Good morning. My name is Phyllis, and I will be your conference operator today. At this time, I would like to welcome everyone to The Hershey Company's Second Quarter 2014 Results Conference Call. [Operator Instructions] Thank you. Mr. Mark Pogharian, you may begin your conference.

Thank you, Phyllis. Good morning, ladies and gentlemen. Welcome to the Hershey Company's Second Quarter 2014 Conference Call. J.P. Bilbrey, President and CEO; Dave Tacka, Senior Vice President and CFO; and I will represent Hershey on this morning's call. We also welcome those of you listening via the webcast. Let me remind everyone listening that today's conference call may contain statements which are forward looking. These statements are based on current expectations, which are subject to risk and uncertainty. Actual results may vary materially from those contained in the forward-looking statements because of factors such as those listed in this morning's press release and in our 10-K for 2013 filed with the SEC. If you have not seen the press release, a copy is posted on our corporate website in the Investor Relations section. Included in the press release is a consolidated balance sheet and a summary of consolidated statements of income prepared in accordance with GAAP. Within the notes section of the press release, we have provided adjusted pro forma reconciliations of select income statement line items quantitatively reconciled to GAAP. The company uses these non-GAAP measures as key metrics for evaluating performance internally. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the company believes the presentation of earnings, excluding certain items, provides additional information to investors to facilitate the comparison of past and present operations. As a result, we will discuss 2014 second quarter results, excluding net pretax charges of $2 million or $0.01 per share diluted related to net acquisition and transaction cost primarily associated with Shanghai Golden Monkey, Project Next Century charges, as well as non-service-related pension income. Our discussion of any future projections will also exclude the impact of these net charges. With that out of the way, let me turn the call over to J.P. Bilbrey.

Thanks, Mark, and good morning to everyone on the phone and webcast. Net sales sequentially improved versus the first quarter, and we continue to make progress against the initiatives that will drive improved performance over the remainder of the year. In the second half of the year, seasonal growth will be solid. New products will launch, and we'll have new initiatives that should enable us to deliver on our objectives. Driven by a late and solid Easter season, second quarter CMG category growth was 6.8%. Hershey marketplace results were also strong with Q2 retail takeaway of 7.5%, resulting in a 0.2 point market share gain, offsetting the decline we experienced in the first quarter. Our Easter sell-through was very good, and we gained 1.1 market share points in this important season. On a quarterly and year-to-date basis, chocolate is driving category growth, and as we stated earlier this year, we expect our net sales and marketplace performance to be driven by strong second half activity that we have planned. But our first half results have been below our expectations. In-store activity and trends were difficult to interpret over the first few months of the year, given abnormal shopping patterns, a late Easter and a continued challenging macro-environment, especially related to the consumer who has not participated in the economic recovery. However, we've now been able to discern that across the broader snacking continuum, especially as it relates to the instant consumable pack type, we're encountering greater levels of competitive in-store merchandising and programming. As a result over the remainder of the year, in addition to solid seasonal growth and previously mentioned new product launches, we have a few more initiatives than we initially planned. A couple examples of those include a King of Summer program, which is a major effort…

Thank you, J.P., and good morning to everyone on the phone and on the webcast. Second quarter net sales of $1.58 billion increased 4.6% versus last year, generating adjusted earnings per share diluted of $0.76, an increase of 5.6% from last year. We expected second quarter sales to improve sequentially versus the first quarter, and they did. However, sales growth was below our expectations, given the U.S. mix headwinds and the increased levels of in-store activity across the broader snack continuum that J.P. discussed. Organic net sales growth of 5.3% was driven by volume. As expected, new product launches are on track from net sales and a marketplace perspective, and we're about 60% of our total volume growth. Core-branded contribution was about 40%. The unfavorable impact from foreign currency exchange rates was 0.7 points, and in line with our expectations. North America's sales increased 4.5% with balanced growth in the U.S. and Canada. International net sales increased 7%, relatively in line with our expectations. Turning to margins. Adjusted gross margin declined by 230 basis points in the quarter as higher input costs, primarily commodities and unfavorable sales mix, more than offset supply chain productivity and cost savings initiatives. Dairy costs in the quarter were higher than our expectations. As many of you know, there's not a developed futures market for dairy, which significantly limits opportunities to hedge our requirements. While spot prices have declined slightly from year-to-date high, U.S. market costs remained at elevated levels. As a result of the higher prices, we have increased our dairy cost forecast for the remainder of the year. This increase, as well as higher trade spending, primarily for greater merchandising activities, will adversely impact gross margin, particularly in the third quarter. Adjusted earnings, before interest and taxes in the second quarter, increased 1.6%…

