Utz Brands Inc Class A Common Stock

Hello and welcome to the U.S. third quarter 2024 earnings call. As a reminder, this call is being recorded. I will now turn the call over to Kevin Powers, head of investor relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us today for our live Q&A session on our third quarter results. With me on today's call are Howard Freeman, CEO, Ajay Kataria, CFO, and Kerry DeVore, COO and Chief Transformation Officer. I hope everyone had a chance to listen or read our prepared remarks this morning and also view our presentation, all of which are available on our investor relations website. Before we begin our Q&A session, just a few housekeeping items to review. Please note that some of our comments today will contain forward-looking statements based on our current view of our business and the actual future results made different materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. Now, operator, we are ready to open up the line for questions.

Thank you. As a reminder, all you have to do to ask a question is press star 1 on your telephone keypad. Your first question comes from the line of Andrew Lazar from Barclays. Please go ahead.

Great. Thanks. Good morning, Howard, Ajay, and Carrie. Good morning. Good morning. Good morning. Maybe to start off, you reaffirmed your full-year organic growth outlook of 2% to 2.5%, which suggests a pretty significant sequential acceleration in 4Q to at least about 3.5% from the 1.9% you reported in 3Q. And that's just to get to sort of the low end of the full year. So, I guess, how much visibility do you have to this acceleration, and how do we square that expectation with consumption data that, at least in the first couple weeks of October, at least based on our data, seems to be running more flattish or so, and particularly in light of the fact that, as we know, shipments were ahead of takeaway in 3Q?

Thanks for the question, Andrew. Look, I think there are a couple of things. The first thing I'd kind of point out is we've always anticipated that the entire year that we were going to continue to sort of see momentum build, and that's really driven by a couple of things that are under our control. First is that the marketing step-up continues as we go through the rest of the year. We have innovation that is also building. You mentioned seasonal shipments, and there is a little bit of that in the third quarter, but We do see an incremental execution on seasonal through the rest of the year. Our distribution has been gaining, and so you kind of saw that in third quarter, especially in our expansion geographies and kind of bringing our on-the-border brand into our core. You saw the distribution gains. And then the last, while not something that I particularly like to hang our hat on, is our laps do get significantly easier in the fourth quarter. So we have pretty good visibility to all the things that are under our control that would suggest to us that we should see momentum continue to build over time. The last thing I'd offer you is, you know, you do see the different, the widening between measured and unmeasured in this quarter. So you saw a little bit of that in the second quarter, and you see a little bit more of it in the third quarter, and we would anticipate a somewhat similar gap between measured and unmeasured channels in the fourth quarter.

That's helpful. And it sounds like outside of potato chips, which had its own sort of idiosyncratic competitive issues during the quarter, the other subsegments held up reasonably well in 3Q. A key competitor recently made some comments about sort of stepping up competitive activity on tortilla chips going forward as well. And I'm just curious how you're sort of taking that into sort of consideration in your outlook.

Yeah, so certainly we saw a much more heightened competitive environment in the third quarter, which which obviously impacted potato chips. I think the rest of our portfolio, to your point, continued to perform well and kind of is the strength of our portfolio strategy and becoming more focused on our power brands as we go forward. You know, tortilla chips is a little bit of a different animal than potato chips for us. First of all, we already have made decisions through the course of the year and have historically had a wider price gap between On the Border and some other competitors. And so we would anticipate that while the gaps may narrow some, that we like where we are competitively. Second of all, the distribution gains that we're getting, again, in our core, which has always been part of our thesis, was that we could bring on the border into sort of our UTS core and drive distribution gains has been working. And then the third is, I think, as you look at some of the merchandising that we are looking at for the rest of the year and as you turn into the next year, on the border does benefit from some of that support. Obviously, we'll evaluate price gaps as we go. And if we need to be more competitive or sharpen where we are, we'll take that decision when we need to. But we feel pretty comfortable with where we are on tortilla chips right now. Thanks very much. Appreciate it. Thank you.

