Brian Holland

Brian Holland inquired how Vital Farms reconciles the challenging macro environment with its core consumer behavior and historical lack of concern about competitive dynamics or widening price gaps. He also questioned the confidence behind maintaining a low 20% growth rate through 2030, and the flexibility of the Seymour build-out if sales decelerate more than projected.

Answer

Russell Diez-Canseco, Executive Chairperson, President, and CEO, clarified that there's no significant change in core consumer confidence, but acknowledged category disruption from competitors. He emphasized a patient approach to adding high-quality households. For long-term growth, he highlighted supply chain capacity, the third production line, consistent volume share gains, and increased brand awareness. Thilo Wrede, CFO, added that this year's growth is primarily volume-driven and accelerating.

Brian Holland asked how Vital Farms reconciles concerns about the macro environment's impact on its core consumer with historical confidence in competitive dynamics. He also questioned the confidence in maintaining a ~20% growth rate through 2030 to reach the $2 billion revenue target, and the flexibility for the Seymour facility build-out if sales decelerate more than projected.

Answer

Russell Diez-Canseco, Executive Chairperson, President, and CEO, stated no significant change in core consumer confidence but acknowledged category disruption from competitors. He affirmed Vital Farms' commitment to its value proposition and patient, measured growth. Mr. Diez-Canseco cited capacity investments, efficiency gains, volume share growth, and high brand awareness as drivers for long-term confidence. Thilo Wrede, CFO, added that current growth is primarily volume-driven and accelerating year-over-year.

Brian Holland asked why the company flowed through all of its Q2 upside to the full-year guidance, a potential shift from its typically conservative approach. He also asked about the company's current position in its investment cycle and when to expect scale benefits.

Answer

CEO Russell Diez-Canseco clarified this was not a change in philosophy but a reflection of high confidence in execution as operations catch up to the powerful commercial engine. CFO Thilo Wrede added that while they are seeing scale benefits, they continue to invest for long-term growth, such as the accelerated CapEx, and are still building out the organization, albeit at a slower pace than last year.

Brian Holland from D.A. Davidson inquired about the evolving egg category dynamics, particularly the impact of heightened promotions on commodity eggs on Vital Farms' sales, and asked for an early outlook on fiscal 2025 relative to the company's long-term growth algorithm.

Answer

Chief Sales Officer Pete Pappas stated that Vital Farms' demand remains high and is not significantly affected by commodity price gaps, as the company maintains stable pricing and serves as a margin offset for retailers. CFO Thilo Wrede added that consumers who buy Vital Farms do not typically cross-shop with commodity eggs. Regarding 2025, CEO Russell Diez-Canseco expressed increased confidence in the long-term target of $1 billion in revenue by 2027 but declined to provide specific 2025 guidance at this time.

Brian Holland asked for a rank ordering of the consumption growth drivers for 2026, considering DTC, distribution, and the increased focus on value proposition. He also inquired about the sustainability of category and consumer dynamics, specifically if the category has bottomed out and if behaviors are normalizing, given the encouraging 4Q household penetration and CAC data.

Answer

CEO Billy Cyr stated that highly effective advertising in a good environment remains the number one driver of growth, supplemented by increased visibility and product innovation. COO Nicki Baty added that 2026 drivers include a full year of club channel distribution, continued new store growth, new retail visibility opportunities like island units, media, and sharpened affordability plans (entry-level price points, innovation, price elasticity). Billy Cyr noted very early indications of improving category and Freshpet trends, with some inflection in household penetration and MVPs, but cautioned about recent storm-related noise. He expressed hope for sustained improvement, observing that competitors and retailers have seen similar phenomena.

Brian Holland from D.A. Davidson asked Freshpet to rank the key drivers for consumption growth in 2026, specifically inquiring about the roles of DTC, distribution expansion, and the sharpened value proposition. He also sought management's perspective on the sustainability of improving category and consumer dynamics, including household penetration and customer acquisition cost (CAC) trends observed in Q4.

