McCormick & Company, Incorporated (NYSE:MKC) Q1 2024 Earnings Call Transcript

McCormick & Company, Incorporated (NYSE:MKC) Q1 2024 Earnings Call Transcript March 26, 2024

McCormick & Company, Incorporated misses on earnings expectations. Reported EPS is $0.537 EPS, expectations were $0.58. MKC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Faten Freiha: Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today’s First Quarter Earnings Call. To accompany this call, we posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, President and CEO; and Mike Smith, Executive Vice President and CFO. During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning’s press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information. Today’s presentation contains projections and other forward-looking statements.

Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or other factors. Please refer to our forward-looking statements on slide two for more information. I will now turn the discussion over to Brendan.

Brendan Foley: Good morning, everyone, and thank you for joining us. As many of you have probably seen on the news this morning, the Francis Scott Key Bridge collapsed in Baltimore. Our thoughts go out to everyone impacted by this terrible tragedy. We have activated a team and are monitoring the situation. We are pleased to start the year with a strong first quarter. Our performance reflects the early success of our prioritized investments to improve volume trends and drive profitable growth. I will begin my remarks this morning with an overview of our first quarter results, focusing on top-line drivers. Next, I will provide perspective on industry trends, highlight some early signposts of success, as well as areas we continue to work on and review our growth plans.

Mike will then go into more depth on the first quarter financial results and review our 2024 outlook, and finally, before your questions, I will have some closing comments. Turning now to our results on slide four. In the first quarter, sales grew 2% in constant currency, reflecting a 3% contribution from pricing, partially offset by a 1% decline in volume and product mix, primarily driven by the pruning of low-margin business and our canning business divestiture. Underlying volume was flat compared to the prior year. Sequentially from the fourth quarter, volume trends improved in both Consumer and Flavor Solutions. We believe this improvement is an indication of continued progress as we remain focused on driving quality top-line growth throughout our portfolio.

In Consumer, volumes improved substantially from the fourth quarter in the Americas. In EMEA, we drove positive volume growth while continuing to benefit from pricing actions. In Asia Pacific, volume performance was impacted by the macro environment in China, as we expected. We continue to expect full year 2024 China Consumer sales to be comparable to 2023. Outside of China, we delivered strong sales growth driven by both price and volume. In Flavor Solutions, our results were solid and growth was driven by price and underlying volume growth, partially offset by the impact of our canning divestiture. We are pleased with our performance recognizing many of our customers, including Consumer Product Companies or CPGs and Quick Service Restaurants or QSRs, continue to experience volume softness in their businesses.

We are continuing to collaborate with our customers to navigate this challenging environment and we remain optimistic about our growth for the year. It’s worth noting that volume trends and Flavor Solutions typically fluctuate from quarter-to-quarter, largely attributable to customer activity, including new product launches, limited time offers, and their other promotional activity. As we said at the CAGNY conference, McCormick is a growth company, and 2024 is an important investment year to return to our long-term objectives. Our results demonstrate the early impact of investments we have made to fuel our top-line and further capitalize on the underlying growth of our categories. We have a robust set of initiatives and continue to expect share gains in units to lead our trends and our results will build throughout 2024.

Let me share some of our perspectives on industry trends. We are in a unique position with our portfolio’s breadth and reach in both Consumer and Flavor Solutions. Our shared insights give us a very strong understanding of consumers flavor needs, preferences, behaviors, and trends. Consumers remain challenged. Two years of steep inflation has had an impact and many are exhibiting value seeking behavior. While food inflation is slowing, its compounded impact is still being felt by consumers. Budgets are stretched, resulting in choiceful spending decisions, a trend that is continuing from the fourth quarter. In the first quarter, with higher inflation in the food service channel and slowing retail food prices, we broadly saw a shift from food away-from-home to food-at-home consumption in our major markets.