Our next question comes from the line of Peter Galbo with Bank of America. Please go ahead.

Hey, guys. Good morning. Maybe just to start, if I can follow up on Andrew's question. as we think about the 4q exit rate in that you know four four percentage type range at least at the midpoint um that kind of sets you up you know for for exiting that algorithm or at least the low end of algorithm into 25 and i'm sure you don't want to give any kind of formal commentary there but just want to understand if that's kind of how we should should be thinking about it at a high level And then in addition to that, you know, you had some commentary and there's some nuances as we get into 25 that I was hoping you could remind us of. I think you mentioned, you know, kettle production is going to start up in one queue. Maybe you have some laps on golden plate, but anything else we should be aware of as we start to kind of think about 25. Thanks.

Yeah, thanks, Pete. You're right. We're not going to do 25 guidance at this point, but I'd offer you a couple of things. I think first of all, If you look at what we have said at our 2023 Investor Day, the conversation that we had was laid out our volume share expectations for both our core and for our expansion geographies. And at the moment, what has been true, and you can see year to date, we are delivering a hold the core volume share and an expansion market volume share around that 0.2 percentage points. So I think we feel pretty good that our distribution gain strategy and our whole core strategy are kind of yielding the fruit that we would expect. I think what's been a little bit different year to date is the translation from volume to value. And certainly with competitive pricing being a near-term conversion question, that I think remains the thing that we are working our way through. The other thing I would offer is, you know, we are feeling very good about our non-measured channels. They continue to grow and step up. We are gaining momentum. you know, there and, you know, we do expect that the category and category participants remain rational, which is great for everybody. So, you know, I think we will continue to see what we control come through in our results. And, you know, then the translation, I think, is the wild card. But I think we feel pretty good about where we are for the fourth quarter of this year. And we'll address 25 as we kind of lap the year. Your second question is around King's Mountain and Kettle?

Yeah. Any other nuances we should be aware of in 25? You know, King's Mountain, I think you're going to have some laps on Golden's Lake. Anything else we should kind of, you know, take note of?

Yeah. You know, so to your point, our productivity program and our automation and capital installation is going on as planned, and we are expecting – for Kings Mountain to start up to add incremental capacity to support our kettle business, which is, you know, a lot of Boulder Canyon growth and a lot of on-trend performance there. But there's not a lot of laps to talk about. I think probably the two biggest ones, one is our C-Store lap gets better. Remember, we actually saw our step down in C-Store business in the back half of last year, really in 4Q. So that, while we're not expecting for C-Store to become a significant positive, it becomes significantly less negative in the year. And then the second is really around Zaps and some of the challenges we've had on that business. I think those are the two biggest material drivers that might change next year.

Great. Thanks very much.

Thanks, Pete.

Your next question comes from the line of Michael Lavery from Piper Sensor. Please go ahead.

Thank you. Good morning. Good morning. Just was wondering if you could talk about the promotional environment a little bit more. You gained volume share in the stepped-up promotional environment, but lost a bit of dollar share. How do you think about the optimal balance between price and volume? And maybe specifically, too, by... you know, kind of portfolio segment. It looks like you promoted foundation brands quite a bit more, even though the volume lift was there. What's maybe some of how you think about that role in the portfolio and especially in the environment here now?

