Q1 2025 Conagra Brands Inc Earnings Call
Speaker Change: [inaudible]
Speaker Change: i
Speaker Change: Good morning everyone and welcome to the Kanagra Brands Q1 fiscal year 2025 Q&A conference call.
Speaker Change: All participants will be in a listen-only mode, should you need assistance? Please sing to our conference specialist by pressing the star key called I-0.
Speaker Change: After today's quick presentation, there will be an opportunity to ask questions, ask a question you may press star and then one, to withdraw your questions you may press star and two.
Speaker Change: We also know today's event is being recorded. If it's time I'd like to turn the floor over to, let's make beer. Man, please go ahead.
Speaker Change: Thanks, Jamie. Good morning, everyone. Thanks for joining us today for our live question and answer session on today's results. Once again, I'm joined this morning by Sean Connolly, our CEO and Dave Marberger, our CFO.
Speaker Change: We may be making some forward-looking statements and discussing non-gap financial measures during this session.
Speaker Change: Please see our earnings release prepared remarks, presentation materials, and filings with the SEC, which can be found in the investor-relation section of our website, for more information, including descriptions of our risk factors.
Speaker Change: Gapton on Gap reconciliation and information on our comparability items.
Jamie: Jamie, please introduce the first question.
Jamie: In our first question today comes from Ken Goldman from JP Morgan. Please go ahead with your question.
Ken Goldman: Hi, thank you. I wanted to ask two questions. First, your commentary or your tone on snacking is certainly better than what we're seeing and hearing from a lot of other snack makers. I really almost all other snack makers out there right now.
Speaker Change: What are you seeing? Obviously, you know, you have a little more of a protein vent in your snacking business, but even your popcorn business, the...
Speaker Change: Tone was positive on and most popcorn brands that we see are not doing great. So just trying to get a sense of sort of, is it execution? Is it the portfolio? What are you seeing out there that's giving you that advantage right now?
Speaker Change: Hey Ken, it's Sean, you have the...
Ken Goldman: Our snack business is larger.
Speaker Change: Then I think people realize and it's also quite a bit different from other snack businesses in a couple of ways.
Ken Goldman: Number one, it's extremely focused on permissible snacks of protein and fiber rich snacks.
Ken Goldman: and number two, it's a non-DSD snack business. So we kind of stay out of the...
Ken Goldman: The ship space and we've been kind of building scale in the permissible snacks space for years now and we have a substantial business. So what we're seeing is...
Ken Goldman: More broadly in snacks, there's a clear pivot toward healthier permissible snacks, and particular, anything that's rich in protein or rich in fiber seems to be among the top priorities in those people who are consuming snacks. Obviously, snacking is a huge space.
Ken Goldman: We're very excited to add the fatty to our mix because that kind of gives us an even more premium meat stick product. But me sticks, as you can see in the repair remarks, is the fastest growing snacks of space of all snacks. And that's where the bulk of our businesses.
Speaker Change: Okay, thank you and then quickly on frozen food.
Speaker Change: You know, there's a lot of comments being weighed in the industry about scratch cooking and how that's picking up because partly because of the cost of eating away from home. I understand that, but what are your data showing about frozen food? It would seem to me that...
Speaker Change: You know, scratch cooking costs more than a frozen dinner. So, do your data show a pickup or a significant pickup in consumers really shifting from restaurants?
Speaker Change: Over the last few months, is it an accelerating trend, a no-shon you thought it would happen? I just don't know quite how much you're actually seeing in the data.
Speaker Change: Well, I think it's a really interesting question because our demand science team is constantly giving us this data and what we're seeing is interesting a year or so ago We did see some behavior shifts toward more scratch-cooking and I'm talking very affordable stuff, a bag of rice
Speaker Change: Pound a ground beef, things like that. Our products like Kansas Tomatoes would do well in that environment.
Speaker Change: But from what we're seeing in the data now, the scratch cooking behavior shift we saw a year ago seems to be running its course and specifically what we're seeing now is there's a pivot back to more convenient items.
Speaker Change: Even the some of the strength you guys point out in the perimeter of the store tends to be things that can be prepared in less than five minutes.
Speaker Change: So consumers have pivoted back to convenience, which we are capitalizing on in our frozen space.
