Welcome to the TreeHouse Foods First Quarter 2021 Conference Call. This call is being recorded. At this time, I will turn the call over to TreeHouse Foods for the reading of the safe harbor statement..

Good morning, and thanks for joining us today. Before we get started, I'd like to point out that we've posted the accompanying slides for our call today on our website at treehousefoods.com. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by the use of words such as guidance, may, should, could, expects, seeks to, anticipates, plans, believes, estimates, approximately, nearly, intends, predicts, projects, potential, promises or continue, or the negative of such terms and other comparable terminology.

These statements are only predictions.

The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors, including COVID-19, that may cause the company or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

TreeHouse's Form 10-K for the period ending December 31, 2020; TreeHouse's Form 10-Q for the periods ending March 31, 2021; and other filings with the SEC discuss some of the risk factors that could contribute to these differences.

You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented during this conference call.

The company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein, to reflect any change in expectations with regard thereto or any other change in events, conditions or circumstances on which any statement is based.

For purposes of our discussion, our results and outlook are provided on a continuing operations basis, which excludes the impact of the ready-to-eat cereal business. I'd now like to turn the call over to our CEO and President, Mr. Steve Oakland..

cost, quality and service. We are focused on building commercial capabilities to drive organic growth as well as operational capabilities to improve manufacturing cost, efficiency, agility and margins.

We also see opportunities to add depth in advantaged categories through M&A with a primary focus on our growth engine categories to accelerate our top line. We are confident that we have a number of good options to profitably grow our business. Turning to Slide 4.

In addition the changes we made to enhance performance, our results reflect the hard work and effort of our teams. I want to express my continued thanks to our TreeHouse employees for their ongoing dedication and focus over the last 13 months. Our first quarter revenue of $1.06 billion declined only 2.5% from last year's sales.

We estimate that last year's first quarter benefited by $66 million as consumers navigated the early days of the pandemic. In the first quarter, we made solid progress in expanding adjusted EBITDA margins, which improved 20 basis points versus last year. Adjusted EPS of $0.36 was also strong and just shy of last year's first quarter.

As we look to the rest of the year and beyond, let me take a few minutes to talk about our strategy and the environment in the near term. Turning to Slide 5.

As I shared with you on our last call and at CAGNY, with the benefit of our stronger foundation, we have taken our learnings from our strategy and the pandemic and are focusing on building depth in our growth engine categories.

These categories represent about 40% of our portfolio and are characterized by strong consumer trends, defined pockets of growth and existing depth where we have meaningful opportunities to go further. We also have a set of cash engine businesses, where our goal is to generate cash that we can reinvest and fuel our high-growth businesses.

The cash engine categories comprised another 40% of our portfolio. The remaining 20% consists of categories where we are reviewing our opportunities to either revitalize the businesses or to deploy that capital elsewhere. Later, I'll talk more about the progress we're making in these areas.

But before I get to that, let me address the macro environment as it is shaping how we see the balance of the year unfolds. Turning to Slide 6. We provided a look at both at-home and away-from-home consumption. There are two important takeaways here.

First, the year-over-year comparisons for retail consumption are uneven as consumers started navigating the pandemic last spring. When you compare March of 2021 to two years ago, or 2019, total edibles grew 14%, and private label grew 13% in measured channels.

If you then consider private label strength in unmeasured channels, we think this demonstrates that takeaway remains healthy. Second, you can see on the right that the away-from-home sector is recovering as restrictions across geographies begin to ease, which has positive implications for our foodservice business.

While the pandemic is not yet over, the availability and acceptance of vaccines in the U.S. has been supportive of reopening efforts across much of the country.

Beyond the pandemic, Slide seven captures several of the headwinds across the food and beverage landscape, specifically, upward pressure on commodities and, in particular, soybean oil has continued. On top of that, freight costs are escalating across the entire landscape due to increased demand and the limited availability of drivers.

To a lesser degree, but worth noting, weather headwinds in the first quarter presented challenges. In our case, several plants were affected, with some, like our San Antonio, Texas plant where we make red sauces and salsa, impacted more extensively than others.

