Q1 2024 Utz Brands Inc Earnings Call

'twenty 'twenty four earnings call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.

I would now like to turn the conference over to Kevin powers head of Investor Relations you.

You may begin.

Good morning, and thank you for joining us today on the call today are Howard Friedman CEO, Jay Qatari CFO and carried a R.

And Chief transformation Officer.

Jay will make prepared comments this morning, and all three will be available to answer questions. During the live Q&A session.

Please note that some of our comments today will contain forward looking statements based on our current view of our business and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

Thank you for standing by my name is Pam and I will be your conference operator today at this time I would like to welcome everyone to the <unk> brands first quarter 'twenty 'twenty four earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question.

Before I turn the call over to Howard I, just have a few housekeeping items to review.

Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials Rex.

And answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to enjoy your question Press Star. One again. Thank you I would now like to turn the conference over to Kevin powers head of Investor Relations you.

Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials posted on our website.

Finally, the company has also prepared presentation slides and additional supplemental financial information, which are posted on our Investor Relations website, and now I'd like to turn the call over to Howard.

Kevin J. Powers: You may begin.

Thank you, Kevin and good morning, everyone.

Kevin J. Powers: Good morning, and thank you for joining us today on the call today are Howard Friedman CEO, Jay Qatari your CFO and carried a or CFO and chief transformation officer.

Starting off with a few key takeaways I am pleased with our good start to the year.

And the second straight quarter, we gained dollar pound and unit share in the southeast snacks category led by several of our consumer low power for brands to include us on the border and Boulder Canyon.

Kevin J. Powers: Jay will make prepared comments this morning, and all three will be available to answer questions. During a live Q&A session.

Kevin J. Powers: Please note that some of our comments today will contain forward looking statements based on our current view of our business and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

In addition productivity programs across our organization continued to build momentum and we delivered our fifth consecutive quarter of adjusted EBITDA margin expansion as well as 27% adjusted earnings per share growth.

To continue building our momentum in April we Opportunistically accelerated our network optimization strategy by disposing of two additional manufacturing plants to our homes.

Speaker Change: Before I turn the call over Howard I, just have a few housekeeping items to review.

Speaker Change: Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials posted on our website.

These follow the three dispositions to our home announced back in February importantly, our former associates at those plans are being offered full employment and we thank them for their hard work and dedication over the years and wish them. The best moving ahead.

Speaker Change: Finally, the company has also prepared presentation slides and additional supplemental financial information, which are posted on our Investor Relations website, and now I'd like to turn the call over to Howard.

Ringing it altogether, given our first quarter results and confidence in the remainder of the year. This morning, we reaffirmed our organic net sales and adjusted EBITDA outlook and raised our adjusted EPS outlook.

Howard A. Friedman: You, Kevin and good morning, everyone.

Howard A. Friedman: Starting off with a few key takeaways I am pleased with our good start to the year.

We are on track to deliver a strong 2024 as well as the 2026 targets introduced at our Investor day back in December.

Howard A. Friedman: Second straight quarter, we gained dollar pound and unit share in the salty snacks category led by several of our consumer low power for brands to include us on the border and Boulder Canyon.

Our four fundamental strategies underpinned our efforts and we've made good progress across each of these strategies this year positioning us well to hit our goals and build momentum for the next three years.

Howard A. Friedman: In addition productivity programs across our organization continued to build momentum and we delivered our fifth consecutive quarter of adjusted EBITDA margin expansion as well as 27% adjusted earnings per share growth.

To quickly review our progress our first fundamental strategy is focusing our portfolio to further penetrate our expansion geographies, while holding the core.

Howard A. Friedman: To continue building our momentum in April we Opportunistically accelerated our network optimization strategy by disposing of two additional manufacturing plants to our hall.

In the quarter, we gained <unk> retail sales market share for the 13 week period ended March 31.

That includes share gains in both our core and expansion geographies led by continued distribution gains and increases in household penetration.

Howard A. Friedman: These follow the three dispositions to our home announced back in February importantly, our former associates at those plans are being offered full employment and we thank them for their hard work and dedication over the years and wish them. The best moving ahead.

While our salty snack measured channel performance was strong in the quarter, our sales trends in unmeasured areas in the portfolio did not keep the same pace.

Howard A. Friedman: It altogether, given our first quarter results and confidence in the remainder of the year. This morning, we reaffirmed our organic net sales and adjusted EBITDA outlook and raised our adjusted EPS outlook.

Part of this is intentional as we optimize our sales mix and investments to focus on our more profitable power brands, while other areas require better execution. These.

These include improving the performance of gypsum sources and.

Howard A. Friedman: We are on track to deliver a strong 2024 as well as the 2026 targets introduced at our Investor day back in December.

In our small format channel, where we have the opportunity to strengthen our price pack architecture and a couple of key brands as consumers remain value seeking in this environment.

Howard A. Friedman: Our four fundamental strategies underpinning our efforts and we've made good progress across each of these strategies this year positioning us well to hit our goals and build momentum for the next three years.

Moreover, we continue to do portfolio shaping in our foundation brands that impact these channels and we expect that these areas will collectively improve throughout the year.

Howard A. Friedman: To quickly review our progress our first fundamental strategy is focusing our portfolio to further penetrate our expansion geographies, while holding the core.

Our second fundamental strategy is transforming our supply chain to fund growth and margin improvement.

We are making good progress on our productivity programs, which is reflected in our adjusted gross margin expansion in the quarter of nearly 300 basis points and our five plant dispositions are accelerating our network optimization strategy, which is enabling us to increase investment in our more scale plants.

Howard A. Friedman: In the quarter, we gained circon, our retail sales market share for the 13 week period ended March 31.

Howard A. Friedman: That includes share gains in both our core and expansion geographies led by continued distribution gains and increases in household penetration.

Our third fundamental strategy is developing leading capabilities to build a best in class organization.

Howard A. Friedman: While our salty snack measured channel performance was strong in the quarter, our sales trends in unmeasured areas of the portfolio did not keep the same pace.

We are in the process of fully implementing our integrated business planning system and building out our consumer and sales analytics as well as continuing to make progress on our marketing and innovation capabilities.

Howard A. Friedman: Part of this is intentional as we optimize our sales mix and investments to focus on our more profitable power brands, while other areas require better execution. These.

I'm excited to see the impact we can make and market as we increase our investments behind both our new product lineup and two of our power for brands in the second quarter.

Howard A. Friedman: These include improving the performance of Gibson sources and.

Howard A. Friedman: And our small format channel, where we have the opportunity to strengthen our price pack architecture and a couple of key brands as consumers remain value seeking in this environment.

Our fourth fundamental strategy is improving balance sheet flexibility and pursuing opportunistic M&A.

Howard A. Friedman: Moreover, we continue to do portfolio shaping in our foundation brands that impact these channels and we expect that these areas will collectively improve throughout the year.

As I mentioned earlier, we have disposed of five manufacturing plants and two brands with the proceeds going to reduce debt and accelerate our leverage reduction timeline.

Howard A. Friedman: Our second fundamental strategy is transforming our supply chain to fund growth and margin improvement.

In addition, our transformation efforts across the company are collectively improving our cash conversion cycle.

Howard A. Friedman: We're making good progress on our productivity programs, which is reflected in our adjusted gross margin expansion in the quarter of nearly 300 basis points and our five plant dispositions are accelerating our network optimization strategy, which is enabling us to increase investment in our more scale plants.

Before turning the call over to a J to discuss our financials in more detail I'll take a few minutes to review our consumption trends in the quarter.

Our retail consumption increased four 1% fueled by strong branded volume growth of four 6%, which ranked first among our branded salty snack peers.

Howard A. Friedman: Our third fundamental strategy is developing leading capabilities to build a best in class organization.

Our consumption growth was again led by power brand growth of four 9% and within our power brand portfolio. Our power for brand increased 6%, which was nearly four times the category growth of one 4%.

Howard A. Friedman: We are in the process of fully implementing our integrated business planning system and building out our consumer and sales analytics as well as continuing to make progress on our marketing and innovation capabilities.

From a salty snack subcategory perspective, our growth was led by significant outperformance in tortilla chips and cheese snacks.

Howard A. Friedman: Im excited to see the impact we can make and market as we increase our investments behind both our new product lineup and two of our power for brands in the second quarter.

Tortilla chip growth was led by on the border consumption growth of 15%, resulting in a half a point share gains fueled by strong growth in both traditional grocery and mass channels.

Howard A. Friedman: Our fourth fundamental strategy is improving balance sheet flexibility and pursuing opportunistic M&A.

Howard A. Friedman: As I mentioned earlier, we have disposed of five manufacturing plants and two brands with the proceeds going to reduce debt and accelerate our leverage reduction timeline.

Our rebound in cheese snacks continued in the quarter led by share gains for iconic cheese balls with strong growth in mass and club channels.

Howard A. Friedman: In addition, our transformation efforts across the company are collectively improving our cash conversion cycle.

Within potato chips, our consumption was basically in line with the sub category driven by share gains for us and Boulder Canyon brands led by continued distribution gains.

Speaker Change: Before turning the call over to Jay to discuss our financials in more detail I'll take a few minutes to review our consumption trends in the quarter.

Our SaaS trends remained below the category given the softness in the C store channel, but we are actively making price pack architecture improvements and regaining distribution.

Speaker Change: Our retail consumption increased four 1% fueled by strong branded volume growth of four 6%, which ranks first among our branded salty snack peers.

Finally, consistent with our expectations, our pretzels trend we're below category, given we are lapping hours apps flavored pretzels sell in in the previous year.

Ajay Kataria: Our consumption growth was again led by power brand growth of four 9% and within our power brand portfolio. Our power for brand increased 6%, which was nearly four times the category growth of one 4%.

These trends will begin to normalize as we get into the latter part of the year.

From a geography standpoint, we gained share in both our core and expansion geographies for our total portfolio, our power brands and our powerful brands.

Ajay Kataria: From a salty snack subcategory perspective, our growth was led by significant outperformance in tortilla chips and cheese snacks.

