This quarter, it was about 30 basis points year-on-year of investment to support our large slate of innovation, which we talked about in the prepared remarks. And other piece that was negative this quarter was mix. And this is simply selling a higher percentage of our lower sales dollar per unit item. So, for example, lower sales on a multi-serve meals like Bertolli relative to higher sales on the Banquet pot pie, that is just a negative sales mix. That’s the timing thing, Peter. So, over the course of the year, that tends to work-out, but quarter-to-quarter it can flip a little positive or a little negative. So, that was negative in this quarter. And then, the remaining piece is the trade and merchandising investment. And that was less than the slotting investment for the second quarter.
So, there is a lot in there that gets to that 0.5%. I did comment that in the second-half, we do expect price mix to be down. Those dynamics are pretty much the same. We would expect less negative impact from mix in the second-half and more increase in the, kind of, the trade and merchandising investment. So, the second-half price mix will be a little bit down a little bit more than we saw in Q2, but directionally in that in that area. So, that – hopefully, that gives you some color on price mix.
Peter Galbo: Yes. No, that’s very helpful. Thank you for that. And then, maybe just – secondly, like, on the leverage piece, guys, you have the bond that comes due in May. The leverage at least has kind of stabilized, but with the earnings coming down. Just how are you thinking about debt paydown on that $1 billion relative to refinance at this point as we kind of go-forward here?
Dave Marberger: Sure. So, we’re always looking at all of our options. Obviously, we have our commercial paper. We have a lot of liquidity. As you saw in the first-half, our free cash flow was very strong. Usually, this Company, we don’t deliver really strong free cash flow in the first-half. Our conversion is usually very low with all the free cash flow coming in the second-half. Well, given our focus on working capital and Ardent Mills cash distributions, we had a very strong first-half, and we expect the second-half free cash flow to be very strong as well. So, it puts us in a nice position, where come May, when the bond is due, we’re going to have strong free cash flow. We have access to our commercial paper and then, obviously, we’re always looking at the capital markets to see if there’s an opportunity to refinance.
Rates seem to be coming down. We watch them very closely. So, we look at all the options and we figure out what’s the best combination. Maybe, we use our free cash flow to paydown some of it and refinance the other part. But we’ll look at all our options as we go-forward. But – I like where we are, given our strong free cash flow.
Peter Galbo: Great. Thanks, guys.
Operator: The next question comes from Robert Moskow of TD Cowen. Please go ahead.
Robert Moskow: Hi, thanks for the question. I guess, it’s a two-parter. One is, I think, the guidance at the start of the year for advertising was to grow it as a percentage of sales to be consistent with what it was last year. And so, I guess, the first part of the question is, now that you’ve cut your sales guide, does that mean that the advertising – it sounds like you’re keeping advertising the same, so does that mean that it will be higher as a percentage of sales for the year, or do you have to cut the A&P commensurate with the sales growth?
Dave Marberger: Yes, Rob. So, let me answer that a couple different ways. So, if you just look at the total year, our guide – our operating margin guide is approximately 15.6%, that’s where we came in, in fiscal ’23. And when you look at gross margin, you look at A&P and SG&A, we generally expect to be in-line with where we were prior year. So, to your question, if – we were 2.4% last year, if we come in again at 2.4% dollar-wise, that’s a little bit lower than where we were, and we’re still looking at that. There is opportunity to spend up if we want to. The way we look at it though is if you look at A&P first-half versus second-half, our A&P spending is going to be up around 20% in the second-half relative to the first-half.
So, we’re just looking at what’s the run-rate on spend now and what is it going to be in the second-half to support the advertising that Sean talked about in our other kind of digital advertising that we’ve been doing. So, we feel good about the second-half and the trajectory of the A&P relative to the first-half.
Sean Connolly: Rob, it’s Sean. I’ll just add a point on there. As we talk to our team about delivering this year, we said at the beginning of the year two things we’re going to have to demonstrate as a team and those things are agility and resilience. And part of the agility piece, from the beginning of the year, has been really trying to understand the consumer readiness to resume more typical purchase behaviors after we saw some of the shifts emerge in the spring. And so, you may recall on last quarter’s call, I mentioned that our assessment was that consumer wasn’t quite ready to engage in that. So, we were fairly conservative in Q1 and Q2 in terms of deploying some of these dollars, because we wanted to kind of keep those funds for the back-half of the year where we had more confidence that the consumer was really going to be ready.
And we – as we mentioned in our prepared remarks, we deliberately tried to assess that readiness in Q2. And we really – we’re quite encouraged by what we saw. So, now that we’ve got – a lot of our powder is still dry for the back-half of the year, we’ve got some easier comps and we’ve got consumers that are demonstrating a real willingness to kind of reengage their more typical purchase behaviors with a little bit of a nudge from us across this multifaceted investment plan. We like where we sit in terms of the fullness of the support for the back-half of the year.
