day, and welcome to the PetIQ, Inc. third quarter 2022 earnings conference 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 presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Katie Turner of Investor Relations. Please go ahead. Good afternoon. Thank you for joining us on PetIQ's third quarter 2022 earnings conference call and webcast. On today's call are Cord Christensen, Chairman and Chief Executive Officer, and Zvi Glasman, Chief Financial Officer. 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. 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 press release for a reconciliation of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. In addition, PetIQ 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 third quarter financial results. I'll begin with an overview of our strategic business and financial highlights. Then Z will review our financial results and outlook. Finally, Z, Michael Smith, John Pearson, and I will be available to answer your questions. We are very pleased to deliver and exceed on our stated objectives for the third quarter. Net sales were approximately $210 million. We're at the high end of our guidance of $200-$210 million. Gross margin increased 420 basis points, and we achieved adjusted EBITDA of $19.2 million ahead of our expectations of $16.5-$17.5 million. Importantly, we had a record cash generation quarter with $64.5 million in cash from operations generated in Q3. Consumption of our higher margin PetIQ manufactured brands fueled our results, and we benefited from our strategic investments behind new products. Pet parents returned to our core flea and tick and health and wellness product categories, and we benefited from consumers trading down from more expensive treatments into our PetIQ manufactured brands. While the total flea and tick category is down year to date, PetIQ has captured a disproportionate amount of market share, and we are positive, far better than the total category. Multiple consumer trends continue to support the long-term growth of the pet industry and PetIQ's unique position in the market, offering convenient and affordable veterinary products and services has never been more valuable and needed. Turning to our product segment in more detail, our PetIQ manufactured products outperformed the broader category in Q3. We generated sales growth across five of our top seven manufactured product categories during the quarter. When looking at our growth in all sales channels, a few of the highlights from the quarter include double-digit growth from our four categories outside of flea and tick. Pet supplements grew 41% compared to third quarter last year, driven by the club channel. Dental treats were up 25% versus the prior year. Cat treats increased 19% year over year, and dewormers increased 11% from Q3 last year. We continue to participate and be a leader in several of the largest growing categories within the pet industry, such as flea and tick solutions and health and wellness. Our manufactured over-the-counter flea and tick results continue to outperform soft category conditions in Q3. For the 12-week period ended October 8, 2022, consumption for our brands was up 4.1% compared to the total category that was down 4.3% when compared to the same period last year. Shipments were down 2.2% due to the inventory drawdown we discussed would take place during the first six weeks of the quarter as retailers balanced their inventory levels from the slow start to the season. This above-category growth led to 77 basis points of share gain, driven by our outperformance within e-commerce, where we posted growth of 18.8% and picked up 122 basis points of share within the channel. Our new flea and tick brand, NextStar, continues to be a driver of our share growth. NextStar represented 1.2% of the category for the same 12-week period. The successful growth of NextStar represents the largest brand launch into the over-the-counter flea and tick category over the past five years. We are pleased with our ability to grow our flea and tick offering across all sales channels for the quarter. E-commerce continues to play an important role for us as consumers choose where and when they want to shop for their pet products through both our retail partner offerings online and our e-commerce partners. In Q3, over 42% of the over-the-counter flea and tick category sales were generated online, and at PetIQ, we have grown to generate a similar amount of our product segment sales via e-commerce. We expect this to represent an even larger percentage at year-end. This means Nielsen data is often not a good representation of how our products business is performing, especially when you consider we also have a strong presence in the club channel, which like e-commerce, is not measured by Nielsen. Our manufactured over-the-counter health and wellness products also delivered great results. Q3, our manufactured health and wellness brands increased 12.9% compared to Q3 last year. We experienced strong consumption trends up 17.3%, which fueled our results, and we also outperformed the health and wellness category growth of 9.5% as compared to the prior year period. This led to 113 basis points of share growth for this portion of our portfolio. For the third quarter, our manufacturer brands outperformed the brands that we distribute. In fact, PetIQ manufactured products represented 32.3% of product sales in Q3. This is a record percentage contribution and compares to 31% in the year ago period. We also had nice sequential growth from the 28.9% that we reported in the second quarter of this year. We continue to have the largest over-the-counter