Good day. Thank you for standing by. Welcome to the Vital Farms conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the call over to your speaker for today. Thank you. Good morning, and welcome to Vital Farms' second quarter 2023 earnings conference call and webcast. I'm joined on today's call by Russell Diez-Canseco, President and Chief Executive Officer, Thilo Wrede, Chief Financial Officer, and I'm happy to introduce Pete Pappas, our Chief Sales Officer. By now, everyone should have access to the company's second quarter 2023 earnings press release issued this morning. This is available on the investor relations section of the Vital Farms website at investors.vitalfarms.com. Through the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and to the company's quarterly report on Form 10-Q for the fiscal quarter ended June 25th, 2023, filed with the SEC today, and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note that on today's call, management will refer to adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to our earnings release for a reconciliation of adjusted EBITDA and adjusted EBITDA margin to their respective most comparable measures prepared in accordance with GAAP. Now I'd like to turn the call over to Russell Diez-Canseco, President and Chief Executive Officer of Vital Farms. Thanks, Matt. Good morning, and thanks everyone for your time today. I'll start by sharing updates on how we delivered on all of our commitments to our stakeholders during the second quarter. Pete will then provide some insight into how our brand continues to expand its footprint with our retail partners. Finally, Thilo will provide more in-depth information on our quarterly results and our annual guidance before we take your questions. It was another strong quarter at Vital Farms. We achieved $106.4 million in net revenue, which reflects a 28.4% increase from the prior year period. The growth was driven by price mix of about 21% and volume growth of about 6%. Our retail footprint has expanded by almost 2,500 stores since last year, and our products are now available in approximately 24,000 locations across the US. Our gross margin expanded by over 500 basis points to 35.5%. We posted another strong quarter of adjusted EBITDA performance at over $11 million, achieving an adjusted EBITDA margin of 10.7%. We delivered these strong results even though during the second quarter, or the 13 weeks ended June 25th, 2023, the egg category saw retail dollar growth of only 1% compared to average growth of over 60% over each of the past three quarters. As you might recall, we anticipated this dynamic at the beginning of the year. In this environment, Vital Farms grew our dollar share significantly by about 150 basis points relative to the same period last year. We are now about 7% of the total egg category in tracked retail channels. Our overall volume is in tracked retail channels, grew at about 2% during the same period, ahead of the category, which declined again, down over 2%. Vital Farms also gained about 15 basis points of volume share, maintaining positive momentum, while many other premium brands have suffered declines in unit growth during the same timeframe. We believe our performance offers proof that we have built a strong brand that resonates with consumers, despite what may be happening across the category at any given time. This is an impressive performance against a volatile industry backdrop, I think it makes sense to review what has transpired in recent months across the egg industry and how we believe it may evolve. The industry experienced a period of prolonged price inflation over the last year, primarily within conventional eggs. Much of this inflation was driven by a supply shock caused by Avian influenza, which you have heard us discuss before. As birds were impacted by the virus, the size of the U.S. laying flock declined and fewer eggs were produced, driving higher prices. As you'll recall, we built these dynamics into our guidance for the 2023 fiscal year. As we look at the industry today, the U.S. laying flock has largely recovered, and the supply of eggs has improved dramatically from earlier in the year. As inventory has returned, prices on conventional eggs have moved below historic averages, which is similar to what occurred after the last avian influenza outbreak. We are seeing short-term promotional activity as retail partners and producers are getting back to a normal cadence. We expected promotions to increase given the return of supply at this point of the calendar year, and the deals you may see from some retailers on eggs are not a surprise to us. We have purposely avoided promotions in the first half of 2023, given the industry dynamics, knowing these issues would eventually reverse. We are prepared to resume some level of promotional activity in the back half of the year as business returns to normal. With that said, Vital Farms will not be chasing consumers to drive quick, unsustainable volume gains with discount deals that dilute our premium brand. We will continue to methodically build our brand and work with our retail partners to grow the category. While the current supply situation is likely behind us, there are issues that will continue to impact the industry. We're still focused on the thoughtful development of our unique supply chain and our relationships with our farmers, and we believe we are well positioned to withstand changes in the operating