Speaker Change: You know, I pointed out that frozen has been a growth engine for over 40 years in large part because of the convenience and affordability. We see that consumer pivot happening. We are more active as we should be as a leader in frozen than just about anybody else in the space and we're gaining as a result. So, you know, we invested to kind of nudge consumers back to this practice, but we had tremendous confidence that of all the consumer benefit areas we've tracked in the last 50 years. [inaudible]
Speaker Change: The single most unshakable one is the need for convenience and that's what we offer with our frozen business.
Sean: Thank you, Sean.
Speaker Change: Our next question, because our manager was all from Barclays, please go ahead with your question.
Speaker Change: Great, thanks so much for morning.
Lawrence: Lawrence, you know, Congress made obviously very good progress on large parts of the portfolio, right most notably frozen and snack domains. But this progress is...
Speaker Change: and maybe too often been clouded by sort of various other parts of the portfolio, like maybe a little bit of a leaky bucket at times. And some of those businesses I think would seem to be at least a peer to be less core, at least from the outside.
Speaker Change: An understanding each business plays a different role within your portfolio, but maybe in light of you are much more I sounded to me pointed remarks in the today's prepared commentary around getting back to portfolio reshaping.
Speaker Change: I guess I'm curious if we should take this to mean, maybe now there's a greater appreciation to the benefits of portfolio reshaping, even if it comes with maybe some near-term or institution but longer-term growth and sort of value creation.
Speaker Change: because if I'm not mistaken, it's definitely made more of a direct point I've thought in today's Repair remarks than I've seen in the past. Thank you.
Speaker Change: Yeah, let me unpack that for a first. I will say that having a Hebrew national issue in grilling season is kind of like getting a flat tire on the way to your wedding.
Speaker Change: It's unfortunate timing, but just like the flat, it's a minor issue and you have to deal with it and you keep moving.
Speaker Change: with respect to the portfolio reshaping, as I've said many times.
Speaker Change: Our true north, long-term has been perpetually reshaping our portfolio for better growth and better margins.
Speaker Change: and we do that three ways. Number one, we invest in the businesses we own, especially innovation, as you all know. Number two, we seek to acquire faster growing businesses in snacks or in frozen. And number three, we digvest slower growth assets.
Speaker Change: So as I mentioned in our prepared remarks, our strong cash flow and our balance sheet progress have put us in a position to put more focus on this.
Speaker Change: But as I said, all while continuing to make progress getting to our leverage target of 3.0 times.
Speaker Change: So, you know, that means that when it comes to acquisitions, we're really not talking more than both ons and you saw that with fatty in this quarter. And as for investigators, if it's a slower growth asset or not a strategic fit, it's a candidate to go if an exit would generate a number out of above intrinsic value.
Speaker Change: So we've done quite a bit of this over the years and we're very disciplined to ensure that if we do it, we're going to create value and not destroy value and you know now that we've got the cash flow with the balance sheet in place we think we can.
Speaker Change: Be more active, reshaping and continue to make progress on our, on our, on our balance sheet and the hitting the debt target.
Speaker Change: Thank you and then a quick follow-up, obviously even if we take out the Hebrew National Disruption Organic for the quarter, maybe came in. I guess a little bit, I mean it was sequentially improved as you thought it would be, but still maybe not quite where maybe you'd hoped it had been or where street estimates were.
Speaker Change: It sounds like TQ also right, it's some gradual sequential improvement but still a greater amount of reinvestment.
Speaker Change: So, it seems like more of the pressure than even maybe you might have thought at the start of the year is going to be in the second half. I guess what gives you the confidence of the visibility, the sort of the full year reiteration is sort of the right approach given it seems more second half-weighted, but maybe I'm seeing that not in the right way. Thanks so much. Yeah, and no question there was a lot of noise in the chorus, why we're trying to impact it today in terms of the...
Speaker Change: The Organic Dollar Sales Miss versus Consensus Andrews, it's two places in David one pack this in just a second after I make another point. One is mix.
Speaker Change: and the other is food service, what you guys were expecting in food service. But the bottom line from my vantage point is that after Q1, we are largely where we expected to be.
Speaker Change: While we didn't expect the Hebrew National Disruption, to me that is not as noteworthy as the fact that our investments are working quite well, our scanned volume was positive and frozen and snacks, and our share performance was outstanding.
