Welcome to the J&J Snack Foods Third Quarter Earnings Conference Call. My name is Cynthia and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note that this conference is being recorded. I will like to turn the call over to Mr. Gerry Shreiber. Gerry, you may begin.

Good morning everyone and thank you for participating for our third quarter conference call. Let me begin by introducing myself, I’m Gerry Shreiber, President and CEO of J & J Snack Foods and with me today on the call, I’m going to left to right, Bob Radano, our Senior Vice President and Chief Operations Officer; Dennis Moore, our Senior Vice President, in charge of accounting and administration; Robert “The Bull” Pape, Senior Vice President, in charge of sales, Bo Powell, Vice President in charge of Food Service sales and Gerry Law, how is Senior Vice President in charge of Marketing and R&D and also my Personal Assistant. Also with us on the call remotely is Dan Fachner, who is President of our ICEE subsidiary. I will begin with the obligatory statement. 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 6% for the quarter and 5% for the nine months, 2% for both periods without the benefit of the sales of Hill & Valley, which was acquired this past January and an ICEE distributor which was acquired this past May. For the quarter, our net earnings decreased by 6% to $25.3 million or $1.34 a share from $26.8 million or $1.43 a share a year ago. For the nine months, our net earnings were $54.8 million, $2.91 a share, a decrease of 1% from the $55.1 million or $2.95…

[Operator Instructions] And we have a question from Francesco Pellegrino. You may begin.

I noticed you did an acquisition during the quarter that you didn’t discuss.

Well, we did two, they were small. They are nice fits, but look at that bigger and we think better things, but sometimes you pick some things up along the way because this is the right thing to pick up. We acquired an ICEE distributor that was operating in the south and they were good distributor in there and we have completely integrated them. And the Auntie Anne’s was really we believe in the long run it's going to be significant. We didn’t buy the mall operations, we bought their products that were in the supermarket. I'm not saying there's going to be any padded here because the malls are just suffering all over the country. I read an interesting article yesterday that most of them, 25% to 50% of them are going to be gone in the next five years, but we acquired their products that were being sold in the grocery market. It's a good name. And Gerry Law engineered that whole deal for us and we're looking forward to selling it right next to our products and grocery and growing it.

I just wanted to talk about your other most recent acquisition Hill & Valley, did it lose money during the third quarter?

No, it did not lose money cash on cash all right, but it's operating income was significantly off what was projected. And a couple of us here have what we call rabbit ears, we hear that, see that and we're involved. We’re extremely confident in the management group that they had, we think that the fourth quarter is going to be better and the first quarter next year will be even more better. So it has not anywhere as near panic time and we're extremely confident.

If I could just point, but in yesterday's press release, since you acquired Hill &Valley, Hill & Valley has contributed $102,000 dollars in operating income, right. In the second quarter it generated $144,000 alone. So the difference between that is a negative number.

That’s’ down $50,000, marginally down.

So it is losing money?

Lost money in the second quarter marginally.

But when I started thinking about the margin of Hill & Valley, when I do the margin calculation for the second quarter, I get a 1.5% operating margin, there's no operating margin in the third quarter. This was acquired for six times EBITDA, you paid $31 million that would imply a $5 million EBITDA valuation. I haven't really heard any issues about low operating leverage that you're not getting enough sales volume for the product line, what's going wrong with the integration here?

Overall we've been disappointed with the sales in the mix coming out of the business. So the sugar free mix gas been a little bit lower and it contributes a little bit less than that we had planned, we’re working on spinning it around and we are confident in the future of Hill & Valley.

Just to shift gears to one of your legacy products. So soft pretzel, so the soft pretzel category, do you think maybe the category had sort of reached its full impact just given where your market share numbers are and just like the modest revenue growth we've really seen over the past six or seven quarters, we’ve seen maybe one impressive quarter, but we've seen just really modest revenue growth.

No I don't think so. I think that if you take each business segment and you look at our soft pretzel position in that segment and you look at some of the growth that we're having outside that, we were still very much bullish on the future of soft pretzels not only its growth, but our market share. And we've added [indiscernible] in the past three months that have been specially dedicated to some of what we call our challenges in this business segment both in C stores and the education system, opportunity channels, what does that mean Bo?

