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spk11: Thank you, and welcome to the Vitacoco Company fourth quarter and full year 2021 earnings results conference call. Today's call is being recorded. With us today are Mr. Mike Kerbin, co-chief executive officer and chairman, Martin Roper, co-chief executive officer, and Kevin Benmusa, chief financial officer of the Vitacoco Company. By now, everyone should have access to the company's fourth quarter earnings press release issued earlier today. This information is available on the investor relations section of the Vitacoco Company's website at investors.thevitacococompany.com. Also on the website is an accompanying presentation of our commercial and financial performance results. Certain comments made on this call include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release and supplementary earnings presentation providing reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are available on our website. And now, I will turn the call over to Mike, our Chairman and Co-Chief Executive Officer.
spk09: Thank you, John. Hello, everyone. We're super excited to share our fourth quarter and full year 2021 results and provide our outlook for fiscal year 2022. Before we start, I would just like to thank everyone in the organization for their efforts in 2021 to successfully take the Vitacookle company public, secure B Corp certification, and most impressively deliver record net sales results in the face of the most challenging supply chain environment we've ever experienced as a company. On today's call, I'll provide an overview of our business and reiterate the key reasons why I believe that the Vitacoco Company is uniquely positioned for long-term growth. I'll then turn the call over to our co-CEO, Martin Roper, who will briefly review our business performance, supply chain position, and key 2022 initiatives. And then our CFO, Kevin Ben-Moussa, will discuss our fourth quarter and full-year financial results in more detail and provide you with our fiscal year 2022 guidance. Our mission is to deliver our consumers great-tasting, functional beverages, while at the same time helping to uplift the communities in which we produce and sell our products. We believe that today's and future generations demand better products from better companies, and we endeavor to deliver that every day. This past year, we were designated as a certified B Corporation. Embedding purpose into our corporate culture, we hired a head of sustainability and social impacts, and plan to release our inaugural ESG report later this month. We've made great progress over the last two years, prioritizing growth and investing in our commercial capabilities to make the Vitagoco Company a leading healthy beverage company. Our primary focus is to compete in the growing premium natural beverage segment as consumers look for better for you products. We aim to do this by continuing to expand consumption of coconut water in our core markets while at the same time introducing and potentially acquiring new brands that can help us to further accelerate our growth in this space. Over the past 12 months, led by the Vitacoco brand, the growth of the coconut water category in North America accelerated significantly faster than beverages generally, as we brought in new consumers and increased consumption by existing drinkers. The strength of the coconut water category and the strength of the Vitacoco brand allowed us to achieve record net sales in fiscal year 2021, growing by 22% to $380 million. Vitacoco branded coconut water alone grew net sales by 39% in fiscal year 2021. Our investments in commercial capabilities have included expanding our national accounting, increasing category management capabilities, improving our sales and operational planning processes, and enhancing our product and brand innovation team to deliver on consumer needs and develop a pipeline of innovation. These investments, have helped grow our business and positioned us well to further scale through innovations and potential M&A. Martin will provide updates on our internal innovation initiatives shortly. But as it relates to M&A, we believe that there is a great opportunity to consolidate mid-sized, healthy, independent beverage brands in an effort to gain further scale and over time be a true competitor to the beverage industry giants. Looking forward, I believe we can continue to grow our business with great execution and the momentum of consumer interest that we're seeing across our current portfolio of brands in our core markets. I will reiterate, we are focused on growth and believe that once the global transportation cost pressures recede, we will emerge in a significantly stronger competitive and financial position with great consumer and retail relationships and a stronger margin structure to further accelerate our prospects and profits. We're proud to be a financially sound company that has many growth opportunities ahead. We have an industry-renowned sales team, an easily scalable asset-light global supply chain, access to capacity, and a pipeline of innovation to support our long-term growth. Additionally, we have an organization and an infrastructure that we believe can greatly help other independent healthy beverage brands scale at an accelerated pace, and this is why we are selectively exploring M&A opportunities. While we are pleased with everything we've accomplished thus far, we are determined not to be complacent, and we are working hard to accelerate our growth trajectory even further. We believe we're positioned to build one of the most exciting and dynamic high-growth consumer goods companies in the market. Now, it's my pleasure to transfer to our co-CEO, Martin Roper.
spk06: Thank you, Mike. I will briefly summarize what we are seeing in retail scan data and our household penetration tracking. and then link that back to our fourth quarter results. Please also refer to our supplementary earnings presentation listed on our website for detailed retail scan data. I will also discuss how our supply chain is performing with the numerous challenges facing global and domestic transportation and how we are reacting to those challenges. And then I will provide some color for the basis of our 2022 commercial outlook with a brief update on innovation. Most of my comments will focus on the U.S. market, which represents the majority of our business. We estimate, based on our shipments, tracked channel data, and import data, that the coconut water category value grew mid-teen percent in 2021. In the tracked channels, IRI Moolah convenience suggests that the coconut water category grew approximately 15 percent in dollars. and 7% in volume for the 52 weeks ending December 26, 2021. Importantly, within the track channel, branded growth was faster than private label, with private label dollar growth approximately 8%. VitaCocoa Coconut Water grew approximately 35% in dollars for the 52-week period, 32% in volume, and finished the full year at 49% share of category versus 42% for the prior year. In our household tracking data, which we source from numerator, we saw total coconut water category penetration growth from 21.7% of households in 2020 to 22.4% in 2021. Our Vitacoco branded penetration outpaced the category and grew from 8.9% of households in 2020 to 10.7% in 2021. Within our households, we saw a 22% increase in dollars purchased per household versus prior year. We also saw faster increases in vitacoco-branded penetration in urban millennial and Gen Z households, with penetration growing from 16.1% in 2020 to 20.1% in 2021, while coconut water penetration grew from 38.1% to 39%. The strength of these trends with urban millennial and Gen Z households is, we believe, an encouraging indicator for the future growth of our brand and the coconut water category. As we shared in RS1, we believe our U.S. household penetration over-indexes with Asian American, Hispanic, and black households, so we should also benefit from the expected favorable demographic trends of these households. We are also pleased to say that the strong retail trends have continued into 2022 in both the Americas and in Europe. For the eight weeks through February 20th, we see coconut water category value growth of 19% for IRI MULOC in the U.S., with VitaCoco coconut water value growth of 37% and VitaCoco category market share of 51% in value. I also want to share that in the United Kingdom, in IRI track channels for chilled coconut water, For the 52 weeks ended January 1st, 2022, we grew Vitacoco retail sales 26.3%, while the category grew 14.4%, and we increased our share from 69% to 76.5%. In France, in IRI track channels in coconut water, for the 52 weeks ending 16th January, 2022, Vitacoco maintained its number one market share position at 39%. In our other Western European markets where we have access to consolidated market data, we grew and maintained our number one branded