Once Upon a Farm, PBC

in as part of our original model, we built in inflation. We built in as part of that and we're coming in the end in line with what the inflation that we built in. We did build in tariffs. We built in 100 basis point of tariff cost for the full year. And that was in the original model that we put in. So the major increment and then one thing that we are also taking into account is really as we see our our actual sales and how the mix is taking place as we're mixing heavier into snacks versus pouches. And our club business, we're building in any impact into margin associated with that change in mix. We are expecting higher top line sales, as we said in our guidance, as we carry that down and we still anticipate carrying it down into our EBITDA. number. We're looking to reinvest that into marketing spend, being able to drive and infrastructure spend to be able to drive the rest of 26 and really prepare us for 27 to make sure that we're ready for 27 as we go forward.

And Leah, just to build on that, this is John. We really feel like it's a good time to be on offense with this brand. Our household penetration is still at a modest number of 5.8%. We see strong repeat. We see all these strong metrics for consumers connecting with the brand, which were outlined in the earlier comments. And it's the perfect time for us to take advantage of the broader awareness to just build the size of the growth opportunity for this business in 27 and 28 and beyond. So that said, we're going to be disciplined. We're going to hold to the guidance that we've given. Hopefully we can do better than that through the year. And then in the, you know, in the mid-term here, we feel very confident in the margin structure in this business, delivering mid-teens, kind of adjusted EBITDA numbers, and feel very confident about that.

Okay. That's really helpful, Collar. Thank you. But maybe on a related follow-up, you know, as you're stepping up investments, I understand being on the offense here, but maybe what are you seeing in the competitive environment? We've had some new entrances come in. you know, over the past year. Any changes there? Maybe any changes on the promotional landscape as well?

Yeah, there's been no significant changes in the competitive landscape on the last call. I mentioned we're facing a new competitor at one specific customer. There's been no change there either. We're still twice as productive on a dollar sales per point across like pack sizes there, continuing to perform really well. We're not seeing any change really in our categories income in the promotional intensity either. And we feel like we've got a really good handle on that and are driving really good strategic revenue management goals as we go through the year. So there's really been no significant change there other than our business, you know, the core consumer connection with the brand has really continued to accelerate. And we saw that from the front of the quarter to the back of the quarter. And even in the April data that we can see, we're continuing to see the same thing. So we see positive momentum. We just want to take advantage of it while remaining very disciplined.

Okay, great. That's very helpful. I'll pass it on. Thank you. Thank you. Next question, Tom Palmer with J.P. Morgan. Please go ahead.

Hey, guys. Thanks for the question. Maybe just to start out, I did want to ask on pricing actions and maybe your thoughts as you look forward in kind of this more inflationary environment, but also, right, one where maybe the consumer, there's some uncertainty. Price mix up over 20% in the quarter. It sounded in the prepared remarks like that was driven by price increases, maybe not as much mix, but maybe just update on what you saw in the quarter with that and kind of how you think about pricing as we look forward. Thanks.

So, first, on the first quarter and the price mix, that was really – we took a price increase in our pouches in 25. That price increase was effective end of Q2 and – and really became effective in Q3, Q4 of 25. What we're doing is we're copying against where we have a price increase built into 26. We're copying against a quarter that does not have the price into it. So that's why the price volume increase was, price mix was showing higher in Q1. But we are looking at, We believe that if the economy and price pressure keeps going up, we have the capability of taking pricing down the road. Our brand is fairly inelastic. We don't anticipate a price increase having any impact on our velocity, our growth of the business. So we are keeping that in mind. We're looking at opportunities on very strategic price increases potential for the future if we want to be able to take them. But at this point, we have nothing. We're not looking to do a price increase in the immediate future, but we may look at that opportunity down the road.

As Larry alluded to, we've been conservative in the way we forecast the business going forward. We have good visibility to the fuel impacts, to the tariff impacts. We've bought forward most of our commodities, so we've got really good visibility. We'll be thoughtful and careful if we do need to take pricing. Our brand is pretty inelastic, but we will also be very cognizant of just making sure that we keep the brand in a really good price value relationship for consumers. And right now, despite all the consumer uncertainty that's out there, the brand is in a really, really strong price value perception map with consumers, and we want to make sure it stays there and continue to drive that forward.

