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B & G Foods (NYSE:BGS)
Q2 2019 Earnings Call
Aug 01, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and welcome to the B&G Foods, Inc. second-quarter 2019 financial results conference 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 the Investor Relations section of bgfoods.com.

Before the company begins its formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. We refer you to the company's most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact the company's future operating results and financial condition. The company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

The company will also be making references on today's call to the non-GAAP financial measures, adjusted EBITDA, adjusted net income, adjusted diluted earnings per share and base business net sales. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are provided in today's earnings release. Ken Romanzi, the company's president and chief executive officer, will begin the call with opening remarks and discuss the various factors that affected the company's results, selected business highlights and his thoughts concerning the outlook for the remainder of 2019 and beyond. Bruce Wacha, the company's chief financial officer, will then discuss the company's financial results for the quarter, as well as its guidance for 2019.

I would now like to turn our conference over to Ken.

Ken Romanzi -- President and Chief Executive Officer

Thank you. Good afternoon. Thank you all for joining us today for our second-quarter earnings call and with the special thanks to the dedicated team at B&G Foods for working so hard in a challenging operating environment to generate our results. This afternoon, I'd like to provide you a perspective on our second-quarter results before I turn the call over to Bruce to provide the details of our financial performance.

I'm pleased to report that we had a solid second quarter with results that were ahead of our internal plans, which got us back with our internal operating plan through the first six months of the year, and we believe it puts us on track to deliver our full-year plan to achieve our 2019 financial targets. And most importantly, they are more reflective of the performance that I expect from B&G Foods. Net sales for the quarter were $371.2 million, a 4.4% decline versus last year, but a 2.2% increase, excluding the divestiture of Pirate's Booty. Adjusted EBITDA was $71 million, down 4.7% versus year ago, but up 5.3% excluding Pirate's Booty.

Adjusted EBITDA as a percentage of net sales was 19.1%, more in line with what we were used to do at B&G Foods and ahead of our full-year target. As we shared with you at the beginning of the year our 2019 plan and, in fact, our longer-term strategic plan is based on a stable base business, pricing to help offset inflation in all forms, such as list pricing, wait outs, trade spending optimization and innovation. Cost savings initiatives targeting to take $50 million of cost out of our cost of goods sold over a two- to three-year time frame. And of course, always on the lookout for accretive acquisitions.

I'm pleased to report that all of these initiatives gained traction in the second quarter, and we expect them to continue to gain momentum throughout the remainder of the year. Our base business performance was powered by our largest brand, Green Giant. For the third consecutive quarter, both shelf-stable and frozen Green Giant drove growth. Shelf-stable grew with new distribution and improved pricing, while Green Giant frozen continues its strong momentum behind our vision of making Green Giant the plant-based vegetable food brand of the future, fueled by continued success of our new product introductions.

Our vision is to not only introduce new vegetable products in the traditional frozen vegetable category, but to help people get more vegetables in their diet by introducing new products made with vegetables, expanding the Giant's reach across the frozen food case. We are very encouraged by the successful launch of the latest generation of innovation, such as Green Giant Cauliflower Pizza Crusts, Green Giant Protein Bowls and Little Green Sprout's Organics. We are very much looking forward to announcing our next wave of Green Giant frozen innovation later this year as we continue to facilitate America's healthier eating habits. And a little bit further into the future, our plans include expanding Green Giant's presence throughout the entire grocery store.

We had some other winners across the portfolio this quarter. Following a challenging first-quarter performance, we're happy to report that Victoria was up in net sales by about 1.5%, and we continue to believe that this is a brand with solid growth opportunity as we continue to expand distribution across the country in the growing premium pasta sauce category. Maple Grove Farms had a strong second quarter, with net sales up more than 4% on the back of strong retail consumption, coupled with excellent performance within the food service channel. And New York Style had another good quarter, up nearly 4%, benefiting from our merchandising efforts in the attractive deli perimeter of the store.

And last but not least, the addition of Clabber Girl mid-way through the quarter help add to our net sales growth by over $8 million, on track with our expectations. Without Clabber Girl and excluding Pirate's Booty, net sales were roughly even with last year. Our net sales growth was supported by solid consumer takeaway. Total B&G Foods' consumer consumption, as measured by Nielsen, grew 1.4% for the second quarter and 1.2% for the first half of 2019.

Sales growth and adjusted EBITDA benefited from the pricing we implemented. We saw benefits of approximately $4 million in pricing during the quarter, inclusive of our list price increase in May of this year, the wraparound benefit of last year's list price increase from June of last year and from trade spend optimization. Through two quarters, we now have benefited from approximately $11.3 million in improved pricing, well on our way to achieve the $15 million to $20 million in our 2019 plan. You can see this price realization in the Nielsen data where the average per unit price across the B&G Foods portfolio increased 2.8% versus year ago, for the 26 weeks ending June 29.

Encouragingly, our price per equivalent unit increased 4.5% versus last year as our wait out initiatives began to flow into the marketplace. We also continue to be on track with our cost savings plan. We have now fully implemented our dry and frozen distribution realignments, as we successfully moved our West Coast distribution center from Texas to California, making a significant dent in our customer delivery spend, while also allowing us to reap the benefits in our internal freight transfers. All told, we have reduced mileage by approximately 17%, taking out nearly 8 million miles out of our dry distribution network through June of this year.

