Welcome to BellRing Brands fourth quarter 2022 earnings conference call and webcast. Hosting the call today from BellRing Brands are Darcy Davenport, President and Chief Executive Officer, and Paul Rode, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 1:30 P.M. Eastern Time. The dial-in number is 800-839-2461. No passcode is required. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of BellRing Brands, for introductions. You may begin. Good morning, and thank you for joining us today for BellRing Brands fourth quarter fiscal 2022 earnings call. With me today are Darcy Davenport, our President and CEO, and Paul Rode, our CFO. Darcy and Paul will begin with prepared remarks, and afterwards, we'll have a brief question and answer session. The press release and supplemental slide presentation that support these remarks are posted on our website in both the Investor Relations and the SEC Filings sections of bellring.com. In addition, the release and slides are available on the SEC's website. Before we continue, I would like to remind you that this call will contain forward-looking statements which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. These forward-looking statements are current as of the date of this call, and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website. Finally, this call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. With that, I will turn the call over to Darcy. Thanks, Jennifer, and thank you all for joining us. Last evening, we reported our fourth quarter and fiscal 2022 results and posted a supplemental presentation to our website. Fiscal 2022 was a transitional year for BellRing Brands. As a result of our outsized growth in 2021, we spent fiscal 2022 laying the foundation and gearing up for the future. We made significant progress in our shake capacity expansion plan to grow and diversify our supply and deepen our competitive moat. Lastly, our organization invested in consumer and category insights, prepared plans to restart marketing and promotion, and created a robust innovation pipeline. The work done in fiscal 2022 sets us up for a strong 2023 and beyond. Now to the quarter results. Q4 net sales came in at $379 million, 12% over prior year. However, this was below our expectations as a result of a production shortfall from our new bottle co-manufacturer, a delayed load-in to the e-commerce channel, and an expansion of the previously announced shake recall. Overall, the recall was immaterial to our business, but it led to shelf disruption that uniquely impacted Q4. Fiscal 2022 saw our net sales grow to $1.37 billion at 10%. Our profit trajectory remained extremely healthy, with adjusted EBITDA growing 16% to $271 million and adjusted EBITDA margins at the top end of our long-term algorithm. Paul will go into more detail on the quarter, but I'm incredibly proud of the team for delivering these results given the challenges we encountered throughout the year. The Premier Protein brand continues to demonstrate strength and resilience. As a reminder, in November 2021, we announced a plan to intentionally dampen shake demand while we expanded our co-manufacturing network. We reduced our full-time shake portfolio from 14 to seven flavors, temporarily turned off promotion and marketing, and still sold every shake we could produce. These supply constraints have made our year-over-year volume trends a bit confusing. In the fourth quarter of 2021, we significantly and unsustainably reduced inventory as a result of our high promoted volumes outstripping our capacity. In Q4 2022, we had limited flavors and did not repeat the promotions because we did not have the inventory. Nonetheless, consumption declined only 5%. During fiscal 2022, a better measure of brand momentum is our sequential dollar consumption, which grew each quarter. Starting in fiscal 2023, we are no longer lapping heavy promotional periods, with October consumption dollars back to growth up 16% versus prior year. Almost all key measures for Premier Protein remain strong and reaffirm our long runway for sustained growth. According to our most recent brand equity study, Premier Protein remains the number one brand I love, the number one brand I would pay more for, and has the number one Net Promoter Score in the category. Our consumption results support these measures, with non-promoted volume in 2022 increasing, clearly showing that our consumers are willing to pay more for Premier Protein. The power of the brand comes through in velocity as well. Premier holds four of the RTD category's top highest velocity items in tracked channels. In fact, at a key mass customer, Premier holds nine of the top 10 items. Household penetration is the only exception to a landscape of bright performance metrics. With Premier Protein's pullback in flavors, promotion, and marketing, we have seen the overall shake category as well as our brand decline in household. However, our buy rate has risen, signifying our loyal high-value buyers are staying with us, while we are temporarily losing occasional deal-seeking buyers. We fully expect household penetration to rebound