Q2 2025 Hormel Foods Corp Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Hormel Foods Corporation's second quarter earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Good morning, ladies and gentlemen, and welcome to the Hormel Foods Corporation second quarter earnings Conference call.

There's some all lines are in listen only mode.

Following the presentation, we will conduct a question and answer session.

Speaker Change: And if I'm doing this call Iroquois immediate assistance. Please press star zero for the operator. This call is being recorded on Thursday May 29, 2025, and I would now like to turn the conference over to MS Chess Blumberg Investor Relations. Please go ahead.

Operator: This call is being recorded on Thursday, May 29, 2025.

Jess Blomberg: And I would now like to turn the conference over to Ms. Jess Blomberg, Investor Relations. Please go ahead.

Jess Blomberg: Good morning. Welcome to the Hormel Foods conference call for the second quarter of fiscal 2025. We released results this morning before the market opened.

Chess Blumberg: Good morning, welcome to the Hormel Foods conference call for the second quarter of fiscal 2025.

Chess Blumberg: We released results. This morning before the market opened if you did not receive a copy of the release you can find it on our website Hormel foods dot com under the investors section along with our supplemental slide materials.

Jess Blomberg: If you did not receive a copy of the release, you can find it on our website, HormelFoods.com, under the investor section, along with our supplemental slide materials. On our call today is James Snee, President and Chief Executive Officer, Jacinth Smiley, Executive Vice President and Chief Financial Officer, and John Ghingo, Executive Vice President of the Retail Segment. Jim and Jacinth will review the company's fiscal 2025 second quarter results and provide a perspective on the remainder of the year. Then, John will join Jim and Jacinth for the Q&A portion of the call. The line will be open for questions following the prepared remarks.

Chess Blumberg: On our call today is Jim Snee, President and Chief Executive Officer, just since my Lee Executive Vice President and Chief Financial Officer, and John Gingell Executive Vice President of the retail segment.

Chess Blumberg: Jim and just since we will review the company's fiscal 2025 second quarter results and provide a perspective on the remainder of the year.

John Gingell: Then John will join Jim and just scent for the Q&A portion of the call.

John Gingell: The line will be opened for questions. Following the prepared remarks as a courtesy to the other analysts please limit yourself to one question with one follow up.

Jess Blomberg: As a courtesy to the other analysts, please limit yourself to one question with one follow up. If you have additional questions, you're welcome to get back into the queue.

John Gingell: If you have additional questions you're welcome to get back into the queue.

Jess Blomberg: At the conclusion of this morning's call, a webcast replay will be posted to our investor website and archived for one year. Before we get started this morning, I'd like to reference our Safe Harbor Statements. Some of the comments we make today will be forward looking and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which can be accessed at HormelFoods.com under the Investors section. Additionally, please note we will be discussing certain non-GAAP financial measures this morning.

John Gingell: At the conclusion of this morning's call a webcast replay will be posted to our investor website and archived for one year.

John Gingell: Before we get started this morning I'd like to reference our safe Harbor statements. Some of the comments, we make today will be forward looking and actual results may differ materially from those expressed in or implied by the statements we will be making.

John Gingell: Please refer to our most recent annual report on Form 10-K, and quarterly reports on Form 10-Q, which can be accessed at Hormel foods dot com under the investors section.

John Gingell: Additionally, please note we will be discussing certain non-GAAP financial measures. This morning management believes that doing so provides investors with a better understanding of the company's underlying operating performance.

Jess Blomberg: Management believes that doing so provides investors with a better understanding of the company's underlying operating performance. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Further information about our non-GAAP financial measures, including our comparability items and reconciliations, are detailed in our press release, which can be accessed from our corporate or investor website.

John Gingell: The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

John Gingell: Further information about our non-GAAP financial measures, including our comparability items and reconciliations are detailed in our press release, which can be accessed from our corporate or investor website.

James Snee: I will now turn the call over to James Snee. Thank you, Jess, and good morning, everyone. We achieved solid organic top line growth and delivered second quarter results in line with our expectations. We are committed to delivering profitable and predictable growth, and despite a dynamic operating environment, we stayed focused on our long-term strategy, executed with discipline, and delivered results consistent with our expectations. In retail, we continue to hold leadership positions in the marketplace across our diverse portfolio. Our success with both consumers and customers is rooted in providing a stable, reliable brand and products they can trust.

John Gingell: I will now turn the call over to Jim Snee.

Jim Snee: Thank you, Jeff and good morning, everyone.

John Gingell: We achieved solid organic top line growth and delivered second quarter results in line with our expectations.

John Gingell: We are committed to delivering profitable and predictable growth and despite a dynamic operating environment. We stayed focused on our long term strategy executed with discipline and delivered results consistent with our expectations.

John Gingell: In retail we continue to hold leadership positions in the marketplace across our diverse portfolio.

Our success with both consumers and customers.

John Gingell: Rooted in providing a stable reliable brand and products they can trust.

James Snee: while continuously evolving to meet the expectations of today's market. We continue to find ways to drive value for our consumers beyond price through quality, product differentiation, innovation, and convenience.

While continuously evolving to meet the expectations of todays market.

We continue to find ways to drive value for our consumers beyond price through quality product differentiation innovation and convenience desk.

James Snee: This quarter, I want to highlight three areas of the retail portfolio that really brought this to life. The Applegate brand is well aligned with today's consumer demand for convenient protein solutions. The brand experienced incredible sales growth, outpacing the total edible category while also growing household The launch of the convenience breakfast platform has been well received in the marketplace. Building on that momentum, the brand recently introduced a new line of lightly breaded chicken products, further expanding its reach and relevance. This ongoing pipeline of innovation, combined with a compelling value proposition, reinforces our confidence in the sustained strength and growth potential of the Applegate brand.

John Gingell: This quarter I want to highlight three areas of the retail portfolio that really brought this to life.

John Gingell: Yeah, Colgate brand is well aligned with today's consumer demand for convenient protein solutions.

John Gingell: The brand experienced an incredible sales growth outpacing the total edible category, while also growing households.

John Gingell: The launch of the convenience breakfast platform has been well received in the marketplace.

Building on that momentum the brand recently introduced a new line of lightweight breaded chicken products further expanding its reach and relevance.

John Gingell: That's ongoing pipeline of innovation combined with a compelling value proposition reinforces our confidence in the sustained strength and growth potential of the Applegate brand.

James Snee: At the same time, Jenny O'Lean ground turkey continues to be a high performing and strategically important offering within our portfolio. positioned to meet today's consumer preference. As demand for lean, high-protein food grows, Geneo is a go-to choice for consumers. demonstrated by consistent consumption gains and strong category leadership. Through the strategic transformation of the Geneo business over the last few years, we are further aligned at the demand driven portfolio.

John Gingell: At the same time, Jennie O lean ground, Turkey continues to be a high performing and strategically important offering within our portfolio.

John Gingell: Positioned to meet today's consumer preferences.

As demand for land high protein food grows Jennie O as a go to choice for consumers demonstrated by consistent consumption gains and strong category leadership.

John Gingell: Through the strategic transformation of the Jennie O business over the last few years, we are further aligned as a demand driven portfolio.

James Snee: We continue to have the right strategy and structure for steady, long-term Finally, our Mexican foods portfolio delivered on the growing demand of high quality and flavorful meal solutions at home. In the second quarter, we saw continued success with our legacy Erdős Salsa business. While our refrigerated guacamole portfolio experienced double-digit consumption growth, driven by AirDez and Holy Grail. To provide another authentic, convenient meal solution, the team expanded our refrigerated entrees line to now include Al Pastor. Led by our flagship and rising brands, our broader retail portfolio is well positioned to deliver the quality, differentiation, innovation, and convenience that consumers demand in today's market.

John Gingell: Continue to have the right strategy and structure for steady long term growth.

John Gingell: Finally, our Mexican foods portfolio delivered on the growing demand of high quality and flavorful meal solutions at home.

John Gingell: In the second quarter, we saw continued success with our legacy Air desk salsa business, while our refrigerated guacamole portfolio experienced double digit consumption growth driven by air des and wholly brands.

John Gingell: To provide another authentic convenient meal solution.

John Gingell: Team expanded our refrigerated entrees line.

John Gingell: Now include L test store.

John Gingell: Led by our flagship and rising brands, our broader retail portfolio is well positioned to deliver the quality differentiation innovation.

John Gingell: And convenience that consumers demand in today's market.

James Snee: Turning now to food service. Our food service business remained resilient in the quarter, despite industry suffering. Many of our branded products, such as Genio, Hormel Fire Braised Meat, and Cafe H Globally Inspired Protein www.HormelFoods.com delivered strong volume and net sales growth in the quarter. our direct selling organization's solution-based approach and a diverse channel presence has once again outperformed the broader food service industry. In addition to our already diversified portfolio that provides high quality and convenient solutions, the team is motivated to deliver on flavor trends and help our operators serve their customers faster.

John Gingell: Turning now to foodservice.

John Gingell: Our foodservice business remained resilient in the quarter despite industry softness.

Of our branded products, such as Jennie O Hormel fire braised meats and cafe H globally inspired proteins delivered strong volume and net sales growth in the quarter.

John Gingell: Our direct selling organization solution based approach and a diverse channel presence has once again outperformed the broader foodservice industry.

John Gingell: In addition to our already diversified portfolio that provides high quality and convenience solutions. The team is motivated to deliver on flavor trends and help our operators serve their customers faster.

James Snee: As an example, at the International Pizza Expo in March, the team showcased our latest pizza topping creation. Recognizing that hot honey has become the fastest growing pizza ingredient, our team saw the perfect opportunity to capture that craveable sweet heat in the form of our premium quality sausage. ultimately creating fontanini, hot honey, sliced, Additionally, our Flash 180 sous vide chicken is designed to streamline back-of-the-house operations. It delivers a consistent, high quality product while significantly reducing prep time and labor, allowing more operators to serve the most in-demand menu item, the chicken sandwich. It's this kind of multifaceted, food-forward thinking that keeps Hormel Food Service a leader in the marketplace.

John Gingell: As an example.

John Gingell: At the International Pizza Expo in March the team showcased our latest pizza topping creation.

John Gingell: Recognizing that hot honey has become the fastest growing pizza ingredients are.

John Gingell: Our team saw the perfect opportunity to capture that craveable sweet heat in the form of our premium quality sausage.

John Gingell: Ultimately, creating fontan Amy.

John Gingell: Honey placed sausage.

John Gingell: Additionally, our flash 180, <unk> chicken is designed to streamline back of the house operations.

John Gingell: <unk> delivers a consistent high quality product, while significantly reducing prep time and labor.

