Q2 2024 J&J Snack Foods Corp Earnings Call

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Operator: Welcome to the J & J Food Snack Foods Fiscal 2024 Second Quarter Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Norberto Aja, Investor Relations. Please go ahead.

Welcome to the J&J food snack foods.

<unk> 2024 second quarter conference call at this time, all participants are in listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone you.

Dean here, an automated message advising your hand is raised.

To withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

Speaker Change: I'd now like to hand, the conference over to your first speaker today, No Boto Bartow Odd Shah Investor Relations. Please go ahead.

Norberto Aja: Thank you, operator, and good morning, everyone. Thank you for joining the J & J Snack Foods fiscal 2024 second quarter conference call. We will start in just a minute with management's comments and your questions. But before doing so, let me take a minute to read the State of Barber language.

Speaker Change: Thank you operator, and good morning, everyone. Thank.

Speaker Change: Thank you for joining the J&J snack foods fiscal 2024 second quarter conference call.

Speaker Change: We will start in just a minute with management's comments and your questions, but before doing so let me take a minute to read the safe Harbor language.

Norberto Aja: This call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. As such, all statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, expectations, and objectives for our anticipated financial performance. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties, and other important factors that may cause results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statement.

Speaker Change: This call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Speaker Change: As such all statements made on this call that do not relate to matters of historical facts should be considered forward looking statements.

Speaker Change: Clothing statements regarding management's plans.

Speaker Change: Strategies goals expectations and objectives, and our anticipated financial performance.

Speaker Change: These statements are neither promises or guarantees involved.

Speaker Change: Risks uncertainties and other important factors that may cause results performance or achievements to be.

Speaker Change: Materially different from any future results performance or achievements expressed or implied by the forward looking statements.

Norberto Aja: Risk factors and other items discussed in our annual report on Form 10-K for the year ended September 30, 2023, and other findings with the Securities and Exchange Commission, could cause actual results to differ materially from those indicated by the forward-looking statements made on this call today. As such, forward-looking statements represent management's estimates as to the date of this call, May 7, 2024. And while we may elect to update forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause expectations. In addition, we may also reference certain non-GAAP measures on the call today, including adjusted EBITDA, adjusted operating income, or adjusted earnings per share, all of which are reconciled to the nearest GAAP measure in our earnings press release, which can be found in the investor relations section of our website

Speaker Change: Risk factors and other items discussed in our annual report on Form 10-K for the year ended September 32023.

Speaker Change: Other filings with the Securities and Exchange Commission.

Speaker Change: Cause actual results to differ materially from those indicated by the forward looking statements made on this call today.

Speaker Change: As such forward looking statements represent managements estimates as to that.

Speaker Change: This call May seven 2024.

Speaker Change: And while we may elect to update forward looking statements at some point in the future. We disclaim any obligation to do so even if subsequent events cause expectations to change and in addition, we may also reference certain non-GAAP measures on the call today, including adjusted EBITDA adjusted operating income or adjusted earnings per share.

Speaker Change: All of which are reconciled to the nearest GAAP measure.

Speaker Change: Our earnings press release, which can be found in the Investor Relations section of our website.

Norberto Aja: Joining me on the call today is Dan Faschner, our chief executive officer, along with Ken Plunk, our chief financial officer. Following management's prepared remarks, we will go ahead and open the call for questions. With that, I would now like to turn the call over to Mr. Dan Fachner, J & J Snack Foods Chief Executive Officer. Dan, please go ahead.

Speaker Change: Joining me on the call today is Dan <unk>, our Chief Executive Officer, along with Ken Clarke, Our Chief Financial Officer. Following management prepared remarks, we will go ahead and open the call for question and answers.

Speaker Change: With that I would now like to turn the call over to Mr. Dan or fashion, our J&J snack foods, Chief Executive Officer, Dan. Please go ahead.

Daniel Fachner: Thank you, Norberto. And good morning, everyone. We appreciate you joining us this morning to discuss J & J Snack Foods' fiscal 2024 second quarter results. We delivered record second-quarter net sales of $360 million, reflecting growth across our food service, retail, and frozen beverage segments. With year-over-year increases across most product categories, our strong performance was driven by an amazing team of employees who are aligned with executing our strategy and committed to serving our customers and valued stakeholders. We have a wonderful business with tremendous growth opportunities ahead of us, and we continue to see that in our financial results. Our strong top-line performance.

Dan: Thank you Norberto and good morning, everyone. We appreciate you joining us this morning to discuss J&J snack foods fiscal 2024 second quarter results.

Dan: We delivered record second quarter net sales of 360 million, reflecting growth across our foodservice retail and frozen beverage segments with year over year increases across most product categories. Our strong performance was driven by an amazing team.

Dan: Employees, who are aligned and executing our strategy and committed to serving our customers and valued stake holders.

Dan: We have a wonderful business with tremendous growth opportunities ahead of us and we continue to see that in our financial results.

Dan: Our strong top line performance combined with gross margins exceeding 30% in the quarter, a 330 basis points improvement over last year as a result of executing our strategy, including focused initiatives to improve profitability.

Daniel Fachner: Combined with gross margins exceeding 30% in the quarter, a 330 basis points improvement over last year is a result of executing our strategy, including focused initiatives to improve profitability. This resulted in adjusted operating income and adjusted EBITDA growth of 81% and 43.1%, respectively, and a more than 90% increase in net earnings. In short, strong performance across the board. Our strategies to leverage innovation and cross-selling opportunities to expand the placement of our core products and brands are delivering results.

Dan: This resulted in adjusted operating income and adjusted EBITDA growth of 81% and 43, 1% respectively.

Dan: More than 90% increase in net earnings in short strong performance across the board.

Dan: Our strategies to leverage innovation and cross selling opportunities to expand placement of our core products and brands are delivering results, let's take a closer look at our sales performance in the quarter.

Daniel Fachner: Let's take a closer look at our sales performance in the quarter, in our food service segment. Churro sales continued their strong growth momentum, increasing 23.7% to nearly 31 million, led by new business growth among one of the three largest QSR customers. Recent investments to add two new churro production lines have us well positioned to capture incremental opportunities in the churro category, and we expect continued growth throughout the year, including international opportunities as well. In addition, bakery sales increased 7.7% driven by unit volume growth in cookies.

Dan: In our foodservice segment Churros sales continued their strong growth momentum, increasing 23, 7% to nearly $31 million led by new business growth was one of the three largest USR customers.

Dan: Recent investments to add two new tariff production lines have us well positioned to capture incremental opportunities in the <unk> category and we expect the continued growth throughout the year, including international opportunities as well.

Dan: In addition, bakery sales increased seven 7% driven by unit volume growth in cookies, new products and expanded customer placements.

Daniel Fachner: New Products and Expanded Customer Placement. Frozen novelty sales grew 4.2%, led by the continued growth of Dippin' Dots. Dippin' Dots sales increased 5% in the quarter, led by growth across most channels. However, growth across the segment was partially offset by softness in soft pretzels and handheld.

Dan: Frozen novelty sales grew a four 2% led by the continued growth of <unk> <unk>.

Dan: <unk> sales increased 5% in the quarter led by growth across most channels growth across this segment was partially offset by softness in soft pretzels and handhelds move.

Daniel Fachner: Moving on to our retail segment, handhelds grew 75.5% driven by expanded placement with a major mass merchant. Frozen Novelties sales increased 14%, led by growth in Dogsters and Icy Novelties, while Biscuits sales increased 6%, and Soft Pretzel sales increased 2.7%, led by our continued expansion of Super Pretzel products, largely reflecting strong demand for our new Super Pretzel Bavarian Stix. The Frozen Beverages segment also delivered healthy growth, led by a 6.9% increase in frozen beverage sales, reflecting consistent Repair and maintenance revenues also increased by 2.9%, reflecting a strong maintenance call volume.

Dan: Moving onto our retail segment.

Dan: Handhelds grew 75, 5% driven by expanded placement with a major mass merchant.

Dan: Frozen novelty sales increased 14% led by growth of dog sitters, and IC novelties, while biscuit sales increased 6% and soft pretzel sales increased two 7% led by our continued expansion of Super Pretzel products largely reflecting.

Dan: Strong demand for our new Super Pretzel Bavarian sticks.

Dan: Frozen beverages segment also delivered healthy growth led by a six 9% increase in frozen beverage sales, reflecting consistent consumer trends across most customer channels.

Dan: A pair and maintenance revenues also increased by two 9%, reflecting strong maintenance call volumes.

Daniel Fachner: Partially offsetting this growth, we're relatively flat on machine sales down 0.4% as we lap a large rollout from last year. I'd like to take a couple of minutes to highlight a few areas that support our relentless focus on driving growth, building our brands, and capturing incremental opportunities, starting with Super Pretzel. This iconic brand is outperforming the snack category and continues to provide opportunities for growth through new product extensions or new points of sale.

Dan: Partially offsetting this growth were relatively flat machine sales down 4% as we lapped a large roll out from last year.

Speaker Change: I'd like to take a couple of minutes to highlight a few areas that support our relentless focus on driving growth building, our brands and capturing incremental opportunities.

Speaker Change: Starting with Super Pretzel.

Speaker Change: Iconic brand is outperforming the snack category and continues to provide opt.

Speaker Change: Opportunities for growth through new product extensions or new points of sales.

