FRPT - NASDAQ

Greetings. Welcome to Freshpet, Inc.'s fourth quarter and full year 2025 earnings call. At this time, participants are in a listen-only mode. A question-and-answer session will follow the presentation. Please note this conference is being recorded. I will now turn the conference over to Rachel Perkins-Ulsh, Vice President, Investor Relations and Corporate Communications. Thank you. You may begin. Good morning, and welcome to Freshpet, Inc.'s fourth quarter and full year 2025 earnings call and webcast. On today's call are William B. Cyr, Chief Executive Officer, and John O’Connor, Chief Financial Officer. Nicola J Baty, Chief Operating Officer, will also be available for Q&A.

Before we begin, please remember that during the course of this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements related to our strategies to reaccelerate growth, progress and opportunities and capital efficiencies, timing and impacts of new technology, capital spending, adequacy of capacity, expectations to be free cash flow positive, 2026 guidance, and 2027 targets. They involve risks and uncertainties that could cause actual results to differ materially from any forward-looking statements made today, including those associated with these statements and those discussed in our earnings press release and our most recent filings with the SEC, including our 2024 annual report on Form 10-K, which are all available on our website. Please note that on today's call, management will refer to certain non-GAAP financial measures such as EBITDA and adjusted EBITDA, among others. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for how management defines such non-GAAP measures, why management believes such non-GAAP measures are useful, a reconciliation of the non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP, and limitations associated with such non-GAAP measures. Finally, the company has produced a presentation that contains many of the key metrics that will be discussed on this call. That presentation can be found on the company's investor website, investors.freshpet.com. Management commentary will not specifically walk through the presentation on the call. Rather, it is a summary of the results and guidance they will discuss today. With that, I would like to turn the call over to William B. Cyr, Chief Executive Officer. Thank you, Rachel.

Good morning, everyone. The message I would like you to take away from today's call is that the challenges we faced in 2025 taught us quite a bit about our strengths and weaknesses, and have made us a much stronger company for 2026 and beyond. We learned that after more than a decade of strong, reliable, and predictable growth, the pet food category and the Freshpet growth algorithm are not immune to swings in consumer sentiment. Category growth last year slowed dramatically, and our net sales growth rate dropped from 27% in fiscal year 2024 to 13% in fiscal year 2025. While the 13% growth we delivered in fiscal year 2025 would excite most companies, it was not the kind of growth we had become accustomed to nor what we expected when we started the year. This dramatic change in sentiment forced us to reevaluate every aspect of our model and adapt to the new environment. We changed our messaging and media buying strategy. We increased our focus on creating value at the entry point. And we demonstrated flexibility in, and control over, our capacity expansion plans. In the end, I am very proud of the agility that our team showed in the face of a dramatic change in the macroeconomic market. The benefits of that agility were demonstrated in our results. Our growth was more than 10 points better than the category. We built significant market share. And we exceeded the $1,000,000,000 net sales target we set in 2020. We also expanded distribution in a very large club customer, and began testing another new class of trade, rural lifestyle retail. At the same time, we protected and even expanded our margins and achieved positive free cash flow. And we withstood the onslaught of new competitive entries with little discernible impact on our business. More importantly, we built a really strong foundation for fiscal year 2026 and beyond. Our new messaging and related media plans are showing early signs of generating the household penetration growth we expect. Our efforts to expand our ecommerce business continue to gain traction, with digital business growing nearly 40% last year, and it is now up to 14% of our total business. We have installed and started up the biggest breakthrough in manufacturing technology in our history. And we began testing fridge islands in a major retailer, one of our biggest breakthroughs in retail visibility and availability ever. In each case, we believe we are in the very early stages of a major new driver of growth and profitability. In total, we believe we are very well positioned to continue to capture a very large share of the growing market for fresh pet food. Our data suggests that despite the macroeconomic headwinds we experienced last year and continue to see today, the total addressable market for Freshpet, Inc. continues to grow and is now up to 36,000,000 households, compared to the 33,000,000 households we announced at CAGNY last year. These figures reflect consumers' ongoing interest in treating their pets as valuable family members and the growth is driven, in part, by the ongoing generational transition to younger consumers for whom pets and high-quality food are of greater interest than previous generations. We believe this suggests that fresh pet food is the future of the pet food category, and that Freshpet, Inc. has a very long runway for growth. And the results of the past year strongly suggest that we have the ability to maintain a very high share of this market, despite the determined efforts of many new competitors. The competitive moat we have built enables us to deliver a wide range of noticeably better products at lower costs, in more locations, in a variety of channels versus competition. And we continue to invest in new manufacturing technologies that we believe will extend our competitive advantages even further. Plus, we are leveraging our extensive fridge network, digital marketing efforts, and strong brand equity to create an omnichannel business that will be difficult for other fresh food marketers to match. We firmly believe we have a unique and compelling advantage in not only manufacturing, but also quality and product appeal. And it can be enhanced through marketing. Last quarter, we talked about our improved commercial framework that focuses on consumers who have the potential and ability to become very heavy users. We expected the increase in digital and streaming as part of our media mix to drive increased trial and usage by millennials and Gen

