J&J Snack Foods (JJSF) 2 May 232023 Q2 Earnings call transcript

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the J&J Snack Foods Fiscal Year 2023 Second Quarter Earnings Conference Call. [Operator Instructions].

At this time, I would like to turn the conference over to Mr. Norberto Aja of Investor Relations. begin. please Sir,

this XXXX. Private comments be and do read as the call our operator, meaning Conference impact everyone. you call Litigation well statements take statements industry-wide with as Thank We'll on doing forward-looking COVID-XX But Act strategies, Thank let contains statements the and our safe of considered should so, and Snack good harbor financial plans, goals Foods' of joining me ongoing management's minute a including J&J in that minute of Quarter the on of your relate facts fiscal All for questions. supply matters Securities statements, start before to to regarding constraints not management's you, performance a just morning, the and the business. anticipated XXXX objectives made Reform within Call. This Second historical forward-looking and language.

call XX-K for or different that expressed indicated known or by XXXX, the in by future cause annual These on statements. implied statements Securities factors to differ other guarantees forward-looking may performance from or those involve year results, could to today. risks, materially this Factors report any are the discussed materially other and be uncertainties results, cause ended forward-looking September Commission, achievements our that made XX, filings Exchange performance or the Form and and important the and with actual on results from promises achievements neither unknown statements

XXXX. May date represent of such to call, as statements the forward-looking Any X, management's estimates this

change. cause at subsequent disclaim future, do obligation While so, even to we any statements events some in point the elect we may update to to if earnings forward-looking

reconciled which be including In EBITDA, website. are the income addition, found press all release, Investor metric Relations company's operating earnings adjusted today, on our certain call can section of may per which the in metrics the to nearest earnings of share, we or non-GAAP the GAAP reference also in

our Joining Chief Financial me on Fachner, Mr. with along Officer. Dan Plunk, Chief Officer; Ken Executive the call today is our

go Following session. management's J&J call With Mr. go Chief turn Dan Executive we to the open prepared now the over remarks, call for ahead, ahead Officer. Snack Dan. would a Fachner, and that, will to like I Foods' question-and-answer Please

Thank quarter you, Norberto, history XXXX everyone. business fiscal appreciate as and I'm strong was to second pleased the company our was quarter, second We all quarter and to in quarter sales results. good our in that across joining segments. you sales morning, report momentum this highest driven second discuss by continued fiscal the X positive us demand

a in enacted volumes $XXX.X frozen QX, combined resulted frozen net XXXX, performances indulgent volumes, in fiscal inflationary marked and While fiscal our increases for pretzels, began price in We with in strong with and novelties fun it consumers million. beverages. impact including of in and and the XX% is to diverse show brands improvements ongoing offerings clear year of strong the unit in demand challenges that iconic for to economic industry, saw churros, sales soft increase continue products. Higher

and increase in related sales Dots a placements. XXX% churros incremental and Dots customer of to reflects soft at products million healthy than generated $XXX.X frozen pretzels, a segment more Taking J&J expanded healthy to million million, margins in key XX.X% and increase in new Dippin' including XX.X% Services growth for Dippin' earnings resulting increased performance growth rise year-over-year approximately $X.X also improvements closer a distribution in the and including metrics, expenses, several a in gross sales XX.X% Overall, sales. strong look including novelties, Food segment $XX across quarter. performance. our

and recent handhelds driven the launch million, in XX.X% major the retailer. beverage frozen filled sales knots strong sales trends led related rebounding $XX.X biscuit. by across as increased our venues to expansion including million was retail to and well with Retail growth to segment sales, amusement, of sales channel. also of sales and $X.X a restaurant, SuperPretzel $XX.X Retail theater million, consumption in pretzels soft increased food novelties, reflecting XX.X% Frozen of service rise strong an a as by XX.X% healthy beverage

repair Machine of volume. while increased and prior the the increased installation sales on back X.X% maintenance customer revenues year versus healthy equipment X.X%

such as historically delivered as we to stabilized, to margin impacts of and in our We margin While gross last the fiscal margin prior the XX.X% pressures XX.X% which challenges, eggs, pressures. improvement to QX of continue pricing favorably mixes early these Overall initiatives improve key X% commodity gross the in manage reflects 'XX, benefits year we our our gross year. the has to productivity. continues continued management overall year-over-year approximately cost impact industry action and compared a sugar. of high through year estimate flour, inflation these ago, on inflationary experience oils, inputs, to Despite and compares cost

aggressively delivering strategy growth, We that investing for J&J is is results. its our are next of positioning clear it phase and and

