TreeHouse Foods, Inc. (NYSE:THS) Q2 2024 Earnings Call Transcript

TreeHouse Foods, Inc. (NYSE:THS) Q2 2024 Earnings Call Transcript August 5, 2024

TreeHouse Foods, Inc. misses on earnings expectations. Reported EPS is $-0.31931 EPS, expectations were $0.13.

Operator: Welcome to the TreeHouse Foods’, Second Quarter 2024 Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. At this time, I would like to turn the call over to Matt Siler of TreeHouse Foods for the reading of the Safe Harbor statement.

Matt Siler: Good morning, and thank you for joining us today. Earlier this morning, we issued our Second Quarter earnings release and posted our earnings deck, both of which are available within the investor relations section of our website at treehousefoods.com. Before we begin, I would like to advise you that all forward-looking statements made on today’s call are intended to fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections and involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. Information concerning these risks is contained in the company’s filings with the SEC.

On September 29th, 2023, we completed the divestiture of our Snack Bars business. Consistent with prior quarters, we will discuss our results on an adjusted continuing operations basis. A reconciliation of non-GAAP measures to their most direct comparable GAAP measures can be found in the release, and the appendix tables in today’s earnings deck. With that, let me now turn the call over to our Chairman, CEO and President, Mr. Steve Oakland.

Steven Oakland: Thank you, Matt, and good morning, everyone. I’m happy to be here with you today to discuss our Second Quarter Financial Results and our update on the outlook for the remainder of the year. First, I’d like to reflect on the first half of 2024 where we met our financial objectives. We achieved the upper end of our net sales guidance and came within a few million dollars of the upper-end of our adjusted EBITDA range. We made significant progress converting a set of net sales pipeline opportunities which should contribute to positive volume growth in the second half. Additionally, we executed well against our supply chain initiatives, driving improved service levels across our network, as well as securing anticipated savings which will provide benefits this year and beyond.

I’m pleased with our strengthening momentum, including at our broth facility, which is operating in line with our plan, and ahead of the second half seasonal peak. This progress reinforces my confidence that we have positioned the business well to deliver on our annual net sales targets and to achieve our updated profitability guidance. And importantly, it’s coming at a time when the private brand consumer landscape is also improving. With that, let me dive into our second quarter results where our organic volume trend improved sequentially. As you can see on Slide 4, we delivered net sales of $789 million, while down 1.9% year-over-year, it was above the midpoint of our guidance range. Our adjusted EBITDA of $71 million exceeded our guidance range of $55 million to $65 million for the period.

We are reiterating our 2024 net sales guidance, supported by volume growth in the third and fourth quarters. Additionally, we are narrowing our adjusted EBITDA range to $360 million to $380 million. Pat will provide more detail on our second quarter results and this guidance in a few minutes. Turning now to an update on the industry. As you have heard me say before, Treehouse remains attractively positioned at an intersection of two incredibly powerful long term consumer trends. The growth of private brand groceries in North America, and the consumers’ shift towards snacking. As you can see on Slide 5, private brands have consistently gained share over the last two decades, and we believe private brands have significant runway for growth. Many grocery retailers also see significant runway for growth in private brands, and are making their own strategic investments.

As you can see on Slide 6, recently Walmart launched bettergoods, the largest food and beverage private brand in roughly 20 years. There are other examples of significant investments in private brands with both Kirkland and Simple Truth. And finally, Aldi continues its store based expansion across the US with an assortment that is focused almost exclusively on private brands. Taking a closer look at the second quarter. In the categories in which we operate, private brand unit sales in measured retail channels grew low single-digits compared to national brands, which declined slightly. Additionally, you can see on Slide 7, that price gaps between national brands and private brands remain elevated relative to historic levels in our categories.

Although we expect these gaps may narrow as national brands promote during the holiday season, we believe the gaps will be well within the historic range that supports continued private brand growth. Taking a look at Slide 8, we provide an illustration that breaks down key elements of our net sales growth strategy. As we’ve discussed previously, core growth refers to the external factors driving our sales. It considers category growth, changes in private brand penetration, and our retail partner strategies, and level of their investment. In addition to the core growth, we believe we can deliver additional growth through what we call a Treehouse, our depth. Depth can be broken down into several elements. One, having advantaged capabilities within our categories where we operate that makes us stand out as the private brand supplier of choice.

