Q2 2025 Utz Brands Inc Earnings Call - Q&A

Good morning. My name is Audra and I will be your conference operator today.

At this time, I would like to welcome everyone to these Brands Inc, second quarter 2025 earnings conference call.

Today's conference is being recorded.

All lines have been placed on mute to prevent any background noise. If you would like to ask a question, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again,

at this time, I would like to in the conference over to Trevor Martin, senior vice president of Vesta relations. Please go ahead.

Thank you, operator. And good morning everyone. Thank you for joining us today for a live Q&A session and our second quarter of 2025 results.

with me on today's call or Howard Freeman, CEO and Bill Kelly CFO, I hope everyone has had a chance to read our prepared remarks and view, our presentations, all of which are available on our investor relations website

Before we begin, our Q&A session, I just have a few administrative items to review.

Please note that some of our comments today will contain 4 looking statements based on our current view of the business and that actual future results May differ materially.

We see our recent FCC filing which identified principal risks and uncertainties that could affect future performance.

today, we will discuss certain adjusted or non-gaap financial measures which are described in more detail in this morning's earnings materials,

Reconciliation is a non-gaap financial measures and other Associated. Disclosures are contained in our earnings materials and posted our website.

Now operator, we are ready to open up the line for questions.

Thank you once again please press star 1. If you would like to ask a question we'll go first to Andrew Lazar at Barclays

Great, thanks so much. Good morning and, um, welcome Bill, and Trevor.

Um, thank you. Good morning, Andrew.

Um I was roughly flat in the first half of the year you're looking for 8 and a half percent growth um for the year at the midpoint um in the back half. I think it actually looked great and a half percent growth that the midpoint for the full year and applies High Teens growth in the back half, I was hoping you can go through maybe a bit more detail on what gives you the the confidence in that Outlook um especially in light of just the more muted first half, Eve, adopt performance.

Okay, good morning, Andrew Howard. I I'll start in uh, hand it over to bill for um, any other caller. But look, I I think there are a couple things that are going on. Uh, in in the quarter, obviously there's a lot of the Investments that we have been making to drive our oh, overall Topline, which are coming through um requires some required investment. As we were as we build into the year when you look specifically to gross margin first is that it naturally steps up as as you would build through the year you know Q Q3 is typically a significant step of versus Q2. And, you know as you look at what's coming into the the back half of this year, the accelerated capex, does accelerate productivity savings as we go in. We obviously announced um a uh, a planned closure that also is going to impact the uh, the back half of the year. And then I think the last thing that you're going to see is there is some benefit to our portfolio mix as well as we are. Uh, continuing to see Topline momentum. That also helps the step up as we go into the back half of the year.

Got it. Okay, thanks and then, um, obviously you have to deliver it. Strong Topline results in in the first half and, and overall category that at least doesn't appear to have improved very much as of yet. Um, I guess what specifically led to the better Top Line is, it is it frankly, just more distribution gains than you might have expected better velocities. Um, new products. What's kind of led to the at least above what your initial expectation was around around Topline

Yeah. What here a couple things that are going on in the quarter, we feel really good about where we are on our Top Line. And as you know, we are not solely dependent on the category in order to be able to drive our growth. Um, the person says you suggest, which is obviously we've had a significant increase in expansion Market distribution points, you see about uh as we went into the first half of the year we are investing in infrastructure which is allowing us to see it significant growth in the first half in those geographies. I think the second thing is is I think for the first um, time in a couple of quarters, you actually saw a volume and value share gains in our core and that's really being driven by bringing um, Boulder Canyon and on the border into our core geographies as well as seeing some improvement in our core. Um, performance as well. We're not where we want to be, uh, yet on core. But you are seeing an improvement in the trend. And so we kind of have measured and unmeasured channels, all kind of moving together, uh, very positively in the first half.

Certainly in the second quarter distribution gains supporting it. And then, you know, we've been making Investments to drive that Westward Expansion and they're also coming through in the Top Line results.

Great. Okay, thanks so much. I'll pass it up.

Thanks Andrew.

We'll move next to Peter galpo at Bank of America.

