Good morning, and welcome to the Freshpet second quarter 2026 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Rachel Perkins-Ulsh, Vice President of Investor Relations and Corporate Communications. Please go ahead. Good morning, and welcome to Freshpet's second quarter 2026 earnings call and webcast. On today's call are Billy Cyr, Chief Executive Officer, and John O'Connor, 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 the size of the category and our TAM, our strategy and expectations for growth, the competitive advantages of our manufacturing on quality and cost, fridge expansion expectations, opportunities in capital efficiencies, timing of new lines and capital spending, 2026 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 our most recent filings with the SEC, including our 2025 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 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, 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 our results and the number of competitors trying to emulate us continue to prove that fresh is the future of pet food, and we remain well-positioned to capture a meaningful share of what we believe can become a $10 billion category over time. Our confidence is grounded in the scale, quality, and cost advantages we have built through our owned manufacturing network, our broad product portfolio, and our expanding on-the-channel presence. We've built a business over the last 20 years around a wide range of product forms, sizes, prices, and channels and believe our manufacturing scale and expertise is one of our greatest competitive advantages, enabling us to create the highest quality products at the lowest cost. Our second quarter financial results were ahead of our guidance range for the year, demonstrating the power of our business model. We delivered our strongest growth rate in over a year and our highest adjusted gross margin since Q1 of 2020. As a result, we are raising our sales and Adjusted EBITDA guidance ranges for 2026, which John will cover in a few moments. We accomplished this against a challenging consumer backdrop, with higher gas prices and weaker consumer sentiment affecting trade-up behavior across a number of categories, including pet food. This is a pattern we have seen before, and it is one we anticipated. We are also mindful that the macro remains volatile and are not relying on sustained improvements to deliver our updated guidance. Amidst that volatile consumer backdrop, our consumer franchise remains healthy, with an increasing share of our growth coming from increases in the buying rate of our consumers. That is a reflection of both our focus on the MVPs who spend five times more per year than the average household and account for 71% of our sales and the tentative consumer backdrop. We closely monitor the combination of household penetration growth and buying rate growth as a good proxy for our total net sales growth and know that the balance between the two can shift over time based on the economic backdrop and the strength of our efforts to win more MVPs. Over the last 52 weeks, that combination totaled 13%, with 7% coming from buying rate growth as we grew MVPs at a much higher rate than we grew overall households. Those strong results give us the confidence to continue investing behind the long-term opportunity while maintaining discipline in how we balance growth, profitability, and returns on capital. We are seeing encouraging evidence that our business model is working across three key areas: on-the-channel access, marketing and consumer engagement, and manufacturing scale and expertise. First, on the channel. We continue to expand access to Freshpet in the places and channels where consumers increasingly want to shop. We believe we're uniquely positioned to compete in multiple channels rather than one. This will really unlock that MVP consumer. Our products are available in over 30,000 stores. Approximately 25% of our U.S. and Canadian stores have multiple fridges. That footprint is increasingly valuable because our fridges do more than support in-store sales. They also serve as micro-fulfillment points for our on-the-channel demand. Our multiple chiller expansion will enable holding capacities to support both online and in-store sales and the broadest possible assortment to be available nationally. In the second quarter, digital orders grew 41% and accounted for 16.7% of our total business. This was up from 16.1% in the first quarter, and approximately 78% of those sales volume went through our extensive fridge network. Additionally, our growth in D2C and pure-play e-commerce was particularly strong in the quarter. We are encouraged by the way retailers are responding to consumer demand for fresh pet food, with total distribution points up 13% in the second quarter. We continue to see opportunities to add fridges to existing high-velocity locations, expand selectively with new retail partners, and broaden our presence in channels such as club. For example, we have 33 Fridge Islands in market today across select stores in mass, pet specialty, and grocery. Further, we now expect to expand our presence to at least 700 rural lifestyle retail stores by the end of the year. We are now testing a third SKU in a set of club stores. We will continue experimenting with retail partners on what fridge configuration and merchandising work best, but at this point, do not expect a material expansion of our Fridge Islands in 2026. Discussions for 2027 are underway now. Taken together, we believe that both retail-based TDP growth and e-commerce growth are a good representation of how we can continue to deliver strong on-the-channel growth. We still have limited market share in the category, with only 4.3% in U.S. dog food and treats, according to Nielsen on-the-channel data. However, we are the fastest-growing brand in dog food in dollars and the second most popular brand among new Gen Z and millennial dog households. Second, our marketing and consumer engagement is becoming more effective as we sharpen both the message and the audience definition. Our latest campaign, Better Food for Your Better Half, is designed to deepen the emotional connection with pet parents while reinforcing the difference fresh food can make. In terms of households, we are particularly encouraged by the strength we are seeing among millennials, e-commerce shoppers, club shoppers, and our highest value households. These are areas where we made deliberate investments, and the early results suggest those investments are beginning to pay off. We are disproportionately winning with millennials and Gen Z compared to the category, and they are the future pet parents that are driving the total addressable market growth. They