通用磨坊 (GIS) 2024 Q1 法說會逐字稿

Greetings, and welcome to the General Mills Q1 Fiscal '24 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded on Wednesday, September 20, 2023.

您好，歡迎參加通用磨坊 24 年第一季財報電話會議。 （操作員說明）謹此提醒，本次會議將於 2023 年 9 月 20 日星期三錄製。

I would now like to turn the conference over to Mr. Jeff Siemon, VP of Investor Relations. Please go ahead.

我現在想把會議交給投資人關係副總裁傑夫‧西蒙先生。請繼續。

Thank you, Frank, and good morning, everyone. Thanks for joining us today for our Q&A session on our first quarter fiscal 2024 results. I hope everyone had time to preview our press release, listen to our prepared remarks and view our presentation materials, which we made available this morning on our Investor Relations website. It's important to note that in our Q&A session, we may make forward-looking statements that are based on our current views and assumptions.

謝謝弗蘭克，大家早安。感謝您今天參加我們關於 2024 財年第一季業績的問答環節。我希望每個人都有時間預覽我們的新聞稿，聆聽我們準備好的發言並查看我們今天早上在投資者關係網站上提供的演示材料。值得注意的是，在我們的問答環節中，我們可能會根據我們目前的觀點和假設做出前瞻性陳述。

Please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call. I'm here this morning with Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; and Jon Nudi, Group President for our North America Retail segment.

請參閱今天上午的新聞稿，以了解可能影響前瞻性陳述的因素以及非公認會計準則資訊的調節，這些資訊可能會在今天的電話會議上討論。今天早上我和我們的董事長兼執行長傑夫哈梅寧 (Jeff Harmening) 一起來到這裡。科菲·布魯斯，我們的財務長； Jon Nudi，北美零售部門集團總裁。

So let's go ahead and get to the first question. Frank, can you please get us started?

那麼讓我們繼續討論第一個問題。法蘭克，你能讓我們開始嗎？

(Operator Instructions) Our hour first question comes from Ken Goldman with JPMorgan.

（操作員說明）我們這一小時的第一個問題來自摩根大通的肯‧戈德曼（Ken Goldman）。

You mentioned that consumers have been shifting purchases to customers and channels, not necessarily tracked by Nielsen. I'm just curious, as this trend has taken place, have you seen any of your more traditional [track] customers? I guess those FDM, kind of leaning more into price to try and retain traffic in tonnage? And if they're not yet, is this something maybe we might expect to see just given past history?

您提到消費者一直在將購買轉移到客戶和管道上，而尼爾森不一定會追蹤。我只是好奇，隨著這種趨勢的發生，您是否見過任何更傳統的[跟踪]客戶？我猜那些 FDM 更傾向於價格以試圖保留噸位流量？如果還沒有，鑑於過去的歷史，這是否是我們可能期望看到的事情？

So Ken, this is Jeff Harmening. And you're right. We did see increased traction in non-measured channels in the first quarter, and we'd expect that to continue throughout the year. But Jon Nudi, why don't you give a little color commentary on that?

肯，這是傑夫·哈梅寧。你是對的。我們確實看到第一季非測量通路的吸引力增加，我們預計這種情況將持續全年。但是喬恩·努迪（Jon Nudi），你為什麼不對此做出一些色彩評論呢？

Yes, absolutely, Ken. So we did see non-measured channels grow at a double-digit rate in the quarter, which obviously drove RNS ahead of movement a bit from NAR. As you look at traditional grocery, we've seen frequency up a bit, about 5%, but price points up dramatically versus pre-pandemic.

是的，絕對是，肯。因此，我們確實看到非測量管道在本季以兩位數的速度成長，這顯然推動 RNS 領先 NAR。當你觀察傳統雜貨時，我們發現頻率有所上升，約為 5%，但價格與疫情前相比大幅上漲。

And we continue to invest in our SRM tools. And as a result of that, we don't expect to see deep discounting as we model, our retailers' model, which just doesn't add up at the end of the day. So we're seeing a bit more frequency, but price points up versus pre-pandemic for sure.

我們繼續投資我們的 SRM 工具。因此，我們預計在我們的零售商模型模型中不會出現大幅折扣，而最終這並不會增加。因此，我們看到頻率增加，但價格肯定比疫情前有所上漲。

Got it. And then I guess quickly, their this [treats modeling], just looking at 2Q low single-digit organic sales growth, is this kind of a reasonable range within the context of you not providing quarterly guidance, just trying to get a little bit of color there, especially in light of scanner data, maybe suggesting that performance in NAR is heading downward a little bit in recent weeks. I just didn't know if that's what you were looking for.

知道了。然後我很快就猜想，他們的這個[對待建模]，僅關注第二季度低個位數的有機銷售增長，在您不提供季度指導，只是試圖獲得一點點的情況下，這是一個合理的範圍嗎？那裡的顏色，特別是根據掃描儀數據，可能表明 NAR 的表現在最近幾週略有下降。我只是不知道這是否是您要找的。

Go ahead, Jon.

繼續吧，喬恩。

Go ahead, Jeff.

繼續吧，傑夫。

Yes. So I think -- first of all, you're right, we're not going to give guidance on a quarter either for the segment or for the company. But I'll give you some -- a little bit of color commentary on the year and the guidance because I think that probably is important. I mean, importantly, as we look at 3% to 4% sales growth, I think it's important to remember that, to know that we don't really expect a huge rebound in our Pet business for the rest of this year. And due to all the factors we've talked about. I would say as importantly, our Foodservice business is growing nicely, and we see continued growth in that. And our International business is up really nicely as well.