once we've reintroduced our full portfolio and restart promotion and marketing. As we enter 2023, our trade inventory levels have improved. However, some retail partners are still below target. Based on our current capacity ramp-up plan, we will focus the first half of 2023 on rebuilding these remaining retailers' inventory levels, so we can get back to full shelves and pallets everywhere. Now to shake capacity. Last November, we outlined a plan to aggressively add capacity for our shake business, and we have made significant progress. In fiscal 2022, we added three co-manufacturers and signed agreements with an additional three that will start up in fiscal 2023. As you may recall, the big step-up in production happens in Q4 2023, when our two dedicated greenfield facilities come online. Consequentially, their benefit will not fully be realized until fiscal 2024. As you would expect, adding this much capacity has not been without its challenges. In addition to the July recall at one of our smaller co-manufacturers, Q4 production scale-up at our new bottle co-manufacturer has been slower than anticipated, which didn't allow us to drive the expected growth in the e-commerce channel. The good news is that our production is growing, with second half production significantly increasing versus the first half. We expect low double-digit production growth in fiscal 2023. In 2024, with the additions of the dedicated facilities, we expect to add north of 20% incremental capacity on top of the 2023 volumes. This year, we have laid the foundation for many years of robust shake growth. Turning to Dymatize. The brand had a terrific quarter, with consumption dollars in the U.S. up 32% across tracked and untracked channels. We saw strong double-digit growth in all key channels, except for Club, where we temporarily lost distribution. The momentum has continued in October, with consumption up 44%. A return of marketing and promotions drove this growth, with sales lifts exceeding our expectations. Equity metrics are incredibly strong, with Dymatize being the number one high-quality brand and number two brand I love among powder brands. Lastly, Dymatize is expanding distribution in mainstream accounts, adding 21% more TDPs this quarter, which are now at an all-time high. Moreover, with only 35% ACV today, Dymatize has a ton of room to grow future distribution, which is a major organizational focus this year. Now to our outlook. As you saw in yesterday's press release, we expect fiscal 2023 net sales to grow between 14% and 20%, and adjusted EBITDA to grow between 11% and 20%. This sales guidance is above our long-term algorithm, reflecting our pricing actions and lapping capacity constraints in 2022 as shake volumes return to growth. We expect to begin driving demand in our Premier Protein shake business again this year. Our current plan is to start reintroducing our temporarily discontinued flavors mid-year and restart marketing and light promotion in the back half. Obviously, these decisions depend on the demand and supply dynamic, and we will remain nimble so we can navigate effectively. In closing, we believe we have many strong growth years ahead of us. Our high-growth category continues to accelerate above historic mid-single-digit growth rates with strong macro trend tailwinds. We now have two powerful growing mainstream brands transforming the category and gearing up to innovate, market, and promote again. Since our 2019 IPO, we have delivered a 17% revenue CAGR and an 11% adjusted EBITDA CAGR, outperforming our long-term algorithm despite the COVID-19 pandemic and major supply chain disruptions. We are well along in our shake capacity expansion plan. We are a rare combination of scale, organic growth, strong margins, and high free cash flow generation. Given our asset-light model, we will have significant cash flow to de-lever rapidly. Lastly, BellRing has a nimble, collaborative culture that will continue to fuel its success for years to come. We remain confident in our long-term outlook for BellRing and look forward to demonstrating our success. Thank you for your continued support. I will now turn the call over to Paul. Thanks, Darcy. Good morning, everyone. Net sales for the quarter were $379 million, and Adjusted EBITDA was $80 million. Net sales grew 11.5% over prior year, and Adjusted EBITDA increased 32% with Adjusted EBITDA margins of 21.1%. Net sales in the quarter lagged expectations driven primarily by production shortfall in bottles, a delayed load into the e-commerce channel, and shelf impacts from the expanded recall. We were able to more than offset the net sales miss on the Adjusted EBITDA line through efficiencies in freight and logistics, as well as modest benefits from lower protein costs. Premier Protein net sales grew 9%, driven by higher average net selling prices, which contributed 18% to overall growth, offset partially by 9% volume decline. Premier Protein RTD shake volumes declined 9% as we lapped prior year promotions and a temporary reduction in available flavors. These headwinds were partially offset by increased baseline