Likewise, we have also completed a realignment of a portion of our frozen distribution network moving from a center in Tennessee to one in Texas. The new Fort Worth, Texas location is closer to both our customers and our Green Giant manufacturing facility in Irapuato, Mexico. Saving miles and money on both customer and inbound replenishment freight to the rapidly growing Southwest market. Furthermore, our procurement group continues to do a great job, reducing the impact of raw material pricing, despite the inflationary pressures in the industry.

And we continue to take cost out of production of our products through wait outs and packaging without sacrificing the quality of these products in the eyes of our consumers. All in, we're on track to deliver our 2019 plan of $15 million to $20 million in cost savings throughout our procurement, logistics, manufacturing, packaging and SG&A spending, which we would expect will deliver another $20 million to $25 million in the year 2020. Now before I turn the call over to Bruce, I'd like to highlight a few other important accomplishments we have achieved at B&G Foods with a little bit -- a little larger time frame to consider. Over the past 18 months, B&G has reduced our outstanding long-term debt by approximately $415 million.

We repurchased 1.4 million shares of our common stock, completed the sale of Pirate Brands at more than double the price we paid for the business, and made two small but accretive acquisitions in McCann's Irish Oatmeal and Clabber Girl. We also continue to maintain our long-standing commitment to our dividend policy. Earlier this week, our board of directors demonstrated this by declaring our 60th consecutive quarterly dividend since our 2004 IPO. Since the IPO, we have returned to our stockholders almost $900 million in the form of dividend.

And while we do miss our beloved Pirate on occasion, our financial results this quarter are beginning to reflect the positive benefits of our reduction in long-term debt and share repurchases, as well as investments that we made in a pair of acquisitions. Our debt repayments over the past 18 months have resulted in interest savings of almost $4.5 million in this year's second quarter compared to last year. In addition, we're benefiting from the reduction in share count in our earnings per share calculation. As a reminder, after we repurchased almost $37 million of our common stock between mid-March 2018 through mid-March 2019, our board of directors extended our stock repurchase authorization for another year through mid-March 2020 and reset the purchase authority to up to $50 million.

We certainly recognize the price at which our shares are trading today and will take that into consideration as we consider capital investment alternatives. Lastly, we're very pleased with our most recent acquisitions. McCann's, which just completed its one-year anniversary under our ownership, is performing, as well as we expected and we continue to see upside for this leader in the premium oatmeal category. We're excited about the potential to drive new distribution growth as we fill in this still sizable distribution gaps to take this on-trend better-for-you brand national over time.

we're also very happy with the acquisition of Clabber Girl. As you know, we acquired this business about two and a half months ago. Clabber Girl holds the leadership position in retail baking powder, which is a growing category, with more than a 90% of market share position across several brands, including Clabber Girl, Davis and Rumford baking powder, as well as a relatively small amount of private label. In addition to baking powder, Clabber also maintains No.

2 positions in retail baking soda and corn starch. We love this business and are very happy it's now part of the B&G Foods family. I'd like to now turn the call over to Bruce to discuss the details of our second-quarter financial performance.

Bruce Wacha -- Chief Financial Officer

Thank you, Ken. Good afternoon, everyone. As Ken just outlined, we had solid results in the second quarter, as we reported net sales of $371.2 million, adjusted EBITDA of $71 million and adjusted diluted earnings per share of $0.38. Adjusted EBITDA as a percentage of net sales was 19.1% for the quarter.

Through six months, we have net sales of $783.9 million and adjusted EBITDA of $146.8 million, both of which are ahead of our internal plan and supportive of our full-year guidance. After adjusting for approximately $25.2 million in net sales for Pirate Brands in the second quarter of 2018, second-quarter 2019 net sales of $371.2 million represents an increase of $8 million or 2.2% more than last year. Net sales benefited in the quarter by $10.6 million resulting from the acquisitions of Clabber Girl in May 2019 and McCann's in July 2018. Second-quarter net sales benefited from approximately $4 million in benefits from price increases, which were largely driven by our list price increase, as well as improvements in trade spending efficiencies.

Volumes, exclusive of the sale of Pirate Brands and including our acquisitions of McCann's and Clabber Girl, increased by $5.1 million. Green Giant continues to be a primary driver of growth within the portfolio, with net sales of all Green Giant products up $8.3 million or 7.9%. Net sales of Green Giant frozen products were up $3.5 million or 4.1% for the quarter. Net sales of Green Giant frozen products benefited from the successful adoption of innovation products.

Frozen growth was slower than we have been used to due to the overlap of innovation pipeline sale last year and from reducing trade promotion activity, which tampered volume growth. But frozen consumption is strong, and we remain very bullish about Green Giant growth going forward. Separately, our Green Giant shelf-stable products, including Le Sueur, are seeing the benefits of increased pricing and new distribution wins and were up sharply, up 23.5% in the second quarter. Among our other large brands, net sales of Maple Grove Farms increased by approximately $0.7 million or 4.1%.

