B&G Foods, Inc. (BGS) Q2 2017 Earnings Report, Transcript and Summary

Good day, and welcome to the B&G Foods Second Quarter 2017 Earnings 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 ir.bgfoods.com. Before the company begins its formal remarks, I need to remind everyone that part of the discussion in today's call includes forward-looking statements. These statements are not guarantees of future performance and, therefore, undue reliance should not be placed upon them. We refer you to the company's most recent Annual Report on Form 10-K and subsequent SEC filings for 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. Amy Chiovari, the company's Interim Chief Financial Officer, will start the call by discussing the company's financial results for the quarter. After that, Bob Cantwell, the company's Chief Executive Officer, will discuss various factors that affected the company's results, selected business highlights, and his thoughts concerning the remainder of 2017 and beyond. I would now like to turn our conference over to Ms. Amy Chiovari. Amy? Amy J. Chiovari - B&G Foods, Inc.: Thank you, operator. Good afternoon, everyone, and thank you for joining us today. Net sales for the second quarter of 2017 increased 20.2% to $368.1 million compared to $306.4 million in the second quarter of 2016. Net sales of the spices & seasonings business, acquired on November 21, 2016, and net sales of Victoria, acquired on December 2, 2016, contributed $67.4 million and $9.7 million, respectively, to our total net sales for the quarter. Base business net sales decreased 4.9% or $15.1 million. The decrease was attributable to decreases in unit volume of $11.8 million and net pricing of $3.3 million. Approximately 65% of the base business net sales decline for the second quarter of 2017 was attributable to Pirate Brands, maple syrup products, Green Giant and Mama Mary's. Gross profit increased 1.2% to $111 million in the second quarter as compared to $109.7 million for the second quarter of 2016. Gross profit expressed as a percentage of net sales decreased 560 basis points to 30.2% for the second quarter of 2017 from 35.8% for the second quarter of 2016. Excluding spices & seasoning and Victoria, approximately 3.2 percentage points of the decrease in gross profit percentage was due to an increase in warehousing and distribution costs. 1.1 percentage points of the decrease was due to a decrease in pricing and 0.9 percentage points of the decrease was due to an increase in coupons and slotting expenses. The remaining 0.4 percentage points of the decrease was due to an increase in all other costs including the impact of product mix. Selling, general and administrative expenses increased 46.3% to $49.6 million for the second quarter, as compared to $33.9 million for the second quarter of 2016. The increase was composed of increases in marketing expenses of $8 million, acquisition-related expenses of $6.2 million, and warehousing expenses of $3.3 million, partially offset by a decrease in distribution restructuring expenses of $0.5 million and all other expenses of $1.7 million. Expressed as a percentage of net sales, our selling, general and administrative expenses increased 250 basis points to 13.5% for the second quarter of 2017 from 11% for the second quarter of 2016. Net interest expense for the second quarter increased 19.4% to $22 million from $18.4 million for the second quarter of 2016, which was primarily attributable to additional borrowings made in the fourth quarter of 2016 to fund the spices & seasonings acquisition and the Victoria acquisition, and in the second quarter of 2017 in connection with our credit agreement, refinancing and senior notes offering. The company's reported net income under U.S. GAAP was $22.1 million or $0.33 per diluted share for the second quarter of 2017 as compared to reported net income of $30.3 million, or $0.48 per diluted share for the second quarter of 2016. The company's adjusted net income for the second quarter of 2017, which excludes the after-tax impact of loss on extinguishment of debt and acquisition-related expenses, was $27.6 million, or $0.41 per adjusted diluted share. The company's adjusted net income for the second quarter of 2016, which excludes an intangible asset impairment related adjustment to deferred taxes, the after-tax impact of the non-cash impairment charge and related loss on disposal of inventory, acquisition-related expenses and distribution restructuring expenses, was $36.1 million, or $0.50 per adjusted diluted share. For the second quarter of 2017, our adjusted EBITDA, which excludes the impact of acquisition-related expenses, decreased 8% to $78.2 million from $85 million for the second quarter of 2016. Moving on to the balance sheet, we finished the second quarter with approximately $1.8 billion in net debt and our current dividend rate is $1.86 per share per annum or approximately $123.7 million in the aggregate based on our current share count. Now onto our guidance for full year fiscal 2017. We narrowed our net sales guidance to a range of $1.64 billion to $1.67 billion, decreased adjusted EBITDA guidance by $7.5 million to a range of $352.5 million to $367.5 million; and decreased adjusted diluted earnings per share guidance to a range of $2.03 to $2.17. We expect the 2017 interest expense will be approximately $86.5 million, including cash interest expense of $81 million and interest amortization of $5.5 million. We project 2017 depreciation expense of approximately $32.5 million and amortization expense of approximately $17.5 million. And finally, we expect our 2017 effective tax rate to be approximately 37.5%. Now, I'd like to turn the call over to Bob for more details on the quarter and his thoughts on the remainder of 2017. Bob? Robert C. Cantwell - B&G Foods, Inc.: Thank you, Amy, and good afternoon, everyone. Consistent with the rest of the industry, our second quarter was challenging, resulting in our base business net sales being down 4.9% compared to the second quarter of 2016, missing our internal expectation by approximately $6 million in net sales. Notwithstanding the disappointing second quarter, we expect to see positive year-over-year trends in the second half of 2017, with net sales growth for our base business in the second half of approximately 2%, driven by a double-digit net sales increase in Green Giant, offset by net sales decreases of 2% to 3% for the rest of our base business. We continue to see encouraging results from our two most recent acquisitions, the spices & seasonings business and the Victoria brand, each of which we completed in the fourth quarter of 2016. The spices & seasonings business, in particular, contributed net sales of $67.4 million for the second quarter and $130.6 million for the first two quarters of 2017, and is on pace to achieve $260 million in net sales for the year. Due in part to the