Greetings, and welcome to Hain Celestial First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasures to introduce your host, Chris Mandeville, Managing Director of Investor Relations at ICR. Thank you, Chris. You may begin.

Good morning, and thank you for joining us on Hain Celestial’s first quarter fiscal year 2023 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. 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. 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, as well as 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. The company has also prepared a presentation, inclusive of additional supplemental financial information, which is 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 be made available on the website. And now, I’d like to turn the call over to Mark Schiller.

Good morning, and thank you, Chris. On today's call, I'll give you an overview of our Q1 performance and outlook for the balance of the year. We're pleased to report that we exceeded our constant currency margin and EBITDA guidance in Q1 and showed material sequential improvement. As a result, we are reaffirming our annual profit guidance with the continued caveats that we expect Europe to be unusually volatile and that our anticipated total fiscal year profit growth is skewed to the back half. Let me now dig into the Q1 results in more detail. On our last earnings call in August, we laid out our annual plan expectations. You'll recall that our guidance for the year was in constant currency, given the expected volatility in foreign exchange rates. While we didn't give specific guidance on revenue in Q1, our total sales growth in constant currency was in line with the Q4 sales growth as expected. On adjusted gross margin and adjusted EBITDA, we guided that Q1 would be modestly below Q4. That said, our adjusted gross margin, which is normally the lowest in the first quarter due to seasonality, came in much better than we guided, up considerably from Q4. Our adjusted EBITDA dollars and margin also improved versus Q4, which is better than we guided. To understand our progress better, let me now pivot to the operating units. In North America, net sales were up 8.6% versus a year ago. While this is less growth than we achieved in Q4, much of the softening was expected. First, as expected, we pulled back on promotional spending on brands that were experiencing supply disruption. As a result, on the growth brands, our non-promoted consumption was up an impressive 17%. That's six points higher than our total consumption revenue growth for…

Thanks, Mark, and good morning, everyone. As Mark discussed, our first quarter results were better than the guidance we provided in August, with sequential improvements in gross margin and bottom line growth versus the fourth quarter of fiscal 2022; improved performance in North America, driven by continued strength of our growth brands, solid performance in our supply chain and productivity initiatives; and the volatility in results from our international business, including a large swing due to strengthening of the US dollar versus the pound and the euro. In the first quarter, consolidated net sales decreased 3.4% to $439.4 million. Consistent with recent trends, foreign exchange remained a material headwind in the quarter. On a constant currency basis, consolidated net sales decreased less than 1%. The strong dollar resulted in a $27 million net sales headwind in Q1. Reported and adjusted net sales growth in North America were 9% and 3%, respectively. In our International Operating segment, constant currency adjusted net sales growth improved sequentially versus the fourth quarter. In Q1, international reported net sales decreased 20%, but the decline on a constant currency basis was only 7%, an improvement of approximately 280 basis points versus Q4. Adjusted gross margin was 21.5% in the first quarter, decreasing approximately 240 basis points versus the prior year period. However, sequentially versus the fourth quarter of fiscal 2022, adjusted gross margin increased approximately 210 basis points due to the impact of pricing catching up to inflation and strong operations performance, offset somewhat by seasonal mix. This is better performance than our Q1 guidance of a modest decrease in gross margin versus the fourth quarter. Total SG&A, including marketing, came in at 16.8% of net sales for the quarter. Adjusted EBITDA on a constant currency basis was $38.6 million versus $47.3 million in the prior…

Thank you, Chris. I'd like to close by thanking our entire global team for their resilience, flexibility and tenacity during these turbulent times. I appreciate their hard work and collaboration and look forward to continued progress together. Let me now turn it back to the operator, so we can answer your questions.

Thank you. We will be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from Brian Holland with Cowen. Please proceed with your question.

Yes, thanks, good morning. I wanted to ask about the Europe nondairy beverage business. You mentioned new contracts there. How has the progress of recouping the customer volume loss last year versus expectations? Just given the category softness that you've referenced, do you still think you'd get back as much of that that you anticipated at the time you lost it?

Yes. So the first thing I would say is, we recouped about 70% of the lost volume from that contract or have commitments for 70%, hasn't all started shipping yet. But we're making good progress in bringing on new customers to replace that volume. On the flip side, however, as the economy gets weaker and we see people migrating to private label or the branded part of the category is softer than it was months ago. And so, most of the contracts that we have added are branded players that we're co-manufacturing for and so their volumes have come down a little bit versus what we had anticipated. So while we're gaining volume by bringing on more customers, the size of that volume and the size of the orders from existing customers has abated a bit kind of offsetting one another. With regard to future contracts, which is the process we're in now for private label annual contracts that become effective in the third quarter, we're in the midst of the bidding process now. And I would say, in an environment where there is more capacity than demand, those contracts are going to be very competitive. And we're going to certainly try and get inflation built into those contracts, but how much we'll be able to get into and how many of them win, time will tell. We'll have a much better idea on the next conference call.

