BGS - Earnings call transcript Q2 2018

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Operator

Good day everyone and welcome to the B&G Foods Second 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 Investor Relations section of bgfoods.com.

Before the company begins its formal remarks, I need to remind everybody 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. 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 per making non-GAAP income, will be references and earnings financial adjusted EBITDA, company call the on net The to business net adjusted adjusted diluted sales. share, base today's Reconciliations comparable of provided earnings most these financial measures to in GAAP the directly release. are financial measures today's Wacha, company's will financial Bruce start the the for by quarter. discussing CFO, company's results the the call the concerning Bob and company's After Cantwell, will company's company's outlook will the Chief select the remarks. discuss Officer Operating businesses the XXXX make Ken his Romanzi, Officer, some and highlights and that Chief beyond, thoughts that, Executive results, for affected various factors Bruce. turn I would now to like over the to call

Bruce C. Wacha

joining second Good you for quarter call. afternoon. for XXXX earnings Thank us our

second very guidance, implied considered Difficulty] environment. benefited the business, be in rates growth of line growth full X% our trends sales from is our top from excess strong results more than [Technical that (XX:XX:XX) growth X.X% despite are operating of what by year Our quarter to base challenging

of the we year. last quarter million million generated the of $XXX.X for net During second quarter, $XXX.X sales compared to

quarter, to million until year in fall from quarter. XXXX and million to million which acquired $X.X to year, and due short million Difficulty] business base in the Nature generated contributed to second the full for freight was increased guidance, and $XX million not (XX:XX:XX) sales in pricing from our adjusted expect price net quarter. in sales the savings EBITDA the $XX.X Our the $X.X increases $X.X which were from approximately increases net approximately our by costs X, full half quarter of the last programs see of of benefit Back $XX.X our updated increased increases a largely fully we price including million late October compared primarily timing of on the year. second implemented of industry-wide to [Technical We volumes. expected cost approximately

the support These during net pace of into of In EBITDA we first costs [Technical had Green offset EBITDA year, cash. Difficulty] Difficulty] were during to of $XXX the million roll-out of adjusted of six in percentage six by million pricing very of increases to addition, already and million we operating begun We of the generated adjusted freight of inclusive of $X.X have generated approximately activities our in (XX:XX:XX) in the [Technical year trade $XXX as moderate. innovation months the spending. approximately benefits generated a the months the increased primarily of to net sales months of of million approximately million first of slotting in for spend coupons (XX:XX:XX) compared of $X.X products. provided part conversion the This by XX%. EBITDA increased costs XXXX. XXXX And cash Giant six $XX.X includes approximately of timing strong compared the freight first costs to and

own we third increased million to been Nature resulting [Technical well in from now XXXX. benefit an $XX compared growth the will adjusted million million price volume that million Green pricing generate this quarter the innovation the the frozen as Back and $XX as not to in an Driving million have million benefits of half did to $XXX portfolio one $XX implemented Giant ago. $XXX Difficulty] to year $XX EBITDA this (XX:XX:XX) of million to which from across primarily a during products expect back We expected (XX:XX:XX) year of be to expected from increases $XXX

Offsetting $X expect also million (XX:XX:XX) from to coupon second including will about $X reduction of in Difficulty] million the SG&A and program freight warehouse [Technical million half (XX:XX:XX). this of anticipated by $X benefits lower benefit Difficulty] year. [Technical savings our savings cost of these driven initiatives be We increase

the (XX:XX:XX) our of other We of costs for majority favorable flat be total expect between to of the basket Difficulty] [Technical remainder year. the and inputs

We are what communicated largely full (XX:XX:XX) year which line our fine Difficulty] is tuning with in [Technical have Difficulty] (XX:XX:XX). [Technical we

We earnings to EBITDA $X.XX. to billion $X.XX $X.XX to adjusted $XXX sales billion, adjusted $XXX million of per expect $X.XX million net share and

Now the $XX.X the the for frozen sales Difficulty] up cover approximately first our [Technical by approximately a innovation million Pirate's to Giant sheet. Spirals the Difficulty] nearly (XX:XX:XX) performance drivers double-digit [Technical for up quarter saw of also and million Veggies, launched by Cauliflower sales products Giant net Riced (XX:XX:XX) year. Mashed driven as Giant some or balance for move strong Despite quarter newest million. sales million $X of the Booty fifth Giant the quarter. before $XX strong frozen consumer nearly with key demand in our quarter. Pirate's XX% during outperformed the Green Pirate's are to XX% Booty I'd $XX.X first net continued Green from of increased Booty of Green and our to to Veggie consecutive XX.X% sales like performance in Giant XXXX six the months slow Green now XXXX we or Net start of of were as well growth Giant its which of quarter Green of launch Green

rest the of pluses a of portfolio, mix had and we at Looking minuses. the

and XX% million in approximately X.X% another quarter, compared quarter New sales year of the under York $XX.X strong X.X% up our following the a net for first ago the X.X% million $XX.X quarter. double to Ortega growth in $X.X for million Cream of of to of ago generated quarter, QX down over sales. of quarter, period. generated sales net (XX:XX:XX) second on the year comes ago up had quarter heels but the sales of ownership during net Victoria down net quarter, Style strong generated of Wheat digit sales compared This period. the year Difficulty] to second the $X approximately net was performance and the X% growth [Technical generated in million compared

million and Difficulty] the and and acquired spices compared X.X% last in that net Back quarter Our generated Net I'm inventory From the such tracking reduction in program a net our balance is Dash annual. that second XXXX prior businesses the of generated our the year. for $XX.X (XX:XX:XX) Nature $XX through to [Technical business to portfolio business and million as report Difficulty] track in were needs of Mrs. schedule sales legacy $XX.X rest sales our we the to to the (XX:XX:XX) $XX.X seasons inclusive of [Technical brand million in quarter. compared (XX:XX) perspective, happy million (XX:XX:XX) quarter sales sheet in to the to brands of XXXX.

