Greetings and welcome to The Simply Good Foods Company's Fiscal Fourth Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] It is my now my pleasure to introduce your host Mark Pogharian, Vice President of Investor Relations. Thank you. You may begin.

Thank you, operator. Good morning. I am pleased to welcome you to The Simply Good Foods Company Earnings Call for the fourth quarter and full year ended August 29, 2020. Joe Scalzo, President and Chief Executive Officer and Todd Cunfer, Chief Financial Officer will provide you with an overview of results, which will then be followed by a Q&A session. The Company issued its earnings press release this morning at approximately 7:00 AM Eastern Time. A copy of the release and the accompanying presentation are available under the Investors section of the company's website at www.thesimplygoodfoodscompany.com. This call is being webcast and an archive of today's remarks will also be available. During the course of today's call, management will make forward-looking statements that are subject to various risks and uncertainties that may cause actual results to differ materially. The company undertakes no obligation to update these statements based on subsequent events. A detailed listing of such risks and uncertainties can be found in today's press release and the company's SEC filings. Note that on today's call, we will refer to certain non-GAAP financial measures that we believe will provide useful information for our investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for a reconciliation of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP. Additionally, note that management's reference for legacy Atkins in today's presentation and remarks encompasses The Simply Good Foods business excluding Quest. With that, it is now my pleasure to turn the call over to Joe Scalzo, President and Chief Executive Officer.

Thank you, Mark. Good morning and thank you for joining us. Today I'll recap Simply Good Foods fourth quarter and full year results and provide you with some details on the performance of our brands. Then Todd will discuss our financial results in a bit more detail and we'll wrap it up with a discussion of our outlook and then open the call to your questions. The last eight months have been an extraordinary period and the COVID-19 situation continues to impact shopping behavior and consumer consumption habits. During this time, we've all faced challenges on the home and work fronts. However, I couldn't be more proud of how our team has stayed focused and executed against our plans during these challenging times. Despite the volatility we experienced during fiscal 2020, we executed well against our company initiatives for the year, and those include increasing market share within the total nutritional snacking category and the sub-segments of active nutrition and weight management, diversifying our portfolio with the acquisition of Quest, hitting every milestone on the integration of the business, as well as the ERP implementation and achieving our fiscal 2020 synergy target while remaining on track to realize our three-year $20 million target prior to the end of fiscal 2022. I'd be remiss if I didn't call out our supply chain team who perform exceptionally well this year with no major issues. Our team worked collaboratively with suppliers, contract manufacturers, and distributors to ensure production occurred seamlessly throughout the year. Importantly, our outsource supply chain is proven to be a competitive advantage in these times and gives us confidence that despite near-term top topline volatility, our margins remain stable, our cash flow steady and sufficient to support future growth. Fiscal 2020, the marketplace changed dramatically at mid-year. We adjusted to…

Thank you Joe and good morning everyone. Let me start with two points as they relate to the numbers you see on the slides to follow. First for comparative purposes, we will review financial statements for the 13 and 52 weeks ended August 29, 2020 versus the 14 and 53 weeks in the year ago period. Our full fiscal year information includes Quest results from the November 7, 2019 date of acquisition. Lastly, given our asset light strong cash flow business model, we evaluate our performance on an adjusted basis as it relates to EBITDA and diluted earnings per share. We have included a detailed reconciliation from GAAP to adjusted historical items in today's press release. We believe these adjusted measures are key indicator of the true underlying performance of the business. I will begin with a review of our net sales. Fourth quarter legacy Atkins sales declined 8% primarily due to the extra week in the year ago period. Excluding the extra week, fourth quarter net sales declined 1% versus the fourth quarter of 2019. Legacy Atkins brick and mortar volume declined 9.2%, while e-commerce increased 55% in the quarter and contributed about 2.6 percentage points of growth. Net price realization was a 1.4% headwind due to higher customer spend as discussed last quarter. Note that the company's Q4 net sales percent change versus IRI MULO retail takeaway is primarily due to the 53rd week and non-measurable e-commerce contribution, as well as a shift related to Q1 promotions that added approximately 2% to Q4 growth. The full 13 week Q4 Qwest contribution was a 67.7% benefit, resulting in total Q4 net sales increase of 59.7%. Now for a review of fourth quarter results across other major metrics. Gross profit was $88.1 million, an increase of $28.9 million or 48.9%,…

