Good day, welcome to the Conagra Brands third quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Melissa Napier, Head of Investor Relations. Please go ahead. Good morning. Thanks for joining us for the Conagra Brands third quarter and first nine months of fiscal 2023 earnings call. I'm here with Sean Connolly, our CEO, and Dave Marberger, our CFO, who will discuss our business performance. We'll take your questions when our prepared remarks conclude. On today's call, we will be making some forward-looking statements, while we are making these statements in good faith, we do not have any guarantees about the results we will achieve. Descriptions of our risk factors are included in the documents we filed with the SEC. We will also be discussing some non-GAAP financial measures. These non-GAAP and adjusted numbers refer to measures that exclude items management believes impact the comparability for the period referenced. Please see the earnings release for additional information on our comparability items. The GAAP to non-GAAP reconciliations can be found in the earnings press release and the slides that we'll be reviewing on today's call, both of which can be found in the investor relations section of our website. I'll now turn the call over to Sean. Thanks, Melissa. Good morning, everyone, and thank you for joining our third quarter fiscal 2023 earnings call. Slide 5 outlines what we'd like you to take away from today's call. Our top priority coming into fiscal year 2023 was margin recovery, following the unprecedented environment of the last two years with COVID and the inflation super cycle. To facilitate that margin recovery, our executional focus has been on inflation-justified pricing, supply chain improvements, and the pruning of low margin volume, a strategy we have successfully deployed before and refer to as value over volume. Three quarters of the way into the year, our plan is working. In Q3, we delivered our second consecutive quarter of strong gross margin recovery. Our pricing execution continued to be excellent while elasticities remained muted and consistent. Our volume performance again led our near and peers versus our pre-pandemic baseline. Our supply chain continued to improve with service levels exceeding 90%. This improvement allowed us to rebuild inventories to appropriate levels and support most of the strong demand from our customers. There were exceptions as we experienced temporary manufacturing disruptions in certain categories that prevented us from being in stock. Despite this, we had strong results in the quarter overall. We are updating our guidance for the year, including increasing our expectations for adjusted EPS growth and tightening the ranges for net sales growth and operating margins. With that overview, let's dive into the results on Slide 6. We delivered organic net sales of approximately $3.1 billion, representing a 6.1% increase over the prior year period. Our adjusted gross margin of 28.1% represents a 409 basis point increase over the third quarter of last year, and our adjusted operating margin of 16.9% represents a 321 basis point increase over that same period. Adjusted EPS rose 31% from last year to $0.76 per share. The year-to-date results underscore the strength of our performance with growth across all four metrics, including 8.1% organic net sales growth compared to the prior year period, and the robust margin improvements we set out to achieve at the beginning of the year. Slide 7 shows the sustained recovery of our gross profit margin for a second consecutive quarter. Again, this margin recovery was our top priority for the year. Why? Our gross margins fund our innovation program, and that innovation has been the centerpiece of our playbook and our success in driving sustained category growth in our two strategic focus areas, frozen and snacks. This recovery, therefore, means you should continue to expect a relentless stream of provocative innovation and brand building support as we go forward. In fact, looking at Slide 8, you can see that Conagra is one of the only companies in our peer set whose gross margins are essentially on par with pre-pandemic levels. Importantly, our brand strength and innovation pipeline position us well to maintain solid growth and healthy gross margin going forward. As I mentioned at the beginning of the call, our sales growth was primarily driven by inflation-justified price increases, coupled with ongoing muted elasticities. Slide 9 shows the relationship between elasticities and price increases. As you can see, elasticities have remained remarkably consistent and benign over the last eight quarters, even as we increased the price per unit of our products to help offset ongoing COGS inflation. Slide 10 shows our elasticities are among the best in the industry. The modest elasticities, which are well below historic norms and have remained consistent in the face of our inflation justified price increases, are a testament to the strength of our brands, the execution of our pricing strategy, and the limited impact of private label competition. Turning to Slide 11, as you can see at the total Conagra level, retail sales grew by 5.5% compared to the third quarter of last year, and by 24.7% compared to three years ago. To put some context around the 5.5% number, three points. First, there was a fair amount of noise in the year-over-year comps for the peer set in Q3. Some companies had a very weak year ago period due to supply chain challenges, while we had pockets of real strength in the year ago period due to Omicron and strong customer support for products that had recently come off allocation. Second, we continued to prune low margin volume, most notably resuming our opportunistic value over volume strategy on select brands. This included eliminating 10 for 10 promotions on both value tier vegetables and canned products such as Chef Boyardee and Hunt's Tomatoes. Third, we experienced manufacturing disruptions in certain categories that led to out of stocks in the quarter. Most notably impacted were our canned meals and sides businesses, specifically canned pasta, canned beans, canned chili, and canned meat, all part of our grocery portfolio. In Frozen, we had one noteworthy disruption as our fish business was on allocation, which led to out of stocks during the peak Lent season. This was due to a fire on our fish frying line as reported in our second quarter 10-Q. While these discrete issues suppressed our volume in Q3, the root causes have been largely resolved and we expect volumes to rebound sequentially from