Net sales of New York Style increased by $0.4 million or 3.8%. Net sales of Victoria increased by $0.1 million or 1.4% and net sales of our Kroger and Cream of Wheat are relatively flat for the quarter. Net sales of the company's spices & seasonings business decreased by $3.6 million, largely driven by price reductions that resulted from lower input costs, certain raw materials, as well as timing. Gross profit was $91.9 million for the second quarter of 2019 or 24.7% of net sales.

Excluding the negative impact of $4.9 million of acquisition/divestiture-related and nonrecurring expenses during the second quarter of 2019, the company's gross profit would have been $96.8 million or 26% of net sales. Gross profit was $81.2 million for the second quarter of 2018 or 20.9% of sales. Excluding the negative impact of $20.1 million of acquisition-related and nonrecurring charges during the second quarter of 2018, the gross profit would have been $101.3 million or 26.1%. Our plan this year was to increase pricing and implement cost-saving initiatives to offset inflation and to maintain gross profit margins, and that is exactly what is happening.

For the second quarter of 2019, gross profit benefited from [Technical difficulty] pricing of $4 million bringing year-to-date pricing benefit to $11.3 million. [Technical difficulty] are also benefiting margins as our cost-cutting initiatives have helped to offset the inflationary pressures that we are seeing across the industry, which include the distribution realignment of our dry and frozen networks, the improved procurement and our G&A rationalization from earlier this year. These initiatives in addition to the Pirate Brands divestiture helped lower our COGS, or cost of goods sold, inclusive of the cost of materials labor, overhead freight and warehousing from $307.2 million in the second quarter of 2018 to $279.3 million in this year's second quarter. Cost of goods sold as a percentage of net sales from 79.1% in the second quarter of 2018 to 75.3% in this year second quarter.

Selling, general and administrative expenses increased by $2.6 million or 6.9% to $39.9 million for the second quarter of 2019 from $37.3 million for the second quarter of 2018. The increase was composed of increases in general and administrative expenses of $1.9 million and an increase in acquisition/divestiture-related and nonrecurring expenses of $1.5 million, which were offset in part by decreases in warehousing of $0.4 million, consumer marketing expense of $0.3 million and selling expenses of $0.1 million. Expressed as a percentage of net sales, selling, general and administrative expenses increased by 1.1 percentage points to 10.7% for the second quarter of 2019, compared to 9.6% for the second quarter of 2018. After adjusting for the impact of acquisition/divestiture-related and nonrecurring expenses, selling, general and administrative expenses expressed as a percentage of net sales increased by 0.7 percentage points to 9.8% in the second quarter of 2019, compared to 9.1% for the second quarter of 2018.

We generated $71 million in adjusted EBITDA for the second quarter of 2019, compared to $74.4 million in the prior-year quarter. [Technical difficulty] This was driven by the benefits of our pricing and cost-saving initiatives, coupled with two small acquisitions offset by the negative drag of cost inflation and approximately $7 million of loss contribution following last year's divestiture of Pirate Brands. Adjusted EBITDA as a percentage of net sales was 19.1% in line with 19.2% in the year-ago quarter and ahead of our full-year target of 18.5%. We generated [Technical difficulty] in adjusted diluted earnings per share in the second quarter of 2019, compared to $0.38 per share [Technical difficulty] second quarter of 2018.

This was driven by increased profitability, coupled with the operating leverage from the reduction in long-term debt, resulting in interest expense savings and the reduction in shares outstanding as a result of share repurchases, more than offsetting the reduction of product contribution that resulted from the divestiture of Pirate Brands. We're updating our full-year guidance for 2019 along with the acquisition of Clabber Girl earlier this year. We expect the acquisition of Clabber Girl to contribute approximately $30 million to $35 million in net sales throughout the remainder of 2019. And while we expect Clabber Girl to ultimately generate adjusted EBITDA, as a percentage of sales, that is generally in line with our base business today, we have limited expectations for EBITDA contribution this year as we continue to integrate the business.

And as a reminder, [Technical difficulty] our 2018 results include almost [Technical difficulty] in net sales and $10 million in product contribution from Pirate Brands during the last two quarters of the year. For 2019, we have increased our net sales guidance to a range of $1.665 billion to $1.7 billion. [Technical difficulty] expect adjusted EBITDA of $305 million to $320 million, adjusted earnings per share of $1.85 to $2, net interest expense of $85.5 million -- $87.5 million to $91.5 million, including cash interest expense of $84 million to $88 million, and interest amortization expense of $3.5 million. Depreciation expense of approximately $41 million, amortization expense of approximately $18.5 million and effective tax rate of approximately 25% to [Technical difficulty] Cash taxes, excluding the tax effects from the gain on sale of Pirate, $5 million or less for the year.

And then finally, we expect capex to be approximately $45 million to $50 million for 2019, in line with last year. Based on the midpoint of our adjusted EBITDA guidance range, we expect that our adjusted EBITDA less capex, cash taxes, excluding the tax effect from the gain on sale of Pirate and cash interest will be approximately $175 million to $180 million. The Pirate Brands divestiture resulted in a pre-tax gain on sale of approximately $176.4 million during the fourth quarter of 2018. The gain on sale negatively impacted our income taxes for 2019 by approximately $71.8 million, which includes a tax payment we made during the second quarter of 2019 of $43.2 million and a cash tax refund we otherwise would have expected to receive approximately $28.6 million.