John Gingell: Allowing more operators to serve the most in demand menu items.

John Gingell: <unk> sandwich.

John Gingell: First kind of multifaceted food forward thinking that keeps hormel foodservice a leader in the marketplace.

James Snee: Rounding out our segments, our international business delivered strong top-line growth in the quarter, driven by an impressive double-digit volume and net sales growth in exports and robust growth in China. Our in-country China business continued to perform well, led by customer and distribution expansions, and continues to lead the company in innovative product offerings. The recent launch of Hormel BBQ Bites is just one example of the team's deep understanding of consumer trends and their ability to create meaningful innovations that address in-country market demand. These six examples demonstrate the continuous transformation of our portfolio with innovative, high quality products that meet the evolving needs of our consumers.

John Gingell: Rounding out our segments, our international business delivered strong topline growth in the quarter driven by an impressive double digit volume and net sales growth in exports.

John Gingell: And robust growth in China.

John Gingell: Our in country, China business continue to perform well led by customer and distribution expansions and continues to lead the company and innovative product offerings.

John Gingell: The recent launch of Hormel barbecue bites as just one example of the team's deep understanding of consumer trends.

John Gingell: And their ability to create meaningful innovations that address in country market demands.

John Gingell: These six examples demonstrate the continuous transformation of our portfolio with innovative high quality products that meet the evolving needs of our consumers.

James Snee: Now this here is a story of moments. And as we've discussed, we expect half one and half two results will look very different. What will not be different, however, is our strategy, as we have intentionally structured our business to balance changes in the marketplace. our confidence in our brands and our team. Our responsibility to our consumers, customers, and operators and our commitment to long-term results for our shareholders remains. We anticipate strong second-half growth, led by our range of consumer-focused, protein-centric products. Notably, we expect meaningful contributions from our turkey portfolio, continued momentum in the planters brand, growth from our leading positions in the market.

John Gingell: Now this year is a story of momentum.

John Gingell: And as we've discussed we expect half one and half two results will look very different.

John Gingell: What will not be different however, as our strategy as we have intentionally structured our business to balance changes in the marketplace.

John Gingell: Our confidence in our brands and our team.

John Gingell: Our responsibility to our consumers customers and operators and our commitment to long term results for our shareholders remain.

John Gingell: We anticipate strong second half growth led by a range of consumer focused protein centric products.

John Gingell: Notably, we expect meaningful contributions from our Turkey portfolio.

John Gingell: Continued momentum in the planters brand.

John Gingell: Growth from our leading positions in the marketplace and ongoing benefits from our transform and modernize initiatives.

James Snee: and ongoing benefits from our Transform and Modernize initiative.

Jacinth Smiley: Jacinth will walk through Turkey and our continued progress against our Transform and Modernize initiative in more detail.

Speaker Change: Just central walked through Turkey, and our continued progress against our transform and modernize initiative in more detail.

James Snee: But I want to take a moment to dive further into a planters and spam update. Our planter snack nuts performance exceeded our second quarter expectation. And these results have paved the way for what's to come in the second half. we expect to see sequential quarter over quarter sales improvement and year over year growth. This is a legacy powerhouse brand with a loyal consumer base and a portfolio of product offerings that ranges from classic comforts to bold flavors and textures. By investing in the brand and putting our proven strategy into action, we expect the Planters brand to be a driving force in the second half.

John Gingell: But I want to take a moment to dive further into our planters and spam update.

John Gingell: Our plant our snack nuts performance exceeded our second quarter expectations.

John Gingell: And these results have paved the way for what's to come in the second half.

John Gingell: We expect to see sequential quarter over quarter sales improvement and year over year growth.

John Gingell: This is a legacy powerhouse brand with a loyal consumer base and a portfolio of product offerings that ranges from classic comforts to bold flavors and textures.

John Gingell: By investing in the brand and putting our proven strategy into action, we expect the planters brand to be a driving force in the second half.

James Snee: Turning now to the SPAM brand, after an impressive first half, we expect an equally impressive second half. We continue to evolve this iconic brand while staying true to its core identity as a versatile, convenient protein solution. Its global momentum has been built. fueled by the strategic efforts to expand beyond the center store and deeper engagement with cultural trends. The rising popularity of Spam Musubi and a recent high profile collaboration featured in a live action film set in Hawaii has led to significant merchandising activity and reinforced the brand's authentic cultural connection. We believe the SPAM brand is a timeless classic.

John Gingell: Turning now to the spam brand after an impressive first half we expect an equally impressive second half we continue to evolve this iconic brand while staying true to its core identity as a versatile convenient protein solution.

John Gingell: It's global momentum has been building.

John Gingell: Fueled by the strategic efforts to expand beyond the center store and deeper engagement with cultural trends.

John Gingell: The rising popularity of spam moves should be.

John Gingell: A recent high profile collaboration featured in a live action film set in Hawaii.

John Gingell: Has led to significant merchandising activity and reinforce the brand's authentic cultural connection wave.

John Gingell: We believe the spam brand is a timeless classic.

James Snee: We are confident in our growth trajectory for the back half of the year, supported by strong execution and strategic momentum.

John Gingell: We are confident in our growth trajectory for the back half of the year supported by strong execution and strategic momentum.

James Snee: In the face of an evolving backdrop, we are responsibly narrowing our fiscal 2025 outlook, which remains largely unchanged. For the full year, we now expect increased net sales growth of 2 to 3 percent, which is being supported by our value-added turkey portfolio, the Planters brand, our leading positions in the marketplace, continued growth in food service, and higher commodity markets overall. We now expect adjusted diluted earnings per share in the range of $1.58 to $1.60. which takes into account our current views on the consumer. tariffs, and lower investment This range implies impressive growth in the second half of the year, aided by investments across our brands and further benefits from our transform and modernize initiatives.

John Gingell: In the face of an evolving backdrop.

John Gingell: Our responsibly narrowing our fiscal 2025 outlook, which remains largely unchanged.

John Gingell: For the full year, we now expect increased net sales growth of 2% to 3%, which is being supported by our value added Turkey portfolio. The <unk> brand.

John Gingell: Our leading positions in the marketplace continued growth in foodservice.

John Gingell: And higher commodity markets overall.

John Gingell: We now expect adjusted diluted earnings per share in the range of $1 58 to $1 68.

John Gingell: Which takes into account our current views on the consumer.

John Gingell: Tariffs and lower investment income.

John Gingell: This range implies an impressive growth in the second half of the year aided by investments across our brands and further benefits from our transform and modernize initiative.

James Snee: While the macro environment is ever-changing, our strategy is consistent and clear. Our top-line momentum is building. Our diversified portfolio allows us to navigate changing preferences and trends, and we are on track to deliver the benefits of our transform and modernize initiatives. positioning us to regain our long-term growth trajectory.

John Gingell: While the macro environment is ever changing our strategy is consistent and clear.

John Gingell: Our topline momentum is building.

John Gingell: Our diversified portfolio allows us to navigate changing preferences and trends and we are on track to deliver the benefits of our transform and modernize initiative.

John Gingell: <unk> us to regain our long term growth trajectory.

James Snee: Our team continues to be, in my opinion, the best in the industry. And each and every one of us is committed to the long term success of our company.

Speaker Change: Our team continues to be in my opinion.

John Gingell: First in the industry and each and every one of US is committed to the long term success of our company.

James Snee: Now, before I transition the call to Jacinth, I'd like to address some of the leadership changes we announced this past quarter. Our incredibly competent management team and deep bench of talented leaders is a unique advantage for our company, and I am pleased to celebrate the advancements we have recently announced. First, Dr. Kevin Myers was appointed to lead our supply chain effort. A nearly 25-year employee of Hormel Foods, Kevin has led critical areas including product development, quality control, food safety, and packaging design. Prior to joining the company, he spent a decade in the food industry, holding leadership roles in food technology and R&D.

John Gingell: Now before I transition the call to <unk> I'd like to address some of the leadership changes we announced this past quarter.

John Gingell: Our incredibly competent management team and deep bench of talented leaders is a unique advantage for our company and I am pleased to celebrate the advancements we have recently announced.

John Gingell: First Dr. Kevin Meyers was appointed to lead our supply chain efforts and nearly 25 year employee of Hormel foods, Kevin had a slide critical areas, including product development quality control food safety and packaging design.

John Gingell: Prior to joining the company. He spent a decade in the food industry holding leadership roles in food technology and R&D.

James Snee: Kevin is widely respected for his expertise and insight. He is a trusted advisor and one of the most capable leaders in the organization. candidly, he's one of the smartest people I know. With Kevin at the helm, we remain focused on transforming our supply chain, delivering for our customers, and driving operational.

John Gingell: Kevin is widely respected for his expertise and insight.

John Gingell: As a trusted adviser and one of the most capable leaders in the organization.

Speaker Change: Candidly is one of the smartest people I know.

Speaker Change: With Kevin at the helm, we remain focused on transforming our supply chain delivering for our customers and driving operational excellence.

James Snee: Next, we announce that Scott Aukrey, Group Vice President and Chief Marketing Officer for Retail, will retire at the end of the fiscal year after an astounding 35-year career with Hormel Foods. We are pleased to share that Scott has been appointed to the Hormel Foods Board of Directors. ensuring we will continue to benefit from his strategic insight and deep brand expertise. Throughout his career, Scott has held several pivotal leadership roles, from guiding our grocery products marketing, to leading corporate innovation, and launching our brand fuel growth initiative.

Speaker Change: Next we announced that Scott <unk> Group, Vice President and Chief Marketing Officer for retail will retire at the end of the fiscal year. After an astounding 35 year career with Hormel foods.

Speaker Change: We are pleased to share that Scott has been appointed to the Hormel Foods board of directors.

Speaker Change: Ensuring we will continue to benefit from his strategic insight and deep brand expertise.

Speaker Change: Throughout his career Scott has held several pivotal leadership roles from guiding our grocery products marketing to leading corporate innovation and launching our brand fueled growth engine on.

James Snee: On a personal note, I am grateful to have built my career alongside Scott's creativity, bold thinking, and thoughtful leadership have left a lasting mark, and his impact will continue to shape our future.

Speaker Change: On a personal note I am grateful to have built my career alongside him Scott's creativity bold thinking and thoughtful leadership have left a lasting mark and his impact will continue to shape our future.

James Snee: Finally, with Scott's impending retirement, we announced that Jeff Baker, a 35-year Hormel veteran, will lead the retail marketing efforts with the start of fiscal 2026. He will oversee the continued evolution of our branded portfolio, driving growth in snacking and entertaining, and our food forward platform. Jeff's proven track record of growth, sharp strategic insight, and a deep understanding of our brands and consumers has been built through his leadership roles across the company. Beyond his results, Jeff is known for his commitment to our company and his ability to foster an inclusive, high-trust, high-performing culture.