here. Importantly, when you take the noise out of the short term view and compare our growth versus the stable baseline of three years ago, you see our performance has been strong on both the top and bottom lines. Examining the results versus this time period normalizes for the volatility across demand, inflation and supply chain throughout the pandemic and demonstrates that Conagra is a top performer among our peer set. Slide 12 details our top line performance on a three-year basis as measured over the prior 52 weeks and compared to our near and peer group who are footnoted in alphabetical order at the bottom of the slide. Among this group, Conagra continued to rank second in dollar sales growth and first in unit sales performance, just as we did in Q2. This remains true when you look at the same chart isolating the third quarter and post Q3, the syndicated scanner data has shown our unit sales trends improving. In the four-week period ending 3/25, our units ranked in the middle of our near and peer group on a two-year CAGR basis. Our continued top-tier pricing execution and volume performance is made possible by the strength of our brands and the superior relative value that our products provide to the consumer. Let's take a look at our top line performance during the third quarter by retail domain. Starting with Frozen on Slide 14. We maintained our momentum, delivering strong retail sales growth on both a one- and three-year basis, improving 4% and 23% respectively. This growth was driven by a number of our key categories, including breakfast sausages and single serve meals. It's worth noting that this performance comes on top of very strong performance for our frozen domain in the year ago period when the Omicron outbreak influenced consumers in home eating behavior. For example, single serve meals grew 12% last year, creating a two-year stack of 18% in that category. Turning to Snacks on Slide 15, you can see a similar story. We drove a 7% increase in retail sales compared to the third quarter of fiscal 2022, and a 39% increase over the third quarter of fiscal 2020. The continued momentum in this domain is broad-based across a number of categories. Compared to last year, seeds was up over 22% and baking mixes and microwave popcorn both rose more than 10%. Meat snacks grew 6% year-over-year, building on top of the 22% growth in the year ago quarter, a period when meat snacks were coming off allocation and our customers were eager to fulfill demand for our leading products in this category. We also continued to drive growth in our highly relevant staples portfolio despite the discrete supply chain challenges in some of our canned meals and sides businesses that I noted earlier. Our staples portfolio increased retail sales 7% compared to the third quarter of last year and 20% compared to the same period three years ago. This growth was led by Whipped Toppings, which grew more than 18% on a year-over-year basis. Turning to Slide 17. While we experienced transitory supply chain friction, we also continued to make progress on our supply chain initiatives during the third quarter, which benefited from continued headway on our ongoing productivity initiatives, which remain on track to achieve the targets we outlined at our most recent Investor Day. More moderate increases in COGS as anticipated. These improvements to our supply chain led to improvements in the service we provide our customers. While we're making good progress in supply chain, it's not back to normal and industry-wide challenges persist. However, we're recovering as expected, and we see more room for improvement as we advance our productivity initiatives and the macro environment continues to normalize. Overall, we're confident we will deliver on our top line and margin guidance for the year, and we're raising our bottom-line estimates. With that in mind, we are updating our guidance to reflect that we now expect organic net sales growth of 7%- 7.5%. We expect adjusted operating margin of 15.5%- 15.6%, and we're increasing our expectations for adjusted EPS growth to range from $2.70- $2.75. Before I hand the call over to Dave, I want to reiterate our confidence in the path ahead. We have successfully executed pricing actions in response to inflation. That inflation is moderating and elasticities remain remarkably consistent and benign. We're moving past discrete supply chain disruptions and continue to make progress on our margin expansion initiatives such as productivity and value over volume, all within an environment that is normalizing. As we look at more recent scanner data, we are already seeing improvements in sales trends, and we expect that momentum to accelerate through the end of the fiscal year. Overall, Conagra continues to benefit from strong brands, strong processes, and strong people, which are all working together to drive sustainable growth and margin expansion. With that, I'll pass the call over to Dave to cover the financials from the quarter in more detail. Thanks, Sean, and good morning, everyone. I'll begin by discussing a few highlights as shown on Slide 20. We delivered another quarter of strong results reflecting the ongoing strength of our brands and successful execution of the Conagra Way playbook. In the quarter, organic net sales increased 6.1% due to inflation-justified pricing and continued muted elasticities, as Sean discussed. Adjusted gross margin increased 409 basis points to 28.1%. Adjusted gross profit dollar growth was up 23.9% for Q3 and 17.8% year- to- date, benefiting from higher organic net sales and productivity initiatives, reflecting our focus on margin recovery. This increase in adjusted gross profit contributed to strong adjusted EBITDA growth of 21.1% in the quarter. Let me break down the drivers of our 6.1% organic net sales growth here on Slide 21. We delivered 15.1% improvement in price mix from our inflation-justified pricing actions. This price improvement was partially offset by a 9% decrease in volume. If you simply apply Conagra's current and historically favorable 0.54 elasticity factor to the 15.1% price mix, you will see that elasticity explains approximately eight of the nine percentage points of the volume decline. The remaining one percentage point of volume decline is mostly from the supply chain disruptions we've discussed. Given our elasticities have been running at these favorable levels for some time now, this level of volume decline has been planned in our fiscal 2023 sales and gross margin projections. Slide 22 shows the top-line performance for each segment in Q3. We are