OFRM

Greetings, welcome to Once Upon a Farm's first quarter fiscal 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the prepared remarks. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Reed Anderson with ICR. Please go ahead.

Thank you, and welcome to the Once Upon a Farm first quarter 2026 earnings conference call. With us on the call today are John Foraker, Chief Executive Officer and Co-founder, and Larry Waldman, President and Chief Financial Officer. By now, everyone should have access to the earnings press release that was issued earlier this afternoon and is available on the investor relations section of Once Upon a Farm's website at www.onceuponafarmorganics.com. This call is also being webcast, and a replay will be available shortly after the call concludes. Before we begin, please note certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. We do not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of this call, except as required by law. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures.

Now I'll turn the call over to John to begin.

Thanks, Reed. Good afternoon, everyone, and thanks for joining us today. We are very pleased with our strong first quarter results, which included 44% year-over-year growth in net sales and a more than 300 basis point improvement in gross margin. The momentum in the business accelerated over the course of the quarter with strengthening key operating metrics, including velocities, household penetration, repeat rates, and distribution. We're also seeing meaningful performance improvements for our cooler placements, which on average delivered an 11% increase in dollar per store per week in Q1 2026 compared to the prior quarter, demonstrating that our cooler retail model is driving higher productivity at retail as we scale. While our IPO in February generated significant brand awareness as expected, the performance we're seeing is being driven by underlying strength in consumer demand and strong retail execution.

Based on the strength we're seeing in velocity, repeat, and cooler productivity, we are increasing our net revenue guidance for 2026, as Larry will outline shortly. Our top line growth was driven by volume, up 21.5% year-over-year, reflecting a significant expansion in distribution along with higher velocities. Price mix benefited from a shift to dry baby products along with higher kid pouch pricing versus a year ago. Consumption trends remained strong across our core metrics. Consumption growth was up in the mid to low 30% range during the quarter in aggregate across all our channels, including MULO and other non-reporting retailers and e-com. Key consumption metrics are strengthening, and we expect this to accelerate as we progress through the rest of the year on broadening distribution. Brand awareness is growing and driving more trial into the brand.

In addition, we improved core packaging across our kid pouch line, in particular on smoothies, on our larger pack sizes, and on our club items. These changes are registering strong velocity improvement with more expected. Household penetration again expanded meaningfully, reaching 5.8% at the end of March compared with 4.5% a year ago. Our buy rate continued to grow modestly, which is strong performance given rapid acceleration in overall households over the year. Our repeat rate among households with kids increased 380 basis points compared to a year ago. For households with kids and for new families, our repeat rates are approximately 50% and approximately 60% respectively. We are attracting the right households, and they are repeating as we build the brand from baby through kid pursuant to our strategy.

We are one of the few brands that is gaining households in baby and toddler across both pouches and snacks, showing that consumers are finding us for more occasions as our brand block scales. Looking at first quarter net sales in more detail. The big story in the first quarter was our baby business, where net sales increased 112% year-over-year to $38.6 million. Both pouches and snacks more than doubled, snacks had the largest impact on overall sales for the quarter. Most of the baby growth was driven by strong velocities on higher distribution levels compared to last year and due to significant distribution gains at existing retailers, particularly on snacks. We added over 18,000 new points of distribution across baby in Q1.

We have another reset at a mass customer in April, so our baby distribution will keep increasing and will be materially higher by the end of Q2 compared to the end of Q1. This expansion is also critically important to driving future momentum since we know that our dry baby snacks are an important entry point into the brand for new consumers. From a category perspective, our measured growth is driving outsized share gains. For the 12 weeks ended March 22nd, we were the fastest-growing brand in baby and toddler snacks by dollar share. Our dollar growth in the category increased 88% versus a year ago, and unit growth was up 81%. This performance moved us into the number 2 share spot overall in the category, according to SPINS US MULO. We are already the number 1 certified organic dry baby snacking brand.

Our assortments continue to deliver category-leading productivity with aggregate velocity metrics meaningfully above all competing brands. Turning to our kid business, our first quarter sales increased 5.4% year-over-year to $34.1 million. While reported kid growth was modest in Q1 due to timing factors, underlying consumption remains strong, and we expect clear acceleration in Q2, supported by key customer programs, distribution gains, and velocity acceleration in our core. Consumption outpaced shipments during the first quarter, and we expect that gap to normalize over the balance of the year. We spent heavier on trade in Q1 to capitalize on the IPO headline momentum and club rotation timing, which is always volatile, came in below expectations for the quarter. For the full year, our kid category will deliver mid-teens growth or better. Next, I wanna highlight our strong baby cooler performance and expansion plans.

We are on track to our year-end target of approximately 5,000 coolers, and we remain confident in our expectation for cooler growth to 8,000 or more in 2027. While cooler count and distribution expansion are powerful and important, even more important is the fact that our coolers are becoming significantly more productive in terms of retail sales per cooler. We added a lot of coolers over the last year, and we are seeing that productivity improve as our cooler base matures. We expect this to continue as we scale the program. In Q1, our coolers on average were 11% more productive than they were in Q4 last year and 27% more productive than they were in the same quarter last year. We expect further productivity gains as we expand assortments.

In March, we announced the launch of our new meat and bone broth, and legume blend pouches. These products are our first-ever refrigerated, organic, cold pressure protected, protein-forward pouches for babies. These started to show up in select retailers in April with a much broader rollout over the next couple quarters. The early productivity improvements from these new additions to our assortments are impressive. In retailers where these new SKUs have gone into our assortments, we are seeing over 20% increases in cooler productivity just after the new products are placed, and with repeat, these should go higher over time. Incremental cooler productivity is important to us because we drive higher retail dollars performance within existing locations, and this also increases the potential ROI on all the potential future coolers in our pipeline.

In other innovation news, late in the quarter, we began shipping our new Smoothies with Protein & Probiotics into select dairy sets nationally, and we also launched Power Wheels, the aged-up version of Tractor Wheels that expands our kid bar sets nationally. It's too early at this point to comment on velocity performance, but we expect these items will perform well in trial and repeat. Retailer enthusiasm and support have certainly been strong and in line with our expectations. Our marketing execution in Q1 was both efficient and highly integrated as we activated a full funnel approach that deepened our brand credibility and extended our reach. Additionally, our IPO-related activities generated significant earned media momentum, resulting in more than 3,500 articles with overwhelmingly positive brand sentiment. Together, these efforts drove a meaningful increase in household penetration and supported consumption growth across our core portfolio.

The value proposition in our brand and products continues to strengthen as we expand and broaden our distribution. Not only is demand robust, but our retail distribution footprint is very well diversified for this economic environment. We see strength in all our channels and key retail relationships nationally. We are seeing significant growth and accelerating velocities in the club channel, and we have a major national program on kid pouches running in May. The club channel has proven to be an important driver of brand awareness for us, helping to convert a light buyer to a medium buyer, which leads to a 2-3 times increase in buy rate for that consumer going forward. This channel exposes us to millions of incremental potential households for our brand, broadening our awareness and physical availability.

In summary, our first quarter results were outstanding and demonstrated the power and momentum of our brand. Our team is executing at a very high level. With that, I'll now turn the call over to Larry to cover the financial details and our increased outlook.

Thank you, John. Good afternoon, everyone. I will now provide you with some additional details on the first quarter financial results, along with our updated outlook for 2026. Net sales in the first quarter increased 43.7% to $72.7 million, compared to $50.6 million in the prior year period, driven by strong volume growth, mix, and pricing. Volume was up 21.5% versus the prior year period, reflecting expanded distribution and the introduction of new products. Cooler slotting fees, which are treated as a period expense and a reduction in net sales, were $500,000 in Q1 of 2026, down $2.1 million from the prior year period. Gross margin for the first quarter was 40.8%, up 308 basis points versus the prior year period.