Despite the headwinds that were affecting the entire food and beverage industry, we remain confident in our outlook. And as I mentioned, we are reaffirming our full year guidance for 2021 today, as seen on Slide 8. Several factors give me confidence that we can continue to deliver the year.

First, we are a much healthier business today with stronger customer relationships and a pipeline of opportunities. We've also restored service levels back to the pre-pandemic levels in the 98% range.

Second, while the top line will face tough comparisons in the near term, we are taking actions to address those issues within our control, specifically, additional pricing to offset the incremental commodity inflation that I spoke to earlier. And third, our retail customers continue to express support for private label.

In recent weeks and months, we've heard several customers publicly address their attentions to further expand their private label programs. We remain confident that the long-term opportunities for private label remain intact and that we're in a strong position to benefit, particularly as the environment normalizes.

With that, let me turn it over to Bill to take you through the quarter and our outlook for the balance of the year.

Bill?.

$40 million which relates to ingredients and another $20 million in freight. We are working with our customers and we are proceeding with additional pricing actions to offset the more recent increases in soybean oil and freight. We will also look to our Lean initiatives and drive efficiencies from increased utilization.

While pricing discussions are never easy, our relationships today with our customers are stronger than we last addressed inflation in 2018. Not only are the teams better equipped and mobilized to engage with our customers, but also today, we're having a much healthier dialogue as customers focus on surety of supply and service levels.

On Slide 16, we shared our detailed full year guidance, reaffirming our ranges of $4.4 billion to $4.6 billion of revenue, $2.80 to $3.20 for adjusted EPS and free cash flow of approximately $300 million.

It's important to note that the free cash flow guidance includes investments that we are making in the business, which I'll cover in more detail in a moment. Our second quarter guidance is laid out on Slide 17, along with several considerations.

First, while our expectation for how the remainder of the year will play out has changed due to the rising commodity and freight costs, we have begun implementing our plans to address the incremental inflation.

As we consider the higher cost environment and the timing for pricing recovery, we have revised our expectations and now anticipate about 20% of our earnings to come in the first half with the remaining 80% in the second half. This compares to our original expectation for 30:70 first half, second half split.

While this does put a bit more pressure in our second half earnings delivery, I will point out that our 20:80 cadence is not dissimilar to 2018 when we took similar actions to offset inflationary headwinds.

As well, in 2021, we will benefit from the contribution of Riviana and related synergies in the back half, consistent with our original expectations. Second, we do have higher cost inventory currently on the balance sheet that was produced in the first quarter and will be sold in Q2. As that inventory is sold, it will pressure gross margins.

This higher cost inventory is a result of not only the inflation I mentioned but also the weather disruptions from the first quarter that caused several temporary plant closures. Our guidance ranges for the second quarter on the right.

We're anticipating $1.02 billion to $1.07 billion of revenue and $0.20 to $0.30 in adjusted earnings per share as inflationary pressure will not yet be offset by our pricing actions. I want to close with a few words that build on Steve's comments earlier about investments in our future.

We continue to feel very good about our business and our long-term opportunities ahead. We've proven the resilience of our business model, our balance sheet is solid and we have financial flexibility.

We also have a unique opportunity to further enable our strategy to build depth in our growth businesses through investments in our commercial and operational capabilities for the future.

In the first quarter, we invested $16 million, and we anticipate these investments to total $75 million in 2021 as we enhance our commercial capabilities and advance our supply chain so that customers view us as their partner of choice. And we are better positioned to accelerate our top line, grow profits and drive shareholder value.

Let me close by expressing my sincere thanks to the TreeHouse organization, and I'll turn it back over to Steve..

Thanks, Bill. Bill gave me a nice segue to close today and share our thinking around how we build on our accomplishments to date and continue to invest in our future.

As I mentioned earlier, the learnings we have accumulated from our strategy and the pandemic are shaping how we'll position ourselves for the future, including how we'll invest in the 40% of our portfolio that represents our growth engine businesses and leverage the cash that we generate from our cash engine categories.

