Ladies and gentlemen, thank you for standing by. Welcome to the General Mills First Quarter Fiscal 2019 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, September 18th of 2018. I would now like to turn the conference over to Mr. Jeff Siemon, Vice President of Investor Relations. Please go ahead, sir.

Thanks, Celina, and good morning, everybody. I am here with Jeff Harmening, our Chairman and CEO; and Don Mulligan, our CFO. In addition, Jon Nudi, who leads our North America Retail segment, is also with us for the question-and-answer portion of the call. And I’ll turn things over to them in a moment, but before I do, let me cover a few housekeeping items. Our press release on first quarter results was issued over the wire services earlier this morning, and you can find the release and a copy of the slides that supplement our remarks this morning, on our Investor Relations website. Please note that our remarks this morning will include forward-looking statements that are based on management’s current views and assumptions and the second slide in today’s presentation was factors that could cause our future results to be different than our current estimates. In addition, you’ll note in the release that this is the first quarter we are incorporating operating results for Blue Buffalo, which we are reporting in a new Pet operating segment. And as we mentioned on our fourth quarter call, we are reporting Blue on a one month lag to our corporate calendar, which means the Pet segment’s first quarter includes results through July. Finally, I’ll note that beginning this quarter, we’ve adopted the new accounting requirements for the presentation of pension, post-retirement and post-employment benefit expenses. This change separates service costs from other benefit-related expenses or income, which have moved out of corporate items and into a new line below operating profit. Just to be clear, there is no impact to net earnings attributable to General Mills. For those of you looking to update your models, we posted a revised fiscal 2018 quarterly income statement to our Investor Relations website, yesterday. And with that, I’ll turn you over to my colleagues, beginning with Jeff.

Thanks, Jeff, and good morning, everyone. I’m pleased to say that we’re off to a good start in fiscal 2019. We drove organic net sales growth for the fourth consecutive quarter, nearly 0.5%, which in this presentation rounds down to flat. The Blue Buffalo transition is progressing well. And we continue to expect double-digit top and bottom line growth for that business this year, excluding the acquisition-related charge. First quarter adjusted operating profit and adjusted diluted EPS results finished ahead of our expectations. And we remain on track to deliver our full-year fiscal 2019 targets. Slide five summarizes General Mills’ first quarter financial performance. Net sales totaled $4.1 billion. Organic net sales were up modestly, driven by positive net price realization and mix across all four legacy operating segments. Adjusted operating profit of $641 million was up 3% in constant currency including an 8-point headwind from a onetime purchase accounting charge related to the Blue Buffalo acquisition. Adjusted diluted earnings per share of $0.71 were in line with year ago levels in constant currency, despite a $0.06 negative impact from the purchase accounting charge. As I mentioned, these results were ahead of our expectations on the bottom line. We’re making good progress against the three key fiscal 2019 priorities we outlined on our Q4 earnings call. As a reminder, those priorities are, first, to grow our core by continuing to compete effectively through compelling consumer news, innovation and in-store support, and by accelerating our differential growth platforms; second, to successfully transition Blue Buffalo into the General Mills family; and third, to deliver on our financial commitments, leveraging our holistic margin management program to drive efficiency, increasing our price mix through our enhanced strategic revenue management capability and maintaining a sharp focus on working capital and cash flow. Let me share…

Thanks, Jeff. Good morning, everyone. Jeff provided a summary of our first quarter financial results. Now, I’ll share a few additional details, starting with the components of net sales growth on slide 20. Organic net sales rounded down to flat versus year-ago, driven by positive net price realization in mix across all four legacy segments, offset by lower contributions from volume. Foreign currency translation did not have a material impact on net sales. And the net impact of acquisitions and divestitures yielded a 9-point benefit to net sales. Turning to our segment results, on slide 21. North America retail net sales declined 2% as reported and were down 1% on an organic basis. Consumer takeaway was a bit stronger, with Nielsen measured retail sales flat in the quarter. Net sales in the U.S. snacks operating unit were down 4% due to declines on Fiber One snack bars, partially offset by strong innovation performance on Lärabar and EPIC bars. Canada net sales were down 4% as reported and 2% in constant currency. Net sales for U.S. Meals & Baking were down 2%, primarily driven by the comparison to last year’s first quarter that included co-packing sales related to the Green Giant divestiture. U.S. Yogurt net sales were also down 2% as declines on Greek and Light were partially offset by Oui and YQ innovations in our simply better segment, and solid performance Go-Gurt and original style yogurt. Retail sales results for yogurt were stronger with Nielsen measured takeaway nearly flat in the quarter. U.S. Cereal posted 1% net sales growth behind effective product news on Lucky Charms, Trix and other core brands. Constant currency segment operating profit increased 3% in the first quarter due to benefits from net price realization mix, lower SG&A expenses and benefits from productivity initiatives, partially offset…

