Greetings and welcome to the General Mills Q2 fiscal 2023 earnings Q&A webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press 1 followed by 4 on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Tuesday, December 20th, 2022. I would now like to turn the conference over to Jeff Siemon, Vice President of Investor Relations. Please go ahead. Thank you, Kelly, and good morning, everyone. Thanks for joining us today for this Q&A session on our Q2 fiscal 23 results. I hope you all had time to review the press release, listen to our prepared remarks, and view the presentation materials which were made available this morning on our IR website. Please do note that in our Q&A session, 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 will be discussed on today's call. I'm here with Jeff Harmening, our Chairman and CEO, Kofi Bruce, our CFO, and Jon Nudi, Group President of our North America Retail segment. Let's get to the first question. Kelly, please get us started. Thanks. Thank you, sir. If you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a 3-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. Once again, 1 4 to register for a question. Our first question comes from Andrew Lazar with Barclays. You may proceed with your question. Thank you. Good morning, everybody, and happy holidays. Happy holidays, Andrew. Andrew. Great. I think just to kick it off, I appreciate that, you know, capacity constraints can often lead to a gap between shipments and retail takeaway. Obviously, the differential in pet was far greater than anticipated. I'm trying to get a sense of why would retailers pull back on orders when capacity is constrained and demand remains so strong? Does this pose any risk ultimately to the demand side of the equation? I've just got a quick follow-up. Yeah, sure, Andrew. Thanks for the question. I would say ironically in the 2nd quarter, a lot of what occurred in pet, we anticipated, including retail sales and the fact that we were capacity constrained. As we look ahead, we get into double-digit growth for the 2nd half of the year, by which I mean starting in Q3. Given the strong level of innovation we have and the fact capacity is online and we've got really good advertising and marketing support. The one thing that was different than we expected was the drawdown in retail inventory you pointed out to. First of all, most importantly, we don't think that this is a long-term trend. We think it was something that happened this quarter. In terms of the rationale why, I would say in general there, you know, retailers have carried a little bit less inventory, you know, across the board during this time, only because as with inflation, what you don't want to do is carry a lot of working capital but certainly not 8 points worth of differential. The, you know, the other reasons I would say is that, you know, because we lack capacity, there are a lot of categories like treats, for example, where normally we would merchandise a lot during this time of year, but we couldn't do that. Not only were we not able to service demand, but we had to pull back on merchandising. A lot of times, retailers carry more inventory when they're gonna merchandise. You really see that in our treats business. You know, the third reason is we had 2 big retail customers and have a more mass merch orientation that didn't take inventory coming into the season because they had warehouses full of other things. It's a little bit different customer set than our North America Retail business, for example. That's why we don't see it on the North America Retail side. Those are really the laundry list, if you will, of reasons why, you know, inventory was less. As you can imagine, we've done a very deep dive on inventory levels by customers. I can tell you, we don't think there's gonna be a repeat performance of that nature in the Q3. In fact, that's why we're comfortable guiding up double-digit sales growth again. Great. Thank you for that clarity. I think you were looking for flattish gross margins or so for the full year if we were thinking about last quarter's conference call, obviously with the upside to gross margins in this quarter, despite the pet constraints on profitability, could we see gross margins likely up year-over-year for the full year at this stage? Thanks so much. Sure. Andrew, it's Kofi. Thanks for the question. Certainly as we look at our revised guidance, that's within the range of possibilities. While we're not giving specific guidance on gross margin, we're very comfortable we're making good progress against our long-term goal of getting our margins back to pre-pandemic levels. We're still about 150 basis points back of there. We're going to continue to drive at the things that will help us improve the margin profile as we go forward. Thanks. Have a great holiday. Thank you. Thank you, Andrew. Our next question comes from Ken Goldman with JP Morgan. You may proceed. Hi. Good morning. Morning, Ken. Hi. I wanted to just ask. You know, you seem confident, understandably why the deload won't happen