Thanks, Todd. The improvements in category trends in the fourth quarter was encouraging, but there's still uncertainty related to when consumption behavior and shopping trips, particularly in the mass channel were returned to more normal levels. The unknown duration of the pandemic and its impact on consumer shopping and consumption behaviors make it difficult to provide full year fiscal 2021 outlook at this time. However, we expect that total Simply Good Foods retail takeaway and revenue trends in the first half of fiscal 2021 to perform similar to current trends. Therefore, we estimate that in the first half of fiscal 2021, net sales will be in the $425 million to $435 million range and adjusted EBITDA in the $77 million to $82 million range. Additionally, we expect inflation to be modest. Quest synergies will be more meaningful from Q2 to Q4, and advertising and marketing to increase in line with organic sales growth. Combined with our variable business model, we expect full year gross margin to be about the same as last year and adjusted EBITDA margin to increase. As Todd mentioned, our advantage business model enables strong cash flow generation and provides us with the financial flexibility. Health and wellness snacking is important to consumers and low household penetration is a long-term opportunity. We remain very confident in our business model and our long-term growth prospects and believe that when the reopening of the U.S. economy resumes and sustains, consumer shopping behavioral will return to more normal patterns and our brand benefits of active nutrition and weight management will drive greater better for you snacking and meal replacement usage occasions. We are executing against our strategies and are well-positioned for long-term sustainable sales and earnings growth that we expect will create value for our shareholders. We appreciate everyone's interest in our company, and we are now available to take your questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from the line of Chris Growe of Stifel. Please proceed with your questions.

Hi, good morning.

Hey, Chris.

Good morning, Chris.

Hi. Just had -- a couple of questions for you. I am curious from a high level, basically the strategy in this environment, is it to lean more heavily on Quest where the brands growing more strongly, or is there a marketing promotion or promotional program that the Heinekens can help sort of revive the sales during this time? I guess more of a kind of first half question. How are you approaching kind of the marketing and promoting of the product in an environment where clearly there's less shopping trips and less consumer interest in the category?

Yeah. Chris, as we said in our comments, we leaned back in on marketing in the fourth quarter all the data that we had on both brands, all the data we had for both brands is it was effective. And so, we're going to continue that investment as we move into the first half of next year. And it also as we've -- we mentioned in our comments we've adjusted. So, we've made some adjusted -- adjustments in messaging. So on the Atkins brand, we shot new Rob Lowe commercials in the in the -- the attempt to obviously as the commercials is to adjust to consumers attitudes and behaviors during the pandemic. And I think as you see those in the marketplace, you'll see that those do that nicely. We've made some shifts on both brands in media investment based on how they were consuming media in the fourth quarter. And then, obviously, probably the biggest change as we move into the first half of this year is about 60% of shelf resets take place right now. And so, we will shift messaging and marketing to start highlighting some of the new products on both brands. But I think, overall, we're leaning in on both branches based upon the data we have on the effectiveness of the marketing at the time.

Okay. Thank you for that. And then just one more question, which is on the first half guidance. And is there anything around the timing of promotion sort of this year versus last year? And then just I'm also curious related to that how your inventory stand and maybe retailer inventory stand currently and how that could affect the first half sales solid.

Yeah, I'll take that. No, no big shift in promotional timing. It's very similar to the first half of last year. So, I don't see a big impact there. We did mention there was a shift in timing that brought some revenue from Q1 this year into Q4 of the prior year. So that'll be a slight headwind. There's always a lot of noise there. Reason why we gave the first half versus individual quarters, we always have a lot of noise with a resolution period shipments between November and December, so they can have a significant impact in Q1 versus Q2. So, we're much more comfortable with getting first half guidance. How's it going? That it should be -- it should be pretty normal.

Okay. Thanks so much for your time.

Thank you. Our next question is comes from the line of Alexia Howard with Bernstein. Please proceed with your questions.

Good morning, everyone.

Good morning Alexia.

Good morning.

Hi, there. Okay. So, two questions. First of all, input cost inflation. We've, obviously, seen some of the grain input costs start to spike up [ph], was a bit over the last couple of months, wondering when that might hit your P&L and how far hedged out you might be hedge that. And then my second question on a very different topic is now that your net debt to EBITDA is coming down fairly sharply, at what point might you be in the market again for another deal? And are you actively looking right now? I mean, the pandemic to see if there are any available opportunities? Thank you. And I'll pass it on.

You take the first one, Todd and I will take the second.

