BGS - Earnings call transcript Q3 2017

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Operator

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. could the subsequent recent more condition. SEC of risks to Form Report detailed you future the and company's XX-K filings that refer company's and Annual most on discussion operating We results the financial impact for a company or publicly or otherwise. forward-looking obligation revise of new to a whether as result no information, undertakes any The update statements, future events diluted be the adjusted will also making per adjusted non-GAAP net measures, company today's to references base The call and EBITDA, financial adjusted income, sales. business earnings share, on net comparable of financial earnings measures Reconciliations financial to these are the today's most in directly GAAP provided measures release. Wacha, the quarter. Bruce Strategy start call Corporate by of discussing financial Vice company's the the the President for will and Business Development, company's Executive results Chief his thoughts the and Cantwell, will the that, Officer, affected that XXXX the discuss concerning and results, factors After selected highlights, beyond. company's company's Executive remainder of business various Bob remarks, Officer, company's and prepared Amy the available Bruce questions. the your be answer will Chiovari, Bob, After Financial Chief Interim to I over to will Bruce. call hand now the

Bruce C. Wacha

September Good It afternoon, Halloween. joining XXXX. today third for us everyone. our our which you reports Thank Happy fiscal quarter ended operator. to for a and financial pleasure is you, report XX, Thank

in million million December November from portfolio, acquisitions the compared for for to adjusted Victoria diluted sales, EPS. and and benefited as completed and increased to spices $XXX.X growth strong the our For were the across as seasonings sales XXXX Net XX.X% third we which XXXX quarter generated X, XXXX. Net of on well much third performance quarter $X.XX $XXX.X of the of base XXXX. XX, the quarter, in $XXX.X $XX.X of sales and million net EBITDA, adjusted quarter the of million

excess million contributed X%. of for growth sales including mix. increased $X.X the $XX our million X.X% offset to in in net quarter, Our million volumes in unit for sales that price half the in base XX during by We $XX.X the a of had third decrease partially and of brands quarter. Increases increase, business or increased brands net by

helped largest than when innovation in Giant growth to products. with sales net Green net shelf-stable more products of sales growth Giant, quarter, the Green double-digit declines for prior-year our Our Green Giant compared offsetting products of and drive X.X% other frozen brand,

Another events benefited sales delivered Pirate from in for leader our Brands, the yes, new XX%, and with correct, portfolio, back-to-school, customers. distribution strong Pirate certain quarter. of that's wins, promotional Brands the timing XX% the increase

Style, as for had strong New Underwood, of our York of Wheat. many Polaner, our other We and quarterly portfolio, also performances Cream such brands in

was a XX% as with of as as our and for it's percent million was to also business our and XQ quarter continued was quarter quarter our quarter improved million third XX.X%, quarter Adjusted EBITDA another EBITDA in $X.X as the third or as year-ago and a Meanwhile, for $XX.X quarter recent expenses $XX.X and and third forecast Adjusted million $XX.X our to for of from XX% XXXX increased a are compared had was interest Our third spices by under XXXX acquisitions have is in million and tracking sales of third XXXX. year third sales to sales percentage expectations our the Gross about $XX.X $XXX.X of fourth to of X.X% and line contributed our year-to-date and $X.X sales profit for of net interest XX%. $X in million of XX% XXXX. profit net of to a million $XX quarter Gross the to million million XX.X% increase by compared percent in the for additional quarter contributed expense profit The attributable made Net of the seasonings quarter The in with net million XXXX. expectations. of Gross initial the the $XXX.X $XX.X XXXX. XQ solid seasonings sales fund and was in the of million million gross from of X.X% the the net XX.X% for for of SG&A for period. Victoria. of year. net SG&A sales sales percent quarter XX.X% business of expense for the ago. the for of of spices net quarter third increased XX.X% by quarter in compared third the or perform compared third net XXXX million to quarter $XX.X full trending to to for to third the by percent of million in XXXX $XX well quarter. Victoria borrowings the $X.X ahead a the line of ownership for increased XXXX. to the of additional and was a primarily profit ahead XXXX acquisitions

diluted to Our $X.XX of third reported net million share $XX.X reported U.S. per was net quarter income of XXXX. of million or the $XX.X the quarter share income per for XXXX, GAAP diluted third $X.XX or under for as compared

after-tax to year-ago third share, adjusted expenses, diluted per million the per $X.XX compared which adjusted acquisition-related in $XX.X Our $XX.X XXXX, net period. or of $X.XX or of was the for impact quarter million share diluted adjusted income excludes the

guidance debt. $XXX cash quarter on Moving $X.X the XXXX $XX.X third of in the approximately in midpoint approximately finished net full-year balance X.X and billion adjusted times million the debt million. to was with or we Net sheet, EBITDA for our