Speaker Change: So, you know, it's not lost on me. There's a lot of noise in the quarter. That's why we're one endeavoring on packet in detail. So we can enable clarity on the quarter fund to metal. So, back over to Dave to kind of talk about this, the other two factors I just mentioned.
Dave: Yeah, so Andrew, there's...
Dave: When we originally gave guidance and we gave some color on 21.
Dave: We were trying to give some perspective on, we didn't expect Q1 to be strong, was going to be our lowest sales quarter, was going to be our lowest margin quarter. We had some wraps on SGA, so we tried to put that out there, but as you know, we don't get specific guidance on Q2. So other than the Hebrew national situation.
Dave: We were in line or better than our internal plans for Q1, it was just different than consensus. And so, you know, we'll manage that. As we look going forward, I gave some color on the call in terms of Q2 and then full year.
Dave: I did make the comment that Q2 would be our highest trade merchandise in quarter of the year. It's also our highest sales quarter of the year by a good amount, so that's part of it. We do expect some of the key variables.
Dave: going forward.
Dave: We do expect our absorption to start the moderate and get positive. That's really important because
Dave: Absorption was a headwind into one. That tamped down our gross margins because volumes have been down, but as volumes in flex and get positive, we'll start to see that as more of a tailwind than a headwind. So that's a big part of our forecast.
Dave: We talked about sales mix in Q1 being unfavorable. We expect that to normalize as we move forward as well.
Dave: Our productivity, we are very pleased with that and to want it, and we expect that to continue.
Dave: to accelerate as we move forward.
Speaker Change: So, you know, it's pretty much right now.
Speaker Change: Playing out like we thought the two big differences are one, the Hebrew impact, the Los sales of 27 million and then the lost, the overall additional cost and lost profit of 11 million that hit in 21 and then secondly we took up our forecast for inflation 20 basis.
Speaker Change: So those two things give in the momentum we see in productivity given our expectation that absorption will start to flip.
Speaker Change: and what we're seeing so far with the strong ROI on our merchandising and our expectation that volumes are going to continue to improve each quarter.
Speaker Change: We feel like we have a line of sight to offset the two headwinds with Hebrew and inflation, and that's why we're holding guidance. So there's a lot there, but it's pretty consistent with the way we originally built the plan for the year.
Speaker Change: God, thank you so much.
Speaker Change: Our next question comes from Alexia Howard from Bernstein, please let me know with your questions. Good morning everyone.
Alexia Howard: Good morning.
Alexia Howard: So, two questions. The first one is just about where price mix goes from here now that we're lacking the tomato product price increase, especially if I think you commented that the trade spend investments are going to be higher next quarter and then I have a follow-up.
Speaker Change: Yes, so as we've mentioned, like see, we expect our overall sales to continue and prove going forward, so we expect volume improvement each quarter.
Speaker Change: I'm so year to go, we expect volumes to be positive.
Speaker Change: We do expect for the full year that price mix will be negative.
Speaker Change: but that rate of sort of decline that we saw in year on year to decline that we saw in Q1 should start the moderate going forward. So yes, we have higher merchandising in Q2, but it is a higher sales quarter as well. And it's going into its the holiday beginning of the holiday season. So there's some more seasonal promotion there. So I don't want that to be taken out of context that it above what we plan. It's just the way it flows Q2. We have more spend given that the sales and the seasonal dynamic.
Speaker Change: Got it. And then as a follow-up, more of a sort of taking a step back question.
Speaker Change: For a number of years, you've been focusing less on advertising and promotion within the SGNA line and maybe a little bit more on promotional though I recognise that today you laid out that promotional spending is still pretty rational.
Speaker Change: I think in fiscal 24, your advertising spend was at about two and a half percent of sales 2.4 percent, which came lower than the pair average.
Speaker Change: Is there the share trends are looking good, but is the category growth being affected by some of that pullback, particularly in light as the very significant pullback that you saw this quarter? Thank you and I'll pass it on.
Alexis: Yes, sure, Alexis.
Speaker Change: The investment we make in brand building, which is how I'll frame it as opposed to what's in the A&P line below the line.
Speaker Change: is in multiple places in the P&L.
