Participants

Dale Ganobsik; Vice President of Corporate Finance and Investor Relations; Lancaster Colony Corp

Dave Ciesinski; President and CEO; Lancaster Colony Corp

Tom Piggott; CFO; Lancaster Colony Corp

Jim Salera; Analyst; Stephens

Alton Stump; Analyst; Loop Capital Markets

Brian Holland; Analyst; D.A. Davidson

Scott Marks; Analyst; Jefferies

Andrew Wolf; Analyst; CL King

Presentation

Operator

Good morning. My name is Carmen, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Lancaster Colony Corporation fiscal year 2025 the second-quarter conference call. Conducting today's call would be Dave Ciesinski, President and CEO; and Tom Piggott, CFO. (Operator Instructions)
Thank you, and now to begin the conference call. Here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for Lancaster Colony Corporation.

Dale Ganobsik

Good morning, everyone, and thank you for joining us today for Lancaster Colony's fiscal year 2025 second-quarter conference call. Our discussion this morning include forward-looking statements which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
These statements are subject to a number of risks and uncertainties that could cause actual results, differ materially. And the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC. Also note that the audio replay of this call will be archived and available at our company's website, lancastercolony.com, later this afternoon.
For today's call, Dave Ciesinski, our President and CEO, will begin with a business update and highlights for the quarter. Tom Piggott, our CFO, will then provide an overview of the financial results. They will then share some comments regarding our current strategy and outlook. At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions.
Once again, we appreciate your participation this morning. I'll now turn the call over to Lancaster Colony's President and CEO, Dave Ciesinski.

Dave Ciesinski

Thanks, Dale. And good morning, everyone.
It's a pleasure to be here with you today as we review the year 2025.
In our fiscal 2nd quarter, which ended December 31st, we reported record highs for net sales, gross profit, and operating income.
Consolidated net sales increased 4.8% to $509 million.
Gross profit improved 9.3% to $133 million and operating income grew 15.1% to $76 million.
In our retail segment, net sales increased 6.3%, driven by volume growth from both our licensing program and our own brands.
In licensing, we saw a very strong consumer demand for the recently introduced Texas Roadhouse dinner rolls, along with solid contributions from Buffalo Wild Wing sauces, Subway sauces and Olive Garden dressings.
I'm also pleased to share that our Marcetti branded caramel dips and refrigerated dressings also performed well.
Excluding the perimeter of the store bakery lines.
We exited last March, retail segment net sales increased 8.4% in retail segment volume, measured in pound shipped, grew 7.4%.
Sirkanana scanner data for the quarter ending December 31st, showed strong performance for several of our licensed items and core brands.
In the frozen dinner roll category, our own sister Schubert's brand and our licensed Texas Roadhouse brand combined to grow 15.9%, resulting in a market share increase of 440 basis points to a category leading 60.8%.
In the produce dressing category are Marzetti brand grew sales 1.4%, and increased market share about 30 basis points, sales of our Marzetti brand produce dips advanced 2% with a market share gain of 110 basis points.
In the frozen garlic bread category are New York bakery brandro sales 2.8%, adding 40 basis points of market share, resulting in a category leading share of 41.7%.
In the shelf stable sauces and condiments category, Buffalo wild wing sauces were up over 11% and Chick fil A sauce sales grew 1 1.1%.
In the shelf stable dressing category, sales of Olive Garden dressings were up 3.3%, further improving their market share in the shelf stable dressing category.
It's worth noting that it's been more than a decade now since we formed our license agreement with Darden and Olive Garden restaurants to sell their eponymous salad dressing.
Since those early days we've expanded this amazing brand from one SKU and the club channel to a growing multi-skew, multi-channel brand platform with over $160 million of scanner sales.
I believe the long-term performance of this brand and others such as Chick fil A, Buffalo Wild Wings, and most recently, Texas Roadhouse.
It's a testament to the strength, the potential, and the enduring consumer relevance of our licensing program.
In the food service segment, net sales grew 3%, led by higher demand from several of our core national chain restaurant accounts and increased sales for our branded food service products.
Food service segment volume measured in pounds shipped, advanced 1.5%.
Finally, we are pleased to report record 2nd quarter gross profit of $133 million.
When compared to last year's 2nd quarter, gross profit margin improved 110 basis points to 26.1%.
The $1 million dollar increase in gross profit was driven by the higher sales volumes, more favorable those mix, the positive impacts of our ongoing cost savings initiatives and some modest cost deflation.
Our focus on supply chain productivity, value engineer and revenue management all remain core elements to further improve our margins and financial performance.
I'll now turn the call over to Tom Piggott, our CFO for his commentary on our 2nd quarter results.
Tom.

