Greetings. Welcome to Freshpet's third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note today's conference is being recorded. At this time, I'll now turn the conference over to Rachel Ulsh, Vice President of Investor Relations and Corporate Communications. Thank you, Rachel. You may now begin. Good morning and welcome to Freshpet's third quarter 2025 earnings call and webcast. On today's call are Billy Cyr, Chief Executive Officer, and Ivan Garcia, Interim Chief Financial Officer. Nicki Baty, 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 Private Securities Litigation Reform Act of 1995. These include statements related to our strategies to accelerate growth, progress, and opportunities and capital efficiencies, timing and impact of new technology, capital spending, adequacy of capacity, expectations to be free cash flow positive, 2025 guidance, and 2027 targets. They involve risks and uncertainties that could cause actual results to differ materially from any forward-looking statements made today, including those associated with these statements and those discussed in our earnings press release and most recent filings with the SEC, including our 2024 annual report on Form 10-K, which are all available on our website. 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 measures, why management believes such non-GAAP measures are useful, a reconciliation of the non-GAAP financial measures, 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; rather, it is a summary of the results and guidance they will discuss today. With that, I'd like to turn the call over to Billy Cyr, Chief Executive Officer. Thank you, Rachel, and good morning, everyone. The message I would like you to take away from today's call is that we are quickly adjusting to the new economic reality and remain one of the best-performing pet food businesses. We continue to outperform the U.S. dog food category. We are building market share across every channel, and we are winning a disproportionate share of new pet parents. We also continue to deliver strong operating performance despite the slowdown in volume growth. Further, we have maintained financial discipline and appropriately managed our capital spending to match our growth, and that, in combination with strong operating performance, has enabled us to achieve positive free cash flow in the third quarter and will enable us to become free cash flow positive for the full year, which is one year ahead of our original 2026 target. Taking a step back, the deceleration in sales growth this year was unprecedented. We clearly started this year expecting to operate in a much different environment and have had to shift our strategy to address these challenging and dynamic times. While we can't control consumer sentiment, we can adapt our consumer proposition and make sure we are best positioned to increase household penetration by winning both new and existing pet parents while also improving our profitability and free cash flow generation. We believe we are taking all of the necessary steps to stabilize and then re-accelerate our top-line growth by continuing to focus on areas that are within our control. To address the consumer environment, we've adjusted our media and go-to-market strategy to both reach and appeal to more households while superserving our MVPs, who account for 70% of our volume. This includes starting to test new digital touchpoints and expanding our focus and resources on e-commerce channels, including DTC. The transition to this updated and improved commercial framework began earlier this year, but it is an evolution, so we will gradually increase the investment behind it as we get increased evidence of its effectiveness. We are also doubling down on our three key strategies designed to expand the appeal of Freshpet, particularly amongst our MVPs. Those strategies are, first, best food. We believe that Freshpet's highly differentiated product offers an enhanced experience for our consumers that we need to highlight in order to expand our franchise. We launched a new media campaign at the end of August and early September, showing the lengths we go to produce the best food, and at the end of October, launched another new ad showcasing our ingredients. The new ads are much more focused on the benefits of fresh food than our previous creative, and early in-market data is encouraging. Second, strong value proposition. We are operating in an environment where economic uncertainty has led to less trade-up than in the past. To address this, we have now launched our new Complete Nutrition Bag product in select retailers to help encourage trial, as well as new multi-packs and bundles, both online and in-store, for the more value-focused consumer. We have also sharpened our price point on our 1 lb chicken roll, which we believe will help drive more trial and increase household penetration. Third, improved accessibility. We continue to make good progress on the visibility and availability of Freshpet, one of our greatest competitive advantages. You may recall that we showed a rendering of a Fridge Island back in February at the CAGNY Conference, which is a new concept with a mix of both open-air and closed-door fridges. It is designed to change the way the consumer shops the fresh pet food category, changing it from a search for a packaged good in an aisle to grocery shopping for your pet. We believe this is the next big unlock in our retail visibility and availability strategy and will create increased awareness of the brand and greater trial of our wide range of items. Last month, we started testing new Fridge Islands in the first 16 stores of a large mass retailer, and we've included a picture in our earnings presentation. It is still very early days, but we believe this expansion demonstrates how leading retailers view Freshpet as the future of the dog food category because of its enormous growth potential. We've also further increased distribution in a large club customer. We were in our first store in this retailer in April, 125 stores at the end of July, and are now in 590 stores as of the end of September. The sales are still ramping up. However, we are very encouraged by the launch so far and the future potential. At another club retailer, we've also expanded our range to have a third SKU in select stores and have also just started a small test in a rural lifestyle retailer. As we look to the next leg of distribution, we expect the majority of growth to come from stores where we have or can have second and third fridges or outside of aisle placements like Fridge Islands, as well as the online channel. We plan to leverage our retail strength where we are the clear category growth driver, and at the same time, we are really excited about our continued growth of e-commerce. We had another strong quarter of growth in digital orders of 45%, and we recognize we are significantly under-penetrated in the e-commerce channel, including DTC. We are keenly focused on increasing our presence to capture the omnichannel and online customers and plan for this to be a more meaningful part of the business as we head into 2026. In total, we believe these strategies will enable us to re-accelerate our growth. Each of these strategies drives actions that we can control and leverage our unique capabilities and proposition. That will ensure that we will continue to outperform the category and drive the transition of the dog food business to fresh food, regardless of the macro environment. Our efforts to adapt to the current environment are not limited to driving the top line. We are also focused on driving operational efficiency through a variety of approaches. First, via our new technology. The current demand environment means that our team has more available line time to lean in and test new technologies and formulations. We have been working on new bag technology since 2019 that is designed to produce significantly better products at a lower cost. It does this by increasing throughput, improving yields, and reducing the amount of product that requires