Q2 2024 Flowers Foods Inc Earnings Call - Q&A

August 16, 2024

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Operator: Good morning, and thank you for standing by.

Unknown Executive: Good morning, and thank you for standing by. Welcome to the Flowers Foods 2nd quarter 2024 results conference call. Please be advised that today's event is being recorded.

Operator: Welcome to the Flowers Foods second quarter 2024 results conference call.

Operator: Please be advised that today's event is being recorded.

Speaker Change: Good morning and thank you for standing by. Welcome to the Flowers Foods second quarter 2024 results conference call. Please be advised that today's event is being recorded.

Operator: Please be advised that today's event is being recorded.

Unknown Executive: I would now like to hand the conference over to your opening speaker today, JT Rick, Executive Vice President of Finance and Investor Relations. Please go ahead.

Operator: I would now like to hand the conference over to your opening speaker today, JT Rick, Executive Vice President of Finance and Investor Relations.

Speaker Change: I would now like to hand the conference over to your opening speaker today, JT Rick, Executive Vice President of Finance and Investor Relations. Please go ahead.

JT Rick: Thank you, Shannon, and good morning. I hope everyone had the opportunity to review our earnings release. Listen to our repaired remarks and view the slide presentation that we're all posted earlier on our end of Investor Relations website.

JT Rick: Please go ahead.

Operator: Please go ahead.

JT Rick: Thank you, Shannon, and good morning. I hope everyone had the opportunity to review our earnings release, listen to our prepared remarks, and view the slide presentation that were all posted earlier on our investor relations website. After today's Q&A session, we will also post an audio replay of this call.

JT Rick: After today's Q&A session, we will also post an audio replay of this call. Please note that in this Q&A session, we may make form-looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties and could cause actual results to differ materially. In addition to what you hear in these remarks, important factors relating to Flowers Foods business are fully detailed in our SEC filings. We also provide non-GAAP financial measures, for which the closure and reconciliation are provided in the earnings release at the end of the slide presentation on our website.

JT Rick: In addition to what you hear in these remarks, important factors relating to Flowers Foods business are fully detailed in our SEC filings. We also provide non-GAAP financial measures for which disclosure and reconciliations are provided in earnings release at the end of the slide presentation on our website.

Unknown Executive: Joining me today are Riles and Vaughan, Chairman and CEO Steve Kenzie, or CFO.

JT Rick: Thank you, Shannon, and good morning.

Operator: Thank you, Shannon, and good morning.

Speaker Change: Joining me today are Riles Van Vollen, Chairman and CEO, and Steve Kinsey, our CFO. Riles, I'll turn it over to you. Okay, thanks JT. Good morning everybody. I'm very pleased with our solid top and bottom line results in the quarter.

Riles: Riles, I'll turn it over to you. Okay, thanks JT. Good morning, everybody. I'm very pleased with our solid top and bottom line results in the quarter. Our leading brands are outperforming the category, growing volumes and gaining market share. And our portfolio strategy is enhancing profitability in our private label and away-from-home businesses. At the same time, our savings and issues have improved our cost structure significantly, boosting our margins compared to the first quarter and enabling us to better leverage our top line performance as we go forward. The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products.

JT Rick: I hope everyone had the opportunity to review our earnings release, listen to our prepared remarks, and view the slide presentation that were all posted earlier on our investor relations website.

Operator: I hope everyone had the opportunity to review our earnings release, listen to our prepared remarks, and view the slide presentation that were all posted earlier on our investor relations website.

JT Rick: After today's Q&A session, we will also post an audio replay of this call.

Operator: After today's Q&A session, we will also post an audio replay of this call.

Operator: Please note that in this Q&A session, we may make forward-looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties and can cause actual results to differ materially.

Speaker Change: Our leading brands are outperforming the category, growing volumes, and gaining market share. And our portfolio strategy is enhancing profitability in our private label and away-from-home businesses.

JT Rick: In addition to what you hear in these remarks, important factors relating to Flowers Foods business are fully detailed in our SEC filings.

Operator: In addition to what you hear in these remarks, important factors relating to Flowers Foods business are fully detailed in our SEC filings.

Steve Kinsey: At the same time, our savings initiatives have improved our cost structure, significantly boosting our margins compared to the first quarter, and enabling us to better leverage our top-line performance as we go forward.

JT Rick: We also provide non-GAAP financial measures for which disclosure and reconciliations are provided in earnings release at the end of the slide presentation on our website.

Operator: We also provide non-GAAP financial measures for which disclosure and reconciliations are provided in earnings release at the end of the slide presentation on our website.

Steve Kinsey: The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products and that desire is manifesting itself in the strong performance of our leading brands.

JT Rick: Joining me today are Riles Van Golen, Chairman and CEO, and Steve Kinsey, our CFO.

Operator: Joining me today are Riles Van Golen, Chairman and CEO, and Steve Kinsey, our CFO.

Riles: And that desire is manifesting itself in the strong performance of our leading brands. Consumers are clearly recognizing our brand's differentiation, resulting in the largest dollar and unit share gain of any company in the category. We're investing to increase that differentiation, further aligning our brand portfolio with the consumer. Our quarterly performance bolsters our confidence that we'll deliver results in line with our annual guidance.

Riles Van Golen: Riles, I'll turn it over to you.

Operator: Riles, I'll turn it over to you.

Riles Van Golen: Okay, thanks, JT.

Operator: Okay, thanks, JT.

Steve Kinsey: Consumers are clearly recognizing our brand's differentiation, resulting in the largest dollar and unit share gain of any company in the category.

Steve Kinsey: We're investing to increase that differentiation, further aligning our brand portfolio with the consumer.

Steve Kinsey: Our quarterly performance bolsters our confidence that we'll deliver results in line with our annual guidance.

Riles: We're working to drive further improvements, and I look forward to continuing our progress throughout 2024.

Steve Kinsey: We're working to drive further improvements and I look forward to continuing our progress throughout 2024.

Unknown Executive: So, with that, Shannon, we're ready to open it up for questions. Thank you. To ask a question, please press star 11 or your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We'll compile the Q&A roster.

Riles Van Golen: Good morning, everybody.

Operator: Good morning, everybody.

Riles Van Golen: I'm very pleased with our solid top and bottom line results in the quarter. Our leading brands are outperforming the category, growing volumes and gaining market share.

Operator: I'm very pleased with our solid top and bottom line results in the quarter. Our leading brands are outperforming the category, growing volumes and gaining market share.

Riles Van Golen: And our portfolio strategy is enhancing profitability in our private label and away from home business. At the same time, our savings initiatives have improved our cost structure, significantly boosting our margins compared to the first quarter, and enabling us to better leverage our top line performance as we go forward.

Operator: And our portfolio strategy is enhancing profitability in our private label and away from home business. At the same time, our savings initiatives have improved our cost structure, significantly boosting our margins compared to the first quarter, and enabling us to better leverage our top line performance as we go forward.

Riles Van Golen: The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products, and that desire is manifesting itself in the strong performance of our leading brand. Consumers are clearly recognizing our brand's differentiation, resulting in the largest dollar and unit share gain of any company in the category.

Operator: The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products, and that desire is manifesting itself in the strong performance of our leading brand. Consumers are clearly recognizing our brand's differentiation, resulting in the largest dollar and unit share gain of any company in the category.

Riles Van Golen: Our quarterly performance bolsters our confidence that we'll deliver results in line with our annual guidance, we're working to drive further improvements and I look forward to continuing our progress throughout 2020, So with that, Shannon, we're ready to open it up for questions.

Operator: Our quarterly performance bolsters our confidence that we'll deliver results in line with our annual guidance, was working to drive further improvements and I look forward to continuing our progress throughout 2020, So with that, Shannon, we're ready to open it up for questions.

Riles Van Golen: We're investing to increase that differentiation further aligning our brand portfolio with the consumer.

Operator: We're investing to increase that differentiation further aligning our brand portfolio with the consumer.

Steve Kinsey: And so with that, Shannon, we're ready to open it up for questions.

Shannon: Thank you. To ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. Please stand by while we compile the Q&A roster.

Robert Dickerson: Our first question comes from the line of Robert Dickerson with Jefferies. Your line is now open.

Operator: Thank you.

Shannon: i

Speaker Change: Our first question comes from the line of Robert Dickerson with Jeffries. Your line is now open.

Operator: To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Robert Dickerson: Great. Thanks so much.

Unknown Executive: Good morning, and thank you for standing by.

Robert Dickerson: Happy Friday. Good morning.

Unknown Executive: Welcome to the Flowers Foods 2nd quarter 2024 results conference call. Please be advised that today's event is being recorded.

Robert Dickerson: Great. Thanks so much. Happy Friday. Good morning.

Operator: Please stand by while we compile the Q&A roster.

Robert Dickerson: I guess it's a question around the promotional environment. You know, the prepared remarks you did. You know, you said you have promoted a little bit more. It doesn't sound like a lot, but a little bit more. And at the same time, you know, clearly, it looks like you're taking both unit and dollar share in bread. So I'm just curious; you know, I feel like, you know, since the beginning of the year, the guidance has allowed for some promotional risk. Right. And maybe some increase in that promotion activity as you get through the back half of the year; you promote a little bit more.

Robert Dickerson: Hey, Raul, I guess just a question around the promotional environment, you know, the prepared remarks you did, you know, you said you have promoted a little bit more, doesn't sound like a lot, but a little bit more. And at the same time, you know, clearly,

J.T. Rick: I would now like to hand the conference over to your opening speaker today, JT Rick Executive Vice President of Finance and Invest relations. Please go ahead. Thank you Shannon and good morning. I hope everyone had the opportunity to review our earnings release. Listen to our repaired remarks and view the slide presentation that we're all posted earlier on our end of Invest relations website. After today's Q&A session, we will also post an audio replay of this call.

Speaker Change: It looks like you're you're taking both unit and dollar share in.

Speaker Change: And Brad, so I'm just curious, you know, I feel like, you know, since the beginning of the year.

J.T. Rick: Please note that in this Q&A session, we may make form looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties and could cause actual results to differ materially. In addition to what you hear in these remarks, important factors relating to flowers foods business are fully detailed in our SEC filings. We also provide non-GAP financial measures for which to disclose the closure and reconciliation are provided in earnings release at the end of the slide presentation on our website.

Speaker Change: The guidance has allowed for some promotional risk, right, and maybe some increase in that promotional activity as you get through the back half of the year. You promote a little bit more, you're also taking share.

Robert Dickerson: You're also taking share.

Riles: So I'm just curious, like, you know, as we sit here today, you feel like there's maybe a little bit more risk because usually, you know, if you're taking share, then maybe others notice and they could start to promote more.

Speaker Change: So I'm just curious, like, you know, as we sit here today, you feel like there's maybe a little bit more risk? Because usually, you know, if you're taking share, then maybe others notice, and they could start to promote more. Thank you.

Riles: you. Yeah, sure. Thanks for the question. Yeah, look, I suppose that's possible. And, you know, we indicated, you know, in our prepared remarks and even embedded in the guidance that we are we are counting for that risk as we go through the year. We called it out to the beginning of the year, and I think it's still prudent to call it out now. You know, as we noted, consumers are responding a bit more to promotions, whereas not too long ago they were not. And we all know that the consumer is, you know, alongside a different differentiation, the consumer is seeking value.

Operator: Our first question comes from the line of Robert Dickerson with Jeffries.

Robert Dickerson: Your line is now open.

Operator: Your line is now open.

Speaker Change: Yeah sure Rob thanks for the question. Yeah look I suppose that's possible and and you know we indicated you know in our prepared remarks and even embedded in the guidance that we are we're accounting for that risk as we go through the year. We called it out at the beginning of the year and I think it's still prudent to call it out now.

Ralph McMillan: Joining me today are Riles and Vaughan Chairman and CEO Steve Kenzie or CFO. Riles, I'll turn it over to you. Okay, thanks JT. Good morning everybody. I'm very pleased with our solid top and bottom line results in the quarter. Our leading brands are outperforming the category, growing volumes and gaining market share. And our portfolio strategy is enhancing profitability in our private label and away from home businesses. At the same time, our savings and issues have improved our cost structure significantly boosting our margins compared to the first quarter and enabling us to better leverage our top line performance as we go forward.

Robert Dickerson: Great, thanks so much.

Operator: Great, thanks so much.

Robert Dickerson: Happy Friday.

Operator: Happy Friday.

Operator: Good morning.

Operator: Hey, uh, Raul, I guess just a question around the promotional environment.

Operator: You know, the prepared remarks to did, you know, you said, you have promoted a little bit more doesn't sound like a lot, but a little bit more.

Operator: And at the same time, you know, clearly, it looks like you're, you're taking both unit and dollar share, inbred.

Speaker Change: As we noted, consumers are responding a bit more to promotions, whereas not too long ago they were not. And we all know that the consumer is, you know, alongside of differentiation, the consumer is seeking value.

Operator: So I'm just curious, you know, I feel like since the beginning of the year, the guidance has allowed for some promotional risk, right?

Riles: I think we saw that in, you know, a large retailer report this week, you know, and we're seeing the channel shift, and we've been calling that out for several quarters now from grocery to mass club, dollar. And that's kind of across income spectrums too.

Speaker Change: I think we saw that in a large retailer report this week, we're seeing the channel shift. We've been calling that out for several quarters now from grocery to mass, club, dollar. And that's kind of across income spectrums too.

Ralph McMillan: The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products. And that desire is manifesting itself in the strong performance of our leading brands. Consumers are clearly recognizing our brand's differentiation resulting in the largest dollar and unit share gain of any company in the category. We're investing to increase that differentiation further aligning our brand portfolio with the consumer. Our quarterly performance bolsters our confidence that we'll deliver results in line with our annual guidance.

Riles: So, you know, to sum up, I think it's only prudent that we, you know, continue to watch that and feel a little bit cautious as it relates to our outlook. Having said all that, you know, while promotions are up, things still remain pretty rational or still well below pre-pandemic. So, you'd have a ways to go before you got to kind of 2019 emotional levels.

Speaker Change: You know, to sum up, I think it's only prudent that we, you know, continue to watch that and be a little bit cautious as it relates to our outlook. Having said all that, you know, while promotions are up, things still remain pretty rational and are still well below pre-pandemic. So...

Speaker Change: Yeah, you'd have a ways to go before you got to kind of 2019 promotional levels.

Robert Dickerson: Okay, fair enough. And then, you know, it sounds like, you know, as you got through kind of the end of the quarter, you started to see some improvement in these trends and you called out, you know, increasing, you know, shift maybe back to at home to seek value, you know, middle of August. I mean, what we've seen in the data kind of through July was that was all going actually even improved a little bit.

Operator: And maybe some increase in that promotional activity as you get through the back half of the year, you promote a little bit more, you're also taking share.

Ralph McMillan: We're working to drive further improvements and I look forward to continuing our progress throughout 2024. So with that Shannon, we're ready to open it up for questions. Thank you. To ask a question, please press star 11 or your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We'll compile the Q&A roster.

Speaker Change: Okay, fair enough. And then.

Speaker Change: You know, it sounds like, you know, as you got through.

Operator: So I'm just curious, like, you know, as we sit here today, you feel like there's maybe a little bit more risk because usually, you know, if you're taking share than maybe others notice, and they could start to promote more.

Speaker Change: kind of the end of the quarter, you started to see some improvement in these trends. And you called out an increasing shift maybe back to at home to seek value.

Speaker Change: Yeah, you know, middle of August. I mean, what we've seen the data kind of through July was that was ongoing actually even improved a little bit. I don't know if there's

Riles: I don't know if there's any way to provide in color, kind of as what you've seen, let's say, through kind of the summer months and kind of how you're thinking about that momentum into back to school. Thanks. Yeah, so, you know, we have, as you know, we have a large food service business and a, you know, a significant component of that is quick serve, you know, fast food, food chains. And, you know, it's been in the news; you know, folks have seen results at some of these QSR-oriented restaurants be a little bit challenged. And I think, you know, a lot of that is inflation, obviously.

Speaker Change: Anyway, to provide and color kind of as what you've seen, let's say through kind of the summer months and kind of how you're thinking about that momentum into back to school. Thanks.

Robert Dickerson: Our first question comes from the line of Robert Dickerson with Jeffries. Your line is now open. Great. Thanks so much. Happy Friday. Good morning.

Operator: Thank you.

Operator: Yeah, sure, Rob.

Speaker Change: Yeah, so, you know, we have, as you know, we have a large food service business and a, you know, a significant component of that is, is quick serve, you know, fast food, food chains.

Ralph McMillan: I guess it's a question around the promotional environment. You know, the prepared remarks you did. You know, you said you have promoted a little bit more. It doesn't sound like a lot, but a little bit more. And at the same time, you know, clearly, it looks like you're you're taking both unit and dollar share in bread. So I'm just curious, you know, I feel like, you know, since the beginning of the year, the guidance has allowed for some promotional risk.

Operator: Thanks for the question.

Speaker Change: And, you know, it's been in the news, you know, folks have seen results that some of these QSR oriented restaurants be a little bit challenged.

