Lancaster Colony (LANC) 22 Aug 242024 Q4 Earnings call transcript

Company Profile

Participants

Dale Ganobsik	executive
David Ciesinski	executive
Thomas K. Pigott	executive
Andrew Paul Wolf	analyst
Brian Holland	analyst
Connor Rattigan	analyst
Robert Dickerson	analyst
Todd Brooks	analyst

Call transcript

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Operator

Good morning. My name is Shannon, 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 Fourth Quarter Conference Call. Conducting today's call will be Dave Ciesinski, President and CEO; and Tom Pigott, CFO. [Operator Instructions]. 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

morning, Call. us for Fiscal Good XXXX thank Lancaster Year Conference for Colony's joining Quarter Fourth and everyone, today you

morning differ to of to forward-looking based subsequent of statements, this results cause number are to XXXX. filings the the These subject which obligation SEC. Securities Private of include of uncertainties a provisions events. statements is harbor the and discussion with actual undertakes no uncertainties may company's materially, that risks update company detailed Litigation discussion in are and these upon to Our the these safe the contained statements Reform could risks A and Act subject

replay note this lancastercolony.com, website, this the Also be on available archived our call audio of company's that and afternoon. later will

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

David Ciesinski

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

XX.X% which sales gross X.X% XX.X%. $XXX.X profit for fiscal million XXX we the share gross margin I quarter, with profit. Net increased improved am million. record completed and points to grew net on to and I Before comments basis XX, provide year $X.X fiscal profit XXXX, to year June my Gross resulting that sales to the ended our pleased

$XXX.X to basis the which the charges profit quarter X.X% net versus includes year results. quarter. income last million million, to sales impact fourth grew declined in Operating and our in year's $XX.X million, points fiscal Consolidated restructuring quarter fourth $XX.X to million million. current impairment while $X.X of Turning XX gross to $XX totaled that increased

All impairment perimeter the basis $XXX.X XX that product of attributed exited the store declined to March. retail charges sales are this restructuring and to segment, million. lines the past In our we net points bakery

sales Excluding the sales segment pounds the Perimeter lines exited, all segment's measured bakery shipped with increased that while associated X.X%. we volume in X.X%, Retail increased

catalyst introduced dressings. segment. growth Our by to This sauces the for in retail addition and dressings sales Roadhouse and Chick-fil-A led refrigerated steak program for successful in a sauces the higher remained Garden was newly licensing subway Olive sandwich Texas

the category XXX for of supported New by quarter, growth XX.X% dressings the points share grew XX-week scanner growth growth. continue sales the newly These to contributed and Circana York leading XX.X%. ending our Chick-fil-A combined items million sauces sales Roadhouse the grew [ dressings which to of licensed their The refrigerated our dressings XX Subway $XX items Bakery offer of with sales bread Buffalo budget. the products to also to in Wings quarter, the the Our own also Toast leading brand our way, a period data led of weight by ] to Texas X% Chick-fil-A food Texas great sauces well tasting increased for frozen stretch performed and our Wild introduced garlic and June refrigerated Marzetti our refrigerated breadsticks. shows in while families garlic and basis

category-leading bread deflationary a restaurants best-selling became of Sales of garlic Frozen impact for product category. quarter, avocado in York our lime the entire growth of to pleased to second the share New Foodservice share dressing also offset unfavorable national SKU I'm Chic-fil-A of lines Bakery during was by In X.X% were the chain the strong $XX.X the pricing. X.X%, by XX.X%. million volume driven segment, up that

profit and XXX gross basis strong a driven range $X.X of delivered increase we initiatives. last increase or savings of by beneficial margin X.X% impacts growth gross million points This cost year. QX, of of the a During was versus

for Our call all financial on fourth turn our focus his elements revenue quarter results. over value our improve engine Tom? management to now core further our on Tom supply the I'll and chain productivity, performance. remain Pigott, to CFO, commentary