But we’re adding people in there and we have full confidence that we can grow that 4% or 5% on a regular basis. I'll be pleased and I think you guys will be pleased.

I just want to talk about your manufacturing facilities because I get a geographical footprint for manufacturing makes sense based upon where your customers are located, but there is a very high concentration in the Northeast for soft pretzel manufacturing. And when I look at the Northeast there's five different soft pretzel manufacturing facilities, two of them strictly just do soft pretzels while the other three have a couple of different products that they also manufacture. Is there a potential to maybe consolidate some of these facilities because there's a very, very, very high concentration of soft pretzel manufacturing in the Northeast. And I would just wonder if maybe you get a little bit more leverage if we consolidated these operations and to - I'm not saying consolidated into one or two locations but…

You raise a very good point, you have good instincts and that's something that we’ll address further probably in the next quarter conference call because things are in the works.

If things are in the work, is now the best time to do it just given the modest growth that we're getting in soft pretzels?

The savings and improvement in the manufacturing process combined with the logistics savings makes good sense.

And my last question for you is, so I think last year in the year-ago period you generated a really impressive operating margin in food service. It was 14.5%, you reported yesterday at 12.8%. That was enhanced by that insurance recovery, we're probably looking closer to like 11% operating margin. Given today's product mix, where do you think if we put manufacturing inefficiency aside, today's product mix, what type of operating margin can food service generate under the best case scenario?

A long time ago when we were in single digits, I remember saying 10% plus and my Vice President, Controller looked at me with glaring eyes, he felt it was too high. I would like to think that at some point we can get into the lower double digits 13%, 14% again. And everything we're doing within the plants to streamline production, to reduce labor, to improve engineering can add points to that.

If you can just turn Hill & Valley around [indiscernible] definitely doable, so thanks again for your time Gerry and guys.

And our next question comes from Jonathan Feeney. You may begin.

I was disappointed in all that discussion to have no puns about Hill or Valley, being in a valley and want to be on the hill or anything like that. But I have questions that don't relate to Hill & Valley. I would like to start if you could, if you could maybe talk - I’m sorry if I missed this, why the 29% decline in machine sales and as part of that does that broadly to all to some of the weakness in the convenience store channel I've seen with some of my other food companies?

What, it might not. Equipment sales for us we never had a geographic or a - it just - it comes and it goes, it follows no specific pattern. As the convenient stores remodel or build new stores, we have an opportunity to provide new equipment which leads to new sales, but it's the last I guess six to nine months, it's been a little off from what it was. And just like we had surprises maybe two years ago where we add a sudden influx and while I bought a bunch of machines for new stores in Florida, the last two quarters have been soft.

It may have something to do with becoming a star channel, let me ask you this way, do you see in any of your other businesses, because it doesn't seem like I don't know what the mix is of the different businesses, I know you have some bigger businesses have like soft pretzel have a pretty big convenience store advantage. Do you see any weakness in convenient store particularly in the quarter?

Actually with soft pretzels, there is more of a effort and a plan by design to sell more soft pretzels and other products to them. ICEE does a great job already with convenience stores, but ICEE was up against and it's to their credit that they were able to have plus numbers on beverage sales when they've lost again 300 Kmart in combination of Sears, Target has closed and remodeled a bunch of stores. So ICEE has been not back on its heels, but it has had to rally against some of the things that suddenly come out that are testing.

It's apparent on you the math with maybe the gross margin a factor was off of Hill & Valley. But I'm concerned about the gross margin more broadly on an apples to apples basis. On the quarter is it a struggle to where there is commodity cost increases or even distribution cost increases, is it - where there places where you tried to take pricing and you weren't able to get it or is that - was this always the plan to just the natural flow of the business?

Let me just say that pricing in today’s economy is difficult. And Dennis, you want to have a comment on it?

Well, we haven't had any pricing to speak of in the past year or so. And it’s very tough as Gerry said because we’ve not, you know, when it headlines out there about commodity costs going up and all that. It’s not easy, but it's, customers are more receptive to taking pricing [Technical Difficulty] flat or some cases down, they just won’t be - just can't get it through. So we're not anticipating that we’re going to have any pricing going forward or in the near future. In terms of expenses, the ratio of expenses to sales goes up as long as if our organic sales are in the very low-single digit increase as they have been and it's very, very tough to keep those expenses as a percentage of sales from going up because you've got your cost increases, your payroll cost increase, your group insurance cost increases, all kinds of cost increases [indiscernible] naturally and really you know [indiscernible].

