Westrock Coffee Company

Good day, and thank you for standing by. Welcome to the West Rock Coffee Company Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Robert Munger.

Thank you, and welcome to Westrock Coffee Company's third quarter 2024 earnings conference call.

Today's call is being recorded. With us are Mr. Scott Ford, co-founder, chief executive officer, and Mr. Chris Pledger, chief financial officer. By now, everyone should have access to the company's third quarter earnings release issued earlier today. This information is available in the investor relations section of the Westrock Coffee Company's website at investors.westrockcoffee.com. 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 four looking statements. Please refer to today's press release and other filings with the SEC for more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any four looking statements made today. Also, discussion during the call will use some non-GAAP financial measures as we describe business performance. These SEC filings, as well as the earnings press release, provide reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. And with that, it is my pleasure to turn the call over to Scott Ford, our co-founder and chief executive officer.

Thank you, Robert, and good afternoon, everyone. It's a pleasure to be with you, and I appreciate you spending a few moments with us getting updated on our progress. Westrock Coffee Company had a strong third quarter despite what continues to be a challenging macroeconomic environment for the consumer. Our quarterly segment adjusted EBITDA for beverage solutions was up 19% year-over-year, and is now up 20% year-to-date over last year, right on track with our previous guidance issued last quarter. Likewise, our sustainable sourcing and traceability segment is up 45% year-over-year for the quarter and 132% year-to-date. This is the third consecutive quarter of impressive combined segment year-over-year performance, which is all the more satisfying as it is essentially solely driven by improvements in our base business. as the Conway extract and RTD plant will not see substantive revenues until early 25. While our single-serve cup business remains soft as consumers continue to shop down in packaging size, these volumes have seen a slight uptick recently, and we have received major new customer volume commitments for next year that should create a material volume and profit lift for this unit. Additionally, as I explained on our second quarter call earlier this summer, we made the decision to extend the startup date for one of our larger customers in our new Conway Extract and RTD plant by about six to nine months. This decision, while neutral to accretive in the long term, compounded our current run rate pressures throughout fiscal 24, and we had to work hard to overcome this added pressure. Fortunately, because of the team's great efforts, we are now quite pleased with our financial position as we move from product launch approvals into commercial production in Conway. While painful short term, refusing to be pedantic and nearsighted with our customers as they adjusted to shifting consumer behaviors has now secured us major new customer volume commitments for next year in single serve cups and garnered us a contract extension in ready to drink. These type of accommodations to large customers are never popular in a beat and raise this quarter's numbers market dynamic. But they are the path to compounding value over the long term. Turning now to what is new news since we last presented, which is the completion of a vast array of new contracts and agreements that have been converted into finished product production schedules with volumes by customer, SKU, date and machine, this SKU production schedule obviously grants us much greater clarity into our monthly financial forecast beginning in January of 25 than we have ever had before. The sales and customer onboarding work that the team has excelled at over the past two years is nothing short of phenomenal and has resulted in more than a dozen new customers who begin commercial volume purchases in the first quarter of 25. To understand the impact of these contract wins, I will simply offer one proof point. Once fully onboarded, these new customers combined are expected to produce more annual EBITDA than the entirety of our current base business. This is the promised earnings power of the Conway Extract and RTD plant coming to fruition as this facility transforms from a construction and product development project into a field operational production facility. Importantly, the production in Conway has two elements for each individual product, the start date and the slope of the scale-up range. So when we look at 2025's consolidated adjusted EBITDA, we have the new run rate for single-serve accounted for in our 2025 forecast. We have the large can lines sold out and scheduled for full production late in the first quarter of 2025. The second can line largely sold out and beginning commercial production in the third quarter of 25, and the glass line sold out and going into phased-in production between the third quarter of 25 and the first quarter of 26. Finally, the multi-serve bottle line is expected to continue at 50 to 75 percent of capacity throughout the year 2025. This production schedule in Conley results in a heavier volume run rate in the back half of the year than in the first half simply due to the combination of the start date and the scheduled ramp-up slopes. Chris will take you through the various detailed performance and guidance data in just a moment, but let me summarize the financial and value creation impact of the update I've just given you. In 2024, and as discussed on our call last quarter, we expect to end the year at the bottom of our previously announced guidance range. While we had higher expectations for volumes this year, the team has done an exceptional job delivering on the things we can control. The consumer will strengthen. Our single-serve volumes are already coming back. We have accommodated the largest brands in the categories. We've been awarded additional volumes and contract extensions, and we are set for a great financial return from our Conway plant investment. The combined results of our base business operations Substantive cost controls we are now executing across the company as we exit the Conway startup mode and enter a more normal production environment, coupled with the expected results from the Conway production schedule I just walked you through, should see us generate consolidated adjusted EBITDA of between 80 and 100 million in our updated presentation format for 2025. With that, I'm going to turn the call over to Chris Pledger, our CFO, so that he can take you through the details of our third quarter and guidance update. Then I will rejoin you in order to give you an update on our strategic positioning as we prepare to kick off 25.