[Operator Instructions] Your first question comes from the line of Chris Growe with Stifel. Christopher R. Growe - Stifel, Nicolaus & Company, Incorporated, Research Division: I just have a couple -- a couple of questions, if I could, please. The first would be, I guess, maybe to Dave, in terms of the gross margin being down slightly for the year, is it the pricing you're relying on in terms of the improvement sequentially in gross margin? I know you lapped some of the input cost inflation, started late last year. And then I guess rated to that, is the -- in terms of the cost savings coming through in terms of Project Next Century and that kind of thing, do those pick up in the second half of the year?

So the Project Next Century savings are pretty well completed. We've completed that project, and the savings were pretty much all flowing through. In the back half of the year, the gross margin is impacted by the higher commodity costs versus last year, but with respect to the fourth quarter, we really just begin to lap where we started having the higher cost last year. Christopher R. Growe - Stifel, Nicolaus & Company, Incorporated, Research Division: Okay. And then if I could ask another question for J.P. And just in relation to, I guess, as you see your investments behind the business from an advertising and promotional standpoint, advertising is up less than you said as of last quarter, but it sounds like you're getting more promotional as well. So as you look at kind of the pressure against the consumer, is that the same as what you thought before, or just more money moving into promotional spending?

Yes. I think there's a combination of things, and let me point a couple of things out about the cost. There's the GRP efficiency, which we've gained, which is a piece of it because of a change we made there in the process. And then one of the things that you don't see is the nonworking piece or the production cost piece, which is a meaningful number for us this year as well. So in terms of absolute GRPs, I think that we're good there as we look at our current plan. I think the way to think about the merchandising is, is as we look at the total snacking continuum, we've seen a significant increase in overall quality merchandising, especially in some specific channels like C-store. It's not that merchandising is necessarily at a deep discount versus where you might think it has been historically. It's really more of a competitive environment and the range of choice that the consumer has. So some of that snacking is being where -- I think, if you look over the last couple of years, a lot of that growth has been led by CMG. I think what you're seeing in the current environment is that there's more on the floor, and it's more competitive across total snacking. So the choice the consumer has is broader versus absolute price being a driver. Christopher R. Growe - Stifel, Nicolaus & Company, Incorporated, Research Division: So any limitation to Hershey getting their fair share of space or more space, especially in the C-store? Is that the intention of these new programs?

No, I don't -- no, I don't think so. I mean, as you know, we've got great coverage in C-store. For us, I think it was really about programming and what we saw with competitive programming, particularly in the first quarter and in continuing into the second quarter. I know there's some of the things that I talked about that we're going to be responding to, and then, of course, our innovation is much more significant in the second half. So we feel good about our stance, but it's a competitive environment.

Your next question comes from the line of Bryan Spillane with Bank of America.

Actually, just to follow-up on Chris's question. If you look at the, I guess, the non-seasonal business and the instant consumable business, the non -- the snacking, the broader snacking competitors have -- there's been a lot of product -- new product innovation. Doritos has definitely -- or Frito has definitely stepped up its activity on new products. You've seen it in Nabisco. So I guess, my question is just how do you feel about your innovation pipeline, not so much for this year, but even kind of into '15? If we assume that there's going to be a lot more of this sort of stepped-up product innovation in that snacking continuum, do you feel comfortable that you've got the new product pipeline to compete and what is -- could be a more competitive landscape?