also over-index to purchasing online and in the club channel, where we see a long runway for growth. We are building a stronger, more durable consumer franchise by increasing availability and improving relevance and deepening relationships with the pet parents who are most likely to participate in the long-term shift from conventional pet food to fresh. Third, our manufacturing scale, technical capability, and expertise continue to be a meaningful competitive advantage, and that is evident in both the operating performance we have delivered and the noticeable difference between the products we produce and those that our competitors are able to produce. We now have three lines utilizing our new bag product technology, two in Bethlehem and one in Ennis, and we are encouraged by the improvement in quality, throughput, yield, and unit economics and what it could mean for innovation. Those lines are running well, and we expect to continue to refine our operating performance on those lines for the balance of the year, just as you would expect with any breakthrough new technology. You can see some evidence of that in the slightly higher quality costs in the quarter, which are due to disposals we incurred during the startup phase. We have clear line of sight to the margin improvements that we can unlock with this technology. At fully optimized performance, we expect over 100 basis points of gross margin improvement on the entire business from the lines we have already installed. We expect approximately 25 basis points of improvement from the new technology in 2026 and more in 2027 as we continue to improve and optimize performance. These technology investments are not just operational improvements. They are strategic enablers. They support better product quality, greater capacity, and new forms of innovation that can help us serve a broader range of consumer needs over time and attract new MVPs to the brand. When fully optimized, the new technology can produce more product per day than a conventional line, higher quality and more innovative products, and do it with greater yields. We've already begun to launch new innovation from these lines in a cross-section of stores, including Homestyle Creations Beef and Healthy Mixers. These new products are evidence of our new manufacturing capabilities, and we have a multiyear pipeline of other exciting new innovations utilizing the new technology. Beyond the new bag technology, we're driving greater capital efficiency through our operational effectiveness program. We intend to, one, get more out of existing lines, primarily through OE improvements. Two, get more out of existing sites, whether that be finding ways to optimize our network or add more lines or capabilities to our existing campuses. Three, develop and implement new technologies in order to improve returns on capital investments, and we are pleased by the progress we've made to date. Given the strong operating performance of our existing lines, we have ample capacity to support projected demand this year and much of 2027. When needed, the next new bag line will utilize our new technology. This approach gives us the flexibility to continue advancing our technology, incorporating further improvements that we believe can enhance capital efficiency, quality, and cost before committing to additional new lines. We are very encouraged by the new opportunities for further improvement that this new technology enables and are committed to continue developing new generations of it so that we can further expand our leadership in manufacturing technology and drive innovation. These three proof points give us confidence that we are building on our advantage position in the future pet food category that we believe will be a $10 billion category. Pet food is still attractive with long-term tailwinds that we believe will continue to increase our total addressable market to above 10 million MVP households and 36 million total households, as younger generations are increasingly interested in feeding high-quality food to every member of their family, including their pets. We continue to gain market share and expect to capture a large portion of the future growth of the fresh frozen category as it continues to become more mainstream. We are navigating a more volatile consumer environment today than we would like, but we anticipated this, and we are doing so from a position of strength, with strong year-to-date growth, a more durable consumer franchise, expanding omni-channel access, and a manufacturing platform that we believe is difficult to replicate. With that, I'll turn it over to John to walk through more details of our financial results. Thank you, Billy, and good morning, everyone. The second quarter results demonstrated strong sales and margin growth in the face of a more challenged economic backdrop. Net sales in the quarter were $305.6 million, up 15.5% year-over-year. Volume contributed 15.7% growth, partially offset by unfavorable price mix of 0.2%. We again had broad-based consumption growth across channels, and for Nielsen-measured dollars, we saw 12.9% growth in total U.S. pet retail plus with Costco. The delta between Nielsen growth of 12.9% and reported net sales of 15.5% was primarily driven by under-reported or unmeasured e-commerce sales, as well as an approximate one point benefit from the timing of shipments mid-year in 2025 that provided a softer comp for Q2 this year and a tougher comp into Q3. In the second quarter, we delivered adjusted gross margin of 48.6%, a significant improvement from 46.9% in the prior year period. The 170 basis point increase was driven by strong leverage on plan expenses from higher sales and lower input costs, partially offset by disposal-related quality costs incurred in the commissioning of our new technology. We are incredibly proud of our improved operating performance, especially as it came while we were implementing our new technology. The strong performance comes as a result of our continued focus on operational improvements and is a strong indicator of the progress we can make in this area. In the second quarter, we had limited benefit from the new bag technology, which remains in the startup and optimization phase. As that technology scales and performance improves, we continue to expect it to become a more meaningful contributor to margin expansion over the next several quarters. Second quarter adjusted SG&A was 31.4% of net sales, compared to 30.1% in the prior year period. This increase was primarily due to higher variable compensation and an increase in our logistics costs, which were 6.9% of net sales in the quarter, compared to 5.7% a year ago. This increase in logistics was primarily due to higher fuel costs and capacity pressures