B&G Foods, Inc. (BGS) Q3 2016 Earnings Report, Transcript and Summary

Good day, and welcome to the B&G Foods Third Quarter 2016 Earnings Conference Call. Today's 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 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 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 base business net sales. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings 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 and his thoughts concerning the remainder of 2016. I'd now like to turn the conference over to Mr. Tom Crimmins. Tom? Thomas P. Crimmins - B&G Foods, Inc.: Thank you, operator. Good afternoon, everyone, and thank you for joining us today. Net sales for the third quarter of 2016 increased 49.2% to $318.2 million compared to $213.3 million in the third quarter of 2015. Net sales of Green Giant acquired on November 2, 2015 contributed $113.8 million to our net sales for the quarter. Base business net sales decreased 3.7% or $7.7 million. And this increase (2:17) was attributable to a $5.9 million decrease in unit volumes and a $1.8 million net reduction in prices. Gross profit increased 61.2% to $150.4 million in the third quarter, as compared to $71.6 million for the third quarter of 2015. Gross profit expressed as a percentage of net sales increased 270 basis points to 36.3% for the third quarter of 2016, from 33.6% for the third quarter of 2015. The increase in gross profit percentage was primarily driven by the acquisition of Green Giant. Gross profit percentage was also positively impacted by the decreased cost for certain commodities and packaging which we anticipate will yield approximately $7 million in total savings in 2016, as well as distribution savings and product mix, partially offset by the unfavorable impact the decrease in base business volume had on cost absorption and a net reduction in base business pricing. Selling, general and administrative expenses increased 55.5% to $42.5 million for the third quarter, as compared to $27.3 million for the third quarter of 2015, which was primarily driven by incremental Green Giant-related expenses. Acquisition-related and distribution restructuring expenses increased $2.5 million for the quarter. The remaining SG&A increase was attributable to the increases in consumer marketing of $7.4 million, selling expenses of $3.5 million, warehousing expenses of $1 million, and general and administrative expenses of $0.8 million. Expressed as a percentage of net sales, our selling, general and administrative expenses increased 50 basis points to 13.3% for the third quarter of 2016, from 12.8% for the third quarter of 2015. Net interest expense for the third quarter increased 59.5% to $18 million from $11.3 million for the third quarter of 2015, which was primarily attributable to additional indebtedness outstanding during the third quarter 2016 as compared to the third quarter of 2015 as a result of the Green Giant acquisition. Our reported net income under U.S. GAAP was $32.4 million or $0.50 per diluted share for the third quarter of 2016, as compared to reported net income of $19.8 million or $0.34 per diluted share for the third quarter of 2015. Third quarter 2016 adjusted net income was $36.7 million or $0.56 per adjusted diluted share as compared to adjusted net income of $22.7 million or $0.39 per adjusted diluted share in the third quarter of 2015. Our adjusted EBITDA increased 60.2% to $85.1 million for the third quarter of 2016, compared to $53.1 million for the third quarter of 2015. Third quarter 2016 adjusted EBITDA expressed as a percentage of net sales increased to 26.7% as compared to 24.9% in the same period in the prior year. Moving on to the balance sheet, we finished the third quarter with approximately $1.3 billion in net debt. Our net leverage was approximately 4.1 times, the midpoint of our revised 2016 projected adjusted EBITDA. And our current dividend rate is $1.68 per share per annum or approximately $111.6 million in the aggregate based on our current share count. With only a little more than two months to go in fiscal 2016, we have revised our prior guidance as follows. We now anticipate our net sales to be in the range of $1.3 billion to $1.4 billion, our adjusted EBITDA to be in a range of $322 million to $328 million, and our adjusted diluted earnings per share guidance, which has been revised to reflect our projected profitability, as well as the dilutive effect of the August 20, 2016 issuance of 3.75 million shares of common stock at $2.11 to $2.17. In addition, we project 2016 interest expense of approximately $73 million, including cash interest expense of $68 million and interest amortization of $5 million. We project 2016 depreciation expense of approximately $23 million and amortization expense of approximately $13.3 million. And finally, we expect our 2016 effective tax rate to be approximately 37.1%. Now, I'd like to turn the call over to Bob for more details on the quarter and his thoughts on the remainder of 2016. Bob? Robert C. Cantwell - B&G Foods, Inc.: Thank you, Tom, and good afternoon, everyone. We are pleased with our profitability this quarter and could not be more excited about the launch of our new Green Giant products and our new marketing campaign that has begun to awaken the Green Giant across America. We are, however, disappointed with our base business net sales decline of $7.7 million for the quarter, with five of our brands counting for the majority of the shortfall. We have been experiencing a challenging competitive environment for our syrup brands, which in the aggregate declined $2.4 million for the quarter. The decline is primarily attributed to maple syrup price deflation. The Canadian exchange rate has benefited the maple syrup category for a few years now, and we are seeing some smaller competitors win shelf space by deeply discounting their prices. In addition, our maple syrup net sales have been negatively impacted by contractually mandated price reductions with certain of our food service customers. Under those contracts, we are required to reduce prices when the U.S dollar strengthens against the Canadian dollar. We believe that the maple syrup environment will remain highly competitive for the near term and we expect to walk away from or lose some low-margin or zero-margin maple syrup sales. TrueNorth posted our second largest decline for the quarter, down approximately $2 million as compared to the same period last year. On prior calls, we highlighted the challenges