the XXXX, million inventory end end During [Technical at of XXXX. to the reduced $XXX.X two (XX:XX:XX) first of quarter at the we've Difficulty] the second compared quarters of fiscal

As by inventory during period a time reminder, $XX same increased last nearly we had year. the million

million of approximately of of our already We inventory cash our expect to continue Difficulty] to reduce $XX.X of quarter, (XX:XX:XX) program the year-to-date. [Technical to been our We million throughout reduction to reducing We of $XXX inventory Green the term decrease the to end approximately in Giant balance billion. of [Technical million the to $XXX and quarter by the million loan (XX:XX:XX) target, high expect approximately net $X prepayment debt inventory has end inventory fiscal reducing million finished to fiscal year $XX a end sheet reduction made million approximately the we on the with facility the the of of and primary voluntary $XXX $XX million our with the beneficiary of achieve during XXXX. $XX at remainder year Difficulty]

$XXX through Directors common XX of the to million million As of share dividend our Directors share $XXX.X those $XX mentioned (XX:XX:XX) an (XX:XX:XX) of by interest cash our the you X.X% program expense to of expense of million expense to interest this of Difficulty] Difficulty] May, And from of average common to have in approximately price or expense end you are who Board $XX.XX quarterly [Technical at your repurchased I of quarter. million, shares [Technical modeling stock million enhancements an amortization for repurchase of here and remaining Net enhancements authorized second $X $XXX.X million. the of increased per Depreciation know, XXX,XXX of guidance. XX our of $XX.X million some own of approximately million. Board year $XXX stock. rate we updated per March including million, share cash are of what of earlier, In now interest amortization $XX.X our $XX doing the approximately

we and effective We rate year. continue million expect than cash less now our to the an XX% XXXX be taxes tax $X approximately expect of for in to

million $XXX adjusted to Irish are And we and guidance, now X.X% inclusive after to CapEx our and our CapEx, lowering of $XX to of we quarter, at EBITDA to plan million (XX:XX:XX) expect our now by I'd EBITDA like Difficulty] anticipated on Bob? (XX:XX:XX) debt inventory taxes our Oatmeal an our McCann's the approximately positively In net will [Technical over to EBITDA year. adjusted approximately occurred the addition, our that million $XX [Technical cash also Also cash be additional acquisition expect cash end previous to when compared an which adjusted increase call Difficulty] $XXX we pro We and million, dividends. midpoint $XXX of to the our X% before $XX guidance of million interest reduction to EBITDA the forma expect impact of Bob. Based million. on the based turn of adjusted X

Robert C. Cantwell

the and Bruce thank to you, our you call joining for today. audience Thank

vision Foods the a results. when growth, key on the reminder, generation to expects would are public free the stable (XX:XX:XX) Difficulty] became we margins achieve track investment company and community with for [Technical laid strong typical be from our year this and earlier suggested a these a year flow B&G XXXX cash As we we XXXX modest in we out year, topline

been the acquisitions acquisition excited of premium know [Technical what and walk of we this It through in With leading we category McCann's very announced B&G is dynamics. a to the authentic (XX:XX:XX) acquisition in business Another better-for-you you love small it straight Irish has typical some for a Difficulty] recently in fifth this category (XX:XX:XX). cut Foods of [Technical as oatmeal. you highlights strategic Irish brand I'm adding and the stands the Oatmeal, our for transaction, brand, steel we but brand, of are Difficulty]

benefit M&A. strong As benefit base were spending. from versus benefits Difficulty] increases growth trade quarter. of (XX:XX:XX) Bruce a [Technical Including [Technical and net base Wheat also (XX:XX:XX) and Back the Difficulty] up from line of second $X.X [Technical sales, last growth brands Difficulty] line This Difficulty] inclusive very list the as expected. up top Green our our to year's M&A the initiatives. including we sales year our of the cash growth growth X-plus And continues start the also flows of to compares the reductions to the $X.X business as growth, price X% full price approximately top [Technical well had is growth Booty, the drivers during and like benefited adjusted Victoria X%. this to more of EBITDA our call, in [Technical as equally mentioned are quarter are key our million. our we're we X our cumulative beginning well and points six to favorably up between target Cream Difficulty] of of Giant, acquisition points We months second nearly (XX:XX:XX) at as X.X% approximately important, from several volume. approximately There Pirate's which and And pricing performing (XX:XX:XX) Nature promotional expected. Also business (XX:XX:XX) contribute for through in of than Ortega, million

costs call, during to we the benefits and year we previously, the million increases increase of pricing by of another Difficulty] half the benefits this designed off in will in two [Technical were later you know, impact to of back $XX head our freight but strategy be as the mentioned we the (XX:XX:XX). margin next I the increases plus compression on As seeing $XX was and Difficulty] first driven largely touch the in cost. cost that event million a half will [Technical [Technical (XX:XX:XX) price (XX:XX:XX) Difficulty]