Thank you. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question. Please pick up your handset before pressing the star keys. We ask that you please ask one question and one follow-up question. First question is from Peter Benedict with Baird. Please proceed.

Hi, good morning, guys. Thanks for taking the questions and welcome. Questions, I guess maybe just help us to understand a little bit more the implied uptick in EBITDA margins as you look out to 2027. Maybe can you help us size maybe the incentive comp impact on 2026? Obviously, that is something that is weighing on this year. But just the other factors that give you the confidence that these margins can be 20% plus in 2027. That is my first question.

Alright. Great. That is super helpful. And I think leads me to the next question actually is around the omnichannel stuff. I am just curious if you guys could expand on what you learned from owning Ollie or being involved with Ollie for all those years, and how that is being deployed in your own custom meals business, your own DTC business. Maybe just expand a little bit more on that. It sounds like 2026 is going to be a big year for how you are going to start to push on that. So any further color there would be helpful. Thank you.

Yeah. Peter, it was really good to have a front-row seat to watch how that segment of the market was unfolding. It is also nice that it turned out to deliver a very good financial return for us. But as we watched it, one of the things that became clear to us was that the best return for us was going to be focusing on building out what I would call an omnichannel business. And by that, I mean a place where we can leverage our brand equity, the brand investment that we are making in the existing channels to cover a wider range of channels. Then we could also leverage the manufacturing footprint that we have, which has significant scale and volume across the existing products and the existing channels, and cover a wider range of channels. And it is our belief that the combination of the custom meals business that we have incubating at this point as well as the broad retail network, you know, lots and lots of fridges, puts us in a position where we are uniquely positioned to meet the consumer wherever they want to buy and however they want to buy. So we will be able to provide you with the Freshpet, Inc. quality products in whatever way in which you want to purchase them. And we feel pretty good about that position, and, frankly, we want to invest in that. I am going to ask Nicola J Baty to talk just for a second about what that means from an organizational capability perspective and how we are investing the media dollars to match that. But to us, that is a huge opportunity and a fairly significant shift for us.

Nikki?

Thanks, Billy, and good morning, Peter. Yes. As Billy said, we are very focused on omnichannel, and we see DTC as just one part of that. When we talk about omnichannel, we are still very much talking about it from a retail standpoint with click-and-collect, a segment that is last-mile delivery, a segment that is also pure play ecommerce, and then a final segment that really is our DTC business. As you know, we went to national on our DTC business really around a year ago, and we have had some great learnings from it. Over 74% of our households are actually coming in incrementally to Freshpet, Inc. They have never bought Freshpet, Inc. before in the retail environment, and I think that is just a key indicator that Omni, for us, drives better brand awareness, and we did have a gap in our brand awareness to purely being in a retail environment. So as we think a little bit about capabilities, we are building there in both the marketing teams and the sales team. On the marketing side, it will be moving more to what we call digital-forward in our media. So that will include everything from how we approach streaming, retail media, and social. And then on the sales side, it is really building capabilities not just to service our direct-to-consumer, but also really to service pure play and other areas too.

Great. Thanks so much, guys. Good luck.

Thanks, Peter.

Our next question is from Brian Patrick Holland with D.A. Davidson. Please proceed.

Thanks. Good morning. Maybe just to start on rank ordering, if you would, the drivers for consumption growth in 2026. As you just spoke in great detail about DTC as obviously an increasing catalyst here. You have got distribution as well. You also have this increased focus on value proposition, which seems to be, at least from what we can see in tracked data, the initial impetus for the stabilizing in unit consumption growth. So just thinking about, as we bring this together in the aggregate, how you would rank order the consumption drivers in 2026?

