J & J Snack Foods Corp (JJSF) 2021 Q2 法說會逐字稿

Welcome to the J&J Snack Foods Second Quarter Earnings Conference Call. My name is James, and I'll be your operator for today's call. (Operator Instructions) And also note this conference is being recorded.

I'd now like to turn the call over to Daniel Fachner. Dan, you may begin.

Thank you very much. Good morning, everyone. I'm Dan Fachner, President of J&J Snack Foods, and we're just so excited to talk to you today about our Q2 performance.

While we all are continuing to see the impacts of COVID-19 on our business and personal lives, we are starting to see some real positive momentum in the business. The environment is changing as more venues are opening, capacity restraints are being lifted, more people are getting the vaccine and overall consumer confidence is improving every month.

Our J&J associates have worked so hard, and I'm really so proud of them over the past last year to manage through an unprecedented year, and we are in great position to bounce back as traffic in our customers' venues and retail outlets recover. Despite the challenges of this past year, our financial position remains strong, and we continue to improve our liquidity, even as profits are challenged.

Joining me today in the room are Gerry Shreiber, Founder, Chairman and CEO; Ken Plunk, Senior Vice President and CFO; Marjorie Roshkoff, Vice President and General Counsel; Bob Radano; and Bob Pape, Senior Vice President of Sales.

Let me take a few minutes to review our results. 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 the 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.

So results of operations, really excited about it. Net sales were $256.2 million for the quarter, a decrease of 6%. Sales improved throughout the quarter, led by venue openings, accessibility to COVID-19 vaccine, improving consumer confidence and the spring season. Both our Food Service and Frozen Beverages businesses improved substantially during the quarter due to these improving consumer trends. Our retail business again continued to hold strong, growing at 17% in the quarter. Operating income was $7.2 million for the quarter, a decrease of $3.8 million compared to last year. Improved sales volume and a strong focus on cost efficiencies helped drive improved gross margins and profitability when compared to last year.

Now I'd like to review the results of each of our business segments. Food Service. Sales to Food Service customers decreased only 1% for the quarter, an improving trend when compared to Q1 2021 that had declined 13% versus the prior year. Traffic continues to improve as theaters are reopening, entertainment and amusement venues increase capacity and strong growth across QSR and casual dining restaurants.

Soft pretzel sales decreased 19% and frozen juices and ices increased 12%. Churro sales were relatively flat for the quarter, and sales of bakery products declined 7%. Our handheld business had a strong sales quarter, exceeding last year by $12.5 million or 168%. That was driven by a new product developed for one of our wholesale club customers, as we previously discussed. Operating income in our Food Service segment decreased $1.9 million in the quarter, driven by lower sales and product mix. Gross margins improved progressively over the quarter, driving a much improved profitability versus Q1.

Retail Supermarkets continue to do really well for us. Our retail business continues to perform well as sales increased 17% for the quarter. Those sales were led by our SUPERPRETZEL brand with an increase of 28% in the quarter, frozen juice and ices sales were up 22% and sales of biscuits declined 2%. Handheld sales declined 28% for the quarter. Operating income increased $2 million or 47% in the quarter, driven by higher sales and operating income margins near 15%, over 300 basis points better than last year.

Frozen Beverage. Sales of the Frozen Beverage business segment were down 32% in the quarter. Beverage-related sales were down 42%, driven primarily by a 40% decline in gallons as traffic in theaters, amusement parks and retailers faced continued impacts from COVID-19. These trends are improving, though, compared to a 56% decline in gallons during our first quarter as consumers returned to our customer venues. Service revenue declined 16%, almost entirely from a cancellation of one of our key customer's preventative maintenance program.

Machine revenues decreased 36% due mainly from slower customer expansion and replacement during another COVID-19 impacted period. Our Frozen Beverage segment incurred an operating loss for the quarter of $5.2 million as the COVID-19 restrictions continued to pressure sales. While these sales challenges continue to impact gross margin mix and efficiency, margins improved steadily across the quarter, and operating and profits improved over $5 million when compared to Q1.

Consolidated. Gross profit as a percentage of sales was 23.8% this quarter, down from 25.5% last year. Gross profit percentage decreased because of the previously mentioned COVID-19 sales pressure on our Food Service and Frozen Beverage segments. Total operating expense as a percentage of sales was 20.9% in the quarter, leveraging 60 basis points compared to last year's 21.5%. Total expenses were $4.8 million, below last year, through diligent management of some variable expenses in our operations. I'm really proud of that accomplishment and what we were able to do. Net earnings for the quarter was $6.1 million, down from $7.3 million last year.

