Greetings, welcome to The Freshpet Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeff Sonnek with ICR. Thank you. You may begin. Thank you. Good morning, and welcome to Freshpet's Fourth Quarter 2022 Earnings Call and Webcast. On today's call are Billy Cyr, Chief Executive Officer, and Todd Cunfer, Chief Financial Officer. Scott Morris, the company's Chief Operating Officer, will also be available for Q&A. Before we begin, please remember that 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 beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to the company's annual report on Form 10-K filed with the SEC and the company's press release issued today for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note that on today's call, management will refer to certain non-GAAP financial measures such as EBITDA and adjusted EBITDA, among others. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for how management defines such non-GAAP financial measures, a reconciliation of the non-GAAP financial measures to the most comparable prepared in accordance with GAAP, and limitations associated with such non-GAAP measures. Finally, as previously disclosed during our second quarter, the company is no longer adding back plant startup and launch expenses in its definition of adjusted EBITDA. The company has provided those costs in a table at the end of the press release to assist in your analysis of the results under both methodologies. Additionally, the company has produced a presentation that contains many of the key metrics that will be discussed on this call. That presentation can be found on the company's investor website. Management's commentary will not specifically walk through the presentation on the call, but rather it's a summary of the results and guidance they will discuss today. Additionally, we'd ask that your questions remain focused on the performance of the business and the results in the quarter. Management will not discuss or speculate on other topics beyond what is being reported here today. With that, I'd now like to turn the call over to Billy Cyr, Chief Executive Officer. Thank you, Jeff. Good morning, everyone. The message I would like you to take away from today's call is that our house is getting back in order after the stumbles we had earlier in 2022. It is not perfect. It will take some time for us to get all the systems and processes working the way we want them to. The actions we have taken since our early September announcement of organizational changes and a renewed focus on our key costs are beginning to show their potential impact. A few of the highlights are, first, strong net sales growth. We delivered 43% growth in the fourth quarter. This is the strongest quarterly net sales growth since the company went public in 2014. We finished 2022 with 40% growth for the year, our sixth consecutive year of accelerating growth and also our strongest net sales growth since we went public eight years ago. Second, adjusted EBITDA ahead of guidance. We delivered $20.1 million for fiscal year 2022, well ahead of our guidance of greater than $15 million. This was due to a wide range of operational improvements in Q4, including better production that enabled higher revenues, improved costs in manufacturing and logistics, and lower startup costs in NS. Third, improved logistics performance. By the end of the quarter, we were consistently shipping customers with a fill rate in excess of 90%, and that benefit flowed through our P&L, the logistics cost dropping to 9.4% of net sales in Q4 from 12.2% in Q3. Our in-stock position is now at pre-pandemic levels for the first time and improving by the day. Our fill rates are the best we've had since 2019, and customers are noticing it and adding fridges at an aggressive pace. Fourth, improved quality. The levels of secondary processing and disposals dropped considerably as we progressed through the quarter due to strong operational improvements that we believe are the result of the investment we've made in training and retention of our workforce via the Freshpet Academy. It typically takes a quarter for quality improvements to flow through to the bottom line. We were quite pleased to see the rapid sequential improvement in Q4, where we realized a 24% drop in the rate of quality costs as a percent of net sales versus Q3, and the momentum has continued into Q1 of 2023 as well. Fifth, more effective balance between commodities and pricing. Input cost as a percent of net sales improved versus Q3 2022 due to the September price increase, coming in at 33.6% versus 34.7% in Q3, and an average of 35.9% for the first nine months. Sixth, we have rebalanced our capacity expansion plan to drive better capital spending discipline and match our anticipated growth. As we indicated at CAGNY last week, we adjusted our capacity plan to reduce capital spending between 2022 and 2023 by $50 million and will still have adequate capacity to support our planned growth with some headroom. Seventh, the NS startup is going very well. Our startup expenses came in a bit lower than we had projected because the Ennis startup is going very well and is ahead of schedule. We are now producing virtually the entire range of rolls and at volumes that are in excess of our previous projections. This allowed us to switch shipments to the state of California to come from the Dallas D.C. in mid-January ahead of our schedule. We are also ahead of schedule on the startup of the bag line in Ennis and expect to be shipping a wide variety of SKUs from that line in Q2. We attribute this performance to the investment in training we made prior to startup and also to the realignment of our engineering resources into a single group as part of the organization changes we made in September. We believe these improvements position us well for 2023. We are starting the year with well-stocked fridges, healthy inventories, an experienced and well-trained production staff, a robust lineup of new product innovations, strong customer commitments for incremental fridges, outstanding advertising on the air, and pricing in the market that more closely matches our input costs. It will take some time for all those improvements to align and drive the resultant margin enhancement that we expect. The early indicators are encouraging. Our plan for 2023 is a logical extension of the updated Fresh Future five-year long-term guidance we outlined last week at CAGNY. We continue to believe Freshpet is going to change the way people nourish their pets forever. That will lead to more rapid increases in household penetration this year than we had last year. Line rate will continue to grow at a strong rate, due in part to higher pricing and consumers continuing to increase the value and quantity of Freshpet items that they buy. That will support strong net sales growth, but at a more measured pace that will allow us to address the margin improvement initiatives that are underway. With that context, we are initiating 2023 guidance that is in line with our updated long-term growth plan, which equates to revenue of approximately $750 million, which would result in growth of about 26%. In setting that target, we are mindful that we are only getting 8.5 points of pricing growth this year versus the 15 points we got last year. We also considered that there is no more trade inventory refill needed, and we are lapping a year that had significant trade inventory refill. While it is hard to put a precise number on the trade inventory refill that happened last year, it is likely that it was somewhere in the range of $15 million-$20 million. Finally, we believe we are facing potential recessionary headwinds at a time when we have also taken another price increase. We expect that there will be some impact from that on our unit movement and growth rate. Counterbalancing those headwinds are the significant increases in new fridges, a strong investment in media, and some of the best new products we have launched in a long time. We will do that in an environment where we are not capacity constrained. We have more than enough installed capacity such that we can add staffing on about 90 days' notice if necessary to meet higher demand. From an operations perspective, we are expecting to see continued improvement in all areas of our operation, but some of them will take a bit of time, and some of them will have transitions that add expense before we actually see the cost benefits. For example, we now have more demand than we could supply from the Bethlehem kitchens and Kitchen South, but not enough to fill both of them and the new lines at Ennis. For perspective, the first two lines in Ennis, if fully staffed, would