Yeah, I appreciate the question, Mike. Look, I certainly in the quarter, we saw a much more promotional environment and actually saw overall promotions kind of coming back in line with what we used to see in 2019. So where we had been lagging promotionally across the category up until then, Q3 of this year was the first time that we kind of saw that step up. And then for us specifically, we've sort of followed similarly, but we stepped up a little bit further driven by the customer mix that we have, which was fundamentally different versus 2019. Remember that predates a lot of the Paul Cecala, Public Schemes, and some of the other expansion geographies where we have a little bit more high-low than we had. So, the promotional environment has gotten more competitive for sure. Obviously, potato chips was the big story on the quarter as a variety of competitors and a variety of channels actually wound up becoming more competitive or more promotional. So, as we go forward, I think the category remains rational, and I think that we will see sort of some of the stabilization of that. I think the category household penetration remains strong. And so it certainly shows that consumers are engaging when we bring promotions and marketing and innovation forward. As for us on foundation brands, just a couple of things. You'll remember last year, we spent a lot of time talking about Vintners and Kitchen Cooked and some of our other businesses, HK Anderson that had struggle a little bit more. And what you saw in the quarter is, as we've been doing the price pack architecture work, those are some of the businesses where you also wind up putting some pricing against to get the absolute price point down. And that's, I think, a little bit of what you're seeing there as well. And then we do have on HK Anderson, we had a promotional shift into the third quarter from the second quarter at one of our retailers. You know, we'll always be a volume value story, I think, volume obviously driven by expansion. And, you know, we do expect that pricing will be something that we'll continue to look at, as all of the category participants do. We'll maintain our price gaps and be rational.

Okay. Thanks for that. And just was wondering how much you could give an update on distribution progressing. You've had some smaller wins recently that, you know, I think we're just ramping up in the second half of this year. But how do we think about maybe how that continues to go? Or is there capacity in place for bigger wins, maybe especially in the West or Midwest? And how does DSD play a role in that?

Yeah. So to your point, look, we felt very good about what our expansion geographies have been doing. And you certainly saw that in the quarter as we continue to gain distribution with both TAB, Mark McIntyre, You know, larger national retailers that have local banners as well as we start thinking about some of our alternative channels club and the sort. TAB, Mark McIntyre, So you know we would expect to continue to gain distribution, there we are ongoing conversations for next year already, as you can imagine. TAB, Mark McIntyre, and expect that that will continue as far as capacity is concerned, what we feel very good about our overall capacity utilization. as well as the investments that we have been making to be able to get a supply chain that is both resilient and responsive and efficient as we have those gains. So we don't see any foreseeable issues with capacity as we go forward, even if there were sort of a larger than average distribution gain that we have, we have visibility. And then in terms of DSD, we're a hybrid model, so we will service customers how they want to be serviced. So if you want to be in DSD, we have the routes. We also have relationships to make sure that that happens. If you want direct to warehouse, we can ship it to you that way as well.

Okay, great. Thanks so much. Thank you.

Our next question comes from the line of Rob Dickerson from Jefferies. Please go ahead.

Great. Thanks so much. First question is on competitive activity and just the geographic expansion plan. I'm just curious, and I'm not sure if you kind of touched on this a little bit earlier, but is there like, you know, a component of the kind of the kind of the close in competitive activity impacting the distribution gains you've seen or you expect that? Or is it kind of more of a kind of post distribution velocity translation translation dynamic? that you have to keep your eyes on? I mean, basically what I'm asking is, like, is anything changed to, you know, being able to expand in new geographies if there is more competitive activity within the category?

Yeah, I think the short answer is no, we don't anticipate a change in our geographic expansion strategy and the discussions that we have with retailers. I think you have to remember that part of why retailers like us is because we tend to be incremental to the category. We are not supplemental. I mean, the data is fairly clear and compelling that when we come in, um, there's, there are more buyers in the category and obviously some investment comes along, um, with that. So the first thing I think for us is that we remain incremental. And I think the second thing is we are highly supportive of a retailer's individual strategy because if you are a, uh, if you are appealing to different consumer segments, it's nice to have a portfolio of brands to choose from. so that you can actually curate your assortment. And the breadth of our portfolio actually allows that to happen. And so I think in both cases, retailers understand the benefit there. And then the third is we are a rational actor. So we will be disciplined about what we do. We have the data. We share it with retailers and are pushing forward with them to make sure that we are meeting our obligations to support a healthy and growing category. that consumers want to be a part of i think in terms of the overall promotional environment i think it's to your point it's really a question of what does that how does that impact velocity uh in in the category overall and that's a little bit of that volume to value translation as well i think those are the biggest drivers all right super and then maybe just um quickly you know excuse me you had said um in a prepared remarks right that

There's a shipment benefit in the quarter kind of ahead of some of the holiday merchandising plans you have. I'm just curious, like so far, right, have you seen fairly good customer reaction or consumer reaction with some of the merchandising plans you've already put in place, let's say, even over the past few weeks?

