Q3 2025 Lancaster Colony Corp Earnings Call
Good morning, My name is Kathy and I'll be your conference call facilitator today at this time I would like to welcome everyone in the Lancaster Colony Corporation fiscal year 2025 third quarter Conference call.
David: Conducting today's call will be David <unk>, President and CEO and Tom Pigott CFO.
Speaker Change: All lines have been placed on mute to prevent any background noise. After the speakers have completed their prepared remarks, there will be a question and answer period, if you'd like to ask a question. During this time simply press star one on your telephone keypad, if you'd like to withdraw your question Press Star one again, thank you.
Speaker Change: And now to begin the conference call here is Dale can off sick, Vice President of corporate Finance and Investor Relations Burt Lancaster Colony Corporation. Please go ahead.
Speaker Change: Good morning, everyone and thank you for joining us today for Lancaster colony's fiscal year 2025 third quarter conference call.
Speaker Change: 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.
Speaker Change: These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially.
Speaker Change: <unk> undertakes no obligation to update these statements based upon subsequent events.
Speaker Change: A detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC.
Speaker Change: Also note that the audio replay of this call will be archived and available at our company's website Lancaster colony Dot Com later this afternoon.
Speaker Change: For today's call, Dave Demski, our president and CEO will begin with the business update highlights for the quarter.
Speaker Change: I'll take it our CFO will then provide an overview of the financial results.
Dave Demski: Dave will then share some comments regarding our current strategy and outlook.
Dave Demski: At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions.
Speaker Change: Once again, we appreciate your participation. This morning, I'll now turn the call over to Lancaster, colony's President and CEO, Dave Demski, Dave.
Speaker Change: Thanks, Dale and good morning, everyone. It's a pleasure to be here with you today as we review our third quarter results for fiscal year 2025.
Speaker Change: In our fiscal third quarter, which ended March 31.
Speaker Change: Holiday that net sales declined two 9% to $458 million.
Speaker Change: Despite the lower sales we are pleased to report.
Speaker Change: Third quarter records for both gross profit, which reached $106 million and operating income which grew to $50 million.
Speaker Change: In our retail segment net sales decreased two 6%.
Speaker Change: Excluding the perimeter of the store bakery lines, we exited in March of 2024 retail sales decrease.
Speaker Change: 7%.
Speaker Change: This decline also reflects the shift of some sales into our fiscal fourth quarter due to the later Easter holiday along with a more challenging consumer environment that resulted in softer demand.
Speaker Change: Despite these headwinds our retail segments licensing program remains a source of growth in the quarter. As we began shipping Chipotle sauce ended the club channel and our Texas Roadhouse dinner rolls continue to perform very well.
Speaker Change: Net sales for our category, leading New York bakery frozen garlic bread products also grew in the period.
Speaker Change: So kind of scanner data for the quarter ended March 31 showed solid performance for several of our licensed items and our core brands.
Speaker Change: In the frozen dinner roll category, our own sister, Schubert's brand and our license, Texas Roadhouse brand combined to grow 11, 6%.
Speaker Change: <unk> and our market share increase of 520 basis points to our category leading 69%.
Speaker Change: And the frozen garlic bread category or your bakery brand grew sales six 8%, adding 180 basis points of market share for our category leading share of 43, 9%.
Speaker Change: And the produce dressing category sales had chick blade dressings grew 4% when combined with our marks any brand dressings, our share totaled a category leading 27, 2%.
Speaker Change: And the shelf stable sauces, and condiments category sales of Chipotle sources grew two 3%, while Buffalo Wild wings sauces gained one 2%.
Speaker Change: Bold sauces picked up market share as sales for the entire category grew only 10 basis points.
Speaker Change: In the Foodservice segment net sales declined three 2% driven by weather and industry wide declines in restaurant traffic and the impact of menu changes as some customers shifted to value offerings.
Speaker Change: Finally, we are pleased to report record third quarter gross profit of $106 million.
Speaker Change: When compared to last year's third quarter gross profit margin improved 90 basis points to 23, 1%.
Speaker Change: Our focus on supply chain productivity value engineering revenue management, all remain core elements to further improve our margins and financial performance.
Speaker Change: I'll now turn the call over to Tom Pigott, our CFO for his commentary on our third quarter results.
Speaker Change: Tom.
Speaker Change: Thanks, Dave overall, the company drove gross margin and operating income growth. Despite the topline decline through strong execution on the fundamentals.
