Greetings. Welcome to the PetIQ, Inc. fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode. A question- and-a nswer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I would now like to turn the conference over to Katie Turner with Investor Relations. Thank you. You may begin. Good afternoon. Thank you for joining us on PetIQ's fourth quarter and full year 2021 earnings conference call and webcast. On today's call are Cord Christensen, Chairman and Chief Executive Officer, and Zvi Glasman, Chief Financial Officer. Susan Sholtis, President, and Michael Smith, Executive Vice President of the Product Division, will also be available for Q&A. Before we begin, please remember that during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements. Please refer to the company's annual report on Form 10-K and other reports filed from time to time with the Securities and Exchange Commission and the company's press release issued today for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note on today's call, management will refer to certain non-GAAP financial measures, including adjusted gross profit, adjusted SG&A, adjusted net income and adjusted EBITDA. While the company believes these non-GAAP financial measures will 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 release for a reconciliation of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. In addition, PetIQ's posted a supplemental presentation on its website for reference. With that, I'd like to turn the call over to Cord Christensen. Thank you, Katie, and good afternoon, everyone. We appreciate you joining us today to discuss our fourth quarter financial results. I'll begin with an overview of our strategic business and financial highlights. Then Zvi will review our financial results and outlook. Finally, Zvi, Susan, Michael, and I will be available to answer your questions. We are very pleased with our strong finish to 2021. We reported fourth quarter record net sales of $196.6 million, an increase of 19.7% compared to Q4 last year. This fueled our record annual results with net sales of $932.5 million, an increase of 19.5% compared to 2020. 2021 product segment net sales were $825.4 million, an increase of 13.7% compared to the prior year. In the Services segment, net revenues were $107.1 million, an increase of 97% compared to 2020. We also generated solid margin improvement. Adjusted gross margin increased 270 basis points to end the year at 22.2%, and our annual adjusted EBITDA margin increased 130 basis points to end the year at 10%. Our financial and operational results demonstrate the strength of our diversified pet products and services offerings. The Product segment posted record results which were stronger than we expected as we benefited from strong flea and tick and health and wellness sales. Our Services segment reported its best quarter since the onset of COVID in 2020, posting its fourth consecutive quarter of positive adjusted EBITDA. Although we still have a lot of room for improvement in the future quarters for services to get back to pre-pandemic profitability. At PetIQ, we're a purpose-built company addressing the large multi-billion-dollar animal health market through our retail and e-commerce partners. Wherever pet parents choose to purchase their products, PetIQ has its animal health product portfolio and clinics across sales channels, including mass, grocery, club, pet specialty, pharmacy, or online. We've created a unique business model committed to convenient and affordable pet health and wellness care. We continue to have the largest over-the-counter animal health brand portfolio with over 1,200 items and a dominant market share in pet prescription products sold through retail and online. Product segment has been a consistent driver of our annual growth, particularly the last two years as we've operated through the pandemic. As those of you familiar with PetIQ know, we experience variability in our Services segment as a result of having to close and reopen our wellness centers and mobile clinics, then followed by continued vet labor-related headwinds. Today, Zvi will highlight the robust growth trajectory of our Product business when he discusses our 2022 outlook and the modest assumptions we've made for the Services segment as we work towards recovery in the segment's growth and profitability over the next several quarters. Focusing on our segment results in more detail. In the Product segment, we generated strong fourth quarter year-over-year sales growth of 17.8% to $170.9 million. We generated double-digit sales growth across six of our top eight product categories during the quarter. In addition, both our distributed and manufactured segments also saw double-digit growth and benefited from a stronger than normal end to the flea and tick season in the fourth quarter. Our OTC flea and tick category in the quarter was better than we expected, led by both a topical segment, which includes PetArmor, that increased 21%, and our emerging brand within the oral segment, Capstar, that increased 38%. Our health and wellness portfolio also had an exceptional quarter as it contributed 63% growth versus the prior year. We also continued to experience strong growth in the e-commerce channel, which increased 23.4% for the quarter, 20.2% for the full fiscal year. This growth was led by our manufactured brands, which grew 47.8% in 2021. In terms of inflation, we have experienced cost inflation headwinds, particularly in labor, freight, raw materials, and packaging. As a result, we implemented a price increase November 1st across our manufactured products segment to offset most of these inflationary pressures. From an R&D perspective, we're excited to have finalized and shipped the first orders of our super premium health and wellness line for a large club store operator during the fourth quarter. The first few months of sales which have been strong, and we expect a greater benefit from this item