Yeah, look, so to your point, we had always planned a seasonal shipment. And I think everybody is seeing holidays getting earlier. And, you know, certainly we saw that it was planning the impact beyond that was very small. And then in terms of the consumer and customer response, the merchandising, what we feel good about where we are, our promotional lifts are improving and our elasticities aren't fairly consistent with what we would have anticipated. And so, you know, we think that our business is exactly where we would have anticipated it right now.

All right. Super. Thank you.

Thank you.

Our next question comes from the line of Nate Modi from RBC Capital Markets. Please go ahead.

Yeah, thank you. Good morning, everyone. Hey, I wanted to go back to the promotional list question. I mean, you know, you're talking about feeling good about that, but, you know, broadly speaking in the channel, it just seems like it's not matching kind of what the list has been historically. I'm not talking about specifically. I'm just talking about broad-based grocery promotional lists and William Bao Bean, M.D.: : You know I don't know if that's a function of the consumers feeling so much inflation that maybe you know 50 cents off on a bag of chips may not be as effective as it used to be or. William Bao Bean, M.D.: : Maybe it's that people aren't trafficking as much in store, because they're doing more online shopping so just wanted to kind of get your reaction and thoughts to that. William Bao Bean, M.D.: : And then I have a quick follow up.

William Bao Bean, M.D.: : yeah so so look, I think. The observation, I think, is fair that consumers have certainly been responding differently and seeking value, whether they're shopping on promotion or channel shifting to try and find either absolute price points or value as they define it. We always talk about the latter being up and down. So if you can afford the pantry inventory, you may lean into a larger pack size. If you prefer an absolute price point, you can do that as well. And so some of that, I think, muddles the math a bit. I do think what we are seeing, particularly in the food channel, where promotions do tend to play a bigger role, that we have seen some improvement in the overall promotional price elasticity versus the second quarter. And I think that is indicated by the incremental buyers that are coming in. That's sort of a little bit of that value seeking that we're talking about. And I think you're seeing the category also testing different price constructs. So you see buy and gets and you see absolute price points all I think in trying to find the right combination of things to keep the consumer and the shopper engaged. And then the last thing I would say is we continue to be an affordable indulgence and an accessible price point, but really this category has always historically been about innovation, marketing, and then price promotion. And I think that I would expect to start to see that also normalized. I think it's way too early to declare a victory. but I think we're cautiously optimistic that we're starting to see that come through.

Great. And then just kind of, you know, a longer range question, but I'm curious on your thoughts on, you know, new substrates within the snacking category, right? I mean, obviously we saw one of your bigger competitors just announce a deal for a different substrate, cassava, and I'm just curious, like, Do you have the capacity or the capability to actually make some of these alternate substrates like cauliflower and edamame and things like that? I just wanted to get your thoughts on that as a holistic strategy going forward.

Yeah, so I think the short answer, so grain-free alternative grains, other powders or other products, yes, we can certainly make them because it really depends on the production asset. I think the bigger question is always around allergen. So whether allergens, that may cause for a different capital strategy. You may need to think about that. I've had a couple of opportunities in my career to actually put peanut butter into manufacturing facilities, which, as you can imagine, is not a small decision for companies. So I think the answer is yes, we can do it. We certainly have the capability. And the bigger question to me is always around the consumer insight. and the addressable market, and how big can you make it for people who are looking for those benefits. To that end, if you look at our Boulder Canyon business as an example, it's a great example of something where we have introduced an innovation that has continued to grow. Obviously, avocado oil remains a strong suit for us, but even things like Canyon Poppers, which is a traditional cheese ball that we have now moved. So we'll listen to the consumer, and if there's a desire for that, we can. And then the last thing to an overly lengthy answer, This is also a benefit of a company that is investing in its supply chain and its production assets, because as those things happen, we have a lot more degrees of freedom to address consumer trends because we are continuing to build out and invest in our production capabilities.