是的。所以我認為，首先，你是對的，我們不會為該部門或該公司提供季度指導。但我會給你們一些關於這一年的彩色評論和指導，因為我認為這可能很重要。我的意思是，重要的是，當我們看到 3% 到 4% 的銷售成長時，我認為重要的是要記住這一點，要知道我們並不真正期望今年剩餘時間寵物業務大幅反彈。由於我們討論過的所有因素。我想說同樣重要的是，我們的餐飲服務業務成長良好，我們看到了持續成長。我們的國際業務也發展得非常好。

Yes, we had a Haagen-Dazs recall that we were lapping, and Haagen-Dazs has responded nicely up 20%. That's not the only thing growing. Our European business was up double digits and growing 70% on our Bars business in France and our India business and Distributor businesses are also growing. And so I think it's important to note that even while Pet didn't quite meet our expectations for the first quarter, it's going to be challenging this year. We have 2 other big segments that are going to do quite well.

是的，哈根達斯召回了我們的產品，哈根達斯對此做出了很好的回應，上漲了 20%。這並不是唯一成長的東西。我們的歐洲業務實現了兩位數成長，法國的金條業務成長了 70%，印度業務和經銷商業務也在成長。因此，我認為值得注意的是，儘管 Pet 沒有完全達到我們對第一季的預期，但今年將面臨挑戰。我們還有另外兩個大的細分市場，它們將會表現得很好。

As it comes to NAR, we're executing really well in NAR. I mean, our distribution is up, the quality of our merchandising are up. Our new products are doing well. And you might say, okay, well, then what happened to share performance in the first quarter. And I guess I'd just remind you that our first quarter is our toughest from a share perspective given the pricing that we're lapping and our competitors' gains that they made in getting their supply chains back up in order, and ours were already really good. Ours are improving, too.

就 NAR 而言，我們在 NAR 方面執行得非常好。我的意思是，我們的分銷提高了，我們的銷售品質也提高了。我們的新產品表現良好。你可能會說，好吧，那麼第一季的股票業績發生了什麼。我想我只是提醒您，從股票的角度來看，我們的第一季是最艱難的，考慮到我們正在製定的定價以及我們的競爭對手在恢復供應鏈秩序方面所取得的收益，而我們的供應鏈已經真的很好。我們的也在進步。

So as we look at the rest of the year in NAR for those listening, and we do expect our volumes to improve. Importantly, they don't have to get to positive. They just have to improve from where they are now. And part of that is really going to be gaining share as pricing gets lapped, as the competition comparisons getting tougher and as our get easier because of this supply chain channels. And we think, with all of that happening as we continue to execute well, our NAR business will continue to get better throughout the year.

因此，當我們看看 NAR 今年剩餘時間的聽眾時，我們確實預計我們的音量會有所改善。重要的是，他們不必變得積極。他們只需要在現在的基礎上來改進。隨著定價的下降，隨著競爭的比較變得更加激烈，隨著我們的供應鏈管道變得更加容易，其中一部分確實會獲得份額。我們認為，隨著我們繼續良好執行，所有這些都發生，我們的 NAR 業務將在全年繼續變得更好。

Yes. And one thing I want to add some color on it, on-shelf availability. So Jeff touched on that, and our on-shelf availability is better this year than last year, and that's great. What's remarkably different is our competitors and particularly private label. So if you look at private label on-shelf availability in categories like grain and RBG, it's up 10 points year-over-year. So while that was a tailwind for us where we were on the shelf and private label wasn't, that's a headwind this year. That comp gets better as we move throughout the year, and that will help us as we expect to see sequential volume improvement.

是的。我想添加一些顏色的一件事是貨架上的可用性。傑夫談到了這一點，今年我們的貨架供應量比去年更好，這很棒。顯著不同的是我們的競爭對手，尤其是自有品牌。因此，如果您查看穀物和 RBG 等類別的自有品牌貨架供應情況，您會發現同比增長了 10 個百分點。因此，雖然這對我們來說是順風，因為我們已經上架，而自有品牌卻沒有，但這對今年來說是逆風。隨著我們全年的發展，這種情況會變得更好，這將有助於我們期望看到銷售的持續改善。

Our next question comes from Robert Moskow with TD Cowen.

我們的下一個問題來自 Robert Moskow 和 TD Cowen。

I wanted to know -- I guess, 2 questions. You've had some very significant marketing investment in first quarter. But this is a very tough volume environment. And I wanted to know, what's your plan for marketing investment for the rest of the year? And do you have -- would you keep the same amount of pressure on? Or would you change tactics mid-year if you're not getting the volume that you expected?

我想知道——我想，有兩個問題。您在第一季進行了一些非常重要的行銷投資。但這是一個非常艱難的成交量環境。我想知道，您今年剩餘時間的行銷投資計畫是什麼？你會保持同樣的壓力嗎？或者，如果您沒有達到預期的銷量，您會在年中改變策略嗎？

Yes, Rob, first of all, this is Jeff. Welcome back. Good to hear you again. And Kofi, you want to take this?

是的，羅布，首先，這是傑夫。歡迎回來。很高興再次聽到你的聲音。科菲，你想接受這個嗎？

Yes. Yes. So you're correct in noting, Rob, that we were up double digits in the first quarter on our media spend. I would expect for the balance of the year based on everything we see right now, we would expect our media spend to grow at least in line with sales in this environment. I think it's important for us to put support, brand support behind quality ideas still and especially so as we see the environment stabilize.