Speaker Change: Third quarter consolidated net sales decreased by two 9% to $457 $8 million.
Speaker Change: Breaking down the revenue performance.
Speaker Change: Our core volume and product mix drove a 250 basis point decline.
Speaker Change: Net pricing was accretive by approximately 20 basis points.
Speaker Change: Last year's exit of the perimeter of the store bakery product lines accounted for 100 basis points of the decline.
Speaker Change: In addition, the company reported $2 1 million in sales or 40 basis points of growth that resulted from a temporary supply agreement with win win foods. The seller of the Atlanta based manufacturing facility that we acquired in mid February.
Speaker Change: We entered into this agreement to facilitate the closing of the transaction fees.
Speaker Change: These temporary and non core sales are expected to end by March 26.
Speaker Change: Consolidated gross profit increased by $1 5 million or one 4% versus the prior year quarter and $106 million and gross margin expanded by 90 basis points.
Speaker Change: The gross profit growth was driven by our cost savings initiatives.
Speaker Change: Favorable pricing net of commodities, because the company held pricing by commodity cost modestly declined.
Speaker Change: And the impact of last year's write downs, resulting from the product line exits. These.
Speaker Change: These favorable items.
Speaker Change: We have set the impact of the revenue declines as well as the startup manufacturing costs at the Atlanta facility.
Speaker Change: Selling general and administrative expenses decreased by $1 $1 million or 2%.
Speaker Change: Decline reflects reduced compensation and benefit expenditures some of which is timing.
Speaker Change: And lower expenditures for project ascent.
Speaker Change: <unk> favorability, partially offset by $1 $7 million of integration costs related to the acquisition of the Atlanta facility.
Speaker Change: These costs are primarily comprised of legal and professional fees.
Speaker Change: Consolidated operating income increased $14 7 million or 41, 9%.
Speaker Change: In the prior year quarter, the company recorded $14 7 million.
Speaker Change: Primarily noncash expenses as a result of the product line exits.
Speaker Change: $12 1 million was recorded in restructuring and impairment and $2 6 million was recorded as an inventory write down cost of goods sold.
Speaker Change: In the current year quarter, the company recorded $1 $7 million of integration costs related to the Atlanta facility acquisition.
Speaker Change: Excluding these items operating income growth was driven by the lower SG&A costs and the gross margin improvement.
Speaker Change: Our tax rate for the quarter was 27% versus 23, 2% in the prior year quarter.
Speaker Change: We estimate our tax rate for the remainder of fiscal 'twenty five to be 22%.
Speaker Change: Third quarter diluted earnings per share increased 46, or 44, 7% to $1 49.
Speaker Change: Incremental SG&A expenses attributed to the integration of the lab facility reduced EPS by five cents in the current year quarter.
Speaker Change: Last year's restructuring and impairment costs, along with the inventory write down reduced EPS by <unk> 41 per share.
Speaker Change: The remaining EPS growth was driven by the underlying performance of the business as well as the lower tax rate.
Speaker Change: With regard to capital expenditures, our payments for property additions totaled $43 7 million for the year to date period.
Speaker Change: For fiscal 'twenty five we are forecasting total capital expenditures of $65 million.
Speaker Change: We continue to invest in both cost savings projects and other manufacturing improvements, including the newly acquired an Atlanta based manufacturing facility.
Speaker Change: In addition to investing in our business. We also returned funds to shareholders. Our quarterly cash dividend of <unk> 95 per share paid on March 31 represented a 6% increase from the prior years now.
Speaker Change: Our enduring streak of annual dividend increases stands at 62 years are.
Speaker Change: Our financial position remains strong with a debt free balance sheet and $124 $6 million in cash to decline in this balance reflects the $78 $8 million deployed to acquire the Atlanta based manufacturing facility.
Speaker Change: So to wrap up my commentary, our third quarter results demonstrate strong execution across a number of areas in a more difficult operating environment. In addition, we continued to make investments to support further growth and cost savings.
Dave Demski: I'll now turn it back over to Dave for his closing remarks. Thank you.
Dave Demski: 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 Demski: One accelerate core business growth.
Dave Demski: To simplify our supply chain to reduce our cost and grow our margins.
Dave Demski: And three to expand our core with focused M&A and strategic licensing.
Dave Demski: Looking ahead to our fiscal fourth quarter, we anticipate some ongoing challenges with the consumer environment.
