B&G Foods, Inc. (BGS) Q3 2015 Earnings Report, Transcript and Summary

Good day and welcome to the B&G Foods Third Quarter 2015 Financial Results Conference Call. Today's conference call is being recorded. You can access detailed financial information on the quarter in the company's earnings release issued today which is available at bgfoods.com. Before the company begins its formal remarks, I need to remind everyone that the part of the discussion today including forward-looking statements, these statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer all of you to the B&G Foods most recent Annual Report on Form 10-K and subsequent SEC filings for a more detailed discussion of risks that could impact the company's future operating results and financial condition. The company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Company will also be making references on today's call to non-GAAP financial measures, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted diluted earnings per share, base business net sales and comparable base business net sales. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earning release. Tom Crimmins, the company's CFO, will start the call by discussing the company's financial results for the quarter. Next Bob Cantwell, the company's CEO, will discuss various factors that affect the company's results, selected business highlights and updates on the Green Giant acquisition and his thoughts concerning the remainder of 2015. Now I'd like to turn the call over to Mr. Tom Crimmins, CFO. Tom? Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: Thank you, operator. Good afternoon, everyone, and thank you for joining us today. Net sales for the third quarter of 2015 increased 2.1% to $213.3 million compared to $209 million for the third quarter of 2014. Net sales of Mama Mary's, which we acquired in July 2015, contributed $8.5 million to our net sales for the quarter. Negatively impacting our net sales for the quarter was a $3.4 million decrease in net sales for Rickland Orchards as compared to the third quarter of 2014, a continuation of the weakness that caused us to impair the branch's trademark and customer relationship intangibles in 2014. The good news from a base business comparability perspective is that we have now lapped the impact from Rickland Orchards. Comparable base business net sales, which excludes the impact of the Mama Mary's acquisition and the Rickland Orchards shortfall, decreased 0.4%. The decrease was attributable to a 2.2% decrease in unit volume offset by a 1.8% increase in net pricing, due to increases in list prices and reduced promotional activity. Also, our Canadian net sales continue to be unfavorably impacted by the weaker Canadian dollar, which resulted in $1 million reduction in net sales in the third quarter. Net sales decreased by 22.3% for TrueNorth, 6.1% for Bear Creek, 4.4% for Maple Grove Farms, and 4.7% for Mrs. Dash. Offset by net sales increases of 9.1% for Cream of Wheat, 3.2% for Ortega, 2.6% for Pirate Brands and 23.3% for Grandma's. Net sales for all other brands in the aggregate decreased 1.2%. Gross profit increased 13.5% to $71.6 million in the third quarter, as compared to $63.1 million for the third quarter of 2014. Gross profit, expressed as a percentage of net sales, increased 340 basis points to 33.6% for the third quarter of 2015 from 30.2% for the third quarter of 2014. The 340 basis point increase primarily resulted from price increases and lower delivery costs, partially offset by minor net cost increases in commodities and packaging, and the negative impact of the Canadian exchange rate on our net sales to Canada. Also 2014, third quarter gross profit was unfavorably impacted by approximately $3 million of write-offs, related to certain Rickland Orchards raw materials and finished goods inventory. Selling, general and administrative expenses increased 29% to $27.3 million for the third quarter, as compared to $21.2 million for the third quarter of 2014. Expressed as a percentage of net sales, our selling, general and administrative expenses increased 270 basis points to 12.8% for the third quarter of 2015 from 10.1% for the third quarter of 2014. The primary drivers of the net increase were higher acquisition related expenses of $2.1 million, distribution restructuring expenses of $1.2 million and compensation related expenses. Net interest expense for the third quarter decreased 2.7% to $11.3 million from $11.6 million for the third quarter of 2014, which was primarily attributable to a decrease in our average debt outstanding. For the third quarter of 2015, the company's adjusted net income which excludes the after tax impact of acquisition-related expenses and distribution restructuring expenses was $22.7 million or $0.39 per adjusted diluted share compared to adjusted income of $20.5 million or $0.38 per adjusted diluted share a year ago, which excludes the after tax impact of acquisition-related expenses, the non-cash impairment charges to Rickland Orchards intangible assets and the related loss on disposal of raw materials and finished goods inventory. Our adjusted EBITDA increased 7.4% to $53.1 million for the third quarter of 2015, compared to $49.5 million for the third quarter of 2014. Adjusted EBITDA as a percentage of net sales increased to 24.9% for the third quarter of 2015 from 23.7% for the third quarter of last year. Moving on to the balance sheet, we finished the third quarter with approximately $933 million in net debt. Our net leverage was approximately 4.4 times adjusted EBITDA. To finance the Green Giant purchase price, closing inventory adjustment, initial working capital requirements and related fees and expenses, we expect to borrow approximately $870 million during the fourth quarter in the form of an incremental $750 million Tranche B term loan and approximately $120 million of borrowings under our existing revolving credit facility. At year-end, we expect our leverage to increase to 5.6 times our pro forma projected adjusted EBITDA. After combined financial statements for B&G Foods and Green Giant are available, we will consider issuing common stock in the first half of 2016 to de-lever depending upon market conditions and other factors. Our current dividend rate is $1.40 per share per annum or approximately $81.2 million in the aggregate based on our current shares outstanding. We are reaffirming our full-year 2015 guidance for adjusted EBITDA at a range of $199 million to $204 million revising our net sales guidance to a range of $865 million to $875 million and reaffirming our adjusted diluted earnings per share guidance at a range of $1.44 to $1.50. This guidance excludes the impact of the Green Giant acquisition expected to close in the fourth quarter. And now I would like to turn the call over to Bob for more details on the quarter, an update on the Green Giant acquisition and the remainder of 2015. Bob? Robert C. Cantwell - President, Chief Executive Officer & Director: Thank you, Tom. Good afternoon, everyone. Let me begin with providing you with some highlights and insights into our third quarter performance. Continuing the trend that began back in the