是的。是的。所以，羅布，您注意到我們第一季的媒體支出成長了兩位數，這是正確的。根據我們現在所看到的一切，我預計今年剩下的時間裡，我們預計我們的媒體支出至少會與這種環境下的銷售成長一致。我認為對我們來說，在品質理念背後提供支援、品牌支援仍然很重要，尤其是當我們看到環境穩定下來時。

Okay. Can I ask a follow-up? Your snacking business has improved in the quarter. It's had some ups and downs. And in the press, you were mentioned as being interested in a major snacking company. As you look at your M&A objectives, is snacking a key area in which you want to expand and possibly through M&A?

好的。我可以問後續嗎？您的零食業務在本季有所改善。它有一些起伏。在媒體上，您被提到對一家大型零食公司感興趣。當您考慮您的併購目標時，零食是否是您想要擴展並可能透過併購來擴展的關鍵領域？

Yes, Rob. So this is Jeff. Clearly, we're not going to comment, say on rumor or what has or hasn't transpired in the marketplace no matter whose transaction it is. What I will tell you is that, for us, our objective with M&A really haven't changed. I mean we've been very consistent, maybe boring over the last couple of years. And that we will look to add about 50 basis points of growth if we can through both acquisitions and divestitures.

是的，羅布。這就是傑夫。顯然，無論是誰的交易，我們都不會評論、謠言或市場上已經發生或未發生的事情。我要告訴你的是，對我們來說，我們的併購目標確實沒有改變。我的意思是，過去幾年我們一直非常穩定，也許有點無聊。如果可以的話，我們將尋求透過收購和資產剝離增加約 50 個基點的成長。

There are things that will be bolt-on in nature, by which I mean what we can use our current capabilities and our knowledge of channels and technology in order to generate both sales growth and some synergies. And we do have the balance sheet in order to be able to do that.

有些事情本質上是附加的，我的意思是我們可以利用我們目前的能力以及我們對通路和技術的知識來產生銷售成長和一些協同效應。我們確實有資產負債表，以便能夠做到這一點。

But I will also remind you is that we've also said we've been disciplined, and we are disciplined. And so, to the extent we see something that we like on acquisitions, we'll certainly do that, but only at pricing that makes sense for our investors. And so I want you to know that no matter what's transpired over the last little while in M&A, our position hasn't really changed.

但我還要提醒大家的是，我們也說過我們一直受到紀律處分，而且我們確實受到紀律處分。因此，只要我們在收購中看到我們喜歡的東西，我們肯定會這樣做，但前提是定價對我們的投資者有意義。所以我想讓你們知道，無論過去一段時間併購中發生了什麼，我們的立場都沒有真正改變。

And that includes -- I've also read commentary, are food companies looking at M&A now because their volumes are down. The answer is no. I mean we don't play the short-term game when it comes in. We go get brands we like, we hold them for a long time. We grow and we've been doing that for 165 years, and we'll continue to do that. And so what isn't going to be the case is that we see volumes going in a certain direction. Therefore, we have to make up a gap. That's really not part of our plan.

這包括——我還讀過評論，食品公司現在正在考慮併購，因為它們的銷量下降了。答案是不行。我的意思是，當它出現時，我們不會玩短期遊戲。我們會選擇我們喜歡的品牌，並長期持有它們。我們不斷成長，我們已經這樣做了 165 年，我們將繼續這樣做。因此，情況不會是我們看到交易量朝著某個方向發展。因此，我們必須彌補缺口。這確實不是我們計劃的一部分。

Our next question comes from Andrew Lazar with Barclays.

我們的下一個問題來自巴克萊銀行的安德魯·拉扎爾。

I guess with the slower result expected in Pet sales for the year versus initial expectations, as you talked about, I'm curious if this impacts your sort of Pet capacity expansion plans in any way? You've obviously got a lot of work underway in trying to get capacity going and bringing a lot of that in-house over the period -- the course of the next year or 2.

我想，正如您所說，今年寵物銷售的預期結果比最初的預期要慢，我很好奇這是否會以任何方式影響您的寵物產能擴張計劃？顯然，您已經進行了大量工作，試圖在未來一兩年內提高產能並在內部引入大量產能。

Does that get any impact -- does that get impacted in any way? And I guess it's another way of asking it is, do you still see sort of Pet as a sort of high single-digit type of sales growth driver over time for the overall portfolio?

這會產生任何影響嗎—會以任何方式產生影響嗎？我想這是問問題的另一種方式是，隨著時間的推移，您是否仍然認為寵物是整個投資組合的一種高單位數銷售成長驅動力？

Sure. Appreciate the question, Andrew. This is Kofi. Look, I think the -- I'll start with the back end of your question first. I think we're still bullish on the long-term prospects for the Pet category. As a reminder it's a $44 billion category. It's supported by a 1% to 1.5% pet population growth. And we do think the prevailing trend over the long term will be humanization which will drive growth, in particular, benefit premium brands like Blue Buffalo.

當然。感謝這個問題，安德魯。這是科菲。聽著，我想──我先從你問題的後端開始。我認為我們仍然看好寵物類別的長期前景。提醒一下，這是一個價值 440 億美元的類別。 1% 到 1.5% 的寵物數量增長為其提供了支持。我們確實認為，從長遠來看，主流趨勢將是人性化，這將推動成長，特別是有利於 Blue Buffalo 等高端品牌。

I think in the short term, we aren't making dramatic changes to our capacity expansion plans on dry dog food. I think it's important as we think about that capacity coming online that late this year, we won't see the benefits this year. We would expect that it will give us longer-term benefits at a minimum of being able to steer more production to internal capacity, which will also help with margin reconstruction on this business over the intermediate term. So we still feel good. We're still bullish and a net investor on this business and on capacity and certainly for the long-term strategically.