in full year 2022. From a mix standpoint, our business in the quarter consisted of 69% distributed and 31% manufactured sales. As we look ahead, we believe PetIQ's manufactured items can reach 32% of product segment sales for 2022. We continue to participate in several of the largest and fastest-growing categories within the pet industry, such as flea and tick solutions, along with health and wellness. Our team's emphasis on winning in both brick-and-mortar retail and e-commerce continues to fuel our growth. For 2021, the product portfolio gained 67 basis points of share within the flea and tick category. This share gain was led by both PetArmor and Capstar, which both gained greater than 125 basis points of share in the year. As for health and wellness, we also continued our momentum in this high-growth segment as we picked up 26 basis points of share for the year. The segment increased 12% across the market, while our portfolio increased 15% for the year, driven by PetIQ, an increase of 31%, and PetArmor, an increase of 23%. We have good visibility into our product innovation pipeline and are excited to launch two new products in the first half of 2022 that we expect to help fuel continued momentum in our branded product segment. We also are introducing a direct-to-consumer initiative in the second half of 2022 as we continue to provide smarter options for pet parents to help enrich their pets' lives through convenient and affordable access to veterinarian products and services. We believe our product team's strong operational execution positions us well for continued growth and increasing contribution from our own pet health and wellness brands at an attractive margin in 2022. Now focusing on the services segment, we generated another quarter of net revenue growth and positive adjusted EBITDA. This was fueled by a solid quarter with double-digit growth in pets per clinic and dollars per clinic, despite not operating a significant percentage of wellness and mobile clinics due to ongoing labor headwinds. While we expect the current labor situation to continue near term, we believe our services segment will make sequential and year-over-year improvement as we progress through 2022. During the fourth quarter, we continued to optimize the services segment to maximize the results and minimize the pet parents' impacts. First, we continued to adjust our clinic schedules to reduce labor hours and cancellations. Second, we enhanced our retention and recruiting programs. Finally, we increased wages of our staff and new hires to help with recruiting and retention. This cost increase was offset by a price increase of approximately 6% that we took at the beginning of September. As we discussed last quarter, we've taken the opportunity to optimize our new wellness centers opening plans and to reduce the risk of deploying capital and starting operating expenses prior to having the labor in place to operate the clinic. As a result, beginning in the fourth quarter, our team started to begin construction on new wellness centers once all required in-center labor has been hired. Previously, we would begin build-out and construction, then begin our recruiting and staffing. In Q4, we opened 26 new wellness centers for a total of 98 wellness centers opened in 2021. While we have full commitments to open with our retail partners across both conversions and greenfield locations, we continue to believe this enhanced wellness center opening plan will also help ensure the best services experience for pet parents, their pets, our retail partners, and our shareholders. Longer term, we still believe 1,000 wellness centers are achievable, but we will be prudent with our growth near term given the challenges in the labor market. We have confidence in our model and how valuable it is to pet parents across the country. For example, dollars per clinic and pets per clinic continue to be the strongest KPIs in the company's history. We believe our differentiated position in the animal health industry will continue to fuel our long-term growth, along with the robust industry tailwinds, including increasing household penetration for pets, the humanization of pets, an increasing pet population, and more pet parents looking for convenient and affordable pet health and wellness. Going forward, our team will continue to execute on our mission of delivering smarter options for pet parents to help enrich their pets' lives through convenient and affordable access to veterinarian products and services. Finally, I'd like to welcome Zvi Glasman to PetIQ. Zvi joined us the first week of January as CFO and has already made quite a positive impact on our entire team and our financial reporting processes with his energy for the business and fresh perspectives. He has 20 years of CFO experience supporting high-growth companies to drive operational improvements and increase profitability. We're excited for our shareholders and members of the investment community to get to know Zvi in the coming weeks and months. We believe he has joined PetIQ at an ideal time as we continue to accelerate our net sales, expand margins, and increase our cash flow generation. With that overview, I'd like to turn the call over to Zvi. Thank you, Cord. It's great to be speaking with all of you today on my first earnings call as CFO of PetIQ. The last two months have been incredibly busy, as you'd expect, and I've enjoyed getting to know the members of our talented team. I'm often asked what attracted me to the company. I was drawn to PetIQ's portfolio of brands, manufacturing assets, and its complete pet health and wellness platform that I believe are uniquely positioned in the industry. The company has a demonstrated track record of growing sales while capturing an ever-increasing share of the market opportunity. I'm excited about our growth ahead and look forward to spending more time with many of you from the investment community in the coming weeks