Greetings. Welcome to the Hostess Brands, Inc. Year-end 2022 Earnings Q&A. At this time, all participants are on a listen- only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I'll now turn the conference over to your host, Andy Callahan. You may begin. Terrific. Good afternoon, and welcome everybody to the Q&A portion of Hostess Brands' fourth quarter 2022 earnings conference call. I'm Andy Callahan, Hostess Brands President and CEO, and I'm joined by Travis Leonard, our Chief Financial Officer. Hopefully, you've all had a chance to review the earnings release for the period ending December 31, 2022, along with the investor presentation, which was published today at 4:00 P.M. Eastern Time. That is available still and will be on the Hostess website at www.hostessbrands.com. A replay of the webcast and our subsequent Q&A will also be available on the Investor Relations section of our website. During the course of the call, we may make a number of forward-looking statements, including expectations and assumptions regarding the Company's future performance. Actual results may differ material from these forward-looking statements. We undertake no obligation to update or revise these forward-looking statements. A detailed list of these risks and uncertainties can be found on today's earnings release and in our SEC filings. Management will make a number of references to non-GAAP financial measures that we believe provide useful information to investors. A full reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the earnings release. With that out of the way, with that, we're available for the Q&A. Thank you. At this time, we will be conducting the Q&A 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 would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of Ben Bienvenu with Stephens Inc. Please proceed with your question. Hey, guys. Jim Salera on for Ben. Thanks for taking my question. Just wanted to get an idea, you know, as we look into 2023, could you maybe give us a little detail on kind of the composition of sales? You know, should we think of that primarily as kind of flat volume and then price through there? Was there some of the innovation from Bouncers, you know, built into that? Any color on that I think would be helpful. Yeah. A lot going on there. As far as the full year 2023, actually, we feel good about it. As you can see, it's, you know, it gets back to algorithm and profit above algorithm for the year. You know, volume is flattish for the full year, then price/ mix drives to the gets us to the total guide. You can also, as we mentioned in our prepared remarks, if you've had a chance to see it, you know, we're focused on the consumer customer sustainable, profitable growth. As you look at the composition of the full year FY23, the volume and the revenue is coming in at a gating perspective, more in line with historical, if you look back at, like, history. The comparisons, especially in Q1, are distorted because of some of disruptions in the marketplace in comparison to last year. We feel good about the full year when you really look at our models and you compare the quarterly gating to historicals if you take out a little bit of the disruption and distortion. As a matter of fact, you know, what further encourages us, Q4, what we just reported, our two-year stacked growth was 33%. You know, we'll have a good stacked two-year growth in Q1 of FY2023, albeit not at the same level as Q4, but very good and at the top of food peers. We're really getting back to a more of a normal pacing in the quarters of FY2023. Bouncers, we're really encouraged with Bouncers. Our customers, what we hear from consumers through the initial trial phase makes us feel nothing but encouraged, and I feel really good about the visibility we have with both our customers and what we're hearing from consumers as we look at the plans we have in FY 23. As we mentioned in the prepared remarks, later this week, you'll hear about our next innovation, which we're real excited to share. Great. Andy, since you brought it up with Bouncers, can you maybe talk about. You guys have laid out in the past kind of these five targeted snacking occasions. Yeah. Is there any occasion that you feel that Bouncers or maybe any innovation that you have kind of coming in the pipeline helps you attack and kind of expand your reach with consumers then? Bouncers. Once again, we get great feedback. For those who have tried it, they've told us the pro-product fits what they, what they need. We're also able to attract their Millennial parents in a disproportionate way. It's all cranking the way we expect. We have designed that for a skew towards the lunchbox occasion. That seems to be working. It's a re-imagination of our some of our icons, Twinkies, Ding Dongs, Donettes, in a two-bite poppable version. That's all resonating with these consumers. It's reimagining what our Hostess brand could be with a whole new generation, putting it in a form that they can do. It's really achieving a lot of our strategy and core to our strategy, which is taking these iconic baked goods and putting them in a more relevant form for a $65 billion snacking universe. We're really excited about our early indications of its ability to do that. It does over skew to the lunchbox. With that being said, once it gets in the household, we do see. You know, our products, you know, consumed at multiple occasions, but that one over- indexes to the lunchbox. Great. Thanks for the color, guys. I'll pass it on. All right, thank you. Thanks, Jim. Our next question comes from the