Loading...
Docoh

General Mills (GIS)

Participants
Jeff Siemon Vice President, Investor Relations
Jeff Harmening Chairman and Chief Executive Officer
Kofi Bruce Chief Financial Officer
Jon Nudi Group President, North America Retail
Andrew Lazar Barclays
David Palmer Evercore ISI
Chris Growe Stifel
Cody Ross UBS
Steve Powers Deutsche Bank
Jason English Goldman Sachs
Bryan Spillane Bank of America
Jonathan Feeney Consumer Edge
Ken Zaslow Bank of Montreal
Michael Lavery Piper Sandler
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Greetings and welcome to the General Mills First Quarter Fiscal 2023 Earnings Q&A Webcast.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, September 21, 2022. I would now like to turn the conference over to Jeff Siemon, VP of Investor Relations. ahead. go Please

Jeff Siemon

our may and time morning and view Kofi statements us call. am Kelly and Jon that first this everyone. the information, appreciate had remarks for We forward-looking fiscal Thank Harmening, release release for on good and in this we that IR our make website. a and with which our our joining discussed press are a everyone non-GAAP hope today to Nudi, factors prepared results. current made Group our note today’s session, assumptions. maybe materials, morning’s President that which were based America and I our views our Bruce, review Q&A to Retail of segment. could for listen to CFO; you available on our and here ‘XX you, statements CEO; I presentation morning to It’s of on impact session North forward-looking Please refer reconciliations Jeff important quarter Q&A our on Chairman press

Let’s get you Session us Question-and-Answer the and right question. please Kelly, started? get go first ahead can to

Operator

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

your with proceed may You question.

Andrew Lazar

Good you. everybody. Thank morning,

Kofi Bruce

Good morning.

Jeff Harmening

morning, Good Andrew.

Andrew Lazar

year? sequential of of the sort year-over-year. drivers you area was start off, was modestly more of this I on the which the how hoping diverged Maybe a quarter to detail the the through remainder you margin see cadence provide And more think and that I in margin, expectations expanded actually performance. do the the could most bit from importantly, certainly performance sustainability of maybe gross on

Kofi Bruce

the of are margins I note we we start kind in are, sort QX. the to as our about the primary costs we This deleverage expansion HMM would The where this show is of pleased Kofi. Sure, quarter. just on in environment driver, on Andrew. think for just price/mix, plus other benefits offset taken savings and modest cost have operating from inflation, we with

are we in going the largely highly fact recognition I chain in think we to are dynamic still environment give vulnerable guidance not to a disruption. forward, we as of and still supply look that

think environment, are of still year. that The operating volume there on biggest noted performance to level take is as So disruption just variables, volatility. and for would environment, as higher be inflationary going the we can of progression degree we imagine, expecting where the for just think high as a the about you us we gross we the note of margin are about inflation obviously modestly we the as

setting. that’s So kind the of table

Andrew Lazar

for Okay. that volume sense of even better you this, or guess the others light get of could the maybe if service because sort And promoted declines am volume I much underlying sense full in elasticity a are given will? in, retail. of much then I seeing let’s Do of not it help I let’s as America an promoting base the volume is based you the And versus of have of levels? curious due just price current to, just some I on you North are that second, say, that you of of say, us asked guess how health business, and loss

Jeff Harmening

Nudi, take Jon to Yes. you do that? want

Jon Nudi

Yes, good Andrew. morning,

due is frequency, points. price declines, really adjusting so and the unit look as but we the to not majority back promotional at much pulling vast So of that our

pullback. is it’s categories, of most to unit in the promotional XX% due about So to up decline

Andrew Lazar

much. so helpful. very Okay, Thanks

Operator

Our David next ISI. Palmer Evercore with question from comes

You may your proceed question. with

David Palmer

might the benefits promotional tease market or as some repeat share could your I very would am plan gross margins? that would margin not performance, us because activity gross or degree your as such a performance don’t you in favorable perhaps to are like impressive obviously gross you of that? be margin profit higher teasing future, quarter. categories what speak gains Hi. that some And are out your anything I caution to in that up some perhaps have am on feel of this I your will maybe am you profit, wondering to trying to follow how versus good on do the that you outsized things wondering was viewing so think benefits you be that us far, gross