Our growth engine businesses include categories like broth, pretzels, crackers, single-serve and powdered beverages and pasta. These are categories where we have deep market penetration, and we're working to enhance our customer relationships as well as build a pipeline of opportunities to fuel growth.

Our accomplishments around operational and commercial excellence, portfolio optimization and people and talent have laid the foundation for this greater focus on growth and for building depth in categories where we are advantaged.

2021 presents a new chapter for our strategic evolution, supported by the strength of our balance sheet and our financial flexibility, enabling us to deploy capital in a number of value-creating ways. M&A represents one avenue, and Riviana is a great example of how we build depth in an important category.

We're pleased so far with the impact of Riviana, and our transition team is doing a great job managing the integration. We'll continue to seek these kinds of accretive and value-creating opportunities that leverage our core strengths and build on our capabilities.

Bill quantified the investments that we're already making behind our commercial organization, business services and supply chain. These investments will include several work streams. On the commercial side, we are investing in capabilities to optimize assortment, market digitally and optimize our pricing architecture.

We will also look to further our e-commerce strategy and capabilities. In addition, on the supply chain side, automation, value engineering and indirect sourcing will be key areas of focus. And finally, even as we're making these investments for long-term shareholder value creation, we will also return capital to shareholders.

Our plan in 2021 is to continue to buy back shares to offset dilution from stock issuance. I'll close by reiterating that I'm pleased with our start to the year and our ability to navigate the challenges in front of us. More importantly, I'm excited about the investments we're making for our future.

As we move forward, we will continue to strive toward having our stock price appropriately reflect the strength of our earnings and the confidence in our outlook. We remain focused on building a company that delivers long-term sustainable growth and drives shareholder value. I look forward to continuing to update you along our strategic journey.

With that, let's open the call up to your questions..

[Operator Instructions] Your first question comes from the line of Jon Andersen with William Blair..

Good morning everybody..

Good morning, Jon..

Hi..

Just have kind of a big – one big picture question on the market share performance or trends that you're seeing in private label relative to both national brands and I guess TreeHouse relative to other private label competitors.

It seems to me, as we kind of parse the measured channel data, which we know is limited and does not provide a complete view of your business, but it does seem to me that the national brands have had a good 12-month-plus run here relative to private label and kind of gotten private label office trend the line improvement, which we've seen over many years.

So how do you think about that, where we are in terms of private label evolution and the market share opportunity going forward? Have we hit a ceiling? Or are we going to resume the kind of share improvement as the macro environment perhaps normalizes and as you take some specific actions within your business?.

Hi, Jon. This is Steve. I think you're absolutely correct, right. When we've had a recession like no other recession, right, we've had actual consumer income go up, right? So discretionary income is up and there's less places for them to spend it through this whole thing. And so we've seen branded food and measured channels do well.

That's why we've looked at a couple of other. We think that is clearly part of the story. The other part of the story, the other – what I would say, two parts of the story are how well private label has done in other channels, right, in unmeasured channels. And that's why we've started showing that data.

So the fact that the consumer continues to shop those value channels where private label is their key offering gives us great confidence. The fact that it does well in club, it does well in other places, gives us great confidence. But also the fact that we are performing and Bill showed those in his remarks, we're performing well.

Our performance versus total private label, specifically in our growth categories, would suggest we're gaining share. And so I think the work we're doing as a company is working. The capabilities we're building is working, and the categories we're focused on are working. And so that gives us great confidence. We do think things will normalize.

How long that's going to take and when the stimulus will slow down, all those things are beyond our control. But what we can control is our performance, and we feel like the efforts we're making and the investments we're making are working. And as soon as the market normalizes, that should be a little tailwind for us..

Thanks. That's helpful. One quick follow-up. I'll let someone else ask about pricing, I'm sure that will come up multiple times. But you've talked a lot now about how you're kind of stratifying or defining the portfolio growth engines, cash engines revitalized.