Riles: But it also affects, you know, our food service volumes. That's a, you know, a pretty significant part of the portfolio. But on the flip side, that tends to, you know, benefit the retail business. And so I do, I do think that that's somewhat of a tailwind for our brand of retail businesses. We, you know, move to the next, at least the next couple of quarters. We'll kind of see how the economy does. Okay, super.

Speaker Change: And I think, you know, a lot of that is inflation, obviously, but it also affects, you know, our food service volumes, because that's a, you know, a pretty significant part of the portfolio, but on the flip side, that tends to, you know, benefit the retail business.

Ralph McMillan: Right. And maybe some increase in that promotion activity as you get through the back half of the year, you promote a little bit more. You're also taking share. So I'm just curious like, you know, as we sit here today, you feel like there's maybe a little bit more risk because usually, you know, if you're taking share, then maybe others notice and they could start to promote more. Thank you. Yeah, sure. Thanks for the question.

Speaker Change: And so I do, I do think that that's somewhat of a tailwind for our branded retail business as we, you know, move through the next at least the next couple of quarters, we'll kind of see how the economy does.

Robert Dickerson: I'll pass it on. Thanks, Robert.

Bill Chapel: Thank you. Our next question comes from the line of Bill Chapel with True Securities. Your line is now open.

Operator: Yeah, look, I suppose that's possible.

Speaker Change: Okay, super. I'll pass it on.

Rob: Thanks, Rob.

Speaker Change: Thank you. Our next question comes from the line of Bill Chappell with Truist Securities. Your line is now open.

Davis Holcomb: Hey, good morning. This is Davis Holcomb on for No Chapel. Just wondering if you could help us kind of unpack the impact of the business exits on volume.

Robert Dickerson: Good morning.

Operator: And you know, we indicated, you know, in our prepared remarks, and even embedded in the guidance that we are we're accounting for that risk.

Robert Dickerson: Hey, I guess just a question around the promotional environment.

Operator: As we go through the year, we called it out at the beginning of the year.

Robert Dickerson: You know, the prepared remarks to did, you know, you said, you have promoted a little bit more doesn't sound like a lot, but a little bit more.

Robert Dickerson: And at the same time, you know, clearly, it looks like you're, you're taking both unit and dollar share, and Brad.

Robert Dickerson: So I'm just curious, you know, I feel like since the beginning of the year, the guidance has allowed for some promotional risk, right?

Speaker Change: Hey, good morning. This is Davis Holcomb on Fridell Chapel.

Robert Dickerson: And maybe some increase in that promotional activity as you get through the back half of the year, you promote a little bit more, you're also taking share.

Ralph McMillan: Yeah, look, I suppose that's possible. And, you know, we indicated, you know, in our prepare remarks and even embedded in the guidance that we are, we are counting for that risk as we go through the year, we called it out at the beginning of the year, and I think it's still prudent to call it out now. You know, I think we saw that in, you know, a large retailer report this week, you know, we're seeing the channel shift and we've been calling that out for several quarters now from grocery to mass club, dollar.

Davis Holcomb: Just wondering if you could help us kind of unpack the impact of the business exits on volume, if there's any way that we can kind of get a quantification where volumes kind of flattish up, what did it look like directionally I guess from there?

Riles: If there's any way that we can kind of get a quantification, where volumes kind of flatish up, what do they look like directionally, I guess, from there? Yeah, sure. We don't break, you know, they were, they were very positive overall on the branded retail side, and particularly on the branded brand side.

Speaker Change: Yeah, sure. We don't break that out to that granular of a level, but when you look at volumes in the quarter,

Speaker Change: They were very positive overall on the branded retail side and particularly on the branded bread side.

Riles: Now, that was some way down, somewhat way down, rather by weakness in the cake business. You've seen that across the sweet baked goods category. And then as for the rest of the business, you know, as we said, you know, food service volumes have been a bit weak due to that QSR weakness. In addition to the strategic exits that we've talked about for several quarters now. However, it's important to remember that those strategic exits roll off in Q4. So they have virtually no impact on us in Q4. We're almost through them, as we mentioned last quarter.

Speaker Change: That was somewhat weighed down, rather, by weakness in the cake business. You've seen that across the sweet baked goods category.

Ralph McMillan: And that's kind of a cross income spectrums too. So, you know, to sum up, I think it's only prudent that we, you know, continue to watch that and feel a little bit cautious as it relates to our outlook. Having said all that, you know, while promotions are up, things still remain pretty rational or still well below pre-pandemic. So, you'd have a ways to go before you got to kind of 2019 emotional levels.

Speaker Change: And then, as for the rest of the business, as we said, food service volumes have been a bit weak due to that QSR weakness. In addition to the strategic exits that we've talked about for several quarters now.

Speaker Change: However, it's important to remember that those strategic exits roll off in Q4.

Ralph McMillan: Okay, fair enough. And then, you know, it sounds like, you know, as you got through kind of the end of the quarter, you started to see some improvement in these trends and you called out, you know, increasing, you know, shift. And maybe back to home to seek value. Yeah, you know, middle of August, I mean, what we've seen in the data kind of through July was that was ongoing, actually even improved a little bit.

Speaker Change: So they have virtually no impact on us in Q4, we're almost through them, as we mentioned last quarter, and so going forward you'll see much less impact from that.

Riles: And so going forward, you'll see much less impact from that. Excellent. Thanks.

Operator: And I think it's still prudent to call it out now.

Riles: And I was just also wondering if you could kind of help us get a feel for how the distribution, I guess, is going for the DKB, like the protein bar rollout and everything like that. Just a little bit more color there. Yeah, sure. Overall, we're really pleased with how well we're doing.

Speaker Change: Excellent, thanks. And I was just also wondering if you could kind of help us get a feel for how the distribution, I guess, is going for the DKB, like the protein bar rollout and everything like that. Just a little bit more color there.

Operator: You know, as we noted, consumers are responding a bit more to promotions, whereas not too long ago, they were not.

Ralph McMillan: I don't know if there's any way to provide in color. Kind of as what you've seen, let's say through kind of the summer months and kind of how you're thinking about that momentum into back to school. Thanks. Yeah, so, you know, we have, as you know, we have a large food service business and a, you know, a significant component of that is, is quick serve, you know, fast food, food chains. And, you know, it's been in the news, you know, folks have seen results at some of these us oriented restaurants, be a little bit challenged.

Operator: And we all know that the consumer is, you know, alongside of different differentiation, the consumer is seeking value.

Speaker Change: Yeah sure overall we're really pleased with with how well we're doing. You know look it's as I've said several times before this is a startup business for us.

Riles: You know, look, as I've said several times before, this is a startup business for us. It's brand new. It's a different form of merchandising. It's not, you know, distributed DST on the bread trucks. It goes to the warehouse. You know, right now we have, you know, a limited number of skews. So we're working to expand our shelf presence. We've got the, you know, the three snack bars. We've got the three protein bars that are coming out. So our shelf presence is getting better. And our top accounts, large retailers, what we're doing, what we're doing, well, we're doing really well.

Speaker Change: It's brand new. It's a different form of merchandising. It's not distributed DSD on the bread trucks. It goes to the warehouse.

Operator: I think we saw that in, you know, large retail report this week, you know, we're seeing the channel shift.

Speaker Change: Right now we have a limited number of SKUs, so we're working to expand our shelf presence. We've got the three snack bars, we've got the three protein bars that are coming out, so our shelf presence is getting better.

Ralph McMillan: And I think, you know, a lot of that is inflation, obviously. But it also affects, you know, our food service volumes. That's a, you know, a pretty significant part of the portfolio. But on the flip side, that tends to benefit the retail business. And so I do, I do think that that's somewhat of a tailwind for our brand of retail businesses. We, you know, move to the next, at least the next couple of quarters.

Operator: And we've been calling that out for several quarters now from grocery to mass club dollar.

Speaker Change: At our top accounts, large retailers, where we're doing well, we're doing really well.

Riles: And we've got velocities, you know, well within the top 10 in the category. However, you know, there's been a couple of places where we've stopped our tow from an execution standpoint. And that's that's part of the learning curve. And we're correcting that. But looking at it overall, we think we've got a great product under a great brand umbrella. And we're very confident about where this is going. Not to mention the, you know, the additional pipeline of innovation with the snack bites coming later this year and then full distribution next year. So overall, we're pleased.

Speaker Change: and we've got velocities well within the top 10 in the category. However, there's been a couple of places where we've stubbed our toe from an execution standpoint, and that's part of the learning curve, and we're correcting that. But looking at it overall,

Operator: And that's kind of across income spectrums, too.

Unknown Executive: We'll kind of see how the economy does. Okay, super.

Operator: So, you know, to sum up, I think it's only prudent that we, you know, continue to watch that and be a little bit cautious as it relates to our outlook.

Speaker Change: We think we've got a great product, under a great brand umbrella, and we're very confident about where this is going. Not to mention the additional pipeline of innovation with the snack bites coming later this year and then full distribution next year. So overall, we're pleased.

Unknown Executive: I'll pass it on. Thanks. Thank you.

William Chappell: Our next question comes from the line of bill chapel with true securities. Your line is open. Hey, good morning. This is Davis Holcomb, long for bill chapel. What, just wondering is, you could probably kind of unpack the impact of the business exits on volume. If there's any way that we can kind of get a quantification, where volume's kind of flatish up. What do they look like directionally, I guess, from there? Yeah, sure.

Operator: Having said all that, you know, while promotions are up, things still remain pretty rational and are still well below pre pandemic.

Riles: Awesome. Thanks for the color.

Riles: We'll go ahead and pass it on. Yeah, thank you.

Speaker Change: Awesome. Thanks for the call. We'll go ahead and pass it on.

Unknown Executive: Thank you.

Jim Celero: Our next question comes from the line of Jim Celero with Steven. She won. His now open.

Speaker Change: Yeah, thank you.

Speaker Change: Thank you. Our next question comes from the line of Jim Salera with Stevens. Your line is now open.

Jim Celero: Thank you.

Robert Dickerson: So I'm just curious, like, you know, as we sit here today, you feel like there's maybe a little bit more risk because usually, you know, if you're taking share than maybe others notice, and they could start to promote more.

Operator: So you'd have a ways to go before you got to kind of 2019 promotional level.

Jim Celero: Morning, guys. Thanks for taking our question. I wanted to make sure we could run through pushing takes on.

Robert Dickerson: Thanks.

Operator: Okay, fair enough. And then, you know, it sounds like, you know, as you got through, kind of the end of the quarter, you started to see some improvement in these trends, and you called out, you know, an increasing, you know, shift, maybe back to at home to seek value.

Jim Salera: Hey, good morning guys. Thanks for taking our question.

Jim Salera: Riles, I wanted to maybe see if we could run through puts and takes on...

Ralph McMillan: We don't break that out to that granular of a level. But, you know, when you look at volumes in the quarter, you know, they were, they were very positive on overall on the branded retail site and particularly on the branded breadside. Now, that was some way down, somewhat way down rather by weakness in the, in the cake business. You've seen that across the, the sweet baked goods category. And then, as for the rest of the business, you know, as we said, you know, food service volumes have been a bit weak due to that QSR weakness.

Riles: If we look at the exits from the business impacts mentioned, the pressure on the QSR business, but then if we think about netting those against the strong results at BKB and Canyon, plus what seems like a benefit from who did own shift. We paid all that. Yep, Jim.

Speaker Change: If we look at the exits from the business impacts.

Speaker Change: You mentioned the pressure on the QSR business, but then if we think about netting those against the strong results at DKB and Canyon, plus what seems like a benefit from food at home shift.

Riles Van Golen: Yeah, sure, Rob.

Operator: You know, now, middle of August, I mean, what we've seen in the data kind of through July was that was ongoing, actually even improved a little bit.

Unknown Executive: Sorry to interrupt you.

Speaker Change: Hey Jim, sorry to interrupt you. Can you start your question over because we had some really bad audio at the beginning of your question.

Riles: Can you start your question ever? Because we had some really bad audio at the beginning of your question? Yeah, no problem. Is that better? Yeah, it seems like it. Yeah, I was just asking if we could maybe net the exit from the business impacts with some of the pressure you mentioned in QSR and then thinking about that against the strong results at BKB, Canyon, benefit from a shift at who did home. If we think about all that together, could we see positive volumes in 3Q and then obviously, you know, rolling into 4Q? Yeah, I think definitely for 4Q, that's a reasonable assumption, particularly with all the new business, Jim, that we have coming on.

Riles Van Golen: Thanks for the question.

Operator: I don't know if there's any way to provide in color, kind of as what you've seen, let's say, through kind of the summer months and kind of how you're thinking about that momentum into back to school.

Jim Salera: Yeah, no problem. Is that better?

Jim Salera: Yes, it seems like it is.

Jim Salera: Okay, perfect. Yeah, I was just asking if we could maybe net the...

Ralph McMillan: In addition to the strategic exits that we've talked about for several quarters now. However, it's important to remember that those strategic exits roll off in Q4. So they have virtually no impact on us in Q4. We're almost through them, as we mentioned last quarter. And so going forward, you'll see much less impact from that. Excellent. Thanks.

Speaker Change: The exit from the business impacts.

Speaker Change: with some of the pressure you mentioned in QSR, and then thinking about that against the strong results of DKB, Canyon, benefit from a shift in food at home, if we think about all that together, could we see positive volumes in 3Q and then obviously rolling into 4Q?

Ralph McMillan: And I was just also wondering if you could kind of help us get a feel for how the distribution, I guess, is going for the DKB, like the protein bar roll out and everything like that, which is a little bit more color there. Yeah, sure. Overall, we're really pleased with how well we're doing.

Speaker Change: Yeah, I think definitely for 4Q, that's a reasonable assumption, particularly with all the new business, Jim, that we have coming on. We talked about that last quarter, so that'll have more of an impact in Q4.

Riles: We talked about that last quarter. So that'll have a more of an impact in Q4. And then with the the roll off of the strategic exits, if we can continue to enjoy good momentum from all the brands you mentioned, then yeah, I think that's the same possibility. I mean, frankly, we were almost there in Q1. You know, the branded retail was actually pretty positive in Q1. So yes, I think that's a reasonable, reasonable possibility.

Speaker Change: And then with the roll-off of the strategic exits, if we can continue to enjoy

Ralph McMillan: You know, look, as I've said several times before, this is a startup business for us. It's brand new. It's a different form of merchandising. It's not, you know, distributed DST on the on the bread trucks. It goes to the warehouse. You know, right now we have, you know, a limited number of skews. So we're working to expand our shelf presents. We've got the, you know, the three snack bars. We've got the three protein bars that are coming out.

Jim Salera: Good momentum from all the brands you mentioned, then yeah, I think that's a distinct possibility. I mean, frankly, we were almost there in Q1. You know, brand and retail was actually pretty positive in Q1. So, yes, I think that's a reasonable possibility.

Jim Celero: Okay, great.

Riles: And then maybe if you could just give us some detail on, you mentioned in your prepared remarks, restructuring the retail team. You could talk about how that changes some of the capabilities relative to the previous structure and maybe when slash how we might see that show up on shelf. Yeah, I mean, I think you got to give us a little bit of time, and Meredith just started not just a few weeks ago. But, you know, we brought Terry Thomas on as the chief growth officer. You know, he had some significant experience and insights from his time at Udeliever and other places.

Speaker Change: Okay, great. And then maybe if you could just give us some detail on, you mentioned in your prepared remarks, restructuring the retail team. Can you talk about how that changes some of the capabilities relative to the previous structure and maybe when slash how we might see that show up on shelf?

Ralph McMillan: So our shelf presents is getting better. And our top accounts, large retailers, what we're doing, what we're doing, well, we're doing really well. And we've got velocities, you know, well within the top 10 in the category. However, you know, there's been a couple of places where we we've stubbed our toe from an execution standpoint. And that's that's part of the learning curve. And we're correcting that. But looking at it overall, we think we've got a great product under a great brand umbrella.

Speaker Change: Yeah, I mean I think you've got to give us a little bit of time and Meredith just started not just a few weeks ago but you know we brought Terry on, Terry Thomas on as the Chief Growth Officer. You know he had some significant experience and insights from his time at Unilever and other places and you know one of the things we lacked here

Riles: And you know, one of the things we lacked here was a channel-specific approach to strategy and execution at the retail level. And I think that's one of the areas where it's going to be these restructurings are going to benefit us the most. Whereas, you know, before, you know, to shorthand it, you know, it was a little bit of a peanut butter spread approach to, you know, to all channels. Now you're, you're, you're looking specifically at mass, you're looking specifically at club, dollar, whatever it might be. And you know, even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply underpenetrated in that channel.

Ralph McMillan: And we're very confident about where this is going. Not to mention the, you know, the additional pipeline of innovation with the snack bites coming later this year, and then full distribution next year. So overall, we're pleased. Awesome. Thanks for the color. We'll go ahead and pass it on. Yeah, thank you. Thank you.

Speaker Change: was a channel-specific.

Speaker Change: Approach.

Speaker Change: It's a strategy and execution at the retail level, and I think that's one of the areas where these restructurings are going to benefit us the most. Whereas, you know, before...