Excluding the negative tax impact of the gain on sale, our next cash provided by operating activities for the second quarter and the first two quarters of 2019 would have been approximately $38.3 million and $88.6 million, respectively. During the remainder of 2019, we expect to make cash tax payments of less than $10 million. From a quarterly modeling perspective, I would remind folks that the third quarter of this year would have a similar drag from the divestiture of Pirate Brands as the first two quarters, and we expect about $7 million to $8 million or so of loss contribution in the third quarter and then approximately $2 million to $3 million impact from the fourth, given that we only owned the business for a portion of the fourth quarter of 2018. And while we expect input costs to remain elevated as inflation appears to be here to stay, we also expect to see more benefits from our pricing initiative throughout the remainder of the year.

These benefits will be coupled with continued activity on the cost-cutting front. Finally, based on the midpoint of our adjusted EBITDA guidance and pro forma for our full-year benefit of the acquisition of Clabber Girl, we expect net debt-to-adjusted-EBITDA of approximately 5.4 times at the end of the year. And now, I will turn the call back over to Ken. Ken?

Ken Romanzi -- President and Chief Executive Officer

Thank you, Bruce. Our second-quarter financial performance reflects the momentum at the beginning to take hold of B&G Foods. Base business is stable and is performing as expected. Our pricing and cost initiatives are beginning to deliver.

Our two most recent acquisitions, McCann's and Clabber Girl are performing in line with our expectations. And our new leaner leadership structure is fully operational and working extremely well together. In summary, we believe that B&G Foods business plan remains intact and very attractive. As we continue to run a lean, but nimble organization that can react quickly to various industry challenges, such as widespread inflationary pressures.

While we also create value through accretive M&A, while simultaneously, returning excess cash to our investors through a healthy dividend and share repurchases from time to time. This concludes our remarks. And now, we'd like to begin the Q&A portion of our call. Operator?

Questions & Answers:


Operator

[Operator instructions] We have our first question from Bryan Hunt of Wells Fargo. Please go ahead.

Bryan Hunt -- Wells Fargo Securities -- Analyst

Good afternoon, Ken and Bruce. My first question is, you talked about your pricing benefits and then you're on track to hit those, as well as cost savings. Can you discuss where freight inflation and input cost inflation, I think you mapped those out at about $18 million and $10 million, respectively, kind of at the midpoint. Where are those tracking relative to your original budget?

Bruce Wacha -- Chief Financial Officer

We continue to expect inflation this year in cost inputs and in freight, and our plans to combat that inflation are tracking within our guidance.

Bryan Hunt -- Wells Fargo Securities -- Analyst

Very good. And then next, Bruce, you talked about 5.4 times leverage by the end of the year. I think on the last call, you mentioned 5.2 times. Can you discuss what that relative change is, I imagine, if it's the acquisition of Clabber Girl?

Bruce Wacha -- Chief Financial Officer

Yeah, it's the acquisition of Clabber Girl.

Bryan Hunt -- Wells Fargo Securities -- Analyst

OK. And then, lastly, you all sound pretty positive about the pricing environment. Is there anywhere within your categories or within your channels that you're seeing heightened competitive activity? I mean, I know you have various pressures of club.

Ken Romanzi -- President and Chief Executive Officer

I'm sorry, so you asked about -- did you mention club in the last piece?

Bryan Hunt -- Wells Fargo Securities -- Analyst

Yeah. Yeah. I was just wondering, are you seeing any incremental competitive activity from your peers? Whether it's in traditional channels or in club, particularly with regards to private label?

Ken Romanzi -- President and Chief Executive Officer

Not anything particular. I mean, the business is always competitive. And so we're not seeing any -- we don't see -- we haven't see in the recent quarters any more competitive more or less than what we're used to.

Bryan Hunt -- Wells Fargo Securities -- Analyst

All right. I will hand it off to somebody else. Thank you for your time.

Operator

Thank you. Our next question comes from Karru Martinson of Jefferies. Please go ahead.

Karru Martinson -- Jefferies -- Analyst

Good afternoon. Just on the Clabber Girl acquisition, how much work has to be done to integrate the business to see some of that sales start to drop down to the bottom line?

Bruce Wacha -- Chief Financial Officer

Sure. I think the key thing to remember with Clabber Girl as we bought a full stand-alone business that had all source of corporate and family owned costs embedded into it. We're very excited about the transaction. It's performing as expected.

But our view was to largely run it as it was being run before, which includes some of the burden of those costs for a period of time as we work through the key baking season. And so that's the game plan and things are proceeding as planned.

Ken Romanzi -- President and Chief Executive Officer

We're also taking time with that acquisition because we just implemented our own ERP system. So we want to make sure that is absolutely free and clear, so before we now integrate any other business into it. And so all green -- everything is a green light for pretty much the first of next year to be just about fully integrated.

