00:04 Greetings, and welcome to Hain Celestial Third Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. 00:30 I would now like to turn the conference over to your host, Anna Kate Heller, Investor Relations. Thank you and over to you.

00:41 Thank you. Good morning, and thanks for joining us on Hain Celestial's third quarter fiscal year 2022 earnings conference call. On the call today are Mark Schiller, President and Chief Executive Officer; and Chris Bellairs, Executive Vice President and Chief Financial Officer. 00:56 During the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These include expectations and assumptions regarding the company's future operations and financial performance. These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described in these forward-looking statements. 01:17 Please refer to Hain Celestial's annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed from time to time with the Securities and Exchange Commission and its press release issued this morning for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. 01:36 The company has also prepared a few presentation slides and additional supplemental financial information, which are posted on Hain Celestial's website under the Investor Relations heading. Please note, management's remarks today will focus on non-GAAP or adjusted financial measures. Reconciliations of GAAP results to non-GAAP financial measures are available in the earnings release and the slide presentation accompanying this call. This call is being webcast, and an archive of it will also be available on the website. 02:01 And now, I'd like to turn the call over to Mark Schiller.

02:06 Thank you, Anna Kate, and good morning. On today's call, Chris and I will give some color on the Q3 performance, our Q4 outlook and what we’re doing to enable the Hain 3.0 strategy that we discussed on Investor Day last September. 02:20 Q3 was a very challenging quarter as additional unexpected inflations, supply disruptions, ingredient and package shortages and eroding European consumer confidence, primarily caused by the Russia/Ukraine conflict had a significant impact on our business and financial performance. 02:37 While these disruptions led to softer than anticipated results in the quarter, strong consumption in market share gains leave us confident in the underlying business health and long-term trajectory. Let me explain why we feel this way. First, consumption of sales in North America are exceptionally strong and we expect that momentum to continue into Q4. 02:57 In fact, while I don’t have a complete archive of the company’s reported earnings history, we do know that this quarter was the highest net sales growth quarter in North America in the last seven years. In a moment, I’ll share with you some impressive details behind these sales and what that means for our future growth. 03:15 Second, while our top line was soft in international, most of the revenue issues within the quarter were driven by short-term factors that we believe will improve in Q4. Although we expect short-term inflation and consumer confidence challenges to continue internationally, it's worth noting that we have nine Number 1 and 2 share brands that are well-positioned for growth as conditions normalize. 03:37 Third, since we don't know when the inflationary pressures we are all facing will ameliorate, we do expect it to continue and are taking actions to reduce our ongoing cost basis while passing on significant additional pricing. To date, we've…

14:16 Thanks, Mark, and good morning, everyone. As Mark said, Q3 was very challenging, given the unprecedented environment that we and other companies are facing industry-wide. 14:25 Now, turning to financials, let me highlight a few key aspects of our third quarter results that demonstrate strong execution of our transformation plan and the building of a solid growth platform as we move into Hain’s 3.0 journey. First, while total Hain Q3 reported net sales increased 2% versus the prior year period, reported net sales in North America were up more than 13% and 9% excluding M&A. 14:54 Second, our growth brands in North America grew approximately 12% in the third quarter. More than 900 basis points higher than the growth rate in the first half of the year. Third, our balance sheet remains strong with good capital allocation and flexibility. And finally, as we look forward to the fourth quarter, we are encouraged by the sequential top and bottom line improvement we are already seeing across Hain. 15:20 Let me start with a discussion of our top line results. Third quarter consolidated net sales increased 2% year-over-year to $503 million, driven by strong consumption growth in the U.S., partially offset by declines in the international business unit, resulting from soft total store sales in the UK, the loss of sales from a large non-dairy co-man account, and a decision we made to temporarily halt shipments on selected brands during price negotiations. 15:52 Foreign Exchange reduced third quarter net sales by approximately 150 basis points, while acquisitions, divestitures and brand discontinuations benefited net sales by 210 basis points. After adjusting to exclude these factors, net sales increased by 1.5% versus the prior year period. 16:13 During the quarter, we experienced higher than expected inflation and continued industry-wide disruption and warehouse cost…

23:48 Thank you, Chris. While Q3 was certainly a challenging quarter, we're encouraged by our North American top line momentum, optimistic about improving international trends ahead, and our laser-focused on reducing our overall cost basis as we navigate current macro headwinds. And importantly, we remain confident in our Hain 3.0 strategy and significant potential over the long haul. 24:10 On behalf of the Hain Executive team and the Board of Directors, I want to thank all our teammates for their hard work, tenacity, and nimbleness. With that, let me turn it back to the operator so we can take your questions.

