The Marzetti Company

Good morning. My name is Anita, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Lancaster Colony Corporation's fiscal year 2023 second quarter conference call. Conducting today's call will be David Selinsky, President and CEO, and Tom Piggott, CFO. All lines have been placed on mute to prevent any background noise. After the speakers have completed the prepared remarks, there will be a question and answer period. 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 an order that they are received. If you would like to withdraw your question, press the penalty. Thank you. And now to begin the conference call, here is David Galinsky, 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 2023 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 on our company's website, LancasterColony.com, later this afternoon. For today's call, Dave Zizinski, our President and CEO, will begin with the 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 Sosinski. 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 2023. In our fiscal second quarter, which ended December 31st, we were pleased to report both record sales and higher profits. Consolidated net sales increased 11.4% to $477 million, while consolidated gross profit improved 5.7% to $102.1 million, and operating income grew 13.3% to $51.3 million. The retail segment's second quarter net sales reached $259 million, up 5.6%, including the favorable impact of the pricing actions we have taken to offset inflationary costs. Beyond pricing, sales gains were driven by New York Bakery frozen garlic bread and the continued success of our licensing program. The growth of licensed sauces was led by Buffalo Wild Wings and incremental sales from the recently launched Arby's Horsey and Arby's Sauces. Retail segment sales volumes measured in pounds were up 3.8% in the period due to price elasticity as anticipated, along with the impact of our decision to exit some less profitable product lines in fiscal 2022. IRI data for the second quarter showed very strong performance for our marquee retail brands. Sister Schubert's leading share of the frozen dinner roll category increased 140 basis points, to 55.4%. Marzetti's share of the refrigerated salad dressing category added 110 basis points to 23.7%. And New York Bakery's leading share of the frozen garlic bread category grew 90 points to 43.1%. In summary, the Q2 top-line results for our retail segment reflect our pricing actions, strong share growth from our core retail brands, and contributions from our licensing program, which were partially offset by price elasticity and product line rationalizations. In our food service segment, net sales grew over 19% driven by our pricing actions, along with volume gains for select customers in our mix of national accounts. Food service volume was down 4.6% in the quarter, primarily driven by our decision to exit some less profitable product lines in fiscal 2022. During Q2, we continued to experience high levels of inflation for raw materials, packaging, and freight. That said, we've made great progress through our pricing actions to where our PNOC, or Pricing Net of Commodities, was favorable versus the prior year. This is a continuation of the trend that began in Q1, in which we are recovering some of the negative PNOC we experienced last year. In the quarters ahead, we intend to focus on productivity gains in our supply chain and revenue growth management to improve our financial performance. Before I turn it over to Tom, I would like to extend my sincere thanks to the entire Lancaster Colony team for all their ongoing commitment and contributions to our improved operational, and financial performance. I'll now turn the call over to Tom, our CFO, for his commentary on our second quarter results. Tom?