Karru Martinson -- Jefferies -- Analyst

OK. And now, with the three quarters under your belt of McCann's distribution gains, I mean, are we going to call this a trend now? And where are you taking that distribution from?

Ken Romanzi -- President and Chief Executive Officer

The biggest distribution gains we received was through the dollar channel. But it is important to note that, when we were overlapping our sales -- negative sales because the overlap of the lost distribution, outside of the major customer that we lost distribution, consumption was up like 1%, which is pretty promising in that category. So this recent growth that's certainly not going to be the future trend, we'll overlap that distribution. But before this occurred, our business was actually up very low single digits absent of distribution gains.

Karru Martinson -- Jefferies -- Analyst

OK. And then, just [Technical difficulty] when we look at your target at the year-end leverage, how should we think about M&A working itself into that 5.4 times target?

Bruce Wacha -- Chief Financial Officer

So we're always actively looking for M&A opportunities and nothing really changed in that perspective. For us, the math always has to work, whether big or small from a pricing evaluation in a business that we want. And so we'll continue to evaluate things. We're certainly aware of where our leverage is.

We're certainly aware of where our stock price is. And all things included the math afterward.

Karru Martinson -- Jefferies -- Analyst

OK. Thank you very much, guys. Appreciate it.

Operator

Thank you. Our next question comes from Robert Moskow of Credit Suisse. Please go ahead.

Robert Moskow -- Credit Suisse -- Analyst

Hi. Thank you for the question. Hey, Ken, I have -- one of the concerns that I have articulated and, I think, others have too is that reinvestment needs might have to go up at B&G. Customers are more aggressive and they've invested more in data analytics and their supply chains and e-commerce.

And B&G has been operating with a game plan of kind of running a stable business and, I guess, brands that have been around for long time. Have you been able to -- obviously, the business stabilized this quarter, that's all good news. Are you seeing that you're able to run the business with the current level of investment pretty well? Or do you think that there's more capabilities that you might have to build in future years that might require more resources given the environment?

Ken Romanzi -- President and Chief Executive Officer

When you say investment, I mean, there's two types of investments in my line. One is a P&L investment, in terms of marketing spend and shopper marketing spend and get ready for e-commerce and things of that nature. And the other is capital spending. So I believe, we do have enough capital spending to do what we need to do.

At $45 million to $50 million a year, we're going to be -- and we're coming of a major IT infrastructure investment with our ERP system. We're going to be turning a lot of those capital investments into further investment to drive cost savings not just maintenance them but investments to drive cost savings on the cost of goods line. And then, in terms -- and one of those investments is a trade management system that's going to allow us to get at our largest expenditure on the P&L besides cost of goods is trade spending. And trade spending gets used in a lot of different ways and we're hoping to take that and do more with that -- those dollars like shopper marketing, like participating in those, all those retailer programs.

So I believe we have enough in our P&L to be able to take part and that is just how we allocate that spending is going to be the most important thing going forward.

Robert Moskow -- Credit Suisse -- Analyst

OK. And then a follow-up. I think you mentioned that your sales growth in frozen started to slow in second quarter. Are you saying that in the back half the pipeline starts building up again with more new products? Or do you think the competitive intensity is going to become a challenge in the back half?

Ken Romanzi -- President and Chief Executive Officer

No. We're -- we did less -- we had two innovation pipelines last year, spring and fall, and this year, we're only doing one. So we overlap a pipeline fill. So that doesn't concern that's just we didn't have a second shot at it in spring of this year.

In addition to on the non-innovation, we had less trade promotion activity, which reduced volumes. But that was planned and intended. So that's why Bruce mentioned, while it appears to be a slowdown, it was planned and not indicative of our expectations going forward.

Robert Moskow -- Credit Suisse -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Carla Casella of JP Morgan. Please go ahead.

Carla Casella -- J.P. Morgan -- Analyst

Hi. Did you ever give the cash payment you made for the Clabber Girl acquisition?

Bruce Wacha -- Chief Financial Officer

Yeah. So we had a tax payment obligation of approximately $71 million.

Ken Romanzi -- President and Chief Executive Officer

No, no, Clabber Girl. What we paid for Clabber Girl.

Bruce Wacha -- Chief Financial Officer

Oh, the purchase price.

Carla Casella -- J.P. Morgan -- Analyst

Yeah.

Bruce Wacha -- Chief Financial Officer

Sorry, did you mean the purchase price of Clabber Girl, $80 million.

Carla Casella -- J.P. Morgan -- Analyst

OK. And now, is all this quarter?

Bruce Wacha -- Chief Financial Officer

Correct.

Carla Casella -- J.P. Morgan -- Analyst

OK. And what was the tax payment?

Bruce Wacha -- Chief Financial Officer

Gain on sale of Pirate's. So when we sold the business, there was a tax payment. We effectively were able to delay that payment for about six months. So that goes through our cash operations this quarter.

Ken Romanzi -- President and Chief Executive Officer

It is important to note that that tax payment this quarter was as a result of sale of Pirate's Booty, which allowed us to pay a large amount of debt back last year.

