Greetings, and welcome to the Freshpet Q3 2023 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Jeff Sonnek, Investor Relations at ICR. Thank you. You may begin. Thank you. Good morning, and Welcome to Freshpet's Q3 2023 Earnings Call and Webcast. On today's call are Billy Cyr, Chief Executive Officer, and Todd Cunfer, Chief Financial Officer. Scott Morris, 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, 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 measures, a reconciliation of the non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP, and limitations associated with such non-GAAP measures. Finally, 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 that we'll discuss today. With that, I'd like to turn the call over to Billy Cyr, Chief Executive Officer. Billy? Thank you, Jeff, and good morning, everyone. The message I would like you to take away from today's call is that the Q3 results show that the Freshpet business is delivering on its promises and potential, and as a result, we are off to a fast start towards our 2027 goals. At the beginning of the year, we laid out our new Fresh Future long-term plan that called for 25% annual top-line growth, resulting in $1.8 billion in net sales in 2027, and strong margin improvement, with the ultimate goal of delivering 18% Adjusted EBITDA margins in 2027. For 2023, the first year of that plan, we committed to continuing our strong track record of net sales growth while simultaneously fixing the operating issues that were preventing us from generating the margins that we know are attainable in this business. We are delivering on that commitment and exceeding many of the targets we set, putting us ahead of the pace required to deliver our 2027 goals. This increases our confidence in the capability we are building, the strategies we are employing, and our ability to deliver our long-term goals. In Q3, we delivered both top line and bottom line growth ahead of expectations for the quarter. We delivered 33% net sales growth, bringing our year-to-date net sales growth to 28%. While we also delivered a step change in our profitability due to strong operational improvements. As a result of that progress, we are raising both our net sales and adjusted EBITDA guidance for the year. We believe our fast start towards our 2027 goals is largely due to the strengthened organization capability we have built and the strength of the Freshpet consumer proposition. The team we've built is delivering improvements in our key focus areas of quality, logistics, and input costs at a rate that has exceeded our projections and which enabled us to deliver a 40.2% adjusted gross margin in the quarter. Our progress in logistics has been even more significant and impressive. This is a true testament to the quality and depth of our team that is spearheading these projects, and we couldn't be more proud of this measurable progress. Our net sales growth has also been impressive and is a good demonstration of how resilient the Freshpet brand is, even in the face of higher pricing. Q3 was our fourth consecutive quarter of accelerating volume growth, and our 23% volume growth in the quarter, in combination with our typical mix improvement, provides added confidence that we can continue to deliver the mid-20s net sales growth CAGR needed to support our long-term algorithm, even without the benefit of pricing. Even more encouraging is the increasing rate of household penetration growth that we have seen. While it will take some time for the 52-week household penetration measure to show the low 20s household penetration growth we have seen previously, the 13-week measure is already approaching that rate of growth. It is just a matter of time for the long-term measures to catch up. We think that will happen by midyear next year. While we are off to a great start, we are also mindful that we still have a lot of work to do to achieve our 2027 goals, particularly our margin goals. Our adjusted gross margin is still 500 basis points below our long-term goal, and our adjusted EBITDA margin is also well below where it needs to be. We need to stay focused on improving our operational performance while simultaneously adding capacity to keep up with the strong growth we expect to deliver. I want to provide a few additional highlights from the quarter, and then we'll turn it over to Todd to provide the key details and our updated outlook for the balance of the year. First, net sales growth. The net sales growth in the quarter was particularly strong and ahead of our expectations. It was largely due to strong 23% volume growth, that in combination with typical mix improvements, is equal to our long-term 25% growth target. This growth was due to continued household penetration growth and even stronger growth in the number of heavy and super heavy users, what we call HIPPOs. Those HIPPOs account for 88% of our volume today. The number of HIPPOs in the Freshpet franchise grew 25% in the past year, and their buying rate grew 6%, demonstrating the disproportional impact that these targeted consumers have on our growth. We also saw particularly strong growth in the unmeasured channels, such as club. The net sales up more than 100% in the unmeasured portion of that channel. What is particularly exciting is that 65% of the households who buy Freshpet in that channel are completely new to Freshpet, and they buy in large quantities. The strong growth in the unmeasured channels more than offsets the slower growth we've been experiencing in the pet specialty channel. Second, fridge placements. We placed 4,464 new, upgraded, and second or third fridges year to date, a record for us by a large margin. 20% of all of our 26,385 stores now have multiple fridges. We are on a pace that is well ahead of our initial commitment to place 5,000 fridges this year, and already have the 1.7 million cubic feet at retail that we projected for the year. This is a testament to retailers' belief in Freshpet as a scalable and innovative category leader, and that we represent a significant growth opportunity for them. Third, e-commerce. We continue to see strong growth in the e-commerce channel, which we define as curbside pickup, delivery, and DTC. E-commerce now accounts for 9.5% of our total volume, and 88% of that volume goes through our fridge network, either via curbside pickup or a store-based delivery option like Instacart, which grew 48% versus year ago. E-commerce sales are up 62% versus year ago, and we continue to believe this will grow as consumers increasingly adopt new and convenient grocery pickup and delivery services. Fourth, innovation. We launched our Large Dog offering in a limited number of stores earlier this year, and it is off to a fast start with its dollar velocity within our top 10 items, where it is in distribution. Based on these strong results and the ability of this item to expand our reach into larger dogs, we expect to expand distribution of this product next year. Additionally, we launched Freshpet Complete Nutrition Rolls in October. Complete Nutrition offers the Freshpet experience at a good entry point value. We expect it to be in more than 9,500 stores by the end of the year. We think this will make Freshpet more accessible to interested but more value-conscious consumers. Fifth, quality, logistics, and input costs. As we told you at the beginning of the year, these costs would be our key focus areas as we sought to improve our operations, and we are making