J & J Snack Foods Corp (JJSF) 2006 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the third quarter earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct the question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. Gerald Shreiber. Mr. Shreiber, you may begin.

Good morning, everyone, and welcome to the J&J Snack Foods third quarter conference call. My name is Jerry Shreiber, and with me today is Dennis Moore, our Chief Financial Officer; Bob Radano, our Vice President and COO; and Michael Karaban, our Vice President of Marketing.

I want to begin with the obligatory statement before getting into the text and discussion of the quarter. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.

You are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Results of operations. Net sales increased 8% for the quarter and 10% for the nine months. Adjusting for sales related to the acquisition of Snack Works LLC acquired in March 2005 and the Hawaii ICEE business acquired this past January and SLUSH PUPPIE acquired in May, sales increased 6% for the quarter and 8% for the nine months.

For the quarter, our net earnings increased by 9% to $10.8 million, or $0.57 a share from $9.9 million, or $0.53 a share a year ago. For the nine months, our net earnings increased by 11% to $17.9 million, $0.95 a share, from $16.2 million, or $0.87 a share a year ago. Operating income in this year's quarter was impacted by $350,000 of share-based compensation expense, or expensing of stock options, and an impairment charge of $1,193,000 for the write-down of certain robotic packaging equipment in connection with our retail Pretzel product.

Excluding the impact of share-based compensation expense, recognized this year and not last year, and the impairment charge, a total of $0.05.5 per share, operating income increased 18% for the quarter and net earnings increased 19% for the quarter. Let me just repeat that sentence. Operating income increased 18% for the quarter and net earnings increased 19% for the quarter if we exclude the extraordinary charge. Operating income in this year's nine months was impacted by $967,000 of share-based compensation expense and by the impairment charge.

Excluding the impact of the share-based compensation expense and the impairment charge a total of $0.07.5 a share, operating income increased 17% and net earnings increased 20% for the nine months. This past quarter, marks the 21st straight quarter of increased earnings over the prior year's, 21 quarters in a row.

Our EBITDA for the last 12 months reached an all-time high of $70.8 million for a 12-month period.

Food service. Sales to our food service customers increased 6% for the quarter and 13% for the nine months. Without Snack Works, sales increased a strong 10% for the nine months. Soft Pretzel sales alone were up 7% in the quarter and 14% for the nine months, 5% for the nine months without Snack Works. All of the third quarter increase was from internal organic growth.

Italian ice and frozen juice treat and dessert sales increased 2% for the quarter and 8% for the nine months, mainly due to a new product LUIGI's Sherbet Cups, sold primarily to and through school foodservice and education systems. Frozen desserts sales to warehouse club stores were down for the quarter. Churro sales were up 60% and 52% in the quarter and nine months, as we had significant large sales increases to one customer.

Bakery sales were flat for the quarter and up 7% for the nine months due mainly to increased sales to our existing private label customers. Bakery sales were impacted by the loss of one account, which accounted for $1.2 million in sales in last year's quarter.

Retail supermarkets. Sales of products to retail supermarkets increased 14% for the quarter and 9% for the nine months. Soft Pretzel sales were up 1% and 2%, 1% for the quarter and 2% for the nine months. Sales of our frozen juice and Italian ices were up 14% for the quarter and 5% for the nine months. Unit sales of our MINUTE MAID licensed products, and our ICEE products, were up 37% this quarter as we have introduced several new packaging -- packages and flavors for the retail supermarket sector. Unit sales of our LUIGI's Real Italian Ice continued their strong performance up 17% for the quarter.

Sales of our restaurant group decreased 28% for the quarter and 30% for the year, due primarily to the closing of unprofitable stores. Same store sales were down about 3% for both periods. We closed one additional store during the quarter. And we have 14 remaining at quarter end. We are on track with our strategy and plan to withdraw from this business. And we're handling it and expect to have it completed without a major impact or write-down to our business.

ICEE and frozen beverages. ICEE frozen beverage and related product sales were up 11% in the quarter and 7% in the nine months. An increase in frozen beverage drink machine sales, primarily two customers, accounted for virtually all of the overall sales increase, excluding the benefit from the SLUSH PUPPY acquisition in both periods. Excluding the Hawaiian ICEE business and SLUSH PUPPIE, beverage sales alone were flat for the quarter and down 1% for the nine months.

