Q1 2025 General Mills Inc Earnings Call

Operator: Good morning and welcome to General Mills' first quarter of fiscal 2025 earnings conference call. All participants are in a listen-only mode.

Good morning, and welcome to General Mills, its first quarter fiscal 'twenty 25 earnings conference call.

Speaker Change: All participants are in a listen only mode.

Operator: After the speaker's remarks, we will have a question-and-answer session. To ask a question, please press star followed by the number one on your telephone keypad. As a reminder, the conference call is being recorded.

After the Speakers' remarks, we will have a question and answer session.

I ask a question. Please press star followed by the number one on your telephone keypad.

As a reminder, this conference call is being recorded.

Jeff Siemon: I would now like to turn the call over to Jeff Siemon, Vice President of Industrial Relations and Treasurer. Thank you. Please go ahead.

Speaker Change: I would now like to turn the call over to Jeff Siemon, Vice President of Investor Relations and Treasurer. Thank you. Please go ahead.

Speaker Change: Okay.

Jeff Siemon: Hi, thank you, Julian, and good morning to everyone. We appreciate you joining us today for our Q&A session on our first quarter fiscal 25 results. I hope you had time to review our press release, listened to our prepared remarks, and view the presentation materials, which we made available this morning on our Investor Relations website.

Jeff Siemon: Alright, Thank you Julian and good morning to everyone.

Speaker Change: Appreciate you joining us today for our Q&A session on our first quarter fiscal 'twenty five results.

Speaker Change: You had time to review, our press release and listen to our prepared remarks and view the presentation materials, which we made available. This morning on our Investor Relations website.

Jeff Siemon: Please do note that in our Q&A session, we may make forward-looking statements that are based on our current views and assumptions. Please refer to this morning's presentation as a press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call.

Speaker Change: Please do note that in our Q&A session. We may make forward looking statements that are based on our current views and assumptions. Please refer to this mornings press release for factors that could impact forward looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call.

Jeff Siemon: I'm here this morning with Jeff Harmoning, our Chairman and CEO, and Kofi Bruce, our CFO.

Speaker Change: I'm here this morning, with Jeff Harmening, our chairman and CEO and Kofi Bruce our CFO.

Jeff Siemon: So, Julian, we can go ahead and get to the first question. Will you please open it up?

Speaker Change: So Julien we can go ahead and get to the first question will you. Please open it up.

Operator: Certainly. As a reminder to ask a question, please press star followed by the number one on your telephone keypad.

Speaker Change: Certainly.

Speaker Change: As a reminder to ask a question. Please press star followed by the number one on your telephone keypad.

Matt Smith: Our first question comes from Matt Smith from Steeple. Please go ahead.

Our first question comes from Matt Smith from Stifel. Please go ahead. Your line is open.

Matt Smith: Your line is open. Thank you, morning.

Matt Smith: Hi, Good morning, I believe when you initially provided fiscal 'twenty five guidance you werent, assuming much improvement in your categories with more emphasis on your competitiveness.

Jeff Harmening: I believe when you initially provided fiscal 25 guidance, you weren't assuming much improvement in your categories with more emphasis on your competitiveness. Does the shift in more at-home food consumption give you more confidence in the organic sales outlook, or are you seeing that benefit muted by continued value-seeking behavior?

Speaker Change: Does the shift in more at home food consumption gives you more confidence in the organic sales outlook or are you seeing that benefit.

Speaker Change: Muted by continued value seeking behavior.

Jeff Harmening: Good morning, and thanks for the question. First, I would say the quarter played out from a macro environment as we had anticipated. And we thought we'd see gradual improvement in our categories throughout the year. And we saw improvement in our categories. In fact, if you look at our North America retail categories, there are a couple percent mix of a little bit of volume and a little bit of pricing in the categories. And so it's played out kind of as we as we expected, and for us, as we said in the fourth quarter, to keep for us is to keep improving our competitiveness.

Speaker Change: Hey, good morning, and thanks for thanks for the question first I would say the quarter played out from a macro environment, you know kind of as we had anticipated and we thought we'd see gradual improvement in our categories. You know throughout the year and we saw improvement in our categories in fact.

Speaker Change: You look at our North America retail category as you know there are a couple of percent.

Speaker Change: Mix a little bit.

Speaker Change:

Speaker Change: Volume and add a little bit of pricing in the category. So it's played out kind of as we as we expected and for US as we said in the fourth quarter and the key for US is to keep improving our competitiveness and we made a step in the right direction in that in the in the first quarter.

Jeff Harmening: And we made a step in the right direction in that in the first quarter. And we have some more work to do across our portfolio. And so the job for us to do for the rest of the year really is to keep improving. We did see we did slide up tick and food consumption at home in the in the quarter. We didn't we didn't anticipate that might be the case as we see consumer seeking value. And you know the fact is that now food at home is four times less expensive than food eating out, on average.

Speaker Change: And we have some more work to do across our portfolio and so.

Speaker Change: The job for us to do for the rest of the year really is to keep improving we did see we did see.

Speaker Change: Slight uptick in food consumption at home and in the quarter. We did it we did anticipate that might be the case as we see consumers seeking value and.

Speaker Change: The fact is that now food at home is four times less expensive than food eating out on average and so eating at home is a great value for consumers.

Jeff Harmening: And so eating at home is a great value for consumers and. And you know consumers are still economically stressed, so that played out the way we thought. And as we look at the rest of the year, I wouldn't say that our guidance is predicated on our categories' continued improvement. What it's predicated on is our continued improvement in competitiveness, which we're confident we can do even going to continue momentum into the second quarter here because we've got really great news on all of our billion dollar brand.

Speaker Change: And consumers are still economically stressed so the so that played out the way we thought.

Speaker Change: And as we look at the we look at the rest of the year I wouldn't say that our guidance is predicated on our categories continued improvement, but it is predicated on is our continued improvement in competitiveness.

Speaker Change: Which we're confident we can do.

Speaker Change: Even got a continuing momentum into the second quarter here, because we've got really great news on all of our 1 billion dollar brands.

Jeff Harmening: Thanks, Jeff, and as a follow-up, I appreciate that your investments span both innovation and some couponing and promotional activity. But on the couponing and promotional investments, the effect of this question of value, and I would first of all tell you that consumers see value in a lot of different ways. And we did couponing; we increased our couponing. We saw good returns on those in line with what we would expect. But consumers also look for brands of products they trust. My protection formula continues to grow. It's up mid-single digits for Blue Buffalo because we talk about ingredient superiority and what that brings.

Speaker Change: Thanks, Jeff and as a follow up I appreciate that your investments span, both innovation and some couponing and promotional activity but.

Speaker Change: On the couponing and promotional investments can you talk about the receptivity from consumers to your investment spending are you are you seeing incremental purchasing behavior from those consumers and is the return on those investments in line with what you had expected.

Speaker Change: Yes, I think you just kind of gets back to this question of value and at first I would tell you that consumers see value and a lot of different ways.

Speaker Change: And we do couponing, we increased our couponing. We saw good returns on that was in line with what we would expect but consumers also look for brands and products. They Trust me and life protection Formula continues to grow it's up mid single digits for Blue Buffalo, because we've talked about ingredient superiority and what that brings we launched advertising on our wilderness and.

