NASDAQ:JJSF J&J Snack Foods Q4 2023 Earnings Report $128.52 -1.15 (-0.89%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$126.12 -2.40 (-1.87%) As of 04/25/2025 07:18 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast J&J Snack Foods EPS ResultsActual EPS$1.73Consensus EPS $1.69Beat/MissBeat by +$0.04One Year Ago EPS$1.05J&J Snack Foods Revenue ResultsActual Revenue$443.90 millionExpected Revenue$421.06 millionBeat/MissBeat by +$22.84 millionYoY Revenue Growth+10.90%J&J Snack Foods Announcement DetailsQuarterQ4 2023Date11/16/2023TimeAfter Market ClosesConference Call DateThursday, November 16, 2023Conference Call Time10:00AM ETUpcoming EarningsJ&J Snack Foods' Q2 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q2 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfilePowered by J&J Snack Foods Q4 2023 Earnings Call TranscriptProvided by QuartrNovember 16, 2023 ShareLink copied to clipboard.There are 3 speakers on the call. Operator00:00:01Welcome to the J and J Snacks Foods Fiscal 2023 4th Quarter Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Norberto Aja, Investor Relations. Operator00:00:33Please go ahead. Speaker 100:00:36Thank you, operator, and good morning, everyone. Thank you for joining the J. J. Snapple Foods fiscal 2023 4th quarter conference call. We will start in just a minute with management's comments and your questions. Speaker 100:00:49But before doing so, let me take a minute to read the Safe Harbor language. This call contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call do not relate to matters. Historical facts should be considered forward looking statements, including statements regarding management's plans, strategies, goals, expectations and objectives as well as our anticipated financial performance. These statements are neither promises or guarantees that involve known and unknown risks, uncertainties and other important factors that may cause results, Performance or achievements could be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Speaker 100:01:35Factors discussed in our annual report on Form 10 ks for the year ended September 30, 2023 and our other filings with Any such forward looking statements represent management's estimates as of the date of this call, November 16, 2023. While we may elect to update forward looking statements at some point in the future, we disclaim any obligation to do so even if subsequent events Cause expectations to change. In addition, we may also reference certain non GAAP measures on the call today, including adjusted EBITDA, Operating income or earnings per share, all of which are reconciled to the nearest GAAP measures in the company's earnings press release, which can be found in the Investor Relations section of our website. Joining me on the call today is Dan Fashner, our Chief Executive Officer along with Mr. Ken Funk, our Chief Financial Officer. Speaker 100:02:40Following management's prepared remarks, we will go ahead and open the call for a question and answer session. With that, I would now like to turn the call over to Mr. Dan Fashner, J. And J. Max Foods' Chief Executive Officer. Speaker 100:02:53Please go ahead, Dan. Thank you, Roberto, and good morning, everyone. We appreciate you joining us this morning to discuss J and J's Snack Foods' Fiscal 2023 4th quarter and full year results. J and J had a great ending to our fiscal year. We delivered record high net sales and profitability for both the 3 12 month periods with improved gross profit margins. Speaker 100:03:21Our results underscore the tremendous progress we are making across the organization, thanks to the dedicated efforts of our employees and the positive impact of the strategic initiatives undertaken over the past 2 years. Our top line results marked the 6th consecutive quarter and the 3rd consecutive year of double digit net sales growth, totaling $443,900,000 up 10.8 percent for the quarter and $1,560,000,000 of 12.9 percent for the year, reflecting $178,000,000 in incremental sales. More importantly, our results were driven by continued growth across all three of our business segments on both a quarterly and a full year basis, highlighting the health of our business and consumer appeal for our products and brands. I am pleased with the success of our work to improve margins and drive profitability. Gross margin improved to 32.8% and 30.1% for the quarter year respectively. Speaker 100:04:33And we've lowered distribution expense as a percentage of revenue for both periods. This led to operating income and adjusted EBITDA increasing by 93% and 55.2% respectively for the 4th quarter and 77.2% and 46.3% For the full year, Ken will review our financial performance in more detail in just a few minutes. As I reflect on the year, Our company has never been more aligned in its vision and strategy. We ended this year with strong momentum across our business segments, Guided by 5 core strategies: grow and protect our brand dominate core categories Sell across the portfolio, invest in our future and embrace our culture. We are collaborating better than ever and finding new sales opportunities across our portfolio. Speaker 100:05:33This strategy is aligned to our financial goals To grow sales above the market, create expense leverage and grow profits faster than sales, I would like to highlight a few of the successes from the 4th quarter that support our strategy. Let me start with our focus on our strategies to grow our core brands and products and how we are collaborating and cross selling across the organization. We increased our marketing investments and added new production lines to support growing opportunities with Super Pretzel. In the 4th quarter, We launched filled jalapeno nuts nationwide with a major theater customer and introduced a private label Bavarian pretzel With a major food service distributor, in retail, I am pleased to report that we gained Superpretzel availability with Walgreens, while also expanding pretzel dogs with new retail customers. In addition, we launched frozen super pretzel of varying sticks with major grocery and mass merchant customers. Speaker 100:06:40Looking ahead to fiscal 2024, We are planning to launch a system wide pretzel croissants with a strategic convenience customer. We also expect to be able to further expand frozen super pretzel products among major retailers throughout the year and have plans To add fresh baked super pretzel, Bavarian sticks and buns to the in store bakery category of several strategic customers. Moving on to our ICEE brand. I'm so proud of our frozen beverage team for delivering a record quarter and year of sales and profitability. We continue to make progress growing consumption and placement of our ICEE and of our ICEE and Slush Puppy brands in amusement, mass merchandisers and restaurants. Speaker 100:07:31Also, The theater industry continues to gain momentum and our Mexico team delivered another stellar quarter year. As we look forward, Our team is rolling out a self serve program to a major club store customer in early fiscal 2024 And we continue to have positive momentum with tests in QSR and family entertainment channels. Turning to Olaf Churros. We are really pleased with the success of this brand in its 1st year. Sales grew over 23% for the year and 8% for the 4th quarter. Speaker 100:08:09With the production capacity we added this year, We have a strong pipeline of growth opportunities. This quarter, we convinced the retail rollout of Olap brand churros in the Northeast with several regional grocery retailers. We also successfully completed a market test with a major QSR sandwich chain for churros that will begin to roll out system wide in early calendar 2024. The best example Of how we are executing product development and leveraging cross selling opportunities is in Dip and Dots. You may recall, we closed the acquisition of Pip and Dot in June 2022. Speaker 100:08:51In the 1st year under James Day's ownership, The brand achieved all time record high sales and profitability, growing over 13% 80%, respectively. We are bringing new flavors to the market like the recently launched Icy Cherry and Blue Razz Ice flavor, the best new flavor launch in Dippin' Dots' history. And we are looking forward to next year's launch of a new cookie dough offering called prosetti dough. Our rollout for Regal Theatres is almost complete and we are adding test locations for 2 other major theater chains and expect to continue building our presence in the theater channel in 2024. Also, We are testing a vending program in amusement parks, clubs, theaters and entertainment venues and have an in store freezer test With a major convenience store. Speaker 100:09:48We also remain laser focused on improving our go to market strategies, including finding added cross selling opportunities, securing new client wins and entering and growing in new geographic markets. We are excited about the opportunities ahead of us in the international markets such as Mexico. We have recently added an international business development leader to identify opportunities to expand key products and brands like Super Pretzel, Ol'Achuros and Dippin' Dots into new markets. Our product portfolio extends across over a dozen product categories from soft pretzels, churros And handhelds, the bakery goods, dog treats, Italian ice and frozen beverages. We also sell into more than a dozen distinct venues, including school cafeterias, theaters, amusement parks, Airports, stadiums and supermarkets as well as restaurants and convenience stores. Speaker 100:10:54Our team is aligned and focused on driving plans to leverage our portfolio of products to add growth across our many channels and customers. As we've discussed for the last couple of years, one of our core strategies is to build capability and invest in our future. Let me begin with our warehousing network. I am pleased to report that we now have 2 new regional distribution centers open, 1 in Texas and the other in New Jersey. We are on track to open the 3rd RDC in Arizona in early calendar 2024. Speaker 100:11:32The 3 RBCs will be used to store and distribute most of our products as we decrease our points of distribution from over 30 The less than 10. This will include added freezer storage capacity for Dippin' Dots, which is really the key to our growth plans for that brand. It will also result in improved customer service and lower distribution costs. We expect this initiative to provide at least $10,000,000 in annual cost savings as we ramp up over the next 2 years. As you know, We are partnered with NFI over a year ago to manage our logistics and transportation network and are seeing efficiency improvements that are lower in shipping, handling and storage costs. Speaker 100:12:20NFI now manages all of our transportation network, improving truck capacity and routing and enhancing customer service. We are also just beginning to leverage the 6 Recently added state of the art production lines as we add production capacity to our core products such as pretzels, Churros and Frozen Novelties. And not only do these lines provide more capacity, they are creating production efficiency and higher output metrics through better automation. Transitioning to M and A, we continue to be highly disciplined in our approach We evaluate opportunities that complement our brand portfolio and business model and that offer attractive shareholder returns. Financially, we have the resources and the balance sheet to invest in growth when opportunities align. Speaker 100:13:15In summary, our momentum is strong And we are aligned on a strategy that positions us well for continued success in fiscal 2024 and beyond. I am so proud of the J and J teams and their relentless focus on satisfying the consumer every time they enjoy one of our products. Our focus on cross selling is opening up new opportunities in channels, which creates new selling opportunities across our portfolio. The diverse nature of our business along with the power