Q4 2025 Utz Brands Inc Earnings Call

February 12, 2026

Speaker #1: Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Utz Brands 4th Quarter and Full Year 2025 Earnings Call.

Operator: Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Utz Brands Q4 and Full Year 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session, and if you'd like to join during this time, simply press Star, followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, press Star 1 again. I'd now like to turn the call over to Trevor Martin, Senior Vice President of Investor Relations. You may begin.

Speaker #1: All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session, and if you'd like to join, during this time, simply press star followed by the number 1 on your telephone keypad.

Speaker #1: If you'd like to withdraw your question, press star 1 again. I'd now like to turn the call over to Trevor Martin, Senior Vice President of Investor Relations.

Speaker #1: You may begin.

Speaker #2: Thank you, operator, and good morning, everyone. Thank you for joining us today for our live Q&A session of our 4th Quarter and Full Year Earnings Results.

Howard Friedman: Thank you, operator, and good morning, everyone. Thank you for joining us today for our live Q&A session of our fourth quarter and full year earnings results. With me on today's call are Howard Friedman, CEO, and BK Kelley, CFO. I hope everyone has had a chance to read our prepared remarks and your presentation, all of which are available on our investor relations website. Before we begin our Q&A session, I just have a few administrative items to review. Please note that some of our comments today will contain forward-looking statements based on our current view of the business and that actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials.

Trevor Martin: Thank you, operator, and good morning, everyone. Thank you for joining us today for our live Q&A session of our fourth quarter and full year earnings results. With me on today's call are Howard Friedman, CEO, and BK Kelley, CFO. I hope everyone has had a chance to read our prepared remarks and your presentation, all of which are available on our investor relations website. Before we begin our Q&A session, I just have a few administrative items to review. Please note that some of our comments today will contain forward-looking statements based on our current view of the business and that actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials.

Speaker #2: With me on today's call are Howard Friedman, CEO, and VK Kelly, CFO. I hope everyone has had a chance to read our prepared remarks and your presentation.

Speaker #2: All of which are available on our Investor Relations website. Before we begin our Q&A session, I just have a few administrative items to review.

Speaker #2: Please note that some of our comments today will contain forward-looking statements based on our current view of the business and that actual future results may differ materially.

Speaker #2: We see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Today, we will discuss certain adjusted or non-gap financial measures, which are described in more detail in this morning's earnings materials.

Speaker #2: Reconciliations of non-gap financial measures and other associated disclosures are contained in our earnings materials posted on our website. Now, operator, we are ready to open the line for questions.

Howard Friedman: Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials posted on our website. Now, operator, we are ready to open the line for questions.

Speaker #1: Your first question comes from the line of Andrew Lizard from Barclays. Your line is live.

Operator: Your first question comes from the line of Andrew Lazar from Barclays. Your line is live.

Speaker #3: Great, thanks so much. Good morning, everybody.

Andrew Lazar: Great. Thanks so much. Good morning, everybody.

Speaker #4: Hey, Andrew. Hey, there.

Howard Friedman: Hey, Andrew. Good morning.

Andrew Lazar: Sure. Sure. Maybe, I, I'm sure you'll get a number of questions along these lines, but figure we'll get this one kind of out of the way, first. And I, I know obviously we've, we've all heard a lot more detail recently from a large salty competitor on, on, you know, a more front-footed approach this year in the category. And I guess based on either what you've seen in market or, or hearing from customers and such, I guess, what are you expecting, and, and how does all of this influence your guidance for the coming year in terms of, you know, needed investment spend and things of that nature?

Speaker #3: Maybe I'm sure you'll get a number of questions along these lines, but figure we'll get this one kind of out of the way. First, I know obviously we've all heard a lot more detail recently from a large salty competitor on a more front-footed approach this year in the category, and I guess based on either what you've seen in market or hearing from customers and such, I guess what do you expect and how does all of this influence your guidance for the coming year in terms of needed investment spend and things of that nature?

Speaker #4: Yeah. Thanks for the question, Andrew. It's Howard. Look, I feel really good, and I have a lot of confidence in our commercial plan as we think about 2026.

Howard Friedman: Yeah, thanks for the question, Andrew. It's Howard. Look, I feel really good, and I have a lot of confidence in our commercial plan as we think about 2026. If you think about our building blocks of driving our geographic white space, continuing to enjoy distribution gains, investing in marketing and innovation, and competing in a rational promotional environment, I think it all feels to us as a pretty, pretty consistent with what we've heard historically and kind of what we've observed in the market. You know, our guide of 200 to 300 basis points contemplates a flat category.

Speaker #4: If you think about our building blocks of driving our geographic white space, continuing to enjoy distribution gains, investing in marketing and innovation, and competing in a rational promotional environment, I think it all feels to us as a pretty consistent with what we've heard historically and kind of what we've observed in the market.

Speaker #4: Our guide at 200 to 300 basis points contemplates a flat category at the midpoints, 2.5 basically 2.5 for the year, which we think is a prudent place to start and give us the flexibility that we need to compete given the variety of unknowns that may be out there in front of us.

Howard Friedman: At the midpoint, it's 2.5, you know, basically 2.5 for the year, which we think is a prudent place to start and give us the flexibility that we need to compete, given the variety of unknowns that may be out there in front of us. But overall, our confidence in our plan and our conviction in what we believe this business can deliver in 2026 has not changed.

Speaker #4: But overall, our confidence in our plan and our conviction in what we believe this business can deliver in '26 has not changed.

Speaker #3: And that's helpful. And then, maybe even if we exclude the $4 to $6 million planned investment spend in '26 for the California expansion, it still seems like maybe guidance would have been short of the originally expected 100 basis points of EBITDA margin expansion this year, if I've kind of done the math right.

Andrew Lazar: And that's helpful. And then maybe, even if we exclude the $4 to 6 million planned investment spend in 2026 for the California expansion, it still seems like maybe guidance would have been short of the originally expected 100 basis points of EBITDA margin expansion this year, if I've kind of done the math right. I was hoping you could kind of get into that a little bit and what things are driving that outcome.

Speaker #3: I was hoping you could kind of get into that a little bit and what things are driving that outcome.

Speaker #4: Yeah. Thanks, Andrew. That's VK. And at the midpoint of our guide, we are expecting about 40 to 50 basis points of margin expansion of EBITDA.

William J. Kelley Jr.: Yeah. Thanks, Andrew. It's BK. You know, at the midpoint of our guide, we are expecting about 40 to 50, you know, basis points of margin expansion of EBITDA. I think, you know, to your point, that accounts for the $4 to 6 million of California investment. And to Howard's point, you know, the environment is dynamic, and we wanna have some flexibility. So it's prudent for us to reflect in our midpoint of our guidance anticipation of things that may, you know, may have to overcome throughout the year. So it's nothing more than being a bit more flexible and then having some capacity to handle any challenges that come our way.

Speaker #4: I think to your point, that accounts for the 4 to 6 million dollars of California investment. And to Howard's point, the environment is dynamic, and we want to have some flexibility.

Speaker #4: So it's prudent for us to reflect on our midpoint of our guidance, anticipation of things that may or may have to overcome throughout the year.

Speaker #4: So it's nothing more than being a bit more flexible and having some capacity to handle any challenges that come our way.

Speaker #3: Got it. That's helpful. And then I'm going to throw in just one real quick one. Just with '26 being sort of the final year of the initial sort of three-year plan, I guess how do we start to think about what type of sort of organic top line and EBITDA growth could look like sort of beyond '26 on a more sort of normalized basis?

Andrew Lazar: Got it. That's helpful. And then I'm gonna throw in just one real quick one. Just with, with 2026 being sort of the, the final year of, you know, the initial sort of three-year plan, I guess, you know, how, how do we start to think about what type of, sort of organic top line and EBITDA growth could look like, sort of beyond 2026 on a more, you know, sort of normalized basis? And, and maybe you're gonna get into this more potentially at, next week in, in Florida. So if that's the case, you know, we can, we can wait till then. But thought I would just try and ask that and see what you're thinking about. Thank you.