Dave Demski: We are positioned to respond.
Dave Demski: And the retail segment, we will focus on innovation and incremental distribution of relevant new items.
Dave Demski: In the Foodservice segment, our award winning culinary team will continue to partner with our customers to support their growth through collaboration on new menu items and other opportunities.
Dave Demski: We project that our retail segment sales will benefit from our licensing program, including expanding distribution for the recently introduced Texas Roadhouse dinner rolls and the extension of the Chipotle sauce ended the club channel.
Dave Demski: In the Foodservice segment, we anticipate continued growth from select customers in our mix of national chain restaurant accounts.
Dave Demski: With respect to our input costs in aggregate, we do not anticipate significant impacts from commodity cost inflation or deflation in the coming quarter.
Dave Demski: I would now like to comment on a couple of strategic matters for our business.
Dave Demski: First you may have noticed as part of our 10-Q filing this morning that we announced the planned closure of our source and dressing facility in Milpitas, California as part of an ongoing initiative to better optimize our manufacturing network.
Dave Demski: I can assure you this was a very difficult decision as it impacts 78 of our employees.
Dave Demski: I extend my most sincere thanks to all of them for their dedication and commitment to our business during their time with us.
Dave Demski: Second we completed the acquisition of the Atlanta based source addressing facility in mid February.
Dave Demski: Strategically this plant represents a significant addition to our manufacturing network and I believe we're off to a great start from an integration and operation standpoint.
Dave Demski: Through the execution of these two strategic items, we believe our supply chain is better positioned to cost effectively support the growth of our key customers for years to come.
Dave Demski: Specific to the acquisition I would like to thank all of the members of our supply chain R&D HR and it.
Dave Demski: Teams that worked tirelessly during the acquisition integration phase that began with the transaction signing in mid November and continued through the start up of production in mid March.
Dave Demski: The execution process for both the integration and production startup was exceptional thanks to the team's thoughtful planning and tremendous leadership.
Dave Demski: In addition, I would like to welcome the plants employees that have joined our remarks at ETE.
Dave Demski: These new teammates have impressed me with their enthusiasm team first attitude and strong work ethic.
Dave Demski: We have demonstrated our firm commitment to the continued growth and future success of our business I look forward to working with them in the years to come.
Dave Demski: Finally, I would like to take a moment to welcome Tanya permit as the new President of our retail business. Tanya is a strong addition to our executive leadership team and a great fit to lead our retail business.
Tanya permit: Her background includes 25 years of general management, and marketing with a proven record of driving growth across many categories in the food and consumer packaged goods industries.
Tanya permit: Most recently she served as senior Vice President at Mont Elise, leading the U S portfolio.
Tanya permit: Cookie and cracker brands.
Tanya permit: <unk> she held leadership roles at Mars, Wrigley buyer consumer care and Johnson <unk> Johnson consumer products.
Tanya permit: Based on Tonya has tremendous experience with iconic brands I am very confident in her ability to innovate market and grow our brands as we continue to deliver on our company's growth strategy.
Tanya permit: This concludes our prepared remarks for today and we'd be happy to answer any questions you may have.
Tanya permit: Operator.
Thank you at this time, we'd like to remind everyone in order to ask a question. Please press star one on your telephone keypad.
Speaker Change: Your first question comes from the line of Jim <unk> with Stephens. Your line is now open.
Tom Pigott: Hey, Dave It's Tom Good morning, Thanks for taking my questions. Good morning.
Tom Pigott: I wanted to maybe start by just asking on the foodservice side of the business, obviously, well documented kind of consumer slowdown, especially across <unk>.
Tom Pigott: Consumer uncertainty this year.
Tom Pigott: How should we think about you.
Tom Pigott: Your ability to collaborate with your foodservice partners on the demand generation side is there anything we can do to.
Tom Pigott: Maybe a little bit more.
Tom Pigott: Contribution on supporting traffic or do we really just need to wait for industry traffic you improve to see the foodservice piece of the business.
Tom Pigott: Get back to normal.
Tom Pigott: <unk>.
Tom Pigott: Yeah, So Joe maybe I'll start by commenting on Q3, and then we'll sort of pivot to talk about the outlook. If you pull apart Q3's volume.
Tom Pigott: There are several drivers that were underlying the results. The first was weather, which I think is pretty well documented as you've heard other peer companies or concept operators come out with their results.
