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00:36 Good morning and thank you for joining us today for our fourth quarter and full year fiscal twenty twenty one earnings call. I'm joined this morning by Chris Scherzinger, our Chief Executive Officer; and Bill Horton, our Chief Financial Officer.

00:47 I'll start with our forward-looking statements disclaimer. As you are aware certain statements made today, such as projections for Weber's future performance are forward-looking statements.

Actual results could be materially different from those projected. For further information concerning factors that could cause results to differ, please refer to our public 10-K SEC filing, our earnings release and to our SEC filings, all of which are available on the company's website.

01:13 During the call today, the company may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to GAAP reporting, please refer to the company's earnings announcement, which has been posted on the company's website at [email protected] and could be found in the company's SEC filings.

A recording of today's webcast and supporting documents will be archived for at least ninety days on Weber's Investor Relations website. 01:38 And now, I'd like to turn the call over to Chris.

01:40 Thanks, Brian and good morning, everyone. I'd like to start today's call by thanking our team around the world for delivering another strong quarter and a record setting year for Weber, delivering thirty percent revenue growth in fiscal twenty twenty one on top of last year's strong eighty percent growth rate for a two year revenue growth debt of plus forty eight percent.

01:59 And despite the well-known challenges in this global operating environment, our revenue growth converted to record setting gross profit and EBITDA as well. Our Weber team around the world work tirelessly to meet customer needs, and to grow our iconic brands while delivering fantastic financial results.

02:16 In fiscal twenty twenty one, we generated net sales of one billion nine hundred and eighty two million dollars, again a thirty percent increase versus last year. Adjusted EBITDA reached a record three hundred and seven million dollars and we expanded EBITDA margins by sixty basis points to fifteen point five percent, while at the same time increasing our strategic investments in new product development, digital marketing and supply chain initiatives that yields current and future benefits for our company.

02:44 Our ability to drive growth today, invest in our future and deliver these results is a testament to our strategies and also our people and their ability to execute in tough environments. Given these strong financial results, last month our Board of Directors declared a quarterly cash dividend of zero point zero four dollars per share to common stockholders implying a zero point sixteen dollars per share annual dividend.

03:06 The initiation of a dividend reflects the confidence we have in the performance of our business and the strong cash flow generation we expect to achieve which affords us the ability to return value to our shareholders while also investing in our future growth. 03:19 In recent months, there has been much discussion around global supply chain challenges and inflationary pressures and like many businesses we have been affected.

However, we believe our unique global manufacturing footprint and world-class supply chain organization is a valuable competitive advantage. It has uniquely positioned us to navigate the current environment favorably relative to the broader market and we continue to supply our customers and consumers in the face of record demand.

03:44 To help mitigate the supply chain pressures that we expect to linger throughout twenty twenty two, we have leveraged the unique broad network of supply partners and proactively engaged with new carriers and landside transportation partners to manage both availability and rates. 04:00 In addition, we've increased rail move within regions and are flexing a variety of alternate container depots and port pairs to limit terminal congestion delays.

As a result, we are current with all global shipments and have healthy inventory levels to meet twenty twenty two demand. We are the only large scale grill brand who owns and operates our own U.S.

manufacturing facilities which has been a distinct advantage in this tough environment. 04:25 In addition, in October, we began production at our new Poland manufacturing facility, which I will speak to in a moment.

We're now the only major grill brand to operate our own European manufacturing facility as well. This is a real unlock for our large and growing EMEA business and it strengthens and diversifies our entire global network.

04:43 Regarding inflation and commodity price increases going into twenty twenty two, these supply chain advantages help us on this front and we remain focused on improving our operational efficiency as the first line of defense to help offset rising input costs. In addition, as we discussed in the past, Weber is a premium brand that has pricing power in the marketplace on a global basis.

05:04 We had implemented price increases this quarter to offset the current inflationary environment as we enter the twenty twenty two season as these have been accepted in planning discussion with our retail partners across geographies. The combination of supply chain productivity and pricing actions will help protect gross profit dollars in twenty twenty two and set up longer-term structural accretion.

05:24 Our strong financial results for fiscal twenty twenty one continue to demonstrate the strength of the Weber brand and our products across all key segments of the outdoor cooking category and all key grilling markets globally and it validates the five key growth strategies that we've discussed since going public a few months ago. 05:41 I'd like to provide some highlights on the progress we've made against these.

First is disruptive new product innovation. We are a company of inventors and have been for seventy years and innovation played a big role in our twenty twenty one success with successful new launches that included the Weber traveler portable grill, the Weber Genesis and spirit ES line of smart gas grills which feature embedded Weber Connect technology, the Summit Kamado Charcoal Grill and the second generation Weber SmokeFire Wood Pellet Grill among others.

06:12 These new products won a number of industry awards and consumer ratings and reviews are excellent and we're on track to unveil several exciting new products for twenty twenty two over the next few months. So, there's a lot of positive momentum here.

The Weber Connect platform is worth a special call out. 06:27 As a reminder in January twenty twenty one, we acquired one hundred percent of June Life, the Silicon Valley inventors of the June oven and our long-time partner in the creation of Weber Connect, the first true smart grilling technology platform.

Weber Connect continues to be recognized as the best-in-class smart grilling experience by influential media and it keeps getting better. 06:48 This month, we are releasing our largest ever update to the Weber Connect app.

