B&G Foods, Inc. (BGS) Q3 2017 Earnings Report, Transcript and Summary

Good day, and welcome to the B&G Foods Third 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 on them. We refer 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. Bruce Wacha, the company's Executive Vice President of Corporate Strategy and Business Development, 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. After the prepared remarks, Bob, Bruce and Amy Chiovari, the company's Interim Chief Financial Officer, will be available to answer your questions. I will now hand the call over to Bruce. Bruce C. Wacha - B&G Foods, Inc.: Thank you, operator. Good afternoon, everyone. Thank you for joining us today and Happy Halloween. It is a pleasure to report our financial reports for our fiscal third quarter which ended September 30, 2017. For the quarter, we generated $408.4 million in net sales, $94.1 million of adjusted EBITDA, and $0.55 of adjusted diluted EPS. Net sales for the third quarter of 2017 increased 28.3% to $408.4 million compared to $318.2 million in the third quarter of 2016. Net sales growth for the quarter benefited from strong performance across much of our base portfolio, as well as the spices and seasonings and the Victoria acquisitions which were completed on November 21, 2016 and December 2, 2016. Our base business net sales increased by 3.2% or $10.1 million for the third quarter. Increases in unit volumes contributed to $13 million of the increase, partially offset by a $2.9 million decrease in price and mix. We had growth in net sales for half of our brands during the quarter, including 10 brands that increased in excess of 5%. Our innovation products helped drive net sales growth of 6.4% for our largest brand, Green Giant, when compared to the prior-year quarter, with double-digit growth of frozen Green Giant products more than offsetting net sales declines in Green Giant shelf-stable and other products. Another leader in our portfolio, Pirate Brands, delivered 21%, yes, that's correct, 21% sales increase for the quarter. Pirate Brands benefited from the strong back-to-school, new distribution wins, and the timing of promotional events with certain customers. We also had strong quarterly performances for many of our other brands in our portfolio, such as Polaner, Underwood, New York Style, and Cream of Wheat. Our recent acquisitions have also continued to perform well and are tracking ahead of our additional expectations. The spices and seasonings business contributed $70.4 million in net sales for the quarter and is ahead of our initial forecast by about 20%. Meanwhile, Victoria had another solid quarter under our ownership and contributed $9.7 million in net sales for the quarter. Gross profit increased by $7.9 million or 6.8% to $123.3 million for the third quarter from $115.4 million for the third quarter of 2016. Gross profit as a percent of net sales was 30.2% in the third quarter of 2017 compared to 36.3% a year ago. Gross profit as a percent of net sales was in line with our 2Q and our 2Q year-to-date gross profit as a percent of net sales of $30.2 and 30.3%, and it's trending in line with our expectations of 29% to 30% for the full year. SG&A expenses increased by $0.5 million or 1.3% to $43 million from $42.5 million in the third quarter of 2016. SG&A as a percent of net sales improved and was 10.5% for the third quarter of 2017 compared to 13.4% for the third quarter of 2016. Adjusted EBITDA increased by $9 million for the third quarter of 2017 to $94.1 million compared to $85.1 million for the year-ago period. Adjusted EBITDA as a percentage of net sales was 23% for the third quarter of 2017. Net interest expense was $23.4 million for the third quarter of 2017 compared to $18 million for the third quarter of 2016. The increase in interest expense was primarily attributable to additional borrowings made in the fourth quarter of 2016 to fund the acquisitions of the spices and seasonings business and Victoria. Our reported net income under U.S. GAAP was $32.7 million or $0.49 per diluted share for the third quarter of 2017, as compared to reported net income of $32.4 million or $0.50 per diluted share for the third quarter of 2016. Our adjusted net income for the third quarter of 2017, which excludes the after-tax impact of acquisition-related expenses, was $36.8 million or $0.55 per adjusted diluted share, compared to $36.7 million or $0.56 per adjusted diluted share in the year-ago period. Moving on to the balance sheet, we finished the third quarter with approximately $22.6 million in cash and $1.9 billion in net debt. Net debt was approximately 5.2 times the midpoint of our adjusted EBITDA guidance for full-year 2017 or $360 million. We also added to our family of brands with the acquisition of Back to Nature, which was announced in August of this year and closed on October 2, 2017, just after the end of the third quarter. As Bob will discuss later in the call, we are very excited about this acquisition and we continue to move our portfolio into on-trend categories; in this case by adding a leader in better-for-you snack brands, while also increasing our access to certain higher-growth customer channels. We are pleased to announce that we are increasing our guidance for net sales for fiscal 2017 to $1.66 billion to $1.685 billion from $1.64 billion to $1.67 billion. This increase in net sales guidance reflects in part the Back to Nature acquisition which is expected to contribute approximately $17.5 million of net sales in the fourth quarter. We are also reaffirming our previously stated guidance for adjusted EBITDA of $352.5 million to $367.5 million and our adjusted diluted EPS of $2.03 to $2.17 per share. We expect to achieve gross profit as a percentage of net sales of 29% and 30%; adjusted EBITDA as a percentage of net sales of approximately 21% to 22%. We expect 2017 interest expense will be approximately $90 million, including cash interest expense of $84.5 million and interest amortization of $5.5 million. We project 2017 depreciation expense of approximately $32 million, and amortization expense of approximately $17.5 million. And finally, we expect our 2017 effective tax rate to be approximately 37.1%. Through three quarters, we have generated $264.3 million in adjusted EBITDA compared to our full-year guidance of $352.5 million to $367.5 million. This would leave us with a target of $95.7 million for the fourth quarter adjusted EBITDA to hit the midpoint of our range or $360 million. As we look to bridge this number, please keep in mind that we generated $62.4 million in adjusted EBITDA during last year's fourth quarter. This leaves us an incremental $33 million to produce during this year's fourth quarter. We expect Green Giant to produce $20 million to $25 million of the incremental adjusted EBITDA due to three factors; an increase in net sales driven by the brand's frozen innovation products; a decrease in marketing expenses for the brand quarter-over-quarter, due to a shift in timing of marketing expenses to the earlier part of this year; and finally, a beneficial comparison to last year's fourth quarter, where we were out of stock in certain products during the key holiday period. In addition to the incremental adjusted EBITDA that we expect Green Giant to produce, we expect the spices and seasonings and Victoria businesses, which were acquired during the fourth quarter of last year, to contribute an incremental adjusted EBITDA of approximately $8 million to $10 million, as a result of full fourth quarter ownership