B&G Foods, Inc. (BGS) Q4 2015 Earnings Report, Transcript and Summary

Good day, and welcome to the B&G Foods Fourth Quarter 2015 Financial Results Conference Call. Today's conference is being recorded. You can access detailed financial information on the quarter and the full year 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 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 all of you to the company's most recent Annual Report on Form 10-K and subsequent SEC filings for a more detailed discussion of the 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. The company 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 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 affected the company's results, selected business highlights, an update on the Green Giant acquisition and thoughts concerning 2016. I would now 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 fourth quarter of 2015 increased 43.8% to $342.3 million, compared to $238 million in the fourth quarter of 2014. Net sales of Green Giant, which includes both Le Sueur brand, acquired on November 2, 2015, and Mama Mary's, acquired on July 10, 2015, contributed $106.2 million and $9.9 million respectively, to our net sales for the quarter. The fourth quarter of 2015 contained 13 weeks and the fourth quarter of 2014 contained 14 weeks, which negatively impacted net sales for the fourth quarter of 2015 on a comparative basis, by approximately $15 million. Customer refunds related to the Ortega and Las Palmas recall negatively impacted the fourth quarter of 2014 by approximately $4.1 million. Comparable base business net sales decreased 0.3%. The decrease was attributable to a 0.7% decrease in unit volume, offset by a 0.4% increase in net pricing, due to increases in list prices and reduced promotional activity. Also, our Canadian net sales continued to be unfavorably impacted by the weaker Canadian dollar, which negatively impacted net sales in the fourth quarter of 2015 by $0.8 million. Gross profit increased 55.3% to $88.6 million in the fourth quarter, as compared to $57 million for the fourth quarter of 2014. Gross profit, expressed as a percentage of net sales, increased 190 basis points to 25.9% for the fourth quarter of 2015, from 24% for the fourth quarter of 2014. The 190-basis-point increase primarily resulted from the negative impact that the 2014 product recall and write-off of certain raw material and finished goods inventory used in the production of Rickland Orchards products, had on gross profit percentage in the fourth quarter of 2014. The increase in 2015 gross profit percentage was also attributable to price increases and lower delivery costs as a percentage of net sales, partially offset by $6.1 million of non-cash amortization of the step-up of inventory acquired in the Green Giant acquisition. Selling, general, and administrative expenses increased 52.6% to $36.6 million for the fourth quarter, as compared to $24 million for the fourth quarter of 2014, with approximately 24% of that increase relating to incremental operating expenses due to the Green Giant acquisition. The overall increase consisted of increases in general and administrative expenses of $4.8 million, selling expenses of $3.3 million, acquisition-related expenses of $2 million, warehousing expenses of $1.3 million, and consumer marketing expenses of $1.2 million. Expressed as a percentage of net sales, our selling, general, and administrative expenses increased 60 basis points to 10.7% for the fourth quarter of 2015 from 10.1% for the fourth quarter of 2014. Net interest expense for the fourth quarter increased 43.3% to $17.3 million from $12.1 million for the fourth quarter of 2014, which was primarily attributable to additional borrowings used to fund the Green Giant acquisition. Fourth quarter 2015 adjusted net income was $25 million or $0.43 per adjusted diluted share as compared to adjusted net income of $21.2 million or $0.39 per adjusted diluted share in the fourth quarter of 2014. Our adjusted EBITDA increased 29.2% to $67.4 million for the fourth quarter of 2015 compared to $52.1 million for the fourth quarter of 2014. Moving on to the balance sheet, we finished the fourth quarter with approximately $1.8 billion in net debt. Our debt leverage was approximately 5.8 times pro forma adjusted EBITDA. Our current dividend rate which our board of directors increased by 20% earlier this week is $1.68 per share per annum or approximately $97.4 million in the aggregate based on our current share count. Now on to our guidance for fiscal 2016. Net sales is expected to be in the range of $1.38 billion to $1.42 billion. Adjusted EBITDA is expected to be in the range of $294 million to $304 million and adjusted diluted earnings per share is expected to be in the range of $1.98 to $2.09. In addition, our projected 2016 interest expense is approximately $70 million including cash interest expense of $64 million and interest amortization of $6 million. Our projected 2016 amortization expense is approximately $14 million, our projected depreciation expense is approximately $22 million, and our projected 2016 effective tax rate is approximately 37%. And now I'd like to turn the call over to Bob for more details on the quarter and full year and his thoughts on 2016. Bob? Robert C. Cantwell - President, Chief Executive Officer & Director: Thank you, Tom, and good afternoon, everyone. As I just completed by first year as CEO of B&G Foods, I can say with absolute certainty that 2015 was a transformative, profitable, and exciting year for the B&G Foods family and our shareholders. Before I discuss the quarter, I would like to recap a few of our accomplishments during 2015. Overall, we grew net sales and adjusted EBITDA by 14% and 12% respectively in 2015 as compared to 2014. During the first part of 2015, we successfully closed out the Ortega recall and the brand has not only recovered but really prospered this year. We also rolled out new Ortega products and we have further innovation coming later this year, such as skillet sauces and sriracha taco sauces. We completed two acquisitions in 2015. In July, we acquired Mama Mary's, a leader in the ready-made pizza crust category. The brand complements very well our existing portfolio