good progress. In the quarter, we improved the collective total of these costs by 780 basis points versus year-ago. Within that, our quality costs were 190 basis points better than the year-ago. Our progress in logistics has been exceptional, improving by 540 basis points versus year-ago. While we are benefiting from the macro environment, which has created less demand for trucking capacity and lower fuel costs than last year, we believe that only about one-third of our improvement is due to those factors, whereas the remaining two-thirds is due to actions we have directly taken. For perspective, despite shipping 23% more pounds of product in Q3 of this year than in Q3 last year, the total number of miles of freight we paid for was down by 28%. This was due to higher fill rates, larger order size after our June implementation of bracket pricing, and the ramp-up of our second DC. We have leveraged our increasing scale to get lower lane rates relative to the market than we've gotten previously. This is a clear demonstration of the incremental capability we have built in logistics over the past year. Sixth, capacity. We've successfully added incremental staffing at all three production sites over the past 90 days, and that is delivering the necessary capacity to support our current rate of growth and is positioning us well to meet the demand we anticipate in Q1 of 2024. Further, the second bag line in Ennis has begun commissioning and is on track to begin producing salable product by the end of the year. Construction of Phase Two in Ennis is on track or slightly ahead of schedule, and that will enable us to begin producing rolls on the first line in Phase Two by the end of Q3 of next year. In total, we believe we will have adequate capacity to support our near-term growth that underpins our 2027 algorithm and will be well positioned to support growth going forward. In summary, we believe we are making very good progress and remain very bullish on the year and our long-term prospects. I would like to end my comments with some thoughts on the overall pet food category. There has been lots of discussion lately about the impact on household budgets and the influence on category volumes, given higher category pricing and a wide variety of macroeconomic factors, such as the resumption of student loan payments, interest rates, and inflation. Clearly, the results we presented today suggest that an increasing number of consumers are still willing to pay for high-quality pet foods, and demand for those types of products is growing. We are seeing strong growth across all age groups and income cohorts, and we believe that the most important variables in determining what kind of pet food you feed your dog are not income or age... but how important your dog is to you and how much you focus on their health and well-being. The cost to feed Freshpet is only about $2 per day for the average 30-pound dog. That expense for high-quality pet food has shown over time to be among the last things that someone cuts from their household budget when times are tight. When you contrast our performance with the wider CPG narrative about consumer trade-down that is occurring, this suggests that there is a bifurcation of the category, with the high end thriving and downward pressure on less differentiated brands. It is true that our volume is becoming increasingly concentrated among our heaviest users, HIPPOs, who also happen to be our fastest growing group of users. We view that trend to be favorable, demonstrating high levels of satisfaction and making our business increasingly main meal instead of a topping or mixer. We now have almost 4 million HIPPOs in our franchise, double the number we had three years ago, and they are consuming an average of $235 of Freshpet per year. That group has grown 25% over the past year, and they now account for 88% of our business. Within the heavy user HIPPO group, we have a subset of about 250,000 users, about the size of some of the DTC brand franchises, who buy more than $1,000 per year and account for about 25% of our total volume. That group has grown more than 50% over the past year. We describe the consumer behavior we are seeing as Freshpet is becoming increasingly mainstream and main meal. We are growing our total franchise across all ages and income cohorts, thus, we are becoming more mainstream, and we are increasingly driving higher and higher buying rates, thus becoming more main meal. This creates a strong, loyal, and very valuable consumer franchise. This behavior is consistent with the long-term trend towards the humanization of pets and consumer interest in feeding their pets the highest quality food that has driven the premiumization of the pet food market for the last two decades. Nothing in the data that we see suggests that this trend is slowing, and in fact, we believe that the next generation of users is even more interested in providing the highest quality of care for their pets and concerned about the quality of food they feed every member of their family. This is a fundamental trend that we've discussed over the years, but is being tested amid this period of economic uncertainty, and the resiliency that we see is extremely encouraging for the future of Freshpet. With this backdrop, we believe that Freshpet has the potential to become a very large brand in a very large and growing category, and we are taking the necessary steps to ensure that we realize that potential. Now, let me turn it over to Todd for the details on the Q3 results. Todd? Thank you, Billy, and good morning, everyone. As Billy said, in Q3, we continued the strong performance we saw earlier this year and have raised our net sales and Adjusted EBITDA guidance to reflect that strength. Let me break it down a bit further. Net sales came in at $200.6 million, up 33% versus a year ago. Our net price mix was up more than 9.5% versus a year ago in the quarter, and volume measured in pounds grew 23%. The price mix was positively impacted by the two price increases we took in February and last September, totaling 7.5%. The mix benefit, which we have consistently seen over time as consumers migrate to higher priced items in our lineup, was slightly more than 2 points. Total Nielsen measured dollar growth was 28% versus a year ago in the quarter, but our growth in non-measured channels was much stronger and added almost 4 points to our measured channel growth, which also has been a consistent trend as of late. The growth was broad-based across channels, ranging from a low of 12% in the pet specialty channel to 30% in XAOC and greater than 100% in the unmeasured channels. Adjusted gross margin was 40.2% in Q3, 570 basis points better than the year ago and well above our base expectation. This improved performance was due to a variety of factors, including improvements in the input cost and quality, the benefits of the pricing we took in February, and increasing fixed cost leverage in Ennis, all aspects of our operational improvement plan that our team is focused on. We expect these elements will continue to improve as we move forward and drive continued margin enhancement, particularly as we grow into the scale of the Ennis operation. Total SG&A was 28.6% of net sales, down from 32.2% in the year ago quarter. The biggest improvement was in logistics, where we gained 540 basis points. We spent 9.5% of net sales on media in the quarter, which represents an increase of $5 million versus a year ago. We did