Good day, and welcome to the Tattooed Chef second quarter 2021 earnings conference call. I would now like to turn the conference over to Rachel Perkins with investor relations. Please go ahead. Thank you. Good afternoon. Welcome to Tattooed Chef's second quarter 2021 earnings conference call. On the call today are Sam Galletti, President and Chief Executive Officer, Sarah Galletti, Chief Creative Officer and lead Tattooed Chef, and Stephanie Dieckmann, Chief Financial Officer and Chief Operating Officer. Matt Williams, Tattooed Chef's Chief Growth Officer, will also be available for questions. By now, everyone should have access to our earnings release, which went out at approximately 4:05 P.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.tattooedchef.com. Before I begin, I'd like to remind everyone that the prepared remarks contain forward-looking statements. 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 could 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, within our earnings release and in today's prepared remarks, adjusted EBITDA is referenced. It is important to note that this is a non-GAAP financial measure that we believe is a useful metric that better reflects the performance of our business on an ongoing basis. A reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure is included in today's press release, which has also been posted on our website. With that, it's my pleasure to turn the call over to Tattooed Chef's President and CEO, Sam Galletti. Thank you, Rachel, and good afternoon. I'll begin today's discussion with key business highlights, new distribution wins, and an update on our recent acquisition of Foods of New Mexico. Sarah will discuss our marketing and innovation, and Stephanie will provide further detail on the financials. Our momentum continued in the second quarter of 2021. Second quarter revenue increased 46% to $50.7 million compared to the second quarter last year, driven by our Tattooed Chef branded products, and $4.3 million from Foods of New Mexico. Our branded product sales for the second quarter of 2021 were $33.1 million. This is an increase of 62% compared to $20.4 million in the second quarter last year. As a percentage of total revenue, branded products accounted for 65%, or 71% excluding Foods of New Mexico. I'm proud to say that we are well ahead of plan to reach 75%-80% branded sales within two to three years. We believe Tattooed Chef is positioned to be the leading plant-based food company for years to come. With fully vertically integrated production, diversified product lines, and ability to win in multiple areas of the grocery stores, not only frozen, but refrigerated and ambient too, Tattooed Chef is positioned for long-term success. We are revolutionizing the way people think about plant-based eating by thoughtfully creating foods that feel good. The Tattooed Chef brand is chef created for every lifestyle, at an accessible price point. The Tattooed Chef brand is for everyone, and we attract consumers of all ages and demographics. We also have a range of products to offer from breakfast, lunch, dinner, or snacks, so that you can enjoy Tattooed Chef at any occasion. It really resonates with both consumers and retailers, as has been apparent through our sales velocities and product launches to date. We are proud to announce that in less than one year, we have two SKUs among the top 10 veggie entrees ranked by velocity, according to the MULO HWI. As we previously announced, we closed our acquisition of New Mexico Food Distributors, Inc. and Karsten Tortilla Factory, LLC, collectively referred to as Foods of New Mexico, on May 14th, for approximately $37 million in cash. Frozen Mexican food is a $1 billion category, and we are super excited about the growth opportunity. We will also be launching our first ever refrigerated ambient products early next year, going after the $20 billion Hispanic Southwest food category with alternative tortillas, burritos, enchiladas, and other creations. This acquisition expands our own production capacity and diversifies our manufacturing capabilities to accelerate our expansion throughout the entire store, not just frozen. We plan to extend the Tattooed Chef reach, not only within grocery, but to a whole new level of convenience in refrigerated and ambient products to an untapped market of retailers such as airports, convenience stores, and more. In two to three years, between all the innovative ideas we have, we believe Foods of New Mexico can contribute up to $200 million in revenue annually. The focus going forward will continue to be on Tattooed Chef branded plant-based products. We continue to look for similar acquisitions that we are able to add assets and manufacturing in order to develop new products in other categories and create shareholder value. Our growth story so far has been around diversifying Tattooed Chef customers and channels, and we have been incredibly