Speaker #3: And maybe you're going to get into this more potentially at next week in Florida. So if that's the case, we can wait till then.

Speaker #3: But thought I would just try and ask that and see what you're thinking about. Thank you.

Speaker #4: Yeah. Thanks for the question. And to your point, we are looking forward to seeing everybody in Florida next week, and we will actually go quite a bit further into our commercial plans for the next three years.

Howard Friedman: Yeah, thanks for the question. To your point, we are looking forward to seeing everybody in Florida next week, and we will actually go quite a bit further into our commercial plans for the next three years. And I think what you'll hear a lot from us is the commercial opportunity, while we have advanced it significantly over the last three years, largely remains intact. We still have a lot of geographic white space and top line to go get. We have the ability to fund that journey through margin expansion, through productivity and other means. And probably the thing that is most additive to our thinking will be a little bit more around cash, which is, I think, the next leg as we're rotating off of the heavy investment cycle we're in.

Speaker #4: And I think what you'll hear a lot from us is the commercial opportunity while we have advanced it significantly over the last three years, largely remains intact.

Speaker #4: We still have a lot of geographic white space and top line to go get. We have the ability to fund that journey through margin expansion, through productivity, and other means.

Speaker #4: And probably the thing that is most additive to our thinking will be a little bit more around cash, which is, I think, the next leg as we're rotating off of the heavy investment cycle we're in.

Speaker #4: But we'll get into quite a bit more of that next week when we see you all. Thank you.

Howard Friedman: But we'll get into quite a bit more of that next week, when we see you all.

Andrew Lazar: Great. See you there. Thank you.

Howard Friedman: Thank you.

Speaker #1: Your next question comes from the line of Peter Galbo from Bank of America. Your line is live.

Operator: Your next question comes from the line of Peter Galbo from Bank of America. Your line is live.

Speaker #3: Hey. Good morning, guys. Thanks for taking the questions. Hey. Howard, maybe just to drill down a bit more on the price reinvestment commentary both for yourselves and obviously from the larger player in the category, just was hoping maybe to understand how you're thinking about the interaction for both Utz Brands and OTB.

Peter Galbo: Hey, good morning, guys. Thanks for taking the question. Hey, Howard, maybe, maybe just to drill down a bit more on the price reinvestment, you know, commentary, both for yourselves and, and obviously from the largest player in the category. Just was hoping maybe to understand how you're thinking about the interaction for both Utz brand, you know, and, and OTB. It would seem like those would be, you know, the more competitive parts of the portfolio. So just again, I know it's kind of early days, but how you're thinking about maybe the interplay of, you know, price cuts in those segments specifically, and, and how it might impact those two brands?

Speaker #3: It would seem like those would be the more competitive parts of the portfolio. So just again, I know it's kind of early days, but how you're thinking about maybe the interplay of price cuts in those segments specifically and how it might impact those two brands.

Speaker #4: Yeah. I appreciate the question. Look, Pete, it's a couple of things. I think first, I feel very good about the investment that we've been making in revenue management capabilities over the last couple of years.

Howard Friedman: Yeah, I, I appreciate the question. Look, Pete, it's a couple of things. I think first, I feel very good about the investment that we've been making in Revenue Management capabilities over the last couple of years. I think we're much clearer on how the Price Ladder works across our entire portfolio. Obviously, those two brands are large and significant to us. And, you know, I think what you're starting to see from us is starting to deploy some of those capabilities. I'll remind everyone that, you know, in 2025, you know, we continued to focus on affordability, and through most of the year, Q1, Q2, Q3, we had a 1 percentage point investment in price along the way.

Speaker #4: I think we're much clearer on how the price ladder works for across our entire portfolio. Obviously, those two brands are large and significant to us.

Speaker #4: And I think as what you're starting to see from us is starting to deploy some of those capabilities. I'll remind everyone that in '25, we continue to focus on affordability.

Speaker #4: And through most of the year, the first three quarters, we had a one percentage point investment in price along the way. And as we got out of the year, we had a little bit more positive price toward the end of the year.

Howard Friedman: And as we got out of the year, we had a little bit more positive price toward the end of the year. We'd expect as you go into next year, that we'll obviously continue to play our role in the category and be prudent in how we invest, but that we'll be up and down the price ladder. And ultimately, I think we'll maintain the gaps we need to. But I do think that you're gonna see a more positive contribution in both volume and price across the portfolio as we go into 2026, because of some of the differences in our commercial strategy this year.

Speaker #4: We'd expect as you go into next year that we'll obviously continue to play our role in the category and be prudent in how we invest.

Speaker #4: But we'll play—we'll be up and down the price ladder. And ultimately, I think we'll maintain the gaps we need to. But I do think that you're going to see a more equal, a more positive contribution in both volume and price across the portfolio.

Speaker #4: As we go into '26, because of some of the differences in our commercial strategy this year.

Speaker #3: Okay. Thanks for that, Howard. And maybe just to piggyback on the EBITDA question that Andrew had asked around if we kind of take the like-for-like, it's maybe a touch light.

Peter Galbo: Okay. Thanks for that, Howard. And maybe just to piggyback on the EBITDA question that Andrew had asked around, if we kind of take the like for like, it's maybe a touch light. If I've done the math right on productivity, I think it's like a $40 million, you know, COGS productivity number. It would imply, you know, I know there's the California investment, but it would imply that, you know, between inflation and reinvestment, there's, I don't know, pretty material headwind. So maybe you just bucket between the reinvestment and the inflation numbers, just kind of how you're thinking about those two within the gross margin cadence and ultimately the EBITDA guide. Thanks very much.

Speaker #3: If I've done the math right on productivity, I think it's like a 40 million dollar COGS productivity number. It would imply I know there's the California investment, but it would imply that between inflation and reinvestment, there's - I don't know - pretty material headwind.

Speaker #3: So maybe you can just bucket between the reinvestment and the inflation numbers just kind of how you're thinking about those two within the gross margin cadence and ultimately the EBITDA guide.

Speaker #3: Thanks very much.

Speaker #4: Thanks, Pete. It's VK. So, first of all, the productivity performance—we're very proud of that, and it's been very strong. Our first step with productivity, obviously, is to mitigate and manage through any inflation.

William J. Kelley Jr.: ... Hey, hi, Pete. It's BK. So first of all, you know, the productivity performance, you know, we're very proud of that, and it's been very strong. You know, our first step with productivity, obviously, is to mitigate and manage through any inflation. We don't see abnormal inflation coming through, but there is a bit in some ingredients, some packaging, and a little labor for sure. We will continue to invest, as Howard said, but also just again, to the point and theme of being flexible and just being prudent in our guide, we wanna make sure that we can manage through a variety of outcomes, no matter what could come our way.

Speaker #4: We don't see abnormal inflation coming through, but there is a bit in some ingredients, some packaging, and a little labor for sure. We will continue to invest, as Howard said, but also, just again, to the point and theme of being flexible and just being prudent in our guide, we want to make sure that we can manage through a variety of outcomes, no matter what could come our way.

Speaker #4: And given that perspective, that's how we come to the EBITDA guide that we have.

William J. Kelley Jr.: You know, given that perspective, that's how we come to the EBITDA guide that we have.

Speaker #3: Okay. Thanks very much.

Peter Galbo: Okay, thanks very much.

Speaker #1: Your next question comes from the line of Scott Marks from Jefferies. Your line is live.

Operator: Your next question comes from the line of Scott Marks from Jefferies. Your line is live.

Speaker #5: Hey, good morning. Thanks for taking my questions. The first thing I wanted to ask about—in the prepared remarks, you called out the SNAP disruption from early November.

Scott Marks: Hey, good morning. Thanks for taking our questions.

Howard Friedman: Yeah.