environment and continue to propel our rapid growth. Let me conclude by reiterating that we will remain focused on driving long-term positive outcomes for each of our stakeholders, including our stockholders. This has been the goal of our business from the start, and we have been intentional about the choices we made over the past several years to drive towards this goal. We believe the decisions we make every day fully consider each of our stakeholders, which contributes to our enduring success and provides a competitive advantage. Our 2023 operating plan has always built in flexibility to drive success regardless of the external environment in the latter half of the year. We have great confidence in the trajectory of our business and are raising our fiscal year 2023 outlook for net revenue and adjusted EBITDA. Thilo will provide further details around our financial outlook later in the call. Now I'm happy to introduce our Chief Sales Officer, Pete Pappas, who will provide some context around the long-term focus of our sales strategy here at Vital Farms. Thank you, Russell. Good morning, everyone. Our brand is an extension of Vital Farms' purpose, and our customers choose us because they know we are committed to improving the lives of people, animals, and the planet through food. In my experience, one way to gauge the health of a brand is the ability to expand distribution on a sustained basis. In other words, get into more doors and have more SKUs on the shelf in existing doors. With that in mind, I want to talk a bit about what we're doing in this regard. Through long-term, deliberate efforts, we have driven substantial growth in our market presence. As Russell mentioned earlier, we continue to successfully expand our footprint with new retail partners. We've added almost 2,500 stores over the last 12 months, and as a result, our products are now available in approximately 24,000 retail locations across the United States. I'm also extremely bullish about the opportunity to place additional items on shelves with our current retail partners and the incremental net revenue it can drive for Vital Farms. We currently have an average of 2.5 SKUs per store across the food channel, which is well below our largest branded competitor, who currently offers approximately six egg SKUs. Most of our SKUs have a higher velocity than the category average. In fact, we have core SKUs that are high performers relative to legacy SKUs in some of our retailers' current sets. As we continue to demonstrate to our retail partners that adding incremental Vital Farms SKUs to their assortment leads to better category performance, we're confident that they will add more SKUs to existing shelves in the coming years. This strategy provides the opportunity to drive growth at both newer and legacy retail partners, where innovations like True Blues or Restorative also add to our depth on the shelf. Our success in building and maintaining strong relationships with our customers has been a cornerstone of our growth. I'm proud to share that we've emerged as a category leader for many of our retailers, a testament to our commitment to quality, consistency, and customer satisfaction. We recognize that retailers are crucial partners in both our journey and our mission, and we've invested heavily in fostering mutually beneficial collaborations. Through communication and tailored support, we've been able to understand and address the unique challenges faced by retailers, providing exceptional service and going above and beyond expectations. This progress would not have been possible without the talent and tenacity of our dedicated crew across the organization and the trust our retailers place in our brand and sales leaders. We've worked hard to identify and onboard new retailers, strategically positioning our products for maximum visibility and accessibility. I'd also like to express my sincere gratitude to our valued retail partners and food service operators for their unwavering support. Thank you for your continued trust and confidence in Vital Farms, and for your time today. With that, I'll pass it over to Thilo. Thank you, Pete. Hello, everyone, and thank you for joining us today. I will review our financial results for the second quarter and the June 25, 2023. I will provide more details about our increased guidance for the fiscal year 2023. As Russell mentioned earlier, we had another strong quarter with net revenue of $106.4 million, an increase of 28.4% compared to the prior year period. This was driven by price mix of about 21% and volume growth of 6%. The volume growth was driven by increases at both new and existing retail customers. Let me put the volume growth in a bit of context. In Q1, we achieved 26% volume growth over the prior year period, which included a one-time benefit due to avian influenza. Last quarter, we said this was a high single digit benefit. Excluding this benefit, our underlying volume growth in Q1 was in the high teens. In Q2, supply returned to the market, but customer order patterns became much more volatile as retailers managed through the return of normal supply and order algorithms had to adjust for noisy baseline data. As a result, even though supply was normalizing, one could still experience empty retail egg shelves throughout Q2. We estimate that these irregular order patterns reduced customer demand for us by mid-single digit%. Now that we have had more than a quarter of a normal