Q3 2025 BRC Inc Earnings Call

Greetings and welcome to the Black Rifle Coffee Company. Third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the form of presentation.

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It is a reminder this conference is being recorded. It is not my pleasure to introduce your host. Matt McGinley vice president of investor relations. Thank you. You may begin.

Good morning, everyone. And thank you for joining Black Rifle, coffee companies, third quarter, 2025 Financial results conference call, we released our results yesterday and the press release and related materials are available on our investor relations website at IR do Black Rifle coffee.com.

Before we begin, I would like to remind you of the company Safe, Harbor statement, regarding forward-looking statements.

During today's call management may make forward-looking statements including guidance in the underlying assumptions. These statements are based on expectations that involve risks and uncertainties which could cause actual results to differ materially.

For a further discussion of these risks, please refer to our previous filings with the SEC. Additionally, this call will include non-GAAP financial measures such as adjusted EVA. Whenever we refer to EVA, we mean adjusted EVA. Unless otherwise noted, reconciliation of non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release, which was furnished to the SEC and is available on our Investor Relations website.

Now, please refer to the presentation on our investor relations website and turn to slide 4.

I would now like to turn the call over to Chris monzoe, CEO, Black Rifle Coffee Company. MS.

Thanks, Matt. Good morning everyone. Joining me today are Evan Hafer. Our executive chairman Matt Ami, our Chief Financial Officer. In Matt McGinley our head of investor relations. The third quarter was another solid step forward for Black Rifle. Our team did an outstanding job executing against our priorities driving. Strong commercial performance maintaining cost discipline in positioning the business for sustainable profitable growth.

We continue to see encouraging momentum across both the wholesale and direct to Consumer channels as our brand gains traction with new customers and deepens its connections with existing ones. As we move to the fourth quarter and into 2026. Our Focus remains clear, driving strong on shelf execution. As we expand our physical presence maintaining costs, effectively to enable reinvestment and growth initiatives and continuing to build a scalable platform for long-term success.

we're broadening distribution, driving stronger, velocities, with key Retail Partners in advancing, our product lineup, to keep the brand fresh and relevant,

The teams execution, this quarter reflects a company that's more agile, more focused and more confidence in its ability to perform even in a challenging cost environment. We're proud of the progress we've made in optimistic about the opportunities ahead, move to slide 6. Please and the third quarter Neen data showed continued strength in the US coffee category within Food Drug, Mass growing 13.2% as higher shelf, pricing to offset commodity inflation flowed through

Black Rifle. Once again, outperformed the market with sales up 36.7% year-over-year, nearly triple the categories growth rate, our land and expand strategy continues to prove effective. We start with a focused set of skus to demonstrate performance and earn additional shelf space as we build retailer confidence in grocery ACV, increased 6 points, year-over-year to 48% in total ACV across

All track channels increased 9 points to 54%.

Even with a 70% increase in average items carried velocity in grocery, improved, more than 7% highlighting the Brand's strengths with consumers, this combination of faster turns. And expanding distribution is translating into stronger Partnerships and continued shelf gains.

Move to slide 7.

Across the category, most of the dollar growth is being driven by price increases in contrast, black rifles. Growth is coming from almost entirely unit gains, which are up more than 20% year to date. This reflects real consumer demand, not price inflation. The brand continues to win new households Drive, repeat purchases, and gain. Share at retail as we expand distribution in sustained, velocity. We're driving durable. Volume lead growth that supports long-term brand health.

Slide 8.

Remains an important part of our Omni channel strategy, deepening customer relationships, strengthening brand, loyalty and providing valuable insights that guide how we engage with consumers across every channel.

It allows us to test new offerings, refined messaging and stay closely connected to our most engaged fans.

Through both our own site and digital Retail Partners Black Rifle products remain easily accessible to customers who prefer the convenience of home delivery.

While most of our recent Topline growth has come from retail distribution in velocity gains. We're by the continued stabilization of our digital channels. This quarter sales in our direct to Consumer segment, the client 4% year-over-year in the third quarter. However after adjusting for the prior year benefit related to our loyalty reserve and the timing shift of promotion results were slightly positive compared to last year.

We also saw a meaningful gains through leading third-party marketplaces, where awareness of the brand and repeat rates continue to build Beyond Topline growth. We've made steady progress, improving the overall customer experience website and mobile updates have enhanced navigation and checkout speed. While back-end improvements support smarter merchandising in more efficient, SKU management.