volumes. Dymatize net sales grew 32% compared to a year ago, benefiting from higher net pricing and favorable product mix, offset partially by lower volumes. ISO100 had a great quarter with sales of 63% on higher volumes, benefiting from distribution gains and category momentum. These gains were partially offset by volume declines for the remainder of the Dymatize portfolio as a result of lapping discontinued products. We made the strategic choice to simplify the business with a core focus on ISO100, our flagship product. As a result, we exited certain Dymatize products which caused volume headwinds in the quarter. This is expected to remain a volume headwind through the first half of fiscal 2023. Gross profit of a hundred and twenty-two million grew twenty-seven percent, with gross margins of thirty-two point three percent, up four hundred and ten basis points as our pricing actions offset significant inflation. In addition, we lapped a prior year period that included significant promotion, supply chain inefficiencies and protein inflation ahead of pricing. Excluding one-time items, SG&A expenses increased nine million compared to last year. As a percent of sales, SG&A, SG&A increased a hundred and twenty basis points, largely reflecting the return to marketing for Dymatize. Turning to full year twenty twenty-two results, net sales were approximately one point four billion, up ten percent over the prior year, with gross profit of four hundred and twenty-two million growing nine percent. Gross profit margins were largely flat year over year as our pricing actions and promotional pullback offset double-digit inflation. SG&A expenses were $190 million, and excluding one-time items, increased $5 million compared to last year. As a% of sales, SG&A improved 80 basis points, driven primarily by reduced marketing spend as we managed demand on Premier Protein shakes. Adjusted EBITDA increased 16% to $271 million, with a margin of 19.8%, an increase of 100 basis points. Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. We generated $10 million in cash flow from operations in the fourth quarter and $21 million for the year. As a reminder, we started the year with low inventories on both our shake and powder businesses, which fueled outsized cash flow in fiscal 2021. In fiscal 2022, we saw the opposite effect as we built inventory, primarily Dymatize powder and raw materials, resulting in lower than typical free cash flow compared to historical rates. Fiscal 2023, we expect shake inventory growth to be largely offset by reductions for our powder and raw material inventories. As a result, we expect to generate much stronger cash flow in fiscal 2023 and be more in line with our historical EBITDA to cash flow conversion rate. During the quarter, we repurchased 1 million shares at an average price of $23.20 per share, 800,000 of which were purchased in connection with a secondary offering of shares previously held by Post. For the fiscal year, we purchased 1.9 million shares at an average price of $23.34. Our remaining share repurchase authorization is $25 million. As of September 30, net debt was $903 million, and net leverage was 3.3x, down 0.7x from the pro forma spin-off closing target of 4x. With our expected EBITDA growth and return to strong free cash flow generation in fiscal 2023, we anticipate net leverage to be lower than 2.5x by the end of fiscal 2023. Turning now to our outlook. We expect fiscal 2023 net sales of $1.56 billion-$1.64 billion and adjusted EBITDA of $300 million-$325 million. Our guidance implies strong top line growth of 14%-20% and adjusted EBITDA growth of 11%-20%, with healthy adjusted EBITDA margins of 19.5% at the midpoint. We expect double-digit sales growth for Premier Protein and Dymatize as both benefit from higher net selling prices and increased volume. Sales are expected to sequentially grow after the first quarter as RTD shake production increases. Volume growth for Premier Protein RTD shakes is expected to be driven by continued category tailwinds, the relaunch of temporarily discontinued flavors, and the restart of marketing promotions to drive demand. We expect volume headwinds in the first half for Dymatize as we lap the exit of discontinued products with stronger volume growth in the second half. We continue to experience significant inflation on dairy proteins and executed an additional price increase on our Premier Protein RTD shakes in October. This increase is expected to offset inflation and result in strong gross margins in the first quarter, with lower gross margins on a sequential basis as protein costs step up. We expect adjusted EBITDA dollar growth to be weighted modestly toward the first half of fiscal 2023, which has a greater benefit from pricing actions, while the second half of 2023 has higher inflation and incremental brand-building investments. Turning to our first quarter forecast, we expect low double-digit net sales growth compared to prior year, with adjusted EBITDA growth outpacing the top-line growth. Through Q2, pricing continues to be the primary sales growth driver compared to prior year. We