Q4 2024 Lancaster Colony Corp Earnings Call

August 22, 2024

Yeah.

Good morning.

Shannon: My name is Shannon, and I will be your conference call facilitator today.

Shannon: My name is Shannon, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Lancaster Colony Corporation fiscal year 2024 fourth quarter conference call.

Shannon: My name is Shannon and I'll be your conference call facilitator today.

Speaker Change: At this time, I would like to welcome everyone to the Lancaster Colony Corporation Fiscal Year 2024 Fourth Quarter Conference Call.

Speaker Change: Thank you for your participation.

Speaker Change: At this time I would like to welcome everyone to the Lancaster Colony Corporation fiscal year 2024 fourth quarter Conference call.

Operator: Conducting today's call will be Dave Susinski, President and CEO, and Tom Pigott, CFO. If you would like to withdraw your question, press star one one again. Thank you.

Speaker Change: Conducting today's call will be Dave Ciesinski, President and CEO, and Tom Pigott, CFO.

Speaker Change: And that during today's call will be Dave, So suski, president and CEO and Tom Pigott CFO.

Speaker Change: Lines have been placed on mute to prevent any background noise.

Speaker Change: After the speakers have completed their prepared remarks, there will be a question and answer period, if you will.

Speaker Change: Like to ask a question during this time simply press star one one of your telephone keypad if.

Speaker Change: If you would like to withdraw your question Press Star one again, thank you.

Dale Ganobsik: And now to begin the conference call, here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation. Good morning, everyone, and thank you for joining us today for Lancaster Colony Fiscal Year 2024 fourth quarter conference call. Our discussion this morning may include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, and the company undertakes no obligations to update these statements based upon subsequent events.

Dale Ganobsick: All lines have been placed on mute to prevent any background noise.

Dale Ganobsick: You may now disconnect.

Dale Ganobsick: And now to begin the conference call here is still good knocks it vice president of corporate Finance and Investor Relations for Lancaster Colony Corporation.

Dale Ganobsick: Good morning, everyone and thank you for joining us today for Lancaster colony's fiscal year 2020 for fourth quarter Conference call.

Dale Ganobsick: After the speakers have completed their prepared remarks, there will be a question and answer period.

Speaker Change: If you would like to ask a question during this time, simply press star 11 on your telephone keypad. If you would like to withdraw your question, press star 11 again.

Speaker Change: Our discussion. This morning May include forward looking statements, which are subject to the safe Harbor provision of the private Securities Litigation Reform Act of 1995.

Speaker Change: These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially and the company undertakes no obligation to update these statements based upon subsequent events.

Operator: The detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC.

Speaker Change: A detailed discussion of these risks and uncertainties is contained in the companys filings with the SEC.

Operator: Also note that the other replay of this call will be archived and available on our company's website, LancasterColony.com later this afternoon.

Speaker Change: Also note that the replay of this call will be archived and available on our company's website Lancaster colony Dot Com later this afternoon.

Operator: For today's call, Dave Susinski, our President and CEO, will begin with a business update and highlights for the quarter. Tom Digett, our CFO, will then provide an overview of the financial results. They will then share some comments regarding our current strategy and outlook.

Speaker Change: For today's call, Dave <unk>, our president and CEO will begin with a business update and highlights for the quarter.

Speaker Change: Thank you.

Tom Pigott: Tom Pigott, our CFO will then provide an overview of the financial results.

Tom Pigott: Dave will then share some comments regarding our current strategy and outlook.

Operator: At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions. Once again, we appreciate your participation this morning.

Tom Pigott: At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions.

Dave Lancaster: Once again, we appreciate your participation. This morning, I'll now turn the call over to Lancaster, colony's President and CEO, Dave <unk> Dave.

Dale Ganobsik: I'll now turn the call over to Lancaster Colony's president and CEO, Dave Susinski.

Dave Lancaster: And now to begin the conference call, here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation.

Dave Susinski: Dave? Thanks, Dale, and good morning, everyone. It's a pleasure to be here with you today as we review our fourth quarter results for fiscal year 2024. Before I provide my comments on recorder, I am pleased to share that we completed fiscal year 2024, which ended June 30, with record net sales and gross profit. Net sales for the fiscal year grew 2.7% to $1.9 billion. Gross profit increased 11.3% to $432.3 million. In the resulting gross profit margin improved 180 basis points to 23.1%.

Tom Pigott: Dave.

Dave: Thanks, Dale and good morning, everyone. It's a pleasure to be here with you today as we review our fourth quarter results for fiscal year 2024.

Dave: Good morning, everyone, and thank you for joining us today for Lancaster Colony's Fiscal Year 2024 Fourth Quarter Conference Call.

Dave: Our discussion this morning may include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Dave: Before I provide my comments on our quarter I am pleased to share that we completed fiscal year 2024, which ended June 30 with record net sales and gross profit net sales for the fiscal year grew two 7% to $1 9 billion.

Dave: Gross profit increased 11, 3% to $432 3 million and the resulting gross profit margin improved 180 basis points to 23, 1%.

Dave Susinski: Turning to our fiscal fourth quarter results, consolidated net sales to client 40 basis points to $452.8 million. While gross profit grew 4.8% to $97.6 million. Operating income increased to $41.7 million, which includes the impact of restructuring and impairment charges that totaled $2.7 million in the current year of quarter. Versus 25 million in last year's fourth quarter. All the restructuring and impairment charges are attributed to the perimeter of the store bakery product lines that we exited this past March. In our retail segment, net sales declined 80 basis points to 234.2 million. Excluding all sales associated with the perimeter bakery lines that we exited, retail segment sales increased 1.4 percent, while the segment's volume measured in pound shift increased 1.2 percent.

Dave: These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, and the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC.

Dave: Turning to our fiscal fourth quarter results consolidated net sales declined 40 basis points to 452 8 million, while gross profit grew four 8% to $97 6 million.

Dave: Also note that the audio replay of this call will be archived and available on our company's website, LancasterColony.com, later this afternoon.

Dave: For today's call, Dave Stasinski, our President and CEO, will begin with a business update and highlights for the quarter.

Dave: Operating income increased to $41 7 million, which includes the impact of restructuring and impairment charges that totaled $2 $7 million in the current year quarter versus $25 million in last year's fourth quarter.

Dave: Tom Figgott, our CFO, will then provide an overview of the financial results.

Dave: All of the restructuring and impairment charges are attributed to the perimeter of the store bakery product lines that we exited this past March.

Dave: Dave will then share some comments regarding our current strategy and outlook.

Dave: In our retail segment net sales declined 80 basis points to $234 2 million.

Dave: Excluding all sales associated with the Premier bakery lines that we exited retail segment sales increased one 4%, while the segments volume measured in pounds shipped increased one 2%.

Dave Susinski: Our successful licensing program remained a catalyst for growth in the retail segment. This was led by the newly introduced subway sandwich sauces and Texas Roadhouse steak sauces in addition to higher sales for all of Garden dressings and Chick-fil-A refrigerated dressings. Our New York bakery frozen garlic bread products also performed well in the quarter, led by the growth of our own Texas toast and supported by the growth of our garlic bread sticks. These items continued to offer families a great-tasting way to stretch their food budget. Sir Connor scanner data for the 13-week period ending June 30 shows sales for our licensed items grew 8 percent, with the newly introduced Subway and Texas Roadhouse sauces leading the way, while Chick-fil-A refrigerated dressings and Buffalo Wild Wing sauces also contributed to sales growth.

Dave: Our successful licensing program remains a catalyst for growth in the retail segment. This was led by the newly introduced subway Sandwich sauces, and Texas Roadhouse stake sources. In addition to higher sales for Olive garden dressings, and Chick Fil a refrigerated dressings.

Dave: My name is Shannon, and I will be your conference call facilitator today.

My name is Shannon, and I will be your conference call facilitator today.

Shannon: My name is Shannon, and I will be your conference call facilitator today. At this time I would like to welcome everyone to the Lancaster Colony Corporation fiscal year 2024 fourth quarter conference call.

Dave: At this time I would like to welcome everyone to the Lancaster Colony Corporation fiscal year 2024 fourth quarter conference call.

Dave: Conducting today's call will be Dave Susinski, President and CEO and Tom Pigott CFO.

Operator: Conducting today's call will be Dave Susinski, President and CEO and Tom Pigott CFO. If you would like to withdraw your question, press star one one again. Thank you.

Dave: Our New York Bakery frozen garlic bread products also performed well in the quarter led by the growth of our own Texas toast and supported by the growth of our garlic bread sticks. These items continue to offer families of great tasting wait to stretch their food budget.

Dave: If you would like to withdraw your question, press star one one again.

Dave: Sure kind of scanner data for the 13 week period, ending June 30 shows sales for our licensed items grew 8% with the newly introduced subway and Texas Roadhouse sources, leading the way.

Dale Ganobsik: And now to begin the conference call, here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation. Good morning, everyone, and thank you for joining us today for Lancaster Colony fiscal year 2024 fourth quarter conference call. Our discussion this morning may include forward-looking statements which are subject to the safe harbor provisions of the private security litigation reform act of 1995. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially and the company undertakes no obligations update these statements based upon subsequent events.

Dave: Chick fillet refrigerated dressings, and Buffalo Wild wings sauces also contributed to sales growth.

Dave: Thank you.

Dave Susinski: The combined sales of Chick-fil-A refrigerated dressings and our Marzetti brand refrigerated dressings grew 11.3 percent to 39 million in the quarter, which increased our category-leading share 330 basis points to 27.4 percent. I'm also pleased to share that during the quarter, Chick-fil-A avocado line dressing became the second best selling skew in the entire category. Sales of our New York frozen bakery garlic bread product lines were up 2.8 percent to 94.7 million for a category-leading share of 40.6 percent. In the food service segment, strong volume growth of 4.2 percent, driven by national chain restaurants, was offset by the unfavorable impact of deflationary pricing.

Dave: The combined sales of Chick fillet refrigerated dressings, and our marks any brand refrigerated dressings grew 11, 3% to $39 million in the quarter, which increased our category, leading share 330 basis points to 27, 4%.

Dave: I'm also pleased to share that during the quarter Chipotle avocado lime dressing became the second best selling SKU in the entire category.

Dale Ganobsik: The detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC. Also note that the other replay of this call will be archived and available on our company's website, Lancastercolony.com later this afternoon. For today's call, Dave Susinski, our President and CEO will begin with a business update and highlights for the quarter.

Dave: Sales of our New York Frozen bakery, garlic bread product lines were up two 8% to $94 7 million for our category leading share of 46%.

Dave: In the foodservice segment strong volume growth of four 2% driven by national chain restaurants was offset by the unfavorable impact of deflationary pricing.

Dave: And now to begin the conference call, here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation.

Dave Susinski: During Q4, we delivered strong profit growth of 4.4 million dollars or 4.8 percent and a gross margin increase of 110 basis points versus last year. This increase was driven by the beneficial impacts of a range of cost savings initiatives. Our focus on supply chain productivity, value engineering, and revenue management all remain core elements to further improve our financial performance.

Operator: Tom Digett, our CFO will then provide an overview of the financial results. They will then share some comments regarding our current strategy and outlook.

Dave: During Q4, we delivered strong gross profit growth of four 4 million or four 8% and a gross margin increase of 110 basis points versus last year.

Operator: At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions. Once again, we appreciate your participation this morning.

Dave: This increase was driven by the beneficial impacts of a range of cost savings initiatives.

Dave: Good morning, everyone, and thank you for joining us today for Lancaster Colony fiscal year 2024 fourth quarter conference call.

Dave Susinski: I'll now turn the call over to Lancastercolony's president and CEO Dave Susinski. Dave? Thanks, Dale, and good morning, everyone.

Dave: Our focus on supply chain productivity value engineering and revenue management, all remain core elements to further improve our financial performance.

Dave: Our discussion this morning may include forward-looking statements which are subject to the safe harbor provisions of the private security litigation reform act of 1995.

Dave: These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially and the company undertakes no obligations update these statements based upon subsequent events.

Dave Susinski: It's a pleasure to be here with you today as we review our fourth quarter results for fiscal year 2024. Before I provide my comments on recorder, I am pleased to share that we completed fiscal year 2024, which ended June 30 with record net sales and gross profit. Net sales for the fiscal year grew 2.7% to $1.9 billion. Gross profit increased 11.3% to $432.3 million. In the resulting gross profit margin improved 180 basis points to 23.1%.

Tom Pigott: I'll now turn the call over to Tom Piggett, our CFO, for his commentary on our fourth quarter results.

Tom Pigott: I'll now turn the call over to Tom Pigott, our CFO for his commentary on our fourth quarter results.

Dave: The detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC.

Tom Pigott: Thanks, Dave. This quarter, the company delivered both volume and gross profit growth, despite the impacts of the product line discontinuations we announced last quarter. Fourth quarter consolidated net sales decreased by 40 basis points to 452.8 million dollars. Decomposing the revenue performance, deflationary pricing in our food service segment drove an approximate 210 basis point decline. The exit of the flat out angelic businesses accounted for an additional 110 basis point decline. These two drivers were offset by favorable volume mix of 280 basis points.

Tom Pigott: Thanks, Dave this quarter the company delivered both volume and gross profit growth. Despite the impacts of the product line discontinuation, we announced last quarter.

Dave: Also note that the other replay of this call will be archived and available on our company's website, Lancastercolony.com later this afternoon.

Tom Pigott: Fourth quarter consolidated net sales decreased by 40 basis points to $452 $8 million.

Dave: For today's call, Dave Susinski, our President and CEO will begin with a business update and highlights for the quarter.

Tom Pigott: Decomposing the revenue performance deflationary pricing in our foodservice segment drove an approximate 210 basis point decline.

Tom Pigott: We exited the flat out in Delek businesses accounted for an additional 110 basis point decline.

Tom Pigott: These two drivers were offset by favorable volume mix of 280 basis points.

Tom Pigott: Justice Points. Consolidated gross profit increased by $4.4 million or 4.8% versus a prior year quarter to $97.6 million. Gross margins expanded by 110 basis points to 21.6%. The gross profit growth was primarily driven by the company's cost-saving initiatives and increased volumes. Tomati costs were deflationary versus a prior year but remained elevated versus historical levels. Selling, general and administrative expenses decreased 6.2% or $3.5 million to $53.2 million. The decrease reflects reduced expenditures for project descent RERP initiated. Costs related to the project continued to wind down, totaling $500,000 in the current year quarter versus $5.6 million in the prior year quarter.

Tom Pigott: Consolidated gross profit increased by $4 4 million or four 8% versus the prior year quarter to $97 6 million gross margins expanded by 110 basis points to 21, 6%.

Tom Pigott: The gross profit growth was primarily driven by the company's cost saving initiatives and increased volumes.

Commodity costs were deflationary versus the prior year, but remained elevated versus historical levels.

Dave Susinski: In our retail segment, net sales declined 80 basis points to 234.2 million, excluding all sales associated with the perimeter bakery lines that we exited, retail segment sales increased 1.4 percent, while the segment's volume measured in pound shift increased 1.2 percent. Our successful licensing program remained a catalyst for growth in the retail segment. This was led by the newly introduced subway sandwich sauces and Texas roadhouse steak sauces in addition to higher sales for all of garden dressings and Chick-fil-A refrigerated dressings.

Tom Pigott: Selling general and administrative expenses decreased six 2% or $3 5 million.

<unk> to $53 2 million.

Tom Pigott: The decrease reflects reduced expenditures for project percent, our ERP initiative.

Tom Pigott: Costs related to the project continued to wind down totaling $500000 in the current year quarter versus $5 6 million in the prior year quarter.

Tom Pigott: Consumer spending was also lower in the quarter. These decreases were offset by higher personnel and IT investments.

Consumer spending was also lower in the quarter. These.

Tom Pigott: These decreases were offset by higher personnel and it investments.

Tom Pigott: As we previously shared, the company chose to exit the flat out and angelic product lines in our fiscal third quarter ended March 31st. In our fiscal fourth quarter, we recorded restructuring impairment charges of $2.7 million related to these acts as we sold or disposed of the proper and equipment associated with these product lines. We do not anticipate any additional related charges going forward. In the prior year quarter, we recorded $25 million of impairment charges related to the now discontinued Flat Out product line. Consolidated operating income increased $30.2 million, as restructuring impairment charges declined $22.2 million.

Tom Pigott: As we previously shared the company chose to exit the flat out and <unk> product lines in our fiscal third quarter ended March 31.

Dave Susinski: Our New York bakery frozen garlic bread products also performed well in the quarter led by the growth of our own Texas toast and supported by the growth of our garlic bread sticks. These items continued to offer families a great tasting way to stretch their food budget. Sir Connor scanner data for the 13-week period ending June 30 shows sales for our licensed items grew 8 percent with the newly introduced subway and Texas roadhouse sauces leading the way, while Chick-fil-A refrigerated dressings and Buffalo Wild Wing sauces also contributed to sales growth.

Tom Pigott: In our fiscal fourth quarter, we recorded restructuring and impairment charges of $2 $7 million related to these exits as we sold or disposed to property and equipment associated with these product lines.

Tom Pigott: We do not anticipate any additional related charges going forward.

Tom Pigott: The prior year quarter, we recorded $25 million of impairment charges related to the now discontinued by about product line.

Tom Pigott: Consolidated operating income increased $32 million as restructuring impairment charges declined $22 $2 million. The remaining $8 million increase was driven by the higher gross profit and lower SG&A costs I mentioned.

Dave Susinski: The combined sales of Chick-fil-A refrigerated dressings and our Marzetti brand refrigerated dressings grew 11.3 percent to 39 million in the quarter, which increased our category leading share 330 basis points to 27.4 percent. I'm also pleased to share that during the quarter Chick-fil-A avocado line dressing became the second best selling skew in the entire category. Sales of our New York frozen bakery garlic bread product lines were up 2.8 percent to 94.7 million for a category leading share of 40.6 percent.

Tom Pigott: The remaining $8 million increase was driven by the higher gross profit and lower SNA costs I mentioned. Our tax rate for the quarter was 20.5%. We estimate our fiscal 25 tax rate to be 23%. Fourth quarter diluted earnings per share increased 93 cents to $1.26. The reduced restructuring impairment charges drove a 62 cents benefit. The reduction in projects at SNA costs drove a 15 cents increase in EPS. The remaining 16 cents of EPS gross was driven by the underlying performance of the business. With regard to capital expenditures, our full year payments for property additions totaled $67.6 million.

Tom Pigott: Our tax rate for the quarter was 20.

Tom Pigott: 5%, we estimate our fiscal 'twenty five tax rate to be 23%.

Tom Pigott: Fourth quarter diluted earnings per share increased 93 to $1 26.

Tom Pigott: The reduced restructuring and impairment charges drove a 60 to benefit.

Tom Pigott: The reduction in projects is sent costs drove 15 increase in EPS.

Dave Susinski: In the food service segment strong volume growth of 4.2 percent driven by national chain restaurants was offset by the unfavorable impact of deflationary pricing. During Q4 we delivered strong growth profit growth of 4.4 million dollars or 4.8 percent and a gross margin increase of 110 basis points versus last year. This increase was driven by the beneficial impacts of a range of cost savings initiatives. Our focus on supply chain productivity value engineering and revenue management all remain core elements to further improve our financial performance.

Tom Pigott: The remaining 16 of EPS growth was driven by the underlying performance of the business.

Tom Pigott: With regard to capital expenditures, our full year payments for property additions totaled $67 6 million for fiscal 'twenty five our forecasted total capital expenditures are estimated to be between 70% and $80 million. This forecast reflects our continued investment in our facilities to strength.

Tom Pigott: For fiscal 25, our forecasted total capital expenditures are estimated to be between $70 and $80 million. This forecast reflects a continued investment in our facilities to strengthen our infrastructure and support cost savings and gross emissions.

Tom Pigott: And our infrastructure and support cost savings and growth initiatives.

Tom Pigott: In addition to investing in our business, we also return funds to shareholders. Our quarterly cash dividend of 90 cents per share paid on June 28 represented a 6% increase from the prior year's amount. Our enduring streak of annual dividend increases stands at 61 years.

Tom Pigott: In addition to investing in our business. We also returned funds to shareholders. Our quarterly cash dividend of <unk> 90 per share paid on June 28, representing a 6% increase from the prior year's amount.

Dave: Tom Digett, our CFO will then provide an overview of the financial results.

Tom Pigott: I'll now turn the call over to Tom Piggett or CFO for his commentary on our fourth quarter results. Thanks Dave. This quarter the company delivered both volume and gross profit growth despite the impacts of the product line discontinuations we announced last quarter.

Tom Pigott: Enduring streak of annual dividend increases stands at 61 years.

Dave: They will then share some comments regarding our current strategy and outlook.

Dave: At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions.

Tom Pigott: Turning now to a recap of the full year results, overall the company was able to deliver on its commitments, reported in that sales group 2.7% with both segments contributing. Grows profit increase by 11.3% driven by the net sales growth in 180 basis points of margin expansion from favorable price and genetic commodities and cost savings programs. S-GNA declined by 1.8% as spending for the successful ERP initiative project descent wound down as the year progressed. Operating income grew by 40.9%; 7.1% was driven by reduced restructuring and impairment costs, and the remaining 33.8% was driven by the underlying performance of the business.

Tom Pigott: Turning now to a recap of the full year results overall, the company was able to deliver on its commitments reported net sales grew two 7% with both segments contributing.

Dave: Once again, we appreciate your participation this morning.

Tom Pigott: Fourth quarter consolidated net sales decreased by 40 basis points to 452.8 million dollars. Decomposing the revenue performance deflationary pricing in our food service segment drove an approximate 210 basis point decline. The exit of the flat out angelic businesses accounted for an additional 110 basis point decline. These two drivers were offset by favorable volume mix of 280 basis points. Justice Points. Consolidated gross profit increased by $4.4 million or 4.8% versus a prior year quarter to $97.6 million.

Tom Pigott: Gross profit increased by 11, 3% driven by the net sales growth and 180 basis points of margin expansion from favorable pricing net of commodities and cost savings programs.

Dave: I'll now turn the call over to Lancastercolony's president and CEO Dave Susinski.

Tom Pigott: SG&A declined by one 8% as spending for the successful ERP initiative project ascent wound down as the year progressed.

Dave: Dave?

Dave: Thanks, Dale, and good morning, everyone.

Tom Pigott: Operating income grew by 49% seven.

Tom Pigott: Seven one percentage points was driven by reduced restructuring and impairment costs and the remaining 33 eight percentage points was driven by the underlying performance of the business.

Dave: It's a pleasure to be here with you today as we review our fourth quarter results for fiscal year 2024.

Tom Pigott: For your operating cash flow increased $25.6 million, we finished the year with a quarter, and four year results reflected continued execution against our key strategies resulting in strong financial returns.

Tom Pigott: Full year operating cash flow increased $25 $6 million, we finished the year with a debt free balance sheet and $163 $4 million in cash.

Tom Pigott: Gross margins expanded by 110 basis points to 21.6%. The gross profit growth was primarily driven by the company's cost-saving initiatives and increased volumes. Tomati Costs were deflationary versus a prior year but remained elevated versus historical levels. Selling general and administrative expenses decreased 6.2% or $3.5 million to $53.2 million. The decrease reflects reduced expenditures for project descent RERP initiated. Costs related to the project continued to wind down totaling $500,000 in the current year quarter versus $5.6 million in the prior year quarter. Consumer spending was also lower in the quarter. These decreases were offset by higher personnel and IT investments.

Tom Pigott: To wrap up my commentary of the company's fourth quarter and full year results reflected continued execution against our key strategies, resulting in strong financial returns I'll now turn it back over to Dave for his closing remarks. Thank you.

Dave Susinski: I'll now turn it back over to Dave for his closing remarks.

Dave Susinski: Thank you. Thanks, Todd.

Thanks, Tom as we look ahead Lancaster colony will continue to leverage the combined strength of our team our operating strategy and our balance sheet in support of the three simple pillars of our growth plan.

Dave Susinski: As we look ahead, Lancaster Colony will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan. To one, accelerate core business growth. Two, to simplify our supply change of reduced cost and grow our margins.

Dave: To one accelerate core business growth.

Dave: Two to simplify our supply chain to reduce cost and grow our margins and three to expand our core with focused M&A and strategic licensing.

Dave Susinski: And three, to expand our core with focused M&A and strategic licensing. In fiscal year 2025, we anticipate retail segment sales will continue to benefit from volume growth led by our licensing program, including increased sales from the 14 new products, flavors, and sizes that we introduced in fiscal year 2024. In addition, we anticipate continued sales momentum for New York Bakery frozen garlic bread products, along with volume growth for our Marzetti refrigerator dressing. Future growth potential for the New York Bakery frozen garlic bread lineup includes new and delicious gluten-free garlic bread products that will begin shipping to retailers early next month.

Dave: In fiscal year 2025, we anticipate retail segment sales will continue to benefit from volume growth led by our licensing program, including increased sales from the 14, new products flavors and sizes that we introduced in fiscal year 2024.

Dave: In addition, we anticipate continued sales momentum for New York bakery frozen garlic bread products, along with volume growth for our <unk> refrigerated dressings.

Dave: Future growth potential for the New York Bakery frozen garlic bread lineup includes new and delicious gluten free garlic bread products that will begin shipping to retailers early next month.

Tom Pigott: Consolidated operating income increased $30.2 million as restructuring impairment charges declined $22.2 million. The remaining $8 million increase was driven by the higher gross profit and lower SNA costs I mentioned. Our tax rate for the quarter was 20.5%. We estimate our fiscal 25 tax rate to be 23%. Fourth quarter diluted earnings per share increased 93 cents to $1.26. The reduced restructuring impairment charges drove a 62 cents benefit. The reduction in projects at SNA costs drove a 15 cents increase in EPS.

Dave Susinski: Finally, we're excited to share that our partnership with Texas Roadhouse has expanded beyond stakes offices to include their popular roles, which we introduced in a three-state regional pilot test in June. So far, the results are very encouraging.

Dave: Finally, we are excited to share that our partnership with Texas Roadhouse has expanded beyond steak sources to include their popular roles, which we introduced in our three state regional pilot test in June so far the results are very encouraging.

Dave Susinski: In the food service segment, we expect sales volume to be led by growth from select QSR customers and our mix of national chain restaurant accounts. As our culinary team continues to support our food service partners with a wide range of innovation initiatives and craveable flavors to help them drive menu excitement and ultimately traffic growth.

Speaker Change: In the Foodservice segment, we expect sales volume to be led by growth from select <unk>, our customers and our mix of national chain restaurant accounts as our culinary team continues to support our foodservice partners with a wide range of innovation initiatives and craveable flavors to help them drive menu excitement.

Speaker Change: And ultimately traffic growth.

Tom Pigott: The remaining 16 cents of EPS gross was driven by the underlying performance of the business. With regard to capital expenditures, our full year payments for property additions totaled $67.6 million. For fiscal 25, our forecasted total capital expenditures are estimated to be between $70 and $80 million. This forecast reflects a continued investment in our facilities to strengthen our infrastructure and support cost savings and gross emissions.

Dave Susinski: Like most of you, we continue to carefully monitor external factors, including US economic performance and consumers' financial health. Suffice it to say, there are a wide range of factors which could influence demand in both our retail and food service segments during fiscal year 2025. Our team has contingency plans in place to respond to a range of these scenarios. With respect to input cost, in the aggregate, we do not foresee significant impact from commodity cost inflation or deflation. We expect our cost savings program to be the primary driver behind March and improvement opportunities in the coming year, with cost savings momentum building throughout the year.