Great. Thanks so much. I'll pass it on.

Thank you. Your next question comes from the line of Robert Moscow from PD Cabin. Please go ahead.

Hi, Howard. Thanks for the question. I wanted to know if you're noticing the tactics for the promotional activities in the salty snacks category kind of shifting. I thought a few months ago on potato chips it was more like just traditional price discounting, but I think it's moving more towards bonus bags going forward. Have I got that right? And and is it happening in a phasing approach or or are these discounts on potato chips like still out there? Is it still very aggressive in that in that category?

Yeah. So I'll answer the second question first. I was the second part of it first. I think what you're starting to see in potato chips is the promotional environment is normalizing. So we're not seeing the deep discounting necessarily that you saw over the summer. across the category. What you are seeing is different constructs showing up of buy two, get three, or buy two, get something different, or an absolute price point of, as opposed to multiples. And I think you see that in different customers based on their strategy and different competitors based on their own. To your question around bonus packs, I think bonus packs are just a different way to drive consumers, get consumers the value that they want at the pricing at an absolute price point. And we've definitely, we heard a competitor say that they were going to introduce bonus packs. We've seen early indications of those products out in the marketplace. And potato chips is one of the segments where we're certainly seeing that come through. And I would expect that you'll continue to see competitors continuing to try all sorts of different ways to get the shopper the value that they want to be able to compete on, to be able to maintain their engagement in a category that they have historically loved and bought and participated in.

So I guess my follow-up is, do you feel that you have to change your tactics in response to that, or do you feel confident with the way you've laid things out that you can just keep doing what you're doing?

Yeah, so I think we feel pretty good about our plans. We feel clear on what we're executing, the marketing and innovation execution that we plan for the fourth quarter, and obviously as we go into next year, the distribution gains, which are always going to be central to our thesis of how we drive our growth, and then a lap period. But that said, look, we work in a competitive environment. We will always look at our tactics and constantly revise them If we need to, that's a lot of the capability building that we've been doing. And so if there is a better way to address the consumer demand, then we will make those changes as we need to. And the biggest thing for us is continuing to be able to do it faster and at speed. And so we're in a good place, but as with everybody else, we can always be better. We'll always be pleased but not satisfied.

Great.

Thank you. Thank you.

Your next question comes from the line of Brian Holden from DA Davidson. Please go ahead.

Yeah, thanks. Good morning. I wanted to ask the 25 question, I guess, kind of taking a theoretical approach. Obviously, category stuff is outside your control, kind of as you referenced earlier, what's happening there. But maybe just curious, you know, Given the extent to which your long-term algorithm incorporates some contribution from price, do you think you can deliver an on-algorithm year if there's no price and it's reliant solely on volume?

Yeah, well, I think that is probably the biggest question, but I'll kind of give you what I think how we have thought about it historically. I'll take you back to Investor Day to start and then kind of how we think about our own growth over time. At Investor Day, we did take a conservative approach where we had said that we thought that volume would be around 0% to 1% for the category and 2% in price, whether a combination of absolute or mix as we built. Obviously, that was a step down from the 4% to 5% percent category that we had seen historically. So I think we had already gone into it with what we thought was a more moderated approach. And, you know, obviously the category has been a little bit softer than that this year, but it's starting to inflect a little bit more positively as we've gone through the rest of the year. I don't know that we believe that we're going to, in the near term, get back to that forecast because it will continue to be a little bit of a work in process. the things that we control and the things that we're doing, which I think give us some confidence, is we've always said that we are not solely reliant on the category assumption in order to drive our growth because of the white space distribution opportunities we had and because we believe that we can bring products from the expansion geographies into our core and our core products into our expansion. And that is largely going as we would have expected. So you can see that in our results. And so, you know, I think what we're controlling is working for us. Non-measured channels continue to be a, which had been a headwind prior year, are building into a tailwind as we're gaining. And, you know, and I do think that in the near term, pricing is a challenge, but over the longer term, I would suspect that the category will move back toward a rational place to occupy and continue its, you know, what makes it probably the best category in CPG. So, We have work to do for sure, but I do think that the things that we control actually should drive the results we are promising. Great, thanks.

