Good day, and welcome to the B&G Foods Third Quarter 2018 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 the Investor Relations section of 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 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 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 businesses highlights, and his thoughts concerning the outlook for 2018 and beyond; as well as Ken Romanzi, the company's 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 for our third quarter 2018 earnings call. Our third quarter results benefited from continued top line…

Thank you. And there are no questions in the queue. And one moment please while we poll for questions. We'll take Jon Andersen with William Blair. Jon R. Andersen - William Blair & Co. LLC: Hey, good afternoon, everybody. Robert C. Cantwell - B&G Foods, Inc.: Good afternoon. Bruce C. Wacha - B&G Foods, Inc.: Good afternoon. Jon R. Andersen - William Blair & Co. LLC: Congrats on the good sequential progress here. I guess I wanted to start – ask a little bit about pricing. The pricing benefit is kind of it seems like played out the way you expected throughout the year with modest first half and building second half. Can you talk a little bit about your confidence and visibility into the $8 million to $10 million benefit you expect in the fourth quarter? How much of this is list price increases? How much of it is fine-tuning some of your kind of promotional practices? And at this point, are retailers kind of fully onboard such that you have a high degree of confidence in that number? Kenneth G. Romanzi - B&G Foods, Inc.: Yeah. This is Ken. We're confident in the pricing in the fourth quarter. Of course, a lot of it rests on – the exact amount rests on how much product left is in there maybe. But it really is a balance between the list price increase that we took earlier in the year and trade promotion adjustments that we made and probably more trade promotions just within the fourth quarter than we made in any other quarter this year. So it really is a balance between the two. We're not seeing any large variance of elasticity that's unexpected at shelf. The biggest volume variances would be on the trade promotion changes, but that's…

Up next is Brian Holland from Consumer Edge Research.

Thanks. Good evening, everyone. If I could just start with a question on the guidance, I just want to make sure you did lower the guidance. I guess, as I sort of did the math prior to today, I thought that maybe it was sort of a net neutral taking Pirate Brands out of Q4 and net of sort of interest expense considerations. So can you just walk me through sort of why the guidance goes lower in Q4, the mechanics behind that? Bruce C. Wacha - B&G Foods, Inc.: So you're talking sales, EBITDA or EPS?

Well, I guess sales sort – why don't we do EBITDA and EPS? Bruce C. Wacha - B&G Foods, Inc.: Yeah. Okay. So obviously somewhat (39:28) sales and EBITDA. So sales is about $20 million to $25 million in the fourth quarter. So fairly...

Right. Bruce C. Wacha - B&G Foods, Inc.: ... straightforward there and that just comes right from the top line. Adjusted EBITDA, it's $6 million to $7 million in adjusted EBITDA product contribution. So keep in mind, this is a revenue stream, nicely profitable. We still obviously have some of the overhead costs associated with the company that this was covering. And so those costs don't go away. Pirate is a great brand. It's about $6 million to $7 million, and that falls to the bottom line. From a savings standpoint, we do have some benefit of interest savings from paying off our term loan. Keep in mind that not all of that occurred in the beginning of October. So that took a little bit longer and there were some breakage costs on that debt. And so that's basically the math in terms of the accretion dilution.

Okay. So just to confirm that there is no – the lower revised guidance is wholly attributable to Back to Nature and no other expectations changed. Robert C. Cantwell - B&G Foods, Inc.: Pirate's Booty. Bruce C. Wacha - B&G Foods, Inc.: Pirate's Booty. And then...

Whatever. I'm sorry, I said – yeah, I'm sorry. Bruce C. Wacha - B&G Foods, Inc.: Yeah, and tightened the range a little bit as well.

Okay. Robert C. Cantwell - B&G Foods, Inc.: Tightened the top end of the range. So the top end came down and then, as Bruce said, adjusted EBITDA range $345 million to $355 million. And we took it down for the loss of Pirate's Booty EBITDA of about $7 million in the fourth quarter on both sides of the range.