of brands, including our Don Pepino pizza sauce, and has been a very solid performer in our portfolio this year, exceeding our initial expectations for net sales. We see a lot of potential for this brand going forward. And of course our acquisition of Green Giant, which closed in November. I will speak further about the Green Giant business in a few moments, but we are extremely excited about what is to come for this iconic brand. We successfully transitioned two of our three distribution centers to a third-party logistics provider in 2015, significantly enhancing our capabilities and customer service potential. We are in the process of transitioning our third facility, which we expect to complete by the end of the first half of 2016. So overall, a very successful year from a financial and operational execution perspective, and we feel the best is yet to come for B&G Foods. Now moving onto more highlights for the quarter and the year. As I previously mentioned, Ortega bounced back strong in 2015 by growing net sales by 8.5% for the year. In 2016, we expect to roll out new products and we will continue to use our digital and social media campaign to drive brand awareness, trial, and sales volume across the country. We are utilizing digital and social media to drive interest and awareness for our Bear Creek products. Despite a generally mild winter, Bear Creek had a solid fourth quarter and our new Bear Creek hearty dry soup mix bowls have contributed to the success. We also see additional opportunities to expand distribution of the brand's core dry soup mixes. Cream of Wheat had a positive year overall. And as a testament to our commitment to innovation in the category, we recently were awarded Best New Cereal in Better Homes and Gardens 2016 Best New Product Awards for our Cream of Wheat To-Go Maple Brown Sugar with Walnuts. We were very pleased with that award and the publicity it generated, and believe that the Cream of Wheat To-Go products are bringing new consumers to discover or rediscover the brand. Pirate Brands' full year net sales came in line with our expectations. Our sales of Pirate Brand products in the retail channel continue to be strong in a highly competitive and diverse category. We still believe that there are further distribution opportunities for Pirate Brands, which will be the strategic focus for the brands in 2016. Despite some overall sales softness in 2015 for New York Style, we started to see stabilization in the New York Style business, particularly in the second half of the year. We intend to focus our efforts for this brand in 2016 on extending distribution and then eventually introducing new products, after we attain distribution at levels that we believe are achievable in 2016. Turning to cost, our overall commodity packaging and ingredient costs for the full year 2015 were relatively flat as compared to 2014. In 2016, we are expecting benefits across most commodities. The weakness in the Canadian dollar has both a positive and negative effect on our business. On the positive side, the weakness reduced cost of goods sold for our pure maple syrup business by approximately $2.5 million in 2015. In 2016, we are expecting $3 million to $4 million of additional savings. On the negative side, the weak Canadian dollar is expected to negatively impact our net sales in Canada, including Green Giant, by approximately $10 million in 2016. In general, we did not see aggressive pricing or promotional spending by our competitors in 2015 and we expect that to continue into 2016. Just as a reminder, we did realize over $12 million in incremental pricing for the full year 2015, but do not have any pricing in our plan for 2016. So with that, let's transition to an update on the Green Giant acquisition, which we closed in November. We are even more excited about this opportunity now that we own the brand. During most of 2016, a majority of our sales distribution and procurement functions will continue to be performed by General Mills, pursuant to a transition services agreement. Full transition of the sales and distribution functions is expected to happen in the second half of 2016, but we expect that General Mills will continue to perform some manufacturing services for us until sometime into late 2017. 2016 will be a year of fixing Green Giant's foundation, initiating the innovation pipeline, and developing a world-class consumer marketing campaign. We bought an iconic brand that was not part of the seller's long term strategy, but I promise you it is a major part of ours. We went into the acquisition understanding that 2016 would be a year focused on addressing customer issues, including lost distribution and trade programs. In parallel, we are actively working on innovation as well as our consumer marketing campaign. We are tremendously excited about our recently announced strategic relationship with Deutsch as the marketing and advertising agency of record for the Green Giant brand. And we are equally excited about our plans to partner with Kerry, a leader in global food insight and innovation to re-establish an innovation pipeline for Green Giant. We are truly energized by these new relationships and the seemingly endless marketing and innovation possibilities that Green Giant provides. So to sum up the way we are thinking about the future of Green Giant, in 2016 we plan to address the foundation, sow the seeds for innovation and enhanced marketing with the goal of relaunching a bigger and better Green Giant in 2017. Three days ago, we announced that our board of directors has increased our dividend by 20% to $1.68 per share per year. This increase is a strong message to our shareholders that our strategy is working and that we remain committed to returning a substantial portion of our excess cash to our shareholders in the form of dividends. Before turning the call over for questions, I would like to say that we expect that 2016 will be another great year for B&G Foods. We have an excellent portfolio of beloved brands, an exciting new transformational acquisition that we will be integrating throughout the year, and we have the team and strategy to make B&G Foods better than ever. With that, I would like to open up the call for questions. Thank you. Operator?