Daniel Fachner: We are quickly expanding this brand across retail, led by the launch of Bavarian Stix, which has become the number two seller in SuperPretzel's portfolio, reaching an ACV of 25% and growing. I'm also pleased with the incremental distribution we are achieving and our marketing execution, led by promotions like the recently concluded March Madness campaign. Later in the year, we look forward to various soft pretzel launches in the Club Channel under the Super Pretzel, Brauhaus, and Annie Ann's brands, as well as bringing to market our Super Pretzel Roller Grill Dog and Food Service.

Speaker Change: We are quickly expanding this brand across retail led by the launch of Bavarian sticks, which has become the number two seller and Super Pretzel portfolio reached an ACB of 25% and growing.

Speaker Change: I'm also pleased with the incremental distribution, we are achieving and our marketing execution led by promotions like the recently concluded March madness campaigns.

Speaker Change: Later in the year, we look forward to various soft pretzel launches in the club channel under the Super Pretzel Brow House, and Andy and brands as well as bringing into market are Super Pretzel roller grill dog in foodservice.

Daniel Fachner: And as it relates to IC, we continue to see healthy momentum with new client wins, such as Dave and Buster's, and an upcoming test with a top 10 national QSR chain. Our sales in Mexico, The Amusement Channel, Mass Merchandise Retailers, and Restaurants increased for the quarter, and we just wrapped up our national flavor and movie promotion with Checkers. Now, let's talk about Dippin' Dots.

Speaker Change: And as it relates to IC, we continue to see healthy momentum with new client wins, such as Dave and Busters and an upcoming test with a top 10 national <unk> chain.

Speaker Change: Our sales in Mexico.

Speaker Change: Amusement channel mass merchandise retailers and restaurants increased for the quarter and we just wrapped up our national flavor and movie promotion with checkers.

Speaker Change: Let's talk about <unk>.

Daniel Fachner: I'm pleased to confirm that we have secured full location rollouts for AMC Theatres and Cinemark Theatres, with targeting a completion by the end of the fiscal year. Once completed, Dippin' Dots will be sold in approximately 880 theater locations, continuing our strong partnership with these leading customers. And we've also reached an agreement to roll out vending machines across the markets theaters. And I'm so proud to report that we were just awarded Vendor of the Year by Marcus Theatres.

Speaker Change: I am pleased to confirm that we have secured four location rollouts for AMC theaters, and cinemark theaters with targeting a completion by the end of the fiscal year.

Speaker Change: Once completed <unk> will be sold in approximately 880 theater locations.

Speaker Change: <unk>, our strong partnership with these leading customers.

Speaker Change: And we've also reached an agreement to rollout vending machines across the markets theaters and I am So proud to report we were just awarded vendor of the year by Marcus theaters. This is a testament to our continued efforts in cross selling our portfolio to our largest customers.

Daniel Fachner: This is a testament to our continued efforts in cross-signing our portfolio to our largest customers. Finally, we are making great progress on tests with a couple of major convenience customers and have a confirmed full rollout with a 162 location food service customer that we hope to have implemented later in the year. Let's talk about a few other innovation highlights. I'm so proud of our R&D team and the opportunities they are creating through new products, better packaging, and product extension. Recent accomplishments include the launch of Ola Churros in retail and the addition of new Dogsters pumpkin flavor. New Dogsters Club Channel packaging.

Speaker Change: Finally, we are making great progress on tests with a couple of major convenience customers and have a confirmed the full rollout with a 162 locations foodservice customer that we hope to have implemented implemented later in the year.

Speaker Change: Let's talk about a few other innovation highlights.

Speaker Change: So proud of our R&D team and the opportunities they are creating through new products.

Speaker Change: Better packaging and product extensions.

Speaker Change: Recent accomplishments include the launch of <unk> into retail and.

Speaker Change: The addition of new dog sitters pumpkin flavor <unk>.

Speaker Change: New doctors club channel packaging.

Daniel Fachner: Brauhaus Bavarian Packaging & Food Service, a new Cakeables cookie brand, and the launch of Super Pretzels soft pretzel buns in the in-store bakery. We have also recently announced the acquisition of the Thinsters brand, which provides us with a strong brand and quality product to add to our cookie portfolio. Fensters are predominantly sold in the club and retail channels, servicing existing customers of ours.

Speaker Change: <unk> very in packaging in foodservice.

Speaker Change: New capable cookie brand.

Speaker Change: And the launch of Super Pretzels, soft pretzel bonds and the in store bakery.

Speaker Change: We also recently announced the acquisition of the <unk> brand, which provides us with strong brand and quality product to add to our cookie portfolio.

Speaker Change: <unk> are predominantly sold in the club and retail channels servicing existing customers of ours.

Daniel Fachner: We have been producing this product for the previous owner, so this will be a seamless integration and a quality brand that we can build across both retail and food services. Our team is relentlessly focused on innovation and creating new selling opportunities. From an operational perspective, there are many positives to report as we continue to execute against our initiatives to enhance overall operations and better support our growth opportunities. Starting with our supply chain strategy, we have now opened all three distribution centers in Terrell, Texas; Woolwich, New Jersey; and more recently, Glendale, Arizona.

Speaker Change: We have been producing this product for the previous owner. So this will be a seamless integration and our quality brand that we can build across both retail and foodservice.

Speaker Change: Our team is relentlessly focused on innovation and creating new selling opportunities.

Speaker Change: From an operational perspective, there are many positives to report as we continue to execute against our initiatives to enhance overall operations and better support our growth opportunities.

Speaker Change: Starting with our supply chain strategy, we now have opened all three distribution centers.

Speaker Change: Texas, Woodbridge, New Jersey, and more recently Glendale, Arizona. These.

Speaker Change: These three new already sees are exceeding expectations and will enable us to continue driving productivity improvements in our supply chain.

Daniel Fachner: These three new RDCs are exceeding expectations and will enable us to continue driving productivity improvements in our supply chain. At this time, 81% of our sales orders are shipped from the new distribution network versus only 26% a year ago, with the average length of haul decreasing by over 40% and the on-time performance improving to 87% versus 74% a year ago. Shifting to operations.

Speaker Change: At this time, 81% of our sales orders are shipped from the new distribution network versus only 26% a year ago.

Speaker Change: With the average length of haul decreasing by over 40% and the on time performance improving to 87% versus 74% a year ago.

Speaker Change: Shifting to operations the.

Daniel Fachner: The addition of six new production lines has significantly expanded our capacity. This has enabled added efficiency and given us the ability to meet growth opportunities across our core products, such as pretzels, churros, and frozen novelties, opening up new customers and channel opportunities. Two new frozen novelty lines have added critical capacity and flexibility during the peak summer season. They're also allowing us to make similar products in different locations, leading to freight savings. The new churro line also increased capacity and provided us with the capability to meet the growth we anticipated in churros.

Speaker Change: The addition of six new production lines have significantly expanded our capacity.

Speaker Change: This has enabled added efficiencies and giving us the ability to meet growth opportunities across our core products, such as pretzels, churros and frozen novelties, enabling new customers and sandal opportunities.

Speaker Change: Two new frozen novelty lines have added critical capacity and flexibility during the peak summer season.

Speaker Change: They are also allowing us to make similar products in different locations leading to freight savings.

Speaker Change: The new <unk> line also increased capacity and provided us with the capability to meet the growth we anticipated insurers.

Daniel Fachner: Our two new pretzel lines in Texas and New Jersey immediately created capacity to meet market demands that we could not previously serve, while also creating growth opportunities in food service for Bavarian Pretzel Bites, retail division expansion, and in-store bakery innovation.

Speaker Change: Our two new pretzel lines in Texas, and New Jersey immediately created capacity to meet market demands that we could not previously serve while also creating growth opportunities and foodservice for Bavarian Pretzel bites retail division expansion expansion and in store bakery.

Speaker Change: Innovation.

Daniel Fachner: Overall, the expanded capacity has created production efficiencies and higher output metrics through better automation, which improves product margins, decreases overtime, and provides the flexibility to meet unforecasted additional sales during peak summer business. In closing, I am pleased with our ability to post record sales while managing through an ongoing challenging consumer environment. And as I mentioned at the beginning, I'm so proud of how the J & J team continues to execute our five core strategies, grow and protect our brand, dominate core categories, cross-sell the portfolio, invest in our future, and embrace our culture. With that, I would now like to pass the call over to Ken to review our financial performance in more detail. Ken. Thank you

Speaker Change: Overall, the expanded capacity has created production efficiencies and higher output metrics through better automation, which improved product margins decreases overtime and provides the flexibility to meet and forecasted additional sales during peak summer business.

Speaker Change: In closing.

Speaker Change: I am pleased with our ability to post record sales, while managing through an ongoing challenging consumer environment.

Speaker Change: And as I mentioned at the onset.

Speaker Change: So proud of how the J&J team continues to execute our five core strategies grow and protect our brands dominate core categories cross sell the portfolio and invest in our future and embraced our culture.

Speaker Change: With that I would now like to pass the call over to Ken to review, our financial performance in more detail Ken.

Ken Allen Plunk: Thank you, Dan, and good morning, everyone. I am pleased with our ability to deliver strong results for the quarter, including the highest fiscal second quarter net sales. Topping our previous record achieved last year, this, combined with growth margins over 30%, contributed to significant profit growth and profits growing faster than sales. Net sales for the quarter totaled $359.7 million, an increase of 6.5% versus the prior year. As Dan mentioned, top line performance was driven primarily by higher volumes and new business performance in the quarter.

Ken Clarke: Thank you Dan and good morning, everyone I am pleased with our ability to deliver strong results for the quarter, including the highest fiscal second quarter net sales.

Ken Clarke: Helping our previous record achieved last year.

Ken Clarke: This combined with gross margins over 30% contributed to significant profit growth and profits growing faster than sales.

