Brian Holland: What about anything in the non-track channels that would be a factor one way or the other to explain the delta whether you might be lapping — whether you lapped a program or anything like that? Just curious.
David Ciesinski: Not really. No.
Brian Holland: Okay. Okay. And then to go back to the gross margin component again. So, I guess what I’m trying to reconcile is I understand the gross profit dollar growth. I understand PNOC going from negative to positive and some improved mix. But it didn’t convey to gross margin improvement either sequentially or year-on-year. And it doesn’t sound like start-up costs for Horse Cave were material. But again if there’s something there to call out just so we understand. I just kind of want to — maybe we’ll just start there to level set and then think about what the path forward is just based on what you’re dealing with both upstream and downstream.
Tom Pigott: Yes. So, when you look at the percentage margins when you lay in all the commodity inflation and keep in mind our inflation is a lot higher than our peers really due to our exposure to soybean oil. And this quarter, in particular eggs, were up quite dramatically. And so when you factor that in and you say okay, I’m going to add $50 million of inflationary cost to the P&L and you price for it, you’ve got that natural dilution that occurs. Sequentially, as I mentioned, it really was the eggs and soybean oil was up sequentially and then we also had some tomato costs that were up sequentially. So, that’s why you’re seeing all that dilution despite the positive PNOC. As you go forward, we feel like we’re going to definitely grow our gross margin percentages versus the prior year certainly in Q3 and we’re looking at Q4 now to try to make sure that we are successful there as well.
But keep in mind it’s — this — until we see some sort of stabilization of costs, we do have this dilutionary impact. And certainly if we get to a point where some of these commodities moderate and come down it will certainly be gross — the percentage dilution. Certainly, we’re focused on growing the penny profit and happy with the quarter’s performance.
Brian Holland: Okay. That’s great. If we could just kind of double-click on the commodities component. So, first looking I guess a little bit backwards. I think you said input cost inflation was something like 24% this quarter. Is that — was — forgive me that I don’t have this at my fingertips, is that an acceleration versus the magnitude of inflation you faced in 1Q?
Tom Pigott: Yes. Yes.
Brian Holland: Okay.
Tom Pigott: It was. And–
Brian Holland: Okay. Go ahead. I’m sorry Tom.
Tom Pigott: Yes. And it was — like I said it was — the unforeseen run-up in egg costs sequentially was a key driver.
Brian Holland: Yes. And then if we roll that forward, I guess maybe a two-part question here. One where are you kind of from a hedging standpoint? Eggs are what they are right now. Obviously, there’s some discussion that maybe the flocks are improved by — second half of calendar 2023. Maybe we could get some cost relief. But I don’t know if you’re in a position to capture that based on what your forward buying looks like. And then kind of a similar dynamic because we’re hearing encouraging news on the oils and those prices coming down. So, I don’t know Dave or Tom if you have commentary there. Just trying to get a sense of we think inflation as you’re looking at it right now moderates from here.