Okay. Thank you for that. Follow-up just on maybe some of the promotional timing that you referenced. We did see the slower kid pouch growth. Is that where the promotional timing really was most in effect? And kind of how do you see promotional cadences as we look out over the course of this year?

Yeah, we're not changing anything significant in our promotional cadence. We leaned in a little bit more aggressively in the first quarter to do things like get display and just get extra – placement and visibility for the brand at retail, tags up in places where we knew that there were going to be millions of consumers that were going to be hearing about the brand for the first time. And we wanted to make sure that we were very visible in store. And we accomplished that. You know, it's not always just price. It can be signage in store. It can be a whole bunch of different tools that you use. And we've done those. But we don't expect on our corp house business any change really at all in the overall cadence of promotion in that business. or in the depth or frequency at all. That business is in a really healthy place and the trends are really continuing to grow as we've improved packaging, we've improved placement, we've moved more of our products from singles to multi-packs and positioned in a better AUP position against consumers across all channels. And so the trends are good there, we just need to continue them. And we see that in the data every month now and we just want to keep that trend going.

Understood. Thank you. Thank you.

John Anderson with William Blair. Please proceed.

Hi. Thanks for the questions.

I'll just ask a two-parter, squeeze them in both here. My question is kind of around the innovation. You launched or announced, you know, a lot of a lot of innovation. And you mentioned, John, kind of the meat-based, meat and bone broth and legume pouches. And what I'm interested in is, number one, where those are going in and how far along you are in that process of getting those into the coolers. Do those Does that product all go into the baby aisle cooler? Is some of that going into the dairy set? And then kind of a follow-up to that, where you do have that in market today, what is that doing to the productivity of those coolers?

You bet. Sure. So we ended the quarter with about 3,700 coolers in market. Larry mentioned in his commentary, or I mentioned in my commentary, I'm sorry, that we would be about 5,000 coolers by the end of the year. These meat, bone broth, and legume pouches are all focused on going into those coolers. We started getting placements in some significant numbers of coolers in the April timeframe. and it'll take a quarter or two with resets and just the shelf work required to get them into all those coolers. Our goal would be to have those items in all of those coolers by the end of, you know, a couple quarters from now. The interesting thing is we have basically daily or weekly insight into the velocity that's coming out of these coolers, and literally the moment these products have hit the coolers, the coolers have become at least 20% more productive just on those items coming in, and in some cases, significantly more. And that, of course, is all in the timeframe we're talking about, John, is all trial, right? I mean, they get in there and you got a week, that's all trial. We don't know what repeat is yet. However, these products tested extremely well, and we have a pretty strong, well-proven methodology for testing products and anticipating how the repeats going to be we expect repeat to be really strong and for these coolers to be extremely incremental to our assortment we do have in the in those coolers that I mentioned where we've got the velocity information and the productivity information we know that it's extraordinarily incremental to our assortment as you would expect right these are meat bone broth protein position pouches going into the assortment that we had there and that did not have that in the assortment before. So it makes sense it would be very incremental as well.

And where, how does the space work? So you have X number of new items that are going into these coolers. Is it replacing existing items? Is it fully incremental to what's in there today? And is it, trying to understand that piece of it too, because you have X amount of space in the cooler, and I guess it's just about filling it out in the most productive way, right?

Yeah, if you looked at our coolers over the prior year and as we have been talking to investors and just talking about what the business is doing, we had a lot of assortment that we were double, triple, and quadruple facing in the prior cooler format because we had more space than we had productive assortment for. And so in this resets that we're doing right now, We're, in some cases, really just narrowing down the assortment, the number of facings on certain items, which is basically going to have zero impact on the amount of that will sell, and just replacing those facings with much stronger assortment. In some coolers, the coolers are performing so well that the retailer and we are working together to add another shelf in the cooler. That's another thing that's happening as well. And we'll, of course, try to do that everywhere we possibly can. because that's a big win for both us and the retailer. But it's all of those things happening. I think right now, when you look at the coolers after they're fully reset, coming out of the introduction, as we just talked about, we will really for the first time have like, I would call like an A-level productivity assortment across the entire cooler that is fit for purpose for where consumers want us to be with respect to covering off all their nutritional needs. We'll continue to improve that, of course, over time. with new innovation, price-back architecture, new formats, things like that. But we really do now have the ability to see how high up is in these coolers, and the early numbers look really, really encouraging there. And I can't wait to report on those over the next couple quarters as we go forward.