share position. Moving to the supply chain, we believe that we have one of the most efficient and unique global supply chains for coconut water, and this provides a competitive advantage and would be very hard to replicate and is a meaningful barrier to entry. Our geographically diversified model creates leverage to effectively manage total delivery costs and to shift volume between suppliers and countries in reaction to demand or supply chain challenges. This was demonstrated by a flexible reaction to the challenges of the last two years and allowed us to keep up with the accelerating growth we experienced in 2021, even with the supply chain disruptions in transportation. Our supply chain has operated reasonably smoothly, with the primary exception being increased transit times due to port delays, more limited availability of ocean shipping containers on most routes, And starting in the second quarter of 2021, greatly increased costs of ocean freight with additional inflation and other logistics costs, such as domestic transportation, demurrage, and port fees appearing later in the year. In the second half of 2021, we faced further challenges with availability and pricing of containers, especially into the US East Coast and Europe. Even as we built inventory, our inventory flow to major markets was not ideal. and our inventory is not yet where we would like it to be on a specific SKU coast perspective. This created inefficiencies in domestic logistics, such as transshipping between U.S. coasts and inefficient utilization of each outbound load, which coupled with the increased demurrage in port surcharges and the inflation in ocean shipping rates, increased our transportation costs materially in the fourth quarter. The cost pressures have continued into 2022, particularly our ability to source containers to the east coast of the U.S. and to Europe at acceptable costs, and our service levels continue to be impacted. Our inventory significantly grew year over year due to these cost increases, the increased volume, and to the increase in transit times. At year end, our inventory in transit on ships in port or awaiting shipping containers in source country was approximately half of our total inventory. In 2022, we intend to seek more of a balance between pursuing growth, service levels, and acceptable logistics costs, while preserving our market share and profitability. To help offset the gross margin pressures from transportation costs, we're looking to implement additional pricing actions, as well as potentially right-sizing our investment levels behind STNA across all projects. We're also looking at other operational efficiencies, such as portfolio SKU rationalization to help reduce complexity, and associated costs, and changes to our minimum order quantities and service levels to increase transportation efficiencies. Importantly, the majority of inflationary pressures we are seeing to date are logistical costs that we think are outliers relative to historical norms. And our purchase finished goods costs at source have shown to date only normal annual increases. Our outlook is based on our best estimate of all these factors, but there is significant uncertainty on how the transportation markets will evolve this year, and it is the most challenging logistical market the company has seen. We have been able to secure acceptable ocean freight rates for a portion of our volume, but are still in the middle of contract season speaking to all major shipping lines. The additional pricing actions we plan include frontline price increases and reduction of promotional depth, length, and frequency above the levels we had initially contemplated during our 2022 planning season. Based on the pricing actions taken in 2021, we believe price elasticity may currently be lower than what we've seen historically. As we take more price, we intend to adjust our approach as we learn how consumers, competitors, and retailers react. We intend to implement the next round of price actions by the end of the first half of 2022. Based on our desire for long-term growth at acceptable profitability, we are focusing on top-line expansion and brand share gain at acceptable margins with the goal of returning our margins closer to historical levels once the global transportation and logistics situation improves. Before passing to Kevin, I wanted to cover some key initiatives to drive growth in 2022 and to create long-term shareholder value and give a short summary on what we are seeing on our emerging brand initiatives. Mike talked earlier that we are pleased with the growth of the coconut water category, our share gains within the category, and with the household penetration metrics we are seeing. To maintain our momentum with Vita Coco in America in 2022, we are adding multi-packs, adding a canned offering targeted at convenience channels, expanding our farmers' organic offering, and requesting more shelf space from retailers to support the healthy category trends and our brand velocity. While some of these discussions with retailers are still ongoing, based on our tracker, we are confident in 25,000 net new points of distribution in ROI MULOC track channels. although final results could vary based on execution, inventory availability, and retailers' reactions to our pricing plans. In context, if we secure these 25,000 net new points of distribution, it will represent more than 10% growth in our total American distribution points and track channels. Late in 2021, we started selling private label product to one of the key coconut water private label retailers in the Americas. This is the first time we have supplied this retailer, and we hope to build a strong partnership with them to build their coconut water category, where we currently do not have branded distribution. We intend to compete in private label requests for proposals where it makes sense as a way of building retailer relationships and potentially introducing our branded products. Our medium-term growth outlook is largely based on our expectations for growth of Vitacoco coconut water in our key markets. But as we have stated before, getting a breakout win of our emerging brands initiatives would significantly grow our business. So these are important areas for us to test and learn and find solutions to create long-term value. I will now briefly comment on these initiatives. As these initiatives collectively account for less than 3% of our 2021 America sales and are likely to contribute meaningful sales until 2023 at the earliest, I will be brief, and we will update you when we see promising developments. Vitacoco Coconut Milk is a shelf-stable dairy alternative that performed well in a couple of regions of club this year, and we received distribution at Walmart in late 2021. Initial scans are promising, with Vitacoco Coconut Milk performing better than the key coconut milk competitor, and we are hopeful that if this continues, we might convert to full distribution, and this win could lead to opportunities with other retailers. Late 2021, we launched RUNA in 16-ounce cans with a positive reaction in independent convenience stores. We have focused on San Diego and Denver to prove the concept and believe that RUNA could benefit from recent competitive beverage instructions who are also using the Guayusa leaf. It is too early to tell if the repositioning of the RUNA liquid and package will unlock this interesting opportunity in natural energy drinks, but the local teams are excited, which is the first step. Also late in 2021, we launched PowerLift in two test markets to follow on from our online test started earlier in the year. PowerLift is our protein-infused fitness drink and is receiving nice commentary online from those who've sampled it. Like Runo, we see 2022 as a test year to confirm that the proposition works, to understand how to improve pool and messaging, and if successful, to roll out more aggressively in 2023. Our initial test of Vitacoca hydration mix, a coconut water powder beverage mix, was through online platforms in mid-2021. After the first test, we addressed consumers' requests for improved packaging and product and relaunched late December to positive responses. We have interest from a few retailers to support retail distribution and hope to learn more from these retail tests this year to help us guide our product activation and development and the level of investment and prioritization for 2023. All of these initiatives are captured within our other product category and are not currently material to our financial performance. I'm excited because we're learning about new beverage segments that we believe are attractive and where we can compete with better for you offerings. And if successful, will be meaningfully beneficial to our business in the coming years. Now I will turn the call over to Kevin, who will discuss our financial results and full year outlook in more detail. Thanks, Martin.
spk08: And hello, everyone. I will provide you with some details on the fourth quarter and full year 2021 financial results. I will then discuss our preliminary outlook for the 2022 fiscal year. Starting with our fourth quarter results, net sales were $87 million, an increase of $17 million, or 25%, compared to Q4 2020. The increase was driven by continued robust consumer demand for Vatacoco Coconut Water, whose net sales were up 61%, partly offset by net sales decreases for our private label and other product categories over the same period. Within the Americas, Vitacoco coconut water grew 64% to $56 million for the fourth quarter of 2021, as compared to the same period last year. The increase was primarily driven by higher case equivalent volume from continued strong consumer demand combined with positive price mix benefits. private label decreased $7 million to $14 million for the fourth quarter, partly driven by timing associated with our revenue recognition accounting practice. In accordance with ANC 606 guidance, our accounting practice for private label is to recognize the net sales for the production of finished goods against open purchase orders, which may occur prior to any shipment. As mentioned last quarter, the timing of receipt of private label purchase orders is unpredictable and could affect our reported private label results quarter over quarter. International net sales grew 21% to 14 million in Q4 2021, primarily driven by higher case equivalent volume in Europe and China. Within this segment, Vatacoco Coconut Water grew 42%, while private label grew 40%. The international segment net sales growth also benefited from a positive FX impact of approximately two percentage points. Consolidated gross profit for the fourth quarter was $22 million, driven by strong case equivalent volume growth and price mix benefits, mostly from the branded business, entirely offset by significantly higher transportation costs versus last year. As Martin mentioned earlier, While our coconut water supply chain continues to operate reasonably well, the transportation costs associated with meeting the demand, including both ocean freight and domestic logistics, were higher than expected for the fourth quarter. As a result, our consolidated gross profit margin in Q4 2021 contracted 750 basis points to 25%. Moving on to operating expenses, Our SG&E in the fourth quarter increased $8 million to $27 million versus the same period last year. The increase was largely due to higher marketing expenses of $3 million, as well as the impact of a one-off senior management team multi-year bonus of approximately $3 million. Finally, net loss attributable to shareholders was $3 million, or $0.06 provided each year for the fourth quarter of 2021. compared to net income of 17 million, or 29 cents, for diluted share in the prior year period. The year-over-year decrease was primarily driven by the impact of the 16 million non-cash contingent liability relief related to our RUDA brand, which occurred in the fourth quarter of 2020, combined with a decrease in gross profit and increase in SGM expenses, as I just described. Net loss attributable to shareholders in fourth quarter also included a positive impact of approximately $1 million related to derivative instruments and currency gains, compared to a positive impact of approximately $3 million in the same period last year. As mentioned last quarter, I would like to highlight again here that we did not designate our derivative instruments as fair value or cash flow hedge for hedge accounting purposes, and therefore recognize our P&L unrealized non-cash gains or losses in the quarter depending on currency fluctuations. Since we cannot accurately predict this situation, we will not provide FX-related guidance, but advise that any material currency fluctuations may positively or negatively affect our reported EPS in the quarter. Adjusted EBITDA in the fourth quarter was approximately $1 million versus $5 million in the same period last year. The year-over-year decrease was primarily driven by lower gross profits combined with an increase in SG&A expenses. Now we will provide a quick highlight of our full-year 2021 performance results. For the 12 months ended December 31, 2021, net sales grew 22% to $380 million, which exceeded our full-year guidance range of 19% to 21%. Our American segment grew 23% to $324 million, while our international segment grew 17% to $56 million. Viacoco coconut water was the largest contributor of our growth, up 39% across both geographic segments, while private label declined 1%. Gross profit for the full year 2021 increased by 8 million to 113 million, with gross profit margin being 30% in 2021 compared to 34% in the full year 2020. Adjusted EBITDA for the year-end of 2021 was 37 million compared to 35 million in 2020, and included approximately $7 million of adjustments, mostly related to non-recurring costs incurred in connection with our IPO, as well as a multi-year management incentive program. I would like to emphasize once again the significance of our total transportation costs, which affected our gross profit and caused the approximate 390 basis points margin decline we saw last year. As you can see in the presentation we posted on our IR website this morning, we have experienced persistent cost pressure quarter over quarter last year, with cost of goods sold per case equivalent being up 15% year over year in the fourth quarter alone, compared to 10% in Q3 2021 and 8% in Q2 2021. Our total spend on transportation in 2021 was approximately $88 million, or 33% of our total COG, compared to $47 million, or 23% in 2020. On a rate basis, Our COGS per case equivalent for transportation increased 75 cents in 2021 versus prior year, representing an estimated impact of 32 million on our gross profit and approximately 840 basis points on the gross profit margin. As Martin mentioned earlier, we managed to partially mitigate some of that margin impact, but were not able to fully cover it. When transportation costs returned to a more normal historical level, we anticipate significant gross profit margin expansion. Turning to our balance sheet and cash flow. As of December 31st, 2021, we had total cash on hand of $29 million and zero debt outstanding compared to $72 million and $25 million of cash in debt, respectively, as of December 31st, 2020. Recall that we used the $30 million net proceeds from our IPO to repay our spending term loan during the fourth quarter, which resulted in a stronger net cash position and further solidified our balance sheet. Net cash used in operating activities was $16 million for the 12 months ended December 31st, 2021, compared to a source of cash of $33 million during the prior full year. The favorable change in our operating assets and liabilities was primarily driven by working capital uses as we build inventories to ensure our ability to meet increased demand. Inventories as of December 31, 2021, were $75 million compared to $32 million in the prior year, though approximately half of it was in transit, with our network still very much unbalanced. Net cash used in financing activity was $27 million for the 12 months ended, December 31, 2021, compared to a source of cash of $2 million during the prior full year, 2021. The change in cash this year reflected the net proceeds from our IPO of $30 million and the settlement prior to the IPO of a loan to one of our co-CEOs of $18 million, offset by $25 million of debt repayment and a $50 million share buyback we executed in the first quarter of 2021. Okay, now moving on to our full year guidance. We expect fiscal year 2022 net sales to be between $440 and $455 million representing a growth in the range of 16 to 20% versus 2021, and forecast non-GAAP adjusted EBITDA to be between 32 and 36 million. Please keep in mind that a lot of volatility and uncertainties remain in the current operating environment, global economies, and geopolitical landscape, which could affect this outlook and our future results. Embedded in our guidance are the following assumptions as you think through your model. For net sales, we expect continued strong case equivalent volume growth in 2022 with the benefit of higher net pricing, along with some mixed benefits from the growth of branded businesses outpacing private label in the Americas. In terms of adjusted EBITDA, we expect continued gross profit margin pressure driven by cost of goods sold per case equivalent inflation running in the mid to high single digit versus our 2021 average, combined with higher year-over-year operating expenses from increased personal expense, and cost of being a public company. And with that, I'd like to turn the call back to Mike for his closing remarks.
spk09: Thank you, everyone, on this call for your continued interest in the Vita Global Company. As I'm sure you can tell, we're very pleased with our fourth quarter and full year results and believe they speak to the increasing demand for our products and healthier beverages in general. We will continue to balance our goal of sustainably sourcing and providing our consumers with products that improve the health, and vitality of their daily lives, while also delivering significant value to our shareholders. The total global addressable market presents a significant opportunity for our company, and we believe that natural and plant-based beverages are only going to increase in demand. Thanks to our many years of preparation, we believe that we are well positioned to leverage our infrastructure to meet that growing demand. We look forward to speaking with you again on our first quarter earnings call in May, and now I'll hand it over to the operator for any questions.
spk01: Thank you. To ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key. Our first question comes from Bonnie Herzog with Goldman Sachs. Your line is open.
spk04: All right. Thank you. Good morning, everyone. Good morning, Bonnie. Hi. I actually have – I guess my first question is on pricing. I guess I was hoping – you could give us a sense of the magnitude of, you know, the further price increases and the reduced promos you plan to implement that you mentioned. You know, should we assume, you know, low single-digit net price realization or could it be higher? And then in thinking about your business and some of the changes you're making or innovation, you know, what about opportunities regarding, you know, changes to your price pack architecture? You know, how – Could some of those, you know, changes, I guess, impact your price mix and then maybe ultimately impact your margin?
spk06: Yeah, Bonnie, I'll take that. And let me just start with a little bit of, you know, history here. When we first saw the inflationary increases sort of last May, we decided to delay, you know, sort of pricing promotional activity from the summer because we thought it was temporary, right? And... you know, those price promotional activities moved to Q4, where we obviously saw some benefit from that activity in Q4 on a top line basis. But that was mainly our action last year on pricing was delaying promotion, reducing promotional cadence. I think it became clear in sort of September that we needed to do more, so we put some planned pricing increases in for this year. And then in November, it became clear that we had to do even more. And so we went back in December, January, and said, okay, what else can we do? And I think by the end of this year, we'll have broad frontline price increases across the board or channels. They're phasing in because of how the decision-making was made. I think most of it will be effective by the end of Q2. And it will show up, I think, you know, your assumption of, you know, low single digits is right. There's some mixed effects. So the pricing is probably a little higher than that, but the mixed effects within our business mean that it won't show up in our P&L quite as high as that. But you'll see it, you know, coming, you know, through by the second half of the year and obviously set us up well for 23. I think if these inflationary pressures continue and obviously it surprised us that they've lasted this long and also that they've deteriorated. If these continue, then we'll probably look for more pricing even above what we've planned in Q4 or for next year. And so that's how we're thinking about it. And Buddy, the second part of your question was I think about a pack mix and stuff. So within our P&L, we have this mix between private label and branded and Some other things that make it hard as it comes through the P&L, I think on the pack mix, particularly on the branded side, we're trying to move all the pack sizes and we're trying to understand the promotional benefit of promoting different pack sizes. And for us, four packs are relatively new. We've had 12 packs and 24 counts before, but four packs in major retail are relatively new. So that's an area we're going to be looking at. to see if we can understand how to revenue optimize.
spk04: Okay, thanks for that. And then maybe a second question from me, if I may, just on M&A, which continues to sound like a priority. So I'd love to hear a little bit more color on the types of businesses you're looking at and how much of an overlap with your business you need to see to consider a brand or business. And then Could you give us a sense of, you know, maybe the financial metrics you're looking for and, you know, maybe ultimately what the hurdle rates you need to see for you to consider an acquisition?
spk09: Yeah. Hey, Bonnie. I think, you know, we've made it very clear that we think we can continue to really grow this business with our core business, with Coconut Water, with our flagship brand, Vitacoco, as we've continued to prove to do. However, you know, we think that we've got this great opportunity over the long term to create a more broad, diversified, healthy beverage platform and really accelerate growth through not only the core but through both innovation and M&A. And as we look at M&A and as we think about M&A, there's a lot of healthy beverage brands that are hitting a ceiling. They're lacking route to market. They're lacking industry relationships and size and scale to really scale to the next level. And these are companies that are either working really well in specific channels, great velocity in certain regions, but haven't been able to really expand because they don't have the routes to market. These are the types of brands that we're looking at. And we're continuing to focus on functional. We really believe that that's where the opportunity lies. We're thinking super hydration, which is where Vitacoco sits, is a very interesting space and something that we're actively looking at. Energy is another very interesting space that continues to fragment and grow in all different ways. So these are different areas that we're looking, and we really believe, I wish I had something to discuss today, but we really believe there's an opportunity through both M&A and innovation to further grow the business over the years and be a true competitor to the big guys in the beverage industry.
spk08: And Bonnie, if I may build on that, just on your question earlier, I think we're looking at brands that obviously from a financial point of view would be accretive, right, as we think about gross margin and also where we see opportunities for synergies, right, both from a top line as we leverage our system and also leveraging our infrastructure to deliver cost synergies.
spk04: Okay, that makes sense. Thank you both. I'll get back in queue. Thanks.
spk08: Thanks, Bonnie. Thank you.
spk01: Thank you. And our next question comes from Laurent Grande with Guggenheim. Your line is open.
spk07: Hey, good morning, Mike, Martin, and Kevin. Hello. Hey, and congrats for convening the year so strongly. Maybe just, I mean, to start with the photo on pricing, that would be the first time you would increase price for quite a while. I'd like to understand what kind of price elasticity you were envisaging.
spk06: Sure, I think historically our elasticity modeling of the available data, which was sort of based on a price promotional cadence. It wasn't really based on increasing pricing. Suggested an elasticity around two. I think if you did the model to yourself, that's what you'd see. I think last summer we thought the elasticity was lower as we pulled the promotional pricing back. We didn't see the impacts that we expected. So I think we're currently expecting a lower LSD than that. Obviously, when we're moving price, it's in a competitive environment as to what's going on relative to the competitive products. And particularly in coconut water, private label took some pricing in the second half of last year. And other brands have started to take pricing because obviously they are under the same pressures we are. So I don't think we have any, you know, data as to how the category will react to an overall, you know, change in pricing structure. So we're sort of in uncharted waters here. And so we're trying to take it incrementally in a series of ways, which is why we, you know, I just talked in the answer to Bonnie that there's a series of pricing waves coming, and we will be monitoring, you know, retailer reaction, consumer reaction, and competitor reaction to understand what is right for our business. But I think with the overarching sort of, you know, direction which we tried to communicate in our comments, that I think last year we thought these inflationary impacts were temporary and short and therefore pursue growth. And this year we are thinking they're going to last for most of the year. At least we haven't seen signs of, you know, anything to suggest otherwise. And therefore, we need to, you know, responsibly take pricing to ensure that our business model stays together and, you know, maybe a more of a balanced approach of growth and profit than last year where it was definitely growth.
spk07: Thanks. Thanks. And really then my real questions about guidance. So supplying seems to be a bit more elevated than expected with marginals lower. That's probably not unexpected. I'd just like you to maybe provide a bit more granularity on the top-line expansion, especially I'd like to understand the dynamics between branding and private level, as there is a nice element of margin mix there. And also maybe just a detail, I'd like to understand what level of ocean freight price you are plugging now for fiscal year 2022, the levels you experience in that. in the first quarter or in the higher? I'd like to understand these. Thank you.
spk06: Yeah. So I think in our sort of, you know, modeling and planning for 22, we envisage the brand Vitacoco coconut water will continue to grow, you know, faster than the category and faster than our private label business. And so I think we, you know, anticipate that for some margin benefit from that. On the private label side, there are some puts and takes. We have, as I mentioned, a new private label customer that we're excited about because they're one of the large ones in the U.S., and that will be helpful. And more importantly, we don't have branded presence there, so we're hopeful that that relationship with that buyer could result in branded presence, which would be a big win. But I think generally we think branded will continue to grow faster than private label, right? And I think to your second point, I'm going to pass to Kevin, and then I'll comment if... Yeah, yeah, I think that what Martin is right, Laurent, right?
spk08: So if you think about the mix overall, so really on a concentrated basis, we will see the growth really coming from case equivalent volume, really driven by coconut water, right, in the Americas. As you think about price mix, for the Americas segment, I would tell you that we're planning for, you know, low single-digit price mix lift. However, keep in mind we do anticipate some negative price mix effect as we think about our international segment, and mostly driven by private label, as Martin mentioned earlier, but also on the European side where we had significant reduction of promo activity last year. So, you know, that's how we view the top line. And I think to your question on cost, right, I think what we're seeing is, you know, still very much pressure and continued pressure as we've seen in Q4.
spk05: we think that the cost per se inflation will still run in a mid-single digit.
spk08: We think the next quarter Q1, Q2 will still be very much challenged by transportation overall, but should probably see some easing of that as the year unfolds and on the back end of the year. So that at least helps you think through the sequencing of the year.
spk09: I think on that point, it's important to realize that Growth is our objective, right? I think we're going to balance with profitability. However, we're not going to take price to overcompensate for all of the cost pressures that we're seeing on ocean freight and logistics in general. We've got a lot of new distribution opportunity this year that Martin spoke about earlier, and our focus will be to drive more consumers into the category, into the brand, and continue to get our current consumers drinking more as they've been doing. So I think price will play a role, but we're not going to use price to make up for all of the cost pressures, obviously. Growth will be the objective for this year.
spk06: And just, you know, another build on, I think in the Q4, you'll obviously see, you know, we were surprised by the cost pressures, right? I think it's important that some of those were potentially, you know, self-inflicted by the imbalance we had in inventory east to west. Now, that, you know, still continues, but that created for us inefficiencies in outbound transportation and also sort of transshipping from coast to coast. So, you know, I think as we think about this year, we think those cost pressures are going to continue Q1, Q2. They may subside a little bit in Q3, Q4, but the comparisons to last year are a lot easier. So I think you'll just see a slowing of the growth rate in cost of goods. We're currently in the middle of ocean freight discussions for our sort of contracts, and it's really hard to know where those are going to end up. We've sort of chosen to sort of wait a little bit to see. So we're currently, you know, our contracts sort of run through April for most of our business, and we're expecting to enter into, you know, contracts probably in April, and we'll have a much better feel for this when we talk to you in Q1, but our outlook basically, you know, contemplates what we think is going to happen, and, you know, there's a pretty wide range in our earnings outlook because of, obviously, the uncertainty, and so Certainly, this is the most crazy time I've run a business in, and we're trying to provide good guidance to everybody, recognizing there's a lot of uncertainty.
spk07: Thank you, guys. Thank you.
spk06: Thanks, all.
spk01: Thank you. Our next question comes from Carmel Gural with Credit Suisse. Your line is open.
spk10: Hi. Thank you. Good morning, everybody. I know it's extremely difficult to provide guidance in this environment. My question, or at least what I would love to try to understand, is how you're balancing the condition of the consumer and the fact that, you know, the story at the moment is about, you know, increasing household penetration and such at a time where the consumer seems to have been fine but might all of a sudden change and inflation might become a major issue. So how are you just thinking about how you invest, how much you're spending, how much you price in that context that, you know, the long-term story is really about just bringing more people into the category?
spk06: I think, as Mike mentioned, we're trying to find a balance between growth and, you know, ensuring the profitability and the cash flow of the business. We're obviously learning more every month is different. And I suppose, you know, with that, we're trying to set ourselves up to be flexible. So, You know, as we talked about pricing, we're layering it in, and if we see something that we don't like, we can, you know, either accelerate it or pull back or change, you know, price promotional patterns. And I think, you know, on the price promotional side, a lot of, you know, some of the bigger, you know, price promotional decisions are accompanied by very significant inventory movements, and obviously we're making those based on what we believe we can deliver so that we're trying to avoid under-delivering to retailers. What I would say is that our approach last year of prioritizing growth and service, even at some cost hit, appears to have generated goodwill with retailers and appears to, one, be resulting in favorable set decisions and even requests for you know, promotions this summer. If you guys did it last year, can you do it again? Or what can you do? And so, you know, we feel that a balance is right, but we also think given, you know, and Kevin described how big these cost impacts are to our business model, we think it's appropriate and prudent to try and ensure we, you know, achieve some, you know, levels of profitability.
spk10: Okay, got it. And on private label, Do you have a sense of your ability to fulfill versus the competition? You mentioned in your prepared remarks you won some new deals and you'll continue to bid for new deals, but do you have just a sense on your ability to supply versus who you compete with?
spk06: So I think we believe, and maybe it's pounding our chest, that we have one of the most unique, flexible companies sort of access to coconut water in the industry. The customer that we gained, again, is a result of supply issues from a third party. That business, I'm not sure, had been available to us before, but it became available. And these decisions don't happen overnight, right? So these are conversations that started maybe a year ago and resulted in, I think, our first shipments at the end of last year. So, yes, I think other people are challenged. I think certain routes are challenged, right? So I think if you look at ocean freight routes from different markets, some of them have quadrupled or more in the spot rate, and some have only doubled. And one of our benefits of our diversified sourcing from Brazil and the Philippines and Sri Lanka is we have some ability to flex routes the routes that we're using, whether it's coming to the Europe or to the U.S., et cetera. So I think we're just set up perhaps better to deal with some of these issues. So I do think we have an advantage, both on branded and private label, frankly. And I think that's coming through in how the retailers are reacting. I would say that it's... On one particular month, the routes from, for instance, Sri Lanka to the UK look incredibly attractive, and we'll make plans to shift production accordingly, which obviously doesn't happen overnight because you have to have inventory for packaging in the right place. Three months later, that could have completely changed. That's the situation we're dealing with, and we're trying to manage that as best we can.
spk10: Okay, great. Thank you.
spk01: Thank you. Our next question comes from Chris Carey with Wells Fargo Securities. Your line is open.
spk05: Hi. Good morning, everyone. Hey, Chris. I just wanted to understand the outlook for, you know, COG for case equivalent running in the mid to high single-digit range. Unless my math is wrong, it would suggest the dollar rate is going to be coming down relative to the Q4 exit rate. I hear you on front half versus back half, but how much visibility do you have on that back half? Is that what the guide is predicated on? Are there other mitigating factors? Do things get better sequentially from the Q4 that you're banking on? Just trying to understand you know, just underlying this mid-to-high single-digit outlook and why maybe it's not going to be a bit higher. And then, you know, just balancing that is, you know, say cost inflation does run ahead of your expectations theoretically, what are the sorts of things that you're looking at as levers, whether that's pricing, reduced promotions, SG&A levers, or would you maintain, you know, this kind of relentless focus on penetration and top line? Thanks so much.
spk08: Hi, Chris, and I can start here. So, look, in regards to the COGS outlook, right, I think right now what we're giving is, based on what we're seeing, the mid to high single digit overall right on the year, we probably will see, you know, the trend that we're seeing in Q4, continuing in Q1 and Q2, with some easing that we expect on the back half of the year. And that's what drives, and that's based on everything we know as of today, right? Obviously, there's a lot of volatility out there and uncertainties, so that's really the range we think we're comfortable giving and what we think we can achieve at this point. And we'll, of course, monitor that very closely and, of course, correct as needed. As you think about the overall P&L look, I mean, there are very different ways to think about protecting profit, right? And that's what we talked about. So number one is pricing, which we talked about, and we'll do that, and we'll monitor closely to see what incremental action we could take to offset some of the incremental pressure if they come higher than anticipated. We're also watching very closely our SG&A. I mean, obviously, we'll have a bit more cost this year, as mentioned earlier, because we need to invest, especially as we're becoming now a public company, so we have those higher costs that will incur this year, so we should expect some of that as well, I do think, through your model. And we really look at all the levers and all the lines we have in the P&L to be as efficient as can be to offset all the pressure we have.
spk09: Sorry, I don't want to beat a dead horse, but we are not a mature business from an EBITDA standpoint. We're a growth business. There aren't many brands like Vitacoco Coconut Water, which grew 39% last year and 62% in the fourth quarter alone. That's what we're focused on. That's the opportunity. Taking that growth and using that to expand distribution and continue to drive growth and accelerate growth, that's our focus right now. We think of ourselves as a growth business. EBITDA will come as cost pressures subside, and we will eventually, over time... become a more mature business from an EBITDA standpoint. But right now, it's growth, growth, growth.
spk08: Yeah, if I can add one last thing here, Chris, on the back of my mind, I would say, remember, if you look at what happened last year, we absorbed on a rate basis over $30 million of extra costs related to transportation. As you think about ocean freight and domestic logistics, we still managed to deliver $37 million of adjusted EBITDA. So it is still a very much profitable business, and that gives you also a sense that when those you know, pressures recede, which we believe it eventually recedes to more historical normal levels, we should see significant margin expansion at that time, right? So that joins a little bit of what Mike was just saying. So it's really about growth, balancing the profit we can in the near term, managing this pressure, and then really get back into much more margins over time.
spk05: Yeah. That's very helpful. Then just one quick follow-up. There was a helpful disclosure in the slides this morning just around finished goods versus transportation. Can you maybe just help frame, and I know you've commented on it throughout the call, just around kind of the components of COGS per case equivalent through 2022? Is it predominantly transportation and logistics, or are there specific commodities that we should also be looking out for? Thanks so much.
