Unknown: I was living the life before we met There were so many nights, so many nights full of dark temptation There were so many nights that I regret You gave me something that I could no longer do A little light when I'm down on my knees I was so lost in myself when I found you But in that moment you made me believe You give me freedom, freedom, freedom I've been looking for Freedom, freedom is you You give me freedom, freedom, freedom I've been looking for Freedom, freedom is you You give me freedom, freedom, freedom You give me freedom, I've been looking for You give me freedom I didn't care, I didn't care enough to stop me falling I didn't care about myself Lifted me up, lifted me up, and I was down and out. It's the highest I have ever felt. You gave me something that I can hold on to. A little light when I'm down on my knees. I was so lost in myself when I found you. But in that moment, you made me believe. You give me freedom, freedom, freedom I've been looking for Freedom, freedom is you You give me freedom, freedom, freedom I've been looking for Freedom, freedom is you You give me freedom, freedom, freedom I've been looking for Freedom, freedom, freedom I've been looking for Freedom, freedom is you
Unknown: Every time I hear this move, it makes me want to move. Must be a feeling it brings to you. It makes you do what you do. and many more.
Operator: Good morning and welcome to the Conagra Brands 4th Quarter Fiscal 2026 Earnings Q&A Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, then zero, on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad, and to withdraw your question, please press star, then two. We do ask that you please limit yourself to one question. Please also note, today's event is being recorded. I would now like to turn the conference over to Matthew Nicias, Senior Director of Investor Relations for Conagra Brands. Please go ahead.
Matthew Nicias: Good morning, everyone, and thank you for joining us. This morning, I'm joined by John Brasi, our CEO. Due to unforeseen circumstances, Dave is unable to join us this morning but sends his regrets, so John and I will be taking your questions. We may be making some forward-looking statements in discussing non-GAAP financial measures during this Q&A session. Please see our earnings release, prepared remarks, presentation materials, and filings with the SEC in the investor relations section of our website for descriptions of our risk factors, gap to non-gap reconciliations, and information on our comparability items. I'll now ask the operator to introduce the first question.
Operator: Thank you, sir. And as a reminder, to ask a question, please press star then 1. And once again, we do ask that you please limit yourself to a single question. Today's first question comes from Andrew Lazar at Barclays. Please go ahead.
Andrew Lazar: Great. Thanks so much. Good morning and welcome, John.
John Brasi: Thank you, Andrew.
Andrew Lazar: Sure. I guess my question would be, you know, even with the dividend cut, leverage is still expected to rise in fiscal 27 given the business reinvestment needs, both A&P and supply chain, you know, as well as I'm assuming some volume due leverage impacts. Thanks so much.
John Brasi: Thanks again for the question, Andrew. As I discussed in my opening remarks, I really believe a balanced approach to capital allocation is critical to the long-term success of the company. The dividend cut is going to enable us over time to progress towards that 3.0 leverage target, which is really, really important to enable the strategic optionality to reshape the portfolio over time. But it's also unlocking some meaningful investments in the business in fiscal 27. We talked about the $40 million increase in brand building, which is a 14% increase, along with an incremental $125 million in capital. It's really going to help drive supply chain resilience and also lower costs by moving more production in-house. I would say relative to brand building, I would call this a first move towards efficiency. We're going to continue to increase our investments behind our strategic growth brands to drive trial and preference. So overall, I really do believe these are the immediate right investments. But as you know, I'm still in the early innings here. I can assure you we're going to continue to look for additional opportunities to invest where we can accelerate our path to profitable growth.
Operator: Thank you. Thank you. And our next question today comes from Peter DeGalbo at Bank of America. Please go ahead.
