# To Our Stockholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NYSE_BGS_2018/NYSE_BGS_2018.mmd` · pages 2-8_

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To Our Stockholders:

## Business Performance

I am pleased to report that fiscal 2018 was another record breaking year for B&G Foods. Once again we set a company record for net sales, which increased 3.3% to \(1.7 billion. We also achieved the high end of our inventory reduction plan target for the year, reducing our inventory by approximately \)100 million as compared to year end 2017.

Another highlight was our Green Giant frozen business, which continued to perform well in 2018, largely on the strength of innovation products we launched over the last three years since acquiring the iconic brand in late 2015. Net sales of Green Giant frozen increased \(42.7 million, or 12.9%, to \)372.7 million for fiscal 2018 compared to fiscal 2017, primarily driven by strong customer and consumer acceptance of Green Giant Veggie Spirals, launched in 2018, as well as continued demand for Green Giant Riced Veggies, Green Giant Veggie Tots and Green Giant Mashed Cauliflower. Net sales of Green Giant frozen products also benefited from Green Giant Cauliflower Pizza Crusts, Green Giant Protein Bowls and Little Green Sprout's Organics by Green Giant, which began shipping in September 2018 and will continue their rollout in the first half of 2019.

Notwithstanding the growth we achieved in net sales, our margins and our adjusted EBTIDA \( ^{*} \) , fell short of our expectations, as we continue to face elevated input and freight costs that in 2018 we were unable to fully offset with price increases and cost savings initiatives. While we are disappointed in our 2018 profitability, we are confident that the actions we are now taking will enable us to achieve our full year 2019 guidance.

## Investment Highlights

In our fourteen years as a publicly held company, we have proven our commitment to creating stockholder value by consistently paying a generous and growing cash dividend. We have paid a dividend every quarter since our initial public offering and over the last five years we have increased the dividend at a compound annual growth rate of 7.6%. We have been able to keep that commitment year after year by growing net sales and adjusted EBITDA over the past fourteen years at compound annual growth rates of 11.5% and 11.3%, respectively. Our dividend yield is among the highest in the industry and we remain as committed as ever to our policy of returning a meaningful portion of our excess cash to stockholders. Assuming the reinvestment of dividends, total stockholder return over the past five fiscal years through the end of fiscal 2018 was 12.9%.

Over the past year pursuant to a \(50 million stock repurchase program authorized in March 2018, we repurchased \)36.9 million of our common stock. In addition, last month we announced that our board has authorized an extension of the stock repurchase program for another year through March 15, 2020 and reset the repurchase authorization to up to $50 million, which gives us an additional option to return excess cash to our stockholders.

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## Acquisition Strategy

Our acquisition strategy, which we have executed successfully over many years, continued to yield positive results in 2018. In July 2018, we successfully completed the acquisition of the McCann's brand of premium Irish oatmeal from TreeHouse Foods. The McCann's brand is an excellent complement to our existing portfolio of brands, including our Cream of Wheat hot cereal brand. This acquisition is another example, along with our acquisitions of Green Giant, Spice Islands and other spices & seasoning brands, Victoria and Back to Nature, of our efforts in recent years to acquire better-for-you brands that taste great and resonate with today's consumer.

During 2018, we also successfully monetized a prior acquisition when in October we completed the sale of Pirate Brands to The Hershey Company for $420 million, more than double the $195 million price we paid for Pirate Brands five years ago.

## In Closing

As previously announced, I will be retiring on April 5, 2019 and Ken Romanzi will succeed me as President and Chief Executive Officer and as a director of B&G Foods. It has been an honor and a privilege to serve as President and Chief Executive Officer and Chief Financial Officer of B&G Foods over the last 35 years. I am very proud of the tremendous growth we have achieved over that time—growing from a small, regional pickle company to a leading public food company with a diverse portfolio of iconic brands—and I would like to thank my senior leadership team and each and every employee of B&G Foods. We could not have achieved this growth without their extraordinary efforts.

Over the four years that I have served as CEO, we have completed six acquisitions, more than doubled net sales from \(837.3 million in fiscal 2014 to \)1.7 billion in fiscal 2018, increased headcount from approximately 1,000 employees to approximately 2,700 employees, acquired our two largest manufacturing facilities and established a more sophisticated distribution network that now also includes a frozen distribution network. Although we did not achieve every objective we set for ourselves at the beginning of my tenure as CEO in 2015, I believe we made valuable progress in positioning our company for future success. B&G Foods is in many ways a different company now than the one I took over four years ago, but we have the same values. Passion for what we do, our commitment to food safety and quality, integrity and accountability, our customer and consumer focus, our commitment to the safety and health of our employees and our belief in collaboration and empowerment are the values that have driven the success of this company for many years and will continue to drive our company's success in the future.

Since joining B&G Foods in December 2017 as Executive Vice President and Chief Operating Officer, Ken has demonstrated that he has the experience and leadership skills to successfully lead B&G Foods to its next phase of growth. Ken has been a terrific partner and I am confident that he is the right person to guide B&G Foods into the future. It is because of the values I mentioned above that we have been able to create tremendous stockholder value over the years, and I believe stockholders of B&G Foods should continue to expect a bright future under Ken's leadership.

Sincerely,

![](images/3_0.jpg)

Robert C. Cantwell

President and Chief Executive Officer

April 1, 2019