in 2017. We expect the balance of $1 million to $2 million of the incremental EBITDA to come from the remainder of the portfolio. Finally, we are reaffirming our long-standing commitment to our dividend policy. Pursuant to this policy, we have paid dividends every quarter since our IPO, 13 years ago. Our dividend is currently $1.86 per share per year or approximately $124 million in the aggregate based on our current share count. Now, I'd like to turn over the call to Bob for more details on the quarter. Bob? Robert C. Cantwell - B&G Foods, Inc.: Thank you, Bruce and good afternoon everyone. While the current consumer environment in the industry remains challenging, as many of our peers have recently noted, we believe that we have a focused portfolio of brands that are relevant to today's consumers and that we will continue to offer a compelling value proposition to our retail partners. While there are always challenges in our industry, we are pleased to start the second half of 2017 with a positive year-over-year trends for the third quarter, and a healthy outlook for the remainder of the year. Our 28.3% growth in third quarter net sales benefited from a pair of key acquisitions in the fourth quarter of 2016. But also important, and as Bruce said earlier, we were very pleased to report that our base business' net sales grew by approximately 3.2% during the quarter. Our third-quarter results were driven by solid performance across much of our portfolio, with 50% of our brands generating net sales growth in the quarter and 10 of our brands generating net sales growth in excess of 5%. Our largest brand, Green Giant was one of our best performers in the quarter, led by our innovation products that are helping to reinvigorate the entire frozen vegetable category. Net sales of Green Giant frozen products increased by 19%, the second consecutive quarter of double-digit growth on the strength of our innovation products, and we believe that Green Giant frozen is quickly reestablishing itself as a powerful brand in the frozen aisle. Overall, net sales of Green Giant increased 6.4% for the quarter, which is in line with our internal planning. We continue to expect great things from Green Giant in the fourth quarter of 2017 and in the years ahead. In the third quarter of 2017, we announced that we are extending the Green Giant's frozen line to include Green Giant Veggie Spirals in three varieties; Zucchini, Carrot, and Butternut Squash. We expect to begin shipping these products in January 2018, and we have seen very strong retailer acceptance so far. We're also very encouraged by the feedback we are receiving from consumer testing. Pirate Brands was another key driver of our performance for the quarter. As we discussed on our second quarter earnings call, we expect to benefit from the timing of certain promotional events, with a key customer that had occurred during last year's second quarter and were scheduled to occur in the third quarter this year, and we did. However, Pirate Brand's 21% growth in the quarter was also driven by very strong back-to-school sales, new distribution, and strong execution during the quarter. We also had nice wins across the portfolio to round out the quarter, with Polaner, Underwood, New York Style, and Cream of Wheat, all showing incremental net sales growth of almost $1 million or more during the quarter. Obviously, not all of our brands grew during the quarter; for example, we saw a modest decrease in net sales of Ortega, although we strongly believe in the health and vitality of this brand over the long-term. Our spices and seasonings business has also been performing well and contributed net sales of $70.4 million for the third quarter and $200.9 million for the first three quarters of 2017. Spices and seasonings is well on its way to exceeding our initial net sales guidance of $220 million for the year, while Victoria, also acquired in the fourth quarter of 2016, is expected to exceed our initial net sales target of $41 million for the year. Now, moving on to Back to Nature Foods acquisition which closed on October 2, we are excited to add this on-trend better-for-you snack business to our portfolio. The Back to Nature brand's product offerings include Non-GMO, Project Verified, organic and gluten-free cookies, crackers and other snack products. Back to Nature Foods also offers the SnackWell's brand of low-fat and no-fat snacks. Back to Nature has been a pioneer in the better-for-you snacks food category and we believe this brand gives us a bigger seat at the better-for-you table. We also believe there is a great opportunity to increase distribution nationally for this business, as not all grocery accounts carry its products today. In addition, our R&D and marketing teams are already researching brand extension opportunities. We expect Back to Nature Foods to contribute approximately $80 million in net sales and $70 million of adjusted EBITDA next year, and we anticipate being able to grow the brand over time. Speaking of R&D, 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 in 2018 and beyond. To help our R&D team continue that great work, we are building a new R&D and innovation center at our Parsippany headquarters. Construction is almost complete and we expect the new R&D innovation center to open later this year. And finally on the M&A front, consistent with our acquisition strategy, we continue to search for opportunities to enhance our portfolio of brands and add stockholder value through accretive acquisitions. Even after completing three acquisitions in the past 11 months, we remain well-positioned for future acquisitions and remain within our long-term comfort zone for leverage of 4.5 to 5.5 times net debt to adjusted EBITDA. We also remain committed to our long-standing policy of returning cash to shareholders through the payment of dividends. In closing, we are pleased with our results for the third quarter and expect the momentum to continue in the fourth quarter. We expect to see strong net sales growth and share gains in our Green Giant frozen products, while also benefiting from a balanced performance from the rest of our portfolio. Our seven largest brands and our spices and seasonings business account for more than 75% of our net sales and 80% of our adjusted EBITDA. These brands, which include Green Giant, Cream of Wheat, Maple Grove Farms, Ortega, Pirate Brands, Victoria, Back to Nature, and spices and seasonings brands such as Mrs. Dash, are in categories that we believe are generally attractive and largely on trend with today's consumers. This focus allows us to manage the rest of the portfolio for cash flows, while opportunistically deploying capital where we see opportunities to enhance our brands. So while the current consumer environment remains challenging, we are happy with the portfolio that we have and believe that we are positioned to achieve our goal of flat to 2% net sales growth in our base business in both the near- and long-term. Consistent with past performance, we expect to successfully integrate the Back to Nature acquisition over the next few months. We also expect that our base business' net sales for full-year 2017 will be positive. Therefore, as Bruce mentioned earlier, we increased our net sales guidance for the full-year and reaffirmed our adjusted diluted earnings per share and adjusted EBITDA guidance. We will provide our guidance for 2018 when we release our fourth quarter and full-year 2017 results. With that, I would like to open up the call for questions. Operator?

