The Honest Company Inc. Q1 2023 Earnings Call
Okay.
Good day and thank you for standing by welcome to the honest company first quarter 'twenty to 'twenty three earnings 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 eat Crestar one one on you.
Telephone you didn't hear an automated message advise your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to.
The conference over to your Speaker today, Steve Austin. So please go ahead.
Good morning, everyone and thank you for joining our first quarter 2023 conference call.
Joining me today are Carl Bernard Chief Executive Officer, and Kelly Kennedy, Our Chief Financial Officer.
Before we start I'd like to remind you that we will make certain statements today that are forward looking within the meaning of the federal securities laws.
Statements about the outlook of our business and other matters referenced in our earnings release issued today.
These forward looking statements involve a number of risks and uncertainties that could cause actual results to differ materially.
Please refer to our earnings release issued today as.
As well as our SEC filings for a more detailed description of the risk factors that may affect our results.
Please also note that these forward looking statements reflect our opinions only as of the date of this call.
And we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events.
Except as required by law.
Also during this call, we will discuss non-GAAP financial measures, which adjust our GAAP results.
Eliminate the impact of certain items.
You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures.
Actual results section of today's earnings release.
Broadcast of this call is also available on the Investor Relations section of our website at investors Dot honest dot com.
With that I'll turn the call over to Carl.
Thanks, Steve Good morning, everyone and thanks for joining us today.
Last quarter I indicated that we were not satisfied with the recent performance of our business.
I also assure you that we can and will drive shareholder value by bringing greater discipline into our cost structure and operating approach.
It was also my first opportunity to share my confidence in the fundamental strength and growth potential of the honest brand.
With decades of experience as a CPG brand builder and more recent experience as a digital retailer I was drawn to the company because of the quality of the product.
Demonstrated strength across a broad set of categories.
And the way the modern mission of the clean and sustainable product design has taken a strong place in consumers' homes and lives.
And now with my first hundred days behind me my conviction about the growth potential of the honest brand and the opportunity to transform our business model remains strong.
The strength of our portfolio is reflected in the Q1 revenue growth, we announced today, which exceeded our expectations.
As a result, we are now raising our revenue outlook for the year.
Over the last year, we've successfully executed our plan to expand retail distribution and drive greater growth in physical channels and while we are pleased with the role of growth from the retail channel. Our Q1 revenue performance was balanced evenly across retail and digital channels with both growing over.
20% illustrating the strength of our Omnichannel approach.
While we are pleased with our top line performance as I emphasized that last quarter. We are relentlessly focused on improving our cost structure and margin performance.
I am pleased to announce the launch of our transformation initiatives in Q1, which will drive long term profitability and sustained shareholder value.
This transformation initiative encompasses three pillars.
Brand maximization.
Margin enhancement.
And operating discipline.
The work streams across these pillars are expected to improve our margin structure.
Drive focus on the most productive areas of our business.
Reduced working capital.
Deliver greater impact of brand building investments and.
And improve execution excellence across the enterprise.
While some of this work builds on ongoing work streams I'm pleased to share that in recent months. Our team has redoubled our efforts to identify a more robust set of strategies and initiatives to accelerate our path to achieve sustainable profitable growth.
Kelly I'll turn it over to you to review the financials, including further details on our transformation initiative.
Thank you Carla and welcome everyone.
Performance in the quarter reflected strong top line results.
As well as continued cost inflation and costs associated with our transformation initiatives.
Starting first with revenue performance.
First quarter revenue was 83 million, which was up 21% versus a year ago.
With comparable growth rates in both our digital and retail channels.
Growth in the quarter was driven by healthy consumption trends.
Banded distributions.
Your pricing actions and healthy orders from a key digital retailer.
Honest consumption in tracked channels, which now represents roughly half of our revenue was up 30% in the first quarter.
With half, reflecting organic growth and half coming from incremental distribution.
One is just gaining market share as our growth continues to outpace the categories, where we compete.
For example, in our largest category diapers and wipes modest consumption growth in Q1 with over 40%.
<unk> outpacing the overall category growth of 7%.
Reflecting on price increases taken in 2022.
We are pleased to see consistent volume growth, indicating the value of our brands and resiliency of our consumer.
As we are poised to take additional pricing actions in 2023, we are confident in our ability to achieve price premiums that are aligned with our premium brands.
