Good day and welcome to the B&G Foods Fourth Quarter 2017 Earnings Call. Today's call is being recorded. You can access detailed financial information on the quarter and the full year in the company's earnings release issued today which is available at ir.bgfoods.com. Before the company begins its formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer 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 adjusted EBITDA, adjusted net income, adjusted diluted earnings per share, base business net sales and free cash flow. 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 CFO, 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 outlook for 2018 and beyond. And Ken Romanzi, the company's newly hired Chief Operating Officer, will make some remarks. I would now like to turn the conference over to Bruce. Bruce C. Wacha - B&G Foods, Inc.: Good afternoon. Thank you for joining us. I'll begin with some highlights for the year. In 2017, we generated company record net sales, adjusted EBITDA and…

Thank you. And we will take our first question from Farha Aslam with Stephens, Inc. Please go ahead.

Hi. Good evening. Robert C. Cantwell - B&G Foods, Inc.: How you doing?

Thanks. I've a question about your margin. Wasn't 2017 margins anticipated to be a bit more subdued? And weren't we anticipating a margin recovery in 2018 to be kind of a bit closer to the 2016 level? I'm just surprised about your margin guidance being as subdued as it is. Any thoughts on what is going on with the margin? Bruce C. Wacha - B&G Foods, Inc.: Sure. I mean, yes – sorry, Farha. I'm – sure. Certainly, we expected as we came into the fourth quarter to have better results and kind of really drive some better margins there, and we were challenged by a few things. One is certainly the mix of products we sold. But more importantly, some of the pressures we're really seeing in the market really driven by freight, a little bit of warehousing, but truly freight. The commodity pressures plus or minus not really a big deal for us, but freight has been a major factor. So, as we look at 2018, we've taken a kind of a more conservative look at this as – we have a new baseline. What we did in 2017 is what we did. We know we're getting hit with really one major piece of cost pressure in 2018, which is freight, which is going to hit us for about $15 million. So, minor plus or minus between commodities, other expenses such as salaries here, fringes, packaging, offset by as Ken said some real – some cost savings programs, et cetera, equate when you put it all together, maybe another $5 million for about $20 million in total. We know we've put price increases in place between list price and freight programs to generate around that $20 million hopefully plus. And then, just kind of – but that kind…

That's helpful. And when we look at your cost savings program, could you give us some context about the amount of cost savings and the sources of cost savings that you anticipate? Robert C. Cantwell - B&G Foods, Inc.: Sure. I mean, I'll let Ken kick in too. We haven't – so, when we think about cost savings here, there's a lot of potential future cost savings and a lot of current things. None of those we expect to be large in 2018. So, there's certainly things we're starting on that will be 2018 events and into 2019. So we'll see some benefits this year which we've kind of built into the minor guidance coverage because we don't have a lot of other major cost pluses or minuses in a big way that don't net itself kind of close to that $5 million number outside of freight, but there is a general relook at everything we're doing here, in addition to in trying to in the future, move margins forward. As opposed to just living with this baseline and growing off this, we think there's real potential longer term, but 2018 we're really looking at programs that are starting as we speak. Some things are easy to pick off, but there's a number of things that are much larger cost savings projects including distribution consolidation, et cetera, that will extend way beyond this year, and we really won't see the fruits of those benefits in any big way until more toward 2019 and 2020. Kenneth G. Romanzi - B&G Foods, Inc.: And I'd add that the cost we're going after is the cost of goods. So as reported, the $1.2 billion. And as Bob mentioned, we see opportunities as this company is growing so big so fast. There is opportunity…

Understood. Thank you.

We'll take our next question from Karru Martinson with Jefferies. Please go ahead.