Thank you. At this time, we'll go to Rob Moscow with Credit Suisse. Please go ahead. Robert Moskow - Credit Suisse Securities (USA) LLC: Hi, and thank you for the question. Obviously, the sales here are better than what I had feared and that's great news. I did have some concerns about cost and revenue into 2018, and maybe first of all, did I hear you say that you thought the base business would grow in 2018? That's the first question. And then secondarily, logistics cost, we've heard about contracts going up 5%, maybe even 10%. Can you give us any visibility for your business in 2018 and is it something that you can manage through? Thanks. Robert C. Cantwell - B&G Foods, Inc.: So we certainly think, well, two things. Yes, answer, our base business' expectation for 2018, and we'll give a more formal guidance with our year-end call, but we expect it to grow overall, which includes Green Giant. So Green Giant is part of that base business. And, yes, just like everybody else, logistics costs are real and going up, and that 5% to 10% number is kind of what we're hearing, I mean, a little bit of what we're seeing. We can manage that. That's a number, kind of worst case for us, give or take would be $5 million. We just have to manage through that. Sometimes it's actually good when the whole industry is moving up, including key customers who also truck their products around from their distribution centers and everybody kind of experiences that, and hopefully, you can ultimately pass price and/or save money elsewhere. Robert Moskow - Credit Suisse Securities (USA) LLC: Okay. I mean, I was getting to a higher number than $5 million. Is that because maybe I've overestimated logistics as a percentage of your cost of goods? I mean... Robert C. Cantwell - B&G Foods, Inc.: I think so. I think we're looking at $5 million, not much more than that overall. And certainly all of us are seeing a little bit of that now, but like we were able to absorb what we saw in the third quarter and so report good results. So it's not a number that were certainly another kind of brick on the low, but it's something that we can deal with. And don't expect that to be a big – you know, we have other challenges as we go forward and that's just one of them and it's something we can deal with. Robert Moskow - Credit Suisse Securities (USA) LLC: To ask a follow-up, well, maybe you can tell us about your other challenges, but first half of 2018, is that going to be a very easy comp for you? And if so, what are the factors that make it an easy comp? Is it just the overall environment will normalize compared to first half of 2017 or is there anything specific that you're doing in the first half of 2018 that can get you off to a good start? Robert C. Cantwell - B&G Foods, Inc.: Well, I think from the comp side as we look at our business, we certainly have a lot of activity in kind of the piece of Green, you know, the frozen Green Giant business growing very fast for us and certainly going in the right direction. And we've really rolled over all the negativity on Green Giant with some of the lost distribution that we were rolling against in the first half of this year, and we saw some shelf stable issues, but not from the frozen and the frozen is just growing very nicely. And then hopefully on the rest of the base business, we had some one-off comps this year with just timing of large promotions like the Pirate's Booty scenario that hopefully we don't have as we go into 2017. So, hopefully from a sales point of view which drives bottom line, things should look pretty good for us in the first half of 2018 and hopefully for the whole year. Robert Moskow - Credit Suisse Securities (USA) LLC: Okay. Thank you very much.