Carla Casella -- J.P. Morgan -- Analyst

Exactly. That actually goes to my next question. Did you give the ABL and how much is drawn and what is the availability on that at the end of the quarter?

Bruce Wacha -- Chief Financial Officer

So -- yeah. Our revolver, all of that information is in the press release.

Carla Casella -- J.P. Morgan -- Analyst

Oh, I'm sorry. I missed it. OK. Great.

And then just one last one. You mentioned outside -- on the last question, one last question is on investment and talked a bit about how you want to redirect some of the spending out of trade. Are you seeing much -- are you seeing obviously the same? Are you getting push backs from retailers as you're trying to redirect trade spending?

Ken Romanzi -- President and Chief Executive Officer

Well, there is a lot of -- we see a lot of dollars going into things like shopper marketing stuff like that so. It's not like we're trying to take anything away, we're really trying to just redirect into all the new programs and initiatives that retailers have. So it's really about how we spent same amount of money with the retailers.

Carla Casella -- J.P. Morgan -- Analyst

OK. Great. Thank you.

Operator

Thank you. And our next question comes from William Reuter of Bank of America Merrill Lynch. Please go ahead.

William Reuter -- Bank of America Merrill Lynch -- Analyst

Good afternoon. It sounds like you've pretty successfully pushed through your price increases with your customers. Have you gotten some data? Or can you talk to me about how the POS was of those items after the price increases were pushed through to the final customer?

Ken Romanzi -- President and Chief Executive Officer

Well, it's all there in Nielsen. Our consumption was up actually a little bit more in the first and second quarter than it was for total B&G, up a smidge and more than it even was in the first quarter. So 1.5% growth of consumer consumption, and that's where you by brands. So we haven't seen any elasticities beyond what we expected.

So far, it is early in terms of when that actually -- we only have Nielsen results through the end of June. So retail prices were only affected by our price increase, it only took place in May, so you're not seeing a lot yet in terms of any changes in consumption patterns.

William Reuter -- Bank of America Merrill Lynch -- Analyst

Yeah. Now I -- you guys had given the commentary about Nielsen. I was just -- that was obviously for across all of your products, and obviously I'm sure there was a range of price increases. So I was just trying to get an early indication of what you might have seen if there was anything different for those products that you had higher price increases on?

Bruce Wacha -- Chief Financial Officer

Yeah. And we haven't seen anything unexpected.

William Reuter -- Bank of America Merrill Lynch -- Analyst

OK. And then one thing you mentioned to an earlier question that you continue to see freight cost. We have heard some indications recently that freight costs are coming down. You haven't seen anything and this is a couple of journal or articles that we had seen.

You haven't seen anything around that recently.

Bruce Wacha -- Chief Financial Officer

We certainly hope those articles are correct.

Ken Romanzi -- President and Chief Executive Officer

But we're not expecting down versus last year.

Bruce Wacha -- Chief Financial Officer

Yeah.

William Reuter -- Bank of America Merrill Lynch -- Analyst

Right. No, I was just --

Ken Romanzi -- President and Chief Executive Officer

In terms of rate.

Bruce Wacha -- Chief Financial Officer

Yeah, where we are getting savings is our activities in terms of realigning both our dry and frozen.

William Reuter -- Bank of America Merrill Lynch -- Analyst

Right. OK. And then last time, we had heard from you, your leverage target was 4.5 to 5.5 times. Is that still the number that you guys would stick with?

Bruce Wacha -- Chief Financial Officer

It is. That's very much our long-term leverage target.

William Reuter -- Bank of America Merrill Lynch -- Analyst

OK. I'll pass to others. Thank you.

Operator

Thank you. And our next question comes from David Palmer of Evercore ISI. Please go ahead.

David Palmer -- Evercore ISI -- Analyst

Question on Green Giant frozen now. Just a follow up to Rob's question. You mentioned that they were slow in consumption, but that you have back weighted your marketing promotions in that part of your business. Do you believe that we will see that consumer takeaway growth for Green Giant frozen perhaps reaccelerating in the next -- in the coming months, in the back of this year?

Ken Romanzi -- President and Chief Executive Officer

Yeah. Mainly because of the launch of innovation in the fourth quarter.

David Palmer -- Evercore ISI -- Analyst

Got it. And just on the distributions. We can see in the scanner data, frozen vegetables, you have ACV up there this quarter, but we're seeing some ACV losses across many other brands, like Ortega and Maple Grove and spices. Could you talk about what's going on with regard to distribution? And perhaps SKU rationalization? And how much of that is your own volition versus retailers?

Ken Romanzi -- President and Chief Executive Officer

Sure. I mean, there's always ebbs and flows on distribution. So some of it is self-inflected, some of it we're cleaning up our product line on lower margin products. Some of it's retailers being more redlining of SKUs that may not turn as fast.

And our whole approach is that, particularly, when we're launching new products, we're always looking at our own portfolio to make sure that we're justified to have incremental SKUs on shelf versus just keep adding. Because we understand the pressures that our customers are under in terms of limited real estate on the shelf. So there's always puts and takes on the distribution line.

