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Thank you, operator. And good morning everyone. Thank you for joining the J&J snack foods, fiscal 2026, first quarter conference call
Before getting started, let me take a minute to read the Safe Harbor language.
Reed Anderson: Thank you, operator, and good morning, everyone. Thank you for joining the J&J Snack Foods Fiscal 2026 Q1 Conference Call. Before getting started, let me take a minute to read the safe harbor language. This call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, expectations, and objectives, as well as our anticipated financial performance. This includes, without limitation, our expectations with respect to the success of our cost savings initiatives and customer demand improvements in the sales channels in which we operate.
Reed Anderson: Thank you, operator, and good morning, everyone. Thank you for joining the J&J Snack Foods Fiscal 2026 Q1 Conference Call. Before getting started, let me take a minute to read the safe harbor language. This call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
This call contains forward-looking statements within the meaning of the private security litigation Reform, Act of 1995, all statements made on this call, that did not relate to matters of historical facts, should be considered forward-looking statements, including statements regarding Management's plans, strategies goals, expectations and objectives as well as our anticipated financial performance.
All statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, expectations, and objectives, as well as our anticipated financial performance. This includes, without limitation, our expectations with respect to the success of our cost savings initiatives and customer demand improvements in the sales channels in which we operate.
This includes without limitation our expectations with respect to the success of our cost savings initiatives and customer demand improvements in the sales channels in which we operate.
these statements are neither promises, nor guarantees involve known and unknown risks, uncertainties, and other important factors that may cause
results performance or achievements to be materially different from any future results performance, or achievements expressed or implied by the forward-looking statements.
Reed Anderson: These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties, and other important factors that may cause results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Risk factors and other items discussed in our annual report on Form 10-K and other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on the call today. As such, forward-looking statements represent management's estimates as of the date of the call today, 3 February 2026. While we may elect to update forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause expectations to change.
These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties, and other important factors that may cause results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
Risk factors and other items discussed in our inner report on form, 10K and other filings with the security Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on the call today.
As such what we're looking statements, represent Management's estimates as of the date of the call today, February 3rd 2026.
Risk factors and other items discussed in our annual report on Form 10-K and other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on the call today. As such, forward-looking statements represent management's estimates as of the date of the call today, 3 February 2026. While we may elect to update forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause expectations to change.
While we may elect to update forward-looking statements at some point in the future, we disclaim any obligation to do. So even if subsequent events
Caused expectations to change.
Reed Anderson: In addition, we may also reference certain non-GAAP measures on the call today, including adjusted EBITDA, adjusted operating income, or adjusted earnings per share, all of which are reconciled to the nearest GAAP measure on the company's earnings press release, which can be found in our investor relations section of our website. Joining me on the call today is Dan Fachner, our chief executive officer, along with Shawn Munsell, our chief financial officer. Following management's prepared remarks, we will open the call for a question and answer session. With that, I would like to turn the call over to Mr. Fachner. Please go ahead, Dan.
In addition, we may also reference certain non-GAAP measures on the call today, including adjusted EBITDA, adjusted operating income, or adjusted earnings per share, all of which are reconciled to the nearest GAAP measure on the company's earnings press release, which can be found in our investor relations section of our website.
In addition, we may also reference certain non-gaap measures on the call today, including adjusted, Evita adjusted operating income or adjusted earnings per share. All of, which are reconciled to the nearest Gap measure on the company's earnings press release which can be found in our investor relations section of our website. Joining me on the call today is Dan fashioner, our chief executive officer along with Shan moncel or Chief Financial Officer. Following Management's prepared remarks. We will open the call for a question and answer session.
With that. I would like to turn the call over to Mr. Fasher please. Go ahead. Dan.
Good morning. I'm pleased to report that our earnings recovery is underway and gaining momentum.
Joining me on the call today is Dan Fachner, our chief executive officer, along with Shawn Munsell, our chief financial officer. Following management's prepared remarks, we will open the call for a question and answer session. With that, I would like to turn the call over to Mr. Fachner. Please go ahead, Dan.
We delivered adjusted ibida of 27 million on sales of 343.8 million in the first quarter. Representing a 7% increase, and adjusted ibida compared to the prior year.
Dan Fachner: Good morning. I'm pleased to report that our earnings recovery is underway and gaining momentum. We delivered adjusted EBITDA of $27 million on sales of $343.8 million in Q1, representing a 7% increase in adjusted EBITDA compared to the prior year. Results in the quarter included $1 million of unfavorable impact associated with product disposal costs. Our performance demonstrates the early benefits of Project Apollo transformation initiatives and our continued focus on operational excellence. Our Q1 results reflect meaningful progress on several fronts. Gross margin improved 200 basis points to 27.9% versus the prior year, driven by our early Apollo savings associated with plant consolidation and improved product mix.
Dan Fachner: Good morning. I'm pleased to report that our earnings recovery is underway and gaining momentum. We delivered adjusted EBITDA of $27 million on sales of $343.8 million in Q1, representing a 7% increase in adjusted EBITDA compared to the prior year. Results in the quarter included $1 million of unfavorable impact associated with product disposal costs.
Results in the quarter included, 1 million of unfavorable impact associated with product disposal costs.
Our first quarter results, reflect meaningful progress. On several fronts.
Gross margin improved 200 basis points to 27.9% versus the prior year.
Our performance demonstrates the early benefits of Project Apollo transformation initiatives and our continued focus on operational excellence. Our Q1 results reflect meaningful progress on several fronts. Gross margin improved 200 basis points to 27.9% versus the prior year, driven by our early Apollo savings associated with plant consolidation and improved product mix.
Driven by our early, Apollo savings associated with plant consolidation and improved product mix.
Well, net sales declined 5.2% to 343.8 million.
Our first quarter results, reflect meaningful progress. On several fronts.
Most of the decline is attributed to our bakery business as we focus on higher margin opportunities.
Gross margin improved 200 basis points to 27.9% versus the prior year.
About 18 million of the revenue decline versus prior year was in that piece of business.
Dan Fachner: While net sales declined 5.2% to $343.8 million, most of the decline is attributed to our bakery business as we focus on higher margin opportunities. About $18 million of the revenue decline versus prior year was in that piece of business. Of this, about $13 million was related to SKU optimization efforts associated with Project Apollo. The remaining bakery sales decline included other lower-margin products, which aligns with our portfolio optimization strategy. We expect portfolio optimization will represent an approximate 3% decline in sales in fiscal 2026. We also believe that sales in the quarter were impacted by the government shutdown and the pause in SNAP benefits. Looking at our syndicated retail data, we did see a dip in dollar sales in mid-November that coincided with the pause in SNAP benefits, with the largest impact in frozen novelties.
While net sales declined 5.2% to $343.8 million, most of the decline is attributed to our bakery business as we focus on higher margin opportunities. About $18 million of the revenue decline versus prior year was in that piece of business. Of this, about $13 million was related to SKU optimization efforts associated with Project Apollo. The remaining bakery sales decline included other lower-margin products, which aligns with our portfolio optimization strategy.
Driven by our early, Apollo savings associated with plant consolidation and improved product mix.