spk08: Yeah, absolutely, Chris. So here, as you can see on the slide, slide 11 that we posted this morning, that gives you the breakdown between finished goods and transportation. We don't disclose, Chris, the exact breakout within transportation, but you can think of it as being just the ocean freight and domestic logistics, and domestic logistics being the higher part. But what I would tell you, though, just to give you some reference points, is last year in 2020, If you think about the COGS mix, right, ocean freight were probably running in mid to high single digits of the mix of cost of goods sold. Now, fast forward 20, 21 years later, this has more than doubled, right? So that gives you a sense of the importance of ocean freight within the COGS mix, and that will also give you the approximate impact, right? As you think, as we quoted the 32 million, a lot of that was really driven by ocean freight.
spk06: Chris, your question on cost of goods, when you think about the major components, we're buying coconut water from coconut processing facilities where it's somewhat a waste product, a byproduct. We're buying tetra packaging and we're buying co-packing. I think we said in our prepared remarks that the inflation that we're seeing there is pretty normal. We have always tried to drive efficiencies through our engineering team out of Singapore to hold cost of goods as flat as we can. And we're not really seeing commodity pressures on that end. And I think Mike can comment, but historically coconut water has not been in any way linked to commodity pricing inflation like in the oil market, et cetera. We don't expect that, and we think that's pretty under control. The issues that we face are ocean freight and domestic transportation and port charge issues. Just swinging back to your previous question around our guidance for the year, I would point out that the Q4 cost increases were, as we said, extreme and maybe a little bit self-inflicted, and so as you think about it, You know, it took us a while to realize that. So, yeah, that might continue into Q1, but we're putting things in place to offset that. And also a little bit driven by we built inventory, and we basically said let's get inventory on the water given the uncertainty around Omicron and everything else, right? And some of that was done at spot rates that also drives that. So I think when you think about our guidance, if you take those factors into account, you'll probably be able to build your model.
spk05: That's very helpful. Thank you all.
spk08: Thanks, Chris.
spk01: Thank you. Our next question comes from Michael Ladary with Piper Sandler. Your line is open.
spk02: Thank you. Good morning. Hey, Michael. Hey, Mike. I just want to make sure I understand some of the domestic freight issues a little bit better. And I guess I know you've indicated in the past that you have inbound torts on both coasts. And so what's maybe driving the imbalance and, you know, some of the factors there? Is there disruptions to production in, I guess, maybe Brazil or something that would more naturally feed the East Coast? Or what's behind, you know, kind of this – where did this problem come from?
spk06: Yeah, so, you know, one, I think on the production side, everything has been remarkably stable, and the bigger issue has been getting – the production on the water and starting. So if you go back last summer, right, everyone was reading about, you know, Long Beach and port delays. And frankly, it was easier for us to get stuff to the East Coast and the West Coast. I think, you know, the competitive dynamics, people started moving stuff to the East Coast, the pricing started going up. And while you can get containers in, some of the spot rates were just pretty crazy. And I think that has caused the imbalance. It's more the spot rates and maybe the ships skipping ports type issues than a production problem. So it's ocean freight type issues. And then once you get a little bit of an inventory imbalance going on, you end up either having to tranship at least on the transshipping from east to west and west to east, that has drastically increased. And I don't know whether these are the right numbers, but the order of magnitude from two grand on rail for east-west, west-east type transportation to eight grand and from five-day, six-day service to two weeks, it's just gone completely crazy. So when we have an imbalance and we have a customer that we're trying to service, where maybe we'll eat those costs and try and service that customer. And so that drives domestic logistics up. We also, starting late Q3, started to see port charges. I think you may have read that they started adding charges to the ports because the ports were blocked with containers and they started trying to penalize the shippers. But frankly, we wanted the product. It wasn't like we didn't want the product. You just couldn't get it out of the ports. And so you've got demurrage charges and port charges that are adding on to this that also accelerated during the quarter, partially because they were imposed and started to be enforced, right? So those are sort of the cost pressures. On the domestic transportation side, we have obviously seen increases, not so much fuel-based, because the fuel piece is a minor piece, but more just availability and securing. And if our inventories are not in balance, we then end up with inefficient truckloads, right? Instead of shipping at, let's say, a 65% efficiency, you end up shipping at a 50% efficiency, and that just has this knock-on effect. And so, again, in our comments, we talked about changing service levels. I think during the pandemic, and we wanted to be a really good partner to our distributors and our retailers, and we did things that perhaps you wouldn't do in a normal environment. And given these cost pressures, we're looking at all of that and adjusting service levels and adjusting our willingness to, you know, ship, you know, half a trailer load from one coast to a customer and try and combine it with other things to get it to full. So we're trying to do all of that efficiency stuff, and that sort of relates to my comment about Q4 being, you know, some self-inflicted, some just surprised, and it was like, okay, we've got to do some things differently.
spk02: That's really helpful. Thank you. And I just want to follow up on private label. I guess a little bit relative to branded, you know, it's great that you're outperforming, you know, you're on the branded side and that was ahead of our expectations. The private label this quarter was a little less than we thought. And if I'm hearing it right, it sounds like some of that could be related to the accounting treatment where there's just a lot of volatility, you know, how you recognize the sales when the orders come in as opposed to the shipping and I guess just now with only around three weeks left in the first quarter, anything you can give us to help model private label for 1Q in terms of just if it might be running close to more average levels or above or more similar to 4Q? Can you just give us a couple guardrails there?
spk08: Hey, Michael. Yeah, so you're absolutely right, right? So I think if you look at private label in Q4, it was definitely timing of shipment here associated with AAC 606, right, the accounting practice we have for revenue recognition. So that creates some noise, as you know, quarter over quarter. What I would tell you is, you know, can't really comment on Q1 specifically, but what I would tell you is for the full year, you know, on average basis, on an annual basis, you know, the trend for private label should follow, you know, fairly closely what we're seeing, the underlying trend, as you think about private label. So recognizing that quarter over quarter, especially on the end of the year, could have some noise if you just look at one quarter. But overall, for the full year, as you model out and you think about how to project that, you know, I would say pretty much mirror the underlying trend.
spk12: Okay. Thanks so much.
spk01: Thank you. Our next question comes from John Anderson with William Blair. Your line is open.
spk12: Good morning. Thank you for the questions. Hey, John. Hi. I wanted to ask, first, congratulations on the terrific performance of the Vitacoco branded business in 2021 and the acceleration in the fourth quarter. I was hoping that you could talk a little bit about some of the, I guess, innovation within that coconut water part of your portfolio. And I know you have introduced in recent years different forms like pressed, boosted, juice varieties to really fill out the offering and drive household penetration, perhaps spend rate. So how are these performing relative to kind of the original coconut water and are you happy with the innovation contribution and Tell us a little bit more about that.
