Good day, and thank you for standing by. Welcome to the Vital Farms' fourth quarter 2023 earnings conference call. At this time, all participants are on 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 then 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 conference over to your speaker today, Anna Kate Heller, Investor Relations. Please go ahead. Thank you. Good morning, and welcome to Vital Farms' fourth quarter and fiscal year 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 Kathryn McKeon, Chief Marketing Officer. By now, everyone should have access to the company's fourth quarter and fiscal year 2023 earnings press release issued this morning. This is available on the investor relations section of Vital Farms' website at investors.vitalfarms.com. During the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could 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 annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC today and other filings with the SEC for a detailed discussion of the risks that can 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 would like to turn the call over to Russell Diez-Canseco, President and Chief Executive Officer of Vital Farms. Thanks, Anna Kate. Good morning, and thanks everyone for your time today. I'll start by sharing how Vital Farms continues to deliver on our commitments to stakeholders, including the commitments we made to our shareholders in September at our 2023 Analyst Day. Then I'll hand it over to our CMO, Kathryn McKeon, to cover how Vital Farms continues to grow our purpose-driven brand and build trusted relationships with consumers. Thilo Wrede, our CFO, will then provide more in-depth information on our fourth quarter and full year results, as well as guidance for fiscal year 2024. The headline today is that we had our strongest ever quarter for net revenue, and we're on track to meet the ambitious multi-year goals that we laid out at our Analyst Day, including our growth to $1 billion of net revenue by 2027. We also made significant progress toward our 2027 targets for 35% gross margin and 12%-14% adjusted EBITDA margin. We entered 2024 with strong momentum and a well-defined roadmap to reach these 2027 targets. Let's get into some of the details, starting with net revenue. We had a record fourth quarter with $135.8 million of net revenue. That's the highest net revenue we've ever achieved in a single quarter and a 23.4% increase over the fourth quarter of 2022. We delivered $13.9 million of adjusted EBITDA, or a 102.6% growth versus the fourth quarter of 2022. This record quarter was driven by a combination of strong consumer demand, increased distribution, expanded SKUs at existing customers, and a diversified supply chain with over 300 family farms. We also benefited from a 53rd week of operations in the fourth quarter, which contributed about 7.7% of net revenue growth and 12.7% of adjusted EBITDA growth during the quarter. As we discussed at our Analyst Day, we continue to focus on expanding distribution to new retailers and increasing SKUs at existing retailers. Both efforts paid off in the fourth quarter. Our distribution gains during 2023 were considerable. We added close to 2,000 new stores compared to the end of 2022, meaning that our products were available in approximately 24,000 retail locations across the United States at the end of 2023. The majority of our distribution gains in 2023 were from expansion in our mass channel and existing chains, as well as regional retailers in the Northeast, California, and the South. We also increased the average number of SKUs at existing retailers. Our average egg SKUs per store in the food channel was 2.7 for 2023, compared to 2.4 in 2022. We're continuing with our expansion as we already have some key wins in January and February of 2024 that will add even more SKUs in existing stores throughout the year, including at several leading grocery retailers. We believe these incremental wins set us up for continued growth at these retailers in 2024 and beyond, and we expect additional wins throughout the year. We continue to see faster growth in sales of higher price point SKUs, particularly fueled by strong demand for our 18-count packs and organic eggs. The positive trends in the organic category demonstrate the strong reputation and foundation of the Vital Farms brand. They also show that consumers are increasingly willing to pay a premium to make sustainable and ethical food choices. Our expanded distribution, increased SKUs at existing stores, and growth in higher price point SKUs enabled us to grow sales and unit volume, while the rest of the category was either flat or down. As of the 24 weeks ended December 31, 2023, Vital Farms now has the number one branded egg SKU in the food channel based on dollar sales. Looking specifically at the data in the tracked channels, during the 13 weeks ended December 24, 2023, the egg category experienced a retail dollar decline of 31%, while Vital Farms grew retail dollar sales by 13% in the same time period. Additionally, the category saw unit volumes stay flat during the same time frame, while Vital