We are also seeing improvement in center store categories and some softness in restaurant traffic across all regions. As we said, the current state of the consumer is not defined by any one trend, it remains dynamic, and we are responding with speed and agility. I am encouraged by the early success of our key initiatives. We have the right plans in place that are continually influenced by what matters most to our consumers and customers, and fit within our strategic priorities. Moving to slide five, let me highlight for the quarter some of the key signposts of our success that demonstrate we have the right plans in place. Starting with spices and seasonings. In Americas, EMEA and Asia Pacific, excluding China, we grew volumes. In the U.S., our unit share performance continues to improve and we drove dollar share gains in Eastern Europe.

In recipe mixes, we strengthened our performance with volume growth in the Americas, reversing the trends from the fourth quarter. Recipe mixes were a significant driver of U.K. volume growth and homemade desserts were also a substantial driver of France’s volume growth. In both, we realized both unit and dollar market share gains. Volume growth in our Flavors business is strong across key categories, including outpacing the category in alcoholic beverages and performance nutrition. Finally, we grew volume in branded foodservice and realized market share gains in spices and seasonings and on Tabletop in hot sauces. Before I get into our growth plans, let me touch on some areas where there is some pressure. We continue to experience volume declines in the prepared food categories that we participate in, like Frozen and Asian.

In Americas Consumer, importantly, these items represent a small part of our portfolio and the improved volume trends in our core categories is beginning to offset these declines. For mustard in Americas Consumer, as we discussed in our last earnings call, we continue to experience extremely low price points for private label, which is impacting our consumption and driving down category dollars. While performance in mustard improved relative to the fourth quarter, we still have work ahead of us. We plan to drive further volume improvement by narrowing price gaps and increasing promotions, new products, including Creamy Dill Pickle, and importantly through recent distribution wins. Moving to hot sauce, in Americas Consumer of consumption, volume trends improved from the fourth quarter, particularly coinciding with our successful Super Bowl activation campaign.

Reflecting on our first quarter performance, it highlights two dynamics. First, we have underlying strength in our base business and strong consumer loyalty. Our growth plans remain consistent, fueling growth through increasing both Cholula and Frank’s RedHot brand marketing, with Frank’s activated year-round for the first time, as well as exciting innovation aligned with consumer trends and expanding distribution. Second, recently we have seen a surge in $1 price point trial sizes from new and existing small players, which is incremental to the category and is pressuring our share performance. We remain the leader in this attractive, fragmented and growing category. New buyers present a great opportunity to win new households using our growth levers, as well as our scale and capabilities.

In Flavors, our growth with Quick Serve Restaurants and Flavor Solutions was impacted by slower QSR traffic in EMEA and Asia Pacific. Finally, some of our consumer packaged food customers continue to experience softness in volumes within their own business, in both Americas and EMEA. We are focused on working with our customers to support their innovation plans and continue to diversify our customer base over time. Before I talk through our growth plans in detail, let me touch on spices and seasonings. At a global level, we are pleased with the growth and consumption we delivered in the quarter. Specifically looking at U.S. spices and seasonings, we are driving significant improvements. Our new packaging continues to increase velocity on shelf, and we are recapturing distribution points, and our sequential improvement led to positive unit share gains at the end of the quarter.

In addition, our growth is supported by our increased brand marketing and new products. Lastly, we expect to largely start seeing the impact of our actions in our results during the second half of the year, following most of our customers shelf resets at the end of the second quarter. Let’s now move to our growth plans on slide six, which are leading our strong first quarter performance and will continue to drive our success in 2024 and beyond. Brand marketing, new products, and packaging innovation, category management, proprietary technologies, and customer engagement continue to be the initiatives behind our growth levers. Starting with brand marketing, our plans across all categories are supported by our global brand marketing initiatives.