Of this about 13 million was related to skew optimization efforts associated with project Apollo.
While net sales declined 5.2% to 343.8 million.
Most of the decline is attributed to our bakery business as we focus on higher margin opportunities.
The remaining Bakery sales, decline included, other lower margin products which aligns with our portfolio. Optimization strategy.
About 18 million of the revenue decline versus prior year was in that piece of business.
We expect portfolio optimization, will represent an approximate 3%, decline in sales and fiscal 26.
Of this, about $13 million was related to SKU optimization efforts associated with project Apollo.
We also believe that sales in the quarter were impacted by the government shutdown and the pause in SNAP benefits.
Looking at our syndicated retail data.
The remaining Bakery sales, decline included, other lower margin products which aligns with our portfolio. Optimization strategy.
We expect portfolio optimization will represent an approximate 3% decline in sales in fiscal 2026. We also believe that sales in the quarter were impacted by the government shutdown and the pause in SNAP benefits. Looking at our syndicated retail data, we did see a dip in dollar sales in mid-November that coincided with the pause in SNAP benefits, with the largest impact in frozen novelties.
Decided with the pause in SNAP benefits with the largest impact in Frozen novelties.
We expect portfolio optimization will represent an approximate 3% decline in sales in fiscal '26.
Project Apollo was progressing as planned.
We also believe that sales in the quarter were impacted by the government shutdown and the pause in SNAP benefits.
Although we're still in the ramp up phase and not yet at the full run rate, we realized over 3 million of net Savings in q1.
Looking at our syndicated retail data.
With plank consolidation on track to be fully implemented during our fiscal second quarter.
Dan Fachner: Project Apollo is progressing as planned. Although we're still in the ramp-up phase and not yet at the full run rate, we realized over $3 million of net savings in Q1. With plant consolidation on track to be fully implemented during our fiscal second quarter, we remain confident in achieving $20 million of run rate operating income once all initiatives are activated. During the quarter, we completed our share repurchase authorization by purchasing $42 million of stock, demonstrating our confidence in the business and our commitment to returning cash to shareholders. Further, today, we announced a new $50 million repurchase authorization. Now I'll turn to commercial activities. We have solid momentum in our snack portfolio, and I'm especially encouraged by our pretzel performance in the quarter. In food service, pretzel sales were up an impressive 6.9%, reflecting the continued success of our Bavarian formulas.
Project Apollo is progressing as planned. Although we're still in the ramp-up phase and not yet at the full run rate, we realized over $3 million of net savings in Q1. With plant consolidation on track to be fully implemented during our fiscal second quarter, we remain confident in achieving $20 million of run rate operating income once all initiatives are activated.
We did see a dip in dollar sales in mid-November that coincided with the pause in SNAP benefits, with the largest impact in frozen novelties.
We remain confident in its even, 20 million of run rate, operating income once all initiatives are activated.
Project Apollo was progressing as planned.
Although we're still in the ramp-up phase and not yet at the full run rate, we realized over $3 million of net savings in Q1.
During the quarter, we completed our share repurchase authorization by purchasing, 42 million of stock, demonstrating our confidence, in the business, and our commitment to returning cash to shareholders.
On track to be fully implemented during our fiscal second quarter.
Further today, we announced a new fifty million dollar repurchase authorization.
During the quarter, we completed our share repurchase authorization by purchasing $42 million of stock, demonstrating our confidence in the business and our commitment to returning cash to shareholders. Further, today, we announced a new $50 million repurchase authorization. Now I'll turn to commercial activities. We have solid momentum in our snack portfolio, and I'm especially encouraged by our pretzel performance in the quarter. In food service, pretzel sales were up an impressive 6.9%, reflecting the continued success of our Bavarian formulas.
We remain confident in achieving, 20 million of run rate, operating income once all initiatives are activated.
Now, I'll turn to commercial activities.
We have solid momentum in our snack portfolio, and I'm especially encouraged by our pretzel performance in the quarter.
In food service.
During the quarter, we completed our share repurchase authorization by purchasing $42 million of stock, demonstrating our confidence in the business and our commitment to returning cash to shareholders.
Pretzel sales were up an impressive 6.9%, reflecting the continued success of our Bavarian formulas.
Further, today we announced a new $50 million repurchase authorization.
Now, I'll turn to commercial activities.
We also realized a 1.8% increase in food service, share in the 13th ending December. According to syndicated data.
We have solid momentum in our snack portfolio, and I'm especially encouraged by our pretzel performance in the quarter.
Growth in the quarter included new business with some of our large distribution customers.
We also launched the very in bites and twists at a major theater chain.
Dan Fachner: We also realized a 1.8% increase in food service share in the 13 weeks ending December, according to syndicated data. Growth in the quarter included new business with some of our large distribution customers. We also launched Bavarian Bites and Twists at a major theater chain. Looking at our retail syndicated data, pretzel sales were up about 4% for the 13 weeks ending December. We attribute the improving trends to the new formulation and packaging released last year. In frozen novelties, Dogsters continues to be the standout performer, with volume growing over 20% in the quarter, with a new item launched late in Q1 and another launching in Q2. Retail partners have been positive regarding our innovation, and we continue to anticipate incremental distribution gains across regional and national customers in fiscal 2026.
We also realized a 1.8% increase in food service share in the 13 weeks ending December, according to syndicated data. Growth in the quarter included new business with some of our large distribution customers. We also launched Bavarian Bites and Twists at a major theater chain. Looking at our retail syndicated data, pretzel sales were up about 4% for the 13 weeks ending December. We attribute the improving trends to the new formulation and packaging released last year.
In Food Service, pretzel sales were up an impressive 6.9%, reflecting the continued success of our Bavarian formula.
Looking at our retail syndicated data.
Pretzel sales are up about 4% for the 13th, ending December.
We also realized a 1.8% increase in food service share in the 13th December, according to syndicated data.
We attribute the improving Trends to the new formulation and packaging released last year.
Growth in the quarter included new business with some of our large distribution customers.
In Frozen Novelties, dogsters continues to be the standout performer.
We also launched Bavarian bites and twists at a major theater chain.
Looking at our retail syndicated data.
With volume growing over. 20% in the quarter, with a new item launched late in q1 and another launching in Q2,
Pretzel sales are up about 4% for the 13th, ending December.
We attribute the improving trends to the new formulation and packaging released last year.
In frozen novelties, Dogsters continues to be the standout performer, with volume growing over 20% in the quarter, with a new item launched late in Q1 and another launching in Q2. Retail partners have been positive regarding our innovation, and we continue to anticipate incremental distribution gains across regional and national customers in fiscal 2026.
Retail Partners have been positive, regarding our Innovation, and we continue to anticipate incremental distribution gains across Regional and National customers in fiscal 2026.
In Frozen Novelties, dogsters continues to be the standout performer.
Dip and Dot sales were up approximately 4% in the first quarter.
Fueled by retail growth.
With volume growing over 20% in the quarter, with a new item launched late in Q1 and another launching in Q2,
Theater expansion and amusement centers.
At icy.
We continue to pursue opportunities to expand their convenience and qsr.
The roll out to a large Southwest convenience store. Operator is now complete.