Thank you. And our first question comes from Sean Naughton with Piper Jaffray. Sean P. Naughton - Piper Jaffray & Co (Broker): Hi. Good afternoon. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: Good afternoon. Sean P. Naughton - Piper Jaffray & Co (Broker): You gave the earnings guidance which obviously is helpful to get to the EPS now, but is there any way you could help us a little bit just on the cadence through the year just to get a better understanding of how you're thinking about it. I know you've got some benefit coming in, in the back half from the warehouse and distribution and it sounds like there's some other activities that could help from the Green Giant perspective in the second half of 2016, just wondering about if we could get a better idea on some of the balance of the flow in the earnings for 2016. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: Okay. Fair question. I guess the best way to look at it is our base business without Green Giant should look very similar to 2015 with a little benefit in really starting in August, September from additional distribution savings. Green Giant and kind of our projection for Green Giant which we put out before, business is 26% in the first quarter, 31% in the fourth quarter, and then kind of second quarter and third quarter pretty equal at 21%, 22%. So a little weighted to the fourth quarter certainly for Thanksgiving and Christmas and then following through, through Easter in the first quarter. And also depends on when Easter is, but Easter in 2016 is in the first quarter. So, a little weighted during those holidays but pretty much as you look at our business, our base business, a little pickup in the second half on our base just because of some incremental savings and Green Giant just the seasonality of the business. Sean P. Naughton - Piper Jaffray & Co (Broker): Okay. That's helpful. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: Okay. Sean P. Naughton - Piper Jaffray & Co (Broker): And then just a question on your largest customer. We have heard some complaints from some consumer staples brands about a cleaner floor policy and some of that impacting some of the volume that they have. Did any of that impact you in the fourth quarter or starting here in 2016 or is that kind of business pretty much status quo for you at this point? Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: This is status quo. We don't see that at all and we have not really seen that hurt our business at all and customers are very big supporter of B&G and very big supporter of what we can do with our latest acquisition going forward here. Sean P. Naughton - Piper Jaffray & Co (Broker): Okay. That's great and then last quick question on Green Giant. What are do you feel like some of the near term opportunities kind of that could help you really stabilize the trends in that business? I know General Mills released some results, some numbers, about how it's been trending the last few years. Did that business stabilize year-over-year when you owned it in November and December or were there similar declines that the brand was seeing before and should that begin to stabilize here in the first half of 2016? Robert C. Cantwell - President, Chief Executive Officer & Director: Okay. So what Green Giant has seen through General Mills' ownership and in the short term for us, and we knew what we were getting into is, the biggest issue that the previous owner had with the brand is it was losing distribution. They weren't supporting the business in distribution losses. So, when we took it over in November and December, we were certainly dealing with year-over-year distribution losses and key customers, and we saw some shortfalls. And we expected that and we expect those shortfalls – certainly we took it on at the biggest time of the year and the most volume in November and December, Thanksgiving and Christmas. We expect to see those shortfalls – you know, the dollars get smaller just because the pure – the dollar sales gets smaller through really the first half of this year. We've done some good things with additional trade programs, et cetera, to kind of get a little bit more volume here in the first half, but the timing of getting back some more distribution is really later this year and really, as we re-launch this brand in a much bigger way in 2017. Because distribution gains come back; we're trying to get some of the core, where it's been lost. But it really comes back with walking into that buyer's office with a lot of new innovation. And we've actually been out there, in the very short time of our ownership, with the help of our key outside parties who are helping us, really developing some innovation as we speak and we've been presenting some of that innovation already to key retailers who are getting excited about it. We won't be able to launch that innovation probably until late summer/early fall, but we're pushing for late summer. Because again, we bought a business that had no innovation in the pipeline and we understood that 2016 we were going to have to fight through distribution losses first, poor trade programs in the trade and really build an innovation pipeline and also build a consumer marketing campaign, because we really weren't doing anything at all, so. But I can tell you, we are extremely excited every day about what this brand's going to mean to us, as we head into late 2016 but really re-launching this iconic brand and this iconic figure in 2017. But working diligently and developing – and I'm very happy to say, really moving quickly on new items, much quicker than even I expected we'd be able to do, and that's our first step in the door. In addition to where B&G, we're going to put money behind this brand and support it. The innovation is key. So, we've been kind of teasing our customers and showing them innovation with our partner and getting them very excited. And they seem very receptive; I mean all our customers are very receptive to this brand. Green Giant is an important brand for them that just, was not a strategic brand for the former owners and they just weren't supporting it the way we will support it in the future. Sean P. Naughton - Piper Jaffray & Co (Broker): Okay. Thank you and best of luck in 2016, Bob.

