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Hain Celestial Group Inc  (NASDAQ:HAIN)
Q1 2019 Earnings Conference Call
Nov. 08, 2018, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for standing by. This is the conference operator. Welcome to the Hain Celestial First Quarter Fiscal Year 2019 Earnings Conference Call. As a reminder all participants are in listen only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. (Operator Instructions).

I would now like to turn the conference over to Katie Turner, Investor Relations.Please go ahead.

Katie Turner -- Investor Relations

Good morning. Thank you for joining us on Hain Celestial first quarter fiscal year 2019 earnings conference call. On the call today are Mark Schiller, President and Chief Executive Officer, James Langrock, Executive vice president and Chief Financial Officer and Gary Tickle, Chief Executive Officer, Hain Celestial North America and as well as several other members of Hain Celestial's management team are here with us today. During the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. 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 the these forward-looking statements. Please refer to Hain Celestial's Annual Report on Form 10K and other reports filed from time to time with the Securities and Exchange Commission and in press release issued this morning for a detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. A reconciliation of GAAP results and non-GAAP financial measures is available on the earnings release and presentation, all of which are posted on Hain Celestials website at www.hain.com under Investor Relations. This call is being webcast and an archive of it will be available on the website.

Now, I'd like to turn the call over to Mark Schiller.

Mark Schiller -- Chief Executive Officer

Thank you, Katie, and good morning. It's great to be speaking with everyone today on my first earnings call as President and CEO of Hain Celestial. Let me start by thanking my predecessor and our founder, Irwin Simon, for building this great company. Irwin had the incredible foresight to see that consumers were making a shift toward healthier living and healthier eating long before most of the packaged goods industry and he built an organic natural and better-for-you products company that has been a leader for many years. Irwin's contributions are many and his influence on this industry has been profound.

I'm honored to succeed him and I look forward to building on his legacy. As I reflect on the path ahead, I realize that I'm privileged to lead a multi-billion dollar company with branded products sold in over 80 countries at a time when consumer demand for organic natural and better-for-you products continues to grow. I see great potential and significant opportunity to accelerate the vision and mission started over 25 years ago as we further build consumer awareness, loyalty and access to our portfolio brand.

It's truly an honor to lead Hain Celestial and I would like to thank all of our passionate employees and external stakeholders around the world for the warm welcome. It is specially only my fourth day leading the company had already everyone's initial efforts to help me quickly begin a thorough review of the business have been helpful and I look forward to meeting many more of our team members, partners, and stakeholders in the coming week as we work to build on the strong foundation we have and taking Celestials business to the next level.

I believe my strong operating background lends itself well to the challenges we face. For hose who don't know me, I have many years of experience leading organizations across all key general management, operational and commercial functions, particularly during my last several leadership roles at PepsiCo's Quaker foods and snacks division and as Chief Commercial Officer at Pinnacle Foods.

When I joined Pinnacle, it faced very similar challenges to what we are facing at Hain in the United States, while portfolio at Hain compete in more on-trend categories with better growth prospects, we have a similar need to reinvigorate and differentiate our brands with world-class marketing and innovation. We need to manage complexity and drive out cost, we need to expand our distribution, deliver smart pricing and improve efficiency. In short, I faced these challenges before and I have successfully helped lead transformation and operational improvements in these areas.

As the CEO, of Hain Celestial, I intend to apply those skills here and help transform our company into a world-class operator. This week marks the beginning of that journey. And over the next several weeks and months, I'll be listening and learning and thoroughly validating and refining our strategic priority. I intend to focus on bringing operational excellence in all key areas of the business and I'm here to accelerate our marketing and innovation effort, execute Project Terra and refine our processes to ensure consistent and reliable earnings growth.

As I said before, this is week one for me. This is the analysis phase for me as well. I expect the situation assessment and corresponding strategy refinements to take about 90 days and once complete, I will give you more details on my findings and clarify how our path will evolve in February at CAGNY. Let me end by thanking you all for your well wishes and support. I'm thrilled to be here and very excited about the journey ahead.

With that overview, I'll turn the call over to James to talk about our performance in Q1.

James Langrock -- Chief Financial Officer, Executive Vice President

Thank you, Mark, and good morning, everyone.As a reminder, the results of operation, financial position, and cash flows related to the Hain Pure Protein segment are presented as a discontinued operation for the current and prior periods. We continued to make substantial progress and expect to complete the divestiture by the third quarter of fiscal 2019.

Today, I will focus my discussion on our financial results from continuing operations, unless otherwise noted. As we discussed during our fourth quarter earnings call, the cadence of our business in fiscal 2019 is such that the year will be back-end weighted on top line due to the timing of distribution gains and planned trade programs now the bottom line due to the majority of the realization of Project Terra savings increasing throughout the year, especially in Q3 and Q4.

As such, we expected a slow start to the year. In Q1, we experienced production challenges primarily in our personal care business as a result of robust demand for our products and supply chain challenges which impacted results. We've already made the necessary changes and we expect this to be resolved by the end of Q2. Gary will provide more color on the personal care business as well as the progress already made to resolve the Q1 operating challenges.

In the first quarter, consolidated net sales decreased 5% to $560.8 million or decreased 4% on a constant currency basis. When adjusted for constant currency, acquisitions, divestitures and certain other items, net sales would have decreased 2%. Adjusted gross profit was $106.5 million or 19%, or 250 basis point decline year-over-year. This decline was due to planned higher trade and promotional investment in the United States, production issues within our Personal Care platform and supply disruptions in the United States, and increased freight and commodity costs partially offset by $13 million of Project Terra savings.

SG&A as a percentage of net sales was 14.6%, relatively flat with the prior-year period. The decrease in SG&A in absolute dollars resulted from $3 million of Project Terra savings and decreased performance-based compensation expense in corporate and the US. Adjusted EBITDA was down 36% to $34.1 million from $53.5 million in the prior-year period. Reported adjusted EPS of $0.09 based on an effective tax rate of 25.1% compared to $0.20 in Q1 last year based on effective tax rate of 27.7%. I will not provide you with key financial results each of our business segment. But the US net sales decreased 8% or 4% when adjusted for acquisitions, divestitures and certain other items including SKU rationalization.