Chris? Thanks, Scott, and good afternoon, everyone. Before I dive into our quarterly results, I'd like to highlight the change in presentation of our consolidated adjusted EBITDA that we noted in our release. We have historically excluded Conway Extract and Ready to Drink facility startup costs from our presentation of Consolidated Adjusted Evita. Those startup costs include two categories. The first category is pre-production costs, which are non-capitalizable costs necessary to place our production and packaging capabilities into commercial production. And the second category is comprised of scale-up operating costs, which represent certain recurring operating costs incurred once a capability is placed into commercial production but before completion of production scale-up. In response to a comment letter from the SEC staff, beginning with these third quarter 2024 results, we no longer exclude the second category, scale-up operating costs, from our presentation of consolidated adjusted EBITDA. As a result, we've revised our year-to-date presentation of our consolidated adjusted EBITDA to account for the impact of scale-up operating costs in prior periods. Because we did not commercialize any of the Conway facility prior to our second quarter of 2024, there's no impact of scale of operating costs in any prior period other than the second quarter of 2024, in which we incurred $1.2 million of such costs. While we've adjusted our presentation of consolidated adjusted EBITDA, we've not made any changes to our presentation of segment adjusted EBITDA, which is the segment performance measure we use to assess the performance of our operating segments. Segment adjusted EBITDA is defined consistently with consolidated adjusted EBITDA, except that it excludes scale of operating costs related to the Conway facility. As we continue to commercialize and scale the Conway facility over the next year, we expect the subtotal of our segment adjusted EBITDA will converge with consolidated adjusted EBITDA. With that, I'll now turn to the results for the quarter. On a consolidated basis, net sales for the third quarter were 220.9 million, flat to the third quarter of 2023. Consolidated gross profit for the quarter was up 5.8% over the third quarter of 2023, primarily driven by increased gross profit growth from our SS&T segment. Consolidated adjusted EBITDA for the quarter was $10.3 million and was burdened by almost $4 million of Conway scale-up operating costs related to our multi-serve bottle, roasting and grinding, and extraction capabilities. This compares to consolidated adjusted EBITDA in the third quarter of 2023 of $11.6 million, which included no Conway scale-up operating costs. For context, historically, we would have added back the $4 million of Conway scale of operating costs into our third quarter 2024 consolidated net sales, which is a decrease of approximately 7% compared to the third quarter of the prior year. Consistent with prior quarters, we continue to see strong results from our flavors, extracts, and ingredients platform with 7% sales growth, while volumes remained under pressure in both core coffee, down 6% from the third quarter of 2023, and single serve, down 24% from the third quarter of 2023. Despite the drop in net sales, beverage solution segment adjusted EBITDA increased almost 19% to $11.8 million, and our segment adjusted EBITDA margin for beverage solutions was up 157 basis points. In our sustainable sourcing and traceability segment, sales net of intersegment revenues were $56.9 million in the third quarter of 2024, an increase of 33% compared to the third quarter of 2023 due to a 36% increase in volumes. SS&T's segment adjusted EBITDA for the quarter was 2.5 million, compared to segment adjusted EBITDA of 1.7 million in the third quarter of 2023. Moving on to capital expenditures, during the third quarter, we deployed approximately 36 million of CapEx, primarily related to our Conway Extract and RTD facility. Through the end of the third quarter, we spent approximately 275 million of the anticipated 315 million on our Conway facility. We expect to spend approximately $30 million in the fourth quarter of 2024 and the balance in the first half of 2025. We also plan to spend an additional $20 million in capital expenditures in Conway to install a second RTD can line, which we'll put into service in the second half of 2025. At quarter end, we had approximately $90 million of consolidated unrestricted cash and undrawn revolving credit commitments, and our leverage continues to be in line with our expectations. As previously reported, on September 30th, we completed our warrant tender offer, exchanging all of our private placement warrants and over 97% of our public warrants, issuing 5.4 million common shares. In connection with the exchange offer, we obtained consent from the requisite number of warrant holders to amend the warrant agreement that allowed the company to force exchange any warrants that remained outstanding after the closing of the exchange offers. On October 16th, we exchanged the remaining outstanding public warrants by issuing approximately 100,000 common shares. As a result, there are no remaining warrants outstanding, and the public warrants have been delisted. Turning to our guidance, the change in presentation of our Consolidated Justice EBITDA no-denial release and described earlier on the call also necessitates a change in the presentation of our 2024 and 2025 Consolidated and Adjusted EBITDA guidance. With that in mind, we expect to report $50 million of consolidated adjusted EBITDA in fiscal year 2024 under our new presentation. This includes $10 million of scale-up operating costs associated with the Conway facility. This expectation correlates with a low end of our previously announced range. The big drivers of growth that underpinned our original 2024 guidance were continued sales, growth, and flavors, extracts, and ingredients, strength in single-serve cup volumes being delivered on a platform that now has all the equipment necessary to efficiently produce the volumes, and the material scale-up of sales of RTD cans and glass bottles from our Conway facility in the third and fourth quarter of 2024. While flavors, extracts, and ingredients had a big year, the challenging macroeconomic environment for the consumer has negatively impacted our single-serve cup volumes and the sales ramp of our extract and RTD products out of our Conway facility, leading us to the low end of our original 2024 guidance. While we still have to complete our 2025 budget work, preliminarily for fiscal year 2025, we expect to generate consolidated adjusted EBITDA between 80 and 100 million dollars under our new presentation. This includes approximately 10 to 15 million of scale-up operating costs associated with the Conway facility. The year-over-year growth and the variability within the 2025 guidance is driven by volume growth in the company's core coffee business for new retail customers, many of whom were onboarded in the back half of 2024, new volume commitments from existing single-serve customers and our expectation for new single-serve customer wins in 2025, the full-year benefit of expense savings from our cost reduction and facility consolidation efforts, and the rapid scale-up of our RTD canned volumes beginning the first quarter of 2025 and continuing throughout 2025, and the launch of our RTD glass products in the third quarter of 2025. We will update this guidance as part of our fourth quarter call. With that, I'll turn the call back over to Scott for some closing remarks.

Thank you, Chris. Now, I'd like to take a few moments before we open the call to questions to give you all an update on the strategic accomplishments this team has delivered on over the past 24 months that will begin to flow through our financial results and the context through which we look at this entire Conway plant build endeavor. I believe that owning Westrock Coffee Stock is not only an investment in this board, executive group, and operating team, and whatever short-term bounces we encounter as we build this business, but is essentially a bet on a set of powerful global consumer and capital market trends. After recently completing a two-day strategic update session with our board, we are more convinced than ever that we are at the leading edge of three mega trends which are going to create significant value appreciation opportunities over the next few years for the shareholders of West. First, The continued generational transition from hot to cold, coffee, tea, and energy beverages. Secondly, the rapid transition to high-quality extracts being the crucial core ingredient in these beverages rather than each beverage being individually brewed, steeped, or mixed by time-pressed consumers or baristas. And finally, the continued capital efficiency-focused move from the historically vertically integrated business model of branded companies to the more flexible and higher returning outsourcing to specialized manufacturers by branded packaged food and beverage operators. We not only believe that we are at the forefront of these dynamic trends, but have some tangible proof to offer up to you in testimony to this fact. We originally targeted four to six CPG and private label retailers as customers for our new Conway extract and RTD facility. We have now contracted with well over a dozen such brands. We were awarded over 80% of all the contracts we competed for in 23 and 24 for our new Conway facility, all of which began production at commercial volumes in 25. The Conway plant is now essentially sold out, and our sales team now spends most of its time selling the 26 through 27 expanded production capacity. So it is built. and it is sold out. And if we deliver the production volumes as planned, we are not trading at a premium to our peers, but at 25 to 30% of our implied comparable valuation. I believe this perspective is the most essential view one needs to come to terms with when considering our business. Additionally, we are asked, what is the potential earnings power of our assets as they sit today after two years of plant expansions and additions? The answer, is approximately $150 to $180 million today, but we also have room for multiple more packaging machines to be added over time. So while we do not report out on who our customers are, we can give you ever more informed estimates of what those contracts produce at the EBITDA line, and I hope thereby you can see why we remain so bullish on this business and our stock price over time, irrespective of the short-term gyrations of the stock market. We have a very seasoned and informed ownership group and board who today still own 96% of all the stock they own the day we went public two years ago. And we have an inordinate number of ways to generate equity value over the next few years. In order to help ensure our delivery of this potential, today we announced that we are adding a new vice chairman of the board, Ken Parent. Ken is the former president of Pilot Flying J. He's a seasoned executive who helped build pilot from a regional travel center operation into a nationwide multi-billion dollar enterprise. We are all extremely excited he'll be joining us as we move from the construction and product approval phase of our Conway facility into commercial production. I'd like to thank each of you who have partnered with us in this endeavor and are now glad to open the microphones up to take a few questions from those of you who may have them. Thank you very much. Operator?