Kofi Bruce

Yes.

alluded gross I of on quality, question. think to me get sort let sort was on of into elasticities into and the what beyond of and In volume than was your the beginning lower were of front year. quarter the the to, the the we back – fiscal the of the part the margin of quarter just level the which going unexpected broadly that Jon largely expected

less So that resulted in deleverage pressure.

flowed that So to margin. through gross

this business note, I would front with stabilized, a the real, environment competitively categorically volume to America our we in very cost our as well, supply disruption cautionary of of leaders, chain think business in well I in Jon including is along levels I very, the think North as stabilization. all certainly that business think the line just still until is want be the we see remain above and and are even will we servicing higher historical higher doing it

volume period remains, is the obviously hard the a coalescence. second frankly is historical and pricing interaction primary is to in to are and in elasticities hard first we still because that and note. read of this So And it and probably the cautionary environment

gross So the notes impact pretty those have of all sort are and cautionary on they significant reasonably margins.

to noted thing flag flow through last potentially that increased will we Haagen-Dazs. other business did headwinds growth remarks, long-term including to cost the the the operating investment recall on sustain margin, the the of scripted as think expected some I in on cost we and is, the of

David Palmer

the at will beginning it the was that gives exit less that you end than supply the that could quarter just pass that, it I a And supply quarter in so-called rate, forward? less there hope going And of friction on of the follow-up the – your the was be was chain I just through your if on. at squeeze quarter comment, will Thanks. chain improvement such

Kofi Bruce

Yes, sure.

fair question. a So

As the supply disruption expectations we in chain of chain very a out level a experience. effectively with are quarter expecting expectations those of with year, our played we we and expected year, we set line disruption. The of modest improvement entered the historical are which the the categorically higher than still in the level supply at beginning

David Palmer

Thanks.

Operator

Growe question next Chris from Our with comes Stifel.

with proceed may your questions. You

Chris Growe

morning. Thank you. Good

Jeff Harmening

Good morning, Chris.

Chris Growe

I that here. had if just expectation could. I And will a increase think elasticity from have an question you I

see you curious a perhaps any any I across that it increasing seeing a that prudent to sign that just that’s give think that bit want if pretty the am seeing some overall. signs categories we is there elasticity missing that would or are It a of going is very I of assumption. the that warning maybe you that it’s anything indicators industry. for – increase are just indicate are where seems or well you if business I like would here?

Jeff Harmening

Chris, this anything think is so don’t think Jeff have Harmening. don’t I mean, far. you I that I missed –

quarter. to eating just through as just we away-from-home at-home elasticities had anticipated environment, favorable little minute more the the year, are to we now, us us consumers elasticities less we bit alluded historically, the particularly ago, seen favorable more consumption. meeting Kofi in matter look current a It’s than still a more have positive been but than that really than have far, they been was traded of would a As they right for a but elasticities, would have we to become any for to change favorable so in haven’t anticipate as would which

Chris Growe

know need to increases maybe performance I Kofi take I That’s great. that you. inflation? was the pricing this have you. to a offset was curious that, have you place to increase Thank margin still retail does we It few related take you inflation, the place guess you that at questions are overall? And phasing And prompt into had more to the and had Thank going you questions. price a to just quite in that margins, I do around gross great there. to gross

Kofi Bruce

No, I appreciate that.