which brands quarter. XXXX, also the year to on closed our Back announced and acquisition of the was just in October August of to Nature, end the X, family this of of with We after added third

are our while case our discuss also we and move categories; into leader excited As call, to access a Bob in to better-for-you brands, customer snack will in higher-growth by on-trend this very in increasing channels. about later we continue the portfolio acquisition this adding certain

increase we reflects guidance sales approximately fiscal Back $XX.X our sales to billion. in billion net to part $X.XXX quarter. pleased to the for in the net in net sales billion which for increasing billion expected of million contribute $X.XX to are XXXX is acquisition to guidance This fourth from $X.XX Nature are to announce $X.XX We that

our per are previously for EPS stated also guidance We diluted our EBITDA million adjusted $X.XX reaffirming of $XXX.X $X.XX and million $XXX.X to adjusted to of share.

XX% sales percentage to expect We of net a XX%. a gross of profit as XX% to XX%; EBITDA achieve adjusted percentage of as sales approximately of net and

have of of of and approximately the we in our amortization guidance tax or will adjusted million We to of $XX.X our and compared effective And approximately of XXXX generated $XX.X for million. depreciation XX.X%. our finally, us $XXX.X $XX expense interest expect EBITDA full-year expense million we $X.X amortization project XXXX approximately million. adjusted be with $XXX.X million million. million, approximately million to of be XXXX the million, interest to a Through leave expense to interest expense $XXX including $XX.X would cash rate quarters, $XX expect EBITDA fourth This target range $XXX.X three hit million. of quarter midpoint We

us million year's last that please year's this keep fourth This an million look this leaves to incremental $XX.X fourth during generated we mind bridge produce adjusted during $XX to in quarter. As number, EBITDA in quarter. we

EBITDA were period. to where sales products; brand's increase shift of incremental driven last we marketing comparison beneficial in to a due expect year's the Green expenses for innovation factors; brand to in this to products quarter-over-quarter, the $XX a frozen net quarter, to Giant of We in to three million million the by in due and $XX produce fourth part an holiday stock of during certain expenses adjusted decrease year; out key timing marketing earlier finally, the a of the

incremental we Giant the Victoria expect spices during EBITDA businesses, $X and of million XXXX. to seasonings of that EBITDA full adjusted approximately $XX last as of were the In year, produce, fourth incremental quarter addition expect a fourth ownership to to the which contribute million, adjusted to result quarter acquired in we Green and an

come We EBITDA $X the $X to remainder of the of million million expect incremental of portfolio. balance the the to from

our policy. to to reaffirming our long-standing are dividends years since this ago. Pursuant quarter we policy, dividend every IPO, XX have we Finally, our paid commitment

per our aggregate $X.XX the currently share year per in approximately on million is share $XXX dividend count. based current Our or

to over on call the the Bob? Bob to more turn details for Now, quarter. I'd like

Robert C. Cantwell

good Thank afternoon and everyone. you, Bruce

have While environment value in consumer noted, portfolio focused the we peers our industry a that to to and proposition have a current today's relevant recently compelling we believe offer the we that our retail to that remains are as will continue many consumers brands partners. of challenging, of

the pleased the there for our XXXX the in year-over-year a are healthy year. industry, for to a third outlook and quarter, start second always While of we trends positive of challenges remainder half with are the

and to a that from quarter benefited earlier, quarter XXXX. the Our Bruce as the of XX.X% key also grew But during sales X.X% report base in growth acquisitions sales third of were we important, quarter. in very net by pleased approximately fourth business' net said our pair

were results our driven X%. growth of portfolio, performance sales our and brands of much of across quarter XX% net generating net by in sales growth solid brands with third-quarter our of in XX Our the generating excess

by best largest Giant Giant the products of vegetable brand frozen Our strength X.X% sales powerful quickly quarter, Green by consecutive category. products, is entire and the innovation increased reinvigorate Giant the Green the to is Green one products performers that the planning. of internal reestablishing our of growth second Giant Net of we itself in aisle. our frozen line quarter, our the was a helping which in in sales believe led that are increased with of frozen on Green Overall, net XX%, as our for brand, frozen quarter double-digit innovation

In from in that XXXX continue we the and and Green varieties; Green are Giant Carrot, Giant's Spirals of We Veggie Butternut things extending to the Squash. we great the XXXX, in quarter the third to announced Green in quarter frozen years Zucchini, Giant fourth line ahead. include expect three of

seen We for our are feedback Brands from quarter. performance shipping in January Pirate have far. these expect XXXX, the begin products by encouraged driver and very consumer We're we retailer strong acceptance the key another very testing. we so receiving was also to of

last this we second discussed in were of the call, key scheduled promotional quarter occurred to and quarter certain earnings quarter a occur during expect from we to that did. on second year's third events, customer timing and we year, As the our had benefit with

quarter strong execution growth very strong driven quarter. XX% sales, in by the Brand's during However, back-to-school and the was new Pirate distribution, also

of and to out Underwood, the also almost the Style, $X believe strongly nice brand in Ortega, we saw or during sales during all New the decrease net in York the for Polaner, of although and million quarter, showing more had across with We round growth wins Cream net of Wheat, portfolio the quarter. incremental long-term. all over brands quarter; of of not modest the Obviously, health example, this a we grew our vitality sales