Our capital spending and cash flow. Our cash and investment securities balance was $280 million as of March 27, 2021, an increase of $2 million from our September year-end. We continue to drive positive cash flow, and our balance sheet and liquidity remains strong in this challenging COVID-19 environment. We continue to look for acquisitions and remain focused on the long-term growth and opportunities of our business. We spent $19 million in capital expenditures through 6 months ended March 27, 2021, as we continue to invest in our plant efficiency and growing our business. We estimate our spending for the year to be about consistent with prior years.

A cash dividend of $0.575 a share was declared by our Board of Directors and paid on April 13, 2021. We didn't buy back any shares of our stock during the quarter. Our investment income this year was $0.6 million, $1 million greater than prior year's second quarter due to improved market conditions. We are really encouraged by this quarter and look forward with great anticipation to the rest of the year.

We want to thank you for your continued interest in J&J Snack Foods, and I will now open it up for any questions and answers. Thank you very much.

(Operator Instructions) Our first question comes from Ryan Bell.

Could you provide some details about the trajectory of the improvements throughout the quarter? You've highlighted that in some of your comments. And then maybe give an indication of where performance stands for Food Service and the Frozen Beverage business in the current month?

Sure. Ryan, I'll take a crack at that, and then I'll let Ken Plunk answer some of the questions as well. But the quarter continued to grow as we went throughout the quarter. So January and February were pretty much the same, but March really started to take off, and we're starting to see that continue through the next quarter.

On the Frozen Beverage business side of the business, we saw a great increase from quarter 1 to quarter 2. And as we ended Q2 with the Frozen Beverage business, we even saw a profit in that business, which was really encouraging as we look forward to the rest of the year.

Ryan, Ken Plunk here. I would just add, I think your question kind of is how did things progress through the months of the quarter. I would say February quarter-to-date, particularly if you look at Food Service, it was still considerably better than Q1. So I think we ended quarter-to-date through February probably at a 50% improvement over Q1. You add in March, when things opened back up, when we got into spring season, March certainly helped that number as well, ultimately driving to Food Service being down just 1%. So -- but it wasn't just March. It was healthy gain throughout the month, but March certainly played a bigger impact on that. For Frozen, March was really when we saw the business turn around, theaters started announcing they're opening up, New York is open, California is open, capacities are increasing, amusement parks are expanding capacity.

And I think essentially, we had thousands of venues that opened up during that period of January through March that we didn't have a year ago.

We did really peak during the March month.

So the Frozen business really benefited from spring, and we really leave the quarter with a lot of confidence as to what we're going to do in April and into Q2 as we see that business rebound.

Great. That's very helpful. And in terms of timing of shipments, is there anything that we should be expecting for Food Service and Frozen Beverages, maybe selling in a little bit more to help up rebuild inventories as parts of the economy are already opening? Or is it just -- or is that not as relevant?

Can you elaborate a little bit more, Ryan, on your question to make sure we answer that.

Sure. I just wanted to see if some of the improvements, say, that we were seeing in the Food Service business and the Frozen Beverage business, was that due to shipments, the timing of shipments rather than the demand on the other side, as I would imagine? Some businesses are going from being fully closed to reopening or opening up more locations and they need to build up their inventories.

Well, we can see demand to remain high at this time, Ryan, and we are encouraged by March and ensure there was some backlog of some supplies that were left, but we're seeing a continued demand as we enter into April here.

I don't have a number for you, Ryan, but I think you're asking if was there sales pulled forward as demand peaked all of a sudden. I would say that would be marginal. I mean it steadily picked up throughout the quarter, but I certainly don't see where there's anything material in terms of sales being pulled into March and not consistent. You should expect much of the same improvement, I think, as we go into the second quarter.

Okay. Perfect. That's helpful. And then I think the last question for me. Retail business continues to perform well. Is there anything -- any way that we should frame that as we lap some of the tougher compares and some of the demand shifts towards away-from-home? Is there anything potentially incremental about that business that will stay after the pandemic?

Well, we're continuing to see good momentum in that business. We're certainly going to start to cycle 2 of the biggest months that retail had last year in that April and May time. But we are continuing to see good sales increases in that area. Bob, do you want to elaborate on that a little bit?

Yes. I think that you'll continue to see the business be strong by virtue of our promotional planning with our customers and also new product distribution that we've secured that will start to bear some fruit as we get into Q3 and Q4.