and call to product excellent innovation, also consumers' the prioritize and products, for while We for have Starting proud growth leveraging very teams our business business opportunities briefly X to and remain turning our done across affinity to focused on product on the of segments. capitalizing I'll our before group. continue future. increased Ken, all over to innovation our for extensions of core brands this do work So the with sales, touch optimize on marketing

achievements We including core several casual QSR, market are to gaining retail, notable in and with our theaters, channels, key gains QX. leading placements dining in in products share

progressing total to across locations Southwest venues, with a The incremental and fast beverage the continues XX of channels. the placement test currently on casual to #X locations team is in working the calendar and America's several customers share also year-end. XXX opportunities. placement gain installed to QSR well, brand, representing The ICEE rollout ICEE Grill date of is by in ICEE, frozen Moe's

major and To the XXX install the been pops we quarter, be QX, relationship targeted new late about Last completed end has the retailers we've response very XXX remainder with innovation, to installed SLUSH ICEE date, positive. by initial terms of new launched and In product very, machines. with branded to of a machines in Checkers we PUPPIE July. announced frozen across

category across brand soft remains channels. SUPERPRETZEL the leader pretzel Our

to see opportunities significant foodservice channels. We in both continue growth and retail

We this are expanding later pretzel be and excited placement to SUPERPRETZEL knots, products launching filled in mini of dogs sticks our branded existing and retail new summer. Bavarian

grow expanded enable business. aggressively our us production Our SUPERPRETZEL capabilities to

the with quarter. key the these We're WHOLE partners. experienced also seeing and healthy frozen also Italian unit and brand, Our retail novelty including during second solid FRUIT Luigi's of brands Ice, growth momentum Dogsters dollar sales

pleased our of this brand, Churros sales extremely also with the healthy are quarter with a success early year-to-date. We and XX% Hola! XX% growing

significant and long-term near- with growth #X producer opportunities retail fast major branded food as distributors, QSR, products America's we our of of channels. As the see casual well U.S. and Churros, as

our launch brand Churros channel with in first the to XXXX expect Hola! the commence We to retail shipments in September. in

test made and theaters with summer. quarter. a plans in third worked additional for the a and team year. plans new XXX-plus Regal a the team XXX Finally, in Dots, seasonally the secured to which also The back expanding over chain, another locations second The we've half freezers period quickly locations slow progress be theater the significant while channels AMC in theaters and of into Dippin' for very in the was install for Dippin' strong Dots to quarter positioning business

opportunities pipeline strong our as a our cross-selling have leverage the base We strategy. customer we and of of breadth execute

products retail best Dots' Cherry ICEE best In product Dots the continue March. novelty by by branded our growth. is continue of terms Also, recently of we launch flavor the frozen This evaluate new Dippin' an we brands ever, to innovation, XX% product Dippin' channel. leverage launching unit ICEE new Dots over Raspberry ways product and find to Dippin' exceeding combined to power branded in Blue for

Turning to our operating initiatives.

in grow grow couple and to a actions line QX. taken our over have sales Operationally, added lines expand capabilities we frozen production supports last sixth and expand and to will years efficiency business. products. our the of of capacity have our to our A We added new core aggressive churros, now novelties. continue of number X growth automated capacity this opportunities to plans be pretzels in This supporting increase

by distribution distribution network handful optimization X state-of-the-art centers. In our including the a new addition, of warehousing of locations, geographic we are completing to consolidating and

Texas, third and early shipping year will facilities our RDC will strategically June other to allow the these from in opening next somewhere storage reliance significantly come for go and this reduce locations parties first The Terrell, X between us to new in logistics while year. X of are XX-plus on open and later The and expected X online to will management. RDCs located

pivotal initiatives and shipping capabilities. the announced costs logistics support more a freezer RDCs of outsourcing system in for supply This capacity transformation new with ERP service play include fiscal of our aligns to strategic will This growth these including Dippin' our expanding NFI. better XXXX, Two distribution a efficient opportunities the reducing and role Dots product in chain customers. to to providing our implementation distribution and of will also

efficiencies the position and incremental sales combined provide distribution confident initiatives reduced that profitability. us these strong improved and are for and We growth operational deliver platform costs to

customer Dippin' business further As confident complement J&J are that J&J brand positioning to and business is to the systems, shareholder evaluate long-term we planned. new of our we as our we that Dots operations integration is the and summary, strengthening levels into potential are to model. channels our growth it Also, In of M&A, the returns. the just M&A and processes, going portfolio opportunities competitiveness of foundation deliver building relates continue and

by brands and heading into supported We growth back fiscal have momentum core half products. our XXXX, of strong the

on brands business, in to Strategically, and the help while investing initiatives grow, us efficiently. focused more team operate implementing to capacity is transforming our the

and aligned the Foods, us ahead J&J strategic is around team on success. to about these leadership opportunities long-term continue Our of building record the growth initiatives, and Snack excited is organization

like over now call review the I Ken Ken? to performance. would our to turn CFO, financial Plunk, to

financial Dan, Thank for results I everyone. our quarter. morning, with am the and you, good pleased