Understood. Gerry just a clarification and a question too. You motioned $9 million in sales for the Auntie Anne’s retail business. That seems awfully small. Would you anticipate an ability to grow that. I mean what has been the constraints on that business in the past. I mean it seems - is it a very regional brand. And I seem to see it everywhere in the mid-Atlantic. Is it - and other - can you move that geographically, can you get better placement for that, can you talk about how big that could be?

Yes, yes, and yes. And not [Technical Difficulty] right there in the same set along side of [Technical Difficulty], it’s always advantage real or perceived when you can in essence [Technical Difficulty] the level of competition.

I'm sorry, there are competitors in the - who would be the big competitors in that category? It seems like kind of a niche item.

Competitors in that category – in grocery?

No, you’re saying, you’re talking about wrapped hotdogs and a sandwich and you know…

Anybody that's selling along side of us, but particularly if it comes to soft pretzel that was a natural fit, was it not? And [indiscernible] soft pretzel business, I believe for about five years and they had a good name. And we can - and they were building a business that had some potential we think we can do it quicker and we can have better results.

Do you have some experience, I think you do with some like the brand awareness that come - translating the brand awareness that comes with the food service brand. You mentioned the mall business, translating that to retail sales, how you go about doing that and how good of an indicator brand awareness, how well that translates over and I guess you mentioned, you were pretty quick to mention you didn't take the mall business, did you look at it? I mean, was that something you thought about?

Not often. It's a different business, it's a franchise business and given the general overall condition of the malls with more closing and certainly there are very few opening, it's not a business because of it [Technical Difficulty] we want to be exactly in.

Okay. Let me ask you then one final question. Interest rates and borrowing costs have never been lower really. I mean as far as the combination of depth of the credit market and what it costs to borrow. Does that - it would seem to me like you just saw McCormick borrow, a company that in my memory has never gone over three times debt to EBITDA, or go to five times debt to EBITDA for a deal. Does that drive your sense of urgency at all to make larger acquisitions or maybe go further afield from where you've gone historically to take advantage of that?

It kind of spurs our senses, but we’ve always had a defined strategy of niche products being the low cost producer and dominating the marketing and distribution channels. McCormick is a terrific company. They’re in the spices and this, I think it was French’s?

French’s and Frank’s Hot Sauce, all the sauce businesses of Reckitt Benckiser.

That was an interesting acquisition and I don't know whether or not given similar circumstances that we could or would take that kind of multiples for something.

And so, I guess does that mean you're seeing a lot of deals where their multiples are too high.

Some that are too high, but again like I mentioned in the last quarter and a quarter before that, we're looking to make bigger acquisitions, we’re looking to make acquisitions that have [Technical Difficulty] they’re not in the meat category and we’re looking to make acquisitions that are bigger and hopefully have management team and group. So it’s not for lack of looking or effort.

And our next question comes from Akshay Jagdale. You may begin.

I think that was meant for Akshay. This is actually Luvi [ph] on for Akshay. So I wanted to ask a question on some of the products that you guys have launched fairly recently, the ones that come to mind are, there was a Pillsbury handheld item OREO Churros. How are those products doing, maybe in terms of distribution and what are consumption trends looking like.

OREO Churros is still out there and we had some good hits last year in Walmart with some facings. Overall, with the Pillsbury handhelds, we've been less than satisfied with the sales growth there. It's been [Technical Difficulty] and we’ll give the comments to Bo. [Technical Difficulty]

I think within the category, we have made the entry into the deserved category. The products are different and we think that that’s a baking home product that can appeal to consumers. We got through our first year. There are some headwinds in the category, but we still feel given some of our capabilities, manufacturing wise that we can offer to consumers, a very high quality product and it gives them the ability to also have a baking home product. So we see some potential in the Pillsbury. It’s a great brand and the products are of high quality and we think that that will continue to move forward for us.