David Palmer -- Evercore ISI -- Analyst

And then just one last one on canned vegetables. Obviously, you're getting that good growth out of the dollar channel as you mentioned. Is that -- are you going to lap that and should we just expect a more moderate growth or more stable performance from McCann's in a quarter or so when you lap that?

Ken Romanzi -- President and Chief Executive Officer

Yeah. Absolutely. We would not model 25% growth, that's distribution growth. So we wouldn't be -- that's been a category declining in years, but we've actually done -- other than a distribution -- one big distribution loss from a big customer, our business has actually been pretty good.

For instance, we're growing in Canada because Green Giant has very, very strong ground in Canada. So they're actually up growing very, very nicely. But we wouldn't expect a lot of growth from McCann's post the overlap in new distribution.

David Palmer -- Evercore ISI -- Analyst

Thank you very much.

Operator

Thank you. Our next question comes from Eric Larson of Buckingham Research Group. Please go ahead.

Eric Larson -- Buckingham Research Group -- Analyst

Hi, Ken. Hi, Bruce. Just a quick and maybe I don't have all of the numbers correct here. But it goes to your sales guidance.

You brought it up obviously -- the increase is about $30 million to $45 million. So if you just kind of break down the components of that, I'm just trying to make sure I understand what's in that increase in guide. You'll have $40 million to $50 million of probably incremental revenue from Clabber Girl. You'll have some offset obviously from Pirate's.

You're going to have the benefit of a price increase and that will take a little while for most of that to kick in. My calculation shows that that puts a base sales assumption on your base brands of about 2%. Is that anywhere close to the ballpark? And I might have some of the divestiture revenues incorrect as well. I'm just trying to see if that is in the ballpark?

Bruce Wacha -- Chief Financial Officer

Yeah. To make it real simple, prior guidance was $1.635 billion, $1.665 billion, and we increased that by between $30 million and $35 million for the addition of Clabber Girl for the year.

Eric Larson -- Buckingham Research Group -- Analyst

OK. All right. And then everything else was net of all of that. So that's -- it's just Clabber Girl as your -- as the reason for your guide up?

Bruce Wacha -- Chief Financial Officer

Correct. Tracking the plan with a nice addition of Clabber Girl.

Eric Larson -- Buckingham Research Group -- Analyst

Got it. OK. And then -- now you're kind of -- you're halfway through the year. And now your cost saves starting to kick in.

You have better cost saves and you -- they actually beat a bit on your EBITDA -- your adjusted EBITDA guide in the quarter. So is there potential upside to your guide in adjusted EBITDA for the next several quarters?

Bruce Wacha -- Chief Financial Officer

I think we will keep it right exactly where it was and that's where we're comfortable with.

Eric Larson -- Buckingham Research Group -- Analyst

And that guide also includes Clabber Girl?

Bruce Wacha -- Chief Financial Officer

Correct. Although, not a lot of incremental benefit from Clabber Girl in 2019, just given like we said earlier on the call, it came with a full corporate impact.

Eric Larson -- Buckingham Research Group -- Analyst

The full, got it. OK.

Bruce Wacha -- Chief Financial Officer

For a relatively small business. And so, we're running at mostly as it is today like I said don't expect --

Eric Larson -- Buckingham Research Group -- Analyst

So that could be potential EBITDA upside may be in 2020 as you get through your ERP systems, gets those up, you could see that as may be upside in the next calendar year?

Bruce Wacha -- Chief Financial Officer

Correct. That's why we --

Eric Larson -- Buckingham Research Group -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Andrew Lazar of Barclays. Please go ahead.

Andrew Lazar -- Barclays -- Analyst

Hi, everybody. Just a couple of quick things. One would be, if you think about just volume and price as we go through the back of the year, can you talk a little bit about would you expect the impact of pricing to accelerate from here? Or because it doesn't sound like you're like at full run rate yet. And then would you anticipate volume to be likely down in the back half around what it had been, let's say, in the first half? Or could there be some adjustment, consumers adjusted to higher prices and may be volume kicks in a little bit or easing down quite as much in response to the pricing?

Bruce Wacha -- Chief Financial Officer

So from a pricing standpoint, we laid out a plan that I talked about $15 million to $20 million of increased price, and through three quarters, we're tracking to the plan and we're happy with that.

Andrew Lazar -- Barclays -- Analyst

Does that -- does the $15 million to $20 million include the benefit that you had in the first quarter from some of the trade optimization? Or is it separate from that?

Bruce Wacha -- Chief Financial Officer

Yeah, we're not changing our guidance on the pricing, we're keeping at $15 million to $20 million. We're comfortable with that.

Andrew Lazar -- Barclays -- Analyst

OK. EBITDA cadence in the back half of the year, maybe could you just remind us over a couple of the -- if there are a couple of discrete items between 3Q and 4Q that you would want to kind of call out just as we think through that?

Bruce Wacha -- Chief Financial Officer

Yeah. The primary things that I'd call out and I've mentioned a little bit earlier on the call when we're talking through the guidance is, last year benefited from about $7 million, $8 million from Pirate's in the third quarter, and we obviously don't have the Pirate today. And so I would say that's your base plan in terms of are you up or down or flat to that. And then fourth quarter, it's a smaller.

