Welcome to the Flowers Foods Third Quarter 2015 Earnings Conference Call. My name is Ellen, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to J.T. Rieck. Mr. Rieck, you may begin. J.T. Rieck - Managing Director of Investor Relations/Financial Analysis, Flowers Foods, Inc.: Thank you, Ellen, and good morning, everyone. Our third quarter results were released yesterday after the market closed. You can find a copy of the earnings release posted on our website along with a set of slides supporting our discussion this morning. Finally, the 10-Q was filed earlier this morning with the SEC. Before we begin, I remind you that our presentation today may include forward-looking statements about our company's performance. Although, we believe those statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially. In addition to matters we will discuss during the call, important factors relating to Flowers Foods' business are detailed fully in our SEC filings. Participating on our call today are Allen Shiver, Flowers Foods' President and Chief Executive Officer; and Steve Kinsey, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we'll open the call to your questions. Now, it's my pleasure to introduce our President and CEO, Allen Shiver. Allen L. Shiver - President, Chief Executive Officer & Director: Thank you, J.T., and good morning, everyone. Thank you for joining our call. On a comparable basis to last year, we grew sales and expanded margins. Our adjusted EBITDA increased 6.1% and our adjusted EPS is up 9.5%. Flowers' consolidated sales were up 4.8%. Volume increased 3.6%.…

Thank you. Our first question is from Farha Aslam with Stephens.

Hi. Good morning. Allen L. Shiver - President, Chief Executive Officer & Director: Good morning, Farha.

Allen, a question about your updated guidance. It's on the lower end of your previous range. Could you just give us some color of what were the factors that made you think that probably the lower end is a better place to be? Allen L. Shiver - President, Chief Executive Officer & Director: Farha, looking at sales as we've gone in to this quarter, sales were a little softer in the first few weeks. That's one factor. The other is that we've had to accelerate some of the integration activity that we had planned for both Dave's and Alpine, creating some additional expense there. But, Farha, as far as our long-term outlook, very bullish, very confident that we're absolutely on the right track.

Okay. And just as a follow-up, your incentive compensation; is that coming in in line with what you anticipated, because in your press release, you did highlight that as a factor in the Warehouse group? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Yes, Farha, this is Steve. Yes, the incentive comp is actually kind of in line with what we had planned for the year. It's really short-term incentive. If you recall, our short-term program is based on a corporate total of EBITDA. And if you go back and look at 2014 and where we were compared to where we are today, we're tracking better than we did last year. So the incentive comp last year was not as high as it is this year.

That's helpful. And then, my final question has to do with pricing. In IRI data, some of the category leaders have more aggressive pricing in place versus what we're seeing coming through on Flowers. Is that a function of mix or is there pricing opportunities for you to take to grow that top line and improve margins going forward? Allen L. Shiver - President, Chief Executive Officer & Director: Farha, it is encouraging that we are seeing some marketplace pricing. Our team is working very hard to really evaluate our pricing in each individual market. It is a market-by-market situation. In most markets, Flowers continues to be the price leader. But we do have pricing opportunities that we're taking action on as we speak.

Great. Thank you very much. Allen L. Shiver - President, Chief Executive Officer & Director: Okay. Thank you.

The next question is from Eric Katzman with Deutsche Bank.

Hi. Good morning, everybody. Allen L. Shiver - President, Chief Executive Officer & Director: Good morning, Eric.

Couple of follow-ups, I think, to Farha's line of questioning; I guess the EBITDA or EBIT margins were kind of below what I expected. Sales were better. And, Steve, you went into the benefit of the input costs. But what would you say, like what basis points on a negative level were attributable to the steps you've had to take with regard to the acquisitions, because it sounds like the environment vis-à-vis Grupo Bimbo and others is pretty good and the input costs are okay and other factors are not too much of a problem. So how much is attributable to the M&A integration and how long should we kind of expect that to last? How far into 2016 will it be a negative for your profitability? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Sure. When you look at the recent acquisitions and specifically the Dave's Killer Bread, they do use quite a few co-packers, so that does put some pressure on the gross margin. In this quarter, we said it was roughly 20 basis points to 30 basis points. That will continue as we rationalize production for them, which will go into the majority of the next year probably. And then, integration across the business will continue through the first half of next year as well, so there's probably another 10 basis points or 20 basis points as well.