We are prioritizing investments to connect with consumers and fuel growth. Our differentiated brand marketing is driven by a combination of factors. In addition to maintaining a high share of voice, we are committed to having the best content in our categories. Content that inspires and educates consumers and reaches them at the right points on their path to purchase and their flavor journey. From flavor exploration and menu planning, to shopping and cooking, and even to eating and sharing the experience online. In Q1, brand marketing spend was up significantly compared to the prior year as expected. This increase was broad-based across all regions and was an important driver in improving volumes. Through our efforts across multiple channels, particularly in retail media, we are driving further household penetration and increasing buy rates across spices and seasonings, recipe mixes, and condiments.

Our holiday campaigns across our regions proved successful. Our marketing campaigns in the Americas highlight our everyday value and point-of-difference to consumers and are supporting our improved volume trends and share improvement. Our Frank Super Bowl activation campaign with Jason Kelce, now a retired NFL player, was very successful. We gained new buyers and media and consumer sentiment, as well as engagement from other big brands, was incredibly positive. We continue to benefit from new products and packaging. It is one of the primary drivers of our growth and as we said at CAGNY, the performance of our launches continues to improve. We are continuing to realize growth from our 2023 launches. For example, our Cholula sauces and recipe mixes are driving new buyers to the category and are exceeding our expectations since launch, and we continue to build U.S. distribution and are also launching both formats in Canada this year.

The rollout of our U.S. Everyday Herbs & Spices portfolio is on plan and expected to be fully shifted by the end of the second quarter. Our Nadiya Hussain range of Schwartz seasonings and recipe mixes continue to drive our innovation performance and expand household penetration with younger consumers. As we look ahead to the rest of the year, with our renovated recipe mixes, we have opportunities to win more dinner occasions with new global cuisine seasonings in both Americas and the AMEA and reshaping the portfolio by shifting offerings to meet consumers growing preference for non-red meat proteins. In Seasoning Blend, an exciting growth opportunity we mentioned at CAGNY, we are launching new Lawry’s, seasoning blends in large sizes, which offer a value price point to consumers.

And we are really excited about the Frank’s RedHot dips and popular flavors in a squeeze bottle format we just launched and are looking forward to another campaign featuring Jason Kelce. In Flavor Solutions, we are leveraging our proprietary technologies to support our innovation in flavors, to win new customers, diversifying our customer base, and drive share gains across our portfolio. Our momentum with our flavors customers continues to be strong and fuel our new product pipeline. We are collaborating with many of our customers to heat up their products from snacking to beverages. Our heat-brief win rates are strong across our regions. We continue to dedicate resources where we have the right to win. In Branded Food Service, we have a strong innovation agenda, including launching a Cattlemen’s Hawaiian Barbecue flavor, expanding our Seasonings portfolio with Ducros line extensions, and extending McCormick Mayonesa, which has had great performance in our consumer segment into this channel.

Let’s turn to category management, where I’d like to review our revenue management efforts and expanding distribution. First, revenue management remains a capability and we have a history of optimizing pricing on shelf to benefit both McCormick and the retailer. We continue to take a surgical approach to managing our price gaps to private label and branded competitors. Our price investments are primarily focused in Americas consumer, where they impact about 15% of our portfolio in that segment. Revenue management will continue to be an important tool for driving growth, and we will consistently leverage real-time analytics and insights to refine our plans. In terms of expanding distribution, we continue to make progress on restoring a majority of the distribution that was lost due to supply issues.

We have secured winds and new distribution. To further strengthen our value proposition in EMEA, we have grown distribution in the fast growing discount channel, and in the U.S., our Lawry’s opening price point is expanding across the stores of a leading discounter. And in China, we are expanding in small format stores, which have grown rapidly in recent years, as well as into third and fourth-tier cities. We are meeting the consumer where they live and shop. Let me briefly mention our heat platform. As you heard in my remarks, heat-infused products span our portfolio and are driving growth. We expect heat to continue to be a long-term growth accelerator globally for McCormick. Consumers, particularly younger generations, continue to drive demand in this flavor profile.