At this time, we'll move now to Farha Aslam with Stephens, Inc.

Hi. Good morning. Robert C. Cantwell - B&G Foods, Inc.: Hi. Good afternoon. Bruce C. Wacha - B&G Foods, Inc.: Hi.

Or actually afternoon, it's been a long day. Green Giant, are you reaffirming that the brand should have sales of about $520 million to $530 million? And any color in terms of more detail on what level of growth we should expect for next year? Robert C. Cantwell - B&G Foods, Inc.: Well, we're going to hold off on that. Growth is going to be very strong next year, but we'll give a little bit more guidance here when we do our year-end call. But, yes, we're very comfortable in that range on Green Giant, $520 million to $530 million for this year.

That's helpful. And then on Pirate's Booty and Ortega, could you just give us some color on the sustainability of Pirate's Booty into the fourth quarter and possibly into next year? And also some color on exactly how weak Ortega was in your outlook for the brand? Robert C. Cantwell - B&G Foods, Inc.: So, on Ortega, it was short a little over $1 million for the quarter, pretty much flat for the year. So, the brand is rock solid. We certainly have strong competition with our friends at Old El Paso among others, but we have our fair share of that category and are actually doing well, and it's a good category to be in. Pirate's just has lots of upside. We talked about at the end of the second quarter the one issue we had which was really promotional timing where the key customers are flipped into the third quarter, but in addition to that, we also knew we had additional distribution on Pirate's that was in place and some other programs with other customers, so we knew Pirate's was going to be really strong in the third quarter. We don't expect a 21% growth in the fourth quarter, but we expect Pirate's to continue to grow in the fourth quarter also year-over-year. If we can do 20%, that's great. But it won't be at that level, because we don't have that one-time promotional flip, and we expect Pirate's to continue to grow. It's a key brand in our portfolio. It's a brand that resonates with consumers, especially consumers with young kids. It's a very meaningful brand in our portfolio that we see some real upside to.

Final question. In terms of general pricing, your ability to get pricing in this current environment and any pressure you're seeing? Robert C. Cantwell - B&G Foods, Inc.: Well, like Bruce mentioned in his part, we had negative pricing in the quarter of about $2.9 million. I would expect to see a $2 million to $3 million negative price hit in the fourth quarter also. Yes, certainly there is some pressure on pricing in certain categories. So, you know, we have lots of brands and lots of categories. Some of the commodity-driven categories, certainly our canned items are in Green Giant, our canned Joan of Arc beans, et cetera, we're getting pushed on pricing there. We expect that to continue. But there's a general belief here. When you talk about just general cost increase, such as the whole, you know, the distribution cost increase that lots of companies are talking about now and experiencing, even though that we don't think it's a big hit to us, we think those are the kind of price increases that we should be able to pass on if needed, if we can't save elsewhere and we can't cut costs in different ways. But, if it's a major commodity mover, but we don't have any commodities we know of that are moving in a large negative fashion for us. I believe we can pass prices on those too. But certainly more commodity-driven products with a lot of low-price competition, such as canned vegetables and canned beans, taco shells on Ortega, a little tougher to move pricing, because the competition is out selling cheap. But for most of our brands, we don't have that low-price competition and we think that, if needed, we can move pricing. We don't see a major need on any major pieces of our business and concerns on cost in a big way as we go into 2018, that we have to be aggressive taking prices on.

Great. That's helpful. Thank you.

We'll now move to David Palmer with RBC Capital Markets.

