The J.M. Smucker Company

Good morning, and welcome to the J.M. Smucker Company's Fiscal 2024 Third Quarter Earnings Question and Answer Session. This conference is being recorded in all participants' turning lists and only mode. Please limit yourself to two questions and re-queue if you have additional questions. I'll now turn the conference over to Aaron Broholm, Vice President, Investor Relations. Please go ahead, sir.

Good morning and thank you for joining our fiscal 2024 third quarter earnings question and answer session. I hope everyone had a chance to review our results as detailed in this morning's press release and management's prepared remarks, which are available on our corporate website at jmsmucker.com. We will also post an audio replay of this call at the conclusion of this morning's Q&A session. During today's call, We may make forward-looking statements that reflect our current expectations about future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. Additionally, we use non-GAAP results to evaluate performance internally. I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP measures in this morning's press release. Participating on this call are Mark Smucker, Chair of the Board, President, and Chief Executive Officer, and Tucker Marshall, Chief Financial Officer. We will now open up the call for questions. Operator, please queue up the first question.

Thank you. The question and answer session will begin at this time. If you're using a speakerphone, please pick up the handset before pressing any numbers. Should you have a question, please press star 1 on your telephone. If you wish to withdraw a question, please press star 2. For operator assistance, please press star zero. As a reminder, please limit yourselves to two questions during the Q&A session. Should you have additional questions, you may re-queue, and the company will take questions as time allows. Please stand by for our first question. Our first question is coming from Andrew Lazar from Barclays. Your line is now live.

Great. Thanks so much. I guess to start, obviously Smucker delivered 6% comparable sales growth in fiscal 3Q, and I think you expect something similar in the fourth quarter as well. With Uncrustables set to accelerate, as you talked about in the prepared remarks in the fourth quarter, trying to get a sense of what would be the offset or what you expect might slow to get back to that mid-single-digit range in the fourth quarter, or is there some conservatism built in?

Andrew, good morning. We're certainly pleased with our third quarter performance. And as you've noted, we anticipate the business momentum to continue into the fourth quarter. Specifically to your question, we would anticipate PET to slow down a bit in the fourth quarter, but still continue its momentum across the portfolio.

Got it. And I guess just picking up on that thread, Pet food comparable sales obviously increased about 20% in the quarter. And even if you take out about six points of growth from contract manufacturing, it was still pretty solid double-digit growth on the base within pet. And obviously you expect that to slow a bit. But I guess was there something anomalous in the third quarter that led to that strength of growth in underlying pet that doesn't continue into the fourth quarter or the next few quarters? Thanks a lot.

Andrew, we did see a normalization of our pet supply chain, specifically on Meow Mix, in support of manufacturing. That was a contributor to the third quarter, and we would still anticipate in the fourth quarter that pet grows double digits.

Great. Thanks so much.

Appreciate it. Thank you. Next question is coming in from Ken Goldman from JPMorgan. Your line is now live.

Hi. Good morning. Thank you. Last week, you mentioned that marketing would be a headwind to earnings next year, I think partly on Hostess and partly on the base business, I believe. You know, with the understanding that you're not quite in a position yet to give exact guidance, I was just hoping to get a little bit better sense of the degree or magnitude to which marketing for the total company may rise. And I'm asking, you know, especially in light of this year where I think you're, you know, a decent amount below your longer-term target range as a percent of sales. Thank you.

And with respect to marketing associated with our Sweetbanks Snacks business, we anticipate a step up in marketing in the coming quarters in support of the brand and our excitement of the portfolio and the opportunity to continue to advance and support the growth of the Hostess brands or portfolio. We have contemplated that at the time of acquisition. We have contemplated that as we gave our outlook for this fiscal year. And we've contemplated that as we think about what potential contribution postage could provide for FY25. Certainly, we look forward to providing a little bit more of the detail of what that step up is on our fourth quarter earnings call when we give the outlook for next fiscal year.