We are uniquely positioned to win in heat with our global iconic brands and our meaningful scale and expertise that we have been building for decades. To wrap up, we believe the execution of our growth plans will be a win for consumers, customers, our categories, and McCormick, which will differentiate and strengthen our leadership. As we look ahead to 2024, we are maintaining our outlook. Mike will share more of the details. At a high level, we expect our top-line to be at the mid to high-end of our guidance range, given the momentum we saw in the first quarter. We are confident in our initiatives and we have provided proof points of where they are working. That said, we also continue to reflect on the uncertainty in the consumer environment in our outlook for 2024.

Before I pass the call to Mike, let me reiterate a few points. We are deliberately focused on attractive, high-growth categories across both segments, resulting in a significant long-term tailwind to drive profitable growth. That said, it is crucial that we continue to capitalize on this position of strength. The long-term trends that fuel our categories, consumer interest in healthy, flavorful cooking, flavorful exploration, and trusted brands continue to be very strong. And, importantly, consumer enjoyment in cooking is growing. We remain dedicated to improving volumes. We continue to refine our plans and are prioritizing our investments to drive impactful results and return to differentiated and sustainable volume-led growth. And, you should continue to expect improvement over the coming year and into 2025 and beyond.

Now, over to Mike.

Mike Smith: Thanks, Brendan, and good morning, everyone. Starting on slide eight. Our top-line constant currency sales grew 2% compared to the first quarter of last year, reflecting 3% of pricing benefit, offset by a 1% volume and mix decline. As expected, volumes were impacted by our strategic decision to exit DSD, Direct Store Delivery, of our bagged Hispanic spices in the Americas. The exit of a private label product line, and the divestiture of a small canning business in EMEA. Underlying volume and mix performance was flat for the quarter, reflecting a sequential improvement from the fourth quarter where total underlying volume growth was down approximately 3%. In our consumer segment, constant currency sales growth of 1% reflects a 3% increase in pricing actions, offset by a 2% volume decline, which is due to a 1% impact from the DSD business exit I just mentioned, lower volume and product mix in the Americas, specifically in Prepared Food Categories, including Frozen and Asian, consistent with our expectations, and the impact of the macro environment in China.

On slide nine, consumer sales in the Americas were comparable to last year. Contribution from price was offset by a volume and mix decline of 3%. This decline was fully attributable to the DSD exit and lower volume and product mix in the Prepared Food Categories I just mentioned. In EMEA, constant currency consumer sales increased 8%, with a 5% increase in pricing actions and 3% volume growth. Sales growth was broad-based across product categories in our major markets. We are pleased with the volume growth we delivered in EMEA and expect the momentum to continue through 2024. Constant currency consumer sales in the APAC region were down 5%, driven by a 6% volume decrease, primarily due to the macro environment in China. Outside of China, we drove high single-digit sales growth with price and volume contributing equally, and the growth was broad-based across categories and markets.

Turning to our Flavor Solutions segment and slide 12, we grew first quarter constant currency sales by 2%, with pricing contributing 2% and volume contributing 1%, partially offset by a 1% decline due to the divestiture of the canning business and the exit of a private label product line in EMEA. In the Americas, Flavor Solutions constant currency sales rose 3%, reflecting a 2% contribution from price and 1% growth in volume and product mix. Sales growth was led by Flavor, most notably in performance nutrition and branded food service. In EMEA, constant currency sales decreased by 1%, including a 3% impact from the divestiture of the canning business. Pricing actions of 4% were partially offset by lower volume and product mix of 2%, primarily attributable to the exit of the private label product line I mentioned earlier.

In the APAC region, Flavor Solutions sales grew 5% in constant currency, with a 4% contribution from pricing and 1% volume growth. Outside of China, sales remain negatively impacted by geopolitical boycotts some of our quick service restaurant customers are experiencing in Southeast Asia. As seen on slide 16, gross profit margins expanded by 140 basis points in the first quarter versus the year ago period. Drivers in the quarter included favorable product mix, the benefit of our Comprehensive Continuous Improvement or CCI, and our Global Operating Effectiveness Program or GOE, as well as effective price realization. As we look to the second quarter, we expect gross margins to modestly expand compared to the year ago period, as we realized our highest level of pricing and cost recovery in the second quarter of 2023.