我認為短期內，我們不會對乾狗糧的產能擴張計畫做出重大改變。我認為這很重要，因為我們考慮到今年稍後將上線該容量，但今年我們不會看到好處。我們預計這將為我們帶來長期利益，至少能夠將更多生產轉向內部產能，這也將有助於該業務在中期的利潤率重建。所以我們還是感覺很好。我們仍然看好這項業務和產能，並且是長期策略上的淨投資者。

Got it. And then, Jeff, I know you and others are certainly talking about the expectation to see improving sequentially volume trends as we go forward, just as the industry gets back to maybe a more normal cadence of sort of marketing and merchandising spending now that service levels are back in a better place and such, which it seems logical certainly.

知道了。然後，傑夫，我知道你和其他人肯定在談論隨著我們的前進，期望看到銷量趨勢不斷改善，就像行業恢復到更正常的營銷和商品支出節奏一樣，因為服務水平提高了回到了一個更好的地方等等，這看起來當然是合乎邏輯的。

But what I still don't I guess, have a lot of clarity on and maybe because it's just a lot of little things that add up is why do you think that broadly, industry volumes are still sort of where they are, even as pricing is starting to lap. And maybe it's just a matter of timing and these things don't always line up perfectly in a linear way. But I don't know there's been lots of different reasons people were traveling, now they're back at home or back to school or people hunkering down a little bit. I'm just curious if what your most sort of up-to-date thinking on that might be.

但我想，我仍然沒有弄清楚，也許是因為這只是很多小事加起來，為什麼你認為從廣義上講，行業銷量仍然處於原來的水平，即使定價開始圈了。也許這只是一個時間問題，而這些事情並不總是以線性方式完美排列。但我不知道人們旅行的原因有很多不同，現在他們回到家或回到學校，或者人們稍微休息一下。我只是好奇你對此的最新想法是什麼。

Yes, sure, Andrew. We spent quite a bit of time on this. And it's very clear to us that there are three broad reasons. And so there's not one thing. I mean, there are kind of three and broad reasons for what we see in the marketplace now, especially as one looks at Nielsen trends.

是的，當然，安德魯。我們在這上面花了相當多的時間。我們非常清楚，主要有以下三個原因。所以沒有一件事。我的意思是，我們現在在市場上看到的情況有三個廣泛的原因，特別是當人們審視尼爾森趨勢時。

The first one, we touched upon this a little bit earlier, but we do see quite a bit of growth in non-measured channels. We're up double digits in NAR, in the first quarter in non-measured channel, for example. And so, that is certainly a piece of why you see Nielsen data as it is.

第一個，我們早些時候談到了這一點，但我們確實看到非測量管道有相當多的增長。例如，第一季非測量通路的 NAR 成長了兩位數。因此，這肯定是您看到尼爾森數據的原因之一。

The second would be that food away from home, not necessarily in restaurant. Restaurant traffic has been pretty flat. In fact, quick service restaurant traffic has been up. So there's a move toward value and restaurants, but that traffic has remained relatively flat. What has changed is that we've seen a reversion back to people being mobile and more at education, and healthcare, and hotels, and lodging and that sort of thing, which I think is logical. In fact, if you look at the movement data through airports. It's up year-over-year. Now it's only back to pre-pandemic levels, but it's up quite a bit year-over-year. So that would kind of corroborate that thinking. So that's the second reason.

第二個是遠離家鄉的食物，不一定是在餐廳。餐廳客流量一直相當穩定。事實上，快餐店的客流量一直在上升。因此，人們開始轉向價值和餐廳，但客流量仍然相對穩定。發生的變化是，我們看到人們回歸到移動性，並且在教育、醫療保健、酒店、住宿等領域越來越多，我認為這是合乎邏輯的。事實上，如果你查看機場的行動數據。是逐年上漲的。現在只是回到了大流行前的水平，但同比增長了不少。所以這在某種程度上證實了這種想法。這是第二個原因。

And the third is there's probably, as we've seen another kind of recession, the consumer recessionary periods, even though technically, we're not in a recession. Consumer behavior, trying to economize. And so that may be going to smaller sizes and things like that, which in the very short term, these are [toxic pantry], but people aren't eating less. And we don't anticipate that they will be less. In fact, what I would say is as consumers start to get squeezed, what generally happens is people move more at home.

第三，正如我們已經看到的另一種衰退，即消費者衰退期，儘管從技術上講，我們並沒有處於衰退之中。消費者行為，試圖節約。因此，這可能會變得更小尺寸和類似的東西，在很短的時間內，這些都是[有毒食品儲藏室]，但人們並沒有減少飲食。我們預計它們不會減少。事實上，我想說的是，隨著消費者開始受到擠壓，通常發生的情況是人們更多地在家中移動。

And now the cost of eating out is roughly 4x what it is eating at home. And so as consumers get more squeezed, and as people get in there warmer routines in the fall, we would think that at-home eating will probably pick up a little bit, we'll find out. But that's what we think. And those are the three factors that is very clear to us are driving the current environment.

現在外出用餐的費用大約是在家吃飯的四倍。因此，隨著消費者受到更多擠壓，隨著人們在秋季進入更溫暖的生活習慣，我們認為在家吃飯可能會增加，我們會發現的。但這就是我們的想法。我們非常清楚，這三個因素正在推動當前的環境。

Our next question comes from Jason English with Goldman Sachs.

我們的下一個問題來自高盛的 Jason English。

I have another question on PAT, but not topline. Instead looking at margins, input costs have been stubbornly onerous for you in PAT, not just you, it seems like the industry at large. The rate of inflation, it's been a little higher and for a lot longer. What's driving that? And what's the forward? Like at what point do we start to get some relief there and get to a point where maybe you can get some margin recovery?