Speaker Change: The place where we put...
Speaker Change: Probably significantly more emphasis in some of our peers in terms of investing in brand building actually goes into cogs.
Speaker Change: and it shows up in higher quality product innovations, more innovation and higher quality packaging innovations.
Speaker Change: We are probably more relantless than we have greater scope in terms of the magnitude of the innovation we do on an annual basis.
Speaker Change: and that has been the key to us driving category help over time, look at Frozen as an example.
Speaker Change: You know, almost 10 years ago now we said we're going to turn the frozen category, frozen meals category from a decliner to a grower. That has happened on the back of kind of unmatched innovation as opposed to unmatched A&P.
Speaker Change: Now within the A&P line what we've done over the years is we've taken the rate.
Speaker Change: from 4-ish to 2.5 largely by eliminating nonworking dollars.
Speaker Change: and eliminating low ROI investments like traditional inline TV. Instead, we focus our A&P investments largely in the digital social realm, in particular in the last number of years, as you've seen, TikTok, instead working with influencers, because our brand resonance and our innovation success has been terrific. It's just we manage to do that as efficiently as we can.
Speaker Change: so that we can continue to invest more in the cog's line in the form of kind of unmatched innovation.
Speaker Change: Thank you very much, I'll pass it on.
Speaker Change: Our next question, that's from Lee Jordan from Goldman Sachs. Please you have a good question.
Leah: Hi, good morning, yes, it's Leah. I just wanted to follow up on the snacking discussion, you know, great to see the share games you called out in that category broadly, but meets six is a notable one missing and you noted it's a high growth category. Maybe you could comment on how you see the competitive environment there, you know, the positioning of swim gym today and any potential outlook for more distribution opportunities and more color on how the new fatty addition plays until about.
Speaker Change: Great question. Here's what's happening in meet snacks and meet sticks specifically and it's super interesting.
Speaker Change: The category is really poised for.
Speaker Change: Material Growth because you've got an 80 billionish overall stack space.
Speaker Change: and there's a lot of potential shifting that we're beginning to see here from more car or sugar laden snacks into protein snacks specifically, protein snacks broadly and meat sticks specifically.
Speaker Change: When categories experience explosive growth like that, one of the first things you'll see is the addition of more varieties. So if you think of a large category like Cookies or a back in the old-day cereal, you would see a lot of varieties emerge as categories grow. That's a normal thing and that's what we've seen in the meat sticks world.
Speaker Change: and one of the new additions to the meat stick space was Fatty Smoke Meat Stick.
Speaker Change: and so we've been tracking that business kind of since its inception, it's additive to what we do with slim gym because slim gym skews to a younger demographic. Fatty is a more sophisticated product, more premium product that skews to an older demographic.
Speaker Change: So it's incremental and we thought it was a terrific fit to our portfolio with Slim Jim and Ducsen as I said now we've got the trifecta smoke house which we're already the market leader in the fastest growing stacking space of meat sticks and now we've got another arrow on our quiver
Speaker Change: Great, thank you. And then from my follow-up, also in the prepared remarks, you said, do you expect the consumer to remain challenged? Have you seen any shifts in behavior across your brands given the wide portfolio? And they've just given this assumption that they remain challenged. I guess why should promotional activity not revert back further to historical norms given their still below kind of 2019 levels? Are they responding to promotional activity differently anyway in the current environment?
Speaker Change: Sure. Well, it's what's happening in the world of promotions is kind of predictable in my eyes because promotions were suppressed because there were supply chain issues.
Speaker Change: They moved back toward pre-pandemic levels, but I think the key thing for me to see is that it kind of remains rational.
Speaker Change: Our promotional activity has been very specific. Number one, it's been targeted in frozen. And number two, it's been about quality merchandising frequency and not depth. It's really kind of a reminder.
Speaker Change: Effect that it hasn't in the shopping experience, but one of the things that we've seen when we mentioned the consumer's challenge is there is still value seeking behavior happening.
Speaker Change: and we have a broad and diverse portfolio and we have some products that offer exceptional value. Some of those products are the products that we have promoted, we put on display. And what we've seen when we've done that is incredibly high lifts.
Speaker Change: versus what we might have historically seen. That's one of the things...
