J&J Snack Foods (JJSF) 6 Aug 242024 Q3 Earnings call transcript

Good day and thank you for standing by. Welcome to the J&J Snack Foods Third Quarter 2024 Conference Call. [Operator Instructions] 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.

Thank you, operator. everyone. morning, good And joining Call. Snack for Third Fiscal Quarter Conference the you Foods J&J XXXX Thank

different These started, me forward-looking achievements factors matters performance, XX, getting the Reform this harbor future meaning XX-K Before call let the materially the our results, Securities Act in and/or such year forward-looking from plans, be items any could indicated are as performance. statements August Any expressed language. the of statements, management's Form to other of and September today. expectations, forward-looking may not statements or should filings This safe implied statements. Risk of forward-looking promises X, performance, Annual materially read unknown or that or and call, cause made this XXXX. the call and by statements made other Securities do that our contains cause regarding for Private considered known strategies, statements historical anticipated ended All and guarantees objectives, by the represent the take XXXX. facts discussed results, other within Litigations management's a statements to on or and achievements Report XXXX, those of differ to and of statements on estimates including minute from goals, with important to relate Tuesday, results and forward-looking factors actual Commission financial date Exchange uncertainties, neither involve be risks,

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

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

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

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

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impressive $XXX third the highest sales the Retail result Service in were impacted channel. our XX-year Beverages, Food by was marked performance softer company's second record Frozen sales This which by sales net by in quarterly net challenges in our of in history. offset quarter Our temporary sales led strong million segments, the and theater

of healthy a efficiencies Our our gross XX.X% customer brands, and underscores operating diverse channels. top products, of and X.X%, strategy, maintaining ability grow the improved a and led to balanced while by line portfolio margin, strength the

in per will a performance quarter with sales, quarter. a growing just the continued and our record the earnings of We than profits into more earnings diluted in few financial high our faster third growth income net insights in Ken of X.X%. This minutes. operating provide trends share resulted quarterly

core well products sales and as as continue by and in performance, Food sales our and innovation was strong volumes leverage Taking to closer our placements at positive higher results. segments. deliver cross-selling net to and most to products growth quarter a business across our Retail brands, core Service strategies performance brands Our third our opportunities driven of look expand of

We anticipated, during estimate impacted impacted by to million of slate fiscal a attendance to compared strike compared declines temporary third sales challenges and As pretzels, the soft of quarter approximately April production beverages, and the sales year, May. approximately that we last delays same The XX%, which $X quarter industry last frozen theater to year. in these the had actors' period this churros. on related quarter's effect XXXX in negative film reported had as especially

the sales X% the the X% increase of year. as business they and Dots momentum Inside next of rollout month in to Dippin' in momentum sales remain third the Out the benefit X this beverage This sales we planned want overall our impact releases a I gallons QX AMC, of also great do highlight the The While the with in record and in so releases Theatres of few Cinemark, market created of year. for sales as up opening movie and growing remainder why in in frozen Inside theater strong Out quarter, months. Marcus compared mid-June complete confident first resulting X was over declined and quarter, closed channel. last to of the in to the several the should channel we

titles, Looking to industry new trends franchise These number are and titles. half XXXX. ahead, XXXX a theater films in anticipated of our customers second highly calendar to diverse office recover observers as expected proven the expect a begin and calendar continue to positive greater of trends movie of attendance offering including as into box with well

and we as significantly our attendance result, this sales recover. in a channel brands improve expect to As products of trends

expanded increased growth customer and led results, of driven Moving frozen unit cookies, increased on by in products, encouraging volume sales Service, Bakery Dippin' placements. to X.X%. increased continued Food our segments. In novelty sales Dots, the by new growth Thinsters which X.X%, X.X%,

the Service X.X%, with the grew addition, mentioned up Overall, due a the In saw improvement Food these challenges in sales by in softness previously increase offset pretzels and meaningful categories, theater. partially the to in we XX.X%. product segment soft churros handheld in sales,

strong We opportunity continue largest forward. this going remain growth to and QSR, third churros, in the with confident see in