24:24 Thank you. [Operator Instructions] The first question comes from the line of David Palmer with Evercore ISI. Please go ahead.

25:14 Good morning. Mark, you made a comment there in your prepared remarks about the pricing and that that was going to be part of your ongoing guidance. It reminds me that we're at a, kind of an interesting time coming out of fiscal year into a new fiscal year. So, I'm wondering, what do you mean by that? I mean, what sort of ongoing performance are you expecting here? What sort of margin reclaim are you expecting from these pricing actions that you are taking?

25:47 Yes. Good morning, David. The comment and the script was basically that we took pricing in the middle of the third quarter. So, we will have the full realization of that pricing in Q4, but that said, look, we do expect that we're going to need to continue to take pricing in this environment. Inflation, while we're certainly hopeful that it ameliorates and comes down a bit, we're planning for it not to happen and are already preparing additional increases both here and in Europe. 26:20 We will be surgical in those increases, just as we have been and that's part of why our unit volume has held up so well in the face of double-digit pricing. And we have multiple levers in terms of how we will take that price and whether it's list pricing, changing our trade strategy, in terms of depth and frequency, looking at the weight of products, etcetera. And so, we expect that we will over time take enough pricing to cover the costs, which was our intent. And we're using the productivity that we generate to really cover the vast majority of these supply disruptions that we're facing.

26:58 And I'll just ask a long-term one. In the past you've talked about that aspirational gross margin target of 30% by fiscal 2025, you know, these are new times where nominal top line is higher and sometimes gross margins may not be keeping up over the long-term, if you're pricing for a gross profit dollar, but you might be able to leverage that better down to the EBITDA margin line. So, I'm wondering how are you still thinking that gross margins of 30% are achievable in fiscal 2025?

27:36 Yes, it's a great question. Obviously 2025 in a long way away, so we have lots of time between now and then and I would certainly expect that inflation will come down dramatically between now and then. And so, if we can keep this pricing and it sticks over time as costs come down and moderate, we expect that we will see significant margin expansion over time. 28:00 Short-term, obviously, we've got the same headwinds that everybody else does. And we are making the conscious decision to prioritize service over margin in the short-term because we have relatively small brands in the scheme of things with relatively low household penetration and our ability to service the customer and keep the shelves full is getting us tremendous trial where there are lots of holes on the shelves for many who are struggling with supply. So, short-term, we'll continue to see some pressure, but we are confident in our ability to expand margins over time.

28:36 Okay. Thank you.

28:41 Thank you. The next question comes from the line of Michael Lavery with Piper Sandler. Please go ahead.

28:51 Thank you. Good morning.

28:52 Good morning.

28:55 I realize you certainly don't want to get into too much detail on 2023 yet, but can you give some sense of just how maybe your thinking has changed or if this quarter, especially in the international had some unexpected pressures, what should we be expecting to flow through? Specifically maybe are you planning on the sentiment headwinds there being a headwind for maybe most of the next year, is the energy cost outlook something we should keep in mind? Just any bread crumbs you can offer for how you're thinking about the next few quarters would be great.

29:36 Yeah, it's obviously early for us to talk too deeply about 2023 and we're in a very volatile environment where things are changing all the time. And I'd remind folks that when we gave our guidance for Q3, the Russia/Ukraine war had not started yet, and it has obviously changed things pretty dramatically both here and in Europe and in terms of global supply challenges. 30:00 So, it's a little bit early for us to give any kind of real guidance around 2023. What I would say though is, we are planning for inflation to continue. We are taking additional pricing to cover. We are ramping up resources and restructuring, as I mentioned in the prepared remarks to increase our productivity and to ensure that we've got supply locked up and so that we can service the business well. And so, we're navigating the short-term headwinds by being very aggressive in terms of how we handle the headwinds. 30:37 It's too early to talk about what's going to happen 6, 9, 12 months from now because we're going to learn a lot over the next few months about the Russia/Ukraine war. We're going to learn a lot about consumer sentiment and whether they're trading down or not. And so, it's pretty early for us to kind of put a stake in the ground at this point.

