Good day. And welcome to the Conagra Brands’ Second Quarter Fiscal Year 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s event is being recorded. I would now like to turn the conference over to Brian Kearney from Investor Relations. Please go ahead, sir.

Good morning, everyone. Thanks for joining us. I will remind you that we will be making some forward-looking statements today. While we are making those statements in good faith, we do not have any guarantee about the results we will achieve. Descriptions of the risk factors are included in the documents we filed with the SEC. Also, we will be discussing some non-GAAP financial measures. References to adjusted items, including organic net sales refer to measures that exclude items management believes impact the comparability for the period referenced. Please see the earnings release for additional information on our comparability items. The GAAP to non-GAAP reconciliations can be found in either the earnings press release or the earnings slides, both of which can be found in the Investor Relations section of our website, conagrabrands.com. With that, I will turn it over to Sean.

Thanks, Brian. Good morning, everyone, and thank you for joining our second quarter fiscal 2022 earnings call. Today, Dave and I will discuss our results for the quarter, our updated outlook for the remainder of the year and why we believe that Conagra continues to be well-positioned for the future. I like to start by giving you some context for the quarter. First, as you all know, the external environment has continued to be highly dynamic, but our team remained extremely agile in the quarter and executed the Conagra Way playbook. We navigated the ongoing complexity and delivered strong net sales growth anchored in elevated consumer demand that continued to exceed our ability to supply inflation-driven pricing actions and lower-than-expected elasticities. While our net sales exceeded our expectations, margin pressure in the second quarter was also higher than expected driven by three key factors. First, while we anticipated elevated inflation during the second quarter, it was higher than our forecast. Second, we experienced some additional transitory supply chain costs related to the current environment. And third, in the face of elevated consumer demand that continue to outpace our ability to supply, we elected to make investments to service orders and maximize product availability for our consumers. We expect margins to improve in the second half of the fiscal year as a result of the levers we pulled and continue to pull to manage the impact of inflation. We will always look to our cost savings programs to offset input cost inflation. However, given the magnitude of the cost increases, our actions also include additional inflation-driven pricing. We communicated pricing to customers again in December. For the year, we are once again reaffirming our adjusted EPS outlook, but our path to achieve that guidance has evolved. We are increasing our organic…

Thank you, Sean, and good morning, everybody. I will start by going over some highlights from the quarter shown on slide 28. As Sean mentioned earlier, there were a number of factors that influenced our results this quarter. First, we were encouraged to see that consumer demand for our products remain strong; and second, elasticities were better than anticipated. However, we also continued to see inflation rise across a number of key inputs and the dynamic macro environment created challenging conditions for the supply chain. The team remained agile in response to these dynamics, including the decision to make additional investments during the quarter to meet the elevated demand and maximize the food supply to our consumers. Overall, our actions favorably impacted our topline during the quarter, with organic net sales up 2.6% compared to the year ago period. An important part of the topline success we have realized throughout the pandemic is our ongoing commitment to the Conagra Way. We have remained focused on building and maintaining strong brands across the portfolio. We continue these efforts in the second quarter with continued product innovation and by further increasing our spending on advertising and promotion, primarily focusing on e-commerce investments. We show a breakdown of our net sales on slide 29. The 4.2% decline in volume was primarily due to the lapping of the prior year’s surge in demand during an earlier stage in the COVID-19 pandemic, as volume increased approximately 1% on a two-year CAGR. The second quarter volume decline was more than offset by the very favorable impact of brand mix and inflation driven pricing actions we realized this quarter, driving an overall organic net sales growth of 2.6%. On last quarter’s call, we noted that the domestic retail pricing actions were just starting to be reflected on…

Thank you. [Operator Instructions] Today’s first question comes from Andrew Lazar with Barclays. Please go ahead.

Good morning and happy New Year everybody.

Good morning.

Hi, Andrew.