Yes. Let me answer it in 2 different pieces. First of all, on the innovation front for our brands, we've got what we believe is a very strong innovation pipeline in the second half. We've talked about some of that, and then, of course, we've added some incremental things. So we think we're going to be competitive there. If you really dig into the data of what's going on, part of what we've seen, which is different than what we've seen in the past is that our everyday business didn't do as well as we would have hoped it would have in this particular timeframe. I think the forces and factors are some of the things that we talked about. The independent C-store in CMG did not do as well, and I think you have a consumer who's more challenged than in maybe the more modern C-store channel, where gas is a part of the overall mix. And then one of the unique things, as we look at our data, is remember, last year, Hostess, Twinkie, some of the bakery segment was not participating in the category. This year, they are. And while they haven't participated at a significant price discount, the percent of merchandising over the quarter that they had their products merchandised was very high. So you saw meat snacks did very well. Salty snacks did well. Bakery did well, and so the growth was really led there across the snacking continuum more so than it was with CMG, and those are some things that we have to respond to as we go forward.

So as you go forward into '15, will you change anything about your -- the types of new products you want to roll out or make some of the -- some adjustments to your pipeline? I mean, it's -- I guess to kind of put it succinctly, it's just you had a new product innovation pipeline, and I guess some of it's going to be back-half-loaded, but it may not be matching up as well against some of the other sort of non-chocolate and non-candy competitors. So is there something you have to do to tweak your innovation or...

Well, I think -- yes, I think you can say that, in the first quarter, as we kind of go back and keep score there. But as we look at our overall growth algorithm of getting a minimum of 1 point of our growth from innovation, and as you know, we've been more in the 2-point range, what we'll do is we feel very good about our pipeline. We'll be pulling some things forward in that pipeline, as it relates to the U.S. business so we don't feel as though we don't have initiatives that can bring a lot of value to us, and then that pipeline will also have a focus on the core. And if you look -- again, just recall from my remarks, if you look at the first and second quarter, we did well on Kit Kat. We did well on Reese's. We did well on Brookside, and so we just need to make sure that we've got the right timing and phasing of that innovation.

Your next question comes from the line of Matthew Grainger with Morgan Stanley.

Just a question on the balance sheet and M&A. You were mentioned in press reports as a potential suitor for Russell Stover, which obviously ended up going elsewhere, I was just wondering if there was anything you could say anecdotally about how you evaluated that opportunity and why, given the strength of your balance sheet, you didn't pursue it more aggressively? And then just on a broader level, can you remind us whether you have any specific valuation or return on capital criteria that come into play with when you're evaluating acquisitions? Or is it really only about strategic fit and accretion over sort of a 1- to 2-year period?

Well, I mean, I think in terms of how we look at the business, so I think the #1 thing we will look at is our strategic fit. And so, again, when we look at acquisitions, we're trying to find things that will be both in our focus markets, and that will add to our ability to grow or ability -- or our capabilities. Those capabilities could be portfolio. They could be distribution or route to market. Those are really our key factors. Economically, we use a discounted cash flow model and clearly look at the return, and we use that to make sure we're disciplined in terms of the pricing. With respect to the Russell Stover, I really don't care to comment any further on that one.

Okay, understood. I mean, just a quick sort of broader question on category trends. Obviously, there's a number competitive and macro factors, and you've highlighted those. But just wondering based on your segmentation work and your observations on the category, is there any evidence that broader health and wellness trends concerns are having, at this point, a measurable impact on the category even though that historically hasn't been the case?