Retail Partners have been positive, regarding our Innovation, and we continue to anticipate incremental distribution gains across Regional and National customers in fiscal 2026.
Dan Fachner: Dippin' Dots sales were up approximately 4% in Q1, fueled by retail growth, theater expansion, and amusement centers. At ICEE, we continue to pursue opportunities to expand at convenience and QSR. The rollout to a large Southwest convenience store operator is now complete, and the test with a major West Coast QSR operator continues to show encouraging results as the test market expands. Looking ahead, our innovation pipeline remains robust. During Q2, we'll be shipping several exciting new products, including two new releases of protein and whole grain pretzels, Luigi's Mini Pops with hydration and immunity benefits, Dippin' Dots sundae flavor extensions, and the launch of traditional Dippin' Dots for retail, a major growth milestone for that brand.
Dippin' Dots sales were up approximately 4% in Q1, fueled by retail growth, theater expansion, and amusement centers. At ICEE, we continue to pursue opportunities to expand at convenience and QSR. The rollout to a large Southwest convenience store operator is now complete, and the test with a major West Coast QSR operator continues to show encouraging results as the test market expands. Looking ahead, our innovation pipeline remains robust.
Scott sales, we're up approximately 4% in the first quarter.
Fueled by retail growth.
And the test with a major West Coast qsr operator continues to show encouraging results as the test Market expands.
Looking ahead.
Theater expansion and amusement centers.
At Icy, we continue to pursue opportunities to expand their convenience and qsr.
Our Innovation pipeline remains, robust, during Q2. We'll be shipping. Several exciting, new products, including 2, new releases of protein, and whole grain pretzels.
The roll out to a large Southwest convenience store. Operator is now complete.
Luigi's, mini pops with hydration and Immunity benefits.
And the test with a major West Coast QSR operator continues to show encouraging results as the test market expands.
Dip and dots, Sunday, flavor extensions, and the launch of traditional dip and dots for retail.
Looking ahead.
A major growth milestone for that brand.
During Q2, we'll be shipping several exciting new products, including two new releases of protein and whole grain pretzels, Luigi's Mini Pops with hydration and immunity benefits, Dippin' Dots sundae flavor extensions, and the launch of traditional Dippin' Dots for retail, a major growth milestone for that brand.
Well box office performance that aligns to our fiscal first quarter was disappointing with an estimated decline to the prior year of about 10%.
Our innovation pipeline remains robust during Q2. We'll be shipping several exciting new products, including two new releases of protein and whole grain pretzels.
Luigi Mini Pops with hydration and immunity benefits.
We remain optimistic about the theater performance for the balance of fiscal 2026.
Dippin' Dots, Sundae, flavor extensions, and the launch of traditional Dippin' Dots for retail.
We saw improved theater Trends in January, primarily from the success of the Avatar movie.
Dan Fachner: While box office performance that aligns to our fiscal Q1 was disappointing, with an estimated decline to the prior year of about 10%, we remain optimistic about the theater performance for the balance of fiscal 2026. We saw improved theater trends in January, primarily from the success of the Avatar movie. The movie slate for the balance of the year includes some promising titles, including the Super Mario Galaxy movie, Minions 3, and Spider-Man: Brand New Day. I'll now turn the call over to Shawn to discuss the quarter results in more detail. Shawn?
While box office performance that aligns to our fiscal Q1 was disappointing, with an estimated decline to the prior year of about 10%, we remain optimistic about the theater performance for the balance of fiscal 2026. We saw improved theater trends in January, primarily from the success of the Avatar movie. The movie slate for the balance of the year includes some promising titles, including the Super Mario Galaxy movie, Minions 3, and Spider-Man: Brand New Day. I'll now turn the call over to Shawn to discuss the quarter results in more detail. Shawn?
A major growth milestone for that brand.
The movie slate to the balance of the Year. Include some promising titles, including the Super Mario Galaxy movie, Minions 3 and Spider-Man brand new day.
Well, box office performance that aligns to our fiscal first quarter was disappointing. With an estimated decline to the prior year of about 10%, we remain optimistic about the theater performance for the balance of fiscal 2026.
I'll now turn the call over to Sean to discuss the quarter results in more detail. John.
Thanks Dan and good morning everyone.
We saw improved theater Trends in January, primarily from the success of the Avatar movie.
As Dan mentioned, we're pleased with our q1 performance which demonstrates early progress on our transformation initiatives.
The movie slate for the balance of the Year. Includes some promising titles, including the Super Mario Galaxy movie Minions 3 and Spider-Man brand new day.
Shawn Munsell: Thanks, Dan, and good morning, everyone. As Dan mentioned, we're pleased with our Q1 performance, which demonstrates early progress on our transformation initiatives. Food service segment net sales declined $19.7 million, or 8.3%, to $219.2 million, with $18 million of the decline attributed to our lower margin bakery business, largely reflecting steps we are taking to improve product mix. Handheld sales declined approximately $5 million in the quarter due to lower comparative volumes and contractual pricing true up on lower costs of certain ingredients. Soft pretzel sales increased $3.6 million, or about 6.9%, continuing the momentum from the second half of fiscal 2025.
Shawn Munsell: Thanks, Dan, and good morning, everyone. As Dan mentioned, we're pleased with our Q1 performance, which demonstrates early progress on our transformation initiatives. Food service segment net sales declined $19.7 million, or 8.3%, to $219.2 million, with $18 million of the decline attributed to our lower margin bakery business, largely reflecting steps we are taking to improve product mix.
Food Service segment, net sales decline, 19.7 million or 8.3% to 219.2 million with 18 million of the decline attributed to our lower margin bakery business, largely reflecting steps, we are taking to improve product, mix.
I'll now turn the call over to Shawn to discuss the quarter results in more detail. John.
Thanks Dan and good morning everyone.
As Dan mentioned, we're pleased with our Q1 performance, which demonstrates early progress on our transformation initiatives.
increased 3.6 million or about 6.9% continuing the momentum from the second half of fiscal 2025,
Handheld sales declined approximately $5 million in the quarter due to lower comparative volumes and contractual pricing true up on lower costs of certain ingredients. Soft pretzel sales increased $3.6 million, or about 6.9%, continuing the momentum from the second half of fiscal 2025.
Food Service segment, net sales decline, 19.7 million or 8.3% to 219.2 million with 18 million of the decline attributed to our lower margin bakery business, largely reflecting steps, we are taking to improve product, mix.
retail segment, net sales increase, 1.2 million or 2.6% to 45.9 million primarily driven by 1.8 million increase in handheld volume, as we laughed last year's capacity, constraints from the facility fire.
Handheld sales declined approximately $5 million in the quarter, due to lower comparative volumes and contractual pricing true-up on lower costs of certain ingredients. Soft pretzel sales increased $3.6 million, or about 6.9%, continuing the momentum from the second half of fiscal 2025.