Okay, I'll follow up offline on that one. And then I wanted to ask, Maybe I missed this, but transaction and integration cash costs, I think you raised the number by around 20 million for that in terms of your expectation for this year. Can you go into a little bit of why that was increased? Unless I'm wrong about that. And were these pulled forward from next year or are they additive to the total deal cost?

Yeah, so it's really a pull forward of some expenses that we had thought would time out into next fiscal year. We have not raised our outlook for the overall transaction and integration expenses. It's more of an impact of timing.

Thanks, Tucker.

Thank you. Next question is coming from Peter Galbo from Bank of America. Your line is now live.

Hey, guys. Good morning.

Morning, Peter.

Mark, maybe you could just expand a little bit on your prepared remarks around Uncrustables, specific to the retail channel. I know you had a difficult compare in the third quarter, and obviously the away-from-home business is growing pretty nicely. But just what gives you the confidence, I guess, that your goal from the mind is to kind of do a double digit in the fourth quarter, specifically in retail?

Yeah, sure, Peter. Thanks for the question. If I may, I might just start a bit more high level on the total business and then answer your question specifically. You know, I think first and foremost, we feel great about our performance this quarter. We feel that it is in many ways a validating moment in our strategic journey. And I know that all of you on the call particularly our analysts, our sell-side community, has been very closely watching us over the last three years along that journey, the reshape of our portfolio, the building of these capabilities, the focus on execution, the marketing expertise, the selling expertise, the supply chain resiliency, all of those things. really for us helped to sort of validate that we've made the right decisions and choices along the way. And ultimately, it starts with the consumer and understanding what the consumer wants. So I would like just to take a moment and just highlight how proud we are of these results, the underlying business momentum, and that we feel very confident in the decisions that we've made and the way that we've been able to reshape our portfolio. As it relates specifically to Uncrustables, you know, our confidence in that brand has not wavered. We're on track to start up the McCulloch, Alabama facility this calendar year. And we knew that we were lapping a huge comp in the prior Q3 because the long month Colorado, the second plant, expansion was completed. And so we were able to gain a significant amount of distribution in last year's third quarter. And so obviously we were lapping that in the retail space. And in addition, you know, we still saw, in addition to the lap in the retail space, we still saw really good performance in both Canada and very strong performance in the away from home space. But I think notably, if you look at consumer takeaway in the quarter, the consumer takeaway remains very strong, which again helps to support our confidence in the double digit growth and the re-acceleration of the brand as we move forward into the next several quarters. And then, you know, I guess just one final point about Uncrustables. Remember, we just turned on marketing. So, you know, we've had great, not only the advertising, both in traditional and social channels, but also the endorsements that we've had across some of our professional sports sponsorships. And then our ability to continue to gain distribution in all of those channels just supports the confidence in that brand.

Great. Thanks, Mark. And Tucker, maybe just to follow up on the contract manufacturing sales, you know, the number kind of keeps trickling down, I think, a bit quarter on quarter. You talked a little bit last week on kind of through the first six months of next year, but just any more call you can give us as we start to kind of model out that specific piece of it into next year.

Yeah, Peter, so we have an outlook for this fiscal year that's approximately $140 million. That's on a 12-month period. As we think about next year, we know that contract manufacturing sales will continue largely through the first half of our fiscal. I think the cadence will be able to articulate a little bit better on our fourth quarter fall, but I think it probably makes sense to sort of work with $140 million and think about sort of the front half.

Thanks, Chris. Thank you. Next question is coming from Tom Palmer from Citi. Your line is now live.

Good morning, and thanks for the question. Maybe I'll just follow up quickly on the contract manufacturing that Peter asked on. So you've taken down your outlook for sales. I think one of the – you talked on some limitations in terms of eliminating stranded costs while the contract manufacturing sales are still going on, but You also haven't changed your earnings solution this year, right, the $0.60. So maybe just get an update. Are you able to eliminate some of these stranded costs as you think about this year? Because I think last week there was a little bit of a call-out maybe as we look at the back half of the year, moving parts with the contract rolling off, having, you know, the stranded costs lag. But, again, seeing that this year, the accelerated roll-off, it hasn't really impacted that earnings delusion.

