荷美爾 (HRL) 2013 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Hormel Foods first-quarter earnings conference call.

During today's presentation, all parties will be in a listen-only mode.

Later, we will conduct a question-and-answer session.

(Operator Instructions).

As a reminder, this conference is being recorded today, Thursday, February 21, 2013.

At this time, I would like to turn the conference over to Kevin Jones.

Please go ahead, sir.

Thank you.

Good morning, everyone.

Welcome to the Hormel Foods conference call for the first quarter of our fiscal 2013 year.

We released our results this morning before the market opened around 6.30 a.m.

Eastern time.

If you did not receive a copy of the release, you can find it on our website at www.HormelFoods.com under the Investors section.

On our call today is Jeff Ettinger, Chairman of the Board, President and Chief Executive Officer, and Jody Feragen, Executive Vice President and Chief Financial Officer.

Jeff will provide a review of the operating results for the quarter; then Jody will provide detailed financial results for the quarter.

The line will be open for questions following Jody's remarks.

An audio replay of this call will be available beginning at 10.30 a.m.

Central time today, February 21, 2013.

The dial-in number is 1-800-406-7325.

The access code is 4599951.

It will also be posted to our website and archived for one year.

Before we get started with the results of the quarter, I need to reference the Safe Harbor statement.

Some of the comments made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those expressed in or implied by the statements we will be making.

Among the factors that may affect the operating results of the Company are fluctuations in the cost and availability of raw materials and market conditions for finished products.

Please refer to pages 27 through 30 in our Company's annual report for the fiscal year ended October 28, 2012 for more details.

It can be accessed on our website.

In order to assure that everyone has an opportunity to ask their questions, please restrict yourself to one question, with one follow-up.

Now I will turn the call over to Jeff.

Thank you, Kevin, and good morning, everyone.

We announced first-quarter earnings this morning of $0.48 per share, even with last year.

The value of our balanced business model was again on display as strong results by our Specialty Foods, Grocery Products and International/All Other segments offset weaker results by our Jennie-O Turkey Store segment.

Results in our Refrigerated Foods segment were even with last year, hindered by poor pork operating margins.

In terms of the top line, we generated record sales of $2.1 billion, an increase of 4%.

Total volumes increased 2% despite a planned reduction in harvest levels at our hog processing operations.

We increased sales in four of our five segments.

I will now take you through each segment.

Our Grocery Products segment profit increased 13% and sales grew 24%.

We began including sales of our Don Miguel products in Grocery Products' results beginning in the third quarter of last year, and these sales were very robust in this recent quarter.

We were also pleased to see that sales for Grocery Products were up 4% excluding Don Miguel products.

Sales gains in Grocery Products were led by our Spam family of products, Hormel Chili, Mary Kitchen hash and Herdez salsa.

Sales of our Hormel Compleats microwave meals also increased during the quarter, as our new cheesy pasta items aided growth.

Segment operating profit for Refrigerated Foods was even with last year, as poor pork operating margins and weaker results in live production eroded the results in our value-added franchises and stronger performance by our affiliated business units.

The affiliated business units include Farmer John, Burke and Dan's Prize.

Sales for Refrigerated Foods declined 2% in the quarter, primarily attributable to a planned reduction of harvest levels in our hog processing operations.

We did achieve growth in retail sales of Hormel Party Trays, retail and foodservice sales of Hormel Natural Choice deli meats, and foodservice sales of our new Hormel fire-braised meats.

Segment operating profit at Jennie-O Turkey Store decreased 23% as we faced significantly higher grain costs and lower commodity turkey meat prices.

Increased sales of our value-added products across all trade channels were unable to offset these headwinds.

Sales of our Jennie-O Turkey Store fresh tray pack items, turkey franks and turkey bacon were particularly strong, as we continue to benefit from our Make the Switch advertising campaign over the past three years.

We reduced our hardest numbers at Jennie-O during the quarter in order to better balance our turkey meat supplies.

However, higher bird weighs offset most of the decrease in harvest levels this quarter.

Our Specialty Foods segment profit grew an impressive 43% in the quarter.

These results were attributable to both significant sales growth and improved operating efficiencies.

Sales grew 7% during the quarter, led by Hormel Health Labs products, private-label canned meat, savory ingredients, nutritional products and ready-to-drink products.

Segment profit results in Specialty Foods have now registered year-over-year growth for four consecutive quarters.