Thank you. [Operator Instructions] And our first question comes from the line of Andrew Lazar of Barclays. Please go ahead with your question.

Good morning, everybody.

Good morning, Andrew.

Just two quick things. And if I missed this, I apologize. I think -- was there anything, I guess, in 1Q that perhaps helped lower relative SG&A a bit more than we all on the outside might have thought? And if so, maybe how much of that might be timing related and when do you think that comes into play to impact SG&A as we go through the year? And then, second, I think Don, last quarter, you’d mentioned that perhaps you expected gross margin to be roughly flattish year-over-year for the full-year. Is that still an expectation that you think makes sense here, given what we saw in the first quarter? Thank you.

Yes. Sure, Andrew. I’ll tackle both of those. For SG&A, -- I guess, I’ll back up and just talk about the results more broadly versus our expectations. And as Jeff said, we were pleased to start the year with a stronger profit performance than our expectations. Frankly, I think it’s a testament to the organization’s focus on cost discipline while we drive improved top-line. Just to set the stage, the sales did come in where we expected. The mix by business is different, but in total, we were on plan. So, our overperformance on the bottom-line was across P&L, many P&L items including SG&A. Gross margin was better due to favorable mix, project timing and inventory absorption. Andrew, to your question, SG&A benefited from lower corporate spending, some of our departmental spending, which will be phased later in the year, some stock-based comp being lower and media being slightly lower than planned. And plus, below that the tax rate came in a bit favorable to our plan, it was clearly under our 23 to 24 range for the full-year. So, we feel good about how we came out of the first quarter with the lead. But we know it’s a dynamic environment and that really did factor into our thinking about the full-year -- the full-year guidance. So, if we go back to SG&A, the key factors were the phasing of our corporate spending, which will phase more in the back half of the year or the back part of the year now in the stock-based comp and media. Of those, I think the stock-based comp will stick for the year, but the others I think will tend to unwind is a year unfolds. In terms of gross margins. What we saw in the quarter was that it reflects higher inventory levels -- or higher inflation levels, excuse me, that haven’t yet been fully offset by benefits of price mix and HMM. And as I mentioned in my comments, we expect price mix to improve as the year unfolds and we also expect HMM to increase as we get continued and incremental benefits from our global sourcing activity. That all said, I think as per our guidance at the beginning of the year, our operating margins will be down somewhat for the year, if you look at what our guidance for sales versus our guidance for operating profit would indicate. And I think just based on how we’re seeing some of the investment against the business, Andrew, I think there’s probably going to be a little bit more pressure on gross margin than we originally anticipated. As we look at what investment, what growth vehicles are working for us, as we look through the frame of our total brand investments, we’re seeing some activity that’s probably going to put a little bit of pressure on our gross margin. But we think it’s going to have a good payback on the top-line for us.

Our next question comes from the line David Driscoll of Citi. Please go ahead with your question.

Just a quick follow-up on Andrew’s question on gross margin. So, I understand your full-year comments, but wouldn’t the second quarter maybe somewhat negatively impacted by the factors that you described? So, the price mix benefits more back half of the year, but the inflation I think is relatively even throughout the year. So, gross margin down in second quarter and then it gets positive in the back half. Just that little modeling clarification would be would be helpful. And then, I have a question on Blue Buffalo, please.

Yes. I think that you’re right, David. The flow will be such that we’ll see a larger benefit both from HMM and price mix in the back half of the year. So, we expect to see some of the gross margin pressure continue in the second quarter.

Okay. And then, on Blue Buffalo, you reiterated your double-digit sales growth guidance. Takeaway was up 9%. So, can you just talk a little bit about why you’re so confident in the double-digit sales growth? And then maybe within that answer, just talk a little bit more about Pet Specialty and why you think you can improve the trends there?

