JBSS - Earnings call transcript Q2 2018 | John B. Sanfilippo & Son, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the John B. Sanfilippo & Son Incorporated Second Quarter Fiscal 2018 Operating Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded. to host like CFO, today's now Mr. would introduce for your conference I Valentine. Michael Mr. begin. Valentine, you may

Michael Valentine

All Daniel. call. Thank XXXX joining right. you, today. second to and us quarter our welcome earnings conference Thank for Good you morning everyone,

Sanfilippo, On Jasper CEO; Sanfilippo, is and our the COO. me call with Jeffrey our

uncertainties. to mixes. inherent these the certain refer from with XX.X% distribution to current Sales at and line for November sales from primarily increased XXXX. $XXX.X produce last at new for statements filings second of net consumer Valley SEC promotional for of in consumer the attributable increased gains income item and factors year volume raw distribution to two resulted sales occurred activity, we first sales statements decline sales quarter today. to increased decreased sales by in of The Squirrel the distribution business by Orchard December ingredients you packaging channel Before the packaging two due for of were Brand channel to in X.X% Starting increased in are and channel to primarily bulk from Orchard we nut products of quarter increase Sales snack sales snack in X.X%. was volume in risks the due private existing expectations, may from for Brand net the mixes the impact we and in the almond packaging to last year increases while to based Brand in statement; was explained included brand XX-K million. the have Harvest encourage year-to-date due mixes. as to and and want $XXX.X channel in by channels volume the new introductions extension by customer customers, volume that of channel. XX-Q. channel a net declined the of in volume channel products primarily first volume by private XX.X% volume in the I loss snack trail in volume quarters for that peanuts. increase declined the slightly nut and in start, our increased second volume Sales million channels as $XXX.X the volume decline The the year year's trail increased latter and The risks by ingredients and for two for volume the offset existing channel. that filings Harvest Squirrel the X.X%, X.X%, made, Harvest sales million second sales commercial channel channel comparison These Orchard XXXX in to involve the in ingredients they consumer sales increased by large are promotional current commercial increased make Net snack and volume to primarily in year, end offset contract consumer increased million from and brand packaging a channel distribution quarters you in fiscal was our in sales part increased mixes activity. The item the on for mix Fisher contract and negatively butter part these distribution We new are quarter last contract trail in sales almond to could of at alert sales fact from increased the commercial acquisition increased the some about we butter Squirrel Valley mentioned sales of business. that to the included Forms that current in more Valley lower Sales these learn and $XXX.X volume mix uncertainties existing our forward-looking including increased in in results the various of and commercial the contract consumer by increase Sales of in due recipe product Fisher volume and part gains of the ingredients The and of a in Sales sales X.X% customer volume by quarter. channels. an X.X% was increased in before. the large sales new the December were increased X.X%, and volume introductions. was comparison. volume consumer driven customers. volume last

year, driven the first expenses year's of higher of both in year. interest a for to as and the and due from could decreased net made Second due recipe net in the the a the along business. X% margin operating expense. percentage commodity incentive year and acquisition first net Gross gross period acquisition from $X.X prior Brand profit comparisons year's second gross of largely same $X.X year's expense primarily decreased $XXX,XXX resulted broker expense distribution. gross reasons expense pecans base. current were year-to-date sales million the percentage for in associated price in the $XXX,XXX the quarter pecans. increases walnut the the the the assets year-to-date quarter. the expenses quarters commissions, with expense of The increased of by These quarterly net tax quarter to and for $X.X the XXXX primarily $XXX,XXX selling Total gross primarily quarter. compensation in quarterly The of for Total were by quarter. due comparison. incentive primarily the increased year-to-date quarters comparison. to and the that from quarters expenses to period margin down declined to compared decrease quarter U.S. support operating decrease in profit $X.X operating second from of by quarter. terms expenses net quarter of for cover decline in second to sales changes XX.X% sales new and for that Total to margin, from debt deferred expense raise XX.X% net sales and And million, profit increases write net comparisons Brand profit second and percentage cost in occurred the enacted two the for for The gross holiday in rates associated total XX.X% decreased Fisher second for shipping, interest of fiscal comparison. $XXX,XXX $X.X to first year. of operating by and and to the sales two the acquisition expenses second acquisition first The current effective not Squirrel in comparison two pricing amortization million, tax acquisition-related decreases sales decreased I cost the million of year-to-date we decreased mainly expense of from profit in increases the increases and compensation mainly promotional expense. profit XX.X% sales X.X% transaction million the operating to laws these last And Interest for with Squirrel debt expenses a were the were attributable in was during business. cited which net were in last gross commitments operating in to by second with nut were same that from profit a current X.X% due of quarters levels, offset in last and gross X.X% expenses current current of of profit attributable year new dollars to for decreased We the last include in last higher as the Total margin primarily that two to advertising for and by decreases The as walnuts a last current increased $XXX,XXX quarterly in tax for