we have been facing with TrueNorth as a result of historically high almond prices, which drove our retail price for the brand up to a level that consumers resisted. Almond prices have since returned to historical norms and we in turn have lowered our prices. In response, our single largest customer for TrueNorth products rolled back pricing in the middle of the third quarter, but we have not experienced the uplift in sales volume that we originally anticipated. We expect that many of our customers will follow suit in Q4 and reduce their shelf prices for TrueNorth. We are hopeful that reduced pricing to consumers will generate increased demand. To further increase consumer demand and generate brand awareness, we have also put in place plans for increased product demos at our largest customer. Bottom line, however, is that while we believe we are in the right track to turn around sales for TrueNorth, it may take longer than we originally anticipated. We expect an additional decline of approximately $2 million in TrueNorth net sales in the fourth quarter. We have also experienced some competitive pressure in our Ortega business, specifically in Taco Shells, which caused some softness in the third quarter, but we do not expect that trend to continue into the fourth quarter. We recently adjusted our pricing for Ortega Taco Shells and we anticipate a strong fourth quarter for the brand. Our Cream of Wheat business was soft during the third quarter, but we believe that was mostly timing related. We look forward to a strong winter season for Cream of Wheat and continue to be encouraged by the positive consumer response for our Cream of Wheat To-Go Cup products, as well as growth in the brand's traditional stovetop offerings. Pirate's Brands experienced soft sales for the quarter, but has performed nicely for the year-to-date period with net sales up 2.5%. We are extremely pleased that the ACV for Pirate's Booty has increased 8 percentage points since 2015. Our sales team continues to focus on increasing distribution and activating key marketing programs, which are producing solid returns. Now moving on to additional positives for the quarter. Our Mama Mary's pizza crust business was a strong performer for us during the quarter, with net sales up over 10%. Our sales team has done an incredible job filling in distribution for that brand, as well as ensuring consistent placement of the product within stores so the consumer always knows where to locate it easily. Our Las Palmas brand continued its success in the quarter with net sales up over 7% and now up over 6% year-to-date. Bear Creek had a solid quarter, with net sales up over 4%, as we continue to see increased distribution with single-serve cups. On another positive note, although the brand's net sales declined a little over 1% for the quarter, we believe we have started to see the stabilization of our New York Style business. During the third quarter, we made some distribution gains and saw increased consumer demand. As for the overall competitive environment other than in specific categories I mentioned earlier, we have not seen any significant signs of a pick-up in aggressive pricing or promotional spending by our peers so far this year and do not expect that to change as we look forward to 2017. We do expect to see our overall base business trends to continue through the fourth quarter and we anticipate an overall decline of approximately 2%, with much of the decline a result of the weakness in TrueNorth and maple syrup. Switching now to Green Giant, whose volume came in as expected for the third quarter. Operationally, our transition services agreement with General Mills has ended. And with the exception of General Mills continuing to co-pack certain products for us in Belvidere, Illinois, we assume full responsibility for the business at the start of the fourth quarter. We anticipate that there will be some growing pains in the early stages of the post-transition period, as it will likely take between three to six months for us to reach a smooth operational rhythm for the business. However, I believe that our very capable team at B&G Foods will provide our customers with the same excellent level of service for Green Giant that we have historically provided our customers for all our other brands. The new Green Giant frozen vegetable product launch, which includes Veggie Tots, Riced Veggies, Mashed Cauliflower and Roasted Veggies, is going very well. Several retailers can't even keep the products on the shelves. We believe that the distribution gains we've earned for the Green Giant through a new product innovation will help drive the brand going forward. We expect incremental net sales in the fourth quarter for the new items will be between $6 million to $8 million. Through innovation and financial support for Green Giant, we believe we can now move the needle and grow our market share or we can move the whole category. From an HR perspective, our organization build-out strategy for Green Giant is now complete, with almost all open positions filled. The successful execution of our plan has enabled us to establish a frozen sales and distribution platform and further enhance our already well-established center-of-the-store, shelf-stable and snack platforms. And finally in September, we announced that we entered into an agreement to acquire the spices and seasonings business of ACH Food Companies, a leading supplier of spices and seasonings to retail and food service customers, for approximately $365 million in cash subject to a post-closing inventory adjustment. We project the acquisition will contribute annually approximately $220 million to net sales and $38 million to $40 million to adjusted EBITDA after we close and complete the integration of the business. We expect the acquisition to close during the fourth quarter of 2016, subject to customary closing conditions, including receipt of regulatory approvals. We look forward to adding these strong brands to the B&G Foods family. So in closing, as we already a third of the way through our fourth quarter, we are looking for a strong close to an incredibly exciting and transformational year at B&G Foods. Despite the challenges that certain brands have presented this year, I remain very pleased with where we are as a company and where we are going. We have an extremely strong portfolio of brands supported by the best team of employees in the business. With that, I would like to open up the call for questions. Thank you. Operator?

