Jon Andersen: And are you seeing — on the Products business, are you seeing both healthy demand on the distributed side of your business, which maybe is more national or premium and as well as your own? Or is there trade down that’s helping manufactured brands? I don’t know if there’s anything you can kind of tease out from what you’ve seen so far in terms of consumer behavior.
Cord Christensen: Michael Smith, would you like to take that one, please?
Michael Smith: Yes. I would say the overall health of the category is solid, right? So our outperformance isn’t necessarily coming at the demise of other players in the category. So if you look at the health of our distributed brands consumption, it is close to the expectation that we built for the year. If you look at our manufactured brands, we’re obviously well ahead of the expectations that we had modeled. And again, a lot of that growth isn’t necessarily coming as cannibalization. We are seeing some new customers come into the category or we’re seeing some lapsed customers come into the category that’s helping to generate kind of an overall bigger pie than we expected, and we are getting a bigger piece of that pie than we modeled in the beginning of the year. So it’s not that our distributed businesses are performing poorly. It’s just that our manufactured brands are really accelerated and exceeding that performance.
Jon Andersen: Yes, that’s helpful. One quick one. I think I may be wrong on this, but I think it’s fairly unusual for you to raise at this point of the year. Could you talk a little bit about what gives you the conviction? Maybe there are one or two things. I don’t know if it’s the release season for a customer or if you’re in the middle of marketing spending, what you’re seeing that gives you the kind of conviction to raise at this point? Thanks.
Zvi Glasman: Yes. Thanks for the question, John. We — you know, obviously, we’ve historically not raised guidance in the end of the first quarter because we want to see second quarter consumption and get a real solid read on some of the seasonal parts of our business. I think first and foremost, we’re starting to see our other brands that aren’t seasonal, pick up steam and they’re continuing to gain momentum and their top-line is growing at a higher percentage than what we did last year, projected flea and tick at a 6%, add some incremental to it as well. So, right now, the consumption rates we’re seeing, the way that we’re seeing the market, we felt very good about raising all three of those lines and leaning in that way. And we hope to see continued acceleration. If we can, we — you know, maybe we’re doing the same thing at the end of the second quarter or third quarter, but we’re definitely seeing the right trends right now.
Jon Andersen: Great. Thanks so much.
Operator: [Operator Instructions] The next question comes from Bill Chappell with Truist Securities. Please proceed.
Bill Chappell: Thanks. Good afternoon. Can you hear me?
Cord Christensen: I can hear you, Bill. Can you hear us?
Bill Chappell: Yes, sorry. Hey, a couple — is there any way to kind of bridge the gross margin expansion in terms of product mix versus being manufactured versus distributed as compared to just channel mix? I’m just trying to understand how much of this was your product versus manufactured products and — I mean, versus, versus third-party product distribution business and how much of this was actual just gains in efficiency and overall?
Cord Christensen: I think, Bill, we said a couple of times that our products are doing extremely well at a much higher margin. We’re seeing the overall average margin in that portfolio move up a little above where we were talking about from before, so we’re better than the 56% plus right now. And when your growth rates are 14.3% overall and you have categories where we’re 50%, 3 times the category, flea and tick being up better than 2 times, that’s going to be a contributor. We are getting extremely good in our plants, and as you get more throughput and get bigger with the efficiencies, we find are paying dividends at a faster rate. And then closing down stores that had a drag on it and picking up the 810 basis points in Services that we believe that we can retain throughout the year gives us a lot of confidence that we’re doing the right things with margin and heading the right direction.
So our mix of the quarter was really in line with what our normal mix is, and so it wasn’t a significant mix change. It’s the other things we just talked about. I don’t know, Zvi, if I missed something or…
Zvi Glasman: Yes, Cord said it right. We had a little bit of benefit in the mix, but it was not the biggest part of the story. It was 1% or 2% higher manufactured versus distributed versus last year. But by the same token, our manufactured businesses, our health and wellness brands, and our dental treats are growing faster, and they carry a slightly lower margin than our flea and tick. So I think everything Cord said is right. This is as — the margin improvements are a real thing. We expect them to continue, albeit at a different rate throughout the course of the year. That’s why we signaled that we’ll be up 75 bps plus in margin for the year.
Bill Chappell: Got it. Maybe just to follow up, I thought there was a distributed product, a new product in the market, kind of a three-in-one that was started last year that you thought was going to drive a lot of the revenue growth, which would have pushed down margins. Was that not the case? I guess I was thinking there were some headwinds just from that standpoint.
Cord Christensen: Yes. I mean, the product is launched. It’s doing extremely well. We’re trying to see a pickup. It was a direct contributor to the excess inventory that people will refer to as you look at Zvi talked to. But again, the timing of the season and what’s going on in the first quarter, it’s not enough volume. And the consumption rates we’re watching, we’ve taken that into account to feel like we can still capture that 75-plus basis points improvement to margin we talked about.
Bill Chappell: Okay. And then in terms of kind of what you’re seeing for Rocco & Roxie, I thought this was a quarter where you’d see pretty meaningful distribution gains. I think that’s right. Did you get those gains? Are they on the shelf? And should that show up more as we move forward through this year?
Cord Christensen: Michael, do you want to take that one, please?