supply, our order books have returned to more expected levels. Gross profit for the second quarter of 2023 was $37.8 million, or 35.5% of net revenue, compared to $24.9 million, or 30.1% of net revenue for the second quarter of 2022. Gross profit dollars benefited primarily from higher sales, and the 540 basis point gross margin expansion was a result of increased pricing across our portfolio, more than offsetting a few headwinds, including higher input costs and higher packaging costs. SG&A expenses for the second quarter were $23.9 million, or 22.5% of net revenue, compared to $17.0 million, or 20.5% of net revenue in the second quarter last year. The increase in SG&A was primarily driven by higher marketing expenses and some increased employee-related costs as we grew headcount to support our continued growth. Excluding marketing expenses, SG&A declined year-over-year as a% of net revenue. Shipping and distribution expenses in the second quarter were $5.9 million, or 5.5% of net revenue, relative to $7.2 million, or 8.7% of net revenue in the second quarter of 2022. The decrease in shipping and distribution expenses was driven by a decline in line haul rates and better truckload utilization. Adjusted EBITDA for the second quarter was $11.3 million or 10.7% of net revenue, compared to $3.7 million or 4.4% of net revenue for the second quarter of 2022. That marks the second consecutive quarter of double-digit adjusted EBITDA margin and was achieved despite the previously mentioned increase in planned marketing spend for the year. Lastly, an update on our capital structure. As of June 25th, 2023, we had total cash, cash equivalents, and marketable securities of $93.5 million, an increase of $10 million compared to the first quarter due to the strong business results. We had no debt outstanding. Before concluding the call, I want to update you on our raised fiscal year 2023 guidance. We now expect net revenue of more than $465 million, up from our prior expectation of more than $450 million. Furthermore, we now expect adjusted EBITDA of more than $35 million, up from our prior expectation of more than $30 million. We still continue to expect that gross margin in the second half of the year will be below what we have posted in the first half of the year, primarily due to the return of a more normal promotional cadence in the back half of 2023. In SG&A, we continue to anticipate higher marketing spending in the second half of the year compared to the first half. Lastly, we are now planning for fiscal year 2023 capital expenditures in the range of $16 million-$21 million, below our prior forecast of $25 million-$30 million. Before we open the line for questions, I would like to reiterate a few points. First, we have successfully navigated several anticipated challenging dynamics across the egg category and continue to grow our volume in a category that declined this quarter. Second, we are taking a different approach to pricing than many of our competitors to protect the retailer and consumer value equation of our brand. Third, we continue to expand our distribution at new and existing retail partners, as can be seen in the growing dollar and volume share for Vital Farms. Thank you for your time and interest in Vital Farms today and for the confidence that you have placed in us with your investment. With that, we will now be happy to take your questions. Thank you. As a reminder, to ask a question, you will need to press star one, one. Please stand by while we compile the Q&A roster. The first call comes from the line of Pamela Kaufman of Morgan Stanley. Pamela, please go ahead. Good morning. Morning, Pam. It's good to see a guidance raise, given the performance in the second quarter. Your increased EBITDA guidance implies about $10 million in EBITDA in the second half versus $25 million in the first half and a much lower EBITDA margin. How much of this is conservatism and what's driving your outlook for the moderation and profitability? Good morning, Pam. Thanks for the question. I think there are a few things at play. One is, you know, we, we talked for the second quarter that there were a few dislocations in, in order patterns, was a good reminder for us that while the quarter. On the underlying performance in the quarter was exactly as we expected, there's variances from quarter to quarter in, in how this plays out. We just wanna make sure that we are not getting ahead of our skis, if you want. There's there is some conservatism in there. The other part that plays into the EBITDA guidance is we, you know, as we mentioned, we are planning to get into a bit more regular promotional cadence, and we're planning to take up our marketing spend in the second half. All those obviously weigh on, on our margin outlook. With that, between conservatism and some planned increases in spending, we wanna make sure that we don't get ahead of our skis. Okay, thanks. Maybe can you just elaborate a bit more on what you observed from customer order, order patterns in the second quarter, and what you're seeing in the third quarter so far? Hi, Pam, this is Pete. One of the things that we saw in Q1 was a dramatic spike in orders as a result of AI. As a result of that spike, what we saw was retailer algorithms, which typically drive a lot of the order patterns, kind of got a little bit. It took a little bit of time for those to adjust, to moderate as supplies now have come back into balance. As those