Tom Piggott

Thanks, Dave.
Overall, the results for the quarter exceeded our expectations.
The company delivered strong top and bottom line results.
2nd quarter consolidated net sales increased by 4.8% to $509.3 million.
Breaking down the revenue performance.
Higher volume in product mix contributed 580 basis points of core growth.
This growth was partially offset by the exit or perimeter of the store bakery product lines, which reduced revenue by 110 basis points.
A slightly higher level of net pricing makes up the balance.
Consolidated gross profit increased by $11.3 million or 9.3% versus a prior year quarter to $132.8 million in gross margin expanded by 110 basis points.
The gross profit growth was driven by higher volumes in favorable sales mix our cost savings initiatives and some modest cost deflation.
Selling general and administrative expenses increased $1.4 million or 2.5%.
The increase reflects $1.6 million for integration costs for the planned acquisition of the Atlanta-based manufacturing facility.
We recently announced.
These costs are primarily comprised of IT and legal expenses.
Consolidated operating income increase $9.9 million or 15.1%, driven by the gross profit improvement, partially offset by the integration costs I mentioned.
Excluding the acquisition integration costs, operating income grew by $11.5 million or 17.5%.
During the quarter, the company chose to transfer its remaining legacy pension plan assets and liabilities to a third party.
This transfer effectively terminated the company's pension plans.
It's important to note that these plans were frozen and relate to plant operations that were closed many years ago.
The plan's participants will either continue to receive their benefits from the third party insurance company.
Or elected to take a lump sum benefit payment in December of 2024.
As a result of the termination, the company recorded a $14 million non-cash pension settlement charge to recognize all the unamortized costs associated with the plants.
Our tax rate for the quarter was 22.5% versus 22.4% in the prior year quarter.
We estimate our tax rate for the remainder of fiscal '25 to be 23%.
Second quarter diluted earnings per share, decreased $0.09 or 4.8% to $1.78 as the growth in operating income is offset by the pension settlement charge.
This charge reduced the EPS by $0.39 per share.
In addition, the acquisition integration costs reduced the EPS by $0.05 per share.
With regard to capital expenditures, our payments for property additions to $28.7 million for the fiscal year-to-date period.
For fiscal 25, we are forecasting total capital expenditures of 70 to $80 million.
We can continue to other manufacturing improvements, as well as the planned acquisition of the Atlanta-based manufacturing facility.
In addition to investing in our business, we also return funds to shareholders.
Our quarterly cash dividend of $0.95 per share pan on December 31st, represented a 6% increase from the prior year's amount are enduring streak of annual dividend increases stands at 62 years.
Our financial position remains strong with the debt-free balance sheet and $203.1 million in cash.
We expect to deploy $75 million for the purchase of the Atlanta manufacturing facility.
We also will spend an additional $10 million in capital expenditures on facility, which is included in the fiscal '25 forecast I provided.
To wrap up my commentary, our 2nd quarter results reflected strong top line growth, improved gross margin performance in double digit operating income growth.
In addition, we're continuing to make investments to support further growth in cost savings.
We'll now turn it back over to Dave for his closing remarks.
Thank you.