More are long-term with evident to initiatives front success. and pleased opportunities importantly, various Hopefully, I us and making across we progress is these in positioned results. it have we our improve the grow for well of am that

and strong business. by result a the the reflecting of $XXX.X second sales health at of first the for X totaled resiliency versus The growth million, the increase months period our driven versus increase X the all net year and was Taking segments, XX% our XXXX. business a quarter look line prior top of across fiscal XX% fiscal a quarter,

representing segment, in million, sales sales. Our XX.X% experienced company increase to Service, Food largest $XXX.X XX% of total a

in in The strong pretzels the a performance frozen XX.X% Dippin' XX.X% acquisition, growth the which also sales, was and given line with handheld soft included Dots by approximately a a flat down result in increase both These segment, million increase business. novelties, respectively. Dippin' across bakery, and and results performance this a including increase XXX.X% relatively of X% Dots of churros, expectations, $XX benefited seasonality our up healthy the from in in X.X%,

Sales million and from our increase XXXX. in increased and this driven fiscal $XX.X frozen same to handhelds, the by sales, the prior in including subcategories, novelties segment. XXX.X% in in biscuit compared and increase to period Moving respectively, versus segment increase to Retail contributions soft was year. Growth XX.X% X.X% in X.X% all X% pretzel

$XX.X rose As were or led period. growth sales revenue Beverage previous it sales all X relates the to QX by 'XX, versus revenue XX.X% Repair increased machine our XX.X%. compared across the third increased and a increase year maintenance to segment, subcategories. Beverages, Frozen X.X% X.X%, million

year, a XX.X%, statement. XX.X% to QX of profit at Moving for or favorably to million in the a comparing second leading to gross quarter XXXX income down prior of came Gross increase margin XX.X% 'XX. versus in fiscal fiscal $XX.X

fiscal gross of marks QX this since the highest fact, XXXX. In QX margin

pressures as such has on inflation key year-over-year sugar. mixes commodity eggs, overall continue and flour, inputs, stabilized, While to we oil, experience

compared year earlier, As we Dan approximately X% inflation mentioned to at ago. estimate our a

inflationary pleased improvement have expected these further our and gross operational in see that affirmation the continued face business. our So the our of initiatives we are results positive were as results with and these to margin beginning on headwinds impact

of QX largely increased business 'XX. XX.X% in our expenses XX.X% ago and compared expenses. or Dippin' expenses compared ongoing to of compared The inflationary Distribution XX.X% to year prior reflects XX.X% many fiscal in the sales quarter Taking from operating represented for to Total representing distribution a versus our $XX.X of Dots expense year, increased million pressures XXXX. at a to of of the and lines, the addition increase sales in across XX.X% XX.X% particular expenses. look

basis of sequential XXXX a and saw XXXX on we distribution fiscal QX However, significant a when QX improvement expenses sales, XX% compared represented and to respectively. fiscal XX.X%

addition versus and logistics QX These allocate improvements job of the how to a of continues a sales targeting business. X.X% QX were environment and X.X% period, across represented as Dippin' X.X% reflecting marketing expenses inflationary Administrative sales do of Dots Marketing compared X.X% our by were to and the team in led we selling year efficiencies stabilizing in in improved expenses. expenses driving management year's this last of marketing dollars. great XXXX year, in prior

is Dots the Dippin' most of its place second reminder, a half highly a over business, As seasonal profitability, the year. of taking with

a it quarter. in As negative impact our such, the and expected, second results had as on

share to $X.XX. operating the year led an of per in 'XX, $X.X comparing to considering earnings QX was to fiscal or to of income operating favorably in reported QX XXXX. to also net QX $X.X earnings This comparing $X.X to $X.X million million, million income million of in $X.XX a million, million, After $X.X taxes $X.XX per XXX.X%. income year-over-year in in XXXX share resulting favorably $XX.X million period. earnings of compares Adjusted QX was diluted increase to $XX.X Adjusted compared $X.XX This prior increased diluted in of compared of XXXX.

sheet, million Adjusted at prior and securities in increased quarter. million year a in look we marketable position, the to a $XX liquidity to period, from healthy $XX.X our was cash $XX the approximately debt. balance in effective rate continue second $XX.X our tax in XX% EBITDA and maintain million XX.X% and Taking million including

availability addition, to million borrowing In our ample This flexibility our of have the of we invest us approximately affords and $XXX support capacity. business. strategically additional under revolver

including to completing of execution in across growth close product investing and new lines the year the currently various investments million are initiatives, the in We RDCs. $XXX

the business. health, summary, and reaffirm results resilience of In these potential our

on second enter of half to the this shareholders. feel our navigate we aspect for we deliver fiscal environment added the dynamic to how do business As create to of in year, every raise goals our the and and bar continue we effectively confident in our value ability

open now would the I like to questions. Operator? call to

[Operator Instructions].