Dollar sales for both periods would have been up except for its change to the way we billed one of our major customers. Managed service revenue for others was up 5% for the quarter and 2% for the nine months, even though service to one customer was down about $1.6 million for the nine months or about 9% of service revenue for the period. SLUSH PUPPIE and ICEE of Hawaii contributed $2.6 million of sales during the quarter. For the quarter, gross profit as a percentage of sales increased 0.45% or almost a half percent of a percentage point from last year.

The increase resulted from efficiencies due to higher volume and pricing, which included reduced coupon expense in our retail segment. We achieve this despite being impacted by higher commodity and packaging costs of $1.5 million and utility costs of $450,000, and [slotting] expense of $1.1 million to introduce the new products.

Excluding the impairment charge, operating expense as a percentage of sales was one-third of a percentage point lower in the quarter as our cost remain controlled as our sales volume increased, even though our two-headed gorilla of distribution costs, fuel and third-party trucking, continued to increase.

Cash spending and cash flow. Our cash and marketable securities balance decreased $11.5 million to $58.9 million at quarter end as we invested, spent $22.8 million on the SLUSH PUPPIE acquisition. Our capital spending was $4.8 million for the quarter. We are projecting capital spending to be about $18 million to $20 million this year, which we estimate will leave us with free cash flow, operating cash flow less capital spending, of approximately $30 million.

We paid a regular quarterly dividend of $1.4 million on July 6, 2006. We will continue to seek acquisitions as we have historically done in the past to supplement our internal organic growth. In the past, we have made key strategic acquisitions, and more importantly, we're able to make them fit and integrate them quickly to further grow our business.

Some closing commentary. We are pleased with our internal sales growth of 6% and overall sales growth of 8% for the quarter. Our internal food service sales growth slowed just a bit, but was still a healthy 6% as we continued to have very strong sales growth in the sale of our product lines. We are optimistic that we will continue to generate continued growth. Internal Pretzel growth increased to 7% this quarter from 2% in the March quarter. Specialty products, specialty Pretzel products that are showing some promise include Pretzel rolls, Pretzel sticks, and Pretzels with fillings.

We will continue to maintain our leadership and our core product business as we extend the boundaries of traditional SoftPretzels and complement them with other day parts, including breakfast and other menu offerings. Although our LUIGI's Real Italian Ice continues to be a strong performer in our retail supermarket segment, it was up 17% in unit volume in the third quarter, in an effort to resurrect and regenerate excitement in the balance of our frozen novelty business in supermarkets, we introduced new flavor varieties and packs of our MINUTE MAID and ICEE products this past quarter.

We also introduced an exciting new combination of flavors, mango and pina colada, to our LUIGI'S line. The result was a strong 17% increase in overall paid sales of our frozen novelties. We also introduced a no sugar added LUIGI's Real Italian Ice in a product called Hot Ice, a combination of two special ices designed for the fast growing ethnic and Hispanic market. Hot Ice has not met our expectations and will be discontinued after the summer.

We have projected slotting expense of $2,700,000 to be incurred this year for all of these product introductions. These expenses, these costs have been expensed along the way. Our frozen beverage segment benefited from strong machine sales during the quarter. Although machine sales are one-time to most customers, we generate ongoing post sale income from the continued servicing of the machines.

As we expect to be continually influenced and impacted by changes that some of our major customers may be undergoing in their snack bar and restaurant operations, we will continue to focus strategies and energies on expanding our managed service business. This past quarter, we acquired the SLUSH PUPPIE branded business from Dr. Pepper/7-Up, a Cadbury Schweppes beverage company. SLUSH PUPPIE, together with ICEE, now gives us the number one and number two brands in the frozen beverage category. We expect the integration into our business to be fairly smooth and to be slightly accretive during our first year of ownership.

Although the business model of the SLUSH PUPPIE business differs from our ICEE business, we believe it is an excellent fit because how the SLUSH PUPPIE frozen uncarbonated beverage products complement our ICEE frozen carbonated beverage products. On an operating basis, our restaurant group's bottom line improved by about $70,000 compared to last year. We will continue to pursue closing or licensing of additional stores as we attempt to reduce or eliminate these business losses.