and months as we execute on our growth objectives. Now, focusing on our consolidated fourth quarter financial results. We had a strong end to the year with solid growth from both the products and services segments, helping us to generate record net sales of $196.6 million, an increase of 19.7%. Fourth quarter gross profit increased 29.1% to $36.9 million, resulting in a gross margin of 18.8%, an increase of 140 basis points from the fourth quarter of last year. Adjusted gross profit was $40.2 million, and adjusted gross margin was 21.3% for the fourth quarter of 2021, representing an improvement of 130 basis points year over year. This margin expansion reflects favorable product mix driven by the growth in sales of the company's branded product portfolio with items such as Capstar, as well as the wellness center optimization that Cord mentioned. SG&A expenses for the fourth quarter of 2021 were $41.5 million compared to $32.6 million in the prior year quarter. Adjusted SG&A was $34.3 million for the fourth quarter of 2021 compared to $27.1 million in Q4 of last year. As a percentage of net sales, adjusted SG&A was 18.1%, an increase of 130 basis points compared to the prior year period, primarily due to an increase in expense to support the company's growth, including increased selling and advertising costs to support the service segment, wellness center, clinic openings, and to support growth in PetIQ owned brands in the product segments. Adjusted EBITDA was $15.3 million, an increase of 17.6% compared to $13 million in the prior year period. Adjusted EBITDA margin of 7.8% was slightly lower, decreasing by 10 basis points versus last year, which reflects timing of expenses as full-year adjusted EBITDA margin of 10% increased 130 basis points versus the prior year. Turning to our balance sheet and liquidity. As of December 31st, 2021, the company had cash and cash equivalents of $79.4 million. During the fourth quarter, we generated $13 million of operating cash flow. We expect 2022 to be the strongest cash generation year in the history of the company. Our long-term debt, which is comprised of our term loan and convertible debt facilities, was $448.5 million as of December 31st, 2021. In addition to our cash on hand of $79.4 million, the company has $125 million of availability on its revolving credit facility, representing total liquidity, which we define as cash on hand plus availability of $204.4 million as of December 31st, 2021. We continue to believe our available liquidity, consistent growth, and contribution from the product segment and improvement in the service segment positions the company to drive free cash flow and build cash in the quarters ahead, as well as opportunistically pay down our debt. Now I'll turn to our outlook. As we noted in today's press release, we are reintroducing annual and quarterly guidance. For the full year 2022, we expect net sales of approximately $985 million, representing an increase of 5.6% compared to 2021, or an increase of 10%, excluding $36 million in sales related to loss of distribution rights for certain animal health manufacturing products, which we communicated in previous quarters. We expect adjusted EBITDA of approximately $100 million, representing an increase of 7.6% compared to 2021, or an increase of 10%, excluding $1.8 million in adjusted EBITDA related to the lost animal health manufacturing products distribution that I just mentioned. Our annual adjusted EBITDA outlook assumes adjusted SG&A to increase approximately 100 basis points to 17.3% in 2022 compared to 16.3% in 2021 as a result of an incremental $15 million or 150 basis points of expense to support our launch into direct-to-consumer, two significant new manufactured brands launches, and continued marketing investments to help accelerate growth of our manufactured brand product portfolio. We expect 2/3 of the incremental $15 million SG&A expense to be incurred in the first half of 2022. Going forward, we anticipate SG&A to return to historical levels in years when we do not have expense activity related to launches or significant product initiatives. Our outlook also assumes very little incremental adjusted EBITDA contribution from the service segments. The services segment has not returned to pre-pandemic levels when the business contributed approximately $10 million-$15 million in additional adjusted EBITDA. While we do expect to eventually return to pre-pandemic levels, based on what we are seeing in the veterinary labor markets, we believe it is prudent to assume the return will not occur in 2022. We continue to believe the services business will be a key driver of long-term EBITDA and sales growth. However, until the pandemic-related dislocation in the labor markets normalizes, we plan on a slower ramp in clinics as we take a more disciplined approach in capital allocation. Accordingly, we will not guide on annual wellness center opening targets until the labor markets are more predictable, and we will continue to execute on our wellness center optimization initiatives that Cord mentioned. As demonstrated in 2021 and in our 2022 guidance and our modeling for 2023, due to the strength in our products business, we are confident the company will continue to achieve strong growth despite the labor headwinds in the services business. For the first quarter of 2022, we expect net sales of approximately $270 million, representing an increase of 6% compared to the first quarter of 2021, or an increase of 15.3%, excluding $20.2 million in sales related to the loss distribution previously mentioned. We expect Q1 adjusted EBITDA of approximately $28 million, representing an increase of 4.1% compared to the first quarter of 2021, or an increase of 8.3%, excluding $1 million in adjusted EBITDA related to the loss distribution. Q1 adjusted EBITDA also assumes adjusted SG&A as a percentage of sales to be relatively consistent with the first quarter of 2021 at 14.7%, despite an incremental $3 million or 110 basis points of expense to support the launch of our two new brands. We expect 2022 net sales seasonality to be very similar to the net sales cadence in 2021 for the first two quarters. Recall in Q4 of 2021, we benefited from a strong late flea and tick season, and we believe most of our growth in the second half of 2022 will be in Q3, with Q4 net sales up nominally. In closing, we believe we entered 2022 with favorable business momentum and good visibility into the growth of our business for the year. With that overview, Cord, Susan, Michael, and I are available for your questions. Operator? Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would 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 poll for questions. Our first question comes from the line of Jon Andersen with William Blair. You may proceed with your question. Good afternoon. Thanks for the questions. Welcome, Zvi. Thank you. My first question is on the products business. You mentioned a handful of new products that will launch and contribute in 2022. I'm wondering if you could talk about a little bit more about the product, the health and wellness product that's already launched and perhaps how that's performing early on the shelf and club. If you can describe in a little bit more maybe detail, the additional items you plan to introduce, from a timing perspective and what maybe your expectations are from a contribution standpoint on those as well, just to kinda get, so we can get a little bit better flavor for the innovation this year, which sounds like it's particularly strong. Yeah. Thanks, Jon. I appreciate the question. First, we'll comment about the health and wellness item that we spoke about on the last call that was shipped in fourth quarter that we launched with a club retailer. We shipped the product into all clubs in November of last year. We saw great sales out of the gate, and we've now had three months of the product performing. We set a unit goal per club at this point. We're slightly ahead of that goal, which we thought was already in a great place. We're very pleased with the performance. They're extremely pleased with it. Obviously, we're excited because by getting it shipped in fourth quarter, we get the full 12 months contribution from it. We did do the item under the club's strong brand, and so the margin profile isn't diluted, but it also isn't accreted to the company's performance. We expect that item to have a long tail based on the initial read, and there's the demand for super premium health and wellness items and believe it's the highest quality soft chew health and wellness item that's currently in the market. Just a great value, and I think the consumer sees it and is responding extremely well to the item. The other two items we're extremely excited about. The first is similar to the item that we launched with the club retailer. We have a full line of super premium health and wellness items we've talked about throughout 2021 and delayed the launch as we had other priorities that we were getting to late in last year. We're finally there. That item is expected to launch in Q2 of this year. We have great plans and significant investment against that brand as we see the upside for that to be a great opportunity for out years where we have one of the best positioned vertically integrated health and wellness production facilities, formulation teams, and have not had the same participation at the super premium area where we've seen a significant amount of growth during the pandemic. We're excited to be in a position to take a unique position as one of the only companies that's vertically integrated with those. Skill sets and abilities to perform. That will launch in Q2 predominantly with our online retail partners initially, and based on success, we'll see if it translates to brick-and-mortar in 2023. The last item I'll reference is we are excited and are now shipping a premium flea and tick item. We've had a very successful execution of the Capstar brand in the oral flea and tick space with significant growth, incredibly high brand awareness and recognition. We've found a great opportunity with our innovation team through formulations that we developed to have a great adjacent topical flea and tick to complement the Capstar brand. That item's been presented last fall to all of our retail partners, and we couldn't be more excited about the amount of placement that we received from brick-and-mortar and online retailers in support of that brand. The brand's name is called NextStar. It'll be advertised by the makers of Capstar, and we expect it to be a real opportunity for the company in out years. This first year, as we always do with new brand launches, we invest significantly more in the first year. Our mature brands, typically, you'll see, you know, 15% of net sales invested in advertising, where with these new brand launches, it's close to 50% of net sales in advertising. The EBITDA contribution will not be there, but it will set the brands up for success as the sales are able to grow, awareness builds, and we're able to invest at similar levels where those brands do have an accretive margin profile to the company's current margin of the business. The last thing I would say, and we mentioned in our guidance, for the company to support those two brand launches and a launch in the second half into the direct-to-consumer space, we're spending $15 million more than we've ever spent in our SG&A category to support the advertising and awareness and ultimate success of those brands. Said differently, the core business' growth and performance, we're reinvesting $10 million of earnings that would have dropped to the bottom line if it wasn't for those launches. Said differently, the company would have a slightly lower top line tied to those sales from those businesses, those new brands, but the earnings would be $110 million versus $100 million. We are so confident