We modest in including majority we inflation pricing announced address – the up to that And address the have or inflationary guidance. revised see, market vast our of in most the provision to the the the inflation in more America additional business, some foodservice to taken we we price/mix. North we quarter our as being steps last have than saw where goods the did in address round cost of

I sort where got So place we we are a feel think have in of we comfortable bounded. this

Chris Growe

great. you. Thank Okay,

Operator

UBS. comes Ross Our next with from question Cody

with proceed question. your may You

Cody Ross

taking bit here. Hey, our a nitpick Thank just for little you good to questions. going am morning. I

dollars chain little am supply and categories deliver most quarter impact? seeing unpack are in not noted bit you category, the brands in line bit, that given a Can fourth with which I pet to the pet that sales were year? we pet. the able you last demand demand the a or just seeing that you are surprised little And total of in You headwinds

Jeff Harmening

Yes.

remind So bit and little it we I sales we to our quarter again and first, more even let last X it in I you increased first our take then have would let that a everybody know. then the business grew that, on would of years. I’ll me billion pet unpack the $X and Kofi, call say pet the over unpack me want me if yet double-digits But

growing have QX been at while still in And it not may so the run-rate double-digits. is

of context. that guess I So be bit first my would

I only are really sales second also really, also is had important last say some remember we were to And our would it’s that’s that because strong. inventory. we always QX think The but capacity, I off year, working that not

only had year, we levels, first not drawing make selling we are previously. made everything also a we could last down quarter are we So inventory of but product

the as by so well. this comparisons they are of second particularly the are quarter And the in as year difficult way

the when say supply at quarter would chain at I the are When in difficult. modestly pet. our – comparisons so really our so we we throughout look performance, improved And look

grew modestly dry treats have that’s service with our don’t actually food improved Our expectations. in in line share lost And share where category we the in wet capacity. we we and pet and the and levels

we reminder, further, take capacity just a for increasing a to Just to from space will more in warehouse second those on our coming January in through few quarter treats it’s a another answer this as the have about that’s things, sales as of and in get or pet, note quarters yet through lot in dry treats think line. going question with won’t having to whether online supply service your chain costs capacity is of And third anticipate the and it. external in associated we all quarter to business, important and then we have because the but year we little adding

fourth and quarter quarters of our we’re a that bit to pet expect rebound second the can confident be little but highly you third year. will this So in challenged,

Cody Ross

Pet XQ that’s to, sure you’re And referring just understand sales? want I make to I not margin that that.

Jeff Harmening

I say yes. the piece, primarily margin Yes. would

Cody Ross

question, Got helpful. one more may. it. That’s quick if And then I

and prepared for to categories do the your up in you investments step remarks noted You brand and most plans growth. brands opportunity? you. Thank building see Which

Jeff Harmening

in long opportunity local would and businesses. run, I see say, our Well, most global we brands the over the our gen

And us, gen we businesses like and but Pillsbury, biggest and so billion China. is include quarter is $X potential, adding are businesses probably of the a $X that pet a brand also Totino’s Haagen-Dazs brand, now in Valley for where during the local upside like some highlighted [indiscernible] and they which we capacity Nature billion our

billion-dollar would for well areas anticipate, brands be I you So some opportunity gem our in us to global brands going the are categories big as of as that local that of mentioned. the just probably which are biggest ones

Operator

comes question next from Our Bank. with Deutsche Steve Powers

You may your question. with proceed

Steve Powers

thanks. Hey, morning. Good

Jeff Harmening

Good morning.

Steve Powers

on And margin hit again. to on gross pet. then a want I follow-up

from XQ pricing run relative feels you’re better? before the well any of quarter. benefits acknowledging around mentioned. supply the benefits. and progression the Do to uncertainty inflation it we the HMM caught so Or run tougher get just margin, rate through relative productivity gross relatively the and get and between the to you We up phasing they things questions, of inflation first volume on benefits Kofi, On as those like focused pricing rate of

get then, sense if b, can before only the a they So thing for better? worse trying I’m of, get reason just and get some that’s that correct to a,

Kofi Bruce

on a is balance, Well, of between balanced front inflation our probably XX% are I half on still terms inflation would the modestly and modestly But think higher say, and broadly, appropriate. in year relatively XX%. it I in call is we