Yes, thank you. We'll now take our first question from David Palmer with RBC Capital Markets.

Thanks. Good afternoon. Could you perhaps elaborate on the progress with the Green Giant innovation so far? In the scanner data, we really can't see that innovation. It looks like we're capturing some of the drag from discontinued SKUs, but not getting the benefit from some of the new products that you say are flying off the shelves. We're not really capturing that so far. So, could you perhaps elaborate on what is indeed happening out there? And if you have a sense about when that will show up in the scanner data that would also be useful for our tracking purposes. Robert C. Cantwell - B&G Foods, Inc.: Sure. Well, first, on the second part of that, you should be seeing that in scanner data very quickly here. I'm not sure of the timing and why you haven't seen it. We started shipping customers really middle of September, some of the larger frozen customers really beginning of October. It's on shelf in most major customers across this country as we speak. Like I said, we're expecting anywhere between $6 million and $8 million of sales in the fourth quarter here. You should be able to find it. It's pretty much everywhere as we speak and any major customer has it as of today. I mean, there's a couple of customers who aren't taking it into the latter part of the fourth quarter. But the larger customers, as you would expect, have it as we speak. Now, in the month of September, we only sold through about $1 million of the product. So, really the sales are starting to pick up here. Because the two largest customers in this country as a retailer really took it at the beginning of October. So, you won't really see those sales reflected in data – until the next data run here probably toward the end of this month, early November.

And you mentioned that you anticipate potential growing pains as you take full control of Green Giant. You've obviously had some time to anticipate this changeover. So, why – what sort – what do you mean by growing pains and how would that manifest itself in terms of the results? And then I'll just throw one more in. You're talking about being galvanized around improving base trends into early 2017, what are your top one, two, or three initiatives to really get the base trends going and where your focus will be? Thanks. Robert C. Cantwell - B&G Foods, Inc.: Okay. So, from the growing pains comment, it has nothing to do with sales. It's more kind of back office distribution, making sure it's in the right warehouses to service the customer. So, we planned it, we're doing it, but we know as soon as we took it over that level of expectation, we're going to have to fight through some growing pains, and that's what we're doing each day. So, it's more of a, what I'd call, the back office logistics, or making sure it's getting to customers and it's in the right distribution center. And when we look at the base business, in addition to the innovation, it's truly about the consumer plans here. We've build out the shelves nicely with innovation. We're trying to fight back on some of the discontinued bay side and that have been discontinued over the last few years under the prior owner, but it's all about the support of the business. We are spending between $18 million to $20 million here in the fourth quarter, supporting the business with advertising. We are going to continue that through the first half of 2017. And we have a long-term plan of continuing to support this business at pretty high level. So, it's really about just making sure we get the consumer back to the franchise, and we believe we can do that through marketing this brand at a much higher level than it's been done. And you have to go back five-plus-years to this level on this brand.

Thank you.

And we'll take our next question from Farha Aslam with Stephens, Inc.

Hi. Good evening. Robert C. Cantwell - B&G Foods, Inc.: Good evening. Thomas P. Crimmins - B&G Foods, Inc.: Good evening.

When you look at Green Giant, do you expect that sales number to still be at around $520 million for the year? Robert C. Cantwell - B&G Foods, Inc.: Yes, we do.

Okay. And then in terms of your marketing spend, this total marketing spend for that Green Giant business for 2016 versus what you had expected when you started, is it about the same? Robert C. Cantwell - B&G Foods, Inc.: It is about the same. We're spending between $32 million and $35 million against the business this year. And some additional slotting for all the new distribution even on top of that.

Okay. And then as we go into next year, do you anticipate that that marketing spend is stable, goes up, or goes down? Robert C. Cantwell - B&G Foods, Inc.: Well, the good news is, it will hopefully go up. As we grow sales, we plan on putting more money back into it, above and beyond what we spent this year. But in addition, it's going to be more directed to consumer marketing. There's a lot of setup in year one from agency expenses to creating commercials, et cetera, that we'll be able to not be spending that level of money in 2017, but using that spend against the consumer. So, we'll actually have more working – what I call, working media against the consumer in 2017. But we will be spending at least what we spend this year and expect to spend more as we grow sales.

