Conagra Brands (CAG) 6 Oct 222023 Q1 Earnings call transcript

Good morning, and welcome to the Conagra Brands First Quarter Full Year 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Melissa Napier. ahead. go Please

will about for will we On be quarter Thanks Sean for making Conagra our CFO, do the our we take performance. Descriptions Good statements questions these making faith, your risk will XXXX joining earnings included first when some who our Marberger, we fiscal and while remarks factors we the with our call, in we call. in Brands have not the business CEO; of our We'll conclude. morning. prepared guarantee Dave the us discuss today's any are I'm Connolly, achieve. filed forward-looking statements. results SEC. good are And with documents here

These reconciliations We in items will information non-GAAP both be found be be items. referenced. for Sean. the non-GAAP that to which on believes on numbers management Please website. call today's now release relations comparability also for exclude measures of I'll press refer see that slides be adjusted discussing the measures. additional the over our our found the we'll financial and can comparability impact section earnings can period GAAP release of the the call, some the turn The investor reviewing to and in to non-GAAP earnings

earnings fiscal Melissa. Thanks, joining for Good morning, everyone, call. ‘XX you first quarter and our thank

ongoing our presentation the robust inflation our quarter on elasticities. across right what first of net due to here Let's away we coupled shown pricing with mainly actions to growth in from X. you portfolio, sales jump had with driven delivered our Overall, limited want Slide We results. strong impact Conagra take

frozen and the market our gain level, snacks quarter. improvement share drove domains to and portfolio during within total the profit continued We at particularly solid strategic

in Ardent from performance strong capitalizing volatility on the to management another enabled as Mills, wheat saw also markets. the joint venture effective continue We

improve. Our to supply chain productivity continued

our during many later benefits improved in peers. presentation. both to from the operational which quarter increased some productivity These However, inefficiencies, our the this costs the external of led impacted we internal offset and unpack and in business like I'll and challenges experienced challenges than quarter. the more

continue also investing business cash and the our ratio balance during to to sheet We strengthen while improving in shareholders. leverage returning quarter, our our

Finally, reaffirms the our shown the solid ‘XX to that let's last confidence dive we year into in quarter. start announced on fiscal our Slide backdrop, results the X. guidance With

As than level, adjusted performance compared Conagra to quarter. the strong earnings ago. share years first compared the we of quarter generated down three increase is last compared XX% of margin you XX.X%, the year a operating a sales chain to slightly $X.X a mentioned grew result in adjusted what almost during of year X.X% per just breaks period; can sales and X last sales billion, down I moment just which XX% retail we over our over to inefficiencies see, last delivered $X.XX, the year quarter, representing net organic Slide ago; and total the At the over by year. higher ago supply of as of X%

X.X sales on marketplace catering taste to generated valuable frozen convenience, frozen our by consumer growth prior growth continued pronounced increased serve categories respectively. meals momentum plant-based Similar of snacks quarters, Diving from can breakfast key one by into double-digits have see first fiscal further the competitors. as Slide quality on 'XX These the and by single in which focus share respectively. gaining three that resonate. X a retail X.X one and a significant XX% protein while of our great acceleration along connection sales three to Our and basis you a top to for this basis percentage points and consumers. gain domain, market such domains, compared brands most on year performance in year our Clearly, our gains as the quarterly of led and to line increased and with we are was sausages points X% share which share continue and demonstrating share quarter our preferences on with percentage

ago, X. to XX% Our the saw prior increased quarter on year the sales snacks retail than sales XX% particular, versus In shown the growth which year, can we domain the one in also increased basis year. continued microwave first sustained recent XX%. growth delivered as popcorn, deliver on you here last a period years strong quarter. growth and sales compared snacks most three of to see, including Slide to And have we more significant three in Compared

domain staples between compared and price over three entrees, sales volume with to by relevant toppings, and relationship year highlights versus and the This X% dinners was increasing time. in prior accelerated also driven and performance highly Our XX ago. years growth single strong Slide the canned tomatoes. XX% serve pickles

last strategic call, quarter's continue on pricing to mentioned COGS offset I actions to take inflation. earnings quarter first the during As ongoing we help

some for expect, most tends As Conagra in consumers adjust. immediate the pricing acute has the and overall both be pricing driven volume to of aftermath wanes you as elasticities time This and over would new industry.

elasticities compared the of elasticities peers flat are our historic at These quarters. both net nearly brands. see testament the of the to slide, strength As few and remained norms over you our bottom have this past a modest relatively can our to

impact between also of impact monitor look on the private actions at pricing the label. volume, relative our foods we and branded we As

average gains year. calendar including certain As you Slide label the on this at in dollar private see has of share can beginning on XXXX, XX, jump a of increased its since share categories

pandemic. gained will they the much These our noting private share we in it's compete. investments more in to the us modest confident of the combined Way market categories that with consumers. exposure during continue help part as our Conagra which to label those continued efforts ensure the the limited gains However, worth with important resonate share will are We're brands retain that in we've

to call turn to want supply over I improvements about the Dave, and I chain the Conagra's both talk referenced I and inefficiencies Before earlier.