have some unfavorability in SG&A as we trued up our bonus accrual to reflect this year's improved performance, increasing our bonus expense versus a year ago by 170 basis points. Adjusted EBITDA was $23.2 million in Q3. That is considerably better than the expectation we had initially provided and was primarily due to the strong operating performance in COGS and logistics and the better-than-planned net sales. Over the year, we have delivered $35.2 million in adjusted EBITDA to date, well ahead of the initial expectations we set at the outset of the year. Capital spending in the quarter was $60 million. There is no change in our outlook for capital spending this year, which remains at $240 million.... We generated around $39 million in operating cash flow year to date, an improvement of almost $93 million versus a year ago. As a result, our cash position is very strong, with $338 million in cash on hand at the end of the quarter. For the remainder of the year, we expect interest income and interest expense to largely offset each other. We believe that we have adequate cash to fully fund our growth through 2024, and we will be free cash flow positive in 2026. We also believe that we will have access to traditional non-dilutive forms of capital to bridge a gap in 2025 if it occurs. As we look ahead to closing out 2023, we expect to continue the strong consumption growth we demonstrated in Q3, but the net sales growth will be impacted by the large trade inventory refill we completed in Q4 of last year. We believe that trade inventory refill totaled around $10-$15 million in Q4 of 2022, and we will not have any trade inventory refill in Q4 of this year. Thus, we are expecting net sales growth to be in the low 20s, while consumption growth will remain in the high 20s. We will continue to see an increasing rate of growth coming from unmeasured channels as the club business is doing extremely well. We will be losing the year-on-year benefit of a 2.7% price increase we took last September, so we will only have 5 points of benefit from pricing versus a year ago in the fourth quarter. Thus, volume and continued mix improvements will be the primary drivers of our net sales growth. The trends we are seeing now are already supportive of the volume and mix growth we need to deliver our net sales goal for the year and start next year strongly. We expect to see continuing improvement in our operating costs in Q4 as we build scale in Ennis and continue the strong delivery we have already seen in logistics and quality. However, we have added manufacturing staff in anticipation of meeting the demand we will experience in Q1 of 2024, and that will impact the adjusted gross margin in Q4. We will also incur some startup costs for the second bag line in Ennis. As a result, we expect fourth quarter adjusted gross margin will be slightly below Q3, but well above the year-ago margin of 33%. In the fourth quarter, we will have a sizable media dollar investment versus a de minimis investment in the year-ago, and that reinvestment will help us get off to a fast start in 2024. However, the rate of media spending in Q4 will be below the level we had in the first half of the year, providing some incremental margin benefit. Now let me turn to our guidance for the balance of the year. Given the strong performance to date and what we have seen of Q4 so far, we believe it is appropriate to raise our guidance to reflect the higher net sales and better than anticipated performance on adjusted gross margin and logistics. Now let me turn to our guidance for the balance of the year. Given the strong performance to date and what we have seen of Q4 so far, we believe it is appropriate to raise our guidance to reflect the higher net sales and better than anticipated performance on adjusted gross margin and logistics. Thus, we are raising our Adjusted EBITDA guidance to around $62 million from at least $55 million, and we are raising our net sales guidance by $5 million to around $755 million. We are not ready to give formal guidance for 2024 yet, but you should expect us to continue to focus our strategic planning on delivering against our 2027 targets that call for 25% compound growth at an increasing rate of margin and profit growth. We will have fewer startup costs next year and will continue to capture scale benefits and quality improvements in our manufacturing facilities, resulting in further improvement in our adjusted gross margin next year. We will continue to capture scale and efficiency benefits in SG&A. It is important to note that our priority will remain on restoring the profitability of the business while continuing to deliver the outsized growth that investors have come to expect from us. However, at the scale we have now achieved, over delivery of our growth rate has consequences that we must avoid to achieve our margin targets. It can significantly impact our ability to meet demand, stretch our ability to design, construct, and start up new lines, and stretch our balance sheet. In this regard, we are being very thoughtful in managing our growth at levels that are consistent with our long-term targets. Our goal is to always have adequate capacity to meet our anticipated demand and not much more than that, so that we can live within our existing resources. Our planning process for adding new capacity has multiple checkpoints before we are fully committed to the cost of new capacity. We are constantly updating our demand forecast and only commit to new increments of capacity when it becomes apparent that we will need them. Because of the infrastructure we have already built in Ennis, Kitchen South, and Pennsylvania, all of our current projects are within the scope of the buildings and sites that we have already developed and the Ennis Phase Two building that will be completed by mid-next year. We can add 4 lines in that space, 2 more lines in the existing space at Kitchen South, and are developing a plan to install another line in storage space in Kitchens Two in Pennsylvania.... Effectively, that means that we are only making capital commitments 18 months out from when we need the capacity at this point, and will not have to invest in new buildings or site infrastructure beyond Ennis Phase Two for the next year or 2. We are only adding staffing 90 days out from when we need it. We believe that gives us flexibility to scale our capacity while simultaneously managing our cash very closely for the next few years. Our fast start towards our 2027 goals will also provide some added strength and flexibility on our balance sheet. With good capital spending discipline, improved margins, and better operating cash flow, we remain convinced that we will have ample liquidity to meet our needs for 2023 and 2024. We expect to require a small amount of traditional debt financing in 2025, and we will have more than enough earnings power to support that. We continue to believe we will be cash flow positive in 2026. In closing, we are very happy with the way the year is turning out. The management changes that we made in September of 2022, and the increased focus on our operational improvement are apparent. They have put us ahead of the glide path we need to deliver our 2027 goals, giving us both some added optimism that we can meet or beat those goals, and also some cushion to absorb any short-term issues along the way. As we end 2023 and head into 2024, we are in a much stronger position than we were one year ago. Ennis is up