Scott Marks: first thing I wanted to ask about, in the prepared remarks, you called out the SNAP disruption from early November. But it sounded like some of your core geographies that Utz was hit maybe a little bit more than the category. So wondering if you can shed some light on that and why that was the case.

Speaker #5: But it sounded like some of your core geographies that Utz was hit maybe a little bit more than the category. So wondering if you can shed some light on that and why that was the case.

Speaker #4: Yeah, thanks for the question, Scott. A couple of things. We certainly, as you look at the disruption that we had in November—SNAP and the government shutdown.

Howard Friedman: Yeah, thanks for the question, Scott. A couple of things. We certainly, as you look at the disruption that we had in November, SNAP and the government shutdown were the two that we called out. And if you just look at our geographic dispersion, and you look at kind of the core of our core, the core of our core is in that Maryland, Virginia, Washington, DC, area, which winds up being a little bit more disproportionately impacted, just given the nature of the population there. And so that's what we were calling out specifically, and that area is about 20% of our overall core sales. And so that's kind of what we passed through in the remarks.

Speaker #4: We're the two that we called out. And if you just look at our geographic dispersion and you look at kind of the core of our core, the core of our core is in that

Speaker #1: In that Maryland , Virginia , Washington , D.C. area , which winds up being a little bit more disproportionately impacted just given the nature of the population , there .

Speaker #1: And so that's what we were calling out specifically . And that area is about 20% of our overall core sales . And and so that's kind of what we passed through in the remarks

Speaker #2: Understood . Thanks for the clarity on that . And then , you know , in the prepared remarks , you also called out some dynamics for this year on the , you know , on the volume front , you obviously call that in Q1 lapping in the bonus bag , but then you also called out some some innovations that you're expecting to launch with with the protein pretzels and some of the new Boulder Canyon offerings .

Scott Marks: Understood. Thanks for the clarity on that. And then, you know, in the prepared remarks, you also called out some dynamics for this year on the, you know, volume front. You obviously called out in Q1, you know, lapping in the bonus bag, but then you also called out some innovations that you're expecting to launch with the protein pretzels and some of the new Boulder Canyon offerings. So wondering if you can just kind of help us understand, maybe, as we think about cadence throughout the year in terms of when these innovations are coming to market and how we should be thinking about some of the distribution wins because of that.

Speaker #2: So wondering if you can just kind of help us understand maybe as we think about cadence throughout the year in terms of when these innovations are coming to market and , and how we should be thinking about some of the distribution wins because of that

Speaker #1: Yeah , I'll start and make sure if BK has any color to add a couple of things . First of all , I think we feel really , really good about the distribution gains that we are expecting to see through the year .

Howard Friedman: Yeah, I'll start and make sure if BK has any color to add. A couple of things. First of all, I think we feel really, really good about the distribution gains that we are expecting to see through the year. You know, they typically start shelving in February and March, and in fact, our California expansion, we start shelving—start actually putting product on shelves in the coming weeks. So we would expect to start to see some distribution gains building through the back half of this quarter. And then innovation starts coming in Q2. So you'll kind of see a more—a pretty consistent and deliberate, similar to prior years, back half of Q1 into Q2, as innovation rolls, planograms reset.

Speaker #1: You know , they typically start shelving in February and March fact our California expansion , we start shelving start actually putting product on shelves in in the coming weeks .

Speaker #1: So we would expect to start to see some distribution gains building through the back half of this quarter . And then innovation is starts coming in Q2 .

Speaker #1: So you'll kind of see a more a pretty consistent and deliberate similar to prior years , a back half of Q1 into Q2 as innovation rolls , Planograms reset and then typically in right around back to school , you'll see a second visibility in terms of additional gains that we may see in the back half of the year , but that's that's actually still in front of us .

Howard Friedman: Then typically in right around back to school, you'll see a second visibility in terms of additional gains that we may see in the back half of the year. That's, that's actually still in front of us. So, you know, I think you'll find a pretty consistent volume year. Obviously, Q1 and into April on the lap on bonus bags will be a little bit anomalous. It's a 3-point on price positive and a 3-point negative on volume through Q1 and into April, which is kind of the reciprocal of what you saw last year. So you kind of put that together, it should help with the cadence.

Speaker #1: So , you know , I think you'll find a pretty consistent volume year . Obviously Q1 and into April on the lap on bonus bags will be a little bit anomalous .

Speaker #1: It's a three point on price positive and a three point negative on volume through Q1 and into April, which is kind of the reciprocal of what you saw last year.

Speaker #1: So you kind of put that together . It should help with the cadence . Yeah .

Speaker #3: Howard , that's great . Only I would add to to your point is , as we get into Q2 , we will start our California distribution .

William J. Kelley Jr.: Yeah, Howard, that, I think that's great. Only I would add to your point is, as we get into Q2, we will have started our California distribution, and so we'll have a little bit of volume there, coming through as well.

Speaker #3: And so we'll have a little bit of volume there coming through as well.

Speaker #2: Appreciate the color . We'll pass it on .

Howard Friedman: Appreciate the color. We'll pass it on.

Speaker #1: Thanks , Scott .

William J. Kelley Jr.: Thanks, Scott.

Speaker #4: And next question comes from the night line of Michael Lavery . Piper Sandler . Your line is live

Operator: Your next question comes from the line of Michael Lavery from Piper Sandler. Your line is live.

Speaker #5: Thank you . Good morning . Good morning . A little bit more on the top line . You're your midpoint and it's a range obviously .

Michael Lavery: Thank you, good morning.

William J. Kelley Jr.: Morning.

Michael Lavery: A little bit more on the top line. Your midpoint, and it's a range, obviously, but you called out as a flat category view. It was close to that, but slightly up. Do you expect a little deceleration, or is that just some conservatism? And then on the distribution piece, you've got the White Space, geographically, especially. But can you also clarify if you're seeing pressure in existing stores or core markets on, you know, can you gain there, or are you losing any space? Can you hold it? How should we think about the distribution side?

Speaker #5: But you called out as a flat category view . It was close to that but slightly up . It is . Do you expect a little deceleration or is that just some conservatism And then on the distribution piece you've got the white space geographically , especially .

Speaker #5: But can you also clarify if you're seeing pressure in existing stores or core markets on , you know , can you gain there or are you losing any space ?

Speaker #5: Can you hold it ? How should we think about the distribution side

Speaker #1: Yeah, I'll take the second question first, and then I'll get into the other piece. Look, we expect to have positive distribution gains in 2026.

Howard Friedman: Yeah, I'll take the second question first, and then I'll get into the other piece. Look, we expect to have positive distribution gains in 2026. It's consistent with the last couple of years. It's not just in expansion markets in California, but also within our core, as we're bringing innovation and some of our Power Three brands continue to gain distribution traction in our core markets. So, you know, we would anticipate a positive distribution gain based on everything that we can see right now, and the wins that we know we have, that you'll start to see materialize as we go into Q1 into California through the course of the year. I just lost your second, your first question. I apologize.

Speaker #1: It's consistent with the last couple of years . It's not just an expansion . Markets in California , but also within our core as we're bringing innovation and some of our power .

Speaker #1: Three brands continue to gain distribution traction in our core markets . So we would we would anticipate a positive distribution gain based on everything that we can see right now .

Speaker #1: And the wins that we know we have , that you'll start to see materialize as we go into into Q1 , into California , through the course of the year .

Speaker #1: I just lost your second your first question . I apologize The category . Yeah , sorry . Look , I think over the last couple of years , obviously much has been written about the category .

Michael Lavery: Uh, category.

Howard Friedman: Oh, category. Yeah. Sorry. Look, I think over the last couple of years, obviously, much has been written about the category. I, I've always been bullish and believe it's a great category to be in, and consumers want to be there. I think what you're seeing right now from a lot of category participants is a renewed commitment in trying to drive shoppers down the aisle through a combination of the things that have always made this category great, which is really around better brands, brand building, innovation, and a rational promotional environment, which is largely what we're seeing and largely what we continue to expect, and we do believe that consumers will respond.