secondary processing. We expect this to result in increased bagged product margins and decrease the margin gap between bags and roll products. Our goal is to deliver both meaningful product improvements and significantly improved economics. It can also unlock new innovation capabilities. The first new production scale line that uses this new technology is now fully installed and in the final stages of commissioning. We expect to produce saleable products on that line in Q4, and we are very excited by what we've seen so far. Second, we are also taking a pragmatic approach to managing our capacity. It is not clear how long this period of consumer uncertainty will last, so we are using a variety of approaches to ensure that we have adequate capacity to meet our growing demand, but also don't get too far ahead of ourselves on capital spending and staffing. Fortunately, our facilities are running very well now, and that has provided us with free capacity. In conjunction with further operating improvements that we expect to deliver, we expect to have adequate capacity to support our growth for a while. We are a much more stable business than we were three or four years ago, and when you couple that with the new technology, it enables us to reduce our capital spending this year and next year. We do not believe that this reduction in CapEx will limit our ability to grow over the next two to three years, as we already have $1.5 billion of installed capacity available to us if the growth re-accelerates and can add staffing as needed. Now I'll provide some highlights from the third quarter. Our third quarter net sales were $288.8 million, up 14% year-over-year, primarily driven by volume. Adjusted gross margin in the third quarter was 46.0% compared to 46.5% in the prior year period, and Adjusted EBITDA in the third quarter was $54.6 million, up approximately $11 million, or 25% year-over-year. From a category perspective, we continue to be the number one dog food brand in U.S. food, with a 95% market share within the gently cooked, fresh, frozen branded dog food segment in Nielsen Brick and Mortar Customers, defined as XAOC + Pet. We compete in the nearly $56 billion U.S. pet food category per Nielsen omnichannel data for the 52 weeks ended September 27, 2025, and within the nearly $38 billion U.S. dog food and treats segment, we have increased our market share to 3.9%. From a retail perspective, competitive interests have not slowed our expansion to date. In fact, we believe that new competition will ultimately grow the category, as we have seen many times before in other categories, such as Greek yogurt and coffee. Freshpet products are now in 29,745 stores, 24% of which have multiple fridges in the U.S. Looking ahead, we expect this percentage to increase as we add more fridges to the highest velocity stores. We ended the third quarter with 38,778 fridges, or nearly 2.1 million cubic feet of retail space, with an average of 20.1 SKUs in distribution. Our percent ACV in grocery, where we're the dog food market leader, was 79% at quarter-end, and in XAOC, only 68%. From a household penetration and buy rate standpoint, we remain one of the only dog food companies that consistently grows both. Our household penetration, as of September 28, was 14.8 million households, up 10% year-over-year, and total buy rate was $111, up 4% year-over-year. MVPs, which are our super heavy and ultra heavy users, are continuing to grow faster, with a total of 2.3 million of those households, up 15% year-over-year. MVPs represented 70% of our sales in the latest 12 months, with an average buy rate of $490. We are still growing households across every age and income group and gaining market share. The dog food category is declining, but Freshpet continues to be a clear winner. We are seeing that we are attracting a large portion of new pet parents, which is very encouraging. Turning to capacity, we feel good about our manufacturing footprint today. Ennis continues to be the most profitable Freshpet Kitchen and accounts for approximately 38% of sales volume. Our Overall Operating Effectiveness, or OEE, our measure of operating efficiency, continues to improve, and the new technology line in Bethlehem is expected to produce saleable product later this quarter, as I mentioned a few minutes ago. This will be our 16th line across the network, and we are very excited by its potential. The technology to make Freshpet food is still very nascent, and we constantly try to push the limits and come up with ways to drive greater returns. Next spring, we also plan to retrofit another bag line in our Bethlehem Kitchen with the light version of the new technology that could prove to deliver a meaningful portion of the same benefits of the full technology line, with minimal line downtime to install the new technology and minimal CapEx. Our capital efficiency framework is centered around three key areas. First, getting more volume out of existing lines, primarily through OEE improvements. Second, getting more out of existing sites, whether that be finding ways to add more lines on our campuses or network optimization. Third, developing and implementing new technologies. We have made tremendous progress with this framework and believe there is still a significant opportunity to create incremental shareholder value. Now turning to outlook for the remainder of the year, we are currently tracking to the lower end of our previous net sales and Adjusted EBITDA guidance ranges, so we now expect net sales growth to be approximately 13% for the year and Adjusted EBITDA to be between $190 million and $195 million. We are updating our CapEx guidance to approximately $140 million as we are able to shift more projects out. The silver lining of the slower-than-expected sales growth this year is it has now positioned us to achieve positive free cash flow a year earlier than anticipated, a significant company milestone. Ivan, our interim CFO, will walk through more details of our 2025 guidance in a few minutes. In regard to our fiscal 2027 targets, we remain confident in our ability to achieve 48% adjusted gross margin and 22% Adjusted EBITDA margin in 2027 if our sales volume growth is at least low teens. If we were to grow high single digits, we believe we can still achieve an Adjusted EBITDA margin of approximately 20%. In summary, we have taken actions in strategic areas to focus on what we can control and make sure we continue to deliver category-leading growth despite the current category softness and competitive entrance. Dog food has historically been one of the best, most recession-resistant categories, and we believe we are best positioned to capture the future growth of the category. We expect to continue to build market share, grow household penetration, and win a disproportionate share of new pet parents to ultimately capture the lion's share of profit in the category too. Before I hand it to Ivan, I want to address the ongoing CFO search. We have hired an independent executive search firm, and we have a very long list of very exciting candidates. We hope to select the next CFO quickly, but we will take our time to find the right person. In the interim, we are confident in Ivan and his team's capabilities and believe we can still deliver the necessary business results until we find a permanent successor. Ivan has been with Freshpet for 11 years, having joined the company shortly before the company went public in 2014 from KPMG. He has been involved in every aspect of our financial operations since then, including leading accounting, financial planning, systems development, and our data analytics operation. Ivan is a trusted member of our team, and his move into the interim CFO role has been seamless. With that, I will turn it over to Ivan to walk through more details of our financial results. Ivan. Thanks, Billy. And good morning, everyone. The highlight of the third quarter results is that we demonstrated our ability to deliver category-leading growth while also achieving positive free cash flow. Now, let me provide more