Next question from Jon Andersen.

Congratulations on some of the good news in the quarter.

Thank you very much. We're excited about it. We're excited about the momentum.

I just wanted to revisit one of Ryan's questions, if I could, and maybe it's for Ken. On the Frozen Beverage business, still trying to understand, like if we think about March or how you exited March in the Frozen Beverage business, what kind of performance you were seeing on a year-over-year basis? Were we kind of back to level? Were we still down? At what kind of rate? I know there's been real trend improvement sequentially, and it sounded like it really accelerated in March, but it would be helpful to have some sense of kind of the exit trend in that portion of the business.

Yes. Thank you, Jon, and good question. Yes, March, for example, in the Frozen business, it was our first month in many months of profitability. So as you look at March by itself, it was a profitable month for Frozen, where we've struggled with sales and margin. Proud of the month of March. Sales, I think we're probably roughly 90% of FY '19. So you're starting to see that claw its way back to kind of call it our base. And then even gross margin, while not entirely back, was within 200 or 300 basis points of kind of what I would consider a bit more of the run rate for the Frozen business at probably around 30%.

That's super helpful. I do appreciate that additional color. Okay. So let's see. Maybe for Dan. Dan in your new role, you've had several months now, not to put you on the spot, but I'm kind of curious as you've kind of surveyed the business if there's any -- how you thought about maybe changes, whether there are things that you think the organization can do from a structural perspective, maybe an emphasis in certain areas that could benefit the business in aggregate going forward? So anything, maybe a little bit new or different, even if it's on the margin or on the periphery that you think we could look forward to going forward with some new eyes on the business? Yes.

Yes. Thank you, Jon. Well, as you know, this has been a great business for a long time. And so coming into it with some fresh eyes, able to do some new and exciting things as well. I think I mentioned this to you once before. We have now hired on a new CMO who had 22 years of experience with Coca-Cola, and he's come in with some fresh ideas around marketing. And we're looking at ways to kind of do a brand stretch with both our ICEE and SUPERPRETZEL brands, finding ways to expand those strong brands out and sales-wise.

On the operations side, we're doing some exciting things there. We're looking at distribution centers, and we're looking at transportation and ways to do that maybe a little bit different. We have organized the procurement group and the R&D in alignment in ways that we think that there might be some cost savings there, but also some efficiencies. We've got some really great growth going in the sales side, some really tremendous energy going around that.

You mentioned on ICEE. And I think on our last call at ICEE, we talked about some diversification of outside of the theater groups, and we've had some really good success. We have a couple rollouts going on in that group right now, both Golden Corral and a QSR chain down in the Southeast. We're picking up every rock. I think I had said that to you once before. We're picking up every rock and being able to improve what we think margins in the future. I think that will continue to show. It showed a little bit this quarter. I think it will continue to show next quarter and even greater into quarter 4. I feel like we are hitting on all cylinders, quite frankly. I think we've got a good leadership team in place and have uncovered lots of different areas to make this company even better than what it's been, and it's been a great company all along. So I think it's a great question, and I'm just really encouraged, Jon.

That's great to hear and I agree, it's been a great company for so many years and look forward to it continuing to be. The last question for me is just -- it's interesting, with the demand coming back on your away-from-home business, you're already kind of back -- well, you're seeing improvement, obviously, both -- in both segments, Food Service and Frozen Beverages and, at the same time, retail growing -- continuing to grow. Is there anything -- I mean is supply just being able to kind of meet demand? I mean this might be the cut -- the reverse of what you've experienced over the last year, but how are you feeling about your ability to kind of meet demand with high service levels going forward as things do begin to continue to return to normal?

Yes. I think that is a great question, and it is one of the areas that we're heavily focused on. Just like you said, it started off with the role, really picking up every rock and looking at ways that we can improve margin and grow sales. I think we're well on our way to doing that. Now we have this labor shortage nationwide that we're having to deal with. And so we're looking at each plant and evaluating it closely and finding ways to make sure that we get the labor in there, so that we can keep up with this peak demand that we're going through.

Maybe I'll tag one on to that because you may be thinking about it. So talk broadly, and this could be for countermeasure, talk about cost inflation and pricing, your ability to price or desire to price. Just how should we think about that going forward? Because it's becoming obviously a big talking point for a lot of different companies.

Yes, it really is. And we are seeing some costing coming to us in certain areas like oil and flower and chocolates and plastic cups, things like that. And so we are -- we have passed on pricing on the Frozen Beverage business, and we are in the midst of evaluating that on the snack food side of the business as well. Hope that we can see some impact from that probably by the time that we get it implemented in the fourth quarter.