successful. As you may remember, at the end of 2020, our branded products were in nearly 4,300 stores and had 23,000 points of distribution. We have grown this to 8,355 stores at the end of Q2, with 48,070 points of distribution, exceeding our previous projections. As you may also recall, our guidance for the full year was 10,000 stores with 65,000 points of distribution. With the additional retailer commitments our sales team has secured, which I will cover in a few moments, I'm proud to announce that by the end of the third quarter, we will be in over 12,000 stores with 79,402 points of distribution. We continue to broaden our growth as measured by SPINS. Through July 11th, our TDPs have increased by over 135% since before closing the transaction in October. This is a strong example of the brand's viability and success in traditional retail and mass accounts. Our MULO consumption data, as measured by SPINS, continues to grow, too. The second quarter of 2021 was our strongest quarter for measured consumption in the history of the company. I'm ecstatic to announce the last 24 weeks, ending July 11, 2021, we had four of the top five best performing innovation SKUs in the plant-based frozen entree category, which Sarah will cover in a few moments. Overall, our quarterly consumption has increased by 88% since completing the transaction in October through strong growth in club, mass, and retail expansion. In the club channel, we had another successful MVM in Costco with Organic Riced Cauliflower Stir Fry. We continue to partner and innovate with Costco, with new items going into selected regions across the U.S. In Sam's Club, we had three limited time offers in Q2, Tempura Green Beans with Vegan Wasabi Ranch, Riced Cauliflower Burrito Blend, and our cauliflower pizza with Plant Based Pepperoni, in addition to our four everyday items. In Q3, we will have three limited time offers, including our Huevos Rancheros Breakfast Bowl, Cheeseburger Bowl, and a Pad Thai fried rice. According to SPINS in the club channel for the last 12 weeks ending July 11, 2021, Tattooed Chef is up over 60%. For the 52 weeks ending July 11, 2021, Tattooed Chef was up nearly 27% and remains one of the fastest growing brands in the frozen category. In the mass channel, latest 12 weeks through July 11, 2021, according to MULO, we saw explosive growth from $119,000 last year to $4.2 million this year, primarily driven by store expansion and the new innovation within the Tattooed Chef brand. We continue to be excited by the results of the retailers that were early adopters of the brand. The combination of strong shelf presence and broad category assortment has led to very successful results that we believe can be scaled across the marketplace. In 1 specific mass retailer, for the latest 4 weeks through July 11th, as measured by SPINS, Tattooed Chef has the number one and number two selling SKU in the frozen vegetable entree and meals category in total dollar sales. Additionally, in the same category, the Tattooed Chef has the highest total sales per point of distribution of all brands being sold. These results support our growth strategy for expanded retail distribution and increased SKU count. We have more than doubled our ACV since the same time last year, and now we're in over half Walmarts in the U.S. and in almost every Target store. We continue to see TDPs increase in the mass channel. In the latest 52 weeks, we have grown our business in the mass channel from $651,000 last year to $7.9 million this year, and we expect this momentum to continue throughout the year. In the grocery and natural channel, we continue to win distribution with both national and regional retailers in the U.S. Our products are resonating with retailers and consumers, and it is a flywheel effect once retailers see our case studies. In Q2, we went on shelf at Whole Foods, Harris Teeter, Jewel, Smart & Final, Nugget Markets in NorCal, and a variety of independent retailers. In Q3, we have begun distribution at Sprouts Farmers Market, Kroger, multiple Albertsons divisions, including the Southwest, SoCal, NorCal, Intermountain, Seattle. Also, H-E-B, Price Chopper, and have additional commitments for later this quarter. We are pleased to also announce our most recent distribution win. Tattooed Chef products will be available in Publix beginning in the fourth quarter. We are seeing our early retail wins expand their Tattooed Chef offerings into additional categories, which will increase the breadth of our distribution. We have set an internal goal of achieving 30 frozen SKUs per store across retail and are confident that we have the portfolio to execute that. We expect our incredible double-digit total company growth to continue, driven by our branded products in the back half of the year. We have multiple avenues for growth near term with expanding product offerings in existing retailers, gaining more distribution with new