Our to is of first $XX.X exceed quarter is expected Spices also seasonings well has XXXX, and exceeding contributed the sales for for business sales million the also sales three spices of net and been year. well XXXX. the and our net $XXX.X of guidance $XXX initial million fourth acquired for quarters year, seasonings in $XX while third performing of Victoria, and for the quarter of target its on way initial to million our million net the

to low-fat Now, cookies, offers to also and the excited offerings a and this products. better-for-you and Nature which The Project bigger seat has to snack snack at Foods organic Foods the Non-GMO, other gluten-free food a Nature include Back us the no-fat table. October business better-for-you category on-trend product are brand's of Back Nature crackers snacks add moving snacks. in Nature our on and SnackWell's to been this X, on to closed acquisition brand Verified, better-for-you Back believe we we to gives pioneer portfolio. brand to Back

today. is We carry also as for accounts there not business, to opportunity distribution products all increase a believe this grocery nationally great its

In R&D brand marketing already extension and teams opportunities. are researching addition, our

the anticipate $XX We sales million time. able expect Foods brand to grow million year, $XX and adjusted net Nature to to in being next we over of contribute Back approximately and EBITDA

long-term and to innovate at open R&D have help XXXX expect launch headquarters. talented are comfort we our of for net well-positioned EBITDA. in new and our R&D work, stockholder we a expect remain within to team R&D completing we continue with continue on that to year. remain almost items opportunities is this innovation acquisitions. for front, leverage new we team center To portfolio enhance to search we the times finally to number our new XX Speaking across later X.X center R&D, accretive building zone months, great to we Parsippany will portfolio to three X.X beyond. continue Even And the innovation consistent the M&A future acquisitions a of complete acquisition that to value brands and past of continue our through acquisitions our and after adjusted a very and Construction our R&D for strategy, debt of add and in

through also momentum we remain to quarter. our the to policy shareholders to for of our are pleased and quarter the committed with closing, We the in third payment fourth returning cash dividends. long-standing In continue expect results of the

our to net from We share expect balanced a Green gains while Giant the see and frozen portfolio. growth also strong from rest in products, sales of our performance benefiting

Ortega, Dash, categories manage believe for today's focus allows deploying and Brands, seven are Nature, and sales include that brands we while our cash and adjusted This brands. largely brands, to Pirate Giant, of and as enhance generally of XX% see more spices flows, our on Back portfolio brands rest of Farms, where business than which Green our and with spices of Maple are net for seasonings us seasonings to These Our Victoria, to we such account opportunities Cream in largest Grove trend opportunistically and our consumers. Mrs. Wheat, EBITDA. the attractive the XX% capital

to So portfolio both to acquisition business positioned current the of to we Back environment in growth challenging, to remains our are are the base long-term. with in achieve few flat we Nature with over consumer Consistent next sales our goal that the and months. we near- integrate performance, believe while and past have the net the happy X% we successfully expect that

XXXX reaffirmed diluted earlier, earnings We also and Bruce adjusted full-year base be mentioned business' share positive. net will EBITDA Therefore, our that our per our sales for sales guidance net increased as guidance. the expect and we adjusted full-year for

up guidance XXXX would quarter call provide Operator? when for and for like the will I release full-year XXXX open we With our We that, our results. questions. fourth to

Operator

with Robert sales here Thank news. heard great this Credit did you better your contracts all, manage secondarily, some Suisse and say Suisse. revenue grow the you. into hear that's feared that thought business Securities I go would the any go time, Please of and what And At and LLC through? then XXXX? Hi, we'll about the Credit I (USA) up and maybe maybe did concerns in is ahead. Rob even that - for logistics you first us Obviously, going to in XXXX cost question. cost, XXXX, base you Moscow thank you business Moskow That's are had have question. the than Thanks. we've I for first Can it give about X%, something visibility can XX%. you and

Robert C. Cantwell

to but things. a expectation think, it more XXXX, certainly which business' guidance answer, we formal we expect base well, our give for our Giant. So two Green and year-end call, we'll grow with includes overall, Yes,