Our next question is from Todd Brooks.

Congratulations on just the visceral start of the recovery year. [Sounds great].

Yes, it really is exciting. It's a good time to be on the call, for sure.

Absolutely. Just a few questions. Ryan and Jon covered a lot of mine. If you look at your Food Service customer base, can you maybe quantify how much of that base is fully reopened, reopened with capacity restrictions or still closed and the reopening still to come?

Bob, could you quantify that in any way? What I would tell you is it's continuing to open piece by piece. So some of them are advanced. Certainly, the QSR side is doing really, really well for us, and the restaurant side is coming back. The theaters are coming back slowly. They're at about a 30% opening through the first -- or the second quarter. We expect that to jump to the 50%, 60% range during Q3 and then as high as 80%, 85% in Q4. The school business is still somewhat slow to open, but really encouraged what might happen there in the fall. Everything that we're reading and hearing is that many of the schools, college campuses, K-12 will be back in action in the fall. And so we're really encouraged by that. Bob, do you have anything more to add?

Yes. Also on the sports and entertainment side, we've been very encouraged by the results that we've seen there against S&E, and we anticipate that's going to continue as capacities are increased.

Yes. And one more, just made me think while he was talking. The amusement sector, we expect to have a really, really strong year in the amusement parks. And in March, we were up to that 90%, 95%, 100% range in the amusement parks, and we feel like that will continue all the way through.

Yes. And I would just -- [want to saw and open that], I heard on a listed news this morning and they were talking about basically relieving requirements on mask outside.

Exactly.

So as vaccines are getting out there and as you're seeing Dr. Fauci and these experts saying you can be outside without a mask, particularly if you've had the vaccine, we expect that just be another feather in the hat, as particularly the sports and entertainment, amusement park-type parts of our channel recover.

That's great. And then we had spoken earlier on in the pandemic, and I'm wondering how it's benefiting J&J now. That like a lot of the restaurants, you get to theaters, amusement parks, stadiums, that a lot of the operators have condensed the menus. And as they're reopening, and I'm thinking especially in theaters and maybe with a more streamlined menu, but that may be a higher percentage of J&J content that you guys didn't lose any of your slots, so to speak. Is that still a reality in a lot of the foodservice channels that are opening up?

Very much so. There are -- they have done that. It is, and it's really played in our favor, Todd, in almost all cases that I can think of sitting here today, where they have limited the SKUs, both J&J and the Frozen Beverage side. Both sides have withstand that and been a part of it. So when you think about the theaters, the information I'm getting back from them is they measure the cents per head spend, the people coming in, in the snack bar, and that's up about 20%. And both the pretzel and the ICEE side has stayed in. When you think about some of the other locations, like maybe a wholesale club, where we're continuing to have some really big success, it's a smaller menu, but our products are still there. So they have limited it, but that's kind of played into our favor.

Okay. Great. And then a final one. Just looking forward to the summertime and what I am and others are expecting will be kind of an explosion in travel by car as people get out, they vacation again, they just start living again. Update on your C store channel, kind of penetration, additional products and categories that you're bringing to that channel? And any sort of distribution gains with new partners on that front?

Yes. C-stores have continued to do really, really well for us. J&J had put together a team a couple of years back to really go after the C store, and that has paid some real benefits for us. And we continue to see that. We continue to see some opportunities on the Frozen Beverage side. As we speak right now, we're in conversations with a couple of the large C stores that I think we'll see some really good expansion in before the end of this year. And we see that as a growth market for us and continue to be a growth market on all sides of the business.

Todd, you still there?

Hello?

Yes, I'm sorry. I thought he was finished, so I let him go.

All right. Let's just make sure he was finished real quick. Let's ask him.

(Operator Instructions) Here, we are. Go ahead, Todd. I do apologize.

I was finished. No worries. I was finished. Just congrats, congrats to everybody on the momentum.

Thank you very much. Really appreciate it. Look forward to following up with you.

Our next question is from Rob.

Is this Rob Dickerson?

This is Rob Dickerson form Jefferies, yes. So just a couple of questions on the Food Service line. So Dan, I thought I heard you say or kind of allude to maybe last quarter, the hope, at least, right? Hope and prayer was, as you kind of got through the year, that you may be able to kind of get back to kind of prepandemic levels, and I'm just speaking to revenue now. In Q2, your revenues in Food Service were approximately $6 million lower relative to Q2 fiscal '19, right? And even though some parts of the business still declined a bit or less so than we saw last quarter, obviously, that Costco handheld business has really helped support, which is great, right? That's incremental.

