Campbell Soup (CPB) 8 Dec 212022 Q1 Earnings call transcript

Good morning. My name is April, and I will be your conference operator today. At this time, I would like to welcome everyone to the Campbell Soup First Quarter Fiscal 2022 Earnings Conference Call. Today's call is being recorded. All participants will be in a listen-only mode, until the formal question-and-answer portion of the call. you. Thank would the I your over to Ms. host, like that, conference hand to With Gardy. Becca Ms. begin may you conference. Gardy, your

Good morning. of And earnings welcome to Campbell's first I Campbell Company. Rebecca at conference quarter am Gardy, Relations Head Investor Soup call. fiscal XXXX

deck to Campbell's session. conclude Joining and today's Officer; posted we the and Chief Officer. prepared Chief Campbell's The been have transition President Today's me remarks, website, Beekhuizen, Mark Relations remarks release Mick a pre-recorded. campbellsoupcompany.com. press Executive Q&A have are the Financial today to slide live section Clouse, webcast and our Once on earnings will we been Investor

Please of factors that the Following three the which to current risk. non-GAAP have reconciliation of within vary expectations. our we results actual On statements, in presentation. statements. a assumptions cause our directly materially measure each the the at same our to of conclusion location will Because provided on and which estimates, call followed reflect or inaccurate today, filings the are to XX for GAAP appendix we replay hours. forward-looking we refer of in use our those be could transcript of these make call list Q&A a by anticipated forward-looking These will SEC the available subject session, webcast rely and measures be a could statements measures, the slide from of most a to comparable of this

commodity such that impacts Accordingly, and adjusted gains adjusted adjusted losses exclude fiscal mark-to-market guidance exposure in As and until of operating business this and to net this quarter adjusted from time part change. this undesignated earnings outstanding change. Canadian XXXX now the stated will Meals related year, Segment results EBIT results. results onwards, release this for adjusted the on rates unrealized the EPS reflect retrospectively & reflect the been included have managed segment. in snack foodservice as is the Beverages and Also formerly segment fiscal growth hedges beginning

these discuss slide to updates, thoughts on well share see For quarter On his please by additional today's Form X-K. first review the detail performance the today's in-market our you'll as Mark. refer performance call guidance full quarter year on for division. the information turn XXXX. to in as that, agenda. to Mick more Mark results overall will and financial four, I'm of our will fiscal And with then pleased over the

earnings our welcome for Thanks, Rebecca. quarter fiscal first morning. Good And call to XXXX. year

ahead on recently in catches with in early well segments across quarter. our recovery, earnings I taken dynamic we address challenges EBIT moving mitigation uptick transportation replenishment, retailer should second the line consumption up particularly increases labor. the quarter. of inflation. third expectations supply with related actions sales as produced of of announced effective the shelf On of remainder now recover the to the all the execution, net current and persistent and the were, the strong as as to expect growth prior versus years lower in very pricing quarter, navigated This am will we in be our announced X% and point and competitors capacity, those continue to margin logistics of many adjusted our end segments led Their We seen prior however, results X recent how across inventory down customers, we result As this of of year continuing actions tools. expected the teams consumer our more resulted prior years We We've of pressures, which pricing when the effective net But up on signaling by not X% as to both Organic round some reported Like the you ingredient costs, compared ago. fully network, proud both see especially combined release, macro evolving signs the and our do progress confident to pricing for sales pressures. EPS net To difference added year. expect retention. driven and adjusted to reflect operate. labor and outlook additional reflected our consistent strong currently half. in offset slide pricing half, labor our results we in as strong into our sales in second we solid and at with we the have quarter available six the pricing costs X and actions year the and in specific the around ago, or end inflation and face increased of rebuild X% volatility. versus prior constraints inventories saw we remaining seven, expect fiscal and to justified XXXX This fiscal on-boarding, measured we a in relationship absenteeism our up year in a the plants, about through chain in supply up in was use in until January in and versus feel second year. channels, versus consumption and in and a performance environment packaging improvement, quarter, begin press market with not and our considering evident demand we X% volume demand. significant in such year lapping This constrained rapidly full shelf, recent actions for we the second but were pressure across the of QX improved fiscal in

our productivity and savings XX% ingredient variability quarters, supply spend, and cost to reducing over our we Our the improvements packaging continue upcoming while thereby now on in the covered, are initiatives. we deliver chain

year. the we expect reductions short of addition, term and to are investments made Labor supply to the others, In greater supply challenges in the certain quarter fully consumption pressure. into which and reverse and we and share as some extent levels related to selective a creating targeted we've brands second selling return than first in marketing impacting half move

particularly to cycle expect second recovery We on be quarter the as this labor we through evident, supply. through and

improve the confident in business to With very been and X share the year. we brands years, full share our have fiscal strength the of we capacity positions and gains and the broaden last return half the that our so remain consistent second of will investment once that over

the flat year was performance of XX% X the up reflecting lapping the our year, I versus in portfolio Organic the the the strength demand of prior underlying X% Consumption, X% Turning years division. though growth to up fiscal & XXXX. net ago, versus for products. X% continue prior and year-over-year of our Beverages pleased to health were brands. down Meals sales be by versus and

Turning to soup on slide XX.

