Operator: Our next question today is coming from Jason English from Goldman Sachs.
Jason English: Congrats on the strong quarter. Sticking on coffee. What type of supply agreement did you terminate and why?
Mark Smucker: It was related to a packaging supplier, Jason.
Jason English: RTB [ph] or the innovation stuff.
Mark Smucker: No, nothing related to cureg [ph] which we have a fantastic relationship with cureg [ph] strictly around roast and ground packaging.
Jason English: Got it. Okay. And your coffee portfolios performed pretty well in the last couple of years. You’ve had good momentum. In that context, I’m surprised by the leadership transition. So can you talk about what’s driving the choice to put new leadership on top of the business and what you expect the new leadership to do differently?
Mark Smucker: Yes, sure. As these types of things go — first of all, I’m incredibly proud of this leadership team. I could not be more pleased with the work that they have done, really pleased that we’ve been able to maintain some strong leadership from Hostess, really looking forward to working with Dan and welcome many other leaders from the Hostess organization. Also I just want to recognize Joe’s contributions to the coffee space have been fantastic. And so as we transition, Rob will be coming in and managing the coffee business. He’s done a great job on our pet business. And so just looking forward to his contributions. I think he’ll add some nice insights to the liquid space and looking forward to driving that there. And then the other thing I would just highlight is, oftentimes, we have had a few individuals leave the organization to move on to larger career opportunities.
I think that really speaks to the caliber of our leaders and the fact that we’ve done a great job preparing them for what comes next.
Operator: Next question is coming from Rob Dickerson from Jefferies.
Rob Dickerson: Great. Maybe question for you, Tucker, just around the EPS accretion commentary for next year. I mean, clearly, the transaction is supposed to be accretive from time of announcement, I guess, for fiscal ’25. But is that — I’m just curious, when you talk to accretion in ’25, is that accretion off of the ’24 base at Hostess. So then if we were to have grown that, let’s say, at the algorithm, it would have been higher than the base growth, the algorithm on top of that which is, I guess, accretive? Or are you just kind of speaking generally saying it will be adding some incremental positive earnings on top of now an adjusted base in ’24. So not really sure what it means. I’m just trying to get any color I can say.
Tucker Marshall: Yes, Rob, the way that we’re thinking about it is, if you isolated this fiscal year’s impact of the Hostess acquisition which we’ve approximated to be $0.40 dilution and you looked at base Smucker, we would anticipate a level of EPS growth for base Smucker year-over-year. And then we would anticipate Hostess also contributing a level of accretion to the company as well. So hopefully, that gives you some context. And what gives us reason to believe in the Hostess accretion for next year is a full year of ownership as we see business growth and delivery as we begin to realize our synergy outlook. And as we think about the impact of paying down debt and therefore, reducing some interest expense.
Rob Dickerson: Right. Fair enough. All right. That’s helpful. And then I think, Mark, you had — there was a line in the prepared remarks around best-in-class marketing and then also potentially stepping up some investment across multiple platforms. As we think through Q3, Q4, just this year, should we be expecting kind of that uptick in, let’s call it, SG&A more so than the promotional side as we get through the year? Or is there some potential for kind of this balance of increased SG&A on top of maybe some incremental promotional activity given the competitive backdrop?
Mark Smucker: Yes, Rob, thanks for the question. First of all, promotional activity, just one quick comment there is generally normal, right? It’s sort of as expected, business as usual. And our categories are performing generally as we would expect from a promotional environment standpoint. On a marketing and advertising standpoint, we do expect our marketing spend to be up in the remaining 2 quarters of the year. And we have been very pleased with the performance of our marketing efforts. One notable one is that we just launched in the first time in over a decade, our Uncrustables advertising which actually launched during Monday Night Football a couple of weeks ago between the Eagles and the Chiefs. And so that has been a fantastic launch and we expect it to continue to drive awareness for Uncrustables which surprisingly not every consumer has heard about or tried Uncrustables.
So we believe that’s going to help continue to drive demand and household penetration. So just one quick example there that we’re really excited about.
Operator: We’ve reached end of our question-and-answer session. I’d like to turn the floor back over to management for any further closing comments.
Mark Smucker: I just want to thank you all for your time this morning. We had another fantastic quarter and just really pleased with the base business and the timing of us absorbing this new fantastic business which is Hostess. It’s really been an exciting couple of months, a busy couple of months but none of it would be possible without the outstanding Smucker and Hostess employees and really just want to thank them for their continued hard work and dedication to their company and your company and looking forward to continuing to create great shareholder value for you, our investors. Have a great holiday season and thank you for listening.
Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