Consumers can access new recipes and guided took programs for a variety of dietary preferences and it will enjoy new experiential benefits, including a new fuel monitoring feature. The stream of Weber Connect updates and added functionality continually make sure grills smarter overtime which tees up exciting opportunities for Weber and our loyal consumers.

07:11 Our next key growth platform is direct-to-consumer sales in e-commerce, which includes both Weber.com and our global network of roughly two hundred Weber stores and Grill Academy. Growth here was up substantially in twenty twenty one, even lapping a strong growth year in twenty twenty, our increased media investment this past year across Connected TV, social media, influencer programing and digital video, top drive revenue gains of around fifty percent in twenty twenty one.

07:38 We'll continue to invest in new signings with fourteen new stores opening in the fourth calendar quarter of twenty twenty one and this will continue to be a meaningful growth platform for us in twenty twenty two and beyond. Bill will going to share more detail on our e-commerce results as well.

07:52 Next, our emerging geographies, which grew nearly sixty percent year-on-year in twenty twenty one. These focus markets outpaced total company growth by two times, highlighted by wins in Latin America, Southern and Eastern Europe and Asia.

We continue to be optimistic about our emerging market runway in the future, fueled by Weber store growth and increased investments to build awareness of the Weber way of grilling. 08:15 And then finally, is our strategic platform around value creating operational initiatives.

As I noted earlier, our operational infrastructure is a key differentiator for Weber. We remain committed to investing here and we're seeing fantastic results.

I was very proud to attend the official grand opening of our first Weber owned and operated European manufacturing site in Zabrze, Poland in October. 08:38 This BREEAM-certified facility is now producing and shipping Weber grills across Europe for the twenty twenty two season.

It provides game changing structural cost savings, improves working capital requirements and derisks our global supply chain in the face of the current industry challenges. 08:54 Before I turn it over to Bill, I wanted to close my comments by highlighting our newly created subsidiary 1952 Ventures, named for the founding here of Weber when the first Weber kettle was invented and revolutionized the outdoor cooking industry.1952 Ventures is designed to house new growth platforms for Weber to accelerate innovation and brand extension.

09:15 It allows us to pursue additional disruptive growth opportunities without distracting the core Weber business team. Troy Shay has been appointed as Chief Executive Officer.

Weber will fund 1952 Ventures through existing cash flows and leverage capacity, staying true to our stated target of three times net leverage. Importantly, we believe 1952 Ventures activity will be highly value accretive to Weber.

09:38 The start-up of 1952 Ventures along with the recent promotions of several key senior leaders, builds on our recent success and expands our capacity for continued growth, I believe the company's success reflects the talents of the team and I feel strongly that we have the best team in the business. 09:55 With that, I'll now pass it over to Bill Horton, our Chief Financial Officer to review the fourth quarter and fiscal year financial results.

Over to you, Bill.

10:03 Thanks, Chris. I will start with a summary of our strong Q4 financial results before going deeper into the regional and channel financial results for our full fiscal year twenty twenty one, that ended September thirty.

I'm pleased to report that across net sales, net income and EBITDA, we delivered results above or in line with our previous guidance. 10:25 As a reminder, Weber is a seasonal business and our first and fourth quarters historically has each represented approximately fifteen percent of our full year sales, with only the Australia-New Zealand business being in season during those quarters.

That said, we saw a significant seasonality shift last fiscal year as strong retail sell-out throughout Q2 and Q3 combined with pandemic driven supply chain slowdown, depressed retailer inventories and required continued replenishment during our fiscal Q4 last year, and into Q1 this fiscal year. 11:01 Both Q4 twenty twenty and Q1 twenty twenty one sales were up more than eighty percent versus the same period in the prior year.

Despite this Q4 twenty twenty comp, we over delivered on our plans for Q4 this year, with sales of three hundred and fifty million dollars, down only five percent from last year and up seventy seven percent on a two year stack basis, a significant accomplishment for our teams. 11:26 E-commerce and direct-to-consumer channels continued the strong growth results we've delivered over the past three years, with Q4 sales up forty two percent versus Q4 last year.

We have a unique mix of growth drivers within our e-commerce and direct-to-consumer channels, with pure play e-tail partners in every country where we operate. Weber.com now sell in our products by our website in twenty eight countries, a unique network of one hundred and ninety three Weber stores, unlike any in our competitive states.

11:58 In the fourth quarter, direct-to-consumer sales were up twenty twenty two with weber.com up thirty nine percent versus the same period last year. Our strong Q4 sales enabled over delivery of our other key financial metrics for the quarter when compared to the guidance provided during our last quarter's earnings call.

12:18 Quarterly sales growth of negative five percent was better than the negative ten percent we guided to during our call and adjusted EBITDA of negative fourteen million dollars in the quarter, just a midpoint of our provided guidance. Again, the sales results in the quarter allowed for over delivery on our full year guidance to drive net sales growth of thirty percent, record EBITDA of three hundred and seven million dollars and EBITDA margin expansion of sixty basis points with fifteen point five percent.

12:48 Specifically, net sales increased by four hundred and fifty seven million dollars to one point nine eight two billion dollars from one point five two five billion dollars last year. This is our second consecutive year of innovation led growth with our two-year sales stack of forty eight percent.

13:05 Core growth which represents business growth, excluding the impact of foreign exchange represented three hundred and eighty one million dollars, a twenty five percent increase versus last year, and foreign exchange accounted for seventy six million dollars. We continue to see progress towards our key strategic growth priorities with direct-to-consumer sales up forty six percent versus last year.