Turning to key drivers by product category first diapers and wipes.
Our diapers and wipes business.
Represented nearly 65% of our revenue this quarter and was up 23% with consumption significantly outpacing the category.
Growth reflected the benefit of price increases.
Retail distribution expansion and increased assortment.
In particular, we've seen growth in wipes as we've capitalized on usage beyond diapers.
With recent campaigns focused on multiple uses in the households.
Skin and personal care, which represented over 25% of total revenue this quarter increased 7% due to retail consumption gains.
We're focused assortment on best selling hero item.
And innovation.
Including daily Green juice, anti oxidant Super CRM, which launched in the first quarter.
We're seeing particular strength in our beauty business with consumption up double digits, driven by over 20% growth target.
Our household and wellness business represented nearly 10% of revenue this quarter and increased 81% due to the benefit of integrating the baby clothing business.
Now turning to results by channel.
Digital channel revenue increased 22%, while retail increased 21%.
Revenue in Q1 was equally split, 50% retail and 50% digital.
Reflecting recent retail distribution wins robust truck channel consumption as well as strong purchases by our key digital retailer.
Some highlights included.
<unk> strong performance that target, our largest customer where we saw all time record consumption during the quarter.
Continued strength at Walmart behind new distribution secured last year, which we believe is highly incremental to our existing business.
And double digit point of sales growth across diapers wipes and beauty items at our key digital retail customer.
Before I cover the rest of the income statement.
Wanted to share further details on our transformation initiative.
Recognizing it's impact on reported results in the first quarter as well as key actions, we are taking to drive margin expansion.
The three key pillars of our transformation initiative.
Brands maximization margin enhancements and operating discipline.
First to drive brands back to Ms <unk> <unk>.
Plan to leverage the strength of the honest brands to deliver growth through new innovation and focus on core items.
Specifically, we will grow distribution and drive higher velocities of margin accretive products in our portfolio.
Something as simple as elevating the benefits.
Claims and imagery of our products and our marketing and packaging to make an impact quickly and drive revenue growth within our existing products.
Another critical component of our brand maximization strategy is pricing.
We are taking significant pricing actions in 2023 to return to historical premiums that align with our brand positioning.
Results of recent pricing actions indicate that consumers believe our value proposition is strong.
The second pillar in our transformation initiative is margin enhancement.
We've taken decisive actions this quarter to transform our cost structure.
From a portfolio standpoint, we are aligning our focus where we can lead and win including two immediate actions that can drive improved margins and profitability.
First we will focus on North America, where we have scale and the ability to most cost efficiently drive growth.
This impacts our international business, where we are exiting Asia and Europe .
This decision will reduce complexity inventory.
Inventory levels and associated costs and.
And give us greater focus on how we deploy our resources.
We are also exiting portions of the household category as we can track your standardization line in the face of waning demand and look for opportunities to rationalize skus across the portfolio to drive higher margin and meaningfully reduce inventory.
Costs associated with these structural changes are reflected in today's earnings release.
Exiting skus is likely to impact offerings at certain retailers, which has been reflected in our revenue outlook at 2023, beginning in the second quarter.
We are currently executing multiple supply chain and sourcing project to produce the landed cost of our products.
Areas of focus include contract manufacturing strategies reduced shipping and logistics costs and product cost optimization.
The third pillar of our initiative is operating discipline.
This includes tightly managing our SG&A expenses and aligning our talent resources and skills to reflect the prioritization of higher margin opportunities and the exit of select low priority businesses and products.
And our operating discipline will extend beyond the P&L to ensure we're aggressively managing working capital, including the reduction of inventory, thereby reducing warehousing and fulfillment costs and generating cash we can invest to drive the business.
In total we anticipate the transformation initiative to incur $10 million to $15 million in cost with the majority being non cash.
In the first quarter, we recognized $7 million of costs, which reflected non cash charges related to inventory and prepaid write off.
And just to recall impacted multiple parts of our income statement, including revenue cost of revenue SG&A and also resulted in restructuring charges, which are reflected within operating expenses.
We anticipate our transformation initiatives will generate an estimated $15 million to $20 million in annualized benefits starting in late 2023, as we monetize pricing cost savings and reduce operating expenses.
Returning back to our Q1 financial results.
Gross margin was 24% in the first quarter of 2023 compared to 30% in the first quarter of 2022.