US adjusted gross margins declined 520 basis points year-over-year to 18.6%, largely due to the planned increase in trade and promotional investment, higher freight and input costs as well as production challenges primarily within Personal Care, and supply chain challenges. These declines were partially offset by Project Terra savings. As I mentioned, these production and supply chain challenges have been addressed and we expect them to abate by the end of Q2.

US SG&A was down 3% compared to the prior-year period, primarily related to decreases in incentive compensation expenses and Project Terra savings. And US adjusted operating income decreased to $7.7 million from $23.1 million. In the UK, net sales decreased 2% to $218.6 million over the prior-year period or relatively flat on an adjusted basis which was in line with our expectations.

Adjusted gross profit decreased $2.1 million and our gross margin decreased 63 basis points, as commodity inflation and increased labor costs were partially offset by Project Terra cost savings. UK adjusted operating income decreased $2.3 million to $10.7 million from the prior-year period. Again, this was in line with our expectations as a result of the decreased gross margin. Net sales for the rest of the world decreased 5% to $98.3 million over the prior-year period were down 2% adjusted for acquisitions, divestitures and certain other items including SKU rationalization. But Canada relatively flat, Europe up 1% and Hain Ventures formerly known as Cultivate down 14%.

Europe and Canada performed to plan, offset by Hain Ventures which was down of a small base. Rest of the world adjusted gross profit decreased $1 million to $22.3 million and adjusted gross margin was relatively flat. Adjusted operating margin increased 60 basis points to 9.3%, primarily due to significant improvement in profitability within our European business with 14 % growth in adjusted operating income. Now turning to our cash flow and balance sheet. For the three months ended September 30, 2018, capital expenditures were $22.5 million and operating free cash flow was a negative $40.8 million, a decrease of $28.5 million from the three months ended September 30, 2017.

The change in operating and free cash flow was primarily attributable to decreased net income in 2019 and an increase of $11.3 million in capital expenditures as we make investments in manufacturing facilities to support demand and our higher growth businesses and spend capital to fund Terra savings. As of September 30, our cash balances was $56 million and net debt was $666 million.

Inventory has increased $23 million sequentially or 6%. This is due to a number of factors. First in the US, we're building inventory ahead of the planned personal care move for a new facility and our distribution wins in the second half of the fiscal year. There are seasonal increases in inventory for Canada, Tilda and Europe. Our bank leverage ratio was 3.33 times as of September 30 compared to 3.32 times in fiscal 2018.

On November 7, we amended our credit agreement to modify the calculation of the consolidated leverage ratio related to cost associated with the CEO succession payment as well as the Project Terra cost reduction program. Similar to the last two quarters, Hain Pure Protein results are noted as a discontinued operation for reporting purposes and are not part of our earnings from continuing operations. In the first quarter, Hain Pure Protein net sales were $113.5 million, a decrease of 5% compared to the prior-year period.

Now I'll turn it over to Gary to revise more details on our US business.

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Thank you, James, and good morning, everyone. Today, I will review our US business results for the first quarter and discuss the reasons we have confidence in our expectations to generate improvement in top-line growth and profitability throughout the remainder of the fiscal year. As I discussed on the quarter 4 call -- our fiscal 2019 plan call for an improved rate of growth and profitability to begin in the second quarter. As a result of our brand investments, distribution gains already won, price optimization, and cost savings realizations, all of which we expect to benefit from as the year progresses. We continue to expect that improved growth for the fiscal 2019 is achievable and believe that we have visibility into our future results based on the benefits from many of the initiatives that have been under way from fiscal 2018 and the start of this year. With regard to the first quarter, our results were weaker than planned due to a few operational challenges in the US business. A majority of which have been -- now been resolved.

I'll speak to these items in more detail in a minute. US net sales decreased 7.5% for the quarter. Our SKU rationalization continued as planned impacting net sales in the quarter by $9.7 million, in line with our expectations. Taking this into account, US net sales decreased 3.9%. Focusing on our US top-line results in more detail, as we outlined on our last earnings call, we anticipated net sales for quarter 1 will be down slightly year-over-year due to planned significant incremental trade and shopper marketing investment year-over-year.

We're already beginning to see the benefit of these programs and have incremental improvements in consumption results which we expect to continue in Q2. However, two key issues impacted our results. Firstly, production challenges primarily from robust demand in our Personal Care business and secondly supply disruptions, both of these resulted in net sales being lower than we expected. Importantly, we were not primary for these two items, both net sales and profitability would have been more in line with our expectations.

In aggregate, our retail takeaway trends are improving, our trade and brand investments are helping to generate an improved consumption trajectory. Most recent MULO plus C read, which represents 60% of the total U.S. business today, we are down 4.5% for the latest 12 weeks ended 21st of October and down 2.4% after SKU rationalization. This is a 210 basis points improvement of the 52-week read. We've also demonstrated sequential improvements in the 12-week read since March 2018.

Our top 11 brands continue to post improved consumption in MULO plus C, up 200 basis points in the latest 12-week read of 10/21 versus the 52-week read. When we look across all channels both measured and unmeasured, the latest 12-week read shows positive consumption for the first time since April 2017. Now this is only one four-week period, but it gives us confidence we're on the right track. We continue to see softness in the spectrum business with net sales down 20% on the back of continued category softness in coconut oil.

We also continued the cycle -- the loss of Sensible Portions in one mass retailer, negatively affecting itself by $4.5 million in the quarter. As a reminder, the brand is still growing double digit outside the one mass retailer. We acknowledge that we still have ways to go, but we remain focused on driving consistent improvements as we progress through fiscal 2019.

Now, I'd like to provide more detail on the growth we generate in Personal Care which created short term late in the quarter. This impacted our expected net sales growth, sales mix and our overall profitability since personal care represents one of our higher margin product categories. As you may know, our personal care businesses continue to outperform with their brands up 6.9% excluding SKU rationalization for Q1. We in fact expected even higher rate of growth for the quarter than we achieved.

We're particularly pleased with our ability to generate these results given that we incurred production supply chain constraints that impacted our sales by around $5 million. Our service levels for personal care were below 80% in the quarter, as we could not fully meet our strong growth plan. We took immediate action to mitigate this with new production and supply sources implemented. Production and supply continues to improve and we expect to end the second quarter with service levels in the low 90% range nd we're confident we will benefit from a recovery in quarter 3 based on the actions taken at the end of quarter 1 and early quarter 2.