in the trucking market. Media spending was 13.4% of net sales in the quarter, down from 15% in the prior year period. Second quarter net income was $19.5 million, compared to net income of $16.4 million in the prior year period. The increase in net income was primarily due to contributions from higher sales, favorable post-closing adjustments to the sale price of our equity investment in Ollie, and decreased non-recurring SG&A charges, partially offset by the increase in income tax expense related to the gain on the Ollie sale. Second quarter adjusted EBITDA was $52.2 million, compared to $44.4 million a year ago, an increase of approximately 18%. This growth was primarily driven by higher sales and gross profit, partially offset by higher adjusted SG&A expenses. Adjusted EBITDA margin was 17.1% in the second quarter, compared to 16.8% in the prior year period. The year-over-year increase was primarily driven by improvements in adjusted gross margin, the cadence of media investments, and was partially offset by higher variable compensation and logistics costs in the quarter. Operating cash flow in the quarter was $44.4 million, growth of 31% compared to the prior year period, while capital spending was $29.7 million, representing free cash flow of $14.7 million, compared to $0.5 million a year ago. On May 21st, we announced a $150 million share repurchase authorization, as of the end of July, we had executed $86.5 million and repurchased 1.6 million shares while ending the quarter with cash on hand of $350.8 million. Turning to our updated guidance for 2026. We were encouraged with our performance during a challenging macro backdrop in Q2. We now expect net sales growth of 10%-12%, compared to 8%-11% previously. Our strong growth in the first half gives us confidence in our ability to navigate the challenging operating environment. We have a tougher comp in Q3 from the significant expansion in a large club customer and shift in ordering around the 4th of July last year, which will impact our year-over-year growth by a little more than two points in the third quarter. We have also started to see total household penetration growth slow given increased inflationary pressure on consumers. To achieve the low end of our sales guidance, we assume the macro environment stays the same as it is today with little to no sequential sales or household penetration growth. To meet or exceed the high end of our guidance, we would need to see greater impact from our advertising and outperformance of our omni-channel efforts and additional distribution gains. From a category perspective, we would likely need to see stronger dog food category growth and/or resurgence in trade-up behaviors. At either end of our net sales range, we continue to expect to grow market share as we benefit from a generational shift from dry and wet food to fresh. We now expect Adjusted EBITDA to be in the range of $210 million-$220 million, an increase of 7%-12% year-over-year, compared to $205 million-$215 million previously. Adjusted EBITDA dollars and margin are still expected to improve sequentially for the remainder of the year. Media as a percent of sales for the year is still expected to be roughly in line with 2025 at approximately 12.5% of net sales. We now expect further elevated logistics costs for the remainder of the year, primarily due to increased fuel costs and a pressured market for trucking capacity. Given where costs are today, this updated guidance assumes an additional $8 million versus our original expectations. As we've said previously, 2026 is not necessarily indicative of the underlying operating leverage in our model, given the significant investments in omni-channel capabilities we are annualizing from 2025 and the reset in variable compensation we previously outlined. Beyond 2026, we still expect Adjusted EBITDA growth to exceed net sales growth with an expectation of continued gross margin expansion and a more consistent variable compensation expense. We now anticipate adjusted gross margin to improve by approximately 100-150 basis points this year at the midpoint of our net sales guidance, compared to 50-100 basis points previously, primarily driven by improved plant leverage and partially offset by mix. As we have raised our sales outlook for the year, we have decided to add additional staffing starting in the fourth quarter to support additional volumes. From an inflation standpoint, we are carefully watching for any higher costs to be sustained. To address any higher input and fuel costs, we are evaluating opportunities to offset through network efficiencies and product reformulations. Capital expenditures are still projected to be approximately $150 million in 2026. As Billy mentioned earlier, we do not expect to spend any incremental capital on implementing new technology this year because our operating performance on our current base has exceeded expectations. Improved operating performance on the lines in place today and incremental staffing will also help defer future capital. Regarding our fiscal year 2027 targets, we are confident in our ability to deliver net sales growth well in excess of the U.S. dog food category growth. We are raising our adjusted gross margin goal from at least 48% to now at least 49%, based on our significant gains achieved in our operating performance this year and the small benefit from the new technology we expect in 2026. The upper bound for our adjusted gross margin in 2027 will be determined by sales and a number of factors including commodity inflation, any pricing actions we take, formulation changes, and other cost improvement activities. We also expect meaningful incremental contribution from running the new manufacturing technology at full rate, which we expect to reach during 2027. We are reiterating our 2027 Adjusted EBITDA margin target of 20%-22%. We expect leverage on G&A expenses and benefits from optimizing our logistics network. Our operating performance to date demonstrates our ability to achieve stronger adjusted gross margin and our ability to achieve our 2027 margin goals. To summarize, our ability to raise our outlook in this environment reinforces the resilience of our model and the benefit of having multiple growth drivers across channels, households, buy rate, and operating efficiency. We are pleased with our second quarter results and remain cautiously optimistic with our outlook for the remainder of the year, given the volatile macro environment. Looking ahead, we see significant opportunities for continued growth and remain focused on leveraging our scale, expertise, and innovation to reinforce our leadership position in fresh and frozen pet food. 