first quarter of the fiscal year, the third quarter saw continued growth in adjusted EBITDA and adjusted EBITDA margins. As Tom indicated previously, adjusted EBITDA grew $3.7 million, or 7.4%, to $53.1 million in 2015 versus $49.5 million in 2014. More importantly, we continued our efforts to expand our adjusted EBITDA margin, already one of the industry's leading margins, increasing our adjusted EBITDA margin 120 basis points to 24.9% in 2015 from 23.7% in 2014. We accomplished this by implementing price increases and decreasing our promotional spending, increasing our year-over-year pricing by $3.7 million and reducing cost, including delivery cost as we continued to see lower fuel surcharges due to lower oil prices. Moving on to sales, many of our brands had a strong quarter, including our most recent addition to the B&G Foods portfolio Mama Mary's, which we acquired in July. We were very pleased to say that we were able to transition that business quickly and efficiently, and it is already exceeding our initial expectations for both EBITDA and net sales. Ortega had another strong quarter with sales up 3.2%. As highlighted in our last earnings call during the second quarter we launched five new innovative Ortega products that have been widely accepted by retailers and are well received by consumers. We continue to have an innovative pipeline for this brand and expect to rollout more new products in 2016. We are also excited about the recent launch of a highly targeted digital and social media campaign to drive brand awareness, trial and sales volume of key Ortega products across the country. Cream of Wheat had an excellent quarter with 9.1% net sales growth over last year. The brand is doing well in both the U.S. and Canada with most of the growth coming from volume. Our recently launched Cream of Wheat instant cups contributed nicely to the volume increase in the quarter. Pirate Brands had a solid quarter with sales up 2.6%. Our sales of Pirate Brand products in the retail channel continue to be strong in a highly competitive and diverse category. We anticipate Pirate Brands' full-year net sales will be in line with our expectations when the year began. And while New York Style net sales were down approximately 3.5% for the quarter, we believe we have started to turn a corner with the business, especially as we now lapped some tough comps. We did see a 4.7% decline in net sales from Mrs. Dash, which is due to cycling through a significant Brazilian shipment in the third quarter of last year, which did not reoccur in Q3 of 2015. Otherwise the brand is doing very well. We also saw declines in TrueNorth of 22.3% as our increased pricing has slowed consumer demand. Maple Grove declined $0.8 million as we exited low-margin club sales. Our Specialty Brands acquisition continues to perform quite well. We officially launched four flavors of Bear Creek Hearty Soup Bowl mixes, which are a new alternative for consumers who are looking for an easy on-the-go single-serve option. We also see additional opportunities to expand distribution of the brand's core dry soup mix items. Net sales of the Bowl products exceeded $1 million in the quarter. Our rollout with DSC Logistics is on plan and frankly we couldn't have picked a better time to begin our relationship with DSC with the pending Green Giant acquisition. We transitioned our first distribution center in Pennsylvania a few months ago and this week we are transitioning our Tennessee Distribution Center. The final DC in Houston will be transitioned to DSC sometime in the first half of 2016. Turning to cost, we expect our overall commodity packaging and agreeing cost for the full year 2015 to remain relatively flat as compared to 2014. Increases in nut prices are expected to negatively impact cost for our TrueNorth brand by over $2.5 million for the full year. We have taken substantial price increases at retail for the TrueNorth brand to offset this substantial cost increase which seems to have been accepted by most of our major customers. The weakness in the Canadian dollar has a positive impact on our maple syrup purchases, reducing cost of goods sold by approximately $5 million annually. We expect to see half of this cost savings in 2015 with the remainder of the savings coming in 2016. As for pricing and promotional spending, in general during 2015, we are not seeing aggressive promotional activity by our competitors other than in the Northeast, and we expect to deliver over $13 million in incremental pricing for the full year 2015. So with that let's transition to an update on the Green Giant acquisition. Our team has been working hand-in-hand with the General Mills team as we work towards closing the transaction and to make sure the post-closing transition is as smooth as possible. Internally we have been putting the framework in place to stabilize and then revitalize the top-line and regain market share. We expect to double the current marketing spend for Green Giant and have begun the process of adding additional members to our marketing department to properly manage the new business and spend. Our marketing team has started developing a comprehensive long-term innovation strategy in the frozen and canned vegetable categories with a focus on nutritious products that meet the needs of today's consumer. The majority of our hiring goals to support Green Giant will be accomplished within the first six months after the acquisition closes. With financing commitments in place, we continue to target a fourth-quarter close. So to sum up, the way we are thinking about the future of Green Giant, I would say that B&G Foods is committed to investing boldly in this iconic brand and supporting it with a 100% dedicated, best-in-class team housed within a new forward thinking marketing structure that properly supports the business and reinvigorates the Green Giant brand for today's consumer. Green Giant is expected to produce approximately $95 million to $100 million in adjusted EBITDA in 2016 with approximately 60% of that adjusted EBITDA turning into excess cash. And we remain committed to returning a substantial portion of our excess cash to our shareholders in the form of dividends. I also want to say thank you to all of the B&G Foods and General Mills employees for all their hard work during this very exciting time. To wrap up, we had a very solid quarter and we have great momentum as we move into the last quarter of 2015. We are happy to see the benefits of our pricing and lower cost help improve our year-to-date adjusted EBITDA margin to 24.1%, an 80 basis point improvement from 2014. We expect to deliver adjusted EBITDA of $199 million to $204 million, excluding the impact of the Green Giant acquisition. Clearly we are excited about adding Green Giant to our organization in the coming weeks, but I also want to assure our shareholders that we remain committed to our entire portfolio of beloved brands and will continue to execute our longstanding strategy of delivering best-in-class margins and cash flows and that Green Giant will only further enhance that strategy. With that, I would like to open up the call for questions. Thank you. Operator?