Hey, good morning, guys. Um, Howard maybe just to start. I'd love to. Um,

Get a little bit more clarity on the the revision on the EPS line, specifically, the stock is currently down about 11% at the open and I think that that a lot of that has to do with just the mechanics of of what changed in the EPS guidance. So maybe you can talk a little bit more in detail about what below the line is specifically changing. I know there was a a comment around interest expense, but also um, some accelerated depreciation. So so just like what was the number before? Where is it? Going to no impact. EBA but but clarifying, comments there would be very helpful.

Yeah. So let me start. And then I'll hand it to to because Pete, obviously, as you know, we we've always maintained that Eva does obviously the, uh, first indicator of the overall, health of our of our business. And, you know, we continue to feel very good about the Evita plan for the year. Uh as we obviously nudged up the the low end from 6, from 6 to 10 to 7 to 10. So kind of, we feel pretty good about where we are on the cost savings programs and productivity though all those things are coming through as it as it relates to specifically. The EPS, let me turn it to BK to go take us the rest of the

Away. Yeah, thank you Howard. Thank you for your question. Um on the EPS piece. Um the original guide that we put in place was the EPS growth of 10 to 15%. Uh we revised that in our print yesterday to be or this morning to be 7 to 10 percent.

As however said, you know, even I is is the indicator for us to in the health of our business but the impact of our revision from midpoint to midpoint is about uh 3 cents uh half of that is interest. The other half is is DNA. Uh, on the interest side and interest, we're taking up a couple of, uh, pennies there giving the impact of the higher capex, spend that we decided to do to accelerate our productivity programs, and to help

Um, we borrowed a bit more, uh, sooner in that line. And, and that's picking up uh, there in terms of of more or more interests. Um, on the capex side, we did confirm a higher span on a higher end of our range on capex. Uh, and and we spent more of that, uh, quick more quickly than, than, in the past. Our, our capex is about 70% spent through the first half of the year, um, and that's different than our our historical kind of pattern, uh, that did create more amortization and appreciation, and that's the other Penny or so that's coming through, uh, in our, in our guide. Um, so we thought that was the, um, the way to think about it. You know, looking forward. We, we think that, um, that we are confident in the 2025 will be the peak of our capex spending and, and so, we think we can manage through that, but I thought it was prudent to just, uh, confirm. Uh, the thinking on EPS. I know it's not the most significant metric for us, but I wanted to make sure that we had the right,

Thinking they were going forward.

Call there would be helpful as well. Thanks very much.

Yeah, thanks for the question, Pete. I think there are a couple things going on, obviously, to your point, potato chips is is doing well, and it's a little bit of a, of a tale of within the expansion geographies are powerful. Brands are all performing quite well and and we're pleased with the performance potato chips. Obviously, from a subcategory perspective, uh, in the quarter was also very strong as you. Look at pretzels, you sort of have the odds brand, which was actually growing in line with the subcat and is performing well. And then the the rest of our pretzel portfolio a little bit softer, which kind of pulled the number, um, number down. But, you know, our our, our primary power brand in US is growing strong in in pretzel and then obviously zaps and Bachmann and some others were a little bit softer. Uh, and then on tortilla chips, it was a little bit more of a mer, an overlap of merchandising, we had some uh activity in the club Channel as well as in the south central portion of the United States, where we were lapping, uh, some promotions in the prior year, not not a an issue that we see, but more just a a quirk of

Of the calendar.

Great. Thanks very much.

Thanks Pete.

We'll move next to Michael Avery at Piper. Sandler Sandler.

Thank you. Good morning.

Just wanted to unpack some of the distribution gains a little bit, you've obviously got really good momentum that you called out in the Midwest.

Can you give a sense of you know, is that smaller retailers? And um you know, kind of what the shape of the channels look like there and how much does that momentum? Help your selling story to to to bigger retailers and how well established is your infrastructure to support? A bigger push out there.

Yeah, so we actually are see. So obviously we're seeing growth in all 30 of the extension geographies. So we did actually we are seeing momentum picking up across the expansion uh, markets, and it's a combination of things that are going on. Like, obviously, we have, we've been, we continue to get very, uh, strong retailer support from National chains as they are, um, taking our taking our products Westward with us. And so, that continues to be a good news story. And we're also seeing good progress in channels, whether it's Club discount dollar, uh, all all also continuing to see momentum and so from a, from a distribution gain perspective, it's a little bit more broad-based, uh, than, you know, sort of a smaller retailer. But they, it's certainly Something That We're, uh, that we're pleased with. And that obviously, the thing that we have found historically, and we've seen it in most of our expansion geographies, once we get in and start to execute our Playbook around the perimeter around, end cap.