positive impact of better than expected net sales results for our two most recent acquisitions, we are maintaining our full year net sales guidance and narrowing the projected range by reducing only the top end of the range by $10 million. Green Giant net sales were down $2 million or 1.9% for the second quarter, generally in line with our expectations. As expected, Green Giant shelf-stable products saw a net sales decline of $7.6 million, primarily due to known distribution losses with certain customers and net sales declined for non-branded bulk IQF products, and the timing of slotting and coupon spend negatively impacted net sales for Green Giant by $0.9 million and $2.9 million, respectively. Net sales of Green Giant frozen products grew $9.4 million or 14% for the second quarter, driven by the brand's new innovation products that we launched in 2016. In the third quarter of 2017, we plan to extend the line of Green Giant frozen innovation products launched in 2016 with five new product entries. We also plan to announce a new line of Green Giant frozen innovation products in September 2017 that will begin shipping in January 2018 and mark our entry into a new category of frozen vegetables. The inventory and transition problems that Green Giant experienced in the fourth quarter of 2016 are behind us, and we anticipate a strong second half of 2017 for Green Giant. Moving on to our two most recent acquisitions, Victoria and spices & seasonings. Victoria, which offers a variety of premium pasta and specialty sauces, savory condiments, and tasty gourmet spreads, exceeded our net sales expectations for the quarter by 18.4%. The spices & seasonings business we acquired in November of last year also had a strong quarter, exceeding our net sales expectations for the quarter by 23.9%. We completed the spices & seasonings transition at the end of July, and expect to begin realizing some cost synergies beginning later this year and into next year, as we begin consolidating production for several of our legacy products into our Iowa manufacturing facility. We believe that our spices & seasonings products respond very favorably to the preferences of today's consumer, and we expect to continue to see the brand exceed our initial expectations in the second half of 2017. In summary, we are very pleased with the performance of our last three acquisitions: Green Giant, spices & seasonings, and Victoria. After a strong 2016 and first quarter of 2017, Pirate Brands had a soft second quarter, due largely to promotional timing at certain customers. We expect to see positive net sales growth during the rest of the year. Net sales for most of our other brands, including Ortega, Bear Creek, and Mama Mary's were down for the quarter, generally in line with their overall categories. We estimate that consumer consumption in the categories that we compete in are down on average approximately 3%. In general, this is not a distribution loss issue, just very difficult category dynamics. Ortega net sales were down slightly, less than 1% for the quarter. We launched two new must-try product lines during the second quarter, Ortega Good Grains Taco Shells and Ortega Crispy Taco Toppers. To date, customer acceptance has generally been very positive, and we are now shipping the new products. Net sales of our maple syrup products declined 11.9% for the quarter, and we continue to expect net sales for our maple syrup products to be down approximately $7 million for the full year 2017. As a reminder, this is primarily because we walked away from certain low-price, low-margin private label sales. Mama Mary's had a challenging quarter, with net sales down $1.5 million or 16.9%. The category was down approximately 10%. We expect Mama Mary's net sales for the second half of the year to be positive, as we lapped out of stock issues in the fourth quarter of 2016 that affected last year's net sales by $2.5 million. Now shifting to cost. As Amy mentioned earlier, we saw an expected decrease in gross profit percentage due to an increase in warehouse and distribution costs, a decrease in pricing, an increase in coupon and slotting expenses, and an increase in all other costs. As expected, we finished the quarter with adjusted EBITDA margin of 21.2%, and have a year-to-date adjusted EBITDA margin of 21.7%. We expect one more quarter of incremental frozen, warehouse, and distribution costs, which we anticipate will impact our third quarter results by approximately $4 million. But we also expect a number of savings that we believe will help our second half results, including procurement savings, packaging changes, and period-over-period cost savings from the 2016 Mama Mary's plant consolidation. We expect these savings to drive incremental adjusted EBITDA of approximately $7 million in the second half of 2017. Adjusted EBITDA in the second half of 2017 should also benefit from the timing of approximately $15 million of marketing spend that we shifted into the first half of the year, an additional five months of ownership of the spices & seasonings business and the Victoria brand, as compared to the second half of 2016, along with the projected increase of approximately 2% in base business net sales. Our full year guidance for net sales and adjusted EBITDA projects adjusted EBITDA margins of 21.5% to 22%. We expect adjusted EBITDA margins for the last two quarters of 2017 to remain in that range. Our CFO search is still underway, and we expect to fill that position during the second half of the year. In closing, while we are disappointed with our results for the second quarter, we continue to believe we will grow our base business net sales approximately 2% in the second half of the year. We have a very talented R&D team that will continue to innovate and we expect to continue to launch a number of new items across our portfolio. We expect to see strong net sales growth and share gains in our Green Giant frozen products, and we have the infrastructure and financial ability to acquire additional shelf-stable and frozen brands. As I look back over the past two years, our three most recent acquisitions have combined to double the size of B&G Foods, and each one is exceeding our expectations. In particular, spices & seasonings and Victoria have together exceeded our initial expectations by over 20%. The quarter also saw a strong net sales growth and share gains in our Green Giant frozen products, driven by the new innovation items we launched in the fourth quarter of 2016. So, while the current consumer environment remains challenging, we believe that, bolstered by our recent acquisitions, there is a significant amount we can do to grow our overall business in both the near and long term. And consistent with our growth strategy, we continue to search for accretive acquisition of on-trend brands. With that, I would like to open up the call for questions. Operator?