Peter DeGalbo: Hey, good morning, John and Matthew. Thanks for taking the question. John, I was maybe hoping to piggyback off of that question from Andrew. Specifically, your plan to stabilize and improve margins in the frozen business, which I think you're looking to do via some pretty significant pricing actions. But you're also, I think, at the same time, reinvesting. So I just think there's a bit of confusion around we want to grow margins in the frozen business, but also we want to reinvest at the same time. And so maybe you can just help us Thanks very much. Yeah, thanks, Peter.
John Brasi: You know, I think over the past couple of years, as you're well aware, we've invested significantly to drive volume improvement, and that's yielded solid results, but it's also resulted in significant margin compression. I would tell you with inflation persistent in 27, we have to remain agile as we look to offset continued cost pressure. Our first line of defense will always be to use productivity to fight inflation. We're targeting another year of productivity above 4%, but we're going to also have to lean on inflation-justified pricing where necessary to give us the fuel that we need to invest in our business and with our customers to drive that long-term growth. I would say this is all about balance, ensuring we're priced competitively and also passing along inflation-justified prices where we need to to give us the ability to drive our brands that we compete in. I want to make sure you hear something importantly, though. We are not backing off our commitment to Frozen. We're making significant incremental investments in brand building, like I just talked about, in fiscal 27, and we have probably our strongest innovation pipeline in place to delight the consumer. and I think as you think about elasticity, we've been very prudent in our elasticity assumptions. Our guidance is assumed higher than historic elasticities with volumes down mid single digits really weighted towards frozen. So I think we've taken a prudent approach to how we plan the year.
Operator: Okay, thank you. Thank you. And our next question today comes from David Palmer at Evercore ISI. Please go ahead.
David Palmer: Thanks. I guess my one question would be, What you're going to be tracking the most. There's a lot of variables that go into any fiscal year. You have a guidance range. If you're going to hit the high end of that guidance, what will be going right? What are some of the key things that you're specifically going to be tracking and watching that you think are the key variables? It might be price elasticities in certain key brands in Frozen, for example, but I'd love to understand how you're thinking about the key variables going into this year. Thank you.
John Brasi: Yeah, a couple of thoughts here. I think you hit the first one, which is I think the price elasticity And again, as I want to reinforce, I think we've taken a very prudent approach. We're expecting higher than historic elasticities. That is probably the most important thing we'll be watching on the top line. I think the next thing is to really continue to drive those productivity savings. We benchmark productivity above 4%, and we have to ensure that those productivity savings are flowing to the bottom line. And so I think that would be another important marker. But Matthew, anything else you want to build here?
Matthew Nicias: Yeah, I think as you go down the P&L, inflation of 5% to 6% is what we called out relative to productivity above 4%. So that continues to be a pressure point with inflation exceeding productivity. However, I'll note the pricing we're putting in place mid Q2, we're only getting a half a year impact of that. So as we get into FY28, we should have a favorable wrap on that piece as well. So I think those pieces get you to gross margin that's roughly flat on the year. And then John talked about the step up in A&P that we're going to have, which really is get you to the margin guidance that we gave. And then just in terms of other swing factors, Ardent Mills is always one that we keep an eye on. Wheat prices have been a bit more volatile of late, but it's always challenging to extrapolate that into a full year. As we rolled everything up, as John mentioned, I think we've given our best shot at how we think the year is going to play out while also building in some prudent assumption where we felt necessary. Great. Thank you.
Operator: Thank you. And our next question today comes from Robert Moscow with TD Cowan. Please go ahead.
Robert Moscow: Hey, thanks. John, maybe you could give a little more color on how you went about I'm trying to figure out what the new earnings base should be. Did you consider something even lower, like $1.20 even, just to fully clear out any further downside and create a path? And if not, is there a margin here? The margins are pretty low at 10%. Is getting below that line just kind of dangerous for the business? Is that one of the concerns you had?
