Flowers Foods Inc (FLO) 2025 Q2 法說會逐字稿

Good day and thank you for standing by. Welcome to the Flowers Foods second-quarter 2025 results conference call.

您好，感謝您的支持。歡迎參加 Flowers Foods 2025 年第二季業績電話會議。

Please be advised that today's event is being recorded.

請注意，今天的活動正在記錄。

I would now like to hand the conference over to your opening speaker today, JT Rieck, Executive Vice President of Finance and Investor Relations. Please go ahead.

現在，我想將會議交給今天的開幕演講者、財務和投資者關係執行副總裁 JT Rieck。請繼續。

Thank you and good morning everyone. I hope you all had the opportunity to review our earnings release, listen to our prepared remarks, and view the slide presentation that were all posted earlier on our investor relations website. After today's Q&A session, we will also post an audio replay of this call.

謝謝大家，早安。我希望大家都有機會審閱我們的收益報告、聽取我們準備好的發言並觀看之前在我們投資者關係網站上發布的幻燈片演示。今天的問答環節結束後，我們也將發布本次通話的音訊回放。

Please note that in this Q&A session, we may make forward-looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risk and uncertainties that could cause actual results to differ materially. In addition to what you hear in these remarks, important factors relating to Flowers Foods' business are fully detailed in our SEC filings. We also provide non-GAAP financial measures for which disclosure and reconciliations are provided in the earnings release at the end of the slide presentation on our website.

請注意，在本次問答環節中，我們可能會對公司的業績做出前瞻性的陳述。儘管我們認為這些陳述是合理的，但它們受風險和不確定性的影響，可能導致實際結果大不相同。除了您在這些評論中聽到的內容之外，與 Flowers Foods 業務相關的重要因素在我們的 SEC 文件中也有詳細說明。我們也提供非公認會計準則 (non-GAAP) 財務指標，其揭露和對帳在我們網站投影片簡報結束時的收益報告中提供。

Joining me today are Ryals McMullian, Chairman & CEO and Steve Kinsey, our CFO.

今天與我一起出席的還有董事長兼執行長 Ryals McMullian 和財務長 Steve Kinsey。

Ryals, I'll turn it over to you.

賴亞爾斯，我將把它交給你。

Okay, thanks, JT. Good morning, everybody, and welcome to the second-quarter call.

好的，謝謝，JT。大家早上好，歡迎參加第二季電話會議。

Before we move to questions, I would like to address one thing right out of the gate. We are in the midst of a transition. The category is transitioning. And by extension Flowers is transitioning. The continued challenging economic environment and shifting consumer trends have pressured end markets and hampered our recent results. However, we are aggressively responding to that pressure, transitioning our portfolio to better align with current consumer demand.

在我們開始提問之前，我想先解決一個問題。我們正處於轉型期。該類別正在轉變。而弗勞爾斯也正在經歷轉變。持續充滿挑戰的經濟環境和不斷變化的消費趨勢給終端市場帶來了壓力，並阻礙了我們近期的業績。然而，我們正在積極應對這種壓力，轉變我們的產品組合以更好地滿足當前的消費者需求。

Now, this transition is going to take time to fully implement and patience will be necessary, but we expect further benefits as we execute our portfolio strategy and continue to develop our deep pipeline of innovation. Our strategies are sound and the early progress we've made in repositioning our portfolio gives me great confidence that we're on the right path to drive consistent long-term growth.

現在，這項轉變需要時間才能完全實施，並且需要耐心，但我們預計，隨著我們執行投資組合策略並繼續開發深度創新管道，我們將獲得更多收益。我們的策略是合理的，我們在重新定位投資組合方面取得的早期進展讓我非常有信心，我們正走在推動長期持續成長的正確道路上。

I would like to thank the entire Flowers team for their tireless dedication in this process and our shareholders for their partnership and support.

我要感謝整個 Flowers 團隊在此過程中不懈的奉獻以及我們股東的合作和支持。

So with that, Gigi, we'll take questions.

那麼，吉吉，我們來回答問題吧。

(Operator Instructions)

（操作員指示）

Steve Powers, Deutsche Bank.

德意志銀行的史蒂夫·鮑爾斯。

Ryals, first for you. So on the branded side, you mentioned in the prepared remarks, greater competitive intensity, and also cited, new lower price bread products as creating challenges in the current environment, maybe just a little bit more detail there as to what you're seeing and what's incremental versus last quarter.

Ryals，首先為您服務。因此，在品牌方面，您在準備好的評論中提到了更大的競爭強度，並且還提到新的低價麵包產品在當前環境下帶來了挑戰，也許您可以更詳細地說明一下您所看到的情況以及與上一季相比的增量。

And then, also you for versus us and I think versus like sequential trends, maybe the bigger change in trend came on the other side, not in branded, so maybe also what you're seeing on that, and then if I could, I got a follow up for Steve.