The increase was driven by lower cooler and slotting expense, partially offset by unfavorable product mix as dry snack growth accelerates. Looking ahead, we expect mix pressure to persist throughout the year, and Q2 margin will face additional headwind from the national club program on kid pouches. Trade efficiency, selective pricing actions, and ongoing supply chain productivity efforts are expected to offset these, as well as the tariff and fuel-related impacts over the full year. SG&A expenses for the first quarter increased $17.5 million over the prior year period to $45.8 million, with $10.9 million of this increase attributable to stock-based compensation, new public company costs, and one-time performance payments related to our IPO. As a percent of net sales, first quarter SG&A was 63%, up 713 basis points versus prior year period.

Labor and employee-related costs were higher as a % of net sales due to planned increases in headcount to support our growth. Logistics costs and selling expenses were both lower as a % of net sales, reflecting leverage as we continue to scale. Net loss for the first quarter improved to $15.8 million from a net loss of $19.5 million in the prior year period, primarily reflecting higher gross profit, partially offset by higher SG&A expenses. adjusted EBITDA loss for the first quarter improved to $3.1 million from $7.5 million in the prior year period, primarily reflecting higher net sales and favorable margin flow-through. First quarter adjusted EBITDA benefited from the timing of approximately $2.5 million in certain marketing and cooler-related costs that shifted from Q1 to Q2. Looking at our balance sheet.

As of March 31st, 2026, we had nearly $100 million in cash and cash equivalents and no debt, reflecting the proceeds from our February 2026 IPO, a portion of which were used to repay all outstanding borrowings under our term loan facility. Inventory of $50.3 million was up 67.5% versus a year ago, reflecting growth in dry snacks, a planned build to support a second quarter club promotion, continued growth across the business, and the rollout of new innovation. We believe that the inventory position supports expected demand and key customer programs in the quarters ahead. Turning to our outlook. Based on the strong results in the first quarter and recent trends, we are raising our net sales outlook for 2026.

We now expect net sales in the range of $313 million to $323 million, representing growth of 30%-34% versus 2025. This is up from our previous guidance of $302 million to $310 million. During 2026, we are reinvesting any upside in sales into top-line growth initiatives, people and infrastructure to support future growth. Accordingly, we are maintaining our full-year adjusted EBITDA guidance of $2 million-$4 million despite the stronger top-line outlook. We continue to expect to achieve mid-teens adjusted EBITDA margins over the medium term. As we scale, we are driving profitability through supply chain efficiency, productivity, operating leverage, and disciplined marketing investments. That includes our prepared remarks. Operator, please open the call for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. To ensure we have enough time to get everyone in queue, we ask that you please limit yourself to one question and one follow-up, then reenter the queue for any additional questions. Please stand by while we compile the Q&A roster. First question comes from Leah Jordan with Goldman Sachs. Please go ahead.

Thank you. Good afternoon. Hi, John. Hi, Larry. Nice job on a great quarter. You know, I just wanted to start off where you guys left off. Okay, the EBITDA guidance unchanged here, sales staying strong. You know, it sounds like you're talking about reinvesting to drive the top line. Just wanting to dig in, you know, what incremental on the cost side are you baking in the guidance now? Is this all just more kind of trade investments and promotions? You know, how much is that being driven by a potential concern around a softer macro? Then, you know, within the cost line item, I think, you know, what's really topical still is, you know, what's your visibility on the freight and raw materials and any inflation there?

How much of that have you baked in now on this unchanged EBITDA guide? Thank you.

We're building in our modeling. We are building in the fuel surcharge impact for the full year. When we talked about it at the end of last quarter, we anticipated 1 quarter of fuel surcharge impact. We're now building in for the full year, we're building 100 basis points of fuel in for the full year, impacting both COGS and our freight and warehousing costs going forward. We built in, as part of our original model, we built in inflation. We built in, as part of that, we're coming in in line with what the inflation that we built in. We did build in tariffs. We built in 100 basis point of tariff cost for the full year.

That was in the original model that we put in. One thing that we are also taking into account is really as we see our actual sales and how the mix is taking place as we're mixing heavier into snacks versus pouches, and our club business, we're building in any impact into margin associated with that change in mix. We are expecting higher top-line sales, as we said in our guidance.

As we carry that down, and we still anticipate carrying that down into our EBITDA number, we're looking to reinvest that into marketing spend, being able to drive, and infrastructure spend to be able to drive, the rest of 2026 and really, prepare us for 2027 to make sure that we're ready to for 2027 as we go forward.

Lia, just to build on that, this is John. We really feel like it's a good time to be on offense with this brand. You know, our household penetration is still at a modest number of 5.8%. We see strong repeat. We see all these strong metrics for consumers connecting with the brand, which were outlined in the earlier comments. It's the perfect time for us to take advantage of the broader awareness to just build the size of the growth opportunity for this business in 2027 and 2028 and beyond. That said, we're gonna be disciplined. We're gonna hold to the guidance that we've given. Hopefully, we can do better than that through the year.

In the, you know, in the midterm here, we feel very confident in the margin structure in this business, delivering mid-teens kind of adjusted EBITDA numbers, and feel very confident about that.

Okay. That's really helpful, caller. Thank you. Maybe on a related follow-up, you know, as you're stepping up investments, I understand being on the offense here, maybe what are you seeing in the competitive environment? We've had some new entrances come in, you know, over the past year. Any changes there? Maybe any changes on the promotional landscape as well?

There's been no significant changes in the competitive landscape. On the last call, I mentioned we're facing a new competitor at one specific customer. There's been no change there either. We're still twice as productive on a dollar sales per point, across like pack sizes there, continuing to perform really well. We're not seeing any change really in our categories in the promotional intensity either. We feel like we've got a really good handle on that and are driving really good strategic revenue management goals as we go through the year. There's really been no significant change there other than our business, you know, the core consumer connection with the brand has really continued to accelerate, and we saw that from the front of the quarter to the back of the quarter.

Even in the April data that we can see, we're continuing to see the same thing. We see positive momentum. We just wanna take advantage of it while remaining very disciplined.

Okay. Great. That's very helpful. I'll pass it on. Thank you.

Thank you.

Next question, Tom Palmer with JPMorgan. Please go ahead.

Hey, guys. Thanks for the question. Maybe just to start out, I did wanna ask on pricing actions and maybe your thoughts as you look forward in kind of this more inflationary environment, but also, right, one where maybe the consumer, there's some uncertainty. Price mix up over 20% in the quarter. It sounded in the prepared remarks like that was driven by price increases, maybe not as much mix. Maybe just update on what you saw in the quarter with that and kinda how you think about pricing as we look forward. Thanks.

First, on the first quarter and the price mix, we took a price increase in our pouches in 2025. That price increase was effective end of Q2 and really became effective in Q3, Q4 of 2025. What we're doing is we're comping against where we have a price increase built into 2026, where we're comping against a quarter that does not have the price into it. That's why the, you know, the price volume increase was price mix was showing higher in Q1. We're, we are looking at, you know, we believe that if the economy kind of in price pressure keeps going up, we have the capability of taking pricing down the road. Our brand is fairly inelastic.

We don't anticipate a price increase having any impact on our velocity or growth of the business. We are keeping that in mind. We're looking at opportunities on very strategic price increases potential for the future if we wanna be able to take them. We have nothing, we're not looking to do a price increase in the immediate future, but we may look at that opportunity down the road.