This trend may differ from our historical cadence, where gross margin increases sequentially every quarter throughout the year. However, we continue to expect higher margins in the second half compared to the first half of the year. Now moving to slide 17, selling, general and administrative expenses, or SG&A, increased relative to the first quarter of last year, driven by brand marketing and research and development investments, which are partially offset by CCI and GOE cost savings. As a percentage of net sales, SG&A increased 110 basis points. Brand marketing increased significantly compared to the prior year. Our investments are yielding results, and we anticipate continuing to invest behind these efforts. Sales growth and gross margin expansion, partially offset by higher SG&A costs, resulted in an increase in adjusted operating income of 5% compared to the first quarter of 2023, and 4% in constant currency.

Adjusted operating income in the consumer segment was up 2%, with minimal impact from currency. In Flavor Solutions, adjusted operating income increased 15% and included a 1% currency impact. We remain committed to restoring Flavor Solutions profitability, and in the first quarter, as expected, we drove margin expansion versus the prior year in this segment. Our performance this quarter reflects our commitment to increase our profit realization and positions us well to make continued investments in 2024 to fuel top line growth. Turning to interest expense and income taxes on slide 18. Our interest expense was comparable to the prior year. Our first quarter adjusted effective tax rate was 25.5% compared to 21.8% in the year ago period. Our tax rate in the prior year benefited from discrete tax items.

We expect these benefits to occur later in the year for us in 2024. As a result, we continue to expect our tax rate to be approximately 22% for the year. Our income from unconsolidated operations in the first quarter reflects strong performance in our largest joint venture, McCormick de Mexico. We’re the market leader with our McCormick branded mayonnaise, marmalades and mustard product lines in Mexico, and the business continues to contribute meaningfully to our net income and operating cash-flow results. At the bottom line, as shown on slide 20, first quarter 2024 adjusted earnings per share was $0.63 as compared to $0.59 for the year ago period. The increase was attributable to higher operating income driven by sales growth and gross margin expansion, as well as the results from McCormick de Mexico joint venture partially offset by higher adjusted effective tax rate.

On slide 21, we’ve summarized highlights for cash flow and the balance sheet. Our cash flow from operations was strong in the first quarter $138 million compared to $103 million in 2023. The increase was primarily driven by higher operating income and working capital improvements. We returned $113 million of cash to our shareholders through dividends and used $62 million for capital expenditures. As a reminder, capital expenditures include projects to increase capacity and capabilities to meet growing demand, advance our digital transformation and optimize our cost structure. Our priority remains to have a balanced use of cash, funding investments to drive growth, returning a significant portion to our shareholders through dividends and paying down debt.

Importantly, we remain committed to a strong investment grade rating and continue to expect 2024 to be another year of strong cash flow driven by profit and working capital initiatives. Now turning to our 2024 financial outlook on slide 22. Our outlook continues to reflect our prioritized investments in key categories to strengthen volume trends and drive long-term sustainable growth while appreciating the uncertainty of the consumer environment. Turning to the details. First, currency rates are expected to unfavorably impact sales, adjusted operating income and adjusted earnings per share by approximately 1%. At the top line, we continue to expect constant currency net sales to range between a decline of 1% to growth of 1%. Given the momentum in the first quarter, we expect to be closer to the midpoint to high end of our guidance range.

In terms of pricing, we continue to expect a favorable impact related to the wrap of last year’s pricing actions, most significantly in the first half, partially offset by our price cap management investments that will drive volume growth. We expect to drive improved volume trends as the year progresses. Through the strength of our brands and the intentional and targeted investments we are making. As we noted, our initiatives will take time to materialize and we continue to expect to return to volume growth during the second half of the year, absent any new macroeconomic headwinds. Starting in the second quarter, we will have lapped the impact of the DSD and private label product line business exits. The divestiture of the Giotti canning business will impact us through the third quarter.