details on our financials and updated guidance. Third quarter net sales were $288.8 million, up 14% year-over-year. Volume contributed to 12.9% growth, and we had a positive price mix of 1.1%. Primarily driven by mix, we saw broad-based consumption growth across channels. For Nielsen-measured dollars, we saw 10% growth in XAOC, 10% in Total U.S. Pet Retail Plus, 8% in U.S. food, and 2% growth in pet specialty. As a reminder, the third quarter benefited by about a point of growth from a slight shift in timing of orders from the end of June to early July, which we shared on the Q2 call. We also expanded into most of our major club retailer stores in the third quarter, and initial pipeline shipments helped boost our shipments growth versus last year. When you net all of that out, we believe that consumption growth in the quarter was approximately 12%. Third quarter adjusted gross margin was 46% compared to 46.5% in the prior year period. The 50- basis point decrease was driven by reduced leverage on planned expenses, partially offset by lower input costs. The deleveraging of planned costs is a result of ending the quarter with lower inventory. Third quarter adjusted SG&A was 27.1% of net sales compared to 29.3% in the prior year period. This decrease was primarily due to a lower variable compensation accrual, partially offset by increased media as a percentage of net sales. We spent 11.2% of net sales on media in the quarter, up from 10.8% of net sales in a prior year period. Logistics costs were 5.5% of net sales in the quarter compared to 5.6% in the prior year period. This continues to be a great strength of ours and something that we're very proud of. Third quarter net income was $101.7 million compared to $11.9 million in the prior year period. The significant increase in net income was primarily due to the deferred income tax benefit resulting from the release of a $77.9 million valuation allowance in the current period. Higher sales and decreased SG&A expense was partially offset by a decrease in gross profit as a percentage of net sales. The release of the $77.9 million valuation allowance is being taken now because we have demonstrated consistent profitability over a meaningful period of time. As a result, our accumulated NOLs are now believed to have meaningful value, so they must flow through the P&L and end up on our balance sheet as an asset. We view this as another milestone in our progress towards becoming a highly profitable company. Third quarter Adjusted EBITDA was $54.6 million compared to $43.5 million in the prior year period. This improvement was primarily driven by higher gross profit, partially offset by higher adjusted SG&A expenses. Capital spending for the third quarter was $35.2 million, while operating cash flow was $66.8 million, and we had cash on hand of $274.6 million at the end of the quarter. As Billy mentioned, we achieved positive free cash flow in the third quarter and now expect to be free cash flow positive for the full year. We intend to utilize our balance sheet to support our growth going forward, with no need to raise outside capital. Now turning to guidance for 2025. As Billy said earlier, we are tracking to the lower end of guidance ranges we provided last quarter, so we now expect net sales growth of approximately 13% compared to our previous guidance of 13%-16% growth year-over-year. We now expect Adjusted EBITDA in the range of $190 million-$195 million compared to the previous guidance of $190 million-$210 million. We continue to expect Adjusted EBITDA and margin to improve in the fourth quarter compared to the third quarter. Media as a percent of sales for the year is expected to be greater than 2024. However, the fourth quarter will be the lowest total dollar spent and as a percent of net sales, in line with our past practices. We now anticipate adjusted gross margin to be flat year-over-year based on lower plant leverage related to our inventory levels, which caused a timing impact to our P&L. We have been able to successfully tighten our inventory without seeing any impact to fill rates. In regards to tariffs, we are currently seeing a small impact on vegetables sourced from Europe and mitigating them where we can. Capital expenditures are now projected to be approximately $140 million this year, compared to our guidance last quarter of approximately $175 million and original guidance earlier this year of $250 million. We have included some impact from tariffs in the updated CapEx projection. The majority of our CapEx spend is focused on the installation of new capacity to support demand in the out years and the implementation of our new technology. As Billy mentioned, we are seeing greater capital efficiencies in our existing facilities. While it is too early to provide guidance for next year, we do expect that ordinary CapEx for new capacity, fridges, and maintenance will be in line with this year's spending. However, if our new production technology demonstrates the potential we are expecting and we have the opportunity to accelerate either conversions of existing lines or the installation of new lines using that technology, we would certainly consider those opportunities. We believe the new technology could generate sizable economic benefits, improve our competitive position, and elevate the quality we can deliver to consumers. Similarly, if we have a breakthrough in the new distribution, particularly if it is a sizable expansion of the island fridges, we would also fund that initiative due to the significant growth it could deliver. In either case, they would not impact our ability to deliver positive free cash flow in 2026, but our CapEx spending could be higher than 2025. In summary, despite a challenging year, we are proud to have delivered another quarter of best-in-class CPG growth and demonstrated our cost discipline to deliver even stronger Adjusted EBITDA margin expansion and become free cash flow positive. We believe Freshpet has a long runway for growth and is well-positioned to capture the sales growth and profit growth of the high-growth fresh frozen dog food category. That concludes our overview. We will now be glad to answer your questions. As a reminder, we ask that you please focus your questions on the quarter, guidance, and the company's operations. Operator. Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question at this time, please press star one from your telephone keypad, and 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 keys. One moment, please, while we pull for our first question. Thank you. Our first question comes from the line of Peter Benedict with Baird. Please proceed with your questions. Hey, good morning, guys. Thanks for taking the question. My first is around kind of the new production technologies. Curious kind of maybe the timeline on when you would make a decision on accelerating those implementations, I guess, next year. Maybe give us a little sense of maybe how this light version coming in the spring compares with maybe the full version. And Billy, if you roll this new technology out, you talked about improved quality. What does it mean for pricing? I mean, at these lower levels of sales, do you intend to kind of turn that into a more aggressive pricing structure in order to kind of re-accelerate the top line and take more share? Or how do you think about reinvesting those potential benefits? Thank you. Great. Great. Thanks, Peter. Let me just start with we're very excited by this new technology. As you heard in the recorded comments, the reality is we've been working on this for a long time, and what we see is the upside potential on it is enormous. We're still really early in the qualification of the first line, and so it's really hard for us to say exactly how long we'll watch that till we make a decision on expanding. It depends on how reliable the line is, how much of a benefit we get, the performance of the products in the market. I don't want to get on the record with any comment about when we would make that decision because it's really going to be dependent