The Marzetti Company Fiscal Year 2027 First Quarter Earnings Call - MARZETTI CO

Good morning. My name is Kelly and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Marzetti Company's fiscal year 2027 first quarter conference call. Conducting today's call will be Dave Sosinski, President and CEO, and Tom Piggott, CFO. All lines have been placed on mute to prevent any background noise. After the speakers have completed their prepared remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star 1-1 on your telephone keypad. If would like withdraw your question, press star 1- 1 again. Thank you. And now to begin the conference call. Here is Dale Gnabczyk, Vice President of Corporate Finance and Investor Relations for the Marzetti Company. Good morning, everyone, and thank you for joining us today for the Marzetti Company's fiscal year 2027 first quarter conference call. Our discussion this morning may include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject a number of risks and uncertainties that could cause actual results to differ materially, and the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC. Also note that the audio replay of this call will be archived and available at our website, investors.marzetticompany.com, later today. For today's call, Dave Szczesinski, our President and CEO, will begin with a business update and highlights for the quarter. Tom Tiggott, our CFO, will then provide an overview of the financial results. Dave will then share some comments regarding our current strategy and outlook. At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions. Once again, we appreciate your participation this morning. I'll now turn the call over to the Merzetti Company's President and CEO, Dave Susinski. Dave? Thanks, Dale, and good morning, everyone. It's a pleasure to be here with you today as we review our first quarter results for fiscal year 2000. to 27. our fiscal first quarter which ended september 30th presented challenges for our business as the cyclospora outbreak and the sharp increase in freight costs adversely affected results consolidated net sales declined 2.4 percent to 481.5 million while operating income decreased $17.8 million to $41.4 million. Excluding non-core sales attributed to the TSA, adjusted net sales declined 0.3%. Cyclospora drove double-digit declines in the affected categories, and the impact was concentrated in the Great Lakes region, where our Marzetti dressings, dips, and croutons have their strongest market development. Retail segment sales grew 2.0% to $252.7 million, as $17.8 million in incremental sales from Vachon, our newly acquired Japanese barbecue sauce brand, along with strong growth from our Texas Roadhouse Dinner Rules, offset the impact of cyclospora. Food service sales, excluding non-core TSA sales, decreased 2.6 percent as strength from select national chain restaurant accounts and a modest level of inflationary pricing were offset by the impact of the cyclospora outbreak. Other areas of our business continue to perform well during the first quarter and the impact of the Cyclospora Outbreak has moderated in recent weeks. Circona scanner data for the the quarter ending September 30th showed continued strong performance of the Boshon's brand with sales up 10.7 percent. Total distribution points or TDPs increasing seven percent and velocity up 13 percent as the brand continues to grow share in the barbecue sauce category. Texas Roadhouse rolls continued the strong path of growth in the frozen dinner roll category with sales up 21.3 percent, GDPs up 79.6 percent, and a market share gain of 270 basis points. When combined with our sister Schubert's brand dinner rules, we finished the quarter with a category-leading market share of 64.2 percent. Our New York bakery brand also continued to perform well, with sales up 5.1 percent in the quarter, resulting in a market-share gain of 250 basis points for a category leading share of 46.6%. I'll now turn the call over to Tom Piggott, our CFO, for his commentaries on our first quarter results. Tom? Thanks, Dave. Overall, we encountered substantial headwinds this quarter that impacted our results more significantly than was anticipated. While some portions of the business performed well, the cyclospora impact to our retail segment and our input costs for fuel were both higher than we initially forecasted first quarter reported net sales decreased by 2.4 percent the key drivers were a decline in organic volume and product mix of 460 basis points primarily driven by the impact of the cyclospora outbreak a pricing contribution of 80 basis points the addition of bashan sales which added 360 basis points of growth These items were offset by the discontinuation of non-core temporary supply agreements, or TSA sales, that we have previously discussed. This discontinuation unfavorably impacted revenue by 220 basis points. Excluding the TSA sale, adjusted net sales declined by 30 basis points, and we estimate the cyclospora impact have reduced revenue by approximately 300 basis points Consolidated gross profit decreased by $8 million, or 6.8%, versus the prior year quarter