Speaker Change: To shorthand it, it was a little bit of a peanut butter spread approach to all channels. Now you're looking specifically at mass, you're looking specifically at club, dollar, whatever it might be.

James Salera: Our next question comes from the line of Jim Solero with Steven.

Ralph McMillan: She won is now open. Hey, good morning, guys. Thanks for taking our question. I wanted to maybe see if we could run through pushing takes on. If we look at the exits from the business impacts, mentioned the pressure on the QSR business, but then if we think about netting those against the strong results at BKB and Canyon, plus what seems like a benefit from who did own shift. We paid all that.

Speaker Change: And, you know, even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply underpenetrated in that channel.

Jim Celero: Great. Appreciate the color, guys.

Unknown Executive: I'll hop back in the queue. Thank you.

Speaker Change: Great. Appreciate the call, guys. I'll hop back into the queue.

Operator: Thanks.

Mitchell Pinheiro: As a reminder to ask a question at this time, please press star 11 or in touch on telephone. Our next question comes from the light of Mitchell Pinero with Starter and In Company.

Speaker Change: Thank you, Jill. Thank you. As a reminder to ask a question at this time, please press star 1 1 or in touchtone telephone.

Operator: Yeah, so you know, we have, as you know, we have a large food service business.

Mitchell Pinheiro: Your line is open. Yeah. Hey, good morning.

Speaker Change: Our next question comes from the line of Mitchell Pinero with Sturdivant & Company. Your line is now open.

Ralph McMillan: Yep. Yeah. Sorry to interrupt you. Can you start your question ever because we had some really bad audio at the beginning of your question? Yeah, no problem. Is that better? Yeah, it seems like it. Yeah, I was just asking if we could maybe net the exit from the business impacts with some of the pressure you mentioned in QSR and then thinking about that against the strong results at BKB, Canyon, benefit from a shift at who did home.

Riles Van Golen: Yeah, look, I suppose that's possible.

Operator: And, you know, a significant component of that is is quick serve, you know, fast food food chains.

Speaker Change: to

Mitchell Pinero: Yeah, hey, good morning.

Riles: So, curious, you know, you talk about making a headway in some of your under-penetrated geographic regions. And I'm curious, like, what's driving? What's driving that? And is it a sustainable, is it sustainable growth that you can see there? Because it's a big part of your growth story, while you have, you know, extraordinary strength in the south and, you know, southwest, it's, there's a lot of sort of white space, and just curious if it's sustainable. Well, we certainly think so. You know, as you rightly pointed out, you know, our largest share concentration is in the South.

Operator: And, you know, it's been in the news, you know, folks have seen results that some of these QSR oriented restaurants be a little bit challenged.

Speaker Change: Thank you.

Speaker Change: So,

Mitchell Pinero: Curious, you know, you talk about making headway in some of your underpenetrated geographic regions and

Speaker Change: I'm curious, what's driving that and is it a sustainable growth that you can see there? Because it's a big part of your growth story is while you have, you know...

Ralph McMillan: If we think about all that together, could we see positive volumes in 3Q and then obviously, you know, rolling into 4Q? Yeah, I think definitely for 4Q, that's a reasonable assumption, particularly with all the new business gem that we have coming on. We talked about that last quarter, so that'll have a more of an impact in Q4 and then with the roll-off of the strategic exits, if we can continue to enjoy good momentum from all the brands you mentioned, then yeah, I think that's the same possibility. I mean, frankly, we were almost there in Q1. You know, the branded retail was actually pretty positive in Q1, so yes, I think that's a reasonable, reasonable possibility.

Speaker Change: You know extraordinary strength in the south and you know southwest it's it's there's a lot of sort of white space and Just curious if it's sustainable

Riles Van Golen: And you know, we indicated, you know, in our prepared remarks, and even embedded in the guidance that we are we're accounting for that risk as we go through the year, we called it out at the beginning of the year.

Operator: And I think, you know, a lot of that is inflation, obviously, but it also affects, you know, our food service volumes, because that's a, you know, a pretty significant part of the portfolio.

Speaker Change: Well, we certainly think so. As you rightly pointed out, our largest share of concentration is in the South. That's a pretty saturated market for us. There's still certain growth pockets, and we're seeing that with the NatureZone keto loaf. Dave's continues to grow.

Riles Van Golen: And I think it's still prudent to call it out now.

Operator: But on the flip side, that tends to, you know, benefit the retail business.

Riles: You know, that's a pretty saturated market for us. There's still, you know, certain growth pockets. And we're seeing that with the nature's on Keto, love, you know, days continues to grow. And then, you know, even in the south, you know, if you break up the geographies and look at, you know, market share gains, has been a little bit tougher in the south, frankly, south, frankly. A little bit more promotional activity, you know, basically two, you know, two primary competitors, you know, our most mature market. But what we've been able to do is find areas within the category to grow.

Operator: And so I do, I do think that that's somewhat of a tailwind for our branded retail business as we, you know, move through the next at least the next couple of quarters, we'll kind of see how the economy does.

Operator: Okay, super.

Operator: I'll pass it on.

Operator: Thanks, Ron.

Speaker Change: And then, you know, even in the South, you know, if you break up the geographies and look at, you know, market share gains, it's been a little bit tougher in the South, frankly.

Riles Van Golen: You know, as we noted, consumers are responding a bit more to promotions, whereas not too long ago, they were not.

Operator: Thank you.

Riles Van Golen: And we all know that the consumer is, you know, alongside of different differentiation, the consumer is seeking value.

Speaker Change: a little bit more promotional activity, you know, basically to, you know, two primary competitors, you know, our most mature market.

Operator: Our next question comes from the line of Bill Chappell with Truist Securities.

Ralph McMillan: Okay, great. And then maybe if you could just give us some detail on, you mentioned in your prepare remarks, restructuring the retail team. You can talk about how that changes some of the capabilities relative to the previous structure and maybe when slash how we might see that show up on shelf. Yeah, I mean, I think you got to give us a little bit of time. I'm fair to just started not just a few weeks ago, but we brought Terry Thomas on as the chief growth officer.

Riles: So that's Keto, that's breakfast, that sandwich buns and rolls, even in the South. Now, more directly to your question on under-penetrated markets, I absolutely think that's sustainable. You know, when you look at a 17-18 overall dollar share nationwide and only a 10 in the Northeast, and we haven't really been there that long, Days been there, DKB's been there for even less time. But, as you know, a lot of our, we don't have a national marketing campaign, at least not yet. So that's one of our focus, focus markets for our advertising campaign. We still got room to go out, grow out west, back north west, and probably most importantly, in the upper Midwest, which we've already started to enter.

Speaker Change: But what we've been able to do is find areas within the category to grow.

Operator: Your line is now open.

Speaker Change: So that's keto, that's breakfast, that's sandwich, buns, and rolls, even in the South.

Riles Van Golen: I think we saw that in, you know, large retailer report this week, you know, we're seeing the channel shift.

Operator: Hey, good morning.

Speaker Change: Now, more directly to your question on underpenetrated markets, I absolutely think that's sustainable. When you look at a 17-18 overall dollar share nationwide and only a 10 in the Northeast, and we haven't even really been there that long.

Riles Van Golen: And we've been calling that out for several quarters now from grocery to mass club dollar.

Operator: This is Davis Holcomb on for Bill Chappell.

Ralph McMillan: He had some significant experience and insights from his time at Udeliever and other places. And one of the things we lacked here was a channel specific approach to strategy and execution at the retail level. And I think that's one of the areas where these restructuring are going to benefit us the most. Whereas before to shorthand, it was a little bit of a peanut butter spread approach to all channels. Now you're looking specifically at mass, you're looking specifically at club, dollar, whatever it might be. And even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply underpenetrated in that channel.

Speaker Change: Day's been there, DKB's been there for even less time. But as you know, a lot of our, we don't have a national marketing campaign, at least not yet. So that's one of our focus markets for our advertising campaign.

Riles Van Golen: And that's kind of across income spectrums, too.

Operator: I'm just wondering if you could help us kind of unpack the impact of the business exits on volume.

Operator: If there's any way that we can kind of get a quantification where volumes kind of flattish up, what did it look like directionally, I guess, from there?

Speaker Change: We've still got room to grow out west, back northwest. For more information, visit www.fema.gov

Operator: Yeah, sure.

Speaker Change: and probably most importantly, in the Upper Midwest.

Riles: And we'll continue to roll that out as we go forward. So, you know, not only, you know, do we have, you know, M&A to look to, innovation to look to, but we've also got these under-penetrated reasons where we've got a lot of runway to grow. to get our fair share of the category.

Riles Van Golen: So, you know, to sum up, I think it's only prudent that we, you know, continue to watch that and be a little bit cautious as it relates to our outlook.

Operator: We don't break that out to that granular of a level.

Speaker Change: which we've already started to enter, and we'll continue to roll that out as we go forward. So, not only do we have M&A to look to, innovation to look to, but we've also got these underpenetrated regions where we've got a lot of runway to grow.

Riles Van Golen: Having said all that, you know, while promotions are up, things still remain pretty rational and are still well below pre pandemic.

Riles Van Golen: So you'd have a ways to go before you got to kind of 2019 promotional level.

Mitchell Pinheiro: Thanks for that.

Robert Dickerson: Okay, fair enough. And then, you know, it sounds like, you know, as you got through, kind of the end of the quarter, you started to see some improvement in these trends, and you called out, you know, an increasing, you know, shift, maybe back to at home to seek value.

Steve: Then on margins, Steve, you know, in the prepared remarks, you talk about moderating ingredient and packaging costs. Is that something you obviously have a lot of visibility there with the amount, you know, with your, you're pretty much set for the, you know, for the remainder of this year with visibility there.

Speaker Change: to get our fair share of the category.

Unknown Executive: Great. Appreciate the color, guys. I'll hop back in the queue. Thank you.

Speaker Change: Okay, thanks for that. Then, on margins,

Unknown Executive: As a reminder to ask a question at this time, please press star 11 or in touch on telephone.

Speaker Change: Steve.

Speaker Change: You know in the prepared remarks you talk about moderating ingredient and packaging costs is

Mitchell Pinheiro: Our next question comes from the line of Mitchell Pinero with Sturter and In Company. Your line is open. Yeah, hey, good morning. So curious, you know, you talk about making a headway in some of your underpenetrated geographic regions. And I'm curious, like, what's driving, what's driving that? And is it a sustainable, is it sustainable growth that you can see there? Because it's a big part of your your growth story is while you have, you know, extraordinary strength in the south and, you know, southwest, there's a lot of sort of white space and just curious if it's sustainable.

Speaker Change: Is that something you obviously have a lot of visibility there with the amount you know with your you're pretty much set for the you know for the remainder this year with visibility there. Is that something we're going to see not just moderating increases but are we going to see declines?

Steve: Is that something we're going to see, not just moderating increases, but are we going to see declines? Yeah, I mean, obviously, when you look at kind of the margin performance here today, you know, we've done really well, and we're pleased with where we are. You know, we continue to hedge; I mean, our strategy hasn't changed. You know, we say six to nine months, you know, ahead of the market, so we understand, you know, the cost structure. You know, we did see that the first half is actually the largest benefit with regards to the moderating cost.

Robert Dickerson: You know, middle of August, I mean, what we've seen in the data kind of through July was that was ongoing, actually even improved a little bit, I don't know if there's any way to provide in color, kind of as what you've seen, let's say, through kind of the summer months and kind of how you're thinking about that momentum into back to school.

Operator: But you know, when you look at volumes in the quarter, you know, they were, they were very positive on overall on the branded retail side, and particularly on the branded bread side.

Riles Van Golen: Thanks.

Speaker Change: Yeah, I mean obviously when you look at kind of the margin performance here today, you know, we've done really well and we're pleased with where we are.

Riles Van Golen: Yeah, so, you know, we have, as you know, we have a large food service business.

Speaker Change: You know, we continue to hedge. I mean our strategy hasn't changed, you know, we say six to nine months, you know ahead of the market So we understand, you know

Speaker Change: the call structure. We did see that the first half is actually the largest benefit with regard to the moderating calls. So while we do expect benefit in the back half, that benefit will begin to grow.

Steve: So, while we do expect benefit in the half, in the back half, you know, that benefit will begin to, you know, decline somewhat. But, you know, overall, we're still, you know, forecasting, you know, decent margin improvement for the year.

Ralph McMillan: Well, we certainly think so. You know, as you rightly pointed out, you know, our largest share concentration is in the south. You know, that's a pretty saturated market for us. There's still, you know, certain growth pockets. And we're seeing that with the nature's own keto loaf. You know, days continues to grow. And then, you know, even in the south, you know, if you break up the geographies and look at, you know, market share gains has been a little bit tougher in the more promotional activity, you know, basically two, you know, two primary competitors, you know, our most mature market. But what we've been able to do is find areas within the category to grow. So that's keto, that's breakfast, that sandwich buns and rolls even in the south.

Speaker Change: decline somewhat, but you know overall we're still forecasting a decent margin improvement for the year.

Steve: And then I guess this one last question, just on M&A, you know, you've been a little quiet. Is that, is this, do you anticipate, I'm curious what the pipeline might look like and, you know, whether, excuse me, whether or not, are you sort of waiting for, you know, a lot of, you know, the ERP and California and things like that to sort of get behind you before we see M&A or are they too, just unrelated and mutually exclusive. No, we're ready to go. I mean, when the right opportunity comes along, you know, it's time for some M&A for us.

Speaker Change: And then I guess this one last question just on M&A You know, you've been a little quiet. Is that is this is do you anticipate?

Speaker Change: I'm curious what the pipeline might look like and...

Speaker Change: you know whether excuse me whether or not are you sort of waiting for you know a lot of

Speaker Change: You know

Speaker Change: the ERP and California and things like that to sort of get behind you before we see M&A or are the two uh...

Ralph McMillan: Now, more directly to your question on underpenetrated markets, I absolutely think that's sustainable. You know, when you look at a 17, 18 overall dollar share nationwide, and only a 10 in the northeast, we haven't really been there that long. Days been there, DKB's been there for even less time. But as you know, a lot of our, we don't have a national marketing campaign, at least not yet. So that's one of our focus, focus markets for our advertising campaign. We still got room to grow out west, back north west, and probably most importantly, in the upper Midwest, which we've already started to enter, and we'll continue to roll that out as we go forward.

Speaker Change: It's just unrelated and mutually exclusive.

Speaker Change: No, we're ready to go. I mean, when the right opportunity comes along.

Steve: You know, I'll reiterate again, you know, we're very proactive in the market. We're out there building relationships, you know, we know what's, what could be coming. We know what we're interested in. In some cases, we've even done some advanced, you know, commercial deals at work so that we're, you know, able to execute quickly when the right opportunity comes along. And again, those opportunities can come both in the core and in adjacent categories. I do think, I mean, there's been some big deals announced over the last, you know, week and the last six months or so.

Speaker Change: It's time for some M&A for us.

Speaker Change: I'll reiterate again, we're very proactive in the market, we're out there building relationships, we know what could be coming, we know what we're interested in. In some cases, we've even done some advanced commercial diligence work so that we're able to... ... ... ... ... ... ... ...

Speaker Change: We're able to execute quickly when the right opportunity comes along.

Speaker Change: and again, those opportunities can come both in the core and in adjacent categories. I do think, I mean, there's been some big deals announced over the last week and the last six months or so, but I think there's more ahead. The M&A market seems to be getting healthier, as we noted last quarter.

Steve Kenzie: So, you know, not only, you know, do we have, you know, emanate a look to innovation to look to, but we've also got these underpenetrated reasons where we've got a lot of runway to grow, to get our fair share of the category. Thanks for that. Then on margins, Steve, you know, in the prepared remarks you talk about moderating, ingredient and packaging costs, is that something you obviously have a lot of visibility there with the amount, you know, with your, you're pretty much set for the, you know, for the remainder of this year with visibility there.

Steve: But I think there's more ahead. The M&A market seems to be getting healthier, as we know it, in the last quarter. So we're bullish on that venture.

Steve: All right.

Steve: Thank you. Appreciate the questions.

Speaker Change: So we're bullish on that venture

Speaker Change: Okay. All right. Thank you.

Unknown Executive: Thanks. Thank you.

Steve Powers: Our next question comes from the line of Steve Powers with Deutsche Bank.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from the line of Steve Powers with Deutsche Bank. Your line is now open.

Steve Powers: Your line is now open. Hey, thanks.

Steve Powers: Good morning, guys.

Steve Powers: So first question, just a little bit more color on how you're thinking about the price versus the reported price mix versus the volume outlook across branded retail as we go to the back half. Obviously, you kind of cycled, you know, you're going to go pricing actions. You know, it's like most recently in the data that we all kind of track week to week, it looks like pricing in the category of pricing for your own portfolio has dipped negative.

Steve Powers: Hey, thanks and good morning guys.

Steve Kenzie: Is that something we're going to see not just moderating increases, but are we going to see declines? Yeah, I mean, obviously, when you look at kind of the margin performance year today, you know, we've done really well and we're pleased with where we are. You know, we continue to hedge. I mean, our strategy hasn't changed. You know, we say six to nine months, you know, ahead of the market. So we understand, you know, the cost structure.