We number manage like and be to everybody kind or I worst XX% is is we're number, just base going manage Giant X% of We That's yes, just bit and that. costs give are real Green up, us, So $X take part case of for what And, hearing, through else, what that kind business. to that logistics a seeing. would a million. little mean, we're that. can of have of

logistics (USA) goods? elsewhere. I've percentage Robert of getting mean... as number a your I maybe that, save million. and Sometimes of and from can good hopefully, Moskow $X cost is mean, that money was the including of truck price centers - their everybody because than moving I LLC it's higher key distribution ultimately customers Is a experiences actually I Credit industry around to pass who their when products kind Suisse Securities also Okay. up, you and/or whole overestimated

Robert C. Cantwell

so. I think

we're that what $X think us more looking able and million, overall. we certainly were much bit the quarter saw not seeing are And a in than good so absorb little of like I but of all now, at we third results. to report that

them half XXXX, something half but but other will a go brick big not that can comp? that or that well, anything a good Is kind to Robert can to about To can to half a just us it's on be of first the that's – Moskow you that don't we your the Suisse environment it's it's going are compared LLC of forward we other low, another is deal easy easy in that get is So there challenges, And of as And can normalize be Securities follow-up, first expect we something ask specific XXXX XXXX a of an tell if we deal know, very Credit start? - make to first one you that (USA) and and certainly so, were you're you overall that challenges of with. have with. a number for the it doing off factors you? what it comp the just maybe

Robert C. Cantwell

and we we had rest timing then XXXX. of Booty business, comps hopefully shelf promotions year, the first this the that is we into this some base growing just saw Pirate's half scenario frozen some from but certainly side the the Well, comp you with us and our nicely. don't frozen I we negativity fast not as over have stable hopefully go on very one-off large we of the the of just against direction. piece very lot all Giant of Green on of Green growing were certainly and Green, for And as we rolling rolled the the Giant know, look in in that the think distribution of we from really lost we've at activity a kind the business, with in like business issues, year the the some going right frozen have And of

in for Thank hopefully and look drives things a point Okay. XXXX first half sales of which should Suisse good for very view the bottom line, Credit pretty hopefully year. you much. LLC us from - Securities whole Robert Moskow the So, (USA) of

Operator

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

Farha Aslam

Hi. Good morning.

Robert C. Cantwell

afternoon. Good Hi.

Bruce C. Wacha

Hi.

Farha Aslam

actually in reaffirming it's terms of a of year? have afternoon, next that $XXX been about color sales growth more Or any million? Green we to expect what million $XXX are you long for Giant, detail of should brand the day. should on level And

Robert C. Cantwell

is on comfortable but be we're guidance next But, we to very to a year. very call. that Giant, give for going million little more Green range bit year-end we'll off going here $XXX when million our Growth we're $XXX this that. year, strong do in hold Well, yes, to on

Farha Aslam

then you And Booty us how the helpful. into and your and fourth some brand? That's sustainability Pirate's weak next And color on the also on give in Ortega, possibly Booty for year? could just color Ortega outlook was of exactly some quarter Pirate's on into the

Robert C. Cantwell

little Ortega, So, over flat $X the was short for pretty the for quarter, much on it year. a million

If is we good of actually the the well, the talked on some doing quarter, We has that in don't continue we Old flip, portfolio. very a see a rock we in with resonates and issue programs key brand had in upside that, But third at was It's in that the quarter into with fourth we because real promotional so addition but of friends brand level, the expect knew also but consumers our kids. we great. lots additional El have also place just consumers, and really timing a other we our Pirate's our don't had brand with certainly a promotional flipped one-time knew expect in key customers, that's which have was with category but Paso expect to we growth one be grow. the continue fair especially customers end XX% we It's won't third to have fourth second be strong of the are that Pirate's about it's distribution are among other the and do we where We category to. upside. quarter Pirate's So, in. brand and be quarter, Pirate's grow solid. competition to in quarter. young the was strong others, XX%, at really We our it to at share to that can a that to meaningful portfolio year-over-year. going Pirate's we that some It's to in

Farha Aslam

question. Final

this and get general In your ability any to of environment terms in pressure pricing current you're seeing? pricing,

Robert C. Cantwell

categories. a pricing mentioned Yes, pricing in in million. I $X to price Bruce $X we also. some the like fourth pressure negative quarter negative hit to $X.X part, million the would in million on Well, about certainly quarter there his had certain of is expect see in

you know, of brands of and categories. So, have lots lots we

canned we're of Some Arc certainly our canned are on our commodity-driven pricing there. items getting the pushed et Giant, beans, of Joan in cetera, categories, Green

big as that a to is too. don't prices us. have selling XXXX, way we that that, go pricing. pricing, aggressive be just low-price But we think those that need if into competition, price as I lot talking a those about major vegetables the in shells on a and lots of pass any hit of such continue. have can't concerns When pass out such that have commodities cut certainly about canned to increase, we on taking here. pieces know for you can whole, prices if know, with and We it's brands, it's to of if don't cheap. the major cost of see to in experiencing, negative on Ortega, think cost a and cost of even our little we elsewhere mover, But believe we there's because companies our we fashion moving increases needed, general commodity-driven commodity be think needed, kind expect increase in are a we though general business if save able are we a don't most talk But canned and competition for large different any us, we But, a We the as on of on the beans, we ways. competition we that but a don't can on. to taco costs major that products move we low-price should move can't belief are now big we you distribution that more tougher and

Farha Aslam

you. Great. That's Thank helpful.

