Michael King: Yes, thanks for clarifying that. It was certainly a food service comment. I kind of took out this question specific to food service. And, yes, I would say it’s more mixed broadly. So we do a little better than half of our business is food service, and the other bit is our food and beverage merchandising segment. And so those segments, largely, it’s a mixed bag really. And so destocking, I would agree with your comments on the destocking largely being over, and we’ve now seen real normal seasonality and the normal consumption trends happening. So heading into Memorial Day, Mother’s Day, Father’s Day, we’re seeing protein season kick in, grilling season with our protein business. Eggs have been really strong. It’s the lowest cost protein in the market.
Produce season’s ahead of last year, and it’s ramping up sooner as we enter Q2. So that’s a good thing if you think about last year when we had all the flooding, which delayed the berry season and the fresh produce season, which we participate in. And then, we’ve also seen, to the mixed point, we participate in retail, and so we still see a very depressed, baked goods, bakery with the consumer electing to spend their discretionary dollars elsewhere than on sweets and discretionary cakes and those kinds of things. So hopefully that, I think I answered your question with that.
Philip Ng: Okay, but in terms of volume for your food and beverage merchandising segment, I know there’s some noise with the compares with the meal that you’re, and visits you’re exiting, but on an organic basis, apples-to-apples basis, we shouldn’t expect your volume cadence until you beat the [inaudible], to be softer, right, on a yearly basis, maybe some modest improvement?
Michael King: Yes, we’re glad to maybe low single -digit improvement. Yes, that’s what we’re looking at.
Philip Ng: Helpful. And then one question for Jon, you gave some color in terms of how to think about the first half versus back half, shape of the year from an EBITDA standpoint, sounds like 2Q will in all likelihood beat down a little bit on a year-over-year basis. Do you inflect positively by 3Q and what are some of the things that you have at your disposal? I know last quarter you were talking about playing catch-up on Cola, we’re obviously seeing some movement on inflation, on resin, but just kind of help us think through the EBITDA cadence on a year-over-year basis in 2Q, kind of progressing to 3Q, and certainly you guys sound pretty upbeat about the back half.
Jon Baksht : Yes, no thanks, it’s a good question. So, but I think that’s the right way to think about it. Q2 maybe I’ll just start with Q2 and then we can talk about the back half a bit further. So, Q2 does benefit from seasonality on a sequential basis and then if you look at year-over-year, volumes are relatively going to be flattish, building on Mike’s comment. One thing to note about Q2 as it relates to just kind of EBITDA, I mentioned that we had the Pine Bluff planned outage that was completed in April. The net effect of that is probably a $20 million impact to Q2 that’s complete behind us. We don’t have any other planned outages for the remainder of the year. And then if you look at Q2, we still are anticipating the impact of inflation on food prices on consumers still being felt.
We’re seeing that still in April. I think if you kind of go on to the back part of the year, we’re expecting some of the actions that we’ve talked about to build some volume momentum in the second half. And so part of that is on the top line. We talked, Mike answered the question, around customer wins during the call. So we are expecting some of that to start being felt. And then the cost initiatives, as you mentioned, the cola does have a bit of a lag effect. We tend to do some of our labor increases at the start of the year. And as those labor kind of add-backs come back in; you’ll start seeing that kick in more as the year goes on. Plus we have several cost initiatives that are underway. And those do take a bit of time to start to recognize that in P&L.
But we expect several of those cost initiatives and cost savings to start building up throughout the year. And when I’m talking about some of those cost savings, even just bifurcating that, there is PEPS continuous improvement. Those are initiatives that are underway. And those are more than just back half of the year benefits. Those are longer-term programs that we have in place that we believe will continue to see some savings on. And then just also to delineate the footprint optimization, which is the bigger program we introduced last quarter. I mentioned last quarter’s call, just to reiterate. A lot of those benefits will be seen really starting 2025, although we will see some benefits of that program to begin in Q4.
Operator: Our next question will be coming from Arun Viswanathan of RBC Capital.
Arun Viswanathan: Great, thanks for taking my question. Just wanted to maybe get your food bev merch seems like there’s been some improvement there, and you guys are still going through some restructuring, but it’s nice to see a little bit of improvement there. So maybe it sounds like food service could be a little bit softer, but what are you seeing on the food bev merch side? Thanks.
Michael King: Yes, I think on the food and bev merch, it’s like I said in the prior question, it’s still mixed. I think we’re ahead of where we could be given year-over-year seasonality. So I mentioned the ag season. I think the biggest thing you’re seeing improvement-wise in our food bev merch is some pricing fidelity. And so as we’ve kind of eclipsed some contracts and started to get some help on the price cost side, our value over volume strategy started to come through in that business, which was a little behind our food service business, if you recall, from the Q4 call. So overall, that seems doing well. I think they’re also benefiting quite a bit from the PEPS improvements we’ve made. And so those operations become more stable that’s also flowing through.
Arun Viswanathan: Great, thanks for that. And then I guess just on price cost, resin prices may be ticking up here a little bit. Obviously, you guys have pretty robust pass-through mechanisms, but maybe you can just give us your thoughts on potential volatility, if that would cause any volatility on your margin side, and what maybe your outlook is for the next couple quarters.