add almost $250 million in capacity, while our guidance implies net sales will grow by about $155 million this year. In other words, while we are adjusting staffing to match the demand, we will be carrying the incremental overhead costs of the new Ennis kitchen while we grow into our new capacity and achieve higher levels of net sales. Further, we will be shipping bags of product from PA to the Dallas DC during Q1 and Q2 of this year that support shipments in Texas and the West Coast until the bag line in Ennis is fully capable of producing the wide array of bags we sell. Those incremental shipping and handling costs are transitory but will impact us until we have a balanced roll and bag production in Ennis. You should also see steady progress on adjusted gross margin and adjusted EBITDA margin as we move through the year. By the end of the year, you should expect to see the fruits of those efforts in the form of much improved capacity utilization and lower freight costs. Furthermore, when measured on an annual basis for the full year 2023, we expect our results will be significantly better than last year's on several KPIs, including adjusted gross margin, freight as a% of sales, and adjusted EBITDA margin. Todd will take you through the details. All these improvements are enabled by the increasing strength of our operations team and our renewed focus on improving margins. While we still expect to make one or two additions to our operations team, the team we have is operating at a much higher level. Our entire leadership team is relentlessly focused on the leading indicators of performance and have developed action plans to drive the improvements we've outlined in our 2027 goals. As previously indicated, we have implemented a 5% price increase, effective with orders beginning on February 6, 2023. At this time, we believe that the pricing we've taken adequately covers the known input and energy cost inflation we have seen. We've locked pricing on inputs that account for greater than 75% of our costs so far and will continue to add to our supply agreements as the year goes along. Due to the timing of our price increase being implemented six weeks into the start of the first quarter, we anticipate that we will have a small price-cost mismatch. On a relative basis to our experience last year, we see this as much, much more manageable. Our advertising plan for the year is, like in most previous years, front-loaded. We have greater than 60% of the spending planned for the first half of the year and have been on air since the beginning of January. We expect this to re-accelerate our household penetration gains, taking them from the 16% we had in 2022 to the low to mid-20s by the end of 2023. We are expecting record support from our customers in 2023. At the end of 2022, we had about 1.5 million cu ft of fridge space at retail. We expect that to grow to more than 1.7 million cu ft by the end of 2023. That represents approximately 1,200 net new stores, the addition of 3,000 second and third fridges, and fridge upgrades in approximately 1,000 stores. This is a terrific endorsement of Freshpet's value to our retail partners. We believe this will amplify our advertising investment, providing added visibility that reinforces our brand's distinctive offering. In total, we believe we have all the necessary building blocks in place to generate consistent long-term growth that is appropriately geared so that we can also achieve our margin improvement goals. We will be able to fully support this growth from our existing kitchens in Bethlehem, three lines in Kitchen South, and the first two lines in Ennis with room to spare. As you heard at CAGNY, we have modified our capital spending plan to better match the rate of sales growth we are expecting and can reliably support. We will continue construction and installation of the next two lines in Ennis so that they are ready to go in 2024 and 2025 when they are likely needed to support the next leg of our growth. Each step of the way, we are carefully assessing the latest view of demand against our available capacity so that we keep these two important variables aligned. This will help us control expenses while maximizing our opportunity to drive profitable sales growth. I want to be clear, however, that our long-term economics and the plan for 2023 assume that we will always have some amount of capacity in excess of our planned net sales because capacity comes on in chunks. It's form specific, i.e., rolls or bags, and startups can be challenging, so we want to be sure that we don't get caught without enough capacity as we did for the past three years. Before I turn it over to Todd, I would like to share one additional thought. I am a big fan of identifying key metrics in our business that are leading indicators of performance. That is how we arrived at the intense focus we have on household penetration as the prime indicator of our net sales potential instead of store count in 2017. That has proven to be a very reliable indicator of our growth and upside potential, and it has also driven the right kinds of investment choices that have resulted in six consecutive years of accelerating growth. When it came to improving our operations, we struggled to find that critical leading indicator. There are so many that seem to be good indicators of parts of our operations, nothing that could be a harbinger of broad-based operations improvement. As I have seen our performance improve over the last 90 to 120 days, there seemed to be one factor that underpinned our improving performance on a wide range of metrics, employee retention within our hourly workforce. There appears to be a strong correlation between the improving retention we have had amongst our hourly workforce and the improvements we are seeing in throughput, quality, fill rate, and many more. While that should not be surprising, what is surprising is how quickly that impact can show up. It takes time to build the skills of our team, but relatively little time for those improved skills to pay off once they are in place. As we saw team members climb the ladder of the Freshpet Academy, we have seen our operating performance improve in turn. In this way, we believe that the investment we made in our talent and the Freshpet Academy is working. We are attracting more skilled team members, providing them with significant training opportunities, and rewarding them with career and compensation gains. As a result, our retention has improved dramatically, and we have advanced a large number of our team members to higher levels within the Freshpet Academy. One year ago, after more than 15 years of operation, we did not have any team members with the skills to be at level 600, the highest level in our Freshpet Academy. One year later, we now have 14 team members at that level. Those highly skilled employees are capable of running virtually any piece of equipment in our operation and demonstrate a level of proficiency that has proven to result in higher quality, less waste, and greater throughput. In Ennis, we already have four team members who have reached level 400 due to the head start we gave them with one year of training in Pennsylvania. That is clearly contributing to our fast startup in Ennis. We are going to continue to focus on enhancing the skills and retention of our hourly workforce and expect to build upon the early gains we have realized since launching the Freshpet Academy. Those gains are very reassuring and gratifying because we strongly believe that focusing on the people part of pets, people, planet will pay dividends, and in this case, it appears it is happening. It is also creating sustainable value for our employees, their families, and the communities in which they live. These employees now have greater skills that will provide value for their entire career and are earning much higher pay with the added benefits of equity ownership. Every day, I hear stories from our production team members about how our investment in their careers is enabling them to enhance the lives of their families through home ownership, paying for kids' education, paying off debts, and more. We are very proud to have created an ecosystem where their efforts and our training enable so many enhancements to their lives while simultaneously creating a recipe for sustainable shareholder value creation. Let me turn it over to Todd for a more detailed look at our results. Todd has been with us since December first, but he has been vigorously working to get up to speed and it's taken him very little time to do that. He has been a great addition to our team and is evidence that the Freshpet opportunity can attract