Edge. Our of Rattigan Connor line first Consumer from question or the comment comes from

want little talking time service I food So traffic. to about spend a

seems So really theaters. it like rebounded in especially nicely, things

holding in the by I So be seeing of to expectations? maybe space. what up of seem could mean, I parse maybe your traffic-wise maybe nicely if you -- out mean QSRs and venue you're anything really coming ahead guess, sort across I is

on. That's a Traffic things Connor. that keeping of question, close is we're those one great really a eye

that into we really, as then patterns business. into next know, we concerned the we're entered and But ended -- little be the quarter it. really the we're it's slow It closely. ended the as were now about quarter second quarter, something when going quarter, for to we're and to the second we this you a seemed throughout As that the here, X But And first we came quarter traffic to watch strong. really pleased into all-important in about may that. started months rise

that out that's those really mindful there have things we watch it read with of so a recession all things be that we And day-to-day of. to we're going of and really one threats closely the to

we're that. so And doing

love we're feel woods, we're the I completely but of if I now. out right at where don't I know like

adding distribution incremental you as makes theaters like That with that ahead where rollout? we maybe heavily are really critical are guess, schedule typically those million that of is But Or very are about right last around and sort in I of million next quarter, And X of on Dippin' ahead backloaded. whatnot, goes, as then months, -- Dots, that things far you sounds sales total rollout so I maybe mean, and know distribution going I expected? quarter right, well business this $XX and with sense. it $XX

with doing can we were what about bought really we when remain I what, aggressive we pretty what business, and it. do it, about think aggressive with know you we're that we Well,

job lot we're have channels. I with we great in that par we We're is what need right solid They've with par So they're pressure would like I company. think very group of would say activity doing integrated And the all really right expected. have to would about coming across we in. what a a we about J&J total well be. on with on a I where on cross-selling team. put our say I The group. of

more at stuff, here Okay. And guys. me one the Good for end. Great. then just

So we be X% at here I of inflation any COGS would but mean, in are. world, last other

here. So just a bit of a X-parter

that where So about think Or commodities? quantified should of last X% at the I'm sure more inflation can we remind sort ag COGS you should inputs And of that? if sort you was? now, other you're how and an be not these that also right what if movement maybe we expect just annual to quarter, rate, just run in and looking your so, us hedging at of given

inflation that's was. really that last $X.XX only this dairy since going we're again, to come you're what least last Flour be QX year comparing and great since what's question. is down There's with kind but Cheese which, year-over-year of get and variations of to then has down, because Connor, And QX. quarter. so down to year quarter. the going later a what's creating the Ken, pronounced overlapping come come Yes. inflation. But has to comparison, year-over-year prestorm at of since quarter. of And last far. continued there's last in Diesel happening always inflation ago, has

and moving. there ago. So are They're same lapping just fast, kind moving the they're things not year quarter a time the pre-inflation of as of

mid-teens, We that kind QX we're we external inflation our X%. calibrate out of metrics. now with And of measured and internally in the came still at with also

upper the Xs. recent at-home CPI, X.X% whether a still Price it's at still that's food, on at X%, look to data or in restaurant, you in Index If Production

our the quarter. of So current X% of kind in that measurements internal that compares to

would as X still quarters but Eggs gradual could that improvement expecting not change. is have a I ago. as what we thought As And wildcard. we're much forward, go again,

I marginal will is inflation up double-digit and benefit of a a I of think And digits ago. to It's it later and projected the improvement, kind X think. go get lapping new But double of year then sugar problem. the will near be in higher. QX you

comparison the will year-over-year where that's change think bit. I little a

[Operator Instructions].