Brian, let me frame it, and then I will ask Nikki to fill in some of the building blocks. But from a broad perspective, what we are seeing is that the volume growth is going to come, as it always has, from highly effective advertising in a good environment. We obviously want to get increased visibility. We want the right product innovation program. But advertising will always remain our number one driver of our growth. And if we are operating with highly effective advertising, in a better backdrop, then we obviously would expect to see some acceleration beyond that. There are elements that are within that, such as the omnichannel piece we just talked about, some channel-specific stuff that I will ask Nikki to walk you through. But suffice it to say that the model is going to be evolving—still the same model, but it is evolving. You are going to see an increasing percentage of the growth coming from our omnichannel, or the ecommerce portion of the omnichannel business. Nikki?

Thanks, Billy. Yep. So maybe I will start there and build on that. On the distribution side, we have obviously got a full year of distribution coming through within the club channel. And we also believe we have got continued growth coming from clubs, so that is built into our plan. We will continue to grow new stores. So we had a record year of new stores last year, and we are still anticipating that there is more new store development to come through this year. And then also within distribution, outside of the ecommerce component of omni where we have significant headroom to grow, we also have multiples and new retail visibility opportunities—for example, the Island Genius. So that falls under that distribution bracket. Media Billy has already touched on. And then the third component I would suggest is what I would call affordability. And we have sharpened our plan in affordability and we do anticipate a little bit more coming through from how we have shored up the entry-level price point within our portfolio. And that is both in terms of innovation, but also in terms of some price elasticity work that we did.

Appreciate the color. And then maybe just looking backwards a bit, Q4 household penetration vis-à-vis my model came in above. CAC came in below. So that is an encouraging development relative to the prior few quarters. Just curious—you talked about in your prepared remarks the extent to which maybe hitting the high end or above would be dependent a bit on the category, maybe the effectiveness of some of the media. But we are, to be sure, in Q4 seeing some of this come together. So just curious to get your perspective on the landscape, whether it be competitive or category dynamics, consumer dynamics. Are we seeing any drivers here that we think would be sustainable as we start to look forward in 2026 and beyond? That we have seen the bottom in this category, and we are starting to see behaviors, if not back to the level they were, at least starting to normalize.

Yeah, Brian. We are seeing some very, very early indications that the category trend, as well as our trends, have started to improve. You can—depends whether you are looking at household penetration, whether you are looking at our MVPs, whether you are looking at the category when it actually inflected. But it has begun to move up in the right direction. We are cautious, though, because there has been a lot of noise over the last several weeks, with all the storm impacts that we have seen. But even in Q4, we saw some hints that it was moving in the right direction. And we heard from some of our competitors and some of the retailers that they have observed some of the same phenomenon. How long it is going to sustain, we are not quite sure. That is why we want to provide a very conservative guide for the year based on what we did deliver in Q4 and what we feel very confident about. There is clearly some opportunity for some upside if those trends continue.

Our next question is from Steve Powers with Deutsche Bank. Please proceed.

Great. Thank you. Good morning, Billy, Nikki. Welcome aboard, John. I guess, can we talk a little bit more about what you have learned so far from the fridge island expansion efforts and what you are looking to better understand as you move from the 16 to 28 stores? And you also talked about some of the other concepts that you are testing, including the open-air end caps and the bunker-style coolers. So is that part of the fridge island initiative? Or is that incremental testing? Maybe just a little bit more clarity there would be helpful. Thank you.

Billy, would you like me to take this one?

Yep. Great.

So we are still very much in test phase with the islands. We are learning a lot. It is early days, and we have taken a thoughtful approach. Clearly, there is more capital that is required for these island units. But they do deliver us 2.5 times capacity versus a single fridge. So that is a really big move forward. So we are now at 28 island units. And what it is allowing us is a broader assortment which is ultimately bringing in new households into the brand. So just by getting that capacity up we get more assortment in, but we are also getting more holding capacity. And the holding capacity is really important for us for omnichannel, especially to serve click-and-collect as well. So we are finding we are staying in stock much better and able to service that consumer coming through too. So that is outside of the significant beacon it is providing, with a better location in the store and driving that awareness overall. So we are very encouraged—I think that is probably the best way to put it—with the fridge islands at the moment. And what our plan is is obviously to just continue to work with retailers that are looking to experiment in this way, and then make sure we really pick the right store locations in order to get the best return. But even outside of fridge islands, we still have a very significant opportunity with multiple fridge expansion. We are only at 25% of all stores having more than one chiller. So we will continue to lean in and put more multiples in, experiment with end-cap open-airs, and also bunker units. So very much looking to tailor our approach for different retailers.