upon the operating performance and the quality of the products that we produce. The second line, the first conversion of an existing line, the light version that we talked about, will start up in the second quarter of this year. In terms of what's different about it and what makes it any different than the original technology, think of it as it has many of the same attributes, just not to the same degree. There is a throughput benefit, but it may not be as significant. There's a yield benefit, but it may not be as significant. There could be some quality benefits and may not be quite as significant. What is significant is that those lines can be converted much more quickly at a much lower capital cost. We'll be watching as we start up that line and comparing the performance of that line against the initial line that we're putting in that's starting up now and having to make a decision about, is less capital done more quickly on existing lines a better idea than installing a new line that gives you all the benefits? We really won't know that until we get the line up and running. Think of it as sometime in the back half of next year, we'll be able to make that assessment about whether or not that makes sense for us to accelerate the expansion of those lines. In the end, I think it's a great place to be. We have two very promising technologies that are very, very different and that can make a big difference. On the second part of your question, which is about how we deal with the quality improvements and also potentially pricing, it's also too early for us to commit on whether or not we would do anything related to pricing. Our focus right now is to demonstrate the quality benefits of the product. Obviously, we have a strong interest in improving the margins on our bags because they're below our rolls, but we'll be in a nice place when you can actually look at significant margin pickup and the opportunity to choose where you invest that, whether it goes to the bottom line or whether that goes into sharpening our price point. I suspect that over time, you'll see a little bit of both, but for the most part, we are very determined to drive the margins up on our bag business, and that's one of the real benefits of this technology. That's helpful. Thanks, Billy. I guess my follow-up question would be around the competitive dynamics in the space. You alluded to the recent entry, said it has not affected your kind of retail placement plans at this point, but maybe just any early learnings in terms of pricing, positioning, just anything you would say about how you're seeing new competition, both at retail, but then also in some of the frozen areas, which are tangential and coming more online. Thank you. Yeah. Let me frame it at the, I'll give you some top-line thoughts. I'm going to hand it to Nicki to talk to you about what we're seeing with our retailers and their actions. Obviously, there's been an unusually large amount of activity in the space this year. We view that as validation that the fresh category is a big long-term potential. Retailers have seen that. Retailers are recognizing that. That is a good validator for us, and it kind of gives us a sense that the investments that we've made, the position we've carved out, is a really attractive one. So far, from a top-line perspective, we haven't seen much impact on our business, certainly not from the executions that have happened to retail. Most of the things that have happened to retail to date have been relatively small and not very significant in their total size. It's just still a little too early to talk about what's happening with the Blue Buffalo launch. It's only been out there for a couple of weeks. The one thing I would notice is we have seen a little bit of price discounting done by them already, which is something that we're not surprised by. That's sort of their calling card. That's the way they do business. Our approach so far has been to stick to the game plan that we've executed over the long haul, and we'll continue to stick to that game plan. We also are very determined that we won't lose consumers on a price or value basis. That's how I see the competitive environment. I'm turning to Nicki, and she can talk a little bit more about how our customers are reacting to it. Thanks, Billy. Thanks also, Peter. Despite the increasing competition coming into the category at the moment, we've been really pleased with, I think, a number of the metrics that we would use to just assess our retailer engagement. As Billy said in the upfront comments, we've grown our cubic feet by 12% this year. We've had 13% improvement in distribution as well. We've also been making some good ground either in some new retailers where we've been testing, some other ones where we've had some full national rollout with, certainly in the club area. A strong signal, I think, from one of the largest retailers of really starting to get behind improved visibility for fresh and have us leading the way with some new island units. Despite that competitive backdrop, I think we've actually had one of our best years in terms of fridge placements and support from retailers. I think where that's going is, for us, a very strong endorsement that the fresh frozen segment is very much here to stay and the only area that's leading growth. To touch on the velocity point that Billy made, it's very early days. The competitive set at retail level is certainly relatively small in terms of velocities that they're seeing per store per week. We've been seeing, again, very strong velocities in those stores. The new players are coming in too. We've certainly seen no impact, but we are watching very closely. The key data set we'll be using in the coming months is much more of our panel data to just make sure that there's no switching, certainly without occasional households or any loss of retention. We'll keep a really close eye on it, and we've got some strong plans to make sure that that doesn't happen. Great. Thanks very much, guys. Good luck. Thank you. The next question is from the line of Brian Holland with D. A. Davidson. Please proceed with your question. Thanks. Good morning. Maybe sticking along the lines of the distribution dynamic at retail, obviously the Fridge Island test, maybe a little more context, if you could, about the conversations with that customer, kind of how long that's been progressing. The logic behind the magnitude of that expansion, just on a per-store basis, and maybe what you're looking for, what they're looking for to help determine what would be a successful test and maybe timing for a subsequent expansion on that. Great. Thanks, Brian. I'll take this one. Look, as you're no doubt aware, this retailer doesn't make decisions overnight, and there's a lot of discipline that goes into making sure that the operational effectiveness runs smoothly for something like these island units. The capacity of each of the island units is around 2.5x an individual chiller. These island units allow not just fantastic retail visibility and brand visibility to lead the category, but they also allow more assortment and a breadth of assortment to be coming into each store. What that's done, and I think as you know already, with this retailer, we typically don't have perhaps as many SKUs as we do to compete with some of the grocery retailers. It's allowed us to actually launch some of our innovation in the more affordable price bracket. That would include things like the multi-packs, the entry-level bag, a number of items really that can bring in new households through. As of this week, we installed 16 of these island units. We have another burst coming of island units as well. There's some criteria that we're working with Walmart on to really be able to set exactly what the sales velocity needs to be for future rollout. Now, one caveat I would say is making sure that the islands perform to our mutual criteria because these are also a bigger capital investment is important. There will be likely somewhere in the region of a four-month lead time before we're able