Ken Clarke: Net sales for the quarter totaled $359 7 million, an increase of six 5% versus the prior year.

Ken Clarke: As Dan mentioned topline performance was driven primarily by higher volumes and new business performance in the quarter.

Ken Allen Plunk: Food Service, our largest segment, saw sales increase 5.4% to $230 million. Churros continued their strong growth momentum, increasing 23.7% to over $30.8 million. Bakery and frozen novelties increased 7.7% and 4.2%, respectively, driven by unit volume growth in cookies and a 5% increase in Dippin' Dots sales. However, growth across the segment was offset by a decrease in soft pretzel and handheld cells of 2.1% and 4%, respectively

Ken Clarke: Soon serve as our largest segment saw sales increased five 4% to tier 30 million as Churros continue their strong growth momentum increasing 23, 7% to.

Ken Clarke: Two over 32 over $38 million.

Ken Clarke: Bakery and frozen novelties increased seven 7% and four 2%, respectively, driven by unit volume growth in cookies, and a 5% increase and defend ourselves.

Ken Clarke: Growth across the segment was offset by a decrease in soft pretzel and handheld sales.

Ken Clarke: 1% and 4%, respectively, driven by soft consumer trends.

Ken Allen Plunk: Driven by soft consumers, it is important to note that volume sales for our major handheld customer did increase for the quarter. In addition, sales of new products and added placement with new customers totaled approximately $13.7 million, driven primarily by the addition of churros to the menu of a major Churros-R-Customer. This led to a second quarter operating income of $7.9 million, an increase of 54.5% versus the prior year period, reflecting the top-line growth and improved gross margin.

Ken Clarke: It's important to note that volume sales to our major handheld customer did increase for the quarter.

Ken Clarke: In addition sales of new products and added placement with new customers totaled approximately $13 7 million.

Ken Allen Plunk: Primarily by the addition of <unk> to the menu or a major cheetos our customer.

Ken Clarke: This led to a second quarter operating income of $7 9 million, an increase of 54, 5% versus the prior year period.

Ken Clarke: Collecting the topline growth and improved gross margins.

Ken Allen Plunk: Moving to our retail segment, Q2 24 retail sales totaled $52.9 million, or an increase of 14.1% driven by handheld sales growth of 75.5% as we expanded product placement with a major mass merchant. In addition, frozen novelty sales increased 14%, led by the growth of dogsters and icy novelties, as well as higher shipments as customers built inventory for the peach-spring summer season. Biscuit sales increased 6% in the quarter, and soft pretzel sales increased 2.7%, led by our continued expansion of super pretzel products in retail. We also benefited from new product innovation in this segment, which contributed approximately $2 million and a quarter. This was largely the result of the introduction of SuperPresto Bavarian sticks into the retail segment.

Ken Allen Plunk: Moving to our retail segment Q2, 'twenty four retail sales totaled $52 9 million or an increase of 14, 1% driven by handheld sales growth of 75, 5% as we expanded product placement with a major mass merchant.

Ken Allen Plunk: In addition, frozen novelty sales increased 14% led by the growth of doctors and IC novelese as well as higher shipments as customers built inventory for the peak spring and summer seasons.

Ken Clarke: <unk> sales increased 6% in the quarter and soft pretzel sales increased two 7% led by a continued expansion of superfast Super Pretzel products and retail.

Ken Clarke: We also benefited from new product innovation in this segment of approximately $2 million in the quarter. This was largely the result of the introduction of Super Pretzel Bavarian sticks into the retail segment.

Ken Allen Plunk: This led to an operating income of $5.1 million, or an increase of $4.6 million versus the prior year period, reflecting the improved sales, product mix, and gross margin. As it relates to our third segment, frozen beverages, sales were 76.9 million in a beat, and beat Q223 sales by 5%, led by beverage sales growth of 6.9%, reflecting consistent consumer trends across most customer channels.

Ken Clarke: This led to an operating income of $5 1 million or an increase of $4 6 million versus the prior year period, reflecting improved sales product mix and gross margin.

Ken Clarke: As it relates to our third segment frozen beverages sales were $76 9 million and indeed.

Ken Allen Plunk: Q2 sales by 5% led by beverage sales growth of six 9%.

Ken Allen Plunk: Slightly inconsistent consumer trends across most customer channels.

Ken Allen Plunk: Repair and maintenance revenues also increased 2.9% as we saw strong maintenance call volumes. However, machine sales were relatively flat, down 0.4% as we lacked a significant customer rollout from last year. This led to operating income of $4.9 million compared to a Q1 2023 operating income of $4.6 million driven by sales growth and consistent gross margin performance. Our investments and initiatives over the last two years to enhance profit margins and drive efficiency across our business are proving to be successful.

Ken Clarke: Repair and maintenance revenues also increased two 9% as we saw strong maintenance call volumes.

Ken Allen Plunk: <unk> sales were relatively flat down <unk>, 4% as we lapped significant customer rollout from last year.

Ken Allen Plunk: This led to operating income of $4 9 million compared to a Q1 'twenty three operating income of $4 6 million driven by sales growth and consistent gross margin performance.

Ken Allen Plunk: Our investments and initiatives over the last two years to enhanced profit margins and drive efficiency across our business are proving to be successful.

Ken Allen Plunk: For the quarter, growth profit totaled $108.2 million, a 19.8% increase compared to Q2 of 2023. This led to a 330 basis point improvement in gross margin to 30.1%, favorably compared to 26.8% in Q2-23. We remain confident in our plans to improve profit margins and expect to achieve gross margins of 30% or better for the full year. As it relates to inflation, the overall impact is stable. We are now experiencing deflation in some raw materials like flour, oils, dairy, and eggs.

Ken Allen Plunk: For the quarter gross profit totaled $108 2 million, a 19, 8% increase compared to Q2 2003.

Ken Allen Plunk: However, this was offset by double-digit inflation in chocolates and mid-single-digit increases in sugars and sweeteners, mixes, and meats. Our procurement team is effectively managing supply and costs, and we are well positioned to respond to any impact. Looking at expenses, total operating expenses increased $10.1 million, or 12.7%, representing 25.1% of sales for the quarter, compared to 23.7% in Q2 of 23. It is important to note that during the quarter, we incurred $2.3 million in one-time expenses.

Ken Allen Plunk: This led to a 330 basis point improvement in gross margin.

Ken Allen Plunk: To 31% favorably comparing to 26, 8% in Q2 two three.

Ken Allen Plunk: We remain confident in our plans to improve profit margins and expect to achieve gross margins of 30% or better for the full year.

Ken Allen Plunk: As it relates to inflation the euro impact has stabilized we are now experiencing deflation in some raw materials like flower oils dairy and eggs.

Ken Allen Plunk: This was offset by double digit inflation in chocolates and mid single digit increases in sugars and sweeteners.

Ken Allen Plunk: <unk> and needs are.

Ken Allen Plunk: Chairman team is effectively managing supply and cost and we are well positioned to respond.

Ken Allen Plunk: Looking at expenses total operating expenses increased $10 1 million or 12, 7%, representing 25, 1% of sales for the quarter compared to 23, 7% in Q2.

Ken Allen Plunk: It's important to note that during the quarter, we incurred $2 3 million in one time expenses, reflecting transition costs, primarily related to the recent opening of our.

Ken Allen Plunk: Reflecting transition costs primarily related to the recent opening of our third distribution center in Glendale, Arizona. This was a planned cost of our distribution network strategy, and it's expected to drive meaningful cost savings once we complete the initiative.

Ken Allen Plunk: The third distribution center in Glendale, Arizona.

Ken Allen Plunk: This was a planned costs of our distribution network strategy.

Ken Allen Plunk: Expected to drive meaningful cost savings once we complete the initiatives.

Ken Allen Plunk: Distribution calls for 12.3% of sales in the quarter compared to 11.3% in the prior year period, driven by the previously mentioned one-time transition call. Going forward, we expect distribution expenses to further benefit from our initiatives to improve logistics management and increase efficiency across our distribution network and supply chain. Marketing, marketing, and selling expenses were 7.7% of sales versus 7.1% in the prior period, driven primarily by incremental licensing fees and promotional marketing support on core brands and new products. Administrative expenses were 5.1% of sales in Q2 of 24 compared to 5.3% in Q2 of 23, driven by tight management of payroll and discretionary spending.

Ken Allen Plunk: Distribution costs were 12, 3% of sales in the quarter compared to 11, 3% in the prior year period, driven by the previously mentioned onetime transition costs.

Ken Allen Plunk: Going forward, we expect distribution expenses to further benefit from our initiatives to improve logistics management increased efficiency across our distribution network and supply chain.

Ken Allen Plunk: Marketing marketing and selling expenses were seven 7% of sales versus seven 1% in.

Ken Allen Plunk: In the prior period, driven primarily by incremental licensing fees and promotional and marketing support on core brands and new products.

Ken Allen Plunk: Administrative expenses were five 1% of sales in Q2 24.

Ken Allen Plunk: Third to five 3% in Q2 of 'twenty, three driven by tight management of payroll and discretionary spending.

Ken Allen Plunk: This led to an operating income of $17.9 million, or a 75.6% increase compared to $10.2 million in Q2 of 2023. Adjusted operating income was $21.8 million, or an 81% increase compared to Q2 of 2023. After the impact of income taxes of $4.8 million compared to $2.4 million due to Fiscal 23, net earnings increased 94% to $13.3 million, resulting in reported earnings per share of $0.69, compared to $0.36 in the prior year period. Adjusted diluted earnings per share were $0.84 for the quarter compared to $0.43 in the prior year period.

