Greetings, welcome to The Real Good Food Company 1st quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shamari Benton, Vice President of FP&A and IR. Thank you, Shamari. You may begin. Good morning, and welcome to The Real Good Food Company's first quarter 2023 earnings conference call. On the call today are Bryan Freeman, Executive Chairman, Gerard Law, Chief Executive Officer, and Akshay Jagdale, Chief Financial Officer. Our first quarter earnings release crossed the wire at approximately 8:00 A.M. Eastern Time today. If you've not had a chance to review the release, it's available on the investor portion of our website at www.realgoodfoods.com. Before we begin, I'd like to remind everyone that certain statements made on this call are forward-looking statements within the meaning of federal securities law and are subject to considerable risk and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than the statements of historical fact, are forward-looking statements and include statements regarding our projected financial results, including net sales, gross profit, gross margin, adjusted gross profit, adjusted gross margin, and adjusted EBITDA, as well as our ability to increase our net sales from existing customers and acquire new customers, introduce new products, compete successfully in our industry, implement our growth strategy, and effectively expand our manufacturing and production capacity. Forward-looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Such statements involve a number of known and unknown uncertainties, many of which are outside the company's control and can cause future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors and risks that can cause or contribute to such differences are detailed in the company's filings with the Securities and Exchange Commission. Except as required by law, the company undertakes no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events, or otherwise. In addition, throughout this discussion, we refer to non-GAAP financial measures, which refer to results before taking into account certain one-time or non-reoccurring charges that are not core to our ongoing operating results and which we believe better reflect the performance of our business on an ongoing basis. Our non-GAAP financial measures include adjusted gross margin and adjusted EBITDA are referenced. A reconciliation of each non-GAAP financial measure to its most directly comparable GAAP financial measure is included in our first quarter earnings release, which is available on our website under our Investors tab. With that, it is my pleasure to turn the call over to The Real Good Food Company's Executive Chairman, Bryan Freeman. Hey, thanks, Shamari. Good morning, everyone, thank you for joining us today on our first quarter earnings call. I will briefly review our first quarter highlights and discuss the reasons we believe we're well-positioned for long-term growth. Gerry will cover operations, Akshay will then review our financial results and outlook in more detail. After that, we'll open the call for questions. Starting with our financial highlights for the first quarter, net sales were $29.8 million, an increase of 78% on a two-year stacked basis. Growth on a year-over-year basis was negatively impacted by the timing of promotional events that boosted sales in the first quarter of last year but are scheduled to repeat in the second half of 2023. Excluding these transitory timing issues, sales would have been up double digits on a year-over-year basis, driven by strong baseline velocities and continued distribution gains. Baseline velocities, which exclude the impact of promotions, grew approximately 8% sequentially in the first quarter when compared to the fourth quarter and the trailing nine-month average. We're able to leverage this velocity growth with our retail partners to grow our distribution and extend our brand into new categories and eating occasions. Gross margins were 16.7% this quarter, which is 300 basis points improvement sequentially and the best margin in the last 8 quarters. What is particularly noteworthy about this performance is the fact that we achieved this while our plants were less than 40% utilized. Adjusted gross margins, which account for the capacity utilization impact, were 33.5%, a 580 basis point improvement sequentially and the best quarterly adjusted margin in the company's history. Margins in the first quarter reflect improved operational performance and seasonally low commodity costs. Our operating performance should continue to improve even more sequentially, and we expect commodity costs to remain at or below historical norms, albeit following normal seasonality. We now have greater conviction in meeting our 2023 revenue target of at least $200 million due to the incremental wins we have secured over the last few weeks and months. In the measured channel, we have secured approximately 57,000 new distribution points for our products to ship in 2023, which represents an approximate 43% year-over-year increase in our distribution footprint. This includes approximately 14,000 new distribution points that were recently authorized at a large national grocery retailer for our entrees, Burritos, and Chicken Bites, with 7,000 of the aforementioned distribution points set to increase in the second half of 2023 and the remaining in January of 2024. These gains also include the previously discussed national rollout of 2 of our Breaded Poultry items at a large mass retailer in June, with placement in a section of the store that has 6 times the velocity as compared to our current placement, as well as the national rollout of our multi-serve Asian entrées. As we've said in the past, due to new item reset schedules in the measured channel, this new distribution will come online late in the second quarter and into the back half of 2023. As such, the shape of our growth this year remains back-half weighted. These