Within our subscription platform, we're adding new functionality in Greater flexibility from Members including prepaid options, exclusive offers and a refreshed brand portal that highlights partner benefits and members-only gear. These ongoing upgrades reflect our focus on building a digital ecosystem that not only drives sales but deepens brand loyalty and supports the broader. Omni channel strategy.

Slide 9.

The ready to drink coffee category. Continue to face headwinds in the third quarter.

Particularly within the convenience Channel, while category sales declined 3.1% our performance remained, resilient down just 0.6% overall, reflecting solid execution and strong brand, loyalty in grocery sales, grew 18%.

Partially offsetting the softness seen in C stores.

even in a challenging environment, where gaining ground Black Rifle Remains the third largest RTD coffee brand in the US and we expanded our ACV by 7 points year-over-year to 53% that growth underscores the confidence, our Retail Partners have in the brand and our proven ability to perform on shelf

We're still in the early stages of unlocking, the full RTD opportunity with roughly, half the category yet to be reached slide 10, Black Rifle energy continues to expand its footprint. Now, available in nearly 20,000, retail locations and reaching approximately 22% ACV, distribution. Growth has been disciplined in targeted guided,

By learnings from early markets, the energy drink category remains 1 of the largest and fastest. Moving segments in beverages in roughly 2/3 of the category. Sales come from convenience stores, that channel remains a primary focus for expansion as Black Rifle energy. Currently has its lowest penetration there in meaningful white. Space ahead, our approach remains. Deliberate focused on building awareness, driving, new consumer trial and earning shelf space through performance rather than overextension by the early traction and see meaningful opportunity for the brand to expand reach and contribution within our broader beverage portfolio in 2026.

Before I hand it off to Matt, I want to pause and reflect on what makes this company special. I'm incredibly proud of the progress. We're making across the business and just as proud of the way our team continues to live out our mission every day.

As we approach Veterans Day, it's a time to honor the men and women who have served our country and to recognize the many ways, our team continues to serve them in return.

This year, we're working with born primitive in forgive Co to help forgive up, the 25 million, in medical debt for more than 10,000 veterans 1. In 5 vet carries medical debt in collections compared to about 13% of the general population.

That burden often leads to financial stress and housing insecurity. And this effort is about lifting that weight and giving back to those who have served.

Whether it's helping rebuild communities after a flood supporting Warriors and crisis or rallying around causes like suicide, prevention Black Rifle is driven by our mission to Veterans. I'm proud of what this team has achieved and excited about the road ahead.

Thank you, Ms.

I'll begin my remarks on the quarter with slide 12.

third quarter, net revenue, increase 3%, year-over-year driven primarily by growth in our wholesale segment, we are cycling a 2.4 million net benefit recognized in the prior year related to barter transactions and a change in loyalty reward approvals excluding these items Revenue increased 5%

Which primarily sells packaged coffee and ready to drink beverages to retailers grew 5% year-over-year.

for the net 2.1 million in non-recurring Revenue, recognizing the prior year sales in this segment, increased 9% in the third quarter,

Growth was driven by gains in velocity and distribution, including increases in the number of doors and items carried as well as continued growth in sales, from Black Rifle energy.

Revenue. And our direct to Consumer segment was 4% lower. In the third quarter a high volume promotional, event occurred later in the quarter compared to Prior year which we estimate shift that approximately 1 million dollars in revenue from the third quarter into the fourth.

Excluding this timing impact and the prior year benefit from the Loyalty, reserved for change Revenue would have been slightly positive year-over-year.

For the Black Rifle brand. Now, of more ways to find our products as brick and mortar retail distribution, expands and online sales through platforms such as Amazon and walmart.com continue to grow.

This increased availability is critical to the Brand's long-term growth and health, and we will continue investing in wholesale and other channels that we expect will drive the most sustainable long-term growth.

Outpost segment Revenue grew 6% benefiting from higher, franchise fees and continued progress in merchandising.

That are bundling and insur presentation, helped Drive, the average order value.

Turning to slide 13.

Gross margin was 36.9% in the third quarter. A decrease of 520 basis points compared to Prior year, the decline was primarily driven by a 390 basis point impact from increased trade investment, and a 300 basis. Point impact from green coffee inflation and tariffs partially offset by pricing actions. These pressures were further mitigated by approximately 170 basis points of benefits, including productivity gains and more favorable product mix.