Speaker #1: I've always been bullish and believe it's a great category to be in . And consumers want to be there . I think what you're seeing right now from a lot of category participants is a renewed commitment in trying to drive shoppers down the aisle through a combination of the things that have always made this category great , which is really around better brands , brand building , innovation and a rational promotional environment , which is largely what we're seeing and largely what we continue to expect .

Speaker #1: And we do believe that consumers will respond . Fourth quarter of this year , we saw positive category . We saw positive category improvement .

Howard Friedman: Q4 of this year, we saw a positive category, we saw positive category improvement, and it actually inflected positively, and then obviously, the storms in January further drove some tailwind. But I just think it's a little premature to say that we expect the category to be positive in 2026. I think we're cautiously optimistic that all of the ingredients are there, but at this point, knowing what we know, we felt like a flat category was the most prudent call.

Speaker #1: And it actually inflected positively . And then obviously the storms in January further drove some tailwind . But I just think it's a little premature to say that we expect the category to be positive in 2026 .

Speaker #1: I think we're cautiously optimistic that all of the ingredients are there. But at this point, knowing what we know, we felt like a flat category was the most prudent call.

Speaker #5: No , that's that's very helpful . Great color , just more a little bit of a housekeeping clarification on the below the line .

Michael Lavery: No, that's very helpful. Great color. Just more, a little bit of a housekeeping clarification. On the below-the-line, I understand that the newer PP&E would have a higher D&A, but maybe can you just make sure to help us reconcile the $93 to 97 million, up $13 million with the $37 million full year figure in your gross profit bridge? It looks like the higher figure kind of aligns with the cash flow statement, but I want to make sure to understand how to translate that into the income statement side and the gross profit bridge, just to get those moving parts straight.

Speaker #5: I understand that the newer PPE would have higher DNA , but maybe can you just make sure to help us reconcile the 93 to 97 million up 13 million with the 37 million full year figure in your gross profit bridge ?

Speaker #5: It looks like the higher figure kind of aligns with the cash flow statement . But I want to make sure to understand how to translate that into the income statement side .

Speaker #5: And the gross profit bridge just to get those moving parts straight .

Speaker #3: Yeah , maybe we can take that one offline , a bit of a modeling question . I'll make sure I understand exactly what you're looking at there .

William J. Kelley Jr.: Yeah, maybe we can take that one offline. It's a bit of a modeling question. I'm just trying to understand, exactly, you know, what, what lines you're looking at there. I'm not exactly certain, you know, to the point. But just in terms of the pressure on EPS, if I can just come back to that point. As you noted, DNA does add about $0.08 to us, you know, year-over-year, in terms of a drag, given the depreciation amortization you just quoted. I think that's the first time we've been so direct about that number. We want to give that transparency. As I said in the script, fair remarks, that does go back to our kind of historical view of what we saw in DNA.

Speaker #3: I'm not exactly certain , you know , to the point , but just in terms of the pressure on EPs , if I can just come back to that point , as you noted , DNA does add about $0.08 to us .

Speaker #3: You know , year on year in terms of a drag , given the depreciation , amortization , you just quoted . I think that's the first time we've been so direct about that number .

Speaker #3: We want to give that transparency . As I said in the script , fair remarks . That does go back to our kind of historical view of what we saw in DNA .

Speaker #3: We have a little bit of a drag coming in on interest as well as we replace swap , they're doing our risk management .

William J. Kelley Jr.: We have a little bit of a drag coming in on interest as well, as we replaced a swap there during our risk management, and then there's a bit about a $0.01 on tax. So, we can come back to the specifics on which rows of depreciation you're focused on in the modeling questions, but that is the EPS kind of year-on-year performance.

Speaker #3: And then there's a bit about a penny on tax . So we can come back to the specifics on which roles of the Sharon you're focusing on in the modeling questions .

Speaker #3: But that is the EPs kind of year on year performance .

Speaker #5: Okay . Thanks so much

Michael Lavery: Okay, thanks so much.

Speaker #4: Your next question comes from the line of Robert Moskow from TD Cowan . Your line is live

Operator: Your next question comes from the line of Robert Moskow from TD Cowen. Your line is live.

Speaker #6: Hi . I was I wanted to ask about the the leverage ratio target . Were you originally expecting leverage to be below three times by the end of 2026 ?

Robert Moskow: Hi. I wanted to ask, BK, about the leverage ratio target. Were you originally expecting leverage to be below 3x by the end of 2026? The guidance this year is 3x to 3.2x. Did something change?

Speaker #6: The guidance this year is 3 to 3.2 . Did something change

Speaker #3: Hi Rob , thanks for your question . Yes . So to your point , you know , in our guide we quoted the leverage range of 3.0 to 3.2 .

William J. Kelley Jr.: Hi, Rob. Thanks for your question. Yeah, so to your point, you know, in our guide, we quoted the leverage range of 3.0 to 3.2. No matter what numbers, I would focus on our leverage. I would have ranged them at some point. You know, we finished at 3.4 times in 2025, Rob, but as you saw, we thought we did some really solid work from Q3 to Q4 last year, dropping from 3.9 to 3.4. We felt 3.4 was approaching the 3 times, but probably a bit at the higher end of where you'd expect it, so there's a little bit of a higher start there to begin with.

Speaker #3: No matter what numbers I will focus on , on leverage , I would have ranged them at some point . You know , we finished at 3.4 times in 2025 .

Speaker #3: Robert , as you saw , we thought we did some really solid work from Q3 to Q4 last year , dropping from 3.9 to 3.4 .

Speaker #3: We saw 3.4 was approaching the three times , but probably a bit at the higher end of where we expected . So there's a little bit of a higher start there to to begin with .

Speaker #3: But in the prepared remarks we talked about that over time , we think we will deliver 0.3 to 2.4 times a year . And we also quoted a free cash flow goal of $100 million .

William J. Kelley Jr.: But in the prepared remarks, we talked about that, over time, we think we will delever 0.3 to 0.4 times a year. And we also quoted a free cash flow goal of $100 million. And so our long-term approach is to get to 2.5 to 3 is still our goal. So nothing changed there other than just we had a bit of a higher starting point given how we finished.

Speaker #3: And so our long term approach to get to 2.5 to 3 is still our goal . So nothing changed there other than just we had a bit of a of a higher starting point .

Speaker #3: Given how we finish the end of the year with a little bit less EBITDA there as well .

Howard Friedman: ... the end of the year with a little bit less inventory out there as well.

Speaker #6: Okay . And I wanted to ask a little more about affordability . Howard , you said that the category is doing the things that it always has done to to generate growth and you talked about innovation and rational promotion .

Robert Moskow: Okay. I wanted to ask a little more about affordability. Howard, you, you said that, you know, that, that the category is doing the things that it always has done to, to generate growth, and you, you talked about innovation and, rational promotion. There's a lot of talk about how affordability needs to improve in order to really get volume to, to bounce back. But you yourself said, you know, pricing's only down 1% in 2025. Why is that sufficient to get... why is minus 1%... It's not just you, it's the whole category. Why is that sufficient to improve the affordability equation?

Speaker #6: There's a lot of talk about how affordability needs to improve in order to really get volume to to bounce back , but you yourself said , you know , pricing is only down 1% in 2025 .

Speaker #6: Why is that sufficient? Why is it -1%? It's not just you; it's the whole category. Why is that sufficient to improve the affordability equation?

Howard Friedman: Yeah, Rob, I appreciate the question. Look, first of all, I would say that if you kind of look at our company through its history, you know, obviously long before me, affordability has always been part of who we are and how we compete. I think we offer an affordable indulgence. We hit the right price points from an opening price point all the way to a premium price point with Boulder Canyon. We have a price back architecture that allows consumers to opt in, depending on where they are.

Speaker #1: Yeah , Rob , I appreciate the question . Look , first of all , I would say that if you kind of look at our at our company through its history , you know , obviously long before me , affordability has always been part of who we are and how we compete .