supplies, the orders have come into balance, what we're seeing now is a much more normal, a return to normal order patterns. As we start to promote, we're starting to see an increase in those orders as well. We're very bullish about the way that we have planned the year, particularly in the back half, now that these algorithms have caught up with the supply and balance. I think we're really well poised with the plans that we have in place. Thank you. I'll pass it on. The next question. Everybody, please stand by for a sec. We're trying to figure out the technical issue we have here. Hello. Hey there. The next question comes from the line of Cody Ross, UBS. Cody, your line is now open. Great. Thank you for taking our questions. Good morning, everyone. A couple questions for me. Can you just help us understand and dig into more on your prepared remarks, your decision to pull back on promotions in Q2, and how you're thinking about increasing your promotional intensity going forward, especially in light of what your competitors are doing? Hey, Cody, it's Russell. Good to be with you. The first thing is, as Pete was describing, and as we foretold, when we, when we gave our guidance at the beginning of the year, the return to normal supply throughout the industry, predictively led to some sort of dislocation, I would say, in the way that retailers and distributors ordered, as they had to switch from a time of scarcity to a return to a time of plenty. The short-term impact of that, and this occurred in Q2, and I believe we're largely past it now, was that they went from having built up some inventory to drawing it down, but maybe under ordering and then having some sort of stock-outs in their warehouses and on shelves, and then they kind of bounced around over ordering and under ordering for a bit. The net result of which is we think it was a, you know, sort of, I would guess, single digit, 200 basis points of growth that we probably missed just by frankly, not seeing the in-stock levels that we thought we could deliver on that in Q2. Against that backdrop, you know, we also predicted, and it's playing out, that the return to full supply would lead to an overshoot, especially amongst commodity producers, at the very same time that retailers were probably looking for a way to recover their price perceptions from a time when eggs were very highly priced in Q1. The net result of which is we're seeing some really hot front page ads for private label eggs across the country, as low as $0.50 or $0.75 a dozen in a multi-dozen pack. The reality is, I don't wanna sort of try to throw our very sort of one, limited, but more importantly, intentional promotional plans against the splash of a front page ad on a hot price for commodity X. We're very happy to, to wait until those kind of short-term supply dislocations play out, until the retailers regain their price perception, until other producers sort of clean out their oversupply issues, and then we can start to talk to consumers again and continue our strategy of driving trial through promotions as opposed to driving short-term volume through promotions. Pete, do you wanna add anything to that? Thanks, Russell. Yeah, I think the only thing I would add is two things. 1 is, one of the, the, the principles that we follow is we wanna be very, very protective of the brand, we do not see a need to subsidize volume through summer promotions. The bulk of our volumes kicks off really now in back to school as well as in the holiday period. You'll see us begin promoting in those those timeframes in partnership with our, our retailers. This has all been orchestrated in support with our retail partners. They, they understand that we're not in a position to where, A, we really need to be promoting at this point in time, given performance, B, the role that we play for these categories is, is quite candidly margin driving. We're, we're an offset to a lot of the deep discounting that they do, given our velocity and the margin structure that we provide them. That's super helpful. Two more quick ones from me, if I may. Just trial seems like it's down a little bit naturally as more supply is coming on. That makes sense. Can you just help inform everyone on the call today how your repeat purchase rates have performed through this- through all this noise of supply coming back online? Yeah, our. Yeah. Well, Go ahead, Russell. Yeah, I was just gonna say that I'm not seeing a big change in repeat purchase behavior as we've seen consistently before, during, and coming out of COVID. The reality is that we get a pretty consistent trial to repeat to loyalty funnel. Frankly, it's still a, it's still a big part of our marketing team's focus to continue to improve those conversion rates, but we, we really haven't seen a big change up or down. Great. That's super helpful. Last one from me. You guys recently announced an Analyst Day, I believe, in September. Can you just share, to the extent that you can, any thoughts on what we can expect from high-level topics that may be addressed? I will leave it there. We hope you're coming, Pete, Cody. You're gonna join us? That's the goal right now. That's the goal. I mean Austin in September sounds good with college football in full swing, so I'm excited. Thilo and Matt are gonna make it worth your while. That sounds good. Cody, I don't know if we'll be able to swing college football, but intention is that it's been a few years since the IPO, which