Cody Ross: Great. Thank you. And then I just want to follow up on gross margin here. You revised your inflation outlook down to about 10% from low teens, implying approximately 8% inflation in the second half. What gives you the confidence to lower your inflation outlook? Where are you seeing the most easing? Thank you.
Dave Marberger: Yes, Cody. If you really look at this, you have to go back to the base, right? So when inflation started for us is similar to what I just said, inflation started hitting us in the fourth quarter of our fiscal €˜21. And then every quarter of fiscal €˜22, we were in the 16% to 17% range. So as we €“ as you look this year and we’re estimating 10% for the year, that may appear a little bit lower than maybe some others, but that’s off of a much higher base than others. So that’s just the percentages. In the quarter, we saw inflation in packaging. So our cans, and in some of the other packaging areas, some of the commodity areas like dairy and sweeteners and then vegetables. We do see inflation moderating in the protein area.
You remember, particularly, poultry hit us hard. We are seeing that moderate. So as we go forward, we expect it to moderate, but it’s still off a very high base. And that’s our latest call based on the way we call inflation as market by market, we go through. And then remember, and you see this on our gross margin bridge, we have the sourcing component, right? So we always quote inflation as gross inflation based on market. And then based on how we lock it in with contracts or our hedges, the actual cost nets out in that sourcing line. So right now, for the quarter, our sourcing was a little negative just because we’re locked into some higher contracts in a couple of areas where the market has dropped.
Cody Ross: Great. Thank you. I will pass it on.
Operator: Our next question comes from Ken Goldman from JPMorgan. Please go ahead with your question.
Ken Goldman: Hi, thank you. Good morning. I wanted to dig in a little bit more toward the €“ or on the operating margin guidance. And thank you for the help in terms of how to think about the gross margin in the back half, Dave. It seems just back of the envelope math that to get to where your operating margin will be sort of that mid-15s for the year. And given that you’re talking roughly about a 300 basis point increase continually in the gross margin that you’re going to have to have a step up in SG&A as a percentage of sales. And I’m just €“ a, is my back of the envelope math correct there? And b, what would cause that step-up as we think about going into the back half of the year? I assume, Sean, you’re not going to advertise a lot more given your history. I’m just trying to get a sense of how to think about that?
Dave Marberger: Let me €“ why don’t I start and Sean, you can fill in. So Ken, from an SG&A perspective €“ and we had forecasted and guided at the beginning of the year that we expected SG&A to be increasing higher than sales and that’s indeed what we’re seeing. So if you look at Q2 and the increase in SG&A, that’s a reasonable estimate to estimate our H2 second half increase in SG&A. And that’s basically investments that we’re making in automation and in our people. And there is some incentive compensation increase in there, partially from this year, but partially wrapping on last year. So they are really the big drivers of SG&A. We are expecting A&P to ramp. So we came in higher this quarter at 2.4%. And we expect that to continue to ramp up in H2 as well. Sean anything to…
Sean Connolly: Yes, the only €“ yes, on that, I would say, we do spend A&P, Ken. So we don’t do a lot of in-line TV because we don’t think it’s particularly effective. But we do spend A&P, and it does vary quarter-to-quarter depending upon the programs that we’ve got. As you know, it’s a lot of influencer type spend, digital spend, things like that. And so as we’ve got new innovations unfolding, we do back them based on the windows where we’ve got products coming to market. So there €“ you will see movements quarter-to-quarter in our A&P line, which syncs up €“ usually syncs up with the activity we’ve got planned in the marketplace. And frankly, when we got business momentum like this, we want €“ and we’ve got really exciting new innovation coming out that we will share at CAGNY. We do want to make sure we get those new products off to a good start with good awareness and good trial.
Ken Goldman: Thank you. That’s helpful. Just a very quick follow-up to Dave’s comment about kind of extrapolating that 2Q SG&A out, Dave, are you talking about the absolute dollars that were spent in 2Q or the year-on-year change that we should kind of think about extrapolating?
Dave Marberger: Year-on-year change, Ken.
Ken Goldman: Great. Thanks so much.
Dave Marberger: Yes.
Operator: Our next question comes from Alexia Howard from Bernstein. Please go ahead with your question.
Alexia Howard: Great. Good morning, everyone.
Sean Connolly: Good morning.