Growth was most pronounced in our expansion geographies with growth of 8% fueled by continued distribution gains, which easily exceeded category growth of one 7%.

Ajay Kataria: Tortilla chip growth was led by on the border consumption growth of 15%, resulting in a half a point share gain fueled by strong growth in both traditional grocery and mass channels.

Share gains across geographies were led by on the border and Boulder Canyon with continued share gains and expansion for our <unk> brand as well.

Ajay Kataria: Our rebound in cheese snacks continued in the quarter led by share gains for iconic us cheese balls with strong growth in mass and club channels.

Moving to our better for you portfolio of salty snacks, our consumption in the natural channel continues to grow and dollar sales were up 21, 9% compared to three 9% for the southeast in that category over the last 12 weeks ending March 24th.

Ajay Kataria: Within potato chips, our consumption was basically in line with the sub category driven by share gains for us and Boulder Canyon brands led by continued distribution gains.

Ajay Kataria: <unk> trends remained below the category given softness in the C store channel, but we are actively making price pack architecture improvements and regaining distribution.

Our leading better for you brand in the natural channel continues to be Boulder Canyon. Okay.

Routing for three quarters of our sales in the channel and the largest driver of growth up 31, 3%, which is eight times the rate of total salty snacks growth.

Ajay Kataria: Finally, consistent with our expectations, our pretzels trend we're below category, given we are lapping hours apps flavored pretzels salad in the previous year. These.

Boulder Canyon has now delivered 31 consecutive periods of double digit growth and spins and as the number two potato chip brand in the natural channel.

Ajay Kataria: These trends will begin to normalize as we get into the latter part of the year.

Ajay Kataria: From a geography standpoint, we gained share in both our core and expansion geographies for our total portfolio, our power brands and our powerful brands.

With our avocado oil chip now ranked number one in terms of dollar sales.

Looking ahead to the rest of the year.

Folio standpoint, our focus will remain on driving outsized investment and focus on our powerful brands.

Ajay Kataria: Growth was most pronounced in our expansion geographies with growth of 8% fueled by continued distribution gains, which easily exceeded category growth of one 7%.

On the border that's in Boulder Canyon.

This will be seen in terms of advertising and consumer spend innovation and overall marketing capabilities.

Ajay Kataria: Share gains across geographies were led by on the border and Boulder Canyon with continued share gains and expansion for our <unk> brand as well.

This year, we are amplifying our innovation to focus on bigger launches, we are focused on delivering craveable flavors and we're introducing a new limited time offering of Mike's Hot honey extra hot potato chips. This summer.

Ajay Kataria: Moving to our better for you portfolio of salty snacks, our consumption in the natural channel continues to grow and dollar sales were up 21, 9% compared to three 9% for the southeast snack category over the last 12 weeks ending March 24.

Hot and spicy is the number one flavor and salty snacks at seven 5 billion.

And growing nearly two times the category rate.

Ajay Kataria: Our leading better for you brand in the natural channel continues to be Boulder Canyon.

In addition, we launched our US mixed minis in three flavors and a strong flavored pretzel segment, which makes up half the pretzel sub category and is posting 12% growth, which is four times the on flavored segment.

Ajay Kataria: Routing for three quarters of our sales in the channel and the largest driver of growth up 31, 3%, which is eight times the rate of total salty snacks growth.

Ajay Kataria: Boulder Canyon has now delivered 31 consecutive periods of double digit growth in expense and as the number two potato chip brand in the natural channel.

In addition, our innovation this year will center around capturing occasion and expanding positive choices.

As consumers continue to snack across occasions, we plan to be there with a proven strategy around seasonal and multi pack innovation to include our new on the border Red White and Blue Cafe style tortilla chips, and our news apps Voodoo Halloween multipack.

Ajay Kataria: With our avocado oil chip now ranked number one in terms of dollar sales.

Ajay Kataria: Looking ahead to the rest of the year from a portfolio standpoint, our focus will remain on driving outsized investment and focus on our power for brands.

And as consumers continue to look for no compromise snacks with bold flavors in our flagship better for you brand Boulder Canyon, we are moving our spicy Green, Chile from a limited time offer to an everyday flavor.

Ajay Kataria: On the border that's in Boulder Canyon.

Ajay Kataria: This will be seen in terms of advertising and consumer spend innovation and overall marketing capabilities.

Ajay Kataria: This year, we are amplifying our innovation to focus on bigger launches, we are focused on delivering craveable flavors and we're introducing a new limited time offering of Mike's Hot honey extra hot potato chips. This summer.

In addition, we have move beyond potato chips and launched our Boulder Canyon Poppers, which is a better for you cheese and snacks made an avocado oil, we launched and white Cheddar and Jalapeno ranch flavors and the early consumer feedback has been great.

Ajay Kataria: Hot and spicy is the number one flavor and salty snacks at seven 5 billion.

Finally, we have begun to invest behind marketing after a year of capability building.

Ajay Kataria: And growing nearly two times the category rate.

Ajay Kataria: In addition, we launched our US mixed minis in three flavors and a strong flavored pretzel segment, which makes up half the pretzel category and is posting 12% growth, which is four times the <unk> segment.

We started with increased investments behind E Commerce, and retail media and next quarter, we will be introducing campaigns possess and us.

While it is still early in the year the increased confidence we have in our gross margin delivery. Our early marketing returns both financially and from a consumer response and our ample investment opportunities. We are now planning to increase investment behind our brands. This year beyond the 40% that was originally assumed in our outlook.

Ajay Kataria: In addition, our innovation this year will center around capturing occasion and expanding positive choices.

Ajay Kataria: As consumers continue to snack across occasions, we plan to be there with a proven strategy around seasonal and multi pack innovation to include our new on the border Red White and Blue Cafe style tortilla chips, and our news apps Voodoo Halloween multi pack.

This is consistent with our beliefs that we make money before we spend money when we build our businesses overnight and our brands over time.

Ajay Kataria: And as consumers continue to look for no compromise snacks with bold flavors in our flagship better for you brand Boulder Canyon, we are moving our spicy Green, Chile from a limited time offer to an everyday flavor.

I am very optimistic we will be able to do both.

Now I'd like to turn the call over to a J J.

Thank you Howard and good morning, everyone.

I will start by congratulating all <unk> associates for delivering a strong start to the year.

Ajay Kataria: In addition, we have moved beyond potato chips and launched our Boulder Canyon Poppers, which is a better for you cheese and snacks made an avocado oil, we launched and white Cheddar and Jalapeno ranch flavors and the early consumer feedback has been great.

As Howard mentioned in his remarks, thanks to our team's efforts in the first quarter, we are well on our way to delivering our 2024 commitments.

As well as our 2026 targets introduced at our Investor day back in December.

Ajay Kataria: Finally, we have begun to invest behind marketing after a year of capability building.

In the first quarter, our organic net sales increased one 5%.

Ajay Kataria: We started with increased investments behind E Commerce, and retail media and next quarter, we will be introducing campaigns possess and us.

Adjusted EBITDA increased seven 4% and.

And adjusted earnings per share increased 27, 3%.

Ajay Kataria: While it is still early in the year the increased confidence we have in our gross margin delivery. Our early marketing returns both financially and from a consumer response and our ample investment opportunities. We are now planning to increase investment behind our brands. This year beyond the 40% that was originally assumed in our outlook.

As our productivity program and actions to optimize our network and portfolio are delivering stronger profitability.

Importantly, our organic net sales growth combined with these actions resulted in a fifth consecutive quarter of adjusted EBITDA margin expansion as we delivered 12, 5% adjusted EBITDA margin in the quarter.

Ajay Kataria: This is consistent with our belief that we make money before we spend money and we build our businesses overnight and our brands over time.

Ajay Kataria: I am very optimistic we will be able to do both.

During the quarter, our organic net sales performance was led by volume mix growth of one 1% driven by our power core brands.

Ajay Kataria: Now I'd like to turn the call over to Ajay Hi, Jay.

Ajay Kataria: Thank you Howard and good morning, everyone.

Ajay Kataria: I will start by congratulating all <unk> associates for delivering a strong start to the year.

Pricing increased 40 basis points due to certain price pack architecture adjustments to be better positioned in the marketplace.

Ajay Kataria: As Howard mentioned in his remarks, thanks to our team's efforts in the first quarter, we are well on our way to delivering our 2024 commitments.

As well as price realization and our partner brands.

Finally, our total net sales growth was impacted by the conversion of company owned honestly routes to independent operators, which.

Ajay Kataria: As well as our 2026 targets introduced at our Investor day back in December.

Ajay Kataria: In the first quarter, our organic net sales increased one 5%.

Which reduced growth by 40 basis points.

And the divestiture of the RW Garcia and good health fans, which reduced net sales growth by two 5%.

Ajay Kataria: Adjusted EBITDA increased seven 4% and.

Ajay Kataria: And adjusted earnings per share increased 27, 3%.

Moving down the P&L.

Adjusted gross margin expanded 280 basis points in the first quarter.

Ajay Kataria: As our productivity program and actions to optimize our network and portfolio are delivering stronger profitability.

I would note that our first quarter margin expansion work better than we had originally anticipated with our productivity programs driven by manufacturing plant and procurement savings.

Ajay Kataria: Importantly, our organic net sales growth combined with these actions resulted in a fifth consecutive quarter of adjusted EBITDA margin expansion as we delivered 12, 5% adjusted EBITDA margin in the quarter.

Levering stronger results.

More than offset inflation and supply chain investments to support our growth.

Ajay Kataria: During the quarter, our organic net sales performance was led by volume mix growth of one 1% driven by our power core brands.

SG&A expense increased 6% as productivity within selling and logistics was offset as expected by continued investments in e-commerce as.

Ajay Kataria: Pricing increased 40 basis points due to certain price pack architecture adjustments to be better positioned in the marketplace.

As well as selling capabilities that support our expansion into new geographies.

To that end in the quarter, we had higher than expected delivery costs, given unplanned boiler pan and transfer shipments to support significant volume growth in the east.