Yeah. As Larry alluded to, we've been conservative in the way we forecast the business going forward. We have good visibility to the fuel impacts, to the tariff impacts. We've you know, we bought forward most of our commodities, so we've got really good visibility. We'll be thoughtful and careful if we do need to take pricing. You know, our brand is pretty inelastic but we will also be very cognizant of just making sure that we keep the brand in a really good price-value relationship for consumers. Right now, despite all the consumer uncertainty that's out there, the brand is in a really, really strong price-value perception map with consumers, and we wanna make sure it stays there and continue to drive that forward.

Okay. Thank you for that. Follow-up just on maybe some of the promotional timing that you referenced. We did see the slower kid pouch growth. Is that where the promotional timing really was most in effect? Kinda how do you see promotional cadences as we look out over the course of this year?

Yeah, we're not changing anything significant in our promotional cadence. We leaned in a little bit more aggressively in the first quarter to do things like get display and just get extra placement and visibility for the brand at retail, tags up in places where we knew that there were gonna be millions of consumers that were gonna be hearing about the brand for the first time, and we wanted to make sure that we were very visible in store, and we accomplished that. You know, it's not always just price. It can be signage in store. It can be a whole bunch of different tools that you use, and we've done those. We don't expect on our core pouch business any change really at all in the overall cadence of promotion in that business, or in the depth or frequency at all.

That business is in a really healthy place, and the trends are really continuing to grow as we've improved packaging, we've improved placement, we've moved more of our products from singles to multi-packs and positioned in a better AUP position against consumers across all channels. The trends are good there. We just need to continue them, and we see that in the data every month now, and we just wanna keep that trend going.

Understood. Thank you.

Thank you.

Jon Andersen with William Blair, please proceed.

Hi, thanks for the questions. I'll just ask a two-parter, squeeze them in both here. My question is kind of around the innovation. You launched or announced, you know, a lot of, lot of innovation, and you mentioned, John, the kinda meat-based, meat and bone broth and legume pouches. And what I'm interested in is number one, you know, where those are going in and, and how far along you are in that process, of getting those into the coolers. Does that product all go into the baby aisle cooler? Is some of that, you know, going into the dairy sets?

Kind of the follow-up to that, where you do have that, you know, in market today, what is that doing to the productivity of those coolers? How incremental is that to the existing pouch business? Thanks.

You bet. Sure. We ended the quarter with about 3,700 coolers in market. Larry mentioned in his commentary or I mentioned in my commentary, I'm sorry, that we would be about 5,000 coolers by the end of the year. These meat, bone broth and legume pouches are all focused on going into those coolers. We started getting placements in some significant numbers of coolers in the April timeframe. It'll take a quarter or two with resets and just the shelf work required to get them into all those coolers. Our goal would be to have those items in all of those coolers by the end of, you know, a couple quarters from now. The interesting thing is we have basically daily or weekly insight into the velocity that's coming out of these coolers.

Literally the moment these products have hit the coolers, the coolers have become at least 20% more productive just on those items coming in, and in some cases, significantly more. That, of course, is all in the timeframe we're talking about, John, is all trial, right? I mean, we have, you know, they get in there and you got a 1 week. That's all trial. We don't know what repeat is yet. However, these products tested extremely well, and we have a pretty, you know, strong, well-proven, you know, methodology for testing products and anticipating how the repeat's gonna be. We expect repeat to be really strong and for these coolers to be extremely incremental to our assortment.

We do have in the, in those coolers that I mentioned where we've got the velocity information, and the productivity information, we know that it's extraordinarily incremental to our assortment. As you would expect, right? These are meat, bone broth, protein position pouches going into the assortment that we had there that did not have that in the assortment before. It makes sense that it would be very incremental as well.

How does the space work? You have X number of new items that are going into these coolers. Is it replacing existing items? Is it fully incremental to what's in there today?

Trying to understand that piece of it too. You have X amount of space in the cooler.

Right

filling it out in the most productive way, right?

Yeah. If you looked at our coolers over the prior year and as we have been talking to investors and just talking about what the business is doing, we had a lot of assortment that we were double, triple, and quadruple facing in the prior cooler format because we had more space than we had productive assortment for. So in this resets that we're doing right now, we're in some cases really just narrowing down the assortment, the number of facings on certain items, which is basically gonna have zero impact on the amount of that we'll sell, and just replacing those facings with much stronger assortment. In some coolers, the coolers are performing so well that the retailer and we are working together to add another shelf in the cooler.

That's another thing that's happening as well, and we'll of course, try to do that everywhere we possibly can because that's a big win for both us and the retailer. It's all of those things happening. I think right now, when you look at the coolers after they're fully reset coming out of the introduction of the items we just talked about, we will really, for the first time, have like, I would call like an A-level productivity assortment across the entire cooler that is fit for purpose for where consumers want us to be with respect to covering off all their nutritional needs. We'll continue to improve that, of course, over time with new innovation, price stack architecture, new formats, things like that.

We really do now have the ability to see how high up is in these coolers, and the early numbers look really, really encouraging there. I can't wait to report on those over the next couple of quarters as we go forward.

Great. Congratulations. Thanks.

Thank you, John.

Next question, Andrew Lazar with Barclays. Please go ahead.

Hey, Andrew.

Great. Thanks so much.

Hi there, John and Larry. I guess first off, obviously fiscal first quarter sales growth almost 44%, well above consensus for the quarter. You basically flowed through, I think, a little more than that upside at the midpoint to the full-year guide. That said, I guess the implied growth rate right at the midpoint for the balance of the year is now about 29%, which is a step down from the first quarter. I'm just trying to get a sense of, you know, how much of that is simply conservatism versus the fact that, you know, the 1Q comp was also a bit softer versus something maybe more discrete you're seeing in the rest of the year that would kind of result in the deceleration.

No, we want, you know, our approach, Andrew Lazar, is to set our guidance conservatively. Our consumption, as was mentioned in the prepared comments, is running in the mid to low 30s%, and toward the end of the first quarter and into April, it's been higher than that. We, we just wanna make sure that we're setting ourselves up to continue to increase expectations as we go through the year. There's absolutely nothing in our business that shows any kind of deceleration right now. In fact, it's the exact opposite. We also wanna make sure we're planning conservatively, guiding conservatively, and making sure that we can deliver against the commitments we're making to our shareholders.

Yep. No, thanks for that. Then just one quick one. I should know this, but as a reminder, who is doing the sort of the baby cooler sort of shelf sets, like, you know, restocking the coolers? Is it the in-store merchandisers? Is it the retailers in some cases? I just forget how that works because I know keeping a-

The-

a fully stocked cooler, right, is really key.

Right.

as velocities go up.

Yep

you know, that requires more effort. Thanks so much.

Sure. Yeah. The basic answer, which is pretty universally true, is it's store-level personnel that are moving product out of the back rooms into the coolers. We are in certain places supplementing that with extra merchandising support just to make sure it's happening, auditing it, doing all those things like you do in any fast-moving category. There's a learning curve with retailers when they put these coolers in. You know, obviously, when you're putting a cooler in an aisle where there's never been any refrigerated items, it requires a little bit of education. Overall, we've been very pleased with how retailers have adapted and our, like, in-store service levels and in-stock rates on these coolers has been very good. That doesn't mean there's not room for improvement.

There certainly is from time to time, especially after, like a busy weekend when the cooler is heavily shopped. That's how it works, and we're just continuing to optimize that and learn as we grow.

Great. Thanks so much.

Thank you, Andrew.

Next question, Rupesh Parikh with Oppenheimer & Co. Please go ahead.

Good afternoon. Thanks for taking my questions. Just going back to the positive club channel commentary, if you could just remind us of, you know, how you approach the club channel, like the permanent items you have and then the rotating items that you typically have in the club channel.