animal health brand portfolio with over 1,000 SKUs and a dominant market share in pet prescriptions and over-the-counter products sold through retail and online. Now focusing on our services segment. Our services segment reported its seventh consecutive quarter of positive adjusted EBITDA since the onset of COVID on net revenues of $33.5 million, an increase of 15.6%. This was in line with what we expected for the quarter and relatively consistent with our revenue contribution in Q2. We opened six new wellness centers in the quarter and 16 new wellness centers year to date. Our team remains prudent with our services growth near term, given the continued challenges in the vet labor market. We expect our services growth rate year-over-year to be the lowest in Q4 as we expect to open four wellness centers and we are lapping certain price increases we took in the services segment during Q4 last year, but a strong finish for the total year in both sales and EBITDA contribution. We remain committed to the growth of our services business and John Pearson, Senior Vice President, Head of Services Division, is making tremendous strides as we assess the best way to generate value within the four walls of both new and existing wellness centers. We look forward to providing you with more detail on our fourth quarter earnings call. That said, as we discussed on our earnings call this year, we evaluated our use of capital and made adjustments to our wellness center openings as a result of the vet labor market and to be more prudent and efficient with our capital. I would now like to discuss the change we'll be making on how we report adjusted EBITDA. Such that beginning the fourth quarter of 2022, we will no longer add back non-same store adjustments in our calculation of adjusted EBITDA. This is a straightforward change we think investors will appreciate, and going forward, we expect EBITDA and adjusted EBITDA to be more closely aligned to one another. We will report Q4 adjusted EBITDA without the non-same store adjustment, and when we provide our 2023 guidance, it will reflect the new definition. However, we will provide investors all the necessary information in Q4 to understand the delta between our new definition and how we would have reported under our current adjusted EBITDA definition. We believe this calculation change will help better demonstrate the company's total performance. However, we do believe it's important to still track our new openings for the first 18 months to see how the base business is performing to understand how we would perform if we chose not to invest in new stores, which requires significant capital and operating losses for the first 18 months. As a result, we will continue to report same store sales for our services segment on a go-forward basis. It is important to note that our leverage ratios and covenants as calculated under our credit agreements adjust for the impact of new openings. Accordingly, we will continue to provide the leverage calculations under the lender definition EBITDA as we report going forward, given that it is an important measure of our ability to service our debt. Finally, I would like to spend a moment on our 2022 outlook. We are reiterating our net sales outlook for the year and raising our adjusted EBITDA guidance. Zvi will discuss the numbers in detail. While we only have about a month and a half left in the year, we are maintaining our net sales range to reflect the potential of retailer year-end inventory variability. As you know, from time to time, and especially at year-end, manufacturers can experience shifts in timing of sales based on retail inventory levels. It's no different for us at PetIQ. We want to maintain some flexibility should we experience it this year in light of how fluid the operating environment has been. From an adjusted EBITDA perspective, we are raising our outlook to reflect the strength of PetIQ's manufactured brands and the resulting flow through in the P&L from higher gross profit and margin expansion it provides us. In closing, we are pleased with our third quarter results. Our product and service teams continue to execute well on our mission, and we believe PetIQ remains well-positioned for growth long term. We expect PetIQ to continue to benefit from favorable pet 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. I'd like to thank all of our dedicated employees for their hard work and contributions. We couldn't provide the access to affordable pet health care without you, and pet parents everywhere are grateful too. With that overview, I would like to now turn the call over to Zvi. Thank you, Cord. We're pleased with our team's execution during the quarter and our ability to deliver strong results and our highest ever free cash flow generation quarter. We also remain pleased with improvements in key areas of our business, as well as the share gains achieved across our product categories, which Cord noted. We are continually evolving our business to provide pet parents with convenient and affordable pet care and wellness where and when they want to shop. Now, I'll go through certain key financials in more detail for the quarter and year-to-date period. Since Cord focused on our top line results for the quarter in detail, I will start my financial review with gross profit. Third quarter of 2022 gross profit increased 20.7% to $50.8 million, resulting in a gross margin of 24.2%, an increase of 420 basis points from the third quarter of last year. Adjusted gross profit was $53 million and adjusted gross margin was 25.8% for the third quarter of 2022, representing an improvement of 290 basis points