Thank you, sir. We'll take our first question from Sean Naughton with Piper Jaffray. Sean P. Naughton - Piper Jaffray & Co (Broker): Hi. Good afternoon and thanks for taking the questions. Robert C. Cantwell - President, Chief Executive Officer & Director: Sure. Sean P. Naughton - Piper Jaffray & Co (Broker): Just on the gross margin, clearly very impressive, up 340 basis points, sounds like just on pricing and some lower delivery costs, you did have some headwinds. Can you talk about how you think about the sustainability of that trend as we look forward here? And then also was there anything from your relationship with DSC that was in that number as well? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, the last part of that question, nothing yet on DSC because the transition has really just begun, so we will not really see those savings until the latter part of 2016. We for a lot reasons with the pricing increases and fundamentally some lower cost and flat cost in most areas, we expect and continue to expect our margins to be better than prior year on a go-forward basis. And part of this is mix too. We've had a very positive mix as brands like Ortega and [technical difficulty] (18:31) – as Cream of Wheat and Ortega have grown very nicely and a few others, even Grandma's Molasses, for example, has really helped the mix on margin. So we expect that to continue, excluding some of the onetime charges. And Tom didn't mention some of the onetime charges that were in the gross profit and gross margin from last year that we didn't have this year. Sean P. Naughton - Piper Jaffray & Co (Broker): Okay. And then just any comments just on the $10 million change in the top-line guidance for the full year? Maybe what was different from planned than you initially had expected from Q2 and now we get in here to Q3. Robert C. Cantwell - President, Chief Executive Officer & Director: Well, we expected – we've gotten the pricing this year, but we haven't gotten the volume we've wanted, totally, on some of our base businesses. And as we looked at our actual results here through the third quarter, it just didn't feel comfortable that we could achieve the original guidance that we needed to take it down. We've got a number of brands doing well. A lot of it is pricing and volume is relatively a little short of where we wanted it to be. So we're very comfortable with the guidance as we look at the fourth quarter here based on our run rate and what we do know is happening in October and November here. Sean P. Naughton - Piper Jaffray & Co (Broker): Okay. Great. Thanks. And then last question, any comments on – clearly there's been a few additional retail issues going out there in food retailing with respect to bankruptcies. Any impacts that we should be thinking about on your business as we think about the fourth quarter and looking into 2016? Thank you. Robert C. Cantwell - President, Chief Executive Officer & Director: Well, part of our guidance takedown a little bit here is in the Northeast. A&P was a very strong customer of B&G. Most of the stores are being transitioned and bought out by various retailers, but it's going to create some noise in the system in the fourth quarter. And that's going to affect our sales by about $1.5 million in the fourth quarter because a lot of our Northeast brands, A&P was a big supporter, the rest of the consolidations and what else is going on in the industry is not going to affect ourselves, but we certainly do have, well, we think will be a short term negative effect on B&G as all gets transferred into new chains. Sean P. Naughton - Piper Jaffray & Co (Broker): Okay, that's helpful. Thanks for the color and congrats on the margin improvement. Robert C. Cantwell - President, Chief Executive Officer & Director: Sure.

