B&G Foods, Inc. (BGS) Earnings Call Transcript & Summary

All right. Welcome back, everybody. And welcome to our fireside chat with B&G Foods. With me today, President and CEO, Casey Keller; CFO, Bruce Wacha. Welcome gentlemen. truly great to be back with you in Boston.

Good to be here.

Yes. Casey, maybe we start off and it makes sense to start with a sort of a state of the union as you reflect upon your first 3 years in charge. How the company has transformed since you've taken over? What's top of mind as we sort of finally approach what appears to be a more normalized or maybe at least more stable operating environment in packaged food?

Yes, absolutely. So if I step back, I've been at the company about 3 years. Coming in to me, there were 2 critical things that we had to deal with. So one was really clarifying what is the portfolio that we're going to be in, what businesses we want to be in, what brands, what categories, what makes sense for us. I mean the company historically had just kind of bought any business across the store, across the grocery store, not a lot of synergies other than just kind of administrative synergies. So for me, one of the big things we need to do was to say what businesses do we want to be in, where do we want to -- can we get the businesses that we can grow and can we get to businesses where we can acquire and build on top of them. And so that was the big first step. And part of that was really understanding the economics of what we had in the portfolio. What businesses were really good margin, what businesses weren't where were we getting performance, where we're not getting performance because we're kind of managing the businesses as a big bundle and spreading our resources like peanut butter are not really looking at what was the true profitability of these businesses and which businesses we should be in. So you've seen us kind of on a journey on that portfolio. So we made a decision to get out of cookie cracker back to nature. We divested the Canned Vegetable business, Green Giant in the U.S., very capital-intensive, lower-margin business. So we're making some steps on that direction. I'll talk about it in a second, but right we've made a -- we announced that we have the Green Giant Frozen business and the Canadian Green Giant business under strategic review, which I think we're coming to the end of that strategic review shortly, but that would be one of the potential next steps in our portfolio shaping activity. So where I think we're going from a portfolio standpoint is and I'll talk about business units in a second, but focused on a few core businesses and categories. So number one, spices and seasonings. So we've got a very nice spice and seasonings business. We're # 2 to McCormick, just #2, but a strong set of assets, good portfolio, good manufacturing capability, that is a business, I think, longer term, the trend has been positive. In the category, 2% to 3%, you're actually seeing a little bit higher growth rate now because of the growth of the fresh perimeter. I believe that's a business, an area where we can also acquire in the future, so organic growth plus acquisition, higher margin business. That's one part of the portfolio that I want to keep driving. Second, we have a Meals business, which is really two things. One is kind of Mexican at-home meal preparation. So Ortega Tacos, Las Palmas and Gelato Sauce and then a Hot Breakfast business, which is Cream of Wheat, McCann's oatmeal, Maple Grove Farm syrup. The Mexican side I'm really interested in because longer term, we see the Mexican at-home meal preparation trends growing. And I think that's a place we want to play. We've got 2 good assets there. Again, organic growth on that business planned acquisition over time. The third area, I would call baking staples, which is basically Crisco shortening oil, molasses, Grandma's molasses and then Clabber Girl baking powder. So we've got some very good assets in the baking stables. These are not growth assets, but they are very good margin strong, stable businesses over time that we would manage for cash. And that's in the specialty business unit. This frozen and vegetable area, honestly, I've talked about it a lot, but frozen is not an area where I see us spending our capital or building scale. Right now, our economics are subscale. The margin on our Frozen Vegetable business unit as we reported in segment reports results is about 1/3 of the margin of the rest of our business. So I don't think it's a place that we should spend our time and energy. I don't think that's a business that we can necessarily succeed in the long term. I don't want to spend our capital buying more frozen assets to get better economics in the frozen portfolio. I think that business probably belongs in someone else's hands that going to be able to drive better economics. We have a third-party warehousing transportation and distribution system that's pretty costly. And I just don't see us spending our time there. I would much rather go build our spices business, then build up our frozen portfolio. So that's the portfolio shaping that's going on. The second thing that we've been doing is reorganize and restructure the company around business units. So part of that is to clarify the portfolio direction, but also a big part of that is to operationally manage the business is better. To push accountability down, to give people P&L accountability for those businesses and to drive better financial P&L and operating decisions on the businesses in terms of what lines of business we're in, how we're managing our factories and our cost structure, how do we make better decisions around productivity and other things. So we push that accountability down. We've got the business up and running. And it's a big transition from where we were in the past, where it was largely a functional silo organization, trying to manage into a very complex portfolio. Now we can say, all right, go optimize your P&L, go make the right decisions, we're going to hold you accountable, and I'm seeing real traction in our ability to manage the businesses better across the portfolio. The other sort of state of the union to me is also leverage. So we're a company that's historically been very acquisitive. But honestly, when I came in, our leverage was way too high, and it got worse as the inflation picked up. So the good news is we're down quite a bit in leverage from where we were just better operating performance, using some of the divestiture proceeds to pay down debt. So now I think last quarter, we were like 6.35, we were way above that 12 to 18 months ago. So we're making progress, but we still have more to go. I mean for me to feel comfortable in this company, I want to get back in our range of 4.5 to 5.5 leverage. And we're on a journey. I think this year, we can get closer to 6 organically with some divestiture proceeds maybe get down in that 5.5 range. But that's where I think we need to be to play our game long term to create the platforms that we want to acquire on top of and drive our business and have enough room and capability to invest back. And we can get -- we can we can pay down debt with excess cash flow, but that's a slower process. I think it's going to take some divestiture activity for us to accelerate that progress. I mean the last thing I'll say is just like the rest of the industry, it's just been kind of a tumultuous 3 years, gone through the pandemic, then the supply crisis, then been taking up pricing. And I think now we're normalizing after all that activity, you call it normalizing. But I think consumers are starting or have been reacting to these higher prices. They've been sort of moving some of their consumption around. Right now, we're seeing fresh perimeter pricing coming down a little bit relative to frozen that's kind of impacting the frozen business. So I'm hoping that we're going to get to our long-term algorithm of 1% to 2% growth across our portfolio next year, but we are still in transition on that. We're still -- we sequentially improved between the first and the second quarter in terms of our organic trend negative but getting better hopeful that kind of by the fourth quarter, we're seeing some stabilization. And then next year, we can get back into that growth profile. But like the rest of the industry, we're watching this pretty carefully. I can tell you why I think some of the stuff is happening which I'm sure you'll ask me about later because everybody asks about that. But that's kind of our journey where we are and where we're trying to head.