Dave Ciesinski

Thanks, Tom.
As we look ahead, Lancaster Colony will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan.
So one, accelerate core business growth.
2, Simplifier supply chain to reduce our cost and grow our margins.
And 3, to expand our core with focused M&A and strategic licensing.
Looking ahead to our fiscal 3rd quarter, and the remainder of the fiscal year, we anticipate retail segment sales will continue to benefit from our expanded licensing program and growth from investments and innovation for our own brands.
We are very excited to share the beginning this spring, we'll be expanding distribution for chick.
Sauces into the strategic club channel.
On the food service side of the business, we anticipate continued growth from select customers in our mix of national chain accounts along with ongoing contributions from our branded food service products.
We anticipate external factors including US economic performance and consumer behavior will continue to impact demand for the food service industry overall.
With respect to input costs in the aggregate, we do not anticipate significant impact for commodity cost inflation or deflation in the remainder of the year.
Before I conclude, I would like to comment briefly on the pending acquisition of the Atlanta-based sauce and dressing facility that we announced last November.
We remain on track to complete this transaction during this current quarter, which ends March 31st.
The facility is an important strategic addition to our manufacturing network that will benefit our core sauce and dressing operations through improved operational efficiency, incremental capacity, and closer proximity to certain core customers.
All the while enhancing our manufacturing network from a business continuity standpoint.
We evaluated several strategic scenarios to support the continued growth of our sauce and dressing operations and identified this opportunity as the most practical and cost-effective solution for our long-term business needs.
We very much look forward to welcoming the plant's employees to our Marcetti team.
In closing, I'd like to thank the entire Lancaster Colony team for all their hard work this past quarter, and their ongoing commitment to our business.
This concludes our prepared remarks for today, and we'd be happy to answer any questions you might have.
Operator.

Question and Answer Session

Operator

Thank you.
And as a reminder to ask a question, press 11 on your telephone keypad.
One moment for our first question, please.
And it comes from the line of Jim Salara with Stevens.
Please proceed.

Jim Salera

Hey, good morning, Dave.

Dave Ciesinski

Good morning, Tom.

Jim Salera

Thanks for taking our questions.
I wanted to start off with the performance of retail because really strong results certainly ahead of our expectations, and, and you mentioned, some of the drivers there on the license side of the business.
Could you just give us a little more detail, as to which of the license products you called out had the biggest impact.
And then if I could maybe tag on a part two to that question with the expansion of, of Chick fil A.
The club and then no more laps from the perimeter exit.
Is it fair to say that, retail sales should kind of continue to accelerate as the year moves on.

Dave Ciesinski

Yeah, well, give us a chance and we'll we'll hit both of those questions in sequence, first, what, what was it that impact current quarter than what our outlook is, but as pertains to to retail and licensing in particular what I would tell you, it was a combination of different brands, first it's the introduction of the Texas Roadhouse rules, which are available today only in Walmart.
And if you have like a scanner sales that that accounted for.
An important component of that growth.
The second is Buffalo wild wing sauces.
This is an item that's been around now about 6 years.
It was up about 12% in terms of pounds, so it had a really good period as well and then both Olive Garden and Chick fil A sauces continued to grow as well, but I think that's sort of the ranking and sequence of of how these things contributed to the period.
Then what I would also, shift focus to is even our own.
Our brands continued to perform relatively well in terms of pound growth.
Our New York bakery in terms of consumption of pound sales were up 3.8% are Marzetti produce dressing was a 4%.
We had a really good season for Caramel dip and, and Sir Schubert continued to grow as well, and what you don't see in Sister Schubert is we made the decision to exit a channel that created a bit of a headwind on that because the margins were low, but we
Able to overcome that, still deliver some incremental growth and improve our our margin profile so I think net net it was balanced between licensing and our own brands with licensing growing a little bit more.
Now your second question is an important one, how do we think about the outlook?
You know, we're bullish about our new product pipeline we're, we're we're continued to be optimistic about how our core brands are holding up, so you know we're, we're looking at probably mid to low single digit growth, just depending.
On how things play out with consumers, but certainly we're we're pleased with how things are going.