Jeff Harmening

then standpoint, it And likely this meaningful QX we just Steve, roll – and through that’s QX I’d pricing the is pricing over comping meaningful a in to in from decelerates last a start similar in say, back obviously, of saw strong more half start this year. as will we come price/mix step-ups more year. we

Steve Powers

capacity stick like to supply allocation on sooner. sort acquisition, to We’ve incremental on fiscal you supply, it it to kind building That’s And the to capital and a through seen of the looks as are of play about I very real it and much. this – tightness you wanted you strategies until competitors that something more that’s that obviously of to bring off get But think like capacity consider start then and online to making and ‘XX. fair. table? through something And the question, Pet come is just adding you’re the M&A space working co-packers. out feels Yes, to get sort inclined Or just efforts sense you up just online. Thank for given is capacity would you okay. and the relief in going at of isn’t accelerate that buy point to

Jeff Harmening

Yes. question. fair Very Thanks.

Let to about trying point to me one in talked relief in I sure I’m but two is or fiscal it And say, because is make think important. sure. nitpick, pieces. would make There you coming want I I ‘XX. think this not about I clarify

and lacking this capacity we and of capacity On treats, Our the quarter external will third on tree dry. treat we’re year. bring in

and wait business that. treat need on we we So Buffalo. and to capacity, are a we so Chews Blue and really forth, True until on for short ‘XX at We Nudges fiscal branding don’t bought great are

it’s another capacity, us take at it’s we’d the don’t to a dry, it to we if need buying doing do. we look capacity. if that are our chain dry additional would outcome we that we question, be it and became will we capacity we can need to because about what speed One would while to source through just that go available, for that, out of external have or and So for going rate January. instead the buy get And supply what We at be whether excited really willing in is internally. willing or to up the look absolutely, it something true

yet evaluate market ourselves. we itself, that and We to certainly at but the had haven’t option relative that doing that we’re it would and the two, of to present cost speed

Steve Powers

Great.

Okay, very thank you much.

Operator

Sachs. Our next question with comes English from Goldman Jason

proceed your question. with may You

Jason English

come – in I’m different year. folks. start a on but Thanks Hey, back was congrats the pet, to a lot, question. really strong a and to going to

much first, the going context that be to ‘XX. you you’re and can So fiscal of capacity going for bringing quantify to terms in on dry, this is some how you add give like is in us

Jeff Siemon

we million haven’t of going meaningful putting to in. But we that add. capacity, a on be we’re we capital it’s was haven’t beyond about but additional that, – be it chunk percentage about $XXX QX that the talked Jason, of quantified of will to upwards what it said call. We

Jason English

is out? that volume And anniversary is a both a small organically a coming think of as does gets adding, a it’s when other the capacity. like the In inorganically, adoption. darn not overbuild seems there is lot adding, pretty is capacity time to okay. Hills Phelps of industry. this as forward, like becomes category. it adding, Simmons competitive Okay, pull-forward adding, and with is you start a coming a the pet How Steve promotional of plenty what’s in play words, it’s growth not seems at like in of an as is we risk is pretty and right, Nestle wake manufacturers, of are there COVID [indiscernible] we alone, adding, It And lot like it’s mentioned,

Jeff Harmening

a already pet double as inelastic promotional because is digits this, activity we would very I know even in most effort which the remember. Blue positioned Yes. for And market. is pandemic, that. humanization to behind pre-pandemic, in Blue grow to growing Buffalo of the very going I a of in is or in demand tend well was a probably to important barely growing question. the were years is so very I realized, you remember consumers that also in XX thing not that that that’s probably add trend been it’s remember productive pretty But trend, and and I understand well but And before on really is mean the you terms pound Jason, rationale be category you loyal. the Buffalo even that

category even the fastest-growing the growth So category of face in Buffalo attractive participates Blue a pounds, the brand. very a of low in that sees best in with part

And so be the is in we Buffalo to as positioned future. category. Blue the the to we’re rest what no look of going That confident well matter happens