Thank you. Our next question comes from Farha Aslam with Stephens, Inc.

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

Just going on the Green Giant, you had targeted at the time of the deal about annual sales of $550 million for the brand. Are we still kind of in that ballpark when we think about 2016 sales? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, I guess the best way to answer that, very comfortable where we targeted the profitability. The sales will be a little less for two reasons. One, November and December were a little short, further short of what we expected, but more importantly, just the exchange rate, the business in Canada is over C$100 million and just the exchange rate effect on Green Giant alone is about, where the exchange rate is today, I can't promise where the exchange rate will be in July, is about $8 million of a sales shortfall. Now again not a huge profit hit and we have certainly enough – we're very comfortable on the profits but sales will be a little short. But as I said before as we look out into 2017 and what this brand is going to mean to us, there's a lot more upside potential to this brand than we expected when we modeled this business and we think there's real serious upside growth in 2017 and 2018 and hopefully further out than that on this brand.

And so when we think about targeted EBITDA for this business, is it around that $95 million to $100 million still? Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: Yes. In that $95 million – and closer to the $95 million side.

Okay. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: And that's part of our guidance. Yeah.

Perfect. And then last question is on marketing on this brand, you had talked about doubling your marketing support, could you give us any color on what you're planning in that $95 million in terms of marketing support and the timing of that marketing? Robert C. Cantwell - President, Chief Executive Officer & Director: Well again a lot of it, it's about $30 million is what we targeted, $30 million, $31 million is in that EBITDA number of $95 million-ish. A lot of that marketing is starting to start, we hired a major partner in Deutsch to help us with insights, developing strategy, and building out a big consumer marketing campaign and we've been working diligently with them. Well, you will start seeing us out there soon, but the bigger campaign we're either going to launch in late fall or beginning of 2017. We haven't figured out the exact timing of that. But we plan on spending it. Some of that spend will be also kind of to push out distribution, in addition. We may use some of that spend in 2016, pushing out a little more distribution. But we are committed to spending $30 million-ish on this brand on a long-term basis because I truly believe in what this brand could be and should be way bigger than it is today.

That's helpful. Thank you.

Thank you. Our next question comes from David Palmer with RBC Capital Markets. Robert C. Cantwell - President, Chief Executive Officer & Director: Good evening, David.

Good evening, Bob. Just a follow-on questions on the Green Giant, the EBITDA lift. My understanding is there's some leftover integration, particularly on the sales side, and there would be, I would imagine, some new product news heading into the fall of 2016 and into 2017. How should we think about the leftover EBITDA upside into what might be a more full integration? Robert C. Cantwell - President, Chief Executive Officer & Director: So just to make sure I understand your question, on a go-forward basis on kind of our target?

Yes. When you really think about having this thing be fully up and running in terms of sales and logistics, heading into 2017, is there – looking at 2016, you might not be at that full integration point, let alone getting the benefit of new product news under your stewardship. Robert C. Cantwell - President, Chief Executive Officer & Director: Right. As we look at 2017, we're certainly looking at $100 million plus, but I want to couch that to say, we really believe the sales volume on this business will start moving in a big way starting in 2017; maybe get a little bit of it in 2016 but really re-launching this brand in 2017. And that sales volume is just going to incrementally add on top of that $100 million plus in a big way to the bottom line. So we're really excited about where this brand can be by the end of 2017, early 2018, and really what has really moved the needle on this brand. And this brand was a lot bigger three to five years ago than it is today. We're getting a real good feeling. It's not going to be easy, but we have an iconic brand. And it's not just the brand, this is an iconic figure that supports this brand that in addition – we got to have all the innovation and all that stuff – all that stuff has to happen, too. We just can't support the brand as is in a big way and move the needle. But all that's happening and this brand has some real upside as we get through 2017 and 2018, and that's going to be upside to the bottom line too.