We don't think so. I think that there's broadly consumers you can see over time have changing a relationships with food. If you look at total snacking, snacking continues to grow as a total category. And then one of the things that we've talked about is if you look at the core confectionary category, people come to the category as a reward-me category. They know it's indulgent. It's not a food group. They tend to -- it tends to represent about 2% of total caloric intake. So it's self-regulating in many respects. So as we think about the future, we're thinking about the total snacking continuum. That can be everything from indulgent to more functional, but remember, the chocolate segment in the category really continues to do well. It's just simply in the last quarter that wasn't led as largely by us as it has been in the previous time frames.

Your next question comes from the line of Andrew Lazar with Barclays.

Quick question on elasticity. I guess, I'm curious what you are sort of modeling for elasticity to the price increase. And I guess, more importantly, if it's different from kind of what you built in the last time around when I think elasticity was -- frankly, it ended up being a lot more modest than you expected, and certainly less than kind of a one-to-one relationship. And then as part of that, J.P., you'd mentioned in your prepared remarks that given the price increase, you'd expect volume to be lower in the second half of the year. I didn't know if that meant lower year-over-year or just lower than you previously would have been, had you not taken pricing?

Yes. So to answer the second part, it's really versus a planning stance without pricing, is what I would say there. Andrew, we always model a one-to-one ratio on all of our pricing. You're correct in that, the last couple of pricing moves we've seen with a significant increase in advertising spend in the category, which reminded consumers why they participated in the category, we experienced something more like 0.6, 0.7 conversion rate. And so the things that we're talking about would have the modeling of one-to-one. Obviously, I'd like to see us do better than that, and we'll keep you posted on what that looks like. So we would hope to see conversion with shorter timelines and faster conversion rates, but the modeling is one-to-one.

Right, that's very helpful. And then just the last one, typically, you've taken pricing with an intention to protect your gross margin percentage as opposed to just gross margin dollars. I assume that's sort of the intent as you think out to '15 and beyond, but I just wanted to run that by you.

You have it correct. Our model is to protect our margin and invest in our brands.

Your next question comes from the line of Eric Katzman with Deutsche Bank.

I guess first is a more detailed question. In the press release, you said that the FX was -- headwind was greater than you expected? And Dave, you said it was in line? So we want to clarify which is correct?

Sure. I think where we wind up there is that, as it affects the international business, that was a bit greater than what we expected. And as it related to North America, Canada was a little bit more favorable than we expected.

So you mean Canada was more favorable?

Canada was a little bit more favorable. International was a little bit more unfavorable. So on balance, we were pretty close to what we expected.

Okay. And then I guess this is kind of like what did you know and when did you know it? But when you last gave guidance, you had -- you expected sales to still be in line with your target, and gross margins you had moderated, but you still expected them to be, I guess, kind of flattish. And now in your guidance, you've included the price increase. So obviously, the price increase could be material to top line, as well as your gross margin calculation. So kind of what -- I guess, what -- were you anticipating a price increase, but didn't tell us last quarter when you gave guidance versus today?

No. I mean, our guidance as of the last quarter was basically what we expected at that time, and not anticipating the price increase. As we've said, we really don't expect the price increase to have a significant impact in 2014. I mean, in the fourth quarter, we'll see some instant consumable pricing, and some of that will be offset by volume, but again, given the elasticities, we don't see much impact. The change in the gross margin versus the last guidance is really about the continued high pricing in dairy costs and also the mix that we saw in the second quarter.

Okay. And then last question, I'll pass it on. Can you remind me, is gross margin a part of your compensation package because, obviously, that piece is coming in well below your expectation this year? And so my question is really geared towards your comp accrual and would have kind of a setback to normal in 2015, be a headwind we should kind of consider? I mean, I realize the year's only half over, but gross margins are obviously below plan.

I guess kind of 2 points. With respect to your first one, and we do disclose our metrics in the proxy. Gross margin, actually, gross margin level is not a part of our comp program, but it's a key part of how we get to our earnings, and so that's how I would address that. The second part of your question, as you're looking at 2015, we're not really ready to give 2015 guidance. But what I would say to you is that as we've taken the price increase, we've looked at our gross margin as part of that.