Absolutely. So, as Joe mentioned, we're expecting some modest inflation for fiscal year 2021. We're pretty well covered for at least the first half of our fiscal year where we're seeing some input cost pressure is in dairy and soy proteins. We're seeing some benefits in some other areas, so clearly are seeing some inflation out there in the marketplace, but nothing -- we believe we cannot handle through a lot of synergies and other cost savings initiatives that we have out there. So, again, modest inflation. First half of the year, we have great visibility. We believe it's impacted into the points that we gave you.

Yeah. Alexia, the second question I'd like to -- since it's a M&A question, I'd like to first take the time to say thank you to the SMPL team and actually the Quest team. So, I think probably the first virtual business integration ever executed. So, as you can imagine, as we got into the mainstream of the integration of Quest, both of the companies went to remote operations. So, we were integrating the organization, doing our ERP integration, doing our business process integration all virtually since March, and the team has performed extremely well. We hit every key milestone in the plan. We went live with the organization and in the ERP on 1st of September and by all accounts have done an outstanding job. We have a little bit more work to do as we move through the end of the calendar year to complete some of the organizational work. And then I think as we emerge in the new calendar year, we'll have our heads up and a balance sheet, as you pointed out that it is in a decent enough shape that we can start looking at other assets. But I didn't want it -- I do want to say thanks to Dave Ritterbush and his team at Quest, his leadership team and my leadership team and all the people at SMPL. They did a phenomenal job in difficult situations in integrating the two businesses and keeping the business on track overall. Thanks for that question.

Great. Thank you very much. I'll pass it on.

Thank you. Our next question is come from the line of John Baumgartner with Wells Fargo. Please proceed with your questions.

Good morning. Thanks for the question.

Hi, John.

Joe, I wanted to touch on your secondary category via chocolate on the Atkins side and salty snacks on the Quest side, given that those are now really becoming material contributors to growth. Can you walk through your expectations for those categories in F21, be it from new distribution or new brand investment? And then over the growth we're seeing now, how much of it do you think is just tied to the broader at-home food shift and how much is tied to underlying velocities and new distribution? Any thoughts on that would be appreciated for F21. Thank you.

Yeah. Really good -- great question. So all -- the all other portion of our portfolio, which you're talking about confections, I'll call them other forms, right, confections on Atkins, soon to be confections on Quest, we launched -- just launched a peanut butter cup in the Quest business in September, and then the chip business and the cookie business. There -- we have high expectations for all those products. And the reason for it is they are a different consumer use occasion and need state, then those satisfied by our bars and shake business. So, opportunity to bring incremental consumption and incremental consumers into the franchise. And just based upon the momentum pretty compelling from a consumer interest standpoint. So you should expect our portfolio to continue to fill out in those areas. We continue to drive those use occasions and innovate in that category. And as we -- as we have shifted our marketing moving into the first half of the year, you should see increased emphasis against those forms. So, I do think I have high expectations from an innovation standpoint, new product development, marketing and white space on those forms going forward, given that they're fairly incremental to our existing product base. And both of these businesses are in a consumer household penetration gain. So, new forms and new use occasions are really important to these brands.

Thanks, Joe. Just to stick with that scene, it looks like the Atkins brand is getting a bit more and more indulgent. You've got some lemon tarts in the presentation today. Is there any reason why -- when you look at the consumer exposures and the overlap there, is there any reason why that salty snacks or cookies would not make sense for the Atkins consumer as you kind of think about cross-pollination the two portfolios?

Yeah. None that I can think of. So, probably the most important thing is the overlap. While the product -- the product profile of these brands is not dramatically different from a nutritional profile standpoint, the user base is, are completely separate and completely incremental each other. So, we would do how they innovate on each one of these bad brands as specific to their target audience and worry less about is there a product overlap between the two? So, I think in the cookie and salty chip case as is for Atkins, I think you should expect to see some innovation there from us. And then as is the case on Quest. So they're going to enter the confection business. They just have with a peanut butter cup and more to come. So, I think you should expect to see that kind of overlap given the uniqueness of the consumer basis.

Thanks, Joe. Thanks for your time.

Yeah. Have a good day.

Thank you. Our next question is come from the line of Jason English with Goldman Sachs. Please proceed with your questions.

Hey, good morning folks. Thanks for stepping me in, much appreciated and congratulations to your teams for executing, particularly on the integration in these tumultuous times. A couple of questions from me. First, real quick tactical housekeeping is you look to the sales outlook for the first half, how much do you expect the incremental M&A contribution from Quest to be?