Now, will begin our [Technical back Green Difficulty] Giant, with I to brands, (XX:XX:XX). our largest

our demand fifth our products in This frozen, by the for sales reported quarter net strong have veggie Green latest approximately innovation Spirals. launch We our $XX double-digit is XX% growth Giant almost increased just growth which million by of to second including of driven Giant in quarter. Green

are helping and they XX% Giant and throughout almost for of are still our Giant we very will (XX:XX:XX) continued by excitement Difficulty] Veggies. achieved brand. in that product already Spirals Green are up we're channels our period days progress these and just also [Technical for Difficulty] as drive to be Veggie Consumption latest of [Technical mass five-week the While the big Giant our latest (XX:XX:XX) growth our innovation and Riced and [Technical in our (XX:XX:XX) launch, as about trends Green this expect frozen, Green our Giant optimism and the to-date strong XX% year. much support excited the core remainder targets the distribution Veggies Difficulty] early have the food Green

and driver a [Technical electronic the the slotting Times coupons launched raised we the for We (XX:XX:XX) Difficulty] our are to new million Spirals as Green quarter [Technical in and Giant Green our Veggie also spending during of primary in (XX:XX:XX) was heart Square. second Green Giant the increase $X.X nearly Difficulty] billboard Giant

increase are vegetable driving efforts we (XX:XX:XX) We [Technical continually and consumers to and consumption. Difficulty] their to our about the awareness get feel also for good brand,

categories In we'll had new number a push stellar frozen of innovation Booty (XX:XX:XX) fact, be Difficulty] also later vegetables. a we of in organic three new a [Technical continuing Pirate's including our items line this and quarter. fall, are new

of outlook confident results, on promotional key the last customer. the mentioned we despite a we As Pirate's in our and were event XQ were Booty driven call, by very timing the which soft for our

in growth delivered Booty a XX% confident Pirate's are think Pirate's the up the unique for of (XX:XX:XX) long-term Booty margin for [Technical [Technical strong very our truly brand for this snacking year category net quarter the better-for-you the Booty in and forecast and second we Pirate's Difficulty] sales, remainder is brand. Difficulty] upside While profile We (XX:XX:XX) in and profile.

talk most Pirate's a truly that for like one would Booty moment. convinced of is about snack I are also in We to America. the brands valuable North Ortega

and brands the a reminder, is X.X% one sold for food first years within brands portfolio. Giant, in Nature of [Technical you that the taste [Technical Green our been Victoria the Spice steel month. acquisitions months another of Difficulty] of to a to ended for McCann's premium portfolio. authentic our we quarter, (XX:XX:XX) brand for Irish Net of Ortega and an Oatmeal the (XX:XX:XX) and were Wheat up brands were up is consumer. in with newest addition X.X% late year. Difficulty] cereal up has Also second Back to is to and last Difficulty] for seasonings and consumption announce XXX-year position aisle. is We [Technical Irish are old (XX:XX:XX) is the to great weeks the of States now, take Islands (XX:XX:XX) data our today's recent example six acquire XX. sales very hot June our but complement discuss Difficulty] X.X% [Technical the McCann's United strong, of of As There second largest the Hispanic also And Difficulty] and perfect oatmeal. McCann's XX better (XX:XX:XX) moment cut acquisition a Cream to [Technical our excited the the to

free Wheat, the (XX:XX:XX) Within support lot great the model for the of years, addition of cash brands our high a years growth (XX:XX:XX) to we like that much to breakfast of to premium attention a come. smaller brands Cream continue portfolio And [Technical in Difficulty] hot expect Difficulty] over flow separately, for of McCann's margin [Technical type to a is innovation creating our has in McCann. cereal [Technical oatmeal like couple (XX:XX:XX) category, Difficulty] opportunity

line from side move business. top our the cost Now, we'd like to of the to

now, for [Technical been (XX:XX:XX) just Bruce high. to we Difficulty] last mentioned, Difficulty] cost first freight time [Technical As have (XX:XX:XX) some which and began remained fall

in fourth Difficulty] [Technical of costs quarter. the three have last of million the first during year's which in quarter We freight past year's over approximately and came increases quarters, (XX:XX:XX) majority $XX this

Now, also XQ costs were elevated.

we Difficulty] and very of of our But unfortunately, we Difficulty] year. two flat in these between XXXX. expected quarters million million the initiatives comparison Outside back to the of out ago. squeezed pricing to [Technical been [Technical half our during are cost we the now the and generated EBITDA $XX.X favorable Bruce on expect of somewhere favorable earlier, year. year The still Difficulty] (XX:XX:XX) pointed the Difficulty] (XX:XX:XX) of (XX:XX:XX) first net freight [Technical adjusted are through have XQ compared We pace this be a [Technical As cost, increases. (XX:XX:XX) of $XX.X

line we our the begin year. top of by our the the with [Technical which the pricing encouraged during successful also on of will to pleased are implementation We very second and really (XX:XX:XX) are Difficulty] we progress expect half strategy,

expect year. McCann's also to we cost (XX:XX:XX) finish other happy Difficulty] to frozen While setting freight And innovation-led up Giant core and exciting of recent to of also from acquisition solid in a brands. a growth the [Technical moderating nice begin in the announce benefit Green performance the to we're

over Ken on Now, I'd the Ken? our like to to provide additional initiatives. turn call detail cost-cutting who'll

Kenneth G. Romanzi

Bob. you, Thank

mentioned, pricing As and had strong our benefits Bob of brands have and we some a net key Bruce by growth quarter led initiative. our from early sales

net growth which X%, half to $XX year business includes be $XX We pricing the the to expect million our in of million approximately of benefit. back base sales

already Bob (XX:XX:XX). Difficulty] On you the the through cost walked factors of that side, some [Technical were

time update the [Technical giving we're I'd like an doing on to on offset (XX:XX:XX) So (XX:XX:XX) Difficulty] to the these Difficulty] of costs some some you spend [Technical side. freight