Your next question comes from the line of Robert Moskow with Crédit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: I wanted to know if Mars' price increase that they just announced, it's 7%. Yours was 8%. Is there any -- have you done any math to determine whether their pricing will be a little bit below yours when it's all said and done? And then secondly, I wanted to know if I could kind of think again about the international growth algorithm. You're probably still mid-teens this year, but if Brazil is -- the category seems to be growing at a very low rate. Mexico has stagnated. China is doing, obviously, very well, but that -- China seems to be the only real driver of growth. So excluding the acquisition for a second, what are your thinking -- what is your thinking about 2015? Does the macro have to get better in Mexico and Brazil for that algorithm to work?

Well, I think there's one component that you didn't talk about, and we have a meaningful export business as a part of that international business. So it's not all about just the focus markets, but we also have a very good structured export business that continues to do very well, and that's also a really profitable business. I think it's important to keep in perspective in Brazil that it's a relative -- we have a relatively modest size business there, and we continue to build distribution and presence on shelves. So a lot of our potential there is really around increasing the portfolio size, and it's really increasing brand presence. So those are fundamentals that we believe that as we continue to execute against that, we'll continue to grow there. So I think while a lot of those macro things are important, we also have another lever that works well for us. In terms of the Mexican business, we've continued to grow our chocolate share there. There's some macro-economic issues that seem to be impacting the consumer there. So I can't really predict, going forward, what I see there in terms of pace of recovery in terms of the total market. But I think those markets will get better versus worse, and then I think we will continue to do well in China, and as well as these other markets. Just remember, within our strategies, as we talk about being focused on specific geographies, it's also about expanding the portfolio. In a lot of these markets, we have a very modest portfolio still at this point in time. So again, I think the fundamentals of how we grow are very much in our favor, and I think that's why more broadly we could feel optimistic about the continued growth process in international businesses. Robert Moskow - Crédit Suisse AG, Research Division: And the Mars question?

You've seen what I've seen in the general marketplace. So I can't really comment or provide any analysis on what they may or may not have done, but I'm sure that will reveal itself as time passes. Robert Moskow - Crédit Suisse AG, Research Division: Just a follow-up. Can you say how much your exports are up this year, and whether that's higher or lower than historical?

What I can do is I don't have the number right in front of me. But if you want to call Mark, we're more than happy to provide you specifically that information. I just don't have the number at the -- on the top of my mind. I apologize for that.

Your next question comes from the line of Ken Goldman with JP Morgan. Kenneth Goldman - JP Morgan Chase & Co, Research Division: As we think about your price increase and the window you've given customers to perhaps buy in a little more than they usually would over the next few weeks, how should we think about the cadence of your shipments the next 2 quarters? I assume it's reasonable to model some 3Q sell and a reversal in 4Q. Is that accurate? And can you help us on the magnitude of that perhaps?

Well, I think given the timing of the price increase and how it executes, I wouldn't expect to see a big swing between the third and fourth quarter because the buy-in period here would run into August and would ship pretty well clean out in September. Kenneth Goldman - JP Morgan Chase & Co, Research Division: And then question for J.P. on advertising. You and your predecessor, Dave West, had a really strong commitment to advertising. For a long time, it's worked, and I guess that's what make this year's lower ad spending as a percent of sales, in terms of growth, a bit confusing. And I guess my question is this, if you believe strongly in brand building, and it's been effective in the past, why not just say, "Okay, this won't be the best year in our history. Maybe we grow earnings below our long-term range. A lot of companies are experiencing that. But we're not going to back off our principles of innovation and marketing just to, perhaps, at least from the outside, it looks like making our numbers." So why not take that hit this year, keep brand-building high, especially in this competitive environment and really stick to your long-term philosophy?