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 will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. In the interest of time, please limit yourself to one question and one follow-up. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Robert Moskow from TD Cowen. Please go ahead. Hi. Thanks for the question. I guess my first question is about the commentary on household penetration slowing. Your chart shows that it still grew 5%. I think that's a year-to-date number. Billy, maybe you could just tell us, did I get this right? Are you expecting household penetration to continue to grow at 5%, or does the guidance assume that it kind of flattens out here and that the growth comes from the higher usage rates and the MVPs? Yeah, Rob, Nicki might add to this, let me just start with the comment that's in the prepared remarks was referring to a sequential growth rate in household penetration. You're right, it's a year-on-year, not year-to-date. It's a year-over-year on a 52-week basis that we're up 5%, then the buying rate is up 7%. What we said in the commentary is that depending on the macro, you might see more buying rate than household penetration or more penetration than buying rate. It just depends on what the macro is doing. The low end of our guidance makes the assumption that on a sequential basis, we're roughly in the place that we are today from a household penetration perspective, and anything beyond that moves us up in the guidance range. Nicki, do you want to add anything to that? Yeah. Thanks, Billy. What I would say, Rob, is that we're very much focused on moving away a little bit from being a trial-based model to a much more durable consumer franchise. You will start to see that rebalance between buy rate and household acquisition. In saying that, despite the macro environment, we actually were the fastest growing brand in terms of household acquisition over the last quarter. We still remain really pleased with the number of households that are coming in, and we're bringing in much higher quality households than what we've historically done. Let's say household penetration kind of stabilizes. How does that relate to the 7%-10% kind of algorithm that you've put out there? Can you still hit 7%-10% through that higher usage rate? I guess maybe of just a worst case scenario where household penetration kind of stays the same. Yeah. Yes, absolutely, Rob. You saw we went up 7% on buy rate in the most recent data. We'd expect to see that grow even higher if you saw the household penetration gains weren't as robust as they have been. Again, we feel very good about the model in total. We think the model's working. It does give us some optionality in terms of how much you get from penetration, how much you get from buy rate. What we're seeing right now is that the market is giving us more buy rate than penetration. Both of them work for us. Our next question comes from Peter Benedict from Baird. Please go ahead. Hey, guys. Good morning. Thanks for taking the question. First maybe, Billy, an update on the Fridge Island test. I know you've got 33 out there. Sounds like 27 would be more the time we would see some expansion in those if that happens. Just an update on kind of the performance there and what the decision tree is for getting more of those in market. Yeah, I'll let Nicki take that one. Hi, Peter. We're really encouraged by the performance of the Island units. As we said all along, this is a trial, and what I would link it to is it's a much stronger signal of retailers now seeing us going from proving out that a category exists and there's demand for it, to now leading a category. We will continue to get learnings from those Island units, but we're not banking only on Island units being the unlock for future distribution and capacity. We're in many different discussions at the moment surrounding multiples expansion, bringing in new assortment, expanding capacity to make sure that we don't have out of stocks, in particular on our best-selling items. I see Island units as being a vehicle that will help enable a certain amount of growth that fits certain retail footprints. I see broader opportunities than that for us to gain distribution. Oh, that's helpful. Thanks, Nicki. My follow-up would be just around the gap between sales growth and the scanner growth. I know it was 200 basis points here in the last quarter. Part of that was some timing stuff from a year ago. Can you expand on the unmeasured channel growth a little bit further? What's driving that and how durable you think that is as you look over the balance of the year and longer term? Thank you. Peter. We think that the gap between the scanner growth and the reported net sales is about 100 basis points. That was related to last year's soft quarter. The remainder is what we would put under unmeasured, and included in that unmeasured is everything from some of the e-commerce, pure play e-commerce guys who may not be fully represented to our D2C business, as well as places like Tractor Supply, which are not included in that. That's the composition of it. How much of that is going to be continued as we go on throughout the year? We're very bullish about our e-commerce business. We feel very good about it, and we'd expect to see strong performance there. As you heard in our commentary, the business that we've got in the rural lifestyle retailer is doing well and going to be expanded. That will do well. We feel good about the unmeasured part. How big it will be in total remains to be seen, but we feel good about it in the absolute. Our next question comes from Rupesh Parikh from Oppenheimer. Please go ahead. Good morning, and thanks for taking my question. Just on advertising, so to the extent that you see upside in the business on the EBITDA side for the balance of the year, would you consider ramping advertising to help sales growth for next year? Just curious how you guys are thinking about potential increases in investments. Let me frame it broadly. Then Nicki will make some comments. We are always looking at opportunities to invest in the advertising, and there is obviously a lot of complications as we think about both capacity as well as the profitability that we want to deliver and the cash generation. We feel like we are in a really good spot right now. We have got a strong balance sheet. We have got a lot of momentum. Our supply network is running really well. If we see good opportunities to get good returns, we would certainly consider them. We are obviously going to take into account the time of the year and what the competitive environment looks like. We would not hesitate to make investments if we thought we would get a good return on the investment. I do not know, Nicki, you want to add anything to that? Only that we continue to be very pleased with the