Okay. Very helpful. Thank you. And then, Nikki, I do not know if you want to take this one as well, but you talked about the affordability initiatives, sharpening entry-level price points, etc. I guess, related to that, number one is, do we have more to go on that front, or do you feel like you have made the intervention necessary at this point? And either way, as you think about the full year 2026, is the expectation that volume growth exceeds sales growth because of those affordability investments? Or will revenue growth management and mix, etc., allow sales to keep pace or even exceed volume growth? How are you thinking about that?

Yeah. That is a great question. I think I would start by saying we did do a big step back. It was a very challenging environment for us really around 2026. I think to start with, for us, it is really about winning more with the retailers that are winning in the marketplace. So you saw us really focus and expand out some of our club channel offerings, and clearly in mass we have made some key moves. We do not anticipate a significant shift in mix or investment coming in this area. I think we have done what we needed to do really within the portfolio, and that is paying back as we saw through the back end of last year and into this year. And we did a lot of work modeling price elasticity, so the small movements we made were really data-driven and well executed. So in summary, I believe as we look through this year, we have made the steps we think are right in the current macro environment. But we do reserve the right, obviously, to regroup and review that if things adjust and change as we go through the year.

Thanks, Nikki.

Our next question is from Thomas Palmer with JPMorgan. Please proceed.

Good morning and thanks for the question. I wanted to ask just on the drivers of the gross margin expansion this year and how that might evolve as we think about the 48% plus target for 2027. One call-out for 2026, for instance, was increasing sales growth without really increasing headcount. So I guess to what extent is that a continued driver as we think about 2027? And what other items such as the new technology might be key drivers as we think about not just 2026, but beyond.

Right. Thanks for all the detail, guys. I do want to follow up just on that new technology rollout. You noted the potential for $20,000,000 to $50,000,000 higher CapEx both from the potential higher, accelerated fridge rollout and then the faster deployment of that new technology. Just any framing of, one, is it just the two rollouts in the $150,000,000 CapEx number; and two, how much does a new line with the technology actually cost? So if we do start to see the acceleration, we get an idea of incremental each one might be.

Yeah. I will take a shot at that. So the base CapEx budget for this year includes the line that is already started up, but most of that CapEx was in last year. And it also includes the conversion of the first line that we are doing, which is here in Bethlehem. If we expand the CapEx, it would include additional conversions. As we said in the prepared comments, the cost of those conversions is a modest cost. Think of that in the single millions of dollars, not in double-digit millions of dollars per line, depending on the configuration, what line we are converting, how much space there is, those kinds of things. If we are going to install another one of the new full-up lines, like the line we have installed here in Pennsylvania, it is a little bit harder to describe that because it would, in essence, be replacing another line of a traditional technology line. And so think of this as: it is a more expensive line than a traditional technology line. It has significantly higher throughput. And so the cost per dollar of production is actually very competitive or very attractive for us. If we were to do that—install one of the new technology lines—we would incur some of the CapEx this year. A much bigger portion of the CapEx would come in 2027 for that line. You would not be starting up that line until sometime at the end of 2027 or in 2028.

Okay. Thank you. Very helpful.

Our next question is from Robert Bain Moskow with TD Cowen. Please proceed.

Hi. Thanks, and welcome, John. Really a question for Billy and Nikki. I did not hear much in the presentation today about the journey to shift consumers from using Freshpet as a topper to more as a main meal. And I am just wondering, is that still a major objective of the marketing plan, or have you kind of evolved the marketing plan to, you know, through the variety of offerings that you have, you know, make it more that something can use more frequently for meals or in other, in other ways. So just wondering where you are in that journey.

Yeah. Rob, I will have Nikki address this and our focus on the MVP consumer.