wins have the potential to double our measured channel business on a run rate basis starting in the second half of 2023. Turning to the unmeasured channel. We have strong conviction in our ability to meet or exceed our 2023 plan owing to 3 factors. First, I am pleased to report that our Breaded Poultry will be available nationally and in full distribution in the unmeasured channel late in the third quarter. This is a big milestone that we have strived to achieve since launching the item in early 2022. Our Breaded Poultry velocities and incrementality to the category have earned this expansion and is helping grow category sales for our customers. Our other items, such as our Creamy Poblano Enchiladas and Bacon Wrapped Jalapenos, have also earned full distribution in the back half of this year due to their strong performance in the current and prior periods. Second, our recently launched Flautas and low-carb refrigerated burritos have performed well, resulting in expanded distribution of these items. Third, the breadth of our offerings is unprecedented for a brand in our stage of growth and points to the momentum we have. We have a total of eight items authorized in this channel across seven categories and two temperature states. To summarize the unmeasured channel and provide additional perspective, in 2021, we had two items that on a combined and annualized basis achieved 65% ACV. For 2022, we grew to three items with a combined and annualized ACV of 68%. Currently, we have 8 items authorized that participate in seven categories and two temperature states. For perspective, we've never had more than four items authorized simultaneously. All of this is to say that our strategy to expand into new categories across two temperature states is working and creates a strong foundation for durable, predictable growth going forward. The aforementioned new distribution gains, combined with strong base business velocities, give us confidence that we will grow sales in 2023 to at least $200 million, representing growth of approximately 41%. Gerry and Akshay will speak to this in more detail. I wanted to touch on our margins this quarter once again and provide a high-level view on how we see the rest of the year shaping up. Costs for chicken, cheese, and bacon have come down from historical highs and are currently at or below their long-term historical averages. We continue to expect commodity costs to have a 6-10 point positive impact on our margins in 2023, assuming current trends hold. Additionally, as we continue to ramp up production at our Bolingbrook facility to meet demand, we expect these efficiency gains to be a significant contributor to margins in 2023 and beyond. Of course, with greater plant utilization, our margins on a reported basis will continue to improve over the coming quarters. Adjusted EBITDA was a loss of $1.2 million, which was in line with our expectations and includes the impact of significantly higher than normal R&D costs in support of our strong second half growth agenda. As for 2023, we expect an adjusted EBITDA in the mid to high single-digit range, driven by lower commodity costs, to a lesser extent lower labor, improved plant utilization, and better overhead cost leverage. Cash flow from operations is also expected to be positive in 2023. Next, let's take a step back and look at the current state of the health and wellness market and how our brand positioning is resonating with the broad consumer base. According to SPINS, for the 52 weeks ending April 30th, the $200 billion total health and wellness industry grew 7% year-over-year, in line with the 7% two-year CAGR. Over the same period, the $65 billion total frozen food category grew 10%, an acceleration compared to the 7% two-year CAGR. It's important to note that the frozen food category has historically performed well during recessions as it tends to benefit for consumers trading down from eating out to eating more at home. Also, private label penetration of frozen category is relatively low and at about 9%-10% as compared to 20%-22% on average across all food categories. Private label penetration in health and wellness frozen is even lower than that of overall frozen food category. As such, trade down risk within the category to lower priced private label options is limited. Additionally, our distribution footprint is focused on retailers that deliver value to their consumers, and we have low concentration of luxury high-end retailers that typically lose foot traffic during economic downturns. Our brand promises three primary claims, low carb with little to no sugar, high protein, and clean ingredients. Products with these attributes are growing well above the growth in our overall total addressable market. All things considered, the categories we compete in remain highly relevant, as evidenced by their large size and strong growth profile. There are no signs of a slowdown despite the lapping of the pandemic bump and/or an economic recession, given frozen foods historically perform well in a recessionary environment. As for our brand health, we track ourselves against four indicators: household penetration, repeat rate, social community growth and engagement, and velocity. Starting with household penetration, according to Numerator data, as of March 2023, the Real Good Foods brand household penetration is 8.3%, approximately flat from 8.4% in December 2022. This means approximately one in every 12 households in the United States has purchased our products in the past 12 months. Our household penetration continues to rank second amongst all health and wellness frozen food brands behind only Amy's, a brand with over $500 million in retail sales. For perspective, according to a research report recently published by Jefferies, the entire plant-based food category had a household penetration of 5%, down from a peak of 9% a couple years ago. Increasing household penetration demonstrates how well