Thomas K. Pigott

Dave. Thanks,

by the net quarter. and both last profit drivers for line million. accounted two profit volume offset of decreased The delivered discontinuations million. gross deflationary in an quarter increased quarter These pricing additional of impacts XX basis an flat-out This basis decline. XXX year gross points exit increased margins our product to $X.X Foodservice points growth we quarter, the performance by approximate Decomposing by XXX prior initiatives the segment company X.X% or XX.X%. decline. $XXX.X volume and to consolidated XXX by of businesses was primarily point sales Consolidated volumes. driven Fourth the announced cost-saving million the to were point the drove company's gross versus XXX profit growth expanded by basis points. $XX.X basis The Gross favorable despite mix basis Angelic revenue the

the also wind offset X.X% were investments. initiative. spending in year down million. lower the levels. quarter. personnel project quarter versus Selling, versus current our in historical deflationary ERP Costs expenses and to continued year versus reflects million the higher Project and prior Ascent the $X.X decreases decrease the IT for in The expenditures costs by decreased remained reduced administrative to totaling $X.X These Commodity elevated million Consumer to related or year quarter. were general but $XXX,XXX was $XX.X prior

lines ended exit flat-out the third in As XX. we shared, product previously our company chose fiscal to quarter and March Angelic the

property we $XX.X and and charges quarter, charges related million million. increased million lines. discontinued not In to Consolidated going now equipment remaining the any higher impairment recorded of of these year associated charges product quarter, the restructuring and do fiscal anticipate the exits million restructuring with or operating our fourth forward. by impairment was sold these related In we additional impairment $XX.X we gross disposed I income prior of $X.X as recorded We costs $XX mentioned. charges to lower The declined as $X profit increase flat-out million line. the SG&A driven related product

XX%. Our We for tax XX.X%. rate quarter tax to 'XX rate was our the estimate fiscal be

by restructuring earnings Fourth to remaining EPS. business. Ascent impairment full expenditures, $X.XX the $X.XX. $X.XX additions underlying of performance per costs The The benefit. drove drove capital increase quarter driven payments diluted With EPS for property growth reduction charges in in $XX.X reduced million. The increased of $X.XX a regard a $X.XX share to our Project the was totaled year

capital and and total to and million. estimated support $XX For This expenditures savings fiscal to are $XX be strengthen forecast reflects cost a our 'XX, facilities million our forecasted between growth in infrastructure continued our investment initiatives.

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

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

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

commitments. by from of sales Gross basis year with full XXX initiative, deliver now performance driven and percentage company the on profit pricing Turning points its expansion X.X% Ascent Project X.X% segments the reduced net Operating the successful by by declined wound the results. to SG&A the and of was points to increased commodities the income XX.X%, a programs. ERP recap spending XX.X% and contributing. impairment of grew driven the driven remaining able by margin Overall, was underlying restructuring sales savings favorable for was Reported net net as progressed. both XX.X growth year as by the by and points down cost grew and costs, business. percentage of

a and financial in cash. strategies, commentary, year $XXX.X increased execution our the to To Thank Full I'll operating million. and Dave fourth continued year We debt-free it sheet balance wrap results $XX.X up million flow his resulting in strong back for closing you. now against the key company's turn year returns. quarter over cash remarks. reflected full finished with my

David Ciesinski

Tom. Thanks,

in As expand by flavors our led our In simple with sales fiscal will core ahead, our XXXX, to M&A support including to segment our focused volume strategic program. strategy year one, to anticipate look continue combined of and and from our in reduce grow to of X licensing. we accelerate and XXXX. sheet the sales three, growth; of we cost supply team, growth retail new benefit chain licensing that year Colony from products, and plan. our pillars to: will XX margins; growth business introduced two, leverage increased Lancaster our fiscal continue operating to core and the our we balance simplify strength the sizes

York our next bread Future Bakery In early with for month. new frozen Marzetti Bakery volume and growth products dressings. for addition, garlic the that potential shipping gluten-free New garlic for will garlic refrigerated lineup momentum sales York retailers bread to anticipate delicious begin we New bread includes along frozen products, continued growth

Finally, to popular with we June. include which sauces that to roles, beyond in their partnership steak excited are test a in Roadhouse introduced Texas regional has we our share pilot X-state expanded

[indiscernible] excitement team In to with select results accounts our culinary growth of be craveable traffic growth. chain a our we continues menu volume encouraging. the from mix led very partners them far, initiatives range innovation to as national sales ultimately, flavors So are segment, and foodservice support drive Foodservice the our help of to by QSR expect and wide customers and

economic U.S. say, and to in factors you, we could financial Foodservice performance to of demand it influence are health. external our XXXX. year including which consumers' factors, wide during Retail there and segments carefully most Like fiscal a Suffice range of continue monitor both

to team cost, foresee to Our cost respond aggregate, these a scenarios. in deflation. the in place impact of not respect do we from inflation commodity contingency to range significant has plans With input

driver throughout opportunities program our momentum improvement year. cost coming to savings expect the the primary We with savings margin building year be cost in the behind

entire blend create This any to Food team today, Before food I ability big inspiration Officer, take through of to a a prepared award we'd part a Quality be what and and craveable questions are very remarks their for Development year. innovation. a products Chief our a would Steve team that product and value This the company. Operator? extend might and our better close, to unique their recent makes out to happy Processing to culinary by R&D and our have. Magazine superior is you They us of recognition of concludes testament Hill, shout I for R&D special the Research as like

Operator

first Jim Instructions] Salera comes [Operator your of from question Stephens.