first-rate talent. If you prefer this early morning earnings call over our late afternoon and evening marathons, you can thank Todd for that, too. Todd? Thank you, Billy. Good morning, everyone. Let me start by telling you how excited I am to join the Freshpet team. I've been here for three months, and I'm even more convinced than ever that the growth opportunity is very real and that this will become one of the greatest growth stories in CPG. We will truly transform pet food for the better and create an iconic brand that generates robust profits and has enduring value. We clearly have some work in front of us to reach our full potential. I have been focused on a few critical priorities in my first 90 days, including the Fresh Future long-term plan we presented last week at CAGNY. We believe that plan provides a solid roadmap to meaningful profitability, beginning with solid margin gains in 2023. I clearly believe that we can achieve the goals we have laid out. We are hard at work on the efforts needed to deliver them. As a new CFO, you always wonder what you will find when you walk in the door at your next opportunity. Fortunately, the Freshpet team gave me some strong results to report in my first call. As Billy indicated, we comfortably exceeded our guidance on both net sales and adjusted EBITDA. Let me break it down a bit further. Net sales came in at $165.5 million, up 43% versus a year ago. This was the result of Nielsen Mega-C hannel consumption growth of 33% versus a year ago, the completion of the trade inventory refill we have been working on for most of the past year and a favorable year-on-year comparison. By the end of the year, we believe that we had largely completed the trade inventory refill as our fill rates were consistently running in the mid-nineties and our in-stock conditions at retail were fairly healthy. For FY 2022, we recorded 40% net sales growth, with 37% Nielsen Mega-C hannel consumption growth and the balance coming from the trade inventory refill that we completed in the year. Price increases averaged 15% for the year and contributed to that growth, but did drive some amount of unit volume erosion. The entire 15% was not additive to our growth rate. We finished the year with household penetration gains using Numerator data of 16%. Regarding adjusted gross margin, we continued to experience significant plant startup expenses in our Ennis kitchen in the fourth quarter in the amount of $8 million. This spend was a bit lighter than we had planned due to a smoother startup in Ennis. Adjusted gross margin was 33% for the quarter, but excluding startup expenses, our adjusted gross margin would have been 480 basis points better. For the year, adjusted gross margin came in at 36%. Plant startup expenses in the year were around $26 million and depressed adjusted gross margin by 440 basis points. Adjusted EBITDA was $18.8 million in Q4 and $20.1 million for the year. Q4's results benefited from better than projected net sales, improvements in quality and logistics cost, and lower media spend versus a year ago, which I'll note was planned. We ended the year with media investments at 10.5% of net sales, which on a dollar basis increased 36% versus a year ago, nearly matching our consumption growth. Logistics costs were 9.4% of net sales in the fourth quarter, down significantly from 12.2% in Q3 due to higher fill rates and efforts to unclog the supply chain. This improvement in logistics costs brought the total logistics as a percent of net sales for the year down to 10.7% from 11.2% in the year-ago period. Well above the 8% we experienced in the years prior to the pandemic and remains a significant opportunity that we expect to begin to realize in 2023. Capital spending for the year came in below the most recent expectations at $230 million, largely due to timing on some sizable expenses in Ennis related to completion of the first production building, the chicken processing facility, and the early stages of construction of phase II. This is also evidence of renewed cost discipline by our reorganized engineering team and better alignment across the organization on priorities. I want to be clear that this reduction in spending does not compromise our ability to grow at rapid rates. We have ample installed capacity for the 25% compound growth rate that we outlined in our 2027 Fresh Future plan. As Billy said, we feel we are well positioned heading into 2023. We also know that we need to demonstrate marked improvement in profitability now that Ennis is operating, our pricing has caught up to our costs, and we have stabilized operations in both production and the supply chain. Turning to our guidance for 2023, you will notice a change in the form of our guidance versus previous years. This reflects our renewed focus on improving margin as the most critical driver of success in 2023. Our goal is to exceed the adjusted EBITDA target. We will prioritize margin expansion over incremental net sales. This does not reflect any less confidence in our ability to drive net sales than in years past, but rather our intention to drive margins as our most important priority this year. We believe our net sales growth rate is very robust, and we fully intend to deliver it. As such, we are guiding to approximately $750 million in net sales for 2023, up 26% versus a year ago. The net sales growth during the year will likely be less than the Nielsen-measured consumption growth as we progress through the year because we have completed the trade inventory refill and will be lapping trade inventory refill in the year-ago period. In terms of cadence, you should expect that Q1 2023 net sales will be comparable to Q4 2022 because we completed the trade inventory refill in Q4. The heavy marketing investment and new fridge placements will drive the underlying household penetration and consumption, which should both grow significantly from Q4 2022. The absence of trade inventory refill in Q1 2023 will likely result in Q1 net sales similar to our Q4 2022. For the year, we expect to see a strong and steady build of consumption throughout the first half of the year, some flattening in the summer behind traditionally slower summer consumption patterns, and then growth again in the fall. We expect that the cadence of our sequential net sales growth will mirror those trends. It is also important to remember that we will get the benefit of the 5% price increase with shipments in mid to late February, but will also lap the larger February 2022 price increase of 12.5% and the smaller September 2022 price increase of 2.7%. For the year, we expect pricing to average around 8.5% versus year-ago, which compares to the 15 points of pricing that we implemented last year. Our adjusted EBITDA is expected to be at least $50 million, an improvement of $30 million versus 2022. A meaningful part of that improvement will come from reduced startup expenses. That improvement will be partially offset by the higher operating cost of having a large new facility that will not be operating at scale yet and some transitory expenses as we ramp up the Dallas DC. We will also have higher operating expenses for our ERP system now that we can no longer capitalize the initial investment in the technology. In terms of the cadence of the adjusted EBITDA, it will be backloaded again this year as we will incur significant plant start-up expenses, heavier marketing spends and transitory logistics costs in both Q1 and Q2 and lower volumes against higher fixed overhead now that we have Ennis online and need to grow into its scale. As you consider those moving parts, Q1 adjusted EBITDA will be modestly negative due to these expenses and will be the low point for the year. Q2 will experience similar transitory logistics and start-up costs along with elevated marketing investments, there will only be modest improvement in Q2. As we move out further in the year, we expect sequential improvement due to increasing scale, the elimination of start-up and transitory expenses, and growing into our marketing investment. For context, we expect to generate only modest adjusted EBITDA in the first half of the year. From an adjusted gross margin perspective, our guidance implies a greater than 200 basis point increase for the full year 2023. Logistics costs, despite the transitory expenses, will improve by at least 100 basis points now that our fill rates are up and we will have the Dallas DC operating. Advertising will grow at a rate slightly greater than net sales growth and support restored growth in household penetration. The remaining part of SG&A will grow slightly less than net sales growth as the previously mentioned higher ERP