Jeff Harmening: We launched advertising on wilderness, and that business has kind of have the losses on that business in a quarter and see some continued momentum. In your cereal, we launched pretty Cheerios as the top-turning new cereal in the category because consumers trust Cheerios and they want something a little bit different. And so whether it's couponing, whether it's new products, or whether it's advertising messaging, or pack sizes and getting those in the right place. There are a lot of ways to create value for consumers.

Speaker Change: And that business as we kind of have the losses on that business at quarter and see some continued momentum in cereal, we launched pretty cheerios is the top turning suite, a new cereal in the category because consumers trust cheerios and they want something a little bit different and so you know, whether it's whether it's couponing or whether it's new products or whether it's advertising messaging.

Speaker Change: Or or pack sizes and getting those in the right places there are a lot of ways to create value for consumers I would say, especially I think probably underappreciated.

Jeff Harmening: I would say especially, I think, probably underappreciated, when consumers feel a little bit economically stressed, the one thing they can't afford to do is throw away food. And so they have to bring something home that their family is going to love, and that's where our brands come in and making sure that we have relevant messages in the right package in the right place. But to your point, I feel good so far. What I feel even better about is the majority of the news that we have on our brands actually takes place in the second quarter because it kind of starts in the second quarter. Because if you think about our portfolio, we have a lot of baking items, a lot of seasonal items. Even treating for pets is a little bit seasonal in the second quarter.

Speaker Change: When when consumers feel a little bit economically stressed but the one thing they can't afford to do is throw away food.

Speaker Change: And so they have to bring something home that their families going to love and that's where that's where our brands come in and making sure that we have relevant messages and the right packages in the right place, but to your point I feel good so far what I feel even better about is the majority of the news that we have on our brands actually it takes place in the second quarter, because it kind of starts in the second quarter because.

Speaker Change: If you think about our portfolio, we have a lot of baking items a lot of seasonal items, even treating for pets is a little bit seasonal in the second quarter and so you combine that with some improvements we're seeing on blue Buffalo and some receptivity from from our pet specialty channel our wilderness, we feel like we'll see a step up in the second quarter because.

Jeff Harmening: And so you combine that with some improvements. We're seeing Blue Buffalo and some receptivity from our pet specialty channel on Wilderness. We feel like we'll see a step up in the second quarter because we've got more good news coming.

Speaker Change: <unk> got more good news coming.

Matt Smith: Thanks, Jeff. I'll pass it on.

Speaker Change: Thanks, Jeff I'll pass it on.

Speaker Change: Hum.

Andrew Lazar: Our next question comes from Andrew Lazar from Barkley. Please go ahead.

Speaker Change: Our next question comes from Andrew Lazar from Barclays. Please go ahead. Your line is open.

Andrew Lazar: Your line is open. Great. Thanks.

Andrew Lazar: Good morning.

Andrew Lazar: Great. Thanks, good morning.

Andrew Lazar: Morning. Jeff, you talked a bit about obviously the expectation of continued sort of progress around market share and competitiveness as you go through the year.

Andrew Lazar: Good morning, good morning.

Andrew Lazar: Jeff you talked a bit about obviously, the the expectation of a continued sort of progress around market share and competitiveness as you go through the year I guess would you anticipate being in a position to sort of hold share across your NAR segment for the year or maybe just the more gradual start make this sort of outcome, perhaps still a bit overly optimistic.

Andrew Lazar: I guess would you anticipate, you know, being in a position to sort of hold share across your NAR segment for the year or maybe just the more gradual start, make this sort of outcome perhaps still a bit overly optimistic.

Kofi Bruce: And then Kofi, I think last quarter, you mentioned expectation for an equal contribution from volume and price mix for the year. Is that still how you sort of see things playing out at this stage.

Speaker Change: And then coffee I think last quarter, you mentioned expectation for an equal contribution from volume and price mix for the year is that still how you sort of see things playing out at this stage. Thanks, so much.

Jeff Harmening: Thanks so much. Yeah, thanks, Andrew.

Speaker Change: Yeah. Thanks, Andrew you know the.

Jeff Harmening: You know, I think that I think the theme of the day is probably progress and continued work to do is we intend to do to improve our competitiveness throughout the year. But it is certainly true for NAR. It's also true for for blue buffalo. I would say the first quarter kind of played out as we anticipated for, you know, for both of those segments. We improved our competitiveness and NAR, but they're still market share gains to get, and we fully expected that, especially as our first quarter sales complex, probably the toughest of the year, and few two gets quite a bit easier from a sales standpoint.

Speaker Change: Thanks, I think the theme of the day from progress and and and continued work to do which we intend to duty to improve our competitiveness throughout the year.

Speaker Change: It is certainly true for an hour. It's also true for for Blue Buffalo I would say the first quarter kind of played out as we anticipated for.

Speaker Change: For both of those segments, we improved our competitiveness and our but there is still market share gains to get and we we we fully expected that especially as our first quarter.

Speaker Change: Comp is probably the toughest of the year and Q2 gets quite a bit easier from a sales standpoint and.

Jeff Harmening: And, you know, we talked a lot above our great news on our biggest brands, but most of that starts to hit in the second quarter.

Speaker Change: We've talked a lot above our great news on our biggest brands, but most of that starts to hit in the second quarter. So.

Jeff Harmening: So, like Andrew, I would say I'm not going to predict where we end up at the end of the year. It's a it's a long year. My, my belief is that we'll keep getting better as the year progresses, starting in Q2 with our competitiveness. And that's what I would expect given the first quarter play that, as we thought. And the news that we have introduced seems to be landing the way we wanted to.

Speaker Change: Andrew I would say I'm not going to predict where we ended up at the end of the year and so it's a long year. My my belief is that we will keep getting better as the year progresses, starting in Q2 with our competitiveness and that's what I would expect given that given the first quarter played out as we thought and the news that we have introduced.

Speaker Change: Seems to be landing in the way we wanted to.

Kofi Bruce: And I would second question. We continue to be focused on and expect, you know, gradual improvement as we move through the year and total sales. And to the point of our expectations for the full year, there is nothing that, you know, tells us where we're probably off mark and expecting equal contributions from volume and price mix as we work our way through the year towards our guidance.

Speaker Change: Yes.

Speaker Change: Second question.

Speaker Change: We continue to be focused on and expect.

Speaker Change: Gradual improvement as we move through the year.

Speaker Change: In total sales.

Speaker Change: And to the point of our expectations for the full year it was nothing that debt.

Speaker Change: Tells us, we're probably off mark expecting equal contributions from from volume and price mix as we work our way through the year towards our guidance.

Thanks, so much.

Kofi Bruce: You best.

Speaker Change: You bet.

Michael Lavery: Our next question comes from Michael Lavery from Piper Sandler. Please go ahead.

Speaker Change: Our next question comes from Michael Lavery from Piper Sandler. Please go ahead. Your line is open.

Michael Lavery: Your line is open. Thank you.

Speaker Change: Yeah.

Jeff Harmening: Good morning. When you talked about some of the continued market share improvement, you cited one of the drivers has improved customer service levels.

Michael Lavery: Thank you and good morning.

Michael Lavery: When you talked about some of the.

Michael Lavery:

Speaker Change: Continued market share improvement you cited one of the drivers as improved customer service levels.