This included nearly 400 basis points of transformation initiative costs, including reserving for inventory related to exiting our international business.
Portions of our sanitizing business and from SKU rationalization, as we pivot to higher margin parts of our portfolio.
Excluding the charges related to our transformation initiatives, our gross margin would have been 28%.
Gross margin was also impacted by approximately 400 basis points of higher supply chain costs.
Due in part to short term inefficiencies driven by elevated levels of inventory.
These costs are expected to sequentially improve throughout the year as inventory levels come down.
Gross margin also reflected over 200 basis points of benefit from pricing and cost savings.
Turning to operating costs and profitability.
Operating expenses increased $4 million in the first quarter of 2023 compared to the first quarter of 2022.
Operating expenses included $6 million of nonrecurring expenses, including $4 million in restructuring and other transformation initiative related expenses.
$1 million in CEO transition costs and $1 million in legal fees related to securities litigation expense.
Marketing spend was 12% of sales.
Flexing higher returns associated with greater support for our retail expansion.
Adjusted EBITDA for the first quarter of 2023 was negative $10 million, including $6 million in costs related to the transformation initiatives.
Excluding the charges we've recorded to the transformation initiative, our adjusted EBITDA would have been negative $5 million.
Turning to the balance sheet, we ended the quarter with $12 million in cash cash equivalents and short term investments with no debt.
Excluding items that we don't anticipate occurring again in 2023, such as CEO transition costs that were accrued in 2022 and paid in the first quarter operating cash flow was positive in the first quarter.
As mentioned earlier the transformation initiative costs in the quarter were predominantly noncash.
As we committed to last quarter, we made significant progress to reduce our inventory dollars, which decreased by $17 million in the quarter.
We now anticipate exceeding our initial goal of a $20 million inventory reduction and continue to believe it will offset our operating loss for the year.
As we mentioned in our March call, we entered into a $35 million asset based credit facility in January to provide liquidity for future growth investments.
We have not borrowed on this line to date and plan to aggressively manage working capital as we implement our transformation initiative.
And drive to profitability.
Now turning to our outlook for 2023.
Following strong consumption trends in the first quarter, we are increasing our full year 2023 revenue outlook to be up low single digits versus full year 2022.
The Companys full year 2023 revenue outlook reflects continued positive track channel consumption.
Combined with the benefit of mid year pricing actions.
Set by lower revenue related to the exit of low margin and low priority product line beginning in the second quarter and comparing against significant new distribution in the second half of 2022.
Adjusted EBITDA is expected to be in the range of negative 25 to negative $30 million.
Including $7 million to $10 million of costs and charges related to the transformation initiatives that will impact adjusted EBITDA.
With that let me turn it back to Karla before we open it up for questions.
Happy to take it over from here.
As Kelly indicated in 2023, we will be relentlessly focused on delivering the goals of our transformation initiative.
<unk> Foundation of improved brand maximization margin enhancement and operational discipline will set the path for more profitable growth in 2024 and beyond.
Later this year I will present, the long term strategic roadmap that will guide our ongoing growth.
As we redefine our growth path I am pleased to announce the cake Barton has joined the honest management team in the new role of Chief growth Officer.
He brings a strong track record of brand building innovation and business management skills.
Most recently Kate was the Chief brand officer at an Omnichannel founder Bill lifestyle brand and she also has a history of driving growth of both high profile Global beauty brands and category, leading food brands that you can read about in our press release issued earlier.
Today.
Kate signature combination of heart and horsepower make her the perfect leader to inspire the loyalty and imagination of our discerning and passionate honest consumers.
With that I'll turn the call over to the operator, and we look forward to answering your questions.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
One moment for our first question.
Our first question comes from the line of Laura <unk> from Loop capital. Your line is open.
Thanks for taking my question, it's a two parter related to the outlook.
First part.
On the revenue guide it doesn't seem as if you pass through the full amount of the Q1 beat so I'm wondering if whether you expect some retrenchment from my key digital customer in Q2. After this strong Q1.
Second question is on the adjusted EBITDA Guide.
I'm, a little confused on which costs from the transformation initiative stay in that number and which ones you'll pull out so I'm just looking for some more clarification on the guidance.
I'm happy to start maybe with the revenue question first Lora.
Certainly, we see great and strong underlying assumption.