of our brands and the affordable price point of our products It's something that we are confident will continue to serve us well. We believe this momentum together with improved operational efficiencies Position J&J to deliver long term value to our employees, partners and shareholders. Speaker 100:14:08Our success is anchored by a winning culture And I want to thank our JNJ employees for their efforts to deliver a record 2023 year. With that, I would now like to pass the call over to Kim to review our financial performance in more detail. Ken? Thank you, Dan. To echo Dan's comments, J and J ended fiscal 2023 on a strong note, including record 4th quarter and annual net sales and profitability. Speaker 100:14:38I'd like to take a few minutes to walk you through the results. Net sales for the quarter totaled 443,900,000 A 10.8% increase versus the prior year and sales for the full year totaled $1,560,000,000 a 12.9% increase versus full year fiscal 2022. Our sales results this quarter And fiscal year included an extra week compared to the prior year and contributed an estimated 6.8% and 2% to sales growth respectively. Foodservice, our largest segment, saw Q4 'twenty three sales exceed Q4 'twenty two by 13 point $5,000,000 to $270,300,000 or an increase of 5.3 percent, including approximately $35,200,000 in sales The recent acquisition of Tip Nuts. We saw continued strong sales across all of our product lines, including a 14.6 Percent increase in pretzels, 9.7% increase in frozen novelties, an 8.1% increase in churros And a 2.2% increase in bakery, Dippin' Dots sales increased almost 12% in the quarter. Speaker 100:15:58Handheld sales decreased 21.8%, driven primarily by contractual cost true up agreement. Volume for core Foodservice handhelds increased for the quarter. This led to Q4 2023 Foodservice segment operating income of $17,500,000 or an increase of 175.8 percent versus the prior year period, reflecting top line growth as well as improvement in margins and added leverage from lower distribution expenses. Moving to our retail segment, Q4 2023 retail sales increased 21.2% to $64,800,000 compared to Q4 'twenty two. Retail sales were driven by a 205.5% growth in handheld sales, A 32% increase in biscuit sales and a 16.7% increase in frozen novelty sales led by Luigi's Dogsters and Icy Sticks. Speaker 100:16:55Sole pretzel sales grew by 6.7% versus the prior year period led by the expanded placement of Super Pretzel Bavarian Stakes million or an increase of 2 37% versus the prior year period, driven by top line growth as well as improvements in margin and lower distribution expenses. As it relates to our 3rd segment, Frozen Beverages segment sales were $108,700,000 and beat Q4 2022 sales by 20.6%. Beverage sales grew 24.8 percent or $14,200,000 higher than Q4 2022 led by double digit volume growth And healthy consumer trends across key channels including convenience, amusement parks, Mass Merchants, Restaurants and Theaters. The Barber and Hammer effect drove strong theater performance and growth above pre pandemic levels as well as higher Food and beverage consumption per visit. Machine service revenues increased 6% versus the prior year period reflecting Strong maintenance call volumes, while equipment sales increased 33.2%, representing our 2nd largest year ever It was driven by strong growth from new clients and convenience customers. Speaker 100:18:25Q4 2023 operating income in the frozen beverage segment also improved to a record $20,600,000 a $6,400,000 increase compared to Q4 2022. Overall, we've made significant progress, improving gross margins and distribution expenses. Our focus on improving gross margins Through an improved mix of core products, better calibration of cost and price and cost to goods efficiencies, it's clearly benefiting our results. For the quarter, gross profit totaled $145,700,000 a 25.8% increase compared to Q4 2022. This led to a gross margin of 32.8 percent favorably comparing to 28.9% in Q4 'twenty two. Speaker 100:19:13This allowed us to reach our goal of 30% gross margin for the full year, a marked improvement from 26.8 percent for the full year in 2022. Overall, we experienced slight deflation for the quarter. The cost of key ingredients including flour, oils, dairy and meats have declined, but we are still experiencing double digit inflation in sugar Sweeteners, which continues to impact products such as fovenomelites and vape goods. Looking at expenses. Total operating expenses increased $9,800,000 or 10.4 percent, representing 23.4% of sales for the quarter compared to 23.5% in Q4 2022. Speaker 100:19:59Distribution cost was 10.8% Sales in the quarter much improved compared to 12.4% in the prior year period. Marketing and selling expenses represented 7% of sales versus 6.4% in the prior period, driven primarily by incremental promotional and marketing support on core brands and new products. Administrative expenses were 5% in sales in Q4 2023 compared to 4.3% in Q4 2022 attributable to higher performance based bonus payments compared to the prior year and investments in capability. This led to an operating income of $41,700,000 or a 93% increase compared to $21,600,000 In Q4 2022, adjusted operating income was $45,800,000 or a 77.8% increase compared to Q4 2022. For the quarter the year, the extra week contributed $2,000,000 in operating profit. Speaker 100:21:05After the impact of income taxes of $11,300,000 Compared to $3,900,000 in Q4 of fiscal 2022, net earnings increased to $30,400,000 resulting in reported earnings per share of $1.57 or $4.08 for the full year. This compares to $0.90 $2.40 in the prior year periods. Adjusted diluted earnings per share were 1.7 $3 for the quarter $4.50 for the full year compared to $1.05 $2.76 in the prior year periods. Adjusted EBITDA increased 55.2 percent to $62,200,000 from $40,100,000 in the prior year period And our effective tax rate was 27% in the 4th quarter. Looking at our liquidity position, I'm pleased with our ability to quickly delever on the back of the dividend Dots Acquisition. Speaker 100:22:05We were able to reduce our debt from approximately $125,000,000 when we acquired the Epigen Dodge to $27,000,000 at the end of fiscal Our focus will continue to be on maintaining a healthy balance sheet and prudent leverage positioning, which positions us to continue investing in the growth of our business and returning value to our shareholders. Our cash and marketable securities at the end of the quarter were $49,600,000 In addition, we have ample availability under our revolver of approximately $188,000,000 in additional borrowing capacity. In summary, we are confident that the decisions we are making and the Operator00:23:17And our first question is going to come from the line of John Anderson with William Blair. Your line is open. Please go ahead. Speaker 200:23:24Hi, good morning everybody. Congrats on the quarter. Speaker 100:23:27Thank you very much, John. Thanks, John. Speaker 200:23:31I wanted to you mentioned in the prepared comments that I think it was kind of a Forward looking thought around maybe an algorithm, longer term algorithm. You mentioned sales growth above That of your principal end markets, expense leverage and earnings growth as a result above The rate of sales. Could you talk a little bit more about that? Did I read that right as Maybe kind of a new way to communicate how you think about the growth of the business top and bottom line going forward And perhaps then kind of narrow in on 2024 Using that as a framework and how you're thinking about end market growth, your own growth and perhaps margin expansion? Thank you. Speaker 100:24:33Yes. Hey, John, this is Ken. Great question. Yes, we've been operating kind of under this What I call financial formula for really the last couple of years and probably haven't stated as good As we did in this script, but it really gets to what I talked about before is we're focused on the entire P and L. And we've kind of Foundationally, set the goal that sales wise, we want to drive our business to grow sales faster than the market. Speaker 100:25:05As we're doing that and as we're investing in capabilities and efficiencies, our job is really to leverage the P and L. As those sales grow at that pace, that obviously provides you a better ability to do that. At the same time, a lot of the initiatives that we've undertaken have been done To improve, say, distribution expenses as a rate of sales, figure out how we can operate more efficiently in our plans. So day in and day out, we kind of operate under that kind of financial formula to think about how we should kind of hold ourselves accountable Managing this business both now and yes going forward. Speaker 200:25:45And then that's helpful. And As we look ahead to fiscal 2024, I mean, it sounds like you have a tremendous amount of New business activity, a lot of cross selling going on, a lot of New distribution for, I guess, new items in both in foodservice and at retail, I see placements in food away from home venues etcetera. I mean How should we be thinking broad strokes about Speaker 100:26:27what are your growth Speaker 200:26:36And then Could you talk also about maybe price and volume? Are you still benefiting from price right now? And would you expect going forward that the growth is going to largely be volume driven? Speaker 100:26:53Good questions, John. We're feeling good about and you saw that in my comments, feeling really good about the momentum that we have going into We've talked a lot about the different areas of our business that we're working on and one of those is the cross selling effect Across our businesses, we have such great relationships in different areas that we're able to bring other size of our businesses in and introduce the products and we really see that working. And as I talked about, we have a really nice pipeline Coming into 2024, so we're feeling pretty good about that. From a price and volume standpoint, we were fortunate in this Last quarter to see volume really increase across our categories, just about all of them. And we think that there's an opportunity for us to continue to do that. Speaker 100:27:48I'll let Ken talk about the pricing, but I think we've pretty well lapped that pricing effect And we'll be looking at some additional pricing in some of the areas in 2024 as well. Yes, John, if you recall from prior calls, the last price increase we took was last, kind of call it September, October. So we've lapped The other 2 we certainly lapped and we've lapped portions of that, but there was a little bit of price increase benefit in the past in this Quarter Q4, but the really good sign as Dan said is much more of that growth is coming from Volume, particularly in retail and frozen beverages, had really nice volume quarters. And yes, you're correct. Given where the kind of the inflation deflationary environment is right now, as we Forward, we really expect probably more of our growth to be from volume than from price as we look to the next year. Speaker 200:28:54Okay. One more for me and I'll get back in the queue. You were able to achieve And your gross margin, I guess, near term or medium term gross margin objective of getting to 30% in this fiscal year. And you finished really strong in the back half, north of I guess in the Second half of the fiscal probably north of 33%. And I know there's some seasonality in there, etcetera. Speaker 200:29:27But I guess not to put you under the gun, but what's the is there kind of a new interim target Or should we is there more room to move in a constructive direction in terms of gross margin? I'm just thinking about your commentary around New production lines that are scaling and more efficient, the focus on core brands and the mix Of your business and that being beneficial, it would just seem there's more room for improvement on that gross margin line, but I don't want to get ahead of myself in thinking about that. Thanks. Speaker 100:30:05Right. Another good