We had it for a shorter period of time. So may be a couple of million dollar drag there before you get into performance of this year.

Andrew Lazar -- Barclays -- Analyst

And then lastly, I guess, a broader question. I was just trying to get a sense of how you would sort of characterize your full-year EBITDA guidance at this point? And I ask that because, and what I mean by that is, conservative giving yourself some room, somewhat flexible, because it's been, I think, it's safe to say a little bit more volatility, right, in sort of forecasting versus kind of what's been reported, both up and down, between first quarter and second quarter and even going back to a little bit last year. So I'm trying to get a sense whether do you -- when you think about a range, do you generally sort of think about, hey, midpoint gives us some room on both ends. Are you just trying to get ultimately be happy to get to the low end? Is there some flexibility there? You get the sense of what I'm going after.

Bruce Wacha -- Chief Financial Officer

And we gave a guidance number, we're tracking to our plan and I don't see anything that would suggest folks should be altering their forecast or estimates for the company. I think we're tracking it where people were and where we were and very pleased to report that.

Andrew Lazar -- Barclays -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Ken Zaslow of Bank of Montreal. Please go ahead.

Ken Zaslow -- BMO Capital Markets -- Analyst

Hey, good afternoon, everybody. If I didn't ask this question, I think, you guys would be insulted. So I'll start there. Can you walk us through the capital -- the dividend opportunity? I'm assuming, it's still in safe regards.

But could you just tell us a little bit through the cash flow and making sure that through the end of the year, we're in good shape there? And there won't be any need for any capital raise or anything like that? Just that will be where I'd start.

Bruce Wacha -- Chief Financial Officer

Sure. So familiar question and thank you for asking a dividend, we're still committed to the dividend. Ken referenced on the call, the long-standing commitment to the dividend, as people saw yesterday, our board reauthorized a dividend at the same level. And so pretty comfortable with that.

And as far as the dividend coverage, based on the range of $305 million to $320 million for adjusted EBITDA, you're getting to $175 million, $180-plus million of EBITDA less cash interest, cash taxes and capex to cover a dividend of about $125 million.

Ken Zaslow -- BMO Capital Markets -- Analyst

And there is no reason that you would even need -- outside an acquisition, there would be no need for you to raise equity of any sort, right? Is that fair?

Bruce Wacha -- Chief Financial Officer

Outside of an acquisition, I don't see the compelling need to it. And we're certainly aware of what our stock price is today. And I think people could see board authorization for additional share buyback of $50 million and the buyback that we did over the last 18 months in terms of what our view is on stock price.

Ken Zaslow -- BMO Capital Markets -- Analyst

And just on the business, can you give us an update on the spices? And what the outlook for that is? I might have missed it, so I just would greatly appreciate that and I will leave it there.

Bruce Wacha -- Chief Financial Officer

Sure. And we don't obviously guide to specific brand performance, but we love the spice business. It's performing in line with expectations. We outperformed in the first quarter of this year.

So there is a little bit of a timing. And then we also have an issue there, it's somewhat of a pass-through business. And so we had some lower raw material costs and that impacted pricing. And so sales down a little bit for the quarter.

Profits very healthy. And on a year-to-date basis, tracking in line with plan. So a little bit of timing.

Ken Zaslow -- BMO Capital Markets -- Analyst

Is there still opportunity for margin expansion within this business given the infrastructure set up? Or is that passes by now? And I will actually leave it there.

Bruce Wacha -- Chief Financial Officer

Margin expansion in spices or in total business?

Ken Zaslow -- BMO Capital Markets -- Analyst

Yeah. In the spices business? I recall, there were some opportunity in terms of distribution opportunities and just consolidating certain plans or something like that. And I just didn't know where you are on that and if there is any opportunity there?

Bruce Wacha -- Chief Financial Officer

Right now, in total margin expansion, as we've said, we're looking at the balance pricing and cost saving to offset inflation. Longer term, we'd like to return to margin expansion, but in the near term, margin maintenance is what the plan is.

Ken Zaslow -- BMO Capital Markets -- Analyst

Perfect. Thank you very much.

Operator

Thank you. Ladies and gentlemen, that's all the time we have for questions for today. I would like to turn the conference back over to Mr. Ken Romanzi for any additional or closing remarks.

Thank you.

Ken Romanzi -- President and Chief Executive Officer

We just appreciate everybody being on the call. Good questions, and look forward to our next third-quarter call. Thank you very much.

Operator

[Operator signoff]

Duration: 59 minutes

Call participants:

Ken Romanzi -- President and Chief Executive Officer

Bruce Wacha -- Chief Financial Officer

Bryan Hunt -- Wells Fargo Securities -- Analyst

Karru Martinson -- Jefferies -- Analyst

Robert Moskow -- Credit Suisse -- Analyst

Carla Casella -- J.P. Morgan -- Analyst

William Reuter -- Bank of America Merrill Lynch -- Analyst

David Palmer -- Evercore ISI -- Analyst

Eric Larson -- Buckingham Research Group -- Analyst

Andrew Lazar -- Barclays -- Analyst

Ken Zaslow -- BMO Capital Markets -- Analyst

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