Good afternoon. When we look at the Green Giant kind of the legacy shelf-stable side of the business, how big is that in business today and what's kind of the outlook for that one given the pressures that, that category has had? Robert C. Cantwell - B&G Foods, Inc.: It's about $125 million, and honestly shrinking. So, we know that a major customer that we lost here in 2017 as an example is we started experiencing those losses in the fourth quarter. So, that will continue through the next nine months of this year. And then, in addition, consumption trends are just generally weak in the category. So, as we think about numbers and we build sales plans, we built plans that takes that – those businesses down. I mean, the shelf-stable Green Giant business down further in 2018 which is a little bit offsetting. We have tremendous frozen growth heading and will achieve in 2018. This will be a little bit of a drag. But Green Giant will be up very nicely in 2018, but shelf-stable is a piece of business that has just been very difficult for us. And we have really two pieces of shelf-stable business. We have the Green Giant brand that competes in kind of the holiday season stack them up and sell them cheap kind of business with everybody else, and then we have a brand called Le Sueur that's around $30 million – a little over $35 million in sales, rock solid stable and doing extremely well. So, the challenge that we see is on this other $125 million Green Giant business that we know is shrinking and we expect to shrink throughout 2018.

Okay. And I certainly can attest to the strength of Pirate's Booty in kids' lunchboxes. But when you look at the acquisitions, are you looking more in – or potential acquisitions. Are you looking more into kind of continuing that snack category or where do you see the kind of the plug-and-plays for you guys? Robert C. Cantwell - B&G Foods, Inc.: Well, I think what's really important for us is to – I think, acquisitions are extremely important. It's part of our model, and acquisitions that deliver products that today's consumer wants. And I think that's what we've done in our last number of acquisitions. So, it doesn't have to Green – from Green Giant frozen to spices and seasonings to Victoria premium pasta sauces, all in categories that are growing and then the acquisition we did this year, Back to Nature cookies and crackers and various snacks, in categories that consumers want to buy in, and kind of better-for-you per se. So, it's not just about snacks, it's really about categories that make sense. And today's consumers are going to – certainly we'd love to buy another brand like a Pirate's Booty. There's not a lot of those out there. So we would not venture against a snack – we would not venture against for a upstart snack brand that's really a couple of years out of the box. When we bought Pirate's Booty, we bought a brand that was around from I think the late 70s, or whenever it kind of kicked in or early 80s. But it was a brand that had real legs on the upside, but it was a brand that was very stable for the long-term. So certainly, those kind of brands are what we're going to look at. But truly the real answer is we could buy another frozen brand, we can buy shelf-stable, we can buy snacks, but we want to be in categories where consumers are shopping more today, is really the goal. Bruce C. Wacha - B&G Foods, Inc.: Yeah, and Karru, the other thing real quick to add to that is we've always been a disciplined buyer. And so while there may be some brands and some exciting categories that we like, we're going to be pretty careful in terms of what we're willing to pay for them.

Thank you very much, guys. Appreciate it.

Our next question will come from Bryan Hunt with Wells Fargo. Please go ahead.

Thank you for the question. My first question is, could you discuss kind of the strong sales gains both in Green Giant frozen, and seasonings in greater detail? How much is shelf space gains, new customer penetration? And maybe same store sales, or overall velocity. Robert C. Cantwell - B&G Foods, Inc.: Well, I mean Green Giant frozen, probably the easiest one to understand. It's all about innovation and it's all about the innovation products that we launched in late 2016. Supplemented them further in 2017 and launched our newest versions, spiralized veggies here in 2018 and more to come as we go forward. All of that's been fundamentally distribution gains, getting more space, getting more shelf space in total and it's really moved the needle and we've been able to take a business and do $80 million – basically $80 million in our first full year out of the box on that and really help move the entire category. And then, our competitors have followed with most of the products, not all, and we're all moving the whole category together and the turn. And we're actually adding products which is very important to retailers. We're adding products that turn faster than the traditional products in frozen. So, the turn on shelf has been terrific, and like I've said, we've got the spiralized in the market now going in distribution and going into distribution as we speak across this country. Early indications are turns are even better than what we saw on Riced Veggies, for example. So, all positive and all growing and we expect some huge gains on Green Giant frozen here in 2018 and we don't think it stops in 2018. We think there's a lot of runway on Green Giant frozen. Spices and seasonings has been about,…