In addition, we're adding personal care capacity that we expect to come online in the second half of fiscal 2019. We also encountered higher than expected costs and service issues related to the planned transition to a new mixing center. This impacted itself to certain customers and resulted in higher charges related to service. We're confident that these mixing set of supply issues are behind us. This situation has since improved considerably and we are now shipping to plan in the quarter.

To summarize, our net sales performance reflected two specific challenges late in the quarter and we believe they are short term in nature, attain -- acted swiftly to mitigate the situation, and going forward, we expect these to be fully behind us as we exit the second quarter. Looking forward to the balance of fiscal 2019, we recognize that we're in the process of rebuilding a business to return to growth and continue to be encouraged by the momentum we're seeing in key brand.

We're gaining new distribution wins and have visibility into growth from expanded distribution of several of our key brands across several retailers for the second half of fiscal 2019. A few key highlights include after a challenging year for Sensible Portions, we're very pleased to regain significant expanded distribution and a key mass retailer with two separate initiatives. The strength of this Sensible Portions brand and our strategic brand investments have helped us to regain shelf space in this important retailer.

We will have a new item at the front of the store in over 1,400 stores in an average of eight check lines for shipping in December 2018. We also had new Sensible Portions offering in the core snack set that have a 4400 points of distribution which will start shipping in January 2019. As a reminder, Sensible Portions has continued to grow at 14% and the latest 12 week outside this mass retailer in MULO plus C.

We expect to build on this strong momentum going forward. Our Terra Chips business continues with good momentum on the back of planned brand investment in quarter one. With the brand of 12% in the latest 12 weeks of 10-21 MULO plus C. And more expansion of distribution to come late in the second quarter. We also see continued strong momentum behind these best brand with over 9% growth in the latest 12 weeks of 10/21 MULO+C as we do with expanded distribution gains in quarter one with additional new distribution gains in the second half of fiscal 2019 and major drag customer and a natural customer which we believe will continue to drive momentum. Looking ahead, we remain confident based on the line of sight we have on distribution guidance, the additional innovation coming to the market, the new innovation in the areas of our business, we expect to continue to build momentum in our core 11 brands and drive net sales and profit improving as we implement our project Terra cost saving.

In summary the challenges in the quarter were execution driven and a majority of these items are behind us already. We have a clear line of sight to an improvement in consumption behind key brand investments, distribution gains and innovation. This gives us confidence in driving net sales growth and profitability as the year progresses. That concludes my overview and I now turn the call over to James.

James Langrock -- Chief Financial Officer, Executive Vice President

Thank you, Gary. Before I get to guidance. I'll provide an update on Project Terra. Project Terra is a comprehensive global plan that the entire organization is aggressively working on to reduce costs and complexity, as well as, driving more profitable sales growth. We have made significant progress on Project Terra and save $16 million of costs in the quarter, which had met our expectations. On slide 17 of the earnings presentation, you will note that for fiscal 2019, we expect to achieve $90 million to $115 million in cost savings, which we expect to build quarter-over-quarter as we progress throughout this year.

Some of the things we are working on include a thorough review of our promotional event at key retailers, which will allow us to achieve planned sales volume with reduced trade support. We expect to see significant improvement in our gross to net realizations during the second half of the year. We have also expected further improved gross margin through continued focus on raw material procurement and strategic negotiations with our coal manufacturer. This includes design to value initiative.

We are enhancing our SNOP capabilities with the goal of managing data distribution and inventory carrying costs while improving the service level of top selling SKUs. We are conducting a detailed portfolio review to optimize our business, drive efficiency and even further reduce cost as we work to create value for stockholders.That said, we are reiterating our fiscal 2019 guidance and expect.

Reported net sales of continuing operations in the range of $2.500 million to $2.560 million (ph), an increase of approximately 2% to 4% as compared to fiscal year 2018. For an increase of 3% to 5% on a constant currency basis. We're expecting the US and the UK to be up low-to-mid single digits on a constant currency basis and rest the world is expected to grow mid-to-high single digits. We expect adjusted EBITDA of $275 million to $300 million, an increase of approximately 7% to 17% compared to fiscal year 2018.

This reflects $90 million to $115 million in Project Terra cost savings and productivity which we expect will accelerate as the year progresses and increased brand investment globally and we expect approximately 2% cost of goods sold inflations from ongoing freight and commodity cost. On slide 20 of our earnings presentation, we have an adjusted EBITDA bridge from fiscal year 2018 to fiscal year 2019 for your reference.

We expect adjusted earnings per diluted share in the range of a $1.21 to a $1.38. We expect our effective tax rate for fiscal 2019 to be between 27% and 28%. Based on fiscal 2019 EBITDA and working capital expectations, we anticipate cash flow from operations of $100 million to $150 million and we expect capital expenditures of $80 million to $100 million.

We are making investments in manufacturing in our higher growth businesses to meet demand. Our cash flow guidance includes $35 million of associated charges related to the CEO succession agreement and $40 million of cost we expect to incur to implement certain Project Terra initiatives and other related items. As a reminder, our guidance is provided on a non-GAAP or adjusted basis of continuing operations excluding the impact of any future acquisitions, divestitures or other non-recurring items, which we will continue to identify with our future financial results. We believe we have the right plan in place to achieve our guidance for fiscal 2019. On the top line as Gary has mentioned, we have already won the distribution, and based on the time, we expect to see the benefit to our sales.

And on the bottom line. we've a detailed cost reduction plan that the organization is working intently on every day. As we have said, but we believe we are addressing the production challenges, they will impact Q2 2019. Accordingly, we expect net sales to be flat to slightly up compared to Q2 last year and adjusted EBITDA to be between $55 million to $65 million. In summary, our team remains focused on the execution of our strategic initiatives.

With that, we are available for your questions. Operator?

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) The first question is from Andrew Lazar with Barclays. Please go ahead.

Andrew Lazar -- Barclays -- Analyst

Good morning, everybody. Mark, welcome and congratulations to you, looking forward to working with you again going forward.

Mark Schiller -- Chief Executive Officer

Thank you.

