Matt Smith: Great. Thank you for that all. I’ll leave it there and pass it on.
Operator: Your next question comes from the line of Carla Casella with J.P. Morgan. Your line is open.
Carla Casella: Hi, thanks for taking the question. You mentioned you’re going to be in the inside your three to three and a half times leverage target, or you’re kind of there now, but you’re going to bring your leverage down a turn with these – with the asset sale. Thoughts to take it back up to that level, and I guess what you’re seeing in the M&A market, or are you comfortable staying below it, if you’re there for a while?
Pat O’Donnell: Yes, I think what we tried to illustrate is, we think from our cost to capital being in that kind of three to three and a half times is the right place to be over the longer term, but we’re not in a hurry to go try to drive that as a goal. And so, we’re going to be very disciplined in our approach on capital allocation, and we’re going to pick the investments that drive the highest return. And so, we’ll continue to invest in the business, and that could be – we try to think through build versus buy scenarios, generally speaking, when – in terms of what we’ve done to date. And so, you’ll see us continue to look at how we invest our capital that way, and then we’ll want to maintain that strong balance sheet. So, we’re not looking to go do that. And so, we’ll continue to evaluate what investments make the most sense, what drives the best risk-adjusted return. And then lastly, we’ll think about returning capital as needed.
Steve Oakland: Yes, Carla, I think the biggest thing there is, we’ve got lots of room now. This is really a byproduct of transformation of the company that we started a year ago. So, now the company’s got a lot of flexibility and we have a balance sheet, I think Pat said in the prepared remarks, it’s an asset for us. So, there’s plenty of room to invest in our business and keep our balance sheet incredibly strong.
Carla Casella: Any thoughts on whether the agent rate – I mean, ratings look relatively low for a three times levered credit? Have you had any conversations with the rating agencies?
Pat O’Donnell: Yes, we have ongoing dialogue with the rating agencies, and we expect as we continue to improve leverage, they’ll continue to look at how we’re progressing. We’ve got to deliver some quarters here in terms of profit as well. That’s the other side of leverage, and we look forward to delivering that.
Steve Oakland: Yes. And to be fair, we were unable to give them an exact timing for that note to be paid off. So, and they did not – I don’t think in their calculation, they give us credit for the note as net. So, I think now that that’s cash, they’ll have to re-look at it.
Carla Casella: Right. Great. Okay, thanks.
Operator: Your next question comes from the line of Jon Andersen with William Blair. Your line is open.
Jon Andersen: Good morning, everybody. Thanks for the questions. Two quick ones, and I apologize in advance if these have already been asked. Core retail units were up 1% in the quarter. Where was that relative to kind of your expectation and your guidance going in? And then what should we expect sequentially in the fourth quarter and into 2024 on that core retail unit growth? And then the second question is, with kind of the supply chain disruption that you mentioned, was referred to in the press release. why not kind of optimize the supply chain across the businesses you have today before considering acquiring more? And I’m thinking about that kind of capital allocation decision, maybe returning more cash to shareholders through share repurchases before adding more complexity to the business through M&A. Thank you.
Pat O’Donnell: Yes, Jon, I can start with the first part. I think generally the trends we’ve seen in core retail over the year have been, private label has been relatively flat, and we’ve seen brands down 3%, 4%. And so, our expectation was something similar to see that. So, we’re really pleased to see the 1% case volume increase over the quarter. That – as we’ve pointed out, there’s some movement in there, a couple of category, we had one category crackers where we thought we could do a little bit better than we did, but generally speaking, that’s how we’re thinking about this year.
Steve Oakland: And Jon, this is Steve. You made a really good question here with regard to fortifying those places that might be weak in our system. And we took the opportunity to do that this quarter in our broth business. One of our broth plants was not performing how we wanted it to. We shut the whole thing down. We basically did a full rebuild on it, took the entire staff out and did really comprehensive training. And so, that business has been a drag on us for a number of years. And we – I’m convinced, quite frankly, that it’ll be – as we go into 2024, it’s going to be a contributor to Treehouse. Now, we also did that a couple more times. We did it in the spring, we talked about it in our cookies business. That was a facility that needed some capital.
We did it in the second quarter in our refrigerated dough business. And now we’ve done it in this business. And so, I think we’ve got most of those behind us. So, I agree with you. We’re going to be very careful on complexity. Remember, our strategy is to go deeper in existing categories. So, not to add that additional amount of complexity, but we have actually addressed three of the main areas that have been historic drags on Treehouse. We’ve got those behind us, we think. And so, that’s going to set us up for a really nice 2024.
Jon Andersen: Thanks so much.
Operator: The last question today comes from the line of Jim Salera with Stephens. Your line is open.
Jim Salera: Hi guys, thanks for fitting us in. I wanted to ask, you talked about kind of the private brand price gaps wider than the historical range. Does that give some opportunity for, I’ll say like higher tier private label brands, like a Simple Truth at Kroger or GreenWise at Publix, to kind of expand their portfolio of offerings? And then as a follow-on to that, does that give you guys an opportunity to support that kind of higher tier private label growth and up margin parts of the business?
Steve Oakland: Jim, I do think it gives a chance for retailers. I mean, Simple Truth, you mentioned one brand. I believe that’s the largest natural organic brand in the country now, right? So, I do think different retailers are using private label very differently. We clearly have large customers who want just sheer value out of their private label program, but given the gaps and given the – where the consumer’s head is and all consumers, right, regardless of what they’re buying, there is an opportunity to do more natural, organic, more value-added. And we do see that happening within our business, right? We see strength in those categories. And there’s a lot of talk about all the different changes in purchase behavior, but health and wellness continues to be strong. So, natural organic ingredients continue to grow. They’re not enormous in private label, but they continue to grow.