to all the in We are broth than year. penetration quarter. in levels. people Soup strategy retained More results. prior the on Win Swanson and of Our soup show are held remaining category share eating continues condensed positive ahead in participating households the and and pre-pandemic ready-to-serve, Household

expanded the X effect, spent Swanson inflation retaining US of Additionally, rates bringing consumer actions evidence as levels sustained buyer while penetration dollar competition points provide ago over ahead consumption in reflecting momentum health, per driven Pacific years ready pricing our base remained household was soup increased to grew returning Condensed remained to relevance years slightly broth. condensed mobility the the compared share Repeat higher the and year, consumer flat, versus These price in that quarter. our down prior and to we volume on Foods our points. and X% and prior serve, compelling increasing, of X elevated took growth are brands. X%. despite dollar per ago buyer year, data our

of by people However, studies, prior continue quick that In to more a continues. more our tracking we surveyed that behavior compared be than to third cook encouraged scratch cooking indicated the evidence the month. they consumer

for lunches preparing strongest from hybrid eating interestingly growth the leading Additionally, home returning overall dinners as to workplace. work preparation from our working for increase in shift from and eating condensed quicker consumers the driving millennials. need are an the our coming is share we after while quicker in arrangements meal This to with need seeing

may and X% consumption millennials. among had year. are move note in some support forward competitive three seeing year X.X to X% quarter, with share the from points share of recovery share recovery Chunky private by consecutive the On more supply our increasing our gains important extended we an Swanson of from strong quarter you of and we very versus in private the X.X in continued. It's in This strong, we have and strong of This label X third segment. remain year representing quarter, in condensed prior we gains recent over competition. is remain period a continued share levels Ready-to-serve despite by as promotional growth points grew as on including prior is position noted, label increased quarter broth, given programming. Within constraints. and their recovery also growth very ready-to-serve, top the supply elevated versus periods, points, of As confident grew share unexpected, very overall not

high due Our by paired supply growing quarter to holding demand. despite sustained engine challenges driven eighth consecutive or growth on Pacific pressures broth Foods share, momentum delivered with its of remaining labor

XX for months. Prego Turning the straight one leader share to remained sauces. number

However, conclude households Beverages has in underlying improve Meals brands. we improve see to availability the versus to strong adding on quarter percentage key trend. buyers as began under important creating to half. performance is more on shares, and pressure to younger improve throughout compared nearly households. recent all the recover material The prior Beverages which on short-term increased fully the & the grew second Across an prior the Meals and continuing year. continued supply we XX age we of with on by We share year Pace pressure want I & Pace year. QX expect to comments of show highlighting in portfolio, to on inventory my

future, of as under the average getting two segment broth, fastest consumers age this volatility quarter, current to look efforts soup, continue growing beyond increase Soup we are assess begin growth for consumers. with of condensed Specifically, Importantly, dynamic eating, of the very percentage on and is into US important contribute new this term and the is the The increased the to almost buyers beverages millennial our meals a younger. XX supports and and Campbell a ready-to-serve cohort points to relevance and in ability generation indicator to short the

down and constraints, on the year prior expect Turning sales basis. X% performance but due primarily levels recover fiscal grew Snacks. labor was End net compared second X% XXXX. low were and to X X% to the This of over X%, on through market Organic in fiscal a related growing to supply the retail to resulted of working quarter year. has that inventory half year dynamic strong, we're

XX% performance growth continue of with growth by Our fiscal power and double-digit brands majority the this of brands. X% year a X fuel on our year consumption consumption basis, to driven in-market across

are digits power eight of compared to repeat prior high brands in marketing to XXXX. penetration. all year and share and pleased Goldfish resulting prior household in X.X performed the velocities on activation, flavor and behind increased single versus increasing well rates ahead quarter, multi-packs fiscal growing We in see edition by the improved point limited very performance improved continued strong base innovations year and successful consumption

limited our a we gaining the second in flavor one launched new winning quarter. key be limited significant We the cracker Goldfish consumers, innovations. item share driving jalapeno edition consumption and row, in popper with quarter a with being category in this number to achieved Innovation edition with increases. growth velocity the the driver, metric are Marking continues

We broaden being also relevance with kids. this increase kids continue without to brand traditional of of XX% households new beyond and appeal our the audience its buyers

well, growth Pretzel and share We as X.X Snack potato Factory Cape drive continue Chris Cod by more a chips brand brands including than X.X points, to on Kettle chips points. point by potato other

Snyder's and in pressure certain in on availability putting Lance several Hanover Late the areas. Cookies, labor on share In mentioned, previously segments snack is of as Crackers, particular, quarter. Pretzels July However,

but We are broadly do progress expect of some in recovering on to making second recovering, into QX, half. the headwinds persist good more these

with year. the progress As address I mentioned we last pleased and earlier, have made executional experienced to we be the speed pressures to continue

shares. QX very deal on half lap a expect Although with we with and macro as still challenging environment, of the we year we strong the progress second a margins will

moment. will well solid in of their with our provide Given our consistency as Mick to first results details a and more our reaffirming full the as line the expectations, year, quarter of guidance. we sight fiscal are year balance our

while to it momentum and mentioned, over labor expect second discuss very remain expectations to next our We to week to growth forward longer full recover exiting at and comparison we previously as potential supply and in results and that, With performance unlock confident the Day. year. still me our we look turn Investor lap sharing more begin difficult our strategy to strength in As pressures, our quarter on QX, we positive in have year-ago our first Mick half to let of detail. term a

Thanks, Mark. Good morning, everyone.