(XX:XX:XX) of increased to continue rates implementing contract spot intermodal we're efficient efforts versus of betterment service. the and Difficulty] so, do have rates to will be for more While freight [Technical and

the we late XXXX increases. will be punitive less the Difficulty] as (XX:XX:XX) we the the lapped freight of throughout We year, expect costs impact but back end than elevated year expect the [Technical

year, this Difficulty] by new expect be expect Houston reduce the fully Beyond our (XX:XX:XX) to (XX:XX:XX). operational [Technical a expense Difficulty] end will in distribution further California once save location Southern and approximately on with [Technical Coast our annual We our (XX:XX:XX). of Difficulty] close as and center we to operational September. We West [Technical Difficulty] [Technical believe an this basis, (XX:XX:XX) new we secured

some our [Technical quarter as service distribution that than the also several expected year. soon customers not Houston with will costs, this to of inventory this new Furthermore, improve However, cost (XX:XX:XX) is reduce center believe levels to close do customers days to those as fourth Difficulty] our we but we only West location. Coast benefits

freight the inventory costs the year. driven $X.X On warehousing see year-to-date costs approximately we've These just maintain to a full versus are margins reduced million. by supply chain drive front, approximately of (XX:XX:XX) comprehensive primarily million to in transform we And program, rates. our reduction saving initiatives time of [Technical the savings the we control of pressures to we're like same undertaking year benefits warehousing meaningful cost cannot to program expect $X our last beginning the Difficulty]

increase sold. basis. to or (XX:XX:XX) an base last As Difficulty] past been X% next Last $XX approximately for have cost of that the quarter, X% engaged is initiatives of of study and an goods annual believe savings years months. our few before this [Technical diagnostic the million a with (XX:XX:XX) over Difficulty] project, opportunity our on anticipated I these working million of now or few we've opportunities to with annual cost identified possibly we $XX you cost even savings COGS we cost about savings And quickly consultant us [Technical mentioned I help in collaboratively our there shared began,

our over have expect year total cost days. as well their be as As part next the to phasing provided end at time guidance few condition of identified anticipated to we the call, savings conference our

the call over back Now, Bob. I'd turn to to like

Robert C. Cantwell

inventory finally, clearly a audience is (XX:XX:XX) into using thanks to translating the for joining have are top the side, more pleasure And that are our but cost We through to significant Ken, cash this work dividend policy Thanks, as Operator? the ability report on to share of reduction and would the program Difficulty] us. coupled line, we to M&A to shareholders repurchase be do generate [Technical supportive program cash [Technical begin generation. that, With with the successful our our Difficulty] I on it our consistent to to our Q&A and accretive returns of portion (XX:XX:XX) pursue now our like call. debt, opportunities. and well to through

Operator

our of question Montreal. take will Zaslow We Bank first Ken from from

Ken Zaslow

everyone. afternoon, good Hey,

Robert C. Cantwell

Good afternoon.

Bruce C. Wacha

Ken. Hey

Ken Zaslow

you So a the forward expect (XX:XX:XX) into just Difficulty] is the cost believe benefit when [Technical (XX:XX:XX) XXXX? savings well as about One questions. year, think cost XXXX I to two is, as do going of to there and

Robert C. Cantwell

question, you the just hard was very repeat the back actually of Could it hearing. half

Ken Zaslow

don't Difficulty] (XX:XX:XX) it Yeah, I know what I apologize. [Technical is,

Robert C. Cantwell

apologize too. I It No, is...

Ken Zaslow

would (XX:XX) [Technical Difficulty] So the that growth of [ph] does benefit into XXXX? the translate XXXX, pricing in (XX:XX:XX)

Robert C. Cantwell

is that's [Technical inefficient later think a and through the in team mean, (XX:XX:XX) see Well, can (XX:XX:XX) again, XXXX. effect trade. work in reducing of We we (XX:XX:XX) by first just in half in the us I six where have at I (XX:XX:XX) Difficulty] the that of we look heard, Difficulty] not led pre-program part absolutely, been certainly extract big good in way, half the pricing as pricing quarter so again as Difficulty] programs is by XXXX. continued Ken pricing to some his we benefit months of [Technical driving in what But the a a benefit addition, I of second t[Technical here that into first

about Difficulty] able only because So, of we XXXX the year pricing expect of not of another (XX:XX:XX) timing six to implementation. in months to be [Technical just talk this

as pricing (XX:XX:XX) be [Technical (XX:XX:XX) promotion [indiscernible] price throughout continue less the to We XXXX. Difficulty] expect work trade [Technical the drive will Difficulty] (XX:XX:XX)

Ken Zaslow

So, will (XX:XX:XX) you XXXX? in

Robert C. Cantwell

Absolutely.

Ken Zaslow

[Technical you second the better Difficulty] type of what And expected (XX:XX:XX) than is [indiscernible] (XX:XX:XX)? thing

Robert C. Cantwell

actually but a Well, [Technical a generation top was first we're we're (XX:XX:XX) so (XX:XX:XX) in brands. early in of through built certainly on Difficulty] we've most in you of I the think [Technical And lot quarter and half of game, number the and what second pricing programs. very that strong pleased, Difficulty] it's saw seeing the volume

$X.X we make get year, only for and the business quarter [Technical the (XX:XX:XX) the do and it's strong finishing second nice in sure really we've second I a million (XX:XX:XX) base half important really number half of base So to quarter the Difficulty] half over X% quarter actually in certainly everybody with second on Difficulty] for half, and growth understood, that line of led the close in too up had but business volume of not first our think really of and expectations we increased changed Giant strong number trajectory to the business [Technical the the year-to-date we as a is the first Pirate's, during and about X% by think Green and first has have brands being the kind year.

right that of rest really certainly, we're into then expecting to continue we this So believe to the flow XXXX. through year and flow will

Ken Zaslow

you very much. Thank

Operator

Our Citi comes Cornell next of Burnette question from Research.

