J & J Snack Foods Corp.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the J&J Snack Foods Fiscal 2023 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Norberto Aja of Investor Relations. Sir, please begin.

Thank you, Michelle, and good morning, everyone. Thank you for joining the J&J Snack Foods fiscal 2023 third quarter conference call. We will start in just a minute with management's comments and your questions. But before doing so, let me take a minute to read the State Barber language. Today's call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. As such, 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. These statements are neither promises or guarantees that 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. Factors discussed in our annual report on Form 10-K for the year ended September 24, 2022, and there are other filings with the Securities and Exchange Commission that caused actual results to defer materially from those indicated by the forward-looking statements made on this call today. Any such forward-looking statements represent management's estimates as to the date of this call, August 1, 2023. While we may collect the 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. In addition, we may also reference certain non-GAAP metrics on the call today, including adjusted EBITDA, operating income, or earnings per share, all of which are reconciled to the nearest GAAP metric in our earnings press release, which can be found in the Investor Relations section of our website. Joining me on the call today is Dan Faschner, our Chief Executive Officer, along with Ken Flint, our Chief Financial Officer. Following management prepared remarks, we will go ahead and open the call for a question and answer session. Dan Faschner, J&J Snack Foods Chief Executive Officer. Please go ahead, Dan.

Thank you, Roberto, and good morning, everyone. We appreciate you joining us to discuss our fiscal 2023 third quarter results. I'd like to start by thanking our employees across all J&J segments for a record quarter. I am so proud of our team and their efforts to continuously improve on our business. Their hard work and dedication are allowing us to post record top and bottom line results and create added value for all our employees partners, and shareholders. For the fiscal third quarter, revenues increased 12% to 425.8 million, and net earnings increased 124.8% to 35 million, led by strong gross margin performance and improved distribution expenses. Our gross margin initiatives and strategies are starting to gain momentum helping us to drive improved profitability. Like most of our industry, we are beginning to see cost inflation stabilize and our pricing actions are now better aligned with costs. This, combined with improved margin mix and added efficiencies in our manufacturing plants, should have us well positioned to deliver consistent margin performance. Ken will provide more details on our financial performance later in the call. Today, I'd like to begin by talking about the operations and supply chain side of our business. As we have discussed in prior quarters, our team has been focused on several initiatives to create more efficiencies in our business and enhance our capabilities. Combined, these initiatives will help us transform how we operate as a company. Here's a quick update on these key priorities. Our team has improved logistics management over shipping, warehousing, and product distribution through our partnership with NFI. NFI now manages 100% of our transportation network and is helping us improve truck capacity, minimize miles, reduce stops, enhance customer service, helping us lower shipping, handling, and storage costs. Next. we are transforming our warehouse network to simplify how we manage product through our warehouses. This includes the build out of three geographically positioned regional distribution centers, adding freezer capacity, including more storage space for Dippin' Dots products in two of these three locations. The first of these three RDCs recently opened in Terrell, Texas in June, And the other two locations are scheduled to open later this calendar year and early 2024. These initiatives will simplify our logistics network by moving from over 30 warehouse locations to less than 10, resulting in improved customer service and lower distribution costs. Also, we have rolled out six state-of-the-art production lines adding capacity to support growth in our key product categories such as pretzels, churros, and frozen novelties. These lines are more automated, creating production efficiencies and higher output metrics, all aligned to support our growth opportunities in these core products. Our operations team has implemented stronger discipline within the plants, that is driving efficiency improvements in areas such as waste reduction, maintenance spend, SKU productivity, and hours utilization. And we have improved our financial and operational foundation via the implementation of a new ERP system last year. This has enabled us to integrate processes and controls across our operations and is now providing better data to manage the key KPIs across operations, supply chain, and finance. We expect to continue to see additional benefits from this initiative. Together, these operational and supply chain initiatives are transforming our business and will play a pivotal role in reducing distribution and manufacturing costs and providing better service to our valued customers. One of our key strategies is to leverage the strength of our core products and brands to drive growth and improve profitability. Our team is working across segments and channels to create new selling opportunities and drive innovation. I'd like to highlight a few of our brand priorities. Dippin' Dots is quickly penetrating new markets and gaining placements in new channels. One of our biggest growth opportunities is in the theater channel where we are now in