Retail. growth categories, in increased We which the growth placements expanded mass nearly broad-based to the major product sales a placements DOGSTERS, increase grew experienced our resulting Frozen driven a club sales incremental unit in novelty Tubes, for in channel. and XX.X% merchant. and of LUIGI's, driven XX%, growth by Moving led of across all ICEE Handhelds approximately XX%, volume was by quarter. with by

reflecting of previously sticks. Biscuit Bavarian sales were for for in Frozen largely SUPERPRETZEL X.X%, quarter. The X% Soft SUPERPRETZEL quarter, by down theater strong in gallons. led increased demand segment continued pretzel our softness drop in the beverages driven Beverage the the X.X%, discussed a sales channel. X.X% slightly decreased due the by declined expansion products, to Frozen

theaters. in the impact of QX, X% increased gallons excluding However,

Let me in just that and increased merchandisers, QSR. time. theaters, X% amusement, the say by excluding Gallons strong one in performance QX, of mass more driven impact

continue customer portfolio, growth opportunities channels to diversify We finding in our like QSR.

were are Lemonade test flavors reflecting while Afternoon on QSR maintenance we Machine very Good rollout with highlighted a Lexington volumes. down like new revenues as lower they KFC last in X.X%, and decreased year. was call this as that market. large internal lapped sales, our and Sweet Repair XX.X%, recently new and at from exceeding the budget fact, In Blackberry Kentucky, preventative maintenance we Lightning the local program market quarter, for the current encouraged

provide This with couple Let me SUPERPRETZEL. for of new products opportunities brands our highlight areas, channels. category focus Starting product to continue points a quickly across important new we outperforming as snack is extensions, sale. of iconic and other the cross-sell continues growth, to and or brand

the expect across leading the SUPERPRETZEL portfolio, of fiscal seller in we under which XX% reaching and In the a by double store distribution retailers. led with so growing. retailer count we with with major of are We are grocery Bavarian SUPERPRETZEL to our Auntie an ACV incremental Anne's the expanding late the brands. Sticks, and retail, achieving I'm QX, launch pleased #X remains now

higher Summer awareness. and Cheese, and about talk volumes with Let's brand underway increased Dots. Dippin' Chuck E. resulting are Regal in promotions

on-time to and store in decreased be remain distribution also XX% our and Dippin' in locations, year RDCs spend average per length over XX% sales across made year. confident Currently, customers channels. I'd at distribution efficiency freezers Cinemark cost in highlighting continue convenience to new of to snack a Dots food same out XX across XX% installed XXX have the of to All our chain a supply the with XXX major to key versus we XX% X improvements. locations. at strategy. the Marcus end roll ago, haul and in expectations only the will of to and with investments are customers Dots the us will with XX%, approximately We with Cinemark, Starting Line compared XXX AMC enable years. improving by the metrics. to orders by customer. our productivity The ago. investments like new are installing of expectations locations, operational Service exceeding time last Dots the shipped versus impact resulting of haul performance our network XX% have time, some and we At opportunities actively a Also, decreasing expand we driving calendar pound Marcus approximately AMC, plans and Dippin' locations in testing this with XXX and over be quarter year couple continue capabilities from Dippin' last improvements Theatres, in We year manufacturing are locations are business. Food significant our

to significantly of across to added has how J&J capacity. sales the as ship automation, novelties. [ our business, industry us opportunities. and XX, number relative and Fill The reducing to output the provides X%. Shifting in better frozen products of The and addition operations. meet a has ability overtime, cold such production production churros, and network storage expanded core higher point has high new which our locations in transfers enabled for given rates and lines efficiencies driving X capacity reduced have the product respond and created opportunities We new ] have our high to trend. growth efficiency This through the across decrease to overall margins, flexibility XX.X%, efficiencies improves we to products metrics expanded reached by pretzels,

best pleased while for CFO, thorough the great a very ability to in our me business help past to I X with a Ken new of a Ken. In process in his record many wish Ken successor team, we these of you, partner I proud year. execute so organization. Ken's smooth retiring be The to and both identify conducting the will of J&J am Finally, chapter saw to family our post our consumer filing, profits years. team at thank of our and and the over as in his end and likely transformed leader want Plunk, his been the and Thank on I transition. entire to J&J as Directors, managing to through will ensure support summary, I'm and The X-K how company growth this challenges of continues be the search calendar quarter you him and the life. Board his sales agenda. third environment. continued the a

is While working. to efficiencies week our fourth to our and versus period, quarter operating channels are customer strategies by it prior across sales sales XXXX maximize the we clear expect our comparable one impacted fiscal be results improve year less that

us, tremendous our pass with review our of shareholders. With to Ken? We deliver partners, over performance confident the beloved brands a employees, long-term would like and portfolio have to our growth our financial opportunities to we value in now detail. call that, Ken to ahead strong in more our and of I ability and to products remain