(21:00) the 20 basis points. Okay. And I guess second question has to do with, again, a follow-up to Farha's line of questioning, is when you talk about pricing, Allen, is it list price increases or is the market really kind of, let's say – quote-unquote -- raising prices by reducing promotion? Allen L. Shiver - President, Chief Executive Officer & Director: Yes. Eric, what we're seeing is really a less promotional activity, not the depth of promotion that the category has seen in the past. But, again, it varies dramatically from one market to the next. Pricing varies dramatically from one product category to the next. So, there's no cookie-cutter answer to your question. But from a priority standpoint, we're evaluating pricing opportunities across the board.

Okay. And then if I could follow up lastly, and maybe it's difficult to answer this question, but obviously there is a major, major retailer based in Arkansas that has been at least publicly more aggressive about how they're going to deal with their suppliers and what they demand, and I'm wondering, how do you see that kind of influencing your business? And I don't recall what percentage of your business is from Walmart, but maybe you could kind of frame that, too. Allen L. Shiver - President, Chief Executive Officer & Director: Yes. Eric, there's a lot of excitement about the acquisitions that Flowers has made in the organic category. And that excitement is coming not only internally but also from our retailers, including the one in Arkansas. In terms of the business relationship with all of our customers, I really don't think if this has ever been better. We are seeing tremendous support from our retailers as we move into new markets and that includes the retailer in Arkansas. So, I think our – I mean as far as our retailer relationships, very solid.

Okay. Great. I'll pass it on. Thank you. Allen L. Shiver - President, Chief Executive Officer & Director: Thank you.

The next question is from Tim Ramey with Pivotal Research Group.

Good morning. Thanks. Allen L. Shiver - President, Chief Executive Officer & Director: Good morning, Tim.

Thanks for the detail on the Dave's Killer Bread in 10-Q. I noted that the – I thought it was interesting that intangibles were more than the purchase price and I guess that was because of the – there's like a $60 million-some deferred tax liability that was assumed. I haven't seen anything on the Alpine Valley deal, and I know part of that is cash. Can you talk – part of it is cash, part of it is stock. Can you talk to the structure of the Alpine Valley deal and what that might look like? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Sure. That deal closed early in the fourth quarter, so we haven't published the purchase price allocation at this point. We're still working on that. But, in reference to your question on Dave's Killer Bread, with the way the accounting rules work, there was a stock acquisition, so you create basis for your financial reporting. However, the tax basis of those assets carry over, so those brands were developed internally, so there's really no tax basis. So, the difference in the purchase price for tax and book creates a deferred tax liability. So, you have to pull that into your purchase price. So, it's not really – we didn't acquire deferred taxes of that magnitude from Dave's, it's just really how the accounting rules work and you book the purchase price. So, that kind of creates that through the purchase price accounting, and that primarily goes to goodwill and not to the intangible. And then with regard to structure on the Alpine Valley deal, it was primarily a cash deal. We bought the stock of Alpine Valley. It was 90% cash and roughly 10% stock.

Okay. R. Steve Kinsey - Chief Financial Officer & Executive Vice President: So, you may see some of the – you may see deferred tax assets. We deferred taxes created as well but not to that magnitude.

Got it. And then, I know there's probably not much you can say about the misclassification suits, but they've really proliferated. I think they've gone from five in the first quarter to seven in the second quarter to 11 today. And a lot of states like California that have different legal structures and sort of environments for labor than perhaps where you've operated in the past. Can you talk a little bit about how much legal expense is as a percent of SG&A or corporate unallocated, and what that's done? I think you called it out on the first quarter end and again this quarter. R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Yes. I mean, we would not specifically give that percentage of the corporate costs. You can see they are up slightly year-over-year on a quarter basis. Some of that was driven by legal expense, but just to specifically say the dollar magnitude, we would not do that.

Okay. Thank you. Allen L. Shiver - President, Chief Executive Officer & Director: Thank you.