for us then is a good opportunity to spend a bit more time with the financial community to talk about what our longer term plans are, how we will accomplish those plans, what gives us confidence that we can accomplish those plans. It will be an opportunity for the financial community to get to know the company a bit better. I'm new. I haven't met most of you yet. Will be an opportunity to sit down and have maybe a few more in-depth conversations as well. That sounds good. Thank you for taking our questions. Best of luck. Thanks, Cody. Please stand by for our next question. The next question comes from the line of Matt McGinley from Needham. Matt, please go ahead. Thank you. With your updated EBITDA guidance, it implies that your EBITDA margins shrink from about 11% in the first half to 4% in the back half. You, you noted the reasons, and you, you said there could be some conservatism built into that. Is that 4% EBITDA margin implied in the back half, the run rate into next year, meaning that's like the new, new margin profile to support growth? Are these expenses just unusually weighted towards the back half of the year, and next year should, you know, kind of look more like the average for the year and not have this front half, back half dynamic of, of high margin, low margin? Yeah, Matt, thanks for your question. I would not say that our exit rate in Q4 is going to be the run rate for next year. What you're seeing this year is that the EBITDA margin, it moves around quite a bit from quarter to quarter based on when we spend marketing dollars, depending on how we roll out promotions and so on. There's really nothing changed about our EBITDA margin guidance, which is low double digits. That's what we're aiming for. We have accomplished that first half this year. The second half will look a little bit lower than that, that doesn't take anything away from where we want to go. As we are growing and, and getting a bit more efficient with our spending, that is how we will get to that double-digit EBITDA margin, on a consistent basis. Great. My second question is on, on the inventory. You've been building inventory for the last year to support the volume growth and, and probably to stock up to negate any potential impact from, from AI. Do you expect inventory levels to decline through year-end, or is this the right level of inventory to support the business going forward? Where our inventory levels are today. You know, supply for the year to date has come in exactly, exactly where we expected it. We've been talking about the slight dislocation in order patterns throughout Q2. Inventory is maybe a bit higher than, than what we would have planned for. It gives us the opportunity to now draw this inventory down throughout the balance of year and start 2024 with a healthy inventory position. That then gives us the certainty that we'll have the supply that we need for our growth going forward. With that, we feel comfortable about the position that, that we have right now. Yeah. Matt, the other thing I would call out is that, as you've observed, there is some seasonality to this category and to our own sales. Because we haven't figured out a way to convince the chickens to lay more eggs in the winter when sales are higher than in the summer when they're lower, we actually build up some inventory every summer and then draw it back down every winter. There is a baseline of that in our annual planning. That makes sense. Great, thank you. One moment for your next call. The next question comes from the line of Adam Samuelson from Goldman Sachs. Adam, please go ahead. Good morning, everyone. Thank you for taking our call. This is actually Guillermo stepping in for Adam. I was wondering if you could provide some additional color on the lower capital expenditure guidance. What are the kind of opportunities that you are putting on hold or potentially walking away from? If this could mean a potential deferral into the 2024 capital program? Yeah, Guillermo, thanks for the question. The, the updated capital guidance, it's, it's really a reflection of, some investments that we're pushing into 2024, to make sure that we have, the right resources in place to execute the spending. Part of it is an assessment that I've done the last four months since I've joined, about where do we put our money and, and what do we focus on? There's not one single thing that, that really drives this reduction of guidance. It's, it's several things that are coming together. Timing is part of it. There's some technology spending that we're pushing into next year, for example, to make sure that, that we're in the best possible position to, to execute that correctly. That, that's super helpful. If I may ask a follow-up on, what would be the necessary conditions for you to start becoming more active on, on the potential launch of a new category that, you had mentioned previously? Well, hey, Guillermo, it's Russell. I think consistent with the way we've talked about that in past calls, You know, our own internal expectations for whatever we do next have certainly risen in terms of path to profitability and, you know, the, the detail with which we have an operating plan that we're confident in. Those rise, in part, with cost of capital. One thing that would certainly help us move a little faster would be to see cost of capital come back down, just as it would for, I think, anybody considering investments in more speculative or startup