So the first question I just have is, if I look at Q2 and say, well, you're only $6 million lower in Q2 relative to Q2 '19. But then given the seasonality side of your business, usually you're putting up higher revenue levels in the back half of the year. I'm assuming, right, that progression sequentially from Q2 kind of relative to the back half of '19 would continue, right? And I kind of asked because, frankly, I think consensus is still kind of under forecasting kind of what that potential could be in the back half of this year. So if you could just kind of clarify what happened in Q2 versus kind of prior comments as you move through the year? Would you expect maybe we can get kind of back to those prepandemic levels as you get through this fiscal year?

Well, we were really encouraged with Q2. And as we've said, really loved the way that it finished, right? March was really strong. January, February, up from Q1 and then March was really strong. And we're continuing to see that after March. I do believe, Todd, that -- or Rob, that we'll be able to get up to those levels again, right? Now the mix is still a little different than what it once was. And so we have some growth that needs to happen on the Frozen Beverage side still. Whether that will get up to the pre levels by the end of the year, I'm not sure.

We believe that we'll continue to grow on the retail side, although we're up against a couple of tough months, but still believe that we'll be able to grow on the retail side and really love what we're seeing on the Food Service side. So where maybe I had a hope and a prayer a quarter ago, I'm feeling more and more confident that we can get up to those levels by the time that we end the year. Mix might be a slight difference, but I think we can get up to those levels.

Got it. Okay. Great. Good answer. And then I guess just on the margin side, and I guess, again, this is kind of more directed to the Food Service business. Like I said earlier, $6 million lower on a revenue basis in Food Service in Q2, but almost like $13 million lower on the operating profit side, right? So revenues seem to be kind of inflecting a little bit more quickly than the profits are. And -- but again, given seasonality of the business, given usually total company, right, your margin is a little bit higher in the back half.

So I'm just curious, are there specific COVID-related costs that could increasingly roll off in the back half of the year? Number one. Or is it more of a -- maybe pricing catches up a little bit more to cost inflation in the back half of the year? And lastly maybe profitability was just better, like in March relative to January and February, like you said on the top line? I'm trying to kind of get a feel as to kind of the timing recovery potential just in Food Service on the margin side as we get through the year? Hopefully, that's clear.

Yes. I think so. Ken, do you want to tackle that?

Yes. Rob, great question. Again, similar to what I'm saying about Frozen, gross margin, it's steadily gotten better for Food Service over the month of the quarter. If you look at just the quarter, it was 100 basis points better than Q1. And if you look at each of the months in the quarter, each month, the gross margin improved. March gross margin was 40 basis points better than February gross margin. So as we mix in more sales of higher-margin products like pretzels and churros, and we got to get the engine going with volumes and [even less] to leverage expenses better, we start to see those margins creep back up.

So I think you can expect to see with more sales that improvement continue to notch up month after month to where we think we'll get back to somewhere in, kind of, call it, our base level, if you call FY '19 base. I think the question is, will we get there all the way by the end of the year? Not sure, but I expect us to get much closer to that.

And then mix of new products plays a role in that as well. We have to just kind of see how that plays out. On the COVID side of expenses, we're still spending $720,000 a quarter on COVID and probably expect to spend that number, maybe a little bit less in Q3. That will be compared against when we started to spend against COVID-related costs last year. I don't have that number off the top of my head, but the balance of those 2, I don't expect to have a material impact either way because we're going to continue to do what we need to do to keep our folks in the plant safe.

Got it. So I mean unless there's like some material change kind of on the COVID front, whatever that means, that probably holds steady for a bit and then like, hopefully, over time, whenever, it probably gets lower. Is that kind of a broad fair assumption?

Yes. I think that's a safe -- this is Dan. I think that's a safe statement, Rob. We're continuing to evaluate it really closely. We get together as a group monthly and talk about what we need to do to keep people safe. We're looking at some new ways to do that, where in the past year or so, we've had stations that employees have to come through, and we're looking at some scanning machines now and testing that, which might take some of the costs down. But the key for us is keeping our employees safe and making them feel comfortable about coming to work each and every day.