line of Ken Goldman with JP Morgan. Please proceed with your question. Hi, thank you. Wanted to ask about what you're seeing in the promotional environment right now. Clearly, there are some indications that one of your larger competitors maybe stepped on the pedal a little bit toward the end of the year. Just curious, what you're seeing in the first quarter, and I guess more importantly, what you're modeling in terms of promotional intensity from you and your competitors as the year goes on? Thank you. We feel really good about our ability and the line of sight we have, both with the consumer response to our plans and our customer engagement. Matter of fact, I don't think our customer relationships have ever been stronger. It's all contemplated in our guide, as a headline. Certainly we've seen, you know, related to the marketplace and the category in which we compete, we the category in total continues to perform really well. Even during times of some of these things coming back, we continue to grow extremely well with our two-year stack numbers. I really like what we're doing. You're seeing the distortion, we talking about because we continue to consistently manage through a supply chain, at a very positive rate. I feel really good about the playbook we're running, the ability to drive the growth which is included in our plan, as we benefit from our consistent execution partnership with our customers, focus on our consumers, and driving our algorithm over time. Thank you for that. Quick follow-up. You talked about how 1 of your expectations for this coming year is that, you know, ultimately consumers, as they have in the past, right, will grow more accustomed to higher prices. Can you talk a little bit about just what's baked in in terms of overall elasticity? Are you still assuming that there's a higher level of elasticity? I know it's tough to kind of model given that, you know, you're not taking as much pricing going forward, but just trying to get a sense for if you're at least assuming that consumers will be somewhat more sensitive than they or less sensitive than they historically have been to higher prices. Yeah. Well, as a reminder, you mentioned it, Ken, we believe now we'll always responsive and agile to changes in the marketplace. We believe all of the pricing that we have in is all the pricing we need to deliver the guide that we just established and to deliver the growth that we just established. We feel really good about that. Therefore, as the year goes on, what we'll see is the benefit of lapping out of the pricing and more into the back half, we get to the volume driving the algorithm, and that's more of our sustainable long term. That's what we see today. Relative to the consumer response to elasticity, we break that out. We think we have Well, we do have a good beat on what the elasticity impacts. What we see is our investment in innovation, our investment in marketing, our execution, our work on driving our partnership and enhanced merchandise with our customers, which includes, you know, not even just the displays, type of displays, timing of it. That's all offsetting any short-term impact that we'll see on elasticities, and we'll start seeing that come through the back half. We have not necessarily changed those assumptions from what we've seen in Q4, which actually gives me a good feel for as we move forward. You've published some reports, as have a lot of the peers, and we've seen with our economists in different banks. Certainly the consumer is still undergoing a changes in the marketplace, as they absorb kind of the new economies. We've done some research, as I've said in my proprietary remarks, that the resiliency of our category and accessibility of our price points performs very well in multiple conditions, and the breadth of our availability across channels also helps support that. All of those factor up to my confidence around our guide and our ability to continue to drive sustainable, profitable growth over time. Thanks, Andy. Yeah, thanks, Ken. Thanks, Ken. Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question. Hey, Rob. Hey, Andy. How's it going? Thanks. I guess a couple questions. First question is I think the EBITDA guide implies a little bit higher than kind of long-term algo for 23. Apologies, I didn't have time to go through all the prepared remarks. Maybe you could just explain, you know, kind of what is driving that growth relative to kind of longer term expectations. Hey, Rob, just to make sure we heard it, you were a little bit garbled there for a second. I think you said explain why the profitability is slightly higher than the long-term algo in the guide. Yeah, that's it. Yeah, sorry about that. You were a little bit garbled. Travis, I'll let you take that one. Yeah. Hey, thanks for the question. First off, we feel really good about our guide. We're really proud of the results that we delivered in 2022. As you mentioned, we expect to deliver strong growth going forward. You know, as we think about our growth from an EBITDA perspective, it's driven by the flywheel that we've talked about, you know, since Investor Day, and you've heard me talk. It's good top line growth, and we're targeting and we're expecting and guiding to 4%-6% top line growth. As Andy mentioned, a lot of that is volume. It's our continued focus. I'm sorry, price-mix rather. Should I say... Sorry, I misspoke. It's our continued focus on productivity. This is productivity across our entire business system. This is revenue growth management, and you've heard me talk about that as well. You