year-over-year. This margin expansion reflects favorable product mix, including the success of the company's manufactured product portfolio, such as the recently launched product, NextStar. We also continue to benefit from pricing and our service segment optimization. SG&A expenses for the third quarter of 2022 were $46 million compared to $45.3 million in the third quarter of the prior year. Adjusted SG&A was $41.3 million for the third quarter of 2022 compared to $39 million in the third quarter of last year. As a percentage of net sales, adjusted SG&A was 21.9%, an increase of 40 basis points compared to the prior year period. A significant driver of the higher SG&A was a $2.1 million of marketing investments to support the growth of our manufactured brand product portfolio. In the third quarter, we recorded a $47.3 million non-cash goodwill impairment charge, resulting in Q3 net loss of $49.6 million compared to a net loss of $8.3 million last year. The driver of the non-cash goodwill impairment charge was a significant decline in the company's market capitalization, driven primarily by rising interest rates, macroeconomic conditions, and a decline in the financial markets. While we have not seen a fundamental change in the economics of our service business and continue to be excited about its potential for growth, the accounting rules nevertheless require us to reflect and consider the decline in market capitalization in valuation of goodwill for our services business. Accordingly, we performed goodwill impairment tests resulting in the charge to be recognized for the quarter. We do not expect to record any future non-cash impairments. Q3 EBITDA was $12.8 million, an increase of 115.8% compared to $5.9 million in Q3 of last year. Adjusted EBITDA of $19.2 million exceeded our Q3 guidance for adjusted EBITDA of $16.5-$17.5 million. We continue to believe this demonstrates the strength of our PetIQ manufacturing brands and our team's focus on finding efficiencies across the business. This resulted in third quarter 2022 adjusted EBITDA margins of 9.2%, an increase of 140 basis points from 7.8% in Q3 of last year. This was ahead of our expectations for the quarter. Turning to our balance sheet and liquidity. As of September 30, 2022, the company generated $64.5 million of operating cash flows and ended the quarter with total cash and cash equivalents of $56.7 million. We continue to expect 2022 to be the strongest cash generation year in the history of the company, with $30-$40 million in free cash flow. Our working capital as of September 30, 2022 was $220.3 million, an increase of $22.6 million from the same period last year. Our working capital needs are primarily to fund inventory and accounts receivable, both of which can fluctuate based on the seasonality of our business, retailer demand, and the timing of new product launches. The increase in working capital is primarily due to artificially low inventory levels last year as a result of industry supply chain challenges. We remain comfortable with our level of inventories. Our long-term debt, which is comprised of our term loan, ABL, convertible debt, and capital leases, was $454.6 million as of September thirtieth, 2022. In addition to our cash on hand, the company's revolving credit limit is undrawn and has $125 million of availability, together representing total liquidity, which we define as cash on hand plus availability of $181.7 million as of September thirtieth, 2022. Keep in mind that due to the flexible nature of our debt facilities, the company can expand availability by an additional $150 million if needed. Our net leverage as of September thirtieth, 2022 was 4.2 times. We expect to continue to reduce our leverage over the next few years. We expect net leverage to be under 3x by the end of 2023, closer to our stated goal of 2.5x leverage. The company repurchased 373,408 shares of its Class A common stock for a total of $3.9 million under its new $30 million share purchase repurchase program announced on September six, 2022. We will continue to evaluate the market conditions and potential for future share repurchases under the existing authorization. We continue to believe our available liquidity, consistent growth, 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, turning to our guidance. Cord already covered the reasons for the reiteration of our 2022 net sales outlook, so I will focus on the specific guidance ranges for the year. For 2022, we expect net sales of $920 million-$940 million. Based on this guidance and solely for comparative purposes, we expect net sales to increase approximately 4% compared to 2021 based on the midpoint of the guidance and excluding the $36.1 million of sales in the prior year related to the lost distribution. We increased our adjusted EBITDA guidance by $1 million from the guidance we previously provided on August eight, 2022. We now expect adjusted EBITDA of $93 million-$95 million. Based on this guidance and solely for comparative purposes, we expect adjusted EBITDA to increase approximately 3.2% compared to 2021, based on the midpoint of the guidance and excluding $1.8 million of adjusted EBITDA in the prior year period related to the lost distribution. That concludes my financial review. On behalf of our management team, I'd like to thank our dedicated employees for their hard work this quarter and over the last several months. Everyone's done a great job to adjust to the changes in the operating environment and to help us achieve these financial results. We believe we have a strong team in place to provide results for all of our stakeholders while continuing to