expect first quarter adjusted EBITDA to grow significantly from prior year, driven by increased net sales and margin expansion. Gross margins are expected to benefit from higher net selling prices offsetting inflation as well as lapping prior-year supply chain inefficiencies and protein inflation ahead of pricing. In closing, we are pleased with our performance this year despite a tough environment. We are emerging stronger and our momentum is growing heading into 2023. I will now turn it over to the operator for questions. At this time, if you would like to ask a question, please press the star and one on your touch-tone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star and one to ask a question. We will pause for a moment to allow questions to queue. We'll take our first question from Ken Goldman with JP Morgan. Hi, thank you very much. I wanted to focus a little bit on Dymatize. I'm just curious a little bit more if we could get a little bit more information about the decision perhaps to, you know, focus on the ISO100 variety, what's driving that decision. I also wanted to, you know, ask as a follow-up, I guess. You know, typically when a product is no longer sold in a channel at all, it seems like Dymatize had 0 sales to club this quarter. That's usually the customer's decision, not the producer's. If it was your decision to exit club, why? Why not just sell ISO100 to that channel versus what you may have been selling there? I'm just trying to get a little better sense of the dynamics there. Thank you. Good morning, Ken. Hey, Paul. Why don't I answer the club, and then I'll let you answer the ISO100 and the SKU rat decision focus. On the club, on Dymatize, it was not our decision to discontinue it. When we took significant pricing on Dymatize as a result of the rapid inflation, the club retailer, you know, was not happy about the increases in price and decided to discontinue it. It was not because of performance. Actually, Dymatize was the number one item in his set for powder, but they weren't happy with the price increase. They've reversed that decision, and we're actually getting it back in. It was a temporary discontinuation, but it was not our decision. Yeah, just to add on that. From a volume headwind, that discontinuation is certainly a part of it, but the discontinuation of flavors and products is a bigger piece. Let me touch on the why. ISO100 has always been the flagship brand for Dymatize. As I mentioned in my prepared remarks, we came into the year on the lower side of inventory, and so we made some decisions to focus on ISO100, but also to take out some of the smaller sub-brands, and in some cases, just flavors so that we could focus our resources and our, you know, in growing ISO100. If you go back, protein was also a little tight back last year, and so it allowed us again to focus on specific SKUs and products. We discontinued a number of, I'll call them, lower value products and in some cases, some flavors, which we will bring back in fiscal 2023. It is a headwind to Q4 as well as into the first half of the year. Yeah, think of this as a kind of typical SKU rationalization. However, it was a little bigger than normal just because of the long tail on the Dymatize business. It has an. A lot of small SKUs that needed to be cleaned up. It has an outsized impact to volume because ISO100 is a high dollar per pound product, and a lot of the other products are lower dollar per pound. The volume impact is outsized compared to the sales because ISO is a, you know, 2/3 to 75% of the overall business. It just has an outsized effect to volume. Got it. That's all very helpful. If I can just tie a bow on that. Putting, you know, or adding one plus one, or is it fair to say that you're getting the product back into club in the second half of the year? I just want to get a sense of the timing on that recovery there. It should be in for Q2. Great. Thanks so much. Yep. We'll take our next question from Andrew Lazar with Barclays. Great. Thanks. Good morning. Morning. Morning. I'm sorry if you said this. I was unclear. Some of the one-off items that affected Q4, the delayed load into e-commerce and sort of the bottler co-packer issue, are those now sort of completely resolved? Do they sort of bleed into the new year? Is there a way to sort of quantify maybe what the impact to sales in the fourth quarter was from some of those one-off items? I know that can be hard sometimes. Yeah. I'll hit the first and then I'll let Paul address the, you know, quantification. You hit the three items. For the most part, they have been resolved. Obviously the recall expansion that is unique to Q4. That was really a shelf disruption. Just to be clear on the recall, the recall happened, and this was immaterial. It was a small co-man, kind of immaterial to our overall business. The initial recall happened on 7/28, which we knew last earnings call. There was an expansion after our earnings call. What happens with the expansion is, from a retailer standpoint, it's like a new recall. They actually, you know, many retailers just wipe the shelf. They can turn off