Awesome. That's great. That's great overview. Thank you. You touched on this a little bit in the answer, but the establishment of the 4 specific business units, I guess how is that reorganization like specifically benefited the company since it was first implemented. Resource allocation and just that keeping people accountable and whatnot, but a little bit more specificity because sometimes I think reorganizations like this can go maybe underappreciated in terms of what it can actually do internally?

Yes. I would say, look, the primary benefits are number one, speed of decision-making. So we were very slow. Honestly, when the pricing inflection and inflation hit we were slow. We were slowed to price because we were looking at everything kind of in a big basket of bundle instead of like business by business saying, "Hey, my cost is going up here, I got to get pricing done here." So we are much faster at responding to market trends now. We've also built better talent kind of working on some of our core businesses. And I think resource allocation is much clearer. Like instead of like constant negotiation around who's going to get what resources or what capital everything else, we're pretty clear now, like, okay, you have this amount of money, how do you optimize it? How do you get the best returns? How do you spend it efficiently? We're getting much better at doing that. So -- and honestly, I'm seeing better decisions in terms of what business lines we're in. In some cases, we were manufacturing some private label or a third-party business that made no sense. But once you have a business unit digging in saying, this doesn't make sense, we should really be getting out of this business. We're not making money. It's a lot clearer. So I think we're running the business better I think we'll continue to see the business improve. We're getting much stronger productivity and productivity really wasn't on the agenda 3 years ago now, we're getting like 2% productivity. I think next year we'll go to 3%. And that's being driven by people in the business, making better decisions about how do we -- what are the costs or the value add cost and the product line that we want to maintain, what do we get rid of. So I'm seeing a lot of the benefits. A little bit messy because we're coming through this whole normalization period, but I think it's a better way to run the company. And it's going to also -- honestly, the last thing in maybe Bruce does wanting me say, but the business units also allow us to kind of plug and play a little bit. So if we're going to take a business out great, and it isolates and gives us visibility to what the business like Spice and Seasonings actually delivers. So it's giving us the management structure that allows us to kind of say, all right, maybe over time, this business moves out or maybe at some point, want to realize the value of another business, it gives us the ability to do that more easily rather than trying to just match businesses together. And then if you try and take them out, it becomes more and more difficult. And that's part of where I think our future is.

And you touched on this a little bit, but maybe just to remind the audience, sort of the specific roles you expect for each of the business units to play within the portfolio.