13:29 For fiscal twenty twenty one, both growth segments within our direct-to-consumer channel delivered exceptional results with weber.com up fifty percent and Weber store sales up forty two percent. While we had exceptional growth across all product categories, two specific drivers were our gas grills segment that was up thirty five percent versus last year and our portable segment that was six hundred percent, the retail success of the Weber traveler which continues to outpace our expectations.

14:01 In addition, for fiscal twenty twenty one, emerging geographies were up nearly sixty percent versus last year, representing twelve percent of total revenues, up from ten percent last year. The focus on developing markets is something we have discussed previously.

Our proven track record of penetrating and scaling the Weber brand in new or underdeveloped geographies is a clear differentiator for our company. 14:27 For example, over the last two years, we've driven two-year CAGR in the UK, Italy and France, up forty five percent, thirty nine percent and twenty four percent respectively.

Other developing markets to call out that are in the early to mid-stages of their maturity cycles, like Japan, Mexico and Russia, collectively grew forty eight percent last year and have delivered two year CAGR of thirty three percent. 14:58 Net sales growth was consistently strong across all of our operating segments with the Americas up twenty five percent, EMEA up thirty four percent and APAC up forty nine percent.

For the Americas, net sales increased twenty five percent or two hundred and twenty two million dollars to one point one billion dollars from eight hundred eighty one million dollars last year. All channels continue to deliver strong year-over-year sales growth with online sales at weber.com outpacing the overall region up sixty four percent.

15:31 Core growth represented a two hundred and twelve million dollars increase or twenty four percent increase year-on-year, while foreign exchange contributed ten million dollars of the revenue increase. Leading the growth within the America's segment was our Canada business with the continued addition of new retailers to the Weber portfolio, successful new product launches, and efficient supply chain execution have led to significant market share gains, delivering growth of eighty four percent in twenty twenty one and a forty seven percent CAGR over the last two years.

16:07 Our EMEA region net sales increased by thirty four percent or one hundred and eighty four million dollars to seven hundred and twenty six million dollars from five hundred and forty two million dollars last year. Core sales growth was one hundred and twenty nine million dollars, up twenty four percent, while foreign exchange was fifty five million dollars of the sales increase.

16:27 Direct-to-consumer sales grew twenty seven percent, driven primarily by new Weber store openings and increased revenue within existing stores along with weber.com growth of twenty five percent. It's worth mentioning that every country in the region delivered double-digit growth.

So, we're very excited about where the brand is positioned for continued future growth. 16:52 For the APAC region, net sales increased by forty nine percent or fifty one million dollars to one hundred and fifty four million dollars from one hundred three million dollars last year.

Core growth represented forty million dollars or thirty nine percent increase, while foreign exchange represented eleven million dollars of the sales increase. 17:12 From an absolute dollar growth basis, Australia and New Zealand led the way.

However, our developing countries in Asia grew eighty five percent, the clear indicator that our accelerated growth strategies for emerging markets are working. Behind the strong sales growth, gross profit for the fiscal year increased by two hundred and fifteen million dollars or thirty five percent to eight hundred and twenty five million dollars from six hundred and ten million dollars last year.

17:40 Gross margin increased by one hundred and seventy basis points versus last year to forty one point six percent. The increase in gross profit dollars was primarily driven by higher sales volumes, global productivity initiatives and a decrease in COVID-19 related costs.

From one hundred and seventy basis point year-over-year expansion of gross margin were driven by pricing actions to offset cost inflation, productivity initiatives, favorable mix shift towards EMEA, reduced COVID-19 costs and favorable FX movement. 18:14 Selling, general and administrative costs for the fiscal year increased by two hundred and ninety four million dollars or sixty six percent to seven hundred and thirty nine million dollars from four hundred and forty five million dollars last year.

SG&A as a percent of net sales increased by eight hundred and ten basis points to thirty seven point three percent this year. 18:36 This increase was primarily driven by higher non-cash stock-based compensation charges of one hundred and twenty seven million dollars, increased distribution costs of forty seven million dollars, associated with higher sales volumes, higher advertising costs of forty one million dollars to drive revenue and higher research and development costs and other investments to support growth initiatives.

18:59 Excluding the impact of non-cash stock-based compensation charges and other one-time items, adjusted SG&A expense as a percent of net sales increased to twenty eight point three percent in twenty twenty one from twenty seven point seven percent in twenty twenty. 19:18 Net income declined ninety four percent to six million dollars from eighty nine million dollars in the prior year.

The decrease was primarily driven by one hundred and thirty one million dollars of non-cash unit-based compensation charges, largely driven by valuation methodology changes as a result of the IPO. 19:36 As discussed last quarter, the timing of the realization of some June Life net operating losses and R&D tax credits shifted some expected earnings in Q3 to Q4 of this year, while having no impact for the full year earnings figures.

Adjusted net income increased twenty eight percent to one hundred and sixty one million dollars from one hundred and twenty six million dollars in the prior year, driven by strong topline growth and gross margin improvement. 20:06 Adjusted EBITDA increased thirty five percent to three hundred seven million dollars or fifteen point five percent of net sales compared to two hundred and twenty seven million dollars or fourteen point nine percent of net sales last year.

This sixty basis point improvement was primarily driven by topline growth and margin improvement initiatives across the business, partially offset by increased investments to support our key strategic growth priorities in areas like brand advertising, marketing, and research and development. 20:39 Net cash provided by operating activities decreased to fifty four million dollars for the fiscal year ended September thirty, twenty twenty one from three hundred and five million dollars for the fiscal year ended September thirty, twenty twenty, a decrease of two hundred fifty one million or eighty two percent.