Speaker Change: Finally, with Scott to impending retirement, we announced that Jeff Baker, a 35 year Hormel veteran will lead the retail marketing efforts with the start of fiscal 2026.

Speaker Change: He will oversee the continued evolution of our branded portfolio driving growth in snacking and entertaining and our food forward platforms.

Speaker Change: <unk> proven track record of growth sharp strategic insight and a deep understanding of our brands and consumers has been built through his leadership roles across the company.

Speaker Change: His results Jeff is known for his commitment to our company and his ability to foster an inclusive high trust high performing culture.

Jacinth Smiley: I'm fortunate to work alongside a team of such strategic senior leaders, and our recent leadership advancements give me great confidence in our company's At this time, I will pass the call to Jacinth to discuss the financial details of our second quarter and provide more color on our outlook for the year. Thank you, Jim. And good morning, everyone. As Jim noted, we achieved solid organic top line growth and delivered second quarter results in line with our expectations. Our results once again demonstrate the effectiveness of our diverse portfolio. Net sales for the quarter were $2.9 billion, a 1% organic increase over last year.

Speaker Change: I am fortunate to work alongside a team of such strategic senior leaders and our recent leadership advancements give me great confidence in our company's future.

Speaker Change: At this time I will pass the call to just sense to discuss the financial details of our second quarter and provide more color on our outlook for the year.

Jim Snee: Thank you Jim.

Speaker Change: And good morning, everyone.

Speaker Change: As Jim noted, we achieved solid organic top line growth and delivered second quarter results in line with our expectations. Our results once again demonstrate the effectiveness of our diverse portfolio.

Speaker Change: Net sales for the quarter were $2 9 billion.

Speaker Change: A 1% organic increase over last year.

Jacinth Smiley: In retail, our flagship and rising brands maintained leadership positions in the marketplace and the planters brand exceeded our volume and net sales expectations. Our food service business, again, outperformed the broader food service industry, and our international business drove impressive top-line growth in Q2, mainly due to double-digit volumes and net sales growth in exports and strong growth in China. Our gross profit margin was 16.7%, reflecting anticipated higher commodity input costs. These known headwinds were partially offset by savings from our TNM initiative, which was on track for the second quarter. For the second quarter, SG&A expenses decreased 50 basis points, primarily driven by the lapping of prior year legal expenses and lower advertising, as the brand teams continued to make strategic return on investment decisions.

Speaker Change: In retail our flagship and rising brands maintained leadership positions in the marketplace and the plant is brand exceeded our volume and net sales expectations.

Speaker Change: Our foodservice business again outperformed the broader foodservice industry and our international business drove impressive topline growth in Q2, mainly due to double digit volume and net sales growth in exports and strong growth in China.

Speaker Change: Our gross profit margin was 16, 7%, reflecting anticipated higher commodity input costs.

Speaker Change: These known headwinds were partially offset by savings from our <unk> initiative, which was on track for the second quarter.

Speaker Change: For the second quarter SG&A expenses decreased 50 basis points, primarily driven by the lapping of prior year legal expenses and lower advertising as the brand teams continued to make strategic return on investment decisions.

Jacinth Smiley: Interest and investment income for the second quarter decreased primarily due to lower cash balances and performance from the Rabbi Trust. All together, we reported diluted earnings per share of $0.33 for the second quarter and adjusted diluted earnings per share of $0.35 in line with expectations. Cash flow from operations was $56 million for the quarter as we made an operational decision to build inventory for summer demand. Capital expenditures were $75 million, and our largest investments were related to value-added capacity and investments in data and technology. We continue to expect to invest $275 to $300 million in capital expenditures for fiscal 2025, with a continued focus on capacity Infrastructure Investments and New Technologies.

Speaker Change: Interest and investment income for the second quarter decreased primarily due to lower cash balances and performance from the Rabbi Trust.

Speaker Change: All together, we reported diluted earnings per share of 33 for the second quarter and adjusted diluted earnings per share of 35.

Speaker Change: In line with expectations.

Speaker Change: Cash flow from operations was $56 million for the quarter as we made an operational decision to build inventory for summer demand.

Speaker Change: Capital expenditures were $75 million and our largest investments were related to value added capacity and investments in data and technology.

Speaker Change: We continue to expect to invest $275 million to $300 million in capital expenditures for fiscal 2025.

Speaker Change: With a continued focus on capacity.

Speaker Change: Infrastructure investments and new technology.

Jacinth Smiley: We are committed to dividend growth and remain a proud dividend aristocrat, having increased our dividend for over 59 years. Dividends paid to shareholders in Q2 marked the 387th consecutive quarterly dividend. We ended the quarter with $2.9 billion in debt and remain at the low end of our stated net debt to EBITDA target. Our transform and modernize initiative remains a critical component of our strategy to restore historical earnings growth. The benefits realized in the first half of the year were as planned, and we remain focused and on track.

Speaker Change: We are committed to dividend growth and remain a proud dividend aristocrat, having increased our dividend for over 59 years.

Speaker Change: Dividends paid to shareholders in Q2 marked the 387 consecutive quarterly dividend.

Speaker Change: We ended the quarter with $2 9 billion in debt and remain at the low end of our stated net debt to EBITDA target.

Speaker Change: Our transform and modernize initiative remains a critical component of our strategy to restore historical earnings growth.

Speaker Change: The benefits realized in the first half of the year.

Speaker Change: Were as planned and we remain focused.

Speaker Change: And on track.

Jacinth Smiley: While there are many milestones the team achieved for this quarter, there are three that I wanted to take a moment to highlight. As part of our ongoing effort to future-fit our supply chain, one of our priorities has been to increase efficiencies in our production processes. After careful consideration and planning, we made the difficult but necessary decision to close one of our three dry sausage production facilities in California and transfer that production to other internal facilities. Another visible advancement has been the successful opening of our new distribution center in the Memphis, Tennessee metro area. This strategically located facility enhances our ability to serve customers more effectively, supporting increased demand and expectations for timely delivery.

Speaker Change: While there are many milestones the team achieved for this quarter. There are three that I wanted to take a moment to highlight.

Speaker Change: As part of our ongoing effort to future fit to our supply chain one of our priorities has been to increase efficiencies in our production processes.

Speaker Change: After careful consideration and planning we.

Speaker Change: We made the difficult but necessary decision to close one of our three dry sausage production facilities in California and transfer that production to other internal facilities.

Speaker Change: Another visible advancement has been the successful opening.

Speaker Change: Of our new distribution center in the Memphis, Tennessee Metro area.

Speaker Change: This strategically located facility enhances our ability to serve customers more effectively supporting increased demand and expectations for timely delivery.

Jacinth Smiley: Finally, I am pleased by the team's success in advancing operational excellence through the Hormel production system. Standardizing our ways of working across our manufacturing facilities. This transformation reflects a cultural shift that will deliver a long lasting impact. We remain committed to delivering profitable and predictable growth. And the second quarter was another proof point of our commitment. We achieved results that met our expectations and firmly believe in our diversified portfolio, fueled by the transform and modernize initiatives to achieve our long term results. Looking ahead to the second half, we expect each of our segments to deliver strong top line growth.

Speaker Change: Finally, I am pleased by the team's success in advancing operational excellence through the Hormel production system.

Speaker Change: Standardizing our ways of working across our manufacturing facilities.

Speaker Change: This transformation reflects a cultural shift that will deliver a long lasting impact.

Speaker Change: We remain committed to delivering profitable and predictable growth.

Speaker Change: And the second quarter was another proof point of our commitment.

Speaker Change: We achieved results that met our expectations and firmly believe in our diversified portfolio.

Speaker Change: <unk> by the transform and modernize initiatives to achieve our long term results.

Speaker Change: Looking ahead to the second half.

Speaker Change: We expect to each of our segments to deliver strong topline growth.

Jacinth Smiley: For retail, we expect low single-digit net sales growth. For food service, we expect mid-single-digit growth in organic net sales. And for the international segment, we expect continued strong top-line performance resulting in high single-digit growth. We expect advertising investments to significantly increase in the second half and we are reaffirming our expectation for incremental benefits from the TNM initiative of $100 to $150 million. Finally, we expect each segment to deliver bottom line growth in the third quarter and second half.

Speaker Change: For retail, we expect low single digit net sales growth.

Speaker Change: For foodservice, we expect mid single digit growth in organic net sales.

Speaker Change: And for the International segment, we expect continued strong topline performance, resulting in high single digit growth.

Speaker Change: We expect advertising investments to significantly increase in the second half and we are reaffirming our expectation for incremental benefits from the <unk> initiative of $100 million to $150 million.

Speaker Change: Finally, we expect each segment to deliver bottom line growth in the third quarter and second half.

Jacinth Smiley: An important component of our guide for the year is our Turkey portfolio, and I would like to provide some additional insight into our assumption. We continue to monitor turkey supply across the industry, and our value-added pricing is in the marketplace, implemented to offset the turkey pressures we discussed in the first half. We are constructive on our overall Turkey portfolio and are impressed by the results we are seeing from Valley Added Turkey across both retail and food service. Turkey remains a meaningful protein in our portfolio, as the demand for lean protein continues to grow. For other commodity markets, we continue to expect markets to be above last.

Speaker Change: An important component of our guide for the year is our Turkey portfolio and I would like to provide some additional insight into our assumptions.

Speaker Change: We continue to monitor Turkey supply across the industry and the value added pricing is in the marketplace implemented to offset the Turkey pressures, we discussed in the first half.

Speaker Change: We are constructive on our overall turn to portfolio.

Speaker Change: We are impressed by the results, we're seeing from value added Turkey across both retail and foodservice.

Speaker Change: Cherokee remains a meaningful protein in our portfolio as the demand for lean protein continues to grow.

Speaker Change: For other commodity to market, we continue to expect markets to be above last year.

Jacinth Smiley: mainly pork, beef, and nut input costs. Our measured pricing actions and benefit from our TNM initiatives will help to offset some of the input pressures contemplated in our guide. The interest and investment income drag we experienced in the first half is not anticipated to be recouped. The impact for that line item alone was three cents. Netting out our deferred compensation, the bottom line impact has been $0.02 to earnings per share.

Speaker Change: Mainly pork beef and not input costs.

Speaker Change: Our measured pricing actions and benefits from our <unk> initiatives will help to offset some of the input pressures contemplated in our guidance.

Speaker Change: The interest and investment income drag we experienced in the first half is not anticipated to be recouped.

Speaker Change: The impact for that line item alone with <unk>.