Yeah, Tom, maybe for awareness purposes, stranded overhead and contract manufacturing sales are independent. So first of all, speaking to contract manufacturing sales, the outlook for this fiscal year today is $140 million. It is essentially at no profit. those sales will begin to go away halfway through next fiscal year. The removal or the elimination of contract manufacturing sales really does not address stranded overhead. Stranded overhead outlook for this fiscal year is a net 60 cent impact. We had said since the time of divestiture, there would be an impact in FY24 and in FY25. To date, we've not outlined what the FY25 impact is, other than to note there will be an impact. As you think about stranded overhead, really what is driving that and the predominance of what will need to be addressed is our network, largely driven by distribution. So as the post volume and or product leaves our distribution environment, we need to right-size that in support of addressing stranded overhead. among other activities that we've already identified and are beginning to address for the benefit of next fiscal year. And then ultimately we believe by the time we step into FY26, we should begin to have address stranded overhead and begin to get it behind us.

Okay. Thanks for that detail. Wanted to maybe clarify some of the costs on Uncrustables. You mentioned the startup costs for 4Q and kind of the full year startup costs. I just wanted to clarify on that, you know, how much the startup costs were in 3Q as we think about kind of the progression into 4Q. And then secondarily, just to step up in advertising, how significant that might be as we think about 3Q to 4Q. Thanks.

So as we think about the Uncrustables venture, there's three areas that we see incremental costs. One is, as we begin to bring the McCall facility online, that becomes an overhead carrying cost. The second component is, as we advance the building of McCall, there's a pre-production expenses that we've also have in our full year guidance. And then the last is, is we have turned on marketing. And so there's incremental marketing and a portion of the outlook for marketing switching from the third quarter to the fourth quarter is not only due to timing, but you're also seeing the step-up associated of uncrustable support for the business or the portfolio.

Okay. I just was hoping for any quantification, I guess, as we think about kind of the progression through Q into 4Q. I understand maybe you guys aren't providing that.

Tom, we're certainly happy to follow up with you afterwards just to help you round out your model.

Got it. Thank you. Thank you. Next question is coming from Chris Carey from Wells Fargo. Your line is now live.

Hi, good morning. I just wanted to drill down on the coffee segment specifically. Can you just give any context on how you see brand performance from here across Brustello and Duncan and Folgers and also how you see Boeing Mix versus Pricing just given the step up in competition, some pricing actions from some of your competitors. And so just any context on how we should be thinking about coffee evolution going forward really on a bowl mix for its price and any comments on the brands.

Sure, Chris. It's Mark. You know, I'd say overall we feel very good. You know, obviously growth, we will continue to be driven by Bustelo and Duncan, and then K-Cups broadly across all brands. Our K-Cup performance in the quarter was very good. We outpaced the category. We gained just over a half a point of share in K-Cup, and that includes solid performance on Folgers. And then, of course, as we've launched Liquid, Some liquid executions and Dunkin', you know, Dunkin' in the shelf-stable coffee aisle has already sort of captured that number two position in liquid coffee concentrate. And we're launching similar Bustelo executions in the same format that are coming here in the next, you know, by the end of the fiscal year. And so we feel very good about our performance in coffee. Folgers is a mature brand, but we're pleased with the performance there as we've continued to, you know, our share of voice. We're advertising on all of our brands. And so we have a very strong share of voice there. And so just feeling generally optimistic about the coffee category in total and and recognizing that we need to continue to shift and start to own some of the liquid executions as we have, but that segment is going to continue to grow. K-cups will continue to be a very important part of the segment, and our goal is to continue to move to where the consumer is headed as well.

Okay, thanks. And just one follow-up on the marketing. expense in Q4. Obviously, understanding the shift in Q3 to Q4, can you just perhaps give a little context around what areas of the portfolio will see the marketing step up in Q4? And just in general, where you see the most potential to invest behind the portfolio from a marketing standpoint, in kind of more of a medium-term perspective, understanding the comments that you made on on Hostess last week.