Okay. Thank you. That's helpful. Robert C. Cantwell - B&G Foods, Inc.: Plus tightened the top of the range. But the bottom of the range just came down purely by the loss of Pirate's.

Okay. Thanks. And then moving on, I think you did a good job of sort of explaining the rationale behind Pirate Brands. So appreciate that. But maybe if I could just sort of ask about – and maybe it's in particular the grocery segment. I think the frozen segment has been a really nice story, both for you guys and the category. Other players have done well in separate parts of that temperature class. So it's a nice turnaround story there and you guys have done well. But on the grocery side, to the extent that you're thinking about your M&A pipeline, I just wonder, historically those cash generative assets, I mean, to some extent, that's probably dependent upon the stability of the category, the stability of the brand in that category, private label, et cetera. Those dynamics have obviously changed, I think, significantly in the past five years, let alone 10 or further. How do you think about, as you look for assets going forward specifically? I appreciate the cash generative component of it, but obviously that's somewhat dependent on you being able to maybe preserve those brands, where they stand, and the value proposition needs to change. Can you just talk about how you maybe think about that? And then just on top of that multiples in the group, what are you seeing there? That'd be great. Robert C. Cantwell - B&G Foods, Inc.: So when you look at center of the store, kind of really talk about, first and foremost, we're a brand in retail buyer. So that's what we're looking for first, a brand that we feel that kind of hopefully stood the test of time, and we can do some things to make it better, the way we've done around Green Giant. Second – and…

Thanks for that. Last one for me, the change of control for Green Giant's biggest competitor that's just been closed. Any commentary there around near-term opportunities or potential disruptions that you're seeing, hearing about in the channel that maybe investors should be thinking about, or no real change other than what you guys are doing sort of in near-term? Robert C. Cantwell - B&G Foods, Inc.: Yeah. I think when you look at Pinnacle and Birds Eye, they were a well-run organization. They ran a great brand and they were very creative with innovation, et cetera. I think that rolling into a very strong company with strong leadership in Conagra. They're going to be certainly a very strong competitor. I don't think their competitive ways will change. I think they'll run fine. I don't see really any slippage in that switch. It's just our job to – as we've shown in the last basically two years here is grow our share, grow the category and keep doing that. And as long as we keep doing that, we'll – we should continue to grow share. But we don't expect that we've got this opportunity here in the short-term because of that transition. We assume it's a very important brand that Conagra bought as part of the whole acquisition, and I'm sure they're – they'll be all over it.

Thanks for the color. Best of luck. Bruce C. Wacha - B&G Foods, Inc.: Thanks, Brian.

And now on to William Reuter with Bank of America Merrill Lynch. William Michael Reuter - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Good afternoon. I don't think I have seen anything that discussed what the taxes that might be due upon the sale of Pirate Brands. Have you guys talked about what those would be and when you might be paying them? Bruce C. Wacha - B&G Foods, Inc.: Yeah. So actually if you look in the 8-K that we've filed last week, it details time and amount. William Michael Reuter - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Okay. I apologize for that. And then when you were talking about M&A, it sounds like you're interested in I guess either frozen or the historical center-of-store candidates that you've looked at. I guess number one is that, is that correct? And I know you've been – a couple of people have kind of tried to ask you a little bit about where multiples are. It sounds like multiples and frozen or at the higher end of the spectrum. Is there anything you can provide at all in terms of ranges for what you're seeing or what you're hearing about in the market for those two different categories? Robert C. Cantwell - B&G Foods, Inc.: Well, I think first thing is, yes, we would – we're certainly looking in both areas of the grocery store. So we're willing to buy something in frozen as well as certainly by our traditional center of the store. From a frozen side, there hasn't been a lot of assets that are really traded. I don't – I mean, Pinnacle kind of traded as a whole company. But yeah, just kind of one-off or two-off assets. We really haven't seen them trade in any way.…

Up next is Eric Larson with Buckingham Research Group.