Our from next comment of or Andersen question line the comes William Blair. Jonathan from

And does year-over-year that of with it's guess question quarter up with in the would the offset and to you inflation. I'm that inflation that today to And that marry or in one about the the where is the about experiencing to kind the quarter, pricing X% you expect of near your are up pricing way how any medium curious following to a one I know in other on I of you contribution pricing respect adjustments pricing you're And to now? term? comparison just inflation? things make last kind provided the

an me it. so awful not as bit a side lot the date. this We've anything in other start, took talk on I'll the let pricing. little done Snack to conversation did Foods year, have Ken reminder, had pricing pricing, many and date let right, last the the then of over a about we around To took year, And as Group January ICEE people. and we Jon, in

closely. where that in of to have real your are closely. there's elasticity sure looking balance we And right you at spot it the needed products. increases We different areas, watch some do watching making going but to and very the it pricing We're might a

on careful really going there. Ken, it to to but to want we we're do the going be you watch that, closely. numbers touch And we're so as maybe

Well, September, think the quarters, then frame, time few remember, one had you in the I had and kind in 'XX, March, late increase the April one October. second we had around price of We XXXX. a third the if Yes. last we

lapped lapped pieces those, the of of we've So one. second we've one and

was pricing, even we cases, days and But terms of known in QX last kind that. and we -- of more might there just in say, in Dan year kind on quarter, have, next increases still because in the question had inflation. XX late happening remind to in aggressive if in of always the So next been of from I I your here QX, kind of sit think slight QX some everybody well, what's

was around number to basis XX points. the think XX I

always think we're But And really in to in So the the bit a the here, take little some more said well particularly Service and and we of competing retail think when spots, side pretty I stabilize. just now. business we to in day back I space Food to Dippin' volume saying But be kind watch, time. by I at something right right retail. was price and we're the opportunity think you pushing and retailers calibrated some watch think is Dots I it and in continue something business. it's retail need as for we're the day, lot things the with And business is there do ICEE probably how where if we of a tricky may and are don't there may pockets with point

really That's helpful.

price Is same around well, price contributed maybe say think trying the to of at of be in hone it would would but strong XX%, the the So But that to Dippin' quarter majority I the positive I'm kind the not level in price? X/X that excluding contribution. on to maybe it going be not now sure be Dots at of possible. -- volume the as I'm of fair here. right that XX%, -- is it's organic if -- growth a number around was in

that's for on Yes. over XX%, situation. I number, category I the growth probably I tell volume depends fair Frozen I'll they growth would business beverage and of XX.X%, say. the I Again, of price, just ICEE mean mean, think. on you had side, it a total just

of the a the really well. So that that and positive lot the really folks sign. And good is theater is theater of to mentioned, is we a industry, as as rebound starting outlook that's really

this in Service. was this want but -- and But nice is it influx our all still Food if quarter, volume are mean, growth, and very a of year of by little in increase them we recent And data, I clear, retail, quarter growth bit led lower. in really a to be there because at even volumes of a do had I Retail of declines volume in ICEE slight proud volume reporting that look retail. we're had most you candidly,

The one helpful. really ask margin. that related last to That's Yes. I'll is gross Sure.

made progress and out, -- good made as sequentially. good You year-over-year you progress, pointed both

I kind reasonable better pre-pandemic to past XX% various bit that think levels of of thinking target? what's or Is here of Is Or perhaps the a still what's you way talked there? the kind you've today, a maybe. that a times rate about the in think about margin restoring And line about? that the, as sit gross to what's time getting you're the kind target? the time line for --

Yes, on quarter. year bullish there the profit getting still Jon. And that's ourselves chance XX% probably as as been in have really question, we third getting Great that still we we're believe good we've back of still, We a the of that soon saying to half margin. reality. think as the gross a

it. a So chance to fight have think that we're have going to and we for continue good to

of comes next Brooks or line comment Company. the Our from from question Todd Benchmark The

second growth half a company the the for by second much of questions you. that has we was we impressive, quarter, in to very so unlocked been this how capacity organic is what from year? to A the from of new lines the most year, on lines talk will new growth quick those that few Or can more the coming Dan? the One, which of far the in unlock incremental saw standpoint benefit

couple just this build novelty that over lines of frozen with the we'll lines on came of the new to past continue quarter. exception I those think a

frozen the in and new the that also and lines that on products. the nice And I some the help during those. frozen months quarter-ish novelty frame that And up came will side, but so what being innovative build to keep in business slightly churros more before on to we'll growth level novelty a happening able The that. continue with numbers time first lines and release by us do doing or pretzel new that with see there the you we're from summer side of the we love one see around

most And from so still is yet I to think growth of the those lines. come

Ken to Is growth these maybe can what capacity X launch just you X a over quarters meeting to new organic looking contribute the that lines products demand say, or next, the Dan or about there weren't way, think we're to as to let's either last meet year? new from

pretty it's I I I look I an could mean, whether Todd, when what don't new exact all you kind to gets the try have tell products, impacts, innovation. at mean you hairy, number, if those Yes, it get to at those million we capacity all those $XXX lines else is probably those to lines everything million -- $XXX when expect, present lines equal, capacity. think once opportunity, the are we being up of

outlook than And that XX% us to could the capacity on kind of faster that's the When XX% there, lines we're really able we these for leverage us is time be, investments, the I on situation. mean, once depending others. to the returns take cases range. are typically going to get what years It's some of X to in to did completely. But these the bit a X business