Speaker Change: Like most of you we continue to carefully monitor external factors, including U S economic performance and consumers financial health.

Speaker Change: Suffice it to say there are a wide range of factors, which could in fluids demand in both our retail and foodservice segments during fiscal year 2025.

Our team has contingency plans in place to respond to a range of these scenarios.

Speaker Change: With respect to input costs in the aggregate, we do not foresee significant impact from commodity cost inflation or deflation.

Speaker Change: We expect our cost savings program to be the primary driver behind margin improvement opportunities in the coming year with cost savings momentum.

Speaker Change: Building throughout the year.

Dave Susinski: Before I close, I would like to extend a special shout-out to Steve Hill, our Chief Research Development and Quality Officer, and our entire R&D team for their recent recognition by Food Processing magazine as the R&D Team of the Year. This award is a testament to their ability to create craveable products and superior value through a unique blend of culinary inspiration and product innovation. They're a very big part of what makes us the better food company.

Speaker Change: Before I close I would like to extend a special shout out to Steve Hill, Our Chief Research development and quality officer, and our entire R&D team for their recent recognition by food processing magazine as the R&D team of the year.

Dave: Before I provide my comments on recorder, I am pleased to share that we completed fiscal year 2024, which ended June 30 with record net sales and gross profit.

Dave: Net sales for the fiscal year grew 2.7% to $1.9 billion. Gross profit increased 11.3% to $432.3 million. In the resulting gross profit margin improved 180 basis points to 23.1%.

Speaker Change: This award is a testament to their ability to create craveable products and superior value through a unique blend of culinary inspiration and product innovation. They are a very big part of what makes us the better food company.

Operator: This concludes our prepared remarks for today, and we'd be happy to take any questions that you might have.

Speaker Change: At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions.

Speaker Change: This concludes our prepared remarks for today and we'd be happy to take any questions that you might have.

Speaker Change: Turning to our fiscal fourth quarter results, consolidated net sales to client 40 basis points to $452.8 million. While gross profit grew 4.8% to $97.6 million.

Dave: Turning to our fiscal fourth quarter results, consolidated net sales to client 40 basis points to $452.8 million. While gross profit grew 4.8% to $97.6 million.

Tom Pigott: Operating income grew by 40.9%, 7.1% was driven by reduced restructuring and impairment costs, and the remaining 33.8% was driven by the underlying performance of the business. For your operating cash flow increased $25.6 million, we finished the year with a quarter and four year results reflected continued execution against our key strategies resulting in strong financial returns.

Operator: Operating.

Speaker Change: Operator.

Operator: Thank you.

Speaker Change: Once again, we appreciate your participation this morning.

Speaker Change: Thank you at this time I would like to remind everyone that in order to ask a question. Please press star one of your telephone keypad.

Operator: At this time, I would like to remind everyone that in order to ask a question, please press star one on your telephone keypad.

Speaker Change: Operating income increased to $41.7 million, which includes the impact of restructuring and impairment charges that totaled $2.7 million in the current year of quarter. Versus 25 million in last year's fourth quarter. All the restructuring and impairment charges are attributed to the perimeter of the store bakery product lines that we exited this past March.

Jim Salera: Your first question comes from Jim Salera of Stevens.

Speaker Change: Your first question comes from Jim Solera of Stephens. Your line is now open.

Tyler Browse: Your line is now open. Hi, this is Tyler Browse on for Jim. Thanks for taking our question.

Tyler Brown: Hi, This is Tyler brown on for Jim Thanks for taking our question.

Dave Susinski: Thinking about the food service segment, most companies in the recent calendar to Q period called out a cautious outlook for demand in the back half of the year. That said, there's been some bright spots in the industry, concepts like Chick-fil-A, Cain's, and Wingstop who continue to benefit from this chicken megatrend. As we look to your fiscal 25, can you give us some color on what you expect from QSR? And then additionally, in your prepared remarks, you made a comment around food service volume being led by select QSRs. Any detail around who this select be might be?

Speaker Change: About the foodservice segment most companies in the recent calendar QQ period called out a cautious outlook for demand in the back half of the year.

Speaker Change: Theres been some bright spots in the industry concepts like cheaply canes in Wingstop, who continued to benefit from the chicken Megatrends as we look to your fiscal 'twenty five can you give us some color on what you expect from <unk> and then additionally in your prepared remarks, you made a comment around foodservice volume being led by select <unk> any detail.

Dave Susinski: I'll now turn it back over to Dave for his closing remarks. Thank you. Thanks, Todd.

Speaker Change: <unk>.

Speaker Change: You might be.

Dave Susinski: Yeah, sure, Tyler.

Speaker Change: Yes sure Tyler this is Dave happy to answer your question.

Speaker Change: I'll now turn the call over to Lancaster Colony's President and CEO, Dave Stasinski.

Dave Susinski: This is Dave. Happy to answer your question. Maybe starting first with where we finished in the quarter, we were pleased to continue to deliver volume metric growth in the quarter, but it was actually slightly below our expectations. We expected it to be stronger. Like many of our peers, we saw it slow down in traffic that sort of evolved throughout the first half of the calendar year and in the quarter in particular, offsetting that. We have a whole range of activity that's in flight right now where we are developing and launching limited time offerings for customers.

Dave: Dave?

Dave: Maybe starting first with where we finished in the quarter. We were pleased to continue to deliver a volumetric growth in the quarter, but it was actually slightly below our expectations, we expected it to be stronger.

Dave: In our retail segment, net sales declined 80 basis points to 234.2 million, excluding all sales associated with the perimeter bakery lines that we exited, retail segment sales increased 1.4 percent, while the segment's volume measured in pound shift increased 1.2 percent.

Speaker Change: In our retail segment, net sales declined 80 basis points to 234.2 million, excluding all sales associated with the perimeter bakery lines that we exited, retail segment sales increased 1.4 percent, while the segment's volume measured in pound shift increased 1.2 percent.

Dave Susinski: In fiscal year 2025, we anticipate retail segment sales will continue to benefit from volume growth led by our licensing program, including increased sales from the 14 new products, flavors, and sizes that we introduced in fiscal year 2024. In addition, we anticipate continued sales momentum for New York bakery frozen garlic bread products, along with volume growth for our Marsetti refrigerator dressing. Future growth potential for the New York bakery frozen garlic bread lineup includes new and delicious gluten-free garlic bread products that will begin shipping to retailers early next month.

Dave: Like many of our peers, we saw a slowdown in traffic that sort of evolved throughout.

Dave: The first half of the calendar year and in the quarter in particular.

Dave: Our successful licensing program remained a catalyst for growth in the retail segment. This was led by the newly introduced subway sandwich sauces and Texas roadhouse steak sauces in addition to higher sales for all of garden dressings and Chick-fil-A refrigerated dressings.

Dave: Offsetting that we have a whole range of activity. That's in flight right now, where we're developing and launching limited time offerings for our customers. Many of those are out in the marketplace now.

Dave: Our New York bakery frozen garlic bread products also performed well in the quarter led by the growth of our own Texas toast and supported by the growth of our garlic bread sticks. These items continued to offer families a great tasting way to stretch their food budget.

Dave: Thanks, Dale, and good morning, everyone.

Dave Susinski: Many of those are out in the marketplace now. You're probably watching the advertising on TV without understanding or appreciating that it's us. So you put all that together, sort of where we've been and our outlook for the go-forward period. We continue to believe that we can deliver a low single-digit volume-led growth that will turn into sales growth in the fiscal year 25. And if the overall outlook improves, there's opportunity for that low single-digit volume growth to become low-to-mid single-digit volume growth.

Dave: Probably watching the advertising on TV without understanding or appreciating that its us. So you put all that together sort of where we've been and our outlook for the go forward period. We continue to believe that we can deliver.

Dave: Low single digit volume led growth that will turn into sales growth in the.

Dave: In fiscal year 'twenty five.

Dave: The overall outlook improves there is opportunity for that low single digit volume growth to become low to mid single digit volume growth.

Dave: Sir Connor scanner data for the 13-week period ending June 30 shows sales for our licensed items grew 8 percent with the newly introduced subway and Texas roadhouse sauces leading the way, while Chick-fil-A refrigerated dressings and Buffalo Wild Wing sauces also contributed to sales growth. The combined sales of Chick-fil-A refrigerated dressings and our Marzetti brand refrigerated dressings grew 11.3 percent to 39 million in the quarter, which increased our category leading share 330 basis points to 27.4 percent.

Dave Susinski: Your second point was on this mega trend of chicken. I couldn't agree more with you. That continues to be a big part of what's underlying the activity that we're being called on for innovation. So we believe that that's going to continue to hold true. If you look at the cost of chicken as a protein source, it continues to be cheaper than beef in the alternative. So I think it's a great way in this environment for restaurant operators to provide great tasting food and relevant value.

Speaker Change: Your second point was on this megatrend of chicken I Couldnt agree more with you that continues to be a big part of what's underlying the activity that we are being called on for innovation.

So we believe that that's going to continue to hold true. If you look at the cost of chicken as a protein source. It continues to be cheaper than beef and the alternatives. So I think it's a great way in this environment for restaurant operators to provide great tasting food and relevant value and then finally on the on the select <unk>.

Dave Susinski: Like most of you, we continue to carefully monitor external factors, including US economic performance and consumers financial health. Suffice it to say, there are a wide range of factors which could influence demand in both our retail and food service segments during fiscal year 2025. Our team has contingency plans in place to respond to a range of these scenarios.

Dave Susinski: And then finally, on the select QSRs, some of our customers, like a Chick-fil-A, were asked Liberty to disclose the activities that we have in flight for some of them were not. And in those cases, that would be the select and the select QSRs that we're talking about. To the degree to which we get clearance from them to talk more openly about the work we do for them, it will be happy to share with that with you guys in due course.

Speaker Change: Some of our customers like a chick Fil a.

Speaker Change: At Liberty to disclose.

Speaker Change: <unk> disclosed the activities that we have in flight for some of them were not and in those cases that would be the select in the select <unk> that we're talking about to the degree to which we get clearance from them to talk more openly about the work we do for them and we'll be happy to share that with you guys since of course.

Speaker Change: It's a pleasure to be here with you today as we review our fourth quarter results for Fiscal Year 2024.

Dave Susinski: With respect to input cost, in the aggregate, we do not foresee significant impact from commodity cost inflation or deflation. We expect our cost savings program to be the primary driver behind March and improvement opportunities in the coming year, with cost savings momentum building throughout the year.

Speaker Change: Before I provide my comments on our quarter, I am pleased to share that we completed Fiscal Year 2024, which ended June 30th, with record net sales and gross profit. Net sales for the fiscal year grew 2.7% to $1.9 billion. Gross profit increased 11.3% to $432.3 million. And the resulting gross profit margin improved 180 basis points to 23.1%.

Speaker Change: Turning to our fiscal fourth quarter results, consolidated net sales declined 40 basis points to $452.8 million, while gross profit grew 4.8% to $97.6 million.

Speaker Change: Operating income increased to $41.7 million, which includes the impact of restructuring and impairment charges that totaled $2.7 million in the current year quarter versus $25 million in last year's fourth quarter. All the restructuring and impairment charges are attributed to the perimeter of the store bakery product lines that we exited this past March.

Speaker Change: In our retail segment, net sales declined 80 basis points to $234.2 million. Excluding all sales associated with the perimeter bakery lines that we exited, retail segment, sales increased 1.4% while the segment's volume measured in pound shift increased 1.2%.

Tyler Browse: Very helpful. Just want to follow up.

Speaker Change: Very helpful. Just one follow up can you offer any details on the cadence of growth for both retail and foodservice in 'twenty five and should we expect both segments to be positive in each quarter and then any color on your kind of front half back half weighting would be very helpful. Thank you.

Dave Susinski: Can you offer any details on the cadence of growth for both retail and food service in 25, and should we expect both segments to be positive in each quarter? Any color on your kind of front half back as waiting would be very helpful. Thank you. Sure. So as we look at the our projections of volume growth, I would say we're overall projecting low single-digit volume growth for both segments throughout the year. I think we do expect a little bit stronger front half growth in our food service business. But much of that is dependent on some of these LTOs that they mentioned and how successful they are.

Dave Susinski: Before I close, I would like to extend a special shout out to Steve Hill, our chief research development and quality officer and our entire R&D team for their recent recognition by food processing magazine as the R&D team of the year. This award is a testament to their ability to create craveable products and superior value through a unique blend of culinary inspiration and product innovation. They're a very big part of what makes us the better food company.

Speaker Change: Sure. So as we look at the our projections of volume growth.

I would say.

We're overall projecting low single digit volume growth for both segments throughout the year.

Speaker Change: Think we do expect a little bit stronger front half growth in our foodservice business.

Dave Susinski: This concludes our prepared remarks for today and we'd be happy to take any questions that you might have. Operating. Thank you.

Dave: But much of that is dependent on some of these <unk> that Dave mentioned and how successful they are.

Tom Pigott: From an overall profitability standpoint, we, as Dave mentioned, we've got we're really focused more on productivity this year. We're last year, we've benefited from both PNOC favorably pricing that a commodities as well as productivity this year. It's more focused on productivity in terms of driving margin expansion on top of the volume growth. And we expect that to be more back and loaded, as Dave mentioned. We're making some investments earlier in the year in terms of factory automation and different programs to improve our productivity performance. So we expect that we expect the margin expansion to be more back-end loaded.

Dave: From an overall profitability standpoint.

Operator: At this time, I would like to remind everyone in order to ask a question, please press star one on your telephone keypad.

Dave: As Dave mentioned, we've got.

Speaker Change: We're really focused more on productivity this year, where last year, we benefited from both P&I favorability pricing net of commodities as well as productivity. This year, it's more focused on productivity in terms of driving margin expansion on top of the volume growth.

Jim Salera: Your first question comes from Jim Salera of Stevens.

Tyler Browse: Your line is now open. Hi, this is Tyler Browse on for Jim. Thanks for taking our question. Thinking about the food service segment, most companies in the recent calendar to Q period called out a cautious outlook for demand in the back half of the year. That said, there's been some bright spots in the industry, concepts like Chick-fil-A, Cain's and Wingstop who continue to benefit from this chicken megatrend. As we look to your fiscal 25, can you give us some color on what you expect from QSR? And then additionally, in your prepared remarks, you made a comment around food service volume being led by select QSRs. Any detail around who this select be might be?

Speaker Change: And we expect that to be more backend loaded as Dave mentioned, we're making some investments earlier in the year in terms of factory automation and different programs to improve our productivity performance.

Speaker Change: I'm also pleased to share that during the quarter Chick-fil-A avocado line dressing became the second best selling skew in the entire category.

Dave: I'm also pleased to share that during the quarter Chick-fil-A avocado line dressing became the second best selling skew in the entire category.

Dave: So we expect we expect the margin expansion to be more backend loaded maybe.

Dave Susinski: Maybe I'll offer on the retail side of the business. We have a strong pipeline and new items, but given the seasonal resets for sauces on the shelf, many of those items tend to be a little bit more back half loaded. But overall, you know, consistent with what Thomas say, when you look at the business as a whole, we expect low volume growth through the whole period.

Dave: Our successful licensing program remained a catalyst for growth in the retail segment. This was led by the newly introduced Subway sandwich sauces and Texas Roadhouse steak, sauces in addition to higher sales for olive garden dressings and Chick-fil-A refrigerated dressings.

Dave: Maybe I'll offer on the retail side of the business, we have a strong pipeline of new items, but given the seasonal resets for sources on the shelf many of those items tend to be a little bit more back half loaded, but overall consistent with what Tom is saying when you look at the business as a whole we expect.

Dave Susinski: Yeah, sure, Tyler. This is Dave. Happy to answer your question. Maybe starting first with where we finished in the quarter, we were pleased to continue to deliver volume metric growth in the quarter, but it was actually slightly below our expectations. We expected it to be stronger. Like many of our peers, we saw it slow down in traffic that sort of evolved throughout the first half of the calendar year and in the quarter in particular offsetting that.

Dave: Sales of our New York frozen bakery garlic bread product lines were up 2.8 percent to 94.7 million for a category leading share of 40.6 percent.

Speaker Change: Sales of our New York frozen bakery garlic bread product lines were up 2.8 percent to 94.7 million for a category leading share of 40.6 percent.

Tom Pigott: Although volume growth throughout the whole period.

Tyler Browse: Great.

Great Thats all for Us I'll hop back in the queue.

Tyler Browse: That's all for us. I'll hop back in the queue. Thank you.

Tom Pigott: Thank you. Thank you.

Andrew Wolfe: Your next question comes from Andrew Wolfe of CO King. You're on its open. Thank you. Good morning. Wanted to ask pricing in the channel. Couple of questions for each of your segments. Sort of like a check-in question on food service. You know, with LTOs of promotions, you know, driving traffic. And, you know, sort of the obviously more promotions across the market. Are any of these partners asking for any kind of price help with that? Or is your typical kind of markup pricing still, still, you know, the standard fare. And if, you know, also, is there any kind of within how you know, you negotiate with them?

Speaker Change: Your next question comes from Andrew Wolf of C. L. King Your line is now open.

Dave: In the food service segment strong volume growth of 4.2 percent driven by national chain restaurants was offset by the unfavorable impact of deflationary pricing.

Andrew Wolf: Thank you good morning, I wanted to ask again.

Speaker Change: Ed.

Andrew Wolf: Pricing in the channel a couple of questions for each of your segments.

Dave Susinski: We have a whole range of activity that's in flight right now where we are developing and launching limited time offerings for customers. Many of those are out in the marketplace now. You're probably watching the advertising on TV without understanding or appreciating that it's us. So you put all that together sort of where we've been and are out looked for the go-forward period. We continue to believe that we can deliver a low single-digit volume-led growth that will turn into sales growth in the fiscal year 25.

Speaker Change: Sort of like a checking question on foodservice.

Speaker Change: With LTE OS or promotions driving.

Speaker Change: Traffic.

Speaker Change: And sort of the.

Speaker Change: Obviously.

Speaker Change: More promotions across the market.

Speaker Change: Are any of these partners asking for any kind of price help with that or is your typical.

Dave Susinski: And if the overall outlook improves, there's opportunity for that low single-digit volume growth to become low-to-mid single-digit volume growth. Your second point was on this mega trend of chicken. I couldn't agree more with you. That continues to be a big part of what's underlying the activity that we're being called on for innovation. So we believe that that's going to continue to hold true. If you look at the cost of chicken as a protein source, it continues to be cheaper than beef in the alternative.

Speaker Change: Kind of markup.

Speaker Change: Pricing still.

Speaker Change: <unk>.

Speaker Change: Still the standard fare.

Speaker Change: Yes.

Speaker Change: Also is there any kind of within.

Speaker Change: How are.

You negotiate with them as their volume concessions.

Andrew Wolfe: Is there volume concessions, which, you know, is a little probably more typical? Yeah.

Speaker Change: Probably more typical.

Speaker Change: Yeah. So great question, Andrew when you look at our LTE Das Theyre, usually at or better than our line average because of all of the proprietary R&D work that goes upfront and ordinarily for those sorts of items, we wouldn't be bidding against other people. So as you think about that stream of work versus our base business.

Dave Susinski: So great question, Andrew. When you look at our LTOs, they're usually at or better than our line average because of all of the proprietary R&D work that goes up front, and ordinarily for those sorts of items, we wouldn't be bidding against other people. So, just think about that stream of work versus our base business. They're typically going to be margin accretive to what we're doing. You know, I'm glad you asked the question about the dialogue with our operators that you might imagine. They're focused on really two things. They're looking at their bottom line and cost.

Speaker Change: They're typically going to be margin accretive to what we're doing.

Dave Susinski: So I think it's a great way in this environment for restaurant operators to provide great tasting food and relevant value. And then finally, on the select QSRs, some of our customers, like a Chick-fil-A, were asked Liberty to disclose the activities that we have in flight for some of them were not. And in those cases, that would be the select and the select QSRs that we're talking about. To the degree to which we get clearance from them to talk more openly about the work we do for them, it will be happy to share with that with you guys in due course. Very helpful. Just want to follow up.

I'm glad you asked the question about the dialogue with our operators as you might imagine they're there.

Speaker Change: We're focused on really two things that are looking at their bottom line and cost, but I think they are really looking at what what needs to be true for them to accelerate their traffic trends. Unfortunately, we tend to get calls that are more focused on exciting menu items that they can feature in their advertising to drive traffic and to that end I would.

Dave Susinski: But I think they're really looking at what needs to be true for them to accelerate their traffic trends. Unfortunately, we tend to get calls that are more focused on exciting menu items that they can feature in their advertising to drive traffic. And to that end, I would tell you that our phone is ringing as hard as it's been in any time in the recent past because the number of people that we work with are ones that we have and are looking for things that they can talk about in their advertising. Most don't want to be discounting on their menu because their margins are already under pressure because of labor and other things.

Speaker Change: Tell you that our phone is ringing as hard as it's been in any time in the recent past because a number of people that we work with are ones that we have and are looking for things that they can talk about in their advertising most don't want to be discounting on their menu.

Tom Pigott: Can you offer any details on the cadence of growth for both retail and food service in 25 and should we expect both segments to be positive in each quarter and then any color on your kind of front half back as waiting would be very helpful. Thank you. Sure. So as as we look at the our projections of volume growth, I would say we're overall projecting low single digit volume growth for for both segments throughout the year.

Speaker Change: Because their margins are already under pressure because of labor and other things.

Dave Susinski: and I think they're trying to figure out how they drive traffic through menu excitement in a really place into our wheelhouse.

Speaker Change: And I think they are trying to figure out how they drive traffic through menu excitement and it really place.

Speaker Change: Into our wheelhouse swinging around too looking at the retail business I think what you can expect is that we're going to continue to carefully monitor value and look at absolute price points and look at promoted price points.

Dave Susinski: Swinging around to looking at the retail business, you know, I think what you can expect is that we're going to continue to carefully monitor value and look at absolute price points and look at promoted price points. You know, as we look at where, you know, maybe I'll say comments on the consumer overall for a little bit later, but what I would tell you is what we're focusing on is really two things in this environment. The first, making sure that we remain sharp on value and surgically addressing price points where we feel like we need to.

Tom Pigott: I think we do expect a little bit stronger front half growth in our food service business. But much of that is dependent on some of these LTOs that they mentioned and how successful they are. From an overall profitability standpoint, we as Dave mentioned, we've got we're really focused more on productivity this year. We're last year, we've benefited from both PNOC favorably pricing that a commodities as well as productivity this year. It's more focused on productivity in terms of driving margin expansion on top of the volume growth.

As we look at where.

Speaker Change: I'll save comments on the consumer overall for a little bit later, but what I would tell you is what we're focusing on is really two things in this environment.

Dave: During Q4 we delivered strong growth profit growth of 4.4 million dollars or 4.8 percent and a gross margin increase of 110 basis points versus last year. This increase was driven by the beneficial impacts of a range of cost savings initiatives.

Tom Pigott: And we expect that to be more back and loaded as Dave mentioned. We're making some investments earlier in the year in terms of factory automation and different programs to improve our productivity performance. So we expect that we expect the margin expansion to be more back and loaded. Maybe I'll offer on the retail side of the business. We have strong pipeline and new items, but given the seasonal resets for sauces on the shelf, many of those items tend to be a little bit more back half loaded.

The first making sure that we remain sharp on value and surgically addressing price points, where we feel like we need to and we've talked about the Olive Garden example, in the past.

Dave Susinski: And we've talked about the Olive Garden example in the past, and that's a good one. But the second thing that we're looking at is how do we, in this environment, provide consumers with affordable luxury. Great tasting product that just makes that meal a little bit better. I think they're feeling a lot of pressure from a lot of different places, and to the degree to which we can offer good sauces that are affordable luxuries that make that meal occasion go a little bit better. It keeps us relevant to them. And that really is the one two of where we're focusing.

Speaker Change: It's a good one but.

Dave: Our focus on supply chain productivity value engineering and revenue management all remain core elements to further improve our financial performance.

Speaker Change: But the second thing that we're looking at is how do we in this environment provide consumers with affordable luxury great tasting product that just makes that a little bit better.

Dave: I'll now turn the call over to Tom Piggett or CFO for his commentary on our fourth quarter results.

Speaker Change: They are feeling a lot of pressure from a lot of different places and to the degree to which we can offer a good sources that are affordable luxuries that make that allocation goes a little bit better it keeps us relevant.

Dave: Thanks Dave.

Dave: This quarter the company delivered both volume and gross profit growth despite the impacts of the product line discontinuations we announced last quarter.

Speaker Change: To them and that really is the one two of where we're focusing.

Andrew Wolfe: Okay, that's, so when you talk, you know, I mean, there are interesting behaviors, you know, like trading down from chicken to, let's say, pasta, you might want a better sauce, you know, like that. But on the converse, you know, what are you seeing with trading down, you know, from brands either in category or your brand specifically with private label? Is that where, you know, is that when you talk about, you know, some surgical price point stuff, like you did a Walnut, like you did with the all of garden products, or is that yeah, I said, it's a great, great line of questions.

Speaker Change: Okay.

Speaker Change: So when you talk I mean, there are interesting behaviors.

Speaker Change: Trading down from chicken to.

Speaker Change: Let's say pasta, you might want a better sauce.

Speaker Change: That.

Tom Pigott: But overall, you know, consistent with what Thomas say when you look at the business as a whole, we expect low volume growth through the whole period. Great. That's all for us. I'll hop back in the queue. Thank you.

Speaker Change: But on the converse.

Speaker Change: What are you seeing with trading down from brands either any category of your brands specifically.

Speaker Change: Private label is that is that where.

Speaker Change: Is that when you talk about some surgical price point stock like you did at Walmart.

Andrew Wolfe: Your next question comes from Andrew Wolfe of CO King. You're on its open. Thank you.

Speaker Change: It did with them.

Speaker Change: The olive garden products.

Speaker Change: Or is that yes, I would say it's.

Dave Susinski: Good morning. Wanted to ask pricing in the channel. Couple of questions for each of your segments. Sort of like a check-in question on food service. You know, with LTOs of promotions, you know, driving traffic. And, you know, sort of the obviously more promotions across the market. Are any of these partners asking for any kind of price help with that? Or is your typical kind of markup pricing still, still, you know, the standard fare.

Dave: Fourth quarter consolidated net sales decreased by 40 basis points to 452.8 million dollars. Decomposing the revenue performance deflationary pricing in our food service segment drove an approximate 210 basis point decline. The exit of the flat out angelic businesses accounted for an additional 110 basis point decline. These two drivers were offset by favorable volume mix of 280 basis points.

Speaker Change: It's a great great line of questions and maybe I'll hit it from the top.

Dave Susinski: And maybe I'll hit it from the top to the degree to which consumers trade to that pasta occasion. We feel like we're well positioned with our New York Texas toast. You know, you probably heard in the script, and if you are following I or I or Nielsen data, that remains really a strong point for us where we're continuing the categories growing for both toast and sticks. And we're outperforming the category and continuing to grow our share. So when consumers are looking for the pasta meal occasion, our strategy is to make sure that we get a basket conversion and get that toast added to the basket.

Speaker Change: To the degree to which consumers traded that past occasions, we feel like we're well positioned with our New York, Texas Toast.

Dave: Justice Points.

Speaker Change: Our New York bakery frozen garlic bread products also performed well in the quarter, led by, the growth of our own Texas toast and supported by the growth of our garlic breadsticks.

Speaker Change: Consolidated gross profit increased by $4.4 million or 4.8% versus a prior year quarter to $97.6 million. Gross margins expanded by 110 basis points to 21.6%. The gross profit growth was primarily driven by the company's cost-saving initiatives and increased volumes.