While the company experienced favorable operating results, this was partially offset by the impact of normalizing inventory levels throughout the fiscal year ended September thirty, twenty twenty one. 21:10 Additionally, less favorable impacts from accounts payable balances, driven by timing of payments, further offset the company's results as compared to the prior year period.

Our inventory position remains healthy and ended twenty twenty one of ninety nine million dollars versus last year to three hundred and thirty three million dollars due to the strong out of season demand last year which drove low retailer inventories into Q1 of this fiscal year. 21:38 Inventory turns again hit a record three point six turns for Weber as our focus on supply and demand planning systems and processes and our Make-Where-We-Sell strategy continues to drive working capital improvement for our business.

Our ending average net leverage was two point nine times with no draw on our revolving credit facilities, in line with our long-term target leverage ratio of three times. 22:06 I would like to wrap up my prepared remarks by providing guidance for the twenty twenty two fiscal year.

Clearly twenty twenty one was the second consecutive record year for Weber by nearly all key financial measures. We drove strong financial results throughout our P&L.

Our entire organization is making great strides against our key growth initiatives and we're leveraging our unique global and manufacturing footprint in world-class supply chain organization as we continue to navigate the current challenging operating environment. 22:38 We anticipate a strong fiscal twenty twenty two with full year net sales growth of between six percent and eight percent, and adjusted EBITDA of between three hundred and twenty five million dollars and three hundred and forty five million dollars.

As in prior years, we anticipate weighted sales activity in our second and third quarters. 22:59 On gross margins, I expect first half year-over-year margin contraction that will normalize and improve in the second half as in-bound freight variances currently held on the balance sheet, also the P&L, the Poland plant favorably impacts cost of goods sold and we allow late Q1 and early Q2 pricing actions across all markets to favorably impact our year-over-year comps in the second half.

23:26 I will now turn it back to Chris to close out our prepared remarks.

23:31 Thanks, Bill. I'd like to close our comments, the same way I opened, with a big thank you to our Weber employees around the world.

We've accomplished so much in twenty twenty one in the face of continual headwinds, but all of you worked so hard to meet the needs of our retail partners and our loyal end consumers, the Weber fans across seventy eight countries globally. These efforts made all the difference, and it shows in our performance of the company.

So, thank you, all. 23:54 And with that, I'd like to open up the call for questions.

24:21 Hi, this is Alex on for Robby, thanks for taking our questions and congrats on another strong quarter. So just first, I wanted to ask about fiscal twenty twenty two outlook a bit more.

I think U.S. household penetration of grills is about as high as it's ever been in twenty twenty one according to some surveys data, although you took the fiscal twenty twenty two guide up, which is very encouraging.

24:49 I guess just how are you thinking about driving demand from here given the tough comps you are obviously facing and maybe talk about how historically how much replacement grills versus first-time purchases have represented as a percent of the mix and sort of how you see that going forward? Thanks.

25:09 Thanks, Alex. Hey, this is Chris.

Good to talk to you and thanks for the questions. Alex, I think you're right that the market has been hot for grills for over the last for outdoor cooking in general over the last couple of years and there is a well-developed household penetration in the U.S.

And so, I think your premise on the first part of the question is right on. Here's how we think about it, and this is consistent with how we've talked about the business in the past but I'll try and make it real in the context of twenty twenty two as well, given that's where you're coming from.

We think about this is a global business clearly. We're in seventy eight countries around the world.

We're in fifty million households around the world. We're the number one brand in all the key grilling markets around the world.

25:50 And there are, you heard Bill talk about in the prepared remarks emerging geographies. There are a number of markets where we have had a great deal of success in fiscal twenty twenty one.

I think Bill's statistic was sales were up about sixty percent in those emerging geographies. This is kind of a bundle of about a dozen countries that we look at specifically and we focus on accelerating growth there.

So, you can see in those markets, we're delivering twice the growth rate of the total business, which is a key growth lever that will continue for us and we think even grow momentum going forward as one of our key strategies. So emerging geographies are a big play that certainly addresses expanding households on a global basis and not just sticking about it as a U.S.

business. So that's one pillar.

26:35 The other pillar I would speak to is innovation. And so one of the big investments, I talked about it in my remarks, June and the acquisition of June last year, just a little under a year ago and what bringing that team into Weber has done for our technology capability set and that's showing up in a number of our Weber Connect new product offerings that started in -- started actually in twenty twenty with our first product line, but grew in twenty twenty one, we saw a really great growth behind Weber Connect attached to our gas grills, the Weber Genesis and the Weber spirit ES line of grills in twenty twenty one.There is a substantial amount of innovation coming for fiscal twenty twenty two that will also be -- that will also feature Weber Connect embedded on the product and that's something that will accelerate purchase frequency or purchase -- repurchase cycles, if you will, in the marketplace.

27:27 So we believe that our innovation platforms can drive acceleration of that purchase frequency dynamic and get a household is in the category already, who already has penetration, if you will, to come back into the category sooner than they might otherwise come in, accelerating the product life cycle and also trading up frankly because the technology play adds both higher average selling price as well as margin accretion for us. And so, it ends up being kind of a win-win for us and it's certainly a win for consumers as well because they get a completely different kind of positive grilling experience in learning how to grill a million different types of new foods on their Weber Grill and their patio.