kind of new category expansion opportunities. You know, for us, we continue to work in earnest, and, and, the good news is that if and when we announce something, it will have benefited from even more rigor than we might have otherwise brought to it in a zero-cost of capital environment. That's super helpful. Thank you for the color and comments on the quarter. Thanks, Guillermo. One moment for your next question. The next question comes from the line of Matt Smith of Stifel. Matt, please go ahead. Hi, good morning. Good morning, Matt. Thank you. I I wanted to ask a little bit about the retailer environment. We've heard retailers prioritizing offering consumer choices in the inflationary environment and the desire to see more attractive price points, and, and maybe that fits in with the more aggressive promotional stance we've seen in the conventional egg category. I, I wanted to get your perspective on if you're still seeing distribution gains for the premium products, are you hearing any pushback on your price points? Are retailers seeing the benefits from the higher velocities that you bring to the egg shelf, and therefore, the premium product benefits the overall category? Thanks, Matt. Yeah, I, yeah, I think you kind of answered your own question. Yes, you're exactly right. Retailers do see the value that we bring to the category and the fact that we are premium priced, we do deliver a healthy margin to them, and we're a good counterbalance to the discounting and promotions that they're, they're executing currently. We still have a lot of runway from a distribution standpoint, both in new points of distribution, meaning new stores, as well as increasing the number of items that we have in those existing stores. You know, our largest branded competitor has more than 2 times the number of items on shelf than we do in a conventional grocery store. When you compare that to the number of SKUs that we have in our natural segment, which is over almost six items, you can see the opportunity that exists in the largest channel of, of, of grocery and egg shopping, in the state. We think that there's a just a tremendous amount of upside. Our partners are starting to recognize that upside in a lot of the work that we're doing with them. I'm, I'm extremely bullish. The second half, I think, really positions us, quite well. Thank you for that. Maybe as a follow-up, we've seen some retailer activity bringing in private label options that have, you know, some of the more premium attributes to them, whether it's various claims other than conventional. Are, are you seeing shelf gains for those types of products as well? If so, where, where are those shelf gains coming from? Is that the conventional products shelf set getting a little smaller to accommodate that? Yeah, I think, you know, imitation is the greatest form of flattery. So we're flattered that others seek to replicate what we're doing. Our brand is a very, very powerful brand, and it stands for something more than just the price. Fortunately, retailers and shoppers recognize that. Yes, we are starting to see retailers dabble a little bit in that space, but I think, as you can see, it's not encroaching in our performance. It's not encroaching in the space opportunity that we have on shelf. I anticipate they'll continue to experiment and dabble, but, you know, it's not a new trend for us. It's something that we've been battling really almost since the time we entered the category. Thank you for that perspective, Pete. I'll, I'll leave it there and pass it on. Thank you. One moment for the next question. The next question comes from the line of Robert Dickerson from Jefferies. Robert, please go ahead. Great. Thanks so much. Hey, guys. Hi, Rob. Just a, I guess two questions. First question, just in terms of, like, the higher ad and promo spend. You know, when you think about, I guess,% of sales, is that you, you kind of view that as maybe ticking up a little bit back half, probably through 2024, just given all the pricing taken? Or, you know, is this kind of an area where you can maybe incrementally weight it to the back half, but maybe for the full year, it's not, you know, materially different? Just trying to get a sense of magnitude and kind of depth of promotional need. Yeah. Hey, Rob, it's Russell. Let me talk about the, the marketing spend first, because that's the one that probably swings the most. You know, I think what we've observed over the years is that, you know, Q4 is the peak for this category. Q4 is, is a strong, quarter for our sales, and, and Q4 is where we wanna do more promoting. You know, when we, y ou know, regardless of how Q1 and Q2, sort of, played out, when we gave our guidance at the beginning of the year, our plans included, you know, a, a, you know, a, a stronger, level of, of marketing spend in the back half of the year, specifically to take advantage of that higher time of sales activity. That's not a, you know, that, that may be a little less about trying to recover from high prices and a little more simply about the seasonality of how we wanna promote and when we wanna promote. I'd say broadly, and certainly, I- I would encourage Pete to speak up too, or, or maybe even Thilo. In terms of promotional spend, I don't see us entering a period of, of different levels of promotional spend than we've historically done. I think that's-- we've had that historically appropriately dialed in. I think this is simply a