Dave: Consolidated gross profit increased by $4.4 million or 4.8% versus a prior year quarter to $97.6 million. Gross margins expanded by 110 basis points to 21.6%. The gross profit growth was primarily driven by the company's cost-saving initiatives and increased volumes.

Speaker Change: These items continue to offer families a great tasting way to stretch their food budget. SIRCANA scanner data for the 13-week period ending June 30th shows sales for our licensed, items grew 8% with the newly introduced Subway and Texas Roadhouse sauces leading the way while Chick-fil-A refrigerated dressings and Buffalo Wild Wing sauces also contributed to sales growth. The combined sales of Chick-fil-A refrigerated dressings and our Marzetti brand refrigerated, dressings grew 11.3% to $39 million in the quarter, which increased our category-leading share 330 basis points to 27.4%.

Speaker Change: As you probably heard in the script and if youre following.

Speaker Change: Tomati Costs were deflationary versus a prior year but remained elevated versus historical levels.

Speaker Change: Iron Nielsen data that remains really a strong point for us where we're continuing the category is growing for bolt toast and sticks and we're outperforming the category and continuing to grow our share. So when consumers are looking for the pasta meal location. Our strategy is to make sure that we get a basket conversion and get that coast add.

Speaker Change: Selling general and administrative expenses decreased 6.2% or $3.5 million to $53.2 million. The decrease reflects reduced expenditures for project descent RERP initiated. Costs related to the project continued to wind down totaling $500,000 in the current year quarter versus $5.6 million in the prior year quarter.

Speaker Change: To the basket.

Dave Susinski: You know, more broadly, as we're looking at our price points, I think you're precisely right. We're watching Private label. So we watch our gap versus private label. And then in key seasons, like think Sister Schubert, we're looking at those promoted price points. As we scan across all of our categories, what I would tell you is if you look at refrigerated dressings, private label really isn't much of a threat. If you go to horrible salad dressing, we've continued to hang in there. We're performing. We're continuing to outperform the category. And we're growing share in the period.

Speaker Change: More broadly as we're looking at at our price points I think you're precisely right. We're watching private label. So we'd watch our gap versus private label and then in key seasons like think sister Schubert, where looking at dose promoted price points as we scan across all of our categories. What I would tell you is if you look.

Dave Susinski: And if, you know, also, is there any kind of within how you know, you negotiate with them? Is there volume concessions, which, you know, is a little probably more typical? Yeah. So great question, Andrew. When you look at our LTOs, they're usually at or better than our line average because of all of the proprietary R&D work that goes up front and ordinarily for those sorts of items, we wouldn't be bidding against other people.

Speaker Change: Refrigerated dressings private label really isn't much of a threat. If you go to portable salad dressing we've continued to hang in there we're performing we're continuing to outperform the category and.

Dave Susinski: So, just think about that stream of work versus our base business. They're typically going to be margin accretive to what we're doing. You know, I'm glad you asked the question about the dialogue with our operators that you might imagine. They're focused on really two things. They're looking at their bottom line and cost. But I think they're really looking at what needs to be true for them to accelerate their traffic trends. Unfortunately, we tend to get calls that are more focused on exciting menu items that they can feature in their advertising to drive traffic.

Speaker Change: And we're growing share in the period private label is growing but what were probably seen in that cases, it trade down from some of the other more value oriented brands to private label, which doesn't seem to be impacting us.

Dave Susinski: Private label is growing, but what we're probably seeing in that case is a trade down from some of the other more value-oriented brands to private label, which doesn't seem to be impacting us. Your world around you look at toast. We feel like we're well positioned. Sister Schubert is a brand that we'll watch. We'll watch croutons as well. Refrigerated dips. We feel like we're insulated there. So generally, I continue to feel that our exposure in private label is more modest than our peers, but we still need to keep just an extremely sharp eye on value to make sure that we're relevant.

Speaker Change: The world around you look a toast we feel like we're well positioned sister Schubert is a brand that we'll watch we'll watch crew tons as well refrigerated dips, we feel like we're insulated there. So generally I continue to feel that our exposure in private label is more modest than our peers, but we still need to keep just in.

Dave Susinski: And to that end, I would tell you that our phone is ringing as hard as it's been in any time in the recent past because the number of people that we work with are ones that we have and are looking for things that they can talk about in their advertising. Most don't want to be discounting on their menu because their margins are already under pressure because of labor and other things, and I think they're trying to figure out how they drive traffic through menu excitement in a really place into our wheelhouse.

Speaker Change: Extremely sharp eye on value to make sure that we're relevant there's a big trend in <unk>.

Andrew Wolfe: There's a big trend in this trade down that I think that we're watching that it endures to our benefit. and it's not just trading down within a category from a brand to a private label, but you're seeing people trade to different channels of trade. You're seeing in some cases that trade down from food to Walmart and things like that. And there again, we feel like we're continued to perform well given the relationships and the assortment of brands that we have any innovation. Okay, got you.

Speaker Change: This trade down that I think that we're watching that in works to our benefit.

Speaker Change: And it's not just trading down within a category from a brand to private label, but youre seeing people trade to different channels of trade youre seeing in some cases, it trade down from food to Walmart and things like that and there again, we feel like we're continued to.

Speaker Change: <unk> performed well given the relationships and the assortment of brands that we have and the innovation.

Speaker Change: Okay got you. Thank you.

Andrew Wolfe: Thank you. Just one quick sort of half question, if you will. A small question. You guys are expecting Marzetti volume to be up, which is a nice, I think, overall turn for that business line. Is that innovation-driven or promotion, or put a little color on that expectation? Yeah. Well, it's, it's a little bit innovation. We brought out some new items. We've strengthened our portfolio of simply items, and honestly and transparently we have a little bit of a soft comp. We're going up against there as well. So. Got it. All right.

Speaker Change: Just one quick.

Speaker Change: Consumer spending was also lower in the quarter.

Dave Susinski: The first, making sure that we remain sharp on value and surgically addressing price points where we feel like we need to. And we've talked about the all of garden example in the past and that's a good one. But the second thing that we're looking at is how do we in this environment provide consumers with affordable luxury. Great tasting product that just makes that meal a little bit better. I think they're feeling a lot of pressure from a lot of different places and to the degree to which we can offer good sauces that are affordable luxuries that make that meal occasion go a little bit better.

Speaker Change: Past question, if you will a small question.

You guys are expecting <unk> volume to be up which is a nice I think overall turn for that business line.

Speaker Change: These decreases were offset by higher personnel and IT investments.

Speaker Change: That innovation, driven or promotion or a.

Speaker Change: A little color on that expectation, yeah, well it's.

Speaker Change: As we previously shared, the company chose to exit the flat out and angelic product lines in our fiscal third quarter ended March 31st. In our fiscal fourth quarter, we recorded restructuring impairment charges of $2.7 million related to these acts as we sold or disposed of the proper and equipment associated with these product lines.

Speaker Change: It's a little bit innovation, we brought out some new items, we've strengthened our portfolio of simply items and honestly and transparently, we have a little bit of a soft comp we're going up against there as well so.

Speaker Change: We do not anticipate any additional related charges going forward.

Speaker Change: In the prior year quarter, we recorded $25 million of impairment charges related to the now discontinued flat out product line. Consolidated operating income increased $30.2 million as restructuring impairment charges declined $22.2 million. The remaining $8 million increase was driven by the higher gross profit and lower SNA costs I mentioned.

Speaker Change: Got it alright, well thank you for the answers I appreciate it.

Speaker Change: Our tax rate for the quarter was 20.5%.

Andrew Wolfe: Well, thank you for the answer.

Andrew Wolfe: Appreciate it.

Speaker Change: Alright, thank you.

Brian Holland: Your next question comes from Brian Holland with DA Davidson. You're letting us know open. Yeah. Thanks for morning. Maybe just to follow up on the line of questioning around the outlook for fiscal 25. I guess to clarify the comments on volume growth specifically in the retail segment, would that be inclusive or exclusive of the perimeter store bakery exit, which fingers to remain a drag. I would think through the third quarter fiscal 25. Yeah, it includes includes. Yeah, so we feel like there's enough to help us offset that solution. Okay, understood. And then on the food service side, should we assume that pass through pricing would obviously for cue it essentially fully offset the food service volume?

Your next question comes from Brian Holland with D. A Davidson your line is now open.

Speaker Change: We estimate our fiscal 25 tax rate to be 23%.

Dave Susinski: It keeps us relevant to them. And that really is the one two of where we're focusing. Okay, that's, so when you talk, you know, I mean, there are interesting behaviors, you know, like trading down from chicken to, let's say pasta, you might want a better sauce, you know, like that. But on the converse, you know, what are you seeing with trading down, you know, from brands either in category or your brand specifically with private label?

Brian Holland: Yes. Thanks, Good morning, maybe just a follow up on the line of questioning around the outlook for fiscal 'twenty five.

Speaker Change: Fourth quarter diluted earnings per share increased 93 cents to $1.26. The reduced restructuring impairment charges drove a 62 cents benefit.

Speaker Change: The reduction in projects at SNA costs drove a 15 cents increase in EPS.

Speaker Change: Yes.

Brian Holland: I guess.

Brian Holland: To clarify the comments on volume growth specifically in the retail segment would that be inclusive or exclusive of the perimeter store bakery exit which figures to remain a drag I would think through.

Speaker Change: The remaining 16 cents of EPS gross was driven by the underlying performance of the business.

Speaker Change: The third quarter of fiscal 'twenty five.

Speaker Change: Yes. It excludes includes.

Dave Susinski: Is that where, you know, is that when you talk about, you know, some surgical price point stuff, like you did a Walnut, like you did with the all of garden products or is that yeah, I said, it's a great, great line of questions. And maybe I'll hit it from the top to the degree to which consumers trade to that pasta occasion. We feel like we're well positioned with our New York Texas toast.

Speaker Change: Yes, so we feel like there is enough to help us offset that dilution.

Speaker Change: Okay understood.

Speaker Change: And then.

Speaker Change: On the foodservice side should we assume that pass through pricing.

Speaker Change: <unk> <unk> is essentially fully offset the foodservice volume.

Tom Pigott: Does that dissipate as we move through fiscal 25 such that volume growth and excess of that pass through pricing? Yes. Q4, the way the timing worked out with our pricing and commodities. We were slightly unfavorable in peanut and had a big gross-to-net sweat down on food service. That's just a function of how things lined up this particular quarter going forward based on our commodity forecast. We expect things to be neutral. And then one other one, just on a point you made in an earlier question about food service volume, where it sounds like it was a bit below your expectation, at least in the fourth quarter. Then you obviously talked about some of the R&D pipeline flowing through.

Speaker Change: Does that dissipate as we move through fiscal 'twenty, five such that volume growth in excess of that pass through pricing.

Dave Susinski: You know, you probably heard in the script and if you are following I or I or Nielsen data, that remains really a strong point for us where we're continuing the categories growing for both toast and sticks. And we're outperforming the category and continuing to grow our share. So when consumers are looking for the pasta meal occasion, our strategy is to make sure that we get a basket conversion and get that toast added to the basket.

Speaker Change: Yes Q4.

Speaker Change: The way the timing worked out with our pricing and commodities we were.

Speaker Change: Slightly favorable.

Speaker Change: Favorable in Penang and had a big gross to net swept down in foodservice.

Speaker Change: Just a function of how things lined up this particular quarter going forward based on our commodity forecast, we expect things to be neutral.

Dave Susinski: You know, more broadly, as we're looking at our price points, I think you're precisely right. We're watching private label. So we watch our gap versus private label. And then in key seasons, like think sister Schubert, we're looking at those promoted price points. As we scan across all of our categories, what I would tell you is if you look at refrigerated dressings, private label really isn't much of a threat. If you go to horrible salad dressing, we've continued to hang in there.

Speaker Change: And then one other one just on a point you made in an earlier question about.

Speaker Change: Foodservice volume.

Speaker Change: Where it sounds like it was a bit below your expectation at least.

Speaker Change: In the fourth quarter when you obviously talked about.

Speaker Change: Some of the R&D pipeline flowing through just curious.

Dave Susinski: So I'm just curious. And so you can correct me on this. I didn't I just assume that was a regular course of business that you have this R&D pipeline that you're always sort of turning out for customers. So maybe if we just dig into that a little bit deeper and understand whether the cadence of that changes in fiscal 25, these would be 24, are you getting asked to do more of that? Has more of that pipeline conveyed. And therefore, maybe that would be the reason for sequential improvement as we move. here.

Speaker Change: And so you can correct me on this.

Dave Susinski: We're performing. We're continuing to outperform the category. And we're growing share in the period. Private label is growing, but what we're probably seeing in that case is a trade down from some of the other more value oriented brands to private label, which doesn't seem to be impacting us. Your world around you look at toast. We feel like we're well positioned. Sister Schubert is a brand that we'll watch. We'll watch croutons as well.

Speaker Change: I didn't I.

Speaker Change: Just assume that was a regular course of business that you have this R&D pipeline that you are always sort of turning out for customers. So maybe if you could just dig into that a little bit deeper and understand whether the cadence of that changes in fiscal 'twenty five vis vis 24 are you getting us to do more of that as more.

Speaker Change: About pipeline conveyed and therefore, maybe that would be the reason for sequential improvement as we moved year over year.

Dave Susinski: Refrigerated dips. We feel like we're insulated there. So generally, I continue to feel that our exposure in private label is more modest than our peers, but we still need to keep just an extremely sharp eye on value to make sure that we're relevant. There's a big trend in this trade down that I think that we're watching that it endures to our benefit, and it's not just trading down within a category from a brand to a private label, but you're seeing people trade to different channels of trade.

Dave Susinski: Sure, so maybe I'll start if you'll allow me a big picture, and then drill in specifically on the timing of the new item. So again, I think there were two drivers. One was, as you look at sort of what happened as we went through the quarter, really, through the spring to the end of our quarter, there was a deceleration and traffic across really all of QSR. You guys are seeing it in the data, and you've heard our peers talk about it. At the very end of the quarter, we saw a slow down in some of our orders that they were probably balancing their inventory with their traffic trends.

Speaker Change: Sure. So maybe I'll start if youll allow me.

Big picture, and then drill and specifically on the timing of the new items. So.

Speaker Change: Again, I think there were two drivers.

Speaker Change: One was as you look at sort of what happened as we went through the <unk>.

Speaker Change: Quarter really through the spring to the end of our quarter. There was a deceleration in traffic across really all of <unk> you guys are seeing it in the data and you've heard our peers talk about it at the very end of the quarter. We saw a slowdown in some of our orders as they were probably balancing their inventory with their traffic.

Dave Susinski: You're seeing in some cases that trade down from food to Walmart and things like that. And there again, we feel like we're continued to to perform well given the relationships and the assortment of brands that we have any innovation. Okay, got you. Thank you. Just one quick sort of half question if you will. A small question. You guys are expecting Marzetti volume to be up, which is a nice, I think, overall turn for that business line.

<unk>.

Dave Susinski: The other piece that I referred to specifically was the timing of the new items, and we had a range of new items that were time to ship at the end of the period. Some of that volume slipped from the end of this period, end of the beginning of the next period, and it was purely timing, and of course, finally, it could have been related to available space for inventory. So, you know, Brian, what I would tell you is when we look at this, it looks like just a wrinkle for this particular period in the way that things lined up.

Speaker Change: The other piece that I referred to specifically was the timing of the new items and we had a range of new items that were time to ship at the end of the period some of that volume slipped from the end of this period and at the beginning of the next period and it was purely timing and a correspondingly it could've been related to available space for inventory.

Brian Holland: Brian what I would tell you is when we looked at this it looks like just a wrinkle for this particular period and the way that things lined up.

Dave Susinski: Is that innovation driven or promotion or put a little color on that expectation? Yeah. Well, it's, it's a little bit innovation. We brought out some new items. We've strengthened our portfolio of simply items and honestly and transparently we have a little bit of a soft comp. We're going up against there as well. So. Got it. All right. Well, thank you for the answer. Appreciate it. Thank you.

Dave Susinski: You're right, we have a very steady cadence of LTO activity or limited time offering activity that's in place, and this particular period, it just hit us a little bit harder than we had expected. So we delivered four points of volume and food service, and we were expecting north of that. Appreciate the color. And then maybe just flipping back over to the retail segment. I guess you said food service, so maybe just quickly, you said food service was a little bit below expectation. How did retail come in relative to internal expectations? Mindful, you don't provide formal guidance because obviously you lack the potential, but there's no guidance, so.

Brian Holland: Right, we have a very steady cadence of <unk> activity, our limited time offering activity that took place in this particular period. It just hit us a little bit harder than we had expected so.

Brian Holland: We delivered fourth trying to volume in foodservice and we were expecting north of that.

Speaker Change: Appreciate the color and then maybe just flipping back over to the retail segment.

Brian Holland: Your next question comes from Brian Holland with DA Davidson. You're letting us know open. Yeah.

I guess, you said foodservice. So maybe just quickly you said foodservice was a little bit below expectation.

Dave Susinski: Thanks for morning. Maybe just to follow up on the line of questioning around the outlook for fiscal 25. I guess to clarify the comments on volume growth specifically in the retail segment, would that be inclusive or exclusive of the perimeter store bakery exit, which fingers to remain a drag. I would think through the third quarter fiscal 25. Yeah, it includes includes. Yeah, so we feel like there's enough to help us offset that solution.

Speaker Change: Retail come in relative to internal expectations mindful, you don't provide formal guidance because obviously you laid out.

Speaker Change: With regard to capital expenditures, our full year payments for property additions totaled $67.6 million. For fiscal 25, our forecasted total capital expenditures are estimated to be between $70 and $80 million. This forecast reflects a continued investment in our facilities to strengthen our infrastructure and support cost savings and gross emissions.

Speaker Change: Theres no guidance, though.

Dave Susinski: Yeah, retail was pretty much right on it. I mean, if you looked at their consumption data through the period, it was very consistent with what we expected. I mean, and the things that shifted really didn't add up to a point where they materially impacted things. We did have one promotion with the retailers slipped from the NQ4 and the Q1, but I don't think it made a material difference in the grand scheme of things. So, you know that business, the data, as you know, is very rich that we get on the consumer side. We get a weekly, and we're able to use that forecast and model what we think our retailers have in terms of their inventory.

Speaker Change: Retail is pretty much right on it I mean, if you looked at their consumption data to the period was very consistent with what we expected.

Speaker Change: And the things that shift and really didn't add up to a point, where they have materially impacted things. We did have one promotion with the retailers slipped from <unk>.

Speaker Change: In addition to investing in our business, we also return funds to shareholders. Our quarterly cash dividend of 90 cents per share paid on June 28 represented a 6% increase from the prior year's amount. Our enduring streak of annual dividend increases stands at 61 years.

Speaker Change: Turning now to a recap of the full year results, overall the company was able to deliver on its commitments, reported in that sales group 2.7% with both segments contributing. Grows profit increase by 11.3% driven by the net sales growth in 180 basis points of margin expansion from favorable price and genetic commodities and cost savings programs.

Speaker Change: The end of Q4 into Q1, but I don't think it made a material difference in the Grand scheme of things.

Speaker Change: So that business the data as you know is very rich that we get on the consumer side, we get a weekly and we're able to use that forecast and model. What we think our retailers have in terms of their inventory on the foodservice side, the data isn't quite as rich and it's not quite as timely so it's harder for us to.

Dave Susinski: Okay, understood. And then on the food service side, should we assume that pass through pricing would obviously for cue it essentially fully offset the food service volume? Does that dissipate as we move through fiscal 25 such that volume growth and excess of that pass through pricing? Yes. Q4, the way the timing worked out with our pricing and commodities. We were slightly unfavorable in peanut and had a big gross to net sweat down on food service.

Dave Susinski: On the food service side, the data isn't quite as rich and it's not quite as timely, so it's hard for us to model out some of that. That's probably the difference, but in both cases, if you look at retail, there was a range. I said 14 new items that we went out with, and they're all performing generally in line with our expectations. Okay, great.

Speaker Change: To model out some of that.

Speaker Change: So that's probably the difference but in both cases.

Speaker Change: Retail there was a range I said 14, new items that we went out with and.

Speaker Change: They're all performing generally in line with our expectations.

Speaker Change: Okay great.

Operator: So, maybe just a close big picture.

Speaker Change: Maybe just to close big picture.

Dave Susinski: That's just a function of how things lined up this particular quarter going forward based on our commodity forecast. We expect things to be neutral. And then one other one, just on a point you made in an earlier question about food service volume, where it sounds like it was a bit below your expectation, at least in in the fourth quarter, then you obviously talked about some of the R&D pipeline flowing through. So I'm just curious.

Operator: Just maybe an update on the food service, or excuse me, the licensing pipeline, how that has evolved. Obviously, you're picking up incremental business from existing customers, i.e. Texas Roadhouse. Just curious how the pipeline is shaping up underneath that given the pressures.

Speaker Change: Just maybe an update on the foodservice or excuse me the licensing pipeline.

Speaker Change: How that has evolved obviously youre picking up incremental business from incremental from existing customers I E, Texas Roadhouse.

Speaker Change: Just curious how the pipeline is shaping up underneath that given the.

Speaker Change: The pressures are we seeing an increase in inbounds with.

Dave Susinski: Are we seeing an increase in in bounds with food service trends performing as they are, and then maybe also the M&A landscape as it feels like we're getting closer to kind of being in a position that you aspire to get to to go out and make acquisitions, just maybe what that pipe. Blind looks like. And I'll leave it there. Thank you. Sure. Of course, maybe starting with the licensing pipeline, we'll talk about the items that we went out with most recently that were drilled with the performance of Chick-fil-A dressings. I think I mentioned that the Avocado Lime dressing, in particular, that single skew has become the second best performing skew in the entire set inside of one year.

Speaker Change: Foodservice trends performing as they are and then maybe also the M&A landscape as it feels like we're getting closer to kind of being in the position that you aspire to get to to go out and make acquisitions, just maybe what that pipeline looks like and I'll leave it there. Thank you yes.

Dave Susinski: And so you can correct me on this. I didn't I just assume that was a regular course of business that you have this R&D pipeline that you're always sort of turning out for customers. So maybe if we just dig into that a little bit deeper and understand whether the cadence of that changes in fiscal 25, these would be 24, are you getting asked to do more of that has more of that pipeline conveyed.

Speaker Change: Sure of course, maybe starting with the licensing pipeline.

Speaker Change: We will talk about the items that we went out with most recently.

Speaker Change: I'm also pleased to share that during the quarter, Chick-fil-A avocado lime dressing, became the second best-selling SKU in the entire category.

Speaker Change: Sales of our New York frozen bakery garlic bread product lines were up 2.8% to $94.7, million for a category-leading share of 40.6%.

Speaker Change: In the food service segment, strong volume growth of 4.2% driven by national chain restaurants, was offset by the unfavorable impact of deflationary pricing.

Speaker Change: During Q4, we delivered strong gross profit growth of $4.4 million or 4.8% and a gross, margin increase of 110 basis points versus last year. This increase was driven by the beneficial impacts of a range of cost savings initiatives.

Speaker Change: We're thrilled with the performance of Chick fillet dressings, I think I mentioned that the avocado lime.

Speaker Change: Our focus on supply chain productivity, value engineering, and revenue management all remain, core elements to further improve our financial performance.

Dave Susinski: And therefore maybe that would be the reason for sequential improvement as we move, here. Sure, so maybe I'll start if you'll allow me a big picture and then drill in specifically on the timing of the new item. So again, I think there were two drivers. One was, as you look at sort of what happened as we went through the quarter, really, through the spring to the end of our quarter, there was a deceleration and traffic across really all of QSR.

Speaker Change: I'll now turn the call over to Tom Piggott, our CFO, for his commentary on our fourth, quarter results.

Speaker Change: Dressing in particular that single SKU has become the second best performing SKU in the entire set inside of one year. If you look at the run rate on that business.

Dave Susinski: If you look at the run rate on that business, it's also become quite substantial. Swinging around to Subway, Subway I would say is outperformed our expectations. And we've even been surprised with the strength of the brand in Canada, where it's been a little bit of an upside on it. So we're excited about that proposition, and they're a great partner to work with. If you look at what's happening on Buffalo Wild Wings and all of the gardens, there continues to be a lot of activity and discussions with those partners. With Buffalo Wild Wings, you'll recall, not only have we been driving sauces, but we did a test.

Speaker Change: S-GNA declined by 1.8% as spending for the successful ERP initiative project descent wound down as the year progressed.

Speaker Change: Also become quite substantial.

Speaker Change: Swinging around a subway subway I would say has outperformed our expectations.

And we've even been surprised with the strength of the brand in Canada, where it's been a little bit of an upside on it. So we're excited about that proposition and they're a great partner to work with.

Speaker Change: Operating income grew by 40.9%, 7.1% was driven by reduced restructuring and impairment costs, and the remaining 33.8% was driven by the underlying performance of the business.

Dave Susinski: You guys are seeing it in the data and you've heard our peers talk about it. At the very end of the quarter we saw a slow down in some of our orders that they were probably balancing their inventory with their traffic trends. The other piece that I referred to specifically was the timing of the new items and we had a range of new items that were time to ship at the end of the period.

Speaker Change: For your operating cash flow increased $25.6 million, we finished the year with a quarter and four year results reflected continued execution against our key strategies resulting in strong financial returns.

Speaker Change: If you look at what's happening on Buffalo Wild wings, and Olive garden, there continues to be a lot of activity and discussions with those partners with Buffalo Wild wings Youll recall, not only have we been driving sources, but we.

Speaker Change: I'll now turn it back over to Dave for his closing remarks.

Speaker Change: Thank you.

Dave Susinski: Some of that volume slipped from the end of this period, end of the beginning of the next period and it was purely timing and of course, finally, it could have been related to available space for inventory. So, you know, Brian, what I would tell you is when we look at this, it looks like just a wrinkle for this particular period in the way that things lined up. You're right, we have a very steady cadence of LTO activity or limited time offering activity that's in place and this particular period, it just hit us a little bit harder than we had expected.

Speaker Change: We did a test it with a single rotation at Costco last year with depths that performed well and we're looking forward to working with them to expand that we will have more news on that later in the year with respect to chip fillet. The Big news was coming out with dressings were working with them on a spring launch of new items that we're going to be excited to.

Dave Susinski: It was a single rotation at Costco last year with dips that perform well. And we're looking forward to working with them to expand that.

Dave Susinski: We'll have more news on that later in the year. With respect to Chick-fil-A, the big news was coming out with dressings. We're working with them on a spring launch of new items that we're going to be excited to share with you once we're in a position to do that. I think the news that we were particularly excited to see was expanding this partnership with Texas Roadhouse, which is just a really strong restaurant concept and a perennial grower. We've been pleased with the performance of the sauces. They play in a small category, and we love our entry there.

Speaker Change: Thanks, Todd.

Speaker Change: As we look ahead, Lancaster Colony will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan.

Speaker Change: Share with you once we're in a position to do that.

Speaker Change: The news that we were particularly excited to see was expanding this partnership with Texas Roadhouse, which is just a really strong restaurant concept and a perennial grower.

Speaker Change: To one, accelerate core business growth.

Dave Susinski: So we delivered four points of volume and food service and we were expecting north of that. Appreciate the color. And then maybe just flipping back over to the retail segment. I guess you said food service, so maybe just quickly, you said food service was a little bit below expectation. How did retail come in relative to internal expectations? Mindful, you don't provide formal guidance because obviously you lack the potential, but there's no guidance, so.

Speaker Change: Two, to simplify our supply change of reduced cost and grow our margins.

Speaker Change: We've been pleased with the performance of the sources they plan a small category and we love our entry there but.