Yeah. So, it's -- I won't give you an exact number, but in total, we're going to -- in a core basis we're going to be flattish. Okay? So, the Quest piece is going to add kind of a 10% to 15% incremental to the full first half of the year.

And that's as precise as I could ask for. So, thank you for that. My next question is on a retailer's shelf resets promotion. So, there's been -- as you mentioned, a lot of volatility here in terms of performance. I think we agree with you that most of this is transitory. Although, there are some skeptics -- maybe this is a fee change. I guess my question is how are retailers doing everything? And maybe there's some interesting tells here in terms of what the shelf resets have shaken out. So, how have they recalibrated the shelves? Have they expanded or shrunk space overall? Are you gaining a proportionate amount of space or losing? And then also, I know it's early, but I imagine a lot of resolution promotional planning is already executed. How are they looking at that season? Given the less resonant period of -- are less residents benefit of weight loss right now, should we expect them to curtail that activity as we roll into the New Year? Or are they looking at this as business as usual? And sorry, I know there's a lot in there.

Yeah. So, let me see if I can parse those apart, Jason, for you. First, I think for most retailers as it pertains to their store operations. So shelf resets, seasonal merchandising, it's business as usual. So, we don't see -- I mean, there's been a little bit of timing change on shelf resets, but weeks. So, not really material. So, we expect the resets to be finished by call it November 1. And they're roughly about 60% -- those resetting are about 60% of the volume in the category, so starting around November 1, we'll get a real sense of how that has changed and how that impacts consumer shopping behaviors -- start to see shopping behavior. I think, as it pertains to it's -- as it pertains to shopping behavior shoppers in stores, as we said in our comments, it looks like consumers are prioritized -- are obviously shopping, less choosing fewer stores shopping more online. And when they do choose stores more convenient, quicker in and out, and I think there's a cleanliness thing or how well they sanitize perception that is driving that behavior. I don't expect that to change in the near-term, quite frankly. So, I think we we've made comments around mass merchant foot traffic has not come back. I think that might be more driven just by how well they've performed on the store access, cleanliness, receptivity, as well as just less shopping behavior, closer to me behavior. So, I think it will modestly improve as we move through the first half of the year. In fact, we're hoping that this given our dependence on mass merchant. As it pertains to the season, we can see into kind of January right now. I expect merchandising in line -- category merchandising by retailer in line with year ago. I think we're going to do a little bit better that we did last year, but I think the real fundamental question is how will consumers respond, right? So, how will they respond to the merchandising events in the store? But it feels like retailers or from an execution standpoint, returning to business as usual. And so, we're selling in promotions and expect a strong January promotion season. So, we'll see how consumers respond to that.

Thank you. That's really helpful. You didn't really give a lot on this shelf resets. And you mentioned like you're going to see the effect on November 1. But have you already seen some other plano-grams? Isn't there some incremental probably you can share in terms of whether you're gaining of space or losing right now?

Yeah. I'd like to hold that conversation until the resets in the business performance. We really like our pipeline. It's really robust against across both brands and in multiple forms. We expect to do well in the resets, but until it's in the marketplace and performing, I just prefer to wait until then to have a conversation with you about how it's doing in the marketplace.

Understood. Thank you very much. I will pass it on.

Yeah.

Thank you. Our next question comes from the line of Fiza Ali with Deutsche Bank. Please proceed with your questions.

Yes. Hi, good morning.

Good morning.

So, I guess, just going back to the fall shelf resets. I guess, I wanted to get a sense in terms of your first half guidance. Are you embedding like any potential sort of distribution of new items with that guidance? Because I know you said that you expect sort of retail takeaway to trend in line with -- where it's trending currently. So, just wanted to see if you could share more in terms of how the fall shelf resets or distribution is playing into -- how you're thinking about your outlook for the first half?

Yeah. We would just stand by our guidance that we feel comfortable in the range that we're in right now. It's roughly in line with what we saw in the fourth quarter. So, the -- we think performance on the shelf will be in line with what it was in the fourth quarter.

Okay. Okay. And then just my second question is just, taking a step back on Quest, you noted both in the release and earlier on the call that you've sort of completed the majority of the integration. And I was wondering sort of what's left specifically. And if you could talk about some of the organizational changes that you've referenced. And now that you've -- now that you've had a year under your belt with Quest sort of how should we expect the two businesses to be run together?