Speaker Change: Obviously you kind of cycled a year ago pricing actions.

Speaker Change: Most recently in the data that we all kind of track week to week, it looks like pricing in the category of pricing for your own portfolio has dipped negative. So as we go through the back half, as you make those targeted promotional investments and you probably have some...

Riles: So, as we go through the back half, as you make those targeted promotional investments and you got probably has some channel package mix that's, you know, negative despite the premization trend, or is the base case that pricing reported pricing runs negative in the back half with volume making up the difference, or do you think you can hold price mix to kind of neutral as you flow through 24. Yeah, so let's take it, let's break it up a little bit. I mean, you know, on the branded side, you know, all of our pricing is now. Now when you, you know, the data that we look at, Steve, our average price was up seven cents on the quarter, not down, but that, that’s also driven by mix, because as we’ve talked about, you know, DKB had a great quarter, Canyon had a great quarter, you know, Nature Zone did well, given the environment.

Steve Kenzie: You know, we did see that the first half is actually the largest benefit with regard to the moderating costs. So long we do expect benefit in the half, in the back half, you know, that benefit will get into, you know, to decline somewhat, but, you know, overall, we're still, you know, forecasting, you know, decent margin improvement for the year.

Speaker Change: some channel package mix that's

Speaker Change: you know negative despite the premiumization trend or is the base case that pricing

Speaker Change: Reported pricing runs negative in the back half with volume making up the difference or do you think you can hold price mix to kind of neutral as you as you flow through 24?

Ralph McMillan: And then I guess this one last question just on M&A, you know, you've been a little quiet. Is that, is this, do you anticipate, I'm curious what the pipeline might look like?

Speaker Change: Yeah, so...

Speaker Change: Let's take it, let's break it up a little bit. I mean, you know, on the branded side, you know, all of our pricing is in.

Speaker Change: Now, when you, you know, the data that we look at, Steve, our average price was up seven cents on the quarter.

Ralph McMillan: And, you know, whether, excuse me, whether or not, are you sort of waiting for, you know, a lot of, you know, the ERP and California and things like that to sort of get behind you before we see M&A or are they to just unrelated and mutually exclusive? No, we're ready to go. I mean, when the right opportunity comes along, you know, it's time for some M&A for us. You know, I'll reiterate again, you know, we're very proactive in the market.

Speaker Change: Lockdown.

Steve: But that's also driven by mix, because as we've talked about, DKB had a great quarter, Canyon had a great quarter, Nature's Own did well given the environment. So that mix is driving that a bit.

Steve: So that, you know, mix is driving that a bit. And you know, if we can continue that trend, and Steve, you should comment on this too, if we can continue that trend, I would expect, you know, mix to be a positive benefit for us as we move to the rest of the year.

Steve: And, you know, if we can continue that trend.

Steve: And Steve, you should comment on this, too. If we can continue that trend, I would expect MIX to be a positive benefit for us as we move through the rest of the year. Yeah, right. I mean, obviously, as Ryle said, all of our brand new pricing is in. You've seen kind of the cost environment as well and also some flight promotions.

Steve: Yeah, right. I mean, obviously, as Raul said, you know, all of our branded pricing is in, you know, you've seen the, kind of the cost environment as well. And also, you know, some flight promotions. So mix is a big car, you know, the back half. Yeah, then that's Raul said. If brands continue to perform well and things play out as we think with some of the new business, you know, by the fourth quarter, we might see some positive volume. Yeah, as well.

Speaker Change: So mix is a big part, you know the back half Yeah, then there's Riles said if the brands continue to perform well and things play out as we think with some of the new business You know by the fourth quarter, we might see some positive volume. Yeah

Ralph McMillan: We're we know what we're interested in. In some cases, we've even done some advanced, you know, commercial deals at work so that we're, you know, we're able to, we're able to execute quickly when the right opportunity comes along. And again, those opportunities can come both in the core and in adjacent categories. I do think, I mean, there's been some big deals announced over the last, you know, week and the last six months or so. But I think there's more ahead, the M&A market seems to be getting healthier as we noted last quarter.

Steve Powers: Okay. Great.

Steve Powers: And you're just, on ERP as it relates to, you know, the, the, you know, the bakery rollout, obviously, that's on hold, pending the California distribution transition. I guess as we, as we look out through that transition, you know, how quickly, what's the base case plan for when the bakery rollout resumes? Is that sort of middle of 25, or sooner or later? How do we think about that?

Speaker Change: Well, okay. Okay, great. And just on

Speaker Change: ERP as it relates to

Speaker Change: You know the the you know the bakery rollout obviously that's on hold

Speaker Change: Pending the the California distribution transition. I guess as we as we look out through that transition, you know, how quickly What's the base case plan for when?

Unknown Executive: So we're going to sell that venture. Okay. All right. Thank you. Appreciate the questions. Thanks. Thank you.

Speaker Change: The bakery rollout resumes. Is that sort of middle of 25 or sooner or later? How do we think about that?

Steve Powers: You mean, today, you know, today, we're, you know, obviously trying to work through California, but, you know, the plan is to pick that, pick back up bakery rollouts late this year or, you know, first quarter of next year. Okay. And they kind of know the pretty strong plan to try to stay on our regional targets. Obviously, a thing should have to allow you know, but I think the good thing is right now, from an overall cost perspective, you know, we're not anticipating anything to change. So, you know, that's critical. That standpoint as well. Okay.

Stephen Powers: Our next question comes from the line of Steve Powers with Deutsche Bank. Your line is open. Hey, thanks. Good morning, guys. So first question, just a little bit more color on how you're thinking about the price versus, or so the reported price mix versus volume outlook across branded retail as we go through the back half. Obviously, you kind of cycled, you know, year ago pricing actions. It's, you know, most recently in the data that we all kind of track week to week, it looks like pricing in the category of pricing for your own portfolio has dipped negative.

Speaker Change: Yeah, I mean, today we're obviously trying to work through California, but the plan is to pick back up baby rollouts late this year or first quarter of next year.

Stephen Powers: So as we go through the back half, as you make those targeted promotional investments and you probably have some channel package mix that's, you know, negative despite the premization trend, or is the base case that pricing, reported pricing runs negative in the back half with volume making up the difference, or do you think you can hold price mix to kind of neutral as you as you flow through 24.

Speaker Change: Okay. And they come up with a pretty strong plan to try to stay on our regional targets. Obviously if things shift we'll let you know, but I think the good thing is right now from an overall cost perspective, you know, we're not anticipating anything to change. So, you know, that's critical that standpoint as well.

Steve Powers: So the resumption could happen before the distribution right purchases are fully complete. That's what I'm cleaning from what we're answering. Yes, the goal is to pick back up no later than Q1 of next year. Okay. Perfect. All right.

Speaker Change: Okay, so the resumption could happen before the distribution right purchases are fully complete. That's what I'm gleaning from one of your answers.

Speaker Change: Yes, the goal is to pick back up no later than Q1 of next year.

Unknown Executive: Thank you very much. Thank you.

Speaker Change: Okay, perfect. All right, thank you very much.

Unknown Executive: And I'm currently showing no further questions at this time.

Speaker Change: Thank you, Steve. Thank you. And I'm currently showing no further questions at this time. I would now like to turn the call back over to Riles McMullin for closing remarks.

Riles: I would now like to turn the call back over to Ralph McMillan for closing remarks. Okay. Thanks, Shannon. Thanks, everybody, for taking time today and joining us for questions. We appreciate your interest in our company. And, as always, we look forward to speaking with you again next quarter. Take care.

Riles McMullin: Okay thanks Shannon. Thanks everybody for taking time today and joining us for questions. We appreciate your interest in our company and as always we look forward to speaking with you again next quarter. Take care.

Unknown Executive: This concludes today's conference call. Thank you for your participation. You may now disconnect. .

Ralph McMillan: Yeah, so let's take it. Let's break it up a little bit. I mean, you know, on the branded side, you know, all of our pricing is now. Now, when you, you know, the data that we look at Steve, our average price was up seven cents on the quarter, not down. But that, that, that's also driven by mix because as we've talked about, you know, DKB had a great quarter, Canyon had a great quarter, you know, nature zone did well, given the environment.

Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Ralph McMillan: So that, you know, mix is, is driving that a bit. And you know, if we can continue that trend and Steve, you, you should comment on this too, if we can continue that trend, I would expect, you know, mix to, to be a positive benefit for us as we move to the rest of the year. Yeah, right. I mean, obviously as Ralph said, you know, all of our branded pricing is in, you know, you've seen the kind of the cost environment as well.

Ralph McMillan: And also, you know, some flight promotions. So mix is a big part, you know, the back half. Yeah, then that's why I'll say, if brands continue to perform well and things play out as we think with some of the new business, you know, by the fourth quarter, we might see from positive volume, yeah, as well. Okay, okay, great.

Ralph McMillan: And you're just on ERP as it relates to, you know, the, the, the, you know, the bakery rollout, obviously that's on hold pending the California distribution transition. I guess as we, as we look out through that transition, you know, how quickly, what's the base case plan for when the bakery rollout resumes? Is that sort of middle of 25 or sooner or later, how do we think about that? You mean today, you know, today we're obviously trying to work through California, but, you know, the plan is to pick that, pick back up bakery rollouts late this year, or, you know, first quarter of next year.

Speaker Change: Karen 1 Karen 2 Karen Karen 3 Karen Karen Karen Karen Karen Karen Karen Karen Karen Karen

Ralph McMillan: Okay, and they kind of know the pretty strong plan to try to stay on our regional targets. Obviously, a thing shifts will let you know, but I think the good thing is right now, from an overall cost perspective, you know, we're not anticipating anything to change. So, you know, that's critical, that standpoint as well. Okay, so the resumption could happen before the, the distribution right purchases are fully complete. That's what I'm cleaning from what we're answering. Yes, the goal is to pick back up, no later than Q1 of next year. Okay, perfect.

Unknown Executive: All right, thank you very much. Thank you. And I'm currently showing no further questions at this time.

Ralph McMillan: I would now like to turn the call back over to Ralph McMillan for closing remarks. Okay, thanks, Shannon. Thanks everybody for taking time today and joining us for questions. We appreciate your interest in our company and as always, we look forward to speaking with you again next quarter. Take care.

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Speaker Change: why

Speaker Change: [music]

Riles Van Golen: And, you know, a significant component of that is is quick serve, you know, fast food food chains.

Operator: Now, that was some way down, somewhat weighed down rather, by weakness in the in the cake business.

Unknown Executive: Welcome to the Flowers Foods 2nd quarter 24 results conference call. Please be advised that today's event is being recorded.

Speaker Change: Good morning and thank you for standing by. Welcome to the Flowers Foods second quarter 2024 results conference call. Please be advised that today's event is being recorded.

Unknown Executive: I would now like to hand the conference over to your opening speaker today, J.T.

Riles Van Golen: And, you know, it's been in the news, you know, folks have seen results that some of these QSR oriented restaurants be a little bit challenged.

Operator: You've seen that across the sweet baked goods category.

JT Rick: Rick, Executive Vice President of Finance and Investor Relations. Please go ahead.

Speaker Change: I would now like to hand the conference over to your opening speaker today, JT Rick, Executive Vice President of Finance and Investor Relations. Please go ahead.

JT Rick: Thank you, Shannon, and good morning. I hope everyone had the opportunity to review our earnings release, listen to our prepared remarks, and view the slide presentation that we're all posted earlier on our Investor Relations website. After today's Q&A session, we will also post an audio replay of this call.

Riles Van Golen: And I think, you know, a lot of that is inflation, obviously, but it also affects, you know, our food service volumes, because that's a, you know, a pretty significant part of the portfolio.

Operator: And then, as for the rest of the business, you know, as we said, you know, food service volumes have been a bit weak due to that QSR weakness, in addition to the strategic exits that we've talked about for several quarters now.

JT Rick: Please note that in this Q&A session, we may make forward-looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties and could cause actual results to differ materially. In addition to what you hear in these remarks, important factors related to Flowers Foods' business are fully detailed in our SEC filings. We will also provide non-GAAP financial measures, for which disclosure and reconciliation are provided in the earnings release at the end of the slide presentation on our website.

Unknown Executive: Joining me today are Riles and Owen, Chairman and CEO, Steve Kenzie, or CFO.

Riles Van Golen: But on the flip side, that tends to, you know, benefit the retail business.

Operator: However, it's important to remember that those strategic exits roll off in Q4. So they have virtually no impact on us in Q4. We're almost through them, as we mentioned last quarter. And so going forward, you'll see much less impact from that.

Riles: Riles, I'll turn it over to you. Okay, thanks, J.T. Good morning, everybody. I'm very pleased with our solid top and bottom line results in the quarter. Our leading brands are outperforming the category, growing volumes, and gaining market share. And our portfolio strategy is enhancing profitability in our private label and away-from-home businesses. At the same time, our savings and issues have improved our cost structure, significantly boosting our margins compared to the first quarter and enabling us to better leverage our top line performance as we go forward. The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products.

Riles Van Golen: And so I do, I do think that that's somewhat of a tailwind for our branded retail business as we, you know, move through the next at least the next couple of quarters, we'll kind of see how the economy does.

Operator: Excellent, thanks.

Robert Dickerson: Okay, super.

Operator: And I was just also wondering if you could kind of help us get a feel for how the distribution, I guess, is going for the DKB, like the protein bar rollout and everything like that.

Robert Dickerson: I'll pass it on.

Operator: Just a little bit more color there.

Robert Dickerson: Thanks, Rob.

Operator: Yeah, sure.

Speaker Change: Our leading brands are outperforming the category, growing volumes and gaining market share.

Operator: Thank you.

Operator: Overall, we're really pleased with with how well we're doing.

Speaker Change: And our portfolio strategy is enhancing profitability in our private label and away from home businesses.

Steve Kinsey: The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products, and that desire is manifesting itself in the strong performance of our leading brands.

Riles: And that desire is manifesting itself in the strong performance of our leading brands. Consumers are clearly recognizing our brand's differentiation, resulting in the largest dollar and unit share gain of any company in the category. We're investing to increase that differentiation further, aligning our brand portfolio with the consumer. Our quarterly performance bolsters are components that will deliver results in line with our annual guidance.

Steve Kinsey: Consumers are clearly recognizing our brand's differentiation, resulting in the largest dollar and unit share gain of any company in the category.

Steve Kinsey: We're investing to increase that differentiation, further aligning our brand portfolio with the consumer.

Steve Kinsey: Our quarterly performance bolsters our confidence that we'll deliver results in line with our annual guidance.

Riles: We're working to drive further improvements, and I look forward to continuing our progress throughout 2024.

Steve Kinsey: We're working to drive further improvements and I look forward to continuing our progress throughout 2024.

Unknown Executive: So, with that, Shannon, we're ready to open it up for questions. Thank you.

Operator: Our next question comes from the line of Bill Chappell with Truist Securities.

Steve Kinsey: With that, Shannon, we're ready to open it up for questions.

Unknown Executive: To ask a question, please press star 11 or your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by; we'll compile the Q&A roster.

Robert Dickerson: Our first question comes from the line of Robert Dickerson with Jefferies. Your line is now open.

Operator: Your line is now open.

Speaker Change: Our first question comes from the line of Robert Dickerson with Jeffreys. Your line is now open.

Davis Holcomb: Hey, good morning.

Robert Dickerson: Great. Thanks so much.

Unknown Executive: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Robert Dickerson: Happy Friday. Good morning. Hey.

Unknown Executive: . Good morning, and thank you for standing by. Welcome to the Flowers Foods, second quarter twenty-four results conference call.

Robert Dickerson: Great. Thanks so much. Happy Friday. Good morning.

Robert Dickerson: Raul, I guess it's a question around the promotional environment. You know, the preparing march to did, you know, you said you have promoted a little bit more. It doesn't sound like a lot, but a little bit more. And at the same time, you know, clearly, it looks like you're taking both unit and dollar share in, in bread. So I'm just curious; you know, I feel like, you know, since the beginning of the year, the guidance has allowed for some promotional risk, right? And maybe some increase in that promotion activity as you get through the back half of the year; you promote a little bit more.

J.T. Rick: Please be advised that today's event is being recorded. I would now like to hand the conference over to your opening speaker today, J.T. Rick, Executive Vice President of Finance and Investor Relations. Please go ahead. Thank you, Shannon. And good morning. I hope everyone had the opportunity to review our earnings release, listen to our repaired remarks and view the slide presentation that we're all posted earlier on our investor relations website. After today's Q&A session, we will also post an audio replay of this call.

Speaker Change: It looks like you're taking both unit and dollar share in.

Speaker Change: Inbred.

Speaker Change: So, I'm just curious, I feel like since the beginning of the year.

J.T. Rick: Please note that in this Q&A session, we may make forward-looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties and could cause actual results to differ materially. In addition to what you hear in these remarks, important factors related to Flowers Foods business are fully detailed in our SEC filings. We will also provide non-GAP financial measures for which disclosure and reconciliation are provided in earnings release at the end of the slide presentation on our website.