Ajay Kataria: As well as price realization and our partner brands.

Ajay Kataria: Finally, our total net sales growth was impacted by the conversion of company owned Odyssey routes to independent operators.

That said.

We are now producing more laconian potato chips and handover to support more profitable growth in this area of the country.

Ajay Kataria: Which reduced growth by 40 basis points.

Ajay Kataria: And the divestiture of the RW Garcia and good health plans, which reduced net sales growth by two 5%.

Finally, our marketing expense increased 40 basis points as a percent of sales.

Ajay Kataria: Moving down the P&L.

Insistent with our strategy as we invest in capabilities and spend to grow our share of voice in the marketplace.

Ajay Kataria: Adjusted gross margin expanded 280 basis points in the first quarter.

Ajay Kataria: I will note that our first quarter margin expansion work better than we had originally anticipated with our productivity programs driven by manufacturing plant and procurement savings.

Bringing it together adjusted EBITDA increased seven 4% to $43 $4 million and margins expanded 100 basis points to 12, 5%.

Ajay Kataria: Delivering stronger results, which more than offset inflation and supply chain investments to support our growth.

The margin expansion was driven by 400 basis points of productivity and 40 basis points of price, partially offset by 220 basis points of supply chain costs.

Ajay Kataria: Adjusted SG&A expense increased 6% as productivity within selling and logistics was offset as expected by continued investments in e-commerce as.

80 basis points from selling and admin expenses and 40 basis points from higher marketing spend.

In addition.

Ajay Kataria: As well as selling capabilities that support our expansion into new geographies.

Adjusted net income increased 38, 7% and adjusted EPS increased by 27, 3% to <unk> 14 per share.

Ajay Kataria: To that end in the quarter, we had higher than expected delivery costs, given unplanned boiler pan and transfer shipments to support significant volume growth in the east.

Stronger operating earnings were aided by lower core DNA and lower interest expense.

Turning to cash flow and the balance sheet consistent with normal seasonality cash flow used in operations was $9 1 million.

Ajay Kataria: That said.

Ajay Kataria: We are now producing more laconian potato chips in Hanover to support more profitable growth in this area of the country.

And capital expenditures were $13 6 million.

Ajay Kataria: Finally, our marketing expense increased 40 basis points as a percent of sales.

Primarily related to investments in our manufacturing plants.

Ajay Kataria: Insistent with our strategy as we invest in capabilities and expect to grow our share of voice in the marketplace.

In addition, we paid $8 million in dividends and distributions to shareholders.

Finishing with the balance sheet cash on hand was $47 million.

Ajay Kataria: Bringing it together adjusted EBITDA increased seven 4% to $43 $4 million and margins expanded 100 basis points to 12, 5% of sales.

And our liquidity remains strong at nearly $200 million.

Giving us ample financial flexibility.

Ajay Kataria: The margin expansion was driven by 400 basis points of productivity and 40 basis points of price, partially offset by 220 basis points of supply chain costs.

Net debt at quarter end was $728 million or three eight times trailing 12 months normalized adjusted EBITDA of $190 1 million.

Ajay Kataria: 80 basis points from selling and admin expenses and 40 basis points from higher market experience.

Just to note. This represents an improvement of one three times plus at the end of the first quarter last year.

Ajay Kataria: In addition.

Ajay Kataria: Adjusted net income increased 38, 7% and adjusted EPS increased by 27, 3% to <unk> 14 per share.

As a reminder.

On February five we closed the disposition transactions after good health and arguably the CR brands and treatment of factoring facility.

Ajay Kataria: Stronger operating earnings were aided by lower core DNA and lower interest expense.

The transaction included a total consideration of $182 $5 million with approximately $150 million in after tax proceeds which will be immediately used to pay down long term debt.

Ajay Kataria: Turning to cash flow and the balance sheet consistent with normal seasonality cash flow used in operations was $9 1 million.

Ajay Kataria: And capital expenditures were $13 6 million.

In addition, after the quarter ended we closed or dispositions of two additional manufacturing facility and used $9 million in net proceeds to pay down long term debt and put $5 million on our balance sheet.

Ajay Kataria: Primarily related to investments in our manufacturing plants.

Ajay Kataria: In addition, we paid $8 million in dividends and distributions to shareholders.

Ajay Kataria: Finishing with the balance sheet cash on hand was $47 million and our liquidity remains strong at nearly $200 million.

We have also successfully completed a repricing of our $630 million term loan due in January 2028 rich.

Ajay Kataria: Giving us ample financial flexibility.

Ajay Kataria: Net debt at quarter end was $728 million.

This reduced the applicable interest rate by 36 basis points.

Ajay Kataria: Our three eight times trailing 12 months normalized adjusted EBITDA of $190 1 million.

These two debt repayments plus the lower interest rate on our term loan will result in approximately $14 million and lower interest expense for 2024.

Ajay Kataria: Just to note. This represents an improvement of $1 three terms versus the end of the first quarter last year.

Notably.

Our fixed rate debt now comprises approximately 80% of our total debt.

Ajay Kataria: As a reminder on.

Ajay Kataria: On February 5th we closed the disposition transactions after good health and arguably the <unk> and <unk> manufacturing facility.

Consistent with our strategy these actions to accelerate our timeframe to achieving our target of three times net leverage ratio.

Ajay Kataria: The transaction included a total consideration of $182 $5 million with approximately $150 million in after tax proceeds which will be immediately used to pay down long term debt.

To year end 2025.

Rich as you know is a year ahead from year end 2026 targets at our Investor Day in December.

Now turning to our full year outlook for fiscal 2024.

Ajay Kataria: In addition, after the quarter ended.

Our 2024 outlook continues to position us well to deliver our 2026 financial targets.

Ajay Kataria: We closed the disposition of two additional manufacturing facility.

Ajay Kataria: And used $9 million in net proceeds to pay down long term debt and put $5 million on our balance sheet.

We are maintaining our organic net sales outlook for growth of approximately 3% of our beds.

Ajay Kataria: We have also successfully completed a repricing of our $630 million term loan due in January 2028.

This reflects our outlook for normalizing salty snack category growth and our growth rate accelerating largely led by distribution gains.

Ajay Kataria: This reduced the applicable interest rate by 36 basis points.

Our growth is expected to be led by volume.

Ajay Kataria: These two debt repayments plus the lower interest rate on our term loan and resulted in approximately $14 million and lower interest expense for 2024.

With outsized strength in our expansion geography, and pricing of our flat for the year.

In terms of phasing, we continue to expect about a $49 51 first half second half split for our next phase.

Ajay Kataria: Notably.

Ajay Kataria: Our fixed rate debt now comprises approximately 80% of our total debt.

Moving to adjusted EBITDA.

Ajay Kataria: Consistent with our strategy these actions to accelerate our timeframe to achieving our target of three times net leverage ratio.

We continue to expect growth of 5% to 8%.

By gross margin expansion from our productivity program.

Ajay Kataria: Through year end 2025.

Partially offset by investments in growth.

Ajay Kataria: Rich as you know is a year ahead from year end 2026 targets at our Investor Day in December.

Our first quarter productivity benefit was higher than expected rich.

Which gives us confidence in our ability to deliver on our cost savings commitments this year and.

Ajay Kataria: Now turning to our full year outlook for fiscal 2024.

Ajay Kataria: Our 2024 outlook continues to position us well to deliver our 2026 financial targets.

And now expect adjusted gross margin.

More than the 200 basis points that was previously assumed in our guidance.

Ajay Kataria: We are maintaining our organic net sales outlook for growth of approximately 3% of our beds.

That said, we will step up investments in our growth as gross margin expansion.

Ajay Kataria: This reflects our outlook for normalizing salty snack category growth and our growth rate accelerating largely led by distribution gains.

<unk> to find investments to support distribution gains, particularly in our expansion geographies.

As well as investments in marketing and capability.

Ajay Kataria: Our growth is expected to be led by volume with outsized strength in our expansion geography and pricing about flat for the year.

Our 2024 adjusted EBITDA outlook continues to maintain a balance between productivity savings and investment.

Ajay Kataria: In terms of phasing we continue to expect about a 49 51 first half second half split for our next sale.

Finally, we are raising our adjusted earnings per share growth to 23% to 28%.

Even our revised expectation for a more favorable effective tax rate.

Ajay Kataria: Moving to adjusted EBITDA.

Ajay Kataria: We continue to expect growth of 5% to 8%.

And also lower interest expense after factoring in the use of net proceeds to pay down long term debt from our April 2024 manufacturing plant that position.

Ajay Kataria: By gross margin expansion from our productivity program.

Ajay Kataria: Partially offset by investments in growth.

And the favorable repricing of our term loan.

Ajay Kataria: Our first quarter productivity benefit was higher than expected rich.

We now expect our adjusted effective tax rate to be between 18% to 20%.

Ajay Kataria: Which gives us confidence in our ability to deliver on our cost savings commitments. This year.

And interest expense of approximately $47 million.

Ajay Kataria: And now expect adjusted gross margin more than the 200 basis points that was previously assumed in our guidance.

Our outlook for capital investments of between $80 million to $90 million.

Ajay Kataria: That said, we will step up investments in our growth as gross margin expansion.

Is unchanged.

As is our net leverage outlook of approximately three six times at fiscal year end 2024.

Ajay Kataria: Due to planned investments to support distribution gains, particularly in our expansion geographies.

I will note is a full turn improvement from year end 2023.

Ajay Kataria: As well as investments in marketing and capability.

Our 2020 for outlook.

An improved capital structure.

Ajay Kataria: Our 2024 adjusted EBITDA outlook continues to maintain a balance between productivity savings and investment.

And building momentum and our productivity program as well as capabilities that allow us to invest in growth.

Ajay Kataria: Finally, we are raising our adjusted earnings per share growth to 23% to 28%.

Position us well to deliver our three year goal.

More importantly.

I am excited to see the entire team working together to deliver on our core fundamental strategy.

Ajay Kataria: Given our revised expectation for a more favorable effective tax rate.