retailers, including grocery and convenience stores, developing our food service business, as well as licensing and international opportunities. In 2021, we are reiterating our revenue guidance of $235 million -$242 million, which Stephanie will expand upon in a few minutes. We are thrilled with our retail wins and how products have been performing. These distribution wins were already included in our original forecast for this year, and given the timing of the equipment we are putting into our Foods of New Mexico facilities in the fourth quarter, as well as selling cycle on what we will like to call the COVID hangover, we will not see the full benefits of these items until fiscal 2022. In 2022, we continue to expect at least $ 300 million in revenue based on our distribution success in grocery this year and our innovation pipeline, including the launch of our first refrigerated ambient products. We'll provide full guidance for fiscal 2022 on our fourth-quarter earnings call next February. One of our key differentiators is our vertical integration in production capacity and capabilities. We have the ability to go to market in as little as three months, which gives us the ability to constantly innovate and stay on trend. We are on track to quadruple our production capacity in 2021 and have approximately 275,000 square feet of manufacturing space today. Between our four manufacturing facilities, we believe we have the capacity available to achieve over $ 500 million in revenue. Our new capabilities in 2021 include gluten-free, soy-free, plant-based meat production, and with the Foods of New Mexico acquisition, we can now produce alternative tortillas, snacks, burritos, handhelds, quesadillas, enchiladas, and more. Since launching the Tattooed Chef brand in 2017, we have seen the brand and our innovative products resonate and appeal to a broad range of consumers. In 2021, we have demonstrated the strength of the brand with the acceptance at retail. We have done what we said we would do from the beginning, and we firmly believe Tattooed Chef has the power to be a generational brand and a leader in plant-based food for years to come. Now is the time to invest in our business and lay the foundation for future growth and success. Plant-based food is here to stay. Every category in the supermarket will be disrupted by a plant-based alternative, and Tattooed Chef is positioned to be the disruptor. We are already doing it, and it is just the beginning. Now I'd like to turn the call over to Sarah to discuss our innovation and our marketing efforts. Thank you, and good afternoon, everyone. At Tattooed Chef, innovation is part of our DNA, and we are paving the way in the plant-based revolution. Today, we offer more than 62 branded items, and we are continually bringing new ideas to the marketplace. In fact, we have a pipeline of over 250 ideas for innovation, including more than 50 in the Hispanic Southwest food category, which we plan to produce at our new Foods of New Mexico facilities. As we continue to innovate as a brand and expand into more channels, we are excited about our partnership with SPINS and the data insights it gives us on the new products that I am creating and the team is bringing to the market. SPINS tracks the sales of the new items that have been launched over the last six months. Through July 11th, 2021, the Tattooed Chef Burrito Bowl is the number one bestselling new SKU in the MULO frozen plant-based entree category across all key velocity metrics, total weekly dollar sales, units per store per week, and dollar sales per store per week. Additionally, Tattooed Chef had four of the top five best performing innovation SKUs in the plant-based frozen entree category launched over the same time period. Considering that other SKUs introduced during the same time period were from legacy frozen entree brands, we are excited about how consumers are responding to Tattooed Chef at retail. In Q2, we launched 14 new SKUs, including our multi-serve meal line at Target, and also a new Pitaya Smoothie Bowl, something we have not seen in mass or grocery yet. In Q3, we plan to launch 6 innovative items, including a Cheeseburger Bowl inspired by California flavors with meat alternatives, caramelized onions, and a secret sauce. We're also launching riced cauliflower pad thai. It's sweet and sour with a little kick and uses nostalgic elements of pad thai. I'm especially excited about the launch of our new gluten-free plant-based chicken in our Spicy Thai Bowl, available now at Sprouts Farmers Market. We believe it's important to have a variety of meat alternatives in our value-added products to appeal to the growing set of consumers who are newer to plant-based eating. We are excited to introduce the Tattooed Chef to the food service channel as well. In addition to our ready-to-eat products, such as entree and smoothie bowls, we recently launched an 11 SKU portfolio of Tattooed