Our first question comes from David Palmer from Royal Bank of Canada. Please go ahead.

Thanks. Good afternoon. Robert C. Cantwell - B&G Foods, Inc.: Good afternoon, David.

Question first – hey. This consumer takeaway data, if you exclude the spices business and Victoria, but including Green Giant, it was only looking like it was down 1% for the quarter. So, in other words, excluding the noise that you would naturally have from spices, that number doesn't look like the down 5%. Do you see anything with regard to shipments versus consumer takeaway in terms of noise with the quarter that was a give and take versus the surrounding quarters either the first or the next quarter? And then I have a follow-up. Robert C. Cantwell - B&G Foods, Inc.: No. Well, a couple of things. When we look at our portfolio and we exclude kind of this – and the spices that relate to what we just bought, (20:58) along with Victoria pasta sauces. We looked on average across our portfolio, we're down about – it's down – consumption trends are down about 3%. So as we looked at kind of what happened in the third quarter, we certainly didn't beat those results and for a few technical reasons and timing, in particular, timing of Pirate's Booty sales, as an example, we fell short a few million dollars on Pirate's Booty that we've already made up here in July. And it was really just timing of promotional spend. So, we feel real good that Pirate's Booty for full year will actually be up and now where it's finished year-to-date. We've also seen some challenges, bigger challenges than expected on Green Giant in shelf-stable. Shelf-stable has been very challenging for us. Category dynamics and pricing – and the pricing dynamics are difficult as everybody is trying to sell it cheaper each day. But we also had a couple of products that are actually very profitable in the Green Giant line, and one of them being mushrooms, in particular, that we have co-packs overseas, just general problems in the industry, and we had problems getting that product, and we were shorting customers – we've been shorting customers for over four months. We now are back fully in stock, but that affected our Green Giant sales in the second quarter by about $2 million by itself. So, we've had some one-time things here. We feel very good about the second half of the year. We know what's going to happen with Green Giant in a big way on frozen. But we do think now that the rest of our base business, even with some of the positives in the second half, will certainly not be down at what we saw in the second quarter, but will look to be (23:030 in the second half down 2% to 3%. So, we'll have more positives in the second half of the year on some of those businesses like Pirate's, among others, like Mama Mary's that I mentioned here in my prior remarks. So, we got good momentum on some key initiatives and key just brand dynamics in the second half of the year. But as we look at consumer consumption trends, we're looking kind of in the product lines we play in, it's closer to 3% down. We're seeing very positive consumer consumption trends, for example, in frozen vegetables and we've been a leader in the growth in that with the whole category dynamic has been moving up, which is all positive for the Green Giant brand, among others.

