CONAGRA BRANDS INC. — Call Transcript 2026

Good day, and welcome to the Conagra Brands third quarter fiscal 2026 earnings Q&A call. All participants will be in a 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 a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call over to Matthew Neisius, Senior Director of Investor Relations for Conagra Brands. Please go ahead. Good morning, everyone, and thank you for joining us. Once again, I'm joined this morning by Sean Connolly, our CEO, and Dave Marberger, our CFO. We may be making some forward-looking statements in discussing non-GAAP financial measures during this Q&A session. Please see our earnings release, prepared remarks, presentation materials, and filings with the SEC in the investor relations section of our website for descriptions of our risk factors, GAAP to non-GAAP reconciliations, and information on our comparability items. I'll now ask the operator to introduce the first question. Our first question comes from Andrew Lazar with Barclays. Please go ahead. Great. Thanks so much. Morning, everybody. Morning, Andrew. Morning. Hi there. Maybe Sean, to start off, I'd really like your thoughts on, you know, if the industry does end up facing another round of broad-based inflation, I guess whether you think, you know, Conagra and the industry at large would be able to, you know, count on pricing as but one lever to help offset it as it has in the past, or if this time is different, you know, just given consumers are particularly value conscious at this stage. You know, I ask it because I think some industry players clearly are needing to, you know, remain highly focused on debt pay down and protect profitability, you know, even if it prolongs sort of the volume recovery dynamic. Yep. Great question. Here's how I would tell you to think about that. First, as a reminder, believe it or not, it was all the way back at the beginning of our fiscal 2024 when we pivoted to a focus on restoring volume growth in frozen and snacks, even if it meant eating some inflation and enduring some margin compression. Well, that strategy has proven to be quite effective because you've seen our volume trajectory improve every quarter since, with the exception of that brief period last year where we had the temporary supply constraints. We're very pleased, you know, and pleased to see our total portfolio growing again this quarter. As for what comes next, our plan at this point is to stay agile. If inflation is benign, you'll see us likely continue to focus on continued volume momentum. If for some reason inflation was to go the other way, we'll keep our options open. After all, we are a company that is intensely focused on maximizing cash flow. We've already proven that we can move the volume needle to growth in frozen and snacks when we need to. You know, net will be agile, but right now, I would say it's too early to speculate on a particular course of action. There's three and a half months to go before we guide for fiscal 2027, and obviously, a lot can unfold by the hour these days. Certainly, a lot can unfold in the next three and a half months. One thing we can be sure of is that we will drive a lot of productivity while we optimize all our other levers to mitigate any inflation that might come our way. Remember, we did take pricing this year on a bunch of products, our canned foods and our cocoa-oriented products, and the elasticities have been quite encouraging. Let's see how the dust settles, and then we'll take the smartest course of action to deal with, you know, whatever we're seeing at the time. As I sit here today, I see a lot of positives. The business has strong momentum, especially in frozen snacks. Shares are excellent, cash flow is strong, productivity is robust, and people are highly engaged in delivering some of the most exciting innovations we've had. A lot to feel good about. Great. No, thank you for that. Just Dave, real quickly, maybe, I guess, what sort of visibility do we have at this stage on costs going into fiscal 2027, just based on where you might already have some, you know, some hedges in place? I'm not asking, obviously, for your overall inflation estimate or whatever for next year, but just how much visibility do you think you have or based on where you already know what you've got in place? Thanks so much. Yeah, Andrew, let me give you a little color there. For our fiscal 2027, our material spend coverage is generally consistent with the prior years at this point. We're roughly 60% covered, and this is total materials. 60% covered for Q1 and roughly 40% covered for the full fiscal year. Areas where we have a bit more coverage than historically would be steel, freight. Remember, we contract line haul, that's a big percentage of our freight. That's on contract. Some of our crop-based ingredients, we have better coverage. A little bit less coverage on diesel fuel. We're covered through the end of this fiscal year there, but not as covered as we've been in the past. Just as a reminder, proteins probably have the lowest coverage of anything. For next year, we're only about 15% covered. We're more spot market when it gets to the animal proteins. Hopefully that gives you a little bit of a feel. Yep, really helpful. Thanks so much. Our next question comes from David Palmer with Evercore ISI. Please go ahead. Thanks. Those were precisely my questions, so let me just follow up on that a little bit. When you look at your portfolio, you've obviously been prioritizing volume over the last fiscal year, and that has helped. You know, there are some other notable companies in the space that have been aggressive in this prioritizing volume first, just like you. I wonder where we are now in terms of where you think your pricing power is. Do you feel like you're in a better spot now with regard to relative price points to private label in some of your categories versus main competitors and others in terms of your just volume momentum overall? I really am asking because in the past, you've said things like we'll be okay if inflation is not over 3% in terms of getting to where I'll go. I just wonder if today, if we do go over 3%, if you'll be able to drive profitable growth going forward. Thank you. Hey, David, it's Sean. First of all, private label, just since you brought that up. We under index in terms of private label development in our categories, particularly in our almost non-existent in our biggest business, which is frozen meals. You know, our strategy has been what I've called a horses for courses strategy, where our growth businesses have been focused on getting back to volume growth that's frozen in snacks, and that is happening. Our staples business is focused on cash maximization. That's a lot of things like our canned food business, and we have taken inflation justified price on those categories, and we've seen good elasticity. It's a surgical approach that we've taken historically. You know, but make no mistake about it, because we've dealt with the most protracted inflation super cycle that I've certainly seen in my 35 years of doing this. After a few years of every company taking justified pricing, you know, investors said, "Look, you can't shrink your way to prosperity. Show us that you can get the volumes moving again." We have done that. Our portfolio responsiveness, I think, has outpaced our peers, which shows you we are delivering good value and we are delivering exciting innovation. You know, as I mentioned to Andrew, as to what's to come, you know, we'll see what the field gives us when we've got to snap the chalk line here. If the, you know, if things settle down with the war and things like that and things look more benign, you know, I think it makes sense to stay focused on keeping the momentum that we've got in volume. If for some reason things broke the other way and we're looking at a whole slog of new costs, you know, we can pivot as well, because to the degree you do take price and you sacrifice a little volume, it's more of a volume sabbatical than it is a permanent volume rebase, and you tend to see the volumes come back when inflation moves again and you see those prices get rolled back. As I said, we've got to stay agile but feel really good to see that we have a portfolio that is responsive to you know proper pricing and wise investments and strong innovation when we need it to be. You know, look, investors always wanna see top line and bottom line growth. Sometimes the macro environment can make it challenging to do both at the same time. You know, we'll stay agile and we'll keep you posted as we get to next quarter in terms of what we're seeing and what the exact plan is. Thanks. I'll pass it on. Up next, we have Megan Clapp with Morgan Stanley. Please go ahead. Hi. Good morning. Thanks so much. I just wanted to start with maybe a question on the fourth quarter. You know, as you look at the third quarter, you obviously had some nice momentum, a return to org sales. There were a lot of moving parts just with the retailer timing and some of your share dynamics. As we think about the fourth quarter, maybe you can just help us with some of the building blocks as we think about top line. Should shipments generally match consumption? And then on the op margin line, can you just help us kind of understand the building blocks to the sequential improvement that's embedded as well? Thanks. Hey, Megan, it's Sean. Let me start by tackling the shipment versus consumption question because I saw a couple early reports this morning that I think might have that wrong. I would not spend a lot of time overthinking shipments versus consumption because with our company, because of the supply interruption last year and then some merchandising timing shifts in frozen this year out of Q2 into Q3, our shipment patterns have moved around a bit compared to what they normally do. Over fiscal 2025 and fiscal 2026 combined, we are basically shipping almost exactly to consumption, which is what we always do as a company. It's just been a bit lumpier quarter to quarter because of those dynamics. You know, with respect to this quarter, I wouldn't get overly exercised around there's an implication in Q4. It's actually more the reversal of Q2, which was where we had a bunch of holiday shipments last year. Those merchandising shipments this year moved to Q3. Not a lot of drama there. That's the shipment versus consumption piece of the year to go. Dave, you wanna tackle anything else? Yeah. Just to add to that, Megan, we do expect positive organic net sales growth in Q4. That's obviously implied with our full year guide to the midpoint of the range for organic. Consumption and shipment should be more in line in Q4, you know, talking to what Sean just explained. We're excited about our innovation slate and you start shipping some of that innovation, so you start to see some of that in Q4. So they're really the building blocks for the top line. As it relates to operating margin, yes. We expect an inflection from Q3 to Q4. Really the big drivers of that, A&P as a percentage of sales will not be as high in Q4 as it was in Q3. It'll be more in line with that kind of 2.5% average. The 53rd week actually gives some leverage in terms of overall operating margin. Then just some of the seasonality of trade, timing of productivity, timing of inflation, all those kind of things give us additional kind of benefit in op margin relative to Q3. I would say they're the kind of key building blocks. Okay, that's helpful. Thank you. Just as a follow-up, the op margin you're now expecting at the high end of the guide, could you maybe just talk about what's driving that? As we look at the exit rate on the fourth quarter, I think it implies something above 12%. You know, understanding there's a lot of moving parts right now, but if inflation kind of stays in this low single-digit range as you would hope it moderates to and normalizes over time, like, should we think about that exit rate as being informative of kind of a starting point going forward at this point? Yeah. Regarding the last part of your question, I'm not gonna comment on fiscal 2027. You know, what I can say is, it, and if you just look at when we gave guidance at the beginning of the year, you know, 11%-11.5% operating margin when there were so many things going on at that time, and since then there have been so many dynamics, I feel really good that we're actually now gonna guide to the higher end of that range. That all starts with our inflation call, which was core inflation and tariffs. We're pretty much on that call. Our productivity programs are really doing well. The investments we've made in our supply chain and technology and in process are really, really delivering. So they're really the key. As Sean talked about, we have taken price increases, particularly in our canned products, and the elasticities have been in line. When you kinda look at it's how we planned the year. There obviously have been some puts and takes, but generally speaking, we feel really good that we're coming in as we expected to on margin, and we expect that productivity to continue into next year. You know, obviously, we have more work to do on inflation. There's a lot of dynamics. Things are changing all the time. I talked about the coverage we have. We are locked in on certain key areas, which is good for us. You know, we feel good that the building blocks for next year's plan are there, but we have to wait the next three months to give specific guidance, obviously. It's not operating margin, but on the free cash flow front, we continue to feel really good. You know, we took our conversion up to 105% from 100%, and we took it up at CAGNY. This is all from focus that we have in this company on free cash flow. It's part of the culture. It's part of the incentive plan for everybody in this company that's compensated, free cash flow is in their incentive. We're very focused on it in areas like cash tax efficiency, areas like Ardent Mills, where although our equity profit is off $0.10, our cash is on plan. They're gonna continue to dividend at plan despite the equity earnings being down. Then inventory. We built up inventory levels coming out of COVID. Our safety stocks were high, and we've continued to ramp that down. If you look at our balance sheet, we have $2 billion of inventory. With Project Catalyst and us being able to leverage AI and other technology, we think we have a long runway to keep, you know, taking inventory out and be more competitive. We're pretty bullish on that front. We'll talk more about that when we give guidance, but obviously that has a cost impact as well. I would say they're the building blocks and foundations how to think about margin kind of ending this year going into next year. Thanks so much for all the color. I'll pass it on. Our next question comes from Peter Galbo with Bank of America. Please go ahead. Hey, guys. Good morning. Thanks for the questions. Dave, maybe if I could just start on Ardent Mills. You know, the change or the revision to that line item, I think it's the second one of the year. You know, historically in that business, when there has been a lot of wheat volatility, you've been able to take advantage and I think, you know, in Q4, you're kind of calling that maybe it's the opposite. Just wanna understand kind of what's happening there, particularly in the fourth quarter, and then just any early read on kinda how we might start to think about the run rate of Ardent for 2027. Sure, Peter. Just taking it from the top, as I've talked about, broadly speaking, Ardent has two sources of revenue and profit. They have their core business margin, where they, you know, they mill flour and sell that at a profit. That business is consistent, and that business is tracking. Then they have what we call commodity trading revenue. That's where there's a lot of activity hedging and different arbitrage where Ardent can be in a position to make a lot of money. What really drives the upside there are overall wheat prices and the volatility of the markets. Through the first three quarters of this year, their wheat prices have been low and there's been less volatility in the wheat market, so not as much opportunity for Ardent to take advantage on the commodity trading side. Obviously, with the start of the war, wheat prices have gone up in the futures and volatility has increased. You don't see those benefits immediately. With our forecast for this year, you know, we've called the number where we are now. Clearly there is more volatility that the Ardent team is working through now. We will work through it as well to determine what kind of impact that could have on next year. We don't have line of sight to that at this time, but there is more volatility at this point since the war. Okay. Thanks for that, Dave. That's helpful. And Sean, I think on Dave's initial comments on inflation for next year, he mentioned a bit on contracting on certain crop-based ingredients. There's a lot of concern in the market just given where fertilizer costs have gone and you all are a pretty big procurer of vegetables. So just how you all are thinking through that, what the conversations are like with your growing partners and whether that's really an issue for this grow season or whether it's more of a 2027 grow cycle event. Thanks very much. Well, fertilizer it would be more of an FY 2028 event than FY 2027. But you know, I would say conversations are very productive. I think everybody's in the same boat, Pete. I mean, it's you know, it's kinda like the news of the hour around