We'll take our next question from Jon Andersen with William Blair. Jon R. Andersen - William Blair & Co. LLC: Hey, good afternoon, guys. Robert C. Cantwell - President, Chief Executive Officer & Director: Hi. Jon R. Andersen - William Blair & Co. LLC: I wanted to ask a little bit more about the price and volume dynamic that you referred to, Bob. Are you happy or comfortable, maybe is a better word with what you're seeing in terms of the price coming in I guess ahead of your initial expectations of $10 million to $12 million for the year, but you know, the volume is a little softer. And are you rethinking or maybe exploring a need to invest in price in order to get the volumes back up? Thanks. Robert C. Cantwell - President, Chief Executive Officer & Director: At this point, no, because the promotional spending we've pulled back and where we've seen some price benefits, which has helped us improve margins, were sales that we were making it either too lower a margin or negative margin last year, especially in the early part of last year. So we went into this year understanding we're going to lose some of that volume because we just weren't promoting, running those deep, deep deals, and we're very comfortable where it has come out. Yeah, the volume expectations are kind of in line with where we expected and the shortfalls are somewhat in line with where we expected, and we're seeing some better results on the top-line just because of incremental pricing above and beyond what we expected. So we're really comfortable with this decision; now we're lapping this. It's really just a little bit more here in the fourth quarter, but we're entering into next year with really not looking at expanding, increasing pricing on more than we've done in 2015. Jon R. Andersen - William Blair & Co. LLC: Okay. And on the DSC, the program with DSC, in your supply chain, have you seen any initial results or are there some initial learnings from the plant that has converted? And I'm just trying to get a sense for whether the kind of the $8 million to $10 million in savings is something that you're getting better visibility into at this point. I understand most of that is something that's going to come in 2016, not necessarily this year. But as these things begin to convert; are you getting an initial read on how it's progressing relative to your expectation? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, we're seeing – and hopefully we're seeing some big changes as this slowly gets integrated into our system. You know we're certainly seeing obvious things from how they run versus what we ran. In addition to just being able to use a lot less space in the same facility because of their systems, the amount of employees who touch product are substantially less. So we're seeing the obvious savings. There's even further incremental that we're actually getting with Green Giant showing up with the shelf-stable is we've created space in these warehouses that we didn't have before and a lot of the Green Giant will now fit under our existing structure, so that's just pure incremental on top. But we're as of today still comfortable with the $8 million number that we've talked about as we head into the second half of next year. And once we get this second warehouse under our belt, we'll be able to really see that and have a better view of what that's going to look like. But just from all the kind of just standard costs in a warehouse, they're just doing it cheaper because they're just more efficient and they just have better systems to do it. Jon R. Andersen - William Blair & Co. LLC: Makes sense. My last one is on Green Giant. It was interesting, you talked about developing a framework for stabilization of that business and eventually growth. Where do you see the most opportunity or the nearest opportunity within that business? Is it within frozen? Is it within canned? Is it within a specific segment within frozen? Just some color around how you're thinking about: number one, the opportunity to stabilize; and then two, regrow? Robert C. Cantwell - President, Chief Executive Officer & Director: I think from the stabilization, I think it's pretty equal. I think a lot of our effort initially is kind of the basic blocking and tackling from packaging to proper promotional programs to marketing support and letting our customers know that B&G is going to really support this in both shelf-stable and frozen. So there's a lot of stabilization on both sides there. I think as we look at the innovation pipeline, there'll be some in shelf-stable, but the majority of that innovation will come in frozen, and building that pipeline and getting that pipeline out into distribution is really – the bigger upside on the business is really driving – first securing what we have in shelf-stable and frozen and then really trying to drive frozen on the upside as well as shelf-stable, but certainly more opportunities with innovation in frozen than you really have in shelf-stable today. Jon R. Andersen - William Blair & Co. LLC: Sitting here today, when you think about this next 12 months, do you think the bigger piece of work ahead of you or the greater risk is in stabilizing the business or is it in the operational integration work around it or do you feel you have your arms around both of those in equal measure? Robert C. Cantwell - President, Chief Executive Officer & Director: Fair question. I think as we look at this is we feel very comfortable we can stabilize the business and hopefully start moving it in the right direction in 2016 but certainly stabilize. The operational complexities – from a sales side, pretty straightforward go-to-market. We do this with 40 of our other brands. We can do that and we've got some work, but it fits right into our structure. Operationally we have a great team and a great leader in operations who is absorbing this. But certainly more operational complexities than a typical B&G deal, but we're very comfortable. We have a long transition with General Mills, as they're helping us through this process. We have a transition agreement with General Mills that can go out 12 months on all the operational pieces and 24 months on the piece that they will continue to co-pack for us. So plenty of time. And it's come a long way here in the last two months. But we're very comfortable, but it's more complex operations. And over the next six to 12 months we'll feel even more comfortable that it fits into our organization and gives us opportunities for growth in the future. Jon R. Andersen - William Blair & Co. LLC: Thanks a lot for the comment. Good luck.