Speaker #1: I think we we offer a an affordable indulgence . We hit the the right price points from an opening price point all the way to a premium price point with Boulder Canyon .

Speaker #1: We have a price pack architecture that allows consumers to opt in . Depending on where they are . And I think if you were to go , if you were to kind of look at our pricing evolution over time , even if you went back to inflation , we took our last price advance in the latter half of 2022 and had not done anything , had not changed our pricing from there .

Howard Friedman: I think if you were to go if you were to kind of look at our pricing evolution over time, even if you went back to inflation, you know, we, we took our last price advance in the latter half of 2022 and had not done anything, had not changed our pricing from there. So I feel like we're in we have maintained a pretty good price position in the marketplace. I do think that consumers, as they are looking for affordability and value, it really kind of depends on an individual's expectations. We do think that there is going to be that the competitive environment is rational, based on what we saw in the back half of Q4 and what we've seen, or at least early into Q1 of 2026.

Speaker #1: So I feel like we're in . We have maintained a pretty good price position in the marketplace . I do think that consumers , as they are looking for affordability and value , are really kind of depends on an individual's expectations .

Speaker #1: We do think that there is going to be that the competitive environment is rational , based on what we saw in the back half of Q4 and what we've seen , or at least early in the Q one of 2026 .

Speaker #1: And I think that price has always been just a piece of the equation . I think consumers will pay what they deem a fair price for the innovation and for the products that they love .

Howard Friedman: You know, I think that price has always been just a piece of the equation. I think consumers will pay what they deem a fair price for the innovation and for the products that they love, and when that equation gets out of whack, then it becomes a little bit of a problem. But I do think that where we are today and kind of where I think the category is headed is a good step to move consumers back into the category and walking down the aisle, and ultimately should yield results. It's kind of how we've thought about our terms of competition for the last several years.

Speaker #1: And when that equation gets out of whack , then it becomes a little bit of a problem . But I do think that where we are today and kind of where I think the category is headed , is a is a good step to move consumers back into the category and walking down the aisle .

Speaker #1: And ultimately should yield results . It's kind of how we've thought about our terms of competition for the last several years .

Speaker #6: Okay, great. Thank you for that.

Robert Moskow: Okay, great. Thank you for that.

Speaker #4: Your next question comes from the line of Jim Salera from Stephens Inc. . Your line is live

Operator: Your next question comes from the line of Jim Salera from Stephens Inc. Your line is live.

Speaker #7: Howard . Good morning . Thanks , Jim . I wanted to ask a little bit around the progression in both households and businesses as we think about against a flat category , that kind of implies that your growth is going to come from either expanding households in markets where you don't have them or obviously capturing households in markets where you already do have decent penetration .

Jim Salera: Howard, Dave McKay, good morning. Thanks for taking my question.

Howard Friedman: Hey, Jim. Hey, Jim.

Jim Salera: I wanted to ask a little bit around the progression in both households and, and buy rates, just as we think about, you know, against a flat category. That kind of implies that your growth is gonna come from either expanding households in markets where you don't have them, or obviously capturing households in markets where you already do have decent penetration. Can you just walk us through maybe the growth drivers there and how we should think about the mix of, you know, expanding in California and the expansion markets to households there, versus maybe some incremental placements for Boulder and picking up new households in the core market?

Speaker #7: Walk us through maybe the growth drivers there and how we should think about the mix of expanding in California and the expansion markets .

Speaker #7: The households there versus maybe some incremental placements for Boulder and picking up new households in the core market .

Speaker #1: Yeah , if I want to make sure I understand the question , if you're asking like contribution in terms of how do we how do we think about distribution versus marketing support versus something else helping to support our top line is that .

Howard Friedman: Yeah, if I wanna make sure I understand the question. If you're asking, like, contribution in terms of how do we, how do we think about distribution versus marketing support versus something else helping to support our top line, is that?

Speaker #7: Yeah , that's correct .

Jim Salera: Yeah, that's correct.

Speaker #1: Yeah . Okay . Yeah . Look , I think there are a couple of things . I think if you look at our if you look at our expansion geographies or expansion geographies are 45% of our business and growing significantly above both our , our business and the category .

Howard Friedman: Yeah. Okay. Yeah, look, I think there are a couple of things. I think if you look at our expansion geographies, our expansion geographies are 45% of our business and growing significantly above both our, you know, our business and the category. We would expect to continue to see that type of outperformance as we go forward. If you were to look at Florida or Illinois or Missouri, you see some of the markets that we have entered and have been there for several years, still growing at a nice 5.8% top line growth. So that is a combination of distribution gains as well as continuing to drive marketing support. California is a largely untapped market for us.

Speaker #1: And we would expect to continue to see that type of outperformance as we go forward . If you were to look at Florida or Illinois or Missouri , you see an older some of our some of the markets where that we have entered and have been there for several years , still growing at a nice 5.8% top line growth .

Speaker #1: So that is that is a combination of distribution gains as well as continuing to drive marketing support . California is a largely untapped market for us .

Speaker #1: You know , we're a 1.9 share today and we will be we'll be setting shelves and moving into into that market very shortly , which we would expect to both contribute .

Howard Friedman: You know, we're at 1.9 share today, and we will be moving, we'll be setting shelves and moving into that market very shortly, which we would expect to both contribute top line sales as well as incremental households. Now, when you look at our household acquisition and the loyalty that we see, our repeat rates are very strong. So when we get into a home, consumers tend to repeat at pretty high levels. So we would expect that the distribution gains in California will obviously be a significant driver, as well as we still have a significant amount of white space through the middle of the country and even in our core markets with some of our Power brands.

Speaker #1: Top line sales as well as incremental households . Now , when you look at our household acquisition and the loyalty that we see , our repeat rates are very strong .

Speaker #1: So when we get into a home , consumers tend to repeat at at pretty high levels . So we would expect that the distribution gains in California will obviously be a significant driver as well , as we still have a significant amount of white space through the middle of the country .

Speaker #1: And even in our core markets , with some of our power brands . I think you're also going to see consumer acquisition driven by both protein and the Boulder Canyon offering that will be coming out with that are incremental occasions and incremental items to our assortment , which we also believe will be driving new trial of different users , which we'd also expect .

Howard Friedman: I think you're also going to see consumer acquisition driven by both protein and the Boulder Canyon Tallow offering that we'll be coming out with, that are incremental occasions and incremental items to our assortment, which we also believe will be driving new trial of different users, which we'd also expect. And then our advertising and consumer spend will be up, you know, similar on a percentage basis to what we did this year, and we are very happy with kind of how consumers have responded to the marketing, both in store and in social and digital, to driving trial in our business. So I still think you're gonna see a distribution-led story in terms of how we grow, and then it is reinforced and built further by the innovation and marketing spend that we have.

Speaker #1: And then our advertising and consumer spend will be up, similar on a percentage basis to what we were, what we did.

Speaker #1: This year . And we are very happy with kind of how consumers have responded to the marketing , both in store and in social and digital , to driving trial in our business .

Speaker #1: So I still think you're going to see a distribution led story in terms of how we grow . And then it is reinforced and built further by the innovation and marketing spend that we have .

Speaker #7: Great . And then if I can ask a follow up on some of the innovation , I think we've seen across the industry more focus on healthy oils .

Jim Salera: Great. And then if I can ask a follow-up on some of the innovation. I think we've seen across the industry, you know, more focus on healthy oils, and beef tallow is the first. I'm excited to try that when that hits shelves. But all of these ingredients, I imagine, are, you know, significantly higher cost than vegetable oil, but also, you know, on the back of a premium product. Could you just give us an idea of how that impacts the mix as we see, you know, a brand like Boulder taking more and more position in the portfolio? And is there any supply limits that we should think about on, you know, things like beef tallow, avocado oil, olive oil, these kind of alternative oils that are outside the traditional vegetable oil market, which is obviously much larger?