to execute at scale as well. Thank you. Appreciate the color. And then, Billy. Appreciating it's November 3rd, and you typically start to provide a little more. Color around how 2026 is shaping up. In early January. Just a sense about some of the building blocks here, right? Because obviously, we're in a very dynamic environment. But relative to maybe this time a year ago, you've got a better handle on what's happening with the consumer, or at least we've been in this dynamic for longer now. You also have some of these distribution moving pieces here that are coming together. Really interested in two parts. One, just thinking about the building blocks for 2026 on the top line at this juncture, and also how that informs your media spend. Obviously, you've talked about a lot of plans in place. How do you think about the magnitude of the investment you want to put behind media when there are clearly fewer incremental parents to go after in this e nvironment? Yeah. I'll give you a couple of thoughts on that. First of all, as you know, we'll give our guidance when we get to the end of February. In an environment as dynamic as this, I'm frankly very grateful to have the couple of extra months of an opportunity to observe what's happening. Recall, the world looked very different last year on the same day than it ended up looking back when we got to the end of February and changed even further. As you know, we are very, very focused on trying to drive up household penetration and particularly looking at MVPs. We're watching that data very, very carefully and seeing what the trends are, what directions it's going. That'll be a big driver of how we determine what our expectations are for revenue for next year. We're still going to be very much a media-driven business. We are very focused on using media to drive our business, but we're not going to be irrational about it. We're going to make sure that the media that we're spending is getting us a decent return. As Nicki has commented, we've done quite a bit to drive the efficiency of our media plan, and we need to make sure that we're really focusing on those things that are as most efficient as possible and give us the highest likelihood of a return. That's a big part of the planning process that we're in right now. The last part is obviously what are retailers going to be doing and how does that influence the visibility and availability of the brand. As you know, we are not of the school that thinks that we are just creating demand via white space. We think it's really visibility, meaning amplifying the advertising, and availability, meaning having a wider range of items available. Having good visibility on what that's going to look like will inform us quite a bit. As we mentioned previously, the island fridges is a big step change. It's probably not going to have much of an impact in the first half of next year. There's a chance we could have some impact in the second half of next year. There are also a bunch of other retailers who are looking at doing some fairly sizable things, either new retailers, as we mentioned in the call, there's a rural lifestyle retailer who's now in test. We also have quite a bit of new distribution coming with existing customers in the forms of second and third fridges. We'll put all those things together, and we'll give you what our view is. I think it's way too early to say right now. It's just going to be built on the same building blocks we talked about in the past. Thank you. The next question is from the line of Tom Palmer with JP Morgan. Please proceed with your questions. Good morning, and thanks for the question. Maybe kicking off, I just wanted to ask on the CapEx next year, $140 million. As kind of a starting point. What projects is most of this going to? I guess the commentary on the billion five in production capacity would seem like you've got a couple of years before you really run into constraints, at least. Just kind of wondering, is it because there are certain products that are facing constraints, even if from a dollar standpoint, you're fine? Any color. Thank you. Yeah. I'll frame this, and then I'm going to hand it to Ivan. Always start with the understanding that we are a growing business. Even though we're not growing at the rate we were growing before, we are a growing business. Adding capacity takes time. We'll be investing in 2026 for capacity that we won't need until probably 2027 or 2028. You're right in your assumption that there are some form-specific elements to this. Bags are different than rolls. Our Homestyle Creations and our chicken bites require different technology, different capacity. Don't forget that we have the new technology that we can always pull forward, which is what we were talking about before. The new technology, investing in new technology is something we can do. Let me turn it to Ivan, and he can characterize for you sort of how you think about that $140 million being spent next year and the optionality that he described in his comments. Yeah. Thanks, Billy. Tom, another thing to also keep in mind with our CapEx spend is we currently have $1.5 billion of capacity in front of us currently on the business. Any spend that we're doing is for the out years. When we look at the $140 million, that includes our current spend, what we're currently looking at as far as the projects. We're also looking at wrapping up some of the technology that we are currently going to go live with next year. That being said. If we have any new distribution, such as the island chillers that we want to lean into, we're willing and able to go ahead and make those investments. That will be above and beyond the $140 million. Also, if we want to lean into technology, if we start to see that play out, we're also willing and able to go ahead and lean into that. That will also be above and beyond the $140 million. Understood. Thank you for that. On the EBITDA margin longer term, you gave some helpful color on kind of different levels you could hit at different growth rates. Just when we're bridging the high single-digit potential growth to that 20% EBITDA margin you noted. The 2% difference, where would we mainly see that? Is the gross margin target kind of holding at multiple levels, and it's more about SG&A leverage, or perhaps a bit different? Thank you. Yeah. No, that's a great question. That's obviously something that we're currently looking at. As you noted, high single digits, we're looking at 20%. Low teens, we're looking at 22%. Let's just break apart the P&L for a second. On the gross margin level, we feel very confident that we will be able to hit our 48% at both high single digits and low teens. There might even be potential for us to be a little bit above that 48%. That's excluding any new technology. I want to make sure everyone appreciates that. From there, it's just the leverage that you would get flowing through your SG&A. We currently believe that at single digits, we'd be at 20%, and then double digits would be at 22% at that point of scale. We continue to be very confident with our ability to hit both the Adjusted EBITDA as well as our gross margin. Okay. Thank you. Thank you. Our next question has come from the line of Rupesh Parikh with Oppenheimer. Please proceed with your questions. Good morning. Thanks for taking my question. I just want to go to the, I guess, to the Q4 implied sales guidance. It does imply a moderation versus even maybe the 12% consumption you saw in Q3. Just curious the drivers there and maybe it also embeds conservatism. Just curious on the drivers there. Yeah, Rupesh, we're frankly just reflecting what we're seeing in the market today, what we're seeing in the consumption data that's coming through. We also have to be mindful that we've seen years past where retailers moved up or down their inventory at the year-end around the holidays. We want to be cautious about that. Also just recognizing that we have a new competitive set, and we want to be mindful that there's things that could change in the dynamics in the coming months. At this