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Our first question comes from Todd Brooks at the Benchmark Company.

Your line is open.

Hey, thanks for taking my question. Just looking out to fiscal 25, and obviously the way you laid out the visibility is entirely different than what it was coming into 24, but with contracts with 12 major kind of CPG companies out there that you talked to, what What guarantees the slope of the ramp over 25? If there's another case that a major client needs to push the launch of a line or their product on your line, when and what are the teeth that kind of start to deliver revenue on expectations with what the contracts are calling for? Thanks.

Sure. It's a terrific question. And I think there's two or three things here that are worth making sure everybody understands. First of all, the push that we gave the client that we talked about this year was a rather rare situation. And it had to do with the timing of contracts where they're coming out of other facilities and coming into ours. They were also at that point in time on the low end of their volume ramp. And rather than just being a jerk about it, we moved and faded the heat. to let them finish up with some other people that provide them product today. And I think it was the right long-term strategic move for us. And I think it was greatly appreciated. And we picked up a contract extension on the backside for doing that. I'll also say we've picked up new products in the SKU from that very client for having been an accommodative, helpful partner. So that is going to more than pay for itself back in time. I think beyond that, it's important to understand in a traditional roasting ground business, and in the single serve business, although slightly less so. Historically, we hold volume commitments for customers, and then if they don't pull them down and fill them, we alone eat the cost of having had the machines and the people and the materials ready, and there is no penalty if they don't pull all of their product down. That's not the case in the ready to drink and extract business in Conway. where either people are going to pay for a product on a take or pay basis within a range up and down, or they will experience an increased price for the lower volumes. And I think those are the two most important things to take away from the nature of the contracts in this particular situation. I'll then say the nice thing about the contract is it forces the teams to sit down and work together on the dates and the dates have multiple milestones before you ever get into production. You have to go through all the product development, the approvals, the line approvals, the water approval, the bacteria counts. Then you have to go through all of the various checks. And then only after that can you get into production. Well, instead of pushing people to get into commercial production in 24 and then having to stop the lines in 25, we decided this year, given the push out of one large customer, to push everybody out, to spend this year getting everybody ready so that when we turn it on in 25, a later start date, we have an immediate absorption and we go straight to essentially full capacity on a run rate basis. So the slope of the take-up is straight up, if you will, as we turn people on in the first quarter. Hope that's helpful.

That is. And just a follow-up, and then I'll hop back in the queue. Does that imply then... Is acceptance work still happening in 24? So when you talk about really turning things on in the first quarter of 25, are we turning on straight into commercialization or is there still an acceptance window that we're going to have to work our way through in the first half of 25? Thanks. Yeah.

So new products have to go through acceptance on their own. We are continually getting new products, new SKUs, new formats, and we will have to work some of those in. But the numbers that we've laid out for you reflect commercial production of things that we have already taken through the approval process in 24.

That's helpful. Thanks, Scott.

You bet.

Our next question comes from Eric Delore at Craig Hallam Capital Group.