pleased with the continued net sales growth across all four reporting segments. Our domestic retail portfolio continues to perform well, with net sales in our Grocery & S nacks and Refrigerated & F rozen segments up a combined 4.7%. Our International segment saw solid growth in the quarter, with organic net sales up 9.5%. International reported net sales were up 7.7%, reflecting the unfavorable impact of foreign exchange. We continued to see strong recovery in our Food service segment, which grew 17.3% in the quarter. I'd now like to discuss our Q3 adjusted margin bridge found on Slide 23. As Sean discussed, we are pleased to have delivered a second consecutive quarter of strong margin recovery. We drove a 10.9% margin benefit from improved price mix during the quarter and realized a 1.8% benefit from continued progress on our supply chain productivity initiatives. These pricing and productivity benefits were partially offset by continued inflationary pressure, with 8% gross market inflation impacting our operating margins by 5.9% and a negative impact of 2.8% from market-based sourcing. Higher investment in A&P and adjusted SG&A during the quarter reduced margins by 0.4% and 0.5% respectively. Slide 24 breaks down our adjusted operating profit and margin by segment. While some supply chain challenges continued during the quarter, execution of pricing and improvements in our productivity and service levels allowed us to deliver adjusted operating margin expansion in each segment. Total adjusted operating profit increased 30.8% to $522 million during the quarter, despite an increase in adjusted corporate expense, primarily due to increased incentive compensation. It is worth noting that we delivered 321 basis points of adjusted operating margin improvement in Q3 versus a year ago, while incurring incremental transitory costs in our Grocery & S nacks segment due to the supply chain challenges we've discussed. Turning to Slide 25. Our Q3 adjusted EPS increased by 31% or $0.18 per share compared to a year ago, primarily driven by higher sales and gross profit as well as from a small benefit in taxes. Our Ardent Mills joint venture performance continued to be strong and has wrapped strong results from a year ago. These positives were partially offset by higher adjusted A&P and SG&A, as well as lower pension and post-retirement income and higher interest expense versus a year ago. You can see on Slide 26 how we are continuing to strengthen our balance sheet metrics. At the end of the third quarter, our net leverage ratio was 3.65x, down from 4.2x at the prior year period. Our net cash flow from operating activities reflects investment to rebuild our inventory levels. Improvement in our inventories has enabled us to improve service levels above 90%, and we are well positioned going forward in most categories to support sustained demand. Year-to-date CapEx was $267 million at the end of the quarter, down from $364 million in the prior year period, while year-to-date free cash flow increased to $436 million. We remain committed to returning capital to shareholders, as evidenced by the year-to-date increase in our dividend payments and share repurchases. For the balance of fiscal 2023, we will continue to evaluate the highest and best use of capital to strengthen our balance sheet and optimize shareholder value. As Sean mentioned, in response to our continued business momentum and ongoing operating dynamics, we are raising our fiscal 2023 EPS guidance and narrowing our ranges for organic net sales growth and adjusted operating margin with only one quarter remaining in fiscal 2023. Turning to Slide 28. I'd like to briefly discuss the considerations and assumptions behind our guidance. We continue to expect total gross inflation of approximately 10% for fiscal 2023, and expect gross inflation to continue for the full calendar year, 2023. We will update you at our Q4 earnings call in July with our inflation expectations for full year fiscal 2024. We expect our net leverage ratio at year-end to remain approximately 3.65x and anticipate CapEx spend of approximately $370 million for fiscal 2023. This number is below our original expectations due to the timing of certain projects. We remain committed to making capital investments to support our growth and productivity priorities, with a focus on capacity expansion and automation. Lastly, we expect interest expense to be approximately $410 million and pension and post-retirement income to be approximately $25 million for the year, driven by the higher interest rate environment. Our full year tax rate estimate remains approximately 24%. To sum things up, we are proud that we delivered another strong quarter in fiscal 2023, especially considering a supply chain environment that continued to present some challenges. Our service levels have improved and our margins continue to recover to pre-COVID levels, and we remain committed to executing on our strategic priorities to generate value for our shareholders. That concludes our prepared remarks for today's call. Thank you for listening. I'll now pass it back to the operator to open the line for questions. Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speaker phone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Andrew Lazar with Barclays. Please go ahead. Great. Thanks so much. Good morning, everybody. Morning, Andrew. Good morning. Morning. Sean, maybe to start off with something a little bit broader. You know, I think we're all aware of, what the more sort of negative narrative on the overall food group is at this stage, which is, you know, as food companies lap the pricing and organic sales will slow, companies will raise promotions to drive volume and, you know, that will somehow compete away, you know, the margin recovery. I guess I was hoping that in light of, you know, Conagra's results today and sort of the implicit fourth quarter EPS that looks to be a bit below the current street view, I guess I'm curious, how would you characterize your results, sort of in the context of the group-wide narrative that I sort of just laid out? Sure, Andrew. Happy to give you a perspective on the big picture and also tackle the Q4 implied guidance a little bit. Let me start with this. As I've said on these calls many times before, navigating these inflation cycles is pretty mechanical. You get hit with inflation, you take price, you don't reflect it right away, and therefore you experience a lag, which compresses margins. Pricing catches up and margins recover, as you saw start to do really materially in Q2. When you wrap