Farms unit volumes grew by about 1%. It is worth noting that due to the mix shift to 18-count packs, our volume growth in tracked channels tends to be underreported. Our dollar share is over 8% of the total egg category. Our resilient supply chain, with over 300 family farms and our world-class washing and packing facility at Egg Central Station, are big reasons why we're able to continually meet growing customer demand. Our supply chain model and our ability to execute has also enabled us to successfully navigate potential disruptions like avian influenza, without significantly impacting our commitments to customers and consumers. We believe our strong close to 2023 sets us up for another important year on our progress to being a $1 billion company by 2027. We're making a number of investments to support that growth, and an important one is our digital transformation, which will enable us to streamline and automate processes, achieve greater efficiency, and control costs. The centerpiece of this digital transformation is a new ERP system, which we believe will go live in summer of 2025 and enable us to take the next crucial step as a leader in ethical food. We have a comprehensive ERP project plan, and with the right external advisors and strong internal team, which will help us continue delivering for our stakeholders over the next year and well into the future. I'm going to close where I started this section. Vital Farms set some really ambitious multi-year goals in 2023, including our growth to $1 billion in net revenue by 2027. We had a great close to 2023, and we're on track for another big year in 2024. I'll now hand it over to our Chief Marketing Officer, Kathryn McKeon, to discuss how we were able to continue growing our brand and deepening relationships with consumers. Thank you, Russell. Vital Farms continued to build trusted relationships with our consumers in 2023. We increased brand awareness, purchase frequency, buy rate, and share of wallet, and we were able to do that while shifting our plans throughout the year to capitalize on changing market dynamics. We focused on the long-term growth of the brand, as we always have, and drove over 6 billion impressions through earned media, in-store marketing, and by extending our Bullshit Free campaign across streaming television, like HBO, social platforms, YouTube, podcasts, and even billboards. We drove a 10% lift in year-over-year brand awareness in 2023, fueled by continued investment in our Bullshit Free brand campaign and timely activations like our holiday campaign, which uniquely reinforced our relationships with family farms on streaming services like Paramount+ and Peacock. We ended the year at 23% awareness and reinforced our position as a category leader on this key brand metric. In 2023, we also deepened loyalty with our target consumer, improving purchase frequency, buy rate, and share of wallet. Said plainly, our already loyal consumers were even more loyal and spent more with the brand last year. This stands out in the context of the overall category, and we're thrilled, but not surprised, that we continue to simultaneously deepen loyalty and increase awareness. We have another big year in store for 2024, as we continue building the Vital Farms brand by increasing awareness and deepening loyalty with our target group of consumers. We will continue investing in our breakthrough Bullshit Free brand campaign, tapping into cultural conversations that connect to our business, connecting with consumers through our high-touch consumer engagement model, and evolving our shopper marketing program. We will continue grounding our brand in the authentic stories that come from our commitment to improve the lives of people, animals, and the planet through food. We are also making two shifts that will help us accelerate progress toward our bold brand awareness goals. We are recalibrating our pricing and promotion strategy to drive trial and reach new consumers, and we're deepening our consumer insights expertise, which will help us better target consumers with the right media and messaging. Thank you for your continued confidence in Vital Farms and for your time today. With that, I will pass it over to Thilo. Thank you, Kathryn. Hello, everyone, and thank you for joining us today. I will review our financial results for the fourth quarter and fiscal year ended December 31, 2023. I will then provide details on our guidance for fiscal year 2024. As a reminder, in 2023, our results benefited from a 53rd week of operations in the fourth quarter compared to the standard 52-week fiscal year in 2022 and 2024. ... As you have already heard on this call, the fourth quarter was strong, with a record net revenue of $135.8 million. That is an increase of 23.4% compared to the prior year period. This was driven by shipment volume growth of 11.6% and higher price mix. The volume growth was driven by an increase at both new and existing retail customers. The extra week in the fourth quarter of 2023 contributed $8.5 million to net revenue, or 7.7% to growth. Excluding the extra week in the fourth quarter of 2023, net revenue