Yes, David. So, this is Jeff. I’ll take that. I mean, there are a lot of moving parts in our business in general and specifically to Blue Buffalo with extra weeks and sell-ins and sellouts. But the key for me and I think in all of that, you hit the nail on the head which is 9% takeaway. And when consumers are buying it, usually good things follow, and we have 9% growth. And I’m confident, because we’re generating that kind of growth and we still only have 3% household penetration among pet parents. We have a lot of room to expand in Food, Drug and Mass. We’re only at 30% distribution. And in Pet Specialty, we think that we can not only improve our business, but in the process, help our retail customers. And we’ll do it -- the way that General Mills builds categories, look, the more we look at this category, the more we like it, the more it feels like categories, we understand and know how to drive and will improve in Pet Specialty food through things like innovation, through shelf management, through merchandising, through consumer promotions, all the levers that we know in the rest of our food business. They all apply to Pet, and they all apply to the Pet Specialty channel. And so, we feel like we know how to do this. And we’re committed to working with the new leadership in the Pet Specialty channel, to help Blue Buffalo, which we think -- we think, in turn can help their business as well.

And then, Jeff, just one follow-up on your comments here. In the second quarter, I think you called out in your script, the year-ago sell-in from the initial FDM customers. Does that mean that Blue Buffalo sales will be flattish in this upcoming second quarter because of that real tough compare, could they actually be down? Just any magnitude of guidance would be helpful.

Yes, David. I think when we think about the Blue Buffalo business, we do have confidence and a line of sight to the growth for the whole year, double-digit top and bottom line. But, one of the things that’s also very clear to us is it’s going to be variable, both on the top line and the cost side. On the top line due to changes in sell-in and inventory, and if you look at the quarterly results from last year, you’ll see that our second quarter was a big one for Blue Buffalo because they had a lot of sell-in. So, I would anticipate that in the second quarter, I’m not going to give the absolute level of sale, but I would anticipate that our sell-through to consumers will far, far outpace our RNS realization that we show in the income statement. And as we continue to expand in the Food, Drug and Mass channel, I think that will reverse over time. And then, the same will be true on the cost side, as we’re building new plants in Richmond, as we have a new treat facility up and going in Joplin, as we’re building new distribution centers. The timing of those costs isn’t always associated with the revenue. And so, we’ll see a lot of variability and we’ll just have to get used to that as we continue this expansion. It’s all part of the expansion. We saw similar things with Annie’s, Annie’s which just happened to be a smaller business. And so, we’ll make sure we flag to you. But, I think you have the general sense of how things are going to flow right.

Thank you. Our next question comes from the line Chris Growe of Stifel. Please go ahead with your question.

Hi. Good morning. I just had a question for you, if I could. In relation to the U.S. where your sales were down in North American retail, 2%, but you gained share in the majority of your categories. So, it just seems that you need stronger sales growth across your categories to really accelerate your revenue growth. I guess, my question would be, do you expect your categories to grow in fiscal ‘19? And I guess, what are the initiatives you have in place, I’m sure, it’s innovation-driven, marketing-driven to help accelerate the growth of these categories which seemed a bit of a impediment to your sales currently?

Hey, Chris. It’s Jon Nudi. So, we saw our categories in Q1 grow about 1%. We were flat. So, if you put non-measured channels on top, we expect -- we believe that we grew about 1% in total consumer movement. So, as we look forward, we think the categories will continue to grow. We feel really good about our plans as we move through the rest of the year. It really starts with supporting our big brands. And we feel good about our media plans and are above the line promotions as well. I feel really good about innovation. In fact, in Q1, we saw 15% more innovation or RNS coming from innovation in the year prior. We believe that our plans would get even stronger as we move through the year. And then, distribution will continue to build as well. So, Jeff mentioned, we’re down about 1 point from a distribution standpoint in Q1. We expect to get back positive as we move throughout the year. And even in Q1, our share of distribution was actually positive as retailers are cutting back the number of SKUs, not shelves. So, we feel good about our plan for the year. In Q1, we saw about 2-point gap between total movement and RNS. And really that was related to pipeline and inventories at our customers. In fiscal ‘18, we saw about a 1-point gap. We expect that to be the case again in fiscal ‘19. So, you’ll see some of that work back our way as we move throughout the year. So again, we feel that our categories are going to grow. We feel good about our ability to compete on and believe that we can deliver for the year.