Appreciate the color, Mark. And then, you've talked about last couple of quarters now about just -- and you just referenced here some of the softness in plant-based demand and the impact on the business. So I'm wondering more broadly, just given some of your peers that are more heavily weighted towards indulgent snacking and have called out strong demand, you play obviously in the better-for-you space. So, if we strip aside plant-based, what's the interplay between Indulgent and better-for-you? Are you seeing any impact here of consumers being less focused on the type of products that you sell and maybe pivoting more towards indulgence just given macro sensitivities, anxiety, et cetera.

Yes. So I'm not sure if that's a Europe question or a North American question, but I'll answer it both ways. In North America, you see that the consumption on our growth brands, which are all health and wellness brands is very high. Excluding promoted volume because we had to pull back on promotions due to supply challenges on some of the brands. Our consumption in North America or in the US, was up 17%. So we're not seeing any softening in particular on salty snacks. We're seeing very robust growth every single quarter for the last three years, and that continues to be very robust. In the UK, our portfolio is a bit different. We do have some center of store things like jams and jellies and preserves and soups that are somewhat -- they're all health and wellness oriented, but they're different than some of the categories that we have here in North America. So less organics and those kinds of things, although we do have fresh soups and we do have Ella's Kitchen, which is an organic baby food and some brands that are like that. In Europe, we're seeing much more trade down from branded to private label. And that's not -- there's no difference between indulgent products and health and wellness products. People are just trading down. They have 15% inflation. They have a lot of turmoil politically, as you know. And so people are nervous and they're trading down. The good news for us is we are in the private label business in the UK as well as in Europe, albeit a smaller part of our business in the UK, but we do have somewhat of a built-in hedge if people do trade down. And so we're seeing that trade down on all categories. It's not unique to health and wellness or indulgence. Q – Brian Holland: I'll leave it there. Thanks.

Thank you. Our next question is from Andrew Lazar with Barclays. Please proceed with your question. Q – Andrew Lazar: Hi. Thanks, good morning, everybody. A – Mark Schiller: Good morning. Q – Andrew Lazar: Mark, I think -- well, you laid out a couple of discrete factors that are going to cause North America adjusted sales growth to slow some in the fiscal second quarter. But I seem to remember on -- I guess, on the last quarter's conference call, there was some concern raised about -- from investors about sort of slowing or slightly slowing trends like consumption trends broadly in North America. And it doesn't sound like that necessarily played out, right? Because you talked just before about the strong consumption you're seeing broadly in North America right now. So can you talk a little bit more about what you're seeing in North America around consumer habits? Like what do you see? Elasticity remains pretty manageable, as you've said in the prepared remarks. Your products tend to be right at premium price points and maybe those are a little bit more protected from certain consumers in this type of environment. But what are you seeing around North America and anything there that makes you incrementally concerned, right, around console behavior in North America going forward? A – Mark Schiller: Yeah. Great question. So part of, again, the difference between the consumption and the shipments in Q1 is the supply disruptions that we've talked about. So we had some of our biggest brands like yogurt and sensible portions and others that formula on baby food that because we didn't have supply, we pulled back on trade. And so some of the slowdown that people are seeing in the total consumption numbers, if you just pull back the onion…

And then in North America, with the pricing that you've taken and are in the process of taking, have you found that generally, the competitive environment around price points and such are pretty consistent with what you're doing such that you don't anticipate necessarily gaps opening up in a way that is -- that it could be problematic? Thank you.

Yes. So we have taken more pricing in the US that hit in Q1. The Canadian pricing is hitting as we speak. And it was high single-digit pricing. So it's significant additional pricing in the algorithm. We watch very closely, Andrew, what our price gaps are versus our competitors, our thresholds, whether velocities and elasticities are changing. And so there's a lot of adjustment going on, customer by customer, brand by brand, if we haven't taken enough or if we've taken too much because we do want to stay at a certain kind of gap to our competitive set. I don't anticipate any major changes versus the pricing that we've taken. We've not seen significant changes in the trajectory of our business. Again, there may be a segment here or a segment there or a customer here or there that we have to make some adjustments. But I expect relatively minor tweaks.