increased 15.7%. Gross profit for the fourth quarter of 2023 was $45.2 million, or 33.3% of net revenue, compared to $33.3 million, or 30.3% of net revenue for the fourth quarter of 2022. Gross profit dollars benefited mainly from higher sales. The 300 basis point gross margin expansion was driven by price increases across our entire shell eggs portfolio in January 2023, a moderate promotional environment, and moderating commodity and logistics costs, which were partially offset by higher packaging and labor costs. SG&A expenses for the fourth quarter of 2023 were $28.8 million, or 21.2% of net revenue, compared to $22.0 million, or 20.0% of net revenue in the fourth quarter last year. The increase in SG&A was driven by higher marketing expense, accompanied by an increased employee-related costs, as we added headcount to support our continued growth. Shipping and distribution expenses in the fourth quarter were $7.3 million, or 5.4% of net revenue, compared to $7.8 million, or 7.1% of net revenue, in the fourth quarter of 2022. The decrease in shipping and distribution expenses was driven by a decline in line haul rates and internal efficiencies as we continue to grow our shipment volume. Net income for the fourth quarter, 2023, was $7.2 million, or $0.17 per diluted share, compared to $1.9 million, or $0.04 per diluted share for the fourth quarter, 2022. Adjusted EBITDA for the fourth quarter of 2023 was $13.9 million, or 10.2% of net revenue, compared to $6.9 million, or 6.2% of net revenue for the fourth quarter of 2022. The extra week in the fourth quarter of 2023 contributed $900,000. Now turning to our fiscal 2023 results. Net revenue for the year was $471.9 million. That is a 30.3% increase compared to fiscal 2022, driven by volume gains of 13.9% and higher prices and better mix across the shell eggs portfolio. The volume growth was primarily driven by increases at both new and existing customers. The extra week in fiscal year 2023 contributed $8.5 million of net revenue, or 2.3% of growth. Excluding the extra week, net revenue increased 28.0% in fiscal 2023. Excluding both the extra week in fiscal 2023 and the impact of avian influenza in the first quarter of 2023, net revenue increased 25.9% in fiscal 2023. Gross profit for the year was $162.3 million, or 34.4% of net revenue, compared to $109.4 million, or 30.2% of net revenue in fiscal 2022. The change in gross profit was primarily driven by higher sales. Our gross margin benefited from increased pricing across the company's portfolio, partially offset by headwinds that included higher input costs, including commodity impacts across the shell egg business, as well as higher packaging costs. SG&A expenses for the year were $101.7 million, or 21.6% of net revenue, compared to $77.2 million, or 21.3% of net revenue in fiscal 2022. The increase in full-year SG&A was driven by increased marketing spending to support the initiatives Kathryn talked about a minute ago. Excluding marketing spend, SG&A, as a percent of net sales, declined by more than a point, demonstrating the scale leverage we're achieving. Shipping and distribution expenses for the year were $27.3 million, or 5.8% of net revenue, compared to $30.1 million, or 8.3% of net revenue in fiscal year 2022. The decrease in costs was driven by favorable freight rates and internal operating efficiencies, partially offset by higher sales volumes. Net income for the year was $25.6 million, or $0.59 per diluted share, compared to $1.2 million, or $0.03 per diluted share in fiscal year 2022. Adjusted EBITDA for the year was $48.3 million, or 10.2% of net revenue, compared to $16.2 million, or 4.5% of net revenue in fiscal 2022. The growth in adjusted EBITDA and meaningful improvement in our adjusted EBITDA margin reflects the growing scale of our business, and we believe puts us on the right path to deliver our long-term targets. This marks the first full fiscal year since our IPO with double-digit adjusted EBITDA margin, demonstrating the benefits of our growing scale, and this is an achievement we're very proud of. The extra week in fiscal year 2023 contributed $0.9 million to adjusted EBITDA. A quick update on our capital structure. As of December 31, 2023, we had total cash, cash equivalents, and marketable securities of $116.8 million. We have no debt outstanding, and in fiscal 2023, we generated $39 million of free cash flow. And lastly, I will note that our capital expenditures for the year came in at $11.5 million, which is near the bottom of our previously guided range and well below our initial guidance for the year. In the fourth quarter, we delayed CapEx spend for our new egg processing facility that was previously expected in Q4. This spend has been shifted to 2024. Compared to our initial CapEx guidance for the year, we also adjusted the timing of the previously mentioned digital transformation to ensure that we are fully set up for success. Now, looking ahead, for the full fiscal year 2024, we are guiding to net revenue of at least $552 million, or at least 17% growth, and adjusted EBITDA of at least $57 million, or at least 18% growth. A