And when you're looking forward, you said you were expecting something like 10% growth in Green Giant and a 2% to 3% decline in your base business or other business, what is your – how is your visibility in that and your confidence in that? And we're coming off obviously a guidance change here, so clearly, there is going to be concern that you're not guiding conservatively enough and that you don't have visibility into your business. So what can you tell us about the way that you're guiding and how you have and perhaps better visibility into this guidance versus the old guidance? Robert C. Cantwell - B&G Foods, Inc.: Sure. I mean, we certainly, from a sales guidance where we were at $1.64 billion to $1.68 billion originally, I mean, all we really moved down is $10 million on the top side. We're very comfortable with, based on where Green Giant frozen is today and our expectation in the second half, that it will deliver in that range of $530 million in sales that we originally talked about at the beginning of the year as part of our guidance. So we expect that there. We're falling a little short than where we thought we could be on the base. But we know of certain positives as we look at the base for the second half of the year that we'll keep our expected decline at kind of somewhere between that 2% to 3% range, 2.5% than hopefully better, but in that range, not a number that says 5%. So we know where we're at with that, and we've already gotten finished July, and some was (25:47) just the rollover trends, we had a very positive July driven by a couple of brands that was just timing and promotions, with the biggest being Pirate. So, we feel good about that, and nothing really should change on the trajectory of the spices & seasonings business as well as Victoria, but spices & seasonings being much bigger business, that just tracking along at kind of, give or take, $130 million half of the year. So we're well on our way to doing kind of $260 million or so, if not more, in sales on spices & seasonings for the year. So, we are a lot more comfortable where we are today and what this is going to look like for the rest of the year. The only disappointment I have and where that is is spices & seasonings and Victoria has been really good, and we're actually seeing more and more benefits from the frozen Green Giant, and I need to get past fix – we need to fix more of the negatives on the rest of the base, and kind of longer term, we need to be better than 2% to 3% down. And that's what we're still looking at that kind of a number for the second half.

Okay. Thank you.

Our next question comes from Cornell Burnette from Citi. Please go ahead.

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

Okay. Just wanted to know, in terms of the guidance, bottom end of the sales range stayed the same, but the bottom end of the EPS guidance goes down about some pennies. So, it looks like there is something kind of hitting you on the cost side and with margins maybe coming in a little bit worse than what you had originally anticipated, so I want to know just specifically perhaps what were the areas on that side that caught you off guard initially? Robert C. Cantwell - B&G Foods, Inc.: Well, so our EBITDA – adjusted EBITDA range were really – were moving down $7.5 million on each side of the range. But in addition to that, the tax rate, along with overall interest that's small, but each one of those – when you add those two together between taxes and kind of interest kind of inched us up down or decreased us about $0.02 on our EPS guidance on both sides of the range. Cost, I said on the last call we're going to be about 22% EBITDA margin. We're tracking towards that with 21.7% year-to-date. Really no surprises on what we've known about cost and even the cadence of where those costs was coming in. I expected the second and third quarter to be a little shy of 22%, which it should be, and the fourth quarter being a little better just because the level of marketing spend really drops in the fourth quarter just based on the cadence of that spend this year. So, from an EBITDA margin, from a cost, I mean, none of it – there's no new news on that. Everything is falling in line. The positive on all of that is we're actually seeing more savings than expected on some key commodities. So, we're actually seeing – on things that we buy, we're seeing some deflation, that will help us in the second half of the year and even further into – as we head into 2018.

That's appreciated. But, I guess, the main thing I was getting at is if the bottom end of the sales line doesn't move, then why does EBITDA, I guess, go down $7 million. So I'm trying to just bridge to what changed there if the sales forecast is still the same at the bottom end. < : It's a lot about the mix of what we're dealing with today. So, when we look at what happened on EBITDA results here, we needed to be a little bit more conservative on that EBITDA range and still feel comfortable in most of the range we had before. And hopefully, we beat the bottom end of this range, and we're more in the mid to upper side of this range. But we felt, with the sales shortfall in the second quarter, it was the right thing to do to look at this range and take it down a little bit. But from a margin perspective, we're tracking toward the margins we expected. Part of it is a mix change because a lot of the sales growth, that kind of the cover sales growth has come from spices & seasonings, which has performed, give or take, about $20 million more than expected for the first half of the year when we initially bought the business. We now understand what to expect on that business based on the customers and what they're doing today. That business is lower margin than our typical business, it's about 17%, 18% EBITDA margin in total. It's mixing our EBITDA margin down a little bit, but not mixing it down more than we understood when we came out of the first quarter, when we looked at 22% for the rest of the year. So I guess, I'd leave you with, hopefully, we deliver and beat that bottom range. We don't want to be at the bottom range, but we felt, after we missed the sales number here, by our internal estimates of where we thought we'd be, by about $6 million in the second quarter, it behooved us to move this EBITDA range down a little bit here. So, hopefully, we will be more conservative than not there.