results that we see from media. It is the main growth driver we have. As we always say, we do not price promote our products. Media is the biggest demand generation activity we have got. We are very encouraged with how we are starting to work our advertising to continue to focus on broad awareness, but also getting increasingly better about targeting those higher value MVP households. That is really coming through in the sales growth. It is coming through in the millennial and Gen Z growth that we are seeing. We will keep moving forward with how we measure advertising to make sure we continue to get a very strong return on investment. Great. Then my follow-up question, just on the FY 2027 targets. As we look at the Adjusted EBITDA targets of 20%-22%, what type of sales growth would you need to achieve to allow into that range? John, you want to take that? Sure. Thanks, Rupesh. Consistent with what we said before, if we were in the kind of high single-digit type range in terms of sales growth, we think that positions us, amongst some other factors, to be in the lower end of that range. As we got into kind of low to mid double-digit, kind of teens range, that would help position us to get to the high end. As I outlined in my commentary, there is a number of other factors t hat we're working on besides just relying on sales growth to get us as far into that range as possible. Our next question comes from Thomas Palmer from JP Morgan. Please go ahead. Good morning. Thanks for the question. Maybe just first to follow up on the gross margin and EBITDA outlook for next year. You took it up by 100 basis points gross margin. How much of that is related to the new lines versus other items? I know they're kind of still ramping as we move into next year, and the ultimate impact is kind of 100 basis points. I'm just trying to figure out if the 100 is entirely the new lines versus maybe some other considerations. Yeah. Hey, thanks, Tom. It's actually the inverse of that. It's very little of the new technology that is contributing to our updated view on adjusted gross margin for 2027. If you look at our performance year-to-date, we've delivered 150 basis points of adjusted gross margin improvement, and that is entirely from our operating performance with limited to no benefit so far from the new technology. As we get through the rest of the year, we expect about 25 basis points for 2026, and that's the amount that we rolled forward into 2027. Remember, the way we've structured the guidance for 2027 at this point is that is a floor for our gross margin next year at greater than 49%. Continued improvement in our operating performance will tell us how much farther above that 49 we can go. In addition, when we get to that full realization of that annualized 100 basis points of margin improvement from the new technology, that will also help push us even higher above that 49% floor. Great. Thanks for all that. Next, just on the input cost environment, there was a comment in the prepared remarks about addressing higher input costs and fuel costs, mainly network efficiencies and product reformulations. I think later in the call there was reference to potential pricing. I guess, how are you thinking about kind of the decision-making process here around pricing and when does maybe the input cost environment matter enough to really consider that more seriously? Yeah, let me take a shot at that, and John and Nicki might have something to add to it. I would just start with, you have to recall that our business model is different than most other CPG companies where we don't do promotion. As a result, we don't have the ability to move up and down on pricing as readily as others. Whenever we make a move to take a higher price, it sticks and it becomes, in essence, permanent. We want to see that the cost structure has permanently moved upward. As you can all see that oil prices have gone all over the place, up and down in the last, call it six months. We want to get a good handle on where our logistics costs are, for example, or other input costs are, for example, before we make a decision that would be fairly permanent. We are not afraid to take pricing if we think we need to, because we believe we have pricing power. We think we're in a position where our products are high-value products that consumers enjoy. If we need to take pricing because there's broad scale inflation, we would not hesitate to do that. I don't know, do you guys want to add anything to that? No. Covered it well, though. Our next question comes from Jon Andersen from William Blair. Please go ahead. Hi. Thanks for the questions. I had two questions. I'll lob them both in right now. One is just related to competition. You talked about some of the main competitors. I'm kind of curious what you're seeing, if anything, new from customers or channels as it relates to some of these offerings like freeze-dried, air-dried products, or kibble plus, if that's something you see as viable formats that are also winning share against traditional kibble. The second question I had is there have been quite a few leadership changes at the company the past couple of years, and I'm just trying to get a sense for where you kind of feel things are in terms of the team and that process and anything we should be kind of thinking about going forward. Thank you. Let me make a comment on the competition and Nicki might add to it, and then I'll touch on the talent as well. Actually, let me start with the talent. As you can imagine, we're a growing company, so we're constantly adding new talent. One of the benefits of the added scale that we've created is that we can get higher and higher level of expertise and specialization in areas where we may not have had it before. We've done quite a bit of that, and we'd expect to continue to do that. The skills that are required to run the company of a scale that we are different than the skills that were required to run the company that we were five or 10 years ago. We're taking advantage of the opportunities to add talent where we need to. It's going to be an evolution. You're going to see it. We're going to continue to add talent as you go, and you should expect to see that. On the competition question, let me frame it and Nicki can talk more about the specifics, but we feel really good about what the results in the market are telling us about the strength of our business. We've seen a wide range of people try to compete with us with a variety of frozen forms, dry forms. They've tried to do it in different channels like D2C. They're now trying to do it through the vet channel, trying to go through mainstream channels. Despite all those different efforts, we still end up being one of the larger players in this