And two quick follow-ups on Pirate's Booty. What is the reason in your mind for the sluggish sales late in 2015 and in spite of – I know you had some new product news for the second half of 2015. And how much of this is the clean store initiative that some retailers versus the competition that seems to be holding back many players in the healthy snack arena. Robert C. Cantwell - President, Chief Executive Officer & Director: Well, I think it's the competition. I think Pirate's Booty is a sought after product, so even a lot of the competition that comes and goes and shows up, Pirate's Booty has its rightful place. As we look at Pirate's Booty going forward, as a branded retail company, it's our third largest brand behind Green Giant and Ortega. It's a very important brand in our portfolio. Originally when we bought this business, we thought we had potentially a lot bigger upside. I don't want to say we can't get there by getting into other categories, but we are not going after other categories in 2016. We are going to concentrate harder on moving distribution. We spent too much time in the first two years of ownership really concentrating on a lot of new things and thinking about what category to try to move into. We're going to sell what sells and really kind of fill out the distribution. But with all of that, this is a brand that on a go-forward basis for us, unless we get into another large category, is going to continue to grow for us, but that growth is going to be 2% to 5%, unless we jump into a much larger category, another category and launch this brand in a different way. So within our plans, we see this brand continuing to grow, fill out distribution, make sure it's everywhere it's supposed to be, and support what it is, but not try to get too creative. And that means certainly supporting additional products within the same category, what we're trying to sell today, whether it's flavor or something else, but not go after another whole category like we went after mac and cheese, or trying to get into cookies or something like that.

Thank you.

Thank you. Our next question comes from Bryan Hunt with Wells Fargo. Robert C. Cantwell - President, Chief Executive Officer & Director: Good evening, Bryan.

Good evening. Thanks for your time, Bob and Tom. I was wondering if you could give us an idea of how much EBITDA in the fourth quarter came from Green Giant. Robert C. Cantwell - President, Chief Executive Officer & Director: Well, we don't separately disclose that because it rolls through kind of a central organization here. But what Green Giant brought to the table was, we're looking at a business that is going to generate EBITDA percentage of about 18% for us, 17%, 18% a year is what Green Giant's going to generate. And we didn't see anything different.

Okay. And how about when we think about the roughly $95 million that you mentioned, Bob, for contribution to 2016 EBITDA from Green Giant, how much of that is going to synergies and how much will be left to be gained in 2017 on the synergy front? Robert C. Cantwell - President, Chief Executive Officer & Director: This was a brand purchase that really comes with a plant in Mexico making products specifically for Green Giant. And because it's a brand purchase, we're not getting other pieces of business. We're not getting General Mills' people, we're not getting General Mills' facilities that were closing down, et cetera. So we buy this on kind of what we know our EBITDA can be operating this business. There's not really synergies to come on this business. It's not like we're getting rid of corporate offices and things like that, which is typical – which is pretty much almost everything we buy. Any time we buy a brand from a large food company, we're not really getting those kind of synergies. We're taking things on as is and effectively on Green Giant we're actually – which was all in our numbers that we put out to the Street, we're actually adding marketing. We're doubling the marketing they were spending. We're adding people to support that brand internally. So it wasn't really a synergy play. This was really a bringing in a large iconic brand into our portfolio that we think we can do good things for many years to come with them.

Got you. And you all have I guess recently launched this fire roasted product, I think there's four SKUs. How is that performing relative to expectations so far? Robert C. Cantwell - President, Chief Executive Officer & Director: Okay. So we own it. We didn't launch it. It was poorly launched. Packaging is not done well. The product doesn't look right. The packaging honestly looks too squatty. Even though the ounces are there, the package just doesn't look right to the consumer. So part of the relaunch of Green Giant is really fixing that and introducing a whole bunch of new innovation and really launch this right. And it was just kind of thrown out there by the former owner. So it's hanging in. It's just not really doing anything. It wasn't the right approach to launching the product.