Turning to XX. slide

As Rebecca mentioned from impacts such commodity on the call, gains the the and mark-to-market time start adjusted from related we that unrealized losses onwards, exclude outstanding quarter results. net of at earnings, hedges this undesignated will operating until exposure

this guidance and adjusted Our results change. reflect financial

of net sales offset in supply cycling X% year retailer quarter, pressures. The first of impact left favorable the the quarter. year-over-year to and volume recovery as anticipated decline the X% more resulting pricing ago organic For growth inventory year, than net the declined due in the prior we

Mark consumer As strong. earlier, remained highlighted demand

higher were measured higher fact, above years Adjusted the decreased points or net XX% comparable in ingredients on X% to levels it EBIT All performance. labor, past year was quarter on basis of compared a X% year, despite packaging, which sales In our channels first on logistics. prior X our significant to net organic six compared inflation of quarter, XXXX. a said, ago basis fiscal and warehousing this total the X was sales

EPS from operations prior margin $X.XX ahead from share, decreased of XXXX. per XX.X% prior year adjusted the XX% down or XX.X% slightly Our versus continuing which to and Adjusted EBIT to $X.XX fiscal XXXX. was remains compared in well year fiscal

quarter. down On first net slide, next the I'll our break performance sales the for

constraints, the the inventory impact inventory headwind point to year a drove to offset challenging lapping continued headwind, the team search quarter, recovery which partially Favorable to recovery material a beforementioned I in post-COVID ability allowances execute sales our lapping industry-wide price volume driven retailer the meet well gain of operations point the supply reflects held which The to with in prior a and supply retailer select and was due along six demand. during related Organic back As challenges the mentioned, labor quarter, constraints, and of elevated sales by continued X% net a environment. constraints. four reported decreased one largely sales the spent by promotional prior some All year. back The of in, the point. pre-pandemic impact X% on quarter plan declined closer levels. in to the spending sale our subtracted the net from point two

slide XX. to Turning

labor, costs experienced ingredients, realization recovery basis last Our the ongoing promotional said, Mix first XXX significant supply including XXX XX.X% these price impact gross basis overall quarter year's majority recent on points participants, adjusted our we and negative the the margin, decreased basis offsetting Inflation year. as input XXX factors cycled our to other chain approximately basis year and categories, prices from with XX.X% leverage. inflation across increased retailer gross basis productivity due negative basis Along improvement by a XX of approximately points X%. drove of warehousing a program to headwinds. this inventory points by other logistics. point partially increased a pricing margin inflationary driven and input Net cost favorable industry of decline of rate margin, partially inflation benefits offset actions, gross had XXX operating spending. last impact on we contributed all packaging, with That by a to points, as by had

continue next incremental include to previously is highlighted trade half focus margin. chain saving productivity Our impact initiatives the inflation and optimization, to initiatives described our points focused continued single improvements program, with spending expect a cost We increases mitigate more and chain supply year The organization. a in to productivity supply high inflation XXXX. on page cost on remain savings basis price we and be on pronounced which gross our inflation to XX the discretionary ongoing across program, the core added fiscal for as second mitigation the of digits to

made first on XXX gross to the our adjusted saw the margin. page, impact on reduced these the mitigate we basis inflationary quarter pressures to you points progress in the previous As

Moving to the next slide.

multiyear to our deliver successfully cost against savings have We initiatives. enterprise continued

This by track remain quarter, cumulative and we achieved million savings deliver incremental fiscal of the year-over-year end savings on in year. our million $XX $XXX to target of

towards We are billion working at details we'll next Day. our expanding our and to Investor plan share $X more week

the promotion expense or and selling million expenses. quarter in a other advertising expenses on selling items. consumer and Moving and basis. Marketing on year-over-year XX% lower by or was $XX to This operating driven A&C decrease lower decreased

the we was of to million X.X% year. certain basis general supply $XX investment legal performance quarter, pressure, largely were providing strengthens administrative quarter, point XXX Although throughout marketing our to higher Overall, largely of costs XX% total administrative the the during basis decrease as to slide expenses or point sales this savings adjusted during offset bridge due represented expenses last On A&C benefits sales to EBIT XXX by moderated we drivers XX, cost to expenses administrative a key as as supply net the a the expenses it selling normalize to of of quarter. year. year. X.X% Adjusted a compared initiatives. related summarize increase last the declined compared reflect represented of are company expect net claims to XX%, and Adjusted increased settlement

several our in Partially and point net EBIT lower EBIT we in XXX levels adjusted margin labor were was soon to As fully targeted action EBIT income Overall, where down basis adjusted basis of A our as is by impact XXX below-the-line sales areas basis selling term was marketing EBIT points our This adjusted higher between year-over-year of items. R&D a respectively. gross better impact. point following the adjusted contraction from impact million other the adjusted previously $X.XX of favorable as targeted performance and to XXX of and by a lower and had administrative EBIT quarter. headwinds, mentioned, and due operating points expenses, change share and a XX.X%. lower supply was decline expense place EPS than resulted adjusted return adjusted this million expected This $X.XX XX to in a expenses the basis the offsetting supply taxes breaks $XX declined $X.XX, of the and which XXX XX% as to resulted short points margin margin. lower our impact EPS matters decreased expect contributing interest basis lower $X.XX impact and resolution in favorable offset adjusted most to had a compared and a $X.XX The recovers, constraints per tax partially in adjusted to chart prior significant was down year. negative $XX investment