John Brasi: Yeah, Rob, thanks for the question. You know, I think as you think about EPS next year, you know, again, I think this is a balancing act and I'll continue to use that. We wanted to give ourselves the room to invest immediately back into the business, which we've done with the step up in A&P and also in the capital to really drive the supply chain resilience and also obviously the cost savings to come from repatriating some of our manufacturing back in-house. I think we wanted to enable sufficient investment back into the business. But you talk about margin and I think it's important that we kind of take the actions necessary to get ourselves to what I would call a healthy structural margin that can build a foundation for profitable growth from. I think we've threaded that balance right as we think about fiscal 27. Okay.
Robert Moscow: Thank you.
Operator: Thank you. And our next question today comes from Lee Jordan with Goldman Sachs. Please go ahead.
Lee Jordan: Good morning. Thank you for taking my question. And thank you, John, for all the detail you've already provided today. You know, John, you talked about being in attractive categories with significant runway for growth, and we see you're leaning into investments in frozen and meat stacks today. But then you also talked about the potential to simplify your portfolio. So just looking for more detail around that, you know, how do you think about the cyclical versus structural headwinds of the industry today? What does normalized category growth look like for you and your business? When do we get there? Which of your categories are better positioned long-term? Thank you.
John Brasi: Yeah, Leigh, I'm glad you brought up portfolio. And I want to start, and you heard my remarks, I really do believe today as we look at the portfolio, it's been too large, it's been too complex for too long. And I think this is an area we definitely want to address. So portfolio reshape is going to be a meaningful part of our strategy moving forward. We're going to be very thoughtful and strategic about the approach that we take. And I will tell you a couple of things here. One, I really like the growth categories that we've outlined. I think our frozen portfolio, I think we're positioned, we have a strong competitive advantage. We have scale. I believe frozen is on trend. We've got the right innovation. And so I think this is a segment that we want to continue to win in. And I believe permissible snacking is the same. I love our portfolio there with meat snacks, our seeds business, our popcorn business. and even some of our permissible sweet snacks are performing incredibly well. Those will continue to be the growth drivers. I think while we look at driving a portfolio that is more efficient and effective moving forward.
Operator: Thank you. Thank you. And our next question today comes from Nick Moody at RBC Capital Markets. Please go ahead.
Nick Moody: Yeah, hi. Good morning, everyone. Thanks for taking the question. So just a quick follow-up to that question, John. I just want to clarify that no portfolio shaping has been embedded into the forward guide. I just wanted to clear that up. And I guess the bigger question is just as you've been in the seat now for about six weeks and you think about the big picture, obviously I don't want to get ahead of any formal strategic updates, but just like when you look at the business, your observations, What are some of your highest conviction kind of observations in terms of the structural work that you believe needs to be done to get Conagra back onto a more sustainable growth track, whether it be cost structure, go-to-market? We just talked about the portfolio shaping. We'd love to get your thoughts on that and kind of how you think about the sequencing of those initiatives.
John Brasi: Yeah, let me try to take those in order. I think first with the portfolio, and thank you for the clarification, we're going to take A very thoughtful and strategic approach as we think about portfolios. So, yeah, I think as you think about the long-term portfolio, that will be more of a mid to longer-term impact. I think there's some opportunity we can do to clean up some of the portfolio in the near term. And you really think about that as a lot of skew complexity. I think there's some really nice opportunities we have to tighten up the portfolio that we have while we do the strategic review that I would call more of a mid to long-term play as it comes to the portfolio. I think as you think about the first, you know, kind of 45 days in the business, you know, I think I want to start with the strengths. There's some things that really excite me about the business. We've got some great brands and some very attractive categories. I've been incredibly impressed with the innovation capabilities of Conagra, and I think we're really ahead of the ball when it comes to kind of developing an advanced foundation in both technology and AI. And maybe most importantly, we've got a deep, talented team and a great culture to build on. I think as I think through the opportunities, and you'll see those in the actions we've taken in 27, I do believe we're a bit out of balance today between this volume and margin, and I think finding that right balance between volume growth that's also structurally profitable is important, and so that's why we've made the moves in pricing. I don't believe we're investing enough in our brands and our supply chain. Again, why you've seen a significant step up in investment there. This notion of complexity, I really believe complexity can be the enemy of execution. We're going to really get after simplification, both in our organization and how we get work done. Project Catalyst would be a nice enabler of that, but also as we think about the portfolio. And what I'm really excited about is, you know, we are planning, as you saw in the notes, the remarks this morning, Investor Day in early 27. That's where we'll be able to kind of fully review the strategic plan moving forward. Great. Thank you.