We expect to continue to be impacted by higher commodities and utility costs going forward. Our insurance costs have continued to increase due to increased claims under our liability policies. We have increased our focus in this area and expect to see a benefit going forward. Our group health insurance costs have dropped and may continue to do so at least for the short-term.

We determined that the installation of robotics packaging equipment in our Pennsauken Pretzel plant was not successful and despite our efforts, and after careful consideration and evaluation, we decided to write it off this quarter. Our robotics packaging installation at our Scranton frozen novelty manufacturing plant has been successfully installed and is running up to the standards we had estimated.

Our estimated income tax rate remains at 38% compared to last year's full-year rate. We will refine this rate as we analyze the benefits of the American Jobs Creation Act of 2004. However, much of the benefit for this year may be offset by higher state taxes and a lower tax benefit on share-based compensation. This concludes my formal comments and I would like to thank you for your continued interest and now I will open up to anybody with any questions or comments.

We will now begin the question-and-answer session. [OPERATOR INSTRUCTIONS] Mitchell Pinheiro is on the line with a question. Please state your question.

Good morning.

Good morning, Mitch.

A couple questions, one how much pricing -- you mentioned pricing in the 10-Q, but how much pricing did you have in the up 8%?

It was a combination of real unit growth and pricing, and maybe it's 40/60, 50/50. There was more organic growth than pricing growth. Maybe half of that.

Okay, but with flour up 30% year-over-year.

That's about right.

And sugar's up 50%, energy, do you have plans to take additional pricing, you know, to offset this inflationary pressures?

Well, we're looking at that, and we're asking you to throw some benefits for us if we don't.

So, I mean, where will you take pricing, in the Pretzel business? Or is it across the board in every business line you have? What do you, what do you think?

Well, we're looking at all of our product lines and there's, we have been successful with growing our business and we have a high degree of respect for the sales equation of it. And we just don't want to be wreckless about pricing. Sometimes we watch what's going on with commodity of packaging. And hopefully it will stay a bit. It hasn't quite happened yet, but we're looking at all of the categories. We've managed it in the past. And although some of this inflationary things are going to have an impact. Maybe more of an impact than we'd like, we will deal with them.

Okay. Now the coupon expense declined in the quarter. Was that, was that a planned decline? Or was there something that happened in the quarter, you know, that --

It was basically a little bit of shift in strategy in our retail and our marketing group. Last year, we were aggressively expanding Pretzel fills and we supported it with some coupons. This year, there was a, more investment in slotting.

Okay.

And so in managing the retail initiative and the retail effort are people there were working with the cost, the cost and expense to discipline and manage the group properly. We're going to take a look at that because we don't want to starve the product category, either.

Right. What did slotting cost you in the quarter?

According to Dennis, $1.1 million.

In the quarter?

In the quarter. And as you know, we expense that when it happens. Amortize it over --

What was the $2.7 million number, Jerry, that you had mentioned in your remarks?

Estimated [INAUDIBLE] for the year.

Okay. So for the fourth quarter, I know you had some in the second quarter, are we going to see a similar $1.1 million slotting in the Q4?

Mitch, this is Dennis, it should probably be in the $700,000 range or so.

Okay. Okay. Also, in -- if the FCB -- you know the customer that changed the contract, sort of how you price or recognize revenue, if that were excluded, or if it were done on your normal contract scenario, what would the beverage sales have been, what kind of impact would that --

It would have been up 4% to 5%, closer to 5%, Mitch. It really has no impact on our profitability.

Right.

All right? It does have some impact on the sales tier, the sales level.

Okay. And my last question. I'll yield the floor, but SLUSH PUPPIE. If SLUSH PUPPIE, I mean, did that add -- was that accretive this quarter on an earnings per share basis?

Yes. Very little. Now keep in mind, we acquired it at the end of May, took us a little bit longer in dealing with -- in getting it done. And we've been quickly, you know, integrating it, taking over, and it was, it's meeting our plans and expectations, and it was slightly accretive during the month of June, as we expected it would be.

And we would expect to be slightly accretive in the fourth quarter, as well?

It better be.

Okay, and then it goes back to dilutive a little bit as you get the cooler --

It will not have -- it will not be as sharply impacted off-season like our regular ICEE business is.

Okay.