Jason English

that Yes. this to No that you’ve premiumization quarter. away. arguing doubt. point, And got not growth double-digit should fade I’m

think cost? Like of I Can the because inflation that it for pass-through the you much it line the you’re that out is everyone And growth us? has that then much unpack talking of about? premiumization how price/mix there. double-digit just mix, maybe higher how of

Jeff Harmening

a combination. really It’s

we the mix, pricing we’re amount So the the from on what business high SRM – the did in actions have itself meaningful obviously, an seen is standpoint seeing SRM quarter. largest is really we business but

Jason English

Got I on. lot, will it. pass Thanks Alright. a it guys.

Jeff Harmening

Thanks.

Operator

Bryan Our next from with America. of question comes Bank Spillane

You with your may proceed question.

Bryan Spillane

that ask to the in Wanted you called looking guys. quarter, the I lagged a the outside morning, of guess, at good milling. know And maybe about in out margins flower pricing I press question release has foodservice. Hey,

dis-synergy that’s a related One, ‘XX. recover is Can there. And any, fiscal of couple going guess, cost can you reflected course things. to resegmentation I or there how just stranded of to of maybe sort So to you’re then margins kind that, need do recover think pricing margins? much about like from of talk separate you the the in

related resegmentation And just that’s inflation? in the to anything So near-term? the is affecting stranded there like is than cost it any or it more

Jeff Harmening

into have but specifics I’ll Kofi this, So this probably is Jeff. get of the

lot one and top service just fact margins food the will is improve. quarter. future me guess – line takeaways that was can it’s the the that high service and in Let I confidence the – of business our with unpack share in into it this to you that a grow and I we food certainly have would we it

there business. is there in food lot that, mass said want it – was Having quarter. So is particular a our you to in fundamentally service on this going I know nothing

bit little let Kofi that. So a explain probably of

Kofi Bruce

start with pricing me And reminder, index as is our profit just Sure. reference on neutral. flower, neutral, so a bakery that index let pricing your or flower to profit dollar

cover prices as to at just profit. through go up So fixed costs, a it flows dollar

as was think which you you by So index actually in chunk about a price/mix about of was saw that, good XX points business, the the driven pricing.

for that, a your convenience the so about into smaller retail costs, administrative with business, of moved the see inflation And with primarily through America we quarter. the not the business, – of prospects stores enough cover well. snacks we fully to On we improvement margin year, have cover of question expect the structure on the balance did reminder, we customers. just We in and see stranded continue in the actually business. part rest subsequently decoupled And North convenience pricing channels the convenience would To that to we focused as we to as – the will in business. as additional the as price/mix put and work the other pass-through come to

the overhang stranded kind So there isn’t of from business. with all of costs, went an really that

fair a the underlying pretty of So this service business food representation is margins.

Bryan Spillane

Okay.

math to the prices piece? this say way of to it’s flour profit non-flour I some is neutral. So, the guess the catching but rest profits, up a really up, dollar that? milling you inflation, Is that good going is just be get And in of just to going the

Kofi Bruce

would the way put it. is That exactly I

You it. have got

Jeff Harmening

the to pricing the just margin basis for no XXX profit a in And with for dollars about that with segment put finer Bryan, points. going point maybe tune the pricing of up on quarter actually coming index is it to incremental negative

are So, margin – you this a in that portion seeing which flow is big quarter. of obviously through

Bryan Spillane

Jeff. Yes. Perfect. it. Thanks Appreciate Thanks guys.

Jeff Harmening

You bet.