Answer

CEO Billy Cyr emphasized that highly effective advertising remains the number one growth driver, supplemented by increased visibility and product innovation, with an increasing percentage of growth expected from omni-channel/e-commerce. COO Nicki Baty outlined distribution drivers including a full year of club channel growth, new store development, multiple fridges, and new retail visibility (e.g., Fridge Islands). She also highlighted affordability initiatives, including entry-level price points and price elasticity work. Billy Cyr noted early indications of improving category and Freshpet trends, but cautioned about recent storm-related noise.

Brian Holland from D.A. Davidson & Co. sought clarification on whether maintaining margin targets, despite removing the 2027 sales target, is predicated on achieving low-to-mid-teens growth. He also asked about the dynamics between slowing household penetration and buy rates.

Answer

CFO Todd Comfort confirmed that achieving low-to-mid-teens growth is necessary to hit the 22% EBITDA margin, primarily for G&A leverage. CEO Billy Cyr addressed the buy rate, explaining it is currently growing faster than the long-term trend partly because household penetration growth has slowed. He acknowledged that consumer hesitation to trade up is a factor, though premium products like Homestyle Creations are still performing well.

Brian Holland sought to clarify if maintaining margin targets while removing the 2027 sales goal implies a new directional growth expectation of low-to-mid teens. He also asked about the dynamics between slowing household penetration and buy rates.

Answer

CFO Todd Cunfer confirmed that low-to-mid teens growth is necessary to achieve the 22% EBITDA margin target due to operating leverage, but stopped short of providing specific long-term guidance. CEO Billy Cyr explained that the buy rate is currently growing faster than its long-term sustainable rate as a direct result of slower household penetration growth. He also noted that consumer reluctance to trade up is impacting both new customer acquisition and up-selling within the portfolio.

Brian Holland asked about the performance of the Complete Nutrition line since its 2023 launch, consumer awareness of Freshpet's value tier, and for evidence of media spend effectiveness over the last 3 to 6 months.

Answer

President & Co-Founder Scott Morris explained that the Complete Nutrition roll successfully attracted new consumers who subsequently traded up within the portfolio, and a similar strategy is being executed with a new bag product. He noted that media effectiveness is being driven by migrating dollars to the most productive, targeted areas like e-commerce, where they are seeing strong returns on ad spend, and by developing new creative to unlock new consumer segments.

Brian Holland questioned whether the relationship between net sales growth and media spend in the second half of 2024 is indicative of the expected dynamic for 2025.

Answer

CEO William Cyr clarified that the two are not time-aligned. He explained that the sales growth in the second half of 2024 is a result of media investment from the first half. The significantly higher media spend planned for the second half of 2024 is intended to drive household penetration and sales growth in the first half of 2025.

Brian Holland questioned whether the relationship between net sales growth and media spend in the second half of 2024 is indicative of how the company views the dynamic for fiscal year 2025.

Answer

Executive William Cyr explained that the two metrics are not time-aligned. Growth in the second half of 2024 is a result of media spending from the first half. The significantly higher media investment in the second half of 2024 is intended to drive growth and reaccelerate household penetration in the first half of 2025.

Brian Holland asked about the strategic timing of the Bachan’s acquisition, focusing on Marzetti's current preparedness for M&A compared to five years ago, and the integration strategy for Bachan’s, including potential cost synergies and capital investment needs.

Answer

CEO Dave Ciesinski detailed Marzetti's transformation over recent years, including narrowing its focus to sauces, dressings, and dips, modernizing its asset base, leveraging licensing for growth, and upgrading its IT infrastructure to SAP S/4HANA. He stated that this foundational rebuilding made it the opportune time for an acquisition like Bachan’s, which aligns perfectly with their core capabilities. Regarding integration, Mr. Ciesinski noted that Bachan’s is currently 100% co-packed, presenting a pathway for manufacturing integration into Marzetti's network, and emphasized a cautious, 'go slow to go fast' approach to realize strong supply chain and growth synergies without immediate significant capital investment.