space, and we don't think people are able to touch the quality or the cost structure that we've got and leaves us in a very strong position. We think we have preferred products, the ability to produce preferred products. We've built an incredibly strong brand around it. We have an omni-channel capability that allows us to reach channels that others cannot reach. People are much more singularly focused on channels. Our cost structure, we believe, continues to get increasingly more competitive and is in a strong advantage position today. No matter who all these innovations are or where they're coming from, we feel good about our ability to compete over the long haul. You should also know, going back to the talent question, we're going to continue to invest in more talent to extend that advantage as much as we possibly can. I don't know, Nicki, you want to add anything to the competitive environment? Sure. Thanks, Billy. What I would say, Jon, is that as we continue to see consumers move away from more traditional food formats of kibble and wet, we continue to see that correlate with less and less distribution and space available in traditional retailers. We're starting to see that we're really becoming a bit more the beneficiary of that, as you can see from the distribution point gains that we're making and why we strongly believe that our big opportunity is much more around expansion in the existing retail formats. Thanks. That's helpful. The next question comes from Eric Serotta from Morgan Stanley. Please go ahead. Great. Thanks for the question. Wanted to come back to the competition side. Back in early June, you showed us some helpful data in terms of your performance and velocity at a large club retailer since some competition came in. Any update you can provide for the past eight weeks or so? Maybe it's a little bit early, but any initial read or forward thoughts in terms of competition in especially pet channel, and just broader competition in grocery mass from Blue Buffalo, which I guess we're coming on nine months now. Thank you. Yeah. Nicki, you'll take that. Great. Thanks, Eric. Look, I take a step back and think a little bit about where our runway is for growth. We're only 4.3% market share at the moment within the category. Despite maybe competition coming into fresh and frozen, we still believe there's an incredibly big opportunity ahead for us. In terms of what we're seeing, as we just posted in our Q2 results, we've had very strong sales performance despite a number of competitive entries coming in. We remain very convinced and encouraged by the model that we're following at the moment. We've not really seen much by way of impact to Freshpet's growth trajectory. We've not seen anything by way of holding back on distribution gains with competition coming in. As I said before, we're seeing more and more retailers start to reimagine what the category looks like and opening up space for some of these new formats. As competition comes into our space, we do see it as more of a validation of really where the long-term consumer demand is going. Let me just add in the specific in your question, Eric, I think in June we updated the market and said that our business in that club retailer is up more than 40% over the last however many weeks we were quoting then. It continues to be above 40%. We're continuing at that rate, and we have an over 80% share of the fresh market in that retailer. We feel really good about the position that we've got and how well insulated we are. Great. In terms of additional or sort of velocities on some of the new distribution that you've added, could you come back to sort of your expectations for velocities at the Rural Lifestyle retailer versus the overall business? Nicki, you'll take that. Sure. Thanks, Eric. It takes time, I think, to really build awareness that we're present now in a number of those stores, and that's what we've been working hard on. We're very encouraged with the results that we're seeing week on week with the growth coming through, as obviously is our partner in this space, which is why they've chosen to accelerate really the rollout into more stores. We're learning together. There's a number of pieces within the assortment that do particularly well with the shopper profile in that environment, and we do see it as nice incremental business for us, serving our MVP shopper in a new destination. Great. Thanks so much. I'll pass it on. The next question comes from Michael Lavery from Piper Sandler. Please go ahead. Thank you. Good morning. You called out really strong e-commerce growth for digital purchases, and just was curious if you could give a sense of how incremental that is versus shifts from brick and mortar, and how much you can develop that channel to reach new households and consumers as well. Nicki, you want to take that? Sure. I think one of the parts for us that we know is very incremental is when we look at buy rate and we look at the average household consumption over the year, we see a marked step change if that pet parent is buying online versus buying in the in-store environment. We know that when that purchase is happening repeatedly online, we're building a more durable franchise. That's the first part that we know is very incremental overall to our business. Now, as we've talked a little bit about, 78% of our e-commerce business is coming out of our existing fridge network. There is part of that business clearly where the shopper is choosing to either purchase in store or purchase online. Less of that is incremental in terms of new households coming through. As Billy mentioned earlier, there's also part of our growth that is coming through new opportunities, whether it's our direct-to-consumer business, whether it's other online retailers. Within this, we're making very big incremental gains. We believe in our omni-channel strategy. More access overall, especially through online purchasing, is absolutely delivering more spend and ultimately more sales for Freshpet. I would just add to that is we're seeing the biggest gains or biggest benefits for us when we're opening distribution in outlets or channels that cater towards larger purchases, meaning club retailers where the consumer's inherently buying a larger quantity, whether it's somebody who buys on a subscription from our D2C business, places where people buy in larger quantities, the act of acquiring a consumer turns into a much higher revenue source. That's a big gain for us, and we're getting a lot of return from that. Okay, great. That's helpful. Just on the new technology, I want to follow up and make sure I understand how you characterized it. I know you laid out some of the benefits and quantified those in a way that you hadn't before, it