Jim Salera

Okay, great.
And then maybe if I could just sneak in a question food service by the way, that's all pound driven just so you know there's no assumption in pricing on that.
Okay, great, that, that, that's helpful,
On food service.
You know, you mentioned kind of the core national accounts being the drivers there I know in QSR in particular, there's been a lot of focus on kind of let's just say value centric messaging, price points versus kind of LTOs and and flavor extensions.
Do you have any sense in the conversations you're having with your food service partners if we're going to see kind of a return to the more experiential focused messaging as the consumer
Gets a little bit better as the year progresses.
And the conversations that we're having with them, they continue to be somewhat circumspect.
I don't think they're expecting a, a miracle recovery.
I think generally the consensus is that the summer was probably going to be the low point and then we're going to see modest sequential improvement as we push forward, if you look at our most recent results, the business unit was on half of pricing that gets you to that 3% if you look at our specific mix of customers obviously Chick fil A hastinuing.
To contribute to our pound growth because of of new store openings and their execution, but we have a, a range of other very important customers that are winning in this environment, one of which is dominoes, which is plain value and PizzaqSar and and we're winning effectively with them.
As far as their positioning, their menus going forward.
It passes prologue, Jim, what we typically see is that they focus on value until they real, and it brings more traffic back into the restaurant, but it really doesn't help them with margins, and it doesn't help with their, their franchisee's profitability overall so I think what I would expect to see is certainly not a more intense focus on value, you may begin to see that start to wean down a little bit more and just more focus on delivering great food.
Awesome.
I appreciate all the detail, guys.
I'll back in the queue.
Thank you.

Operator

Our next question comes from the line of Altton stump with loop capital.
Please proceed.

Alton Stump

Great, thank you.
Good morning and I appreciate you taking my questions, you know, David, I guess, you know, I want to ask about Texas roadhouse obviously, of course, the first introduction was of the sauces and then, I came out shortly thereafter, you know, mid last year, with the frozen dinner rolls, it sounds like a dinner rolls for them have become an even bigger business than your sauces.
One is that accurate and 2, how much of, of, of, a surprise as it been given the fact that, once again, that that was a secondary offer.
When they came after you, first introduced our sauces last year.
Yeah, it's a great question, Alton.
You know what I would tell you, and I know you're very familiar with the restaurant space and you visited Texas Roadhouse and for anybody like you that has, those roles are iconic.
That's one of the reasons that people visit those restaurants, and one of the teams that that we're pleased about and our partners at Texas Roadhouse are pleased about is that we've done a really nice job of really mirroring the taste of that role that's available in the restaurant.
So we've got it, so far into Walmart, 4,000 of their stores and it's performing exceptionally well, if you look at the scanner data sales when we can keep it in stock, it's running somewhere between a million and 5 and 1.5 million per week, so it is, it's, it's really performing well, but I think it goes back to the lesson that we've learned with Olive Garden with Buffalo wild wings and with Chick fil A.
When you can take an iconic product from a strong restaurant.
Property with a loyal following.
There's just a lot of consumer upside for those products in retail and I think we're going to continue to see that story unfold, our plans on this product are to, as we bring online more capacity which we're having to do to begin to roll it out into all the retail first in 4 states and then early into our next fiscal year to actually launch it across all channels and all stores not.
Club, but all channels in, retail and mass and then we'll, we'll revisit club at some point in the future, but this is, it's been an exciting development.
It's succeeded our expectation enough so that we've had to actually take one of our, our bakery plants and that not just 122 more shifts to keep up with the demand.
Okay, great.
Well, that's brilliant, help a couple things that date and then I guess one question, you know, you know, I hop back and queue on the food service side, you know, kind of back to the last question about restaurant space and, clearly, everybody's trying to, if they can, to get traffic back.
You know, there's been a lot of pricing, you know.
Of course across the industry the last couple of years that, have
You know, giving their comp growth, that now you know, all but gone away, so given that environment where you're going to have a lot of focus on, new products, collaborations.
I would think that would fit well into what you guys do with your partners, whether it is developing new sauces and or, you know, and or similar items, you know, how much of a benefit do you think that could be to you, or, as you kind of look, at the course of calendar 25 if we do indeed see an increased focus.
Formerly major QSR customers and you know pick a new product to drive traffic.
Yeah, so our, our outlook for the industry is that it's probably on and this is traffic, not sales, but traffic alone is that it's likely to continue down let's say 1 or 2 points, our view on our business and food services that will be flattish but we believe that based on this composition of customers will be able to overcome those trends to the degree to which the consumer gets stronger and traffic improves on restaurants.
I'm fully confident that we'll be able to do that and, and we'll be able to give you guys an indication that sales would trend back into the mid single low to mid single digit range, but for now, predicated on the macro economic outlook.
I think we're, we're holding fast at sort of flattish on this business but poised to recover when the industry recovers.
Okay, okay, thanks so much, dude.
I appreciate it.
I'll hop back in the queue.
Thank you.