again. Thank you for the clear explanation, Jeff, on what the drivers were. I'm just curious, as you progress into your Q3, it might be a little early to ask because we're still not at Christmas, but are you seeing any, you know, refilling of inventory levels by retailers? If you addressed this already, forgive me, but just trying to get a sense of sort of more, more real-time data as to what's going on. Yeah. I think, you know, a couple points, Ken. Yeah, we are early in the quarter. Having said that, there are a couple of things that give us confidence in, you know, our forecast for the Q3. The first I would start with Life Protection Formula, which is, you know, our biggest dry business. We you know, we've seen Over the last six weeks, we've seen demand really rebound quickly, and that's important because that's the first business that we could bring back up to appropriate service levels. That gives us confidence. In addition to that, you know, we I did tell you we were gonna grow double digits in the Q3. I can report that we're only about three weeks in to December, so it's, you know. You know, three weeks is not nothing, and I can tell you we're on track to deliver what we said we're gonna do in the Q3, which again gives us more confidence that we're gonna be able to do what we say we're gonna do and that we've seen the pipeline of inventory start to refill itself because we're able to service the business better, and it's especially true on treats. Ken, I'd add, just to put some numbers on it, this is Jeff Siemon. For Life Protection Formula, you know, the movement in Nielsen measured channels in the last month is up almost 20%, and volume has been positive and accelerating recently now that we've gotten service back into the nineties. You know, just to put some dimensions on it's been encouraging to see that business grow, you know, basically in line with or even ahead of where the category is growing overall. Thank you. A quick follow-up. Just how do we think about the impact of adding more production from co-manufacturers and maybe, you know, re-stepping on the marketing pedal for your pet food business in the third and Q4? You know, obviously, hopefully it'll be a better volume turnaround, and that'll help as well. I'm just trying to get a general sense of, I guess, how to model those margins given all the puts and takes. Let me start, and then Kofi can give you some more thoughts on the margin piece. I would say, you know, how to think about the whole basket, I would say clearly we anticipate our reported net sales to improve to double digits in the second half of the year behind all the activity we talked about. Given that we've gone externally, both in treats and more importantly in dried dog food for to get capacity sooner, that obviously helps our service levels. External capacity doesn't tend to be as profitable. I wouldn't anticipate our gross margins to rise as proportionately as our sales would rise. The benefit is that we're getting back and we're satisfying pet parents sooner. The other thing I would say is that to the extent that we increase advertising in the Q3, and I think we have some really nice advertising. We'll increase that double digits in the Q3. I wouldn't expect our operating profit margin to rise as fast. I mean, it should get better, a lot better, but it probably won't rise as fast as the sales growth in the near term. That's a choice that we're making, and our choice is to get back to growth first and making sure we can get that flywheel going again. Kofi, you want to add any color to that? at said, we do expect profit growth on our pet business in the back half of fiscal 23. Some of the key things you'll see is, we'll expect price mix to catch up with inflation. We've got another effectively round of pricing coming through at the beginning of calendar year 23. We don't expect the pressure on supply chain to be as acute, so we won't see as much sort of drag from other cost of goods sold. And, of course, we're not expecting the inventory depletion and the pressure and deleverage that comes with that headwind. As a result, we would expect our second half top line growth should give us still solid profit growth, even if it's slightly behind the top line growth. Thanks so much. Happy holidays. You too. Thank you. Our next question comes from Max Gumport with BNP Paribas. You may proceed. Hey, thanks for the question and Happy Holidays. Happy Holidays. sticking with pet, you just mentioned another round of pricing you expect to come online in CY 2023, I believe. There's a narrative that the pet food industry in the U.S. could be on the horizon of getting more competitive due to potential supply-demand imbalances. I'm wondering if you can provide any color on what you're seeing on that front. Yeah, Max. Thanks for the question. When you say more competitive, first of all, I would say that, you know, the pet category is always competitive. There are a lot of great competitors in the category. I suppose the question comes down to, are you talking about price competitor or something like that? What I would say is that, you know, we continue to see the premium end of the category grow. You know, we see Blue Buffalo, especially Life Protection Formula, again, continue to accelerate once we get supply back online. In general, we see the premium part of the category doing quite well. It's a category that really lends itself. It is a fairly inelastic category. That's because pet parents really, really care about what they, way they feed their pets. I don't anticipate between the nature of the category and the fact we're still seeing inflation. I mean, our inflation for the company in the back half of the year will be up double digits. It's not as if we're entering into a deflationary environment. We're all still kind of recovering service levels. The supply chain, you know, we're not at an overcapacity situation. The supply chains are still, have some catching up to do. Because we see inflation, because of the nature of the consumer, because of the nature of the supply chain, even though it's always a competitive category, I wouldn't see it getting more competitive in terms of pricing in the near term, only because of all those factors. Great. Thank you very much. One follow-up. You mentioned that you expect price elasticities to remain below historical levels during the remainder of FY 23, and also that they're particularly benign in North America retail. I'm wondering what you're seeing on this front in your international businesses, particularly European cereal, as we've heard some commentary of a return to normal levels of elasticities in those markets from other industry participants. Thanks very much. Yeah, I guess I would say in general, not commenting on cereal specifically, I guess, but in general in Europe, first of all, I would say the economic situation is Europe is more challenging than it is here, particularly driven by energy prices and unemployment that's a little bit higher than it is in the U.S. I would start with that. The second I would say is that elasticities in Europe tend to be a little bit higher than they are in the U.S. normally, and we're seeing that in this environment as well. That kind of plays itself out across categories. Whether it's cereal or bars or ice cream. I would say the situation in Europe is a little more challenging than it is here, but it really has to do with a combination of macroeconomic backdrop combined with elasticities in general tend to be a little higher. I would say directionally, we're seeing the same kinds of things there that we see here. Great. Thank you very much, and happy holidays. Yep. Thank you. Happy holidays. Our next question comes from Robert Moskow with Credit Suisse. You may proceed. Hey, good morning. Hi, Rob. Hey. Hi. Hi. You mentioned some new pricing actions in pet. Do you expect to take more pricing actions in North America Retail as well? You know, the public comments from the grocers sound increasingly concerned about higher pricing and the impact on their consumers. Wanted to know if there's any blowback on that. Also, you know, in the past, there's been unusual deloading in January by some retailers to protect balance sheets. I think you mentioned it here today. Do you see any risk of that happening as well? Rob, you know, I would say as it relates to pricing, I mean, we've announced some pricing on pet, so we've announced that to our retail customers already to take effect, I think February 1st. We've announced that already. In terms of, I will also remind you that as when we started the year, we said that, you know, for most of this fiscal year, we've taken most of the pricing that we need to take in the market already for this fiscal year. That also remains true. I would also say in the back half of the year, we're, you know, we're expecting double-digit inflation. It's not as if it may decelerate from where it is now, but then decelerating to double digits is not exactly zero. Even as we look across a longer horizon, I don't wanna play Nostradamus with inflation rates. I will say, though, is even looking out past 6 months, it's pretty clear to us that we'll still see an inflationary environment. It may or may not be as robust as it is now, but it'll still be an inflationary environment driven quite a bit by wage increases. So it's hard for us to see an environment where we don't see inflation, even if that inflation, those inflationary levels may not be exactly what we've experienced over the last 6 months. As we look at our business, we'll continue to look at pricing. The key is that the pricing has to be justified and which has always been the case. It has to be justified based on the cost that we're seeing. We find with our retail customers if we can justify the cost that we're seeing and that they know that we're investing in the growth of our categories, which we are through double-digit consumer spending increases, launches like minis and cereal and like the innovation we have in Pillsbury and in Blue Buffalo, then the conversations are a lot more productive than otherwise. That's, I guess, what it was a long-winded answer to a very straightforward question on pricing. With regard to retailer inventories, I would say we've seen a little bit less retail inventory because of this inflationary environment. I would say as we look forward, we've probably seen. I wouldn't anti I don't think that's a risk to our go forward, either on Blue Buffalo or our business in general. That's kind of some generalities. Jon Nudi, anything you wanna add to that? No, I think you hit it. I would just say that our SRM capability is something I'd point to is much more sophisticated than it was a few years ago. As inflation continues to come, we'll leverage the entire toolbox. It's not just list pricing, it's promotional optimization and mix and pack price architecture. By leveraging all those tools, we believe that we'll be able to combat inflation as we move forward as well. In terms of retailers, as Jeff mentioned, I mean, it's pricing's never been easy, and even over the last couple of years, we've seen significant inflation. If we can bring in a strong market basket story, we have had success to moving pricing through the market. Can I ask a follow-up? In the past, have you been able to go to retailers and show labor inflation internally and use that as a rationale for raising price? It seems like that's something new. Yeah, Rob. I think the scale of the inflation is different today, right? We're seeing double-digit inflation. Historically, you know, over the last decade or so, we haven't seen a lot of inflation. It's been low single digits. It really hasn't been a conversation because there really hasn't been enough inflation to take significant. I think with the scale of the inflation we're seeing today and the sophistication, as I mentioned as well, we're able to really break down where we're seeing inflation and some things are starting to moderate, but at the same time, you're seeing things like labor certainly remains sticky and it's in the equation. We've gotten more sophisticated, but our retailers have as well. Again, I think we have really good constructive conversations that are really based on facts at this point. Rob Got it. The labor, where we see that impacting us is not so much our own labor, but it's the labor at our suppliers, which translates through their pricing to us. Yes, there's labor inflation in our own facilities, et cetera, but the much bigger aspect of labor is upstream at the supplier base. Got it. Makes sense. Thanks. Our next question comes from Michael Lavery with Piper Sandler. You may proceed. Good morning. Thank you. Morning. Thanks. I just wanted to come back to the elasticities and maybe understand a couple of things better. You say you don't expect, you know, to sort of revert to more normal levels over the second half. I guess it or just at least over the year. Is that just because half the year is done or what are you seeing something different maybe structurally? You know, what's driving that expectation and what would you consider a more normal level to be? I think what drives our, you know, what drives our assumption, Michael, and Frank, look, is an assumption, is that we still see, you know, we still see the conditions for inelasticity and relative inelasticity, not complete inelasticity, but relative inelasticity in the marketplace. Those conditions are a continuation of inflation. Even if they're not what we experienced in the first half, they're still double digit. The second is supply chain, the supply chain still having supply chain disruptions. Again, our service level is in the high 80s, so that's certainly a lot better than they were a year ago, which they were in the 70s, but it's certainly not at 98% either. A continuation of supply chain challenges and also consumers to be under pressure. In fact, it's highly possible consumers will be under more pressure over the next 6 months. When that happens, consumers tend to eat at home more rather than eat out more. We know it's very possible we'll continue to see trading into food eaten at home. Those are the factors that we see and drive our assumptions that there won't be a significant change in elasticities over the next 6 months. Look, those are the assumptions based on what we see right now. Okay, great. That's helpful. I know China's fairly small, but just would love to get an update on maybe what you're seeing there. Obviously, in the Q2, there was some of the lockdown, you know, I guess pressure or, you know, the certainly food service challenges from those restrictions. As it's kind of evolving there, any update on the latest of what you're seeing in China and how we should think about that? Well, there have been a fairly significant policy change by the Chinese government on COVID and zero COVID. It's gonna be a ride, I think, for the next few months because we've had a population that's gone from relatively no COVID to quite a bit of COVID in the marketplace. Now people aren't locked down as much. I think when you have as much COVID as they have, we'll see not as many people venturing out, which is very good for our Wanchai Ferry dumpling business, which is half of our business, and not as good for our Häagen-Dazs business. You know, I, you know, what to think about that business over the next few months, I think it's gonna be a wild ride, but I would think that our dumpling business will do quite well and our Häagen-Dazs business will maybe be a little bit more challenging over the next few months, but they're about equal in size. Since they pivoted on policy, they've conveniently stopped giving information on case counts. I guess, yeah, is it pretty chaotic there? I mean, I guess we're just in for a few months of some uncertainty, but it sounds like you're positioned on either side of that pretty well. I think so. I think in the grand scheme it won't be material for General Mills, the shift from one to another. It may be a little more material for our Chinese market, but it won't be for the company in aggregate. In terms of the case counts, I don't know, but they're clearly going up and they're going up rapidly for the moment. Okay, thanks so much. Yep. Our next question comes from Pamela Kaufman with Morgan Stanley. You may proceed. Hi. Good morning. I wanted to come back to the pet segment, and just to revisit what gives you confidence that you can return to double-digit growth in pet in the second half of the year. Can you decompose how you're thinking about the drivers of that growth? I mean, can you grow volumes with the capacity that you've secured, or do you expect volumes to continue to decline with the growth driven predominantly by the pricing? Pam, you know what gives me confidence are a combination of factors. I think the key, the first key factor is the restoration of our supply chain and of our capacity. That's particularly important in our treats area. But it's also important for dry dog food and cat food as well. I would start with treats and then go to dry dog and cat food. The first piece of confidence is that we have gained enough capacity actually to be able to grow volumes in the second half of the year on both of those platforms. That's the first piece. The second, though, then, you know, it has to be backed up by good marketing. I feel really good about our innovation, really good about what we're doing on the Wilderness brand. I feel good about our change to Tastefuls and cat dry food. I feel very good about our partnerships with our retail customers to get our treats business kick-started again. We have great products on treats. We've rebranded a lot of what we had bought from Tyson to Blue Buffalo, so the branding is really good. We've got good programs with our retail customers, so I feel good about our ability to drive our treats business. We're gonna increase our brand building by double digits. We've actually already seen a return to volume growth on Life Protection Formula. We didn't have innovation on that. We didn't have advertising increases on that. All we had is supply. I feel like the key is supply and then building on top of that really good innovation, strong in-store execution on treats and good advertising at good levels on top of that. That gives me quite a bit of confidence that we'll be able to turn around the Blue Buffalo business in short order. As we've seen through this whole time, even though our Q2 was not what we wanted and not what you all expected, the brand remains really good. You know, we've done a lot of brand testing. The brand remains really good. The trends towards humanization are really good. You know, the tailwinds in the category are still there for us behind a good brand and increased supply and marketing. Thanks. That's helpful. You pointed to a lot of innovation that's coming within the pet segment. Is there anything in particular that prompted your plans to step up innovation, or were these initiatives already in the works? How should we think about the margin impacts of the innovation? You mentioned you're adding more meat to Wilderness. How are you planning to offset these costs, and what is the margin profile versus the existing portfolio? Well, I would say, you know, on the innovation front, we've been, we've had innovation that we've been wanting to put in the marketplace for some time. Obviously, we haven't been able to supply the base business the way we wanted to. Adding innovation on top of that is probably not a good idea. In fact, I think the people listening should take it a sign of confidence that we can supply our business better because we're bringing this innovation to the marketplace. We certainly wouldn't do that if we didn't think we could supply it. That would be my first point of innovation. We've had this plan for a while. You know, when it comes to the product renovations themselves, I mean, Wilderness is a high-price, high-margin business. You know, to the extent that the pet parents want more meat in the product, which they do, and we're giving that to them, that should do wonders for our margin profile. In fact, I would tell you that the most important thing that we can do to enhance our margins in pet is to grow pounds. To the extent that we have the supply and the news on a high-price, high-margin brand, that should be just what the doctor ordered for the margins for the pet business. Great. Thank you. Yep. Our next question comes from Chris Growe with Stifel. You may proceed with your question. Hi, good morning. Hi, good morning. Good morning. Hi. I wanted to start first, if I could, with a question on the gross margin, perhaps for Kofi, but just to understand the sequential change in the gross margin, from 1 Q. Again, your gross margin was up nicely year-over-year, and that's been quite unique in the industry. I just want to get a sense of any factors that are worth considering that occurred sequentially. Obviously, the one that stands out, I think would be around pet. Was that one of the sequential drivers of the softer gross margin, absolute performance or any other factors that are worth noting there, if you could, please? Sure, Chris. You have the plot. Certainly, pet is a contributing factor, but there are also some other structural things around mix of our business as we move from Q1 to Q2. You know, we have a lot more volume from businesses such as soup and baking products, which is, as you know, are heavily merchandised in that seasonal window. So those tend to drive us to a structural step down in margin as we move from Q1 to Q2. The other factor, as you rightfully noted, was the acute pressure on pet margins in this quarter. Okay. Thank you for that. I just had one more follow-up on the pet profit. You had indicated that the Q2 would be a little softer. You had some, you know, costs related to getting, you know, third parties and co-manufacturing ready, some inventory and warehousing costs. I guess I just want to get a sense of this Q2 pet profit performance was, you know, was unique. You had planned on some of that occurring. Are a lot of those costs then sort of embedded in the business? Do you have any ongoing costs related to the co-manufacturing outside of just that's a lower margin way to supply your business? Sure. I would expect some of those costs to be structural for sure as we go forward. We'll have external supply chain, you know, costs related to the step up in volume that we're getting. Not all of those costs will carry forward. Some of these costs were related to disruption, and enrollment of additional, you know, warehousing capacity in that window. We would expect in aggregate that the drag from those costs will reduce as we step into Q3 and Q4 for this year, which is part of the reason why we also expect profit growth and profit margin improvement as we step into those quarters. Okay. Thank you for the color. You bet. Our next question comes from David Palmer with Evercore ISI. You may proceed. Thanks. Just another angle on that gross margin question. You know, if we look at this quarter, your gross margin's still down maybe 80, 100 basis points from pre-COVID levels. You know, tons of crosscurrents there. I'm wondering how you're thinking about that gap and your ability to get back to pre-COVID levels on gross margin. The things I'm thinking about are, you know, you mentioned the supply chain friction costs. There's maybe be some categories out there where you're gonna be pricing to protect profit dollars, there's some math going against you. I'm wondering if you'll need to see some easing in some key commodities in certain categories. The other thing I'm also thinking about is you've had some very strong growth in some of your highest margin categories. I could imagine a scenario that you'd be particularly as you're doing as well as you're doing with dough, that you could be above past peak as you get past some of these friction costs. Any commentary there would be helpful. Sure. Sure. I'll try to do justice to your question. As you think about the path forward, obviously you hit on the first thing and sort of one of the precedent conditions will be, you know, a return to something that is a much more stable and closer to historical level of supply chain disruptions. We're still probably running about 2 times our historic levels, you know, well off of the peak of 6 to 7 times where we were last year, but still enough to be meaningful and significant. We would also expect that once we get out of a short supply environment, it'll be easier to get at HMM and more fully utilize that lever. That we would expect some of the pandemic era costs related to servicing the business in a more stable environment will become easier and lower. Structurally we view our job to kinda claw back about 150 basis points of margin versus our sort of pre-pandemic level. I think the stable environment from a supply chain standpoint will be one of the first and the most important things. The second will be probably a return to, you know, more historic levels of inflation, moderation of inflation, which, you know, who knows when that's coming. We're certainly positioning our business to make sure that we're taking the costs out as we have the opportunity to do so. Just a separate follow-up. You talk about investments in your pre-prepared remarks, in digital and other capabilities. Could you just give us a sense about what you think the benefits will be from those investments and where, when, and where we'll see that? Thanks. Sure. A lot of the focus of our investments in digital and technology are to enable our marketing activity, and as well our supply chain efficiency. We'll see benefits both in gross margins and we would expect to see that deliver on growth. Then I'll ask Jon if he wants to weigh in since, we're seeing a lot of investment in our North America retail business. Yeah, absolutely. As Kofi mentioned, supply chain's a big focus and there's a lot of opportunity for efficiency there. Now on the marketing side, and it's really something we call connected commerce, and it's really the funnel. At the top of the funnel is how we generate demand in a digital world. More and more of our marketing is becoming digital marketing, performance-based marketing. We've invested heavily to acquire first-party data, and really make sure that we have a strong marketing engagement platform that we can then serve up relevant messaging at scale, and really customize for our consumers. We're seeing really incredible return from that. Further down the funnel at the bottom is actually the transaction, and we're kind of ambivalent whether it's in-store or online. The margins are the same. We actually over-index from a share standpoint online, but we've developed quite a few digital tools to really understand the digital shelf. We grew up in a world, a bricks-and-mortar world, that we understand Nielsen and the drivers of our business. Digital is different, right? We had to develop the dashboards for our teams to really look at the metrics that matter, make sure that the digital shelf is correct, make sure that our search metrics were where they needed to be. A lot of that is now digitized. It's on our, you know, our leaders' computers every day in a dashboard form, and they're making real-time adjustments to the business. I think you're seeing it actually translate into stronger performance in market today and will continue to become even more sophisticated as we move forward and continue to invest in this capability. Thank you. Our next question comes from Cody Ross with UBS. You may proceed. Good morning. Thank you for taking our questions. Can you just clarify or quantify how much the retailer inventory reduction was in pet this quarter? Also, I apologize if I missed it, which channels or retailers was the inventory reduction in? You know, I'll answer the first part of that question for you. The second one, I'll take a polite pass. On the first part, you know, our retail sales, Cody, were about up 8% during the quarter, and our reported net sales were flat. The difference between that 8 percentage points was a reduction in retailer inventory for the variety of reasons that I stated earlier. In terms of, you know, which customers in retail, I'm not gonna get into a customer-by-customer, you know, kind of dissection of that. Understood. Thank you for that. Then you mentioned in your prepared remarks adding capacity in fruit snacks in pet treats and dog food. Can you just discuss holistically across your business how much capacity you are adding? Can you walk us through the planning and analysis that is done to determine which categories that you choose to add more capacity in? Thank you. Yeah. From a, from a high level, I mean, what I would tell you, the best returns that we can generate as a company are adding capacity on platforms that we already know and that are already growing. You know, the litmus test for me is that if they're growing before the pandemic and they're growing during the pandemic, the chances they grow after a pandemic are quite a bit higher. You, you see that in our pet food business. You see that in fruit snacks. You see that in Totino's. You see that in Old El Paso. So, you know, we have a variety of businesses. You've seen that in our cereal business. So we have a variety of businesses that we've seen continued growth. You know, we've run out of capacity, and frankly, as soon as we generate capacity, I think fruit snacks is a good example, we've added capacity and you'll probably need more given the high level of demand. That's kinda how we look at it. We make sure that all these growth investments are value enhancing for our shareholders. To the extent they're growth businesses and they're good margin businesses and all of the above are, you know, meet that criteria, then we're more than happy to invest in our own internal capacity. Thank you very much for that. I'll pass it on. Thank you. Okay. I think that's all the time we have for this morning. Kelly, I think we can go ahead and wrap up. Thanks everyone for the time and the good questions, and happy holidays to everyone. Thank you. That does conclude the conference call for today. We thank you for your participation, and we ask that you please disconnect your lines.