Q1 2021 UTZ Brands Inc Earnings Call
[music].
Okay.
Good day and thank you for standing by welcome to the <unk> brands first quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session for <unk>.
I ask a question during the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Kevin powers head of Investor Relations. Thank you. Please go ahead.
Good morning, and thank you for joining us today on the <unk>.
Call today, Alright, gentlemen stack.
Chief Executive officer, and carried of ore Chief Financial Officer.
During this call management may make forward looking statements within the meaning of the federal Securities laws.
These statements are based on management's current expectations.
And involve risks and uncertainties.
That could differ materially from actual events and those described in these forward looking statements.
Please refer to these risk factors in our most recent quarterly report filed with the Securities and Exchange Commission.
As well as the risks highlighted in our press release issued this morning for.
For a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.
Please note.
Management's remarks today, we will highlight certain non-GAAP financial measures. Our earnings release also presents the comparable GAAP numbers to the non-GAAP numbers and reconciliations of the non-GAAP results for the GAAP financial measures.
Finally the.
The company has also prepared presentation slides and additional supplemental financial information, which are posted on <unk> Investor Relations website.
You may want to refer to the slides during today's call.
This call is being webcast and an archive will be available on our website.
And now I'd like to turn the call over to Dylan Dylan.
Thanks, Kevin and good morning, everyone in the first quarter, we continued to execute against our value creation strategies to position the company for long term success.
Our net sales increased 18% and our adjusted EBITDA grew 30% and we remain on track to deliver on our full year 2021 sales and profitability targets.
As we lap our significant outperformance versus the category in the early weeks of the COVID-19 pandemic last year, our retail sales increased five 9% are the two year CAGR basis and showed continued strength across our platform.
Importantly, our new buyers and repeat rates showed strength and the increased versus prior year and remained consistent with where we ended fiscal 2020.
We continued to further penetrate key channels like e-commerce, and convenience and we are driving distribution gains and our emerging and expansion of geographies.
In addition, we went live on our ERP implementation that will better enable our growth platform to scale and we remain on target to increase productivity for 1% to 2% of cost of goods sold in 2021.
Lastly, we continued to execute on our strategy of making accretive strategic acquisitions focused on U S branded snacking and delivering strong synergies.
To that end earlier this week, we announced the acquisition of <unk>, The foods, which is the largest manufacturer of our on the border tortilla chip brands.
We expect this acquisition to close in the second quarter of 2021, and all of that note. Our M&A pipeline continues to remain robust as we expect to continue to enhance our growth capabilities and margin profile with value enhancing acquisitions.
Looking a little closer at the numbers in the first quarter net sales grew over 18% in the quarter and we estimate that the February snow storms had of 200 to 300 basis point impact on our growth rate.
Fortunately, our pro forma net sales increased over 4% on the two year CAGR basis, and this included about a 1% impact from the storms.
As it relates to our view for the full year, our first quarter results were relatively in line with our expectations and we continue to expect sales to increase sequentially as planned into the second quarter and we remain on track to deliver our full year results.
From a profitability perspective, adjusted gross margins expanded to nearly 39% and adjusted EBITDA margins increased to over 14% of sales, reflecting the addition of trucco, which generates a strong adjusted EBITDA margin.
Before we dive into our IRI retail sales results I'd like to take a minute to revisit how COVID-19 impacted our results in 2020.
This should provide some helpful context for our first quarter 2021 results and for how we expect our sales cadence to play out this year.
As we kick off 2021, we begin to lap significant market share gains that we experienced in early 2020.
During the early pantry loading stages of the COVID-19 pandemic.
We reacted quickly to maintain and grow in stock positions.
Which better enabled our retail customers to meet immediate and the heightened consumer demand for example in the four week period ended April 19th of 2020, the category grew 10%, while let's brands grew 25%.
As we move through the remainder of the year, we maintained strong sales momentum and saw share gains and we gained new buyers of <unk> products, which increased by 3 million to approximately $61 million at the end of 2020.
Not only did we add more buyers of <unk> products relative to the prior year, but we also increased our rate of repeat purchases.
This continues to suggest stickiness amongst our new buyers and consistent with our long term value creation strategy, we will increase our marketing brand investments to better enable buyer retention.
In 2021, we will significantly increase our working media spend and invest in highly targeted media buys on platforms like Snapchat and Tictoc.
Additionally, we will invest in both of our expansion and the emerging geographies to support new distribution as we grow.
Now, let's take a few minutes to discuss our IRI retail sales trends and results.