Speaker Change: Netting out our deferred compensation the bottomline impact has been <unk> to earnings per share.

Jacinth Smiley: Turning now to terror. The global environment remains dynamic and ever-changing. Although our business has not been materially impacted by the tariff landscape to date, based on what we know today, we have assumed a range of $0.01 to $0.02 of tariff impacts in the back half of the year in our output.

Speaker Change: Turning now to tariffs.

Speaker Change: The global environment remains dynamic and ever changing.

Speaker Change: Although our business has not been materially impacted by the tariff landscape to date.

Speaker Change: Based on what we know today, we have assumed a range of one to two cents of tariff impacts in the back half of the year in our outlook.

Jacinth Smiley: In the face of this dynamic environment, we are responsibly narrowing our full-year organic net sales growth outlook to a range of 2 to 3 percent and narrowing our adjusted diluted net earnings per share expectations to $1.58 to $1.68. We remain confident in our outlook for bottom line growth for each segment in the second half of the year and remain committed to delivering long-term value through strategic execution, including continued success from our transform and modernize initiatives.

Speaker Change: In the face of this dynamic environment, we are responsibly narrowing our full year organic net sales growth outlook to.

Speaker Change: So a range of 2% to 3% and narrowing our adjusted diluted net earnings per share expectations.

Speaker Change: The $1 58 to $1 68.

Speaker Change: We remain confident in our outlook for bottom line growth for each segment in the second half of the year and remain committed to delivering long term value through strategic execution, including continued success from our transform and modernize initiatives.

Operator: With that, I will turn the call over to the operator for the question and answer portion of the call. Thank you.

Speaker Change: With that I will turn the call over to the operator for the question and answer portion of the call.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star, followed by the one on your telephone keypad. And should you wish to cancel your request, please press star, followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Do you have a question. Please press star followed by the one on your telephone keypad and should you wish to cancel your request. Please press star followed by that is if you're using a speaker phone. Please lift the handset before pressing entities. One moment. Please for your first question.

Speaker Change: Yeah.

Peter Galbo: Your first question comes from the line of Peter Galbo from Bank of America. Please go ahead. Hey, good morning, guys. Thank you for the question. Morning, Peter. Morning, morning.

Speaker Change: Your first question comes from the line of Peter Galbo from Bank of America. Please go ahead.

Peter Galbo: Hey, good morning, guys. Thank you for the question.

Speaker Change: Good morning, Peter.

Peter Galbo: Jim, I think, you know, I wanted to focus on the revised operating income outlook that you provided for the year, and just bridging kind of the back half of the year, I think to kind of hit the midpoint of the revised guidance, you have to deliver about $700 million of operating income. That would be up versus the $575 million you did in the second half of last year. So still a pretty meaningful ramp. So maybe, A, you can help us bridge kind of how you get there. You obviously have the increased advertising costs that come in the back half.

Speaker Change: Good morning, Jim I think.

Speaker Change: I wanted to focus on on the <unk> will be the revised operating income outlook that.

Speaker Change: You provided for the year.

Speaker Change: And just bridging kind at the back half of the year I think to kind of hit the midpoint of the revised guidance you have to deliver.

Speaker Change: About $700 million of operating income that would be up versus the $5 75, you did in the second half of last year, so still a pretty meaningful ramp.

Speaker Change: A you can just you can help us bridge kind of how how you get there you obviously.

Speaker Change: You have the increased advertising costs to come in the back half maybe there is some benefit from from dry sausage facility closure.

James Snee: Maybe there's some benefit from dry sausage facility closure. But any additional detail that you can provide there, as we think about the ramp, and maybe also just where T&M savings have kind of run year-to-date in the context of the $100 to $100 million. Yeah, great. Thanks, Peter. Appreciate the question.

Speaker Change: But any additional detail that you can provide there as we think about the ramp and maybe also just where PNM savings of kind of run year to date in the context of the $100 million to $150 million.

Speaker Change: Yeah, great. Thanks.

Peter Galbo: Thanks, Peter I appreciate the question.

James Snee: You know, let's start with that first part in terms of the back half of the year. And I think what's really important here is this idea that there's a lot to like about how well positioned we are for the back half of this year and our ability to deliver a strong second half. You know, some of the things that we've been talking about over the last number of quarters, and that is that, you know, planter's recovery is on track. What's happening with our turkey portfolio, especially value added turkey, we're seeing really positive momentum. You know, and then when we get into the businesses, you know, specifically our value added business and retail continues to perform well.

Speaker Change: Let's start with that first part in terms of the back half of the year and I think what's really important here is this idea that there is a lot to like about how well positioned we are for the back half of this year and our ability to deliver a strong second half.

Peter Galbo: Some other things that we've been talking about over the last number of quarters and that is that.

Speaker Change: <unk> recovery is on track.

Speaker Change: What's happening with our Turkey portfolio, especially value added Turkey.

Speaker Change: We're seeing really positive momentum.

Speaker Change: When we get into the businesses, specifically our value added business and retail continues to perform well and it might be helpful. When I when I wrap up here to have John gave you just a little more color on that.

James Snee: And it might be helpful when I wrap up here to have John give you just a little more color on that. When we get to food service, you know, we've had strong momentum on the top line. And we do expect to have some favorable year over year comps in the second half. We'll have international with steady, strong growth. And then just in regards to TNM overall, we've said it's on track. Right. And so it is delivering what we expect it to deliver in fiscal year 2025. There's a lot going on in the organization. There's a lot of projects that we're working on.

John Gingell: When we get to foodservice, we've had strong momentum on the top line.

John Gingell: And we do expect to have some favorable year over year comps in the second half.

John Gingell: We will have international with steady strong growth and then just in regards to Tam overall, we've said that it's on track right and so it is delivering what we expect it to deliver in fiscal year 2025. There is a lot going on in the organization. There is a lot of projects that we're working on.

James Snee: But again, the important thing here is when we roll up all of these drivers for our business, it's really what we expected at the beginning of the year for the back half of the year. And so there's just really great substance in our ability and our confidence to be able to deliver this strong, achievable second half number.

Speaker Change: But again the important thing here is when we roll up all of these drivers for our business. It's really what we expected at the beginning of the year or for the back half of the year and so there's just really great substance and our ability and our confidence to be able to deliver this strong achievable second.

Speaker Change: Half number.

John Ghingo: John, if you want to maybe add some color on retail. Yeah, thanks, Jim. I'll add a couple of comments. We do feel confident in our second half. We have a lot to be excited about for retail elements that will help us navigate what I would call a choppy environment and a strained consumer in the backdrop.

Speaker Change: John if you want to maybe add some color on retail yes. Thanks, Jim I'll add a couple of comments, we do feel confident in our second half we have a lot to be excited about for retail elements that will help us navigate what I would call a choppy environment in the strained consumer in the backdrop.

John Ghingo: I'll comment briefly why we feel good about the relevance of our flagship and rising brands right now, and also the support plans we have in place in the back half behind those brands. If you step back and just look at our protein centric portfolio right now, it offers a lot of value to consumers. We know consumers are willing to pay for protein, especially with the added benefits of convenience, food, flavor experiences, and generally the emotional and functional benefits of our brands continue to resonate. So when you take those protein offerings, put those added benefits on top, we know that is still equating strongly to value for the consumer.

Speaker Change: I'll comment briefly why we feel good about the relevance of our flagship and rising brands right now and also the support plans we have in place in the back half behind those brands. If you step back and just look at our protein centric portfolio right. Now it offers a lot of value to consumers. We know consumers are willing to pay for protein, especially with.

Speaker Change: The added benefits of convenience food flavor experiences and generally the emotional and functional benefits of our brands continue to resonate. So when you take those protein offerings put those added benefits on top we know that is still equating strongly to value for the consumer.

John Ghingo: And then on top of that, we're planning double digit advertising increases in the second half of the year, including significant investment in planters. So we'll be returning that flagship brand to growth in the back half. But we also have new advertising, good investment levels planned across other priority brands in the portfolio. Applegate, Spam, Hormel, Pepperoni, Skippy. Those investments will leave us with advertising spending planned up year over year for the full fiscal year basis. All in all, I would say for retail, we feel confident we have good momentum. Our portfolio is strong in this environment and our plans for the back half are strong to support our brand.

Speaker Change: And then on top of that we're planning double digit advertising increases in the second half of the year, including significant investment and planters. So we will be returning that flagship brand to growth in the back half, but we also have new advertising good investment levels planned across other priority brands in the portfolio Applegate spam Hormel Pepperoni Skippy.

Speaker Change: Those investments will leave us with advertising spending planned up year over year for the full fiscal year basis.

Speaker Change: All in all I would say for retail we feel confident we have good momentum our portfolio is strong in this environment and our plans for the back half are strong to support our brand. So we are feeling good going into the back half of the year.

John Ghingo: So we are feeling good going into the back half of the year.

Speaker Change: Okay. Thanks, Thanks for that and Jim maybe you can just help us a little bit on on cadence and maybe specifically on Turkey cadence in the back half.

Speaker Change: A whether we should think about <unk> that improvement really being probably the bigger contributor given when you ship whole bird.

Speaker Change: And in the context of Turkey just.

Speaker Change: The market has changed so dramatically the competitive landscape is changing just what are you. What are you kind of seeing on the ground. Thanks very much.

Jacinth Smiley: Yeah, Peter, I'm going to let Jacinth start off on the cadence, and then I can come back to Turkey. Yeah, good morning, Peter. So as we think about the back half and double-clicking into the expectations here, so we're expecting strong top-line growth in Q3 with low double-digit EPS growth. And when we tick through the segments of the business or retail from a sales guide perspective, we're expecting low single-digit, food service, mid-single-digit, and then the international business, high single-digit. So all in all, that's what really gets us to that Q3 outlook. Yeah. And when we think about Turkey specifically, I mean, you're right.

Peter Galbo: Peter I'm going to let just start off on the on the cadence and then I can come back to Turkey, Yes. Good morning, Peter So as we think about the back half and double clicking into the expectations here. So we're expecting strong top line growth in Q3 with low double digit EPS growth and when we.

Peter Galbo: Through this segment of the business of retail from our sales guide perspective, we're expecting low single digit foodservice mid single digit and then the international business high single digits. So all in all that's what really gets us to that Q3.

Peter Galbo: Outlook.

Peter Galbo: Yeah.

Peter Galbo: When we think about Turkey, specifically, I mean, youre right I mean, the competitive landscape, we've seen a tightening supply.