Brian Holland from D.A. Davidson questioned the timing of the Bachan’s acquisition, asking why now is the right time for Marzetti to execute and integrate this asset effectively, considering its historical M&A track record. He also inquired about the integration and cost synergy aspects, specifically regarding Bachan’s manufacturing (co-packed vs. in-house) and potential capital investment needs for future growth.

Answer

CEO Dave Ciesinski explained that Marzetti has spent years narrowing its focus on sauces, dressings, and dips, modernizing its asset base (e.g., Horse Cave, College Park), and upgrading its IT infrastructure to SAP S/4HANA. He emphasized that most infrastructure remediation is now complete, strengthening capabilities in culinary, manufacturing, marketing, and sales, making it a logical time for an acquisition like Bachan’s, which fits perfectly within their core. Regarding integration, Ciesinski stated that Bachan’s is 100% co-packed, offering a pathway to integrate manufacturing into Marzetti's network. He stressed a 'go slow to go fast' approach to ensure a smooth transition, confirming strong synergy potential across the supply chain and for growth.

Brian Holland asked if the mass retailer merchandising event is meeting expectations despite initial rollout delays and competitive activity, and for insights into similar merchandising events planned for the remainder of the year.

Answer

President and CEO Darcy Horn Davenport confirmed that the mass retailer event is now hitting expectations, with the initial delay being the primary factor for softer consumption. She stated that the team is leveraging the positive results and learnings from this event to develop sales materials and make planned future promotions even bigger at this and other customers.

Brian Holland sought clarification on whether the mass retailer merchandising event is meeting expectations despite rollout delays and competitive activity, and asked about future similar events.

Answer

Darcy Davenport, President and CEO, confirmed the mass retailer event is now meeting expectations, with initial delays being the primary factor for softer consumption, not competitive activity. She stated the team is leveraging current success and learnings to enhance future planned promotions across channels, focusing on improved execution and impactful displays.

Brian Holland followed up on comparisons for the balance of the year, seeking a better understanding of why compares are expected to be easier, and inquired about the visibility into competitor shelf placement throughout the year.

Answer

President and CEO Darcy Davenport explained that club comparisons ease as the company laps periods with fewer new entrants and expanded sets from Q3 and Q4 of the prior year. She noted Premier's role as a partner for retailers in category development. CFO Paul Rode added that distribution gains, innovation, and increased advertising/merchandising will drive acceleration.

Brian Holland asked for a better understanding of why comparisons are expected to be easier over the balance of the year, given prior year consumption strength, and the visibility into competitor shelf placement.

Answer

Darcy Davenport, President and CEO, BellRing Brands, explained that club comparisons ease because the expanded competitive set at the largest club customer began in Q3 and Q4 of the prior year, making Q1 and Q2 comps more difficult. She noted good visibility on competitive entrants for the first half. Paul Rode, CFO, BellRing Brands, added that full-year benefits from 2025 distribution gains, Q1 innovation shipments, increased advertising, merchandising, and promotional events in FDM will drive acceleration from Q2 onwards.

Brian Holland from D.A. Davidson & Co. asked about the core value proposition of Premier Protein and what provides confidence in maintaining or growing market share as the category evolves.

Answer

CEO Darcy Horn Davenport defined Premier Protein's value proposition as a 'trifecta' of approachable positioning, fantastic taste, and great nutritionals. She emphasized that its thicker, milkshake-like consistency and wide flavor variety are key differentiators that appeal to the largest consumer segment, which prioritizes a filling, decadent experience over other product attributes.

Brian Holland of D.A. Davidson & Co. asked to distinguish how much of the recent distribution gains are from resolving past out-of-stocks versus tapping into new long-term white space, and inquired about the evolving competitive landscape as category capacity eases.

Answer

President and CEO Darcy Davenport estimated that lapping out-of-stocks accounts for about a quarter of the growth in the first half. The larger, long-term opportunity comes from two areas: first, doubling their 'share of shelf' to match their market share, and second, working with retailers to expand the entire category's footprint in stores. On competition, she stated the ready-to-drink (RTD) landscape is stable, with high barriers to entry (complex formulation, expensive aseptic facilities) preventing the frequent emergence of significant new competitors, unlike in the ready-to-mix powder space.