our brand position resonates and how quickly we can connect with a broad consumer base. We view this as a leading indicator of future growth, and as our distribution footprint grows in the back half of this year, we expect to see our household penetration grow significantly. Turning to repeat rates, they continue to be in line with industry averages at 32% in the most recent trailing 52-week data as of March 2023. Regarding social community growth, we continue to grow Real Good Foods online community. In the first quarter, our social and digital teams continue to outperform. We generated over 3 million organic impressions and 108 million total brand impressions. We also acquired 5,000 new SMS text subscribers and added 31,000 followers on Instagram, bringing our total to over 466,000 Instagram followers. We continue to believe that using micro and nano content creators to spark authentic peer-to-peer conversations is a better use of marketing dollars than traditional advertising. Based on our number of followers and subscribers, I could say it's working and it's efficient. This is reflected in the strong returns we get on our ad spending, which averages 4-6 times as measured by third parties, far higher than our peers on average. Our retailer partners appreciate how we drive new consumers to the categories we participate in also, allowing Real Good Foods to truly grow the frozen category with consumers new to frozen foods rather than simply taking share from others. In fact, a recent study from SPINS showed that only 3.5% of households who purchased our Breaded Poultry items were from households that purchased Breaded Poultry from the nation's largest brand in the prior 52 weeks. This generates incremental category growth I've not seen before in my career. It means our growth is not only good for us, but it is good for our retail partners as well. These strong brand health indicators underpin our confidence in achieving over $500 million in sales over the long term. I'd now like to turn the call over to our CEO, Gerard Law, to provide an update on Bolingbrook and our operations more broadly. Thank you, Bryan. Good morning, everyone, and thank you for joining us on today's call. Our Bolingbrook, Illinois, facility is continuing to ramp up production, and we are on track to achieve targeted efficiencies in the second quarter. I am very proud of the team and how far we've come since opening the new facility. Bolingbrook enables our entry into exciting new categories and gives us much-needed capacity to meet the growing demand for our new and existing products. I was pleased with our gross margin performance in the first quarter, which was above our expectations. Our 16.7% gross margin is particularly encouraging given that our plants were significantly underutilized owing to the cadence of our sales plan, which points to the first quarter being the trough for utilization. For perspective, our sales plan calls for a doubling of our capacity utilization rates by the end of the year relative to the first quarter. Adjusted gross margins, which assume full utilization, were 33.5% and point to the underlying margin profile of the business when the plants are fully utilized. We have been deliberate about building capacity ahead of demand. All the hard work and investments made to get this capacity up and running over the past 12 months has put us in a position where we are confident that we can scale production to meet our significant growth our sales team has locked in for the rest of the year. Not only are we in a good position to meet our demand needs, we expect to do so at targeted efficiencies. In other words, our growth should be highly incremental to the margin structure for the remainder of the year, especially in the second half of 2023. Lower raw material costs contributed to our solid margin performance in the quarter, it also reflects improved efficiencies in our formulations, which we had planned for and are durable. This was a tough quarter to judge plant efficiencies given the sub 40% utilization levels as well as the amount of new product activity, both of which have a negative impact on efficiencies. However, I am encouraged by the sequential improvement in efficiencies at Bolingbrook and City of Industry continues to perform well. We expect our operating performance to improve significantly as the year progresses, driven by better efficiencies, lower labor costs, improved plant utilization, and better overhead cost leverage. Before I turn it over to Akshay, I would like to discuss the biggest catalyst for the remainder of 2023. We expect our labor costs to continue to come down sequentially as Bolingbrook becomes a bigger portion of our production mix and achieves targeted efficiencies, further aided by continued efficiency gains at our City of Industry facility. We are confident in our ability to bring labor costs in line with industry standards of about 5%-10% of sales. To reiterate, we expect a major portion of this opportunity to flow through this year as efficiencies are optimized in both plants and Bolingbrook becomes a bigger portion of our production mix. Higher sales will drive plant utilization rates higher and allow us to leverage lower overhead costs. We expect this overhead leverage to drive approximately 10 points in our further improvement in our margin profile in the second half of 2023 as compared to the first half. Bolingbrook has enabled significant productivity savings that have already started to accrue as we move into 2023. These include the self-manufacturing of our chicken tortillas, cooked chicken that is used in our product fillings, and our proprietary breading blends, which on a combined basis are likely to drive approximately 200-400 basis points of margin improvement. As for direct material inflation, the good news is the commodity costs remain favorable and point to roughly a 600-1,000 basis point tailwind for 2023. Although we