Jacinth Smiley: I mean, the competitive landscape, we've seen a tightening supply. And so, of course, you know, we're thinking about it from our perspective and, you know, thinking about the work that we did several years ago to really make this a demand driven business. I mean, we're really well positioned on the supply chain. And we've got, and are in a good supply chain position, or a good supply position overall. Now, again, I want to emphasize, right, we are focused on the value added portion of this business, right? We think about lean ground Turkey in our retail segment, and the great work that that team has done, right, to drive that business, the number one brand in a growing category, strong supply behind it, that's really, really important.

Peter Galbo: And so of course, we're thinking about it from from our perspective and thinking about the work that we did several years ago to really make this a demand driven business and we're really well positioned on the supply chain and we've got and are in a good supply chain because if we're good supply position overall.

Peter Galbo: Again I want to emphasize we are focused on the value added portion of this business by the way you think about lean ground, Turkey, and our retail segment and the great work that that team has done right to drive that business. The number one brand in a growing category strong supply behind it.

That's really really important.

Jacinth Smiley: And I mean, we're overcoming, you know, Turkey markets that not all of them are in our favor, right. And so this is, this is something that we're navigating, but it's something that we do really well, we understand how to manage through it. You know, you know, there's a backdrop of whole birds and what's happening there, you know, those are slightly better than our original outlook. So we do expect most of the upside will be captured during the fresh season, which is closer to Thanksgiving. But again, overall, the Turkey complex is doing really well and well positioned for the back half of the year.

Peter Galbo: And I mean, we're overcoming.

Peter Galbo: Turkey markets not all of them are in our favor right and so this is something that we're navigating but it's something that we do really well, we understand how to manage through it.

Peter Galbo: There is a backdrop of whole birds and what's happening there.

Peter Galbo: Or slightly better than our original outlook. So we do expect most of the upside will be captured during the fresh season, which is closer to Thanksgiving, but again overall, the Turkey complex is doing really well and well positioned for the back half of the year.

Jacinth Smiley: Thank you. Yep.

Peter Galbo: Thank you.

Peter Galbo: Yep.

Michael Lavery: Thank you, and your next question comes from the line of Michael Lavery from Piper Sender. Please go ahead. Thank you. Good morning.

Speaker Change: Thank you and your next question comes from the line of Michael Lavery from Piper Sandler. Please go ahead.

Michael Lavery: Thank you and good morning.

Michael Lavery: I just wanted to drill into the second half margins a little more specifically, and I know you said that the year is kind of according to plan, but obviously first half margins were fairly weak, and there's a big step up now expected. Maybe just how much more can you unpack some of the key drivers there and what we should be looking for?

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Second half margins, a little more specifically.

Speaker Change: I know you said that the year.

Speaker Change: Year is kind of according to plan, but.

Speaker Change: Obviously first half margins were fairly weak and there is a big step up now.

Speaker Change: Now expected, maybe just how much more can you unpack some of the key drivers there.

Speaker Change: And what we should be looking for.

Jacinth Smiley: Good morning, Michael. So when we think about, you know, the margins going into the back half, we do expect expansion in the second half driven primarily by Turkey planters or value added business in addition to, you know, we, Jim talked about T&M and how that continues to deliver for us through the half here, and that will accelerate more even into the back half of this year. So we will, we have already actually seen sequential margin improvement, the back end of Q2 here, and that will continue into the second half. Some of those drivers, as we said on the call last time, we expect benefit from Turkey pricing in the second half going into fiscal 26, as Jim just talked about here, with this, you know, some of this, some of it happening for Thanksgiving, and then planters continue to perform well, we had better than expected performance in Q2.

Speaker Change: Yes.

Speaker Change: Good morning, Michael So when we think about the margin going into the back half we do expect expansion.

Speaker Change: In the second half driven primarily by Cherokee planters our value added business. In addition to.

Speaker Change: Jim talked about PNM, and how that continues to deliver for us.

Speaker Change: Through the half here and that will accelerate more even into the back half of this year. So we will we have already actually seen sequential margin improvement the backend of Q2 here and that will continue into the second half.

Speaker Change: Some of those drivers as he said on the call last time, we expect benefit from Turkey pricing in the second half going into fiscal 'twenty six as Jim just talked about here with this some of this some of it happening for Thanksgiving and then planters continuing to perform well we had.

Speaker Change: Better than expected performance in Q2, and we expect that to exceed and continue into the second half as well and see strong growth in margins there for planters as well and then finally, when we think about the commodity markets. I mean, those continue to be elevated for the business and for some parts of it.

Jacinth Smiley: And we expect that to exceed and continue into the second half as well, and see strong growth in margins there for planters as well. And then finally, when we think about the commodity markets, I mean, those continue to be elevated for the business. And for some parts of our business, we do And get that impact and translate that into pass-through pricing. And then for other parts of the business, we do take thoughtful pricing to be able to overcome that as needed. So all in all, we expect margin expansion in the second half. And long term for our portfolio, we are well positioned to continue to drive margin growth.

Speaker Change: Our business we do.

Speaker Change: And get that impact and translate that into pass through pricing and then for other parts of the business, we do take thoughtful pricing.

Speaker Change: To be able to overcome that as needed. So all in all we expect margin expansion in the second half.

Speaker Change: And long term for our portfolio, we are well positioned to continue to drive margin growth.

Speaker Change: Yes.

Michael Lavery: Okay, thanks for that.

Speaker Change: Okay. Thanks for that.

Michael Lavery: And just on food service, the mid-single-digit growth expectations are certainly ahead of what would seem to be the industry backdrop, just given tough traffic and, you know, a stretched consumer. Can you just tell us how you're thinking about your ability to grow there and what some of the maybe specific drivers are? Yeah, I'll take that one, Michael. I mean, I think it starts with, you know, the comments we've made about our food service business is that we, you know, historically outperform what is happening in the industry. So we were not immune to what's happening in the backdrop of what we are focused on is over delivering and outperforming.

Speaker Change: Just on foodservice.

Speaker Change: The mid single digit growth expectations are.

Speaker Change: [noise] ahead of what would seem to be the industry backdrop, just given a tough traffic in.

Speaker Change: It was a stretch consumer can you just tell us how youre thinking about your ability to grow there.

Speaker Change: Some of the maybe specific drivers are.

Speaker Change: Yeah, I'll take that one Michael I mean, I think it starts with.

Speaker Change: The the comments, we've made about our foodservice business is that we.

Speaker Change: Historically outperformed what is happening in the industry. So we were not immune to what's happening in the backdrop of what we are focused on is over delivering and outperforming.

James Snee: You know, we've had strong momentum on the top line in this And so that obviously has been a really positive signal. As we head into the back half of the year, we do expect to be aided by the improvement in our planters and C-store business. We've got an incredible pipeline of innovation that's coming. We had a chance to showcase a lot of that at the recent National Restaurant Show. And then of course, you know, I think I mentioned it earlier, that we will have a favorable year over year comp in the second half for food service.

Speaker Change: We've had strong momentum.

Speaker Change: On the topline in this business and so that obviously has been a really positive signal as we head into the back half of the year.

Speaker Change: We do expect to be aided by improvements in our planters and historic business.

Speaker Change: We've got an incredible pipeline of innovation, that's coming we had a chance to showcase a lot of that at the recent National restaurant show and then of course, I think I mentioned it earlier that we will have a favorable year over year comp in the second half for foodservice and so when we put all.

Michael Lavery: And so when we put all of those things together, right, supported by the fundamentals of our business, the direct selling organization, you know, we've talked a lot about our diverse channel presence, and really underlying or underpinning all of it is a solution based portfolio. That's what sets us up for success and ability to deliver those results in the second half of the Okay, great.

Speaker Change: Those things together supported by the fundamentals of our business the direct selling organization, we've talked a lot about our diverse channel presence and really underlying are underpinning all of it as a solution based portfolio. Okay. That's what sets us up for success and ability to deliver those results in the <unk>.

Speaker Change: Second half of the year.

Operator: Thanks so much. Thank you.

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

Speaker Change: Yeah.

Tom Palmer: And your next question comes from the line of Tom Palmer from Citi. Please go ahead. Morning, and thanks for the question. Maybe I could just first ask on the TNM savings.

Speaker Change: Thank you and your next question comes from the line of Tom Palmer from Janney. Please go ahead.

Speaker Change: Hi.

Speaker Change: Good morning, and thanks for the question.

Speaker Change: Maybe I could just first ask on the <unk> savings.

Tom Palmer: Any quantification that you could give for savings in the first half of the year, and then when we're thinking about the $100 to $150 million range, could you maybe give some examples of key initiatives, progress towards them, and kind of what might swing us to the high end or the low end of the range this year? Thank you. Yeah, certainly. Good morning. So I'll start off. So just to reiterate, again, you know, the guide that we have given for the year, we continue to track well, against that guide. And going into the back half, we continue to be on track to meet our expectations that we have set out.

Speaker Change: Any quantification you could give for savings in the first half of the year and then when we're thinking about the $100 million to $150 million range could you maybe give some examples of key initiatives progress towards them and kind of what might swing us to the high end or the low end of the range. This year.

Speaker Change: Thank you.

Speaker Change: Yes, certainly good morning, so I'll start off so just to reiterate again the.

Speaker Change: <unk> that we have given for the year, we continued to track well against that guide.

Speaker Change: And going into the back half we continue to be on track to meet our expectations that we have set out there.

Jacinth Smiley: Definitely a lot that's going on in the business. For example, you know, this, this quarter, we executed 66 projects underneath this, the TNM initiative. So a lot that's going on across all of the pillars. When we think about the pillars we have laid out for TNM, move, buy, plan, make a couple examples that we executed this quarter. I have a couple I had given in prepared remarks. One is around opening of this Memphis metro area facility, which really speaks to what we're doing in terms of. ensuring we have an effective network logistically of how we really deliver to our customer in an efficient way.

Speaker Change: Definitely a lot that's going on in the business for example.

Speaker Change: This quarter, we executed 66 projects.

Speaker Change: Underneath the TNF initiatives. So a lot that's going on across all of the pillars. When we think about the pillars, we laid out for PNM.

Speaker Change: Move by plan me a couple of examples that we executed this quarter I had a couple of I had given in my prepared remarks, one is around opening of the Memphis.

Speaker Change: Metro area facility, which really speaks to what we're doing in terms of.

Speaker Change: And sure we have an effective network logistically of how we really deliver to our customers in an efficient way.

Jacinth Smiley: And so that's one of one of those examples. The other one is the closing of that dry sausage facility in California. And then again, that speaks to how we're thinking about our portfolio, and how we make that as efficient as possible for our business to ensure that we have a portfolio that has the margin structure that we need for the business. But then even in terms of how where we're located as well, we are also being logistically efficient with our with our business. So there again, there is quite a lot going on in the business.