know, we've got good leverage, you know, across our operating expenses. Our operating costs as a percent of net revenue is going to be relatively flat in 2022. All of our flywheel is humming and it's kicking starting from the top line, our key team focus on margins and getting leverage, particularly in our operating costs, where we see that. Okay, great. Maybe, just two quick follow-ups. In terms of gross margin cadence for the year and then volume and a year-over-year cadence for the year. Andy, it sounded like you sort of implied that maybe in the back half, the top line will be a little bit more volume driven, which would, you know, suggest maybe positive volume in the back half. I'm not sure if that's kind of what the message is. Also just on the gross margin, you know, is there anything we should be thinking about as we get through the year in terms of kind of accelerated ability? That's it. Thanks so much. Let me reiterate the top line, then Travis come on top on the gross margin. Rob, your takeaway is correct. As you look at price-mix more of a driver early as we lap the multiple pricing actions that we executed in 2022, as that flows out through the year, you'll start seeing our growth drivers around marketing and innovation and other things becoming more, and then you'll see that at above algo as we move through the year. That's it. If you wanna look at the cadence of our 2023, you'll see that it follows more historical. If you take an average of historical benchmarks and take away the distortion of the last year, where you see a lot of timing and pricing and supply chain disruptions distorting some things, you'll see, that'll be a good way to gate that. That all adds up, and it aligns with our model. That's a way to look at it. I'll turn over to Travis for the gross margin discussion. Hey, great question. Let me talk a little bit about gross margins and frame this up a bit. Our gross margins are essentially flat. Adjusted gross margin is essentially flat versus FY2022. Keep in mind, you know, we expect to deliver strong EBITDA growth. We've got flat gross margins, but we're absorbing high single-digit inflation and Arkadelphia startup costs, of which $5 million is essentially one time in nature. Our gross margins still remain better than peers. We are committed to recovering those gross margins over time. As we think about FY2023, this is around the choices around timing. We're not prioritizing margin recovery sense of long term profitable growth, but we'll continue to leverage our gross margin toolkit, which we feel really good about those capabilities, around revenue growth management and productivity to recover our margins and fuel our investments for growth. As you think about the cadence, one of the things that you'll probably see on the cadence is we did have a tough Q2. I talked about that. That was actually my first earnings call. There was a lot around. Obviously, inflation was high, there was supply chain fragility. We do expect a better result in Q2 as we begin to lap some of that. Yeah. Just related to it, I feel we've what's paid off really well for Hostess Brands is our continued focus on our consumer and customer first and sustainable, profitable growth over time, and that's gonna serve us well. As Travis mentioned, we're committed to recovering gross margins over time, and we'll do that, and feel we'll do that within the context of continuing to deliver consistent, sustainable, profitable growth. Thanks, Rob. Super. Thank you. Our next question comes from the line of Bill Chappell with Truist Securities. Please proceed with your question. Thanks. Good afternoon. Hey, Bill. Bill. Can you just tell me a little bit about the competitive landscape? I know just for the sweet baked goods, you held share, I guess, for the year after 2 years of kind of gaining some share. I know it's a little bit different from an innovation standpoint, but I guess, 1, what are kind of your expectations for the category growth this year? 2, do you expect promotions? I know it wouldn't be on the single serve side, but kind of at the grocery level to come back as costs start to ease as we move to the second half. Yeah. A couple of things is I feel really good about our models, about our ability to be able to run our play and really feel great about our guide. You know, it's a little bit harder to predict share, mostly because we're in a category that's highly expandable, for one. It's not a complete set. We're in a $65 billion snacking occasion map of which we're in a $7 billion sweet baked goods category that competes and that can access growth across it. There's a lot of interest in baked goods right now. That I take that as a compliment that we're in a real good category. And in the short term, been a lot of disruptions that have caused share to kind of go up and down. Over time, I really believe that our playbook will execute that share better over time. It's a long way of saying we don't really model share. That doesn't undermine our confidence, our ability to drive the number that we believe is in our guide. We have a lot of confidence in that. The timing of pricing was all different in our category, whether it flowed through, including now we have everything we need. The timing of our execution on supply chain, they all have helped or contributed to a little bit of the distortions I've talked about in the marketplace. All that being said, our 2-year stack growth continues to be good. My confidence in our model continues to be good. Related to promotions, we have I'll reiterate this. I do think 2023, similar