So I think Spice and Seasonings longer term, we think that category is a 2%, 3% growth category, and I would expect that from our business. I would expect us to be able to deliver 2% to 3% top line growth flowing to the bottom line. And so that -- it's a high-margin business. We want to grow that business. It is -- the role of that business also will be to say, how do we plug in some additional Spice and Seasonings assets. we've been successful with a couple of licensed brands. We just launched the Four Sixes, part of the Yellowstone franchise, the Four Sixes Ranch seasoning lines, blended seasoning line. So that's a business I think we'll focus on 2% to 3% growth. That's where we want to get it. The Meals business, again, I think 2% to 3%, the category in Mexican is at least that, maybe slightly higher. I expect us to get to organic growth on that business as well. Again, I think there's some fragmented world out there in terms of Mexican and Mexican sauces. We'll look at some inorganic acquisition activity there. but I expect to get growth from that business unit as well. The specialty business unit comprised mostly of those staples and is largely a cash flow-driven objective. We don't expect growth from that. We expect that business to be kind of stable good cash flow, good margins, shelf stable, good economic structure, probably kind of flat on the top line, flat on the profitability. That's a business that if we acquire, we acquired another banking staple that we would build it in, but we pay the right price for it and we would manage it for catalog. Frozen and vegetables we talked about. It's the question mark in the portfolio, very weak economics. I mean longer term, the trends in frozen business are good. Right now, I think they're being -- they're kind of being hit by the price differential between fresh and frozen getting compressed but that business, I think, has reasonable long-term prospects. My issue with that business is the economic structure in our portfolio.

And you talked about getting nearing the end of strategic review. I guess what are the potential -- the various options that are available to you that could come out of this review?

Yes. Keep the business, keep the entire business. There's really 3 parts in this business, by the way, we call it our Frozen Vegetable [indiscernible]. One is the U.S. Frozen portfolio, which is largely Green Giant. And then in Canada, we are the #1 player in both canned vegetables and frozen vegetables. So not like the U.S., where we're #2 to Birds Eye. We are the brand and the brand and private label is the category up there. So we are the branded position up there. And then third is Le Sueur canned piece. So we've kept that business. It's a premium priced, good margin business and very differentiated in kind of the canned vegetable category. So it's 3 businesses. So I would say the options are, we keep all the businesses continue to run it, which we can do. Economics is a little bit tough so it will still be a drag on our margins. If without that Frozen Vegetable Green Giant business, we would be a 19% or 20% margin business. I mean Green Giant, I think we had was like 7. So it's really way below on a segment basis versus our other businesses. The second option would be we sell parts of that business and keep others. And the third is we sell everything. 3 options, there are 3 options on it.

Good to have optionality. One of the key priorities you noted in your second quarter earnings call in August was improving base business net sales trends, the core business really to that long-term objective of, call it, 1% to 2%. What gives you confidence that this is a tenable range, right, for the company to consistently be able to achieve? And what is the path and time line to achieving this target look like? Is this and does this target assume any further divestitures at least from here in terms of where the portfolio is right now?

Yes. I think -- so our long-term objective is to be 1% to 2%. And you could hear -- you can see the calculus. If we can get our Spices Seasonings business and our Meals portfolio grow at 2%, 3%, which are very consistent with the long-term trends of those categories, and I think those we're coming back to those kind of trends. If we can -- and then we can hold our specialty business flat, roughly flat, maybe even like minus 0.5 to plus 0.5 over time, we can get to that 1% to 2% algorithm. And so I'm looking at long-term trends right now. I mean everybody is sort of projecting when do they expect normalization, the stabilization to occur. Like I said, we saw some improvement between the first and second quarter. I think we start to lap some of the promotion intensity that we put back in the business in the fourth quarter. So that becomes less of a drag on our business. I think we're going to get through this cycle of consumers responding to absolute higher price points. That has been probably -- you don't see consumers respond on day 1 of a price increase. You kind of see them a lag effect. So I think we're going to get through that. But like I said, our expectation looking at year-over-year trends, looking at promotions looking at kind of the sequential improvement in the business where things are that we're going to be able to get to that 1% to 2% at some point next year. With some improvement, particularly in the fourth quarter of this year as we lap some of those variables done.