然後，同樣，對於您和我們而言，我認為與連續趨勢相比，趨勢的更大變化可能出現在另一邊，而不是品牌方面，所以也許您也看到了這一點，然後，如果可以的話，我會跟進史蒂夫的情況。

Okay, sure. So in terms of the competitive environment, as we said, Steve, the promotional environment is elevated, but relatively stable, you've seen us promote a little bit more, particularly around our differentiated products continuing to drive trial awareness, household penetration, et cetera. And that's definitely paying some dividends as you can see with DKB's performance in the quarter.

好的，當然。因此，就競爭環境而言，正如我們所說，史蒂夫，促銷環境有所提升，但相對穩定，您已經看到我們進行了更多的促銷，特別是圍繞我們的差異化產品繼續推動試用意識、家庭滲透率等。從 DKB 本季的表現可以看出，這無疑會帶來一些回報。

Yes, there have been some lower priced entrants into the markets that is pressuring results somewhat and I would say that's particularly affecting the traditional loaf area, which we're, as you know particularly exposed to. We are addressing that, we have our own line of small loaves now, and we have more coming to address that value shopper, but I think Steve, it's a continuation of the trend that we've seen in the sense that the market remains bifurcated, certainly on the premium differentiated side of things, you see good performance, but you also see good performance on the value end, particularly in mass and club channels. So it's there, we're aware of it, and we're proactively addressing it.

是的，有一些低價企業進入市場，這在一定程度上給業績帶來了壓力，我想說，這尤其影響了傳統麵包領域，正如你所知，我們特別容易受到這一領域的影響。我們正在解決這個問題，我們現在有自己的小麵包生產線，並且我們還有更多產品來滿足價值購物者的需求，但我認為史蒂夫，這是我們所看到的趨勢的延續，因為市場仍然分裂，當然在高端差異化方面，你會看到良好的表現，但你也會看到價值端的良好表現，特別是在大眾和俱樂部渠道。所以它就在那裡，我們意識到了它，我們正在積極地解決它。

In terms of the other category, there was -- yeah, a lot of the private label businesses is bid business, so it's not unusual for it to come and go and a lot of that on the private label side was driven by lost business that eventually gets replaced by something else. But we're also seeing continued weakness in the away-from-home food service business as well, so that's what's driving that.

就其他類別而言，是的，許多自有品牌業務都是競標業務，因此它的出現和消失並不罕見，而自有品牌方面的許多業務都是由業務損失所驅動的，最終會被其他業務所取代。但我們也看到外食服務業務持續疲軟，這就是造成這種情況的原因。

Okay, very clear.

好的，非常清楚。

Steve, if I could on the -- I got two questions for you. One is just on the updated tariff outlook. I wasn't clear from your remarks if previous tariff costs have just been delayed because of -- just because of volume dynamics or if you've updated kind of structurally to a lower tariff cost run rate number one.

史蒂夫，如果可以的話，我有兩個問題想問你。一是關於更新的關稅前景。從您的評論中我無法清楚地看出，之前的關稅成本是否只是因為數量動態而被推遲，或者您是否已經從結構上更新為較低的關稅成本運行率。

And then number two, from a -- I guess from a capital allocation standpoint with this reduction in EPS guidance, the gap between your dividend commitments and your current EPS run rate is increasingly narrow. So just how you're thinking about that, I know the board just raised the dividend, you say you feel you're kind of good about overall, kind of cash and capital positioning, but just how you're thinking about that and as you pay down debt, just the relative constraint that the dividend may place on M&A aspirations.

第二，從資本配置的角度來看，隨著每股盈餘指引的下調，您的股利承諾和目前每股盈餘運作率之間的差距越來越小。所以，您是怎麼想的呢？我知道董事會剛剛提高了股息，您說您覺得總體上對現金和資本狀況還算滿意，但是您是怎麼想的呢？當您償還債務時，股利可能會對併購意願產生相對的限制。

Thank you.

謝謝。

Thank you, sure.

謝謝，當然了。

With regard to the tariffs, actually it's just structurally it's an update with things becoming, I guess, maybe more final, for lack of a better term, we just continue to follow the various countries and the changes from an overall rate. And so it's not really a delay, it's actually -- we expect tariffs to pull back, quite a bit based on the -- based on what we're seeing currently.