Well, it makes sense to me, what you're saying. And then this is the only question I have is if maybe you can give some comfort or some guidance on how you get there in the back half. If my math is correct, then, it would say that, to get just to the bottom end of the range, you're looking for something like a more than 20% increase year-on-year on EBITDA, whereas in the first half it was down. So it seems like a very big change. I know that kind of consumer marketing expenses moves from a tailwind to a headwind, but just wanted to see if you can kind of put the pieces together, to say why you're comfortable with the bottom end of the range, and actually think that it could be more towards the middle of the range? Robert C. Cantwell - B&G Foods, Inc.: So, kind of what I said in my prepared remarks, I'll certainly walk through that again. So what we know that hits us in the third quarter is, we've been experiencing – and we knew, coming into this year, we'd have higher distribution cost from warehouse and distribution in frozen than the former owner had on the Green Giant business, just because they have a lot more products to ship beyond Green Giant on those trucks and warehouse. And we knew in our model, once we took it over, we'd have more expenses. So we know we're getting hit for $4 million, kind of, as we look versus the (32:54) last year and the last six months, we know that we have incremental cost of $4 million in the third quarter on warehouse and distribution. We don't have any incremental cost in the fourth quarter on our kind of base business, which includes Green Giant, because we were running it fully as of October 1 last year. So we just have this one more quarter of a negative on that. We also know that the benefits that we'll get out of the Mama Mary's plant consolidation, the procurement savings that we know today, and packaging changes we've done on some of the Green Giant products, will generate $7 million more profit in the second half of the year. And it's happening as we speak, so we're getting it in the third quarter, too. The other big pieces of this puzzle are – when you kind of roll year-over-year EBITDA, you have $16 million of a marketing timing spend, and we spent more in the first half of the year versus the second half of last year, so we'll see a benefit of pure EBITDA of $16 million there. We also have five months of kind of spices & seasonings and Victoria business that we didn't have last year. We bought spices & seasonings Thanksgiving week of last year, and then we bought Victoria December 1. So we still have five months of sales. And when you kind of look at where those sales are trending, that's at least $130 million in sales at an EBITDA margin, give or take, around 18% that generates, give or take, $23 million of incremental EBITDA, just purely because we didn't have that business last year. And we're really – and then the other small piece of EBITDA generation, but it's EBITDA generation, is, we're looking at a 2% increase on our base business sales, most of that being driven just by the dynamic of Green Giant growing, give or take, around $30 million year-over-year in sales in the second half of the year, offset a little bit by some declines on our base business that generate a few million more in EBITDA. When you kind of put those together, the bottom end into our range is conservative, but – again, as I said before, missing the sales number in the second quarter and being a little short of where I wanted to be coming out of the second quarter made us move our range, our EBITDA range and our adjusted diluting earnings per share kind of moved in the same direction, because of our sales results in the second quarter. But as we look at our business, those big chunks are very known and just – they sit there, we know that's just pure plus to us in the second half of the year. We just need to deliver the sales guidance, and then the pluses will just fall into place.

Okay. Thank you. Well understood.

Our next question comes from Farha Aslam from Stephens, Inc. Please go ahead.

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

First question is on that base business, on that 2% to 3% decline. That decline accelerated versus the sort of 1% to 2% you had been running at previously. Is that acceleration just the issues at Mama Mary's essentially, or is there something more longer-term we should think about, in terms of where the consumer dynamic is going, where the retail dynamic is going, and a longer term response to the changing dynamic in the retail landscape, given your product mix of smaller brands? Robert C. Cantwell - B&G Foods, Inc.: Well, I don't think today that's affecting us in a big way. I mean, certainly, consumption trends in our categories at least – certainly over the last few years and a little bit more in this first half of the year, had been a little bit more negative than we want. The consumer dynamic is changing, and that change is taking place, but it's not a big effect on our business today. E-commerce, and all the other things that everybody talks about is, here to stay. It's a small part of kind of the food business today, but we're also dedicating a team to make sure we are out in front of that, because we think it will be a bigger and bigger part of the food business as we go forward. Our expectation, though, is hopefully that helps some of our brands, not hurts it. When I look at the pieces that drives us to 2% to 3%, what you said is correct. Mama Mary's is a big piece that we don't usually make up the whole piece of it. We haven't turned around another brand real well that was troublesome last year, it's still being trouble for us this year, in TrueNorth, small business, but the dollars are affecting our percentage, and there's a few others. But there are other very good performers. We're feeling really good about our second largest brand in Ortega. We're real positive about Pirate's, and that was truly timing and Pirate's will have a strong second half of the year and among others. But I think when I – we look at our total portfolio, till we can deliver that base business, excluding Green Giant, better than 2%, we wanted to kind of look at this projection and hopefully we deliver better than that, but look at this in a more conservative way as we look at the rest of this year. Lastly, we declined a little over 2%, what came into this year thinking we could get that down to 0%, 1%. Trends in the center of the store aren't the best and we need to win those tactical fights. We have brands that are small enough that little wins get us over the hump. Most of our brands are actually – could allow us to have some of those little wins that that can keep us flat to up, and we need to achieve that. We had some bigger hits this quarter and kind of year-to-date on some of those key brands that drove some bigger dollar numbers. Once you get to past the bigger dollar numbers, I mean, there's a lot of little shortfalls and some gains, but they're all relatively small pluses and minuses, it's really those four brands, the four kind of business brands I talked about, which includes all our maple syrup brands as one, really drove 65% of the sales shortfall on our base business for the quarter. So, it really came from a select few in a big way, still doesn't help our overall results. So we felt let's be more conservative here as we look at the rest of the year till we prove that we can do better.