30:59 That's helpful color though. And can I just follow-up on the pricing, I guess dispute that you mentioned in the international segment. And it sounds like it was a few brands, I think, and a few retailers. I guess just would love to understand that situation a little bit better. That seems like kind of unusual event. Can you maybe just catch us up on what played out there and what if any residual impact there is going forward?

31:30 Yes. So, the European retailer market and the Canadian market for that example – for that aspect are much more consolidated than they are here. You have fewer bigger retail [Technical Difficulty] and so negotiations on pricing has always been more difficult there than it is here. 31:52 That said, we started presenting our price increases against [Technical Difficulty] like things were stabilizing. And so we were getting some pushback on retailers as to whether or not the energy costs were going to continue, whether costs were going to come down. And so in that negotiation, we made the tough decision to say, if you're not going to accept our price increases, we're not going to ship you product. 32:18 The good news is after a couple of weeks of back and forth and us not shipping, we were able to get all of the retailers to accept the price increases and those are now firmly in place. So, a lot of it is really what's the macro requirement and what's the retailers perspective on whether the inflation is transitory or not, I think we clearly learned from this war that inflation is getting worse, it’s not getting better and supply challenges are getting worse, not getting better. And so, we stuck to our guns. We are trying to make sure that we're passing on our costs and we were successful in doing it. 32:54 Now, again, we're going to take more increases going forward, and we will certainly reflect in go-forward guidance, any anticipated disruption is associated with that, but there's no question that the inflation is significant and that has to get passed on ultimately to the consumer.

33:13 Well, and it sounds like ultimately getting the products in, it reflects the consumer demand too. So, thanks for that [clarification] [ph] and thanks for the questions.

33:21 Yeah. And it also reflects the strength of the brands, right, with nine Number 1 and 2 share brands, the retailers need our products. We have the Number 1, 2, 3 shared [shelf] [ph] soup brands as an example, which is very short shelf life. So, whatever we lost during that period of not shipping is lost. We’re not going to – it's not like inventory is depleted and it comes back. It's very short shelf life product, but when you have the top three brands in a category, the retailers category suffers dramatically if they're not accepting product from us. 33:52 So, we think we're in a good position to negotiate. It’s certainly a partnership and we work hard to make sure that we're appeasing the retailers, but also covering our costs.

34:04 Okay, great. Thanks.

34:09 Thank you. The next question comes from the line of Alexia Howard with Bernstein. Please go ahead.

34:16 Thank you. Good morning, everyone.

34:19 Good morning, Alexia.

34:21 Okay. So, can we ask about the composition of the input costs and freight pressures? You have on Slide 14, the 740 basis points of headwind from inflation and energy and supply chain disruption, is it possible to break that down to let us know how much of it was input costs ingredient related and packaging, how much of it was freight and how much it was supply chain disruption? And specifically, what changed most dramatically from when you gave guidance last quarter? Just so that we have a feel for where the big pressures have shifted over the last couple of months?

35:03 Yes. So, we're seeing double-digit inflation across almost everything Alexia. So, packaging, ingredients, freight, labor, costs have gone up dramatically. So that certainly changed considerably versus when we wrote the original plan and gave the original guidance back last summer. We have about double the inflation that we originally had planned for. 35:27 With regard to the question within the quarter, certainly, gas prices have gone up dramatically, which impacted freight. We're seeing the knock-on effect of oil prices on things like packaging going up. And while we have contracts on all of our ingredients when there are supply shortages, our ability to get those ingredients becomes challenged and we have to find alternatives often at a premium cost. 35:55 And so, as an example, with 75% of the World Sunflower oil coming from Russia/Ukraine and 60% of the palm oil coming from Indonesia, which is said they're not going to export any of it, there is a supply demand issue with regard to oils, which affects our spectrum business, which affects our snacks business. And so, we seek to find alternatives in a very constrained environment and that comes at a cost. And so that was a big part of what changed versus what was originally planned when we gave the guidance for Q3.

36:34 Thank you. And then as a follow-up, just trying to get the short-term factors that pressured sales in Europe. And I know that you outlined them qualitatively, are you able to quantify things like that? How much the several weeks of not shipping to those retailers hit your top line in Europe? And if there were other factors like the co-manufacturing piece, how much of it was short-term versus the overall decline that we saw this quarter? Thank you and I'll pass it on.