question and you know we've been talking about this now for over a couple of years and our goals that Ken and I have wanted to drive And to get to that 30% gross profit margin, really proud of the teams to have followed the strategies to allow us to get there. And yes, John, we might be a little even more bullish there. We think our strategies are working. We think some of the New lines allow us to make products more efficiently. Speaker 100:30:36We think our teams are working hard in every facet And are starting to look at that 30% as a floor and which we can grow from. How quickly? Again, we have some Seasonality to it, we're coming off the back end of the summer months where EBITDA and IC are a big part of our sales. And as you get into the winter months that isn't as strong, but we think we can continue to grow from where we landed this year for sure. Great. Speaker 100:31:06Thanks. Speaker 200:31:08Thanks. Thank you guys and congrats again. Good luck. Speaker 100:31:11Thank you, John. Operator00:31:13Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Conor Radigan with Consumer Edge. Your line is open. Please go ahead. Speaker 100:31:29Hey, guys. Good morning. Thanks for taking our questions. Good morning, Connor. Good morning, Connor. Speaker 100:31:35Yes. So Dan, I think I just heard you mention that you're expecting some Pricing next year. And so if I'm not mistaken, you guys are pretty much back to pre pandemic margins with deflation plus commodities. I guess just how do you go to customers to sort of push that pricing through while they know you're experiencing deflation? And I guess maybe could you provide a little color into your visibility, into Your input costs for next year and maybe any hedging you have in place. Speaker 100:32:01And I guess should we kind of expect that deflation to continue next year? Thanks. Good question, Conor. And we are experiencing deflation in some of the areas and yet we are having double digit inflation in others Like sugars and sweeteners and that impacts some of our business pieces like the icy side or the dip and dust side or pieces of our Frozen Novelies. And so there will be some areas that We will be able or will be taking price increases and probably need to, maybe have needed to already. Speaker 100:32:40And yet there will be other areas that we'll be taking a look at and I'm sure we'll be challenged in and we're prepared for those areas as they come. So there will be some pricing that we'll take. I see it pretty consistent about doing that at the 1st of the year, and I believe that we're scheduled for that again. And Ken, do you want to mention the other piece of that? Yes. Speaker 100:33:04Connor, in terms of kind of Cover the contracts. I couldn't say enough good things about the procurement organizations, whether it's flower, whether it's Sweeteners, whether it's something like eggs or whatever, I think they're managing that very well. In some cases, we've got contract out The next 3 months, some cases it would be 6 to 9 months, but think we're really well positioned to Kind of maintain and manage and minimize any other inflation or maximize deflation in that and how we buy. Yes. In terms of the outlook, I mean, it's always hard to say. Speaker 100:33:47You've seen different political and just International things happen that can drive things pretty quickly, whether it's the Ukraine situation. So those wildcards, I think, So out there, but absent any of that, I think it's going to be a pretty stable environment. I mean, I don't see a lot of Significant more deflation, but I think most of these categories will hold pretty well. And so I don't expect to see a lot of inflation. CPI, I think came out yesterday at around 2%. Speaker 100:34:24Production CPI is generally about 100 basis points to 150 basis Higher than that because there's a bit of a trail there. As we look forward, I think the forecast on inflation is in that Yes, 1.5% to 2% range. So that's probably how we kind of feel about it and how we're trying to manage what we do in terms of Procuring materials and how we do that. Okay, perfect. Very thorough. Speaker 100:34:53And then I guess just one more for me. So again in your prepared remarks, you mentioned targeting international growth, especially down in Growth especially down in Mexico. I guess first, can you remind us that you currently have any international operations? And I guess just is this more of an exploratory project? Or should we expect this to be a tangible 2024 impact? Speaker 100:35:14And then I guess just kind of stepping back as well, We've seen a lot of CPGs that are U. S. Focused kind of attempt to migrate to international markets and we've really run into And also experiencing some profitability challenges given the skew to more traditional retail and also just a lack of scale. I guess just sort of what is the plan in place to sort of drive that distribution growth and maybe minimize those profitability headwinds? Down in Mexico, our operation is really centered around ICEE today and they really had a tremendous year. Speaker 100:35:49They had a record year in both sales and Profits and proud of what that team is doing down there. We want to be able to expand on some of their business. We want to be able to maybe take some of our products That they aren't operating with today and expand them down there such as Dippin' Dots or Some of our snack food items and think that there's a real opportunity for us to grow. We do do a little business internationally today And feel like there's an opportunity for growth for us. And so for kind of really the first time we've brought on an international business leader to help us identify I don't see that being Impactful to our 2024 year, I think it will build over a period of time and we have enough experience to know to be careful about how we do that. Speaker 100:36:44And so we're excited about the opportunity. We're excited about the opportunity of bringing on this business leader and had some experience with him in the past I think that he will hit the ground running for us, but I probably would caution not to be overly optimistic about that in 2024. Okay, got it. Sounds good to me. Thanks, guys. Speaker 100:37:07Thank you, Conor. Operator00:37:09Thank you. And one moment as we move on to our next question. And it looks like our next question is going to come from the line of Todd Brooks with The Benchmark Company. Your line is open. Please go ahead. Speaker 100:37:32Hey, thank you and congrats on a strong quarter to end Strong year. Thank you very much, Todd. It's a great way to end the year for sure. Yes. Thank you, Todd. Speaker 100:37:41Good morning. Good morning. Dan, I want to start off. When you started rattling off new opportunities for 2024 and John kind of hit on this, it was Quite the laundry list. I don't necessarily remember that much internal momentum at J and J. Speaker 100:37:57Could you maybe highlight for us The 2 or 3 most impactful opportunities as you see it for 2024 that investors should be most focused on? We really do have a great pipeline. Our snack food side led by Bjorn Leiser is doing such a good job Identifying opportunities as we are building capabilities to be able to grow within some of our core markets. You've heard that talked about in our Core strategies and so some of the great opportunities we have are right within our core. I love what we're doing. Speaker 100:38:33We released our Super pretzel sticks this past quarter and they sold really, really well. And not surprised by that either, Todd. I knew that was going to be a good hit and it was. And I think we have some great opportunities there within the retail environment. Also Within the retail environment, we released the Olah Churros and early readings on that are strong and I think that will continue to grow Alongside the growth of the super pretzel hotdogs that we make that I think have a real So some really good things inside retail. Speaker 100:39:12On the boot service side, you heard me touch on a Test that we had over this past quarter with a large sandwich chain that is going to roll out Come January of 2024, I think that has a really big impact that can make a difference for us in this Coming year, again, able to do those things because we've built that capacity out there. On the bakery side, I love what they're doing there. We've been re Shaping that piece of our business, but we're going to be able to release some of our core products, the sticks and the buns inside the bakery and think that has some real Opportunities for growth in 2024 and ICE keeps chugging along. ICE has an opportunity in a club store To move our machines from a pre serve to a self serve and early tests on that and we've been in the test mode for a while Are really strong and have a great impact on those sales and they're in test with a couple of QSR chains that I think you have the opportunity to come through for this coming year. So I love where we're heading. Speaker 100:40:20The pipeline looks good. The sales team On led by Bjorn on Snack Foods and Aaron Winkelmann in the ICEE side and Matt Enderle on Tip N Dot's side are all We had a sales meeting last week and had the 3 of them on stage. It was really impressive to see the kind of pipeline they have built. And so it gives us good confidence going into 2024. That's great. Speaker 100:40:47Thanks Dan. A follow-up, you talked about Six new lines that have been put in place for the core products over the course of this year. I don't think you've ever sized the revenue unlock that those lines could represent J and J, but can you maybe at least talk from a percentage basis how much of the benefit was realized in fiscal 23 versus how much of that benefit you could see harvested in 2024 and 2025, just looking at the overall opportunity? Yes, 2023 not so much. We're kind of building those out during 2023 and it really was much of a Canadian in the back Half of the year, so not too impactful in the 2023 year. Speaker 100:41:30They're likely to have a chance for it to grow in 2024 With the pipeline that I just talked about, some of those opportunities required those investments that we made in the 6 new lines. And so happy with where they're at there. I think what we had said before, Todd, is that the opportunity of those 6 new lines Allows us to grow sales by $150,000,000 or above, right? And so I think that's where we're really shooting for. And I think that we can see a piece of that come through in 2024 with those opportunities that I just talked about. Speaker 100:42:07Great. And then one for Ken and I'll jump back in queue. John kind of pointed out the seasonal nature of Gross margins. I'm just wanted to see if we can maybe level set for our modeling purposes. I know last year we saw basically A 300 basis point ish gross margin dip in the first half of the fiscal year versus Second half of fiscal twenty twenty two, we're obviously working off a higher base. Speaker 100:42:38Would you expect that magnitude of retrenchment In the first half of fiscal twenty twenty four, our modeling, so kind of down to that 30% level from the 33% you put up in the back half year? Yes. That's a good question, Todd. I think the way to think about that is you're right. As we got towards the end of this year, We got our mix humming and we got price caught up. Speaker 100:43:04Inflationary was a bit more As our friend than it was earlier in the year, you start to see us get to those marks that we set with goals of ours. We ended up finishing The full year at 30.1 percent gross margin. And I think Dan and I talked about that was kind of the floor. We had to get back there. And I think we expect to be able to as this goes forward to get beyond that number. Speaker 100:43:32But yes, there is a seasonal impact. So as you look at Q1 and Q2, I think the way to think about that is the trajectory of being better than the prior year will should continue. But we're not all of a sudden going to do 30% in Q1 because of the