Yeah. Thanks for the question. I wasn't sure I was going to get one in. I didn't hear my buzzer go off when I queued in for questions. So I think I – no, I think there was a little technical difficulty. But just a couple of questions. I want to focus on cash. Your inventories in the third quarter were pretty flat. And this is normally a seasonal quarter where your inventories build and it uses some cash. So your goal of $100 million to reduce inventories for the year, which I believe you outlined really at the very beginning of the year, are you online to accomplish that number for the full year when you now look at your fourth quarter? Bruce C. Wacha - B&G Foods, Inc.: Yeah. And I think you do rightly point out that the third quarter is a seasonal high period. And what I would remind folks is that we're down from 12/31/2017 to date through three quarters about $13 million inventory. A lot of that was in the first half, and then we've got to build (52:27) with the pack plan for Green Giant. In that same time period last year, we were up about $130 million. So a pretty stark comparison between the two.

Good. Yeah. I just – thank you for that compare because I – it looked like there was really a fairly significant improvement in inventory. Then you – I like to call it kind of your net – your net EBITDA, your net cash. You put a range I think now out of about $183 million to $193 million. So kind of at the midpoint of that range, that's about $13 million or so better than you have been kind of talking $175 million. Is that – is that – that obviously includes some of the continued benefits that you'll get from inventory reduction in Q4 is what I would assume. Bruce C. Wacha - B&G Foods, Inc.: Yeah. So what's really driving that is two things, both from a cash tax standpoint. When we began the year, I believe we gave guidance for less than $10 million or $15 million, and now we're tracking to less than $5 million. And also when we began the year, we were talking about $50 million to $55 million in full-year CapEx spend, and we now expect that to be a little bit less than $45 million. And so we've got the big inventory benefit, but also just the daily operations of the business are coming along. If you look to our cash flow statement, for example, in our financials, you'll see we're nearly $140 million of cash from operations for the first three quarters of this year. Last year at the same time here, we were $7.5 million. A big turnaround this year compared to last year.

Yes. Well, thanks for the clarification. I wasn't aware of the CapEx benefits here as well. So then, just a final question. And I – this one probably goes to Ken. Ken, we're hearing – obviously freight costs are abating. They're coming down as a percentage of increase. And I think that's probably maybe the best way to describe it. But most companies are saying that there will be a little bit of headwind again in 2019, and that's probably true. It takes a – it's going to take a little time to get that whole thing sort of I guess recapitalized or get enough capacity to keep rates from going up. But some companies are also talking about even some more pricing. So do you think that you're going to generate enough cost savings in your two-year to three-year cost savings program to basically keep your – I don't know you – I don't want to check this out with pricing per se, but do you feel good about pricing and could you take it if you need it? Kenneth G. Romanzi - B&G Foods, Inc.: Well, we're currently building that plan as we speak. So there will be gestation (55:23) increases. We're also seeing another round of raw material increases. With a good economy, we're seeing input costs. While we benefited from input costs this year, we're seeing that the headwind next year. So when we looked at pricing and trade promotion this year, we look at it more than just for a year at a time. So we're always looking at ways for us to be more efficient, and we'll be prepared to do something on the net price realization front if we need to add that offset cost inflation as well as the positive overlap we're getting from this year.

Okay. Thanks, guys. I'll turn it over. Bruce C. Wacha - B&G Foods, Inc.: Thanks, Eric.

And we'll take Cornell Burnette from Citi Research.

Thanks a lot. And thanks for the questions, guys. Just want to start off with kind of pricing and volumes. It looked like for the most part, pricing and volumes will offset each other in the quarter. I didn't think about it I guess in the fourth quarter as your price really starts to accelerate as you make some adjustments on the trade promos. It would just seem that maybe there's a higher risk point for volumes in the fourth quarter. So I just wanted to get your thoughts on that. Robert C. Cantwell - B&G Foods, Inc.: Well, where we made changes to trade promotion, we absolutely made the tradeoff between volume and low price points versus the reduced trade spend. So – but that's all reflected in our forecast. So there is a few brands that were heavily trade promotion where we reduced frequency. In some cases, we increased the promoter price to a degree. Those will do less volume but turn into better price realization.