Thanks, Billy. Thanks, Rob. So it is still very much core to our marketing and plans. MVP is 71% now of our total sales. So by far, the biggest area that I call it, we need to super-serve. So in order to really be able to get these households in, this is what has also prompted our renewed focus on omnichannel. And one of the key elements, I think, to bring in those MVPs into the brand is shifting our media mix to being more digital-forward. And this is really driving brand awareness through streaming, through social, and then through retail media. And then making sure from an online standpoint, we can actually sell and serve those consumers where they best want to buy. So our efforts are still very much around super-serving that audience, but when we look at our total media spend, we will continue to make sure that we first address the TAM, which is those 36,000,000 households we have got. And then we will drive better reach and frequency, so we will put more dollars, I guess, per MVP household into what I would call the digital part of our spend. So it has not changed from what we talked about last year. I think that we just got better at where to spend those dollars and how to focus on and attract those MVPs. And then the last thing I would say, perhaps to put a bow around it, is our expansion in club and what I would call value packs and bulk packs is also really helping to serve those MVPs better. We rolled out a number of value pack items last year, and we have expanded into club. We do see club and online—online because of that retention, that subscription service, and club because of the nature of the pack—as really helping us to better improve our offering to MVPs.

Hey, Rob. I would also encourage you to think about the discussion that we have had in the call so far, both the prepared remarks and in the questions, about omnichannel as being highly synergistic—highly synergistic—with the focus on MVPs. In essence, to meet the needs of the MVPs, we have got to be available and effectively marketed in a wider range of channels. And so when we talk about omnichannel, it is sort of the distribution and availability component of an MVP strategy.

Okay. I will follow up offline. Thanks.

Our next question is from Michael Scott Lavery with Piper Sandler. Please proceed.

Thank you. Good morning, and welcome, John, as well. Just wanted to understand the multi a little bit better and maybe get a sense of how the consumer interacts with that—if you have found it to be incremental. You seem to have an already loyal consumer. Assume it is obviously at a more favorable price point. I guess, how do you know you are not just maybe giving a subsidy through that? Or how does it interact with the rest of the portfolio?

Nikki, you want to take that one?

Yeah. Sure. I would say we are pretty early days on multipacks at the moment. So we have relatively focused distribution, especially where we are in the double chillers—so multiple chillers—and also in island units. So far, we have seen there is a certain kind of household that wants to buy those packs. And that is different to those that want to come in very frequently into store. One of the challenges I think we have had historically has been fresh food requires very, very frequent shopping trips. So putting a product into a multipack that is very convenient—both in an online format and also a club format—is making sure that they are getting enough of their food in a more convenient way rather than multi trips per week. So far, we are seeing a different household target coming through those multipacks, but we will continue to experiment and see how it works and make sure it maximizes incrementality. The other thing I would say is the discount level for a multipack is very, very low. So this is not something that we are driving aggressively in terms of pricing.

Okay. That is helpful. And just a question back on the consumer. Your upper, kind of middle-end consumer. It would seem to be the very one that could most benefit from some of the tax law changes, and maybe not as much a function of elevated refund this year as much as withholding changes that have an ongoing benefit. Is this something you think could maybe help drive some improvement in trends over the course of the year? And even if so, is it something that you, just as yet another piece of your conservatism, would not be capturing in the guidance, but that you would keep an eye on?

Yeah, Michael. I will tell you there is a variety of things that we think can influence the macro market. The larger tax refunds are certainly going to help; the lower withholdings, in part because of the change in SALT deductions. All that is going to help, and we think there are other drivers that are helping. If you take a look at the consumer sentiment data, it was not good last year. It hit a real low in April and May, kind of bounced back, and it dropped down again very low in November. But we have now seen a couple of months in a row where it is starting to tick up, and one of the things that I would attribute that to is the consumer is remarkably resilient. They digest the bad news. They look for the good news. And then they move on. It takes time, and there is a little bit of pain that we all endure when you are going through that process. But the consumer, I think, is remarkably resilient over time. And we are hopeful that that means good things for the pet food category and certainly for Freshpet, Inc.

Okay. Great. Thanks. I will pass it on.

Our next question is from Rupesh Dhinoj Parikh with Oppenheimer and Company. Please proceed.

Good morning, and thanks for taking my questions. So just going back to the competitive backdrop, just curious if there is anything surprising that you have seen from some of the competitor entries, whether positive or negative, just given the increased focus on the fresh category? Thank you.

Yeah. First of all, it is not a surprise that we have had as many competitors enter the market, in as many different channels. We think it is helping the total category—the increased attention of retailers, media investment, all that is—you know, a rising tide is going to lift all the boats, and we feel very good about that. We also believe that as you take a look at it, it is also validating that the business that we spent almost two decades now building, and the things that we have chosen to invest in—the strength of the brand—are the most important and most meaningful. The quality of our products that we have built, the manufacturing, distribution, and scale—all those have done a very nice job of insulating our business from fairly significant investments by a wide range of competitors with a very diverse array of offerings. At the end, we feel really good about the product proposition that we have, the brand proposition we have, and the capabilities that we have built. We are not standing still either. We are looking for ways to add on to that. So we talked about building out omnichannel. We have talked about new technologies in manufacturing. We are leaning in in a very big way to make sure that as this segment becomes a larger and larger share of the category—which I think everybody now believes it will be—that we will have a very large share of that expanding category.