in make the able to last continued service offset supply Pricing our the metrics QX. our said, to to largely implemented over and we progress. actions continues in improve continued were year inflation and I chain quarter As

businesses, types up result the our up, backing of downtime margin supply where is effect higher two cans identified time with linger these product and have some they and the we is, beans spec. pleased accomplished determine that date, not cause We've result costs can to pop we're to in solve properly, production My an sales we've illustrate -- and should where QX. up see of found chili pulled a in will recalled. chain to were late is QX, as yet QX we while during production. examples inefficiencies what this. While our to running off in now been. discrete that is issue example root our off-spec point can No give needed fully back of I'll that lost lost in normalized. resulted continued and to time below second gross We and manufacturing in less issue This disposed In ramp higher product back in lost the Foodservice challenges proper well you costs canned good while for The testing business, as production And our and customer. the into was diagnostic. inventory product margins. finished producing volumes impacting and

good and off In a improve. are we're ‘XX, in interruptions strong line these to fueled making But and dynamic. start Investor remain of these result in transitory ahead, make robust of the committed supply chain with focus. growth we're progress margin as not inflation we our continue as year pricing for productivity despite overnight we to announced Looking supply Accordingly, external our disruptions, to driven expecting summary, to discrete elasticities. to chain core specific muted the targets progress operating target continuing we the we disappear our by in at to environment Operationally, areas productivity a top Day the remains July. in increases fiscal

planning we're operating to For the for remain environment the dynamic. the balance of year,

to While recent pricing outlined and of to brands wave consumer in most disruptions, introduced QX. stay I are chain response market this strong, supply for to we impacted driven the quarter's the we our from just early be expect to inflation volumes our planning by

inflation However, while start, focused we delivering as moderation in time. our relief and I earlier, quarter for starting year covered customers one a but year see for to a over on remains we remain great expect And and persistent, elasticity commodities the to off doesn't unfolds. this and to areas wane anticipate we Overall, we're consumers. make as are certain

leading initiatives behind that, it a clear path us for of targets. see Dave. achieving those brands our issued reaffirm to to ’XX ongoing we continue I'll the and productivity We guidance the strength to pass over With fiscal to

Ardent sales our supply and gross to line our the X.X% did initiatives, achieve organic Thanks, shown profit gain portfolio in as business QX, up chain expectations. of although I'll X.X%. at organic on XX. sales continues of progress operate year Adjusted higher gross an fiscal our net targets. dollar continued as with equity Sean market as growth adjusted delivered good reflected We conditions discussing Adjusted challenges management supply begin quarter continued on referenced. confident the quarterly the everyone. strong from inflation contributing with and in in to from as venture to to net by was remain in growth impact full relevancy are The growth benefiting productivity favorable of performance Slide consumers. ’XX Sean, X.X% our our in reflecting XX.X% start guidance drove margin to effective joint and Overall, came pleased line and morning, and strong another ability Mills hedge we effective few EBITDA a earnings operational highlights

final XX. by result a continued elasticity improvement was a the XX inflation from segment net the was performance sales from mix, This The the in each partially during by top increase pricing offset impact in of increases. was to decrease Slide Slide The in to exchange foreign impact to primarily quarter. due contributor X.X% sales in line for volume, driven the QX. organic a the actions. X.X% net price small those driven of shows Turning XX.X% headwind

As mentioned, continued our with portfolio, entire gains sales across retail our net we domestic and robust within pleased share are businesses. growth particularly the

on XX.X% like of quarter, net segment. the in QX found adjusted impact a I'd discussing improved from some net growth the price of Refrigerated decrease drove and and Our foreign Grocery our margin spend was previously actions. our X.X% Snacks and achieved during reflecting segments reflected to now communicated for exchange pricing bridge unfavorable Frozen sales Slide XX. The respectively. mix sales We time International benefit XX.X% and

and price from margin by productivity benefits X.X% which our of impact chain sourcing progress had continued gross realized margins XX% XX%. inflation inefficiencies X.X%. benefit discussed. a net on by supply initiatives, with nearly is pressure also negative market of These a muted operational inflationary were impacting operating We continued Sean Market-based productivity our

rose last from costs prices lower than year, that quarter. this As we commodity have quickly contracted locking benefited rolled off were the market and in

commodity this segment immediately adjusted product our organic net we eases, in Snacks XX We than As a adjusted the sales across XX of strength three the QX. points stands with will increasing Slide profit our drove to market by out a were basis remain when contracts. may The a operating breaks year increased operating operating productivity by higher margin segments down Grocery segment. supply growth our margin is inflation of ago. reminder, compared segment four to on that adjusted operating not dynamic and in and higher of benefit chain pleased our costs timing slide, a profit and as and of due a environment. even realize This transitory spot