關於關稅，實際上它只是結構上的更新，我想，事情可能會變得更加最終，因為缺乏更好的術語，我們只是繼續關注各國和整體稅率的變化。所以這實際上並不是一個延遲，而是——根據我們目前看到的情況，我們預計關稅將會大幅回落。

Overall, with regards to kind of the capital allocation structure. I mean, we've always taken -- try to take a balanced approach. And you're right, I mean the board evaluates this, quarter to quarter. And they'll take into consideration performance, cash flow, liquidity, and this will be no different, you'll continue to have those conversations and we’ll continue to make decisions as things progress.

總體而言，關於資本配置結構。我的意思是，我們一直試圖採取平衡的方法。你說得對，我的意思是董事會會逐季對此進行評估。他們會考慮業績、現金流、流動性，這次也不會例外，你會繼續進行這些對話，我們也會隨著事情的進展繼續做出決定。

Okay, remind me, is there a target payout ratio? I mean, I'm assuming you're running now quite higher than ideal. Like what's the -- is there a stated long-term target?

好的，提醒我一下，有目標派息率嗎？我的意思是，我假設你現在的跑步水平比理想水平高得多。例如－是否有明確的長期目標？

No, we currently do not have a stated targeted payout ratio.

不，我們目前沒有明確的目標派息率。

Yeah.

是的。

Yeah.

是的。

You can go ahead, sorry, Ryals. I didn't mean to cut you off (multiple speakers)--

你可以繼續，對不起，Ryals。我不是故意打斷你的（多位發言者）——

Just yeah, in terms of the payout ratio, one thing that we like to remind people is that, if you look at that on a cash basis, it's quite different than it is on a GAAP basis just due to D&A being significantly above our CapEx so just wanted to remind you of that as well.

是的，就派息率而言，我們想提醒大家的一件事是，如果你以現金為基礎來看待它，它與以 GAAP 為基礎有很大不同，因為 D&A 遠遠高於我們的資本支出，所以我們也想提醒你這一點。

Yeah. Understood. Thank you so much.

是的。明白了。太感謝了。

(Operator Instructions)

（操作員指示）

Bill Chappell, Truist Securities.

Truist Securities 的 Bill Chappell。

So, I guess back to the competitive question, I guess 10 years ago, maybe not that long ago, it was supposed to be a duopoly between you and Bimbo and the thought would be (technical difficulty) everybody play well in the sandbox in the -- on the pricing, but instead, all the players kind of competed for market share, competed for capacity utilization, and gave that up for profits and so the gross margin never really improved. And we had a kind of a six-, seven-year period where it's been pretty benign. Are we going back to the five, six, seven, eight years ago where it's buy-one, get-one free and more competitive and figuring out more ways where it's kind of a race to the bottom on profitability or is it not that bad?

所以，我想回到競爭問題，我想 10 年前，也許不是那麼久以前，它應該是你和 Bimbo 之間的雙頭壟斷，並且認為（技術難度）每個人都在定價的沙盒中玩得很好，但事實上，所有的參與者都在爭奪市場份額，爭奪產能利用率，並為了利潤而放棄這些，因此毛利率從未真正提高。我們經歷了六、七年相當平穩的時期。我們是否要回到五、六、七、八年前，那時買一送一，競爭更激烈，我們是否要想方設法在盈利能力上展開逐底競爭，還是說情況並沒有那麼糟糕？

Yeah, I don't think it's that bad. I think that what you're seeing more than anything else, Bill, as I said at the opening is a pretty significant transition in the category, primarily driven by significantly shifting consumer trends and we can spread that over a lot of different things, right? We can spread it over health and wellness, MAHA movement, GLP-1s, whatever it is. Ultra-processed foods, all that sort of stuff. It is really changing the dynamics in food and particularly in baked foods. For whatever reason, they tend to get called out quite a bit when the ultra-processed argument comes up, and I think we're seeing a lot of that now.

是的，我認為情況沒那麼糟。比爾，我認為你所看到的最重要的事情是，正如我在開幕式上所說的那樣，這個類別正在發生相當大的轉變，這主要是由消費者趨勢的顯著轉變所驅動的，我們可以將其擴展到很多不同的事情上，對嗎？我們可以將其傳播到健康和保健、MAHA 運動、GLP-1 等各個領域。超加工食品，諸如此類的東西。它確實改變了食品，特別是烘焙食品的動態。無論出於什麼原因，當有關過度加工的爭論出現時，他們往往會受到相當多的指責，我認為我們現在看到很多這樣的情況。

We are committed to aggressively innovating to work our way through this transition. Most of -- we can have a conversation about food service, but that's more macroeconomic driven. But, on the retail side of things what is being most affected is traditional loaf. Those less-differentiated white and wheat breads are what are being affected the most. That is why we're innovating so aggressively to work our way through that. We've seen tremendous success with things like Dave's Killer Bread, Canyon Bakehouse, across different subsegments of the category too, not just breads, but sandwich, buns and rolls, breakfast, et cetera. And we're winning in those areas. Keto is another example that I would give you. Our keto products were up, I think, 37% in the quarter, and that segment of the category continues to grow. We have a wonderful slate of innovation coming out in Q3 to further address the softness in these categories.