to $110.8 million. Reported gross margin declined by 110 basis points. The gross profit decline was driven by the reduced sales volume attributed to the cyclospora outbreak and the associated impact to our production facilities. freight costs due to increased diesel prices and higher line haul rates and incremental expenses related to the capacity expansion at our sauce and dressing facility in Atlanta incremental sales from the bachons acquisition and our cost savings programs contributed to partially offset these items going forward we expect a higher level of productivity contribution Selling general and administrative expenses increased by $10.9 million. The increase was primarily driven by the addition of Boshan's core SG&A expenses and a modest increase on the base business. We also incurred $2.4 million in non-cash amortization expense for the Boshans intangible assets. Consolidated reported operating income decreased by $17.8 million or 30.1%, due to the reduced gross profit and higher SCNA expenses. Our tax rate for the quarter was 24.4% compared to 22.4%, in the prior year quarter. We estimate our tax rate, for the remainder of fiscal 27, to be 23%. First quarter reported diluted earnings per share decreased 64 cents, or 37.4%. To $1.07. The drivers of the decline were the lower operating income, higher interest expense, and a higher tax rate. Turning to the balance sheet and cash flow, the company delivered operating cash flow of $51 million. That cash was deployed into payments for property additions of $17.8 million, as well as debt reduction, share purchases, and dividend payments. Our full-year forecast for capital expenditures remains at $90 million. A quarterly cash dividend of $1 per share paid on September 30th represented a 5% increase from the prior year's amount. Our enduring streak of annual dividend increases stands at 63 years. The company finished the quarter with less than $200 million of debt on the balance sheet with an effective interest rate of approximately 5%. So, to wrap up my commentary, our results reflected the impact of significant headwinds we encountered during the quarter. As the impact to the cyclospora issue has largely moderated, we're focused on improving performance while continuing to invest to grow the business and returning funds to shareholders. I will now turn it back over to Dave for his closing remarks. Thank you. Thanks, Tom. Moving forward, the Marsetti Company will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan to, one, accelerate core business growth, two, to simplify our supply chain to reduce our costs and grow our margins, and three, to expand our core to focus M&A and strategic licensing. As we look ahead to our second quarter and the remainder of fiscal year 2027, in addition to the incremental sales attributed to Bosh On, we expect retail sales will benefit from new items that we recently launched or have planned for introduction later this year. In the food service segment, we expected sales to remain supported by select quick service restaurant customers in our mix of national chain restaurant accounts. We continue to anticipate a moderate level of commodity cost inflation, along with significantly higher freight costs, which we expect to substantially mitigate through inflationary pricing and our cost savings programs as we remain focused on margin improvements. On the sales front, I have some exciting news to share regarding our largest food service customer and trusted partner, Chick-fil-A. Beginning November 16th, Chick-fil-A is introducing a new spicy version of their popular Chick-Fil-A sauce, produced and supplied by Marzetti. The new sauce will be available in their restaurants nationwide and is planned to be a permanent addition to their sauce offerings. The sauce combines the iconic Chick- Fil-A Sauce with mustard notes and a smoky tang, balanced with subtle sweetness and infused with spicy peppers. We greatly value our long-standing relationship with Chick-fil-A, which dates back to 1983, and we look forward to further strengthening our partnership and supporting their continued growth through this important initiative. Before I finish up, I also want to take a moment to welcome Mark Christensen as the new president of our retail business. I'm very excited to be adding Mark to our executive leadership team. Mark is a proven brand builder with a track record of creating sustainable growth in highly competitive categories. His background includes more than 20 years of relevant leadership experience, most recently serving as Chief Revenue Officer of Wingstop, where he led brand strategy and customer-facing commercial activity for the company's U.S. BISC. Prior to Wingstop, he spent 20 years at Procter & Gamble in roles including Senior Vice President of Global Feminine Care, Vice President of North American Baby Care, and Vice President of Global Fabric Care. I'm confident Mark's experience and leadership will help us accelerate organic growth in retail, strengthen our brands and innovation pipeline, and deepen our customer partnerships. In closing, I extend my sincere thanks to the entire