LANC - Earnings call transcript Q4 2022 | Lancaster Colony Corporation

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Operator

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's Fiscal Year 2022 Fourth Quarter Conference Call. Conducting today's call will be Dave Ciesinski, President and CEO; and Tom Pigott, CFO. [Operator Instructions] Thank you. the Corporate here for Finance Corporation. begin Vice Dale Lancaster to of President and now conference is call, Ganobsik, Colony And Investor Relations

Dale Ganobsik

you, fourth quarter you call. and for Thank Colony's conference morning, us Lancaster XXXX joining today thank year fiscal Good Operator. for everyone,

obligation that the Litigation subject this discussion uncertainties Reform and to upon is risks available of XXXX. statements are to will be Act a discussion contained results include provisions number of website, detailed our and these afternoon. that the to uncertainties which are forward-looking company's no of this of cause call company's the Our note Harbor statements the to update differ replay with of company may the filings statements subject subsequent morning actual events. Safe could on lancastercolony.com Private audio Securities and in These and archived later materially, SEC. based these this undertakes risks Also A the

turn For strategy Ciesinski, our the Ciesinski. CEO, and Dave share regarding update our CEO, the financial call happy Once and and today's an any of now call, with CFO, remarks, current the of some and for Pigott, Tom this then over overview the quarter. again, participation President our of your results. to Dave then will Colony's business Dave provide highlights will begin we we'll outlook. the At will to comments our I'll President prepared morning. questions. conclusion Lancaster be respond to Dave? appreciate your

Dave Ciesinski

fiscal XXXX, XXXX. today as fiscal to to pleasure It's and quarter you look and we results with good forward fourth Dale, Thanks, everyone. here a morning, review year our for year be

Ascent. results, I with to ERP I'd Project initiative, a brief Before you update on our our provide cover like

and very we that new happy of cutover the went ERP on first expectations. our the S/X planned, Xst, line July SAP the I'm with to in Project of our share well Ascent, As wave HANA executed implementation system.

the transactions For important customer to of most remain supplier-facing to the processes. was system sincere financial business levels re-platform. complex cutover, all and forth to procure of context, no and the and put fulfillment company receiving orders, all producing the orders, this shipping manufacturing to I'd my promotion third-party a in order later Wave have to two to more distribution encompassing EDI one milestone. payments. one our center, converted effort and before of tremendous our after project wave system. in reach disruptions our unplanned of plants, and management, trade included strategic all Customer new wave the comments. I'll large warehouses, general pay, products, one teammates my and cash, ERP about who Project with extend ledger, importance an also like Ascent, strong receiving this This say onto or thanks

pickup Sister million, brand sales while on QX, operating ordering to advanced for expectations our product line pounds profit which volume end grew actions sales on of Sister quarter, gross by the solid Schubert’s, up we for XX.X% decisions and pricing net to ERP our Retail declined a our leading was share sales for quarter near points, to X.X% with fourth rolls pushed million. fourth basis New with in data Schubert’s gains IRI the based to net rationalization year. measured the This Olive actions consolidated perspective, environment. XXX Garden, year's showed a which and QX. XX.X%. that attributed pricing of York X% and Moving $XX.X solid by segment of in to frozen the to past incremental X.X% all we gross volumes growth record Consolidated growth to during driven From sales of XX. go-live. and comps our customers share quarter. $XXX dinner despite X%, our in in ahead have Bakery, the profit, sales June in pleased fiscal were quarter ended our reported our difficult report increased our Retail executed results in last rolls, improved financial

volume for net Our segment go-live, our in pricing QX of the measured Garden to Food summary, our Select ERP national sales dressings sales X in points, Olive growth. a XX% on XX%, growth Schubert’s, July were XX% posted our for increased accounts, pricing of was Food Service XXX which Bakery, Service growing driven were quarter, branded our customers volumes this pounds, last of for X% of In also over QX. accounting ahead to significant XX.X%. year's Marzetti refrigerated by our a in results Retail contributors mix expectations, sales sales In grew segment, York New of and basis Food gains and ordering gain demand higher increase. share and Service topline advance in in our with solid noted and share compares items, dressings. over our to with line category-leading Sister our the actions, sales