Speaker Change: And so that's one of one of those examples the other one is the closing of that dry sausage facility in California, and then again that speaks to how we're thinking about our portfolio.

Speaker Change: And how we make that as efficient as possible for our business to ensure that we have a portfolio that has the margin structure that we need for the business, but then even in terms of how where we're located as well. We are also being logistically efficient with our with our business. So.

Speaker Change: There again, there is quite a lot going on in the business. The other one I will mention that is really driving a lot of value for the business is our end to end planning and if you recall, we spend a lot of time in.

Jacinth Smiley: The other one, you know, I will that's really driving a lot of value for the business is our end to end planning. And if you know, if you recall, we spent a lot of time in the past year or so talking about how we have been inefficient in how we manage our inventory, we are investing a ton in really thinking about how we plan that our production, how we then get that into our plans to ensure that we have the right supply and our team is producing the right amount for our customers in the most efficient and effective way to get it to them on time.

Speaker Change: In the past year or so talking about how we have been inefficient in how we manage our inventory we are investing a ton in really thinking about how we.

Speaker Change: Plan our production, how we then get that into our plans to ensure that we have the right supply and our team is producing the right amount for our customers in the most efficient and effective way to get it to them on time, so really a very end to end solution.

Jacinth Smiley: So really a very end to end solution as we're thinking about the business and then underneath it building the infrastructure from a data and analytics standpoint to do that in a great way. So overall, we're running the program in an agile manner. So when we think about the confidence we have in TNM, it gives us confidence. in that way because of the approach that we're using. So to the extent that we go after a savings opportunity and it doesn't seem to be panning out in terms of the expectations on savings, then we're able to pivot in a very quick manner and then go after other projects.

Speaker Change: As we're thinking about the business and then underneath that building the infrastructure of data and analytics standpoint to do that in a great way. So overall.

Speaker Change: Running the program in an agile manner.

Speaker Change: So when we think about the confidence we have in PNM It gives us confidence in.

Speaker Change: In that way because of the approach that we're using so to the extent that we go after are.

Speaker Change: Savings opportunity and it doesn't seem to be panning out in terms of the expectations on savings then we're able to pivot and a very quick manner and then go after other projects. So we have a very robust pipeline of projects to be able to deliver the TM.

Jacinth Smiley: So we have a very robust pipeline of projects to be able to deliver the TNM, that objectives and goals that we have set out. Okay, thanks for that.

Speaker Change: <unk> objectives and goals that we have set out.

Speaker Change: Okay. Thanks for that.

Tom Palmer: Um, one thing you've mentioned on the prepared remarks was just the inventory build for summer demand.

Speaker Change: One thing you'd mentioned on the prepared remarks was just the inventory build for summer demand.

Jacinth Smiley: Any color on what products this is related to? And look, it has been a few years, but I think there was a time where excess inventory was a little bit of a challenge to work through for you guys. Could you maybe just note the visibility this time around, in terms of visibility for the sell through these products you've built up the inventory for? Yes, certainly. And that actually ties back into the comment I just made here around our ability to manage our inventory in a different way as part of this investment that we're making in transform and modernize.

Speaker Change: And any color on what products. This is related to and look it has been a few years, but I think.

Speaker Change: There was a time, where excess inventory was a little bit of a challenge to work through for you guys could you maybe just note the visibility this time around in terms of visibility for the sell through of these products you built up the inventory for.

Speaker Change: Certainly certainly and that actually ties back into the comment I just made here around our ability to manage our inventory in a different way as part of this investment that we're making and transform and modernize and so we have intentionally and strategically build inventory or are.

James Snee: And so we have intentionally and strategically built inventory for our upcoming summer demands. And some of those particular areas are around planters. We also have promotions coming up with, with spam. And then the other piece I want to just include there if we think about elevated commodity markets and our input costs that also have an impact on our balances that are showing in inventory. Yeah, and Tom, I think it, you know, just that last part is important, you know, because our pounds are down, our commodity prices are up. So when you see the dollars, you know, it's one thing, but we are managing this, this inventory very effectively to align with the needs of the business.

Speaker Change: Upcoming summer demand and some of those particular areas are around planters. We also have.

Speaker Change: <unk> is coming up with with Tom and then the other piece I wanted to just include there. If we think about elevated commodity to market on our input cost that also have an impact on our balances that are showing an inventory.

Tom: And Tom I think you know.

Tom: Just that last part is important.

Tom: Because our pounds are down our commodity prices are up so when you see the $1.

Tom: One thing, but we are managing this this inventory very effectively to align with the needs of the business.

Tom: Okay.

Tom Palmer: Okay, thank you for that. Yep. Thank you.

Tom: Okay. Thank you for that.

Tom: Yes.

Ben Tudor: And your next question comes from the line of Ben Tudor from Barclays. Please go ahead. Yeah, good morning, and thanks for taking my question. Maybe just to come back a little bit to planters and the cadence, you said you were basically on track, if not even slightly exceeding what you were expecting for 2Q.

Speaker Change: Thank you and your next question comes from the line of Ben <unk> from Barclays. Please go ahead.

Ben: Yes, good morning, and thanks for taking my question.

Speaker Change: Maybe just to come back a little bit.

Speaker Change: Lenders.

Speaker Change: You said you were basically on track if not even slightly exceeding what you were expecting for <unk>. So as you look into the lineup into <unk> in the back half in general how would you describe.

Ben Tudor: So as you look into the lineup into 3Q and the back half in general, how would you describe the situation of having regained some of that space and some of those points of distribution that you lost last year after the outage at the facility? And what is your expectation as to the growth contributions from planters in particular as it relates to the second half outlook? Thank you.

Tom: The situation of having regained some of that shelf space in some of those points of distribution that you lost last year. After the outage at the facility and what is your expectation as to like kind of like the growth contribution from planters in particular as it relates to the.

Tom: To the second half outlook. Thank you.

James Snee: Yeah, Ben, I'm gonna, I'm gonna start and I'm gonna let John answer most of that question. But I think the important thing here is that this recovery is on track as we've been describing, right. And when we're looking at the charts and the graphs and everything, right, all of the trends are headed in the right direction. And that's a really positive signal for us, when we think about where the brand is headed. And we know, as we've said, how important this brand is to to our portfolio.

Ben: Yes, Ben.

Speaker Change: I'll start and then I'll, let John answer most of that question, but I think the important thing here is that this recovery is on track as we've been describing right and when we're looking at the charts and graphs and everything right. All of the trends are headed in the right direction and that's a really positive.

John Gingell: No for us when we think about where the brand is headed and we know as we've said how important this brand is to our portfolio.

John Ghingo: John, I'll let you get into this, maybe some of the specific actions. Yeah, that's great. Thanks, Jim. Yeah, I think, good morning, Ben. And thanks for the question. We do have a lot of enthusiasm, excitement for planters and the growth potential there. The foundational work, you know, is in good shape, our supplies corrected, we continue to see, as Jim said, that sequential improvement in the marketplace. And in fact, as he mentioned, the second quarter did come in a bit better than expected for planters, which was good. As we look forward, we expect to see, you know, the distribution continue to ramp, the overall consumption on the brand continue to ramp.

John Gingell: John I'll, let you get into maybe some of the specific actions yeah. That's great. Thanks, Jim Yeah I think.

Speaker Change: Good morning, Ben Thanks for the question, we do have a lot of enthusiasm and excitement for planters in the growth potential there the foundational work.

Speaker Change: <unk> is in good shape, our supply is corrected we continue to see as Jim said that sequential improvement in the marketplace.

Speaker Change: And in fact as he mentioned the second quarter did come in a bit better than expected for planters, which was good as we look forward.

Speaker Change: We expect to see the distribution continue to ramp the overall consumption on the brand continue to ramp we've seen that pretty clearly and we are confident in planters in the back half of the year that it will be a driving force for growth for us.

John Ghingo: We've seen that pretty clearly. And we are confident in planters in the back half of the year that it will be a driving force for growth for us. As you look at Q3 and kind of map it out, and you see that sequential progress continue, we will see year over year consumption turn positive in the latter part of the quarter. That's where we lapped the time period in 2024, when we were impacted by those distribution losses at the shelf. And then we expect that year over year consumption gain to continue for the remainder of the year.

Speaker Change: As you look at Q3 and kind of map it out and you see that sequential progress continue we will see year over year consumption turned positive in the latter part of the quarter, that's where we lap the time period in 2024, when we were impacted by those distribution losses at the shelf and then we expect that year over year consumption gains to continue for the remainder of the year.

John Ghingo: And we're driving our three-part plan with planters that we've talked about before. So stepped up advertising, strong in-store promotions, a renewed and increased focus on our exciting innovation. And if you remember, that's flavored cashews, it's flavored nut duos. Both of those innovation platforms have proven to be highly incremental, attracting new, younger consumers to our brand and to the category. And so as we talked about the increased advertising spend on planters, that's going to help us accelerate, you know, attracting consumers back, driving trial and repeat on those platforms. And overall, planters just continues to sit in a great spot in the macro snacking category, consumer demand for substantial snacks with protein, nourishing snacks, real food, portable real food.

Speaker Change: We're driving our three part plan with planters that we've talked about before so stepped up advertising strong in store promotions are renewed and increased focus on our exciting innovation and if you remember that's flavored cashews its flavor not duos both of those innovation platforms have proven to be highly incremental attracting new younger.

Speaker Change: Consumers to our brand and to the category and so as we talked about the increased advertising spend on planters, that's going to help us accelerate attracting consumers back driving trial and repeat on those platforms and overall planters just continues to sit in a great spot and the macro snacking category consumer demand for substantial snacks with protein.

Speaker Change: <unk> nourishing snacks real food portable real food planters is extremely well positioned in that space. So we are feeling very good about the sequential improvement we've seen to date, our expectations for the back half of the year and the longer term.

John Ghingo: Planters is extremely well positioned in that space. So we are feeling very good about the sequential improvement we've seen to date, our expectations for the back half of the year and the longer term, you know, ability for us to drive this growth platform.

Speaker Change: The ability for us to drive this growth platform.

Ben Tudor: Okay, perfect. Thank you very much.

Speaker Change: Okay perfect. Thank you very much and then one quick one for Susan you talked about the.

Jacinth Smiley: And then one quick one for Jacinth, you talked about the interest and investment income, and that it's basically not going to be recovered. But just to understand, I mean, obviously, there was a there was a little bit of an income as well, if you want to put it this way, in 3Q and to a lesser degree in 4Q of last year. So would you expect it to be on a year-to-year basis, similar to last year? Or would you expect it to be similar to what we've seen, particularly in and maybe 2Q? Yeah, no, thanks for the question.

Speaker Change: Interest and investment income and that is basically not going to be recovered.