Shawn Munsell: Retail segment net sales increased $1.2 million, or 2.6%, to $45.9 million, primarily driven by a $1.8 million increase in handheld volume as we lapped last year's capacity constraints from the facility fire. Sales within the remaining retail portfolio decreased to about $600,000, primarily driven by lower frozen novelty sales, as growth in Dogsters and Dippin' Dots was more than offset by decreases in other novelties. Frozen beverage net sales were materially flat at $78.7 million. Beverage sales were up modestly, whereas service and machine sales combined were down modestly. Consolidated gross margin improved 200 basis points to 27.9%, primarily reflecting Apollo initiatives, including a reduction in lower margin sales. Results included product disposal expenses of approximately $1 million. Tariff-related costs were approximately $600,000, net of pricing offsets.
Retail segment net sales increased $1.2 million, or 2.6%, to $45.9 million, primarily driven by a $1.8 million increase in handheld volume as we lapped last year's capacity constraints from the facility fire. Sales within the remaining retail portfolio decreased to about $600,000, primarily driven by lower frozen novelty sales, as growth in Dogsters and Dippin' Dots was more than offset by decreases in other novelties. Frozen beverage net sales were materially flat at $78.7 million.
Sales within the remaining retail portfolio decreased to about 600,000 primarily driven by lower Frozen novelty sales as growth in dogsters and dip and dots was more than offset by decreases in other novelties.
Frozen beverage, net sales were materially flat at 78.7 million.
Beverage sales were up modestly where a service and Machine Sales combined were down modestly.
From the facility, fire.
Consolidated gross. Margin improved 200 basis points to 27.9% primarily reflecting Apollo initiatives. Including a reduction in lower margin sales.
Sales within the remaining retail portfolio decreased to about 600,000, primarily driven by lower frozen novelty sales, as growth in Dogsters and Dippin' Dots was more than offset by decreases in other novelties.
results included product, disposal, expenses of approximately 1 million
Beverage sales were up modestly, whereas service and machine sales combined were down modestly. Consolidated gross margin improved 200 basis points to 27.9%, primarily reflecting Apollo initiatives, including a reduction in lower margin sales. Results included product disposal expenses of approximately $1 million. Tariff-related costs were approximately $600,000, net of pricing offsets.
Frozen beverage net sales were materially flat at $78.7 million.
Beverage sales were up modestly, whereas service and machine sales combined were down modestly.
Tariff related costs were approximately dollars. Net of pricing offsets. We do expect some tariff impacts to subside over the course of fiscal 26.
Consolidated growth. Margin improved 200 basis points to 27.9%.
Primarily reflecting Apollo initiatives, including a reduction in lower-margin sales.
operating expenses, increased 95.4 million, which included 6.1 million in non-recurring, plant closure costs, and other non-recurring impacts
Results included product disposal expenses of approximately $1 million.
We expect additional non-recurring transformation project costs of approximately dollars in fiscal 26.
Shawn Munsell: We do expect some tariff impact to subside over the course of fiscal 2026. Operating expenses increased $95.4 million, which included $6.1 million in non-recurring plant closure costs and other non-recurring impacts. We expect additional non-recurring transformation project costs of approximately $5 million in fiscal 2026. Selling and marketing expenses increased 9.9% or $2.8 million compared to the prior year quarter. Approximately 140 basis points of the increase was associated with higher commissions for retail vending sales, which is a growing component of our Dippin' Dots business. Investments to support our brands in preparation for our peak summer season accounted for roughly 250 basis points of the increase.
We do expect some tariff impact to subside over the course of fiscal 2026. Operating expenses increased $95.4 million, which included $6.1 million in non-recurring plant closure costs and other non-recurring impacts. We expect additional non-recurring transformation project costs of approximately $5 million in fiscal 2026.
Tariff-related costs were approximately dollars, net of pricing offsets. We do expect some tariff impacts to subside over the course of fiscal '26.
Selling and marketing expenses increased 9.9% or 2.8 million compared to the prior year quarter approximately 140 basis points of the increase was associated with higher commissions for retail vending sales, which is a growing component of our dip and dots business.
Operating expenses increased $95.4 million, which included $6.1 million in non-recurring plant closure costs and other non-recurring impacts.
We expect additional non-recurring transformation project costs of approximately 5 million dollars in fiscal 26.
Selling and marketing expenses increased 9.9% or $2.8 million compared to the prior year quarter. Approximately 140 basis points of the increase was associated with higher commissions for retail vending sales, which is a growing component of our Dippin' Dots business. Investments to support our brands in preparation for our peak summer season accounted for roughly 250 basis points of the increase.
Selling and marketing expenses increased 9.9%, or $2.8 million, compared to the prior year quarter.
Investments to support our brands in preparation for our Peak summer season accounted for roughly 250 basis points of the increase higher depreciation associated with customer equipment. Accounted for approximately 190 basis points of the increase with almost half of that associated with growth and dip and dots.
We expect these Investments to generate growth during the peak summer season.
Approximately 140 basis points of the increase was associated with higher commissions for retail vending sales, which is a growing component of our dip and dots business.
Distribution expenses, declined, 1.6 million or 3.9%, primarily due to lower volume.
Shawn Munsell: Higher depreciation associated with customer equipment accounted for approximately 190 basis points of the increase, with almost half of that associated with growth in Dippin' Dots. We expect these investments to generate growth during the peak summer season. Distribution expenses declined $1.6 million or 3.9%, primarily due to lower volume. Distribution expenses were 11.1% of sales, as compared to 10.9% in the prior year. Administrative expenses were $20.4 million, an increase of 7.8% from the prior year. Approximately 300 basis points of the increase was related to non-recurring restructuring charges and legal fees. Adjusted operating income was $8 million, compared to $8.2 million in the prior year. Adjusted EBITDA increased 7% to $27 million, versus $25.3 million last year.
Higher depreciation associated with customer equipment accounted for approximately 190 basis points of the increase, with almost half of that associated with growth in Dippin' Dots. We expect these investments to generate growth during the peak summer season. Distribution expenses declined $1.6 million or 3.9%, primarily due to lower volume.
Investments to support our brands in preparation for a peak summer season accounted for roughly 250 basis points of the increase.
Distribution expenses were 11.1% of sales as compared to 10.9% in the prior year.
Higher depreciation associated with customer equipment accounted for approximately 190 basis points of the increase, with almost half of that associated with growth in given dots.
We expect these Investments to generate growth during the peak summer season.
Administrative expenses, were 20.4 million in increase of 7.8% from the prior year. Approximately 300 basis. Points of the increase was related to non-recurring, restructuring charges and legal fees.
Distribution expenses were 11.1% of sales, as compared to 10.9% in the prior year. Administrative expenses were $20.4 million, an increase of 7.8% from the prior year. Approximately 300 basis points of the increase was related to non-recurring restructuring charges and legal fees. Adjusted operating income was $8 million, compared to $8.2 million in the prior year. Adjusted EBITDA increased 7% to $27 million, versus $25.3 million last year.
Distribution expenses, declined, 1.6 million or 3.9%, primarily due to lower volume.
Adjusted operating income was 8 million compared to 8.2 million in the prior year.
Distribution expenses were 11.1% of sales as compared to 10.9% in the prior year.
Adjusted ebit da increased 7% to 27 million versus 25.3 Million last year.
The effective tax rate was 27%.