sounds like even just the throughput and efficiency is running ahead of what you expected. Did I catch this correctly that it's so much so the case that you're holding off putting more upgrades in or more new lines just because you don't need them yet? How do you think about just whether or not to pull forward- Yeah roll it out more and kind of how that unfolds? It's a little bit different than that. What's happening is that our existing operations are performing so well and the throughput that we're getting, and you can see that in the gross margin that we posted in the quarter, is so strong that the need for incremental capacity, meaning converting more lines or adding new lines, isn't as great as we at one point thought it might be. The other piece, the other factor, and we refer to this in the prepared remarks, is that we continue to innovate on this technology and find ways to make it even better. Things where you might automate a part of the process or places where you might be able to drive a little bit higher yield or higher efficiency. It's to our advantage to get as much out of the existing lines as we can, we're doing that, and that allows us to push back when we actually have to lock in on the specific execution of the new technology that we would invest in. Once you buy it, you own it for the next 15 years. We'd sure like to know that we're investing in the version that is the best possible version at the time that we need it. That's really the balancing act that we're going through. The technology that we did start up, the lines that we did start up are doing well. We have the usual startup bumps that you might see. You saw that in the quality cost that we reported in the quarter where we had a little bit more disposals than we normally would. From where we sit right now, we're very bullish on this technology and what its potential is. Frankly, we think it's going to be a phenomenal platform for us going forward. I would add one final thought is what's underappreciated about it, I think, is the amount of value we're going to get on new product innovation from this technology. The things that we can produce that our existing lines cannot produce using this new technology are pretty dramatic and you're just seeing a little glimpse of that in some of the stuff that we have in the market today, but there's a lot more that can come from that. Our next question comes from Todd Brooks from The Benchmark Company. Please go ahead. Looks like they dropped off. Our next question is from Marc Torrente from Wells Fargo. Please go ahead. Hey, good morning, and thank you for the questions. First, just building on the earlier question on Club. There's increased competition in the channel, but at the same time, dedicated fridge space is expanding and you're testing new SKUs. How should we think about continued runway within Club as you start to lap the launch from last year? Nicki, you'll take that. Yeah, sure. We think a little bit about Club in terms of the total channel, not just one specific retailer, but it's a good indication maybe of where the future is to come. We have very limited assortment today across Club retailers, and we still believe there is more opportunity for innovation to go into those outlets. We believe there's more opportunities with multiple expansion in other Clubs as well that we're in. When we model out where the runway is, we still see a very big trajectory ahead for us over the coming years. Okay. For the 2027 EBITDA targets, you increased the gross margin target, held the EBITDA margin target. Can you help us bridge some of the expected SG&A leverage over the next year to help you get there? Are you embedding any incremental investment in your longer term outlook? Thanks. Sure, Marc. One, just a reminder, right? The adjusted gross margin goal that we have out there for next year in 2027 is a floor, right? At the 48%, there was implied a lot of work to do in other parts of the P&L to get to that 22%. We're increasingly confident in the contribution to our ability to get into that range that's coming from adjusted gross margin. At this stage, we were prepared to raise that floor in terms of where we see gross margin next year. In terms of SG&A, as we said more broadly, media, Nicki talked about earlier, is the primary way in which we generate demand. We're obviously very keen to maintain that level of investment so that we can drive our sales growth, which is the most important for us to build our franchise over time. We do expect to get some optimization of our logistics costs from where we sit today, which is higher than we had expected it to be for the year. As I mentioned earlier, a few times this year, we made some investments in 2025 to build the types of capabilities that are helping fuel our growth, particularly in e-commerce in 2026, and we're annualizing those gains here in 2026. We don't foresee investments of that nature to operate our business in 2027. On top of that, there are a number of items we're looking at from just a general cost improvement and productivity improvement lens that we think will help reduce some of the costs that it takes to operate the business today, because there are opportunities here to be more efficient than we are in 2026. As a reminder, if you have a question, please press star then one. Our next question comes from Yasmine Deswandhy from Bank of America. Please go ahead. Thanks, guys. I just had a quick clarifying questions off of Tom's question earlier. Just on the gross margin improvement that we're expecting from these lines, you said it's 25 basis points for this year, is it an incremental 25 basis points next year, or is it just a 25 basis points that's in the base? I guess, if you could comment on the pace to achieving the full 100 basis points, that would be great as well. Thanks. I'll remind folks again, we do not have a specific number, nor have we bound the upper end of the gross margin range for next year. What we're looking at today is 150 basis points year to date improvement in adjusted gross margin that we have clearly delivered. We have a tough comp in Q4, where we had very strong adjusted gross margin in 2025, but we still see net delivering 100 to 150 basis points of adjusted gross margin improvement in 2026, with only 25 basis points of that coming from the new technology. That operating performance, separate from the new technology, has given us the confidence to raise the floor of our adjusted gross margin expectations for 2027 by the 100 basis points that we did today. The 25 basis points that we're achieving full year on the new technology helps us be there for sure, but we also expect further gains from operating performance and the potential to reach some of that 100 basis