We expect to continue to prune lower margin business throughout the year as we optimize our portfolio. The impact of which will be reflected within the natural fluctuation of sales. Finally in China, our food away-from-home business, which is included in APAC consumer, is expected to be impacted by slower demand in the first half of the year, and as such, we expect China consumer sales to be comparable to 2023 for the full year. While we recognize there has been volatility and demand in China, we continue to believe in a long-term growth trajectory of the China business. Our 2024 gross margin is projected to range between 50 to 100 basis points higher than 2023. This gross margin expansion reflects favorable impacts from pricing, product mix, and cost savings from our CCI and GOE programs, partially offset by the anticipated impact of low single-digit increases in cost inflation and our increased investments.

Additionally, we expect to begin reducing our dual running costs related to our transition to the new Flavor Solutions facility in the U.K. in the back half of the year. Moving to adjusted operating income, we expect 4% to 6% constant currency growth. This growth is projected to be driven by our gross margin expansion, as well as SG&A cost savings from our CCI and GOE programs, partially offset by investments to drive volume growth, including brand marketing. We expect our brand marketing spend to increase high single digits in 2024, reflecting a double-digit increase in investments, partially offset by CCI savings, and we continue to expect our increased investments in brand marketing to be concentrated in the first half of the year. Our 2024 adjusted effective income tax rate projection of approximately 22% is based upon our estimated mix of earnings by geography, as well as factoring in discrete impacts.

We expect a mid-teens increase in our income from unconsolidated operations, reflecting the strong performance we anticipate in McCormick de Mexico. To summarize, our 2024 adjusted earnings per share projection of $2.80 to $2.85 reflects a 4% to 6% increase compared to 2023. As we head into the second quarter, let me summarize some of the puts and takes. We expect a drive volume improvement, with some pressure expected in Flavor Solutions due to the trends Brendan mentioned earlier. Fully wrapped the impact of pricing actions we took in the prior year and activated a significant portion of our price cap management efforts, and continue our investments in brand marketing, as our programs are working and driving growth. As a result, our operating profit will likely be less robust for the second quarter.

However, we continue to anticipate strong profit growth in the second half of the year. As Brendan noted, we are dedicated to improving volumes. We are prioritizing our investments to drive impactful results and return to differentiated and sustainable volume-led growth. We remain confident in the underlying fundamentals of our business and delivering on the profitable growth reflected in our 2024 financial outlook.

Brendan Foley : Thank you, Mike. Before moving to Q&A, I would like to close with our key takeaway on slide 23. First quarter results in our volume trajectory demonstrate that we are making the right investments to drive long-term sustainable organic growth and reinforces our confidence. We are executing on proven strategies and investing behind our business with speed and agility and in alignment to consumer behavior, and capitalizing on our advantage categories across segments. We are able to do this and continue to make great progress on managing costs, led by our GOE and CCI programs, to support our increased investments in the business and drive margin expansion. Our performance for the quarter, coupled with our growth plans, give us confidence in achieving the mid-to-high end of our projected constant currency sales growth for 2024.

Finally, I want to recognize McCormick employees around the world for their contributions and reiterate my confidence that together we will drive the profitable growth reflected in our 2024 outlook. Now, for your questions.

See also 30 Countries with Most Dangerous Roads in the World and 13 Best Dividend-Paying Stocks Under $15.

Q&A Session

Operator: Thank you. [Operator Instructions]. Our first question comes from the line of Andrew Lazar with Barclays. Please proceed with your question.

Andrew Lazar : Great, thanks. Good morning, Brendan and Mike.

Brendan Foley: Good morning, Andrew.