Marzetti Company team for all their hard work this past quarter and their ongoing commitment to grow our business. This concludes our prepared remarks for today and we'd be happy to answer any questions you may have. Thank you. At this time, I would like to remind everyone, in order to ask a question, please press star R11 on your telephone keypad. One moment while we compile the Q&A roster. Our first question comes from Alton Stump of Loop Capital. Your line is now open. Great. Thanks so much for taking my questions. I appreciate it this morning. I just wanted to touch on what I thought was your interesting comments about the outbreak with what is having a bigger impact because you guys have a very strong presence in you know you know in you know in the Great Lakes region so you know given that you know as you kind of see things get back to normal you know hopefully you know incoming quarters you know should we see sort of an outsized recovery for you guys because of that regional presence that you have that was obviously impacted most heavily by the outbreak yeah out in the morning and I think it's an important question I appreciate you asking it if you look at sort of market development by brand south of various Socona regions and you look at the Great Lakes it represents 30% of our overall business versus all of the other regions so it's a very high concentration it's 3x most of our other competitors there and as you you pointed out those were the areas that were most significantly impacted so if you went to sort of the center of when this thing was was imparting the impact it was sort of early august and that impact ran until the very end of august so case in point here if you look at croutons crouton as of that first week in august were actually down 30 believe it or not by the end of august they'd recovered 18 if you look at shelf stable salad dressing it was down 17 for the entire month of augus and then if you look at produce dressing which is i think again an area where we're very developed it was down 23 as a category for the first week of august and it remained down 20 as of the last week of august so bringing it around when it does recover we would expect to see an outside benefit now as for the recovery what we're seeing is that it's trailing the category as you remember was a little bit soft going into this so we're still seeing a modest decline there but it's substantially recovered over where it had been before and what I would also add is as we were in the throes of the situation we and other peers elected to turn off our marketing because it really didn't make any sense to be spending consumer advertising while the category was going through this we do have that advertising expected to come back online in the back half we're going to do it around January 1st, which is the historic beginning of salad season and new New Year's resolutions around eating healthier and attacking weight. Got that. Some great color. Thanks so much for that, Dave. And then I guess just one other one and then hop back in the queue. You know, obviously we are several months now into your Bob Johns acquisition, you know, clearly, you Know, based on the cell food data, you know, it's, you're off to a very good start. I'm curious if you have had any sort of material learnings now that you've owned the business for several months as far as maybe upside potential that maybe was even better than what you had thought heading into the deal. Yeah, I would say, look, the brand and the team have met and exceeded all of our expectations. And maybe I'll start by talking a little bit about the brand issue. You heard in the comments we're continuing to achieve double-digit growth. We're continuing to expand TDPs, and one of the metrics that I'm particularly excited about is that we're actually growing our velocity faster than we're growing the sales overall. So it isn't just by virtue of new distribution that we'RE achieving growth, but really it's the underlying velocity or sales per TDP of the existing items, which is driving the product. So I would say on the core item, we continue to be very excited. We're driving awareness and trial in households, and it's manifest in the velocity. Now, as you look at sort of the other pillars of the overall growth plan, the team has done a fabulous job developing Mayo and selling it in, and so far the sell-in has gone very well. It's already available in the natural channel at Whole Foods, where they were a lead customer, And you can expect to see it in the remainder of retail as we go into the next calendar year. And then they have other items in their pipeline as well. And so the team continues to do a great job. You know, what's the learning? I think probably the biggest one, Alton, is that, you know, Boshan's on the label says Japanese barbecue sauce. But nearly three-quarters of the occasions actually are everyday meals where consumers are looking for fresh, flavorful, quick meal solutions. And Vashon's really plays well there. And I think that learning for both us at Marzetti and the team at Vashons is informing how we think about marketing