Our All Other segment, which consists primarily of our Hormel Foods International business, grew operating profit a strong 37% on a 4% increase in sales.

Results were primarily attributable to strong exports of fresh pork and improved profitability by our China operations.

Our current fiscal year and beyond are shaping up well.

In our Grocery Products area, we are seeing strength in all three of our key product platforms.

In the traditional canned goods area, we have excellent momentum on the Spam family of products, Hormel Chili and Mary Kitchen hash.

Our microwave franchise is being reinvigorated by our new Cheesy Pasta Completes item.

And within our MegaMex Foods joint venture, we continue to grow our consumer franchises with Herdez salsas, Don Miguel appetizers and Holy Guacamole dips and salsas.

We expect continued growth from both our Specialty Foods and All Other/International segments.

For Specialty Foods, our approach of managing operations on a segment-wide basis is paying dividends, coupled with some nice sales success in the industrial and private-label arena.

For International, we look for continued success in growing our Spam franchise worldwide, and with targeted fresh pork exports, coupled with the added sales growth and efficiency we are seeing from our China operations.

We are also encouraged by the strength of our value-added protein products in both Refrigerated Foods and Jennie-O Turkey Store.

This bodes well for positive long-term contributions by both units to our overall Company.

We recognize that both of these units are facing some challenges in terms of immediate delivery of segment profit growth.

In the case of Refrigerated Foods, the soft and even negative processing margins in pork are weaker than we had anticipated, but we do expect the balance to eventually return to this area, allowing for more traditional returns.

Higher grain costs and lower turkey commodity meat prices will continue to hinder margins at Jennie-O Turkey Store in the near term.

We expect the results to begin to improve as we move into the latter part of the year.

The planned reduction in harvest levels at Jennie-O Turkey Store and modest and strategic pricing should help mitigate those headwinds going forward.

I would point out that this unit is still delivering excellent operating results.

The current business is solid from our standpoint, and we expect will soon see a substantial added benefit in two of our five operating segments from the Skippy acquisition.

Although our ownership of this iconic brand is in its early stages, we are excited by what we see in terms of opportunities for growth, both domestically and abroad.

The financial benefits from this acquisition will emerge more significantly as the year proceeds, in that our second quarter will bear the burden of a large amount of the charges related to the transaction.

Strong operating margins, enhanced by expected synergies, will flow fully through our results commencing in fiscal 2014.

The estimated charges and income are both reflected in our revised guidance.

In addition, we continue to enjoy outstanding contributions to total Company growth from our innovation efforts.

The latest example of our teams' work is the planned launch this spring of our new Hormel REV snack wraps, which are being offered by the meat products team within our Refrigerated Foods segment.

This line consists of eight varieties of meat and cheese combinations, each rolled in flatbread.

These ready-on-the-go products can be enjoyed by consumers either in a cold state or easily warmed up in 20 seconds in a microwave oven.

This new line outpaced all of our benchmarks in recent test markets, and we are receiving broad acceptance of the line from retailers throughout the United States.

Taking all of these factors into account, we are raising our fiscal 2013 earnings guidance to a range of $1.93 per share to $2.03 per share from our prior guidance range of $1.90 per share to $2.00 per share.

At this time, I will turn the call over to Jody Feragen to discuss the financial information relating to the first quarter.

Thank you, Jeff.

Good morning, everyone.

Earnings for the first quarter of fiscal 2013 totaled $129.7 million, or $0.48 per share, compared to $128.4 million, also $0.48 per share, a year ago.

Dollar sales for the first quarter totaled $2.12 billion compared to $2.04 billion last year, a 4% increase.

Volume for the first quarter was 1.24 billion pounds, up 2% from the same period last year.

Selling, general and administrative expenses in the first quarter were 7.4% of sales, down slightly from 7.5% of sales last year.

Selling, general and administrative expenses are expected to be between 7% and 7.5% of sales for the full year.

Interest and investment income was $1.8 million for the first quarter compared to $1.6 million last year.

Interest expense for the quarter was $3.1 million compared to $3.2 million last year.

We expect interest expense to be approximately $12 million to $14 million for fiscal 2013.

Our effective tax in the first quarter was 33.5% versus 33.4% in fiscal 2012.

For fiscal 2013, we expect the effective tax rate to be between 33.5% and 34.5%.

The basic weighted average number of shares outstanding for the first quarter was 263.9 million.