Thanks. Good afternoon. This quarter, your organic chips sales, they were up 3% versus about a 2% growth in the scanner data, and given all the potential areas of non-measured channel noise including what you're doing with spices, with Sam's, and then you mentioned the dollar store canned veggie declines last quarter, I can only imagine that those two matching is maybe a coincidence, or at least things going up and down away from what we see in the measured channel data. So, looking ahead to fourth quarter, if we're looking at – and I think we're looking at measured channel data that's up some small amount, I'm just trying to get a sense of what we should be thinking about beyond that measured channel data that will give us a sense of what your organic sales growth would be in that fourth quarter. And I have a follow-up. Bruce C. Wacha - B&G Foods, Inc.: Sure. I mean, we obviously are targeting fourth quarter sales to be up. The one thing to make sure you're correcting for when you're looking at the scanned data is the Tone brand within that spices and seasoning where we did have a customer that switched to private label, and so that it is one area in the scanned data where it will show negative, if you're not thinking through and giving us some incremental benefit.

So you're... Bruce C. Wacha - B&G Foods, Inc.: That's fine, but you'll still see that in the fourth quarter.

So you're thinking organic sales will be up in the fourth quarter, just to be clear? Robert C. Cantwell - B&G Foods, Inc.: Absolutely. And what I said in kind of my comments, with a very strong third quarter here, we're now year-to-date only down on our, what we call our base business 1.4%. We expect to take that 1.4% into a positive number by the end of the year, full year. So, we're going to be up very nicely in the fourth quarter.

The guidance, I mean, I guess, at least as we're implying, as we're inferring from this, implying for the fourth quarter, it kind of feels like people's estimates previous to this sort of are towards the high-end of that and the range is, as you left it is still fairly wide. Is there something that we should know about variability that you left it at that wide of a range going into the fourth quarter that we should be thinking about? Robert C. Cantwell - B&G Foods, Inc.: Not from a variability; I mean, we certainly moved the bottom of the range $20 million up to be more realistic, and when you kind of put numbers on paper, hopefully we're on the high-side of that range, but the very, I mean this – and we already are through October. We know what those results are. We've only got basically nine week left to the year. We're not seeing anything that's going to blow up. Everything seems to be turning the way we expected. So, it's not a lot of variability as you know from our business plus or minus that could change that dramatically in a quarter anyway. So, Green Giant is going to continue to grow and we expect a number of the other base businesses to have a pretty strong fourth quarter also. Net-net, we're going to be up very nicely in our base business and seasonings is going to turn along like it's been turning along all year. So from a sales perspective, we're looking at a pretty rock solid finish to 2017.

One quick one on gross margin, you've had obviously a very unusual last 12 months where the onboarding and the supply chain create a lot of noise and now you're lapping that. But if you're going to get into a normal seasonal rhythm of your business, would the gross margins be below average or above average? Right now, you're saying slightly below the year-to-date run rate for the fourth quarter. And I'm wondering if there's an insight there about maybe selling more of the basic veggies during the holidays and that offsetting some of the scale of it being a high sales quarter. How does that kind of work going forward (34:03)? Robert C. Cantwell - B&G Foods, Inc.: So basic – we're at kind of this 30.2% gross margin kind of year-to-date. That's kind of pretty much been what we've been tracking every quarter. So it's been fully consistent. But if you look at kind of our gross margin in the fourth quarter of 2016, it was a little over 26%. So it does drop from the 30% range to in that 26% range in the fourth quarter, all driven because of Green Giant promotional activity for Thanksgiving, particularly, but then through Christmas, which will net our gross margin down to kind of in that 29% to 30% that Bruce had talked about. But we'll look at very consistent gross margins with last year, and last year we were at 26.4%, so it should be very similar in the fourth quarter of this year. And it's the Green Giant effect on our business in the fourth quarter. Bruce C. Wacha - B&G Foods, Inc.: But certainly if you look back historically, you'd see 2014, 2015 gross margin is the same levels on an annual basis.

Thank you.

We will now move to Andrew Lazar with Barclays.

Good afternoon, everybody. Robert C. Cantwell - B&G Foods, Inc.: Good afternoon. Bruce C. Wacha - B&G Foods, Inc.: Hi.

I guess one key question from me is, you raised obviously the sales guidance for the year in part due to the addition of Back to Nature. You didn't change the EBITDA guidance at all for the full year, albeit I know it's a somewhat wide range. So I'm just trying to get a sense of does Back to Nature, is it expected to contribute much in the way of EBITDA in the fourth quarter? Because if it is, then perhaps that means the underlying base business EBITDA is a little bit less robust. If it doesn't, then that's not so much of an issue. Do you see what I'm trying to get at? Bruce C. Wacha - B&G Foods, Inc.: Not a lot of impact in the fourth quarter. Keep in mind that we just took the business on. We'll have it from one quarter, but there's something that we're doing from a cost savings standpoint bringing that business on, including the office down in Florida. So, really you see the impact in 2018 where we talk to $17 million of run rate EBITDA.