communications to drive that versatility message. I thinkthat's going to be important in the future of the business. maybe one other quick passing comment is the business is actually growing faster in Canada than it is in the United States right now. So that's been a nice surprise on the upside. Interesting. Thank you so much for all that color. I really appreciate it. I'll hop back in the queue. Our pleasure. Thank You. Thank YOU. One moment for our next question. Thank you. Our next question comes from Jim Solera of Stevens. Your line is now open. Guys, good morning. Thanks for taking our question. Jim, good moring. Tom, I wanted to start on the gross margin side. If I kind of piece everything together, it seems like the primary variance in 1Q was the freight costs and kind of the incremental transport costs. So can you just maybe break that apart and give us a sense for how we should think about freight costs in the remainder of the year? And please correct me if I'm wrong, but I believe in the 4Q call, you guys talked about kind of 100 basis points, give or take, of gross margin expansion through the year. Are we still thinking about something in that range or maybe a little bit less, given where 1Q came in? Just put some takes on gross margin would be great. Sure. So you're right. The higher freight costs significantly impacted our first quarter margins. We calculated an impact of about 120 basis point headwind from that. In addition, the higher cyclospora impact on revenue impacted our ability to drive cost savings as well as the mix was unfavorable. That was an additional 40 basis point headwind for the quarter. Now as you go forward, the freight headwind remains through Q2. So as we look at our Q2 outlook, we anticipate being able to get to flat margins. but not grow margins in in the second quarter but as you look at the the second half we expect to be fully back on algorithm and to be able to drive some some nice margin growth so the full year outlook we've adjusted down to be growing between 25 and 75 basis points really driven by growth in the second half now what I would say is that our forecast is based on the market outlook for diesel fuels which does anticipate some moderation in the second half so it's something that we're going to continue to monitor and continue to work to offset great and then shifting gears he's talking about innovation exciting to hear the new opportunity at chick-fil-a you guys also had a press release out yesterday announcing new collaboration to just give us a sense for how much incrementality, innovation outside of botch-ons should contribute this year and just maybe the sequencing of when those things start to hit. You gave kind of an initial ramp for Chick-fil-A, but just how quickly we should see the uptake in market and sort of quantify some benefits. Maybe I'll hit them in the order in which you covered them, Jim, and I'll begin first with Chick-il-A sauce. So as was discussed in the script, we're thrilled. it goes into market on November 12th. They're going to be starting their advertising before too long to drive it, and we're super excited about it. It's a major initiative for them that's been in the works for quite a long time, and we look forward to supporting with them and participating in the growth. As you might imagine, it's going to being a contributor to Q2 for food service and a contributor for Q3 as well. And as the item becomes a permanent part of their sauce portfolio I think we're going to remain I think optimistic about what the overall impact is going to be I'm going to switch to retail if I may swing it around to that portfolio that the current plan is to launch that product in retail in the spring launch window of next February so it's not going to come out right now on the heels of the restaurant launch they want to use the restaurants as means by which to see the advertising and drive it as an LTO but But we have plans in place already to bring it into retail, but it's going to be launching next year. As far as the current pipeline of activity that we have this year, I would characterize it as building. Our bakery items are already out in the marketplace with New York Texas Toast behind focaccia bread and loaf. They're both doing very well. We launched a new SKU of Texas Roadhouse that's driving TDP growth, and I think you saw the consumption was up about 20% in the period. As we move around to sauces, where we've spent a lot of energy recently, what you're going to begin to see is a host of new items, the first of which we mentioned in the press release, which is a really exciting partnership with Tahin. You can consider this sort of licensing 2.0, where I believe we found a very, very consumer-relevant brand platform that connects with both younger consumers and consumers out west. growing very rapidly in a range of different areas and it naturally lends itself to things like ranch dressing so we have several items that we have planned to come out into the marketplace this year February with that we're selling those in right now and then we also have a range activity in flight with our own Marsetti brand