So, and Luvi, we can’t tell, it has been less than stellar, but it has not been terrible and we’re not giving up anything yet and our investment in this was very, very small and it made a lot of sense.

And the velocity isn’t deserved to, just less than [indiscernible].

Got it. And then so along those lines, are there any other new products or maybe licensing agreements that you guys are working on to the extent that you can share any of that with us that you’re excited about?

There are always things that we’re working on and looking at, but there’s nothing that we can share at this time.

Got it. Okay. And then going back to Hill & Valley, could you elaborate a little bit on what's really driving the confidence that results are going to get significantly better in the upcoming quarter? I mean, I'm sure there are a number of things that you guys are working on, but it does sound at least like you're calling for a pretty significant turnaround in a short order of time. So I'm just wondering if there's some specific factors that you have good visibility on that might be driving some of that optimism?

One of it, we have, I guess it's commitments, if not contracts on hand, which could go all the way out until September, October and through Christmas. So that we can visually see and knowing what our costs are and what our production has been, and we have some products in storage, so that's helping us have visibility to determine the profitability. Beyond that, we're just relying at this point on the talent of our management there and their budgeting factor and certainly they have performed well in the two years leading up to our acquisition. So we had a natural comfort level with them.

Okay. And then if I could just ask one last one, so just speaking more broadly in terms of the level of sales growth. So I think organic sales growth has probably been in sort of that 2% range for a number of quarters now whereas historically, this was more of a mid-single digit type organic growth business. I'm just wondering as you look longer-term, down the road, do you kind of - do you see a pathway back to that mid-single digit range or do you think this is kind of the - this low single digit is kind of the new normal, just given sort of the macro trends that we're seeing out there?

Well, we believe that we can get back to that mid-single digit level of growth. And that may be something between 4% and 6% without acquisitions. We've hired some people, recently in April, some people that have been assigned certain developments, certain targets, which include the education channel, which include to see store and healthcare. Now, it's early on. They've only been, they’re on for less than six months, which is 180 days, but they're starting to make some progress. As a matter of fact, we had some meetings going on last week and this week with this team to see how we can accelerate the process and what we really have in the bag coming into maturity for next year.

And our next question comes from Jon Andersen. You may begin.

I’ll tell you, most of my - almost all my questions have been asked, but I’ll lob a couple more in. Could you talk a little bit about the, if you take out the insurance recovery, the operating income in the food service business as you pointed out was down about 4 million, a little more than 4 million year-over-year and I guess I'm still trying to get a sense for how we should think about that, because you’ve called out a number of I guess things that could be considered more transitory, the pipeline shipments, I guess the funnel cakes last year, the push out of the, I think, you mentioned club store business in to the fourth quarter versus third quarter this year. Can you give us a sense, I mean is that the right way to think about it that that year-over-year decline is more comp related and temporary in nature or are there more structural things going on?

Oh, there's nothing structural or fundamentally different. Bob, do you have a comment?

I think there were, there were events that took place last third quarter and that provided a challenge for this quarter. But we don’t see that as a long term or product situation.

Okay. And Gerry, I think you said in your prepared comments that we should start to see operational benefits beginning in the fourth quarter, which does imply recovery I suppose in the margin profile of the business in aggregate in maybe food service more specifically.

End of fourth quarter, we are four months into it now.

Okay. Can you talk a little more specifically, when you talk about operational benefits, are these manufacturing changes you've made to improve throughput yield. What are the more specific operational benefits we should be looking for?

Exactly. We’ve completed several large projects now and put them in service and they work and they work. And we had little start up blues on them. So we should start to see the benefits, particularly in yield and efficiency from these projects coming online in a couple of plants right now.

Okay. And just the last one for me, it's on more of the customer channel orientation. So restaurants, I think historically you've talked about how you've built that business to $50 million to $60 million could potentially double that over time. Is that still your expectation sitting here today? And then the second part of that question is with the hiring that you've done to pinpoint opportunities and C-stores and healthcare and the educational channel, what kind of opportunity, how big could that kind of be over time when you think about those pieces of business that you're going after? Thanks.