Slow down in this winter months of some of those high margin areas like Dippenbach and ICEE. But we should on kind of an equivalent improvement basis Better than what we were in Q1 of the year ago and Q2 of the year ago. And then probably as we get into the back half of the year, You probably see gross margins probably pretty similar to what they were in Q3 and Q4 of this year. Speaker 100:44:18Okay. Perfect. Thanks, Tim. Operator00:44:21Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Andrew Wolf with C. L. Kane, your line is open. Operator00:44:37Please go ahead. Speaker 200:44:40Good morning. And Dan, congratulations on your election Chairman of the Board. Speaker 100:44:45Thank you very much, Andrew. Good morning to you as well. Thanks for joining us. So So I wanted Speaker 200:44:53to ask, given the current grocery environments, you guys are having good volume growth, particularly And on the shelves I assume. But as you look to the current planning year fiscal 2024, Is it fair to say the predominant or maybe even all of the planned volume is going to come from new doors and new distribution, Maybe line extensions or are you guys planning any velocity gains as you kind of ramp up the marketing spend as Speaker 100:45:25I think we'll have a little bit of both. I do think we have some great opportunities for Continued expansion on some of our core products, like what we talked about the pretzel sticks, I believe that will continue to grow. I think Luigi is continuing to grow. Our ICEE frozen novelty is growing well. So I think we'll have that Continued, Dogsters is doing really well. Speaker 100:45:49Dogsters did well in the 4th quarter and think that we have some good opportunities for new outlets with that, but I also think that we'll see a little bit of increase in some of our core products too. I think we've put a niche in an area that allows us to be able to do that. We're watching that consumer really closely And watching what others are saying and doing and we'll be prepared for whatever headwind comes our way. But we think we have some good opportunities for continuing to not just grow volume with what we have today, but by garnishing new outlets as well. Speaker 200:46:29Okay. And I also wanted to kind of follow-up to Todd's questioning on the unlock. When you get the 3rd RDC open On Dippendots, you've referenced a few times that's really that business needs national frozen capability to be fully distributed. Any chance you could help us see a feeling for how much Speaker 100:46:52in addressable market increases What it really Speaker 200:46:55what it does for the business either quantitatively or qualitatively in terms of Speaker 100:46:59how much more of the market you can Speaker 200:47:00go I love what the Speaker 100:47:03team is doing at the docks. We had the best year sales and profits in its history And feel like we're still just scratching the surface. I think really gelling together fit really nicely synergies from their organization to Ours is just really fit good. I love what they have in test today. I talked about this in the opening there. Speaker 100:47:28The Regal Theater now is pretty much completely rolled out. A couple of other big theater chains expanding their tests And the team is out there knocking on a lot of doors and having some great success. I think that will continue to grow nicely for us. Love what they're doing, Really happy with that acquisition. Ken, I don't know if you want to add any color to that at all. Speaker 100:47:52Yes. I think Dan summarized it well. I think the thing to think about with Bip and Dot is, one, we just came out of having them for a full year. We'll have, I think we even mentioned this, double digit growth in that business. We would expect to be able to grow that business next year double digits. Speaker 100:48:11Production capacity, we have capacity to hit those numbers and produce that. It was really the freezer and storage space that We had to address to be able to move faster and keep up with that growth. And with the added freezer space at At Terrell and at Woolwich, the 2 facilities that are now open, we feel really good about really meeting any kind of opportunity In the foreseeable future, I don't have an exact number on what that means. All I can tell you is it's a part of the enablement Helping us continue to grow this business double digits. Speaker 200:48:50Okay. Fair enough. Speaker 100:48:52And the last thing is for Speaker 200:48:53you Ken as well. Could you just size up the true up expense that you had to record against sales? And tell us if that was also a Full flow through as a reduction to earnings as well, the cost plus arrangement and the Speaker 100:49:11Yes. The way to speak to that, I think we may have said this before Andrew is We have an agreement with a customer that would make they hand out for where we pass on Any cost increases or decreases, it's a quarterly true up for that customer as you can probably appreciate Really benefited us. I mean, it's going through 20 plus percent inflation. And but now that we've had deflation, we've passed those cost reductions back to that Customer, but the profit of that stays whole. So we continue to make the same profit because we're kind of locked into a Profit margin in the contract and the volume of those core SKUs continues to grow. Speaker 200:50:00Okay. So that was all intra quarter. It wasn't for previous accrual rates that were too high. Speaker 100:50:08No. Yes, that was inter quarter. That was each quarter give or take, if things stay stable, then you wouldn't see much of any movement there. Speaker 200:50:18So our handheld sales down this quarter last quarter basically because of deflation and the contract arrangement? Speaker 100:50:24Or is Speaker 200:50:24there other reasons Speaker 100:50:27the sales dollars are down? The sales dollars are mainly down because of the contractual Pass through of those costs back to the customer. Speaker 200:50:37Got it. Thank you. Operator00:50:41Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Robert Dickerson with Jefferies. Your line is open. Please go ahead. Speaker 100:50:58Great. Thanks so much. So guys, I'm just curious, I mean, maybe it's on me, but I didn't really realize there was going to be a 53rd week. So once we back out the 53rd week, you get to sales growth about 4% in the quarter. And while I respect that you don't always break out kind of pricing volume In relative to other companies, I'm just curious, I could maybe add some color, would you say of the 4% like most of that still is pricing? Speaker 100:51:28I'm just trying to gauge Tired volume trajectory, especially vis a vis kind of the overall backdrop we're seeing right now and kind of Market food in the U. S. Yes. Let me kind of explain it this way. And there's a lot into In terms of really trying to narrow down the puts and takes of 1 extra week. Speaker 100:51:53And so we summarize that In the release, based on our business overall, but if you take two parts of our business, retail In frozen beverages both up over 20%, you back out the extra week. Both of those businesses were up Double digits and both would have been atorneardoubledigitvolumegrowth. So very healthy quarters there. If you look at foodservice, given the 5.3%, but you've got a handheld Negative against that, that I just explained to Andrew, which was really more of a cost pass through, not a volume They start to break that out. Foodservice would have grown 8.5% without that effect. Speaker 100:52:44If you focus on the core categories in foodservice, pretzels, churros and frozen nominees, those were up 11.5%. So you start to see even peeling back the extra week, a very strong quarter and really volumes up across the board Probably other than bakery and that's really a part of what we've been talking about. In bakery, we've been dialing in on SKUs and getting out of SKUs that weren't profitable. So that's probably the best way to kind of think about each of those segments And the 53rd week. Okay, great. Speaker 100:53:23So kind of net net still Positive volume growth kind of despite pricing you've taken kind of overall? Yes, yes, absolutely. Okay. And then that's great. And then I guess just kind of more broadly speaking, just Kind of want to get your feel around kind of current consumption behavior like what you've been seeing, right? Speaker 100:53:49We've heard from, Let's say some confection companies that might say, well, maybe we've seen a little recent pressure and consumers might be shopping the perimeter Store, maybe they're looking for products that are more satiating in quality. Everyone's kind of shopping for more value. There's been channel shifts. I got Walmart this morning, I was saying last couple of weeks of the quarter definitely saw some pressure. But it sounds like kind of given the positive volumes that consumers We're still kind of walking into a Wawa buying a snack. Speaker 100:54:23We're going to movie theater and getting an icy drink. So I'm just Curious kind of what your feel is around consumption behavior with your product? Like why are you still able to generate this volume? Because it's the value proposition, Right. That tastes good. Speaker 100:54:44Appreciating anything you have would be very helpful. Right. Good morning, Rob. How are you doing? Great. Speaker 100:54:52Thank you. Good. Hey, I think it's a great question and kind of expected and anticipated to get something along that We're watching the customer and the consumer really, really closely and watching that behavior. We faced a lot of headwinds since we've been in this position. We're prepared as a company to kind of be able to pivot In any direction that we need to pivot, we've talked a lot about the resiliency of the J and B portfolio. Speaker 100:55:25Partly, we sell across a lot of different channels with a lot of products, many of them With tremendous brand that people follow and use as a treat or a reward. And I really believe it's that diversification that we have across channels, across brands That allows us to be resilient during times like this, right? You watched it even as we've been in charge here And led the organization. There's been times when the theater business is down, but the retail is way up, right? And then we go through a year like last year where Theaters are way up and we're challenged in other areas. Speaker 100:56:09We're really proud of the diversification that we have The products that we have and the following that the brands are and I think that allows us to withstand periods like this. All right. Super. Fair enough. Thank you, guys. Speaker 100:56:25Thank you, Rob. Thank you, Rob. Operator00:56:27Thank you. And I would now like to Turn the conference back over to Dan Fashner for any closing remarks. Speaker 100:56:33Great. Thank you very much. In closing, In 2023, we delivered the strongest year in the history of the company. It took tremendous hard work, Perseverance and agility from every one of our employees and partners and I could not be prouder of what we have accomplished Are more excited about what lies ahead. We expect to deliver another year of strong sales and earnings growth in fiscal 2024 as we invest in our amazing portfolio of brands, additional capacity and capabilities. Speaker 100:57:06We look forward to updatingRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallJ&J Snack Foods Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Annual report(10-K) J&J Snack Foods Earnings HeadlinesAnalysts Offer Insights on Consumer Goods Companies: J & J Snack Foods (JJSF) and Philip Morris (PM)April 24 at 5:13 PM | markets.businessinsider.comJ&J Snack Foods Refreshes SUPERPRETZEL® with a Bolder Taste and Softer TextureApril 24 at 9:00 AM | prnewswire.