these actions, dollar growth comes down and unit performance improves, both because elasticities wane and because you wrap the unit impact. That stuff is all mechanical and it's all predictable. I think what you're getting at is the big question then becomes: What comes next? The goal is obviously sustained growth. The debate that you're poking at here is, well, what will the tactic be? To me, that answer is crystal clear, especially for us, simply by looking at how we have pursued growth since I have been with Conagra. The answer, in a word, is innovation. Just look at our frozen performance over the past eight years. It was 100% about innovation, premiumization, but ironically, also value over volume philosophy around actually eliminating low-quality promotion. The question then becomes, why would Conagra suddenly, or anybody else for that matter, suddenly believe that the opposite approach is now a smart growth strategy? That doesn't make a lot of sense to me. As far as Q4 goes, first, you know, listen, as I said in my opening remarks, I feel very good about where we sit and our plan is working. Our margin recovery is in place, our elasticities remain benign and consistent. Supply chain is improving, innovation is hitting the market, top line trends are improving. In terms of the implied Q4 guide, we think it's prudent. You know, supply chain is improving, but it's not all the way back. Our position all year has been to plan conservatively in this regard. You know, as far as unit volume goes, I think we gave you a lot of color on that already. For those that are more inclined to focus on short-term trends, our two-year unit CAGR in the most recent four-week period scanner data, which is ending 3/25, was right smack in the middle of our peer set and at levels that are entirely predictable as our muted elasticities kind of show you. You know, to be above that, either elasticities would have to be nonexistent or you would have to be shipping ahead of consumption. The former is unrealistic and the latter is not part of our playbook. Right. Great. Thanks so much. Then just-- I didn't hear, just a quick one. I didn't hear any mention of the canned meat recall as impacting the quarter, and I'm pretty sure there was supposed to be some impact, but maybe I got that wrong. Then I'll pass it on. Thanks so much. Andrew. As we said in CAGNY, we expected a 50 basis point impact on Q3, and that's exactly what it did. It impacted us 50 basis points on sales, lost sales. We also had additional impact of around $8 million in kind of fees and just cost to bring the product back. That actually hits net sales and gross margin. It's really both of those pieces. That did hit in Q3. Just to finish that point, I did say that that would fully recover in Q4. One thing that has changed is we're really ramping up the replenishment on the shelf, so we're not gonna see that full replenishment of the 50 basis points we lost in Q3 come back in Q4. That's gonna drift into the beginning of fiscal 2024. Great. Thanks so much. Thank you. Our next question today comes from Ken Goldman at JP Morgan. Please go ahead. Hi, thank you. I just wanted to ask, a little bit about the guidance for the top line, just trimmed at the top end very slightly. Not a huge deal, but just trying to get a little bit deeper into the reasons behind that. Is it mainly just the manufacturing issues that you had, or are there, you know, other factors that we should think about as we, as we look at that? Ken, I'll make a quick comment, and I'll turn it over to Dave. The, you know, the manufacturing friction that we've run into, you know, this is part of the reason why we've had a conservative outlook all year long, is these things keep popping up. For us, it happens to be heavily isolated around cans. Whether it's Vienna Sausage or other things, it's a quality issue that we've had to deal with getting cans where we need it to be. Frankly, you've seen those kinds of issues pop up across the industry, in large part tied to labor, where you're dealing with a lot of inexperienced labor in companies and their suppliers that lead to these quality issues that you sometimes you find before you produce the product, sometimes you find them after you produce the product. That impacted Q3 and it'll, you know, drift a little bit into Q4. The good news is we've gotten to the root cause of those things, and we've got them contained. Now we just gotta get the remnant out of our, out of our system, so to speak. Again, that means the setup going forward as we do that, I think is a positive and should become a tailwind. Dave, do you wanna add anything? Yeah, I mean, Sean hit it. Just to give you a little bit more specifics, as I just mentioned, on the previous question, we do not expect now to see the bounce back from the Armour recall in Q4. That is gonna drift into next year. That was 50 basis points that impacted Q3. In the category Sean talked about, chilies, beans, the impact of the frozen fish. These dynamics, we're working through that, it's improving, but we're still on allocation in some of those specific categories and actually SKUs, that is impacting Q4 as well in the top line. If you just think about it this way, if you look at the previous guidance, which was 7%-8% for the full year, that implies a midpoint for Q4 of about 5.8%. With the revised guidance for the year, that implies a midpoint of about 4.8%. That's about 100 basis points of a decline in the Armour and these other allocation issues with the brands I just mentioned are pretty much why. Okay. Thank you for that. For my follow-up, you trimmed your CapEx outlook. You're hardly the only company to be doing that these days, I understand. I think I understand the reasons why. I'm just curious, Dave, you mentioned it's more of a timing issue. I'm curious how delayed are those projects in general, and is it fair to say that nothing really throws your supply chain optimization plan off course, or is there anything in there that's delayed as well? Thank you. No, Ken. Just that we're still on track with the commitments we made at our Investor Day on the $1 billion over three years. A lot of it is just normal timing. In this environment, we're still working through where things just take longer. You know, if you're ordering, you know, certain materials and things that you need to execute these, CapEx projects, they're just taking a little bit more time. It's not at all changing kind of the opportunities we see in the projects that we're gonna target. Great. Thank you. Thank you. Our next question today comes from Pamela