where we're looking to bring new items into the refrigerated section the intention is not for these to be salad dressings per se but really for them to be more versatile sauces that you can use to dip drizzle or to dress those products are also in the process of being sold out sold into the market so you can expect to see those February ish and as retailers begin to prepare to reset their shops great I appreciate the thoughts, I'll hop back in the queue. Thanks, Jen. Thank you. One moment for our next question. Thank you, our next questions comes from Scott Marks of Jefferies. Your line is now open. Hey, good morning all. Thanks very much for taking our questions here. First thing I wanted to ask about is if we look at underlying organic growth trends, if we strip out the impact from cyclospora, it looks like organic volumes are still down across both retail and food service. So wondering if you can just help us understand a little bit what are the main drivers behind that and how should we think about those factors contributing or helping going forward? Yeah. It's an important question. If you pull them out, Scott, like you indicated, if you adjust for cyclospora, what you're looking at on the base business continues to be a low single-digit decline. And what I would point to is a couple of things. One, despite the – or in spite of cyclospor, really, it's the dressings category is probably the softest piece. Other than that, we feel like our categories are generally healthy. continuing to drive growth in our bread business and really all eyes and focus are on continuing to build on our strength and softness and really fix and then grow what we have going on in the dressing space and it may be an opportunity now to talk about some of what we've had going on you read recently that we appointed a new leader of our retail business probably six months before that we launched something internally called project alpha which is intended to go back and to strengthen all of our fundamental processes in developing consumer insights developing new products and innovation and strengthening our marketing particularly in the digital space and that work is in flight it's informing and producing some of the products that I just talked about and then this leadership change that you heard with the addition of Mark Christiansen is really just the latest move to strengthen that team that comes on the heels of an appointment of a new sales leader just a few months ago and a new head of overall marketing probably about four months ago. So a lot of activity there to strengthen our team because, honestly, we feel like we have both the right to play and the right of win. We want to make sure we have the right ideas and the correct people to drive those ideas to bring it to fruition. Appreciate the thoughts there. And just following up on that one as well, and then I have another one. If we think about the kind of some of the underlying trends you mentioned in the context of your expectations for the full year, I think on the Q4 earnings call, you called out the expectation for mid-single digit net top line growth, including botchums with retail up mid-ingle digits and food service up low to mid-ingles. Any change to that expectation at this point? we still believe we we can achieve that scott so in spite of the cyclical situation okay understood thanks for the clarity on that and then last one from me um hey scott maybe before we go on one thing that's worth clarifying um is is is not the what but let's say the how because part of what's driving that also is you know historically in an environment where we didn't see commodity cost inflation allies were on volume in an environment where we saw elevated commodity costs we mentioned in q4 that we intended to price we have since implemented those prices they've been accepted on both our center store grocery sauces and dressings and our produce items so those prices have flown through so as you look at sort of the composition of how we achieve that growth you're going to see some of the growth coming by way of pricing and then some modesty a little bit more modest performance on volume and that's fully expected we took that move intending to protect our margins in the long haul understood and actually that was part of my follow-up question which is in the prepared comments or in the press release you talked about taking some some maybe some incremental inflationary pricing because of what you're seeing across freight and diesel, in addition to other mitigating efforts. Wondering if you can just help us understand, you know, if that's correct, if that is because of the higher freight costs and how are retailers responding at this point to, you now, to request for pricing to offset those costs. So maybe I'll start with the first, because it's a really important point, you know, just it's ironic if you sit back and look at the scope of time, four months ago, you know, cyclist four was on the horizon. We didn't appreciate how significant it was going to be. What we really focused on was a run-up in commodity cost because of soybean oil. As I shared, we