Great. Congratulations. Thanks. Thank you, John.

Next question. Andrew Lazar with Barclays. Please go ahead.

Andrew. Great. Thanks so much. Hi there, John and Ari. I guess first off, just obviously fiscal first quarter sales growth, almost 44%, well above consensus for the quarter. And you basically flowed through, I think, a little more than that upside at the midpoint to the full year guide. With that said, I guess the implied growth rate right at the midpoint for the balance of the year is now about 29%, which is a step down from the first quarter. And I'm just trying to get a sense of, you know, how much of that is simply conservatism versus the fact that, you know, the 1Q comp was also a bit softer this versus something maybe more discreet you're seeing in the rest of the year that would kind of result in the deceleration? No, we want, you know, our approach, Andrew, is to set our guidance conservatively. Our consumption, as was mentioned in the prepared comments, is running in the mid to low 30s, and toward the end of the first quarter and into April, it's been higher than that. We just want to make sure that we're setting ourselves up to continue to increase expectations as we go through the year. There's absolutely nothing in our business that shows any kind of deceleration right now. In fact, it's the exact opposite. But we also want to make sure we're planning conservatively, guiding conservatively, and making sure that we can deliver against the commitments we're making to our shareholders. Yep. Thanks for that. And then just one quick one. I should know this, but as a reminder, who is doing the – sort of the baby cooler sort of shelf sets, like, you know, restocking the coolers? Is it the in-store merchandisers? Is it the retailers in some cases? I just forget how that works because I know keeping a fully stocked cooler, right, is really key. And as velocities go up, you know, that requires more effort.

Thanks so much.

Sure, yeah. The basic answer, which is pretty universally true, is it's store-level personnel that are moving product out of the back rooms into the coolers. We are in certain places supplementing that with extra merchandising support just to make sure it's happening, auditing it, doing all those things like you do in any fast-moving category. There's a learning curve with retailers when they put these coolers in. You know, obviously, when you're putting a cooler in your aisle where there's never been any refrigerated items, it requires a little bit of education. But overall, we've been very pleased with how retailers have adapted and are, like, in-store service leveling, or in-store service levels, and in-stock rates on these coolers has been very good. That doesn't mean there's not room for improvement. There certainly is from time to time, especially after like a busy weekend when the cooler's heavily shopped. So, but that's how it works, and we're just continuing to optimize that and learn as we grow.

Great. Thanks so much.

Thank you, Andrew.

Next question, Rupesh Parikh with Oppenheimer and Company. Please go ahead.

Good afternoon. Thanks for taking my questions. So just going back to the positive club channel commentary, if you could just remind us of how you approach the club channel, like the permanent items you have and then the rotating items that you typically have in the club channel.

We typically have permanent items in a number, but not all of the regions of the big clubs. We also participate in rotational programs, which is very common. This program that we're running in May is our first national program at the scale that you'll see out there in store. But I'd say if you look at our business over the last three years and just kind of trend line it, the trend line has been that velocities have continued to increase consistently as consumers have become aware of the brand and tried it and have seen the value slope to club. And more and more of our business is becoming everyday, although I would expect that it will always have a strong rotational component to it because that keeps the assortment fresh. But we are seeing more and more everyday placements. That's a trend that's definitely happening. And just same store, the beauty of it is, Rupesh, you can see same store year-over-year productivity gains, which are all about velocity. because it's really not really a pricing story in that channel over the last two years. It's really all about unit velocity.

Great. And then just a housekeeping question. Stock-based comp, I know, is elevated in Q1. If there's any clarity or additional color you can provide there for the balance of the year. Thank you.

Yeah. So, I mean, in Q1, it was really all tied to the IPO and transactions and equity issuance through the IPO. We're not expecting that to continue through the rest of the year, and this was a one-time IPO-related stock-based comp adjustment.

Great. Thank you. Thanks, Rupesh.

Next question, Yasmin Beswandi with Bank of America. Please proceed.