in the growth trajectory of these businesses and their out years contribution. It's the right decision for us to invest in the business and to see the sales come through in the future and the earnings come through in the future. That's really helpful. Thanks for the detail. On sticking with the investment, the incremental $15 million, does that? Should we think about that as kind of permanent structural spend? To your point, I think Zvi referred to this in the prepared comments, does that normalize in an out year? I'm trying to think about what to expect as we look to 2023. How do you monitor that spend closely and are you able to step it up if it's really delivering at or above plan rate? Do you step it down if you're not seeing the return you expect on it? Yeah, I think the first and foremost, it's a great question, and appreciate the question. I mean, the good news about where the advertising world's gone is every dollar we spend is equal to anyone else's dollar out there for the spaces we spend it in. Whether it's spent on shopper conversion that takes place with our retail partners, like with Amazon or Chewy, or if it's with social and other direct-to-consumer advertising platforms to drive awareness, we can absolutely monitor a number of key metrics and measurement tools to see that we're getting the return from those investments. I think further to outline in my comment I made earlier about it, across our portfolio for our mature brands that are doing extremely well, gaining share, expanding as a mix without these new items, we're investing 15% of net revenues to grow those brands, take share, and do extremely well. First year, we're investing 50%. Now based on the success of it and based on how that works, we'll start to be in a position to pull back the percentage, and we'll also see an increase in sales as awareness builds. So you'll see that spread in contribution coming through. As we do some of these things that we see as significant growth vehicles for the future, it's on us to continue to communicate well and let you know what level of investment we're making. We fully expect that all these brands eventually get into the same place as our existing portfolio with 15% investment of net sales, which when you have a 55% margin, we should see EBITDA contributions coming from these brands in that mid-30% in those out years. Again, year one, heavy investment. Year two, lighter investment, but still not at par. Year three, we should see back into, and we believe, normal kind of flow and contribution. Excellent. Last one for me, is on services and kind of as it ties into the guidance for 2022. It seems that assuming very little contribution, EBITDA contribution from services, seems pretty conservative given, I guess, what kind of you said about dollars per clinic and pets per clinic. Hopefully, you know, the labor situation evolves positively, you know, during the next nine months or so. How did you think about that, you know, again, because it does seem conservative. Was this just a decision that, hey, we're better off, you know, kind of following this as we move forward, and if there's upside, you know, so be it. Just tell us a little bit about your thinking there in attributing so little contribution to services this year. Thanks. Yeah, I think, you know, first, we're very excited that versus 2020, the sales and the service organization are almost 100% better in 2021. However, we saw cancellation rates due to labor at the first of 2021 at a much lower level that ended up being at the highest levels in the history of the pandemic at the end of the year. We were committed to giving guidance and managing our destiny as a company. As we committed to that guidance, strategy, and structure, we decided that we knew we were at a place that we understood how to operate in this environment with the unknown and guarantee we could repeat the results in 2021 with no risk. We absolutely believe we have a team in place that can deliver something better than that. We can't predict with all the new versions coming out, Omicron and others, if we're gonna see other setbacks. To be able to go out and tell you that we're gonna deliver the sales and earnings numbers, invest in our product business, and still not projecting to recover that $10 million-$15 million of earnings that we made in 2019, that we do believe shows up at some point in the out quarters, that is upside on the business, and we're excited to go find that upside as we see that. As we've started the new year, January looked very similar to Q4, but we finally saw some sun in February, and we are able to see that number finally dip down in the teens for the first time. If we're able to get down in the teens consistently, we will see that, and I think it's an opportunity for us to come out each quarter as we see that performance improve and communicate an increase in expectations as the service organization heals. We'd rather start conservative and raise those expectations throughout the year as we see what is happening. We have high hopes that we're gonna be able to come in and bring back in some of those numbers throughout the year. Great. Thanks so much, and good luck. Thanks, Jon. Our next question comes from the line of Bill Chappell with Truist Securities. You may proceed with your question. Thanks. Good afternoon. Good afternoon, Bill. Hey. A couple questions. I guess first, on the sales growth, I assume that your distributed products and likely your own products are taking price increases for this year, so how much is factored into that kind of organic 10% growth and maybe even the services business is taking a price increase? How much of that is factored in kind of to your 10% outlook? Thanks. Yeah. Surprisingly, a lot of our distributed partners didn't take the price increases that we expected them to take, and so we haven't seen a lot of price contribution from our distributed business, which is obviously the biggest