And so if I kind of look at what you just reported and the midpoint of your guidance, it implies about $85 million of EBITDA pickup. Considering that you're going to have Green Giant a big add on, it doesn't seem like you're moving the needle on a go-forward basis on EBITDA, other than the purchase of Green Giant. Is that a fair assessment or do you...? Robert C. Cantwell - President, Chief Executive Officer & Director: As you look at base B&G, you pull Green Giant out, what investors hopefully understand about B&G is we're going to grow our business, our 40-plus brands hopefully 1%, 2% a year which kind of rolls to our bottom line, and plus there's some cost savings from distribution and other things and hopefully those cost savings more than offset cost increases. And you get a little bit of incremental EBITDA pick up on that. And then we're really rolling Green Giant in. Now Green Giant for the two months in sales in November and December I think was $106 million, so it's a big time of the year that we actually bought Green Giant. So Green Giant was certainly a nice benefit to B&G in the fourth quarter. But we're a manager of brands. We think there's a lot of upside potential in Green Giant as we look at and some real sales and EBITDA growth as we go forward. But for the rest of our portfolio, it's going to be typically that 1%, 2% growth hopefully on the top line when you put the whole portfolio together and then on the bottom line hopefully you can do a little bit better than that just because you've shrunk some costs and you've done some things better than just purely as a percentage of net sales.

And I believe historically you all have targeted and you've talked about distribution savings 2% to 3% of efficiency gains every year. Is that a good base forecast for 2016? Robert C. Cantwell - President, Chief Executive Officer & Director: Just to make sure, 2% to 3% of our total delivery...

Your cost of goods. Robert C. Cantwell - President, Chief Executive Officer & Director: Of our cost of goods, yes. That we're working towards, yes. But again that offsets some other expenses such as increase in medical and giving people raises in our plants and corp (37:05). So it historically has more than offset and gained us some efficiencies in total. But it's not 2% to 3% dropping to the bottom line.

And then my last question is I think you had mentioned in conjunction with Green Giant and loading up the balance sheet a little bit that you all might look to do equity to knock down the debt level and prep your balance sheet for the next acquisition. Is that still on the table or do you feel comfortable enough that the company will generate enough free cash to de-lever kind of to your targets in 2016? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, to answer the de-levering, as part of what we just recently did is really part of who we are. What investors should always expect from B&G is we do accretive acquisitions. We're buying brands that fit our portfolio. We're buying them for multiples way below what we trade at. We increased the dividend; we share upwards of 60% of that free cash flow from the acquisition back in the form of dividends to shareholders, and that's just what we announced three nights ago, raised our dividend 20%. And then consistent with past practice following acquisitions, we consider and we're looking, depending on market conditions, issuing common stock and using some of the proceeds to reduce leverage. Because we're not going to reduce leverage because we give out, give or take, 60% of our free cash flow in a big way. Even though we're a tremendous cash generator, we're sharing 60%-ish of that cash back in the form of dividends to shareholders. So we have historically looked to the market to raise equity, to reduce leverage and reload the balance sheet to be able to do the next acquisition tomorrow. So it's part of a board conversation and part of where market conditions are, and we seem to have always picked the right spots before and hopefully we'll make the right decision again and that's what, hopefully, investors expect us to do.

And just one follow-up. What's the share count in your guidance? And that's it for me. Thank you. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: So right now... Robert C. Cantwell - President, Chief Executive Officer & Director: 58 million shares. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: 58 million shares. Robert C. Cantwell - President, Chief Executive Officer & Director: A little over 58 million shares, right? Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: Slightly above 58 million shares. Robert C. Cantwell - President, Chief Executive Officer & Director: 58 million shares, yes.

Thank you for your time. Robert C. Cantwell - President, Chief Executive Officer & Director: Sure.

Thank you. Our next question comes from Robert Moskow with Credit Suisse. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Thank you. Hey, Bob, the guidance, like you said, doesn't appear to imply much in the way of core EBITDA growth. But if you think about commodities being a little deflationary this year, your pricing seems to be holding up pretty well. You mentioned Cream of Wheat's on a roll, Pirate's stabilized, Ortega's up. Couldn't this be a year where you have maybe a little bit more organic kind of growth from the core than you normally do? Because I think consensus estimates were a little ahead of you and maybe that's what was in there. I'm just wondering. Robert C. Cantwell - President, Chief Executive Officer & Director: Well, we certainly have some upside from everything you just said there. We're looking at this and putting something out to the Street, consistent with how B&G has looked at its business over the years. And certainly, you're absolutely right. We're seeing commodity – the only place we get hurt, and it's not going up is, nut costs really haven't come down from where it's ratcheted up through 2015, but we don't see it actually going up on us in 2016 and maybe there's a little tiny relief on nut prices. But across the board most commodities are down. We're really not commodity intensive in anything, so it's not a huge dollar amount but certainly it's a benefit to our P&L. Get a huge benefit on purchasing maple syrup. We give up a decent amount on our entire Canadian business because the exchange rate affects it the other way on everything we do in Canada. And with Green Giant, our Canadian business in Canadian dollar sales about C$135 million now. So a penny on the exchange rate is more and more meaningful to us. But you're absolutely right, the net effect is we expect our cost to be down, we're seeing that a lot of places, we'll certainly see it in fuel surcharges, in our freight cost and that certainly trickles down and helps our plants and energy and all of that, and some of that also helps us in packaging. So hopefully we're going to have a bigger and better year than what we're expecting as of today. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Great. Thank you.