your item, et cetera. There is a disruption at the shelf. That was the unique item. Yes, on the e-commerce pieces, delayed load-in largely was remedied in Q1. Bottle production continues to improve, not where we need to be, but improving. I would say largely, it has been kind of corrected, and they were kind of unique items to Q4. Mm-hmm. Paul, I think you were gonna mention, yeah, if there was a way to quantify the impact on sales. Yeah. As far as magnitude, about 2/3 of the impact is from the e-commerce challenges and about 1/3 from the recall. On the e-commerce side, you know, bottle production was a majority of it, but we did have some challenges with an e-commerce retailer. They were heavy on inventory, and so they weren't allowing us to ship in some of our products. That's part of it. One thing I wanted to touch on, so Darcy mentioned the production challenges. The one issue we did have as well is it did result in some of our limited time offerings not getting to shelf because of issues. That's the one thing that it would have benefited Q4 that won't come in back into Q1. We do get some timing benefits from some of the other products as they fall into Q1. Got it. Darcy, you mentioned the buy rate was up. Is some of that due to just purely the price increases that you've had? I mean, is there a way to see what maybe buy rate would be on sort of more of a volumetric basis to get a sense of how consumers are thinking about or the loyal consumers are thinking about the brand? Yes, most of the buy rate increases are pricing. I think that what it shows is that our loyal high-value buyers are sticking with us. Okay. Thank you. Thanks. We'll take our next question from Chris Growe with Stifel. Hi, good morning. Morning. Morning. Hi. I had a question for you on you showed a chart in the slides around a TDP recovery. I just want to get a sense of, you know, clearly about 20% below where you were pre sort of supply issues. Would you expect to build back to that level throughout the year? Is that a way to think about it? Does it build back there more quickly as you're rebuilding inventory at the trade? I'm assuming, Chris, you're talking about Premier Protein, not Dymatize, right? Correct. I'm sorry. Yes, yes. Okay. Yeah. We expect TDPs to stay kind of stable. They've been very stable, you know, for most of the calendar year. We expect them to stay stable until we start reintroducing some of those paused SKUs, and that's gonna happen mid-year, then they will pick up. We should see a little bit of an increase over the next kind of, you know, several months just as we continue to fill the shelves out and, you know, as we increase trade inventory. We still have holes on the shelf, especially in some FDM accounts. We'll think of it as maybe some small increases as we fill out the shelves better in kind of FDM. We'll start seeing consecutive improvements as we start reintroducing kind of mid-year as we start reintroducing those paused SKUs. Okay. Our data does show it picking up here a little bit, even in recent weeks. I know your data goes through the quarter, but looks like it picked up a bit, and perhaps that's filling in some of those holes in the FDM accounts. That's exactly right. Just a second question for you, perhaps for Paul, is around accounts receivable spiked up a lot in the fourth quarter and days sales outstanding spiked up. I guess I want to just understand, like, obviously it would indicate you shipped a lot, you know, late in the quarter. Was that getting retailers back to targeted levels? Is that what I'm seeing there? Maybe related to that, is a targeted level for a retailer, is that above where it's been historically? Is it where it's been historically and you're trying to get back to that level? Yeah. On your last question, we're really just trying to get back to their, you know, initial level. We haven't necessarily seen changes in their desired weeks of supply, so it's really trying to get them back. As far as cash or as far as receivables, you're correct. It's really more about timing. We did have, you know, heavier shipments in September, which drove the A.R. up. If you compare that to the prior year, we had a lot of promotional shipments in kind of that July, August time period, which meant that the accounts receivable in September was really almost at a low point year ago where it was just a little different in how it shipped out in the fourth quarter of fiscal 2022. Okay, thanks a lot for that. Thank you. Thanks. We'll take our next question from Ben Bienvenu with Stephens. Hey, guys. Jim Salera on for Ben. Thanks for taking our question. I wanted to ask you touched on this a little bit at the beginning with the club retailer flip-flop. Just kind of your retail partners' receptiveness to you guys pulling the price lever. I know we've heard, you know, some larger retailers kind of digging their heels in. Just wanted to get some commentary around, you know, the category sets as you guys have taken price. Have you seen maybe some SKUs get trimmed out or maybe new brands coming into the category? From a price standpoint, I mean, it's