and running, including the chicken processing operation. Our operating efficiency has improved dramatically, and we see solid evidence of continuing improvement almost every day. Our customers have added a record number of new fridges that are amplifying our advertising investment. Household penetration is growing nicely, and our HIPPOs are growing even faster. Freshpet is becoming more mainstream and more main meal. All of that, plus the additions we have made to our team, is the recipe for our long-term success. We are very bullish about our future and our ability to deliver our long-term goals. That concludes our overview. We will now be glad to answer your questions. As a reminder, please focus your questions on the quarter and the company's operations. Operator? Thank you. We will now be conducting a question and answer session. If you would 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 participants limit themselves to one question and one follow-up. One moment please while we poll for questions. Thank you. Our first question is from Ken Goldman with JP Morgan. Please proceed with your question. Good morning. Thank you. I know you're not talking specifically about 2024 yet, but you did bring up the idea that I think, you know, you're generally aiming for 25% CAGR over the next few years. I just wanted to make sure, is the messaging for next year, if there is messaging at all, "Hey, you know, you're, you're on target for that 25% CAGR in general," but, you know, you're, you're gonna do, if things come in as expected, above 25% in 2023. So maybe you can still do below 25% in 2024 and still get to that number. I'm just trying to get a sense if there's any kind of underlying messaging in there or if I'm reading too much into that. I think you're reading a little much into that, Ken. The message is that our current run rate of volume and mix would support 25% growth. Our long-term algorithm calls for 25% growth, and so we fully would expect to deliver a 25% growth next year based on what we can see today. We feel very good about the momentum in the business. We're seeing good consumption. There's no reason for us to think that's not gonna be part of the plan. Thank you. Then just a quick follow-up, and if you said this on the call, I missed it. But, Todd, now you're there, you're into November, presumably some discussions with vendors have been underway. What's your updated estimate for COGs inflation next year? I think you were roughly thinking on an early basis about low single digit last quarter. Yeah, I mean, it's, it is too early to tell. Chicken pricing is the biggest component. We will know that in about the next month. I mentioned on the call we're very confident we will have gross margin expansion next year. Don't know exactly what that looks like. I'll obviously, we'll give you more color, when we report Q4. But look, I think it's gonna be, I think it's gonna be flattish. Right now, things are looking pretty good. I think we'll have some nice leverage from fixed cost. We think the quality cost will continue to decline. Feel great about logistics, so very confident about some level of gross margin expansion next year. It's really gonna be dependent on what those final input costs are. Thank you so much. Thanks, Ken. Thank you. Our next question is from Mark Astrachan with Stifel. Please proceed with your question. Yeah, thanks, and morning, everybody. I guess maybe just to start, so on the on track and on the mix breakout, can you maybe talk a bit about how much line of sight you have on each of those? You know, you talked about mix being a similar sort of contributor. Historically, I don't recall a specific breakout previously, just sort of curious, you know, why and how we think about it and how much ability do you have to manipulate that higher with the innovation? And on the untracked piece, at four points or so, contribution was a little bit more than in the first half. How do you think about that on a go-forward basis? Is there opportunity for that to sustain into 2024? Thank you. Well, hey, Mark, it's Scott. So historically, what we've seen is mix has definitely been a contributor, typically around 3 to maybe 4 points per year. So you kinda add that to our volume, and that's the majority of, of what we're seeing, you know... And that's kind of been historical. We're starting to see it again this year. And then the other thing that we're kinda starting to, you know, obviously see a ton of expansion in is when all the non-measured channels. And part of that's club, but part of that's also the online piece, too. Let me just add to it. One of the reasons why it hasn't been as much of a discussion over the last couple of years is because our mix has oftentimes been dictated by capacity, and this year, our mix, you know, we have much more of the consumer available to choose on their own. You know, historically, our Fresh from the Kitchen product has been our fastest-growing part of our lineup, and it's the most premium part of our lineup, and we frankly, finally have good in-stocks and good supply of that. And so the consumer is able to naturally migrate up through the platform or through the brand franchise, as they have historically. And then I'll add one more piece to it, is we, as Billy mentioned in the call, we introduced some innovation called Complete Nutrition, and that's, we think, a great opportunity to bring additional people in. We think that that's gonna help us with overall buy rate over time, and then we're also starting to kind of introduce mixed or bulk cases into the portfolio. So as we see that, we'll see probably buy rate expansion with that. And I think that's gonna help us with kind of overall consumption, expansion of mix, and in addition, actually, to penetration. Got it. And maybe related to the last piece on just the incrementality and sort of building on what you talked about on the hippos, how do you think about the recruitment, and how many non-users are there out there to continue driving growth? And what do you know about them in terms of competition or composition of income and generations in terms of users? Yeah. I mean, first of all, you, you'll see in the presentation we attached that the growth has been fairly broad-based. The, obviously, the group that is the highest likelihood of being interested in Freshpet skews younger, so the millennials and the Gen Z's, and that's where we're making the most progress. And I think millennials and Gen Z's today account for about 50% of the dog ownership in the U.S., and it's obviously where the growth is coming from going forward, and that's where our proposition really resonates. I think the number I recall is that Gen Z is twice as likely to choose Freshpet as a baby boomer is. So we think that fundamentally, over the long haul, there's a very good demographic tailwind that's gonna help us with this, and we'd expect to see that cohort grow much more quickly. Thank you. Thank you. Our next question is from Rupesh Parikh with Oppenheimer. Please proceed with your question. Good morning, and thanks for taking my question. So in regard to your marketing efforts, just curious how the response is to your marketing. And then, as you look towards next year, just any initial thoughts on the plan for spend, you know, whether you plan to be consistent with the 11%, or just any thoughts there as well? So I'll answer the response to the marketing piece, and I'll turn it over to Todd on the kind of the