37:10 Yes. So, the first thing I would point out is total store softness, which in the UK was down 7%, that's total store every category. Food was down 7% and units were down 9%. So, in an environment where the store is consolidating at that kind of a rate, even if we're gaining share, our volumes are going to be down. 37:31 It's hard to distinguish how much was caused by the soft store versus how much was caused by stop shipping as an example, but in the charts that we provided, it was roughly a third we're attributing to the store declines, a third to the stop shipping, and a third to the lost co-man volume. And just to add a quick color on the co-man, the non-dairy beverage market still is extremely robust and the fact that one of our major customers decided to repatriate the volume as a sign of the strength of the category, unfortunately for us that repatriation, which we knew was coming in a year earlier than we had planned for. And so we will resell that volume. 38:17 The private label has gained 7 share points in plant-based beverages in the last 18 months, and that's largely where our volume is. So, replacing that volume over time is not going to be an issue. We just have to wait for existing contracts to expire for us to replace it in as I said in the prepared remarks, we expect we'll have half of that replaced already by the end of the fourth quarter. 38:40 So, we're confident we'll get all that volume back. And if you look at another chart that was in there, you also see that the overlap from the consumer softness in the UK also gets better as we get into the fourth quarter. So, we've got a lot of reasons to believe that the trends are going to improve from here.

39:00 Great. Thank you very much. I'll pass it on.

39:05 Thank you. The next question comes from the line of Ken Goldman with JPMorgan. Please go ahead.

39:13 Hi. Thank you so much. Mark, I wanted to follow-up on your comment about, perhaps needing to take or think about taking more pricing in the EU, as you consider what happened in the third quarter with shipments withheld and understanding that's not super uncommon in the EU, it’s obviously not something we see a lot in the U.S., but how does that affect how much pricing you might consider for the next round? You did emerge victorious by your words, but not without some short-term pain. So, I'm just curious how you balance some of those factors in your thought process there?

39:47 Yes. So, first and foremost, the retailers are our partners. So, we work with them to make sure we're meeting their needs and our needs. In the negotiation we just had, we went out with some pricing. We had to give a little in some cases to get the pricing in, but at the end of the day, it was a win-win for both. We're going to continue to pass on whatever inflation we have that we can't cover with productivity. 40:13 We do it surgically. We look at our price gaps versus our competitive set. We look at price thresholds. We look at the elasticity data that we have. And so, we're not just randomly throwing out pricing or taking, kind of an across the board, x-percent pricing. It's very surgical. It's very pinpointed. Some of it will be in list. Some of it will be in trade. Some it may take the form of readouts as I mentioned. And we will do it in a way that meets our needs, but also meets the retailer’s needs. 40:45 So, while the negotiations may be challenging and difficult, and that's just part of the nature of price increases in Europe. At the end of the day, we need the retailers and the retailers need us and we will find a way for us to get pricing pass-through in a way that works for both parties.

41:04 Thank you. And then quick follow-up. You've been fairly aggressive with share repo this year, is it fair to assume that this pace will maybe cool off a little bit, now that you may not drive quite as much free cash flow as you previously anticipated or is the stock heading toward evaluation level that's due? Just too attractive to ignore as you see it.

41:24 Yes. It's a great question. I'm not going to give a specific answer because that's a conversation between us and the Board and it also depends on what other uses for capital or for cash that we have. So, part of our productivity agenda includes a lot of automation, so there will be some needs for capital. 41:44 There is acquisition opportunities that we're still pursuing and then of course, share buybacks is another. So, we look at all of these things through the same lens and decide where we're going to get the best and highest return for shareholders, some quarters that may be repurchases, other quarters it may be capital or maybe M&A. So, it's hard for me to give you a specific answer until we've made those specific decisions.

42:09 Understood. Thanks.

42:16 Thank you. The next question comes from the line of Eric Larson with Seaport Research Partners. Please go ahead.

42:26 Yes, thanks everybody. Thanks for the question. So, Mark, obviously, a lot of moving pieces here, but in your prepared comments, you also talked about consumers in Europe trading down, I think maybe there are situation over there is a little more dire than maybe what we might have in the U.S. but one of the concerns we're seeing now is consumers in the U.S. are getting pretty stretched and is there a possibility of trade-off or maybe slowdown in in your very strong consumption growth rates in North America as this inflation becomes even more problematic here as well?