Thanks. Yeah, it's pretty much across the board in marketing. I wouldn't say it really doesn't skew to one business or another. I think you can generally apply it. It spreads pretty evenly. I guess I would just remind the group as well that we are committed to continuing supporting our brands through marketing. We You know, over time and, you know, depending on obviously pricing and relative pricing, we still strive to be in that six to seven-ish percent of net sales. Obviously, it varies a little bit by category. But marketing is really key to our model, and it's important to maintain a reasonable level of spend to support the brands over time.

Thank you. Next question is coming from Robert Moscow from TD calendar line. Is that live?

Hi, uh, thanks for the question. Um, actually two, uh, first, uh, mark on, on hostess, you know, those of us familiar with that company are, are used to seeing maybe like a one big, uh, product innovation that kind of dominates the pipeline. And when I looked at, you know, some of the announcements for this calendar year anyway, You know, it seemed like more like a couple of little things. So I was hoping you could dive a little bit more into how you view the pipeline this year compared to past pipelines. And then secondly, for Tucker on, on free cashflow, you know, the guides down 30 million, you mentioned a couple of things impacting it. One of which was cash taxes, which is a, I think a $40 million increase. Can you go through the puts and takes as to, it looks like from the puts and takes you might actually be even lower than that 30 guide given the cash taxes. So what was offsetting it? Thanks.

Sure, Rob. It's Mark. I'll start on innovation. You know, I think reading between the lines of your question, one of the things that you might have been referencing is CASBARs, right, because that was a pretty large innovation. and really pleased with the performance on CASBARs. It hits on a lot of different consumer insights, if you will, in terms of why consumers enjoy that product. I would also just point out that Hostus has been very successful in their innovation of doing iterative innovation. I mean, sometimes that's seasonal, sometimes that's, you know, variations on flavors, fillings, those types of things. That will continue. That needs to continue. And, you know, as I've talked about the complementary capabilities that the Hostess team has, as well as our legacy team, we view, you know, without giving too much away, that there continue to be great opportunities for continued growth. innovation being a key driver of growth going forward. So we won't be unveiling anything, you know, just today, but wanted to just make sure that we're focused on it. The pace of innovation, the cycle times of innovation are still very important, and protecting that and fueling it will continue to be a focus for us.

Rob, with respect to your free cash flow question, you're correct. The outlook for the fiscal year is now $500 million. The change of $30 million is largely driven by the cash taxes, as you have noted, being partially offset by just a little bit stronger earnings and also a little bit more favorability coming across all working capital.

Okay. Maybe a follow-up, Mark, on Hostess. I think you fielded a question on Hostess's pricing. It is down in our tracking data, and then there's a couple of competitors who are also down, but then there's another competitor that's up a lot. Can you give more clarity on what Hostess's pricing strategy is for the last six months or so, and is it achieving its objectives?

Rob, just generally, I think that as we look at any of our categories, we want to make sure that we're being thoughtful and prudent about pricing and that we're recovering our costs. And generally speaking, not over-recovering. So at the end of the day, we have to be responsible to the consumer, obviously to our shareholders, and making sure that we're doing the right things for the business. We feel that from a pricing perspective right now we're in a good place, that the pricing is set where it needs to be, and we will continue to compete effectively with the other brands in the marketplace.

Very helpful. Thank you.

Thank you. Next question today is coming from Matt Smith from Steeple. Your line is now live.

Hi, good morning. You've talked about investing more behind hostess, bringing that advertising and marketing closer to a high single digit as a percent of sales. And you're starting that increase, it sounds like, in the fourth quarter. Should we think about the path towards your target level as a multi-year step up, or do you expect to exit next year closer to that targeted investment level?

We do expect this step up over time, and so we may not be completed there in fiscal 25. It will be a journey.

Thank you. And a quick follow-up on the pet sales comment. You talked about growing in the fourth quarter, and I want to make sure, is that growth inclusive of the co-manufacturing sales? And I can leave it there. Thank you.

Correct. My comments around pet growth were inclusive of the co-manufacturing volume.