We'll take our next question from Farha Aslam with Stephens.

Hi. Good evening. Robert C. Cantwell - President, Chief Executive Officer & Director: Hi.

Could we talk about the Canadian dollar? What percentage of your sales are in Canadian dollar? Would do you expect the negative impact of the Canadian dollar weakening or is that going to be entirely offset with this maple benefit of like $5 million? Robert C. Cantwell - President, Chief Executive Officer & Director: Yes, the maple syrup is kind of locked in because we've already bought it, and we sell it basically through July 1 through June 30 of next year. The ongoing exchange rate, the comparison gets a little closer as the months go on as the exchange rate was dropping pretty dramatically last year at this time. But you're looking at a business today in Canada without Green Giant that's around $25 million in sales. So it's right around in the mid-$20s million. And we've been affected at the same rate. It's kind of about $0.10 on a dollar. That will affect us in the high-$2 million range on sales for this year in total.

That's helpful. And then just a question on Green Giant. So as you think about bringing up your operational capabilities to take in Green Giant, are you hiring people right now? Will that cost be in the fourth quarter and are you going to take that extraordinary or include it in normal operations? Robert C. Cantwell - President, Chief Executive Officer & Director: The ongoing labor costs once we hire people we're going to take on, including in operations. The one-time expenses, especially on the hire people such as recruiters and stuff probably take as a one-time cost. Some will happen in the fourth quarter. We've got a lot of activity looking for people as we speak. A lot of it's not really going to come into play until the first and second quarter of next as we build out this organization. So I think more of the dollars spend will happen in the first quarter of next year. We've started looking, but by the time you actually find people and you get into holidays and things and when people want to leave their jobs, the year is almost over.

Great. That was key questions. Thank you.

We'll take our next question from Andrew Lazar with Barclays.

Good afternoon, Bob and Tom. Robert C. Cantwell - President, Chief Executive Officer & Director: Good afternoon. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: How are you?

I guess two things for me. First, I just wanted to come back to the underlying volume performance for a minute just to make sure I understand it. If I'm not mistaken, I think on the last quarter's call there was maybe like $3 million or $4 million of sales that were going to get shifted from 2Q into 3Q. If that happened, if we were to adjust that out for a minute to get a sense of what the underlying base business is doing, that would suggest volumes maybe were down not $2 million but maybe $4 million (31:12), and I don't know if that's really like an accurate run rate or way to think about things going forward, or if I'm not looking at that properly. Robert C. Cantwell - President, Chief Executive Officer & Director: Well, you're looking at it properly as we came into this quarter because we saw that benefit of $3.5 million of incremental sales in the early part of July, so we did get that. And then we've had some things at the end of the quarter that really got pushed into the fourth quarter here. I guess the way I look at this is as we look at a year-to-date basis, our base business sales is basically relatively flat, up 0.1%. $2.2 million of that – it could be $2.2 million higher, except for the exchange rate in Canada that affected our sales by $2.2 million. And we've got pluses and minuses on the volume. You know Pirate's brands didn't move as high as we would have liked it to in this quarter. I mean it still had a okay, strong quarter. It just didn't really produce some of the higher volume trends we were hoping and that was offset by some really good brands that were relatively higher.