43:17 Yes. So first – and thanks for the question. First, I would say in the UK, just know that we are also a private label supplier. So, as consumers change behavior and trade down, we benefit on one side of the equation where we may lose on another, but it's not an all or nothing equation for us there. In North America, what I would tell you is, if you go back to the last recession, our healthy food grew 8% at a time when the store declined. That's during the housing crisis since 2007 and 2008. 43:49 Because we have a much more affluent consumer, they tend to be much more inelastic. Now, I'm certainly not going to suggest that it isn't possible that we'll see some trade down and we're watching that exceptionally closely, obviously we just took some pricing, we're going to assess what the impact of that pricing is, but I would argue based on history that people are much more affluent and used to paying a premium for healthy food and that will continue even if the economy gets softer and people are more strapped in their wallet, because it's not really the affluent consumer that is affected as much as kind of the middle income and lower income consumer. 44:34 We do watch – that said, however, we do watch our price gaps versus our competitive set. So, if you’ve made a decision to buy organic, where do we fit versus other organic products as an example? We want to be very cognizant of those price gaps and watch those closely. And we've learned from the first two rounds of pricing where we took too much pricing relative to our competitive set or maybe they didn't go up at all. We had to adjust back down. And in other cases, we didn't take enough, right. 45:02 There's opportunity to take more and because these are very dynamic times, we have a very robust pricing capability that watches that closely, and we expect that with the inflation that we're seeing and the words that we've heard from others on their earnings calls, we expect that others are going to take more pricing as well. And we will watch our gaps very closely.

45:26 Okay, thanks. And then then my final question here, a follow-up question is, can you give us a little bit more color on the timing of productivity, you know that’s been one of your big positives for the last three years, obviously, some step back here with cost inflation, etcetera, but could you give us an idea of – and remind us of the ranges of guidance for long-term productivity that you've had and what we might start seeing some of that incremental productivity show up in the P&L?

46:10 Yes, we've been generating about $40 million to $50 million of productivity a year, which is around 4% and we expect that we will continue to do that. What I would tell you though is in the last three to six months, some of our productivity resources have shifted to things like formulations as opposed to just capital automation projects and things like that. So, in an environment where certain ingredients are going up dramatically and other ingredients haven't gone up at all, we are looking at our formulas very closely and flexing those formulas in a way that minimizes our cost. 46:48 That's a big source of productivity for us going forward. And you've already seen that in certain brands like Garden of Eatin’ where we did complete reform dramatically lowered the cost, and we're actually able to lower the price of the product such that we are now growing high single digits and very well-positioned for the future. 47:09 So, it's a combination projects. As I mentioned in the prepared remarks, we are adding resources and productivity because we have so many projects and people are spending a fair amount of time fighting the various supply challenges that we have, and I don't want to lose any momentum on productivity as a result. 47:30 So, I expect we'll still be in that 40 million to 50 million range and it's materializing in the P&L today, you just don't see it given the magnitude of the inflation and the disruption costs, but we are generating good productivity and we have a very robust pipeline of ideas that we're continuing to work.

47:49 All right. Thank you.

47:54 Thank you. The next question comes from the line of Anthony Vendetti with Maxim Group. Please go ahead.

48:01 Thanks. Just two questions. So, the first is on the top line, obviously you've been taking price increases and been successful and you're going continue to do that where you can, but in this particular quarter, was volume down year-over-year because – since the price increases, it looks like may have accounted for most if not all of the revenue growth? And then, just a quick follow-up is on, you mentioned obviously, there's been increased costs throughout whether it's ingredients, packaging cost, freight labor, and how much of the increased raw material costs would you contribute to the war in Ukraine?

49:00 Yes. So on the volume question, volume was up in North America, but it was down in international. Given the top line softness that we mentioned, and the not shipping product, the weak consumer, our volume was definitely down in our international business, but it was up in North America. And in the prepared remarks, I talked about how our unit growth is mid-single-digits in an environment where we're taking double-digit pricing. 49:27 So, we feel really good about the strength of our brands and the fact that we're gaining households and gaining units at a time when our categories are not and our competitors aren't necessarily either. So, it really is a tale of two cities with regard to that question. 49:44 On the raw material, what I would tell you is the war has impacted pretty much everything. And what I mean by that is, obviously, gas prices have gone up, you all see it at the pump. The derivatives of oil, things like packaging are going up because of the war. And in particular, I mentioned earlier oils, the cost of oils are going up exponentially because both Indonesia hoarding what they have and Ukraine not planting or harvesting anything, there's just going to be a shortage of oils relative to the supply that's out there. 50:25 Now, the good news for us is, we have contract that extend all the way through the end of the calendar year, but just because we have contracts doesn't mean that the supplier has supply, right. And so, they're honoring the prices that they have when they have supply, but if they don't have it, we have to go find alternate sources and that comes at a premium cost, because there just is more demand than there is supply right now. 50:48 So, I'd say, oils is a big piece, freight is a big piece, packaging is a big piece and even in Europe, a lot of the manufacturing employees, the people that pick the crops, a lot of them come from the Ukraine and those people are not available. So, there's also wage inflation pressure as well, as a result of the wars.