planned spend. So basically, I think we've been able to consistently refresh the advertising over time and the marketing and the communication, and we really have been able to see incredible responses to the marketing that we put in place. We see penetration, it really kind of pushing penetration, really nice, consistent growth over time, an expansion of the portfolio, and bringing it, as Billy mentioned in the call, to this really, we're mainstreaming the brand and mainstreaming the idea of fresh pet food. And continuing to kinda deliver on that concept. Todd, I'll let you talk a little bit about planned spend. Yeah. I mean, still a little bit early on in the planning cycle for next year. I'm anticipating it will largely grow with sales, budget for the year. That will bring us our media spend over $100 million for 2024. If that's the way it plays out, which obviously we're really excited about. And at that point, we'll be able to start, you know, bringing that number as a percent of sales down over the next few years. As you know, that target, the goal is to get from 11% to about 9%, and I'm really confident we'll have enough in our media budget to be able to do that in the out years. But right now, about growing with sales. Great. And then maybe just one follow-up question: So your operating cash flows were very strong year to date. I think you guys at one point thought you could do $30-$35, and you're already above that. Just any updated expectations on how to think about that line for the balance of the year? Yeah, I mean, I think we'll be. Obviously, it depends on final working capital. We had a very strong working capital in Q3. I think a little bit of that was timing, but we're doing a much better job there. I mean, I'm anticipating we can do at least $50 million for the year. And look, this is one of the bright spots, I think not only the net sales and Adjusted EBITDA, but the operating cash flow and the discipline that the team has put in in the last year has been really impressive. So, we're off to a really good start. Great. Thank you. I'll pass it along. Thank you. Thank you. Our next question is from Peter Benedict with Baird. Please proceed with your question. ... Hi, guys. Good morning. So first question, just on the fridge placement momentum, obviously, a big year here in 2023. Just how are you thinking about that as we move maybe into 2024? Not just kind of the new placements, but also the second and third fridge placements. Just how are you thinking about that? Well, we've made incredible progress this year. I mean, it's a banner year, really a record year for fridge placements, and it's not just first fridges we're doing well with. We're. It's the second, and in some cases, even third fridges. We continue to see that as being a really big piece of our overall kind of construct in the future, where we're adding, you know, second fridges into many of the high volume stores. We expand out. When we do that, we expand out on some of the current portfolio on things that we have kinda lower stock and lower inventory on sometimes and holding power over the weekend, but it also allows us to bring some innovation into the market. So we really kinda think that's a really important and fundamental piece. Going forward, we're not ready to put up any numbers, but I would for 2024 on fridges, but I would expect a return to more historical levels, and I think over the next kind of, you know, year and maybe even 2-3 years, we'll have the benefit of what we were able to do in 2023 and kinda give us an incredible platform to build out the business and the entire company and the brand. Now, that makes sense. I think as a follow-up to that, Scott, would be, you know, I mean, not all new stores are created equal, and, you know, you've got a lot of momentum with the club channel. Just curious, kind of the durability of that, the duration of kind of expanded presence within club, and anything else you would say in terms of, you know, partners or, or channels that you maybe not, you're not fully penetrated, in at this point. Thank you. Sure. So look, this is the first year that we've had significant expansion in club. We've made great progress. We're gonna get the benefit of that for multiple years. My constant joke for the last decade is, the best time to put a Freshpet fridge in is yesterday, because every single year, it delivers on same-store sales increases and growth. So I think that we'll get the benefit of the club channel, and it will be oversized or supersized to some extent. So, you know, in an average fridge, you know, might go up. If it goes up 15 points or whatever on a same-store sales basis, if that goes up 15%, after a year, it'll be kind of at that higher rate that a club typically will sell. So we, we like that. The other thing is, I mean, it's very, very obvious out there, but we have zero Sam's Clubs. We think over time, there's a really tremendous opportunity for us to start developing a partnership with Sam's and, and, and seeing and deliver a different type of proposition that is appropriate to their, their customer, and, and really see a great opportunity for expansion over time at Sam's. Terrific. Thanks so much. Thank you. Our next question is from Jason English with Goldman Sachs. Please proceed with your question. Hey, folks. Thanks for slotting me in. I'm gonna take us back to the top with the first two lines of questioning, which I think we're all about trying to get confidence in the consensus estimate for 25% growth next year. You mentioned that you, you're confident based on everything you see. It's a little harder for us to get confidence because we don't see the unmeasured contribution, nor the mix. We just clearly see in the Nielsen data, which is tracking below, and we know the big box pet is not particularly strong. So coming back on, on two points that have already been addressed, but I wanna make sure we come back and, and hit them again because I think they're really important. The mix component, obviously a nice contributor. You're launching a lower price per pound product. Shouldn't we expect some of your consumers to opt in for that and mix, therefore, to turn into a headwind? Question one. And then question two, and I'm sorry, I was distracted. There was other news on the tape, and I know Mark asked this, but the 400 basis points, the Costco contribution, you're going to start to cycle the build-out next year, and you know, getting the same number of stores as you got this year, just net neutralizes that. It doesn't continue to add incremental growth over and above. So what's the source of the incremental growth? Like, how do we keep that incremental 400 basis points coming? Let me let me take a shot at this. So first of all, on the Costco part, we're still not in the full Costco collection of stores. I think at the end of the quarter, we were in something like 370 of the Costcos. There's like 550. So we still have a long runway of new stores, and then each of the stores that we're in grows at a very rapid rate, and they're relatively early in their life. So I would expect that trend with Costco to continue for quite some time. And as Scott just mentioned, we are not yet in Sam's, but that certainly becomes another opportunity for us when they decide that that's a play that they'd like to make. On the mix part, yes, we do expect to see that some number of consumers will migrate to the new Complete Nutrition product. But what we've seen so far