And around the distribution because we are additive and incremental to the C, the the, uh, category retail, we tend to get incremental spaces we go and so what we wind up doing is building strength upon strength and so you're starting to see distribution gains, you know, both in core and expansion markets, kind of across the board and from an infrastructure perspective. Uh you know that that that is the benefit of our hybrid model between director warehouse and DSD. You know, we can serve as a customer based on how their their unique preferences are or in some cases, start out in a market before we can get to it. The the route infrastructure that we need for customers that want to be serviced that way. So you know, hopefully that answers the the question but we're feeling really good about where we are and we believe that that was part of the logic of saying that this would bring our the low end of our G guide to at least 2 and a half.

percent moving into the back, half of the

No. No, that's that's great color and just a quick follow-up. On, on packaging, the side with some of the new innovation, um, it looks good. I, I know you've got a big portfolio, but what does it reflect really any even subtle changes to Brand architecture? That might be applied more broadly.

Yeah, well, I look, I think at the moment, um, you know, there's a lot of, there are a lot of things going on with our packaging. We obviously introduced our, a, a cheese ball barrel, uh, refresh that we that we want to do from a structure perspective, you know, the front and back Graphics at the moment. You know, we, we continue to, obviously, look to make sure that the brand, uh, is that the brands are fresh and modern and that the packaging is appealing. So we'll continue to to look at that and and tweak as necessary but um for the moment, I think that what we're pretty pleased with our architecture overall

Okay, thanks so much.

Thank you.

We'll take our next question from Robert Moscow at C.

Mr. Moscow, your line is open, you may be on mute.

Okay, I'm glad you have Trevor there to, uh, help explain why the stock is down. Because I don't think I can. Uh, this is, uh, I thought the print was pretty good. Um, can I ask, um,

the uh the bridge, the EBA bridge in the back has uh, the investment spending that you talked about Howard

Uh, in sgna to drive the the distribution games.

Can can you? I I would imagine that that that continues in the back half of the year because, you know, it it it's supporting your, your growth and expansion categories, or expansion geographies and also your DSD system. So, is that true? Well, will that continue in the back half?

Yeah, I think if you look at sdna front half versus versus back half, we do expect that on a percentage basis, that them to be, uh, that FDA in the, in the second half will be modestly higher. Uh, some of that is to your point being able to invest in the sales infrastructure for the westward expansion, and obviously marketing spending in Q3, uh, will be a little will be higher because we're in the peak of the summer selling season. Um, so I I think that that's a fair assumption. You know, there's also a little bit of of cost inflation around Healthcare uh that's in there. But but a by and large, the investment that you're seeing in sdna is to continue to drive the Topline momentum, you know, which is obviously being supported by gross margin expansion uh that you saw in the first half of the year and we expect to continue and accelerate.

Okay. And is there any way to isolate the, the margin of Boulder Canyon, uh, in relation to the rest of the, the the portfolio is, is this a higher margin, uh, brand and will that eventually, uh, help, uh, your path towards margin expansion as it continues to grow?

yeah, I I think

Disclosed obviously, our brand margins, uh, historically, but I think it's it is fair to say that Boulder Canyon is a premium brand and that we expect that it, it actually has a margin benefit to the business is a little bit. What we talked about earlier on, why do we believe that there's a, that there's a, there's a mixed benefit in the back half of the year to Eva on on our brand and channel mix. So we're bringing Boulder Canyon as an example, into not only is in our, uh, untracked channels in in club and, and natural. And, uh, but we're also bringing into our most profitable channels, which is really food,

So you should see a benefit over time there. Um, and we think that that actually will support supports the higher IBA guy that we have in the back half of the year.

Okay, thank you.

Thank you.

We'll move next to Brian Holland at da Davidson.

Uh, thanks. Good morning. Um, just within your outlook.