QX, expect margin we Foodservice were inflection go. Frozen, Refrigerated International Frozen margins offset was and to year chain margin gross and in than Refrigerated higher gross points QX demonstrating elevated in cost XX Although to continue margins, our operating realized better this productivity Inflation, basis supply gross and segments. segment's operating headwinds and down and pressures that sales

on impairment context goodwill charges unpacking the numbers. I'd on to that XX, Slide impacted reported Before and like some adjusted our EPS brand provide

and the impairment. we reporting with the changes the of an to these made decision accordance goodwill in segment. conducted in quarter, connection our Refrigerated evaluation for for we and During structure certain reorganize GAAP, Frozen brands In with

drove rate used has discount standard the the recently we Given a the further in but primarily from environment, of for brand the adjusted in are tables be numbers, interest charges million quarter presentation. the they reported QX The increased all goodwill the the in which testing, our impact slide back on not $XXX and expenses. rates in do impairment of impairment higher not our current non-cash charges can SG&A at rate reconciliations found this because shown the increases

positives XX%. from adjusted were adjusted Higher $X.XX EPS or Mill's performance and positive gross performance increased profit, QX strong adjusted to benefit a our Our taxes in primary the sales contributors slight quarter. EPS expense. and Ardent were the incentive comparison year's compensation by pension the interest as higher as income quarter, lower first well offset postretirement to in adjusted These higher SG&A the from lower and prior and

X how are can to on our the X.X the we continuing of You the strengthen at sheet XX. quarter, ratio times ‘XX. end times, balance our of At leverage see end down from net Slide fiscal was

capital X.X ratio is expect end historically a leverage We to times. quarter use a perspective. in cash working net QX of heavier a of roughly Keep that with mind fiscal ’XX from

in of million stated of $XXX shares half fiscal million during million share year-over-year returning free ‘XX, in an $XXX paid from dividends incentive plans. And we due QX net the ’XX from cash the QX year on a ago, compared of increase dilution to We progress objective receivables as highlighting our $XX the QX repurchased in while million in negative certain to shareholders. increased quarter, accelerated in flow greater by our the quarter, $XX expect $XX offsetting terms. CapEx $XXX payment we commitment year. customer to capitalized first leverage $XX decreased back line we compensation receipt outstanding with be our based million worth capital reduction the partially to in of of million on to So million our to fiscal

performance to our strong we expectations fiscal continue the capital again, all our optimize through of and guidance the to will highest best metrics evaluate are of quarter balance the ’XX and value solid the we as year. use We given progress across for shareholder Once reaffirming year. for fiscal

the guidance. questions, I up call through and considerations want walk for Before opening the to behind our assumptions

’XX persist, expect calendar the in but year. result inflationary the year which rate a to towards first our year the weighted environment to for fiscal of continue will We moderate low-teens half inflation ‘XX, fiscal through

volume effective actions some We light also likely communicated pricing expect these communicated be to We costs will causing to in second pricing quarter, additional effective of early the in previously decline. in become QX. that recently

actions. magnitude will previous smaller than and the However, be more targeted pricing

future and needed price will to to monitor we continue inflation always, As levels as manage volatility.

approximately make growth and and 'XX spend we our investments with of priorities, to $XXX We fiscal expect focus support CapEx million capacity a productivity in as on expansion automation.

$XXX approximately the Finally, pension be we anticipate interest and to expense rate to be the income million for and by year, million interest environment. $XX roughly driven postretirement higher

tax with are Our the full year ‘XX. in our to strong To estimate approximately is rate we confident pleased for start outlook remain XX%. our year reiterate, fiscal and

for our skills Way That the prepared listening. remarks back results today's is amidst the pass dynamic environment strength for ability for you the Our our deliver solid questions. team, to now I'll such our Thank operator to the open it to of work line a hard the and a testament to Conagra of call. playbook. brands our of execution and concludes

Thank you.

from now question the Our will from We Please Lazar question-and-answer Instructions] begin first Andrew go [Operator session. ahead. Barclays. comes

very much. Thanks everybody. morning, Good

Hey, Andrew.

morning. Good

way see you the being, anything trying a forward? XQ XQ? since or like forecasting that we Hi. changed more I've or in say any the let's in Just reaction since into And just sense of your and to guess pricing I prudent get if questions. sort are elasticity volume I has retailer sort has data play see more don't you off, you of volume got elasticity in pricing that sort two come of yet? targeted guess, the new in first seen the you're have change going announcing for trends again,

that are Sure. basically I recent this that kind pricing as Andrew, with And here's effect this associated inflation concept the is is, pricing offset stable and more news. an about elasticities, how benign waning of elasticities that the And pricing, materials had this I they think earlier are think cycle, view net but net is combination they very about we and positive way into and far very, the do elasticities flat and of to being by we benign shared of stable. elasticities. elasticities

we and And been As mean, consistently Investor our our peers important have that, done our strength than that we've work elasticities reflects more our better. Day, of I portfolio. mentioned at our by benign modernize the the and brands to

this but we important be the an portfolio. point, at how Now strong look and as nuanced, coefficient, more may elasticity our ahead given stable nuance, of expect are been, this you elasticities it's I pricing have continued but

we've larger elasticity some benign piece weakness. a to why It's So not has coefficient elasticity apply being the to of now that those based broader volume that volume is applied a that for it's incremental the coefficients portfolio. which planned is changed

that's in standpoint. our But an that compared seen you is to as pricing very is in quite to have that to as volumes at along anything dollar that. move it's you've that from you're plus what going stable plus and go that look look why been effect see and X% XX% most sales XX% So plus And think important, you to volume I from coefficient directionally the more the industry, we've at elasticity modest seen with competitors company broadly historically.