Ajay Kataria: And also lower interest expense after factoring in the use of net proceeds to pay down long term debt from our April 2024 manufacturing plant that position.

Operator, we would now like to open up the call for questions.

Thank you we will now begin the question and answer session. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Ajay Kataria: And the favorable repricing of our term loan.

Ajay Kataria: We now expect our adjusted effective tax rate to be between 18% to 20%.

Would like to withdraw your question simply press Star one again.

Ajay Kataria: And interest expense of approximately $47 million.

I called upon to ask a question and you are listening via loud speaker on your device.

Ajay Kataria: Our outlook for capital investments of between $80 million to $90 million.

Your handset and ensure that your phone is not on mute when asking your question again press star one to join the team and your first question comes from the line of Andrew Lazar with Barclays. Please go ahead.

Speaker Change: Is unchanged.

Ajay Kataria: As is our net leverage outlook of approximately three six times at fiscal year end 2024.

Ajay Kataria: Which I'll note is a full turn improvement from year end 2023.

Good morning, Howard Hey, Jay.

Ajay Kataria: Our 2020 for outlook.

Good morning, how are you good.

Ajay Kataria: An improved capital structure.

Howard you mentioned, a couple times of weakness in small format stores and adjustments that need to be made on sort of price pack architecture.

Ajay Kataria: And building momentum and our productivity program as well as capabilities that allow us to invest in growth.

Ajay Kataria: Position us well to deliver our three year ago.

I'm trying to get a sense if if your value equation. In these areas are either out of line with competitors and this specific channel or if it's the overall category that need some adjustments there and I guess given the timing of making these adjustments is it such that we should continue to expect the gap between scanner data and what you report on an organic.

Ajay Kataria: More importantly.

Ajay Kataria: I am excited to see the entire <unk> team working together to deliver on our core fundamental strategy.

Speaker Change: Operator, we would now like to open up the call for questions.

Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and I would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Sales basis for a couple more quarters like very much like what we saw in the first quarter.

I appreciate the question I think one of the things that I would kind of point to as we've been talking a lot about the consumer and moving up and down the price ladder and I think over the last couple of quarters. We've done a really good job of not only getting our our revenue management capabilities, correct, but getting our assortment.

Ajay Kataria: We'd like to withdraw your question simply press Star one again.

Speaker Change: I called upon to ask a question and you are listening via loud speaker on your device.

Speaker Change: Your handset and ensure that your phone is not on mute when asking your question again press star one to join the team and your first question comes from the line of Andrew Lazar with Barclays. Please go ahead.

To where it needs to be and you've seen that on cheese balls, you've seen that in pretzels and.

And we've seen that in a lot of the classes of trade with respect to small format. It really is actually a very specific couple of items that we have that with what we did was we actually increased the pack size and that obviously was not given where the consumer is today, where we where we want to be so we'll be adjust.

Andrew Lazar: Howard Hey, Jay.

Andrew Lazar: Good morning, how are you good.

Andrew Lazar: Howard you mentioned, a couple times of weakness in small format stores and adjustments that need to be made on sort of price pack architecture.

Andrew Lazar: I'm trying to get a sense if if your value equation. In these areas are either out of line with competitors in this specific channel or if it's the overall category that need some adjustments there and I guess given the timing of making these adjustments is it such that we should continue to expect the gap between scanner data and what you report on an organic.

<unk> back to a lower absolute price point, and making sure that the value seeking consumer can hit the price point, we need to this is not a systemic.

Issue, nor a category wide issue and say look we would continue to believe and are confident in kind of how our results are coming through that you'll continue to see that the spread narrow as we move into the second quarter and beyond.

Andrew Lazar: Sales basis for a couple more quarters like very much like what we saw in the first quarter.

Andrew Lazar: Yes.

Got it okay. Thanks, and then with a number of key salty snack players mentioning the need to maybe focus a little bit more on value moving forward.

Speaker Change: The question I think one of the things that I would kind of point to as we've been talking a lot about the consumer and moving up and down the price ladder and I think over the last couple of quarters. We've done a really good job of not only getting our revenue management capabilities, correct, but getting our assortments.

Have you seen any significant shift in sort of category competitiveness or merchandising activity that maybe you would characterize as either unexpected or irrational or or I guess that pose.

Andrew Lazar: To where it needs to be and you've seen that on cheese balls, you've seen that in pretzels.

Additional risk to your full year outlook.

Andrew Lazar: <unk> seen that in a.

I guess I'm trying to get a sense of what what your full year outlook contemplates with respect to.

Andrew Lazar: A lot of the classes of trade with respect to small format. It really is actually a very specific a couple of items that we have that with what we did was we actually increased the pack size and that obviously was not given where the consumer is today, where we where we want to be so we will be adjusting back to <unk>.

Category sort of competitiveness in and I think you mentioned in your prepared remarks.

There is an assumption there that the salty snack category sort of growth normalizes and I didn't know how either reasonable or aggressive type of assumption might be in the context of your full year guidance. Thanks, so much.

Andrew Lazar: Lower absolute price point, and making sure that the value seeking consumer can hit the price point, we need to this is not a systemic.

I appreciate the question.

I think one of the first thing I'd say is we feel very good about how we started the year and as you look at kind of where how we thought our organic net sales would come in it has come in.

Andrew Lazar: Issue, nor a category wide issue and say look we would continue to believe and are confident in kind of how our results are coming through that youll continue to see that.

Andrew Lazar: The spread narrow as we move into the second quarter and beyond.

The better than we would've expected, we had a little bit of a benefit on price and so there were some tradeoffs, but the category that we were sort of expecting that we were entering into in the beginning of the year has largely materialize. The way we would have expected it to.

Speaker Change: Got it okay. Thanks, and then with a number of key salty snack players mentioning the need to maybe focus a little bit more on value moving forward.

Speaker Change: Have you seen any I guess significant shifting sort of category competitiveness or merchandising activity that maybe you would characterize as either unexpected or irrational or or I guess post <unk>.

We also realized the category is getting a little bit more promotional I mean, there is no question about it as continued quarter over quarter and we are all sort of been seeing this but the nice thing about our competition and I think the category overall is it still remains very rational obviously, given partially the price point, it's still a innovation and brand building led cat.

Speaker Change: Any additional risk to your full year outlook.

Speaker Change: I guess I'm trying to get a sense of what what your full year outlook contemplates with respect to categories sort of competitiveness in and I think you mentioned in your prepared remarks.

Ori overall, and so price while important and will continue to be important to address the consumer who is shopping those price points.

Speaker Change: As an assumption there that the salty snack category sort of growth normalizes and I didn't know how either reasonable or aggressive that type of assumption might be in the context of your full year guidance. Thanks, so much.

Largely speaking, we're pretty comfortable with where we are and expect that.

It will continue.

We are keeping a close eye on price gaps and obviously, we will because we will remain competitive but the last thing for our growth. What you're also seeing is the power of our distribution story coming through both in our core and expansion geographies.

Speaker Change: I appreciate the question look I think one of the first thing I would say is we feel very good about how we started the year.

Speaker Change: And as you look at kind of where how we thought our organic net sales would come in it has come in.

As we're seeing consistent and significant growth in our distribution points across our business, which obviously blunt some of the potential impacts that could be sort of transitory in nature.

Speaker Change: Slightly better than we would have expected we had a little bit of a benefit on price and so there were some tradeoffs, but the.

Speaker Change: Laurie that we were sort of expecting that we were entering into in the beginning of the year has largely materialize. The way we would have expected it to.

Great. Thanks, so much.

Thank you.

Speaker Change: We also realized the category is getting a little bit more promotional I mean, there's no question about it as continued quarter over quarter and we've all sort of been seeing this but the nice thing about our competition and I think the category overall is it still remains very rational obviously, given partially the price point is still a innovation and brand building led category.

Your next question comes from the line of Nik Modi from RBC capital.

Please go ahead.

Thank you and good morning, everyone.

David.

Hey, two quick question, just how maybe you can provide some context on.

Now obviously at year ago, getting taken away from the consumer at least the emergency Department.

Speaker Change: Ori overall, and so price while important and will continue to be important to address the consumer who is shopping those price points.

We have some states that kind of went off earlier. So I was wondering if you had any perspective on some of those leading indicators.

Speaker Change: Largely speaking we're.

Speaker Change: Pretty comfortable with where we are and expect that that it will continue.

In terms of are you seeing the category.

<unk> improved to some degree.

Speaker Change: Keeping a close eye on price gaps and obviously, we will because we will remain competitive but the last thing for our growth.

And then I guess the broader question is no.

Retailers are obviously.

Speaker Change: You're also seeing is the power of our distribution story coming through both in our core and expansion geographies as we're seeing consistent and significant growth in our distribution points across our business, which obviously blunt some of the potential impacts that could be sort of transitory in nature.

Seeking suppliers, who can grow volume right now.

And obviously you have to have that and it's very unique in the industry. So I'm curious in terms of the narration. The narrative you have with retailers are you getting even more traction just because they are looking for suppliers that can actually grow volume and how are you managing that with your.

Speaker Change: Great. Thanks, so much.

What's the capacity plan. Thank you.

Speaker Change: <unk>.

Yes.

Speaker Change:

First with respect to snap.

Speaker Change: Your next question comes from the line of Nik Modi from RBC capital.

What we would what I would tell you is at least from what we are where we are seeing is it's a little still a little early to tell a lot of the snap lap is really starting to happen I think now as you go as it progresses through the middle part of the year and I think that's part of why I think many of us believe that the.

Sunil Harshad Modi: Please go ahead.

Sunil Harshad Modi: Thank you and good morning, everyone.

Speaker Change: Hey.

Sunil Harshad Modi: Two quick questions just how maybe you can provide some context on.

Sunil Harshad Modi: Snap obviously at year ago, getting taken away from the consumer at least the emergency allotment.

Volumes will continue to inflect in the consumer will become a little bit more normalized as we get into the Q2 three and four.

Speaker Change: And we have some states that kind of went off earlier. So I was wondering if you had any perspective on some of those leading indicators.