Operator: Thank you. And our next question today comes from Peter Grom at UBS. Please go ahead.
Peter Grom: Great. Thank you and welcome, John. I guess I wanted to just more follow up on kind of the outlook and just get some perspective on kind of the shape of the year from a margin and earnings trajectory. Sounds like 1Q is going to be under some pressure. So just kind of curious how we should be thinking about the improvement from there, you know, just given the puts and takes around inflation and pricing. Thanks.
Matthew Nicias: Yeah, thanks for the question. So for Q1 op margin, we pointed that in the high single digits. That's really impacted by a couple things. Number one, inflation. So inflation, as you know, picked up a bit as we got into our fourth quarter. That's going to take a little bit of time to flow through the P&L, so that will start to impact Q1 in a bigger way. We also have the tariff wrap that we called out of $40 million to the year. That's really lapping some of the mitigating items we had last Q1. So as you think about the $40 million, that's really going to over-index to the first quarter. and then the step up in A&P. That's going to be really throughout the year a piece in Q1 and a bit more back half weighted. So I think that's kind of how Q1 is shaping up. And then we gave the full year guidance where the pricing will go in mid second quarter. I think that's really where you're going to see the step up in gross margin just from that price mix turning a bit more positive, especially in the frozen area where some of those pricing is concentrated.
Peter Grom: Great. Thank you so much.
Operator: I'll pass it on. Thank you. And our next question today comes from Alexia Howard at Bernstein. Go ahead.
Alexia Howard: Great. Just to follow up on that about the pricing in Q2, are you able to give us an idea of roughly how much that will be across the portfolio? And more importantly, what sort of price elasticity assumption are you making in terms of the impact on volumes as you take that?
Matthew Nicias: Yeah, Alexia, in our guidance, so we guided to volumes down mid-single digits for the year, and organic net sales, I suppose if you use the midpoint of down 2%, gets you to a price mixed figure of roughly plus 3 or so. So I think that's probably a fair starting place as you just kind of evaluate those considerations. And then I'm sorry, could you repeat your second question?
Alexia Howard: No, it was really around the price elasticity. What gives you the confidence that the EPS numbers can come around so nicely in Q2? It's really just around the pricing.
Matthew Nicias: Yeah, pricing is a big part of it. I think on the elasticity question John mentioned, we've been very prudent in the assumptions that we put into the plan. I think for frozen, it's recognizing the current consumer environment. We've been a bit more We've leaned in a bit higher on the elasticity, maybe relative to historical standards, whereas grocery and snacks, I would say, is more on that one-to-one level. So I think from an elasticity standpoint, we feel good about what we've put in the plan. It's clearly going to be one of the items we're paying very close attention to as we go throughout the year, but that's just one piece of it. I think productivity at above 4% really reflects continued effort across our organization to find cost savings. We mentioned some of the insourcing initiatives that we have that give us better control of our supply chain while also removing costs. So I think it's a number of factors that kind of come together to make the year. But from a phasing perspective, I think the pricing is not insignificant. So that's when you'll see it is largely in Q2 and beyond.
Operator: Thank you. I'll toss it on. Thank you. And our next question today comes from Max Gumport with BNP Paribas. Please go ahead.