Two, competing in categories where there is high demand, and we are making investments to capitalize on that demand. Three, leveraging our unique category expertise and consumer insights to help our retail partners drive growth in the overall category. And finally, understanding our customers and the categories will allow us to drive enhanced margins over time. As a result of this strategy, we have created a net sales pipeline that we are excited about. We are executing well against our plan for 2024. We’ve secured a variety of opportunities throughout the first half of the year, including wins in cookies, refrigerated dough, pretzels and pickles, bolstering my confidence in our ability to deliver volume growth not only in the third and fourth quarters, but beyond.

Next, I’d like to briefly discuss our supply chain initiatives, which are outlined on Slide 9, and are core to our company’s strategy of driving profitable growth. We continue to invest directly in our supply chain to drive consistent execution throughout our network, enhancing our competitive position and strengthening our partnership with customers. Our teams are focused on three priorities: Driving manufacturing efficiencies through TMOS, our TreeHouse Management Operating System; procurement savings opportunities; and improving the efficiency of our distribution network. The benefits of TMOS can be seen in our Overall Equipment Effectiveness, or OEE. We have seen good momentum throughout the first half of the year, driving an increase in our service level metrics as planned.

We also feel confident in the benefits we can achieve from our recent work across procurement. This particular supply chain initiative is integral to the roughly $50 million of gross cost savings we outlined as a driver of the improvement in our second half profitability. More specifically, in many cases, the procurement contracts we have negotiated provide savings in the current year, as well as the opportunity for further savings throughout the life of these agreements. Finally, work to improve the efficiency of our distribution network continues with logistics utilization and efficiency initiatives providing savings today. We continue to develop long term strategies as it relates to our distribution network consolidation, which will bear more fruit over time.

Moving on to an update on one of our broth facilities. As you can see on Slide 10, our efforts continue to progress as anticipated, and I’m happy to report that we are running the key broth production lines and shipping product from this facility today. We have upgraded our equipment, refined and improved our processes, and are progressing against our internal time line. Looking ahead, we will continue to work with our customers to fulfill current needs and prepare for the upcoming broth season. We believe the restoration of this facility will provide the planned contributions to net sales and profitability in the back half. Before I turn the call over to Pat, I’d like to provide a brief update on our sustainability efforts. Last week, we released our annual Environmental, Social and Governance report, which captured the progress we’ve made in 2023 relative to our sustainability goals, including reducing greenhouse gas emissions and increasing the use of recycled content.

Sustainability remains an important focus area for many of our customers, and we are continuing to make progress on our initiatives. We believe this work will represent a long term competitive advantage for TreeHouse and better align our business strategy with the priorities of our key stakeholders. We are pleased with the strides we are making, and encourage you all to read our 2024 report. With that, I’ll now turn the call over to Pat for further detail on our second quarter results and our updated 2024 outlook. Pat?

Patrick O’Donnell: Thanks Steve, and good morning, everyone. I’d like to start by thanking the entire TreeHouse team for their hard work this quarter, which is setting us up for success in the second half of 2024 and beyond. I’ll begin with a summary of our second quarter results on Slide 11. Net sales and adjusted EBITDA both declined relative to the prior year as expected. Net sales of $789 million was above the midpoint of our second quarter guidance of $770 million to $800 million. Adjusted EBITDA of $71 million exceeded the top end of our guidance range of $55 million to $65 million, which was primarily driven by improved execution across our supply chain, and to a lesser extent, a modest timing shift into the second quarter on favorable freight expense.

On Slide 12, we have provided further detail on our year-over-year net sales drivers. Our second quarter net sales were down less than 2%, which reflects an improvement in trend compared to the last couple of quarters. While organic volume and mix was down year-over-year, recall, we are lapping the business that we exited last year. Importantly, we are now through the impact of those business exits and coupled with pipeline wins and strong private brand consumer trends, we have great confidence in returning to volume growth in Q3 and Q4. Additionally, the constraints at one of our broth facilities provided a drag of approximately 1%. This was more than offset by the volume contribution from our Coffee acquisition. Finally, pricing was a drag of 3% due to targeted commodity driven pricing adjustments as we expected.