Helpful. And then, my final question is back on the base business. As you seek to turn around trends, do you anticipate doing it via increased innovation, pricing, promotion, any color you could provide there? Robert C. Cantwell - B&G Foods, Inc.: Well, I think as we look at the base business, we certainly got some minuses and we got some pluses. We feel very comfortable today about where the base business is going, except for really two pieces of business. One is, we're going to find our way through on TrueNorth and we'll see where that goes. The business – and maybe we'll end up (23:44) $10 million business. So I think as we look at comparatives next year, hopefully we're growing that, but we won't see the level of just pure dollar declines we saw this year just based on the size of the business. The other really big challenge we have and it's really about price deflation in our syrup category. And that's not going to get fixed because at the end of the day, syrup coming out of Canada, where the exchange rate is today, is allowing some smaller competitors to really drop prices and reduce prices in the whole category. And we're making decisions sometimes to fight back in certain customers and sometimes to walk away just because we're getting down to little to no profit on those sales. So, one of the things you're seeing from – even as we looked at kind of the mix of the base business product, one of the reasons our EBITDA percentage in addition to all the cost savings in Green Giant, is going up is the sales that we've been losing and the large chunk of those sales are coming in syrup and TrueNorth and, prior to this quarter, New York Style, are some of our lowest margin businesses. So, as we mix out of that a little bit, it's actually helping our overall EBITDA percentage. But I think that as we look at our biggest challenge year-over-year next year, it's going to be in syrup because we're going to make decisions potentially to walk away from some business and not match some ridiculously low prices where all we're doing is saving sales and not making any money.

Helpful. Thank you.

And we'll take our next question from Bryan Hunt with Wells Fargo.

Good evening, Bob and Tom. Robert C. Cantwell - B&G Foods, Inc.: Good evening.

I guess my first question and I'm pretty curious about what's going on with the rest of the businesses. And you touched on it, Bob. But historically, we've seen when we've had material price deflation or cost deflation in various grains, whether it's soy, wheat or corn, and we're definitely seeing it all now. You've seen the industry become more promotional. One, why is that not happening today across more categories, in your opinion? And, two, do you think the potential exists, I guess, going forward given the outlook for cost? Robert C. Cantwell - B&G Foods, Inc.: Well, I think when we look at just purely the size of the cost savings that we have this year, year-over-year that Tom mentioned earlier, about $7 million, with a good more than half of that packaging versus commodities, there is certainly price deflation in certain commodities. None of those commodities are big part of – those specific commodities that you're referencing that have come down are not big parts of some of the products we sell. So we're not seeing it in the categories we compete in today except for this kind of odd thing in maple syrup, because certainly the price coming out of Quebec is way down because of the exchange rate over the last few years. And I think it's just the nature and the luck of the categories we're in more than anything else with that. So there's nothing that we compete in today that has a major commodity move down trend in a big way that's material to the products in the categories themselves that we compete in.

Do you think the outlook for 2017 raw material costs is similar to what you saw this year? Robert C. Cantwell - B&G Foods, Inc.: Well, so we typically are trying to lock in and roll out at least 12 months at a time. And we know today early stages and we expect more, but we're already locked in to save at least $3 million next year. We expect that to be more as the months go on here. Yeah, we're not seeing any trends going – it's always miscellaneous things up and down, but we're not seeing the overall trend going the other way right now.

Great. Switching gears and looking at the ACH transaction. They have a facility. You do other spices, whether it's Mrs. Dash or Ac'cent. Do you see the opportunity to move the rest of your business into that facility? And is that part of the planned synergy number? Robert C. Cantwell - B&G Foods, Inc.: Well, in our numbers today, it's we bought a business as usual. Over the long period of time, we look at moving things in and out of all our facilities. So we're certainly looking at different things. But when we talk $38 million to $40 million, that's really the business we bought as it stands without any potential moving anything into that facility or potentially out of that facility.

Okay. Robert C. Cantwell - B&G Foods, Inc.: All possibilities, yeah.

All possibilities. All right. We've seen you do that in the past with things like Mama Mary's. All right. And then lastly, I guess the challenges on the headline looked greater than maybe you've alluded to in the call or at least they've been toned down. If you look at the challenges, whether it's competition in maple syrup, the TrueNorth headwinds, is there anything in your base business to – and include what's going on in your Mexican portfolio. But are any of those challenges maybe making you more hesitant to go out and make acquisitions, trying to settle a portfolio's performance before you take your next big bite? Robert C. Cantwell - B&G Foods, Inc.: No, not all. We're working diligently internally and have created certain people running, starting with our smaller brands, to really focus on those brands in a different way. We're in a challenging center – from most of what we do, it's challenging center of the store movement. When we look at our portfolio of 40-plus brands, we don't see issues with the brands, pure issues with the brands, honestly except for TrueNorth today, because we got to figure out what we can do with that. But it's a small brand in our portfolio. Syrup, we don't need to lose except for price deflation (30:28) volume. We're making some volume decisions on – and it's all about maple syrup, I keep saying syrup, it's all maple syrup numbers that just if we can't make a margin that's acceptable to us, we're willing to potentially walk away from some of that. But there's nothing outside of TrueNorth that's really troubling overall in our portfolio that would make us get concerned about actively pursuing other acquisitions as we speak.

Best of luck in the upcoming year. Robert C. Cantwell - B&G Foods, Inc.: Thank you. Thomas P. Crimmins - B&G Foods, Inc.: Thanks.