As we highlighted that consumption, which is roughly 30% is half organic and half from new distribution as we move into the back half of the year.
Of course, it does that will be up against the pipeline fill new distribution to doctors.
So as we think about just growth certainly the 21% growth in Q1 reflects we're up against the low quarter a year ago.
We have as we move into the back half significant pricing thats going in that we've taken a kind of a thoughtful and conservative approach on what the elasticity will be against that pricing actions and then we also as we move into Q2 or do we have pulled out revenue associated with the SKU rationalization the exited.
National and product lines that we're not moving forward with which were a drag on margin and allow us to be allocate those resources towards kind of the.
Future growth really driving accretive growth in the future.
Those are the main reasons, if you think about kind of the back half.
<unk> off of Q1 were tending to be kind of thoughtful about what we think that revenue outlook will be for the balance of the year.
And certainly we did take up the outlook, but as you mentioned.
Some of that certainly as we go into the back half of the year and as we announced the transformation initiative.
We havent yet reflected the revenue coming out so that's predominantly the reason specific to your question. We had great results in the digital channel in Q1, we saw consumption in line with shipments from our key digital partner, we are not anticipating we think that the inventory levels are the right levels.
Put that business.
But we're not anticipating any further <unk> or inhaled in the back half of the year.
As it moves to just the question on adjusted EBITDA.
Certainly with the transformation initiative.
That $10 million to $15 million is actually going to be across the P&L and so we wanted to make sure that the range of adjusted EBITDA, which is $25 million to $30 million you need to back out $7 million to $10 million, which excludes the restructuring component, which is already taken out.
Adjusted EBITDA, So we anticipate the restructuring component to be 3% to $5 million.
And the restructuring is really going to be around.
Zinc cost for example.
Termination fees contract liabilities that we had as we kind of moved away in our SKU rat too so that would cover the sovereign debt.
Our head count.
Contract termination fees and then also prepaid write offs go into restructuring.
Separate from that anything inventory related is predominantly noncash in nature. These would be reserves and write offs of inventory that we won't be going forward with.
Those continue to go through cost of revenue and will impact adjusted EBITDA.
So you need to exclude $7 million to $10 million, which is predominantly inventory reserves that were taken in cost will be taking a customer.
If you back that out you'll notice that adjusted EBITDA is a slight improvement of course, we took up our revenue outlook.
Outlook and so it is not.
<unk> is a slight improvement versus what we were talking about.
Yes.
In the fourth quarter.
Understood. Thank you.
Thank you for your questions.
One moment for our next question.
Alright.
Our next question comes from the line of Andrea Teixeira from Jpmorgan. Your line is open.
Thank you operator, Hi, Collyn Kelly.
Just and then our team just too big.
Basically come in and ask on the transformation process.
What is the bridge for sales and margins of those products have being excluded and also the regions I mean, just to give us a perspective on how you're thinking of the underlying.
As we move forward to our new honest company like how we should be thinking of and I understand that obviously you have some.
Some some work to be done on the underlying itself.
Just to see like how what is the recurrence.
Our underlying growth patterns and margin as you progress beyond 2023. Thank you.
Yes, I'll start and then you can jump in when.
When you think about kind of the transformation initiative, we talked about there being kind of three big buckets that we're focused on in the first is really around branch maximization.
This is driving pricing and getting back to a pricing premium historically and also really focusing on our core and margin enhancing products into which we can support with marketing better packaging and really driving better performance. So that's really around re a maximization of the.
The margin expansion really is the area that generated the cost for the business, which was $7 million in Q1.
We anticipate some additional cost coming later in the year and I would break that into kind of three components. The first is really product exits and international and as we think about.
Kind of getting to that product those were.
Margin drags overall in the business.
And more importantly, as we think about the complexity of that piece of the business, whether it be international or some of these other category and lower volume lower margin products getting out of those allows us to one focus but also less drag and get out of some of the complexity that we see within those and focus more on.
Core where we think there is a higher return.
Also did you a key rationalization across all of our categories. So that touched every part of our portfolio, which is just something the company has not done in many years.
We thought it was the right things that are in that.
And then.
<unk> piece really to think about the transformation initiatives around cost savings initiatives as we move into lower cost. There are some costs that we incur as we kind of move in to new packaging cost savings that we can generate on that will also take so as you think about the revenue impact we're not breaking down specifically the impact.