During commodities. our high we inflation in materials, pricing which is showed by PNOC, third progress margin, This gross sequential our quarter. encouraged fiscal improvement QX, versus our XXX of QX of progress we net reflected packaging, raw to said, and basis experience points were levels freight. improving of of for continued our That

pleased by now completed year improvement characterized also to financial our quarter, fiscal done. our remain gains started as I'm our XXXX on our CFO, with growth productivity fourth we to a his record a We commentary Pigott, and ERP. on to results. operating environment. delighted fourth year have inflation Tom revenue go-live fiscal also turn fiscal over work challenging improving more our call a successful there's We with upon supply the for the and quarter our I'll Overall, chain, in performance and be focused in performance financial through acknowledge management. I'm

Tom Pigott

topline Overall, growth Dave. reflected gross margin Thanks for improvements our in quarter performance. the and results strong the

The of by have quarter by of pricing Our of these customer to XX.X% implemented the advance near the ensure Customers Fourth impacting on end they estimate pricing unprecedented successfully sales had both SAP actions our consolidated levels to to July $XXX.X the inflation offset of deliveries in their shipments inventory go-live. to for segments taken was ERP actions in driven implementation X. increased growth increased orders the net and We pull-forward our our million. shipments business. contributed quarter adequate percentage prior XXX accounted points points. volume in increased profit decline balance. profit The incremental gross million customer for results. to segments. the line in Decomposing our the driven by expectations, actions $XX.X increase and Consolidated that the our for by quarter our XX.X revenue Gross $XX declined to pull-forward pricing points, The implemented with both gross million a by in was growth, sales million. margin shipments reflected profit accounted percentage in X.X basis were pricing. fourth XX.X% $X.X of begun

or gross commodities nearly an addition, highs. supply commodities profit advanced XX%. go-live. XX-year benefited to costs. our of The from In due the was we $X for and up sales Inflation packaging increased offset unprecedented ERP chain to at the million near we materials inflation These prior incremental by were were and priced estimate utilized majority the items

many oil, chain a factors. in peers. costs our higher significant to of of notably, The our exposure number supply drove soybean was our resulted from up Our which increase than inflationary impact

experienced factory of other a First, and labor inflation manufacturing we level high on costs. our

manufacturing challenges up our operating costs environment. Second, to were due this in

facilities. at external cost our and react to has been to hampered savings demand supply Our program volatility by efforts

higher we Third, costs to had inflation. freight due fuel wage and and warehousing

year the initiatives focused was costs. million in advanced due a go-live, We the and $X.X impairment unfavorable to including business. in spending and of continue non-cash $XX to new an consumer with to reductions impact decreased current year on the operations, charge quarter, the million the million quarter. for related declined million, or performance impairment $XX.X to our ERP operating the sales charges, ahead benefit work restructuring Restructuring reflect $X.X decrease were increasing and partially This income our business. X.X% million. Angelic offset Selling, engineering incentive administrative from $X.X and due million charges prior of totaled to initiative, of the compensation versus the our program. Consolidated Project European impairment to value by Ascent, improve Expenditures Bakehouse $XX.X expenses productivity, million, underlying and general $XX.X primarily in

underlying year Our per result ‘XX be of property was $X.XX tax tax for for Horse reduced state our earnings the million. Ascent share quarter versus fiscal primarily project in $X.XX performance impairment Horse for payments our impact quarter. quarter, tax $XXX to per EPS lower partially $X.XX. from We and $XX $X.XX the regard was advanced benefit the $X.XX per restructuring Spending offset the previous of of due year This the rate year The XX.X%, the was million business. to the Cave lower the in timing driven decreased full per the $X.XX capital expenditures, a reflected the rate Project to tax quarter below rate, restructuring added due totaled to our share prior cents capacity the impairment was The lower by additions benefit advanced estimate from the our share and share, Cave expansion. to sales to rate totaled adjustments. and payments to by The charge, diluted for share. tax and fiscal Costs Fourth XX%. non-recurring the of per ’XX. sales by share. benefit ERP this With rate impact go-live, related decrease expectations, from year ahead $X.XX EPS per of the

of the This the forecasting For that of are total expansion $XX fiscal million. we ’XX, forecast project. remains Cave approximately $XXX includes million for approximately expenditures Horse capital completion year

to shareholders. addition returned investing our funds in also to we business, In

XX, Our share year increase the dividend X% quarterly represented prior per $X.XX amount. on a June cash paid from of

currently streak of annual enduring at increases dividend years. XX stands Our

position year financial strong finish we the debt-free, remains very cash sheet. $XX on Our of with balance million the as

commentary, his results we’ll and I for revenue our to benefited advanced improve customer go-live. you. to from closing commodity purchases coming pricing-driven year, fourth the to our plans to In also cost program, are growth, reflected growth Dave and the continue profit offsetting back gross our remarks. our it prior inflationary strong chain the quarter revenue So, increases implementing to over shipped up performance wrap Thank turn management revenue SAP with significant will now supply inflation. address performance. The my