Max Gumport: Thanks for the question. So you're clearly prioritizing investments, but your prepared remarks suggest a bit of a pivot from a focus on stabilizing volumes to stabilizing margins. You discussed how past margin compression was partially driven by an emphasis on driving volume at the expense of margin, most notably in frozen. We can clearly see the impact that's had on the business. Your operating margins have fallen from 16% just a few years ago to your guidance now calling for 10% to 10.5%. However, at the same time, organic volumes are now expected to decline six fiscal years in a row. I understand you can't have margins keep falling, but outside of tobacco, I can't think of many CPG businesses that have thrived with consistent volume declines, particularly given So why is this pivot the right approach, and how many more years of volume declines do you believe the business has the capacity to suffer through? Thanks very much.
John Brasi: Yeah, again, I think this continues to be about balance, right? We're managing both the impact on the consumer with our volume assumptions, but again, we have to have the right structural margins to fuel the future investments. I think we've been very, very thoughtful and deliberate about our pricing strategy. What I can tell you is we're going to continue to be agile in our pricing to make sure that we find the right balance between the right structural margins and being competitive on the shelf in a time where we know the consumer is being very value conscious. I think one of the things that gives me great confidence is the portfolio and the power of the portfolio. Using Frozen as an example, we've got a portfolio that really plays across the full value spectrum and I think that also gives us some insulation as you think about these pricing moves. We've got places for the consumer to go within our portfolio no matter what the value challenges might be that they're facing.
Matthew Nicias: And Max, I would just add, I think, you know, this environment that we've experienced the past several years is not necessarily normal in terms of the level of inflation that we've seen in our business. So, you know, the past several quarters, we've talked about the need to be agile. And if inflation is going to be persistent and elevated again, then pricing may be on the table. So I think the plan that you're seeing today reflects that while also balancing other investment needs in the business, including A&P, including CapEx. So I think to John's point, balance is probably the key word there.
Max Gumport: Okay, thanks very much.
Operator: Thank you. And our next question today comes from Chris Carey at Wells Fargo. Please go ahead.
Chris Carey: Hi, everyone. I wanted to go back to the complexity reduction part of your key priorities, John. You said the portfolio has been too large and too complex for too long, but also that skew rationalization or portfolio cleanup will be more of a medium-term endeavor. Nevertheless, can you give us a sense of where you see this complexity? Is it in skews that have become... to plentiful. Is that in the structure of the portfolio at large? Does a dividend reduction allow you to consider larger transactions for bigger pieces of your business? Are there implications for your supply chain, which is already dealing with a bit of capacity issues? I realize it's still early days, but I think investors would agree with the complexity observation and just a bit more detail on where you see that from product or portfolio segmentation or even your reporting segments. I'd love any additional color if you have it. Thanks.
John Brasi: I want to start with the positive. We've got some real gems in this portfolio, so I think a big part of this simplification and prioritization is to allow us to disproportionately focus our resources and our investments on the brands that we believe can really drive profitable growth for the portfolio. So I really look at this as allowing more focus and attention on the brands and the segments where we have a right to win and we believe we can win. And so I think to hit your question directly, I really think the right approach is to attack this from both a bottoms-up and a top-down perspective. And again, as I think about bottoms-up, this really is taking a bit of a zero-based approach to our SKUs. We need to ensure that all of the SKUs in our portfolio are playing a key role in delighting our consumers and our customers, but they're also creating value for the enterprise. And again, I think looking at making each SKU, each item kind of earn their keep is going to be important. And so we'll be doing a very robust kind of bottoms-up look at all of the items, all of our 5,500 SKUs across the portfolio to ensure they're doing that. I think at the same time on a parallel path, we're going to take a very prudent top-down approach. And you heard me talk about we're going to be thoughtful and strategic here, but really starting with what do we want this portfolio to look like five years from now? and how are we going to get there? And I think that's going to take some time. That's probably the piece that I would call more of a mid to long-term perspective. I think we'll have a lot more to share on that strategic direction of the portfolio when we are at investor day in early 2027. Okay.
Chris Carey: Thank you.