我們致力於積極創新，以完成這項轉變。大多數情況下，我們可以討論食品服務，但這更多的是由宏觀經濟驅動的。但從零售方面來看，受影響最大的是傳統麵包。那些差異較小的白麵包和小麥麵包受到的影響最大。這就是我們如此積極地創新以解決這個問題的原因。我們看到 Dave's Killer Bread、Canyon Bakehouse 等產品在該類別的不同細分領域都取得了巨大的成功，不僅僅是麵包，還有三明治、小圓麵包和麵包捲、早餐等等。我們在這些領域取得了勝利。我要給你舉的另一個例子是 Keto。我認為，我們的酮類產品本季成長了 37%，而該類別的細分市場仍在持續成長。我們將在第三季推出一系列出色的創新，以進一步解決這些類別的疲軟問題。

That's really the solve for us, Bill, is just working our way through this de-emphasis by the consumer, if you will, on traditional loaf as it stands today. And towards more innovative and differentiated products in addition to value offerings.

比爾，這對我們來說確實是一個解決方案，如果你願意的話，我們只是在努力解決消費者對當今傳統麵包的不再重視的問題。除了提供有價值的產品外，還致力於提供更具創新性和差異化的產品。

Now, having said that, with regard to traditional loaf, we do have plans to address that even more directly. I'm not going to get into it today for competitive reasons, but we do have plans to address the relative weakness of large brands like Nature’s Own.

現在，話雖如此，關於傳統麵包，我們確實有計劃更直接地解決這個問題。由於競爭原因，我今天不打算深入討論這個問題，但我們確實有計劃解決 Nature's Own 等大品牌的相對弱勢。

Got it. Well, just to follow up I mean. I don't doubt you have plans to improve profitability, but you obviously don't work in a vacuum. So how about your competitors? I mean, not just Bimbo, but think about the dozens of smaller regional competitors who are usually the bad guy when it comes to promotions and driving -- to try to drive volume. I mean, are you comfortable that everyone is working on the same goal or could it get worse from that standpoint in terms of the competitive pressures?

知道了。嗯，我只是想跟進一下。我並不懷疑您有提高盈利能力的計劃，但您顯然不是在真空中工作。那你的競爭對手呢？我的意思是，不僅僅是賓堡集團，想想幾十家規模較小的地區性競爭對手，他們在促銷和推動方面通常是壞人——試圖提高銷量。我的意思是，您是否相信每個人都在為同一個目標而努力，或者從競爭壓力的角度來看情況是否會變得更糟？

Well, look, I mean, this has always been a competitive category and you know our competitors are going to do what they're going to do, that's not within my control. What is within my control is what Flowers is going to do. And our strength is in our brands, our strength is in our innovation, and that's what we're going to continue to focus on.

嗯，你看，我的意思是，這一直是一個競爭激烈的類別，你知道我們的競爭對手會做他們想做的事，這不在我的控制範圍內。我能控制的就是 Flowers 會做什麼。我們的優勢在於我們的品牌，我們的優勢在於我們的創新，這也是我們將持續關注的重點。

(Operator Instructions)

（操作員指示）

Jim Salera, Stephens.

吉姆·薩萊拉、史蒂芬斯。

I also wanted touch on something you'd mentioned in the [prepared] remarks about, Wonder obviously helping to contribute to share gain in cake and that they didn't see any cannibalization in Tastykake. Are you able to just give us some commentary around is that just due to the geographies where Wonder is rolling out or do you have retailers where you know in the regions that Tastykake’s a little bit more formidable that you have Tasty and Wonder in the same set?

我還想談談您在[準備好的]評論中提到的一些事情，Wonder 顯然有助於提高蛋糕的市場份額，並且他們沒有看到 Tastykake 受到任何蠶食。您能否給我們一些評論，這僅僅是因為 Wonder 推出的地區不同，還是您知道在哪些地區有零售商，Tastykake 的競爭力更強，以至於您將 Tasty 和 Wonder 放在同一個系列中？

Yeah, maybe a little bit. I mean -- Tasty, as you know is, particularly strong in that mid-Atlantic region, whereas Wonder naturally is more of a natural -- national brand. I'll admit I'm a little bit surprised that there hasn't been more cannibalization, but I'm quite pleased that there has not been. But Wonder, the launch of that line of products has vastly exceeded our expectations.