is that that is more than offset by the migration up the franchise, especially as we've gotten complete distribution on our Fresh from the Kitchen product and some of the other more premium products we've added to the lineup. So on balance, we believe that there's continue to be mixed gains rather than a mixed headwind. Our data, you know, we obviously showed you the data through the end of September. We've had the Complete Nutrition product in the market in October. We've seen what the sales look like, and we still feel very comfortable that it is not dilutive. Good. That's good stuff. I appreciate that. And by the way, congrats on all the operational improvement. I should open with that because you, you're obviously making great strides, and I wanna make sure those are recognized. And it's great to see the driving margin. So sticking on the new, more value-oriented product, is that margin neutral, margin dilutive, or penny profit neutral, penny profit dilutive? ... It is margin neutral. Okay. Okay. So basically, we think it's gonna open up a lot more penetration, bring people into the portfolio, and then keep some people using it on a more consistent basis. Performance has been extraordinary. It's very new, and performance has been extraordinary already. And from where we're able to watch it so far, the results have been excellent. And again, I think that across the portfolio, there's lots of mix and trade-up opportunity. Those items are more available. We're adding things on the other end of the entire spectrum on our portfolio. On the higher end of the spectrum, we're seeing great growth with those items. Large Dog's a great example that was called out, too. You know, so we've got all that, and then eventually going to, as I mentioned earlier, we're gonna start adding these cases in, like these bulk packs, and it's gonna change the dynamics of the business, bringing it more and more kind of mainstream and main meal. I hear you. Makes sense to me. Cool. Thank you. I'll pass it on. Thank you. Thank you. Our next question is from Michael Lavery with Piper Sandler. Your question. Thank you. Good morning. Morning. Just looking at the household penetration growth by income bucket, and in the last 52 weeks, before this Complete Nutrition launch, you already have that lowest-end consumer household penetration up 17%. And so I guess, what's driving that, and with this launch, how much higher do you think that should go, if there's already that good momentum? Is it really where you see a kick-up to some, you know, much faster pace, and how do we think about the magnitude of that? So, so, look, as part of our strategy over time, we wanna make sure we have an incredibly wide portfolio of products that really span different price points, different offerings, and also different benefits to consumers and, and what they're looking for in products. So we wanna make sure we have everything out there. One of the things that we have the opportunity to do now is, as we get more and more scale, we have the opportunity to bring products that are even more value oriented and build that piece out. What we know is that sometimes the initial price point is a little bit of a shock for some consumers. So the goal is to bring them into the franchise, let them kind of migrate through, and then migrate up over time, and use more of our, more of our products every single day. Okay, that's helpful. Just for the consumer's understanding, I'm looking at your slide with the Complete Nutrition package, and obviously, it doesn't say nearly as good or almost as good as some of these others, but how do they understand the differentiation between this and the rest of the portfolio? Obviously, the price point conveys a bit of that message, but what's the right way for them to understand how they're different and what the value proposition distinctions would be? I mean, really, it definitely. People make assumptions on products a lot of times based on price point, so that's probably the number one and leading indicator, and having an aggressive price point is a piece of it. But one of the other key pieces is, we have brought a little bit more whole grains, complete carbohydrates into this product, and we've kind of called that out on the front. It's very small, and it's subtle, but it's very focused. And it can be, it is, to Freshpet, our incredibly high standards. It is, it is, kind of meets and exceeds our standards. I will be feeding my dogs Complete Nutrition on and off. It's gonna be rotated in. It's an incredible product that we're proud of, but we can also offer a value which can keep some people out of getting into the Freshpet portfolio. Yep, okay. Thanks so much. Thank you. Our next question is from Bryan Spillane with Bank of America. Please proceed with your question. Hey, thanks, operator. Good morning, everyone. Actually, just two really quick ones for me. One is, I think this is inferred in all the commentary made, but I think just wanna make sure it's clear that, excuse me, based on where you stand today in terms of, you know, cost, you know, inflation and productivity, it doesn't sound like another price increase is contemplated? So just wanted to make sure that that was, you know, I was hearing that correctly. Yeah, I mean, obviously, until we price our chicken, we can't say for sure, but our read of the tea leaves would suggest that we will not be taking pricing, at least not in the first part of next year. So we feel comfortable about where we sit from a commodities perspective, based on the markets and the small portion of our commodity costs that we've already locked. Okay. Then the second question, in the prepared remarks, Billy, you talked about. There was a discussion about, like, you know, kind of balancing demand stimulation with, you know, not overheating the supply chain, basically. Right? So- Yes. Can you talk a little bit more about that? Just how do you... I don't know, like, what does the dial look like? How do you turn the dials to make sure you're not overstimulating demand? And I guess, what are the bandwidths, right, in terms of just how much you could actually, you know, exceed, you know, the 25%? Just trying to get an understanding of kind of how you approach that. Yeah. I mean, one of the benefits of this business is it's probably one of the most reliable and predictable businesses that I've seen in my thirty-some-odd plus years of CPG. You know, we don't do any trade promotion, no discounting, so the single biggest driver, and by far the vast majority of the growth, comes from advertising investment, and so our dial is advertising investment. It's not literally, you turn it on and tomorrow you see it, but if you turn it on, you start adding the users that will contribute meaningful volume over the coming months. ... and so that's the way which we can control the demand going forward, and that's where we spend the bulk of our time, is literally laying in advertising spending against what we think our capacity needs are gonna be. The reason we made the comment in the prepared remarks about the dialing it in fairly closely is, you know, three or four years ago, we would put a line in, and it would give us capacity that would last us a year or two years, and you were, you know, you're kind of fine on it. Now, at the scale that we've achieved, when you put a line in, you can pretty quickly burn through the capacity of a line in less than a year. And so we can't afford to, you know, have