Operator

Consumer Edge. comes question Feeney Jonathan from next with Our

proceed You question. your may with

Jonathan Feeney

Good very much. Thanks Hey. questions. morning. Two

is the structural on like be some more comment, back First, I at of you XX% to to that much that XX COGS would helpful. the expecting of wanted about dig-in Just all XX on the or would Do costs question broadly their want Japan? pre-COVID you cost point? XX% the how off inflation. retailers get promotional normal. Thanks. expected – relative inflationary the other for that they Could are – use any merchandising a majority or that things input to in be levels, levels kind can, if flavor in is to if to syndicated of the second My U.S. vast something you pre-COVID normal points more input data,

Kofi Bruce

question, Jon the will and Well, on let of Jeff. to I then probably second Yes. me start part front hand or part the the

COGS Just of energy items on inflation, on, but conversion. our particular, think suppliers, higher our about as we are go that on things on the higher and burden high transportation in couple seeing call of costs you in modestly a have reflects it labor, primarily our

So, think so that. your fruits, flavors, the as ingredients such pass-through etcetera, of impact nuts, value-added about

– than as Second expected. the volume is on have our slight way higher expectation of that through as result will quarter lower elasticities a been and see we the flow-through working that we we

areas. have coverage We in some outstripped

buying and are in we actually spot exposed to prices. So, market more year of at out the the back

of – just for then calendar reasonably are turn those drivers it. is to spot as strong about And at think the year as coverage So, the we started this coverage reminder, a the the that position year. relative positions primary our And prices. taking we still

pretty in think as the are our you we about coverage. money So, effectively

we thinking Jeff And handle the inflation. part of how So, the let think second on question. the balance the guidance just the your are about year or then I some those things are will of of as you about critical and Jon

Jeff Harmening

Yes.

is – me this Let Jeff.

Let one. that me take

true risk a have of low. that kind ramping is couple to is think increase. of I to believe I of And be conference think over of the of we a quite at reason next significantly three said promotions you for the a things to promotions quarters as in see – lot couple the order ago, up weeks

were The isn’t last think this is first, cycle there Mills. inflationary business a different a sharp that promotions have that was the we at out we cycle really General ones here of increase than you an cycle. And I would in seen the inflationary have in And see before. coming what to running inflationary

So, you would environment that think have to be the different.

deflation. second from thing And think now. to right to is have you three you we get only The of decelerate, our on any supply disruption things don’t of where we going you fact significantly And those is but the to I the absolute that are change increased see a as We believe are those now. not the to bit. inflation need they in guidance that all COGS would chain little inflation just have the see third see things, also is

ago. the We if pandemic, what inflationary supply below as have is – are elevated, we were low a they what before And is there that’s told but so high, out, what you laid risk chain the are what about even see relatively think. out. given they mean we then they just cycle Xx that year that they I remain I disruptions keep playing were

Jonathan Feeney

helpful. Very Thanks.

Jeff Harmening

Thank you.

Operator

Our with Bank Ken of question next Zaslow from comes Montreal.

with proceed your may You question.

Ken Zaslow

Good morning guys.

Jeff Harmening

morning. Good

Ken Zaslow

innovation your progression years? last for One is, and X to relative year expectations your what are next Two this the questions.

Jeff Harmening

would to when innovating the be flow roughly in probably exception constrained capacity I would say as years. constrained have is of little same when are you I would that prior one pet they we expect the are our capacity in to business. aggregate, say innovation Clearly, levels a you difficult. would bit our

about weighted we year, our of the half innovation more pet, we the December. in in will and talk see would so second And to that

actually is products. of in second businesses We similar. of some innovation in But with coming. pleased our I of some the would say the and we roughly it quite some have of A pet, lot But – the innovation promotion see of the we is new are half on probably first the it that more in half the the year than timing general, coming year. established

Ken Zaslow

or years, that consumer is innovation you your of I gross supply go a but X But your have accelerate all will forward profits the saying. don’t kind you in you – think then actually your I are ease. you am thought the little do and that subside the points the me hear have being would you what think a given volumes given the what don’t to core truly of little can if it’s the be to leverage a accelerate have curious. to volume one seems for elasticity operating be as pointed And and that couple becomes expansion. as years, just expand will because a you would bit going margin bit, next question happened told between constraints you my need over things key of I you reason gross next

was little and I your on So, a time. color appreciate get to just trying I that,

Kofi Bruce

Kofi. appreciate question. I is This the Sure.