The diluted weighted average number of shares outstanding for the first quarter was 269.1 million shares.

On January 29, 2013, our Board of Directors approved a new share authorization to repurchase up to 10 million shares of our common stock.

We now have authorization in place to purchase approximately 11.2 million shares.

Depreciation and amortization for the quarter was $29.8 million, down slightly from $30.8 million last year.

We expect depreciation and amortization to be approximately $120 million in fiscal 2013.

Total long-term debt at the end of the quarter was $250 million, unchanged from last year.

Capital expenditures for the quarter totaled $22.1 million compared to $30.5 million last year.

For fiscal 2013, we expect capital expenditures to be approximately $130 million to $140 million.

At the beginning of our second quarter, we completed the acquisition of the Skippy business, excluding China, using our available cash balances.

We expect to have minimal borrowings on our revolving line of credit in the current quarter.

At this time, I will turn the call over to the operator for the question-and-answer portion.

Operator?

(Operator Instructions) Farha Aslam, Stephens Inc.

Good morning.

My first question is more an industry one.

Recently, you have seen China implement some restrictions on US exports with ractopamine.

How do you anticipate that will impact the industry and, as well, your business, because you've seen recently a significant selloff in hogs as a result of that?

Is that a net positive or negative for your business?

It is obviously very current, what is going on there; a very fluid situation; each day seems to bring some different results.

And it is fluid in terms of the market impact.

For example, yesterday, the processing margins turned positive for the first time in quite a while, and that was a fairly sharp change from what we had been seeing before.

But it is probably a little early for us to tell both whether that is going to have that long-term impact on the processing margins, and more specifically, what it will do to export volumes.

I can say that in our case, we are not a big player when it comes to exporting of pork directly to China, and so it is not -- we don't see it as a major direct impact on our business.

But clearly, it can have spillover effects on the markets, as you pointed out.

So net -- so far, it has been a positive, because hog prices have gone down and your pork margins turned positive?

For a day.

Thank you.

And then just a follow-up.

You've now had Skippy for a few weeks.

As you've gotten under the hood, is there anything that has been notably positive or negative that you've noted in the new business?

I guess we are still very positive about it.

It is very early.

The Skippy -- the onboarding happens in multiple phases with Skippy.

On the domestic side, we are now involved in managing the Little Rock plant on a day-to-day basis, and haven't had a great chance to get to know the team down there.

They have an excellent operation there.

And so business emanating from that venture, operationally, we're right in charge of it right now.

In terms of the sales, logistics, et cetera, for the upcoming quarter, those will still be handled by Unilever as part of the transition agreement we have.

We actually have up to five months of transition opportunity with Unilever.

Our goal is to get that done in three months.

We are trying to have that totally in our hands by the beginning of the second half.

When it comes to the international side of the business, it is a little tricky, and so I will kind of lay that out for how that works.

As we said on the Skippy acquisition call, we don't own the Skippy plant in China yet and we won't for several months.

That has to be approved.

That permit has to be transferred by the Chinese government.

However, sales internationally that emanate from the Little Rock plant -- so, for example, the Canada or Mexico -- those we have right now; clearly have control over.

The sales of products out of the China plant into markets other than China will count in our International results starting now.

However, the margin will probably be a little different than we ultimately experience, because, again, we are not only having it copacked, but it is also being distributed and sold for us by Unilever.

And then lastly, sales in China don't count at all right now.

That comes with the permit.

And so that probably won't come on board until at the earliest Q4, and maybe more like the beginning of next year.

But overall, we are really very excited by what we see.

Great.

Thanks for your additional color.

Tim Ramey, D.A. Davidson.

Good morning, and thanks.

So I continue to be positively impressed with the margins of Jennie-O Turkey Store.

The macro certainly was worse than a 15% margin would have -- macro would have indicated a worse margin than 15%, so congratulations on that.

Your comments suggested that -- are we going to see it sort of go a little lower in the near term, or just sort of hang in this level and then recover as the year progresses?

Do you have that sense of granularity about the business?

Sure.

What we talked about at the year-end call was sort of a new, annualized guidance range for Jennie-O of an 11% to 15% range, and we are still quite comfortable with that.

The 15% delivery this quarter, I mean, Q1 and Q4 are traditionally their highest margin delivery quarters and the middle of the year is traditionally lower.

So on that basis alone, if you are looking at percentage returns, we would expect Q2 to be lower than Q1.