Cornell R. Burnette

guys. evening, Good

Robert C. Cantwell

Hi.

Cornell R. Burnette

in so that just surprised a that Just [Technical than tracking, drove was but accelerated Look of kind the cost that about you did gross $X or gross some pressures the of that million you the better result a In of XQ, due little team Difficulty] did given what you on came what sales EBITDA I margins. below. was (XX:XX:XX) like expected your of A quarter? there quarter, something pricing lot that couple and XQ margin questions. was really get curious bit in versus was side during kind to

Robert C. Cantwell

better of the what to certainly, little actually, EBITDA, here. in come less so expect did So be it bit year in $XX we surprises a cost million short we like last on side, have

we cost said, we're to and another. through Bruce quarter freight had increases see, the going second So knew as certainly, heading we still

of of bit is So Northeast quarter for the year-over-year of margins of quarter change [Technical lower like a here that in little down. [Technical a about we've [Technical barbecue Difficulty] million I mix summer do what our helps our first (XX:XX:XX) a and mix the (XX:XX:XX) freight the first (XX:XX:XX) $XX really season only Part brands the We're B&M what sell half half. experienced EBITDA in Difficulty] Difficulty] call to you B&G so get margin cost $X the there's into at million which second from you in lot looking drive just close growth. the second

that of So quarter from [Technical we (XX:XX:XX) didn't [Technical first a at in (XX:XX:XX) kind the Difficulty] compression all. margin Difficulty]

And what is certainly look increasing, cost [Technical seeing we're our don't year then, shrinking So all of it and in know kind I some because of our improved this let as benefits a structure of our out we mean, we and rest sales that we're (XX:XX:XX) and Difficulty] dynamics growth. the will margins, up solid small seeing the results other year. from we're actually see here. the on the really should mean pricing at net of freight see pricing in internal We benefit rock the from rest Nielsen through sales is small growth a the of the I be place. certainly

more the because mean, (XX:XX:XX) pricing going pricing. between much that, pure quarter to $XX in Difficulty] dollar just [Technical million But than So I fourth there's (XX:XX:XX) we're is quarter. pure we're [Technical between other it's a and quarter pretty third higher, sold. Difficulty] volume be of to see that pretty generating the on split quarter split price on so quarter, fourth the the third and fourth the equal

Cornell R. Burnette

the and EBITDA guidance year [Technical the [Technical of Difficulty] about just full (XX:XX:XX) And why the Difficulty] was cash when end (XX:XX:XX)? upper down brought the total, thinking guidance

Robert C. Cantwell

I think think certainly comfortable Well, very through just are – Difficulty] in walked kind (XX:XX:XX), as where we us we you wanted to from of extra [indiscernible] gets the we (XX:XX:XX) uncomfortable that I have end which low million, feel just was on kind we're It basically really felt where, of to guidance our roll of the our we and top. here. today, range $XX guidance [Technical Bruce just at

cost will have, know we we think know we our than be cost worry rates know what about the pain only spot cost the only in as last what are. it believe in achieved did saw because rates �� we And reduce better we are. we is we here, the last quarter that. fourth can contract freight, our we and mix year We of So the we the think structure but where We year.

on bit raise (XX:XX:XX) conservative top sales more how a So really the the line comfortable the I top the we the on of side. a well of but But sales was did year. on rates, high also we're think bottom with on approach EBITDA side the it little through on performing both is and line sales the

Cornell R. Burnette

And on you freight (XX:XX:XX) have half? Difficulty] Difficulty] (XX:XX:XX) [Technical of back kind Difficulty] [Technical do that (XX:XX:XX) [Technical

Robert C. Cantwell

is locked nothing Well, ever in.

that's rates last kind in there's major that and kind in. We have around of too. our unless quarter help understanding is. our changing we spot locked inventory, this the again lot year We move, The moving we we're don't So down, inefficient nowhere rates feel real because can that are comfortable. what bunch outside that us but helps good doing hurricanes year that as contracts dramatically. less the of expect whole fourth inventories were And we're

So of we're I reasons that quarter piece. we that's EBITDA. a [Technical the Fourth mean (XX:XX:XX) year, EBITDA punished hit last quarter year-over-year (XX:XX:XX) our [Technical terrible the biggest last hit one on took year probably Difficulty] lapping over freight on the fourth really year, last of Difficulty] little

X% even the seen second months at we're saw through the We the to year-over-year know at year this and year, the (XX:XX:XX) million that high almost and rest rates higher going on of the know year, we've improved change in in about so we happen X% little we're and us quarter. against $XX a year. the quarter million million gone rates, We're We've looking $X X%, freight the to rates we around – are quarter. as really – number. up, to double know look rising this we be closer second look hit we over the we first did. what six what's we We happened as very at we've not saw $XX with And So on but in for improving next here.

So we have really...

Cornell R. Burnette

guess... I

Robert C. Cantwell

Yeah.

Cornell R. Burnette

going I'm of (XX:XX:XX) spot out year? just is there say last to one of the the from how contracts that basically are the the the on much remainder this for

Robert C. Cantwell

we're So contracting.

trucking out just rates. are to it's contract available, of – trucks a So go fully contracting, tough matter be if are – we a at it's going environment. It's they

for in spot. goes hoping larger of we're So that the contractor percentage the out (XX:XX) rates

year give last XX-ish can fourth or the in percent shipped take we (XX:XX:XX) Difficulty] spot? So [Technical

Bruce C. Wacha

Yeah. XX% Like almost – XX%.

Robert C. Cantwell

XX% spot.

Bruce C. Wacha

(XX:XX:XX) XX%.