always difficult, you know? I mean, yeah, we've definitely seen the same articles out there. We obviously just took a round of pricing on the Premier Protein shake business effective Q1, so in October. It was accepted by all retailers and it is, you know, currently in the market. I think that, I mean, there were a lot of negotiations, you know? There's definitely pushback, but I think ultimately they understand that our costs are dramatically increasing. It just kind of comes down to that. It was a pretty logical conversation. What was your second question? Oh, I was just saying that with the Club flip-flop, when they pull the SKUs off, did they replace that with a different brand, or did they just pull them out entirely and just put a different set in there? Yeah. Club flip-flop was on Dymatize, happened earlier this year. They put in a different competitor. I don't remember which one it was. You know, Club is a little different, especially on the powder side of the business, where they do bring in some ins and outs. I can't remember if it was a permanent SKU that replaced it or just an in and out. I seem to remember it was an in and out, which is why we're getting back in. Okay. If I can ask then, when you guys put together the guidance, did that assume that you guys would be out on Club for Dymatize, or is that assuming that you guys would be back in? Basically, is it incremental or you're back in? No, it's not incremental. We knew that it was coming back. Okay, got it. Well, thank you. I'll pass along. Thank you. Thank you. Once again, if you would like to ask a question, please press star one. That is star one, if you would like to ask a question. We'll take our next question from John Baumgartner with Mizuho Securities. For the question. First off, Darcy, I wanted to ask about Premier's household penetration and promo and rebuilding penetration from here, given the stable buy rate, you know, set against the consumers you lost who are more deal-driven. As you build back supply, is there a way of promoting differently or positioning the brand differently in light of the promoter score and the willingness to pay data that you mentioned, where you don't need to go as deep on future promo and you can maximize that mix of loyal consumers in your base? Is having that price-driven consumer just necessary to build penetration and we should still see kind of that similar promotional depth as we've seen historically before the supply constraints? It's a great question, and we've been debating this internally a lot, just about rethinking kind of our promotional strategy. First of all, we know that promotion is key. There's gonna be some natural churn within all brands. We need promotion especially. For us, it's less the temporary price reduction, but it's more about the display that often comes with the temporary price reduction. Just to remind you know, this business has been really built on getting kind of out of the aisle. What that does, it's a mainstream product. As long as we get out of the aisle and get eyeballs, then we can, you know, bring in new people, and then because of our strong repeat, we keep them for the most part in the franchise. It's a balance. We're talking to retailers right now about our promotional strategy. They're dying to promote again, as you can imagine, because we bring in a lot of people from outside the category. Now it's a balance of, okay, you know, can we maybe not go as deep as you were talking about? Can we do maybe one last promotion? I think the big thing for us is, as long as we get outside of the aisle, it will be very effective. Okay. Thanks for that. A follow-up for Paul on the commodity outlooks for this year. I think you mentioned higher inflation for H2. Is that pressure driven by expectations for spot pricing, maybe in protein, where there could be potential flexibility? Is that outlook sort of locked through forward buying or hedging, where there's really not much wiggle room? Just trying to figure out how much flexibility is inherent in the back half of the year on commodities. Thank you. Sure. Yeah, our typical strategy is to be, you know, covered on commodities out about six months or so. For us, our, you know, our hit on COGS, the protein rates that flow through our P&L typically go more about a six to nine-month lag to the market. The market did tick up obviously in the second half of last year. We're really expecting the height of that to hit us in the second and third quarter. I mentioned in my prepared remarks that we would expect sequential increase in protein from Q1 into Q2 and Q3. We have recently seen commodities start to come down a bit, but they have been bouncing around a little bit, and so I think it's a little bit to be determined where they land, but it could provide some potential opportunity for us in the second half, depending on where the rates go. Okay. Thanks, Paul. We'll take our next question from David Palmer with Evercore ISI. Thanks. A question on the production growth. You said low double digits in fiscal 2023. Is that below where you had previously believed it would be? If