But these were smaller parts of our business, we have disclosed international being.
A small percentage of our business and the other product exits predominantly would be areas that are not going to be a significant.
<unk>.
On revenue as we think about going forward, but really allowing us to get the margin and cost structure of our business in the right place.
Andreas This is Carl and good morning, I'll, just build a couple of additional teams because I know that at the heart of your question you were asking about the underlying base of the business and really reasons to believe.
Where we are going in terms of growing our margins and driving value creation in the portfolio. So Kelly did a great job of explaining the bridge I want to make sure a couple of themes just come out loud and clear, which is first and foremost one of the things. We have done is we've redoubled our efforts to.
Two drive disciplined and how we operationalize our approach here on the team as we have found that there are opportunities to improve the cost structure of items in our existing portfolio and so that is really wonderful because thats something in the near term. We can really begin to address is expanding the margins of the things that.
Like we already have.
Additionally, we also believe there is great growth opportunities in some of our best items. Our distribution levels are very small against some of our most productive and highest velocity items that will remain hero items in our core. So we have an opportunity to really drive growth often I'd love to talk.
The <unk> principle, which is that it's really true for many CPG portfolios that the top items drive the majority of the revenue and the majority of the productivity of the portfolio and so making sure that we have a mindfulness to our top items as we drive our growth.
<unk> roadmap going forward is going to be important and we like what we see there with that opportunity and then lastly, as I said I will be back later in the year to talk about my growth strategy that growth strategy is where youre going to also hear more about in addition to the importance of the core re imagining the mix of our portfolio.
<unk>.
We understand our role.
Enhancing margins by enhancing the mix in categories. We are in where we know we can lead and win in categories, where we see opportunities to drive that leadership and innovation in those categories need.
And just have it is super helpful. Just to be Super clear when you say youre going to come back on the top line growth and I think we all appreciate in CPG that youre being focused on.
The 80, 20 rule and basically to drive home.
The kind of the highest level.
Of growth and return of the products and focus but is that also given that we're all kind of burned by [laughter] by Devry basis is that basically it in terms of rate basing should we tell investors like how much visibility do you have into the plan O grams of the large retailers, obviously you come from one of them.
On your key retail partner.
I'd like to make sure that you have that visibility to the expense.
The salary and sell out converge.
You were seeing some sort of confidence on that on the new number that there is not going to be any further rebase at this point at least on the margin front.
I think let me make sure I'm understanding your question Andrea if.
Can you talk about whether we think that consumption.
Is this a consumption momentum were seeing at our current 30% overall consumption tracked channel along with our topline growth of 21%. If we think that the underlying fundamentals will remain fundamentally strong in that regard or if we expect surprises if that is best.
Sure.
Yes.
Yeah, I think your color for making sure you and I know, there's a lot in there.
I think number one is more the 20 to 30 negative is that.
Is that 25 to 30, sorry, an adjusted 18 to 20 EBIT.
Our ebitdas range is that pretty much embedding some conservatism in that you don't need to come back when youll come up back with your topline growth strategy.
It's going to be more upsides why do you why do.
You have so far are rather than downside. So in other words. This is the number one part of the question and then number two is.
In that vein, how much visibility do you have.
Into into the balance of the year.
Okay, I'm going to start just by really grounding us philosophically I'm going to have Kelly really hit on some of the specific building blocks, but philosophically I hope what.
What I'm, saying is that it.
It's very we have great confidence in our ability to continue to have a glide path towards margin expansion profit creation value creation that we think is very evidenced already in the early things, we're identifying as we do our transformation and.
<unk>.
In addition to the transformation initiative our growth strategy project lives on top of that and that growth strategy is designed specifically to continue to strengthen the places that we already like that are margin accretive in our portfolio, but small.
And have an opportunity to grow and then really continue to move in that direction of that glide path. So I feel very confident that because of the amount of growth we see before us that even if there are bumps in the road glide path. We're on is one towards greater value accretion and margin expansion I'm going to let Kelly answer you about any specific.
Structural building well, yeah, and I think I think this is what youre getting is Andre is that as we think about implementing that growth plan. There will be investments, we need to make and that is absolutely. The beauty of an asset light model is there can be a disadvantage of not owning your own manufacturing, but it allows us to quickly get into new.
Products and expand.