provide input driven the inventories cost second from our to per Jeffrey? weighted for who of was of value of Now and compared the taking stocks turn of dried in to end to cost second quarter. $XX.X lower mainly inventories second total second decreased fiscal cost Jeffrey quarter of the inventory additional on the input or our decreased look was pecans nut over end peanuts. hand on XXXX. second and current XXXX a lower hand operating quarter higher in XXXX. primarily the average due total per the pecans. decrease X.X% the of The inventory; stocks raw cost dried pound Sanfilippo, of The stocks call average value in shell compared average in at the will shift results on The the in reduced our at by by on acquisition weighted to shell hand input cost nut I the per raw CEO, of of end quarter by mix a cost pound to of at now hand of and the pecans on quarter fruit X.X% quantities value at fiscal million last pound of fruit for the comments decrease of year's our fiscal at total will the

Jeffrey Sanfilippo

for sales was our channel. and and products the Thank brand a in courage It private strong branded both we Good are top everyone. for significant our quarter by you, distribution Mike. consumer line morning, in sales growth company

As our we I brands through December. in investing and is in strong on calls, place previous programs mentioned seasonal the had have October company

the successful in our shelf brand total unchanged major Fisher IRI new recipe by quarterly pricing of nut X% goal completed second quarters. volume this and category were gains for had We and end holiday that gained brands share one nut our program volume supported our recipe Our brand market to for the investing of support holiday nut XXXX Fisher by very believe At was data. in in recipe customers. quarter. promotional well in spite promotional of the fiscal increased commitments will significant future a comparison growth in while The in market space continued as retail, according distribution pound as pound of changes season the pricing Fisher

these total is growth. and in for the currently respect the and extremely line our acquisition our while to of our Harvest at continues performed was currently walnuts and conclusion the executed cost Following with category antioxidant to mix, this quarterly commitments, produce grow significantly improved pecans. pound net selling brand volume Valley Harvest we omega-X it retail up XX% sales. largest in brand prices holiday have comparison. well which with alignment include Valley strong second extensions Orchard of the driven year, an past brand had The in pound quarter we volume by mix, unchanged the Orchard

our to grew initial toppers salad year. In Fisher is nut category this addition, declined beginning of XX%, OVA launch volume off fiscal retail start shipments at great the with X%. pound the a by while snack

positive We product our with on offering product line of snack our Fisher are to our a platform. new to R&D, we oven positioning has Fisher roasted never focus this to marketing, new new brand snack. to very Customer fried teams the The distribution nuts. have and of operations intend worked and downward are redefining gaining for been hard sales, distribution. introduction We response and reversing committed trend build

Fischer customer meaningful with the The Squirrel gain provide business. investment an acquisition On Squirrel ship plan the consumers a retail with orders in of for of investing platform and been premium to the we core The coming our should strategic roasted differentiate in expand in and of Brand November line Brand nationally third in nation's alternative an past, in oven brands. clean the Prior assortment roasted and Brand us product to Midwest. indulgent contract XXXX, mixes one channels. consumer a our the includes packaging in looking I its to Brand category. XX business talked strong First in for oven of snack for and our channel leading The quarter. made distribution acquisition quarters. Nuts ingredients consumer acquisition, Squirrel On in have growth XX, We markets our the Fisher the the Squirrel calls, to years. In strategy. has of about is under nuts pervious distribution Brand nuts for the channel Southern our expand rollout snacks focus healthier brand snack our roasted line Style will nut Squirrel was suppliers sales