walked away from some promotions in the first quarter that negatively impact sales, it was all done with a keen eye on margin targets. We are pleased by our margin performance this quarter, which showed significant sequential improvement to the highest margin in our company's history. We continue to expect 2023 adjusted EBITDA to be in the positive to mid-high single-digit millions of dollars range. We have strong visibility into the drivers of our continued margin turnaround and feel confident in achieving our outlook. It's an exciting time at Real Good Foods, and I am thrilled to report the tremendous progress of our supply chain and operations teams have made all in order to support our growing demand. I still believe we are in the very early innings in growth and are well positioned to capture market share in the categories in which we compete. Now, I'd like to turn the call over to Akshay, our Chief Financial Officer, who will walk you through the first quarter financials. Thank you, Gerry. Good morning, everyone. Turning to our financial results. Net sales in the first quarter were $29.8 million, a decrease of 21% as compared to the Q1 of last year. The year-over-year decline in sales this quarter was driven primarily by the timing of certain promotional events that drove sales growth in the Q1 of last year, which now fall in the H2 of this year. Excluding these promotional timing issues, sales would have been up double digits this quarter, driven by continued distribution gains in the measured channel, new product, and strong baseline velocities. Underlying velocities remained strong and were up sequentially in the first quarter. Sales in the unmeasured channel declined by approximately 35% year-over-year in the first quarter, owing to the aforementioned promotional timing issue. Excluding the impact of promotions, sales would have been up in the mid-teens on a year-over-year basis. On a two-year stack basis, growth remained strong at 77%. We expect growth to accelerate both on a year-over-year and two-year basis for the remainder of the year. As you may recall, 8 items were authorized for distribution in March, which is a twofold increase in the number of items we have ever previously had authorized at any one time. Several of the new items authorized are in categories that have 50% higher velocities than our base business, and as such, will be additive to our brand level velocities in this channel. Points of distribution in the unmeasured channel, which are a good proxy for volume growth, troughed in March as we were transitioning into newer versions of our legacy products and had yet to gain distribution for our new products. Distribution has increased substantially in the second quarter, and we expect this trend to continue as the year progresses on the back of the significant new distribution wins already secured, growth in legacy item distribution, as well as commitments to certain planned promotional events. Since we reported 4Q earnings in late March, we have gained greater visibility on the outlook for growth in this channel. Specifically, we now have commitments for nationwide distribution of our Breaded Poultry, as well as our 2.0 Enchiladas in the second half of 2023. These commitments, combined with our new product win, give us greater confidence in achieving our 2023 sales target for the unmeasured channel. In the retail channel, growth was flat in the quarter as we lapped 76% growth in the first quarter of 2022. Excluding the impact of promotional timing, sales growth would have been in the mid-single digits on a year-over-year basis. Shipment growth outpaced consumption this quarter, which we attribute to the new product activity that is yet to be captured by syndicated data and usually takes 90 days to integrate. We expect both shipments and consumption to accelerate for the remainder of the year, starting in the second quarter, driven by the aforementioned 40% increase in distribution points already secured and strong owing baseline velocities. Underlying velocities on average across our portfolio remain strong and improved by approximately 8% sequentially in the first quarter. We expect velocities to continue to improve sequentially and show year-over-year growth starting in the second quarter as the comps normalize and we gain further distribution on new items that have higher velocities. As such, we remain bullish about our prospects for measured channel growth in 2023. As Bryan mentioned, we now have greater conviction in meeting our 2023 revenue target of at least $200 million in sales. The increase in our conviction is based on the following. One. Continued strong momentum on distribution expansion in the measured channel, including approximately 14,000 new distribution points at a large national grocery retailer. Two. Commitments for national and full distribution of our Breaded Poultry and 2.0 Enchiladas in the unmeasured channel. Three. Sequential improvement in baseline velocities. Four. Strong new item velocities and incremental distribution growth. Our first quarter gross profit was $5 million, reflecting a gross margin of 16.7% of net sales, as compared to a gross profit of $4.2 million or a gross margin of 11.3% of net sales in the first quarter of last year. The increase in gross margin was primarily due to lower commodity costs and the positive impact of our productivity initiatives, which include reformulations and throughput increases. The 16.7% gross margin performance this quarter implies an approximate 300 basis point sequential improvement, which is particularly encouraging given the fact that our plant utilization remained below 40% and declined sequentially. Adjusted gross profit during the quarter was $10 million, reflecting an adjusted gross margin of 33.5% of net sales, as compared to $6.5 million or 17.2% of net sales in the first quarter of last year. Productivity initiatives and lower commodity prices contributed