J & J Snack Foods Corp.

Good day and thank you for standing by. Welcome to the J&J Snack Foods Physical 2025 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. I would like to now hand the conference over to the first speaker today, Norberto Aja.

Thank you, operator, and good morning, everyone. Thank you for joining the J&J Snack Foods fiscal 2025 third quarter 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 Security 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 her 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 end of September 28, 2024, and there are 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. Any such forward-looking statements represents management's estimates as to the date of the call today, August 5th, 2025. 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 gap measure in 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 Faschner, 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 now like to turn the call over to Mr. Fashner. Please go ahead, Dan.

Thank you, Norberto, and good morning, everyone. We delivered record financial results in our fiscal third quarter as we successfully navigated various market challenges during the quarter. Our ability to achieve these results despite a cautious consumer backdrop, unfavorable summer weather, and foreign exchange headwinds reflects the resilience of our diversified portfolio of brands and products, as well as the commitment of our team. Net sales grew 3.3% to a record $454.3 million, while adjusted EBITDA increased 1.6% to a record $72 million, and adjusted EPS was $2 per share as compared to $1.98 last year. We delivered gross margin of 33%, reflecting a seasonal mixed shift towards our higher margin products, as well as we progressed on pricing initiatives and a sharpened focus on operating discipline. I'm proud of our performance in the quarter and commend our team members for their hard work delivering exceptional financial results. Our peak summer season encountered slow traffic at outdoor venues across the country throughout the quarter due to poor weather. However, a meaningful rebound in theater traffic helped to compensate for sluggish performance in other channels. Box office sales coinciding with our third quarter are estimated to have increased 37% versus the prior year, driven primarily by the strength of the Minecraft movie in April and May. And although our beverage sales were down modestly for the quarter, beverage sales would have increased compared to the prior year, if not for the impact of foreign exchange related headwinds. We have been working with our customers this year to implement price increases to help offset persistent input cost inflation, namely related to chocolate. And we've made further progress in the quarter. These conversations are never easy, and we endeavor to minimize the impact to customers wherever we can. While tariffs are threatening margins as we look ahead, we feel comfortable that the pricing progress we have made has offset much of the non-tariff-related ingredient cost inflation that we incurred this year. I'll now discuss segment performance in more detail. Beginning with our food service segment, sales increased 4.8%. from a combination of price increases and volume growth in pretzels. Pretzel sales increased an impressive 12.8%, with a significant portion of the growth coming from our Bavarian varieties. Sales of Bavarian pretzels were up 20% in the quarter. Our overall food service pretzel dollar share increased 1.3%, while our Bavarian dollar share increased 2.7%, reflecting J&J's leadership of this popular variety. Turo sales declined approximately 13%, nearly all of which was attributed to the wind down of a limited time offer program. We expect this impact to further taper in the fourth quarter. Looking ahead, we remain optimistic about Turo growth prospects, including the potential for a permanent menu placement with a major QSR customer in early calendar 2026. Dippin' Dots sales continued to grow, mostly attributed to expanded theater penetration. We're completing the rollout of Dippin' Dots at Urban Air, and we are excited to welcome them as a flagship customer, representing the next leg of meaningful growth for this brand. Turning to our retail segment, sales decreased by 7.1%. namely due to the decline in frozen novelty and handheld sales. Frozen novelty sales were impacted by lower promotional activity in the quarter and a tougher comp last year, given strong third quarter performance following a slower first half start. And although frozen novelty sales were down in total, sales from Dogsters and Dippin' Dot Sundays continue to deliver growth. Year-to-date retail frozen novelties are up 3%. Dippin' Dots retail sales accelerated to approximately 2.5 million in the quarter, with distribution expanding. This product has exceeded our expectations, and we're adding new flavors to the lineup for 2026. In a moment, I'll share more about the upcoming innovation and pros and novelties. Retail handheld sales declined by 21%, as continued capacity constraints from the fire last year limited sales. we are now implementing a solution to fully restore capacity by the end of the calendar year. Soft pretzel sales increased 3.3% during the quarter, outperforming the overall frozen snack category at retail, which was up about 2% in dollars for the quarter. Overall, we're seeing positive results from the rollout of our updated super pretzel recipe and packaging. In our frozen beverage segment, sales increased by 6.1% as the modest decline in beverage volume was more than offset by higher machine revenue. Beverage sales were modestly lower for the quarter, primarily due to the headwind from unfavorable foreign exchange rates, which negatively impacted beverage sales by approximately 400 basis points, and total frozen beverage segment sales by approximately 270 basis points. Beverage volumes in theaters rebounded sharply in the quarter due to the success of the Minecraft movie, as well as other quality movies during the quarter, which helped to offset softness in other channels. The movie lineup for Q4 is promising, although it's unlikely to match the performance of last year's fourth quarter, given the success of Inside Out 2. The Q4 lineup includes titles like Smurfs, Fantastic Four, and Jurassic World Rebirth. Machine sales increased primarily due to a major convenience customer upgrading its equipment across its store network. We're excited about several initiatives executed in third quarter and those we're preparing for launch in the future. As I mentioned, The rollout of the updated retail super pretzel recipe and packaging is underway, and we continue to see promising results to date. The packaging really stands out on the shelves, and we're confident that the formulation updates will prove popular with consumers. The rollout to food service is also now underway. We have several pretzel innovations around the corner, including extending our lineup of filled pretzels, and fill bites for the retail channel. Our Dippin' Dots business continues to grow in both food service and retail with year-to-date revenue growth of 10% led by our expanded theater presence and Sundays at retail. Our Dippin' Dots retail Sundays have proven that the brand has strong appeal with consumers at retail. We are rolling out two new flavors this year, and we have other Dippin' Dots innovation for retail planned for 2026 that we will share in the future. A major QSR customer is actively testing churros for a potential permanent placement on their menu for early 2026. This test is now underway and could represent a meaningful addition to our churro business. We're also launching a retail packaging refresh for the Ola Churro brand in the fall. On the frozen beverage front, a major QSR customer is testing icy products for their locations, and this is going extremely well to date. As I mentioned last quarter, we continue to innovate around better-for-you products to appeal to consumers seeking such options for snacking occasions. We're excited about the high protein and whole grain pretzels that we're developing along with our clean label frozen novelties that will include ingredients that provide hydration, immunity, and digestive benefits. We're already eliminating red dye from icy products and are continuing to eliminate it from other snack products well ahead of the deadline. Additionally, we plan to remove certified food, drug, and cosmetic colors from products served in schools by fall of 2026. I'd also like to share with you that we are in the process of developing a transformation program through which we will drive enterprise-wide cost savings and efficiencies while also modernizing our financial systems and analytics capabilities. Some of the more significant initiatives will involve network optimization improvements. We will share more specifics once we finalize the details. Looking ahead to the fourth quarter, we remain cautious given the consumer backdrop, tariff-related risks, and projections for box office sales to be down in Q4. In summary, we are pleased with our third quarter performance. As we look to close out the fiscal year, we remain focused on execution and maintaining our agility in a dynamic market environment. We are proactively addressing near-term challenges through targeted pricing actions, cost reduction initiatives, and continued consumer-led innovation across our portfolio. With a great collection of fun brands and products and our multi-channel diversification, we remain confident in our ability to drive sustainable growth and to deliver long-term value for our customers, partners, and shareholders. With that, I would now like to turn the call over to Sean to review the financial results in greater detail. Sean?