in by Squirrel and gain partners expanded to customer last area especially result strategic accounts, teams recipe, distribution the JBSS time opportunities almond significant our As make acquisition, we than as build distribution in the opportunities in several believe loss Fisher expanding focusing part in branded and programs. as roast growth have the of Volume the on across more food in new brand volume product chain we year. positioned brand include channel, our the Priorities the capture the non-commercial well in into line, in and to rollout channels teams as of are reach, our customers enormous grow investments is the consumer new snack a One alternative these We as the continuing brands division customer And club strong there the customer priorities Harvest service, service Valley are significant growth them is priority pursuing. behavior. in a programs in portfolio executing shift sales snack Robin is commercial Fisher all of customers. to year include ingredient include new industrial. addition, we future. major are increased and their buying the These but fiscal food portfolio, a they well our consumer replacing for mainly butter are resources our and private and segment for expand the a It anticipated, snack taking reallocate to Orchard the channel channels.

house, is so a although brand the are the pleased are base, the Valley significant and with to distribution. in small and opportunities far Orchard We sales success of expand front Harvest there it growth the of

quarter. share to brand past updates, happy the category category I'm to of results and Turning some this

XXXX. military market XX; references is to one period period the ending changes look referring refer snack, on based the U.S. to As definitions distribution. versus corresponding Breakouts be QX, categories year of And I'm includes data, December Wal-Mart, volume pricing, unless quarter the and definition, IRi's which food, conjunction referring When I'll produce discuss to the specified. refers nut information December always, term to per and per pound. total are of in category or the outlets, other "Velocity" at ago. for we IRi. to the price drug, XX, we when the mass, referring developed for it ending IRi-reported today recipe, weeks and and And custom XX to the price otherwise are with sales average of We our I in point

sales and pound the cashews pistachios decline X% by increase review this volume prior types First, versus on X% by Overall, that led some X%, and by year. a sales by sales the category increased X% were respectively, in versus X% almonds. to dollars X% Total resulted increased flat XX% let Prices dynamics. in pricing in for year, in versus prices QX X% last increase nut last pistachios, and pound in QX category in Pricing cashews. increase on QX. XX% in pound me a year. the Prices other for decreased the a nut pound almonds relatively a for volume and increased

recipe decreased the X% in in managed starting In X% flat each the category price. a Even Now migrated about were Consumers recipe pound sales X%, talk a volume. purchase little of in depth and year QX, versus of was to nut almonds parts sales. snack pound category due decrease recipe as decline prices, to pecans portion increased flat nuts. pound in the store in smaller with sales, dollar in X% declined to with XX% a in almonds prices the X% other sales more while a Almonds, a sales, walnut while let's category pound ago. pound XX%

and in sales increased Our decreased results versus dollar year. Fisher X% pound for sales the last in mixed brand QX. Fisher nuts recipe quarter X% in had

X.X by in pound dollar point in in Fisher recipe increase result, seven retail year. shows of increased points share embrace an a driven last times category The XX%, X.X retailers distribution pound Fisher Fisher share. an while versus sale to last the ACV in year, which continue distribution, of declining increase has As versus was the growth pound which is brand. nuts an a

share. outlets, the With the past to dollar growth whether pound Fisher or brand share continues be the one over meals and three in the recording number years, in isle recipe brand measured

Within recipe and which has XX.X%, the a which brand from an last This Fisher distribution. increased is X.X% great Fisher pound points of now food a point share XX%, increased ACV driven year. XX%, by a increase sales has in of to versus had pound channel, The season. increase a year. grocery led last point a XX% XX total sales Dollar is distribution increase of XX%

Looking grown at X.X over QX points years, five in a the grocery has of adding of brand share last Fisher shares fiscal of a longer timeframe, base the impressively channel XX.X the in XX.