Ken Allen Plunk: This led to an operating income of $17 9 million or <unk> 75, 6% increase compared to $10 2 million in Q2 of 'twenty three.

Ken Allen Plunk: Adjusted operating income was $21 8 million or <unk>, 81% increase compared to Q2 of 'twenty three.

Ken Allen Plunk: After the impact of income taxes of $4 8 million compared to $2 4 million in Q2 fiscal 'twenty three.

Ken Allen Plunk: Net earnings increased 94%.

Ken Allen Plunk: $14 3 million.

Ken Allen Plunk: Resulting in reported earnings per share of <unk> 69 cents.

Ken Allen Plunk: <unk> 36 in the prior year period.

Ken Allen Plunk: Adjusted diluted earnings per share were <unk> 84 for the quarter compared to <unk> 43 in the prior year period.

Ken Allen Plunk: Adjusted EBITDA increased 43.1% to $39.3 million from $27.5 million in the prior year period, and our effective tax rate was 26.6% in the second quarter. Looking at our liquidity position, we continue to have a healthy balance sheet and overall strong liquidity position with $43.6 million in cash and approximately $17 million in debt. Our ability to improve cash flow through working capital initiatives and stronger profitability is generating more cash to pay down debt, raise dividends, and continue investing in our business.

Ken Allen Plunk: Adjusted EBITDA increased 43, 1% to $39 3 million from.

Ken Allen Plunk: From $27 5 million in the prior year period, and our effective tax rate was 26, 6% in the second quarter.

Ken Allen Plunk: Looking at our liquidity position, we continue to have a healthy balance sheet and overall strong liquidity position with $43 6 million in cash and approximately $17 million in debt.

Ken Allen Plunk: Our ability to improve cash flow through working capital initiatives and stronger profitability is generating more cash to pay down debt.

Ken Allen Plunk: Raised dividend and continue investing in our business.

Ken Allen Plunk: Our focus will continue to be on maintaining a healthy balance sheet and prudent leverage position, which enables us to continue investing in the growth of our business and returning value to our shareholders. In addition, we have ample availability under our revolver of approximately $198 million in additional borrowing capacity.

Ken Allen Plunk: Our focus will continue to be on maintaining a healthy balance sheet and prudent leverage position, which enables us to continue investing in the growth of our business.

Ken Allen Plunk: And returning value to our shareholders.

Ken Allen Plunk: In addition, we have ample availability under our revolver of approximately $198 million in additional borrowing capacity.

Ken Allen Plunk: In summary, we are executing our strategy, improving operational efficiencies and profit margins, and expanding growth opportunities across channels and customers. Our second quarter performance, together with our robust balance sheet and liquidity position, has us positioned to continue driving growth across our brand portfolio and customer chain. We are executing our strategy and remain confident in our plan to continue driving profitable growth and value to our shareholders.

Ken Allen Plunk: In summary, we are executing our strategy, improving operational efficiencies and profit margins and expanding growth opportunities across channels and customers.

Ken Allen Plunk: Our second quarter performance together with our robust balance sheet and liquidity position.

Ken Allen Plunk: Positioned to continue driving growth across our brand portfolio and customer channels we.

Ken Allen Plunk: We are executing our strategy and remain confident in our plans to continue driving profitable growth and value to our shareholders.

Operator: I would now like to turn the call over to the operator for questions and answers. Thank you. Thank you. At this time, we will conduct a question.

Speaker Change: I'd now like to turn the call over to the operator for questions and answers.

Operator: King.

Operator: Thank you.

Operator: At this time, we will conduct a question and answer session. As a reminder, to ask a question, you need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.

Operator: At this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Operator: To withdraw your question. Please press star one again, please standby while a compile the Q&A roster.

Operator: Please stand by while I compile the Q&A roster. Our first question comes from David. Chuck Know, from William Blair. Please go ahead.

Operator: Okay.

Operator: Our first question comes from David <unk>.

Operator: No.

Chuck Know: From William Blair. Please go ahead.

David Chapnow: Hey, congrats on a nice quarter, guys. This is David Chapnow stepping in for Jon Andersen. Two quick questions for you guys. First off, can you help us quantify the savings that may be achieved with the third distribution center in Arizona that's now up and running?

David: Hey, Congrats on nice quarter guys. This is David Shaq no stepping in for John Anderson.

David Chapnow: Two quick questions for you guys first Scott can you help us quantify the savings that may be achieved with the third distribution center in Arizona that is now up and running.

Unknown Executive: Good morning, David. How are you doing? Good. How are you?

Speaker Change: Hi, Good morning, David How're you doing.

Daniel Fachner: Good. Thanks for joining us today. Ken, I don't know if you want to look forward to what that savings might be, but David, you know, that third one just got into place. And so what we've said pretty consistently is once we get those three distribution networks into place, we believe that we can drive the percentage of sales distribution down into that 10% or lower range. And they're just now getting the place. We haven't seen that savings yet, but we think that savings are yet to come in short order over the next six months to a year.

Unknown Executive: Good how are you.

Speaker Change: Thanks for joining us today.

Daniel Fachner: Ken I don't know if you want to look forward to.

Daniel Fachner: What that savings might be but David you know that third one just got into place and so what we've said pretty consistently is once we get those three distribution networks into place. We believe that we can drive the percentage of sales of distribution down into that 10% or less.

Daniel Fachner: Range.

Daniel Fachner: They're just now getting the place we haven't seen that savings yet, but we think that savings is.

Daniel Fachner: Is yet to come and in short order over the next six months to a year.

Ken Allen Plunk: David, I would just add to that, you do need to look at the savings collectively, as all three of those RDCs and the changes we've made work together. Just to add to what Dan said, I think we have come out and said in previous meetings that the business case for this, as it's all integrated and working together, will save us. $10 million a year, you know, in that range, give or take.

Speaker Change: Yes, Dave.

Ken Allen Plunk: That you do need to look at the savings collectively and all three of those rbcs and if the changes we've made work together.

David Chapnow: Just to add to what Dan said, I think we have come out and said in previous meetings.

Ken Allen Plunk: The business case for this as it is.

Ken Allen Plunk: All integrated and working together, we think it will save us.

Speaker Change: $10 million a year in that range give or take we're really confident about that.

Speaker Change: And then it will be really the next quarter in the Q4 next year. When all of this really starts to be a bit more seamless and I think youll start to see that percent of sales come down under.

Ken Allen Plunk: We're really confident about that, and it'll be the next quarter, in Q4 next year, when all this really starts to be a bit more seamless. And I think we'll start to see that percent of sales come down, you know, under that 10% range that Dan mentioned. Really excited about that distribution network, though. Love what it's already performing at and how it's helping us better serve the customer. And then know that that savings is right around the corner.

Ken Allen Plunk: Under that 10% range that Dan mentioned really excited about.

Ken Allen Plunk: <unk> distribution network.

Ken Allen Plunk: It is already performing at and how it's helping us better serve the customer.

Ken Allen Plunk: And then no that that savings is right around the corner.

Daniel Fachner: Great, thank you. And then, if I can slip in one more question, I just wanted to know what attracted you to acquiring the Thinsters brand. I know in the prepared remarks that you mentioned that you produce that anyway. But if you could just talk about any plans you have for Thinsters, whether it's new flavors, distribution, or something else that I'm not thinking of. Yeah.

Speaker Change: Great. Thank you and then if I can slip in one other I just wanted to know what attracted you to acquiring the <unk> brand I know in the prepared remarks, you mentioned that that.

Daniel Fachner: That you produce that anyway.

Daniel Fachner: But if you could just talk about any plans you have for <unk>, whether it's.

Daniel Fachner: New flavors distribution or or something else that I'm not thinking out yes.

Daniel Fachner: Yeah, you know, what really attracted us, you already mentioned it, is that we make the product today, right? And love the product and enjoy the brand, right? And so, we had the opportunity to acquire it. It's a little bit out of what I've said that we're looking for in general. We look for something that's larger than that.

Daniel Fachner: Yes.

Daniel Fachner: Really did attractive you already mentioned it is we make the product right and love the product and enjoy the brand right and so had the opportunity to acquire it's a little bit out of what I've said that we're looking for in general we look for something that's larger than that but this is a product that we've been making.

Daniel Fachner: But this is a product that we've been making, and if you've tasted it, it's really, really good. I like the brand, and I like the opportunity to be able to grow it not just in retail but in food service as well. And I like it's clean label. Honestly, there's just a lot about the product that I like. It's small, much smaller than what we've been looking at, but it was just a nice tuck in for our organization.

Daniel Fachner: And if it tasted it its really really good I like the brand I'd like the opportunity to be able to grow it's not just in retail but in foodservice as well.

Daniel Fachner: And unlike its clean label honestly Theres just a lot about the product that are like it's small it's much smaller than what we've been looking at but it was just a nice tuck in for our organization.

David Chapnow: Got it. Thank you. That's all for me. Thank you, David. Thank you.

Speaker Change: Got it. Thank you that's all for me. Thank you David.

Operator: Thank you. One moment for our next question. Our next question comes from Todd Brooks from the Benchmark Company. Please go ahead.

Speaker Change: Thank you.

Todd Morrison Brooks: Our next question.

Operator: Our next question comes from Todd Brooks from the Benchmark Company. Please go ahead.

Todd Morrison Brooks: Hey, thanks and congrats everybody on a really eye-opening quarter in what's typically one of your seasonally softer ones, so very impressive. Thank you, Todd.