resumption of a, of a more normal pattern as the market returns to a little bit of a more normal dynamic. Okay, super. Then I guess just in terms of, you know, where costs are, and I guess as you kind of think through just pass-through dynamics of contracts, with your farmers, is there anything there to add? I mean, I, you know, the commodity markets have been a little fickle, but kind of generally, you know, it still looks like you have some kind of core feed costs that have been deflationary. Just kind of wondering, you know, there might be some pass-through dynamic on the contracts, but doesn't sound like you're talking about kind of pass-through dynamics on the end product, you know, kind of net of the promotional spend. Yeah. The thing I'd call out there, Rob, is that, you know, it's funny, yeah, we've seen that short-term decline in corn and maybe even soy, but if you compare it to three or four years ago, it's still up, you know, in some cases, 50% plus. I don't have the latest data, but it's, it's substantially higher than it was just a few years ago. That, combined with everything from, you know, hourly, you know, labor for our hourly crew at Egg Central Station, which is much higher than it was just a few years ago. Certainly, as we've described, we've taken farmer pay up above what the kind of contractual mechanisms would do, in part to, to, help accommodate increases in costs that are outside of feed. You know, we don't see a lot of those things reversing. You know, our sense is that this is probably the new normal in terms of our pricing. The hope is that we've taken enough pricing to, to, sort of accommodate those inflationary pressures that we've seen. All right, super. Then I guess just lastly, in, in terms of the volumes, you know, understand, there was some kind of choppiness on the order side and flocks normalizing, et cetera. I think, you know, you called out kind of that mid-single digit, kind of one-off, delta in demand. I guess that would have been there if it were more normalized. Then if we're thinking kind of back half, you know, given, you know, strong volumes, and shipments last year, I mean, it, it kind of seems like a little sort of talking to maybe like low double digit volume potential. I mean, you know, I'm just taking the 6% volume in Q2 and putting, putting mid-single digit on top of that, and your comps aren't necessarily more challenging. I don't know if you provide that level of detail, but just trying to get a sense of that volume health trajectory. Yeah, Rob, I mean, you know, we're not giving volume guidance. As I think about the second half, we do have shelf resets coming in the fall that will help us get some additional product on the shelf. That should help with volume. We talked about that we gained about 2,500 new, new doors over the last 12 months. That is now volume that we can sell through. You know, this year, for the first time since we've gone public, we have a 53rd week in December. It's a week between Christmas and New Year, so for us, it's a bit of uncharted territory, what that will mean in terms of how much volume upside that will drive, but there is the benefit of having an extra week this year. All those pieces come together, as you, as you think about the volume, growth that we will get for the balance of the year. These pieces are, are part of the reason why we feel comfortable taking up guidance. All right. Then maybe just last one, last quick one, kind of housekeeping. You know, clearly shipping distribution rates have come down a little bit, kind of across the board for everyone. Q2, you know, more attractive for you than it has been historically. Is that kind of a general, you know, normalized run rate as you think through at least the back half of the year? Or is, is there anything that could, you know, change? Yeah, if, if I had a crystal ball, I would probably be doing a different job. For now, we're assuming that we will continue to have year-over-year benefits from better distribution rates. There are really two pieces at work for us, right? One is that just the line haul rates have come down and fuel costs have come down. That certainly benefits us. The other part is that our shipping is getting more efficient. With scale, we're able to put more pallets on trucks, and you pay for the truck, right? You don't pay per pallet. With that, the cost per pallet is coming down. With the growth that we are delivering, it drives some margin benefits for us through more efficient distribution. All right, thank you- Our own Rob, our own internal expectations assume some uptick in Q3, Q4, just with seasonal volumes and. Yes. Always there's the potential for hurricane season to have FEMA sop up a bunch of capacity as well. Fair enough. Fair enough. Super. Thank you, guys. Thanks, Rob. One, one moment for your next question. The next question comes from the line of Ben Klieve of Lake Street Capital Markets. Ben, please go ahead. All right, thanks for taking my questions, and congratulations on a great quarter. Two quick ones from me. First, on the various dynamics that you've been talking about with, with kind of choppiness and volume and, and, and inventory expectations over the next couple quarters, can you talk about how all these dynamics are informing your outlook for bringing in new farmer suppliers here, you know, throughout this year and into next year to, you know, provide additional supply in 2024? Are, are you slowing