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.April 26, 2025 | Paradigm Press (Ad)J & J SNACK FOODS SCHEDULES FISCAL 2025 SECOND QUARTER EARNINGS CONFERENCE CALL AND WEBCASTApril 15, 2025 | globenewswire.comJ&J Snack Foods: Despite Some Promising Signs, I'm Staying Away For NowApril 15, 2025 | seekingalpha.com3 Reasons to Avoid JJSF and 1 Stock to Buy InsteadApril 7, 2025 | msn.comSee More J&J Snack Foods Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like J&J Snack Foods? Sign up for Earnings360's daily newsletter to receive timely earnings updates on J&J Snack Foods and other key companies, straight to your email. Email Address About J&J Snack FoodsJ&J Snack Foods (NASDAQ:JJSF) engages in the manufacturing of nutritional snack foods and distribution of frozen beverages to the food service and retail supermarket industries. It operates through the following segments: Food Service, Retail Supermarkets, and Frozen Beverages. The Food Service segment includes soft pretzels, frozen novelties, churros, handheld products, and baked goods. The Retail Supermarkets segment offers soft pretzel products including Superpretzel, frozen juice treats and desserts, including Luigi's real Italian ice, Minute Maid juice bars and soft frozen lemonade, Whole Fruit frozen fruit bars and sorbet, Philly Swirl cups and sticks, ICEE Squeeze-Up Tubes and dough enrobed handheld products including Patio burritos. The Frozen Beverages segment provides frozen beverages to the food service industry primarily under the names ICEE, SLUSH PUPPIE, and PARROT ICE in the United States, Mexico, and Canada, as well as repair and maintenance services. The company was founded by Gerald B. Shreiber in 1971 and is headquartered in Mount Laurel, NJ.View J&J Snack Foods ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 3 speakers on the call. Operator00:00:01Welcome to the J and J Snacks Foods Fiscal 2023 4th Quarter Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Norberto Aja, Investor Relations. Operator00:00:33Please go ahead. Speaker 100:00:36Thank you, operator, and good morning, everyone. Thank you for joining the J. J. Snapple Foods fiscal 2023 4th quarter conference call. We will start in just a minute with management's comments and your questions. Speaker 100:00:49But before doing so, let me take a minute to read the Safe Harbor language. This call contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call do not relate to matters. Historical facts should be considered forward looking statements, including statements regarding management's plans, strategies, goals, expectations and objectives as well as our anticipated financial performance. These statements are neither promises or guarantees that involve known and unknown risks, uncertainties and other important factors that may cause results, Performance or achievements could be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Speaker 100:01:35Factors discussed in our annual report on Form 10 ks for the year ended September 30, 2023 and our other filings with Any such forward looking statements represent management's estimates as of the date of this call, November 16, 2023. While we may elect to update forward looking statements at some point in the future, we disclaim any obligation to do so even if subsequent events Cause expectations to change. In addition, we may also reference certain non GAAP measures on the call today, including adjusted EBITDA, Operating income or earnings per share, all of which are reconciled to the nearest GAAP measures in the company's earnings press release, which can be found in the Investor Relations section of our website. Joining me on the call today is Dan Fashner, our Chief Executive Officer along with Mr. Ken Funk, our Chief Financial Officer. Speaker 100:02:40Following management's prepared remarks, we will go ahead and open the call for a question and answer session. With that, I would now like to turn the call over to Mr. Dan Fashner, J. And J. Max Foods' Chief Executive Officer. Speaker 100:02:53Please go ahead, Dan. Thank you, Roberto, and good morning, everyone. We appreciate you joining us this morning to discuss J and J's Snack Foods' Fiscal 2023 4th quarter and full year results. J and J had a great ending to our fiscal year. We delivered record high net sales and profitability for both the 3 12 month periods with improved gross profit margins. Speaker 100:03:21Our results underscore the tremendous progress we are making across the organization, thanks to the dedicated efforts of our employees and the positive impact of the strategic initiatives undertaken over the past 2 years. Our top line results marked the 6th consecutive quarter and the 3rd consecutive year of double digit net sales growth, totaling $443,900,000 up 10.8 percent for the quarter and $1,560,000,000 of 12.9 percent for the year, reflecting $178,000,000 in incremental sales. More importantly, our results were driven by continued growth across all three of our business segments on both a quarterly and a full year basis, highlighting the health of our business and consumer appeal for our products and brands. I am pleased with the success of our work to improve margins and drive profitability. Gross margin improved to 32.8% and 30.1% for the quarter year respectively. Speaker 100:04:33And we've lowered distribution expense as a percentage of revenue for both periods. This led to operating income and adjusted EBITDA increasing by 93% and 55.2% respectively for the 4th quarter and 77.2% and 46.3% For the full year, Ken will review our financial performance in more detail in just a few minutes. As I reflect on the year, Our company has never been more aligned in its vision and strategy. We ended this year with strong momentum across our business segments, Guided by 5 core strategies: grow and protect our brand dominate core categories Sell across the portfolio, invest in our future and embrace our culture. We are collaborating better than ever and finding new sales opportunities across our portfolio. Speaker 100:05:33This strategy is aligned to our financial goals To grow sales above the market, create expense leverage and grow profits faster than sales, I would like to highlight a few of the successes from the 4th quarter that support our strategy. Let me start with our focus on our strategies to grow our core brands and products and how we are collaborating and cross selling across the organization. We increased our marketing investments and added new production lines to support growing opportunities with Super Pretzel. In the 4th quarter, We launched filled jalapeno nuts nationwide with a major theater customer and introduced a private label Bavarian pretzel With a major food service distributor, in retail, I am pleased to report that we gained Superpretzel availability with Walgreens, while also expanding pretzel dogs with new retail customers. In addition, we launched frozen super pretzel of varying sticks with major grocery and mass merchant customers. Speaker 100:06:40Looking ahead to fiscal 2024, We are planning to launch a system wide pretzel croissants with a strategic convenience customer. We also expect to be able to further expand frozen super pretzel products among major retailers throughout the year and have plans To add fresh baked super pretzel, Bavarian sticks and buns to the in store bakery category of several strategic customers. Moving on to our ICEE brand. I'm so proud of our frozen beverage team for delivering a record quarter and year of sales and profitability. We continue to make progress growing consumption and placement of our ICEE and of our ICEE and Slush Puppy brands in amusement, mass merchandisers and restaurants. Speaker 100:07:31Also, The theater industry continues to gain momentum and our Mexico team delivered another stellar quarter year. As we look forward, Our team is rolling out a self serve program to a major club store customer in early fiscal 2024 And we continue to have positive momentum with tests in QSR and family entertainment channels. Turning to Olaf Churros. We are really pleased with the success of this brand in its 1st year. Sales grew over 23% for the year and 8% for the 4th quarter. Speaker 100:08:09With the production capacity we added this year, We have a strong pipeline of growth opportunities. This quarter, we convinced the retail rollout of Olap brand churros in the Northeast with several regional grocery retailers. We also successfully completed a market test with a major QSR sandwich chain for churros that will begin to roll out system wide in early calendar 2024. The best example Of how we are executing product development and leveraging cross selling opportunities is in Dip and Dots. You may recall, we closed the acquisition of Pip and Dot in June 2022. Speaker 100:08:51In the 1st year under James Day's ownership, The brand achieved all time record high sales and profitability, growing over 13% 80%, respectively. We are bringing new flavors to the market like the recently launched Icy Cherry and Blue Razz Ice flavor, the best new flavor launch in Dippin' Dots' history. And we are looking forward to next year's launch of a new cookie dough offering called prosetti dough. Our rollout for Regal Theatres is almost complete and we are adding test locations for 2 other major theater chains and expect to continue building our presence in the theater channel in 2024. Also, We are testing a vending program in amusement parks, clubs, theaters and entertainment venues and have an in store freezer test With a major convenience store. Speaker 100:09:48We also remain laser focused on improving our go to market strategies, including finding added cross selling opportunities, securing new client wins and entering and growing in new geographic markets. We are excited about the opportunities ahead of us in the international markets such as Mexico. We have recently added an international business development leader to identify opportunities to expand key products and brands like Super Pretzel, Ol'Achuros and Dippin' Dots into new markets. Our product portfolio extends across over a dozen product categories from soft pretzels, churros And handhelds, the bakery goods, dog treats, Italian ice and frozen beverages. We also sell into more than a dozen distinct venues, including school cafeterias, theaters, amusement parks, Airports, stadiums and supermarkets as well as restaurants and convenience stores. Speaker 100:10:54Our team is aligned and focused on driving plans to leverage our portfolio of products to add growth across our many channels and customers. As we've discussed for the last couple of years, one of our core strategies is to build capability and invest in our future. Let me begin with our warehousing network. I am pleased to report that we now have 2 new regional distribution centers open, 1 in Texas and the other in New Jersey. We are on track to open the 3rd RDC in Arizona in early calendar 2024. Speaker 100:11:32The 3 RBCs will be used to store and distribute most of our products as we decrease our points of distribution from over 30 The less than 10. This will include added freezer storage capacity for Dippin' Dots, which is really the key to our growth plans for that brand. It will also result in improved customer service and lower distribution costs. We expect this initiative to provide at least $10,000,000 in annual cost savings as we ramp up over the next 2 years. As you know, We are partnered with NFI over a year ago to manage our logistics and transportation network and are seeing efficiency improvements that are lower in shipping, handling and storage costs. Speaker 100:12:20NFI now manages all of our transportation network, improving truck capacity and routing and enhancing customer service. We are also just beginning to leverage the 6 Recently added state of the art production lines as we add production capacity to our core products such as pretzels, Churros and Frozen Novelties. And not only do these lines provide more capacity, they are creating production efficiency and higher output metrics through better automation. Transitioning to M and A, we continue to be highly disciplined in our approach We evaluate opportunities that complement our brand