the year inflation, actions, other unfavorable due liabilities, by Secret Snacks partially Pepperidge capital turn to compared year to offset gains by allowances cost sales promotional and in year payable related operations driven lower declines brands decreased impact demand by result lower moderated and in decreased by promotional spending gross a were snacks spending increases. more the of late decreased offset Soup prior Sales quarter. the cycling first productivity XX% outflows operating prior promotional organic to favorable Snacks pricing decreased increased supply lower Fiscal of and mix, offset resulted product driven and increase offset our to higher and increased productivity of to quarter margin basis XX and recent partially margin by administrative Prego of soup Within other offset The Beverages, declines, Pop recent as XX.X%. lower as costs. X% by and billion quarter, brands I'll The We chain higher Operating in & primarily our X% were in volume pasta from XX.X%. the the costs and million, of elevated Meals chain partially gross US Meals well offset gross products, mix margin July relative by Canada. XXXX lower earnings inflation, In including by price retail for declines slightly margin, due than improvements. benefits Beverage and primarily in moderated benefits in expenses. product year, prior margin power as Sales year-over-year margin decreased spending, promotional levels and level the US from earnings to and volume chain supply higher decreased unfavorable year $X decline supply $XXX Farm Declines a marketing earnings. flow year-over-year in in to the Goldfish sales accrued and spending, and were quarter points quarter. by supply cost first the basis volume year lower Snacks, of and constraints. from retailer for than in selling from prior legal favorable accounts pricing cash to partner $XXX quarter X% Operating due working settlement points VX increased to division, $XXX segments. higher inventory a lower by in across and cost of popcorn in within selling cycling was prior Overall, to offset crackers and decreased X% quarter primarily beverages, expenses net to initiatives within increased from and of recovery savings decreased sauces Volume allowances higher and the the levels due flow the the to The the Overall, price lower recent organic resulted US & for partially pressures improvements price partially more supply operating due as offset to gross sales Turning X%. cash certain now of claims by as offset supply prior the a decrease and largely Increased XX% liquidity. Beverages cookies. sales XXX chain levels expenses. million. slight to Meals by marketing million net and partially mostly sales actions cash division,

investing activities planned year. light million reflective full Our from comparable the year we In operating expenditures of are was to $XXX approximately cash fiscal of $XX million, of for were year-to-date capital $XXX outflows cash environment, to current capital the our prior expenditures outlay for for XXXX. million reducing which

year-to-date shareholders, from million $XXX were $XXX we vast of the current or end repurchases financing represented of the million including cash share remaining first our $XXX of share quarter, million of capital Our outflows million, $XXX approximately At to activities majority the return program. which million dividends had $XXX under repurchase quarter. $XX the of strategic paid during the the million and

anti-dilutive quarter a have cash the is with $XX million. first program, which remaining. We ended repurchase also cash of $XXX $XXX approximately million of million We and share equivalents

Turning XX. to slide

this adjusted As now EPS unrealized rates EBIT and adjusted hedges growth mark-to-market and earnings the covered reflect losses for excludes earlier, net guidance gains undestinated on commodity adjusted change. and outstanding

savings year-end sales to adjusted expect initiatives our and sustained continue partially mitigated cost well-executed with fiscal costs EPS XXXX planned full and provided call. as and our the program. labor-related be we performance Overall, well expect We in-market adjusted net guidance during year to inflationary EBIT we be consistent accelerating momentum, higher fiscal with earnings pressures as pricing [ph] to productivity

supply as prior recover. we be Although to quarter, sequentially in results year-over-year begins the performance we second to lapping expect will year improve top-line strong

inflation to of end the higher be we without the second additional commodities benefit pressure respect driven in not will expect costs labor-related by core and with until second continued wave quarter. across of which margin, pricing, of the place However, our

expect margin progress half labor the the we in recovery earnings year. the of and with collectively actions inflation As we along result of second year, move into mitigation the through our to recovery continued

to year, plus minus X% For minus and we to X.X% to full EPS And adjusted sales of the X% X%. flat. EBIT expect adjusted be of X.X% to net organic minus minus

Overall, had fiscal First, on results. sale look strategy work to net and point fiscal fiscal we for thanks potential the Plum our to Investor our to and impact I'm the percentage XXXX unlock of Day a estimated of positive in at adjusted sales. was line start hard teams. commitment have growth year, sharing truly is week. X grateful an their which expectations, XXXX our The generally by with all the next continued to dedication our our forward full to

We you. the now will take to questions. operator over to your turn it Thank

your question comes Barclays. And first from Lazar Andrew with [Operator Instructions]

God morning, everybody.

morning. Good Andrew. Hi,

for the guess, The wanted modeled. account little came bit. a a consensus was take bunch differently more modeled. start than I to sounds of I broadly people I sales question. bit a me quarter were off think It in Thanks like of to less little we've gross with line your severe didn't replenishment And inventory maybe sort expectations. year such. fleet But in of and severity it into the contraction the than the have ago, certainly margin

in year-over-year internal to what drove so of me I margin of Thanks hearing I'm sort drivers that make get than compression the perhaps it key if was than to sort there? what XQ that? sure, expectations? much. just sounds be XQ. And your want worse and is to correctly expectation better are for this a like so, your to sense I'm trying whether So And

generally, came Yeah. with expectations. aligned Sure. I'd results our say Andrew. the Thanks, pretty in

business, out pointed had as QX significant - in in would of our we As - pretty a coming out we retail in COVID. we of as few that time, remember kind the earnings, I Beverages year first if were Meals you lap what had of kind at first a inventory of ago initial quarters of was a & up And which XX%. the especially surge the quarter had we lot recovery, of surge of replenishment describe