That's helpful. And then on Green Giant, could you share with us the performance of your new products and then how you expect the new items that you're introducing could garner shelf space given that there have been a number of new entries in that frozen category by a competitor? Robert C. Cantwell - B&G Foods, Inc.: Oh, absolutely, our competitor launches a lot of new products and those are certainly a great job. But our new innovation that we launched kind of September, October of last year has just taken off, and it's driving our overall frozen business in a very large way. And as I've said I've said in other calls and in conferences, and this is a run rate of a business that's heading toward $100 million plus. And we're really excited about – and, yeah, the first half of the year didn't even should (41:32) have the ability to show all that positive because we were still building inventory and capacity to sell because the demand has been higher than kind of our capacity. We now have all the capacity to sell a lot more, and we're getting a lot more points of distribution at some retailers we held back a little bit with just because of capacity constraints. So, there's a lot of upside. We've launched some exciting new line extensions, which are a little bit more flavor extensions in what we just launched here that's out in the market getting great acceptances because the retailers and our ultimate consumers have loved these products and really have upside. And we're really excited about our launch that we'll announce in September for delivery in January in the frozen space that nobody else is doing today. So, really excited, and that's what we did last year. We really launched products that nobody was doing in a big way in frozen. It might have been getting done in fresh and in other venues, but not in frozen, and that's what we're launching again here that we'll announce in September. So, we're really excited about our approach to innovation on Green Giant, which is, in a lot of ways, as simple as let's try to deliver vegetables in a format that the consumer wants to eat them today, not just as a side, but a lot more ability to use in recipes along with a side or use as a main meal altogether. And we have a lot more things on the docket that we're going to drive to for that. But certainly, all has been good in frozen, and as you mentioned, with our competitor, category is growing, and that's good for all of us. And as we all pay attention to the category and create new innovation and excitement, it's moving the whole category, and that's a win for everybody who succeeds in the category.

That's helpful. Thank you.