Jeff Harmening: Can you call out maybe where that still has been an issue and what the kind of road map is or timing for improvement there? So we have seen improved customer service, gradually across most of the portfolio, but cutely so in our food service business, our pet business, in particular. Those have been aided by, I would say, bigger changes in service levels, but an aggregate service levels are moving close to where they were pre pre-pandemic. So it's not any one particular category. It's just, it's just broad improvement for that. Say specifically when our food service portfolio and are refrigerated, and you know, obviously across our pet portfolio, both are internal and external supply chain reliability has improved service levels across all the formats.

Speaker Change: Can you call out maybe where that's still has been an issue and what the.

Speaker Change: Kind of roadmap is our timing for improvement there.

Speaker Change: So we have seen improved customer service.

Speaker Change: Gradually across most of the portfolio acutely so in our foodservice business.

Speaker Change: Our pet business.

Speaker Change: In particular, those who have been aided by I.

Speaker Change: I would say bigger changes and the service levels, but in aggregate. Our service levels are are moving close to where they were pre pandemic.

Speaker Change: So it's not any one particular category it's just.

Speaker Change: Broad improvement for that.

Speaker Change: Say, specifically with our foodservice portfolio on our refrigerated.

Speaker Change: And obviously across our pet portfolio, both our internal and external supply chain reliability has improved service levels cross across all the formats.

Jeff Harmening: Okay, that's helpful. And on pet, you, it's a bit it's that the quarter kind of, you know, you're seeing progression that it's as you would expected.

Speaker Change: Okay. That's helpful.

Speaker Change: On pet you.

Speaker Change: It's the quarter kind of <unk>.

Speaker Change: Youre seeing progression.

Speaker Change: You had expected can you give a sense of a little bit more what's ahead and maybe specifically on wilderness, even if the declines are moderating do you.

Jeff Harmening: Can you give a sense of a little bit more what's ahead and I may be specifically on wilderness, even if the declines are moderating.

Jeff Harmening: Do you have an idea of when actual growth is expected and how we should be what we should be looking for there?

Speaker Change: I do.

Speaker Change: Do you have when actual growth as expected and how we should what we should be looking for there.

Jeff Harmening: Yeah, it's a good, very fair question. You know, I was pleased by our improvement in Q1 on pet, particularly the on the sales, but I mean we were down 1%. I think we lost 0.1% market share. Forget and our drive our drive pet food business Wilderness and Life Protection Formula. And and actually taste bold and cab actually gain shares we can gain share on 60% so it's a good improvement on one is clearly not the goal and even a wilderness improved it did not improve all the way that we want.

Speaker Change: Yeah, that's a good fair very fair question, yes.

Speaker Change: I was pleased by our improvement in Q1 on on pattern, particularly the on the sales floor.

Speaker Change: We were down 1% I think we lost 1% market share I forget.

Speaker Change: Our drive or drive pet food business.

Speaker Change: Wilderness and life protection Formula.

Speaker Change: And and actually tasteful than cat actually gained share. So we kind of gained share in 60%. It's a good improvement on one is clearly not the goal and even if wilderness improved it would not improve all the way that we want so I'm really pleased with the direction.

Jeff Harmening: So I'm really pleased that the direction on the momentum and there's I think there's more to come on wilderness specifically. You know, we just turned on the advertising, you know, at the end of the first quarter to new advertising, which shows the protein relative to our nearest competitor. We, you know, we've seen, we've seen the games we thought, but you know, it was take a little while from the feeding cycle of pets. I will also say, you know, starting in the second quarter. So we're going to help on the advertising in the second quarter. But in addition, you know, a couple other things on the wilderness that will help us.

Speaker Change: Mentum and Theres I think theres more wilderness specifically.

Speaker Change: We just turned on the advertising at the end of the first quarter, the new advertising, which just shows the protein relative to our nearest competitor.

Speaker Change: We've seen you see.

Speaker Change: The gains we saw.

Speaker Change: But you know those take a little while and they're feeding cycle of pets I hope so.

Speaker Change: You say you know starting in the second quarter. So we're gonna have to catch up on advertising in the second quarter, but in addition.

Speaker Change: A couple of other things.

Jeff Harmening: The first is that we're reintroducing some grain-free products. So we have some some green free products heading back to the portfolio as we had a few years ago. The other is that we're adjusting sizes and making some smaller sizes. Again, in this current economic environment, smaller bags of dog food tend to do better. So we're reintroducing those. And we have commitments from a couple of our pet specialty customers to improve the way that they feature Wilderness in store. And so we're working with that retail customers; all those things hit in the second quarter. So, you know, my expectations that we continue to see improvement on wilderness and pet into the second quarter.

Speaker Change: That will help us the first is that we're reintroducing some grain free products. So we have some some grain free products heading back to the portfolio as we had a few years ago. The other is that we're adjusting sizes, making some smaller sizes again in this current economic environment, our smaller bags of dog food tend to tend to do better. So we're reintroducing those.

Speaker Change: And we have commitments from a couple of our pet specialty customers to to improve the way that they feature wilderness in store and so we're working with our retail customers all of those things hit in the second quarter. So my expectation is that we continue to see improvement on wilderness and pet into the second quarter, and we'll see what that yields so I'm not going to I'm not going to give a number for how much.

Jeff Harmening: And we'll see what that yields. So I'm not going to. I'm not going to give a number for how much is going to. But looking for improvement on our pet business in the second quarter and on and on.

Speaker Change: But looking for improvement of our pet business in the second quarter and on a and all the rest.

Michael Lavery: Okay, great.

Speaker Change: Okay, great. Thanks, so much.

Max Gumport: Thanks so much.

Max Gumport: Our next question comes from Max Gumport from BNP Paribas. Please go ahead; your line is open.

Speaker Change: Yeah.

Max <unk>: Our next question comes from Max <unk> from BNP Paribas. Please go ahead. Your line is open.

Max Gumport: Hey, thanks for the question. Jeff, last quarter you discussed your intent to return excess cash to shareholders in the form of share repurchases that you couldn't find attractive acquisition canvas. So I think the initial read of the intent to use all the proceeds from the yogurt investment researchers suggested there might not be attracted them in the out there.

Max <unk>: Hey, Thanks for the question, Jeff last quarter, you discussed your intent to return excess cash to shareholders in the form of share repurchases that you couldnt find attractive acquisition candidates. So I think the initial read of it.

Speaker Change: They intend to use all the proceeds from the yogurt divestiture suggested there might not be attractive M&A out there. It seems like in today's prepared remarks, you had a bit more pointed commentary about focusing on deals that are more bolt on in nature.

Jeff Harmening: It seems like in today's prepared remarks, you had a bit more pointed commentary about focusing on deals that are more false on the nature, specifically in that one to two billion transaction size range. So I think that helps to provide more clarity on the reason for why you're returning the proceeds to shareholders. I'm curious what you're seeing in the current environment that has made you focus on finding the next. And these are tights and pet treats business rather than the next Blue Buffalo.

Speaker Change: Likely in that one to 2 billion in transaction size range them because it helps to provide more clarity on and the reason for why you're returning.

Speaker Change: The proceeds to shareholders, but I'm curious what you're seeing in the current environment and that has made you focus on finding the next and ether Tyson pet treats business rather than the next blue Buffalo.