to the year-over-year increase in margin. We'd also note that certain key commodities like chicken, pork, and cheese were at seasonally low levels in the first quarter and contributed to our adjusted gross margin being the highest in the company's history. Although we exited 2022 with structurally lower costs, given the cyclical nature of some of our key commodities, we expect our adjusted margins to moderate in the second quarter as we absorb the impact of seasonally higher costs for some of our key commodities. With that being said, we're maintaining our adjusted gross margin guidance for 2023 of at least 24%. Looking ahead to 2023 and beyond, we have a long runway of future productivity savings that will drive incremental margin expansion. Additionally, as Jerry mentioned, the cost of our key commodities are down significantly on a year-over-year basis. If we were to lock in our key commodities at current spot rates, our margins in 2023 would be 600-1,000 basis points higher. Total operating expenses were $15.7 million, as compared to $12.9 million in the first quarter of 2022. Adjusted operating expenses increased by approximately $2.5 million to $12.7 million in the first quarter of 2023, as compared to $10.2 million in the first quarter of 2022. The increase in operating expenses was driven entirely by the increase in research and development costs to support the strong new product pipeline in 2023. For perspective, R&D costs were $3.1 million or 10.3% of sales this quarter and are expected to moderate as a% of sales for the remainder of the year. We continue to expect R&D costs to be roughly 3%-4% of sales for the full year. R&D costs tend to be lumpy on a quarterly basis, depending on the level of new product activity as well as the timing and scale of commercialization. adjusted EBITDA totaled a loss of $1.1 million as compared to a loss of $3.3 million in the first quarter of 2022. This was generally in line with our expectations. Cash burn was greater than expected this quarter owing to our plants being significantly underutilized as a result of the shift in promotional timing we talked about earlier. We also invested in inventory to support the significant new product activity in the quarter, as well as some opportunistic buys to take advantage of lower commodity costs. We have strong visibility into our distribution gains in the upcoming shelf reset cycle in May, which includes the national rollout of our Breaded Poultry items at a large mass retailer. This significant inflection in our sales growth starting in the end of May and early June should result in significant fixed cost leverage across our plant network and in G&A, propelling us to be closer to our goal of being operating cash flow positive starting in the second half of 2023 and for the full year. As such, we have sufficient liquidity to fund our current needs and execute the plan we have laid out. As a reminder, it is important to note the Bolingbrook facility and equipment is being leased with costs flowing through the P&L. Turning to our outlook for 2023. In 2023, we continue to expect net sales of at least $200 million, adjusted gross margin of at least 24%, adjusted EBITDA in mid-to-high single digit range, and positive cash flow from operations. Long term, we continue to expect net sales of approximately $500 million, adjusted gross margins of 35% and adjusted EBITDA margins of 15%. This concludes our prepared remarks. I would now like to hand the call over to the operator to begin our Q&A session. Operator? Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Thank you. Our first question is from Jon Andersen with William Blair. Please proceed with your question. Morning, everybody. Morning. I wanted to start with trying to better understand some of the new news versus the prior quarter. Could you describe a little bit more specifically what has improved from a distribution standpoint? I think, you know, we knew last quarter that you had achieved significant new distribution on Breaded Poultry with a large mass customer. If I'm interpreting the prepared comments correctly, it sounds like you've also added significant new wins, both maybe in Asian Entrees and with Breaded Poultry and non-measured. Could you just kind of tease out what's incremental to what we had heard on the last call? Thanks. Yeah. Hey, good morning, Jon. This is Bryan. on in the measured channel, you're right. You're exactly right. A large national retailer recently authorized four of our multi-serve entrées into all banners, all stores with great placement. We see that kind of rolling out in Q3. That's just because I think, you know, we do have that product in stores today, and retailers are starting to see the velocities and the incrementality that we're delivering. In the unmeasured channel, yeah, the new news is Breaded Poultry will be available nationally in full distribution in late Q3. That's something that we've really been working hard on. Again, incremental revenue for our retail partners. We're helping them grow the categories and we were able to earn that placement, and we're pretty excited about the impact that will have on the company. That's helpful. Thanks. Then kind of turning back to the rollout of Breaded Poultry with that large mass account. Two questions about that. One is, you know, what gives you confidence in the velocity performance there? I think you've been on shelf for some time with one item, and I'd just love to hear your comments on the trajectory of the velocity that you've seen on that item, because that should be a, I think, a pretty good predictor of how that business performs going forward as you take it nationally. Then what are in your assumptions for the guidance on those particular items? Are you baking in, you know, anything that we should be aware of with respect to the performance of that product, once it rolls out, you know, nationally? I know it's moving into a new