Tom Pigott: And just maybe to elaborate on that for you we had several of our big customers that had.
Tom Pigott: Stores closed for upwards of the week and on that the outside 10 days I believe it or not because of weather. So January was was materially impacted by that.
Tom Pigott: More broadly we are seeing a diminution and traffic.
Tom Pigott: It's one that we're watching carefully it was slow through January due to weather in February what I would point to though is in March it looked like it was modestly better as we looked at the NPD crest. The other contributor and this is a little bit unique to US is that we had several of our concept. The operators, we're working with on source programs that pivoted their menus.
Tom Pigott: To focus on value in the period.
Tom Pigott: So you put it all together it gets you into that that sort of zone as we look forward our outlook is that.
Tom Pigott: Unless something materially changes up or down in the economy, we're still looking at our foodservice volume outlook that is probably down in the low single digits low low single digits, having said that we see the ability to get price in there because the big inflation. So our view is it.
Tom Pigott: It's going to remain soft, we're probably going to be doing better than most of our peers, but we're not looking for.
Tom Pigott: Material change there.
Tom Pigott: Okay. That's helpful and then.
Tom Pigott: Just thinking over on the retail side.
Tom Pigott: We look at kind of the puts and takes with that.
Tom Pigott: Particularly soft distribution in club and the increased distributions with Texas Roadhouse roles.
Tom Pigott: How should we balance that against maybe just some core softness again more broad base with the consumer.
Tom Pigott: Do those are those distribution gains enough to kind of more than offset will be seen consumer softness are you kind of expect a wash from those two.
Tom Pigott: No. We believe so so again if you pull apart Q3, if you allow me I will do the same thing, let's maybe start with value of volume and if you look at I think our reported volume was down two 6% or two 2%.
Tom Pigott: And then you pull out flat out an angelic, which we exited.
Tom Pigott: A year ago at this time that takes us down about 90 basis points on volume.
Tom Pigott: And then you yet.
Tom Pigott: Adjusted for Easter and some other trade moves that we've made there our business. We believe would be growing on volume. If you look at revenue sort of the same thing holds because we weren't getting much pricing. If you go when you look at consumption in the period consumed sales our business was actually up.
Tom Pigott: Two 2%.
Tom Pigott: <unk> excuse me, 2% ex angelic and flat out in the period and our pounds were up actually 50 basis points and that's lapping Easter in the period. So our view on our retail business again, notwithstanding the material change.
Tom Pigott: Things inflect downward inflect up, but if things kind of stay the course, we see line of sight to low single digit volumetric growth on volume and on revenue and the way that we expect to get there is as you pointed out contribution on new items now we had some pipeline fill in the period on Chick Fil, a but we do.
Tom Pigott: Not really have any sales in the period.
Tom Pigott: On Chipotle club through consumption, and then Texas Roadhouse now, Texas Roadhouse, just recently is expanding into general retail and it's not really going to be until our next fiscal year that we begin to ship that to all outlets.
Tom Pigott: As you sort of pull apart other elements of the business I think there's some high points there that may be worth mentioning we continued to grow our Texas toast business.
Tom Pigott: We grew share and we grew volume in the period, it's performing quite well both on toast and down our bread sticks and on suite sister Schubert's sort of hard to look at just because Easter pretty significantly impacts that item in the period.
Tom Pigott: But notwithstanding Easter we believe that business continues to be well positioned maybe as a proof point, we actually grew share on that item in the period as well as you move down to our own brands <unk> classics continues to be strong it was improving or simply as a bit of a sore point and then our license program.
Tom Pigott: In General Chip Folate was up Buffalo Wild wings was up Olive garden was down, but we're lapping a lot of support in the same time last year. So you put it altogether allow me to kind of bring it up our view is on a volumetric basis little soft and foodservice revenue.
Tom Pigott: ROE in retail volume kind of sets up because of those offsets probably flattish on a consolidated basis with our revenue being up in the low single digit range.
Tom Pigott: As we go forward.
Speaker Change: Great I appreciate all the color that variable.
Tom Pigott: Absolutely.
Tom Pigott: Thank you.
Tom Pigott: Yes.
Speaker Change: Your next question comes from the line of Scott marks with Jefferies. Your line is now open.
Scott Marks: Hey, good morning, guys. Thanks, so much for us.
Questions here.
Scott Marks: First question I guess as I look at the retail business performance and I kind of break down across the different platforms. It looks like most of.