Slide 4.

Operating expenses declined by 3.6 million or 9%, compared to the third quarter of last year. Marketing expenses decreased 14% on a dollar basis and improved to 165 basis points as a percentage of sales, reflecting lower non-working, advertising spend and a reallocation of dollars towards programs more directly tied, the revenue growth

Salaries wages and benefits declined, 13% on a dollar basis and improved by 255 basis points year-over-year.

That quarter included approximately of 7 expense and total headcount was down. 19% compared to the third quarter last year.

General administrative expenses. Increased 5% primarily due to costs related to settled? Legal matters. Partially offset, by efficiency gained in our corporate infrastructure.

Despite the growth margin pressure, we faced scale benefits from revenue growth, and efficiency gains drove a 19% increase in adjusted EVA to 8.4% of sales, representing a 115 basis point improvement compared to the same quarter last year.

Turning to capital and cash flow.

We raised 40.25 million in Gross proceeds through an equity offering in July, which enabled us to pay off the outstanding balance of our revolving credit facility and strengthen our cash position.

We also generated 5.6 million of free cash flow in the quarter. Further improving liquidity.

Moving to the outlook on slide 16.

On the last quarter's call, we discussed our expectations. That results would be toward the lower end of the full year guidance range. We provided at the start of the year.

We expect to finish the year with at least 395 million in revenue and at least 35% gross margin and at least 20 million in adjusted Eva Each of which remain within the previously, communicated ranges.

We continue to expect a sequential Step Up in Revenue throughout the year, driven by ongoing distribution gains, across both packaged coffee and ready to drink product lines.

In the fourth quarter, this Step Up should be slightly larger than the roughly $5 million quarterly increase is seen earlier in the year reflecting normal seasonality and a greater benefit from pricing actions.

As a reminder, we are cycling $30.4 million of prior year revenue related to one-time items that are not expected to recur. In 2025, this represents a $9.1 million headwind in the fourth quarter, which we expect will be the final quarter impacted by these prior year items.

Turning to gross margin.

Margins. This year we delivered a solid sequential Improvement in the third quarter. Reaching 36.9% compared to 35% in the first half of the year. We expect to see additional pricing benefit in the fourth quarter. However, that period is typically more Promotional and will also see a slightly greater impact from tariffs as higher cost, inventory flows through the p&l.

As such we expect the fourth quarter gross, margins to be closer to the 35% level. We saw in the first half of the Year rather than the nearly 37% achieved in the third quarter.

Our assumptions regarding the key drivers of the margin outlook compared to the prior year remain unchanged and include.

At least the 300 basis. Point headwind from green coffee inflation, net of pricing actions.

A 250 basis, point impact from increased trade investment, behind the energy, line in a more normalized, promotional Cadence.

At least 100 basis point margin impact from Recently implemented import duties with a full effect building through the second half of the year.

These pressures are expected to be partially offset by at least 200 basis point benefit from productivity initiatives, in a more favorable product mix.

Green coffee, prices have been volatile and remain elevated relative to historical levels.

While movements and coffee and tariff costs are largely outside our control. We are not assuming any relief as we plan for 2026, our Focus remains on the elements, we can control executing productivity initiatives across the supply chain and refining, our pricing architecture is needed.

As part of our operational Improvement plan launched in the second quarter, we continue to expect to deliver 8 to 10 million dollars in annualized cost Savings in the second half of 2025.

We remain disciplined in managing expenses, while continuing to invest selectively and capabilities as support growth and margin expansion.

Looking ahead. Our priorities are clear sharp and execution Drive efficiency, and build a stronger, more resilient business.

The opportunities ahead are substantial and we're focused on converting that potential into measurable progress. I'm confident in our plan, our team in the momentum, we're carrying into 2026.

Operator. We're now ready for the Q&A session.

Thank you.

We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue for participants using speaker equipment and may be necessary to pick up the handset before pressing the star keys.

1 moment, please while we pull for questions.

Our first question.

Comes from the line of Michael Baker with da Davidson please proceed with your question.

Hi, uh thanks. Uh, 2 parter as it relates to the guidance. So there is a change in the language on that guidance. Uh, it, it feels to me as if it's a little bit more cautious than, than what you thought. 3 months ago. Uh, is that the correct interpretation? And then my second guidance related question is in the, in the in the presentation you're sticking with the 3-year targets uh, using 2024 as the base and I think growing out to 2027 requires a pretty big ramp in 26 and 27 versus 2025 can, can you remind us why you have confidence in that?