Thank you.

Thank you. Our next question is coming from Alexia Howard with Bernstein. Please proceed with your question.

Good morning, everyone.

Good morning.

Can you talk a little bit more about exactly sort of when the pricing is expected to come through? I know you had some this quarter, but you're expecting to have some. Is it both Europe and the US that's planning to have more as we roll through the year, or is the Q1 pretty much it?

So the pricing in the US occurred in the middle of the first quarter. So it's in place. We will do some minor pricing in the second half. It may be more by weighed-outs or adjustments to trade debt as opposed to list price increases. But there will be some minor tweaks here and there in the second half of the year. In the case of the UK, the pricing hit at the end of the first quarter, so it really fully started getting reflected in market in October. And I'm pleased that we got all of that pricing through without having to stop shipping anywhere during the negotiations. And again, thus far, it appears like the elasticities are holding up well. In Canada, the pricing is hitting now in the second quarter, so there was very little pricing in the first quarter. And in Europe, the nondairy beverage contracts that we're negotiating, that pricing will hit in the second half of the year. As we bid on contracts to replace the lost co-manufacturer contract that we had in the third quarter, we've obviously been bidding at what we think the market will bear on those things. And they're getting some of the inflation built into the contracts, but it's challenging in an environment where there's more supply than demand. So all that said, I think most of the pricing, with the exception of the private label non-dairy beverage contracts, is in the market now. You'll see the full impact of things like Canada next quarter. You only get a partial impact this quarter. And we will continue to look at inflation and the rest of the market. As inflation goes up from here, we'll have to take more pricing. Inflation goes down from here, then we've probably taken enough.…

Thank you. Our next question is from David Palmer with Evercore ISI. Please proceed with your question. Q – David Palmer: Thanks. Mark, you were always very willing and able to focus on long-term targets in the past, and that was because you're making real changes at the company in terms of mix and internal functions. I wonder how much has really changed in your terms of your long-term views based on everything that's happened in the last 18 to 24 months? I mean how do you view Hain today versus back in late 2021. I think back then, you were talking about it being an 8% to 11% EBITDA grower and getting gross margins up into the high-20s. So any thoughts about how things have really changed for you? And I have a follow-up. A – Mark Schiller: Yeah. I mean what's good about having a portfolio is you get the yin and the yang. While some things are performing better than you expect, other things not quite as much. I think given all the noise of COVID and inflation and the Russia-Ukraine War, it's hard to tell, whether some of these things are more permanent changes or more transitory changes. And when we get back to whatever a new normal is, how do those behaviors change. But what I would say is there's categories like salty snacks that continue to perform exceptionally well and become a bigger and bigger part of our business. And then there's other pieces that have ebbed and flow. Chia had a huge surge during COVID, and then it has overlapped. Baby had a huge negative during COVID when people were at home making their own baby food. And then the society reopened, it got much stronger. So there is kind of some back and forth there. The only place where I would say anything has fundamentally changed is the gap between supply and demand in nondairy beverage is different than it was pre-pandemic. There was much more demand than there was supply, and now it's the other way around. So, what we need to do is keep rightsizing infrastructure and make sure we can get back to the margins that we used to enjoy on that business and get back the lost volume that we talked about last year. So that's the one that we're watching closely. But other than that, I don't think there's any material fundamental changes that we would call long term.

And the other one I had, back then, you were pretty clear about your M&A priorities, maybe becoming more of a fast-growing pure-play food company. A lot of that was the plant-based direction you were trying to go. I wonder, how much you just mentioned about the nondairy beverages plant-based. And of course, there's also been a tougher environment with higher interest rates that might make M&A harder. How are you really shifting your view there about M&A and your ability to affect the shift in your portfolio? And I'll pass it on.

Well, so we are always looking at M&A, both on the buying side and the selling side. It is more challenging in this environment with high interest rates for people to get financing. There is interest in some of our non-priority assets, but getting those deals done has been challenging. And obviously, given our current leverage, we're less likely to be doing any buying right now, until we do some selling. And there is still a tail here that we've talked about in Hain 3.0 that we would like to, over time, exit. So, all I would tell you is those conversations continue. Our desire to continue to simplify the portfolio and reshape it is still there, but the marketplace is going to somewhat dictate what we can and can't do in this environment.

Thanks.

Thank you. Our next question is from Michael Lavery with Piper Sandler. Please proceed with your question.

Good morning. Thank you.

Good morning.