是的，也許有一點。我的意思是——正如你所知，Tasty 在中大西洋地區尤其強大，而 Wonder 自然更像是自然的全國性品牌。我承認我有點驚訝沒有發生更多的蠶食，但我很高興沒有發生這種情況。但令人驚訝的是，該系列產品的推出大大超出了我們的預期。

And now even our forecast off of early results, it's running ahead of that. Retailers continue to be excited about it, the consumer has accepted it with enthusiasm, and we're going to continue to add to that. We've got more innovation coming from one or two. So we've been extremely pleased with the results there.

現在，即使我們根據早期結果進行預測，它也已經超出了這個範圍。零售商對此一直感到興奮，消費者也熱情地接受了它，我們將繼續為此做出貢獻。我們從一兩個方面獲得了更多的創新。因此我們對結果非常滿意。

Right, and then shifting gears a little bit on talk on Simple Mills. As you talk about innovation and I can appreciate, this kind of a broad range of stuff you guys can lean into. Should we expect to see Simple Mills as kind of an outsized contributor on the innovation side or you really speaking to the legacy portfolio brands?

好的，然後稍微轉換一下話題，談談 Simple Mills。當您談論創新時，我可以理解，您可以關注的領域非常廣泛。我們是否應該期望看到 Simple Mills 成為創新方面的超大貢獻者，或者您實際上談論的是傳統投資組合品牌？

And then as maybe a part two to that, I'm in the Midwest and I saw Simple Mills pretty prominently at a club retailer the last time I was shopping there that could have just been something that was there that I missed, but maybe any comments is that something you guys are seeing more engagment with club or you guys have a reputation in club. Any color that would be great.

然後，也許作為第二部分，我在中西部，上次我去一傢俱樂部零售店購物時，看到 Simple Mills 在那兒非常顯眼，這可能只是我錯過了什麼，但也許有任何評論是，你們看到了與俱樂部的更多互動，或者你們在俱樂部中享有盛譽。任何顏色都可以。

Okay, on the innovation front.

好的，關於創新方面。

As I was responding to to Bill's question, I was speaking more in terms of the core category, Jim. However, Simple Mills will also continue to aggressively innovate. I think I've mentioned on maybe the last call that they had kind of been on every other year innovation rotation. We're working with them to speed that up and we have aggressive plans for them for next year.

當我回答比爾的問題時，我更多地是從核心類別的角度來談論的，吉姆。然而，Simple Mills 也將持續積極創新。我想我在上次電話會議上提到過，他們每隔一年就會進行一次創新輪調。我們正在與他們合作以加快這一進程，並為他們制定了明年的積極計劃。

In terms of the club rotation, I'm not quite sure I understood the question, but if you were saying that you were in a club retailer and didn't see what you're used to seeing, that's probably due to rotations. (multiple speakers)

關於俱樂部輪換，我不太確定我是否理解了這個問題，但如果你說你在俱樂部零售店裡沒有看到你過去所看到的東西，那可能是由於輪換造成的。（多位發言者）

I'm sorry, go ahead.

抱歉，請繼續。

No, go ahead, Joe.

不，繼續吧，喬。

I had seen Simple Mills more prominently than I had traditionally seen it, and so I wasn't sure if you guys were on a rotation, that I had -- that hadn't been the case before.

我以前看過 Simple Mills 的次數比以往更多，所以我不確定你們是否在輪流看，而我以前沒有這種情況。

No, nothing's changed. They have rotations in club. I'll just add, they continue to grow their distribution points and had another nice quarter of that in Q2. So that business continues to perform very well, even though in the second quarter, they were somewhat affected by that cyberattack at UNFI. And even with that still performed in line with our already high expectations. We expect that to continue. They're doing great.

不，什麼都沒改變。他們在俱樂部輪換。我只想補充一點，他們繼續擴大分銷點，並且在第二季度又取得了不錯的成績。因此，儘管第二季度 UNFI 的業務受到了一定影響，但其業務表現仍然良好。即使如此，其表現仍然符合我們先前很高的期望。我們預計這種情況將會持續下去。他們做得很好。

Great, I'll pass it along. Thanks.

太好了，我會傳達的。謝謝。

(Operator Instructions)

（操作員指示）

Mitchell Pinheiro, Sturdivant and Company.

米切爾·皮涅羅 (Mitchell Pinheiro)，Sturdivant 和公司。

So we talk about like the transition, you're in the midst of a transition and it's going to take time. I mean, it's going to take -- how fast do you see your innovation and some of your other plans that you have to address this? I mean, this is a long time to turn around an aircraft carrier. Nature’s Own is a huge brand and your other loaf products. I mean, it's the bulk of your business, so the transition, I mean, this is going to be, right, a five-year minimum time period to sort of get this turned around. Or are there I want say quicker fixes, but are there more near-term things that you see that can speed up this transition?

因此，我們談論的是過渡，你正處於過渡之中，這需要時間。我的意思是，這需要多快的時間，您認為您的創新以及解決這一問題的其他計劃需要多快的時間？我的意思是，要讓一艘航空母艦掉頭需要很長時間。Nature's Own 是一個大品牌，還有您的其他麵包產品。我的意思是，這是你們業務的主體，所以過渡期，我的意思是，這將是一個至少五年的時間來扭轉這種局面。或者我想說有沒有更快的解決方案，但您認為是否有更多近期措施可以加速這一轉變？

Yeah, fair question. I'm not going to put a time on it today, but I did note that some patience is going to be required. It's not an overnight fix. This is a -- as a generational shift in our category, perhaps a once in a lifetime shift that needs to be addressed. Mitch, I do think that the category and I'm speaking mostly about traditional loaf. I do think that the category will stabilize eventually.

是的，公平的問題。我今天不會為此設定時間，但我確實注意到這需要一些耐心。這不是一朝一夕就能解決的。這是我們這個類別的世代轉變，也許是一生中需要解決的轉變。米奇，我確實認為這個類別和我主要談論的是傳統麵包。我確實認為該類別最終會穩定下來。

Now, if that, I don't know if that's next quarter or this time next year, it's hard to say, but I do think that it will stabilize. I think that we're seeing a lot of things, primarily, the shift in consumer taste and behaviors.

現在，如果是這樣，我不知道是下個季度還是明年這個時候，很難說，但我確實認為它會穩定下來。我認為我們看到了很多事情，主要是消費者口味和行為的轉變。

I think part of this is kind of the final throws of the pandemic [reversion] that, you all were asking us about every quarter, when the worst of the pandemic was over, when was that going to happen? I think that's part of it too in addition to the health and wellness and GLP-1 issue. So I do think it's going to find its footing.

我認為這在某種程度上是疫情[逆轉]的最後階段，你們每季都在問我們，當疫情最嚴重的時期結束時，什麼時候會發生逆轉？我認為除了健康和保健以及 GLP-1 問題之外，這也是其中的一部分。所以我確實認為它會找到立足點。

What's important for us is to make sure that, as it begins to stabilize that we're winning in that environment. I'm not saying that traditional loaf is going to go away. There are still tens of millions of loaves of traditional loaf sold, every day. But I do think, it's going to be smaller perhaps than it has been in the past and that needs to be replaced by something, hence the hyperfocus on innovation. And bringing, new exciting products to consumers that have the attributes that they want. That's going to be important.

對我們來說，重要的是確保隨著情況開始穩定，我們能夠在這種環境中取得勝利。我並不是說傳統麵包將會消失。每天仍售出數千萬條傳統麵包。但我確實認為，它可能會比過去規模更小，需要用某些東西來取代，因此要高度重視創新。並為消費者帶來具有他們想要的屬性的令人興奮的新產品。這將會非常重要。

But even in the traditional loaf area, I do think that there are opportunities for us to further separate ourselves. We do have the number one brand. We still have the number one SKU, there's a lot of things to like about being number one in a category, even though it's declining, but we will continue to invest behind brands like Nature’s Own to ensure that it performs as well as it can given the environment.

但即使在傳統麵包領域，我確實認為我們仍有機會進一步脫穎而出。我們確實擁有第一品牌。我們仍然擁有排名第一的 SKU，儘管銷量正在下降，但在某個類別中排名第一還是有很多值得高興的事情，但我們將繼續投資 Nature's Own 等品牌，以確保其在考慮到環境的情況下能夠發揮最佳表現。

But yeah, that is going to take some time and it's going to take some time for the innovative segments of the category to more than offset any declines in traditional loaf. But again, I do think that we have the ability to further mitigate any further losses even in that soft traditional loaf category.

但是，是的，這需要一些時間，而且該類別的創新部分也需要一些時間來抵消傳統麵包的下降。但我確實認為，即使在傳統軟麵包類別中，我們也有能力進一步減輕任何損失。

And then how are you looking at your gross margin as it relates to the lower volume and the negative fixed cost leverage? Do you have leverage there you can pull to maintain your gross margin despite the volumes being under pressure?

那麼，您如何看待毛利率與較低的銷售量和負的固定成本槓桿之間的關係？儘管銷售面臨壓力，您是否可以利用槓桿來維持毛利率？

Yeah, we do, and we closed a bakery earlier this year, Mitch. We've closed several in the last few years. That's not the only lever we have to pull, but it's certainly one of them. There are path to market efficiencies as well that we can extract and we have plans in place to address all of that.

是的，我們確實關閉了一家麵包店，米奇。過去幾年我們已經關閉了好幾家。這不是我們必須採取的唯一措施，但肯定是其中之一。我們還可以提取提高市場效率的途徑，並且我們已經制定了計劃來解決所有這些問題。

The other thing I would note is that via our portfolio strategy, the food service business that, we're a very scaled food service player, we have refilled that volume with much higher margin business and thus the profitability of that away from home business is up significantly. I've mentioned that a few times, but I think it bears repeating today in the context of what you just asked. So it's not just closing bakeries or lines or whatever, there's also optimization of the portfolio, if you will, to margin up to better business to help address that overhead leakage that you referenced.

我要指出的另一件事是，透過我們的投資組合策略，我們是一家規模很大的食品服務公司，食品服務業務已經透過利潤率更高的業務補充了這一業務量，因此，離家業務的盈利能力顯著提高。我已經提到過幾次了，但我認為今天結合你剛才問的問題，值得再重複一遍。因此，這不僅僅是關閉麵包店或生產線或其他什麼，如果你願意的話，還要優化投資組合，以提高業務利潤率，幫助解決你提到的間接費用洩漏問題。

I guess this last question is on M&A. Obviously M&A is a quick way -- a quicker way to help transition to other products, other adjacencies, and I guess, having just acquired Simple Mills, I mean, is there an appetite for further M&A? I mean right now with the way you're -- the 3.2 levered or is this something that we'll see over time?

我想最後一個問題是關於併購的。顯然，併購是一種快速的方式——一種幫助過渡到其他產品、其他鄰接領域的快捷方式，我想，剛剛收購了 Simple Mills，我的意思是，是否有進一步併購的興趣？我的意思是，就目前的情況來看——槓桿率為 3.2，還是我們會隨著時間的推移而看到這種情況？

I would say, as of today, Mitch, probably a little bit more over time. I mean, obviously, we're focused on debt pay down right now, but as always, we continue to monitor the market. I guess I would also offer up that there are other ways to do M&A other than cash. So it's always -- it has been and will always be one of our big strategic priorities.

我想說，截至今天，米奇，隨著時間的推移可能會更多。我的意思是，顯然，我們現在專注於償還債務，但一如既往，我們會繼續關注市場。我想我還會提出，除了現金之外，還有其他方式可以併購。因此，它一直是並且永遠都是我們的重大戰略重點之一。

(Operator Instructions)

（操作員指示）

Scott Marks, Jefferies.

史考特馬克斯，傑富瑞。

First thing I wanted to ask about is you just touched upon still putting investment dollars behind Nature’s Own and some of the more mainstream loaf parts of the portfolio, but in the prepared remarks you talked about more of the, let's say promotional activity being in kind of the differentiated parts of the portfolio to drive trial and repeat purchase.

我想問的第一件事是，您剛才提到仍然在 Nature's Own 和產品組合中一些更主流的麵包部分投入資金，但在準備好的評論中，您更多地談到了促銷活動，即產品組合中差異化的部分，以推動試用和重複購買。

So maybe as we think about the investments in the more mainstream traditional loaf part of the category, how should we be thinking about those investments? Will that be behind marketing? Will that be promotional? Will that be packaging redesign? Just trying to understand how those investment dollars will be spent.

因此，當我們考慮對更主流的傳統麵包類別進行投資時，我們應該如何考慮這些投資？這是否是行銷背後的原因？這能起到促銷作用嗎？那會是包裝重新設計嗎？只是想了解這些投資資金將如何使用。

Yeah, it'll be a mix of promotional support but that's always been the case, that's not new, and like we always say we view promotions more as a tool to drive trial and awareness than necessarily unit share, and I think, if you look back at our market share performance even through this tough transition period, our market share performance, particularly on a relative basis, has been impressive. And I think that will continue and I think that's a testament to our overall strategies and our brand support and promotional strategies. But yeah, it'll be a mix of marketing, dollar support, and promotions but that's -- again, that's no big change there, we've been doing that.

是的，這將是一系列促銷支持，但情況一直如此，這並不是什麼新鮮事，就像我們常說的那樣，我們將促銷更多地視為推動試用和認知的工具，而不一定是單位份額，我認為，如果你回顧我們的市場份額表現，即使在這個艱難的過渡時期，我們的市場份額表現，特別是在相對基礎上，也令人印象深刻。我認為這種情況將會持續下去，我認為這證明了我們的整體策略以及我們的品牌支援和促銷策略。但是的，它將是行銷、資金支持和促銷的混合體，但那是——再說一次，這沒有什麼大的變化，我們一直這樣做。

Got it.