so, you know, what's driving that? It is a little bit below what we previously said. There are two pieces when you add capacity. One is the startup timing, meaning, you know, when they actually start producing. There's the scale-up, and that is getting to the levels, kind of throughput. The timing of startup was absolutely, you know, on time and what we expected. It's taking longer than we previously expected. Our bottle co-man is a perfect example of that affecting this quarter. What we've done is we've applied those learnings that we saw in 2022-2023, and the result is bringing down the production expectations a little bit. Okay. Got it. Thank you. I'm wondering how you're viewing the interplay between capacity increases for you and your competitors. Do you see your capacity increasing at the same rate as competitors? If everybody's getting the same sort of co-packer capacity relief, what dynamics do you see playing out in the market in terms of pricing power and, you know, how do you see this all playing out? I can talk to the kind of Tetra co-man portion of the business. Based on our estimates, we are kind of gobbling up about 70% of the new capacity. We're definitely getting more than our fair share of the new capacity, and that's really a reflection of we were the ones, you know, initiating it. We needed it the most. We're the bigger player, and so we were able to enter into these long-term agreements and get even, you know, right of first refusal for expansions from here as well. I definitely, you know that we're getting more than our fair share of new Tetra capacity. Your second question was around. Can you clarify your second question? Yeah. Well, that is the bulk of the question, is really that. I wonder how you're even thinking about till this point. Certainly, pricing power has been perhaps reinforced by this dynamic that nobody else can fill in the capacity that you're vacating, that you're not able to supply. I wonder if you think that how you think promotion and pricing power will break down or not as this capacity rolls in. Yeah, I mean, you know, I talked about in my prepared remarks just that this last year was a transitional year. I mean, in many ways, I mean, we kinda were holding ground for a year, and now we're getting back to driving demand. Starting in 2023 and beyond, because of capacity, we're gonna be able to get back to driving demand, you know, having a full set of flavors, driving through promotion and marketing, building households, doing, you know, innovating, doing all the things that we were doing before. I think we have proved that, you know, pricing power. I think what's important is we wanna get back to growth, and we wanna get back to bringing new. We still think that the category and our brand is highly under-penetrated. I think as we get back to growth, we'll start bringing in new households. Some of it will be on promotion, and some of it will be on every day. I think that that will be the focus going forward. I mean, the whole category really has been, you know, a little bit on hold, even though the category is growing. I'm excited to see it get back to growth 'cause there's so much more potential here. Thank you. Thanks. We'll take our next question from Ken Zaslow with Bank of Montreal. Hey, good morning, everyone. Good morning, Ken. Do you ever think that you need to rethink your business model in terms of potentially getting a closer relationship or something? Obviously, that you wouldn't wanna actually do the manufacturing, but is there something that you can do? 'Cause this obviously isn't the first time, you know, you've had supply issues. You know, going back to the IPO, we've gone through this a couple times. You know, is there a thought of just taking a step back and saying, All right, there's a better way to work this model? Yeah. In many ways, I think we have pivoted, um, our strategy. Uh, as we... I mean, if you look at several years ago, we were, you know, simply a co-man. We had a simply a co-man model, and every single one of our co-mans had multiple different competitors in the same co-man. Now, uh, let's see. Two of our three that are coming on next year are exclusive to us. They're dedicated to us. So yes, they're still... And which I think is a-- it's really kind of an eg- an elegant solution because it allows us to stay with our asset-light model, but allows us also to have a dedicated facility, um, or two dedicated facilities, which actually will make it three because we have one already. Um, but-- And so that-- And so we will have, you know, kind of more influence, uh, more transparency. I also talked about before about, you know, right of first refusal on new assets. In many ways, I think our manufacturing strategy has evolved, given as we've learned from the past couple, you know, capacity constraints. Okay. My second question is, have you segmented your customers in a way that you would know what% are the ones that are seeking value? Is there an opportunity to just, you know, continue to minimize that and not even worry about that because they're probably profit, you know, maybe not