Okay. And then the last one I just had really was – just a little bit of clarification when you're talking about kind of the way the cost basket works in the fourth quarter. When you put all – of everything together, your different raw materials and of course freight, are you kind of saying that in the fourth quarter we're expected to see a little bit of deflation for everything in total for you? Kenneth G. Romanzi - B&G Foods, Inc.: Versus last year, yeah, yes, actually, given the cost savings efforts as well as the overlap of the spike of cost last year in transportation.

And so I think you said it's about 1% of COGS. Was that kind of what you were referring to related to that? Bruce C. Wacha - B&G Foods, Inc.: Correct. Yes.

Okay. Great. Great. All of my other questions have been kind of touched on. So that's it for me. But just want some clarification there. Thank you. Kenneth G. Romanzi - B&G Foods, Inc.: Yep. Thanks, Cornell.

Moving onto Ken Zaslow with Bank of Montreal.

Hi. Good evening, everyone. Kenneth G. Romanzi - B&G Foods, Inc.: Hi, Ken.

So let me just start off with a couple of questions. One is, as you work into 2019, can you talk about the freight inflation versus the pricing differential? Kenneth G. Romanzi - B&G Foods, Inc.: Freight versus pricing in 2019? Well, I mean, we're still developing as planned.

Yeah... Kenneth G. Romanzi - B&G Foods, Inc.: But – but – like I said, we don't – we don't have any planned pricing yet. But we will fully expect to get some better price realization in 2019 versus 2018 through trade promotion. But we're evaluating not only freight cost but also the other input cost increases as well, as we're seeing those continue to mount as a headwind for next year. Bruce C. Wacha - B&G Foods, Inc.: And Ken, I think we're pretty consistent with most of the other food players of, call it, high-single digit increase in freight costs for 2019.

Yeah. Maybe I – I think I misstated my question. So when you took your pricing in 2018, there is going to be a net benefit into 2019 as well, right? Bruce C. Wacha - B&G Foods, Inc.: Correct.

And (59:19) of your freight costs are lapping (59:22) at, so the increase in 2019 will slow. So I'm assuming at least in the first half of 2019, it'll look like the fourth quarter of 2018. And how long will that spread work in your favor, right? Is that not the way to think about it, right? Because you took freight cost increase earlier in the year and your pricing you took kind of mid-year? Is that not the way to look at it? Bruce C. Wacha - B&G Foods, Inc.: Yeah. So, for sure, we will give a full year 2019 guidance when we give out our fourth quarter results early next year. But I think directionally what you're asking, over the last four quarters, we have seen increases in freight, the largest for the fourth quarter 2018 and first quarter – sorry, fourth quarter of 2017, first quarter of 2018. We've seen those costs moderate. But they're still elevated. And we haven't seen anything that's going to suggest that freight costs suddenly rebound back to 2016 level next year. So we're prepared for increased freight costs hitting us again in 2019. We just haven't seen anything that suggests it's going to be the same level increases that we saw 4Q 2017 and 1Q 2018.

Okay. But at the same time, you (01:00:45) pricing and your biggest increase in pricing in the fourth, why would that not be positive in first and second quarter of 2019? Kenneth G. Romanzi - B&G Foods, Inc.: There is a deferring level of trade promotions that drove that pricing. So I think if you're asking, well, pricing positive overlap in 2019 help offset all of the freight overlap? We don't think that math will work. So what we still have, we still have to put finishing touches on the plan.