Hey. Two questions for me, if I could. First, maybe Sean, you mentioned several times that elasticities remain sort of below expectations than maybe what you have seen historically, and I realize there are a lot of dynamics at play that that lead to that. I am trying to get a sense of what you are building into sort of back half guidance along these lines in terms of elasticity, just given more pricing is obviously set to keep rolling in as you have talked about. And just some of your expectation taking into account the potential fading of some government stimulus and how does that play a role again and how you think about elasticity? And then I have just got a follow up for Dave.

Right. Sure, Andrew. Let me hit that elasticities and stimulus. I’d say, our year-to-go outlook takes into consideration everything that we have seen in the marketplace to-date as well as our planned pricing and merchandising actions in the year-to-go period. I will tell you that I see with respect to elasticities a major difference in the marketplace today in terms of how consumers are assessing value versus what I have historically seen in the past. Previously, a consumer’s comparison of choices was between close proximity items inside the grocery store. Today, due to the demographic dynamics I talked about around young consumers home nesting, as well as the huge move to working from home, the biggest comparison taking place from a value standpoint is between away-from-home choices and at-home choices. And as I said in my prepared remarks, the consumer is showing us that modernized national brands like ours are offering superior relative value and that’s having a positive impact on elasticities that we expect to continue, but we have factored in our year-to-go actions. In terms of reduced stimulus payments particularly SNAP, the short answer is we don’t believe that the eventual end to the emergency allotments in the SNAP program is going to create a material headwind to our business, and fundamentally it comes back to that superior relative value of our portfolio versus alternatives. But let me unpack this one a bit because I know it’s been kind of a hot topic. Since the start of the pandemic, consumers were actually able to reduce their overall food spending significantly and that reduction was driven by the mix shift from higher priced food away-from-home to lower priced food at-home, and at the same time, that consumers have been able to save money on food because of that shift…

Great. Thank you for that. That was a very helpful perspective. And then just a quick one for Dave, and my sense is you will get a lot questions along these lines, Dave. But, obviously, given your expectations that you just talked about in terms of margins for 3Q, I think, there’s some 150 basis points, 200 basis points sort of below maybe where consensus was looking for, and I get it it’s a timing lag around pricing coming through and impacting 4Q more significantly and then some of these incremental costs starting to sort of fade a little as the year goes on. So, I guess the question is, it puts obviously a lot more pressure on 4Q to kind of deliver the year. I guess are you -- would it be your sense that you are building in some level of flexibility to that based on what it requires in 4Q, and I guess what’s your level of visibility to that at this stage given it does seem like it’s more 4Q loaded. So, it’s a broader question, but you sort of get where I am coming from. Thanks so much.

Yeah. No. And you summarized it well, Andrew. Let me try to walk through it, so I can kind of hit the kind of the big puts and takes. So as I mentioned in my remarks, we expect Q3 operating margins to be roughly in line with Q2 margins and then Q4 margins up. If you look at the puts and takes from Q2 to Q3, we have increased our total inflation estimate for the year from 11% to 14%, so now we expect second half inflation to approximate 11.5%, and that’s off of a prior year inflation that was about 6.5%. We also expect that some of the additional costs we incurred in the second quarter to support shipments and getting product to consumers will continue into the third quarter given the continued challenges in supply chain. We are forecasting that this complexity will gradually improve as we approach Q4 and the March timeframe. The additional pricing actions, which are critical, we announced in December and they were accepted and we have a small impact in Q3 given the timing, but we will have a much bigger impact on Q4 from the pricing. So the pricing has been announced, it’s been accepted and we have very good visibility to that for forecasting purposes. So Q4 will benefit meaningfully from these pricing actions. We expect price/mix to approximate 10% in the fourth quarter as we will start to catch up with the inflation and the reduced pricing lag that impacted us through the first half and will impact Q3. Q4, as you mentioned, will also benefit from the decline in incremental cost to support shipments that I just referenced, as well as a decline in some of the transitory costs that hit us in Q2 as well. So it’s important to note that, although we expect meaningful improvement in Q4, we are still forecasting higher inflation, as I mentioned. So if you look at our cost per unit of volume, we expect that to continue to increase and H2 before being offset by the pricing and Q4.