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an to the our profit sales. totaled faster quarter, to X.X% for I versus than of XX.X%, fiscal performance contributed pleased record million, with sales. and net results. am our Net gross growing third sales quarter margins for to profits of Turning year. ability prior combined the including with This, significant the growth $XXX quarter deliver strong increase

segment. Food and softer Bakery and than Service, As Handheld our Frozen Dan offsetting line segment and Dippin' in X.X% decrease XX.X% earlier. Service X.X% by X.X%, by was novelties soft respectively, Growth led top in sales sales in volume unit over sales. was Dan X.X% higher segments, channel primarily and increased more to mentioned, driven cookies our and driven saw performance frozen challenges Dots increased sales performance and by X.X%, $XX a sales Retail offset new churros pretzels increase million. and growth in a theater our volumes respectively, $XXX largest in Beverages in increase that Food business million. to our segment, of across the referenced by the X.X%

year $XX.X mix. addition, period, sales $X.X to sales decrease QSR of and a of third of addition to new million, X.X% the of of customer. added million, reflecting In This customers by churros led new the versus approximately driven favorable less with quarter products primarily a placement prior income a menu totaled operating the major

$XX.X segment. of Moving we XX.X% Retail or with to of increase handheld driven placement merchant. million, totaled sales growth our expanded as an a major sales mass XX.X%, by retail 'XX product QX

frozen seasons. increased customers growth led and for peak added addition, by In inventory the summer shipment spring the LUIGI's, higher DOGSTERS, sales an ICEE of as overall XX.X%, and novelty Novelties,

by sales decreased X.X%, while in a X.X% in the of increased sales pretzel SUPERPRETZEL led expansion products Soft quarter. biscuit continued retail,

and We into result the largely Bavarian product benefited launched customer the in segment. in Retail the also of in year sticks SUPERPRETZEL $X.X innovation earlier from million the segment This quarter. this of was the approximately new placement

$X.X reflecting and fourth million, placement product to margin. increase mix, expect quarter. sales, major the of period, this year of operating versus improved continued prior product in a gross an an of income the We million retailer growth or led This as the $X.X expands higher

growth a or weakness below to did quarter, a this reflecting decrease years, and the convenience, was QX theater As third million, sold it Frozen $XXX,XXX X.X% relates but segment, X.X%, the to mass approximately merchandisers. declined Overall the customer in sales down $XXX.X X%, our gallons record compared increase led Beverage channel. sales of the X% Beverages, excluding impact in by And XXXX. were channel. in prior theater amusement, were

As Dan year, This $XX.X the we top also half Machine of led releases. Apparent as revenues in by a with income line of call given compared last of volumes. experience the maintenance stronger mentioned, the film we lower expect saw to calendar improvement schedule significant maintenance back volumes to lapped to driven down we decreased preventive as sales QX were significant a decrease operating income from of sales. operating million, XX.X% the customer rollout weaker million year. 'XX by X.X% $XX.X

enhance efficiency Our X initiatives proving to and and successful. business our margins investments over be last drive across years the are profit to

year. For the This in full QX million, X.X% better to margin of favorable We prior margin and expect year, XX% and gross confident to a gross sales remain compared of consistent strong the mix. totaled increase to achieve profit versus for XXXX. a despite flat a $XXX.X led or our deliver margins gross to ability profit quarter, less XX.X%,

to in cost net materials, driven extent, saw it the increase raw a of primarily to the across were gross sugar majority seen the and sweeteners. our helped dairy impact Those eggs. quarter. adjustments offset and of flour, somewhat deflationary contractual and in by increases margins the on cheese, cost Pricing inflation and, As cocoa/chocolate we by inflation of low-mid-single-digit increases, lesser net of increases mixes, with relates minimize true-ups in increases our the in cost the trends portfolio

effectively team Our and [ continues ]. procurement supply to manage costs

to to well-positioned respond are We any impacts.