points of annualized gains from the new technology at some point in 2027. We're still ramping up out of this optimization phase, as Billy mentioned. The lines are running well. It's still a little early to pinpoint exactly when we get to that full rate and start achieving that annualized 100 basis point rate. Okay, great. Thank you. At the fully optimized, 100 basis points of gross margin improvement, based on the three lines that you guys have installed, I'm pretty sure the three lines were two light versions and one full. I'm not sure if it's a little bit too early, but should we assume that the gross margin improvement that you're seeing from the full upgrade is double that of the light lines? I guess going forward, would the look of these upgrades look similar to that ratio of two to one of where it's double light upgrades versus the full upgrades? Yeah. It's a little bit more complicated than that because the benefits that we get from the two technologies, while they may be reported as similar things in terms of yield throughput and whatnot, the reality is they are very different depending on what products that we're producing on those lines. From a simplistic perspective going forward, what you should expect is we will use the full version of the technology more for innovation for new products that will probably have embedded in them a much higher quality of product and visual appeal, probably a higher price that goes with that, and probably very good margins that come with it. The existing lines, which would be converted using the light version technology, would more likely be our existing products in our lineup, and so the return there would be a financial return, meaning higher throughput that you might get. It's gonna be a little bit of a mixed bag going forward. We aren't gonna just add lines and add capacity when we don't have the need for it. We're gonna add them as we need them. The ratio between the new lines and the light lines will vary over time, depending on how many incremental lines we need to add. The next question comes from Todd Brooks from The Benchmark Company. Please go ahead. Hey, thanks for squeezing me in. Sorry for the hang-up earlier. Just following up on that last comment, Billy, on the new bag technology and what it unlocks. As you're looking out longer term, are there any game-changing product capabilities that we should be thinking about from a almost category redefinition standpoint, or how people think about Freshpet bagged product, or is it that improved quality, better visual appeal? I'm just trying to figure out how big the moat is that you see coming out of this new production technology. Yeah, I would frame it this way, is the light version of technology allows us some product innovation capability, but much more we'll be focused on converting our existing products and doing it more efficiently and making them higher quality, better visual appeal. The full version of this technology has tremendous innovation capabilities, and it will take us to a level of performance in terms of the aesthetics, the ingredients that we can use, the types of ingredients that we can use, the aroma that we can deliver, the visual appeal. All those things will be at a level well beyond what we can currently produce and what we believe anybody else can produce. That should open up levels of premiumness, ranges of ingredients and product forms. For example, you'll see in some of our materials, we talk about having a beef version of one of the products we currently only can do a chicken. That kind of thing is possible with this new technology. More to be determined as we go forward, suffice it to say, that is a major unlock for us from a product flexibility perspective. Okay, great. The other question I wanted to ask, a little bit more strategic, but the continued category leadership that Freshpet's showing from a growth rate standpoint. When you're talking to customers, what are you hearing about how they want to grow in the fresh category? Do they want to commit to the proven leader in this type of environment, are they more willing to gamble on new entrants and form factors? Do they want to take the current brand winner and say, "Okay, this is the way to address growth in the category with a proven partner?" Thanks. Nicki will take that. Look, we're not fully inside the head of what retailers are going to do in terms of the balance of where we sit versus maybe some competition. The one thing I think that really stands in our favor, is the impact that we have for a retailer on the most loyal consumers that come into their store. Typically, the MVP consumer that we bring in is one that is very, very valuable to that retailer. They're already shopping a very high propensity of fresh foods. They're already going in on a much higher frequency basis. We believe we're very well-placed. We have a really strong proven track record. We have the broadest assortment with the deepest tiering of pricing that there is. We believe that we provide really the best all-round solution that is out there to date. Clearly, different retailers are going to look to absolutely double down and expand on this category. Our focus is less about competition in the same segment as us. Our focus is much more on the runway that we have ahead of us, given we're only just over four percentage points of share of market today. I would just add to that if you look historically, retailers have tried everything from go all in on us to the alternate strategy of try to enable other competition or private label in this space. What the results have shown, at least to date, is that the guy who bets on Freshpet tends to get a better return than the person who bets on alternative competitors or on doing private label in this space. Our goal going forward is to make it so that our products and our manufacturing capability is so much better than what they can get from anybody else, that the guy who chooses to bet on our business ultimately is the winner because our products are that much better and they're at affordable prices. If we can continue to invest in our capability, our manufacturing capability, and deliver that superior consumer experience, it'll make it increasingly difficult for someone to compete with us. That's our goal. This concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks. Thank you very much for your interest. I'll end with a quote from an unknown source, "Home is where the dog runs to greet you." To which I would add, don't feel so special, though. If your dog is like mine, she's waiting to show you where the fridge is. Thank you very much. The conference has now concluded. Thank you for attending today's presentation. 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