Andrew Lazar -- Barclays -- Analyst

Yes, so two things for me. I guess first just to clarify a little bit around the guidance for the full year. Obviously, as you guys have talked about, it implies a very hefty inflection point in the second half and you went through a lot of the reasons why you've got some visibility and confidence in that. But I guess for Mark, for you, obviously you're only a week in. Is it that you feel like it's just too early perhaps to put your full perspective based on your 90-day assessment into what that might mean for guidance? Or is your sense that from what you see you feel very comfortable in the full year guidance even in the context of not having had your 90 days yet if you will? And then I just got a follow-up.

Mark Schiller -- Chief Executive Officer

Yes, having only been here three days, Andrew, I don't have a strong point of view at this point. So I'm going to refer all questions relative to guidance and performance to the rest of the team. What I'm going to do over the next 90 days is really immerse myself in the business and the facts and the strategy and come back to everyone with a point of view on where we are and what we need to be doing to continue to change the trajectory of the business. But for right now, I'll leave questions relating to both performance and guidance to James.

Andrew Lazar -- Barclays -- Analyst

Got it, kind of makes sense. And then in Pinnacle, you were dealing with a relatively focused portfolio , Hain obviously much, much more diverse and of course including in the international component as well. I guess what are the sort of the best practices or the opportunities you see from your work on the Pinnacle portfolio that you think you can apply obviously to the same portfolio going forward which admittedly is a lot more complex?

Mark Schiller -- Chief Executive Officer

Yes, clearly there's an opportunity for simplification and that's one of the things that we're addressing with project Terra, both in terms of looking at the portfolio and how to prioritize resources against the portfolio, but also in terms of managing all of the complexity of having so many brands. So as an example, we've got over 100 Co-backers on this business. We've got to figure out how to simplify that. So I'd say a general theme would be around simplification. I think the second theme would be around process that we have the right systems and processes to deliver consistent reliable, repeatable performance. And what can we bring to the party with regard to that and obviously I've got some experience from my previous company. And then it really is do we have resources allocated in the right place to really deliver against what we need. So those are some of the things that we'll be focused on, obviously there's a lot in place already with things like Project Terra, but I'm going to assess all of those things and how we've allocated resources, where we're focusing our energies and make sure that we've got the right strategy to deliver consistent performance.

Andrew Lazar -- Barclays -- Analyst

Thank you very much.

Operator

The next question is from Ken Goldman with J.P. Morgan. Please go ahead.

Ken Goldman -- J.P.Morgan -- Analyst

Hi. Thank you, and Mark, welcome, from me as well, congratulations. You and James talked today about some of the brands working very well and there are some of the categories and brands may be maybe lagging a little bit. From my perspective, this seems to have been maybe the story for Hain for a long time, right, it's not for the bad stuff, earnings would have been great. So I guess along those lines, can you talk about your perception of the Board's appetite and your appetite really for maybe more sizable or number of divestitures, I guess you've just been there three days, so maybe there is no answer there, but I'm just trying to get a sense of how you see the size , complexity of the company in terms of the number of categories, brands, skews they're currently in ?

Mark Schiller -- Chief Executive Officer

Yes, the easiest answer is I don't have a point of view at this point. It really is three days into it. Clearly complexity is something we have to address. How we're going to address, it is not clear at this point, but it's on the radar screen, we know it's an area of focus on something that we have to go after, but how and when is three days into it, I really don't have a point of view at this point.

Ken Goldman -- J.P.Morgan -- Analyst

Understood. And then a perfect follow-up for me. You talked about making progress on divesting HPP. Can you walk us through some of the milestones that you may have crossed, because it feels like there's been progress it's been made on that for a long time now. I'm just trying to get a better sense of where your confidence is that this will actually happen when you think it will this time ?

James Langrock -- Chief Financial Officer, Executive Vice President

Okay and this is James. So clearly we believe that the business is very attractive with very good growth potential, it's obviously taking a little bit longer than we expected, but during this past quarter we've made some significant progress on the sales process. So we believe that we will have completed by the end of Hain Q3. That being said, I'm not sure how appropriate would be to be commenting on an ongoing process, but it had made some very significant headway this past quarter.

Ken Goldman -- J.P.Morgan -- Analyst

Thank you.

Operator

The next question is from Alexia Howard with Bernstein. Please go ahead.

Alexia Howard -- Bernstein -- Analyst

Good morning, everyone, and welcome to mark as well. Can I hone in on the gross margin trend in the U.S. about 520 basis point decline this quarter? I know you called out the production challenges and probably freight -- unexpected freight cost inflation. Are you able to quantify how much of that was due to be ramped up investment in freight spend, as well as, some of those onetime factors. And when you expect to get a better trajectory maybe even back to a positive trajectory in the U.S. on the gross margin. And then my follow up would just be when do you think we're going to be lapping at the end of the SKU rationalization, I'm looking at page 17. It looks as though it's all done by the end of this fiscal year. Have you any got a couple more quarters of that? Thank you and I'll pass it on.

James Langrock -- Chief Financial Officer, Executive Vice President

So the U.S. gross margin, we were as we mentioned on our last call that we knew it was going to be down in Q1, we were forecasting that. A big piece of that was the planned trade spend going into Q1. So that was as planned. So that was driving down the gross margin on a year-over-year basis. The end of year, we know we had headwinds going into the quarter. That was actually a little higher than we anticipated because of some of the supply chain issues and disruptions that we had. Then, clearly our inflation and other input cost we were forecasting as well that came in pretty much in line what we thought, the tariff savings we had, we got the tariff savings that we were forecasting which is very good news. And the thing that did hurt the margin and drove it down was the personal care issue, that's one of our highest margin businesses. So the mid sales on that obviously had a negative impact. And then some of the other supply chain issues had a negative impact. So that being said, we are working through that -- the issues that we had. We're going to be through that, we've addressed a lot of them already and working through that. So that will abate by the end of Q2. So we'll see improvement in Q2 and our gross margin and then that will accelerate in Q3 and Q4 throughout the year as we continue to get more and more Project Terra savings. So this I would say Q1 is the low point and it's going to accelerate for the remainder of the year.

Alexia Howard -- Bernstein -- Analyst

And then on SKU rationalization?

James Langrock -- Chief Financial Officer, Executive Vice President

Of the SKU rationalization, we will be through that cycle, through that by the end of our fiscal 2019.

Alexia Howard -- Bernstein -- Analyst

Thank you, I'll pass it on.

Operator

Our next question is from Scott Mushkin with Wolfe Research. Please go ahead.