And we'll now take our next question from Karru Martinson with Jefferies.

Good afternoon. Just on the ACH Food Companies acquisition, just wanted to get a sense on the Weber brand that are sold under license, wanted to get a sense of where does that license extend out to and how much of the business is the license portfolio here? Robert C. Cantwell - B&G Foods, Inc.: Well, it's a piece of that $220 million. It's a small piece, give or take, $30 million-ish in sales. It's a small piece. The license goes – they've certainly met the hurdles that this license will continue as long as we want to use it. And it's a really nice brand, it's a very nice brand that hopefully has some opportunities even further. They did a really good job at building it up to where it was. Hopefully, we can take it further down the road here.

Okay. And there's been a lot of noise about millennials aren't shopping traditional grocery, grocers are talking about traffic declines. When you look at your portfolio of products, how do you feel that you're represented whether it's that traditional mass, club, dollar stores? And where are areas where you can get into more doors as we go forward? Robert C. Cantwell - B&G Foods, Inc.: Well, there's not a lot of doors that we can get into that we're not in today. So, most of our products are relatively fully distributed. We're also selling a number of our products through outlets like Amazon, et cetera, which is growing every day. It's still small piece of everybody's overall business in our industry, but it is growing. And we see those kind of outlets as real opportunities to make sure we are reaching millennials and suburbanites who buy things and have it delivered to their garage in Suburbia, America. So, we need to be in supermarkets, we need to be in clubs, we need to be in CVS and we need to then be able to be on those sites that are servicing those customers online. And we're pretty much across the board doing that. Some brands might be a little different than others, but there's not an outlet that we're not selling our products in today. And most of our larger brands are selling in all of the outlets that you could think of today. We don't have huge presence in customers like Whole Foods, et cetera, and Nano Salads (33:32). We do sell some of our brands. Some of our brands are just not natural fits for those outlets. But whereas an outlet where a brand like ours that we own is in, we have our brands in those outlets.

Thank you very much, guys. Appreciate it. Robert C. Cantwell - B&G Foods, Inc.: Okay. Sure.

And we'll now take our next question from Sean Naughton with Piper Jaffray. Sean P. Naughton - Piper Jaffray & Co.: Yeah, another question on ACH, just because we haven't talked about it a lot. This is the first conference call, I think. Anything on the seasonality for that business just that we should be thinking about in terms of modeling? And then also, how has this business been performing over the last few years? So, this has been one that's been a little under-loved and under-marketed or has this business been performing over the last few years? Robert C. Cantwell - B&G Foods, Inc.: Well, on the business performance first, we're getting a nice little business here that has not been under-marketed. So that P&L has a reasonable amount for marketing in that P&L that the former – eventually, the former owner, when we closed the deal, was spending on the brand. Businesses in general have been up 1%, 2% a year for the last number of years. A lot of that has been Weber, Weber driving that more than anything else. But a lot of the brands in the portfolio are kind of flat to up, and it's pretty solid business. And certainly, when you think about spices, it should be solid business. As millennials may eat at home a little bit more each day and every – and all of us are trying to cook a little bit more at home, spices, a great category to be in. So, it's the right category in today's environment. Not a lot of seasonality. So, basically, regular everyday spices, when you sell oregano and basil and all that stuff, pretty straightforward across the board. You get a little holiday blips when people need something for their Thanksgiving dinners and something, but not meaningful. Weber is going to be a little bit more because the nature of what that is. It's Weber and people relates to it as grilling blends more than anything else. It's certainly going to sell a little bit more during summer barbecue season when you (35:58). But as we look at this, you're not going to really even notice the blips plus or minus on a monthly basis, relatively flat on a monthly basis. Sean P. Naughton - Piper Jaffray & Co.: Okay. And then, I guess on the – just the guidance for the EBITDA in Q4, looks a little bit lower than I would've anticipated. So, just – and part of that could be is that we have some of the ACH deal in our numbers. But can you talk about – or is this like a level of conservatism on the transition service agreement or there's some other disruptions that you're seeing in Q4, or was there some pull-forward into Q3? Just trying to understand the number that we're getting to for Q4. Robert C. Cantwell - B&G Foods, Inc.: Well, really it's two things. One is, just to make sure everybody understands, ACH results depending (36:54) are not in those guidance numbers. So, that guidance is without ACH. And we still don't know when a closing date will be yet. We're heading toward just the last two months of the year here. So, really that's just timing and if we – certainly we're closing the last quarter, we get a few weeks of sales and profits in our numbers. Guidance is pretty relatively consistent with kind of the quarterly results from prior quarters. A little lower margin business on Green Giant in the fourth quarter for two reasons. One is this trade promotional spending. This is the time when you spend money in frozen and cans. You sell a lot of product during Thanksgiving, and then a little bit during Christmas, but a lot of products in Thanksgiving. And there's deals in those categories. The other piece is, we're spending between $18 million and $20 million in marketing on Green Giant in the fourth quarter. We came into the fourth quarter – to put it in perspective, we've spent $14 million year-to-date on Green Giant. So, for nine months, we spent $14 million. We're going to spend between $18 million to $20 million here in the fourth quarter. And that's really what's doing in them. I think we pride to guide the Street to the timing of that spend for this year just because of getting everything ready. When we give guidance for 2017, that spend is going to be a little smoothed out, and certainly going to be heavier in the winter months, so the first quarter and fourth quarter. But it will not be as all oriented to one quarter and when we look at 2017 for Green Giant. Sean P. Naughton - Piper Jaffray & Co.: Okay. So, that's kind of what's impacting the EBITDA there to be flattish or even down a little bit at the midpoint of kind of the guide at this point? Okay. Got it. Okay. Thanks a lot. I'll pass it on. Best of luck. Robert C. Cantwell - B&G Foods, Inc.: Okay.