Speaker #7: And this is the first I'm excited to try that. When that hits shelves. But all of these ingredients, I imagine, are significantly higher costs than vegetable oil.

Speaker #7: But also on the back of a premium product . Just give us an idea of how that impacts the mix . As we see , you know , a brand like Boulder taking more and more position in the portfolio .

Speaker #7: And is there any supply limits that we should think about on things like beef tallow , avocado oil , olive oil , these kind of alternative oils that are outside the traditional vegetable oil market , which is obviously much larger .

Speaker #1: Yeah . I'll start . And then if BK has some color to add on top , I think in terms of supply , look , we've been investing in integrated business planning capabilities to really try to understand our volume expectations .

Howard Friedman: Yeah, I'll, I'll start, and then if BK has some color to add on top. I think in terms of supply, look, we, we've been investing in Integrated Business Planning capabilities to really try to understand our volume expectations. And also we've spent a lot of time collaborating with our customer base to make sure we know what their, what their interest and, and what they're seeing in the market. So I think from a supply perspective, we feel very good with the availability that we have and our, you know, our ingredient suppliers and our oil suppliers have been tremendous partners as Boulder has, you know, really jumped significantly over the last couple of years. And so we don't, we don't anticipate a problem in terms of availability of the oils or really any of the other ingredients that we would be pursuing.

Speaker #1: And also we've spent a lot of time collaborating with our customer base to make sure we know what their what their interest and what they're seeing in the market .

Speaker #1: So I think from a supply perspective , we feel very good with the availability that we have and our our ingredient suppliers and our oil suppliers have been tremendous partners .

Speaker #1: As Boulder has really jumped significantly over the last couple of years . And so we don't we don't anticipate a problem in terms of availability of the oils or really any of the other ingredients that we would be pursuing .

Speaker #1: I think it's kind of standard work for us , and I'm pretty proud of our teams and what they're able to do . I think in terms of , you know , how do we think about the margin mix and how do we think about the , the , the contribution to of innovation to our overall portfolio ?

Howard Friedman: I think it's, you know, kind of standard work for us. I'm pretty proud of our teams and what they're able to do. I think in terms of, you know, how do we think about the margin mix and how do we think about the contribution of innovation to our overall portfolio? Look, our expectation when we launch a new item is that it's margin accretive, that the value that we're offering to a consumer, that there is a propensity to be willing to pay for those premium ingredients, whether it's protein in the Utz Pretzels and Puffs, or the beef tallow for Boulder Canyon, or avocado oil, or really anything else that we do. So we would anticipate it being a net positive on the margin line, and obviously on the higher priced items.

Speaker #1: Look , our expectation when we launch a new item is , is that it's margin accretive , that the value that we're , that we're offering to a consumer , that there is a propensity to be willing to , to pay for those premium ingredients , whether it's protein in the US , pretzels and puffs or the beef tallow for Boulder Canyon or avocado oil or really anything else that we do .

Speaker #1: So we would we would anticipate it being a net positive on the margin line . And obviously on the higher priced items as they grow more , you'll also see a positive price benefit to the PNL .

Howard Friedman: As they grow more, you'll also see a positive price benefit to the P&L. I don't know, VK, if you have anything else to offer.

Speaker #1: I don't know if you have anything else to offer .

Speaker #3: No , I think that's well said . Howard . Thanks .

Michael Lavery: No, I think that's well said, Howard. Thanks.

Speaker #7: Great . I appreciate the color , guys . I'll hop back . Thank you .

Jim Salera: Great. I appreciate the color, guys. I'll hop back. Thank you.

Speaker #1: Thanks , Jim .

Howard Friedman: Thanks, Jim.

Speaker #4: Your next question comes from the line of Peter Grom from UBS . Your line is live

Operator: Your next question comes from the line of Peter Grom from UBS. Your line is live.

Speaker #7: Great .

Peter Grom: Great. Thank you. Good morning, everyone.

Speaker #8: Thank you . Good morning everyone . So I wanted to just ask . Hey , Howard , I guess on the organic sales outlook and I understand you mentioned in the prepared remarks you're , you know , trying to be conservative , but , you know , as I take a step back , right , you just delivered 2.4% growth this year .

Howard Friedman: Hey, Peter.

Peter Grom: So I wanted to just ask... Hey, Howard. I guess this is on the organic sales outlook, and I understand you mentioned in the prepared remarks you're, you know, trying to be conservative. But, you know, as I take a step back, right, you just delivered 2.4% growth this year. The category was down 50 basis points, and there was, you know, 100 related to the kind of the non-branded, non-salty portion of the portfolio. But, just so as I look out to next year, you're expecting a better category backdrop, you know, albeit, you know, maybe not growth. It sounds like there's gonna be less of a headwind from non-brand and non-salty. You're getting a benefit from California, yet, you know, the guidance at the midpoint is kind of similar to what you just delivered.

Speaker #8: The category was down 50 basis points, and there was a headwind related to kind of the non-branded, non-salty portion of the portfolio.

Speaker #8: But so as I look out to next year , you're expecting a better category backdrop . You know , albeit you know maybe not growth .

Speaker #8: It sounds like there's going to be less of a headwind from non-branded non salty . You're getting a benefit from California . Yet you know the guidance at the midpoint is kind of similar to what you just delivered .

Speaker #8: So is there something happening beneath the surface as to why it wouldn't be stronger . Or are you just simply taking a conservative approach to start the year ?

Peter Grom: So is there something happening beneath the surface as to why it wouldn't be stronger, or are you just simply taking a conservative approach to start the year?

Speaker #1: Yeah . Look , I think so . I appreciate the question . I think first and foremost , I want to reiterate that we feel very good about our commercial plans .

Howard Friedman: Yeah. Look, I think, so I appreciate the question. I think first and foremost, I wanna reiterate that we feel very good and about our commercial plans. I think we have a strong lineup, and I feel like we are gaining just the response from consumers in the marketplace. That said, it's February, and the environment is gonna continue to be dynamic, and we're trying to make sure that we are prepared for a variety of outcomes. Obviously, if you were to think about our business over the last couple of years, making sure that we are prepared with appropriate contingencies to deliver against our promises continues to be an area of focus for us.

Speaker #1: I think we have a strong lineup , and I feel like we are gaining the the response from consumers in the marketplace . That said , it's February and the environment is going to continue to be dynamic , and we're trying to make sure that we we are prepared for a variety of outcomes .

Speaker #1: Obviously, if you were to think about our business over the last couple of years, making sure that we are prepared with appropriate contingencies to deliver against our promises continues to be an area of focus for us.

Speaker #1: And so I just want to make sure that, as we're starting out in February, that we're giving ourselves the appropriate framing so that we are prepared for a variety of outcomes, and we have the flexibility to respond as we need to.

Howard Friedman: And so I just wanna make sure that as we're starting out in February, that we're giving ourselves the appropriate framing so that we are prepared for a variety of outcomes, and we have the flexibility to respond as we need to.

Speaker #8: Got it . That makes sense . And then I guess , just to follow up on the commentary around distribution and shelf space specifically , I mean , obviously , you know , a large competitor talked about growing space in the double digit range with the upcoming resets .

Peter Grom: Got it. That makes sense. Then I guess, just to follow up on the commentary around distribution and shelf space specifically. I mean, obviously, you know, a large competitor talked about growing space in the double-digit range with the upcoming resets. Howard, I think you mentioned you still expect to gain space through innovation in core markets. So can you just help us understand what's happening around shelf space with the upcoming resets? Thanks.

Speaker #8: Howard, I think you mentioned you still expect to gain space through innovation and core markets. So, can you just help us understand what's happening around shelf space with the upcoming resets?

Speaker #8: Thanks .

Speaker #1: Yeah . So you know , obviously we have been we've been working and we've been working with our retailers over the last couple of years , and we have enjoyed a great partnership where we've been able to not only get entry into some new banners and new geographies , but once we get in , we wind up seeing an expansion in the average items that are carried in those stores .