One of the reasons is, in our ICEE business, we have this huge infrastructure, we put our own machines, we invested our own machines, we service it. Here at SLUSH PUPPIE, which is a frozen, uncarbonated beverage, there is a unique distribution team, some 86 distributors, and they in turn, they are the business owners who are placing the equipment, buying the equipment, delivering the products. So we're dependent on that infrastructure and want to work real well with that infrastructure to complement their efforts and initiatives. So it will not be nearly as impacted by off-season as what we have experienced in the past, the ICEE side.

All right. Thank you.

Brian Rafn is on the line with a question, please go ahead.

Morning, Jerry.

Morning.

Question for you, you guys talked about some of the commodity pressures, and the elasticity of consumers, you mentioned this in the past, you get up above kind of $3 in the frozen novelty, the consumer gets a little hesitant. You guys have always delivered a great product, a lot of manufacturers have tackled the inflation problem by not just having an implicit price increase per unit, but they played around with the unit volumes where you had a pack for $2.89, you've got six-ounce units, now you've got the 4.5-ounce-unit. What has been your thinking on dealing with volumes or having more of a bias to not playing around with, you know, unit volumes?

Well, I think we have more of a bias for not playing around, although we did introduce an item this quarter, a frozen treat under our ICEE brand, which is in the little two and a quarter [F-Pack], it's a 14-count.

Okay.

And there are a lot of others that had 18 and 20-count, a 24, a 12-count, this is a 14-count, which we believe meets the objectives of the -- of the mom for her children and also the economics.

Okay.

Other products have stayed essentially the same.

They have, they have. And hats off to you guys for doing it. There's this constant erosion and shrinkage. It's always thinner and smaller. Is it at some point if the consumer is again too elastic, we get into a recession. Is there some point where you may be forced from a threshold standpoint to look at unit volumes?

We hope not, we've been selling a six-pack of Pretzels, and it's been the standard six-pack for some 20 years now. And we haven't reduced our size, reduced our count. To the contrary, we've always wanted to bring good value to the consumer.

Yes, we're a little concerned that the price point has gone up significantly in the past five, six years, as there has been a consolidation of retailers and their sales and profit objectives kind of change. But we believe that bringing value to the shopper and we continue to look for ways to improve our efficiencies and to drive costs out.

Yes, yes.

Wal-Mart is a great example. They have, notwithstanding some of the other comments and critiques about them, they have done a tremendous job of driving costs out through the system. And working with their providers and suppliers to not only carrying that message, but utilizing the uniqueness of that message in the process.

Okay. Jumping over, you guys talked a little bit about the ICEE and the SLUSH PUPPIE. Could you give us a sense? You said the business models are very, very different. I think you talked about SLUSH PUPPIE having 86 distributors. Can you kind of give a sense, is there overlap in locations? You know, obviously, one's carbonated one's not carbonated. Can you give us a sense of how different they are?

I guess the best way to describe, we've taken the number one brand in frozen carbonated beverages that has a business model and employees that execute it, and the number one brand and uncarbonated, or FUB, which goes through independent, you know, distributors.

Right.

Investment. That's their life blood. Those guys have done a good job over the years in establishing and maintaining their little niche. We at ICEE attempted to enter that business three or four different times with some different product names and under different umbrellas. This opportunity came along now and it gives us a chance to combine the two best brands, the best brands in the frozen beverage category. And we seized it. We believe it's going to be good for -- it will complement each others' business, and we don't expect it to have any kind of adverse competitive effects within our system.

From the shoppers' standpoint, Jerry, is that something where at a snack bar or a kiosk that you may see both of those beverages side-by-side?

Generally not. Generally not. Where ICEE is sold perhaps at a Target or a Wal-Mart or a location, SLUSH PUPPIE would not be sold, however, there's about six or eight other brands like SLUSH PUPPIE that would be competing for the specialty convenience stores, would be competing for the school foodservice business with their 50% juice, 100% juice product and the little leagues and the swim clubs where you can bring in a portable machine, you know, and provide for the whole system. There SLUSH PUPPIE was, and is, the number one brand. And we think, we from ICEE, can even enhance that further and support them, complement it so that they will grow their brand and their business, too.

Okay. Can you give us a sense, Jerry, of what your in-field machine installation is for both ICEE and SLUSH PUPPIE?