If you are looking at it on a year-over-year segment profit delivery basis, we do feel that Q2 -- by the time you really get in all the different cost impacts and all the commodity market impacts, our best look right now would say we will probably have a slightly deeper decline in Q2 year-over-year than what we experienced in Q1.

But we expect them to be able to rebound from that as the year goes on.

Okay.

Obviously, the mix of commodity items changes from Q1 to Q2.

Is that right, or am I overstating that?

That's an impact.

The other impact that occurs is on the operations side, as when we get summer conditions, weights go down and typically margins decline.

Okay.

Thanks so much.

Congrats.

Diane Geissler, CLSA.

Good morning.

I wanted to ask -- so in your script, you said you thought the quarter kind of came in line with where you thought it would be originally.

You did take up your guidance modestly.

Is that solely reflecting the closure of Skippy?

And then if you could just tell us what are -- I'm assuming the one-time costs you are going to have is a separate line item in your P&L when you report your second-quarter results.

To the extent the Street excludes those as one-time items, would your EPS range then be higher by whatever that amount is?

And if you could quantify that amount.

I'll let Jody answer part of the second question.

I'm doubting she's going to answer the last part of it.

But in terms of the guidance change, typically, we've been in the mode of giving annual guidance for the past couple of years, and our philosophy has been not to just tweak the range based on results of a given quarter.

We really want the focus to be on annual.

In this case, with the significant announcement of the Skippy acquisition in the middle of the quarter, we then did undertake the responsibility as a team to reassess, okay, what do we now think the year looks like on the basis of our knowledge right now.

So clearly, the addition of Skippy was factored in.

We looked at the trends of what was going on in our other businesses, and that is where we ended up with moving the guidance range.

And as far as -- I think the part that was left for me is to talk about the one-time transaction costs.

I would expect that at the end of the second quarter, when we have paid all the one-time transaction costs, that we would be able to give you some level of magnitude.

We have included our best estimates of those in the guidance range that we provided this quarter.

But a lot of them are uncertain at this point, so I wouldn't want to give you something that wasn't precise.

Okay, I appreciate that.

And then just as a follow-up on Skippy, can you give us an idea about when you think you might be able to tell us what you expect in terms of synergies?

I appreciate the China business is -- you're not going to talk about that at this point.

But just in terms of you have to have some synergies within the US business itself, which I am assuming you will be able to quantify over the next six months, three months?

We've tended to not really endeavor to precisely lay out, okay, here is a synergy target.

We prefer to give you the all-in, okay, here is the operating results we expect to have from the business.

We provided that for the 2014 goal of the $0.13 to $0.17 range, and we are still comfortable with that.

However, as we get our hands around the business more, if we find that has changed, we certainly would provide an update then to that expectation.

Were there some synergies included in that 2014 impact that you gave us when you announced the deal?

Yes, but -- yes, that was intended to encompass that.

Okay, perfect.

Thank you.

Ann Gurkin, Davenport & Company.

Good morning.

I want to ask about two areas.

One is your strategy in deli meats.

Are you changing any pricing or trying to get into any different segments in that area?

And then second, can you just update me on peanut contracts for the Skippy business?

Where are those?

On the first question on deli meats, I mean, the category is evolving somewhat.

We are still a significant behind-the-glass player, with ham and turkey being two of the major protein components that are behind there.

And we certainly are working actively with all our retail partners to keep that business as robust as possible.

But it's a business that has seen small declines for the last couple of years.

A lot more activity is occurring in grab-and-go context, and between our Natural Choice offerings, which are still doing quite well in the marketplace, and our party trays would be another example of a deli offering, and the snack trays.

So that is our effort to go after those kind of areas and provide other options when it comes to deli meats.

On peanut contracts, I'm really going to have to punt on that one and maybe come back to you next quarter.

We just don't have our hands around that aspect of it completely at this stage.

It is still pretty early on.

Thank you.

Akshay Jagdale, KeyBanc Capital Markets.

Good morning.

Thanks for taking the question.

I just want to chat a little bit about the pork margins that you mentioned.

Overall, the pork complex has been pretty weak.

The hog prices have come down recently and pork cutout has been weak now for a while.

In that environment, with the value-added portfolio that you have, you typically do well or better than you did in Refrigerated Foods.

So first, am I understanding that correctly?

And if I am, what is different about this time around, where you have weak cutout and you have relatively weak hog prices and yet the Refrigerated Foods business showed some weak results?