I margin. think, It's want Great. Very on to of improved helpful color. sort deeper And the past then, quarters. little I go sequentially, bit for I guess, a gross five

where pricing that Conagra was fiscal in quarter year right, the of the sort said previously between and would largest ‘XX. cost really XQ had see you think the mismatch, I of

issues, still in looking those Street if margins And could understand had in So operational was guess lower be? has year-over-year for. I Street fiscal gross of year-over-year? not, I that of some you margins some expand still came the XQ, I why than margins as but would XQ, start we in but better to see the guess, starting gross the

would because a trying the So the around industry to for read recovery get be any color we're on you again sort as actual margin think covering will? sort on dollar that I you the of just the and if of to potential helpful opposed for the cost, timing

Yeah.

Let are necessarily Dave and it's overall, of kind continue. little remains not think more getting direction to the straight right environment But you margins obviously line a that about here. I the external then margins expect me how dynamic. the of heading we a in detail bit But tell because

saw margin Foodservice. in Snacks expansion If and last you we quarter, year-on-year about Grocery think and

This due of Foodservice progress back issue quarter, we And place. minutes few in gave plus ago, little good in a operational discussed that I Refrigerated. Frozen in the to transitory made but is we core productivity a and a good

on So you And just and with overall, stable I brands, that Dave, and say that? elasticities that couple it bodes I'd you do to strong take build and benign of want all mentioned. broad-based pricing it well.

Yeah. Sure.

Andrew, now. based don't margin but gross specific we So, margins in moving have give and we guidance, on improvement sequential assumptions do the operating we quarterly expect forward

highest we the for expect inflation year delivered. just the the percentage fiscal in of We QX

the moderate of seeing also at pricing we've the the and will quarter, during taken magnitude took forward. beginning QX. of fiscal additional the So expect moving full ’XX percentage pricing we we We're in but from pricing QX

we chain impact continue and QX. the supply full gradual some will So improvement that in to to see And service our normalize. levels the productivity also starting as net expect we see in of

us things margin we'll give moving sequentially improve that confidence So all forward. those our

much. very Thanks

from Please Ken JPMorgan. go from comes ahead. Goldman question next The

Thank you. Hi.

seeing it those some But, reiterated that inflation two this areas don't troublesome said this outlook expected you're that outlook. think and -- dropped have year. maybe and You you initial see we prices for you and were you’d surely in the chicken alter are past. some your areas relief that low-teens Sean, maybe in for I can COGS pork was

were become COGS I pessimistic in I'm nutshell, offset guess, than the I about for I guess think in curious guess cost as asking about have So would there recently a tailwinds, other general that. we or I'm more quarter are you any some Thank you. the a that year drivers ago? difficult, inflation of that optimistic are you key more

a comment think in brief turn that commodities over it Dave. seeing to We're make obviously Ken, well. green and shoots I'll and I some does some bode

news do hoped drop these be. start But contracts longer cycle obviously are longer in an This when some see don't very on ever. off. inflation minute, shaping contract much would up. imagine, into you forward as those anybody thing than the I But than you of we is positive necessarily At you positive commodities, persisted the We things curve. can seeing

done very sourcing the to this of end about factor the a it's the one cycles. team of is, you think want to be these that a to how because right? want Dave, of do job feel I of coming good good reality end news -- of So being negative an managed is cycle, team And you don't when just more any our purchasing has And long, inflation that. you're add good I overly color? the has at

for Yeah, sure.

in happened So the in be that right? line has that's continued Ken, market time volatile. came to art The first the inflation, with market quarters, largely which we several had, regarding in QX just very estimate that's

So moving we that The estimate proxy low that's for still less full inflation a forward. volatility believe to the year a bit is for little like teens.