Right now, we probably, ICEE is servicing about 28,000, 29,000 machines right now. And the SLUSH PUPPIE system, I think, has somewhere over 15,000, I've heard as high as 20,000. So we have quite an arsenal out there of potential sales driven installs.

Okay. Can you talk Jerry, about your ability. You've not only been great acquirers of other business, in some cases businesses have been in bankruptcy. But you've also had a great organic ability to develop flavors and packaging and different iterations. The SLUSH PUPPIE side, is there an ability to add flavors or do some different things with the product novelty?

Have you been going around in our R&D department? We have a list of objectives that we're going to be sharing some of our flavors with SLUSH PUPPIE. And quite frankly there are some benefits that are going to cross over. We think there's a lot of support and promise that's going to come out of this acquisition. Not only in the two beverage groups, all right, or the beverage groups are all under the ICEE flag, but there is, on a slightly lower scale, there's some opportunities to work with them within our food service Pretzel snack business, too.

Okay. Okay.

Some of these places that may be the bigger distributors, Ciscos and the U.S. Foods, and the [INAUDIBLE] maybe don't get to, but these guys do get to the Little League at the 5:00 on a Friday afternoon, even with the threat of rain. Not quite door-to-door like an Avon.

Right. Right, sure.

The next best thing.

Okay. All right. You guys mentioned a budget for property planned equipment $18 million to $20 million, maybe a question for Dennis. What percentage of that would be maintenance CapEx?

Roughly half.

Okay. Okay. You talked too, and certainly been talking about the, regardless of the best efforts the robotic packaging, did you also mention that the installation, you said it's Scranton from the robotics was okay?

Yes, we had a two -- we had a dual install, well, actually Scranton started a little bit earlier and a couple reasons for that. One, we thought they were more ready for it -- the Scranton install is packaging tubes.

Yes.

And reading tubes and reading by color and picking them up with a series of mechanical arms. And inserting them in a box. And after your normal debugging and install, it's come along pretty well, we're achieving the efficiencies that we thought. And this robotics only affected our retail Pretzel business.

Right. Right.

It was a line there also of six robotics hands that were picking up the Pretzels, but then they had to insert them in a bag, then they had to seal that bag, and then they had to put the bag into a box and finally close the box and move it along. Where it failed was that the Pretzels, Pretzels are consistently inconsistent. And the gripper arms, there were some issues with the gripper arms. But we had even more pronounced issues with the baggers and some of the systems.

Originally, we thought perhaps we were designed flawed, engineering flawed. We invested additional moneys and additional times and we kept tending to it. And this was a process that's lasted for the better part of two years. And finally our people, you know, we took a look at it, our senior people took a look at it and they made some other recommendations and finally we made a determination very, very recently that we're never going to get the efficiencies or the labor savings that was originally planned.

Okay.

And it became pretty clear. We're still running them and we'll run it for a while. But we decided to -- this is never going to produce what we had anticipated. And the promise of the robotics efficiencies and labor savings, we missed it. We just missed it. So we looked at the assets we had and wrote it down significantly. And on an ongoing basis, we're going to have some benefit of lower depreciation. So there will be some pickups that way. But we decided to be done with it and recognize it now.

Yes, okay. Okay. Question for Dennis. What are you guys seeing, kind of eastern sea board or maybe even across your Company, relative to wage and salary growth, attrition, turnover, retention, that type of thing?

Basically, we see no changes from where it's been. You know, we've -- we have some guidelines as to wage increases which have pretty much remained consistent over the past three or four years, and we don't expect any change in that area in terms of retention. You know, we have probably -- in terms of senior management and management overall, our retention level is, you know, as good as anyone's. And the lower level is fairly good, as well.

Okay.

We don't see any issues in that area.

Okay. Would you give us kind of a sense of magnitude -- you said the last three or four years, Dennis, kind of low-single digit, wage/salary growth, or mid-single digit, can you give a sense of magnitude?

3% to 4% range.

Okay. That's fair. Sarbanes-Oxley cost, you've got a sense for the year?

They should be a little bit lower than last year. But, you know, quite frankly what our expenses last year, which was our first year, were pretty low compared to averages of, you know, almost anyone else, and all of the published information. So we were low so we can't go down much lower than where we were.

Can you give us a dollar sense for this year, Dennis, what you might be at?