Yeah. Thanks so much.

And our next question today comes from Ken Goldman at JPMorgan. Please go ahead.

Hi. Thanks so much. Dave, I just wanted to clarify, when you said to expect 3Q’s margin to be roughly in line with 2Q’s margin, is this comment solely about the operating margin or should that roughly apply to the gross margin as well?

I was commenting on the operating margin, but that’s driven by the gross margin.

Okay. Perfect. Thank you. And then I wanted to clarify, you mentioned inventory write-offs, I think, I heard and higher overtime expenses as maybe some of the examples of 2Q’s non-recurring challenges. I guess, number one, can you elaborate a bit, if I did hear that right, on what the write-offs were. And can you also talk a little bit about labor availability over the last couple of weeks, maybe as Omicron has started to affect more people and how much of that risk is baked into your guidance as well?

All right, Ken, it’s Sean. Let me start with the back piece, because I know that’s also a hot topic and you wrote about it the other day, which is absenteeism. And what I’d say there is, I told my team back in July, the word of the year this year is perseverance and that has certainly proven to be true. We faced a number of factors that have converged to create a persistently challenging operating environment, things like sustained elevated demand alongside a protracted pandemic and a strained supply chain and acute inflation. But against that backdrop, I’d say our team has done a remarkable job persevering and doing everything possible to keep our food in consumer’s hands, particularly in Q2, which is our largest volume quarter. But to your point, clearly, it’s not perfect yet, and I think, it’s entirely reasonable for all of us to project that the next month or so could remain strained within the supply chain as Omicron runs its course. But I’d say we will persevere through that too, but as you saw in Q2 and you referenced some of the things, not at normal efficiency which is a factor as to why margins in Q3 are expected to be similar to what we put up in Q2. But we will persevere, because keep in mind, that Q3 is a smaller quarter volumetrically than Q2, call it, 5% to 10% less volume on average. We also have a geographically diversified manufacturing footprint across our plants and those of our co-packers. We don’t have like one big mega plant. And as we saw early in COVID, there are steps we can take to maximize line efficiencies and throughput, things like SKU simplification, et cetera. And as I mentioned earlier, we have already tightened up our merchandising activity in year-to-go period. So collectively, these things should help ease the impact of Omicron driven absenteeism. And importantly, as you highlighted in your note from Tuesday, there’s good reason to believe that, that challenge will be short lived. So I’d say to sum up, the team is staying agile and as we move beyond Q3 and into Q4, clearly we see opportunity. We will begin to wrap the onset of input cost inflation, our most recent pricing actions will be rolling into market and Omicron-driven absenteeism should be diminished, and all of that positions us to deliver meaningful improvement in multiple metrics as we go into the final quarter. Dave?

Yeah. So let me get the first part of your question, Ken. So, yeah, we were impacted $0.02 to $0.03 in the quarter from incremental transitory costs and that included higher overtime across all of our supply chain operations, given the labor challenges and higher inventory write-offs. Regarding the inventory, in this environment, it’s no secret the end-to-end supply chain has been strained. We are moving fast to meet demand as are our suppliers. So our food safety and quality standards are the highest priority for this company and include product from suppliers that we use as well. We have thorough processes for ensuring that the raw materials and finished goods meet our standards before they are utilized, and if not, we write them off. And that’s what happened in Q2, we do believe that this impact is transitory in nature as we move into the third quarter. So we always have some level of inventory write-offs, but this was higher than we expected for those reasons.

And the messaging just to wrap it up is not a demand driven write-off, it’s a supply chain driven issue?

Yeah. Absolutely…

I mean, demand is for that…

Yeah. You are correct.

Is that…

Yeah. Supply chain is a complex thing…

Yeah.

… and there are multiple facets and we each have run into challenges, it tends to have a bit of a compound effect and this is the kind of friction that you see during those kind of transitory windows.