Thank you. We move now to Ken Zaslow with Bank of Montreal.

Hey. Good evening, everyone. Robert C. Cantwell - President, Chief Executive Officer & Director: Good evening, Ken. Thomas P. Crimmins - Chief Financial Officer & Executive VP-Finance: Hi, Ken.

I'm sorry, I'm going to belabor this point; I'm still a little confused here is, you have cost savings coming in, you have distribution opportunities, and you have lower commodity costs, in which businesses – are you increasing your promotional spending to reduce EBITDA in some businesses? Robert C. Cantwell - President, Chief Executive Officer & Director: We're not increasing promotional spending at all, so, on any of the businesses. We don't see a need to do that. Nobody else is doing that and we don't see a need to do that.

Then I guess, I mean if I exclude out those things that means that the base business is actually going down, which again seems surprising given your operating efficiencies and your focus on the bottom line. Robert C. Cantwell - President, Chief Executive Officer & Director: Well, base business is certainly not going down and that plan and that guidance has base business going up a little over 2%. And as you were saying is there some upside from cost, further cost reductions on that base business. And also those cost reductions certainly help Green Giant too, but certainly there's marketplace cost reductions that should help us as we go through the year.

And how do you balance Green Giant, and I think you alluded to it is, obviously you want to get the distribution opportunities and regain your distribution and I think there's some promotional spending behind that to get it in there, so where is the balance between the two and how do you strategically think about how much distribution is necessary based on how much promotional spending will you do and kind of give us some strategic, not the exact numbers, but how you think about it? Robert C. Cantwell - President, Chief Executive Officer & Director: Sure. Well, certainly there's a lot of distribution to be gained and there's two pieces of the distribution. One is in key customers certain items have been lost over the years; we need to get those back. You don't easily get those back unless you're coming into that buyer with new innovation for distribution. And really the goal is, you're walking into that buyer and selling them some innovation and getting five new innovative SKUs in and then saying to the buyer, you need these three bags of corn and peas that for some reason you don't have today in a certain size. But you need the innovation to really try to get some of the basic core vegetables back in – not that they're out. There's certain customers that lost distribution through the former seller and there's certain large customers in the U.S. that haven't lost distribution and Green Giant is actually performing very well. So again we've built into our model paying to get back into that distribution. We may use some trade money to support that distribution early on as we're building a bigger spend plan for consumer marketing. So, 2016 is really fixing the foundation and fixing the core, and we're really looking to work very hard to get that done and really kind of build the shelf back or build the freezer set back. So that's really the bigger plan for 2016 in addition to getting everything ready and putting the major effort into really having an innovation pipeline and being able to be in the market with new items later this year in a big way, along with a real big marketing campaign that we're either going to launch in the fourth quarter or the beginning of 2017. We've just got to figure it – and really, we want to launch that marketing campaign to support distribution gains in a big way and really just relaunch the brand in a big way and really push that. So there's a lot of blocking and tackling in 2016 that we're really going through and that was in our plan all along and that's what we need to do. But the real upside on Green Giant and the potential of Green Giant is some real big upside, I truly believe on this brand as we head through 2017 and 2018, and then further out. But certainly, a real change in the dynamic of Green Giant as we really get into 2017.