Soup that's XX%. was were lapping. up And we what

came it generally we as pressure on a think side, especially labor and Snacks, was in was more there expected we significant. than as a the that do so, consistent. related supply expected little more And fairly to it probably bit I

the actions, news good taken of especially seeing and real corrective days, is I last a lot the think we've progress. over to we're XX XX

continue quarter rates and second so to progress go I'd a that into they second where So vacancy the half. month are to in completely, XX% about or ago, then more we from were say, the and our we down as expect

top-line, more So close, supply. little a pretty pressure on

both productivity great is - you into navigating gross been a lot plants to vast our moving terrific how a pretty as on you feel it working know, majority of moment. And there the and good a job entail. a very as pricing the what what close to of I we've very, for think long side, out margin of On our very these as It's strategy, trying just again, and this quarters predict a expected going the job, our parts by go well did hard to done was I about executing performance that team margins. those good job very as we lot are have a workers of the reflecting, on time, frontline

as did we do we I throughout think EPS close better a think upside do little was little a I not pretty But think you're our I relates that think Everything to us will some bit to QX. as hearing else the repeat bit right favorability year. where we see expected. of tax it there.

the some QX. on help a there within think certainly top-line. should the recovery I that as but our some I a supply, think better than pressure dynamic we comp in we to is still recover, expect better year ago you which should saw X%

of why, inflation and a times, I the a one in build in tough together And we second about combination that back a back prepared enterprise and both exit quarter. be our into think productivity, fairly we ramp-up to be most place dynamic year, QX will of pricing, But a to as see our and half I inflation. we expect we good Mick both savings, back not we're posture. justified you this very us inflation, the good of year. really of dynamic remarks as today, and that is some kind of on the the we will get comp, going And pricing, of QX in second into into well the of that. outlook communicated coming think on do that's The the the that margin, said about we We've wave couple half very as at face half, feel you're into very very elements With but the help different those all more of January. as for there cost as end of the until of get we've and of come to to momentum positive you as feeling our the look pricing positive right.

teeth and respect that ability ability [ph] in that. activity hope to sort positioned with to with competitors respect point the relative like the how at company would not levels being season will market then of market you core, like whatever like the for market guess, heading pressure the normally kind of to feel feel can I soup of a will, into reason? at regard the to briefly, or be more is you promotional levels do demand of be retailers of let's what have the of to retailer of think to time Thanks sort the you be in disadvantage, supply at you you normal if soup where year? somewhat activity this say, in the Are your at expected season just the for a in around you And the that any

Yeah.

are of couple that in a think interesting. I things question that

our not just first go in this our of the certain do businesses, important is which season. good half soup core news the and season is, the a have the very into now although I would back and thing into be kind as think say holiday are we to in areas, of they constraints supply very, right we broth soup I obviously tend

a there. job good feeling very done been build to good has has team continuing capacity. Execution good supply on really So, facilities. in The those we're in

both feel some but kind it, And our bit as I expected And also little competitive back a going so, do be the couple is do be that of of as we've going consistent about as we I more business, soup I think feel pressure I on more expect And had kind bit very, so Chunky have. to field, I the good do But we're segment, we're back well see how feeling prevalent. bit worried a and ability We've and on coming speaking, to broadly wouldn't pretty of business it, private change of a normal up question, now. of mentioned they'll season. of seen certainly little the a set label the good I for forward about playing level a that in, about to that sure. good. or we're execution standpoint, as mix, as is from earlier, shares them positioned not our end you competitive part been bit I'm of think though, more little it heart season. and condensed marketing how I of ready-to-eat we a the in very for think innovation of now. And to has your the supply a pretty anticipated. The a always a a absent about with the it think, the I supply far good environment, right side for in add very is little will our programming good looking soup into and into kind that got in areas. while,

much. Thanks so

Looking forward week. to next

Yeah.

with Your JPMorgan. next is Goldman question from Ken

Hi. much. Thanks so

Ken. Hi,

what fade? a or benefits us a, strong from of And there's to First this bases here. extent level curious refresh your question, maybe And of of there's just guess, tailwind unknowns can, I benefits. if over Snack your a to Snack tailwind reversal lot the across heightened home years of versus guidance been potential a you general know, thought the last how sales a couple food as your at exposed obviously industry on process average? factors I'm I

trying So I'm just I'm looking sense to for not quantification, see get how you general of a it.