What is a student from a category standpoint? Uh you know, around this time, a year ago, the competitive landscape, uh, became a bit more aggressive on promotion. So so what's your view of that dynamic as we head into back to school this year?

Yeah. So you know we had said uh last quarter that we kind of envisioned a that the category would would get to flat-ish kind of growing into that um as we went through the year, right? And to your point, um, at this point, the category has been fairly stable in terms of where it's been sitting and you know, obviously we are continuing to grow quite a bit more quickly. I think where you'll what we would expect is you should see some category progress in the third quarter. As to your point, the lapping of last year's merchandising events occurs and and and the categories should start to normalize but our guide at this point is really predicated on the idea that the category is not going to get a whole lot better from here. Uh, and and that we continue to see the type of performance. We saw in the first half of the year, um, support kind of where we, where we expect to be at least 2 and a half percent or better.

Got it, thank you. Um and then you referenced the partnership between zaps and pop belly. What can you tell us about the pipeline that you have or are developing in Food Service, you know, beyond this relationship and and also what's the current mix of food service within your net sales and and do you have any view on what that could or or should ultimately be?

Yeah so I um look we I think many of us who have ever tried zaps. The first place that many of us may have tried. It was was in pot belly and we're very, um,

Happy with that relationship. You know what? We

Precise numbers. Um, but it, it tends to be pretty small and and an area where we do think that there is growth potential.

We know that most people who go to, who tend to want to buy Brands away from home, typically experiencing them in home at first, so you kind of feel like driving our Geographic expansion in the introduction into kind of traditional channels and grocery then sets up a, a really um, strong argument to be able to then be included uh, in single server away from home. So it it'll come over time, but it's still early Innings there, I think.

Appreciate the color. And if I could just speak in 1 quick, uh, and let me Echo, Rob's comments about the stock at the open this morning. Uh, but are you still on Pace to exceed your 26 financial goals that you said at the end of 23, on the bottom line?

A mindful of of, of kind of the adjustments that uh, you you've made today, it's on Epps.

Yeah. Look I think what we what we said an investor day was that we we'd be able to contribute a 100 basis points of IBA margin expansion year over year over year and that we would be delivering double digit EPS uh growth over that same period of time. If you look at what happened last year, we grew 120 basis, points of Eva expansion going for 13 to 14 and 0.2 and we grew EPS 35%.

so at least as we look today and as you see our guide where we are the building blocks Topline expansion, or Topline growth and expansion markets, holding our core,

Being able to drive productivity at 135 million which we revised to 150 plus and where we are on Ava, we don't we we continue to be very confident that we can meet the bottom line goals that we have um given by given that we are. I think executing what we promised in December 2023 and it continues to come through in our in our results. I think we feel really good about where we are and where we're headed.

Thanks a lot back in the queue.

Thank you.

We'll take our next question from John Bob Garner at Mizuho.

Good morning. Thanks for the question.

Hey, John.

Howard. I'd like to ask about the comments on DSD Investments. Can you elaborate on what sort of changing or evolving there? And then looking specifically at the convenience channel that was a focal point for you, coming into the year and you're building some nice momentum in Sea stores with, you know, good distribution. Point growth for the first time in a couple of years. How much of that Improvement in Sea stores is down to, you know, new package capabilities and flavors against sort of a static routes to Market relative to benefits from Material changes or improvements in the actual routes and selling resources, I'm not sure if the sea stores and and DC Investments related, but just wanted to ask on both.

Yeah, I appreciate the question. Look, look, I think, what you what the part of the Investments is, there are 2 different Investments that we're making in DSD, um, more broadly in our expansion markets. Obviously, we're putting in, uh, infrastructure to be able to support the expanded distribution that you see in the, in, in the wet as we're moving Westward. And that part of that, uh, e effort is actually still underway and we're making infrastructure Investments which you can see in the numbers. Um, and then the second piece is really in our core geography. Is we have been working to um, you know, kind of evaluate where the routes have been and make sure that the I that our IO partners are getting the support. Uh, that they need to be able to execute. And in some cases, you know, we are uh, buying back routes and then reselling them to to new iOS who want to get into the business. So that is kind of a little bit of standard work but it

A quarter specifically in the in our core geographies.