were able to implement those prices. The first one went into effect right on the heels of being in June the next one went at the end of June they both since flowed through and that includes all customers and those conversations as you might expect were you know they were full conversations but we were resolute that we could see clear line of sight to how the commodities were flowing right through to our products and we said you know to our customers irrespectfully you want us to innovate you want us to market, but we need to be protecting our margins in the long term so we can do this. And I think after a period of back and forth going over the data, they could see where we were coming from and as an aside, they were pricing in some cases their private label as well. So those conversations on the center of the store and produce happened and we felt like we priced everything that we could see as of that moment in time. Now as diesel has remained higher and possibly for longer there's another round of pricing that we're looking at in grain and dough so this would be our bread and roll business we are putting those plans in place the intention is to make those pricing moves effective after the end of the holidays and in that round of price and we intend to sweep the relevant components of transportation cost that we mentioned so we don't intend at this moment in time to go back and try to reprice what was priced in the center of the store or in in produce but we are going to try to sweep what we can that's relevant to those products on frozen the other piece that we were referring to is to the degree appropriate we intend to go back in the food service business even though when you look at the segment makeup of the two businesses you can see that the margin maybe I'll step back our food service business is largely a customer pickup business on outbound so when you look at the impact of the segment margins you can see that the segment in food service held up a little bit better than retail having said that when we're looking at diesel and running in the six dollar range across the United States and eight dollars in Canada what's happening now is we're seeing that diesel not just an outbound but we're seen it inbound on all of the ingredients and all of that packaging that's coming to our plants so what the food service team is doing is making sure that they're sweeping those costs and don't be passed along as well. Kind of a long answer to a short question. Hopefully I got to what you were looking for. Yeah, yep. I think you did appreciate it. I'll back in the queue. Thanks. Thank you. One moment for our next question. Thank you. Our next question comes from Todd Brooks of Benchmark StoneX. Your line is now open. Hey, thanks for taking my questions. Good morning, guys. Good morning. Since we've kicked around the distribution freight cost probably enough here, I want to pivot back to the top line drivers discussion for the business. I guess, historically, or can you frame up how impactful an incremental Chick-fil-A sauce is, where it touches both sides of the business now, food service and retail? I'm trying to start to stack that with bachans, and I want to get to the mayo rollout and what that could be for the business. And then just kind of the timing and what the outlook is for tajin. Again, just trying to see what type of organic new product development building blocks we have to get us to that mid single-digit top-line growth sure well I'll I'll do my best on this one let's start first with food service it's actually been believe it or not about ten years since we launched our last sauce with them so I don't know if the data is all that strong their business is substantially bigger and different than it was then but what I would expect to see is because of the marketing energy being put against this you should expect to see a step up in food service behind this particularly in q2 and then a let's say a residual effect into q3 and then it beginning to normalize as they go into q4 I think the easiest way to think about chick-fil-a is that when you put together their combination of traffic growth and new store openings they're lining up pretty comfortably in the mid single digit range and what I would expect to see is this really just fortified that so as you're looking at their business in the context of our food service business which is material I would expect to seed mid single-digit maybe high single- digit growth in the second quarter behind the promotion you know trending out to more like mid single digit growth as they go into the back half. That may be the easiest way to try to do that. As we swing around to, you know, Bosch Ons, Boschs Ons has been in a pretty comfortable cadence now of delivering sales growth in the range of let's call it 10 to 12 percent. Their consumption has been growing anywhere between 10 and 15 percent in the period. optimistic about Mayo but here's what I would tell you as far as fiscal year 27 it's not likely to be that big of a contributor because of the shelf step a shelf resets that happen in the spring we expect it to be a more