Robert C. Cantwell

Yeah.

Bruce C. Wacha

spot significantly. to the going going we're to be down but be we're So market, in

Robert C. Cantwell

Yeah.

Bruce C. Wacha

So average even though is less a was individual higher it intermodal and than down that more year rate spot freight will ago. rate come each and

Cornell R. Burnette

Okay. Thank you.

Operator

next Our of question Karru from Jefferies. comes Martinson

Karru Martinson

afternoon. Good

Robert C. Cantwell

Karru. Hey,

Karru Martinson

today Thanks. you where [Technical – (XX:XX:XX) in much [Technical on Difficulty] we remind can further Just Difficulty] (XX:XX:XX)? are us of how business terms

Robert C. Cantwell

the So year. the of basically, happens has is good be that news we the less which really is the fourth of quarter Difficulty] the lost in business began as (XX:XX:XX) down mean, been decline it the expected. than down but it's to on I which first-half, loss major in a – actually Wal-Mart last [Technical customer we lot

We rest (XX:XX:XX) are [Technical Difficulty] (XX:XX:XX) up in the [Technical Difficulty] in of the year-over-year. accounts

we factor third hit have really [Technical So the the just Difficulty] (XX:XX:XX) quarter loss is again.

in we're I the but had and the quarter million but not we of fourth mean, I roll year that. not close quarter. it the hit in any last grow, quarter, So likely a going forgot over upwards number fourth the most to fourth in further quarter to last major $X going year, fourth to in shrink was We're the against

quarter not that season hit it's quarter Christmas vegetable and hit, canned I have guess. year. go big third was big don't third So quarter a The is we during that hit hit fourth to the the just last

Green very a first in really strong and certainly very our to going we're and had strong So half, strong confident – kind internal to of a it's have very forecasts expect have second Giant half. a

Karru Martinson

Okay.

sense that new or when (XX:XX:XX) of year? of a roll three out, category half Green will the first will Giant get trying frozen. second next mentioned the all guys carry You those We're will into in that half and launches, to

Kenneth G. Romanzi

years. Yeah. the Ken. both for This The spread would be really benefit is well

had part Difficulty] several is but XXXX, [Technical (XX:XX:XX) we of that Difficulty] [Technical first (XX:XX:XX) innovation So this we pull slotted – wanted it major ourselves forward. actually and to

So no this for with launching we several plans work major slot. with customers year

about expect just category, want common again whenever [Technical you the next of Difficulty] we the [Technical and when retailers that no timeframes, have of (XX:XX:XX) have out ACV, get year. of a hard [ph] innovation conversations it, So efforts items mid take gotten we we'll timeframes will frozen throughout same third new roll roughly on we (XX:XX:XX) people and those year of And the next more innovation this Difficulty] and easier. those and expect on will let's between have – we existing say, the the as first to easier retail – reset, Difficulty] (XX:XX:XX) (XX:XX:XX) initial our these there's on so three [Technical on retailers based expect set All amount distribution year. now part

Karru Martinson

there how opportunities M&A Difficulty] of the lastly, Okay. on additional the that (XX:XX:XX) acquisitions look the or McCann's, environment? horizon tuck-in when [Technical at we And then, are on

Robert C. Cantwell

three say, out many become Well, opportune or the but available. I certainly Difficulty] always years, we've acquisitions [Technical years – [Technical over (XX:XX:XX) always last proven as I I mean, we're think over think (XX:XX:XX) four Difficulty] we looking years

(XX:XX:XX) to simple center think the it. is I frozen, and/or answer in Difficulty] and going Difficulty] store is aggressively (XX:XX:XX) [Technical right, [Technical the B&G we're of for So pursue

Karru Martinson

much it. Thank Appreciate guys. you very

Operator

from next Our Wells Fargo Hunt Bryan from question Securities. comes

Bryan C. Hunt

talk of creating growth [Technical the Difficulty] to Giant little halo products like a I'd could Green bit you. innovation, for (XX:XX:XX) same-store and frozen about growth a you innovation Thank whether brand? the deeper, from whole away

Robert C. Cantwell

Ken so [Technical So driving has force (XX:XX:XX), category for jump Difficulty] – frozen can the innovation us. been but the and the certainly in in

key halo I support from is tremendous we're on rest gaining the Difficulty] all the factor [Technical frozen the the (XX:XX:XX). of think

Giant we So super [Technical now Green become certainly has [Technical what Difficulty] on innovation (XX:XX:XX) (XX:XX:XX). on meaningful Difficulty] meaningful meaningful (XX:XX:XX) Difficulty] the [Technical

into large is growth meaningful is a lost, say retailer. business we're growing, is on the we And retailer, the distribution and wouldn't fundamentally the way. outside some way, say the only of cans category halo stopped can on to say Giant see that seeing a the declines rest and could moving that's in big (XX:XX:XX). happens a But of that that in thing of opportunities that's rolls it a big needle outside one I see Green to we in but So a core, in but trouble I which a be we it's really opportunities lot, the the not of X%

been have, pick frozen in so, a meaningful [Technical is Difficulty] winning up it's be kind kind to have and the our gaining little (XX:XX:XX) we really how I just of which category. kind Difficulty] vegetable had [Technical frozen a we're is a we're have to innovation too frozen said, the but Part (XX:XX:XX) new and and that's we continue think we growth and (XX:XX:XX) what September these the And of the the lot in of of certainly acceptance goal of all but [ph] do [ph] of about everybody categories. call, launches about Giant truly here. outside say we December much not and (XX:XX:XX) So other it happening. see spread (XX:XX:XX) (XX:XX:XX) exciting of through here only timeframe spread as can hard we continue also to And to excited innovation we're of Difficulty] and and we're new launch some here we're powerful innovation, [Technical to extension not our to is we've going halo driven launches category the to share, and and certainly [ph] traditional – that is vegetables the to the kind of really efforts going excited gaining said in share as really keep business. strong thing nice is our Ken Green here enter where the focusing has towards major focus three is It's still from all

Bryan C. Hunt

if year? decline wondering [ph] (XX:XX:XX) were could demand in (XX:XX:XX) Difficulty] what was [Technical last you sales in So the I QX repeat

Robert C. Cantwell

million $XX last $XX the in quarter right About of year. fourth around million,

So...