So I think both of those things 1 is laying in new and then the other is acquiring new iOS and making sure that we're providing the services that they require to be able to build their business. Both of those things, I think are coming through in, in the top line. Um, performance. I think with respect to core, I think there are a couple of things going on. There's no question that when the Core Business starts to improve that that also makes it a more attractive place for our iOS to, to, um, Place product as well. So they get to be a little bit of a virtuous cycle there. We've also had distribution gains in a couple of the larger.

Q4 Q2 is better than a q1 and we expect that momentum to continue.

Great. Thanks. Howard.

Thank you.

We'll go next to Jim Solera at Stevens Inc.

Hey Bill. Good morning. Thanks for taking a question. Hey Jim. Um, I would I wanted to uh ask a little bit, maybe starting off on on Boulder and obviously the very strong growth. You guys see there in in conventional channels.

is that coming from both core and expansion markets or just to to maybe you can give us some detail on you know what's driving that if it's being introduced to cross the footprint, if there's specific areas

And kind of what the the runway as you see, it want to go forward basis.

Yeah, so look I think you know, Boulder Canyon we talked about investor day that we thought we could go to a hundred million dollars within 3 years, obviously, we got past 100 million dollars. Uh, this past year at the end of the Q4 and that business continues to kind of be riding a perfect combination of things. Um, it's a great product. It it has a better for you, uh, benefit with non seed oil and it it it has grown up in the natural organic and better, uh, channels. And what you now see us doing is bringing that product into across our geographies core and expansion as well as, uh, some unmeasured and club. And so, you can see the a broad-based distribution gain across channels, but still quite a bit of room to go. I think we're still only

Around 50% 49% ACV, which obviously is a step up, but still significantly lower than some of our other products.

and then what you're seeing is not only are we continuing as the number 1, um,

Potato chip brand and what you can see in in in the natural channels, but distribution is growing, and velocity is growing as well. Those 2 things are both moving together across channels. So we're not seeing the cannibalization that you normally may see. And there is a differentiation between between the channels. But, you know, we're very bullish about that brand and look, I don't think it's inconceivable to believe that that could be a couple hundred million dollar brand in the next uh few years. But right now we're very pleased with that business. Um and mostly what we're pleased about is what that brand stands for to its core Shopper which is beyond just, you know, avocado oil or non seed but it's a great product that's performing quite

Right? And and then maybe holding on that thread. A little bit. You you guys talked about household penetration, you know, at an all-time high around 50%

Do you see in the composition of the new households that they're maybe non-traditional households compared to where the the core kind of us brand used to play or plays today? And a lot of our a lot of them coming in through some of the other brands or is that balance between expansion geographies entering you know households entering from those geographies just any details, you can offer on what that composition looks like as as households continue to grow.

Yeah, I'm not sure that we've um broken it out. The household composition for household penetration but what I would what I would offer you is it's not surprising that as our power for brands are entering into different geographies respectively that, um, you know, my, my hypothesis would be that you would be seeing our power for Brands, driving the Top Line kind of commensurate with their business size on average. Although I would be surprised uh if if order is not a significant contributor given just the sheer momentum of that business, kind of where we are right now but we can get you a better sense of kind of how that how that growth is coming. But the household pain.

Pain, penetration, the trial rates and the repeat rates are all very strong and continue to be quarter after quarter year after year, which continues to make us bullish that our expansion strategy. Um, and our growth strategy is working

Okay, great. I appreciate your call back. Thank you.

We'll go next to Scott Marks at Jefferies.

Hey, good morning. Thanks so much for taking the questions. Hey Scott first, first 1, I wanted to ask about there was um, certainly some commentary about the supply chain, obviously closing the Grand Rapids facility, and some other comments about automation um, some insourcing. So question really around, how you're feeling about state of the supply chain currently and where you see maybe future opportunities for improvements and to make things more.

Session.

A reduction in overall plans. We are now at that number, um, a couple of years, I think earlier than we would have expected. So, I think from, from a prospective of kind of where are we in sort of the optimization? We're we're getting towards the, uh, end of a lot of the manufacturing piece of the work.