Very clear. Thanks so much.

And our next question today comes from Bryan Spillane at BoA. Please go ahead.

Hey. Thanks, Operator. Good morning, everyone. Just two quick ones for me. Maybe the first, Dave, can you give us a little bit of help with some color on some of the below the operating profit line items for the balance of the year or for the full year? I think interest expense consensus is around $3.80. Equity income, I guess, with Ardent Mills, it’s a -- there’s some tailwinds there. So maybe that will be up. Just -- and also the tax rate, if you could just kind of help us a little bit in terms of how we should be thinking about the below the operating profit line for the full year?

Sure. I think on the interest expense, I think, that number is in line, the number that you quoted the $3.80. Ardent, we had benefit in the quarter, which you saw and we expect to continue to have benefits. So we see upside in Ardent and that contributes to our EPS, call it, $2.50. So we have upside in Ardent year-to-go. And the tax rate should be in line with the 23% guide that we have. We are a little favorable this quarter slightly, but that’s the right rate to use.

Okay. Thanks for that. And then, Sean, just as we are -- as you are in this inflationary period, and I think, you mentioned maybe in response to one of the questions, just adjusting merchandising. Pre-COVID there was more of an emphasis to spend, I guess, above the sales line, because that was kind of where the bang for the buck was. And now it seems like if there’s not a real incentive to do that here, are you shifting more of that spend into A&P and is that sort of going to be an ongoing thing, especially as we are kind of in this inflationary environment?

Yeah. I would not think of it that way, Bryan. The money that is spent in brand building above the line, there’s all kinds of investments in there. Traditional merchandising is one of them. My comments in the prepared remarks today were basically about not being as aggressive as we typically would on normal in-store merchandising. And so that piece of it, we have been very consistent on since the part -- start of the pandemic, because it just doesn’t make sense to stimulate excess demand when you are already having trouble servicing the demand you have got. The other investments that we make above the line have been robust for several years now and that won’t change, because that’s where we get to some of the best ROI we get in brand building. It’s everything from investing in COGS for all into product innovation and packaging innovation we do, to investing with our customers to get the right merchandise, to get the right physical placement on the shelf in terms of getting our new items in the store, getting the right kind of support in store, investing with our customers on things like sampling and in-store theater. So those investments are really brand-building investments, and those have continued strong. The piece of the above the line that I was referring to was exclusively that merchandising piece. And then, with respect to the A&P being up in the quarter, that as I have said before, can change any given quarter depending upon what our innovation agenda is. We have a new item hitting in the marketplace that we want a spotlight and A&P is the right way to go, particularly in e-commerce, which we continue to drive, we will put that money there. So that will move around quarter-to-quarter, but no philosophical changes in the way we spend.

Okay. Thanks for that Sean. Happy New Year, guys.

Yeah.

Thank you.

And our next question today comes from David Palmer at Evercore ISI. Please go ahead.

Thanks. Question on slide 31, you have that 620-basis-point benefit from productivity, hedging price, mix and other. I just would love to dig into that a little bit. You have pricing of 680 basis points and I would imagine you might have a few hundred basis points of productivity and some hedging benefits. So that number could be seen as low, but obviously, there’s some headwinds in there. Could you dig into that and maybe give a sense of the headwinds offsetting what might be significant benefits of pricing and productivity?

Sure. David, let me give you a kind of a high level bridge. So we clearly had the benefit of pricing. We always combine price/mix, right? So we did have unfavorable mix in the quarter. Primary driver of that is because our away-from-home segment was up 15% and that’s a lower margin segment. So you get the unfavorable segment mix there and there is some unfavorable brand mix embedded in the business, but away-from-home is the big driver there. You are right, we have productivity and sourcing combined. We had over 500 basis points of favorability there or improvement. But then the additional supply chain costs that we incurred that I went through plus absorption hit us because volumes were down. We had forecasted that, but that’s in those numbers. So that’s a headwind for the additional supply chain costs outside of inflation, which we show separately. So that’s a high-level bridge to get you to the 620 basis points.