Chef products that can be used to incorporate more plant-based ingredients into their menus. These items are on trend, high quality, convenient to use, and help eliminate food waste, all important attributes in today's dynamic food service industry. In regards to marketing, we successfully launched our first commercials in the beginning of April on a curated list of cable networks, connected TV, and digital media. We are pleased to report we have more than doubled our U.S. brand awareness from 6% to 15%, according to Kantar Millward Brown. After just a few months of advertising, purchase consideration for Tattooed Chef is approaching the levels of competitors who have been in the market for years. What we have learned from over the last eight months is that the brand is responsive to advertising. We will continue in the back half of this year to test some other marketing initiatives, and next year, increase our marketing spend with a disciplined approach to ROI. E-commerce is a minor part of our business today, but I am proud to announce that we will be launching a subscription service later this year as another way for our loyal consumers to shop for Tattooed Chef products. I'll turn over to Stephanie to walk through our financials. Thank you, Sarah. Good afternoon, everyone. In the second quarter of 2021, revenue increased 45.9% to $50.7 million, compared to $34.8 million for the prior year period. As Sam mentioned, the revenue increase was driven by a $12.7 million increase in revenue of Tattooed Chef branded products. This now accounts for 65% of our total revenue, as well as $4.3 million in revenue from our recent Foods of New Mexico acquisition. As a reminder, we closed the acquisition over halfway through the second quarter on May 14th, so this was only a partial quarter contribution. Gross profit in the second quarter was $8 million, or 15.7% of revenue, compared to $3.7 million or 10.8% for the prior year period. The increase in gross margin was primarily due to the increase in branded Tattooed Chef sales and the investment in manufacturing equipment made in the back half of 2020 that doubled our production capacity in both the U.S. and Italy. Despite inflationary pressures in freight and container costs, which were $6.7 million during the second quarter of 2021, we were still able to leverage our operating efficiencies and contractual buying opportunities for raw materials due to our vertically integrated business model. Going forward, we anticipate quarterly gross margin expansion throughout the rest of 2021 as we increase our branded volume and, as Sam mentioned, quadruple our production capacity. Operating expenses increased to $15.9 million in the second quarter of 2021 compared to $2.1 million in the prior year period. The increase in operating expenses was primarily due to promotional expenses of $3.2 million, marketing expenses of $2.9 million, and professional services, including legal and accounting, of $2.6 million. We do not expect operating expenses to decrease as a percentage of revenue over time, as many fixed operating expenses will be spread over increased revenue. We are also heavily investing in the Tattooed Chef brand to increase distribution, raise brand awareness, and drive sales in the new stores that are launching products. The costs that we are investing in today should produce realized benefits in the future. Net loss was $53.2 million in the three months ended June 30th, 2021, compared to net income of $1.3 million in the prior year period. There was a one-time non-cash expense of $46 million included in the second quarter of 2021, resulting from a valuation allowance on a deferred tax asset due to the company's additional investments. This adjustment does not affect revenue, gross margin, or adjusted EBITDA. Adjusted EBITDA was - $5.9 million in the second quarter of 2021 compared to adjusted EBITDA of + $2 million in the prior year period. The decline was primarily due to public accounting costs that were not present in the second quarter of 2020 and the operating expenses that were just mentioned. As of June 30th, 2021, we had cash and cash equivalents of $140.2 million. Now turning to our outlook. We continue to expect total revenue in the range of $235 million-$242 million, an increase of 58%-63% compared to 2020. We expect the base business, or rather, excluding Foods of New Mexico, to grow 49% year-over-year to $222 million. This is consistent with our projections at the time of the transaction announcement over a year ago and includes the expected distribution wins in the mass and retail channels. We expect a $13 million-$20 million contribution from the recent Foods of New Mexico acquisition, and do not expect the second facility, Karsten, to have a material impact on 2021 revenue because of the timing of the facility being finished during the fourth quarter. We are updating our full year 2021 gross margin guidance to be