Kaufman with Morgan Stanley. Please go ahead. Hi. Good morning. Morning. Just a question on the Q4 guidance. At the midpoint, your updated full year guidance for operating margins implies Q4 operating margins decline year-over-year, but you've seen about 180 basis points of operating margin expansion year to date. What's driving that more cautious Q4 margin outlook? Yeah, Pam, Good question. Sean had mentioned that our approach to guidance this entire fiscal year has been about being prudent, and it's because of the volatile environment we're in with the supply chain challenges and then the historic inflation in pricing. We're continuing that approach as, you know, for Q4. We still expect inflection in our gross margins, but we are building in what I'll call a healthy level of contingency for supply chain friction costs in our cost of goods sold. Also, just a more specific item regarding SG&A, we will be up in Q4 versus prior year and up versus Q3 absolute dollar levels. SG&A will be more in line with what we saw in Q2 in terms of SG&A dollars. We expect to finish the year near that 9% in net sales level, and that's just timing. For EPS, we always forecast a sort of a more moderate estimate for Ardent Mills, so that would be down versus what we delivered for Q3. They're really the key drivers. I think it's just a, you know, we're taking a prudent approach to our guidance. Got it. Thanks. Just on gross margins. You've had very strong gross margin expansion year- to- date. How should we think about gross margins in Q4 into next year? You know, can gross margins continue to move above this 28% level, how are you thinking about the contribution from your productivity investments? Yeah, Pam, it's Sean. First thing I'd say is we were deliberate in stating off the bat that our top priority this year was on gross margin recovery. It kind of comes back to Andrew's point, why is that so important? Because gross margins fund our innovation program, and our innovation program is how we drive high quality, sustained growth that can be margin accretive over time. This all hangs together. It's a simple concept. You know, if you think about what we try to do around here as a company in our playbook, it's all about perpetually improving our growth rates and improving our margins. We do that a variety of ways from, you know, the mix of our portfolio, to our value over volume strategy, to our relentless approach to innovation. That's what it's all about. You know, we're not giving long-term gross margin guidance from here, but I would just say what we've always said, which is philosophically, our game plan is to drive a northward trajectory on sales and gross margins, you know, into the future. Great. Thank you. Thank you. Our next question today comes from David Palmer at Evercore ISI. Please go ahead. Thanks. Good morning. Wanted to ask you about your multi-year sales trends or how you're maybe thinking about that. You know, this quarter, the sales trends were stable on a four-year basis, and your guidance implies roughly stable for your organic sales trends, with that 5% or so organic growth in fiscal 4Q. I wonder if you see reasons for re-acceleration in the multi-year trend into the first half of this upcoming year. You mentioned the supply chain, maybe a point or so. The reason I'm asking this is because, you know, stable four-year trends will get you to maybe flat to up 2% organic revenue by the first quarter, which I'm sure is not great news. I'm wondering about reasons for re-acceleration beyond maybe that supply chain hiccup you mentioned. Hey, David. We're not obviously gonna get into next year's guidance today, but I come back to the mechanical point that I made at the beginning of the Q&A section here. You know, we're gonna go into this phase here where we start getting into Q1 and then Q2 and then Q3 next year, where you really start to wrap on the pricing, and you're gonna see dollars come down, but you'll see the unit declines that were tied to multiple waves of pricing tied to the elasticities start to rebound. That, that's gonna be a shift that's gonna be in everybody's next fiscal year, and it's gonna be different for every company because every company started pricing. You're gonna see that shift, and I think everybody's gotta start to model for that and prepare for that because, you know, then when you get through that, you're gonna be back to pretty much everybody's long-term algorithm. For us, as sales, that's low single digits. That's what we expect, and then we pursue that a variety of ways, the bulk of which is through innovation. Dave, anything else you'd add to that? Yeah. David, what you're poking at is true, right? If you think about Armour, for example, where, you know, we had a recall, we pulled everything, and now we're replenishing, and some of that will drift into the beginning of fiscal 2024. When you have that's obviously gonna be a tailwind, right, for the quarter. That's what's made these last couple years so difficult because every quarter there's different dynamics in terms of when different companies are on allocation and then when they get off allocation and what does that do to shipments versus consumption. It's hard to put a really fine point on it. Plus, we're not gonna get into detail on guidance until July. Conceptually, that's correct. When you're on allocation or you're out of stock and then you replenish, you are gonna see a bounce back from that. Thanks. I wanted to ask maybe one more going to leap and see if you could comment a bit more on the inflation. You said you're expecting, quote, inflation for all of calendar 2023. If that were up low single digits, you would be talking about a flat, you know, second half of calendar 2023, meaning, you know, your first half of fiscal 2024. I'm wondering what type of inflation are you thinking about for as you enter into fiscal 2024? Thanks. Yeah, David, we're gonna give more detailed guidance on fiscal year 2024 inflation on our July call. I think to do it now is a bit premature. What I can tell you is, as you've seen every quarter, our market inflation has been decelerating, okay. The rate of inflation has come down, and we expect that to continue into Q4. We guided to approximately 10%, which implies about a 5.5% market inflation rate in Q4. You know, in terms of the 8% that we saw in Q3, you know, it's still roughly about 10% is materials, which is 2/3 of our cost, right, ingredients and packaging. We are still seeing market inflation at a high level there, although it is coming down, as I mentioned. When you get into the manufacturing side with labor, that's more kinda mid to higher single digits there. The, the transportation and warehousing has actually been kinda lower single digits. That has been coming down, you know, stronger. That's where we are now. We're not gonna give all that detail until we do it in the context of our full guidance for fiscal 2024. I think that's the way we wanna do it. Okay. Thank you. Thank you. Our next question today comes from Nik Modi with RBC Capital Markets. Please go ahead. Yeah, thanks. Good morning, everyone. Just a quick question, Sean, on how you're thinking about, you know, the rolling off of the SNAP benefits and, you know, the impact obviously, it has on just the overall packaged food space. Just curious if you have any thoughts on, you know, states that rolled off last year and if you have any observations there. Just tied to that, given, you know, how dynamic the promotional environment is and how savvy Conagra has been with digital, I'm just curious, like how you think about measuring the ROI of some of that spend. If you expect that kind of digital promotion side of the business to really start ramping in the back half of the year. Sure, Nik. Let's talk SNAP first. You know, out of the 50 states, we've had 18 rolled off of these, they've sunset these emergency allotments previously, and then you got 32 that just rolled off recently. What do we know so far? What we know is that what we saw in terms of impact to our portfolio from the 18 was no material impact. You know, we've been tracking that for some time. I've mentioned this on calls before, and we just have not seen any material impact there. I will give you, as I did last quarter, one perspective on why I think that's the case for our portfolio is we already do have really great value offerings within the Conagra portfolio. If you've got more limited SNAP allotments, it would seem logical to me that you would use them on the things that are inherently harder to afford. Our products are inherently easier to afford, and that may explain why we've seen such modest impacts. You've got 32 states that have just recently come off. It's just, you know, it's brand new data. We monitor this over an eight, 10-week period, so we can see if there's any movement there, and we will do just that. Based on what we've seen in the 18 thus far, you know, I just don't have a good rationale for saying that that would be any different of a result. With respect to digital, you know, I would say you use the word promotion. I think what we do is digital marketing. I mean, we do literally do some digital promotion with our customers where they shop online, things like that, and we invest in search to make sure people find our products. A lot of what we do to drive buzz on our brands is what I talked about at CAGNY, which is really finding real people who use our brands to tell their story of how our brands fit in their life, in their own words, very authentically. We call those people irrefutable advocates. They live on TikTok, Insta, things like that. They, you know, we build relationships with them, and they tell our story. It's incredibly efficient, which is why you see our A&P line, look lighter than you see in companies that use traditional tools because it's far more efficient than traditional in-line media, which is not only expensive, but it's heavily ineffective. We've done that. I just saw some new stuff, from my team yesterday that's coming on a couple of our brands that I'm very excited about. We're just gonna you know, this is an evolution in terms of this digital marketing and these irrefutable advocates. We love it, we think it works for us. We're gonna continue to drive it hard. Great. Just one just quick question. How long do you think it'll take to get back to fill rates that, you know, were in line with pre-pandemic levels? I mean, do you guys have any visibility or timeline on that? Yeah, frankly, we're there on some categories right now. We gave you the north of 90% number, but this is a pretty vast portfolio, as you know. The way you should interpret that is that that 90%-ish number at the portfolio level has embedded in it some categories and brands that are already back to 98%, which is best in class where we've already been. Equally, we have had manufacturing disruptions that we talked about quite a bit today that, you know, we're still on allocation or we're still replenishing stock on the shelf, and we have to do that before it's even gonna scan. You put those all together, and you get that low 90% service level. The transitory stuff with manufacturing disruptions, we've got it contained. We're ramping it up, and so that average that we quoted today should improve from here. Dave, do you wanna add anything? Yeah, just one thing to add. Nick, our inventory levels and our days on hand, our safety stocks are finally back to pre-COVID levels where we want them. We're in really good shape with our inventory levels and we're well-positioned. We have a couple of categories which we've talked about, where we're still working through it, but overall, I feel really good about where we are now with our inventory levels. Excellent. Thanks, guys. Appreciate it. Thank you. Our next question today comes from Peter Galbo with Bank of America. Please go ahead. Hey, guys. Good morning. Thank you for taking the question. Sean, I just wanted to clarify one of your comments, I think in your prepared remarks, talking about more of the recent Nielsen data. You said you expected an acceleration kind of going forward in that data. If we just look at the 4Q guidance, you know, obviously there's a decel in the sales growth rate. Maybe you can just clarify that for us quickly. Well, what I'm really getting at there is relative to Q3. I mean, we as I pointed out in my prepared remarks, we had. You know, there's a lot of noise in the year-over-year quarterly data in Q3, both for us and peers. You know, we had some of these supply chain things hit us in Q3. As we get past some of the unusual comps, we had some strong comps on big businesses in Q3. We move into Q4, the profile of the comps change on some of our big businesses. Plus you'll see we get back in stock on some of these canned categories where we've had, and fish, where we've had some limited ability to supply, and those conspire to show improving consumption trends. I referenced the four-week, Nielsen's ending 3/25, today. You know, our units and our dollars, you've seen improvements, and that's a four-week number, right? The fact that these staggering four-week numbers that come out every two weeks improve are kinda showing you embedded in that is weekly data that is improving week after week after week, and that's really what I was referring to. Got it. Okay. No, that's helpful. Thanks for that. Dave, you know, going back to the question around CapEx, you know, obviously understanding the timing. Just also understanding, you know, like, cash flow from operations is actually running a little bit behind last year. You know, maybe that's a timing mismatch on working capital. How we should think about free cash flow, you know, maybe through the rest of this year and particularly as we get into next year, with some of the debt maturities that you have upcoming. Yeah, absolutely. All of the cash flow from operations impact that you're talking about is from us building back our inventory levels. You'll see on our cash flow statement the increase in working capital related to inventory. That gets back to the point I just made, where we are back to, you know, healthy levels with our inventory, great safety stock levels. We feel really good going forward. As we get into, especially Q1 of fiscal 2024, we should be in an opportunity where, you know, you can start to see inventory as more of a tailwind versus a headwind. It's just been investment to build back our inventories to the safety stock levels that we want to be able to execute our plan. Thank you. Our next question today comes from Alexia Howard with Bernstein. Please go ahead. Good morning, everyone. Hi, Alexia. Good morning. Hi there. Can I, first of all ask about, the surge in the food service, side of things? It's obviously been strong for a while. Are there particular channels in there that are doing very well? I'm just wondering about the overall recovery on that side of the business, then I have a follow-up. Alexia. We're really pleased with Food service. Our sales were up 18%. We had just over 1% volume decline. You know, we've seen strength in a couple different areas. Our commercial business has been up. We have a popcorn business, which was very healthy, you know, in terms of volumes in the quarter. Obviously the pricing. We've been able to pass on inflation-justified pricing, and we have not seen volume declines, significant volume declines from that. The area we're still focused on are margins. We've seen nice improvement in margins in food service, but, you know, we still have some work to do to get back to the pre-COVID margin level. You know, another 200 basis points-300 basis points of improvement, and I'll be happier with the margins. Overall, we're really pleased with kind of how our Food service business has bounced back. Got it. As a follow-up, I'm just curious about the market share trends in Frozen. It looks as though, things are down a bit in that part of the business. I'm wondering if it's supply constraints and how does that recover over time? Is that a faster pace of innovation as we roll into 2024 or marketing, or would pricing actions, be needed on or promotional activity be needed on that side of the business? Thank you. I'll pass it on. Sure, Alexia, it's Sean. Yeah, that is a great example of what I mean by noise in the quarter in year-on-year. I mean, if you wanna look at our sustained market share trends in Frozen since 2016, 2017 when the innovation program really ramped up, it's been extremely strong, you know, consistently. Now we're wrapping a quarter where there is a bunch of noise in there. Let me just give you some examples of that. Omicron was last Q3, and we had businesses that performed, especially single-serve meals, exceedingly well during Omicron because people were staying home, they were having lunch at home, and so we had very big comps on some big businesses there. We also had competitors in Frozen in the year-ago period that had major supply chain challenges and lost merchandising events where we picked it up, also impacting our comps in the year-ago period. We did not repeat some of those this year. You got the fish fire issue. There is a fair and I should mention, value over volume on Birds Eye is one of the things that volumetrically it's gonna affect those numbers because 10 for 10 promotions. We've weaned ourselves off of promotion big time since 2015. In the last quarter, we were just over 20%. Until we hit this most recent inflation cycle, there still have been surgical 10 for 10s in our company's portfolio that were not very profitable. They existed in two places. One was in low-tier vegetables. The other was in some of our canned meals and sides businesses, like Chef Boyardee is a good example. We have eliminated that practice. This was the right window for us to do that. We refer to that as value over volume. As you've seen us do in the past, when we take that action, we will purge some low profit volume out of our base. Our margins will expand. We'll now have a much stronger base to build on with high quality, more premium innovation. That, that is one of the things we're doing at low-tier vegetables, getting out of that 10 for 10 business. Hopefully that gives you some color. We feel awesome about our Frozen business and the innovation pipeline we've got going forward. Super helpful. Thanks ever so much. I'll pass it on. Thank you. Our next question today comes from Jason English with Goldman Sachs. Please go ahead. Hey, folks. Thanks for letting me in. two questions. First, Ardent Mills JV, banner year this year on top of a great year last year. I know you're not giving guidance for next year, but maybe you can help level set us. Like, as we look to quote-unquote, normalize year, what do you think the right level of earnings is to model for that business? Jason, it's a difficult question to answer. You know, Ardent Mills is a great business. It's a newer business. It's been growing, and it really has two key components of its business, its core milling and blending business, where it creates, you know, great flours that it sells to customers, and then it has more of a trading type business. That core business has continued to grow. The margins have expanded. They have great mix. They have great strategies to really drive the margins on that business and the sales. They've also benefited from this environment and the volatility on their trading side of the business. The question comes down to, you know, what's that trading piece? I think, you know, the center line of performance for Ardent Mills will continue to go up. It's just quarter-to-quarter, there can be more volatility just given the nature of the business. Yeah. Okay. Well, in the first quarter of 2021, you