I just wanted to come back to plant-based. You called out you broke down the European -- the growth in International and show that down 9%. Is that -- how much of that was driven by the lost contracts? And I guess, as you look ahead, you talked about the competitive pricing for trying to fill that capacity and renew some existing contracts. You just touched on rightsizing infrastructure as well. How much is potentially rationalizing some of that capacity on the table, or is the expectation that there's enough demand? How does that sort of shake out?

Yes. So we have multiple manufacturing plants for plant based. And I think, depending on where we net out on, contracts that we're going after and have a better visibility to what the volume is going to be, we will certainly continue to look at, do we have the right infrastructure to support that. I mean, we have been aggressively taking cost out since we lost that contract. And part of the reason you see some progress on margin, it's because we have been aggressively taking out cost, eliminating overtime, taking longer holidays around national holidays, looking at the non-manufacturing labor that we have in the plant. And so we will continue to rationalize the infrastructure to whatever the demand is. And vice versa, if demand goes up considerably, we also look at adding capacity. And this is all part of kind of our productivity culture where we're constantly evaluating where do we need more capacity, where we have too much capacity in some places around the world where we're repatriating volume from co-manufacturers into our facilities. And in other places, we're rationalizing the capacity that we have. So it's an ongoing conversation. But given that we're at an inflection point on replacing that volume from last year, we're not going to do anything until we have better visibility to what that looks like. Q – Michael Lavery: Okay. Great. And just on the sales momentum, can you give a sense of the declines you called out and how much is driven by the lost contract versus in-market or the pressure on demand? A – Mark Schiller: Yeah. So I don't have a specific breakdown on the pieces, but there are a few components. One is obviously that loss contract. The second is the softness in the category and people trading down to private label. So a lot of our plant-based beverage volume is branded, our own brands and co-manufacturing for other brands. So as the brand side of the equation has lost, I think, five share points in the last 12 to 18 months in that category, the branded volume has also declined. And so that's a chunk of it as well. And again, I don't know what the relationship is, whether it's 50-50 or 60-40, but they're both contributing at a fairly meaningful level. Q – Michael Lavery: Okay. Great. Thanks so much.

Thank you. Our next question is from Ken Goldman of JPMorgan. Please proceed with your question. Q – Ken Goldman: Hi. Thank you. I guess my question is in -- or my first one, in light of the first quarter's reported figure and now your updated guidance for 2Q, does your outlook still assume that North America organic sales growth will grow mid single-digits for the year? If you said that, I missed it. I'm just curious if some of those -- and maybe unique headwinds in 2Q were kind of conspiring to drag that down a bit for the whole year? A – Mark Schiller: Yeah. So -- and Chris, feel free to chime in. But we haven't changed our guidance for the year. There are puts and takes on any given quarter. And there is some new news with the continuing shortage on formula and some of the softness in the club channel that I mentioned. But we have not yet changed our guidance for the long haul because there's a lot of programs that we're also adding in the second half of the year. So at this point, I'd say we're still holding our guidance, but there's definitely some puts and takes in that. A – Chris Bellairs: Yeah, exactly, as Mark said. So holding total guidance, but also within North America, to your question specifically, we do still expect mid single-digit adjusted net sales growth in North America. Q – Ken Goldman: Got it. Perfect. Then I guess the easy follow to that is, does that still apply to your gross margin guidance? I think previously, it was for flat to slightly down. Again, I didn't hear you update that. Should we just assume that, that's still the outlook?

Yes, it is.

Just going to take that.

Great. I’ll pass it on. Thank you.

Thanks, Ken.

Thank you. Our next question is from Rob Dickerson with Jefferies. Please proceed with your question.

Great. Thank, so much. Just to kind of follow-up on the gross margin piece. I thought I heard you say in the prepared comments, you may be able to recover a fair balance of the kind of profitability margin loss, how you get through the year, just driven by potentially some supply chain improvements and also the incremental pricing coming. So, what I just wanted to make sure, I heard that correctly. Is that for total company? And then if we think about kind of how you exit the year in '23, like how much should we be expecting some of that gross margin to recover as we go sequentially Q2 to Q4? Thanks.

Yes. The thought there was that the exit rate, that by the time -- so sorry. To begin again. It's a consolidated, the total Hain. And as we exit the year, the Q4 run rate for total Hain, we believe will be begin to look a lot like what it did a year ago [indiscernible].