Will you be able to grow EBITDA in 2019? Bruce C. Wacha - B&G Foods, Inc.: So we'll give our 2019 guidance when we give you our fourth quarter results. Robert C. Cantwell - B&G Foods, Inc.: But as Ken has – and you heard Ken on the last few calls. There is a – and some of the cost savings projects that were put into effect this year and the latter part of the year, there's a lot of cost savings also that are implemented and a lot more to come. So we feel really good about where – I mean, we're not happy freights going up further. But we feel really good about being able to cover those freight increases. Bruce C. Wacha - B&G Foods, Inc.: And yes, our intention is to grow. Robert C. Cantwell - B&G Foods, Inc.: Yeah.

Okay. And then the – I don't know, it's the fourth question, I don't know, I lost count. But the spices business you said was underperformed in the category, when do you expect that to kind of go back in line and what's the catalyst to get you back there? Robert C. Cantwell - B&G Foods, Inc.: So it has not underperformed the category. Volumes are good. A little slowing of volume at a large customer, Sam's, as they closed 60-plus outlets. But volumes are very strong. I mean, there is some – there's some ingredient and certain spices have come down in cost, and part of being in this business is you end up reducing retail a little bit when cost comes down and you have the ability to increase retail, costs go up. So our biggest hit to us, we look at our spice negativity is really there's two things. Sam's closing a few stores here that we're dealing through, and we'll lock that here in early part of 2019. And then we've given – we've had really strong procurement savings on spices, specifically pepper as an example, and we've given some of that pricing back just like others. So it's just what the market does. So that's affecting our top-line. But volumes are very strong. Bruce C. Wacha - B&G Foods, Inc.: And consumption across just all of our brands are very strong. Robert C. Cantwell - B&G Foods, Inc.: Yeah.

Okay. And then just to understand, if there was a bidder, maybe there isn't, for one of your assets that would give you two times sales, would you not take it across any sort of business? I mean, is there anything that you would not step out? Robert C. Cantwell - B&G Foods, Inc.: I don't – well, multiples of sales can't help me. If somebody wants to pay me a ridiculous multiple on EBITDA, we would certainly as a management team and then as a board need to discuss that. We can create value to shareholders. Again, we're not out looking to sell anything. This was really a one-off sale that just two parties – and that had made sense because they own – they really own the brand that Pirate's typically sits next to in pretty much every outlet we sell Pirate's. So it made sense. I think this was just unusual, but somebody want to come with a multiple of EBITDA that's just outrageous, we're going to sit down and talk.

Okay. Great. I appreciate it, guys. Bruce C. Wacha - B&G Foods, Inc.: Thanks, Ken.

And we'll take David Palmer from RBC Capital Markets.

Hey, guys. Robert C. Cantwell - B&G Foods, Inc.: Hi.

Just a question on your organic revenue growth. I think there is a feeling after the sale of Pirate's Booty that your long-term revenue growth is lower. You're having a bit of a transition here. You're going to get passed some of these can declines. You're talking about innovation. But I think there's also a feeling that there's some ongoing risks to some of your legacy center-of-store categories. So just generally speaking, if you want to bucket it or talk about rough strokes on this, but how should we think about what is a reasonable organic top-line growth rate? And I have a follow-up. Robert C. Cantwell - B&G Foods, Inc.: I'll let Ken dive in too. But we're very comfortable with that top-line that we've talked to of 0% to 2%. Hopefully, that continues, and if we can do better, that's great. I think putting Pirate's in perspective, we bought a business that was a little over $80 million in sales five years ago. The run rate basically through September on Pirate's under our ownership is around $92 million. So it was a great brand, nice brand, steady increase, and with a good $12 million over five years. So this is not a rocket ship. So we weren't moving the needle that great. So we didn't – we certainly gave up a great brand, and I think a seller who – I mean, a buyer who would do wonders with it. But it's not like we're giving up something that was growing at a much higher rate. So this was small, steady growth versus something bigger. So there is nothing that we think that we can continually hope – achieve that 0% to 2% growth. And it's really the brands and part of the portfolio that I think you've seen grow this year. And others that – the key to our growth of growing 0% to 2% is making sure some of the smaller brands that are extremely profitable don't decline faster than the growth of our better brands. And that's – and if we can manage through that, all the cash flow and everything else works. And we're up – we look at our brand this year without Pirate's, we're up six-tenths of a percent. So we're in that 0% to 2%. And hopefully, we have a good finish, and that number is 1% or above. But – we've grown our base business here for the first nine months.

