通用磨坊 (GIS) 2024 Q2 法說會逐字稿

Greetings, and welcome to the General Mills Second Quarter F24 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded, Wednesday, December 20, 2023. I would now like to turn the conference over to Jeff Siemon, Vice President for Investor Relations and Treasurer. Please go ahead.

您好，歡迎參加通用磨坊第二季 F24 財報電話會議。 （操作員說明）謹此提醒，本次會議將於 2023 年 12 月 20 日星期三進行錄製。我現在將會議交給投資者關係副總裁兼財務主管傑夫·西蒙 (Jeff Siemon)。請繼續。

Thank you, Dina, and good morning to everyone. Thank you for joining us this morning for our Q&A session on our second quarter fiscal 2024 results. I hope everyone had time to review our press release, listen to the prepared remarks and view our presentation materials, which were made available this morning on our Investor Relations website.

謝謝你，迪娜，祝大家早安。感謝您今天早上參加我們關於 2024 財年第二季業績的問答環節。我希望每個人都有時間閱讀我們的新聞稿，聽取準備好的發言並查看我們的簡報資料，這些資料今天早上在我們的投資者關係網站上提供。

Please note that in our Q&A session this morning, we may make forward-looking statements that are based on our current views and assumptions. 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.

請注意，在今天早上的問答環節中，我們可能會根據我們目前的觀點和假設做出前瞻性陳述。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。

I'm here with Jeff Harmening, our Chairman and CEO; and Kofi Bruce, our CFO. So let's go ahead and get to the first question. Dina, can you please get us started?

我和我們的董事長兼執行長 Jeff Harmening 一起來到這裡。和我們的財務長科菲·布魯斯 (Kofi Bruce)。那麼讓我們繼續討論第一個問題。迪娜，你能讓我們開始嗎？

(Operator Instructions) Our first question is coming from the line of David Palmer with Evercore ISI.

（操作員說明）我們的第一個問題來自 Evercore ISI 的 David Palmer。

A question on North America retail margins. They've been impressive in spite of the volume declines we've been seeing. Do you think that the segment margin can hold near these levels, given what's going on with volume trends? And I guess what -- a couple of factors I'm thinking about is some of your high-margin categories like dough might be a negative mix effect. But then again you're talking about accelerating productivity gains. So curious about the margins for that segment.

關於北美零售利潤率的問題。儘管我們看到銷量有所下降，但它們仍然令人印象深刻。考慮到銷售趨勢，您認為細分市場利潤率可以保持在這些水準附近嗎？我想，我正在考慮的幾個因素是，一些高利潤類別（例如麵團）可能會產生負面的混合效應。但話又說回來，您正在談論加速生產力的提升。對該細分市場的利潤率非常好奇。

Yes. David, thanks for the question. Just to rewind a bit, we've seen the margin improvement, to your point, largely on the backs of really strong HMM delivery. So one of the features of this environment has been sort of the stabilization of the supply chain environment, which has allowed us to step up HMM more acutely on this business than our other segments and also to get at some of those disruption-related costs. We've made really strong margin progression gains on this business on the backs of those 2 things. I expect that to abate a bit here as we move forward just as a result of having already gotten at a good chunk of those disruption-related costs. So on balance, I see this business poised for more stability in aggregate.

是的。大衛，謝謝你的提問。回顧一下，我們已經看到了利潤率的改善，就您的觀點而言，很大程度上是由於 HMM 交付非常強勁。因此，這種環境的特徵之一是供應鏈環境的穩定性，這使我們能夠比其他細分市場更積極地發展 HMM 業務，並獲得一些與中斷相關的成本。在這兩件事的支持下，我們在這項業務上取得了非常強勁的利潤成長。我預計，隨著我們前進，這種情況會減弱，因為我們已經獲得了大部分與中斷相關的成本。因此，總的來說，我認為這項業務總體上將更加穩定。

And then with regard to the pet business, maybe is there a comment you want to make there about what the biggest fix will be from here, Wilderness, for example, has been relatively weak. But what do you think the best earliest fixes will be for that business? And what are some of the long-term things you're looking to do to improve the trajectory.

然後關於寵物業務，也許您想對這裡最大的修復是什麼發表評論，例如，荒野相對較弱。但您認為該業務最早的最佳解決方案是什麼？您希望採取哪些長期措施來改善發展軌跡？

Yes. Thanks, David. This is Jeff. I would say that in the presentation, we shared 4 things we're working on. And a couple of things we know that we can improve upon to improve the profile of the business. And 2 of them were -- we feel good about, and that's important because it shows the Blue brand is still strong. And so as we look at Life Protection Formula, we've changed our advertising on that. The business has responded nicely, and we've seen steady improvements there. We have changed the merchandising on our Treats business. And while it's not all the way to bright, we've seen significant improvement throughout the second quarter on that business. And yet, the results are still not what we want to be. And so that leads to what needs to come next.

是的。謝謝，大衛。這是傑夫。我想說的是，在演示中，我們分享了我們正在做的四件事。我們知道有幾件事可以改進，以提高業務形象。其中兩個是——我們感覺很好，這很重要，因為它表明 Blue 品牌仍然強大。因此，當我們考慮生命保護配方時，我們改變了我們的廣告。業務反應良好，我們看到了穩定改善。我們改變了零食業務的推銷方式。雖然並不是一路光明，但我們在第二季度看到了該業務的顯著改善。然而，結果仍然不是我們想要的。這就是接下來需要做的事情。

And I think there are really a couple of businesses that we need to improve. One is our wet business and our wet pet food. And so you'll see us introduce some value in variety packs in the back half of the year starting in January. And that we'd like to see improvements in that. And then the biggest fixes which will take a little bit longer, and they're kind of interlinked, but they're not the same. One is Wilderness. And we really need to reposition the Wilderness brand and do some work on that. And that will take a little while to get back to full health.