Great. And then my follow-up is, you all continue to discuss acquisitions and then maybe having $1 billion of firepower for an acquisition. But, if you look at this year, you kind of missed your EBITDA and your free cash flow target. Does that make you feel like you need to kind of adjust your balance sheet leverage or the total risk of the business going forward and the potential size of the acquisitions that you may be targeting? Robert C. Cantwell - B&G Foods, Inc.: Well, a couple things. So, I think Bruce said before, we've always been very conservative on how we go about acquisitions. So, kind of being at net leverage of about 5.8 times at the end of this year – at the end of 2017 and then looking out in 2018, if we don't do an acquisition and the cash generation we're going to get from working capital and EBITDA would take our leverage down to 5.2 times. We would do an acquisition tomorrow. But at the end of the day, we're not going to be sitting here and telling you we took leverage up to 6.5 times. That's not who we are. We don't want to do that. So, getting our balance sheet reset that's why we have a formalized program on reduction in inventory. The inventory build had a lot of components to it in kind of transitioning Green Giant from the seller in different pieces along with a lot of innovation build up on all those new innovations. So, we know between that which is the majority of the inventory reduction plan of about $75 million to $100 million will come from Green Giant and then there's some just across the board as we've built an inventory management team here who's very…

So, Bob, just to clarify. You won't take leverage to 6.5 times to do an acquisition, is that a fair... Robert C. Cantwell - B&G Foods, Inc.: There's no need. We would have – yeah. No. For us to buy something that we would need to – we would have to be back in the equity markets. We could basically do it as Bruce said because the cash is available to us. We would not be prudent to do that. So, we would have to do a combination of equity and debt, if we were paying a multiple, that was going to take our leverage anywhere near that.

Okay. Robert C. Cantwell - B&G Foods, Inc.: So it wouldn't – we could afford it, we could pay the interest, we generate a ton of cash. It's just not the – because we always have to have the balance sheet ready for the next acquisition. And we don't want to be out of the market for acquisitions. So taking our leverage too high would just take us out of the market completely, and that is something (51:43).

Very good. I appreciate it. Thank you. Robert C. Cantwell - B&G Foods, Inc.: Sure.

Our next question will come from Cornell Burnette with Citi. Please go ahead.

Hello everyone. Robert C. Cantwell - B&G Foods, Inc.: Hello.

All right, just had a few – really on focus in on gross margin. So it appears in the guidance that look, you got pricing that you've put in place that should mathematically offset the impacts of freight and some of the other costs that you have going on. But in the quarter, you said there was about a $5 million to $6 million shortfall in kind of the way you saw EBITDA coming in, related to kind of weaker sales on the canned side of the Green Giant business and what that means. Going forward, the category is still weak and you've got the lost customer that it's going to be in there for the first nine months of the year until you lap it. So I just was wondering, it seems that the guidance would imply that gross margin is sort of flattish, and I know the pricing takes care of the freight cost, but you still have this overhang possibly from the canned business? So I just wanted to see if I can get some thoughts on – just some clarity on how I need to think about gross margin next year in context of that. Robert C. Cantwell - B&G Foods, Inc.: So again, on the canned piece, and I'll let Bruce kind of kick in. So what we know today is weak consumption trends and that's just general for everybody. And we have a customer loss that we have nine months left of it. But we also know that during 2017 in the early part of the year, we had other losses and other distribution losses that really we were also losing ground then too. So, kind of year-over-year comparison is relatively flat from kind of distribution losses that we're going to experience in 2018 versus 2017 from what we know today. So as of today, we don't know of any other distribution losses. We don't expect it, but can I guarantee that something happens sometime during this year or next year we loss some other distribution? No.