We typically have permanent items in a number but not all of the regions of the big clubs. We also participate in rotational programs, which is very common. This program that we're running in May is our first national program at the scale that you'll see out there in store. I'd say if you look at our business over the last 3 years and just kind of trendline it, the trendline has been that velocities have continued to increase consistently as consumers have become aware of the brand and tried it and have seen the value slope to club. More and more of our business is becoming every day, although I would expect that it'll always have a strong rotational component to it because that keeps the assortment fresh.

We are seeing more and more everyday placements. That's a trend that's definitely happening. Just same store, the beauty of it is, Rupesh, you can see same store year-over-year productivity gains, which are all about velocity, because, you know, it's really not really a pricing story in that channel over the last two years. It's really all about unit velocity.

Great. Then just a housekeeping question. stock-based comp, I know is elevated in Q1, if there's any clarity or additional color you can provide there for the balance of the year. Thank you.

Yeah. I mean, in Q1, it was really all tied to the IPO, and transactions and equity issuance through the IPO. We're not expecting that to continue through the rest of the year. This was a one-time IPO related stock-based comp adjustment.

Great. Thank you.

Thanks, Rupesh Parikh.

Next question, Yasmin Bisilwani with Bank of America. Please proceed.

Hey, guys. Thank you for the question. I just wanted to ask a little bit about revenue phasing for the year. You know, there's back to school in the third quarter. You have some promotion happening in the second quarter. I guess, how should we be thinking about, you know, which quarter should be the high watermark, either on, like, a growth or an absolute basis on revenues?

First, in Q2, we have the club promotion that we're going through that John was talking about. That's going to significantly increase revenues in Q2 over historical percentages and phasing for the year. Then in Q3, we have back to school, and we have other rotations that are running through club. Q4 is should be very similar to the cadence that we built into the earlier models that we've had. Q2 being increased over historical because of the club promotion. Q3 is usually our peak quarter because of back to school and other promotions we have in that quarter. Then Q4 comes in and usually is flat on a net sales basis, coming into Q4.

That's what we're looking for for this year and it's very similar to what we've done in the past.

Okay, great. Thank you. Just the same question, but on margins, is there anything that we should keep in mind quarterly?

Yeah, Q2, because of the promotion that we're having with the in club, that is a lower margin, significantly high volume of promotion. It will be putting pressure on margins in Q2 where And the way it's coming in is we're overdriving what we've built into our earlier model. That in line with also the $1 million in cooler slotting spend that moved from Q1 to Q2, we're anticipating a 200 basis point impact on margins in Q2 versus what we went out in our earlier model.

For the whole year, though, we're anticipating to be in line with our 120 basis point reduction from prior year, really just showing the impact of the promotions that we're running, a little bit of unfavorable mix associated with the growth of snacks and then the impacts of both the tariffs and the fuel into margin.

Great. Thank you.

Thank you.

Next question, Robert Moskow with TD Cowen. Please go ahead.

Hey, Rob.

Hey. Just 2 questions. Hi. I wanted to ask, there's a sales beat, but there's also higher costs for freight and for fuel. After the extra cost, is there money left over for reinvestment? Like, that seems like a pretty big number for fuel inflation. I just wanna see exactly how much extra is being put back into the business.

Yeah, Rob, there is extra. The way we're modeling it, there is extra to be able to be put back into the business, specifically into marketing for the year. We're looking at $3 million-$4 million with the potential of going up from, you know, potentially move from adjusted EBITDA back into investment into the company for driving and, you know, really end of the year '26 and really setting us up for '27 full year.

That's great. Okay. The second question was, you mentioned yourself that you got a lot of attention from the IPO. You know, is one of the reasons for conservatism that it might have spiked a lot of trial or one-time use, and it's unclear whether the repeat will be there in 2Q and 3Q. I'm sure you're very confident that it will be.

Yeah

of gauging, you know, how much extra sales you got from all that attention?

Well, you know, we know there was obviously a lot of engagement with the brand during the IPO from an earned media standpoint. We could see it online, we could see it in press hits.

Yeah

all that stuff. There's no question about that. We get repeat rate information from our panels on a monthly basis. Through the whole quarter, we saw increases in our repeat rates and engagement and, you know, I would just say if you, if you just kind of look at the way the products are turning out there, it feels really solid to us. We also wanna make sure that we're just setting the bar at a place where we can plan around it for contingencies, things like that could happen in the economy that we have not seen yet and we're not expecting, but we also wanna make sure that we're careful in the way that we plan. Our objective and goal would be to continue to increase our outlook as we go through the year. That's, that's been our philosophy.

You know, we wanna build and earn some credibility around calling our numbers, and that's why we've taken this approach with our forward guidance. Even though you could argue from a consumption standpoint, we could have taken those numbers higher, I'd much rather take them up later based on actual execution versus, you know, just, you know, extrapolation.

For sure. All right. Very good. Thank you.

Thank you, Rob.

I would like to turn the floor over to John for closing remarks.

Okay. Thank you very much, everyone. In closing, we're really proud of our strong start to the year. More importantly, we're seeing clear evidence that our model is working and strengthening as we scale. The combination of accelerating velocities, increasing household penetration and repeat, and improving retail productivity give us a lot of confidence in the durability and quality of our growth. We are building a differentiated brand and business with a long runway for category expansion, increased efficiency, and long-term value creation. As I often say, we're still in the very early innings of this opportunity, and look forward to the road ahead. I wanna thank our team, our retail partners, and our shareholders for their continued support as we execute against this significant opportunity. Thank you, everyone. Appreciate you dialing in today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to Once Upon a Farm's fourth quarter fiscal 2025 earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Reed Anderson with ICR. Thank you. You may begin.

Thank you, and welcome to the Once Upon a Farm fourth quarter 2025 earnings conference call, and first as a public company. With us on the call today are John Foraker, Chief Executive Officer and Co-founder, and Larry Waldman, President and Chief Financial Officer. By now, everyone should have access to the earnings press release that was issued earlier this afternoon and is available on the Investor Relations section of Once Upon a Farm's website at onceuponafarmorganics.com.

This call is also being webcast, and a replay will be available shortly after the call concludes. Before we begin, please note certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

We do not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of this call, except as required by law. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures.

Now, I will turn the call over to John to begin.

Thanks, Reed. Good afternoon, everyone, and thanks for joining us today. We're excited to share our fourth quarter results as a public company. Before I dive into our business performance, I wanna take you back to where this incredible journey began, because understanding our origins helps explain the passion and purpose that drives everything we do today. I will share some more fulsome than typical updates on our prior year's performance, as this is our first earnings call.

Once Upon a Farm was born from Cassandra Curtis's love and determination to provide better nutrition for her children. After bringing her first child into the world, she couldn't find baby food that met her high standards for freshness, taste, and nutrition at the grocery store, so she started making her own. That entrepreneurial instinct to solve her own problem created the company's foundation.

What started in that one kitchen with a commitment to creating real, organic, farm-fresh food has grown into a movement that's transforming childhood nutrition across America. From those early days selling at farmers markets, we've always believed that children deserve better than the available options that have historically dominated the market. When Jennifer Garner and I joined Cassandra Curtis and Ari Raz as co-founders in 2017, the very first thing we did together was draft our mission statement.

"We exist to drive systemic improvements in childhood nutrition for a healthier, happier, and more equitable world." It's impossible to overstate how critical these words and intentions have been in guiding us in the development of this brand and business over the years. Our mission remains unwavering and more relevant than ever.

We are shaping the future of food, and our mission informs every decision from what products we'll make, to who we'll hire, to what business partnerships we'll enter into, and how and where we source. Our entire team is dedicated to delivering on this mission and building our strong company culture as we grow from here.