costs and lapping below target bonus accruals will be a headwind to corporate expenses in FY 2023. Our capital spending plan for 2023 is around $240 million, and for 2024 is around $210 million. This will support the installation of enough capacity to meet $1.1 billion in demand in 2024 and put us on track for enough capacity to meet up to $1.4 billion in demand in 2025. You will note that the combination of the 2022 and 2023 capital spending is $50 million less than we projected in November. This is largely due to the timing of the Ennis phase two capacity and a decision to split that project into two pieces to allow us to ramp up utilization of the first phase of Ennis and also provide more time to qualify new manufacturing technologies that could be significantly more efficient than our current technology. We believe we have adequate resources to fully fund this plan from our balance sheet, line of credit, and from cash generated by operations. We do expect to refinance our line of credit this year to better match our expected growth and capital spending. In closing, we are very bullish about the prospects for Freshpet. We have significant momentum on both the top line and in our operations. We have adequate capacity to support strong growth. Our customers are making significant investments of shelf space to support the growing demand, and our marketing and innovation programs are hitting on all cylinders. Our operations teams are performing well and with a renewed focus on delivering excellence in quality, logistics, and manufacturing efficiency. We are aware of the challenging economic backdrop and will constantly monitor any impact the changing conditions may have on our business in order to position ourselves for the best long-term return for our investors. In short, I am glad that I am here. I think we have a very bright future. That concludes our overview. We will now be glad to take your questions. As a reminder, please focus your questions on the quarter and the company's operations. Operator? Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. In the interest of time, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Peter Benedict with Baird. Please proceed with your question. Hi, good morning, guys. Thank you for taking the question or questions. My first one, Billy, you'd mentioned some recession unit impact that's kind of baked into your view for this year. I was just wondering maybe you could expand on that, talk a little bit about your view on the macro and how you think that, or at least if you're seeing any of that yet, or what you're seeing now and how you expect that to play out this year? That's my first question. I'll just give you a top line on it, and Scott could probably provide a little bit more compounding on it. We're, we have, you know, we're watching the economy. We're not seeing anything specific yet, but you can't be in a spot, you know, where you look at the macroeconomic factors that we're seeing, whether it's consumers starting to pull back on and trade down in a variety of other categories, not necessarily in our category, and think that it's gonna be smooth sailing for the balance of the year. We wanted to be appropriately cautious. We don't have a specific number that I'm gonna give you that would tell you, "Here's what we're worried about." It's more of a generalized concern. I don't know, Scott, you wanna add to that? Yeah. I mean, look, Peter, I think what we're seeing is pet food's up a lot. It's more than many categories. I think consumers have to get a little bit more comfortable with that new bar that it's at. The good news is the entire category has moved up. I think that some people have there's been a little bit of trading around and moving back and forth, but it looks like what we're seeing that we really like, that's an early indicator is we're consistently seeing pounds move up versus a year ago, and that provides kind of really good clarity. The piece that underneath all that's kind of underpinning it is these HIPPOs that we started introducing at ICR, and I think it was talked about also at CAGNY. We're seeing those super heavy or those HIPPOs continue to build and grow, and that's gonna be the core of our consumer base. Those people, their pet is their child, and they really don't wanna cut back on, you know, on nutrition. I don't think we have any perfect clarity on it, but we just wanna be kind of prudent and thoughtful about what we're gonna see over the course of the year with gaining consumers. All the early signs look encouraging, we also wanna be kind of providing kind of guidance and thoughts for everybody that we don't have perfect clarity on it. Yep. No, no, that makes sense. Thank you for that. I guess maybe for Todd, just curious, if you can help us out with D&A here in the business. I mean, you've retasked kind of the CapEx spend. I think this year, you know, you're about $35 million in D&A, a little less than 6% of sales. Just curious if you can give us a benchmark for 2023, and then maybe as we think about it longer term, where it kind of settles out in your five-year plan, that would be helpful. Thank you. Yeah. I'd say for 2023, we'll be in a, you know, we'll be in a low $40 million. We don't have a precise number. Depends really the timing of some, when of this, some of the equipment gets installed, so that number's gonna move around. Quite honestly, I don't have a 2027 number for D&A. We'll work on that over time, but at this point, I do not have a number five years out. Okay. All right. Thank you very much. Good luck. Thanks. Thank you. Our next question comes from the line of Noreen Norton with JP Morgan. Please proceed with your question. Hi. Good morning. Morning. Billy, you and Scott have long talked about the strong correlation between media spending and sales growth. This year you again are spending close to 12% of sales for, you know, 26% sales growth, but over time for that percentage to fall and sales to continue to grow at a similar clip. Curious if you've seen a change lately in that historical relationship that helped inform the media leverage you're expecting to gain over time or any additional color on how you got comfortable with that 9% longer term target. Thank you. I'll give a thought and Scott can add to it. We've seen a little bit of an erosion last year on the media effectiveness, but we attributed most of that to the out of stocks that we were seeing. Consumers were seeing the ad, but they couldn't find the product. In, as you got later in the years, you know, we were basically off air in the fourth quarter, so your ability to track the two in concert was eliminated. Over a long period of time, the correlation has remained very, very strong, and we expect it to continue to remain strong. With all the pricing that we've had to take, you can also see periods behind every price increase where there is a dip. You know, the consumers have a little bit of a, you know, shelf shock that they see the new higher prices. They kinda wait out the next purchase or two, and then they start coming back to their purchase behavior. We have to be mindful of that. Overall, we continue to believe the advertising is the right long-term driver. In terms of how we got comfortable with the 9%, recall when we were running closer to 12%, we were running growth rates in the mid-30s% and higher. When we were running closer to 9%, our growth rates were in the mid to upper 20s%. There's actually a decent history of us demonstrating the kind of long-term growth that we've seen at 9% of sales, and that's how we got comfortable with that number. We basically have planned this year to be slightly more conservative on the productivity of the advertising. We also know that as we add a lot more fridges and we add good innovation, that helps with the productivity. There's a bunch of these puts and takes that are going on. We've got pricing. Last year, we had out of stock. This year, we've got a lot of fridges coming, and we have really strong innovation. That typically helps with the productivity advertising. We also know that the pricing coming in can basically impact that. There's a lot of puts and takes. Overall, I think to the key point of your question, we have not seen any significant change in the long-term correlation in advertising productivity in sales growth. Great. Thank you. That's really helpful. As a follow-up, you're talking about some incremental innovation for the year. If there's any color on what we can expect there, the cadence of when we could potentially see some of these new items come to market, any color you could give us there would be great. Thank you. Yeah. We actually shared a