to the gating of the top line, the pacing of the promotions is all contemplated in our guide, similar probably to historical patterns. I feel really good about the partnerships that we have with our customers, with a partnership to drive consumer satisfaction and overall growth. It's never been better. It's fully in there. When you get a chance to listen to prepared remarks, if you haven't already, Travis talked about our enhanced merchandising, which is multi-tiered, related to our focus on availability across the store, displays, merchandising. We're activating our access to consumers through customers' tools and I feel really good about the visibility we have and the partnerships we're forming. Got it. I'm sorry, I missed. Category growth you expect for this year? I did not model that. I'm not forecasting that. I'm forecasting ours. I wouldn't have a reliable number to give it to you, but I believe over time, we'll continue to drive share. In the short term, predicting a share number is difficult for me to do given the fact of how great sweet baked goods has been performing over time and the distortion that I talked about that we've communicated in the category in the short term. Great. Thanks so much. You got it, Bill. Our next question comes from the line of David Palmer with Evercore ISI. Please proceed with your question. Thanks. A question for you about productivity and how much you think the supply chain costs would ease over time and what net effect those two things would have this year and perhaps even into next year in terms of gross margin improvement. Hey, hey, this is Travis. Thanks for the question. Let me maybe, separate these things a bit. Productivity, I think I alluded to it a little bit earlier in the call. We feel really good about our productivity, and our ability to, really keep the pipeline of initiatives full. We've accelerated our investments, and you've heard me talk about this in fiscal year 2022. We've accelerated our investments to build this capability, to develop scalable and repeatable processes to keep this pipeline of productivity full, and we feel very good about that. That's again, part of our flywheel of growth, and that allow us to continue to, invest in growth and obviously re-recover our margins. As we think about the supply chain, as we sit here today, the way we see it is that it's improving. You know, in FY2022, we aren't alone in this. This is not unique to us. There were a lot of supply chain challenges. You might have heard us talk about in the context of supply chain fragility. What came out of that was we strengthened our relationships with our key suppliers. We feel really good going forward with that, those strategic relationships, the partnership, our ability to strengthen it during tough situations in 2022, and feel good if there are some shocks in the system as we move forward. Building on that, we've committed to recovering our gross margins over time. We're communicating flat this year. If you ladder up from that, certainly we have a couple of things. We've talked on our prepared remarks, and Travis mentioned earlier in this Q&A section related to our one-time $5 million costs. Obviously, some of our inflation's gonna be double digits. You know, obviously, we probably skew a little bit more to eggs. As we balance all of that with our focus on sustainable growth, we know we have that balance right. We'll eventually get it, but with all of that, we're still in really high profit growth. We'll recover them over time, but this year we have it. We've really, under Travis's leadership, we've been doing great on building our pipeline of productivity. I believe as we settle all that there, that's gonna be a real driver of fuel as we continue to invest in growth. Your belief is that, you know, your productivity will be a bigger benefit this year and that there will be some easing of those supply chain costs, but price net of commodities and any other, you know, including promotion, would bring you back to neutral. Is that? We'll be neutral. the thinking about gross margin? Certainly, all of that math adds to neutral because that's what we're doing as we absorb some of the one-time costs of Arkadelphia. Yeah. Manage the balance of a consumer customer growth model to the timing of gross margin recovery. That's the conclusion you have to make. One, like, final question about the innovation pace and then the cadence of it. You know, how will the new product news and merchandising benefit the first quarter versus the rest of the year? Thank you. As you know, David, covering a lot of companies, we launched Bouncers back in the fall. We will announce another innovation here later this week, which I know you'll really like and some industry attendees will have a chance to sample. I look forward to that feedback. As we looked at 2022, we drove 44% of the total revenue from innovation, so that's well above what the category in the index was. The pacing of the innovation and the trial phase takes about 12 months. We expect our innovation contribution to be another really strong year as we continue to get the benefit of the innovations we've launched previously. Bouncers continues to grow. We also have a Voortman innovation that's coming out with new packaging and Zero Sugar. We have another one on Hostess we're announcing, and Bouncers is still in the trial phase as well as the new one. I actually feel as good as I've ever felt related to our innovation pipeline and ability to drive growth. We'll continue to. I expect us to continue to be at a 2x index maybe of the