And just one other question, if I could. And forgive me if I missed this, Don. But, how much was inflation up in the quarter? And then, I’m just curious on your SRM initiatives. Price mix was positive this quarter. Are there more price increases that go into place, something you want to get in each of those and not looking for that. But just to understand, is it that, is it more around reduced promotional spending or wait outside kind of things to help achieve stronger pricing through the year?

Yes. Inflation is fairly leveled through the year. So, the 5% is pretty consistent. It may move a couple of basis points from here there, but pretty steady through the year. As I said, HMM will grow as global sourcing initiative to contribute. So, the gap between inflation and HMM will diminish as the year unfolds. SRM will be other driver of price realization and mix. And we’re looking at all the levers, whether it’s list price or price-pack architecture, the trade optimization and mix. And as we look at the year, I think we talked about this in July, we see each of those contributing about equally as the year unfolds. And you will see an increasing contribution from that as well as the quarters past.

I’d like to build on Don’s comment, just to remind you. I mean, we saw good, price mix -- net price realization on all four of our legacy segments, as well as Blue Buffalo. And so, the strategic revenue capability management that we’re rolling out is we’re really taking it global and I like what we’re seeing across all of the different segments.

Our next question comes from the line of Michael Lavery of Piper Jaffray. Please go ahead with your question.

When you look at the distribution losses, can you give us a sense of where -- in what categories you think that should turn and become a positive tailwind, and how to think about the timing for something like that?

Michael, it’s Jon. In the U.S., again, we’ve made big strides over the past year. We were down 5 points of distribution in fiscal ‘18; in Q1, we were down 1, but share of distribution actually grew. So, if you look at the categories that we’re lagging right now, the biggest one is yogurt. And as Jeff mentioned, we’re actually seeing much improved trends, in fact grew share half-point in Q1. So, as we continue to build momentum and really prove that we can deliver in the category, particularly bring innovation and segments like simply better, we expect our distribution to build in yogurt and improve as we move throughout the year. So that would be the biggest delta that we see as we move forward.

And when you mention the innovation, obviously you’ve had some launches early fiscal ‘19 already. If you’re looking at distribution from gains from innovation, would you have a similar amount of innovation coming or is it a step-up? What’s the right way to think about the back half?

Yes. So, if you think about our yogurt launches, the biggest one was YQ by Yoplait which is off to a good start. That’s just launched in July. So, we’re still building distribution. I think at this point, we’re still only around 30% or 35% ACV. So, we expect that to continue to build. Oui Petites is another one that will build too. So, we expect both of those to continue to build throughout the quarter and throughout the rest of the year.

Okay. That’s helpful. And just the last one on the pricing. I know last year there was some accrual timing that distorted a little bit of the pacing or made the optics a little bit funny. Is there anything going on in this quarter that is similar to that?

Nothing material to note.

Thank you. Our next question comes from the line of Alexia Howard of Bernstein. Please go ahead with your question.

Hi. So, can I just ask about the Blue Buffalo profitability track here? It looks as though on an underlying basis, when you strip out the onetime items, it was probably down a bit in the first quarter. Is it mainly that the plant start-up costs really pressured profitability in the first quarter, and that that will improve as we move through the year? And then, can you quantify exactly how much Blue Buffalo benefited overall EBIT for the quarter as well? Thank you.

Alexia, let me get the first question. If you strip out the purchase accounting impacts, both the inventory and the ongoing amortization, the profit margins for Blue Buffalo will be about 20% and that’s versus a full year number last year about 23%. There’s about a point or so from plant startups embedded in there. So, the profitability as a percent of sales is actually pretty close to what it was for the full year last year. Now, we think that’s going to improve as the year unfolds. I mentioned, the driving factors, we’re going to see increased price mixed benefits. We’ve announced some pricing a couple months ago. And as we expand further FDM, we’ll get the product mix benefit of more wet and treat products. HMM and synergies are weighted to the back half. That includes opening a new warehouse that’s going to help offset some logistics inflation. And we expect stronger volume growth as well which will leverage fixed costs. So, all those will benefit the margins as we -- as the year unfolds.