Dave Ciesinski

industry-leading Arby’s Thanks, some And expect XXXX, continue expect national Chick-Fil-A such the of Chick-fil-A Tom. sales from growth to distribution to the launch Olive year Sauces, deliver Horsey retail, a we volume Sriracha Spicy items, addition a in incremental Sauce. And Garden we addition In of new size on pricing, growth. Sweet as In flavor, of sales to fiscal new, of Sauce, Arby's and larger Sauce and new dressing a Barbecue Caesar strong

reference, contractual-based Just headwind regional fiscal for Service, pose pricing the gains salad very second in QSR consumer we Chick-fil-A at elasticity, that fiscal year XXXX. ERP Also sentiment. Consumer growth slowing impact note to quarter. are during In first the impacted XXXX, by in Food offset a will any partially in a year we sales and customers, sales test a for rationalization momentum planning we unfavorably demand by our diminution of initiatives by product economy will and select our be and limited be quarter Tom implemented volume anticipate also fiscal of fiscal will year XXXX, fueled implemented in potential million dressings already refrigerated inflation. continue August, QX of quarter which sales on increases effective to fiscal fiscal of offsets retail in realize year early and late estimated his shelf. our we’re and These the significant Service sauces. are In mentioned reflected an pricing. of round increase comments. costs price dressings forecasting we we through freight another will XXXX, $XX list ordering, Food another commodity pulled and into increases advance as of Segment, In on In to year became fourth inflationary XXXX, year fiscal the

growth programs will management impacts initiatives the revenue savings cost offset in unfavorable and the inflation year in of also ahead. Our ongoing

our was continue at is Production expansion placing context, in will expansion Lancaster scheduled year regard Kentucky, Cave new in a significant as our this planned. and as back XX Ascent and to Corporation years Ascent, our major evolution founded two can Stepping Project Horse Project our and this fall. sauce and ERP With we initiatives strategy, strategic Horse our facility today warehouses phase additional begin to and phases. in represent over capstone transition. be into is progressing organized Colony XXXX, distinct plants chain later network. dressing supply our fiscal throughout to to add ago, the Turning Cave, implementation

sold Lancaster food numerous Lancaster first X.X of the a Lancaster implementation followed were beginning by the The our of food. our of candles, that Colony of of in the with evolution as marked Colony last acquisitions and plan, phase pure-plate, highlights Notable have company growth food In rapid as better next development which and business the is our of and a sale decades to the and growth, our phase core grow business strategic automotive, reduce X.X. and and three core with glass our Colony conglomerate costs our XXXX focused simple and XXXX. segments, began M&A Lancaster Our chain Lancaster the margins, on expanding of of licensing. focused pillars, accelerating our characterized Colony supply end simplifying included of our January XXXX, five candle non-food consisting Colony three growth in assets. X.X, and founding The X.X,

platform During a Cave capabilities to but These Lancaster implementation assets investments X.X constructing in and enable and limited ERP the of the not Colony and to locations several our older SAP S/X the center, HANA, been phase also of growth. Colony will X.X, been new has support new office investments expansion to and of and into company Horse new numerous innovation existing the consolidating the have The to, pathways capstone grow a next Lancaster invested automation future. us initiatives. included, headquarters, plant-level pursue have scalable that a

Lancaster end I'd This the growth been our Lancaster the and inorganic on growth. Colony existing ahead, to quarters mark Lancaster Horse the and focus leveraging will has in, infrastructure, remarks things X.X happy Bringing the coming our to you our beginning have. and Lancaster resilience, new over infrastructure this and to Ascent. X.X during strategic completing everyone year, journey Operator, to answer the like business entire continue the rebuilding Project we as to Colony new the in any I prepared team to their for complete This Lancaster food questions Colony ongoing again on Colony for helping organic and all together critical concludes at be and of the Whereas During our pursue of closer focus the might will XXXX, company. X.X. with better year thank will in of to the that X.X of we commitment hard construction Cave transition. working work fiscal Colony scalable pathways and be once forward to today, be we'd look with us you. implementation and

Operator

Your Cowen. first Thank comes from Instructions] Holland ahead. you. Brian [Operator Go question Please. with