That's great.

if expenses some And found distribution about Coast structure? can historically new at that the digits points? back shipping get the just you're it we your of West RDC, view on looking facilities consolidation into now question, X us like this saw where roll the Can talk longer-term sounds get the the facility with to, a and high back can facility should we X timing to you Second for single giving we when consolidation out. you're

used we'll back those place, lot. get high Todd, what single hopes a to that expect be to the We maybe that absolute get we that that digits able than to for team, even to as about do all talk leadership better we is in goal and in something and be. the have this

appropriately together. impact coming be spaced really and a that way around Coast is And early have on You're business. on one We move to can our them open we've big XXXX, right, the somewhere able as we're it, out excited that's West really we that to a them, about handle February schedule we RDC, in that think think did X. to to identify up and we

then and you one And And just slotting at fees quarter? fees like we year-over-year product comparison maybe, have? at talk for look does the fees what newness run slotting look that final great. the the retail, me. activity in about That's successes can would product the in slotting new with you all If

something will right in as Well, and exact spending we're term, we're the I fees we to long Todd. for out Yes. can it's we're that And ago to here this places, And us. we'll definitely I that quarter investing of with a get don't right the what ultimate an me. I benefit in think terms back year we in. we're in tell we that comparison think versus that space have way getting balance value we're slotting you to into that now spent of But spending figure placement, look ensure the year, all but the in half more.

the what front year marketing we in for There's it's and promotions, space a that here the in those may LTO-type think it lot do caps. off don't know have will brands in I of me and lot kind ago. end But us. recently, of of of retailers if some doing that But stores on a of I retail of investment pay was in you've an ultimately any a been seen you us have not

or comment the of from question Our King. CL next line comes from Wolf Andrew

in The like pretty it's plus remains sales put and you release, pretty sounds answering your pipeline robust it it [indiscernible] good. and

just -- when the not there's grind the going -- doesn't aren't women but halt, been sales sales sales enough tilt cetera? get happen and of -- more et the are has an their fulfilled. filled, campaign and if capacity, -- full can can process an of overall, because kind it experience you're salespeople Does that to aggressive get a they stuff my they're of commissions, the know there whole organization not kind now get can't it there's that So guys

our reason no, Well, And correct, we've grow capacity core lines. bit excellent sell wants It service aggressively pretty volume now for a this. And out of to ourselves we to to investing to that salesperson And talked being in in go had. level things deliver up little that's and absolutely is that in we the good we've any their struggled are Andrew. and those on a with absolutely we've continue the keep investing really to about business. We've the that and plants customers. these And gotten kind to sell core products. able our want with to of high new

a at and And with really the what churros, fronts, but able in different is really on and the we out aggressively there make we're that. have just future see. shapes nice about those holds that great And all sizes, pretzels not the now rate team to and Snack and just the being it's coming side, the selling pipeline Foods to excited really,

a line? And should Okay. mean, national that Churros, this is I mentioned Hola! -- mean should big what to expectations just a how -- on going is regional for be of a or you a sort that of a we specifically launch of -- retail think sort the or specific crawl-walk-run? or launch about I

we've on And heavily. it selling there a had already. it very lot feedback of out good we're Well,

soon will say and it. that And I when whether it's but and churros sell our line that age, that be of or out as we're to it to a a we the not product there, we're it be about getting good think lot will feedback retailers it. will really excited coming you of from just national I how about think too launch big tell

to so go that's well. And think we going very

poking looks inflation think happen the pressure it right. and abating you kind this gross of quarter. like tailwinds, different could you, a been have caused on as up lot whichever hear All gross puts both to or it Maybe -- guys and people of goal input as this, turning of your are I'd pricing. lot are -- And you margin, that or on great and like there's Ken but looks variability like the me, particularly and I of of to takes to It's either a at margin. follow XX% soon headwinds into a on these lot or cost it say

with volumes the and in it half, XXXX? their But some good that, the for are you some who, in I to there. you've promotionality, also in in retailers maybe increased XX% of not there's as commentary, a we release the And seasonality plus lot -- the look that that. like of there's hit reasonable can I sounds is at back mean, that being alluded be think half, asking back also Because the it's if into