dollar percentage of the mix. On our own brands, we did take some price, which translates into about 20% of the Product Division growth or about 2% of that 10%. The rest is now projected as, you know, the organic growth that's coming from the unit increases and the sales increase that take place in the business. Okay. The other question, maybe I missed the math. I think you said 31% of your sales came from manufactured products last year, and you're expecting that to be in the mid-30s or low 30s this year. I'm just trying to understand how that works with losing the kind of the, I guess, Zoetis business, with what looks to be pretty promising new products, especially in the club channel. It seems like that number should be a lot higher or could be a lot higher. Yeah. We saw acceleration, Bill, through the year from, you know, mid-20s%- 28% and then, you know, finished the year at 31% in the quarter. So you know, some of the lower number the first year was obviously reintroduction of the Frontline program at Costco, which was about a 3% clip to our mix there. So we really recovered well through the year. We've got a projection that says we can be in the 32%-34% range. We've been conservative, say 32, because we're always left to see just how much transfer comes from the vet channel from the prescription side, which can skew that mix number. We're confident the dollar margin or the dollars we're gonna deliver, the mix percentage will be tied to how the other dollars show up, and there very likely will be upsides on both sides of it. From where our visibility is today, we feel great about that and feel great about being able to be in a position to have 10% growth when you back out the Zoetis business on the full company for this next year. Okay, thanks. Last one on the services. I guess I'm just trying to understand the new model of hiring before you build. Does that mean the time to break even for these new facilities is, you know, a few months longer? Are you holding them kind of, you know, paying them while the construction is happening, and so the losses are a little bit greater up front than the original model? Thanks. Hey, Bill. It's Susan. No, actually it does not. It doesn't change a whole lot other than the fact that we're literally getting a line of sight on a veterinarian and staff ahead of time. Remember that when we build these clinics, we build them very quickly. It usually takes us from the time we start swinging hammers until we're done about six weeks. You know, obviously, when we bring people on board, they go through a training program. Actually the timing works out pretty nicely to actually have the clinic up and running and bring in the new staff close to the same time. Okay. Just to make sure I understand. Is the labor shortage on vets or on technicians or both? It is primarily on veterinarians. I think that it is pretty much out there everywhere right now. Well, everybody is pushing to hire veterinarians. Veterinarians right now, I think that the most recent VetSuccess data basically tells us that in their regular practices, they're working 1.5-2 hours longer every day, and their actual productivity is down, so they're seeing fewer pets. At the end of the day, it's because of their stress, it's because of their work-life balance. We believe that we've got the absolute best model for veterinarians to come and work for us. I think that we're also seeing that with our retention numbers. When veterinarians come to work for us, our turnover rate is less than 10% when the industry is experiencing a turnover rate of 25%. I do think that we're in the right place at the right time for these veterinarians, and we have a sales force crew out there looking for veterinarians and recruiting them, bringing them into our fold. Great. Thanks for the color. Thanks, Bill. Our next question comes from the line of Steph Wissink with Jefferies. You may proceed with your question. Thank you. Good afternoon, everyone. We have two things we wanted to unpack. The first is just on the $15 million of incremental SG&A. Can you talk a little bit about where you're funding that from? Are there cost savings programs internally? Is it related to efficiency or mix offsets? Just wanna get a little perspective on how you're funding that incremental. Definitely encouraging to see the support for the two new launches. Just wanna understand a little bit about where it's coming from. Yeah. We're funding it from gross margin on the incremental sales for the new products introduced. As we said, our adjusted SG&A percentage is gonna go up about 100 basis points. Were it not for this investment, our adjusted SG&A would be down 50 basis points. I think, Steph, I said earlier in the call as well that the base business with the growth in that business and the mix shift, if we were not doing these programs, we think we could make $110 million. We're funding it out of our existing business plus the new items contribution to fund that, to fund out those investments. Okay. That's helpful. You talked about the DTC business, I think the last time we spoke, and talked a little bit about it this time. Can you just give us a bit more context for how you're thinking about DTC if we roll forward a couple of years? You know, could you be in the direct to consumer subscription business with respect to some of your products? Is there a way to think about tying your services business to your products business through a platform like direct to consumer? Thank you. Thanks for the question. Obviously, we have a significant investment in a veterinary management team and veterinarians across the country, and we've thought a lot about how that asset helps us build a platform for consumers to interact, to get what they need from information, from advice, from a consultation perspective. Ultimately, there's a lot of products from an over-the-counter standpoint today that can be conducted through that space. We believe there is