Hey, guys. Thank you for the question. I just wanted to ask a little bit about revenue phasing for the year. You know, there's back to school in the third quarter. You have some promotion happening in the second quarter. I guess, how should we be thinking about, you know, which quarter should be the high watermark, either on like a growth or an absolute basis on revenues?

So first, in Q2, we have the club promotion that we're going through that John was talking about. That's going to significantly increase revenues in Q2 over historical percentages and phasing for the year. And we have and then Q3, we have back to school and we have other rotations that are running through club. Q4 should be very similar to the cadence that we built into the in the earlier models that we've had. So Q2 being an increase over historical because of the club promotion. Q3 is usually our peak quarter because of back to school and other promotions we have in that quarter. And then Q4 comes in and usually is flat on a net sales basis coming into Q4. That's what we're looking for for this year, and it's very similar to what we've done in the past.

Okay, great. Thank you. And just the same question, but on margins, is there anything that we should keep in mind quarterly?

Yeah, Q2, because of the promotion that we're having in club, that is a lower margin, significantly high volume of promotion. So it will be putting pressure on margins in Q2. And the way it's coming in is we're overdriving what we built into our earlier model. So that in line with also the $1 million in cooler slotting spend that move from Q1 to Q2, we're anticipating a 200 basis point impact on margins in Q2 versus what we went out in our earlier model. For the whole year, though, we're anticipating to be in line with our 120 basis point reduction from prior year, really just showing the impact of the promotions that we're running a little bit of unfavorable mix associated with the growth of snacks and then the impacts of both the tariffs and the fuel into margin.

Great. Thank you. Thank you.

Next question, Robert Mosca with TD Cowan. Please go ahead.

Just a couple of questions.

Hi. I wanted to ask, there's a sales beat But there's also higher costs for freight and for fuel. After the extra cost, is there money left over for reinvestment? That seems like a pretty big number for fuel inflation. I just want to see exactly how much extra is being put back into the business.

Yeah, Rob, there is extra that the way we're modeling it, there is extra to be able to be put back into the business, specifically into marketing for the year. We're looking at $3 to $4 million with the potential of going up from, you know, potentially move from adjusted EBITDA back into investment into the company for driving and, you know, really into the year 26 and really setting us up for 27 for the year.

That's great. Okay. And then the second question was, you mentioned yourself that you got a lot of attention from the IPO. Is one of the reasons for conservatism that it might have spiked a lot of trial or one-time use and it's unclear whether the repeat will be there in 2Q and 3Q? I'm sure you're very confident that it will be, but is there any way of gauging how much extra sales you got from all that attention?

Well, you know, we know there was obviously a lot of engagement with the brand during the IPO from an earned media standpoint. We could see it online. We could see it in press hits, all that stuff. There's no question about that. We get repeat rate information from our panels on a monthly basis. Through the whole quarter, we saw increases in our repeat rates and engagement. And, you know, I would just say if you just kind of look at the, The way the products are turning out there, it feels really solid to us. We also want to make sure that we're just setting the bar at a place where we can plan around it for contingencies, things like that, that could happen in the economy that we have not seen yet and we're not expecting, but we also want to make sure that we're careful in the way that we plan. And our objective and goal would be to continue to increase our outlook as we go through the year. That's been our philosophy. And, you know, we want to build and earn some credibility around calling our numbers. And that's why we've taken this approach with our forward guidance. Even though you could argue from a consumption standpoint, we could have taken those numbers higher. I'd much rather take them up later based on actual execution versus, you know, just, you know, extrapolation.

For sure. All right. Very good. Thank you. Thank you, Rob.

I would like to turn the floor over to John for closing remarks.

Okay. Thank you very much, everyone. In closing, we're really proud of our strong start to the year. More importantly, we're seeing clear evidence that our model is working and strengthening as we scale. The combination of accelerating velocities, increasing household penetration and repeat, and improving retail productivity give us a lot of confidence in the durability and quality of our growth. We are building a differentiated brand in business with a long runway for category expansion, increased efficiency, and long-term value creation. And as I often say, we're still in the very early innings of this opportunity and look forward to the road ahead. I want to thank our team, our retail partners, and our shareholders for their continued support as we execute against this significant opportunity. Thank you, everyone. Appreciate you dialing in today.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.