That's helpful. Robert C. Cantwell - B&G Foods, Inc.: And we had also – so we did the acquisition, it would take about six months to have that run rate EBITDA. We're very comfortable now. It's really three months from now, so the beginning of January, because we're basically eliminating their G&A effective the second week of January, which is why we're not going to show much EBITDA on Back to Nature all in the fourth quarter.

Yeah. Got it. That's helpful. And then obviously as you said, you're not going to really give guidance on 2018, of course, till the fourth quarter call. But are there a couple of things that maybe you can clarify that we do know now that are sort of discrete contributors, if you will? In other words, I guess, how much left, we know what Back to Nature is expected to contribute incrementally on EBITDA. With respect to ACH and Victoria, trying to remember how much we think those contribute incrementally in 2018. And then beyond that, it would just be obviously whatever happens with the base business. Is that right? Robert C. Cantwell - B&G Foods, Inc.: Right. Well, Victoria and seasonings, we have for the full year of 2017. So it's really just whatever we grow them is incremental. There's no – so, we've had them for the full 12 months in 2017. We bought them in end of 2016. So there's no just pure acquisition and incremental growth from them.

So it's really just base business EBITDA growth and then whatever obviously comes from Back to Nature? Bruce C. Wacha - B&G Foods, Inc.: Exactly. Robert C. Cantwell - B&G Foods, Inc.: Correct. Yes.

Okay. Bruce C. Wacha - B&G Foods, Inc.: What we do have for both of those acquisitions from last year is the incremental pick-up in the fourth quarter, that brings us to our guidance.

Right. Yeah. Got it. Perfect. Thank you very much. Robert C. Cantwell - B&G Foods, Inc.: Okay.

At this time, we'll move to Eric Larson with Buckingham Research Group.

Yeah. Thank you. Nice quarter, everyone. Robert C. Cantwell - B&G Foods, Inc.: Thank you. Bruce C. Wacha - B&G Foods, Inc.: Thank you.

A couple of questions and it relates kind of to the roll-out of your Spirals product, Bob, and I think last year in the fourth quarter when you introduced your rice veggies, you sort of underestimated demand. You didn't have, I don't think the capacity or the inventory to meet the retailer's demand. And then, again, that led to I think a purposeful increase in your inventories for Green Giant in the first half of this year. You wouldn't anticipate the same type of inventory build for Spirals or anything such as that? And maybe that's a good thing, but could you give us a little bit of thought on how the Spirals rollout might take place in the first quarter? Robert C. Cantwell - B&G Foods, Inc.: Well, certainly, we are building Spirals inventory now. We started building it towards the end of August. So we're fully ready and have capacity to support a very large launch and a very large, hopefully, brand addition. So that's not an issue. A lot of the inventory issue was some of the innovation last year, but it was more of us needing to build inventory because we didn't just have enough of the basics, but also build inventory in connection with closing down the former General Mills' plant then being added there at the end of September which we're now out of, so. We'll actually see a benefit on inventory reduction as we certainly go through the rest of this year and through the first half of next year versus what we saw this year. We'll actually be taking cash out of inventory as opposed to building inventory over the next nine months here.

Okay. Good. Thank you for the clarification on that, because I was going to ask the cash impact of that. Then just another follow-up on that, your slotting allowances, I believe, took about a 100 basis points out of your third quarter gross profit margin. Well, obviously that – well, I shouldn't say obviously, but you'll have the roll-out of Spirals, will you have more slotting allowances impacting your fourth quarter and maybe into your 2018 gross profit margin as well? Robert C. Cantwell - B&G Foods, Inc.: So we'll certainly have, not in 2017 here, so not in the fourth quarter, but we'll certainly have slotting payments to be made on Spirals in the first half of next year. But in the first half of 2017, we spent a lot of slotting money also that where – we front-loaded slotting last year as we filled out distribution for all the rice veggies and veggie tots, et cetera, so. That will look almost identical. So once – we've now gone through and we'll have some benefits on marketing and slotting in the fourth quarter here than this quarter that helps us versus last year. But once we get through this year-end, the cadence of our spending from marketing to slotting and everything else will look very similar on a quarter-to-quarter basis in 2018 versus 2017.

Okay. And then just one final question, Bob, I think the fourth quarter last year, I believe the fourth quarter captured the vast majority of that increased spend that you had for Green Giant. I don't know if you started that in the third quarter of last year. Did the third quarter this year include some marketing spend from Green Giant, trying to get to an even cadence across the quarters? Did the third quarter include spend this year that you didn't have last year in Q3? Robert C. Cantwell - B&G Foods, Inc.: No. It's actually very consistent. And actually this quarter was a little less than $1 million spend less than last year.

