more interest in the pipeline. I think there's certainly chatter that sounds like there should be more activity.
I would have thought the same thing six months ago or a year ago, but I think is the financing and environment starts to stabilize. We're going to see more activity. We probably have seen some some nice little brand deals get done we saw two of our deals get done. I think it's fine. I don't think it's shut down. It's just not gone gangbusters like it was a few years ago, but it should be fine.
Okay, great. Thank you very much.
Operator
David Palmer, Evercore ISI.
David Palmer
Thanks, guys. Inventory declined in the quarter. Obviously, with the divestiture of wondering how I always ask you about free cash flow conversion, but I was wondering how much of the inventory change will happen will in 24 and where you see free cash flow conversion settling in of EBITDA going forward?
Yes.
Kenneth Keller
I I think the inventory reduction come in '23 from both the sale of Green Giant U.S. canned vegetables and honestly, base business improvement coming off the inflationary cycle and on and the supply shortages, we did a lot of reduction in this year. So in the future, I wouldn't expect to see that kind of magnitude change. Obviously, a divestiture would impact that. But in terms of our base business and organic kind of trends, I'm looking for kind of a 2% to 3% continuous improvement trend line as we get better in terms of our operations and our demand supply integration, that's kind of our expectation. So you will see some benefit from reducing working capital, but nothing to the magnitude you saw this year looked at our look, our long-term perspective, and I think we said this before is that we wanted to have excess cash that half of it can be used to pay the dividends and half of that can be used to pay down debt. And that's where we're driving and that's where we're driving so that we have we have the ability to kind of reduce debt year in year out with our excess cash flow.
Bruce Wacha
Yes, I think in the past, you might have had a 60% of EBITDA type target. Is that yet?
I don't know, give or take that. So I mean, if you think about the midpoint of our guidance range, call it, 315 million of adjusted EBITDA, throwing five $10 million in non-cash share-based comp is sort of your baseline. And then again, we gave guidance on the call, but cash interest at the midpoint about $140 million. Cash taxes have been bounced around 30 plus million a year. Capex of 35 $40 million. Casey talk to modest, certainly not what we had last year, but modest levels of inventory reductions, slash working capital improvement. You could see a number that's 110, 125 million or so in excess cash. And before dividends, if you get the benefit of working capital and their dividends are about 60 million bucks So and that's that's all helpful.
David Palmer
And just just a question on Crisco. It's your you said you were expecting profit dollars from Crisco to remain pretty steady this year, which is which is great to hear. And going forward, what do you think will be your biggest watch out for that business? Is that brand's profitability? Is there a level of volatility of soybean oil that makes keeping profits steady it much more difficult or is there price thresholds where trade down accelerate to what are things that would kind of throw you off the horse, so to speak on keeping profit steady for Crisco?
Kenneth Keller
Yes, I think it's our ability to just pass through the oil costs. And so far we've been doing that. I mean, I if you were to talk to me in 2022, I would have said the risk was much higher. But since January kind of January first quarter of last year, we implemented this pass-through model with customers and they like it, they like it. We come to them every quarter and say, here's what the well cost here is we're going to price to relative to that. And we know they've been pretty good about reflecting that in the pricing. And so it's been successful such a strategy to maintain our gross profit dollars the I would say the only things I worry about is if soybean oil goes back up to, I don't know $0.8, then you know, we're going to we're going to pass that through and take pricing up. Unfortunately, at that level, we see the absolute dollar gap to private label growing percentage the same, but the get the absolute dollar gap and so we see some risk to the volume trend, the business. And with that kind of commodity structure, I mean, look, fortunately right now, soybean oil prices last time I checked are kind of in the $0.45 per pound range, which is well down from where it was last year and well down from the high of $0.8 that we saw probably 18 to 24 months ago. So I mean, that's really the big risk. I mean, the only other thing we watch is we have a shortening business, which is, yes, which is the key, a key part of that whole Crisco business outside of the oil into those shortening. And we look at the long term household penetrations on the household penetration on that business, just to make sure people are still baking cooking pricing at the same level.
David Palmer
That's great. Thank you.
Operator
Ladies and gentlemen, just a final reminder, if you would like to ask a question, you're welcome to press star then one. We will pause for a moment. See if we have any other questions, there are no further questions at this time. I would like to turn the floor back over to Casey Keller for closing comments.
Kenneth Keller
And thank you all for joining us today for the fourth-quarter earnings call. Obviously reach out if we want to talk anything, I appreciate your attention. And look, we're pleased with the results in the fourth quarter, but obviously, we have more work to do in 24 to get this business in the shape we want it. So thank you very much.
Operator
Ladies and gentlemen, this concludes today's conference. Thank you for joining us. You may now disconnect your lines.