bit at. I know we share a lot. We shared a bit at ICR. We talked about some products in our Vital line called Vital Benefits. We are expanding our Homestyle Creations product line, Spring & Sprout, which is kind of our plant-based proteins. We think there's an opportunity there over time and also really a leadership positioning there. Probably most significantly for us this year is what we're talking about from a e-commerce standpoint and expanding kind of our presence in e-commerce and our offering there, kind of a product that we're coming with at the very end of this quarter. In the beginning of next quarter, you'll start to see that kinda come out to the market. We think it'll be. Everything we've seen testing-wise shows that it's a really kind of incremental and differentiated offering than what we have today. We're kind of very enthusiastic and excited about that. It's going to be smaller this year, but we think long term, it can be a significant contributor to the growth. Thank you, guys. Appreciate it. Thanks, Nori. Thank you. Our next question comes in line of Brian Holland with Cowen and Company. Please proceed with your question. Yeah, thanks. Good morning. If I could just tack on to Nori's question about the media investment, just thinking kind of near term here as we, you know, contemplate the volume bridge in 2023, which I think assumes about 18%. First things first, when we turn off the media spend and we turn back on the media spend, just help us think about the lag that you anticipate between, actually, you know, being on air, spending those dollars and seeing the consumer receptivity. The second part of the volume question would be, is there any way you can quantify or contextualize how you think about the contribution from accelerated distribution and maybe to a lesser extent, innovation contribution over the next 12 months? Well, let me take this in a couple of parts, I guess. The first one is when you're at... Q4, we really had really no advertising whatsoever, and I think it was probably the most significant period where we didn't have anything for that long a time, really almost anything for all of Q4. I mean, the best analogy, Brian, is it's a little bit like a flywheel. We have seen it in the past when we, when we have less or very little in Q4, it takes, you know, four to six weeks at least to kind of start seeing that flywheel move and gain momentum. Now we saw a nice kind of pickup over the literally the past couple of weeks in pounds. I think I mentioned that earlier. We like that. It's a great early indicator. It demonstrates that the advertising is in-directionally working. Obviously, we need to get some of the dynamics underneath that to work, a lot, you know, a lot harder and a lot better. I guess the second part of your question is, in a typical year where we didn't have some of the pricing dynamics in place, we could probably give you a pretty clear kind of guidance or directional information on how the additional fridges and the innovation would help. I think because there are so many puts and takes, I don't think we have that perfect clarity right now, quite honestly. I think we've tried to budget it, and it's reflected in our net sales guidance for the year. What we've tried to budget it that way, where we said, "These are the kind of those puts and takes altogether." There have been lots and lots of work done around it. We, we've put out a number that we feel good about. I wish I could tell you exactly on the advertising. I think we have to kind of wait and watch it play through. I think it's going to be a period over the next kind of 60 to 90 days where we get the second price increase reflected at shelf, where we'll start to kinda understand what that impact is. Typically after that price increase hits a shelf, you see a kind of a 4-week kind of flattening, and then you kind of go back onto the kind of trajectory that you would like to be at and see for the year. Okay, great. Thanks. Todd, if I could, both near term, long term, thinking about the balance sheet, just looking at the cadence that you've put together for EBITDA, just wondering, any updates on, you know, credit agreement, any risk of the covenant sort of in the near term? Do you have flexibility to adjust that as we think about that expiring, I think, around mid-year? Secondly, you know, billion one of CapEx you know, four times $50 million is $200 million of balance sheet capacity if you go up to four times. I know there's some cash on there as well. Just remind us as we think beyond the next 12 months, do we have more flexibility on the CapEx plan if needed, or is the assumption that we would have to raise equity at some point, it's just you think you can get through the next 12 months without that? No issue on the covenants in Q4. We were fine. You know, we'll watch it closely in the first, you know, two quarters of the year. As you pointed out, we're gonna have, you know, limited EBITDA for the first half of the year. I am hoping by the time we have our next conference call, we'll have a little bit more clarity on where we are from a credit agreement perspective. We're working very hard on that right now. As I've said a couple times, I am not gonna be issuing, you know, straight equity here in 2023. Could I do it in 2024, 2025? Yeah, maybe if the market conditions are out there and seems like a wise thing to do. I would never take that off the table. I, you know, I'm confident we will get something done here by mid-year and, you know, next time we're on the call, hopefully that'll be resolved. Thank you. Our next question comes from the line of Rupesh Parikh with Oppenheimer. Please proceed with your question. Good morning, thanks for taking my question. I also had a question on advertising. Just given a number of your competitors have stepped up advertising, I think there's also a Super Bowl ad out there. I was just curious how you guys think about all that accelerated advertising, how that's impacting Freshpet. Yeah. There's definitely a lot of chatter in the market. Typically... You know, it's interesting. We typically don't see quite as much in Q1, I think historically. It feels like there is a lot going on this time of year. What we do know is we have extraordinary advertising that has year after year after year been able to produce the results that we need. I do think that there's a lot of, you know, even if you look at some of the advertising that's out there, including a Super Bowl ad, I think creates incredible awareness around the fresh pet food category. I think that's really, really good for us. I think that one of the challenges we continue to have today and will for the foreseeable future is people may know about it, but they don't know why it's fresh pet food is interesting. I think, having the leadership position we have, across the products that we have, the brands we have, the distribution that we have, and I would say the portfolio of products, the wide portfolio of products and price points that we have, I think we're really well positioned to be a very clear leader for the very long term. As there's more advertising in the category, I think it brings awareness, I think it brings visibility, I think it can be helpful for us, and we do know that our advertising delivers very well. Great. Maybe one follow-up question for Todd, just on working capital. Just curious if you guys are now past the ERP issues, and then if you see any working capital opportunities this year. Yeah. We, you know, I would say we did not end the year in a perfect spot, but a much better place than we were at the end of Q3. It made a lot of improvement. I think we will continue to improve a bit in 2024, and that, you know, working capital as a% of net sales will come down a bit. We're definitely behind the worst, ended in a decent spot and still a little bit of improvement to come this year. Great. Thank you. Thank you. Our next question comes from the line of Corey Grady with Jefferies. Please proceed with your question. Hi. Thanks for taking my questions. First I wanted to ask about pricing, just on your outlook for 8.5% for the year. Does that include any, like, of the typical mix-up in the portfolio that you guys see every year or, you know, in a recessionary environment, would you expect that dynamic to pause? That's just based on list price changes. That doesn't assume any mix change. Yeah, we usually see a couple of points of positive contribution from mix. It's usually kind of three to up to five. Would I see it pause? I don't think so. If maybe not on the high end, but I would think that we'd definitely be into that range from a mix standpoint. The reason being, if you