Operator

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

David Palmer

Thanks. Good afternoon.

about This noise declines quarter, dollar they and up you see quarter, what I spices, including of that going data. areas a the those scanner last were the growth the doing and versus with in you're X% your given all organic non-measured data, channel X% chips with then and Sam's, sales, potential least matching we maybe or things channel imagine can veggie only canned away two down a the is coincidence, from in measured up store mentioned at what

So, sense quarter, we that looking amount, just if channel measured should looking at that measured channel data be of we're a beyond at that's would ahead what some we're fourth give follow-up. looking data sense a what I in I to And trying organic sales up have a think I'm get – and of small to that will growth quarter. be thinking your fourth us about

Bruce C. Wacha

Tone is you're some will we when incremental data within mean, be sure where area the at correcting not a switched negative, looking giving it thing benefit. up. is you're for brand have we customer to you're one I The that one sales us the that to in and spices that make obviously and so thinking label, through scanned seasoning to private if show scanned quarter where did the Sure. are fourth targeting data and it

David Palmer

you're... So

Bruce C. Wacha

that see still you'll but fine, the fourth quarter. in That's

David Palmer

up thinking quarter, fourth sales So you're in will be just the clear? organic be to

Robert C. Cantwell

a call X.X%. comments, what with business on my our, quarter down we strong Absolutely. year-to-date our base third kind here, And of what now we're only very I in said

We by expect year, X.X% to the a the full year. number end of that take into positive

So, the we're going nicely quarter. fourth very in be to up

David Palmer

this, a still people's range this you fourth of fourth left left that there we something sort that it that I guidance, at about variability is, wide. know to you as as going about? range that The implying, it be I guess, we're quarter of at the from the fairly that should feels previous kind like of thinking are should high-end it we of into Is the for as is wide mean, quarter, the inferring least implying towards estimates we're and

Robert C. Cantwell

are. million Not the on of from mean, certainly we're mean when we put a of more the high-side hopefully Everything way variability; on We the those week seeing seems numbers up anything and moved the up. $XX – We're are to expected. October. be be we very, going the to already of year. bottom we I to know the only kind and results realistic, left but to I We've you that's range, basically that paper, this through turning what range nine got blow not

it's as a you quarter know a of lot that dramatically minus not or business that our anyway. plus So, change could in variability from

it's we our continue going to seasonings So, also. businesses to quarter is number up all in to like been fourth other pretty a Giant the Green and very along a Net-net, going nicely grow expect strong base have business turning of be year. base going along to we're and is to turn

pretty a to at looking rock we're solid perspective, XXXX. sales finish a from So

David Palmer

the going fourth Right the high average? How the veggies the slightly being work unusual the gross gross an on insight of But and your forward run you're saying of below of would now, that does if quarter. scale rhythm margin, create basic rate quarter. going the I'm kind some you're seasonal year-to-date And and maybe months business, below sales there's it be a a for or that. now there to offsetting during of one you've selling (XX:XX)? chain onboarding average that a the lapping holidays wondering about lot where more last normal obviously quick of of noise One the and above into had you're get very margins XX a supply if

Robert C. Cantwell

every of gross year-to-date. tracking kind been That's basic kind margin of quarter. kind we've what this been pretty So of XX.X% we're – at much

gross a you in XX%. So it's been fourth at XXXX, kind quarter was the of little fully if it margin consistent. over our look of But

gross driven that XX% range in from then it all to of quarter, net XX% the for down our gross activity So to that because particularly, XX% does in Thanksgiving, Green of range the that promotional will Giant drop to in kind XX% fourth which margin but Christmas, in fourth through our margins Giant year. quarter. be consistent talked in last the of year with this at so it's had it very on should about. XX.X%, very similar effect Bruce last business were quarter fourth But we at the Green the we'll and year, look And

Bruce C. Wacha

But on same if gross margin XXXX the you'd basis. annual look XXXX, see certainly an you is levels historically, back

David Palmer

Thank you.

Operator

move with now Barclays. will to Lazar Andrew We

Andrew Lazar

afternoon, Good everybody.

Robert C. Cantwell

Good afternoon.

Bruce C. Wacha

Hi.