Operator: Thank you. And our next question today comes from Matt Smith at Stiefel. Please go ahead.
Matt Smith: Hey, good morning. John, I wanted to come back to the part of your plan around increasing investment in the supply chain. You call that improving resiliency and some investment to unlock savings. The guidance this year includes a step up in CapEx. I think it's above 5% of sales at this point. When we think about the level of spending this year, is there a unique amount related to some capacity projects? Would you expect... CapEx investment in the supply chain to kind of ratchet down in future years? Do you think it needs to remain elevated as you pursue this resiliency and productivity savings? Thank you.
Matthew Nicias: Yeah, Matt, I can take that one. So I think for CapEx, you know, our long-term guidance is between 4% and 5% of net sales. This year is obviously towards the upper end of that. And part of that is some of the bigger insourcing projects that we have planned this year. We've talked about fried chicken in the past, and more broadly, just our belief in protein. So that's a big project. I would say roughly $100 million of the year-over-year step-up in CapEx is related to that. But as we go forward, I think resiliency is going to be one of the things that we continue to prioritize. So that 4% to 5% net sales range probably feels right going forward, but resilience But rest assured, our supply team is hard at work evaluating projects, ensuring we have a really strong foundation in our supply chain while also tackling some of these more modern manufacturing initiatives around technology, around AI, and really trying to simplify the way we work even within our manufacturing facilities.
Operator: Thank you. And our next question today comes from Scott Marks at Jefferies. Please go ahead.
Scott Marks: Hey, good morning all. Thanks for taking your questions. Just wanted to follow up a bit on that supply chain resiliency. I guess how should we be thinking about maybe just benchmarks along the way as you go through this investment phase? When should we be expecting certain milestones to be hit or what milestones are you looking for to kind of signal to the investment community that you guys are making real progress and you feel comfortable with where you are? and how things are going. Thanks.
John Brasi: Yeah, the things that we'll continue to look at really is things like our service levels, right? And, you know, we want to continue to operate in that, you know, 98 and 98.5% kind of, you know, service levels. That's probably the The cleanest indicator, are we delivering the product in the right specifications at the right time for our customers? That's probably the strongest indicator. And then I think it's trying to minimize any of those business interruptions that come from a supply challenge. And so our goal is zero, right? We don't want any supply disruptions to kind of get in the way of delighting our consumers and our customers. So I think those are some of the key markers that we'll look at. But Matthew, anything to build here?
Matthew Nicias: I think the last piece I would just highlight is inventory and working capital management, which for us has been a huge priority these past couple years. You know, in FY26, again, we took out a significant amount of inventories in terms of days and dollars, which, as you think about our other priorities, really helps from a cash flow perspective, from a leverage perspective. So I think that's just one of those other areas of the supply chain that as we look to become more efficient and effective, Our inventory balance and days of inventory will be another marker that we'll keep an eye on.
Operator: Thank you. And our next question today comes from Steve Powers at Deutsche Bank.
Steve Powers: Please go ahead. Hey, thanks. Hi, John. Good morning. You know, maybe stepping back a little bit, I guess over these first six weeks, you've emphasized the importance of listening to external stakeholders, including retail customers and investors. Maybe reflecting on those conversations, was there particular feedback that stood out or surprised you most? And where maybe did the feedback you received externally challenge assumptions that the organization may have held previously that leads to the plan you're outlining today? And I guess as an extension, what's been the buy-in on the plan you've outlined today as you've begun to present it internally?