Unknown Analyst

Prausse most for half Kanes a companies ] calendar in there's recent about segment, Thinking and [ back the some demand Jim. chicken Tyler out outlook in industry the said, at this the called from concepts of the for Wingstop year. That [ XQ to benefit period who is Chic-fil-A, bright spots been in the Foodservice on megatrend. This ] like cautious continue

you give what by you in some then can your 'XX, As being additionally, food around Any we fiscal us color view be? remarks, the look QSR. detail And comment SRs. to you our prepared service expect led select around from who on a made select might volume

David Ciesinski

Yes. to pleased to expectations. where were Sure, in in question. Dave. your Maybe quarter, our slightly Tyler. is to Happy answer volumetric it the we was starting finished but below first we with quarter, the This continue deliver growth actually

to slowdown it sort a saw many stronger. And in first calendar the expected be We Like of throughout that. that's in in quarter, we peers, the of particular, half the offset of evolved traffic year. our

the We now whole for in play are those of launching marketplace customers. right Many now. developing that's we in and are offerings limited a who time of out have activity range where

on advertising You're understanding, us. the probably without that watching TV it's appreciating

and the can will you volume-led continue outlook go-forward overall growth become fiscal sort to the that into together period, there's year believe So all 'XX. been in low that And growth single-digit low turn where our of we we we've if to volume deliver sales opportunity growth. outlook growth single-digit the put to that low that mid-single-digit for in volume -- improves, for

called was second with of for big that of Your chicken. what's agree on we're a I to more you. innovation. this on underlying couldn't being part continues be activity That point the

that's to going hold a believe we that, true. get So

be to at If a the continues the source, as you in of chicken than protein alternative. beef cheaper look cost it

in of this operators restaurant great that like for So our disclose liberty great it's food activities have customers and the I way at provide And value. in then to we some tasting on were relevant finally, environment QSRs, Chic-fil-A the think a flight. to select

course. with to be we them would of And the about. those get we'll the the QSRs in clearance were talking talk some openly degree work them, For to be them and select we're that the guys more that select do not. to that with cases, for you we in happy about To share which the from

Unknown Analyst

one in front just And expect retail positive in would And And follow-up. on do on very be helpful. cadence then those segments each the half growth of Can back 'XX. you foodservice Very half, helpful. color both to we offer the details of any and any for be weighting kind quarter?

Thomas K. Pigott

Sure.

look single-digit throughout volume volume the we -- growth, our would growth low overall projections as I projecting the both say So at segments year. of we're for

I an as overall on PNOC last growth profitability Dave productivity commodities of some Dave we where standpoint, year, business, do favorability, bit dependent as expect year, is really how of think pricing little these got more and mentioned but that benefited stronger LTOs net half much productivity. we -- we from as -- we've mentioned, this -- from focused we're both well are they on a foodservice in that our front successful of

growth. driving margin loaded, as on making in year we programs some improve that expect We're in earlier Dave investments our top volume to mentioned. year, terms focused be and of automation the on expansion This more productivity of more terms in factory back-end performance. of And different productivity the it's to

So expansion be more margin we the back-end to loaded. expect

David Ciesinski

business. I'll [indiscernible] of on Maybe offer the the

little new a shelf, is consistent many through at pipeline with on overall, whole whole, for a items. volume when of those items loaded. the bit half But a we strong have to seasonal of given resets We saying, look low tend as back Tom what the more you expect the period. business growth the But sauces be

Operator

Wolf question next King. of Your Andrew from CL comes

Andrew Paul Wolf

of pricing in channel, a questions segments. Thank for each of your the couple to ask you. Wanted

and across kind help Sort of that? how And is is -- any of Or is traffic which any promotions kind within with standard Foodservice. check-in with of promotions them is their you typical. concessions, question obviously, any With more like of there of Are a LTOs your pricing typical driving a negotiate sort markup these of the market. also, on the, probably still price asking more volume or fare. little the for partners kind

David Ciesinski

Yes.

than bidding So great because wouldn't LTOs, ordinarily they're the against our R&D line question, usually Andrew. sorts work we our When upfront goes be better for items, or that other of at and you those look average all of at proprietary of people.