Let me try to help you with that.

We did see hog costs this quarter that were below the quarter a year ago, but quite a bit above where we were at the end of fiscal 2012.

We would expect those higher hog prices to continue for the full year.

Now that is certainly subject to all those uncertainties related to the recent news on China.

What we have seen is low domestic demand for pork.

Certainly, that is driving that cutout and the value of those primals that go into our value-added products lower, which do benefit our value-added businesses.

And sometimes that is not quite an immediate benefit, but happens over a period of time as you work through some inventories.

So we would expect higher cutout values for the rest of the year, and that should help Refrigerated Foods as they turn back into more normalized margins.

So if I understand correctly, the cutout being weak net-net should be a positive, since you have a value-added portfolio.

And what you are saying is there may just be some timing issues related to your portfolio.

Is that a fair way to think about it?

Right.

I would expect those margins to improve as the year goes on.

Perfect.

I'll pass it on.

Thanks a lot.

Andrew Strelzik, BMO Capital Markets.

Good morning, everyone.

This is Andrew Strelzik for Ken Zaslow.

First, I'm interested in how you are thinking about capital allocation, particularly on the M&A side, after the Skippy deal.

Has your appetite for acquisitions changed at all?

What type of deal or size of deal would interest you?

Any color around that would be helpful.

Sure.

It really hasn't changed our outlook.

We are (technical difficulty) for growing our business.

Our long-term guidance for the business is 5% top line, 10% bottom line.

And if you look at our track record over the past dozen years, I mean, clearly acquisitions have played a role in that.

And we were very pleased to bring on the Skippy brand as the latest example of that.

While that did winnow down our cash position and now we are slight net borrowers after that, we still have virtually no debt and realize we have significant debt capacity and are fully ready and capable of utilizing that capacity if the right opportunity comes along.

In terms of strategic area, we were excited by the many things that Skippy brought to the party.

I've been asked a couple times, gee, does that mean you're only going to buy shelf-stable items now or grocery items.

And while we definitely like that aspect of that transaction, that does not mean that we wouldn't look to continue to grow our protein businesses, our international business, our specialty business, et cetera.

So we still intend to be actively looking for things that would be logical fits with our Company, and we have the financial capability to do that.

I appreciate the color around that.

My second question is related to Foodservice.

Some of the recent data we've been seeing shows a weakening in the foodservice segment, so just interested in what you are seeing there.

We are seeing the same thing.

Now, Foodservices to me has been a very choppy environment for quite some time now, almost since the recession began.

It has its ups and downs.

It seems to recover, it goes back.

This weakness that we are seeing is really only a couple months old.

Some of the theories out there include the recent hike in gas prices.

They include the lapse of the payroll tax holiday.

And I think those probably do make sense.

I would say, though, based on what has happened over the last couple of years that consumers do sometimes seem to for a short time change their habits and maybe, okay, have more meals at home.

But they usually eventually kind of revert back to what their preferred mix of at-home versus out of home occasions are.

And so my best guess right now is this will be a fairly short-term phenomenon, and then we'll see at least some growth returning to the Foodservice segment going forward.

Lastly, you talked about reducing your harvest volumes on the turkey side.

Can you quantify that?

And have you changed your outlook for production levels internally for the rest of the year?

The goal, I think we kind of said it's probably in the maybe 1.5% range, was the annualized pound change we were looking to see.

And we acknowledged, I guess, in the comments earlier that we made the head adjustment that we had planned, but at least in this early season, the weights ended up a little higher.

We do think still and over the course of the full year there will be a reduction.

Whether it will be the full 1.5% within fiscal 2013, it may not be, after having a quarter where that didn't occur.

But the trend will definitely be in that direction.

And that's part of -- I mean, commodity meat values are lower, and so we really don't see the need to have surplus meat in this environment.

We will still have sufficient meat to support our growing value-added business for Jennie-O.

Great.

I appreciate it and I'll pass it on.

Christine McCracken, Cleveland Research.

Good morning.

I don't know if you mentioned it earlier, I might've missed it, but we are hearing a lot about the sequester and the potential for the furlough to impact USDA inspectors.

I'm wondering, is it realistic to think they could even withdraw those inspectors, and do you have any contingency plans in place should that happen?

It is definitely an issue worth keeping our eye on.

Obviously, we are one of many players that would be affected.