Let me just -- this is Jeff Siemon. I’ll just jump in your second part of your question. So, Pet segment was $14 million in profit. That’s about a little over 2% of the operating profit growth for the quarter, off of the base of a little over 600 last year.

Great, thank you. And just as a quick follow-up with marketing spending down year-on-year in the quarter, is that expected to continue? And then, I’ll pass it on.

Yes. Media spend, the advertising spend was down in the quarter. And Alexia, that’s part of as we talked about our total brand investment where we’re looking at a number of different vehicles and it’s really by brand. And I think the testament to the fact that that’s working is that we’ve had four quarters of organic sales growth. And so, we’ll continue to make sure we’re using the right vehicle for the right brand.

Thank you. Our next question comes from the line of Dara Mohsenian, please go ahead with your question from Morgan Stanley.

So, Jeff, just at a high level, following up on that question. A&M levels have been down pretty significantly, in aggregate, year-over-year over the last few quarters, if you go back to the back half of last fiscal year also. And I’m a bit surprised by that, just given the shift back to top line focus and a desire to drive accelerating organic sales growth going forward. So, help me understand what sort of driven that drop in the last few quarters? I understand, some of it’s going to other areas? But also, as you look out over the next couple of years, should that line item move up? Do you expect to continue to get leverage? What are you thinking going forward? And why has there been such a big drop in the last few quarters there? Thanks.

Yes. Thanks for the question. I mean, I think -- let me start with the answer from a little different perspective, which is, look, our focus is on driving organic sales growth and driving that in most efficient effective way possible. And sometimes that’s through media spending, sometimes that’s through other types of commercial spending, things like in-store displays or coolers or adding to the sales organization in India. But, in this current year, what I’m pleased is in the first quarter, we kind of grew as I thought we would, which is we’ve improved our distribution here in the U.S., we’ve improved our new products as a percentage of sales, we’ve grown in all 3 of our top emerging markets in India and Brazil and China. And so, there are a lot of paths to growth. And we’re focusing on doing it the most efficient and effective way possible. It just turned that out in the first quarter of this year our media spending was down a little bit, even if our commercial spending was solid and we had good new product programs. And so, as we look out into the future, we’ll continue to -- we’re pretty pragmatic. And we’re looking to grow the most efficient and effective way possible. And if that’s media spending, we’ll spend more on media; if it’s more on in-store support on freezers for Häagen-Dazs, we’ll do that; if it’s building distribution or new products, we’ll do that. So, you’ll see a full variety of levers. And so, as we look out, I’m not going to give an advertising and media perspective, only because I think what we need to do is provide a growth perspective and then provide the means to get there.

Our next question comes from the line of Jonathan Feeney from Consumer Edge Research. Please go ahead with your question.

I apologize for the deep, detailed question, but I think it’s important; I want to understand what’s going on in Blue Buffalo. You gave us a lot of real helpful data. With the shift, the comparison from the period where they -- last year, they reported at June end and September end obviously gets a lot to tougher as you pointed out in your remarks. But I’m trying to understand how -- I guess how that extra month compares, like how much more difficult this comparison is Q2 versus Q1? And any comments you can make? Obviously, everything’s one month shifted forward, October comes in. How big was that and what was the kind of trend with that we can think about right now?

Jon, this is Jeff Siemon. I’d just tell you that, if you think about the sell-in last year to the first wave of FDM customers, that really peaked in August, September, which are the first two months of Q2 for Blue Buffalo, because they’re on a month lag on our calendar. So, our first quarter for Blue Buffalo ended in July, sell-in in that first pipeline fill was really August, September. So, we’ll get the brunt of that difficult comparison here in Q2.

And Jonathon, this is Don. To put some numbers to it, as Jeff Siemon noted upfront, we posted the pro forma results for Pet, for our F18. And what you’ll see in that, Q1 sales last year for Blue Buffalo were $302 million, in Q2 jumped to 360; and then in Q3 it was 330. So, clearly, there was a pretty significant shipment to the customers, but it’s now our second quarter.

Right, which is -- I guess, which tells us, it’s right about in line with what the reported numbers were for Blue Buffalo independently. There isn’t much monthly shift there.