Brian Holland

sequential Yes, thanks. margin into thinking kind with Good ’XX, the could about nice morning. off and I of guess takes just if start gross fiscal puts improvement. I

to obviously And we gross lift if magnitude Just look going QX? of kind forward. Can year, with expect we looking first maybe just the gross do think into you much full as ‘XX? about fiscal trying somewhere a we back sequential year? pricing XX that you of fiscal half the back Are in How XXXX, for think can year-end about ‘XX that that of catching go margin you to of of range to kind that up? out in range-bound we kind margin, as get you mid-XXs range. you viable a think Is had

Dave Ciesinski

say the topline by I'll We let's to driving lot basics. little ago, we're all get there. there, Well, volume. bit of was way growth, is feel where really a than years it Maybe good sales the to be a you of covered start several and driven algorithm about Brian, with different the water going our going but

right, bakery business, that business. tried comments, of the our that particularly see, the August sauces. half is pushing lot in the question, frozen early margin a like QX, we're retail on became release we press frozen we a our another Now really We increase that in feel what On which just in quarter and you're took in through pricing dressings we prepared into that turning our to we outline fact and PNOC, of obviously our the kind corner, and price to effective had pricing. and going of gets on we're of business, that mentioned

we're what I tell good corner. is, a we that feel turning you would So, about PNOC

days look forward, plants sequentially the of five the down going to first quarters, of see you're you go this bit in a timing sort we as because that of July also bearing we at had volume, in As the as cutover. little shift of had month we noise, through we go some of of and of mind for and that the

improvement, between that caveat on margin continued things magnitude We systems, for do data you we on start going do that expect, then, might look is systems but I how see whole? down, the back right. of price new your see going what offer into and that literally to pass ‘XX the diminution taking, from are We a fiscal you old pricing percentages. then things all a As the of margin ‘XX as we're physical and poured I'm because going broader fiscal a we ‘XX But year cost, year inventory. to if the up. shut you're the we think to you not just feel and about spread, some question the to at

engineering value be touch greater dying also down, areas going allowing put in should years what see of The that's initiative. to and stabilizing see we're to past, overall in another productivity. So, supply. is gross situation, important is, push here, margin profit forward. is you external and recovery. we to what And as the us pandemic adding tell would to some you're going against focus improvement wood weight But I to seems And you continue of as I'm in in terms unlike

it's over And restoring be. building back to levels, the about and gross margins offer want to historical the be to engineering where that. get anything course initiatives don't want and else think on of you'd value foremost pathway time, PNOC. that. if be we it's I margins what's them you on to said, back focusing to profitability, just And productivity I So, but then as going those we're turning to profit growth to not and And into like Tom, and first know our corner you

Tom Pigott

your and PNOC, us do ‘XX. as but And key Brian, similar it, in Yes. ‘XX pricing fiscal in levels the focus inflation at No. we you I had of as you we're model is as looking think for model, fiscal

So, in fiscal XXX terms over basis going we’re we've like positive. quarter go but we we slightly starting as where we're from into it, indicated, ‘XX, at it the of a at diminution, the of looked points similar way, looking perspective, turned dilution a PNOC to in and percentage feel Dave in

Brian Holland

of pricing my that we Food as that's color. do the Okay, - think I into to bit where model, I or of speaking way mismodeled get margin about to pricing imagine in profit of have I in to to level understand would of pricing right that least to other that that rounds first side. magnitude support on gross XXXX. relative trying was the we such magnitude increase? through deeper maybe that lap heavier the of I just question, gross think still sure just Service order I'm little that you more appreciate And into could Is Food Service. great. make the the half it, versus pricing on of retrospect I start clearly a at the coming

Dave Ciesinski

a What with how caveat. I think Brian, that Right. would about would it, maybe I is is offer,

of the prices seeing in is aren't seeing necessarily down. our slowing back. we're What is inflation We fall rate increase

order see we’ve would there's can need dramatic us Tom. that bit more little pullback go some for to of to see those to want, you of to in for start nuance actually - And put pricing So, into but if unwind. a categories We the a we there.

