Amit Banati: Yes.
Alexia Howard: Perfect. Thank you very much. I’ll pass it on.
Operator: Thank you. Our next question comes from Bryan Spillane from Bank of America. Your line is now open. Please go ahead.
Bryan Spillane: Thanks operator. Good morning, everyone. I wanted to follow-up, I guess, on Pam’s question. She asked a bit about investment shift to the back half. And I guess maybe just stepping back, like just looking at it more broadly, if we look at SG&A as a percentage of sales, it’s running and it’s been, I guess, the last six or eight quarters, it’s been running about 200 basis points as a percentage of sales below where it was before last year. And so, I guess, as we kind of look thinking about that going forward, right? Is that kind of the new run rate? Is there still some rebasing of marketing spends that has to happen? So just really trying to understand, where SG&A as a percentage of sales have been running in roughly 20% range for a long time, and now we’re or 20% to 21% and now we’re kind of high 18%, 19%. Just is this really a good run rate going forward, or is there more spend that still has to be put back? Thank you.
A – Amit Banati: Yeah. I think, so firstly, there’s been some phasing, right, when you compare it versus 2020 versus 2022. And we talked that, we started the year saying it will be much more first half weighted. I think that has shifted a little bit between first half and second half. I think to your question around levels of advertising, we’re pleased with the levels of advertising. So I don’t think we expect any rebasing needed going forward. On SG&A, we are catching up as meetings, travel, business returns to pre-pandemic levels. So I think that you’ll see that catch-up I’d say that overall, you’d expect overheads to be up mid-single digits is to be up slightly higher than what we increased in 2022. So in 2022, we were up we’d probably be up this year as well at a slightly higher rate.
Q – Bryan Spillane: Okay. So it sounds as, if we’re thinking about SG&A as a percentage of sales, if we go back past 2022, right, if you look at 2020, 2021, just the years before, it sounds like it’s going to be net and lower as a percentage of sales, but the run rate was leading up before the pandemic?
A – Amit Banati: Yeah. I mean, there’s been a lot of pricing that has come through. So I think we’ve been in this period of exceptional pricing. So, some of the ratios probably are displaced a little bit as that pricing has worked its way through the P&L.
Q – Bryan Spillane: That’s great. Thanks Amit. That’s very helpful.
Operator: Thank you. Our next question comes from Robert Dickerson of Jefferies. Your line is now open. Please go ahead.
A – Amit Banati: Rob? Are you on mute?
Q – Robert Dickerson: Hello? Can you hear me?
A – Amit Banati: Yes. Now we can.
Q – Robert Dickerson: I am sorry. Yeah. Yes, I just want to ask a broader question around [indiscernible] strike. If you think for like two quarters it seems kind of habitability as to why do you think that actually fully recovered, [indiscernible]?
A – Amit Banati: Rob, I think you were not entirely — you’re a little breaking up, but I think the question was around R-Tech and R-Tech recovery and where we see it. So I’ll answer that question. I think that’s what you’re asking. We continue to recover the share. We talked about in the prepared remarks. In the first half of 2023, we gained 1.5 points year-on-year. We’re also up year-on-year on a 13-week basis and a four-week basis. We’re still recovering items. We’re still recovering distribution points, and we see that continuing to recover. We have a long tail of SKUs we had. We took the opportunity to chop some of that tail to make efficiency gains in our plants, but there’s still some recovery happening with the long-tail SKUs that we did not chop.
And so we still see recovery on the horizon. I wouldn’t really call it a recovery, but I just see it as ongoing momentum as we get back to where we were pre strike from a share perspective. And I think you’ll see some ambitious plans next week. There should be no ceiling for our share ambitions when we think about what the potential of this business is. But we’re pleased with the momentum. We’re pleased with the plant performance. We mentioned also in the prepared remarks, we’re running company and company right now, which is really exciting. We did the cutover over the weekend. And one of the things that means is there’s now a separate sales organization for North American Cereal, which is, I think, one of the really exciting developments as we talk about two companies, two quality companies going forward.
And so you’ll have a sales organization that’s 100% focused on North American cereal and they’ll have goals that are ambitious and I think very achievable as we continue to look forward for North American cereal and what its true potential is.