Okay. Got it. And then just another clarification question. On FX, I thought you said, maybe for the full year, the drag could be like $14 million to $110 million, and that was for sales and EBITDA. So just curious, I might have missed it, have you said kind of what that drag was in Q1? And how we should be thinking about the trajectory in absolute terms as we get through the year? That’s it. Thanks.

Yes. So in my prepared remarks, we said $110 million net sales for full year headwind and $14 million of EBITDA full year headwind. In Q1, the net sales have been above $27 million, and the EBITDA had been raised 2.5 or 2.6 [ph], I think. So the trajectory kind of stays the same in total dollars, even though there's puts and takes within that. So we expect in the back half of the year will overlap the beginning of the strengthening of the dollar from last year. So the rate effect goes down a little bit. But as net sales grows, then that's an offset. And so, the quarter-by-quarter impact ends up looking pretty similar throughout the year, even though there's some changes with the details.

Got it. Super. That’s all I have. Thank you, so uch.

Thank you. Our next question is from John Baumgartner with Mizuho Securities. Please proceed with your question.

Good morning. Thanks for the question.

Good morning.

Good morning.

I wanted to ask about fun crisps. The Q1 sales contribution was much lighter sequentially. And I think you mentioned some distribution losses. Can you quantify the impact from those losses? How you're thinking about regaining those? And then I guess, aside from distribution, how is the underlying volume holding up, given what it looks like to be -- you raised prices are not double digits. Just the lay-land on farm, Chris, would be appreciated. Thank you.

Yes. So in Q4, we had some significant club activity that we did not have in Q1. And so there was definitely less of a contribution from that's how we roll in Q1 than there was in Q4. A good portion of that business is skewed towards nonmeasured channels. And a lot of that is locations that they're in and out kind of distribution. And so we've lost some of those in the first half of the year, and we're working to strengthen and confirm those for the back half of the year. So I don't have on an annual basis, what the impact of that will be. But certainly, we did have a gap between Q1 and Q4. On the measured channel side, we continue to gain market share. But it is a high-priced snack relative to other mainstream snacks, and it is a relatively low awareness and household penetration category because it's a somewhat nascent category. So the loyals are still loyal, but the trial, when you have to go to the store now and your pocket book is somewhat constrained, are you going to try a snack with $5, or you going to try a snack with $3. So we're having -- we've got more work to do to generate more trial in the measured channels, but we are certainly continuing to gain share there, which is encouraging. Q – John Baumgartner: Okay. And then on the inflation outlook, Chris, I think you mentioned 75% covered. The inflation is a little bit better in H2 now relative to what you thought a couple of months ago. Is that just largely the reflection of the volatility of energy complex, or is there anything else on the ingredient side that has gotten materially better or I guess marginally better that you think can stick? Thank you. A – Chris Bellairs: We think some... A – Mark Schiller: Go ahead, Chris. A – Chris Bellairs: We're seeing some of the packaging, some of the raw materials are moderating a little bit either versus where they expect them to be in the first half or moderating a little bit versus our expectations, what we put in plan. But on a few select places, we're beginning to see a little bit of softening versus where we had been. And to your point, a piece of it also is definitely the energy complex, whether it's the trends or some of the programs that have been discussed in both the UK and in Continental Europe to provide some subsidies and caps. Q – John Baumgartner: Okay. Thanks for your time.

Thank you. Our next question is from Andrew Wolf with CL King. Please proceed with your question. Q – Andrew Wolf: Great. Thank you. I want to ask about the UK and the fact that there was some sales growth in the market despite -- for Hain despite the consumer confidence being it, as you mentioned, a record low. So could you kind of unpack that, like how is the company able to achieve that in regard to price versus volume? Was it price driven or turn our promotions? I'm sure some of it was -- well, I'm not sure, where some of it any your fill rates just having able to fill the orders at a higher percentage. I mean it's a pretty nice result in regard to -- or was it just comparisons? Just help us understand that improvement versus market conditions? A – Mark Schiller: Yeah, I'd say there's two drivers there. One is certainly pricing. We've been aggressive on pricing in the UK from day one and have gotten pricing into the market faster than others, which has helped. The other is -- which I alluded to, is about 20%, 25% of our sales in the UK is private label. Private label is growing double-digit. So that part of the business is growing much faster than the branded side for the entire store. And so having a presence there, which we talked in the past about how that helps us in terms of relationships with customers, but certainly in a recessionary environment where in the UK, the pattern has been to trade down short term, and then when the inflation abates to trade back to branded, it's a little bit of a natural hedge for us that we're certainly benefiting from, and that's helped the results as well. Q – Andrew Wolf: Okay. And is most of that private label within the category where just the structure of the market is the asset manufacturer to also make the private brand, or is it truly incremental like in different categories?

