Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Connor Rattigan with Consumer Edge. Your line is now open.
Connor Rattigan: Hey, guys. Good morning. Congrats on the great quarter.
Ryals McMullian: Thank you, Connor. Appreciate it.
Connor Rattigan: Yes. So, just kind of wanted to follow-up on some of Mitch’s questions there. So, you noted private label share gains somewhat moderating in the quarter and sort of confined to more, I guess, traditional loaf segment and sort of with those share — and I guess just trying to get a fact — just trying to get a sense, just how much of a factor is maybe mix shift shifting maybe — more towards the buns segment or I guess is more differentiated segments in the summer months? And I guess maybe is there any concern that consumers are maybe just temporarily moving to different segments of the category where private label is under shared?
Ryals McMullian: Actually, we’ve been seeing that trend for some time. If you go back quite a few quarters, I think we talked about that pretty heavily that even within the category, we were seeing shifts more towards specialty premium, more towards breads, buns and rolls, more towards breakfast items, all of which tend to have a higher level of differentiation, and are certainly more premium products as well. So, for example, our Nature’s Own Perfectly Crafted Brioche buns have done extremely well. That’s a differentiated item from just a standard white bun. The Dave’s Killer Bread, bagels, English muffins, et cetera, even the buns with Dave’s have done really well, as well as that broader specialty premium category. So I think it’s a trend we’ve been seeing for a while, somewhat disrupted by the inflationary environment because obviously we’ve talked a lot about trade down and households economizing.
But I think over the longer pull, I think that trend remains in place. One of the things that we’re focused on here is how can we bring more differentiation to that traditional loaf category? It is still our largest segment. So, it’s very important from performance, from a cash flow standpoint, all of it. So, what can we do to further differentiate those mainline Nature’s Own items? Is it from a quality standpoint, a packaging standpoint, different flavors, et cetera? So that’s something that we’re focused on here.
Connor Rattigan: Perfect. And then just back to SKU rationalizations a little bit as well. So that was the volume headwind again in the quarter, obviously. And I guess, I was just wondering, was a headwind driven mostly by compares from prior rationalizations or were there more SKUs actually eliminated during the quarter? And mean, I know you mentioned the impact is expected to lessen the second half, but I guess just trying to get a sense for if there are a lot more SKUs potentially on the chopping block or if you’re pretty much all finished?
Ryals McMullian: I’m going to break that into two pieces, because on the cake side, we’re largely done. And I think we said at the beginning of the year, you’ll see those volume declines start to moderate as we move to the back half of the year. And you — we saw that even in the second quarter. So that’s on the cake side. I mean, obviously, there’s always continued SKU rationalization, but the bulk of it that we’ve been doing over the last couple of years, we’re sort of through that. On the foodservice side, it’s a little bit different, because we still have some of that lower-margin business that we’ll be rationalizing over time. And it’s not all going to come at once. Some of it is under contract and that affects the timing.