Bryan C. Hunt

oatmeal, McCann's talk of of you opportunity and and the have on then what said see (XX:XX:XX) expand in terms about retailers where you it (XX:XX:XX) Next about can your

Robert C. Cantwell

certainly the on is that is our over formats Irish has in oatmeal can but a label certainly, cetera private spotty instant et so branded business of is network, this business. is of way power think it is company. distribution. a the big an This oatmeal distribution Irish cut a cook product Well in stove, We and a business This a oatmeal, business. steel This kind move time. still sales ACV line is

as great this concept country name. opportunity, the for of again, parts We a this excited. which this is in see sales, a Very small that So percentage northeast brand, in this a today. certainly brand great better-for-you profitable know people is the brand. And also the example, of certain

is a about steel rolling plan there's this under about and a looking and the [Technical his This that out country don't on a isn't roll-out think really at new brand of great lot product to make So know of (XX:XX:XX) brand. people a bunch This cut team Ken we are Difficulty] creating can and we distribution. difference parts (XX:XX:XX) Irish here.

Bryan C. Hunt

last is and maybe (XX:XX:XX) question the then (XX:XX:XX) where And gone performance given your equity

Bruce C. Wacha

and bringing levels leverage goal lived range down X.X times, bring to continue still debt-to-EBITDA is this our [Technical make to in So Difficulty] X.X (XX:XX:XX) year. net few for to times those the progress that we've down that to past years

Bryan C. Hunt

Fantastic. That's it all (XX:XX:XX)

Operator

Our next Aslam comes Farha Stephens. from question with

Farha Aslam

Hi. Good evening.

Robert C. Cantwell

Hi.

Farha Aslam

year? you packaging pickup and into Given expenses (XX:XX:XX) [indiscernible] you [Technical next a do are [Technical anticipate pricing for in (XX:XX:XX) Difficulty] should or you're your Difficulty] that (XX:XX:XX) seeing

Robert C. Cantwell

today, of specifically based example. some cans have to ability know our we so tariffs the No, packagings, on best for done of our what

(XX:XX:XX) cans. and we of number Giant brands dollars of Green go couple of that on our cans, have So million that [Technical a Difficulty] between cost in the upwards increases

and is. we nothing that but pluses across tariffs has procurement do that minuses where know board, purely other There's know just have offset. other we (XX:XX:XX) savings we some than that also cost [ph] to with smaller more So the outs

pertinent. tariffs have hurt Outside biggest because that, But the on certainly the for of is today, it's positive those in tariffs So we Probably in our we at – the least into some XXXX, component. overall know we XXXX costs of as small to speak, hurt. expect everything have They've of us. the likely steel hurt is of P&L. be Difficulty] [Technical relatively to costs locking and going steel we that (XX:XX:XX) most certainly some as where side procurement of that we're

I'll So procurement savings, not mentioned, big some this cost about addition in in detail nice have call. increases a lot our – more much a Ken of in to savings organization lot year-end conference more we talk as will in then that and other

XX% If further. more and/or with to margin freight [Technical normal it to assuming price. ratchets see that there's nothing savings with, XXXX. But crazy okay. that got to goes (XX:XX:XX) that's some are increases find So in reason, for Difficulty] we've don't deal up all cover we somewhat Hopefully, compression

Farha Aslam

but very Understand. strong, quarter Difficulty] Clearly, just [Technical the since (XX:XX:XX) sales were in

Robert C. Cantwell

you been lines of our So with but we see product quarter? what across have a – place, we strong asking consumption have we and don't in about trends that don't very are can anything Well, changing. happen our number general in

Ken Zaslow

Yeah.

(XX:XX:XX) to list on to price the our increases. forecasted unit [ph] level. diamond (XX:XX:XX) Again, be Difficulty] we a retail So [Technical have translate

of While going we have forecasted base business. the on elasticity, to elasticity lot we're a not see

will (XX:XX:XX) not way right what a promotions, basically trade carve [ph] elasticity. satisfactory actually have – we we We're we that see necessarily deeply as some trade not big [Technical [Technical elasticity the economically. inefficient in will pricing promos volume are Difficulty] areas not that's margins And So out we'll eliminate going is Difficulty] (XX:XX:XX) where where see in perhaps to (XX:XX:XX)

are the carving our So deep the out discount there's softness at all for but rest forecast those [ph] (XX:XX:XX) if of trade least any on promotion, volume year.

Farha Aslam

Thank you. Helpful.