approximately 375 Regal theaters and actively testing with the other two largest theater chains. Like we reported last quarter, we are leveraging our brand portfolio to create products like Dippin' Dots Icy Cherry and Blue Raspberry, which is already the best new product launch for Dippin' Dots ever. Finally, We are pursuing numerous vending opportunities as we find new ways to serve our customers. Olatsuro has exceeded our expectations with sales growing by over 19% in the most recent quarter and almost 30% year to date. We now have significant market share and are confident in our ability to maintain our leadership position. We are finding growth opportunities that include bringing Ola Churros into the retail space in the fourth quarter, and new business with major US food distributors, QSR, and fast casual channels. Super Pretzel is one of our most powerful brands with endless potential, it seems. In the fourth quarter, we will be launching Super Pretzel Bavarian sticks, bites, and mini dogs in the food service and retail creating new snacking occasions and solidifying our dominant position within soft pretzels. I see it continues to benefit from a recovering theater industry, as well as from its strong consumer appeal across a growing number of occasions. There is recent momentum in the theater industry as attendance moves close to pre-pandemic level and stronger movie releases are hitting the markets. We continue to gain placements in QSR and are currently discussing a major opportunity with a Club Channel customer. On the marketing side, a new campaign is currently being tested in the Atlanta market called Let the Kid Out. That includes out-of-home, curb-in, and digital media support and is receiving very positive reviews. We continue to have strong plans to market and grow this brand across our portfolio. We have really built a business balanced across multiple products, channels, and customer segments, which together helps us adapt to changing consumer and snacking occasions. We manage this portfolio to maximize our growth opportunities across food service, retail, and frozen beverage segments. This quarter is a great example of our flexible business model and our capabilities to continue driving both sales and growth and profit growth. Before transitioning to Ken, let me highlight a few additional insights within each of our business segments. Food service continued its strong performance from prior quarters with sales up 11.9% to 255 million. Super Pretzel Bavarian Pretzel Bite and Jalapeno Cheese Filled Nuts launched this quarter, and we gained placements of a Super Pretzel Bavarian Sticks at a large family entertainment center. Also, we launched Hola! Chocolate Filled Churros across food service, including incremental placements with distributors, cash and carry, national accounts, and individual operators. We're also testing a significant opportunity with a large QSR customer with full rollout scheduled in early calendar 2024. Funnel cakes, fries, funnel cake fries are a big opportunity in QSR and casual dining growing 10% in Q3. And Zaxby's, a fast casual restaurant chain with over 900 locations across the USA, recently informed us that they will move from a test of our five inch funnel cake to a permanent menu item in Q4. As it relates to the retail segment, sales were up 0.2% to 61.2 million. For the quarter, the consumer environment was a bit soft in the first couple of months as retailers and grocery stores reported lower traffic in their stores and smaller baskets. This trend did improve in June, but highlights the fluctuation we are seeing in retail consumer spending. We believe this impacted sales of soft pretzels and biscuits in the Q3, as both were down 12.2% and 15.3% respectively compared to the prior year. We continue to see strong growth opportunities in retail, especially in our super pretzel, frozen novelty, and churros. The Super Pretzel brand continues to resonate with consumers with purchase intent of 50% versus the year ago. As previously discussed, we are currently launching Super Pretzel Bavarian sticks, bites, and mini dogs in the retail supported by strong sales plans and marketing. Frozen novelties continue to be an opportunity led by Luigi's, Dogsters, and Icy Stix as the performance of each product continues to outpace the category. Olash Churros will begin shipping in the Northeast region this month as we bring this growing brand to retail. Moving to our third business segment, frozen beverages, we saw a record Q3 sales of 109.6 million, reflecting the strong rebound in the theater channel as well as ongoing strength at our Mexico operations. There is a lot of excitement in the theater industry on the heels of stronger movie releases and higher food and beverage consumption per visit. Theater attendance is improving closer to pre-pandemic levels. Beverage sales grew 26.1% in Q3, driven by 9% volume increases in the quarter. Our maintenance and service sales grew 5.5%, and equipment sales grew 17.1%, driven mostly by the continued checkers rollout. Finally, we continue to make progress growing consumption and placement in amusement, mass merchandisers, and restaurants. As it relates to M&A, we continue to evaluate potential M&A opportunities that complement our brand portfolio and business model and that offer an attractive shareholder return. Financially, we are well positioned to invest in growth when the opportunities align with our business model. In summary, I applaud the excellent work everyone across the organization is doing to improve every aspect of our business. I am confident that our team is aligned on our core strategies and executing the right initiatives to grow our business and improve our operations. We are well positioned in the market with a long-term focus on growing sales and profits and delivering shareholder returns. I would now like to turn the call over to Ken Plunk, CFO, to review our financial performance. Ken?