Dave Susinski: But their roles are really a special item that consumers really like. We've come up with an item that's inspired by their original role. It's in a three-state test in Indiana, Kentucky, Ohio that's outperforming our expectations and our partner at Texas Roadhouse. So we look forward to sitting down with them and then planning the launch thereafter. But that item in particular really opens up a whole new category for us to play in.

Speaker Change: But their roles are really a special item that consumers really like we've come up with an item. That's inspired by their original role. It's an of three state testing, Indiana, Kentucky and Ohio.

Speaker Change: Thats outperforming our expectations and our and our partner at Texas Roadhouse.

Dave Susinski: Yeah, retail was pretty much right on it. I mean, if you looked at their consumption data through the period was very consistent with what we expected. I mean, and the things that shifted really didn't add up to a point where they materially impacted things. We did have one promotion with the retailers slipped from the NQ4 and the Q1, but I don't think it made a material difference in the grand scheme of things.

Speaker Change: So we look forward to sitting down with them and planning the launch thereafter, but that item in particular really opens up a whole new category for us to play in and.

Dave Susinski: We're excited for that, where that can go. You know, more broadly, we do continue to have conversations with other people. We'll be in a position to update you guys once we have more. But maybe what I'm not excited to talk about is you're precisely right. If you go back over the last two years, we've gone live on ERP. We finished all of our waves. We laughed the last, we're going to laugh the last wave, our fifth wave in September. So ERP, as Tom mentioned, completely drawn down. Horse Cave is up and running. You look at our cash balances for the end of the quarter.

Speaker Change: We're excited for that where that can go more broadly we do continue to have conversations with other people.

Speaker Change: We'll be in a position to update you guys. Once we have more than maybe what I'm really excited to talk about is you're precisely right. If you go back over the last two years, we've gone live on ERP. We finished all of our waves. We lapped the last what we're going to lap the last wave our fifth wave in September So ERP is as Tom mentioned.

Dave Susinski: So, you know, that business, the data, as you know, is very rich that we get on the consumer side. We get a weekly and we're able to use that forecast and model what we think our retailers have in terms of their inventory. On the food service side, the data isn't quite as rich and it's not quite as timely, so it's hard for us to model out some of that. That's probably the difference, but in both cases, if you look at retail there was a range, I said 14 new items that we went out with and they're all performing generally in line with our expectations. Okay, great.

Speaker Change: Tom?

Speaker Change: Lately drawn down horse cave is up and running.

You look at our cash balances for the end of the quarter. There continue to build this business generates has the ability to generate a lot of cash.

Dave Susinski: They're continued to build. This business generates, has the ability to generate a lot of cash.

Dave Susinski: And I think we're in a position now to lift and shift our focus and start to look at that sorts of inorganic growth. And you can expect to hear more from us on that as we progress through this year because we feel like we have the team. We have that strong balance sheet. We have an asset to allow us to produce with focus scale that will allow us to compete against even the mega caps within narrow categories like sauces and dressings.

Speaker Change: And I think we're in a position now to lift and shift our focus and start to look at that sort of have been organic growth.

Dave Susinski: So, maybe just a close big picture. Just maybe an update on the food service or excuse me, the licensing pipeline, how that has evolved. Obviously, you're picking up incremental business from existing customers i.e. Texas Roadhouse. Just curious how the pipeline is shaping up underneath that given the pressures. Are we seeing an increase in in bounds with food service trends performing as they are, and then maybe also the M&A landscape as it feels like we're getting closer to kind of being in a position that you aspire to get to to go out and make acquisitions, just maybe what that pipe.

Speaker Change: <unk>.

You can expect to hear more from us on that as we progress through this year, because we feel like we have the team we have that strong balance sheet. We have assets that will allow us to produce with focus scale that will allow us to compete against even the mega caps within narrow categories like sauces and dressings.

Speaker Change: And three, to expand our core with focused M&A and strategic licensing.

Dave Susinski: Blind looks like. And I'll leave it there. Thank you. Sure. Of course, maybe starting with the licensing pipeline, we'll talk about the items that we went out with most recently that were drilled with the performance of Chick-fil-A dressings. I think I mentioned that the Avocado Lime dressing in particular, that single skew has become the second best performing skew in the entire set inside of one year. If you look at the run rate on that business, it's also become quite substantial.

Dave Susinski: And we're looking forward to that next chapter of our group.

Speaker Change: And we're looking forward to that next chapter of our growth.

Speaker Change: Thank you.

Speaker Change: Thanks, Dave.

Connor Rattigan: Your next question comes from Connor Rattigan with Consumer Edge.

Speaker Change: This quarter, the company delivered both volume and gross profit growth despite the impacts, of the product line discontinuations we announced last quarter.

Speaker Change: The exit of the flat-out angelic businesses accounted for an additional 110 basis point, decline.

Speaker Change: Your next question comes from Conor Rattigan with consumer edge. Your line is now open.

Speaker Change: Fourth quarter consolidated net sales decreased by 40 basis points to $452.8 million. Decomposing the revenue performance, deflationary pricing in our food service segment drove, an approximate 210 basis point decline.

Connor Rattigan: Your line is open.

Speaker Change: These two drivers were offset by favorable volume mix of 280 basis points. Consolidated gross profit increased by $4.4 million or 4.8% versus the prior year quarter to $97.6 million. Gross margins expanded by 110 basis points to 21.6%. The gross profit growth was primarily driven by the company's cost-saving initiatives and increased volumes. Commodity costs were deflationary versus the prior year but remained elevated versus historical levels.

Connor Rattigan: Hey guys, good morning. Thanks for the question. Good morning, Connor. Yeah, so in the data that we see, it looks like Chick-fil-A friends are really starting to soften as I get from some tough comps or laps.

Conor Rattigan: Selling, general, and administrative expenses decreased 6.2% or $3.5 million to $53.2 million. The decrease reflects reduced expenditures for Project Ascent RERP initiative. Costs related to the project continued to wind down, totaling $500,000 in the current year quarter versus $5.6 million in the prior year quarter.

Conor Rattigan: Hey, guys. Good morning, Thanks for the question.

Conor Rattigan: Consumer spending was also lower in the quarter.

Conor Rattigan: These decreases were offset by higher personnel and IT investments.

Conor Rattigan: As we previously shared, the company chose to exit the flat-out and angelic product lines and our fiscal third quarter ended March 31st. In our fiscal fourth quarter, we recorded restructuring impairment charges of $2.7 million related to these exits as we sold or disposed of the property and equipment associated with these product lines.

Conor Rattigan: Good morning.

Speaker Change: We do not anticipate any additional related charges going forward. In the prior year quarter, we recorded $25 million of impairment charges related to the now discontinued flat-out product line. Consolidated operating income increased $30.2 million as restructuring impairment charges declined $22.2 million. The remaining $8 million increase was driven by the higher gross profit and lower SG&A costs I mentioned.

Speaker Change: Yes, so in the data that we see.

<unk> trends are really starting to soften.

Speaker Change: In fiscal year 2025, we anticipate retail segment sales will continue to benefit from volume growth led by our licensing program, including increased sales from the 14 new products, flavors, and sizes that we introduced in fiscal year 2024. In addition, we anticipate continued sales momentum for New York bakery frozen garlic bread products, along with volume growth for our Marsetti refrigerator dressing. Future growth potential for the New York bakery frozen garlic bread lineup includes new and delicious gluten-free garlic bread products that will begin shipping to retailers early next month.

Speaker Change: Some tough comps are lapped so.

Dave Susinski: So as we look ahead to fiscal 2025, do you guys still expect Chick-fil-A to be the primary retail sales driver or easy explication sort of that a lot of that license growth comes from other licenses with Chick-fil-A, something like taking the back seat, the time being despite the new products coming. No, you're right. When you look at a particularly towards the end of the fourth quarter, we had a lot of promotional activity last year that didn't necessarily repeat this year. We also had the launch of dressings, which has provided an overall source of growth for the proposition.

Speaker Change: As we look ahead to fiscal 2025 do you guys still expect chicken slated to be the primary retail sales driver at work is the expectation of sort of at a lot of that license growth comes from other licenses with checkpoint when we're taking a backseat at the time being despite the new products coming.

Speaker Change: No Youre right when you look at it particularly towards the end of the fourth quarter. We had a lot of promotional activity last year that didn't necessarily repeat this year and we also had the launch of dressings, which has provided an overall source of growth for the proposition. If you look at the business, we expect it to continue to grow.

Dave Susinski: Swinging around to Subway, Subway I would say is outperformed our expectations. And we've even been surprised with the strength of the brand in Canada, where it's been a little bit of an upside on it. So we're excited about that proposition and they're a great partner to work with. If you look at what's happening on Buffalo Wild Wings and all of the gardens, there continues to be a lot of activity and discussions with those partners, with Buffalo Wild Wings, you'll recall, not only have we been driving sauces, but we did a test.

Dave Susinski: If you look at the business, we expected to continue to grow as we press forward, you know, behind support as we look to drive households.

Speaker Change: As we press forward behind support as we look to drive households.

Connor Rattigan: But I think what we're more excited to share is we do have a range of new product activity that we're going to come out with probably in November and talk to you guys about there that will continue to fuel growth growth on the brand more in the back half. Got it makes sense. And so also, so I guess we'll say adjusted retail volume. So X the business like this, where we're pretty solid this quarter.

Speaker Change: But I think what we're more excited to shares we do have a range of new product activity that we're going to come out with probably in November and talk to you guys about there that will continue to fuel growth growth on the brand.

Speaker Change: More in the back half.

Dave Susinski: It was a single rotation at Costco last year with dips that perform well. And we're looking forward to working with them to expand that. We'll have more news on that later in the year. With respect to Chick-fil-A, the big news was coming out with dressings. We're working with them on a spring launch of new items that we're going to be excited to share with you once we're in a position to do that.

Speaker Change: Got it makes sense and so also.

Speaker Change: So I guess, we'll say adjusted retail volume.

Speaker Change: I think thats, where were pretty solid this quarter. So.

Dave Susinski: So I mean, I guess I was just trying to wondering, do you guys maybe give us a sense of just sort of how incremental Subway and Texas Roadhouse word this quarter and sort of how they perform versus your expectations. So because in the data that we see, right the list has been pretty modest, but it sounds like that should be, I guess, much stronger in just 2025. I'm not mistaken. But when we look at it on scanner data for some way, you know, some kind of data, it was about $5 million within the quarter. And it's built throughout the quarter as we continue to build that distribution.

Speaker Change: Yes that was just kind of wondering could you maybe give us a sense of just sort of how incremental subway and Texas Roadhouse, where this quarter and sort of how they performed versus your expectation. So because then the data that we see right. The lift has been pretty modest but it sounds like that should be I guess much stronger in fiscal 2025, I'm not mistaken.

Speaker Change: Finally, we're excited to share that our partnership with Texas Roadhouse has expanded beyond stakes offices to include their popular roles, which we introduced in a three-state regional pilot test in June. So far, the results are very encouraging.

Dave Susinski: I think the news that we were particularly excited to see was expanding this partnership with Texas Roadhouse, which is just a really strong restaurant concept and a perennial grower. We've been pleased with the performance of the sauces. They play in a small category and we love our entry there. But their roles are really a special item that consumers really like. We've come up with an item that's inspired by their original role.

Speaker Change: Well when we look at it on scanner data for <unk>.

Speaker Change: In the food service segment, we expect sales volume to be led by growth from select QSR customers and our mix of national chain restaurant accounts.

Speaker Change: As our culinary team continues to support our food service partners with a wide range of innovation initiatives and craveable flavors to help them drive menu excitement and ultimately traffic growth.

Speaker Change: If I have.

Speaker Change: <unk> data it was about $5 million.

Speaker Change: Good quarter.

Speaker Change: Built throughout the quarter as we continue to build that distribution. If you look at Texas Roadhouse.

Dave Susinski: It's in a three-state test in Indiana, Kentucky, Ohio that's outperforming our expectations and our partner at Texas Roadhouse. So we look forward to sitting down with them and then planning the launch thereafter. But that item in particular really opens up a whole new category for us to play in. We're excited for that where that can go. You know more broadly, we do continue to have conversations with other people. We'll be in a position to update you guys once we have more.

Dave Susinski: If you look at Texas Roadhouse, it was a little bit more than a million. And again, just building as we went through the period. Hopefully, that helps you. You put the two together; the percentage of net sales on those two items is roughly 3%.

Speaker Change: Little bit more than $1 million and again just building as we went through the period.

Speaker Change: Hopefully that helps you put the two together the percentage of net sales on those two items is roughly 3%.

Speaker Change: Like most of you, we continue to carefully monitor external factors, including US economic performance and consumers financial health.

Connor Rattigan: Thank you.

Speaker Change: Thank you.

Robert Dickerson: Your next question comes from the line of Robert Dickerson with Jeffries.

Speaker Change #100: Your next question comes from the line of Robert Dickerson with Jefferies. Your line is now open.

Speaker Change #100: Our tax rate for the quarter was 20.5%.

Dave Susinski: But maybe what I'm not excited to talk about is you're precisely right. If you go back over the last two years, we've gone live on ERP. We finished all of our waves. We laughed the last, we're going to laugh the last wave, our fifth wave in September. So ERP, as Tom mentioned, completely drawn down. Horse Cave is up and running. You look at our cash balances for the end of the quarter.

Robert Dickerson: Your line is not open. Great. Thanks so much. It's had a couple of questions on the price investment. I know there was deflationary dynamics in place, I guess, in Q4. The price investment did seem a little bit more than I think kind of the market expected. So maybe if you could just one just provide some color. You know, I know, but it's like I heard a lot about LCOs and you know, partnerships and kind of, you know, ancillary plan. in place in case certain, you know, dynamics play out to the year, but I'm kind of curious.

Speaker Change #100: We estimate our fiscal 25 tax rate to be 23%.

Speaker Change #100: Fourth quarter diluted earnings per share increased $0.93 to $1.26. The reduced restructuring impairment charges drove a $0.62 benefit. The reduction in project ascent costs drove a $0.15 increase in EPS.

Speaker Change #100: Turning now to a recap of the full-year results, overall the company was able to deliver on its commitments. Reported net sales grew 2.7% with both segments contributing. Gross profit increased by 11.3%, driven by the net sales growth, and 180 basis points of margin expansion from favorable pricing net of commodities and cost savings programs.

Speaker Change #100: The remaining $0.16 of EPS growth was driven by the underlying performance of the business.

Speaker Change #100: SG&A declined by 1.8% as spending for the successful ERP initiative Project Ascent wound down as the year progressed.

Speaker Change #100: I'll now turn it back over to Dave for his closing remarks.

Great. Thanks, so much.

Speaker Change #100: With regard to capital expenditures, our full-year payments for property additions totaled $67.6 million. For fiscal 25, our forecasted total capital expenditures are estimated to be between $70 and $80 million. This forecast reflects a continued investment in our facilities to strengthen our infrastructure and support cost savings and growth initiatives.

Speaker Change #100: Operating income grew by 40.9%, 7.1% points was driven by reduced restructuring and impairment costs, and the remaining 33.8% points was driven by the underlying performance of the business.

Speaker Change #100: Thank you.

Robert Dickerson: In addition to investing in our business, we also return funds to shareholders. Our quarterly cash dividend of $0.90 per share paid on June 28 represented a 6% increase from the prior year's amount. Our enduring streak of annual dividend increases stands at 61 years.

Robert Dickerson: Four-year operating cash flow increased $25.6 million.

Robert Dickerson: We finished the year with a debt-free balance sheet and $163.4 million in cash.

Robert Dickerson: I just have a couple of questions on the on the price investment.

Robert Dickerson: To wrap up my commentary, the company's fourth quarter and four-year results reflected continued execution against our key strategies resulting in strong financial returns.

Speaker Change #102: I know there was deflationary.

Speaker Change #102: Thanks, Tom.

Robert Dickerson: As we look ahead, Lancaster Colony will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan.

Robert Dickerson: No.

Speaker Change #103: Dynamics in place I guess in Q4.

The price investment did seem a little bit more than I think kind of the market expected. So maybe if you could just one.

Dave Susinski: They're continued to build. This business generates, has the ability to generate a lot of cash. And I think we're in a position now to lift and shift our focus and start to look at that sorts of inorganic growth. And you can expect to hear more from us on that as we progress through this year because we feel like we have the team. We have that strong balance sheet. We have an asset to allow us to produce with focus scale that will allow us to compete against even the the mega caps within narrow categories like sauces and dressings. And we're looking forward to that next chapter of our group. Thank you.

Speaker Change #103: To one, accelerate core business growth.

Speaker Change #104: Just provide some color.

Speaker Change #104: <unk> heard a lot about <unk>.

Speaker Change #104: Partnerships and kind of.

Ancillary plans in place.

Speaker Change #104: Two, to simplify our supply chain to reduce costs and grow our margins.

Speaker Change #106: Suffice it to say, there are a wide range of factors which could influence demand in both our retail and food service segments during fiscal year 2025.

Speaker Change #106: And three, to expand our core with focused M&A and strategic licensing.

Speaker Change #106: In fiscal year 2025, we anticipate retail segment sales will continue to benefit from volume growth led by our licensing program, including increased sales from the 14 new products, flavors, and sizes that we introduced in fiscal year 2024. In addition, we anticipate continued sales momentum for New York bakery frozen garlic bread products, along with volume growth for our marzetti refrigerated dressings. Future growth potential for the New York bakery frozen garlic bread lineup includes new and delicious gluten-free garlic bread products that will begin shipping to retailers early next month.

Speaker Change #106: Certain dynamics play out through the year, but I'm kind of curious I guess one.

Speaker Change #106: Finally, we are excited to share that our partnership with Texas Roadhouse has expanded beyond steak sauces to include their popular rolls, which we introduced in a three-state regional pilot test in June. So far, the results are very encouraging.

Speaker Change #106: In the food service segment, we expect sales volume to be led by growth from select QSR customers in our mix of national chain restaurant accounts.

Speaker Change #106: As our culinary team continues to support our food service partners with a wide range of innovation initiatives and craveable flavors to help them drive menu excitement and ultimately traffic growth.

Robert Dickerson: I guess one is just, you know, as we think through just like the first two quarters of the year. Like, does that year pricing investment kind of go way, or we seem like we're, we're kind of still in that pocket. That's the first question.

Speaker Change #106: Like most of you, we continue to carefully monitor external factors, including U.S. economic performance and consumers' financial health.

Speaker Change #106: Just as we think through just like the first two quarters of the year like does that year over year.

Speaker Change #106: Pricing investment kind of go away or it seems like.

Speaker Change #106: Kind of still in that pocket. So that's the first question and then the second piece was just.

Speaker Change #106: Our team has contingency plans in place to respond to a range of these scenarios.

Tom Pigott: And then the second piece was just on the food service margin. Thank you for clearly that well than it normally is. I'm just trying to gauge against we think through, let's say, the first half of the year. You know, is that dynamic there, or did I hear you kind of say there was it was Q4 specific, kind of given the pricing and the commodities, but somehow that changes as we get through the early part of the year. Thanks. Yeah, it's, it really, as I mentioned, was kind of a timing issue in Q4 as commodities come down.

Speaker Change #107: On the foodservice margin in Q4, clearly that's lower than it normally is so I'm just trying to gauge I guess, we think through let's say the first half of the year.

Speaker Change #107: With respect to input cost, in the aggregate, we do not foresee significant impact from commodity cost inflation or deflation. We expect our cost savings program to be the primary driver behind margin improvement opportunities in the coming year, with cost savings momentum building throughout the year.

Speaker Change #107: Before I close, I would like to extend a special shout out to Steve Hill, our Chief Research Development and Quality Officer, and our entire R&D team for their recent recognition by Food Processing Magazine as the R&D Team of the Year.

Speaker Change #107: This award is a testament to their ability to create craveable products in superior value through a unique blend of culinary inspiration and product innovation.

Speaker Change #108: They are a very big part of what makes us the better food company.

Connor Rattigan: Your next question comes from Connor Rattigan with Consumer Edge. Your line is open. Hey guys, good morning. Thanks for the question. Good morning, Connor. Yeah, so in the data that we see, it looks like Chick-fil-A friends are really starting to soften as I get from some tough comps or laps.

Speaker Change #108: Is that dynamic there or did I hear you kind of say there was it was Q4 specific kind of given the pricing and the commodities, but somehow that changes as we get through the early part of the year.

Yes.

Speaker Change #109: It really.

As I mentioned was kind of a timing issue in Q4 as commodities come down our prices are coming down and.

Speaker Change #108: Suffice it to say, there are a wide range of factors which could influence demand in both our retail and food service segments during fiscal year 2025.

Speaker Change: Suffice it to say, there are a wide range of factors which could influence demand in both our retail and food service segments during fiscal year 2025.

Tom Pigott: Our prices are coming down, and as such, it hit more significantly in Q4 than in the earlier quarters, as you mentioned. Going forward, we do expect to be more neutral. Now turning to the food service profitability. This particular quarter peanut was negative, as I mentioned. In addition, we had some incremental outsourcing that impacted the margins, and we were making some supply chain investments to improve performance. So, you know, going forward in terms of the plans to improve, we definitely expect to improve efficiencies on this business. We're going to get more benefits from SAP understanding our costs and driving for better margin performance.

Speaker Change #110: As such it hit.

Speaker Change #111: More significantly in Q4 than in the earlier quarters as you mentioned.

Speaker Change #111: Going forward, we do expect it to be more neutral net now turning to the foodservice profitability.

Speaker Change #108: Our team has contingency plans in place to respond to a range of these scenarios.

Speaker Change #111: This concludes our prepared remarks for today, and we'd be happy to take any questions that you might have.

Speaker Change #111: This particular quarter <unk> was negative as I mentioned in addition, we had some incremental outsourcing that impacted the margins and and we were making some supply chain investments to improve performance.

Dave Susinski: We also had the launch of dressings, which is provided an overall source of growth for the proposition. If you look at the business, we expected to continue to grow as we press forward, you know, behind support as we look to drive households. But I think what we're more excited to share is we do have a range of new product activity that we're going to come out with probably in November and talk to you guys about there that will continue to fuel growth growth on the brand more in the back half. Got it makes sense. And so also so I guess we'll say adjusted retail volume. So X the business like this, where we're pretty solid this quarter.

So.

Speaker Change #111: <unk> forward.

Speaker Change #111: In terms of the plants to improve we definitely expect to improve efficiencies on this business, we're going to get more benefits from SAP understanding our cost and driving for for better margin performance, we expect to reduce outsourcing.

Tom Pigott: We expect to reduce outsourcing, and we're also looking at some ways to optimize the network to improve the profitability. We expect that, as I mentioned, kind of overall, a lot of those programs to be more back end loaded and front end loaded, but we still feel like we've got a lot of opportunity, a lot of runway to improve the margins. Okay, fair enough.

Speaker Change #111: And we're also looking at some ways to optimize the network to improve the profitability.

Speaker Change #111: We expect as I mentioned kind of overall a lot of those programs to be more backend loaded than front end loaded, but we still.

Dave Susinski: So I mean, I guess I was just trying to wondering, do you guys maybe give us a sense of just sort of how incremental subway and Texas Roadhouse word this quarter and sort of how they perform versus your expectations. So because in the data that we see right the list has been pretty modest, but it sounds like that should be, I guess, much stronger in just 2025. I'm not mistaken. But when we look at it on scanner data for some way, you know, some kind of data, it was about $5 million within the quarter.

Speaker Change #111: We still feel like we've got a lot of opportunity a lot of runway to improve the margins.

Speaker Change #112: Okay fair enough.

Robert Dickerson: And then I guess just secondly. You know, in the retail segment, volumes that could leave a flat. You know, I'm hearing definitely a lot of positive comments around certain brands and certain products. And then I'm also hearing, you know, there should be some incremental products as it sounds like as we kind of get through fiscal 25.

Speaker Change #113: And then I guess just secondly.

Speaker Change #114: In the retail segment volumes are I believe were flat.

Speaker Change #113:

Speaker Change #115: Im hearing definitely a lot of positive comments.

Speaker Change #116: Certain brands and certain products.

Speaker Change #116: And then I'm also hearing there should be some incremental product says sounds like as we kind of get through fiscal 'twenty five.

Dave Susinski: And it's built throughout the quarter as we continue to build that distribution. If you look at Texas Roadhouse, it was a little bit more than a million. And again, just building as we went through the period. Hopefully that helps you. You put the two together, the percentage of net sales on those two items is roughly 3%.

Dave Susinski: We're there areas though that maybe didn't do so well that you're kind of letting us say not do so well. Right. So for thinking about kind of where the target investment is, one of the real drivers that grows is we think through even the first half of 25. You know, are there areas where there's a little bit of an offset, or maybe you're okay, you know, you're actually okay with that because you're running it for profitability, et cetera.

Speaker Change #117: Were there areas, though.

Speaker Change #117: Then maybe didn't do so well.

Speaker Change #117: That you're kind of letting let's say not do so well right. So for thinking about kind of where the targeted investment is what are the real drivers of growth as we think through even the first half of 'twenty five.

Speaker Change #117: Are there areas, where theres, a little bit of an offset but maybe you're okay.

Speaker Change #118: Youre actually okay with that because you are running it for profitability et cetera, that's all thanks.

Dave Susinski: That's all, thanks. Yeah, so it's a great question, Rob, and when you look at the business, you know, I don't think that there are any areas necessarily where we're over distorting our investments because we think there's outsized leverage. Having said that, they're areas of the portfolio where we think that we continue to watch. We've made a series of changes in Sister Schubert, as you recall. We downsized the role. They used to be a one and a half ounces. We took them down to one and a quarter that moved them in line with the peer group.

Speaker Change #118: Yeah.

Speaker Change #118: So it's a great question Robin.

Robert Dickerson: Thank you. Your next question comes from the line of Robert Dickerson with Jeffries. Your line is not open.

Speaker Change #119: When you look at the business.

Speaker Change #120: Don't think that there are any areas necessarily where we're over distorting our investments because we think there is outsized leverage.

Robert Dickerson: Great. Thanks so much. It's had a couple of questions on the price investment. I know there was deflationary dynamics in place, I guess, in Q4. The price investment did seem a little bit more than I think kind of the market expected. So maybe if you could just one just provide some color. You know, I know, but it's like I heard a lot about LCOs and you know, partnerships and kind of, you know, ancillary plan, in place in case certain, you know, dynamics play out to the year, but I'm kind of curious.

Speaker Change #121: Having said that there are areas of the portfolio, where we think that.

Speaker Change #111: With respect to input cost, in the aggregate, we do not foresee significant impact from commodity cost inflation or deflation. We expect our cost savings program to be the primary driver behind March and improvement opportunities in the coming year, with cost savings momentum building throughout the year.

Speaker Change #108: With respect to input cost, in the aggregate, we do not foresee significant impact from commodity cost inflation or deflation. We expect our cost savings program to be the primary driver behind March and improvement opportunities in the coming year, with cost savings momentum building throughout the year.

Speaker Change #121: We continue to watch.

Speaker Change #122: We've made a series of changes in sister Schubert.

Speaker Change #111: Before I close, I would like to extend a special shout out to Steve Hill, our chief research development and quality officer and our entire R&D team for their recent recognition by food processing magazine as the R&D team of the year. This award is a testament to their ability to create craveable products and superior value through a unique blend of culinary inspiration and product innovation.

Speaker Change #122: As you recall, we downsized the role they used to be.

Speaker Change #111: They're a very big part of what makes us the better food company.

Speaker Change #122: One and a half ounce since we took them down to one and a quarter that moved them in line with the peer group.