And my second question is, the dividend increase versus paying down debt. Not to say that a 4%-plus dividend yield is not interesting and part of the strategy. How do you balance that versus paying down debt, versus equity raise? Because right, if you use more of your balance sheet to pay down debt rather than the dividend, would that not require less equity raise? Or – I guess that's what I'm trying to figure out, why the balance between (47:21). Robert C. Cantwell - President, Chief Executive Officer & Director: Yeah. I think the simple answer is, it is a true model that we – we went public in 2004 with a model to share our free cash flow with shareholders in the form of dividends. And that's been the B&G model and shareholders who've been investors for a long time or been investors in the past understand it's a three-pronged model, that we are going to buy things accretively, truly not overpay for things, and buy the kind of things we buy and manage well. Give shareholders back cash in the form of dividends, because that's part of this model that has worked for shareholders and created the tremendous equity value and return for shareholders, and really being one of the top returning stocks, absolutely, in the food industry since 2004 by far. And then going back to the equity market, and they know there's accretion to the shareholders on the acquisition, hopefully accretion on the dividend, maybe a slight dilution on the equity offering, but it reloads the balance sheet and ready to do the next acquisition. And shareholders who've supported that have made – we have tremendous support from our shareholders in that thought process. It has made them a lot of money along the way and it has worked for B&G. And it's just been the model we've followed. I'm a true believer in that model and returning the cash to shareholders in the form of dividends, and then effectively going to ask for some of it back at the appropriate time, to reload the balance sheet to do the next acquisitions.

Good. I appreciate it. Thanks Bob (49:08). Robert C. Cantwell - President, Chief Executive Officer & Director: Sure.

Thank you. And we move to Eric Gottlieb with D.A. Davidson. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Good evening. I just want to talk a little bit more about innovation. You said that your customers wanted to see your initial thoughts. Now that they've seen some of them, what kind of things are they expecting? New flavors? New veggie combinations? (49:33). Robert C. Cantwell - President, Chief Executive Officer & Director: Well, it's a combination of all of those, and I don't want to disclose. But we truly have built an initial, real pipeline. And it's all of what you said, but it's entering into certain – in addition to things like that, it's also entering in different ways to sell vegetables, whether it's a different kind of package format or potentially a different way to eat veg. And being very – there's basic innovation, which is kind of what I call a little bit more of the noise innovation, which is just creating more flavors, whether it's robust, whether it's a Mexican flavored corn or something like that. That's relatively easy and we have to do some of that too, because we need our rightful share of that. And then it becomes more – what I call more innovative innovation which is something that's unique, and it can be packaging or it can be product and we're looking at both and we have some really good ideas on both. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Got it. I know you said second half is basically when we'll start to see something like this. Could packaging come earlier? Robert C. Cantwell - President, Chief Executive Officer & Director: Packaging is probably a little later. Packaging is – something that's new and very different and nobody else has is a little bit longer runway to get done than some of the other things. But we got some really good ideas on the other things and we've been presenting some of those ideas already in some of the product already that we're going to be on the market later this year with, and showing to buyers as we speak and kind of just fine tuning what we're looking to do. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Okay. The sale guidance, again I think some of the answers already, it was well below the Street expectations. Are there any areas that appear to be struggling? What do you think we got wrong? Robert C. Cantwell - President, Chief Executive Officer & Director: Well, one thing is – and maybe we're a little conservative on where the Canadian dollar is versus the U.S., but where it is today, that has hit our sales guidance in 2016 by almost $10 million. And that's a real number. Now the Canadian dollar gets a little stronger over the course of the year, that $10 million shrinks. It could go the other way too, but I don't think it goes the other way in a much bigger way, so that's part of it. And that's really the biggest piece of it. Green Giant, as I said earlier, a little short of our expectations; not profit-wise but sales-wise, at least initially, as we fight our way through 2016. But our base business, the rest of our base business, we feel really good about. Ortega had a very strong year. Our Bear Creek and Cream of Wheat business is doing very well. Mrs. Dash is doing very well. Pirate's Booty, we have a lot of good expectations on that. So we're not seeing our overall base portfolio and kind of having any real issues besides whatever we sell in Canada with the exchange rate at all. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Okay. And then just one last thing, I know you said $0.60 of EPS accretion for Green Giant, now that we're at the bottom end of the $95 million to $100 million and maybe we do an equity offering and maybe we don't. But is there any updates to that $0.60 number? Robert C. Cantwell - President, Chief Executive Officer & Director: Yeah. Our guidance we put out there is about $0.60 – it's around the $0.60 we're talking about, so we're still very comfortable with that. Certainly if we do an equity offering that comes down. So certainly putting more shares out there will reduce that. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Okay. Great. I'll pass it on. Robert C. Cantwell - President, Chief Executive Officer & Director: Sure.

Thank you. That concludes today's question-and-answer session. Mr. Bob Cantwell, at this time I'll turn the conference back to you for any additional or closing remarks. Robert C. Cantwell - President, Chief Executive Officer & Director: Okay. Thank you again everyone for joining our call today. Again, I want to thank you for all your years of interest and support on B&G, and I truly look forward to a successful and exciting 2016 and some real success as we go forward in a big way and move Green Giant forward in 2017 and 2018. Thank you very much.