Given the significant outperformance versus the salty snack category in the earlier months of the COVID-19 pandemic last year, we believe that evaluating our results on a two year basis is a better indicator of overall performance.
That will be our approach this quarter and for that and as we lap COVID-19, pantry stocking we are driving very strong two year growth rates led by our power brands, which continue to outperform the category.
From a retail sales perspective for the 13 week period, ending April 4th of 2021, our power brands momentum continued growing at a two year CAGR of seven 6% versus the salty snacks category growth of 6%.
Foundation brands declined for 3% and this is consistent with our strategy to continue to emphasize our collective efforts around our power brands.
Additionally over the past two years, we have grown power brands from approximately 84% of sales to 87%.
And as noted we will continue to focus our marketing and innovation efforts around our power brands, which remains a critical focus for our company.
Turning to our growth drivers in the quarter. We grew sales on the two year CAGR in five of our key <unk> subcategories, and we also drove double digit sales gains and sulfur and queso.
From a share perspective, we gained share across potato chips tortilla chips and for clients over the two year period, which comprised about 65% of our retail sales.
And potato chips and tortilla chips are two largest categories, we significantly outpaced the category highlighted by growth in zaps of nearly 24% and our newest power brands on the border continue to outpace the tortilla subcategory growing seven 2%.
During the quarter. We also successfully continued our centuries of long strategy of continued geographic expansion.
Even as we faced very difficult comparisons to prior year, we drove year over year growth in our expansion and emerging geographies, while driving significant outperformance versus the category on the two year basis.
We continue to benefit from the geographic expansion efforts that have been underway for decades, and our acquisitions are helping to fuel this expansion.
The strategy is enabling incremental growth for our power brands, which remains underdeveloped and our emerging and expansion of geographies, leading to continued white space for future growth and expansion.
For the core perspective over the last two years, our total portfolio of growth trends are below the category, but more importantly, our power brands performance within the core is nearly in line with the category.
Our overall core performance was driven by both of the decline in our good health brands and the negative impact of our foundation brands, both of which are more heavily weighted to our core.
For an additional of frame of reference our power brands in the core excluding good health increased five 5% on the two year CAGR basis, which outpaced category growth of four 9% in the quarter by about 60 bps.
It is important to note that we have a targeted set of actions that we are executing to drive improvement in the core for our power brands as we move throughout the year and we remain focused on this area of opportunity.
In addition, core performance will benefit from unlocking beyond the border distribution opportunity.
Wrapping up our retail sales insights would look at our channel growth. We continued to drive two year share gains in grocery club and C store.
Looking specifically at grocery which showed strong growth through COVID-19, our power brands grew nearly 10% significantly outpacing the two year category growth of six 7%.
Our most underpenetrated channels, namely mass and C store remain of continued opportunity for future growth.
We are focused on expanding our C store presence through new retailer wins and strengthen the distributor relationships.
And we have seen share growth for the <unk> platform with growth in the US brands are TGIF brands, and our <unk> brands, which generated tremendous two year growth of about 25% in this important channel.
In mass we are focused on driving distribution by leveraging our national scale and.
Walking our DSD sales force and selling an expanded brand portfolio.
And mass we underperformed the overall category on the two year basis, primarily due to our on the board of brands.
Excluding on the border Utz grew seven 4% for the two year period.
We expect the trends in mass to normalize as the year progresses and as some of our larger direct programs in 2021 take place after the first quarter and we are confident in our continued opportunities for success and growth in this very important channel.
Before I turn the call over to Carrie I'll make just a few final remarks on our acquisition progress.
This is a key element of our value creation story, given our unique positioning within the category and our team's ability to execute well on M&A and I'll share a few thoughts on our progress.
Trucco and vendors are our two most recently closed acquisitions and the teams are working very well together we.
We are deploying our proven integration playbook and we remain on track to deliver our expected cost synergy targets across manufacturing procurement and SG&A.
From a revenue synergy perspective, we're also very pleased with our early progress.
We see opportunities abound for the on the board of brands within our DSD system, and we are winning new customers and gaining placement of new channels.
We're seeing new distribution for on the border across multiple channels, such as grocery drug C store and dollar.
To that end, we recently gained placement for new and incremental DSD distribution for on the border with the key small format customer that has the potential to reach nearly 10000 stores.
We remain very excited about the contributions of this wonderful tortilla chips and salsa differently will bring to us long term, especially in our core geographies.