an opportunity to have a storefront that does interact with pet parents to help them in that self-care space at a higher level and allow us to be able to be in that direct to consumer space. A lot of people call direct to consumer what they're doing through, you know, online and other places, and we definitely view that as a huge priority with what we're doing with Amazon and Chewy and already are significantly more mature than the typical DTC businesses out there in those areas. We're just adding the last piece where those people typically start and to be able to have some of that subscription and some of that additional stickiness with the consumer relationship with the DTC space and are excited. The team has been assembled, the work is getting done, and we believe we'll be able to show people the storefront in the second half of the year and start to conduct business. We view it based on other DTC businesses we've looked at over this past year, that it is a significant size opportunity for the company and contribution in out years. Very helpful. Thank you. Thanks, Steph. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. Our next question comes from the line of Elliot Wilbur with Raymond James. You may proceed with your question. Thanks. Good afternoon. First question for Zvi. Just you had mentioned that you expect cash generation or operating cash flow to be at record levels for the company for the year. Outside of maybe just the general overall increase in business level, maybe you can highlight some other initiatives, working capital and such that may be contributing incrementally to just the lift in the overall business. Hey, Elliot. Your question, you broke up there for a minute, so we missed the middle of which was the most important part. If you wouldn't mind reasking the question for Zvi, it'd be great. Sure. You had commented with respect to expectations of record cash generation or operating cash flow for the year, and outside of just the general overall lift in the business, wonder what else may be contributing to that in terms of working capital initiatives or, you know, other endeavors that are increasing cash generation just beyond, you know, the increase in sales and in EBITDA. I would tell you, number one, that our CapEx is probably gonna drop in half. We had about $12.5 million in 2021 for our headquarters build-up. Our more disciplined approach on the service center build-out also will preserve some CapEx. In terms of working capital initiatives, I think we saw great working capital performance in 2021 here. Our AR was relatively flat even though sales were up significantly. I mean, the main driver is just executed on is EBITDA performance plus the CapEx initiatives I just talked about or changes I talked about. Which I think will generate significantly more cash from operations year-over-year. Okay. For Cord, with respect to the DTC campaign, any commentary you can make in terms of you know, when you expect to you know, realize a positive ROI there or payback period? Yeah. We're not ready to kind of announce all the financial performance or projections. We've spent a lot of time studying other models that spent years kind of investing to a point of break-even to accelerate growth, and none of them were vertically integrated, so there was margin going to contract manufacturing. We have the largest portfolio of items to go into that type of a model where we control the production. I think we'll have more to say soon, but we're not quite there today, Elliot. Okay. Just one last question for Susan with respect to the services business. You continue to see upward trends in KPIs at record levels, including dollars per pet. Just wonder if you could provide some commentary in terms of, you know, if there's anything, any one item or category that specifically is driving that. You know, given that you continue to see strong performance in terms of, you know, pets per clinic, maybe just sort of compare and contrast, you know, what you're seeing versus what you're seeing in some of the fixed clinic sites where you have less productivity, what some of the key differentiators are. Thanks. Yeah, Elliot, thank you for the question. So it's across the board bluntly in both our wellness centers and our community clinics. When we take a look at the pets per clinic and dollars per clinic, both are in significant double-digit improvements over 2020. I think the important point to that, though, is that as I was talking about a little bit earlier, just what's happening in the general veterinary market. We keep very close to the data that is generated by the AVMA and VetSuccess and what's happening with the industry. Right now, when you take a look at the fourth quarter industry-wide, vets aren't seeing more pets. Those pets, if pet parents are basically. If we're getting into double-digit growth of pet parents that are adopting pets or that are bringing pets into their household, those pets have to go someplace, and right now they're not going into your full service veterinary clinics. A lot of it is attributed to the fact that those pets need to be seen for their basic wellness, and we are truly reaping the benefits of that. We also have full service practices that are starting to refer to us. They're referring to us because, again, they cannot handle the capacity that's coming their direction. We have the capacity to be able to handle that primarily because of our model, because of the fact that, number one, we're affordable, but number two, we're convenient. People, pet parents don't need to make appointments to come and see us. The volume that we can put through the clinic because of not taking appointments is far surpasses what a normal veterinary clinic would see. Thank you. Our next question comes from the line of John Lawrence with Benchmark. You may proceed with your question. Yeah, thanks. Congratulations, guys. Welcome, Zvi. Thank you. Thanks, John. Just a quick