So, just I would note.

still Our pre-pandemic. to gross margins are relative the down

it, savings us to think and between X%. during cost So, our think offset and benefits basis or has and pretty reason roughly points this disruptions of period The cost from serve additional environment. we business mix covering operate I in inflationary the price probably to to enough our period really been of with be fiscal to done ‘XX, to the for so measure And margins two gross XXX inflation. is X% HMM about goal of in And that supply drive of of versus the dealing combination chain down things. kind the with those cost our the because we a the good I inflation job this actually, SRM have as are

chain confidence supply of footprint. as think to able margins a pre-pandemic in with And we environment. actions that gross levels gives supply that, when sort be to our we that changes and able to environment costs, in well would order those as things take HMM more we targeted this the relatively of us environment, step stable back short be out out expect in are our I So, get will stabilized the as productivity to

Ken Zaslow

Okay. it. Thanks guys. Appreciate

Jeff Harmening

bet. You

Operator

Our with next Michael from Lavery question Sandler. Piper comes

may with your You question. proceed

Michael Lavery

morning. Good you. Thank

Jeff Harmening

Good morning.

Michael Lavery

mentioned just more maybe it’s that growth of back very help even probably your look Maybe all about XQ but few even have what’s home the more are Is faster. versus service? aren’t is but as inflation I consumer consumers perfect, much at some know how part organic years, to a retail. outpaced logical fiscal there to back is You reconcile momentum moving North the against by food index elasticities, in like going there pricing, And service homes. food shipping America growing – looks ‘XX, in some comparisons of it and shifting parts, numbers just or softening us that there strong driven food color the back

Jeff Harmening

are you to just than But on logical is in it there otherwise. be are have quarter – that assume our inflates playing different – move consumption. the our it and flour, of a quarter, which pricing service business. which accounting with the things the in one trend given the service playing direction will than two this sense into at Michael, that retail food for business, thing right, the but is on this over at-home more In generally. remember, it the we sales food bakery a it it mean would look is higher lot really the index makes number right I

our the I service is pricing. you. would And so growth thing a food that quarter index in result That’s of first tell of really all that this

business. though, a that, that retail doesn’t our have we really food in inverse is school business perfect correlation even with our given service because business move second correlation, The big

goods yogurt we restaurants, that so we that. our only significant and baked and through have a are at really, really not And part cereal education, good are we sell and we servicing other

demand to that bit be a tends inelastic. And more so little

though service inversely in face fact, it, of they And the may for consideration retail, take the food point ours so that it seem we out of have move even logical of index if doesn’t with that even pricing. and perfectly reason, way

Michael Lavery

can just margin that? I pet maybe on impact higher that guess of it of behind the on Okay. is of in business, or That’s capacity as What one in I seem you there? an it curve a wouldn’t G&A, called SG&A I the on SG&A two helpful. just what’s is am out there follow-up higher drivers margin. or the then a curious pieces if – of sort And like the biggest because it’s constraints marketing. just the behind step-up Is having

Kofi Bruce

of in with most and retail spending increases analytics. businesses, our have modest No, data had, we Yes. behind along our

you be that So, it. of, as more of a That big be the in chunk SG&A driving would comp. what’s think would about growth

trying media As maintained you of through, we on step supply know, pressure levels we obviously, modest increases as and manage through in are have the this business. to we

Jeff Harmening

got quarter full have the Michael, thing we acquired Tyson the year. a now business you last of is And that other one

bit a the So, there in an of of step-up is business incremental SG&A there. by math just adding

Michael Lavery

Okay. of of Q&A Thanks that. all for End

Jeff Harmening

bet. You

Okay.

go going please are questions. to free And being we with we to the and there. the and feel up appreciate quarter. ahead wrap follow-up good team, and over to time forward think touch of I day I next everyone’s look the course in IR

Operator

we and participation, your you We the disconnect thank conclude does your for today. for conference you ask please that lines. call That