Todd Cunfer: Yes. I mean, still a little bit early on in the planning cycle for next year. I’m anticipating it will largely grow with sales budget for the year. That will bring us our media spend over $100 million for ‘24. That’s the way it plays out, which obviously we’re really excited about. And at that point, we’ll be able to start bringing that number as a percent of sales down over the next few years. As you know, that target — the goal is to get from 11% to about 9%. And I’m really confident we’ll have enough in our media budget to be able to do that in the out years. But right now, about growing with sales.
Rupesh Parikh: Great. And then maybe just one follow-up question. So your operating cash flows are very strong year-to-date. I think you guys at one point thought you could do 30 to 35 and you’re already about that. Just any updated expectations on how to think about that line for the balance of the year?
Todd Cunfer: Yes. I mean I think we’ll be — obviously depends on final working capital. We had very strong working capital in Q3. I think a little bit of that was timing, but we’re doing a much better job there. I mean I’m anticipating we can do at least $50 million for the year. And look, this is 1 of the bright spots, I think, not only the net sales and adjusted EBITDA, but the operating cash flow and the discipline that the team has put in, in the last year has been really impressive. So we’re off to a really good start.
Rupesh Parikh: Great, thank you. I’ll pass it along.
Todd Cunfer: Thank you.
Operator: Thank you. Our next question is from Peter Benedict with Baird. Please proceed with your question.
Peter Benedict: Hi, guys. Good morning. So first question, just on the fridge placement momentum. Obviously, a big year here in ‘23. Just how you’re thinking about that as we move maybe into ’24, not just kind of the new placements, but also the second and third fridge placements. Just how are you thinking about that?
Scott Morris: Well, we’ve made incredible progress this year. I mean, it’s a banner year, really a record year for fridge placements. And it’s not just first fridges we’re doing well with. It’s a second and in some cases, even third fridges. We continue to see that as being a really big piece of our overall kind of construct in the future where we’re adding second fridges into many of the high-volume stores. We expand out — when we do that, we expand out on some of the current portfolio on things that we have kind of lower stock and lower inventory on, sometimes in holding power over the weekend, but it also allows us to bring some innovation into the market. So really kind of think that’s a really important and fundamental piece.
Going forward, we’re not ready to put up any numbers, but I would — for 2024 on fridges, but I would expect a return to more historical levels. And I think over the next kind of year and maybe even two to three years, we’ll have the benefit of what we were able to do in 2023 and kind of give us an incredible platform to build out the business and the entire company and the brand.
Peter Benedict: No, that makes sense. And I guess a follow-up to that, Scott, would be — I mean, not all new stores are created equal, and you’ve got a lot of momentum with the club channel. Just curious kind of the durability of that, the duration of kind of expanded presence within club and anything else you would say in terms of partners or channels that you maybe not fully penetrated at this point?
Scott Morris: Sure. So look, this is the first year that we’ve had significant expansion in club. We’ve made great progress. We’re going to get the benefit of that for multiple years. My constant joke for the last decade is the best time to put a Freshpet vision as yesterday because every single year, it delivers on same-store sales increases and growth. So I think that we’ll get the benefit of the club channel. And it will be oversized or supersized to some extent. So on an average bridge might go up if it goes up 15 points or whatever on a same-store sales basis, if that grows 15% after a year, it will be kind of at that higher rate that a club typically will sell. So we like that. The other thing is we are — I mean, it’s very obvious out there, but we have zero Sam’s clubs.
We think, over time, there’s a really tremendous opportunity for us to start developing a partnership with Sam’s and deliver a different type of proposition that is appropriate to their customer, and really see a great opportunity for expansion over time at Sam’s.
Peter Benedict: Terrific. Thanks so much.
Operator: Thank you. Our next question is from Jason English with Goldman Sachs. Please proceed with your question.
Jason English: Hey, folks. Thanks for slot me in. I’m going to take us back to the top with the first two lines of questions, which I think we’re all about trying to get confidence in the consensus estimate for 25% growth next year. You mentioned that you’re confident based on everything you see. It’s a little harder for us to get confidence because we don’t see the saw measured contribution or the mix we used to see the Nielsen data, which is tracking below, and we know the big box pet is not particularly strong. So coming back on two points that have already been addressed, but I want to make sure we come back and hit them again because I think they’re really important. The mix component, obviously, a nice contributor. You’re launching a lower price per pound product.
Shouldn’t we expect some of your consumers to opt in for that and mix, therefore, to turn into a headwind, question one. And then question two. I’m sorry, I was distracted. There’s other news on the tape. And I know Mark asked this, but the 400 basis points, the Costco contribution. You are going to start to cycle the build-out next year and getting the same number of stores as you got this year, just net neutralizes that. It doesn’t continue to add incremental growth over and above. So what’s the source of the incremental growth? Like how do we keep that incremental 400 basis points coming?
Billy Cyr: Let me take a shot at this. So first of all, on the Costco part, we’re still not in the full Costco collection of stores. I think at the end of the quarter, we were in something 370 of the Costco’s, there’s like 550. So we still have a long runway of new stores. And then each of the stores that we’re in grows at a very rapid rate, and they’re relatively early in their life. So I would expect that trend with Costco to continue for quite some time. And as Scott just mentioned, we are not yet in Sam’s, but that certainly becomes another opportunity for us when they decide that that’s a play that they like to make. On the mix part, yes, we do expect to see that some number of consumers will migrate to the new complete nutrition product.