that down or is that continuing, you know, as expected? Yeah. Thanks, Ben. You know, we, we sort of start working on those plans about two years in advance, and that's lends itself to that long-term through-cycle mentality that we use when we kind of plan everything we do. We have to make a final call about a year in advance of the demand. The, the purposely vague answer is we're, we're planning now for the supply we need a year from now, and we're adding, we add farms, you know, throughout the year and throughout the life of our company. The reality is to tell you how much we're adding is to signal what we think our growth is gonna be next year, and we're not quite ready to do that. Okay, fair enough. Thank you. Then one other one. Pete, on your, your prepared comments, you, you discussed that your SKU volatility was, you know, in excess of your peers for, for most of your products, which certainly tracks. I'm wondering if you can elaborate a bit on the categories that, on the SKUs that, that are, that have velocity that are below, some of your counterparts, and kind of how that is, informing your, your strategy here for future product expansion. Ben, I'm not quite sure I, I understand the question. I'm sorry. Well, so, so in your prepared remarks, you said that there are some SKUs that were, that most of your SKUs were, were outperforming on a velocity basis relative to counterparts on the shelf, and which implies that some are, are underperforming. I'm curious if you can elaborate a bit on the dynamics that, that are leading to, you know, certain SKUs having velocity below kind of what you would probably be expecting? Then if you can elaborate on, on, you know, the dynamics behind that and, and how that's informing future strategies, you know, with different product categories, that would be great. Hey, Ben, it's Russell. If that still doesn't make any sense, that's okay. No, no, no. Yeah, no. Go ahead, Russell. Ben, it's Russell. I the thing I'd say is, like, we, like any company in our category, have a portfolio of SKUs. We've got, you know, our, our heavy hitters, our, our high volume SKUs, which are gonna show up in just about any retailer's top five, if not top one list. It's, it's things like our core dozen black carton, conventional pasteurized eggs, our organic brown carton dozen, pasteurized eggs, and then we've got 18-count versions of both of those. I think those are probably our top four most popular SKUs. We also have, like any other, you know, CPG company, a longer tail of items that move more slowly than those things. For example, some retailers, for strategic reasons, have asked us to sell them what we call off-size eggs, jumbo eggs, or medium eggs, for example. Perhaps in some retailers, they'd like to see a smaller pack size. For example, apartment dwellers in Manhattan sometimes prefer a six-count because a single household may not eat 12 eggs in a week. Those items perform the need of that retailer, but they may not be in our top four. They may not be the items we take to any retailer across the country, but for specific retailers in specific geographies, they're wonderful. That's all we meant by that. We've got some clear winners that no matter where we go, these top four items should be in your set. We've got a long tail of more specialty items, blue eggs, regenerative eggs, six-count, medium, jumbo, that belong in some, but perhaps not all stores. Got it. That, that's helpful. Thanks, Russell. Thanks for taking my questions. Congratulations again on a really good quarter, and I'll get back in line. Thank you, Ben. Thanks, Ben. One moment for our last question. The last question comes from Robert Moskow of TD Cowen. Robert, please go ahead. Hi, everybody, congratulations, Thilo. Thanks, Rob. Oh, you're welcome. I guess my question is about the stock price. It's, you know, it's been a disappointing year, and, and I know, you know, there's a lot of, you know, there's a lot of contingencies to, to, to, to, cope with. You know, you got $47 million of cash on the balance sheet now, and, and I think, Thilo, you even said that you did a review, you found that, you know, some of these projects probably should be delayed. I imagine some of those are category expansion projects, which are, are inherently risky. Is there any thought between you and management and the board about using some of that cash to buy back stock in this environment? Or is it just not possible, given the, the capital structure? Yeah, Rob, I, I think the, between management, myself, the board, I think we would all agree that our stock is undervalued right now. I would also say at, at the current moment, there are plenty of growth opportunities that we want to go after, where I would rather put my cash right now. You know, obviously, never say never, things can change, but, with needed capacity expansion that has to come over the next, you know, however many months, with, new category entries still on the horizon, I wanna make sure that we keep our powder dry so that we can act when, when we have an opportunity. You know, with that as kind of the mindset, I would say share buybacks right now, right now are not on the, on the priority list. Okay. Appreciate the, the certainty. All right, thank you! Thanks, Rob. Thanks, Rob. Good to hear from you. See you. Thank you. I would now like to turn it back over to Matt Siler for closing remarks. Thanks for your interest and time, everybody. Have a great day.