And we'll now take our next question from Rob Moskow with Credit Suisse. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Hey, Bob. I think you mentioned back office logistics being I guess a thing that might go through some growing pains. But I guess I'm not quite sure if you're calling out incremental costs that you're incurring right now or just kind of warning us that those costs might accelerate in the future if certain things happen. So, can you give us any more specifics as to... Robert C. Cantwell - B&G Foods, Inc.: Okay. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): ...what fourth quarter looks like? Robert C. Cantwell - B&G Foods, Inc.: Sure. Certainly, this is not a cost comment on Green Giant integration. This is just all about – we – October – Monday, October 3, we entered into the world of shipping frozen product and doing it all ourselves, which we're totally fine with doing. Now, it's just a matter of planning and procurement and making sure in the number of frozen warehouses we've employed to ship products, it's in the right spot at the right time. And we're getting it to the customer when they wanted. So, we don't think there's any real issues in doing that. We just know we are just kind of babysitting every order as it comes in to make sure we do the best we can. And it's a learning experience. It's $300 million of give or take frozen business now going through our system through a different distribution system. So, from the can side, relatively easy dropping that into our warehouses and shipping it. In frozen side, not difficult, it's just different. So, we're doing that and we know when we have all hands on deck from the top end, just making sure this is getting done as best as possible right now. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): Okay. That's helpful. And just to – I heard some people question whether there would be another equity raise at some point just to maybe recapitalize the balance sheet or maybe even finance ACH. But you're quite clear here that ACH is financed through what you have right now. And how do you look at where you are in terms of your capital ratios right now? Robert C. Cantwell - B&G Foods, Inc.: Well, I think when you look at where we are today, and Tom mentioned, our net leverage is 4.1 times. When you look at ACH EBITDA coming on board of $38 million to $40 million, and we're paying $365 million for it, after we pay for that, between cash on our books and using some of our revolver, our leverage is only at 4.4 times. So, very comfortable spot right down the center of where we like to be between 4 times and 5 times. But we're always looking at opportunistic – when is the right time to create value for our shareholders by looking at the balance sheet. We don't see a need for it today, but you never know when the right time is. And I think we've always come to market typically after we do the next deal. So, it's really not – ACH is kind of paid for in a lot of ways with the last equity raise we did in the summer. So, come to market with another big deal that we create a lot of incremental cash flow and increased dividend and increased value, probably at some point, we need to come back to the equity markets to raise equity. Robert Moskow - Credit Suisse Securities (USA) LLC (Broker): All right. Makes sense. Thank you. Robert C. Cantwell - B&G Foods, Inc.: Okay.