Yes, fair. Okay, cool. And then just last question. Just on the cash side, look, and, again, you got through the pandemic, I should say, very well on the cash side. So congrats doing that. Cash position now is strong. So 2 quick questions. I think you had said before, there might be some CapEx needs in some of the plants. I don't think there's like a CapEx guidance for the year, long term. Last few years, you're spending about $60 million in CapEx. Is that about right, maybe a little bit higher? And then just a second quick follow-up is, just in terms of acquisitions, I know you see you keep looking at it. Maybe any color as to kind of like, in an ideal world, right, hypothetically, what kind of acquisition would you like to make? So CapEx and ideal acquisition.

Yes. I think what we've said around CapEx is that we'll be spending about the same thing we have in previous years. That mix in CapEx might be a little bit different. We're probably spending a little heavier on the J&J side and a little lighter on the ICEE side, although that might change in the next few months as we roll out a couple of new programs on the ICEE side. We continue to watch that really, really closely. We put together a good CapEx team with cross-functional people on it and looking at our plants and making sure that we are doing the right things to be the leaders, not just today but in the future. And so if I were guessing, the CapEx might stretch a little bit higher than even what we've stated. But what we have stated is it will be around the same amount.

On the M&A front, Ken and I are reviewing things weekly, for sure. We're continuing to look, but we want to be careful and find the right thing. We want something that fits in with what we do today, and that adds value to the company in the future. If I had my perfect world, that would be something probably in that $50 million, $60 million range. But I'm not limiting us to what we're looking at in that range either. So we're being active, but we're also being cautious and careful to make sure that we make the right choices there.

I would just add to that. Rob, the majority of that CapEx spend is on, call it, more strategic CapEx, driving efficiencies in the plants, innovation, that sort of thing. So think about of the CapEx we're spending, the majority of that is being focused on strategic areas that drive return.

Yes, fair enough. Well, I mean the question wasn't asked because I think it's a bad thing. I just want to make sure my model is right. That's all.

Thank you.

Our next question is from Ryan Hamilton.

Congrats on the rebound. Being last in line, I think most of my questions have already been answered. You talked about labor and cost inflation. Anything on the logistical side that could slow down this momentum potentially?

Well, certainly, freight has gone up, right? And we're continuing to hit those headwinds. But we're -- as we talked about, we are evaluating increases on the Food Service side and the Retail side right now, and we'll be taking that into consideration. We're doing some things, I think I mentioned earlier, around transportation that we think has the potential to save us some money there, too, even though the cost of transportation has gone up. And so we're working really hard to make sure that we maintain and grow the kind of margins that we have.

Sounds good. I don't think anyone can argue that J&J didn't survive the last 12 months in really good shape. Any early indications that you guys are taking market share from companies that were less fortunate?

Well, we always think we are, right? And that might just be because we're bold like that, but we always think we are and would like to think that. I don't know if we have exact facts on that. But I will tell you, our competitive nature would want us to think that we are and would want us to go out there and make sure that we are in the future.

Sounds good. Are there any indicators that you guys are seeing that displays that or no? Not that you can share.

Yes. Nothing that we have, Ryan, that we could share with you.

(Operator Instructions) And a question from Robert Costello.

Just one question on the Food Service. Historically, that's been an area for growth. And with the recovery in the restaurant industry, is there anything new that you're going to do differently with regards to the products or technology or selling to the customer than, say, the last 3 years with the recovery in the industry right now?

Yes. Honestly, Robert, I don't know that there's anything new or different, except a greater focus on doing what we do today really, really well. We've had a lot of conversations, just had a leadership call last week. Lot of conversations about being better at what we do well today. And so I don't know that we have anything new in the way that we're doing it, but maybe just a greater focus. Bob, would you?

Yes. I think we have a strategic idea of where we want to go with our products, who our customer partners are and then our base products are going to continue to help us grow the company.

So the end market customer on the Food Service was -- you used to do restaurants and you had the waffle fries with Burger King. Is that an area that you're going to continue to innovate with, with new product? Or are you trying to expand beyond that?

Yes. We will continue to do that. And just as a side note, I said this earlier, the QSR channel is doing really, really well for us. We continue to grow really strong there right now and have some tests in place that we are hopeful in the future as well. So we will continue to do exactly that, to come up with some specialty items for those kinds of places.

(Operator Instructions) And it looks like we have all our questions answered.

Great. Well, thank you very much for being on the call today. We really appreciate it. We're really excited about the things that we're doing inside the business and the momentum that we see as we close out the second quarter and are excited to have the opportunity to get back together with you 3 months from now and hopeful about the momentum that we're seeing. So thank you very much for spending the time with us today. And we look forward to talking with you soon. Have a great day. Bye-bye.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.