I think second you then Seuss a significant step up to 6% productivity last year and we expect to be around 6% or 6% uh this year as well. And I think that that is also kind of an indication. You see the growth margin coming through. I think the thing that we're we're most pleased about, and I think what the supply chain is rightfully, proud of, is that we've been able to do all of those things, while we've been driving expansion of our geographies and grow and supporting a growing business, and service has been has been outstanding for our retailers, um, throughout the journey really kind of starting out with the, with the middle of last year through to now. So, you know, we're we're toward the end of uh, a lot of that, a lot of the work that we had to do, this is to BK's Point earlier. You know, we this is sort of, the peak of the capex investment. Our automation is now in place and is is now um, active as well. It started up in Q2 potato chip lines. Actually started up in Q2 we had a pretzel line that started up in q1. We've expanded catalog.

Capacity invested in Kings Mountain, and all of those things are moving forward. Which allow us to take this last step which is to, uh, to finish the, um, uh, shaping of the plant footprint.

Because I don't know if you have anything to add, I think that's all well said, Howard. Uh, the only day I would build it on is that this does give us, you know, capability as we think about our margin profile going forward. Um, you know,

These savings will be supportive of the balance of this year as we head into next year as well.

Got it. Thanks so much for that. And then, um, last question from me, obviously, you talked about material Step Up in marketing, spend obviously plans to maintain kind of higher levels of investment moving forward. Just wondering if you can kind of share a bit of color around, maybe some of your marketing strategies in terms of core geographies expansion geographies and kind of how you're thinking about um channels I guess to reach consumers. Thanks.

Yep. Yeah so you know what we said investor day was about 40% year-over-year over a year for 3 years and depending on how our productivity programs came if we had

More gross, margins savings that we would consider to invest. Obviously last year we invested 70% more in a and C this year. Um, in the second quarter, we actually invested 44% more than a year ago and, you know, we have a combination of things that we're doing. So we do have retail media to support Geographic expansion and making sure that Shoppers are being interested, due to the brand and expansion geographies as they are as they're going in. We we have a lot.

Of social and digital media. We had some fun with how you pronounce our name, um, with actual real-life consumers asking them to say the name and having a debate because there are two pronunciations, depending on geographically where you're from. So that's been fun to introduce to the U.S. brands. You can guess which team I'm on—the U.S. brands team. We've also been investing in um.

In zaps media as well and I and we will be rolling to our day. Uh, launch introducing and launching some more consumer pressure on Boulder Canyon as we get into sort of the back half of the year end. So you know, we we tend to try and hit consumers across channels. We try to hit them um, with a, with a message at the at the right point where they're trying to think about us. And, uh, you know, our returns are quite good but, and but we know we have a lot to do and we have a lot more to learn as we continue to invest more.

Understood. We'll pass it on. Thanks so much.

Thanks guys.

And excellent with your patch break at.

Good morning, and thanks for taking my question. So, just going back to your commentary on quarter-to-date trends and the momentum you're seeing quarter-to-date, I'm just curious what you think is driving that, compared to less promotional backup. Just curious what you think is driving the strength.

Yeah. So um well I mean I think there are a couple things that are going on for us as we look at Q2 and into early Q3 I think if you look at the building blocks of our Topline momentum uh it has been expanded distribution, increased consumer pressure and um and support in store behind our hybrid model. I think all 3 of those things are working pretty well for us right now. We've definitely enjoyed distribution gains in both our, in our core markets and our expansion markets of our items.

Our competitively, which obviously helps some but I think the building blocks of distribution, A and C customer support and Ajo execution, are all the things that are driving this flywheel. Now, backed up by the marketing that we are investing in.

Great. And then maybe 1 final question. Just just on the your value proposition. So bonus box. Now, winding down. Could you just talk about where you are with your key out? First to improve the value? Proposition for consumers,

Yeah, so um bonus packs ended in April and had no net sales impact on the quarter. Uh, so we're, which I think turned out to be a, a great trial of it. Driver for us, you know, look, we we compete, we compete in value up and down the price ladder, right? And so in in club stores where it's larger packs with, um, more premium items, something like a boulder which is the most expensive um, product in our range as well as when we think about price pack and and assortment through food through Mass, through drug through dollar and discount, what you can see in our in our performance is we're seeing strength across the board and some of it is by making sure we have the right price point at the right and the right package at the right time and some of it is playing the ladder, all the way through. We've got a great range of items. You can see strength and pork and you can see strength, uh, strength and cheese as well. Um, so you know, I think our value proposition is remains quite strong. We haven't had to make major tweaks in my opinion to it, but rather running the player.