spk06: Yeah, it's a great question. I think, you know, several years ago, the company, you know, put in place sort of a long-term innovation pipeline that started with press to basically provide, you know, different taste profiles to this consumer to address, you know, different needs. And so we have, obviously, reticococcal. We have press. That's continued with Farmer's Organic last year and this year with the canned juiced products with our goal basically to meet each need on the shelf and each different demographic because some of that is demographically driven as to how people were introduced to coconut water. I think obviously the core business has been very healthy. Prest has performed very well. It's brought in some new drinkers. who like that sort of flavor profile and has added to the household penetration, I think, sort of on a consistent basis. Our hope with things like Farmer's Organic is to build a higher price point and anchor a different price point on the shelf. And that was introduced last year in sort of limited distribution with just Whole Foods. and is now rolling out more broadly to broad retail, so I think we're very encouraged with one, the acceptance of that by retailers as an item on the shelf, and two, the possibility that that could provide a price halo for our brand on that shelf, and also margin enhancement to us. So that's going well, and then the Cannes product that is launching sort of as we speak, end of March, beginning of April, going into primarily convenience channels. I think when you think about the distribution opportunity we have as a business, convenience is the area where we have low ACV, and we view a canned product targeted at a slightly different drinker, a different occasion, more of a coconut water juice product as being a very interesting opportunity to leverage in that channel, and we expect that to be a good driver based on what we've heard today, a good driver of our incremental pods this year, and it's only geographically focused on a couple of regions, so if it's successful, then it will also drive pods next year as well.
spk12: Great, that's helpful. That hit my other question on distribution, too. I guess just one quick one. Has anything changed, or do you anticipate anything changing From a competitive perspective, there have been other brands or another brand in the category historically that kind of fell by the wayside. You obviously have been much more successful. I don't know if there's any restart or expectation of restart of that brand. But if you could just talk about the competitive landscapes. branded in coconut water? And if there's been any kind of change or you see or see any change over the next 12 to 24 months? Thank you.
spk09: Yeah, I mean, you'll see our share continues to gain in the category as we're not only bringing in new households and current households are drinking more, our share is continuing to rise. And we believe that that will continue. As we continue to add, like Martin just mentioned, new items close to the core, which are gaining further distribution and taking more space on the shelf at retail, we believe that those share gains will continue. So, yep, we're in a pretty good place.
spk06: Yeah, I think that's right, and I think the brand that I think you're referencing potentially is Zico. They have come back into the market, but if you look at scan data, they're not showing I think it's a very challenging time to relaunch a brand into the marketplace given the ocean freight containers. I also think it's very challenging for the lower-priced brands to compete. The ocean freight issues for them are obviously a much bigger impact, and I think you're seeing that, and then you're also seeing service and supply issues, particularly on brands that are reliant on Thailand, where there's a lot of sort of challenges getting containers out of, and there's more volume trying to come out of that, just generally not just in coconut water, but in general with folks moving manufacturing out of China. So very challenging, I think, for the competitors. I think, again, this is some of the benefit of our scale and our size and our diversification, and we've been able to gain share. I think Mike mentioned that we achieve 49% share You know, last year on a 52-week basis, we're at 51% share, I think, year-to-date. I think you're just seeing, you know, the fact that we can supply and can operate even under this incredible, you know, pressure on the global supply chain. You're seeing us able basically to take share from people, and I think it's hard for people to recover from that.
spk12: Yep, makes sense. Thank you so much.
spk01: Thank you. And as a reminder, if you would like to ask a question, press the star, then the one key on your touchtone telephone. We have a question from Robert Attenstein with Evercore ISI. Your line is open.
spk03: Hey, guys. This is actually Greg on for Robert. I just have a quick question on your marketing spend. How do you guys picture that looking going into this year? What areas do you plan on spending more behind? And do you think those levels are going to compare to your prior year? Thank you.
spk06: Yeah, I think we're very happy with our spend and the consumer interest that it's generating, particularly in social channels and sort of the commentary and the voice that we have. I think when COVID first hit we pulled back a little bit, but last year was more of a normal year for us. And obviously happy with the gains of share and sort of the new item activation that we have with the retailer acceptance. So I think we anticipate more of the same. I'll let Kevin maybe talk a little bit more specific on numbers. Obviously we'll flex that based on what we see. If we have inventory availability issues, we'll pull back. If we need to push harder, we'll push harder. in order to meet our goals of continued growth and acceptable profitability.
spk08: Yeah, and just to build on that very briefly, I would say that, look, within SG&A, we don't disclose specifically the marketing span, but what we tell you, though, that we typically span in the mid to high single digits behind our brands. Overall, if you think about brand support, marketing activation, retail activation, we think this is the right level of span behind our brand. We think we have the right marketing mix model. That has worked well for us last year and previously. So we intend to maintain a similar level of spend behind our brand this year.
spk06: And just adding to that, I think the biggest part of the SG&A is people. And obviously, we have people pressures of now being a public company, the things we have to do. But I think more importantly, over the last two years, we've done a really nice job building our commercial capabilities, our sales capabilities, both in the US and in other markets and building a professional dynamic, highly executional sales force that can deliver displays if we need them to, but also has these retail relationships that we're servicing with category insights and great sort of messages as to how retailers can improve the profitability of that shelf, right? And so right now, we think that team is a competitive advantage. They're obviously delivering based on the sales results, and we're filling in. I think when you're in a business like us, you tend to have relationships and people, like against a Walmart or a Kroger or whatever, but there's another layer of retailers, regional retailers, regional C-stores that you need to get to to build out that penetration, and we're committed to building the organization to deliver that.
spk08: And then we do that always in an efficient way, right? I mean, it's a balance. We thought growth is very important to us, but it's a balance of profit, right? So SG&A is definitely where we can also find efficiencies as we see fit along the year.
spk03: Great. Thanks, guys.
spk01: Thank you. And I'm showing no other questions on the call, and I'd like to turn the call back to management for any closing remarks.
spk09: Just wanted to thank everybody for joining today and giving us the time, and we look forward to our next call with Q1 results, and we'll be talking soon. Thank you, everybody.
spk07: Thanks, everybody. Thanks, everyone.
spk01: This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.
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