A few years ago, there was a lot of discussion around the optimization of your customer mix as well. I think wanting to do business with more strategic customers, maybe that meant larger customers that were more – where there were higher volumes and better profit potential.

Where are you with respect to customer mix? And are you happy with it? Did you cut too much? Do you need to kind of expand it? Or are you happy with kind of the mix of the customer relationships that you have today? Thank you..

Yes, Jon, I think the customer mix is very solid. I would tell you, what I understand about our darkest times from a service standpoint is we did have to prioritize. And maybe we did prioritize just the largest customers because we were forced to in order to get service back in line. Our service rates are great.

And you hear us talk now about digital marketing, about pricing architecture, about e-commerce, right? It's not about service on this call. So I think we – now that we have those fundamentals fixed, we can focus on those customers that have the best opportunity for private label.

So I think we're in a very different place, and we probably had to do that at the time. But the foundation is somewhat stronger now. I think we're in a better place to serve those customers that offer the best opportunity..

Okay. Thank you. Goodluck..

Thank you..

Your next question comes from the line of Ken Goldman with JPMorgan..

Good morning, this is Anoori on for Ken..

Good morning..

I guess I'll ask the obligatory pricing question. Could you update us on how discussions are going with your customers on pricing? And specifically, how much have you locked in versus how much is still up in the air? And kind of if you could give us a general sense of the magnitude of the increases? Thank you..

Sure. I would suggest pricing is going really well. I think the macro environment is so well understood by everybody in the chain, whether it be our customers, our vendors, our partners. So everybody in the chain understands what is going on from the magnitude of a cost change standpoint. Maybe I'll focus specifically on soybean oil.

Soybean oil and soybean oil basis are probably the biggest change from when we talked three months ago, okay? But more importantly, I think it's a great example for us to share on the progress our commercial organization has made at building what I would call true partnerships.

The soybean oil pricing that our teams put together and agreed to with our customers, our commitment is not just on the pricing for soybean and for things like salad dressing or mayonnaise. Those things use a lot of soybean oil. We not only have the pricing locked in, but we have a volume forecast locked in with the customer.

And then we have, in turn, covered that forecast with our vendors, right? We think that soybean oil will be an availability of supply when we get into the back end of this year. And so we've worked with customers on specific pricing, specific volumes and then cover that volume. So that's why we feel so confident that we can reaffirm for the back half.

We have those things covered, and that would be for virtually all of our key soybean oil customers. There's so much pricing across all 29 categories. For me to give you one percentage, I think, wouldn't be accurate. Some of it is ingredient based. Some of it is just freight and labor based. So those prices swing wildly based on the specific ingredients.

But I would suggest there, some of those increases are substantial. We're working with the customer to have them be as sure as possible as soon as those commodities come back to their normal averages; we'll get that pricing back down. But I would suggest that it's gone very well. We would not have reaffirmed our year had we not felt that way..

Great. Thank you. That's very helpful color on the soybean oil. And just as a follow-up.

It sounds like on soybean oil, you're pretty covered, but how are you thinking about the risk of inflation going even higher in the back half? Is the pricing that you're taking now enough to cover that?.

Obviously, we always have the opportunity to go back to the customer, I think. We have a pretty good line of sight. We're full almost four months into the year now, so we have a pretty good line of sight to what we need. We have the capabilities and the sophistication to cover that appropriately.

So I think our purchasing group understands risk management, understands the tools available to them, and they work literally, literally daily with our commercial teams to be sure that, that coverage aligns with what we have in the customer. So we feel good about it for the back half of the year. I do think there's more inflation risk.

I think there's actually availability risk. The biodiesel – the biofuels blenders' credits that are on soybean oil will make soybean oil very, very tight for the back half of the year. I think if you're not a large producer, it will be difficult to buy soybean oil..

Okay. Great. Thank you..

Your next question comes from the line of Chris Growe with Stifel..

Hi, good morning..

Good morning, Chris..

Good morning, Chris..

