Lancaster Colony Corporation

Good morning. My name is Sarah, 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 2022 Fourth Quarter Conference Call. Conducting today's call will be Dave Szczynski, President and CEO, and Todd Piggott, 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 period if you'd like to ask a question during this time please press star send the number one on your telephone keypad and questions will be taken in the order they are received if you would like to withdraw your question please press star send two thank you and now to begin the conference call here is dale Gnabsek, Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation.

Thank you, Operator. Good morning, everyone, and thank you for joining us today for Lancaster Colony's Fiscal Year 2022 Fourth 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 Szczynski, our president and CEO, will begin with a business update and highlights for the quarter. Tom Piggott, our CFO, will then provide an overview of the financial results. Dave will then share some comments regarding our current strategy and outlook. 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 Colony's president and CEO, Dave Szczynski. Dave?

Thanks, Dale, and good morning, everyone. It's a pleasure to be here with you today as we review our fourth quarter results for fiscal year 2022 and look forward to fiscal year 2023. Before I cover our results, I'd like to provide you with a brief update on our ERP initiative, Project Ascent. As planned, on July 1st, we executed the first wave of Project Ascent. The implementation of our new SAP S4 HANA ERP system. I'm happy to share that the cutover went very well and in line with our expectations. For context, wave one was the most complex wave of Project Ascent, encompassing all financial transactions and all customer and supplier facing business processes. This included order to cash, trade promotion management, procure to pay, the general ledger, and an EDI re-platform. Wave 1 also converted two of our manufacturing plants, one large distribution center, and all of our third-party warehouses onto the new ERP system. Customer fulfillment levels remained strong before and after the system cutover, with no unplanned disruptions in receiving orders, producing products, shipping orders, or receiving payments. I'd like to extend my sincere thanks to our teammates. who put forth a tremendous effort to reach this important project and company milestone. I'll have more to say about the strategic importance of this later in my comments. Moving on to our financial results for our fiscal fourth quarter ended June 30th, we were pleased to report record sales and gross profit despite the difficult operating environment. Consolidated net sales increased 17.3% to $452 million while consolidated gross profit improved 1.8% to 98.4 million. Retail segment net sales grew 8.8% in the quarter, driven by our pricing actions and incremental sales attributed to advance ordering by our customers near the end of Q4 ahead of our ERP go-live. From a brand perspective, New York Bakery, Sister Schubert's, and Olive Garden all reported solid growth in the quarter, Retail sales volumes measured in pounds declined 2%, which comps to solid volume growth of 9% in last year's Q4. This was in line with our expectations based on pricing actions and product rationalization decisions that we have executed during the past year. IRI data for our fourth quarter showed share gains for sister Schubert dinner rolls with a pickup of 300 basis points. which pushed our leading share in frozen rolls up to 54.2%. Our Marzetti refrigerated dressings posted a share gain of 140 basis points, growing our share to a category leading 24.8%. In summary, Q4 top line results for our retail segment were driven by our pricing actions, advance ordering ahead of our July 1st ERP Go Live, and solid sales volume gains on New York Bakery, Sister Schubert's, and Olive Garden Dressings. In our food service segment, net sales grew over 28% with pricing accounting for over 24% of the sales increase. Select customers in our mix of national accounts and higher demand for our branded food service items were also noted contributors to this sales growth. Food service sales volumes measured in pounds increased 2% in the quarter which was in line with our expectations and compares to significant growth of 29% in last year's Q4. During Q4, we continued to experience high levels of inflation for raw materials, packaging, and freight. That said, we were encouraged by our progress in improving our PNOC, pricing net of commodities. This progress is reflected in our Q4 gross margin, which showed sequential improvement of 480 basis points versus our fiscal third quarter. We also acknowledge there's more work to be done. We remain focused upon improving our financial performance through productivity gains in our supply chain and revenue growth management. Overall, I'm pleased with the improvement in our financial performance in our fiscal fourth quarter as we completed a fiscal year characterized by record inflation and a challenging operating environment. I'm also delighted to have started fiscal year 2023 with a successful go-live on ERP. I'll now turn the call over to Tom Piggott, our CFO, for his commentary on our fourth quarter results.