Todd Morrison Brooks: Hey, Thanks, and congrats separate body on a really eye opening.

Todd Morrison Brooks: Quarter in what's typically one of your seasonally softer ones. So.

Todd Morrison Brooks: Impressive thank you Todd.

Todd Morrison Brooks: First question for me, and this is just so I can wrap my mind around the gross margin performance in the quarter and the normal seasonal pattern that we would see would be gross margins that were 500 basis points stronger for the second half of the year. How do we think about the improvement? I know, Ken, you're staying anchored to the 30%, but that, based on the historical seasonality, seems like, a low bar to clear. So how do you want us to think about the seasonal gross margin performance in the second half of the year?

Todd Morrison Brooks: First question for me and this is just.

Todd Morrison Brooks: Forgive my mind around the gross margin performance in the quarter and.

Todd Morrison Brooks: The normal seasonal pattern that we would see would be gross margins that were 500 basis points stronger.

Todd Morrison Brooks: For the second half of the year.

Todd Morrison Brooks: How do we think about the improvement I know Ken you are staying anchored to the 30% with that based on the historical seasonality seems like.

Todd Morrison Brooks: A low bar to clear so how do you how do you want us thinking about the seasonal gross margin performance in the second half of the year.

Ken Allen Plunk: Yeah, it was an exceptional quarter for margin performance, where a lot of things Todd are really starting to work together. It's the mix of what we're selling and the efficiencies that we're gaining in our production facilities. We're doing a much better job of Leveraging the capacity of each facility across the product categories. Gross margin improves significantly year over year. And we finally, I think, got pricing calibrated with cost really well. So, all that working together really led to one of the best second quarters in terms of margin in the last 10 or 15 years with the company. It sets us up really nicely for the full year.

Ken: Yes. It was an exceptional quarter margin performance were a lot of things Todd are really starting to work together.

Ken Allen Plunk: The mix of what we are.

Ken Allen Plunk: Selling is the efficiencies that we're gaining in our production.

Ken Allen Plunk: <unk> will do a much better job.

Ken Allen Plunk: Leveraging the capacity of each facility really across the product categories gross margin.

Ken Allen Plunk: Improved significantly.

Ken Allen Plunk: Year over year, and we finally, I think got price in calibrated with costs really well so.

Ken Allen Plunk: All of that working together really led.

Ken Allen Plunk: One of the best second quarter in terms of margin.

Ken Allen Plunk: And the last 10 or 15 years for the company.

Ken Allen Plunk: It sets us up really nicely for the full year.

Ken Allen Plunk: I certainly expect, you know, when we say 30% or better, I think I expect it to be better. We go into Q3 and Q4, where I expect margins, if you remember last year, they were very strong. I expect our Q3, Q4 this year to probably be similar to a year ago because the comparability is on a different kind of scale than it was this Q2 to last year's Q2. That ought to translate into us doing, Yeah, potentially up to 31% of sales for the year. We can do that.

Ken Allen Plunk: I, certainly expect when we say, 30% or better or are they I expect it to be the better.

Ken Allen Plunk: We go into Q3, and Q4, where I expect margins. If you remember last year they were very strong.

Ken Allen Plunk: Expect our Q3 Q4, this year to be probably similar to a year ago.

Ken Allen Plunk: Because the comparability is on a different kind of scale than it was this Q2 of last year Q2.

Ken Allen Plunk: That ought to translate and us doing.

Ken Allen Plunk: Potentially up to 31% of sales for the for the year, we can execute that.

Daniel Fachner: Todd, you know, we've had a lot of conversations about what we've been doing here at the organization and really transforming the model. And gross margin is one of those areas that we're, you know, keenly focused on from sales to operations to finance, and it's nice to see it really working. And that's what we saw this time.

Ken Allen Plunk: We've had a lot of conversations about.

Daniel Fachner: What we've been doing here at the organization and really transforming the model.

Daniel Fachner: And gross margins is one of those areas that we're keenly focused on from from sales to operations.

Daniel Fachner: Finance and and it's nice to see it really working.

Daniel Fachner: That's what we saw in this quarter.

Todd Morrison Brooks: On a longer term basis, Dan, with the new lines that you guys invested in last year, you're producing higher margin profits.

Daniel Fachner: On a longer term basis tan with the.

Todd Morrison Brooks: The new lines that you guys have invested in last year that you are producing higher margin products on.

Todd Morrison Brooks: With the success with cross selling.

Todd Morrison Brooks: What in that kind of three to five year horizon is the gross margin kind of profile for this business. As you guys are thinking about the longer term vision of the operating model.

Daniel Fachner: Well, you know, as we've said, we absolutely believe that we can continue to grow that margin, and we would love to see us somewhere at some point in that mid-30s range. I think we're doing all the right things, right? The teams are focused on efficiency in the plants.

Daniel Fachner: Well as we've said we absolutely believe that we can continue to grow that margin right.

Daniel Fachner: Would love to see us somewhere at some point in that mid <unk> range.

Daniel Fachner: I think we're doing all the right. Thanks alright.

Daniel Fachner: Teams are focused on efficiency in the plants.

Daniel Fachner: The new lines are working our sales group is understanding pricing better than they ever have before.

Daniel Fachner: The finance teams come alongside and help shape that as well and so we're hopeful as we have said that we do.

Daniel Fachner: We could get to 30.

Daniel Fachner: What the next milestone is I would love it.

Daniel Fachner: Mid <unk> over the next four to five years.

Ken Allen Plunk: Yeah, I think, Todd, one of the keys to that will be to spread out the seasonality for Dippin' Dots. And we mentioned, Dan mentioned in his script, a number of big wins that are coming in that business down the road, particularly in theaters. If we can spread that sales out in Q1 and Q2 of our fiscal year, then that starts to build towards even stronger gross margins on a yearly basis.

Speaker Change: Yes, I think Scott I think Todd one of the keys that will beat us spread out the seasonality for <unk>.

Ken Allen Plunk: And we mentioned.

Ken Allen Plunk: Dan mentioned in his script, a number of big wins that are coming.

Ken Allen Plunk: In that business down the road, particularly in theaters.

Ken Allen Plunk: If we can spread that sales out in Q1 and two of our fiscal year.

Ken Allen Plunk: And then that starts to build towards even stronger gross margins on a yearly basis.

Todd Morrison Brooks: That's great. And then one more, and I'll jump back in the queue.

Speaker Change: That's great and then one more and I'll jump back in queue can you talk.

Todd Morrison Brooks: Can you talk loosely about commodities, kinds of wins and losses in the quarter, but he talked about what the overall basket performance was in the quarter. And he reminded us, I think, when we were living through the spike in sugar cost late last year that you may have been hedged through the second quarter here. So just wondering what the second quarter reality is commodity wise and then the forward outlook that you have for commodities in the back half of the year. Thank you.

Todd Morrison Brooks: Loosely about commodities kinds of wins and losses in the quarter, but can you talk about what the overall basket.

Todd Morrison Brooks: Performance was in the quarter and can you remind us I think when we were living through the spike in.

Todd Morrison Brooks: Our sugar cost.

Todd Morrison Brooks: Late last year that you may have you may have been hedged through the second quarter here. So just wondering the second quarter reality commodity wise and then the forward outlook after commodities in the back half of the year. Thank you.

Ken Allen Plunk: Yeah, I couldn't say enough positive things about what our procurement organization is doing to get ahead of some of these things. Sugar was doubled just a few months ago. It's coming down.

Ken Allen Plunk: Yes, I Couldnt say enough positive things about what our procurement organization is doing to get ahead of some of these same sugar.

Speaker Change: Double digits, a few months ago. It has come down it's like I think it's around 665% for us, but we were managed against that its contracts in place.

Speaker Change: Yes, we are.

Ken Allen Plunk: It's like, I think it's around six, six and a half percent for us, but we were managed against that with contracts in place. And, you know, we are in a good position to leverage where those prices are in the next six months as well. So we're not locked into old prices, and we're able to react to that. So I feel good about our position there.

Speaker Change: In a good position to leverage where those prices are in the next six months as well. So we're not locked in to oil prices and were able to react to that.

Ken Allen Plunk: We've done a good job of locking in supply and cost on chocolate, which is probably the biggest commodity, you know, ingredient challenge for us and many others that use chocolate. The good news there is that about half of that is built into the contracts where we pass increases and decreases on to the customer. But we have that well managed.

Ken Allen Plunk: So feel good about our position there.

Ken Allen Plunk: We've done a good job of.

Ken Allen Plunk: Locking in supply and cost on chocolate, which is probably either.

Ken Allen Plunk: Commodity ingredient challenge for us and many others that use chocolate.

Ken Allen Plunk: The good news there is about half of that is built into contracts, where we pass increases decreases onto the customer.

Ken Allen Plunk: But we have that well managed.

Ken Allen Plunk: If you look at Q2, probably on a net basis, we were slightly favorable in terms of inflation and deflation. As we look outward, we are really focusing in on what inflation continues to do. I think you saw the latest CPI numbers are about three and a half percent. I don't know that anybody sees total inflation getting down to two anytime soon. You know, we'll probably see food inflation doing a little bit better than that.

Ken Allen Plunk: If you look at Q2, probably on a net basis, we were slightly favorable in terms of inflation deflation.

Ken Allen Plunk: As we look outward.

Ken Allen Plunk: It's really focusing in on what inflation continues to do I think you saw the latest CPI numbers are about three 5%.

Ken Allen Plunk: Don't know that anybody sees.

Ken Allen Plunk: Total inflation getting down to two anytime soon.