51:12 Okay, great. That's helpful. Thanks Mark.

51:20 Thank you. [Operator Instructions] The next question comes from the line of John Baumgartner with Mizuho Securities. Please go ahead.

51:42 Good morning. Thanks for the question.

51:44 Hi, John.

51:47 Mark, I like to revisit the subject of productivity, given the increasing importance there and offsetting cost push. As we think through the next phases for contribution, and you just discussed this a bit in terms of the ingredients, but what's been on the board, I think is lean manufacturing, automation, regional integration, will you sort of rank order your projects for [F 2023] [ph], to what extent is that, you know call it [40 million to 50 million] [ph] of savings, contingent on outside parties, may be vulnerable to ongoing disruptions to the supply chain. I guess I'm really asking more about the mechanics to the activities and what could potentially get delayed rather than just the straight dollar contribution?

52:26 Yeah, a great question. So, the two biggest productivity areas, which I just mentioned, a few questions ago is, reformulation and capital automation projects with [Technical Difficulty] Sorry. The capital projects are the ones that are subject to potential disruption because we're reliant on other people having the labor and the materials to be able to provide us the capital on time. And so, we're seeing in some cases some slippage in the timing of the receipt of those materials, but at the end of the day, there's a lot of projects in productivity. 53:10 Automation of packaging design. In the case of That's How We Roll, which we just bought grinding our own cheese versus pre-ground cheese. There's also capacity projects that are capital dependent where we've grown so fast in some categories that we are adding capacity. So, those are the things that rely on third party equipment manufacturers. Those was are the ones that are somewhat at risk, but so far so good, those seem to be on track and we will watch this closely.

53:51 Thank you. The next question comes from the line of Rebecca Scheuneman with Morningstar. Please go ahead.

54:01 Great, thank you. So, my first question is, I was just wondering if you could shed a little bit of light on the soft volumes, you know the down percent, the 9% fall in volumes in Europe. I would think that with the [problems] [ph] in the consumer concerns over there that this would be very resilient. Can you explain why this is more discretionary than I would have expected?

54:35 Well, so part of it is certainly driven by the Russia/Ukraine war and just people's angst around their own finances and what the implications of the war are going to be going forward, right. So Russia has cut off supply to Poland on certain things. They’ve threatened Finland, people are anxious about kind of what's coming, which is affecting purchases and certainly, we're seeing some trading down as a result of it. But the other thing that's also very relevant here is, if you look at the overlap, and there's a chart that we provided with the earnings that shows that we had a very elevated volume period last year, which was because Europe was in complete lockdown and unlike the United States, where we have red states and blue states and some were locked down and some weren't, there was complete lockdown a year ago, and now that they're completely open, the lunch occasion has left the home, as people go back to work and kids go back to school. 55:39 And so some of this is an overlap issue that, again, if you look at the chart, that was included, that overlap gets much easier going forward. So, I do expect that it will get better just from an overlap perspective alone, and I think at the end of the day, people have to eat. And so, you can't have perpetual declines in unit sales within grocery over an extended period of time unless everybody is eating out of home and I don't think restaurants are going to be a beneficiary of consumer angst. 56:09 I think people are more likely to eat more at home, not less at home over time. So, I think some of it is just a short-term reaction to the magnitude of the disruption there and the overlap, but I do expect it will get better over time.

56:26 Thank you. The next question comes from the line of Scott Mushkin with R5 Capital. Please go ahead.

56:34 Hey, guys. Thanks for taking my questions. So, I guess I wanted to, maybe you said this already and I missed it, but how much of the inflation is reflected already on your shelf price, do you think?