我認為我們確實有一些業務需要改進。一是我們的濕業務和我們的寵物濕食。因此，您會看到我們從一月份開始的下半年推出了一些有價值的品種包。我們希望看到這方面的改進。然後是最大的修復，需要更長的時間，它們是相互關聯的，但它們並不相同。一是荒野。我們確實需要重新定位荒野品牌並為此做一些工作。這需要一段時間才能完全恢復健康。

The other is that we haven't -- the pet specialty channel in itself has not done particularly well. We've over-indexed in that channel. And there are some things we can probably do to perform better in that channel even while we keep investing to grow our food, drug and mass channel, which we're quite pleased with the results and online with the results.

另一個是我們還沒有——寵物專業頻道本身做得不是特別好。我們對該頻道的索引過多。即使我們繼續投資發展我們的食品、藥品和大眾管道，我們也可以採取一些措施來在該管道中表現更好，我們對結果和線上結果非常滿意。

The other thing, I guess, I would add is we did have -- as I look at the back half of the year, the reason we're not saying recovery or stabilization is that in the back half, we had shipments ahead of sales last year. And so we're lapping. That's particularly true in the third quarter. And so even to the extent we see some stabilization in the sales trends in Pet, the reported net sales are going to lag that because of some inventory build in the back half of the year. So those are the things that we need to do. Some of them are underway, and we like what we see so far. And there are a couple more that we really need to work on and will take a little bit longer.

我想，我要補充的另一件事是，我們確實做到了——正如我所看到的那樣，我們沒有說復甦或穩定的原因是，在下半年，我們的發貨量超過了銷售量去年。所以我們正在研磨。第三季尤其如此。因此，即使我們看到寵物銷售趨勢穩定，但由於下半年庫存增加，報告的淨銷售額仍將落後。這些就是我們需要做的事情。其中一些正在進行中，我們喜歡目前所看到的情況。還有一些我們確實需要解決的問題，並且需要更長的時間。

Our next question is coming from the line of 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。

Jeff, I wanted to maybe chat a bit about -- I realize, as you've talked about in the prepared remarks, the company has some EPS flexibility despite the weaker sales in the form of lower sort of compensation expense versus last year, the HMM that's been stepped up, some more share repurchase versus your sort of initial expectations. So I guess my question is, is '24 a year where maybe the company perhaps should lean in even more and maybe be a little less concerned about sort of a specific EPS range, if you will, in order to set it up -- set the company up for more sustainable sort of growth in '25 and beyond. That's a question I'm sort of getting a lot this morning. So I just wanted to get your thoughts on that, if I could.

傑夫，我也許想聊聊——我意識到，正如您在準備好的發言中談到的那樣，儘管與去年相比，由於補償費用較低而導致銷售疲軟，但該公司的每股收益具有一定的靈活性， HMM 已經加大了力度，與您最初的預期相比，進行了更多的股票回購。所以我想我的問題是，「一年24年，如果你願意的話，公司也許應該更多地傾斜，也許不太關心某種特定的每股收益範圍，以便設置它——設置該公司準備在25 年及以後實現更永續的成長。今天早上我收到了很多這樣的問題。所以如果可以的話，我只是想聽聽你對此的想法。

Yes, Andrew, I'm glad you asked, and I appreciate the fact you're getting a lot. I think it's a really important question because our job is to maximize long-term shareholder return, not any particular quarter or frankly, even in any particular year. And so one of the things that we -- as we look back over time, when the consumer is stressed and the results are harder to come by, one of the things we've seen successful companies like ours do is reinvest for the future. And that comes in the form of consumer investment, but also investment in capabilities, things like strategic revenue management and performance marketing and automating supply chains and things like that.

是的，安德魯，我很高興你提出這個問題，我很感激你得到了很多。我認為這是一個非常重要的問題，因為我們的工作是最大化長期股東回報，而不是任何特定的季度，坦白說，即使在任何特定的年份。因此，當我們回顧過去，當消費者感到壓力且難以獲得結果時，我們看到像我們這樣的成功公司所做的事情之一就是為未來進行再投資。這不僅以消費者投資的形式出現，也以能力投資的形式出現，例如策略收入管理、績效行銷以及供應鏈自動化等。

And so incumbent included in our results is an increase in consumer spending, even though we've guided down on our sales for the year, we'll still invest in consumer spending. And we're still investing in all the capabilities that we know will drive our growth, not only for this year but in years to come. And then that's with regard to growing revenues, but also maintaining our discipline on HMM and automation and using AI and our supply chains are going to be important parts of that as well. So one of the things that I want to make sure you can tell your investors is that while our profit guidance is still 4% to 5% growth on EPS, that's inclusive of making sure we maintain our reinvestment in the business. And we're able to do that because our HMM levels are very high right now. We're taking out the cost from our supply chain. And as you mentioned, our admin costs are declining.

因此，我們的業績中必須包括增加消費者支出，儘管我們下調了今年的銷售額，但我們仍將投資於消費者支出。我們仍在投資所有我們知道將推動我們成長的能力，不僅是今年，而且是未來幾年。然後是收入的成長，但維持我們在 HMM 和自動化方面的紀律以及使用人工智慧和我們的供應鏈也將成為其中的重要組成部分。因此，我想確保您可以告訴投資者的一件事是，雖然我們的利潤指導仍然是每股收益 4% 至 5% 的成長，但這包括確保我們維持對業務的再投資。我們能夠做到這一點是因為我們的 HMM 水平現在非常高。我們正在從供應鏈中扣除成本。正如您所提到的，我們的管理成本正在下降。

Great. And then just on -- a bit more on the faster competitor normalization of shelf availability comments that you made in the prepared remarks. Is it an issue in a specific category? Or is it more broad-based? And is it General Mills actually losing shelf space or really just others now having better availability in the slots that they have? And what have you seen that mean for promotional intensity or not?

偉大的。然後，再談談您在準備好的評論中所做的評論，即競爭對手更快地將貨架供應正常化。這是特定類別的問題嗎？或者它的基礎更廣泛？是通用磨坊實際上失去了貨架空間，還是實際上只是其他公司現在擁有更好的貨架空間？您認為這對於促銷強度意味著什麼？

Andrew, I want to try to address all those questions and if I miss one, come back because I didn't mean to skip. On the on-shelf availability, when we put our guidance together for this year, I mean, we grew at 10% last year and our original guidance was 3% to 4% this year. And so we knew that on-shelf ability would be a headwind for us because, frankly, our supply chain held up a lot better than our competition did a year ago. And so we calculate -- we factored that into our guidance for this year. But the fact of the matter is on-shelf availability for our competition increased a lot faster, particularly private label and small players, faster than we had anticipated.