double-digit years inflation. number a off of two very high that's So of

in like we've estimated we're we feel feel planned But into we deflationary adequately built that environment. like we like forecast and this. indicators, not for So our and our it's some conservatism a market that use

quickly. So, very our procurement on based listen, with a based we coming things strong the Sean very last just where on about year forecast, change on team. that and But us that has in can a talked told QX half thought based

we today, here good each sit we affect going about will it forward. feel quarter estimates and our As how

follow-up. quick a Thank you. And then

promotions to peers, form improve, but or margins start advertising. to those whether of hear cases vendor weakening and I'm will the your store -- more your is in start the a as from all time, on bit retailers of maybe their consumers higher and bearish you that of some in industry gross demand the the One as more start sure this the you customers,

think tone in curious really seen your I any I'm It like promotion indication you're and taking if price hearing competitors categories rise. seeing a continue the on an your in but getting seem in talk you're to sometimes kind suggest and data, you. not back or we of place your talk industry about just would your So today either, this or more any haven't seeing before, prices doesn't the of but aggressive story. customers the as said or whole we're these bit little it don't as pushing the data tell Thank list Andrew

don't they've the Yeah. to the heard Ken, in Making got that most words enter so year I in that's two particularly in surety. supply out the Especially now the period. think the is common is get service I've plus of want we to we're last from sure continue customers That right holidays, our priority. to levels direction They about moving stock. stock. the a products as through go sensitive that can

now across last the you like fuel that. the wants drove anybody things fully on normalized it issues fire issues, exacerbate yet chain do think the if and right I inventory out of stock about industry, supply think not thing with is to So the

now environment I going have remains the I to reason the continue future. So for to foreseeable rational not believe no think pretty that's right and

so much. Thanks

you. Thank

English ahead. Goldman Sachs. comes next Please The question from from Jason go

squeezing Good me Hey. for Thanks morning, in. folks.

morning. Good

give they you that us to still levels last service Can quarter? where subdued. stand how compares update on and where were you mentioned an maybe You

positive. quite It's dramatically. pretty improved have levels service Jason, Actually,

right -- down over and service you've in saw companies food peak broader you north getting during seen recently, And CPG of levels COVID, drop So the even back were moving the XXs. into in XX%. in up companies direction, some

-- that's So category specific. it's

everywhere. volume and be so is categories demand more supply say So more flawless? chain. But flawless, Conagra. our Jim. chain Service Is to selling certain how just progress. still Clear you We'd There assume can't kind I'd Core like materially improved, out to strong. well. have about supply not progress happening the that's of just We Slim have where tracking productivity it's at I think it as cranking like here's as clear across levels you and it's said. heard. overall. is It's industry, It's is No, in improving. that,

Some up, popping things as we outlined. keep

environment impact to for to of broader looking the it. year. modest it say, prudent why stance taking be we're prudent. a this commentary look, want just some we are tied that's our some on comments more pricing. we remains making longer. to and to it's some that's continues think a And to the on way the you are we point, external just chain So portfolio. got -- heard that real That's service dynamic, forward on And going take That'll the to into dynamism we've assume levels, But going handle supply the right your to have overall, bit We close even think progress. QX,

improve improve, as it? you you to expect And Sean, activity would promotional continue to with

things from I quite about think we're in of a couple a the company. ways that. our mind And to to keep degree it does, Jason,

of on of been example brands, volume one our times the it's our total it's certain opposed that percentage of the you A a levels industry. good and certain of We it of and lowest say what the work has it base, kind the we promotion is at look that the do know, volume not you we're deliberate because binary. you promotion. of do And and of year because in as promoted, some at do but drives and If we playbook, part promotion promotion, we volume. around to is do holidays incremental

because If sales, sales ROIC. that's you're those some not we'll going you're pure miss promotion and take holidays, on to on

kind At and focused anticipating not pursuit selective that'll right of become on promotion we've any promotion very -- lows ROI record I'm point, of come some focus very we're up very a on and modestly, high So we're now. at material but change. probably

for Thanks sense. I’ll your Makes on. Understood. pass it time.

question America. Bryan from Please ahead. next from comes Bank go The Spillane of

operator. All Good morning, right. Thanks, everyone.

ones me. So quick for two

with to issues The it out called the Sean, can, the is -- and first that, chili Foodservice in just one in and and getting back maybe you beans.

margins? and Just if and or things -- much didn't how can have these impacted sense trying how magnitude, this, of give can have been much tease to just Just maybe, Dave, out the us issues. can would better revenue on the it just you you volume you impact some do

So Yeah, in the realized in don't that? take Bryan. Why that we in bridge our I the deck see margin productivity if that you had was COGS plus X.X%. other

specific of those shoot give but to, know, clearly, core which margin, as issues that's equates impacted of I'm goods going -- in that. So X.X%. we that look sold, productivity for X% at to about you when about our two a you amount, number cost not

productivity is, would improvement be and came margin X.X% our core what So X.X%. at we in

impact. percentage point that's of X So about

things wasn't just talked about. Now the Sean that

absorption We other kind that are But things a a of that different us things productivity you just of examples the of gave and also headwind couple in all core against and that gave hit. that number. had some Sean things

So at the great It's about some these headwinds things productivity just progress. in making that of that to core of we number. isolated as are pleased look plants. We're we're transitory kind