From a business perspective, we believe the brand and the platform will benefit from our DSD management oversight and focus and we are leveraging the vendors DSD network to introduce more of our power brands into Chicago and the Midwest.
For example, within the month of closing of <unk>, We began shipping goods pirate brands into the veterinary DSD system and we are seeing strong early reads on growth for these brands and we are driving continued market share gains in the region.
Lastly, I would like to discuss our latest strategic acquisition the speed of foods.
We are very excited about this announcement and the value that this brings to our company.
This data located in Grand Rapids, Michigan is the leading manufacturer of tortilla chips, corn chips and pellet snacks and is the largest co packer of tortilla chips for our on the border brands.
We expect of this acquisition of <unk> will enable strong supply chain productivity and synergies and enhance our ability to expand on an accelerated basis, both the on the border brands and other other brands geographically in the Midwest.
Over time, we intend to invest in additional production capabilities and the manufacturing plant to support growth in other southeast snack subcategories, and we expect the this will enhance our ability to better service current and future retail customers in that area.
We also recognize the importance of Thestreet as current long standing customers.
And we look forward to continuing to service them going forward.
In summary of them.
Very proud of our first quarter results. This is our third quarter of reporting as a public company and we continue to drive our long term value creation strategies that we believe will continue to enhance both short term and long term shareholder value.
In a quarter, where the mix of challenges and great accomplishments I continue to be very thankful for the tremendous efforts from our entire team.
We have built the third largest branded salty snack platform in the U S and we continue to drive forward as we embark on what we call. It our next century of growth.
And now I'd like to turn the call over to Kerry <unk>, our Chief Financial Officer.
Gary.
Thank you Dylan and good morning, everyone as Dylan mentioned earlier the year began in line with our expectations net sales increased 18% to $269 2 million adjusted gross margins expanded to 38, 8% adjusted SG&A was consistent at 25% of <unk>.
Sales and adjusted EBITDA increased 29, 8% to $37 9 million of 14, 1% of sales. Finally, adjusted net income increased 65, 1% to $19 million and adjusted EPS was <unk> 13.
Based on fully diluted shares on an as converted basis of $142 million.
As a reminder, our non-GAAP share count reflects the combination of total outstanding shares and assumes the net settlement of private placement warrants, resulting from our business combination with call Youre Creek Holdings.
Moving to the details our net sales growth in the quarter was driven by price mix of one 9% and acquisitions of 21, 5%.
Partially offset by volume declines of four 7% and the impact of our Io rail conversions, which reduced the net sales growth rate by 60 basis points.
The volume decline was primarily due to lapping significant growth in the early weeks of the COVID-19 pandemic. In addition volumes were also impacted by the February winter storms across many of our core regions.
Finally, looking at net sales on a two year basis, which helps to normalize the impacts from COVID-19 pro forma net sales increased four 3%.
Which is in line with our long term growth outlook of 3% to 4% per year.
Moving down the P&L I'll discuss our margin performance.
In the first quarter, we expanded adjusted EBITDA margins by 130 basis points to 14, 1% decomposing the increase in adjusted EBITDA margin for the quarter positive drivers include price mix of 80 basis points per.
Connectivity improvement of 20 basis points.
SG&A of 10 basis points, and 130 basis points from our acquisitions largely driven by trucco.
Partially offsetting these factors were headwinds of volume of 60 basis points inflation of 10 basis points, and 40 basis points from higher delivery costs, largely due to higher spot market rates and contract delivery costs.
As a reminder, delivery costs, which are essentially free it out are included in selling and administrative expense on our income statement and not the cost of goods sold.
Turning to our balance sheet and other key points.
At the end of the quarter, our liquidity remains solid with availability on our ABL credit facility of approximately $93 4 million.
Cash and cash equivalents were approximately $4 million, which reflects using $25 million of cash to fund the <unk> acquisition as well as working capital seasonality.
Moving down the balance sheet, just a brief reminder, that during the first quarter, we completed a term loan refinancing in place the new $720 million term loan b.
This new term loan coupled with exercising the public warrants, which brought in approximately $181 million of cash enabled us to repay in full the $490 million bridge credit facility used to fund the acquisition of <unk> enterprises and the on the border brand.
As well as refinance the preexisting $410 million term loan B due 2024.
Net debt at quarter end was $739 2 million or for times normalized further adjusted EBITDA of $186 million, we expect net leverage to improve throughout the year as cash flows increase and our net leverage ratio target at the end of the year remains approximately three five times.
Before I discuss our outlook for 2021.
Give a brief update on our Io rail conversion of progress.
After we pause last year to accommodate the COVID-19 impact and the ERP implementation, we resumed our conversion from company owned routes to independent operators and.
In the first quarter, we converted approximately 40 routes and we continue to expect to finish the conversion in the first half of 2022.
As we've spoken to before we believe the Io conversion strategy is incremental to long term organic growth and is accretive to EBITDA margins and cash flow.
Turning to guidance, we remain on track to deliver another strong year for us as our momentum builds throughout fiscal 2021.
As indicated in our press release. This morning today, we are reaffirming our full year financial outlook for fiscal 2021.
We continue to expect full year 2021, net sales to be consistent with 2020 pro forma net sales of $1 6 billion.
As a reminder, our 2020 pro forma net sales of 52 week comparison basis.
Assumes we owned <unk> Anderson of Trucco on the first day of fiscal 2020.
And assumes $20 million of net sales for <unk> to align with expectations for fiscal 2021.
We continue to expect modest organic sales growth year over year, even as we lap fiscal 2020 organic growth of over 8%.
Additionally, we expect pro forma sales to grow about 6% on a two year CAGR basis, which is above our long term growth outlook of 3% to 4%.
Moving to adjusted EBITDA, We continue to expect the range of $180 million to $190 million versus 2020 further adjusted EBITDA of $181 million delivering a margin of approximately 16%.
Included in our 2021 assumptions is the contribution of $48 million to $52 million from our acquisitions of each day, Anderson trucco and vendors.
Also included in our EBITDA assumption as commodity inflation of about 4%.
We remain focused on pricing and price pack architecture to help offset this cost pressure.
In fact in the last 212 week retail sales periods, we have seen momentum in our pricing actions and as they build they will contribute even further to our efforts.
Additionally, we expect to increase productivity from 1% to 2% of cost of goods sold which helps to offset inflation and fund continued incremental marketing spend.
Finally, and as I mentioned earlier, we are in the process of converting routes from company owned to independent operator in this conversion increases the rate of growth for sales discounts, which negatively impacts net sales and gross profit.
For adjusted EPS, We continue to expect the range of $70 to 75.
Which assumes fully diluted shares on an as converted basis of approximately $142 million.
On slide 20 in our earnings presentation, Youll find additional assumptions supporting our 2021 outlook.
These remain consistent with our outlook provided on our fourth quarter call with one small revision to our DNA assumptions. We continue to expect core DNA of between 25% to $27 million, but we now expect step up D&A of between $50 to $53 million versus our previous expectation of 50.
The 7% to $59 million.
Additionally, we now expect of mix of 40% in cost of goods sold and 60% in selling and administrative.
As a reminder, step up D&A is excluded from adjusted net income.
Of note our fiscal 2021 outlook excludes the impact of the pending acquisition of the speed of fluids.
The total purchase price was $41 million and is subject to customary purchase price adjustments.
Purchase price represents five one times fiscal 2020 pro forma adjusted EBITDA of $7 million.
Assuming 5 million of net present value from expected tax benefits.
And $1 million of expected selling and administrative cost run rate synergies.
We expect the acquisition to be accretive to earnings in 2021 of beyond.
The subject to customary closing conditions and.
And we expect to close in the second quarter of 2021.
Before we open the call for Q&A I, just want to comment on our fiscal 2021 seasonality that we hope will help you from a modeling perspective.
Consistent with our prior expectations, we expect our first quarter of 2021 will be the low point in terms of both net sales and margins as.
As we move throughout the year and consistent with our normal seasonality.
We expect that for net sales the third quarter will be our largest quarter of the year, followed by Q2, and then Q4.
From a margin standpoint, we also expect that the third quarter will be our highest margin performance for.
All of by Q4, and then Q2.
We expect better margins in the fourth quarter relative to our second quarter as our pricing and productivity initiatives are more weighted to the second half of the year.
I'd now like to ask the operator to open the call for questions.
Right.
As a reminder to ask the question you will need to press star one on your telephone.
Draw your question press the pound key.
Please standby, while we compile the Q&A roster.
Our first question comes from Rakesh per week of Oppenheimer. Your question. Please.
Good morning, Thanks for taking my questions. So I guess I wanted to start off first of all the winter storms, which geographies. The did you see the most of it back related to the storms and then just more color in terms of why.
What drove that through hundreds of 300 basis points of headwind.
<unk>. This is Jerry I'll take that so it was more of our core regions of mid Atlantic and northeast low.
<unk> related mainly we were converting our largest warehouses in Hanover and switching to a new order processing of fulfillment system as part of our ERP go live and as part of that we plan to put more inventory extra inventory closer to our customers, but the February storms in these regions prevented us from doing so which led to.
Some out of stock, but it was transitory and shipments quickly resumed to normal and we remain on track to hit the year.
Okay, Great and then I guess my follow up question. So just on the core of geography of underperformance I know you guys gave some good color in terms of some of the drivers of the underperforming.
So it sounds like good health is where are you.
Plan to focus on to drive the improvement. So if you think about the upper zone I guess, the good health brands and to drive that maybe at least in line with the category. How long do you think it takes and just any more color in terms of I guess the types of efforts improved the performance of <unk>.
The Pasha. Thanks for the question this is Dylan.
Yes, the core of markets in general are.
The good help as you noted in the foundation brands that we sell into those markets Foundation brands are.
Where we utilize power brands in the entire country, it's 87% of our sales in the core it's only 85%. So we're overweighted to the foundation and we have of heavier index to good health in that market. So when we really rip it apart and look at like our power brands and we look at good health and we look at our power.
Brands without good health on the couple of different ways, we have a really strong sales results in our core so we're focused on fixing and turning around good health and we're also focused on making power brands a bigger part of our sales in the core and that is happening if you do look back to.
For two years ago power brands were only 83% of our sales in the core our power brands in the quarter today are 85%. So we're making that transformation over time much of it is M&A driven as we acquire.
The foundation brands and we convert them into power.
But we're making good progress so I feel really comfortable about the future opportunities for the core.
And note the the good health work that has to be done the turn that around.
Great. Thank you I'll pass it along.
Our next question comes from Michael Lavery Piper Sandler Your question. Please.
Good morning, Thank you.
Good morning, good morning.
Okay I just wanted to come back to the margin piece and your seasonality color is really helpful. But.
Just maybe understand the progression.
For the 16% full year and some of the key drivers. Obviously, there is some growing inflation and you called out the higher marketing costs.
How significant is the pricing.
Pricing or productivity of both what are the key to getting to the 16% full year number.
Yes, Michael this is Kerry yes.
Yes, so look we'll.
Of our pricing and productivity is really back half weighted second half weighted we only took about less than 10% of the productivity. We have for the year hitting Q1, so it's going to ramp as we as we proceed throughout the year.
<unk> had some nice net price realization in Q1, but that really didn't reflect the pricing. We took in March that takes a couple of weeks to a month or two to get to get pushed through the retailers. So so we expect meaningful improvement in price as we go throughout the year as well as productivity. So when you look at the kind of the first half versus.
In the second half of the year.
It's going to be a higher margin in the second half in a meaningful way relative to the first half.
Okay, that's helpful and maybe just.
Sort of follow up specifically related to that one is on the pricing.
Use of that you expect about 4%.
The soft.
Pretty easy math, but obviously, if thats for the full year and you were around the $1 nine of the quarter.
Your back half of numbers would be.
Of that pretty nicely.
Is that the right way to think about it.
I think we said.
We said inflation would be 4%.
And we're taking pricing and productivity to offset that.
But yes pricing in general will be more back half weighted because of the things. We did last year of benefiting the first half of this year and will benefit the second half and then the things we're putting into place.
In Q1 and Q2.
Q3 will obviously benefit the second half more than the first.
Alright, yes. Good helpful clarification, and then I think you've called out about $50 million of productivity savings can you give any sense of.
How youre tracking against that so far and how much of it.
Very well the $50 million was of three year cumulative number so as we talked about it.
Historically, we're at 1% of Cogs in terms of productivity takeout each year. This year, we will deliver at least 2% will be run rating higher than 2% as we exit the year and we expect a meaningful step.
Towards the 3% to 4% annual goal next year. So so on track.
And meaningful.
New projects to hit 2022 as well.
Okay, great. Thanks, so much.
Our next question comes from Robert Moskow of Credit Suisse. Your question. Please.
Hi, a couple of questions just want to make sure that I understood. The <unk>.
Paths of inflation cost.
During the year it was Michael right that it's under 2% in first quarter and then it scales up half of the year goes on to average out to for for the year.
And if so does that mean like.
So something like a six by fourth quarter.
And then inflation keeps right.
Since even since the last we're on the call in March.
On a spot basis.
Are you looking at even higher rates of inflation into 2022.
When do you start evaluating more of list price increases.
<unk>.
Good to speak of Europe.
Honestly I think the cadence for this year relative to inflation of 4% still remains the annual target.