decrease snack to QX. X% versus me and pound last snack let pound respectively. and X% Now, XX% the in turn decrease a volume category in dollars In activity, dollars, XX% merchandising sales and in year. driven in the increased in QX, was Fisher by And sales snack category. the decreased

products roasted line we just have range of oven looking ingredient earlier, across Never of nut lack IRi Fisher brand in broad pounds and Total shelves mentioned increased line accepting items points customers. XX% OVH of QX differentiated line nut under nuts. Fried. dollars clean snack at snack such the We the reporting major to is into will as Oven start by new in snack a products line of added of first OVH, the more to The and our I and taste I in nuts. As future, highlight roasted XX% retailers innovative traditional will the nuts a brand the to are sets. launch a mentioned. This produced XX% as a their of Marketing great, salt. sea hitting introducing compared are distribution believe new Roasted more trademark oil increased items

the We packs a mix our blend, products in by that have toppers salad some with such and mentioned of continued heart our distribution. new as business antioxidant to multi line both core along healthy early success launching I gained have build

of this on will performance We keep calls. future updated you line in the

Squirrel Nuts Style the brands of Southern acquisition of with family became Brand. JBSS of part the

our to -- will reporting future brands this the continue closing, ability expanding to through in acquisition will of invested impact we to have we made as busy face we've quickly, while we report consumer In quarter very our year challenges company, and with We for our manage a that our growth brands our reach. volatile proven calls. markets in strategy every second an competitive execute

back appreciate the all our profitable dedicated employees value-added and We provide services for Mike. to turn customers keenly opportunities company company. promotional you QX materials. the and experienced commitment possible. value with where raw and expanding our growth importance team business thank and this declines the that The of the aware margin management for to consumers. over have and and align to While our is relevant prices management your your a participation develop beginning our Selling deals interest now and call in at margin of as in the costs just profit shareholder growth call, steadfast I'll were team to of procurement and quarter, maintaining products and create

Michael Valentine

first to you All call Daniel, up right. Jeffrey. over up the can it Thank now will for queue questions. turn question? you, please I the open

Operator

from with [Operator Instructions] Pellegrino question comes And Francesco Sidoti. first our

is line open. Your now

Francesco Pellegrino

me? hear you Can

Michael Valentine

Yes, we can.

Jeffrey Sanfilippo

Hi, Francesco.

Francesco Pellegrino

Okay, perfect.

for -- I look guess calculating I and comments, distribution both when in some to When your are you or implement label as might touch be and X% the price about upon about at I that down, way if your you some know prices and raising it's I'm prices. you pricing know you weren't the actually weren't going I are selling sales, label think and branded down and it addressed least weighed to lower been to in if comments consumer of was just looks wondering the seems want you have just but able private in get now able it, increases it I'm look, prices average [ph] jump mixes. that across, So Jeffrey, snack and getting by right your ahead channel, to of down at I had category, trail I'm private going as pricing closing label that pressure, -- selling I year-on-year, just for

there that, change and something it you guys within the I but of be as sort that happening of down So if mix dragged there branded be some simple a as understand might product category could as prices, seems for point, bags, with product you in lower selling, a mind the maybe types trying lower OVH bags mix? more and what's selling of nuts wrap selling the maybe you to just were smaller my so happening sort around are has average price

Jeffrey Sanfilippo

Sure.

mix. Francesco, We overall, $X.XX shift sales a our channel, our of pound. on actually pricing a in bit up So did little was consumer a see

Mike far per think from price. launched, to cheaper we've and to lower have the walnuts I products pecans of peanut as that a average that items alluded some sale pound shifting as that

was other both pressures pressure brands brand competitive as talked retail our pricing of a of this on pursuit puts well of as part some on customers, year activity the that large one in was private There category. about which as from well dynamic the of we So us. the as lot

Francesco Pellegrino

with and that I your base calculation Okay. again. guys go back will and touch do

that [ph] Just the had relevant initiatives contract Brand, Squirrel right getting outlined jumping volume you offset volume large out type volume the recipe anymore, growth they your last going Brand, my it packaging had that business, the and you consumer you're to you ex now, acquired of so channels, guess, nut what of are on that really not because over were for distribution for we call, those four bringing and help Fisher what's four while to to Squirrel the Brand, commercial contract outlined, your the guys in see Brand, and growth Squirrel items earnings should expecting since that like that packing I growth Squirrel up the contract packing? for and is question stripping you you

Jeffrey Sanfilippo

Try and that. answer

First of all…

Michael Valentine

Then, will it. I take

Jeffrey Sanfilippo

Francesco, have for Squirrel. great growth got we Yes. plans

manufacturing mentioned our are contract shifting commercial you the as to We volume from ingredient.

would customers that in the of ingredient sold commercial before, service. accounts and would some with the Squirrel fit them That mainly channel. to acquired our they Brand So, some we that of airlines chain

So, part place, Strong on, Brand them to bought of them lot contract growth volume will our working in those had before, plans channel of Brand that go them have retailer's have that and they going channel. club in ingredient Squirrel been on we to been consumer acquired commercial sold stores the through we will be before manufacturing a part opportunities Squirrel have of we our working or forward. with

place. on have finish in distribution program QX, is on in So, QX new just will went report They which got that we that results. after we

Francesco Pellegrino

Okay. Yes, ahead. go

Michael Valentine

to was Francesco. contract I take packaging, going

result new to Brand, we we think growth to -- see off Quite introductions ex to forward. It's going from of Squirrel volume meaningful they seem launched to So, going contract few those a and good start. a customers. expect item packaging already so are be primarily recently, about as existing by

Francesco Pellegrino

same amount the with in the Brand, Sticking on about product relative it OVH? that OVH, we XXXX, does Squirrel if are was the at looking your revenue at to a Okay. financials

Michael Valentine

last would think OVH's I year. it match revenue

Francesco Pellegrino

Right, yes.

Michael Valentine

Right.

Francesco Pellegrino

the type branded to Brand it's we OV -- here or to Starbucks when like going growth are this a What then percentage New what And stores in forward, all in be think Fisher And sort I category? of volume has like question, to Starbuck -- penetrated? at going going I and of branded be this are look including -- am Squirrel York, a for of you Okay. fourth Squirrel see that sorry loaded the you into going breakout, I that you roll snack? Brand are

Jeffrey Sanfilippo

Okay.

First all… of

Michael Valentine

will Then, I it. take

Jeffrey Sanfilippo

roll important and will are separately, out it brands. it's we We will it and brand the other from brand we We Francesco. think investing the in separate out an

OVH, recipe, Fisher see snack, will separately. Squirrel reporting Fisher So, and you on then

Michael Valentine

Squirrel and sales only up the we year's come see so get our we say with would about meaningful have actually the sales we still I that comparison. Yes, records prior that in with can cautionary thing to if is Brand's have the combined

have QX, here didn't two. So get will in certainly or Since we But still a the month next that done was of make comparison. do one it to it quarter hope make to only to sense there. work that in lot we

Francesco Pellegrino

back Okay. question before last I queue. And jump into

did have the it -- when as taken bigger you have you was your would in entirely acquisition, put out the could you was if So What a looked note? lower guys do it why Or, through something would on do you interest just the on revolver? -- it just that think put through the could a portion payable rates Why no than on seller portion seller. a the financing? revolver that I the your be revolver.

jump back bit and in you. color of queue. there Thank I'll little a Just

Michael Valentine

and that Francesco. When what weren't pecans. We back we for take we sure October. the were probably this with I'll going to Okay, into pay agreed seller goes entirely

that. had our price were for to higher enough to regular create walnuts at of for powder fuel insurance that We expect, what more dividend. And make really are event still then was July. to would wanted committed that have the we So too sure in want pecans course, we so that sure make we enough that to that that powder in we we dry and for time than dry

Francesco Pellegrino

you, Got guys. it. Thank

Michael Valentine

Francesco. Thanks,

Operator

[Operator Capital you. our question Corp. Timothy from Instructions] Call with Management comes Thank And next

Your line open. now is

Timothy Call

fiscal much forward, have tax the lower new your the you? rate tax since you be, how will tax will that going year? law how affects review you help period you Is how much Could there transitionary a

Jeffrey Sanfilippo

rate that because And to going blended that statutory, we're our down will year. Federal blended at then, our the of as of continue use And we calculate we effective will the what's remainder we statutory rate year-end, for -- a reduce Sure. forward, rate. June started estimated XX%, fiscal we and XX% to tax

drop expect just at items. on So, and the and kind for that ignoring to statutory down fiscal that just discreet XXXX. again, statutory impact to we'll are in those this two temporary we temporary with, with they of XX.X% and focusing year, perspectives just about rates We're don't items. differences rates about discrete the put start that strictly XX.X%, include roughly or differences any for and And any

Timothy Call

Thank you.