Our next question comes from Jon Andersen from William Blair. Please go ahead. Jon R. Andersen - William Blair & Co. LLC: Hey, good afternoon, everybody. Robert C. Cantwell - B&G Foods, Inc.: Good afternoon. Jon R. Andersen - William Blair & Co. LLC: Bob, I wanted to ask first about pricing. The pricing got sequentially a little bit more challenging, it looks like, in the second quarter relative to the first quarter. What's your outlook for pricing overall as you look to the back half of the year? And are you feeling any incremental pressure there just as retailers look to kind of find ways to compete in a rapidly evolving market? Robert C. Cantwell - B&G Foods, Inc.: Yeah, and there's certainly pressure out there, but that's not what's driving our pricing today. There's a little bit of that. Most of our pricing and shortfall for the quarter, it's coming from a few specific areas. We certainly got more aggressive on Ortega to defend ourselves in pieces of the categories that we sell against our competition, all planned, and that means driven by the retailer, really driven by competition. And we've also have just pure (45:12) lower pricing on all our syrup, our maple syrup brands just because of cost in the industry is lower. And cost has come down year-over-year for the last few years and everybody has had to kind of move pricing down. And we competed where it made sense, and as I said earlier in my remarks, we walked away from private label business that prices just got too low, it made no sense. But certainly, we're not seeing the full retailer – and we're not seeing the pressure from retailers as much and we're really just seeing a few – in a few of our categories where competition in certain pieces of the business. And then Ortega is really just in one of the pieces of the business we sell not all of the pieces of the business just to be competitive and just compete with our competitive set. And seeing a little bit is that in our Bear Creek soup too as we've had to do things with a little bit more promotional spend than prior just because of competition. So, as we look at where we are in pricing year-to-date, we expect to kind of see that kind of number in the second half of the year. So we were down in pricing about $2 million for the first six months. We're looking at that $2 million, $2.5 million down in the second six months. Jon R. Andersen - William Blair & Co. LLC: Helpful. That's helpful. Thanks. Shifting gears to the marketing spending. I think you mentioned earlier that marketing was up about $8 million in the second quarter. Can you talk about marketing spending for the full year and the timing differences, because it sounds like you're looking for a meaningful benefit from lower marketing spending in the second half of the year? So, what happened in the first half that your marketing spending is up materially year-over-year and why is that coming down in the second half? And if you can help us with kind of the overall marketing spend for the year, that will be great too. Robert C. Cantwell - B&G Foods, Inc.: Sure. So, when we just look at the full year, we spend in total – there's about $20 million of marketing spend above the line, and that's in sales, which is kind of coupon redemption and slotting. And we consider slotting marketing because it's our choice of spending to support a brand or sometimes launch and distribution. And then there is about $70 million below the line in marketing and advertising for all our businesses. And again, this is all our businesses including the two acquisitions from last year. So, about $90 million in total, that's what would have been spent in last year pro forma for the two acquisitions we had. And we're spending, give or take, right around the same thing. The only reason for the shift this year is one of our biggest brand, Green Giant, we spend a good chunk of marketing and advertising against Green Giant. Last year, when we bought – last year was our first full year of ownership of the brand. There was nothing in the kitty that the former seller really had in plans and they've, historically, over the last few years prior to us buying it, really spent very little on the brand. We bought the brand with the idea we would go back to spending and growing this frozen business, and that's what we're doing. So, the last year, pretty much all the marketing, about $27 million of marketing on that brand was skewed into the second half of the year. And we were spending kind of a little over $30-plus million on the brand in total. So, not a lot happened in the first half except getting ready for the kind of launch and the re-launch of the brand. We came out of the first half of this year with plans, and at the end of last year, the spend – kind of distribute that spend a little bit more equally between the first half and the second half. And that's really where we're seeing the change. The money we spent in the first half that we didn't spend in 2016 that we spent in 2017 really just doesn't get spent at that level in the second half. So, the second half spending, especially the fourth quarter, because most of the marketing spend last year on that brand was all done in the fourth quarter, comes down in total, and not all of this is absolutely Green Giant, but a good chunk of this is that just doesn't get spent here in the second half of the year. Jon R. Andersen - William Blair & Co. LLC: Okay. Last one for me is on ACH, I think there was a TSA or any an integration process going on there with a TSA. Can you give us an update on where you are with respect to the integration work and if that's complete, if you're off the TSA and what the benefits going forward may be? Robert C. Cantwell - B&G Foods, Inc.: Yes. Well, the – I mean, we are now off – we took over running the business fully basically August 1, the end of July here. So, we had to get systems in place and everything, that's why it took as long as it did because they were coming off an SAP system, and we had to get them up and running on our system. So, that is done, we are running the business fully. The real benefit of that longer term is, what I mentioned earlier is, as they were running TSA, it was hard to get anything else done besides – and they did a great job running the business for us up through the end of July here. We have a number of items that, as we looked at this acquisition, from spices to other things, that we either make ourselves today in other facilities or have co-pack, that we've been working hard on looking at bringing it into the facility we bought with the spices & seasonings business, which is a first-in-class facility, super capitalized, great facility that can make a lot of things. So there is more cost savings. So there is really some real cost savings to come on our other businesses that we will be putting into that facility over the coming kind of next – the rest of this year and in through 2018. Jon R. Andersen - William Blair & Co. LLC: Okay. Thank you. Robert C. Cantwell - B&G Foods, Inc.: Sure.