And then as you are looking through the rest of the year, can you give us a sense even directionally about some of those line items, how you are thinking about, I mean, it sounds like we are going to get some more pricing benefit, perhaps, how you are thinking about the cadence and the directions of those items on gross margins?

Yeah. So from a price/mix perspective, we are estimating price/mix now will be approximately 6% for the year. So Q3 should be in line with Q2, and as I mentioned, Q4 price/mix, we expect to be at about 10%. So, clearly, there’s a benefit there. We continue to expect our productivity to click along as it’s done both our core productivity and our sourcing benefit. So that will continue to track. We laid out the inflation and kind of what that looks like. So they are really the key drivers and then, as I mentioned, David, the cost we got hit with in Q2, the transitory costs, we really expect those to start to go down in Q3 and into Q4. And then some of the incremental cost to support selling and getting product on shelves, that will continue through Q3 and then we expect that to decline in Q4. So that’s a high level kind of bridge there.

And I will stop here, but the supply chain friction costs, whether those you are really calling them transitory or another, but you can see that during COVID there’s a lot of these costs. How much of that would you estimate is in the fiscal 2022 gross margins that you are anticipating overall? How much of the supply chain, you call it, COVID era friction costs, do you think are weighing on that 15.5% overall margin?

Yeah. David, let me get back to you on that, because there are so many different components of cost. I want to go through that to make sure that I classify it right.

Yeah.

Yeah. The things are on the move clearly, David, and we can see it. Some things had begun to improve more recently and then you got Omicron comes in. So things are still moving in terms of multiple things going in different directions. But we do see some of these friction points improving based on our best available information right now as we kind of move out of Q3 and into Q4 and that’s important -- that’s part of what helps the gross margin piece improve in Q4. But there’s more to it than that in terms of gross margin recovery in the fourth quarter, and frankly, beyond the fourth quarter. And I’d come back to the big picture, which is the key to navigating these acute inflationary cycles is two things, A, brands that resonate with consumers, and B, perseverance. Because the former enables implementation of inflation driven pricing and a benign consumer response to that pricing, we have both of those things in place and that’s critically important for this company. The latter perseverance is an important reminder that once you wrap acute inflation with pricing in place and strong demand material improvements, they can come pretty quickly and so sharp inflections are fairly common when these two things are in place, pricing and benign consumer response. And all the data we have suggests that consumers particularly our younger ones are seeing our products as being in that value sweet spot between away-from-home and store brands, and it’s driven by demographic dynamics and a huge move to working from home. So all of that says, we are coming to kind of the end of this really challenging period as we kind of get into Q4 and that’s a good setup on the other side.

Thank you.

And our next question today comes from Jonathan Feeney at Consumer Edge. Please go ahead.

Thanks very much. A couple of questions, first, a detailed one, if I look at the bridge between measured pricing, what appears to be, you could weight things across the months differently. But it looks like about 9 and your realized price/ mix was about 6, 8, like I realize scanner doesn’t cover everything. But if you could comment, Dave, particularly on any of the big buckets of things that affect that lag? I am particularly concerned about whether it is the case that retailers maybe are margining up on some -- on this pricing environment? And maybe a related question would be, broadly, Sean, you mentioned several times elasticities are low, that’s clearly the case. Utilization is high, you can’t even make enough things for the consumer’s demand you know is there. What -- big picture like, what is preventing maybe as an industry or an ever detail you are comfortable getting into, what is preventing pricing from getting through, because it’s been a while now? Just any comments you have on that. Thanks.

