Ken Plunk: Yes. That’s a good question, Todd. I think the way to think about that is you’re right. As we got towards the end of this year, we got our mix humming and we got price caught up. Inflationary was a bit more of our friend than it was earlier in the year. You start to see us get to those marks that we said were goals of ours. We ended up finishing the full year at 30.1% gross margin. And I think Dan and I talked about that was kind of the floor, we had to get back there. And I think we expect to be able, as this goes forward, to get beyond that number. But yes, there is a seasonal impact. So as you look at Q1 and Q2, I think the way to think about that is the trajectory of being better than the prior year should continue.
But we are not all of a sudden going to do 30% in Q1, because of the slowdown in those winter months of some of those high margin areas like Dippin’ Dots and ICEE. But we should, on kind of an equivalent improvement basis, be better than we were Q1 of a year ago and Q2 of a year ago. And then probably as we get into the back half of the year, you probably see gross margins probably pretty similar to what they were in Q3 and Q4 this year.
Todd Brooks: Okay. Perfect. Thanks, Ken.
Operator: Thank you. [Operator Instructions] And our next question is going to come from the line of Andrew Wolf with C.L. King. Your line is open. Please go ahead.
Andrew Wolf: Good morning. And Dan, congratulations on your election to Chairman of the Board.
Dan Fachner: Thank you very much, Andrew. Good morning to you as well. Thanks for joining us.
Andrew Wolf: So I wanted to ask, given the current grocery environments, you guys are having good volume growth, particularly shipping and on the shelves, I assume. But as you look to the current planning year, fiscal ’24, is it fair to say the predominant or maybe even all of the planned volume is going to come from new doors and new distribution, maybe line extensions? Or are you guys planning any velocity gains as you kind of ramp up the marketing spend as well?
Dan Fachner: I think we’ll have a little bit of both. I do think we have some great opportunities for continued expansion on some of our core products, like what we talked about, the pretzel sticks. I believe that will continue to grow. I think Luigi’s is continuing to grow. Our ICEE — frozen novelty is growing well. So I think we’ll have that continue. Dogsters is doing really well. Dogsters did well in the fourth quarter, and think that we have some good opportunities for new outlets with that. But I also think that we’ll see a little bit of increase in some of our core products too. I think we fit a niche in an area that allows us to be able to do that. We’re watching that consumer really closely and watching what others are saying and doing, and we’ll be prepared for whatever headwind comes our way. But we think we have some good opportunities for continuing to not just grow volume with what we have today, but by garnishing new outlets as well.
Andrew Wolf: Okay. And I also wanted to kind of follow up to Todd’s questioning on the unlock. When you get the third RDC open on Dippin’ Dots, you’ve referenced a few times that’s — really that business needs national frozen capability to be fully distributed. Any chance you could help us a feeling for how much the addressable market increases or what it does for the business, either quantitatively or qualitatively, in terms of how much more of the market you can go after?
Dan Fachner: I love what the team is doing at Dippin’ Dots. We had the best year sales and profits in its history and feel like we’re still just scratching the surface. That team’s really gelling together, fit really nicely. Synergies from their organization to ours is just really fit good. I love what they have in test today. I talked about this in the opening. The Regal Theater now is pretty much completely rolled out. A couple of other big theater chains expanding their tests. And the team is out there knocking on a lot of doors and having some great success. I think that will continue to grow nicely for us. Love what they’re doing. Really happy with that acquisition. Ken, I don’t know if you want to add any color to that at all.
Ken Plunk: Yes. I think Dan summarized it well. I think the thing to think about with Dippin’ Dots is, one, we just came out of having them for a full year, we’ll have, I think we even mentioned this, double-digit growth in that business. We would expect to be able to grow that business next year double digits. Production capacity, we have plenty of capacity to hit those numbers and produce that. It was really the freezer and storage space that we had to address to be able to move faster and keep up with that growth. And with the added freezer space at Terrell and at Woolwich, the two facilities that are now open, we feel really good about really meeting any kind of opportunity in the foreseeable future. I don’t have an exact number on what that means. All I can tell you is it’s a part of the enablement of helping us continue to grow this business double digits.
Andrew Wolf: Okay. Fair enough. And the last thing is for you, Ken, as well. Could you just size up the true-up expense that you had to record against sales and tell us if that was also a full flow through as a reduction to earnings as well, the cost-plus arrangement in the handhelds?
Ken Plunk: Oh, yes. The way to speak to that, I think we may have said this before, Andrew, is we have an agreement with a customer that we make handheld for, where we pass on any cost increases or decreases. It’s a quarterly true-up. But that customer, as you can probably appreciate, really benefited us when we were going through 20-plus-percent inflation. But now that we’ve had deflation, we’ve passed those cost reductions back to that customer, but the profit of that stays whole. So we continue to make the same profit, because we’re kind of locked into a profit margin in the contract, and the volume of those core SKUs continues to grow.
