Financial Data and Key Metrics Changes - Adjusted EBITDA for the first quarter was $27 million on sales of $343.8 million, representing a 7% increase in adjusted EBITDA compared to the prior year [5] - Gross margin improved by 200 basis points to 27.9% versus the prior year, driven by early savings from Project Apollo and improved product mix [5][12] - Net sales declined by 5.2% to $343.8 million, primarily due to a decline in the bakery business [5][11] Business Line Data and Key Metrics Changes - Food service segment net sales declined by $19.7 million, or 8.3%, to $219.2 million, with $18 million of the decline attributed to the lower-margin bakery business [11] - Handheld sales in the food service segment declined approximately $5 million, while soft pretzel sales increased by $3.6 million, or about 6.9% [11] - Retail segment net sales increased by $1.2 million, or 2.6%, to $45.9 million, driven by a $1.8 million increase in handheld volume [11] Market Data and Key Metrics Changes - The company experienced a dip in dollar sales in mid-November coinciding with a pause in SNAP benefits, impacting frozen novelties the most [6] - Dippin' Dots sales were up approximately 4% in the first quarter, fueled by retail growth and theater expansion [9] - The company anticipates incremental distribution gains across regional and national customers in fiscal 2026 [9] Company Strategy and Development Direction - The company is focused on higher-margin opportunities and operational excellence as part of its strategic direction [41] - Project Apollo is expected to deliver $20 million in run-rate operating income once fully implemented, with significant progress already made [7][29] - The company is committed to returning cash to shareholders, having completed a $42 million share repurchase and announced a new $50 million repurchase authorization [7][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the theater performance for the balance of fiscal 2026, despite a disappointing box office performance in the first quarter [10] - The company expects to achieve low single-digit growth for the entire year, factoring in the impact of SKU rationalization [25][26] - Management believes commodity pricing will be more favorable this year compared to the previous year, which faced significant headwinds [32] Other Important Information - Operating expenses increased by $95.4 million, including non-recurring plant closure costs [14] - The effective tax rate was 27%, with reported earnings per diluted share at $0.05 compared to $0.26 last year [17] - The company generated approximately $36 million in operating cash flow and invested $19 million in capital expenditures during the quarter [17] Q&A Session Summary Question: Sales and SKU Rationalization Impact - Analyst inquired about the full-year sales expectations considering the SKU rationalization impact of about 3 percentage points [19] Response - Management indicated that despite the SKU rationalization, they expect low single-digit growth for the year, supported by new business and innovation [25][26] Question: Project Apollo Cost Savings - Analyst asked about the $20 million annual run rate for Project Apollo and what needs to happen to achieve it [28] Response - Management believes they will reach the $20 million run rate starting in Q2, with most of the work related to plant consolidation already completed [29] Question: Commodity Environment and Gross Margin - Analyst requested an update on commodity costs and their impact on gross margin moving forward [31] Response - Management noted that commodity pricing is expected to be more favorable this year, contributing to gross margin improvements [32]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2026 was $27 million on sales of $343.8 million, representing a 7% increase in adjusted EBITDA compared to the prior year [5] - Gross margin improved by 200 basis points to 27.9% versus the prior year, driven by early Apollo savings and improved product mix [5][12] - Net sales declined by 5.2% to $343.8 million, primarily due to a decline in the bakery business [5][11] Business Line Data and Key Metrics Changes - Food service segment net sales declined by $19.7 million, or 8.3%, to $219.2 million, with $18 million of the decline attributed to the lower-margin bakery business [11] - Handheld sales in the food service segment declined approximately $5 million, while soft pretzel sales increased by $3.6 million, or about 6.9% [11] - Retail segment net sales increased by $1.2 million, or 2.6%, to $45.9 million, driven by a $1.8 million increase in handheld volume [11] Market Data and Key Metrics Changes - Sales in the quarter were impacted by the government shutdown and the pause in SNAP benefits, with a noted dip in dollar sales in mid-November [6] - Dippin' Dots sales increased approximately 4% in Q1, fueled by retail growth and theater expansion [9] - The company saw improved theater trends in January, primarily from the success of the Avatar movie [10] Company Strategy and Development Direction - The company is focused on higher-margin opportunities and operational excellence as part of its transformation initiatives under Project Apollo [5][38] - A new $50 million share repurchase authorization was announced, demonstrating confidence in the business and commitment to returning cash to shareholders [7] - The innovation pipeline remains robust, with several new products set to launch in Q2 [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving low single-digit growth for the full year despite a 3% impact from SKU rationalization [22] - The company anticipates achieving a $20 million annual run rate in cost savings from Project Apollo by Q2 [25][26] - Commodity pricing is expected to be more favorable this year compared to the previous year, which faced significant headwinds [29] Other Important Information - The effective tax rate was 27%, and on a reported basis, earnings per diluted share was $0.05 compared to $0.26 last year [15] - The company generated approximately $36 million in operating cash flow and invested $19 million in capital expenditures during the quarter [15] Q&A Session Summary Question: Sales and Project Apollo - Inquiry about the full-year sales expectations considering SKU rationalization and underlying growth objectives [17] - Management indicated that they expect low single-digit growth for the year despite the SKU impact [22] Question: Cost Savings from Project Apollo - Follow-up on the $20 million annual run rate for cost savings and the timeline for achieving it [25] - Management confirmed that they expect to reach the full run rate in Q2 [26] Question: Commodity Environment and Gross Margin - Question regarding the current commodity environment and its impact on gross margin [27] - Management noted that commodity pricing is expected to be more favorable this year, contributing to gross margin improvements [29]

Core Insights - The company reported an earnings recovery with adjusted EBITDA of $27 million on sales of $343.8 million for Q1 2026, marking a 7% increase in adjusted EBITDA year-over-year [5][12] - Despite a 5.2% decline in net sales, the company is focusing on higher-margin opportunities, particularly through its Project Apollo transformation initiatives [6][31] - The gross margin improved by 200 basis points to 27.9%, driven by operational improvements and a better product mix [5][12] Financial Performance - Adjusted EBITDA for Q1 2026 was $27 million, up from $25.3 million in the previous year [15] - Net sales decreased to $343.8 million, primarily due to a $19.7 million decline in the foodservice segment, with $18 million attributed to the lower-margin bakery business [6][12] - The company incurred $1 million in product disposal costs during the quarter, which impacted gross profit [29] Project Apollo and Strategic Initiatives - Project Apollo is expected to yield $20 million in annual run rate operating income once fully implemented, with $3 million in net savings realized in Q1 [7][24] - The company is in the ramp-up phase of Project Apollo, with plant consolidations expected to be completed by the end of Q2 2026 [7][24] - SKU optimization efforts related to Project Apollo are anticipated to result in a 3% decline in sales for fiscal 2026 [6][19] Market and Product Performance - The company experienced a 6.9% increase in pretzel sales in the food service segment, reflecting strong demand for its Bavarian formulas [8][12] - Retail segment net sales increased by 2.6% to $45.9 million, driven by a $1.8 million increase in handheld volume [13] - Dippin' Dots sales grew approximately 4% in Q1, supported by retail growth and expansion into theaters and amusement centers [9][12] Shareholder Returns and Financial Health - The company completed a share repurchase authorization, buying back $42 million worth of stock, and announced a new $50 million repurchase authorization [8][18] - The balance sheet remains strong with approximately $67 million in cash and no long-term debt, alongside $210 million of borrowing capacity under its revolving credit facility [17]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 was $57.4 million on sales of $410.2 million, a 3.9% decline in sales compared to the previous year [5][21] - For the full year, adjusted EBITDA was $180.9 million, while net sales increased by 0.5% to $1.58 billion [6][22] - Operating expenses increased by 24% to $118.8 million, which included $24.8 million of non-recurring charges related to Project Apollo [19] Business Line Data and Key Metrics Changes - Food service segment net sales declined by 1.1% to $259.3 million, with soft pretzel sales increasing by 3.6% [16] - Retail segment net sales declined by 8.1%, primarily due to lower frozen novelty volumes, although higher pretzel volume partially offset this [17] - Frozen beverage segment sales declined by 8.3%, attributed to lower beverage volume in the quarter [17] Market Data and Key Metrics Changes - Box office sales for the period aligned with fiscal 2025 were up 10% compared to the prior year, with projections for a 9% increase in North America box office sales for fiscal 2026 [14] - The theater industry is expected to continue its rebound in 2026, supported by a strong lineup of movies [14] Company Strategy and Development Direction - The company initiated a business transformation program called Project Apollo, expected to generate at least $20 million of annualized operating income once fully implemented in 2026 [8][9] - The focus of Project Apollo includes the consolidation of manufacturing facilities, with three facilities announced for closure [9][10] - The company plans to increase share repurchase activity, with $3 million in repurchases during the quarter and intentions to accelerate this in the current quarter [15][41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal 2026, citing operational execution improvements and a strong innovation pipeline [7][34] - The macro environment remains cautious, particularly in retail, but management is encouraged by early results in Q1 of fiscal 2026 [34] - Challenges faced in 2025 included consumer sentiment, foreign exchange impacts, and commodity cost inflation, but management is bullish about overcoming these in 2026 [35] Other Important Information - The company has approximately $106 million in cash and no long-term debt, maintaining a strong financial position [14][21] - Adjusted earnings per diluted share were $1.58, down from $1.60 in the prior year, with a significantly lower effective tax rate of 4.8% compared to 26.8% [21] Q&A Session Summary Question: Impact of portfolio optimization on sales - Management indicated that portfolio optimization could lead to a 1-1.5% impact on overall sales growth, with expectations of mid-single-digit growth year over year [28][29] Question: Macro environment and 2026 outlook - Management noted cautious consumer sentiment but expressed positive momentum entering 2026, with expectations for benefits from plant closures and innovation [34][35] Question: Timeline for Project Apollo and automation - The second phase of Project Apollo focusing on automation and efficiencies is expected to be implemented in 2027, with initial benefits from plant closures anticipated by Q2 of fiscal 2026 [50][68] Question: Gross margin potential post-Apollo - Management aims to improve gross margin above 30% toward the mid-30s, with savings from Project Apollo contributing to this goal [68] Question: Capital allocation and share repurchase plans - Management plans to accelerate stock buybacks, with $42 million remaining on the authorization and intentions to buy back stock in the current quarter [41][42]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2025 was $57.4 million on sales of $410.2 million, a 3.9% decline in sales compared to the previous year [5][18] - For the full year, adjusted EBITDA was $180.9 million, while net sales increased by 0.5% to $1.58 billion [5][19] - Consolidated gross profit was $130.2 million, with a gross margin of 31.7%, slightly down from 31.8% the previous year [16] - Adjusted earnings per diluted share were $1.58, compared to $1.60 in the prior year [18] Business Line Data and Key Metrics Changes - Food service segment net sales declined by 1.1% to $259.3 million, while soft pretzel sales increased by 3.6% [14] - Retail segment net sales fell by 8.1%, primarily due to lower frozen novelty volumes, although higher pretzel volume partially offset this decline [15] - Frozen beverage segment sales decreased by 8.3%, attributed to lower beverage volume in the quarter [15] Market Data and Key Metrics Changes - Box office sales for the period aligned with fiscal 2025 were up 10% compared to the prior year, with industry projections for a 9% increase in North America box office sales for fiscal 2026 [12] - The theater industry is expected to continue its rebound, supported by a strong lineup of movies [12][28] Company Strategy and Development Direction - The company initiated a business transformation program called Project Apollo, expected to generate at least $20 million in annualized operating income once fully implemented [7][8] - The focus of Project Apollo includes the consolidation of manufacturing facilities, with three facilities announced for closure [7][8] - The company plans to increase share repurchase activity, with $3 million in repurchases during the quarter and intentions to accelerate this in the current quarter [13][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal 2026, citing operational execution improvements and a strong innovation pipeline [6][27] - The macro environment remains cautious, particularly in the retail sector, but management is encouraged by early results in Q1 2026 [27][28] - Challenges faced in 2025 included a significant LTO for churros and unfavorable foreign exchange impacts, but management is bullish about 2026 [29] Other Important Information - The company has a strong financial position with approximately $106 million in cash and