Tom Pigott

then first based on kind half Service, gets in half outlook. at Food In of looking the into second mid-XXs, Yes. our it and you're pricing the in the mid-teens current of

so of that projections. So, right you're - in your terms

Brian Holland

sense that it. me, in done about missed contributed the didn't allow was what I for of some do it, know then, but guess in the perfect. growth two-parter. then last one I see the And slowdown obviously And saw to that One, anything may was how sauces much the have a into licensed a the I launch. the talked would back we I quarter? the that Okay, have we in at we've rate. And quarter merchandising me

most license of Just a range. that double-digit earlier how back out sense low the this up that's recent looks in in building. Obviously, portfolio the week, like data

We're So, a we're on in inflationary environment heavy - it's guess on the and obviously to of some on not focused drive you’re is, back we're pricing. lot hearing to getting a But something towards. what I where This like companies lot track. in back of where the going trying pulling media from is visibility of spend the an really get looks pricing, a return.

us about of that environment So, investment help mindful that's go just going in category, into think the we're to the current

Dave Ciesinski

what I'll first, $XX million give of was those you of it brands. sales about we Sauce, the I'll million contribution retail scanner of numbers here. IRI in Directionally, in about at if Olive million was Maybe scanner PWW was had. Chick-fil-A Garden $XX scanner $XX about sales. and the sales, with you look start

in a where quarter. sales were range pushing XX, those on somewhere just line, the me here, - On is second sales, give sales necessarily more on the not net in those it's total and like items but that's probably we total that incremental,

we more down stepped of where shift away sort point the also and we that starting spending, elected that at to business, a looked from get better like double back and moving a couple in purchase, on make A and at, we're and but spend, As our strategic also of in-store our traditional bit team of think and of leverage. driving focusing we've on we We're we're leader one, about feel how to of the size spend, went marketing the we're he a works we've things. in back and focusing looked more and we're we how of digital. marketers with, the retail we done

we've So, historically in like we some the But aggregate, modestly. of big others. haven't the advertiser it produced been a

think at Buffalo thing and Wild businesses, Chick-fil-A consideration, and those spend their like be on that the level Olive had our one given necessitate growth that brands. I organizations, the given other marketing of Wings, the own we've marketing, is, the in that and it spending licensed it would may Brian, worth Garden, doesn't traditional same on of spend

as spend we're look So, a doing spend see brands. essentially the Because we're be percentage And of as on at paying is at as marketing have view we total our by level slightly. a you if surprised to spend our much. license, What is moderate sales over licensed time, you don't of looking that shouldn't our brand.

Brian Holland

That's of there. the luck. great. Best all can color. Appreciate I leave it

Operator

Your Brooks next Please Todd question ahead. The Company. from comes Benchmark go with

Todd Brooks

Hey, the congrats morning, gross and in good on guys, profit the Nicely done. improvement quarter.

Dave Ciesinski

John. Thanks,

Todd Brooks

into of introductions benefit if that to licensed there can way opportunities, Chick-fil-A expecting from at license for you either the side. dimensionalize product in dimensionalize you're if looking the large question. roster thinking the that product flavors? incremental there it on of a across versus a way ‘XX you a the Just, total you're Quick fiscal incremental incremental or is size you outlined product opportunities branded break bunch to Is Dave, ‘XX? wanted you're

Dave Ciesinski

let's Well, see.

maybe, it would First, in put some I context.

the a we've or last right? sales in at So, thereabouts, in in million big over back just our $XXX more that a look about been you the business year, become just with and you than $XXX licensing go sales done at pretty sales. there's course Sauce, a does million, little you what of retail months, XX in it's for as look a If Chick-Fil-A example, step-up

RB don't something we expect be have see But the assume is, and to that. variants more we So, the sort third and right. what the to it's Caesar. Barbecue Olive it's going think achieve to that Spicy you’re look large Chick-fil-A mixed. kind range, share the Sriracha, in like to I Sweet in able of Coming be we across year. then something might size, one that’s and Sauces, that in be current reasonable of Garden new items I of it's thinking to in the And the the And at as that the to and then is, like want necessarily there portfolio, going

bear Now, in earliest aren't these spring select for October, the when they customers to to that take resets. is to be the customers items the these begin ship more mind going but majority to do these shelf until items, start going of their

So, the grocery topline cherish their if like And winning operators. And we deliver solid, at we the in. and what and as we food to to really partnership. growth. going of set cut before XXXX. We our items comment overall these your with - up early feel in own will continue doing we're other in up calendar the you we more that's to we the But it in you country, algorithm, now, be really look continue to side question maybe everywhere confidence. have question between to brands adopters see it's stores really, we’re in in feel then all year like industry-leading But Brian's our why teamed earlier, we’re licensing, service not

Todd Brooks

that helpful. or the that That's of second past about to you kind the talked running side if increases were retail have obviously you do on now some maybe half tenor blended needed, off August discussions can of for Dave. then rolling these what cadence of business, sort great. do think of those And see to further still them? the the anniversary the of the you remind in what Food And playing start talk Can just and price increase, ability with around you Thanks, the as maybe we increases about That's pricing half. Tom first nature and we to to increase how Service, out if we're us, gotten the increase. that of you've of expect the we get need August versus