Howard Friedman: Yeah. So you know, obviously, we've been working with our retailers over the last couple of years, and we have enjoyed a great partnership where we've been able to not only get entry into some new banners and new geographies, but once we get in, we wind up seeing an expansion in the average items that are carried in those stores. You saw that play out in Florida. You saw that play out in Missouri. You've seen it consistently over the course of our history. We get in with a reasonable set of assortment, and then we sort of build from there. And there are a lot of geographies where we're in that sort of build from there step.

Speaker #1: You saw that play out in Florida . You saw that play out in Missouri . You've seen it consistently over the course of our history of we get in with a reasonable set of assortment , and then we sort of build from there .

Speaker #1: And there are a lot of geographies where we're in that sort of build from there . Step . So we do have good visibility to what we expect to gain in terms of both our core markets and our core brands , as well as our more significantly , our expansion geographies .

Howard Friedman: So we do have good visibility to what we expect to gain in terms of both our core markets and our core brands, as well as our more significantly, our expansion geographies, and as we continue to fully develop the channels in those markets. So you know, we anticipate and can see positive distribution gains for us in the beginning of the year. I think you'll see that, and we can talk a lot more about it when we get to the end of Q1, where you know, we sort of get into that normal distribution cycle. But I think overall, you know, we feel really good about where our distribution driver is for the year, and you know, anticipate another strong year of growth.

Speaker #1: And as we continue to fully develop the channels in those markets . So I am expect we will anticipate and can see positive distribution gains for us in the beginning of the year .

Speaker #1: I think you'll see that and we can talk a lot more about it when we when we get to the end of Q1 , where we sort of get into that normal distribution cycle .

Speaker #1: But I think overall , you know , we feel really good about where our distribution driver is for the year . And , you know , anticipate another strong year of growth

Speaker #8: Great . Thank you so much . I'll pass it on .

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

Speaker #1: Thanks , Pete

Howard Friedman: Thanks, Pete.

Speaker #4: Your next question comes from the line of Nik Modi from RBC . Your line is live .

Operator: Your next question comes from the line of Nick Modi from RBC. Your line is live.

Speaker #7: Thank you .

Nik Modi: Thank you. Good, good morning, everyone.

Speaker #9: Good morning everyone . Just hey , Howard . So just on your comment about the dynamic consumer environment , I mean , it strikes me as , you know , as we started the year .

Howard Friedman: Hey.

Nik Modi: Hey, Howard. So just on your comment about the dynamic consumer environment, I mean, it strikes me as, you know, as we started the year, things actually got worse. And then we had that winter storm that might have helped, you know, just some pantry, pantry loading. But just kinda, I know with the guide and a lot of questions about kind of, are you being conservative or not, but maybe you could just give us your kind of 50,000-foot view on, like, what you're seeing. And there's so many moving pieces like, you know, tax refunds are coming, but for higher income consumers, and then you still, I don't know, the ICE situation is still causing some traffic issues and some of the up-and-down-the-street retailers.

Speaker #9: Things actually got worse . And then we had that winter storm that might have helped , you know , just some pantry , pantry loading .

Speaker #9: But just kind of I know the guide and a lot of questions about kind of , are you being conservative or not , but maybe you could just give us your , your kind of 50,000 foot view on , like what you're seeing and there's so many moving pieces like , you know , tax refunds are coming , but for higher income consumers and then you still , I don't know the Ice situation is still causing some traffic issues .

Speaker #9: And some of the up and down the street retailers , you know , so you just kind of like give us your quick take on that .

Nik Modi: You know, so if you just kinda, like, give us your quick take on that. It seems like some of the headlines coming out that the middle income consumer is now coming under increasing duress, versus, you know, just being a lower income consumer issue a year ago. Any thoughts on that would be helpful. Then the kind of the bigger picture question is just on portfolio construction. You know, obviously, things are shifting in the food landscape, you know, focus on protein, also fiber. As you think about your portfolio longer term, and maybe you'll address this at CAGNY, so forgive me if I'm jumping the gun here.

Speaker #9: And it seems like some of the headlines coming out are that middle-income consumers are now coming under increasing duress, versus, you know, it just being a lower-income consumer issue a year ago.

Speaker #9: So any thoughts on that would be helpful . And then the kind of the bigger picture question is just on portfolio construction , you know , obviously things are shifting in the food in the food landscape .

Speaker #9: You know , focus on protein . Also fiber , as you think about your portfolio longer term and maybe you'll address this a Cagney .

Speaker #9: So forgive me if I'm jumping the gun here , but just wanted to get your thoughts on like how you think about the portfolio longer term in terms of some of these kind of emerging areas of growth ?

Nik Modi: But just wanted to get your thoughts on, like, how you think about the portfolio, longer term in terms of some of these kind of emerging areas of growth. Thanks.

Speaker #9: Thanks .

Speaker #1: Yeah . So I'll start with consumer and then I'll kind of give you a portfolio thought . And you know obviously we can certainly talk more about it .

Howard Friedman: Yeah. So, I'll start with the consumer, and then I'll kind of give you a portfolio thought. And I... You know, obviously, we can certainly talk more about it. I think we'll give you a sense. I do feel really good about our brand lineup and their ability to stretch, which we'll talk about. Look, couple of things on the consumer, and I wanna kind of start where I typically start in these conversations.

Speaker #1: I think we'll give you a sense I do feel really good about our brand lineup and their ability to stretch , which we'll talk about look , a couple of things on the consumer .

Speaker #1: And I want to kind of start where I typically start in these conversations . The nice thing about our business and the thing that I think we are most excited about , is that we have some growth drivers that are not solely dependent on a a market or a state or a geography that , you know , there's there's a lot of white space in our in our commercial operating plans that give us the opportunity to overcome some of the headwinds that some of our more mature competitors may not be able to do as simply or easily .

Howard Friedman: The nice thing about our business, and the thing that I think we are most excited about, is that we have some growth drivers that are not solely dependent on a market or a state or a geography, that, you know, there's a lot of white space in our commercial operating plans that give us the opportunity to overcome some of the headwinds that some of our more mature competitors may not be able to do as simply or easily.

Speaker #1: If you think about geographic white space and the investments that we're doing in marketing and an innovation lineup that is and capability that is ramping and becoming bigger ideas and more on trend consumer thoughts , all of those things , I think help us to be able to overcome some of the consumer dynamics that that you see in the marketplace .

Howard Friedman: If you think about geographic white space and the investments that we're doing in marketing and, you know, an innovation lineup that is, and capability is ramping and becoming bigger ideas and more on trend consumer thoughts, all of those things, I think, help us to be able to overcome some of the consumer dynamics that you see in the marketplace. If we were fully developed, we'd have to have a different response for. So I think that, you know, we feel good that the underlying consumer situation obviously is something that we're paying attention to, but it's not, it's not going to override the ability for us to grow. I do think that, you know, if you look at kind of where the consumer is right now, we, you know, we continue to see them shopping up and down the ladder and looking for value.

Speaker #1: If we were fully developed , we'd have to different response for . So I think that we feel good that the underlying consumer situation obviously is something that we're paying attention to , but it's not it's not going to override the ability for us to grow .

Speaker #1: I do think that if you look at kind of where the consumer is right now , you know , we continue to see them shopping up and down the ladder and looking for value .

Howard Friedman: You talked about the storms, and obviously, that did certainly drove some pantry loading. But, you know, the category was improving before then. And, you know, the consumer trends in the fourth quarter transitioning into the first quarter, a lot of those things have persisted, and we would expect that, you know, it'd be an environment where we need to be flexible as we go. We have offerings up and down the Price Ladder, from premium to opening price points. We have brands and packages that allow for the consumer to opt into our portfolio, and I feel like we're going to do—we'll do our, our job to make sure that consumers stay there and engage. You know, obviously, our marketing spend will also, will also help. I think in terms of the portfolio, I'll just offer you a couple of things.