told me it was around $70 million was a reasonable number on an annualized basis. If the core business is growing, it sounds like it's north of $70 million, but clearly well south of the $180 million-ish or whatever you're gonna deliver this year, somewhere in that range, I guess. Any, any guidance in terms of where we're closer to? No, not at this point. Okay. The performance this quarter was solid. Obviously volume was soft, but no worse than expected other than in Frozen. I mean, Frozen was a bit of a odd man out in terms of the relative underperformance of volume versus what we saw in Nielsen. You mentioned frozen fish, but can you, again, unpack a little bit more of what drove the sharp sequential deceleration and the underperformance versus what we're seeing in Nielsen? You mentioned you're pursuing a volume or value over volume, which makes sense. How are you rightsizing your manufacturing network to adjust for the lower volume input? Jason, I'll come back to kind of the things that I just shared with Alexia. If you're looking at year-on-year decel, you have to consider what was in the last year. You gotta look at it at brand level. You gotta pull out the Omicron stuff. It's probably even better look at it on a two-year stack basis because you had Omicron strength in single-serve meals, you got weakness this year in fish, and then the bigger one is, you know, the right time to get off of the 10 for 10 promotions in Birds Eye is now because we're in a pricing cycle. Basically the way to think about it is, in an inflationary environment, you don't wanna stick your promotion practices, especially these high velocity promotions that are not very profitable. You don't wanna stick to where you were before an inflation super cycle. You have to move off that. Frankly, while these inflation cycles are painful for manufacturers to go through to a degree, sometimes they're actually quite good for you because they become a catalyst for getting your pricing right and getting off of legacy promotions that customers are very attached to that are low profitability. Just the timing is right for us to go further on that. On the businesses I cited, some of it in Frozen and some of it in our canned businesses. Got it. Thank you. Thank you. Our next question today comes from Rob Dickerson with Jefferies. Please go ahead. Great, thanks. Just one question for me. Just to kind of stick on the Refrigerated & F rozen line of questioning. Sean, you know, profitability margin in that segment, you know, was clearly the highest I think we've ever seen. Clearly, you know, huge step up year-over-year, huge step up relative to Q1 of this year. You know, yeah, you know, it sounds like maybe there's some need over time to, you know, kind of increasingly invest in that side of the business, but at the same time, you're almost sitting at 21% op margin. you know, as we think forward, whether it's Q4, next year, 5 years forward, you know, like, would you say now you've kind of reached, you know, a point of profitability on that business that maybe you would have expected coming out of the Pinnacle acquisition? you know, is that level of profitability, you know, sustainable or at least within some rational range, factoring in, you know, the volatility of the supply chain, et cetera? That's it. Thanks. Hey, Rob. Yeah, this week you saw a pretty massive expansion in that frozen refrigerated segment, part of it were things like the vegetable promotion decisions that we made that contribute to that. It's one of the reasons why I always remind our investors, before you get too focused on absolute gross margin numbers, focus on gross margin trajectory. You know, through an investor's lens, that's I think what people want, is they want gross margins that can sustainably move north. You know, with our company and where we were even 10 years ago, because of the lack of innovation and because of legacy prices that were stuck at certain levels for, in some cases, decades, you saw that structural margins had drifted lower. By unwinding that under management, premiumizing the portfolio, we have the ability over time, across all of our segments, we believe, to drive northward progress in our gross margins. That is central to our strategy. That's what we're doing in Frozen, and it's one of the things that contributed to the growth in the quarter. The only other color I would give on Frozen specifically is something I mentioned at CAGNY, which is to be very profitable in Frozen, you have to have scale. We have been very deliberate over the last several years in continuing to build our scale in Frozen, because when you've got scale, you can drive that profit and that margin improvement. If you've got the innovation program that wins with consumers, then you've got the trifecta. That's really our game plan. Just to clarify, you know, I obviously realize you're not guiding for next fiscal year, but, you know, all of us have to put something in our model. I'm just curious, you know, if I look at that percent margin operating in Q3, it doesn't sound, from what you're saying, is there's anything necessarily in there that was one-off that could have inflated that in a given quarter? That's basically kind of what you were managing toward that hopefully would be somewhat sustainable. Yeah. Rob, this is Dave. I think that's fair. I think if you kinda step back and you just look at the last two quarters, and this applies to further, applies to the entire domestic retail business, the gross margins have inflected while volume's been down 8.5% to 9%. We've been able to improve the margins with the volume decline and because it gets back to the earlier point. We know there's elasticities on pricing, so we knew there was gonna be volume declines and we planned for it. It's all in the sort of the forecast for the margin. We don't see that materially changing. We're not gonna give you a specific number, but I think those dynamics are right, and that's why this value over volume approach is really important. We look category by category, and we understand the dynamics, and we focus on managing our margin as we manage it, as we manage the volume. Super. Thanks, guys. Thank you. Thank you. Ladies and gentlemen, this concludes today's question and answer session. I'd like to turn the conference back over to Melissa Napier for any closing remarks. Thank you very much for joining us this morning. Investor Relations is around for any additional follow-up questions that you might have. We hope everyone has a wonderful day. Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.