deliver on our mission of smarter, convenient, and affordable options for pet parents. With that overview, Cord, Michael, John, and I are available for your questions. Operator. Thank you. We'll 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. To withdraw your question, please press Star then two. At this time, we'll pause momentarily to assemble a roster. Our first question comes from Jon Andersen from William Blair. Please go ahead. Good afternoon, everybody. Thanks for the questions. On the products business, I wanted to start there for a minute. If you could just tell us a little bit more about the manufactured side of the business. It sounds like it's been strong. You know, what are you seeing there that's driving that growth? Is it innovation that you've launched this year? Is it the trade down that you referred to on the part of the consumer? Some combination of both. I just wanna get my arms around, you know, what you think is driving that and how sustainable that is going forward. Thanks. Thanks for the question, John. This is Cord. I'll take a quick stab at it and then Michael will fill in a few details as well. Look, we've performed extremely well, as we said, across five of our categories, and the growth is different in each category. We have a couple of the categories where new product innovation and launches has really driven some of the growth. We have other spots where our value and affordability is driving the growth. Having said that, we are doing well in that category. We're up in our manufactured brands. We've expanded share in almost all the important categories we'd wanna be in, but we also have not grown as much as we thought we were gonna grow. There is still a consumer overhang that we should and feel like we're capable of even doing more and being even better than that. You are having some trade down in flea and tick. You're having some value. You're having some things go in those categories. But in general, I would say our brands are positioned really well for what's going on in the economy. Although we're up, we're not up as much as we'd like to be. I don't know, Michael, is there anything else you wanna add? Yeah, Cord. I would just add, in addition to those components driving our growth, there's a meaningful increase in distribution that we've been able to gain on some of our own items across the marketplace. What we would have identified going into the year as white space opportunities for us to broaden distribution with more retailers or have more retailers embrace more of our portfolio as a share of the shelf that they put in front of their customer base. That's been a real driver for us, in addition to everything that Cord mentioned related to some of the trade-down that's going on in flea and tick, has definitely been favorable for how our portfolio is positioned in the marketplace. Okay, that's helpful. I know you're not guiding 2023 today, but I'm trying to kind of think through what could happen or some of the puts and takes in products next year. You know, I think a lot of the innovation that you launched this year, you know, in the manufactured side, you know, maybe you didn't have a full year benefit of that in 2022, which you might have next year, or you should have next year. I'm also wondering if there's some incremental distribution for some of those items that could benefit you. I think the higher marketing spend is also probably a tailwind. You know, the category weakness this year for flea and tick, that's just a seasonal phenomenon. There's nothing kind of secular going on there. Is that accurate? Then am I thinking right about some of the, you know, potential underpinnings for your manufactured portfolio to continue to grow or gain share in 2023? Thanks. Thanks, John. Well, I'll take the kinda category question. I'll let Michael talk about some of the puts and takes and the comments you made about our new items having full year and stuff. Look, the total category is running negative this year, and we're seeing a negative category, but we've also seen a lot of pressure and lack of performance at the very high end of the category where the highest market share is held. A lot of that negative pressure is clearly tied to economic pressures and kind of macroeconomic stuff that's going on. When you know, isolate that and say you have that. Secondly, obviously we saw in second quarter, we had a slow start to the season due to bad weather. That's something that should reverse itself going into next year. We view the category right now as where we make our money as doing well and healthy. But the total category in this macro environment, we still see pressure from those top and more expensive brands, and they're not growing like they used to in this environment, so it's putting some pressure, making the category negative. But again, we believe people wanna take care of their pets. They'll be in the category. More pets are gonna be in the market, and we're gonna be positioned well with what we do across all things to service those pets. Michael, if you wanna take the 2022 to 2023 on the new stuff. Yeah. Hey, John, I'll just add a little more color to that. You know, when we think of our new initiatives and the way that plays out in 2022 and into 2023, we did largely get a full year of flow into the marketplace, especially when you think about how the season plays out from a seasonality standpoint across the different months. Even though we wouldn't have shipped into the trade until late January, early February, we really didn't miss much of the season in terms of the way that that cadence flows with how demand flows. I would say