Administrative expenses were $20.4 million, an increase of 7.8% from the prior year. Approximately 300 basis points of the increase was related to non-recurring restructuring charges and legal fees.
On a reported basis earnings per diluted share was 5 cents, compared to 26 Cents last year, primarily reflecting the impact of 1 time. Charges on an adjusted basis. Earnings per diluted share was 33 cents in line with last year.
Adjusted operating income was 8 million compared to 8.2 million in the prior year.
Shawn Munsell: The effective tax rate was 27%. On a reported basis, earnings per diluted share was $0.05 compared to $0.26 last year, primarily reflecting the impact of one-time charges. On an adjusted basis, earnings per diluted share was $0.33, in line with last year. Our balance sheet remains strong, with approximately $67 million in cash and no long-term debt. We had approximately $210 million of borrowing capacity under our revolving credit facility. During the quarter, we generated approximately $36 million in operating cash flow and invested $19 million in capital expenditures. As Dan mentioned, during the quarter, we completed our share repurchase authorization by buying back just over 458,000 shares for $42 million, or an average price of about $91.60 per share.
The effective tax rate was 27%. On a reported basis, earnings per diluted share was $0.05 compared to $0.26 last year, primarily reflecting the impact of one-time charges. On an adjusted basis, earnings per diluted share was $0.33, in line with last year. Our balance sheet remains strong, with approximately $67 million in cash and no long-term debt. We had approximately $210 million of borrowing capacity under our revolving credit facility.
Adjusted even to increase 7% to 27 million versus 25.3 Million last year.
The effective tax rate was 27%.
Our balance sheet remains strong with approximately 67 million in cash and no long-term debt. We had approximately 210 million of borrowing capacity under our revolving credit facility during the quarter. We generated approximately 36 million in operating cash flow and invested 19 million in capital expenditures,
On a reported basis, earnings per diluted share was $0.05, compared to $0.26 last year, primarily reflecting the impact of one-time charges. On an adjusted basis, earnings per diluted share was $0.33, in line with last year.
As Dan mentioned during the quarter, we completed our share repurchase authorization by buying back, just over 458,000 shares for 42 million or an average price of about $91.60 per share.
During the quarter, we generated approximately $36 million in operating cash flow and invested $19 million in capital expenditures. As Dan mentioned, during the quarter, we completed our share repurchase authorization by buying back just over 458,000 shares for $42 million, or an average price of about $91.60 per share.
Our balance sheet remains strong with approximately 67 million in cash and no long-term debt. We had approximately 210 million of borrowing capacity under our revolving credit facility during the quarter. We generated approximately 36 million in operating cash flow and invested 19 million in capital expenditures,
Including shares bought in fiscal 2025. We repurchase just over 525,000 shares for fifty million dollars or an average price of about 95 dollars per share.
That concludes our prepared remarks and we are now ready to take your questions, operator.
Shawn Munsell: Including shares bought in fiscal 2025, we repurchased just over 525,000 shares for $50 million, or an average price of about $95 per share. That concludes our prepared remarks, and we are now ready to take your questions. Operator?
Including shares bought in fiscal 2025, we repurchased just over 525,000 shares for $50 million, or an average price of about $95 per share. That concludes our prepared remarks, and we are now ready to take your questions. Operator?
As Dan mentioned during the quarter, we completed our share repurchase authorization by buying back just over 458,000 shares for $42 million, or an average price of about $91.60 per share.
Including share repurchases bought in fiscal 2025, we repurchased just over 5.25% at an average price of about $95 per share.
Thank you as a reminder, to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please. Press star. 1 1 again, and our first question comes from John Anderson with William. Blair your line is now open?
That concludes our prepared remarks, and we are now ready to take your questions, operator.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Jon Andersen with William Blair. Your line is now open.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Jon Andersen with William Blair. Your line is now open.
Thank you as a reminder, to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please. Press star. 1 1 again, and our first question comes from John Anderson with William. Blair your line is now open?
Jon Andersen: Good morning.
Jon Andersen: Good morning.
Shawn Munsell: Good morning, John.
Shawn Munsell: Good morning, Jon.
Jon Andersen: Thanks for the question. Morning. I have one question on sales and then one on Project Apollo and cost outs. Beginning on sales, you know, you mentioned that the SKU rat is now expected to kind of be a headwind of about three percentage points on a full year basis. That makes sense, I understand, and is consistent with what you've talked about in terms of portfolio optimization work. But, what I'm trying to kind of get to is how you're thinking about the full year, you know, in the context of that.
Jon Andersen: Thanks for the question. Morning. I have one question on sales and then one on Project Apollo and cost outs. Beginning on sales, you know, you mentioned that the SKU rat is now expected to kind of be a headwind of about three percentage points on a full year basis. That makes sense, I understand, and is consistent with what you've talked about in terms of portfolio optimization work. But, what I'm trying to kind of get to is how you're thinking about the full year, you know, in the context of that.
What you've talked about in terms of um, portfolio optimization work.
but um,
Morning. Um I I have 1 question on on sales and then um 1 on Project Apollo and and cost outs um beginning on sales. Um it you know you mentioned that the SKU rat is is now um expected to kind of be a headwind of about 3 percentage points on a full year basis, that makes sense. I understand and is consistent with what what you've talked about in terms of um portfolio optimization work.
but um,
what I'm trying to kind of get to is how you're thinking about the full year, you know, in the, in the context of that, I, I know you have kind of an underlying long-term objective of of growing, the business organically in the mid single digits. Um, but again, I think we have to net out the 300 bips, uh, related to Stuart this year. So um, in that I know there are some things that, you know, are building through the year as well, in terms of commercial Innovation. Um, some new business wins.
Jon Andersen: I know you have kind of an underlying long-term objective of growing the business organically in the mid-single digits, but again, I think we have to net out the 300 bps related to SKU rat this year. So, and then I know there are some things that, you know, are building through the year as well in terms of commercial innovation, some new business wins. You know, are you looking for, or expecting or budgeting, you know, to grow the business, headline sales on a full year basis? And how might that kind of ramp from the number that you printed in Q1 work from here? And then I'll follow up with a question on Project Apollo. Thanks.
I know you have kind of an underlying long-term objective of growing the business organically in the mid-single digits, but again, I think we have to net out the 300 bps related to SKU rat this year. So, and then I know there are some things that, you know, are building through the year as well in terms of commercial innovation, some new business wins.
You know, are are you looking for um, or expecting or budgeting, you know, to grow the business uh, headline sales on a full year basis and and how might that kind of ramp up from the number uh, that you printed in q1, uh, work from here and then I'll follow up with a question on Project Apollo, thanks.
You know, are you looking for, or expecting or budgeting, you know, to grow the business, headline sales on a full year basis? And how might that kind of ramp from the number that you printed in Q1 work from here? And then I'll follow up with a question on Project Apollo. Thanks.
But again, I think we have to net out the 300 bps related to Stuart this year. So, um, and then I know there are some things that, you know, are building through the year as well in terms of commercial innovation. Um, some new business wins.