And then more recently, we've seen, I know you referenced, you know, kind of the convenience channel pressures, which we've seen for a while now. More recently, I've seen gas prices come in. Just curious, and I appreciate it's a more recent phenomenon, so certainly fewer of any data points behind this, but any lift in pulse purchases in the convenience channel concurrent with lower fuel prices?

You know, I mean, I'm not sure that we've seen that. And to the point around convenience, the convenience channel has been a challenge for the category overall and us particularly. So a lot of the work that we've been doing that are yielding better results, we're feeling pretty good that where we fixed it, where we've changed we're seeing an improvement in trend i'm not sure we could correlate that to gas per se um so i think i'm not really sure that we have a we have a unique perspective on that but fair enough thanks thank you your next question comes from the line of john bone garter from the zuho please go ahead good morning thanks for the question hey john

Howard, I wanted to ask, just on the volume pressure in salty snacks, sweet snacks volumes are also down, confectionary, baked goods. So it's not just salty, and there's an elasticity impact, obviously. But as the inflation dust sort of settles and you look back, how much of this volume softness in salty do you perceive as a function of just sort of an elevated base and overconsumption in the years following COVID? I mean, did frequency become overstretched? I'm curious how you think about base demand relative to trend and whether there's sort of a natural diminishing of returns from promo and lifts that sort of cultivates more price discipline going forward.

Yeah, so I think a couple of things. I think it is fair to look at the last several years and say, boy, the category really ran strong and well ahead of its long-term algorithm and therefore is the pause that we are seeing particularly surprising or, and is it a broader question? I do think we believe that there is some normalizing in the growth rates. What I would also say is that, you know, if you look at category household penetration, you look at category buy rates and buyers, you know, you do still see a step up and you do see the category growing buyers and households. So there's certainly still consumer interest and desire to engage in the category more than it has historically. And we certainly see that the consumer engages when innovation and marketing comes through. That's one of the reasons why we feel very good about, for our own business, if you look at our household penetration growth and the buyer acquisition that we've had, that you're also seeing not only are you getting new buyers, but they're buying at a similar rate as our historical did, which is, as you know, not particularly easy to do as you gain distribution. So, you know, I don't think there's a long-term question on the category and the consumer enthusiasm for it. I think those are all still strong. I do think there's a little bit of a normalization going on.

Thanks, Howard. Thank you.

Your next question comes from Lana from . Please go ahead.

Yeah, hey, just two quick questions. One, is private label, is that having any impact on the potato chip category? Certainly anecdotally, we're seeing a pickup in stores that we visit regularly. And the quality of the private label potato chip and even other salty snacks has gotten, has improved substantially. So I'd love to hear your take on that.

Yeah, so, I mean, look, the category, I mean, obviously, overall, this category has a fairly low presence of private label historically. And sort of the usual actors who use private label as central to their brand will continue to support it. And I think that that is not unusual. It's still a relatively small piece of the business, albeit grew as inflation took off. I think one of the things that's been sort of interesting is that when you look at the pricing that we saw in the third quarter and that in some cases we saw branded players going down to private label level pricing, you actually saw private label struggle in those boxes over that period of time, which to me kind of continues to affirm that brands matter and that ultimately as we think about, as we go forward, making sure that we have a healthy, rational pricing environment for the category, including an opening price point like a private label, all makes sense to me. But I think in the third quarter, private label, I think, struggled fairly significantly as pricing came down. Okay, thank you.