They're -- focused glad about as them about think to our typically base but asked you They're imagine. might accretive that doing. you things. to dialogue work the accelerate of with they're they're So versus really their think as you stream to margin to going at bottom question on our be looking cost business, the trends. traffic what we're line operators, really what and I two looking at needs for be their true I'm

with looking want advertising. I we we be traffic. phone our work menu feature under the that they people on talk figure their calls their get And to that their you don't that can out traffic labor because it's of are in their margins other plays we because menu things. Most really things can already number time that are our focused to they're it they on have that would to for about the I and been as tell pressure to and exciting because that recent as drive through wheelhouse. how drive excitement into that think tend menu in discounting and are ones they fortunately, And trying end, of and And are is hard any past items ringing in advertising to more

look monitor promoted you that price points the points. expect carefully Swinging and going value to continue look we're absolute at at business, is around price think I looking retail to what at and to can

the But focusing I I'll what you we're tell a for what maybe things at is X little look we is on later. save where consumer really this would bit overall in As on comments -- environment.

we The remain good making in on to. surgically one. the a where Garden first, feel sharp And sure addressing and need talked that's we've like that past, the value we about and price we points Olive example

is provide at looking we're affordable better. meal with just that this do thing that in a Great makes tasting we, product luxury. little second the bit But consumers how environment, that

a the of luxuries And them. go relevant make really lot we're is the are little places. And where you're feeling can focusing. to relocation to that us offer to we good that think affordable of different a a lot pressure bit better, it to sauces from which one degree keeps I that that

Andrew Paul Wolf

Okay. point label. that. price the did converse, you That's But might -- with you are Olive from that... brands, so did sauce, category when saying better interesting you product? some trading say, Or the brand like at when chicken are you like is what from -- down that to talk either there a you let's behaviors that Garden in you where like trading specifically, want down your on with surgical stuff private your with or to Walmart, Is pasta,

David Ciesinski

the IRI Nielsen we're of great grow data, probably line and do strong questions, it well if ], that category that and is York really from a a and with heard feel point the in growing top. share. category Texas where degree hit script and we're the and the outperforming It's us maybe our sticks our -- we're Toast for to you're Yes or following to both I'll consumers continuing for we the New To remains toast you positioned like as [ pastacation which

our gap looking we'd when basket. conversion so the watch our at you're added we're best consumers are private points, think strategy sure and that is price label, right. I get So looking our to broadly, private precisely to that We're [indiscernible], label. the versus get for More positive we a make watching as

categories, we you as scan look dressings, you isn't then those think I of across price we're threat. a refrigerated Sister all like key really label seasons at Schubert, much at tell if points. private our of would in what promoted And is looking

salad to private in value-oriented -- we're But we're And performing we've go share label, category. what to to probably the outperform Private we're some is period. label continuing to seem continued other impacting the case that you more is of pourable which to If from trade there. growing. hang down us. growing the brands a in dressing, We're in doesn't be seeing

a around, crew well. We look will Schubert we're We'll Sister we're there. as all well were positioned. Toast, feel that at feel like is watch refrigerated insulated dips. watch. we tons You you like brand

down is peers. value like on make eye So our more trade that this a in generally, And brand label benefit. to that than it's category trading keep we from I we're continue to private channels down of to extremely in that to just to think you're inures still a seeing trade. trend we're watching our sharp a an I relevant. private label, modest but feel that to exposure trade different within people not our sure big just need There's But

that. You're assortment some the given well Walmart like we perform food from and there, in And to trade seeing, like and and the relationships of have down innovation. we again, that a cases, brands things feel we've to continued the

Andrew Paul Wolf

you. Got Okay.

quick sort one of will, if a you small past Just question. question,

to expecting You promotion? -- color up, little volume that think, put on Or I overall expectation. is Is that that a nice, be business guys which or Marzetti are innovation-driven line. for turn a

David Ciesinski

We've it's new simply strengthened we're as brought Well, And little of and up out soft a bit going We against a comp portfolio a there bit our little items. honestly, have items. well. of we Yes. transparently, innovation. some

Operator

from comes Brian question with next D.A. Holland Your Davidson.