我還有一個關於 PAT 的問題，但不是最重要的。與其關注利潤率，投入成本對 PAT 來說一直是非常繁重的，不僅僅是你，似乎整個行業也是如此。通貨膨脹率有點高，而且持續時間更長。是什麼推動了這一點？那麼前鋒是什麼？就像我們從什麼時候開始得到一些緩解，並達到也許可以恢復一些利潤的程度？

And second part of my margin question. I know you expanded treat capacity coming into this year with a third-party vendor. Obviously, you don't need it with what's happening with treats, is that a take-or-pay agreement? And is that also a contributing factor to your margins? And if so, how big and how long will that headwind persist?

我的保證金問題的第二部分。我知道你們今年與第三方供應商一起擴大了處理能力。顯然，你不需要它來對待發生的事情，這是一個照付不議的協議嗎？這也是影響您利潤的因素嗎？如果是這樣，這種逆風會持續多久？

Sure. Sure. Thanks for the question, Jason. Just a couple of thoughts. So I think on the first, as you sort of take the frame on the year, given all of the challenges of the mix of business, we don't expect the operating profit margins to improve this year. As you think about the structure of inflation, some of the same trends that are driving stickiness in human food inputs are there and present and probably more so in some of the pet inputs.

當然。當然。謝謝你的提問，傑森。只是幾個想法。因此，我認為，首先，當你考慮今年的框架時，考慮到業務組合的所有挑戰，我們預計今年的營業利潤率不會改善。當你思考通貨膨脹的結構時，會發現一些推動人類食品投入黏性的相同趨勢是存在的，而且在某些寵物投入中可能更是如此。

In particular, the conversion costs, which are heavily factored labor, in particular in the inputs in pet food. So that -- until we start to see that trend come off, I wouldn't expect to see any near-term relief on the inflationary pressures on our input basket for pet food. I think on supply chain, our external suppliers, we generally have a pretty flexible structure. So I mean the benefit of the way we structured those contracts is as we need the capacity, we can get access to it. We don't have a hard floor fixed cost structure where we would be paying if we aren't using it.

特別是轉換成本，這是勞動力的重要組成部分，特別是在寵物食品的投入中。因此，在我們開始看到這種趨勢消失之前，我預期寵物食品投入籃子的通膨壓力短期內不會有所緩解。我認為在供應鏈上，我們的外部供應商，我們通常有一個相當靈活的結構。所以我的意思是，我們建立這些合約的方式的好處是，當我們需要容量時，我們可以存取它。我們沒有硬地板固定成本結構，如果我們不使用它，我們就要付費。

Jason, this is Jeff Siemon. I would just add on that second point. We were able to close down an internal factory, so we weren't adding capacity to the system. We were just reshuffling where that capacity on treats, specifically was located. And this supplier is -- we have a strategic partnership. We have our HMM cost savings program built into that contract. So we like what that can do for us from a profitability standpoint on that business.

傑森，這是傑夫·西蒙。我只想補充第二點。我們能夠關閉一家內部工廠，因此我們沒有增加系統的產能。我們只是重新調整了零食容量的具體位置。這個供應商是－我們有策略夥伴關係。我們在該合約中納入了 HMM 成本節約計劃。因此，從該業務獲利能力的角度來看，我們喜歡它能為我們帶來的好處。

And it's actually a lower cost alternative to the internal production, in this case.

在這種情況下，它實際上是內部生產的一種成本較低的替代方案。

Got it. That's really helpful. I appreciate that. And one more question on margins. Food service dipped sequentially. It's historically looking back, there's not a lot of seasonality there, but we've seen margins slip for 2 consecutive quarters, and we're now at 11%. What's driving the sequential dip? Is there anything unique about this quarter? Or is this like 11% rate, something we should take to the bank for the rest of the year?

知道了。這真的很有幫助。我很感激。還有一個關於利潤率的問題。餐飲服務連續下降。回顧歷史，季節性因素並不多，但我們已經看到利潤率連續兩季下滑，現在是 11%。是什麼推動了連續下跌？這個季度有什麼獨特之處嗎？或者這是否是 11% 的利率，我們應該在今年剩餘的時間裡將其存入銀行？

No, I would expect that we will see margins improve on this business. I do think one of the big factors has been the volatility in [flour] pricing as we've worked through this environment, which is a significant -- has been a significant headwind in the deconstruction margins. That's been put and a take as we've moved through the past several quarters, including the last couple. I think long-term, the challenge and the opportunity on this business will come from stabilization of the supply chain, giving us access to a more stable HMM delivery.

不，我預計我們會看到這項業務的利潤率有所提高。我確實認為，重要因素之一是[麵粉]價格的波動，因為我們在這種環境下工作，這是一個重要的因素，一直是解構利潤的重大阻力。這是我們在過去幾個季度（包括最後幾季）中提出和採取的。我認為從長遠來看，這項業務的挑戰和機會將來自供應鏈的穩定，使我們能夠獲得更穩定的HMM交付。

We are seeing that come through closer to our historical levels in the mid-single-digit range on this business. And we'd expect that the pricing benefits from last year's significant pricing will also help buoy margins as we move through the back of the year.

我們看到這項業務的業績接近歷史水平，處於中個位數範圍。我們預計，去年大幅定價帶來的定價優勢也將有助於今年下半年提振利潤率。

Our next question comes from Chris Carey with Wells Fargo Securities.

我們的下一個問題來自富國銀行證券的克里斯凱裡。

So just on the Pet business, you noted SRM and pack size would be one of the methods that you're using to kind of like stimulate sales. How long does it take to get those right pack sizes in market? And is SRM your current thinking kind of exclusively? Or are you starting to think about any pricing adjustments beyond just pack size and just overall SRM?

就寵物業務而言，您指出 SRM 和包裝尺寸將是您用來刺激銷售的方法之一。需要多長時間才能在市場上獲得合適的包裝尺寸？ SRM 是您目前的獨特想法嗎？或者您是否開始考慮除了包裝尺寸和整體 SRM 之外的任何定價調整？

Yes, Chris, on the -- good questions. On the Pet business, we're doing a couple of things. First, and someone asked this question earlier about the amount of marketing spend, but also what we're spending it on. On what we're spending it on, the first thing I would say is that we're going back to some more hard-hitting advertising that really gives pet parents a very rational reason to believe why Blue Buffalo feeds them like family. The equity has held up well and -- and we think in this environment, direct comparative advertising on why exactly pet parents should pay for Blue is really important. So we're going back to that. That's the first thing I would say.

是的，克里斯，關於——很好的問題。在寵物業務上，我們正​​在做幾件事。首先，有人早些時候問過這個問題，涉及行銷支出的金額，以及我們將其花在什麼方面。關於我們的支出，我要說的第一件事是，我們將回歸一些更有力的廣告，這確實給寵物父母一個非常合理的理由，讓他們相信為什麼 Blue Buffalo 像家人一樣餵養他們。股權一直保持良好，我們認為在這種環境下，直接比較廣告來說明為什麼寵物父母應該為 Blue 付費確實很重要。所以我們回到這一點。這是我要說的第一件事。

On the pricing itself from price pack architecture, we're doing along several lines of our products. I'll give you just a couple of examples. And in our dry pet food line, we didn't have a medium size. We had a lot of large sizes but not some medium sizes. So we're introducing those. And those start rolling out now but it takes a while for them to kind of get going. The same will be in treating. We didn't -- we are introducing some sizes that has some more entry-level price points. That doesn't mean low margin for us, it just means lower price points. So it's good for pet parents.

關於價格包架構的定價本身，我們正在沿著我們的產品的幾條線進行。我只舉幾個例子。在我們的乾燥寵物食品系列中，我們沒有中等尺寸的產品。我們有很多大尺寸的，但沒有一些中尺寸的。所以我們正在介紹這些。這些現在開始推出，但需要一段時間才能開始。治療時也是如此。我們沒有—我們正在推出一些具有入門級價格點的尺寸。這對我們來說並不意味著低利潤，而只是意味著更低的價格。所以這對寵物父母來說是有好處的。

And then in wet food, we're looking at some variety packs and things like that, which will probably be more weighted toward the back half of the year. So those are just a few examples of things we are doing to make sure that consumers understand the value. What we're not going to do is disrupt the value proposition of Blue Buffalo, which is a premium brand. And consumers know us a premium brand. We've spent lots of money and lots of years making it the best brand in the premium part of the category. And what I can assure you we'll do is not to drop that.

然後在濕食品方面，我們正在考慮一些品種包裝之類的東西，這些產品在今年下半年可能會更加重要。這些只是我們為確保消費者了解其價值而採取的一些措施的例子。我們不會做的是破壞 Blue Buffalo 的價值主張，它是一個優質品牌。消費者知道我們是一個優質品牌。我們花費了大量資金和多年時間，使其成為該類別高端產品中的最佳品牌。我可以向你保證，我們會做的就是不會放棄這一點。

Okay. Very helpful. Just one quick follow-up. In the press release, you noted that gross margin had benefited from favorable mark-to-market. Can you just remind us of the typical hedging strategy and where you sit for the year, basically trying to understand where there might be some variability if we see any move to inputs?

好的。很有幫助。只需一個快速跟進。在新聞稿中，您指出毛利率受益於有利的市價計算。您能否提醒我們典型的對沖策略以及您今年的立場，基本上是試圖了解如果我們看到投入有任何變化，哪裡可能會出現一些變化？

Sure. So as a reminder, our adjusted gross margin, obviously does not include that mark-to-market benefit. So that is an effect of our GAAP reporting where we do not get the hedge accounting treatment on our commodity hedging program. As a reminder, we're generally trying to hedge out at the beginning of the year at about 50%. So given where we are in the year, we're about 65% hedged across all of our 4 businesses and across all the inputs.

當然。因此，提醒一下，我們調整後的毛利率顯然不包括以市值計價的收益。因此，這是我們公認的會計原則報告的影響，我們沒有對我們的商品對沖計劃進行對沖會計處理。提醒一下，我們通常會在年初嘗試以 50% 左右的利率進行對沖。因此，考慮到我們今年的處境，我們對所有 4 項業務和所有投入進行了大約 65% 的對沖。

Our next question comes from Rob Dickerson with Jefferies.

我們的下一個問題來自 Jefferies 的 Rob Dickerson。

Maybe if we just move to Cereal for a minute. It sounds like just some various sources, I believe yourselves included, there's not necessarily a tremendous amount of growth expected in the category over the next few years. So Jeff, I -- it's probably easier to kind of comment on the category maybe reverting right back to kind of pre-COVID dynamics. For the same time, I felt like during that period of time, there was some acceleration for General Mills specifically, just speaking to the quality of the power of the brand.