Moving on to Slide 13, I’ll take you through our adjusted EBITDA drivers. Volume and mix including absorption was down $1 million in the quarter, primarily driven by the lapping of business exits that I mentioned earlier. PNOC, Pricing Net Of Commodities contributed $7 million year-over-year. This was primarily driven by our procurement supply chain initiatives where our teams are making great progress that should continue to benefit us moving forward. Operations and supply chain were a $3 million headwind versus the prior year, primarily driven by higher labor costs and the impact of our broth facility restoration, which were partially offset by favorable freight costs. Lastly, SG&A and other contributed negative $8 million versus last year, primarily due to investments in employee rewards and benefits and less TSA income relative to the prior year as we expected.

Moving on to our capital allocation strategy which is outlined on Slide 14, the Board and management continue to be focused on deploying capital in a manner that enhances returns for shareholders. Our first priority remains investing in our business, which we do organically through CapEx investments and inorganically by strategically adding depth and capabilities. We continue to expect CapEx of about $145 million, which reflects investments in our supply chain and building capabilities to drive incremental growth. We also continue to execute on our share repurchase program. In the second quarter, we repurchased $45 million of common stock, bringing our year-to-date repurchases to $89 million. We will continue to be disciplined and look at all capital deployment decisions by evaluating risk adjusted returns, while maintaining our balance sheet strength.

Moving on to our guidance on Slide 15, we are maintaining our full year net sales outlook of flat to 2% year-over-year growth for a range of $3.43 billion to $3.50 billion. We continue to expect our organic volume and mix to drive our sales growth in 2024. From a pricing perspective, we are still planning for a modest commodity driven decline year-over-year. We continue to anticipate this will be mostly offset by a slight volume and mix benefit from the Coffee and Pretzel acquisitions that we completed last year. Additionally, we have narrowed our adjusted EBITDA guidance range to a range of $360 million to $380 million, which represents a $10 million reduction to the upper end of the range. This update accounts for our performance for the first half of the year, where our adjusted EBITDA was a few million dollars short of the upper end of our guidance range.

Additionally, we assume that some of the consumer driven mix trends continue into the second half of the year. We still expect free cash flow of at least $130 million, and our guidance for net interest expense of $56 million to $62 million and capital expenditures of approximately $145 million is unchanged. As it relates to the third quarter, we expect net sales to be in the range of $865 million to $895 million, representing flat to approximately 4% growth year-over-year. Importantly, we expect volume to drive our third quarter net sales growth with flat pricing. Our third quarter adjusted EBITDA is expected to be in the range of $98 million to $108 million, which reflects a timing shift of favorable freight expense moving into the second quarter, which we do not expect to benefit us in the second half.

As you’ve heard throughout this morning’s call, we are confident about the momentum underway, and in our ability to deliver the second half. On Slide 16, we’ve outlined the building blocks we expect to drive the second half net sales improvement. These drivers, include: One, seasonal volume. Given assortment within our portfolio, we tend to have our highest volume periods in the second half of the year, driven by categories including coffee, creamer, hot cereal, refrigerated dough and broth. We continue to expect that our broth business will be a stronger contributor in the second half. Two, net sales opportunities. We’ve talked about the net sales pipeline that our teams have been working to convert. We have good visibility into those contracts and expect an uplift in the third and fourth quarters, as well as into 2025.

And three, incremental pricing to recover inflation. In the first half of the year, we executed pricing to recover cocoa inflation. This pricing is effective beginning in the third quarter, which will benefit our second half net sales. We’ve provided a similar analysis as it relates to our anticipated adjusted EBITDA performance on Slide 17. The primary drivers of our second half improvement includes the following. First, the seasonal volume and mix uplift we typically experience in the second half, as well as the conversion of new net sales opportunities from our pipeline and our broth business returning to normalized service levels. Second, supply chain initiatives. Our teams have been making great progress in executing our supply chain initiatives around TMOS, our distribution network and procurement, which we expect to be the largest contributor to our second half profitability.

And third, the aforementioned cocoa pricing we implemented will also benefit our second half profitability as we get back some of the drag we incurred to our profit in the first half. In closing, I’m pleased with the improved business momentum heading into the second half of the year, and we will continue to focus on successful execution as we move forward. With that, I’ll turn it back over to Steve for closing remarks. Steve?

Steven Oakland: Thanks Pat. Before I open the call up to your questions, I’d like to end where I started, which is that the business is well positioned for the remainder of the year. To that end, I want to thank the entire TreeHouse team for their hard work and dedication in driving our strategic execution as a private brand leader. Our topline performance is improving, and we are on track to deliver organic volume growth in both the third and fourth quarters. We are executing on our initiatives across the supply chain, which should help drive gross margin expansion and improve the consistency of our performance in the second half. And we have restored production capability at our broth facility in line with our plan, and are well positioned to deliver for our customers ahead of the upcoming peak season.