Thank you. Next question is coming from Alexia Howard from Bernstein. Your line is now live.

Good morning, everyone. Good morning. Can I ask, there's been a lot of discussion about the marketing step up. Can I ask where you're at on promotional activity? Are you anticipating certain parts of the business leaning into promotions more over the coming quarters? And if so, which parts of the business? And I'm wondering how the depth and breadth of promotional activity compares to pre-COVID at this point. Do you still have to get back to those levels, or where are you in that transition?

Alexia, it's Mark. I think we're not seeing anything abnormal in promotional spend. We're generally back to pre-pandemic promotional levels. Across our categories, the categories and competition, in our view, is behaving normally and rationally, so we don't see anything out of the ordinary from a promotional standpoint.

Okay, great. And then just touching on the state of the U.S. consumer, I think at the Cagney Conference last week, there were a number of companies that said things seem to be improving, U.S. consumer confidence seems to be in a reasonably good place. Are you seeing any sort of glimmers of light in terms of emerging from a rather challenging last calendar year as we move into 2024?

A couple comments. I think the first is our categories have continued to perform very well in this environment. I mean, you have, you know, this notion that Within our categories, we play across the value spectrum. So we offer products that are, you know, the consumer views as more value, whether it's Folgers or traditional milk bone dog biscuits are obviously more affordable. We've also seen some of our premium offerings continue to perform well. So I think the breadth of our offering has served us well. We have a relatively low incidence of private labels. competition relatively lower than other categories in what you have in our portfolio. So that's been helpful. Even in areas where you have seen some consumers shifting a bit, what I might highlight is natural meat and pets. So you see our pepperoni brand may be a little bit softer than it has in the past. That's indicative of the entire sort of soft and chewy pet snack category, so it's not just us, but I think it's across competition as well. That said, brands like MilkBone that play across that value spectrum have actually been able to pick up the slack of where we have seen some maybe temporary softness in some of those other brands.

Great. Thank you very much. I'll pass it on.

Thank you. Our next question today is coming from Steve Powers from Deutsche Bank. Your line is now live. Hey, thanks.

Hi, Mark. Hi, Tucker.

Good morning.

Tucker, good morning. So, Tucker, I don't want to beat a dead horse, but I do want to go back to the stranded overhead, the conversation you were having earlier, and just play it back to you. I think a lot of the confusion on this point comes from, I think it was slide 90 in your Cagney deck when you gave a number of fiscal 25 considerations. The way that that slide reads is that is it's a year-over-year impact, right? So all of the considerations on those slides are pluses and minuses relative, it seems, to 24. Stranded overhead is a negative. And it's confusing because, as you said earlier, contract manufacturing and stranded overheads are independent considerations. And while there should be stranded overhead carryover from 24 before it's fully rationalized in 26 and beyond, I guess I'm struggling from what you said earlier to see how it is worse in 25 than in 24. So maybe you can just kind of, maybe I'm misinterpreting either the slide or your comments earlier, but just talk me through how to think about stranded overheads specifically, you know, if you could. Thank you.

Yeah, absolutely, Steve. And we certainly appreciate that, you know, the group is looking for clarity on this. You know, we're doing our best without providing an estimate for FY25. But Going back to this fiscal year, we have a net 60 cent impact to earnings per share as a result of stranded overhead. That net impact is total stranded overhead costs less by TSA income and reimbursement for services. So we will end our transition services agreement about midway through the fiscal year. So therefore, we will not be collecting the income associated with those services. Secondly is we receive reimbursement for utilization of smucker infrastructure, such as our distribution environment. And as a result of that, when ultimately POST exits our distribution facilities, we won't be receiving reimbursement. So the company, through our transformation office, has begun to address stranded overhead this fiscal year for the benefit of next fiscal year, but there are certain activities that we can't address until the TSA is completed, until they exit our distribution facilities, and we can rationalize some of that network. Steve, I hope that helps provide context just around the framework and the mechanics. Certainly appreciate you're not the only one asking, so hopefully that additional color is helpful to you and others.