Andrew Lazar : Maybe to start off, your first quarter organic sales obviously came in better than I think the Street had forecast and sounds like maybe better than you might have initially expected, but of course, it’s a seasonally smaller quarter for McCormick as well. And while you did confirm the full year sales growth range, obviously it was notable in your comments about having increased confidence and achieving the mid-to-high end of your constant currency sales growth range for the full year. So I was hoping maybe you could give us a sense of some of the specifics of what gives you that greater confidence now than when you first gave guidance last quarter?

Brendan Foley: Well, thanks Andrew for the question. Maybe just to open up with, a couple of remarks that I think drive at the heart of your question. We did have a strong quarter. We drove a little bit more on sales, which does give us confidence to be in that mid to upper half of our range. And I think importantly, we accomplished the things that we said we would do, and we made a lot of good progress. We drove sequential improvement, volume improvement in our core categories, especially on spices and seasonings. We said this would be a year of investment, and we were able to quickly execute the programs that we intended to get out in the market. That was an example of increased brand marketing, new product launches are performing well from 2023, and that targeted price gap management execution, and at the same time, we did expand margins.

So we are pleased with the results, yet it is the start of the year, and it’s our smallest quarter as you called out, and so we’re keeping it in perspective. But this is strong progress, and so I think that gives us some of that confidence going into the rest of the year. As we noted on the call or probably as you expect, our pricing assumptions haven’t changed. So this doesn’t imply that volumes are improving as we go through the year. We have targeted investments, and we continue to expect to improve those volume trends as the year progresses and to drive volume growth during the second half of the year. We’re focused on what we can control, and we’re confident in those initiatives that we’ve called out, and hopefully you’ve heard the proof points that we’ve cited.

We don’t necessarily guide by quarter or segment or region, but we can provide some additional color in that. From the segment level, we’d expect those volumes to be relatively similar. We see that same volume growth in both segments in the second half, and as we did call out, the Flavor Solutions volume does fluctuate quarter-to-quarter, so that’s something that we still expect to see across our business, largely attributed just to customer activity. But we do feel like there is a lot of good momentum, I think that we’ve established. The drivers of what’s delivering this, we made substantial investments in the first half of the year on increased brand marketing. So it already happened in Q1. We expect to do some more of that in Q2. We also have new product launches coming out in 2024.

For instance, we called out that flavor maker line that’s going into bricks and mortar or we have a lot of Frank’s innovation coming out in the marketplace as we lead into the grilling season, and we’re really quite pleased with our category management and renovation across our portfolio. So I think that would speak to our confidence in the year as we continue to move forward.

Andrew Lazar : Great. Then, I know volumes, specifically in Consumer Americas, I think were down about 6% in the fourth quarter last year, and as you noted, down a much more modest, sort of less than 3% in the first quarter. Would you expect Consumer Americas volume to sort of continue to improve sequentially from here? And again, in that segment, that it could inflect a positive during the second half of the year? Or are some of the headwinds you pointed out that still exist in Consumer Americas still more of a challenge to that?

Brendan Foley: Let me give more context around Q1, and then that might also help provide sort of a foundation for how to think about the year to go. The volume decline of 2.6% in the Americas for Q1, it was really coming through two key factors. One is that DSD exit that we’ve spoken about quite a bit over the last four quarters. So that definitely was one of the drivers of that 2.6%, and then that decline in the prepared food categories as we noted on the call. So, if you exclude those two factors, volume growth in Consumer Americas would have been flat to slightly positive. So I think that’s kind of a, helps to sort of set a foundation for how we think about the year to go. Also, in our key categories in Q1, growth in spices and seasonings and recipe mixes was pretty healthy.

It was offset by declines in mustard and hot sauce. So, that’s other context I think we would provide against Q1. As we look forward to the year, we expect volumes to continue to sequentially improve and drive volume growth as we get into the second half. So, that would probably be the best perspective I could provide on that.

Mike Smith: I think – to think about too, this is not just about Americas Consumer. I mean, we’re building volume globally in the consumer side, and a lot of the same brand building activities, such as increased A&P, we talked about this in the call, is in all regions. So we continue to support those brands globally in each of our regions, not just Americas.