Pat O’Donnell: No, I would look at that slightly different. I think that the $20 million is really lost tails and profits of what we can’t deliver while we do the ramp up. And so, we’ve done the majority of the investment that we need to do in the fourth quarter, and now we’re on a very disciplined sort of ramp up of that facility and getting all of our lines up and running. And so, that’s really the guidance that – I wouldn’t say that those are adjustments. We’re just trying to show what the impact of that is and then what is the rest of the business doing.
Carla Casella: Okay. Great. That’s helpful. Thank you. That’s all I had.
Operator: Your next question comes from a line of Jon Anderson from William Blair. Your line is open.
Jon Anderson: Hi, good morning, everybody. On Slide 5 in the presentation, there are three categories I think that you kind of call out as categories where you see the (indiscernible) or better competitive positioning in in-store bakery, liquid beverages, and tea. Just wondering if you can talk about those a little bit where you sit vis-à-vis competition, what the opportunity is and what the action plan is to improve that. Thanks.
Steve Oakland: Sure. And if you would’ve gone back a year, you’d have seen coffee there, right? And so, I think what we’re doing is we’re showing you the categories that we feel are good consumer categories, but we need to make some investments to give us the kind of depth and capability to make us that preferred vendor with a customer. So, the Northlake Coffee – we call it our coffee center of excellence, but the Northlake Coffee acquisition has had an enormous impact very, very quickly on the coffee business. We would like to do that in the tea business. Our septic business, we think we’re doing the right thing, right? And we think we were there. We will be back there. And then if you think about things like liquid beverages, that’s a very small business for us.
That’s our ready to drink mostly coffee beverages, and we just think we’re subscale there, right? We do a lot of niche producing there, but it’s subscale and small. So, it’s those kinds of things. And in-store bakery, which we think is a great category, we’re a cookie provider, right? So, we participate – we’re the largest scale provider, but in only one category on that table, when you walk in a grocery store and you see that big in-store bakery table. So, is there an opportunity for us to maybe use that connection with a customer and that infrastructure to have more placements on that table, right? It’s that simple, right? We simply make the best frosted sugar cookies on the table, but we really don’t participate in the rest of it. And so, we would look at capabilities, and maybe that’s a foreshadow of places where we do at least hunt for capabilities, whether they be build or buy.
Jon Anderson: Okay, that’s helpful. Thanks. You mentioned the three facilities that you’ve invested in, cookies, dough, and broth, which is I guess in process. Are there any other, I don’t know if I should call them problem plants like this, that you need to do remediation work in, or is it more kind of routine investments beyond this point? And then just second part, on the $250 million in gross cost savings through 2027, can you just update us on the cadence of those savings, if it’s changed at all from what you presented at Investor Day middle of last year? Thanks.
Steve Oakland: Sure. I’ll take the first one, and Pat, maybe you take the second one. I think, look, we had thought that our cookie plants and our dough plants were under-invested in for a number of years. They were run incredibly hard during the COVID period when you couldn’t do that kind of maintenance. And so, we knew those were areas we needed to invest. We caught those last year. We had funds planned in 2024, quite frankly, for broth, and the broth plant just needed pull forward. But I feel like the autonomous maintenance work we’re doing, we have invested in our engineering organization and our maintenance teams. I think our ongoing efforts will keep us from having the same kind of problems in the future. So, I think we’re addressing maybe the last real risk that was in our system, and quite frankly, drag on our financials, right? Broth should be a driver. This Cambridge facility should be a driver, and that’s what our goal is. It has for 10 years been a drag.
Pat O’Donnell: And then regarding cost savings, so if I take TMOS first, that has the most maturity in terms of launch. And so, we will enter this year with a number of projects in place. And so, think of TMOS as relatively ratable over that three-year period. From a procurement, we’re really pleased with the reaction and the response we’re getting across our base. But that work is happening here in the first part of the year where we’re renegotiating contracts. And so, I would think of that as starting to ramp up into the back half of this year. There’s a few low hanging few things that will pay off a little bit earlier, but think of the bulk of the savings as happening in the second half of this year and into 2025. And then similar for logistics, we reached a major milestone in the fourth quarter where we separated our logistics network from the business that we sold, the meal prep business.
And so, we’re going about the work now to go optimize our network. And so, think of that as ramping up over the course of this year and really starting to pay off into late 2024 and into 2025.
Steve Oakland: I did guide, though, that given the maturity, especially of TMOS and the progress on the procurement exercise, we have more projects in place and more run model savings in this plan. And so, I think it sort of de-risks the plan so far this year.
Jon Anderson: Okay. Thanks very much.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Steve Oakland for closing remarks.
Steve Oakland: Yes. I’d just like to thank you all for being with us today, and we look forward to sharing our progress as we go on this year. So, have a great day, and we’ll talk to you all soon.
Operator: This concludes today’s conference call. You may now disconnect.