Got it. Robert C. Cantwell - President, Chief Executive Officer & Director: So I think it's timing. Certainly quarters are important. We're looking at these brands since most of these brands are 100-plus years old on an annual basis more than quarters, and some things just move within the quarters. We're looking to pretty much finish this year on the base business flat to up a little bit. It's going to be up a little bit, but it's not going to be up a lot.

Yes. But with that kind of pricing obviously I realize that's a pretty significant result. Is there a way to get a sense of what caused some of the sales to be pushed into 4Q? And was that a substantial amount or not particularly? Robert C. Cantwell - President, Chief Executive Officer & Director: It's not the same size as it was the $3.5 million to $4 million that happened in the second quarter.

Got you. Robert C. Cantwell - President, Chief Executive Officer & Director: But a $2 million that just – some of it's just part of the transitional timing and things as we've gone through transition with DSC as we're working through some kinks on how things get shipped at quarters' ends and the movement between warehouses, et cetera, that we're still working through those kinks.

Got it. Okay, that's helpful. Thank you. And then it's sort of like a big elephant in the room from a retailer perspective and this isn't just as it relates to B&G but, of course, to the industry as a whole, but obviously a lot of the potential changes and a lot of the discussion out there around changes around the industry's largest retail customer, which may or may not come to pass and we may not know the form of what they'll be yet. But I'm trying to get a sense just from you, particularly because you're having good success in pulling back on ineffective trade spend. And I don't know, just some people look at those things and say, is that consistent with what a large customer may want to do for the industry as a whole, not just you, going forward? So maybe even just your broader or general thoughts on that would be helpful. Robert C. Cantwell - President, Chief Executive Officer & Director: I think in general ineffective trade spend doesn't work for the customers either. So smarter trade spending, sometime more often trade spending that's smarter is better for the customer as well as it's better for all of us. In all of this, there's been no pushback from our customers when we pulled back some of this trade spending. So I think it's part of an overall support of the brand that seems to have worked well with us this year. So we don't see that as a problem. And we'll see what happens in the future. But as we look at going forward, we're not looking to do today anything differently in 2016 on the brands that we currently own, differently in a big plus or minus way versus what we did in 2015.

Okay. Robert C. Cantwell - President, Chief Executive Officer & Director: So this was really a one-time resetting on things that we were overspending in the two years prior.

Got it. Okay. That's helpful. And then I guess lastly just any early feedback from key customers or stakeholders around your planned purchase of Green Giant? Have you gotten unsolicited feedback from key retail partners? I'm just curious what that has looked like. Robert C. Cantwell - President, Chief Executive Officer & Director: We're getting a lot of positives and probably the biggest positive is they've heard from our announcement, they've heard from the conference calls that we're going to double the marketing support of this brand, and they're anxious to see what that actually means. So I think we've gotten a lot of positives that we're going to support the category because doubling the marketing support of the brand supports the category, too. And if we can drive more usage out of the frozen section, everybody benefits; hopefully Green Giant more than that competition, but getting more consumers to the section makes a difference. So really certainly no negatives and a lot of positives, especially with the amount of support we're looking to put back behind the brand.

Thanks very much.