Speaker Change: that is creating the mix effect on a dollar per unit basis that Dave talked about. But that's perfectly fine in our mind because those products, while they might be a negative mix at dollar sales, the gross margins tend to be equivalent.
Speaker Change: So what we're really doing is offering a value-seeking consumer, a tremendous value through the former promotion and getting really good lifts, which is great because we bring households back to our portfolio and that's ultimately what we're trying to do for the long-term cash flows of the business is keep that relationship strong with our households.
Speaker Change: Great, thank you.
Speaker Change: Our next question comes from Nick Modi from RBC, please go ahead with your question.
Nick Modi: Yeah, thank you. Good morning, everyone.
Speaker Change: I'm going to show you, you could just kind of a pine on all the noise between the out of home and in home, you have obviously restaurant traffic has been weak, we've seen a lot of the food services and so that many consumer companies have.
Speaker Change: you know, struggle over the past few months and quarters, but then you also have these very sharp price points at some of the QSRs and value meals and you know I have to assume that there's some interplay so I would just love your observations on kind of what you guys are seeing from that standpoint from a consumer, from a consumer behavior perspective.
Speaker Change: Well, I think in a simpler sense, as...
Speaker Change: People seek value, you do see trade downs and...
Speaker Change: One of the obvious trade downs you see is within a way from home meeting in the types of restaurants. People eat at, more toward value types of restaurants, and then...
Speaker Change: from away from home into the grocery store. And so, we've seen that, you know, our focus in food services you heard in our remarks today in this kind of...
Speaker Change: An unusual environment has been to protect the margin that we worked so hard to claw back after COVID and after.
Speaker Change: the pricing super cycle and we've managed to do that. One of the ways we've managed to do that is by exiting.
Speaker Change: and some unprofitable business, which obviously pressures the top line, but we think it's a right thing to do for the long term, but you know, the food service dynamic you're poking at is really just it goes under the banner of continued value seeking behavior, or tapping from away from home into the store and then it's happening within the stores.
Speaker Change: But ultimately what people will pivot to are the benefit areas that are most necessary for them to live their lives. And as I mentioned, convenience is pretty much at the top of the list.
Speaker Change: and I may be back to ask David a question just on the input call and anything that you would highlight, you know, in terms of things that are moving in the right or wrong direction, just to kind of give us a state of union there would be helpful.
David: Sure, Nick um
David: So to take it from the top, we had originally estimated our overall inflation and that's everything that's materials and our manufacturing and our transportation warehousing. We had estimated that as a 3% increase for the year, we're now estimating a 3.2%.
Speaker Change: the biggest changes in some of the material areas and really for us it's...
Speaker Change: It's coming down to just a few things. We spend a lot on beef in our inputs.
Speaker Change: and we're seeing double digit in place and even higher than we originally estimated and it's just, it's a supply issue, just that the lack of herd expansion, lower cattle weights from the heat, we're just seeing the impacts of this.
Speaker Change: on our forecast for a week and it's a big spend for us and other one is sweeteners.
Speaker Change: there's just tighter supply conditions driven mostly by the drought so double-digit inflation and what are big input categories for us.
Speaker Change: We're seeing some other more moderate inflation areas like chicken, we're seeing inflation and milk, but that's a smaller spend for us. So it's really coming down to a handful of categories.
Speaker Change: that we watch closely and we manage everything we can do, if we can take positions and try to manage that the best we can we do, but that's our latest call on where we see the overall inflation.
Speaker Change: Super helpful. I'll pass it on. Thank you.
Speaker Change: Our next question comes from Peter Gallo from Bank of America. Please go with your question.
Peter Gallo: Hey, guys, good morning. Dave, thanks for the detail on the beef cycle. Always a fun topic.
Speaker Change: I may just wanted to make a clarification on Hebrew National.
Peter Gallo: You know, just given this seasonality in that business and on Sean, I think in your comments, it shouldn't be that we expect really a meaningful rebound now that it's kind of behind you in the rest of the year. It's kind of, we have to wait more until grilling season of next year, you know, and I think you had a similar issue with fish sticks a few years ago, so maybe you can just clarify that.
Sean: Hotdogs is a business that has a baseline, but on top of that baseline between kind of a more-old-day labor-nap, there is a seasonal spike. So if you miss out on a good chunk of that, you don't get it back to the following season, you're absolutely right.