We will continue to prioritize execution, sales and volume growth and margin expansion as our strategy plays out and we capitalize on the benefits from the industry and consumer trends. With that, I’ll turn the call over to the operator to open the line for your questions.

Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Andrew Lazar from Barclays. Your line is open.

Andrew Lazar: Hi, Steve and Pat. Good morning.

Steven Oakland: Good morning. Good morning, Andrew.

Andrew Lazar: Hey there. Steve, to start off, you’ve talked a lot about the pipeline in sales that are starting to convert into wins, which is nice to see, I guess how much or how would you dimensionalize how much of the full year is based on wins that you sort of know are converting like you’ve got the — It’s secured, if you will, and have visibility to it versus ones that could convert, and if they do, I guess would represent either upside to sales growth in ’24 or give you more visibility into ’25.

Steven Oakland: Sure. Andrew, the guidance that we’ve given today counts those things that have been secured, right? And so, if you think about the back half, there’s a couple of things at play here. Obviously, restoring our broth facility was key and we’ve guided that, that’s nicely on track. And then as we lap those losses, turning those into wins, right. And so, the numbers we have in the deck are, you know, reflect just those things that are committed. Are there some opportunities that could maybe impact the fourth quarter? Certainly there are, but they’ll actually be more impactful for next year.

Andrew Lazar: Got it. And then you talk about private label share growing in your categories. I know it’s always a harder one, but what about TreeHouse’s share of private label in your categories? I mean, have you seen that, I guess stabilize or start to improve, and if not, when would you expect that?

Steven Oakland: Sure. And honestly, that’s been the most frustrating part of both the exits that we did last year in the broth facility because it’s masked that to the outside world. So, we’ve seen ourselves do well in places like cookies, in places like dough, in places like crackers, but it hasn’t been obvious outside the business. And so, we expect that to turn in the back half. In fact, the guidance that we have, if you look at the midpoint of that, would suggest we’ll need to do a little better than the marketplace. So I think that reflects a little gain of share, at least specifically in the fourth quarter, you’ll see a gain of share.

Andrew Lazar: Great. Thank you. And then a real quick one, just Pat, if you’ll be able to quantify just the amount of the timing shift of the freight benefit from 3Q to 2Q? Thanks so much.

Patrick O’Donnell: Yes, I think that’s a few million dollars of the over delivery that we saw in the second quarter.

Andrew Lazar: Thanks very much.

Steven Oakland: Great. Thanks, Andrew.

Operator: The next question comes from Matt Smith of Stifel. Your line is open.

Matt Smith: Hi. Good morning. Pat, I want to ask, you highlighted $50 million of gross productivity savings in the back half of the year. If we go back to the investor day you were targeting, $250 million through 2027. Are you seeing, have you seen anything in your procurement activities or the supply chain and distribution review where there’s potential upside to that $250 million as you move through the years?

Patrick O’Donnell: I think we feel really good about delivering that $250 million, Matt. So, I think it’s probably, given that that was a multi-year target, it’s probably hard to say upside today. I think we feel really good about the progress in terms of what we expect to deliver this year. And then obviously, everything we do this year helps us into the future years as well as that lapsed. And so, we feel really confident about where we’re at and the progress that we’re making across all three elements.

Matt Smith: Thank you. And could you talk about the bidding environment? You talked about winning a couple of contracts in hand with line of sight into potential future wins. Are you seeing a fairly rational bidding environment? Has there been any impact from some of the deflationary inputs that we’ve seen, especially across grains?

Patrick O’Donnell: Yes. I don’t think we’re seeing anything that we would describe as irrational bidding behavior. I think we are in an environment that we, you know, we feel confident in, and we feel good about the categories that we’re in, too, which was one of the changes with our strategy of, in growing categories, we feel like we compete really well, and we’re in more of those today than we were before.

Matt Smith: Thank you. I’ll pass it on.

Operator: The next question comes from the line of Robert Moskow of TD Cowen. Your line is open.

Robert Moskow: Hi there, Steve.

Steven Oakland: Good morning, Robert.