door. I think you're having to have two items on shelf instead of one today. You know, talk to us a little bit more about that. Thanks. You bet. In the measured channel, you're right that our Breaded Poultry has been on shelf for almost 1 year now. What we've seen is very stable velocities, very predictable business. That's the beauty of our guidance for the rest of the year that, you know, the distribution expansion that we've obtained are all from products that have been on shelf for, you know, 9 months, and in some cases almost 12 months. In that category in particular, you see very stable velocity, very predictable velocities. It's true that in the measured channel we'll be moved over into a door that has 6 times the velocity of the current door that we're in. Of course, we're not going to include expected velocity gains in a meaningful way in our guidance. you know, that's a discipline that we've maintained since we went public, and we continue to do so. There might be some upside there, and we have the capacity to handle it if that occurs, but it's not in the guide. On the unmeasured channel, the story's the same. I mean, we launched in one region of the country back in early Q4 of last year. Product is still on shelf today, obviously. It's expanding, and we see, you know, nice stable velocities as well, and that's why we were able to earn the national distribution that we'll get in Q3. you know, part of it's category dynamics, it's a stable category with predictable velocities. But to be really clear, we don't include expected velocity gains in a meaningful way in the guide. Okay. Maybe one more follow-up. I don't know, this might be for Jerry or Akshay. On the gross margin, you know, strong on an adjusted basis in the first quarter at north of 33%. You know, you're guiding, I think, at least 24% for the full year, which would imply a pretty significant, you know, come down as we move forward. Is that just conservatism given everything you have going on from a new distribution perspective, ramping up Bolingbrook? You know, how should we interpret that, and how do you see the kind of the cadence of gross margin playing out from here through the balance of the year? Thank you. You know, I'll turn this to Akshay, but before I do, at a high level, I think it's prudent not to change guidance at this time. You know, for me, at a high level, it's really about plant utilization is really where the opportunity is. It's just so obvious. Akshay, why don't you go ahead and jump in on that one? Yeah. Thanks. Hey, Jon. A great question. You know, the way you wanna think about it is you've looked at the numbers in our guide. We didn't change the guide. It implies, you know, roughly 24%, adjusted gross margins for the rest of the year. Certainly there's some conservatism in there, but I think it's prudent 'cause there's plenty of the year to go. However, the way you wanna think about the building blocks is this quarter, the commodity cost benefit was higher than it will be all else equal, by about 350-400 basis points. Why? Because some of our key commodities, like chicken and cheese and bacon, are seasonal, at their seasonal low points, in this quarter. Okay? That won't sustain. It's still gonna be beneficial year-over-year, you gotta walk it down 300 basis points if you're looking at the next 4 quarters from a commodity perspective. Then you gotta add labor and overhead as significant contributors for the remainder of the year with all the initiatives that we have in place. The overhead piece, as Bryan mentioned, really easy to understand. With the volume that we have coming, we're gonna increase our utilization rates from 40% to 80%. That's gonna have a tremendous positive impact on overhead leverage and cash flow, right? That's easy. On labor, you know, every pound coming out of Bolingbrook is going to be accretive to our overall labor cost. We're gonna have more and more pounds coming out of Bolingbrook and more and more bread poultry pounds, which are very efficient from a labor perspective. Our labor costs are still 17%, 18% of sales. They were the same in 1Q. We've been talking about labor, as a huge driver of savings, and that has yet to accrue for a number of reasons, but it's all timing related. It's in our control, great visibility. There's 700-800 basis points that will accrue in the next 9-12 months on labor. That's why we continue to feel really good about our guidance on operating cash 'cause we're about to turn the corner in a major way on these value drivers. Did that help? Yeah, very helpful, Akshay. Appreciate all the commentary. Good luck. Sounds like an exciting 3 quarters coming up. Thank you. Thank you. Our next question is from John-Paul Wollam with Roth Capital Partners. Please proceed with your question. Good morning, everyone, thanks for taking my questions. Maybe if we could just start, you know, I think this is actually something that may have come out at the April presentation, but I want to just focus on household spend. I think there was kind of a comment in that presentation about industry average being something around $50 and RGF only being at about $10. I was just hoping maybe you could share kind of why that is as low as it is today and maybe just how you get closer to that industry average. It seems like that obviously goes a long way towards your targets and just longer term targets. Just kinda curious how that number ramps up closer to industry average. You're right. Great question. Great insight to the category. Health and wellness brands average actually closer to $60 per household. To tie that down, household penetration is really an indicator of future growth. What it takes to get to that $60 is just more points of distribution. Why? Because the consumer needs variety in their basket. To give you perspective, the brands such as Amy's that, you know, achieve that kind of dollars per store, they're gonna average over 40-50 items in any