Operator

Thank you.
Our next question comes from the line of Brian Holland with DA Davidson.
Please proceed.

Brian Holland

Thanks.
Good morning and congratulations on the strong results.
If I could just maybe just quickly on the gross margin and and specifically the input cost outlook, obviously I think you called out modest deflation in the quarter if I have that right, just grapoating that out for, because I think that's obviously an improvement maybe from where we've been so just as we tease that out, over the second half of the year, what's your view on how that.
How that dynamic shakes out.

Tom Piggott

Yeah, hi, Brian, this is Tom.
Thank you.
So you're right, we did have a little bit of deflation that was a a bit of a tailwind for this quarter's results as we look at the second half, we're projecting more flattish commodity costs.
We don't expect to have that tailwind that we experienced this quarter and really what's behind that is, and I'm sure you've read about it, we've seen a lot of inflation in terms of eggs prices, and that's an input cost for us but
We're getting the benefit from lower soybean oil and and grain costs.
So when you net it all together, we're looking at a flat outlook for the second half.

Brian Holland

Thank you, that's helpful.
And it may, and forgive me to the extent that this may have been addressed and I missed it,
With the new facility in Atlanta maybe just sort of discern between,
This opens up more revenue capacity, it, implying that.
And is increased, there's more innovation opportunities, etc.
Etc.
Versus strategic optionality kind of looking at your manufacturing network, so I, the first one's probably to, to some extent, self-explanatory, but on the second one,
Do we think about margins, the ability of this plant to expand your margins over time, the, picking up some more cost synergies through optimization, etc.
And maybe just kind of I appreciate you probably wouldn't want to quantify that, but maybe just timeline for when we might just might start to see those benefits flow through.
Sure.

Dave Ciesinski

Why don't I, I'll address the first part of the question, and then let.
Tom expand on margins, so the first part, as we said in our commentary up front, we expect to close this quarter, really what this plan is going to for
A capacity to make products that are both cooked and non-cooked.
And just give you background things like barbecue sauce and H1y muster require booking whereas things like a, a ranch dressing, for example, don't, you're, you're just mixing ingredients and and packaging on those, so this plan, importantly provides us both cooked and non-cooked, which, which gives us a lot of options to play both in sauces and dressings, and then as far as their particular packaging abilities they have high speed packaging line.
They have ddi capacity.
Down there as well and then they have a range of different food service manufacturing platforms that we're going to be able to use over time what you can expect to see us do is is to begin to put in some of our system specific product packaging platforms, for example, Haa, which we use for Chick fil A, they're not a supplier today you can expect in due course for us to put that down there and it'll provide a benefit for both us and for Chick fil A by way of, of where.
It's located, so I would say that the single biggest thing that it gives us, Brian, is a great mix of cooked and non-cooked, a range of different packaging platforms and it's in a a highly cost effective location for us in terms of proximity to customers now what I'll let Tom talk to you is then how does this sort of feather into our outlook on things like margins and things like that in due course I'll turn it over to you.