So I think a little bit early we're pretty comfortable and pleased with our overall performance with consumers across the classes of trade with the places where we've talked about but overall I think it's still a little bit early.

Speaker Change: In terms of are you seeing the category.

Speaker Change: Rate improved to some degree.

Speaker Change: And then I guess the broader question is.

Speaker Change: Retailers are obviously.

I think with respect to our retailer partners.

Speaker Change: Seeking suppliers, who can grow volume right now.

We have been very fortunate over the last couple of years that we have been able to gain distribution and demonstrate the value that we can create to the category and show that we can actually add something incremental to the overall assortment that retailers have and I think even before.

Speaker Change: And obviously you have to have that <unk>.

Speaker Change: Very unique in the industry. So I'm curious in terms of the narration. The narrative you have with retailers are you getting even more traction just because they are looking for suppliers that can actually grow volume and how are you managing that with your with your capacity plan. Thank you.

This quarter or last quarter that Congress. Those conversations are ongoing we have great use cases, and we have great anchor mentality and I think retailers are recognizing that so as a result, not surprisingly you are seeing distribution gains that we're getting in the core specifically around Boulder Canyon and on the border being places, where we're bringing that into us as.

Speaker Change: Yes, so first with respect to snap I think what we would what I would tell you is at least from what we're where we're seeing is it's a little still a little early to tell.

Speaker Change: Lot of the snap.

Speaker Change: <unk> is really starting to happen I think now as you go as it progresses through the middle part of the year and I think that's part of why I think many of US believe that the volumes will continue to inflect in the consumer will become a law.

<unk> core as well as into some of our expansion geographies, we are seeing space.

Space gains and we will continue to expect to see that as we get through towards the end of Q2 and into the back half of the year. So.

Speaker Change: More normalized as we get into the Q2, three and four so I think a little bit early we're pretty comfortable and pleased with our overall performance with consumers.

Retailers are looking for partners that can grow across multiple years in multiple context, and I think we're proving that.

Speaker Change: Across the classes of trade with the places, where we've talked about but overall I think it's still a little bit early.

Excellent I'll pass it on.

Thank you.

Speaker Change: I think with respect to our retailer partners.

Your next question comes from the line of Peter Galbo of Bank of America. Please go ahead.

Speaker Change: We have been very fortunate over the last couple of years that we have been able to gain distribution and demonstrate the value that we can create to the category and show that we can actually add something incremental to the overall assortment that retailers have and I think even before.

Hey, guys. Good morning, Thanks for taking the questions.

Okay.

Just two quick clarifications.

One going back to <unk> question about kind of the gap between reported and scanner.

Speaker Change: This quarter or last quarter that Congress. Those conversations are ongoing we have great use cases, and we have great incur mentality and I think retailers are recognizing that so as a result, not surprisingly you are seeing distribution gains that we're getting in the core specifically around Boulder Canyon and on the border being in places, where we're bringing that into us is true.

So I understand it we should start to see in <unk> and maybe even more so in the back half of pretty meaningful narrowing of that gap right just to be able to hit kind of 3%.

Organic sales number just want to make sure I have that clear and then the second.

Clarification, and I have a follow up as well Jay did you give a split.

Speaker Change: <unk> core as well as into some of our expansion geographies. We are seeing space gains and we will continue to expect to see that as we get through towards the end of Q2 and into the back half of the year. So retailers are looking for partners that can grow across multiple years in multiple context, and I think we're proving that.

On EBITDA for first half second half of the year.

We.

Yes, I can clarify that fairly quickly we are maintaining what we said in February so far.

First half second half EBITDA should look like last year.

<unk>.

Yes.

Speaker Change: Excellent I'll pass it on.

The short answer is yes, you should continue to see a meaningful narrowing between our between the two sales numbers and actually Q4 to Q1, you did see a narrowing as well. So this is by and large playing out.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Peter Galbo of Bank of America. Please go ahead.

Peter Thomas Galbo: Hey, guys. Good morning, Thanks for taking the questions.

Peter Thomas Galbo: Okay.

As we expected it to we hit the organic net sales, we would expect that as I mentioned to Andrew.

Peter Thomas Galbo: Just two quick clarifications.

Peter Thomas Galbo: One going back to <unk> question about kind of the gap between reported and scanner. So so just so I understand it we should start to see in <unk> and maybe even more so in the back half of pretty meaningful narrowing of that gap right just to be able to hit kind of 3%.

Composition was slightly different but the couple of areas, where we have some work that caused that to be a little bit wider Gibson salsa is a contributor as well.

<unk> discussed I know when Nielsen comes out and.

We have the Io conversion, which obviously starts to go away and then there is a small format opportunities on price pack architecture. I think those are the three biggest drivers to the delta and all of those we would expect to improve as we progress through the year.

Peter Thomas Galbo: Organic sales number just want to make sure I have that clear and then the second.

Speaker Change: Clarification, and I have a follow up as well Jay did you give a split on.

Speaker Change: On EBITDA for first half second half of the year.

Okay. Thanks for that and then.

Ajay Kataria: Yes, I can clarify that really quickly we are maintaining what we said in February so first half second half EBITDA should look like last year.

Maybe for Terry or Howard just you have gone through a lot of this plant rationalization and selling off maybe you can just give us a sense of where.

Speaker Change: Smith.

After all of the moves like like capacity utilization across your network will stand.

Speaker Change: And then Peter it's Howard.

Howard A. Friedman: The short answer is yes, you should continue to see a meaningful narrowing between our between the two sales numbers and actually Q4 to Q1, you did see a narrowing as well. So this is by and large playing out.

Relative to maybe where it was prior to all of the transactions I think would be helpful. Thanks very much.

So.

To the point, obviously, we have just we have now announced the disposition of five plants I think were very comfortable with where our asset utilization is historically we've talked about.

Speaker Change: As we expected it to we hit the organic net sales, we would expect that as I mentioned to Andrew.

It's about $100 million of sales on average in the benchmark was $180 million and sales being supported and I think right. Now we are moving to moving it towards that $180 million range with the right level of capacity and redundancy that we need we're still.

Speaker Change: Competition was slightly different but the couple of areas, where we have some work that caused that to be a little bit wider Gibson salsa is a contributor.

Speaker Change: <unk> discussed I know when Nielsen comes out and.

Speaker Change: We have the Io conversion, which obviously starts to go away and then there is a small format opportunities our price pack architecture. I think those are the three biggest drivers to the delta and all of those we would expect to improve as we progress through the year.

Call it low seventy's I think in capacity utilization overall, it obviously depends on by sub category, but we have the firepower, we need but really the benefit of the.

Speaker Change: Okay. Thanks for that and then.

The dispositions was really driven on two things one the opportunity to meaningfully delever and.

Speaker Change: Maybe for Terry or Howard just you have gone through a lot of this plant rationalization and selling off maybe you can just give us a sense of where.

Then two was the opportunity for us to now focus our energies and attention on in sourcing that product and protecting our supply while we invest in automation and some of the capital improvements that we want that will drive our productivity as we go through.

Speaker Change: After all of the moves like like capacity utilization across your network will stand.

Speaker Change: Relative to maybe where it was prior to all of the transactions I think would be helpful. Thanks very much.

The next couple of years consistent with what we said at Investor Day, Yes, Pete and just to add onto what Howard said.

Speaker Change: So.

Howard A. Friedman: To the point, obviously, we have just we have now announced the disposition of five plants I think were very comfortable with where our asset utilization is historically we've talked about.

That 70% number will improve obviously as we in source things over the next 12 months. So you'll you'll see that climb in kind of march towards that 80% oil.

Howard A. Friedman: It's about $100 million of sales on average in the benchmark was $180 million and sales being supported and I think right. Now we are moving to moving it towards that $180 million range with the right level of capacity and redundancy that we need we're still.

Got it thanks guys. Thank.

Thank you. Thank you.

Your next question comes from the line of Rob Dickerson of Jefferies. Please go ahead.

Great. Thanks, so much.

Howard just to kind of a quick.

Howard A. Friedman: Call it low Seventy's I think in the capacity utilization overall, it obviously depends on by sub category, but we have the firepower, we need but really the benefit of the.

Quick question for you.

Given the current.

Let's see outperformance.

For kind of core brands.

Also.

Great performance in the new geographies.

Howard A. Friedman: The dispositions was really driven on two things one the opportunity to meaningfully delever and.

I'm just curious.

Is it is it essentially kind of the more of the strategy works right the easier hopefully it becomes for kind of increased retailer.

Howard A. Friedman: Then two was the opportunity for us to now focus our energies and attention on in sourcing that product and protecting our supply while we invest in automation and some of the capital improvements that we want that will drive our productivity as we go through.

Congrats again.

On the brands essentially trying to move a little bit further west straight I just think about it.

If you walk into a retailer a year ago, and say hey, we want to do this.

Howard A. Friedman: The next couple of years consistent with what we said at Investor Day, Yes, Pete and just to add onto what Howard said.

Maybe that'll work you can walk in now and say look we're we've done this.

Speaker Change: That 70% number will improve obviously as we in source things over the next 12 months. So youll youll see that climb in kind of march towards that 80% oil.

Clearly working and we're clearly doing.

Kind of where we are clearly outperforming the category, where it seem like that would just increase the probability of the go forward strategy as pointed out.

Speaker Change: Got it thanks guys. Thank.

Yes, Ron Yes, I think the short answer is it's much easier to be able to sell with facts and evidence specifically in a market, but even more powerfully in a retailer.

Speaker Change: Thank you. Thank you.

Speaker Change: Yes.

Speaker Change: Your next question comes from the line of Rob Dickerson of Jefferies. Please go ahead.

Robert Frederick Dickerson: Great. Thanks, so much.

Other geographies right. So we are now at the point with a lot of the national retailers, where we can actually point to geographies, where we are and where we have been added and the benefits that we've had which makes them obviously much more positive to expanding and broadening their relationship with us.

Robert Frederick Dickerson: Howard just to kind of a quick.

Robert Frederick Dickerson: Quick question for you.

Robert Frederick Dickerson: Given the current.