couple of call-outs on our net revenue cadence. It is worth noting that in the first quarter of 2023, we had a volume benefit from avian influenza. Lapping this benefit in the first quarter of 2024 will be a headwind of 11 points of net revenue growth and eight points of volume growth. On the other hand, in the second quarter of 2023, demand was lower as order patterns from retailers were out of sync, which we expect will be a tailwind of three points for net revenue growth in the second quarter of 2024. In addition, due to an industry-wide shortage of eggs in the first half of 2023, we reduced our trade spending, which we now need to lap, creating another point of net revenue growth headwind in the first half of 2024. Additionally, in the fourth quarter of 2024, we will face a headwind from the extra week in 2023, as we are operating a standard 52-week calendar this year. Note that in 2024, we expect a normalized promotional cadence. Let me add one more housekeeping item to the revenue guidance. We regularly review our product portfolio and, in the process, decided to discontinue four SKUs of ghee and tub butter at the end of 2023 in order to concentrate our focus on stick butter. Combined, these SKUs generated $2.6 million in net sales for us in 2023. We anticipate that increased stick butter sales in 2024 will more than offset the rationalization, and we expect growth in our butter, butter category compared to 2023. Next, let me touch on our Adjusted EBITDA guidance. Within our Adjusted EBITDA guidance, we expect marketing spend to be up a few million dollars compared to 2023, as we are increasing spend on awareness-focused media tactics. We expect more of the marketing spend to occur in the second half of the year and a higher Adjusted EBITDA margin in the first half of the year. Additionally, the cost to produce eggs remains higher than it was just a few years ago, and our operating plan assumes this will remain the case in the near term. We don't expect any contribution to net sales growth from price mix improvements. We increased prices for organic shell eggs by low double digits at the beginning of January 2024, while keeping the price of conventional eggs constant and supporting them with the previously mentioned higher trade spend. We anticipate benefits from lower feed costs, mostly offset by higher butter costs, packaging costs, trade spend, labor costs, and shipping rates. Lastly, on guidance, we expect fiscal year 2024 capital expenditures in the range of $35 million-$45 million. Note that this includes $11 million of timing shift from the CapEx spend that was initially planned in 2023. We continue to evaluate our capital allocation priorities and, if necessary, will provide updates on future earnings calls. Overall, 2023 was a strong year for Vital Farms as we navigated some challenging industry dynamics and still delivered a record year for the business with healthy growth and profitability. We are excited to carry this momentum into 2024, build on our double-digit EBITDA margin, and we are focused on increasing retail penetration to raise brand awareness and deliver our eggs to more and more households. Thank you for your time and interest in Vital Farms. We appreciate the confidence that you place in us with your investment. And with that, we will gladly take your questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Brian Holland with D.A. Davidson. Your line is now open. Yeah, thanks. Good morning. I wanted to ask about the fundamental drivers of the acceleration we're seeing in the scanner data quarter to date. I think I have it up about 40% year-on-year. So wondering if you could comment with respect to, you know, again, fundamental drivers versus maybe on-shelf availability for sort of the commoditized peer set in the category. Hey, Brian, good morning. Yeah, you noticed that. You know, we've certainly enjoyed seeing that trend, and I think there are a couple of things that I'd point to. I wouldn't point to just one thing. The first is, I think we had really great sort of supply chain execution in January, which can occasionally be a troubled period of time, just given you know, weather disruptions and other things. We managed to thread the needle, I think, really well, and that might have been worth a couple of hundred basis points of growth versus last year. But I think fundamentally what we're seeing is that perhaps we've gotten past some of the initial consumer reaction to the inflation that we all saw at the shelf last year for a variety of brands. ... combined with the fact that we've returned to a more typical promotional cadence, and we didn't yet have a read on how successful those promotions would be when we, you know, when we created our guidance and when we made our plans. So we've seen that strong growth. But the one thing I would call out, a little bit of a cautionary note, because as you know, that's part of what I do, is that, when we look at the timing of the spike we had a year ago in 2023 from avian influenza, the first couple of weeks of January had a smaller impact than we saw in the back half of January and then into