between 16%-22%. We are committed to an aggressive plan of growing our brand through extensive marketing and promotional spending that has already produced significant revenue growth in both grocery and mass retail. To augment our revenue growth, we have invested in our staff and infrastructure, equipment, brand visibility, and customer acquisition costs to meet the marketplace demand and our current and future goals. We also continue to be impacted by increases in logistics costs, storage fees, legal and accounting fees, and marketplace shortages in packaging products. Given this, we are updating our adjusted EBITDA guidance to a loss of $14 million-$17 million. Lastly, we expect capital expenditures in the range of $15 million-$20 million for full year 2021, which includes our recent acquisition of Foods of New Mexico. Tattooed Chef has a long runway for growth with both new and exciting customers and channels, an experienced team, and a strong cash position to support the growth of the business. With that, we are now available to take your questions. Operator? We will now begin the question and answer session. The first question today will come from George Kelly of Roth Capital Partners. Hi, everybody. Thanks for taking my questions. Maybe if we could start with your EBITDA guidance for the year. Bit of a change since the last time you updated us. Just curious if you could maybe bridge exactly what that, I think it was $2 million-$4 million before. Could you break down the difference? Absolutely, George. Stephanie here. We are going to spend an additional $3 million in marketing during the back half of this year to take advantage of some of the opportunities that we have discovered in order to build more brand awareness. We have also been building our infrastructure and hiring experienced, talented individuals in what is a very tight job market right now. We want to build the foundation for that infrastructure, not for the sales and distribution of today, but for the growth of this company next year and the year after. In addition, there is also inflationary costs to freight, cold storage, other logistical items, and upcoming increases in both packaging costs, corrugated, and even pallets. Combined with these, we felt that it was important at this time to make this adjustment. Okay. Understood. Next question is just about all the distribution wins. Really amazing progress on door expansion and distribution points. What's next, I guess? I'm not trying to get too far ahead here. It's been a really crazy year, I know. What do you think the total opportunity is if you were to look out maybe to the end of next year or a couple of years from now? Is 12,000 doors and how many distribution points, where can you take that over time? Hi, George. This is Matt. Obviously, thank you for the compliment. We're equally as excited about the results that we've had this year. I think that there's really a two-pronged approach. The first is, we obviously have established relationships with the retailers that we're with today. Sarah has created a lot of amazing products that not every one has been accepted. I think that we're really encouraged by closing those voids on other categories that retailers that we're with today are not carrying. I would say, that's job one for the sales team, is to get to that 30 SKU target that we talked about. What we're really excited about is that our SKU acceptance quarter-over-quarter is actually increasing. We started the first quarter with about 4.4 SKUs accepted per retailer. In Q3, we're going to be up to 7.7. We're really excited about the fact that we're seeing almost like a double or over 60% SKU increase. Increase in our SKU counts that are accepted when we launch with a retailer and that's really encouraging. The next thing that we're also going to be focused on is still closing a lot of the gaps that we have in terms of customers that we are not with today. We do have regional as well as other customers that are not doing business with us yet. We also have opportunity with other major retailers today to close store gap. Those combined with all the innovation that we have coming, we are obviously very bullish about what the future holds in terms of getting to that 30 store or that 30 count of SKUs across the market. Okay. Then the push, this has come up on prior calls, but all the success you've had, exceeding your target to start the year as far as doors and distribution points, guidance is staying the same. So, is there something that is maybe you've seen pressure in certain channels. I don't know if it's club or is the kind of initial velocity in a lot of these new channels maybe not what you thought it could be? Can you talk at all about just the reasoning that goes into maintaining the initial revenue guidance? Hey, George, Sam. It's really a function of our projected acceptance to the products. We really had some good knowledge of the