Dan Fachner: Great. Thank you, Jon. Yeah, great question, and you know, just to, to start off, we're really pleased with the way that the quarter shaped up. It's, it's really what we had talked about to begin with, with Project Apollo, and are very happy with the way that it is shaping up so far. The sales results in Q1 were just slightly softer than we anticipated, and, and that's due to the ramp up of being able to consolidate those plants. You know, we have three of them that we're- we consolidated. One is fully done at this point, one's kind of halfway there, will be done shortly, and then the final one will be done by the end of this quarter... which puts us at a full run rate. So-
Dan Fachner: Great. Thank you, Jon. Yeah, great question, and you know, just to, to start off, we're really pleased with the way that the quarter shaped up. It's, it's really what we had talked about to begin with, with Project Apollo, and are very happy with the way that it is shaping up so far.
You know, are you looking for, um, or expecting or budgeting, you know, to grow the business, uh, headline sales on a full-year basis, and how might that kind of ramp, uh, from the number, uh, that you printed in Q1, uh, work from here? And then I'll follow up with a question on Project Apollo. Thanks.
Great. Thank you, John. Uh, yeah, great question. And, you know, just to to start off, we're really pleased with the way that the quarter shaked up. It's, it's really what we had talked about to begin with, with project Apollo and are very happy, uh, with the way that it is shaping up so far, uh, the sales results in q1 were just a slightly softer than we anticipated and and that's due to the ramp up of being able to uh, consolidate those plants. You know, we have 3 of them that were we Consolidated 1?
The sales results in Q1 were just slightly softer than we anticipated, and, and that's due to the ramp up of being able to consolidate those plants. You know, we have three of them that we're- we consolidated. One is fully done at this point, one's kind of halfway there, will be done shortly, and then the final one will be done by the end of this quarter... which puts us at a full run rate. So-
Is fully done at this point 1's. Uh, kind of halfway there will be done shortly and then the final 1 will be done by the end of this quarter which puts us at a full run rate.
Uh, so John can excuse me. John can you hear us?
Yes.
Great. Thank you, John. Uh, yeah, great question. And, you know, just to to start off, we're really pleased with the way that the quarter shaked up. It's, it's really what we had talked about to begin with, with project Apollo and are very happy, uh, with the way that it is shaping up so far, uh, the sales results in q1 were just a slightly softer than we anticipated and and that's due to the ramp up of being able to uh, consolidate those plants. You know, we have 3 of them that were we Consolidated. 1 is fully done at this point 1's. Uh, kind of halfway there will be done shortly and then the final 1 will be done by the end of this quarter which puts us at a full run rate.
Shawn Munsell: Hey, John, can you-
Shawn Munsell: Hey, Jon, can you-
Dan Fachner: Excuse me.
Dan Fachner: Excuse me.
Shawn Munsell: John, can you hear us?
Shawn Munsell: John, can you hear us?
Jon Andersen: Yes.
Jon Andersen: Yes.
Uh, so John, can you excuse me? John, can you hear us?
Dan Fachner: Okay, good. We're sorry, we got a little interruption here. I apologize for that. So overall, we're happy with where the quarter landed, much like what we have talked about all along with you. As it looks towards long term and where we might shake out for the year, like you talked about, we have a lot of great new business, great innovation coming on. And yes, about 3% impacted by the SKU rationalization that was escalated during this quarter because the speed in which we were able to consolidate those branches. We still look towards low single digits growth for the entire year, though.
Dan Fachner: Okay, good. We're sorry, we got a little interruption here. I apologize for that. So overall, we're happy with where the quarter landed, much like what we have talked about all along with you. As it looks towards long term and where we might shake out for the year, like you talked about, we have a lot of great new business, great innovation coming on.
And yes, about 3% impacted by the SKU rationalization that was escalated during this quarter because the speed in which we were able to consolidate those branches. We still look towards low single digits growth for the entire year, though. We think that we're in a good position with all the great things that we have going on, to kinda land the plane there in that low single digits growth.
Okay, good. Wait, sorry, we got a little Interruption here. Apologize for that. Uh, so overall, we're we're happy with where the quarter landed much like what we have talked about all along with you, uh, as it looks towards long term. And, and where we might shake out for the year. Like you talked about, we have a lot of great, new business, great Innovation coming on. Um, and and yes, about 3% impacted by the SKU rationalization, that was escalated during this quarter because the, the speed in, which we are able to consolidate those branches, we still look towards, um, low single digits growth, uh, for the entire year, though. We think that, uh, we think that we're in a good position with all the great things that we have going on uh to kind of land the plane there in that low single digits growth. Yeah, that's that's no single digits John on kind of the the remaining portion of the portfolio.
Got it on the, on the X ski rat portion. Yeah, that's right. Yep.
Okay, Fair Point. Okay. And then um,
Dan Fachner: We think that we're in a good position with all the great things that we have going on, to kinda land the plane there in that low single digits growth.
Shawn Munsell: Yeah, that's, that's low single digits, John, on kind of the, the remaining portion of the portfolio.
Shawn Munsell: Yeah, that's, that's low single digits, John, on kind of the, the remaining portion of the portfolio.
You, you mentioned that project Apollo, I think delivered 3 million dollars of of cost Savings in the quarter I guess the Run rate.
Yes. Okay, good. Wait sorry. We got a little Interruption here. Apologize for that. Uh, so overall, we're we're happy with where the quarter landed much like what we have talked about all along with you, uh, as it looks towards long-term. And and where we might shake out for the year, like you talked about, we have a lot of great, new business, great Innovation coming on. Um, and and yes, about 3% impacted by the SKU rationalization, that was escalated during this quarter because the, the speed in, which we are able to consolidate those branches, we still look towards, um, low single digits growth, uh, for the entire year though. Uh, we think that, uh, we think that we're in a good position with all the great things that we have going on, uh, to kind of land the plane there in that low single digits growth. Yeah, that's, that's little single digits John on kind of the the remaining portion of the portfolio.
Jon Andersen: Got it. On the ex-SKU rat portion?
Jon Andersen: Got it. On the ex-SKU rat portion?
Shawn Munsell: Yeah, that's right. Yep.
Shawn Munsell: Yeah, that's right. Yep.
Jon Andersen: Okay, fair point. Okay. And then, you mentioned that Project Apollo, I think, delivered $3 million of cost savings in the quarter. I guess, the run rate you're looking to achieve, once complete with phase one, is $20 million.
Jon Andersen: Okay, fair point. Okay. And then, you mentioned that Project Apollo, I think, delivered $3 million of cost savings in the quarter. I guess, the run rate you're looking to achieve, once complete with phase one, is $20 million.
Got it on the, on the X ski rat portion. Yeah, that's right. Yeah.
Okay, fair point. Okay. And then, um,
you're looking to achieve once complete would say 1 is 20 million um what else needs to happen um to get to the 20 million dollar annual run rate and and you know, if you had to kind of
uh point to a time frame this year when you hit that stride what when do you think that that might be
You, you mentioned that project Apollo, I think delivered 3 million dollars of of cost Savings in the quarter I guess the Run rate.
Dan Fachner: Yep.
Dan Fachner: Yep.
Jon Andersen: What else needs to happen to get to the $20 million annual run rate? You know, if you had to kind of point to a timeframe this year when you hit that stride, when do you think that might be?
Jon Andersen: What else needs to happen to get to the $20 million annual run rate? You know, if you had to kind of point to a timeframe this year when you hit that stride, when do you think that might be?
You're looking to achieve once complete with Phase 1 is $20 million. Um, what else needs to happen, um, to get to the $20 million annual run rate and, you know, if you had to kind of—
Dan Fachner: Yeah, we really believe that we'll be there here in the second quarter. The team has done a tremendous job getting us to this position, and we talked about that $20 million annual run rate, and we believe that we will be fully capable of doing that starting in Q2.
Dan Fachner: Yeah, we really believe that we'll be there here in the second quarter. The team has done a tremendous job getting us to this position, and we talked about that $20 million annual run rate, and we believe that we will be fully capable of doing that starting in Q2.
you know uh point to a time frame this year when you hit that stride, what when do you think that that might be
Shawn Munsell: Yeah, and that's the plant consolidation component. So that's the plant consolidation component. So if you remember, Jon, $15 million of the $20 million is associated with plant. So, you know, we were closing in on that full run rate in Q1. We expect to hit it in Q2. You know, a lot of the work has been done in terms of, you know, shutting down those plants, transferring inventory, you know, all of the all the closure and consolidation work. We expect that to be complete this quarter. The remaining $5 million, if you remember, that's a mix between, you know, distribution expense savings and G&A savings, and we expect to be on the run rate.
Shawn Munsell: Yeah, and that's the plant consolidation component. So that's the plant consolidation component. So if you remember, Jon, $15 million of the $20 million is associated with plant. So, you know, we were closing in on that full run rate in Q1. We expect to hit it in Q2. You know, a lot of the work has been done in terms of, you know, shutting down those plants, transferring inventory, you know, all of the all the closure and consolidation work.
Yeah, we really believe that we'll be there here in the second quarter. Um, the team has done a tremendous job uh, getting us to this position. Uh and we talked about that 20 million annual run rate and and we believe that we will be, um, fully uh, capable of doing that starting in Q2. Yeah. And that's the uh, so that's the, the, the plant consolidation component. So, if you remember John, 15 million of the 20 million is associated with plant. So you know, we were, we were closing in on the on that full run rate in q1, expect to hit it in Q2. Um, you know, a lot of the a lot of the work has been done in terms of, you know, shutting down those plants, transferring inventory, you know, all of the uh, all the closure and consolidation work.
We expect that to be complete, this quarter, the remaining 5 million. If you remember, that's a mix between, um, you know, distribution expense savings, and GNA savings and we expect to be on the Run rate, we'll be ramping up into the third quarter of this fiscal year and then should be on the full run rate for that remaining 5 million by the fourth quarter.
We expect that to be complete this quarter. The remaining $5 million, if you remember, that's a mix between, you know, distribution expense savings and G&A savings, and we expect to be on the run rate. We'll be ramping up in Q3 of this fiscal year, and then should be on the full run rate for that remaining $5 million by Q4.
Okay, super helpful. Um, maybe I screwed if I could squeeze 1 more in. Um,
Yeah, we really believe that we'll be there here in the second quarter. Um, the team has done a tremendous job uh, getting us to this position. Uh, and we talked about that 20 million annual run rate. And and we believe that we will be, um, fully, uh, capable of doing that starting in Q2. Yeah. And that's the, uh, so that's the the plant consolidation component. So, if you remember John, 15 million of the 20 million is associated with plants. So, you know, we were, we were closing in on the on that full run rate in q1, we expect to hit it in Q2. Um, you know, a lot of the a lot of the work has been done in terms of, you know, shutting down those plants, transferring inventory, you know, all of the, uh, all the closure and consolidation work, we expect that to be complete. This quarter, the remaining 5 million. If you remember, that's a mix between, um, you know, distribution expense savings, and
Shawn Munsell: We'll be ramping up in Q3 of this fiscal year, and then should be on the full run rate for that remaining $5 million by Q4.
GNA savings and we expect to be on the Run rate. We'll be ramping up into the third quarter of this fiscal year and then should be on the full run rate for that remaining 5 million by the fourth quarter.
Jon Andersen: Okay, super helpful. If I can squeeze one more in. You know, I know that the commodity environment has not been a helper for you in recent years, and there have been certain, you know, pockets within your cost of goods basket, like eggs and cocoa, but, you know, can you give us an update on where things sit now? Are those less, you know, of a headwind to moving forward? And how are you kind of thinking about just kind of inflation and also what you're doing overall from a portfolio perspective and the impact on gross margin?
Jon Andersen: Okay, super helpful. If I can squeeze one more in. You know, I know that the commodity environment has not been a helper for you in recent years, and there have been certain, you know, pockets within your cost of goods basket, like eggs and cocoa, but, you know, can you give us an update on where things sit now? Are those less, you know, of a headwind to moving forward? And how are you kind of thinking about just kind of inflation and also what you're doing overall from a portfolio perspective and the impact on gross margin?
But you can, you give us an update on on where things sit now are those less?
Okay, super helpful. Um, maybe I screwed—if I could squeeze one more in. Um,
You know, of a headwind moving forward. And, and um, how are you kind of thinking about just kind of inflation? And also, what you're doing, overall from a portfolio perspective and, and the impact on gross margin, you know, you had a nice Step Up in q1, 200 basis points and I'm, I'm wondering if we should be thinking about, you know, that kind of level of improvement year over year, you know, persisting as we move forward and I know the plant consolidation is part of that but there, there are probably other factors in there as well. Portfolio mix.
Uh, commodity costs Etc.
Jon Andersen: You know, you had a nice step up in Q1, 200 basis points, and I'm wondering if we should be thinking about, you know, that kind of level of improvement year-over-year, you know, persisting as we move forward. And I know the plant consolidation is part of that, but there are probably other factors in there as well, portfolio mix, commodity costs, et cetera.
You know, you had a nice step up in Q1, 200 basis points, and I'm wondering if we should be thinking about, you know, that kind of level of improvement year-over-year, you know, persisting as we move forward. And I know the plant consolidation is part of that, but there are probably other factors in there as well, portfolio mix, commodity costs, et cetera.
Step Up in, q1, 200 basis points. And I'm, I'm wondering if we should be thinking about, you know, that kind of level of improvement year-over-year, you know, persisting, as we move forward, and I know the plant consolidation is part of that, but there, there are probably other factors in there as well. Portfolio mix.
Dan Fachner: Well, the plant consolidation and the addition of some of the new business and our continued kind of mantra of margining up, so we're seeing some really nice things come through with all three of those things. Commodity pricing, I think will be a little bit in our favor this year. You know, last year we really struggled in this quarter and Q2 with some headwinds of, like you talked about, with cocoa and eggs. But overall, we believe this year that there's a good chance that will kind of be in our favor.
Dan Fachner: Well, the plant consolidation and the addition of some of the new business and our continued kind of mantra of margining up, so we're seeing some really nice things come through with all three of those things. Commodity pricing, I think will be a little bit in our favor this year. You know, last year we really struggled in this quarter and Q2 with some headwinds of, like you talked about, with cocoa and eggs. But overall, we believe this year that there's a good chance that will kind of be in our favor.
Uh, commodity costs Etc.
Well, the the plant consolidation and uh and the addition of some of the new business and our continued um, uh kind of Mantra of margining up. Uh, so we're seeing some really nice things come through, with all 3 of those things, uh, commodity pricing. Um, I think we'll be a little bit in our favor this year. Um, you know, last year we really struggled and, and this quarter and and Q2 with some headwinds of, like, you talked about with cocoa and a, uh, but overall, we believe this year that, um, that there's a good chance that, that, that will kind of be in our favor.
Well, the the plant consolidation and uh and the addition of some of the new business and our continued um uh kind of Mantra of margining up. Uh, so we're seeing some really nice things come through, with all 3 of those things, uh commodity pricing. Um, I think will be a little bit in our favor this year. Um, you know, last year we really struggled and, and this quarter and and Q2 with some headwinds and like you talked about with cocoa and eggs. Uh, but overall, we believe this year that, um, that there's a good chance that, that, that will kind of be in our favor.
Shawn Munsell: Yeah.
Shawn Munsell: Yeah.
Jon Andersen: Great. Thanks so much.
Jon Andersen: Great. Thanks so much.
Yeah. And and 1 other thing, I meant to add to John is, you know, that the 1 million dollars worth of product disposal costs that we incurred in the quarter just to be clear that was not adjusted out of our earnings. And so just think about the gross margin Improvement in the context to that. You know, if not if not for uh, you know, product disposal. We you know we would have picked up another, you know, you'd have another million dollars flowing through gross profits in the quarter.
Shawn Munsell: One other thing I meant to add, too, John, is, you know, that the $1 million worth of product disposal costs that we incurred in the quarter, just to be clear, that was not adjusted out of our earnings. So just think about the gross margin improvement in the context of that. You know, if not, if not for, you know, product disposal, we, you know, we would've picked up another, you know, you'd have another $1 million flowing through gross, gross profit in the quarter.
Shawn Munsell: One other thing I meant to add, too, John, is, you know, that the $1 million worth of product disposal costs that we incurred in the quarter, just to be clear, that was not adjusted out of our earnings. So just think about the gross margin improvement in the context of that. You know, if not, if not for, you know, product disposal, we, you know, we would've picked up another, you know, you'd have another $1 million flowing through gross, gross profit in the quarter.
Okay, and Sean. That's that's something that doesn't, that that's done. That's in the rearview mirror at this point that won't affect us. Yeah. Yeah. Yeah. That was just, that was a 1-time impact on some. Some product that got on a spec
Okay, great. Thank you very much. I'll get back on the computer. Thank you, John
Thank you as a reminder.
To ask.
For telephone.
Jon Andersen: Okay. And Shawn, that's something that's done. That's in the rearview mirror at this point.
Jon Andersen: Okay. And Shawn, that's something that's done. That's in the rearview mirror at this point.
Yeah, and 1 of and 1 other thing, I meant to add to John is, you know, that the $1 million worth of product disposal costs that we incurred in the quarter just to be clear that was not adjusted out of our earnings. And so just think about the gross margin Improvement in the context of that. You know, if not if not for uh, you know, product disposal we, you know, we would have picked up another, you know, you'd have another million dollars going through gross profits in the quarter.
Shawn Munsell: Yeah
Jon Andersen: - that won't affect us going forward?
Shawn Munsell: Yeah
Jon Andersen: - that won't affect us going forward?
Shawn Munsell: Yeah. Yeah, that was just, that was a one-time impact on some, some product that got out of spec.
Shawn Munsell: Yeah. Yeah, that was just, that was a one-time impact on some, some product that got out of spec.
Hey, I am showing no further questions in the queue, I will now turn the call back to Dan for closing remarks.
Jon Andersen: Okay, great. Thank you very much. I'll get back in the queue.
Jon Andersen: Okay, great. Thank you very much. I'll get back in the queue.
Okay, and Sean, that's that's something that doesn't, that that's done. That's in the rearview mirror at the point that won't affect us. Yeah. Yeah. That was just, that was a 1-time impact on some, some product that got out of spec.
Dan Fachner: Thank you, Jon.
Dan Fachner: Thank you, Jon.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. I am showing no further questions in the queue. I will now turn the call back to Dan for closing remarks.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. I am showing no further questions in the queue. I will now turn the call back to Dan for closing remarks.
Okay, great. Thank you very much. I'll get back to you. Thank you, John.
Thank you, operator in closing, I want to emphasize that our q1 results demonstrate that our transformation project is taking hold.
Thank you as a reminder to ask a question. Please press star.
The early benefits from Project Apollo combined, with our continued, pretzel growth and strong Innovation pipelines, positions us, well for fiscal 2026.
Yeah, I am showing no further questions in the queue, I will now turn the call back to Dan for closing remarks.
Dan Fachner: Thank you, operator. In closing, I want to emphasize that our Q1 results demonstrate that our transformation project has taken hold. The early benefits from Project Apollo, combined with our continued pretzel growth and strong innovation pipeline, positions us well for fiscal 2026. With our strategic focus on higher margin opportunities and operational excellence, we're building momentum for sustainable growth. Our strong balance sheet provides flexibility to invest in growth opportunities while returning capital to shareholders. We remain confident in our ability to deliver the full benefits of Project Apollo and drive long-term value creation. Thank you for your continued support, and we look forward to updating you on our progress throughout fiscal 2026. Thank you.
Dan Fachner: Thank you, operator. In closing, I want to emphasize that our Q1 results demonstrate that our transformation project has taken hold. The early benefits from Project Apollo, combined with our continued pretzel growth and strong innovation pipeline, positions us well for fiscal 2026. With our strategic focus on higher margin opportunities and operational excellence, we're building momentum for sustainable growth.
With our strategic focus on higher margin opportunities. And operational excellence. We're building momentum for sustainable growth.
Thank you, operator in closing, I want to emphasize that our q1 results demonstrate that our transformation project has taken hold
Our strong balance sheet provides flexibility to invest in growth opportunities while returning Capital to shareholders.
We remain confident in our ability to deliver the full benefits of project Apollo and drive long-term value creation.
The early benefits from Project Apollo, combined with our continued pretzel growth and strong innovation pipelines, position us well for fiscal 2026.
Thank you for your continued support and we look forward to updating you on our progress. Throughout fiscal 2026. Thank you.
Our strong balance sheet provides flexibility to invest in growth opportunities while returning capital to shareholders. We remain confident in our ability to deliver the full benefits of Project Apollo and drive long-term value creation. Thank you for your continued support, and we look forward to updating you on our progress throughout fiscal 2026. Thank you.
With our strategic focus on higher margin opportunities and operational excellence, we're building momentum for sustainable growth.
This concludes today's conference call, thank you for participating. You may now disconnect
Our strong balance sheet provides flexibility to invest in growth opportunities while returning capital to shareholders.
We remain confident in our ability to deliver the full benefits of Project Apollo and drive long-term value creation.
Thank you for your continued support, and we look forward to updating you on our progress throughout fiscal 2026. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
This concludes today's conference call, thank you for participating. You may now disconnect