Oh, you say with the hiring of the people and we think it's going to get us to this 5% to 6% growth in our overall food service category. One of the issues we're also fighting when it comes to club stores is that one of our major clubs, BJ’s, has closed down their restaurant unit, which was selling our pretzels and some other products in favor of leasing it to a restaurant chain. And we go through these things now and then. And sometimes, we’re able to recover and sometimes, it lasts a lot longer than what we think. We're also going through a little bit of that with target, which is going to both a re-modeling and a shifting of their target café and they are leasing it to other restaurant operators, but how we get hurt, have a cookie and a pretzel in there and most cases an ICEE machine. IC has been able to soften their loss by opening up a special [indiscernible] within the Target stores. But we truly believe adding these people and having them concentrate the efforts that we believe there are growth in will help the business and will get us back to our numbers. I read an interesting article just the other day on malls. Malls in America and how they use to be where we or our kids grew up, hanging out, that was the social life. They went there and they went there all day and now that has changed. It has changed not just significantly, dramatically in there. I guess 20 years ago, perhaps 25% of our business was in the malls. Now, it would not even be a weak 2% of our business. Where are they going now? Well, we're looking at ways to sell online. We're looking at ways to sell in these little village and small shops. We're looking at ways to get into more convenience stores and we're certainly looking for way, because the biggest restaurants in any city of every city in the country is schools. We have a decent school business and now we're trying to make it even more decent. So we are exploring all or most of the opportunities to get our products in and everywhere.

And our next question comes from Brian Rafn. You may begin.

Let me ask Gerry, from the standpoint of your experience, just in, if you go back over the last 10, 15, 20 years, if you look at some of the recent acquisitions. Gerry, how have they met kind of your expectation for sales growth? If you look at, forget about Hill & Valley, but like New York Pretzel, Philly versus some of the things overtime that you had, ICEE, Daddy Ray’s and that, what's been kind of your expectation or what's been versus plan.

Well, we’re pleased - essentially we're pleased. The jury's still out on Hill & Valley. Obviously we've made acquisitions in the beverage line and ICEE and all of them have worked out and some have worked out better than others and we've made acquisitions in the Pretzel group and we've rolled it into a category, but I can't protect, the only area that we made an acquisition was when we went into the retail business, we made an acquisition of something called Bavarian Pretzel shops, factories. It was about 60 stores. I expanded it to 80, never quite got my arms around it, we, as a company. Different kind of business, different kind of traffic patterns, constantly changing, remodeling and ultimately we drew a line and we are now down to a couple stores. And we're no longer in that business which is why I have a great hesitancy about expanding into that type of business today.

Okay. No, I would certainly remember that from that. Just ask you relative to the Pretzel business, the challenges and do you have a mature market share that - is it your thought that the growth in soft pretzels and that that the - the standalone pretzel itself really needs some of the line extension, iterations of fills and flavors and seasonings, or can you just still sell a raw pretzel, but in a different channel somewhere?

You're exactly right. We have all the line extensions, we fill them with cheese. We wrap them around a hotdog, we put Caramel in them. We put [indiscernible], we put all these things in that and we still sell some or all product in it. So and just the other day, I was in our Bellmawr plant which is our main R&D center and they're working on some product, what’s the hot stuff I tasted? Jalapeno. Jalapeno. No, I go through it, R&D, I talk to people, I pick up something and man, I took a bite into a little hot roll Jalapeno bite and I lifted up off my seat. I'm told this particular costumer and it’s the chain and it's way out in the West and they have a critical mass. They love it. So we're going to see if we're going to get that, we're going to get, but we are doing all these things and we can go from concept. This is our people with them, less in almost record time. Customers love that and that's been a factor in our restaurant, in quick service restaurant growth and people are good at it.

Let me ask you Gerry from that cycle time between a laboratory concept flavorings, ingredients, recipes to actually production, how, if you go back 10, 15 years, how much is that cycle compressed, how much faster have you been able to drive that?

I got it. It's like non-compatible, something that would take a year before, is done in a month to six weeks. And we're - I mean we get on a horse and we're moving.

Awesome. Let me ask you, in the supermarket channel, the old battle between shelf space national brands versus private label and what is the appetite for supermarket grocery stores coming to you for more private label recipes in that? What's your take on that here in 2017?