Dave Ciesinski

Sure.

probably you of latest Todd, to two XX% portfolio is our with most of we've taken. you go the of back, the up last look couple if round price now at increases So, across price this and XX% that years, increases,

height to lower increases that, range of that, how recent questions August In just lower. be the discussion to question about a XX. don't have you little price other dips, to would your dressing And again, in go you sauces The if of took most and sort was then things that then, went. on the we and XX%, I'll give any on end bit So, the X% idea. an

would costs, tough that call particularly some And it. have sauces, the and you ask is to a us of before, merchants, and and were than reason were our input on think might But of earnings that those to - they Their last was what for they increase, of became shared had were through a what some laid we remember, now. we out tougher oil and that was as and in with the I price we tell big before. in coming process concerns, Target You little they discussions the we happening document fact-based they dressings the our constructive. heels taking out of had, imagined, we our I able concerns we bit came work increases, you were out probably are the fact-based were the and and the on case been Walmart. They way on

we're Now just forward. we're - pressing

as to some to been leader sauces they're bring many also we've what new sort do, the of because with that the us think helps fact we able viewing In level news of category. and also continue in it helps that the I dressings at cases, to and innovation

Todd Brooks

you've talked last one about rationalization journey And the Great. final quarters, started. me, the of that for SKU and I couple you've just a know increasingly it

‘XX, are fiscal the of kind portfolio? further rationalizing on to should you that base? think out related a SKU to rationalize Is Thanks. looking as we looking there growth about further revenue anything you're put to the As

Dave Ciesinski

you than fiscal Not really. idea, more going and SKUs magnitude. Service, little a more with about between to now, X,XXX, a right and we're X,XXX Food little to than give and XXXX journey X,XXX things on was through that a It's down Retail that picked to comparing ironic started we that. To at looking that you XXXX. I you an give fiscal and

So, of talking that's - a the in reduction. of you’re order XX%

Todd, know don't back pruning. SAP felt our we at really A getting of successful. go this and our on pruning, secondary But, and slower SKUs we a of going Tom, don't sort area ensure that simplify anything business into isn't where I to. could forward, of some be and if look focus. to like focus we really looking making of to ready sure for we for of that driver deeper us SKU have We'll that on the back cutover. geared that And got no, just towards was we big and sort to go going and inflation we moving service capacity sit lot the to customers, big our rationalization to we as wanted today and an activity cutover we needed want all a have us and add. We if you prune we deeper rationalize. be was had, as this expect focus core was of to had to our use optimizing So, you

Tom Pigott

of for Todd, a model. couple give Yes. you your numbers just I'll

and look declines to of the next expected this million and Produce we segment remainder the was same Mamma $X for about the fiscal. and about level it quarter, Retail of as and to $X million is So, be exit at the quarter, to the $X then Packers, that million Bella

Todd Brooks

Thanks, Tom, congrats great. Okay, again. and

Operator

with Your Wolf next King. from question ahead. comes Please Andrew C.L. go

Andrew Wolf

question, pricing like disinflation that and you doesn't of to a Ag basic of future morning. you point, ask they'll need not so real industry. later kind But the more going people on I Wanted maybe - more pricing, think pricing simple XXXX. some and in is if Lancaster pushback up like on, from - you do economists you pricing, a slowing, but on, you right, accept in in - the a the most looking if and so for at follow economy and you're more happen anticipate a sense some from think trade are economists or bigger retailers pushback feel if would have some Do needed? and sense some the you as a Good experience and Hi. is to that of do kind the

Dave Ciesinski

share and to sometimes what And categories, that of with most me I up sizes on walk just $X.XX. do now a weekends, stores. are mean, the prices different just and grocery would on the I always Having of items. of to a shelf kids my years is that on Andrew, for of there the you it on see just you, question beyond look sort more surprises the make a magnitude than point through is, some the I go XX, lot for we're have what at same aisles. for item And thinking great and when the they with spending And tell remember our are. you range I bucks. shopping, about. of we stores. What that time you our ago, time XX in would the they I of own at spend a some It's promote eight is, family Heinz one thing can I than where can is Ketchup worked I at And used see on areas. of it that more I

when trade. in we're albeit to I the continuing into the Let's start the be if seen, but just in increases the shelf, surprised cost the remains this. maybe, our you Consumers what we've the at making conversations. magnitude but food like that just look you, same prices anything, constructive the can't space passing you help of that on peers input of at are at Generally, building spend, time, and seeing none trade the say, we're margins the And think are out through they're trade-offs. along

selectively. pulling other back food I on things apparel lines. think in They're and hard like they're spending

the are we're think to early shifts. I signs what starting of, see

shopping than to So, middle are erosion the maybe lower of more consumers show more behavior starting income consumers. affluent or consumers

think think I what expect is, to So, think I can we're and see all you this. merchants I know realistic. And

input depending I of what on you're the And areas pass think continue to them different As be costs, value. going do to they need on. demographic to a is there's climb, segment, create to if probably is, going the to focus see

So, probably a forward you’re be loop don't my I answer to in think asking is. I same long find This go see continue you're question move But in to as think is, a think up, don’t we're it. I now. short - way going just as through is to I costs going to I the if what we're right - just we'll

Tom Pigott

little of add I'll a color. Yes. bit

on productivity products, look one to optimize at well our our of So, as a inflation, level but seeing ways reduce our engineering at high initiatives value some in factories program projects working as we're think as quality, able what key our to offset we about of of maintaining to to somewhat terms it, commodity the is being we're this costs.

increases. on environment, more in get this focused business, we're you historically, all but retail if side. benefit, to Service the mitigate a tailwinds into margin there, some to So, as get headwinds higher those business, have trying in is we seen our our Food we Broadly, which recessionary on of certainly

Andrew Wolf

of on can of - it get is QX to had about cadence, I'd elasticities. And you then - in on now? sounds to anticipate but going And - the you I wanted you you - us sort was like what - kind seeing the had Maybe hey, as you. you help you thoughtful. the talked don't volume I a the what you with the That look obviously to model you're - the do SKU know this, I about are whether really you about not in a in was me, your also rat, the just it's And cadence. about What mentioned. little lingering ask I quarter sense you to a which sense of SKU well, think you it's rat. compares. then, it. then that. your And the down like tell your budget? to forward, and mean, compare outlook, retail, a Thank of ask as appreciate tough and

Dave Ciesinski

to the going math you overarching we into of and a tell Sure. as pulled have I point thing you needs into that's weigh So, on rationalized that take tell you're the your and retailers that I QX that. adjustment, we've right? be That And look then would to And shifted forward of Tom, in. shared that. elasticities into an the the side QX, sort ERP, businesses, to you be we've the on fact going into couple To there's to volume exited orders and do of you consideration. I'll with you if you is, the QX first What volume then, that other would get taken can on between to start. can is, provided maybe consideration you.

So, of getting of topline we by there not we're industry-leading solid, volume provide way growth, pricing, what if is, to side. going feel with still confident but the on to but softer continue

I about how working math. the So, that's probably would think

and going you're So, see to volume driving some on algorithm. diminution the pricing

we get the becomes obviously quarters the three, deeper into a Now, non-event. as two and pull-forward

And its work works their out. the way so, rationalizations that And even out. way

thing So, the consumer to volume due is left in be going only some that's elasticities. the to of reduction

it fourth stabilize quarter, second third see of second, quarter. sort you'll think I from quarter late quarter, third, fourth or

Andrew Wolf

timing, we should see are. in elasticities the reference market into the recently, the that you've what to pricing of because Is that's how you'll will Okay. put and what talking about of impact kind on And it? the about you're the think flow

Dave Ciesinski

it we every Yes. week. And track

And so in are alignment performing far, elasticities with our those modeling.

that his outlined So, exit you well, elasticity, use the about the QX that would just sure and And you're I sure, then that. between your first can you're on things that fact I focus judgment. think the did we be businesses making Tom and shift couple would that year of the timing capturing QX comments, in adjusting last that as and for a we've making and foremost, talked

Andrew Wolf

Okay. Well, you. thank it. Appreciate

Operator

comes Consumer Rattigan Please Research. Your ahead. Connor next with go from question Edge

Connor Rattigan

morning, Yes. Thanks Good I guys. for me. appreciate squeezing it.

maybe Can the maybe to the Can you're over increase given what's front. the like the driving seems the just one or but looks us actually hedging soybean guys it of the XX% us about remind relief you fiscal that in ‘XX, one have commodities understand should you on release, about contracts Just that heading commodity end oil call, place? here off we you expected on ‘XX. into help at in front is inflationary tie, policies it expect sort up like quick some Just wrap step-up? of expecting any to fiscal the

Dave Ciesinski

Yes.

good really a question. it's So,

then to a started There's basis to though of which the what couple So, don't but about. soybean a things - see, actually, there's which you think we're seeing which moderate, for oil, has there's price cost, even increasing. is board

in below So, price. we to is, coverage market soybean deltas, and factored oil fiscal at savings. had an you're And But But of costs. that board. in coverage. aspect again, the have good the all on year-over-year, those go benefit our we're it what And fiscal ‘XX, some also looking we we we see into are ’XX, how you into increase then managing second get to we relative despite pricing seeing at of oil good soybean that's the full look when the as on PNOC then our

Connor Rattigan

All - That's all that's Okay. me. Thank right. Got it. so you much. for it

Tom Pigott

Thanks, Connor.

Dave Ciesinski

dressings with new was other I'd maybe avian oil thing is that in Connor, add you also and and in the on dips, an some we just of range items. just headwind, and quickly use included the egg as besides a it's later the only and baked the our a other of created year, that in hit subsequent our commodities ingredient news flu it

Operator

go Please is Cowen. ahead. with Our next a Holland follow-up question from Brian

Brian Holland

indeed kind curious - Hey, opportunities vehicle would on similar and you that prepared the reasons, X.X done and some Lancaster of the of number the you've the a could partner do inorganic Dave, them have here. historically, in of of opportunities. bringing recently, a context model human to evolved, disposal you going source growth. a the three organic or commentary Colony years would program out I leveraging ago what more your how new that's you a inorganic to larger thanks I'm businesses. right, around define But opportunity, for inorganic at have your if maybe to provided way, about of acquisitions, doing scale and more And i.e., about the for about would thought that but me mentioned letting as thinking success hop licensing the remarks suggest such that capital run on including you that back of it as the leverage inorganic because in more maybe

sort help the So, license And catalysts think is just going that seems than buying perspective I be your of a new or reason there in there love asset, that inorganic less because like - about that evolution business? the risky seems ask continuing execution can as would maybe formula risk the get and would you you about more less of to learn about but a us

Dave Ciesinski

system to just in you XXXX, synergies. cost XXXX, be acquisition ERP really context. with able first was Maybe old it With providing a any installed that generate our we was struggled little such to that

we So, as ordinarily, more inclined we were looked at focus synergies. acquisitions, to on growth

mandate, an the it's acquisitions think the allow to So, going allow as not us synergies. we to S/X about bigger option, we've should gone with is on HANA, us option system, which cost all-cloud-based obviously justify those choose, this SAP and but

going because is The do allow of difficult limitations in to been systems about us our other of and would past, the have it's international of some a growth, to as that of thing component the whereas think processes. to it

long But about as is view and years a from the able from to that as we're we SAP step have year away you the and not say, and growth that and or back a with big Cave X.X we to both have going take fair to generational amount of And no that what just and X.X, next a be backing enjoy that system agree we And part do to with really going we're platform a licensing. we years. for I'm investments to three half to Horse term, or of Now, we able been X.X that. trying create on. of grow two intention think

right we that. grow, opportunities continue sit strategy, now, would and existing intermediate Brian, we we good opportunities where driving we So, near-term feel to you, and grow, like to term about I have to feel our this tell summer,

places able in more some to execute to the food feel than could steps far we past. have We operators our baby service also that that and follow like of been efficiently we take like and do might Canada

aren't that not - risky isn't moves. big, this So, these

agree As the how acquisitions be we view difficult our to risk. the you able past, might is, as been with to about take even we in But far on are something even it's we think haven't concerned, on bigger. - really

from bold and set can all Now, do that well. last there. machine whether years strengthen to your or impression to it things and from like take we want we've the it's thing away make so investments grow that done. generational a the about the efficiently we do what pivot with the that longer, like feel somehow is that are up several we're you is now out platform we at continue least to to is and going on others needs leave This to meet to But

Brian Holland

it, it I'll color. leave Got there. I Dave. that all appreciate

Operator

There questions. are further no

will turn call comments. now We for his closing to the back Mr. Ciesinski

Dave Ciesinski

our you. thank early Well, in to up summer, and for a catching rest of everyone, you, first quarter have to we'll you thank And Hope participating morning. results the then. fiscal November. We great forward you this forward with with look look sharing you

Operator

for The today’s attending conference Thank presentation. you concluded. now has

now may disconnect. You

Lancaster Colony (LANC) 25 Aug 222022 Q4 Earnings call transcript