Great. Thank you for taking my questions. Sure. First one for me, on the EBITDA growth drivers for next year, You cited new core coffee retail customers, new volume commitments, new customer wins, and single serve. I guess I was just a little bit unclear on which of those were sort of, you know, already secured or signed and then which of those may be anticipated but not exactly over the finish line yet, if you could just help me understand that.

So if you start in kind of the retail – if you start in the core coffee roasting ground business, We've onboarded new Roast & Ground retail customers in the back part of this year. And so that's volume that's pulling through and positively impacting the P&L in the back half of this year. We'll get the full year benefit of it next year and also have new volume coming on through those customers and others. So there's growth in our Roast & Ground business, which is something to be excited about. It's a scaled platform and it needs volume. So pushing volume through it is good for the overall economics of that platform. On single serve, we've got new volume from existing customers that start in the first part of next year, and then an expectation for a new contract when in next year that'll increase the volume over that platform. We'd also expect to see, and have seen kind of in the beginning of the fourth quarter, some return to normalcy around single serve cut volumes. It's been soft, obviously, through the second and third quarter, but we're seeing a little bit more volume thus far into the fourth quarter. And so I think the combination of those things makes the single serve platform, quite frankly, return to and become kind of our ability to generate the earnings power off of that platform. You'll see that in 2025. All right, that's helpful.

And then my follow-up is just kind of on the single serve cups and the sort of rebound that you've seen so far. You just kind of touched on it a little bit, but I'm wondering if we should think of this as sort of a return to sort of year-over-year growth at this point, or if we're sort of plateauing and the decline has improved. Just wondering if you can kind of flesh that out a bit more for us.

Sure. This is Scott there. I think Chris was right on in his description of the nature of the volume moves. I'll try to summarize for you. maybe in between the nature and the EBITDA impact. What we're seeing in the cup space on a like-for-like, DC-for-DC basis is starting to firm up just a bit, which is what Chris was talking about. What we have been informed of is we are winning more DCs, if you will, from current customers, and then we have new customers coming in, and then we have customers that we did a small amount of business for this year that have new sales in the next year. And so it's quite possible that you're looking at a business that the industry is growing, you know, small single digits. And we would be perfectly comfortable with that. But right now, we're looking at being up 60 to 80% in our cup volumes next year if everything comes to pass that we're talking about at this level. And we have not assumed all of that in these numbers because, like you, we want people to be pleased that we beat numbers instead of missed them. But we're talking about being on the cusp of a really important step up in the scale of that single serve platform as more and more customers add to us and more and more new customers come to us.

Very helpful. Thank you for the call.

Our next question comes from Matt Smith at Stifle.

Hi, good afternoon. Thank you, Scott and Chris, for taking my question. When you talk about Conway more than doubling the EBITDA base for the existing business, just a point of clarification here, is that for the lines you expect to be operating exiting 2025, or is that specific to the orders you expect to have up and running in the first half? I'm just trying to understand the doubling of the base business EBITDA versus Scott, your concluding comments about the earnings power being more in the 150 to 180 range.

Yeah. Great question. To parse that, the earnings power of the customers that we have sold, if they were all starting on January 1 and they all went through December 31, we would be reporting a much higher EBITDA guidance range than 80 to 100. Exactly what that would be. We're finishing all the work on that. So the fact that some of them start later in the year, even some of them that start early in the year, add skews through the year. We've already walked you through the glass line, doesn't come on until the third quarter. It then goes through a three quarter ramp. So when we take all of that beginning date and the slope of the ramp up in, you get to 80 to 100. If everything had started January 1 and everything was fully on board, we would be closer to 150.

Thank you for that, Scott. And as a follow-up, you previously talked about kind of an exit run rate in 2025. I realize you have more moving parts now given the nature of scale-up costs. Are you able to provide any color on how you view an exit of 2025, or does the slope and the scale-up cost kind of obfuscate your ability to have visibility into that?

No, I think the numbers that we're kicking around, plus or minus, I think we said last quarter it should be 125 to 150 on the back-end run rate. I think that's still the right number. Frankly, it may be on the high end of that.

Thank you, Scott. I'll leave it there.

I'll give you one interesting tidbit, Matt, on this point. I think it might help. If you look at our top 25 customers for next year, 12 of them do no business with us in 24 and are all coming in in 25. Half of our top 25 customers are brand new to the business. We've never even reported a substantive dollar of revenue from them. It's completely different than the business we've been running.