Speaker Change: the guidance has allowed for some promotional risk, right? And maybe some increase in that promotional activity as you get through the back half of the year, you've promoted a little bit more, you're also taking share.

Riles: You're also taking share. So I'm just curious, like, you know, as we sit here today, you feel like there's maybe a little bit more risk because usually, you know, if you're taking share, then maybe others notice and they could start to promote more. Thanks.

Speaker Change: So I'm just curious, like, you know, as we sit here today, you feel like there's maybe a little bit more risk? Because usually, you know, if you're taking shares, and maybe others notice, and they could start to promote more. Thank you.

Riles: You. Yeah, sure. Thanks for the question. Yeah, look, I suppose that's possible. And, you know, we indicated, you know, in our prepared remarks and even been in the guidance that we are counting for that risk as we go through the year. We called it out to the beginning of the year. And I think it's still prudent to call it out now. You know, I think we saw that in, you know, a large retailer report this week, you know, and we're seeing the channel shift, and we've been calling them out for several quarters now from grocery to mass club, dollar.

J.T. Rick: Joining me today are Riles and Owen, Chairman and CEO, Steve Kenzie, or CFO. Riles, I'll turn it over to you. Okay, thanks J.T. Good morning, everybody. I'm very pleased with our solid top and bottom line results in the quarter. Our leading brands are outperforming the category, growing volumes, and gaining market share. And our portfolio strategy is enhancing profitability in our private label and away from home businesses. At the same time, our savings and issues have improved our cost structure, significantly boosting our margins compared to the first quarter, and enabling us to better leverage our top line performance as we go forward.

Speaker Change: I think we saw that in a large retailer report this week, and we're seeing the channel shift. We've been calling that out for several quarters now from grocery to mass, club, dollar. And that's kind of across income spectrums too. So

Riles: And that's kind of a cross income spectrums too.

J.T. Rick: The inflationary environment is encouraging some consumers to seek value, but many are increasingly looking for differentiated products. And that desire is manifesting itself in the strong performance of our leading brands. Consumers are clearly recognizing our brand's differentiation, resulting in the largest dollar and unit share gain of any company in the category. We're investing to increase that differentiation further aligning our brand portfolio with the consumer. Our quarterly performance bolsters our confidence that we'll deliver results in line with our annual guidance.

Riles: So, you know, to sum up, I think it's only prudent that we, you know, continue to watch that and be a little bit cautious as it relates to our outlook. Having said all that, you know, while promotions are up, things still remain pretty rational or still well below pre-pandemic. So, you'd have a ways to go before you got to kind of 2019 emotional levels.

Speaker Change: You know, to sum up, I think it's only prudent that we, you know, continue to watch that and be a little bit cautious as it relates to our outlook. Having said all that...

Speaker Change: You know it while promotions are up things still remain pretty rational and are still well below pre pandemic So yeah, you'd have a ways to go before you got to kind of 2019 promotional levels

J.T. Rick: We're working to drive further improvements, and I look forward to continuing our progress throughout 2024. So with that Shannon, we're ready to open it up for questions. Thank you. To ask a question, please press star 11 or your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by, we'll compile the Q&A roster. Our first question comes from the line of Robert Dickerson with Jeffries.

Speaker Change: Okay, fair enough. And then, you know, it sounds like, you know, as you got through.

Speaker Change: kind of the end of the quarter, you started to see some improvement in these trends. And you called out an increasing shift maybe back to at home to seek value.

Robert Dickerson: Maybe back to home to seek value. Yeah. You know, middle of August, I mean, what we've seen the data kind of through July was that was ongoing actually even improved a little bit.

Speaker Change: Yeah, you know, middle of August. I mean, what we've seen in the data kind of through July was that was ongoing actually even improved a little bit. I don't know if there's

Robert Dickerson: I don't know if there's any way to provide in color. Kind of as what you've seen us say through kind of the summer months and kind of how you're thinking about that momentum into back to school. Thanks.

J.T. Rick: Your line is now open. Great. Thanks so much. Happy Friday. Good morning. Hey, Raul, I guess it's a question around the promotional environment. You know, the prepared remarks you did, you know, you said you have promoted a little bit more. It doesn't sound like a lot, but a little bit more. And at the same time, you know, clearly, it looks like you're, you're taking both unit and dollar share in, in bread.

Riles: Yeah. So, you know, we have, as you know, we have a large food service business and a, you know, a significant component of that is is quick serve, you know, fast food, food chains. And, you know, it's been in the news; you know, folks have seen results at some of these US-oriented restaurants, be a little bit challenged. And I think, you know, a lot of that is inflation, obviously. But it also affects, you know, our food service volumes. That's a, you know, a pretty significant part of the portfolio.

Speaker Change: Yeah so you know we have as you know we have a large food service business and a you know a significant component of that is is quick serve you know fast food food chains.

Speaker Change: And, you know, it's been in the news, you know, folks have seen results that some of these QSR oriented restaurants be a little bit challenged.

Speaker Change: And I think, you know, a lot of that is inflation, obviously, but it also affects, you know, our food service volumes, because that's a, you know, a pretty significant part of the portfolio. But on the flip side, that tends to, you know, benefit the retail business.

J.T. Rick: So I'm just curious, you know, I feel like, you know, since the beginning of the year, the guidance has allowed for some promotional risk, right. And maybe some increase in that promotion activity as you get through the back half of the year, you promote a little bit more. You're also taking share. So I'm just curious, like, you know, as we sit here today. You feel like there's maybe a little bit more risk because usually, you know, if you're taking share, then maybe others notice and they could start to promote more.

Riles: But on the flip side, that tends to benefit the retail business. And so I do, I do think that that's somewhat of a tailwind for our brand of retail businesses. We, you know, move to the next; at least the next couple of quarters will kind of see how the economy does. Okay, super.

Speaker Change: And so I do think that that's somewhat of a tailwind for our branded retail business as we, you know, move through the next, at least the next couple of quarters, we'll kind of see how the economy does.

Robert Dickerson: I'll pass it on. Thanks.

Unknown Executive: Thank you.

Speaker Change: Okay super, I'll pass it on.

Bill Chapel: Our next question comes from the line of Bill Chapel with True Securities. You'll let us know up and.

Rob: Thanks, Rob.

Speaker Change: Thank you. Our next question comes from the line of Bill Chappell with Truist Securities. Your line is now open.

Davis Holcomb: Hey, good morning. This is Davis Holcomb on for No Chapel. Just wondering if you could help us kind of unpack the impact of the business exits on volume.

Davis Holcomb: This is Davis Holcomb on Fertile Chapel.

J.T. Rick: Thank you. Yeah, sure. Thanks for the question. Yeah, look, I suppose that's possible. And, you know, we indicated, you know, in our prepare remarks and even been in the guidance that we are counting for that risk as we go through the year, we called it out to the beginning of the year. And I think it's still prudent to call it out now. You know, I think we saw that in, you know, a large retailer report this week, you know, we're seeing the channel shift and we've been calling that out for several quarters now from grocery to mass club, dollar.

Davis Holcomb: I'm just wondering if you could help us kind of unpack the impact of the business exits on volume, if there's any way that we can kind of get a quantification where volumes kind of flattish up, what did it look like directionally, I guess, from there.

Speaker Change: Hey, good morning, this is Davis Holcomb on for Ville Chapel.

Davis Holcomb: If there's any way that we can kind of get a qualification, we're volumes kind of flatish up.

Riles: What did it look like directionally, I guess, from there? Yeah, sure.

Riles Van Golen: Yeah, sure.

Riles: We don't break that out to that granular of a level. But, you know, when you look at volumes in the quarter, you know, they were very positive. They were very positive overall on the branded retail side and particularly on the branded brand side. Now, that was some way down, somewhat way down rather by weakness in the cake business. You've seen that across the sweet baked goods category. And then as for the rest of the business, you know, as we said, you know, food service volumes have been a bit weak due to that. In addition to the strategic exits that we talked about for several quarters now.

Speaker Change: Yeah, sure. We don't break that out to that granular of a level, but when you look at volumes in the quarter,

Speaker Change: You know, they were very positive overall on the branded retail side, and particularly on the branded bread side.

Speaker Change: That was some way down, somewhat way down, rather, by weakness in the cake business. You've seen that across the sweet baked goods category.

J.T. Rick: And that's kind of across income spectrums too. So, you know, to sum up, I think it's only prudent that we, you know, continue to watch that and feel a little bit cautious as it relates to our outlook. Having said all that, you know, while promotions are up, things still remain pretty rational or still well below pre pandemic. So, you'd have a ways to go before you got to kind of 2019 emotional levels.

Riles Van Golen: We don't break that out to that granular of a level.

Riles: However, it's important to remember that those strategic exits roll off in Q4, so they have virtually no impact on us in Q4. We're almost through them, as we mentioned last quarter, and so you're going forward. You'll see much less impact from that. Excellent.

Speaker Change: However, it's important to remember that those strategic exits roll off in Q4.

J.T. Rick: Okay, fair enough. And then, you know, it sounds like, you know, as you got through kind of the end of the quarter, you started to see some improvement in these trends and you called out, you know, an increasing shift. You know, shift maybe back to home to seek value. You know, middle of August, I mean, what we've seen the data kind of through July was that was all going actually even improved a little bit.

Speaker Change: So, they have virtually no impact on us in Q4, we're almost through them, as we mentioned last quarter, and so going forward you'll see much less impact from that.

Davis Holcomb: Thanks.

Riles: And I was just also wondering if you could kind of help us get a feel for how the distribution I guess is going for the DKB on like the protein bar rollout and everything like that.

Speaker Change #100: Excellent, thanks. And I was just also wondering if you could kind of help us get a feel for how the the distribution I guess is going for the DKB like the protein bar rollout and everything like that. Just a little bit more color there.

Riles: Just a little bit more color there. Yeah, sure. Overall, we're really pleased with how well we're doing.

J.T. Rick: I don't know if there's any way to provide and color. Kind of as what you've seen, let's say through kind of the summer months and kind of how you're thinking about that momentum into back to school. Thanks. Yeah, so, you know, we have, as you know, we have a large food service business and a, you know, a significant component of that is is quick serve, you know, fast food chains. And, you know, it's been in the news, you know, folks have seen results at some of these us or oriented restaurants be a little bit challenged.

Operator: You know, look, it's, as I've said several times before, this is a startup business for us.

Operator: It's brand new.

Speaker Change #101: Yeah sure, overall we're really pleased with with how well we're doing. You know look it's as I've said several times before this is a startup business for us.

Riles: You know, look, as I've said several times before, this is a startup business for us. It's brand new. It's a different form of merchandising. It's not, you know, distributed DST on the bread trucks. It goes to the warehouse. You know, right now we have, you know, a limited number of skews. So we're working to expand our shelf presents. We've got the, you know, the three snack bars. We've got the three protein bars that are coming out. So our shelf presents is getting better. And our top accounts, large retailers, what we're doing, what we're doing, well, we're doing really well.

Speaker Change #102: It's brand new. It's a different form of merchandising. It's not distributed DSD on the bread trucks. It goes to the warehouse.

Speaker Change #102: Right now we have a limited number of SKUs, so we're working to expand our shelf presence. We've got the three snack bars, we've got the three protein bars that are coming out, so our shelf presence is getting better.

J.T. Rick: And I think, you know, a lot of that is inflation, obviously, but it also affects, you know, our food service volumes. That's a, you know, a pretty significant part of the portfolio. But on the flip side, that tends to benefit the retail business. And so I do, I do think that that's somewhat of a tailwind for our brand of retail businesses. We, you know, move to the next, at least the next couple of quarters will kind of see how the economy does.

Speaker Change #102: At our top accounts, large retailers, where we're doing well, we're doing really well.

Riles: And we've got velocities, you know, well within the top 10 in the category.

Speaker Change #102: and we've got velocities well within the top 10 in the category. However, there's been a couple of places where we've stubbed our toe from an execution standpoint, and that's part of the learning curve, and we're correcting that. But looking at it overall,

Riles: However, you know, there's been a couple of places where we've stopped our toe from an execution standpoint, and that's part of the learning curve, and we're correcting that. But looking at it overall, we think we've got a great product under a great brand umbrella, and we're very confident about where this is going. Not to mention the, you know, the additional pipeline of innovation with the snack bites coming later this year and then full distribution next year. So overall, we're pleased.

Operator: It's a different form of merchandising.

Speaker Change #102: We think we've got a great product, under a great brand umbrella, and we're very confident about where this is going. Not to mention the additional pipeline of innovation with the snack bites coming later this year and then full distribution next year. So overall, we're pleased.

J.T. Rick: Okay, super. I'll pass it on. Thanks. Thank you. Our next question comes from the line of bill chapel with true securities. Your line is open. Hey, good morning. This is Davis Holcomb on for no chapel. Just wondering if you could help us kind of unpack the impact of the business exits on volume. If there's any way that we can kind of get a qualification, we're volumes kind of flatish up. What did it look like, directionally, I guess, from there?

Riles: Awesome.

Riles: Thanks for the color. We'll go ahead and pass it on.

Unknown Executive: Yeah. Thank you.

Speaker Change #103: Awesome, thanks for the call. We'll go ahead and pass it on.

Jim Celero: Our next question comes from the line of Jim Solero with Steven. She won us an open.

Speaker Change #104: Yeah, thank you.

Speaker Change #105: Thank you. Our next question comes from the line of Jim Salera with Stevens. Your line is now open.

Jim Celero: Thanks for taking our question. I wanted to maybe see if we could run through pushing takes on if we look at the exits from the business impacts mentioned, the pressure on the QSR business, but then if we think about netting those against the strong results at BKB and Canyon, plus what seems like a benefit from who did own shift. We paid all that, and yep.

Jim Salera: Hey, good morning guys. Thanks for taking our question.

Jim Salera: Bronson, I wanted to maybe see if we could run through puts and takes on

J.T. Rick: Yeah, sure. We don't break that out to that granular of a level, but, you know, when you look at volumes in the quarter, you know, they were, they were very positive on overall on the. Branded retail site and particularly on the branded brand side now that was some way down, somewhat way down rather by weakness in the in the cake business. You've seen that across the sweet baked goods category. And then as for the rest of the business, you know, as we said, you know, food service volumes have been a bit weak due to that QS are weakness in addition to the strategic exits that we talked about for several quarters now.

Jim Salera: If we look at the exits from the business impacts.

Speaker Change #106: Mentioned the pressure on the QSR business, but then if we think about

Speaker Change #107: ...netting those against.

Speaker Change #108: The strong results of DKB and Canyon plus what seems like a benefit from food at home shift.

Operator: It's not, you know, distributed DSD on the on the bread trucks, it goes to the warehouse.

Jim Celero: Sorry to interrupt you. Can you start your question ever? Because we had some really bad audio at the beginning of your question. Yeah, no problem. Is that better? Yeah, it seems like it is. Okay, perfect.

Speaker Change #109: Hey Jim, sorry to interrupt you. Can you start your question over because we had some really bad audio at the beginning of your question.

Operator: You know, right now we have, you know, a limited number of SKUs.

Operator: So we're working to expand our shelf presence.

Operator: We've got the, you know, the three snack bars, we've got the three protein bars that are coming out.

Operator: So our shelf presence is getting better. And our top accounts, large retailers where we're doing, where we're doing well, we're doing really well.

Jim Salera: Yeah, no problem. Is that better?

Operator: And we've got velocities, you know, well within the top 10 in the category.

Riles: Yeah, I was just asking if we could maybe net the exit from the business impacts with some of the pressure you mentioned in QSR and then thinking about that against the strong results at BKB. Yeah, I think that's a reasonable assumption, particularly with all the new business gym that we have coming on. You know, we talked about that last quarter, so that'll have a more of an impact in Q4. And then, with the roll-off of the strategic exits, if we can continue to enjoy good momentum from all the brands you mentioned, then, yeah, I think that's the same possibility.

Operator: However, you know, there's been a couple of places where we we stubbed our toe from an execution standpoint, and that's, that's part of the learning curve, and we're correcting that.

Jim Salera: Yes, it seems like it is.

Jim Salera: Okay, perfect. Yeah, I was just asking if we could maybe net the exit from the business impacts with some of the pressure you mentioned in QSR and then thinking about that against

J.T. Rick: However, it's important to remember that those strategic exits roll off in Q4 so they have virtually no impact on us in Q4 were almost through them as we mentioned last quarter and so you're going forward, you'll see much less impact from that. So we're going to put a theme bar roll out and everything like that, just a little bit more color there. Yeah, sure. Overall, we're really pleased with how well we're doing.

Speaker Change #110: the strong results of DKB, Canyon, benefit from a shift at food at home. If we think about all that together, could we see positive volumes in 3Q and then obviously rolling into 4Q?

Riles Van Golen: But you know, when you look at volumes in the quarter, you know, they were, they were very positive on overall on the branded retail side, and particularly on the branded bread side.

Riles Van Golen: Now, that was some way down, somewhat weighed down rather, by weakness in the in the cake business.

Speaker Change #110: Yeah, I think definitely for 4Q, that's a reasonable assumption, particularly with all the new business, Jim, that we have coming on. We talked about that last quarter, so that'll have more of an impact in Q4.

