The Marzetti Company

Good morning. My name is Tanya 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 2023 fourth quarter conference call. Conducting today's call will be Dave Sosinski, President and CEO, and Tom 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 would like to ask a question during this time, simply press star, then the number one, one on your telephone keypad, and questions will be taken in that order they are received. 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. You may begin.

Good morning, everyone, and thank you for joining us today for Lancaster Colony's fiscal year 2023 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 for 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 file 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 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 for fiscal 2024. 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 2023. In our fiscal fourth quarter, which ended June 30th, consolidated net sales increased 50 basis points to a fourth quarter record 455 million, while gross profit declined 5.2 to 93.2 million. As a reminder, last year's fourth quarter included an estimated 25 million in incremental net sales. or 6% of the total which were attributed to advance orders ahead of our ERP go-live on July 1, 2022. These incremental sales added about $5 million to last year's Q4 gross profit. In our retail segment, net sales increased 1.3%, driven by the favorable impact of pricing actions to offset inflation and continued growth from our licensing program. Excluding the prior year advance ordering ahead of our ERP go-live, retail sales volumes measured in pound shift increased 1.7%. Given these period-on-period shifts, it's informative to look at retailer scanner data as a barometer of our retail business. During the quarter ending June 30th, retailer consumption for our branded products measured in pounds was up 4.7%, led by growth in our licensing program. Cercana Data, formerly IRI, showed notable share gains in the quarter for our category-leading New York Bakery and Sister Schubert brands. New York Bakery's leading share of the frozen garlic bread category grew 180 basis points to 42.3%. And Sister Schubert's leading share of the frozen dinner roll category increased 200 basis points to 56.1%. Our licensed products also continue to perform very well during the quarter, as Chick-fil-A sauces were up 28% to $43.7 million. Olive Garden dressings were up 15.8% to $42.6 million. And Buffalo Wild Wing sauces were up 43.1% to $20.7 million. I'm also happy to report that Chick-fil-A sauces were recently recognized by Cercana as a new product pace setter. In calendar year 2022, Chick-fil-A sauces were the fastest growing retail food item in the food and mass channels, generating more than 140 million in retail sales. In the food service segment, net sales were essentially flat at 218 million and compared to a significant increase of 28% in last year's fourth quarter. In addition to the impact of last year's advanced ordering, which comprised about 8%, food service sales also reflect a modest low down in traffic for some of our national chain customers. During Q4, we continued to experience high levels of inflation for raw materials and packaging, although we did note a considerable decline in the rate of inflation compared to the first three quarters of fiscal year 2023. Through the benefit of our pricing actions, our Q4 PNOC, or pricing net of commodities, was favorable versus the prior year. This is a continuation of the trend that began in Q1 of fiscal year 2023, whereby we are recovering some of the prior year's negative PNOC. Q4 gross profit fell short of our expectations as we incurred some temporary costs associated with our long-term strategic investments in production capacity, and our ERP network. These issues have since been resolved, and we look forward to the many benefits these investments will provide our business in the years ahead. Our focus on supply chain productivity, value engineering, and revenue management will also remain core elements to improve our financial performance during fiscal year 2024 and beyond. I'll now turn the call over to Tom Pigott, our CFO, for his commentary on our fourth quarter results.