And two margins. are the said of positive. collection we two mentioned, had a here Bryan, one time, And is an say, (ph) I on we segments segments. filed quarter, that of four expect the you the a us we we all and inflect other making ago last procedure Yeah. our for as to know we to year are guys At important looking for markets progress obviously,

these is course, portfolio, of it's of bit we little but the piece examples little color we, Foodservice is reasons up not Foodservice through that the And to quarter. the a ground a Foodservice in we some gave issue this As we on this in Foodservice. impacted popped one year, big wanted of but while put -- of a move do, still in up of

systemic anticipate the as prepared and directional more something described there's that don't There Foodservice, gave read So to ground tied that it's that and why in pop reasons. the want happening broader up case. for that you causes in in advance segment behind don't root want it remarks. that see to be we some not we we volatility. the you the -- It's up, instance in specific of to the we are some That's

Just regard we to, of then Hurricane I thinking other be follow-up be and in we guess, impact there? recent the there, thinking just pull forward And with or quarter, the this any about just Okay. on one either anything Ian that given operations? impact anything should about sales should is Florida

think might one right now unfortunately, because in not to can their where people, a be really some tough don't so. closed. I or they call Bryan, That's are stores a shop obviously, position

By can be so token, in might miss that And replenished that. have their of argue and there because future. to maybe sales be you pantry inventories obliterated the were the same

disruption one So what business, or just exactly Dave, you the that, the want And too know that do another. of be early anticipate like. a whole to add? it's don't way in I would that looks material scheme to national

part of hurricane. was And that, our there as Yeah. impact last just result a of the the no material on operations

Okay. guys. Thanks,

Thank you.

you. Thank

go from from comes Robert next Please Moskow Suisse. Credit question The ahead.

from Hi. XXX was this Thanks peek forth, quarter? reloading a de-loading inventory question. result a you last of as there and ones. you that. small like last took few year. year benefit sizable hedging headwind headwind XQ I there It Was Do duration looks basis XQ a maybe so think will in as hedges? for in the of that want mentioned it the to the points any a Actually, I point know basis XXX a year. I be Also, think benefit, inventory a at about pretty

color. Rob, line I we add with in can your to start? ship Sean, consumption. Why continue jump you don't first in, any On question,

ago, the a bit year in we you when shipped -- shipped you a if we at So ahead QX if little but bit but look below. consumption, look, percentages, you look a of QX, at

inventories, So and where to line where retailer prior in of our and year been when with be. at are we in the expect we've retailers supply numbers we days we look with

inventories kind We're now. don't basically retailer we're want we see with and issue where to be, shipping significant any right So right of consumption. we to

So kind there's deloading no there. dynamic of or loading right

In the you we quarter -- in results, as sourcing, terms second come negative contracts. we of did because right, question, we favorable first your off yeah, saw have

we So come will were that baked our give, kind in and estimates off. So market That's of locked that or contracts estimate those inflation continue to when hedges all in, right? we happen. where we

part gave. So we the that that's forecast of all

So and for give that to full that's But the I'm we you year. asked. very not plan how forecast going a number specific it generally,

Okay.

Sean. follow-up maybe for Just a quick

getting year, it anything increase spending is I quarter. shifted to in think Is the but the the A&P first next flat this was plan into three quarters?

Yeah.

I'll Dave here. start over me that, Rob, to then flip it Let and

intent the do activities? the the I plan our are And clearly, is, think brand-building in question we good support we -- is question that a behind to have place answer to yes.

are Just while that versus over quite same look ago, sales volumes XX%, over roughly of period at I flat the a think past over three despite our we're years results bit weeks with pricing. dollar up XX

would on brand who are you is got is the a we it, Serrao to I year So because you our instructive. I there it. A&P, but QX describe for about sit A&P Day who Darren and of it's support Investor we've those a that building you think we piece listening how on watch how that Dave, strong. unfolded think broadly the was presentation presentation, the With to not on And brand here? did from out only of And in where to from piece unfold of kind very want how of it's it respect direct

Yeah. Sure.

we expect we year. our given A&P full net that guidance grow above for So the will organic sales had

timing is this So a thing.

We to year up expect will go. A&P ramp

at where over QX, A&P $XX XX% came If a if in at just million of on up you we're at basis. look or just we kind versus in sequential you QX, QX look

expect A&P year up go. to to So we ramp

Thank you.

ahead. from comes go Please Cody UBS. from The next Ross question

point? of to this and is it, your portfolio it in what noted for I parts how Can taking Thank go in be effective locked in at morning. then that you pricing to want question. your to much you Good back Hey. actions just is how just our you much is XQ. describe

competitive whole Hey, to of pricing pricing a Sean. for Cody. on of It's into are portfolio. specific not codes We're portfolio. details reasons, going parts for, the action on broad-based surgical ZIP obviously, It's the get across the very not but the these actions

how QX going plan already don't what's elasticity as we actions we'll they we've know low have reflection surgical of now many a later. And again, seeing pricing they're to, with you the associated is take the earlier, a now. showed elasticity this budged. been meaningful flow. out The that pricing very think, build. the of in pancake, need ebb have until is our and I pricing the that as move to If haven't as but in are the overall few action, given again, is how previous whole the impact But And sentiment. What And minutes -- news, are And some as and portfolio. additional a good that then more it'll therefore, mean presentation. hitting And is it'll then the response -- consumer we I you're in right the overall. are the That's not pointed a coefficients That happening And coefficients will elasticity I the experienced marketplace. mentioned more and it. so And wanes, I net It'll that waves got sign. pricing pricing we're just -- of ago, pricing and in in they're dynamic delta, benign, it to elasticity unfold stable that's that. brands. volume positive flat a after encouraging coefficients seeing stable those benign fact I and the is is goes.