Speaker Change: Hey, guys.
Speaker Change: Weakness in the segment, where maybe it came in below expectations was on the refrigerated dressings, and dips side, whereas frozen breads and shelf stable seem to have held up pretty well. So I'm wondering if you can just kind of speak to that weakness and kind of help us understand what's going on with with that part of the business.
Speaker Change: Yes, it's a great question and I would say that was significantly impacted by the timing of Easter. If you look at that we get a seasonal bump.
Speaker Change: Don't have to restate the calendar, but you remember last year's Easter was on March 31, So all of those shipments and the consumption would've been in third quarter. This year Easter switch to April 'twenty and it resulted in a drag on both when you look at that.
Speaker Change: Im assuming that youre looking at the consumption data inside of there as you pull those apart now that sort of macro adjustment notwithstanding I would tell you that our classics continues to be strong we're picking up share Chick Fil a dressing in refrigerated continues to be strong it's growing share also.
Speaker Change: Our simply dressed as a platform continues to need work, maybe the only other thing that I would mention is that as you look at the category.
Speaker Change: That category was down about three points in the quarter, which is softer than it had been.
Speaker Change: Some was Easter and some might be just sort of a broader consumer shift.
Speaker Change: Understood. Thank you for that and next question for me would be just around kind of the promotional environment at retail.
Speaker Change: Tweak them other Scott.
Speaker Change: Scott large before I jump to that if I may one thing the BB worth mentioning I talked dressings and dips, we did implement a material downgrading of dips in the prior year, which were lapping so if youre looking at the pounds in their particular youre going to see something that overstates, what's happening in terms of units. So again.
Speaker Change: Easter timing, but one unique nuance on that was it down waiting that we did to get some price realizations.
Speaker Change: We're continuing to cycles.
Speaker Change: So back to trade finished your question. Please.
Speaker Change: Yeah sure. Thanks, Thanks for that yes, just in terms of what we're seeing on the promotional environment I think reports from some some larger peers of yours about retail performance and maybe the need to invest a little bit more.
Speaker Change: And in pricing and some of their brands and categories wondering what you'd see from from your perspective.
Speaker Change: So it's a great question. If you remember last year in our Q3 and Q4, we took our trade radar, which elevated our year against year fiscal year 'twenty five versus 24 trade rate, we made the decision going into fiscal year 'twenty five that what we wanted to do with sort of level load that trade.
Speaker Change: So we took the incremental increase that we had in Q3 and four as we went into this fiscal year and we split that evenly across all four quarters.
Speaker Change: As a result, our trade rate was modestly up in Q1 and Q2.
Speaker Change: It was modestly down in Q3 and is planned to be modestly down in Q4.
Speaker Change: As we look at our categories. Scott, We don't think that we have a pricing problem right now and as we pulled apart where we spent there were some areas where we felt like we got really strong performance quality support from our retailers and others, where we felt like it just wasn't worth the investment and if you look at that you can see some of that leverage and our consumption data where you can see actually.
Speaker Change: Our consumer sales were up more than our pounds and if you look at it we call they've either a sweat up where youre getting leverage between your your.
Speaker Change: Gross sales in your net sales are swept down where youre, losing leverage because of training.
Speaker Change: Chosen at least at this point to be a little bit more careful on trade just because even in this environment. We just don't think that we're getting the financial return.
Speaker Change: Understood. Thanks, so much will pass it on.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question star one on your telephone keypad.
Speaker Change: Your next question comes from the line of Andrew Wolf with C. L. King Your line is now open.
Andrew Wolf: Hi, Good morning, I wanted to ask an open ended question sort of <unk> and just competitive.
Speaker Change: Dynamic related on.
Andrew Wolf: Items being sold on promotion.
Andrew Wolf: Kind of in your major categories and <unk>.
Andrew Wolf: Your stance I mean in the past.
Andrew Wolf: Basically said you don't.
Andrew Wolf: I don't know completely put words in your mouth.
Andrew Wolf: I don't think you'd wanted to spend that much promotional maybe it wasn't the most effective way.
Andrew Wolf: Trade promotions, maybe it was better.
Andrew Wolf: And cap placement and some other things like that.
Andrew Wolf: I just wanted an update on your <unk>.
Andrew Wolf: Are you seeing competitively and what your thinking is.
Andrew Wolf: Maybe start first Andrew with.
Andrew Wolf: A high level view, if you looked at all edibles all edibles.