And we'll take our next question from Robert Moskow with Credit Suisse. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Hey, thanks. Bob, I think you mentioned a few kinks in the system that you're finding during this transition to DSC, and I think the subject has been discussed already to some extent, but you did mention last quarter that the shortfall was specifically caused by a shortage of freight carriers heading into the Fourth of July holiday. Maybe you can just give us – is that truly what caused that shift and did that resolve itself in the third quarter and maybe just be a little more specific as to what are the DSC people finding in your system that needs to be corrected? Robert C. Cantwell - President, Chief Executive Officer & Director: Certainly the shortfall in carriers at the end of the second quarter was what affected them. The first week out of the box we were up almost $4 million in sales versus prior year on a comparative basis. So those orders really went out that following week and we knew that when we had the conference call. I think the difference with us and DSC is they're just better at what they do than we were and everything is about systems and everything works. It's less about the people and the people follow the systems where we were just the opposite. We didn't have the sophisticated systems at warehouse and people made a lot of decisions on the floor. So you had a lot of legacy people who knew when certain orders came in for B&G's almost 2,000 SKUs that weren't just a typical shipment to Kroger with 150 items on it. It could be a foodservice order that needs to get there by tomorrow or the next day or some other thing in the Northeast that the kinks are really making sure DSC's systems have that information customer by customer to understand the customer needs. So they've got all the information for all the big customers, shipping to Walmart or shipping to Kroger and Safeway that all works, but we also sold a lot of different ways, and a lot of different ways to go to market, and a lot of the legacy people at the warehouse who would make those decisions more by hand versus the system are now – now everything is relying on the system. So the only way you have that working is you have to have all that information properly stored in the system. So when that order comes out for XYZ foodservice guy in the Northeast, the system knows when that has to get delivered and how it gets picked. So part of it – we knew there'd be growing pains. Actually it's been pretty efficient, but there's been some growing pains, but we were very comfortable that we've gone through most of the growing pains and that's why we switched over the second warehouse basically this weekend and this week we're transitioning that warehouse as we speak. So we were very comfortable going with the second warehouse, because we've gotten through a lot of the glitches here as we're heading here into November. But this was a big switchover going from a somewhat unsophisticated warehousing system to someone who is very sophisticated and just a lot better at it than we were. And we're not seeing anything that is going to affect us long term and everyday most of those little issues have gotten fixed and are getting fixed. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Got it. Hey, just one more question. You mentioned that you're going to wait until the first half of 2016 before doing the equity offering. Just can you explain here why wait? Why not a little bit earlier? You don't really know what the market conditions are going to be like next year. Let's hope they are positive. But can you give me that logic one more time? Robert C. Cantwell - President, Chief Executive Officer & Director: Sure. Yes, it's pretty much a technical issue because I agree with you, you can never predict where a market goes, and market's kind of okay now, but Green Giant is a large enough acquisition for us. We're required by the SEC to file three years of their historical audited statements. You have up to 75 days from closing to get it done. They're being worked on by the accounting firms now, but you just look at kind of closing in, in the fourth quarter and getting those done, you're already in the first quarter, and then we got to wait really to announce our results. So the earliest we could go to market, and hopefully market conditions would be there, would be end of February, early-March, after we release our results. And we can't do it until we get those audited statements filed with the SEC, and that's just not going to happen that quickly. It'll happen within 75 days from closing at worst, hopefully a little sooner. But it still pushes us out to – we need to announce our yearend results first. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Got it, makes sense. Thank you so much. Robert C. Cantwell - President, Chief Executive Officer & Director: Okay.

We'll go next to Eric Larson with Buckingham Research Group.

Yeah, good afternoon everyone. Most of the questions have been answered, just a couple follow-ups. I think in your prepared comments you did say that the promotional activity was a little bit greater in the northeast. Did I hear that correctly? Or was that related to the discussion of the retailer that's in bankruptcy? Robert C. Cantwell - President, Chief Executive Officer & Director: No, it's actually been – it's been softening that's – it's not bad, but it's been more promotional activity on some of our smaller brands in the northeast. We have some legacy brands here in the northeast like B&G pickles, Polaner Jams and Jellies, B&M Beans, Vermont Maid Syrups. And it just seems that the retailer activity and our competitors are a little bit more aggressive here, where we're not seeing that aggression on brands like Ortega and Cream of Wheat, and the larger brands that are more national in scope. And we don't see aggressive promotional activity on those brands even in the northeast. It's much more regional, it's much more our regional brands, which is at the end of the day, they're not that large a brands for us, so it's not a big deal, and we've been able to absorb that and be competitive.

Okay. And then just a follow-up on I think on Andrew's question. You've been very successful this year in dialing back your price competitive activity and from a strategic point of view, I don't know how you attacked the problem this year or the issue, it may have been tactfully done where you do certain brands. Is there more upside to maybe reducing some of your promotional spending again next year as well? Or do you think that the majority of the inefficiency will be kind of completed this year? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, you can always do more, and you can always do better, but the majority has been completed. I mean, we knew the trade programs that were completely inefficient in the two years prior that just needed to be pulled back on. So we're always looking to be more efficient in our spend because it's substantial dollars we spend, just like anybody else in this industry. But you won't see large gains in pricing as you did this year.