That we expect at the beginning of the year and driving the results that we have.

Great, thank you. Best of luck.

Thanks.

We'll move to our next question from Peter. Grom at UBS.

Thanks operator, good morning, everyone. Hope you're doing well. So I wanted to follow up on the, prior question, around, underlying category, growth and Howard. I think you mentioned, you don't really expect a category to get much better, which which makes sense given what we're kind of seeing today, but I was hoping to get your perspective longer term, you know, obviously, a lot of debate in terms of what the current backdrop means for the long term, you know, growth for this industry. So it was just hoping to get your perspective on on how you maybe see category growth, you've all been beyond 2025. Do you think we can get back to kind of the historical levels of growth? Uh, we've seen over time and if so what kind of your perspective on a on a reasonable timeline of getting back to that level?

Yeah, so look I I I remain bullish on the category long term. I still think it's 1 of the 1 of if not the best category in food part of that I could be biased. But when you look at the underlying panel data uh and I kind of always start there which is what is household penetration look like is it growing? Is it Contracting? And then what do you consumers, do once they buy it once and the thing that you do see is this category enjoys good, good, strong repeat, but household penetration continues to grow which at least, says, to me that consumers want this

Category in their these products in the pantry.

I think if you look at over the last couple of years, the category had been call it a 0 to 1 volume and a 3 to 4 price category. And I think over the last couple of years, that 3 to 4 price, has been a lot of the driver for it to obviously now perform. But household penetration continues to hold up.

So look, I think as you look outward, I think as the category gets back to Brand, building Innovation, marketing support, and sort of consumers, adjust to the pricing levels of where they've been over the last couple of years. I, I think the category can and will, uh, continue to grow and remain what it has always been, which is, I think the best category in food, I do think that the part of the way out is innovation and I, and I certainly think that investing in things Beyond um promotional price points is the way forward and that's certainly what we are. Um interested in focused on on doing as we go forward and I think our our programs are working so far but long term. I'm pretty, I'm very positive on where we are.

That's super helpful, Howard I guess and then just maybe on that innovation.

Uh, point you made I I had, you know a a question on protein. Um obviously you've done a great job in the organic natural segment but obviously a lot of consumer interests and protein 1 of your largest competitors. You know, appears to be leaning more into that segment a bit more. So just would love to get your thoughts on kind of

Protein protein shake for the segment and maybe how you see this sub segments evolving within the category over the next several years.

Yeah, look, I think there are a couple of key points to discuss. I think protein is certainly a place where all of us can focus. Look, I feel like I've been in the meat and cheese business for many years before, and protein snacking was a big driver. And look, I think the consumer interest will remain high in the category. It's really about how you deliver a product that consumers want to buy, with the benefits they want, without a taste sacrifice?

Will certainly look at much like we look at high flavor and spicy in the natural Channel, where I mean, sorry in the convenience Channel, or non seed oils and the natural Channel where the consumer wants to travel is a place that we're going to do our best to meet those. Those needs. So more to come, I think on that. But I think obviously it's it's an area among many, um, that we are. That that we look at that. We see a lot of consumer interest in.

Great. Thank you so much. I'll pass it on.

Thanks man.

And that that concludes our Q&A session I would like to turn the conference back over to Howard for closing remarks.

Yeah, first of all, uh, thank you all for joining us in Q2, you know, I think if you went back to where we've been, um, as a company over the last couple of years and and the promise is that we made an investor day. Uh, I think that you continue to see those results coming through in our numbers. Uh, we had promised productivity, we promised, um, a more efficient Network, we'd promise, gross margin and EBA expansion and brand support in Westward Expansion. And if you look across what we, what we just produced and what we've done through the first half, I think we're, we are doing what we set out to do. I appreciate everybody's time and I look forward to seeing you all in Q3

And this concludes today's conference call. Thank you for your participation. You may now disconnect