So, innovation is a big piece of that. 28:07 I would also point out the Weber traveler, which is a key innovation for us.

It grew our business in the portable segment by six hundred percent last year. I think it's fantastic and so traveler for us is a great example of how you can take a Weber household, who has got a very -- a loyalty and a fondness for the Weber brand and owns maybe a Weber Genesis on their patio in their backyard.

But when they see the traveler operating to add a second grill to their household and so you can accelerate, purchase frequency is also by introducing new types of grills to give different use occasions and take that Weber loyalty and accelerated. That goes that goes along with our accessory strategy as well, both of those are filling in kind of the main grill repurchase cycle with additional revenue opportunities in between that cycle.

28:51 Bill, anything that you would add to that?

28:51 I would just emphasize, Alex, we still -- we remain highly confident in our six percent to eight percent growth target for this year that we -- I provided to on the call. A couple of other things I'd probably add I talked about the Canada growth and that just underscores our focus on new customer acquisition and that's working extremely well for us.

So that's another piece that and I don't think, Chris mentioned that we want to highlight and will continue to drive, is that new customer growth and picked up that will help us. And then direct-to-consumers and other channel for us that continues to perform extremely well.

So, all of those taken together, give us high confidence in our growth targets that we've set forth.

29:33 Thank you. That's incredibly helpful.

And then just one quick follow-up. EMEA had a another very strong quarter and I think came in sort of above expectations, a one percent growth on top of fifty one percent last year.

Just maybe give us a little more color on sort of what continues to drive EMEA growth and how you're thinking about that region going forward? Thank you.

30:00 Sure. It's been, the EMEA business is really healthy as you pointed out.

It's been on a roll to be honest. One of the growth drivers there is the Weber store footprint that we have and so on a global basis, Bill talked about our direct-to-consumer business, a big part of our global direct-to-consumer business is a network of Weber original stores and grill academies.

And our Weber stores grew on a global basis from around, I'd say, one hundred and seventy globally at the start of last fiscal year to a one hundred ninety three, I think, by the end of the year and we're adding another fourteen this current calendar quarter. So that -- a lot of that Weber store growth is happening in our European footprint and that's been a key lever for us as we drive a deeper Weber experience.

30:51 The Weber stores on a global basis were up I think forty two percent. Bill is nodding his head so, I mean the right ballpark, up forty two percent versus the prior year.

And Weber stores are a longstanding part of our European footprint and have been a reliable source of Weber growth for years. It's a great platform to introduce innovation.

And so, what the store concept does is, it pulls in consumers who have a relationship with Weber and it showcases a Weber specific in-depth experience with our new product launches. And so, when you think about Weber Connect or the launch of SmokeFire which has been really successful for us in Europe or you think about Traveler which is also off to a great start in Europe, that exposure to innovation is aided by our store footprint and also, I would say even our dealer partners as well.

We have a really developed the channel differences in Europe are subtle from North America. But we do have a very strong independent dealer network in Europe and that's been very supportive and helpful for us, particularly coming out sort of the back end of the pandemic when consumers are -- when more stores are open and consumers are back out in the marketplace.

So that's a big driver. 32:01 Bill, what else would you add from a Europe standpoint?

32:03 No, I think you hit it for Europe. I think the one thing I'd probably just mentioned just to call out to the Americas businesses, if you look at these businesses on a two-year stack basis, if you look at the fourth quarter, there's a lot of dynamics over the last couple of years, but on a two-year stack basis, the Americas is actually up one hundred and four percent.

So, while there one year quarter growth rate may see lighter than normal, that one hundred and four percent growth for the Americas is really strong as well. So, we feel really good about all of our operating growth.

Did that hit it, Alex?

32:35 Yes. That's really helpful.

Best luck going forward.

32:41 Thank you.

32:52 Hey, good morning. This is Dan on for Simeon.

Echo my congrats on a great year. To the extent that you feel comfortable sharing, how should we think about the cadence of new product development or launches into next year?

I think, Chris, you mentioned some of the next few months, but anything in the back half. And then what's the pricing on this?

Thanks.

33:12 So thanks, Dan for the question and say, hi, to Simeon for us. I would say, we're very excited about the innovation that's coming in for fiscal twenty twenty two.

I would frame it around, it's a seasonal business, generally with the exception of Australia, New Zealand, which is playing a southern hemisphere seasonality And so they are in the peak season literally right now as we talk. Generally speaking, in the Northern Hemisphere so the Americas and EMEA, we will launch new products in the January, February timeframe with peak shipments and loading shipments to retailers in what will be our fiscal Q2.

So, January to March and then run the season. And so typically that would be on floor at retail in the March timeframe, depending on the channel and the independent -- and the particular retailer and run the peak season from kind of the April through August timeframe in terms of consumer demand.

34:08 And so what typically happens as we launch our new products in the. Jan, Feb timeframe, we have a big launch in the gas category.

It's a really revolutionary and exciting restaging of our Genesis line that will -- I think, just sort of knock people socks off. The early response from retailers has been very positive.

And so that generally is our flagship launch for the year. We have four or five new product launches planned.

I won't get into all the details for each one. But you will see the timing come out in terms of market announcements and things like that.

