For example, our Extreme Lengthening Mascara, can never stop talking about it. I’m having — always great eye lash all day. When I choose to put on my [ prime length ] than my extreme lengthening. And that’s the consumer loves that also, right? It’s the number one turning climate pledge friendly mascara in all of Amazon and yet its distribution remains less than half of all stores that we play in. So we do believe that distribution in all of its forms is going to be a very rewarding journey for us, not only this year, not only next year but a company like ours has a long runway for growth on distribution. And that some of those distribution efforts will be against new items and some of those distribution efforts will be against hero items. We believe those are both levers.
We have to play in balance. So I think that the answer is you will see some of all of that from us because there’s actually so much opportunity.
Dave Loretta: Yes, Dana, I can touch on the adjusted EBITDA question. There will be some puts and takes across the year. We’re comfortable that the model is set up to deliver on a full year basis, the positive outcome that we’ve articulated. But in the very near term, some of the revenue pressures that relate to inventory that was orders that were pulled into our fourth quarter will impact our first quarter. And so we want to call out that first quarter, in particular, will be a little more muted on the top line and that would impact the bottom line opportunity for us. But we do see the top line progressing in a positive way going through the balance of the year, as Carla articulated, those back half of the year opportunities.
And really, this is a reflection of setting up this model that we see developing bottom line results growing faster than the top line. It’s going to be a consistent gross margin expansion opportunity for us across the periods and expense leverage as well that will help get us to that adjusted EBITDA positive level.
Operator: Our next question comes from the line of Dara Mohsenian of Morgan Stanley.
Dara Mohsenian: So can we talk about long-term EBITDA margin potential and what you guys are thinking looking out 3 to 5 years, obviously, you made some nice progress in 2023. But what do you think is a reasonable level looking out long term? And how do you think about the pace of improvement over the next few years?
Dave Loretta: Dara, the algorithm that we think is the best way to express the opportunity has got obviously, a function of the progress that we’ve made, that we’ve demonstrated in ’23, the model that we believe is best to allow revenue gains to kind of flow through at a faster pace to the bottom line. And — but it’s also balanced with what we think is things that are out of our control, the uncertainty of the macro environment, pressures from the consumer that we might face. And so we think that this model allows us to weather through any of those periods that we might encounter those. And it gives us the flexibility to be strategic over time with that growth in the bottom line. I think it’s safe to say that continually expanding margin from an adjusted EBITDA standpoint is what we’re comfortable expressing at this time given that we’re still in the early stages of a transformation journey.
And as time goes through, I think you’ll see that we can kind of deliver behind that.
Dara Mohsenian: Okay. And maybe a more specific question, leaving 2024, are there big opportunities left from a cost perspective as you think about maximizing profit and driving longer-term profitability? And how do you think about that from a cost perspective after 2024?
Dave Loretta: Yes. I believe we definitely see continued cost savings opportunities beyond 2024, both within our supply chain, our cost structure of the products we bring to market and maintaining a real vigilance on expense control. So those are going to be aspects of opportunity beyond 2024. And I’ll say, we always benchmark ourselves against other CPG companies out there and use the opportunity that we see in those best-in-class companies as guides for us is what we can get to as well.
Operator: I’m showing no further questions at this time. I’d like to turn the call back over to Carla for any closing remarks.
Carla Vernon: Well, on behalf of the entire Honest team, or as we like to call them our Butterfly family, we are so thankful that you dialed in today to join us for our fourth quarter and full year results. And we look forward to talking to you next time. Thank you.
Operator: Thank you. Ladies and gentlemen, this does conclude today’s conference. Thank you all for participating. You may now disconnect. Have a great day.