Operator

go At this time we're over some to e-mail questions. going

Bruce C. Wacha

over was of on year said should the put on the is call, back to of [ph] to visibility $XX the year. very of the the we're and rates of mentioned which $X visibility saw (XX:XX:XX) expecting benefit volatility, pricing. initiatives. $X Difficulty] it we drag launch Ken is the before, and [ph] good on visibility. pricing place, said having to top-line versus price So of some a else we've expect we you've freight margins as contracted an [Technical ship question primarily (XX:XX:XX) So to incremental half we or primary the the quarters few availability confidence million (XX:XX:XX) from as got the (XX:XX:XX)? Difficulty] first We the these spot that the (XX:XX:XX) million throughout in on $XX million (XX:XX:XX) And million the freight, the anything we I pricing [Technical on just incremental first have

Robert C. Cantwell

to think the million our other we is little and around (XX:XX:XX) look knew in first $X [Technical – [ph] was We kind of And I the on million going that like to in half the $XX our in it's over million freight within saw plan. $XX exactly the and (XX:XX:XX) comment to close first what important a plan. Difficulty] quarter quarter second

haven't of the all you some look half like. freight we year That's operator we're what more? the So question, unless pretty second that Difficulty] good should (XX:XX:XX) at email so we think done for on have so all feel surprised I we been [Technical that have means

Operator

does Buckingham next come Our question from Eric from Research.

Robert C. Cantwell

Hey, Eric. How you? are

Eric J. Larson

I'm can Difficulty] if (XX:XX:XX) so one total the I'm year this (XX:XX:XX) follow-up your sales quick sure just But call for be here, – I'm answered. Difficulty] the – of [Technical quarters that customer? not three on estimates sure sales canned vegetable you've asking even I'm side, questions already including [Technical would vegetable what your

Robert C. Cantwell

Okay.

So million we expect year. to $XXX this because I $XXX million be between to somewhere have that, expect sales can we

between and million We expect for sales $XX year. be the down million to can $XX

Bruce C. Wacha

Sueur. is that a well can reminder U.S. and Eric, Canada, Green as just Le and Giant as as

Eric J. Larson

you Right. with (XX:XX:XX) [Technical follow Thanks. Difficulty] later. up

Robert C. Cantwell

Okay.

Operator

Brian question last Consumer Research. from comes Edge from Our

Brian P. Holland

thanks. Yes,

Given short. keep I tried the issues very it to

whether could question, clarity internally? just First was your in with QX you line plan

Robert C. Cantwell

But is QX. We still hit pricing in by two was. on of (XX:XX:XX) mid we it freight part this we knew later settled of to knew addition, getting the getting Yes kind was factors; pressures. were

be was there lot Giant. largest So (XX:XX:XX) of slotting that going both kind spiralized the Green knew and we were the numbers and veggies we'd we quarter, knew a upfront quarter where in second on also the more to third

year. just oriented in So the but in of the first the launching in more for year, couponing not than both total and half and more slotting

So, are We're we expected. top little for [Technical where thought we on tracking exactly be comfortable tracking that we'd performing pretty actually year. better we're a the Difficulty] (XX:XX:XX) we

haven't seen So that some bit thought certainly programs and more, volume is strong and trade the actually that. good. but little on backs said affect a Ken as the very of pricing we is pull we Volume

top pleased the very we're So line. on

positive that's little been a So than expected. bit actually

few of we're where second And smaller and in it's the Power a a and can others. be to whole Giant of and So Difficulty] year. [Technical Green year, have brands. for going (XX:XX:XX) Brands about our sales heading the Pirate's excited into our we lot be certainly the very our really half But driven

have and It has up has that last the struggled was down a quarter. TrueNorth million We years. couple brand for been the $X like in over

just some improved, of really too. and change that dynamic the go-to-market on brands some there's some the smaller really the in So just of we've go-to-market

better looking we trends So were of think everybody [Technical in same I are results certainly that (XX:XX:XX) most general than better at because categories last probably showing in Difficulty] time. year what consumption the

Brian P. Holland

million $X that sounds offered in one you me. QX. on Okay. like $XX guess It from freight, And million then so or I in cadence the in last QX,

or which flat think your of one (XX:XX:XX) that the doubled actually would you QX back Do the in full (XX:XX:XX) be QX. I half in for you when half, that (XX:XX:XX) million you $X in said means maybe year [Technical sounds think freight out something like because asking I'm guess, [ph] I the than they anticipate Difficulty] lap. suggested inflation than morning it. for

that if for you So curious clean us. up could maybe

Robert C. Cantwell

Yeah. quarter. [Technical happen Difficulty] that the (XX:XX:XX) third in will

So what that contract. the year. where needed even in a we're a year, is quarter. quarter we we're way And [Technical ratcheting inventory this part than a – last expect that big we just Difficulty] fourth to of were And the up rolling in in in we not against doing (XX:XX:XX) flat little benefit some fourth up what

mix know which we're are in is to spot now our ability our inventory because changes that So just down we and less, going bringing up. rates much demand needs really contracts

both in rates we're spot. we're So seeing and up of going kind seeing

a begin lot every the rates costs more frozen in huge distribution, And on less of quarter for in huge rates. out (XX:XX:XX), not contract we know mean the because means when and than this difference [indiscernible] difference we're comes a us. spots higher based what market means lot Difficulty] went spot first in we contract so in upwards on And a looking million last truck just But what first we surprising lot spot which with. all need to the inventory I of it's fourth year [Technical long. on which much at more $XXX thought a there's been a year that side that's tracking contract and year we're of which (XX:XX:XX)

much get multiply when And – of you the being inventory out which decrease percentages by numbers led is a majority inventory. frozen decrease bigger. those our So is vast in Giant, Green coming of

at in some the of all So some it's there's versus We we had on we've year know [Technical be Hello? last more freight higher quarter to conservative of [ph] year. expect Difficulty] thinking get going all don't got because And even we kind than issues last (XX:XX:XX) us positive. maybe here, we're of our positives bottom up. positive. But to is And kind flat shelves (XX:XX:XX) the

Operator

there time no are this questions. At additional

Robert C. Cantwell

Great. everyone Okay. Thank the for you. call. joining you Thank

B&G Foods (BGS) 3 Aug 182018 Q2 Earnings call transcript