Best in innovation and those investments are predominantly around resources, which we talked about in our contemplated within our transformation initiative within the SG&A with the head count changes, we realigned the head count in the business away from the areas that we're getting out towards the areas that we're going to be investing in including.
Innovation the other pieces that is predominantly a working capital investment that will need to make at the time, we launched <unk>.
And as you can imagine that growth plan is predominantly not 2023, it's really driving growth in 2024 and forward and so there was working capital investments each week.
We will be able to utilize the liquidity available in our etiology that we have.
Kind of the to make investments in 2024, and then going forward as these are on a path to profitability.
Self funded on those investments going forward.
And in terms of visibility I do think in your question there.
Expenses that we will incur around the transformation initiative, which is the entire foundation of growth. We have contemplated any cost that we anticipate for 2023 within the numbers we provided.
So that is sufficient the ranges that we've given to cover the activities.
Very helpful. Thank you.
One moment for our next question.
Okay.
Our next question comes from the line of Jon Andersen from William Blair. Your line is open.
Hi, good morning, everybody.
Okay.
I was going to take one more stab at the prior question just if I'm clear on it.
The guidance for the year at this point.
As I understand it takes the sales guidance takes into account.
The kind of the.
The pruning, let's say work.
In terms of SKU rat.
Key exits international some of the household.
And what can come later in the year then.
Carla would be.
The the strategy too.
Ladies on top of that.
There wouldn't be a further reset of kind of the sales outlook.
Our reset it would be more of an opportunity to enhance the topline growth outlook relative to where we sit today is that fair.
John Hello, Good morning, I think Thats, a really great way to capture what we've communicated.
Okay I appreciate that thank you.
I did want to ask on pricing.
A lot of companies are.
It's not pricing as much this year I guess as they did last in.
It sounds like you've done done the homework to determine that the brand.
Elasticities are such that debt.
Price increase makes sense could you provide a little bit more detail around what.
What level of pricing are we talking about on what part of the portfolio and again maybe why.
What evidence you have that you're really confident that you won't see greater elasticity going forward on that thanks.
Yes, happy to speak to the pricing and Carla you can speak a little maybe to the brand component of it when we looked at the data John we and we talked about this in our last call. We really felt that we left some money on the table by not taking pricing as quickly.
One thing we were really pleased to see and you can see in the recent consumption data.
I think $3 31, and even the next round of.
Basically tracked channel data.
Come out is that we continue to grow.
Predominantly by volume and pricing as we highlighted earlier, we've taken only about half the pricing versus kind of the competitive products and we've actually depressed the premium to where we would like to be so as we think about the pricing, we're taking which is in.
The timing is kind of scale out over the course of the year, but it will cover roughly half of our revenue base and its mid to high single digits.
And so it also is across our product categories.
So it will be in some cases, taking additional pricing on top of pricing that we've already taken in 2022.
And I don't know Carlos do you want to add just rolled out. This you talk about why we feel that this is not only the right thing to do but why we feel good about the way we're estimating the impacts going forward a few factors for me one is.
The honest brand has typically had that 15% price premium to our key branded players that are often does share of meters in that category.
Got it.
Pricing relationship is one that is true for us across many of our categories and our retail partners know that they understand that that is related to the premium of the product the quality of the inputs in our product and really what our brand stands for in all of the categories. We are in and so in the conversations we've been having with our retail.
They understand that this pricing strategy and so far we are finding that we're getting agreement and alignment on the return of our 15% approximate price premium.
Other thing that we see as we've been growing across every category that we are in so we have a lot of reason to believe in addition to seeing the 30% consumption growth for the quarter. We have a lot of reason to believe that our brand is <unk>.
As we see gaining market share is strong with the consumers that we serve it is important though that we have a pricing structure that matches the branded premium and that allows us to continue to deliver that shareholder value and invest in the brand and invest in the differentiated benefits that we deliver.
We have every signal to believe that this is going to really be accepted in the market and fit with our retail strategies in our categories.
Yeah.
Thanks, Thanks, a lot Carlin Kelly very helpful.
Yes.
Thank you.
And as a reminder, that star one one for a question star one one.
One moment, while we compile the Q&A roster.
Okay.
And I'm not showing any further questions in the queue.
To turn the conference back to Carlos for any closing remarks.
Wonderful. Thank you again, everyone for joining us and your interest and support for the honest company. We look forward to speaking with you next quarter.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
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