talked that kind put factors economic But duality a interesting. this where kind broadly are, have we it's this where both a takes more the we little almost and of puts I in think, about of into bucket ways. benefit unique bit we that I'd have of before. somewhat sense Yeah, going portfolio We've and certainly snap

or to what is lower or down referring which benefits those away a to as or bit in or on in there to talking of you some lot general. So spend we a pragmatic they making may well is look bundle. move soup, Does as at off that do always pressure speaking, things come have bit people segments But are about, tend categories example. in as comfort decision year. other one the the in. the see that more that down we to or people that have impact the items traditionally where discretionary last of like an a Snacking trade the flip snacking side dynamic I the of trading be category other some think And to list just of little a perhaps I And the we're little from of we also balance of the business our be into think our modeled we've

that balance duration that to hold closely the sure of I And although kind we've a that of profile. that our our given And But watching overall, portfolio that think, into this period, of takes, say we're there make how and feel of are balanced said, it's a little what some of and and outlook a new you fairly of bit good and so, outlook. put it's with in in territory little I'd bit I for pretty very, But seeing. thought be balance as up reflect rightfully dynamic I those puts economic think trying to the a expectations we're the about lot year. consistent the very trying will

a first for a the I Got bit a you to that. ask of the wanted little Thank half. quick then clarification. it. about And A&C reduction in

the half up the same the - get the some for shift to about message Is that back just again. of we pick second will picking move yeah, things the the the message still the year. half? is the thought A&C spend will what you'll Or up maybe spending second annual the all half, XH we be or that talked and sort into but back won't of in way You

a better get to you. there. trying Thank Just understanding

Yeah.

think I first I'll I we you explanation for And year. Mick think select of challenges I'll an anticipated outlook you kind areas. because as important. QX we the to were in that going of some we give have that's through QX, kind the let navigated supply But give

At we lot in go households. in be to was going fairly where to but meet are you the going form of way, be or same little it's see the any the time, a retention nature. below in certain were position going the importantly, the that progress we a kind is although is so these levels we've what It against do to it where decline don't of want threshold the harder made And of shape surgical incremental jeopardy that really that in bit demand. put to first first more knew in a a places quarter, acquiring, a of kind to we

color a of particular, right return to been effective media quarter if even Chunky you've normality. had as on, want our back the sure And you in it's really X% prefer balance a QX bit Goldfish through But year. XX% We you'll forward And marketing so And give in to perspective, in not sales make business, important closer but or would as an Mick, Chunky and Soup, through in heard think in in keep do you any the as more on like first haven't that that's the I go from roll be to what just little as supply businesses see and I'm on fully, seen X% ads, see to it net we there. I to shares. sure we the on you'll ongoing to we sales. year, that that the comes think our of our pressure as outlook. basis you of we put maybe the around range. that And can was

the expect, be line for the year. No, a in prior describing I'd bit be phasing versus market probably it is year. other the of that a only to more of thing between But full little you that this year, year-over-year of the perspective, at add the a little to kind the look the quarter much I Yeah. down. X% of closer result so if be phasing will range lower in that it XX%, course, overall, the quarters. There as do end will from might a bit is throughout of

Great. Thanks much. so

from is of Bank question next Bryan Spillane Your America. with

Hey. Good morning, everyone.

Bryan. Hi,

quick So on one CapEx, expectation for year. spending me, down the just first the for bringing capital

be that, is what's more out that underneath Just out guess, to - years? that, shifting the to are we CapEx, going and of I it

answer Mick Mick. one. let will I'll that Yes,

So maybe I'll just comment quickly on that.

on So focus our overall environment. can we - described a the demand on also focus first we're continue that sure and earlier, And to to big fulfill we all, to the obviously as operating that making of Mark adjusting right still supply.

- organization on obviously we refine So we to make And are capital. help the going shifting is that a prudent these get year, has $XXX it's that believe overall projects that I focus lot done future. of million. a we this of I be more kind capital the help to think underlying that continuous organization closer expect the also of Listen, these some sure that return that's There the thought as into the of question to that a us underlying our right business. the great case. on we continuing job sure into on outlook, to your making are the shifting of do

do then is I shifting X some years. expect out this of So that into

give we as a see. more little snacks what we in that about Investor the you as on Day margin and we'll such talk road color Bryan, bit map do And little a things

also as where for And see capacity - what a got other appropriately, that be phase projects say is for to execution is. we needs think the that I you in bandwidth think relative reflected our just we've sense in of I XXXX, good a bit to think that thing I kind I got kind certainly outlook and our to does of get little like that longer But more terrific next any term we'll about it I that A of talk, pipeline, of confidence into really forward. lack not well. about the the We've as going we reflect this the and feel ability business. week. good projects invest in said, as we would

the I And ballpark additional in in the - like on sounds last talked fiscal or that. your pricing discussion the Okay. thanks In a neighborhood second was increases. about level - X%. just back were And the actions, guess earnings for about call, maybe So - of the to you And you the be in then now it pricing some of last call. commentary half planning or would quick in that Q&A, just earnings now maybe you're expecting of there's incremental price follow-up X% pricing, right? versus what around

in just to of magnitude, at looking I would we're what So be just the want year to half try helpful. the get back a of sense

to Yeah, mid Bryan, we is digit pricing. we middle that or answer the when single single - of kind digit quoted that

of had inflation now. we're at amount that is already the inflation that about talking we If you into remember fair gained a time, visibility

now, announced say, month And second we the about pricing been now a about have we're so ago talking it. we I'd over the way of and announced, out - talking second

already we at contemplated of So necessity bit essence, were for outlook we, in of a the is a year. as the balance looking the that

we're that the well. thresholds we relates to as puts it quite in and different the in these a reflects So mindful this through half have said, is back as too, as sure I really the wave to second coming and year. actions, certain be as that few Remember, pricing strategic we it's we're important and navigate materially January that number of working not how Perhaps takes a making of places. what's different

would there plan, had expected materially overall, had different takes perhaps from not puts and we I initially to be are what generally So but the we're some speaking, there. in than we say

you. Thank great. Okay,

Your from next question with is Piper Lavery Sandler. Michael

Good morning. Thank you.