question. Cord, I mean, just a question on the services business. If you take the best of the best, those top 10-15% stores and apply that model to a new territory where this labor situation, how much better is this optimized model running in that clinic, where things are just overall better from that labor situation? Just to get a feel for the improvement on this optimization. I think I'm gonna answer the question a little differently, and we'll see if I answer it properly. If not, tell me to answer it a different way. Taking our best clinics that don't have any labor issues and looking at their performance, they are hitting our KPIs and hitting our revenue goals and exceeding those and are extremely good. The other extreme is where we have labor pressures, where we're trying to force schedules to meet what the consumer would like us to do. But when the labor doesn't show up, we sometimes have partial labor shows up. We have other operating expenses that are prepared to be there, and we end up disappointing the pet parent. This optimization's really about getting the schedules to match the actual labor environment. When you match the right labor environment, we optimize expense and revenue generation, and we don't waste as much money. That isn't the point that we're turning on to maximize the return on that location's potential, because that comes when the recruiting is fixed and we have a full-time labor and we turn to full schedule. In some cases, we may have a veterinarian that has to work two to three days at a clinic and then go work two days someplace else to try and cover the need of those markets. If we get five days in both those locations, we're significantly better and more profitable than running differently. A community clinic that was running four days a month, we may only have enough labor to run it twice a month, and we've given back, you know, half of the revenue for those days. We're also not disappointing people by someone not showing up or potentially having the technician show up, then we have to pay them, but they can't go do the servicing because a vet has to be present. Phase I is us really operating the business in the constraints of the labor environment to maximize results and reduce waste of expense. We would love nothing more than to be able to take our best performers and have that labor condition across the company, because that's really where we get to phase I of returning that $15 million of earnings that we think will show up soon. Then as we build into more locations in that environment, we'll see that expand. We're doing a really good job of managing the business in a much better way because we've had time to study it, see consistent patterns, and then size the business to that labor. Said differently, we ran 55,000 clinics in 2021. We ran or 72,000 in 2019. Today optimized, we're probably running 50,000 community clinics and we'll make more money running 50,000 than 55,000. Got it. Thanks for that. On the recent product launch in the club business, just from a timing standpoint, when did you start marketing that product and putting that 15% of sales out there to the public to create awareness for that product? Hey John, this is Michael. As Cord mentioned, that item shipped and launched in the month of November. Really not a lot of activation against the item at that time as it got introduced to the member holiday season, focus on gifting and some other areas of the business for them. Then came out strong in the middle of January with our first promotion and activation and very pleased with the early results of the base business, and especially pleased with the results we saw behind that first wave of activation. We have multiple programs throughout the year cadencing in support with that retail partner to promote that item. Again, all indications right now is that it's slightly ahead of track of the expectations we've set and very happy with the trial generated by the activation of the promotion. I think, John, the 15%, I think you're talking about the $15 million of investment that you're seeing. We call it very clearly in our release, the cadence of that $15 million, where two-thirds of it will be done in the first half of the year. The other third is really in the third quarter with nothing really happening in the fourth quarter at this point for that cadence of us spending that $15 million against all of those new programs and projects. Just one other build on that. That 15 that Cord's referencing is to support our branded items that will be in the market in 2022. That's not necessarily in reference to this specific item. The club item is different. Great. Thanks a lot. Appreciate it. Good luck. Thanks, John. At this time, we have reached the end of the question and answer session, and I will now turn the call back over to Cord Christensen for any closing remarks. Thank you, everybody, for joining us today. Obviously, we're very excited about our record performance throughout 2021, despite the pressures from the pandemic and all the other potential labor pressures we had in our service organization. We're very proud of our full year results and our fourth quarter record results as a company. We sit here today at the end of February, first of March, extremely excited about what we see happening for us in 2022, where the company is going for the full year, and the projects that we have working on for those out years that we have in our pipeline and R&D program. Couldn't be more excited at the company, how we're performing. Our animal health platform that is addressing convenient, affordable access to pet health and wellness with one of the largest portfolios to address that is working, and we see it working for a very long time. Thanks for joining us. We look forward to talking to you very soon as we report Q1 results in the near-distant future. Thank you, everybody. Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation and have a great day.