of a there's lot So puts takes. and

us If of those some ones just margin? major through walk planning you about your gross could -- as think guys you how your you're

doing to on. also I manage costs, be having going Dots. little managing that getting the we're we then and seasons peak cases, We're QX mean, in QX, it, trajectory think at that to with about better and deflation Dan we a bit. QX business margins the Dippin' we're spoke really some IC like way. strongly growth inflation, some Yes. QX all, helping Andrew, things adding and improve We're really of And mixing the and is I I first some we're think in the look of that out also for the to as

makes So confident QX. and here in that that XX% the combination QX that pretty get us of feel all we're to to going range

on gross into quite we of next Dippin' much and doing business our As goal fall XX%, bit, direction. those going think like that and but it's heading more margin, we're year of X, winter be margins a a may Dots sales to QX be items, in go in year, at the high-margin a might or better, feel that. in in we're out and much ICEE totality quarter or XX% we're is not further year that like and think and where and I is reach I I get closer QX, There that

your commentary? I another around was on I question Can mute. sorry, distribution ask I'm

Sure.

so lower NFI How prices If how currently that How single of that's the diesel really that kind just were, less normalizing how out is but the much much market that of it tight? us little down cost anticipate? to guys of number. think apportion you're And much an savings where margin, of? help of company it's sprawling basis a going labor just you is this hundreds network Can of about digit getting you doing of the distribution operates bucket taking that you big of big realize back a you sort that doing? they're lastly, what rationalizing coming down, to points perhaps hundreds, maybe is ultimate of

for top-X the while. This our company distribution outgrew has potentially been network one that And one a strategies of the it at time. had

something to was needed do it see that it's clear so a we pretty big undertaking. but early on, And to

somewhere down have getting things neighborhood that us points going high-digit make to all significant and it, impact XX-plus again. single call goal our to, to ourselves get of from in to the to on allow And is X% distribution a that business. of X% so the that kind down will And better on X touched you it number

about first and open fill these excited here chance with if get one opportunity of down, But of and hard that to a how making X X touch X it that have at July, that those really I some much we and know the that impact we're the broken to we're areas don't each And teams I we working about us allow in that of we are one in DCs, will of know new sure areas confident Andrew, gains it. make those opening all significant area. will excellence. kind

a at opportunity. -- that partner and I've talked going pieces Yes. I'll that savings at moving management opportunity. we we million and to strategy and the add having to case as from think so basically Andrew, talked are X this And to I XX-ish our RDCs $XX the them least to We RDC various our about word with logistics around on a this the this. thought time, business was there X then about $X estimated said X million of these before, kind dedicated

the going out of good were cases. we And to still that. on feel about what we're business get of very projections based Again, all those

that that things be in we're deflation around that gives get a that putting doing some down metrics that all of will to X%, add going helps of with You that we're things back management, some in where lot below inventory this range. combined us confidence we're other there like hopefully, to place,

working that this and we we is starts within here, our think once certainly all will I tandem. targets there get in eventually believe

or question the next of Robert comment Our from comes Jefferies from LLC. line Dickerson

for guess, here questions quick sitting early two now me. I Just May. we're

let's get of into these have I say, a kind kind your you we we the across just fiscal of assume next some think, about Ken, heavier conversations of months. had year, or and channels with part kind into latter of couple comments been impact year of as the mix on demand think would had of I as --

been how Ken you color any going, parks, like or have of or kind with have conversations Dan amusement So just say, either with let's right? those --

And taking gauge you kind then feel enter this quick how core kind a trip question. you've start to maybe I'm but amusement than last Europe, kind kind banner -- seemed Like demand demand. of a effective It little was year, park of pent-up the season. more bit of year, like profitability just of as economic it's kind is backdrop don't this trying it to cost so I some to on of pressured, year, have a maybe there's going a I know, more

Yes. I'll kind of this. touch on

coming has what's very park industry for pretty about you feel quite as been today, this us they And talk good amusement to them still for time. So bullish some year.