February. So it may also be a question of what we're lapping. Got it. Appreciate the color. And then I also, looking at the K, food service grew about, I think, 160% year-over-year. It's about $28 million, more than 5% of your business now. Just kind of, looking for an update on the trajectory of that business, the runway ahead, how sustainable that is, and then just, understanding, you know, whether there's any, margin considerations, alongside that. Yeah, thanks for that, Brian. You know, we continue on the same trajectory and path that we have had for food service for a few years now, under the strategic leadership of Pete Pappas, who leads our sales team. The thought process there is, we wanna partner with the right restaurant concepts that are kind of have brands that are committed to sourcing ethical food, premium ingredients for an elevated menu, and with whom we likely have consumer overlap. And that continues to be a terrific, steady source of growth. We want to grow in the right places, and frankly, we're not gonna compromise on choosing the right partners in order to accelerate growth. So my headline for all that will be, we expect to continue to grow that business. We don't expect it to be dilutive to margins, but I wouldn't see that as a way to kind of hit the gas, as it were, on our growth. It's more of a steady execution of the plan we've been running through for the last few years. Great, thanks. I'll leave it there. Congrats. Thanks, Brian. Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Your line is now open. Yes, thank you. Good morning, everyone. Hey, Adam. Hi. So, I guess the first question would love to just get a bit better color on cost and margin outlook. As we think about the outlook for the sales growth and the EBITDA, I guess, the EBITDA that you've laid out, I mean, high teens revenue growth, EBITDA margins, essentially flat year-over-year, and I know increase in trade spend is a part of that, but how do we think about scope for operating leverage in the business versus reinvestment, moving forward? And along similarly, in the 10-K, there was an allusion to increased payments for your contract growers as they were starting up and rising kind of inflation for their construction costs. Can you just elaborate a little bit on how the contract rates may have stepped up and what the implications of that are for cash and net margins? Great. Thanks, Adam. Great, great questions, as always. Let me start with the conversation about farmers, and then Thilo will take the rest. As you know, we've always considered a steady pipeline of the right farmers to be critical to our long-term growth strategy, and that hasn't changed. We continue to enjoy strong relationships with excellent farmers and to continue to attract the right number of prospects as we continue to grow. But the reality is that if we look at the experience of our farmers over the last few years, they haven't been immune to the inflationary forces that have affected so many other parts of the supply chain. The one piece that we've observed having more of a lingering effect is related to construction costs. So we continue to see elevated construction costs for new barn builds, for new farmers, in part driven by cost of construction and in part driven by continued elevated interest rates on the loan that they take to do that construction. So the way we thought about it was, in order to make sure that this continues to be a strong, you know, financial arrangement for the farmer, and, you know, we want to continue to make sure that the farmer wins at the end of the game, we made the decision to help offset some of those, what we believe to be, short-term elevations in construction and interest-related costs, on the front end, so that we can continue to attract great farmers, and they can continue to see our sort of long-term contract terms, as attractive as they always have. So that's the thought process there. Then, Adam, on the broader cost picture, I think I've alluded to it in the prepared remarks, right? We're seeing corn, soybean meal and corn costs are decreasing year-over-year, so we do get a benefit from that. But from a gross margin perspective, that's offset by the return of more normal trade spending and by some labor inflation, and then below the gross profit line, we are anticipating some increase in freight rates. Jury is out on that one. We hope to get some SG&A leverage, but there is a reinvestment in marketing spend. And so that is why we're giving the guidance that we're giving for the time being. You also asked about cash flows. So CapEx, we're giving guidance of $35 million-$45 million of CapEx. We're anticipating still continued, strong operating cash flow generation. But compared to prior years, we'll start putting more money into CapEx, as we have talked in the past. We're getting started with the new facility, this year, and, Russell had mentioned it in the beginning, that we are, that we're starting now this digital transformation that will also require CapEx spending. Okay, now that's all, that's all very helpful. Just on the—on that CapEx point, so you said $10 