Lancaster Colony Corporation

Good morning. My name is Dee Dee, 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 2024 Second Quarter Conference Call. Conducting today's call will be Dave Zasinski, 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 period. If you would like to ask a question during this time, simply press star 1-1 on your telephone keypad. If you would like to withdraw your question, press star 1-1 again. Thank you. And now, to begin the conference call, here is Dale Gnabczyk. Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation.

Good morning, everyone, and thank you for joining us today for Lancaster Colony's fiscal year 2024 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 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 second quarter results for fiscal year 2024. In our fiscal second quarter, which ended December 31st, we are pleased to report record financial results. As consolidated net sales increased 1.8% to $485.9 million, gross profit grew 19% to $121.5 million, and operating income increased 28.1% to $65.8 million. I'm very thankful for the effort and commitment by all of our teammates throughout Lancaster Colony that enabled us to deliver these strong results. In our retail segment, net sales growth of 2% was driven by carryover pricing, volume gains for our successful licensing program, continued strong performance for our New York bakery, Frozen Garlic Bread, and increased demand for our Reem's frozen egg noodles. Retail segment sales volume measured in pound shift declined 1.9%. Excluding the impact of a product down-weighting initiative and our reduced commitment to private label bread, retail sales volume increased 1.2%. Specific to our licensed product, retail scanner data for the quarter showed Chick-fil-A sauces up 6%. to 38.7 million, and olive garden dressings up 2.1% to 34.4 million. Buffalo Wild Wing sauces were about flat at 19.3 million, which compares to a strong quarter last year when sales increased over 26%. Our category leading New York Bakery frozen garlic bread saw sales growth of 4% to 88.7 million for a share of 43.1. Sales of our Reem's frozen egg noodles increased 17.9% to 16.5 million to capture a 70.3 share of the frozen pasta noodle category. I'm also happy to report that Chick-fil-A refrigerated salad dressings, which we launched nationally last May, are also performing well, with scanner data showing 9.4 million in sales during the quarter. When combined with the sales of our Marzetti brand dressings, our refrigerated dressing sales have grown to represent a category leading 27.7%. In the food service segment, sales growth of 1.5% was led higher by demand from several of our national chain restaurant accounts, along with volume growth for our branded food service products. Food service sales volume measured in pound shipped increased 4.6%. During the period, food service segment net sales were adversely impacted by pass-through price decreases, which resulted from commodity deflation. During Q2, we were pleased to deliver a gross profit of $121.5 million and a gross margin of 25%, an increase of 360 basis points versus last year. This increase was driven by favorability in our pricing net of commodities, or PNOC, following two years of unprecedented inflation, along with the beneficial impacts of our cost savings initiatives. Our focus on supply chain productivity, value engineering, and revenue management remain core elements to further improve our financial performance. I'll now turn the call over to Tom Piggott, our CFO, for his commentary on our second quarter results. Tom?