The pricing in general for innovation, we want it to be, I mentioned before, that when you embed technology on a grill, it generally takes the average price point up, that can range anywhere from a one hundred dollars premium to two hundred dollars or more premium on a per unit basis. And so you would expect to see particularly in inflationary environment that we're seeing right now, innovation is a really important lever for us as we absorb the inflationary impact and bring that price to the marketplace in a way that consumers see the value that they -- it's not just a price increase, but it's a real value enhancement, from -- coming from the innovation, it does deliver on what we need from a price accretion standpoint without having to just sort of take a commodity type price increase.

35:27 And so it's a great lever for us, the innovation platform. And I think you'll see Genesis being a big driver for us going into twenty twenty two.

Did I hit all of your question, Dan? It was our second half that I'm forgetting.

35:39 No. You got it.

And then just on Poland, is there a way to quantify the COGS savings from that or how much that helps gross margin? Thank you.

35:47 You'll see the Poland impacts start to impact our results in Q3. And as we don't provide quarterly guidance, and we don't get into specifics on Poland plant productivity but as we've talked in the past during the road show and during our IPO process, we expect significant margin improvement from the Poland plants, not only just in manufacturing efficiencies but also in freight.

Obviously, we've talked a lot about freight -- inbound freight costs escalating. And this is one of the significant benefits of the Poland plant that will see start to impact the P&L in late Q2 and then full-year run rate, if you will, by Q3 and into Q4.

36:33 Awesome. Thanks very much.

Happy holidays, guys.

36:36 Thanks.

36:37 Thank you.

36:48 Hi. Good morning.

Thanks for taking our question. Our first question was on the guidance for the twenty twenty two sales growth.

I know you just went through the innovation and the impact of pricing that you can get from that innovation in twenty twenty two. Is there a way to parse out that six percent to eight percent sales growth between sales and units?

37:18 Yes. Generally, the six percent to eight percent is -- yes.

And generally, most of that topline growth that we've modeled, it is coming from pricing, that again, like first it goes into effect in Q2 and its fully reflected on the P&L Q3 and beyond. So, I would say most of the growth is on price.

And then, as a reminder, we don't plan on providing quarterly sales or quarterly EBITDA guidance. But we're highly confident in the full year sales growth that we've provided.

Given the constantly changing supply chain environment, we anticipate there's going to be fluctuations quarter-over-quarter versus our prior expectations. And specifically, we expect some continued margin pressure in Q1, but we're really confident in our ability to maintain full year margin and EBITDA targets through Q3 and Q4 performance as our pricing actions, as I mentioned, and other operational initiatives like Poland take hold and begin to impact the P&L.

38:22 So generally as in prior years, we expect weighted sales activity. So, I think what you'll see Kate is, generally historically you've seen fifteen percent of our sales in Q1, fifteen percent in Q4 and then seventy percent spread across Q2 and Q3 and that's how we're looking at modeling the business for this year.

So, I think you'll see a normalization towards that kind of -- does that help give some perspective?

38:45 Yes. That's helpful.

Thank you. And then our second question was just on the adjusted EBITDA growth guide of three hundred twenty five million dollars to three hundred forty five million dollars.

I think the Street is closer to three hundred forty five million dollars for the year. So, I wondered, if you could maybe talk a little bit about what the lower end represents versus the higher-end in terms of that range of the guide.

39:11 Yeah. I think the primary factor the thing we're factoring into all of our guidance is the supply chain challenges that we're all aware of.

While we believe that our unique global manufacturing footprint, we own and operate facilities in the U.S. and Europe.

These are all advantages for us. However, it's a rapidly changing environment.

So, I would guide that the lower end of our range assumes no significant improvement in the supply chain, specifically, inbound freight. The higher end of our range moves more to a normalization over the next few quarters.

So that's really, in this environment, our range, you might think our range is a little bit wide. But it's really driven by the supply chain.

We're just being probably more conservative on the lower end given the fluctuations we're still seeing in the supply chain.

40:03 Thank you.

40:06 Thank you.

40:07 Thanks. Kate.

40:18 Hi. Thanks for taking my question.

Just a follow-up on that point. You talked on the last call about inbound freight being more like twelve percent, fifteen percent of COGS versus five percent to six percent normally.

Can you just talk about what that looks like now and I guess based on what you just said is, does the low end of the guide assume that stays flat? And maybe gross margin pressure peaks in 1Q and then can improve sequentially throughout the rest of the year?

40:49 Yeah. I think, like I said, I think we're on the lower end of the guide that assumes freight rates stay generally where they are today, which is certainly up significantly versus prior years and the higher end of our guide assumes somewhat of a normalization.

I wouldn't say normalization back to historical rates but the normalization versus what we're seeing today. For perspective, I can give you a few data points.

If you look at our Q4 freight rates, we had a blended average of something in the eight thousand five hundred dollars per container, which was up one hundred and forty percent versus Q4 twenty twenty. What we saw as the rate escalation in inbound freight at least for us, it started to occur back in Q1 of twenty twenty one.

41:35 So if you go back to Q4 twenty twenty one, we were at roughly forty five hundred dollars per container that then has grown to Q3 at ten thousand dollars and has begun to normalize in Q4 like I said at eighty four hundred dollars per container. Q1 will likely be at our peak negative comp on inbound freight, just because of what we're comping versus prior year.

But then we would expect that to normalize as we get into Q2. So that's what you'll see in our gross margins, is continued pressure in Q1 that starts to normalize in Q2 because of the comp on freight.

42:12 And then in Q3 not only do we still get the favorable comps year-on-year on freight inbound freight, you also start to ramp up the Poland facility. And as the Poland facility drives those synergies that we've committed to, you'll see our gross margin improve versus prior year.