Well, I do believe we're sticking to our long-term philosophy. I think part of what is going to happening is, is you're going to continue to see the balance over the first and second half as we support innovation. We've also gotten a number of our brands more towards the top of the curve of our advertising efficiency. So it doesn't require necessarily the same levels of increase. It's really much more around the mix of where you apply some of that advertising. So if you were to really look at where we've rebalanced some of that advertising, you would see some brand, individual brands, that have gotten some pretty significant increases in advertising. Maybe some others that have been deemphasized, the frequency has changed, but I don't think our philosophy has changed, and we'll continue to reassess over time if we believe we're doing the right thing or not. And the fact that we want to be a knowledge-based brand building company is at the core of everything we think about and how we want to act. So I may come to a different conclusion in the way that you're describing it, but the philosophy hasn't changed.

Your next question comes from the line of David Driscoll with Citi.

J.P., just wanted to ask a little bit about the second half sales growth. You made some comments here, but I want to go over this because I think this is a fairly critical issue. Second half sales growth must accelerate to reach the full year growth of about 5%. Given first half performance at 3.4%, really, I want to just understand what gives you confidence in this acceleration? And frankly, is this just a high bar kind of given after first quarter in a reduction in guidance here. I think you might understand that confidence on the outside is going to be a little bit low so your answer here, I think, is reasonably critical.

Yes. Well, so there's a couple of things. Remember that in the second half of the year, 68% of our seasonal growth occurs then. We have visibility to what those numbers are, and that seasonal growth is ahead of what the average company growth would be. So we know that we have very strong seasonal business booked for the second half of the year. We believe that the innovation that we have is both meaningful, and should be effective for us. So those are big contributors as well. And we continue to have, we think, in our international business, where we're rolling out Reese's, that that's going to continue to work hard for us. And then the incremental advertising that we've added with the king-size event I mentioned earlier, we have a great cross promotion program with Coke and Reese's, and a couple of things that we haven't talked about yet. So I think, David, we're really lining up to take the things we learned in the first half. The take to make is over 6%, and we know that, but we feel good about the actions that we're taking in terms of the competitiveness and understanding of some of the things that went on in the first and second quarter. So I have confidence that we're going to get there.

Two follow ups. On international, I believe, last quarter, your guidance for international on a full year basis was 15%, and you've reiterated that today. But apologies, but it sounded like in your description of international, things were weaker. So I'm just trying to reconcile kind of the tone of your international comments in Mexico and Brazil versus the fact that the international guidance is unchanged.

Well, I think -- Dave and I can both respond to this. I think what we're saying about Mexico and Brazil is pretty consistent with what we've said last quarter, and we continue to experience good growth in China. And then the exports piece of our business, as I mentioned to you, continues to do well also. So to reiterate, I don't think there's change there. Certainly, I was very transparent in terms of some of the challenges in terms of FX, and then the consumer challenges in Mexico. But from a programming standpoint and a takeaway standpoint, I think the results are pretty good.

Yes. I mean, in the first quarter, I mean, I think we laid out the challenge in Mexico and also the challenge in Brazil, and we said we would see some sequential improvement as we go through the year, and we definitely saw that in the second quarter. So our results there were pretty much in line with what we we're expecting.

If I could sneak just a final one in, the innovation on Ice Breakers and Brookside, am I correct that you have shifted this from the third quarter into the fourth quarter? And if that's true, can you explain why you did that?

Well, the only thing that has had a shift on timing is Cool Blast. It really had a couple of factors. We continue to be finalizing, perfecting the start-up and formula, and then the other part of it is the capacity issue, where we just want to make sure we had the right capacity in place. It's not going to affect anything else, and we feel good about going ahead there. But those are some normal kinds of start-up things, nothing remarkable.

Your next question comes from the line of Jason English with Goldman Sachs.