here that we're responding to, and so it's just super dynamic. We gotta stay on top of it. It changes day to day, and you gotta be agile. That's why I started my comments today to Andrew saying, you know, we will be responsive to the hand we are dealt, and we will choose the smartest course of action. That's just kind of the nature of operating in incredibly dynamic times. Okay. Thanks very much, guys. Thanks, Peter. Our next question comes from Tom Palmer with J.P. Morgan. Please go ahead. Good morning. Thanks for the question. Maybe I could just start off with a clarification on some of the inflation and freight commentary. You noted that you're covered in terms of contracts. I think in the past when we've seen rates run up, not totally dissimilar to now, we have seen spot running well above contracted rates and maybe contracted rates not holding in the way that you might think of a contract holding. I guess to what extent you're seeing that now, especially when I look at some of that margin pressure in the refrigerated business this quarter. Thanks. Yeah. Spot was actually running low for a lot of our fiscal year. Spot has now spiked up and is above sort of contracted rates. A high percentage of our freight as we kind of look into next year is contracted line haul, so a high percentage. A smaller percentage is spot. You know, that market has spiked up like you just alluded to. But we have incorporated all that for our fiscal 2026 guide. As I mentioned next year, we're covered through a good part of next fiscal year with our freight contracts, and that's a high percentage. We do have some spot, but a high percentage is contracted. Okay. Thank you. Then following up on Ardent, you mentioned earlier the strong free cash flow conversion, how some of that was aided by not lowering the distributions from Ardent, even as earnings have maybe not come in quite the way you expected. If we think about a potential rebound next year in Ardent's earnings, to what extent should we think about that flowing through to free cash flow generation, so essentially increasing the distributions versus more just fully covering the distributions in terms of the earnings? Thanks. Yeah. Tom, we look at this on a kind of a year-by-year basis. We have a lot of discussion with our joint venture partners on capital allocation priorities. As a kind of a general rule, Ardent Mills does an outstanding job managing their balance sheet. They keep their leverage low, and they're really efficient with their cash flow. You know, this year, they were in a position to be able to hold to plan despite, you know, some of the volatility I described early on the commodity trading revenue. As a general rule, we set, you know, we have a sort of a payout ratio level that we set going into the year, and then, you know, we look at how the year plays out, and then we modify from there. Generally speaking, we feel very good about, you know, the cash generation of Ardent Mills and, you know, getting timely distributions. Okay. Thank you. Our next question comes from Robert Moskow with TD Cowen. Please go ahead. Thanks. A couple questions. One, Dave, can you remind us what the tariff component of your cost inflation is this year? I think it's like 2% or so. How should we think about it for fiscal 2027? Does it lap? Will it turn to zero? Does that automatically get you some relief in your inflation for next year? Yeah, Rob. Generally kind of our going into the year, our overall inflation was 7%, 4% was core, and 3% were gross tariffs before mitigation. Yeah. We track mitigation as part of productivity, and we estimated 1% in mitigation. As we look in and that's pretty much played out. We have, you know, there's been some volatility obviously with the IEEPA tariffs, but then we have the new tariffs that have come in. Not a material change, I would say to the original estimate, a little bit favorable, but then our core inflation's been a little unfavorable. We're still at that kind of total 7%, call it. As we look to next year, because we had mitigation that we're gonna wrap, there is gonna be some headwind from a kind of wrap perspective in tariffs. You know, we originally said 1% mitigation, which would imply $80 million of headwind. We don't think it's gonna be that much. Might be more like half of that, but we are gonna have some headwind with tariff just because we're wrapping up the mitigation that we had this year that now won't flow into next year. Okay. I'll follow up on that. More broadly, the retail consumption data, Sean, looks really strong on a two-year volume CAGR basis for frozen. When I just look at your shipments and I try to do that same two-year CAGR just for Refrigerated and Frozen division, it's down on a two-year basis, and that's trying to normalize for the supply chain disruption. Is that just because this division has refrigerated brands that have been down over that two-year period that you're not including in that Nielsen data? You know, I'm not sure exactly what you're looking at, Rob, but that could be a piece of it. I mean, there are some of the refrigerated businesses that are nowhere near the strategic priority as our frozen business as an example. Mm-hmm. Those could be categories where, as we follow our horses for courses approach, it's more of a value over volume. You know, I would say in general, on the core Frozen business, you've seen strength on a one-year and you see strength on a two-year. You know, staggering market share data around 88% of that business holding or gaining share, which I know was a central focus for investors last year when we had the supply interruption. It's like, will this bounce back? Will it bounce back strong? It has bounced back. Our Refrigerated businesses, some of those businesses are more about cash contribution. There are some particularly high margin businesses in there. Some of those refrigerated businesses we treat more like some of our center store businesses like cans, where we manage them for cash and not as much for volume growth. That's probably what you're seeing there. Dave, you wanna add to that? Yeah, just Rob, and I'll let you kind of follow up checking numbers, but if I just look at the Q3, obviously this quarter for shipments for RNF volume was +3.9%, Q3 a year ago was -3%. On a two-year basis- Yes. Volume is actually up in shipments. Yes. I was referring to overall dollars are down. Yeah, I agree with you, Dave. All right. Thank you. Thanks. Our next question comes from Chris Carey with Wells Fargo. Please go ahead. Hey, good morning, guys. I wanted to see if you maybe could just take a sort of a two- to three-year view on the margin trajectory for your key U.S. businesses. You know, the grocery and snacks business has seen pressure, but there's clearly been more pressure on the Refrigerated and Frozen side. When you kinda digest that past few years, what are the key challenges that have impacted the business? Obviously, there's been inflation, but I wonder if there are other things under the hood. Maybe you can comment on your medium-term productivity initiatives as well. I'd love any thoughts there. Yeah. Chris, let me give you my thoughts on that. We are the biggest frozen food manufacturer in North America, if not the world. We have, as a company, seen, you know, in this, you know, now five- or six-year deep inflation super cycle, we've seen a, you know, a massive increase in the cost of goods that we've had to deal with. After about four years of taking inflation-justified pricing in order to kinda protect margins, that's where we said on our growth business is you can't shrink your way to prosperity, and that's led by frozen. We did pivot the strategy to, you know, stop taking, at some point, all this inflation-justified pricing in frozen to get volumes moving again. That means we had to eat some of that higher cost. As a result, that business in particular, because it's so strategic to us, we got volumes moving. They're moving extremely well again this quarter, but we've had to eat some cost. A lot of that cost has been in animal protein, because as you know, animal proteins have been up. That is exactly what has driven the margin compression in the frozen business. It was a choice we made to protect our leading market shares and protect our sales. If you looked at even the velocities across our portfolio that came out yesterday, I think we've got the best velocities by a good chunk in the group. Now the question comes, you know, what's next? Obviously, we've got the wild curveball that we're dealing with. As I said last quarter, we absolutely, you know, assuming we can get some element of normalcy, we absolutely expect margin expansion going forward, particularly in frozen. The building blocks haven't changed. It starts with productivity. In fiscal 2026, between core productivity and tariff mitigation, that number is just over 5%, which is very strong. Second, at some point, we're gonna get inflation relief, hopefully back to closer to our typical 2%. Certainly, getting the war behind us would help with that. Third, we've got the advancement of our supply chain resiliency investments, including the chicken plants, and that's gonna enable us at some point to repatriate outsourced volume, which will be a, you know, a good thing for margin. Fourth, you know, we are taking price and we have taken price surgically and we've seen encouraging elasticities. The fifth thing is, as you've heard me talk, you know, in the last couple of quarters, we've kicked off this Project Catalyst, which is an ambitious initiative to reengineer our core work processes leveraging technology. That's gonna be a benefit to both the P&L and the balance sheet. In the P&L, it'll be a benefit to sales, it'll be a benefit to profit. In the balance sheet, we see opportunity there in terms of, you know, reducing working capital, increasing cash, and that's a real tangible and exciting opportunity. Yeah, it's margin, and it's more than margin in that particular project. You know, put those things together and, you know, we feel very good about the margin outlook from here. Obviously, it wouldn't hurt if the world settled down a bit. You know, we'll deal with that because that's, you know, not something we control. We gotta respond to that. Okay. All right. Great. Thanks, Sean. Just, you know, Dave, the free cash flow conversion has been a really good story. You upped that at CAGNY and a small increase again today. Are we run rating at a new level for free cash flow conversion? You know, do you see a level of sustainability up here over 100%? Then just, you know, it's kind of a confirmation of a prior question. You know, the dividends are staying on Ardent, or I think that the cash component of Ardent has maintained despite the income statement component coming down. Does that get reset next year or can you maintain a level of dividends? By the way, I know you're not guiding to Ardent, and nor am I suggesting, but is there some sort of like mark-to-market that needs to happen there? That's kind of, you know, just a quick follow-up. Same things on cash. Yeah. Okay. Well, let me start with the free cash flow conversion. We're not gonna guide to that now. What I would say is we always target a 90% or better free cash flow conversion as the base. You know, given our earnings and our ability to convert that to cash just in the normal course, we feel 90% is the appropriate target. To get above that, we need to find additional cash-generating ideas. We've done that with cash tax efficiency this year, with different planning that we've done that's really helped us there. The big thing has been working capital specific to inventory, and I talked about it earlier. We have a significant amount of inventory, and we believe we have great opportunity to really reduce that inventory in future years. Our inventory increased coming out of COVID 'cause we had a lot of demand and we increased our safety stocks, and now we're methodically reducing it with our supply planning systems and our process. When we leverage some of these new tools with AI now, we think that we can continue that acceleration of inventory reduction, and that's the kinda thing that's gonna take you above 90%. Again, I'm not gonna specifically guide on that today, but we're laser-focused on inventory. A big part of that too, I've done this a long time, to be able to take inventory down, you have to have alignment between supply chain, sales, and finance. It may sound simple, but sometimes that doesn't always happen. We have great alignment here, and it starts at the top in terms of a commitment to taking inventory out. We're investing and we feel pretty bullish on our ability to take that out. As it relates to Ardent Mills, I would just when we set equity earnings for Ardent, we always have a payout ratio on those earnings, and that's how we start the year. That payout ratio is pretty high. It's not 100%, but it's pretty close. Then we go from there. This year the earnings fell, but we kept the dividend to plan, so our payout ratio is above 100%. You always reset it every year so that the dividend payment and the equity earnings to start the year are pretty much in sync, and then we evaluate their balance sheet as we go each quarter. Okay. That's really helpful. Thanks so much, guys. Appreciate it. Thanks. Our next question comes from Scott Marks with Jefferies. Please go ahead. Hey, good morning. Thanks so much for taking the questions. First thing I just wanted to get clarity on, in terms of the volume growth in the business, wondering if you can help us understand how much of that was driven by some of the retailer inventory adjustments and how much of it would you attribute to just recovery from the supply chain disruptions a year ago? Well, we certainly undershipped last quarter, Scott, and we've caught that back up because the merchandising events moved into Q3, and so the shipments associated with those moved into Q3. We're on a two-year basis, as I mentioned before, we've basically shipped consumption and there's not a material gap there at all. In terms of the takeaway portion of it's strong on a one- and two-year basis. If you look at the mix of TPDs versus velocities, the hero there has really been the velocity piece, and that's driven in large part by just the strength of the innovation we've seen. You know, very pleased with the consumer takeaway that we've seen, particularly in frozen and snacks, which is obviously, you could see in some of the data, has been quite strong. Yeah. Understood. Appreciate that. A follow-up just quickly. I know last quarter you've been talking about the new big chicken facility, talking about bringing in-house some production and that had been on track. Just wondering if you can share an update on that, how that's progressing versus expectations. Thanks. Yeah, we sell a lot of chicken, and we use a lot of chicken in our products, and it's a combination of baked or roasted, whatever you wanna call it, and fried. Both have been strong. Both projects are tracking right where we need them to be. We still do have production on the outside. That'll continue for a little bit, but then at some point when all our work is complete, we'll have an opportunity to bring that back in as a good guy to our margins. Yeah. Just on the bake side, we did complete that project and we're starting to bring that volume back this year. As we go into next year, that should be a tailwind in terms of having full year on that. Then the fried, we've made investments and that's, you know, that's gonna go out longer. Appreciate it. Thanks very much. Thanks. Our next question comes from Carla Casella with J.P. Morgan. Please go ahead. Carla, is it possible your line is muted? It's open on our end, but I'm still unable to hear you. I think that might be the last question, so why don't we go ahead and wrap up today? All right. This concludes our question and answer session. I would like to turn the call back over to Matthew Neisius for closing remarks. Thank you, Bailey, and thank you all so much for joining us today. Please reach out to Investor Relations if you have any follow-up questions. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker 7: Good day, and welcome to the Conagra Brands third quarter fiscal 2026 earnings Q&A call. All participants will be in a 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 a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call over to Matthew Neisius, Senior Director of Investor Relations for Conagra Brands. Please go ahead. Good day, and welcome to the Conagra Brands third quarter fiscal 2026 earnings Q&A call. good day and welcome to the conagra brands third quarter fiscal 2026 earnings q&a call All participants will be in a listen-only mode. all participants will be in a listen-only mode Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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. after today's presentation there will be an opportunity to ask questions To ask a question, you may press star then one on a touch-tone phone. to ask a question you may press star then one on a touch-tone phone To withdraw your question, please press star then two. to withdraw your question please press star then two Please note this event is being recorded. please note this event is being recorded I would now like to turn the call over to Matthew Neisius, Senior Director of Investor Relations for Conagra Brands. i would now like to turn the call over to matthew neisius senior director of investor relations for conagra brands Please go ahead. please go ahead

Speaker 5: Good morning, everyone, and thank you for joining us. Once again, I'm joined this morning by Sean Connolly, our CEO, and Dave Marberger, our CFO. We may be making some forward-looking statements in discussing non-GAAP financial measures during this Q&A session. Please see our earnings release, prepared remarks, presentation materials, and filings with the SEC in the investor relations section of our website for descriptions of our risk factors, GAAP to non-GAAP reconciliations, and information on our comparability items. I'll now ask the operator to introduce the first question. Good morning, everyone, and thank you for joining us. good morning everyone and thank you for joining us Once again, I'm joined this morning by Sean Connolly, our CEO, and Dave Marberger, our CFO. once again i'm joined this morning by sean connolly our ceo and dave marberger our cfo We may be making some forward-looking statements in discussing non-GAAP financial measures during this Q&A session. we may be making some forward-looking statements in discussing non-gaap financial measures during this q&a session Please see our earnings release, prepared remarks, presentation materials, and filings with the SEC in the investor relations section of our website for descriptions of our risk factors, GAAP to non-GAAP reconciliations, and information on our comparability items. please see our earnings release prepared remarks presentation materials and filings with the sec in the investor relations section of our website for descriptions of our risk factors gaap to non-gaap reconciliations and information on our comparability items I'll now ask the operator to introduce the first question. i'll now ask the operator to introduce the first question

Speaker 7: Our first question comes from Andrew Lazar with Barclays. Please go ahead. Our first question comes from Andrew Lazar with Barclays. our first question comes from andrew lazar with barclays Please go ahead. please go ahead

Speaker 1: Great. Thanks so much. Morning, everybody. Great. great Thanks so much. thanks so much Morning, everybody. morning everybody

Speaker 11: Morning, Andrew. Morning. Morning, Andrew. morning andrew Morning. morning

Speaker 1: Hi there. Maybe Sean, to start off, I'd really like your thoughts on, you know, if the industry does end up facing another round of broad-based inflation, I guess whether you think, you know, Conagra and the industry at large would be able to, you know, count on pricing as but one lever to help offset it as it has in the past, or if this time is different, you know, just given consumers are particularly value conscious at this stage. You know, I ask it because I think some industry players clearly are needing to, you know, remain highly focused on debt pay down and protect profitability, you know, even if it prolongs sort of the volume recovery dynamic. Hi there. hi there Maybe Sean, to start off, I'd really like your thoughts on, you know, if the industry does end up facing another round of broad-based inflation, I guess whether you think, you know, Conagra and the industry at large would be able to, you know, count on pricing as but one lever to help offset it as it has in the past, or if this time is different, you know, just given consumers are particularly value conscious at this stage. maybe sean to start off i'd really like your thoughts on you know if the industry does end up facing another round of broad-based inflation i guess whether you think you know conagra and the industry at large would be able to you know count on pricing as but one lever to help offset it as it has in the past or if this time is different you know just given consumers are particularly value conscious at this stage You know, I ask it because I think some industry players clearly are needing to, you know, remain highly focused on debt pay down and protect profitability, you know, even if it prolongs sort of the volume recovery dynamic. you know i ask it because i think some industry players clearly are needing to you know remain highly focused on debt pay down and protect profitability you know even if it prolongs sort of the volume recovery dynamic

Speaker 11: Yep. Great question. Here's how I would tell you to think about that. First, as a reminder, believe it or not, it was all the way back at the beginning of our fiscal 2024 when we pivoted to a focus on restoring volume growth in frozen and snacks, even if it meant eating some inflation and enduring some margin compression. Well, that strategy has proven to be quite effective because you've seen our volume trajectory improve every quarter since, with the exception of that brief period last year where we had the temporary supply constraints. We're very pleased, you know, and pleased to see our total portfolio growing again this quarter. As for what comes next, our plan at this point is to stay agile. If inflation is benign, you'll see us likely continue to focus on continued volume momentum. Yep. yep Great question. great question Here's how I would tell you to think about that. here's how i would tell you to think about that First, as a reminder, believe it or not, it was all the way back at the beginning of our fiscal 2024 when we pivoted to a focus on restoring volume growth in frozen and snacks, even if it meant eating some inflation and enduring some margin compression. first as a reminder believe it or not it was all the way back at the beginning of our fiscal 2024 when we pivoted to a focus on restoring volume growth in frozen and snacks even if it meant eating some inflation and enduring some margin compression Well, that strategy has proven to be quite effective because you've seen our volume trajectory improve every quarter since, with the exception of that brief period last year where we had the temporary supply constraints. well that strategy has proven to be quite effective because you've seen our volume trajectory improve every quarter since with the exception of that brief period last year where we had the temporary supply constraints We're very pleased, you know, and pleased to see our total portfolio growing again this quarter. we're very pleased you know and pleased to see our total portfolio growing again this quarter As for what comes next, our plan at this point is to stay agile. as for what comes next our plan at this point is to stay agile If inflation is benign, you'll see us likely continue to focus on continued volume momentum. if inflation is benign you'll see us likely continue to focus on continued volume momentum If for some reason inflation was to go the other way, we'll keep our options open. After all, we are a company that is intensely focused on maximizing cash flow. We've already proven that we can move the volume needle to growth in frozen and snacks when we need to. You know, net will be agile, but right now, I would say it's too early to speculate on a particular course of action. There's three and a half months to go before we guide for fiscal 2027, and obviously, a lot can unfold by the hour these days. Certainly, a lot can unfold in the next three and a half months. One thing we can be sure of is that we will drive a lot of productivity while we optimize all our other levers to mitigate any inflation that might come our way. If for some reason inflation was to go the other way, we'll keep our options open. if for some reason inflation was to go the other way we'll keep our options open After all, we are a company that is intensely focused on maximizing cash flow. after all we are a company that is intensely focused on maximizing cash flow We've already proven that we can move the volume needle to growth in frozen and snacks when we need to. we've already proven that we can move the volume needle to growth in frozen and snacks when we need to You know, net will be agile, but right now, I would say it's too early to speculate on a particular course of action. you know net will be agile but right now i would say it's too early to speculate on a particular course of action There's three and a half months to go before we guide for fiscal 2027, and obviously, a lot can unfold by the hour these days. there's three and a half months to go before we guide for fiscal 2027 and obviously a lot can unfold by the hour these days Certainly, a lot can unfold in the next three and a half months. certainly a lot can unfold in the next three and a half months One thing we can be sure of is that we will drive a lot of productivity while we optimize all our other levers to mitigate any inflation that might come our way. one thing we can be sure of is that we will drive a lot of productivity while we optimize all our other levers to mitigate any inflation that might come our way Remember, we did take pricing this year on a bunch of products, our canned foods and our cocoa-oriented products, and the elasticities have been quite encouraging. Let's see how the dust settles, and then we'll take the smartest course of action to deal with, you know, whatever we're seeing at the time. As I sit here today, I see a lot of positives. The business has strong momentum, especially in frozen snacks. Shares are excellent, cash flow is strong, productivity is robust, and people are highly engaged in delivering some of the most exciting innovations we've had. A lot to feel good about. Remember, we did take pricing this year on a bunch of products, our canned foods and our cocoa-oriented products, and the elasticities have been quite encouraging. remember we did take pricing this year on a bunch of products our canned foods and our cocoa-oriented products and the elasticities have been quite encouraging Let's see how the dust settles, and then we'll take the smartest course of action to deal with, you know, whatever we're seeing at the time. let's see how the dust settles and then we'll take the smartest course of action to deal with you know whatever we're seeing at the time As I sit here today, I see a lot of positives. as i sit here today i see a lot of positives The business has strong momentum, especially in frozen snacks. the business has strong momentum especially in frozen snacks Shares are excellent, cash flow is strong, productivity is robust, and people are highly engaged in delivering some of the most exciting innovations we've had. shares are excellent cash flow is strong productivity is robust and people are highly engaged in delivering some of the most exciting innovations we've had A lot to feel good about. a lot to feel good about

Speaker 1: Great. No, thank you for that. Just Dave, real quickly, maybe, I guess, what sort of visibility do we have at this stage on costs going into fiscal 2027, just based on where you might already have some, you know, some hedges in place? I'm not asking, obviously, for your overall inflation estimate or whatever for next year, but just how much visibility do you think you have or based on where you already know what you've got in place? Thanks so much. Great. great No, thank you for that. no thank you for that Just Dave, real quickly, maybe, I guess, what sort of visibility do we have at this stage on costs going into fiscal 2027, just based on where you might already have some, you know, some hedges in place? just dave real quickly maybe i guess what sort of visibility do we have at this stage on costs going into fiscal 2027 just based on where you might already have some you know some hedges in place I'm not asking, obviously, for your overall inflation estimate or whatever for next year, but just how much visibility do you think you have or based on where you already know what you've got in place? i'm not asking obviously for your overall inflation estimate or whatever for next year but just how much visibility do you think you have or based on where you already know what you've got in place Thanks so much. thanks so much

Speaker 3: Yeah, Andrew, let me give you a little color there. For our fiscal 2027, our material spend coverage is generally consistent with the prior years at this point. We're roughly 60% covered, and this is total materials. 60% covered for Q1 and roughly 40% covered for the full fiscal year. Areas where we have a bit more coverage than historically would be steel, freight. Remember, we contract line haul, that's a big percentage of our freight. That's on contract. Some of our crop-based ingredients, we have better coverage. A little bit less coverage on diesel fuel. We're covered through the end of this fiscal year there, but not as covered as we've been in the past. Yeah, Andrew, let me give you a little color there. yeah andrew let me give you a little color there For our fiscal 2027, our material spend coverage is generally consistent with the prior years at this point. for our fiscal 2027 our material spend coverage is generally consistent with the prior years at this point We're roughly 60% covered, and this is total materials. 60% covered for Q1 and roughly 40% covered for the full fiscal year. we're roughly 60% covered and this is total materials 60% covered for q1 and roughly 40% covered for the full fiscal year Areas where we have a bit more coverage than historically would be steel, freight. areas where we have a bit more coverage than historically would be steel freight Remember, we contract line haul, that's a big percentage of our freight. remember we contract line haul that's a big percentage of our freight That's on contract. that's on contract Some of our crop-based ingredients, we have better coverage. some of our crop-based ingredients we have better coverage A little bit less coverage on diesel fuel. a little bit less coverage on diesel fuel We're covered through the end of this fiscal year there, but not as covered as we've been in the past. we're covered through the end of this fiscal year there but not as covered as we've been in the past Just as a reminder, proteins probably have the lowest coverage of anything. For next year, we're only about 15% covered. We're more spot market when it gets to the animal proteins. Hopefully that gives you a little bit of a feel. Just as a reminder, proteins probably have the lowest coverage of anything. just as a reminder proteins probably have the lowest coverage of anything For next year, we're only about 15% covered. for next year we're only about 15% covered We're more spot market when it gets to the animal proteins. we're more spot market when it gets to the animal proteins Hopefully that gives you a little bit of a feel. hopefully that gives you a little bit of a feel

Speaker 1: Yep, really helpful. Thanks so much. Yep, really helpful. yep really helpful Thanks so much. thanks so much

Speaker 7: Our next question comes from David Palmer with Evercore ISI. Please go ahead. Our next question comes from David Palmer with Evercore ISI. our next question comes from david palmer with evercore isi Please go ahead. please go ahead

Speaker 4: Thanks. Those were precisely my questions, so let me just follow up on that a little bit. When you look at your portfolio, you've obviously been prioritizing volume over the last fiscal year, and that has helped. You know, there are some other notable companies in the space that have been aggressive in this prioritizing volume first, just like you. I wonder where we are now in terms of where you think your pricing power is. Do you feel like you're in a better spot now with regard to relative price points to private label in some of your categories versus main competitors and others in terms of your just volume momentum overall? Thanks. thanks Those were precisely my questions, so let me just follow up on that a little bit. those were precisely my questions so let me just follow up on that a little bit When you look at your portfolio, you've obviously been prioritizing volume over the last fiscal year, and that has helped. when you look at your portfolio you've obviously been prioritizing volume over the last fiscal year and that has helped You know, there are some other notable companies in the space that have been aggressive in this prioritizing volume first, just like you. you know there are some other notable companies in the space that have been aggressive in this prioritizing volume first just like you I wonder where we are now in terms of where you think your pricing power is. i wonder where we are now in terms of where you think your pricing power is Do you feel like you're in a better spot now with regard to relative price points to private label in some of your categories versus main competitors and others in terms of your just volume momentum overall? do you feel like you're in a better spot now with regard to relative price points to private label in some of your categories versus main competitors and others in terms of your just volume momentum overall I really am asking because in the past, you've said things like we'll be okay if inflation is not over 3% in terms of getting to where I'll go. I just wonder if today, if we do go over 3%, if you'll be able to drive profitable growth going forward. Thank you. I really am asking because in the past, you've said things like we'll be okay if inflation is not over 3% in terms of getting to where I'll go. i really am asking because in the past you've said things like we'll be okay if inflation is not over 3% in terms of getting to where i'll go I just wonder if today, if we do go over 3%, if you'll be able to drive profitable growth going forward. i just wonder if today if we do go over 3% if you'll be able to drive profitable growth going forward Thank you. thank you

Speaker 11: Hey, David, it's Sean. First of all, private label, just since you brought that up. We under index in terms of private label development in our categories, particularly in our almost non-existent in our biggest business, which is frozen meals. You know, our strategy has been what I've called a horses for courses strategy, where our growth businesses have been focused on getting back to volume growth that's frozen in snacks, and that is happening. Our staples business is focused on cash maximization. That's a lot of things like our canned food business, and we have taken inflation justified price on those categories, and we've seen good elasticity. It's a surgical approach that we've taken historically. Hey, David, it's Sean. hey david it's sean First of all, private label, just since you brought that up. first of all private label just since you brought that up We under index in terms of private label development in our categories, particularly in our almost non-existent in our biggest business, which is frozen meals. we under index in terms of private label development in our categories particularly in our almost non-existent in our biggest business which is frozen meals You know, our strategy has been what I've called a horses for courses strategy, where our growth businesses have been focused on getting back to volume growth that's frozen in snacks, and that is happening. you know our strategy has been what i've called a horses for courses strategy where our growth businesses have been focused on getting back to volume growth that's frozen in snacks and that is happening Our staples business is focused on cash maximization. our staples business is focused on cash maximization That's a lot of things like our canned food business, and we have taken inflation justified price on those categories, and we've seen good elasticity. that's a lot of things like our canned food business and we have taken inflation justified price on those categories and we've seen good elasticity It's a surgical approach that we've taken historically. it's a surgical approach that we've taken historically You know, but make no mistake about it, because we've dealt with the most protracted inflation super cycle that I've certainly seen in my 35 years of doing this. After a few years of every company taking justified pricing, you know, investors said, "Look, you can't shrink your way to prosperity. Show us that you can get the volumes moving again." We have done that. Our portfolio responsiveness, I think, has outpaced our peers, which shows you we are delivering good value and we are delivering exciting innovation. You know, as I mentioned to Andrew, as to what's to come, you know, we'll see what the field gives us when we've got to snap the chalk line here. You know, but make no mistake about it, because we've dealt with the most protracted inflation super cycle that I've certainly seen in my 35 years of doing this. you know but make no mistake about it because we've dealt with the most protracted inflation super cycle that i've certainly seen in my 35 years of doing this After a few years of every company taking justified pricing, you know, investors said, "Look, you can't shrink your way to prosperity. after a few years of every company taking justified pricing you know investors said "look you can't shrink your way to prosperity Show us that you can get the volumes moving again." We have done that. show us that you can get the volumes moving again." we have done that Our portfolio responsiveness, I think, has outpaced our peers, which shows you we are delivering good value and we are delivering exciting innovation. our portfolio responsiveness i think has outpaced our peers which shows you we are delivering good value and we are delivering exciting innovation You know, as I mentioned to Andrew, as to what's to come, you know, we'll see what the field gives us when we've got to snap the chalk line here. you know as i mentioned to andrew as to what's to come you know we'll see what the field gives us when we've got to snap the chalk line here If the, you know, if things settle down with the war and things like that and things look more benign, you know, I think it makes sense to stay focused on keeping the momentum that we've got in volume. If for some reason things broke the other way and we're looking at a whole slog of new costs, you know, we can pivot as well, because to the degree you do take price and you sacrifice a little volume, it's more of a volume sabbatical than it is a permanent volume rebase, and you tend to see the volumes come back when inflation moves again and you see those prices get rolled back. If the, you know, if things settle down with the war and things like that and things look more benign, you know, I think it makes sense to stay focused on keeping the momentum that we've got in volume. if the you know if things settle down with the war and things like that and things look more benign you know i think it makes sense to stay focused on keeping the momentum that we've got in volume If for some reason things broke the other way and we're looking at a whole slog of new costs, you know, we can pivot as well, because to the degree you do take price and you sacrifice a little volume, it's more of a volume sabbatical than it is a permanent volume rebase, and you tend to see the volumes come back when inflation moves again and you see those prices get rolled back. if for some reason things broke the other way and we're looking at a whole slog of new costs you know we can pivot as well because to the degree you do take price and you sacrifice a little volume it's more of a volume sabbatical than it is a permanent volume rebase and you tend to see the volumes come back when inflation moves again and you see those prices get rolled back As I said, we've got to stay agile but feel really good to see that we have a portfolio that is responsive to you know proper pricing and wise investments and strong innovation when we need it to be. You know, look, investors always wanna see top line and bottom line growth. Sometimes the macro environment can make it challenging to do both at the same time. You know, we'll stay agile and we'll keep you posted as we get to next quarter in terms of what we're seeing and what the exact plan is. As I said, we've got to stay agile but feel really good to see that we have a portfolio that is responsive to you know proper pricing and wise investments and strong innovation when we need it to be. as i said we've got to stay agile but feel really good to see that we have a portfolio that is responsive to you know proper pricing and wise investments and strong innovation when we need it to be You know, look, investors always wanna see top line and bottom line growth. you know look investors always wanna see top line and bottom line growth Sometimes the macro environment can make it challenging to do both at the same time. sometimes the macro environment can make it challenging to do both at the same time You know, we'll stay agile and we'll keep you posted as we get to next quarter in terms of what we're seeing and what the exact plan is. you know we'll stay agile and we'll keep you posted as we get to next quarter in terms of what we're seeing and what the exact plan is

Speaker 4: Thanks. I'll pass it on. Thanks. thanks I'll pass it on. i'll pass it on

Speaker 7: Up next, we have Megan Clapp with Morgan Stanley. Please go ahead. Up next, we have Megan Clapp with Morgan Stanley. up next we have megan clapp with morgan stanley Please go ahead. please go ahead

Speaker 6: Hi. Good morning. Thanks so much. I just wanted to start with maybe a question on the fourth quarter. You know, as you look at the third quarter, you obviously had some nice momentum, a return to org sales. There were a lot of moving parts just with the retailer timing and some of your share dynamics. As we think about the fourth quarter, maybe you can just help us with some of the building blocks as we think about top line. Should shipments generally match consumption? And then on the op margin line, can you just help us kind of understand the building blocks to the sequential improvement that's embedded as well? Thanks. Hi. hi Good morning. good morning Thanks so much. thanks so much I just wanted to start with maybe a question on the fourth quarter. i just wanted to start with maybe a question on the fourth quarter You know, as you look at the third quarter, you obviously had some nice momentum, a return to org sales. you know as you look at the third quarter you obviously had some nice momentum a return to org sales There were a lot of moving parts just with the retailer timing and some of your share dynamics. there were a lot of moving parts just with the retailer timing and some of your share dynamics As we think about the fourth quarter, maybe you can just help us with some of the building blocks as we think about top line. as we think about the fourth quarter maybe you can just help us with some of the building blocks as we think about top line Should shipments generally match consumption? should shipments generally match consumption And then on the op margin line, can you just help us kind of understand the building blocks to the sequential improvement that's embedded as well? and then on the op margin line can you just help us kind of understand the building blocks to the sequential improvement that's embedded as well Thanks. thanks

Speaker 11: Hey, Megan, it's Sean. Let me start by tackling the shipment versus consumption question because I saw a couple early reports this morning that I think might have that wrong. I would not spend a lot of time overthinking shipments versus consumption because with our company, because of the supply interruption last year and then some merchandising timing shifts in frozen this year out of Q2 into Q3, our shipment patterns have moved around a bit compared to what they normally do. Over fiscal 2025 and fiscal 2026 combined, we are basically shipping almost exactly to consumption, which is what we always do as a company. It's just been a bit lumpier quarter to quarter because of those dynamics. You know, with respect to this quarter, I wouldn't get overly exercised around there's an implication in Q4. Hey, Megan, it's Sean. hey megan it's sean Let me start by tackling the shipment versus consumption question because I saw a couple early reports this morning that I think might have that wrong. let me start by tackling the shipment versus consumption question because i saw a couple early reports this morning that i think might have that wrong I would not spend a lot of time overthinking shipments versus consumption because with our company, because of the supply interruption last year and then some merchandising timing shifts in frozen this year out of Q2 into Q3, our shipment patterns have moved around a bit compared to what they normally do. i would not spend a lot of time overthinking shipments versus consumption because with our company because of the supply interruption last year and then some merchandising timing shifts in frozen this year out of q2 into q3 our shipment patterns have moved around a bit compared to what they normally do Over fiscal 2025 and fiscal 2026 combined, we are basically shipping almost exactly to consumption, which is what we always do as a company. over fiscal 2025 and fiscal 2026 combined we are basically shipping almost exactly to consumption which is what we always do as a company It's just been a bit lumpier quarter to quarter because of those dynamics. it's just been a bit lumpier quarter to quarter because of those dynamics You know, with respect to this quarter, I wouldn't get overly exercised around there's an implication in Q4. you know with respect to this quarter i wouldn't get overly exercised around there's an implication in q4 It's actually more the reversal of Q2, which was where we had a bunch of holiday shipments last year. Those merchandising shipments this year moved to Q3. Not a lot of drama there. That's the shipment versus consumption piece of the year to go. Dave, you wanna tackle anything else? It's actually more the reversal of Q2, which was where we had a bunch of holiday shipments last year. it's actually more the reversal of q2 which was where we had a bunch of holiday shipments last year Those merchandising shipments this year moved to Q3. those merchandising shipments this year moved to q3 Not a lot of drama there. not a lot of drama there That's the shipment versus consumption piece of the year to go. that's the shipment versus consumption piece of the year to go Dave, you wanna tackle anything else? dave you wanna tackle anything else

Speaker 3: Yeah. Just to add to that, Megan, we do expect positive organic net sales growth in Q4. That's obviously implied with our full year guide to the midpoint of the range for organic. Consumption and shipment should be more in line in Q4, you know, talking to what Sean just explained. We're excited about our innovation slate and you start shipping some of that innovation, so you start to see some of that in Q4. So they're really the building blocks for the top line. As it relates to operating margin, yes. Yeah. yeah Just to add to that, Megan, we do expect positive organic net sales growth in Q4. just to add to that megan we do expect positive organic net sales growth in q4 That's obviously implied with our full year guide to the midpoint of the range for organic. that's obviously implied with our full year guide to the midpoint of the range for organic Consumption and shipment should be more in line in Q4, you know, talking to what Sean just explained. consumption and shipment should be more in line in q4 you know talking to what sean just explained We're excited about our innovation slate and you start shipping some of that innovation, so you start to see some of that in Q4. we're excited about our innovation slate and you start shipping some of that innovation so you start to see some of that in q4 So they're really the building blocks for the top line. so they're really the building blocks for the top line As it relates to operating margin, yes. as it relates to operating margin yes We expect an inflection from Q3 to Q4. Really the big drivers of that, A&P as a percentage of sales will not be as high in Q4 as it was in Q3. It'll be more in line with that kind of 2.5% average. The 53rd week actually gives some leverage in terms of overall operating margin. Then just some of the seasonality of trade, timing of productivity, timing of inflation, all those kind of things give us additional kind of benefit in op margin relative to Q3. I would say they're the kind of key building blocks. We expect an inflection from Q3 to Q4. we expect an inflection from q3 to q4 Really the big drivers of that, A&P as a percentage of sales will not be as high in Q4 as it was in Q3. really the big drivers of that a&p as a percentage of sales will not be as high in q4 as it was in q3 It'll be more in line with that kind of 2.5% average. it'll be more in line with that kind of 2.5% average The 53rd week actually gives some leverage in terms of overall operating margin. the 53rd week actually gives some leverage in terms of overall operating margin Then just some of the seasonality of trade, timing of productivity, timing of inflation, all those kind of things give us additional kind of benefit in op margin relative to Q3. then just some of the seasonality of trade timing of productivity timing of inflation all those kind of things give us additional kind of benefit in op margin relative to q3 I would say they're the kind of key building blocks. i would say they're the kind of key building blocks

