Adam Samuelson: Good morning. Hi. So, I wanted to maybe hone in a little bit on the kind of net operating income growth guidance and where you shake out for 2023, because I am just trying to square the thought relative to where profit was in 2020 and 2021. Especially €˜21, you are still at the high end of the guidance range, $80 million, $90 million lower than you were last year, which there shouldn’t be an incentive comp kind of comparison issue in there and you talk about fully recovering pricing €“ cost inflation. Currency has been a little bit of a headwind. Divestitures kind of net sold a few things and volumes are lower. But I guess I am just trying to reconcile kind of where on an absolute dollar basis, we shake out for 2023, inclusive of the incremental restructuring and the cumulative effect of pricing relative to where the profit dollars were 2 years ago, or 3 years ago and how we should think about that at the company level moving forward?
I mean if we rebase somewhat through as we come through COVID, or is there an acceleration beyond 2024 and 2023 in profit growth to kind of get the long-term kind of EBIT CAGR back into that kind of mid to high-single digit range?
Mike Smith: Adam, this is Mike. Good question. I mean we put together the slide in the earnings deck to really walk you from the current guidance. And from a percentage basis, realizing it’s not dollars, but from a percentage basis, constant currency guidance to the underlying base growth. And if you think about it, you look at that underlying base for, once you take out all the kind of I hate to say one-timers, but things are really discrete items year-over-year, and some of which will continue into next year, like the global operating effectiveness program, as you talked about rebuilding there are profit getting back to our long-term profit algorithm by taking out these costs that have really come through during the pandemic.
So, I think there is a case for acceleration into the future. We are not talking about €˜24 or €˜25 right now. We need to nail €˜23. But if you look at that underlying base growth 4% to 6% net sales growth, which actually went out bolt-on M&A is at the high end of our guidance. So, really good underlying performance. We get back to the 7% to 9% operating profit growth. If you really if you think about the recovery of the pricing that we talked about, that allows us to really drive that 3 percentage point increase will get to that 7% to 9%. So, we feel good about that, along with our noble things like our normal CCI program and things like that, investing a bit more in advertising to grow the brand. So, that virtuous cycle we talk about is to get the operating profit and 1% leverage below there, we would love to pay down more debt.
That’s why we are driving hard on our working capital programs this year to get our inventories back down to where they need to be. So, we feel good about like Lawrence said before, it’s a prudent call. We feel really confident about it. And so I think hopefully that helps you understand the moving parts other than the discrete items, some of which the positives will continue into next year, even the net recovery in China, hopefully €˜24 is better than the €˜23. But we feel good about on base.
Lawrence Kurzius: I will add to that, that the guidance that we are giving is balanced and all we have been saying prudent. And just from €“ that’s our opinion. And as you have heard from some of the other questions, that there is somebody think that this actually might even be aggressive. But we have tried to give a balanced guidance here, but our teams are used to winning and have €“ we have very aggressive business plans, and we will do everything we can to not just recover, but exceed. We are used to starting every year-end earnings call with record €“ with the phrase record results. We were not able to do that this year, and we would like to get back on track with that low record of historic performance.
Adam Samuelson: Okay. I appreciate all that color. If I can just ask a follow-up on flavor solutions and just €“ I mean there is a meaningful portion of that business that’s selling into other food companies. And just want to get a sense if you saw or have experience or worried about any destocking amongst some of your food company customers who either have taken similar working capital kind of reduction actions as you are taking yourselves, or are kind of have counseled you to think about that potential moving forward in the context of a still fairly sluggish underlying consumption environment?
Lawrence Kurzius: I would say at this point, no. The fact is that our supply chain recovery, I believe and the feedback we get from our customers is generally ahead of the peers. And so many of them are still fairly hand to mouth right now and have a different set of dynamics. Many of them are still rebuilding inventory €“ sorry, rebuilding inventories in the store at the shelf and correctly getting items reinstated. And those in the area of snacking are just experiencing explosive growth.
Brendan Foley: If I could build on that, Lawrence. Adam, the other thing to consider regarding our flavor solutions business is a good part of that sales growth algorithm is a lot of new product and innovation activity for our customers as well as winning new customers and winning share in the market. And so that factors into how we think about our growth.
Adam Samuelson: Okay. Alright. That’s all helpful. I will pass it on. Thank you.
Operator: Our next question is coming from the line of Chris Growe with Stifel. Please proceed with your question.
Chris Growe: Hi. Good morning.
Lawrence Kurzius: Good morning.
Chris Growe: Hi. I had a question coming back to kind of the U.S. business overall, and Brendan had talked about kind of moderating and trade down in the U.S. I wanted to understand, do you attribute that to your promotional spending? Was that one of the factors that helped drive that? And would you expect promotional spending to be up in fiscal €˜23, because I am trying to square that with the need for more pricing. And can you accomplish the price points you need and also see kind of the value it seems like consumers are seeking here?
Lawrence Kurzius: Yes. I will say that the promotional activity isn’t all about discounting. And so a lot of the promotional activity that we have been able to reinstate is around merchandising activity, which includes displays and digital partnerships and all €“ and these things have very good ROI, and we are quite positive about it. I am going to give the floor here to Brendan though.
Brendan Foley: Yes. I mean Chris, I think as we go into €˜23 and how we look at it, just to build off of where Lawrence is going, a lot of that promotional spending is getting back into driving the categories with our customers. And the feedback we are getting from them is welcome, frankly, in that regard because we want to keep driving up better overall growth. Can you just remind me the front end of your question, though, was in regards to what?