This mission-led approach isn't just marketing speak. It's woven into our articles of incorporation as a Public Benefit Corporation, a PBC, where we are uniquely positioned to balance the financial interests of our stockholders with the broader impact we're making on childhood nutrition and the communities we serve. All our work against our mission results in better products and deeply layered elements of impact that drive brand trust, loyalty, and word-of-mouth advocacy among consumers who care. When parents find a product and brand they love, they share with their personal networks in powerful ways.

The depth of our mission matters. From baby's first bites to kids' school-ready snacks, we've established ourselves as a rapidly growing leader in modern childhood nutrition, giving parents one trusted brand spanning babies' first foods through older kids. Our journey demonstrates the power of our consumer-first approach and the massive opportunity we're addressing in the childhood nutrition market.

Our results speak to our remarkable growth trajectory. Since 2018, our net sales have grown at a compound annual rate of 63%, including a 53% year-over-year increase in 2025. We are the number one growth brand for retailers in the categories in which we participate, and we have a repeat purchase rate of over 50% from households with children and 60% from new families. Our products are now available in more than 25,000 doors nationwide.

What makes us particularly attractive to retailers is that we are a high-velocity, highly incremental brand that brings valuable consumers into the store. When they get there, they find our unique and growing presence across the store. We sell in both the fresh perimeter and center of store. The positioning provides convenience for consumers, whether they're shopping on premises or online, while helping retailers attract larger basket shoppers and generate better margin outcomes.

The incrementality we bring to our categories is significant and rare in consumer packaged goods. On the fresh perimeter, our kids' snacking pouches are 69% incremental, and in the baby aisle and center store, our coolers are 61% incremental to the baby food category, while our dry baby snacks are 80% incremental to each baby and toddler snacking segment.

As a result, our brand helps drive 2-4 x larger baskets for our retailers, and we contribute significantly to growing the entire category. Retailers see the power of our brand and the results we deliver, and as a result, we have significant future growth opportunities ahead of us. Our brand's farm-fresh-first approach has created deep, authentic connections with parents who share our values around childhood nutrition. This has resulted in exceptional consumer loyalty and advocacy that goes far beyond traditional brand metrics.

The power of our brand is perhaps best demonstrated through word-of-mouth marketing, which has become increasingly significant for us. In 2025, over one-third of new consumers discovered the Once Upon a Farm brand through word of mouth. This authentic advocacy from parents who genuinely love our products provides us with cost-effective marketing that money simply can't buy.

When parents become advocates for our brand, they're not just recommending a product, they're sharing their belief in our mission and values. Our brand strength is built on several key elements. First is trust. Parents know that when they choose Once Upon a Farm, they're getting always USDA-certified organic products with no added sugar, no preservatives, and nothing artificial. Second is quality. Our cold-pressed approach and farm-fresh ingredients deliver taste and nutrition that kids actually crave. Third is convenience.

We make it easy for parents to provide nutritious options for their children without compromising on quality. We believe we are building the first parent ally brand with a deep commitment to superior fresh products with high nutrition standards. 92% of our customers believe that Once Upon a Farm delivers the best overall nutrition.

Together with incredible taste from baby's first foods all the way through kid, Once Upon a Farm's positioning differentiates us in a crowded marketplace and creates emotional connections that drive long-term loyalty. Our growth strategy is built on four foundational pillars. Number one, growing brand awareness to drive increased household penetration. Number two, deepening and expanding reach with retailers. Number three, continuing innovation-led category disruption. And four, driving sustained profitable growth.

Together, these pillars leverage our unique positioning in the childhood nutrition market to capitalize on the significant opportunities ahead of us. We're making tremendous progress growing brand awareness to drive increased household penetration, our first strategic pillar. At the end of December, our household penetration stood at 5.1%, a 42% increase over the past year.

While this growth trajectory is encouraging, we recognize substantial runway remains when we consider that leading competitors average 12.5% household penetration or higher. Over time, we see mid-teens or higher household penetration as we continue to build brand awareness and broaden our product portfolio to increase the number of consumer-relevant categories where we show up. Our marketing approach encompasses a comprehensive omni-channel strategy from top-of-the-funnel awareness efforts down through purchase and repeat. Key elements include national television advertising, influencer partnerships, social media engagement, retail media, strategic sponsorships, and of course, compelling in-store and digital shelf positioning with the best retailers in every corner of the country.

What's particularly noteworthy is that even while growing our penetration by more than 42% in 2025, where we added approximately 2.2 million new households, our buy rate among households with children increased by nearly 7% to a robust $47.20. Generally, when brands add new households at this fast a pace, you expect to see dilution in buy rate as they attract lots of lighter and more infrequent users, but we are seeing the opposite.

We are obviously attracting the right brand-fit households, and additionally, more of them are buying us across multiple categories, which is our goal as we grow. Our direct-to-consumer channel also continues to serve as a valuable data collection and relationship-building platform, providing critical insights that inform our product development and marketing strategies.

Regarding deepening and expanding our reach with retailers, our second strategic pillar, we are seeing strong results across both existing and new partnerships. We've achieved 69% ACV distribution, spanning more than 25,000 locations across six product categories, with an average SKU count exceeding 20 per door in U.S. MULO channels. Our top-tier retail partners carry 30-60 SKUs with continued growth trajectory. Baby coolers are an important cornerstone of our retail strategy, but they are only part of it. Coolers in a baby aisle serve as a key point of entry into the brand for new households.

We are rapidly expanding this program, including 62% growth in 2025 to over 3,400 units installed. The economics are compelling, with each cooler generating approximately $12,000 in run rate average annual retail sales and our investment contribution ranging from $3,000-$8,000 per unit, depending on the size of the cooler, retail terms, and anticipated productivity. This expense varies on our P&L, but is typically recognized in our trade spend or sales expense, with minimal spend hitting our CapEx. Coolers are treated as a period expense, and when reflected in trade spend, our net sales and profitability are depressed by such in the period the cooler is installed. For retailers, coolers are a clear winner.

They drive a 1.8x lift in overall baby department basket size, creating incremental value for our retail partners as they see higher share and more frequent trips down the aisle that lift the entire aisle. Because of these attractive consumer dynamics, we are either expanding, are in test and about to expand, or about to go into tests with almost every significant grocery retailer in the U.S., with lots of opportunity to expand. We see potential to scale this program to over 15,000 coolers in North America over time. This represents the number of stores where our cooler strategy is viable today and where a cooler would work well right now if we got it in, not just a future projection. Of course, it will take time to build toward this potential.

Given our confidence and years of experience in coolers, we are prioritizing speed to market while ensuring we partner with the right retailers and right stores within their footprints to expand this part of our business as fast as we can while executing with precision. Our third strategic pillar, continuing innovation-led category disruption, underscores how our innovation pipeline consistently delivers impressive market performance and drives valuable cross-category shopping behavior. Since 2023, we've introduced more than 40 new products from new product lines, all of which captured significant share within a short period of time. For example, we introduced dry baby snacks in 2024, and within six months, we had achieved top three performance within the category according to SPINS's US MULO data. Last week, we announced the latest wave of all USDA-certified organic innovation that will be hitting store shelves beginning in April.

Our meat and bone broth, and legume blends mark the next evolution of Once Upon a Farm's signature pouches. These are the brand's first-ever refrigerated, organic, cold-pressure protected, protein-forward pouches for babies. We are targeting these products for placement in all our existing and future baby coolers over the coming quarters.

We expect these pouches to be highly incremental to our existing assortment, and they should be a driver of continued cooler productivity growth in the years ahead. Further advancing our innovation in the pouch category, we're also introducing smoothies with protein and probiotics, offering 4 grams of protein and added probiotics to help support immune health of older kids. These products will be focused on kid dairy sets where we sit nationally in retail.