Robert Frederick Dickerson: Let's see outperformance.

Robert Frederick Dickerson: For kind of core brands.

Robert Frederick Dickerson: Also.

Robert Frederick Dickerson: Great performance in the new geographies I'm.

Speaker Change: I'm just curious.

So the short answer is yes, but more of the strategy works the easier the district, the distribution gains and the selling opportunities are but equally important I think the easier. It is for us to talk to our independent operators about making the investments that they need to be able to build routes and build the infrastructure because they really own a lot of the final leg and.

Speaker Change: Is it is it essentially kind of the more of the strategy works right the easier hopefully it becomes for kind of increased retailer.

Speaker Change: Good afternoon.

Speaker Change: On the brands, because you're essentially trying to move a little bit further west straight I just think about.

Speaker Change: If you walk into a retailer a year ago, and say hey, we want to do this sort of like okay. Maybe that'll work you can walk in now and say look we're we've done this it's clearly working and we're clearly doing.

So the whole puzzle comes into place as we continue to have greater success with our powerful brands.

Alright, Super and then just quickly.

Speaker Change: Kind of where we're clearly outperforming the category, we would seem like that would just increase the probability of the go forward strategy as pointed out.

We spoke to somebody recently.

To assist you made it sound like as we kind of move through the pandemic right.

Speaker Change: Yes, Ron Yes, I think the short answer is it's much easier to be able to sell with facts and evidence specifically in a market, but even more powerfully in a retailer.

Supply chains were a little bit, let's say just from franchise so to speak.

And some of the regional brands with a smaller brands, we're able to kind of infill right.

Essentially get on shelf and try to sell more kind of given where demand wise.

Speaker Change: Other geographies right. So we are now at the point with a lot of the national retailers, where we can actually point to geographies, where we are and where we have been added and the benefits that we've had which makes them obviously much more positive to expanding and broadening their relationship with us.

But at the same time retailers clearly clearly.

Prefer the larger larger brands are more scale with better profitability.

And actually alluded to it and say well this would probably provided a great opportunity for some of the non leading.

Speaker Change: So the short answer is yes, the more of the strategy works the easier the district, the distribution gains and the selling opportunities are but equally important I think the easier. It is for us to talk to our independent operators about making the investments that they need to be able to build routes and build the infrastructure because they really own a lot of the final leg and so.

Big brands, such as art. So I'm just curious like as you go again speak with these retailers is there kind of just like a general excitement.

Bring in.

Let's say odds are bolder what have you.

And still basically take share maybe from some smaller brands that's all thanks.

Speaker Change: The whole puzzle comes into place as we continue to have greater success with our powerful brands.

So.

Obviously as we got through the pandemic one of the things that allowed us to stand out.

Speaker Change: Alright, Super and then just quickly.

Was that we had both capacity and great products and great brands that we could bring to consumers that maybe hadn't gotten as much of an opportunity to see it so that for us the.

Speaker Change: We spoke to somebody recently.

Speaker Change: To assist you made it sound like as we kind of move through the pandemic right.

Speaker Change: Supply chains were a little bit, let's say just from franchise so to speak.

The opportunity became greater to prove that we were more than just a regional brand, but that we could compete more broadly both for retailers confidence and I think in some cases for ourselves.

Speaker Change: And some of the regional brands with a smaller brands, we're able to kind of infill right.

Speaker Change: Essentially get on shelf and try to sell more kind of given where demand wise.

And I think the premise that we have been talking to retailers about is unlike some of the smaller guys. We actually compete in every in all of the subcategories that a retailer would want so we can compete from potato chips to pork rinds.

Speaker Change: But at the same time retailers clearly.

Speaker Change: Refer the larger larger brands are more scale with better profitability.

Speaker Change: And the extra alluded to you would say well this would probably provided a great opportunity for some of the non leading.

Pretzels to variety packs and multi packs. So we can actually have a more complete thought with some of these retailers and what we've been able to prove year on year is that as we are investing in the category and as consumers are getting exposure our trial and repeat rate is great. Our household penetration is expanding and as a result, the retailers category grows.

Speaker Change: Big brands, such as the heart. So I'm just curious like as you go again speak with these retailers.

Speaker Change: They're kind of just like a general excitement.

Speaker Change: Bring in.

Speaker Change: Let's say odds are bolder what have you.

Speaker Change: And still basically take share maybe from some smaller brands that's all thanks.

So we're a little bit more of a one stop shop, we can definitely do more today than we were able to do say.

Speaker Change: So.

Speaker Change: Obviously as we got through the pandemic one of the things that allowed us to stand out.

I don't know go all the way back to 2010 before we started on our acquisition journey.

Speaker Change: Was that we had both capacity and great products and great brands that we could bring to consumers that maybe hadn't gotten as much of an opportunity to see it so that for us the.

And I think as we go forward, we are building a case for confidence across.

Across the retail network industry that we can we can actually do more with them and I think thats, what youre seeing with our distribution.

Speaker Change: The opportunity became greater to prove that we were more than just a regional brand, but that we could compete more broadly both for retailers confidence and I think in some cases for ourselves.

All right Super Thank you so much.

Alright.

Speaker Change: And I think the premise that we have been talking to retailers about is unlike some of the smaller guys. We actually compete in every in all of the subcategories that a retailer would want so we can compete from potato chips to pork rinds.

The next question comes from.

Oppenheimer.

Please go ahead.

Thank you refresh freak Oppenheimer. Thanks for taking my question.

Speaker Change: From pretzels to variety packs and multi packs. So we can actually have a more complete thought with some of these retailers and what we've been able to prove year on year is that as we are investing in the category and as consumers are getting exposure our trial and repeat rate is great. Our household penetration is expanding and as a result of retailers category grows.

Just on I guess on the cost side, just curious the latest on the input cost inflation youre seeing and just some of the other cost pressures in the business.

Yes.

Thanks for the question so as we as we talked about during our guidance in February.

We are seeing very consistent with our plans, we are seeing cost and labor and some in freight as well.

Speaker Change: So we're a little bit more of a one stop shop, we can definitely do more today than we were able to do say.

As you would expect and then that is offset in commodities. So as we said commodities get better as we move through the year.

Speaker Change: I don't know that all the way back to 2010 before we started on our acquisition journey and and I think as we go forward. We are building a case for confidence across.

Especially around potatoes, we are still paying for the higher potato costs than our contracted through Q1, and then we get into immune Purdue crop later this year and that should get better. So overall still expecting inflation to be flat for the year.

Speaker Change: Across the retail network industry that we can we can actually do more with them and I think thats, what youre seeing with our distribution.

Speaker Change: Alright Super Thank you so much.

Speaker Change: Alright.

Speaker Change: Sure.

Higher on conversion costs offset by commodities.

Speaker Change: The next question comes from.

Great and then maybe just one follow up question just given concerns out there on the consumer backdrop. Just curious as you look at your business are you seeing any signs of increased channel shifting or really any any changes in consumer behavior versus your last update.

Speaker Change: Oppenheimer.

Oppenheimer: Please go ahead.

Speaker Change: Thank you refresh Greek Oppenheimer. Thanks for taking my question.

Oppenheimer: Just on I guess on the cost side, just curious the latest on the input cost inflation, you're seeing just.

Hey, refresh its Howard.

Definitely we definitely similar to I think what you are hearing across.

Oppenheimer: Some of the other cost pressures in the business.

Speaker Change: Yes <unk>. Thanks.

The industry is there are that consumers are value seeking and there are there is a subsegment of the low end consumer low income consumer who is now more specifically price shopping then potentially they had been historically.

Oppenheimer: Thanks for the question so as we as we talked about during our <unk>.

Speaker Change: Guidance in February.

Speaker Change: We are seeing very consistent with our plans, we are seeing cost and labor and some in freight as well.

So we're seeing the same things I think what is what tends to and that is obviously driving some of the price pack architecture changes.

Speaker Change: As you would expect and then that is offset in commodities. So as we said commodities get better as we move through the year.

We referenced in our prepared comments I think what is still a little different about us. However is the distribution expansion opportunities and the opportunity for our portfolio to continue to expand and by bringing our power for brands across the.

Speaker Change: Especially around potatoes, we are still paying for the higher potato costs than our contracted through Q1, and then we get into immune rodeo crop later this year and that should get better. So overall still expecting inflation to be flat for the year.

The markets sort of offsets some of the some of the noise, we may be seeing but we're going to address that we're going to address our pricing and our price pack to make sure that every shopper in every channel can get our products.

Speaker Change: Higher higher on conversion costs offset by commodities.

Speaker Change: Great and then maybe just one follow up question just given concerns out there on the consumer backdrop. Just curious as you look at your business are you seeing any signs of increased channel shifting or really any any changes in consumer behavior versus your last update.

At the price point and the product that they want.

Great. Thank you I'll pass it along.

Howard A. Friedman: Hey, refresh its Howard.

Your next.

Churn comes from Matt Mcginley from Needham. Please go ahead.

Howard A. Friedman: Definitely we definitely similar to I think what you are hearing across.

Thank you.

Speaker Change: The industry is that there are that consumers are value seeking and there are there is a subsegment of the low end consumer low income consumer who is now more specifically price shopping that potentially they had been historically so we're seeing the same things I think what is what tends to and that is obviously driving some of the price pack architecture changes.

EBITDA Bridge, you noted that four point benefit from productivity savings, but also that two 2% drag from the supply chain costs, how much of that supply chain impact was inflation versus that Boulder Canyon transport issue that you mentioned in it.

Was primarily Boulder Canyon related does that headwind primarily resolve over the course of <unk>.

This quarter second quarter.

Speaker Change: That we referenced in our prepared comments I think what is still a little different about us. However is the distribution expansion opportunities and the opportunity for our portfolio to continue to expand.

Yes so.

I would say.

A little less than half was inflation.

As I talked about just now.

Seeing conversion cost inflation that we would expecting them.

Speaker Change: And by bringing our power for brands across the.

And then.

We definitely saw delivery costs, which was <unk>.

