J & J Snack Foods Corp.

Welcome to the J&J Snack Foods Fiscal 2024 Second Quarter Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Noberto Aja, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining in J&J Snapsuit's fiscal 2024 second 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 of Barbara language. This 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 in our anticipated financial performance. These statements are neither promises or 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 for the year ended September 30, 2023 and other filings with the Securities and Exchange Commission could cause actual results to occur materially from those indicated by the forward-looking statements made on this call today. As such, forward-looking statements represent management's estimates as to the date of this call, May 7, 2024. And 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. 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 in our earnings press release, which can be found in the investor relations section of our websites. Joining me on the call today is Dan Faschner, our Chief Executive Officer, along with Ken Plunk, our Chief Financial Officer. Following management-prepared remarks, we will go ahead and open the call for question and answers. With that, I would now like to turn the call over to Mr. Dan Faschner, J&J Snack Foods Chief Executive Officer. Dan, please go ahead.

Thank you, Norberto, and good morning, everyone. We appreciate you joining us this morning to discuss J&J Snack Foods' fiscal 2024 second quarter results we delivered record second quarter net sales of 360 million reflecting growth across our food service retail and frozen beverage segments with year-over-year increases across most product categories our strong performance was driven by an amazing team of employees who are aligned in executing our strategy and committed to serving our customers and valued stakeholders. We have a wonderful business with tremendous growth opportunities ahead of us, and we continue to see that in our financial results. Our strong top line performance, combined with gross margins exceeding 30% in the quarter, a 330 basis points improvement over last year, is a result of executing our strategy, including focused initiatives, to improve profitability. This resulted in adjusted operating income and adjusted EBITDA growth of 81% and 43.1%, respectively, and a more than 90% increase in net earnings. In short, strong performance across the board. Our strategies to leverage innovation and cross-selling opportunities to expand placement of our core products and brands are delivering results. Let's take a closer look at our sales performance in the quarter. In our food service segment, Churro's sales continued their strong growth momentum, increasing 23.7% to nearly 31 million, led by new business growth of one of the three largest QSR customers. Recent investments To add two new churro production lines have us well positioned to capture incremental opportunities in the churro category, and we expect the continued growth throughout the year, including international opportunities as well. In addition, bakery sales increased 7.7%, driven by unit volume growth in cookies, new products, and expanded customer placements. Frozen novelty sales grew a 4.2%, led by the continued growth of Dippin' Dots. Dippin' Dots sales increased 5% in the quarter, led by growth across most channels. Growth across the segment was partially offset by softness in soft pretzels and handhelds. Moving on to our retail segment, handhelds grew 75.5%, driven by expanded placement with a major mass merchant, Frozen novelty sales increased 14%, led by growth of Dogsters and Icy Novelties, while biscuit sales increased 6%, and soft pretzel sales increased 2.7%, led by our continued expansion of Super Pretzel products, largely reflecting strong demand for our new Super Pretzel Bavarian Sticks. Frozen beverages segment also delivered healthy growth, led by a 6.9% increase in frozen beverage sales, reflecting consistent consumer trends across most customer channels. Repair and maintenance revenues also increased by 2.9%, reflecting strong maintenance call volumes. Partially offsetting this growth were relatively flat machine sales, down 0.4% as we lap a large rollout from last year. I'd like to take a couple of minutes to highlight a few areas that support our relentless focus on driving growth, building our brands, and capturing incremental opportunities. Starting with Super Pretzel. This iconic brand is outperforming the snack category and continues to provide opportunities for growth through new product extensions or new points of sale. We are quickly expanding this brand across retail led by the launch of Bavarian Sticks, which has become the number two seller in Super Pretzel portfolio, reaching an ACV of 25% and growing. I'm also pleased with the incremental distribution we are achieving and our marketing execution, led by promotions like the recently concluded March Madness campaign. Later in the year, we look forward to various soft pretzel launches in the club channel under the Super Pretzel, Brow House, and Annie Ann's Brands, as well as bringing to market our Super Pretzel, Roller Grill Dog, and Food Service. And as it relates to Icy, we continue to see healthy momentum with new client wins, such as Dave & Buster's, and an upcoming test with a top 10 national QSR chain. Our sales in Mexico, the Amusement Channel, mass merchandise retailers, and restaurants increased for the quarter. And we just wrapped up our national flavor and movie promotion with checkers. Let's talk about Dippin' Dots. I'm pleased to confirm that we have secured full location rollouts for AMC theaters and Cinemark theaters with targeting a completion by the end of the fiscal year. Once completed, Dippin' Dots will be sold in approximately 880 theater locations, continuing our strong partnership with these leading customers. And we've also reached an agreement to roll out vending machines across Marcus Theatres. And I'm so proud to report we were just awarded vendor of the year by Marcus Theatres. This is a testament to our continued efforts in cross-signing our portfolio to our largest customers. Finally, we are making great progress on tests with a couple of major convenience customers and have a confirmed full rollout with 162 location food service customer that we hope to have implemented later in the year. Let's talk about a few other innovation highlights. I'm so proud of our R&D team and the opportunities they are creating through new products, better packaging, and product extensions. Recent accomplishments include the launch of Ola Churros in the retail, the addition of new Dogsters pumpkin flavor, new Dogsters Club Channel packaging, Brow House Bavarian packaging and food service, a new Cakeables cookie brand, and the launch of Super Pretzels soft pretzel buns in the in-store bakery. We also recently announced the acquisition of the Fensters brand, which provides us with strong brand and quality product to add to our cookie portfolio. Fensters are predominantly sold in the club and retail channels, servicing existing customers of ours. We have been producing this product for the previous owner, so this will be a seamless integration and a quality brand that we can build across both retail and food service. Our team is relentlessly focused on innovation and creating new selling opportunities. From an operational perspective, there are many positives to report as we continue to execute against our initiatives to enhance overall operations and better support our growth opportunities. Starting with our supply chain strategy, we now have opened all three distribution centers, Terrell, Texas, Woolwich, New Jersey, and more recently, Glendale, Arizona. These three new RDCs are exceeding expectations and will enable us to continue driving productivity improvements in our supply chain. At this time, 81% of our sales orders are shipped from the new distribution network versus only 26% a year ago, with the average length of haul decreasing by over 40%, and the on-time performance improving to 87% versus 74% a year ago. Shifting to operations. The addition of six new production lines has significantly expanded our capacity. This has enabled added efficiencies and given us the ability to meet growth opportunities across our core products, such as pretzels, churros, and frozen novelties, enabling new customers and channel opportunities. Two new frozen novelty lines have added critical capacity and flexibility during the peak summer season. They're also allowing us to make similar products in different locations, leading to freight savings. The new churro line also increased capacity and provided us with the capability to meet the growth we anticipated in churros. Our two new pretzel lines in Texas and New Jersey immediately created capacity to meet market demands that we could not previously serve, while also creating growth opportunities in food service for Bavarian pretzel bites, retail division expansion, and in-store bakery innovation. Overall, the expanded capacity has created production efficiencies and higher output metrics through better automation, which improves product margins, decreases overtime, and provides the flexibility to meet unforecasted additional sales during peak summer business. In closing, I am pleased with our ability to post record sales while managing through an ongoing challenging consumer environment. And as I mentioned at the onset, I'm so proud of how the J&J team continues to execute our five core strategies, grow and protect our brands, dominate core categories, cross-sell the portfolio, invest in our future, and embrace our culture. With that, I would now like to pass the call over to Ken to review our financial performance in more detail. Ken?