Brian Holland

of the third fiscal specifically drag, or I fiscal which for questioning think, store would Maybe 'XX. guess comments would retail exit, growth, to 'XX. around inclusive a be on remain follow-up figures that bakery through the volume I the segment, exclusive of line perimeter of the the to quarter on outlook clarify in a the just

David Ciesinski

Yes. includes. It Yes.

like dilution. to offset we there's feel us help So that enough

Brian Holland

side, we offset of Okay. in fully Understood. pricing through assume grows volume that pass-through would the the And foodservice move on foodservice such that 'XX or then excess does as that pass-through pricing? that we -- should fiscal volume essentially it dissipate

Thomas K. Pigott

food slightly worked particular things That's commodity service. neutral. we net way down be timing were quarter just QX, function gross PNOC up based lined in our with in going the on unfavorable the expect a we sweat big Yes. had this and how our a pricing forecast, of out and things commodities, forward to to

Brian Holland

fourth you through. some on Then R&D expectation, just about And was least at a other then one pipeline sounds an obviously volume point it a about bit earlier quarter. the foodservice it talked your in in made where you flowing below of like one, question the

curious I'm out assumed So just can business customers. me on this. you that sort of you're correct just -- because have for regular a was I of that this always you that so pipeline I R&D course turning and didn't

you move more that the maybe of if [indiscernible] understand that into could of of So fiscal XX are the that to whether do improvement be dig conveyed in and a more cadence little deeper through vis-a-vis reason 'XX therefore, you pipeline as just that the bit year. maybe would changes asked that for we and as getting

David Ciesinski

Sure.

So the maybe picture on of big I'll start, timing if and you'll allow the specifically me in drill new then a items.

sort of quarter I spring again, look in as were through really of the quarter, there at the So deceleration the QSR. you One two we went as through a was across all end drivers. happened traffic there really of what our was to think

talk a their end were of our heard inventory it. are we data saw very traffic you've as with trends. guys quarter, At balancing about orders the seeing the slowdown it the their in probably some our of You and peers they in

of for inventory. from period, I of that items and related slipped beginning piece this range have specifically it and the period purely next new other was into had space the to end the trying correspondingly, to to timing. And been new period. the it volume referred available The of ship could that we of was the end at items, of a some the that were the timing of

it look looks things particular you period the that we way right. So what tell like at wrinkle would I for a just up, Brian, in is lined this when this, you're

just place expected. harder we period, LTO little it bit limited had of in us very offering activity this a or hit have that's than cadence in activity steady a We particular time

expecting of delivered we were volume service, of north we points in and X that. food So

Brian Holland

the I obviously, you guess relative Appreciate said was just to don't internal the And no you quickly, below said color. back segment. because you How to food let you [indiscernible], flipping expectations? retail does but maybe over expectation. there's maybe guidance so then a just provide in retail formal come little foodservice, bit service Mindfully, guidance

David Ciesinski

Retail point Yes. is and what much through I mean, at if things. where I right think that We end expected. shifted have one the the pretty to mean, scheme of have from QX it. they data QX, period did consumption impacted the slip of very difference the the with on things materially it into material really the didn't look we retailer was consistent things. don't I a promotion with you to in a but grand made

in know, side, as get what inventory. we have terms and our and that we're So get is data, able on very business, the rich retailers of model the think their that it use consumer weekly, we that we you to forecast

not Foodservice data so quite model it's the the some that. timely, out of isn't as On it's to side, rich as quite and us for harder

and there both that's at all went our you in cases, the XX difference. a range that said But we they're with line out look generally So new I probably if retail, performing items in -- was expectations. with

Brian Holland

just big And then maybe Great. picture. close Okay. to so --

from customers, existing the me, on Texas update Just Roadhouse. picking that i.e., incremental or excuse business -- pipeline you're how has the maybe evolved? licensing service an up Obviously, food

looks pressures, are. that, an M&A inbounds the then the to we how foodservice acquisitions, it up go shaping performing as maybe make what to closer And being increase and in getting the with there. And the to of to, kind maybe also as leave given pipeline I'll we're it landscape position seeing curious like Just you are feels just is get in they pipeline out that aspire trends that underneath like.

David Ciesinski

that We'll Yes. that the with recently out course. starting licensing the Maybe pipeline. items -- we're of of talk went about Chick-fil-A the we thrilled with with most performance dressings. Sure,

best-performing the entire on SKU of if around lime even single bit would has an I been second substantial. inside a business, our in think the the upside it's mentioned run that particular, the in brand that the it. been we've become surprised that look say, rate the Swinging also of SKU you I quite outperformed become in dressing X avocado at has it's Canada, set with -- on Subway I and Subway. little year strength expectations where of

about proposition with. and to excited that they're great a partner work So we're

