Darcy Davenport: Sure. Yes. So why don’t we start just with net sales. So, the biggest factor that would force us to go to the higher, the low side is really production. So, it’s the timing of our production scale up, as you might expect. Other factors are response to promotion, competition, also the overall economy, but the biggest one from a net sales perspective is the timing of the production scale up. When you think of EBITDA, obviously, net sales is a — fact is the major factor and that would just flow through. And then protein mix and freight rates could also push us up or down. Paul, I don’t know if you want to talk a little bit about some of the fluctuations within protein? But again, I wouldn’t — I really wouldn’t read too much into the slightly expanded EBITDA range.
Paul Rode: Yes. From a protein perspective, we have good line of sight really through the first half of the year into the third quarter. So, I think it’s still kind of wait and see how the protein costs. There’s been some fluctuations on the milk protein side. And then on whey protein, which is our primary input for our powder business, we have seen some tightness in that market recently, which likely will start to affect our second half. The question there is that that’s a temporary blip or if it stays at an elevated rate, but we have seen some fluctuations there. But to Darcy’s point, the wider range is just more of a reflection of our growth versus really anything fundamentally changing from how we’re thinking about fiscal ’24.
Operator: Thank you [Operator Instructions] Our next question comes from Pamela Kaufman with Morgan Stanley. You may proceed.
Pamela Kaufman: I have a follow-up question on your production capacity. I think you previously indicated that it would be up around 20% year-on-year in fiscal ’24. Is that still fair? And then in addition to Michael’s capacity, is there additional production that you’re bringing online? And then what is the visibility into production expansion beyond this year?
Darcy Davenport: Yes. We feel good about the 20% plus. And it — the growth slightly skewed to the second half, and that’s just a factor of the start-up from Michael Foods. If you break down the production growth for 24, about 40% of it is coming from new co-mans in ’24. So, new adds that we’re adding in ’24. About 40% of the growth is coming from lapping the ’23 adds and then about 20% is coming from just additional volume from our existing. So that gives you kind of a flavor for the growth that we’re bringing on this year. I think you asked, Pam, what other facilities or partners are coming on this year. So in addition to Michael Foods, we have two existing partners that are adding capacity, so some of our existing partners adding a line, basically.
And then your last question about looking forward on adding capacity. We have in our visibility. So currently, because of how much capacity we added this year — last year and this year, we will get the benefit of kind of a full year. And as they get up to kind of their run rate, the expected run rate. So we actually — we do long-range planning every — twice a year or if anything fundamentally changes. So, our long-range planning are five years out now. And currently, we’re looking at — we think that we will need additional capacity in 20 — bringing on late ’25-’26 and into ’27. So that’s our current. And so, we are already talking to all of our partners and figuring out who we’re going to partner with to expand the capacity.
Pamela Kaufman: Great. And then also, thanks for sharing your thoughts on how you’re thinking about the impact from GLP-1 drugs on the business. And it’s consistent with our research on the benefits to higher protein and weight management foods. But can you elaborate on your initiative to target these consumers? And how do you plan to identify them?
Darcy Davenport: I mean, as you know, Pam, it’s still early. So I think in general, we’re very encouraged by the results of the drugs just for society, but also for our category and our business, but we are in learning mode. So, we did kind of our initial research, mining the data, we’re now adding some additional research. We had already started — we did a pretty thorough study around consumers and how they approach kind of weight wellness. And now we’re adding to that. So, we’re going to — we need to better understand what these consumers need and their journey, how they get information. And then we’re going to test media to determine the best way to reach these consumers. So whether it’s outreach to support communities, to partner with, et cetera.
So I don’t want to go into too much detail. But suffice to say, we are definitely digging in and better understanding, and it will be this year, doing a lot of testing and learning and further understanding kind of their health journey.
Operator: Thank you. [Operator Instructions] Our next question comes from Matt Smith with Stifel. You may proceed.
Matt Smith: I wanted to ask about promotional events timing through the year. Can you talk about the timing of your planned activity? You called out investments in 2Q and 4Q. And I guess when we think about the large promotional events to the extent that there will be timing differences between consumption and shipments beyond 1Q? That would be helpful.