Speaker Change: The markets.

Speaker Change: Offsets some of the some of the noise, we may be seeing but we're going to address that we're going to address our pricing and our price pack to make sure that every shopper in every channel can get our products.

Think of it as a good investment that we made as we talked about in the prepared remarks.

Some other investments that we've made to drive productivity around capabilities et cetera. So those are in there as well. So you are correct the delivery cost.

Speaker Change: At the price point and the product they want.

Speaker Change: Great. Thank you I'll pass it along.

Speaker Change: Yes.

Investments will taper off but then.

Speaker Change: Your next question comes from Matt Mcginley from Needham. Please go ahead.

We start to make some some other investments to continue to drive productivity.

Sure.

Matthew Robert McGinley: Thank you.

Got it.

Matthew Robert McGinley: EBITDA Bridge, you noted that four point benefit from productivity savings, but also that two 2% drag from the supply chain costs, how much of that supply chain impact was inflation versus that Boulder Canyon transport issue that you mentioned and if that is that.

The guide for the full year implies about a point of EBITDA growth.

You did that this quarter as well it sounded like youre getting more from productivity, but then youre going to reinvest that back into marketing, but I guess my question is can you get any leverage on G&A on the higher volume in the back half or does that G&A continue to be a headwind and then G&A exclusive on the advertising and marketing that youre that youre going to spend more.

Matthew Robert McGinley: It was primarily Boulder Canyon related does that headwind primarily resolve over the course of I guess into this quarter second quarter.

Speaker Change: Yes so.

Speaker Change: I would say.

Speaker Change: A little less than half was inflation.

Yes, we will get some some leverage on G&A. So.

Speaker Change: As I talked about just now.

I will say that we are really excited to see the results in the first quarter productivity is definitely flowing through there.

Speaker Change: Are seeing conversion cost inflation that we would expecting and then.

Speaker Change: We definitely saw delivery costs, which was <unk>.

A little more than we expected so to your point as gross margins expand.

Speaker Change: Think of it as a good investment that we've made as we've talked about in the prepared remarks.

Higher than expectation, we'll keep.

Speaker Change: There were some other investments that we've made to drive productivity around capabilities et cetera. So those are in there as well. So you are correct the delivery cost.

We'll continue to make.

Hi, Ottawa investments and you call out marketing I will say.

There are really three areas that we invest in around our brands switches marketing and distribution and selling capabilities.

Speaker Change: <unk> will taper off but then.

Speaker Change: We start to make some some other investments to continue to drive productivity.

Well as building out our team our capabilities such as in the area of analytics marketing driving productivity revenue management integrated business planning so on and so forth. So you will see us invest in all three areas.

Speaker Change: Got it and your guide for the full year implies about a point of EBITDA growth.

Speaker Change: You did that this quarter as well it sounded like youre getting more from productivity, but then youre going to reinvest that back into marketing.

Yes.

Speaker Change: I guess my question is can you get any leverage on G&A on the higher volume in the back half or does that G&A continue to be a headwind and then SG&A exclusive on the advertising and marketing that youre that youre going to spend more.

Behind the brands.

The primary area of investment this year.

Thanks for the great work on all the progress we've made this year.

Thank you.

Speaker Change: Yes, we will get some some leverage on G&A. So.

Your next.

<unk> comes from John Baumgartner of Mizuho Securities. Please go ahead.

Speaker Change: I will say that we are very excited to see the results in the first quarter productivity is definitely flowing through there.

Good morning, Thanks for the question.

Hi, John first off good morning, first of all in measured channels Youre volume lift on promo across your main categories potato chips tortillas pretzels those lifts have been above the categories for quite some time now can you speak Howard can you speak to that outperformance. What do you think drive that gap is it is it more outsized trial.

Speaker Change: There are more than we expected so to your point as gross margins expand.

Speaker Change: Higher than expectation, we will keep.

Speaker Change: We will continue to make.

Speaker Change: Hi, ROI investments and you called out marketing I'll say.

Speaker Change: There are really three areas that we invest in.

And in growth market is it more your consumers in core geographies expanding consumption is there something in the execution in general that standout Im curious what youre seeing there.

Speaker Change: Our brands switches marketing and distribution and selling capabilities.

Speaker Change: As well as building out our team our capabilities such as EMEA ETF analytics marketing driving productivity revenue management integrated business planning so on and so forth. So you will see us invest in all three areas.

Yes so.

I appreciate the question John Obviously may recommend people want me to call out. The fact that I have great revenue revenue management folks so I needed to get that built in.

Look I think a couple of things one of the things I think youre seeing right now with our promotional apps is twofold first is sort of the maturation of our revenue management capabilities, where we have historically been a lot more about getting our price gaps right and maintaining them.

Speaker Change: But yes behind the brand as a primary area of investment this year.

Speaker Change: Thanks for the great work on all the progress we've made this year.

Speaker Change: Thank you.

Speaker Change: Your next question comes from John Baumgartner of Mizuho Securities. Please go ahead.

Over the last year or so we have been acquiring new talent and capabilities from other places, which is actually allowing us to experiment with different promotional constructs as well. So it's not necessarily just a straight lift it can be a must buy program.

John Joseph Baumgartner: Good morning, Thanks for the question.

John Joseph Baumgartner: Hi, John first off good morning, first of all in measured channels Youre volume lift on promo across your main categories potato chips tortillas pretzels those lifts have been above the categories for quite some time now can you speak Howard can you speak to the outperformance what do you think drives that gap is it is it more outsized trial.

We're playing with different price points as well to try try an experiment. So I think part of what Youre seeing there.

Are the benefits of that of that construct the second is that we are doing a better job of making sure that our promotional rois are working so youre getting a pro.

John Joseph Baumgartner: And in growth market is it more your consumers in core geographies and expanding consumption is there something in the execution in general that standout Im curious what youre seeing there.

Promotional benefit of just getting sharper and more effective across the retailer.

Universe as well, obviously, we're very pleased with that.

Speaker Change: Yes so.

Speaker Change: I appreciate the question John Obviously May Rev Man people want me to call out. The fact that I have great revenue revenue management folks so I needed to get that built in.

With that progress and then the last thing I would just offer you as our customer mix as we continue to mature we're getting different customers with <unk>.

Speaker Change: Look I think a couple of things one of the things I think youre seeing right now with our promotional lifts is twofold, one it's sort of the maturation of our revenue management capabilities, where we have historically been a lot more about getting our price gaps right and maintaining them.

Different levels of expectations in terms of how to execute.

We're trialing and promotional activity so all of those things together.

Our rolling up to a better quality merchandising lift then potentially you are seeing with others.

Okay, and then building on that as it ties into the decision to increase marketing more than the 40% this year that that incremental spend as it pertains to the brands will that also fund more in store display is there more of an event or a seasonal tie and we should be thinking about just how you're thinking about the allocation at the margin.

Speaker Change: Over the last year or so we have been acquired.

Yes so.

Jay kind of referenced to this and the last question as well when we think about investing in growth, we sort of think about it not only in terms of investing in the brand, which is more consumer poll, but also retailers push alright. So that means more displays more end cap space that we are able.

Able to get as well.

So that's a piece of it youll see greater expansion of shelf in distribution and obviously greater spaces.

Progress through the year I think the secondary as you see a lot more effort from us on innovation with or behind Craveable flavors, we've addressed our multi pack in variety pack and occasions. There. We're excited about the Voodoo Halloween.

Variety pack that we're going to push through so there is some investment there as well and then the last is really it.

As we are building out our capabilities, it's absent and us will have marketing campaigns as we go into the back half of the year starting this quarter in Q2, and then building in support not only of the distribution, but also in support of building those brands. So there will be.

So fund more in store display is there more of a an event or a seasonal tie and we should be thinking about just how you're thinking about the allocation at the margin.

Yes so.

A lot more concerted effort to making sure that consumers can comment understand who we are and what we offer as we go forward and then last is really if you look at E Commerce and our E. Com business that business is growing really nicely and that's because we're getting much more effective with both retailer dot com and some of the digital places where.

Jay kind of referenced to this and the last question as well when we think about investing in growth.

Sort of think about it not only in terms of investing in the brand, which is more consumer poll, but also retailer push alright. So that means more displays more end cap space that we are.

<unk> able to get as well.

We can invest and get higher.

So that's a piece of it youll see greater expansion of show up in distribution and obviously greater spaces.

Roy High trial activity. So you put it all altogether it will be kind of across all three distribution innovation and communication and then retailer specific execution to support our growth.

Progress through the year I think the secondary as you see a lot more effort from us on innovation with or behind Craveable flavors, we've addressed our multi pack in variety pack and occasions. There. We're excited about the Voodoo Halloween.

Thank you.

Variety pack that we're going to push through so.

Your next question comes from Robert Moskow of PD Cowen. Please go ahead.

Investment there as well and then the last is really it.

Okay.

As we are building out our capabilities, it's absent and us will have marketing campaigns as we go into the back half of the year starting this quarter in Q2, and then building in support not only of the distribution, but also in support of building those brands. So there will be.

Hi, Thanks for the question.

Just wanted to make sure.

Fully understand the gap between your.

Net sales.

And the IRI reported numbers.

It's mostly unmeasured channels and dips and sauces.

A lot more concerted effort to making sure that consumers can come in understand to who we are and what we offer as we go forward and then last is really if you look at E Commerce and our E. Com business that business is growing really nicely and that's because we're getting much more effective with both retailer dot com and some of the digital places where.

Just to be clear the unmeasured channels is it club stores or is it small format stores that you don't think are really covered in the in the in the IRI.

Yes.

Thanks for the question look I think there are three pieces to it and let me answer your question first which is we feel great about how our club store and our discounter and for the most part the dollar channel is doing I think if you look at where.

We can invest and get high high ROI high trial activity. So you put it all altogether it will be kind of across all three distribution innovation and communication and then retailer specific execution to support our growth.

Where are we where we are executing we feel very strongly that we're getting very good results and we're continuing to see.

Thank.

Thank you.

The growth that we would expect it's really.

