Q2 2021 J & J Snack Foods Corp Earnings Call
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Thank you for holding your conference begins and about two minutes.
Once again, we appreciate your patience of the conference will begin and about two minutes.
Yeah.
[music].
Welcome to the J&J snack foods second quarter earnings Conference call. My name is James and I'll be your operator for today's call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the Q&A session. If you have a question. Please press star one on your phone and also note. This conference is being recorded.
And I'd like to turn the call over to Dan Fastener, Dan you may begin.
Thank you very much good morning, everyone and Dan Fashioner President of J&J snack foods and we're just so excited to talk to you today about our Q2 performance.
While we all are continuing to see the impacts of COVID-19 on our business and personal lives. We're starting to see some real positive momentum and the business. The environment is changing as more venues are opening capacity restraints or being lifted more people are getting the vaccine and overall consumer confidence is improving every month R. J.
The J associates of work, so hard and I'm really so proud of them over the past the last year to manage through unprecedented year and we are in great position, the bounce back as traffic and our customers venues and retail outlets recover despite the challenges of this past year, our financial position remains strong.
And we continue to improve our liquidity even as profits are challenged and joining me today and the room are Gerry Shreiber, founder Chairman and CEO, Ken Clarke Senior Vice President and CFO, Marjorie Ross Cobb, Vice President and General Counsel, Bob Modano and Bob.
<unk> senior Vice President of sales, let me take a few minutes to review our results.
The forward looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to.
To differ materially from those projected and the forward looking statements.
You are cautioned not to place undue reliance on these forward looking statements, which reflect the management's analysis only as of the date hereof.
We undertake no obligation to publicly revise or update these forward looking statements to reflect the events or circumstances that arise after the date.
So the results of operations really excited about it net sales were $256 2 million per the quarter of decrease of 6%.
Sales improved throughout the quarter led by venue openings accessibility of the COVID-19 vaccine improving consumer confidence and the spring season.
Both of our foodservice and frozen beverage businesses improved substantially during the quarter due to these and improving consumer trends.
Our retail business again continued to hold strong growing at 17% and the quarter.
Operating income was $7 $2 million per the quarter of decrease of $3 8 million compared to last year and.
And proved sales volume and a strong focus on cost efficiencies helped drive improved gross margins and profitability when compared to last year.
And now I'd like to review the results of each of our business segments.
Foodservice.
Sales the foodservice customers decreased only 1% for the quarter and improving trend when compared to Q1 2021 that had declined 13% versus the prior year, Charlie traffic continues to improve its theaters of reopening and entertainment and amusement venues increased.
The city and.
And strong growth across <unk> and casual dining restaurants.
Soft pretzel sales decreased 19% and frozen juices and ices steep.
Increased 12% share.
Taro sales were relatively flat for the quarter and sales of bakery products declined 7%.
Our handheld business had a strong sales quarter exceeding last year by $12 5 million or 168% that was driven by our new product developed for one of our wholesale club customers as we've previously discussed.
Operating income and our foodservice segment decreased $1 9 million and the quarter driven by lower sales and product mix gross margin improved progressively over the quarter driving and much improved profitability versus Q1.
Retail supermarkets continue to do really well for us our retail business continues to perform well as sales increased 17% for the quarter.
And those sales were led by our Super Pretzel brand with an increase of 28% and the quarter.
Frozen juice and ice and sales were up 22%.
And sales of <unk> declined 2% handheld sales declined 28% for the quarter.
Operating income increased 2 million or 47% in the quarter driven by higher sales and operating income margins near 15%.
Over 300 basis points better than last year.
Frozen beverage sales of the frozen beverage business segment were down 32% and the quarter.
Average related sales were down 42%, driven primarily by a 40% decline and gallons as traffic and theaters abuse of parts and retailers face continued impacts from COVID-19. These.
And these trends are improving though compared to a 56% decline of gallons during our first quarter as consumers return to our customer venues.
Service revenue declined 16%.
Almost entirely from a cancellation of one of our key customers preventative maintenance programs.
The machine revenues decreased 36% due mainly from slower customer expansion and replacement during and another COVID-19 impacted period.
Our frozen beverage segment incurred an operating loss for the quarter of $5 2 million as the COVID-19 restrictions continued to pressure sales.
While the sales challenges continue to impact gross margin mix and efficiency margins improve steadily across the quarter and operating and profit improved over $5 million when compared to Q1.
Consolidated.
Gross profit as a percentage of sales was 23, 8% this quarter down from 25, 5% last year.
Gross profit percentage decreased because of the previously mentioned and COVID-19 sales pressure on our foodservice and frozen beverage segments.
Total operating expense as a percentage of sales was 29% and the quarter, leveraging 60 basis points compared to last year's 21, 5%.
Total expenses were $4 8 million below last year through diligent management of some variable expenses and our operations really proud of that accomplishment and what we were able to do.
Net earnings for the quarter was $6 1 million down from $7 3 million last year.
Our capital spending and cash flow.
Our cash and investment Securities balance was $280 million as of March 27th 2021, and increase of $2 million from our September year and.
We continue to drive positive cash flow and our balance sheet and liquidity remains strong and this challenging and COVID-19 environment.
We continue to look for acquisitions and remain focused on the long term growth and opportunities of our business.
We spent $19 million and capital expenditures through six months ended March 27th 2021.
As we continue to invest and our plant efficiency and growing our business.
We estimate our spending for the year to be about consistent with prior years.
A cash dividend of <unk> 57, five cents a share was declared by our board of directors and paid on April 13 2021.
We didnt buyback any shares of our stock during the quarter.
Our investment income this year was <unk> $6 million 1 billion and greater than prior year's second quarter due to improved market conditions.
We are really encouraged by this quarter.
And look forward with great anticipation to the rest of the year.
We want to thank you for your continued interest and J&J snack foods and I will now open it up for any questions and answers. Thank you very much.
Yes.
Thank you as.
We can begin our question and answer session. If you have a question. Please press star one on your phone.
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Our first question comes from Brian Bell.
Hey, good morning, everyone.
Good morning, Brian how are you.
Ryan it's good.
Could you Brian.
Some details about the trajectory of the improvements throughout the quarter.
Delighted that.
And some of your comments and then maybe give an indication of where the.
Performance stands for food service.
And the president and beverage business and alright months.
Sure Ryan I'll take a crack at that and then I'll, let Ken plug the answer some of the questions as well.
But the quarter.
<unk> the grow as we went throughout the quarter. So January and February were pretty much the same but March really started to take off.
And we're starting to see that continue through the next quarter.
On the on the frozen beverage business side of the business.
And we saw a great increase from quarter, one to quarter two and.
And as we ended Q2 with the frozen beverage business, we even saw profit and that business, which was really encouraging.
As we look forward through the rest of the year.
Yeah, Hey, Ryan Kimball like here I would just add.
And I think your question kind of is how did things progress through the months of the quarter.
I would say February quarter to date, particularly if you look at.
Foodservice it was still considerably better than Q1.
So I think we ended the quarter to date as of February probably at the.
50% improvement over Q1, and you add in March.
When things open back up when we got into the spring season.
And March certainly helped that number as well ultimately driving.
Foodservice being down just 1%.
So, but it wasn't just March it was.
And it was healthy gains out of the month of March certainly played.
The bigger impact on that from frozen.
March was really when we saw the business turnaround theater started announcing the opening up New York's open California's open capacities are increasing amusement parks are expanding capacity and I think essentially we had thousands of venues and opened up during that period of January through March and we didn't have the.
A year ago, we did and it really peaked during the March month.
So and the frozen business really benefited from spring and we really leave the cash.
Quarter with a lot of confidence as to what we're going to do and.
April and into Q2, as we see that business rebounds.
Great that's very helpful and.
In terms of.
<unk> of shipment and is there anything that we should be expecting.
The foodservice and present aggregate maybe.
Selling in a little bit more to help us rebuild inventories of parts of the economy, our RV opening.
Or is it just or is that not as relevant.
Can you elaborate a little bit more Ryan on your question the materially answer that.
So I just wanted to see if the.
Some of the improvements day, that'd be a theme and the foodservice business and the friends and beverage business.
Was that due to shipment.
And the timing of shipments rather than the demand on the <unk>.
Other side as I would imagine.
Businesses are selling from being fully closed to reopening.
We're opening up more locations and they need to build up their inventories.
Well, we can see and demand remained high at this time Ryan and.
And we are encouraged by March and sure. There was some backlog of simple some supplies that were left but we're seeing a continued demand as we enter into April here.
Okay. Thank you.
Number for your I am, but I think youre asking and was there.
Sales pulled forward.
The demand.
All of the sudden I would say that would be marginal.
The steadily picked up throughout the quarter, but I, certainly don't see where theres anything material in terms of sales being pulled into March and not <unk>.
Consistent you Shouldnt you should expect much of the same improvement I think as we go into the second quarter.
Okay perfect. That's helpful. And then I think the last question from me retail business continues to perform well.
Is there anything any way that we shouldnt strain that is the last in the tougher compares.
And the demand shifts towards away from home.
Is there anything potentially incremental about that business debt.
We'll stay.
After the pandemic.
And where we're continuing to see good momentum and that business. We're certainly going to start the cycle two of the biggest months that retail had.
Last year and that April and May time.
But we are continuing to see good sales increases and that area, Bob you and elaborate on that and a little bit yes, I think that youll continue to see the business be strong by virtue of our promotional planning with our customers and also new product distribution that we've secured debt will start to bear some fruit as we get into.
Q3 Q4.
Thanks, that's it from me.
Thank you Ryan.
Next question from Jon Andersen.
Hey, John.
Hey, good morning, everybody.
Are you.
We're doing great how about you.
Good. Thank you yeah, congratulations on debt.
Some of the good news and the quarter.
Thank you very much.
Cited about it we're excited about the momentum.
And I just wanted to revisit.
One of Ryan's questions if I could.
And and maybe it's.
Maybe it's for Ken on the.
Frozen beverage business.
And.
Try and still trying to understand like if we think about March or how you exited March.
And the frozen beverage business, what kind of.
Performance, you were seeing kind of.
Year over year basis, where we kind of back of the level, where we still down.
What kind of rate I know, there's been real trend improvement sequentially and it sounded like it really accelerated in March but it would be helpful debt have some sense of.
Kind of the exit trends.
And that portion of the business.
Thank you John and good question, Yes March.
For example, and the frozen business.
It was our first month and many months of profitability.
As you look at March by itself it was a profitable month for frozen.
Where we've struggled with sales and margin proud of the month of March sales.
Sales and I think we're probably roughly 90% of FY 19.
So you're starting to see that quality way back to kind of call. It our base and then even gross margin.
The entirely back.
Was it within two or three day, two or 300 basis points of <unk>.
What I would consider a bit more of a run rate for the frozen business and.
Around 30%.
That's super helpful. I do appreciate that that.
And that additional color.
Okay, So let's see.
Maybe.
For Dan.
Dan and your new role.
And you've had several months now not to put you on the spot but.
I'm kind of curious as you've kind of surveyed the business.
If theres any.
How you've thought about maybe changes whether it.
And there are things that you think the organization can do from a structural perspective, maybe and.
The emphasis and certain areas debt.
That could could benefit the business and aggregate going forward, so anything maybe a.
A little bit newer different even if it's on the margin.
Around the periphery that you think.
We could look forward to going forward.
With some new eyes on the business.
Thank you John.
As you know this has been of great business for a long time and so.
So coming into it with some fresh eyes able to do some new and exciting things as well.
I think I'd mentioned the this this to you once before we have now hired on a new CMO, who had 22 years of experience with Coca Cola and he's come in with some fresh ideas around marketing and we're looking at ways to kind of do of brand stretch with both our Ics and Super Pretzel brands finding ways.
Expand those strong brands out and sales wise on the operations sides were doing some exciting things there we're looking at distribution centers and we're looking at transportation and ways.
To do that may be a little bit different.
We have we have organized the procurement group and the R&D and alignment and of ways that we think of that where it might be some cost savings there, but also some efficiencies.
We've got some really great growth going into the sales side, some really tremendous energy going around that.
You mentioned on <unk>.
And I think on our last call at ICD, we talked about some diversification.
Outside of the theater groups and we've had some really good success, we have a couple of rollouts going on and.
And that group right now both the Golden Corral and of <unk> chain down and the South East.
Sure.
We're picking up every rock I think I had said that to you once before and we're picking up every rock and being able to improve what we think margins and the future I think that will continue to show it showed a little bit this quarter I think it will continue to show next quarter and even greater in the quarter four.
I feel like we are hitting on all cylinders and quite frankly, I think we've got a good leadership team in place and have uncovered lots of different areas to make this company.
Even better than what it what it's been and it's been a great company all along so I think that's of Great question and I'm, just really encouraged John.
That's that's.
That's great to hear and agree it's been a great company for so many years and.
Look forward to it the continuing to be.
The last question from me is.
Just it's interesting with this the demand coming back on your away from home business.
You are already kind of back.
And what Youre seeing improvement, obviously, both and in both segments foodservice and and.
Frozen beverages.
And at the same time retail growing continuing to grow.
Is there anything.
I mean, the supply just being able to kind of meet demand I mean, this might be the cot business. The reverse of what you've experienced over the last year, but how are you feeling about your ability to kind of meet demand with high service levels.
<unk> forward as things do begin to continue to return to normal.
Yes.
And that is a great question and and that is one of the areas that we're heavily focused on just like just like you said it started off with the roll really picking up every rock and looking at ways that we can improve margin and growth sales.
I think we're well on our way to doing that now we have this labor shortage nationwide that we're having to deal with and so we're looking at each plant and and and evaluating the closely and finding ways to make sure that we get the labor in there. So that we can keep up with this peak demand that we're going through.
Maybe I'll tag one onto that but because you maybe think about it so talk broadly and this could be for kind of measure about cost inflation.
And pricing your ability to price or desire to price.
Just how should we think about you.
And that going forward because it is becoming obviously a big talking point for a lot of different companies.
Yes, it really is and we.
We are seeing some.
Some costing coming to us and certain areas like oil and flower and chocolates and plastic cups things like that.
And so we are we have we have passed on pricing on the frozen beverage business and we are in the midst of evaluating that on the.
And on the snack foods side of the business as well hope that we can see some impact from that probably by the time that we get and implemented in the fourth quarter.
Thank you so much good luck.
Great. Thank you John.
Our next question is from.
Todd Brooks.
Hey, Todd.
Hey, good morning, everybody congratulations on the.
And the visceral start of the recovery here so.
Yes, it really is exciting its a good time to be on the call for sure.
Absolutely.
Just a few questions Ryan and John covered a lot of mine. If you look at your foodservice customer base.
Can you maybe quantify.
And how much of that basis fully reopened.
And we opened with capacity.
<unk> are still closed and the reopening still to come.
Bob could you quantify that any way what I would tell you is it's continuing to open.
<unk> so some of them are advanced.
Certainly the <unk> side is doing really really well for us and and the restaurant side is coming back the theaters are coming back slowly they are at about a 30% opening.
Through the first or the second quarter, and we expect that the jump to the 50% 60% range. During Q3, and then as high as 80, 85% and Q4.
The school business is still somewhat slowed the open but.
But really encouraged what might happen there and the fall everything that we're reading and hearing is that many of the schools College campuses K through 12, we'll be back in action and the fall and so we're really encouraged by that Bob do you have anything also on the sports and entertainment side, we've been very encouraged by the results.
And so we've seen there against the SME and we anticipate that's going to continue as capacities are our increase yes, and one more just made me think he was talking the amusement sector. We expect to have a really really strong year and the amusement parks and and March we were up to that 90% 9500%.
<unk> and the amusement parks and we feel like that will continue all the way through.
Yeah, and I would just.
That's correct.
Okay understood. The news this morning and.
They were talking about basically relieving requirements on the mask outside of exactly.
The vaccines are getting out there and as Youre seeing the doctor if Archie and these experts.
And you can be outside without of mask, particularly if you've had the vaccine.
We expect that just the another further and the hat as particularly the sports and entertainment amusement parks.
The chat parts of our channel recover.
That's great and then we had spoken earlier on and the pandemic and I'm wondering how that's benefiting J&J now.
And then like a lot of the restaurants. She gets the you get the theaters of amusement parks.
Stadiums.
A lot of the operators have condensed the menus and absent of reopening.
And I am thinking of especially in theaters and maybe with a more streamlined menu, but that may be a higher percentage of J&J content.
Didn't lose any of your slot so to speak of that is that still a reality and a lot of the foodservice channels that are opening up and.
And they are much. So there are they have done that it is and it's really played in our favor Todd and.
And almost all cases that I can think of sitting here today.
And where they have limited the skus, both J&J and the frozen beverage side, both sides have withstand debt and been a part of it. So when you think about the theaters the information and I am getting back from them is they measure the.
Per head spend of the people coming in and the snack bar and that's up about 20% and both the the pretzel and the IC side has stayed in and when do you think about some of the other locations like.
Maybe of wholesale club, where we're continuing to have some really big success, it's a smaller menu, but our products are still there. So they have limited it but that's kind of played into our favor.
Yes.
Okay, Great and then the final one just looking forward to.
The summer time and what.
I'm and others are expecting will be kind of an explosion and travel by car as people get out the vacation again and they just start living again.
The update on your C store channel kind of penetration additional products and categories that youre, bringing to that channel and any sort of distribution.
Distribution gains with new partners on that front. Thank you.
Yes, the stores that have continued to do really really well for us J&J and put together a team a couple of years back.
And to really go after the C store and that has paid some real benefits for us and we continue to see that we continue to see some opportunities on the frozen beverage side as we speak right. Now we are having conversations with a couple of the large C stores that I think we'll see some really good expansion and before the end of this year.
And we see that as a growth market for us and continue to be of growth market on all sides of the business.
Todd you still there.
Okay.
Hello.
Yes, I'm sorry.
I thought he was finished and let them go.
J J.
Dave.
Yes, it is J alright.
Alright, let's just make sure. He was finished drove quick let's ask of them.
Okay.
And then the star one.
And here we are.
Go ahead, Todd I do apologize and finished.
No worries.
Congrats to everybody on the momentum.
Thank you very much really appreciate it look forward to following up with you. Thanks.
Okay.
Okay. Our next question is from Rob.
Hey, How's it guidance is.
And this Rob Dickerson and.
And this is Rob Dickerson from Jefferies, Yes, Yes, Hey, how are you Rob.
Yes, just known as Rob and like that.
So [laughter].
Just a couple of questions on the <unk>.
Foodservice line.
So Dan I think I thought I heard you say of kind of alluded to and maybe last quarter.
The hope at least right hope and prayer.
And as you kind of got through the year.
<unk>.
You may be able to kind of get back to kind of.
Pre pandemic levels and I'm just speaking of revenue now.
Q2 your revenue.
Revenues and foodservice were approximately $6 million lower relative to the Q2 <unk> and <unk>.
Even though some parts of the business still declined a bit less sales and we saw last quarter, obviously that Costco handheld business has really helped support which is great right that's incremental.
Right.
So the the first question and I just have is.
If I look at Q2, and say well, you're only $6 million lower.
Q2 relative to Q2 19, but.
But then given the seasonality of your business, usually youre, putting up higher revenue levels and the back half of the year I'm assuming right.
And that progression sequentially from Q2 kind of relative to the back half of 19 would continue and I kind of asked because frankly, I think consensus and Phil.
Under forecasting kind of what that potential could be and the back half of this year. So can you just kind of clarify what happened in Q2 versus.
Kind of prior comments as you move through the year would you expect maybe we can get kind of back to the pre pandemic level and so as you get through this fiscal year.
Well, we were really encouraged with Q2 and as we've said really loved the way that it finished March was really strong January and February up from Q1, and then March was really strong and we're continuing to see that.
After March.
I do believe Dod debt are Rob that we'll be able to get up to those those levels again right now the mix is still a little different than what it once was.
And so we have some we have some growth that needs to happen on the frozen beverage side still.
That will get up to the pre levels by the end of the year I'm not sure.
We believe that will continue to grow on the retail side. Although we are up against a couple of tough months, but still believe that we'll be able to grow on the retail side and really love what we're seeing on the foodservice side.
No.
Where maybe I had to open a prayer of corridor go.
Phil and more and more confidence that we can get up to those levels by the time that we end of the year mix might be a slight difference, but I think we can get up to those levels.
Got it okay great.
Good answer.
And then.
I guess just on the margin side.
And again this is kind of more directed to the foodservice business.
Like I said earlier $6 million lower out of revenue basis, and foodservice and Q2, but almost like $13 million lower.
On the operating profit side right. So revenues seem to be kind of inflicting a little bit more quickly than the profits are.
And.
But again.
Given the seasonality of the business, usually total company driver of your margins, a little bit higher and the back half. So I'm just curious are there.
The specific.
COVID-19 related costs that could increasingly roll off and the back half of the year number one or is it more of a maybe pricing catches up a little bit more to cost inflation in the back half of the year and I'll ask.
And maybe profitability was just better like and March relative to January and February like you said all of the top line and kind of get out of.
The feel at.
Tired of the timing recovery potential.
Adjusted crude service on the margin side as we get through the year.
That's clear.
I think so Jim do you want to tackle that Rob great question.
Similar to what I was saying about the frozen.
Margin.
Steadily got better from foodservice over the months of the quarter. If you look at just the quarter. It was a one.
100 basis points better than Q1.
And if you look at each of the months and the quarter each month. The gross margin improved March gross margin was.
40 basis points better than February and gross margin. So as we mix in more sales of higher margin products like pretzels, and Churros and when you.
John and get the engine going.
And David and that is to leverage expenses better.
We start to see those margins creep back up so.
I think you can expect to see with more sales of that improvement continuing non job month after month.
To where we think we will get back somewhere in kind of call it our base level.
2019.
The base I think the question is will we get there all the way by the end of the year.
Not sure, but I expect us to get much closer to that and then.
The mix of new products and plays a role and that as well.
Yes.
And see how that plays out on the COVID-19 side of the expenses.
We're still spending $720000 of quarter until that and probably expect to spin that number maybe a little bit less in Q3.
That will be compared against.
When we started to spend against COVID-19 related costs last year.
I don't have that number off the top of my head, but the <unk>.
<unk> of those two items.
I don't expect to have a material impact either way because we're going to continue to do what we needed to keep our.
Folks and the plants safe.
Got it so let's say it's like some.
Material.
And Paul on the.
COVID-19 front and whatever that means.
And that probably hold steady for a bit and then hopefully over time whatever.
It probably gets lower does that kind.
Have a broad set of assumptions, yes, I think thats to say this is Dan and I think thats the safe statement.
And to evaluate it really closely we get together as a group of monthly and and talk about what we need to do to keep people safe. We're looking at some new ways to do that where.
And the past year or so we've had stations that employees have to come through and.
We're looking at some scanning machines, now and testing that which might take some of the costs down but the.
The key for us is keeping our employees safe and making them feel comfortable about coming to work each and every day.
Yeah, Okay Cool and then just last question.
Just from the cash side.
And again, you got you got through the pandemic, just say it very well and the cash side sort of concur.
And that's doing that.
Cash position now of strong.
Two quick questions I think.
You had said before there might be some capex needs and some of the plants.
But I don't think theres like of the Capex guidance.
For the year of long term last year, and Youre spending of about 16 million and Capex.
Is that about right, maybe a little bit higher and then just the second follow up is just in terms of acquisitions. I know you said you keep working at it.
Maybe any color as to kind of like and.
And ideal world Alright hypothetically.
<unk> kind of acquisition.
Do you like to make.
The capex and localize the likely.
Yes.
I think what we've said around Capex is it will be spent and about the same thing we have and previous years.
That mix and capex might be a little bit different we're probably spending a little heavier on the J&J side and the the lighter on the IC side all.
So that might change and the next few months as we're rolling out of couple of new programs on the IC side.
We continue to watch that really really closely.
Put together a good capex team with cross functional people on it and looking at our plants and making sure that we are doing the right things to be the leaders not just today, but in the future and so.
If I were guests and the capex might stretch a little bit higher than even what we've stated, but but what we have stated is will be around the same amount on the M&A front Ken.
Ken and I are reviewing things.
Weekly for sure we're continuing to look, but we want to be careful and find the right thing.
Something that fits in with what we do today and that adds value to the company and the future.
And my perfect World that would be something probably in that $50 million to $60 million range, but I'm not limiting us to what we're looking at in that range either so.
We're being active but we're also being cautious and careful to make sure that we make the right choices there.
Fair enough. Thank you so much.
I would just add to that.
Ralph and the majority of that Capex spend is on call.
Call it more strategic Capex driving efficiencies of the plant.
Innovation and that sort of thing so.
Think about of the Capex, we're spending the.
The majority of that is being focused on.
The strategic areas that drive the return.
Yes fair enough.
And the license.
And because I think it's a bad thing I just want to make sure of is my model is right.
Thanks, Kevin and we say that.
Good day.
Thank you.
Yeah.
Our next question is from Ryan Hamilton.
Good morning, everyone and Greg Congrats on the on the rebound.
And last in line I think most of my questions have already been answered.
You talked about labor and cost inflation anything on the logistical side.
Flow down this this momentum potentially.
Well, certainly and our freight has gone up right.
And we're continuing to hit those headwinds, but but.
And as we talked about we are evaluating.
The increases on the on the foodservice side and the retail side right now and we will be taking that into consideration.
We're doing some things I think I mentioned earlier around transportation that we think has the potential the save us some money there too even though the cost of transportation has gone up and so we're working really hard to make sure that.
We maintain and grow the kind of margins that we have.
Sounds good.
Think anyone can argue the J&J.
Didn't survive the last 12 months and really good shape any early indications that you guys are taking market share from companies that were less fortunate.
Yes, well, we always think we are right and that might just be because we're bold like that but we always think we are and wed like to think that I don't know if we have exact facts on that but but I will tell you our competitive nature.
And wouldn't want us to think that we are and would want us to go out there and make sure that we are and the future.
Sounds good are there any early indicators that you guys are seeing net debt.
And displays that are now.
Not that you can share.
Yes, nothing that we have Ryan that we could share with you. Okay sounds good thanks again and congrats.
Thank you very much thank you.
And once again, if you have a question please press star one.
And the question from Robert Costello.
Just one question on the foodservice historically, that's been an area for growth and with the recovery and the restaurant industry is there anything new that youre going to do differently.
With regard to the products or technology or selling to the customer than say the last three years with the recovery and the industry right now.
Thanks.
Yes.
Honestly Robert.
I don't know that theres anything new or different except the greater focus on doing what we do today really really well.
Had a lot of conversations just had a leadership call last week, a lot of conversations about being better at what we do well today.
And so I don't know that we have anything new and the way that we're doing it but maybe just a greater focus Bob would you, yes, I think we have the strategic.
The idea of where we want to go with our products, who our customer partners are and that our base products are going to continue to help us grow the company.
So the end market customer on the foodservice was.
You used to do restaurants, and you had the waffle fries with Burger King and is that an area that youre going to continue to.
Innovate with new product or you're trying to expand beyond that.
Yes, we will continue to do that and just as a side note I said this earlier the <unk> channel is doing really really well for us we continue to grow really strong there right now and have some tests in place.
And that we are hopeful and the future as well. So we will continue to do exactly that.
Come up with some special the items for those kinds of places.
Thanks.
Thank you.
And one more time and if you have a question press star one.
Okay.
And it looks like we have all of our questions and answers.
Great well, thank you very much for being on the call today, we really appreciate it and we're really excited about the things that we're doing inside the business and the momentum that we see as we close out the second quarter and and are excited to have the opportunity to get back together with you three months from now and and hopeful.
About the momentum that we're seeing so thank you very much for spending the time with us today and we look forward to talking with you soon have a great day bye bye.
Yes.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
Yes.