也許我們先談談穀物食品。聽起來只是一些不同的來源，我相信包括你們自己在內，未來幾年該類別不一定會有巨大的成長。所以，傑夫，我——對這個類別的評論可能會更容易，可能會回到新冠疫情之前的動態。同時，我覺得在那段時間裡，通用磨坊 (General Mills) 出現了一些加速，這只體現在品牌力量的品質上。

So like your own Cheerios, Cinnamon Toast Crunch, has done really well. So I'm just curious because you think forward, next year, next 3 years, kind of like why even state that you would think that category might not grow kind of relative to overall food just as a reminder. And then just secondly, just given the power of your portfolio, like within that dynamic, like I guess what's the conviction level and your ability to continue to gain share like you've done for, let's say, the prior 7 years or so?

就像你自己的麥片、肉桂吐司脆餅一樣，效果非常好。所以我很好奇，因為你展望未來，明年，未來三年，有點像為什麼會說你認為該類別相對於整體食品可能不會增長，只是作為提醒。其次，考慮到你的投資組合的力量，就像在這種動態中一樣，我猜你的信念水平和你繼續獲得份額的能力是多少，就像你在過去 7 年左右所做的那樣？

Yes. Thanks, Rob. Let me provide some commentary and then Jon follow up as necessary. The first reminder, I would let you know is that cereals still the #1 item in the morning for breakfast. And it's almost 20% of breakfast eatings, I guess 19%. So that's here in the U.S. So it's still highly consumed item in the morning. We've been doing very well in cereal. As you know that we've grown more than 20% over the last 5 years. We've gained share, I think, 5 years in a row. We have the 2 biggest brands in the category in Cheerios and Cinnamon Toast Crunch.

是的。謝謝，羅布。讓我提供一些評論，然後喬恩根據需要進行跟進。第一個提醒，我要告訴你的是，穀物仍然是早上早餐的第一道食物。幾乎佔早餐的 20%，我猜是 19%。所以在美國，它仍然是早上消耗較多的物品。我們在穀物方面做得很好。如您所知，過去 5 年我們的成長超過 20%。我認為，我們已經連續五年獲得了市場份額。我們擁有該類別中最大的 2 個品牌：Cheerios 麥圈和肉桂吐司脆餅。

We have almost 50% of categories new product volume, and I think it's 47%. And 4 of the last 5 big items are from General Mills. So we're innovating well. We're developing our equities well, we continue to grow. And so my expectation for our cereal business is that we grow a little bit every year and hopefully take a little bit of share every year. But keeping in growth, what everybody else says, you'll have to ask the rest of the competitors in the category, but we like Cereal. We like our brands. I love how we've been competing. So Jon, anything you want to add to that?

我們幾乎有 50% 的品類新產品量，我認為是 47%。最後5件大件中有4件來自通用磨坊。所以我們創新得很好。我們的股票發展良好，我們持續成長。因此，我對穀物麥片業務的期望是，我們每年都會成長一點，並希望每年都能獲得一點份額。但要保持成長，正如其他人所說，你必須詢問該類別中的其他競爭對手，但我們喜歡穀物。我們喜歡我們的品牌。我喜歡我們的競爭方式。喬恩，你還有什麼要補充的嗎？

I think you hit it well. I mean at the end of the day, we believe in cereal, and we think it's a great category. As Jeff said, it's the most widely eaten breakfast in America today. And as Jeff mentioned, we've been really performing well across the board. And we plan to continue to do that. As Jeff said, we don't need to grow a lot. We can grow a little bit and really like the way that the business runs for us, the P&L looks as well.

我認為你打得很好。我的意思是，歸根結底，我們相信穀物食品，我們認為這是一個很棒的類別。正如傑夫所說，這是當今美國最廣泛食用的早餐。正如傑夫所提到的，我們在各方面都表現得很好。我們計劃繼續這樣做。正如傑夫所說，我們不需要成長太多。我們可以發展一點，並且非常喜歡我們的業務運作方式，損益表看起來也是如此。

So we're going to keep investing. We're more excited today about Cereal than we were even a decade ago. As Jeff mentioned, grew share 6 of the last 7 years. We're the clear share leader today. And again, that we're have been in the history of the category, and in the last 5 years or so, and we'll keep investing and keep growing the category.

所以我們將繼續投資。今天，我們對 Cereal 的興趣甚至比十年前還要興奮。正如 Jeff 所提到的，過去 7 年中份額增長了 6 倍。今天我們是明顯的份額領導者。再說一遍，我們已經進入了該類別的歷史，在過去 5 年左右的時間裡，我們將繼續投資並不斷發展該類別。

The other question we get a lot is, what happens if one of our major competitors gets more focused? And what we would tell you is that's actually a good thing. If you go back through history when the 2 major competitors in the category are supporting the category with marketing as well as innovation, the category does better. So we hope that everyone comes to play, and we can continue to grow those categories as we move forward.

我們經常遇到的另一個問題是，如果我們的主要競爭對手更專注，會發生什麼？我們要告訴你的是，這其實是一件好事。如果你回顧歷史，當該類別的兩個主要競爭對手透過行銷和創新來支持該類別時，該類別會做得更好。因此，我們希望每個人都來玩，並且我們可以在前進的過程中繼續擴大這些類別。

All right. Superb. And then just a quick clarification question on Pet. A lot of the commentary is really around like Pet not really improving that much as we get through the year, given the drivers relative to Q1. I believe last year that was Q2, you did have a fairly pronounced inventory de-load.

好的。高超。然後是一個關於寵物的快速澄清問題。考慮到相對於第一季的車手，許多評論都是圍繞著佩特這一年的表現並沒有真正提高那麼多。我相信去年第二季度，庫存確實出現了相當明顯的下降。

So should we be thinking that kind of starts to revert out some to provide some tailwind to your volume dynamic in Q2 specific to Pet? Or is it basically maybe there was some de-load and then maybe a little bit of reload in Q3? But maybe some of that inventory is just kind of now being sold through kind of as normal without maybe the more traditional kind of year-over-year rebound from a deal, if that makes sense?