42:32 I think also the piece that I would add Megan is, this is Chris. The piece I would add is the, what are we doing about it, right, so this is a market wide impact.

It's impacting all companies across the consumer goods arena. And what makes us different and unique is the manufacturing footprint.

That's something that isn't -- coming particularly in Poland, it's growing in terms of its positive impact on our ability to offset freight inflation and some of those transportation cost increases that you talked about and Bill talked about and that's going to be at full steam. So, if you take a thirteen week lens on this, it's a really big challenge.

If you take a one-year lens on this, we're putting in an infrastructure and really building on an infrastructure we've already had with a Make-Where-We-Sell strategy that gives us the ability to withstand this over the long haul and be really insulated from this kind of volatility on a long-term basis. And so, it's making our really robust footprint even more robust.

And I think that's going to be an important lever. 43:34 And then on top of that, while we're going through this -- I will not use the word transitory because I think we're planning that this is going to be a twenty twenty two challenge for the year.

But I would say, I think that it will normalize eventually, but we're also taking price on top of this to accomplish in the marketplace and Weber is really unique in terms of our pricing power in the marketplace. And so, we partner really closely with our retail customers to build-out plans that can navigate the current environment as productively and as consumer friendly -- as consumer friendly way as possible.

But the pricing power of the brand is really important in our ability to leverage that as an offset to the logistics and inflationary costs are really important part of our story. So even that will take some time to get out into the marketplace.

So, we've announced pricing. It's been accepted by our retail partners that we said in the prepared remarks.

And should be taking effect over the course of -- varies by region and by customer. But it takes effect over the course of the next couple of months.

44:37 And so by the time Q2 hits and when we hit our peak season in that kind of March to July timeframe that I talked about before, the pricing will be in place and will have kind of the structural side from an economic standpoint, the structural revenue side and the offsetting cost sides, both coming to fruition around the mid-year timeframe, which gives us a high-level confidence in the full year story which is what Bill mentioned at the open.

45:04 That's really helpful. I guess, just a quick follow-up to that point.

When you announced these price increases and go to retailers, are you looking to maintain gross profit dollars, or do you want to fully offset the pressure and maintain gross margin rate? And to that point, you did mention you took some price increases already in 1Q.

Can you just talk about consumer response to that? I know it's early and not peak season, but whether you're seeing any elasticity?

45:34 Yeah. I would say, generally over the long-term, our intent is to protect gross margin rate.

Although, in the environment where we are with record inbound freight costs, record commodity costs across most of our key commodities, we're now in a position where for this year we're protecting gross margin dollars. And that's generally what you see in our outlook.

So -- and then your second question around how consumers are reacting. 46:01 Couple of points, first, as Chris mentioned, in most of our markets we are out of seasons.

So, we're not seeing a significant positive or negative reaction to the pricing with the exception of Australia. In Australia, which is our one market that's in season, it's a one key call up for this business versus our competition, which is we have a really strong and large Australia business.

They've just come through the season and we've seen favorable results year-on-year, consumer uptake is really strong as they are coming out of COVID. So, we feel positive.

46:36 It's one data point, but we feel really positive of the results we've seen in Australia as we head into our peak seasons in Australia or I'm sorry, in Europe and the Americas. Does that help?

46:45 That's really helpful. Thank you so much.

46:51 Thanks for the question.

47:11 Hi. Thanks very much for taking my question.

I was wondering, if you could talk about the retail environment a bit. What was retail POS growth for the quarter and what have you seen so far into the quarter?

And we do expect to see POS growth in twenty twenty two? And I have a quick follow-up.

47:31 Sure. Arpine, this is Chris.

I'll take the first swing at that. Generally speaking, the POS trends, they vary across region and they vary across channel and some we have great metrics on and some we have fuzzy metrics on.

But generally speaking, our POS has been really strong. The general dynamic which I think I've talked about before, is the increase in consumer sell-out or point of sale from the twenty twenty to twenty twenty one season, really the twenty nineteen to twenty twenty season has such a huge skyrocket.

And then really what established is the -- what established just sort of a new floor for the category. And so, the ability for us to build our POS in twenty twenty one on top of what was a really kind of a new inflated base, if you will, in twenty twenty, has been the story and then the objective for us frankly is to retain the momentum that was built during twenty twenty as the pandemic took hold and people locked down in their houses and started cooking at home more and that has sustained.

And we've seen that sustained throughout Q4 and throughout fiscal twenty twenty one. 48:43 What -- so, we're very encouraged, in short, like the growth rate won't be the same.

We're not planning for point of sale to grow in twenty twenty two on top of twenty twenty one like we saw in twenty twenty on top of twenty nineteen. But I think I think the Q4 trends which would say, I'll give you one example, that's top of mind the Weber spirit, which is a big part of our gas grill line in the U.S., our point of sale in the most recent data I saw was kind of at mid-single digit and that compares in the two-year stack on that, was high double-digit.

And so, what we've seen is in line with this idea of establishing a new floor and growing from there. And that's really how we view it as business leaders is, our team is taking through innovation, through emerging geographies, through the direct-to-consumer and e-commerce play.

Our strategies are intending to build upon the base of the business today without looking in our rear-view mirror at twenty eighteen or twenty nineteen, like it's really -- it's a new level of consumer engagement with the category and we feel like that -- like that's going to sustain and fuel continued POS growth going forward.