John Brasi: Yeah. Thanks for the question because I think it's really important to reemphasize the first 45 days I've spent a lot more time listening and learning. Each of you have been incredibly helpful, but our internal team, customers, consumers, all of which have been really, really informative. I think a couple of things have really resonated. We've hit on these that I think are important to reinforce. The importance of simplification and prioritization. I think that was a theme loud and clear that I've heard internally and externally, the need to simplify and prioritize as we think about our portfolio, but also even how we get work done. And so I'm really excited about some of the portfolio work that we're going to continue to embark on, but also Project Catalyst, which is going to help us do work more efficiently and effectively. I would say get our folks more time building the business than managing and tracking the business, and Catalyst will be a major enabler there. So I think that's the first one. I think the second one is really it's about my words matter, but our actions matter even more. And I think this notion of restoring credibility by delivering on our commitments. And so I think what you've What you'll hear today is a plan, and our job now is to go deliver that plan with no excuses. And I think you'll see high accountability from our team in delivering what we say we're going to do to the external world, I think, is another critical one. I think the last one and again a theme that we've discussed throughout this session is the need to invest back in the business and again why we've created a plan that does create some of that flexibility both in the balance sheet and in the P&L to invest back in ourselves and I think that's really critical. So those are probably three of the top themes and we've acted on all three of those in this fiscal year but I would tell you there's still a lot to learn. I'm going to continue to to stay on the learning journey. And I think you'll see the full summation of what we've learned and how we're going to make our strategic pivots as we spend more time talking through the strategic plan in early 2027.
Steve Powers: Great. Thank you very much.
Operator: Thank you. And our next question comes from Priya Gupta with Barclays. Please go ahead.
Priya Gupta: Great. Thank you so much for taking the question. As you talk to the rating agencies about some of the actions that you've taken around the dividend as well as your reinvestment for next year, what are their thoughts around your current ratings and outlooks and how should we be thinking about the timeline to get back to that three-time target that you have and whether that's sort of been baked into the current ratings and outlooks from the agencies as well? Thank you.
Matthew Nicias: Yeah, thanks for the question. We have really good relationships with our rating agencies, and as you can imagine, they're up to speed on our latest thinking. Obviously, the dividend cut from a credit perspective is probably seen as a positive there, and I think it really does help accelerate our path to getting back to that three times number. If you just look at the next three years or so, the level of the dividend cut will free up roughly a billion dollars of incremental cash flow, A good amount of which will help us deliver, continue to pay down debt. I think the other thing I would also highlight is just the focus on cash flow at this company is across the board. We delivered free cash flow conversion of 119% this year. That's the third year in a row of above 115%, which really just reflects the focus company-wide on driving cash at this company. And I can assure you that we're not going to stop. That's something that's going to continue into next year. But overall, I think with the rating agencies, I think they understand the plan, they understand the need for balance, and they understand our commitment to the investment-grade credit rating.
Priya Gupta: Great. Thank you so much.
Operator: Thank you. And our next question today comes from Brian Callen at Bank of America. Please go ahead.
Brian Callen: Hi, thank you. Just a quick follow-up question to that, maybe on a shorter-term basis. How are you planning to handle the October debt maturities? Are hybrids considered in the four-times leverage guide or any incremental debt repayment that's embedded in the, I guess, the interest expense guidance? Just kind of what's baked into that interest expense and the four-times number? Thank you.
Matthew Nicias: Yeah, I think what you'll find in the interest expense number is a continued focus on debt pay down. So with the dividend reduction this year, we'll get three-fourths of the benefit into fiscal 27. A good amount of that cash will go to continuing to de-lever, and then part of the cash as we laid out in terms of the A&P investments and the CapEx investments will go to that as well. So in terms of the refinancing, we do have some notes coming due here in October. I think right now we're continuing to evaluate what our options are there, but I would say we have a number of options, whether that's commercial paper, whether that's term loans, whether that's public notes. So the teams are hard at work figuring out a plan to refinance either a portion of those or all of those, but I would say more to come there.
Brian Callen: Thank you.
Operator: Thank you, and that concludes our question and answer session. I'd like to turn the conference back over to Matthew Nicias for any closing remarks.
Matthew Nicias: All right. Thank you so much, and thank you all for joining us today. Please reach out to Investor Relations if you guys have any additional follow-up questions.
Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