Jeff Harmening: Thanks. Yeah, so thanks for the question. I appreciate that.

Speaker Change: Yeah.

Speaker Change: Yeah. So thanks for the question I appreciate that and you know first I was kind of back up and say in the last fiscal year. We did exactly what I said, which is we didn't find any acquisition candidates that we really liked and so we returned money to the shareholders in the form of share repurchases. So.

Jeff Harmening: And you know, what first I was, you know, kind of back up and saying in the last fiscal year, you know, we did exactly what I said, which is we didn't find any acquisition candidates that we really liked. And so we returned money to shareholders in the form of share repurchases. So, you know, so we actually did we actually did what you said we're going to do in the last the last fiscal year.

Speaker Change: So we actually we actually did we actually did what we said we're going to do it in the last the last fiscal year.

Jeff Harmening: When it comes to this year, the, you know, we're in a, our balance sheet isn't a great place. And I mean, so with this, that investiture of our American yogurt businesses, we felt it important to make sure that all our investors know what we intend to do with those proceeds. And as we look at the environment, you're right; I got a little bit more specific in this, this release. And it really is kind of what we see in the near term. As you know, you know, the kinds of things that might be available to us in terms of bolt-offs.

Speaker Change: When it comes to this year, the where in our balance sheet isn't a great place and so with this divestiture of our.

Speaker Change: Erica in yogurt business says well, we felt it important to make sure that that all of our investors know that what we intend to do with those proceeds.

Speaker Change: And as we look at the environment you are right I I got a little bit more specific in this release and it really is kind of what we see in the near term.

Speaker Change: As you know the kinds of things that might be available to us in terms of bolt ons and similar to what we had done in and is there similar with what you had done and Tyson.

Jeff Harmening: And, you know, similar to what we had done. And he's similar with what you had done in Tyson. I mean, certainly if something, you know, bigger came along than we don't see now, we would, we could entertain the notion. But for us, it seems like our focus right now on what we see in the marketplace really is probably more availability of smaller size assets that we could bolt on that would enhance our growth. So still enhancing our growth. But bolt it on to businesses we already, we already own.

Speaker Change: Certainly if something you know bigger came along that we don't see now we would we could entertain the notion but for us it seems like our focus right now on what we see in the marketplace really is probably more availability of smaller sized assets that we could bolt on that would enhance our growth so still enhancing our growth.

Speaker Change: But bolt it onto the businesses, we already we already own and importantly, I mean, I know that you know this because you've been following us for a while but for those who havent been maybe we're able to do these bolt on acquisitions and repurchase shares at the same time, we did it with ice and we did it with Annie's we've done it for a long we've done it for a long period of time, and so we get a little bit more spin.

Jeff Harmening: And importantly, I mean, I know that you know this because you've been following this for a while, but for those who haven't been maybe, you know, we're able to do these bolt-on acquisitions and repurchase shares at the same time. We did it with Tyson, we did it with Annie's; you know, we've done it for a long, we've done it for a long period of time. And so we got a little bit more specific on the near term, only because that's the way it looks to us and looks to be our focus over the coming, over the coming time.

Speaker Change: Click on the near term only because that's the way it looks to us it looks to be our focus over the coming over the coming time and you know we have the balance sheet to be able to do both of those things at the same time add on bolt on acquisitions and do this this yogurt divestiture and as well as repurchase shares.

Jeff Harmening: And, you know, we have the balance sheet to be able to do both of those things at the same time. Add on bolt-on acquisitions and do this yogurt divestiture as well as repurchase shares. Thanks.

Jeff Harmening: And then, with regard to improving your competitiveness, which is clearly a focus for this year, it is nice to see the progress in the first quarter. And I recognize your far from declaring victory on that crunchist.

Speaker Change: Thanks, and then with regard to improving your competitor, which is clearly a focus for this year. It is nice to see the progress in the first quarter and I recognize you're far from declaring victory on that front, just yet, but I'm wondering if you think investors should be making too much of a big deal out of the last.

Jeff Harmening: Yeah, but I'm wondering if you think investors would be making too much of a big deal out of the last month or so of data, which would suggest you took a step backwards. I realized it's just a quad week, and there could be volatility, but it'll take in cereal, refrigerated dough. Snack bar switch snacks. There was a bit of a step backwards, but it does sound like you have more product news coming later on in two cues. I just curious how you think you should all be reading that latest quad we could data. Yeah, so your question says commentary on Q1 is right.

Speaker Change: Or set of data, which would suggest he took a step backwards.

Speaker Change: That's the quad week, and there can be volatility but.

Speaker Change: They can cereal refrigerated dough snack bar fruit snacks everybody.

Speaker Change: A step backwards. It does sound like you have more product news coming later on in <unk>. So just curious how you think we should all be reading that latest quad week of data. Thanks.

Speaker Change: Yeah. So your your your question says commentary on Q1 is right I mean, we did make progress theres no victory being declared but but but I would say that we're confident in that you know the first quarter played out the way we saw it both in terms of the macro environment and our improved competitiveness and we understand that there's a job left on them, which is to kind of get back all the way to.

Jeff Harmening: I mean, we didn't make progress. There's no victory being declared, but I would say that we're confident in that, you know, the first quarter played out the way we thought, both in terms of the macro environment that are improved competitiveness, and we understand that there's a job left undone, which is to kind of get back all the way to share growth and absolute growth.

Speaker Change: To share growth in absolute growth I mean down one is not the is not the goal, but we're confident we can get there given what we see coming up on the horizon in terms of in terms of our initiatives over the last four week period.

Jeff Harmening: I mean, down one is not the goal.

Jeff Harmening: But we're confident we can get there given what we see coming up on the horizon in terms of our initiatives over the last four-week period. I'm not sure the angst of investors feel over the last four-week period, but I can tell you it's entirely due to a timing of merchandising shift from one period to another. So it's really a big, a really big merchandising programs that shift in timing. So I am not worried about what you see in the scanner data for the last month.

Speaker Change: I'm not sure the angst of investors for you over the last four week period, but I can tell you is it's entirely due to.

Speaker Change: Timing of merchandising shift from one period to another so it's really a big really big merchandising programs that shifted timing. So I am not worried about what you see in the scanner data for the for the last month.

Operator: And I'm very glad to hear that.

Speaker Change: Great. Thanks very much.

Speaker Change: In the category.

Speaker Change: Thanks.

Rob Dickerson: Our next question comes from Rob Dickerson from Jeffrey. Please go ahead.

Speaker Change: Our next question comes from Rob Dickerson from Jefferies. Please go ahead. Your line is open.

Rob Dickerson: Your line is open. Great.

Rob Dickerson: Thank you so much. I guess you touched on kind of pricing couponing a little bit earlier, but I am just curious, you know, as we think through, I guess Q2 and then I also, I guess back after the year, like, you know, is there a scenario that kind of plays out such that North America price mix could actually be positive this year. I mean, clearly, you know, there's a lot of discussion around promotional needs and what we're doing on pricing and the value-based consumer, et cetera. But at the same time, there's a comment in the prepared remarks that spoke to like selling the right, you know, pack size, the right channel, the right price.

Rob Dickerson: Great. Thank you so much.

Speaker Change:

Speaker Change: I guess you touched on kind.

Rob Dickerson: Kind of price and couponing, a little bit earlier, but I am just curious you know as we think through I guess Q2, and then you also I guess back half of the year like it is is there a scenario that kind of plays out such that.

Rob Dickerson: North America price mix could actually be positive this year.

Speaker Change: I mean, clearly you know there's a lot of discussion around promotional needs and what we're doing on pricing and the value based consumer et cetera, but at the same time, there's a comment in the prepared remarks.

Speaker Change: Spoke to like selling the right pack size the right channel at the right price, but then also maybe there is some price mix benefit on some of those shifts. So just trying to get a sense of kind of the price mix outlook for the year.

Rob Dickerson: But then also maybe there is some price mix benefit on some of those ships.

Kofi Bruce: So just trying to get a sense of kind of the price mix outlook for the year. Yeah, I was, you know, the less, okay, we know kind of what's happened this year in our categories where you see kind of an equal contribution from, from rate and from, from mix or from rate and volume in our categories. And that's kind of what we see playing out for the year, kind of an equal contribution. And it's more or less what we saw in the first quarter. Then, if you look at our business, you'll look at our price mix was down 1%; it was entirely mixed.

Speaker Change: Yes.

Speaker Change: The.

Speaker Change: Okay, you know kind of what's happened this year in our categories, where you see kind of an equal contribution from from rate and from from mix.

Speaker Change: Right and volume in our categories and that's kind of what we see playing out for the year kind of an equal contribution and that's more or less what we saw in the first quarter that if you look at our business.

Speaker Change: You'll look at our price mix was down 1%. It was entirely mix in fact more than entirely more than entirely mix and mix is a hard thing to.

Kofi Bruce: In fact, more than entirely and more than entirely mixed and mixes a hard thing to, to really predict as we, as we look ahead. I mean, we don't comment on pricing or promotion plans as we look ahead. But I mean, I think it's important to note that our categories are very rational. And that what we see is input cost inflation is certainly moderated. But it's still, you know, are still our forecast for us for the year is 3 to 4%. And, and so, you know, as we look ahead, we see, you know, rational categories, and we see a little bit of inflation.

Speaker Change: To really predict as we as we look ahead I mean, we don't comment on pricing or promotion plans as we look ahead, but I mean, I think it's important to note that our categories remain very irrational.

Speaker Change: And that what we see as input cost inflation is certainly moderated.

Speaker Change: But it's still you know we're still in our forecast for us for the year is 3% to 4%.

Speaker Change: And so as we look ahead, we see rationale categories and we see we see a little bit of inflation and what I'm pleased with is that we have the productivity savings.

Kofi Bruce: And you know what I'm pleased with is that we have some productivity savings that can, that can really offset that.

Speaker Change: That can that can offset that can really offset that and so now our job is to drive growth. So as we look at the coming quarters.

Kofi Bruce: And so now our job is to drive growth. And so, as we look at the coming quarters, we'll see what happens with price mix, but it's played out exactly so far this year, kind of as we thought it would. And you know, we could see some modest improvement next; as we work our way forward, but to jump point it is, it is hard to predict.

Speaker Change: We'll see we'll see what happens with price mix, but it's played out exactly so far this year kind of as we as we thought it would.

Speaker Change: We could see some modest improvement mixed.

Speaker Change: As we work our way forward.

Speaker Change: To Jeff's point it is it is hard to predict.

Kofi Bruce: Fair enough.

Speaker Change: Fair enough and then just on.

Kofi Bruce: And then just on the M&A side, you know, again, prepare remarks, you know, spoke to kind of bolt-on attraction, 1 to 2 billion transaction size on average, simple question, kind of where you would like to go, right? Is this, you know, kind of build up a little bit more international scale, maybe leading to pet some, just any color you could provide would be fabulous. Thank you.

Jeff: On the M&A side.

Speaker Change: Again prepared remarks, you spoke to kind of bolt on track.

Speaker Change: Traction in one or $2 billion transaction size on average simple question are kind.

Speaker Change: Kind of where you would like to go right is this kind of build up a little bit more international scale maybe.

Speaker Change: Maybe leading into pets, just any any color you could provide would be a fabulous. Thank you.

Jeff Harmening: Well, I'll provide a little bit of color, but maybe not as colorful as you're. It's going to be things that, you know, that kind of bolt on to our existing categories. That would say specifically, you know, our category where you have a right to win, which, you know, in a large degree are our global businesses. And so, you know, you look at pet or you look at what we've done in acquisition and pet or snacking or what we've done in food service, I would expect more of those, both on the priority business, so we have a right to win and where we see growth.

Speaker Change: I'll provide a little bit of color, but but maybe not as colorful as yours.

Speaker Change: [laughter], it's gonna be things there.

That kind of bolt ons.

Speaker Change: Two are <unk>.

Speaker Change: Existing categories that was say specifically you know are the categories, where you have a right to win which you know in in a large degree our global businesses.

Speaker Change: And so you look at pet or you look at what we've done an acquisition in pet or snacking or what we've done in foodservice I would expect more of those bolt ons are priority businesses, where we have a right to win and where we see growth and it could be international it can be it can be domestic so I'm not going to get at that level of detail, but really where we have a <unk>.

Jeff Harmening: And it could be international, it could be, it could be domestic, so I'm not going to let that level of detail, but really where we have a competitive advantage, where we see growth, maybe get a little synergies along the way, those are the places where we'll, we will continue to look. All right, super.

Speaker Change: Competitive advantage, where we see growth maybe get a little synergies along the way those are the places where it will we will continue to look.

Speaker Change: Alright Super Thanks, guys.

Jeff Harmening: Thanks, guys.

Speaker Change: Thanks.

Brian: Our next question comes from Brian from Bank of America. Please go ahead.

Speaker Change: Our next question comes from Bryan Spillane from Bank of America. Please go ahead. Your line is open hey, thanks, operator, good morning, everyone.

Brian: Your line is open. Hey, thanks Operator.

Brian: Good morning, everyone. Two for me. One, just I think we've talked a little bit about, you know, kind of progress and trend.

Speaker Change: Hum.

Speaker Change: So two for me one just I think we've talked a little bit about.

Speaker Change: Kind of progress and trends so maybe kofi could you just tie together I think at the start of the year, we were kind of looking at more of a back half loaded plan to begin with so just as we're looking at the second quarter will look somewhat similar to <unk> I know, we've got the constant kind of wonky in pet, but any color you can give us in terms of.

Kofi Bruce: So maybe Kofi, could you just tie together. I think at the start of the year, we were kind of looking at more of a back half loaded plan to begin with. So just as we're looking at the second quarter, you know, we'll look somewhat similar to one, two. I know we've got the concert kind of wonky and pet, but any color you can give us in terms of phasing, I think will help, will be helpful. And then I got to follow up. So we would expect to see continued improvement off of this trend as we step in the Q2.

Speaker Change: Phasing I think will help will be helpful. And then I got a follow up.

Speaker Change: Sure.

Kofi Bruce: We would expect to see continued improvement off of this trend as we step into Q2.

Kofi Bruce: You know, I think it would be fair to characterize the years expecting gradual improvement in the top line as we work our way Q2 into the back half of the year. And then obviously profit a little bit more face the back half.

