POST
#You are.
For the cereal business, we previously commented that on a 2015 to 2016 basis, that our basket of commodities was a modest unfavorable.
As the year has progressed that modest unfavorable has turned into a slight favorable.
So it would be fair to say that the commodity impact in the second half of the year should be slightly favorable to the first half of the year.
The other pocket of commodity that falls to the bottom line significantly is in our Active Nutrition business, where on the Premier side, we are benefiting from lower milk protein.
That, we expect to continue through the remainder of 2016.
On the Dymatize side, we are not benefiting because we are working through a contract that was at higher prices that had long volumes on it.
In terms of 2017, although it's early, we ---+ our current view, which is always subject to change as you know, but our current view is that the grain outlook is benign, so we would expect that the low commodity environment we are currently in will continue.
Same would be true for energy and to a lesser extent but into the beginning of 2017, we also see the low milk protein continuing as well.
Yes.
So tree nuts, the biggest fall through benefit for us is on the cereal side, because of the significant almond buy that we do.
So that gives a favorable component in the outlook into 2017.
It's about 50/50 in terms of the benefit on the nut butter business because there's quite a bit of pass-through of pricing in that business.
We talk to the agencies on a regular basis.
I would describe their view as, they are pleased with the improvement in the credit profile, but are hesitant to make any ratings changes because they understand that part of our strategy is ongoing M&A and to flex our leverage as we do M&A.
So they're hesitant to make an upgrade only to be followed by a downgrade as we go through that M&A cycle.
But they certainly are viewing the current trends favorably.
The heavily promoted period should cycle through this quarter.
This quarter being the ---+ our third fiscal quarter.
Yes.
It absorbs some fixed costs.
I think you should think about it more in a holistic sense that, as we have increased state-of-the-art biosecurity and we have that as a competitive advantage given the size of the business and the reliability of the supply, that suggests that there will be potential opportunities to earn from that increased value proposition.
Not specifically that it's like a cost-plus pricing.
Well, certainly, the only way that we will ever know that with certainty is if there is a significant outbreak and then to test how we are impacted by it.
I think if we all have our druthers, we will never have good insights into that answer.
The diversification of flock is something that we have somewhat tiptoed into because diversification also has a costing implication that is negative.
So we are regularly reviewing that very question, not only in the context of biosecurity but in the context of this ongoing migration to cage free.
So it's a little bit of both in that, it's business that we have but to say we have won anything is not realistic because we haven't had supply ---+ the whole industry hasn't had supply.
So, it's the residual business shrunken from pre-AI levels and the anticipated re-emergence in a somewhat different mix construct.
Thank you.
Thank you, everyone, again.
We look forward to talking to you in August.
Have a nice weekend.