The next question is from Amit Sharma with BMO Capital Markets.

Hi. Good morning, everyone. Allen L. Shiver - President, Chief Executive Officer & Director: Good morning, Amit.

Just a couple of modeling questions first. Steve, you're talking about interest expense, but could you talk about net interest expense for the full year as well? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Yes. If you look on the full year net interest, I mean, interest income should be roughly $21 million I believe.

Got it. R. Steve Kinsey - Chief Financial Officer & Executive Vice President: $21 million to $22 million.

Okay got it. And we're early for 2016, but your commodity hedges, could you talk about how much you have covered for next year, and at what levels versus what we saw in 2015? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: So what I would say is we're not prepared today to give really guidance for 2016. But generally, we feel good about our coverage at this point for next year. What we've said historically is when the market is opportunistic, we will take coverage. And as you can see from the prices over the last four months or five months, there's been a lot of opportunity. So, from that perspective, I would say we feel very good about how we're covered at this point for 2016, and we'll provide more detail when we finish our planning process and give you the guidance in February. But generally speaking, 2016 is shaping up nicely.

Okay, got it. And then, Allen, going back to the pricing question, so just want to make sure that we understand it correctly. So, we saw that the category had higher pricing, and Flowers' price mix lagged the category, right? So, is that a conscious decision on your part to maybe focus a little bit more on volume and share gains versus price mix and, therefore, you see that as an opportunity going forward? Or should we expect your price mix to continue to lag the overall category? Allen L. Shiver - President, Chief Executive Officer & Director: Amit, I think what you're seeing in IRI is total for the U.S. and, again, each individual market is a very different story. But our strategy is not to lag the category. If you look at our history, we have always led the category on pricing. And that's exactly the strategy we're taking forward. So, there is some lead time necessary with individual retailers on implementing price changes. And we have to deal with their timeline. But overall, our strategy has not changed, and we look for improved pricing as we move into next year.

And just to be clear on that, the fact that expansion markets are probably a bigger share of your sales now than they have been in the past, with the Wonder Bread brand. That doesn't prevent you from leading on pricing as you start to think about pricing going higher from this point, right? It doesn't structurally disadvantage you. Allen L. Shiver - President, Chief Executive Officer & Director: In new markets, where our brands may not be as well known, it's important to be competitive on pricing. But that doesn't mean you need to be the lowest price in the market. In markets where our brands are strong, we can take the leadership position.

Okay. So I'm hearing that, you think it's more of a timing factor in terms of your price mix lagging now and you expect that to catch up as you go through. Allen L. Shiver - President, Chief Executive Officer & Director: I'm going to say that's fair.

Okay. Got it. Thank you very much. R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Thank you.

The next question is from Bill Chappell with SunTrust.

Thanks. Good morning. Allen L. Shiver - President, Chief Executive Officer & Director: Good morning, Bill.

Hey. I guess, Steve, just sort of a little clarification on the quarter and kind of what you've said. It seems like maybe that from Dave's Killer Bread there was a 30-basis point, 40-basis point hit to gross margin in the quarter that maybe wasn't expected from bringing on or weren't expected by us because of the timing from bringing on the inventory. Is that the right way to look at it, kind of (30:46) the EPS by about $0.01? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: About 20 basis points on gross margin for Dave's, again, primarily the impact of consolidating their sales in with ours and they rely heavy on outside producers.

So, net-net, Dave's was probably about a $0.01 dilutive to the numbers just because of the timing? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Well, if you look at Dave's and if you look at the acquisition in total, it's basically neutral when you take their contribution to margin and then back off the interest expense and depreciation and amortization.

So, neutral for the quarter, you mean? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Yes. It's forecasted to be basically neutral for the year. Could be slightly up or slightly down as we finish out the year, depending on how their sales progress.

Okay. And then I think you originally said that you expected Dave's to add $60 million to $65 million sales this year, and now you're saying $50 million to $55 million. Did I miss something there? R. Steve Kinsey - Chief Financial Officer & Executive Vice President: I think we've always – we've said $50 million to $55 million range.

Okay. So, maybe I just had that off. Then second, Allen, maybe just talking about the environment and a little bit on the slowdown you've seen in... R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Actually, Bill.