material contributor to fiscal year 28 as well the other new items are launching there so for the purposes of that I would take that business which we just disclosed and continue to run that out in the lower double-digit range as we just continue to expand it out and then as we get into further quarters and have more to share on Mayo we'll help you revise your model up based on what we know but right now you know it's not going to have much of an impact in 27 just some pipeline build and we really expect it to be a more material in the periods of that follow. You know looking around at Tahene and the Marsetti item that I talked about, those two are going to be launching at the end of this fiscal year so their impact is more likely going to as we roll into fiscal year 28. If you put all of this together, you know as we've outlined in the algorithm, the combination of bachons and what we have that is incremental and the performance of the base business comfortably gets us into that big single-digit range that we discussed. Okay, great. Thanks, Dave. Very helpful. And then I want to talk on the frozen bread side of the house. Any early reads on the performance of new New York bakery items? And then if we look at dinner rolls, and you talked about the second skew of the Texas Roadhouse dinner roll being launched. I know we're growing the overall market share within dinner rolls between Sister Schubert's and Texas Roadhouse, but do you have a sense of how much demand is transferring between the brands? Is Sister Schupert's basically seeding some of that market share growth for Texas Road House dinner rolls as you keep rolling out additional products there? No, it's an important question. To date, that cannibalization has run about 5% against sister sugar so yes the growth has been incremental to our portfolio overall by splice several points but you're right importantly margins are such that it doesn't result in a margin trade down when that happens so it's not even if it is cannibalization it isn't margin destructive so but as we look at it today when it was launched the cannibalisation was virtually zero now we seem to have it out in the marketplace for close to a year it seems to be running about the five-point range hopefully that gives you an idea really what we're seeing also that that may be worth mentioning here is the occasions are slightly different the sisters Hubert occasion is more of that big family meal maybe on a weekend or a special occasion so execution on that product really magical matters you need to own Thanksgiving with merchandising you need to hunt Christmas with merchandising, Easter and Mother's Day are important, whereas with Texas Roadhouse, what you're seeing is that it's just an affordable moment of joy. Consumers are buying them and eating them at any point in the week. So they're working together to expand our position in that category. I think we're up to about a 64 share now. Okay, perfect. Thanks, Dave. Thank you. One moment for our next question. Thank you, our next question comes from Andrew Tompkins of D.A. Davidson. Your line is now open. Hi, this is actually Matt Curtis. I wanted to ask about the reiteration of the mid-single-digit sales growth this year. I mean, given some of your comments around Chick-fil-A and Vachon, I mean it sounds like second quarter sales growth will still be lower than what you expect for the second half. So, I mean A, is that accurate? And then maybe could you clarify more of the cadence of the sales improvement you're expecting as we get further away from the cyclospora here? Yeah, I think that's a fair characterization, Matt. We expect it to accelerate through the second fiscal quarter and into the back half for all the reasons that you described. Okay. Great. And then one more on wash-ons. I think you've previously talked about more than $100 million in revenue from that brand this year. I assume that's still achievable, but when you think about sort of how that looks going forward, do you expect a fairly consistent ramp from the, you know, approximate $18 million at the first quarter? I'm not sure if I – I'm sorry, I wasn't able to quite understand your question. Did somebody else get it? Can you repeat the question? Let me ask you to repeat the questions, Matt. Sure, no problem. I think for Bosch arms, you mentioned about $100 million in revenue that you're expecting this year. You know, with $18 million in the first quarter, I was just wondering if you're expecting a fairly steady ramp-up in that figure as we go forward. Yes. That's a bit of a seasonal business, and this is one of the quieter periods of the year for them. They tend to do more in the back half. So, absolutely. Okay. Understood. Thanks very much. Yeah. Thank you. There are no further questions at this time. We will now turn the call back to Mr. Sosinski for his concluding comments. Thank you, operator, and thank you, everybody, for joining today. We look forward to meeting with you again in February when we can update you on our results for our fiscal second quarter. Thank you very much. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.