安德魯，我想嘗試解決所有這些問題，如果我錯過了一個，請回來，因為我無意跳過。關於現貨供應，當我們把今年的指導放在一起時，我的意思是，去年我們成長了 10%，而今年我們最初的指導是 3% 到 4%。因此，我們知道貨架能力對我們來說將是一個阻力，因為坦白說，我們的供應鏈比一年前的競爭對手好得多。所以我們計算——我們將其納入今年的指導中。但事實是，我們的競爭對手的貨架供應量成長速度要快得多，特別是自有品牌和小型廠商，速度比我們預期的要快。

Importantly, they're now catching up to our on-shelf availability. And so we've actually improved our on-shelf availability this year. So it's not as if we have gone backwards. We are -- our on-shelf availability is higher now. And you can see that out because we have reduced our disruption costs. It's just that our competitors have increased quite a bit and now have kind of drawn even with us after trailing for like 4 years. So that's the first part of the question. We anticipated it, but not the rate of change.

重要的是，他們現在正在趕上我們的貨架供應情況。因此，今年我們實際上提高了貨架供應量。所以我們並沒有倒退。我們現在的貨架供應量更高了。您可以看到這一點，因為我們降低了中斷成本。只是我們的競爭對手增加了很多，在落後了四年之後，現在已經和我們平手了。這是問題的第一部分。我們預料到了它，但沒有預料到變化的速度。

In terms of the -- and we'll lap -- we'll start lapping that really in kind of late April and May of this year. So that's when we started to see this impact.

就我們將要繞圈而言，我們將在今年四月下旬和五月開始真正進行繞圈。那就是我們開始看到這種影響的時候。

In terms of distribution, one of the things -- our teams across the board, certainly in North America retail are really executing well. Our share of distribution is actually up. And so there's not a problem with our distribution. In fact, the opposite. Our distribution looks good. And I will say that I'm really excited about our innovation in the back half of this year, which I'm hoping will bolster that further. We've got good innovation in cereal. We've got good innovation in yogurt, in soup, in Old El Paso and Haagen-Dazs. And so as I look across our big billion-dollar businesses, our innovation lineup is really good and frankly, better than it was last year. And so as we look to the next half of the year, I think we can see our distribution continuing to build.

在分銷方面，其中一件事是——我們的整個團隊，當然是北美零售業的團隊，執行得非常好。我們的分配份額實際上有所增加。所以我們的發行版沒有問題。事實上，恰恰相反。我們的分佈看起來不錯。我想說，我對今年下半年的創新感到非常興奮，我希望這將進一步推動這一點。我們在穀物方面有很好的創新。我們在優格、湯、老埃爾帕索和哈根達斯方面都有很好的創新。因此，當我縱觀我們數十億美元的大型業務時，我們的創新陣容非常好，坦白說，比去年更好。因此，當我們展望下半年時，我認為我們可以看到我們的發行版繼續建造。

As what it means to promotional, the promotional environment has been a very rational promotional environment against some thoughts to the contrary. We have seen the number of promotions pick up this year as we expected because of on-shelf availability. Importantly, we've also seen the quality of the merchandising, specifically the quality of merchandising that we get has also accelerated. And because the quality of merchandising has improved for us, we've seen the list we received, but also the ROIs we receive have been better than they were a year ago.

就促銷而言，促銷環境一直是個非常理性的促銷環境，反對一些相反的想法。由於貨架上的供應情況，我們看到今年的促銷活動數量如我們預期的增加。重要的是，我們也看到了商品推銷的質量，特別是我們獲得的商品推銷的品質也在加快。由於我們的銷售品質有所提高，我們看到了收到的清單，而且我們收到的投資回報率也比一年前更好。

But importantly, and this is a really important point, even though the level of merchandising has increased in frequency, it has not increased in depth. And even the frequency is still below where it was before the pandemic and the depth of the promotion is well below. So yes, we're seeing increased levels of promotion. We expected that. And frankly, the returns are better because of the quality of merchandising that we're seeing.

但重要的是，這是非常重要的一點，儘管推銷的頻率增加了，但深度卻沒有增加。甚至頻率仍低於疫情前的水平，促銷的深度也遠低於疫情前的水平。所以，是的，我們看到促銷力道增加。我們預料到了。坦白說，由於我們所看到的商品質量，回報更好。

Our next question is coming from the line of Ken Goldman with JPMorgan.

我們的下一個問題來自摩根大通的肯‧戈德曼。

When you visited New York a couple of months ago, you mentioned that your -- you may lean in a little bit harder to share repo. So I don't think today's announcement on that line item was a huge surprise. But I guess I'm curious, you've also spoken about your ongoing desire to be flexible for potential strategic acquisitions. And I'm just wondering, is there any read-through from your willingness to purchase more shares than you initially expected into how you kind of see the ripeness of M&A opportunities, I guess, in today's market?

當您幾個月前訪問紐約時，您提到您可能會更加努力地分享回購協議。因此，我認為今天關於該訂單項目的公告並不令人意外。但我想我很好奇，您也談到了您一直希望能夠靈活地進行潛在的策略收購。我只是想知道，您是否願意購買比最初預期更多的股票，以了解您如何看待當今市場中併購機會的成熟度？

Yes, Ken. This is Jeff. Let me start with that question. And Kofi, if you want to add any color commentary that would probably be helpful too. But know the fact that we repurchased more shares in the quarter than originally anticipated at the beginning of the year is not a reflection of a change on how we view capital allocation. We're investing quite a bit in the business and then increasing our dividend. And then if we see M&A, we'll certainly do more M&A. And if not, we said we repurchase shares, which is what we're doing. And importantly, our net debt-to-EBITDA levels are in a good place. And so to the extent that we see something that we think can create shareholder value in terms of portfolio reshaping, we're more than capable of doing that. So what you've seen is really a reflection of our executing against the capital allocation priorities we already stated.