Andrew Lazar

year one is, raised you question guidance Back the due guess sales obviously me the addition to Nature. part the I key from of to for in

somewhat the for I You guidance a albeit all at year, didn't full it's wide EBITDA change know range. the

to the So to does of perhaps the Because I'm just is, EBITDA underlying is robust. if means get of it little contribute quarter? Nature, base at? business it way expected trying not is it doesn't, I'm If much to Do issue. the get see that's then to much then what a an less Back you sense in bit in EBITDA so of that fourth trying a

Bruce C. Wacha

fourth in Not the from from a there's including that just one took the it cost on, in we doing Keep have savings in business office that business down a that quarter. mind the we're lot bringing of but We'll on. standpoint impact Florida. quarter, something

$XX see you rate where million in of we run So, the XXXX impact really talk EBITDA. to

Andrew Lazar

helpful. That's

Robert C. Cantwell

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

Andrew Lazar

obviously guess, expected incrementally we to those is how to think words, beyond With right? XXXX. I you're trying incrementally clarify what quarter business. contribute we not can that In And really That's sort know there then Got are on now of maybe as you if you to know base the much just it on call. Yeah. things are give left, will? course, that Victoria, in much that contributors, a obviously discrete fourth couple do that Back how Nature going remember guidance the Is of would till then that, contribute XXXX, of But happens EBITDA. And it. you to be ACH whatever helpful. said, and other with we respect to

Robert C. Cantwell

Victoria of we Well, Right. for XXXX. seasonings, have full and the year

– for XXXX. grow bought just in so, XX end XXXX. them in incremental. months of we've no So them had whatever really is full we it's the them There's We

just and no So incremental there's acquisition from growth pure them.

Andrew Lazar

obviously just So whatever from Back to EBITDA business Nature? and then growth it's really base comes

Bruce C. Wacha

Exactly.

Robert C. Cantwell

Yes. Correct.

Andrew Lazar

Okay.

Bruce C. Wacha

we in both is do for incremental that quarter, guidance. those year to us acquisitions What of pick-up the our last from have fourth the brings

Andrew Lazar

you Right. very much. Thank Yeah. it. Got Perfect.

Robert C. Cantwell

Okay.

Operator

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

Eric J. Larson

Nice quarter, Yeah. everyone. Thank you.

Robert C. Cantwell

Thank you.

Bruce C. Wacha

Thank you.

Eric J. Larson

when the introduced A Bob, it your think kind questions and roll-out of your product, fourth in quarter of I rice you the and sort veggies, relates demand. of to year underestimated last you Spirals couple of

purposeful don't of I led a the in to You didn't think capacity in demand. first half the think the your have, then, to this I And or increase year. that again, for inventory Giant meet the retailer's Green inventories

rollout on might anticipate the same such how the thing, build the a first could for Spirals that's Spirals place that? you us good bit You wouldn't or maybe but anything little quarter? take thought type of a of give in inventory And as

Robert C. Cantwell

building now. we August. end Spirals it of We building certainly, started towards Well, are the inventory

very to a have very large So and support addition. brand launch ready a we're hopefully, large, fully and capacity

a more So former lot closing at inventory that's build the A of the the being didn't the with an was we but inventory to plant basics, added General down needing build us have in connection not also it of year, inventory Mills' was just then the of but because of innovation last end some enough issue. actually out cash there of now building issue we as which over versus next this of saw months the actually as to we of taking next be inventory rest here. We'll out We'll through opposed reduction first half the on year the inventory inventory and nine benefit of this year. what see certainly September we're of, year through go so.

Eric J. Larson

allowances Well, that well, say the you maybe your as more I Okay. well? fourth the Good. Thank shouldn't of for that, I obviously profit a Spirals, margin third that, clarification of out margin. your that. points Then impact – quarter follow-up you took to into profit and because just XXXX ask have another roll-out the on I slotting have impacting obviously, you'll was going quarter gross believe, of allowances, about basis slotting XXX gross your your but cash on will

Robert C. Cantwell

we year. as distribution half slotting That lot in half on have filled XXXX slotting the so made so. in will – where a veggies identical. here, But year last almost spent have, we also quarter, payments XXXX, out we but to that and look first the rice of certainly et we'll money certainly we'll front-loaded slotting for all cetera, veggie tots, next So not of in the be not first of the in fourth Spirals

once similar the slotting look gone some marketing on cadence in XXXX. this helps we've versus everything we'll quarter So last else us on very and a slotting once year-end, we quarter to through and now versus through XXXX have benefits marketing quarter-to-quarter basis But here this than that our and from will in fourth spending of get year. – the

Eric J. Larson

the for the this include cadence Did Okay. from of question, spend in quarters? get the believe year, Did the quarter year. spend year in And even just last to Bob, Green you third Giant. didn't final quarter vast if last then fourth last marketing Green of third I started one that quarter you have third year increased the I fourth this majority trying that QX? spend include had across Giant, quarter think captured I year know that the that quarter an to you the some don't

Robert C. Cantwell

actually No. last million It's this than consistent. than little very spend less actually year. was And a $X quarter less

Eric J. Larson

Okay.