million was spend budgeted for 2023, that's slipping into 2024. Can you just delineate how much of the rest is the ERP spending, and how much would be kind of Egg Central Station Three at this point? Yeah. The new facility and ERP spend is about half of what we are budgeting CapEx for. Then there's the regular ongoing CapEx, plus some additional automation that we want to put into ECS. All right. That's all, super helpful. I'll pass it on. Thank you. Thanks, Adam. Thank you. Our next question comes from the line of Matt Smith with Stifel. Your line is now open. Hi, good morning. Let me ask a question. There was a comment in the prepared remarks about a pricing and promotional recalibration. Could you expand on that? Is that a recalibration in consideration to how you have viewed your promotional events in the past, or is that more indicating that 2024, the recalibration is getting back to a normal cadence of promotional spending? It's really the latter. If you recall, last year, because of the high demand from AI, and therefore the empty shelves that we saw, especially at the beginning of the year, we talked repeatedly about it last year, that in the first half of the year, we were able to really meaningfully reduce our trade spend. And so what the prepared remarks were supposed to indicate was that this year, we're back to regular promotional spend throughout the year, focus on generating trial, getting new households into the brand. It's not a recalibration of how we think about promotional spend overall. It's more a 2023 was an outlier for us. We're getting back to how we would've done it otherwise. Thank you. A follow-up relating to the butter business. There was a significant decline in sales. I believe revenue was down over 30%, even including the benefit of a 53rd week. You indicated butter sales are expected to grow, even though you are rationalizing some SKUs. Was there something unique in the fourth quarter related to that rationalization that weighed on the top line? And I can leave it there. Thanks so much. Thank you. Yeah, I'll talk a little bit about how that business has evolved. You've heard me talk in prior calls about how, you know, how we started that butter business years ago, with aspirations to grow it to $20 million. At the time, that was about the size of the egg business. As we have expanded that butter business beyond $20 million, what we found is that it is increasingly hard to find the right farms that meet our very high standards, and so that has affected our ability to grow that business. The demand is there, but we're unwilling to procure butter and work with co-packers that, you know, we don't love. And so what we've had to do is actually rethink our supply chain for butter, and in essence, really transform it. And that transformation started in Q4, and we should be complete by the end of Q1. But in the transition, we've faced some real strong product shortages that have limited our ability to fill orders. So we're expecting to see strong growth in the back half of the year, but for right now, we're a bit challenged on the supply side. Thank you. Our next question comes from the line of Rob Moskow with TD Cowen. Your line is now open. Hey, thanks for the question. This is Jacob Henrion for Robert Moskow. I saw a slide in your presentation on legislation changes in several states on laws around cage eggs. I'm just curious, are you noticing any change in conversations with retailers in these states? Maybe a greater willingness to allocate more shelf space to ethically sourced eggs? Yeah. Thanks for that question. I think it's a great one. You know, I think what we've seen historically and what we continue to see is that when these kinds of legislations go into effect, there is sometimes a temporary disruption or dislocation in the egg market as retailers need to adjust their forecasts for various items within their sets. And that can sometimes create a short term, but probably temporary, benefit for anybody whose product meets those new standards. So, we're not seeing a substantial change in the interest of retailers to add our products to their shelves. I think what we are seeing potentially, from a short-term perspective, is occasionally some elevated retail pricing for commodity or cage-free eggs that generally will smooth out in the months after the transition to that new regulation. Great. Thank you. I'll leave it there. Thank you. Thank you. Our next question comes from the line of Robert Dickerson with Jefferies. Your line is now open. Great. Thanks so much. Good morning. Good morning, Rob. Hey, how's it going? I guess two questions, just one on long-term sales growth and other on kind of go forward CapEx. For the first one, you know, when we think about kind of that, the long-term goal of reaching $1 billion in net revenue, it, I mean, it does seem like, you know, kind of given, you know, what revenues could be, at least in 2024, that there is maybe an implied kick-up in the growth rate. I mean, it's not monumental, but it's not as if, like, as you grow, as you get bigger, you know, that you're implying that your sales growth would