Next question comes from Robert Moskow from Credit Suisse. Please go ahead. Robert Moskow - Credit Suisse Securities (USA) LLC: Hi, Bob. I was just hoping you could help me with a couple of questions in my bridge. Is Green Giant still expected to grow year-over-year? I mean, I had like 5% growth in my numbers off of a $507 million base. It doesn't seem like that's the case now. And then secondly, what's the strategy for shelf-stable Green Giant going forward? It seems like there's a lot of parts of this business – and maybe in frozen, too, where it's going to industrial customers or it's under a lot of pressure at retail from private label. So, can you tell us, as you're figuring out the pack, the vegetable pack for the fall, this fall, are you intending to reduce your exposure to shelf-stable? Robert C. Cantwell - B&G Foods, Inc.: Well, let's – I mean, I'll kind of walk you through the pieces, starting with your first question again (53:19). Robert Moskow - Credit Suisse Securities (USA) LLC: Thanks. Robert C. Cantwell - B&G Foods, Inc.: Last year, we kind of finished around $507 million in total sales in Green Giant. We're looking at a business that will deliver $530 million, if not more, in 2017. So very strong double-digit growth in the second half getting us there, most of that coming in the fourth quarter. A lot of that – we had an inventory issue. And when we took over the – from the TSA in October of last year, that hit our sales with anywhere between $12 million and $15 million. We have a full boat and a run rate on innovation, that's going to be huge in the fourth quarter. So we're really feeling really good – it's all frozen, so all that growth is frozen, that will deliver kind of $530 million, if not more, in sales on Green Giant. When you look at the pieces of business on Green Giant, this kind of bulk non-branded business that we're doing, that we're going to be down this year somewhere between $6 million and $7 million in sales, that's hitting our sales number this year that, honestly, doesn't really generate much margin. It was done by the former owner as part of running their plant, and absorption in their facility, et cetera. That business will have about $6 million, $7 million left in total sales when we finish this year. Yeah, and we long term have to figure out how much interest we are doing that ,since we're not the manufacturer, we're actually having somebody else make that for us, we're kind of a third party selling it. And it's not a profitable piece of Green Giant. So, that could just dwindle way over time, or we walk away from it at some point. So there's – by the end of this year, in that $530 million, there's still that $7 million left that will shrink on us as we go forward, whether we walk away from it in total or let it shrink over time. When you look at shelf-stable in the U.S., shelf-stable Green Giant business is right around $110 million in sales. And the other piece of shelf-stable business we have is the Le Sueur brand of canned vegetables, which is, give or take, around $35 million in sales. So, we have a shelf-stable business that will finish this year with a, give or take, right around $145 million, $150 million. The issue we're having is not on Le Sueur. Le Sueur has real upside potential, it's a wonderfully high margin product, and we got some things we can do on Le Sueur to move the needle. The other piece of business is Green Giant, and that's the challenge we have on the shelf-stable. That's competing against two other competitors as well as private label. This is selling (56:21) cans of peas and corn and just commodity vegetables in a lot of ways that prices – there's a lot of price wars on this right now. This is stack them up and sell them cheap. So, we have a number of customers, certainly, that support the Green Giant brand, not only because it's Green Giant, but we're the only guys in the shelf-stable category that's actually really supporting the category. But it's challenging, because we've had to make decisions whether to drop as low as some other people at certain accounts, it's for certain promotional periods that sometimes make sense, sometimes don't make sense, depending on where prices go. So, as we look at that kind of $110 million of Green Giant shelf-stable business, yeah, that's our challenge. As we think about Green Giant, as we go into 2018, that's our real challenge on the brand. We have huge upsize belief in where frozen will go in Green Giant, and we're seeing that as we speak. And it's not just on the innovation on frozen, on a lot of the core frozen that we sell today, and hopefully some more of tomorrow. Robert Moskow - Credit Suisse Securities (USA) LLC: Okay. Bob, I think... Robert C. Cantwell - B&G Foods, Inc.: So that is not easy. Robert Moskow - Credit Suisse Securities (USA) LLC: Right. Bob, let me ask you, just in terms of numbers. If Green Giant really is growing that much, and then you have the contribution from the ACH and Victoria acquisitions, I think I've done this bridge with you before, it implies that the core business is really down like 5% or something like that, and you described it down 2% to 3%. Is that because... Robert C. Cantwell - B&G Foods, Inc.: That's it, when you do the math on what seasonings and Victoria will do plus kind of Green Giant delivering pretty much $30 million more in sales year-over-year in the second-half of the year, you get to the kind of the midpoint, the rest of the base business goes down kind of, give or take, 2.5% to get to the numbers. And maybe what – is you only have five months of year-over-year comparison on seasoning, the Victoria because we had it at the end of last year. So, you have an incremental increase, give or take, on sales for Victoria in seasonings, most of it coming from, give or take, $130 million year-over-year. Robert Moskow - Credit Suisse Securities (USA) LLC: All right. Thank you. Robert C. Cantwell - B&G Foods, Inc.: Okay. Yeah.

And this is all the time we've had for Q&A today. At this time, I would like to turn it back to Bob Cantwell for any closing or additional remarks. Robert C. Cantwell - B&G Foods, Inc.: Okay. Thank you again for joining us today. We look forward to a much better second half of the year, and we feel very confident we will deliver our guidance that we put out today. Thank you.

And this does conclude our conference for today. Thank you for your participation. You may disconnect.