Speaker Change #111: This concludes our prepared remarks for today and we'd be happy to take any questions that you might have.

Dave Susinski: And so when you look at volume growth and pound, you're going to see that diminution that's in there. You know, we've seen that come out, but we're also watching units in that particular category. And our units are probably a little softer than we would like them to be. So we're keeping a careful eye on that category. Are there categories like croutons, which we have a greater level of exposure to with private label that were that to become soft? We would probably be pretty careful about over investing and things like that. The areas where I think you can expect us to watch most carefully because of the margin and the size of the business would be, you know, Olive Garden, for example.

Speaker Change #122: And so when you look at volume growth in pound youre going to see that diminution thats in there we've seen that come out, but we're also watching units in that particular category and our units are probably a little softer than we would like them to be so we're keeping a careful eye on on that category. There are categories like coupons, which we have a great.

Speaker Change #111: Operating.

Speaker Change #111: Thank you.

Robert Dickerson: I guess one is just, you know, as we think through just like the first two quarters of the year. Like, does that year pricing investment kind of go way or we seem like we're, we're kind of still in that pocket. That's the first question.

Speaker Change #111: At this time, I would like to remind everyone in order to ask a question, please press star one on your telephone keypad.

Speaker Change #122: Our level of exposure to with private label that were that to become soft.

Speaker Change #111: Your first question comes from Jim Salera of Stevens.

Speaker Change #111: Your line is now open.

Tom Pigott: And then the second piece was just on the food service margin. Thank you for clearly that well than it normally is. I'm just trying to gauge against we think through let's say the first half of the year, you know, is that dynamic there or did I hear you kind of say there was it was Q4 specific kind of given the pricing and the commodities but somehow that changes as we get through the early part of the year.

Speaker Change #122: Would probably be pretty careful about over investing and things like that the areas, where I think you can expect us to watch most carefully because of the margin and the size of the business would be.

Speaker Change #111: Hi, this is Tyler Browse on for Jim.

Speaker Change #111: Thanks for taking our question.

Olive Garden for example, it's a very big brand.

Dave Susinski: It's a very big brand, and we watch our price points; there will shop or activity carefully. Another one would be Texas toast. It's our single biggest brand in our portfolio, own brand. And it's one where we know that the category has a pretty well-developed private label entrance. So that's one where we watch. We're continuing to do well in the category, but that's one that should we see softness. We would be prepared to invest against it. And if you look at our licensed businesses, generally they held up better than a lot of other brands because we're so unique in the space.

Speaker Change #122: And we watch our price points, there with shopper activity carefully another one would be Texas toast fits our single biggest brand in our portfolio owned brand and it's one where we note that the category.

Tom Pigott: Thanks. Yeah, it's it really as I mentioned was kind of a timing issue in Q4 as commodities come down. Our prices are coming down and as such, it hit more significantly in Q4 than in the earlier quarters, as you mentioned. Going forward, we do expect to be more neutral now turning to the food service profitability. This particular quarter peanut was negative as I mentioned. In addition, we had some incremental outsourcing that impacted the margins and we were making some supply chain investments to improve performance.

Speaker Change #122: It has a pretty well developed private label entrant. So that's one where we're we watch we're continuing to do.

Speaker Change #122: Well in the category, but that's one that should we see softness we would be prepared to invest against it.

Speaker Change #122: And if you look at our licensed businesses generally they held up better than than a lot of other brands because they are so unique in the space and we haven't felt the need necessarily to go in and discount really.

Speaker Change #111: Thinking about the food service segment, most companies in the recent calendar to Q period called out a cautious outlook for demand in the back half of the year.

Dave Susinski: And we haven't felt the need necessarily to go in and discount. Really, that one exception there has been Olive Garden that I mentioned, where we focused on that 16 ounce skew. But your instincts are right. I would look at what underlies this whole thing. I think broadly is that consumers are in the midst of really a sustained, unrelenting squeeze. That affects 60% of households, including households making over a hundred thousand bucks, where, after years of inflation that exceeded wage growth, they found themselves upside down. And they bridged it initially with COVID savings. And once those were expended, they turned the credit cards.

Speaker Change #122: The one exception there has been olive garden that I mentioned, where we focused on that 16 ounce SKU.

Speaker Change #122: But your instincts are right I mean look at what underlies. This whole thing I think broadly is that consumers are in the midst of really up sustained unrelenting squeeze.

Tom Pigott: So, you know, going forward in terms of the plans to improve, we definitely expect to improve efficiencies on this business. We're going to get more benefits from SAP understanding our costs and driving for better margin performance. We expect to reduce outsourcing and we're also looking at some ways to optimize the network to improve the profitability. We expect that, as I mentioned, kind of overall, a lot of those programs to be more back end loaded and front end loaded, but we still we still feel like we've got a lot of opportunity, a lot of runway to improve the margins.

Speaker Change #123: And that effects.

Speaker Change #123: 60% of households, including households, making over 100000 Bucks, where after years of inflation that exceeded wage growth. They found themselves upside down and they bridge did initially with Covid savings and once those were extended they turned to credit cards, but we know credit card debt has grown now on average to about 6000 Bucks.

Dave Susinski: But we know credit card debt has grown now, on average, about 6,000 bucks. And the interest payment on that per month is about 200 bucks. And you put that all together. And I think consumers now are really trimming their sale and trying to balance their sources and uses. And they're looking for value. But again, they're also looking for affordable luxury and small things to make their days go better. So, our own view internally here, Rob, is that we think that we're going to be in this environment for some time. And nothing magically is going to fix it.

Speaker Change #123: The interest payment on that per month is about 200 Bucks and you put that all together and I think consumers now are really trimming their sales and trying to balance their sources and uses and.

Speaker Change #123: And they're looking for value, but again Theyre also looking for affordable luxury and small things to make their days go better so.

Dave Susinski: Okay, fair enough. And then I guess just secondly. You know, in the retail segment, volumes that could leave a flat, you know, I'm hearing definitely a lot of positive comments around certain brands and certain products. And then I'm also hearing, you know, there should be some incremental products as it sounds like as we kind of get through fiscal 25. We're there areas though that maybe didn't do so well that you're kind of letting us say not do so well.

Speaker Change #111: That said, there's been some bright spots in the industry, concepts like Chick-fil-A, Cain's and Wingstop who continue to benefit from this chicken megatrend.

Speaker Change #123: Our own view internally here, Rob is that we think that we're going to be in this environment for some time and nothing magically, it's going to fix it. So it's kind of a combination of watch value, but we're not going to win on value and then let's leverage our innovation as a means by which to continue to bring good items into the marketplace at the right price point that allow us to outperform the peers over the long.

Dave Susinski: So it's kind of a combination of watch value, but we're not going to win on value. And then let's leverage our innovation as a means by which to continue to bring good items into the marketplace at the right price point, that allow us to outperform the peers over the long haul. And it just feels like an appropriate strategy in this environment.

Speaker Change #111: As we look to your fiscal 25, can you give us some color on what you expect from QSR?

Speaker Change #123: Long haul and.

Speaker Change #111: And then additionally, in your prepared remarks, you made a comment around food service volume being led by select QSRs.

Speaker Change #123: And it just feels like an appropriate strategy in this environment.

Robert Dickerson: Makes complete sense. I really appreciate it.

Rob: It makes complete sense I really appreciate it. Thank you so much.

Operator: Thank you so much. Of course, thanks, Rob. Rob.

Speaker Change #111: Any detail around who this select be might be?

Dave Susinski: Right. So for thinking about kind of where the target investment is, one of the real drivers that grows is we think through even the first half of 25. You know, are there areas where there's a little bit of an offset or maybe you're okay, you know, you're actually okay with that because you're running it for profitability, et cetera.

Speaker Change #111: Yeah, sure, Tyler.

Robert Dickerson: Thanks Robert.

Operator: Thank you.

Rob: Q.

Operator: As a reminder, to ask a question, please press star one one on your telephone keypad.

Rob: Operator?

As a reminder to ask a question. Please press star one on your telephone keypad.

Rob: This is Dave.

Speaker Change #111: This is Dave.

Todd Brooks: Your next question is from Todd Brooks of the Benchmark Company.

Speaker Change #125: Your next question is from Todd Brooks of the Benchmark Company. Your line is now open.

Todd Brooks: You don't want to sell open. Hey, thanks.

Todd Brooks: Alright. Thanks.

Todd Brooks: Good morning. Thanks for taking my questions. One just start on the gross mark. Good morning. One start on the gross margin side. And the way that I'm kind of reading the discussion as far as what we're thinking for fiscal 25 is kind of hold the hill on the product margin components of the business and then task cost saves to generate an improvement and margin rate. But I want to see if we could talk through if that's the right read or is it more cost saves offset a chunk of potentially pressure on product margins. And the incremental cost saves are what can allow for some modest gross margin improvement 25.

Todd Brooks: Thank you.

Todd Brooks: Thanks for taking my questions I wanted to ask on our gross margin.

Todd Brooks: At this time, I would like to remind everyone, in order to ask a question, please press star 11 on your telephone keypad.

Todd Brooks: Happy to answer your question.

Rob: Happy to answer your question.

Dave Susinski: That's all thanks. Yeah, so it's a great question Rob and when you look at the business, you know, I don't think that there are any areas necessarily where we're over distorting our investments because we think there's outsized leverage. Having said that, they're areas of the portfolio where we think that we continue to watch. We've made a series of changes in Sister Schubert, as you recall, we downsize the role. They used to be a one and a half ounces.

Speaker Change #127: Good morning.

Todd Brooks: Wanted to start on the gross margin side.

Speaker Change #128: The way that I'm kind of reading the discussion as far as what we're thinking for fiscal 'twenty five.

Speaker Change #128: Hold the Hell, along the product margin components of the business.

Todd Brooks: Maybe starting first with where we finished in the quarter, we were pleased to continue to deliver volume metric growth in the quarter, but it was actually slightly below our expectations.

Speaker Change #129: And then cask cost saves to generate an improvement in margin rate, but wanted to see if we could talk through if that's the right read or is it more cost saves offset a chunk of.

Dave Susinski: We took them down to one and a quarter that moved them in line with the peer group. And so when you look at volume growth and pound, you're going to see that diminution that's in there. You know, we've seen that come out, but we're also watching units in that particular category. And our units are probably a little softer than we would like them to be. So we're keeping a careful eye on that category.

Speaker Change #129: Potentially pressure on product margins.

Speaker Change #130: And the incremental cost saves and what could allow for some modest gross margin improvement.

Dave Susinski: Yeah, well, if you'll allow me, maybe I'll start and turn it to Tom, and I'll start with the big picture. If you look at the drivers of margins, maybe I'd start with commodities. And what we've seen is a strong growing season in the commodities that matter to us, which has brought down prices on things like wheat, corn, and soybean oil. On the flip side, though, we're watching commodities rise, particularly in eggs and dairy. Work eggs on earnabary recently have gone up to above $3.50. But you put all that together and packaging right now that puts us in a position where we're pretty much neutral in terms of the commodity outlook.

Speaker Change #130: Yes.

Speaker Change #130: Your first question comes from Jim Salera of Stevens.

Speaker Change #130: Youll allow maybe I'll start and then turn it to Tom I'll start with the Big picture.

Speaker Change #130: Your line is now open.

Tom Pigott: If you look at the drivers of margins, maybe ill start with commodities.

Dave Susinski: Are there categories like croutons, which we have a greater level of exposure to with private label that were that to become soft? We would probably be pretty careful about over investing and things like that. The areas where I think you can expect us to watch most carefully because of the margin and the size of the business would be, you know, all of garden, for example. It's a very big brand and we watch our price points there will shop or activity carefully.

Tom Pigott: And what we've seen is a strong growing season in the commodities that matter to us, which has brought down prices on things like wheat, and corn and soybean oil.

On the flip side, though we're watching commodities rise, particularly in eggs and dairy where Exxon earn a very recently have gone up to above $3 50.

Tom Pigott: But you put all of that together and packaging right now that puts us in a position where were pretty much neutral in terms of of the commodity outlook that means that it really doesn't give us a reason to have a conversation on pricing.

Dave Susinski: Another one would be Texas Toast. It's our single biggest brand in our portfolio, own brand. And it's one where we know that the category has a pretty well developed private label entrance. So that's one where we watch. We're continuing to do well in the category, but that's one that should we see softness. We would be prepared to invest against it. And if you look at our licensed businesses, generally they held up better than a lot of other brands because we're so unique in the space. And we haven't felt the need necessarily to go in and discount really that the one exception there has been all of garden that I mentioned, where we focused on that 16 ounce skew.

Dave Susinski: That means that we really doesn't give us a reason to have a conversation on pricing. So then you flip around and you say, OK, now, if that's true, you know, what needs to be true for us to drive margin improvement? It's probably not going to come from Revenue Management. It's going to come through execution and our plants. And given the commodity outlook, it's not deflation. It's really going to come through productivity improvements in the manufacturing environment and, to a lesser degree, in our logistics environment. But we're singularly focused, really, on the manufacturing side. And I'm sure with some of you on the call that we feel like there are continue to be opportunities to drive automation projects in our dough plants.

So then you flip around and you say, okay now if thats true.

Tom Pigott: What needs to be true for us to drive margin improvement, it's probably not going to come from revenue management, it's going to come through execution in our plants and given the commodity outlook, it's not deflation its really going to come through productivity improvements in the manufacturing environment and to a lesser degree in our.

Tom Pigott: Our logistics environment.

Tom Pigott: But we are singularly focused really on the manufacturing side and I've shared with some of you you on the call that we feel like there continue to be opportunities to drive automation projects in our Doe plants. We have a number of those that are in flight, they're going to be coming online with benefits as the year builds.

Speaker Change #130: We expected it to be stronger.

Todd Brooks: We expected it to be stronger.

Dave Susinski: But your instincts are right. I would look at what underlies this whole thing. I think broadly is that consumers are in the midst of really a sustained, unrelenting squeeze. That affects 60% of households, including households making over a hundred thousand bucks, where after years of inflation that exceeded wage growth, they found themselves upside down. And they bridged it initially with COVID savings. And once those were expended, they turned the credit cards.

Speaker Change #130: Like many of our peers, we saw it slow down in traffic that sort of evolved throughout the first half of the calendar year and in the quarter in particular offsetting that.

Tom Pigott: We have a number of those that are in flight that are going to be coming online with benefits as the year builds, which are great projects. But again, we think this is the sustained environment. Labor costs are moderating. We're not seeing the run-up we were seeing. Labor availability tends to be good. So now I think for us and everybody else in the space, it's just figuring out how do we hold our price points? How do we maintain value? And then how do we figure out how we excise the trap cost in our manufacturing environment? That's all, Paul.

Speaker Change #130: We have a whole range of activity that's in flight right now where we are developing and launching limited time offerings for customers.

Tom Pigott: Which are great projects, but again, we think this is the sustained environment labor costs are moderating we're not seeing the run up we were seeing labor availability tends to be good. So now I think for us and everybody else in the space. It's just figuring out how we hold our price points, how do we maintain value and then how do we.

Speaker Change #130: Many of those are out in the marketplace now.

Speaker Change #130: You're probably watching the advertising on TV without understanding or appreciating that it's us.

Speaker Change #130: So you put all that together sort of where we've been and are out looked for the go-forward period.

Dave Susinski: But we know credit card debt has grown now on average, about 6,000 bucks. And the interest payment on that per month is about 200 bucks. And you put that all together. And I think consumers now are really trimming their sale and trying to balance their sources and uses. And they're looking for value. But again, they're also looking for affordable luxury and small things to make their days go better. So, our own view internally here, Rob, is that we think that we're going to be in this environment for some time.

Tom Pigott: Figure out how we exercise that trap costs in our manufacturing environment.

Speaker Change #130: We continue to believe that we can deliver a low single-digit volume-led growth that will turn into sales growth in the fiscal year 25.

Tom Pigott: That's helpful. Thanks, Dave and then I know that you've talked about having the ERP.

Tom Pigott: Thanks, Dave. And then I know that you've talked about having the ERP project behind us here and being able to lever benefits of the data that you're now getting on both businesses. I guess if you look at historically, this has been part of the DNA for Lancaster, that cost extraction goal each year with these additional tools on top. And maybe the fact that it's been a hard environment to extract. Costs. Is there an annual goal that you share with us that you're tasking the team with, given the new tools going forward? Well, what I maybe what I'm prepared to share, what we're prepared to share with Todd is if you go back to the early days for a continuous improvement program before COVID.

Speaker Change #131: Project behind us here and being able to lever benefits of good data that youre not giving on both businesses I guess, if you look at.

Speaker Change #130: And if the overall outlook improves, there's opportunity for that low single-digit volume growth to become low-to-mid single-digit volume growth.

Speaker Change #132: And historically this has been part of the DNA for for Lancaster that cost extraction goal.

Speaker Change #130: Your second point was on this mega trend of chicken.

Dave Susinski: And nothing magically is going to fix it. So it's kind of a combination of watch value, but we're not going to win on value. And then let's leverage our innovation as a means by which to continue to bring good items into the marketplace at the right price point, that allow us to outperform the peers over the long haul. And it just feels like an appropriate strategy in this environment.

Speaker Change #133: Each year with these additional tools on top and maybe the fact that it's been a hard environment to extract.

Speaker Change #130: I couldn't agree more with you.

Operator: Makes complete sense. I really appreciate it. Thank you so much.

Speaker Change #130: That continues to be a big part of what's underlying the activity that we're being called on for innovation.

Speaker Change #134: Of course is there is there are annual goal that you could share with us your tasking the team with given the new tools going forward.

Speaker Change #134: Or what maybe what im prepared to share what we're prepared to share with you. Todd is if you go back to the early days of our continuous improvement program before Covid.

Speaker Change #130: So we believe that that's going to continue to hold true.

Speaker Change #130: If you look at the cost of chicken as a protein source, it continues to be cheaper than beef in the alternative.

Operator: Of course, thanks, Rob, Rob. Thank you.

Tom Pigott: And before ERP, we used to talk about saving $20 million a year. And then we suspended that as we focused on construction projects and ERP. And now we've brought that back. And what I am prepared to tell you is that we've taken the target up that our team is pursuing north of what we used to pursue, and we feel like it's achievable.

Speaker Change #135: And before ERP, we used to talk about saving $20 million a year and then we suspended that as we focused on construction projects and ERP.

Operator: As a reminder, to ask a question, please press star one one on your telephone keypad.

Todd Brooks: Your next question is from Todd Brooks of the benchmark company. You don't want to sell open. Hey, thanks.

Speaker Change #135: And now we brought that back and what I am prepared to tell you is that we've taken the target up that our team is pursuing north of what we used to pursue and we feel like it's achievable.

Speaker Change #130: So I think it's a great way in this environment for restaurant operators to provide great tasting food and relevant value.

Speaker Change #130: And then finally, on the select QSRs, some of our customers, like a Chick-fil-A, were asked Liberty to disclose the activities that we have in flight for some of them were not.

Speaker Change #130: And in those cases, that would be the select and the select QSRs that we're talking about.

Dave Susinski: Good morning. Thanks for taking my questions. One just start on the gross mark. Good morning. One start on the gross margin side. And the way that I'm kind of reading the discussion as far as what we're thinking for fiscal 25 is kind of hold the hill on the product margin components of the business and then task cost saves to generate an improvement and margin rate. But I want to see if we could talk through if that's the right read or is it more cost saves offset a chunk of potentially pressure on product margins.

Speaker Change #130: To the degree to which we get clearance from them to talk more openly about the work we do for them, it will be happy to share with that with you guys in due course.

Speaker Change #130: Very helpful.

Speaker Change #130: Just want to follow up.

Tom Pigott: Okay, great.

Speaker Change #135: Okay, Great and then just.

Tom Pigott: And then just kind of working our way down the income statement here thoughts on SG&A efficiency and just the ability to keep leveling. That line item as you as you look to 25 or do you expect more spend around what's needed to consumers and you're thinking about that kind of holding flatish and that that high 11% range that you're able to achieve in fiscal 24. Yeah, from a percent of revenue, I think we're going to be in that similar range. We do expect it in the absolutes to go up. We do need to make some critical investments in our IT infrastructure that we're going to fund in part through the savings of project dissent ending.

Speaker Change #130: Can you offer any details on the cadence of growth for both retail and food service in 25 and should we expect both segments to be positive in each quarter and then any color on your kind of front half back as waiting would be very helpful.

Kind of working our way down the income statement here.

Speaker Change #136: Thoughts on.

Speaker Change #136: SG&A efficiency and just the ability to keep levering.

Speaker Change #137: That line item as you look to 'twenty five or do you expect more spend around.

What's needed to consumers you can thinking about that kind of holding flattish in that that high 11% range that you were able to achieve in fiscal 'twenty four.

Speaker Change #130: Thank you.

Speaker Change #138: Yes from from a percent of revenue I think we're going to be in that similar range. We do expect it in the absolute to go up.

Speaker Change #130: Sure.

Dave Susinski: And the incremental cost saves are what can allow for some modest gross margin improvement 25. Yeah, well, if you'll allow me, maybe I'll start and turn it to Tom and I'll start with the big picture. If you look at the drivers of margins, maybe I'd start with commodities. And what we've seen is a strong growing season in the commodities that matter to us, which has brought down prices on things like wheat and corn and soybean oil.

Speaker Change #138: We do need to make some critical investments in our it infrastructure.

Speaker Change #130: So as as we look at the our projections of volume growth, I would say we're overall projecting low single digit volume growth for for both segments throughout the year.

Speaker Change #139: That debt.

Speaker Change #139: We're going to fund in part through the savings of project ascent.

Speaker Change #130: I think we do expect a little bit stronger front half growth in our food service business.

Speaker Change #139: Ending.

Tom Pigott: But overall, we do we don't expect it to go any up any more than inflation and, and it's a percent of revenue to be in mind.

Speaker Change #139: But overall, we do we don't expect it to go up anymore than inflation and as a percent of revenue to be in line.

Speaker Change #130: But much of that is dependent on some of these LTOs that they mentioned and how successful they are.

Tom Pigott: Okay, great. Thanks, Tom.

Speaker Change #140: Okay. Thanks, Tom and then the final one for me and I'll jump back in.

Operator: And then the final one for me, and I'll jump back in.

Speaker Change #130: From an overall profitability standpoint, we as Dave mentioned, we've got we're really focused more on productivity this year.

Dave Susinski: On the flip side, though, we're watching commodities rise, particularly in eggs and dairy work eggs on earnabary recently have gone up to above $3.50. But you put all that together and packaging right now that puts us in a position where we're pretty much neutral in terms of the commodity outlook. That means that we really doesn't give us a reason to have a conversation on pricing. So then you flip around and you say, OK, now, if that's true, you know, what needs to be true for us to drive margin improvement?

Dave Susinski: Exciting news about the gluten free Texas toast and obviously Texas Road has roles coming in the future. When we look at the gluten free Texas toast, how big of a category of opportunity is that product and how protected is that offering as far as not having private label competition. So is that a margin-enhancing opportunity on whatever additional sales dollars you expected to deliver.

Speaker Change #141: Exciting news about the gluten pre Texas, toast, and obviously, Texas Roadhouse.

Speaker Change #142: Rules coming in the future.

Speaker Change #142: When we look at it.

Speaker Change #130: We're last year, we've benefited from both PNOC favorably pricing that a commodities as well as productivity this year.

Speaker Change #144: <unk> pre Texas toast, how big of a category opportunity is for that product.

Speaker Change #145: And how protected is not offering as far as not having private label competition. So is that a margin enhancing opportunity on whatever additional sales dollars do you expect it to deliver.

Speaker Change #130: It's more focused on productivity in terms of driving margin expansion on top of the volume growth.

Speaker Change #130: And we expect that to be more back and loaded as Dave mentioned.

Dave Susinski: Thanks. Yeah.

Speaker Change #144: Thanks.

Yeah.

Dave Susinski: Well, maybe starting first with the product. It's it's amazing. We it's a product that we developed. We actually got a patent on the technology because, if you've tried gluten-free bread products, a lot of times they're very spongy or they have an off note in the flavor, and these tastes nearly identical to our current item. That's part of the reason why we're so excited about it. We, you know, versus private label, this is one where I think we're probably a little bit isolated, you know, for us. These are consumers that were either, you know, that were the gluten intolerant or they had celiacs where they weren't really able to even buy our products.

Speaker Change #146: Well, maybe starting first with the product it's amazing.

Speaker Change #130: We're making some investments earlier in the year in terms of factory automation and different programs to improve our productivity performance.

Dave Susinski: It's probably not going to come from revenue management. It's going to come through execution and our plants. And given the commodity outlook, it's not deflation. It's really going to come through productivity improvements in the manufacturing environment and to a lesser degree in our logistics environment. But we're singularly focused really on the manufacturing side. And I'm sure with some of you on the call that we feel like there are continue to be opportunities to drive automation projects in our dough plants.

Speaker Change #147: It's a product that we developed we actually got a patent on the technology, because if you've tried gluten free bread products a lot of times, they're very spongy or do they have an off note in the flavor and these taste nearly identical to our current item. That's part of the recent why we're so excited about it.

Speaker Change #130: So we expect that we expect the margin expansion to be more back and loaded.

Speaker Change #130: Maybe I'll offer on the retail side of the business.

Speaker Change #130: We have strong pipeline and new items, but given the seasonal resets for sauces on the shelf, many of those items tend to be a little bit more back half loaded.

Speaker Change #130: But overall, you know, consistent with what Thomas say when you look at the business as a whole, we expect low volume growth through the whole period.

Speaker Change #130: Great.

Speaker Change #146: We <unk>.

Speaker Change #146: <unk> private label. This is one where I think we're probably a little bit isolated for us. These are consumers that were either.

Dave Susinski: We have a number of those that are in flight that are going to be coming online with benefits as the year builds, which are great projects. But again, we think this is the sustained environment. Labor costs are moderating. We're not seeing the run-up we were seeing. Labor availability tends to be good. So now I think for us and everybody else in the space, it's just figuring out how do we hold our price points? How do we maintain value? And then how do we figure out how we excise the trap cost in our manufacturing environment? That's all, Paul.

Speaker Change #146: The gluten intolerant or they had celiacs, where they werent really able to even buy our products. So for us it's incremental and the items that are out there today, both the brands and the private label just honestly don't taste very good I've spent a lot of time in the last quarter heat in Texas Toast gluten.

Dave Susinski: So for us, it's incremental, and the items that are out there today, both the brands and the private label, just honestly don't taste very good. I've spent a lot of time in the last quarter eating Texas toast gluten free and non gluten free, as we've got the products ready for launch, and these are really great products. So I'm thrilled to have IP. I'm thrilled to have the flavor, and, you know, the pricing on this thing is very much in line with the other products that are out there. Similar products that are gluten-free. So I think we could win on taste and on value.

Speaker Change #146: <unk> three and non gluten free as we've got the products ready for launch and these are really great product. So.

Speaker Change #146: I am thrilled to have IP I'm thrilled to have that the flavor and the pricing on this thing is very much in line with the other products that are out there similar products that are gluten free. So I think we can win on taste and on value. So I think what we're also looking for is just the platform is there an opportunity for us to use this technology or <unk>.

Speaker Change #130: That's all for us.

Speaker Change #130: I'll hop back in the queue.

Speaker Change #130: Thank you.

Dave Susinski: So I think what we're also looking for as just a platform is there an opportunity for us to use this technology or similar technologies that we're patenting to look for other gluten free items because, to your point, it is. It's a very, very big addressable opportunity that we just haven't played in in the past.

Speaker Change #130: Your next question comes from Andrew Wolfe of CO King.

Speaker Change #146: Are there technologies that we're patenting.

