Mike Smith: Yeah, I think, Rob, just a follow up on my point before, from a reported basis, our implied fourth quarter guidance is 3.7% at the low end to 11.2%. That includes about a 2% FX favorable, because FX is back-loaded favorable this year. So, constant currency is 5% to 5.5% range. So, I’m not sure where the 3% is coming from for the fourth quarter you mentioned. Make it as a follow-up with Faten and Kasey, we can make sure your model is okay.
Robert Moskow: That’s fine. So, maybe that answers the question, Mike. So, you’re not expecting any kind of decel in U.S. retail conditions in fourth quarter?
Brendan Foley: No, in fact — yeah. We do believe we’re having again underlying improvement. We’ve mentioned this the last few quarters and we continue to progress there.
Robert Moskow: Got it. Okay. Thank you.
Mike Smith: Okay. Thanks.
Operator: Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.
Rob Dickerson: Great. Thank you so much. I just wanted to ask a question about the renovated SKUs. I think I heard you say in the prepared remarks that — I think it’s 40% of the renovated SKUs, maybe our own shelf. So, maybe just as a reminder, just curious kind of when you think about total SKU selection, it sounds like maybe it’s more spice and seasoning, kind of what percent is being renovated? And then kind of what’s the feedback so far as to why that’s driving velocity? Is it just consumers are more attracted to different packaging or — it doesn’t sound like these are different SKUs. Thanks.
Brendan Foley: Thanks for the question. Just to make sure I clarify what we said in the prepared remarks, about 40% of those SKUs are shipping and the SKUs we’re talking about is part of our core herbs and spices line. These tend to be those straight fill items, meaning it’s a bottle of cumin or a bottle of cinnamon, et cetera, so that’s what we’re calling those straight fill spices. And we have visibility to the SKUs that are being shipped. It’s not as easy to track exactly what has hit shelf yet. And that’s really dependent on the retailers’ plans. But where we know it has, there’s really been an improvement in velocity overall. And one of the drivers of that, just there’s a lot of different benefits from this new package.
We’ve talked about it before, but it is nitrogen-flushed, so there’s even — what we’re providing there is just greater long-term freshness. Until you open up that package, we’re really securing the freshness of that product. There’s sort of a nice click and snap with the cap that really kind of tells the consumer, not only just through seeing but also listening, there’s a real sort of snap to disclosure that kind of again creates to retain freshness. And the package is 50% post-consumer recycled plastic, so it also has a big sustainability benefit. It just has a great appearance on the shelf overall. And so, we knew that this was a strong packaging innovation because we’ve launched it in other markets around the world like in EMEA. And also, it’s also going out to the Asia Pacific too.
So, we have some experience with this package and how it performs. And we’re seeing similar, if not better, velocity performance as we get started here on U.S. shelves. So that’s a little bit of context around what we’re seeing from that renovation in our product line.
Mike Smith: Yeah, just to re-emphasize that 40% is really shipped. I mean, if you walk into a store today, it might be 10% of the items or 5% or 20% depending on the stores, but it depends sometimes on their supply chain, too. So, we see like a good tailwind into next year from this too.
Rob Dickerson: Got it, Okay. Super. Thanks. And then maybe just quickly and kind of simplistically on SG&A. Q3 you ran for total SG&A about 22% of revenues. Clearly, that’s up, but kind of inline-ish, right, relative to maybe the kind of prior four or five years. As we think about Q4 and then I guess kind of going forward, is like 22% of sales, is that kind of fair? Or could there be certain quarter-to-quarter movement? Thanks.
Mike Smith: Yeah, I mean third quarter I think was a bit of a high watermark for SG&A. We had a big incentive comp. As we talked about on the call, incentive comp got billed back for a couple reasons. And remember last year’s third quarter was way down. So, the incentive comp was getting adjusted then. So, the build back this year was a big part of SG&A on a smaller quarter than the fourth quarter. So, you got to think about it in makable terms too. And really then incentive comp was driven, not only by the EPS improvement, with everyone in the company, which is great. Within our regions, the mix of our regional underlying strength of Americas and EMEA region did drive it a bit more NIV — excuse me, incentive comp, but also the great working capital performance.
And people forget that sometimes, I mean we’re an EVA, economic value-added company. We have a working capital charge component of our incentive compensation. So, last year when working capital wasn’t great, we all got dinged for it. This year, we are doing great and coming through incentive comp. It is just another reason we are driving cash and those types of activities that help us lever down and things like that, which are really great. So, a bit more of that impact in the third quarter. And then, brand marketing, we mentioned up 8%. So really strong performance there. And for the year, we stick to our guide as low-single digit A&P.
Rob Dickerson: And maybe if I could just sneak one last one in. Asia-Pac, clearly understand what you’re talking about in terms of just getting a slower China recovery. And I think you called out maybe a few kind of one-off drivers, but maybe it’s more EMEA-driven. Kind of net-net, right, Asia-Pac in Consumer, it was still down a quarter, but clearly Asia-Pac in Flavor Solutions is doing better, and I realize, like, part of your China business is in Consumer, but maybe it’s still somewhat foodservice. So, I’m just trying to understand kind of the comparison between kind of Asia-Pac Consumer versus Asia-Pac Flavor Solutions, and what’s driving the delta? That’s all. Thanks.
Brendan Foley: Well, appreciate the question there, Rob, on China. It’s probably worth unpacking that a little bit. I would say, though, despite the pace of recovery in this business having been slower than expected, we continue to believe in long-term growth trajectory of that business. And it’s also when you step back on a constant currency basis, we are growing this business. Versus a year ago, we’ve grown sales in the high-single digits. So, yeah, we’re disappointed that the pace of recovery wasn’t what we expected it to be, but nevertheless, we are growing sales year-over-year. And even despite the volatility since 2019, we’ve grown our total China business at a 3% CAGR on a constant currency basis, which is kind of in line with the long-term algorithm.