no long-term debt [12][18] - Marketing expenses increased by 4.8% year-over-year, driven by new sponsorships and promotional activities [17] Q&A Session Summary Question: Impact of portfolio optimization on sales - Management indicated that portfolio optimization could lead to a 1-1.5% impact on overall sales growth, with expectations of mid-single-digit growth year over year [22][24] Question: Macro environment and its impact on 2026 - Management noted cautious consumer sentiment but expressed positive momentum entering 2026, with expectations for theater industry recovery [27][28] Question: Timeline for Project Apollo and expected benefits - The full run rate for plant closure benefits is expected to be reached by Q2 2026, with additional savings anticipated in the latter half of the year [31] Question: Details on commercial opportunities for fiscal 2026 - Key opportunities include a churro LTO with a major customer and a frozen beverage rollout with a large convenience store operator [54] Question: Gross margin potential post-Apollo - Management aims to improve gross margins above 30% toward the mid-30s, with savings from Project Apollo contributing to this goal [56]

Financial Data and Key Metrics Changes - The company reported a revenue increase of 4.1% to $362.6 million, driven by volume increases and pricing [5][19] - Gross margin declined to 25.9% from 27.2% year-over-year, reflecting input cost inflation not fully offset by price increases [6][19] - Operating income decreased to $6.2 million from $9.7 million, with adjusted operating income at $8.2 million compared to $13.5 million last year [22][24] - Net earnings fell to $5.1 million from $7.3 million, with earnings per diluted share decreasing to $0.26 from $0.37 [23][24] Business Line Data and Key Metrics Changes - Foodservice revenue increased by 4.5%, with soft pretzel sales up 4.8% due to convenience store recovery [11] - Frozen novelties saw a significant increase of 9.8%, driven by Zippin' Dots growth [11] - Bakery sales grew by 6.6%, primarily due to price increases [12] - Retail sales increased by 2.2%, with frozen novelty sales rising significantly, while soft pretzel sales declined by 7.4% due to an ordering system issue [12] Market Data and Key Metrics Changes - Frozen beverage sales increased by 4%, with a notable 10% volume increase attributed to a 45% growth in theater channels [13] - The North American box office is projected to grow over 10% year-over-year, indicating a strong recovery in the entertainment sector [13][14] - Consumer spending on leisure and entertainment is outpacing traditional retail channels, providing a favorable environment for the company [14] Company Strategy and Development Direction - The company is focused on driving volume growth and mix improvement across its portfolio, with a disciplined approach to capital deployment [10][17] - A new $50 million stock repurchase authorization reflects confidence in long-term value and financial flexibility [10] - The rollout of Dippin' Dots to theaters is progressing well, with plans for further growth in retail channels [16][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in Q1 but expressed confidence in overcoming them, citing strong underlying business fundamentals [9][17] - The company is optimistic about the recovery trajectory in theater traffic and overall consumer spending trends [14][25] - Management expects gross margins to improve in the second half of the year, targeting a return to low 30% levels [66][67] Other Important Information - The company experienced significant inflation in chocolates, eggs, and proteins, which impacted profitability [7][20] - The effective tax rate for the quarter was 27.2%, up from 26.6% in the prior year [23] Q&A Session Summary Question: Can you provide a gross margin bridge for the decline year over year? - Management indicated that about 80 basis points of the decline were due to pricing gaps relative to input costs, with the remainder attributed to mix changes in the bakery business [30][31] Question: How does the pricing lag occur? - The delay in implementing price increases was primarily due to the time taken to push these through to customers, not a lack of visibility [46][47] Question: What is the impact of the peso on profitability? - The peso's depreciation had a nearly $1 million impact on profitability for the frozen beverage segment [54] Question: What is the outlook for gross margins in the second half of the year? - Management expects gross margins to improve, aiming for low 30% levels, with seasonal factors contributing positively [66][67] Question: Can you elaborate on the Dippin' Dots rollout? - The Dippin' Dots product has been well received, launching with a major nationwide retailer, and is expected to see significant growth [70] Question: Will stock repurchases occur alongside potential acquisitions? - The company plans to be opportunistic with stock repurchases while also actively seeking attractive acquisition opportunities [75]