Andrew Wolf: Were really soft in the period I would say with some some categories doing slightly better than others. So I do think in the quarter at a total grocery store. There are a number of categories that are undergoing some pressure. So you sort of pull in and you look more closely at US we continue to believe that.
Andrew Wolf: Trade has a role but for us.
Andrew Wolf: Reduced price on the shelf with yellow Tag for example, just doesn't get the sort of lift that we would need to offset the investment in trade, where we might see a benefit is if we make an investment and we get an end cap and what we're likely to see is we're likely to pick up incremental households, or get some pantry load, which in the cat and in the case of sources.
Andrew Wolf: Adult and expandable consumption.
Andrew Wolf: And maybe to go a click deeper I'll run through some of the categories. If you look at our Texas coast. It really is consolidating around.
Andrew Wolf: Our brand, where we're picking up share we were north of 43% and private label and we both are continuing to perform well with some of the other contributors donating share. If you go into the role category, It's us and its roads the newest news in the categories that we're bringing in Texas Roadhouse.
Andrew Wolf: But here's what's interesting that's actually growing the category and it's not cannibalizing the category.
Andrew Wolf: We're taking we're bringing consumers from the other parts of the store with other brands and we're bringing them into frozen by that so private label is not really outperforming there I wouldn't say some of our big retailers have tried to focus on private label items I won't name their names.
Andrew Wolf: But theyre not performing particularly well so we continue to believe that we're set up there to continue to perform.
Andrew Wolf: Refrigerated dressings private label has really never been a material contributor and that remains as you cycle through lighthouses is doing well behind their larger 20, outsize, it's a squeeze bottle with some of the other branded players Murray's Panera and others losing share.
Andrew Wolf: With the growth driver being modestly our brand our classics and Chick Fil a.
Andrew Wolf: And are simply is one that's donating some share as well across to chipotle.
Andrew Wolf: And others, but again private label isn't much of an item as we look there as you swing across the license source space.
Andrew Wolf: I would say some of our retailers have looked at introducing.
Andrew Wolf: Private label Knockoffs, but again, they haven't performed particularly well and I'm pointing in this case to chipotle sauce, and Buffalo Wild wings, I think the area, where we want to continue to watch as shelf stable dressings.
Andrew Wolf: We have seen some trade down in that category. If you remember we talked at length about a year and a half ago about watching our opening price point on our 16 ounce item that may be one that we want to watch going forward and then finally, albeit a smaller piece of our business Futons is one where we are seeing maybe a little bit larger shift to private label.
Andrew Wolf: But as it is it really plays out for our business.
Andrew Wolf: Private label still isn't the biggest opt.
Andrew Wolf: Opportunity or obstacle for us it comes down to relevant new items and executing our plan.
Andrew Wolf: Okay got it thank you.
Speaker Change: And I'm going to just ask one hopefully quick question, but that was an excellent overview because.
Speaker Change: You know when you guys had kind of a competitive overview and a lot of.
Speaker Change: That's really where at.
Speaker Change: At least I want to hear about what's going on right in those categories.
Speaker Change: Just on.
Speaker Change: The Easter shift any chance you can quantify that in dollar terms or percentage I know, it's an estimate but what.
Speaker Change: Do you think it impacted the quarter.
Speaker Change: The current quarter, but.
Speaker Change: Yeah, well, it's at least one point is what we're pegging. It at so if you go back to the adjusted volume notwithstanding the discontinuation, where we were down about 90 basis points. We think it's at least a point marginally better than a point that's out there.
Speaker Change: So.
Speaker Change: Got it okay. That's it for me thank you.
Speaker Change: Sure.
Speaker Change: Youre welcome.
Speaker Change: Thank you.
Speaker Change: Yeah.
Alton Stump: Your next question comes online of Alton Stump with loop capital. Your line is now open.
Alton Stump: Great. Thank you Hey, good morning, Thanks for taking my questions I guess.
Alton Stump: First of all on foodservice I'm glad that you brought up whether I think it was in response to the first question here in the Q&A.
Alton Stump: Because.
Alton Stump: Weather was absolutely terrible during the first two months of the year, maybe kind of similar to last question any way that you can kind of quantify how much of an impact do you think that had.
Alton Stump: Your futures volumes for the full quarter I know you mentioned that things did get marginally better in March.
Alton Stump: I think all the best I can kind of point to as may be just macro traffic. If you look at things overall, where traffic in the first couple of months January and February.