kind of naturally decelerate. Still be high, but decelerate, right? That happens in companies that sometimes just get a little bit bigger. But you're not really saying that, right? You're saying that, you know, basically over the next, call it, you know, 4 years, we could still grow, you know, at least 20% a year, kind of once we get past this fiscal 2024 that have some puts and takes, some puts and takes. So I'm just curious, Russell, like, you know, what are those kind of core drivers that give you kind of the conviction that, you know, the growth rate we're seeing now will be consistent? And I'm not sure, you know, if a piece of that just is essentially like west, you know, westward market expansion, because I know through your Investor Day, you spoke, you know, you spoke to kind of increase, it's really about increased distribution and SKUs in store. Just kind of curious as the update post Investor Day, where we sit now, like, how you feel about that strategy if we look out three years? Thanks. Thanks, Rob. You know, I feel certainly at least as strongly convicted today as I did last September about the trajectory of our sales growth and the potential for our brand to have a right to win in more and more households. So the... You know, I think our confidence in our ability to maintain, as you said, that 20%+ growth, give or take, given the puts and takes of any given year, is rooted in our continued ability to do the right analysis, to identify the right households and develop meaningful strategies for reaching them. Ability to continue to expand our capacity, our supply chain and get well out in front of our growth needs, so that's never a bottleneck. And to continue to invest in the resources needed to tell a very compelling, fact-based sales story to our retail partners. We create value for consumers and retailers, and I think that's always going to be in fashion in a sense. The good news is, Kathryn McKeon's here, and so she can bring even more detail to that conversation. Kathryn? Hey, good morning. Look, we have grown households year over year and continue to do that. We're growing loyalty at the same time, which is, you know, certainly an accomplishment. As we look at the long-term growth of the brand, we're thinking about how to bring in the right households and how to grow the household penetration, and that will be a key driver to this long-term growth you're asking about. So the three drivers of that, and they go hand in hand, the right marketing, the right messaging, as Russell alluded to, it's strong distribution and the right, right promotions. This year, we are firing on all cylinders there and bringing those all three together. They weren't very much in harmony, and you need not look further than our past to see that we know how to accomplish those things individually and make them work together to grow our households. So I'm feeling really confident in our ability to grow households, grow sales with both new households and deepen loyalty to hit those numbers. All right, great. And then, just a question on kind of go forward CapEx and the commentary around ERP. Just quick clarification first is just, I thought I heard, does that program start to kick off in 2025, or is that, you know, the kind of a process you're working on as you get through 2024 and part of 2025, such that that ERP implementation program would be finished in 2025? I just didn't hear that. Yeah, I know. So Thilo can answer more substantially about the timing of the cash flows. But I but you mentioned timing and when it starts, and I wanted to just share a little bit of background. The proposal to do a digital transformation came across my desk almost two years ago. And we've invested a lot of time, as we do with everything we do, in very intentionally putting together the right team internally, the right outside support, and having the right plan to make sure that we execute excellently, because this is so critical to the management of our business and to enabling expansion beyond eggs. I'll let Thilo speak about the investment process and timeline. Yeah, on the timing, Rob, we've kicked off the digital transformation. The timing of the go live is summer next year, so we're giving ourselves eight to 18 months to do it. Majority of the CapEx spend is happening this year. It's pretty much correlated with just ongoing work. We don't have any peaks or valleys there. And so majority of the CapEx spend for the digital transformation is this year, with some additional spend next year and then somewhere next year, we're going live. We're throwing the switch, and while we're doing that, we're improving our processes, we're improving our data availability. So there are a lot of benefits that we anticipate to get out of this. All right, super. And then, I mean, it doesn't sound as if you're calling out any P&L impacts from that spend. It's all CapEx. And I just ask because normally we do see some SG&A impact as you get through the process. Yeah, the vast majority of this is CapEx. You know, we can get into the accounting details in the full call. There are some that will count as OpEx, but