And then this last question on the gross margin, very good performance in third quarter. Does that continue at that type of improvement rate because of the, you know, your fixed cost leverage that you've been able to achieve, or does the promotional environment at all put some of that, you know, strong gain at risk?

Yeah, so I'll take that. I think the short answer is yes. The gross margin performance that you're seeing will continue. We have delivered about 270 basis points of margin expansion year-to-date, and you will see that sort of, you know, we'll finish out about 250 basis points for the year. I would say, you know, productivity programs are running pretty strong. We are delivering more than 4% of EBITDA between 5.5% to 6% of cost of goods in productivity this year, and that is helping us, you know, offset any, you know, price mix investment that we are seeing on the top line. And, you know, if you look at our P&L, our price investment is slightly negative, you know, 50 basis points in the quarter. So it's not much. All right.

Thank you. That's all I had. Thank you.

Your next question comes from the line of Jim Salera from Stevens. Please go ahead.

Good morning.

Thanks for taking our question.

Hey, John.

Howard, I believe in your prepared remarks, you talked about household penetration up like 180 basis points. Can you just offer some insight into which brands are funneling those new households to you? And if you have any details on, you know, characteristics they find attractive with various other brands, if it's a value thing because of the price gaps or unique flavors or any color that would be helpful.

Yeah, so... a couple of things, Jim. I think one is not surprising as we are seeing distribution gains and expansion markets that you would also see some household penetration gains across the portfolio because we're bringing our Power 4 brands into those markets. I think the two shining stars, I'm sure it won't surprise you, one is on the border as we have increased our distribution in our core, and the second is obviously Boulder Canyon which just continues to grow much faster than the market, much faster in the classes of trade it's in. Certainly, it's outpacing in the spins channel, and you can see that number. And we're approaching $100 million in sales. So we're feeling really good about where we are on Boulder Canyon. And so those two brands are obviously driving a lot of it. But it is not exclusively there because we're seeing expansion geographies overall gaining households. So I think that's the biggest driver of it. And then I think in terms of insights as to why, you know, listen, we're very proud of the quality of our products. You know, we have recipes and products. a product that is unique in the market. I think we're pretty proud of what we taste like. We don't taste like everybody else's product overall. And I think when consumers try it, they repeat. We've always enjoyed historically high repeat rates. And I think that, you know, that continues to be the case.

Okay, great. And then maybe if I could drill down a little bit on the border. On the border growth, especially around, I would imagine they get a boost from football season is encouraging to see, but least in the standard it seems like i still see some softness in what i would use kind of the complementary sauces and dips that would go alongside otb is that something that as otb continues to scale we should see a turnaround in those or do you still need to do some more work to kind of get them on shelf next to the to the chips or send me thoughts there yeah um i appreciate the question obviously uh on the border dips and salsa are an important complementary product to the overall

Justin Capposian, Business because everybody who sits and watches watches a game wants to have both we had a we had a. Justin Capposian, contraction distribution last year, it was not a discontinuation, but we went from two locations in a retailer to one, so we were in sort of the traditional salty aisle and we were also in the ethnic aisle and it consolidated to. Justin Capposian, The traditional salty aisle and we're still cycling through that that's been a lot of the decline that you're seeing. The underlying health of that business is quite strong. We also had, like everybody else does from time to time, you launch an innovation that doesn't work that we also have in the prior year that we're also cycling through. But I think the underlying health of on-the-border non-salty, so the dips and salsa business, is actually pretty healthy. We have to cycle through that work, and we continue to look at ways to innovate the entire brand, not just the chip.

Appreciate it, Tyler. I'll hop back in the queue.

Thank you. As there are no further questions at this time, this concludes the Q&A session in August third quarter, 2024 earnings call. Thank you all for attending today's meeting. You may now disconnect. Have a pleasant day, everyone.