wins that we were going to get on these retailers. That's really it. We really projected pretty aggressively our guidance on the acceptance of the brand based on what was happening with club with us. That's why we're solid right there. Like was mentioned in our review right now was that because of the timing of distribution through the year with these retailers getting all this product on the shelf, that's why we really feel we won't feel the full impact until 2022 of all these wins that we're getting with full distribution and the promotional programs that we have planned for 2022 now. That's why we're very excited about exactly what's happening. The wins and the acceptance and the increase of sales per week and units per retailer, it's all very, it's really incredible. It's very positive, and we think we really got a tiger by the tail here, and we have so many different categories. Because of our capabilities, any one of these sections that we're doing right now, whether from Foods of New Mexico, us stating that within two to three years, we really believe it could be a couple $100 million. Just with our existing facilities, we are over a couple $100 million. To hit that first point of $500 million in revenue, we feel pretty confident that that's the direction and the opportunity is there for us. Okay, great. Last question from me, just an accounting issue. I remember on the last call, there was a feasibility study that was going on having to do with how you treat certain operating expenses or should they go into the cost of goods sold line. Is that settled, and are we comparing apples to apples if you look back to last year's second quarter? That's all I had. Thank you. Thanks, George. It's Stephanie again. We are comparing apples to apples when we talk about second quarter last year. We have not concluded on the preferability study, and we are still working on it, and we're hoping to be able to provide an update soon. Okay, thanks. The next question is from Rob Dickerson of Jefferies. Please go ahead. Great. Thank you so much. Try to keep this short, a lot of ground was covered. I guess, first question I have is just on the revenues in Q2 relative to Q1, right? I know you called out some of the private label business, I want to call them losses. Sounds like they're more intentional exits. It seems like those potentially offset maybe some of the branded growth and also the $4 million included from the Foods of New Mexico. I'm just asking because the growth obviously is extremely impressive, right, year-over-year, but technically the revenues were a couple million off relative to Q1. I would think that kind of with some of these new wins, we'd see it be going up, not down, but then the delta here at the private label side, I just don't know what that was. If you just provide color on that delta Q1, Q2. That's the first question. Hi, Rob, this is Sam. If we were 100% grocery and mass, and then I understand where there would just be this increase of quarter-over-quarter. But because the majority of our brand is still in club, it's based on these LTOs, these limited time offers and the distributions and the timing of when these things happen. Overall, it's like you see we're still up over in the year in club year-over-year, but it's just from a timing standpoint, that's all this is. We'll see in Q3, I think that you'll really start to see more of this consistent growth start happening as our grocery and mass market starts becoming a bigger part of our company. As far as private label goes, it's pretty much flat. You're absolutely correct. The focus has definitely been branded, and that's where we're really pushing. Hey, Rob. Sure. Go ahead. Sorry about that, Rob. It's Stephanie. I can just add to that a little bit. Remember that when we look at last year and we talked about the quarter-over-quarter, we experienced a lot of growth in 2020 as well. But we did see that big peak in Quarter one, we've talked about it. It has to do with organic months and a lot of limited time offers. We ran a very large acai promotion with Costco, we did run a promotion on organic stir fry, it's just a blend of products right now at club. When we start to talk about Quarter two, I think that the big focus needs to be on the fact that we grew 46% year-over-year in Quarter two, we had great growth in Quarter one year-over-year. This is a little more cyclical for us as it was last year, and we expect this to even out in the future as we expand into more mass and traditional grocery. Those wonderful club items were fantastic in January, and we will see some of those limited time offers in Q3, as Sarah discussed. There is a little bit of that that happens throughout the year, but it is still 46% growth. Yeah. Okay. No, it completely makes sense. It's just a function of club exposure, which I get. Okay, cool. Then I guess, usually along with LTOs, there's some promotional activity. You guys have