And if we are to sort of project to the M&A world, it feels like valuations there may be diverging as much as we think they would be, where there's a few categories out there, snacks, frozen, maybe enhancers, like spices that are on maybe at the right side of history at this point. And there's some other legacy center-of-store categories that may be more challenged. You're seeing some big companies and you no doubt have seen them talking about shedding the bottom 5-plus% of their assets. Some of them have the tax cover to do that. But if they were to try to do those sales to gross up, the Street would see that that would be grossing you down. So I guess the question is, do you think within your valuation rigor and your target valuation range, can you keep that 0% to 2% going? Are there categories and brands out there that are going to be at the right price but also not grows you down? Robert C. Cantwell - B&G Foods, Inc.: Well, I think all of that is an assumption. We believe, yes. And I think it's kind of how we've looked at things all through the years here. So I think the point here is we're not going to jump into a category that's on a steep decline. We wouldn't buy Green Giant canned vegetables by itself today. The categories that are just that tough to deal with, we're not jumping in. So the category dynamics have to be flat to – it's kind of – it needs to look like B&G in total where it's flat to down, flat to up. So a very small window that's kind of 0% to 2%. And if it's down, hopefully it's not down more than 1% kind of thing, and then it makes sense for us. If it's something that's very different, probably doesn't make sense. But we truly believe there's certainly a lot of those categories that fit. There are a lot of those brands in those companies that are saying they might sell something in shared assets that we believe good fit. It remains to be seen when and if they actually come to market with any of those assets.

And then one last one I'll squeeze in on your debt leverage, target amount of debt. Clearly it's come down after the sale of Pirate's Booty. It seems like the markets right now are more averse to higher debt levels, higher ratios. Are you feeling that? Are you re-sculpting where you think the appropriate ranges are in light of the fact that interest rates are coming up? And how big of an acquisition would you contemplate at this point? Robert C. Cantwell - B&G Foods, Inc.: Well, I'll let Bruce jump in. But I mean, when we look at our interest rates, now that we've taken out the term B, basically except for a small revolver borrowing, it's all fixed today. So we're fixed at very low interest rates. So, even as interest on variable rates have moved up with LIBOR here, they're still relatively low. So that doesn't concern us today since our capital structure is basically fixed. From a debt level point of view, that 4.5 times to 5.5 times I think still completely works from a cash flow. It works – upwards of 6 works. But I think just playing in that range works. And we looked at the sale of Pirate's in many ways strategically, but it has also allowed us to – as opposed to going to the equity markets where we feel our stock is undervalued today, to use an asset to de-lever too. We weren't out there trying to do that. It just all came together. But the de-levering has really opened our balance sheet again. So the acquisition, when you're at $300 plus million of EBITDA at 5 times leverage basically at the end of this year, you could do pretty sizable acquisitions and not get really far past north of 5.5 times. So, again, all of that's assumptions on what comes to market and when and right and many different things can happen once things come to market, including issuing equity too. So until we know what those assets are, and hopefully these companies – and we're always looking at things that float around, But some of the assets that we hope come out of those larger strategics, they know where – they know to make a call to us too. So... Bruce C. Wacha - B&G Foods, Inc.: And we're certainly happy to take somebody to a half a turn and a turn of leverage off our balance sheet... Robert C. Cantwell - B&G Foods, Inc.: Yeah. Bruce C. Wacha - B&G Foods, Inc.: ... when you think about what we did with the cash flow this year, throughout the remainder of the year in this transaction, which is the significant deleveraging there.

Thank you. Bruce C. Wacha - B&G Foods, Inc.: Thanks, Dave.

And I'd like to turn the call back over to Bob Cantwell for closing remarks.