We didn't see a ton of inflation in our P&L.
We were very well covered.
Due to how we how we cover commodities.
So it will it will be more back half weighted from an inflation perspective than front half weighted.
Locked in 80% plus.
Of our of our commodities this year. So so we feel good about our coverage.
And as we look at 2022, obviously inflation.
At current rates implies inflation next year.
But we're going to battle that just like we are this year.
We're in a battle that with pricing and productivity. So so we're ahead of it we're already starting obviously our plans for next year to get incremental pricing and incremental productivity to offset inflation may look like next year.
Okay. Okay.
And you mentioned mass being a little weaker than the rest of your channels I spoke.
That had to do with very tough comparisons for on the border compared to last year.
Is that true or is there anything else.
Impacting execution in the mass channel.
Yes, the mass mass.
Looking at retail sales data.
As driven by OTB.
It's still a very you know our largest mass customer for OTB is still very strong the.
Quarterly trends ebb and flow.
If you look at.
And if you look at.
OTB and then the rest of the business excluding OTB.
For the rest of the business, excluding OTB was up seven 5% on of to your CAGR basis.
So so very healthy I think one thing that's driving that delta between $7 of happened where the market was.
At $9 seven as variety packs really drove a lot of growth in mass in the quarter from a retail sales perspective, and honestly thats. The thats an area of improvement for US. We can do we can do better with variety packs. So I think thats an opportunity for us going forward.
And the variety packs kind of hinge on kids going back to school or.
Is that one of the reasons why it's weaker.
The other stuff.
This is Rob this is Dylan.
I wouldn't say the variety packs are weighted on back to school activity.
It's just sort of a trend in general in CPG and salty snacks.
The variety packs for just becoming a bigger part of the.
Of the category and so we have a lot of opportunity there.
Speaking about I think carry hit it right on the UGG brand platform.
<unk> is up about seven 5% on the two year CAGR basis OTB.
Masses of huge channel for the OTV brands.
And there is sometimes just shifting of sort of the cadence of events that occur in mass and it can make a.
Decent difference.
<unk> basis lastly, as they think about.
Mass in that channel, our DSD efforts that go into.
The thousands of mass retailers that exists across the U S. Our DSD efforts are really strong. So we have this really strong foundational platform of growth in business and volume in mass via our DSD and so then we layer on.
The more <unk> opportunities that occur specifically more with <unk>.
OTB that gives us a lot of upside in vision into what the rest of the year low.
Holds and we feel really confident about OTB audits btw basis into mass for the rest of the year as well.
Okay, a lot of acronyms, but I think I got them all but thank you sorry about that.
Okay beyond the border and the Ptw's director of warehouse sorry, Thank you for ebay.
Thank you.
Yeah.
Our next question comes from Wendy Nicholson of Citi. Your question. Please.
Alright. This is Abigail lake on for Wendy Nicholson.
One quick question. So you highlighted strong market share performance is in many of the key categories like pretzels.
Like for David Katz, and tortilla chips, the trends are looking at a little weaker than pretzels, and we've noticed an uptick in social media activity related to perhaps also is there anything going on in that category for Mike.
On the competitive perspective that could be impacting your performance there.
Okay.
We're slightly under on the two year basis, we have a lot of innovation that's come out recently and we'll be coming out specifically starting in June of 2021 in the Pretzel category. There have been there are some brands that are in that category that are growing quite well and so it's putting upward pressure.
Sure on the category of subcategory of Pretzels in general growing at a more dynamic right.
We're very large and pretzel we've got.
At least 40 years of history of making and selling pretzels are the category strong the <unk>.
Subcategory Pretzels is strong we're strong in it we have a lot of innovation coming.
I just don't look at it as upside for our brands I think youll see a lot of the innovation that we do have coming out in the second half of 2021 is related to pretzel, so hopefully that'll debt.
We bolster our.
Our category growth of our subcategory of growth in pretzels.
Okay, great. Thank you.
Okay.
Yeah.
There are no further questions at this time I would now like to turn the call over to the deadline with sacks for closing remarks.
Yes. Thank you very much I just wanted to thank everybody for joining us today I do want to thank all of the wonderful associates. The votes that have enabled us to continue to execute on our long term growth strategies, we have geographic growth channel growth sub category growth, we layer in our M&A, we have our productivity efforts well underway.
Day, which we're reinvesting into our brands, which.
Create the very long term value creation strategy that we're all very much aligned behind so again, thank you very much for joining us today.
Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect.