Lancaster Colony Corporation (NASDAQ:LANC) Q1 2024 Earnings Call Transcript

Andrew Wolf: Great. I guess that’s really helpful. And — you earlier, Dave, you mentioned private label. I assume that — that’s sort of the event not completely unknown, but the degree which is private label substitution, I would imagine as a big driver of some of the responses.

Dave Ciesinski: Yes. So, — and I think it’s really — it’s a watch out. So if you look at some of the most recent data, what you’re seeing is that the private — the growth of share of private label is still somewhat modest, right? So you’re not seeing a big run to private label. And I would go back to the fact that this transition away from free money is starting to buy consumers in certain demographic segments more than others, and they’re making trade-offs. In some cases, they just may be going to shop in different outlets where they feel like they can get value. In some cases, they may start to look at things like private label. For us, as we think about our brands, this is stuff that we’ve done. All of us that have been doing it a while, I can remember brands like [Indiscernible], where we knew we had to have certain price gaps versus private label because if we crept above those price gaps, our brand was under pressure, right?

So, that was then. This is now. We need to be doing the same thing on our brands, all of our brands within the context of this environment to make sure the value proposition is right in the absolute, but it’s also right versus those other substitutes, whether it’s private label or another brand.

Andrew Wolf: Great. Appreciate it.

Dave Ciesinski: Of course.

Operator: Your next question comes from Todd Brooks of The Benchmark Company. Your line is open.

Todd Brooks: Hey thanks. Good morning gentlemen.

Dave Ciesinski: Good morning Todd.

Tom Pigott: Good morning Todd.

Todd Brooks: I want to dig in on the licensed branded product a little bit. First, I was wondering if you had at your fingertips the Arby’s number for Q1. You talked about the other three key brands.

Tom Pigott: Give me a second here. Dale, if you get it before I do, fell free.

Dale Ganobsik: So, for the quarter, Todd, it was about $3 million.

Todd Brooks: Okay, great. Thanks Dale. My follow-up and why I needed that data point. What I don’t think I may be understood about the business, I wanted to explore is — is there a certain seasonality to demand for these products between the September quarter and the June quarter? Because I know we saw it last year, but I thought some of that may have been around Horse Cave and just ramping into the new facility. But again, we’ve seen a sequential downtick of about by my estimate, almost $7 million here in the September quarter. Can we talk about seasonality for those products? And then I’ve got a follow-up along that same line of questioning.

Dave Ciesinski: My intuition is that this really isn’t a seasonal business. A seasonal business Sister Schubert is a great example of a highly seasonal business where we’re going to see a spike over Thanksgiving and Christmas and another spike over Easter. We’re going to see — if we were talking about gravy in the old days, that would be a business with a big seasonal spike. With most of our sauces, I think you’re going to see that it’s more level loaded across periods. I think what you’re likely to see that may be driving periods where it’s higher and periods when it’s lower, a couple of things. One, when we launched the items a lot of time, we get a lot of elevated display end caps that will drive a spike. So, when we lap that, it could come across as something that’s unique that’s going on.