given grocery store. Today, our TPDs are so low, we're at 9-10. That's number one. Our job is to, you know, grow our TPD. Good news is, you know, we said in our prepared remarks that we have over 50,000 new Points of Distribution, so that's going to help. The other thing, this is just me speaking on this. When you talk about Breaded Poultry, that's a higher frequency item. I think that will grow our dollars per consumer as well. It's an item that's enjoyed by all of the households, and it's a higher velocity area of the store. You know, look, at the end of the day, our low dollars per household shows the room for significant growth. How do we get there? We grow the number of items in the stores we are at, and we participate in higher velocity categories. Does that make sense? Yeah, I think that makes complete sense. Appreciate the color there. Maybe one more for Akshay, but just in terms of liquidity, I know we're a little post quarter end here. What is First off, is there anything remaining on in terms of the revolver? Second would just be in terms of kind of inventory and thinking about operating cash flow for the year, you know, have you built inventory to a higher level than you would expect given kind of the distribution gains? Will we see any kind of major drawdowns that will benefit operating cash flow in concert with the shelf resets? Maybe that's a 3Q big drop. Any kind of color you can point out there, and then just also the revolver availability. Thank you. Yeah. Great, great question. You know, we have sufficient liquidity currently under our revolver, and our plan remains to self-fund the business. We've talked about, you know, turning the corner on turning operating cash flow positive here in the short term with the resets that are ongoing. If we execute our plan, which we fully expect to, we think we have an opportunity to actually refinance our debt at lower costs and increase our liquidity even further. That's where we think we are from a liquidity standpoint. We have sufficient liquidity and access to more. Secondly, yes, inventory build was a greater than expected this quarter. You know, I think it's timing related and new product related. That's what happened. We had about $8 million of working capital related, you know, cash usage this quarter. Timing wise, it was somewhat unexpected relative to the original plan, again, because of everything we've talked about with the cadence of our sales plan. Absolutely, there's a big opportunity for us to reduce our days on hand for inventory. We're working really hard on it. When you're growing as rapidly as we are and expanding your, you know, base of products and the categories you compete in, you are gonna see increased inventories temporarily, and that's what you're seeing. It's a good problem to have. It's, you know, let's call it collateralized, you know, debt, right? It gets added to the borrowing base, so it's easy to borrow off of. Yeah, we did increase inventory. We will lower it over time, but right now we're in heavy growth mode, and that investment is absolutely necessary. We also, this quarter, made some opportunistic purchases of commodities, like bacon, you know, that are gonna accrue to the margin and cash flow for the remainder of the year. Hopefully that helps. Did that answer your question? Yeah, I think definitely. Any color you can share about when the refinance, or is it way too early to even kind of contemplate that? Yeah. You know, we're not providing guidance specifically on that. We're focused on, you know, executing our plan. We have great support from our current lender. As you saw in March, you know, we amended that facility, and that should tell you the appetite that our existing lender has and the support that they continue to give us. We have sufficient liquidity under our existing facility, so we don't need to do anything. Opportunistically, if the opportunity comes up, certainly we'll pull the trigger. Great. Yep. I'll pass it along. Best of luck. Thank you, guys. Thank you. Our next question is from Rob Dickerson with Jefferies. Please proceed with your question. Great. Thanks so much. I guess just kind of circling back to the guide, just to kind of make sure I got everything. I guess what I'm hearing is, you know, Akshay, you said 350, 400 basis points and kind of the step down given the seasonality and input cost. At the same time, right, it seems like there could be some incremental top-line advantages of some of the poultry, that's being rolled out in late Q3. We have the whole conversation around utilization of labor. I guess, you know, prior question was there, are you being conservative? You know, even if you take that 350-400 basis point step down, I mean, it seems like gross margin this year. You know, should in theory be, you know, much, much better than the 24%, right? I I know you're saying 24% or higher, but it just seems like it should be much better than 24%. I guess, like, why not take it up to, like, 26 or higher? You know, sometimes companies take it up a little bit. Sounds like you're being very prudent and careful in Q1, but all the commentary right now is super positive. Like, is there anything that's just preventing you from saying, "Hey. Yeah, we're doing an awesome job, and you know what? Yeah, it's gonna probably be higher than 24%. I'll take that. You know, it's a good question. I think it's prudent for us to, you know, be appropriately conservative. Most of our commodities, as you know, especially the big ones, aren't hedgeable. We are hedged advantageously on cheese right now. You know, chicken market can be quite volatile at times. We wanna leave some room for that, things that are out of our control. You know, we've gotta execute on our plan, and we are confident that we will. Let's see how we perform in the second quarter, and we'll reassess our guidance then, right? 