for practical purposes, assume this is all CapEx. Okay. All right, great. Thanks a lot. I'll pass it on. Thanks, Robert. Thank you. Our next question comes from the line of Matthew McGinley with Needham. Your line is now open. Thank you. I have a follow-up on the margin. It's more of a long-term one. I know that the targets that you outlined for 2027 weren't linear, but how should we think about where you'll be at this year with margins being relatively flat at 10% versus your plan to get to that 12%-14% over the next few years? Does that leverage in the model come more from gross margin or from operating expense? And as you're on that path to $1 billion, do you see most of that leverage when you get closer to that billion-dollar mark? Or do you see leverage all along the way, where kind of this year is more of an anomaly, where you know, the puts and takes, where the margins are relatively flat? Yeah, it's. I don't think it's going to be exactly linear. There's going to be quarters and years that might be a bit heavy on investment and some years that are lighter. I think with the digital transformation, for example, once we are live, we can think about, say, with all the data that we're now getting, what other capabilities can we build, for example, where can we invest in running the business even better? I think the guidance for this year, it's early days. You know, we talked about anticipating increases in freight rates, for example. We'll see how that will play out. Reality is, to get from where we are, but we're guiding this year in terms of EBITDA, to get to the 12%-14%, it's a pretty clear path for us, but we want to make sure that as we're giving you guidance on how to think about the modeling, that we're not getting ahead of our skis on that. Okay. Appreciate that. And then you had a really outstanding year for operating cash flow generation, and most of that was driven by the increase in profitability. This year, your implied profit dollars won't, you know, grow at the same rate, obviously, with the big margin increase you had, and, and obviously won't have the same impact on cash flows. I'm wondering if the operating cash flow this year may be difficult to sustain at that same levels you did last year, if you have a more normal investment in working capital. Yeah, I think where we had a benefit, Matt, last year was that a lot of the growth came from pricing, right? When you think about what drove our revenue growth last year, it was about half volume, half price mix, and price is obviously a very nice way to drive cash flow. This year, the growth will be pretty much entirely volume driven, and so the makeup of where the growth is coming from is a bit more expensive, if you want. And so with that, we're probably getting a bit less of an operating cash flow benefit than we did last year, but we continue to be very cash generating and being able to fund operations entirely with the cash that the business generates. Yeah. Okay. Thank you very much. Thank you. Our next question comes from the line of Ben Klieve with Lake Street Capital Markets. Your line is now open. All right, thank you for taking my questions. Congratulations on a great end of the year here. I just have one question here as a follow-up on the food service conversation. You know, 6% of revenue, $25 million-$30 million-dollar revenue business out of food service. I'm wondering how much—if you can characterize kind of how much of that revenue is really from restaurants that you have kind of characterized as those that uniquely fit your brand versus just kind of more general pull from restaurants that may just be aware of your product from, you know, from the broadliners. You know, do you guys have a relationship with the vast majority of that $25 million or $30 million, or are you guys seeing some pull, you know, that just comes because of the success of your brand, you know, outside of your, you know, internal efforts, and sales and marketing? I think that's a great question, and, I actually don't have an exact split to share with you on this call, although we can probably do a little bit of research and come up with an estimate. What I would say is that, not unlike the grocery business in 2023, we did experience some sales acceleration due to avian influenza, and I'm confident that we got some trial from some restaurants over the short run that may or may not have, become enduring. And there's a conversion rate, not unlike what we see in households. I'm really excited about that, the strategy we've discussed and, really partnering with great brands. And we should probably, do a better job of helping, you understand how big that opportunity is. No, I mean, that's very helpful. I appreciate that, that color, Russell. More to talk about this. That's a good place to leave it. Congratulations again. I'll hop back in the queue. Thanks, Ben. Thank you. I'm currently showing no further questions at this time. I'd like to hand the call back over to Anna Kate Heller for closing remarks. Thanks, everyone, for your support of Vital Farms, and have a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect.