Q3 2025 The Campbell’s Company Earnings Call

Operator: Good morning and welcome to the Campbell's Company third quarter fiscal 2025 earnings conference call. Today's conference is being recorded. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end.

Good morning, and welcome to the Campbell's Company third quarter fiscal 2025 earnings conference call.

Today's conference is being recorded.

All lines will be needed during the presentation portion of the call with an opportunity for questions and answers at the end.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad.

If you'd like to ask a question. Please press star one on your telephone keypad.

Rebecca Gardy: I would now like to turn the call over to Rebecca Gardy, Chief Investor Relations Officer at Campbell's. Please go ahead.

Speaker Change: I would now like to turn the call over to Rebecca Gardy, Chief Investor Relations Officer at Campbell. Please go ahead.

Rebecca Gardy: Good morning and welcome to Campbell's third quarter fiscal 2025 earnings conference call. I'm Rebecca Gardy, Campbell's Chief Industrial Relations Officer. Joining me today are Mick Beekhuizen, Chief Executive Officer, and Carrie Anderson, Chief Financial Officer.

Good morning, and welcome to Campbell's third quarter fiscal 2025 earnings Conference call I'm, Rebecca Gardy Campbell, Chief Investor Relations Officer. Joining me today are make bake housing Chief Executive Officer, and Carrie Anderson Chief Financial Officer, today's remarks had been prerecorded once we conclude the prepared remarks.

Operator: Today's remarks have been prerecorded. Once we conclude the prepared remarks, we will transition to a live webcast Q&A session.

Speaker Change: We will transition to a live webcast Q&A session. The presentation, a transcript of managements prepared remarks, and today's earnings press release has been posted to the Investor Relations section on our website. The Campbell's company Dot com. Following the conclusion of the Q&A session. A replay of the webcast will be available at the same location followed by a transcript of the.

Operator: The presentation, a transcript of management's prepared remarks, and today's earnings press release have been posted to the investor relations section on our website, thecampbellscompany.com. Following the conclusion of the Q&A session, a replay of the webcast will be available at the same location, followed by a transcript of the call within 24 hours.

Speaker Change: Call within 24 hours by two outlines today's agenda, Nick will provide insights into our third quarter performance as well as our in market performance by Division. Please recall that effective first quarter fiscal 'twenty five we are using store economy low plus for end market data Carey will then discuss the financial results of the quarter in more detail and review our guy.

Rebecca Gardy: Slide two outlines today's agenda. Mick will provide insights into our third quarter performance, as well as our in-market performance by division. Please recall that effective first quarter fiscal 25, we are using Cercana Mulo Plus for in-market data. Carrie will then discuss the financial results of the quarter in more detail and review our guidance for the full fiscal year 25.

Speaker Change: For the full fiscal year of 25 on our call today, we will make forward looking statements, which reflects our current expectations. These statements rely on assumptions and estimates, which could be inaccurate and are subject to risk. Please refer to slide three of our presentation or our SEC filings for a list of factors that could cause our actual results to vary materially from.

Rebecca Gardy: On our call today, we will make forward-looking statements which reflect our current expectations. These statements rely on assumptions and estimates which could be inaccurate and are subject to risk. Please refer to slide three of our presentation or our SEC filings for a list of factors that could cause our actual results to vary materially from those anticipated in the forward-looking statements.

Speaker Change: Those anticipated in the forward looking statements because we use non-GAAP measures. We have provided a reconciliation of each of these measures to the most directly comparable GAAP measure in the appendix of our presentation and now it's my pleasure to turn it over to Chief Executive Officer, Mcveigh, Kevin Nick Thanks, Rebecca and good morning, everyone.

Rebecca Gardy: Because we use non-GAAP measures, we have provided a reconciliation of each of these measures to the most directly comparable GAAP measure in the appendix of our presentation.

Mick Beekhuizen: And now it's my pleasure to turn it over to Chief Executive Officer Mick Bakhausen. Mick? Thanks, Rebecca, and good morning, everyone. Our third quarter earnings performance exceeded expectations. driven by solid contributions from our meals and beverages business due to strong in-market performance and a benefit from favorable shipment timing, which we expect to normalize in the fourth quarter. The performance of our snacks business was mixed this quarter, reflecting continued category softness and an increasingly competitive environment. That said, we have an attractive snacking portfolio with a clear right to win, and we have been refining our plans to improve our in-market performance.

Speaker Change: Our third quarter earnings performance exceeded expectations, driven by solid contributions from our meals and beverages business due to strong in market performance and a benefit from favorable shipment timing, which we expect to normalize in the fourth quarter. The performance of our snacks business was mixed this quarter, reflecting.

Speaker Change: It's category softness and an increasingly competitive environment that said, we have an attractive snacking portfolio with a clear right to win and we have been refining our plans to improve our in market performance in the.

Mick Beekhuizen: In the current dynamic macro environment, consumers are making thoughtful spending decisions, which is materializing in our category. Consumers continue to cook at home and focus their spending on products that help them stretch their food budgets, and they are increasingly intentional about their discretionary snack These behaviors supported growth in our meals and beverages categories and increased headwinds in our snacking categories. Collectively, our 16 leadership brands' in-market performance was in line with overall category consumption, with meals and beverages consumption ahead of categories and snacks behind, driven by heightened competitive pressure. Given our performance year to date, we are reaffirming our full year fiscal 2025 guidance ranges.

Speaker Change: Current dynamic macro environment consumers are making thoughtful spending decisions, which is materializing in our categories.

Speaker Change: Humans continue to Cook at home and focus their spending on products that help them stretch their food budgets and they are increasingly intentional about the discretionary snack purchases. These behaviors supported growth in our meals and beverages categories and increased headwinds in our <unk>.

Speaker Change: Back in categories collectively are 16 leadership brands in market performance was in line with overall category consumption with meals and beverages consumption ahead of categories and snacks behind driven by heightened competitive pressures.

Speaker Change: Our performance year to date, we are reaffirming our full year fiscal 2025 guidance ranges that said, we now expect adjusted earnings to be at the low end of the guidance range due to the slower than anticipated recovery in the snacks business.

Mick Beekhuizen: That said, we now expect adjusted earnings to be at the low end of the guidance range due to the slower than anticipated recovery in the SNACs. Consistent with what we said during our last earnings call, and given the fluid operating environment, this guidance excludes any impact from the imposition of import tariffs. Government as potential retaliatory actions taken by other countries. The trade environment remains uncertain. We have separately estimated the fiscal 25 tariff impact, which Carrie will talk through in a few moments.

Speaker Change: Systems with what we said during our last earnings call and given the fluid operating environment. This guidance excludes any impact from the imposition of import tariffs.

Speaker Change: Government and potential retaliatory actions taken by other countries as the trade environment remains uncertain.

Speaker Change: We have separately estimated the fiscal 'twenty five tariff impact, which Carey will talk through in a few moments we remain focused on near term in market execution and mitigating tariff impact while investing in our brands leveraging our scale for growth elevating senior leaders to payrolls.

Mick Beekhuizen: We remain focused on near-term in-market execution and mitigating tariff impact while investing in our brands, leveraging our skill for growth, elevating senior leaders to key roles and advancing critical capabilities for long-term value creation.

Speaker Change: Advancing critical capabilities for long term value creation.

Mick Beekhuizen: Now, let's turn to key highlights from our third quarter results on slides. Organic net sales growth of 1% was driven by volume growth, marking five consecutive quarters of flat or positive volume across the enterprise. Organic net sales growth was ahead of in-market consumption driven by timing of shipments, which we expect to normalize in Q4. The organic net sales growth was led by our meals and beverages division, which more than outweighed the ongoing pressure in our snacks. It's important to note that the Sobel's acquisition moved into organic net sales in the middle of the third quarter.

Speaker Change: Now, let's turn to key highlights from our third quarter results on slide six.

Speaker Change: Organic net sales growth of 1% was driven by volume growth, marking five consecutive quarters of flat or positive volume across the enterprise organic net sales growth was ahead of in market consumption driven by timing of shipments, which we expect to normalize in Q4.

Speaker Change: Organic net sales growth was led by our meals and beverages division, which more than outweighed the ongoing pressure in our snacks business. It is important to note that the <unk> acquisition moved into organic net sales in the middle of the third quarter.

Mick Beekhuizen: We delivered 4% net sales growth, reflecting the before-mentioned organic net sales growth and contribution from Rails during the first half of the third quarter. Adjusted EBIT increased 2% for his prior year, which resulted in a slight margin decrease as lower net pricing realization was only partially offset by spending reductions. Adjusted EPS was down 3% with a net positive EPS contribution from the service acquisition in the quarter. Turning to slide 7, the in-market contribution of our 16 leadership brands, representing approximately 90% of total net sales, remains stable in the third quarter, with more than half holding or gaining share.

Speaker Change: We delivered 4% net sales growth, reflecting the performance organic net sales growth and contribution from our rail during the first half of the third quarter.

Speaker Change: Adjusted EBIT increased 2% versus prior year, which resulted in a slight margin decrease as lower net pricing realization was only partially offset by spending reductions.

Speaker Change: Adjusted EPS was down 3% with a net positive EPS contribution from the service acquisition in the quarter.

Speaker Change: Turning to slide seven the in market contribution of our 16 leadership brands, representing approximately 90% of total net sales remained stable in the third quarter with more than half holding or gaining share.

Mick Beekhuizen: As we mentioned last quarter, we started to see consumer sentiment softening in January. This continued throughout Q3, with consumers making more deliberate choices with their spending on food. A key outcome is a growing preference for home-cooked meals, leading to the highest levels of meals prepared at home since early 2020. Additionally, consumers are favoring ingredients that help stretch tighter food budgets. Both provided a tailwind for our Meals and Beverages business, especially for our condensed cooking soups, broth, and Italian sauces. As a result, our Meals and Beverages leadership brands continued to outpace category consumption and grew dollar share by 0.4 points.

Speaker Change: As we mentioned last quarter, we started to see consumer sentiment softening in January this continued throughout Q3 with consumers, making more deliberate choices with their spending on food a key outcome is a growing preference for a home cooked meals, leading to the highest levels of meals prepared at home since early 2002.

Speaker Change: Additionally, consumers are favoring ingredients that help stretch tighter food budget.

Speaker Change: Both provided a tailwind for our meals and beverages business, especially for our condensed cooking soups broth and Italian sources as a result, our meals and beverages leadership brands continued to outpace category consumption and grew dollar share by 0.4 points.

Mick Beekhuizen: Six of our eight Meals and Beverages Leadership Brands grew our health share in the third quarter. In total, Meals and Beverages Leadership Brand consumption increased by 2% in the. Conversely, the consumer environment was a continued headwind in the quarter for some of our more discretionary categories in snacks, such as crackers and chips. However, while value is important, consumers favor better-for-you segments and are willing to selectively splurge when the benefits are clearly worth it, as evident by the momentum of some of our recent innovation launches. In snacks, three of our eight leadership brands grew or held share.

Speaker Change: <unk> of our eight meals and beverages leadership brands grew or held share in the third quarter in total meals and beverages leadership brands consumption increased by 2% in the quarter.

Speaker Change: Conversely, the consumer environment was a continued headwind in the quarter for some of our more discretionary categories in snacks, such as crackers and chips. However, while value is important consumers' favorite better for you segments and are willing to selectively splurge when the benefits are clearly worth it.

Speaker Change: As evidenced by the momentum of some of our recent innovation launches.

Speaker Change: In snacks three of our eight leadership brands grew or held share Pepperidge farm bakery and cookies brands held share partially driven by our successful innovation snack factory with a presence in both the deli and snack I'll now grew share by almost half a point and our Lance sandwich crackers maintained momentum.

Mick Beekhuizen: Pepperidge Farm Bakery and Cookies brands held share, partially driven by our successful innovation. Snack Factory, with a presence in both the deli and snack aisles now, grew share by almost half a point. And our Land Sandwich Crackers maintained momentum with a second consecutive quarter of share. Given the category trends and aggregate share headwinds, our overall SMAX leadership brand consumption declined by 3% in the quarter. We remain confident in the strength and long-term growth potential of our SMAX brands and the plans we have to stabilize share while navigating the dynamic operating environment.

Speaker Change: With a second consecutive quarter of share growth given the category trends in aggregates share headwinds our overall snacks leadership brand consumption declined by 3% in the quarter, we remain confident in the strength and long term growth potential of our snacks brands and the plans we have to stabilize share while navigating.

Speaker Change: The dynamic operating environment.

Mick Beekhuizen: Let's take a closer look at each division, beginning with Meals and Beverages on slide 8. Organic Net Sales increased 6% for the quarter, led by volume and mixed growth of 7%. Specifically, organic net sales increased year-over-year due to consumption growth of 2% and timing of customer shipments in our base business at the end of the quarter, as well as Rails, in connection with the implementation of our existing SAP Enterprise Resource Planning System for serverless. Turning to slide 9, our soup portfolio continued its strong performance in Q3, benefiting from the increased at-home cooking trend I mentioned earlier.

Speaker Change: Let's take a closer look at each division, beginning with meals and beverages on slide eight.

Speaker Change: Organic net sales increased 6% for the quarter led by volume and mix growth of 7% spin.

Speaker Change: Specifically organic net sales increased year over year due to consumption growth of 2% and timing of customer shipments in our base business at the end of the quarter as well as rayos in connection with the implementation of our existing SAP enterprise resource planning system for <unk> brands.

Speaker Change: Turning to slide nine our soup portfolio continued its strong performance in Q3 benefiting from the increased at home cooking trends I mentioned earlier Campbell Stoessel wet soup grew dollar share by <unk> four points and solve the sixth consecutive quarter of volume share growth driven by household gains, particularly among younger.

Mick Beekhuizen: Campbell's Total Wet Soup grew dollar share by 0.4 points and saw the 6th consecutive quarter of volume share growth driven by household. particularly among younger cohorts as they increasingly cook at home. The broad category has grown since 2020 and more recently further accelerated. fueled by the uptick in cooking behavior, making our broad business a continued bright spot within the portfolio. In Q3, we significantly outpaced category consumption and grew dollar share by nearly three points in the quarter. Swanson saw strong consumption and volume growth and has now gained or held millennial households for seven consecutive quarters.

Speaker Change: Cohorts as they increasingly cook at home.

Speaker Change: Broth category has grown since 2020 and more recently further accelerated fueled by the uptick in cooking behavior, making our broth business a continued bright spot within the portfolio in Q3, we significantly outpaced category consumption and grew dollar share by nearly three points in the quarter.

Speaker Change: <unk> saw strong consumption in volume growth and Thats now gains or a health millennial households for seven consecutive quarters, a strong performance in the broth categories. Further emphasized by Pacific's continued double digit consumption growth.

Mick Beekhuizen: Our strong performance in the broad category is further emphasized by Pacific's continued double-digit consumption growth. The pace of the private labor recovery has been slower than we originally anticipated. that we expect it to continue to recover. Our supply chain team has done an outstanding job of meeting customer demand in the phase of private label supply constraints, and we are confident in our ability to continue to do so. A ready-to-serve in-market consumption declines were driven by increased competitive promotional intensity and our discontinuation of our WellYes brand. Our Chunky, Pacific, Rails, and HomeStyle brands all gained share in the quarter.

Speaker Change: Phase of the private label recovery has been slower than we originally anticipated.

Speaker Change: Expected to continue to recover.

Speaker Change: Supply chain team has done an outstanding job of meeting customer demands in the face of private label supply constraints as we are confident in our ability to continue to do so.

Speaker Change: Ready to serve in markets consumption declines were driven by increased competitive promotional intensity and our discontinuation of our well, yes brands are chunky Pacific rails, and homestyle brands all gained share in the quarter.

Mick Beekhuizen: Finally, our Condensed Portfolio continued its strong performance during the quarter with a sixth consecutive quarter of dollar share growth and increases in both dollar and volume consumption. Our brands outperformed the segment and grew share, partially driven by the successful mac and cheese activation. In the current economic environment, we are constantly looking to provide consumers with exciting new options that let them use our products in more versatile ways to cook meals at home. A great example of that is our Mac and Cheese Marketing Act. In the third quarter, we introduced a new, easy, and delicious way to make this household classy.

Speaker Change: Finally, our condensed portfolio continued its strong performance during the quarter with a sixth consecutive quarter of dollar share growth and increases in both dollar and volume consumption.

Speaker Change: Our brands outperformed the segment and grew share partially driven by the successful Mac and cheese activation.

Speaker Change: In the current economic environment, we are constantly looking to provide consumers with exciting new options that let them use our products and more first always to cook meals at home a great example of that is a Mac and cheese marketing activation in the third quarter, we introduced a new easy and delicious way to make these households.

Speaker Change: <unk>.

Mick Beekhuizen: This activation helped drive the 11th consecutive quarter of Condensed Cooking Soup share growth and added approximately 1 million households to Campbell's Condensed Cooking portfolio, the highest household penetration gains for Condensed in any quarter over the past 4 years. More than half of these new buyers were millennials, displaying the brand's growing popularity with this generation. This is a great example of our purpose at work, connecting people through food they love, and demonstrates the growth we can unlock by continuing to highlight the versatility of our condensed soups in making delicious, affordable, and stretchable meals. Year over year, the Italian sauce category grew roughly two points in Q3 and was relatively stable to Q2.

Speaker Change: This activation helped drive the 11th consecutive quarter of condensed cooking soups share growth and added approximately 1 million households to Campbell's condensed cooking portfolio. The highest household penetration gains for condensed in any quarter over the past four years more than half of these new buyers.

Speaker Change: Where millennials displaying the brand's growing popularity with this generation.

Speaker Change: This is a great example of our purpose at work.

Speaker Change: <unk> people through food they love.

And demonstrates the growth we can unlock by continuing to highlight diverse utility of our condensed soups in making delicious affordable and stretcher will meals.

Speaker Change: Year over year, the Italian sauce category grew roughly two points in Q3 and was relatively stable to Q2 prego trailed dollar consumption for Q3, largely due to a shift in the timing of promotional activity. However, on a Q3 year to date basis Prego consumption was more in line.

Mick Beekhuizen: Prego trailed dollar consumption for Q3, largely due to a shift in the timing of promotional activity. However, on a Q3 year-to-date basis, Prego consumption was more in line with the Italian sauce category and well ahead on share when excluding the ultra-distinctive sector. Rail's dollar consumption growth in Q3 was in line with the overall category, but underperformed our initial expectations. The main drivers of the lower-than-expected rail source growth in Q3 can be attributed to a couple of points of headwind from certain prior promotional events we decided not to repeat this quarter because they were below our premium price guardrails.

Speaker Change: With the Italian sauce category and well ahead on share when excluding the altra distinctive segment.

Speaker Change: Rayos dollar consumption growth in Q3 was in line with the overall category, but underperformed our initial expectations.

Speaker Change: The main drivers of the lower than expected rail source growth in Q3 can be attributed to a couple of points of headwinds from certain prior year promotional events, we decided not to repeat this quarter because they were below our premium priced car trails combined with slightly increased consumer spending.

Mick Beekhuizen: combined with slightly increased consumer spending sensitivity and increased competitive promotional activity. That said, the Rails brand remains strong, and we still have significant opportunities to increase distribution, household penetration, and awareness of Rails when comparing it to While we have made considerable progress growing the brand since acquiring it last year, there is still a significant opportunity ahead. We have a history of category growth and leadership and believe that the distinctive premium nature of rail sources will allow us to continue that success. RAILSAUCE is reaching a point of maturity on core distribution. So we're investing in other levers to sustain growth, including marketing focused on highlighting the Italian origin of RAILS ingredients, continued innovation, and sharpened sales.

Speaker Change: Pending sensitivity and increased competitive promotional activity.

Speaker Change: That said the rails brands remained strong and we still have significant opportunities to increase distribution household penetration and awareness of rails when comparing it to prego.

Speaker Change: While we have made considerable progress growing the brand since acquiring it last year. There is still a significant opportunity ahead.

Speaker Change: We have a history of category growth and leadership and believe that the distinctive premium nature of rail sources will allow us to continue that success.

Speaker Change: <unk> sauce is reaching a point of maturity on core distribution. So we're investing in other levers to sustained growth.

Speaker Change: Including marketing focused on highlighting the Italian origin of radios ingredients continue to innovation as sharpened sales execution.

Mick Beekhuizen: Now let's turn to our snacks business on slide 13. In the third quarter, the pressure on snacking categories increased sequentially, which combined with heightened competitive activity resulted in year-over-year 3% lower in market consumption. Organic net sales declined by 5% driven by lower volume and mix. The bulk of the two-point variance to consumption was driven by partners slash contract brands as we continue to reshape our portfolio to focus more on our differentiated leadership.

Speaker Change: Now, let's turn to our snacks business on slide 13.

Speaker Change: In the third quarter, the pressure on snacking categories increased sequentially, which combined with heightened competitive activity resulted in year over year, 3% lower in market consumption organic net.

Speaker Change: <unk> net sales declined by 5% driven by lower volume and mix.

Speaker Change: Bulk of the two point variance to consumption was driven by partners like contract brands as we continue to reshape our portfolio to focus more on our differentiated leadership brands.

Mick Beekhuizen: Turning to slide 14. You can see how our snacks portfolio performed relative to each respective snacking category. and Key Brand Specific Action Plans to Navigate the Current Landscape. In Bakery and Cookies, we outperformed category consumption through sustained momentum in Pepperidge Farm Fresh Bakery and Cookies, resulting in stable in-market consumption. Coming off a successful winter holiday, we elevated innovation and unlocked growth by giving consumers the indulgences they are looking for. In pretzels, consumption grew in the quarter in the salty aisle, although at lower levels than the broader category. We are meeting consumer needs through two distinct brands.

Speaker Change: Turning to slide 14.

Speaker Change: You can see how our snacks portfolio performed relative to each respective snacking category and key brand specific action plans to navigate the current landscape.

Speaker Change: In bakery and cookies, we outperformed category consumption through sustained momentum in Pepperidge farm fresh bakery and cookies, resulting in stable in market consumption.

Speaker Change: <unk> off a successful winter holiday, we elevated innovation and unlocks growth by giving consumers the indulgences theyre looking for.

Speaker Change: In pretzels consumption grew in the quarter in the salty all although at lower levels than the broader category.

Speaker Change: Our meeting consumer needs through two distinct brands Snyder's of Hanover, Pretzel, traditionalist and snack factory, which re imagines pretzels on.

Mick Beekhuizen: Schneider's of Hanover for pretzel traditionalists, and Snack Factory, which reimagines pretzels. On Schneiders of Hanover, we continue to proactively manage our assortment to higher performing items and invest in expanding convenient portion-controlled packs. But this was not enough to offset the category competitive pressure. With Snack Factory, we are pleased with the results of its expansion into the Salty Snack Owl, including the successful launch of Pop-Ums and Bites, which have garnered strong repeat purchases. We expect this momentum to fuel consumption for our Praxos portfolio. In crackers, reduced overall consumer sentiment has put pressure on the category. The outsized consumption decline for our business was partially driven by lapping the significantly supported Goldfish Crisps launch in the prior year, which peaked in Q3.

Speaker Change: <unk> of Hanover, we continue to proactively manage our assortment to a higher performing items and to invest in expanding convenient portion controlled packs.

Speaker Change: But this was not enough to offset the category competitive pressures with snack factory. We are pleased with the results of its expansion into the salty snack aisle, including the successful launch of pop ups and bites, which have garden's strong repeat purchases. We expect this momentum to fuel consumption.

Speaker Change: For our pretzels portfolio in.

Speaker Change: In crackers reduced overall consumer sentiment has put pressure on the category. The outsized consumption decline for our business was partially driven by lapping the significantly supported goldfish crisp launch in the prior year, which peaked in Q3.

Mick Beekhuizen: While there were bright spots within Goldfish, especially related to the Harry Potter Butterbeer limited time offering, we have more work to do to reinvigorate this brand and get it back on its historical growth trajectory. We plan to focus on core relevancy through marketing support, strategic promotional activity, and the critical back-to-schools. Finally, our Chips portfolio is well positioned but continues to face strong competitive pressure. We have seen positive consumer and customer response to our product innovation and have increased household penetration through some of our better-for-you offerings, such as Kettle brand avocado oil and air-fried options. And while in-market consumption fell short of our expectations compared to the narrower kettle-cooked chip segment, it was in line with the broader chip category.

Speaker Change: While there were bright spots within goldfish, especially related to the Harry Potter butter beer limited time offering we have more work to do to reinvigorate this brand and get it back on its historical growth trajectory.

Speaker Change: We plan to focus on core relevancy through marketing support strategic promotional activity and the critical back to school season.

Speaker Change: Finally, our chips portfolio is well positioned but continues to face strong competitive pressures.

Speaker Change: We have seen positive consumer and customer response to our product innovation and have increased household penetration through some of our better for you offerings, such as Kettle brand avocado oil and air freight options and while in market consumption fell short of our expectations compared to the narrower kettle cooked chips segment.

Speaker Change: It was in line with the broader chip category.

Mick Beekhuizen: We have specific plans to drive incremental volume growth through optimized distribution, promotion, and continued limited-edition innovation ahead of the all-important summer chips.

Speaker Change: We have specific plans to drive incremental volume growth through optimized distribution promotion and continued limited edition innovation ahead of the all important summer chip season.

Mick Beekhuizen: Moving to slide 15, we are pleased to share the latest results in our efforts to reignite Pepperidge Farm, one of our billion dollar brands. In Q3, our Pepperidge Farm bakery business delivered the highest volume in dollar share growth in nine quarters, driven by the Farmhouse Brioche platform. This platform now includes delicious items in sandwich bread, buns and rolls, and swirl breakfast. Growth in our Pepperidge Farm Cookies business is coming from Milano. which had the strongest household penetration gains in nine quarters in Q3, driven by the Milano white chocolate platform launch. This has helped fuel the core Milano brand, attract a younger demographic, maintain its trajectory, coming out of the winter holiday, and resulted in strong dollar and volume gains.

Speaker Change: Moving to slide 15, we are pleased to share the latest results in our efforts to re ignite Pepperidge farm one of our billion dollar brands in Q3, our Pepperidge farm bakery business delivered the highest volume and dollar share growth in nine quarters, driven by the farmhouse brioche platform.

Speaker Change: This platform now includes delicious items in sandwich bread, buns, and rolls and swirl breakfast breath.

Speaker Change: Growth in our Pepperidge farm cookies business is coming from the line of cookies, which had the strongest household penetration gains in nine quarters in Q3, driven by the Milan a wide chocolate platform launch. This has helped fuel the core melano brands attract a younger demographic maintain its trajectory coming out of the winter.

Speaker Change: Holiday and resulted in strong dollar and volume growth. Other Melano innovation included the on trend Limited edition, Paramount Cafe, Ole and the return of the popular London fog variety. We are excited about the recent results and additional upcoming opportunities to innovate and provide.

Mick Beekhuizen: Other Milano innovation included the on-trend limited edition Caramel Café Au Lait and the return of the popular London Fog variety. We are excited about the recent results and additional upcoming opportunities to innovate and provide consumers with the touch of premium indulgence that they seek from our bakery and cookie sports.

Speaker Change: Consumers with the touch of premium indulgence that they seek from our bakery and cookie portfolio.

Mick Beekhuizen: Before I turn it over to Carrie, I want to thank the entire Campbell for their focus on delivering solid Q3 results in such a dynamic operating environment. Our Meals and Beverages division had strong in-market performance fueled by growing consumer demand for home-cooked meals. Our snacks results were mixed as consumers are being more intentional with discretionary dollars and the categories are increasingly competitive. We recognize that we need to continue to sharpen our execution to win in the marketplace and drive future growth. As we look to the fourth quarter, we will continue to navigate the current environment and stay focused on near-term in-market execution while we actively work to mitigate as much of the potential direct impact of tariffs as possible.

Speaker Change: Before I turn it over to Gary I wanted to thank the entire Campbell's team for their focus on delivering solid Q3 results in such a dynamic operating environment.

Speaker Change: Meals and beverage division had strong in market performance fueled by growing consumer demand for home cooking.

Speaker Change: Our snacks results were mixed as consumers are being more intentional with discretionary dollars and the categories are increasingly competitive we recognized that we need to continue to sharpen our execution to win in the marketplace and drive future growth as.

Speaker Change: As we look through the fourth quarter, we will continue to navigate the current environment that stay focused on near term in market execution, while we actively work to mitigate as much of the potential direct impact of tariffs as possible. These dynamics are also pushing us to focus on what matters most to our <unk>.

Mick Beekhuizen: These dynamics are also pushing us to focus on what matters most to our customers and consumers and invest in the capabilities that will position us for long-term growth. We are building a stronger foundation for the future by improving our efficiency and effectiveness across the organization to facilitate growth. With the creation of the growth office, supporting both divisions, we are taking advantage of our scale while we elevate the focus on growth across the organization. The Growth Office will elevate capabilities within consumer insights, brand activation, innovation, and revenue growth management. Additionally, we have hired a Chief Digital and Technology Officer to accelerate digital tools and capabilities to improve our efficiency and effectiveness.

Speaker Change: <unk> and consumers and then that's in the capabilities that will position us for long term growth.

Speaker Change: We are building a stronger foundation for the future by improving our efficiency and effectiveness across the organization to facilitate growth.

Speaker Change: With the creation of the growth office supporting both divisions, we are taking advantage of our scale, while we elevate the focus on growth across the organization to growth office will elevate capabilities within consumer insights brand activation innovation and revenue growth management.

Speaker Change: Additionally, we have hired a chief digital and technology officer to accelerate digital tools and capabilities to improve our efficiency and effectiveness. Finally, we remain focused on identifying incremental productivity and cost savings opportunities to create more fuel to invest in.

Mick Beekhuizen: Finally, we remain focused on identifying incremental productivity and cost-savings opportunities to create more fuel to invest in our brand. All told, our focus remains firmly on disciplined, short-term execution as we lay the groundwork for consistent, sustainable growth.

Speaker Change: Our brands.

Speaker Change: All told our focus remains firmly on disciplined short term execution as we lay the groundwork for consistent sustainable growth, let me turn it over to Carrie to go over the Q3 results in more detail. Thanks, Nick and good morning, everyone as Mick said earlier, our third quarter performance.

Carrie Anderson: Let me turn it over to Carrie to go over the Q3 results in more detail. Thanks, Mick, and good morning, everyone. As Mick said earlier, our third quarter performance exceeded our expectations. The overperformance in the quarter was primarily attributable to our Meals and Beverages Division, which benefited from timing of customer inventory orders.

Carrie Anderson: Seeded our expectations the over performance in the quarter was primarily attributable to our meals and beverages division, which benefited from timing of customer inventory orders.

Carrie Anderson: Reported Net Sales Increased 4% Driven by the Sales Contribution from Sovos Brands Organic Net Sales Excluding the Impact of Currency The Pop Secret and Noosa Divestitures And Approximately Half a Quarter of Sovos Increased 1% As Over-Delivery in Meals and Beverages More Than Offset Continued Pressures in Our Snacks As a reminder, Sobus moved into organic growth mid-quarter as we lapped the anniversary date of the acquisition on March 12, 2024. Adjusted EBIT increased 2% primarily due to the contribution from the acquisition offsetting lower base business performance. Adjusted EBIT margin was down 30 basis points with limited impact from tariffs.

Carrie Anderson: Reported net sales increased 4% driven by the sales contribution from sell those brands organic net sales, excluding the impact of currency the pop secret and use of divestitures and approximately half a quarter of sell those increased 1% as over delivery in meals and beverages more than offset continued pressures in our snacks business as a ring.

Carrie Anderson: Minders tablets moved into organic growth mid quarter as we lap the anniversary date of the acquisition on March 12 2024.

Carrie Anderson: Adjusted EBIT increased 2%, primarily due to the contribution from the acquisition offsetting lower base business performance. Adjusted EBIT margin was down 30 basis points with limited impact from tariffs adjusted EPS exceeded our expectations at 73 <unk>.

Carrie Anderson: Adjusted EPS exceeded our expectations at $0.73, down 3% from the prior year. The impact of the acquisition was accretive to adjusted EPS in the quarter. Turning to slide 19, as mentioned earlier, organic net sales for the third quarter were up 1% due to favorable volume and mix, partially offset by planned lower net price realization. The favorable volume and mix component was attributable to both Sobos as well as over delivery within our base meals and beverages business, which I'll discuss more in a moment. Reported net sales in the quarter of 4% reflected a four-point net contribution from acquisitions and divestiture.

Carrie Anderson: Down 3% from the prior year the impact of the acquisition was accretive to adjusted EPS in the quarter.

Carrie Anderson: Turning to slide 19, as mentioned earlier organic net sales for the third quarter were up 1% due to favorable volume and mix, partially offset by planned lower net price realization the favorable volume and mix component was attributable to both sell those as well as over delivery within our base meals and beverages business, which I'll discuss more in a moment.

Carrie Anderson: Reported net sales in the quarter, a 4% reflected a $4 net contribution from acquisitions and divestitures.

Carrie Anderson: which included 6 points from the Sobos Acquisition and negative 2 points from the Pop Secret and NUSA Divestment. On slide 20, third quarter adjusted gross profit margin declined 110 basis points, with margin in the base business down 100 basis points and a negative 10 basis point impact related to the acquisition. Base business margins were impacted by approximately 80 basis points of net price investment and 20 basis points of other cost headwinds, as inflation and other supply chain costs were largely mitigated by productivity improvements, cost savings, and favorable volume and mix. As mentioned earlier, the direct tariff impact to the business was not material in the quarter.

Carrie Anderson: Which included six points from the <unk> acquisition and negative two points from the pop secret and user divestitures.

Carrie Anderson: On slide 23rd quarter, adjusted gross profit margin declined 110 basis points with margin in the base business down 100 basis points and a negative 10 basis point impact related to the acquisition base business margins were impacted by approximately 80 basis points of net price investment and 20 basis points of other cost headwinds.

Speaker Change: As inflation and other supply chain costs were largely mitigated by productivity improvements cost savings and favorable volume and mix as mentioned earlier, the direct tariff impact to the business was not material in the quarter as of the end of the third quarter, we delivered approximately $110 million of total savings under the $250 million.

Carrie Anderson: As of the end of the third quarter, we delivered approximately $110 million of total savings under the $250 million cost savings program announced at our investor day in September of 2024, of which approximately 30% were realized in cost of products sold. Turning to slide 21, the total combined dollar spend on adjusted marketing and selling expenses and admin expenses increased slightly compared to the prior year, primarily reflecting the integration of Sogos. However, these combined expenses improved as a percentage of net sales compared to the prior year. Within adjusted marketing and selling expenses, advertising and consumer promotion expense increased 3%, primarily reflecting the acquisition of Sovo.

Speaker Change: Cost savings program announced at our Investor Day in September of 2024 of which approximately 30% were realized in cost of products sold.

Speaker Change: Turning to slide 21, the total combined dollar spend on adjusted marketing and selling expenses and admin expenses increased slightly compared to the prior year, primarily reflecting the integration of silos. However, these combined expenses improved as a percentage of net sales compared to the prior year.

Speaker Change: Within adjusted marketing and selling expenses advertising and consumer promotion expense increased 3%, primarily reflecting the acquisition of service adjusted administrative expenses decreased 4%, mainly driven by the benefits from cost savings initiatives. These savings include the benefits of the integration of <unk>, which continues to exceed expectations.

Carrie Anderson: Adjusted administrative expenses decreased 4%, mainly driven by the benefits from cost savings initiatives. These savings include the benefits of the integration of Sovos, which continues to exceed expectations. As of the beginning of the fourth quarter, we have now transitioned the Sovos business into our Campbell's ERP system, which will unlock additional back-office savings in IT, finance, and order management into fiscal 26. As shown on slide 22, third quarter adjusted EBIT increased 2%, primarily due to lower adjusted administrative, R&D, and other expenses, along with higher adjusted gross profit, which were partially offset by an increase in adjusted marketing and selling expenses.

Speaker Change: As at the beginning of the fourth quarter, we have now transitioned to service business into our Campbell's ERP system, which will unlock additional back office savings in it finance and order management into fiscal 'twenty six.

Speaker Change: As shown on slide 22 third quarter, adjusted EBIT increased 2%, primarily due to lower adjusted administrative R&D and other expenses along with higher adjusted gross profit, which were partially offset by an increase in adjusted marketing and selling expenses.

Carrie Anderson: On slide 23, adjusted EPS decreased 3% to $0.73, as adjusted EBIT growth was more than offset by higher adjusted interest expense, primarily due to higher levels of debt and higher average interest rates on the overall debt portfolio. As I mentioned earlier, the SOBOS acquisition was accretive to adjusted earnings per share in the quarter. Turning to slide 24, meals and beverages reported a 15% increase in net sales growth, including the contribution of the acquisition and net of the divestiture impact of NUSA that was completed earlier this calendar year on February 24th. Organic net sales increased 6% compared to the prior year, driven by favorable volume and mix of 7% in U.S.

Speaker Change: On slide 23, adjusted EPS decreased 3% to 73 as adjusted EBIT growth was more than offset by higher adjusted interest expense, primarily due to higher levels of debt and higher average interest rates on the overall debt portfolio as I mentioned earlier, the <unk> acquisition was accretive to adjusted earnings per share in the <unk>.

Speaker Change: Quarter.

Speaker Change: Turning to slide 24 meals and beverages reported a 15% increase in net sales growth, including the contribution of the acquisition and net of the divestiture impact of new stuff that was completed earlier this calendar year and February 24th.

Speaker Change: Organic net sales increased 6% compared to the prior year, driven by favorable volume and mix of 7% in U S soup, Rayos and Canada, partially offset by a one point lower net price realization approximately one third of the organic growth was attributable to growth in condensed broth and ready to serve soups and rail sauces.

Carrie Anderson: Soup, Rayos, and Canada, partially offset by a one-point lower net price realization. Approximately one-third of the organic growth was attributable to growth in condensed, broth, and ready-to-serve soups and Rayos sauces, which benefited from the continued shift to at-home meals that Mick mentioned earlier. The remaining growth was related to the timing of customer shipments at the end of the quarter in our base business as well as in Rayos, in connection with the integration of SoBos into Campbell's ERP system. We expect inventory orders to normalize in the fourth quarter. Third quarter operating earnings in the division increased 8% primarily due to the benefits of the acquisition, partially offset by a decline in the base business.

Speaker Change: <unk>, which benefited from the continued shift to at home meals that Nick mentioned earlier, the remaining growth was related to the timing of customer shipments at the end of the quarter in our base business as well as in rails in connection with the integration of silver into Campbell's ERP system, we expect inventory orders to normalize in the fourth quarter.

Speaker Change: Third quarter operating earnings in the division increased 8%, primarily due to the benefits of the acquisition, partially offset by a decline in the base business.

Carrie Anderson: Meals and Beverages operating margin was lowered by 100 basis points, which was primarily driven by lower realized net price, and in part due to the mixed impact of the Sobos acquisition not being included in our base for half the quarter. The remaining cost headwinds, including higher cost inflation and other supply chain costs, were offset by favorable volume and mix, productivity and cost savings, as well as reduced marketing, selling, and administrative expenses as a percent to net sale. Turning to slide 25, snacks reported an 8% decrease in net sales. Excluding the impact of the PopSecret divestiture, organic net sales decreased 5%, driven primarily by lower net sales in Goldfish crackers, third-party partner and contract brands, and Snyder's of Hanover pretzels.

Speaker Change: Nielsen beverages operating margin was lower by 100 basis points, which was primarily driven by lower realized net price and in part due to the mix impact of the <unk> acquisition not being included in our base for half the quarter, the remaining cost headwinds, including higher cost inflation and other supply chain costs were offset by favorable volume and mix productivity.

Speaker Change: Pivoting and cost savings as well as reduce marketing selling and administrative expenses as a percent to net sales.

Speaker Change: Turning to slide 25 snacks reported an 8% decrease in net sales excluding the impact of the pop secret divestiture organic net sales decreased 5% driven primarily by lower net sales and goldfish crackers third party partner and contract brands and Snyder's of Hanover Pretzels as a reminder, we lap the launch of goldfish Chris.

Carrie Anderson: As a reminder, we lapped the launch of Goldfish crisps in the prior year. In addition, net sales were also lower in late July snacks due to a promotional shift versus prior year, and Lance sandwich crackers as we lapped a pipeline fill in the prior year due to a change in pack sizes. Snacks Organic Net Sales were impacted by unpayable volume and mix of 5% and neutral net price realization. Snacks operating earnings in the quarter declined 13% due to lower gross profit as the impact of lower volume and mix, inflation, and other supply chain costs were only partially offset by supply chain productivity, benefits from cost savings initiatives, and lower administrative expenses.

Speaker Change: In the prior year. In addition, net sales were also lower in late July snacks due to a promotional shift versus prior year and Lance sandwich crackers as we lap a pipeline fill in the prior year due to a change impacts sizes.

Speaker Change: Snacks organic net sales were impacted by unfavorable volume and mix of 5% and neutral net price realization.

Speaker Change: Snacks operating earnings in the quarter declined 13% due to lower gross profit as the impact of lower volume and mix inflation and other supply chain costs were only partially offset by supply chain productivity benefits from cost savings initiatives and lower administrative expenses.

Carrie Anderson: Q3 operating margin for Snacks decreased 90 basis points to 14.3%, mainly driven by higher selling expenses as a percent of net sales, and lower gross profit. Notably, Snacks operating margin sequentially improved 300 basis points compared to Q2, driven by an improvement in supply chain cost, as expected. Turning to slide 26, we generated $872 million in operating cash flow year to date, slightly lower than the prior year period driven by changes in working capital. Capital expenditures were $296 million year to date and reflect investments in chip and cracker capacity expansion for our snacks business, network optimization for our meals and beverages business, and enhancements to business capabilities.

Speaker Change: Q3 operating margin percent decreased 90 basis points to 14, 3%, mainly driven by higher selling expenses as a percent of net sales and lower gross profit, notably snacks operating margins sequentially improved 300 basis points compared to Q2, driven by an improvement in supply chain cost as expected turning to <unk>.

Speaker Change: The 26, we generated $872 million in operating cash flow year to date slightly lower than the prior year period, driven by changes in working capital capital expenditures were $296 million year to date and reflect investments in chip and cracker capacity expansion for our snacks business network optimization for our meals <unk>.

Speaker Change: Average is business and enhancements to business capabilities, we remain committed to returning cash to our shareholders with $343 million of dividends paid reflecting a 5% increase in the third quarter and $60 million in anti dilutive share repurchases year to date, our net debt to adjusted EBITDA leverage ratio at the end of.

Carrie Anderson: We remain committed to returning cash to our shareholders with $343 million of dividends paid reflecting a 5% increase in the third quarter and $60 million in anti-dilutive share repurchases year to date. Our net debt to adjusted EBITDA leverage ratio at the end of the third quarter was 3.6 times, a slight improvement from our ratio at the end of the second quarter as we continue to focus on deleveraging the balance sheet towards our goal of three times net leverage. At the end of the third quarter, the company had approximately $143 million in cash and cash equivalents and approximately $1.5 billion available under our undrawn revolving credit facility.

Speaker Change: The third quarter was three six times, a slight improvement from our ratio at the end of the second quarter as we continue to focus on deleveraging the balance sheet towards our goal of three times net leverage.

Speaker Change: At the end of the third quarter, the company had approximately $143 million in cash and cash equivalents and approximately $1 5 billion available under our undrawn revolving credit facility.

Carrie Anderson: Our full-year fiscal 2025 guidance provided on March 5, 2025 remains unchanged, excluding the impact of tariffs. Adjusted earnings are expected at the low end of the guidance range due to the slower-than-anticipated recovery in the tax business. We have estimated the net incremental headwind of tariff-related costs to be up to $0.03 to $0.05 per share to Fiscal 25 adjusted EPS. This is not factored into our Fiscal 25 guidance as the trade environment remains uncertain. This estimate reflects our assumption that the current tariff actions stay in place and incorporates the proactive steps we're taking to minimize the overall impact, including strategic inventory management, working in close partnership with our suppliers, pursuing alternative sourcing and product cost optimization, and where absolutely necessary, consideration of surgical pricing actions.

Speaker Change: Our full year fiscal 2025 guidance provided on March five 2025 remains unchanged excluding the impact of tariffs adjusted earnings are expected at the low end of the guidance range due to the slower than anticipated recovery in the snacks business. We have estimated the net incremental headwind of tariff related costs to be up to three to five.

Speaker Change: <unk> per share to fiscal 'twenty five adjusted EPS. This is not factored into our fiscal 'twenty five guidance as the trade environment remains uncertain. This estimate reflects our assumption that the current tariff actions stay in place and incorporates the proactive steps, we're taking to minimize the overall impact including strategic inventory management working on.

Speaker Change: Close partnership with our suppliers pursuing alternative sourcing and product cost optimization and were absolutely necessary consideration of surgical pricing actions to finish off the discussion of fiscal 'twenty five guidance as a reminder, fiscal 'twenty five comprises 53 weeks one additional week compared to fiscal 'twenty for the benefit of the 50 <unk> week.

Carrie Anderson: To finish out the discussion of Fiscal 25 guidance, as a reminder, Fiscal 25 comprises 53 weeks, one additional week compared to Fiscal 24. The benefit of the 53rd week is included in our Fiscal 25 guidance and is estimated to be worth approximately two points of growth to reported net sales and adjusted EBIT, along with approximately five cents of adjusted EPS. Although we expect an increase in core inflation in the second half as compared to the prior year and a sequential increase from the first half, we expect core inflation for the full fiscal year to remain in the low single-digit range and to be mitigated by productivity improvements and higher expected cost savings.

Speaker Change: As included in our fiscal 'twenty five guidance and is estimated to be worth approximately two points of growth to reported net sales and adjusted EBIT along with approximately <unk> of adjusted EPS, Although we expect an increase in core inflation in the second half as compared to the prior year and a sequential increase from the first half we expect core inflation.

Speaker Change: For the full fiscal year to remain in the low single digit range and to be mitigated by productivity improvements and higher expected cost savings.

Carrie Anderson: We are increasing our cost savings expectation for the full year from $120 million to $130 million as a result of our continued strong year-to-date performance. This includes savings from the integration of Sovos and several previously discussed network optimization projects across both divisions. Capital expenditures for Fiscal 25 are expected to be approximately 4.5% of net sales compared to our prior guidance of 4.7% due to timing of expenditures.

Speaker Change: We are increasing our cost savings expectation for the full year from $120 million to $130 million as a result of our continued strong year to date performance. This includes savings from the integration of <unk> and several previously discussed network optimization projects across both divisions capital expenditures for fiscal 'twenty.

Speaker Change: Five are expected to be approximately four 5% of net sales compared to our prior guidance of four 7% due to timing of expenditures.

Carrie Anderson: To wrap up, our Q3 performance exceeded our expectations, driven by over-delivery by the Meals and Beverages Division. And while we are not satisfied with the results of our snacks division, we remain confident in the strength of our snacks portfolio and continue to take steps to regain our momentum. We remain focused on delivering high-quality, high-value food that consumers trust, while advancing our productivity and cost-savings initiatives. Our long-standing supply chain excellence and scale position us to effectively navigate a dynamic operating environment. We're committed to driving long-term growth and maintaining capital discipline to deliver value to our shareholders.

Speaker Change: To wrap up our Q3 performance exceeded our expectations driven by over delivery by the meals and beverages division and while we are not satisfied with the results of our snacks Division, we remain confident in the strength of our SaaS portfolio and continue to take steps to regain our momentum we remain focused on delivering high quality high value food that can.

Speaker Change: Tumors trust, while advancing our productivity and cost savings initiatives are longstanding supply chain excellence and scale position us to effectively navigate a dynamic operating environment, we're committed to driving long term growth and maintaining capital discipline to deliver value to our shareholders. This concludes our prepared remarks, operator, let's begin the.

Operator: This concludes our prepared remarks. Operator, let's begin the Q&A. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw any questions, please press star one again.

Speaker Change: Q&A.

Speaker Change: Okay.

Speaker Change: If you would like to ask a question. Please press star followed by the number one on your telephone keypad to withdraw any questions. Please press star one again.

Andrew Lazar: Our first question comes from Andrew Lazar from Barclays. Please go ahead. Your line is open. Great, thanks so much.

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

Andrew Lazar: Great. Thanks, so much.

Mick Beekhuizen: Mick, I wanted to dig in, obviously, on snacks some more, that's the area where the company is seeing sort of the most pressure. How much of the pressure is overall category versus Campbell's in-market execution? And I guess, what's the company specifically doing, I guess, to control what it can while also not contributing to any sort of race to the bottom, so to Category Pricing and Competitiveness standpoint, I guess I'm trying to get a sense of how we think about the next few quarters in this segment in terms of sort of volume. Yeah, yeah. Okay, great.

Speaker Change: Nick I wanted to dig in obviously on snacks or more that's the area, where the company is seeing sort of the most pressure how much of the pressure is overall category versus Campbell's in market execution, and I guess, what's the company specifically you're doing I guess to control what it can while also not contributing to any sort of race to the bottom so to speak.

Speaker Change: Category pricing and competitiveness standpoint, I guess I'm trying to get a sense of how we think about the next few quarters. In this segment in terms of sort of volume and price.

Speaker Change: Yes, yes, okay, great good morning, Andrew.

Mick Beekhuizen: Morning, Andrew. I appreciate the question. And obviously, a core focus of us. If you look at the quarter Q3, and you put it in perspective versus Q2, you see that actually sequentially, the aggregate categories deteriorated, which is one driven by deteriorating consumer confidence that we've obviously all seen. And then on top of it, that the consumer continues to become increasingly intentional. And that is really that focus on value, better for you, and indulgence. If you look at our in market consumption, you saw that in Q2, we were down minus 1%. In Q3, we're down minus 3%.

Speaker Change: Appreciate the question and obviously a core focus of us.

Speaker Change: If you look at the quarter Q3, and you put it in perspective for US. This Q2, you'll see that actually sequentially.

Speaker Change: Aggregate categories deteriorate, it's which is one driven by the deteriorating consumer confidence that we've obviously all seen and then on top of it that the consumer continues to become increasingly intentional and that is really that focus on value added for you.

Speaker Change: And indulgence.

Speaker Change: If you look at our in market consumption you saw that in Q2, we were down minus 1% in Q3 were minus down minus 3% about two thirds of that is driven by the worsening of the aggregates categories and about one third of that is driven.

Mick Beekhuizen: About two thirds of that, it's driven by the worsening of the aggregate categories. And about one third of that is driven by our in market performance. And if you look at the in-market performance during the quarter, there are a couple of areas that actually worked well, and I talked about it in my preparatory remarks, which comes back to beverage farm bakery and cookies, as well as pretzels, where you saw some innovation really driving our brands and supporting overall consumption. I expect us to continue to focus on innovation, which is important as the consumer, as I described earlier, is really intentional about the dollars that they're spending.

Speaker Change: And by our in market performance.

Speaker Change: If you look at the in market performance during the quarter. There are a couple of areas that actually worked well when I talked about it in my prepared remarks, which comes back to Pepperidge farm bakery and cookies as well as pretzels, while you saw some innovation really driving our brands and support.

Speaker Change: <unk> overall consumption I expect us to continue to focus on innovation, which is important.

Speaker Change: Zoom as I described earlier really intentional about the dollars that they're spending and we are really focused with our innovation.

Mick Beekhuizen: And we are really focused with our innovation on meeting those consumer needs. Then on the flip side, if you look at Q3, on the first on the on the one end, we got the chips categories. and within Chips, we are actually our brands are are within the right subsegments of the broader chips category. So I feel good from that perspective. That being said, there's some increased competition, and the team is working through making sure that we're successful in this environment with on the one hand, focus on in-market execution with distribution expansion where possible, but also back to some of the also bringing the excitement to the category with some LTOs.

Speaker Change: Meeting dose consumer needs.

Speaker Change: Then on the flip side, if you look at Q3. The first one is we got the chips categories.

Speaker Change: And we.

Speaker Change: Within chips, we are actually our brands are.

Speaker Change: Or within the right sub segments of the broader chips category. So feel good from that perspective that being said theres. Some increased competition and the team is working through making sure that we're successful in this environment with on the one end focus on in market execution with <unk>.

Speaker Change: Houston expansion, where possible, but also back to some of the innovation and also bringing excitement to the category with some LTE OS and then finally I'd call out instead.

Mick Beekhuizen: And finally, I'd call out, instead of a focus just purely on promotional activity, really bringing much more back to price pack architecture and making sure that we have the right price points in the marketplace. And if anything, actually, one of the things that we've seen multi-packs within chips has worked well.

Speaker Change: Focus just purely on promotional activity really bringing it much more back to a price pack architecture, and making sure that we have the right price points in the marketplace and if anything actually one of the things that we've seen multi packs within chips as worked well.

Mick Beekhuizen: Now, then finally, crackers and specifically goldfish, we got some work to do on goldfish. And I talked a little bit about that in my prepared remarks. But if you look at the headwind that we had on goldfish, about half of it is driven by the category and the goldfish crisps launch from last year. And then the other half is really back to core declines. So when you think about our focus areas, we're focused on reigniting that core with advertising, activations, LTOs. But on top of it, back to my earlier comment around the focus of the consumer on value, we need to make sure to provide value in the marketplace.

Speaker Change: Finally, crackers and specifically goldfish, we got some work to do on goldfish, and I talked a little bit about that.

Speaker Change: In my prepared remarks.

Speaker Change: If you look at the headwinds that we had on goldfish about half of it is driven by the category.

Speaker Change: Goldfish crisp launch from last year, and then the other half is really back to core declines.

Speaker Change: So when you think about our focus areas, we're focused on reigniting that core with advertising.

Speaker Change: Advertising Activations <unk>, but on top of it back to my earlier comment.

Speaker Change: And the focus of the consumer and value, we need to make sure to provide value in the marketplace.

Mick Beekhuizen: And that is. not so much coming back to incremental promotions, but it's much more coming back to, on the one hand, making sure that we allocate the promotional activity to where we're actually getting the best ROI. And then on top of it, also making sure that we have that right price point in the marketplace. And you might recall, we talked before about that two and a half ounce. a grab bag for Goldface. And I expect that there's a good entry price point and expect us to continue to expand distribution and also displace within that. And then there might be an opportunity to multi-pack as well.

Speaker Change: It is not.

Speaker Change: Not so much coming back to incremental promotions, but it's much more coming back to on the one is making sure that we allocate the promotional activity to where we're actually getting the best ROI.

Speaker Change: On top of it also making sure that we have that right price point in a marketplace and you might recall, we talked before about two and a half ounce.

Speaker Change: Grab bag.

Speaker Change: For gold.

Speaker Change: Goldfish and I expect that there is.

Speaker Change: It's a good entry price points and I expect us to continue to expand distribution and also displays within that and then it might be an opportunity to a multi pack as well. So hopefully that gives you a little bit of a sense of kind of the dynamics more broadly within our portfolio and what we're planning on doing about it.

Andrew Lazar: So hopefully, Andrew, that gives you a little bit of a sense of kind of the dynamics more broadly within our portfolio and what we're planning on doing about it. Thanks for that. A very quick follow-up.

Speaker Change: Thanks for thanks for that very quick follow up just I know, it's too early to guide for fiscal 'twenty, six and it's still an incredibly dynamic environment, but what are the kiosks. It takes for us to consider just as we think to next year, particularly as it seems there is a need for some continued reinvestment in the snack space. Some other food companies have been increasingly transparent about the need for <unk>.

Mick Beekhuizen: I know it's too early to guide for Fiscal 26, and it's still an incredibly dynamic environment, but what are the key up-and-takes for us to consider, just as we think to next year, particularly as it seems there's a need for some continued reinvestment in the snack space, you know, some other food companies have been increasingly transparent about the need for, you know, greater in-market pressure to sort of nudge the consumer a bit. Thanks. Yeah, yeah. Okay. Obviously, I mean, we're, we're not yet ready to give fiscal 26 guidance. But when I look at where we're at with regard to the snacks business, As you might recall from last time around, we actually expected a recovery of the snacking business throughout this year and actually ending the year relatively flat.

Speaker Change: In market pressure to sort of nudge the consumer a bit thanks, so much.

Speaker Change: Yeah, Yeah, okay.

Speaker Change: Anyway, where we.

Speaker Change: We're not yet ready to give fiscal 2006 guidance, but when I look at where we're at with regard to the snacks business.

Speaker Change: As.

Speaker Change: As you might recall from last time around we actually expect that.

Speaker Change: A recovery of the snack.

Speaker Change: Snacking business throughout this year and actually ending the year relatively flat.

Mick Beekhuizen: and then going with that into fiscal 26. Obviously, where the current trend is and looking at into Q4, we still have ways to go on that. And as a result, I expect that recovery to take place now in fiscal 26. I do think that's coming back to the different tactics that I previously described, probably combined with making sure that we continue to invest in our brands. And one of the things that you see right now is that we are spending from a marketing selling perspective at the lower end of our 9 to 10% range. I do expect that going into next year, we might need to lean into that a little bit more as we need to make sure that we support our brands in the marketplace.

Speaker Change: And then going with that into fiscal 'twenty six.

Speaker Change: Obviously, where the current trend is and looking at into Q4, we still have ways to go on that and as a result, I expect that recovery to take place now in fiscal 'twenty six.

Speaker Change: Do think that's coming back to.

Speaker Change: The different tactics that I previously described probably combined with making sure that we continue to invest in our brands.

Speaker Change: One of the things that you see right now is that we have.

Speaker Change: Our spending from a marketing selling perspective at the lower end of our 9% to 10% range I do expect that going into next year, we might need to lean into that.

Speaker Change: Little bit more as we need to make sure that.

Speaker Change: That we support our brands in the marketplace.

Andrew Lazar: The other thing is, Andrew, maybe kind of from a call it broader incentive comp perspective, our incentive comp is not surprising in light of kind of overall results that you're seeing. I expect that that will be a little bit of a headwind going into next year. Thanks very much.

Andrew Lazar: The other thing is Andrew maybe kind of from a call it broader incentive comp perspective, our incentive comp is not surprising in light of kind of overall results that you're seeing.

Speaker Change: I expect that that will be a little bit of a headwind going into next year.

Speaker Change: Got it thanks very much.

Speaker Change: Okay.

Ken Goldman: Our next question comes from Ken Goldman from J.P. Morgan. Please go ahead. Your line is open. Hi. Thanks. Good morning. In Meals and Beverages, you did highlight a few times the uptick in at-home cooking and eating trends, which, of course, is great to see. I'm just curious, I guess, to what extent you have optimism in this positive trend to continue? How much of it do you think is driven by just lower consumer confidence or are there other factors you'd highlight? I'm really just trying to get a sense of the sustainability of that tailwind as you Yep, yep.

Ken Goldman: Our next question comes from Ken Goldman from Jpmorgan. Please go ahead. Your line is open hi.

Ken Goldman: Hi, Thanks, good morning.

Speaker Change: And meals and beverages, you did highlight a few times the uptick.

Speaker Change: In at home cooking and eating trends, which of course is great to see I'm, just curious I guess to what extent you have optimism in this positive trend to continue.

Speaker Change: How much of it do you think is driven by sort of just lower consumer confidence or are there other factors you'd highlight.

Speaker Change: I'm really just trying to get a sense of the sustainability of that tailwind as you see it.

Speaker Change: Yeah, Yeah, Okay, yeah. Thanks, Scott.

Mick Beekhuizen: Yeah, thanks, guys. If I look at the meals and beverages, business meals and beverages, obviously a bright spot within our portfolio, and you see that in the results. We now have six quarters of positive in-market consumption growth within meals and beverages. And if you look at the results this time around, they were exacerbated a little bit by the timing of shipments. And we do expect those to reverse in Q4 and will likely be in about three points headwind in MMB for the fourth quarter. Now, that being said, from an in-market consumption perspective, we feel pretty good about where we're at.

Speaker Change: If I look at the meals and beverages business meals and beverages, obviously, a bright spot within our portfolio and you'll see that in the results.

Speaker Change: We now have six quarters of positive in market consumption growth within meals and beverages.

Speaker Change: And then if you look at the results this time around.

Speaker Change: They were exacerbated a little bit by the timing of shipments.

Speaker Change: And we do expect those to read for us in Q4, and it will likely be in about three points headwind.

Speaker Change: <unk> for the fourth quarter now that being said from an in market consumption perspective, who still feel pretty good about where we're at and particularly if you look at what the team has been able to do over the.

Mick Beekhuizen: And particularly, if you look at what the team has been able to do over the past, call it six quarters. When you start looking at the overall portfolio, the portfolio is well-positioned with providing that value, quality, and convenience in an environment where the consumers continue to look more at cooking at home. And you also see the power of our portfolio at work with us being, for instance, both having mainstream as well as premium offerings. A good example, obviously, we often talk about Prego and Rails. But if you look at, for instance, in broth, we also have Swanson and Pacific.

Speaker Change: Past call it six quarters.

Speaker Change: Ed.

Speaker Change: When you start looking at the overall portfolio the portfolio is well positioned with <unk>.

Speaker Change: Providing that.

Speaker Change: Value quality and convenience in an environment, where the consumers continuing to look more at cooking at home.

Speaker Change: And you also see the power of our portfolio, where it works with us being for instance, both.

Speaker Change: Having mainstream as well as premium offerings.

Speaker Change: And a good example, obviously, we often talk about the fragrance prego and rails, but if you look at France and broth, we also have Swanson and Pacific and particularly during a time when there is disproportionate demand.

Mick Beekhuizen: And particularly during a time where there's disproportionate demand for broth and a little bit of supply pressure, you see actually both brands doing really well in this marketplace. Now, it isn't only coming back to those. You also saw some of the condensed activation that we had in the marketplace this time around with mac and cheese, which is really driving to cooking with condensed as an everyday behavior versus just during the holidays. And I think the activation this past quarter was a great proof point of that. I'm obviously a continued big believer in the Rails brand.

Speaker Change: Or broth and a little bit of supply pressure you see actually both brands doing really well in this marketplace now it isn't only coming back to dose you also saw some of the condensed activation that we added in the marketplace. This time around with Mac and cheese, which is really driving two cooking with gas.

Speaker Change: <unk> is an everyday behavior or is it.

Speaker Change: During the holidays and I think the activation this past quarter was a great proof point of that.

Speaker Change: Obviously continued big believer in the rails brand I'm sure, we'll talk a little bit more about that.

Mick Beekhuizen: I'm sure we'll talk a little bit more about that. And then other areas within the portfolio that we don't talk as much about is, for instance, V8. And if you look at V8 over the past nine quarters, the team has done a great job to actually stabilizing that business. And in certain areas like, for instance, V8 Energy, we've actually seen double digits growth. So overall, I feel very good about meals and beverages and the meals and beverages portfolio in light of some of the trends that we're seeing with regard to the consumer and the continued focus on cooking at home in combination with our portfolio and the breadth of our portfolio.

Speaker Change: And then other areas within the portfolio that we don't talk as much about just for instance V. Eight and if you look at the.

Speaker Change: Eight over the past nine quarters. The team has done a great job to actually stabilizing that business and in certain areas like France V. H energy, we've actually seen double digit growth.

Speaker Change: Overall, I feel very good about meals and beverages and the meals and beverages portfolio in light of some of the trends that we're seeing with regard to the consumer and the continued focus on cooking at home in combination with our portfolio and the breadth of.

Mick Beekhuizen: Now, that being said, I don't expect us, per se, to repeat the Q3 results as we are coming out of the soup season, obviously. But all said, I feel good about where we're at, and I still believe that there's a lot of opportunity going forward within the portfolio.

Speaker Change: Our portfolio now that being said I don't expect us per se to repeat the Q3 results as we are coming out of the soup season, obviously, but all said I feel good about where we're at and I still believe that there is a lot of opportunity going forward within the portfolio.

Operator: Thank you.

Speaker Change: Thank you very quickly understanding it's too soon for specifics you mentioned a couple of factors influencing the bottom line next year one of them was higher marketing below the gross margin line just in light of some of the competitive activities. You mentioned today, whether it's Rts premium pasta sauce or snacks is it also reasonable at this <unk>.

Ken Goldman: Very quickly, you know, understanding it's too soon for specifics. You mentioned a couple of factors influencing the bottom line next year. One of them was higher marketing, you know, below the gross margin line. Just in light of some of the competitive activities you mentioned today, whether it's RTS, premium pasta sauce or snacks, is it also reasonable at this point to anticipate an uptick in your promotional activities as well? Not that these activities, you know, so to speak, won't have an ROI that's beneficial, but just on a gross level, I want to get a better sense or idea of investments ahead.

Speaker Change: To anticipate an uptick in your promotional activities as well not that these activities. So to speak won't have an ROI thats beneficial, but just on a gross level I want to get a better.

Speaker Change: Sensor idea of investments ahead. Thank you.

Mick Beekhuizen: Thank you. Yeah, yeah. Good. Good question. And it's something that we're obviously very focused on. If anything, I actually, whereas if I looked at about 12 months ago, we were very much continue to increase the overall promotional activity. And it was not just us, you saw it more broadly in the categories. And I'm starting to see that that is stabilizing. And it's much more about not so much about adding promotional activity, or and it's much more to my earlier point, making sure that the promotional activity that's in the marketplace is in the marketplace when it really matters, like for instance, during key drive period.

Speaker Change: Yep Yep.

Speaker Change: Good good question and it's something that we're obviously very focused on it if anything.

Speaker Change: Actually, whereas if I look about 12 months ago, we were very much.

Speaker Change: Continuing to increase the overall promotional activity and it wasn't just US you saw it more broadly in the categories in that I'm, starting to see that that is stabilizing and it's much more about not so much about adding.

Speaker Change: Promotional activity or.

Speaker Change: And it's much more to my earlier point, making sure that the promotional activity. That's in the marketplace is in the marketplace. When it really matters like for instance, during key drive periods.

Mick Beekhuizen: on top of it. And what do I mean by key drive periods, for instance, during the Easter time period, important for, you know, to broth. And that is, you know, a good moment where the brands really matter, you want to make sure that you're, you're out there with the proper price point. I do think the other piece, particularly when I think about snacking, and on a day to day basis is making sure that we have the right starting price point in the marketplace. And that comes back to that price pack architecture. And when you heard me talk a little bit about Goldfish, for instance, smaller pack size, but also across broader salty, some of these multi pack initiatives, and that's actually really working.

Speaker Change: On top of it and what do I mean by key drive periods for instance, during the Easter time period.

Speaker Change: Important for.

Speaker Change: Broth.

Speaker Change: And that is a good moment why the brands really matter and you wanted to make sure that you're you're out there with the proper price point I do think the other.

Speaker Change: <unk>, particularly when I think about snacking and on the day to day basis is making sure that we have the right starting price points in the marketplace and that comes back to that price pack architecture, and when you heard me talk a little bit about goldfish brings to smaller pack size, but also across broader.

Speaker Change: Faulty some of these multi pack initiatives and Thats actually really working so again I'm not looking at much S increased promotional activity from a dollars perspective, it's much more making sure that we allocate the promotion promotional dollars properly and on top of it we.

Mick Beekhuizen: So again, I am not looking at much as increased promotional activity from a dollar's perspective, it's much more making sure that we allocate the promotion promotional dollars properly. And on top of it, we continue to evolve around PPA.

Speaker Change: <unk> to evolve around at EPA.

Peter Galbo: Our next question comes from Peter Galbo from Bank of America. Please go ahead. Your line is open. Hey, Mick, Carrie, good morning. Thanks for the question. Mick, I maybe want to ask a slight variation on the snacks question and understanding we've kind of already addressed a bit of it, but, I mean, your results in the quarter were more or less in line with how the category has been performing. And I think that the broader question is probably just that, you know, the category continues to be such a such a drag. And, you know, as we get into what should be a pretty peak demand season over the summer, and even just over the next 12 months, I think it would be maybe more helpful to just understand what you think needs to happen from a category perspective in stacks to actually be able to see some improvement.

Speaker Change: Our next question comes from Peter Galbo from Bank of America. Please go ahead. Your line is open.

Peter Galbo: Hey, Terry good morning, Thanks for the question.

Mick: Mick I, maybe want to ask.

Peter Galbo: Variation on the snacks question and understanding we we've kind of already addressed a bit of it but I mean like.

Speaker Change: Like your results in the quarter were more or less in line with how the category has been performing and I think the broader question is probably just that.

Speaker Change: The category continues to be such a such a drag and as we get into.

Speaker Change: What should be a pretty peak demand season over the summer and even just over the next 12 months I think it would be more helpful to just understand what you think needs to happen from a category perspective.

Speaker Change: Stacks to actually be able to see some improvements. So we have all this discussion about race to the bottom on pricing or lack thereof, but just youre using comments in your prepared remarks like.