And as Casey said, we've had 3, 4 years of absolute crazy in the packaged food industry and we're lapping that. When we think about some of the category trends that Casey was talking about around spices, around ethnic, those are the long-term trends, right? Those are pre-pandemic. We're probably going to revert into a world that has a lot of the same challenges as the pre-pandemic 2017-2018 period ahead, we're probably going back there. But those are categories that we feel over the long term really have some growth relative to a food company.

Yes. Last thing I'll say is we are already seeing the Spice and Seasoning this in our portfolio to grow. It's like 20% of our company growing between 4% and 5% in the last quarter, we're continuing to see growth. So I'm already feeling like Spice and Seasoning is there, where we needed to be. The big drag is frozen. It's really the frozen business on our portfolio. I've seen our Mexican business get back into kind of positive territory now. The specialty business with the baking staples is depressed a little bit because of the Crisco pressing impact. So we've been lowering prices on Crisco as the soybean oil commodity has come down. So that's dragging us a little bit. So what gives me confidence? I'm already seeing Spices and Seasoning there. I'm seeing improvement in our meals portfolio that, in particular, in the key Ortega brand, Crisco will lap the pricing largely in the fourth quarter and vegetables, frozen vegetables, we have a stronger innovation pipeline this fall. Our distribution, I think, is fairly stable beginning this fall. I still think that category overall is pressured because of the fresh pricing relative to frozen, and you can see it in the whole category and Birds Eye and everybody. So when we're going to get through that, I'm not sure. But that's what -- the 3 other business used to be done in Frozen Vegetable, I feel like we're moving in the right direction.

Got it. Closer in on the second quarter call, sales actually came in a bit better than anticipated, yet you lowered the overall full year '24 sales guidance. And now you're looking for base business net sales growth, I think of minus 2 to plus 0.5 year-over-year in the back half of the year versus minus 1 to plus 1 previously. Can you talk a bit about what you're seeing in the market at that time that ultimately led to that shift in the back half sales outlook?

Yes. I mean I think part one, we had a little bit worse first quarter than we wanted to and then a little bit better second quarter. Some of that was movement in the food service. But the other part of that is we're looking for an industry-wide recovery and stabilization. And we think that, that's happening, but it's a little bit slower than the plan that we laid out back in January, February when we were first preparing our full year guidance, and that reflects that.

Obviously consistent [indiscernible].

And by the way, we think as you think about third and fourth quarter, there should be sequential improvement, meaning whatever number we're going to hit, it's probably not going to be linear third quarter. And fourth, it's probably going to be a little bit more improvement in the fourth quarter relative to the third quarter.

Got it.

I mean one of the other things that we were kind of hearing also from retailers, which informed our guidance was that they were talking about inventory reductions. So we just made sure that we were in line with anything that we saw. And we saw a little bit of that in their quarters ending July. So I mean, I don't know what -- I've heard other people talk about this, too, but there was a fairly explicit message from a few retailers.

And you've talked a lot about Spices and Seasonings, obviously, one of the better growing categories. You're seeing some of the benefits of that as well. I think that business was up or that segment was up mid-single digit for you in the second quarter. And some of the theory is that more consumers look to do a little more scratch cooking, purchase items around the perimeter of the store, they need to flavor what they cook. Is that what you're sort of seeing in driving some of this dynamic right now? Or are there other things there at play as well?

No, I think what we hear pretty clearly from consumers is that they are buying -- the prices on fresh perimeter, whether it's vegetables, fruit, proteins, those have kind of come down over the last 6 to 12 months that not all categories, but a lot. And so people are migrating to more fresh at home, and the center store categories that go with those things. So like we all of our -- basically, we're a flavor seasoning grilling proteins. So we ride that. We're running that. And I think you probably heard McCormick talk about that, too. So I think center store categories that go with that trend are benefiting packaged good preprepared things in the center store that don't ride that trend or the fresh trend or not enhancing the fresh perimeter are probably not coming back as fast. So that's why I think spices is a good business. Interestingly, our baking staples, that business has been relatively -- scratch baking has been relatively flat. I don't -- it hasn't gone down like maybe some people predicted after the pandemic. I think people learned how to scratch bake in the pandemic, and they're kind of maintaining a certain level of it, not the same kind of frequency that they were. So that business has been relatively stable because I think people are still going to do a little bit of that at home. But the prepared meal prepared foods, packaged foods in the center, it's not ringing that fresh perimeter trend right now. So in our portfolio.

You mentioned earlier, obviously, you're #2 in Spice and Seasoning to a dominant player. But you've talked about you do have some interesting sort of brands within Spices and Seasonings that are sort of differentiated almost unique in a way and don't not necessarily compete with just the core 10 basic sort of spices. Maybe you can go through a little bit of that because I think that does isolate you a little bit what makes the distant #2 share less of a significant issue as it might be in another category.