Well, I would just say that I think the pricing is getting through. We have certainly been very upfront with our customers about the true cost inflation we are experiencing and what we believe is the justified action or in this case, actions -- consecutive actions to take price. And different -- we don’t control what customers do with the price they put on shelf. But I’d say, on average, they tend to pass it through pretty close to the way we pass it through to them. There may be some that take a small margin grab, equally there may be some that compress because they want to gain market share. So it tends to come out in awash and it tends to be pretty much in lockstep. But what I would say is keep following the scanner data, because we anticipate that the pricing actions that we take are going to show up in that scanner data. It’s unfolded thus far, Jon, pretty consistently with what we expected.

Yeah. Jon, I would just say to my previous point, mix does impact that 6, 8 number. So we had some negative mix in the quarter.

I got you. Thank you. And Sean, yeah, that’s clear you are exiting the quarter with much stronger pricing at scanner. Thank you.

Thank you.

And our next question today comes from Robert Moskow with Credit Suisse. Please go ahead.

Hi, there guys. Happy New Year. A couple of questions. I think your forecast says that you expect these transitory costs to dissipate in the second half of your fiscal year. But did you experience them in December and in January in your fiscal third quarter, because I would imagine absenteeism and these issues would have continued. Are you experiencing it now in the third quarter? And then the second question I had is, I look at what’s changed in your -- in my model anyway, is it looks like you raised your pricing guidance for the year, but you didn’t really change your volume guidance for the year. And I know you have talked through your confidence in the elasticity and all that, but when pricing gets up to 10% in the May quarter, I mean, that’s a significant change for what consumers are going to see and you are also going to have an Omicron wave that’s going to be fast and dissipate quickly. So you might have consumers relieved that it was mild and quick and may go back to restaurant eating faster than you think. So am I correct that you didn’t change any volume estimates for the year in relation to price?

Let me comment on the first piece is the, in terms of Q3, as I mentioned in my response to Ken a little bit ago, we don’t expect Q3 to operated off, what I will call, normal efficiency. And Dave talked about some of the transitory expenses in Q2 that we were willing to incur, because we were determined to get as many boxes of product as we could in the consumers’ hands and so that’s an inefficiency. And that -- there are a variety of things that created that in Q2, we think some of that dynamic will persist in Q3. Although, it might look differently, it might be more Omicron-driven absenteeism for the first, whatever it’s going to be six weeks, seven weeks of Q3 and less of something else where we have seen improvements already taking place. So that’s what I was referring to earlier when I said some things are already improving, then you had other things a bit of whack-a-mole that start to create a bit of a headwind like the Omicron absenteeism. But when you put it all together on that piece of it, I’d say, will persevere, that’s why we expect volumes -- we are still focused on getting as much volume as we can out in Q3 even if it comes at less efficiency than what we normally expect. And then as we exit Q3 and go into Q4, we expect some of those friction points will diminish. I think it’s reasonable to expect them to diminish. And then as we wrap pricing, that’s when you start to see the meaningful margin expansion. In terms of sales, Dave, I know you got some comments here for Rob. But I -- Rob, one thing I want to keep coming back to here is, the calculus on how the consumer determines value. Historically, it might be widget A versus widget B side-by-side on the shelf and if you see a $0.20 increase, it translates to meaningful elasticity. That’s not the comparator today. The comparator today is we are selling a product that might have been $2.69 and it might go up to $2.89 or something like that versus the alternative is to go away-from-home where prices have increased even faster and it’s $14.50. We are clearly a superior value proposition versus that and that is what the consumer is seeing. And part of that is being aided by the fact that they are working at home. A lot of these consumers are working at home now. They are not working in the office. So there’s more structural stuff at play here than you would typically see and that’s why we believe we have seen very little elasticity. We have seen some, but much lower than historical to-date and we don’t see a whole lot of reasons that’s going to change materially going forward. Dave, did you want to add on that?

Yeah. Just on the transitory costs, the piece that’s inventory related, Rob, that I discussed earlier, we do see that as transitory as we get into the third quarter, so that will come down. And then volume, our internal forecast, our volume declines -- our volume has declined a little bit in our internal forecast. It’s not significant, but it is down. And as Sean said, the way we do this is we go brand-by-brand, category-by-category and we look at our demand science models and determine the elasticity. So it’s a bottoms-up forecast of impacts on volume based on the brand and category where we pricing, so that’s how we got to it. But volume is a little bit down versus where it was in the previous forecast.