that there were a couple of retail partners. I think we shared when we talked about the launch of NextStar that did not take it year one. The largest of those, we feel really good about them taking it in year two. I would highlight the fact that we have a lot of pipeline volume in our base from those initiatives that we will be anniversarying. Yes, we will get and expect stronger year two of consumption than year one of consumption on that brand. How that flows through in shipments will not be as clean based upon the way the pipeline levels work in the category. Okay. Yeah, just one. Well, actually two quick ones. It's great that, you know, you've kind of had bumped the EBITDA guidance for the year by $1 million, but it looks like you beat by $2 million in Q3. It's not kind of a flow-through of the $2 million EBITDA beat in Q3, you know, or it's a partial flow-through, which kind of implies, you know, a little bit lower EBITDA in Q4. Any thoughts on that, reasons for that? Then, I just wanted also you to talk a little bit about the cash generative aspects of the business this year, you know, stronger obviously than you expected. The inflection in the strong free cash flow generation in Q3, how that plays out in Q4 next year. Thank you. Yeah. Thanks, John. Z, do you wanna take the cash generation first, and I'll take the other one after? Sure. John, ask it again. I'm sorry. Ask it again about the cash flow, and I want to explain it exactly the way you asked it. Yeah, just if you could just, you know, you had a very strong free cash flow quarter in Q3. How you expect that to, you know, play out in Q4 and then on a full year basis, you know, next year. Maybe you could add in there just kind of given that you are looking to generate $30 million-$40 million of free cash this year, what does it look like next year? What are your capital allocation priorities? Is it debt reduction? You did buy back a little bit of stock this quarter. Yeah. How are you gonna allocate going forward? Thanks. Firstly, we don't have any change to our annual guidance of $30 million-$40 million of cash flow through the year. I think as investors saw our performance through the first couple quarters, it implied a pretty big amount of cash flow generation in Q3 and Q4, and we're pleased to announce that we had $65 million of that big goal that we accomplished in Q3. We ran negative $10 million cash flow through the first two quarters of the year. In order to hit our $30 million-$40 million, that means that we're gonna have $40 million-$50 million in the last quarter, and we feel confident with that and are reiterating that. As you think about the cash flow generation of the business next year, obviously, we're not gonna give guidance yet, but what you're seeing is a narrowing of the gap between EBITDA and adjusted EBITDA. As Cord mentioned, you know, we're gonna be changing the way we guide. It's too early to give you a new outlook for next year. The tailwinds for cash flow for next year are, you know, less of these non-GAAP add backs. The slowing pace of the expansion has a positive impact on cash flow, and we're gonna continue to be judicious in opening new wellness centers and open them when the veterinary labor market permits. No change there. In terms of uses of cash, first and foremost, we're gonna reinvest in the business, and that means that we will reinvest in new wellness centers when the labor market permits. That's the first order of magnitude. Second, pay down debt. Third, we will consider, you know, we announced a share buyback, and we bought some shares in Q3. We're gonna continue to monitor market conditions, and you know, and that's gonna certainly be one of the areas of allocation of cash flow. Then, fourth, we've done, prior to me joining PetIQ, the company's done a fantastic job on acquisitions that have had strategic synergies as well as great financial synergies. You know, we have been a very disciplined acquirer. We don't have any intentions on changing that discipline. If there are good acquisitions that we think fit in well strategically and meet our financial criteria, we'll look at that. Then maybe lastly, John, you did ask in that last question about advertising. We're not prepared now to discuss what the level of advertising investment will be for neext year. It is possible that we will not get any step-up in EBITDA. We will make those allocation decisions based on ROI for next year, I wouldn't just assume that we're gonna invest less next year. The first couple of years when you launch new products tend to be more important than after you get to a steady run rate. Hopefully I answered all your questions. I think last, John, you asked about our guidance change and raising the adjusted EBITDA, and you're right. We did have a stronger beat in this quarter than we anticipated, and it was great to see it happen for the company as we saw kind of a reverse in some of the things that were putting pressure in second quarter. We do have a lot of visibility about what's happening this quarter, and other than, you know, retail or inventories at year-end, feel very good about how the company's performing in the quarter. Having said that, we've given a range. It gives us the ability to be at the top end of the range and even go out the top end of the range if we perform to our full capabilities, and we think it's important to still be conservative as we guide the business. Feel great about our EBITDA delivery this quarter, feel great about where we are but trending for full year, and we think we're positioned extremely well to be able to, you know, finish the year strong and come in like we cam