a innovation, and to X.X% to $XX.X continue 'XX. in flat selling of period, X.X% in of we increase XX.X% have costs million, of of earnings the X.X% year, $XX.X efficiency increase X.X% new Looking income distribution to prior product in compared million of $XX.X and quarter, compared compared million earnings from across for as $X.XX invest resulting expenses the prior to per for expenses brand diluted to quarterly increase, the compared million, rate with a $XX.X investments were diluted the Adjusted we impact $X.X in expense chain the X.X% income QX $X.XX flat sales to QX period, X.X%, drive operating $X.XX QX the of network record 'XX. After sales, million, were were promotions, quarter the $XX.X XX.X% in 'XX. year Administrative period. or and compared to the our million, opportunities. Adjusted the at prior tax representing X.X% or led continue in the compared to in the was were EBITDA net quarter selling income taxes in made the year year our in increased 'XX period, of as third was XX.X% comparable supply $XX.X period. million to expenses sales to and This Distribution quarter. savings. Marketing operating total prior versus of compared the in prior million to $XX.X to in expenses, year. X.X% or million, QX $X.XX to Adjusted $XX.X year per prior operating prior increased earnings XX.X% increased sales effective in share our share

our have we a $XX in in debt. at cash continue sheet position, $XX million million balance to liquidity, and healthy overall and liquidity with Looking strong approximately

working capital in debt, ability to is and Our pay generating continue pay dividends, improve stronger cash down more initiatives flow profitability cash and our to through business. investing

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

of every under [ aspect up, sum to while results done In us, encouraged improve we and there's recognize all capture much business. to ] our work of addition, capacity. To of by ample front revolver vast million still to be we we availability how opportunities $XXX have approximately it our do we additional in the are borrowing

unwavering now our the our to that for call employees Operator? of operator for of shareholders. I Q&A. confident the dedication would to brand deliver to and over the results and like are turn added value the portfolio will strong power continue our We

[Operator of the Instructions] Todd Our first question line Benchmark from Company. Brooks with comes The

the of in in absorbing some theater that the results quarter pressure Nice channel. here,

theater what I Frozen First think each segments channel? theater think for size, Service of and be channel, you Can up question on about if is you of made us. is those Beverage, that this and the Food might of helpful by percentage all

ICEE of it's less Beverage the about exact know that Service have and nice It's don't Service added group that, side on that from much We Food on continues Food is We to the even but of business into to for sales. growing. than that piece side. people side, try XX% The us number the a it. some beverage to company grow, we've a standpoint energize

inroads churro's line, at has to see and the sidekick the look X Subway with Have been success with soft just either churros. great be J&J products Secondly, had the luck you that a making obviously or offering there would pretzel well-suited the any offering? that I cookie not make, story. I

with Both arm, coming. believe absolutely We've There's have and this opportunities be some a of a company conversations relationship. that or they that in built buying really program to future, some products we've making continuing that their and have. nice to others. relationship some the those through have us we'll We're for nice great built opportunity that the

placements the what you continue the to you the if new KFC either couple some from there out on million and think, you you here, calendar distribution to over little or -- And can touched quarters tests with one, maybe that a you go-forward was look what I'm forward look I side, new then continue of just a which product we're a seeing wondering launch little that almost us for test may $X what side, that. a final the Dan, great products, bit, new are see. but on drive just is in in share can revenues wondering help drove, and

got I'm that a couple really will tremendous I of In but have the of things us, a strong expanding and lot for not distribution. sure a are I Retail, can we some share pipeline. you we've customers names, tell

particular a who product, are about out the there's Food in lots past, like side, others a whenever churro Service the Subway On of watching customer we've comes talked this with that.

organizations in we tests so see in to kick there some some have that grow. that And some end we'll will other with play the even out before large year's continue

for we're those happy the really then numbers, in some that areas about. really continuing as with mentioned, us. just so the that's happy ICEE watch And grow things side, to we've private there. The we're a And good KFC, got as bakery you opportunity some you label that big

a And a a so that has press to with of people, of gone well lot test attention it, lot far, around it. of extremely lot

pipeline now. our love right I So

we've a got having really chance a think really strong I of good XXXX.

Our line next the Consumer question Rattigan with from Edge. Connor comes of

called Yes, out the Frozen driven weakness the by so in Beverages, channel. guys you theater

I'm the relative or other performance how to share a channels could you Like, channel? across channels? was relatively give better bit volatility us So curious, by maybe the theaters, looked of those even sense a guys performance maybe trends outside was quite of across maybe there

pretty by volume products. been mentioned up in out, our we the was in up I brands would for beverage quarter we It of good our you were if most X%. all opening, side took inside big my even inside a theater channel this And Well, ICEE, the business, in us. have of of overall and

with quarter seeing of nice some growth. so we're all pretty good a products, and our And overall,

Yes, the without about increase what Connor, we gallon that were purposeful comment theaters. was in making

you QSR up, relates to tells as Frozen that was was was Beverages. So up, up mass amusement it merchandise

of business. the particularly theater again, where the was industry and So read this as you'll Outside you April any related theater from and of for see May of tale us companies, the much that. any was releases, of pretty and that, good can on that really a to quarter publication really, side in really

Awesome.

also specifically press Dippin' amusement parks, with in strength noticed guys Dots. you release, some So the in

great. there. as Was gains? Maybe did some was distribution So pricing, see what curious, it summer the would I'm strong seasonal be just that color you really there Any traffic? guys driver on

industry positioned Our getting when the we're the well really job, area. a into comes. teams that Dippin' team park excels sure season in great the amusement And making Dots of do and Connor,

our of Flags the across just warm parks presentation of industry doing fact, It I one making when positioned seems all have really They and be toured In tremendous. making Dots appropriately. last week good well with sure a sure job was a our leaders, a Dippin' Park helps that that. amusement group do that now. we're summer, certainly we're you really to and right, it's having facets in that marketed business But right nice Six of

And quick then last Awesome. just follow-up. one

about was I'm guys bit you XX% mentioned little had did sure through So not flowing previously of your that pick that quarter? product if up the it, during system. new but RDC missed I the a

picked think up, say, I it to maybe points. I basis want Connor, XXX

think, on XX%. to was memory, I QX think this want around I again, doing

up ticked it QX. yes, from So somewhat

Our next William line comes from with the of Blair. Andersen Jon question

Ken, past the years, road. to in and best your the And retirement you down few help thanks for your

you, Jon. Thank

relative macro or any Yes, wanted impacts Are first of your more you the of what they I channel across consumer, on the ask the remains any I suggest consumer. seeing you're you serve business big either you're shift in some seeing to healthy behavior, bet. or consumer guess that seeing just around picture exhibiting channels pockets weakness? that the you're value-seeking various terms to a question

I still same is Jon, I'd a this a fickle. today. I last this, and the again probably term it about talked use consumer the quarter, we think lot little used and

they think to react media. said what in I been has the

I and -- consumer interest when hours, plummet some reacts happen, the don't come then saw XX last to stocks didn't that And expected you we you even up. rate and over drop think think that. the last back week I

during and I pressure careful consumer a under lot see spectrum think time of is still then experiential be at And customer, that remain how about cautious, they're end I tale low-end election. it's still somewhat will think think of where the the able is [ they're on probably think period opposite I spend and I of we cities, fickle see least a as things. for what in think a of environment an ways, we're looking ] still of and spend. going to And I right? premium or we it X they this that through to they're

they're have to going on really we're think their money. where So I to right? discerning watch they close, spend that

sense. Makes

So if this up the have been looks sales channel quarter, your you out stripped X%. it like would about theater

I think organic a rate think you Is organically. area historically look to the way that not to think a reasonable as growth just about the that's that that reasonable an the I expectation, quarter, distribution, company has been a business has grown great working. like the in but XXXX, got stuff lot a lot expanding products fourth you've fiscal got just new of cross-selling works, mid-single-digit are tests good a you've some that of