If on out that. was new Garden, a at test. and not there that. well, that expand excited in share to to we're Buffalo With Wild did sauces, Wild with Olive activity happening partners with working working but We'll with to on we been the to what's lot of launch single recall, was a do items you and with have to and a in them forward with we looking you'll once going on Chic-fil-A, dressings. performed We're news more be we're that. coming be them with later only with spring those Buffalo look to a year. Wings respect dips to rotation that position Costco you the have year news big continues discussions a driving Wings, of we're It at last

with Texas particularly with Roadhouse, we news expanding is think which were really to excited I the that this in see strong partnership just grower. was a restaurant perennial a concept

our We've in a item we there. like. entry of roles But their special that really been a performance and really the sauces. pleased They consumers the love with category, small play are and that's outperforming a We've test and in Roadhouse. come an their expectations at Kentucky in Ohio by X-state our Indiana, partner inspired our item It's that's with role. original Texas up

in. for that can launch So that and category planning item, whole thereafter. new we But us look opens in that forward for to particular, -- down with where go. the excited we're a And up them really to sitting play

to to guys conversations More a people. -- but other real about be you once I'm position what And more update maybe precisely have do have right. to excited broadly, we we'll we with you're continue talk in is

to lap September. If of years, ERP. gone waves. we've our the you live in We going last the last our finished We fifth we're the on wave wave, back lapped over go all X last

and So ERP completely up Horse as is Cave Tom down. is, drawn mentioned, running.

the a our lift business our of the inorganic to the growth. to build. to at focus at start generate look look cash position lot balances You to This of and end continue now cash. a ability generates for think -- quarter, source shift in and of we're that I has they And

us on scale compete you have we within allow have that expect forward feel can allow mega to we we're hear caps because like dressings team, with this we through assets that even strong year will that us us sauces narrow like from And to balance against the that growth. next we progress of chapter the have as sheet to looking and more focused our we produce will to and categories that

Operator

you. Thank

Your comes Consumer Connor with next Edge. from question Rattigan

Connor Rattigan

question. for the Thanks Yes.

data soften in tough to it comps see, So that I the are looks really Chic-fil-A as like for guess, some last. we starting from

as products that be from fiscal that sales look back being is lot license licenses the expectation to thick a we the comes ahead a primary on of driver? guys growth with sort time coming. of So taking Chic-fil-A XXXX, still at new the despite expect the you other to do late retail Or seat

David Ciesinski

an source necessarily the you're for end had didn't dressings at No, towards also growth When year. we activity proposition. has that of a had provided it, quarter, we of last fourth look this overall which of the the of year right. lot promotional launch you particularly the repeat And

we're business But continue do behind we that with we the we're more you a about growth support guys half. to drive households. grow I expect the on probably in going as is we it what range fuel we as in excited to will out share If you to talk continue to forward look more brand have to there that new press at look to of product back the activities and November come to think

Connor Rattigan

Got it. Makes sense.

also quarter. we'll so And mixes say solid business so so I -- the adjusted pretty were retail ex guess, volumes, this

just sense how how versus give I -- were a performed of could sort kind So of And I just they Roadhouse I of mean this wondering, your expectations. you guess us incremental quarter? subway of guys maybe sort was Texas

modest, pretty much the mistaken. that XXXX, but data not like it if sounds right, So lift we be, in been see, fiscal that because in should has I stronger the I'm guess,

David Ciesinski

Roadhouse, scanner you build when a bit subway you. we as to or it see within than million the went million. of built was Texas little $X at helps look if about have at for you period. the the just continue $X data, And And it throughout Well, on look I Hopefully, quarter. that we we more it quarter again, was distribution kind building as data through it's

together, those You of the two put items X%. sales is two the percentage net roughly on

Operator

with from Jefferies. comes question next line Dickerson of Robert Your the

Robert Dickerson

Great.

I of questions Just expected. know kind the of deflationary was price think, little in QX, the than, more had did couple price dynamics investment. in guess, a market I bit a I place investment seem there on the

it we of So -- kind quarters as of But pricing -- lot we're does maybe first year, just, we're play I color. if the just X curious, the Or in like place we know about year-over-year like That's through I think you that of in away? is seems could kind of investment kind and some kind just heard in ancillary just dynamics certain I provide I'm like through like that year. pocket. partnerships and a go one, the still guess, case LTOs are question. of one first out the plans

Clearly, was is. And it the then in food than the margin normally second that's QX. on lower piece just service

of is was it kind gauge, say Or the half changes the somehow there early trying and we specific we year. part that just think through get I'm the guess, but I the commodities, So of let's given hear as there? -- of first through, dynamic kind did pricing was the to that of the QX you say, I year,