Ken Allen Plunk: We're probably doing.

Ken Allen Plunk: Doing a little bit better than that more in the two to two.

Ken Allen Plunk: More in the two 2.2 So if I had to project out, I'd probably say net-net, we may see inflation of around two to two and a half percent, you know, for the as we look forward, but we're in good shape where we need to be to lock in and protect ourselves.

Ken Allen Plunk: So if I had to project out at all I say net net we may see inflation.

Ken Allen Plunk: Around two to two 5%.

Ken Allen Plunk: As they look forward, but we're in good shape.

Ken Allen Plunk: Where we need to be to lock in and protect ourselves.

Daniel Fachner: Hey, Todd, I could just echo something that Ken said as well, really proud of what that team is doing. Another area where we're really transforming the company. We brought in a lead for procurement about a little over a year ago, and he's just doing a tremendous job leading that group and helping us get better in ways that we needed to get

Speaker Change: Hey, Scott and Mike if I can just echo shortly thank you.

Daniel Fachner: Ted as well.

Daniel Fachner: We are proud of what that team is doing.

Daniel Fachner: Other area, where were really transforming the company we brought in a lead for a procurement about little over a year ago.

Daniel Fachner: Doing a tremendous job, leading that group and helping us get better in ways that we needed to get better.

Todd Morrison Brooks: All right. Thanks both.

Speaker Change: Alright, Thank you both.

Operator: Thank you. One moment for our next question. Our next question comes from Connor Rattigan from Consumer Edge. Please go ahead.

Speaker Change: Thank you.

Connor Rattigan: One moment for our next question.

Connor Rattigan: Our next question comes from Connor <unk> from consumer edge. Please go ahead.

Connor Rattigan: Hey guys, good morning. Congratulations on a great quarter.

Connor Rattigan: Hey, guys. Good morning, Congrats on a great quarter.

Daniel Fachner: Thank you. Good morning, Connor. Thank you very much.

Connor Rattigan: Good morning, Thank you very much.

Connor Rattigan: Yeah, so, Ken, you call this an inventory build in the quarter. You know, I guess I was just curious, maybe how much of a tailwind was that inventory build? And were there maybe any other one-time items like pull forwards or anything like that, which are on the top line? And just thinking about that in total, I guess also with all these new business wins that you guys called out, should we maybe start thinking about the top line as maybe trending back to that pre-COVID mid-single digit growth? Yeah,

Daniel Fachner: Yes.

Connor Rattigan: You called out some inventory build in the quarter.

Connor Rattigan: I guess I was just curious maybe how much of a tail or how much of a tailwind was that inventory build and where there maybe any other.

Connor Rattigan: One time items.

Connor Rattigan: Words or anything like that that drove the top line and just thinking about that in total I guess also with all these new business wins that you guys called out.

Connor Rattigan: Can we maybe start thinking about the top line is may be trending back to that pre COVID-19 mid single digit growth.

Connor Rattigan: Yes.

Ken Allen Plunk: Yeah, Connor, you know, we talked about this in Q1, kind of the opposite effect, particularly in areas like frozen novelties, where you're in the winter months, but a lot of dialing back of inventory. And in the second quarter, I think as people look forward to spring and summer, we saw a little bit of that being trued up, which I think benefited us. We also, like in frozen novelties, saw really nice growth in dogsters and in icy novelties.

Connor Rattigan: Yeah.

Ken Allen Plunk: Connor.

Ken Allen Plunk: We talked about this in Q1 kind of the opposite effect.

Ken Allen Plunk: Particularly in areas like frozen novelties, where you are in the winter months, but a lot of dialing back of inventory.

Ken Allen Plunk: And in the second quarter, I think as people look forward to spring and summer.

Ken Allen Plunk: We saw a little bit of that being true up which I think benefited us.

Ken Allen Plunk: So like in frozen novelties saw really nice growth in dogs chairs and an IC novelties.

Ken Allen Plunk: Those were all benefits as well. And really, some of the work we've done, Dan talked about this, and improving on time and in full metrics with our supply chain changes, you know, has reduced some of the OTCs that we were paying. So that benefited that sales number as well because those were deductions that we were taking in the prior year. So it's a combination of a lot of things that are working well and worked well in the quarter.

Ken Allen Plunk: Those were all benefits as well and really some of the work we've done.

Ken Allen Plunk: Dan talked about this and improving.

Ken Allen Plunk: On time, and <unk> metrics with our supply chain changes.

Ken Allen Plunk: Reduced some of the OTA fees that we're paying so that benefited net sales number as well because those reductions that we were taking in the prior year.

Ken Allen Plunk: So it's a combination of a lot of things that are working well and worked well in the quarter.

Ken Allen Plunk: And.

Ken Allen Plunk: Hopefully, it's a signal for what our customers kind of see as it relates to kind of the entertainment areas and people getting out and buying in Q3 and Q4 and in the spring and summer, that the outlook is that they'll see some improvement there. I mean, I know the consumer and many retailers have been a bit stretched. But I think there's some anticipation that some of that may improve. In fact, I know the outlook on travel is pretty strong, based on something I read this morning. So it's a combination of many of those things that benefited us in the quarter.

Ken Allen Plunk: Hopefully, it's a signal for what our customers.

Ken Allen Plunk: Kind of see as it relates to.

Ken Allen Plunk: The entertainment areas and people getting out and buying in Q3, and Q4 and into the spring and summer.

Ken Allen Plunk: That the outlook is the dose see some improvement there I mean I know the <unk>.

Ken Allen Plunk: Consumer many retailers have been a bit stretched.

Ken Allen Plunk: But I think there is some anticipation that some of that may improve in fact, I know the outlook on travel.

Ken Allen Plunk: It's pretty strong based on something I read this morning. So it's a combination of may those thing that benefited us in the quarter.

Connor Rattigan: Okay, I'll follow up on that later. So, also, in the sort of in the same vein, we've heard from numerous other reporters that there appears to be a widespread slowdown in food service traffic. And, you know, I know you guys called that out pretty substantially last quarter, but it was a sort of noticeably absence in this quarter's commentary, I guess. What are you seeing on your end? And, you know, is traffic still down? And if not, what do you think has changed? Yeah.

Speaker Change: Okay I'll follow up on there later.

Connor Rattigan: I guess also to start up in the same vein we've heard from numerous other reporters that there appears to be a widespread slowdown in foodservice traffic and I know you.

Connor Rattigan: You guys called that out pretty substantially last quarter, but it was kind of noticeably absent from this quarter's commentary I guess what are you seeing on your end.

Connor Rattigan: Traffic is still down and if not what do you think changed.

Daniel Fachner: Yeah, you know, Connor, we're certainly in an interesting environment with consumers, right? I kind of call it choppy waters or fickle customers.

Speaker Change: Yes got it we're certainly an interesting environment with consumers right I kind of call. It like choppy waters or piccolo customers. We had a great quarter Q2 was a really strong quarter for us and we didn't see that nearly as much as we did in Q1.

Daniel Fachner: We had a great quarter, right? Q2 was a really strong quarter for us, and we didn't see that nearly as much as we did in Q1.

Daniel Fachner: But we're watching it closely. We think that, you know, as we've said, over the past three years, we have a product that is almost an experience, an experiential kind of product. And so often you might cut back at the grocery store or in the basket, but you might still buy the group and I see on the way home, or you might get a churro or you might get a pretzel as a reward or a treat, something out of the ordinary.

Daniel Fachner: But we're watching it closely.

Daniel Fachner: We think that as we've said over the past three years.

Daniel Fachner: We have a product that.

Daniel Fachner: It's almost an experienced experiential kind of product and so often you might cut back.

Daniel Fachner: The grocery store or in the basket, but you might still by the group in IC on the way home or you might get a churro or you might get a pretzel as a reward or a treat something out of the ordinary we had a really good quarter, we're going to watch the consumer closely will react to it if we see.

Daniel Fachner: We had a really good quarter, we're going to watch the consumer closely, we'll react to it if we see some downturn, but our teams are keenly aware. And, again, I just call it kind of a little bit of choppy waters when it comes to

Daniel Fachner: Some downturn, but our teams are keenly aware and.

Daniel Fachner: And again I'd just call it kind of a little bit of a choppy waters when it comes to the consumer.

Connor Rattigan: Got it. That makes total sense.

Speaker Change: Got it that makes total sense and if I can squeeze one more in real quick so on the on the RBC. Congrats on getting all three of those up and running as a big big long running accomplishment.

Connor Rattigan: And if I could just squeeze one more in real quick. So on the RDC, congrats on getting all three of those up and running. That's a big, big, long-term accomplishment.

Connor Rattigan: So I noticed that you mentioned only about 80% of product Assortments is flowing through that system. I guess just on a second on the remaining 20% I guess is that just going to take maybe a little bit longer to get through that kind of thoughtful as to get down to that 10% distribution margin number or are you guys can maybe growing so fast.

Connor Rattigan: So, I noticed that you mentioned only about 80% of products are flowing through that system. I guess I just want to check in on the remaining 20%. I guess it's just going to take maybe a little bit longer to get through. And that's kind of a toggle to get down to that 10% distribution margin number, or are you guys maybe growing so fast that you kind of just need that exit fast?

Connor Rattigan: Just need that extra capacity.

Daniel Fachner: Well, we need more capacity than just the three RDCs. We'll probably use an additional RDC when it's all said and done, not one that we own but one that we use down in the Florida market.

Connor Rattigan: Well, we need more capacity than just the three already fees will probably use a additional RTC when it's all said and done.

Daniel Fachner: One that we own but one that we use down in the Florida market, but we still have some that we need to shut down and try to get that.

Daniel Fachner: But we still have some that we need to shut down. Trying to get that fine-tuned is one of those things that we're working on right now. The team's done a tremendous job, and you can see it in our numbers almost across the board. But we will continue to shut down some of those other 3PLs over the next three to six months.

Daniel Fachner: And to that.

Daniel Fachner: As one of those things that we're working on right now the team has done a tremendous job and you can see it in our numbers almost across the board.

Daniel Fachner: But we will continue to shut down some of those other three pls over the next three to six months.

Ken Allen Plunk: Yeah, but Connor, just a reminder, even with this new structure, there'll still be, you know, maybe six to eight facilities that we'll use to move product in and out, whether it's through PL, or regionally located. So it's not necessarily just going from where we were, just three; there'll still be a few other facilities, as well. But that 80% will probably build a little bit higher as we move forward.

Speaker Change: Yes that kind of just as a reminder, even.

Ken Allen Plunk: With this new structure there'll still be.

Ken Allen Plunk: Maybe six to eight facilities that we'll use to move product in and out whether it's through PL regionally located.

Ken Allen Plunk: So it is not necessary is going from where we were just three there's still a few other facilities.

Ken Allen Plunk: As well, but that 80% will probably build a little bit higher.

Ken Allen Plunk: As we move forward also.

Connor Rattigan: Got it. Thank you. Thank you so much for the call. I appreciate it. Thank you. I don't know.

Connor Rattigan: Got it. Thank you. Thank you so much for the color appreciate it. Thank you.

Speaker Change: Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from Andrew Wolf from C.L. King, please.

Speaker Change: One moment for our next question.

Operator: Our next question comes from Andrew Wolf.

Andrew Paul Wolf: C L. King. Please go ahead.

Andrew Paul Wolf: Thank you and good morning, and congratulations also on everything.

Andrew Paul Wolf: Thank you and good morning, and congratulations also on your success. Thank you very much, Andrew. Good morning to you.

Andrew Paul Wolf: Thank you very much Andrew and good morning to you.

Andrew Paul Wolf: Transcripts provided by Transcription Outsourcing, LLC. I wanted to ask, revisit on the gross margin, or tell us either. Gross price, how much price was in there, or net, net of mix, I don't know how you guys, you know, communicate about that. You did, I think, in the release call out price and mix, first listed at first, which often means it was the biggest contributor. So I would just like to get a sense of that versus, maybe, volume.

Andrew Paul Wolf: Quite impressive as everyone's been pointing out.

Andrew Paul Wolf: I wanted to ask you revisit on the gross margin.

Speaker Change: Could you tell us.

Andrew Paul Wolf: Either if it's gross price how much price was in there or net net of mix I don't know how you guys.

Andrew Paul Wolf: No.

Andrew Paul Wolf: Communicating about that but.

Andrew Paul Wolf: You did I think in the release call out price and mix first listed it first which often means was the biggest contributor so I'd just like to get a sense of that versus maybe volume.

Ken Allen Plunk: Yeah, well, let me see if I can answer that in a few ways. One, I want to be clear; each of the three segments had positive volume growth. So units were up in all three of the business areas, and the pricing that we've been taking, with the exception of the pricing we take every January with Icy, and I think we took one in January with Dippin' Dots. The other pricing is more surgical, so we're having to do a few surgical things with chocolates.

Speaker Change: Yeah, well, let me see.

Ken Allen Plunk: If I can answer that in a few ways one I want to be clear each of the three segments had positive volume growth.

Ken Allen Plunk: So units were up in all three of the business areas.

Ken Allen Plunk: Pricing that we've been taking with the exception of the pricing we take every January with IC.

Ken Allen Plunk: And I think we took one in January with <unk>.

Ken Allen Plunk: Other pricing is more surgical so we're having to do a few surgical teams.

Ken Allen Plunk: You know, we've done some with Sugars, but nothing wholesale. So, you know, when you think about margin for the quarter, you know, I don't really have it kind of broken out, Andrew, or I could say this much is probably as much as this. I can just tell you that when we kind of walk through it, it's a combination of really all of the above, you know, the.

Ken Allen Plunk: Chocolate.

Ken Allen Plunk: We've done some with <unk>.

Ken Allen Plunk: <unk>, but nothing wholesale.

Ken Allen Plunk: So when you think about margin for the quarter.

Ken Allen Plunk: I don't really have that kind of broken out Andrew I can say this much as dry as as much as this I can just tell you.

Ken Allen Plunk: That when we kind of walk through it it's a combination of really all of the above.

Ken Allen Plunk: The.

Ken Allen Plunk: The new business we have in churros is driving really good, good margins for us. We've really done a lot to improve the production efficiencies in our bakery facilities, and that is improving margins on bakery items. Some of the automation we put in is also starting to drive benefits, you know, in that way. So we're finally getting to the point where these initiatives we've had, whether it's procurement, whether it's operations, whether it's Margin Management and Sales, and we manage the mix and the products we grow. That is all really working nicely together to get us to the margins that we reported this quarter.

Ken Allen Plunk: New business, we have insurers is driving really good good margins for us.

Ken Allen Plunk: We have really done a lot to improve the production efficiencies in our bakery facilities that is improving margins.

Ken Allen Plunk: On bakery items.

Ken Allen Plunk: Some of the automation, we put in is also starting to drive benefits.

Ken Allen Plunk: And that way. So we're just finally getting to the point, where these initiatives we've had whether it's procurement whether it's operations whether it's <unk>.

Ken Allen Plunk: Margin management sales and how we manage mix and the products we grows.

Ken Allen Plunk: That is all really working nicely together to get us to the margins that we.

Ken Allen Plunk: That we reported this quarter.

Andrew Paul Wolf: Got it. Thanks for that color.

Speaker Change: Got it thanks for that color is very helpful.

Andrew Paul Wolf: It's very helpful. I just wanted to ask about Subway, you know. It looks like they started, announced it sort of mid to late January, you know, at least from my observation, started, advertising pretty heavy, you know, later in the quarter. Uh, how should we think about it? You know, because you gave us a number for Subway, you know, how that run rate can be understated as a run rate? Or do you think there was a bunch of trial and maybe like, how should we think about the 6 million or so in sales you out, you know, you called out going forward?

Speaker Change: I just wanted to ask on I guess subway.

Andrew Paul Wolf: Yes.

Andrew Paul Wolf: It looks like they started announced it sort of mid to late January.

Andrew Paul Wolf: At least from my observation started.

Andrew Paul Wolf: Advertising pretty heavy later in the quarter.

Andrew Paul Wolf: How should we think about.

Andrew Paul Wolf: Just kind of could you gave us a number for subway.

Andrew Paul Wolf: How that run rate can.

Andrew Paul Wolf: Understand it as a run rate or do you think there was a bunch of trial and maybe like how should we think about the $6 million or so in sales you.

Andrew Paul Wolf: You called out.

Andrew Paul Wolf: Going forward.

Ken Allen Plunk: Right, it's a great new piece of business for us, Andrew, for sure. I think they're still dialing in on what that means, even to them. The positioning of where we're at with that churro is great. It's, you know, there are three tiers to the footlong pricing, and we're at the bottom tier of that. And we've been able to, because of kind of foreseeing the need for churros and the new lines that we've had, we've been able to keep them in stock.

Speaker Change: Well, it's a great new piece of business for US Andrew for sure I think they are still dialing in on what that means EBIT for them.

Ken Allen Plunk: The positioning of where we're at with that Euro is great.

Ken Allen Plunk: There are three tiers to the foot long pricing and we're at the bottom tier of that.

Ken Allen Plunk: Been able to because of.

Ken Allen Plunk: Kind of foreseeing the need in euros, and the new lines that we've had we've been able to keep them in stock.

Ken Allen Plunk: We're a couple of the other areas that struggle with that, which might even turn out to be an opportunity for us in some ways. So I think they're still dialing in on it. I don't know that we have an exact number that we'd be able to guide you with that particular customer, but we love the positioning and believe that we have some opportunities with them internationally.

Ken Allen Plunk: A couple of the other areas struggled with that which might even turn out to be an opportunity for us in some ways.

Ken Allen Plunk: So I think theres still dialing in on it I don't know that we have an exact number that we'd be able to guide you with.

Ken Allen Plunk: That particular customer, but what we loved the positioning and believe that we have some opportunities.

Ken Allen Plunk: Them internationally even.

Ken Allen Plunk: Okay, I understand the sensitivity. Thank you for that color as well. And yeah, I guess that's it for me. Congratulations again.

Speaker Change: Okay I understand the sensitivity thank you for that color as well.

Ken Allen Plunk:

Ken Allen Plunk: And I guess, that's it for me congrats again.

Andrew Paul Wolf: Thank you very much. Thank you. Thank you.

Speaker Change: Thank you very much thank you Andrew.

Speaker Change: Thank you.

Operator: One moment for our next question. Our next question comes from Robert Dickinson from Jeffries.

Speaker Change: One moment for our next question.

Robert Frederick Dickerson: Our next question comes from Robert Dickerson from Jefferies. Please go ahead.

Robert Frederick Dickerson: Great. Thanks, so much.

Robert Frederick Dickerson: Great, thanks so much. Dan, you know, you said a lot today. Business is doing great. So congrats, like everyone else has said. I guess question I have, you kind of make these comments about, you know, like, portfolio positioning and, you know, kind of indulgent treat that, frankly, a lot of your products are still affordable. As was brought up before, right, a lot of companies talking about some pressure and food service, restaurants, etc.