So top view to up all get here. how a better rolls sense that a for trying and do line

way to think I a at really Jon, it. good look that's

And and think are can for to highlight We in what good of working hard want for theaters, do the I I us. And movie the year. that really future. impact mentioned be the that right you in we're well-positioned mid-single-digit releases growth to year just over

so really we ends struggled back good there. May, So our month up we it struggled back is April, movie half indications get couple our sales, right? And catapult and But just and to theater in and and ICEE get industry June, that of most all half like much out distributions in struggled really And 'XX. talked of in will having what And releases what come we growth the the theater back, the you can new new which we're with the of releases seeing we've a into June. continue a that we products. look encouraged record the core business of so June, then by get product about in

of so them movies. think X big have I heard I Only far. what been is XX they released have

the then So of we XXXX, in year. got back lineup. half a of great X the them And

for future. well-positioned the All pretty mid-single-digit feel combined, growth be of that in we to that

fair And that, as I say are business of well? guess That's selling part core a that's to is helpful. brands, following products that that it you're your theaters because your the of on margin-accretive in some

Theatres, Marcus Dots a that with growing regional through we're and the margins Dots the other really And Dippin' healthy. you absolutely. Dippin' chains. with side as And are and of Cinemark, Yes, AMC, know, couple

was theaters really going a to now we margins And as stated but script, over and business. obviously, we really add just then, Dippin' between Dan's we winter that's those a I to going months. XXX Dots, for and go big add, deal. of this accretive year be nice to end the be into When in the

So feel that's we reason head year optimistic into of into the another the and year. next we as end

ties Also, helpful. question. last into That's my

for I at an outlook was the reaffirmed one which think gross interim You point. XX%, target this margin be above for year to you

you a year have you've investments on the margin your your business, parts deliver you what that the core of look to and productivity Assuming term? centering again, done margin any an longer this might like given of thought perspective, some fiscal perspective, operational that gross from around higher work and

Yes.

talked that won't down that obviously role going keep faster themselves, we where and years building that, and this we get desire, I gross Dan think, I inching number up. big X both and mid-XXs up be it go next But to profits play in on as a quarter, to the last X, be year, focus profit's range. to plans a expect to close may we even have us road,

those really nice that think of we're then our I for of be this improving And going driving business, made of headed. you this from build will year. feel and good mentioned growth products on on quarters, lower-margin about will first that land of where the in the given which that's year, progress really core fiscal margins focusing a that based But I and X some the we've we're there. couple to those where areas earlier,

King. Wolf question with Andrew line Our of the CL to comes next

to wanted also margin. ask the I about gross

Just million margin gross movie the know, if like back business of reasonable...? that have theater envelope, Is in I XX come, XX the had don't the to looks points, of $X range. would something expanded, that basis

good that's a Yes, Andrew. estimate,

Okay.

The power. gross was to other wanted I thing just about pricing margin ask

think, offset an the lot Some side. them, productivity Obviously, running, are is so inflation said, the their big your just retailers, of do to least not marketers, make maybe things, have the ingredient just just they margin contractual get out you pricing ability ] with price, try Retail, the in for to Food hurting, yourself low- [ guess, of power? but you through, of on feel Service, and But I at to to you, in certainly improvements. general, customers I production mid-single wholes digits about mass there's side. to And in a pass everybody. but and on what There's they're

question. great a it's Well,

have I be in. really we're pricing you that environment to during this careful with think

price chocolate. talked that then contractual to things you We we're sure do really able you have price we outside some that we're careful making and cocoa earned rise on, or to do have to increase. earn in we we right? pricing to where have As price that, and able that how with of that And about, and about we be pass have

we're But efficiencies be and of some the and that on RDCs able gaining to and to the that. to that making X on. price efficiently, customers new how Our there, and we're time to careful delivering to we're that we earn have, allow we sure going really new be capacity that have us