Yes. So we -- there's this really -- you can break down that category into 2 things: A to Z spices, right? So the basic spices, we don't really play very hard in that. We have a Spice Islands business, which is a premium A to Z business, but it's a relatively small part of our overall portfolio. our portfolio, we have a fairly large business with Sam's, where we drive their members mark A to Z, but with an exclusive arrangement, and we also do a lot of their direct fulfillment through our kind of a sorting operation in our warehouse. So that's a very nice business for us. The rest of the business is brands like Dash, salt-free differentiated, seasoning blend, weber grilling spices, so seasoning blends, not A to Z, obviously, we do compete with there, but that's been a big nice business for us with a very long-term agreement with Weber. We have -- we just launched the Four Sixes. We've got Einstein Brothers, Everything Bagel. We've got some interesting businesses that are blends that are targeted different things than people buying just the normal cadre spices. And that's been an active part of the category, like new innovation, new ideas, blends -- that area has been kind of growing in that category. And it's differentiated and you don't get into this commodity game where you're competing with private label. Because if you're an A to Z, there's premium, there's mainstream and then the private label. And you got to fight for distribution in those all the time, and you also have to be wary about people trading down or private label competition encroaching. So that's what I like about our portfolio. It's differentiated enough from McCormick that I don't feel like we're always competing head-to-head in every segment.

You also highlighted, I think, in your recent call that you're expecting less of a drag from price as we move through the year, primarily because you're going to be lapping some of the Crisco pass-through pricing actions. But maybe outside of that, what are you seeing from sort of a promotional perspective that gives you some confidence that pricing can be less of a drag as you go into the back half of the year? And are there any specific categories where maybe you're seeing greater promotional intensity than others or maybe greater than what you might have anticipated or hoped to see?

I think the big thing is we had a period in 2022 with like 18% to 20% input cost inflation, right? And so '23 was all about addressing that and fixing the P&L, which for most people that look like us was either at risk of being broken or broken. 2000 -- late 2023, '24, it's a little bit more normal, right? And so when we think about our cost pressures, they're not quite the same. Every time we talk like 12%. So the P&L is a little bit more stable that way. From a promotional environment, promotions kind of went away in 2020, Right? Retailers were just trying to keep product on the shelves and manufacturers trying to manufacture product and more challenges. And so promotional spend, trade promotions kind of one away have gradually been increasing. And I think that's the piece that it's been where it's getting closer and closer to normal. For the most part, it's all pretty reasonable and rational. And nobody's made steps where they're doing anything like shocking or putting P&Ls at risk. We think that that's going to be the trend. But clearly, that's something we want to watch out.

Yes. I mean the -- just from our standpoint, we -- so beginning in the fourth quarter of last year, we kind of put promotion levels back to where they were pre-pandemic. We had a very fall seasonality portfolio. So last year, that's when we kind of put promotion spending back in to try and get the right level of merchandising. And it's now where it was pre-pandemic. And we've been kind of going through that. So we lap that and then we lap Crisco, the Crisco pricing impact, we expect to be much, much lower in Q4. So the big drags in terms of pricing and trade spend in our portfolio kind of stop in Q4.

And on Crisco, I think it's worth just reminding investors about the recent move to alter the pricing structure right on that Crisco business. What was the purpose behind it? And how effective have you seen it been since coming through that?

Sure. And the big thing is we talked about when we bought Crisco late 2020, we bought that business, #1 brand in vegetable oil, #1 brand in vegetable shortening. That was even before we had a specialty BU that was a specialty brand where we just want to generate cash. The math around that business was about $270 million of net sales and incremental to B&G before giving it a share of broader corporate cost was about $60 million in EBITDA. We always believe that was a brand where we could take price and protect profit, gross profit dollars. Didn't anticipate input costs going from low $0.30 per pound to 40, 45, 50, 55, 65, 75, 85, but we did. And that's what we saw. So welcome to commodity oil. We just took price as fast as we could. At a period in time, we began thinking through like we want to manage this business for profit dollars. Input costs at that point, had doubled from where they were when we bought the business. And there was a recognition on this business. We got to be a little bit more proactive and not reactive and manage that business, put some discipline around our buying, put some discipline around our pricing and really be upfront with the retailer and say, we're going to come back to you pretty regularly and give you an idea this is where pricing is for us, and this is what we need you to reflect. It's probably never perfect on a day-to-day basis, but it's generally worked. The interesting thing is we saw at the peak sales, probably reached $350 million in net sales from the $270 million that we bought. Profit dollars never perfect in any month, but probably still hovering around that $60. Yes, $60 million. So you actually saw sales go up from the outside looking in, looks fantastic. Margins go down. Internally, we see this impacts broader B&G. On the flip side, we're going to see sales come down, as Casey was talking about as we took pricing down. Sales are coming down, volumes relatively stable, but dollar sales are down. And our job is to manage that profit dollar to be pretty steady.