Scott Mushkin -- Wolfe Research -- Analyst

Guys, thanks for taking my question. And Mark, welcome. So I just wanted to understand a little bit on the talent of manufacturing. Obviously, this has been an ongoing issue whether it's your own facilities with the co-packers. And I was wondering if you kind of maybe just there's going to be a series of unfortunate events, so you think it's something that's going on with your processes, because it does seem to be a recurring issue and I guess my concern is you talked about sensible portions really ramping up at the beginning of next year and I guess my comfort around that is I guess I'm cautious about that given the challenges you had. So I was wondering if you could do, then I have a follow-up please.

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Yes, great, thanks, good morning, Scott, this is Gary. First of all, the personal care issue that create the short-term bottleneck late in the quarter was very specific to one co-manufacture, it was quite a unique set of circumstances related to the co-manufacture and ultimately create a very short-term acute issues for us. But production and supply continues to improve as we move through the second quarter, already in the high 80s and expect to be in the low 90s as I mentioned in terms of supply level.

We're very confident that we're going to benefit from a full recovery in quarter three. And to that point, we mentioned that we're adding additional personal care capacity to our own manufacturing plant late at the end of fiscal 2019. So I think it's a very unique set of circumstances around that particular issue, not a widespread or an operational issue generally, is a very specific to one co-manufacture.

As for Sensible Portions, I'm very confident we have the ability to manage this internally. We've done a lot of work in our own manufacturing facility in Malchus, Pennsylvania, just recently the factory is in great shape, really ready to go, we already have a clear line of sight to how we're going to manage the capacity upload for this. So I have no concerns about us meeting those requirements, we've done a fair amount of investment over the last 12 months in that site to continue to improve the performance and the throughput through that site. So I think we're in good shape for that.

Scott Mushkin -- Wolfe Research -- Analyst

Okay, thank you. And my follow-up question is, I have been little bit surprised and I want to make sure how to write that, you guys think you're going to be able to take down trade support as we go through 2019 and I was just wondering what the thought process there, obviously you've done a lot of work to get back on the shelves to get the sales line hopefully moving and I was a little bit surprised about that comment. It seems like keeping shelf and having the support in place at least for now would make more sense, but I just want to see if I heard that correctly.

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Yes, I think it's important to point out that we had always called out very specific planned trade investment in this quarter, unique to this quarter around specific programming in the cloud channel for a couple of key brands and some additional support from expanding distribution, it's just timing related across a range of customers and retail customers and also some e-commerce expansion investment ahead of growth. I think the important takeaway is that we have some additional tools at our disposal now working on how we're going to optimize their trade spend. I don't think for us it's a case of pulling trade away from our key brands to more about being very efficient and very effective both for us and our retail partners in terms of how we get the best return on the investment. So I'm confident with the planning that's going in, very detailed planning that we are going to optimize their spend. And like all plans and all expenditure, you have to continue to review to make sure you've got the most efficient investment.

Operator

The next question is from Amit Sharma with BMO Capital Markets. Please go ahead.

Amit Sharma -- BMO Capital Markets -- Analyst

Mark, very warm welcome. Let me just begin with you. I think you laid out a very interesting parallel between (inaudible) food, your sweeteners there in Hain. I mean you'll take some time, but as you look back at your Pinnacle experience and obviously lots of things change there to turn around that business. One of the top one or two things that come to mind that move the needle most over there and do you think your due diligence were disposed, did you feel like the similar label can be applied here as well?

Mark Schiller -- Chief Executive Officer

I think there are a number of analogies between where Pinnacle was five or six years ago and where Hain is now. And I give you three themes, one again is around simplification. We have a lot of brands, we have a lot of customers, we have a lot of geographies. And how do you take the resources that you have and apply them in the places that will give you the largest return versus peanut butter and get across everything, that's an opportunity here and one that we will sort out. I think the second is around robust innovation and marketing support of the businesses to resurrect the top line. We have some great brands here and we've got to figure out how to keep them relevant, how to keep them in front of the consumers in the right ways and meet needs that aren't being met in the marketplace. So there will be emphasis on resurrecting and continuing to support places where we have robust growth on the top line. And then the third is really around the cost side of the business and what are the processes, resources, capabilities that we need to build in to be able to manage our spending efficiently, to be able to manage that complexity that we have. And again I think all three of those were themes that applied in my previous company that we will apply here as well.

Amit Sharma -- BMO Capital Markets -- Analyst

How long it typically takes for you to implement these changes? Or how long they take at Pinnacle?

Mark Schiller -- Chief Executive Officer

Yes, it is too early at this point for me to say obviously I have to better understand the facts that where we are and what capabilities we have and what opportunities we have. So I'm going to do that assessment over the next 90 days and be ready to unveil kind of the path forward in the mountain that we're going to climb at CAGNY, so it's going to take me a little bit of time to assess that, some things will be fast fixes, some things are going to take much longer, but I really have to get the foundational learning to be able to give you a good answer to that question.

Amit Sharma -- BMO Capital Markets -- Analyst

And that's fair and I don't want to like accelerated the timeline, but it sounds like from what's your focus is that on the three initiatives a deeper look at where your earning base is and perhaps resetting isn't really an unreasonable outcome from this analysis, right?

Mark Schiller -- Chief Executive Officer

I don't know about resetting it, but I am going to do the analysis and assess where we are and what it's going to take for us to deliver consistent reliable growth. And again at this point, three days in, I don't really have a point of view on the algorithm and whether it's spot on or whether it needs modification, it's way too early at this point for me to have a point of view on that.

Amit Sharma -- BMO Capital Markets -- Analyst

Thank you so much.

Operator

The next question is from Akshay Jagdale with Jefferies. Please go ahead.

Akshay Jagdale -- Jefferies -- Analyst

Good morning and welcome, Mark, just wanted to follow up on the same line of questioning just some way. So obviously from an outside perspective, so when you are looking at this business, looking at the job of CEO, how did you think about like structural issues versus things like that. You've obviously concluded that a lot of the issues are not structural. So to me, there's two major (inaudible) about the market share losses and then you got cost issue. How did you land up with the conclusion that these aren't structural, because obviously you bet on the success of the company with a lot of your pay being connected to options, right? So I know that there won't be a straight line up, but essentially you're saying we can come in and make this business more profitable and have a throw at some point to stand up. So can you help me understand how you thought about like structural issues versus ones that you can fix and the way you land at present?