Mick Beekhuizen: So we have all this discussion about, you know, race to the bottom on pricing or lack thereof. But just, you know, you're using comments in your prepared remarks, like, you know, are consumers deeming that it's worth it to actually indulge in snacking. So just like maybe help us from a much higher level understand what needs to happen from a category perspective, for that demand profile, and consumers to actually deem the category to be worth it over the next 12 months. Yeah, okay. Let me try to frame it up as follows. So first, Peter, when I look at the overall category dynamics, and you look at that sequential quality deterioration that I described earlier, I think one of the key components of that is the deteriorating consumer confidence.

Speaker Change: Our consumers deeming that it's worth it to actually indulgent snacking. So just maybe help us from a much higher level understand what needs to happen from a category perspective for that demand profile.

Speaker Change: And consumers to actually deem the category to be worth it over the next 12 months.

Speaker Change: Okay.

Speaker Change: Let me try to frame it up as follows so first.

Peter Galbo: Peter when I look at the.

Peter Galbo: The overall category dynamics and you look at that sequential call. The deterioration that I described earlier I think one of the key components of that is.

Speaker Change: <unk>.

Speaker Change: Deteriorating consumer confidence and you see that disproportionately play out in categories like snacks because of the discretionary nature.

Mick Beekhuizen: And you see that disproportionately play out in categories like snacks because of the discretionary nature.

Mick Beekhuizen: So that is one thing that, if there's one area that I could point to that, that's one area that I think would actually be helpful is improving overall consumer confidence. Then I think the other aspect of it is back to your specific question around some of the, quote, unquote, worth it, worth it not being as much. of the dollars, but much more about like the experience. And I think that comes really back to that continued focus on intentionality that we have seen within the smacking categories, with a broader focus on the one-end value better for you, and then indulgence or flavors or experience, if you want to call it, and the last three all within that, call it one pocket.

Speaker Change: So that is one thing that.

Speaker Change: If there's one area that I could point to that that's one area that I think would actually be helpful is improving overall consumer confidence than I think the other aspect of it is.

Speaker Change: Back to your specific question around.

Speaker Change: Some of the quote unquote worth it worth it not being as much.

Speaker Change: Of the dollars, but much more about like the experience.

Speaker Change: And I think that comes really back to that continued focus on intentionality that we have seen within the snacking categories with a broader focus on the one end value better for you and then indulgence or flavors or experience. If you want to call. It in the lab.

Speaker Change: Last three all within that call. It one bucket what do I think.

Mick Beekhuizen: And what do I think is important within that is making sure that we continue to meet the consumer's needs. And you see, for instance, with a good example of that is in the innovation of Pepperidge Farm cookies, with the launch of the Milano white chocolate, and the resulting lift that we have had, of course, on the one hand, around that particular innovation, but also then the broader Milano brand. So I just think it's coming back to making sure that we continue to evolve our brands and meet those consumer needs. And if anything, actually, the broader, you know, you know, CPG industry has actually done a real good job over time to continue to meet those consumer needs.

Speaker Change: Is important within that is.

Speaker Change: Making sure we continue to meet consumers' needs and you see for instance.

Speaker Change: A good example of that is in the innovation path.

Speaker Change: Efforts farm cookies with the launch of the Milan, a white chocolate and new resulting lift that we have had of course on the one hand around that particular issue.

Speaker Change: Innovation, but also then the broader Milano brand.

Speaker Change: So I just think it's coming back to making sure that we continue to evolve our brands and meet those consumer needs and if anything actually the broader.

Speaker Change: CPG industry, it's actually done a real good job over time to continue to meet those consumer needs and Thats, what we continue to focus on and work through as well.

Peter Galbo: And that's what we continue to focus on and work through as well. Okay, thanks for that, Mick. Now, that's helpful context.

Speaker Change: Okay. Thanks for that make no that's helpful context.

Carrie Anderson: And Carrie, if I can ask a clarification comment, the three to five cents of tariff related impact that you outlined that that's not included in the guidance, but presumably, hits the Q4 numbers. Should we be viewing that as a full quarter impact? Presumably, you would have carried some inventory maybe into the fourth quarter. So just want to understand that three to five cents is truly a three month impact that if things don't change, we could kind of run rate forward or if there's some some nuance around inventory. Thanks very much. Thanks, Peter. I would say when I think about the three to five cents tariffs are being phased in right so it I would say three main areas of impact that that's in that three to five cents First, currently, we're seeing an impact from the Canada Wave 1 retaliatory tariff.

Andrew Lazar: Kerry if I can ask a clarification comment the three to five cents of tariff related impact.

Andrew Lazar: You outlined that Thats not included in the guidance, but presumably hit.

Speaker Change: The Q4 numbers should we be viewing that as a as a full quarter impact.

Speaker Change: Presumably you would have carried some inventory maybe into the fourth quarter. So just want to understand that three to five is truly a.

Speaker Change: Three month impact that if things don't change, we could kind of run rate forward or if there's some some nuance around inventory thanks very much.

Speaker Change: Thanks, Peter I would say when I think about the three to five.

Speaker Change: Tariffs are being phased in right. So it I would say three main areas of impact that that's in that 3% to five.

Speaker Change: First currently we're seeing an impact from the Canada wave one retaliatory tariffs those went into effect at the beginning of March and they remain in place and they relate to our Canadian exports of a portion of our soup business.

Carrie Anderson: Those went into effect at the beginning of March, and they remain in place, and they relate to our Canadian exports of a portion of our soup business that we ship to Canada. You have other tariffs that are starting to phase in in Q4. You have your Section 232 tariffs that impact tinplate and aluminum, where obviously we source for our soup and our beverage cans. And then you also have the phase-in of reciprocal trade actions, which does include the impact of our RAOS portfolio, which is made in Italy, both finished goods as well as raw materials coming from Italy.

Speaker Change: That we ship to Canada, you have other tariffs that are starting to phase in in Q4, if you're section 232 tariffs that impact tin plate and aluminum, where obviously, we source for our soup and our beverage cans and then you also have the phase end of reciprocal trade actions, which does include the impact of our rayos.

Speaker Change: Polio, which is made in Italy, both finished goods as well as raw materials coming from Italy. So to your point we are that's a.

Carrie Anderson: So to your point, we are, that's a net impact, net of mitigation. And as I mentioned in my prepared marks, we're working to minimize that overall impact, including strategic inventory management, as you referenced earlier, and then working closely with our suppliers here. I wouldn't be right now taking that 3 to 5 cents and annualizing it. I wouldn't go there at this point. I think it's a bit too early to say what the fiscal 26 impact may be, mainly because of the rapidly evolving trade landscape. I would say also, you know, the, as we mentioned, those tariff impacts are being phased in and we've had more limited ability to minimize that gross impact.

Speaker Change: The net impact net of mitigation and as I mentioned in my prepared remarks, we're working to minimize that overall impact, including strategic inventory management as you as you as you referenced earlier and then working closely with our with our suppliers here I wouldn't I wouldn't be.

Speaker Change: Right now taking that three to five and Annualizing. It I wouldn't go there at this point I think it's a bit too early to say what the fiscal 'twenty six impact may be mainly because of the rapidly evolving trade landscape landscape I would say also.

Speaker Change: As we mentioned those tariff impacts are being phased in them and we've had more limited ability to minimize that gross impact. So the range provided does not reflect all of the levers that we are working towards which some take more time to effect. So we'd just be cautious to annualize that queue important impact at this time and are obviously working to minimize the.

Carrie Anderson: So the range provided doesn't reflect all of the levers that we are working towards, which some take more time to affect. So it would just be cautious to annualize that Q import impact at this time. And obviously working to minimize the overall impact as much as we can, that will inform us ultimately for fiscal 26 view. Great. Thanks.

Speaker Change: Overall impact as much as we can that will inform us ultimately for our fiscal 'twenty six deal.

Speaker Change: Great. Thank you.

Megan Claps: Our next question comes from Megan Claps from Morgan Stanley. Please go ahead. Your line is open. Hey, good morning. Thanks so much.

Speaker Change: Our next question comes from Megan Clark from Morgan Stanley. Please go ahead. Your line is open.

Megan Clark: Hey, good morning, Thanks, so much for taking our question.

Megan Claps: I wanted to just ask on Rao's, and apologies if I missed it, but I don't think I saw you reiterate the expectation for Rao's growth to be slightly above 10% this year, so could you just maybe give us an update on how you're thinking about Rao's growth? Yeah. Morning, Megan.

Speaker Change: Wanted to just ask on rayos and apologies if I missed it but I don't think I saw you reiterate the expectation for rayos growth to be slightly above 10% this year.

Speaker Change: So could you just maybe give us an update on how youre thinking about radios growth for this year.

Speaker Change: Yes, Good morning America.

Mick Beekhuizen: So let me talk about Rails. So one, and some of it is also in the preparatory remarks, I continue to be very bullish around Rails, and I'm very excited to have Rails in the portfolio, which is playing also right into or supporting the overall meals and beverage. divisional growth. And particularly in light of some of the consumer trends we just talked about.

Speaker Change: So let me talk about right so.

Speaker Change: And some of it is also in the prepared remarks I continue to be very bullish around trails and I'm very excited to have ray.

Speaker Change: Sales in our portfolio, which which is.

Speaker Change: Laying also right into or supporting the overall meals and beverage.

Speaker Change: Divisional growth.

Speaker Change: And particularly in light of some of the consumer trends, we just talked about now.

Mick Beekhuizen: Now, if you look at the and maybe I'll step back for a second. It is, or let me first answer your question. It's like, we expect still, you know, I probably with where I sit right now expect high single digits for fiscal 25. If I look at the year to date, in market consumption is about 10%, 2% this past quarter. That was obviously in line with the overall category, but below our expectations. And as I mentioned in the prepared remarks, we have a pretty good handle on the individual drivers. And the team is all over in market execution.

Speaker Change: If you look at the and maybe I'll step back for a second.

Speaker Change: It is.

Speaker Change: Let me first answer your question just like we expect it still.

Speaker Change: I, probably with where I sit right now expect high single digits for fiscal 'twenty five.

Speaker Change: If I look at the year to date in market consumption is about 10%.

Speaker Change: 2% this past quarter and that was obviously in line with the overall category, but below our expectations.

Speaker Change: And as I mentioned in the prepared remarks, we have a pretty good handle on the individual drivers and the team is all over in market execution and.

Mick Beekhuizen: And, and as a result, I have a lot of confidence in the continued trajectory or growth trajectory of the brand.

Speaker Change: As a result, I have a lot of confidence in the continued trajectory or growth trajectory of the brand.

Megan Claps: If you if you look at the L4, so the last four weeks in market consumption, you actually see some of that already come to fruition. It's obviously always tricky to look just at like L4 periods, but you actually do see that sauce is up 9% and the overall brand is up about 11%. So feel good where we are with Rails and You might have a little bit of timing here and there, but the team is continuing to expand the brand and we're glad to have Rails in our portfolio. Great, that's helpful. Thanks.

Speaker Change: If you if you look at the al four so the last four weeks in market consumption, you actually see some of that already come to fruition. It's obviously always tricky to look just like al for periods, but you actually do see that source is up 9%.

Speaker Change: And the overall brand is up about 11% so.

Speaker Change: Good where we are with rayos.

Speaker Change: You might have a little bit of timing here and there, but the team is continuing to expand the brand.

Speaker Change: And we're glad to.

Speaker Change: Rayos in our portfolio.

Speaker Change: Okay, Great that's helpful. Thanks.