Got it. Got it. You've highlighted in the past long-term EBIT margin target in that sort of 18% to 20% range which you're able to achieve in '19 and '20. With an implied EBITDA margin, I think below about 16% this year. Is the 18% to 20% range still where you're looking to get back to longer term? And can you do that even if, let's say, no larger divestiture activity happens? Or is that required to sort of get you there?

I think what we saw with all of the inflation is some of those margin structures were changed. So we talked about Crisco. You saw that on a smaller scale across the rest of the portfolio. As input costs went up and we protected dollars. For us, our goal very much is to get back to that 18% to 20%. I think that works from our strategy of generating cash and being able to support the dividend, reduce leverage and fund other acquisitions. I think it's going to be hard for us to get all the way back to that 18% to 20% ex M&A. So portfolio reshaping should accelerate that.

Got it.

I mean we get back there without Green Giant, we're already there the rest of the portfolio. So I mean that's part of the drag. But like Bruce said, I think we will -- we could -- and our costs, frankly, have gone up more in the Frozen Vegetable and Frozen business. So we will get there very fast with divestiture if that happens, but I think we're also making progress. Like Crisco margins are improving as price comes down, we're starting to institute productivity, which is paying dividends. So I think we can get there. It's just a much speedier path.

Maybe last just worth talking about you mentioned at the outset. Talking a little bit about your perspective on why not just for B&G but the industry, the volume recovery process has taken longer maybe than most had expected. And I think if you look, you have to squint really hard at the recent data, it's certainly not getting worse, I think, for the industry, and that's a good start. Certainly not getting better as quickly as we'd like, but what's your rationale for speaking that it's gradual, but as we move through that part of the year into the fourth quarter, hopefully, this industry and B&G can get back to a place that's more in line with sort of historical performance.

Yes. So I think like I said before, honestly, I think people have been reacting -- consumers have been reacting to the higher prices. Look, food prices are up, I don't know what you could pick in whatever category you want 3% over the last 5 years, 50% people don't respond right way. They sort of alter their habits. I think we're going through that cycle right now, honestly. I think we're -- that's a normalization cycle on this crazy pandemic supply, pricing inflation. We're still kind of normalizing off of that. And in a lot of cases, volumes have been pressured. We're starting to see our volumes get a little bit better. Look, in our portfolio, very specifically, it's clear to me the Frozen category, the Frozen vegetable category is all about a change in the differential. Like frozen business went way up post pandemic when supply was tight, fresh prices were skyrocketing, now that, that differential is kind of compressed. First Frozen being a huge part of our portfolio, we're just seeing weakness in the category and in the frozen categories. And it doesn't matter what brand or private label is still struggling there. So I think we got to get through that kind of lapping that price differential to see that part of our business normalize. But that's a big -- that's probably the biggest drag on our portfolio. Like I said, the other 3 businesses, I see making the right progress -- so I mean -- so the macro view to me is consumers still adjusting the higher price points. We see trade down behavior. So if people were buying a 3-pound canned Crisco, they're now buying a 1-pound can, units are way up. They are coming faster back to buy units but they're adjusting their purchasing habits based on these really high price points. I don't think [indiscernible] size more than anything. I don't think they're all way through that yet. Micro, it's really about how does our -- how does frozen start to stabilize relative to the trend in differential in thing versus the fresh category.

And the other part, when we think about that recovery, there's almost two pieces. There's the industry recovery, consumer behavior and then there's just -- this is price and volume, and we're lapping a period where we had higher price because we're all promoting a little bit more kind of normalizing. Volumes that sort of stabilized, downward pressure, but all of the sales drag is not volume. It's price and volume, and we should be lapping that. So there's a structural piece as well.

Good. Perfect. All right. So we're going to leave it there. Please join us if you'd like over in the breakout session and join me in thanking Casey and Bruce.

Thank you.