e in this quarter. I think I'd just leave it at that. The next question comes from Rupesh Parikh from Oppenheimer. Please go ahead. Good afternoon. Thanks for taking my question. I guess just going back to the inventory comment here earlier. Your inventory was up, I think, you know, more than 30% year-over-year. As we look out for the balance of the year, do you expect improvement on that growth rate, or is this the right level to think about for the base? Yeah, I think, Rupesh, I think we've talked. Zvi, did you wanna talk? Sure. Sorry, Rupesh. We No, I got it. It's fine. Rupesh, we, as I commented before, we had a major supplier with the comparable number you're using that was going through a ERP conversion and even a factory conversion. During that time period, inventory was drawn down very significantly. We do believe there was a significant amount of the inventory for comparable purposes that was just arbitrarily lower than it should have been. I think we feel very good that we're operating at inventory that is acceptable for our run rate. We are pretty consistent throughout this year where we were, and there was a little bit higher than we thought because of, you know, obviously performance in flea and tick. We do see the inventory getting better by year-end, but not significantly better when compared to last year for what we just described. Then Zvi, if there's anything else you'd like to add, go ahead. Yeah. I think as you look at the year-over-year comparisons for a lot of last year, we ran low as Cord mentioned. I think if you looked at it, and you were just trying to normalize inventory for where it should have been at the end of last year, inventory should have been, say, $40 million higher if we were running the number of weeks on hand that we typically target with our distribution partners and with some of our internal inventory. Just bridging year-over-year versus, say, let's say year-end, you add $40 million. Then, of course, we've got increases in the prices of the distributed products that we distribute and the things that we buy that go in the inventory, so that's probably worth another $7 or $8 million. I think if you were gonna do an apples and apples comparison, Q4 of last year versus Q3 of this year, you would adjust Q4 up by, say, $48 million. Probably do the same for Q3, and I don't remember what it looked like for Q2. I think that's the way to think about it. We continue to run our inventory, you know, lean so that we can meet our satisfied customer delivery expectations. As Cord has mentioned repeatedly, in previous calls, we have very, very little in the way of inventory obsolescence because these products that we have have long expiration dates. Historically, it's been extremely immaterial for us to have obsolescence. On top of that, we do have right of return for much of our inventory as well. Okay, great. I guess as we think about next year, I mean, you know, if you hit the $30 million-$40 million free cash flow target this year, then, you know, next year, that could be a nice benefit as you won't really have this big working capital drag that's weighing on your cash generation this year. I think by the end of this year, there's a lot of timing involved in terms of, you know, whether you bring it in in November or, you know, end of December. I don't think we're ready to give cash flow targets for next year. We would say that obviously, the tailwinds are lower, you know, some of the lower investments that we think are gonna continue in terms of CapEx for opening new wellness centers. The headwind is higher interest rate. The other tailwind is we had this $5.5 million of legal non-recurring expense. We're not gonna have that next year. I think there's some puts and takes and, you know, we'll obviously provide you some detailed guidance when we report Q4. Great. Thank you. I'll pass it along. Again, if you have a question, please press Star then one. Our next question comes from Elliot Wilbur from Raymond James. Please go ahead. Hey, guys. This is actually Michael Parolari on for Elliot. Just a quick one from me, and you guys might have already mentioned it, but maybe I missed it. If you could just talk about the move in interest rates, where you expect interest expense to be in Q4 and then where you expect to trend in 2023, that'd be great. Thank you. Yeah. Rather than give you an interest expense forecast. Well, I can give you one that's rough. It's every point in interest expense increase costs us about $3 million a year. That's the math. You know, if you looked at Q3 versus Q4, that's, you know, you'd annualize that or unannualize that, right? The reason is the term loan is variable. It's just $300 million, and that's how I think about it. It's 4.25 points plus 4% is the floor of the LIBOR. Got it. That's helpful. That's all I had. Thank you. Again, if you have a question, please press Star then one. There are no more questions in the queue. This concludes our question and answer session. I'd like to turn the conference back over to Cord Christensen for any closing remarks. Yeah, I just would like to start off by thanking all of you for joining today and obviously thanking all of our employees and all the hard work that's got done to deliver a strong quarter and set us up to finish a strong year and put us in a great shape to go into a great 2023. We look forward to speaking with all of you that need to speak with us and talking more and more detail about how the company's doing. We feel very good about how the company's currently performing and where we're headed. Thank you for your time. Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.