And then just in terms of the category and just takeaway or specifically for your business once you get past the distribution losses. I mean, what type of takeaway numbers should we be looking for, is kind of thinking of mid-single digit declines in the business within the bounds of what you're looking for or is it more kind of continuing to see kind of some of Nielsen numbers down double digits? Robert C. Cantwell - B&G Foods, Inc.: So, I think as we look at shelf-stable, it's two fold. So, the customers that we haven't lost and where we're doing – we're actually performing pretty well, and our numbers look pretty good. But I think the general outlook would be this category is probably declining mid-single digit, so kind of a 4% to 6%, 5% number is what – until something changes, we're assuming in our modeling going forward that shelf-stable vegetables are going to continue to decline even though we are performing better than that at the customers we're selling to today. But there's nothing that we're going to do to fix long-term consumption trends and we'll see where it ends up. So, hopefully it's not as bad as kind of 4% to 6%. I don't think this is double digit declines on consumption trends. There's no reason that all of a sudden for a long period of time that people have just run away from this – it is still a very large category at supermarket retailer shelf, between the lead brands and private label being a big piece of those, I don't believe it's going away. But I would not model something that's say's it's not going to keep declining. And I think mid-single digits is a fair look at that decline today.

Okay. And then the last one is just surrounding pricing. It looks like kind of full year pricing has to be up a point or a little bit above that to offset inflation. Just kind of when I look back in the model maybe the last time we saw pricing at that 1%, 1.5% range, we saw volumes down more than that, down about 3%. I know that the portfolio has changed a bit now with Green Giant, but maybe with some of the other brands. Can you just talk about kind of how you perceive the risk of just volume elasticity as you go through the year and maybe it varies by categories, but any information you have there would be helpful. Robert C. Cantwell - B&G Foods, Inc.: Well, I think, in general we spend a lot of time looking at elasticity when we when we've done this. The pricing we're putting in place moves the retail price, $0.10, $0.20, these are small price increases for most of what we're trying to do here. And we don't – today we're not seeing that as an issue that we were able to achieve that and hopefully we have some upside as we look at further and deeper at some of our trade programs and what makes sense and what doesn't. But we're very comfortable with this. And we went with kind of what I'd call a smaller price increase than a larger one really just to cover that freight piece and really send the message that that list price change $0.10, $0.20 at retail. And the difference between this price increase and kind of the last price increase we would have done that would have been 1%, 2%, is we're doing this more across the board, so when we look at a 1% price increase on $1.7 billion, that's between $15 million and $20 million, but it's across the board. When we did it before, it was much more specific so the movement at retail on the brands we moved price was not $0.10, $0.20. It was $0.30 to $0.50 and that was a lot more meaningful than what we're doing here. So, we did this more of just – this is a cost increases industry wide, and in other industries not just food, driven mostly by freight, so this is spread across our portfolio which makes the retail change very small and we're very comfortable that's achievable and sustainable to stay and achieve because of the way we approached it this time.

Understood. Thank you.

We will now take our first question from Ken Zaslow with Bank of Montreal. Please go ahead.

Hey. Good evening everyone. Robert C. Cantwell - B&G Foods, Inc.: Hello. Bruce C. Wacha - B&G Foods, Inc.: Hi, Ken.

So, let me first start off with I'm glad that you guys went through and got $19 million. But when I look at the midpoint, I get to $27 million. So, there's still an $8 million discrepancy. Can you talk about, unless you were forecasting to miss to begin with, so is there another $8 million that you could talk about where that came from? That's my first question. Robert C. Cantwell - B&G Foods, Inc.: Well, the bigger piece of this is we got through kind of the quarter and the shelf-stable piece hit us way more than expected. I mean that's part of it. Nothing else really kind of stares out at you. We truly believe coming into this quarter based on where Green Giant should finish, we were going to blow away the top end of the guidance on sales, and we were – and the shelf-stable penalty on Green Giant hurt probably our model more than anything else in addition to some of those costs. There's some smaller costs that we didn't get into – that are not huge dollars, but part of this is our feeling of being closer to the midpoint was much more driven by kind of really beating the top line in a much bigger way. And, everything that we really felt coming into the quarter until we lost a large – in addition to just general consumption trends on shelf-stable being down, losing that customer really does penalize us in a very large way. And then in addition, we had difficulties with one or two key retailers who were managing a little bit of their own working capital at the end of the year and didn't take shipments in that last week to 10 days. That really was meaningful to us. It's somewhere between $4 million to $7 million of sales that are just – that all would – all that would came with us some freight to ship it because all the other costs were in our numbers already. So that was very meaningful piece of it too. I think, it's really about the top line. So, there's no other cost that came at us that surprised us that was unexpected that really kind of hit us hard. And, the shelf-stable piece really was a big piece of that, and then the end – finish at the end was the really other big piece of that. In addition to, as Bruce mentioned, the freight and some of the other little pieces. And then we just got, I mean honestly, we got burnt by a $1.5 million at the end here for just the exchange rate on the peso that flipped right back. And we've already seen the benefit, back of that in January. So we're going to have that benefit in the first quarter, but we got penalized in the fourth quarter of last year.