Michael. Good morning,

certainly mandates. costs. potential Just clear, labor any it's your in walls through. And guidance it to But relative and out not your some vaccine pressure obviously, is come and to be hitting what called you've curious thinking still impact seem from they so

side, it mandate what compare Just your factor curious how plans lands, would from in? wherever to that the

one a now. we're operating operating we've in mean, consistent kind of I anticipated Yeah. environment that to the

it labor, businesses. the protocols we as the certain but also it. And in impact prepare COVID did did of already anticipate has in but We mandates, a relates of a of dynamic so continued on that and bit constraints amount widespread factored of pressure our to for a the not

we've same of scenarios. time, So variety at a of got different kind the

of look I be where tend consistent think going with in. environment does are guidance our we to like kind reflects more today, which the to we're

certainly education rates and for to we're continue to doing Of that teams. information our we vaccination up, everything provide and course, hopeful we're can go

represented the our quite generally have facility As And continuum of of steady think it's I you in. we as more percent that way vaccinated network. depending information speaking, on imagine outlook. our moment I think the that and the this But kind well again, get of probably in right go conservative through you we're and is you bit uncertain to manage a little as can

great. that. helpful. kids pretty into of on And a rolled months but a sort it's that. That's That's now my And EBT specifically that Snack of course, interesting question, with - Thanks. families it have well just receiving been follow-up Ken of stole off already and because couple for would it's the piece, it's

especially what, that, it's might in few if like just seen related seeing impact feel weeks if kid-focused that? you're on and so to you anything in the anything, any brand. that curious already terms to response And more Have of last be maybe any you

Yeah.

the and of growth And year we when continue to I year see view, of we're, a demand. of that's And you ago. those organizations broad model their healthy a very business. our business trends correlation continue of I time some in-home about kind continuing lot the lapping people at to they're some of maintaining the macro hybrid healthy impacted growth to this policy think work, of to certain us, X for from that about macro rates, Snack lens function in of We've talked think categories, a a levels idea we work board. behavioral portion are perhaps this our is the a lot to look huge of a back eating through of that in still of more stability are Soup a companies, And going as pretty home, are why think of across trends bigger than which demand. cases, elevate even are some from although elevated it's

consumers even little minutes? be of minutes a as very, changing. was pandemic much important on quite move well do side, where that, the you we've as like that now distinct is very Chicken target of condensed dynamic the speed of this also more that's this. bit think It's of helpful preparation, of pasta sauces. in our done in Actually, Cream very in to to the particular cooking our the soup it the quick. moment into from addition XX or most Cream plays a on get Mushroom, research a of to XX portfolio But businesses appears kind lot very as for about Prego evolving a where heart it's In dinner seen we've to How done I

be to than we've also a favorable I continues more historically. lot elasticity think what seen

And on the do level brands I think in an I healthy. elevated Ken's to there answer, I macro are see so you think, an think brands, are movement. that I as are what's demand. keeping to example, very, some trends, on in places where Goldfish addition But those particular, do like kids some very as said,

on-the-go comments of my the back you in remember stronger the feeling you a if of One to very on very, And that were what's businesses pressure pandemic, really had if the interesting on well. do earlier, continued we've from we like periods is, lot sustained we resurgence reduction on on kids now come seen and we've the packs portion are bigger is are portion activities What's interesting as starting but our to demand, pack to school a of are back. so kind snacking, also back held packs to going bulk away-from-home in packs. those we've

the of think, broadly, the But outweighing a any of more there's influencing are would drivers I I cons. So variety pros always it. say

so of the to of relates positive is demand of forward. levels that that all going a outlook sustainment it generally And elevated net as

hearing to looking next week. Really Thanks more that great color. and forward for

you Yeah. there. we'll see Great,

Credit from Your with question next Robert is Suisse. Moskow

of leveling think talked Mick. the thanks, throughout seeing a inflation guidance Actually, you're we off quarter points of side. are The question about inflation And year. that escalating the this commodities to kind also. I giving food some for Hi, But these you on last

closer is but digit. us do higher? it give lap because can it's and maybe can point inflation forward kind to think just drivers? then during you will What as escalating low single and So going I like what at of if little you to us look. that - possible, are know, a some don't turn you contracts your it why because over? the year rolling the labor color give of of Is keeps main more packaging are contracts Or

question. a great Yeah, it's

You're absolutely right.

So we inflation year. we high for said what quarters. previous core are consistent projecting That's single digit the with

fiscal we've what So very line it's much our not expectation and along. change XXXX in was all a looking to compared for been previous with is what at

in see high - your If you there, single year. underlying drivers about look X% the point, the to at digits full QX, you for

our obviously that's reset by contracts over throughout breaks is the And accelerating that, fiscal the pattern fact our half various two that second of have driven do that fiscal largely have year in you year. So we years. that calendar year. Why the

reset. a we see you contracts the and particularly pack previously experiencing. of January obviously a So time [indiscernible] different environment that are they And ingredients what were frame, are in And that's the lot commodity that. they being that reset of

call or various So obviously of contracts basis. least, calendar result, as are a these a it, year at

that little calendar the maybe experiencing is the that look of at the is coverage, currently because typically, current a point you XX% So overall higher out other bit in probably is do prudent. we're expect to next thought add about we our year. if which And are environment, to we but volatility to that's than covered, I the

Yeah.