Okay. Robert C. Cantwell - B&G Foods, Inc.: As we roll into the fourth quarter, as Bruce mentioned, that's where you see the big spending reductions versus 2016.

Okay. Thank you, everyone.

At this time, we'll hear from Jon Andersen with William Blair. Jon R. Andersen - William Blair & Co. LLC: Hey. Good afternoon, everybody. Thanks for the question. Robert C. Cantwell - B&G Foods, Inc.: Hi. Bruce C. Wacha - B&G Foods, Inc.: Hey, Jon. Jon R. Andersen - William Blair & Co. LLC: Just sticking with marketing for a minute, I'm wondering if you can talk a little bit about your full-year marketing spending plans. Are you still looking at about $90 million in total? I think $20 million ends up kind of deduction from gross to net and about $70 million are below the line. But just wondering if that full-year cadence, that full-year level is kind of similar to what you previously thought. Robert C. Cantwell - B&G Foods, Inc.: That's correct. Jon R. Andersen - William Blair & Co. LLC: Okay. And then the cadence of that, because the cadence has been different in 2017 than the cadence in 2016, as we look to 2018 and look to modeling the quarters in 2018, are you expecting 2018 to look a lot more like 2017? Or is there some timing that you can talk to, to help us kind of think through the progression? Robert C. Cantwell - B&G Foods, Inc.: It'll look more like 2017. Jon R. Andersen - William Blair & Co. LLC: Okay. One bigger picture question; the overall sales run-rate for the company is – you've doubled the size of the company since 2014 with Green Giant and the other acquisitions. And I guess I'm just trying to get a sense maybe, Bob, how you feel overall today about kind of the capacity of the organization, the execution capabilities of the organization? Obviously, this is a very strong quarter. Where are you in terms of just thinking about having the right resources and the capabilities to manage a business which has doubled in size over the past 24 to 36 months? Thanks. Robert C. Cantwell - B&G Foods, Inc.: Well, certainly when I took over as CEO almost three years ago now, the goal was to build out this company and certainly grow not only the top line and bottom line, but to grow this organization. And we've not only doubled the size of this business from a sales and kind of bottom line, we've doubled the size of kind of our corporate infrastructure. So, from people, expertise and sophistication that have come on board through a new ERP system, all of those things are pretty much in place and moving forward to what I mentioned is a first-in-class R&D innovation lab, et cetera, that we're opening here in the next couple of weeks, that we're all real excited by. So we're ready; we're ready to double our size again. So this organization is ready and structured to be ready to continue to grow through acquisition. So, feeling really comfortable that we put in place an organization that can easily support a business twice if not more in size today. Jon R. Andersen - William Blair & Co. LLC: Great. Thanks for the color. Robert C. Cantwell - B&G Foods, Inc.: Okay.

We'll now move to Cornell Burnette with Citigroup.

Thanks a lot and congratulations on the quarter. Bruce C. Wacha - B&G Foods, Inc.: Thank you. Robert C. Cantwell - B&G Foods, Inc.: Thank you.

I just wanted to know, obviously, over the past couple of years, there's been some steady losses in distribution at the Green Giant brand as it struggled, but just is wondering over the past couple of quarters as to sales, they've really begun to tick-up and turn the corner, if you can kind of dimensionlize, a, are you starting to see some of that loss distribution come back into play? And then over the longer term, perhaps what's the size of the opportunity in kind of reclaiming some of this lost share that you've had in the past? Robert C. Cantwell - B&G Foods, Inc.: Well, I think from the frozen side of Green Giant, the answer is yes. I mean, certainly all the innovation customers wanted and we're getting some of the core, and really have stabilized what we call the rest of the core and we see some really kind of even consumer takeaway growth where that is stabilized. When we bought Green Giant, what we saw was the opportunity in frozen. We knew it was going to be a tough year to two to kind of to get a pretty badly declining brand from flat to up, and today we're sitting here going – we feel really good about where it is and where it's going. And the real good news is, our competitors are growing too, which is actually good for the category. The whole category is growing. So with us and our lead competitor here, we're moving the whole category. So Green Giant only has ups on frozen. We have some difficulties on shelf-stable and challenges just because of the low-price environment that shelf stable competes in. That's just a challenge. But the future of Green Giant is, this is a business that was, in total, kind of a $700 million business. It's going to take time, but we see some big growth here over the next few years if not longer and really moving. Our first step is to get it over $600 million again. It's going to take a few years. Next step we'll try and get it closer to $700 million. But there's just tremendous opportunity. It's the right category to be in with today's consumer. It's vegetables. We're selling vegetables, which is better for you. It's certainly a category we're excited about being in. And it's certainly a category that we have a lot more innovation coming. And there'll be a lot more innovation in the pipeline over the next few years, including more innovation that we'll launch here in 2018. So, hopefully it's all up and it's all up for us and the whole category.