Thomas K. Pigott

some mentioned, be This In to going mentioned, it QX kind to improve of prices I our turning particular some -- than incremental a that as it as you down, was in and that's expect significantly as margins, as we do quarters, commodities come was are making QX addition, I timing such, quarter, issue. the It's And we forward, more had investments more earlier were it supply the really, outsourcing negative, the to down. in hit neutral service impacted and chain in Yes. we food PNOC performance. coming as profitability. mentioned,

definitely to plans improve, forward, the So terms on of going expect this efficiencies business. to we improve in

SAP, for benefits understanding performance. driving more from to our going and We're get cost better margin

at optimize outsourcing. ways to some to network And also the expect looking we're the to improve We profitability. reduce

expect, lot margins. We a be the opportunity, than more of loaded overall, a still got to we back-end to we runway but a lot lot of improve kind as programs mentioned, like I those of front-end loaded, still of feel we've

Robert Dickerson

incremental not the of 'XX. maybe there through a around think we're is, didn't say, of products. let's maybe what positive it hearing targeted retail also lot actually flat. of then the an the drivers sounds or well thinking enough. kind the because through hearing definitely we I'm just for half products do you're as it of even then you're letting, first as are there's you're where That's and secondly, so there right? guess, bit of profitability, volumes, believe, be okay, okay cetera. do are Fair a Were I though like segment, so areas real there brands running as with that certain that about were And investment of And in So little areas all et I'm kind you're I comments we Okay. should where kind some if get offset well, growth that fiscal certain

David Ciesinski

Yes.

watch. question, series in think we're are changes of a made the leverage. there necessarily a distorting that we are continue We've Sister over outsized think Rob. said it's any Having don't there's you business, investments where Schubert. there So to areas look we think areas portfolio I of great because And where our that, the we at that when

ounces, be the that recall, them with down we you group. used a As the They to to in we them X.XX downsized took peer moved line role.

look volume there. at diminution when you so to in And see that growth you're pounds, in that's going

come softer would our be. we're units that but them watching a in also to particular probably category, units that out, we than like seen little and are We've

that that and private overinvesting There for brand. are with think where things of big example. would have pretty because become eye were that. to the and keeping We category. about to carefully a would the and can The [ categories our Garden, like label watch a like with careful So business on level we're that margin areas of crew soft. you we probably of there tons to most watch careful expect exposure carefully. be points we greater which price us be very It's a the I size Olive activity shopper ],

where SKU. you focused against XX-ounce of where but that be they're held well it. felt single softness, Texas space, it's Garden in exception know a generally, we they the better brands category pretty our It's portfolio, be that other one we're that's the category, discount been should would unique has in necessarily we we in one invest mentioned, haven't that's we and label do so prepared brand. has on that a own -- watch. our would see we go need Another businesses, license the brand to really because in look at up that And to our private the And so one where biggest entrant, if to and Olive Toast. lot well-developed I one than the we there one continuing the

extended, what over exceeded that really it is themselves instincts affects your all think they including years and found with And put look trimming to where And bridged grown upside you that But households, together, wage unrelenting savings. average I were interest consumers sources now are think on is squeeze. balance a households cards. they value. mean month and know to and credit of turned they're $XXX, I are are down after has that thing, really inflation sustained the we of once initially of But $XXX,XXX, payment trying looking sales for And now broadly this whole that consumers their COVID underlies uses. on midst right. credit they card $X,XXX. I the That per to growth, about their at in those debt about making and and

luxury days But affordable for again, things their make go they're better. looking and to also small

fix -- going it. is that going to So view this here, environment some be internally time to we Rob, think magically we're own and nothing that we our is for in

over feels good it's value. And of of watch So an which combination bring the the price at this us appropriate point long then a that And peers like continue items but just right to the allow haul. marketplace as value, let's to strategy into outperform we're innovation means by the it in not to a kind win environment. our to on leverage going

Operator

[Operator Instructions].

Benchmark Brooks the from Todd of question is Company. next Your

Todd Brooks

the kind kind task I gross talk chunk on wanted margins or if improvement what for saves potentially that's to product if generate and discussion modest product gross a let's read incremental gross that fiscal the wanted offset on or the pressure saves far to start And an the on some of the more business. on cost margin rate. allow components margin the reading what is of could hill to start cost of hold in for I'm side? as I -- and cost the through of margin way 'XX we could as improvement then thinking we're margin But saves right see the in

David Ciesinski

Yes.