Yeah, it does. So I think that, so let me just, so it sounds like the plug is that when you talked earlier about contract manufacturing being essentially a zero margin activity, you weren't including in that all of the other income considerations that you just spelled out. Fair.

Contract manufacturing considerations are independent of stranded overhead considerations, whether they be qualitative or quantitative.

Understood. Very clear. Thank you so much.

Absolutely.

Thank you. Thank you. Our next question today is coming from Pamela Kaufman from Morgan Stanley. Your line is now live.

Good morning. I'm sorry to ask this again, but just to clarify Steve's question on stranded overheads, do you expect the magnitude of stranded overhead costs to moderate next year? relative to the 60 cent impact this year so that effectively it creates a tailwind to year-over-year earnings growth?

Pam, I would love to tell you the number or the direction for next fiscal year, but that would be inappropriate until we finish our planning process. So unfortunately, we'll have to do that on the fourth quarter earnings call. I'm sorry.

Understood. And then separately, will there be any lingering impact from the Uncrustables startup costs that impact 2025. And then can you just give an update on the progress that the Transformation Office has made? What have they been focused on and what cost savings opportunities have they identified?

As we ramp up Uncrustables production in McCalla, we will continue to see an impact associated with carrying overhead and a level of pre-production expenses. We're still refining what that estimate will be, but the great thing about McCollough is it will be producing saleable sandwiches for the benefit of fiscal year 25. As you think about our transformation office, we continue to be very pleased with our initial year where we've stood up the office, where we've created almost 10 active work streams in support of cost and productivity savings, in support of realizing synergies associated with the Hostess acquisition, and also in support of addressing stranded overhead associated with the divested pet food brands. And the exciting thing is it's not only contributing dollars for reinvestment back into the business, but it's supporting our earnings and earnings growth and delivery. but it's also enabling new ways of working for our employees and cross-functional teams to really deliver great benefits to our company and organization.

Thank you.

Thanks. Thank you. Our next question today is coming from Rob Dickerson from Jefferies. Your line is now live.

Great. Thanks so much. I don't mean to... I'm just kidding. I don't... Excuse me. I just want to ask a kind of broader question on coffee. You know, I guess, Mark, you know, when we think historically of the coffee business, it's always very strong. You know, it's been a consistent performer. Operating margin, you know, kind of most of the time, let's say, you know, the majority of the time historically, you know, was coming in a little bit north of 30%. Totally understand that at that point in time, input costs were a bit lower. But now, you know, I look at the business and, you know, think, okay, well, main cafe Bustela is clearly doing extremely well. Duncan's still strong with new innovation platform folders, you know, still taking volume shares to the largest brand. So it seems as if the business itself is in a good position. I mean, even on a relative basis across the category, you're investing a little bit in price, but still pass through category. So I'm just trying to right size kind of like, how you're thinking about that margin profile, let's just even say broadly speaking of the next couple of years, you know, vis-a-vis kind of volume and price, right? Because volume's strong, right? And pricing comes through usually kind of in a pastor business. I would think there would be some fixed, you know, cost leverage that would allow you to start to recover kind of back to that 30% plus profile. We're just not there yet. So just curious as to how you're thinking about that. Thanks.

So, Rob, as we think about the coffee momentum through the year, the business continues to perform across the portfolio, and we're very pleased with the brands and with the formats. To your point, we've seen coffee margins improve as we have gone through the fiscal year, particularly as we have lapped larger cost baskets and gotten into more normalized cost baskets. And so we continue to see the strength of the portfolio. I think we're focused on sort of the high 20s, as we've said in previous earnings calls, in support of having healthy margins in the portfolio, but also in support of reinvesting in the business for the health and strength of our brands. And also as we think about our desired growth in liquid coffee, And then furthermore, as we continue to think about the trajectory of coffee, we always assess the volatility in the green coffee market. And we also ensure that we're passing through pricing when appropriate and prudent, both on the upside and the downside of inflation or deflation. And then lastly is the coffee margin profile will continue to be strong in the fourth quarter. But then as we think about our first quarter of any fiscal year, it tends to be our sort of softer margin quarter of the full fiscal year.