Finally, we launched Power Wheels, a soft and chewy fun-sized fuel made with four grams of protein, 100% whole grain oats, and real fruits and veggie ingredients created with older active kids in mind. Power Wheels builds on the success of Tractor Wheels with an aged-up version that extends our Wheel franchise and expands our retail brand block and presence in kid bar sets nationally, an area of significant growth opportunity for our brands.

Our final strategic pillar, driving sustained profitable growth, encompasses a broad range of operational excellence initiatives that have already delivered meaningful margin expansion and cost optimization. For example, gross margin was 42.3% in 2025 and has improved 305 basis points over the past three years.

Our optimization efforts have delivered over $25 million in annual savings and include reducing final mile delivery costs by more than 35% over the last three years while maintaining our customer-first experience. Going forward, we will continue to focus on high ROI investments in our supply chain, systems, and business capabilities to drive further margin expansion potential from our portfolio. We've also made strategic investments in best-in-class talent, implemented strategic revenue and sales management principles, and built scalable information technology systems to support profitable growth. Our Follow the Harvest global procurement network enhances both quality and cost efficiency while ensuring supply chain resiliency. We've developed a scalable production platform with partners who share our commitment to quality and have invested alongside us to support our growth, positioning us well to consistently deliver premium products while ensuring profitability and sustainability.

These four strategic pillars work synergistically to position us for sustained profitable growth while staying true to our mission of transforming childhood nutrition. As we look ahead to the opportunities before us, we're excited about our ability to continue creating positive change in childhood nutrition while delivering value to our shareholders and stakeholders alike.

Our strong foundation and mission, business operations, brand building, innovation and supply chain excellence positions us well for continued growth and success as a public company. We believe our products and mission are more important and relevant than ever, given the widely recognized societal challenges around the health of our children, and we're committed to being part of the solution. Now I'll turn the call over to Larry to cover the financial details and our updated outlook.

Thank you, John, and good afternoon, everyone. I will now provide you with some additional details on the fourth quarter and full year 2025 financial results, along with our outlook for 2026. Net sales in the fourth quarter increased 30.1% to $64 million, driven by relatively balanced volume and price mix growth. Importantly, consumption growth exceeded our reported sales growth by over 300 basis points, reflecting our strong brand momentum. Buy rate also continued to trend upwards and our repeat rate increased 480 basis points versus the prior year period to 50.5%. Looking at fourth quarter net sales by product. Kids sales increased 11.5% to $34.7 million, driven by 9.8% growth in pouches and 25.8% growth in snacks.

Baby sales increased 62.2% to $29.3 million, driven by 35.8% growth in pouches and 91.3% growth in snacks. Gross margin for the fourth quarter was 47.7%, up 105 basis points versus the prior year period. The increase in gross margin was driven by lower trade spend and higher average selling prices. SG&A expenses as a percent of net sales for the fourth quarter decreased by 318 basis points versus the prior year period to 40.7%, primarily due to lower marketing, logistics, and G&A expenses as a percent of net sales, partially offset by higher selling expenses. Net income for the fourth quarter was $22.5 million, compared to a net loss of $12.3 million in the prior year period.

The change in fair value of a derivative liability accounted for over $30 million of the year-over-year improvement in net income, with the balance of the increase due to higher gross profit, partially offset by higher G&A expenses. Adjusted EBITDA for the fourth quarter was $6.6 million, compared to $2.2 million in the prior year period. Briefly touching on full year 2025 results. Net sales increased 53.5% to $240.7 million, driven primarily by 42% volume growth, reflecting both incremental distribution of existing products and new product introductions.

Gross margin for 2025 was 42.3%, down 125 basis points versus the prior year due to increased planned trade spend as a percent of net sales, reflecting slotting fees related to expansion to new stores and placement of coolers. Cost of goods was unfavorably impacted by sales mix. SG&A expenses as a percent of net sales in 2025 decreased by 291 basis points versus the prior year to 44.7%. This improvement was primarily driven by strong revenue growth and disciplined cost management, which allowed us to leverage expenses more efficiently across a larger sales base. We reported a net loss of $17.2 million for 2025, compared to a net loss of $23.8 million in the prior year.

Adjusted EBITDA was $2.1 million for 2025, compared to a loss of $3.7 million in the prior year. Turning to our balance sheet. As of 31st December, 2025, prior to the completion of our initial public offering, we had cash and cash equivalents of $10.9 million and total debt of $60.2 million, comprised of $43 million on a revolving credit facility and $17 million of convertible notes. Subsequent to year-end, we completed our IPO in February, resulting in total net proceeds to the company of approximately $139 million. A portion of our net proceeds was used to repay outstanding borrowings under our revolving credit facility. 2026 outlook. We are confident in our outlook for 2026, as we will continue to execute our long-standing plans.

2026 will see strong marketing, continued TDP growth on our powerful, best-selling core product lines, exciting and incremental innovation in both baby and kid, and disciplined execution against our strategic goals. Our financial position is strong, and today we have cash and cash equivalents of approximately $102 million, plus $82 million in borrowing availability, and currently no debt. In terms of specific guidance, we expect the business to deliver the following in 2026. On the top line, we expect growth of 25%-29% versus 2025, reflecting net sales of $302 million-$310 million, driven by innovation, expanded distribution, and further development across retail and club channels.

We expect Adjusted EBITDA to be just above breakeven at $2 million-$4 million, reflecting our continued prioritization of investing in talent and infrastructure over the near term to support future growth. We are building capabilities with a strong emphasis on supply chain efficiency, productivity, and disciplined marketing investment. As we scale, we expect to reach a mid-teens% Adjusted EBITDA margin over the medium term, with our near-term investments setting up for the long-term success. This concludes our prepared remarks. Operator, please open the call for questions.

We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To ensure we have enough time to get to everyone in the queue, we ask that you please limit yourself to one question initially and then reenter the queue for any additional questions. Please stand by while we compile the Q&A roster. Our first question is from Leah Jordan with Goldman Sachs. Please proceed.

Thank you. Good afternoon, and congrats, John and Larry, on your nice first quarter out.

Thank you.

I first wanted to ask on the sales guidance for 2026, seeing if you could provide more detail on how you're thinking about the drivers between price and volume as well as any color by category as we move throughout the year.

Yeah. Most of the growth is gonna be volume driven as just a general theme. We built the plan with, you know, clear plans and expectations around distribution growth on our existing items, expectations for innovation, marketing effectiveness, including, you know, a surge in awareness that we've gotten coming out of the IPO and just distribution wins and timing, and we feel real confident in the range that we've provided and hopefully have the opportunity to do better than that over time.

Okay, that's helpful. I just wanted to follow up on the competitive environment. You know, how do you view your price gap today? You know, how would you characterize the overall promotional activity you're seeing out there, and how is that influencing your own kind of brand investments and marketing as you plan for the year?

Yeah, broadly speaking, we haven't seen any significant change in the promotional cadence or depth across our categories over the last year. There are some exceptions in certain places, but as a general rule, that's been the case. We are priced very competitively relative to the value we're providing for consumers and that they see.

You know, we're definitely a premium product, but consumers see a lot of value in it, and we feel like our price gaps are in a really good spot. We aggressively use Price Pack Architecture to drive our AUPs down to make sure we're broadly accessible across the channels and retailers that we compete in. We watch our cohorts of consumers very closely, you know, across income brackets. For example, this brand over-indexes obviously in upper third income households.

For middle and lower third income households, we index right to the category, and we've seen really no significant shifts in our demand or velocity trends across any of those three, with respect to potential, like, uncertainty or competitive issues or price gaps in the marketplace or weakness in economic outlook and the like. We feel like we're really well positioned, given what we offer and where we are in our competitive positioning in the marketplace.

That's very helpful. Thank you. I'll pass it on.

Thank you, Leah.

Our next question is from Thomas Palmer with J.P. Morgan. Please proceed.