We look for other gluten free items because to your point. It is it's a very very big addressable opportunity that we just haven't played in the past.

Speaker Change #130: You're on its open.

Dave Susinski: That's great. Thanks, Dave.

Speaker Change #148: That's great. Thanks, guys.

Speaker Change #130: Thank you.

Speaker Change #130: Good morning.

Speaker Change #148: Perfect.

Operator: First. Thank you.

Speaker Change #149: Hi, this is Tyler Browse.

Speaker Change #149: Thank you if there are no further questions. We will now turn the call back to Mr. <unk>.

Speaker Change #149: I'm for Jim.

Shannon: If there are no further questions, we will now turn the call back to Mrs. Ciesinski for her closing comments. Thank you, everyone. It's been nice to be with you, and we look forward to being with you again in November when we review our two one results.

Speaker Change #149: Thanks for taking our questions.

Speaker Change #149: Thinking about the food service segment, most companies in the recent calendar 2Q period called out a cautious outlook for demand in the back half of the year.

<unk>: That said, there's been some bright spots in the industry at concepts like Chick-fil-A, Cane's, and Wingstop who continue to benefit from this chicken megatrend.

<unk>: As we look to your fiscal 25, can you give us some color on what you expect from QSR?

<unk>: For his closing comments.

<unk>: And then additionally, in your prepared remarks, you made a comment around food service volume being led by select QSRs.

<unk>: Wanted to ask pricing in the channel.

Speaker Change #130: Wanted to ask pricing in the channel.

Tom Pigott: Well, what I maybe what I'm prepared to share, what we're prepared to share with Todd is if you go back to the early days for a continuous improvement program before COVID. And before ERP, we used to talk about saving $20 million a year. And then we suspended that as we focused on construction projects and ERP. And now we've brought that back. And what I am prepared to tell you is that we've taken the target up that our team is pursuing north of what we used to pursue and we feel like it's achievable.

<unk>: Any detail around who this select few might be?

Mr. <unk>: Sure, Tyler.

Mr. <unk>: This is Dave.

Mr. <unk>: Well, thank you, everyone.

Mr. <unk>: Well. Thank you everyone. It's been nice to be with you and we look forward to being with you again in November when we review our Q1 results have a great rest of the day.

Mr. <unk>: Happy to answer your question.

Mr. <unk>: It's been nice to be with you, and we look forward to being with you again in November when we review our Q1 results.

Mr. <unk>: Maybe starting first with where we finished in the quarter, we were pleased to continue to deliver volumetric growth in the quarter, but it was actually slightly below our expectations.

Mr. <unk>: Have a great rest of the day.

Mr. <unk>: We expected it to be stronger. Like many of our peers, we saw a slowdown in traffic that sort of evolved throughout the first half of the calendar year and in the quarter in particular.

Mr. <unk>: Offsetting that, we have a whole range of activity that's in flight right now where we're developing and launching limited time offerings for customers.

Mr. <unk>: Many of those are out in the marketplace now.

Mr. <unk>: You're probably watching the advertising on TV without understanding or appreciating that it's us.

Mr. <unk>: So you put all that together, sort of where we've been and our outlook for the go-forward period.

Mr. <unk>: Couple of questions for each of your segments.

<unk>: Couple of questions for each of your segments.

Mr. <unk>: We continue to believe that we can deliver low single-digit volume-led growth that will turn into sales growth in fiscal year 25.

Shannon: Have a great rest of the day.

Mr. <unk>: And if the overall outlook improves, there's opportunity for that low single-digit volume growth to become low to mid single-digit volume growth.

Speaker Change #152: Your second point was on this mega trend of chicken.

Speaker Change #152: I couldn't agree more with you.

Speaker Change #152: This concludes today's conference call.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change #152: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change #152: That continues to be a big part of what's underlying the activity that we're being called on for innovation.

Speaker Change #152: Sort of like a check-in question on food service.

Mr. <unk>: Sort of like a check-in question on food service.

Speaker Change #152: So we believe that that's going to continue to hold true.

Speaker Change #152: If you look at the cost of chicken as a protein source, it continues to be cheaper than beef and the alternative.

Speaker Change #152: So I think it's a great way in this environment for restaurant operators to provide great tasting food and relevant value.

Speaker Change #152: And then finally, on the select QSRs, some of our customers like at Chick-fil-A were at liberty to disclose the activities that we have in flight.

Speaker Change #152: For some of them, we're not.

Speaker Change #152: You know, with LTOs of promotions, you know, driving traffic.

Speaker Change #152: And in those cases, that would be the select and the select QSRs that we're talking about.

Speaker Change #152: To the degree to which we get clearance from them to talk more openly about the work we do for them, we'll be happy to share that with you guys in due course.

Speaker Change #152: And, you know, sort of the obviously more promotions across the market.

Speaker Change #152: Very helpful.

Speaker Change #152: Just one follow-up.

Speaker Change #152: Can you offer any details on the cadence of growth for both retail and food service in 2025?

Speaker Change #152: And should we expect those segments to be positive in each quarter?

Speaker Change #152: And then any color on, you know, kind of front half, back half weighting would be very helpful.

[music].

Speaker Change #152: Thank you.

Speaker Change #152: Sure.

Speaker Change #152: So as we look at our projections of volume growth, I would say we're overall projecting low single-digit volume growth for both segments throughout the year.

Speaker Change #152: Okay.

Speaker Change #152: I think we do expect a little bit stronger front half growth in our food service business, but much of that is dependent on some of these LTOs that Dave mentioned and how successful they are.

Speaker Change #152: <unk>.

Speaker Change #152: From an overall profitability standpoint, we, as Dave mentioned, we've got, we're really focused more on productivity this year, where last year we benefited from both PNOC favorability pricing net of commodities, as well as productivity.

Speaker Change #152: Are any of these partners asking for any kind of price help with that?

Speaker Change #152: This year, it's more focused on productivity in terms of driving margin expansion on top of the volume growth.

Speaker Change #152: Or is your typical kind of markup pricing still, still, you know, the standard fare.

Tom Pigott: Okay, great. And then just kind of working our way down the income statement here thoughts on SGNA efficiency and just the ability to keep leveling. That line item as you as you look to 25 or do you expect more spend around what's needed to consumers and you're thinking about that kind of holding flatish and that that high 11% range that you're able to achieve in fiscal 24. Yeah, from from a percent of revenue, I think we're going to be in that similar range.

Speaker Change #152: And we expect that to be more back-end loaded, as Dave mentioned.

Speaker Change #152: We're making some investments earlier in the year in terms of factory automation and different programs to improve our productivity performance.

Speaker Change #152: So we expect, we expect the margin expansion to be more back-end loaded.

Speaker Change #152: Maybe I'll offer on the retail side of the business, we have a strong pipeline of new items, but given the seasonal resets for sauces on the shelf, many of those items tend to be a little bit more back half loaded.

Speaker Change #152: But overall, you know, consistent with what Tom is saying, when you look at the business as a whole, we expect, you know, low volume growth through the whole period.

Speaker Change #152: Okay.

Speaker Change #152: Great.

Speaker Change #152: That's all for us.

Speaker Change #152:

Speaker Change #152: I'll hop back into queue.

Speaker Change #152: Thank you.

Speaker Change #152: Okay.

Speaker Change #152: Thank you.

Speaker Change #152: Your next question comes from Andrew Wolfe of CL King.

Speaker Change #152: Okay.

Speaker Change #152: Your line is now open.

Speaker Change #152: And if, you know, also, is there any kind of within how you know, you negotiate with them?

Speaker Change #152: Thank you.

Speaker Change #152: Okay.

Speaker Change #152: Good morning.

Speaker Change #152: I wanted to ask pricing in the channel a couple of questions for each of your segments.

Speaker Change #152: Okay.

Speaker Change #152: Sort of like a check-in question on food service, you know, with LTOs and promotions, you know, driving traffic and, you know, sort of the obviously more promotions across the market.

Speaker Change #152: Are any of these partners asking for any kind of price help with that?

Speaker Change #152: Or is your typical kind of markup pricing still, you know, the standard fare?

Speaker Change #152: And if, you know, also, is there any kind of, within how you, you know, you negotiate with them, is there volume concessions, which, you know, is probably more typical?

Speaker Change #152: Yeah.

Speaker Change #152: So, great question, Andrew.

Speaker Change #152: When you look at our LTOs, they're usually at or better than our line average because of all of the proprietary R&D work that goes up front.

Speaker Change #152: Yes.

Speaker Change #152: And ordinarily, for those sorts of items, we wouldn't be bidding against other people.

Speaker Change #152: So, as you think about that stream of work versus our base business, they're typically going to be margin accretive to what we're doing.

Speaker Change #152: Yes.

Speaker Change #152: You know, I'm glad you asked the question about the dialogue with our operators, as you might imagine.

Speaker Change #152: They're focused on really two things.

Speaker Change #152:

Speaker Change #152: They're looking at their bottom line in cost, but I think they're really looking at what needs to be true for them to accelerate their traffic trends.

Speaker Change #152: Yes.

Speaker Change #152: Is there volume concessions, which, you know, is a little probably more typical?

Speaker Change #152: And fortunately, we tend to get calls that are more focused on exciting menu items that they can feature in their advertising to drive traffic.

Speaker Change #152: And to that end, I would tell you that our phone is ringing as hard as it's been in any time in the recent past because a number of people that we work with or ones that we haven't are looking for things that they can talk about in their advertising.

Speaker Change #152: [music].

Speaker Change #152: And I think they're trying to figure out how they drive traffic through menu excitement.

Speaker Change #152: Sure.

Speaker Change #152: And it really plays into our wheelhouse.

Speaker Change #152: Swinging around to looking at the retail business.

Speaker Change #152: You know, I think what you can expect is that we're going to continue to carefully monitor value, and look at absolute price points and look at promoted price points.

Speaker Change #152: You know, as we look at where, you know, maybe I'll save comments on the consumer overall for a little bit later.

Speaker Change #152: Yeah.

Tom Pigott: We do expect it in the absolutes to go up. We do need to make some critical investments in our IT infrastructure that that we're going to fund in part through the savings of project dissent ending. But overall, we do we don't expect it to go any up any more than inflation and and it's a percent of revenue to be in mind.

Speaker Change #152: But what I would tell you is what we're focusing on is really two things in this environment.

Speaker Change #152: The first, making sure that we remain sharp on value and surgically addressing price points where we feel like we need to.

Speaker Change #152: Okay.

Speaker Change #152: And we've talked about the Olive Garden example in the past, and that's a good one.

Speaker Change #152: So great question, Andrew.

Speaker Change #152: But the second thing that we're looking at is how do we in this environment provide consumers with affordable luxury?

Speaker Change #152: Yes.

Speaker Change #152: Great tasting product that just makes that meal a little bit better.

Speaker Change #152: I think they're feeling a lot of pressure from a lot of different places.

Speaker Change #152: And to the degree to which we can offer good sauces that are affordable luxuries that make that meal occasion go a little bit better.

Speaker Change #152: It keeps us relevant to them.

Speaker Change #152: And that really is the one to where we're focusing.

Speaker Change #152: Okay.

Speaker Change #152: OK, that's so when you talk, you know, I mean, there are interesting behaviors, you know, like trading down from chicken to.

Speaker Change #152: Let's say pasta, you might want a better sauce, you know, like that.

Speaker Change #152: But on the converse, you know.

Speaker Change #152: What are you seeing with trading down, you know, from brands, either in the category of your brand specifically with private label?

Speaker Change #152: Is that is that where you know that when you talk about, you know, some surgical price point stuff like you did a while like you did with the Olive Garden products or is that?

Speaker Change #152: Yeah, I'd say it's a great, great line of questions.

Speaker Change #152: So maybe I'll hit it from the top to the degree to which consumers trade to that pasta occasion.

Speaker Change #152: We feel like we're well positioned with our New York, Texas toast.

Speaker Change #152: When you look at our LTOs, they're usually at or better than our line average because of all of the proprietary R&D work that goes up front and ordinarily for those sorts of items, we wouldn't be bidding against other people.

Speaker Change #152: And as you probably heard in the script, and if you're following IRI or Nielsen data, that remains really a strong point for us where we're content.

Speaker Change #152: The category is growing for both toast and sticks, and we're outperforming the category and continuing to grow our share.

Speaker Change #152: So when consumers are looking for the pasta meal occasion, our strategy is to make sure that we get a basket conversion and get that toast added to the basket.

Speaker Change #152: You know, more broadly, as we're looking at at our price points, I think you're precisely right.

Speaker Change #152: We're watching private label.

Speaker Change #152: So we'd watch our gap versus private label.

Speaker Change #152: And then in key seasons, like think Sister Schubert, we're looking at those promoted price points.

Speaker Change #152: As we scan across all of our categories, what I would tell you is if you look at refrigerated dressings, private label really isn't much of a threat.

Speaker Change #152: If you go to pourable salad dressing, we've continued to hang in there.

Dave Susinski: Okay, great. Thanks, Tom. And then the final one for me and I'll jump back in. Exciting news about the gluten free Texas toast and obviously Texas road has roles coming in the future. When we look at the gluten free Texas toast, how big of a category of opportunity is that product and how protected is that offering as far as not having private label competition. So is that a margin enhancing opportunity on whatever additional sales dollars you expected to deliver.

Speaker Change #152: We're performing, we're continuing to outperform the category and we're growing share in the period. Private label is growing, but what we're probably seeing in that case is a trade down from some of the other more value oriented brands to private label, which doesn't seem to be impacting us.

Speaker Change #152: You whirl around, you look at toast, we feel like we're well positioned.

Speaker Change #152: Sister Schubert is a brand that we'll watch.

Speaker Change #152: We'll watch croutons as well.

Speaker Change #152: Refrigerated dips, we feel like we're insulated there.

Speaker Change #152: So generally, I continue to feel like our exposure and private label is more modest than our peers.

Speaker Change #152: But we still need to keep just an extremely sharp eye on value to make sure that we're relevant.

Speaker Change #152: There's a big trend in this trade down that I think that we're watching that in order to our benefit.

Speaker Change #152: And it's not just trading down within a category from a brand to a private label, but you're seeing people trade to different channels of trade.

Speaker Change #152: You're seeing, in some cases, a trade down from food to Walmart and things like that.

Speaker Change #152: And there again, we feel like we're continued to perform well, given the relationships and the assortment of brands that we have and the innovation.

Speaker Change #152: OK, gotcha.

Speaker Change #152: Thank you.

Speaker Change #152: Just one quick sort of half question, if you will, a small question.

Speaker Change #152: You guys are expecting Marzetti volume to be up, which is a nice, I think, overall turn for that business line.

Speaker Change #152: Is that innovation driven or promotion or could you put a little color on that expectation?

Speaker Change #152: Yeah, well, it's it's a little bit innovation.

Speaker Change #152: We brought out some new items.

Speaker Change #152: We've strengthened our portfolio of simply items and honestly and transparently, we have a little bit of a soft comp we're going up against there as well.

Speaker Change #152: So.

Speaker Change #152: Got it.

Speaker Change #152: All right.

Speaker Change #152: Well, thank you for the answer.

Speaker Change #152: Appreciate it.

Speaker Change #152: Thank you.

Speaker Change #152: Your next question comes from Brian Holland with D.A.

Speaker Change #152: Davidson.

Speaker Change #152: So, just think about that stream of work versus our base business. They're typically going to be margin accretive to what we're doing.

Speaker Change #152: Your line is now open.

Speaker Change #152: Yeah, thanks.

Speaker Change #152: Good morning.

Speaker Change #152: Maybe just to follow up on the line of questioning around the outlook for fiscal twenty five.

Speaker Change #152: I guess to clarify the comments on volume growth specifically in the retail segment, would that be inclusive or exclusive of the perimeter store bakery exit, which figures to remain a drag?

Speaker Change #152: I would think through the third quarter fiscal twenty five.

Speaker Change #152: Yeah, it includes includes.

Speaker Change #152: You know, I'm glad you asked the question about the dialogue with our operators that you might imagine.

Speaker Change #152: Yeah.

Speaker Change #152: They're focused on really two things.

Speaker Change #152: So we feel like there's enough to help us offset that dilution.

Speaker Change #152: They're looking at their bottom line and cost.

Dave Susinski: Thanks. Yeah. Well, maybe starting first with the product. It's it's amazing. We it's a product that we developed. We actually got a patent on the technology because if you've tried gluten free bread products, a lot of times they're very spongy or they have an off note in the flavor and these tastes nearly identical to our current item. That's part of the reason why we're so excited about it. We, you know, versus private label, this is one where I think we're probably a little bit isolated, you know, for us.

Speaker Change #152: OK, understood.

Speaker Change #152: And then on the food service side, should we assume that pass through pricing would obviously for Q it essentially fully offset the food service volume?

Speaker Change #152: But I think they're really looking at what needs to be true for them to accelerate their traffic trends.

Speaker Change #152: Does that dissipate as we move through fiscal twenty five such that volume grows in excess of that pass through pricing?

Speaker Change #152: Yes.

Speaker Change #152: Unfortunately, we tend to get calls that are more focused on exciting menu items that they can feature in their advertising to drive traffic.

Speaker Change #152: Q4, the way the timing worked out with our pricing and commodities, we were slightly unfavorable in PNAC and had a big gross to net sweat down on food service.

Speaker Change #152: That's just a function of how things lined up this particular quarter going forward.

Speaker Change #152: And to that end, I would tell you that our phone is ringing as hard as it's been in any time in the recent past because the number of people that we work with are ones that we have and are looking for things that they can talk about in their advertising.

Speaker Change #152: Based on our commodity forecast, we expect things to be neutral.

Speaker Change #152: And then one other one, just on a point you made in an earlier question about food service volume, where it sounds like it was a bit below your expectation, at least in in the fourth quarter.

Speaker Change #152: Then you obviously talked about some of the R&D pipeline flowing through.

Speaker Change #152: So I'm just curious, and so you can correct me on this.

Speaker Change #152: I didn't I just assumed that was a regular course of business that you have this R&D pipeline that you're always sort of turning out for customers.

Speaker Change #152: So maybe if we just dig into that a little bit deeper and understand whether the cadence of that changes in fiscal twenty five vis-a-vis twenty four, are you getting asked to do more of that as more of that pipeline conveyed?

Speaker Change #152: And therefore, maybe that would be the reason for sequential improvement as we move through the year?

Speaker Change #152: Sure.

Speaker Change #152: Sure, so maybe I'll start, if you'll allow me, big picture and then drill in, specifically on the timing of the new items.

Speaker Change #152: So again, I think there were two drivers.

Speaker Change #152: One was, as you look at sort of what happened as we went through the quarter, really through the spring to the end of our quarter, there was a deceleration in traffic across really all of QSR. You guys are seeing it in the data and you've heard our peers talk about it.

Speaker Change #152: At the very end of the quarter we saw a slowdown in some of our orders, that they were probably balancing their inventory with their traffic trends.

Speaker Change #152: The other piece that I referred to specifically was the timing of the new items and we had a range of new items that were timed to ship at the end of the period. Some of that volume slipped from the end of this period into the beginning of the next period and it was purely timing and correspondingly it could have been related to available space for inventory.

Speaker Change #152: So you know Brian, what I would tell you is when we look at this, it looks like just a wrinkle for this particular period in the way that things lined up.

Speaker Change #152: Most don't want to be discounting on their menu because their margins are already under pressure because of labor and other things, and I think they're trying to figure out how they drive traffic through menu excitement in a really place into our wheelhouse.

Speaker Change #152: You're right, we have a very steady cadence of LTO activity or limited time offering activity that's in place and this particular period it just hit us a little bit harder than we had expected.

Speaker Change #152: So we delivered four points of volume in food service and we were expecting north of that.

Speaker Change #152: Appreciate the color.

Speaker Change #152: Swinging around to looking at the retail business, you know, I think what you can expect is that we're going to continue to carefully monitor value and look at absolute price points and look at promoted price points.

Speaker Change #152: And then maybe just flipping back over to the retail, segment, you know, I guess you said food service, so maybe just quickly, you said food service was a little bit below expectation.

Speaker Change #152: How did retail come in relative to internal expectations?

Speaker Change #152: Mindful you don't provide formal guidance because obviously you lack consensus, but there's no guidance.

Speaker Change #152: Yeah, retail was pretty much right on it.

Speaker Change #152: I mean, if you looked at their consumption data through the period, it was very consistent with what we expected.

Speaker Change #152: I mean, and the things that shifted really didn't add up to a point where they materially impacted things.

Speaker Change #152: We did have one promotion with the retail that slipped from the end of Q4 into Q1, but I don't think it made a material difference in the grand scheme of things.

Speaker Change #152: So you know, that business, the data as you know, is very rich that we get on the, consumer side.

Speaker Change #152: You know, as we look at where, you know, maybe I'll say comments on the consumer overall for a little bit later, but what I would tell you is what we're focusing on is really two things in this environment.

Dave Susinski: These are consumers that were either, you know, that were the gluten intolerant or they had celiacs where they weren't really able to even buy our products. So for us, it's incremental and the items that are out there today both the brands and the private label just honestly don't taste very good. I've spent a lot of time in the last quarter eating Texas toast gluten free and non gluten free as we've got the products ready for launch and these are really great products.

Speaker Change #152: We get it weekly and we're able to use that forecast and model what we think our retailers have in terms of their inventory.

Speaker Change #152: On the food service side, the data isn't quite as rich and it's not quite as timely, so it's harder for us to model out some of that.

Speaker Change #152: That's probably the difference.

Speaker Change #152: But in both cases, I feel like a retail there was a range, I said 14 new items that we went out with and they're all performing generally in line with our expectations.

Speaker Change #152: Okay, great.

Speaker Change #152: And so maybe just to close big picture, just maybe an update on the food service, or excuse me, the licensing pipeline, how that has evolved.

Speaker Change #152: Obviously you're picking up incremental business from existing customers, i.e.

Speaker Change #152: Texas Roadhouse.

Speaker Change #152: Just curious how the pipeline is shaping up underneath that given the pressures.

Speaker Change #152: Are we seeing an increase in inbounds with food service trends performing as they are?

Speaker Change #152: The first, making sure that we remain sharp on value and surgically addressing price points where we feel like we need to.

Speaker Change #152: And then maybe also the M&A landscape as it feels like we're getting closer to you kind of being in a position that you aspire to get to, to go out and make acquisitions.

Speaker Change #152: Just maybe what that pipeline is.

Speaker Change #152: Sure, of course.

Speaker Change #152: Maybe starting with the licensing pipeline, we'll talk about the items that, we went out with most recently.

Speaker Change #152: We're thrilled with the performance of Chick-fil-A dressings.

Speaker Change #152: I think I mentioned that the avocado lime dressing in particular, that single skew has, become the second best performing skew in the entire set inside of one year.

Speaker Change #152: If you look at the run rate on that business, it's also become quite substantial.

Speaker Change #152: Swinging around a Subway, Subway, I would say, has outperformed our expectations.

Speaker Change #152: And we've even been surprised with the strength of the brand in Canada, where it's been a little bit of an upside on it.

Speaker Change #152: And we've talked about the all of garden example in the past and that's a good one.

Speaker Change #152: So we're excited about that proposition, and they're a great partner to work with.

Speaker Change #152: If you look at what's happening on Buffalo Wild Wings and Olive Garden, there continues, to be a lot of activity and discussions with those partners.

Speaker Change #152: With Buffalo Wild Wings, you'll recall, not only have we been driving sauces, but we did a test.

Speaker Change #152: It was a single rotation at Costco last year with dips that performed well, and we're looking forward to working with them to expand that.

Speaker Change #152: We'll have more news on that later in the year.

Speaker Change #152: With respect to Chick-fil-A, the big news was coming out with dressings.

Speaker Change #152: We're working, with them on a spring launch of new items that we're going to be excited to share with you once we're in a position to do that.

Speaker Change #152: I think the news that we were particularly excited to see was expanding this partnership with Texas Roadhouse, which is just a really strong restaurant concept and a perennial grower.

Speaker Change #152: But the second thing that we're looking at is how do we in this environment provide consumers with affordable luxury.

Dave Susinski: So I'm thrilled to have IP. I'm thrilled to have the flavor and, you know, the pricing on this thing is very much in line with the other products that are out there. Similar products that are gluten free. So I think we could win on taste and on value. So I think what we're also looking for as just a platform is there an opportunity for us to use this technology or similar technologies that we're patenting to look for other gluten free items because to your point, it is. It's a very, very big addressable opportunity that we just haven't played in in the past.

Speaker Change #152: We've been pleased with the performance of the sauces.

Speaker Change #152: They play in a small category, and we love our entry there.

Speaker Change #152: But their roles are really a special item that consumers really like. We've come up with an item that's inspired by their original role.

Speaker Change #152: Great tasting product that just makes that meal a little bit better.

Dave Susinski: That's great. Thanks, Dave. First. Thank you.

Speaker Change #152: It's in a three-state test in Indiana, Kentucky, and Ohio that's outperforming our expectations and our partner at Texas Roadhouse.

Speaker Change #152: We look, forward to sitting down with them and then planning the launch thereafter.

Speaker Change #152: But that item in particular really opens up a whole new category for us to play in, and we're excited for where that can go.

Speaker Change #152: You know, more broadly, we do continue to have conversations with other people, and we'll be in a position to update you guys once we have more.

Speaker Change #152: But maybe what I'm really excited to talk about is, you're precisely right.

Speaker Change #152: If you go back over the last two years, we've gone live on ERP.

Speaker Change #152: We've finished all of our waves.

Speaker Change #152: I think they're feeling a lot of pressure from a lot of different places and to the degree to which we can offer good sauces that are affordable luxuries that make that meal occasion go a little bit better.

Speaker Change #152: We're going to lap the last wave, our fifth wave, in September.

Speaker Change #152: So ERP is, as Tom mentioned, completely drawn down.

Speaker Change #152: It keeps us relevant to them.

Speaker Change #152: Horse Cave is up and running.

Speaker Change #152: You look at our cash balances for the end of the quarter, they're continuing to build. This business has the ability to generate a lot of cash.

Speaker Change #152: And I think we're in a position now to lift and shift our focus and start to look at that, source of inorganic growth.

Speaker Change #152: And that really is the one two of where we're focusing.

Speaker Change #152: And you can expect to hear more from us on that as we progress through this year, because we feel like we have the team, we have that strong balance sheet. We have assets that will allow us to produce with focus, you know, scale that will allow us to compete against even the mega caps within narrow categories like sauces and dressings.

Speaker Change #152: And we're looking forward to that next chapter of our growth.

Speaker Change #152: Thank you.

Speaker Change #152: Your next question comes from Connor Rattigan with Consumer Edge.

Speaker Change #152: Your line is now open.

Speaker Change #152: Hey, guys.

Speaker Change #152: Good morning.

Speaker Change #152: Thanks for the question.

Speaker Change #152: Good morning, Connor.

Speaker Change #152: Yeah.

Speaker Change #152: So in the data that we see, it looks like Chick-fil-A trends are really starting to, soften as, I guess, some tough comps are lapped.

Speaker Change #152: So as we look ahead to fiscal 2025, do you guys still expect Chick-fil-A to be the primary, retail sales driver, or is the expectation sort of that a lot of that license growth comes from other licenses, with Chick-fil-A somewhat taking the backseat for the time being, despite the new products coming?

Speaker Change #152: Okay, that's, so when you talk, you know, I mean, there are interesting behaviors, you know, like trading down from chicken to, let's say pasta, you might want a better sauce, you know, like that.

Speaker Change #152: No.

Speaker Change #152: But on the converse, you know, what are you seeing with trading down, you know, from brands either in category or your brand specifically with private label?