Probably $400,000 or so.

Okay. Okay. Okay. You guys were kind of running. I missed -- you talked about some of the commodity stuff. You talked about slotting costs increasing, utility. Have you got a sense of what your kind of diesel fuel surcharges and energy transportation costs, what kind of, maybe, year-over-year magnitude of cost change, cost inflation, maybe?

Our distribution costs as a percent of sales was roughly up about half of a percentage point this quarter.

Okay.

Which would equate to about $600,000 to $700,000.

Okay. Okay. Jumping back. You know, the issue with, then, I think we're seeing it certainly in the academic area, the schools, food service in schools, cafeterias and that going to less sugar and less fat. How has that been, you've got Pretzels and a lot of things Italian ices and that. How have you guys managed that process?

This is Jerry. It really has had no negative impact on our juice bar business for our Pretzel business. Pretzels, you know, are baked not fried. They're essentially all natural. They're fat free. There's really not any sugar in them. On some of the other parts of the business, it will have an impact on our cookie part of the business, perhaps on our churro and funnel cake business.

We're looking for ways, we are in the process of reformulating some of our cookie offerings so that we can meet these challenges. We're looking at ways to reformulate our churro product, too, so that we can get that product into more schools and we're doing this right into the teeth of a 50% increase in sales for us for the past, over 50% for this quarter and 50% for the nine months.

So this product, some of our other products, churros and funnel cakes, and for that matter, juice bars they are very, very fertile, and very, very growable. And, yes, we need to make sure that they, that we establish and maintain the nutrition and healthy standard. But by the same token, we want a product that tastes good too.

And it does. I've got two little -- I've got a two-year-old and a five-year-old. So they're quite happy with the flavor --

Our kind of customer and hopefully for the next 25 --

That is true, that is true. Just kind of one final one. Jerry, you mentioned something about in the warehouse club channel, you talked about, I don't know if it was less freezer space or less shelf space, was one of your products and I was writing so fast I couldn't get it down.

Yes, it was primarily one product that last year we had decent sales with and this year the product, we actually don't have any sales, and it was the Barq's Root Beer and Ice Cream. But we do okay with the warehouse and club stores. And if you look at those big freezer sets, we have a pretty good presence in there with our ICEE, with MINUTE MAID, and if you look at so many other people that are flanking us, the company was U, like Unilever, and there's a company like Nestle's, and there's a company like M&M Mars, so we're, again, a little niche player dancing around those big, good elephants.

Yes, yes. Superb job, guys, as always. Keep it up.

Thank you, thank you, we will.

Robert Costello is online with a question. Please state your question.

Hi.

Hi, Bob, how are you?

Good. You talked last time about the new distribution opportunities with the pina colada coming out. Could you talk a little more about that now that you've introduced it?

We introduced it early spring. And it's doing well.

Right. Well --

We're in a --

I had asked you about the opportunity in the restaurant side at the bar or in the prepackaged drinks with liquor companies as an idea. Is that anything you're thinking about or not?

We have a -- a major objective list with our beverage business, with our ICEE business, which will now include bar mixes and some of the places that we can go and get to with the SLUSH PUPPIE organization, quite frankly, that we weren't able to before. So the 100% juice and the 50% juice and the bar mixes are all going to be part of an extension from the SLUSH PUPPIE group.

So do you see doing that yourself or going with somebody else to get into the restaurants instead of going it one restaurant at a time?

We will look to partner with somebody that's already doing the distribution process there and we're still in the process of determining who, what, where and why.

Right. Now on the liquor side, is that something you just want to stay on the mix side and let the liquor companies?

We're not in the liquor business, we can make a mix and get that there. And it's not something that's at the top of our list to do this summer.

Right. In your acquisitions that you've made going forward in the next year, do you see the acquisitions on a cash flow basis, where do you see them, you know, helping you?

We expect them to be accretive in earnings per share, and before they get accretive, I would hope that they're cash flow positive. You know, in the past three years we've made three, perhaps four, acquisitions, most of them little, we had the Country Home acquisition, which was a bankrupt company which we acquired [INAUDIBLE] and now it's contributing. We bought the beverage business of ICEE of Hawaii this past January.