Thank you. Our next question comes from Saranvara.

Great. You know, I have two questions. I'll start first with the single serve. Can you help us take a deeper dive into what's happening? Like, you know, the volumes have been down like 20%. So can you help us understand, you know, what is happening there? Are you losing customers? Is there a shift in, you know, how consumers shop? Just curious to know, like, you know, just a deeper dive on, you know, the volume declines in that business. And then I have a Conway question after that. Thank you.

Sure.

Sarong, I think at its simplest level, the consumer is down on an apples-to-apples basis in single serve. We've been down roughly 10% to 12% in volume of cups, and that's because they've gone down from a larger pack size to a smaller one. So they're still shopping, they're still shopping every week, but they're buying a smaller package and they're stretching it out to make it work. and out of the actual consumer flow-through on an apples-to-apples basis. We've had some places where we lost DCs, which we had in the beginning of the year, and that's part of our volume drop year over year. That's the biggest part of it, I think. And then we have recently won a bunch of new DCs that will come in in the first part of next year, and that bridge is what we're trying to help people walk their way through.

Ledger, what else would you say on that front? I think that's true. I think you continue to see kind of at-home coffee consumption has been a little muted this year. That's not unique to our business. You've heard other folks talk about it. But I think you're also seeing is kind of the inflation gap between in-home and out-of-home lessens as that gap gets smaller. I think you'll continue to see more growth in the at-home space.

Got it. And, you know, I have a question on the Conway, and maybe I'm sure you ran through, you know, the scenarios. But, you know, for that one large customer, we are pushing off the production for, like, you know, next year and even, you know, bottling plant in third quarter. So does it not upset some of your other 11 customers that you are trying to win? You know, does it not push them off? Second question is, can you not run shifts for the can lines, which I think is almost ready when I last saw it over the summer. So can you not run shifts on the production line, or is it just ideal mathematically to pull it off? I'm just curious to know the thought process.

No, it's really around being able to complete the commercialization work for all of the customers so that as we start 2025 on the can line from a can volume perspective, that we're starting a very steep ramp on sales volume as we start 2025. The exciting thing is the first can line, like Scott said, is sold out. As that can line ramps in the first half of the year, We have the second can line that will start towards the beginning of the second half of the year that's able to offtake volume off the first so that we can increase the speed of the first and have new volume throughout the year. So the volume sales ramp on our can products is going to increase throughout the year, which gets you to the exit velocity that Scott was talking about first. And so the push out of the other customer doesn't really impact the sales The rest of them, it's just really about making sure that from a timing perspective that we've got, that was going to be our big customer for cans in the fourth quarter of this year and kind of into the third quarter. That volume is not going to be there. That's going to start in the first quarter of 2025. And so we're taking time to make sure that we're ready for all of them. So as 2025 kicks off, we're ready to roll. Thank you.

Our last question comes from Bill Chappell at Truett Securities.

Hi, this is Davis Holcomb on for Bill Chappell. So we've been hearing from some other companies that the RTD coffee category is slowing, and we were just wondering how that might be impacting your business or the contracting process or your outlook going forward.

Yeah, well, one of the things that these guys at a large scale have is they have multiple places to have product manufactured. And so whether the market's growing 8% or shrinking 8%, just like in the single serve cup example a minute ago, the important thing is that we take share. And then if the market grows over time, you take share in a growing market. That's how you really stack chips up. So we've been taking share, and that share coming on is enough to double, triple, quadruple our earnings over the next short few number of years. just from the share that we've won, irrespective of what the category and the whole is doing.

Got it. Thank you.

And my point was on single serve. Single serve can be growing 2%, and we're likely to grow 60% next year from share. It obfuscates in the short term, especially when you're turning something on. It dwarfs. The leg end dwarfs. machinations of the movement underneath it.

Thank you.

This concludes the question and answer session. I would now like to turn it back to Scott Ford for closing remarks.

Well, thank you guys for getting on the phone. We appreciate it. Thank you for your question. You know where we are. Be glad to answer them, any follow-ups that you've got. And I know that this is a busy time of year, and we will wish you all a good evening. Thanks so much.

Thank you for your participation in today's conference. This does include the program. You may now disconnect.