Speaker 6: Okay, that's helpful. Thank you. Just as a follow-up, the op margin you're now expecting at the high end of the guide, could you maybe just talk about what's driving that? As we look at the exit rate on the fourth quarter, I think it implies something above 12%. You know, understanding there's a lot of moving parts right now, but if inflation kind of stays in this low single-digit range as you would hope it moderates to and normalizes over time, like, should we think about that exit rate as being informative of kind of a starting point going forward at this point? Okay, that's helpful. okay that's helpful Thank you. thank you Just as a follow-up, the op margin you're now expecting at the high end of the guide, could you maybe just talk about what's driving that? just as a follow-up the op margin you're now expecting at the high end of the guide could you maybe just talk about what's driving that As we look at the exit rate on the fourth quarter, I think it implies something above 12%. as we look at the exit rate on the fourth quarter i think it implies something above 12% You know, understanding there's a lot of moving parts right now, but if inflation kind of stays in this low single-digit range as you would hope it moderates to and normalizes over time, like, should we think about that exit rate as being informative of kind of a starting point going forward at this point? you know understanding there's a lot of moving parts right now but if inflation kind of stays in this low single-digit range as you would hope it moderates to and normalizes over time like should we think about that exit rate as being informative of kind of a starting point going forward at this point

Speaker 3: Yeah. Regarding the last part of your question, I'm not gonna comment on fiscal 2027. You know, what I can say is, it, and if you just look at when we gave guidance at the beginning of the year, you know, 11%-11.5% operating margin when there were so many things going on at that time, and since then there have been so many dynamics, I feel really good that we're actually now gonna guide to the higher end of that range. That all starts with our inflation call, which was core inflation and tariffs. We're pretty much on that call. Our productivity programs are really doing well. The investments we've made in our supply chain and technology and in process are really, really delivering. So they're really the key. Yeah. yeah Regarding the last part of your question, I'm not gonna comment on fiscal 2027. regarding the last part of your question i'm not gonna comment on fiscal 2027 You know, what I can say is, it, and if you just look at when we gave guidance at the beginning of the year, you know, 11%-11.5% operating margin when there were so many things going on at that time, and since then there have been so many dynamics, I feel really good that we're actually now gonna guide to the higher end of that range. you know what i can say is it and if you just look at when we gave guidance at the beginning of the year you know 11%-11.5% operating margin when there were so many things going on at that time and since then there have been so many dynamics i feel really good that we're actually now gonna guide to the higher end of that range That all starts with our inflation call, which was core inflation and tariffs. that all starts with our inflation call which was core inflation and tariffs We're pretty much on that call. we're pretty much on that call Our productivity programs are really doing well. our productivity programs are really doing well The investments we've made in our supply chain and technology and in process are really, really delivering. the investments we've made in our supply chain and technology and in process are really really delivering So they're really the key. so they're really the key As Sean talked about, we have taken price increases, particularly in our canned products, and the elasticities have been in line. When you kinda look at it's how we planned the year. There obviously have been some puts and takes, but generally speaking, we feel really good that we're coming in as we expected to on margin, and we expect that productivity to continue into next year. You know, obviously, we have more work to do on inflation. There's a lot of dynamics. Things are changing all the time. I talked about the coverage we have. We are locked in on certain key areas, which is good for us. As Sean talked about, we have taken price increases, particularly in our canned products, and the elasticities have been in line. as sean talked about we have taken price increases particularly in our canned products and the elasticities have been in line When you kinda look at it's how we planned the year. when you kinda look at it's how we planned the year There obviously have been some puts and takes, but generally speaking, we feel really good that we're coming in as we expected to on margin, and we expect that productivity to continue into next year. there obviously have been some puts and takes but generally speaking we feel really good that we're coming in as we expected to on margin and we expect that productivity to continue into next year You know, obviously, we have more work to do on inflation. you know obviously we have more work to do on inflation There's a lot of dynamics. there's a lot of dynamics Things are changing all the time. things are changing all the time I talked about the coverage we have. i talked about the coverage we have We are locked in on certain key areas, which is good for us. we are locked in on certain key areas which is good for us You know, we feel good that the building blocks for next year's plan are there, but we have to wait the next three months to give specific guidance, obviously. It's not operating margin, but on the free cash flow front, we continue to feel really good. You know, we took our conversion up to 105% from 100%, and we took it up at CAGNY. This is all from focus that we have in this company on free cash flow. It's part of the culture. It's part of the incentive plan for everybody in this company that's compensated, free cash flow is in their incentive. You know, we feel good that the building blocks for next year's plan are there, but we have to wait the next three months to give specific guidance, obviously. you know we feel good that the building blocks for next year's plan are there but we have to wait the next three months to give specific guidance obviously It's not operating margin, but on the free cash flow front, we continue to feel really good. it's not operating margin but on the free cash flow front we continue to feel really good You know, we took our conversion up to 105% from 100%, and we took it up at CAGNY. you know we took our conversion up to 105% from 100% and we took it up at cagny This is all from focus that we have in this company on free cash flow. this is all from focus that we have in this company on free cash flow It's part of the culture. it's part of the culture It's part of the incentive plan for everybody in this company that's compensated, free cash flow is in their incentive. it's part of the incentive plan for everybody in this company that's compensated free cash flow is in their incentive We're very focused on it in areas like cash tax efficiency, areas like Ardent Mills, where although our equity profit is off $0.10, our cash is on plan. They're gonna continue to dividend at plan despite the equity earnings being down. Then inventory. We built up inventory levels coming out of COVID. Our safety stocks were high, and we've continued to ramp that down. If you look at our balance sheet, we have $2 billion of inventory. With Project Catalyst and us being able to leverage AI and other technology, we think we have a long runway to keep, you know, taking inventory out and be more competitive. We're pretty bullish on that front. We'll talk more about that when we give guidance, but obviously that has a cost impact as well. We're very focused on it in areas like cash tax efficiency, areas like Ardent Mills, where although our equity profit is off $0.10, our cash is on plan. we're very focused on it in areas like cash tax efficiency areas like ardent mills where although our equity profit is off $0.10 our cash is on plan They're gonna continue to dividend at plan despite the equity earnings being down. they're gonna continue to dividend at plan despite the equity earnings being down Then inventory. then inventory We built up inventory levels coming out of COVID. we built up inventory levels coming out of covid Our safety stocks were high, and we've continued to ramp that down. our safety stocks were high and we've continued to ramp that down If you look at our balance sheet, we have $2 billion of inventory. if you look at our balance sheet we have $2 billion of inventory With Project Catalyst and us being able to leverage AI and other technology, we think we have a long runway to keep, you know, taking inventory out and be more competitive. with project catalyst and us being able to leverage ai and other technology we think we have a long runway to keep you know taking inventory out and be more competitive We're pretty bullish on that front. we're pretty bullish on that front We'll talk more about that when we give guidance, but obviously that has a cost impact as well. we'll talk more about that when we give guidance but obviously that has a cost impact as well I would say they're the building blocks and foundations how to think about margin kind of ending this year going into next year. I would say they're the building blocks and foundations how to think about margin kind of ending this year going into next year. i would say they're the building blocks and foundations how to think about margin kind of ending this year going into next year

Speaker 6: Thanks so much for all the color. I'll pass it on. Thanks so much for all the color. thanks so much for all the color I'll pass it on. i'll pass it on

Speaker 7: Our next question comes from Peter Galbo with Bank of America. Please go ahead. Our next question comes from Peter Galbo with Bank of America. our next question comes from peter galbo with bank of america Please go ahead. please go ahead

Speaker 8: Hey, guys. Good morning. Thanks for the questions. Dave, maybe if I could just start on Ardent Mills. You know, the change or the revision to that line item, I think it's the second one of the year. You know, historically in that business, when there has been a lot of wheat volatility, you've been able to take advantage and I think, you know, in Q4, you're kind of calling that maybe it's the opposite. Just wanna understand kind of what's happening there, particularly in the fourth quarter, and then just any early read on kinda how we might start to think about the run rate of Ardent for 2027. Hey, guys. hey guys Good morning. good morning Thanks for the questions. thanks for the questions Dave, maybe if I could just start on Ardent Mills. dave maybe if i could just start on ardent mills You know, the change or the revision to that line item, I think it's the second one of the year. you know the change or the revision to that line item i think it's the second one of the year You know, historically in that business, when there has been a lot of wheat volatility, you've been able to take advantage and I think, you know, in Q4, you're kind of calling that maybe it's the opposite. you know historically in that business when there has been a lot of wheat volatility you've been able to take advantage and i think you know in q4 you're kind of calling that maybe it's the opposite Just wanna understand kind of what's happening there, particularly in the fourth quarter, and then just any early read on kinda how we might start to think about the run rate of Ardent for 2027. just wanna understand kind of what's happening there particularly in the fourth quarter and then just any early read on kinda how we might start to think about the run rate of ardent for 2027

Speaker 3: Sure, Peter. Just taking it from the top, as I've talked about, broadly speaking, Ardent has two sources of revenue and profit. They have their core business margin, where they, you know, they mill flour and sell that at a profit. That business is consistent, and that business is tracking. Then they have what we call commodity trading revenue. That's where there's a lot of activity hedging and different arbitrage where Ardent can be in a position to make a lot of money. What really drives the upside there are overall wheat prices and the volatility of the markets. Sure, Peter. sure peter Just taking it from the top, as I've talked about, broadly speaking, Ardent has two sources of revenue and profit. just taking it from the top as i've talked about broadly speaking ardent has two sources of revenue and profit They have their core business margin, where they, you know, they mill flour and sell that at a profit. they have their core business margin where they you know they mill flour and sell that at a profit That business is consistent, and that business is tracking. that business is consistent and that business is tracking Then they have what we call commodity trading revenue. then they have what we call commodity trading revenue That's where there's a lot of activity hedging and different arbitrage where Ardent can be in a position to make a lot of money. that's where there's a lot of activity hedging and different arbitrage where ardent can be in a position to make a lot of money What really drives the upside there are overall wheat prices and the volatility of the markets. what really drives the upside there are overall wheat prices and the volatility of the markets Through the first three quarters of this year, their wheat prices have been low and there's been less volatility in the wheat market, so not as much opportunity for Ardent to take advantage on the commodity trading side. Obviously, with the start of the war, wheat prices have gone up in the futures and volatility has increased. You don't see those benefits immediately. With our forecast for this year, you know, we've called the number where we are now. Clearly there is more volatility that the Ardent team is working through now. We will work through it as well to determine what kind of impact that could have on next year. We don't have line of sight to that at this time, but there is more volatility at this point since the war. Through the first three quarters of this year, their wheat prices have been low and there's been less volatility in the wheat market, so not as much opportunity for Ardent to take advantage on the commodity trading side. through the first three quarters of this year their wheat prices have been low and there's been less volatility in the wheat market so not as much opportunity for ardent to take advantage on the commodity trading side Obviously, with the start of the war, wheat prices have gone up in the futures and volatility has increased. obviously with the start of the war wheat prices have gone up in the futures and volatility has increased You don't see those benefits immediately. you don't see those benefits immediately With our forecast for this year, you know, we've called the number where we are now. with our forecast for this year you know we've called the number where we are now Clearly there is more volatility that the Ardent team is working through now. clearly there is more volatility that the ardent team is working through now We will work through it as well to determine what kind of impact that could have on next year. we will work through it as well to determine what kind of impact that could have on next year We don't have line of sight to that at this time, but there is more volatility at this point since the war. we don't have line of sight to that at this time but there is more volatility at this point since the war

Speaker 8: Okay. Thanks for that, Dave. That's helpful. And Sean, I think on Dave's initial comments on inflation for next year, he mentioned a bit on contracting on certain crop-based ingredients. There's a lot of concern in the market just given where fertilizer costs have gone and you all are a pretty big procurer of vegetables. So just how you all are thinking through that, what the conversations are like with your growing partners and whether that's really an issue for this grow season or whether it's more of a 2027 grow cycle event. Thanks very much. Okay. okay Thanks for that, Dave. thanks for that dave That's helpful. that's helpful And Sean, I think on Dave's initial comments on inflation for next year, he mentioned a bit on contracting on certain crop-based ingredients. and sean i think on dave's initial comments on inflation for next year he mentioned a bit on contracting on certain crop-based ingredients There's a lot of concern in the market just given where fertilizer costs have gone and you all are a pretty big procurer of vegetables. there's a lot of concern in the market just given where fertilizer costs have gone and you all are a pretty big procurer of vegetables So just how you all are thinking through that, what the conversations are like with your growing partners and whether that's really an issue for this grow season or whether it's more of a 2027 grow cycle event. so just how you all are thinking through that what the conversations are like with your growing partners and whether that's really an issue for this grow season or whether it's more of a 2027 grow cycle event Thanks very much. thanks very much

Speaker 11: Well, fertilizer it would be more of an FY 2028 event than FY 2027. But you know, I would say conversations are very productive. I think everybody's in the same boat, Pete. I mean, it's you know, it's kinda like the news of the hour around here that we're responding to, and so it's just super dynamic. We gotta stay on top of it. It changes day to day, and you gotta be agile. That's why I started my comments today to Andrew saying, you know, we will be responsive to the hand we are dealt, and we will choose the smartest course of action. That's just kind of the nature of operating in incredibly dynamic times. Well, fertilizer it would be more of an FY 2028 event than FY 2027. well fertilizer it would be more of an fy 2028 event than fy 2027 But you know, I would say conversations are very productive. but you know i would say conversations are very productive I think everybody's in the same boat, Pete. i think everybody's in the same boat pete I mean, it's you know, it's kinda like the news of the hour around here that we're responding to, and so it's just super dynamic. i mean it's you know it's kinda like the news of the hour around here that we're responding to and so it's just super dynamic We gotta stay on top of it. we gotta stay on top of it It changes day to day, and you gotta be agile. it changes day to day and you gotta be agile That's why I started my comments today to Andrew saying, you know, we will be responsive to the hand we are dealt, and we will choose the smartest course of action. that's why i started my comments today to andrew saying you know we will be responsive to the hand we are dealt and we will choose the smartest course of action That's just kind of the nature of operating in incredibly dynamic times. that's just kind of the nature of operating in incredibly dynamic times

Speaker 8: Okay. Thanks very much, guys. Okay. okay Thanks very much, guys. thanks very much guys

Speaker 11: Thanks, Peter. Thanks, Peter. thanks peter

Speaker 7: Our next question comes from Tom Palmer with J.P. Morgan. Please go ahead. Our next question comes from Tom Palmer with J.P. our next question comes from tom palmer with j.p Morgan. morgan Please go ahead. please go ahead

Speaker 12: Good morning. Thanks for the question. Maybe I could just start off with a clarification on some of the inflation and freight commentary. You noted that you're covered in terms of contracts. I think in the past when we've seen rates run up, not totally dissimilar to now, we have seen spot running well above contracted rates and maybe contracted rates not holding in the way that you might think of a contract holding. I guess to what extent you're seeing that now, especially when I look at some of that margin pressure in the refrigerated business this quarter. Thanks. Good morning. good morning Thanks for the question. thanks for the question Maybe I could just start off with a clarification on some of the inflation and freight commentary. maybe i could just start off with a clarification on some of the inflation and freight commentary You noted that you're covered in terms of contracts. you noted that you're covered in terms of contracts I think in the past when we've seen rates run up, not totally dissimilar to now, we have seen spot running well above contracted rates and maybe contracted rates not holding in the way that you might think of a contract holding. i think in the past when we've seen rates run up not totally dissimilar to now we have seen spot running well above contracted rates and maybe contracted rates not holding in the way that you might think of a contract holding I guess to what extent you're seeing that now, especially when I look at some of that margin pressure in the refrigerated business this quarter. i guess to what extent you're seeing that now especially when i look at some of that margin pressure in the refrigerated business this quarter Thanks. thanks

Speaker 3: Yeah. Spot was actually running low for a lot of our fiscal year. Spot has now spiked up and is above sort of contracted rates. A high percentage of our freight as we kind of look into next year is contracted line haul, so a high percentage. A smaller percentage is spot. You know, that market has spiked up like you just alluded to. But we have incorporated all that for our fiscal 2026 guide. As I mentioned next year, we're covered through a good part of next fiscal year with our freight contracts, and that's a high percentage. We do have some spot, but a high percentage is contracted. Yeah. yeah Spot was actually running low for a lot of our fiscal year. spot was actually running low for a lot of our fiscal year Spot has now spiked up and is above sort of contracted rates. spot has now spiked up and is above sort of contracted rates A high percentage of our freight as we kind of look into next year is contracted line haul, so a high percentage. a high percentage of our freight as we kind of look into next year is contracted line haul so a high percentage A smaller percentage is spot. a smaller percentage is spot You know, that market has spiked up like you just alluded to. you know that market has spiked up like you just alluded to But we have incorporated all that for our fiscal 2026 guide. but we have incorporated all that for our fiscal 2026 guide As I mentioned next year, we're covered through a good part of next fiscal year with our freight contracts, and that's a high percentage. as i mentioned next year we're covered through a good part of next fiscal year with our freight contracts and that's a high percentage We do have some spot, but a high percentage is contracted. we do have some spot but a high percentage is contracted

Speaker 12: Okay. Thank you. Then following up on Ardent, you mentioned earlier the strong free cash flow conversion, how some of that was aided by not lowering the distributions from Ardent, even as earnings have maybe not come in quite the way you expected. If we think about a potential rebound next year in Ardent's earnings, to what extent should we think about that flowing through to free cash flow generation, so essentially increasing the distributions versus more just fully covering the distributions in terms of the earnings? Thanks. Okay. okay Thank you. thank you Then following up on Ardent, you mentioned earlier the strong free cash flow conversion, how some of that was aided by not lowering the distributions from Ardent, even as earnings have maybe not come in quite the way you expected. then following up on ardent you mentioned earlier the strong free cash flow conversion how some of that was aided by not lowering the distributions from ardent even as earnings have maybe not come in quite the way you expected If we think about a potential rebound next year in Ardent's earnings, to what extent should we think about that flowing through to free cash flow generation, so essentially increasing the distributions versus more just fully covering the distributions in terms of the earnings? if we think about a potential rebound next year in ardent's earnings to what extent should we think about that flowing through to free cash flow generation so essentially increasing the distributions versus more just fully covering the distributions in terms of the earnings Thanks. thanks

Speaker 3: Yeah. Tom, we look at this on a kind of a year-by-year basis. We have a lot of discussion with our joint venture partners on capital allocation priorities. As a kind of a general rule, Ardent Mills does an outstanding job managing their balance sheet. They keep their leverage low, and they're really efficient with their cash flow. You know, this year, they were in a position to be able to hold to plan despite, you know, some of the volatility I described early on the commodity trading revenue. As a general rule, we set, you know, we have a sort of a payout ratio level that we set going into the year, and then, you know, we look at how the year plays out, and then we modify from there. Yeah. yeah Tom, we look at this on a kind of a year- by- year basis. tom we look at this on a kind of a year- by- year basis We have a lot of discussion with our joint venture partners on capital allocation priorities. we have a lot of discussion with our joint venture partners on capital allocation priorities As a kind of a general rule, Ardent Mills does an outstanding job managing their balance sheet. as a kind of a general rule ardent mills does an outstanding job managing their balance sheet They keep their leverage low, and they're really efficient with their cash flow. they keep their leverage low and they're really efficient with their cash flow You know, this year, they were in a position to be able to hold to plan despite, you know, some of the volatility I described early on the commodity trading revenue. you know this year they were in a position to be able to hold to plan despite you know some of the volatility i described early on the commodity trading revenue As a general rule, we set, you know, we have a sort of a payout ratio level that we set going into the year, and then, you know, we look at how the year plays out, and then we modify from there. as a general rule we set you know we have a sort of a payout ratio level that we set going into the year and then you know we look at how the year plays out and then we modify from there Generally speaking, we feel very good about, you know, the cash generation of Ardent Mills and, you know, getting timely distributions. Generally speaking, we feel very good about, you know, the cash generation of Ardent Mills and, you know, getting timely distributions. generally speaking we feel very good about you know the cash generation of ardent mills and you know getting timely distributions

Speaker 12: Okay. Thank you. Okay. okay Thank you. thank you

Speaker 7: Our next question comes from Robert Moskow with TD Cowen. Please go ahead. Our next question comes from Robert Moskow with TD Cowen. our next question comes from robert moskow with td cowen Please go ahead. please go ahead

Speaker 9: Thanks. A couple questions. One, Dave, can you remind us what the tariff component of your cost inflation is this year? I think it's like 2% or so. How should we think about it for fiscal 2027? Does it lap? Will it turn to zero? Does that automatically get you some relief in your inflation for next year? Thanks. thanks A couple questions. a couple questions One, Dave, can you remind us what the tariff component of your cost inflation is this year? one dave can you remind us what the tariff component of your cost inflation is this year I think it's like 2% or so. i think it's like 2% or so How should we think about it for fiscal 2027? how should we think about it for fiscal 2027 Does it lap? does it lap Will it turn to zero? will it turn to zero Does that automatically get you some relief in your inflation for next year? does that automatically get you some relief in your inflation for next year

Speaker 3: Yeah, Rob. Generally kind of our going into the year, our overall inflation was 7%, 4% was core, and 3% were gross tariffs before mitigation. Yeah, Rob. yeah rob Generally kind of our going into the year, our overall inflation was 7%, 4% was core, and 3% were gross tariffs before mitigation. generally kind of our going into the year our overall inflation was 7% 4% was core and 3% were gross tariffs before mitigation

Speaker 9: Yeah. Yeah. yeah

Speaker 3: We track mitigation as part of productivity, and we estimated 1% in mitigation. As we look in and that's pretty much played out. We have, you know, there's been some volatility obviously with the IEEPA tariffs, but then we have the new tariffs that have come in. Not a material change, I would say to the original estimate, a little bit favorable, but then our core inflation's been a little unfavorable. We're still at that kind of total 7%, call it. As we look to next year, because we had mitigation that we're gonna wrap, there is gonna be some headwind from a kind of wrap perspective in tariffs. You know, we originally said 1% mitigation, which would imply $80 million of headwind. We don't think it's gonna be that much. We track mitigation as part of productivity, and we estimated 1% in mitigation. we track mitigation as part of productivity and we estimated 1% in mitigation As we look in and that's pretty much played out. as we look in and that's pretty much played out We have, you know, there's been some volatility obviously with the IEEPA tariffs, but then we have the new tariffs that have come in. we have you know there's been some volatility obviously with the ieepa tariffs but then we have the new tariffs that have come in Not a material change, I would say to the original estimate, a little bit favorable, but then our core inflation's been a little unfavorable. not a material change i would say to the original estimate a little bit favorable but then our core inflation's been a little unfavorable We're still at that kind of total 7%, call it. we're still at that kind of total 7% call it As we look to next year, because we had mitigation that we're gonna wrap, there is gonna be some headwind from a kind of wrap perspective in tariffs. as we look to next year because we had mitigation that we're gonna wrap there is gonna be some headwind from a kind of wrap perspective in tariffs You know, we originally said 1% mitigation, which would imply $80 million of headwind. you know we originally said 1% mitigation which would imply $80 million of headwind We don't think it's gonna be that much. we don't think it's gonna be that much Might be more like half of that, but we are gonna have some headwind with tariff just because we're wrapping up the mitigation that we had this year that now won't flow into next year. Might be more like half of that, but we are gonna have some headwind with tariff just because we're wrapping up the mitigation that we had this year that now won't flow into next year. might be more like half of that but we are gonna have some headwind with tariff just because we're wrapping up the mitigation that we had this year that now won't flow into next year

Speaker 9: Okay. I'll follow up on that. More broadly, the retail consumption data, Sean, looks really strong on a two-year volume CAGR basis for frozen. When I just look at your shipments and I try to do that same two-year CAGR just for Refrigerated and Frozen division, it's down on a two-year basis, and that's trying to normalize for the supply chain disruption. Is that just because this division has refrigerated brands that have been down over that two-year period that you're not including in that Nielsen data? Okay. okay I'll follow up on that. i'll follow up on that More broadly, the retail consumption data, Sean, looks really strong on a two-year volume CAGR basis for frozen. more broadly the retail consumption data sean looks really strong on a two-year volume cagr basis for frozen When I just look at your shipments and I try to do that same two-year CAGR just for Refrigerated and Frozen division, it's down on a two-year basis, and that's trying to normalize for the supply chain disruption. when i just look at your shipments and i try to do that same two-year cagr just for refrigerated and frozen division it's down on a two-year basis and that's trying to normalize for the supply chain disruption Is that just because this division has refrigerated brands that have been down over that two-year period that you're not including in that Nielsen data? is that just because this division has refrigerated brands that have been down over that two-year period that you're not including in that nielsen data

Speaker 11: You know, I'm not sure exactly what you're looking at, Rob, but that could be a piece of it. I mean, there are some of the refrigerated businesses that are nowhere near the strategic priority as our frozen business as an example. You know, I'm not sure exactly what you're looking at, Rob, but that could be a piece of it. you know i'm not sure exactly what you're looking at rob but that could be a piece of it I mean, there are some of the refrigerated businesses that are nowhere near the strategic priority as our frozen business as an example. i mean there are some of the refrigerated businesses that are nowhere near the strategic priority as our frozen business as an example

Speaker 9: Mm-hmm. Mm-hmm. mm-hmm

Speaker 11: Those could be categories where, as we follow our horses for courses approach, it's more of a value over volume. You know, I would say in general, on the core Frozen business, you've seen strength on a one-year and you see strength on a two-year. You know, staggering market share data around 88% of that business holding or gaining share, which I know was a central focus for investors last year when we had the supply interruption. It's like, will this bounce back? Will it bounce back strong? It has bounced back. Our Refrigerated businesses, some of those businesses are more about cash contribution. There are some particularly high margin businesses in there. Those could be categories where, as we follow our horses for courses approach, it's more of a value over volume. those could be categories where as we follow our horses for courses approach it's more of a value over volume You know, I would say in general, on the core Frozen business, you've seen strength on a one-year and you see strength on a two-year. you know i would say in general on the core frozen business you've seen strength on a one-year and you see strength on a two-year You know, staggering market share data around 88% of that business holding or gaining share, which I know was a central focus for investors last year when we had the supply interruption. you know staggering market share data around 88% of that business holding or gaining share which i know was a central focus for investors last year when we had the supply interruption It's like, will this bounce back? it's like will this bounce back Will it bounce back strong? will it bounce back strong It has bounced back. it has bounced back Our Refrigerated businesses, some of those businesses are more about cash contribution. our refrigerated businesses some of those businesses are more about cash contribution There are some particularly high margin businesses in there. there are some particularly high margin businesses in there Some of those refrigerated businesses we treat more like some of our center store businesses like cans, where we manage them for cash and not as much for volume growth. That's probably what you're seeing there. Dave, you wanna add to that? Some of those refrigerated businesses we treat more like some of our center store businesses like cans, where we manage them for cash and not as much for volume growth. some of those refrigerated businesses we treat more like some of our center store businesses like cans where we manage them for cash and not as much for volume growth That's probably what you're seeing there. that's probably what you're seeing there Dave, you wanna add to that? dave you wanna add to that

Speaker 3: Yeah, just Rob, and I'll let you kind of follow up checking numbers, but if I just look at the Q3, obviously this quarter for shipments for RNF volume was +3.9%, Q3 a year ago was -3%. On a two-year basis- Yeah, just Rob, and I'll let you kind of follow up checking numbers, but if I just look at the Q3, obviously this quarter for shipments for RNF volume was +3.9%, Q3 a year ago was -3%. yeah just rob and i'll let you kind of follow up checking numbers but if i just look at the q3 obviously this quarter for shipments for rnf volume was +3.9% q3 a year ago was -3% On a two-year basis- on a two-year basis-

Speaker 9: Yes. Yes. yes

Speaker 3: Volume is actually up in shipments. Volume is actually up in shipments. volume is actually up in shipments

Speaker 9: Yes. I was referring to overall dollars are down. Yeah, I agree with you, Dave. All right. Thank you. Yes. yes I was referring to overall dollars are down. i was referring to overall dollars are down Yeah, I agree with you, Dave. yeah i agree with you dave All right. all right Thank you. thank you

Speaker 3: Thanks. Thanks. thanks

Speaker 7: Our next question comes from Chris Carey with Wells Fargo. Please go ahead. Our next question comes from Chris Carey with Wells Fargo. our next question comes from chris carey with wells fargo Please go ahead. please go ahead

Speaker 2: Hey, good morning, guys. I wanted to see if you maybe could just take a sort of a two- to three-year view on the margin trajectory for your key U.S. businesses. You know, the grocery and snacks business has seen pressure, but there's clearly been more pressure on the Refrigerated and Frozen side. When you kinda digest that past few years, what are the key challenges that have impacted the business? Obviously, there's been inflation, but I wonder if there are other things under the hood. Maybe you can comment on your medium-term productivity initiatives as well. I'd love any thoughts there. Hey, good morning, guys. hey good morning guys I wanted to see if you maybe could just take a sort of a two- to three-year view on the margin trajectory for your key U.S. businesses. i wanted to see if you maybe could just take a sort of a two- to three-year view on the margin trajectory for your key u.s businesses You know, the grocery and snacks business has seen pressure, but there's clearly been more pressure on the Refrigerated and Frozen side. you know the grocery and snacks business has seen pressure but there's clearly been more pressure on the refrigerated and frozen side When you kinda digest that past few years, what are the key challenges that have impacted the business? when you kinda digest that past few years what are the key challenges that have impacted the business Obviously, there's been inflation, but I wonder if there are other things under the hood. obviously there's been inflation but i wonder if there are other things under the hood Maybe you can comment on your medium-term productivity initiatives as well. maybe you can comment on your medium-term productivity initiatives as well I'd love any thoughts there. i'd love any thoughts there

Speaker 11: Yeah. Chris, let me give you my thoughts on that. We are the biggest frozen food manufacturer in North America, if not the world. We have, as a company, seen, you know, in this, you know, now five- or six-year deep inflation super cycle, we've seen a, you know, a massive increase in the cost of goods that we've had to deal with. After about four years of taking inflation-justified pricing in order to kinda protect margins, that's where we said on our growth business is you can't shrink your way to prosperity, and that's led by frozen. We did pivot the strategy to, you know, stop taking, at some point, all this inflation-justified pricing in frozen to get volumes moving again. That means we had to eat some of that higher cost. Yeah. yeah Chris, let me give you my thoughts on that. chris let me give you my thoughts on that We are the biggest frozen food manufacturer in North America, if not the world. we are the biggest frozen food manufacturer in north america if not the world We have, as a company, seen, you know, in this, you know, now five- or six-year deep inflation super cycle, we've seen a, you know, a massive increase in the cost of goods that we've had to deal with. we have as a company seen you know in this you know now five- or six-year deep inflation super cycle we've seen a you know a massive increase in the cost of goods that we've had to deal with After about four years of taking inflation-justified pricing in order to kinda protect margins, that's where we said on our growth business is you can't shrink your way to prosperity, and that's led by frozen. after about four years of taking inflation-justified pricing in order to kinda protect margins that's where we said on our growth business is you can't shrink your way to prosperity and that's led by frozen We did pivot the strategy to, you know, stop taking, at some point, all this inflation-justified pricing in frozen to get volumes moving again. we did pivot the strategy to you know stop taking at some point all this inflation-justified pricing in frozen to get volumes moving again That means we had to eat some of that higher cost. that means we had to eat some of that higher cost As a result, that business in particular, because it's so strategic to us, we got volumes moving. They're moving extremely well again this quarter, but we've had to eat some cost. A lot of that cost has been in animal protein, because as you know, animal proteins have been up. That is exactly what has driven the margin compression in the frozen business. It was a choice we made to protect our leading market shares and protect our sales. If you looked at even the velocities across our portfolio that came out yesterday, I think we've got the best velocities by a good chunk in the group. Now the question comes, you know, what's next? Obviously, we've got the wild curveball that we're dealing with. As a result, that business in particular, because it's so strategic to us, we got volumes moving. as a result that business in particular because it's so strategic to us we got volumes moving They're moving extremely well again this quarter, but we've had to eat some cost. they're moving extremely well again this quarter but we've had to eat some cost A lot of that cost has been in animal protein, because as you know, animal proteins have been up. a lot of that cost has been in animal protein because as you know animal proteins have been up That is exactly what has driven the margin compression in the frozen business. that is exactly what has driven the margin compression in the frozen business It was a choice we made to protect our leading market shares and protect our sales. it was a choice we made to protect our leading market shares and protect our sales If you looked at even the velocities across our portfolio that came out yesterday, I think we've got the best velocities by a good chunk in the group. if you looked at even the velocities across our portfolio that came out yesterday i think we've got the best velocities by a good chunk in the group Now the question comes, you know, what's next? now the question comes you know what's next Obviously, we've got the wild curveball that we're dealing with. obviously we've got the wild curveball that we're dealing with As I said last quarter, we absolutely, you know, assuming we can get some element of normalcy, we absolutely expect margin expansion going forward, particularly in frozen. The building blocks haven't changed. It starts with productivity. In fiscal 2026, between core productivity and tariff mitigation, that number is just over 5%, which is very strong. Second, at some point, we're gonna get inflation relief, hopefully back to closer to our typical 2%. Certainly, getting the war behind us would help with that. Third, we've got the advancement of our supply chain resiliency investments, including the chicken plants, and that's gonna enable us at some point to repatriate outsourced volume, which will be a, you know, a good thing for margin. As I said last quarter, we absolutely, you know, assuming we can get some element of normalcy, we absolutely expect margin expansion going forward, particularly in frozen. as i said last quarter we absolutely you know assuming we can get some element of normalcy we absolutely expect margin expansion going forward particularly in frozen The building blocks haven't changed. the building blocks haven't changed It starts with productivity. it starts with productivity In fiscal 2026, between core productivity and tariff mitigation, that number is just over 5%, which is very strong. in fiscal 2026 between core productivity and tariff mitigation that number is just over 5% which is very strong Second, at some point, we're gonna get inflation relief, hopefully back to closer to our typical 2%. second at some point we're gonna get inflation relief hopefully back to closer to our typical 2% Certainly, getting the war behind us would help with that. certainly getting the war behind us would help with that Third, we've got the advancement of our supply chain resiliency investments, including the chicken plants, and that's gonna enable us at some point to repatriate outsourced volume, which will be a, you know, a good thing for margin. third we've got the advancement of our supply chain resiliency investments including the chicken plants and that's gonna enable us at some point to repatriate outsourced volume which will be a you know a good thing for margin Fourth, you know, we are taking price and we have taken price surgically and we've seen encouraging elasticities. The fifth thing is, as you've heard me talk, you know, in the last couple of quarters, we've kicked off this Project Catalyst, which is an ambitious initiative to reengineer our core work processes leveraging technology. That's gonna be a benefit to both the P&L and the balance sheet. In the P&L, it'll be a benefit to sales, it'll be a benefit to profit. In the balance sheet, we see opportunity there in terms of, you know, reducing working capital, increasing cash, and that's a real tangible and exciting opportunity. Yeah, it's margin, and it's more than margin in that particular project. Fourth, you know, we are taking price and we have taken price surgically and we've seen encouraging elasticities. fourth you know we are taking price and we have taken price surgically and we've seen encouraging elasticities The fifth thing is, as you've heard me talk, you know, in the last couple of quarters, we've kicked off this Project Catalyst, which is an ambitious initiative to reengineer our core work processes leveraging technology. the fifth thing is as you've heard me talk you know in the last couple of quarters we've kicked off this project catalyst which is an ambitious initiative to reengineer our core work processes leveraging technology That's gonna be a benefit to both the P&L and the balance sheet. that's gonna be a benefit to both the p&l and the balance sheet In the P&L, it'll be a benefit to sales, it'll be a benefit to profit. in the p&l it'll be a benefit to sales it'll be a benefit to profit In the balance sheet, we see opportunity there in terms of, you know, reducing working capital, increasing cash, and that's a real tangible and exciting opportunity. in the balance sheet we see opportunity there in terms of you know reducing working capital increasing cash and that's a real tangible and exciting opportunity Yeah, it's margin, and it's more than margin in that particular project. yeah it's margin and it's more than margin in that particular project You know, put those things together and, you know, we feel very good about the margin outlook from here. Obviously, it wouldn't hurt if the world settled down a bit. You know, we'll deal with that because that's, you know, not something we control. We gotta respond to that. You know, put those things together and, you know, we feel very good about the margin outlook from here. you know put those things together and you know we feel very good about the margin outlook from here Obviously, it wouldn't hurt if the world settled down a bit. obviously it wouldn't hurt if the world settled down a bit You know, we'll deal with that because that's, you know, not something we control. you know we'll deal with that because that's you know not something we control We gotta respond to that. we gotta respond to that