Speaker Change: Okay, thanks Sean for that.
Speaker Change: and then maybe Sean, you spent some time talking about stacking and Slim Jam is obviously a pretty important product in the convenience store channel.
Speaker Change: There's been a lot of debate, I think, amongst investors just around the cyclical versus structural nature of communion store kind of traffic decline.
Speaker Change: Curious anything you're hearing from the demand science team or just views there on how you're thinking about that channel, specifically within Snackay. Thanks very much.
Speaker Change: Sure, well I'd say it's obviously a huge channel in the sacking space, but as you all well know there's been a fair amount of channel shifting, literally from the onset of COVID through today.
Speaker Change: At the beginning of COVID, it was because people were moving out of big stores.
Speaker Change: into small stores because they thought it was safer, and then after COVID passed.
Speaker Change: and then we had the pricing super cycle and that was the pursuit of value. So you saw more volume moving through club stores and mass merge. And you also saw each food service at peak of inflation cycles, not food service. Convenience can be challenged because people get their gas and they may not go out of the store. Those tend to be...
Speaker Change: kind of cyclical transitory dynamics, so we try to remain agile. I think what we're seeing right now is to the degree there's
Speaker Change: and a temporary softness in convenience stores, you tend to see strength and mass merge in club as an example. So it's just that we've got huge businesses with all of these customers, we've got a be agile and kind of meet the shopper where they are.
Speaker Change: and
Speaker Change: Thank you.
Speaker Change: Our next question comes from Robert Moscow from PD Cowell and please go ahead with your questions.
Robert Moscow: Hi, thanks for the question. Dave, I was wondering if you could help us in refrigerated frozen just how to think about price mix going forward. Have you fully laughed?
Robert Moscow: the price rollback that you had last year in frozen entraise and maybe some other categories. And therefore does that kind of level off?
Robert Moscow: and then also with their more deflation pass through in Margerin, I guess. Are you still living with that for the next few quarters and then click follow-up?
Speaker Change: Yes, so in terms of the cadence of price mix or a refrigerator in frozen, I will still see.
Speaker Change: some kind of reduction in negative price mix in Q2. As we sort of go through Q2, we'll start to rap. So the second half we will be fully rap on that, so we should see kind of the down driver on that in terms of timing.
Speaker Change: What was your second question?
Speaker Change: is there like a deflation pass through just on like commodity related oils in this division, like for Margeron, for example.
Speaker Change: Yeah, so we've seen deflation in our edible fats and oils, and so we have passed that through, and that was in my comments today. We've had past-through price reductions on our spread businesses, which are obviously prominently oils.
Speaker Change: Okay, so that continues for the rest of the, that continues for the year, unless there's a change in the underland. You know, after Q2, we're wrapping on that.
Speaker Change: Oh, you're wrapping on that, too. Okay, okay. And then, follow up. There's a discrepancy, I think, between the IRI data and the Nielsen data on your meat snacks, sales. Your presentation today says things look pretty strong.
Speaker Change: Nelson's a little different. Like is this, is this a, do you think that this data, is your meets next business up year over year in the quarter overall in retail and in your shipments?
Speaker Change: Rob, I can't speak to the difference between the two data sources. We're just kind of showing you the strength we've got in the business overall, but we're very pleased with where we are and very pleased to add Faddy to the mix.
Speaker Change: But as you can see from the data, the universe we compete in is significantly outpacing the broader snacks universe and we are participating in that.
Bob: and just for Bob, for Slim Jim from the IRI data, or the quarter we're seeing volume increases, you know, kind of.
Bob: Little below 1% volume increase in slim gym.
Bob: Okay, what about dollars though, David, is that up as well or is that down a little?
David: Dollars are down lately.
David: Okay, all right, thank you.
Speaker Change: Our next question comes from Tom Palmer from City, please go ahead with your question.
Tom Palmer: Thanks for the question.
Speaker Change: You noted the higher lifts from items on promotion, and ultimately a portion of the percentage of sales on promo are driven by consumer decisions and not just with fun show.
Tom Palmer: I was wondering about the frequency of promotions on shelves, where else is the pre-pandemic level? Do you think that's kind of back to full levels or do you think maybe we'll see some changes there still to come?
