Jeff Harmening: So let me — so it is true, our balance sheet is in great shape, thanks to the profitability we’ve had for the last few years as well as all the work we’ve done to unpayable and receivables asset. So our balance sheet is in really good shape. We do have a lot of flexibility. The first point I would say that even though we have a lot of flexibility, we’re still going to remain disciplined. To the extent we look at M&A, we have about 50 basis points of growth we’d like to get from M&A over the coming years, both through acquisitions and divestitures. And so in general, we’ll look for businesses that are accretive to our growth. And in categories we’re already in or adjacent to categories we already participate where we think we have a competitive advantage.
And to the extent we do those things and they’re bolt-on acquisitions, we would expect some synergies to come with that growth. And so I’m not going to get into a specific category that we’re looking at. You can probably guess them as well as anyone else. But they would be growth — but I can say they’ll be growth oriented, and there will be places where we think we have competitive advantage, and we can create value for shareholders.
Unidentified Analyst: Great. Thank you very much.
Operator: Thank you. Our next question is from the line of Pamela Kaufman with Morgan Stanley. Please go ahead. Your line is now open.
Pamela Kaufman: Hi, good morning.
Jeff Harmening: Good morning.
Pamela Kaufman: Your gross margin was a highlight in the quarter. I just wanted to get a sense for how you’re thinking about gross margins in fiscal 2024. And then for the 5% input cost inflation outlook, I guess, could you just give us a sense for how you’re thinking about the cadence and how that influences the cadence of your gross margin for the year?
Jeff Harmening: Well, Pamela, first of all, thank you for asking about that. Gross margin was a highlight for the quarter. And it was a highlight for a year and I think it will be a highlight in the coming year as well, and we’re really proud of what we’ll be able to do on the gross margin front over the last couple of years. And so probably turn it over to Kofi with more specifics, but appreciate the question.
Kofi Bruce: And I would just add, I think we’ve made some really good progress in moving back towards our pre-pandemic gross margin. We still have a little bit of work to do. And obviously, if you read our guidance, you can expect that we expect to make further progress towards recovering our gross margin levels. I think the important thing to note in our guidance around inflation is that we see it moderating, but there will still be inflation above sort of the historic levels we would expect to see in our category. And as we work through the year, I wouldn’t necessarily call out anything notable as you expect the quarterly flow to play out, other than the comments I made about sales and the expectation of the price mix and SRM actions and the interaction of those on the top line.
I think the key thing for us though, is that we do see a step up in our HMM levels at 4%, a one point step up from the past couple of years where we’ve been kind of under-delivered at 3%. With the moderation of supply chain that in — that we certainly have higher confidence in being able to pull that off, as well as our confidence in our ability to take out some of the significant levels of cost and continue to take out some of the significant levels of operating costs that we put into our model to manage through service disruptions. So, all those things give us the confidence that we should be able to continue to drive back towards pre-pandemic level gross margin.