some promotional spend. Again, if I'm thinking forward then, would you say collectively, like as you think about the back half of this year, marketing spend goes up a little bit. You're getting into new stores, right? It's important once you're in the store, you want to make sure the velocities are good. Maybe, like you said, there could be some LTO activity, near term, Q3, but overall, there could also be just some upfront promotional activity to also make sure you're getting the brand going in the new stores. Just trying to get a sense of how you think about that promotional dynamic. What is the plan for So as our retail and grocery mass is going to start coming on more aggressively in the second half, absolutely. That's why Stephanie suggested that, why she said that we're going back in with an additional $3 million spend on the back half of the year. Still, against all the products with all these major retailers, there's tremendous marketing plans that are already built into this. I know, Matt, if you want to elaborate on this. Yeah. No, I think you said it. This extra $3 million that we've got built into the plan, George, is all around, we did the broad campaign to build awareness. That money is now there to spend to drive velocity, right? We're getting closer to the retailer. We want to make sure that our new distribution wins are successful. We're really investing in programs that are there to drive purchase and conversion at the point of sale. That's where you're seeing that come in. Okay. Done. Yeah. I guess, just to come back to the margin question. Obviously I understand what's driving that lower EBITDA in the near term. Sounds like you said you're hiring more people. I guess, first question, it seems like essentially you could just sum it up and say, tell me if this is fair, relative to where you were in Q1 and Q2, you said, "Okay, we actually got some new wins. We need some more people. We need to hire some more people." As we've heard from a lot of food companies, there are also some other incremental costs that are coming in, be it, product cost, packaging, freight, what have you. It's really like there's $3 million in the marketing side, but then there's, call it another $10 million or so that are other costs. I'm assuming that those other costs are the buckets that you explained. Just trying to get a sense as to what kind of change to the quarter that made you decide to, or let's say, increase your overall cost basis, outside of the incremental marketing promo spend. Absolutely, Rob. I think that when we start to talk about inflationary costs, that some of these items were things that as we looked at them at the end of the year and even through the first quarter, seemed to be temporary. I believe that a lot of people assumed that we would be more on a road to recovery by this point in time after the pandemic than we currently are. The fact of the matter is that freight and container costs do not seem to be decreasing. Fuel prices do not seem to be decreasing, and there are things that we can all see. We would like to take the conservative approach after analyzing our data and the information with our providers in logistics and things of that nature, that honestly, after we saw the increase of roughly 1.84% in freight and container costs, when it's taken as a percentage of revenue compared to last year, we want to be very cautious in this. We are starting to hear things about packaging shortages and paper shortages and those types of things. We made sure that our raw material inflation prices were not going to be an issue in the back half of this year. We have talked about it, and it's one of those things in which the things that we are able to control and do better, we are. I know that I have heard other companies who have quoted higher inflation rates on some of these items. It's not that we're necessarily doing better than they are. We've just made other changes within our system and within the infrastructure to help mitigate some of those costs. We are focusing on costs which will improve the gross margin within the operations themselves. Okay. Good enough. That's all I have. Thank you so much. This concludes the question and answer session. I would now like to turn the conference back over to Sam Galletti for any closing remarks. Thank you for joining us today. We are pleased with our results for the first half of the year and expect our momentum to continue in the second half. With our incredible brand, innovation pipeline, manufacturing expertise, and with the team and resources we have available, I believe we are well positioned for long-term growth and success. I look forward to speaking to you again at the upcoming investor events and on our third quarter earnings call in November. Have a great day. Thank you. The conference is now concluded. Thank you all for attending today's presentation. You may now disconnect your lines. Have a great day.