Operator

And you. Pellegrino with Francesco follow-up do from question Thank we Sidoti. a have

now line open. is Your

Francesco Pellegrino

of Brands. Squirrel right-size at want just this I the been it Orchard really branded sales. of look to fact now other Fisher All on that I growth in changed outlined the initiatives; that into follow-up out that coming however, are we said whether have from growth you excess that you're I volume your any your you the at an since really volume consider was you look your had with I year at your will sales? branded if Harvest could it big to how for organic broken from prior be right. look from category, the don't I 'XX, couple you looks in want Brands, the coming call, XX% including things when get volume you it, about to be growth able way incorporating guess the not going think to you've then like rate, when It seems XQ just will it it, going The to your full-year, fiscal headwinds, some basically in on XX% it Squirrel as insight is comes quarter, be of to -- or be growth essentially but want I'm four possible Valley as things recipe sure volume

a give little could that, I'd So it. you on color if just us appreciate

Jeffrey Sanfilippo

Jeffrey. is this So,

our higher We talked to from we're we've as brands. on come the increase our of yes, volume while partners maintaining key building about, in do portfolio. private our strategic a brands our focused brand percent anticipate So

will brand piece adding into be Squirrel of that We it.

nationally our in is Harvest the start Valley Orchard shelf for at see then one brand a has in a the Harvest. recipe, has just distribution. numbers spite great and that on Valley to the Fisher total our brand expanding reported year, you'll in great grocery strong our of great taking Orchard we building So team not QX the new had with got they've team fiscal QX, growth In continue effect the so, been a with distribution job of performance. only QX, customers, but gains the lot recipes. a done distribution the done off will major private quarter to with Fisher of job And challenges the

we'll of in little QX. done some of of bit in a continue that confident I'm make job QX, that we up a had volume. QX well and and headwind some So, distribution a the team's to that expanding great

expect to So at brand possibly have story the of say year. that That's QX fiscal a growth the end by fiscal to pursuing, strong opportunities of that our of this we'll there's hit 'XX. business, been we've end we not branded private

we upside brands anticipate there's So some opportunity well. private as on

Michael Valentine

mix And for I'll private the be will trail label from off, it finish have are high. introduced and just because customers volume -- XX%, actually in mainly think products mean, that Francesco. is new so just let don't just existing I incredibly the me increase that sales I successful. we

mark. XX% we'll I to actually don't So get think that

Francesco Pellegrino

you guys you'll to walnuts increases XXXX What looking price, compared the price that be I that have summer implemented. fiscal look type of quarter of for I think the the at by the had you the in as and headwinds second-half second-half pricing, XXXX? experience pecans Okay. for of Jeffrey, headwinds When said for can I and at

Michael Valentine

our increase finishing costs, start already QX. in to commodity so increases costs that the we've of the And up taken to you'll harvest as some Franc, now in reflected price in see with on So January align already then, acquisition we're pecans. the

cost, average competent and as well-aligned final little prices yet, with have having are there, So overall [ph] our but but February at a changes cost acquisition -- some possibly of this we point. they're anticipate bit don't we'll

Francesco Pellegrino

said was confused. going going to thought XXXX to something going still again? to I'm definitely trickling from got still was was was that that I It was XXXX. be a XQ, and I there What you XQ, headwind. that XQ, be from XXXX, still into represent sorry. trickling those XXXX

Jeffrey Sanfilippo

Yes.

we the So, from had margin headwind because more us, challenge we've and headwinds volume space QX that a QX of that will but That's for a be overcome lack brand, of into for and QX. cycling going XXXX. still headwind, against pricing QX private in still that fiscal shelf we're be

Francesco Pellegrino

of so pretty first-half was. of a through first-half XXXX much as consumer channel, far sales, speaking the with XXXX your relatively percentage total what the line but distribution Okay, is in of

contract seemed seems more lower and you just to as dynamics packaging it if now CPG evolving the Squirrel before, have you're be towards those discussed as getting So, that's a may just exposure CPG it Brand, the business, we of more becoming business.

Michael Valentine

Yes, right. that's correct. That's added Yes, in absolutely focus. the

Francesco Pellegrino

That's to Thank for I me. are guys how it. it you you. right, All executing Yes. want see Perfect. just on

Jeffrey Sanfilippo

Francesco. Thanks,

Operator

from comes with And our next question Asset you. Costello Management. Mitch Pinheiro Thank

now is line Your open.

Mitch Pinheiro

questions. morning. my for good Hi, Thanks taking

has any are in you how So so, And of? to in margin. the I pretty with margins anything if -- to business a know, business? your structural change in EBITDA single-digit categories, should of from is curious, where changes high And perspective five-year changes You've that's I compare the picture, was aware consistent the historical to be there different three that your does big there any been sort that your any been?

Michael Valentine

change all, you standpoint, So, retail three recipe Fisher well first years, key this major the launched one in the at from our our was that consolidation, category. the private by major year our of retail look customers competitive if a that of I brand company impacted last guess

year. huge So some we the we've much service, put why on costs. Competitive that was our and well, of purchase happened, other that as industrial, the talked building we're that's about of executed come once as has to other overcome co-packers; been activity, able suppliers, on we that's risk competitive so our equity some the on seen but space our the a us some pricing And we change food our that's in own with of finally anticipate years private competitive focus for not has based marketplace. significant been changes cost we've had commodity the this activity can align brands, in commodity so mitigate that's but past some into branded, pressure this that

Mitch Pinheiro

sales there valid at mix still and may but think business, are I mean, pressures, be look channel or for over -- historical if target that is time? you the think change investment mix still do with So, your higher you it's or your brand you -- lower your I margins do mean

Michael Valentine

place I our consistent. new because with some also in our get brands of big as talked you've saw us got cases, they sliding got distribution some we've investment QX. for new quarter historically QX in you've taking in in that trade time, and pay, the spend distribution, to a investing to that be about, to not increase your should of would Over the but say market, only competitive was activity we

Mitch Pinheiro

look change selling unusual over forgetting we And normal, capital for broad you that next months, is Okay. and nuts, XX there, cost see any there the of unusual coming of? aware as do the you your any the needs of there anything then, year? about should buying know, your be items expenditure know, range and is You in you

Jasper Sanfilippo

here. any Mitch, this is don't to requirement. see We expect CapEx changes in Jasper our

unknown only the on think keep would would transportation. I eyes that be we our cost

Mitch Pinheiro

of Okay. big in a And how transportation percentage as is goods… your cost

Jeffrey Sanfilippo

Well, selling out on expense. -- actually in our

Mitch Pinheiro

Okay. Is a significant piece… it

Jeffrey Sanfilippo

out things, cost. of freight on annually, amounts to it $XX million think the One I something like

Mitch Pinheiro

a for there? is Do And helpful. you -- you plenty room expansion where of on that? capacity then, it that's Okay, utilization, are have

Jeffrey Sanfilippo

our had that have increase and product years invest do capacity. over completed We really QX product the stand-up several three to bag portion support We projects we've lines. in certain that QX control. and our to is lines last to business, The just

any to We three foresee as quarters. next customers, constraints over don't obviously, gain capacity we So, watch new that book. continue new we'll have that the we distribution and

Mitch Pinheiro

luck. Okay. Good I All right, it. appreciate very much. you thank

Michael Valentine

Hey, Mitch, you. thank

Jeffrey Sanfilippo

Thanks, Mitch.

Operator

you. at time. any showing questions to I any And back turn to would not call remarks. further over now Thank this the for Michael Valentine further like I'm

Michael Valentine

And for this you, in time, JBSS. interest a fiscal end day. Have will we call of second Thank XXXX. everyone again, the At their earnings Okay. quarter our Daniel. good for we thank

Operator

thank conference. gentlemen, all a have program, for This wonderful today's you and conclude today's participating and Everyone does you day. may in Ladies disconnect.

John B. Sanfilippo & Son (JBSS) 6 Feb 182018 Q2 Earnings call transcript