Brian Holland: Yes, thanks. Good morning and welcome, Wendy. If I could just ask about the second half of 2023, you reaffirmed the top line guide, but obviously, some moving parts in there, the shifting of the brand spend. We obviously had some of the retail inventory adjustments. So I guess, I’m just wondering, within the reaffirmed guidance, has anything changed around the shape of that specifically? Do retailer inventory adjustments remain a little bit of a pain through the second half or into the second half? And similarly, is productivity ahead of plan, therefore, maybe some capacity coming back a little bit faster than what you would have expected last quarter. Thanks.
Chris Bellairs: So Brian, to confirm, we reaffirm both net sales and EBITDA for the full year. So we feel comfortable about that. And to your point, kind of below the service that there are a number of moving parts. So certainly, versus the original guidance, we believe we’re on track and how we’re getting there is the same or a little different depending upon the quarter. You heard us talk about kind of the view we have for what the third quarter will look like and then that relative to the fourth quarter, of course. On the retailer destocking that took place in the second quarter, we think we’re through the worst of that, that was more of an isolated thing for the second quarter. I don’t see that as continued overhang for the balance of the year.
And productivity, to your point, ahead of plan back-end loaded. So I would say our productivity savings that we’ve built into the forecast right now and it’s embedded in guidance, is about 60-40 back half versus front half. So as we’ve talked certainly in the original guidance, as we talked on the last call, we believe that productivity will ramp throughout the year, and we’re seeing that come to fruition.
Brian Holland: Great color. Much appreciated, Chris. And then if I could just ask, in recent weeks, it is a new story out that Whole Foods has talked about supplier price concessions. I’m just wondering, and I won’t €“ I appreciate you may not want to talk too specifically about any one customer. But just kind of curious what you’re seeing more broadly in your retail conversations, what folks are looking for from you? And really what’s possible because we’re not talking about maybe some moderating of inflation here, but not fully reversing quite yet. So just how you plan on having €“ or how those conversations are taking shape here as we think about where price goes from here?
Wendy Davidson: Yes, good morning. I’ll start and then let Chris add in some additional color. More broadly, when I took a look at the pricing actions that we have taken to date, Hain’s taken pricing to cover for the majority of inflation but not all. And the balance of our profit delivery was through our productivity initiatives. And that’s sort of what you would want to do is you take pricing where you can, but not to fully offset inflation and then there’s some efficiency initiatives you want to do inside the company that will assure that you can cover your profit without passing it all along to customers or the consumer. And I think the team has effectively done that. We still have some inflation pressures coming at us in the space, especially around packaging, but we feel comfortable that we’ve been able to offset the majority of that through our productivity and won’t need to take additional pricing this year except for some €“ a few areas, especially around international.
That said, I think because of that and because of the fact that we are largely an entry price point into the more premium parts of our categories, I’m not anticipating that we’re in a position where we will need to take ourselves backwards. But that’s something that we monitor very closely as Chris said. I don’t know, Chris, if you want to add any additional color?
Chris Bellairs: Yes. Brian, as we said in the prepared remarks, we see inflation plateauing, but actually beginning to sort of reverse and become a significant tailwind in the back of the year. That doesn’t look like it’s on the horizon as we sit here today. And keep in mind, the vast majority of our input costs, our raw material and our packaging costs for the back half of the year are mostly locked in at this point. So even if you did start to see some inflation begin €“ some deflation beginning to emerge, when that will actually pass through to our cost structure and our gross margin is probably still out over the horizon a little bit. And as Wendy indicated there is a difference between what we’re seeing in North America and what you’re seeing internationally still.
I think with CPI coming down month over month in December in North America, good news. And certainly, I think it supports what we said in the prepared remarks around plateauing. In international, there are still some items that are running pretty hot and no sign yet that that’s going to abate in the short-term. So we’re definitely seeing the two segments differently and managing the business differently as well.
Operator: Thank you. Our next question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.
Michael Lavery: Thank you. Good morning.
Wendy Davidson: Good morning.
Michael Lavery: You had your North America organic revenue growth down looks like just a little over 2%, but then you called out the core brands, snacks up 5%, and some of these others in the double €“ strong double-digits category. How much does that €“ Wendy, I know you’re still settling in and fairly new, but how much does that make you think about further portfolio optimization given that there’s still €“ you just mentioned again the value of being streamlined. How much further can you push that if you still have a bunch of these smaller brands that also are quite a bit of a drag on growth?
Wendy Davidson: I think from a portfolio shape, the bigger question I’m asking is less about where we currently are or looking backwards. But as we look forward, are the categories large enough? Are they growing? What’s our relative position? What is our opportunity to be able to get a larger share in some of those categories? That’s probably the bigger focus as we go forward. So those are the things that we’re evaluating. But there are some one-time or sort of episodic events over the last year and then some because of our supply chain situation that resulted in some softness in categories. But I don’t think that’s an indication that those aren’t spaces we want to be in or that those aren’t areas that could turn around. Those are still questions that we need to explore.
Michael Lavery: Okay. That’s helpful. And just a follow-up, a little bit related to Alexia’s question. You also had these €“ the co-manufacturing contracts that I think renewed or reset January 1. Obviously, you’re reiterating guidance, so it must be around what you expected, but just to the extent that that also would spill into next fiscal year. Can you give a sense where those landed? Was that better than you expected? Or offset €“ worse, offset by something else? Or how should we think about where those landed?
Chris Bellairs: Mike, are you specifically talking about the co-man contracts in non-dairy beverage on the continent?
Michael Lavery: Exactly, yes.