Robert C. Cantwell

as see quarter, reductions that's XXXX. As Bruce spending fourth you mentioned, the we into the big roll versus where

Eric J. Larson

everyone. you, Thank Okay.

Operator

with Blair. At this from Jon William hear time, we'll Andersen

Jon R. Andersen

Thanks Good everybody. afternoon, question. for Hey. the

Robert C. Cantwell

Hi.

Bruce C. Wacha

Hey, Jon.

Jon R. Andersen

that deduction and $XX about plans. But to talk if think in Just previously ends sticking the are full-year a you from looking million spending your about a at $XX up of Are kind if marketing you bit little full-year minute, of what kind wondering just total? thought. wondering with you still net about gross million marketing to million is similar I $XX line. full-year I'm below can cadence, level for that

Robert C. Cantwell

correct. That's

Jon R. Andersen

is been to because Okay. that, the quarters the help us to you a than lot in and the of cadence the different through to, we the kind like then XXXX, more look Or that some look there talk to modeling look has XXXX can XXXX of XXXX you are timing think And expecting cadence XXXX? to cadence as in in progression? XXXX,

Robert C. Cantwell

It'll look more like XXXX.

Jon R. Andersen

of the is you've question; sense trying overall of company doubled to capabilities One acquisitions. to this just Okay. a And XXXX strong how quarter. terms of overall about resources the thinking I today about – business Thanks. Where organization? a over maybe, XX size and to which doubled a kind the has right I'm the in company Obviously, picture run-rate in the for the with is organization, since execution sales of XX size the you capacity the bigger the Bob, the the very just past guess other get the feel of you Green and Giant are months? having manage capabilities

Robert C. Cantwell

line, kind business sales bottom we've kind from this of certainly only three was size this and CEO not doubled Well, not I ago grow line, to grow when took now, the bottom of doubled as and we've corporate And a the infrastructure. to almost company this of but certainly the over goal size top build and of organization. our out the years only line

have the through that of of expertise I to excited So, by. and pretty weeks, next in ERP opening much in R&D on first-in-class lab, real all mentioned innovation we're place a new here are forward couple board come things system, from that we're that a is all what those and sophistication moving people, cetera, et

So size we're our again. double we're ready; ready to

and is continue to this to ready grow through structured ready be to acquisition. So organization

more really today. comfortable business an in that support size we feeling So, easily a put organization can place twice if not in that

Jon R. Andersen

for Thanks color. Great. the

Robert C. Cantwell

Okay.

Operator

Cornell Citigroup. Burnette to move now with We'll

Cornell R. Burnette

a and on congratulations Thanks lot the quarter.

Bruce C. Wacha

you. Thank

Robert C. Cantwell

you. Thank

Cornell R. Burnette

kind losses if the size a, the loss of reclaiming brand of you into longer the this distribution of you've starting distribution in in lost you of the opportunity sales, they've kind turn just share but back of then And is dimensionlize, past struggled, wondering couple come years, that really of Giant of tick-up at to obviously, wanted just I steady Green the are to begun that quarters to it past past? can some what's play? as term, the perhaps the the know, as had over some over over to couple there's see in and been some corner,

Robert C. Cantwell

is competitors and good where going. whole good Well, for from Giant, frozen is customers And of takeaway to the the brand some frozen. to real we're The in opportunity growing. stabilized. really side I good and a and to are core declining have rest stabilized certainly and Giant, of of really the even some When the up, a yes. where and answer is pretty I about growing kind – the all going is be today it from which sitting year two bought was to actually news innovation getting our call the see core, we we we're we mean, badly get was too, saw the kind category. wanted what it going consumer of knew tough where Green it's think we the category is, feel that flat growth We to here really is Green what of the we

our category. and here, competitor whole So with the us lead moving we're

has only frozen. Giant Green ups So on

difficulties just some low-price that future That's of the time, shelf-stable the total, on environment in moving. longer of stable a big a that competes shelf not take have years challenge. really of see kind because But Giant was, just $XXX business we is this in. is, but We million It's and Green next some over a few business. here going growth to the if and challenges

get $XXX first Our over few again. It's going years. step is to million a it take to

innovation It's be it $XXX It's opportunity. a consumer. vegetables, tremendous there's And Next step we'll get the launch lot category XXXX. over excited that in in coming. innovation about to category more we're in you. the being in. with a selling But million. and try for to have category there'll a which next today's innovation just It's better here right more the that And including certainly certainly vegetables. few more closer is we We're it's pipeline a we'll lot years, be

So, hopefully all us for all up it's and up whole it's and the category.