Hey, thanks. Michael, this is Matt Amigh here. Um, yeah, you know, let me explain the language a little bit more about our guidance change. Um, you know, we didn't change guidance overall, but we're going to the lower end of the range for sure. And as we mentioned on the last call, we want to go towards the lower end of the range, but the underlying puts and takes have.

Haven't changed. You know, we're still seeing coffee inflation trade investment will be higher in the fourth quarter than it was in the third we still see tariffs and they'll be offset by the operational Improvement plan that we spoke about

You know, when it comes to the range, we use the words at least in that framework.

So that we don't ask so that the analysts don't anchor on a like a midpoint. We want to be clear about the floor of our expectations. Now we're confident that we'll hit 395 million for for the year, we're confident that we'll hit 35% growth margins for the year and at least 20 million in adjusted ibida. But Michael what? That means though, that means we'll deliver about 110 million dollars in Revenue in Q4. Gross, margins will be relatively the same. As what we saw in the first half of the year and we'll have about 8.4 million dollars in evida which is about what we did in Q3.

The, uh, Q4 from prior year in the exclude, the 1 time, non-recurring Revenue, related to the barter transaction. That'll be a comparable base of 97 million in last year or about a 13% growth.

Switching to the second part of your question.

We are confident in our long-term guidance and again, that's 10 to 15% kegger on the top line approaching 40, uh, percent margins, uh, by 2027. And then on the bottom line, a little bit more, aggressive it at 15 to 25%. Um, kegger over that time period, we will see growth obviously, when we get into 26, but we'll see even more growth moving into 27 as we start to, um, really get the distribution points that we gain in 26 and they pay out on a full year benefit. What comes to margin? You know, we do have a ways to go on margin. We've executed 2 rounds of pricing in 2025. Um, 1 in Q3 we have another 1 that is being executed right now in in Q4, that'll pay uh dividends when it comes to 2026. But we're also seeing uh more inflation when it comes to green coffee. You know, green coffee right now is at all-time Highs at 4 dollars a pound in the nearby. And the forward curve is, you know, roughly about $3.30 for the year.

So we'll continue to see the tasks and the green coffee inflation. Um, but we will see that margin pick up as we exit 2026 and into 2027.

Let me just build a little bit on that Michael. Um, as we think about the the second part of your question, you know, the the 3 year guidance that we gave for the business, um, we're feeling, you know, more confident than ever. Uh, on that guidance. If you think about the fundamentals that we talked about, you know, in the opening remarks, um, we're growing share in every segment of the business. Um, we are the strongest unit growth player right now in the US, uh, in coffee, and we still have significant distribution rooms. So, on top of the unit growth, we're driving in the velocity that we're driving. Um, we still have significant, um, room to continue to expand distribution, um, on every segment of our business. So again, we're, you know, uh, as we think about that 10, to 15% guidance range that we put out there through 27, we feel highly confident in that.

Uh okay, great thank you. Uh very very complete answer. If I could ask 1 more just more I presume this will be more qualitative but any caller on the energy drink how consumers are accepting it? I I think it's still in 12 markets. Correct me if I'm wrong but yeah any any color on on how that's progressing relative to your expectations?

Yeah. Uh, I'll start off Michael. I think, you know, we're pleased with the overall performance. So to remind, uh, everyone, we had a very limited launch this year. We, uh, went into 12, um, what are called up and down the street markets in partnership with, uh, our distribution Partners KDP. And on top of that, we had 2, uh, National customers 1, uh, Mass customer and 1 core customer. Um, that was all we wanted to bite off in the first year and, you know, um, we're pleased with the results. You know, we've seen, uh, improvements in those customers through the year as we've been able to track them. And as we think about 26, um, it's going to continue to be careful steps forward with that business. Um, we have an incredible coffee business right now. Uh, we are growing every segment as I just mentioned, and we want to be very careful that we continue to put uh, as much investment as is necessary in continuing the momentum and coffee. Uh, we're excited about energy and we're going to continue to take strategic steps to expand that on a more Regional basis. So, while I'm not, you know,

Position to talk specifically about our plan in 26, um, it will be a step forward from where we were, but still, you know, really managing that in a targeted way where we can build that business the right way.

Thank you.

Thank you.

Thank you. Our next question comes from the line of sarong war with telc Advisory Group please proceed with your question.