56:48 Yeah. So, our pricing lags inflation and so what was built into the third quarter pricing that we just took was the inflation that we saw coming in the second quarter. We've not fully reflected in the cost of the Ukraine war, because again, we were out selling the third quarter increases in December, January before the war started. 57:12 So, hence to need for additional pricing. And we want to first read the impact of the pricing we just took before we come out with the next round of pricing so that we understand the elasticities and where brands are resilient and where brands may see a negative impact from that pricing. 57:31 So, there's more coming. It does lag. Certainly, we have more pricing in Q4 than we did in Q2 because of the pricing that we just took, but it's not sufficient to totally cover all of the inflation, which is why we've guided to some margin erosion continuing in Q4. Not as significant as it was in Q3, but still there will be some erosion.

57:52 Now is – so that's good. I just want to make sure I understand. So, is all – like if I went and bought [indiscernible] whatever I'm buying, you know one of your products here in the U.S., is, [ex-Ukraine] [ph] is all of that now reflected in the place through the second quarter of the inflation or is it still we have some in the second quarter to kind of drip through and then we're going to have another big price increase at the shelf? I just want to make sure I understand.

58:20 Yes. So, the pricing that was taken in the third quarter reflects all the known cost through the end of the second quarter, but obviously for the earnings announcement today, we've seen additional costs in Q3 that will be reflected going forward. And also, you have to remember our fiscal year ends in June and we have contracts that are on a fiscal year basis, we have some that are on an annual year basis. 58:44 So, as contracts roll-off, they are likely to be inflationary versus what we contracted for a year ago before all of these cost increases materialize. So, inflation is going to continue and we need to again make sure that we pass that on and do it in a very disciplined way.

59:03 And then one final one and maybe you said this too already, if I missed it, I apologize [Technical Difficulty] price increases coming because of the Ukraine war and what's going on commodities, which is just obviously they have all taken off quite a bit versus what we've seen thus far?

59:21 I'm sorry, I missed part of your question, you cut out. Say one more time.

59:23 Sorry. So, basically the size of the future price increases given what's going on with the commodities in labor versus what we've already seen, and if you said that already, I apologize, but I must have missed it if you did.

59:35 No, I didn’t. So, the first increase we took was in 7%, 8% range. The second one we took was in the 4% range. This will probably be somewhere in the middle of those two.

59:48 All right, guys. Perfect.

59:55 Thank you. The next question comes from the line of Jon Andersen with William Blair. Please go ahead.

60:05 Thanks. Good morning everybody. I'm struggling here to come up with the question after all of those, but let's see. Let's ask about – I’ll ask about the co-man in Europe, since you had a shift in that business with one of your customers, it would be helpful to kind of understand, I guess how much co-man you do in Europe and what kind of visibility you have into that business and maybe how much kind of turns over on an annual basis? Really just the question is, is it likely or unlikely that you could be surprised with a customer repatriating on a regular basis, sort of this is a unique situation? Thanks so much.

61:03 Yes. So, we are the number three supplier of plant-based beverages in continental Europe, both co-manufacturers for branded companies, as well as private label all of those relationships have the annual contracts. And so, we have one large customer, you could guess who it is. Who's decided to repatriate the volume? It was intended to happen a year from now. That was the direction we were giving and we were given and we were somewhat surprised by the timing of it, but it does speak to the health of the category and the continued growth potential. 61:41 So, over the last three or four years, demand has outstripped supply, and so, it doesn't shock me that one of the biggest players in the category has decided to repatriate some of that volume, but there's plenty other volume out there to be had. Most of our contracts are at least 12 months in length, we don't have any expiring in the immediate term, most of them expire at the end of the calendar year as they expire at all in our multi-year. And so, we're picking up some volume here and there as I mentioned. 62:15 We'll have half of the volume already recaptured by the end of the Q4. And I would expect by the end of the calendar year, we will have all of it recaptured. So, look, private label and co-man is a bid business. We are a low cost supplier. We've actually been making plant-based beverages for 30 years, and we're really good at it. And so, we can be very competitive on costs and still make good margins for ourselves. 62:41 So, I'm not overly worried about any long-term disruptions. Is it possible that there are short-term ones, maybe, but this was a bit of a unique circumstance given the size of the customer here.

62:59 Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. And I would like to turn the call back to Mark Schiller for closing remarks.

63:11 I thank everybody for your time today. Obviously, we’ll be available throughout the day to answer continued questions. I'd just reiterate, we're extremely proud and excited with the growth that we're seeing in North America and we do believe that some of the pressures that we saw in Q3 will improve as we go forward. So, our thesis is intact. Our team is strong. Our execution is good, and we're very optimistic about the future. With that, I thank you.

63:41 Thank you. This concludes today's conference call. You may disconnect your line at this time. Thank you for your participation.