那麼，我們是否應該認為，這種情況開始恢復一些，從而為第二季度寵物的交易量動態提供一些推動力？或者基本上可能在第三季度進行了一些卸載，然後可能進行了一些重新加載？但也許其中一些庫存現在只是透過正常方式出售，而沒有從交易中實現更傳統的逐年反彈，如果這有意義的話？

The -- I guess what I would say is that, one of the things I've learned about Pet in the short 5 years we owned it, first of all, it's a great category and brand, we've doubled the business. But also trying to go quarter-by-quarter on a business with this much e-commerce and everything else is a tough way to go. So I'm not going to try to prognosticate what happens.

我想我想說的是，在我們擁有 Pet 的短短 5 年裡，我了解到的一件事是，首先，它是一個很棒的品類和品牌，我們的業務翻了一番。但試圖按季度開展如此多的電子商務和其他業務的業務是一條艱難的道路。所以我不會嘗試預測會發生什麼。

But you do bring up the point, we had an inventory de-load last second quarter. That is true. We're going up against that but it's also true that inventories vary quite a bit. And as the business has slowed down a little bit, inventory tends to come out of the system. And so we'll see what happens in the second quarter. But we're not anticipating a big rebound in the second quarter from what we saw in the first quarter in order for us to hit our guidance.

但你確實提出了這一點，我們在上第二季度進行了庫存減載。那是真實的。我們反對這一點，但庫存確實存在很大差異。隨著業務稍微放緩，庫存往往會從系統中流出。所以我們將看看第二季會發生什麼。但我們預計第二季不會比第一季大幅反彈，從而達到我們的指導。

Our next question comes from Max Gumport with BNP Paribas.

我們的下一個問題來自法國巴黎銀行的 Max Gumport。

As the industry starts to return to quality merchandising and with your own displays were up mid-single digits, we're hearing that the lift associated with some of these events, especially endcap displays, aren't proving to be as incremental as might have been anticipated. We're wondering if you're seeing this dynamic and also what you think is driving it?

隨著行業開始回歸高品質的銷售，並且您自己的顯示器的銷量上升了中個位數，我們聽說與其中一些事件（尤其是端蓋顯示器）相關的提升並沒有被證明是像可能的那樣增量已被預料到。我們想知道您是否看到了這種動態以及您認為是什麼推動了它？

Jon Nudi, do you want to comment on that?

喬恩·努迪，你想對此發表評論嗎？

Yes, absolutely. So as we look at and merchandising at large, I mentioned earlier, we see frequency up a bit of mid-single digits but fell down about 10% versus pre-pandemic levels. One of the things, as I mentioned before, we've invested in is SRM capabilities. Our competition has as well and our retailers have also. So as all of us are modeling the various pricing actions we can take. I think some of the tactics are different than maybe what we owned pre-pandemic.

是的，一點沒錯。因此，當我們觀察整個銷售情況時，我之前提到過，我們看到頻率上升了一點，但與大流行前的水平相比下降了約 10%。正如我之前提到的，我們投資的其中一件事是 SRM 功能。我們的競爭對手也是如此，我們的零售商也是如此。因此，當我們所有人都在對我們可以採取的各種定價行為進行建模時。我認為有些策略可能與我們在疫情前所採取的策略不同。

I think, we all know that driving deep discounts actually drives dollars out of the category. It drives profit out of the category as well. So what you're seeing is maybe more frequency at higher price points. And as a result of that, maybe the lift on each deal isn't higher. But at the end of the day, when you add up all of your merchandising across the year, a little bit more frequency with higher price points, actually drives more dollars for the category and our retailers more for us as well.

我想，我們都知道，大幅折扣實際上會讓美元退出該類別。它也推動了該類別的利潤。所以你所看到的可能是更高的價格點的頻率更高。因此，也許每筆交易的提升並不會更高。但歸根結底，當你把全年的所有商品加起來時，頻率更高、價格更高，實際上會為該類別帶來更多收入，也為我們的零售商帶來更多收入。

So you are right, we're seeing slightly smaller lifts off a higher price points. But at the end of the day, we believe it's a good thing for a category. And again, the big difference, I think, versus maybe in the past are the SRM capabilities that all of us have delivered or developed and pretty sophisticated models now that we all can have a real -- a good conversation with retailers on what to expect from a merchandising performance.

所以你是對的，我們看到較高價格點的漲幅略小。但歸根結底，我們相信這對一個類別來說是一件好事。再說一遍，我認為，與過去相比，最大的區別可能是我們所有人都已經交付或開發的 SRM 功能以及相當複雜的模型，現在我們都可以與零售商就期望進行真正的良好對話從商品推銷的表現來看。

Okay. Frank, I think we're going to wrap it up there. I appreciate everyone's time on the call this morning. I know we didn't get to everyone, so please feel free to follow up with any questions throughout the day or the coming days. Look forward to continuing to connect with you, and we'll look forward to speaking again next quarter. Thanks so much.

好的。法蘭克，我想我們就到此為止吧。我感謝大家今天早上撥冗參加電話會議。我知道我們並沒有聯繫到所有人，所以請隨時跟進全天或未來幾天的任何問題。期待繼續與您聯繫，我們期待下季度再次交談。非常感謝。

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.

今天的電話會議到此結束。我們感謝您的參與，並請您斷開線路。祝大家有個美好的一天。