Tom Piggott

Thanks, Dave.
So from a top-line basis as we look at our long-term growth algorithm, we've said we're going to continue to grow in the low mid single digits.
This facility allows us to to continue to grow without additional in an additional green field option, so it supports our growth over the next 5 years as we've modeled it out, which is a very efficient use of cap for us, so then.
Turning now into the margins, what I would caution is that the first quarter to as we get into into that facility and start to ramp it up.
We do expect a modest headwind as we have some absorbed overheads that will be incurring, but over time as you get into fiscal 26, we do expect to see some nice margin accretion from this business, as you mentioned, we're probably not ready to quantify the.
Specifics on that, but it, it's, it's projected to provide nice growth and and margin accretion for us.
The one thing I want to make sure we highlight for you, and we mentioned this in the initial release, in the Ak is that for a period of time we're going to be manufacturing costs, manufacturing products for, for the seller of this facility, so we'll be picking up some of their business and we agreed to do that to facilitate the.
Transaction we'll be splitting out that revenue separately, we don't expect it to have a significant profit impact, but we'll want you to take that out because we don't we view it as noncore and and short term in nature.
So, overall, we feel very good about this, this acquisition and we expect it to have a nice return for our shareholders and as we get further in we'll share more with you.

Brian Holland

Next time and that, that's very helpful.
Maybe just last question, just of because I probably left some things incomplete in that first question, with respect to input costs, good color there, thinking about the bos of the year, specific to input costs, but if we broaden that out and talk about gross margin, I would presume that throughput benefits from the volume was the primary driver of the gross margin expansion in 2 and if we expect volumes to sustain
Then margins should be higher over the second half of the year.
I just want to clarify and separate that point from the fact that input costs would be closer to flat, Tom, if you could help there, I think as we look at the second half, we do expect our cost savings initiatives to contribute further to our margin growth, why we won't have the commodity tailwind so as we look at it, you know, we expect to be able to grow our margins in the second half.
At similar levels to the first half, maybe in the 50 to 100 basis point range, as we get greater cost savings initiatives and the only headwind that that could be an impact to to that is, is the integration of, of the Atlanta manufacturing facility, the ramp up and and how that all goes, but certainly we'll, we'll give you those impacts as they occur.
Fantastic.
Leave it there.
Thanks.

Operator

Thank you, and that's a reminder to ask the question simply press 11 on your telephone keypad.
Our next question is from Scott Marks with Jeffreys.
Please proceed.