Yes. R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Just to back up real quick on the sales question. We may have included Alpine in the $65 million to $70 million...

Okay. R. Steve Kinsey - Chief Financial Officer & Executive Vice President: ...$65 million to $70 million number for Alpine and Dave's.

Okay. Thanks. That helps. Allen, just to kind of understand the slowdown. We've heard from other companies a little bit of a slowing of center of the store type sales at conventional. We've seen some issues with kind of Albertsons-Safeway, some bankruptcies from a couple retailers. Can you kind of talk to that? What's kind of affecting the slowness you've seen in recent weeks? Allen L. Shiver - President, Chief Executive Officer & Director: No, Bill, you're right. You can look at – there's a long list of center store products that are – those categories are flat to down. Fresh bakery is also flat to down slightly. And I think the real challenge for us is to make sure that the segments of fresh bakery that are growing, that we're taking full advantage of that. And that's why we're so excited about new products like Cobblestone Bread Company that really has unique positioning in the specialty segment, and as well as our organic brands, Dave's and Alpine. So, the category is relatively flat. I'm very proud of our team. Even in a flat market, we've been able to generate acceptable price and sales increases. We're working on a lot of other aspects of the business to improve our brand strength and give the consumer a reason to buy Flowers brands as opposed to what they may be doing now. But the category is flat, but at the same time, we're doing things that we feel like can drive the category to our brands over time.

But just to be clear with your full year guidance, you aren't seeing like a step change in the past few weeks? It's just kind of been an overall softness. Allen L. Shiver - President, Chief Executive Officer & Director: No. Really, Bill, the trend that I'm referring to really goes back two years to three years.

Got it. Allen L. Shiver - President, Chief Executive Officer & Director: It's not a new trend that we're seeing.

Perfect. Thanks so much. R. Steve Kinsey - Chief Financial Officer & Executive Vice President: Bill, this is Steve. Just to clarify on the sales number, it is $50 million to $55 million. We did close Alpine Valley a little later than anticipated, so that there may be some – and there might have been some difference for that closure about four weeks later than what we had normally thought.

Okay. Thanks all. Allen L. Shiver - President, Chief Executive Officer & Director: Thank you, Bill.

The next question is from Brett Hundley with BB&T Capital Markets. Brett Michael Hundley - BB&T Capital Markets: Hey. Good morning, guys. Allen L. Shiver - President, Chief Executive Officer & Director: Good morning, Brett. Brett Michael Hundley - BB&T Capital Markets: Just two questions for me. Allen, you spoke at the beginning of Q&A here about accelerating integration activities, which, of course, suggest that you are seeing good interest from customers. And you guys have also spoken about seeing broad-based support for some of these new brands to you guys. And so it sounds like distribution of DKB and Alpine can be beyond that traditional natural channel. And so, I just wanted to kind of confirm that with you and get an expectation of where we could see these products in store. It sounds like these products can be in mainstream aisle, in the mainstream bread aisle. Allen L. Shiver - President, Chief Executive Officer & Director: Brett, you are exactly right. The acceleration that I'm referring to is primarily West Coast. With the acquisitions of Dave's on the West Coast, a lot of the grocers are very anxious to have fresh DSD delivery of Dave's, and we're right, and as we speak, we're in the process of adding Dave's to our DSD network on the West Coast. The rest of our retailers are also excited about the brands and would like to have them nationwide. Obviously, we've got some work to do from a manufacturing standpoint to make sure that we are producing the products as close to market as possible. And we are targeting to be ready for really another level of our rollout for Dave's and Alpine this spring. So, the good news is there's a lot of support and a lot of interest from the…

That was our final question. I'd like to turn the call back to Allen Shiver for closing remarks. Allen L. Shiver - President, Chief Executive Officer & Director: Yes. Thank you for your interest. This is an exciting time for our team. I would also like to thank the team at Alpine and also the team at Dave's for all the extra work that is taking place as we speak. We look forward to sharing results with you on the fourth quarter in February, and we look forward to an exciting 2016 as we continue to grow our company. Thank you for your attention.