Riles Van Golen: You've seen that across the sweet baked goods category.

Riles Van Golen: And then, as for the rest of the business, you know, as we said, you know, food service volumes have been a bit weak due to that QSR weakness, in addition to the strategic exits that we've talked about for several quarters now.

Speaker Change #111: And then with the roll-off of the strategic exits, if we can continue to enjoy

Riles Van Golen: However, it's important to remember that those strategic exits roll off in Q4. So they have virtually no impact on us in Q4. We're almost through them, as we mentioned last quarter. And so going forward, you'll see much less impact from that.

Davis Holcomb: Excellent, thanks.

J.T. Rick: You know, look, as I've said several times before, this is a startup business for us. It's brand new. It's a different form of merchandising. It's not, you know, distributed DST on the on the bread trucks. It goes to the warehouse. You know, right now we have a limited number of skews, so we're working to expand our shelf presents. We've got the three snack bars. We've got the three protein bars that are coming out.

Jim Salera: Good momentum from all the brands you mentioned, then yeah, I think that's a distinct possibility. I mean, frankly, we were almost there in Q1. You know, the brand in retail was actually pretty positive in Q1. So yes, I think that's a reasonable possibility.

Riles: I mean, frankly, we were almost there in Q1. You know, branded retail was actually pretty positive in Q1, so yes, I think that's a reasonable possibility.

Jim Celero: Okay, great.

Davis Holcomb: And I was just also wondering if you could kind of help us get a feel for how the distribution, I guess, is going for the DKB, like the protein bar rollout and everything like that.

Riles: And then maybe if you could just give us some detail on, you mentioned in your prepared remarks, restructuring the retail team.

Speaker Change #112: Okay, great. And then maybe if you could just give us some detail on, you mentioned in your prepared remarks, restructuring the retail team. Can you talk about how that changes some of the capabilities relative to the previous structure and maybe when slash how we might see that show up on shelf?

Riles: You could talk about how that changes, some of the capabilities relative to the previous structure, and maybe when slash how we might see that show up on shelf. Yeah, I mean, I think you got to give us a little bit of time. And Meredith just started not just a few weeks ago, but we brought Terry Thomas on as the Chief Growth Officer. You know, he had some significant experience and insights from his time at Udeliever and other places. And one of the things we lacked here was a channel-specific approach to strategy and execution at the retail level.

J.T. Rick: So our shelf presents is getting better. And our top accounts, large retailers, what we're doing, what we're doing, well, we're doing really well. And we've got velocities, you know, well within the top 10 in the category. However, you know, there's been a couple of places where we we stumped our toe from an execution standpoint. And that's that's part of the learning curve and we're correcting that. But looking at it overall, we think we've got a great product under a great brand umbrella.

Riles Van Golen: Just a little bit more color there.

Speaker Change #112: Yeah, I mean, I think you got to give us a little bit of time and Berenice just started not just a few weeks ago, but

Speaker Change #113: You know, we brought Terry on, Terry Thomas on as the Chief Growth Officer. You know, he had some significant experience and insights from his time at Unilever and other places. And, you know, one of the things we lacked here...

J.T. Rick: And we're very confident about where this is going, not to mention the, you know, the additional pipeline innovation with the snack bites coming later this year and then full distribution next year. So overall, we're pleased. Awesome. Thanks for the color. We'll go ahead and pass it on. Yeah. Thank you. Our next question comes from the line of Jim Solero with Steven. She won't open. Thank you. Thanks for taking our question. I wanted to maybe see if we could run through pushing takes on if we look at the exits from the business impacts mentioned the pressure on the QSR business.

Speaker Change #113: was a channel-specific.

Riles: And I think that's one of the areas where it's got these restructuring are going to benefit us the most. Whereas, you know, before, you know, to shorthand it, you know, it was a little bit of a peanut butter spread approach to, you know, to all channels. Now you're looking specifically at mass, you're looking specifically at club, dollar, whatever it might be. And you know, even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply underpenetrated in that channel.

Speaker Change #113: Approach.

Speaker Change #113: to strategy and execution at the retail level. And I think that's one of the areas where it's gonna be, these restructurings are gonna benefit us the most. Whereas before, to shorthand it, it was a little bit of a peanut butter spread approach to all channels. Now you're looking specifically at mass, you're looking specifically at club, dollar, whatever it might be.

J.T. Rick: But then if we think about netting those against the strong results at BKB and Canyon, plus what seems like a benefit from who did own shift. We paid all that. Yep. Sorry to interrupt you. Can you start your question ever because we had some really bad audio at the beginning of your question. Yeah, no problem. Is that better? Yeah, it seems like it is. Okay, perfect. Yeah, I was just asking if we could maybe net the exit from the business impacts with some of the pressure you mentioned in QSR and then thinking about that against the strong results at BKB.

Speaker Change #113: And, you know, even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply underpenetrated in that channel.

Jim Celero: Great. Appreciate the color, guys.

Unknown Executive: I'll hop back in the queue. Thank you.

Speaker Change #114: Great. Appreciate the call, guys. I'll hop back into the queue.

Riles Van Golen: Yeah, sure.

Operator: But looking at it overall.

Unknown Executive: As a reminder to ask a question at this time, please press star 11 or in touch on telephone.

Riles Van Golen: Overall, we're really pleased with with how well we're doing.

Speaker Change #115: Thank you, Jill. Thank you. As a reminder to ask a question at this time, please press star 1 1 or in touchtone telephone.

Mitchell Pinheiro: Our next question comes from the light of Mitchell Pinero with Sertivan and Company.

Operator: We think we've got a great product under a great brand umbrella, and we're very confident about where this is going. Not to mention the additional pipeline of innovation with the snack bites coming later this year and then full distribution next year. So overall, we're pleased.

Mitchell Pinheiro: Your line is open. Yeah.

Speaker Change #116: Our next question comes from the line of Mitchell Pinero with Sturdivant & Company. Your line is now open.

Riles Van Golen: You know, look, it's, as I've said several times before, this is a startup business for us.

Operator: Awesome.

Mitchell Pinheiro: Hey, good morning.

Riles: So, curious. You know, you talk about making headway in some of your under-penetrated geographic regions. And I'm curious, like, what's driving? What's driving that? And is it a sustainable, is it sustainable growth that you can see there? Because it's a big part of your growth story, is while you have, you know, extraordinary strength in the south and, you know, southwest. There's a lot of sort of white space, and just curious if it's sustainable.

Riles Van Golen: It's brand new.

Operator: Thanks for the color.

Mitchell Pinero: Yeah, hey, good morning.

Riles Van Golen: It's a different form of merchandising.

Riles Van Golen: It's not, you know, distributed DSD on the on the bread trucks, it goes to the warehouse.

Operator: We'll go ahead and pass it on.

Speaker Change #117: Thank you.

Speaker Change #117: So,

Operator: Thank you.

Mitchell Pinero: Curious, you know, you talked about making headway in some of your underpenetrated geographic regions and

Operator: Our next question comes from the line of Jim Salera with Stevens.

Speaker Change #118: I'm curious, what's driving that and is it a sustainable growth that you can see there? Because it's a big part of your growth story is while you have, you know...

J.T. Rick: Canyon benefit from a shifted food at home. Think about all that together. Could we see positive volumes in three Q and then obviously rolling into four Q. Yeah, I think I think definitely for four Q that's that's a reasonable assumption, particularly with all the new business gym that we have coming on you we talked about that last quarter. So that'll have a more of an impact in Q4. And then with the roll off of the strategic exits, if we can continue to enjoy good momentum from all the brands you mentioned, then yeah, I think that's the same possibility.

Riles Van Golen: You know, right now we have, you know, a limited number of SKUs.

Speaker Change #118: You know extraordinary strength in the south and you know southwest it's it's there's a lot of sort of white space and Just curious if it's sustainable

Riles: Well, we certainly think so. You know, as you rightly pointed out, you know, our largest share concentration is in the South. You know, that's a pretty saturated market for us. There's still, you know, certain growth pockets. And we're seeing that with the nature's on keto, love, you know, days continues to grow. And then, you know, even in the south, you know, if you break up the geographies and look at, you know, market share gains, has been a little bit tougher in the south, frankly, south, frankly. A little bit more promotional activity, you know, basically two, you know, two primary competitors, you know, our most mature market.

Riles Van Golen: So we're working to expand our shelf presence.

Operator: Your line is now open.

Speaker Change #119: Well, we certainly think so. As you rightly pointed out, our largest share of concentration is in the South. That's a pretty saturated market for us. There's still certain growth pockets, and we're seeing that with the NatureZone keto loaf. Dave's continues to grow.

Riles Van Golen: We've got the, you know, the three snack bars, we've got the three protein bars that are coming out.

Operator: Hey, good morning, guys.

Riles Van Golen: So our shelf presence is getting better. At our top accounts, large retailers where we're doing, where we're doing well, we're doing really well.

Operator: Thanks for taking our question.

Operator: Um, I wanted to maybe see if we could run through puts and takes on, if we look at the exits from the business impacts, mentioned the pressure on the QSR business, but then if we think about netting those against the strong results at DKB and Canyon, plus what seems like a benefit from food at home shift, and we saved all that and yep, Jim, sorry to interrupt you.

Riles Van Golen: And we've got velocities, you know, well within the top 10 in the category.

J.T. Rick: I mean, frankly, we were almost there in Q1. You know, branded retail was actually pretty positive in Q1. So yes, I think that's that's a reasonable reasonable possibility. Okay, great. And then maybe if you could just give us some detail on you mentioned in your prepare remarks, restructuring the retail team. You can talk about how that changes, some of the capabilities relative to the previous structure and maybe when slash how we might see that show up on shelf.

Speaker Change #119: And then, even in the South, if you break up the geographies and look at market share gains, it's been a little bit tougher in the South, frankly. A little bit more promotional activity, basically two primary competitors, our most mature market.

Riles Van Golen: However, you know, there's been a couple of places where we we stubbed our toe from an execution standpoint.

Riles Van Golen: And that's, that's part of the learning curve.

Riles: But what we've been able to do is find areas within the category to grow. So that's keto, that's breakfast, that sandwich buns and rolls, even in the South. Now, more directly to your question on under-penetrated markets, I absolutely think that's sustainable. You know, when you look at a 17, 18 overall dollar share nationwide and only a 10 in the Northeast, we haven't really been there that long. Days been there; DKB's been there for even less time. But, as you know, a lot of our, we don't have a national marketing campaign, at least not yet. So that's one of our focus, focus markets for our advertising campaign.

Riles Van Golen: And we're correcting that.

Operator: Can you start your question over because we had some really bad audio at the beginning of your question?

Speaker Change #119: But what we've been able to do is find areas within the category to grow.

Speaker Change #119: So that's keto, that's breakfast, that's sandwich buns and rolls, even in the South. So that's keto, that's breakfast, that's sandwich buns and rolls, even in the South.

Riles Van Golen: But looking at it overall, We think we've got a great product under a great brand umbrella, and we're very confident about where this is going. Not to mention the additional pipeline of innovation with the snack bites coming later this year and then full distribution next year. So overall, we're pleased.

Operator: Yeah, no problem.

Speaker Change #120: Now, more directly to your question on underpenetrated markets, I absolutely think that's sustainable.

J.T. Rick: Yeah, I mean, I think you got to give us a little bit of time. I'm fair enough just started not just a few weeks ago, but yeah, we brought Terry Thomas on as the Chief Growth Officer. He had some significant experience and insights from his time at Udeliever and other places. And one of the things we lacked here was a channel-specific approach to strategy and execution at the retail level. And I think that's one of the areas where it's got these restructuring are going to benefit us the most.

Davis Holcomb: Awesome.

Operator: Is that better?

Speaker Change #120: You know, when you look at a 1718 overall dollar share nationwide, and only a 10 in the Northeast, we haven't really been there that long.

Davis Holcomb: Thanks for the color.

Operator: Yes, it seems like it is.

Speaker Change #120: Day's been there, DKB's been there for even less time. But as you know, a lot of our... we don't have a national marketing campaign, at least not yet. So that's one of our focus markets for our advertising campaign.

Davis Holcomb: We'll go ahead and pass it on.

Operator: Okay, perfect.

Operator: Thank you.

Operator: Yeah, I was just asking if we could maybe net the the exit from the business impacts with some of the pressure you mentioned in QSR and then thinking about that again.

Riles: We still got room to go out, grow out west, back northwest, and probably most importantly, in the upper Midwest, which we've already started to enter. And we'll continue to roll that out as we go forward. So, you know, not only do we have, you know, emanate a look to innovation to look to, but we've also got these under penetrated reasons where we've got a lot of runway to grow. to get our fair share of the category.

Operator: The strong results of DKB, Canyon, benefit from a shift at food at home.

Speaker Change #121: We've still got room to go out, grow out West, act Northwest. For more information, visit www.fema.gov

Operator: Our next question comes from the line of Jim Salera with Stevens.

Operator: If we think about all that together, could we see positive volumes in 3Q and then obviously rolling into 4Q?

J.T. Rick: Whereas before to shorthand, it was a little bit of a peanut butter spread approach to all channels. Now you're looking specifically at mass, you're looking specifically at club, dollar, whatever it might be. And even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply under penetrated in that channel. Great. Appreciate the color, guys. I'll hop back in the queue. Thank you. As a reminder to ask a question at this time, please press star 11 or in touch on telephone.

Speaker Change #121: and probably, most importantly, in the Upper Midwest.

Operator: Your line is now open.

Operator: Yeah, I think I think definitely, for 4Q, that's that's a reasonable assumption, particularly with all the new business, Jim, that we have coming on, you know, we talked about that last quarter. So that'll have a more of an impact in in Q4.

Speaker Change #122: which we've already started to enter, and we'll continue to roll that out as we go forward. So, you know, not only, you know, do we have, you know, M&A to look to, innovation to look to, but we've also got these underpenetrated regions where we've got a lot of runway to grow.

Jim Salera: Hey, morning, guys.

Operator: And then with the roll off of the strategic exits, if we can continue to enjoy, good momentum from all the brands you mentioned, that yeah, I think that's a distinct possibility.

Jim Salera: Thanks for taking our question.

Operator: I mean, frankly, we were almost there in Q1.

Jim Salera: Um, I wanted to maybe see if we could run through puts and takes on, if we look at the exits from the business impacts, mentioned the pressure on the QSR business, but then if we think about netting those against the strong results at DKB and Canyon, plus what seems like a benefit from food at home shift, Hey Jim, sorry to interrupt you.

Operator: You know, the brand in retail was actually pretty positive in Q1, so yes, I think that's a reasonable possibility.

Operator: Okay, great.

Mitchell Pinheiro: Thanks for that.

Operator: And then maybe if you could just give us some detail on you mentioned in your prepared remarks, restructuring the retail team.

Steve: Then on margins, Steve, you know, in the prepare the remarks you talk about moderating ingredients and packaging costs. Is that something you obviously have a lot of visibility there with the amount, you know, with your, you're pretty much set for the, you know, for the remainder of this year with visibility there? Is that something we're going to see, not just moderating increases, but are we going to see the kinds? Yeah, I mean, obviously, when you look at kind of the margin performance here today, you know, we've done really well, and we're pleased with where we are.

Speaker Change #122: to get our fair share of the category.

Operator: Can you talk about how that changes some of the capabilities relative to the previous structure and maybe when slash how we might see that show up on shelf?

Speaker Change #123: Okay, thanks for that. Then, on margins,

Speaker Change #123: Steve.

Speaker Change #124: You know in the prepared remarks you talk about moderating ingredient and packaging costs is

J.T. Rick: Our next question comes from the line of Mitchell Pinero with Sturter and In Company. Your line is now open. Yeah, hey, good morning. So curious, you know, you talk about making a headway in some of your under under penetrated geographic regions. And I'm curious, like, what's driving, what's driving that? And is it a sustainable, is it sustainable growth that you can see there? Because it's a big part of your, your growth story is while you have, you know, extraordinary strength in the south and, you know, southwest, there's a lot of sort of white space and just curious if it's sustainable.

Speaker Change #125: Is that something we're going to see, not just moderating increases, but are we going to see declines?

Operator: Yeah, I mean, I think you got to give us a little bit of time.

Steve: Yeah, I mean obviously when you look at kind of the margin performance here today, you know, we've done really well and we're pleased with where we are.

Steve: You know, we continue to hedge. I mean, our strategy hasn't changed. You know, we say six to nine months, you know, ahead of the market, so we understand the cost structure. You know, we did see the, the first half is actually the largest benefit with regards to the moderating cost, so while we do expect benefit in the half, in the back half, you know, that benefit will get into, you know, to climb somewhat, but, you know, overall we're still, you know, forecasting, you know, decent margin improvement for the year.

Speaker Change #126: You know, we continue to hedge, I mean our strategy hasn't changed, you know, we say

Speaker Change #126: six to nine months, you know ahead of the market so we understand, you know

Speaker Change #126: the call structure. You know, we did see that the first half is actually the largest benefit with regard to the moderating calls. So, while we do expect benefit in the half, in the back half, you know, that benefit will begin to, you know, to grow.