Okay. My next question is, your dividend yield tomorrow will be 7% given the opening of – given the aftermarket. Robert C. Cantwell - B&G Foods, Inc.: Yes.

How do you – how was there a better use of your capital then to even think about acquisitions than buy back your stock? To me, I think, you interest cost – your interest expense can't be that high, you can make a spread on that business just by financial engineering. Why would you even consider or think about another acquisition when your yield on your stock will be 7%? And I don't see where else you can get that 7% yield on a free basis. Robert C. Cantwell - B&G Foods, Inc.: I completely agree with you. I don't know where you get that 7% yield either on a cash flow business like ours. So it's a fair point, and it's something from a board level that we're certainly discussing. Depending on where this – where our stock settles in as opposed to just the initial effect of results and see where it settles in. We got to be good stewards of our capital and we've got to use it appropriately, and that's a possibility too. The only negative about buying stock back is you just use your cash to take leverage up. So none of that's good. But ultimately we got to be smart stewards of capital and do the right thing for investors in this overall business. So, all of that's on the table.

I know I'm not supposed to ask a third question, but I'm going to go for it anyway. Ken, when you take on this role is there a system's improvement that you're looking at? What is the process to which you will assess this because there seems to be some more opportunities on an operational level to potentially improve> How do you – I get what you said of some of these cost savings opportunities, but it seems like there is bigger picture here. Is there a ZBB, is there a deeper potential to change the systems to do more than just hey, kind of put some Band-Aids on some cost structure? What is your thinking and how long will the process take? Kenneth G. Romanzi - B&G Foods, Inc.: Well, again as I mentioned before, the company has gotten so big so fast with so many different acquisitions and so many different types, whether it's plants we've acquired through Green Giant or Back to Nature, which came with 50 or 60 co-factories. There is – it's not Band-Aids at all, it's really taking a step back and saying how is a $1.7 billion company with a $1.2 billion cost of goods infrastructure that no one has ever really looked at $1.2 billion cost infrastructure at this company because it hasn't existed that long. So, where other companies spend years integrating things and spending time doing asset rationalization and logistics rationalization, we haven't really done any of that. So, we think there is a pretty good runway of multi-year cost reduction programs to better align our manufacturing, warehousing and distribution to our customers. That's within that cost of goods beside the cost of raw materials which we have a really strong procurement department that buys very well. So, it's really about the conversion and warehousing and transportation costs where they have not been optimized at all here because the company has been spending so much time buying the companies. Now that we're a $1.7 billion company it's how do we optimize what we have and be ready for the next one. So, I'm a fan of internal manufacturing. When we make things ourselves, we usually make more money than when we buy it from somebody else. Now, we can't make everything ourselves. We have a lot of dispersed product lines. We have a lot – we have upside in our own manufacturing capability in terms of our capacity utilization. There are things – there's upside there. So, so it's a multiyear program. And as Bob mentioned, these are longer term initiatives. They take a while to design and they take a while to execute, and we're going to have to prioritize from size and price, to ease of execution and balance that out with multiple years. And as Bob mentioned, later on this year, we'll be able to identify what those projects are and what kind of cost savings there is associated with it.

And there's real productivity opportunities here. Kenneth G. Romanzi - B&G Foods, Inc.: I hope so. Thank you.