Driven by a little bit of the untracked channels small format and its really pretty much pretty well isolated to we have some price pack architecture.

Your next question comes from Robert Moskow of PD Cowen. Please go ahead.

Hi, Thanks for the question.

We kind of talked about that I think it would be.

I wanted to make sure I fully understand the gap between your.

A fairly significant portion of the issue. The second is really around gypsum salsa and you see the the.

Net sales.

And the IRI reported numbers that you mentioned, it's mostly unmeasured channels and dips and sauces.

The spread there between if you look at just the pure salty pull all the data versus versus total US you can sort of see in the measured channels that difference and then the last is the Io conversion, which kind of wanes over time, which is another eight about 40 basis points. So we'll solve the small format issue as we progress through the year, we're making we've made.

To be clear the unmeasured channels is it club stores or is it small format stores that you don't think are really covered in the in the in the IRI.

Yes.

Thanks for the question look I think there are three pieces to it and let me answer. Your your question first which is we feel great about how our club store and our discounter and for the most part the dollar channel is doing I think if you look at where.

The changes.

We need to we've got to get the assortment in the right place, but with respect to discount dollar value channel in club, we feel very good about about our performance.

Okay. So these are small formats that are not picked up in the IRI, because IRI throats convenience stores, but but not not what youre not the small formats.

Where are we are where we are executing we feel very struck we get we're getting very good results and we're continuing to see.

That's correct.

The growth that we would expect it's really.

Okay and then the last question fourth quarter do you feel that you have an easy comparison to your performance a year ago coming up in the fourth quarter optically it looks like that.

Driven by a little bit of the untracked channels small format and its really pretty much pretty well isolated to we have some price pack architecture.

We kind of talked about that I think it would be.

When I when I look at fourth quarter sales, but there's all kinds of factors. So how do you view it.

A fairly significant portion of the issue. The second is really around if some salsa and you see the the spread there between if you look at just the pure saw the pull of the data versus versus total US you can sort of see in the measured channels that difference and then the last is the Io conversion, which kind of wanes over time, which is another eight about 40 basis.

Yes, we think that.

What we what we would say is if you look at the progression through the year.

As you think about Q1 Q1, there was a lot of a lot of noise early early we get through our first quarter or second quarter really are.

So we will solve the small format issue as we progress through the year, we're making we've made the changes.

It gets progressively a little bit.

Sure.

Gets progressively easier once you get through the second quarter.

We need to we've got to get the assortment in the right place, but with respect to discount dollar value channel in club, we feel very good about about our performance.

As you get into Q3 and Q4 over Q4.

Is the is the quarter, where we think the latter is the most straightforward.

Most of the most straightforward.

Kevin J. Powers: Okay. So these are small formats that are not picked up in the IRI, because IRI and throws convenience stores, but not not what youre not the small formats.

Forward, you mean apples to apples already I mean like I remember there was some disruption in the fourth quarter a year ago.

Flattens in Q4.

Okay, Great alright. Thank you very much. Thank you. Thank you.

Kevin J. Powers: That's correct.

Kevin J. Powers: Okay and then the last question fourth quarter do you feel that you have an easy comparison to your performance a year ago coming up in the fourth quarter optically it looks like that.

Sure.

Your last question comes from Jim <unk> of Stephens. Please go ahead.

Hi, guys. Thanks for squeezing me in.

Hey, gentlemen.

Kevin J. Powers: When I when I look at fourth quarter sales, but there's all kinds of factors. So how do you view it.

Yeah.

On Boulder, you just given the continued strength of the natural channel there how much of the assortment of Boulder in natural do you think is transferable to traditional grocery and I believe the Jay you said that now that you are making bolder in Hanover does that improve your ability to go after new distribution on the east coast because.

Speaker Change: Yes, we think that.

Speaker Change: What we what we would say is if you look at the progression through the year.

Kevin J. Powers: As you think about Q1 Q1, there was a lot of a lot of noise early early we get through our first quarter or second quarter really are.

Correct me, if I'm wrong, but I think Boulder is actually one of your few brands that has better market share out west versus your core markets in the east.

Kevin J. Powers: It gets progressively a little bit.

Kevin J. Powers: <unk>.

Kevin J. Powers: Gets progressively easier once you get through the second quarter.

Yes so.

I appreciate the question.

Kevin J. Powers: As you get into Q3 and Q4 for Q4.

We've been talking about our aspirations for Boulder for Awhile and I think it's one of the one of the brands that.

Speaker Change: Is the is the quarter, where we think the latter is the most straightforward.

Speaker Change: Most of them most grateful if we say straightforward you mean apples to apples already I mean like I remember there was some disruption in the fourth quarter a year ago.

We're particularly excited about not only because it is a clear point of difference around healthier oils.

But to your point about where it's geography of origin comes from so to answer. The question. Yes. We believe it is transfer approval, we believe that the consumer interest in healthier oils will be true across the country and we are seeing really good distribution gains as we're moving east.

Speaker Change: Flattens in Q4.

Speaker Change: Okay, Great alright. Thank you very much. Thank you. Thank you.

Speaker Change: Yes.

Speaker Change: Your last question comes from James <unk> of Stephens. Please go ahead.

James: Hi, guys. Thanks for squeezing me in.

Howard A. Friedman: Jim.

Howard A. Friedman: Yeah.

Howard A. Friedman: On Boulder, you just given the continued strength in the natural channel there how much of the assortment of Boulder in natural do you think is transferable to traditional grocery and I believe the Jay you said that you know now that you are making bolder in Hanover does that improve your ability to go after new distribution on the east coast because.

And we're also seeing good distribution opportunities as we think about places like club.

So.

To Jay's point, we put we put in the capital to be able to make the product in the east specifically to address the higher levels of demand that we're starting to see and if you certainly look at the core performance in the first quarter.

Howard A. Friedman: Correct me, if I'm wrong, but I think Boulder is actually one of your few brands that has better market share out west versus your core markets in the east.

Youre seeing that transferable demand. So we're excited about boulder.

I think it is a brand that is growing nicely and growing quickly and consistently and as we build over time, we are staging our supply chain to be able to meet that demand.

Speaker Change: Yes so.

Speaker Change: I appreciate the question.

Speaker Change: We've been talking about our aspirations for Boulder for Awhile and I think it's one of the one of the brands that.

Great.

Speaker Change: We're particularly excited about not only because it is a clear point of difference around healthier oils.

If I could maybe ask one more on just retailer engagement on the recent innovation launches I know in my local grocery store I've seen Mike Scott on a mixed minis on end caps along some of the other innovation do you have a sense for how many incremental households that brings to the brand.

Howard A. Friedman: But to your point about where it's geography of origin comes from so to answer. The question. Yes. We believe it is transfer herbal we believe that the consumer interest in healthier oils will be true across the country and we are seeing really good distribution gains as we're moving east.

If you can offer any color on maybe conversion from let's say like the mixed minis back to the traditional core potato chip offerings.

Howard A. Friedman: And we're also seeing good distribution opportunities as we think about places like club.

Yeah, I think it's still early we're sort of it I think the second purchase cycle. So we won't really have a good read for a few more months to be able to see the trial and repeat data what I, what I can tell you and him and Im pleased that youre local retail or actually has the product.

Howard A. Friedman: So.

Howard A. Friedman: To Jay's point, we put we put in the capital to be able to make the product in the east specifically to address the higher levels of demand that we're starting to see and if you certainly look at the core performance in the first quarter.

Is that we are seeing good retailer acceptance across our innovation, so far because of both the need states that we are identifying and frankly some of the subcategories that we are that we're entering into where the growth is really the most attractive so it mixed minis case.

Speaker Change: Youre seeing that transferable demand. So we're excited about boulder.

Speaker Change: I think it is a brand that is growing nicely and growing quickly and consistently and as we build over time, we are staging our supply chain to be able to meet that demand.

Obviously, the flavored pretzel segment is growing fast and we wanted we were there.

Howard A. Friedman: Great.

Howard A. Friedman: If I could maybe ask one more on just retailer engagement on the recent innovation launches I know in my local grocery store I've seen Mike Scott on a mixed minis on end caps along some of the other.

Earlier, what's apps to be able to bring our flagship <unk> brand in as well what's important and then in the case of Mike's Hot Honey and the zaps seasoned pretzels, bringing in hot spicy, which is also a fast growing segment of the category. So retailers have been very positive early sales were good it's still early to understand what the trial and error.

Howard A. Friedman: Innovation do you have a sense for how many incremental households that brings to the brand.

Speaker Change: You can offer any color on maybe conversion from let's say like the mixed <unk> back to the traditional core potato chip offerings.

<unk> data is but we'll be happy to share it as soon as we have it.

Yeah.

Great. Thanks, guys I'll pass along thank you. Thank you.

Howard A. Friedman: Yeah.

Howard A. Friedman: I think it's still early we're sort of it I think the second purchase cycle. So we won't really have a good read for a few more months to be able to see the trial and repeat data what I, what I can tell you and I'm and I'm pleased that you are a local retail or actually has the product.

Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Howard A. Friedman: Is that we are seeing good retailer acceptance across our innovation, so far because of both the need states that we are identifying and frankly some of the subcategories that we are that we're entering into where the growth is really the most attractive. So it mixed minis case, obviously.

Howard A. Friedman: Obviously, the flavored pretzel segment is growing fast and we need we want it we were there earlier, what's apps to be able to bring our flagship <unk> brand in as well what's important and then in the case of Mike's Hot Honey and <unk>.

Howard A. Friedman: Seasoned pretzels, bringing in hot spicy, which is also a fast growing segment of the category. So retailers have been very positive early sales are good it's still early to understand what the trial and repeat data is but we'll be happy to share. It as soon as we have it.

Speaker Change: Great. Thanks, guys I'll pass along thank you. Thank you.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Howard A. Friedman: Yes.

Howard A. Friedman: Okay.

Howard A. Friedman: Yeah.

Howard A. Friedman: Okay.

Howard A. Friedman: Yeah.

Howard A. Friedman:

Speaker Change: [noise].