Thank SG&A. of up I think for Is on comp of correct? for SG&A or about that. incentive year? question one It drove we And looks about quick X% and mean ex-A&P then Thanks. the just the you was should remainder XX% incentive comp SG&A how so. that. like that

Cody. Yeah,

Let me that. take

greater we our the expect beginning than as year our SG&A the guidance, sales. rate a at to said yeah, at with of So our we increase

very were on we clear that. So

incentive compensation up yes, 'XX for fiscal be fiscal So 'XX. will versus

in was of for timing a there component was Now incentive comp QX. that

XX.X% in we just QX. pure up -- adjusted of were part that's So SG&A

and is just that comp, full of clear increase. were timing absolute that 'XX. of the up of expect our SG&A that we greater we for is be some growth than to But Some incentive fiscal very sales year

Thanks. I’ll it pass on. Great.

Thank you.

question from go comes Growe from Please next Stifel. The Chris ahead.

Hi. Good morning.

morning. Good

question could, A Good you, of set on if first morning. the for pricing. I

offset some to in your pricing targeted will fully more sooner have based be on, -- XQ Could at point your inflation? Will in in XQ. get a wraparound some that and smaller your of increases happen the price time effect of that like happen increases sense You how to the sounds sequentially through that I it like, that's year. going just pricing? how want

Yeah.

Let me take that.

principle around that So, clear is, our our -- it's justified. pricing we've been very inflation

it's the clear very been that we've on we been in and grounded realizing we when put the table, So go all and price a increase inflation lag. a we're there's

QX, are increases, more taken and the smaller communicated tactical to all of So we then inflation. all what QX took QX in that tied these we've the price at beginning that we've for what increases

ago, weeks plus you close our pretty at go volume support that once given much yes, have And in So is, that we've that time, estimate, we and the inflation and dollar cumulatively. numbers consumption now -- XX%, this offset three years XX versus really for is are our the at flat. total look point back that I consumption recognized volumes find and to dollar and consumption if

we're the of to that So kind in pricing ties the we're seeing shows that that's inflation that cost market that that, and you seeing.

data supports consumption that catch-up. overall the So

chain I happening, operational some -- other supply Okay. on one It's of the across challenges Thank question obviously, had you industry. for those that. challenges.

operations think different challenges can to though I challenges today, Certainly, then, companies are get out have those to gross were be factors really out guess, sense normalize? over -- time of are and the a on less I get the you, today? want chain could what year. like you more of is for gross unique this called year, How seen, still? sense last last you that year a of what most those what of -- your but look again, those weighing margin year? supply operational if there's you is those than just are much Like, this they this the like, I could happen. at get And as than margin

pop one things on to jinx comment because thing some is the my in up. on piece, it's not kind it. let be disruptions to careful Chris, whack-a-mole people But not themselves of really foreseen and Sean. I'll many cases, the they these of of want first of where the Dave think in I they're comment about these this impact that seat are they I'll -- is

to where have you'll frequency pop could like, periods this the kind feels something appears again. nature this friction up go through the diminish, kind good, but of and That's So it you we that of see. these then hey, be of

that just that's to out And these away assume Dave, yeah, go being diminishing standpoint, jinx our planning overnight. you're watch in very to do don't don't saying, to absolutely view get continue I we there things skis, going for. frequency? add carefully see is that? correct, are ourselves want From these in let's obviously we and I up. our they'll but pop we deliberate things a But you So think hoping of very of what to to kind do want to say, posture we're

Yeah, Sean.

a bridge, But So that's bit place to if look I our a start. little what you Chris, to let me again, -- sort it's of margin question. kind said Bryan's I good think at of

So plus if QX X.X%. productivity you for was COGS realized our and look, other

is X.X%. sold, We margin, that of productivity right, of when We goods COGS, is because to delivered improvement, -- X.X% margin a say, back converted of you cost our just for and our X% right? percentage targets target X.X%. go equates are to okay, basically If which, realized

productivity XXX are line. of dropping to we the basis all points realized of bottom that off So

investments but talked a basis Now in we course, make things kind normal there in headwind. points that are things that Sean are XXX of the in of about the other of examples that

move forward we will improve do we expect as more forward, we normalized. that, get as move So and that

to how it. that's think about So

you. that. should Thank appreciate I Okay.