And we'll take our next question from Eric Gottlieb with D. A. Davidson. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Yes, good evening. Robert C. Cantwell - B&G Foods, Inc.: Good evening. Thomas P. Crimmins - B&G Foods, Inc.: Good evening. Eric Mitchell Gottlieb - D. A. Davidson & Co.: I have a couple of questions. First, back to Green Giant, you originally said that we're going to achieve certain margins after a six-month growing period. Is this the six-month growing period you were referring to, or this is kind of in addition to? Robert C. Cantwell - B&G Foods, Inc.: On Green Giant? Eric Mitchell Gottlieb - D. A. Davidson & Co.: Yes. Robert C. Cantwell - B&G Foods, Inc.: We're at the margin level. I mean, you've been seeing that flow through the P&L. That's the margin level we've been running at. We're looking at Green Giant generating give or take $115 million in EBITDA for us this year, very strong margin business. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Okay. Robert C. Cantwell - B&G Foods, Inc.: So, we're not going to expand on that. Hopefully we can and there's always savings and synergies et cetera, but we're running that business at what we now expect to run at. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Okay. And on the growing pains, when I hear growing pains and I hear distribution, I jump back to when you entered the snack business. Is that – really there was problems filling up the trucks. I know you've never really dealt with our frozen business all that much, but is this the kind of growing pains we should be expecting or is it not going to be as longer or as deep? Robert C. Cantwell - B&G Foods, Inc.: Certainly not going to be deep and very different. So, snacks came into our warehouse and it was a different product going with everything else. Frozen is through third party warehouses, it's just frozen product. This is just making sure – there's a lot of movement around with frozen coming from Mexico making sure it's in the warehouses that need to ship to customers. I don't think this is a really big problem for us, but with everything, we're just walking through the transition each day. And we feel very comfortable this team is doing the job the right way. And we're almost finished month one of that transition period where we're by ourselves. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Got it. And then moving on to syrup, how much in sales potentially could you be walking away from? Robert C. Cantwell - B&G Foods, Inc.: It all depends. It could be $1 million, it could be $10 million. It really depends on as time goes on if somebody wants to drop price at a certain customer or two or three or four at prices we just don't want to match. We have to make some decisions here. One of the interesting things about maple syrup, which is pretty different than anything else we're involved in. In everything else we compete with large companies typically, and that's actually a lot easier to work with. Whether it's our competitor in frozen or our competitor on Ortega, et cetera. These are large businesses who also have margins that they're trying to achieve and it's easier to compete. Maple syrup is – we're really the only big guy who's a big company. Most everybody else on maple syrup are fairly small, somewhat mom-and-pop companies. And if they can sell another $1 million and make $10,000 sometimes on that $1 million, they're happy. We're not going to do that. So we're looking – each instance comes up. It's not going to affect overall profitability or any concern. But we potentially may walk away from sales if competition just gets at some very low prices. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Got it. And then moving on to TrueNorth. I assume the whole space had the same nut cost. So, what did competitors do? Robert C. Cantwell - B&G Foods, Inc.: So everybody raised prices. If you were a Costco and you've been buying bulk almonds, and they sell a lot of large bags of almonds and pecans and everything, all prices went up. So from the clubs and everything, they understood raising prices. At the end of the day, at some point, the consumer who's buying it a one price says, I don't really want to pay another $1.50 or $2 a bag and we saw that hesitation. So I think we've dropped prices. The challenge is on a small brand, which this is what it is. This is not like we raise prices on Cream of Wheat, it's going to sit on shelf, people who buy Cream of Wheat for the last 50 years are going to buy Cream of Wheat. They may have gotten turned off by a large price increase, if that happened, on Cream of Wheat. But as soon as you lower, they're back buying it. This is a little different because it's not a big business, it doesn't have complete permanent shelf space everywhere it sells like most of our products. And now it's just a fight back to make sure consumers know it's out there. It's a great product, we just need to make sure consumers know it's out there. And today is a good value. Eric Mitchell Gottlieb - D. A. Davidson & Co.: Got it. Okay. With that, I'll pass it on. Thank you. Robert C. Cantwell - B&G Foods, Inc.: Okay.

And we'll now take our next question from Jon Andersen with William Blair. Jon R. Andersen - William Blair & Co. LLC: Hey, Bob and Tom. Robert C. Cantwell - B&G Foods, Inc.: How are you doing? Jon R. Andersen - William Blair & Co. LLC: Good. Hey. Just on Green Giant, actually more broadly on the frozen category in general. Do you think you're bringing more innovation than the competition for this fall reset that we're talking about? And what's been the overall reception from retailers around the relaunch and your ability to get merchandising and promotion for the brand and the new offerings? Robert C. Cantwell - B&G Foods, Inc.: Well, certainly the retailers were completely onboard with this relaunch. Our net points of distribution gain is well over 100,000 net points of distribution across this country. Most major retailers took – and we launched 15 items, most major retailers across the country took an average of 11, many took all 15. They're excited about the innovation, but they're also very excited about the long-term support we're committing to and trying to drive this brand, and really hopefully, drive the whole category. Hopefully, we grow faster. But we believe that our support is really going to drive the category in total. So, retailers look at this as certainly this is a high-volume category. They turn a lot of dollars in frozen vegetables. We can drive more foot traffic or more usage occasions. It's great for everyone. And retailers have been very supportive of our campaigns. Jon R. Andersen - William Blair & Co. LLC: On the sales side for Green Giant, the $520 million that you referred to earlier, Bob, is that the base business excluding the incremental revenue you talked about for the new products? And how should we think about that on a full-year basis maybe for 2016 and how that flows through into 2017? Robert C. Cantwell - B&G Foods, Inc.: Well, I think I want to hesitate on the 2017 numbers for Green Giant. And we'll certainly give really comfortable guidance on where we believe we can be in our year-end conference call on Green Giant because we'll have a much better feel of how this – I believe today the innovation is going to be a real win for us in a big way. We'll have a much better feel after a few months of actual sales and consumer trends and consumer repurchases as the next few months go by. We're looking at $520 million on Green Giant, give or take, and there's a range around that. It would include that innovation of another $6 million to $8 million. So, that's kind of baked into that number as we speak. Jon R. Andersen - William Blair & Co. LLC: Okay. That's helpful. Last one for me. As you think about M&A going forward, is there a preference for frozen versus ambient temperature product? And I guess, I ask because I'm wondering if given the state of the frozen platform today, do you see more synergy opportunity from scaling that business as opposed to adding to the legacy biz? Thanks. Robert C. Cantwell - B&G Foods, Inc.: Well, I think it's in – I think we're different. We can handle acquisitions in center of the store grocery, snacks, and now frozen. I do want to say, frozen, we're still only be looking at, as of today. Our minds can change over time, but if it's frozen, it's got to be vegetables. We're not going to – today go into meal solutions, et cetera, and kind of stretch who we are. So, we'd certainly consider another smaller frozen vegetable brand if it became available. But that certainly means center of the store is more wide open because we're willing – as long as it's high-margin categories and it's a good brand, we're willing to look at many different categories in center of the store. But in frozen, we want to stick to vegetables at this point. Jon R. Andersen - William Blair & Co. LLC: Really helpful. Thanks, guys. Good luck going forward. Robert C. Cantwell - B&G Foods, Inc.: Thank you.