Yes.

And can I ask one follow-up, Don. As far as the total, where are you as far as the total channel ACV expansion? If anywhere, if you can comment on that plans, uptake, progress report as to where we stand as far as total distribution growth? Thank you.

Yes. So, this is Jeff. Let me intercept that question from Don and take that. We’re -- if you look at the Food, Drug and Mass channel, we are about -- we only have about 30% ACV, and we only have it with Life Protection Formula only, roughly half of the Blue Buffalo product line. So, as we look ahead, there is a tremendous amount of expansion in front of us in the Food, Drug and Mass channel. And we think we can perform better in specialty and we’re performing really well in e-commerce. So, we see a lot of -- we think that we can drive growth in all 3 of those channels for the -- we can drive for improved performance in all 3 of those channels, certainly drive growth in Food, Drug and Mass and e-commerce for the rest of this year.

Thank you. Our next question comes from the line of Robert Moskow of Credit Suisse. Please go ahead with your question.

Hi. Good morning. Thanks for the question. I guess, two questions. One is, just very broadly, it’s surprising to me to see such a big difference between your reported sales and the Nielsen trends. Given that you launched a lot of new products, which I’d expect would fill the pipeline and also you have the e-commerce growth which I guess is not captured by Nielsen. You’ve mentioned some distribution kind of differences. Is that really the answer, it’s really like yogurt distribution, is that really what the difference is? And then, I have a quick follow-up.

Hi, Rob. This is John. I guess, again, for the U.S., we are planning for, and you’ve seen historically, about a 1 point gap between movement and RNS, and in Q1 it was 2 points. So, again, it was about a point different than what we’ve seen and what we expect to see for the year. So, again, we think that’ll come back to us. But beyond that, as retailers continue to draw down inventories and focus on working capital, we do expect to see that 1 point gap for the year.

Okay. And then, follow-up, I think Don, you said that you would expect, given the performance of new products, you expect a bigger investment behind them in second quarter that will pressure gross margin. Can you give me a sense of what that means? Is that more marketing support, or is it that these new products are lower gross margin mix in nature? Is it pricing? What kind of investment?

So, it wasn’t necessarily related to new products, I was talking about the gross margin, it was really the flow HMM versus inflation and our pricing build over the course of the year.

Okay. But, I think you said a bigger investment also in your response to Andrew Lazar’s question?

No. The point was, as we think about our total brand investment that you’re going to see it hit numerous places in the P&L, not just in media. And I referenced the fact that packaging forward would be an example of something that would hit gross margin, and certainly as we talked about, Oui has been one of the strongest marketing aspects of it.

One of the others is customer activation funds, and where we’re getting in-store taco truck visibility, or other activations we’re getting brand as one in-store, that falls above the net sales line, which should also obviously pressure gross margin.

Yes. That wasn’t necessarily unique to Q2; that was just more of a comment as we think about the full-year.

Okay. So, maybe it’s a shift in media -- lower media and more towards these types of activities?

Yes, for sure. Year-over-year, we’ll see that. Yes.

Thank you. Our next question comes from the line of Bryan Spillane of Bank of America. Please go ahead.

Two questions for me. One, just related to the pricing, the comments you made about price mix will build through the balance of the year. So, I guess, one, just how much of that has already been, I guess discussed with and sold in, and how much still has to sort of be negotiated or sold in? If we can get a sense for that. Just trying to get a sense for, how much could still be open to, I guess, some variability. And then, the second related to that is just, you kind of made a commentary about, just in general, there’s the retailers -- at retailers, there’s more price mix going in. And just why -- what factors are sort of allowing that to happen? Is it that more companies are coming through with SRM tools and being smarter about the way they can sort of negotiate pricing or if there’s some other factor that’s sort of enabling that to -- sort of go into the market?