look at the innovation and the innovation in the portfolio that we have and what we naturally see consumers kind of migrating to some of the better products that are now more available than they've been, like our Fresh from the Kitchen, for example. I think that we could see that dynamic again, you know, even this year, because again, it goes back to these high, you know, these HIPPO, these high profit pet owning households for us or very heavy households. I think they're gonna exhibit that similar type behavior. It may not be in Q1, but I think over the course of the year, I think we're gonna see that dynamic. Yeah, I would just emphasize in Scott's answer that the availability of our Fresh from the Kitchen product this year, which is significantly better than where it was last year, will give us that benefit. We saw some of that in Q4. As we lap last year's Q1 and Q2, we should see some of that benefit of migration up to Fresh from the Kitchen. That's really helpful. Thank you. My second question, I wanted to ask about just the new HIPPO demographic that you're targeting. I mean, what are you assuming in terms of CAC going forward relative to historical as you know, target these customers? Maybe you can take the opportunity to talk about, you know, acquiring higher value customers at a lower level of media spend. Thanks. Yeah. If you think about today, I don't think we're gonna adjust our CAC specific to HIPPOs. I mean, we probably have some internal metrics, it's probably not something that we're gonna talk about more broadly. We'd probably keep our CAC in a similar range and talk total households over time. If we do change it, I don't think we're quite ready to kind of share, just get into sharing externally that level of detail and complexity, quite honestly, in the model. I would keep CAC in kind of the traditional range. Now, again, CAC is not a monthly or in reality, not even necessarily a quarter. It's typically what we see over the course of a year is where you're gonna get the most accurate reads on it. I would say I would really emphasize that because of all the dynamics that are going on in the market right now. Hopefully that gives you what you need. It did. Thank you. Thank you. Our next question comes from line of Michael Lavery with Piper Sandler. Please proceed with your question. Thank you. Excuse me. Thank you. Good morning. Morning. Just wanted to understand some of the input costs and just how to think about, say, chicken, for example, specifically. Its prices have come in a little bit. How fixed is that for you? Is that a benefit? Should we be thinking about it that way? When the new chicken processing plant comes online, with your partner in Ennis, does that change how any of the pricing dynamics for your sourcing? The chicken pricing, we lock the bulk of our chicken on an annual basis. That was done in December, and it's was assumed in the pricing that we put in the market for February. It was slightly below where it had been a year ago, but not the magnitude that people may have seen as they watched chicken overall, the broader chicken market ramp up last year and then drop back down. The kind of chicken that we buy didn't go up as much and didn't go down as much. There's really not a lot of leverage on the chicken pricing for the balance of this year. Your comment about the Ennis chicken processing facility, when that facility begins, and it begins operating at scale, there is an opportunity for a benefit in lower cost chicken. First, because it's sourced in a different part of the country and chicken pricing can be regional, and the second is because of obviously the efficiency of being an on-site facility. We're very encouraged and optimistic, and that's part of the, of the rationale for having built the chicken processing facility, but we're not ready yet to commit to or forecast what that, the magnitude of that, improvement will be. Okay, that's helpful. I just wanted to follow up on a comment you made about some potential technology improvements, that sounds like are how you think about one of the upcoming lines. I guess any more color you could add to that, and then at least specifically, would that be sort of a different set of equipment, or is it something that could be applied retroactively back to some of the other lines as well? How could that play out? Yeah. I would say we're constantly working to improve the technology to make Freshpet. You should expect we're looking for ways that deliver higher quality, higher yield, more capital efficient, taking up less space, and we have some pretty good leads that are taking us down that path. If they do pan out, we would certainly try to retrofit anything back into the original facilities as much as possible. At this point, we're just leaving the option open. Our comments were really focused on leaving the options open because we do have some good leads. Thanks so much. Thank you. Our next question comes from line of Jason English with Goldman Sachs. Please proceed with your question. Hey, guys. Thanks for slotting me in. Two quick questions. Well, one quick question and one not so quick question. First, the quick one, and I apologize if you already provided this. Can you give us the details of how you plan to fund the CapEx this year? Yeah. We, you know, we ended the year with about $130 million of cash. You know, we will generate some cash flow this year, so that's a good thing, probably in the range of $30 million-$35 million of cash flow generated from operations. We are going to redo the credit facility in some shape or form, so we will leverage some of that as well. Those are the basic building blocks. I'm very confident we'll be able to get that done. Okay. Okay. Sticking on the theme of cash flow, you gave us a lot of incremental color at CAGNY last week. I wanna zoom in a bit on 2027, which seems like it's a bit more reflective of a bit more of a steady state business. The CapEx numbers you're projecting out there are still pretty lofty, close to 9% of sales. You mentioned a four turn leverage target, which assuming a 6% loan borrowing rate equates to almost 5% of sales in terms of interest expense. This leaves you with free cash flow of around 4.5% of sales based on that disclosure, and that's assuming a zero tax rate. If we actually normalize the tax rate, you end up with a very, very low single-digit free cash flow in 2027. I know it's gonna take time to bleed out those NOLs, but I still think it's a reasonable way to look at it. I mean, is that what we're looking at? Is the goal here five years out? Like we're just barely generating free cash flow given the capital intensity of this business. At what point in the future do you think, will we ever actually get to like a meaningful inflection where there's better cash generation as a percent of sales? Yeah. look, as I said at CAGNY, our expectation is we'll be free cash flow positive in 2026, it's gonna incrementally improve over time. You know, our expectations are we try to lay out some targets from a margin perspective that we thought were very attainable. We talked about some where we thought the upsides were longer term on margins. You know, we feel like those could come into play over the next several years as well. As we just talked about some new technologies we're working on to, you know, reduce CapEx over time and to improve profitability. look, yes, the free cash flow outlook over in the next several years look robust. Not a lot, we have some clear opportunities, you know, past that point to dramatically increase free cash flow. Okay. Okay. Thank you. I'll pass it on. Thanks, Jason. Thank you. Our next question comes from the line of Ben Bienvenu with Stephens Inc. Please proceed with your question. Hey, guys. It's [inaudible] for Ben. Thanks for taking our question. Todd, I guess first to follow up on Jason's question there on kind of some of the cash flow timing. Can you give us an idea if the first half of the year is essentially gonna be, you know, very modest EBITDA and can be all back half-weighted, can you give us an idea how you guys will draw on the credit facility and what that'll look like kind of going into the back half of the year and maybe, you know, expected interest rates? Yes. Look, we're in the middle of redoing that credit agreement, so I'm not gonna comment on how that's, you know, exactly gonna get drawn and what the terms are. You know, more to come on that. You know, my job is to get that done, and I'm very, very confident that we'll be in good shape. You know, there's a couple of different alternatives we have out there. More to come on it. We ended with some significant cash at year-end, so