49:54 Great. And then inventory on the balance sheet was up about forty three percent, which could also be a function of what's going on in the supply chain and what you're trying to do on the supply chain front.

But could you detail what inventory situation at retail, both in terms of dollar and some inventory, if you have it handy?

50:16 We don't have a retailer dollars in weeks necessarily at our fingertips right now. We can maybe as a follow we can talk -- look into that.

But generally, first of all, I'll hit your question on just overall inventory year-on-year and then I'll talk about retailer inventory, which we feel really strong about. There is a number of factors in play on our cash flow statement.

Certainly, our increase in year-over-year end inventory was one primary driver of our lower than average op cash flow. But I should mention that we again delivered a record inventory turns result of three point nine times.

And you also have this dynamic in last year's cash flow. We hit a two hundred million dollars favorable cash flow and accounts payable.

That was due to high purchasing levels at the end of last year. So that's a dynamic that causes this view on op cash that may not look quote normal, if you will.

51:07 Our inventory, as we've discussed previously, at the end of twenty twenty, it was extremely low due to the continued post season strong POS, low retailer inventories due to POS and supply chain challenges. So that had us last year replenishing well into Q1 of this year.

A second factor on our year-end inventories that significant is the capitalized variances and higher cost of goods, that are in our Q4 related to inbound freight, the commodity inflation, which then drives your inventory balances higher year-on-year, as well as longer transit times that we're experiencing. So, I should call out that unit, if you just look at unit inventory, is generally flat across all of our markets.

And from an inventory trade standpoint, we feel really good about our trade inventories globally in almost every market across Europe and across the Americas. 52:06 So we feel like we're positioned extremely well for the season.

We made a decisional point to make sure that especially in some of the new gas lines and innovation which Chris talked about that we're going to be heading into the season with retailers stocked ready to sell through what we believe to be maybe extremely successful initiative. I guess one other point on inventory that I should mention is, and our Poland plant and the impact of that is having.

We basically have a full raw material investment in finished goods build an inventory in Poland that's parallel to what we have, if you will, in our Palatine (ph) manufacturing and across the globe over in China. So, this dual supply of U.S.

built EMEA grills and the Poland plant start-up is a bit of a double-count. But it was intentional to make sure that we have a smooth start up to the Poland plant and so far, as we've now started to produce grills in Poland, we feel really good about the runway on that plant.

53:05 So does that -- hopefully that addresses the question.

53:09 Yeah. No, absolutely it does.

Just a small clarification, your unit inventory flat across all market that comment was referring to your own inventory, right, not for retail? You said you inventory flat across all.

Okay.

53:23 That's correct. Retail inventories, generally the feedback we're getting from most markets is, where they want to be.

So last year they were low as I mentioned because of the strong POS sell-out. So now we've got them back in stock ready for the season.

I would say generally what we're hearing is our retailers are feeling really bullish on the category. So, they want their product early, so that they can be ready for a really strong POS sell off season that will impact our sales results into Q3.

53:54 Excellent. Thank you very much.

53:58 Yeah.

53:58 Thanks, Arpine.

54:12 Hi. Good morning.

The only question I have is, can you just help us understand maybe, like how mix is evolved over maybe the past year? And I guess as we think about as a channel mix standpoint, product mix standpoint, you have higher margin for accessories or sort of products and really just trying to have a sense of how product or channel mixes is factored into your thinking going into next year, which would you expect it to be helper neutral.

So, I guess, I'm getting at is like the broader evolution of how channel and product mixes is involved and how you're thinking about it factoring into the model over the next twelve months? Thanks so much.

55:02 Yeah. Chris, I can take the start.

Maybe Chris can jump in. From a product mix standpoint, we don't share margins across category.

But we feel really good about -- generally, we're somewhat neutral as far as product standpoint. We'll love to sell you gas grill, SmokeFire and electric grill, a charcoal grill because we have strong margins across categories.

So, we haven't modeled any dramatic change in product mix into our financials going forward. I will say that with the exception of accessories.

So, as we've talked before, accessories does drive a higher margin for our business, both at a gross margin level and a contribution basis. So, as we see and it's somewhat tied into our development of Weber stores as well.

We see higher penetration of accessories as we get consumers into our Weber stores. So, it's just an easier sell-through and sell out for us on accessories when we can talk directly to consumers and we see the same dynamic on weber.com.

So, we expect to see accessories as a percent of our business continue to grow, which is factored into our next three to five year gross margin improvement. So that's one piece.

56:11 From a channel standpoint, yes, again, we've talked this before. We do make higher margins in our direct-to-consumer businesses.

But we have healthy margins across our wholesale partners as well. So, while we're somewhat agnostic there as far as which channel we'd like to drive.

So as again, in Europe, in particular and across Asia, we will continue to drive Weber stores and those Weber stores generally have higher margins, not only because we're fulfilling those orders, but also the higher penetration of accessories. 56:46 And then the last piece is on emerging geographies.

So, as we talk throughout the road show, you heard in Chris' comments, we are laser focused on driving our developing markets in emerging geographies. We continue to grow those businesses, two times the rate of our core business.

And we continue to see that two times growth line of sight deliverable in twenty twenty two and beyond. And those markets generally for us have higher margins.

So that's kind of the mix impact that we're seeing, most of it, which is favorable and will continue to see that going forward. 57:25 Does that answer the question?

57:29 Yeah. That's perfect.

Thanks so much.

57:33 Thanks, Chris.

57:34 Thanks, Chris.