Alton Stump: We're off.
Alton Stump: Three points ish or thereabouts.
Alton Stump: Softer than.
Alton Stump: Than they had been trending.
Alton Stump: As you swing into March and again this is NPD crest data traffic improved still off but it improved by more than 100 basis points.
Alton Stump: As we looked at some of our specific customers.
Alton Stump: Again, I don't want to name names, but the weather was particularly hard in let's say the upper Midwest and the northeast and we had one concept that comes to mind with.
Alton Stump: 3000, restaurants, and they mentioned that they had 200 of the restaurants that were impacted by weather and it ended up being more material than I think even we appreciated as we cycled through that that month, so really hard to put up a peg on it the best number I can give you is NPD crest.
Alton Stump: Got it.
Alton Stump: It was a material contributor.
Alton Stump: Yeah.
Alton Stump: Understood. Thank you.
Alton Stump: And then I guess just.
Speaker Change: On the retail side, obviously, you got several major new things coming from a SKU standpoint.
Speaker Change: With the new source with new chip voice off going into club, how big of a deal we think that could be metrics.
Speaker Change: All right, but also from a marketing perspective to sort of introduce that brand too.
Speaker Change: Integrated channel customers.
Speaker Change: Yes, I'd say, it's a great question.
Speaker Change: <unk> is a tremendous brand and I would put it in the same campus Mega brands like Heinz ketchup or hidden Valley Ranch.
Speaker Change: And if you look at brands like that club is a material part of their overall portfolio and really what it allows you to do is reach consumers often times that are slightly more affluent that have larger families and they use it as a stock up occasion, and given that the sauces and expandable consumable I think it's going to be an important overall.
Speaker Change: Contributor.
Speaker Change: To our business as we go forward. So we're thrilled.
Speaker Change: We didn't start shipping until the very very end of the quarter. We're starting to see early returns on the scan data at Sam's and Costco and it's exceeding our expectations in both of those channels. So we continue to be very excited by that one.
Speaker Change: So and I think what we've talked about there is oftentimes if you look at our mix of a mature brand.
Speaker Change: Kraft Mac and cheese, a heinz ketchup like I mentioned earlier club oftentimes it might be 15% or so of the overall total of the business. So it's a meaningful channel and we're thrilled that it's there and I think predicated on its performance. It may open up opportunities for other chicken fillet items to move into club also at <unk>.
Speaker Change: Some point in time, a Texas Roadhouse that rollout continues to proceed at pace if you remember.
Speaker Change: We had it in a test and we expanded and that was the Walmart only.
Speaker Change: We've expanded it now into four states. That's just starting that started in early April.
Speaker Change: In August we're going to be expanding at full retail.
Speaker Change: All math, all retail and we're already in discussions about maybe moving that item into club at some point.
Speaker Change: Citing thing here is that we.
Speaker Change: We're able to do this on existing lines, we just simply had to add labor. We've gone back we've added that labor we're building the capacity and we're watching consumption and it continues to be really strong so.
Speaker Change: A great new items that we're excited about and a great brand platform.
Speaker Change: Great. Thank you so much for all of the detail I'll hop back in the queue.
Speaker Change: Thank you all people.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: If there are no further questions. We would now like to turn the call back to Mr. <unk> for his concluding comments.
Speaker Change: Thank you operator, and thank you everybody for joining in and maybe ill just provide a couple of summary comments I mean, obviously, there's a lot of noise today and the macro environment and we believe against this complicated backdrop, we're positioned to continue to outperform behind strong brands, both the brands, we own and the brands with license relevant.
Speaker Change: Categories advantaged foodservice customers.
Speaker Change: And then moving beyond that as you look at some of the other.
Speaker Change: Sources of volatility out there for example, tariffs and make America healthy. We believe we have modest exposure to bolt and then finally, we really didn't get into it in the call today, but we've taken actions over the last several months just to continue to strengthen our supply chain network and reduce our <unk>.
Speaker Change: <unk> landed cost, which should allow us line of sight, even in this environment to improve our margin structure. So we feel like again against a very complicated backdrop, we're positioned to continue to outperform we see line of sight to revenue growth and margin improvement and modest profit improvement.
Speaker Change: So again, we look forward to meeting with you in August if you have additional questions. We look forward here from you that's all for today.
Speaker Change: Thank you for your participation. This does conclude today's call you may now disconnect.
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