portfolio and business model and that offer attractive shareholder returns. Financially, we have the resources and the balance sheet to invest in growth when opportunities align. Speaker 100:13:15In summary, our momentum is strong And we are aligned on a strategy that positions us well for continued success in fiscal 2024 and beyond. I am so proud of the J and J teams and their relentless focus on satisfying the consumer every time they enjoy one of our products. Our focus on cross selling is opening up new opportunities in channels, which creates new selling opportunities across our portfolio. The diverse nature of our business along with the power of our brands and the affordable price point of our products It's something that we are confident will continue to serve us well. We believe this momentum together with improved operational efficiencies Position J&J to deliver long term value to our employees, partners and shareholders. Speaker 100:14:08Our success is anchored by a winning culture And I want to thank our JNJ employees for their efforts to deliver a record 2023 year. With that, I would now like to pass the call over to Kim to review our financial performance in more detail. Ken? Thank you, Dan. To echo Dan's comments, J and J ended fiscal 2023 on a strong note, including record 4th quarter and annual net sales and profitability. Speaker 100:14:38I'd like to take a few minutes to walk you through the results. Net sales for the quarter totaled 443,900,000 A 10.8% increase versus the prior year and sales for the full year totaled $1,560,000,000 a 12.9% increase versus full year fiscal 2022. Our sales results this quarter And fiscal year included an extra week compared to the prior year and contributed an estimated 6.8% and 2% to sales growth respectively. Foodservice, our largest segment, saw Q4 'twenty three sales exceed Q4 'twenty two by 13 point $5,000,000 to $270,300,000 or an increase of 5.3 percent, including approximately $35,200,000 in sales The recent acquisition of Tip Nuts. We saw continued strong sales across all of our product lines, including a 14.6 Percent increase in pretzels, 9.7% increase in frozen novelties, an 8.1% increase in churros And a 2.2% increase in bakery, Dippin' Dots sales increased almost 12% in the quarter. Speaker 100:15:58Handheld sales decreased 21.8%, driven primarily by contractual cost true up agreement. Volume for core Foodservice handhelds increased for the quarter. This led to Q4 2023 Foodservice segment operating income of $17,500,000 or an increase of 175.8 percent versus the prior year period, reflecting top line growth as well as improvement in margins and added leverage from lower distribution expenses. Moving to our retail segment, Q4 2023 retail sales increased 21.2% to $64,800,000 compared to Q4 'twenty two. Retail sales were driven by a 205.5% growth in handheld sales, A 32% increase in biscuit sales and a 16.7% increase in frozen novelty sales led by Luigi's Dogsters and Icy Sticks. Speaker 100:16:55Sole pretzel sales grew by 6.7% versus the prior year period led by the expanded placement of Super Pretzel Bavarian Stakes million or an increase of 2 37% versus the prior year period, driven by top line growth as well as improvements in margin and lower distribution expenses. As it relates to our 3rd segment, Frozen Beverages segment sales were $108,700,000 and beat Q4 2022 sales by 20.6%. Beverage sales grew 24.8 percent or $14,200,000 higher than Q4 2022 led by double digit volume growth And healthy consumer trends across key channels including convenience, amusement parks, Mass Merchants, Restaurants and Theaters. The Barber and Hammer effect drove strong theater performance and growth above pre pandemic levels as well as higher Food and beverage consumption per visit. Machine service revenues increased 6% versus the prior year period reflecting Strong maintenance call volumes, while equipment sales increased 33.2%, representing our 2nd largest year ever It was driven by strong growth from new clients and convenience customers. Speaker 100:18:25Q4 2023 operating income in the frozen beverage segment also improved to a record $20,600,000 a $6,400,000 increase compared to Q4 2022. Overall, we've made significant progress, improving gross margins and distribution expenses. Our focus on improving gross margins Through an improved mix of core products, better calibration of cost and price and cost to goods efficiencies, it's clearly benefiting our results. For the quarter, gross profit totaled $145,700,000 a 25.8% increase compared to Q4 2022. This led to a gross margin of 32.8 percent favorably comparing to 28.9% in Q4 'twenty two. Speaker 100:19:13This allowed us to reach our goal of 30% gross margin for the full year, a marked improvement from 26.8 percent for the full year in 2022. Overall, we experienced slight deflation for the quarter. The cost of key ingredients including flour, oils, dairy and meats have declined, but we are still experiencing double digit inflation in sugar Sweeteners, which continues to impact products such as fovenomelites and vape goods. Looking at expenses. Total operating expenses increased $9,800,000 or 10.4 percent, representing 23.4% of sales for the quarter compared to 23.5% in Q4 2022. Speaker 100:19:59Distribution cost was 10.8% Sales in the quarter much improved compared to 12.4% in the prior year period. Marketing and selling expenses represented 7% of sales versus 6.4% in the prior period, driven primarily by incremental promotional and marketing support on core brands and new products. Administrative expenses were 5% in sales in Q4 2023 compared to 4.3% in Q4 2022 attributable to higher performance based bonus payments compared to the prior year and investments in capability. This led to an operating income of $41,700,000 or a 93% increase compared to $21,600,000 In Q4 2022, adjusted operating income was $45,800,000 or a 77.8% increase compared to Q4 2022. For the quarter the year, the extra week contributed $2,000,000 in operating profit. Speaker 100:21:05After the impact of income taxes of $11,300,000 Compared to $3,900,000 in Q4 of fiscal 2022, net earnings increased to $30,400,000 resulting in reported earnings per share of $1.57 or $4.08 for the full year. This compares to $0.90 $2.40 in the prior year periods. Adjusted diluted earnings per share were 1.7 $3 for the quarter $4.50 for the full year compared to $1.05 $2.76 in the prior year periods. Adjusted EBITDA increased 55.2 percent to $62,200,000 from $40,100,000 in the prior year period And our effective tax rate was 27% in the 4th quarter. Looking at our liquidity position, I'm pleased with our ability to quickly delever on the back of the dividend Dots Acquisition. Speaker 100:22:05We were able to reduce our debt from approximately $125,000,000 when we acquired the Epigen Dodge to $27,000,000 at the end of fiscal Our focus will continue to be on maintaining a healthy balance sheet and prudent leverage positioning, which positions us to continue investing in the growth of our business and returning value to our shareholders. Our cash and marketable securities at the end of the quarter were $49,600,000 In addition, we have ample availability under our revolver of approximately $188,000,000 in additional borrowing capacity. In summary, we are confident that the decisions we are making and the Operator00:23:17And our first question is going to come from the line of John Anderson with William Blair. Your line is open. Please go ahead. Speaker 200:23:24Hi, good morning everybody. Congrats on the quarter. Speaker 100:23:27Thank you very much, John. Thanks, John. Speaker 200:23:31I wanted to you mentioned in the prepared comments that I think it was kind of a Forward looking thought around maybe an algorithm, longer term algorithm. You mentioned sales growth above That of your principal end markets, expense leverage and earnings growth as a result above The rate of sales. Could you talk a little bit more about that? Did I read that right as Maybe kind of a new way to communicate how you think about the growth of the business top and bottom line going forward And perhaps then kind of narrow in on 2024 Using that as a framework and how you're thinking about end market growth, your own growth and perhaps margin expansion? Thank you. Speaker 100:24:33Yes. Hey, John, this is Ken. Great question. Yes, we've been operating kind of under this What I call financial formula for really the last couple of years and probably haven't stated as good As we did in this script, but it really gets to what I talked about before is we're focused on the entire P and L. And we've kind of Foundationally, set the goal that sales wise, we want to drive our business to grow sales faster than the market. Speaker 100:25:05As we're doing that and as we're investing in capabilities and efficiencies, our job is really to leverage the P and L. As those sales grow at that pace, that obviously provides you a better ability to do that. At the same time, a lot of the initiatives that we've undertaken have been done To improve, say, distribution expenses as a rate of sales, figure out how we can operate more efficiently in our plans. So day in and day out, we kind of operate under that kind of financial formula to think about how we should kind of hold ourselves accountable Managing this business both now and yes going forward. Speaker 200:25:45And then that's helpful. And As we look ahead to fiscal 2024, I mean, it sounds like you have a tremendous amount of New business activity, a lot of cross selling going on, a lot of New distribution for, I guess, new items in both in foodservice and at retail, I see placements in food away from home venues etcetera. I mean How should we be thinking broad strokes about Speaker 100:26:27what are your growth Speaker 200:26:36And then Could you talk also about maybe price and volume? Are you still benefiting from price right now? And would you expect going forward that the growth is going to largely be volume driven? Speaker 100:26:53Good questions, John. We're feeling good about and you saw that in my comments, feeling really good about the momentum that we have going into We've talked a lot about the different areas of our business that we're working on and one of those is the cross selling effect Across our businesses, we have such great relationships in different areas that we're able to bring other size of our businesses in and introduce the products and we really see that working. And as I talked about, we have a really nice pipeline Coming into 2024, so we're feeling pretty good about that. From a price and volume standpoint, we were fortunate in this Last quarter to see volume really increase across our categories, just about all of them. And we think that there's an opportunity for us to continue to do that. Speaker 100:27:48I'll let Ken talk about the pricing, but I think we've pretty well lapped that pricing effect And we'll be looking at some additional pricing in some of the areas in 2024 as well. Yes, John, if you recall from prior calls, the last price increase we took was last, kind of call it September, October. So we've lapped The other 2 we certainly lapped and we've lapped portions of that, but there was a little bit of price increase benefit in the past in this Quarter Q4, but the really good sign as Dan said is much more of that growth is coming from Volume, particularly in retail and frozen beverages, had really nice volume quarters. And yes, you're correct. Given where the kind of the inflation deflationary environment is right now, as we Forward, we really expect probably more of our growth to be from volume than from price as we look to the next year. Speaker 200:28:54Okay. One more for me and I'll get back in the queue. You were able to achieve And your gross margin, I guess, near term or medium term gross margin objective of getting to 30% in this fiscal year. And you finished really strong in the back half, north of I guess in the Second half of the fiscal