All right. And then in terms of maybe some of the spending behind the brand, I think in the previous question you had answered that in the third quarter that you spent about $1 million on the brand less than you did a year ago. What's the expectation for the fourth quarter in terms of the year-over-year delta and spending behind Green Giant? Bruce C. Wacha - B&G Foods, Inc.: Yeah. It should be about $15 million to our benefit. But, again, year-over-year for the full year, it'd be a similar number.

Okay. It's very good. Thanks a lot.

And at this time, we'll move to Rob Moskow with Credit Suisse. Robert Moskow - Credit Suisse Securities (USA) LLC: Hi. I think my question was actually answered. But I've got one more question. Your sales growth this quarter 28%; 25% from acquisitions. Operating profit growth is only up 8%. And I just want to make sure, I know fourth quarter, it's all going to come back. But if I had to isolate this quarter, why would that relationship between the sales and the operating income growth be so different? Is it because of higher spending this quarter on anything? Robert C. Cantwell - B&G Foods, Inc.: Well, it's consistently the same higher spending that we've experienced all year long, which is kind of why our gross margin has been right around 32% for the whole year and EBITDA margin right around 22%. As we took over this business in the fourth quarter of last year, we knew we were going to be being by our own in the frozen world, we knew our distribution and warehousing costs were going to go up pretty dramatically. And it is something we modeled in when we bought the business and we've seen that substantial increase. And, that's a number that kind of year-over-year has hit our P&L for about $18 million. All been modeled in and it's kind of been part of what we've had to explain through these first three quarters. Fourth quarter, you don't have that negative comparison because we were on our own in the fourth quarter. We took over transition of this business effective October 1 last year. So, fourth quarter has that level of spending. That's why EBITDA margins were much lower in the fourth quarter, et cetera. So the comparison is very different. So, nothing new has happened in the third quarter versus the second quarter or versus the first half of this year. It's really just the modeled acquisition spending that we expected that when we compare ourselves versus what the seller was doing for us in transition in the first nine months of 2016, we had much lower spending than our actual. But it's all been in the numbers that I've talked about every quarter that our EBITDA margin of 21%, 22% is where we'll finish is where we've been tracking all year, and our gross profit margin of right around the 30% is where we've been tracking the whole year. So, really no change in anything that's happened, it's just kind of the year-over-year comparison, and we're finally over that year-over-year comparison as we go forward. Robert Moskow - Credit Suisse Securities (USA) LLC: Just plugging in some numbers. I think you said that fourth quarter gross margin would be around the same 26.5%. If I plug that in... Robert C. Cantwell - B&G Foods, Inc.: Since last year. Robert Moskow - Credit Suisse Securities (USA) LLC: Pardon me? Robert C. Cantwell - B&G Foods, Inc.: Yeah, since last year. Yes. Robert Moskow - Credit Suisse Securities (USA) LLC: Okay. If I plug that in, I get to a 29% margin for your year? Not 30%. Robert C. Cantwell - B&G Foods, Inc.: Correct. And that's what Bruce had said, between 29% and 30%. And when you plug that kind of a number in, you get into the low-29% range. Yes, that's correct. Robert Moskow - Credit Suisse Securities (USA) LLC: Okay. All right. Thank you very much. Robert C. Cantwell - B&G Foods, Inc.: Okay.

We're going to hear again from Eric Larson with Buckingham Research Group.

Yeah, just a quick follow-up question for Bob and Bruce. If I take the mid-part of your EBITDA guidance for the year, just take the mid-part, maybe you got to move a little bit to the higher part. Take out your cash interest expense, maybe some cash taxes, your CapEx and dividends, it seems like – and given your ratio that you like to pay out, forecast dividends to shareholders, it looks like, Bob, maybe you could go to the board at the end of they year and maybe recommend that you have a small raise in your cash dividends. Is that – are my calculations wrong or how would you respond to that? Robert C. Cantwell - B&G Foods, Inc.: Well, no. Your calculation is – our cash generation after kind of our current dividend, give or take $124 million, is about $75 million after that. Yes, so there is plenty of money to support our current dividend. At every board meeting, we talk about what we should do with the dividend. The board is committed to sharing cash with investors, but it's a board conversation. I think the most important part of your point is, there's plenty of cash flow here to support our current dividend and any future raises we might want to do.

Thank you very much.

That will conclude the question-and-answer session. I'll turn it back over to Bob Cantwell for any additional or closing remarks. Robert C. Cantwell - B&G Foods, Inc.: Okay. Again, thank you for joining the call today and thank you for all your support over the years. We certainly look to have a very strong finish to 2017 and a great start and a great year in 2018. Thank you very much.

And again, this does conclude today's call. Thank you all for your participation.