and it If picture. and big turn the you'll then allow me, start I'll maybe to Tom, I'll with start

commodities. strong in wheat a things I'd with is soybean like look corn we've margins, And season you brought to that has the commodities us, If of the on maybe at seen oil. matter which start drivers and and down what growing prices

really work. commodities means a we're on of ] in but it On of the though, up a packaging flip dairy gone terms we're you neutral right Barry [ all that put above now, in in that on where eggs outlook. particularly conversation $X.XX. watching to we us much together pretty us puts a recently That Urner reason -- in of have commodity side, the pricing. have doesn't position And to rise, give and Eggs that --

okay, say, if then true, flip improvement. drive be us that's what and now to margin to you needs So you for around true

flight we're singularly It's not there But continue Which of projects. that are of in the projects manufacturing come the we through our productivity it's really those are on management. our environment. plans. I've outlook, come the automation really builds. execution to going focused coming we going drive call with But moderating. to commodity think And that the and a online Labor going in given to revenue in number probably benefits you year through It's sustained plants this from improvements on come going not on is manufacturing lesser side. And some degree, in costs to logistics great be a our are shared are like it's the that with be the to again, feel environment to opportunities deflation, dog to as environment.

We're seeing to good. tends the be not Labor availability run-up seeing. we're

I value? we we we out it's how think the how points, then manufacturing maintain do we our environment? space, trapped figuring out in do our for us figure excise And in hold and do price now just how else So everybody how the cost

Todd Brooks

this you here that And extraction ERP on at being helpful. the about for us been both look know to the benefits if each behind -- you're cost that part businesses. I then getting year. and of you've That's I lever data historically, goal guess, and project talked able DNA now of the Lancaster, having that has

environment fact there maybe tasking to been goal extract share with that Is additional costs. with top an tools it's forward? the given annual With team and tools the the you're us on that you'd new hard these that going a

David Ciesinski

back projects we then I north our used achievable. used What we it's to is about we share am to with you of early target focused that before of that up And we've taken continuous that you, a what the as And to COVID, what we're the is if in. and like talk pursue, and now construction back. million brought feel to pursuing team on go our prepared saving program tell $XX improvement And year. that ERP, you we before prepared is to days Todd, we suspended we

Todd Brooks

levering just line working item. ability Okay. the way of Great. down keep income here. on and that Thoughts to just SG&A statement kind our And efficiency then the

consumers you As expect high what's holding fiscal in that to range achieve or to that spend you thinking needed able to 'XX. look kind of your XX% around 'XX do flattish and that you're in about more

Thomas K. Pigott

investments We expect percent do in going I and some Yes. to that revenue, be We a percent in part we're overall, savings go to up. revenue need our to range. Ascent a to think it up in similar go going it to From But do as of we're IT be absolutes any the make critical expect through ending. Project inflation in. of than that don't we infrastructure fund more the of in to

Todd Brooks

we as that jump far for in gluten back category Texas product When Okay. not toast look Great. competition. roles of And news as then opportunity I'll having at the future. obviously, a and about how one a the Toast, that has me, Exciting in. final the Texas Road is free and offering gluten-free how big label private and is Texas protected

So sales additional it is whatever that a margin-enhancing dollars opportunity on you deliver expect to

David Ciesinski

actually isolated. flavor. label, to bit an Yes. identical developed. well, a these the private gluten-free one we're our a because versus probably tried item, tastes maybe that we're off starting We a you've where a have it. excited of amazing. is We it's the and bread think I part reason products, the on lot product nearly that's or in if technology -- first patent with got they this It's we note of very so why spongy times, We current product. they're little And about the

products. our For or able really consumers were us, the they were gluten weren't to Celiac intolerant are had buy that these either that where they even

the very the taste are and us, items honestly label brands out for private So good. it's both there the don't today, and incremental just -- that

got a really these of launch, time in Toast. great the the are and products. for spent we've last I've as ready products Gluten-free non-gluten-free quarter, and Texas lot Eaton

have to very products in are flavor thethe the thrilled that I'm So the pricing other I'm and to similar much free. line on are with thing have there, thrilled that out is gluten products IP. this

on and can we think I So win value. taste on

it because, a us to So other platform, use I past. similar technology technologies the this items think or point, we're just for it's look for very we that a played addressable gluten-free opportunity in -- what in, to is big we're very, your for patenting is that is an also there to opportunity looking just haven't

Operator

the are for comments. there closing his call now no Ciesinski Mr. back will turn further If we questions, to

David Ciesinski

nice It's everyone. you, in review look with be the November and rest with Have to great QX being forward you, of we you thank when to our Well, day. been again we results. a

Operator

today's for call. This conference concludes your you participation. Thank

disconnect. now may You

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