All right. That's a great question. So, we have some -- we -- obviously the biggest chunk of the work now is capturing the synergy as it pertains to our supply chain. So, we have a we -- we both -- both businesses operate a warehouse in Indiana. That'll get consolidated with a construction of a single warehouse for both businesses, which will enable us to get our products on one truck. So, one order, one shipment, one invoice. So that'll take us through the end of this fiscal year. As a -- and there's some organizational things, getting people on common payroll and a few of the things we have to wrap up between common benefits that we will wrap up by the end of this calendar year. As it pertains to what's the organization look like going forward, it's interesting from a people standpoint, organizationally more like a merger than a bolt-on acquisition. So, we will have equal numbers of folks in the LA area as we do in the Denver area. We -- organizationally, we have a kind of a common value chain. So, one supply chain, one selling organization that is comprised of folks from both organizations. We, then, obviously have shared services, finance, IT, HR, legal, all one organization. And then we maintained separate brand business units, which comprise a Chief Marketing Officer and marketing team for both businesses in the case of Atkins Denver based, in the case of Quest LA based, and then separate R&D teams led by one in -- actually led by the head of R&D from Quest. So we have a R&D team that's based in LA, sits alongside the marketing team in LA. So think of the brand unit for Quest in LA and then a similar team in the Denver area for R&D. So, that's kind of the structure of going forward. We have kind of marketing driven business units and R&D and marketing located in each of the cities with a common underlying foundational infrastructure organized by each -- by one functional head with people in both cities.

Great. Thank you so much.

You're welcome.

Thank you. Our next question is comes from the line of Pamela Kaufman with Morgan Stanley. Please proceed with your questions.

Hi. Good morning.

Good morning.

How are you thinking about the long-term health of the category? Do you think that there are any permanent changes to consumer behavior resulting from the pandemic that could impact your product? And I guess what factors give you confidence in the recovery of the category as we move past the pandemic? And then are there any strategic changes that you need to make to address these?

Yeah. Great question. So, I think, overall, we've seen evidence that suggests as people -- if you remember the one chart from our presentation that showed the four periods. So, we saw at the height of confinement category decline pretty precipitously and our brands did too. In fact, across the board every brand performance was about the same. Then as people started -- as confinement restrictions started the ease, the business started to category and our business started to perform better. So, almost in a direct line. And then during the summer, as we saw a little bit of a resurgence in the pandemic and infections, you saw confinement kind of plateaus, so improvements on people being out and about kind of plateaued as did our business. So, it appears there appears to be a pretty strong correlation between people out and about on-the-go behavior. I think the brand benefits of weight management and active nutrition, I think are variable based upon people returning to more normal lives. And so, as those have plateaued, so it was our business. Look, I've been in this business seven years. I've seen these mega trends for that period of time. I totally expected as we emerge out of the pandemic, I think we will all have the same hectic time crunched, not enough time for family meals, eating on-the-go, always concerned about our wellness. I think all that's going to return, and I think our business will return. Those things that are headwinds right now will become tailwinds in our business, and we're going to continue to see growth. And then the one factor I keep pointing to it's -- I think it's really compelling metric. The category is only about half penetrated. So, about 50% of households. If you look at most more mature center store categories, they're in the 90s. There's no reason this category given the trends that are -- had been in this -- in our back for so many years. There's no reason that we're not in the 90s. So, I do think this category will return to the brands that will win, will be the brands that are best positioned at growing household penetration ahead of the category. And I like the hand that we have with this company. I like both of the brands that are lifestyle based brands. We've defined who the targets are for the brands. I think we're pretty effective at growing penetration. Our innovation pipeline is strong. I feel optimistic about our ability to return to the kind of growth that we saw pre-COVID-19.

Thank you. That's helpful. And then, I was also hoping that you can comment on the current competitive environment within the ready-to-drink shake category. And just how you're addressing some of the elevated promotional activity over the quarter from some of your -- one of your competitors. And it also seems like private label has been taking share within the category. So, just any comments on what you're seeing and your plans for innovation and promotions within ready-to-drink shakes, would be helpful.