J.T. Rick: Well, we certainly think so. You know, as you rightly pointed out, you know, our largest share concentration is in the south. You know, that's a pretty saturated market for us. There's still, you know, certain growth pockets. And we're seeing that with the nature's own keto, love, you know, days continues to grow. And then, you know, even in the south, you know, if you break up the geographies and look at, you know, market share gains, it's been a little bit tougher in the south, frankly, south, frankly.

Speaker Change #126: Decline somewhat, but you know overall we're still forecasting a decent margin improvement for the year.

Steve: And then, I guess this one last question, just on M&A, you know, you've been a little quiet. Is that, is this, do you anticipate, I'm curious what the pipeline might look like and, you know, whether, excuse me, whether or not, are you sort of waiting for, you know, a lot of, you know, the ERP and California and things like that to sort of get behind you before we see M&A or are they too, just unrelated and mutually exclusive. No, we're ready to go. I mean, when the right opportunity comes along, you know, it's time for M&A for us, you know, and I'll reiterate again, you know, we're very proactive in the market, we're out there building relationships. You know, we know what could be coming, we know we're interested in; in some cases, we've even done some advanced, you know, commercial deals that's worked so that we're, you know, we're able to, we're able to execute quickly when the right opportunity comes along.

Speaker Change #127: And then I guess this one last question just on M&A you know you've been a little quiet is that is this is do you anticipate

Speaker Change #128: I'm curious what the pipeline might look like and...

J.T. Rick: A little bit more promotional activity, you know, basically two, you know, two primary competitors, you know, our most mature market. But what we've been able to do is find areas within the category to grow. So that's keto, that's breakfast, that sandwich buns and rolls, even in the south. Now, more directly to your question on under penetrated markets, I absolutely think that's sustainable. You know, when you look at a 17, 18 overall dollar share nationwide and only a 10 in the northeast, we haven't really been there that long.

Speaker Change #129: whether or not, are you sort of waiting for a lot of

Speaker Change #128: you know.

Speaker Change #130: the ERP, and California, and things like that to sort of get behind you before we see M&A or are the two just unrelated.

Speaker Change #130: and mutually exclusive.

Speaker Change #131: No, we're ready to go. I mean, when the right opportunity comes along,

J.T. Rick: Days been there, DKB's been there for even less time. But as you know, a lot of our, we don't have a national marketing campaign, at least not yet. So that's one of our focus markets for our advertising campaign. We still got room to go out, grow out west, back north west, and probably most importantly, in the upper Midwest, which we've already started to enter. And we'll continue to roll that out as we go forward.

Speaker Change #131: It's time for some M&A for us.

Speaker Change #131: You know, I'll reiterate again, you know, we're very proactive in the market, we're out there building relationships. Yeah, we know what's

Speaker Change #131: what could be coming. We know what we're interested in. In some cases we've even done some advanced commercial diligence work so that we're able to

Steve: And again, those opportunities can come both in the core and in adjacent categories. I do think, I mean, there's been some big deals announced over the last, you know, the last six months or so, but I think there's more ahead. The M&A market seems to be getting healthier, as we know, in the last quarter.

Speaker Change #131: We're able to execute quickly when the right opportunity comes along.

Speaker Change #131: And again, those opportunities can come both in the core and in adjacent categories. I do think, I mean, there's been some big deals announced over the last week and the last six months or so, but I think there's more ahead. The M&A market seems to be getting healthier, as we noted last quarter. So we're bullish on that venture.

J.T. Rick: So, you know, not only, you know, do we have, you know, M&A to look to, innovation to look to, but we've also got these under penetrated reasons where we've got a lot of runway to grow, to get our fair share of the category. Thanks for that. Then on margins, Steve, you know, in the prepared remarks you talk about moderating, ingredient and packaging costs, is that something you obviously have a lot of visibility there with the amount, you know, with your, you're pretty much set for the, you know, for the remainder of this year with visibility there.

Steve: So, we're bullish on that mentioned.

Steve: All right.

Steve: Thank you. Appreciate the questions.

J.T. Rick: Is that something we're going to see, not just moderating increases, but are we going to see the kinds? Yeah, I mean, obviously, when you look at kind of the margin performance here today, you know, we've done really well and we're pleased with where we are. You know, we continue to hedge, I mean, our strategy hasn't changed, you know, we say six to nine months, you know, ahead of the market. So we understand, you know, the cost structure, you know, we did see the first half is actually the largest benefit with regard to the moderating cost.

Unknown Executive: Thanks.

Speaker Change #131: Okay.

Unknown Executive: Thank you.

Speaker Change #132: All right. Thank you. I appreciate the questions.

Operator: Can you start your question over because we had some really bad audio at the beginning of your question?

Operator: And Meredith just started not just a few weeks ago.

Steve Powers: Our next question comes from the line of Steve Powers with Go To Bank. Your line is open.

Speaker Change #132: Thanks.

Speaker Change #133: Thank you. Our next question comes from the line of Steve Powers with Deutsche Bank. Your line is now open.

Steve Powers: Hey, thanks.

Jim Salera: Yeah, no problem.

Operator: But, you know, we brought Terry on, Terry Thomas on as the Chief Growth Officer, you know, he had some significant experience and insights from his time at Unilever and other places.

Steve Powers: Good morning, guys. So, first question, just a little bit more color on how you're thinking about the price versus, you know, kind of reported price mix versus the volume outlook across branded retail as we go to the back half.

Jim Salera: Is that better?

Operator: And, you know, one of the things we lacked here was a channel specific approach to strategy and execution at the retail level.

Operator: And I think that's that's one of the areas where it's going to be these restructurings are going to benefit us the most.

Steve Powers: Hey, thanks and good morning guys.

Operator: Yes, it seems like it is.

Steve Powers: Obviously, you kind of cycled, you know, go pricing actions. You know, it's like most recently in the data that we all kind of track week to week, it looks like pricing in the category of pricing for your own portfolio has dipped negative.

Operator: Okay, perfect.

Operator: Whereas, you know, before, you know, to shorthand it, you know, it was a little bit of a peanut butter spread approach to, you know, to all channels.

Operator: Now you're looking specifically at mass, you're looking specifically at club dollar, you know, whatever it might be.

Speaker Change #134: It's like most recently in the data that we all kind of track.

Speaker Change #135: week to week, it looks like pricing in the category of pricing for your own portfolio has dipped negative. So as we go through the back half, as you make those targeted promotional investments, and you probably have some

Riles: So, as we go through the back half, as you make those targeted promotional investments and you probably have some channel package mix that's, you know, negative despite the premization trend, or is the base case that pricing reported pricing runs negative in the back half with volume making up the difference, or do you think you can hold price mix to kind of neutral as you as you flow through 24? Yeah, so let's take it. Let's break it up a little bit. I mean, you know, on the branded side, you know, all of our pricing is now.

Speaker Change #135: some channel package mix that's

J.T. Rick: So long we do expect benefit in a half, in the back half, you know, that benefit will get into, you know, to climb somewhat. But, you know, overall, we're still, you know, forecasting, you know, decent margin improvement for the year. And then, I guess this one last question, just on M&A, you know, you've been a little quiet, is that, is this is, do you anticipate, I'm curious what the pipeline might look like and, you know, whether, excuse me, whether or not, are you sort of waiting for, you know, a lot of, you know, the ERP and California and things like that to sort of get behind you before we see M&A or are they too, just unrelated and mutually exclusive.

Speaker Change #135: you know negative despite the premiumization trend or is the base case that pricing

Speaker Change #136: Reported pricing runs negative in the back half with volume making up the difference or do you think you can hold price mixed to kind of neutral as you as you flow through 24?

Jim Salera: Yeah, I was just asking if we could maybe net the the exit from the business impacts with some of the pressure you mentioned in QSR and then thinking about that again.

Operator: And, you know, even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply under penetrated in that channel.

Operator: Great.

Speaker Change #137: Yeah, so...

Speaker Change #138: Let's take it, let's break it up a little bit. I mean, you know, on the branded side, you know, all of our pricing is in.

Riles: Now, when you, you know, the data that we look at, Steve, our average price was up seven cents on the quarter, not down, but that that's also driven by mix because, as we've talked about, you know, DKB had a great quarter, Canyon had a great quarter, you know, Nature Zone did well given the environment, so that, you know, mix is driving that a bit. And you know, if we can continue that trend, and Steve, you should comment on this too, if we can continue that trend, I would expect, you know, mix to be a positive benefit for us as we move to the rest of the year.

Operator: Appreciate the call, guys.

Operator: I'll hop back into the queue.

Speaker Change #138: Now, when you, you know, the data that we look at, Steve, our average price was up seven cents on the quarter.

Operator: Thank you, Jim.

Jim Salera: The strong results of DKB, Canyon, benefit from a shift at food at home.

Operator: Thank you.

Steve: Not now.

Jim Salera: If we think about all that together, could we see positive volumes in 3Q and then obviously rolling into 4Q?

Operator: As a reminder, to ask a question at this time, please press star 1-1 or in touchtone telephone.

Riles Van Golen: Yeah, I think I think definitely, for 4Q, that's that's a reasonable assumption, particularly with all the new business, Jim, that we have coming on, you know, we talked about that last quarter. So that'll have a more of an impact in in Q4.

Operator: Our next question comes from the line of Mitchell Pinheiro with Sturdivant & Company.

Riles Van Golen: And then with the roll off of the strategic exits, if we can continue to enjoy, good momentum from all the brands you mentioned, that yeah, I think that's a distinct possibility.

Operator: Your line is now open.

Riles Van Golen: I mean, frankly, we were almost there in Q1.

Riles Van Golen: Branded retail was actually pretty positive in Q1, so yes, I think that's a reasonable possibility.

Steve: And, you know, if we can continue that trend.

Jim Salera: Okay, great.

Jim Salera: And then maybe if you could just give us some detail on you mentioned in your prepared remarks, restructuring the retail team, he talked about how that changes some of the capabilities relative to the previous structure, and maybe when slash how we might see that show up on shelf.

Steve: And Steve, you should comment on this, too. If we can continue that trend, I would expect MIX to be a positive benefit for us as we move through the rest of the year. Yeah, right. I mean, obviously, as Ryle said, all of our branded pricing is in. You've seen kind of the cost environment as well and also some flight promotions.

Steve: Yeah, right. I mean, obviously, as Ralph said, you know, all of our branded pricing is in, you know, you've seen the kind of the cost environment as well. And also, you know, some flight promotions, some mix is a big part, you know, the back half.

Riles Van Golen: Yeah, I mean, I think you got to give us a little bit of time.

Operator: Yeah, hey, good morning.

Riles Van Golen: And I think that's that's one of the areas where it's going to be these restructurings are going to benefit us the most.

Operator: So.

Riles Van Golen: And Meredith just started not just a few weeks ago.

Riles Van Golen: Whereas, you know, before, you know, to shorthand it, you know, it was a little bit of a peanut butter spread approach to, you know, to all channels.

Riles Van Golen: But, you know, we brought Terry on, Terry Thomas on as the chief growth officer. You know, he had some significant experience and insights from his time at Unilever and other places.

Riles Van Golen: Now you're looking specifically at mass, you're looking specifically at club dollar, you know, whatever it might be.

Riles Van Golen: And, you know, one of the things we lacked here was a channel specific approach to strategy and execution at the retail level.

Riles Van Golen: And, you know, even as we roll out our snack items, convenience is a tremendous opportunity for us because we're so deeply under penetrated in that channel.

J.T. Rick: No, we're ready to go. I mean, when the right opportunity comes along, you know, it's time for M&A for us. You know, I'll reiterate again, you know, we're very proactive in the market, we're out there building relationships, you know, we know what's what could be coming. We know we're interested in. In some cases, we've even done some advanced, you know, commercial deals that's worked so that we're, you know, we're able to, we're able to execute quickly when the right opportunity comes along.

Jim Salera: Great.

J.T. Rick: And again, those opportunities can come both in the core and in adjacent categories. I do think, I mean, there's been some big deals announced over the last, you know, week and the last six months or so. But I think there's more ahead. The M&A market seems to be getting healthier as we noted last quarter. So we're bullish on that mentioned. Okay. All right. Thank you. Appreciate the questions. Thank you. Our next question comes from the line of Steve Powers with Deutsche Bank.

Riles: Yeah, and then that's Ralph said, if brands continue to perform well and things play out as we think with some of the new business, you know, by the fourth quarter, we might see some positive volume, yeah, as well.

Speaker Change #139: So mix is a big part, you know, the back half. Yeah, and then as Ronald said, if brands continue to perform well and things play out as we think with some of the new business, you know, by the fourth quarter, we might see some positive volume.

Steve Powers: Okay, okay, great.

Operator: I'm just curious, you know, you talk about, making headway in some of your under-penetrated geographic regions.

Steve Powers: And you're just on ERP as it relates to, you know, the, you know, the bakery roll out. Obviously, that's on hold pending the California distribution transition.

Speaker Change #140: Okay okay great and you're just on

Speaker Change #141: ERP as it relates to

Speaker Change #142: You know the the you know the bakery rollout obviously that's on hold Pending the the California distribution transition. I guess as we as we look out through that transition You know how quickly what's the base case plan for when? the the bakery rollout resumes is that sort of

Steve Powers: I guess as we look out through that transition, you know, how quickly, what's the base case plan for when the bakery rollout resumes? Is that sort of middle of 25, or sooner or later? How do we think about that?

Steve Powers: You know, I mean, today, you know, today we're obviously done to work through California, but, you know, the plan is to pick that, pick back up bakery roll out late this year or, you know, first quarter of next year. Okay. And then comes the pretty strong plan to try to stay on our regional targets. Obviously, a thing shifts; we'll let you know. But I think the good thing is right now from an overall cost perspective, you know, we're not anticipating anything to change. So, you know, that's critical. That's the end point as well. Okay. So the resumption could happen before the distribution right purchases are fully complete.

Speaker Change #142: Middle of 25 or sooner or later? How do we think about that?

J.T. Rick: Your line is open. Hey, thanks. Good morning, guys. Steve. So first question, just a little bit more color on how you're thinking about the the price versus sort of reported price mix versus volume outlook across branded retail as we go through the back half. Obviously, you kind of cycled, you know, year ago pricing actions. You know, it's like most recently in the data that we all kind of track week to week, it looks like pricing in the category of pricing for your own portfolio has dipped negative.

Speaker Change #143: Today we're obviously trying to work through California, but the plan is to pick back up baby rollouts late this year or first quarter of next year.

J.T. Rick: So as we go through the back half, as you make those target of promotional investments and you probably have some channel package mix that's, you know, negative despite the premization trend, or is the base case that pricing reported pricing runs negative in the back half with volume making up the difference, or do you think you can hold price mix to kind of neutral as you as you flow through 24? Yeah, so let's take it, let's break it up a little bit.

Speaker Change #144: Okay. And they come up with a pretty strong plan to try to stay on our regional targets. Obviously if things shift we'll let you know, but I think the good thing is right now from an overall cost perspective, you know, we're not anticipating anything to change. So, you know, that's critical that standpoint as well.

Speaker Change #145: Okay, so the resumption could happen before the distribution right purchases are fully complete. That's what I'm gleaning from what your answer was.

Steve Powers: That's what I'm cleaning from what we're answering. I mean, yes, the goal is to pick back up no later than Q1 of next year. Okay, perfect.

Speaker Change #146: Yes, the goal is to pick back up no later than Q1 of next year.

Steve Powers: All right. Thank you very much.

Unknown Executive: Thank you. And I'm currently showing no further questions at this time.

Speaker Change #147: Okay, perfect. All right. Thank you very much.

Speaker Change #147: Thank you, Steve. Thank you. And I'm currently showing no further questions at this time. I would now like to turn the call back over to Riles McMillan for closing remarks.

Riles: I would now like to turn the call back over to Ralph McMillan for closing remarks. Okay. Thanks, Sean. Thanks, everybody, for taking time today and joining us for questions. We appreciate your interest in our company. And, as always, we look forward to speaking with you again next quarter.

Jim Salera: Appreciate the call, guys.

Operator: Curiously, what's driving what's driving that?

Jim Salera: I'll hop back into the queue.

Operator: And is it a sustainable?

Operator: Our next question comes from the line of Mitchell Pinheiro with Sturdivant & Company.

Operator: So we understand, you know, the call structure.

Jim Salera: Thank you, Jim.

Operator: Is it sustainable growth that you can see there?

Operator: You know, we did see the the first half is actually the largest benefit with regard to the moderating costs.

Riles McMillan: Okay. Thanks, Shannon. Thanks, everybody, for taking time today and joining us for questions. We appreciate your interest in our company. And as always, we look forward to speaking with you again next quarter. Take care.

Operator: Your line is now open.

Operator: So we're bullish on that.

Operator: Thank you.

Operator: Because it's a big part of your your your growth story is, while you have, you know, you know, extraordinary strength in the south and southwest.

Operator: So while we do expect benefit and a half and the back half, you know, that that benefit will get into, decline somewhat.

Mitchell Pinheiro: Hey, good morning.

Operator: Alright, thank you, appreciate the questions.

Operator: As a reminder, to ask a question at this time, please press star 1-1 or in touchtone telephone.

Operator: It's, there's a lot of sort of white space, and just curious if it's sustained.

Operator: But, you know, overall, we're still forecasting, you know, decent margin improvement for the year.

Mitchell Pinheiro: So.

Operator: Thank you.

Operator: Well, we certainly think so.

Riles Van Golen: And as always, we look forward to speaking with you again next quarter.

Operator: And as always, we look forward to speaking with you again next quarter.

Operator: And then I guess this is one last question just on M&A.

Mitchell Pinheiro: I'm curious, you know, you talk about, making headway in some of your under-penetrated geographic regions.

Operator: Our next question comes from the line of Steve Powers with Deutsche Bank.

Operator: You know, as you rightly pointed out, you know, our largest share of concentration is in the south.

Operator: You know, you've been a little quiet, do anticipate.

Mitchell Pinheiro: Curiously, what's driving what's driving that?

Operator: Your line is now open.

Operator: You know, that's a pretty saturated market for us, there's still, you know, certain growth pockets.

Operator: I'm curious what the pipeline might look like and, you know, whether, excuse me, whether or not.

Mitchell Pinheiro: And is it a sustainable?

Operator: Hey, thanks.

Operator: And we're seeing that with the Nature's Own Keto Loaf, you know, Dave's continues to grow.

Riles: Take care.

Operator: Take care.

Operator: Are you sort of waiting for, you know, a lot of, you know, ERP, and California, and things like that to sort of get behind you before we see M&A or are the two, were able to execute quickly when the right opportunity comes along.

Mitchell Pinheiro: Is it sustainable growth that you can see there?

Operator: Good morning, guys.

Operator: And then, you know, even in the south, you know, if you break up the geographies and look at, you know, market share gains, it's been a little bit tougher in the south, frankly.

Unknown Executive: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: And again, those opportunities can come both in the core and in adjacent categories.

Operator: This concludes today's conference call.

Mitchell Pinheiro: Because it's a big part of your your your growth story is, while you have, you know, you know, extraordinary strength in the South and Southwest.

Operator: So first question, just a little bit more color on how you're thinking about the price versus reported price mix versus volume outlook across branded retail as we go through the back half.

Operator: A little bit more promotional activity, you know, basically two, you know, two primary competitors, you know, our most mature market.

Operator: I do think I mean, there's been some big deals announced over the last week and the last six months or so.

Operator: Thank you for your participation.

Mitchell Pinheiro: It's there's a lot of sort of white space, and just curious if it's sustained.

Operator: Obviously, you kind of cycled a year ago pricing actions, you know, it's like most recently in the data that we all kind of track week to week, it looks like pricing in the category of pricing for your own portfolio has has dipped negative.

Operator: But what we've been able to do is find areas within the category to grow.

Operator: But I think there's more ahead the M&A market seems to be getting healthier, as we noted last quarter.

Operator: You may now disconnect.

Mitchell Pinheiro: Well, we certainly think so.

Operator: So as we as we go through the back half, as you make those targeted promotional investments, and you got probably have some channel package mix that's, you know, negative despite the premiumization trend or is the base case that price reported pricing runs negative in the back half with volume making up the difference?

Operator: So that's keto, that's breakfast, that's sandwich buns and rolls, even in the south.

Operator: අප මිශ්රීමට හොඳින් ඇත නැල්ලමි එය දැලක කරන්න, අපට කිරීමට විටික් නැතියි වන තෙල්ස්සුම් කිරීමට පැල්ලමි අපට කිරීමට පැල්සුම් කිරීමට පැල්ලමි Good morning, and thank you for standing by.

Riles Van Golen: You know, as you rightly pointed out, you know, our largest share of concentration is in the South.

Operator: Or do you think you can hold price mixed to kind of neutral as you as you flow through 24?

Operator: Now, more directly to your question on underpenetrated markets, I absolutely think that's sustainable.

Operator: Welcome to the Flowers Foods second quarter 2024 results conference call.

Riles Van Golen: You know, that's a pretty saturated market for us.

Operator: Yeah, so, Let's take it.

Operator: You know, when you look at a 1718 overall dollar share nationwide, and only a 10 in the Northeast, we haven't really been there that long.

Speaker Change #149: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Riles Van Golen: There's still, you know, certain growth pockets, and we're seeing that with the Nature's Own Keto Loaf, you know, Dave's continues to grow.

Operator: Let's break it up a little bit.

Operator: Dave's been there, DKB's been there for even less time.

J.T. Rick: I mean, you know, on the branded side, you know, all of our pricing is in. Now when you, you know, the data that we look at Steve, our average price was up seven cents on the quarter, not down, but that, that, that's also driven by mix, because as we've talked about, you know, DKB had a great quarter, Canyon had a great quarter, you know, nature's own did well given the environment, so that, you know, mix is, is driving that a bit.

Riles Van Golen: And then, you know, even in the South, you know, if you break up the geographies and look at, you know, market share gains, it's been a little bit tougher in the South, frankly.

Operator: I mean, you know, on the branded side, you know, all of our pricing, Now, when you, you know, the data that we look at, Steve, our average price was up seven cents on the quarter, not down.

Operator: But as you know, a lot of our, we don't have a national marketing campaign, at least not yet.

Riles Van Golen: A little bit more promotional activity, you know, basically two, you know, two primary competitors, you know, our most mature market.

Operator: But that's also driven by mix.

Operator: So that's one of our focus, focus markets for our advertising campaign.

Riles Van Golen: But what we've been able to do is find areas within the category to grow.

Operator: Because as we've talked about, DKB had a great quarter, Canyon had a great quarter, Nature's Own did well given the environment.

Operator: We've still got room to go out, grow out west, back northwest, and probably most importantly, in the upper Midwest, which we've already started to enter.

Riles Van Golen: So that's keto, that's breakfast, that's sandwich buns and rolls, even in the South.

Operator: So that mix is driving that a bit.

Operator: And we'll continue to roll that out as we go forward.

Riles Van Golen: Now, more directly to your question on underpenetrated markets, I absolutely think that's sustainable.

Operator: And if we can continue that trend, and Steve, you should comment on this too, if we can continue that trend, I would expect Mix to be a positive benefit for us as we move through the rest of the year.

Speaker Change #150: Welcome to the 2013 World Cyber Conference. This is a live broadcast. Please find your seat. Welcome to the 2013 World Cyber Conference. This is a live broadcast. Please find your seat. Welcome to the 2013 World Cyber Conference. [inaudible]

Operator: So, you know, not only, you know, do we have, you know, M&A to look to, innovation to look to, but we've also got these underpenetrated regions where we've got a lot of runway to grow, to get our fair share of the category.

Riles Van Golen: You know, when you look at a 17-18 overall dollar share nationwide, and only a 10 in the Northeast, we haven't really been there that long.

Operator: Yeah, right.

Operator: Thanks for that.

J.T. Rick: And you know, if we can continue that trend and Steve, you, you should comment on this too, if we can continue that trend, I would expect, you know, mix to, to be a positive benefit for us as we move to the rest of the year. Yeah, right. I mean, obviously, as Ralph said, you know, all of our branded pricing is in, you know, you've seen the kind of the cost environment as well, and also, you know, some flight promotions.

Riles Van Golen: Dave's been there, DKB's been there for even less time.

Operator: I mean, obviously, as Ryle said, all of our brand new pricing is in.

Operator: And then on margins, In the prepared remarks, you talk about moderating ingredient and packaging costs.

Riles Van Golen: But as you know, a lot of our, we don't have a national marketing campaign, at least not yet.

Operator: You've seen kind of the cost environment as well, and also some slight promotions.

Operator: Is that something, you know, obviously you have a lot of visibility there with the amount, you know, with your, your, your pretty much set.

Riles Van Golen: So that's one of our focus, focus markets for our advertising campaign.

Operator: So mix is a big part, you know, the back half.

Operator: Transcripts provided by Transcription Outsourcing, LLC.

Riles Van Golen: We've still got room to grow out west, back northwest, and probably most importantly, in the upper Midwest, which we've already started to enter, and we'll continue to roll that out as we go forward.

Operator: Yeah, and as Ronald said, if the brands continue to perform well and things play out as we think with some of the new business.

Operator: Yeah, I mean, obviously, when you look at kind of the margin performance here today, you know, we've done really well, and we're pleased with where we are.

Mitchell Pinheiro: So, you know, not only, you know, do we have, you know, M&A to look to, innovation to look to, but we've also got these underpenetrated regions where we've got a lot of runway to grow, to get our fair share of the category.

Operator: By the fourth quarter, we might see some positive volume.

Operator: You know, we continue to hedge.

Mitchell Pinheiro: Thanks for that.

Operator: Okay, okay, great.

Operator: I mean, our strategy hasn't changed, you know, we say, six to nine months, you know, ahead of the market.

Mitchell Pinheiro: And then on margins, In the prepared remarks, you talk about moderating ingredient and packaging cost.

Operator: And you're just on, ERP as it relates to you know, the, the, you know, the bakery rollout, obviously, that's on hold, pending the California distribution transition, I guess, as we, as we look out through that transition, you know, how quickly what's the base case plan for when the bakery rollout resumes?

Mitchell Pinheiro: Is that something, you know, obviously you have a lot of visibility there with the amount, you know, with your, your, your pretty much set.

Operator: Is that sort of middle of 25 or sooner or later?

Mitchell Pinheiro: Transcripts provided by Transcription Outsourcing, LLC.

Operator: How do we think about that?

Riles Van Golen: Yeah, I mean, obviously, when you look at kind of the margin performance here today, you know, we've done really well, and we're pleased with where we are.

Operator: Yeah, I mean, today, today, we're obviously trying to work through California.

Riles Van Golen: You know, we continue to hedge.

Operator: But, you know, the plan is to pick the pick back up baby rollout late this year, or, you know, first quarter of next, Okay, and they come with a pretty strong plan to try to stay on our original targets.

Riles Van Golen: I mean, our strategy hasn't changed, you know, we say, six to nine months, you know, ahead of the market.

Operator: Obviously, if things shift, we'll let you know.

Riles Van Golen: So we understand, you know, the call structure.

Operator: But I think the good thing is right now, from an overall cost perspective, you know, we're not anticipating anything to change.

Riles Van Golen: You know, we did see the the first half is actually the largest benefit with regard to the moderating calls.

Operator: So, you know, that's critical from that standpoint as well.

Riles Van Golen: So while we do expect benefit and a half and the back half, you know, that that benefit will get into, decline somewhat, but, you know, overall, we're still, you know, forecasting, you know, decent margin improvement for the year.

Operator: Okay, so the resumption could happen before the distribution right purchases are fully complete.

Mitchell Pinheiro: And then I guess this is one last question just on M&A.

Operator: That's what I'm gleaning from what your answer was.

Mitchell Pinheiro: You know, you've been a little quiet, do you anticipate, I'm curious what the pipeline might look like and.., you know, whether, excuse me, whether or not.

Operator: Yes, the goal is to pick back up no later than Q1 of May.

Mitchell Pinheiro: Are you sort of waiting for, you know, a lot of, you know... PRP and California and things like that to sort of get, behind you before we see M&A or are the two, were able to execute quickly when the right opportunity comes along.

Operator: Okay, perfect.

Riles Van Golen: And again, those opportunities can come both in the core and in adjacent categories.

Operator: All right.

Riles Van Golen: I do think I mean, there's been some big deals announced over the last week and the last six months or so.

Operator: Thank you very much.

Riles Van Golen: But I think there's more ahead the M&A market seems to be getting healthier, as we noted last quarter.

Operator: Thanks Steve.

Riles Van Golen: So we're bullish on that.

Operator: Thank you, and I'm currently showing no further questions at this time.

Mitchell Pinheiro: Alright, thank you, appreciate the questions.

Operator: I would now like to turn the call back over to Riles McMillan for closing remarks.

Mitchell Pinheiro: Thank you.

Operator: Okay, thanks, Shannon.

Operator: Our next question comes from the line of Steve Powers with Deutsche Bank.

Operator: Thanks everybody for taking time today and joining us for questions.

Operator: Your line is now open.

Operator: We appreciate your interest in our company.

Operator: Hey, thanks.

Steve Powers: Good morning, guys.

Steve Powers: So first question, just a little bit more color on how you're thinking about the price versus reported price mix versus the volume outlook across branded retail as we go to the back half.

Steve Powers: Obviously, you kind of cycled a year ago pricing actions, you know, it's like most recently in the data that we all kind of track week to week, it looks like pricing in the category of pricing for your own portfolio has has dipped negative.

Steve Powers: So as we as we go through the back half, as you make those targeted promotional investments, and you got probably have some channel package mix that's, you know, Negative despite the premiumization trend, or is the base case that price, reported pricing runs negative in the back half with volume making up the difference or do you think you can hold price mixed to kind of neutral as you as you flow through 24?

Steve Powers: Yeah, so, Let's take it, let's break it up a little bit.

Riles Van Golen: I mean, you know, on the branded side, you know, all of our pricing, Now, when you, you know, the data that we look at, Steve, our average price was up seven cents on the quarter, not down.

Riles Van Golen: But that's also driven by mix.

Riles Van Golen: Because as we've talked about, DKB had a great quarter, Canyon had a great quarter, Nature's Own did well given the environment.

Riles Van Golen: So that mix is driving that a bit.

Riles Van Golen: And, you know, if we can continue that trend, and Steve, you should comment on this, too, if we can continue that trend, I would expect, you know, mix to be a positive benefit for us as we move through the rest of the year.

Riles Van Golen: Yeah, right.

Riles Van Golen: I mean, obviously, as Ryle said, you know, all of our branded pricing is in, you know, you've seen the kind of the cost environment as well, and also, you know, some slight promotions.

Riles Van Golen: So mix is a big part, you know, at the back half.

Riles Van Golen: Yeah, and then as Ronald said, if the brands continue to perform well, and things play out as we think with some of the new business.

J.T. Rick: So mix is a big part, you know, the back half, yeah, then that's Ralph said, if brands continue to perform well and things play out as we think with some of the new business, you know, by the fourth quarter, we might see some positive volume, yeah, as well. Okay. Yeah. Great. And you're just on ERP as it relates to, you know, the, you know, the, the, you know, the bakery rollout, obviously, that's on hold, pending the California distribution transition.

Riles Van Golen: By the fourth quarter, we might see some positive volume.

Steve Powers: Okay, okay, great.

Steve Powers: And you're just on, ERP as it relates to you know, the, the, you know, the bakery rollout, obviously, that's on hold, pending the California distribution transition, I guess, as we, as we look out through that transition, you know, how quickly what's the base case plan for when the bakery rollout resumes?

Riles Van Golen: Is that sort of middle of 25 or sooner or later?

Riles Van Golen: How do we think about that?

Riles Van Golen: Yeah, I mean, today, today, we're obviously trying to work through California.

Riles Van Golen: But, you know, the plan is to pick the pick back up baby rollouts late this year, or, you know, first quarter of next, Okay, and they come with a pretty strong plan to try to stay on our original targets.

Riles Van Golen: Obviously, if things shift, we'll let you know.

Riles Van Golen: But I think the good thing is right now, from an overall cost perspective, you know, we're not anticipating anything to change.

Riles Van Golen: So, you know, that's critical from that standpoint as well.

Steve Powers: Okay, so the resumption could happen before the distribution right purchases are fully complete.

Steve Powers: That's what I'm gleaning from what your answer was.

Steve Powers: Yes, the goal is to pick back up no later than Q1 of, Okay, perfect.

Steve Powers: All right.

Steve Powers: Thank you very much.

Steve Powers: Thanks Steve.

Steve Powers: Thank you.

Operator: And I'm currently showing no further questions at this time.

Operator: I would now like to turn the call back over to Riles McMillan for closing remarks.

Riles Van Golen: Okay, thanks, Shannon.

Riles Van Golen: Thanks everybody for taking time today and joining us for questions.

Riles Van Golen: We appreciate your interest in our company.

J.T. Rick: I guess as we, as we look out through that transition, you know, how quickly, what's the base case plan for when the, the bakery rollout resumes, is that sort of middle of 25 or sooner or later, how do we think about that? You know, I mean, today, you know, today we're obviously done to work through California, but, you know, the plan is to pick that, pick back up bakery rollouts late, this year or, you know, first quarter of next year.

J.T. Rick: Okay. And then kind of, it was a pretty strong plan to try to stay on our regional targets. Obviously, a thing should have to well let you know, but I think the good thing is right now, from an overall cost perspective, you know, we're not anticipating anything to change. So, you know, that's critical, that's the end point as well. Okay. So the resumption could happen before the, the distribution right purchases are fully complete.

J.T. Rick: That's what I'm cleaning from. Yes. The goal is to pick back up no later than Q1 of next year. Okay. Perfect. All right. Thank you very much. Thank you. And I'm currently showing no further questions at this time. I would now like to turn the call back over to Ralph McMillan for closing remarks. Okay. Thanks, Shann. Thanks, everybody, for taking time today and joining us for questions. We appreciate your interest in our company, and as always, we look forward to speaking with you again next quarter. Take care. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Q2 2024 Flowers Foods Inc Earnings Call - Q&A

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