Okay. And then just one other quick follow-on. Your Cream of Wheat revenues were really strong in the quarter and that's a very profitable brand for you. And I think you put some innovation against that brand, and pardon me for forgetting what that was, I don't know if it was a single-serve cup, or – I remember you put some innovation against that. Is that why the brand is responding so well and does that give you confidence that that could continue its momentum on the upside? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, what's interesting, it's kind of the Green Giant analogy that you need innovation to build out your base business too. So as that innovation got presented to the major retailers, and the major retailers took it and it was helpful in the third quarter. But a large part of the gain in the third quarter was our base business, getting additional distribution on our core items in a couple of the larger key retailers. So taking the innovation in helps us sell in some of the core better. So we got the benefit of both, but most of the Cream of Wheat increase was from the core items this quarter.

Okay. Thank you very much. Robert C. Cantwell - President, Chief Executive Officer & Director: Okay.

And we'll go next to Kevin Ziets with Citigroup.

Hi. Thanks for taking my questions. I guess the first one is on the equity issuance. What will your leverage target would be post an issuance or are you just trying to build capacity for additional acquisitions and sort of how quickly do you think maybe you could think about going after additional M&A? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, I think as we've always looked at and if you've followed B&G for a number of years, our balance sheet's extremely important to us. And having our balance sheet always loaded to be able to do the next acquisition is very important to us, certainly important to our shareholders, because these are accretive acquisitions and accretive cash flow acquisitions have been a win for all our shareholders for many years. So getting leverage down, as we've always said, we don't want our leverage to really be much more than five times and keeping leverage below 5 times is important to us. So if we do an equity issuance, we're going to try to get leverage below 5 times so we're ready for the next acquisition. And we're always ready for the next acquisition. We certainly want to absorb and transition Green Giant in over the next number of months, but we're not going to – not look at something that comes to market that would make sense for B&G either. But we've got a lot of transition work on Green Giant, and that's first and foremost here. And really getting our balance sheet ready, as you look into kind of the late winter, early spring time, is perfect for us to be able to do it assuming the market is there. And perfect to be ready for the next acquisition assuming one comes along.

That makes sense. And then in terms of the doubling of the marketing spend. I guess I just wanted to be clear, is that where you think it is needed for the stabilization? Or is part of that also driving spend for the innovation that you're expecting to bring to market? Robert C. Cantwell - President, Chief Executive Officer & Director: It's a combination. A lot of it would be more toward the innovation, it's certainly about the brand. So it's first and foremost about the brand. But it's first and foremost – second it's to support the brand going forward. So certainly letting the market know we're here, and we're stabilizing is important, but it's more of a longer term goal to build this brand and grow this brand in the future, not just stabilize it.

Okay. And so it sounds to me – tell me if I'm wrong, that you think it's more in advertising and brand building than necessarily promotion and trade spend? Or am I wrong about that? Robert C. Cantwell - President, Chief Executive Officer & Director: We're talking the piece that where we say double the marketing spend, and General Mills was spending around $15 million $16 million in the last 12 months. You go back three years or four years they were spending double that. And we're really taking it back to the double and that's all about marketing. That's advertising, that's social media, that's TV, that's print, all the typical go-to-market advertising. It's not trade promotions.

Okay. And do you think there is additional trade promotion that needs to be adjusted? Robert C. Cantwell - President, Chief Executive Officer & Director: We don't see that. I mean the brand is on a price level during promotional periods. It's very competitive with the competitors today. There is no reason, we believe in this brand and the power of this brand. We need to market it. We don't need to price below the competition.

Okay. I appreciate that. And then my last question is on the – you mentioned digital and social media campaign for Ortega. I'm wondering, I guess, if overall advertising spend away from obviously Green Giant, is going to tick up here in the fourth quarter and sort of what your thoughts are on additional or similar campaigns moving forward? Robert C. Cantwell - President, Chief Executive Officer & Director: If I understand your question right, I mean, we're planning on spending the level of marketing we basically spent last year on our existing business. And a lot of that spend has been transitioned a little bit more oriented to social and digital media. As we go forward, we'll see the results from that, but we're pretty excited about what those results can look like, and the Green Giant's going to be a combination of many things and certainly digital and social media really fit for this brand too. It's such an iconic figure. It's an iconic brand. It sells well through social media, so there's a lot of opportunity there, but there's a lot of opportunity with traditional advertising on Green Giant also.

Okay. So it's just a shift in the existing spend, not additional spend? Robert C. Cantwell - President, Chief Executive Officer & Director: Not additional.

Okay. Thanks so much.

And that's the final question we have today. And Mr. Cantwell I'll turn the call back over to you for any closing remarks. Robert C. Cantwell - President, Chief Executive Officer & Director: Okay. I want to thank you again for joining the call today. We look forward to a strong finish to 2015 and are very excited about adding Green Giant to our portfolio of brands this quarter. Thank you.

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.