Okay, thank you so much. Um, so 1 of the words you used on the transcript was expansion of portfolio. I think it related to the energy category so can you help us understand how uh, you know, the categories expanding as you look at stronger growth out here along with Distribution on the energy side

As we think about the summer season. So yeah, it's an important category to evolve yourself uh and make sure you're staying relevant with your flavor profiles. So we'll continue to double down and use that as a way to be able to increase distribution with some of our existing customers and as a way to go get new distribution. Um, we're driving innovation in the rest of our business as well. So we're very excited about, uh, the items. We have going into coffee, uh, pods bags. And then, uh, we actually have a couple of our RTD items, um, in the presentation as well. Our cold brew items, um, these are, uh, 25 Cal, uh, low sugar. Um, you know, exceptionally developed items that we, you know, again are already seeing a strong response from retailers on and, you know, we we look forward to, you know, we we believe that, you know, we're at the point as Black Rifle, where, um, yes we participate in these categories, we need to be leaders in these categories. So you're going to continue to see us driving Innovation into each of the segments that we compete in in partnership with our retailers. Uh and in the case of energy and partnership with KDP, and we're going to be doing things that we believe.

Um, we will drive leading growth in these categories, not just participating, but allowing us to continue to lead the growth and continue to drive share.

That's great. We can't wait to try new products. Um, you know, I had a follow-up question on marketing, um, you know, dollars were down in the quarter. Um, you know, you are very focused on marketing. There's new brands coming. Um, and these flavors profiles coming in. How should we think about marketing, spend, as you look out for like next year and just the broader? Um,

The role of marketing in leveraging the cost part of the business.

Thanks.

Thanks rank. This is Matt. Um yeah, we were thinking about marketing as we go into 2026 is maintaining a relative uh, marketing as a percentage of net sales as we go forward. But what we'll see is we'll shift, we'll see more of a shift that you're seeing now, which is a shift away from non-working into working. So we'll continue on with that shift, you know, reducing contractors, reducing agency fees and things of that nature and putting it towards

Tactics and strategies that have a more of an immediate impact on sales. So, you'll see that and, you know, 1 of the key things that the mods will talk about is how we're improving our activations against, some of our key Partnerships that we have. So it's really driving more with what we already have and um, converting that to sales quicker.

Yeah, just building out what Matt said, you know, we're going to continue uh, to do what we're doing at a, at a higher level, you know, as we build the business and, and make the business bigger, um, you know, as we, you know, generate you know, more margin dollars in the business. We want to be able to reinvest those dollars into the marketing that already works. So well for us, you know, we're very fortunate. We have an exceptionally strong brand Team, we have an exceptionally strong brand. Um, we focus very heavily on Topline. Uh, I should say top of funnel. Uh, brand awareness and it works. Um, we have grown awareness, every quarter over the last, uh, 3 years. Um, nearly half the country is aware of Black Rifle at this point. Um, and we're going to continue to drive that number through very strong owned media executions. Um, as Matt said Partnerships, we have

Strong Partnerships with the UFC with the Dallas Cowboys. Um, we will have some additional major Partnerships that will announce as we get into the year. Um, and then, you know, the part that we actually got very good at this year, that we're going to continue to expand on is that execution in store. So, um, we'll drive that money into our retailer Partners. Um, and will ensure that, you know, we are available at that point of purchase, um, on display, you know, at the right price point. So again, uh, we feel confident that we've got the right level of marketing in play as we go into 26.

That's right, just 1 more point on that is um, you know, we have a maniacal focus on returns so when it comes to the digital spending we are looking at the right metrics to make sure the the activities are working out and paying out and break, even or better. So we're focused on that.

That's great. Good luck. Thank you.

Thank you. Our next question comes from the line of Joseph Alto with Raymond James. Please proceed with your question.

Good morning. This is Martin on true. Joe just want to really quickly touch on the energy distribution. You previously given a goal, an ACV about 780% by end of next year. Is that still something you're targeting?

So in the case of energy you know I'll just double down on what I said before. We're going to expand off of the uh, existing targeted plan that we have this year. We we've not given. Um, guidance at this point on what we think 26 is going to look like as we get deeper into, you know, uh, our 26, overall guidance. Um, you know, we can consider doing

An expanded geography. But again I don't at this point want to give guidance on specifically what that looks like.