Robert Frederick Dickerson: Ted you said a lot today, yes business is doing great.

Robert Frederick Dickerson: So congrats like everyone else has said.

Robert Frederick Dickerson: I guess a question I have.

Robert Frederick Dickerson: You kind of make these comments about.

Robert Frederick Dickerson: Portfolio positioning in Permian indulgent treat that frankly, a lot of your products are still affordable.

Robert Frederick Dickerson: As was brought up before a lot of companies talking about some pressure in foodservice restaurants et cetera, but at the same time.

Robert Frederick Dickerson: But at the same time, you know, you're saying, you know, there are a lot of new business wins, right? Like Subway comes up. I've heard you say in the prepared remarks that, you know, handhelds, frankly, gross was off the charts because of the new mass.

Robert Frederick Dickerson: There are a lot of new business wins right like subway comes up.

Robert Frederick Dickerson: I heard you say that in the prepared remarks.

Robert Frederick Dickerson: I can help frankly growth was off the charts because the new masks.

Daniel Fachner: Merchant Business, Dave and Buster's, you know you've spoken to before, Dippin' Dots sounds like it has a nice little runway even through, you know, the back half of this year. So I'm just curious, like, would you characterize this as, You know, like, yeah, demand broadly in the market could be a little softer in different parts, but given our product portfolio and these new business wins that we're clearly doing better?

Robert Frederick Dickerson: Merchant business.

Daniel Fachner: Dave <unk> buster's you'd spoken to before.

Daniel Fachner: <unk> sounds like it has a nice little run way even through.

Daniel Fachner: The back half of this year, so I'm just curious like.

Daniel Fachner: Like would you characterize this as.

Daniel Fachner: Yes, like demand broadly in the market could be a little softer.

Daniel Fachner: <unk>.

Daniel Fachner: Different parts, but given our product portfolio and these new business wins.

Daniel Fachner: That clearly we're doing better and then also I'm curious as you.

Daniel Fachner: And then also, I'm curious, you know, as you talk to the retailers, are the retailers saying, yeah, like, you know, we really haven't seen this office in your business. So, absolutely, we're going to, you know, blast that out in all our C-stores. I'm just kind of trying to understand kind of why it's doing better and then also combine it kind of with this new business, you know, its upside potential. Well, I do think he hit it on the nose there, Rob, and good morning. Thanks for the call.

Daniel Fachner: You talk to the retailers are the retailers, saying, yeah like we really haven't seen the softness in your business. So absolutely we're gonna.

Daniel Fachner: <unk> set out in all our C stores I'm, just kind of trying to navigate kind of.

Daniel Fachner: Like why it's doing better and then also combine their kind of with this new business.

Daniel Fachner: Upside potential.

Daniel Fachner: I do think he hit it on the nose, though. Our business is diversified enough that, one, we are an indulgent, and we're a treat and a reward. And so I don't think we get as impacted as much.

Speaker Change: I do think you hit it on the nose, there Rob and good morning, Thanks for the call.

Speaker Change: Due to get it on the nose, though our business is diversified enough.

Daniel Fachner: That one we arent indulgent and we're treating a reward and so I don't think we get as impacted as.

Daniel Fachner: Some of the things that are more staples that people are cutting back on.

Daniel Fachner: And and I love, what our team is doing with innovation and new products that we're releasing that are selling really well and then kind of a third leg to that is the sales team, bringing new opportunities through the business, which is something that we've been driving on it. It's really part of the strategy that we have been laying.

Daniel Fachner: Over the last three years or so and it's really come into play.

Daniel Fachner: <unk> talked about cross selling several times and even got the questions can you really make that happen because it's not easy to make happen, but it is happening here at J&J, we're seeing the sales they really work with one another to be able to bring.

Daniel Fachner: New products in there.

Daniel Fachner: There are customers that we deal with today and they're working really hard at it I'm proud of the sales team I'm proud of the marketing team and the way that they brought innovation.

Speaker Change: And I think we have the fortunate.

Daniel Fachner: The thing of having products that are indulgent treats, that are experiential, and all of those are working together to make the consumer a concern. We would, you know, Ken and I are sitting here being naive that it's soft out there in some ways, but that's not an excuse for us not growing sales. And that's what you would hear within our organization. We're going to continue to explore other areas, even if it is soft.

Daniel Fachner: Thing of having products that our indulgent treats that are experiential.

Daniel Fachner: And all of those are working together the consumer is a concern we would get and I are sitting here being naive it's soft out there in some ways, but that's not an excuse for us not growing sales and that's what you would hear within our organization, we're going to continue to drive other areas even.

Daniel Fachner: If it is soft out there.

Robert Frederick Dickerson: All right, super. And then I guess a follow-up question kind of around the demand landscape. You know, you are entering, or let's say almost entered, kind of what we normally consider your best part of the year. Some of the amusement parks have already opened. Seems like movie traffic maybe is a little bit still light.

Speaker Change: Alright, Super and then I guess.

Robert Frederick Dickerson: Just a follow up question kind of around the demand landscape.

Speaker Change: You are.

Robert Frederick Dickerson: Entering or let's say almost entered cut.

Robert Frederick Dickerson: Kind of what we normally consider.

Robert Frederick Dickerson: Your best part of the year.

Robert Frederick Dickerson: Some of the amusement parks are already opened seemed like movie traffic, maybe is a little bit still light.

Daniel Fachner: So I kind of like where we sit today, I guess, like as you got through April, you know. I asked the same question almost every year, this time of year, like, would you say that kind of demand, that landscape, you know, as you kind of think for the next few months with respect to amusement parks and the other seasonal dynamics of the business seems to be, you know, fairly sound, like pretty, pretty good. I think we're positioned really well, of course, you know, you get into these six months, and weather plays a big part in it.

Daniel Fachner: So I kind of like where we sit today I guess like as you got through April.

Daniel Fachner: Yes.

Daniel Fachner: I asked the same question hours every year at this time of year like would you say that kind of demand that landscape.

Daniel Fachner: As you kind of think forward. The next few months with respect to amusement parks in the other seasonal dynamics of the business seems to be fairly sound like pretty pretty good I think we are.

Daniel Fachner: So, you know, if the weather gods can shine on us, and I mean that shine on us, have that sun out there and keep people in the parks, the amusement park industry is forecasting a pretty good season. The movie industry, we hadn't talked about a little bit. It has been soft, and you know, that strike did affect the movie industry, and they're expecting kind of a softer year overall, down 15% or so, but it builds as you get to the latter half of the year as new movies start to be released.

Daniel Fachner: <unk> really well of course, you get into these six months and weather plays a big part in it so.

Daniel Fachner: If the weather gods can shine on us.

Daniel Fachner: And I mean that China has had that saw in out there and keep people to the parks. The amusement park industry is forecasting a pretty good season.

Daniel Fachner: The movie industry, we hadn't talked about it a little bit it has been soft.

Daniel Fachner: That strike did affect the movie industry, and Theyre expecting kind of a softer year overall down 15% or so but it builds as you get to the later half of the year as new movie start to be released.

Daniel Fachner: We're kind of in that lull time right now, but we expect that to come back stronger in the fourth quarter or first quarter of our fiscal 2025, but we're investing in that group. We're investing in the movie industry.

Daniel Fachner: Kind of in that lull time, right now, but we expect that to come back.

Daniel Fachner: More in that fourth quarter or first quarter of our fiscal 2025, but we're investing in that group were investing in the movie industry. Because we saw before the strike when you have the right movies in place people are willing to come back out to the movies like the Bourbon Hydra Hymer effect last year and so we're seeing some good growth.

Daniel Fachner: There with our different dots Brian.

Daniel Fachner: But I think we're in a good position.

Daniel Fachner: But I think we're in good position as we go into the core summer months.

Robert Frederick Dickerson: All right, lovely. I'll pass it on. Thanks so much. Thank you, Rob.

Speaker Change: Alright, I'll pass it on thanks, so much thank you Rob Thanks, Ron.

Operator: Thank you. I am showing no further questions at this time. I will now turn it over to Dan Fachner for closing remarks.

Speaker Change: Thank you.

Daniel Fachner: I am showing no further questions at this time I will.

Daniel Fachner: I'll now turn it over to Dan <unk> for closing remarks.

Daniel Fachner: Great, thank you very much. I appreciate that, and I appreciate everybody's questions today. So looking ahead, we remain focused on executing our strategy, including maximizing every sale and new business opportunity to further grow our core brands while investing in our capabilities and resources to improve our overall operation. While we are closely monitoring consumer and inflationary trends, we expect to build momentum through the second half of fiscal 2024 and remain excited about the many opportunities ahead of us to deliver long-term value to our employees, partners, and shareholders. In the interim, should you have any questions or wish to speak to us, please contact our investor relations firm, JCIR, at 212-835-8500.

Daniel Fachner: Great. Thank you very much I appreciate that and I appreciate everybody's.

Daniel Fachner: Questions. Today. So looking ahead, we remain focused on our executing our strategy, including maximizing every sale and new business opportunities to further grow our core brands, while investing in our capabilities and resources to improve our overall operations.

Daniel Fachner: While we are closely monitoring consumer and inflationary trends, we expect to build momentum through the second half of fiscal 2024 and remain excited about the many opportunities ahead of us to deliver long term value to our employees partners and shareholders.

Daniel Fachner: In the interim should you have any questions or wish to speak to US. Please contact our investor relations firm <unk> at two one to 80 358500. Thank you very much.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Thank you for your participation in today's conference.

Operator: Does conclude the program you may now disconnect.

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