Speaker Change: But just to understand I mean, obviously there was a there was a little bit of a.

Speaker Change: And income as well if you want to put this way in <unk>.

Speaker Change: <unk>.

Speaker Change: To a lesser degree in <unk> of last year. So would you expect it to be on a year over year basis, similar to last year or would you expect it to be similar to what we've seen particularly and maybe <unk>.

Speaker Change: Yeah no. Thanks for the question. So we typically given that the markets are unpredictable. We don't plan, we don't plan investment income and so we just really.

Jacinth Smiley: So we typically given that we, that the markets are unpredictable, we don't plan, we don't plan investment income. And so we just really see where the market plays out. And that's, you know, that's the The impact to our business is just the actuals that come through.

Speaker Change: See where the market.

Speaker Change: Lays out in that.

Speaker Change: Uh huh.

Speaker Change: The impact to our business is just the actuals that come through.

Operator: Okay, we'll take it to zero. Thank you.

Speaker Change: Okay, we'll take it to zero.

Speaker Change: Thanks Pat.

Speaker Change: Okay.

Speaker Change: Yeah.

Heather Jones: And your next question comes from the line of Heather Jones. From Heather Jones Research, please go ahead. Good morning. Thanks for the question. Thank you. I was just wondering on ground turkey. So I know the second half will benefit from the price increases you've taken to offset the higher input cost. So I was wondering, a couple of your competitors have shuttered facilities. So I was wondering if y'all are also seeing any share gains as yet or those anticipated on the come?

Speaker Change: Thank you and your next question comes from the line of Hydrogens from Heather Jones Research. Please go ahead.

Speaker Change: Good morning, Thanks for the question.

Speaker Change: I wish.

Speaker Change: Thank you.

Speaker Change: Just one of our own ground, Turkey. So I know the second half will benefit from the price increases you've taken to offset the higher input cost was wondering a.

Speaker Change: A couple of your competitors have shuttered facilities. So I was wondering if you all are also seen.

Speaker Change: Any share gains as jet or are those anticipated on the com.

Heather Jones: Yeah, Heather, I'll go ahead and start. What you said is exactly right, is that, you know, we have seen this tightening supply across the competitive landscape. And so, you know, while the headlines are out there about what's happening, I think the full details about how it's really unfolding is TBD. And I mean, at this point, the biggest facility that's been announced isn't shut down yet. And so, again, what's important here is we know the work that we're doing to drive demand, that it's well positioned in the category with the consumer. And then, as those opportunities present themselves, you know, we can rest assured that we're going to do everything we can to capitalize on them.

Speaker Change: Yeah, Heather I'll go ahead and start.

Speaker Change: You know I.

Speaker Change: What you said is exactly right is that you know we have seen this tightening supply across the competitive landscape.

Speaker Change: And so while.

Speaker Change: While the headlines are out there about what's happening.

Speaker Change: The full details about how it's really on folding.

Speaker Change: Is TBD.

Speaker Change: This point the Vegas facility, that's been announced isn't shut down yet.

Speaker Change: And so that again, what's important here is we know the work that we're doing to drive demand and it's well positioned in the category with the consumer and then as those opportunities present themselves we.

Speaker Change: We can rest assured that we're going to do everything we can to capitalize on them and John and the team obviously are working hard in this space.

James Snee: And John and the team obviously are working hard in this space. Thanks for the question, Heather.

John Ghingo: I'll just comment briefly a little bit from the consumer lens on your question, too, which is, you know, I mentioned earlier, delivering value for the consumer and ground turkey just continues to be a winning proposition in that sense. You know, it's a highly versatile option for consumers, plugs in very well to everyday life, different meal occasions, food experiences, and that versatility is valuable. And then, you know, beyond that, just poultry and ground turkey right now, very aligned with dietary needs from consumers who seek out lean sources of protein. So, if I kind of, you know, walk down the line, you look at the recent consumption data, Genio continues to perform very well, consistent household penetration gains over the past 52 weeks, up over 4% in dollar consumption in the latest quarter.

Speaker Change: Thanks for the question Heather I'll, just comment briefly a little bit from the consumer lens on your question, two which as I mentioned earlier delivering value for the consumer and ground, Turkey, just continues to be a winning proposition in that sense.

Speaker Change: It's a highly versatile option for consumers plugs in very well to everyday life different meal occasions, food experiences and that versatility is valuable.

Speaker Change: And then beyond that just poultry and ground, Turkey, right now very aligned with dietary needs from consumers, who seek out being sources of protein. So if I kind of walked down the line and you look at the recent consumption data Jennie O continues to perform very well consistent household penetration gains over the past 52 weeks up over 4% in dollar consumption.

John Ghingo: And if you look at the demand trend, we believe those trends underneath that rising demand are longer term in nature, and we love having the number one brand in ground turkey, right? It's a great position to continue to capitalize on that consumer moment. Perfect.

Speaker Change: And in the latest quarter and if you look at the demand trend. We believe those trends underneath that rising demand are longer term in nature, and we love having the number one brand in ground, Turkey right. It's a great position to continue to capitalize on that consumer momentum.

Heather Jones: Thank you for that.

Speaker Change: Okay perfect. Thank you for that and then I'll.

Heather Jones: And then on my follow-up, I just wanted to stick with retail. So looking at just, and I'm just looking at Q2, but looking at your volumes for Q2 versus, so 25 versus 21, you're down roughly 20% in volumes over that time. And I know a big chunk of that has been Co-Man, and some of it has been a contract manufacturer, I should say, and some of it has been Geneo. And then obviously the planner's impact.

Speaker Change: My follow up I, just wanted to stick with retail.

Speaker Change: So looking at just and I'm just looking at Q2, but looking at your volumes for Q2 versus.

Speaker Change: So 25 versus 21.

Speaker Change: Youre down roughly 20% in volumes over that Tom and I know a big chunk of that has been co man and some of it has been.

Speaker Change: Our contract manufacturer I should say and some of it has been Jennie O and then obviously the planners impact, but I was just wondering as we think about.

John Ghingo: But I was just wondering if we think about that business now, and for the forward look, do you, Do you believe we're close to a stabilization point and going to grow from here? Or how are y'all thinking about that business or just pure volume?

Speaker Change: That business now and for the forward look do you.

Speaker Change: Do you believe we are close to stabilization point.

Speaker Change: And going to grow from here or how are you all thinking about that business or just pure volumes.

John Ghingo: Yeah, thank you, Heather. So let me kind of click into quarter, and I'll pull back and talk a little bit about retail in general. So you are correct, our retail volumes did contract in the second quarter. It is important to note that two-thirds of that volume decline was related to lower commodity shipments and contract manufacturing. And in fact, the contract manufacturing business, while that volume was down, it was mixed favorable and provided net sales growth on the quarter. The other significant drag to volume worth calling out here is promotional timing that we referenced in the release, and that was club channel volumes specifically related to quarterly year-over-year timing differences and promotions.

Heather: Yeah. Thank you Heather So let me kind of click into.

Speaker Change: The quarter.

Speaker Change: I'll pull back and talk a little bit about retail in general. So you are correct. Our retail volumes did contract in the second quarter. It is important to note that two thirds of that volume decline was related to lower commodity shipments and contract manufacturing and in fact, the contract manufacturing business, while that volume was down it was mixed favorable and provided net sale.

Speaker Change: <unk> growth on the quarter.

Speaker Change: The other significant drag to volume worth calling out here is promotional timing that we referenced in the release and that was club channel volume specific related to quarterly year over year timing differences and promotions. So that was the other bulk of the volume decline. When you. When you look at volume year over year, you can see the quality of the volume for retail what's different in the sense that net.

John Ghingo: So that was the other bulk of the volume decline. When you look at volume year-over-year, you can see the quality of the volume for retail was different in the sense that net sales was flat and we increased profitability on the quarter. So to your question of what do we expect with the outlook as we move forward into the second half of the year, we feel very good about being able to drive increased consumer demand across our flagship and rising brands. We have good consumption momentum on those businesses. We have some strong tailwinds at our back.

Speaker Change: Sales was flat and we increased profitability on the quarter. So to your question of what do we expect with the outlook as we move forward into the second half of the year, we feel very good about being able to drive increased consumer demand across our flagship and rising brands.

Speaker Change: We have good consumption momentum on those businesses we have some.

John Ghingo: And on top of that, we will continue to manage strategically the commodity and less strategic elements of the business over time.

Speaker Change: Strong tailwind at our back and on top of that we will continue to manage strategically the commodity and less strategic element to the business over time.

Heather Jones: Okay, thank you so much.

Speaker Change: Okay. Thank you so much.

Speaker Change: Okay.

Rupesh Parikh: Thank you, and your next question comes from the line of Rupesh Parikh from Oppenheimer. Please go ahead. Good morning, and thanks for taking my questions. So I guess I just have an intermediate term question.

Speaker Change: Thank you and your next question comes from the line of fish Barwick from Oppenheimer. Please go ahead.

Speaker Change: Good morning, and thanks for taking my questions. So I guess I just have an intermediate term question, so going back to your targets for $250 million plus in operating income growth by FY 'twenty six just given I guess, the tariff and consumer backdrop.

James Snee: So going back to your targets for $250 million plus in operating income growth by FY26, just given, you know, I guess the tariff and consumer backdrop, you know, is your team still confident being able to deliver on that? Yeah, Rupesh, I mean, for us at this point, nothing, nothing has changed, right? I mean, we're obviously very excited about the work that's happening. Jacinth did a really nice job there elaborating on just how much work is happening across the organization. You know, while we want to get to 26, obviously, our focus right now is on 25, and all of the work that that's happening here.

Speaker Change: Is your team still confident being able to deliver on that target.

Speaker Change: Yeah for patch I mean for us at this point nothing nothing has changed right. I mean, we're obviously very excited about the work that's happening just did a really nice job Barry elaborating on just how much work is happening across the organization.

Speaker Change: While we want to get to 26, obviously, our focus right now is on on 25 and all of the work that's happening here and so nothing is nothing has changed in our outlook are from our perspective.

James Snee: And so nothing has nothing's changed in our outlook or from our perspective, you know, really excited about the benefits that that TNM is bringing to the organization, not just the financial benefits, but the long term capabilities that we've needed. So, you know, all of that is what, you know, leaves us in a really, really favorable position for this entire initiative.

Speaker Change: Really excited about the benefits that that Pan am is bringing to the organization not just the financial benefits, but the long term capabilities that we need it.

Speaker Change: So all of that is what leaves us in a really really favorable position for this entire initiative.