Mark Schiller -- Chief Executive Officer

Yes, what I would say at this point is everything's on the table, so I haven't drawn any conclusions around structure at this point either. I think what I'm doing right now is a thorough assessment of where we are, what's working , what's not working. Where do we have a strong foundation to build from and where do we need to pivot and that includes anything and everything in the P&L. So it really is a fair game at this point for me to assess everything and that's what the Board has asked me to do. Clearly we have some great brands and as you heard from the commentary, we have some brands with terrific momentum, but we also clearly have some challenges, right. So how do we build on what's working and how do we pivot on the things that aren't and whether that entails structural changes or not is TBD at this point. I don't have a point of view yet, but I don't want you to conclude that we've made any decisions relative to that.

Akshay Jagdale -- Jefferies -- Analyst

Got it, And just want to follow up for the US business for Gary. The dispensing of portions is really good news. Can you give us some background on what led to that and I'm sure the pilot program and the issues that that retailer was having with private label might have led to it, but can you give us some background on what led to that success and how does that distribution compare in total. So what you have now plus what you've balanced as you've gotten back, how does that compare to the two things in 2016. I think we're close to that or is there another reset in March that you're hoping to improve with?

James Langrock -- Chief Financial Officer, Executive Vice President

Yes, so I think the key steps that led to the changes. One, we have had a very successful pilot program running in the recent months which has demonstrated the strength of the brand and the relevance it has to the consumer which is great news. I think in addition to that, the clear proof-point that operationally we were able to deliver and deliver a strong solution reliably and efficiently for the customer and ultimately I think we were very, very reactive -- we reacted very positively to the request of the customer for what they needed in the store and so the formats et cetera that are required for the store.

So it's very positive news and that is a demonstration that the team can absolutely deliver against this brand. In terms of the the ultimate outcome relative to where we were, I think it's still too early to completely gauge that I called out the extent of the new lay out. The good news is it's not just kind of in the core shelf fit. We're also going to have something at the front of store for the first time. So this will be new business for us and we'll have to assess how that performs, but we have some guidance of how it's done in another mass retailer and we're pretty confident going to perform strongly.

Akshay Jagdale -- Jefferies -- Analyst

Thank you.

Operator

The next question is from Rob Dickerson with Deutschland. Please go ahead.

Matt Fishbein -- Deutsche Bank -- Analyst

Hi, Matt Fishbein on for Rob. Welcome, Mark, and congratulations. I have one for James and one for Gary. James, what exactly were the supply chain challenges which If I understand correctly, we're separate from the personal care issues that were experienced in the quarter and the challenges you said should be resolved by Q2 or the end of Q2. So will we see a similar impact in Q2 as we saw in Q1 or a smaller one. Just wanted to make sure I heard correctly will any of that impact from those challenges spill over into Q3, Q4. Just want to clarify what you meant by like they'll abate by the end of Q2? And for Gary on the U.S. business, the total, so all brand distribution gains you're anticipating in the second quarter, should we expect those to show in the measure channel data and just wanted to confirm I know we were talking about net distribution gains for the year. Are these distribution gains that we'll be seeing after the retailer reset still be net distribution gains in total relative to last year?

James Langrock -- Chief Financial Officer, Executive Vice President

So I'll take the first question as well. Just to clarify the two separate issues that called out we had specific production challenges related to our Personal Care business and I referenced there that through quarter 2 we will see improvement and the issue abate we expect to be in the low 90% range in terms of service level through Q2 and back to full service level in Q3. So that was a reference on service, very specific to personal care. Outside of that the remaining supply disruptions were related to a new mixing center. We incurred some start-up issues that slowed the throughput of the site, we had a slow rampup than we expected. The good news is in recent weeks we've seen complete steady state performance out of that facility. So we don't anticipate any further challenges we should be in full service out of that facility now. So that's behind us. Your second question was related to the distribution guidance. We are definitely going to see distribution gains continue through our measured channel, but also in our unmeasured channel, I think called out we've got distribution gains for seven of our key brands. We're just cycling into distribution gains in a large mass retailer for Imagine soup as we speak. We have distribution gains coming for tortilla chips as the back of the quarter. Now we've had distribution gains from Maranatha and as best as well. So the key wins for us which is trying to turn up and you are seeing in our consumption data improved performance in the measured channel, but also we've had very strong performance in the unmeasured channels in the high single-digit growth.

Operator

The next question is from Eric Larson with Buckingham Research Group. Please go ahead.

Eric Larson -- Buckingham Research Group -- Analyst

Good morning, everyone, and congratulations, Mark, and we wish you all success there. My question goes to a lot of people in the industry are now taking some list pricing because of the higher input costs, particularly transportation. We haven't heard a lot of that from you to date particularly, but you've got some strong Project Terra savings, maybe this is for Gary, do you have -- have you taken pricing, do you have the ability to take pricing relative to how you perceive your price gaps with your major competitive products against each other, could you talk a little bit about that lever that you may have available and whether you've used any of that ?

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Yes, in fact in our last earnings call, we already referenced the fact that we'd put a planned price increase through. It was a broad based price increase in the trade and we anticipated to realize those benefits in this quarter which we have, just through the contractual terms, we'll see some of it increase in quarter 2, but ultimately that price increase has been passed through I think we're one of the earlier large well powers (ph) to actually pass these increases through and so we'll see that flow through the quarter 2 and then the balance of the year.

Eric Larson -- Buckingham Research Group -- Analyst

So second half will probably get the full benefit or will that -- actually full benefit of that price increase started in Q2 ?

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Say the full benefit would be more in the back half with some of the contractual arrangements that we have, but also specifically to your question on freight, we did have -- we took action on freight pricing on our delivered shipments, so part of the price increase was around we were able to pass on some of the freight increases to our customers. So part of that action was related to freight price increases.

Eric Larson -- Buckingham Research Group -- Analyst

And I guess I apologize, Gary, I guess did you mention in Q1 what the percentage of your list price increase was and was it straight across the board or was it weighted toward some other products. I'm sorry I did not remember that number.

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Yes, we called out there was around 4% to 5% price increase, it was broad based. It wasn't specifically targeted to just one category. it's a broad based increase.