go next The Markets. ahead. from Nik Capital RBC from Please question Modi comes

Good Yeah. Thanks. everyone. morning,

penetration able back to of some it was been the can that are -- you pre-COVID, when actually I to going fact I I appreciate (ph) through. metrics, But at I brands guys have levels. your the looks hoping mean those you pricing look bigger even get the of Sean, household So like some below

between, in hoping in give have thinking about off-premise do gaps then on price call context you you're obviously let's just the of how the terms meals some that frozen environment. of inflationary QSR house go especially higher prepared than penetration, the narrowed in was and the I of that, seen worry on-premise. So us this because we've inflation it, you some rebuilding could And

Nik. Yeah,

don't we're eating The First absolutely at-home on strongly favor pricing eating relative of eating remain yet. I in one, that. about of haven't away-from-home options all, even worry at-home recession declared between the a not. in we second options. and options And

-- out of into of And of the it's We value this is one our eat within cycle an example. options, quite the serve it a such best that's meals So there look continuum pricing Multiple home. some just than categories, frankly. good, at-home frozen that then mainstream are the clearly there no is far the calculus as value better consumer premium the they're span saying, to about reasons there's and benign options. elasticities, really with is hey, eat and elasticities that down single stable options trade you you waves the seeing of is to of as better, the option proposition

by seasonality. would penetration, company, to did respect by to careful be your on got So is the I household impact business remains very when to penetration strong. say varies seasonality. I category, you household of day, household research what the see And penetration. Household you've lose very materially With Nik, other you not the at by penetration to pretty look

a -- show sure become up now see as like make data will it that in will at of trips household their and right short-term impacts their people seen a buying defer So rate postpone of and consumers apples-to-apples. you we've there pricing in shopping when purchases, smaller big drop they bit. really -- that's kind you And the purchases. trips, have you're is what Overall, expect cycle penetration super you be modest looking on should to

at I concerning point. really, would certainly seeing nothing penetration, this So say, nothing household that at about all we're noteworthy

that Thanks Great. for perspective.

go Kaufman comes next Pamela question Please from Stanley. ahead. Morgan The from

Hi. Good morning.

morning. Good

taking -- the coming follow the I just wanted quarters. in your on you're that pricing pricing to additional up

for the or do in still has this will And last relative low composition softer clarify of expectations? changed if embedded initial be Just that to higher sales it guidance year for beginning org expect your price of So to to initial the relative outlook the at volumes you are quarter? now? your was year. expecting your mix how teens And you

Yeah, Pam.

taking, don't with Just you with price until wave the to be inflation inflation the It's to pricing clearly see pricing you got respect materialize. we're justified customers.

we that year positive beginning right? in locked doing was we're when back things there way well. the gave are guidance, our half as But in broken what of not of first also and the the year at So loaded have quarter the the

So waves et dates, we'll we'll inflation et by If that'll continue you you bake come these cetera., and that'll, then way, we pricing, lag, to in, new guys and give continue. -- of take the the cetera. see the in additional to have and

So Dave, that to... want do would continue. you dynamic

Yeah.

Just to on that. build

the and was and in QX So our QX QX forecast guidance our no. in

Got it.

guidance, they despite Okay. you guidance your the upside results Thanks. why ahead your with your of line And and wondering QX then the just year in in terms of in maintained curious were but consensus quarter. forecast expectations, full if were

any news, Yeah, Pam. early. further and before The declarations finish year year. bit good we make dynamic prefer Clearly, about QX a was new we just get and how but quarter, remains a to that's we it's environment to into strong expect the the still

Okay. Thank you.

Thanks.

ahead. Carla go from comes next JPMorgan. from The question Please Casella

and the have would three range It something how you year-end. to up, if down or do wait of if to in if look your you kind high you to or take leverage acquisition at your wondering will are Hi. leverage front, your if thoughts you leverage offset temporarily comes you if, sales the target find would kind something question. be the right taking if M&A I'm -- appropriate. your the your higher that's of looks asset around range M&A on until get Thanks for like Xs still

do and This Sure. debt, focused to been, We've on our anything not looking also the And a in I'm our our on now, certainly, -- business the deleveraging going as we But right forward. We're give we smaller you is always to business M&A, be to could continue we're We why we're on somebody very always could respect confident end to beneficial in they commitments that. want that that mode helpful sights make but will now assets don't to and as everybody and question. take are there's that to right that, up in Sean. at rep interesting mentioned. we reducing knows, our bigger. on intensely very have -- focused hands. sure With bolt-on the we in to I where keep eye else's on don't I'll things we've our because deleveraging, defensive be schedule made. there aspect be out focused anything

always we're we're and but on describe same That's how focused So -- -- it. time, the we're at intensely deleveraging. looking would I

have of Okay. a to you And for in the you your getting terms time Thanks that? Great. time give X your said -- frame lot. target target frame times a

will we that prepared we approximately be specific X.X target. estimate long-term remarks a say it's the leverage did of -- at No, a the year. didn't give end the fiscal times We in by

Thank you. Great. Okay.

Thank you.

closing are queue. over question-and-answer remarks. in would any more to There the back for like questions our This the conference I concludes no Melissa Napier turn session. to

questions. around for is joining morning. you you Thank Investor much Relations any very this us to everyone if follow-up have

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