that'll keep us going for a while. We're gonna watch, you know, every penny of CapEx as the year goes on. I am fully aware of the cash needs of this business in the near term, and, I'm gonna go get it solved. Okay, great. Then, maybe one for you guys, Billy and Scott. You called out stronger trends among the kind of heavy, super heavy households versus kind of the broader household demographics. Is that driven by just in-stocks finally being at a consistent level, or is there something else at work there that is having the results with the super heavy and the heavy households be kind of ahead of the broader portfolio? I don't think it has to do with in-stocks. I think those are the people that have sought us out over time and actually be willing to either switch or even change stores. We have a pretty long-term kind of picture of these people. We've had really good, consistent growth with them over time. I think what we're recognizing as we mature is that we wanna make sure that we focus on those more than ever. They're, you know, over 80% of our total dollars. They're the people that are very dedicated to this idea. There's a lot more of them out there, and we wanna base our business even more so, you know, focusing on those folks I don't think it has to do with, more recent in-stocks, but I think it's, you know. I guess it could help, but I don't think that has not been the dynamic we've seen historically. We have, like, a 5-year trend on those folks. Okay, great. Thanks, guys. I'll pass it on. Thanks. Thank you. Our next question comes from the line of Bill Chappell with Truist Securities. Please proceed with your question. Thanks. Good morning. Morning. Hey, Bill. Just wanna talk a little bit about kind of the, what I would say soft landing in the second half. I mean, you'll have left most of your pricing. Advertising will obviously come back a little bit as you move to the second half. Just trying to understand how volumes pick back up to make up. I mean, I think you said you're gonna have, you had 15 points of price benefit last year. You're gonna have nine this year, but I'm in the first half. You know, is it just a case of further in-stocks and added fridges versus supply constraints last year? You know, does that give you enough momentum so that you can, as we move into 2024, still have kind of this high or in the 20%+ type growth, or are there other things that I need to be thinking about? Bill, I would say that you should view this year as a year where momentum builds. We start with, you know, all the pricing that we've taken, including the most recent price increase, having impacts on the unit volume, pound volume, and the advertising investment that we've made, which is front-loaded again, starting to jumpstart that engine getting the growth. The fridges are gonna come on. They're gonna come on at a fairly heavy rate in the first half of the year and will amplify the value of that advertising. The in-stock positions we start with being in the year are pretty good, so I think it's the advertising is falling on very fertile ground. We expect to see continued build as you move towards the back half of the year, and we'd expect to see household penetration gains in the back half of the year that are much more consistent with our long-term trends than what you're seeing. We will have from a net sales perspective, we'll have to lap the trade inventory refill that we did in the fourth quarter. You won't necessarily see it all in the net sales, but you will see it in the consumption. I don't know if that answers the question or not, but that's the way we see it unfolding for this year. Got it. No, yeah, we'll stay tuned. The second question, just on the competitive landscape. There have been some commentary from a competitor that there was, I'm not quoting, lots of fridge availability at the retail side for other competitors to come in. If, if that's the case, then I guess, one, do you have a lot more opportunity to add fridges this year. Two, if that's not the case, can you maybe help us understand the dynamics there? Thanks. Yeah. Bill, as I said at CAGNY, I found that comment as odd as you did. The reality is we're in 60% ACV today. If this was an easy thing to do, we have the highest productivity per linear foot or cubic foot at retail in the pet category, and we deliver the best margin. If this was an easy thing for the retailer to do, we'd be in 85% ACV today. I found it really odd that we heard that comment, but, you know, we'll see what their plan is. You know, as we all know, Walmart has invested in fridges, not many other people have. I'm not sure what they're thinking. Thanks. Thank you. Our next question comes from the line of Mark Astrachan with Stifel. Please proceed with your question. Yeah, thanks, and morning, everyone. wanted to ask about a couple of things related to volume. You know, first, you talked about media spend being back on air year to date versus 4Q. You know, can you talk a bit about how volumes have progressed relative to expectations? If I look at our scanner data, you know, volume trends have been largely flat with 4Q. How would you expect that to progress relative to the advertising spend? Related to that or sort of related to that, 13% or so new fridge space by my calculation, how do we think about the productivity of that adding to the sales growth, you know, layering on your volume assumptions and layering on the points of price that you talked about? Thanks. Hey, Mark. I'm a little obsessive with it, especially during this type of period. I look at the pounds weekly. You know, I'm a prior period guy, right? I'm all about when I look at the business, I could care less about. Year ago is interesting, but it's all about prior period and are we making progress. I've been watching pounds weekly. Every single week over the past four or five weeks, actually almost six weeks, we've made progress in pounds versus if you take a look at, you know, Q4, we should reconcile potentially on the numbers here, maybe offline. When you look at Q4, we're up about 6% versus Q4, which is right in line with where we expect it to be on a pounds basis year to date. Would I like to be higher? Absolutely. We're kind of in that double-digit range, low double-digit, but we're in the double-digit range on pounds. We're kind of tracking with exactly how we would expect. Then the second part of your question was around fridges. Fridges unquestionably add availability. At the end of the day, we're selling, you know, dollars and pounds, and it helps with the advertising productivity, et cetera, et cetera. Now when fridges come on, it's great that they come on. Again, now I'm looking versus prior period. We haven't added a whole lot quite yet. We've added some kinda quarter to date. The biggest quarter is gonna be probably next quarter. From a fridge standpoint, we'll add a lot during that period. And it will help. When a fridge first goes in, the first couple of weeks, it's not doing a whole lot. It takes a few months. I think the number we quote is within six months, it's doing about 80% of what that channel typically ends up doing if we add a totally new fridge. We are adding a lot of second fridges here. They take a little bit longer in order to create the level of productivity that we would see on a first fridge, for example. We know that those definitely add, and we've done a bottoms up view on what the fridges add over the course of the year with the advertising ads and how it all works together. That's kinda how we've gotten to the guidance that we've all gotten comfortable with. Does that give you enough... Go ahead. Just let me add one more point, Mark, 'cause not everybody sees all the data that we see. When you add pet in, pet historically, I mean, and I mean in much of last year, was a very significant drag on the published Nielsen data, but or on our data, not the published data. It has had a rebirth lately. Last four weeks we're up 20% versus year ago. We're starting to see renewed growth in the pet channel that is helping pull the total business along. I would just add that piece to it. That's definitely helpful, Scott, to answer your question. Just related to that, you know, you called that out in the presentation, right? The pet specialty piece. Would the expectation be is that continues to build relative to the number in the fourth quarter? What's driving it? Is it comparisons coming off of the big base from a couple of years ago? You know, what's going on within that channel? We've consistently added fridges in the channel, which is helpful. Quite honestly, one of the biggest ones is it has been the most disrupted supply chain we've probably