Speaker Change: Well, the quality promotion that we try to drive on, and particularly it's been on our frozen business and mostly within our biggest frozen business, single-surmeals, we try to drive quality display. So we try to, in addition to just our normal shelf space in the frozen aisle, we try to get into the end caps because that is ultimately what drives the highest lifts.
Speaker Change: as opposed to just the tag on the shelf that has a modest price decline. So it's quality display at the end of the frozen aisle is really what we're after that should drive those maximum lifts.
Speaker Change: Thanks for that. And quick one on Arden, it was a bit light at the implied run rate for the year. I know there can be fluctuations, but this was the lowest in almost three years.
Speaker Change: Just any kind of thoughts on when we might see the rebound in that business and if there was anything notable to think about in one tube that maybe drove the slight downpour.
Speaker Change: Now, and I mentioned on my comments, and we've talked about it before, Arden's results can fluctuate based on volatility with the wheat market, so the core business of Arden, and the milling and selling a flower product that a margin is very strong.
Speaker Change: They do a great job servicing customers.
Speaker Change: The remaining business is this commodity revenue and that's the more volatile part of the business and it can be volatile, where it's a bit down and then it can go the other way and be positive.
Speaker Change: We're holding our forecast for the year with Arden, there is going to be some volatility, but we were a little bit softer than we wanted to be into one, but we're holding the year right now, because the volatility can really swing both ways.
Speaker Change: All right, thank you. Yup.
Speaker Change #100: Our next question comes from Max Gunport from BMP Parabelle. Please go ahead with your questions.
Max Gunport: Hey, thanks for the question with regard to the excitation for volumes to improve to the year, is that really a category dynamic or is a market-share expectation.
Max Gunport: It's a mix, Max. You know, we've got a fair, a good percentage of our categories are growing, which is great to see, but the share, as you saw in our numbers, is share strength is broad-based, particularly in the key domains of frozen snacks.
Max Gunport: Right, yeah, and I'm that market chair, you're right, I mean, it does look quite impressive, I think that was a highlight for the quarter. I'm curious what you think the key drivers are for the outperforming town up.
Speaker Change #102: and a violin basis, and then...
Speaker Change #103: So you think there's any help you're getting on volume, market share because you...
Speaker Change #104: Perhaps invested in price first, it feels maybe similar to what you were talking about a couple of years ago with also taking price first and then laughing that price increase.
Speaker Change #105: First, I just wonder if you're still ahead of your competitors in that cycle. It's a good question. It's a different answer in each of the domains. So if you take the frozen space first.
Speaker Change #105: What we see happening in the frozen spaces, the category has returned to growth driven by Connolly basically. The category goes in frozen as we go.
Speaker Change #105: So what we've done there is not deep discounting, so I would not put under the heading of major pricing incentives.
Speaker Change #105: We saw the consumer desire to get back to convenience, we saw the key on some of the scratch-cooking, and so we nudged them along by giving them a shallow discount, but unfortunately getting the product.
Speaker Change #105: and the end of the aisle in a display so we can remind them and we've seen a good responsiveness there and that's
Speaker Change #105: typically is what happens. That drive strength in the category and outside strength for our portfolio.
Speaker Change #106: It snacks, I think, you're dealing with a little bit of a different dynamic because we've started later in terms of...
Speaker Change #106: got more merchandising support on snacks there.
Speaker Change #106: It's been about price pack architecture to help the value seeker so in the case of slum gems.
Speaker Change #106: Smith selling smaller sizes, things like that. But the big tailwind on our snacking business is when it comes to share and overall growth is just what we talked about earlier, which is the pivot toward permissible snacking, particularly high protein eye fiber choices.
Speaker Change #107: Great thing for a mouthful of that.
Speaker Change #108: and Ladies and Gentlemen, at this time we'll be ending the question and answer session. I'll be tearing the floor back over to Melissa for any closing remarks.
Melissa: So, once again, thank you all for joining us for our call this morning and please reach out to Investor Relations with any additional questions.
Melissa: and Ladies and gentlemen, with that we'll be concluding the question and answer session and presentation for today. Would you thank you for joining. You may now disconnect your lines.
Melissa: [inaudible]
Melissa: [inaudible]