'Cause we gotta get these pounds through the plant, and that's what we want to see happen. We know if we do that efficiently what the numbers will look like, and you know that too. Yeah, I think once we do that, we'll have greater confidence, and we'll be further enough in the year to be able to adjust our margin expectations. Certainly, you know, we've had now two quarters of really good performance despite being 40%, 50% utilized. Yes, we are feeling better. You know, we've got to perform. We're gonna let our results speak for themselves. All right. Fair enough. Bryan, just kinda wanna circle back to, I guess, the Breaded Poultry conversation. You know, I think you said, correct me if I'm wrong, you know, incremental, like, fairly material distribution gain in a non-tracked channel, right? Sounds like that's, I'd assume that's club. I just forget, so apologies. You're already in mass, so I'm just curious, you know, as you think through kind of the potential here in Breaded Poultry, there are other subcategories, right? Like you've spoken to Asian. There also is a comment that you made on the call about, you know, the two different temperature states. I'm just curious, you know, right now, kind of what I'm hearing on this call is, you know, we have visibility. I think the line was because of essentially, you know, the orders that have, you know, taken place. Like, the orders are there. You know it's coming. You have to actually ship it, get it through the plant, have everything work. We're highlighting breaded chicken. You know, given the success already of the brand, kinda, I guess, the two direct questions I have are, you know, are there other conversations with those other subcategories that maybe we're not highlighting as much? Number one. Number two is, you know, with these SKUs you're getting, in non-tracked and breaded poultry, the assumption here, right, is this is all incremental, right? 'Cause it's in a different part of the freezer case, and that's part of the broader plan, right? You know, multiple locations within the freezer dependent on the category. This is all a step up in incremental SKUs in non-tracked. You know, how does this benefit kind of the broader landscape of your overall SKU selection and conversations you're probably already having? That's it. Thanks a lot. Yeah. I mean, our strategy in the unmeasured channel is to have a portfolio of products that are in two different temperature states and in, you know, seven different categories. What you'll see play out in addition to breaded poultry, you're gonna see a frozen breakfast item roll out. I should not say roll out. You'll see a frozen breakfast item in parts of the country. You know, we have an appetizer item. Obviously our entrees. You know, it shouldn't go overlooked that, you know, our enchilada, our new Poblano Enchilada, will be in full distribution in late Q3 as well. You know, the strategy behind it, Rob, is to have a durable, predictable business, the way you get there is by having, you know, offerings that are in different eating occasions, different day parts, and different categories, and different temperature states. If we do that, which that's why you saw kind of a pretty significant R&D spend in the quarter, it's a great investment because that's where we land, that's how we get there. In the measured channel, the same is playing out as well. In terms of our innovation agenda, we plan on building SKUs around our winning breaded poultry that, you know, are exciting and new to the category, and really begin building a brand block within the breaded poultry section. We like that category a lot. We think that innovation in that category is long overdue, and we're working hard at it. We, you know, I think you'll hear us talk about that in 2024. Did I hit, was that, clear enough, Rob? Yeah, no, yeah. No, I think that's clear enough. You know, maybe just one quick follow-up, Phil. You know, as you mentioned R&D, then also to just touch on marketing, you know, obviously there can be operating leverage that will flow through the plants with higher revenue and the efficiencies. You know, you've been highlighting since day one, you know, the success rate of social media, right? Kinda how you're marketing the product. You know, is there any change potentially that could come to that strategy? Not in a bad way, but in an incremental way, you know, either via trade spend or, you know, different channels of marketing and kinda demand, you know, consumer push, just to make sure people are aware of your brand, right? What you're doing seems to be working, but it still is a fairly new brand. You know, when you look at our marketing spend as a% of revenue, it's very, very low. It's gonna stay that way until we begin to make money and be, you know, significantly high, you know, positive EBITDA. The good news is being the largest social, you know, having the largest social media footprint of any frozen food and having these authentic conversations, you know, we activate over 1,500 nano and micro influencers. It's really efficient, Rob. In terms of, you know, really throwing money at the marketing side at some point in the future, you're not gonna see us do that until we are making a lot of money. You know, what excites me about the quarter is it shows the true, you know, potential that this business can, you know, will make money in the future. All we gotta do is get the pounds through the plant, and the thing really starts to take off. That's our philosophy. You know, priority one A, one B, one C is to be cash flow positive and EBITDA positive in a meaningful way. We're gonna do that first before we lean in anymore on marketing. Super. Thanks. You bet. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Bryan Freeman, executive chairman, for any closing comments. Hey, thank you for joining us on this call this morning, and we look forward to reporting our second quarter results in a few weeks. Have a good day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.