James Snee: Great. And then maybe my follow-up question, just on the macro, you know, as you look at food service in your retail business, you know, any changes in consumer behavior lately, positive or negative? So just love to hear your latest thoughts on the consumer back Yeah, thanks for the question. I'll comment on the consumer and kind of backdrop and a little bit of what we're seeing in the marketplace. So I would describe the consumer, you know, sentiment as not great, meaning they're feeling the cumulative effects of inflation and at the same time feeling uncertainty in the macro environment.

Speaker Change: Great and then maybe my follow up question just on the macro you know as you look at foodservice and your retail business you know any changes in consumer behavior, whether it be positive or negative. So just love to hear your latest thoughts on the consumer backdrop.

Speaker Change: Yeah.

Speaker Change: Yes. Thanks for the question I'll comment on the consumer and kind of <unk>.

Speaker Change: Backdrop, and a little bit of what we're seeing in the marketplace. So I.

Speaker Change: I would describe the consumer sentiment as.

Speaker Change: Not great, meaning they're feeling the cumulative effects of inflation and at the same time feeling uncertainty in the macro environment. So I would describe that as a strained consumer sentiment.

James Snee: So I would describe that as a strained consumer sentiment. And, you know, what's interesting is you do see some trading down from consumers to lower prices. You know, fortunately, with our portfolio being so broad, we do offer products at all different pricing tiers, including more value oriented options. Some of our categories actually play very well for affordability. But if we pull back even from that and say, where is the growth coming from? Right in our own portfolio, we can see some very different pockets of strong growth, because consumers are still looking for solutions. They're still looking for, you know, what they would classify, as I said earlier, as value.

Speaker Change: And.

Speaker Change: What's interesting is you do see some trading down from consumers to lower prices, Fortunately with our portfolio being so broad we do offer products at all different pricing tiers, including more value oriented options some of our categories actually play very well for affordability.

Speaker Change: But if we pull back even from that and say where is the growth coming from right in our own portfolio. We can see some very different pockets of strong growth because consumers are still looking for solutions. They are still looking for what they would classify as I said earlier is value and so within our own portfolio, we see strong growth still in the premium end with our Applegate brand. So applegate is playing in the more.

James Snee: And so within our own portfolio, we see strong growth still in the premium end with our Applegate brand. So Applegate is playing in the more premium side, natural organic segment, experiencing very strong growth with consumers gravitating to the brand for differentiated product quality, attaching themselves to the brand and the brand building we're doing, as well as convenient forms of product innovation. We also see strong growth in our Mexican portfolio. There we're delivering authentic Mexican food experiences with the Ordez brand, the Holy brand, and both of those brands delivered really strong growth in the quarter. And again, consumers, they are gravitating to innovation, right?

Speaker Change: Premium side natural organic segment experiencing very strong growth with consumers gravitating to the brand for differentiated product quality attaching themselves to the brand and the brand building, we're doing as well as convenient forms of product innovation. We also see strong growth in our Mexican portfolio, there, we're delivering authentic Mexican.

Speaker Change: Food experiences with your desk brand the wholly brand and both of those brands delivered really strong growth in the quarter.

Speaker Change: And again consumers are gravitating to innovation, we're extending the <unk> brand into our refrigerated entrees category flavor forward Super convenient meal platform also creating value for consumers so paying for flavor and convenience and then a very different example, we talked touched on earlier as Jennie O and ground, Turkey, right and we continue to see strong demand there as consumers are willing.

James Snee: We're extending the Ordez brand into our refrigerated entrees category, flavor forward, super convenient meal platform, also creating value for consumers. So paying for flavor and convenience. And then a very different example we touched on earlier is Jenny O and ground turkey, right? And we continue to see strong demand there as consumers are willing to pay for lean sources of protein and the versatility that ground turkey provides. So I think the answer is the consumer is feeling strained. There is some trading down, but for the most part, consumers are looking for value and protein. We feel really good about our protein centric portfolio being able to meet their needs for the value they're looking for.

Speaker Change: To pay for lean sources of protein and the versatility that ground, Turkey provide so I think the answer is the consumer is feeling strain.

Speaker Change: There is some trading down but for the most cards consumers who are looking for value and protein we feel really good about our protein centric portfolio being able to meet their needs for the value. They are looking for yeah and refresh I think when we think about retail as John described we're holding our own in market share right. We're continuing to focus on these flagship and at <unk>.

James Snee: Yeah. And Rupesh, I think when we think about retail, as John described, I mean, we're holding our own market share, right? We're continuing to focus on these flagship and rising brands. And there's still some clear opportunities. On the food service side, we talked about what is happening in terms of the pressure on food away from home. And again, we're structured the right way. We have the right strategies to outperform what's happening in that macro environment. And so when we look at whether it's independently or together, we feel like these businesses, our portfolio have us well positioned to navigate those macro factors.

Speaker Change: <unk> brands and there are still some clear opportunities.

Speaker Change: The foodservice side.

Speaker Change: Are you talking about what is happening in terms of the pressure on food away from home and again, we're structured the right way, we have the right strategies to outperform what's happening in the macro environment and so when we look at you know whether it's independently or together when you feel like is the status of these businesses our portfolio.

Speaker Change: Have us well positioned to navigate those macro factors.

James Snee: Great.

Operator: Thank you for all the call.

Operator: Best of luck.

Speaker Change: Great. Thank you for all the color best of luck.

James Snee: Thank you.

Operator: And your last question comes from the line of Pooran Sharma from Stevens. Please go ahead. Great. Thanks for the color, or the question. Just wanted to ask about food service here. I, you know, noted that you, you know, you talked about outperforming the general market and just your positioning there. But looking at margins here, they've kind of been at this for the last four quarters or so.

Speaker Change: Thank you and your last question comes from the line of <unk> Sharma from Stephens. Please go ahead.

Speaker Change: Great. Thanks for the color.

Speaker Change: The question.

Speaker Change: Just wanted to ask about foodservice gear.

Speaker Change: Yeah.

Speaker Change: I noted that you.

Speaker Change: You talked about outperforming the general market.

Speaker Change: And just your positioning there but.

Speaker Change: Looking at margins here, they've kind of been at this level for the last.

Pooran Sharma: As you look out to the rest of the year, do you think margins for this business inflect upwards, kind of with the rest of the back half performance you've noted? Or how should we think about food service margins, kind of in the back half of the Yeah, Pooran, I'll go ahead and take that. I mean, I think for us, right, it's the strong momentum on the top line that we'll continue to have, right? And I think when we're able to capitalize on the opportunities with planters, when we're able to really start selling against this great pipeline of innovation, I mean, that's what gives us the confidence in growth and broad-based growth in food service.

Speaker Change: Four quarters or so as.

Speaker Change: As you look out to the rest of the year do you think margins for this business.

Speaker Change: Inflect upwards.

Speaker Change: With the rest of the back half performance, you've noted or how should we think about foodservice margins kind of in the back half of the year.

Speaker Change: Yep.

Speaker Change: I'll go ahead and take that I mean, I think for US right as the strong momentum on the top line that will we'll continue to have right and I think when we're able to capitalize on the opportunities with with plasters, when we're able to really start selling against this great pipeline of van.

Speaker Change: Innovation.

Speaker Change: That's what gives us the call.

Speaker Change: Confidence in growth and broad based growth in foodservice and yeah. You are right. I mean, we have talked extensively about how we outperform what is happening in the foodservice market place.

James Snee: And yeah, you're right. I mean, we have talked extensively about how we outperform what is happening in the food service marketplace. That's something that we absolutely have to continue to do in order to be able to deliver growth. You know, and so we do expect segment profit growth from food service in the back half of the year. And it is, it's planters, it's innovation.

Speaker Change: That's something that we absolutely have to continue to do in order to be able to deliver growth.

Speaker Change: And so we do expect segment profit growth from foodservice in the back half of the year and it is it's planters that's innovation, but then again as I said you know we do have some favorable year over year comps in the second half.

Pooran Sharma: But then again, as I said, you know, we do have some favorable year over year comps in the second half. Okay, appreciate that color.

Speaker Change: Okay, I appreciate that color and just really quickly.

Pooran Sharma: And just really quickly, just on international, wanted to kind of understand how the shift and export customer mix impacted margins. I think you mentioned it was temporary. And just wanted to see if that's resolved or any ongoing headwind from that. Just in light of the strong top line growth in that segment. Yeah, no, it's a good question, Pooran. Thanks. And it is it's fixed. It really is more of a timing issue in terms of shipments and location. But as we think about the back half of the year for international, right, it's steady, strong growth. Our business in China continues to perform really well.

Speaker Change: Just on international.

Speaker Change: Wanted to kind of understand how the stiff.

Speaker Change: Stepped in export customer mix impacted margins.

Thank you mentioned it was temporary.

Speaker Change: Just wanted to see if that's resolved or any ongoing headwind from that just just in light of the strong topline growth in that segment.

Speaker Change: Yeah. It's a good question who are on things and it is it's fixed it really is more of a timing issue in terms of shipments and location.

Speaker Change: As we think about the back half of the year for international it's steady strong growth our business in China continues to perform really well and that's obviously a key driver for their ability to deliver what we need them to deliver in the back half of the year, but it really timing issue that has been resolved.

Jacinth Smiley: And that's obviously a key driver for their ability to deliver what we need them to deliver in the back half of the year.

Jacinth Smiley: But it really timing issue that has been resolved. Great. Appreciate it, Carlos. Thank you.

Speaker Change: Great appreciate the color.

Speaker Change: Yes.

Operator: That ends our question and answer session.

Speaker Change: Thank you.

James Snee: I will now hand the call back to Mr. James Nee for any closing remarks. Yeah, thank you. And thank thank you all for joining us this morning. We achieved solid top line performance and delivered results in line with our expectations for the second quarter. This accomplishment leaves us incredibly well positioned to deliver a strong second half. And while there's work to do, we have the right structure, the right strategies, and the right portfolio that allows us to be confident in our ability to get this done.

Speaker Change: That answer your question and answer session I would now hand, the call back to Mr. Jim Smith for any closing remarks.

Speaker Change: Yeah. Thank you and thank you all for joining us this morning.

Speaker Change: We achieved solid top line performance and delivered results in line with our expectations for the second quarter. This accomplishment leaves us incredibly well positioned to deliver a strong second half.

Speaker Change: And while there is work to do.

Speaker Change: We have the right structure, the right strategies and the right portfolio that allows us to be confident in our ability to get this done.

James Snee: Thank you for joining us today, and I hope you have a great rest of your day. And this concludes today's call. Thank you for participating. You may all disconnect.

Speaker Change: Thank you for joining us today and I Hope you have a great rest of your day.

Speaker Change: And this concludes today's call. Thank you for participating you may all disconnect.

Speaker Change: [noise].