Robert Moskow: I kind of wanted to gauge your thinking on how the portfolio stands today. Do you think that you’re done on rationalization efforts? There’s been so much over the years, and you yourself said it’s been frustrating because it doesn’t show the market share gains you’re picking up. Do you think you’re done? Or do you — is there more you have to do? And then secondly, on broth. Are you now fully back to where you were before in terms of sales on broth. Like in the back half of this year, do you expect to be 100% of the business, or are you just making improvement here compared to last year and still have work to do? Thanks.

Steven Oakland: Sure, sure. Let me touch on the first one. Obviously, looking at your portfolio was good hygiene, right, to constantly be doing that. You saw that we have impaired our ready-to-drink coffee business. That is a very small business, it’s like $25 million in sales. That is a category that — actually the capital was going in when I arrived, right, and the previous management team had a pro forma and a plan there that, that was going to become a nice private label business. Well, unfortunately, not all of those things work out, right? I think the private brand share and ready-to-drink coffee is like 1%, right? And so we’ve worked closely with a number of retail customers that tried that, and that is just one of those categories that the consumer buys brand, not private label.

So that one makes sense to us. And so we think those kinds of things need to happen. But for the most part, Rob, we’re in a great place, right? We like the categories we’re in, we have a couple of categories that we talk about where we’re not as — we’re not as deep as we’d like to be, and we’ll make investments. So I would say it’ll be investments rather than divestments, right or rather than exits there. So, the portfolio is in good shape. And then when it comes to broth, I think we’ll be very close to fully 100% by the fourth quarter. It may take us into the first quarter to be absolutely 100%, but we’ve got the four key lines running in our Cambridge facility today, and we’re building momentum there. So, we think we’ll start to fill the pipeline in the third quarter and we’ll serve the demand.

The interesting thing is, and I think I’ve spoken to this before, is we actually have more business on the books today than we did before this all happened. And some of our largest customers and their QA departments have been through this journey with us, and see the investments that we’ve made and feel very confident in our ability to deliver long term. And so they’ve actually awarded us some more business, right? So, we feel good about that. It’s a tough thing to run, it’s a very complicated process, and that capacity is very valuable, and we’re committed to continue to invest in it. So, we feel good about it.

Robert Moskow: Thank you.

Operator: The next question comes from the line of Carla Casella of JP Morgan. Your line is open.

Carla Casella: Hi. Thank you for taking the question. You may have said this, I might have missed it. Did you say what the impairment was related to?

Patrick O’Donnell: Yes, we just covered that. So that was on some assets within our ready-to-drink beverage business, where we’ve made the decision to move on from that business this year.

Steven Oakland: Yes, Carlos, as I just mentioned that was a very small business that they invested in that, in fact, that capital was literally being put in the ground as I arrived, and it never lived up to the pro forma that the original management team put together for that.

Carla Casella: Okay, great. And then you talked about a good new sales pipeline. I’m just wondering, is it, how much of that is coming from new accounts, or is it depth within existing accounts and kind of whether you see growth coming more from one of those elements or the other going forward?

Steven Oakland: I would say it’s nicely balanced. I think there’s depth in categories, right, where we have brought back a lot of our assortment, but there’s new items. I mean, I take it back to seasoned pretzels, for example, the investments we made in capacity and capability there, that business is, there’s a number of wins in that as we go forward, both in this year and into next year. So it’s a combination of depth, things like that, in categories as well as, we still have a number of customers who don’t buy every category from us, right. And so we’re picking up some categories at existing customers.

Carla Casella: Okay, great. Thank you so much.

Operator: The next question comes from the line of William Reuter of Bank of America. Your line is open.

William Reuter: Good morning. In a question regarding the portfolio, a couple of minutes ago, you mentioned that you’re probably going to be growing more so than divesting at this point. Are there further opportunities for M&A? What’s the pipeline look like? What’s your appetite and what’s the — how are valuations?

Steven Oakland: Sure, I think. Thank you, Bill. I think there are some opportunities for us, and I would, though, liken them more to what we did in Coffee, right? It’s a build versus buy decision. I still think it’s really hard to put capital in the ground at a very fast pace, right? It still takes longer and costs more to build these new factories. And so, we think there’s a couple of assets around that would tuck-in nicely. That may bring some sales and EBITDA along with them, but more importantly, bring capability, capacity in categories where we know there’s good private label growth rates. So, I would say it’ll be more that kind of thing at this point, but there are a couple around. And when it comes to valuations, I think those sell at more reasonable valuations than growing businesses, right? When you’re buying CapEx or buying capital assets, it’s easier to value.