Carrie Anderson: And Carrie, maybe a follow up for you just on the margin profile in the fourth quarter and the expectations there. Clearly, you know, you're expecting EBIT and EPS now at the low end on a slower SNAX recovery. Previously, you talked about SNAX margins recovering sequentially in 3Q and 4Q that did occur nicely in 3Q. Is that still the expectation in the fourth quarter? Or are there some incremental actions that you're taking that might is not the case. Yeah, I think we were pleased with our Q3 sequential improvement, knowing that we had some discrete items that impacted us in Q2, saw that rebound nicely in that 300 basis point sequential improvement into Q3.

Speaker Change: Gary maybe a follow up for you just on the <unk>.

Speaker Change: Margin profile in the fourth quarter and your expectations there.

Speaker Change: Clearly, you're expecting EBIT and EPS now at the low end on a slower snacks recovery previously you talked about snacks margins recovering sequentially in <unk> and <unk> that that did occur nicely in <unk> is that still the expectation in the fourth quarter are there some incremental actions that.

Speaker Change: We're taking that might.

Speaker Change: That's not the case anymore.

Speaker Change: Yes, I think we were pleased with our Q3 sequential improvement knowing that we had some discrete items that impacted us in Q2 saw that rebound nicely in that 300 basis points sequential improvement into Q3, I would say as we look at first half versus second half still expecting that sequential improvement from first half to second half hour.

Carrie Anderson: I would say as we look at first half versus second half, still expecting that sequential improvement from first half to second half. However, given the slower than anticipated recovery of our snacks business, that obviously took us to that lower end of our earnings guidance. Because we're now expecting snacks margins to be at 13% for the full year. I think what we're still focused on is all of those snacks margin building blocks, including our broader network initiatives that we've been working on, including DSD warehouse and route optimization, as well as those mixed improvements as we grow our leadership brands.

Speaker Change: Given the slower than anticipated recovery of our snacks business that obviously it took us to that lower end of our earnings guidance. We're now expecting snacks margins to be at 13% for the full year and what we're still focused on is all of those snacks margin building blocks, including our broader network initiatives that we've been working.

Speaker Change: Not including DSD warehouse route optimization as well as those mix improvements.

Speaker Change: As we grow our leadership brands. So I think it's but it's also important that we remain competitive in the marketplace and to continue to support our brands for the long term value. So we're really trying to make sure we balance both.

Carrie Anderson: So I think it's but it's also important that we remain competitive in the marketplace and to continue to support our brands for the long term value. So we're really trying to make sure we balance both.

Speaker Change: Okay, great. Thank you.

Jim Salera: Our last question comes from Jim Salera from Stevens. Please go ahead, your line is open. Hey guys, thanks for checking out.

Speaker Change: Our last question comes from Jim <unk> from Stephens. Please go ahead. Your line is open.

Speaker Change: Hey, guys. Thanks for taking my question.

Jim Salera: I wanted to dig in, Mick, on this conversation around the splurge-worthy portion of your portfolio and really trying to categorize how much of meals and beverage and how much of snacks would you kind of put under that broader, better-for-you umbrella? And is that – on a go-forward basis, is that really going to be kind of the driver for growth, and do we need to see the innovation focused around there and maybe a revamp of some of the overall snack brands to target that consumer? Or is it really just get consumer confidence back, and that's kind of the first leg?

Speaker Change:

Speaker Change: Dig in.

Speaker Change: On this conversation around the splurge worthy portion of your portfolio and really trying to.

Speaker Change: Categorize how much of meals and beverage and how much is actually you kind of put under that broader better for you umbrella and does that.

Speaker Change: On a go forward basis is that really going to be kind of the.

Speaker Change: Driver for growth do we need to see the innovation focused around there.

Speaker Change: And maybe a revamp of some of the the overall snack brands to target that consumer or is it really just that consumer confidence back and that's kind of the first <unk> forwards.

Operator: Ladies and gentlemen, this is the operator. We're experiencing technical difficulties. Please stay on the line for a moment. The call will resume shortly.

Speaker Change: Ladies and gentlemen, this is the operator, we're experiencing technical difficulties. Please stay on the line for a moment.

Speaker Change: <unk> resume shortly.

Speaker Change: Yeah.

Mick Beekhuizen: We've reconnected the host line. Great. Can you hear us? Yes, I declare. I'll leave you to my questions and you can ask them. Sorry about that, Jim. We had a, we lost power for a second here. Well, no problem. Basically, the core of the question was, you know, what percentage of your portfolio do you kind of view as being under this, you know, better for you, splurge worthy umbrella? And if we think about, you know, what drives the recovery on a go forward basis is, is it really, you know, pivoting the portfolio to have a broader focus there?

Speaker Change: We've reconnected the host line.

Speaker Change: Great can you hear us.

Speaker Change: Okay.

Speaker Change: Yes, I had a clear.

Speaker Change: Thanks, Greg.

Speaker Change: Okay.

Speaker Change: Yes, my question on the dividend Raskin.

Speaker Change: Sorry about that Jim.

Ed: Hi, Ed.

Ed: We lost power for a second here.

Speaker Change: No problem.

Speaker Change: Basically the core of the question was what.

Speaker Change: What percentage of your portfolio do you kind of view as being under this better for you splurge worthy umbrella and if we think about what drives the recovery on a go forward basis is it really pivoting.

Speaker Change: Pivoting the portfolio to tap a broader focus there and adding innovation focus areas, we need consumer.

Mick Beekhuizen: And having innovation focus there? Is it, you know, we need consumer problems to rebound, and then the innovation and the better for you expansion is kind of secondary to that? Yeah, yeah. So when I, when I look at where we're at right now, and with, if you look at the sequential performance that I described, and also the sequential performance of the categories, as I mentioned, the deterioration of consumer confidence definitely did have an impact, right, on the discretion, particularly with the discretionary nature of the categories. So an improvement in overall consumer confidence and would support the categories as a whole.

Speaker Change: Bob comes to rebound and then.

Speaker Change: The innovation and the better for you expansion just kind of secondary to that yes.

Speaker Change: Yes.

Speaker Change: So when.

Speaker Change: When I look at where we're at right now.

Mick Beekhuizen: With if you look at the sequential performance that is described and also the sequential performance of the categories as I mentioned, the deterioration of consumer confidence definitely did have an impact right on the.

Speaker Change: Particularly with the discretionary nature of the categories.

Speaker Change: So an improvement in overall consumer confidence and support.

Mick Beekhuizen: That being said, we obviously got to make sure that we stay focused on the pieces that we can control and we should, and we are going to continue to evolve with the environment. Hence, you hear me also talk a little bit more about some of these PPA initiatives, and the strategic promotional activity. Now, that being said, I think for the long term health of the brands, and the broader particularly snacking portfolio, I think that innovation around indulgence and experiences is important. And you've seen that with, for instance, the Milano example that I gave previously. I don't think it's much of a complete a reset of the portfolio.

Speaker Change: The categories as a whole that being said, we obviously got to make sure that we stay focused on the pieces that we can control and we should and we are going to continue to evolve with the environment. Hence you hear me also talk a little bit more about some of these.

Speaker Change: PPA initiatives and the.

Speaker Change: Strategic.

Speaker Change: Promotional activity.

Speaker Change: Now that being said I think for the long term health of the brand.

Speaker Change: And the broader particularly snacking portfolio I think thats innovation around indulgence and experiences is important how you've seen that with for instance, the Melano example data.

Speaker Change: Gave previously.

Speaker Change: I don't think it's much of a.

Speaker Change: Lee.

Speaker Change: Reset of the portfolio I don't want you to take that away I think we have a lot of things that are.

Mick Beekhuizen: I don't want you to take that away. I think we have a lot of things that are actually working well. And if you look, for instance, at our pretzels portfolio, I feel very good about on the one hand having Snyder's of Hanover, which is much more focused on the pretzel traditionalists, and then the snack factory portfolio, which is really in and around the reimagining of pretzels. And they work really nicely together, as you saw this past quarter as well. And then on chips, we're actually already in the better for you broader segment that is actually growing, whether it's through cattle or cape, or even late July.

Speaker Change: Actually working well.

Speaker Change: If you look for instance, at our pretzels portfolio I feel very good about one the one is having snyder's of Hanover, which is much more focused on the pretzel tradition of lists and then the snack factory portfolio, which is really no.

Speaker Change: Around the re imagining.

Speaker Change: Pretzels and they work really nicely to Canada as you saw this past quarter as well and then on chips, we're actually already in the better for you.

Speaker Change: Broader segment of that is actually growing.

Speaker Change: Through cattle or Cape or even late July so feel good about that and then on the cracker side I think we have a unique proposition more broadly with with goldfish and I'm very confident that the team with all the things that are working through it.

Carrie Anderson: So feel good about that. And then on the cracker side, I think we have a unique proposition more broadly with goldfish. And I'm very confident that the team with all the things that are working through it is, you know, going to change the trajectory over time. So that is probably hopefully giving you a little bit of a sense it is much more surgical than it is a complete repositioning. And then finally, if I look at the meals and beverage portfolio, I actually think there we have a very good collection of brands with premium mainstream, as we've talked about in the past, as well as the way that they are positioned that I think they're meeting consumer needs really well.

Speaker Change: To change the trajectory over time.

Speaker Change: So that is probably hopefully, giving you a little bit of a sense. It is much more surgical than it is a.

Speaker Change: Complete.

Speaker Change: Repositioning.

Speaker Change: And then finally, if I look at the.

Speaker Change: Our meals and beverage portfolio I actually think that we have.

Speaker Change: A very good collection of brands with premium mainstream as we've talked about in the past as well as the way that they are positioned that I think they're meeting consumer needs really well when we see that in the results this past quarter.

Carrie Anderson: And we see that in the results this past quarter.

Carrie Anderson: Right, if I could just sneak in one quick one for Carrie. There, you've mentioned, you know, some of the impact on RAOs from from the import tariffs. Are you guys able to shift more production to Alma? Or do you give us any sense of what the capacity is there? And You know, if that has a meaningful impact on the unit economics, if you can, you know, just have more stuff produced in Alma and just import, I would assume the raw materials versus the finished product. Yeah, I mean, I would say just generally, I'd answer it with with all of the steps, we're going to look at all of the levers that we have to mitigate tariffs.

Speaker Change: Great and if I could just sneak in one quick one.

Speaker Change: Gary.

Speaker Change: Gary you had mentioned some of the impact on rayos from from the import tariffs.

Speaker Change: You guys able to shift more production to Omar can you give us any sense for what the capacity is there and.

Speaker Change: As a meaningful impact on the unit economics. If you can just have more stuff produced in at all mines, just important I would assume nodes raw materials versus the finished product.

Speaker Change: Yes, I mean, I would say just generally I'd answer it with with all of the steps that we're going to look at all of the levers that we have.

Speaker Change: To mitigate tariff so whether it's strategic inventory management, which we're obviously leaning on that hard disk. This quarter here working in close partnership with our suppliers and that would include our partnership with La Regina looking at they're all of what they can bring to help us look at the overall minimizing overall.

Carrie Anderson: So whether it's Strategic Inventory Management, which we're obviously leaning on that hard this quarter here, working in close partnership with our suppliers, and that would include our partnership with La Regina, looking at their, all of what they can bring to help us look at the overall, minimizing overall impact, and then also looking at product cost optimization. So I think all of those levers will come into play as we manage that relationship and manage the overall impact for the Rayos brand.

Speaker Change: Impact.

Speaker Change: And.

Speaker Change: And then also looking at product cost optimization. So I think all of those levers will come into play as we manage that relationship and manage the overall impact for the radios brand.

Operator: We are out of time for questions today. This will conclude today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: We are out of time for questions. Today. This will conclude today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: [music].