Speaker 2: Okay. All right. Great. Thanks, Sean. Just, you know, Dave, the free cash flow conversion has been a really good story. You upped that at CAGNY and a small increase again today. Are we run rating at a new level for free cash flow conversion? You know, do you see a level of sustainability up here over 100%? Then just, you know, it's kind of a confirmation of a prior question. You know, the dividends are staying on Ardent, or I think that the cash component of Ardent has maintained despite the income statement component coming down. Okay. okay All right. all right Great. great Thanks, Sean. thanks sean Just, you know, Dave, the free cash flow conversion has been a really good story. just you know dave the free cash flow conversion has been a really good story You upped that at CAGNY and a small increase again today. you upped that at cagny and a small increase again today Are we run rating at a new level for free cash flow conversion? are we run rating at a new level for free cash flow conversion You know, do you see a level of sustainability up here over 100%? you know do you see a level of sustainability up here over 100% Then just, you know, it's kind of a confirmation of a prior question. then just you know it's kind of a confirmation of a prior question You know, the dividends are staying on Ardent, or I think that the cash component of Ardent has maintained despite the income statement component coming down. you know the dividends are staying on ardent or i think that the cash component of ardent has maintained despite the income statement component coming down Does that get reset next year or can you maintain a level of dividends? By the way, I know you're not guiding to Ardent, and nor am I suggesting, but is there some sort of like mark-to-market that needs to happen there? That's kind of, you know, just a quick follow-up. Same things on cash. Does that get reset next year or can you maintain a level of dividends? does that get reset next year or can you maintain a level of dividends By the way, I know you're not guiding to Ardent, and nor am I suggesting, but is there some sort of like mark-to-market that needs to happen there? by the way i know you're not guiding to ardent and nor am i suggesting but is there some sort of like mark-to-market that needs to happen there That's kind of, you know, just a quick follow-up. that's kind of you know just a quick follow-up Same things on cash. same things on cash

Speaker 3: Yeah. Okay. Well, let me start with the free cash flow conversion. We're not gonna guide to that now. What I would say is we always target a 90% or better free cash flow conversion as the base. You know, given our earnings and our ability to convert that to cash just in the normal course, we feel 90% is the appropriate target. To get above that, we need to find additional cash-generating ideas. We've done that with cash tax efficiency this year, with different planning that we've done that's really helped us there. The big thing has been working capital specific to inventory, and I talked about it earlier. Yeah. yeah Okay. okay Well, let me start with the free cash flow conversion. well let me start with the free cash flow conversion We're not gonna guide to that now. we're not gonna guide to that now What I would say is we always target a 90% or better free cash flow conversion as the base. what i would say is we always target a 90% or better free cash flow conversion as the base You know, given our earnings and our ability to convert that to cash just in the normal course, we feel 90% is the appropriate target. you know given our earnings and our ability to convert that to cash just in the normal course we feel 90% is the appropriate target To get above that, we need to find additional cash-generating ideas. to get above that we need to find additional cash-generating ideas We've done that with cash tax efficiency this year, with different planning that we've done that's really helped us there. we've done that with cash tax efficiency this year with different planning that we've done that's really helped us there The big thing has been working capital specific to inventory, and I talked about it earlier. the big thing has been working capital specific to inventory and i talked about it earlier We have a significant amount of inventory, and we believe we have great opportunity to really reduce that inventory in future years. Our inventory increased coming out of COVID 'cause we had a lot of demand and we increased our safety stocks, and now we're methodically reducing it with our supply planning systems and our process. When we leverage some of these new tools with AI now, we think that we can continue that acceleration of inventory reduction, and that's the kinda thing that's gonna take you above 90%. Again, I'm not gonna specifically guide on that today, but we're laser-focused on inventory. A big part of that too, I've done this a long time, to be able to take inventory down, you have to have alignment between supply chain, sales, and finance. We have a significant amount of inventory, and we believe we have great opportunity to really reduce that inventory in future years. we have a significant amount of inventory and we believe we have great opportunity to really reduce that inventory in future years Our inventory increased coming out of COVID 'cause we had a lot of demand and we increased our safety stocks, and now we're methodically reducing it with our supply planning systems and our process. our inventory increased coming out of covid 'cause we had a lot of demand and we increased our safety stocks and now we're methodically reducing it with our supply planning systems and our process When we leverage some of these new tools with AI now, we think that we can continue that acceleration of inventory reduction, and that's the kinda thing that's gonna take you above 90%. when we leverage some of these new tools with ai now we think that we can continue that acceleration of inventory reduction and that's the kinda thing that's gonna take you above 90% Again, I'm not gonna specifically guide on that today, but we're laser-focused on inventory. again i'm not gonna specifically guide on that today but we're laser-focused on inventory A big part of that too, I've done this a long time, to be able to take inventory down, you have to have alignment between supply chain, sales, and finance. a big part of that too i've done this a long time to be able to take inventory down you have to have alignment between supply chain sales and finance It may sound simple, but sometimes that doesn't always happen. We have great alignment here, and it starts at the top in terms of a commitment to taking inventory out. We're investing and we feel pretty bullish on our ability to take that out. As it relates to Ardent Mills, I would just when we set equity earnings for Ardent, we always have a payout ratio on those earnings, and that's how we start the year. That payout ratio is pretty high. It's not 100%, but it's pretty close. Then we go from there. This year the earnings fell, but we kept the dividend to plan, so our payout ratio is above 100%. It may sound simple, but sometimes that doesn't always happen. it may sound simple but sometimes that doesn't always happen We have great alignment here, and it starts at the top in terms of a commitment to taking inventory out. we have great alignment here and it starts at the top in terms of a commitment to taking inventory out We're investing and we feel pretty bullish on our ability to take that out. we're investing and we feel pretty bullish on our ability to take that out As it relates to Ardent Mills, I would just when we set equity earnings for Ardent, we always have a payout ratio on those earnings, and that's how we start the year. as it relates to ardent mills i would just when we set equity earnings for ardent we always have a payout ratio on those earnings and that's how we start the year That payout ratio is pretty high. that payout ratio is pretty high It's not 100%, but it's pretty close. it's not 100% but it's pretty close Then we go from there. then we go from there This year the earnings fell, but we kept the dividend to plan, so our payout ratio is above 100%. this year the earnings fell but we kept the dividend to plan so our payout ratio is above 100% You always reset it every year so that the dividend payment and the equity earnings to start the year are pretty much in sync, and then we evaluate their balance sheet as we go each quarter. You always reset it every year so that the dividend payment and the equity earnings to start the year are pretty much in sync, and then we evaluate their balance sheet as we go each quarter. you always reset it every year so that the dividend payment and the equity earnings to start the year are pretty much in sync and then we evaluate their balance sheet as we go each quarter

Speaker 2: Okay. That's really helpful. Thanks so much, guys. Appreciate it. Okay. okay That's really helpful. that's really helpful Thanks so much, guys. thanks so much guys Appreciate it. appreciate it

Speaker 3: Thanks. Thanks. thanks

Speaker 7: Our next question comes from Scott Marks with Jefferies. Please go ahead. Our next question comes from Scott Marks with Jefferies. our next question comes from scott marks with jefferies Please go ahead. please go ahead

Speaker 10: Hey, good morning. Thanks so much for taking the questions. First thing I just wanted to get clarity on, in terms of the volume growth in the business, wondering if you can help us understand how much of that was driven by some of the retailer inventory adjustments and how much of it would you attribute to just recovery from the supply chain disruptions a year ago? Hey, good morning. hey good morning Thanks so much for taking the questions. thanks so much for taking the questions First thing I just wanted to get clarity on, in terms of the volume growth in the business, wondering if you can help us understand how much of that was driven by some of the retailer inventory adjustments and how much of it would you attribute to just recovery from the supply chain disruptions a year ago? first thing i just wanted to get clarity on in terms of the volume growth in the business wondering if you can help us understand how much of that was driven by some of the retailer inventory adjustments and how much of it would you attribute to just recovery from the supply chain disruptions a year ago

Speaker 11: Well, we certainly undershipped last quarter, Scott, and we've caught that back up because the merchandising events moved into Q3, and so the shipments associated with those moved into Q3. We're on a two-year basis, as I mentioned before, we've basically shipped consumption and there's not a material gap there at all. In terms of the takeaway portion of it's strong on a one- and two-year basis. If you look at the mix of TPDs versus velocities, the hero there has really been the velocity piece, and that's driven in large part by just the strength of the innovation we've seen. Well, we certainly undershipped last quarter, Scott, and we've caught that back up because the merchandising events moved into Q3, and so the shipments associated with those moved into Q3. well we certainly undershipped last quarter scott and we've caught that back up because the merchandising events moved into q3 and so the shipments associated with those moved into q3 We're on a two-year basis, as I mentioned before, we've basically shipped consumption and there's not a material gap there at all. we're on a two-year basis as i mentioned before we've basically shipped consumption and there's not a material gap there at all In terms of the takeaway portion of it's strong on a one- and two-year basis. in terms of the takeaway portion of it's strong on a one- and two-year basis If you look at the mix of TPDs versus velocities, the hero there has really been the velocity piece, and that's driven in large part by just the strength of the innovation we've seen. if you look at the mix of tpds versus velocities the hero there has really been the velocity piece and that's driven in large part by just the strength of the innovation we've seen You know, very pleased with the consumer takeaway that we've seen, particularly in frozen and snacks, which is obviously, you could see in some of the data, has been quite strong. Yeah. You know, very pleased with the consumer takeaway that we've seen, particularly in frozen and snacks, which is obviously, you could see in some of the data, has been quite strong. you know very pleased with the consumer takeaway that we've seen particularly in frozen and snacks which is obviously you could see in some of the data has been quite strong Yeah. yeah

Speaker 10: Understood. Appreciate that. A follow-up just quickly. I know last quarter you've been talking about the new big chicken facility, talking about bringing in-house some production and that had been on track. Just wondering if you can share an update on that, how that's progressing versus expectations. Thanks. Understood. understood Appreciate that. appreciate that A follow-up just quickly. a follow-up just quickly I know last quarter you've been talking about the new big chicken facility, talking about bringing in-house some production and that had been on track. i know last quarter you've been talking about the new big chicken facility talking about bringing in-house some production and that had been on track Just wondering if you can share an update on that, how that's progressing versus expectations. just wondering if you can share an update on that how that's progressing versus expectations Thanks. thanks

Speaker 11: Yeah, we sell a lot of chicken, and we use a lot of chicken in our products, and it's a combination of baked or roasted, whatever you wanna call it, and fried. Both have been strong. Both projects are tracking right where we need them to be. We still do have production on the outside. That'll continue for a little bit, but then at some point when all our work is complete, we'll have an opportunity to bring that back in as a good guy to our margins. Yeah, we sell a lot of chicken, and we use a lot of chicken in our products, and it's a combination of baked or roasted, whatever you wanna call it, and fried. yeah we sell a lot of chicken and we use a lot of chicken in our products and it's a combination of baked or roasted whatever you wanna call it and fried Both have been strong. both have been strong Both projects are tracking right where we need them to be. both projects are tracking right where we need them to be We still do have production on the outside. we still do have production on the outside That'll continue for a little bit, but then at some point when all our work is complete, we'll have an opportunity to bring that back in as a good guy to our margins. that'll continue for a little bit but then at some point when all our work is complete we'll have an opportunity to bring that back in as a good guy to our margins

Speaker 3: Yeah. Just on the bake side, we did complete that project and we're starting to bring that volume back this year. As we go into next year, that should be a tailwind in terms of having full year on that. Then the fried, we've made investments and that's, you know, that's gonna go out longer. Yeah. yeah Just on the bake side, we did complete that project and we're starting to bring that volume back this year. just on the bake side we did complete that project and we're starting to bring that volume back this year As we go into next year, that should be a tailwind in terms of having full year on that. as we go into next year that should be a tailwind in terms of having full year on that Then the fried, we've made investments and that's, you know, that's gonna go out longer. then the fried we've made investments and that's you know that's gonna go out longer

Speaker 10: Appreciate it. Thanks very much. Appreciate it. appreciate it Thanks very much. thanks very much

Speaker 3: Thanks. Thanks. thanks

Speaker 7: Our next question comes from Carla Casella with J.P. Morgan. Please go ahead. Carla, is it possible your line is muted? It's open on our end, but I'm still unable to hear you. Our next question comes from Carla Casella with J.P. Morgan. our next question comes from carla casella with j.p. morgan Please go ahead. please go ahead Carla, is it possible your line is muted? carla is it possible your line is muted It's open on our end, but I'm still unable to hear you. it's open on our end but i'm still unable to hear you

Speaker 5: I think that might be the last question, so why don't we go ahead and wrap up today? I think that might be the last question, so why don't we go ahead and wrap up today? i think that might be the last question so why don't we go ahead and wrap up today

Speaker 7: All right. This concludes our question and answer session. I would like to turn the call back over to Matthew Neisius for closing remarks. All right. all right This concludes our question and answer session. this concludes our question and answer session I would like to turn the call back over to Matthew Neisius for closing remarks. i would like to turn the call back over to matthew neisius for closing remarks

Speaker 5: Thank you, Bailey, and thank you all so much for joining us today. Please reach out to Investor Relations if you have any follow-up questions. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you, Bailey, and thank you all so much for joining us today. thank you bailey and thank you all so much for joining us today Please reach out to Investor Relations if you have any follow-up questions. please reach out to investor relations if you have any follow-up questions The conference is now concluded. the conference is now concluded Thank you for attending today's presentation. thank you for attending today's presentation You may now disconnect. you may now disconnect