category. Our vitality of delivering at the high end of moving up to the high end of our 15% to 17%, I'm very optimistic about. It'll be really good. The first half of 2023, we're still in that trial phase related to Bouncers, the new products we're launching. Our initial feedback from our consumers is really encouraging, and our customers continue to be really excited about it. For how excited they were about Bouncers, obviously, they have a sneak peek under the innovation since they're selling it in and it's launching here later in March. They're even more excited about the next one we're launching. Thank you. Our next question comes from the line of Pamela Kaufman with Morgan Stanley. Please proceed with your question. Hi, good evening. I just wanted to ask about what you're observing in consumer behavior across channels. I guess, are you seeing any differences in shopping habits across convenience versus mass and grocery stores? What are you seeing in terms of demand for single-serve versus multi-packs? Let me take the last part first, and then I'll talk about the cross-channel. Our single-serve business does very well, and it continues to do very well. Matter of fact, it's not only is our convenience channel continue to have strong consumption, and we do very well, where, as you know, we over-index a single serve. We also have an initiative of expanding our single-serve business across more broader channels, leveraging the strength in the business model we really spent in convenience. The expansion of that availability with, like, planogram front- ends at some really large grocery retailers is going well, and I see that, those numbers regularly and expanding much. The partnership we have with our customers to build that program on single- serve is really doing well now, and I expect it continue to drive growth and do well in the future. Related to the channels, as just as a headline, you know, one of the strengths of our business is the breadth of our availability, which is really enabled by our operating model and powered by our investment in quality products throughout the entire shelf life, adding to the availability. We strive to have the exact same quality at the end of our shelf life as day one, which really neutralizes and it really empowers our ability to be able to enact that. You ask about the channels. We've seen, obviously some minor shifts, but not like a major shift across our channels, but we're positioned if that does happen. We have seen trips which were originally really high, but they have moderated slightly recently. We continue to see strong resilience within the convenience channel. We're moving into a high season related to that. Those trends are normal. Related to consumer behavior and shopping trends, in our business anyway, we haven't seen a major move across. They've been minor with continued strength within convenience and the breadth of our availability and access to consumer really buoying our business as the consumer moves. By the way. Thank you. Related to the quality, Pam, we continue to see really strong addition of 2 times buyers to our franchise, which is the increase in loyalty over time at a rate that's almost 2 times greater than 2 times the total category. I continue to track that because that's really a testament to our investment and our product quality. Great. And then just on Voortman, continued to have very strong growth in the fourth quarter. Can you just give an update on what's driving the growth? How much, you know, where is distribution now, and what are you targeting for distribution expansion over the next year? Yeah. One of the great things about Voortman is, you know, when we originally bought it, you know, we just passed the 3-year anniversary, it has been margin accretive, growth accretive. It's added a new category to us. We have a leading position within a reduced sugar segment within a $8 billion cookie category that's grown at more than twice the rate. We immediately moved it to the warehouse to unlock the margin profile of it, then we focus on really driving the growth. What's driving the growth now is not really the distribution. Although our distribution is not going down, it continues to be positive. What's really driving growth of Voortman has been velocity. Velocity mostly related to our ability to be able to provide more compelling and higher product quality versus competition, velocity driven by our execution of our merchandising model that we learned from Hostess, velocity driven by the macro trends behind reduced sugar within a cookie category in our preferred position, and our innovation launches. When I look and dissect our model, that shows us that that's what's driving growth, despite the fact that we've been aggressive with our price-mix on this to protect the margins over time. Once again, very similar to Hostess, I expect these macro trends of velocity to continue in Voortman as we continue to build this subsegment of the cookie category into a larger piece of it, and we lap the elasticity impacts of the pricing. There's nothing but good stuff ahead of Voortman, but it's mostly almost completely due to the velocity drivers of the business. Thanks. Yep. Our next question comes from the line of Robert Moskow with Credit Suisse. Please proceed with your question. Hi, thanks. I'm at the CAGNY Conference right next to a big display of Jack Daniel's. If I become incoherent in the middle of this question, just let me know. Rob, that's what you get for having our conference call at 5:00 P.M. We'll see you tomorrow, and you'll be able to