No, no. So this is really about maximizing your overhead absorption in your factory. So, 92%, I think, of our UK sales are self-manufactured, which is very different than North America, where it's a little more than 50%. And so we've got lots of plants with lots of overhead. And a long time ago, a decision was made to use that stranded overhead to get into private label and partner with retailers. And so, it really is us expanding our distribution in categories that we're already in. There is no kind of unique private label manufacturing of categories that we don't have brand.

Okay. And I just wanted to also revisit or follow-on on the plant-based business in the International segment. And I guess, I want to also kind of unpack it. Obviously, beverages have a specific event that happened. But I also want to add about entrees, the Linda McCartney brand, food ingredients. I mean, from time to time, natural and organic product category is just kind of slow because they do. It seemed to happen here in the US. Is there something structurally happening in these categories in your guys' view in Europe, or is -- or do you just think it's more of an event-driven and macro driven in terms of the demand side?

Yes. So when the pandemic hit and animal protein was difficult to get because of lots of issues within the manufacturing facilities and COVID outbreaks and the like, a lot of people tried plant-based proteins for the first time. And some stayed and some left. And so part of this is just overlapping a COVID surge, and that's why the category is soft. The other dynamic in the UK is the growth migrated from frozen to chill. We are the number two player in frozen. We're a very small player in chilled. So that's impacted our short-term results a bit. But actually, in the most recent quarter, we've seen chilled start to flow and frozen start to pick back up. Again, I think, because of spoilage and shorter shelf life, consumers who are interested in plant-based are more likely to fill their freezer and know that they're not going to have to throw something out because it expires, which is the risk with short shelf life products. So, it's a dynamic category. The softness globally is well documented. We like our positioning. We feel like we have a great brand with a lot of potential, but it's -- again, there's kind of the ebbs and flows of COVID and some of the shifts between segments that has driven some short-term volatility.

Okay. Thank you.

Thank you. Our next question comes from Anthony Vendetti with Maxim. Please proceed with your question.

Thanks. Just a quick question on the e-commerce side. Is that continuing to grow significantly? Can you just talk a little bit about the quarter results on that side?

Yes. So it was more flattish this last quarter. I think as people were out and about much more this summer than they were in previous quarters with last -- the cold weather and the COVID lockdown that happened last winter, we've seen some of that volume slow a bit. It's still about a little bit less than 11% of our total volume in North America. It's a very small percentage of our volume in Europe. And quite frankly, it's never really -- the entire food business has never really taken off in Europe to the extent that it did here in North America. So it's stable. We're well positioned. There are certain categories like baby, like personal care, where it's a pretty significant portion of our business. So we watch that closely. People don't want to -- they get a lot more variety on the Internet than they would in a store, particularly on health and wellness brand. So it's important for a company like ours, given the amount of choices we can give people online relative to brick-and-mortar, but it's stable. It's not declining, but it's not growing double-digit like it was at the beginning of the pandemic. Q – Anthony Vendetti: Okay. Thanks. Appreciate it.

Thank you. Our next question is from Rebecca Scheuneman with Morningstar. Please proceed with your question. Q – Rebecca Scheuneman: Good morning. Thanks for squeezing me in. So most of my questions have been answered, but I just have one left. I'm wondering if the current environment is in any way hampering your ability to launch your new products or set the stage for meeting your long-term growth objectives, either in terms of shortages or in terms of the economic environment? Thank you. A – Mark Schiller: Great question. So we continue to launch new products, but we're being much more selective, primarily because we were very proactive during the pandemic. When everybody else stopped innovating, we kept innovating with things like veggie puffs and screaming hot veggie straws and wellness teas and other things, that we never got full distribution on even though they're performing very well. And so we've made the choice to make sure we fill out the distribution on the winners before we start bringing more in. But that said, there are things like we just launched peanut butter and jelly bites under Earth's Best. That got 50% ACV and is off to a terrific start. We've had some seasonal things on yogurt that did very well. So we're being more selective and trying to finish the play on the big ideas that we launched over the last couple of years, but we have a nice robust pipeline. Retailers are testing innovation as they're resetting categories, and we expect that we'll continue to use innovation as a major part of our growth strategy. Q – Rebecca Scheuneman: Okay. Great. Thanks for the color.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mark Schiller for any closing comments.

Thank you, everyone. We appreciate your interest and your time today. We're around for the rest of the day and look forward to additional conversations. Thank you so much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.