point, we're looking at the Nielsen's every week, just like everybody else is. We feel good about the trends that we're seeing in delivering the guidance we talked about. Hopefully that continues. Great. Maybe my follow-up question, just on gross margins. I know this year there's pretty minimal gross margin expansion, but as you look towards getting to that 48%, what are the bigger buckets we should be thinking about? Yeah. Good question, Rupesh. As we look at the gross margin for this quarter, I want to really maybe peel back the onion just one layer and look at the drivers that we're seeing during this quarter. When we look at input costs, we're very happy with the progress we've made throughout the year. We continue to make slight progress on yield every quarter. When we look at quality, we continue to be in the low 2% throughout the year. More importantly, we're having a lot of consistency with our quality, which is going to be very important as we look at gaining leverage on gross margin in the coming years. Then you have plant cost. Our conversion cost this quarter was actually really good. We were happy with that conversion cost. What occurred during the quarter was a timing issue between our inventory in Q2 versus Q3. We went ahead and decreased our inventory. That was a hurt of 130 basis points, which we should get back in Q4. That's what we're expecting in Q4, to have a gross margin handle of 47%. That's who we believe we are currently. We're a 47% gross margin company. As we look at getting to 48%, we'll continue to leverage our plant costs. That's the main lever that we have in front of us currently. Yeah. Let me just add to that. One of the things that we're very focused on is getting ourselves in a position where we have the right amount of inventory, very healthy inventory, deliver great customer service, good in-stock conditions, not have surplus inventory because that obviously doesn't serve us well. We believe we're now in a position where we have the staffing that can carry us through next year. To Ivan's point about conversion costs, that's the single biggest driver of our margin improvement. We'll be getting better leverage on the conversion cost, and it's based on leverage on the staffing. That comes because we're driving up our OEEs. The team we've got, the training, the stability in our manufacturing operations has delivered the capability to get more volume out of existing staffing. That's a critical driver for us of building margin. Great. Thank you. Our next question comes from the line of Robert Moskow with TD Cowen. Please proceed with your questions. Hi, thanks. Hey, Billy. On slide 17, you mentioned $1.5 billion of installed capacity today that is not fully staffed. In terms of priorities for next year, retrofitting existing bag lines with light versions. I guess two questions. The $1.5 billion, how quickly can you fully staff that much capacity? And then secondly, is there a way to quantify what the benefit of this light version is? What does it provide to you from a gross margin perspective? Thanks. Yeah. So on the timing question, typically, if we have these lines installed in an existing building, adding staffing can be done on, call it, 90-120 day kind of timetable. You would not want to do two or three lines at the same time that way because you would be diluting the talent that you have at that site. If we had an increase in demand and we had a line that had available capacity, meaning it was running only half-time or its partial schedule, then we could add staffing in, call it, 90-120 days. We feel very comfortable about our ability to do that. The labor market supported, our training and development teams are in a good position to do that. In terms of the value of the new technology and how that might impact the capacity, that is one of the most important questions we want to get answered as we go through the testing and qualification phase. Every one of the test runs we do, we are tinkering with what the throughput rates will be. We are tinkering with the amount of time we can run the line continuously between stopping it and doing maintenance and clean-out. All those variables will have a big impact on what the total increase in capacity will end up being. It is too early for me to commit to it. When you think about the margin gain, what we have described is if we execute this new technology, the gap between our bags and our rolls could close considerably. It will not get all the way back to where our rolls are, but it will get pretty close once it is fully expanded across our entire lineup, across all of our lines. It is not something that happened in 2026 or 2027, but by the time you get into 2028, you could start seeing the gap between bags and rolls close considerably. Okay. Thank you. Yep. The next question is from the line of Angeline Goh with Deutsche Bank. Please proceed with your questions. Hi, good morning. This is Angeline on for Steve. Quick question on how would you approach trade promotions going forward, given that Buff is promoting heavily? Yeah. Let me frame this, and then I will turn it to Nicki. First of all, welcome to the call. It is nice to meet you. I would just tell you our position has been that we believe when you are in the perishable products business, that trade promotion, which just creates spikes in demand, short-term stocking up, and then profits that follow behind it, is not a very efficient way to run the business. We are going to avoid that practice as much as we possibly can. It's also good for the long-term profitability. It also means that our advertising model is the primary driver bringing consumers in the franchise. People buy the product for the first time at full price. That's the overall philosophy. I'll turn it to Nicki, and she can just comment on how we're thinking about it in the context of having new competitors in the market. Thanks. Nice to meet you, Angeline. We've done a lot of work really reviewing both category dynamics in terms of promotions, price elasticities on our portfolio, and also deeply assessing the media ROI. We come out in a place where we still believe what's right for our brand is media is the critical driver overall for growth. Trade promotions, as Billy indicated, don't seem to be doing anything other than driving what we would call occasional households into the brand. As it stands, we're here to build long-term brand equity and also to build a loyal franchise of consumers in Freshpet. We haven't seen any strong results really in the competitive environment of brands succeeding with promotions in the dog food category. Our focus right now is very much to make sure that our media delivers both long-term equity and near-term ROI. That's really the model that we're using. You will see us investing less in areas like linear TV, where we've seen a little bit of diminishing returns with the current consumer sentiment. You're also going to see us investing more in digital touchpoints that drive that direct conversion, in particular through e-commerce, which we believe is a very big opportunity for growth for Freshpet in the future. Great. Thank you, y'all. The next question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question. Thank you. Good morning. Just want to touch on. You announced a CFO transition in the quarter. In the time from when Todd was there until just now, there's been significant improvement, obviously, in a lot of different ways, most notably the margin momentum. It was always our sense that he changed some of the sort of discipline and institutional things that could last beyond him quite well. Can you maybe just touch a little bit on some of how that comes to life and what to expect kind of being sticky from some of the changes or momentum that was in place these last few years? Maybe then what you're looking for and who's next in terms of kind of taking it from there. Yeah. I'll take a shot at this. I'll ask Ivan to chime in in a minute with what he's observed as change because he's been here for a very long time, and he's got a long view on