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

Hi, Bob and Tom. Robert C. Cantwell - B&G Foods, Inc.: Hi, Andrew. Thomas P. Crimmins - B&G Foods, Inc.: Hi.

Two quick ones. I may have missed this, but I think you had said previously you expected Green Giant EBITDA this year to be in the $115 million to $120 million range. Is that sort of still the expectation? Robert C. Cantwell - B&G Foods, Inc.: Yes, it is.

Okay. And then when I guess should we start to see – you highlighted some of the innovation, but when we look at the Green Giant brand in totality, in sort of scanner data, right, it's still showing some pretty big year-over-year declines. When given all the efforts and the relaunch and everything else, would we start to see some of that data look like it's starting to – or the decline starts to moderate and when do we – when are we going to start to see it sort of stabilize at some point? Robert C. Cantwell - B&G Foods, Inc.: Well, we expect on the base – putting innovation aside, that you're going to see that stabilization and hopefully grow really as we head into the first quarter and into the second quarter of next year. We think the real support of this brand is going to drive that in a very different way. So, we expect those numbers to really start turning as we head into the first quarter. Innovation is all on top. And we'll know better, at least on this round of innovation and certainly more to come in 2017, how well they're performing. Early results look extremely good where we placed it. Great products and it fits to consumers' need today. So, we see some real opportunities there. But – and we look at the bulk of this business before the innovation, it's give or take $300 million in kind of frozen sales. It's really kind of – our expectation and our outlook is that it really starts turning the quarter as we kind of kick in to the beginning of 2017 and then certainly as we head through 2017 in a bigger way.

Got it. And very last thing, I definitely don't want to belabor this, but with respect to some of the growing pains, because you hadn't made a statement like that previously, even though maybe it was assumed given it's a big integration and a new temperature state for you. But you hadn't made that comment before obviously. So, I'm trying to get a sense of whether this comes up now because just the timing of the TSA rolling off and because you're actually starting to see some of these growing pains? Or it's more just anticipating and trying to plan for what could happen as opposed to like you're seeing some things crop up as we speak? Robert C. Cantwell - B&G Foods, Inc.: Well, I think maybe the words meant more than reality. At the end of the day, we're fundamentally taking on a $300-million business that has very high customer service standards. We are taking on a business from a top-notch person in this industry who service customers at very high levels, we expect to be able to do that plus. And we want to make sure we meet all those standards. And it's more about just meeting the customer service standards, more than anything else. It's that window that – at the end of the day, to get real simple, that if customer A wanted the product delivered into their distribution center by 11 o'clock in the morning, we're hitting that. We're not delivering it at 1 o'clock in the afternoon. Because in frozen which is very different than shelf-stable, there's always certain windows from the distribution center shipping it and the distribution centers receiving because you can't leave – frozens got to go into the freezer. It can't be left on the floor where you have a lot more ability to adjust shipments et cetera when you're delivering dry groceries because people can stack it on the side when it gets to a distribution and then receive it in later, there's lot of – you don't have that ability in frozen. But we're not seeing where we can't live to those standards and we expect – as each day goes on, we're doing fine, we're just going to get better and better on it. This is a new $300 million frozen business for us through our infrastructure. And it's really, like I said, the back office, it's not the sales, it's not the marketing. All of that has been – we've been running all that. This is just making sure deliveries get to customers when they want it and how they want it. And that's our number one goal here, and we're working very hard in getting that done. And we just wanted to point out is not just here's the keys and everything was going to be absolutely perfect. But we don't see anything affecting our business at all. We actually see – we're a month into this now and things are going and getting really – service levels are getting better every day and service levels are good as we speak.

Got it. Thanks very much.

And ladies and gentlemen, it appears there are no further questions at this time. Mr. Cantwell, I'd like to turn the conference back over to you for any additional or closing remarks. Robert C. Cantwell - B&G Foods, Inc.: Okay. Thank you. We certainly look forward to reporting the progress of our Green Giant innovation results in our year-end conference call, as well as our expected strong results for our overall business in the fourth quarter. Again, thank you again for your support in the company and look forward to talking to you again in few months. Thank you.

And ladies and gentlemen, that concludes today's conference call. We thank you for your participation.