Hi. I had just two questions for you. Just to think about the leverage you have to offset inflation, you have less of those levers than maybe some of the big companies have.

But I want to also understand, do you have some productivity savings coming through this year? And to a smaller degree, but can you control some promotional spending? The little things that you can do on top of the pricing to help offset the inflation, can you give us some color on that?.

Sure, I'll start. So Chris, from a lever perspective, we were very proud of our Lean programs that we have in place. And as we faced the year, we anticipated a certain amount of labor inflation and probably some freight as well. And we have plans in place to offset that.

I think the commodity-based inflation that Steve talked about is incremental, and the freight market got a bit more severe as well. So that's where the incremental pricing kind of comes from. But we will continue to always manage the Lean program very efficiently.

Lot of the investments we made in the past around TreeHouse 2020 and our Structure to Win program continue to drive benefits for us. And then we'll have a little bit of savings in year for the growth initiatives that we're implementing strategically to go forward as well..

Okay. Thank you. Understood. Another question I had on – was on – you talked about the service levels being restored and back to kind of where they should be at a 98% level.

Is that helping you rebuild shelf space? Are you finding – and we talked about that, I think, a couple of quarters ago, we're starting to see that improvement, but it seems like it's plateaued a bit. We're not seeing – and I'm talking about private label overall, not rebuilding to levels of on-shelf presence like they were – like it was pre-pandemic.

How is that going for your business? Have you seen that service level? Is that one of the key elements of getting shelf space back like you had pre-pandemic?.

Chris, I can't speak for other vendors, but I think we have all the assortment back on shelf that we plan to bring back. I mean there might be – any time you go through this, there's a chance maybe to prune some underperforming items, but there's nothing material there. So we're back on.

There's one place – we spoke to the weather impact, and the weather really hit Texas, as we all know, and our San Antonio, Texas plant was hit pretty hard there. And so we might have a category like red sauces that still need some help, but that's not anything to do with the retailer.

That's strictly that we had some damage to a factory from weather, right?.

Okay. Appreciate that. Thank you..

Your next question comes from the line of Rob Dickerson with Jefferies..

Hi. Great. Thank you so much. So Steve, just a question about the back half, right? I mean, obviously, there's this cost/price timing effect in Q2, but the guidance has been reiterated for the full year. Pricing, you're saying is kind of increasingly locked in, in the back half, right, if we assume everything kind of stays where it is.

And then I think I also heard you say that there is some incremental volume, right, that you have visibility in – or on in the back half. So maybe if you could just kind of expand on that volume comment because I do think it's important, we're going to all be focused on pricing.

But if you do have decent visibility on whether it's increased distribution or you're just saying there's like a natural cadence of private label coming back into the market or what have you, that would seem like that would limit some potential elasticity risk as well? That's my first question..

Sure, Rob. Well, I think there's two things that have changed, right? We've talked a lot about the inflation and the pricing has changed. We also have three more months' visibility into our integration of Riviana. So we look back at – and I think Bill mentioned in 2018, we had similar situation. The earnings cadence was similar.

But what we didn't have in 2018 is an accretive acquisition, and we didn't have the synergies from it, from an acquisition. So we have already accomplished several of the key milestones for the Riviana integration. And so we have even more confidence in those synergies and when they'll hit our P&L.

And that tends – pasta tends to be a cold weather business. And so we know that will hit us in the back half. And the promotional commitments on brands are starting to be made for those periods. So we have a pretty good sense of what that's going to deliver.

So that gives us confidence – even more confidence, I would say, than what we had when we originally guided. But the pricing is – there is a lag, and it will hit us in the quarter. If you remember, we didn't guide the quarters, we guided the first half. This is going to put a little lag in that.

If you think about the difference in what we guided for the first half and you think the weather that hit Texas and the South is close to a dime, the rest of that is the inflation that Bill spoke to. And we have pricing to recoup that in the back half.

So when you add that to the work we're doing on Riviana, I think it gives us a pretty good line of sight to what's going to happen for the rest of the year..