it. Obviously, we loved having Todd here. He added an enormous amount of value. He was a healthy skeptic on anything that the most optimistic members of our organization viewed as slam dunks. It was a healthy balance that it created in our organization. He also brought a lot of practical discipline. He had a relentless desire to keep things simple. I think that that's a calling card of his. I think that's something that's been embraced as part of our organization. When I look forward, obviously, as I said in the scripted remarks, the reality is that this is viewed as a very attractive position, being the CFO at Freshpet. We have a very robust amount of interest in the position. I am highly confident we're going to be able to attract really high-quality talent for this position. What's really going to be important for us, though, and it's sort of at the root of your comment, is how this person fits in with the team. We need somebody who is going to be complementary to what the team's skills are. The skills that we have today are dramatically different than the skills that we had a couple of years ago when we hired Todd. We are much deeper. We have much stronger capability across our broad leadership team, within our finance team. The requirements for the person stepping into this job are going to be probably much more strategic, much more conceptual leadership because we've built a lot of the technical capability inside the organization today. We are looking for somebody who can play at that level. I'd turn it to Ivan and just give you any observations he has about what he observed in the pre-Todd days to Todd days and what he hopes to carry forward. Yeah. No, thank you. Michael, I think you touched on something that's really important that Todd was able to drive, and that was culture, right? Culture permeates. The great thing about culture is that when someone leaves, that culture stays behind. There are a few things that he definitely brought: healthy optimism, as Billy noted, practicality. Also, when we look at planning, the thing that we always ensure is that there's various paths to get into the goal. That's something that we continue to have when we look at our long-term guidance for 2027. There's more than one path there. We'll see where it all ends up. We continue to feel very confident that we'll be able to deliver on the goals that Todd assisted us in building out. Todd, if you're listening, hello. We love you. That's all really helpful. Just to follow up on 4Q, you pointed out that you're basically guiding that implied 4Q momentum right at around what it's selling through. You've also got some of the new advertising. You've got a new competitive launch that's pushing into fresh. You've got the Complete Nutrition Bag launch. Are your assumptions that all of those are sort of a push, or would you say you expect a lift or a risk? Or I guess, how would you unpack some of those pieces and what to keep an eye on from our side in terms of how things might unfold for the rest of the year? Yeah. Let me just balance it out and just tell you, obviously, the level of precision we had in this business a year and a half ago does not exist today given the environment that we are operating in. But you described many of the things that I would characterize as sort of the initiatives that are going to drive growth and then some of the things that are a headwind to working against. Obviously, the new advertising is a big help. We have seen it on air. We are very optimistic about the performance it is going to drive. The retailer engagement and the actions the retailers are taking is helping us. The expansion that we described in the club channel is obviously helping us quite a bit. The complete nutrition product is helping us quite a bit. We have to put all that against the backdrop of the consumer sentiment remains weak. The consumer sentiment for October was in line with where it was in April and May, which is not a healthy place to be. The category is still in a tough place. That is a fairly sizable headwind that we have to address. We believe that we are outperforming the category by a significant margin, call it in the range of 10 points. It is something we would expect to be able to sustain. The category is having a tough time right now. In addition to that, there is the uncertainty created by the expanded number of competitors that we have. Again, so far, so good. We feel pretty good about the position that we are in and the relative outperformance that we have. We are also going to be very mindful that things are still going to come down the pike, and we will have to see how we play against those. You balance them all out and kind of say, "Okay, what is in the market and what we are seeing in Nielsen's today looks like is what we are going to see for the balance of the quarter." That is the way we are thinking about it. Okay. Thanks a lot. I will pass it on. Yep. The next question has come from the line of Peter Galbo with Bank of America. Please proceed with your questions. Hey, Billy. Good morning. Good morning. Not to harp on the Q4 implied guidance, but I do have an additional question there. Look, I think if we are reading the math right, the implied actual dollars of revenue in Q4 is probably flat to down versus Q3. I know you don't want to give guidance on 2026 today, but maybe we could just pressure test the logic of. If we run out kind of the current environment into the front half of next year. Before Fridge Island is coming into the back half, to me, it seems like there's a possibility that. Sequentially things kind of stay the same, at least through the first half. Which I think would imply what you've seen in the past, some kind of flattish revenue quarters, at least sequentially. Again, I know you don't want to give an official 2026, but maybe we can just kind of think about that logic as we think about the first half of next year and any thoughts there. Thanks very much. Yeah. Let me just re-characterize what we believe is happening sequentially. You can then project it forward as you see fit. Remember the Q3 number we described, we had one point of help of stuff that carried over from Q2 into Q3 and another point of help that came from the Sam’s pipeline fill that happened in the quarter. You are seeing as Q3 was probably a little bit bigger than it normally would be. When you go to Q4, while it hasn't happened every year, Q3 to Q4 has been probably the smallest sequential gain we have historically. There have been some years where it's basically been flat Q3 to Q4. Part of that is the way the trade manages their inventory. Part of that is it's our lowest advertising spend quarter. There are a whole lot of reasons for that to happen. I wouldn't take a relatively flat sequential Q3 to Q4 to mean anything about what the trend will be going into Q1 because we've seen stuff like that before, and Q1 then bounces back and is a fairly significant increase. On top of that, the other part is I would say that the biggest anomaly for us was Q2 of this year. Q2 obviously gave up some volume to Q3 in that shift that we saw. Q2 was relatively flat compared to Q1. That was the real anomaly. That really meshed up with all the concern around tariffs, all the change in the consumer sentiment was so dramatic. As you project going forward, I would expect that next year would have a more normal cadence, that the market has adapted to this environment. You would see sequential cadence that looked more like it has historically rather than what it looked like in 2024 or 2025. Under any set of circumstances, you should recognize we will be building market share. We will be outpacing the category. No matter what the sentiment is, no matter what's going on, we will be outperforming the category sequentially as well as on a year-on-year basis. That's sort of how we're seeing it. Okay. Thanks for that, Billy. No, that's very helpful. Ivan, maybe just a slightly more technical one. Just the NOL tax benefit in the quarter, I mean, is there a change to assumption in the tax status now? Should