Okay. So a little bit down. All right. Thank you for that clarity.

And our next question today comes from Alexia Howard with Bernstein. Please go ahead.

Good morning, everyone, and thank you for the question. Happy New Year.

Happy New Year, Alexia.

So just -- I just want to dig into the e-commerce slide on page 13. You basically said that 80% over two years in fiscal 2021, 50% over two years in Q2. I assume that means that year-on-year things have slowed materially. Is the 9.4% that you are at at the moment, is that mostly click and collect? What are the e-commerce investments that you are making at the moment and does that mean that the profitability of the e-commerce channel is now different from the regular brick-and-mortar approach that you are taking? Thank you and I have a quick follow-up.

Yeah. Alexia, the -- we have made, if you -- even if you look within our A&P line, a lot of the investments that we -- if you look at our total A&P pot, it’s changed dramatically in the last seven years in terms of what we spend it on, much less in-line TV and things like that, that you have heard me talk about before that are inefficient. So instead today we put those investments into social and digital platforms, but also importantly into e-commerce. So I would say, we made the decision a few years back to treat e-commerce as a bit of a start-up business and we said we are going to invest in it. So we have been, I would say, over investing relative to other areas in e-commerce because it’s far more elastic. We see the business. We get the purchases started in consumers’ basket and it’s both pure blood e-trailers and brick-and-mortar retailers who have built out their e-commerce platforms. Both of them have been very high-growth areas for us and very strong investment areas for us. And what we found is that, there is a good ROI on these investments in e-commerce, because once we invest to kind of getting into the getting into consumer repertoire and are part of their shopping algorithm online it that translates to a repeat purchase. So we get them when they come back whatever the purchase cycle is for that product. So that’s been one of our key marketing shift there is to go hard after e-commerce the last few years, and we are very happy with the returns and that’s why we continue to invest there. We will move around from quarter-to-quarter and when you look at the percent comps, it also can be a bit misleading, because it’s a function of whatever we did in the base period. We might have -- we might be wrapping a huge base year in any given quarter when you see a relative dip, but you see large absolute growth. So, overall, it’s a big priority for us. It’s working really well and you would be amazed at the kinds of products that are working well in e-commerce. Frozen, for example, is one that you may not think of intuitively as being very successful in e-commerce, but it is and these are profitable sales for us.

Very helpful. And just a quick follow-up. Pace of innovation, you highlighted that innovation is an important driver for you at the moment. I remember over the last few years, you have meaningfully increased the percentage of sales from new products. Are you at a level -- what level are you at now and are you comfortable with where you are at or are you expecting increases -- further increases over time?

Yeah. We call this the renewal rate, the percentage of our annual sales that comes from stuff we have launched in the past three years and we have gotten to about 15% from back in the day we started, we were about 9%. And that’s -- I like that level and because what it reflects is that and it’s a persistent amount of innovation, because consumers have new benefit areas that they become interested in every single year. For example, last year, healthy choice, we are already wrapping huge numbers on Power Bowls, but we went with the grain-free trend, which was a big thing, and it’s been a big success for us innovation-wise. So we try to be out ahead of our competition using our demand science team in terms of emerging trends and it’s interesting, because many times when we are bringing out the new trend, our competitors are just catching up and they are launching a knockoff of last year’s stuff. And so that keeping out in front of these trends, I would say, will continue to be an important part of our innovation repertoire.

Great. Thank you very much. I will pass it on.

And ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to Brian Kearney for any closing remarks.

Great. Thank you. So, as a reminder, this call has been recorded and will be archived on the web as detailed in our press release. The IR team is available for any follow-up calls that anyone may have. So feel free to reach out. Thank you for your interest in Conagra Brands.

Thank you, sir. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.