Kofi Bruce: I think it would be fair to characterize the year as expecting gradual improvement in the top line as we work our way Q2.

Kofi Bruce: The back half of the year.

Kofi Bruce: And then obviously profit a little bit more phased to the back half.

Kofi Bruce: Okay. Thank you.

Kofi Bruce: Okay.

Kofi Bruce: And then the follow up, Kofi, just on the divestiture and the dilution is, is there stranded overhead on incorporated and that I guess underneath my question is just, you know, is it dilute of initially, but then you work through the overhead and over time it actually isn't imminent. It isn't as dilute. Yeah. So our expectation that you're exactly right there. Our expectation is that there is there stranded overhead that we will take us a period of time. We would expect that period to be about two years or less for us to get that stranded overhead address and out of the cost structure.

Speaker Change: Thank you and then the follow up coffee just on on.

Kofi Bruce: The divestiture.

Speaker Change: The dilution is there stranded overhead.

Speaker Change: <unk> incorporated in that I guess underneath my question is just is it dilutive initially, but then you work through the overheads and over time, it actually isn't even it isn't as dilutive.

Speaker Change: Yes, our expectation you're exactly right. The our expectation is that there is there are stranded overhead that we will take US a period of time, we would expect that period to be about two years or less for us to get that stranded overhead addressed and out of the cost structure. So that that is.

Kofi Bruce: So that that is part of the drag in the dilution now. Okay.

Speaker Change: Part of the drag in.

Speaker Change: And the dilution math, Okay are there any TSA as also we should be aware of.

Kofi Bruce: Are there any TSAs also we should be aware of? Yeah, there will be TSAs as part of the terms of both of the sale agreements with Sodium Lactel. Okay, but not very material. Yeah, I would not consider the material to the dilution and accretion. All right, cool.

Speaker Change: There will be TSA.

Speaker Change: TSA as part of the terms of both the sale agreements with soda all might tell us.

Speaker Change: Okay, but not not very material.

Speaker Change: Yes, I would.

Speaker Change: Not considering the material to the dilution and accretion alright.

Kofi Bruce: Thank you. You bet.

Speaker Change: Thank you.

Speaker Change: You bet.

Leah Jordan: Our next question comes from Leah Jordan from Goldman Sachs. Please go ahead.

Speaker Change: Our next question comes from Lee Giordano from Goldman Sachs. Please go ahead. Your line is open.

Leah Jordan: Your line is open. Good morning.

Lee Giordano: Good morning. Thank you for taking my question I just wanted to follow up to the discussion on the more food at home trends supporting the volume lift is that a widespread lift versus your expected baseline across categories or any notable surprises to call out there.

Leah Jordan: Thank you for taking my question. I just wanted to follow up to the discussion on the more through-to-home trends supporting the volume list. You know, is that a widespread list versus your expected baseline across categories, or any notable surprises to call out there?

Jeff Harmening: And has that demand shift impacted your view on how you're promoting or messaging in this current environment, including the update on how you're thinking about the timing of the spin throughout the year. Yeah, as we look at a little bit of a shift from away from home to at home, first it's a little bit of a shift. I mean, it's from like 86% of food at home to 87%. So just to make sure we highlight that and don't overplay it. You know, the second I would say within the trend, it is broad based. And what we see is that the traffic at restaurants is down a little bit, and the traffic at what we call non-commercial outlets.

Speaker Change: And has that demand shift impacted your view on how you are promoting or messaging in this current environment, including any update on how youre thinking about the timing of the spin throughout the year.

Speaker Change: Yes the.

Speaker Change: As we look at a little bit of a shift from away from home to at home.

Speaker Change: First is it's a little bit of a shift I mean, its is from like 86% of food at home to 87%. So that just just to make sure. We highlight that don't overplay. It you know the second I would say within the trends. It is it is broad based and what we see is that the traffic at restaurants was down a little bit in the traffic.

Speaker Change: What we call a noncommercial outlet so places like K through 12 schools or colleges and University of your health care places like that we actually see growth.

Jeff Harmening: So places like K through 12 schools or colleges and universities or healthcare, places like that. We actually see growth, which is where we over-index. And importantly, we see growth versus the prior year, but neither are actually at pre-pandemic level. So it's growth off a base that was much lower than it was before, but growth in this non-commercial space, which we over index, which is why we have confidence in the growth of our food service business. In terms of the impact on our retail business, it's actually been quite broad-based across food and beverage. So it hasn't really impacted one category or the other significantly, because again, it's a one-point change versus what we saw a year ago.

Speaker Change: Which is where we over index in and importantly, we see growth versus the prior year, but neither are actually at pre pandemic levels. So is growth off a base that was much lower than it was before but growth in this non commercial space, which we over index, which is why we have confidence in the growth of our foodservice business in terms of the impact on our retail business.

Speaker Change: It's actually been quite broad based across food and beverage. So it hasn't really impacted one category or the other significantly because again, it's a it's a one point change versus what we saw a year ago.

Speaker Change: Yeah.

Speaker Change: Okay.

Jeff Harmening: I mean, we have had I think pretty consistent plans for to increase our investment behind media and brands this year. We saw that in Q1, that'll actually be even more in Q2. Jeff talked about some of the big seasonal initiatives that we have, whether it's on Pillsbury or Super Others. And so, making sure we're supporting our brands through that period of time is important. So you'll see even a bit more of an increase in brand support here in the second quarter, and that will continue in the back half.

Speaker Change: Oh spend I mean, we have had I think pretty consistent plans for to increase our investment behind media and brands. This year.

Speaker Change: We saw that in Q1 that will actually be up even more in Q2, Jeff talked about some of them. The big seasonal initiatives that we have whether it's on pillsbury or four super others, and so making sure we're supporting our brands through that period of time is important so you'll see even a bit more of an increase in brand support here in the second quarter.

Speaker Change: And that will that will continue in the back half.

Speaker Change: Okay.

Speaker Change: Okay.

Leah Jordan: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you and then for my follow up I don't think we've touched on international I get just see if you could.

Jeff Harmening: And then for my follow-up, I don't think we've touched on international yet to see if you could provide more color on trends in that segment. I mean, it sounds like Brazil has improved from last quarter. You know, what are the key drivers in that region. And then, if you could comment on China as well. I mean, that seems to still be challenged. You know, how are things turning sequentially and any updated use on on that region as we go throughout the year?

Speaker Change: I'll provide more color on trends in that segment I mean, it sounds like Brazil has improved from last quarter what were the key drivers in that region and then see.

Speaker Change: If you could comment on China, as well I mean that seems to still be challenged how are things trending sequentially and any updated views on that region as we go throughout the year.

Jeff Harmening: Sure, on our, on our, on our international business, you know, I was really pleased. First of all, it's really pleased about European results. You didn't mention that, but I, but I'll, but I'll, I'll tee up the question and answer it myself. Yeah, we did see some growth on our European Australian business, which is good because it's a, you know, it's a business that is a strong profit contributor. And so I like the way we're competing in Europe, in Brazil, you're right. I'm, we grew in the first quarter in Brazil on the, on the top line and a much improved from from the year before we, you know, it's one place.

Speaker Change: Sure on our Internet on our international business.

Speaker Change: Please first of all I'm really pleased with our European results, you Didnt mention that but I'll put out but all of it.