And SLUSH PUPPIE about a year ago, and about a year and a half ago we bought a small Pretzel competitor with about $15 million in sales, Snack Works. All of these little businesses, all unique, and all like special fits we were able to integrate them and consolidate them within our system and all of them have produced both sales and have had a positive impact on earnings and have been accretive in earnings per share. We've done that over the years, 20 years we've been a public company. We have some unique talents and resources in smelling these things out and acting on them. And we think that we are wiser for the experience and sharper for the expertise. So we look forward to doing a couple more of these.

Thanks.

[OPERATOR INSTRUCTIONS] Brian Rafn is online with a follow-up question. Please state your question.

Relative -- you guys have been certainly great consolidators over the year in adding things and then organically building them. What are you seeing, Jerry, as far as multiples on EBITDA, multiples of sales and the availability of niche sized package food companies that you guys are always constantly perusing?

That's a tough question. Right now it's kind of competitive out there. There's new ways to go to market. Your good things are being packaged and auctioned off. Even some of the bad things are being given a cosmetic coat of shine or paint and being packaged and auctioned off. We participated in some of these that we didn't get. And we're still participating in some.

I know that -- hey, we're trading at a decent multiple. And so in the past we've always used cash for acquisitions and we've made sure that they fit, and we've made sure that they've been accretive.

And we found things, we're able to fit things for one reason or the other that others have either let go or shunned. We will continue to focus on that kind of special J&J segment that we do.

As far as some of the others in there, you know with multiples being the way they are and they are down a little bit from, perhaps, six months to a year ago, we're just going to be real, real careful before we quote, unquote bet the store.

Yes, well, you've got plenty of cash and if you get a looming recession, I think you've been the master, you can teach a Harvard course of buying businesses at the bottom of the cycle. I think you've done that superbly.

One of the differences is this is like all of us feel this way. Our cash, our dollar, and I've kind of taught and told my people continually over the years, treat every dollar like it's your first, or your last. All right. Sometimes I've got to relax a little bit with that. I'll let them monkey around -- not monkey around, but ease some of the restrictions. But we're looking at things and we expect to be active on that front again.

Okay. One closing question. Can you guys give us a sense, I think you talked about internal growth of Pretzels, I don't know if that was in pounds shipped or capacity. Can you give us a sense of what your total Pretzel operations, either in volumes shipped or in a percentage of the marketplace, you know, thick, soft, fills, the whole gamut. And where that is, or maybe how big that is in relation to the whole Pretzel market domestically?

Well, we are quite a sizable share of the whole Soft Pretzel market. I would venture to say that we're more than 50% and maybe some people would have us, like at the 60% range with a lot of other people making up the other 40%.

Right.

Let's assume our sales are running at roughly $500 million right now and I would say Pretzels would be about 25% to 28% of that.

Okay.

So we know we've got to grow the category.

Right.

And we're constantly developing products and looking for day parts and other menu offerings to expand the category. And we will be the leaders in that category like we have been.

Okay. Good enough. Super job, guys.

Thank you.

[INAUDIBLE] is online with a follow-up question, please go ahead.

Hey, Jerry?

Yes?

Hi, it's Mitch.

Hey, Mitch.

One last thing, the bakery, you know, flat performance, I see private label sales I guess were up, but with your growth at like such, you know like it's Wawa, I'm surprised were there other things that were down? I mean it just surprised me that bakery was flat in the quarter?

Yes, Country Home did not have a great quarter. All right? The Wawa business is fine. But Country Home did not have a great quarter. And with some of the reformulation in the cookie business, and a minor, you know, customer shift in there. So that made up the major reason for the flat sales.

What's the reformulation in the cookie business?

Well, there's a lot of schools that have essentially taken them off the menu.

Okay.

Until the trans fats and the sugars are formulated out.

So what what's the outlook for the bakery?

I'm sorry.

What's the outlook for the bakery as you head, you know, into the fourth quarter in the early part of next year? I mean do you see this continuing for a period of time?

I hope not. We're going to be doing everything we can to make sure that it does not. I don't look at this as a long-term negative.

Okay. Okay. All right. Thank you. That's it.

Thank you, Mitch.

[OPERATOR INSTRUCTIONS] I show no further questions at this time.

I want to thank everybody for participating, I look forward to speaking with you again at our next quarter's conference, our year-end call. Bye, now.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating, you may all disconnect.