知道了。

And then as we think about these differentiated better for you offerings that you're talking about maybe some of the small loaf products that you mentioned, just what part of the portfolio is that in terms of just overall mix right now and relative to where you want that to be three, five, seven years out.

然後，當我們考慮這些對您來說更好的差異化產品時，您談論的可能是您提到的一些小麵包產品，就目前的整體組合而言，產品組合的哪一部分是相對於您希望在三、五、七年後達到的位置而言的。

Yeah, in terms of small loaf, it's pretty small right now, actually but growing, and I think that could ebb and flow a little bit with the economy, Scott, but from a more demographic perspective, we see a lot more smaller households now. So from that standpoint, I think it will continue to be a pretty big part of our portfolio and the category. In fact, some retailers are even resetting shelves with small loaf segments within the shelf. So I think that's an indication of how important it is to the retailers as well.

是的，就小規模而言，目前規模確實很小，但正在增長，而且我認為這可能會隨著經濟形勢而有所起伏，斯科特，但從人口統計的角度來看，我們現在看到更多的小家庭。因此從這個角度來看，我認為它將繼續成為我們產品組合和類別中相當重要的一部分。事實上，一些零售商甚至重新佈置了貨架，並在貨架內放置了小塊麵包。所以我認為這也顯示了它對零售商的重要性。

And then just maybe what you would consider, the more differentiated part of your portfolio, how should we think about the current mix versus where you want to get that to.

然後也許您會考慮，您的投資組合中更具差異化的部分，我們應該如何考慮當前的組合以及您希望實現的組合。

Well, that's a focus for us. And so over time, you'll see that continue to grow and be a bigger and bigger part of our portfolio, not only within the bread category, but within adjacent segments with our DKB bars and our Snack Bites and Simple Mills on top of that -- you can -- it's pretty obvious, you're seeing us really lean into that area. We like it because we think it's the right thing to do for the consumer and we also like it because it's premium and the profits are quite robust. That's also been a focus of our M&A efforts as well.

嗯，這是我們關注的重點。因此，隨著時間的推移，您會看到它繼續增長並成為我們產品組合中越來越重要的一部分，不僅在麵包類別中，而且在相鄰的細分市場中，包括我們的 DKB 棒、Snack Bites 和 Simple Mills 等等——您可以——很明顯，您會看到我們確實傾向於這個領域。我們喜歡它，因為我們認為這對消費者來說是正確的做法，我們也喜歡它，因為它是優質的並且利潤相當可觀。這也是我們併購工作的重點。

Got it.

知道了。

And then maybe if I can just squeeze one more in. You mentioned retailers resetting some shelves focusing on smaller loaves, maybe what other changes have you seen from retailers recently to address some of the pressures and competitive intensity that you've spoken to.

然後也許我可以再擠一個。您提到零售商重新設定了一些專注於較小麵包的貨架，也許您最近看到零售商做出哪些其他改變來應對您提到的一些壓力和競爭強度。

Yeah, I think, other than the small loaves, obviously you've seen significant growth in organics and with the 75 share, we've been the primary beneficiary of that. So we've seen substantial space gains, particularly in mass for DKB which I think really highlights the bifurcation of the category. When you think about mass as a value shopper's paradise, the fact that they're also focusing on premium tells you a lot about the category. But other than the small loaf piece, not a whole lot more has happened yet from the retailer standpoint. But I do think that that is coming at some point. I think we'll see some amount of shelf reallocation that reflects these consumer trends as we go forward.

是的，我認為，除了小麵包之外，顯然您已經看到有機食品的顯著增長，並且憑藉 75% 的份額，我們是其中的主要受益者。因此，我們看到了顯著的空間增益，特別是 DKB 的質量增益，我認為這確實凸顯了該類別的分歧。當你將大眾視為價值購物者的天堂時，他們也專注於高端產品這一事實告訴你很多關於該類別的資訊。但從零售商的角度來看，除了小塊麵包之外，還沒有發生更多的事情。但我確實認為，這一天終有一天會到來。我認為，隨著我們不斷前進，我們將看到一定程度的貨架重新分配，以反映這些消費趨勢。

Thank you. At this time, I would not like to turn the conference back over to Ryals McMullian for closing remarks.

謝謝。此時，我不想將會議交還給 Ryals McMullian 做閉幕發言。

Okay, thank you, Gigi.

好的，謝謝你，Gigi。

I want to thank everybody for taking time today and joining us for questions. We appreciate your interest in our company and as always, we look forward to talking with you again next quarter. Take care.

我要感謝大家今天抽出時間參加我們的問答環節。我們感謝您對我們公司的關注，並且一如既往地期待下個季度再次與您交談。小心。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。