is and got So all this a conditions and we'll we West few over the way year. amusement they've on like on quarter park our had feel with But that much industry a year have But strong throughout think big weather the weather Coast, we in of really it overall, next to past strong rain was hard the impacted the continue weather impacted. was negative coming. dependent months. a our customers It

really theater really released the going over be movies back industry, They even got they over feel from months. released a and come. they're are CinemaCon, lineup some really, the have to strong feeling that just X, year great tremendous about next to what's and I the of X like

hopes that good with this it momentum and group was the year. to coming so back strong build of that it really And

by that. encouraged So we're

well. like our of I what's So what what ICEE doing. would side I come. segment to what like business. doing. I next I is We over guess Rob, like months. the is good I we what's X positioned of Dippin' feel about And good foods say, like is snack we're feel the We Dots is I each doing. business like the coming about feel what

any a that margin and to guess, retail comment, Ken margin surpass what kind back the kind of of Back I while to just, QX, on can frozen provide the go then the it's full I retail the don't used basically, to positive here year, up the to in, we've food the margin supermarket the margin and as how actually know, segments, always like I'm could seen service pretty supermarket kind But too. margin beverages, food each better side, is of it expectation be that were as differentiation see margin Because actually maybe continue back reversion for can look in so the slower? and think, think itself made, bit service the a QX we're margins good, perform I service -- -- of I ramp of we mean your kind half in some right? beverages on a we maybe historically? of Lovely. best side. and supermarket, beverage seeing of retail frozen we mix just Cool. of the the year, pertains in frozen been in the has coming kind food little little the to And of forward, put in while you've as on that's you curious, operating at

food gauge just of less beverages, quarters, retail. there's trying I'm maybe more next service acceleration just to of frozen the and of So couple a acceleration really little probably

Yes.

them Rob, margins at, where expect ICEE, at sales our you of we're know opportunities where the at at spot they're if tell in with my frozen at I can are ICEE. good right terms rate I continue now levels meeting to your On of on terms where I but historical don't our expectations off top head, observation, on they're Rob. feel do and they're where of in and be you're we're with to think about really we

come the right a that of from on being areas On little I also that increases. little a and That to food mentioned good is Retail but was, see price to year we're a cost there's not manage improved I bit about should impact promotional. side where expect us progressing differently some bit up earlier, food advantages and what some the increases the pricing We which in have we're on But think kind more is tougher margin. that and we're bit of better are that. making there looking service. cases ago. retail, now long-term continue down, you all come in. to probably we navigate us to margin yet covering on get But Retail, business I we're better. we that as of a environment slower. get feel and service better, terms things ground some operates how of think closer cost do And probably one I at on segment those

The Our next is question Benchmark Company. Mr. Todd from or Brooks follow-up from comment a

to or into one we do QX? next for because to turns about those a either quarters lines Dots of quarters these there as Dippin' So into impact here. over What of couple Dippin' get in neutral QX Dots. last and maybe revenues, sequential against the that kind X just squeeze Dippin' it lines We've get leverage distribution for operating talked as some drag we expense those and seasonally Dots operating strong has see instead let had administration between negative improvement quarters, marketing we on in incremental a of a me contributor where expense expenses soft the relatively the are on more

this Yes, Ken. is Todd,

really characterized well. You that

a that. add to couple to Just things of

of Dippin' Dots be Just over in the will sales QX of XX% QX. and

over costs didn't year we're a Dots. million in $XX on Dots. well So to add the you And sales rate of that little you going quarter of a seasonality cost versus also nice incremental that business. it's across point year gives of And really obviously, the Dippin' is making have that. magnitude of this going a margins as the then kind out that's a have really Dippin' Dippin' basis Dots And for this just that's in to SG&A SG&A you cover higher ago, mix we the

out, expenses. take we of where year, you we If last came about sales roughly were that for SG&A X.X% in

we question, your So in we'll we sales will that put I -- diesel more improve, a standpoint, It get will yes, talked that was way other terms kind of expenses, came business. for when you about, of leverage would The overall prices the if the see think in I continue get distribution part XX%, better that answer at company. $X.XX. to we a throw going the of in aggressive that XX.X%, XX.X% it continue to declining, But And then more And will Dots. the I'm we other a number, XX.X%. exact get on into only expect they what below not think down. should bit down Dippin' out closer, to for leverage strong sales part, move do certainly P&L to when periods around but be we bit historically the I particularly

Thank no you. remarks. for turn I'd showing additional I'm to questions to queue management and the closing conference at Fachner Mr. in over time. the this back any like

I'm reflect that thank and the you being for time about about were comments to by proud of why week, J&J your teams last create the one and shareholders. the of partners Foods we largest good our of ability and where employees, happen. optimistic and so I mentioned Snack awarded have the our that I of of feels all today. the theater you, Supplier earlier clearly Thank future doing Great. hope work Year value our for that we they're and and are results hard CinemaCon there. just to chains out out

sharing thanks you any to Investor you year. very us, call fiscal Thank and interim, have the contact or much, this And for forward in the wish at on JCIR, please We today. quarter firm, later third XXXX our questions speak our you XXX-XXX-XXXX. to to Relations being with look results should

thank and the you conference. participating for Ladies concludes gentlemen, This today's in program.

disconnect. have day. now a wonderful may Everyone, You