be profit dilutive, but they're less accretive than the others? Because it doesn't seem like demand is your challenge, right? If you push all your capacity towards those consumers willing to pay and have a higher, is there an opportunity there to do something like that? Yes, we are able to segment our customers kind of to the, like, loyal high value and occasional. That's occasional deal seeking. That's how we knew that we were losing our household penetration as it's gone down this last year. We were losing those occasional deal-seeking buyers. You know, half of those buyers actually left the category completely. Half went to, you know, a variety of different competitors that were on deal there. Those will just always move to the next deal. That's how they operate. We also know that as consumers stay within the franchise, they continue to buy more and become more valuable. For instance, the ones that entered at the beginning of the pandemic, they have doubled. Those consumers have doubled their spend. The model is all about bringing in new households and then continue to graduate them, you know, to spend more. I think the deal-seeking buyers, when we promote again, I think they'll come and go. They're not our focus. Our focus is to bring in these loyal high values and then continue to graduate them up and spend more. Right. Because you said in your comment that anytime we've produced anything, it's been sold. Like you can't produce anything and not sell it. Therefore, why sell it to somebody who would not pay, you know, full price, right? I mean, you don't have a consumer problem. You have a distribution or a production issue. That's the only thing I'm thinking. Right. Yes, it makes sense. I think that, you know, we don't expect to start promotion until we have, you know, the adequate supply. I think what promotion does, and what I was saying to John earlier is, it is really around the display and getting more eyeballs and therefore more household penetration. Okay. Thank you. Yeah, thanks. We'll take our next question from Jason English with Goldman Sachs. Hey, good morning, folks. Thanks for letting me in. Good morning. I suppose I kinda wanna pick up on that last question, but really about timing. You characterized this year as the year of coming back and stimulating demand. When do you expect to be in a position to start stimulating that demand? Our current plan right now, Jason, is to bring back some of these paused SKUs mid-year and then to start marketing and some light promotion in the back half. Okay. For those of us tracking the data, we should expect a deceleration based on comps as we enter next year. I suspect, you tell me if you see it differently. On shipments, you mentioned, I think in the press release, that you expect to use the first half to reload inventory. Should we expect the shipment versus consumption disparity, meaning a surplus of shipments over consumption, to persist through the first half of the year? Yes, I'll take the last one. We do expect some modest shipments over consumption in the first half as we, as Darcy touched on earlier, rebuild the remaining customers that we have that aren't at optimal levels. I think it is moderating from where it's been. I'd expect to be fairly modest until we get to reloading some of the paused flavors as Darcy touched on, which we expect to happen sometime in the late first half into the second half. That obviously would be a load ahead of consumption. Those are the two primary items. Jason, can you touch a little bit about the? Okay. Sorry, go ahead. Yeah. Well, yeah, sure. You said something about the comps. I said something about comps. Yeah. Your consumption growth has accelerated because we're lapping a dip in consumption from a prior year. Sequentially, we're not really seeing a tremendous uptick, and that dip doesn't really exist in the front half of the year. At current run rate, it suggests your sales growth is gonna moderate quite a bit in the front half of the year if you don't have more TDPs and more marketing going in. If you tell me you're only gonna modestly overship, it suggests that you have a very back half weighted year. Am I wrong on my maths? Okay. Just remember that Q1 is a seasonally low period. What you're seeing right now in the POS is that's where the year ago and sequential, I mean, obviously, you know this, but just factor them both in. We always see a seasonally in kind of November, December, it's low for the category. It's the one seasonal time. There's a natural increase in Q2 because of New Year, New You for the overall category. We'll start driving demand, you know, throughout Q2-Q4. Is it a back half weighted year or not in terms of sales growth, unit growth? Well, it is. That is, you know, partially because, first of all, we're a growth business. It will always be back half weighted, but also because that's when our supply also is coming more online. That does lend itself to. We have the demand drivers, which are related. Right. Okay. Thank you. Yep. We have reached our allotted time for Q&A, and this concludes today's call. You may now disconnect.