Brian Holland with DA Davidson inquired about Mama's Creations' progress on Additional Item Count (AIC) initiatives, the early sell-through and marketing efforts for the Costco MVM, and the expected pricing and benefits from locking in chicken commodity agreements for calendar 2026.

Answer

Chairman and CEO Adam L. Michaels detailed the success of AIC across retailers like Publix, BJ's, and Fresh Market, emphasizing its high ROI. He also discussed the ongoing Costco MVM rollout, highlighting digital marketing strategies on platforms like Instacart and Walmart. Regarding chicken pricing, Mr. Michaels noted that the Bayshore acquisition doubled chicken volume, leading to better supplier negotiations, and that current prices are more favorable than 2025, with further strategic insights to be shared at the upcoming Investor Day.

Brian Holland asked for clarity on the updated EBITDA guidance range, inquiring about the factors that would lead to the high versus low end of the forecast. He also questioned the drivers behind the second-half SG&A outlook, particularly regarding digital investments, the impact of health and wellness trends on innovation, and plans to leverage excess manufacturing capacity through M&A or co-manufacturing.

Answer

CFO Shane Jones explained that reaching the top end of the EBITDA guidance depends on the continued acceleration of the digital business and performance in Asia against tough comparisons. He confirmed a $1 million incremental digital ad spend in Q2 yielded strong returns, and similar investments may continue. CEO Terrence Moorhead added that innovation, like the new MarineGlo collagen product, is designed to capitalize on wellness trends and that the company is actively pursuing third-party opportunities to fill its increased manufacturing capacity.

Brian Holland of D.A. Davidson & Co. inquired about the assumptions embedded in the full-year 2025 guidance, specifically regarding the macroeconomic outlook and the impact of tariffs. He also sought an update on the launch timeline and practitioner adoption of the new digital toolkit for North America.

Answer

CFO Shane Jones clarified that the midpoint of the 2025 guidance assumes ongoing macroeconomic instability, while the high end reflects a continuation of Q1's strong performance. CEO Terrence Moorehead added that the company has proactively managed tariff risks by building inventory. Moorehead also confirmed the new digital toolkit is on track for a H2 2025 launch and is not expected to cause any order disruption.

Brian Holland from D.A. Davidson asked about the company's category growth assumptions, the foodservice business mix, and whether UTZ is still on track to meet its 2026 financial goals set at the 2023 Investor Day despite the recent EPS guidance change.

Answer

CEO Howard Friedman stated the outlook assumes the category remains stable and doesn't improve significantly. He characterized foodservice as a small but potential growth area. Friedman expressed strong confidence in meeting the long-term 2026 goals, highlighting that the core strategic pillars of top-line growth, productivity, and EBITDA expansion are performing as planned and that the company over-delivered on margin and EPS growth last year.

Brian Holland posed a theoretical question about whether Utz could achieve its long-term growth algorithm in 2025 if there were no contribution from price, relying solely on volume. He also asked if recent declines in gas prices have led to any noticeable lift in convenience channel sales.

Answer

CEO Howard Friedman expressed confidence that the factors Utz controls, particularly its white space distribution opportunities, should drive results even with near-term pricing challenges. He believes the company is not solely reliant on category growth to hit its targets. Regarding the convenience channel, he noted it remains a challenge and that while Utz is seeing some improvement from its own actions, he could not correlate it to changes in gas prices.

Brian Holland inquired about the drivers behind the recent growth inflection in Quest protein bars, the market response to the Overload launch, and the innovation pipeline for the bar category.

Answer

CEO Geoff Tanner attributed the bar business's return to growth to the success of the Hero/Crispy line and the new Overload launch. He noted that Overload is performing extremely well where it has distribution, despite its ACV still being low. He acknowledged a prior slowdown in bar innovation but confirmed that efforts have been reignited with an exciting pipeline.

Brian Holland questioned the drivers behind the expected second-half acceleration for OWYN revenue, given recent consumption deceleration. He also asked if the company's strong growth from Quest and OWYN could position it at the high end of its long-term algorithm for fiscal 2026.