Speaker Change: I'll Tee up the question and answer it myself.

Speaker Change: We did see some growth in our European and Australian business, which is good because it's a you know it's a it's a business that has a strong profit contributor and so I like the way, we're competing in Europe, and Brazil, you're right. We grew in the first quarter in Brazil on the on the top line and a much improved from the year before we you know it's one place when we've talked.

Jeff Harmening: And when we've talked about this before, there's one place where, you know, we saw lots quite a bit of inflation over the last few years and probably didn't, you know, fully utilize strategic revenue management tools in the right way. And so, we've adjusted pricing in Brazil. It's one of the places where we needed to adjust. We've made the adjustments. We're seeing the benefits of that. So pleased with how we perform in Brazil.

Speaker Change: About this before is one place where we saw.

Speaker Change: Quite a bit of inflation over the last few years and it probably didn't fully.

Speaker Change: Fully utilize our strategic revenue management tools, and the right way and so we've adjusted pricing and in Brazil. It's one of the places where we needed to adjust we've made the adjustments we're seeing the benefits of that so pleased with how we performed in Brazil. The challenge for US really is just China and and within China, We have two businesses Wanchai ferry dumplings.

Jeff Harmening: The challenge for us really is China. And, and within China, we have two businesses: one side ferry dumplings and Hagan. It does kind of equally split; one side ferry dumplings doing fine. And even Hagan does a retail store and through e-commerce also doing pretty well. It's the Hagan dot shops; the shop traffic is down. And you must like keep seeing that probably heard other others in the market talk about the, you know, consumer pulling back and, and when they do you know shop traffic it down. And so, as we look at the rest of the year, while we would like that trend to improve, we're not banking on that trend improving for us to hit our guidance for the year.

Speaker Change: At Hagen Dazs kind of equally split once a ferry dumpling doing fine.

Speaker Change: And event Hagen Dazs retail stores and through E. Commerce also doing pretty well, it's the Hagen dazs shops, the shop traffic is down.

Speaker Change: And much like you've seen that probably hurt other others in the market talk about the consumer is pulling back in and when they do as you know shop traffic is down and so as we look at the rest of the year, while we would like that trend to improve we're not banking on that trends improving for us to hit our.

Speaker Change: So here our guidance for the year and so as we look at international I'm actually pretty pleased with most of it and the one area. That's challenging is is China and it is not really an execution challenge on our part it really is a more of a macroeconomic challenge with the shops. The margins on shops are low, but the fixed costs are high so it. So it has an impact on profitability.

Jeff Harmening: And so, as we look at international, I'm actually pretty pleased with most of it. And then the one area of this challenging is, is China. And it is not really an execution challenge on our part. It really is more of a macroeconomic challenge with the shops; the margins on shops below, but the fixed costs are high. So, it has an impact on profitability. So, that's what we're seeing a little bit in China. We're not counting on the, the economics to get better in the near term. So, it's just, you know, it's something we'll continue have to work with throughout the, throughout the year.

Speaker Change: So that's where we're seeing a little bit in China, we're not counting on the the economics to get better in the in the near term.

Speaker Change: Services, it's something we'll continue to have to work with throughout the throughout the year.

Speaker Change: Thank you.

Speaker Change: Yeah.

Robert Moskow: Our next question comes from Robert Moskow from TV Cowan. Please go ahead.

Speaker Change: Our next question comes from Robert Moskow from TD Cowen. Please go ahead. Your line is open.

Robert Moskow: Your line is open.

Speaker Change: Alright.

Speaker Change: Oh.

Robert Moskow: Sorry, we can't; we can't hear you. We heard just a tiny little sound. How's this?

Speaker Change: Sorry, we can't we can't hear you.

Speaker Change #100: When we heard just a tiny little Sam.

Jeff Harmening: I'm sorry. To what extent does morning foods currently operate? With an integrated cross-category strategy across cereal and yogurt? And does the investor of yogurt require you to alter your approach to the retailer or your consumer insights, and, you know, are there any implications regarding scale in that regard? Or is it just like there's different buyers as there's a cereal buyer. There's a refrigerated buyer, and it's very separate.

Speaker Change #101: How is that I'm sorry.

Speaker Change #101: Perfect Okay.

Speaker Change #101: Okay.

Speaker Change #103: To what extent this morning foods currently operate with an integrated cross category strategy across cereal and yogurt.

Speaker Change #103: And does the divestiture of yogurt require you to alter your approach to the to the retailer or your consumer insights.

Speaker Change #104: Are there any implications.

Speaker Change #105: Regarding scale in that regard or is it just like there's different buyers as it theres a serial buyer, there's a refrigerated buyer and it's it's very separate.

Jeff Harmening: The answer, the answer Rob, is much more the latter. There's not, there's not a category strategy when it comes to yogurt and cereal. I mean, they both participate in a lot of the morning occasion. So that, you know, things they have in common as well as, you know, kind of a combination of taste good and good for you. So they have that in common as well. But, but there's not really a, there's not broader implication with our retailers. There's not a broader implication on insights. We have insights embedded in that particular operating unit, but also we have insights in North America retail.

Speaker Change #105: The answer the answer Rob is more.

Rob Dickerson: Much more of the ladder theres.

Rob Dickerson: Theres not theres not theres another category of strategy when it comes to yogurt and cereal I mean, they they they both participate in a lot of the morning occasion.

Rob Dickerson: So that you know things that Havent com as well as you know kind of a combination of tastes good and good for you usually have that in common as well, but there's not really there's not broader implication with our retailers, there's not a broader implication on the insights we have insights embedded in that particular operating unit, but also we have insights in North America retail.

Jeff Harmening: They kind of span. So there is a business from standpoint and frankly from a manufacturing standpoint that's that's relatively easily, easily separable. And I wouldn't see an impact on cereal from that divestiture. Right.

Speaker Change #106: Kind of spans so there it's a business from that standpoint, and frankly from a manufacturing standpoint, that's that's a relatively easily separable and I wouldnt see an impact on cereal from from that divestiture right. Okay. Thanks, and a follow up you said six of your 10 categories are flat or get.

Rob Dickerson: Okay. Thanks.

Rob Dickerson: And a follow-up if it's six of your 10 categories are flat or getting better.

Jeff Harmening: Can you comment on the other four? Or like if it's snacks and dough, and what's the plan for accelerating the growth in those other four? Yeah, I would say that, you know, rather than taking you to around the world of all four, I would say that the biggest one, you know, the biggest one is is dealt. And a little next next. And so those are kind of the two biggest, by far. And with refrigerated dough, I think we have some phenomenal advertising coming up in the second quarter using the Doughboy. We have lots of product news in that category, launching some new products.

Speaker Change #107: Better can you comment on on the other four.

Speaker Change #108: Like is it snacks, and Doe and and what's the plan for accelerating the growth in those other four.

Speaker Change #109: Yeah, I would say that that you know.

Speaker Change #110: Rather than taking you to around the world have all four I would say that the biggest one the biggest one is as Dell and.

Speaker Change #111: Next and so those are those are kind of the two biggest by far and with refrigerated dough I think we have some phenomenal advertising coming up in the second quarter using the doughboy, we have lots of product news in that category launching some new products and so I would anticipate our doe business to get better in the second quarter, where we'll see about share R. R.