Once again, we ask that you please limit yourself to one question in the interest of time. We will move next to Neel Kulkarni with Credit Suisse. Please go ahead. Neel Kulkarni - Credit Suisse Securities (USA) LLC: Hi, everyone. This is on behalf of Robert Moskow at Credit Suisse. So, the first question is do you expect a negative impact on your ACH business from the Sam's Club store closures? Robert C. Cantwell - B&G Foods, Inc.: So, yeah, certainly, losing 60 plus stores of Sam's affects that business. But, the growth at Sam's has been so substantial and continuing to grow more items, more distribution. We feel it more than offsets that. And in addition, kind of that acquisition itself we've got a lot of benefits outside of just Sam's whether it's food service or other major retailer that we've moved the needle. And working with Sam's at the end of the day, they don't want to lose much ground in total spice sales, so they're working together to try to make sure we maintain that business. But in addition, they've been very supportive of additional things at existing outlets. It's never good when an important customer closes 60-plus of their outlets but we've had many strategic conversations with them and we're all working together hand-in-hand to come out ahead on this because Sam's doesn't want to fall backwards on spice sales either. Bruce C. Wacha - B&G Foods, Inc.: Yeah. And keep in mind, we're actually under indexed to the whole Walmart Sam's combination so we continue to see this more as opportunity for us.

We'll take our next question from Eric Larson with Buckingham Research Group. Please go ahead.

Good afternoon. Thanks for taking my question. Just one here regarding your leverage. When you refinanced your balance sheet in I believe late November, I think, you actually borrowed an incremental $200 million at the time which I thought that's probably at 5% plus, that's about an annual $10 million of interest expense and we were thinking that maybe that would be reinvested at some point maybe in another acquisition or something. Is that fair to say? And is your guidance on interest expense assuming that that money does not get reinvested at this point? Robert C. Cantwell - B&G Foods, Inc.: So, right now we are sitting on cash or I guess at the end of the fourth quarter, we were sitting on cash of just over $207 million. That is balance sheet cash that includes that cash that we raised in that financing transaction. And as we said earlier, we will be opportunistic with that whether it's looking at M&A ideas, whether it's retiring some of our term loan debt, or whether it's opportunistically buying back shares. And yes, the answer to your question is we are baking in the full debt load into our interest assumptions.

Our next question will come from Andrew Lazar with Barclays. Please go ahead.

Good evening, everybody, and welcome Ken. Kenneth G. Romanzi - B&G Foods, Inc.: Thank you.

I want to come back just quickly to the fourth quarter. On the third quarter call, I think you'd given a bridge where you laid out how you expected to get to sort of the EBITDA for the fourth quarter. And I think, it was $20 million to $25 million from marketing timing, $8 million to $10 million from acquisitions, and I think $1 million to $2 million from kind of the remainder of the portfolio. Could you quickly just go through those three things just to bridge it, to kind of what you gave us a bit earlier? It sounds like marketing wasn't quite the source of EBITDA given some incremental investment that you thought, and then I guess, it's the remainder of the portfolio that fell well short of the $1 million to $2 million. Robert C. Cantwell - B&G Foods, Inc.: Right. So I apologize, and I'm just making sure. So what we would have said in a bridge was $14 million to $15 million. And I think, we probably said $14 million in the third quarter, but I might have said $15 million for the fourth quarter... Bruce C. Wacha - B&G Foods, Inc.: For the marketing. Robert C. Cantwell - B&G Foods, Inc.: ...for the marketing. And we came in at $11 million. So we decided with the rollout of spiralized, there was some movement, and we call sliding marketing too. There was a reason to spend the money and spend some more money upfront to get this on shelf, and it's performing extremely well. So that was just a decision internally. Where we really got hit – Bruce, can help me with this bridge, is really just on the sales line. We expected Green Giant to have two pieces of growth in the fourth…

This concludes today's question-and-answer session. I'd like to turn the conference back over to management for additional or closing remarks. Robert C. Cantwell - B&G Foods, Inc.: Okay. Just want to thank everybody for joining the call today and look forward to reporting some very good results as we head through 2018. Thank you.

This concludes today's conference. Thank you for your participation. You may now disconnect.