taste some of our next innovation. Okay. Well, if it's, if it's Jack Daniel's, let me know. I wanna know about shaping of the year. Like, first quarter, you have this really tough comp because of the distribution that you picked up from a competitor and now it's reversing. First quarter, you know, how should we think about volume and top line growth? Yeah. I'm trying to explain this concept the best way I can. If you look at the pacing of our volumes and Well, not, revenue pacing throughout the quarters Q1, 2, 3 and 4, the pacing of that revenue is in line with if you take out the year ago, which was mostly in Q4 of 2021 and Q1 of 2020, it follows those historical patterns. That's why we feel good. Then that is supported when we cross- tab that to our internal models, innovation, et cetera. We aligned with that approach. What's really distorting that as looking like it may be up or down is the comparison to the year ago, which was really the outlier was the growth. We also still feel good about that when you normalize it's not like we're declining because in Q4. Here, here's a stat for you, Rob. In Q4, two-year stack as high in Q1 of 20%. It's not gonna be as high, but it'll be a really strong two-year stack in Q1, and we'll be off to the races following that. That's the best way to think through how to put it in the year. Okay. That benchmark versus historicals gating. Does that mean we should look at things on a three-year stack when we're forecasting 1 Q? Is that the best way to look at it? You can look at that. Yep, compare the absolute number to the Q2 2022 growth and then gate it based on the historical gating of a three-year history. Okay. That'll get you close, and it'll take out the distortion. Okay. Okay. Is there anything more you can tell us about whether the degree of the market share declines in 4Q was a surprise to you? Like, it was a surprise to me. You know, we all knew this competitor is gonna regain capacity, but the degree to which it came back was a surprise. I just wanted to know how you thought about it when you looked at the, you know, the numbers actually came out for retail. Yeah. The share number is different than our total. Now Where we came in in Q4 was within our guide. Mm-hmm. The share number is impacted by way the total baking sweet baked goods category does specifically, of which you can look at it 2 ways, and one of the ways we look at it is clearly we're in a very expandable category. We get a lot of news and interest from a lot of competitors interested in baking. Frankly, I think we do it very well. The share number, we do not forecast as precisely as we do our own number, our own number within our guide. The category performed better than we would've anticipated, which is driving the share. Still our models fit and our ability to be able to access new millennial consumers continue to drive penetration in households, continue to increase the growth rate of our 2 times buyers. All is intact and makes us feel good about our growth going forward. Okay. Makes sense. Thank you. Yep. Thank you. Thanks, Rob. Our next question comes from the line of Steve Powers with Deutsche Bank. Please proceed with your question. Yes. Hey, good evening. Just a follow-up on the capacity investments you called out for 2023. Maybe if you could just provide a little bit more color around exactly, you know, what parts of the business are getting those capacity increases. Then based on, you know, expected growth as you go forward, just to, you know, help us frame, do you see more capacity needs in 2024 and beyond? Or is this really a, you know, a big step up in 2023, and then you build capacity, you know, for the foreseeable future? Hey, this is Travis. I'll start this, the answer. Great question. Thank you for that. What we're referring to is our new bakery in Arkadelphia. You know, this will provide 20% incremental capacity to our donut and cake lines. It will come online in Q4 of 2023. We feel really good about this bakery. It's got a kind of a sustainability first concept lens feel to it, which we feel really good about. Definitely, it's gonna really help us, you know, with the donuts and cake platform. I would say, you know, as we think about investments and capacity, this is the big one. The way to think about CapEx here. The way to think about this in the context of our capital, you'll see that our guide is $150 million-$170 million. That reflects the investment into this bakery. As we talked about in Investor Day, in 2024 and 2025 and beyond, we'll ramp that down. Just to give you a little bit of more color here, in 2022, we had CapEx spending of $130.5 million, which is about 10% of our revenue, and that's kinda how we talked about it in the context of Investor Day. That will remain elevated at low double- digits in 2023, given the guide. We'll be consistent with what we talked about in Investor Day as you think about our CapEx as a% of revenue. Yeah. Steve, let me build on that. Travis talked about the financials industry first, feel really good about it. We're adding a new bakery footprint. It's gonna add 20% capacity to donuts and our cake business, exactly where Travis said, which are strategically important to us, and they're growing. Obviously, you have to make these decisions 2 years in advance. We need this capacity. What we're gonna do when we unlock it, we're able to drive efficiencies within it. As we sit here today, as we've driven our growth over time, we talked about our total volume growth, our stacked growth. When we get back into the algorithm, we need the growth. There's