Scott Marks

Hey, good morning guys, thanks so much for taking my question.
Yeah.
I just want to follow up on some of the conversation there on the gross margin side, my numbers are correct.
The gross margin, that, that you guys put up in Q2 is the best in 4 years that it's been, obviously going through the cost inflation cycle and, and everything else that's happened over the past few years.
I know you spoke to some of the drivers, why that's the case, but wondering if you could maybe give a little bit more detail about kind of the journey that you've been on and, and, and
How you got to this, 26% level and, and kind of how, how, how you think, you know, you can sustain it moving forward.
Yeah.
So maybe I'll start with a little bit of context, one of the features of COVID for our business in particular is that we had 20% inflation two years in a row, and as you might imagine, it's got that math is our costs go up to 20% and we passed it on dollar for dollar into our into our pricing I our sales, but that in and of itself drove several 100 basis points of margin compression.
In the early part of COVID, and then what you've seen in the period thereafter is you've seen us, we've been able to hold on to pricing as we've seen a little bit of deflation and Tom has talked about that, but the other thing that's happened is a lot of the noise in the businesses behind us, our ERP implementation is behind us.
The construction of the horse cave facility is behind us and we have a team now that's just really focused on good end to end execution.
And productivity and we're getting back to more of the ordinary course.
So, as Tom pointed out, as we think about the outlook going forward we don't expect some big tailwind from commodities.
So if we get a grade and you can expect to see that reflected in margin, but our view is we're going to be able to build on the trends that you see sequentially because of just going back to our roots of driving productivity, manufacturing and conversion productivity at the front, the back of our lines pro.
Productivity and supply chain and logistics, excuse me, transportation and logistics, productivity, so we have a big catalog of initiatives that the team is running, they're doing a very nice job and I have every confidence that you'll see that continue to improve, so I, we don't think, just to put a fine point on it that that was a one-off clearly it was a high water mark but we expect to continue to build on every one of the quarters going forward.
Appreciate that.
Thank you.
And next question for me, I know you call out some of the drivers of topline retail volume strength, including some of the licensed brands, you call out some of the Marzetti products, some of the New York brand products, you know, obviously licensed products you're introducing the Subway Texas you can talk why, why the improvement in some of the Lancaster owned brands, if you will, so he spoke to, some of the Marzetti dips in the New York.
Brand products, just wondering if you could speak to some of those trends and, and, and what you think the main drivers are.
Well, I think we'll, we'll hit them each one at a time in the case of our New York Texas toast or garlic bread proposition is doing well, but we also launched a value side of our breadsticks that's continued to crush it in the marketplace, so you know, good core performance plus breadsticks is what's pro providing the tailwind on New York and then I think, our gluten free item is, is small, but it's, it's providing incrementally to that as well if you look at.
Sister Schubert, a great execution in the holiday season, which is vital on this brand and then I would add to that that our sweet rolls are doing well on that business if you look at our Marzetti, our classics proposition has continued to perform well and over the last let's call it year, we've restaged simply and that part of the portfolio has been performing better within Marzetti dressings and dips, we had a particularly good caramel season when we can.
Get that product with our our key customers, Walmart, Kroger, and the others out early in the season and merchandise near Apples.
It just performs well and this is one of those years where our our retailers were willing to really work with us, they got it out early and, and it really performed for us.
So really it's, it's kind of a mix of in some cases the right skews like the value pack on sticks and in other cases it's just good.
Detail execution by the selling organization, just, just good solid fundamentals.
Got it.
And then one last one for me, you know, one of the things I don't think I've heard you speak much about is promotional activity and obviously across the food landscape, that's been kind of a hot button topic, just wondering if you can kind of share your perspective on what's happening, you know, in the promotional environment, maybe what you're hearing from retailers, and maybe why that's, that's not really applicable to some of your products.
Yeah, so if you, if you unpack our trade spending, one of the things.
That we talked to you about is that we took up our level of trade spending in the back half of last year in retail modestly and that we intended to keep it up in the 1st and 2nd quarter we were going to take the overall spending rate and sort of level load so it's going to be a little bit higher in the 1st and 2nd quarter and then marginally lower in the 3rd and 4th quarter.
So our trade spending rate was modestly, I don't 100 basis points or something maybe if higher in the period.
But as it pertains to promotions, you know what I would focus your attention, Scott, is I just recently went through all of our updated elasticities with our retail team and what we're finding is that heavy trade spending isn't really driving the incrementality that we would have expected.
So as we think about trade spending going forward, we're going to be somewhat cautious about it.
It's, there's certain products where it seems to work better than others if we can get feature and display particularly on things like our.
Our license saucesit on an incap, it really helps us drive household penetration and performance, but we don't think that it's a lever that we're going to want to lean into in this environment outside of very point specific activities.
Understood.
Thanks so much.
I'll pass it on.
Thank you.

Operator

Our next question comes from the line of Andrew Wolf with CL King.
Please proceed.