had. I mean, it's just the facts around it. I think that as we're having, you know, the other thing is if you miss a shopping trip in pet, you're not coming back there next week. You miss a shopping trip in grocery, you may have a chance to get a consumer back. You know, the average shopping trip for pet specialty is, like, 30 something days, where a grocery store could be twice a week, right? It creates a really tough dynamic to recover from a sales standpoint. We were just not in a good spot for a very, very long time, and it actually has taken a little bit longer to recover kinda getting in stock in pet. I think that that's been a part of the dynamic. I think overall, again, I go back to the advertising that's on air, we know it's incredibly impactful. It's some of the best advertising we've ever had. And I think that's gonna drive across all channels over the course of the year. Got it. Thank you. Our next question comes from the line of Cody Ross with UBS. Please proceed with your question. Good morning. Thank you for taking our questions. I just had two quick clarification questions and then one longer term picture question. First on the mix that you talked about, three to five points you usually get a benefit. Is that in your guidance for this year for sales to grow 26%? Yes. Okay. Then secondly, on the EBITDA, you guided 1Q EBITDA to be negative with an improvement in 2Q, and essentially all of the EBITDA for 2023 to be generated in the second half. Does this mean that your cash burn will be greater in the first half as well? Yeah. Yes. It will be greater in the first half, than the second half. That is a correct statement. Okay. Just more longer term, you've consistently delivered against your top line goals each year as new competitors have come and gone. Do you think a more formidable competitor in the category would help accelerate growth in the category, or would it impede your ability to grow and reach your goals? Thank you. What we've seen in other categories is the arrival of another competitor, if they do a good job and they spend money, obviously increases the size of the total category, and that's viewed as a good thing. Most leading brands, if they continue to execute well, end up with a smaller share of a larger market, but a larger business in total. We'd have to see what the quality execution has been. What you can see from the competitors who come at us in the past is they really haven't been additive to the category, and they've ultimately ended up leaving because they just didn't have the velocity to justify the space they were taking up and certainly didn't produce the economics that they were expecting. It really depends on what the quality of execution is, but I would suggest that this is a category that's gonna grow very fast and more investment is gonna make it even bigger faster. Great. Thanks. I'll pass it on. Thank you. Our next question comes from line of Robert Moskow with Credit Suisse. Please proceed with your question. Hard to believe that there are more questions. Maybe just a couple of quick ones. In your 2027 number that Jason was talking about, I think you have a $200 million CapEx number in there. Is that considered run rate CapEx? I guess it isn't, is it? Like, how much of that is still growth, and do you think by 2028 it's a lower CapEx number? Maybe you could help us a little bit on, is any of it related to fridges? You know, I would imagine that type of spending would continue. Yeah. Couple thoughts on it. It does include fridges. I would assume over time, the rate of growth in fridges, you know, ultimately will slow down as we get the ACV and, you know, multiple fridges in many, many retail outlets, you know, across the country. We will invest heavily in that area over the next couple of years, but that will slow down over time. CapEx, I would say as you go five years and out, will be dependent on a couple things. One is, what is our expectation for rate of growth when we get into that 26%, 27%, you know, timeframe? Are we still growing 25% or do we see that coming down a bit? The other variable is new technologies, as we've been discussing. Those are the big variables. You know, could it be as high as $200 million on a run rate? It could if we're growing at, you know, an extraordinary rate, but I think that's TBD at this point. I guess the question is it possible to break out the $200 in terms of maintenance versus growth? I mean, the fridges we tend to spend right now about $25 million-$30 million a year, and then we, you know, we have nominal maintenance, you know, on the plant. The vast majority of what we're spending on capital today, I would say, you know, 75% to 80% of it is growth in new capacity. Great. That's what I needed. Thank you. Thanks, Rob. Thank you. Our final question this morning comes from the line of Jon Andersen with William Blair. Please proceed with your question. Hi. Thanks for squeezing me in. Two quick ones. I wanted to ask about Ennis. If you can talk a little bit about the ramp of line one, the rolls line versus your internal plan, productivity, etc. Does that signal, depending on how that's gone, we believe it's gone well, right? Does that signal well for line two? Or is the line two effort really, you know, unique, different, distinct, given that it will be focused on bags? What are some of the key milestones we should be looking for or you're looking for around the development of that second line? Yeah. Jon, the rolls line is going well. It's ramping up at a pace that is in line with our expectations, maybe slightly ahead of our expectations at this point, producing the full range of SKUs and in reasonable quantities of volume. They are separate efforts, although if you can avoid having a distraction from the first line to focus your energy on the second line, it certainly helps you get the second line up and running more quickly and more reliably. I can tell you, as I said on the comments, that the second line is doing well. We're well along in the commissioning part of that process, and we'd expected to bringing that line up fairly quickly. To recognize though that line has to produce a fairly wide range of SKUs, everything from our roasted meals to our multi-protein, to our small dog, to our Fresh from the Kitchen products. It'll take a little bit longer to qualify every one of the items on that line. What we've outlooked is that we would have saleable product at the end of this quarter, beginning of next quarter. We're well on track with that. We said we'd have the full lineup qualified by about the end of second quarter. We feel like we're on track for that. Once all that happens, that facility in Ennis will be producing the vast majority of our lineup, and we'll be able to get all the freight efficiencies out of the Dallas DC. Okay, thanks. And then, you've highlighted e-commerce as a kind of an innovation, big innovation opportunity. I guess what's different about this DTC approach versus, you know, what your customers can do today, which is, you know, click and collect or, you know, procure Freshpet through last mile delivery? How is this different and value added, in incremental relative to the kind of the current go-to-market approach? Thank you. Hey, Jon. Yeah, it's actually a product that will be much more specific or custom to a specific consumer and dog's needs. Someone could find some of the attributes within our line, but this will be very, very specific and kind of almost a customized solution, custom feeding plan for that specific dog and their attributes. Activity level, body type, any kind of ailments, issues they may have, sensitivities they may have, et cetera. It'll be very custom and it'll be incredibly convenient for consumers also. We do think it's definitely incremental, and it's seen as incremental by consumers in all the testing that we've done. Is this something that, you know, the consumer will interact with through your website, in order to get that customization? No. We'll be working with our customers, to execute this. We think that this is the. We think it's the best and smartest, cleanest, most cost-effective and environmentally friendly way in order to execute the launch. Thanks so much. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Cyr for any final comments. Great. Thank you everyone for your interest, and I would end, leave you with one thought. According to the Nobel Prize-winning author, Orhan Pamuk, "Dogs do speak, but only to those who know how to listen." To which I would add, if they're anything like my dog, they're asking for more Freshpet. Thanks, everyone. We appreciate your interest. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.