not a time now that there's not a human on our line either producing cake product, sanitizing our lines or upgrading them with either equipment or preventive maintenance. We're 24/7 pretty much on these lines. If it's overtime or whatever anything. When COVID hit, we run a complex network, and we did a real nice job of optimizing the network to drive efficiencies throughout. We will do that when we unlock this new bakery. We'll be able to reset our network. We'll be able to optimize the line runs. We'll be able to then manage to a way that's less burdensome on our employees, more planful. Part of our pipeline of productivity includes our ability to be able to do that. First we need the capacity, and second, we're gonna optimize it in a way that really drives successful, sustainable, profitable growth that we talk about in the first time. We're so confident in that those long-term growth algorithm, which is mostly volume driven as we get out of this period of hyperinflation, it'll really drive great success for us. Feel really good about it, and I feel really fortunate that the team made the decision to really get it online in the back half of the year when we did, 'cause we'll need it. Yeah, that's great. You, you sort of anticipated part of my follow-up. You know, as you, as you get that flex in the overall production footprint, on the lines that you've been, you know, kind of running all out now for a while, is there investments need to be made in those older lines as you have a little bit more freedom to upgrade them, to automate them, bring them into, you know, full modernity? Is it more just get this new plant online, optimize in the new footprint and carry forward? I think it's a yes, and yes, I think would be the maybe not the try not to be the flippant answer, but the honest answer. We do a lot of things in our line. We have in part of our productivity, we invest in automation, for example, which is part of our lines. We need to take down lines to be able to do that. That unlocks really high ROI savings as we go forward. We're also, when we're launching Arkadelphia, we have some forward digital IT technology that we're able to implement right away. We're able to train our team and our supervisors at different facilities and then bring back those learnings with IT investments back. It's not only, yes, it gives us the freedom to be able to then, without as impact to capacity, to be able to update the lines. It also provides as a really a foot forward test bed for some of the IT and other digitization technologies that we plan to bring throughout the network. They're all contemplated in some of the pipeline that we talked about related to productivity. Don't forget our quality investment. Not only do that, but those digital technologies which we already implement, they really allow us to focus on our quality and support our innovation. Okay. Thank you very much. Yeah. Sure. Next question comes from the line of Ken Goldman with JP Morgan. Please proceed with your question. Hi, thanks. two quick follow-ups, if I can, in the name of clarification. I think there's a little bit of confusion about exactly what number you would sort of Soft guide us to for the first quarter's top line. I think some people are getting a little bit closer to that $340 million number. I'm curious if that's reasonable for people to model. Again, with the context, you're not actually giving the number. I just wanna make sure that we're not way off in modeling that. The second question is, you know, you're guiding to around at the mid point 5% organic top line growth for this year. You're guiding to a few percentage points above that for EBITDA, but you're also seeing gross margin percentage will be flat and your operating expense as a% of sales will be flat. I guess mathematically, the difference is D&A. I assume that's the Arkadelphia plant coming online. I wanted to make sure I'm just thinking about that, correctly. Thanks for your help there. We can follow up on the Q1 number, but it does imply that at once you get out of Q1 with the 5%, you're higher than that. You have the benchmark across the full year at a 5% growth versus the quarter. We can follow up off-offline on that, Ken, but I think your math on Q1... Did you... What did you say? I think that was slightly high. Just thinking roughly of slightly high. Okay. I don't know what- Thanks for that. Ken, let's talk about this in the follow-up call. Yeah. We don't guide the specific quarters on that. Related to the profitability that you talked about, we do get some leverage throughout, clearly throughout the P&L from the top line to the EBITDA to the EPS. If you go to the margin bridge, we talked about that related to mostly related to some of our fuel initiatives, some of our pricing flowing through in the first half, and then our growth and our price-mix throughout the year. That's where we feel about that. We'll follow up on that one too. Thanks, guys. We have reached the end of the question and answer session. I'll turn the call back over to management for any closing remarks. That's it. You know, I feel I'd like to thank the Hostess Brands team for what they do every day to deliver the results that we have sustainably shown that we can deliver year after year after year. We look forward to continuing to take a long-term, sustainable, profitable growth to this business. I'm confident that our position to drive industry-leading growth will continue. So thanks for your interest, and we will see you next quarter. This concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.