Answer

CEO Geoff Tanner explained the Q2 OWYN deceleration was planned due to lapping significant distribution gains. He expressed confidence in H2 acceleration driven by secured new distribution, continued velocity growth, innovation, and low brand awareness offering significant runway. Regarding FY26, CFO Shaun Mara stated it was too early for guidance but the goal is to deliver on their 4-6% growth algorithm, balancing the strong momentum of Quest and OWYN against macro headwinds like inflation and tariffs. Tanner added that strong category fundamentals support their confidence.

Brian Holland of D.A. Davidson & Co. inquired about the competitive and retail environment for the 'New Year, New You' season and asked about the potential for future pricing actions given input cost trends.

Answer

CEO Geoff Tanner noted that retailers are increasing support for the category and he is pleased with the plans for Quest and OWYN, while acknowledging Atkins is pulling back on some promotions. CFO Shaun Mara confirmed a mid-single-digit price increase for RTDs effective in the spring and stated the company is currently focused on productivity but continues to evaluate further pricing actions.

Brian Holland inquired about the performance and incrementality of recent innovations like Quest's Bake Shop and coffee drinks, and asked for an outlook on the competitive landscape for the upcoming 'New Year, New You' season.

Answer

CEO Geoff Tanner expressed encouragement over early results from the Quest Bake Shop platform and noted that new Atkins innovations are turning at double the velocity of the SKUs they replaced. CFO Shaun Mara provided a specific example of this success at Walmart. Regarding the New Year season, Tanner conveyed confidence in their merchandising plans, viewing the upcoming period as more stable than the prior year, which was skewed by a competitor's supply issues.

Brian Holland inquired about the specific sources of the Q1 revenue upside, the implied conversion rate of the business pipeline, and the potential impact of a customer's inventory destocking in the protein shake category.

Answer

Executive Brian Kocher attributed the Q1 outperformance more to accelerated capacity creation than to unexpected demand, allowing them to fulfill existing orders. He declined to provide a specific pipeline conversion rate but reiterated that a larger pipeline increases confidence in long-term growth. Regarding protein shakes, he did not comment on specific customers but stated the category remains strong and SunOpta is still working to increase its output.

Brian Holland from D.A. Davidson & Co. questioned how the current supply chain investments relate to the long-term 20% gross margin target, asking if they signal higher costs or potential upside. He also inquired about the future allocation of capacity at the Midlothian facility, particularly for lines 4 through 8.

Answer

Executive Brian Kocher clarified that the investments are an acceleration of their plans due to faster-than-expected growth, which he believes will accelerate their path to the 20% margin target and potentially create upside beyond it. Regarding Midlothian, Kocher stated that the immediate priority is deleveraging to under 3x by year-end. He also stressed the importance of creating 'non-CapEx capacity' through efficiency gains, which is the current focus before committing to new lines.

Asked for the input cost outlook for the second half of the year, the strategic rationale and margin impact timeline for the new Atlanta facility, and clarification on the drivers for gross margin expansion in the second half, separating volume throughput benefits from the flat input cost outlook.

Answer

The CFO stated that input costs are expected to be flattish for the second half. The new Atlanta facility provides needed capacity for growth and is expected to be margin accretive in fiscal '26 after an initial ramp-up period. For the second half gross margin, they expect to grow margins at similar levels to the first half (50-100 bps) driven by cost savings initiatives, even without a commodity tailwind.

Asked about the gross margin outlook for the rest of fiscal 2025, the drivers behind the recent acceleration in the breads and rolls category, and the company's strategy regarding licensing versus acquisitions.

Answer

The company expects gross margin to improve beyond the 20 basis points gained in Q1, driven by a strong productivity pipeline. The acceleration in breads and rolls is attributed to broad strength, including Sister Schubert's growth and the highly incremental launch of Texas Roadhouse rolls. On strategy, the company believes it can pursue both licensing and acquisitions simultaneously and notes that the licensing pipeline is very strong as restaurant partners increasingly see it as a complementary revenue stream.