As we look at the broader food and beverage trends, I think, there’s been a lot written about pricing, and particularly, about how tough it is to get pricing in this environment with everything being so competitive. And it is a competitive environment. But, I think that’s only part of the story. The other part of the story is we’re actually seeing quite a bit of inflation for the industry, and we’re seeing it in a number of areas. So, we’re seeing it in raw materials; we’re seeing it in logistics; we’re seeing it in wage increases. And our retailers are saying the same things. And so, I think that to be honest, in some cases, part of the conversation that had been lost -- the part that it’s a competitive environment, has not been lost. But the part that there’s inflation across a wide spectrum of types of input costs, I think has been lost a little bit. And we all see that and our competitor see that and retailer see that. So, I think that the pricing mix we’ve seen in the marketplace -- and a couple of points of pricing is not a tremendous amount, and it’s certainly not egregious as -- when it comes to the kind of inflation that we’re seeing overall. And so, I think that actually explains why we’re seeing a little bit of pricing in the market, because both we, as manufacturers and our retail customers are all seeing their costs go up on a variety of fronts. As we look at our price -- as we look into the future, we’ll continue to work all four levers of price realization. So, whether that’s list pricing or trade or sizing or what have you, we will look at all the different elements. And we’ve sold a lot in already. And I’m sure there may be some to come, but we’ve sold a lot of them already all over the globe. And so, we’ve got a pretty good line of sight as to what to expect for the rest of the year.

And I just had one follow-up. There was a couple of comments made about to 2Q, I guess with regard to spending and margins. And so, just as we’re looking at sort of the bottom-line, would we expect that the earnings growth or the earnings performance in the second quarter would still be -- the expectation would be that it would be suitable be below the full-year range or does it all net out to being something close to what you’re expecting for the full-year in terms of earnings growth?

Yes. But, we’re not going to forecast in the quarter. I think, we gave some sort of guidance on, some of the Q2 factors we see in response to David’s question on how Q2 will unfold on gross margin versus what we saw in Q1 and then some comments on Blue. I don’t think that we’re going to go any further than that in terms of discussing the quarter.

All right. I figured, I’d give it a try at least. All right. Thanks, guys.

Our next question comes from the line of Jason English of Goldman Sachs. Please go ahead with your question.

I guess, I wanted to come back with another question on the media horse, because I don’t think we’ve beaten it to death just yet. Can you quantify how much you’re A&P was down this quarter, both all-in with Buff and on a base business perspective?

Yes. All-in, it contributed to SG&A, it was down mid to high single digits, all-in and double digit on the base business. Again, I would just make sure that we also put that in the context of that we grew organic sales growth for the fourth consecutive quarter. So the levers that we are investing are paying off for us.

No doubt, no doubt. And to a couple of questions, or in response to a couple of questions. I think you referenced a bit more trade spend going in and maybe you initially planned for the year in terms of customer activation. As we think about the full year and we think about the totality of your consumer facing spend, both from a trade perspective and from an A&P perspective, is this still tracking in line what you initially expected, or is it going to be higher or lower than what you set up as your initial expectation coming to the year?

Yes. Jonathan, it’s in the same range as we have planned, instead of maybe in different buckets. And again, I wouldn’t necessarily call it customer activation trade, it may hit that line but it’s different than -- the promotional spending, or the price discounting that most people associated with trade. But, I just want to make sure that that’s clear. But the total brand investment is going to be very near to what we had in the plan, in the same range of the plan and that was obviously informed part of our reaffirmation of our guidance.

Let me build on Don’s point, as we roll around in the details of media spending and trade by quarter and so forth. I mean, what I feel great about is that we did what we said we were going to do in the first quarter. And we said we are going to grow organically, and we did. We said we we’re going to grow Blue Buffalo, we did. We said we’re going to meet our financial commitments, we did. We grew 8 of the top 9 categories in the U.S. We grew in Brazil, despite the trucking strike. We grew in China. We grew in India. We grew in Europe. We grew in C&F and across our core categories and we realized pricing. And so, I do appreciate the specific nature of questions about media. But the fact is that we deliver what we said we’re going to deliver in the first quarter of issue, both in the top line and the bottom line across our established business across Blue Buffalo. And if we can do that for few more quarters, we’re going to have a good year.

I hear you. I asked just to understand, not to critique. Thank you very much for the time. I’ll pass it on.

All right. Celina, I think that’s probably all the time we have, given that we’re at the bottom of the hour. So, thank you, everybody for joining us this morning. I appreciate the engagement. I’m available. I know we probably didn’t get to everybody quite on the queue. So, please don’t hesitate to reach out with additional questions today. Thanks very much.

Thank you. Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.