Brian Kocher: Well, Bobby, I think a couple of things to think about. We definitely saw oat driving growth in the category, foodservice as well as our co-man business and private label business. So we saw oat as a driver. Remember, we also anticipated that and our oat extraction line in Modesto is in place. It’s coming online in the first quarter, and we expect it to be positively impacting profits in the second quarter. So we foresaw the oat expansion. I think we’ve been able to partner with our customers. Again, I would say we have a really blue chip customer base. And so we’ve been able to partner with them across a spectrum of different outlets to make sure that we’re executing well and they’re executing well. And that’s what’s taking advantage of the growth in the fourth quarter.
And certainly knowing some of our customers and our existing customers and our existing product lines when we charted out our ‘24 growth, we’ve been able to see those trends be exactly in-line with what we were expecting.
Bobby Burleson: Okay, great. Thank you. Congratulations.
Brian Kocher: Thank you, Bobby.
Operator: Your next question comes from the line of Ryan Meyers with Lake Street Capital Markets. Your line is open.
Ryan Meyers: Hey, thanks for taking my questions. First one for me. If we think about the guidance ranges that you guys gave for 2024, what are some things that you’re looking for, you could potentially see where you could come in at the high end, if not better than what you have initially guided here?
Brian Kocher: Yes. I think there’s a couple of things that would positively impact our ‘24 outlook. One would be if some of these new business development opportunities got across the goal line, I would think of those as additive. The other thing that I would say is we certainly have visibility to what our customers who operate in tracked channels were forecasting for ‘24, and they’re forecasting in tracked channels again, not for the entire category, I think we’ve explained well enough that the entire category is growing mid-single digits, but tracked channels, we see some softness there. If that would turn around, if promotional volume would drive some increases, if that would turn around and start growing, I think that would be additive to the ‘24 outlook as well.
Ryan Meyers: Got it. That’s helpful. And then as we think about the growth levers and the expansion of the new customers, I was wondering if you could talk about how penetrated you are in foodservice and how much ability there is to add new customers in that channel.
Brian Kocher: Well, I think it’s a great question. I mean, we certainly have customers that we’re penetrated in, and we’re working on new product development or TAM expansion ideas. I think if you look at shelf stable, we believe we’re about 65%, 70% of the overall shelf stable market, including tracked and untracked channels.
Ryan Meyers: Got it. That’s helpful. Thank you for taking my questions.
Brian Kocher: Thanks, Ryan.
Operator: Your next question comes from the line of Jim Salera with Stephens. Your line is open.
Jim Salera: Hi, guys. First of all, Joe, congrats on retirement. I think you leave the business in a really great spot moving forward. And I’d be lying if I said I wasn’t a little envious of your future escaped. So have fun with that. Maybe one last question for you to kind of close the loop on everything. If we look at the sales composition moving forward into 2024, it sounds like smoothies are gone. You guys are using the majority of the ingredients internally now. Is it really just two categories now, the beverages and broths and the fruit snacks?
Joe Ennen: I mean, I think, Jim, it depends upon how you think about protein shakes. We certainly see that as an incredibly untapped market for us for the next half a decade, if not decades. So I would think about that as – even though from a reporting standpoint, it rolls up in there, just really outstanding revenue potential growth territory for us.
Jim Salera: Okay. And I’m sorry if I missed this, but did you give the 4Q number for beverages and broth? I know fruit snacks was 31%, but maybe I missed the beverage and broth growth rate?
Joe Ennen: We said plus 19%. Yes, beverages and broths, I think it was 81% of total revenue and plus 19%.
Jim Salera: Okay. Great. In 2024, the midpoint for the sales guide is like 8.5%. Should we think about that as being evenly split between beverages and broths and fruit snacks or is there a little bit more leverage on fruit snacks just given the capacity unlock that you guys are working through there?
Brian Kocher: Yes. Jim, I think it’s probably fair to say there might be a little accelerated growth rate on the fruit snacks side versus the beverage and broth. But remember, the size of the beverage and broth is so big that the absolute dollar amount may be similar.
Jim Salera: Okay. Great. And then maybe switching gears to the operations side. So, Brian, I know that’s your area of expertise and excited to see what you can do with the business here. But especially on the Tetra Pak side, you already inherit a very well-functioning supply chain and operations piece. Can you just maybe walk through where you think there’s opportunity to cross the manufacturing base to really see operating leverage that you can extract out of the business and hopefully see that flow through to the EBITDA line?
Brian Kocher: Yes, Jim, thanks for the question. I think, A, you are right. We do have what we believe is a competitive advantage in our supply chain and our ability to fulfill customer demand. So I agree with you there. Even with that, I think if you look at the supply chain in total and what we do is essentially break it down into its component parts, everywhere from long-term planning to procurement to inventory to conversion to distribution, there are points along that line that you find that maybe there’s some leakage in either productivity or opportunity. And we’ve spent a large part of last year implementing some shop floor metrics that allow us to track that, but most importantly, to track the operating metrics at each one of those, for lack of a better word, component parts of the supply chain, pareto the defects and then start working against fixes and opportunities to improve that.