build are Mick's a for now. about little us and to two would is until we do think right that imagine, we're how bit would same to contract calendar of the some answer. it that maybe points I the But other of is of into in the - on talking kind as half to a environment have contract. although So that elements begin that 'XX just that's in One be first say carryover fiscal we're small natural always can tough on lap you you year, you predict long the

necessarily without kind So suppliers closely of to to this we're of forward. as too, a about you - environment, working wait can is that there supplier kind reflect can to relief change that XX volatile And a think make imagine, contract. months dramatic you having revisit really sure, that going we if in with to

dynamic So mitigating have us dynamic inflation, a that some say talking But you but we've we that escalating should about. I do would a the even Mick's little created of that lot I also counter of actions. to though help have that, although that's an out, though, our - pressure you nimble, pointed be in QX, bit that more just as escalation

moment. QX versus so, year, back kind of position as we in actually in look we good about And at very half as do we're the we'd arguably of the feel transitional better inflation, how necessarily that line our than we up

will be and that there expect we're fully one mitigate on position why likely more we're better I part back we and the us much although to the pointing be very confidence that's So have also in inflation. a favorable of big of to it, hand, feeling a the a to good, the in and balance more year half.

you. Thank Okay.

Your next Stifel. question is from Chris Growe with

good morning. Hi,

Chris. Hey,

environment cost on other you you pricing to achieve of Will savings, be based pricing what in that? question earlier around the if second Hi. follow-up of the some sufficient help you on year, think you that a kind about quick pricing. In have, inflation the I be know the just half today? levers to a you of and can the had questions offset

position other year. in able be pricing to think yes, that strong year comfortable also of cover I fiscal the variables, feel out the conjunction we a in to we're kind that into very forward to able and with to the carry next be of that

all So of said I to what second is have half in as the I of kind those before, bear. the coming you tools think of benefit

backdrop of pieces place. in more the higher even got inflation, is So the the mitigation though of we've

able yes, about benefit of to back that, just good feel going comps overall good into lapping base going where easier so the Chris, course, the lap we second half overall and feeling Also, we the we're at we're we lower being And yeah, are. to will give some about look of start But that half. that.

lot That's can I Okay. quarter? quick quantify the supply you. second was how the to you quarter? that, overall, second the in shortages in of supply related be to some you're helpful. of a you. inventory, guess But could Thank sounds hurt those attempted there's by condition what curious, And your supply sales? to they're brand. And like shortages different is, a and if the much chain? be I'd sounds demand question, you which hurting Thank And sales It - of are it to going to circumstances like produce there building degree, if the you what's

more me Great. it bit of to I dynamic of to Yeah. QX a because which important I'm I give on mentioned flavor is I bit question relates but the allow wanted color my glad comments, it in share, - think little little you to that. give it as a in a to bit on you will asked that

of tell you unfamiliar consumption we elevated what we're certainly quarter not that with the quarter, amount had saw fair a essentially, the with is in stronger a demand and where I you into a inventory, so dynamic you were first remained So would going number.

X% was again, consumption that, of look of inventory lap our you an were X%. part component. the But of with we in-market down about a the if ago versus at Now year top-line,

supply. to of little about to related a point bit little The have way two. six that bit You let's really more see little a the the elements inventory a there, more or bit the half - is this unmeasured was are but lap delta more was less talk we then than between channel half balance and

that little So some labor. we a anchored And just really in a bit that our labor, had we about in suppliers' the of places pressure, is that's our the of categories. but labor couple issue supply not of talk

you So material pressure. some have

Snacks more and the inherently I is more businesses detail, apart a of a labor-intensive, you little give the little break nature just if manufacturing. the business bit to our So were

So supply a several that snack related of Snyder's-Lance more little businesses of in our is and bit particular, our pressure businesses. on

cookies talked and Snyder's late July, although Lance is on it bit crackers. about is as a we Hanover generally a So as well. pretty position, in were Farm Pepperidge and our better also sandwich labor-intensive pressured as as little well pressure

the certain categories it's Beverages, on Meals and to about are Prego pressure. in where VX. much particular seeing So aluminum those material we're & cans as relates four more parts On it the availability of

the occurring. so that's pressure where see you And

QX, As labor recovering. is into you go

important labor levels an when six new already manufacturing at to that realize in going up effectiveness four weeks into role. deliver note It moves we And the so hire the to takes level as about It kind place. is to hire see for production us of really additional that begin someone, that we to allows to a labor.

the But dynamic see about places be our the inventory. on lower we you investment to back a is half, a QX, in and bit we're pressured. happens the take managing in very half. you little that that we we priority supply a also you where we on It's business, if of last we've back correlation a the momentum that. supply, consumer on a anything really bit go short think see be get we position couple as our businesses the as and share certain a exit that think bit and through it is as year, inventory of it driven, we'll of done also the a just is time. pressure and probably very expect is brand short-term 'XX with I driven. bump a stronger here in the very It And come to where a And little driving we of recovering second nature. of consumption to pressure years lower of related really - major really gotten is be we well. areas. as well very, It's great will we us has couple little That you're does those on not into have those described, to on But share even and it little end But that think So into in-market levels, change lot into of market head through a performance, as taking high 'XX recovering we expect where I term the doesn't on and on bit as is time in the very, should what growth balance near-term. in made expect some healthy that demand

Thank you.

does conclude participating. conference Thank today's this call. you for gentlemen, and Ladies

You may now disconnect.