Speaker #1: You talked about the storms and obviously that did certainly drove a some pantry . Loading . But you know , the category was improving before then .

Speaker #1: And now the consumer trends in the fourth quarter transitioning into the first quarter , a lot of those things have persisted , and we would expect that it'll be an environment where we need to be flexible as we go .

Speaker #1: We have offerings up and down . The price ladder from premium to opening price points . We have brands and packages that allow for the consumer to opt into our portfolio , and I feel like we're going to do we'll do our our job to make sure that consumers stay there and engage , you know , obviously our marketing spend will also will also help , I think , in terms of the portfolio , I just offer you a couple of things .

Speaker #1: I think first , when you think about protein and fiber and flavors and portion control , a lot of those , a lot of those behaviors are sort of transcendent .

Howard Friedman: I think first, when you think about protein and fiber and flavors and portion control, a lot of those behaviors are sort of transcendent. They've been in the industry for a very long time. I feel like if you look at our Power Four Brands, we identify them as our growth drivers because of their ability to meet the near-term consumer need, but also to be able to expand and stretch into other occasions. You see us expanding into protein this year, you know, 8 to 10 grams of protein for the puffs and pretzels. It'll be at an affordable price point that makes sense for that consumer and allows us to get into a fast-growing segment for consumers who are looking for it.

Speaker #1: They've been in the industry for a very long time , and I feel like if you look at our power for brands , we we identified them as our growth drivers because of their ability to meet the near-term consumer need , but also to be able to expand and stretch into other occasions .

Speaker #1: You see us expanding into protein . This year , you know , 8 to 10g of protein for the pops and pretzels . It'll be at an affordable price point that makes sense for that consumer and allows us to get into a fast growing segment for consumers who are looking for it .

Speaker #1: And as you think about Boulder Canyon , not only has it been able to stretch into incremental non seed oil , but also into subcategories .

Howard Friedman: And as you think about Boulder Canyon, not only has it been able to stretch into incremental non-seed oil, but also into subcategories. So I, you know, I do feel like we have the right portfolio, and we have a few hidden—we have a few gems, you know, in the rest of our targeted branded portfolio that have opportunities to grow as well, brands like Hawaiian. So I feel like our portfolio is pretty strong, and our ability to engage with consumers is, is there, and expect that you'll see more of that as we get into CAGNY.

Speaker #1: So , you know , I do feel like we have the right portfolio and we have a few hidden . We have a few gems .

Speaker #1: You know in the rest of our targeted branded portfolio that have opportunities to grow as well . Brands like Hawaiian . So I feel like our portfolio is pretty strong and our ability to engage with consumers is there .

Speaker #1: And expect that that you'll see more of that as we get into Cagny

Speaker #9: Super helpful . Can you just maybe comment on are you still seeing some depressed activity in some of the up and down the street retailers just because of , you know , the immigration issues and Ice raids and things like that ?

Nik Modi: Super helpful. Can you just maybe comment on, are you still seeing some of the depressed activity in some of the up and down the street retailers, just because of, you know, the immigration issues, ICE raids, and things like that?

Speaker #1: You know , I think what we saw in the fourth quarter was that our up and down the street business was improving , and certainly C-store was getting better , which is kind of the places where we would look .

Howard Friedman: You know, I think what we saw in the fourth quarter was that our up and down the street business was improving and certainly C-store was getting better, which is, you know, kind of the places where we would look. I think January, with the snowstorms, it gets a little bit harder for us to see, just given what happens when everybody stays home. But, you know, I do think that, you know, from our... As we look at our business, given that we do tend to overindex to food, to the larger classes of trade, it's a little bit harder for us to see a lot of noise there.

Speaker #1: I think January , with the snowstorms , it gets a little bit harder for us to see , just given what happens when everybody stays home .

Speaker #1: But , you know , I do think that , you know , as we look at our business , given that we do tend to overindex to to the larger classes of trade , it's a little bit harder for us to see a lot of noise there .

Speaker #7: Got it .

Nik Modi: Got it. Thanks so much.

Speaker #9: Thanks so much .

Speaker #1: Thank you

Howard Friedman: Thank you.

Speaker #4: Your final question comes from the line of John Baumgartner from Mizuho Securities . Your line is live .

Operator: Your final question comes from the line of John Baumgartner from Mizuho Securities. Your line is live.

Speaker #7: Good morning . Thanks for the question .

John Baumgartner: Good morning. Thanks for the question.

Speaker #1: Hey , John .

Howard Friedman: Hey, John.

John Baumgartner: Hey, I'd like to ask about some of the incremental consumption occasions as a number of your snacking peers are, you know, sort of ramping their presence during events and seasons to, I guess, augment the weakness in the everyday business. And, you know, Howard, you seem comfortable with distribution and shelf presence this year, but can you speak a bit to that competitive programming noise? The increased activity, does it require you to invest more in marketing or pricing? Does it require a different approach to innovation? Just, how do you sort of rise above or, I guess, at least capture your fair share in that heightened programming environment?

Speaker #7: Hey , I'd like to ask about some of the incremental consumption occasions as a number of your snacking peers are sort of ramping their presence during events and seasons to , I guess , augment the weakness in the everyday business .

Speaker #7: And Howard, you seem comfortable with distribution and shelf presence this year, but can you speak a bit to that competitive programming noise?

Speaker #7: The increased activity ? Does it require you to invest more in marketing or pricing ? Does it require a different approach to innovation ?

Speaker #7: Just you have you sort of rise above or I guess at least capture your fair share and then heightened programming environment

Speaker #1: Yeah , I appreciate the question Look , I think there are a couple of things I feel very pleased with what our marketers have been able to do over the last few years in terms of in terms of seasons , whether it is variety packs at Halloween on zaps or our whoops mix right now .

Howard Friedman: Yeah, I appreciate the question. Look, I think there are a couple of things. I feel very pleased with what our marketers have been able to do over the last few years in terms of seasons, whether it is variety packs at Halloween on Zapp's or our hoops mix right now. So we have always had a pretty strong lineup of limited time offers. It's something that we're very proud of, and several of them have then rotated into our core assortment, things like Mike's Hot Honey. So I think we have a pretty good lineup. I mean, we tend to pick our spots. We can't... You know, we're not gonna engage in every season where it doesn't where we don't really feel like we have something to say or something meaningful to offer.

Speaker #1: So we have always had a pretty strong lineup of limited time offers . It's something that we're very proud of , and several of them have then rotated into our core assortment things like Mike's Hot Honey .

Speaker #1: So I think we have a pretty good lineup . I mean , we tend to pick our spots . We can't , you know , we're not going to engage in every season where it doesn't , where we don't really feel like we have something to say or something meaningful to offer .

Speaker #1: So we do tend to pick our spots , and I think we'll continue to do that . I don't think it requires a different marketing or promotional strategy per se .

Howard Friedman: So we do tend to pick our spots, and I think we'll continue to do that. I don't think it requires a different marketing or promotional strategy per se. I think what it requires is for us to be able to continue to make sure that our products are present in those occasions, at the right price points, at the right points of disruption in the store, which our IO Partners do a great job of. So we'll invest there where we feel like we should. But I think the heightened environment, if it drives more consumer interest into the category over those occasions, we would expect that we would get our fair share of that activity as well.

Speaker #1: I think what it requires is for us to be able to continue to make sure that that our , our products are present in those occasions at the right price points , at the right points of disruption in the store , which are I o partners , do a great job of .

Speaker #1: So we'll invest there where we feel like we we should . But I think the heightened environment , if it drives more consumer interest into the category over those occasions , we would expect that we would get our fair share of that activity as well

Speaker #7: Okay . Thanks , Howard .

John Baumgartner: Thanks, Howard.

Speaker #1: Thanks , John

Howard Friedman: Thanks, John.

Operator: That concludes today's question and answer session. Thank you for joining today's conference call. You may disconnect.

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