Cornell R. Burnette

answered you delta a expectation and in you I the terms $X of brand that What's third terms spending brand, the in than for question in then behind of that quarter less spending Green you ago. maybe the year Giant? had spent in think did the previous some the the quarter about behind And right. on year-over-year fourth the of the million All

Bruce C. Wacha

it'd full Yeah. for year-over-year number. the It should $XX be our million But, year, a again, about similar be benefit. to

Cornell R. Burnette

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

Operator

move And to Rob LLC (USA) time, Robert Securities Suisse. Suisse we'll Moskow Credit at this with Moskow Hi. - Credit

got But I I've think actually question one answered. more my was question.

up higher relationship fourth And growth sales all had quarter, acquisitions. the make this Your X%. going is I just sure, XX% only would I Is to it's anything? know different? operating from so growth to it why because growth be Operating back. and that come between profit quarter, spending the I quarter to XX%; of if income isolate this this on sales But quarter want

Robert C. Cantwell

right long, Well, for that XX%. margin it's we've the which why around our year the margin consistently XX% is same spending gross whole of and experienced EBITDA all kind right has higher been around year

has of Fourth these last our to comparison had quarter year. our And All of year, bought up is warehousing number been dramatically. modeled we in business million. it in and over go explain first fourth quarters. have to were knew we kind in in through going we As our we've seen what business that we $XX October to that be were modeled took because And, part we we we've knew the it's were costs over fourth when pretty and year-over-year transition effective the by that's quarter. this something hit distribution world, in last own business a of X the substantial three don't frozen that for our being quarter, of negative going the increase. took we and on of We been P&L this kind about you own

cetera. spending. So, why of fourth EBITDA were lower the et in that fourth much level That's quarter quarter, has margins

very is comparison the So different.

XX%, months our our third It's the where what compare second tracking ourselves quarter in whole the us in all XXXX, seller of the that for nine that year, just margin the much than talked transition versus all doing and the new actual. acquisition expected we've around gross of been the has year. quarter happened in this when in we'll right is we first about year. margin was XX% or every we versus been that lower nothing versus modeled of first spending half really where numbers that quarter the had So, the the XX% been is it's is EBITDA profit But I've finish we've of where spending tracking our we

we're really of happened, Credit LLC the Securities Suisse finally forward. go Moskow kind just anything it's year-over-year So, in year-over-year change - over and comparison, (USA) no Just plugging that's we comparison that in Robert as numbers. some

said would around plug the think quarter margin XX.X%. in... I that be that you same gross If fourth I

Robert C. Cantwell

Suisse Since Credit last year. - Moskow Pardon Securities Robert (USA) LLC me?

Robert C. Cantwell

margin get Yeah, in, Not your since If last Suisse XX% year? plug year. Yes. a Okay. I - LLC Credit XX%. (USA) to Robert that I Securities Moskow for

Robert C. Cantwell

in, XX% you said, Suisse into range. and low-XX% plug And what between Moskow that's had And LLC Okay. Securities the Bruce very Yes, Correct. kind - XX%. (USA) correct. Credit Robert when you right. number get Thank that a much. of that's All you

Robert C. Cantwell

Okay.

Operator

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

Eric J. Larson

and year taxes, that take part. your like, of your higher just small have board expense, or are the how for – year, would guidance ratio your that out, If I dividends. quick you maybe cash dividends, Yeah, at looks a raise of you the respond Bob, recommend a got Take out interest take little it dividends Is in cash the to they go – pay like it that shareholders, and you you your my given maybe forecast your to to end could wrong to calculations that? just the mid-part mid-part, to Bruce. to and EBITDA follow-up a and maybe like move the for Bob question the maybe bit you seems cash some CapEx

Robert C. Cantwell

Well, no.

should but million, The investors, plenty sharing we board meeting, Your to current dividend. is about the calculation support with conversation. that. million committed Yes, with $XX is after current there what of money every cash of $XXX At we board to talk board do about our our dividend. it's – is kind our after a is so dividend, or cash give take generation

there's and raises here part to any to I is, current most plenty future think cash of point of want we our might important do. your dividend the flow support

Eric J. Larson

you Thank very much.

Operator

That Cantwell session. to will back closing conclude the any additional turn question-and-answer for remarks. Bob it I'll over or

Robert C. Cantwell

Thank you great joining and years. great XXXX. all a thank year strong over the thank finish start a have the support today call to you certainly and Okay. your and We in for a you for Again, very much. very look to XXXX

Operator

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

B&G Foods (BGS) 31 Oct 172017 Q3 Earnings call transcript