Andrew Wolf

Thanks.
Good morning.
Congratulations on really good looking quarter.
I'd like to ask about the,
Few questions on the Texas Roadhouse dinner rolls, how the, I think, you know, you've said it's right now it's still only at Walmart, and
They talk about, is that being featured there or is that just sort of in their frozen aisle and just it's, it's movement is not being kind of promoted in any special way.
And secondly, do you have any view yet from their data or your, your outgoing shipping data, however you look at it,
About repeat sales from similar customers or if it's still sort of in the trial phase.
Yeah, so what hit those questions in sequence Andrew, so first, just as context, it's one single skew.
That were
That is available right now at Walmart only and we were able to work with Walmart in this case to co-develop this idea so we afforded them a a small.
Of exclusivity while we build capacity to launch it into the rest of BTO, but that one SKU at retail is not being featured, it's not getting incremental display it did get a fair amount of viral support by way of social media once it became aware that the product was out there.
And it's just pulling right off of the shelf, so there's really nothing.
Incremental being done in terms of marketing and promotion to facilitate this.
I think I mentioned the cells when we can keep it in stock, it's usually somewhere between a million and 11.5 million per week as we launch it into full retail I would expect to see those numbers at Walmart start to pull down as it becomes available at other places.
Now, your, your last question about repeat is it really, really important question, and what we're seeing is the repeat on this item is actually quite high.
The purchase cycle is actually somewhere in the range of like 13 days, so in many cases we're seeing people come back twice a month to buy this item which in a frozen category is faster than anything that I've seen, you know, Sister Schubert tends to be a heavy holiday item and maybe a Sunday dinner item where this item is everyday item if we look at it today it's been the number one item available in frozen bread and when
Measure it across.
All the frozen just the velocity of the items, it's a performing.
Also
So I think that the more we see of this, the more we believe that, it's just a, it's a great tasting item that we think has a long term leg so we're excited to share with you as we bring online that capacity, how it continues to perform in the marketplace and importantly how we take the platform of Texas Roadhouse and expanded into more SUs and more channels and help this brand and this channel achieve all of its full potential.
Got it.
So the ACV Outlook sounds quite promising, I would imagine.
Whenever that exclude can you just
Speak to the exclusivitypar or is that a trade secret secrets here beginning in April we'll begin to ship it into 4 states into all channels, so it'll be Moo.
And then really beginning in August once we're we're fully in capacity we'll begin to ship it to the rest of retail and then predicated on performance will be evaluating incremental suses and then also channels my club and things like that.
Got it.
Too quick housekeeping if I can, on the pension plan retirements is there ongoing kind of cost savings that was running through the P&L we will get a a modest savings in terms of fees.
And and administrative costs from and amortization of those losses will, will stop, so, modest, modest P&L benefit going forward.
Okay.
Thank you.

Operator

Thank you so much and as a reminder to ask the question, simply press star 11 to get in the queue.
All right, I don't see any further questions in the clue and I would like to turn the call back to Mr.
Sucinski for his concluding comments.
Thanks, operator, and thank you everybody for participating today, before we wind up the call, I wanted to make just a couple of comments about all of the emerging discourse that's taking place, out in the industry about Make America healthy again and particularly the focus on big food and in moments like this we believe it's important to ground ourselves on really key facts and first as our tagline, the better food company implies we.
Have and we always will comply with all state and federal food regulations.
It's especially food manufacturers, businesses historically focused on supply and leading restaurants and competing in niche retail categories, very few of our products contain many of the chemical ingredients of concern that are receiving attention today.
And then I want to assure you that to the degree to which any of our ingredients, those are which are are receiving some scrutiny today or anything else for that matter come under scrutiny.
We have every confidence that our industry leading culinary R&D team will enable us to adapt to the meet consumer needs and continue to grow a big, strong, and, and relevant a food company to supply our critical restaurant partners as well as consumers in the categories in which we compete.
So
A lot of interesting times in the food industry these days, and I just want to assure you guys that are following us that we are we're we're keeping track of this discourse and we're plotting the strategy to ensure that we always serve safe food and relevant food and meet the needs of all of our stakeholders, so that ends our our call today and our comments, we look forward to being with you guys in a few months where we go over our Q3 results.
We hope you guys have a great rest of the day.
And thank you everyone for participating in today's conference, and you may now disconnect.