Eric Larson -- Buckingham Research Group -- Analyst

Ok. Perfect. Thank you.

Operator

The next question is from Michael Lowery with Piper Jaffray. Please go ahead.

Michael Lowery -- Piper Jaffray -- Analyst

Good morning and welcome, Mark, from me as well. Question on e-commerce more for Gary and then James, you over-indexed there obviously, how do you think about the assortment in terms of balancing growth and profitability and then just a related followup, can you give any color on the Family Treat (ph) launch and there's an early read there and do you have any other brands you think might lend themselves to direct-to-consumer sales online ?

Mark Schiller -- Chief Executive Officer

Sure. So in terms of e-commerce, it's certainly been a business where we overindex in one category for a substantial period of time and actually I have conscious work has been to broaden now assortment online which we're successfully doing, we're seeing the assortment broaden over time which is a very positive sign for us, brands in the Personal Care range, snacks, et cetera. We think it will continue to grow very strongly as they have done in the last quarter. So, yes, we expect to have a broader portfolio online which is important in terms of margin and mix management, which is something we're very conscious of. In terms of Family Treat (ph), it's very early days of course, I think we've passed important online milestone. It's been online only launch to date. We crossed the 10,000 Instagram follower, Mark, which is a sort of a relevant mark to be able to do other things online. Very encouraged by the very positive ratings and reviews we're seeing and there's a lot more to roll out which we will have more to talk about in future quarters in other forums as to how we will launch this brand. So it's e-com only at this stage, but very encouraging early signs of a small base of course and we'll have more to say in the future quarters about how we roll that out into other areas.

Michael Lowery -- Piper Jaffray -- Analyst

And just any other brands you think would fit direct online sales as well or is it just your focus?

Mark Schiller -- Chief Executive Officer

yes, we're still exploring some of those options, I mean if you think about where some of the other markets are today, personal care obviously is one that's very interesting to us. So is snacks and some other key products within particular brand portfolio. So there's work going on to investigate those. No commitment at this point, but logically we want to learn what we can from this Family Treat launch to help inform us and our choices. But we've built this platform at a point of view that we can do other things with this platform beyond Family Treat.

Operator

The next question is from Bill Chappell with SunTrust. Please go ahead.

Bill Chappell -- SunTrust -- Analyst

Mark, questions, I guess, one, I realize you say everything's on the table, but as you look at the brand portfolio, you probably have two or three times the number of categories or brands -- category brands that Pinnacle had. So I mean is it a manageable portfolio with that many brands and that many categories that you are trying to compete in and would you look to skinny that down? Or does this make sense as it?

Mark Schiller -- Chief Executive Officer

Yes, I mean there are definitely a lot of brands about twice as many as they were at my previous company. I think one of the things that we -- at a minimum have to do is segment portfolio, which the brands that have highest margin, the most growth potential, the most competitive installation, the strongest consumer proposition. Those are the ones that we need to double down on and each brand has to play a specific role in our portfolio. So today we're trying to grow all of them and we've got to be more choiceable in terms of where the biggest opportunities are, because you end up starving the real stars if you spread the peanut butter too thin. So that's a huge opportunity for us and one that we are actively evaluating and moving toward. Whether we have too many brands in the portfolio or not is to be determined. I mean we really have to figure out once we do that segmentation work of the portfolio and know what the role is of each one. We'll look at what we have left and say what's the best course of action, how do we get the right amount of investment in the ones that we think have the growth potential and how do we best manage the ones that we think have less growth potential.

And we'll do all of that in the context of complexity as I mentioned, because the more things we can focus on the more effective we're going to be, but if you have too many things to focus on, you end up being somewhat ineffective. So we've got work to do on that portfolio segmentation. Obviously, we want to make sure that we're concentrating on a set of brands that are going to improve the trajectory of the company from where it's been. And if you look we've talked before about the top 11 brands in the portfolio and the growth potential of those brands, those are clearly going to be part of the prioritization at the end of the day.

But once we figured this all out, then we have to look at are we structured right against those brands, are we resourced right against those brands and how do we start to make trade off between what we have to get more optimal performance. And then as I said, ultimately we'll figure out what does that mean for the brands and the portfolio that we have too many that we have not enough in certain parts of the business where we (technical difficulty) with a strong point of view.

Bill Chappell -- SunTrust -- Analyst

Okay. And just as a followup and I know my colleagues have asked us same question, but I may ask it different way, I mean normally after a choppy quarter and a CEO comes in, he has kind of a grace period to go ahead and cut numbers. And you've kind of set up even more of a back-end-loaded year than I think anybody would like to see, so was it considered to just go ahead, hey, let's go ahead and just I understand that you're new, you're already few days on the job, but looking at the situation presumably for the past two months, was it considered to do that or do the new distribution gains that Walmart give you greater confidence or give the company greater confidence that no -- this is still a good plan for this year.

Mark Schiller -- Chief Executive Officer

I'm not going to comment on how we go about creating our guidance, but what I will tell you is, there is a lot of reasons to believe the second half is going to be considerably stronger than the first half and you heard a lot of those on this call whether their distribution gains or brand momentum or project Terra savings. We are making progress in a lot of areas. And so we have every reason to believe that the back half is going to be considerably stronger than the first half. You know with regard to guidance, as I said I've been here three days and I'm not in a position at this point to comment on that. But we're going to look at how the business is performing and what we need to do to get it to where we want it to be and guidance will follow. But right now we believe we've got a plan we could make and deliver and we're working diligently to make that happen. And we have every reason to believe that will be the case.

Operator

The next question is from Steve Strycula with UBS. Please go ahead.

Steve Strycula -- UBS -- Analyst

Hi, good morning. Congratulations, Mark, and I have a quick question for you. Appreciate the fact you have been on the job for three days. But as a former industry competitor, what were the -- at a very high level where the brands in Hain's portfolio or categories that I guess you had most of admiration for? And then I have a follow-up, thanks.