Speaker Change #152: You're right. When you look at it, particularly towards the end of the fourth quarter, we had a lot, of promotional activity last year that didn't necessarily repeat this year.

Speaker Change #152: We also had the launch of dressings, which has provided an overall source of growth for, the proposition.

Speaker Change #152: If you look at the business, we expect it to continue to grow as we press forward behind, support as we look to drive households.

Speaker Change #152: But I think what we're more excited to share is we do have a range of new product activities, that we're going to come out with probably in November and talk to you guys about there that will continue to fuel growth on the brand more in the back half.

Speaker Change #152: Got it.

Speaker Change #152: Is that where, you know, is that when you talk about, you know, some surgical price point stuff, like you did a Walnut, like you did with the all of garden products or is that yeah, I said, it's a great, great line of questions.

Speaker Change #152: But on the converse, you know, what are you seeing with trading down, you know, from brands either in category or your brand specifically with private label?

Speaker Change #152: Makes sense.

Speaker Change #152: And maybe I'll hit it from the top to the degree to which consumers trade to that pasta occasion.

Speaker Change #152: Got it.

Speaker Change #152: Makes sense.

Speaker Change #152: We feel like we're well positioned with our New York Texas toast.

Speaker Change #152: And maybe I'll hit it from the top to the degree to which consumers trade to that pasta occasion.

Speaker Change #152: And so also, so I guess we'll say adjusted retail volume, so X, the business exits were, pretty solid this quarter.

Speaker Change #152: You know, you probably heard in the script and if you are following I or I or Nielsen data, that remains really a strong point for us where we're continuing the categories growing for both toast and sticks.

Speaker Change #152: So, I mean, I guess I was just kind of wondering, could you guys maybe give us a sense of just, sort of how incremental Subway and Texas Roadhouse were this quarter and sort of how they performed versus your expectations?

Speaker Change #152: And we're outperforming the category and continuing to grow our share.

Speaker Change #152: We feel like we're well positioned with our New York Texas toast.

Speaker Change #152: So, because in the data that we see, right, the list has been pretty modest, but it sounds, like that should be, I guess, much stronger in fiscal 2025, if I'm not mistaken.

Dave Susinski: If there are no further questions, we will now turn the call back to Mrs. Ciesinski for his closing comments. Thank you, everyone. It's been nice to be with you, and we look forward to being with you again in November when we review our two one results. Have a great rest of the day.

Speaker Change #152: So when consumers are looking for the pasta meal occasion, our strategy is to make sure that we get a basket conversion and get that toast added to the basket.

Speaker Change #152: Well, when we look at it on scanner data for, let's see if I have Subway here, Cercana data, it was about $5 million within the quarter, and it's built throughout the quarter as we continue to build that distribution.

Speaker Change #152: You know, more broadly, as we're looking at our price points, I think you're precisely right.

Speaker Change #152: If you look at Texas Roadhouse, it was a little bit more than a million, and again, just building as we went through the period.

Speaker Change #152: We're watching private label.

Speaker Change #152: Hopefully that helps you.

Speaker Change #152: You put the two together, the percentage of net sales on those two items is roughly 3%.

Speaker Change #152: Thank you.

Speaker Change #152: Your next question comes from the line of Robert Dickerson with Jeffries.

Speaker Change #152: Your line is now open.

Speaker Change #152: So we watch our gap versus private label.

Speaker Change #152: And we're outperforming the category and continuing to grow our share.

Speaker Change #152: Great.

Speaker Change #152: So when consumers are looking for the pasta meal occasion, our strategy is to make sure that we get a basket conversion and get that toast added to the basket.

Speaker Change #152: Thanks so much.

Speaker Change #152: And then in key seasons, like think sister Schubert, we're looking at those promoted price points.

Speaker Change #152: You know, more broadly, as we're looking at our price points, I think you're precisely right.

Speaker Change #152: I just have a couple of questions on the price investment.

Speaker Change #152: We're watching private label.

Speaker Change #152: I know there was deflationary, you know, dynamics in place, I guess, in Q4.

Speaker Change #152: The price investment did seem a little bit more than I think kind of the market expected, so maybe if you could just one, just provide some color, you know, I know we're like, I heard a lot about LTOs and, you know, partnerships and, you know, kind of, you know, ancillary plans, in place in case certain, you know, dynamics play out through the year.

Speaker Change #152: But I'm kind of curious, I guess one is just, you know, as we think through just, like the first two quarters of the year, like does that year of pricing investment kind of go away or we, it seems like we're kind of still in that pocket.

Speaker Change #152: That's the first question.

Speaker Change #152: And then the second piece was just on the food service margin in Q4.

Speaker Change #152: Clearly that's lower than it normally is.

Speaker Change #152: As we scan across all of our categories, what I would tell you is if you look at refrigerated dressings, private label really isn't much of a threat.

Speaker Change #152: So we watch our gap versus private label.

Speaker Change #152: I'm just trying to gauge, I guess we think through, let's say the first half of the year, you know, is that dynamic there or did I hear you kind of say there was, it was Q4 specific kind of given the pricing and the commodities, but somehow that changes as we get through the early part of the year.

Speaker Change #152: If you go to horrible salad dressing, we've continued to hang in there.

Speaker Change #152: And then in key seasons, like think sister Schubert, we're looking at those promoted price points.

Speaker Change #152: Thanks.

Speaker Change #152: Yeah, it's, it really, as I mentioned, was kind of a timing issue in Q4.

Speaker Change #152: We're performing.

Speaker Change #152: As we scan across all of our categories, what I would tell you is if you look at refrigerated dressings, private label really isn't much of a threat.

Operator: This concludes today's conference call. Thank you for your participation.

Speaker Change #152: As commodities come down, our prices are coming down. And as such, it hit more significantly in Q4 than in the earlier quarters, as you mentioned.

Speaker Change #152: You know, going forward, we do expect to be more neutral.

Speaker Change #152: We're continuing to outperform the category. And we're growing share in the period.

Speaker Change #152: If you go to horrible salad dressing, we've continued to hang in there.

Speaker Change #152: Now, turning to the food service profitability, this particular quarter, PNAC was negative, as I mentioned. In addition, we had some incremental outsourcing that impacted the margins. And we were making some supply chain investments to improve performance.

Speaker Change #152: Private label is growing, but what we're probably seeing in that case is a trade down from some of the other more value oriented brands to private label, which doesn't seem to be impacting us.

Speaker Change #152: We're performing.

Operator: You may now disconnect.

Speaker Change #152: So, you know, going forward, in terms of the plans to improve, we definitely expect to improve efficiencies on this business.

Speaker Change #152: Your world around you look at toast.

Speaker Change #152: We're continuing to outperform the category. And we're growing share in the period.

Speaker Change #152: We're going to get more benefits from SAP, understanding our costs, and driving for better margin performance.

Speaker Change #152: We feel like we're well positioned.

Speaker Change #152: We expect to reduce outsourcing.

Speaker Change #152: Sister Schubert is a brand that we'll watch.

Speaker Change #152: Your world around you look at toast.

Speaker Change #152: And we're also looking at some ways to optimize the network to improve the profitability.

Speaker Change #152: We'll watch croutons as well.

Speaker Change #152: We feel like we're well positioned.

Speaker Change #152: We expect, as I mentioned, kind of overall, a lot of those programs, to be more back-end loaded than front-end loaded.

Speaker Change #152: Refrigerated dips.

Speaker Change #152: Sister Schubert is a brand that we'll watch.

Speaker Change #152: But we still, we still feel like we've got a lot of opportunity, a lot of runway to improve the margins.

Speaker Change #152: We feel like we're insulated there.

Speaker Change #152: We'll watch croutons as well.

Speaker Change #152: Okay, fair enough.

Speaker Change #152: So generally, I continue to feel that our exposure in private label is more modest than our peers, but we still need to keep just an extremely sharp eye on value to make sure that we're relevant.

Speaker Change #152: Refrigerated dips.

Speaker Change #152: And then I guess just secondly, you know, in the retail segment, volumes, I believe, were flat.

Speaker Change #152: There's a big trend in this trade down that I think that we're watching that it endures to our benefit, and it's not just trading down within a category from a brand to a private label, but you're seeing people trade to different channels of trade.

Speaker Change #152: We feel like we're insulated there.

Speaker Change #152: You know, I'm hearing definitely a lot of positive comments, around certain brands and certain products.

Speaker Change #152: You're seeing in some cases that trade down from food to Walmart and things like that.

Speaker Change #152: And then I'm also hearing, you know, there should be some incremental products, as it sounds like, as we kind of get through fiscal 25.

Speaker Change #152: And there again, we feel like we're continued to to perform well given the relationships and the assortment of brands that we have any innovation.

Speaker Change #152: Were there areas, though, that maybe didn't do so well that, you know, you're kind of letting, let's say, not do so well, right?

Speaker Change #152: Okay, got you.

Speaker Change #152: You're seeing in some cases that trade down from food to Walmart and things like that.

Speaker Change #152: So, if we're thinking about kind of where the targeted investment is, what are the real drivers of growth as we think through even the first half of 25?

Speaker Change #152: Thank you.

Speaker Change #152: And there again, we feel like we're continued to to perform well given the relationships and the assortment of brands that we have any innovation.

Speaker Change #152: You know, are there areas where there's a little bit of an offset, but maybe you're okay, you know, you're actually okay with that because you're running it for profitability, et cetera?

Speaker Change #152: Just one quick sort of half question if you will.

Speaker Change #152: Okay, got you.

Speaker Change #152: That's all.

Speaker Change #152: A small question.

Speaker Change #152: Thank you.

Speaker Change #152: Thanks.

Speaker Change #152: You guys are expecting Marzetti volume to be up, which is a nice, I think, overall turn for that business line.

Speaker Change #152: Just one quick sort of half question if you will.

Speaker Change #152: Yeah.

Speaker Change #152: Is that innovation driven or promotion or put a little color on that expectation?

Speaker Change #152: A small question.

Speaker Change #152: So, it's a great question, Rob.

Speaker Change #152: Yeah.

Speaker Change #152: You guys are expecting Marzetti volume to be up, which is a nice, I think, overall turn for that business line.

Speaker Change #152: And when you look at the business, you know, I don't think that there are any areas, necessarily where we're over distorting our investments because we think there's outsized leverage. But I think there's a lot of areas where, you know, we're kind of overdistorting our investments because we think there's outsized leverage. But I think there's a lot of areas where we're kind of overdistorting our investments.

Speaker Change #152: Well, it's, it's a little bit innovation.

Speaker Change #152: Is that innovation driven or promotion or put a little color on that expectation?

Speaker Change #152: Having said that, there are areas of the portfolio where we think that we continue to watch.

Speaker Change #152: We brought out some new items.

Speaker Change #152: Yeah.

Speaker Change #152: We've made a series of changes in Sister Schubert.

Speaker Change #152: We've strengthened our portfolio of simply items and honestly and transparently we have a little bit of a soft comp.

Speaker Change #152: Well, it's, it's a little bit innovation.

Speaker Change #152: As you recall, we downsized the roll.

Speaker Change #152: We're going up against there as well.

Speaker Change #152: We brought out some new items.

Speaker Change #152: They used to be one and a half ounces.

Speaker Change #152: So.

Speaker Change #152: We've strengthened our portfolio of simply items and honestly and transparently we have a little bit of a soft comp.

Speaker Change #152: We took them down to one and a quarter that moved them, in line with the peer group.

Speaker Change #152: Got it.

Speaker Change #152: We're going up against there as well.

Speaker Change #152: And so when you look at volume growth in pounds, you're going to see that diminution that's in there.

Speaker Change #152: All right.

Speaker Change #152: So.

Speaker Change #152: We've seen that come out, but we're also watching units in that particular category, and our units are probably a little softer than we would like them to be.

Speaker Change #152: Well, thank you for the answer.

Speaker Change #152: Got it.

Speaker Change #152: So we're keeping a careful eye on that category.

Speaker Change #152: Appreciate it.

Speaker Change #152: All right.

Speaker Change #152: There are categories like croutons, which we have a greater level of exposure to with private label.

Speaker Change #152: Thank you.

Speaker Change #152: Well, thank you for the answer.

Speaker Change #152: Were that to become soft, we would probably be pretty careful about over-investing and things like that.

Speaker Change #152: Your next question comes from Brian Holland with DA Davidson.

Speaker Change #152: Appreciate it.

Speaker Change #152: The areas where I think you can expect us to watch most carefully because of the margin and, the size of the business would be Olive Garden, for example.

Speaker Change #152: You're letting us know open.

Speaker Change #152: Thank you.

Speaker Change #152: It's a very big brand, and we watch our price points there with shopper activity carefully.

Speaker Change #152: Yeah.

Speaker Change #152: Your next question comes from Brian Holland with DA Davidson.

Speaker Change #152: Another one would be Texas Toast.

Speaker Change #152: Thanks for morning.

Speaker Change #152: You're letting us know open.

Speaker Change #152: It's our single biggest brand in our portfolio, own brand, and it's one where we know that the category has a pretty well-developed private label entrant.

Speaker Change #152: Maybe just to follow up on the line of questioning around the outlook for fiscal 25.

Speaker Change #152: Yeah.

Speaker Change #152: So that's one where we watch.

Speaker Change #152: Thanks for morning.

Speaker Change #152: We're continuing to do well in the category, but that's one that should we see softness, we would be prepared to invest against it.

Speaker Change #152: I would think through the third quarter fiscal 25.

Speaker Change #152: Maybe just to follow up on the line of questioning around the outlook for fiscal 25.

Speaker Change #152: If you look at our licensed businesses, generally they held up better than a lot of other brands, because they're so unique in the space, and we haven't felt the need necessarily to go in and discount.

Speaker Change #152: Yeah, it includes includes.

Speaker Change #152: Really, the one exception there has been Olive Garden that I mentioned where we focused on that 16-ounce skew.

Speaker Change #152: Yeah, so we feel like there's enough to help us offset that solution.

Speaker Change #152: I would think through the third quarter fiscal 25.

Speaker Change #152: But your instincts are right.

Speaker Change #152: Okay, understood.

Speaker Change #152: Yeah, it includes includes.

Speaker Change #152: I mean, look, what underlies this whole thing, I think broadly, is that consumers are in the midst of really a sustained, unrelenting squeeze that affects 60% of households, including households making over $100,000, where after years of inflation that exceeded wage growth, they found themselves upside down, and they bridged it initially with COVID savings, and once those were expended, they turned to credit cards. But we know credit card debt has grown now on average to about $6,000, and the interest payment on that per month is about $200.

Speaker Change #152: And then on the food service side, should we assume that pass through pricing would obviously for cue it essentially fully offset the food service volume?

Speaker Change #152: Yeah, so we feel like there's enough to help us offset that solution.

Speaker Change #152: And you put that all together, and I think consumers now are really trimming their sales and trying to balance their sources and uses.

Speaker Change #152: Does that dissipate as we move through fiscal 25 such that volume growth and excess of that pass through pricing?

Speaker Change #152: Okay, understood.

Speaker Change #152: And they're looking for value, but again, they're also looking for affordable luxury and small things to make their days go better.

Speaker Change #152: Yes.

Speaker Change #152: And then on the food service side, should we assume that pass through pricing would obviously for cue it essentially fully offset the food service volume?

Speaker Change #152: So our own view internally here, Rob, is that we think that we're going to be in this environment for some time, and nothing magically is going to fix it.

Speaker Change #152: Q4, the way the timing worked out with our pricing and commodities. We were slightly unfavorable in peanut and had a big gross to net sweat down on food service.

Speaker Change #152: Does that dissipate as we move through fiscal 25 such that volume growth and excess of that pass through pricing?

Speaker Change #152: So it's kind of a combination of watch value, but we're not going to win on value.

Speaker Change #152: That's just a function of how things lined up this particular quarter going forward based on our commodity forecast.

Speaker Change #152: Yes.

Speaker Change #152: And then let's leverage our innovation as a means by which to continue to bring good items into the marketplace at the right price point that allow us to outperform the peers over the long haul.

Speaker Change #152: We expect things to be neutral.

Speaker Change #152: Q4, the way the timing worked out with our pricing and commodities. We were slightly unfavorable in peanut and had a big gross to net sweat down on food service.

Speaker Change #152: And it just feels like an appropriate strategy in this environment.

Speaker Change #152: That's just a function of how things lined up this particular quarter going forward based on our commodity forecast.

Speaker Change #152: It makes complete sense.

Speaker Change #152: So I'm just curious.

Speaker Change #152: We expect things to be neutral.

Speaker Change #152: I really appreciate it.

Speaker Change #152: And so you can correct me on this.

Speaker Change #152: Thank you so much.

Speaker Change #152: I didn't I just assume that was a regular course of business that you have this R&D pipeline that you're always sort of turning out for customers.

Speaker Change #152: So I'm just curious.

Speaker Change #152: Of course.

Speaker Change #152: So maybe if we just dig into that a little bit deeper and understand whether the cadence of that changes in fiscal 25, these would be 24, are you getting asked to do more of that has more of that pipeline conveyed.

Speaker Change #152: And so you can correct me on this.

Speaker Change #152: Thanks, Robert.

Speaker Change #152: And therefore maybe that would be the reason for sequential improvement as we move, here.

Speaker Change #152: I didn't I just assume that was a regular course of business that you have this R&D pipeline that you're always sort of turning out for customers.

Speaker Change #152: Thanks.

Speaker Change #152: Sure, so maybe I'll start if you'll allow me a big picture and then drill in specifically on the timing of the new item.

Speaker Change #152: Thank you.

Speaker Change #152: So again, I think there were two drivers.

Speaker Change #152: And therefore maybe that would be the reason for sequential improvement as we move, here.

Speaker Change #152: As a reminder, to ask a question, please press star 1-1 on your telephone keypad.

Speaker Change #152: One was, as you look at sort of what happened as we went through the quarter, really, through the spring to the end of our quarter, there was a deceleration and traffic across really all of QSR.

Speaker Change #152: Sure, so maybe I'll start if you'll allow me a big picture and then drill in specifically on the timing of the new item.

Speaker Change #152: Your next question is from Todd Brooks of the Benchmark Company.

Speaker Change #152: You guys are seeing it in the data and you've heard our peers talk about it. At the very end of the quarter we saw a slow down in some of our orders that they were probably balancing their inventory with their traffic trends.

Speaker Change #152: So again, I think there were two drivers.

Speaker Change #152: Your line is now open.

Speaker Change #152: The other piece that I referred to specifically was the timing of the new items and we had a range of new items that were time to ship at the end of the period.

Speaker Change #152: Hey.

Speaker Change #152: Some of that volume slipped from the end of this period, end of the beginning of the next period and it was purely timing and of course, finally, it could have been related to available space for inventory.

Speaker Change #152: Thanks.

Speaker Change #152: So, you know, Brian, what I would tell you is when we look at this, it looks like just a wrinkle for this particular period in the way that things lined up.

Speaker Change #152: The other piece that I referred to specifically was the timing of the new items and we had a range of new items that were time to ship at the end of the period.

Speaker Change #152: Good morning.

Speaker Change #152: You're right, we have a very steady cadence of LTO activity or limited time offering activity that's in place and this particular period, it just hit us a little bit harder than we had expected.

Speaker Change #152: Thanks for taking my questions.

Speaker Change #152: So we delivered four points of volume and food service and we were expecting north of that.

Speaker Change #152: So, you know, Brian, what I would tell you is when we look at this, it looks like just a wrinkle for this particular period in the way that things lined up.

Speaker Change #152: I wanted to start on the gross margin side, and the way that I'm kind of reading the discussion, as far as what we're thinking for fiscal 25 is kind of hold the hill on the product margin components of the business, and then task cost saves to generate an improvement in margin rate.

Speaker Change #152: Appreciate the color.

Speaker Change #152: But I wanted to see if we could talk through if that's the right read, or is it more cost, saves offset a chunk of potentially pressure on product margins, and the incremental cost saves are what could allow for some modest gross margin improvement in 25?

Speaker Change #152: And then maybe just flipping back over to the retail segment.

Speaker Change #152: So we delivered four points of volume and food service and we were expecting north of that.

Speaker Change #152: Yeah.

Speaker Change #152: I guess you said food service, so maybe just quickly, you said food service was a little bit below expectation.

Speaker Change #152: Appreciate the color.

Speaker Change #152: Well, if you'll allow me, maybe I'll start and then turn it to Tom, and I'll start with, the big picture.

Speaker Change #152: How did retail come in relative to internal expectations?

Speaker Change #152: And then maybe just flipping back over to the retail segment.

Speaker Change #152: If you look at the drivers of margins, maybe I'd start with commodities, and what we've, seen is a strong growing season in the commodities that matter to us, which has brought down prices on things like wheat and corn and soybean oil.

Speaker Change #152: Mindful, you don't provide formal guidance because obviously you lack the potential, but there's no guidance, so.

Speaker Change #152: I guess you said food service, so maybe just quickly, you said food service was a little bit below expectation.

Speaker Change #152: On the flip side, though, we're watching commodities rise, particularly in eggs and dairy, where, eggs on the Erneberry recently have gone up to above $3.50.

Speaker Change #152: Yeah, retail was pretty much right on it.

Speaker Change #152: How did retail come in relative to internal expectations?

Speaker Change #152: But you put all of that together in packaging, right now that puts us in a position where, we're pretty much neutral in terms of the commodity outlook.

Speaker Change #152: I mean, if you looked at their consumption data through the period was very consistent with what we expected.

Speaker Change #152: Mindful, you don't provide formal guidance because obviously you lack the potential, but there's no guidance, so.

Speaker Change #152: That means that it really doesn't give us a reason to have a conversation on pricing.

Speaker Change #152: I mean, and the things that shifted really didn't add up to a point where they materially impacted things.

Speaker Change #152: Yeah, retail was pretty much right on it.

Speaker Change #152: So then you flip around and you say, okay, now, if that's true, what needs to be true, for us to drive margin improvement?

Speaker Change #152: We did have one promotion with the retailers slipped from the NQ4 and the Q1, but I don't think it made a material difference in the grand scheme of things.

Speaker Change #152: I mean, if you looked at their consumption data through the period was very consistent with what we expected.

Speaker Change #152: It's probably not going to come from revenue management.

Speaker Change #152: So, you know, that business, the data, as you know, is very rich that we get on the consumer side.

Speaker Change #152: I mean, and the things that shifted really didn't add up to a point where they materially impacted things.

Speaker Change #152: It's going to come through execution or plans, and given the commodity outlook, it's not, deflation. It's really going to come through productivity improvements in the manufacturing environment, and to a lesser degree in our logistics environment.

Speaker Change #152: We get a weekly and we're able to use that forecast and model what we think our retailers have in terms of their inventory.

Speaker Change #152: We did have one promotion with the retailers slipped from the NQ4 and the Q1, but I don't think it made a material difference in the grand scheme of things.

Speaker Change #152: But we're singularly focused really on the manufacturing side, and I've shared with some, of you on the call that we feel like there continue to be opportunities to drive automation projects in our dough plants.

Speaker Change #152: On the food service side, the data isn't quite as rich and it's not quite as timely, so it's hard for us to model out some of that.

Speaker Change #152: So, you know, that business, the data, as you know, is very rich that we get on the consumer side.

Speaker Change #152: We have a number of those that are in flight that are going to be coming online with benefits, as the year builds, which are great projects.

Speaker Change #152: That's probably the difference, but in both cases, if you look at retail there was a range, I said 14 new items that we went out with and they're all performing generally in line with our expectations.

Speaker Change #152: We get a weekly and we're able to use that forecast and model what we think our retailers have in terms of their inventory.

Speaker Change #152: But again, we think this is the sustained environment.

Speaker Change #152: Okay, great.

Speaker Change #152: On the food service side, the data isn't quite as rich and it's not quite as timely, so it's hard for us to model out some of that.

Speaker Change #152: Labor costs are moderating.

Speaker Change #152: So, maybe just a close big picture.

Speaker Change #152: We're not seeing the run-up we were seeing.

Speaker Change #152: Just maybe an update on the food service or excuse me, the licensing pipeline, how that has evolved.

Speaker Change #152: Okay, great.

Speaker Change #152: Labor availability tends to be good.

Speaker Change #152: Obviously, you're picking up incremental business from existing customers i.e.

Speaker Change #152: So, maybe just a close big picture.

Speaker Change #152: So now I think for us and everybody else in the space, it's just figuring out how we hold, our price points, how do we maintain value, and then how do we figure out how we excise the trapped cost in our manufacturing environment.

Speaker Change #152: Texas Roadhouse.

Speaker Change #152: Just maybe an update on the food service or excuse me, the licensing pipeline, how that has evolved.

Speaker Change #152: That's helpful.

Speaker Change #152: Just curious how the pipeline is shaping up underneath that given the pressures.

Speaker Change #152: Obviously, you're picking up incremental business from existing customers i.e.

Speaker Change #152: Thanks, Dave.

Speaker Change #152: Are we seeing an increase in in bounds with food service trends performing as they are, and then maybe also the M&A landscape as it feels like we're getting closer to kind of being in a position that you aspire to get to to go out and make acquisitions, just maybe what that pipe.

Speaker Change #152: Texas Roadhouse.

Speaker Change #152: That's helpful.

Speaker Change #152: Blind looks like.

Speaker Change #152: Just curious how the pipeline is shaping up underneath that given the pressures.

Speaker Change #152: Thanks, Dave.

Speaker Change #152: And I'll leave it there.

Speaker Change #152: And then I know that you've talked about having the ERP project behind us here and being able, to lever benefits of the data that you're now getting on both businesses.

Speaker Change #152: Thank you.

Speaker Change #152: Blind looks like.

Speaker Change #152: I guess if you look at – and historically, this has been part of the DNA for Lancaster, – that cost extraction goal each year, with these additional tools on top and maybe the fact that it's been a hard environment to extract, costs.

Speaker Change #152: Sure.

Speaker Change #152: And I'll leave it there.

Speaker Change #152: Is there an annual goal that you'd share with us that you're tasking the team with, given the new tools going forward?

Speaker Change #152: Of course, maybe starting with the licensing pipeline, we'll talk about the items that we went out with most recently that were drilled with the performance of Chick-fil-A dressings.

Speaker Change #152: Thank you.

Speaker Change #152: Well, maybe what I'm prepared to share, what we're prepared to share with you, Todd, is if you go back to the early days of our Continuous Improvement Program, before COVID and before ERP, we used to talk about saving, $20 million a year.

Speaker Change #152: I think I mentioned that the Avocado Lime dressing in particular, that single skew has become the second best performing skew in the entire set inside of one year. If you look at the run rate on that business, it's also become quite substantial.

Speaker Change #152: Sure.

Speaker Change #152: And then we suspended that as we focused on construction projects and ERP.

Speaker Change #152: Swinging around to Subway, Subway I would say is outperformed our expectations.

Speaker Change #152: And now we've brought that back.

Speaker Change #152: And we've even been surprised with the strength of the brand in Canada, where it's been a little bit of an upside on it.

Speaker Change #152: And what I am prepared to tell you is that we've taken the, target up that our team is pursuing north of what we used to pursue, and we feel like it's achievable.

Speaker Change #152: So we're excited about that proposition and they're a great partner to work with.

Speaker Change #152: Swinging around to Subway, Subway I would say is outperformed our expectations.

Speaker Change #152: Okay, great.

Speaker Change #152: If you look at what's happening on Buffalo Wild Wings and all of the gardens, there continues to be a lot of activity and discussions with those partners, with Buffalo Wild Wings, you'll recall, not only have we been driving sauces, but we did a test.

Speaker Change #152: And we've even been surprised with the strength of the brand in Canada, where it's been a little bit of an upside on it.