probably north of 33%. And I know there's some seasonality in there, etcetera. Speaker 200:29:27But I guess not to put you under the gun, but what's the is there kind of a new interim target Or should we is there more room to move in a constructive direction in terms of gross margin? I'm just thinking about your commentary around New production lines that are scaling and more efficient, the focus on core brands and the mix Of your business and that being beneficial, it would just seem there's more room for improvement on that gross margin line, but I don't want to get ahead of myself in thinking about that. Thanks. Speaker 100:30:05Right. Another good question and you know we've been talking about this now for over a couple of years and our goals that Ken and I have wanted to drive And to get to that 30% gross profit margin, really proud of the teams to have followed the strategies to allow us to get there. And yes, John, we might be a little even more bullish there. We think our strategies are working. We think some of the New lines allow us to make products more efficiently. Speaker 100:30:36We think our teams are working hard in every facet And are starting to look at that 30% as a floor and which we can grow from. How quickly? Again, we have some Seasonality to it, we're coming off the back end of the summer months where EBITDA and IC are a big part of our sales. And as you get into the winter months that isn't as strong, but we think we can continue to grow from where we landed this year for sure. Great. Speaker 100:31:06Thanks. Speaker 200:31:08Thanks. Thank you guys and congrats again. Good luck. Speaker 100:31:11Thank you, John. Operator00:31:13Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Conor Radigan with Consumer Edge. Your line is open. Please go ahead. Speaker 100:31:29Hey, guys. Good morning. Thanks for taking our questions. Good morning, Connor. Good morning, Connor. Speaker 100:31:35Yes. So Dan, I think I just heard you mention that you're expecting some Pricing next year. And so if I'm not mistaken, you guys are pretty much back to pre pandemic margins with deflation plus commodities. I guess just how do you go to customers to sort of push that pricing through while they know you're experiencing deflation? And I guess maybe could you provide a little color into your visibility, into Your input costs for next year and maybe any hedging you have in place. Speaker 100:32:01And I guess should we kind of expect that deflation to continue next year? Thanks. Good question, Conor. And we are experiencing deflation in some of the areas and yet we are having double digit inflation in others Like sugars and sweeteners and that impacts some of our business pieces like the icy side or the dip and dust side or pieces of our Frozen Novelies. And so there will be some areas that We will be able or will be taking price increases and probably need to, maybe have needed to already. Speaker 100:32:40And yet there will be other areas that we'll be taking a look at and I'm sure we'll be challenged in and we're prepared for those areas as they come. So there will be some pricing that we'll take. I see it pretty consistent about doing that at the 1st of the year, and I believe that we're scheduled for that again. And Ken, do you want to mention the other piece of that? Yes. Speaker 100:33:04Connor, in terms of kind of Cover the contracts. I couldn't say enough good things about the procurement organizations, whether it's flower, whether it's Sweeteners, whether it's something like eggs or whatever, I think they're managing that very well. In some cases, we've got contract out The next 3 months, some cases it would be 6 to 9 months, but think we're really well positioned to Kind of maintain and manage and minimize any other inflation or maximize deflation in that and how we buy. Yes. In terms of the outlook, I mean, it's always hard to say. Speaker 100:33:47You've seen different political and just International things happen that can drive things pretty quickly, whether it's the Ukraine situation. So those wildcards, I think, So out there, but absent any of that, I think it's going to be a pretty stable environment. I mean, I don't see a lot of Significant more deflation, but I think most of these categories will hold pretty well. And so I don't expect to see a lot of inflation. CPI, I think came out yesterday at around 2%. Speaker 100:34:24Production CPI is generally about 100 basis points to 150 basis Higher than that because there's a bit of a trail there. As we look forward, I think the forecast on inflation is in that Yes, 1.5% to 2% range. So that's probably how we kind of feel about it and how we're trying to manage what we do in terms of Procuring materials and how we do that. Okay, perfect. Very thorough. Speaker 100:34:53And then I guess just one more for me. So again in your prepared remarks, you mentioned targeting international growth, especially down in Growth especially down in Mexico. I guess first, can you remind us that you currently have any international operations? And I guess just is this more of an exploratory project? Or should we expect this to be a tangible 2024 impact? Speaker 100:35:14And then I guess just kind of stepping back as well, We've seen a lot of CPGs that are U. S. Focused kind of attempt to migrate to international markets and we've really run into And also experiencing some profitability challenges given the skew to more traditional retail and also just a lack of scale. I guess just sort of what is the plan in place to sort of drive that distribution growth and maybe minimize those profitability headwinds? Down in Mexico, our operation is really centered around ICEE today and they really had a tremendous year. Speaker 100:35:49They had a record year in both sales and Profits and proud of what that team is doing down there. We want to be able to expand on some of their business. We want to be able to maybe take some of our products That they aren't operating with today and expand them down there such as Dippin' Dots or Some of our snack food items and think that there's a real opportunity for us to grow. We do do a little business internationally today And feel like there's an opportunity for growth for us. And so for kind of really the first time we've brought on an international business leader to help us identify I don't see that being Impactful to our 2024 year, I think it will build over a period of time and we have enough experience to know to be careful about how we do that. Speaker 100:36:44And so we're excited about the opportunity. We're excited about the opportunity of bringing on this business leader and had some experience with him in the past I think that he will hit the ground running for us, but I probably would caution not to be overly optimistic about that in 2024. Okay, got it. Sounds good to me. Thanks, guys. Speaker 100:37:07Thank you, Conor. Operator00:37:09Thank you. And one moment as we move on to our next question. And it looks like our next question is going to come from the line of Todd Brooks with The Benchmark Company. Your line is open. Please go ahead. Speaker 100:37:32Hey, thank you and congrats on a strong quarter to end Strong year. Thank you very much, Todd. It's a great way to end the year for sure. Yes. Thank you, Todd. Speaker 100:37:41Good morning. Good morning. Dan, I want to start off. When you started rattling off new opportunities for 2024 and John kind of hit on this, it was Quite the laundry list. I don't necessarily remember that much internal momentum at J and J. Speaker 100:37:57Could you maybe highlight for us The 2 or 3 most impactful opportunities as you see it for 2024 that investors should be most focused on? We really do have a great pipeline. Our snack food side led by Bjorn Leiser is doing such a good job Identifying opportunities as we are building capabilities to be able to grow within some of our core markets. You've heard that talked about in our Core strategies and so some of the great opportunities we have are right within our core. I love what we're doing. Speaker 100:38:33We released our Super pretzel sticks this past quarter and they sold really, really well. And not surprised by that either, Todd. I knew that was going to be a good hit and it was. And I think we have some great opportunities there within the retail environment. Also Within the retail environment, we released the Olah Churros and early readings on that are strong and I think that will continue to grow Alongside the growth of the super pretzel hotdogs that we make that I think have a real So some really good things inside retail. Speaker 100:39:12On the boot service side, you heard me touch on a Test that we had over this past quarter with a large sandwich chain that is going to roll out Come January of 2024, I think that has a really big impact that can make a difference for us in this Coming year, again, able to do those things because we've built that capacity out there. On the bakery side, I love what they're doing there. We've been re Shaping that piece of our business, but we're going to be able to release some of our core products, the sticks and the buns inside the bakery and think that has some real Opportunities for growth in 2024 and ICE keeps chugging along. ICE has an opportunity in a club store To move our machines from a pre serve to a self serve and early tests on that and we've been in the test mode for a while Are really strong and have a great impact on those sales and they're in test with a couple of QSR chains that I think you have the opportunity to come through for this coming year. So I love where we're heading. Speaker 100:40:20The pipeline looks good. The sales team On led by Bjorn on Snack Foods and Aaron Winkelmann in the ICEE side and Matt Enderle on Tip N Dot's side are all We had a sales meeting last week and had the 3 of them on stage. It was really impressive to see the kind of pipeline they have built. And so it gives us good confidence going into 2024. That's great. Speaker 100:40:47Thanks Dan. A follow-up, you talked about Six new lines that have been put in place for the core products over the course of this year. I don't think you've ever sized the revenue unlock that those lines could represent J and J, but can you maybe at least talk from a percentage basis how much of the benefit was realized in fiscal 23 versus how much of that benefit you could see harvested in 2024 and 2025, just looking at the overall opportunity? Yes, 2023 not so much. We're kind of building those out during 2023 and it really was much of a Canadian in the back Half of the year, so not too impactful in the 2023 year. Speaker 100:41:30They're likely to have a chance for it to grow in 2024 With the pipeline that I just talked about, some of those opportunities required those investments that we made in the 6 new lines. And so happy with where they're at there. I think what we had said before, Todd, is that the opportunity of those 6 new lines Allows us to grow sales by $150,000,000 or above, right? And so I think that's where we're really shooting for. And I think that we can see a piece of that come through in 2024 with those opportunities that I just talked about. Speaker 100:42:07Great. And then one for Ken and I'll jump back in queue. John kind of pointed out the seasonal nature of Gross margins. I'm just wanted to see if we can maybe level set for our modeling purposes. I know last year we saw basically A 300 basis point ish gross margin dip in the first half of the fiscal year versus Second half of fiscal twenty twenty two, we're obviously working off a higher base. Speaker 100:42:38Would you expect that magnitude of retrenchment In the first half of fiscal twenty twenty four, our modeling, so kind of down to that 30% level from the 33% you put up in the back half year? Yes. That's a good question, Todd. I think the way to think about that is you're right. As we got towards the end of this year, We got our mix humming and we got price caught up. Speaker 