The sequester side related to inspectors is just one of numerous things going on in the economy that may or may not happen, depending on how the political games play out.

Our best information right now would suggest that, okay, even if no budget deal or change is made and a sequester begins, that there are notice requirements within the government to their own inspectors that would probably push a change in operations out to the May/June time frame, and then we'll just have to see, okay, how many -- what are the numbers you are talking about, what does that potentially do to our operation.

Our position has been, consistent with the position articulated by the American Meat Institute, which is we believe that there are other discretionary things within the USDA's total operation that potentially would be more logical targets for reductions in cost versus the mandatory presence of inspectors in our facilities.

And if they are not there, and that means all those people have to get laid off and all that food is not delivered, that seems to be a pretty disruptive thing to the economy and society, and perhaps we can come up with a better solution than that.

But it's a very fluid situation.

It definitely is something we have to keep our eye on.

But right now, we don't expect there to be an immediate impact from it.

Okay.

And then just one follow-up.

It sounds like you're pretty optimistic on value-added sales going forward tied to your portfolio.

And yet we are seeing some weakness on the protein side for commodity meats.

I'm curious how does that fit?

You've got pretty strong expectations, I guess, around more expensive or what I would consider premium product versus weaker expectations for commodity.

So maybe you can explain (multiple speakers).

Christine, one explanation I would have is the commodity markets, at least for our two main proteins, turkey and pork, are significantly influenced by export activity.

And so there has been Russia doing this and China doing that, and as things potentially tighten up some on that basis, that will have an overall impact on the commodity values; that clearly is affecting turkey, for example.

As we move up and up the value ladder into having consumer-based items that, yes, come from protein, but that are used by consumers, whether they are meal-type items like chili and Compleats, or Don Miguel, or items that are more fully meat, like our Natural Choice, our experience right now is that those are very robust franchises.

We are growing them at high single digits in many cases, and they are meeting the lifestyle needs of consumers.

And so I think those are somewhat divorced then from what the commodity markets are doing.

Great.

Thanks for the color.

(Operator Instructions) Eric Larson, CL King.

Good morning, everyone.

We've talked about this before.

Maybe, Jeff, this might be a question for Jody as well.

I'm just not sure.

Can you quantify the impact -- the margin impact of including the Don Miguel sales in Grocery Products in the quarter?

And the reason why I'm asking is because actually the profit impact was bigger than I had expected.

And you did have good sales in some of your very high-margin products in the quarter, Spam, et cetera.

Is there a way to sort of quantify what the impact was with the Don Miguel sales in Grocery for the quarter?

You have to remember that we get an equity and earnings contribution from the Don Miguel sales.

So it is not a margin thing, and I'm not off the top of my head thinking what that impact would have been quarter-over-quarter.

That might be a follow-up with Kevin if there is any additional color.

Sorry.

Right.

That was the second part of my follow-up.

Your equity earnings were actually down modestly in the quarter.

I think you were at $9.8 million in equity earnings versus $11 million the year before.

I was just trying to reconcile those two lines a little bit.

That's all.

We can maybe get that off-line.

But let me do -- let me clarify what is in that equity and earnings line that is on the top-side financial statement.

That is equity and earnings in not only our domestic joint venture, the MegaMex, but also our international joint venture.

So that -- any change there is not just attributable to MegaMex.

No, I realize that.

And I -- again, I saw that was down as well.

So I was just trying to -- I realize there is more than just Don Miguel sales in that equity line.

So I was just trying to get an idea of what the impact was with all of that for the quarter.

Okay.

The other thing to remember, Eric, with Don Miguel, is the only change that has occurred year-over-year is the sales being reflected in the sales line.

And we've owned the deal for two plus years.

So the bottom-line profit of it has been -- our half share has been the same.

But Jody is correct in terms of you probably need to kind of dive into it maybe off-line to know which part flowed through margins versus equity and earnings.

Yes, that -- it is more of a technical question than anything else, in my judgment.

Yes.

Thank you.

I am showing no additional questions at this time.

I would like to turn it back to Kevin Jones for closing remarks.

Okay.

Thank you for all of you who did take the time to listen, especially those (technical difficulty) and at CAGNY down in Boca Raton, Florida.

I wish everybody a great rest of the day, and please feel free to follow up with me directly with any follow-up questions.

Thank you.

Ladies and gentlemen, that does conclude our conference for today.

Thank you for your participation.

You may now disconnect.