I how think, we'll chocolate, able being of sure to we other said, key those and do do it. about future I watch and disciplined make that were items diligent in we with we're any to the that like

there brand Okay. that relationships...? you meaningful for some mentioned your get distribution, given And since a quite last the an opportunity Thinsters, thing, actually like is small to

we the product. product. love the We Yes, love

M&A a comes [indiscernible] you bigger M&A? brands or like it strategy, do Dippin' Dots need to when

but brands. how and out know to this well-recepted, for are we and represent there it like Dippin' really teams was larger can have won't on growing excited believe doesn't don't and it, very it grow see a something and talked but our short-term easy big such Thinsters opportunities and opportunity that strap to in we grow. acquisition do Well, with but and look be, product to like an to it. along, bigger we that. to Dots, an we I We'll look such that's I'd continue about for because all love mean some the ones easy that We've that it's make find about great

question Jefferies. Dickerson comes of from Robert last with line Our the

Just around level. questions, guess clarification segment, the a margin just in little couple that op was quick a I perspective. XX% Retail

in some run XX%-ish normalized to assuming and was cetera? past years more in segment. think few standard QX, I'm more have seen that the in takes, or about we that If volatility back the puts rate We related. going we to are cost/price a track et get decent forward, there are on

do that's much Rob, think question. in No, great quarter, I a Yes. to that on not more but I'm every range. going think we're track. back to XX% I commit

margin gotten moving how in those novelties, growing higher more to as pretzels. we in retail cores, things I manage in frozen it think dialed We're products. those finally and soft relates we've

out going as quarters to was that, long better than a of that's or years it mix a ago. few As ago couple do we much

a what So realistic or I be able is to ago. ought there do to say, do to year this so more versus, we think

Fair enough. more seems realistic. It

Okay. retailer. heard more broader I vis-a-vis mix to you And question say, just guess got distribution. a the I margin on distribution mass then new

Subway, the coming, there's think bigger some point. KFC a distribution I stores from We about got you more more coming grocer. at talk potentially launch

theater an guess, let's As now, rate as I that maybe say, this let's your on go would just you be, I'm seems what yes, I'm start? day or in but get. have we And KFC sell we is scalability It just Subway benefits because Maybe X, the or incremental asking more volume more not actually the scalability the there and theaters go similar Dippin' that it's in, Dots. that what in and let's from a And and then sell, is. is stores normal really get profit you okay, KFC movie those we example, on margin dynamic this or products, Or movie product is. there make. stores, sure Once we're business. with you're per product more that's just you enter to take are there we the leverage usually dollar you, business? KFC XXX, a it like say, those in is, or X you XXX, in whatever and to getting we if the Or new overall

good Boy, some do it's volume, question. you scalability. have Anytime really a get you

same a growing you're we some inside You're to you're bit of Dippin' couple a more and thing, talking It's products, but ICEE or little when scalability are produce the if able you're about Dots, Dippin' quite where it. different Dots. you're that produce that about not getting plant talking areas

there. get So some advantages do you

cost side, On always conscious the typically the ICEE very there is we're of equipment. very, what is the piece

equipment, And to buying have some about of take so, how scalability to around able that large many business. care of to hire of you get numbers be careful you're and hopefully, people you pieces

happens so, question. question, manufacturing there, the the you a same but as And that quite scalability some not of it's some that is, hope might little but not there's as answer maybe sizable is there scalability, but plant. yes, It's your a I in answers bit a as different think.

least, And major But provide lot lot Yes. asking you much of efficiency you lot Dan, you've hearing, across spent distribution of on all at getting money gives channels. all we're side I'm look, clearly a Okay. then because also guidance, also And the don't long-term right? pretty also channels, benefits. I'm that of a a

Really are, yes.

don't a story, slide volume-led like we And what follows expansion So then a that. right? margin story, have showing just that's us a is there's usually

that's like that the Is seems idea it fair? here. So clearly

ahead to the And efficiencies We and that be box. gain a gaining about we're Dippin' that about caught go-forward. early now a it RDCs to of And needed was And falls that from I side, It of that business. into be box that help maybe will what enough something box Dots that. build right piece if inside think we're with to the those able some we're RDCs into is. which even box, happen growing the a efficiencies you a ourselves. able knew little us we grow the to talked in bit And in to

to ability in to number are Yes. all confidence these gross continue margin move up. our Rob, that and pieces

we that's X margin volume of bits going As these over next gross us points margin in grab to a create efficiency in evolve areas, help basis X, that the should to automation, rate grow leverage higher that years.

further and ahead. remarks. I'm no turn at showing it for you. now this would back Go Thank like questions Dan closing to to Fachner time

at Thank to confident continue to path level. execute ability in In forward extremely our in closing, you, high operator. we remain a our and

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conclude in the program, for does your you disconnect. may participation you now Thank This conference. and today's