All right. Super. That's clear. And then I guess just a question quickly on M&A and the buckets that you threw out there today. It sounds like you're still proactively, obviously, looking at acquisitions kind of more on the growth side. You called out the review and revitalize bucket was about 20% of revenues.

Maybe if you could, again, just expand on kind of how you feel about that bucket, right? Is this a bucket where you say, we've gone through all of the different categories we play in, in SKUs? Obviously, right, you're calling out about 20% of the portfolio that maybe doesn't have as much growth potential or it would cost more to try to drive that growth.

So are you also just implicitly kind of suggesting that not only we'll will be more proactive in acquisitions potentially, but also, obviously that we will, on an ongoing basis, look for potential divestments? And that's all. Thanks..

Sure, Rob. Well, I would say, I don't think it's any surprise to anyone that post pandemic, there's a lot of businesses that were being prepped for sale that were held back.

And so I think we'll see a lot of M&A activity and opportunity as we come out of pandemic, right? I think that's pretty well documented across a number of industries, and ours is no different. So we're excited that our balance sheet is in a place when the opportunities appear to be coming to market. So that's good news.

With regards to the other – there really are a couple of businesses in there that need to be run differently. If you think about it, the revitalize strategy is different than running our core businesses. And so we put different groups on that, put different teams on that. It gives us some focus.

There's no question a little bit that, that capital will in fact be deployed. But I don't think we're in a position to talk specifically about what percent. But there are a couple of them that I think are good businesses that just – that need some work and need special attention, and that's what we've tried to segregate to do.

So as we get closer to that, we'll have more detail going forward..

Makes sense. Thanks Steve. Appreciated..

Your next question comes from the line of Marco Copolla with JPMorgan..

Hi, good morning, and thank you for taking my question.

I just wanted to ask about if there was any update on the potential sale or timing of the ready-to-eat cereal business?.

Hi, Marco. This is Bill Kelley. We continue to market the RTE business for sale. We don't have any updates this morning. The activity has picked up as we've – as the world kind of opened back up here this year. So we still have every intention to sell that business, so we're moving forward with it..

Yes. We don't want to infer anything, but we're not any less optimistic about that. We're no less optimistic. We think we'll have that done..

Okay. Great. Thank you guys and Ill think of another question for that. I appreciate it..

Your next question comes from the line of Bill Chappell with Truist Securities..

Hi. Thanks, good morning..

Good morning, Bill..

Back to pricing, if we remember back 10 years ago when we had kind of a similar spike in a short amount of time, the problem TreeHouse ran into wasn't the ability to take pricing but just the timing.

I believe it's still you have to kind of notify and negotiate with each of the retailers, then wait 90 days to get the price to go through and just – whereas branded players can move a lot faster.

Didn't know if that's still the case or if you see any timing issues creating an incremental lag to your business or if things have kind of been cleared up where it's much more straightforward than it was years ago?.

Well, maybe I'll start, and I can hand it to Bill if he has any thoughts. I think it's highly reflected in the guidance we've given you for the second quarter. So we – yes, there will be a lag. It's shorter than what – I think, Bill, what you articulated or what it was in the past.

I can't speak to 10 years ago, but I can speak to the fact that the time lines and the lag that we have and our confidence in it is reflected in the fact that we can reaffirm guidance, but that there will be a lag in the second quarter. So we're set there..

Got it. Okay. And then second question, certainly, a lot of themes over the past year about consumers trading up to trusted brands during the pandemic or during the lockdown.

Didn't know if you're seeing – or starting to see kind of a reversal of that or if we have seen a reversal of that or to norms as we're reopening in certain states or just throughout the country?.

I think the data is yet to come on that. I think – that's why we tried to show March with the progress we've made in unmeasured, and now it's very close in measured. We feel good about it. We feel even better about the progress we're making in our categories.

Those categories we prioritized, our trends are better than the categories' trends in measured channels, so that makes us feel good. And so we're gaining share in our mind. It's a difficult metric to actually detail. So those things are good. The good news though is our foodservice business is recovering.