this thing planned for 25 and deliver 33 on an ongoing basis because you just won't have the infrastructure in place. You just won't have the equipment installed. Lead times on equipment are long, construction takes a long time. Staffing is quick, we can staff up in 90 days, but if we're gonna suddenly outperform our expectations by 5 or 10 points, as we might have done over the last couple of years, we could find ourselves short shipping again, and we don't wanna do that. So at this point, we're very comfortable planning for, call it, 25% growth. There's a growth, there's a little bit of headroom on top of that, and we plan for a little bit of headroom on top of that, but we certainly don't wanna be pushing over 30. All right. Thanks, Billy. Thank you. Thank you. Our next question is from Bill Chappell with Truist Securities. Please proceed with your question. Thanks. Good morning. Morning. Just a little bit more on pricing, especially as we move to next year. One, do you think you get back to a normal cadence of just doing some pricing every year going forward, or is there some pushbacks from the pricing you've taken so far? And then two, and probably more importantly, I know you have a different product than the dry goods, but, I mean, do you see some increased promotions in kind of the competitive landscape that may change your pricing attitude? Or do you think everybody's gonna kinda hold the line, even at the premium, super premium side as we move into 2024? Hey, Bill. So, let me talk about the category first. I have, as volume has kinda gotten softer, we are looking at it- Category volume. Yeah, yeah, I'm sorry. Not you. Yeah, as the category volume has gotten softer, we are kind of all over it, and we keep waiting for someone to really kind of start pressing on the pricing dial. Have not seen it, have not seen increased promotion. There's been very, very little kind of growth there. It's been interesting. At some point, I think you'll see a bit of it, but I... You know, we haven't seen anything yet, but I—again, I think that historically, you'll see some people kind of you know, layer some of it in, but not a lot. From our standpoint, I think what we try and do is, we will take pricing, like, when appropriate and very strategically, and very targeted in everything that we're doing. So will we do a couple of points here and there? Yeah, that's probably going to be something that we'll always look at, but a lot of the pricing that we have done is from how we've kind of modified and changed the portfolio and the products that we've brought into the market. It hasn't been just an across-the-board 2 or 3% price increase. We've basically put new items in at higher price levels, and we've you know, we've just kinda taken, you know, different opportunities over time in order to do a little bit on pricing. Bill, I would add to that, we also expect that there's fairly sizable opportunities for us to improve the gross margins from throughput and yield. We have, you know, built organizational capability over the last, call it year, that is really focused on increasing throughput, driving efficiencies in the manufacturing operation, driving efficiencies in the supply chain, much more competitive bidding on some of the key components that we, we buy, whereas you used to just have to, you know, take whatever you could get, whatever was available. Now, there's, you know, much more ability to do strategic sourcing. So all of those elements will help us and could mitigate the need for further pricing. It doesn't mean we won't try to take some pricing at some point, but the need for it won't be as great. Got it. And then switching back to some of the questions on the club channel, and it's got... I mean, at the store level, we've seen a lot of changes over the past few months. I mean, I know you've gotten benefit, but can you maybe give us an idea of where we are? You know, I think Costco has 11 regions, and I'm not sure if you're in every store, and you know, it seems like there's more opportunity in front of you than behind you, but I just wanna make sure- Yeah ... I'm looking at it the right way. No, we believe that there's a tremendous amount of opportunity in front of us. First of all, you know, obviously, you know, year one, you get into the store. This has been a pretty, pretty amazing year and pretty significant expansion, so we're gonna have the benefit of that really all next year. Plus, we're, call it, two-thirds of the way, you know, into the Costcos through Q3, so there's more Costcos to come, and then not only domestically, but then in some other areas, even into, you know, Canada and Mexico, and even in the UK, there's plenty more Costcos. But the biggest single piece is, and I touched on this earlier, we're in zero Sam's, and we think that over time, the right proposition going into Sam's could be really helpful and provide us, like, another opportunity to be exposed to another group of consumers that shop for pet food at Sam's. Great. Thanks so much. Thank you. Thank you. Our next question is from Rob Moskow with TD Cowen. Please proceed with your question. ... Hi, everyone. This is Jacob Aiken-Phillips for Rob. Congrats on the quarter. Thank you. I just had two, two quick, clarifying questions and then a broader question. So first, for media spend, last quarter, you said that it would be up $15 million in the second half. Is that still true, or it was today an update to that? And then for, like, freight and logistics costs, does your guidance assume that the fuel costs and stuff will stay where they currently are, or go back to more normalized levels, or what does it include? Your question on media first. So yes, we were up about $5 million in Q3 year-over-year. We'll be up approximately $10 million in Q4. Spent only $2 million last year, so we'll be kind of in the ±$13 million range of spending for Q4, which we're really excited about. I think it will give us a little bit of a help in Q4, but more importantly, get us off to a strong start as we go into 2024. Logistics been holding steady. We don't see a big change sequentially between Q3 and Q4. We've had a little bit of an uptick in diesel costs, not significant, but we've seen some favorability in some other areas, and so we're feeling very good about the logistics expense right now. Okay, awesome. Then just more broadly back to media. You said that next year you'll kind of expect it to grow close to sales, maybe above $1 million, rough math. But then going forward, you'll expect it to leverage with sales growth. But it's my understanding that your media and sales are kind of like 1-to-1. When you turn on media, you get sales. So how do you expect to generate this 25% sales growth in the later years with a lower media as a percentage of sales? There's certainly some scale benefits as we get further and further out. One of the things that we've seen is the more you build out your fridge network and you get the visibility, amplifying the advertising. So stores with two and three fridges amplify the advertising. And so we think that part of the reason that our advertising has gotten so effective and driven growth in excess of what we had planned for was because of the increased retail visibility, and that doesn't go away. You know, yes, net new fridges is a good thing, but the installed base of fridges, you know, lighted fridge sitting in a store, double or triple fridges, continues to amplify the value of the advertising