Andrew Lazar: Thanks so much. Appreciate it.
Operator: Our next question will come from Ken Goldman with JPMorgan. Please go ahead with your question.
Ken Goldman: Hi, thank you. I wanted to ask just quickly about where your customer inventory levels are today and if that you see any abnormalities there. And part of the reason I’m asking is it seems even if you add back the 110 basis point impact in the medical, that maybe your shipments in Refrigerated & Frozen were a little bit less than what we saw in terms of measured channel takeaway. So just trying to get a sense of how you see that looking ahead.
Dave Marberger: Yes, Ken, this is Dave. We don’t see any significant difference in our customer inventory levels versus where we’ve been historically. If you look at Refrigerated & Frozen, which is really what you’re talking about, for the quarter, our price/mix was 10.4% and volumes were down 11.5%. Our consumption was 2.9% for the quarter. So there was about a – we shipped below consumption by about 400 basis points. We plan to do that, Ken. So we expected shipments to be below consumption in Q4 because we shipped ahead of consumption year-to-date Q3 in Refrigerated & Frozen. So if you look at the full year, we basically ship to consumption, which we normally do. So there were no unusual customer dynamics that drove that. And yes, the Americold situation was a 110 basis point negative impact of volumes for Refrigerated & Frozen for the quarter.
Ken Goldman: Great. I will pass it on. Thank you.
Operator: Our next question will come from Pamela Kaufman with Morgan Stanley. Please go ahead with your question.
Pamela Kaufman: Good morning.
Sean Connolly: Good morning.
Pamela Kaufman: Can you talk about the pricing outlook from here? You pointed to some additional inflation in fiscal ‘24, although it’s much more modest compared to the last few years. Do you anticipate taking more pricing in fiscal ‘24 to offset those increases? And then you mentioned lowering prices in a few key categories. do you expect having to lower list prices across other product categories as well?
Sean Connolly: Hey, Pam, it’s Sean. Let me tackle this and Dave going whatever I miss. So big picture in terms of the deflation piece, we’re really talking about – we’ve got a large portfolio, as you know, significant scope. And not surprisingly, we’ve got a small number of what you might call pass-through categories that are more single ingredient. And some of those have – are made of ingredients that are actually on the deflationary side. So those are the exceptions that tend to go up or down. And so we’re seeing things like oil dairy, some of the meat products that are coming down during our fiscal year outlook. So that’s a piece of it. In terms of the new pricing, yes, overall inflation is still with us. It’s – as Dave covered in the 3% range and – but we’ve got some surgical pricing on select categories that we are taking to offset that.
But at a company level, it’s productivity getting back in the game that really helps us to tackle the continued inflation. We’re able to see it come down, but it’s still with us, and it is going to cause us to take some surgical pricing in a few businesses early in the year. Dave, anything you want to add to that?
Dave Marberger: I would just add, just reiterate, Q1, we will see the pricing wrap from obviously pricing we took in fiscal ‘23. And then we have communicated to customers, and there will be pricing on our tomato-based products effective early Q2. We’re seeing significant tomato inflation in fiscal ‘24.
Sean Connolly: Yes. And to your last question, Pam, no, we don’t see price rollbacks or price downward adjustments in a broad-based way across the category. That’s highly contained to those very limited single ingredient, more pass-through categories in our portfolio.
Pamela Kaufman: Great, thank you. And just on your guidance for 40 to 90 basis points of operating margin expansion. Can you unpack that a bit? What’s embedded into that through gross margin expansion versus SG&A reinvestment?
