Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
Please consider a small donation if you think this website provides you with relevant information
| Statement |
|---|
| Excluding the incremental sales from our acquisitions net sales grew 15%; price-mix was up 23% as we benefited from the pricing actions taken in fiscal 2023 in both our North-America and International segments to counter input and manufacturing cost inflation |
| Bernadette Madarieta Yes, Adam, strong price mix performance was the key driver of our better-than-expected financial results |
| Matt, I fully expect as I said earlier that, in the back half of the year we should start to see positive volume trends and that's a function of lapping the exited business, but also we have line-of-sight to additional business that we are going to start to backfill with, and it takes time, but I fully expect based on how we've got the business forecast and the opportunities we have that we are going to start seeing positive volume trends in the back half |
| [indiscernible] income helping traffic generate or we're holding up pretty well |
| Mix was also favorable, as we continue to strategically manage our product and customer portfolio |
| We should see our year-over-year volume trends improve as the year progresses as we begin to lap and backfill exited volumes with higher-margin business |
| Overall, we feel good about the health of the category, our first quarter financial results, and our operating momentum, and have raised our sales and earning targets for the year |
| The global frozen potato category continues to be solid with overall demand and supply balanced |
| And we expect year-over-year volume trends will continue to improve as the year progresses, as we lap some of the significant low-margin, low product profit volume that we chose to exit in the second half of last year and as we gradually backfill the exited lower-margin business with more profitable business |
| Restaurant traffic in our key markets was generally solid |
| Based on our strong first quarter performance, we raised our financial targets for the year |
| We delivered a strong start to the year as we continued to execute on our strategies to drive sustainable profitable growth |
| In addition, we are confident in the health of the global category and remain committed to investing in our business to drive sustainable profitable growth and create value for our shareholders over the long-term |
| Specifically, we continue to expect strong net sales gains for the year and have increased our annual net sales target to $6.8 billion to $7 billion, which is up from our previous target of $6.7 billion to $6.9 billion |
| Growth was also solid in France, Germany, Italy and Spain |
| In Asia, China restaurant traffic growth was very strong, but of depressed levels as a country rebounded from the severe COVID-related restrictions |
| Traffic in Japan was solid in both QSR and full-service restaurants |
| That said, frozen potato demand has proven resilient during the most challenging economic times and we continue to be confident in the long-term growth prospects of the global category |
| In summary, we are executing our strategies to deliver strong top and bottom-line growth by improving our customer and product portfolio mix and offsetting input cost inflation through pricing actions and driving productivity savings across our supply chain |
| Customer contracts representing about 20% of our North American business are in the process of being finalized and we feel good in the aggregate about the likely pricing and terms |
| Feel good about where it's at |
| We will also continue to drive improvements in product and customer mix to benefit sales growth and profitability |
| Feel good about where we are at |
| So in summary, we delivered solid results in the first quarter and continue to have good operating momentum |
| So between organic growth and some things that we have identified, I feel great about where we are at and how we are going to execute and continue to grow the volume in the back half of the year and over the course of the next several quarters |
| While we remain cautious about the effect of inflation on the consumer, we feel good about the start of the year and the health of the category, which gives us the confidence to raise our full year sales and earnings targets |
| So we feel good about the operating momentum that we have had |
| We recognize that we are operating in a challenging macro-environment, but the strong first quarter performance has allowed us to raise our fiscal 2024 financial targets |
| So most of that's pricing and we feel really good about the operating momentum of the business |
| We delivered a strong quarter, and our operating momentum has us well-positioned to deliver another year of solid sales and earnings growth |
| Statement |
|---|
| To a lesser extent, inventory destocking by certain customers in retail channels also pressured volumes |
| In-line with expectations overall sales volumes declined 8% |
| We suspect that restaurant traffic trends will be volatile in the near term as high interest rates, high inflation and uncertainty continues to affect consumers |
| But I think there was some confusion and maybe some might have taken that to mean that, you know, as you move towards profit dollars that somehow you were expecting, you know, sort of ongoing or structural margin erosion going forward as some of the new capacity comes online and you know that you would have to sort of go after lower-margin business somehow to, you know, fill that capacity |
| Higher prices for open market potatoes due to poor yields from the 2022 crop and continued increases in the cost of labor, energy, and ingredients for batter coatings |
| I think, there has been some issues in the East Coast Canada crop |
| Volume in North America declined 5% |
| The decline was primarily due to our decisions to exit volume-related primarily to four of our lower-priced and lower-margin contracts as part of our revenue growth management initiatives and to a lesser extent continued inventory destocking by certain customers in international markets and in select US retail channels also impacted volume |
| To a lesser extent, continued inventory destocking also impacted volumes in the quarter, but as I mentioned earlier, we believe the effect of destocking is largely over |
| Bernadette Madarieta To the second question you asked, you know that those volume exits started impacting our International sales in our fiscal fourth quarter of 2023, and the business that we chose to walk away from, I would say about 90% of that relates to that in terms of volume decline with the remainder of being the destocking |
| As expected, volume, excluding acquisitions declined 27% |
| While our volume was down versus the prior year, it was in line with our expectations and was primarily driven by our decisions to exit lower-priced, lower-margin business |
| And as a result, could be a slight headwind as the year progresses |
| When we think that those financial targets are really prudent given the macro-environment that we are faced -- facing, as well as just uncertainty regarding consumer health |
| We believe that this is the cumulative effect of inflation and other macro pressures on the consumer over the past few years favoring QSR traffic and tampering full-service and casual dining traffic |
| It's important to note that volume elasticities or the amount of volume lost in response to inflation-based pricing actions have been generally low |
| This primarily reflects our decision to exit volumes related primarily to two lower-priced and lower-margin contracts that largely began to impact our sales in the second and third quarters of fiscal 2023 |
| For the year, we are targeting price mix to be up low-double-digits, which means that we expect price mix will slow sequentially from the 23% increase that we delivered in the first quarter as we begin to lap some of our price actions that we began implementing in the second quarter of last year |
| It's probably a little bit of, might have a little bit of softness last year, just coming out of COVID and everything like that |
| While the overall potato category continues to be solid, due to the timing of contract openers, we are targeting our full year volume excluding acquisitions to be down mid-single-digits compared with the prior year |
Please consider a small donation if you think this website provides you with relevant information