Pete Pappas: Yes, thanks very much for the question. This is Pete. We continue to look for ways to add value to our stakeholder partners. And in food service, this is one way that we are able to do that rather uniquely. One of the benefits that we have by the farms is the strength of our brand and the strength of our brand lends itself to these types of unique partnership opportunities that we can offer to some of our operators as well as some of our retail partners. So we’re going to continue to look at different ways to engage consumers, engage our operators in a unique way. And we do think that, that expands relevance, expands awareness, expands households and puts us in a little bit of a different playing field than our competitive set.
Robert Dickerson: All right. Super. And then kind of a technical question, balance sheet, cash flow related. So right now, on the balance sheet, you have approximately $57 million in cash, which is great, very positive free cash flow continues, and its cash balance is a very nice uptick relative to where you finished the end of last year. At the same time, they have the investment security piece, available for sale has come down quite a bit. And I’m just not sure kind of how I should read that, like not even sure what the mechanics are of that? Like what — why has that come down? Where is that cash going? And clearly, you’re sitting on more cash. So I’m just not sure if there’s been kind of a transfer of securities into a cash balance because maybe there is a potential need to allocate more cash going forward?
Thilo Wrede: Yes, Rob, I think you just answered your own question. Actually, we are moving from investment securities into cash equivalents, i.e., we’re holding it in money market funds. It’s actually working to our advantage right now from [indiscernible] perspective since money market plans are yielding really well right now. And we are shifting this in anticipation of spending that is coming up with a new facility. We have talked about that before that we need to build another egg processing facility. We’ll pay that out of operating cash and out of existing cash balances. And as we are preparing for that, we are just letting investment securities mature and once they mature, we then reinvest them in the money market.
Operator: And our next question comes from Matt McGinley with Needham.
Matt McGinley: So based on the cadence of when you took price increases last year, I think the gross pricing benefit would have been a low double-digit for overall benefit to sales, but your overall pricing impact that you reported is around 7% on higher planned promotion. I think the gross impact in the fourth quarter is about the same, but the fourth quarter is typically a little bit more promotional. So can you give some color on the promotional impact on sales in the fourth quarter and how we should view that relative to what we saw this quarter?
Thilo Wrede: If I follow your math correctly, I agree with it. The reason why the pricing benefit that you saw in our P&L wasn’t as high as you thought was that we started spending on promotions again in the third quarter plus this higher sales volume than normal to the wholesale channel. That’s just a lower revenue break. And so that’s a reduction of the overall pricing benefit that we have for the year. Fourth quarter, yes, there are — it’s a promotional environment. We participate in promotions to the degree that we want to create new consumers from our brand. We are not participating with the intention of renting market share, if you want. It’s all about consumer acquisition rather than participating in price moves up and down by commodity producers. We have a strong brand. That’s a game that we decided not to participate in.
Matt McGinley: Got it. And on the shipping and distribution, you noted that much of the benefit there as you said, a gain in rate, much of that was driven by a decline in linehaul rates. But I mean, you had really impressive volume gains. So I assume that there was some operating efficiency or volume leverage there that you got from that. So I guess, can you talk about what that volume or operating efficiency leverage was? And do you think there’s more benefit to come over the next few quarters from cheaper transport costs or do you think you’re nearing the end of that kind of linehaul benefit?
Thilo Wrede: Yes. I’m not going to speculate on how linehaul rates are going to move going forward. But what we have had for this quarter, as I said, it was a balance of better haul rates and better capacity utilization. As the business continues to grow, in general, we’re able to put more pallets on outbound trucks. And that reduces the cost — the shipping cost per pallet. The linehaul rate reduction that we saw in the third quarter was about 15% decline year-over-year. That obviously plays into that as well.
Operator: And our final question comes from Ryan Meyers with Lake Street Capital Markets.
Ryan Meyers: First one for me. How has the risk of trade downs impacted how you guys think about launching new product SKUs or how are you viewing potential new categories?
Russell Diez-Canseco: I think it’s a great question. I appreciate it. We’ve got Pete here, and so he might add some more detailed context. But it’s interesting, our most recent product expansions and where we’re seeing some of the fastest year-on-year growth in percentage terms are in some of our highest priced SKUs. So we’re expanding distribution of a specialty egg, which is our blue egg. We’re expanding distribution and seeing velocity gains in those higher egg count, 18 count because we’re a value proposition SKUs. And so what we’re actually seeing is a mix shift toward higher price point items. In that context, I don’t see the risk of trade down as affecting our ability to introduce innovation that continues to be a strong value for consumers even at a relatively high price point. Pete, do you have anything to add or did I get it?
Pete Pappas: You got it.
Russell Diez-Canseco: Okay. Sounds like I got it.
Ryan Meyers: Got it. No, that’s helpful. And then how should we think about marketing spend in 2024, both kind of on a full year basis? And then from a seasonality perspective as we progress throughout the year?
Thilo Wrede: Yes. I would assume that our marketing spend in dollars, it grows as the business grows. We’re not going to provide guidance right now for spending and that includes — and thinking about how it moves quarter-by-quarter, we adjust those plans as we go throughout the year. Obviously, we go into the year with a plan and then we adjust the events over the year unfold, but we’ll talk about that once we’re done with 2023.
Operator: And that does conclude the question-and-answer session. I would now like to turn it back to Matt Siler for closing remarks.
Matt Siler: Thanks, everybody, for your interest today. Have a good one.
Operator: This does conclude the program. You may now disconnect.