是的，肯。這是傑夫。讓我從這個問題開始。還有科菲，如果你想添加任何色彩評論，這可能也會有幫助。但要知道，我們在本季回購的股票數量多於年初最初預期的數量，這一事實並不反映我們對資本配置的看法發生了變化。我們在業務上進行了大量投資，然後增加了股息。如果我們看到併購，我們肯定會進行更多的併購。如果沒有，我們就會回購股票，而這就是我們正在做的事情。重要的是，我們的淨債務與 EBITDA 水準處於良好狀態。因此，只要我們看到一些我們認為可以在投資組合重塑方面創造股東價值的東西，我們就完全有能力做到這一點。因此，您所看到的實際上反映了我們對我們已經聲明的資本分配優先事項的執行情況。

And I think, Ken, the only other thing I'd add is just to state one of the obvious sort of underlying points, we're getting additional leverage out of our repurchase activity. So dollars are going further because of the pressure, obviously, on the stock as much as the stock has come down since the beginning of our fiscal year. So that's also amplifying the impact in terms of the diluted share count and the acceleration into the front half of the year.

我認為，肯，我要補充的唯一一件事就是陳述一個明顯的基本點之一，我們正在從回購活動中獲得額外的槓桿作用。因此，美元將進一步走高，顯然是因為該股面臨壓力，而該股自本財年年初以來已經下跌。因此，這也放大了稀釋股票數量和今年上半年加速的影響。

But I think I'd reiterate Jeff's point, we expect to have more than ample flexibility for M&A should we see the right project or set of projects. None of the things we're doing on share repurchase, we would expect to take our leverage above 3x net debt to EBITDA.

但我想我會重申傑夫的觀點，如果我們看到合適的項目或一組項目，我們預計將有足夠的靈活性進行併購。無論我們在股票回購方面做什麼，我們都希望我們的槓桿率高於 EBITDA 淨債務的 3 倍。

And then changing subjects, one of the more appealing elements of pet food as a category has been the high level of switching costs, especially in premium where there's less price sensitivity, too. Just curious, though, given some of the challenges facing Blue, is it fair to wonder if maybe the cost to switch isn't quite as high as we all thought and that premium isn't quite as protected? Or do you think maybe, hey, we're just in a unique time when the specialty channel is kind of lagging at the same exact time that the consumer suddenly worse off?

然後換個話題，寵物食品作為一個類別更有吸引力的因素之一是高水準的轉換成本，特別是在價格敏感度較低的高端食品中。不過，只是好奇，考慮到 Blue 面臨的一些挑戰，是否有理由懷疑轉換成本是否沒有我們想像的那麼高，而且溢價也沒有得到充分保護？或者你認為也許，嘿，我們正處於一個獨特的時期，專業管道有點滯後，而消費者的境況突然變得更糟？

Yes, Ken, that's a fair question. I think there are 2 things at play here, and one of you pointed out, but I'll start with another area. As we look at the pet food business, the feeding business, and certainly, that was the majority of the business we bought when we bought Blue Buffalo was feeding, is relatively inelastic. And when we see that with our dry pet food, both cat and dog food performance, the -- but treating and we bought into that when we bought the pet food business from Tyson a couple of years later, that is actually more elastic and is more of an [end-plus] purchase. And that's why when you see the economy as it is, people trading down to less expensive treats if they're still treating and treating a little bit out of treats because they're trying to economize on that, but they stick with the feeding.

是的，肯，這是一個公平的問題。我認為這裡有兩件事在起作用，你們中的一個指出了，但我將從另一個領域開始。當我們審視寵物食品業務時，餵食業務，當然，我們購買 Blue Buffalo 時購買的大部分業務都是餵養業務，相對缺乏彈性。當我們看到我們的乾寵物食品、貓糧和狗糧的表現時，幾年後，當我們從泰森收購寵物食品業務時，我們就買入了這一點，這實際上更有彈性，而且更多的是[最終加]購買。這就是為什麼當你看到經濟現狀時，如果人們仍在治療或治療的食物不足，他們就會降價購買更便宜的食物，因為他們試圖節省開支，但他們堅持餵食。

And so the first part of the question -- the first part is that the feeding part is actually not more inelastic than we had thought. The -- but treating is more elastic. The second piece is, it's a combination, you say, I mean, I don't remember the last time when you see 30% increase in costs over 3 years. And while it's relatively inelastic, it's not completely inelastic. And so the combination of the tremendous increase in input costs, combined with the pet specialty channel where we over-index, that is -- there's no question that those 2 things have had and impact on our business in the short term.

所以問題的第一部分——第一部分是餵食部分實際上並不比我們想像的更缺乏彈性。但治療更有彈性。第二部分是，這是一個組合，你說，我的意思是，我不記得上次你看到成本在 3 年內增加 30% 是什麼時候了。雖然它相對缺乏彈性，但並非完全缺乏彈性。因此，投入成本的大幅增加，再加上我們過度索引的寵物專業管道，毫無疑問，這兩件事在短期內對我們的業務產生了影響。

But importantly, as we look over the 5 years we've owned the business, we've doubled the business. The Blue brand is really strong when we execute well against it, whether it's on Life Protection Formula advertising or holiday treats or things like that. We see the business really respond well. And it's very clear to us this humanization trend is going to continue and the Blue is well placed to capture that over the course of time.

但重要的是，回顧我們擁有該業務的 5 年，我們的業務增長了一倍。當我們執行得很好時，藍色品牌確實很強大，無論是在生命保護配方廣告還是節日款待或類似的事情上。我們看到企業的反應確實很好。我們非常清楚，這種人性化趨勢將持續下去，而隨著時間的推移，藍色已經準備好抓住這一趨勢。

Our next question is coming from the line of Nik Modi with RBC Capital Markets.

我們的下一個問題來自加拿大皇家銀行資本市場的尼克莫迪。

On the promotional -- I want to follow up on the promotional comment. One thing we're hearing from retailers is the lift doesn't seem to be as good as we've seen historically, Jeff. So I just -- I was hoping you can just comment on that? And is that something you're seeing in the marketplace? And does that kind of maybe be -- send a signal that perhaps absolute price points have become too high? I would just love your comments on that.