Yeah. It feels about -- so promotion activity feels about the same for us, right? Private label entry is a Walmart-specific are getting the 30-gram active nutrition protein products, and in particular BellRing's Premier brand. And I haven't looked in detail to see how much it's affecting the Premier business. I know it's been relatively successful at Walmart. Our Atkins business has very little substitutability or switching with any other shakes. So our ability to grow our shake business is really driven about -- on our ability to bend the trends that we're seeing today. Temporary reduced interest in weight management, the shopper behavior and mass merchants, and our ability to just market from a consumer standpoint and bring in new buyers into our brand and therefore our shakes. It has some impact on Quest shakes. So, we launched Quest shakes a year ago. We got distribution, but frankly, the trial levels of our shake business have been lagging in large part due to the fact -- from the pandemic difficult to generate trial when people aren't shopping and their normal behavior. So, we have seen some impact and that is a 30-gram active nutrition product, probably a more direct competitor than -- certainly a more direct competitor to Premier than we experienced with -- we experienced with Atkins. So, it's going to -- it'll -- it has us focused on driving trial as we move into the -- on Quest shakes as we move into the fiscal year and getting our velocities up where we have new distribution.

Great. Thank you.

You're welcome.

Thank you. Our last question of the day will come from the line of Jon Anderson with William Blair. Please proceed with your questions.

I have one question on e-commerce. If you could share with us the portion for each brand of the two brands that e-commerce now represents and talk a little bit about how you feel your position from a share perspective online versus offline. Are there any profit implications to the business and your capability set -- the strength of your capability set in product content marketing? The brands online. There's a lot there. I'll leave it at that for the moment.

Yeah. Hey Todd, do you want to handle share of brand and then I'll talk about capability and positioning?

Sure. Absolutely. So, from Atkins perspective, it has grown dramatically in the last couple of years. So, it is now about 9% of our total business. A couple years ago was around -- it was around 2%, which -- so we've had significant growth on the Atkins side. And we foresee more growth, obviously in the future. From Quest perspective, they have been well-developed in e-comm for several years. Now they are one of the leaders in e-comm in this category clearly. It's about 20% of the business. It is -- the largest e-commerce retailer out there is Quest's largest customer, and both businesses Quest and Atkins are growing significantly and gaining share in e-commerce right now. So, we're really, really pleased with how those businesses are doing. From a margin perspective, yeah, they're a little bit lower than our average. We're continuing to -- not significantly lower, but they are a little bit lower than our averages we've talked about before. We continue to look for opportunities to take cost out from a supply chain perspective to bridge that gap a little bit on the margin, but we're really pleased with both of the businesses.

Yeah. I would also say just if you look at the history of both brands, Quest grew up online. It is the largest bar sold on Amazon today. So, well-positioned. They had a terrific general manager leading their business, lots of capability as their largest customer. Atkins, I think three and a half years. I think when we went public, e-commerce was 1% of our business. It's now -- we said, we thought it should be around 10% to 15%. It's at 9% right now. So, we've done. I think the team legacy SMPL team's done a nice job of accelerating that growth. We have combined those teams under the Quest leader. We have, I think, what is best-in-class capability right now online with Amazon and e-commerce. So, our view is the pandemic probably accelerated adoption of e-commerce by four or five years. And I think, we're well-positioned to -- from a content standpoint, from a marketing sophistication standpoint, from a who shops there, how they different from brick and mortar, I think we're as good as anybody now in that area and well-positioned to leverage the change in consumer shopping behaviors. And then trying to link that team, obviously with the brick and mortar e-commerce organization, so Walmart's done a nice job of building their business. Target's done a nice job of building their business and a number of other retailers, and then linking all that with pickup and delivery of brick and mortar, trying to get that integrated and thinking as one going forward, I think will be a core capability. I think we're well-positioned to do that.

That's helpful. Thanks.

You're welcome.

One -- I missed this earlier, but one on the integration cost synergies. Could you talk about the cadence that you expect as you move towards the $20 million of synergies by the end of the fiscal 2021? And how those will show up, whether they'll be in reductions in COGS or OpEx? Thank you.

Yeah. I'll take that one. So, about half of that $20 million will show up this fiscal year. As we've mentioned in the call it will really start to kick -- we'll get a little bit in Q1, but it really starts to kick-in in Q2 and beyond, primarily because the people part of it, most people are still with the organization through the calendar years. We will not get most of those synergies until Jan 1. So, the cadence is definitely loaded back in three quarters. About two-thirds of those synergies are going to show up below the gross margin line and G&A and selling where we had -- combined brokers about third up in the supply chain. But we have very strong visibility to those savings and feel really good about them.

Thanks so much.

That is all the time we have today for questions. I will now hand the call back over to management for any closing remarks.

Yeah. Thanks again for your participation on the call today. We hope you'll continue to remain safe, and we look forward to updating you on our first quarter results in January. Hope you all have a good day. Thank you.

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.