Okay, fair enough. And then if I could just ask a fairly simple kind of dumbed-down question. In the frozen handheld spread segment, you know, you've clearly outlined kind of the revenue bogey per year over the next, I mean, this year and then over the next two years. So for modeling purposes, right, it's easy enough to say, okay, well, let's, you know, take what they finished this year in the segment and add $100 million, right? That's Uncrustable. It seems like you have decent visibility on that. Are there any other puts and takes, you know, in that segment that could potentially get that segment, let's say, higher than that incremental $100 million that you've already defined on Uncrustables and You know, I'm partially speaking to the new innovation coming from Jeff and then I don't know if they're offsets on spreads and that's all. Thanks a lot.

You know, Rob, we, we continue to be very excited about the trajectory of the Uncrustables venture brand and or portfolio. You know, we're still on track to the billion dollar ambition by the end of FY 26. You have noted, you know, we said directionally on average, that might be about a hundred million dollars per year. I think right now that's where our focus is to ensure that we get to that ambition as we continue to build out traditional distribution channels and territories along with new distribution channels as well. And so I think that that's probably the framework that I would use as you think about modeling the glide path of Uncrustables over the next several years.

All right, great.

Thanks so much. Thank you. Our next question is coming from Max Comfort from BNP Power Buy. Your line is now live.

Hey, thanks for the question. The first one's on coffee. So on volume mix, it looked like it came in a bit better than we might have expected based on track channel trends during the quarter. I was hoping you could unpack the mix impact versus volume and then also what you were seeing in track channels versus non-track channels and how those factors inform your view of the fourth quarter. Thanks.

Yeah, so as we think about the third quarter performance on coffee, we saw nice momentum from a volume mix standpoint. Obviously, we had the deflationary impact as a result of taking pricing. Continue to be very pleased with the momentum on Cafe Bustelo and Dunkin' along with our K-Cup portfolio. They all performed well on the quarter. Folgers also had a very strong quarter as well, but it was a little softer from a volume mix standpoint as we were lapping a key retailer activity in the prior quarter. And we continue to be very pleased with how we're considering the momentum into our fourth quarter as well.

Thanks. And then on circling back to a slide you put up at Cagney last week. So you laid out two tailwinds and three headwinds for your top line. Three of those are more, you know, are not related to organic. Two of them are. So continued brand momentum and inflationary pressures impacting consumers. I realize you're not giving guidance yet for FY25, but as we think about those two factors, if there's any reason to think one outweighs the other, I'm really just trying to get a sense for how that continued brand momentum could or could not be offsetting the inflationary pressures impacting consumers. Thanks. I'll leave it there.

Yeah, Max, we have really strengthened the portfolio over the last several years with investments across our key brands, along with reshaping the portfolio. And so we feel very confident in the ongoing growth of the Uncrustables Frozen Handheld, demonstrating category leadership and spreads, continuing to demonstrate at-home coffee leadership with the continued growth of the Café Bustelo, Dunkin', and K-cup portfolios, and then thinking about our pet momentum as we think about MilkBone and also MeowMix, and then also the contribution from the Hostess acquisition. But to your point back on the core portfolio, you know, as it relates to just the impact of inflationary pressures associated with consumers' purchasing behavior, we continue to monitor and assess and understand what that means to our core portfolio. But what we have seen over the last several quarters is continued growth across the portfolio and demonstrating volume growth. And our expectation is that we continue to demonstrate momentum.

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Thank you. Appreciate everyone joining the call this morning. It was actually great to see you all at Cagney last week. And obviously there we were able to share our strategy more holistically and why we are so confident about the journey we've been on and the future of this business. Obviously, we hope you recognize the strong momentum in the third quarter. Another great quarter for us, and none of that would have been possible without our awesome employees. So I just want to take a moment to acknowledge our great employees. Again, welcome the hostess folks and the brands to our portfolio, and just remain optimistic for the future, and hope you all have a great day.

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.