關於促銷——我想跟進促銷評論。我們從零售商那裡聽到的一件事是，電梯似乎沒有我們歷史上看到的那麼好，傑夫。所以我只是——我希望你能對此發表評論？這是您在市場上看到的嗎？這是否可能發出一個信號：也許絕對價格點已經變得太高了？我很想聽聽你對此的評論。

When we talk about historical, it kind of depends, Nik, on what we mean by historical. I don't mean to be cute with this. But if we look relative to where we were a year ago, what we see is our lifts have actually improved vis-a-vis where they were a year ago. If we look to see where the lifts are versus where they were 4 years ago, they're not quite at the levels of where they were 4 years ago. And I don't have a fact that I can point to as why exactly that is the case. But I would tell you that neither we nor consumers have seen inflation the way we've seen it over the last few years, and consumers are still getting used to new prices in the marketplace. And I suspect whether that's food or gas or rent or any number of things, that is absolutely the case. And it will take a little while for consumers to settle into what new price points are to the extent we continue to see inflation, which we do, even if at a more modest level.

當我們談論歷史時，尼克，這在某種程度上取決於我們所說的歷史的含義。我並不是想以此來表現可愛。但如果我們相對於一年前的情況來看，我們會發現我們的電梯實際上比一年前有所改善。如果我們看看電梯與 4 年前相比，會發現它們還沒有達到 4 年前的水平。我沒有一個事實可以指出為什麼會出現這種情況。但我要告訴你的是，我們和消費者都沒有像過去幾年那樣看到通貨膨脹，而且消費者仍在適應市場上的新價格。我懷疑無論是食物、汽油、租金或其他任何事情，情況絕對是如此。如果我們繼續看到通膨，消費者需要一段時間才能適應新的價格點，我們確實如此，即使通膨程度較為溫和。

So Nik, I would say that relative to a year ago, we're pleased with the progress of our lifts but relative to historic pre-pandemic, they're a little bit lower, and I would surmise that it's the consumer catching up to a new reality.

所以尼克，我想說，相對於一年前，我們對電梯的進展感到滿意，但相對於歷史性的大流行前，它們要低一些，我猜測這是消費者正在趕上一個新的現實。

Our next question is coming from the line of Pamela Kaufman with Morgan Stanley.

我們的下一個問題來自摩根士丹利的帕梅拉·考夫曼。

I had a follow-up question on the guidance for this year. I just wanted to see if you could walk through the puts and takes of the updated outlook through your org sales outlook, implies about $800 million less in sales this year at the midpoint versus before. But you narrowed your EBIT growth guidance slightly compared to your prior expectations. So can you just walk through -- I know you have the higher HMM savings, but where else are you finding offsets in the P&L because HMM wouldn't seem to explain the full impact on the lower impact on EBIT changing.

我對今年的指導有一個後續問題。我只是想看看您是否可以透過您的組織銷售展望來了解更新後的前景的看跌期權和期權，這意味著今年中點銷售額比以前減少了約 8 億美元。但與先前的預期相比，您略微縮小了息稅前利潤成長指引。那麼，您能簡單介紹一下嗎？我知道您有較高的 HMM 儲蓄，但是您在損益表中還能在哪裡找到抵消額，因為 HMM 似乎無法解釋對 EBIT 變化的較低影響的全部影響。

So Pam, Kofi and I are going to tag team this. Let me talk about the revenue and then Kofi's going to take the rest of the P&L side. On the revenue side, the way I think about our guidance is that in order to hit the low end of our guidance, let's call it, minus 1%, that would indicate that we'd see a continuation of the top line performance we saw in Q2 and which would indicate a little bit better volume and a little bit less price/mix than we saw in the second quarter, but in absolute terms, about the same as we saw in the second quarter.

所以帕姆、科菲和我要為此標記團隊。讓我談談收入，然後科菲將討論損益表方面的其餘部分。在收入方面，我對我們的指導的看法是，為了達到指導的下限，我們稱之為負1%，這表明我們將看到我們所看到的頂線業績的延續在第二季度，這表明與我們在第二季度看到的相比，銷量要好一些，價格/組合要少一些，但從絕對值來看，與我們在第二季度看到的大致相同。

The higher end of our guidance, which suggests that the categories get a little bit better, which we think they certainly could due to lapping, the SNAP, emergency reductions from a year ago in January through March and from our lapping pricing activity from March and April of last year. So those 2 things, combined with a little bit better share performance based on the out-of-stock situation changing near the end of the year, we could hit the top end of the guidance we suggested. So that kind of brackets the top line. I'll let Kofi talk a little bit more about the profitability.

我們指導的高端，這表明這些類別會變得更好一些，我們認為這肯定是由於研磨、SNAP、一年前1 月至3 月的緊急削減以及我們3 月和3 月的研磨定價活動所致。去年四月。因此，這兩件事，再加上接近年底的缺貨情況變化帶來的更好的股價表現，我們可能會達到我們建議的指導的上限。所以這種括號是頂行。我會讓科菲多談談獲利能力。

Sure, Pam and thanks for the question. I would just note the HMM adjustment is pretty significant. As a reminder, the past 2 years, we've delivered below our historic levels of kind of 4%, at 3% for each of the prior 2 years due to the supply chain disrupted environment. We're now on pace to deliver 5% against an early expectation of 4%. That is the biggest single contributor, but we are seeing improvement in our inflation but not significant enough to change the rounding. So that's a modest contributor as well. But the other component in gross margin is the supply chain-related disruption costs.

當然，帕姆，謝謝你的提問。我只想指出 HMM 的調整非常重要。提醒一下，過去兩年，由於供應鏈中斷的環境，我們的交付量低於 4% 的歷史水平，而前兩年每年為 3%。我們現在的目標是達成 5%，而之前的預期是 4%。這是最大的單一貢獻者，但我們看到通膨有所改善，但不足以改變四捨五入的程度。所以這也是一個適度的貢獻者。但毛利率的另一個組成部分是與供應鏈相關的中斷成本。

So as I mentioned earlier, one of the features of this environment is supply chain stability has allowed us to get at some of those embedded costs we took on to operate in this environment, and we've made sequential improvement over the last 4 quarters on this and most acutely within our North America retail business.

因此，正如我之前提到的，這種環境的特點之一是供應鏈穩定性使我們能夠獲得在這種環境中運營所承擔的一些嵌入成本，並且我們在過去4 個季度中取得了連續的改進這在我們的北美零售業務中最為明顯。

And then lastly, the adjustment of our incentive for last year's peak level. So as you know, last year, a really strong year of performance, historically high levels of incentive-based comp, which is variable and based on the top and bottom line projections as that's both normalized at the start of the year to a base expectation of plan targets. And now as we take the top line down, that's almost $100 million in reduction in admin expenses. So as you take all of those, that gives us the confidence to keep within the range, albeit a little tighter as volume expectations come in from the top of the year.

最後，我們將激勵措施調整為去年的峰值水準。如您所知，去年是業績非常強勁的一年，基於激勵的薪酬處於歷史高水平，這是可變的，並且基於頂線和底線預測，因為這在年初都已標準化為基本預期的計劃目標。現在，如果我們降低總收入，管理費用將減少近 1 億美元。因此，當你考慮所有這些因素時，這讓我們有信心保持在這個範圍內，儘管隨著今年年底銷量預期的增加而稍微收緊。

That's very helpful. And just a follow-up question on gross margins, they're now back to pre-pandemic levels. So how are you thinking about the potential for gross margin expansion from here? On one hand, you have the benefit from HMM, but I'm assuming there will be some volume deleverage. So how should we expect gross margins to progress? And do you kind of see them at the right levels here?

這非常有幫助。關於毛利率的後續問題，它們現在已回到大流行前的水平。那麼您如何看待毛利率從這裡擴大的潛力？一方面，你可以從 HMM 中受益，但我假設會有一些成交量去槓桿化。那我們該如何預期毛利率的進步呢？您認為它們處於正確的水平嗎？

Yes. Well, okay, I think it implied within our guidance would be a little bit less gross operating margin expansion, bolstered obviously by gross margins in the back half. As we see a step down of sequential step down in the contributions from price/mix as we lap last year, that's from our actions fully by Q4 of this year.

是的。好吧，我認為這在我們的指導中意味著毛營業利潤率的擴張會稍微減少，這顯然是受到後半段毛利率的推動。正如我們去年看到的那樣，價格/組合的貢獻逐漸下降，這完全來自我們今年第四季的行動。

I'd just note we've made significant progress at the gross margin level and bolstered in part, not just by HMM these past 2 quarters, but in part by the disruption costs that I mentioned earlier. 170 basis points to 120 basis points in the back half of last year and the first half of this year, respectively. So I would expect we'd see more normalized levels of gross margin expansion going forward kind of off of this base. There's still a little bit more disruption related costs to get out primarily in some of our other businesses outside of NAR. So that will give us a little bit of tailwind. But to your point, given the volume environment, that's largely going to go to offset the impacts of deleverage.

我想指出的是，我們在毛利率水準上取得了重大進展，這在一定程度上不僅得益於現代商船過去兩個季度的推動，而且部分得益於我之前提到的中斷成本。去年下半年和今年上半年分別為170個基點至120個基點。因此，我預計我們會在這個基礎上看到更正常化的毛利率擴張水準。仍然有更多與中斷相關的成本需要消除，主要是在 NAR 之外的一些其他業務中。所以這會帶給我們一點順風。但就您而言，考慮到成交量環境，這在很大程度上將抵消去槓桿化的影響。

And our next question is coming from the line of Matthew Smith with Stifel.

我們的下一個問題來自馬修史密斯（Matthew Smith）和史蒂菲爾（Stifel）的回答。

I wanted to follow up on the elevated level of HMM savings here in the year. You mentioned it's a step up relative to the prior 2 years where it was a bit lower because of inflation and supply chain issues. But how much of the elevated rate here this year is a pull forward from savings that you would expect next year? Or I guess that's another way of saying, just how sustainable is this elevated rate of HMM savings as you exit fiscal '24?

我想跟進今年 HMM 儲蓄水準的提升。您提到，與前兩年相比，這是一個進步，前兩年由於通貨膨脹和供應鏈問題，這一數字略低。但今年上漲的利率有多少是來自您預計明年的儲蓄的拉動？或者我想這是另一種說法，當你退出 24 財年時，HMM 儲蓄率的上升究竟有多可持續？

I would expect that if the supply chain environment remains stable and continues to stabilize even a little further, we will have the ability to deliver at least in line with our historic levels of about 4% HMM, 4% of COGS. I would expect that the contributions from getting out some of those other disruption-related costs that sit in COGS, to decrease a bit here as we've gathered a good chunk of them on the back of our NAR business and as we see maybe a smaller base of costs in the other 3 segments.

我預計，如果供應鏈環境保持穩定，並繼續穩定，甚至進一步穩定，我們將有能力以我們約 4% HMM、4% COGS 的歷史水準至少交付產品。我預計，從銷貨成本中扣除其他一些與中斷相關的成本所帶來的貢獻會有所減少，因為我們已經在NAR 業務的支持下收集了其中的很大一部分，而且正如我們所看到的，這可能是其他 3 個細分市場的成本基數較小。

So all things equal, I think 4% would be a good long-term estimate for us to migrate back to provided the supply chain environment continues to cooperate.

因此，在所有條件相同的情況下，我認為，如果供應鏈環境繼續合作，4% 將是我們遷移回的一個良好的長期估計。

And Jeff, maybe a follow-up about your share performance as you begin to lap the rebuild of competitive distribution, which I believe you said that begins to move into the base as you exit fiscal '24. You're holding and gaining share in majority of the distribution of your category. So would you expect your dollar market share performance to improve as you lap that competitive rebuild? Or are there other concerns like consumer value-seeking behavior or list price gaps that may need to be addressed as the share of shelf normalizes?

傑夫，也許是關於你的股票表現的後續行動，因為你開始重建競爭性分配，我相信你說過，當你退出 24 財年時，它開始進入基礎。您正在持有並獲得您所在類別的大部分分銷份額。那麼，當您完成競爭重建後，您是否期望您的美元市佔率表現會有所改善？或者，隨著貨架份額的正常化，是否還有其他問題需要解決，例如消費者的價值追求行為或標價差距？

Yes. One of the things that I'm most pleased with is that over the last 5 years, particularly in North America Retail, we've gained share in 60% of our categories. And we continue to execute well. And the key our success once we start to lap the on-shelf availability and once we lap the pricing activities from March and April will be to the question that Andrew proposed, which is making sure we maintain our brand building support, really good brand building, make sure we execute against what I think is really good innovation and continue to execute in store. And if we do those things, and I would expect us to do those things, then our share performance will certainly improve over time. And hopefully, as we're exiting this fiscal year and beginning next fiscal year, we'll see that happen.

是的。我最滿意的事情之一是，在過去 5 年裡，特別是在北美零售業，我們在 60% 的類別中獲得了份額。我們繼續執行得很好。一旦我們開始完成上架供應以及三月和四月的定價活動，我們成功的關鍵將是安德魯提出的問題，即確保我們維持我們的品牌建設支持，真正良好的品牌建設，確保我們執行我認為真正好的創新，並繼續在商店執行。如果我們做這些事情，我希望我們做這些事情，那麼我們的股價表現肯定會隨著時間的推移而改善。希望當我們結束本財年並開始下一個財年時，我們會看到這種情況發生。

Interestingly, our dollar share performance has not been what we needed to be. In terms of pound share, we are growing pound share in about 40% of our categories. And then that's because even though our pricing trailed inflation, so we responded to inflationary pressures, we're actually more agile than our competitors. And so that provided us a dollar share benefit last year. And this year, it's a headwind, but we are growing pound share in roughly 40% of our categories.

有趣的是，我們的美元股表現並未達到我們所需的水平。就磅份額而言，我們大約 40% 的品類中的磅份額正在增長。這是因為，儘管我們的定價落後於通膨，因此我們對通膨壓力做出了反應，但我們實際上比競爭對手更靈活。因此，這為我們去年帶來了美元份額收益。今年，這是一個逆風，但我們在大約 40% 的品類中所佔的份額正在增長。

Our next question is coming from the line of Michael Lavery with Piper Sandler.

我們的下一個問題來自 Michael Lavery 和 Piper Sandler。

I wanted to have a couple of follow-ups on the shelf availability. You said it's improving for competitors. Would you say that it's -- that there's still headwinds to come there? Or is that sort of all caught up to a normal level? And then on the promotional sort of dynamic related to that, you gave some color on how that environment looks. But just given your guidance update, it would seem like strategically, you'd rather take a little bit of the volume hit and push promo much harder. I suppose, first, is that a fair characterization? And what would make you lean in more on the pricing side?

我想對貨架供應情況進行一些跟進。你說競爭對手的情況正在改善。您是否會說，到達那裡仍然存在阻力？或者這一切都達到正常水平了嗎？然後，在與此相關的促銷動態方面，您對環境的外觀進行了一些描述。但根據您的指導更新，從策略上看，您似乎寧願承受一點銷售衝擊，並更加努力地推動促銷。我想，首先，這是一個公平的描述嗎？什麼會讓您在定價方面更加傾斜？

On the on-shelf availability, I mean the competitors have kind of caught up to our levels, and that's been pretty stable for the past few months. And I wouldn't expect that to accelerate. So I think we've seen a stabilization in that. Now we'll see that they're on-shelf availability kind of -- which is equal to ours, as I remind you. So we're actually -- we're doing quite well. So it's equaled ours. We'll see -- they will see that benefit for the next 3 or 4 months until they start (inaudible) will happen a year from now. And so while it has stabilized, we'll see some of our competitors see a benefit for that for the next few months, and then they won't.

就貨架供應情況而言，我的意思是競爭對手已經趕上了我們的水平，而且在過去幾個月裡一直相當穩定。我不認為這種情況會加速。所以我認為我們已經看到了這種情況的穩定。現在，我們將看到它們的現貨供應量與我們的相同，正如我提醒您的那樣。所以我們實際上——我們做得很好。所以它和我們的一樣。我們會看到——他們會看到在接下來的 3 或 4 個月內受益，直到一年後他們開始（聽不清楚）。因此，雖然它已經穩定下來，但我們會看到我們的一些競爭對手在接下來的幾個月中看到了它的好處，然後他們就不會了。

In terms of the pricing environment itself, I'm not really going to get into specifics of future pricing. What we do see is that, I think importantly, we see an inflationary environment ahead of us. I know there's been talk of deflation in some cases. And that may be true for things like commodities like milk and eggs. bu it's only not true for restaurants. Their inflation is actually outpacing ours. And we see inflation in the low single digits. If you look at the category pricing, and it's somewhere in the 2% to 3% range. So we see continued inflation even at a lower level. And usually, pricing tends to follow inflation because that's the basis on which we which we increase prices if we see an inflationary environment.

就定價環境本身而言，我不會真正討論未來定價的細節。我認為重要的是，我們確實看到的是，我們看到了通貨膨脹的環境。我知道在某些情況下有人談論通貨緊縮。對於牛奶和雞蛋等商品來說可能也是如此。但對於餐館來說卻並非如此。他們的通貨膨脹率實際上超過了我們。我們看到通貨膨脹率處於低個位數。如果你看一下類別定價，你會發現它在 2% 到 3% 的範圍內。因此，即使通膨水平較低，我們仍會看到持續的通膨。通常，定價往往會跟隨通貨膨脹，因為這是我們在看到通貨膨脹環境時提高價格的基礎。

And so the -- as we look at trade-offs, I mean, our job is to create long-term value for shareholders, and we do that by serving consumers. And we'll do that by making sure that our brands are strong and by innovating and making sure the products are available when and where people want them.

因此，當我們考慮權衡時，我的意思是，我們的工作是為股東創造長期價值，而我們透過服務消費者來做到這一點。為此，我們將確保我們的品牌強大，不斷創新，並確保產品可以在人們需要的時間和地點提供。

Okay. That's really helpful. And just one quick follow-up on pet. You had mentioned the retailer inventory destocking and characterized it as a temporary headwind. Is that just because there's only so low they can go? Or do you expect it to reverse?

好的。這真的很有幫助。以及對寵物的快速跟進。您曾提到零售商庫存去庫存，並將其描述為暫時的逆風。這只是因為他們能達到的水平太低了嗎？還是你預期情況會逆轉？

I do not expect it to reverse. I think there's only so low that it can go. And we may see a reduction again in the third quarter because I suspect that our sale -- our reported net sales are going to lack our sales out to consumers. And so we may have not have seen the bottom of that as we look at our third quarter but really is more of a -- I don't see a rebound in inventory levels and especially as some of our retailers specifically look to manage their working capital.

我不期望它會逆轉。我認為它只能低到可以走的程度。我們可能會在第三季再次看到下降，因為我懷疑我們的銷售——我們報告的淨銷售額將缺乏對消費者的銷售。因此，當我們回顧第三季度時，我們可能還沒有看到底部，但實際上更多的是——我沒有看到庫存水平出現反彈，特別是當我們的一些零售商特別希望管理他們的工作時首都。

Our next question is coming from the line of Chris Carey with Wells Fargo Securities.

我們的下一個問題來自富國銀行證券公司的克里斯凱裡。

So just a couple of quick follow-ups for me. I guess, number one, and I think you've been clear about this, but maybe just put a ball on this. I mean in your prepared remarks, you mentioned that price/mix will remain positive in fiscal '24. I'm not sure if I'm reading too much into this, but is there an expectation that price/mix could turn negative in any given quarter ahead, near or medium term because of mix dynamics or potentially some step-up in promotional activity and just secondly, Jeff, you mentioned an expectation for some improvement in category growth. Is any of that just associated with lapping SNAP benefits as you get kind of deeper into your fiscal Q4?

所以我只需要進行一些快速跟進。我想，第一，我想你已經很清楚這一點了，但也許只是對此放個球。我的意思是，在您準備好的發言中，您提到價格/組合在 24 財年將保持正值。我不確定我是否對此理解過多，但由於組合動態或促銷活動可能有所加強，預計價格/組合可能在未來任何特定季度、近期或中期變為負數其次，傑夫，您提到了對品類增長有所改善的預期。當您深入了解第四財季時，這些是否與 SNAP 福利有關？

I'll take the first part of that question, and then I'll let Jeff get you on the second. So look, our expectations on price/mix are really built around the fact that we'll be sequentially stepping down as we lap pricing actions that we took throughout last year. We should fully lap those by the time we get to the end of the fiscal year. We're not expecting any of the quarters to deliver a negative price/mix, but merely just a step down in the contribution from price/mix to total RNS.

我將回答該問題的第一部分，然後讓傑夫回答第二部分。所以看，我們對價格/組合的預期實際上是建立在這樣一個事實之上的：隨著我們完成去年採取的定價行動，我們將依次下調價格。我們應該在本財年結束時完全完成這些任務。我們預計任何一個季度都不會出現負價格/組合，而只是價格/組合對總 RNS 的貢獻有所下降。

And Chris, this is Jeff. One point I'd add there is what you're seeing over the last couple of quarters is mix, even at the segment level is more of a headwind. As for example, our pet business is growing slower than the other parts of the business. That's a high price per pound business. As our foodservice business, which is a low price per pound is outperforming. And so there are mix elements within the segments that do depress the overall enterprise price/mix.

克里斯，這是傑夫。我要補充的一點是，您在過去幾季中看到的情況是混合的，即使在細分市場層面也更像是一種逆風。例如，我們的寵物業務成長速度慢於其他業務。每磅業務的價格很高。我們的餐飲服務業務每磅價格低廉，表現優異。因此，細分市場中存在混合元素，確實會壓低企業整體價格/組合。

And when you asked a question about growth at the category level. I mean there are a couple of headwinds. One is just a little bit of consumer behavior and feeling the economic pressure and a little bit less discretionary spending. And I don't frankly know when that will turn around. Consumers are certainly still stressed right now, they feel the impact of inflation over the past few years, and we certainly understand that. The thing that we -- that's more discrete really is the lapping of the SNAP emergency allotments benefits from last year. And those kind of go state by state, but they took place last year between January and March, and that may be a 1 point benefit to the categories that we're in. And so it's not a heroic increase but certainly a stabilization of the categories. And we'll start to -- as I said, we'll start to lap that here in the next month or so throughout our fiscal third quarter.

當你問到有關品類層面成長的問題。我的意思是有一些阻力。一是消費行為稍微有點，感受到經濟壓力，可自由支配支出稍微減少。坦白說，我不知道這種情況什麼時候會扭轉。消費者現在肯定仍然面臨壓力，他們感受到了過去幾年通膨的影響，我們當然理解這一點。我們真正更離散的是去年 SNAP 緊急撥款福利的重疊。這些都是按州進行的，但它們發生在去年一月到三月之間，這可能會為我們所在的類別帶來 1 分的好處。所以這不是一個英雄般的增長，但肯定是穩定的類別。我們將開始——正如我所說，我們將在下個月左右的整個第三財季開始進行這一點。

Okay. Unfortunately, I think that's all the time we're going to have this morning. Thank you for all the good questions and discussion. I appreciate your time and attention, and we will look forward to catching up in the new year. In the meantime, happy holidays to everyone, and please reach out if you have any follow-ups to the IR team. Thanks.

好的。不幸的是，我想這就是我們今天早上的全部時間了。感謝您提出的所有好問題和討論。感謝您的時間和關注，我們將期待在新的一年迎頭趕上。同時，祝大家節日快樂，如果您有任何後續訊息，請聯繫 IR 團隊。謝謝。

That does conclude the conference call for today. We thank you for your participation. I ask that you please disconnect your lines.

今天的電話會議到此結束。我們感謝您的參與。我請求您斷開線路。