William Reuter: Got it. And then — and a question, I think it was to Carla’s question, but you talked about how you’ll be at full capacity in the Broth facility by the fourth quarter, you have some new wins. Were there any accounts that you permanently lost or that have not come back and felt comfortable buying at the same level that they had before in Broth?

Steven Oakland: Yes, sure. That’s one of the toughest conversations I have, because I know most of these retailers personally, right? There are some of our smaller customers when we had to allocate current production that we were unable to provide anything meaningful for, and so they were able to find those supplies elsewhere. So, in the end, that may take some complexity out of our network, but we always hate to disappoint anybody. So there were a couple smaller ones that we had to leave.

William Reuter: Got it. All right, that’s all for me. Thank you.

Operator: The next question comes from the line of Truist Sec CIB. Your line is open.

Steven Oakland: Hi, Bill.

Jack Crawford: Hey, this is Jack Crawford on the line for Bill Chappell. We’ve seen various reports about a slowdown in QSRs. Could you give any color on what you’re seeing there? And then just remind us what percentage of the business is exposed to foodservice?

Steven Oakland: Sure. Food services is small for us, right? It’s less than 10% of our business. The only exposure we have to QSR is in our pickle business, and it’s with one of the hottest QSR chains in the country. So we’ve not seen that impact. But most of our business is grocery, so we see the same numbers, we think food service in general is soft, but it isn’t impacting what we’ve guided so far.

Operator: Your next question comes from the line of Jim Salera of Stephens. Your line is open.

Jim Salera: Hi, guys. Thanks for taking our question.

Steven Oakland: Hi, Jim.

Jim Salera: I wanted to ask a little bit about some trends we’ve seen at least in my area. I’m in the Midwest, where on a lot of displays, we’ve noticed an emerging presence of private label coupled with kind of prominent branding displays on the end cap. And I’m just wondering if that’s something that you guys have seen kind of across your categories and if that’s perhaps supporting some of the strong market share trends we continue to see in private label?

Steven Oakland: I think our retail partners are listening to their consumer, right. And their consumer, at least a segment of their consumer, is really looking for value. And so private label is a way for them to do that. If you look at the current price gaps, you can see that the retailer is investing in private label value, the value proposition, right? So I think you have to put that all together. And I don’t think it’s a Mid-West thing, I think it’s a national thing, quite frankly. What we see is the private label is that arrow in the quiver to provide value. And it’s positioned really well with quality assortment and price. And so, I think you’ll see that merchandising continue, so…

Jim Salera: Okay, that’s helpful. And then maybe as a follow up to that, do you have a — one of the shifts to private label has also been kind of a channel shift away from traditional retail towards dollar and more value-oriented channels. As we think of your customer exposure, is there any channels that you’re either under penetrated or over-penetrated in, that we should think about as consumers shift the channel shopping, even if it’s in the near-term, that’s maybe a tailwind or headwind relative to your portfolio?

Steven Oakland: I would say you’re right, it’s gone to mass, right, if you look at where the share gains have been, right, it’s been mass, hard discount, those kinds of things. We’re represented really well in those channels. I mean, we have a core grocery business that we think a lot of. And you know, those retailers are probably the ones where you’re going to see the most leverage of private label. So, we’ve got a pretty nice balanced distribution base at this time. So we feel really good about it. We have seen that coming, and I would tell you that we talk about sales pipeline. That’s a place we’ve leaned in, right, to balance that. And the number of the wins that you’re seeing are going to be in those channels where we know there’s growth right now. So, well, that’s the nice thing about a pipeline this size. We can lean in or lean out in certain places to try to manage that.

Jim Salera: Okay, great. Thanks for the call, guys. I’ll hop back in the queue.

Steven Oakland: Thanks, Jim.

Operator: This concludes our Q&A session. I would now turn the conference back over to Steve Oakland for the closing remarks.

Steven Oakland: Well, I’d just like to thank everyone for being with us today. I know it’s a dynamic moment, given all of the things going on in the public markets. But, I’d reiterate that I think we’re positioned really well, and I’m really pleased and proud of the team, and I look forward to being with you three months from now when we share the pivot that’s happening here at TreeHouse. Have a great day.

Operator: Thank you. This concludes today’s conference call. You may now disconnect.