Hi. Thanks for the question. I wanted to just ask on the guidance range. Appreciate that sales is probably the key driver here, but when we think about key swing items in EBITDA, are there costs or spending decisions we should keep in mind for 2026?

We have some costs that just keep in mind. One of it is that we are looking to continue to drive top-line sales, and we're looking to invest in top-line sales. What we're looking is and potentially adding cost into marketing on top top of the funnel marketing be able to drive not only for 2026 but also to drive us into 2027. The other thing is looking at is really cooler spend.

We've built in you know a set number of coolers for the years. We're looking to get up about 5,000 coolers in 2026. We've had significant conversations with all of our major customers. They are looking to accelerate coolers, and if the acceleration happens in 2026, that could add to the cooler spend that we have.

That would affect net sales, and it would affect EBITDA.

Great. Thank you.

You bet. Thanks. Thanks, Tom.

Our next question is from Jon Andersen with William Blair. Please proceed.

Hi. Good afternoon. Thanks for the question. My question is kind of bigger picture around competition. Are you facing any new competition at any of your key accounts, larger customers? You know, if so, how are you seeing the Once Upon a Farm brand perform in that setting? If I can just ask a follow-up.

With regard to coolers, can you just remind us how you, as you roll out more coolers during the course of 2026 and 2027, do you typically get the vast majority of the space in those coolers? Do you have kind of multi-year commitments from your key accounts to preserve that space? Thank you.

Yeah. Thank you, John. We have a long history of competing effectively in our space. We've been in the kid dairy set for a long time. It's a very competitive space. The only significant change in competitive set over the last year or so has been a new entrant that came in into a big mass account of ours, into our section.

In about September of 2025, we've been going head-to-head there for about six months. As you could expect, they came in pretty aggressively and have done over 50% of their volume on deal since the beginning, plus marketing investments and customer support, including, you know, retailer-supported display at launch. Despite all that, our average dollar velocity per week on our items is two times better than that competitor.

Our repeat rate is 1.8x better than that competitor, and their best-selling pouch after six months is selling at the rate of our number 12 item. We feel like we're competing very effectively and that we'll continue to do that, and we credit that to really strong loyalty with our consumers, a very strong brand, and a strong team that knows how to compete when we need to.After we saw an initial volume hit from that entrance, we've seen growth sequentially growing again there. We're really optimistic about our outlook there. On coolers, we have. We generally do have a multi-year agreements in place. It varies by retailer. We generally will have most of the space in the cooler, but not all of it by design.

Our short-term and long-term view is that if we're the highest velocity product in those coolers, we'll tend to have most or all the space over time, and that's our primary focus.

Great. Thank you.

Our next question is from Peter Galbo with Bank of America. Please proceed.

Hey, guys. Good morning. Oh, good afternoon. Jeez. Thanks for the questions. John, I wanted to discuss a little bit on the protein offerings, or the animal protein offerings, the new ones that you announced at Expo West. I'd love to get a little bit more detail. It's obviously a different form factor, a different product. I mean, potentially a different supply chain. So just any additional detail. Do you need you know new equipment in the co-manufacturers? Did you need to go acquire new co-mans in order to be able to process, just given it's different than kind of what your core product is. So appreciate any detail there. Thanks very much.

Yeah, certainly. One of the key consumer requests that we've gotten for a long time, just like every other consumer packaged goods company in America, is for more protein and better protein. We've had this in our innovation pipeline for a very long time. We did have to set up a new supply chain for it, sourcing very high quality or organic meats for all these products. It's using our existing manufacturing capacity and strong partnerships. What we're really excited about is we've seen a real clear, you know, demand for our consumers for these fresh positioned, organic products. This is a really, really good subcategory in baby. It's about $185 million in retail scanning data across Nielsen, growing at 9%.

It's a very healthy category with good brands there, and we feel really strong that we're gonna be able to bring these products into coolers, serve an incremental need to our existing consumers who are looking for that product and really drive overall category growth. We think, I mean, it's possible we could bring some share from these other brands that are there, but I think the vast majority of what we're gonna do is we're gonna drive the category with incremental growth, just like we have every time we've come in. We feel really good about that. Larry, is there anything you wanna add on the supply chain side?

No. I mean, on the supply chain, a lot of supply chain was pulled off our existing supply chain, but we did have to build a new supply chain for the proteins that we're actually using and be able to source that work within our manufacturing. We did build our specific line for this because we did not wanna run it with our fruit and vegetable pouches. But it's being produced by our existing manufacturers and we have all the relationships and everything else that we have on that. It carries over from our existing core business to this new line of product.

Okay, great. Thanks.

Thanks. Thanks, Peter.

Our next question comes from David Palmer with Evercore ISI. Please proceed.

Thanks. Congrats on the quarter, and thanks for the color so far. You know, you sounded confident on your commentary on the cooler rollouts, talking about the discussions with virtually every retailer. I'm wondering if you can maybe give us some more color about your assumptions for cooler rollouts in 2026 and how much of a contribution you've baked in in terms of your sales guidance for that year. If you're continuing to think that whatever the ramp-up in cooler placement is in 2026, that you're gonna be ramping up even more into 2027, or if perhaps you're, you know, pulling back, you think you're pulling some of 2027 into 2026. Just any color on all this would be helpful. Thank you.

Yeah. We've built into our existing forecast the goal to 5,000 or slightly above 5,000 in coolers in 2026. There are opportunities for us to be able to expand faster in 2026, and that would pull some of the coolers in from 2027. A lot of the growth that we're looking in 2026 is really new customers, new retailers that we haven't built within our modeling in either 2026 or 2027.

We've had some great discussions with these additional retailers, and so we're looking at that as, yes, some of it could be pulled through acceleration with existing retailers, but we're seeing a lot of opportunity in 2026 and in 2027 to be able to bring in new retailers that we're in discussions with right now that haven't been put in, that hasn't been put into the modeling right now.

Yeah. What I'd add, David, is like, the way it generally works on coolers is on every retailer, almost every retailer tests first, right? We'll design a relatively small test. It could be two stores, it could be five, it could be 25, whatever the appropriate store count is. We'll get that test going. Generally, those tests do relatively well or really well, depends on how the execution goes. Then the conversation becomes how fast they can expand. What we have noticed as a general trend over the last couple years, especially the last year, remember, we've been doing coolers now for multiple years and learning as we've been going, is that the tests are performing bigger and better, and the retailer ambition to go aggressive and fast is growing. We feel that.

As I mentioned in the opening comments, you know, we wanna go as fast as we possibly can against the coolers, the retailers, the store locations that we know are gonna be successful based on the model that we have. I mentioned in my opening comments that there's 15,000 doors out there. If you put a cooler in tomorrow, and it was the right cooler with our assortment in it, we know it would work. We know it would deliver for the retailer what we talked about in terms of the total category lift, impact on frequency down the aisle, just all these good things that retailers love. Now, that is what retailers are seeing broadly. They're seeing competitors do it. They're seeing competitors have success with it. We're seeing a lot of positive momentum there.

We'll go as fast as we possibly can as long as we can execute with high perfection.

Yeah. What we're looking at when we talk about it's not, we're not pulling 27 into 26. What we're looking at is accelerating the move towards the 15,000 coolers that we believe would be in.

That's our objective and what we think can happen.

Great. Thank you.

Thank you, David.

Our next question is from Andrew Lazar with Barclays. Please proceed.

Great. Thanks a lot. Good evening, everybody. Two things. One, any commentary around just discrete things we should keep in mind around sort of cadence of how the year plays out, both on the top line and on EBITDA, if there are things just to call out there from a modeling standpoint? Then, I know there are some opportunities that you might have as you talked about to go faster that might justify some incremental investment this year. I'm wondering where there might be some other areas where perhaps you've built in some conservatism into the model, maybe around whether it be around productivity and what's built in there, or where you might have some opportunities to help fund some of that incremental investment should it, you know, should those opportunities arise. Thanks so much.