Great. Thank you, I will pass.

Great. Thanks, Rupesh.

Our next question is from Jon Andersen with William Blair. Please proceed.

Hey, good morning. Thanks for the question and welcome, John. I guess, I wanted to ask on the 2027 EBITDA margin targets that you talked about—kind of reiterating what you have said before, 20% with an upper single-digit growth rate, and if you kind of resume mid-teen growth closer to 22%—what is, is the benefit of the technology that you have been talking about today, the production technology, included in those targets? And if so, to what degree?

Yeah. I will take a shot at that, and then John might have something to add. I would start with the reality that unless we accelerate the manufacturing investment on the new technology, it will still have a relatively modest impact in 2027. The one line that we have installed in Pennsylvania is a relatively small-scale line, so it will produce good product, but not a significant percentage of our total volume. And the line that we are converting this year is, again, going to produce a good amount of product. But against the backdrop of the total number of lines we have, it is still a relatively small share. If we do pull forward the investment to accelerate the technology, it could help us get there. We have not—our building blocks have not assumed that. Our building blocks have assumed that we would get there through good old-fashioned OEE improvements, through yield improvements, through G&A efficiency, net sales growth that would be at a higher level. And that could just give us another lever to pull that might get us there, but it is not necessarily necessary.

Thanks. That is helpful. And then the 7% to 10% sales growth for 2026, what are you—is that what we should expect from a consumption perspective as well? Are there any puts and takes that we need to think about there where consumption might deviate from that one way or the other? And then with respect to the cadence, I think John mentioned, to what extent should we be thinking about maybe over-delivery on that guide in Q1 due to easy comp and maybe under-delivery in Q3 due to the more difficult comp? Thank you.

Yeah. Let me take a shot at that. So starting with the difference between consumption and net sales, consumption is now measuring just about every part of our business. It does not provide a complete measure of our DTC business or of some of the ecommerce businesses that we do. But it is a relatively small share of the total pie that it does not measure. So the two should trend fairly close together. There should not be any significantly meaningful difference between what is measured in consumption and what we report in net sales, outside of our own internal DTC business. In terms of the cadence, I think you called it out right. We said in the call, Q1 is a little bit softer comp just because of disruption we had a year ago. Q3 is a tougher comp. Beyond that, it is really going to come down to how effective is our advertising and what is the consumer environment. And that will dictate the pace of the year. But we feel very good about the trends that we are seeing so far. We feel really good about the building blocks that we put in place between the advertising program, the product initiatives, the retailer support that we are getting.

Thanks so much.

Our next question is from Peter Thomas Galbo with Bank of America. Please proceed.

Okay. Got it. No, that is helpful. And Billy, we spent a lot of time talking about the gross margin improvement and some of the benefits that could potentially unlock from the technology side. I guess just what I have not heard today at all is any color on raw material inputs. You know, the protein complex has kind of been all over the map over the last twelve months and kind of where chicken has gone, where beef has gone. So maybe you can just remind us where you stand on material costs and the curve there—maybe locks for the year? Thanks very much.

Yes. I will comment on this, and Nikki, you might want to add to it. But overall, we, as we mentioned in the past, we lock our chicken pricing, or at least the bulk of our chicken pricing, in the fourth quarter, and we did. And it came in at prices that were in line with where we were a year ago. The big issue for everyone is beef. Beef continues to be a higher cost. We are taking some actions to try to address the higher beef cost. But at the end of the day, that is the one commodity cost that is really a challenge for us in this year. And as we mentioned in the comments earlier, we have taken some pricing. We have done some formulation work. All of that is intended to address those costs. Nikki, is there anything you want to add? Nope.

Awesome. Thanks.

We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing remarks.

Great. Thank you, everybody, for bearing with us through the middle of this blizzard. I want to leave you with a thought from the comedian Fran Lebowitz, and it is: if you are a dog, your owner suggests that you wear a sweater, suggest that he wear a tail, to which I would add, or you could just feed your dog Freshpet, Inc., and all will be forgiven. Thank you very much for your time.