100:43:04Inflationary was a bit more As our friend than it was earlier in the year, you start to see us get to those marks that we set with goals of ours. We ended up finishing The full year at 30.1 percent gross margin. And I think Dan and I talked about that was kind of the floor. We had to get back there. And I think we expect to be able to as this goes forward to get beyond that number. Speaker 100:43:32But yes, there is a seasonal impact. So as you look at Q1 and Q2, I think the way to think about that is the trajectory of being better than the prior year will should continue. But we're not all of a sudden going to do 30% in Q1 because of the Slow down in this winter months of some of those high margin areas like Dippenbach and ICEE. But we should on kind of an equivalent improvement basis Better than what we were in Q1 of the year ago and Q2 of the year ago. And then probably as we get into the back half of the year, You probably see gross margins probably pretty similar to what they were in Q3 and Q4 of this year. Speaker 100:44:18Okay. Perfect. Thanks, Tim. Operator00:44:21Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Andrew Wolf with C. L. Kane, your line is open. Operator00:44:37Please go ahead. Speaker 200:44:40Good morning. And Dan, congratulations on your election Chairman of the Board. Speaker 100:44:45Thank you very much, Andrew. Good morning to you as well. Thanks for joining us. So So I wanted Speaker 200:44:53to ask, given the current grocery environments, you guys are having good volume growth, particularly And on the shelves I assume. But as you look to the current planning year fiscal 2024, Is it fair to say the predominant or maybe even all of the planned volume is going to come from new doors and new distribution, Maybe line extensions or are you guys planning any velocity gains as you kind of ramp up the marketing spend as Speaker 100:45:25I think we'll have a little bit of both. I do think we have some great opportunities for Continued expansion on some of our core products, like what we talked about the pretzel sticks, I believe that will continue to grow. I think Luigi is continuing to grow. Our ICEE frozen novelty is growing well. So I think we'll have that Continued, Dogsters is doing really well. Speaker 100:45:49Dogsters did well in the 4th quarter and think that we have some good opportunities for new outlets with that, but I also think that we'll see a little bit of increase in some of our core products too. I think we've put a niche in an area that allows us to be able to do that. We're watching that consumer really closely And watching what others are saying and doing and we'll be prepared for whatever headwind comes our way. But we think we have some good opportunities for continuing to not just grow volume with what we have today, but by garnishing new outlets as well. Speaker 200:46:29Okay. And I also wanted to kind of follow-up to Todd's questioning on the unlock. When you get the 3rd RDC open On Dippendots, you've referenced a few times that's really that business needs national frozen capability to be fully distributed. Any chance you could help us see a feeling for how much Speaker 100:46:52in addressable market increases What it really Speaker 200:46:55what it does for the business either quantitatively or qualitatively in terms of Speaker 100:46:59how much more of the market you can Speaker 200:47:00go I love what the Speaker 100:47:03team is doing at the docks. We had the best year sales and profits in its history And feel like we're still just scratching the surface. I think really gelling together fit really nicely synergies from their organization to Ours is just really fit good. I love what they have in test today. I talked about this in the opening there. Speaker 100:47:28The Regal Theater now is pretty much completely rolled out. A couple of other big theater chains expanding their tests And the team is out there knocking on a lot of doors and having some great success. I think that will continue to grow nicely for us. Love what they're doing, Really happy with that acquisition. Ken, I don't know if you want to add any color to that at all. Speaker 100:47:52Yes. I think Dan summarized it well. I think the thing to think about with Bip and Dot is, one, we just came out of having them for a full year. We'll have, I think we even mentioned this, double digit growth in that business. We would expect to be able to grow that business next year double digits. Speaker 100:48:11Production capacity, we have capacity to hit those numbers and produce that. It was really the freezer and storage space that We had to address to be able to move faster and keep up with that growth. And with the added freezer space at At Terrell and at Woolwich, the 2 facilities that are now open, we feel really good about really meeting any kind of opportunity In the foreseeable future, I don't have an exact number on what that means. All I can tell you is it's a part of the enablement Helping us continue to grow this business double digits. Speaker 200:48:50Okay. Fair enough. Speaker 100:48:52And the last thing is for Speaker 200:48:53you Ken as well. Could you just size up the true up expense that you had to record against sales? And tell us if that was also a Full flow through as a reduction to earnings as well, the cost plus arrangement and the Speaker 100:49:11Yes. The way to speak to that, I think we may have said this before Andrew is We have an agreement with a customer that would make they hand out for where we pass on Any cost increases or decreases, it's a quarterly true up for that customer as you can probably appreciate Really benefited us. I mean, it's going through 20 plus percent inflation. And but now that we've had deflation, we've passed those cost reductions back to that Customer, but the profit of that stays whole. So we continue to make the same profit because we're kind of locked into a Profit margin in the contract and the volume of those core SKUs continues to grow. Speaker 200:50:00Okay. So that was all intra quarter. It wasn't for previous accrual rates that were too high. Speaker 100:50:08No. Yes, that was inter quarter. That was each quarter give or take, if things stay stable, then you wouldn't see much of any movement there. Speaker 200:50:18So our handheld sales down this quarter last quarter basically because of deflation and the contract arrangement? Speaker 100:50:24Or is Speaker 200:50:24there other reasons Speaker 100:50:27the sales dollars are down? The sales dollars are mainly down because of the contractual Pass through of those costs back to the customer. Speaker 200:50:37Got it. Thank you. Operator00:50:41Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Robert Dickerson with Jefferies. Your line is open. Please go ahead. Speaker 100:50:58Great. Thanks so much. So guys, I'm just curious, I mean, maybe it's on me, but I didn't really realize there was going to be a 53rd week. So once we back out the 53rd week, you get to sales growth about 4% in the quarter. And while I respect that you don't always break out kind of pricing volume In relative to other companies, I'm just curious, I could maybe add some color, would you say of the 4% like most of that still is pricing? Speaker 100:51:28I'm just trying to gauge Tired volume trajectory, especially vis a vis kind of the overall backdrop we're seeing right now and kind of Market food in the U. S. Yes. Let me kind of explain it this way. And there's a lot into In terms of really trying to narrow down the puts and takes of 1 extra week. Speaker 100:51:53And so we summarize that In the release, based on our business overall, but if you take two parts of our business, retail In frozen beverages both up over 20%, you back out the extra week. Both of those businesses were up Double digits and both would have been atorneardoubledigitvolumegrowth. So very healthy quarters there. If you look at foodservice, given the 5.3%, but you've got a handheld Negative against that, that I just explained to Andrew, which was really more of a cost pass through, not a volume They start to break that out. Foodservice would have grown 8.5% without that effect. Speaker 100:52:44If you focus on the core categories in foodservice, pretzels, churros and frozen nominees, those were up 11.5%. So you start to see even peeling back the extra week, a very strong quarter and really volumes up across the board Probably other than bakery and that's really a part of what we've been talking about. In bakery, we've been dialing in on SKUs and getting out of SKUs that weren't profitable. So that's probably the best way to kind of think about each of those segments And the 53rd week. Okay, great. Speaker 100:53:23So kind of net net still Positive volume growth kind of despite pricing you've taken kind of overall? Yes, yes, absolutely. Okay. And then that's great. And then I guess just kind of more broadly speaking, just Kind of want to get your feel around kind of current consumption behavior like what you've been seeing, right? Speaker 100:53:49We've heard from, Let's say some confection companies that might say, well, maybe we've seen a little recent pressure and consumers might be shopping the perimeter Store, maybe they're looking for products that are more satiating in quality. Everyone's kind of shopping for more value. There's been channel shifts. I got Walmart this morning, I was saying last couple of weeks of the quarter definitely saw some pressure. But it sounds like kind of given the positive volumes that consumers We're still kind of walking into a Wawa buying a snack. Speaker 100:54:23We're going to movie theater and getting an icy drink. So I'm just Curious kind of what your feel is around consumption behavior with your product? Like why are you still able to generate this volume? Because it's the value proposition, Right. That tastes good. Speaker 100:54:44Appreciating anything you have would be very helpful. Right. Good morning, Rob. How are you doing? Great. Speaker 100:54:52Thank you. Good. Hey, I think it's a great question and kind of expected and anticipated to get something along that We're watching the customer and the consumer really, really closely and watching that behavior. We faced a lot of headwinds since we've been in this position. We're prepared as a company to kind of be able to pivot In any direction that we need to pivot, we've talked a lot about the resiliency of the J and B portfolio. Speaker 100:55:25Partly, we sell across a lot of different channels with a lot of products, many of them With tremendous brand that people follow and use as a treat or a reward. And I really believe it's that diversification that we have across channels, across brands That allows us to be resilient during times like this, right? You watched it even as we've been in charge here And led the organization. There's been times when the theater business is down, but the retail is way up, right? And then we go through a year like last year where Theaters are way up and we're challenged in other areas. Speaker 100:56:09We're really proud of the diversification that we have The products that we have and the following that the brands are and I think that allows us to withstand periods like this. All right. Super. Fair enough. Thank you, guys. Speaker 100:56:25Thank you, Rob. Thank you, Rob. Operator00:56:27Thank you. And I would now like to Turn the conference back over to Dan Fashner for any closing remarks. Speaker 100:56:33Great. Thank you very much. In closing, In 2023, we delivered the strongest year in the history of the company. It took tremendous hard work, Perseverance and agility from every one of our employees and partners and I could not be prouder of what we have accomplished Are more excited about what lies ahead. We expect to deliver another year of strong sales and earnings growth in fiscal 2024 as we invest in our amazing portfolio of brands, additional capacity and capabilities. Speaker 100:57:06We look forward to updatingRead morePowered by