Speaker Change #152: And then just kind of working our way down the income statement here, thoughts on SG&A efficiency and just the ability to keep levering that line item as you look to 25, or do you expect more spend around what's needed to consumers?

Speaker Change #152: It was a single rotation at Costco last year with dips that perform well.

Speaker Change #152: So we're excited about that proposition and they're a great partner to work with.

Speaker Change #152: Are you thinking about that, kind of holding flattish in that high 11% range that you were able to achieve in fiscal 24?

Speaker Change #152: And we're looking forward to working with them to expand that.

Speaker Change #152: Yeah, from a percent of revenue, I think we're going to be in that similar range.

Speaker Change #152: We'll have more news on that later in the year.

Speaker Change #152: It was a single rotation at Costco last year with dips that perform well.

Speaker Change #152: We do expect, it in the absolutes to go up.

Speaker Change #152: With respect to Chick-fil-A, the big news was coming out with dressings.

Speaker Change #152: And we're looking forward to working with them to expand that.

Speaker Change #152: We do need to make some critical investments in our IT infrastructure that we're going to fund in part through the savings of Project Ascent ending.

Speaker Change #152: We're working with them on a spring launch of new items that we're going to be excited to share with you once we're in a position to do that.

Speaker Change #152: We'll have more news on that later in the year.

Speaker Change #152: But overall, we don't expect it to go up any more than inflation and as a percent of revenue to be in mind.

Speaker Change #152: With respect to Chick-fil-A, the big news was coming out with dressings.

Speaker Change #152: Okay, great.

Speaker Change #152: We've been pleased with the performance of the sauces.

Speaker Change #152: We're working with them on a spring launch of new items that we're going to be excited to share with you once we're in a position to do that.

Speaker Change #152: Thanks, Tom.

Speaker Change #152: They play in a small category and we love our entry there.

Speaker Change #152: And then the final one for me, and I'll jump back in.

Speaker Change #152: But their roles are really a special item that consumers really like. We've come up with an item that's inspired by their original role.

Speaker Change #152: We've been pleased with the performance of the sauces.

Speaker Change #152: Exciting news about the gluten-free Texas toast.

Speaker Change #152: It's in a three-state test in Indiana, Kentucky, Ohio that's outperforming our expectations and our partner at Texas Roadhouse.

Speaker Change #152: They play in a small category and we love our entry there.

Speaker Change #152: And obviously, Texas Roadhouse, has roles coming in the future.

Speaker Change #152: So we look forward to sitting down with them and then planning the launch thereafter.

Speaker Change #152: But their roles are really a special item that consumers really like. We've come up with an item that's inspired by their original role.

Speaker Change #152: When we look at the gluten-free Texas toast, how big of a category opportunity is that product?

Speaker Change #152: But that item in particular really opens up a whole new category for us to play in.

Speaker Change #152: It's in a three-state test in Indiana, Kentucky, Ohio that's outperforming our expectations and our partner at Texas Roadhouse.

Speaker Change #152: And how protected is that offering as far as not having private label competition?

Speaker Change #152: We're excited for that where that can go.

Speaker Change #152: So we look forward to sitting down with them and then planning the launch thereafter.

Speaker Change #152: So is that a margin enhancing opportunity on whatever additional sales dollars you expect it to deliver?

Speaker Change #152: You know more broadly, we do continue to have conversations with other people.

Speaker Change #152: But that item in particular really opens up a whole new category for us to play in.

Speaker Change #152: Thanks.

Speaker Change #152: We'll be in a position to update you guys once we have more.

Speaker Change #152: We're excited for that where that can go.

Speaker Change #152: Yeah.

Speaker Change #152: But maybe what I'm not excited to talk about is you're precisely right.

Speaker Change #152: You know more broadly, we do continue to have conversations with other people.

Speaker Change #152: Well, maybe starting first with the product, it's amazing.

Speaker Change #152: If you go back over the last two years, we've gone live on ERP.

Speaker Change #152: We'll be in a position to update you guys once we have more.

Speaker Change #152: It's a product that we developed. We actually got a patent on the technology because if you've tried gluten-free bread products, a lot of times they're very spongy, or they have an off note in the flavor. And these taste nearly identical to our current item. And that's part of the reason why we're so excited about it.

Speaker Change #152: We finished all of our waves.

Speaker Change #152: But maybe what I'm not excited to talk about is you're precisely right.

Speaker Change #152: Versus private label, this is one where I think we're probably a little bit isolated.

Speaker Change #152: We laughed the last, we're going to laugh the last wave, our fifth wave in September.

Speaker Change #152: If you go back over the last two years, we've gone live on ERP.

Speaker Change #152: For us, these are consumers that were either gluten intolerant, or they had celiacs where they weren't really able to even buy our product.

Speaker Change #152: So ERP, as Tom mentioned, completely drawn down.

Speaker Change #152: We finished all of our waves.

Speaker Change #152: So for us, it's incremental.

Speaker Change #152: Horse Cave is up and running.

Speaker Change #152: We laughed the last, we're going to laugh the last wave, our fifth wave in September.

Speaker Change #152: And the items that are out there today, both the brands and the private label, just honestly don't taste very good.

Speaker Change #152: You look at our cash balances for the end of the quarter. They're continued to build. This business generates, has the ability to generate a lot of cash.

Speaker Change #152: So ERP, as Tom mentioned, completely drawn down.

Speaker Change #152: I've spent a lot of time in the last quarter eating Texas toast, gluten-free and non-gluten-free as we've got the products ready for launch. And these are really great products.

Speaker Change #152: And I think we're in a position now to lift and shift our focus and start to look at that sorts of inorganic growth.

Speaker Change #152: Horse Cave is up and running.

Speaker Change #152: So I'm thrilled to have IP.

Speaker Change #152: And you can expect to hear more from us on that as we progress through this year because we feel like we have the team.

Speaker Change #152: You look at our cash balances for the end of the quarter. They're continued to build. This business generates, has the ability to generate a lot of cash.

Speaker Change #152: I'm thrilled to have the flavor and the pricing on this thing is very much in line with the other products that are out there, similar products that are gluten-free.

Speaker Change #152: We have that strong balance sheet. We have an asset to allow us to produce with focus scale that will allow us to compete against even the the mega caps within narrow categories like sauces and dressings.

Speaker Change #152: And I think we're in a position now to lift and shift our focus and start to look at that sorts of inorganic growth.

Speaker Change #152: So I think we can win on taste and on value.

Speaker Change #152: And we're looking forward to that next chapter of our group.

Speaker Change #152: And you can expect to hear more from us on that as we progress through this year because we feel like we have the team.

Speaker Change #152: So I think what we're also looking for as just a platform, is there an opportunity for us to, use this technology or similar technologies that we're patenting to look for other gluten-free items?

Speaker Change #152: Thank you.

Speaker Change #152: Because to your point, it is, it's a very, very big addressable opportunity that we just haven't played in in the past.

Speaker Change #152: Your next question comes from Connor Rattigan with Consumer Edge.

Speaker Change #152: And we're looking forward to that next chapter of our group.

Speaker Change #152: That's great.

Speaker Change #152: Your line is open.

Speaker Change #152: Thank you.

Speaker Change #152: Thanks, Dave.

Speaker Change #152: Hey guys, good morning.

Speaker Change #152: Your next question comes from Connor Rattigan with Consumer Edge.

Speaker Change #152: Thank you.

Speaker Change #152: Thanks for the question.

Speaker Change #152: Your line is open.

Speaker Change #152: If there are no further questions, we will now turn the call back to Mr. Ciesinski for his closing comments.

Speaker Change #152: Good morning, Connor.

Speaker Change #152: Hey guys, good morning.

Speaker Change #152: Yeah, so in the data that we see, it looks like Chick-fil-A friends are really starting to soften as I get from some tough comps or laps.

Speaker Change #152: Thanks for the question.

Speaker Change #152: So as we look ahead to fiscal 2025, do you guys still expect Chick-fil-A to be the primary retail sales driver or easy explication sort of that a lot of that license growth comes from other licenses with Chick-fil-A, something like taking the back seat, the time being despite the new products coming.

Speaker Change #152: Good morning, Connor.

Speaker Change #152: No, you're right.

Speaker Change #152: Yeah, so in the data that we see, it looks like Chick-fil-A friends are really starting to soften as I get from some tough comps or laps.

Speaker Change #152: When you look at a particularly towards the end of the fourth quarter, we had a lot of promotional activity last year that didn't necessarily repeat this year.

Speaker Change #152: We also had the launch of dressings, which is provided an overall source of growth for the proposition.

Speaker Change #152: No, you're right.

Speaker Change #152: If you look at the business, we expected to continue to grow as we press forward, you know, behind support as we look to drive households.

Speaker Change #152: When you look at a particularly towards the end of the fourth quarter, we had a lot of promotional activity last year that didn't necessarily repeat this year.

Speaker Change #152: But I think what we're more excited to share is we do have a range of new product activity that we're going to come out with probably in November and talk to you guys about there that will continue to fuel growth growth on the brand more in the back half.

Speaker Change #152: We also had the launch of dressings, which is provided an overall source of growth for the proposition.

Speaker Change #152: Got it makes sense.

Speaker Change #152: If you look at the business, we expected to continue to grow as we press forward, you know, behind support as we look to drive households.

Speaker Change #152: And so also so I guess we'll say adjusted retail volume.

Speaker Change #152: So X the business like this, where we're pretty solid this quarter.

Speaker Change #152: Got it makes sense.

Speaker Change #152: So I mean, I guess I was just trying to wondering, do you guys maybe give us a sense of just sort of how incremental subway and Texas Roadhouse word this quarter and sort of how they perform versus your expectations.

Speaker Change #152: And so also so I guess we'll say adjusted retail volume.

Speaker Change #152: So because in the data that we see right the list has been pretty modest, but it sounds like that should be, I guess, much stronger in just 2025.

Speaker Change #152: So X the business like this, where we're pretty solid this quarter.

Speaker Change #152: I'm not mistaken.

Speaker Change #152: But when we look at it on scanner data for some way, you know, some kind of data, it was about $5 million within the quarter.

Speaker Change #152: So because in the data that we see right the list has been pretty modest, but it sounds like that should be, I guess, much stronger in just 2025.

Speaker Change #152: And it's built throughout the quarter as we continue to build that distribution.

Speaker Change #152: I'm not mistaken.

Speaker Change #152: If you look at Texas Roadhouse, it was a little bit more than a million.

Speaker Change #152: But when we look at it on scanner data for some way, you know, some kind of data, it was about $5 million within the quarter.

Speaker Change #152: And again, just building as we went through the period.

Speaker Change #152: And it's built throughout the quarter as we continue to build that distribution.

Speaker Change #152: Hopefully that helps you.

Speaker Change #152: If you look at Texas Roadhouse, it was a little bit more than a million.

Speaker Change #152: You put the two together, the percentage of net sales on those two items is roughly 3%.

Speaker Change #152: And again, just building as we went through the period.

Speaker Change #152: Thank you.

Speaker Change #152: Hopefully that helps you.

Speaker Change #152: Your next question comes from the line of Robert Dickerson with Jeffries.

Speaker Change #152: You put the two together, the percentage of net sales on those two items is roughly 3%.

Speaker Change #152: Your line is not open.

Speaker Change #152: Thank you.

Speaker Change #152: Great.

Speaker Change #152: Your next question comes from the line of Robert Dickerson with Jeffries.

Speaker Change #152: Thanks so much.

Speaker Change #152: Your line is not open.

Speaker Change #152: It's had a couple of questions on the price investment.

Speaker Change #152: Great.

Speaker Change #152: I know there was deflationary dynamics in place, I guess, in Q4.

Speaker Change #152: Thanks so much.

Speaker Change #152: The price investment did seem a little bit more than I think kind of the market expected.

Speaker Change #152: It's had a couple of questions on the price investment.

Speaker Change #152: So maybe if you could just one just provide some color.

Speaker Change #152: I know there was deflationary dynamics in place, I guess, in Q4.

Speaker Change #152: You know, I know, but it's like I heard a lot about LCOs and you know, partnerships and kind of, you know, ancillary plan, in place in case certain, you know, dynamics play out to the year, but I'm kind of curious.

Speaker Change #152: The price investment did seem a little bit more than I think kind of the market expected.

Speaker Change #152: I guess one is just, you know, as we think through just like the first two quarters of the year.

Speaker Change #152: So maybe if you could just one just provide some color.

Speaker Change #152: Like, does that year pricing investment kind of go way or we seem like we're, we're kind of still in that pocket.

Speaker Change #152: That's the first question.

Speaker Change #152: I guess one is just, you know, as we think through just like the first two quarters of the year.

Speaker Change #152: And then the second piece was just on the food service margin.

Speaker Change #152: Like, does that year pricing investment kind of go way or we seem like we're, we're kind of still in that pocket.

Speaker Change #152: Thank you for clearly that well than it normally is.

Speaker Change #152: That's the first question.

Speaker Change #152: I'm just trying to gauge against we think through let's say the first half of the year, you know, is that dynamic there or did I hear you kind of say there was it was Q4 specific kind of given the pricing and the commodities but somehow that changes as we get through the early part of the year.

Speaker Change #152: And then the second piece was just on the food service margin.

Speaker Change #152: Thanks.

Speaker Change #152: Thank you for clearly that well than it normally is.

Speaker Change #152: Yeah, it's it really as I mentioned was kind of a timing issue in Q4 as commodities come down. Our prices are coming down and as such, it hit more significantly in Q4 than in the earlier quarters, as you mentioned.

Speaker Change #152: Going forward, we do expect to be more neutral now turning to the food service profitability.

Speaker Change #152: Thanks.

Speaker Change #152: This particular quarter peanut was negative as I mentioned. In addition, we had some incremental outsourcing that impacted the margins and we were making some supply chain investments to improve performance.

Speaker Change #152: So, you know, going forward in terms of the plans to improve, we definitely expect to improve efficiencies on this business.

Speaker Change #152: Going forward, we do expect to be more neutral now turning to the food service profitability.

Speaker Change #152: We're going to get more benefits from SAP understanding our costs and driving for better margin performance.

Speaker Change #152: We expect to reduce outsourcing and we're also looking at some ways to optimize the network to improve the profitability.

Speaker Change #152: So, you know, going forward in terms of the plans to improve, we definitely expect to improve efficiencies on this business.

Speaker Change #152: We expect that, as I mentioned, kind of overall, a lot of those programs to be more back end loaded and front end loaded, but we still we still feel like we've got a lot of opportunity, a lot of runway to improve the margins.

Speaker Change #152: We're going to get more benefits from SAP understanding our costs and driving for better margin performance.

Speaker Change #152: Okay, fair enough.

Speaker Change #152: We expect to reduce outsourcing and we're also looking at some ways to optimize the network to improve the profitability.

Speaker Change #152: And then I guess just secondly.

Speaker Change #152: You know, in the retail segment, volumes that could leave a flat, you know, I'm hearing definitely a lot of positive comments around certain brands and certain products.

Speaker Change #152: Okay, fair enough.

Speaker Change #152: And then I'm also hearing, you know, there should be some incremental products as it sounds like as we kind of get through fiscal 25.

Speaker Change #152: And then I guess just secondly.

Speaker Change #152: We're there areas though that maybe didn't do so well that you're kind of letting us say not do so well.

Speaker Change #152: You know, in the retail segment, volumes that could leave a flat, you know, I'm hearing definitely a lot of positive comments around certain brands and certain products.

Speaker Change #152: Right.

Speaker Change #152: And then I'm also hearing, you know, there should be some incremental products as it sounds like as we kind of get through fiscal 25.

Speaker Change #152: So for thinking about kind of where the target investment is, one of the real drivers that grows is we think through even the first half of 25.

Speaker Change #152: We're there areas though that maybe didn't do so well that you're kind of letting us say not do so well.

Speaker Change #152: You know, are there areas where there's a little bit of an offset or maybe you're okay, you know, you're actually okay with that because you're running it for profitability, et cetera.

Speaker Change #152: Right.

Speaker Change #152: That's all thanks.

Speaker Change #152: So for thinking about kind of where the target investment is, one of the real drivers that grows is we think through even the first half of 25.

Speaker Change #152: Yeah, so it's a great question Rob and when you look at the business, you know, I don't think that there are any areas necessarily where we're over distorting our investments because we think there's outsized leverage.

Speaker Change #152: Having said that, they're areas of the portfolio where we think that we continue to watch.

Speaker Change #152: That's all thanks.

Speaker Change #152: We've made a series of changes in Sister Schubert, as you recall, we downsize the role.

Speaker Change #152: They used to be a one and a half ounces.

Speaker Change #152: Having said that, they're areas of the portfolio where we think that we continue to watch.

Speaker Change #152: We took them down to one and a quarter that moved them in line with the peer group.

Speaker Change #152: We've made a series of changes in Sister Schubert, as you recall, we downsize the role.

Speaker Change #152: And so when you look at volume growth and pound, you're going to see that diminution that's in there.

Speaker Change #152: They used to be a one and a half ounces.

Speaker Change #152: You know, we've seen that come out, but we're also watching units in that particular category.

Speaker Change #152: We took them down to one and a quarter that moved them in line with the peer group.

Speaker Change #152: And our units are probably a little softer than we would like them to be. So we're keeping a careful eye on that category.

Speaker Change #152: And so when you look at volume growth and pound, you're going to see that diminution that's in there.

Speaker Change #152: Are there categories like croutons, which we have a greater level of exposure to with private label that were that to become soft?

Speaker Change #152: You know, we've seen that come out, but we're also watching units in that particular category.

Speaker Change #152: We would probably be pretty careful about over investing and things like that.

Speaker Change #152: And our units are probably a little softer than we would like them to be. So we're keeping a careful eye on that category.

Speaker Change #152: The areas where I think you can expect us to watch most carefully because of the margin and the size of the business would be, you know, all of garden, for example.

Speaker Change #152: Are there categories like croutons, which we have a greater level of exposure to with private label that were that to become soft?

Speaker Change #152: It's a very big brand and we watch our price points there will shop or activity carefully.

Speaker Change #152: We would probably be pretty careful about over investing and things like that.

Speaker Change #152: Another one would be Texas Toast.

Speaker Change #152: The areas where I think you can expect us to watch most carefully because of the margin and the size of the business would be, you know, all of garden, for example.

Speaker Change #152: It's our single biggest brand in our portfolio, own brand. And it's one where we know that the category has a pretty well developed private label entrance.

Speaker Change #152: It's a very big brand and we watch our price points there will shop or activity carefully.

Speaker Change #152: Another one would be Texas Toast.

Speaker Change #152: It's our single biggest brand in our portfolio, own brand. And it's one where we know that the category has a pretty well developed private label entrance.

Speaker Change #152: So that's one where we watch.

Speaker Change #152: We're continuing to do well in the category, but that's one that should we see softness.

Speaker Change #152: We would be prepared to invest against it.

Speaker Change #152: And if you look at our licensed businesses, generally they held up better than a lot of other brands because we're so unique in the space.

Speaker Change #152: And we haven't felt the need necessarily to go in and discount really that the one exception there has been all of garden that I mentioned, where we focused on that 16 ounce skew.

Speaker Change #152: But your instincts are right.

Speaker Change #152: I would look at what underlies this whole thing.

Speaker Change #152: I think broadly is that consumers are in the midst of really a sustained, unrelenting squeeze.

Speaker Change #152: That affects 60% of households, including households making over a hundred thousand bucks, where after years of inflation that exceeded wage growth, they found themselves upside down. And they bridged it initially with COVID savings. And once those were expended, they turned the credit cards.

Speaker Change #152: But we know credit card debt has grown now on average, about 6,000 bucks. And the interest payment on that per month is about 200 bucks.

Speaker Change #152: And you put that all together.

Speaker Change #152: And I think consumers now are really trimming their sale and trying to balance their sources and uses.

Speaker Change #152: And they're looking for value.

Speaker Change #152: But again, they're also looking for affordable luxury and small things to make their days go better.

Speaker Change #152: So, our own view internally here, Rob, is that we think that we're going to be in this environment for some time.

Speaker Change #152: And nothing magically is going to fix it.

Speaker Change #152: So it's kind of a combination of watch value, but we're not going to win on value. And then let's leverage our innovation as a means by which to continue to bring good items into the marketplace at the right price point, that allow us to outperform the peers over the long haul.

Speaker Change #152: And it just feels like an appropriate strategy in this environment.

Speaker Change #152: Makes complete sense.

Speaker Change #152: I really appreciate it.

Speaker Change #152: Thank you so much.

Speaker Change #152: Of course, thanks, Rob, Rob.

Speaker Change #152: Thank you.

Speaker Change #152: As a reminder, to ask a question, please press star one one on your telephone keypad.

Speaker Change #152: Your next question is from Todd Brooks of the benchmark company.

Speaker Change #152: You don't want to sell open.

Speaker Change #152: Hey, thanks.

Speaker Change #152: Good morning.

Speaker Change #152: Thanks for taking my questions.

Speaker Change #152: One just start on the gross mark.

Speaker Change #152: Good morning.

Speaker Change #152: One start on the gross margin side.

Speaker Change #152: And the way that I'm kind of reading the discussion as far as what we're thinking for fiscal 25 is kind of hold the hill on the product margin components of the business and then task cost saves to generate an improvement and margin rate.

Speaker Change #152: But I want to see if we could talk through if that's the right read or is it more cost saves offset a chunk of potentially pressure on product margins.

Speaker Change #152: And the incremental cost saves are what can allow for some modest gross margin improvement 25.

Speaker Change #152: Yeah, well, if you'll allow me, maybe I'll start and turn it to Tom and I'll start with the big picture.

Speaker Change #152: If you look at the drivers of margins, maybe I'd start with commodities. And what we've seen is a strong growing season in the commodities that matter to us, which has brought down prices on things like wheat and corn and soybean oil.

Speaker Change #152: On the flip side, though, we're watching commodities rise, particularly in eggs and dairy work eggs on earnabary recently have gone up to above $3.50.

Speaker Change #152: But you put all that together and packaging right now that puts us in a position where we're pretty much neutral in terms of the commodity outlook.

Speaker Change #152: That means that we really doesn't give us a reason to have a conversation on pricing.

Speaker Change #152: So then you flip around and you say, OK, now, if that's true, you know, what needs to be true for us to drive margin improvement?

Speaker Change #152: It's probably not going to come from revenue management.

Speaker Change #152: It's going to come through execution and our plants.

Speaker Change #152: And given the commodity outlook, it's not deflation. It's really going to come through productivity improvements in the manufacturing environment and to a lesser degree in our logistics environment.

Speaker Change #152: But we're singularly focused really on the manufacturing side.

Speaker Change #152: And I'm sure with some of you on the call that we feel like there are continue to be opportunities to drive automation projects in our dough plants.

Speaker Change #152: We have a number of those that are in flight that are going to be coming online with benefits as the year builds, which are great projects.

Speaker Change #152: But again, we think this is the sustained environment.

Speaker Change #152: Labor costs are moderating.

Speaker Change #152: We're not seeing the run-up we were seeing.

Speaker Change #152: Labor availability tends to be good.

Speaker Change #152: So now I think for us and everybody else in the space, it's just figuring out how do we hold our price points?

Speaker Change #152: How do we maintain value?

Speaker Change #152: And then how do we figure out how we excise the trap cost in our manufacturing environment?

Speaker Change #152: That's all, Paul.

Speaker Change #152: Thanks, Dave.

Speaker Change #152: And then I know that you've talked about having the ERP project behind us here and being able to lever benefits of the data that you're now getting on both businesses.

Speaker Change #152: I guess if you look at historically, this has been part of the DNA for Lancaster, that cost extraction goal each year with these additional tools on top. And maybe the fact that it's been a hard environment to extract.

Speaker Change #152: Costs.

Speaker Change #152: Is there an annual goal that you share with us that you're tasking the team with given the new tools going forward?

Speaker Change #152: Well, what I maybe what I'm prepared to share, what we're prepared to share with Todd is if you go back to the early days for a continuous improvement program before COVID.

Speaker Change #152: And before ERP, we used to talk about saving $20 million a year.

Speaker Change #152: And then we suspended that as we focused on construction projects and ERP.

Speaker Change #152: And now we've brought that back.

Speaker Change #152: And what I am prepared to tell you is that we've taken the target up that our team is pursuing north of what we used to pursue and we feel like it's achievable.

Speaker Change #152: Okay, great.

Speaker Change #152: And then just kind of working our way down the income statement here thoughts on SGNA efficiency and just the ability to keep leveling.

Speaker Change #152: That line item as you as you look to 25 or do you expect more spend around what's needed to consumers and you're thinking about that kind of holding flatish and that that high 11% range that you're able to achieve in fiscal 24.

Speaker Change #152: Yeah, from from a percent of revenue, I think we're going to be in that similar range.

Speaker Change #152: We do expect it in the absolutes to go up.

Speaker Change #152: We do need to make some critical investments in our IT infrastructure that that we're going to fund in part through the savings of project dissent ending.

Speaker Change #152: But overall, we do we don't expect it to go any up any more than inflation and and it's a percent of revenue to be in mind.

Speaker Change #152: Okay, great.

Speaker Change #152: Thanks, Tom.

Speaker Change #152: And then the final one for me and I'll jump back in.

Speaker Change #152: Exciting news about the gluten free Texas toast and obviously Texas road has roles coming in the future.

Speaker Change #152: When we look at the gluten free Texas toast, how big of a category of opportunity is that product and how protected is that offering as far as not having private label competition.

Speaker Change #152: So is that a margin enhancing opportunity on whatever additional sales dollars you expected to deliver.

Speaker Change #152: Thanks.

Speaker Change #152: Yeah.

Speaker Change #152: Well, maybe starting first with the product.

Speaker Change #152: It's it's amazing.

Speaker Change #152: We it's a product that we developed.

Speaker Change #152: We actually got a patent on the technology because if you've tried gluten free bread products, a lot of times they're very spongy or they have an off note in the flavor and these tastes nearly identical to our current item. That's part of the reason why we're so excited about it.

Speaker Change #152: We, you know, versus private label, this is one where I think we're probably a little bit isolated, you know, for us.

Speaker Change #152: These are consumers that were either, you know, that were the gluten intolerant or they had celiacs where they weren't really able to even buy our products.

Speaker Change #152: So for us, it's incremental and the items that are out there today both the brands and the private label just honestly don't taste very good.

Speaker Change #152: I've spent a lot of time in the last quarter eating Texas toast gluten free and non gluten free as we've got the products ready for launch and these are really great products.

Speaker Change #152: So I'm thrilled to have IP. I'm thrilled to have the flavor and, you know, the pricing on this thing is very much in line with the other products that are out there.

Speaker Change #152: Similar products that are gluten free.

Speaker Change #152: So I think we could win on taste and on value.

Speaker Change #152: So I think what we're also looking for as just a platform is there an opportunity for us to use this technology or similar technologies that we're patenting to look for other gluten free items because to your point, it is.

Speaker Change #152: It's a very, very big addressable opportunity that we just haven't played in in the past.

Speaker Change #152: That's great.

Speaker Change #152: Thanks, Dave.

Speaker Change #152: First.

Speaker Change #152: Thank you.

Speaker Change #152: If there are no further questions, we will now turn the call back to Mrs. Ciesinski for his closing comments.

Speaker Change #152: Thank you, everyone.

Speaker Change #152: It's been nice to be with you, and we look forward to being with you again in November when we review our two one results.

Speaker Change #152: Have a great rest of the day.

Speaker Change #152: This concludes today's conference call.

Speaker Change #152: Thank you for your participation.

Speaker Change #152: You may now disconnect.

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