every successive year. So we think that's frankly where we're gonna get some of the benefit, but also scale in the media. We'll get some benefit there as well. Yeah, and just for perspective, I've said this before, I mean, if we reach the $1.8 billion goal in 2027, and get the media spend down to around 9% of sales, which we expect on both, that's $160 million of media spend. One brand, basically one country, we think that's a powerful resource to drive 25% CAGR. Awesome, I appreciate it, and congrats again. Great. Thank you. Thank you. Our next question is from Jim Salera with Stephens. Please proceed with your question. Hi, guys. Thanks for squeezing us in. I wanted to ask on the expanded distribution of the Large Dog offering, as well as the Complete Nutrition, what does that look like in the fridges in store? Which SKUs get taken out and replaced with those? Or is that kind of a way to dangle that offer in front of retailers to motivate them to put in that second fridge? Yeah, it's as we've built out new products, we typically will really have a very deep discussion with the retailers about adding a second fridge. It takes up a fair amount of space. You're typically dedicating, you know, at least a full, you know, kind of two feet to it in a fridge, on a shelf, in order to get pack out. So it takes up a fair amount of space. You never wanna kinda take out existing items that are performing extremely well. So it is a really, really big push to go into our second fridges and even some of our third fridges over time. Okay, that's helpful. And then, Todd, maybe a follow-up. I know people have touched on the logistics piece, but I think you just, you guys delivered really impressive results there. Should we think of the current logistics expense at that kind of sub 7% rate as sustainable moving forward? And maybe you guys just, you know, delivered on that kind of better than the 2027 target on an ongoing basis. Yeah, I mean, we laid out, to your point, we laid out a goal of 7.5% logistics back in February. Obviously, one of the bright spots is we've already beat that-- beat that target. So yeah, we, we think we will long term be below the 7.5%. Obviously, if there's a big spike in diesel or lane rates, you know, from time to time, that could, that could drive it periodically higher. But long term, we're very confident at this point with reasonable diesel costs, that we will be sub seven percent. And from what we can see right now, obviously, subject to change, but we feel, we feel good about being 7% or below for next year as well. That's helpful. And then if I could maybe sneak in one last question on the breakdown of the household growth rate by income. I was honestly surprised to see low income up as much as it's been. Can you just give us an idea of maybe what SKUs are driving that? And then from a consumer perspective, just kind of the, you know, value proposition that you guys offer, that a consumer that has a, you know, a little bit tighter of a budget would still be buying, you know, premium pet food? Yeah, Jim, one of the, one of the things I always struggle with in providing the data by income is it treats all, all income as if it's funding the same size of household. The reality is that a significant number of our consumers who fall in that lower income bucket are in the smaller sized household. They might be single and have a dog. They might be, you know, the kids may have left the nest, and so that it's them and the dog. And so the discretionary income they have available is significantly higher, despite the relatively low overall total income. And given our skew towards younger households, we have a fairly significant number of Millennial and Gen Z consumers who are in that bucket, but for whom the dog is the only thing or the most important thing in their life. They don't have a car, they don't have a spouse. They, you know, their expenses are relatively, narrowly, confined. Okay, awesome. That's very helpful. I'll pass it along. Thank you. Our next question is from Jon Andersen with William Blair. Please proceed with your question. Hey, good morning, everybody. Thanks. Just two quick ones. On the productivity work, congrats on the benefits that you're delivering there. As you look to the Fresh Future goal of getting to 18% EBITDA margin by 2027, it looks like this year will come in closer to 8% from an EBITDA margin perspective. So you've got about a 10 percentage points over the next four years. Can you talk a little bit about the path you expect during that time frame? Is it straight line? Does it ramp, the improvement ramp in the out years, and what some of the drivers are there? Then the follow-up to that is, Todd, I think you mentioned gross margin. You expect it to be sequentially lower in the fourth quarter than the Q3. When do you think you hit an inflection point where we could see kind of sustained gross margin improvement, you know, sequentially going forward? Thanks. So let's take your first question on EBITDA margin. So yeah, look, we're gonna get around 500 basis points of EBITDA margin improvement this year, which obviously is terrific. We're not gonna get 500 basis points each and every year, and obviously don't need to. So you know, where is that next 10 points that you mentioned going to come from? So obviously, 5 of it has to come from gross margin. You know, we're gonna have about 39.5%-ish% gross margin for this year. So we have about 550 basis points to go, so obviously, that's half or a little bit more than half of it. We talked about the media spend. That will come down as a% of sales, a couple hundred basis points. We've probably got a little bit more room to grow in logistics, but not significantly. Obviously, we've made tremendous strides there. And then the rest of it, quite frankly, just comes from SG&A leverage. If you're growing 25%, you know, we do not need to grow headcount and other expenses, you know, more than, you know, high single digits. So there's a tremendous amount of leverage in SG&A as well. So those are the components and, you know, we have really good visibility to it. Obviously, gross margin's the trickiest part to get, and we have to execute really, really well. But we're very confident with the scale of the business and our ability to, you know, execute, and we can be more productive and efficient in our lines that that will, that will occur. The cadence... Look, the cadence is really hard to predict. Again, I think we'll, you know, I'm confident we'll, we'll have some nice improvement both on gross, gross margin and EBITDA margin next year. Again, it's a little bit too early to commit to a number. Again, I got 4, I got 4 years to get 10 points, so I got to get 200-250 basis points on average of EBITDA margin per year. Again, very confident we will do that, but the exact cadence of that is hard to predict. But I think we'll get another nice chunk next year. Thank you. Thank you. There are no further questions at this time. I would like to hand the floor back over to Mr. Billy Cyr for any closing comments. Great. Thank you, everyone. I'll leave you with this thought: the humorist Jerome K. Jerome said about dogs, "They never talk about themselves, but listen to you while you talk about yourself and keep up an appearance of being interested in the conversation." To which I'd add, reward them for their patience and feed them Freshpet. Thank you very much for your interest. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.