Jeff Harmening: And so, you know, I would anticipate our dough business to get better in the second quarter. We'll see about share our market share and dough is already about 75% or so. So the key to do it really just to get you know, to kind of grow it. And so I have a high degree of confidence in our plans as we look forward. We'll see what they yield, but our dough business. I feel good about.

Speaker Change #111: Market share in DAU was already about $7 75 per cent or social or the the key the DAU. It really just to get scale grow it and so I have a high degree of confidence in our plans as we look forward, we will see what the yield but our Doe business I feel good about and then fruit snacks a reminder.

Jeff Harmening: And then fruits next reminder: you may not remember this, but we're bringing on additional capacity starting in the second quarter. For particularly for our customer business, which has been capacity constrained, we have some really good new products, especially and got yours also coming in the second quarter. So that's a business where I would expect to see some improvement as we move throughout the year. It may not happen in the second quarter, but as we move through the year, I would expect us to see improvement in our fruits next business. So those are the two biggest ones, Rob, of the one where we feel like OK, we made a good progress on a lot of them, but those are two we need to continue to make progress.

Speaker Change #111: You may not remember this but we are bringing on additional capacity starting in the second quarter.

Speaker Change #111: For particularly for our <unk> business, which has been capacity constrained we have some really good new products, especially on gushers also coming in the second quarter. So.

Speaker Change #111: That's a business, where I would expect to see some improvement as we move throughout the Europe and you know what will happen in the second quarter, but as we move through the year I would expect us to see improvement in our AR and our fruit snacks business. So those are those are the two biggest ones Rob of the one where we feel like okay. We made a good progress on a lot of them, but those are two we need to continue to make progress.

Rob Dickerson: Got it thank you.

Speaker Change #111: Yeah.

Jon Baumgartner: Our last question today will come from Jon Baumgartner from Musical Securities. Please go ahead; your line is open.

Speaker Change #111: Our last question today will come from John Baumgartner from Mizuho Securities. Please go ahead. Your line is open.

Jon Baumgartner: Good morning, thanks for the question.

Speaker Change #112: Good morning, Thanks for the question.

Jon Baumgartner: Morning, Jeff. I wanted to come back to North America and the comments on competitiveness and the larger eating-at-home environment.

John Baumgartner: Good morning.

John Baumgartner: Good morning, Jeff I wanted to come back to North America, and the comments on competitiveness in the larger eating at home environment, you're looking at recent innovation. It seems to appeal, maybe a bit differently to the frequency of consumption.

Jon Baumgartner: If you're looking at recent innovation, it seems to appeal maybe a bit differently to the frequency of consumption.

Jon Baumgartner: But Tatino's breakfast, the taco dessert shells, the most sugary Betty Crocker, how do you assess report fully at this point and the frequency of consumption relative to its potential? Are there certain brands or categories with that gap is completely significant?

Speaker Change #114: He knows breakfast Taco dessert shells, both sugar Betty Crocker.

Speaker Change #115: How do you assess your portfolio at this point and the frequency of consumption relative to its potential are there certain brands or categories, where that gap is still significant and in closing those gaps what's the relative importance between even more innovation relative to making pack size changes or marketing differently against the business in its current state.

Jeff Harmening: And in closing those gaps, what's the relative importance between even more innovation relative to making pack size changes or marketing differently against the business in its current state? Yeah, when we think about innovation, we kind of think about it broadly, and it can happen in all the ways you identify, which is new product innovation. It can happen through our marketing messaging, it can happen through pack sizes, it can happen through all those things. A lot of times, people focus on just the new product innovation, and probably I think our new product innovation is good, but it's like it'll be 5% of our business this year, and the rest of the 95% is really what drives profitability and growth and household penetration.

Speaker Change #114: Yeah.

Speaker Change #114: Yeah.

Speaker Change #116: Yeah, when we think about innovation, we kind of think about it broadly and it can happen at all the ways you identify which is new product innovation. It can happen with them through our marketing messaging. It can happen through pack sizes that can happen through all of those things.

Speaker Change #116: A lot of times people focus on just the new product innovation and by the way I think our new product innovation is good but it's like five it'll be 5% of our business this year and the rest of the 95%.

Speaker Change #116: It is really what drives profitability and growth in household penetration and so you know.

Jeff Harmening: And so you know, I will. So the key for us is to make sure we have innovation that's relevant category by category, and sometimes that's messaging, sometimes that's news, sometimes that's having the right pack sizes in place. And other times is new product innovation.

Speaker Change #116: I will so so the key for US is to make sure. We have innovation, that's relevant category by category and sometimes that's messaging, sometimes as news, sometimes that having the right pack sizes in place another times as new product innovation Fortunately.

Jeff Harmening: Fortunately, I've stood up before, so I'm maybe at the risk of just repeating myself, but as we look broadly landing in the second quarter, I feel good that we have good new product innovation or a billion dollar brands. We also have stepped up levels of advertising; you'll see some, I think, some exciting advertising on Tatino's coming here, starting in the second quarter, as well as new products from Old El Paso and new Old El Paso soups that we've lost in the marketplace, as well as news on our core like flaky or biscuit. So it really, so really is, and I go category by category, but everything I just mentioned is innovation on a billion dollar brand.

Speaker Change #116: Instead, it before so I'm, maybe at the risk of just repeating myself, but as we look broadly landing in the second quarter I feel I feel good that we have good new product innovation on our $1 billion brands.

Speaker Change #116: We also have stepped up levels of advertising, you'll see some some I think some exciting advertising on 13 I was coming here starting in the second quarter.

Speaker Change #116: As well as new products from old El Paso, and new old El Paso soups that we that we've launched into the marketplace as well as in the news on our core like flaky. Your biscuit. So it really so it really is go category by category, but everything I. Just mentioned is innovation on a 1 billion dollar brands.

Jeff Harmening: And I think that's the key; when you have good ideas on big brands, you tend to do better. And I think we have differentially good ideas on big brands, which, by the way, includes Blue Buffalo, not just North America retail.

Speaker Change #116: And I think that's the key when you have good ideas.

Speaker Change #116: Big brands do you tend to do better and I think we have differentially good ideas on big brands, which by the way includes Blue Buffalo, not just North America retail.

Speaker Change #116: Yeah.

Jon Baumgartner: Thank you.

Speaker Change #117: Thanks, Jeff.

Speaker Change #117: Yeah.

Jeff Siemon: Okay, I think that's all the time we have this morning. I appreciate everyone's engagement, and we look forward to catching up over the course of the coming months. Please reach out with any questions through today and for just speaking with you again next month.

Okay.

Speaker Change #118: Okay, I think thats all the time, we have this morning I appreciate everyones engagement and we look forward to catching up over the course of the coming months. Please reach out with any questions through today and we look forward to speaking with you again.

Operator: Take care.

Speaker Change #117: Next month.

Operator: Thanks, Julian, already.

Speaker Change #117: Take care, thanks, Julian over to you.

Operator: This concludes today's conference call. Thank you for your participation. You may have this.

Speaker Change #119: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change #119: Okay.

Speaker Change #119:

Speaker Change #119: Hum.

Speaker Change #119:

Speaker Change #119: Yeah.

Speaker Change #119:

Speaker Change #119: Yeah.