So I've got 2 here. I'll just rattle them off at the same time. First, if there's some concern in immediate consumption channels that consumers are swamping into other categories where promotional activity is elevated, as you raised prices, how do you make sure that, that shift doesn't accelerate? And then the second question, lower advertising, more trade promo, bringing back limited editions, just feels very déjà vu mid-2000s, which obviously didn't end very well. So can you maybe draw some parallels or contrast of why -- what's similar, what's different and why this doesn't end as poorly as that one did?

Yes. Well, let me -- let's try to do everything we can to not compare the fact that we're doing a limited edition to the fact that we did a lot of limited editions back in 2005. So in 2005, as we've discussed quite openly many times, those limited-editions really became our innovation, and that's really not what we do at this point in this era. And so -- but if you have a limited edition, and it's limited, the news is not a bad thing. It's a merchandising event. So that's how, I think, you ought to probably think about characterizing that. We know that the category has been pretty inelastic over time. We've been able to successfully convert price. The consumers' been able to convert it again. I think what we have to observe over time is what's happening with the frequency in some of those areas or channels, where the consumer may not be participating in the recovery as those at the top end of the economic pyramid. So I think that it will be as we've done in the past. We expect conversion to be good, and the phenomena that I talked about in the independent C-store probably is not going to be that connected to what's happening in terms of the price, and the pricing most likely would affect the entire category and not individual brands. So I don't think to the consumer it's going to look that different.

What I would add is in the things that we've gone through and we've talked about in responding to the situation from the first part of the year is that there's activities that we're putting right around our base products. And so that -- the limited editions have a very limited focused role, and that's just to obtaining some level of merchandising and news. And as J.P. said, the big difference is that we really are focused. The innovation now is really focused on more meaningful and sustainable activities.

Your next question comes from the line of Jonathan Feeney with Athlos Research.

I wanted to dig in, get another go with this price increase margin elasticity question going into next year. When you took your price increase in 2011, I mean, as bad as things are today, I mean, the unemployment rate was higher then. It was just wasn't a great macro environment in general in 2011. If I remember correctly, gas prices were going up at that time. So I guess -- you've talked a lot about the macro environment, but I guess, what gives you -- what makes you think that the elasticity reaction consumers will have in this really tough macro-environment would be any different than what they had back in 2011, particularly given that your -- it seems your leading competitor is sort of following suit here?

Yes, I don't think that it will have big differences than what we've seen. As I've said before, the planning that we've always done around these is the one-to-one ratio. I think your point is a good one in terms of how we should expect the category to behave this time versus other times. And the history of the category over many, many decades is it is a pretty inelastic category, and it cycles pricing really effectively, and that's exactly what I would hope this time. I don't want to -- the thing that I want you to take away from this call is, is that we think about their business. There have been a number of different things over the last 6 to 9 months, whether it's been trips, weather, all of these other things. Largely, we don't know if those are one-offs. If there's some weather effect, they were real. But what we know is that we have fundamental execution opportunities, planning opportunities around how we schedule the promotion and merchandising activities we have, and so we really want to kind of put a number of these things aside. We do know in certain parts of classes of trade, there's a consumer that continues to be challenged. But we're also seeing in the snacking categories some items with some pretty significant pricing. They've been doing very, very well. So I think in the end, while there may be some people, unfortunately, who are really impacted, I think the real drivers will be around the things we know how to do best, and that's execution.

Your final question comes from the line of Eric Larson with Janney Montgomery.

One quick follow-up question. In your price increase that you have, going forward here, and in your allowed buy-in to your customers, are you protecting the margins on your fourth quarter seasonal sales for your customers?

Yes, so the answer would be yes. And if you just think about how it works, so the instant consumables tend -- those prices tend to go up almost immediately on the shelf. Merchandising that's been schedule tends to also -- you'd agree, tends to be protected, and then the seasons are protected all the way out to what will be Halloween of next year. So the answer to your question is yes.

Thank you very much for joining us for today's conference call, and we'll be available for any follow-up questions that you may have.

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