Mark Schiller -- Chief Executive Officer

The snacking portfolio, I think, is exceptional, Terra chips and Sensible Portions in particular are two powerhouse brands, Baby between the Earth's Best brand here and the Ella's brand overseas. We have a terrific position there. Teas are a very exciting place to be and the personal care business is very interesting, very high margins, very fast growth, we've got some terrific brands and I'd say those are probably the four categories that I think are most exciting, where we have the most potential, but even as you look at the rest of the portfolio, we play in some very interesting spaces like plant-based eating as an example. That also has a lot of potential and a lot of momentum in the marketplace. So, the advantage of having such a vast portfolio is there are a lot of things here alike. The challenges not liking everything and figuring out how to focus your energy and your resources, but very excited about the portfolio and that was one of the primary reasons that I joined is we're talking about powerhouse brands in health and wellness which is exactly where the consumer is going. And we've got the biggest portfolio in the marketplace, so our ability and opportunity that lead here is tremendous and that's exactly what we plan on doing.

Steve Strycula -- UBS -- Analyst

Great. That was helpful. Quick question for James. James, with the first quarter coming in soft and the way you had planned likely internally from both the sales and EBITDA contribution. How should we think about where -- to maintain your full year guidance, where did you have to make that up to still feel confident that you can hit the full year. So what were the key relative pieces that you use to offset the shortfall in first quarter.Thank you.

James Langrock -- Chief Financial Officer, Executive Vice President

Clearly we're making really good traction on Project Terra savings, we got $16 million in Q1, so we're off to a very strong start. The range is $90 million to $115 million. So we have a really clear line of sight to all of those initiatives. So, that's where we would make up the shortfall and then clearly getting through the operational issues through Q2 to start Q3. So (inaudible) in the Project Terra savings initiatives.

Steve Strycula -- UBS -- Analyst

Okay. Thank you.

Operator

The next question is from John Anderson with William Blair. Please go ahead.

John Anderson -- William Blair -- Analyst

Hi, good morning, thanks for the questions everybody and congratulations, Mark, just a couple of quick ones. I was wondering if you could talk a little bit more about the SKU rationalization, maybe Gary, I think it was a $10 million headwind in the quarter, how do you project the cadence of that SKU rationalization and the impact going forward it sounds like you expect that to be largely complete by the end of the fiscal year, what kind of cadence or what kind of headwind do you anticipate over the next three quarters and then am I accurate in saying as you get into fiscal 2020, you don't expect to be talking about that at that point.

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Yes, so the cadence is roughly $10 million a quarter is our plan and as we called it out. So we do intend as you mentioned to be through that by the end of fiscal 2019. So in the fiscal 2020 ,we should have concluded that that exercise of SKU should be out of our system and we should be then focusing on the remaining range.

John Anderson -- William Blair -- Analyst

Okay. In the consumption trends that we can see in the measured channels, is there a time frame by which you're kind of looking at the measured channel consumption and expecting or anticipating an inflection into positive growth. And if so kind of what is that time frame we should be looking for?

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Yes. So as we mentioned earlier, obviously our MULO numbers continue to improve sequentially, which is excellent for us and we do expect obviously some inflection as a result of the planned distribution gains for Sensible Portions year-over-year and if you think around the February-March time frame, we're going to have quite a significant inflection of where we had loss distribution last year and this year we will be gaining it on top of the momentum we're seeing in terms of the brands that I have already called out, so continued improvement in performance, but definitely there's got to be some key inflection points coming in the back of quarter two into quarter three.

John Anderson -- William Blair -- Analyst

Excellent. That's really helpful. I think I missed this earlier on the call, but on the pure protein sale. Still confident, it sounds like maybe pushed out a quarter, but still confident in the sale of that business. And then what are the plans for use of proceeds upon completion of that transaction?

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Yes, we've made significant process this quarter and we anticipate that will close by the end of our Q3 and the use of proceeds depending on the timing of it. We'll look at all the options to us that we've paid down debt, that we buy back shares, that we do a special dividend. So when we do sell and we get the proceeds depending where we are are, we'll look at all those options.

John Anderson -- William Blair -- Analyst

Okay. And last one for Mark. Mark, when you talked about the portfolio earlier and segmentation work, I'm assuming you're kind of talking there's an analogy here to Pinnacle, where Pinnacle had kind of leadership brands and foundation brands and there were resources, allocated based on those definitions and specific roles in the portfolio. Is that how you kind of see this playing out? And two, is the portfolio segmentation work that's being done over the next 90 days. Is that being done internally, is there external support for that? How is that being kind of looked at -- thank you -- and implemented? Thanks.

Mark Schiller -- Chief Executive Officer

Yes, so I'll answer the second part first. There is internal analysis and there's external assistance in that analysis, then we're well into that analysis that started before I got here and obviously I'm going to get immersed in it and shape it. I think, yes, at the end of the day, the first part of the question segmenting the portfolio is about prioritizing where you're going to put your resources and where you're going to place your bet. And clearly there's more growth potential in some parts of this business than others and there's higher margins in some parts, they are more responsive to consumer spending, et cetera. And so you'll end up saying is putting greater emphasis on some brands and more of a foundational approach to the other brands, similar to what we did within Pinnacle. And we need to do that. We've got a lot of brands and we've got again multiple geographies. We need to do it across the world, not just in the U.S. That opportunity exists everywhere and that will help us be razor sharp and efficient with everything we do to make sure that we get the maximum return on every dollar we're spending.

Operator

This concludes the question-and-answer session. I will now turn the conference back over to Hain Celestial for closing remarks.

Katie Turner -- Investor Relations

Great, thanks everyone for your questions and for your participation on today's call. We look forward to speaking to you again for our fiscal second quarter earnings in February. Have a great day.

Duration: 68 minutes

Call participants:

Katie Turner -- Investor Relations

Mark Schiller -- Chief Executive Officer

James Langrock -- Chief Financial Officer, Executive Vice President

Gary W. Tickle -- Chief Executive Officer Hain Celestial North America

Andrew Lazar -- Barclays -- Analyst

Ken Goldman -- J.P.Morgan -- Analyst

Alexia Howard -- Bernstein -- Analyst

Scott Mushkin -- Wolfe Research -- Analyst

Amit Sharma -- BMO Capital Markets -- Analyst

Akshay Jagdale -- Jefferies -- Analyst

Matt Fishbein -- Deutsche Bank -- Analyst

Eric Larson -- Buckingham Research Group -- Analyst

Michael Lowery -- Piper Jaffray -- Analyst

Bill Chappell -- SunTrust -- Analyst

Steve Strycula -- UBS -- Analyst

John Anderson -- William Blair -- Analyst

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