Yeah. On the phasing of how the year flows, I mean, the way we look at it is that, you know, we have a big lift, and we usually have a big lift in the second quarter associated with some promotions. What we have is we have a lot of resets in the second quarter that drive getting to market with the new distribution. We also have back to school in Q3. That is a big promotional period for us. Then what you'll see is Q4 usually is flat to Q3 coming out. We run less promotion during the year, so the top line gross sales slightly lower. But when you look at net sales, it's usually flat between Q3 and Q4.

That's kind of the cadence. The things that could throw that off would be promotions, you know, working with Costco and Club on other promotions that may not be committed at this point and may not be built in the model. The phasing of coolers and when the coolers actually hit and go live with the customer. That, you know, we have an idea of when the coolers are gonna be coming in based upon our conversations with our customers, but it does somewhat push out or pull in based upon what the timing is for that customer, and that changes usually within two to three months of when the cooler actually hits the stores.

On the areas where we can drive productivity, the real thing, and we talked about this on other calls, is that we have a lot of projects of what we're trying to build to drive efficiency within our manufacturing base. So we have a lot of them. They're currently in place. We're working to get them up and running. As we said before, we did not build those into our model because we don't know when they're actually gonna hit and then the level of productivity is, and when we're gonna start seeing that productivity coming in.

We have a lot of opportunities within our gross margin and within our COGS, as we drive those productivity projects and as they get online. That is really where we were conservative within the model because we did not build. We just carried over the productivity programs that we built in prior years. We didn't build any new productivity into the model going forward because we just wanted to make sure we had a better feel of what those projects would deliver and the timing of those projects when they start hitting the P&L.

Thanks so much.

You bet.

Our next question is from Stephen Powers with Deutsche Bank. Please proceed.

Great. Thanks so much, John, Larry. Good afternoon.

Great.

Two things for me too, if possible. One, I was just hoping, maybe to start, you could compare and contrast the volume growth, the volume-led growth, outlook that you mentioned, John, for 2026, just versus the more balanced volume versus price mix dynamics we saw in the fourth quarter here. Maybe just dig a little bit into the drivers and call out any kind of known variations in volume versus price as we kind of roll through the year, maybe building on Larry's cadence commentary that he just went through in response to Andrew's question. The second question I had was, just around cost structure sensitivity to higher oil, natural gas, and energy costs, just as those variables are, obviously top of mind for the market today, generally. Thanks.

Most of our growth will be in volume for 2026, and it's being driven by the new innovation, all the TDP growth that we have. You'll see some price when we do future reporting, also being there, but that's really driven by customer mix and our move into Price Pack Architecture. You'll see that because when we move into bigger pack sizes, the average cost per AUP per unit actually goes down because they're buying a larger amount within that larger pack size. Even though it's a volume-related growth, but you'll see that there's volume-related growth driven by price.

On the second question on the oil, you know, we do source from all over the world. We do bring product in, and so we do look at the cost of most of the products are coming in by ship, although that's the most efficient way and the lowest cost. You know, oil still has an impact on that cost coming into the States for those items. Most of our product, whether it's domestic or international, comes in by truck. What we're seeing is because we negotiated and we've contracted for all the base freight rates, but we'll see higher surcharges coming into us as we have those products coming in.

We're not anticipating that to be a material impact to us. For right now, it's going to be. We've kind of modeled it in. It's less than 100 basis points. You know, and that's where if it continues to play out for the whole year, so we're thinking that it's immaterial at this point, just based on how our mix of materials go through and how we deliver our products directly to our customers. It is an impact, but we're looking at it being immaterial.

Yeah. I'd also just add, we have, you know, flexibility. We have strategic revenue management projects that are ongoing with opportunities to pick up there, and we have the opportunity to do things from a pricing standpoint if we needed to. We do not anticipate that right now. But we have levers to pull to make sure that we can deliver against what we're saying.

Okay, great. Thanks so much.

Thank you, Stephen.

Our next question is from Rupesh Parikh with Oppenheimer & Co. Please proceed.

Good afternoon, and thanks for taking my question. Just with the IPO and all the awareness that you guys have generated so far, just curious, you know, how that's played out, you know, based on what you're seeing in the business and maybe on the retailer side as well.

Yeah. Our engagement on the brand from a retailer perspective has always been strong. We've built very strong relationships top to top at these big chains all the way down through the category managers and buyers and the like. I'd say it's pretty clear that our business credibility inside those chains has only accelerated as a result of the IPO, which we would have anticipated. There's no question that we generated an incredible surge in awareness for the brand coming out of the IPO. We've been able to see that in a lot of different metrics that we track across the business. We'll see how that plays out over time.

You know, awareness is definitely a leading indicator to household penetration, and we expect it's certainly gonna help us drive continued growth in awareness in the trial and repeat and household penetration for the brand as part of our broader marketing plans. I'd say in addition to the IPO, we have very strong marketing plans in place this year. Robust top-of-funnel support all the way down, continuing through the entire year, built on all of the learning and great marketing that we did in 2025 to drive those results. We're feeling really optimistic about our ability to build the audience that's following this brand and buying us, hopefully in multiple categories over time.

Great. Thank you.

You bet.

Our next question is from Robert Moskow with TD Cowen. Please proceed.

Hey, thanks, and congratulations again, John and Larry. I wanted to know if there's any way to kind of dimensionalize your distribution growth assumption, as it relates specifically to coolers. You know, you put up a big number here, but you're also talking about, I guess just distribution from new products as well. So, like, maybe the right way to ask is, of this, like, 26% growth or so for the year, is the majority of that coming from distribution? Is it just half? And can I correlate that directly to the new coolers or something else?

The biggest driver in growth for the year is gonna be distribution expansion across our existing best-selling items, including coolers, right? But broadly speaking, it's really everything. It's from our core assortment in kid dairy. It's obviously from our snacking business in baby aisle, but coolers is growing as well from around 3,400 now to a little over 5,000, as Larry talked about. That's. Does that help?

Yeah. I'll follow up. A follow-up to the question is, you know, your gross margin is down in 2025, and you've been very transparent that there's slotting fees related to that associated with the coolers. Are we still on track to be down, you know, 120 basis points this year? Is it the same driver for that decline, the slotting fees?

Yeah, Robert, we're projecting to be slightly down from 25, about 120 basis points. The driver of that is coolers. We're projecting higher cooler slotting than 25, but we're also building in about 100 basis points of tariff costs during the year. Between the both of those, that's what's impacting margin right now.

Great. Thank you.

You bet. Thank you, Rob.

There are no further questions at this time. I would like to turn the floor back over to John for closing remarks.

Great. Thank you very much, everyone, for dialing in today. I wanna thank all our incredible OFR and team members for their hard work and dedication every day in pursuit of our mission and to build the best brand and business possible. You know, everything that you've done over many years to prepare us to perform on this very public stage and to continue to execute at a very high level, much appreciated. We're proud of the strong fourth quarter performance, which reflects the powerful underlying momentum around the brand and ongoing trust consumers place in our mission-driven approach. Our successful IPO was a major milestone that will serve as a launching pad for further acceleration of our growth initiatives. We'll continue to delight consumers, drive strong win-win retail partnerships, and deliver against our mission to improve childhood nutrition for all kids everywhere.

Parents today are more committed than ever to providing their children with the highest quality organic nutrition, and Once Upon a Farm is uniquely positioned to capitalize on this demand to drive sustained growth in 2026 and beyond, as well as value for all of our shareholders and stakeholders. Thank you very much for your time today.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.