No, I understand that's helpful. Uh would you just mind? Reminding us how much of your green coffee needs? Are already locked in for 2026?

Yeah, right now we have approximately 50% of our, um, our coverage locked in.

In 26%.

Right, thank you 5250.

Thank you.

All right, next question comes from the line of Daniel uh uh Billy with agile, please proceed with your question.

Thank you. All right, good morning are you seeing different demographic with your energy, drinks versus the rtds? And then do you envision the distribution to be the same between the rtds and energy drinks when they're mature?

Um, as far as the demographics. Um, it, it's similar, you know, there are some differences as we look at it. Uh, it does tend to skew, um, younger on the energy drinks. Uh, our coffee portfolio is actually quite broad. So, um, you know, when you look at the total coffee portfolio as a whole, um, we actually hit a very, very wide range of demographics with that portfolio. Um, when you start to talk about the cold, canned beverages, the RTD coffee and the energy. Um, the demographics are quite similar, it does tend to be a, uh, younger customer, um, that skews towards that, uh, behavior, um, as far as energy, uh,

You know, ultimate distribution.

We'll see, you know, I ultimately there's there are very different categories and so you know, we're going to build those categories very differently. It's important to us that, you know, when we take on a market with energy, we can be concentrated in that market. Um, and that we can really go and invest the right way to win there. Um, in the case of RTD coffee, we're already the number 3 player in America, uh, and we are the fastest growing of all of the major brands, uh, in America. So we're in a different position scale wise. Um, it allows us to play that differently from a national basis at this point with different um forms of national marketing versus on energy in 26. Um, you're going to see us marketing, uh, very heavily against that business, but it's going to be targeted within the geographies that we choose to go and compete with them.

And and, and if, if you can sort of bracket, how much of your distribution gains for for, um, rtds and and, uh, energy is between, you know, the coolers versus the, uh, Center of store. How would you think about it in 25 versus 26, or sorting the same sort of goal to be in the, the coolers or, or is there more of an opportunity to, you know, maybe be Center store or, you know, at some point, uh, you know, the club Channel.

Well, it's a, it's a, it's a great Point, you're making, I am, I'm, I'm not going to give specific numbers on, you know, cooler versus Center store. We do track that right our sales team. Um, we're we're very fortunate to have a lot of deep, um, RTD experience in our sales team and um, they, you know, 1 of their favorites saying is cold is sold. Um, so you know, when you can get canned beverages, uh, into cold distribution, um, you see your sales increased dramatically. So that's a big part of the game. We have a lot of tactics that we operate, you know, down uh, in our sales organization to ensure that we're not just getting distribution but that we're getting that cold distribution. And that's uh, constant negotiation between us and our retailers. Um, some Retail Partners are exclusively in cold distribution. Uh, it's particularly true of the sea Stores. Um, a lot of times in grocery, you may have dual distribution, you may have Center store ambient, as well as the cold distribution. Uh, it can be harder to get that cold distribution in a grocery, um, store simply because it's more limited. Uh, the amount of space they have available.

But that is absolutely right. What you're saying, as we drive into 26, you know, we will have internal goals, um, to increase those percentages, um, in some cases, pretty dramatically right in in, in areas where we've already had success with the brand that allows us to go in and say, you know, let's increase that percentage of cold distribution. So um what you're describing is a very fundamental part of how we're going to build and drive that business.

It also keep in mind like they the, the growth in the business is going to be coming from our coffee business, our packaged coffee business. And when you, when you look at our distribution, we have right now. It's, it's it's roughly 50%, we have a lot of head room in terms of growing that business out. Great margins on that business. The business is not just grown in terms of distribution. But average number of items is increasing, velocities are increasing and it's a real powerhouse for us. So you know, that's a business that will be very, very much focused on as we exit the year. Moving to 26.

Thank you.

And yeah, no further questions at this time.

Therefore,

Management for any additional or closing comments.

Yeah, no, thanks very much, um, to close. I'll just say, you know, we're delivering discipline profitable growth. We have a clear path forward. Our teams uh, are executing well, uh, we feel we have incredible brand momentum. Um, we're going to continue to stay very focused on our customers and we're going to balance that, you know, with our mission, uh, as I talked about in the opening remarks, um, and we believe that that, you know, combination will continue to drive strong stronger and stronger results for us. So we're grateful for your continued support and we look forward to updating you over the next couple of quarters here, as we continue to build on this momentum.

Thank you. And this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.