So we are seeing the pipeline fill start there, which would suggest that the foodservice operators are starting to feel good about the economy reopening. I think everything around us would suggest that. We've all been somewhere where we've seen the consumer wants to get back out, I believe..

Got it. No, certainly.

And then the last one just for me, on the guidance, should – and reiterating it, is it a belief that within a given year, you have enough pricing power where you can recoup the near-term issues? Or did we take out some of the upside potential with the recent commodity spikes?.

I think the range that we guided to encompasses what we think could be things that could go in a better direction than the new play would suggest.

I think Steve's point about our guidance this year, having Riviana in the back half a seasonal cost of business, having synergies from Riviana come through, he just mentioned the food-away-from-home business coming back online, and obviously, we're right on target with our pricing in terms of our communications and really focused on providing the surety of supply with our customers and our service is good.

So there's a lot of reasons for us to believe the midpoint in our guidance and then we try to work a range around that to accomplish your point of what could be better and what could be a struggle..

Okay. I’ll leave it to that. Thank you so much..

Thank you..

Your next question comes from the line of Robert Moskow with Credit Suisse..

Hi, Steve. Look, there's been a couple of pretty high-profile departures with Shay and Dean leaving. And I just want to know, what is your strategy for populating your management team or repopulating? It looks like one of them will be backfilled internally.

But when you came in a few years ago, Steve, I thought the idea was that you'd bring in a lot of really talented people from CPG to take TreeHouse to the next level.

Is that still kind of – and – or is it now like you have the bench you need, so you feel like you can operate leaner? Is it one of those two things?.

Well, I would say we – two things, thanks, Rob. I think we've done that, right? I think if you look at Sean Lewis, who we announced is running our commercial organization; and Kevin Jackson, if you look at the people we've promoted within the organization and the people we brought in from the outside.

I mean Shay got a great opportunity, right? I'm going to build a management team that is capable of doing more than their current job, right? And if you do that, you do it well, folks are going to get opportunities that I – that maybe occasionally I can't give them internally, right? And so the good news is the talent below Shay is very strong, and Craig McCutcheon, who was running those businesses for Shay, is now reporting to me, doing the same thing he was doing.

So I feel good about that. So I would take Shay's departure as a fact that we continue to build talent here. Others have recognized that, and Shay's is a great example of that. So I think we will continue to add talent where necessary. I think CPG is a great source – there are other sources, but CPG will be a great source for talent for us.

And the performance of the business will show that over time. But if you build great talent, occasionally, they will have opportunities that you can't give them, and that's just the case with Shay. So I wish Shay the best. Shay is president of a nice private business.

The TreeHouse's President and CEO is still here and intends to be here for a while, so that opportunity wasn't available for Shay. So I can't document all. I left a company where I didn't have that opportunity, and Shay did the same thing. So....

Okay. And a follow-up to that, TreeHouse has been through many rounds of restructuring and reorganization.

Are you content now with how you're structured into these two divisions? Do these departures mean that you have to rethink things at all? Or are you pretty much done?.

Oh, no. I think we're in good shape, right? I mean I think we'll add businesses to these divisions. We have a really clear line of sight. We talk about cash engines and growth engines. Most of the growth engines are in the Snacking & Beverages group, which is, just by the definition and what consumers are doing in those categories, is pretty natural.

So I think those divisions are lined up clearly with the company's strategy, with the business unit strategy. So I want to go back to a comment I made earlier, too. We're talking about investments in e-commerce capabilities and digital marketing and pricing architecture.

We're not – those are different conversations for TreeHouse, right? So that would suggest that we feel good about the base and that we're starting to build growth capabilities, not doing the denominator constantly, right?.

Okay. Thank you..

Alright. Thanks, Rob..

And there are no further questions at this time. I will now turn the call back over to the speakers for any closing remarks..

Well, I'd like to thank you all for being with us today, and hope you all have a great day, and I'm sure we will have a chance to talk to you individually soon. Have a great day. Take care..

This concludes today's conference call. You may now disconnect..