we be actually modeling cash taxes going forward? Just anything on that, please. Thanks very much. Yeah. Maybe I'll take a little bit of a step back and explain that entry a little bit more. It's not that common of an entry, actually. Throughout our time here, our goal has always been to be a highly profitable company. On that journey, every now and then, you hit certain milestones. This is definitely one of the big milestones that we are hitting. What this is saying is all those NOLs that we incurred since the start of Freshpet, they have a tax benefit associated with it. Unfortunately, the auditors, the accountants do not allow you to take that benefit to your P&L until you're able to prove that you will be able to utilize them. This is the first quarter where we've been able to utilize or to prove to our accountants that we will actually be able to utilize the NOL. We now have a significant asset on our books. We also see the offset flowing through the P&L. That's a one-time benefit that's flowing through. Yes, going back to your specific comment, we will now start to see a tax expense flow through our P&L in the coming quarters. That being said, we will not be a taxpayer. We will actually offset that with the asset that we have on the books. It's something that we're really proud of. For all the Freshpet team members that are listening in, please be very proud of this. This is a huge thing that we're all really excited about. Yeah. Just comment on when you think we would become a cash taxpayer. Yeah. No, that's a good point. Right now, we're looking at, depends on the growth algorithm, but around 2028 is when we think we'll start to be a taxpayer, cash taxpayer. Hey, Ivan, just if I could sneak one in, what's the estimated book tax rate, just book versus cash, but just the book tax rate we should put in the model going forward? Yeah. I mean, we're still looking into that, but we're going to use just the normal corporate tax rate and then the New Jersey tax rate on top of that. We'll keep on sharpening the pencil on that. Once again, in the short term, we will not be paying cash. We'll be utilizing the NOLs against that. Thanks very much. Thank you. Our last and final question will be from the line of Jon Andersen with William Blair. Please just use your questions. Hey, good morning. Thanks for the questions. I'll put two in here and then listen. Billy, you mentioned in the prepared comments that you expect the online business to have a more material impact in 2026. You've been underpenetrated historically. I assume that. You're not underpenetrated with respect to kind of your clicks and bricks part of that strategy. Fulfillment from your fridge is strong, but more on the DTC side. Can you talk about some of the actions that you might take on that front, what to expect, how impactful that could be? And then second, just in light of all the discussion around competition lately, if you could just remind us where you are in terms of your moat. I think when I think about early days of Freshpet, it was about the fridge footprint. It seems like it's perhaps the manufacturing scale and maybe even now the technology that you're considering implementing that represent maybe the bigger parts of your moat. But I think it'd be helpful if you have some thoughts on that as well. Thanks. Yeah. So I'll take the second part first, and then I'll turn it to Nicki to answer the first part about the e-commerce DTC part. Your characterization of the moats is fairly accurate. I think the moats evolve and develop over time. As you recall, when we launched Feed the Growth in 2017, it was because we believed that fresh was inherently a scale-driven business. And we also had a first mover. And we wanted to maximize the benefit of both the first mover and also get scale before others entered the market. We've now gotten to the point where we've delivered on those. The advantages we've got, the head start we've got, the scale that we've created are delivering sizable advantages. In 2019, we made the decision to start investing in technology and manufacturing because we believed that manufacturing technology in the space was very premature or immature. And so we started investing. And that's sort of the long-term thinking that we brought to this business. And today, we're now about to realize the benefit of that long-term thinking and that investment that we've made, where it's not only going to be the manufacturing scale, it's going to be the manufacturing technology and the quality and the margins that that produces that will be a big advantage. Along the way, we've been building a brand, a brand that stands for the virtues and benefits of this category. We've been broadening our product lineup. So now we have product assortments that meet a wider range of needs than any of the people who've come into the category after us. We've gotten the retail visibility and availability from the number of stores and the fridges we had. And we continue to invest in that by changing the way in which people shop this category with the F ridge Islands. You should think about us as continually investing in those things that will create an even bigger and more sizable moat. Frankly, the struggles that everybody's had in competing with us would suggest that those investments have served us very, very well. At this point, I think you should expect that we're probably working on some stuff behind the scenes that you aren't aware of yet that are going to build that moat further. We are right now going to focus on driving the moats that we have created, the technology, manufacturing scale, the brand equity, the product assortment, and driving maximum leverage from those. Let me turn it to Nicki to talk about the e-commerce side of this. Great. Thanks, Billy. Hello, Jon. E-commerce, as you rightly point out, is a big opportunity for us here at Freshpet. It's only 14% share of our business. We've had another quarter. This quarter was 45% growth. The previous two quarters, around 40% growth. It's also becoming a really important part of our growth algorithm going forward too. The category is over 30% e-commerce penetration. We know when we dig into our consumer, it is a preferred place to shop as well and also very important for that Millennial and Gen Z consumer that we're a bit underpenetrated in. This year, we've spent a lot of time building out our capabilities and focus to really start to win in e-commerce. You'll see more of that as we go into next year too. The fridge network, yes, you rightly point out, that's the biggest part of our e-commerce business, serviced through click and collect and also last-mile delivery. We also think that there is an opportunity, obviously, with pure play. You've seen the news on Amazon Fresh, and Chewy clearly is opportunity space for us to drive into. Our D2C business is also going to be an important part of the mix. I would say that D2C for us won't be a primary channel that we will drive, but it absolutely plays a role in terms of incremental households to the brand. We stood up a small D2C business earlier this year. We're seeing some really encouraging green shoots coming through. 70% of our households are incremental, first-time trying the Freshpet brand, with very, very high buy rates, typically more than double what our current MVP buy rate is we're seeing coming through in that area. All the metrics are looking like it has got some good headroom to be part of our growth for the future. Thank you. Thanks, Jon. Thank you. At this time, we have reached the end of our question-and-answer session. I'd like to turn the floor back over to management for closing comments. Great. Thank you, everyone. Thank you for your interest. Let me leave you with this thought. It's from an unknown author. Without my dog, my wallet would be full, my house would be clean, but my heart would be empty. To that, I would add, "Fill your dog's stomach with Freshpet every day, and your heart will be forever full." Thank you very much for your interest. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.