Lancaster Colony Corporation

Good morning. My name is Michelle, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Lancaster Colony Corporation fiscal year 2021 second quarter conference call. Conducting today's call will be Dave Szczynski, President and CEO, and Tom Pickett, CFO. All lines have been placed on mute to prevent any background noise. after the speakers have completed their prepared remarks there will be a question and answer session if you would like to ask a question during this time simply press star then the number one on your telephone keypad and questions will be taken in the order that they are received if you would like to withdraw your question please press the pound key thank you Now, I would like to begin the conference call. Here is Dave Gnabczyk, Vice President of Investor Relations for Lancaster Colony Corporation. Please go ahead.

Thank you, Michelle. Good morning, everyone, and thank you for joining us today for Lancaster Colony's fiscal year 2021 second quarter conference call. Our discussion this morning may include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, and the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC. Also note that the audio replay of this call will be archived and available at our company's website, LancasterColony.com, later this afternoon. For today's call, Dave Susinski, our president and CEO, will begin with a business update and highlights for the quarter. Tom Figgott, our CFO, will then provide an overview of the financial results. Dave will then share some comments regarding our current outlook and strategy. At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions. Once again, we appreciate your participation this morning. I'll now turn the call over to Lancaster County's president and CEO, Dave Susinski. Dave?

Thanks Dale and good morning everyone. It's a pleasure to be here with you today as we review our second quarter results for fiscal year 2021. I'd like to begin by extending a sincere and heartfelt thank you to the entire Lancaster Colony team for all their contributions and sacrifices during the past quarter. Despite the uncertainty and obstacles that the pandemic imposed upon our business, we are very pleased to report record sales and gross profit. Throughout the pandemic, we've remained steadfast that our mission is fixed. First, to provide for the health, safety, and welfare of our teammates. And second, to ensure that we continue to play our role in our country's vital food supply chain. In our fiscal second quarter, which ended December 31st, consolidated net sales grew 5.6% to a second quarter record $375 million. Net sales in a retail segment grew 19.5%, while net sales in our food service segment declined 9.7%. Excluding Omni baking sales, consolidated net sales increased 7.3%, and food service net sales declined 6.8%. Retail net sales benefited from higher demand as the impact of the pandemic drove higher at-home food consumption. The success of our licensing program also continued to drive retail sales growth with Olive Garden dressings, Chick-fil-A sauces, and Buffalo Wild Wings sauces noted contributors. Per IRI, key highlights for the quarter included the following. Sales of Marsetti refrigerated salad dressings grew 12.3%. New York Bakery frozen garlic bread grew 16.9%. Branded croutons advanced 21.9%. Sister Schubert's frozen dinner rolls increased 11.8%, and all garden dressings grew a very strong 61.3%. Chick-fil-A sauces and single-bottle Buffalo Wild Wing sauces, which we introduced last spring, continued to perform very well, adding over four percentage points to our retail segment's Q2 sales growth. The regional rollout of Chick-fil-A sauces continued as planned during the quarter as we expanded distribution beyond the state of Florida with the addition of retailers in Georgia, Alabama, Mississippi, and Louisiana. IRI data for the four new states indicate that initial velocity is very strong. In Florida, where we introduced Chick-fil-A sauces to the retail market with a pilot test last March, recent IRI data shows that trial and repeat purchases are extremely favorable with cumulative household penetration of 11.1% and a repeat rate of 50.6%. In our food service segment, sales to national count QSR and pizza chain customers remained a source of strength and represented over 60% of our total food service sales in the quarter. Recent NPD CREST data shows that our revenue trends in QSR are pacing ahead of the QSR segment average. The same data indicates that our sales in the full service segment are in line with the industry average. we continue to pursue growth opportunities with many of our national account customers on a range of new sauces, dressings, and spreads. Separately, we're also pursuing opportunities in other market segments, including the home meal kit market, where we've enjoyed some recent success. Despite higher manufacturing costs related to the impacts of COVID-19, gross profit grew 7% to a second quarter record $106.8 million. This was driven by the strength of our retail segment. As with prior quarters, we continue to follow protocols and guidelines provided by government health authorities. We also continue to make the necessary investments to promote safe operations at all of our plants and distribution centers. I'll now turn the call over to Tom Pigott, our CFO, for his commentary on our second quarter financial results. Tom?