We do a fair amount of private label business. Some of our private label business were in partnership with people like Walmart. So we're partners with the grocers. We also make sure that our brands are the preferred brand of pretzels, the preferred brand of a tie in ice, the preferred brand of churros and all those things, we have established and maintained a leadership quality. At Mondelez, we're doing two or three items for Mondelez, one at either control brand or in their brand. So we have a fair amount of business that is, what we call, private label and mostly we have it because we're good producers and we've earned their confidence and their respect that our Daddy Ray's plant in Missouri, which we've only had for about eight years, ten years, we've expanded that a couple of times and the last couple of expansions has been in partnership with Mondelez.

Okay. I would imagine in this kind of low growth unit volume driven market that couponing and promotional and shelf slotting and that’s still very intensive.

Yes. It's intense.

Okay. Do you guys, maybe a question for Dennis, do you guys break out or discuss, I've not seen it in your press releases what new product sales are say for the quarter or trailing 12 months from things launched in the last two or three years or is that something that’s difficult because you got differences in the life span between one ingredient launch versus another, flavors of that.

It is in the Q and I’m not sure, and it’s in the press release as well.

Okay. I'll go back and check. Maybe a little bit forward asking, anything spring, early summer here, weather impacting obviously heat and that type of thing drives ICEE, it drives your frozen food, what is your sense here, this year 2017 versus what you experienced in 2016?

Last year, weather was terrific. I don’t like to depend or blame weather, whether it’s good or bad. I know, our third quarter, April to June was tough on us for weather. I talk to Dan Fachner at least three four times a week and Dan is out in California when he's not flying around the country, but one of the things I’ve always, we’ve got great weather, it's hotter than hell here, good, it's good for ICEE. Conversely, when it's too hot, it affects a little bit our regular food products sales. But in any event, it's a nice balance, seasonals is a nice balance and we're gearing up right for schools and our school business has been growing significantly and we expect to have another banner year for schools this year.

Yeah. Let me ask you in that, you guys have thought - you had certainly major challenges in sugar content, [indiscernible] how has that market for you matured, are you getting little better because there is kind of like a fine line between healthy and something a teenager is going to eat?

Right. And it has to taste good and we seem to have unlocked some of the secrets into having, complying and getting sugars out and getting trans-fats out, but keeping the flavor in. The key, it has to taste good and we're good at developing taste good.

Okay. You talked a little bit about, just wanted to comment about several projects, yield and efficiency in that. The 60 million to 65 million, what specifically is that targeted all over the manufacturing footprint, is it - is there a little more or less to one product line or a little more emphasis to Pretzels versus frozen beverage or where is that kind of going?

Well, our main plant in Pennsauken, Bellmawr, these are the heavy pretzel plants. There may be one plant that we’re going to be closing and shifting it in there and our Uptown plant, which is primarily dedicated to WaWa foods, there is, is growing significantly every year. So it's primarily that we've also made investments in our North Carolina plant and our Oregon plant. These are the two US laid plants that we acquired and that ConAgra deal some six years ago and although originally, we were concerned that we had not enough volume there, we put some pretzel products in there and we had a new product that we’ve, that we’ve developed, called ground house. It’s been made out there and shipped around. So we have a lot of good things happening and that's why we mentioned that some of the manufacturing improvements will yield not only the direct manufacturing improvements within the plant, but also benefit logistically because we’ll be able to distribute them at sight, not the old way.

Let me just ask one more, Gerry. ICEE has been such a homerun over the years. I mean, you guys, you’ve just done such a fabulous job of that. A little more niche has been certainly Slush Puppy, Arctic Blast and Parrot Ice. What’s kind of the organic story there? Are they just kind of niche fill-ins or I mean obviously they are not ICEE?

You have to go back and look at the history. Originally, we had ICEE for the West Coast and Mexico when Mexico wasn't worth two pesos. All right. Over the years, we've acquired a couple of ICEE distributors and then when we had to, let's say, compete with them, we developed a brand, Arctic Blast and we moved into the territories and they competed until we made up and then bought them. Slush Puppy was an independent distributor, originally owned by, Dan, what was his name?

Will Radcliff.

Radcliff who did a great job getting it out. It’s a little bit different. It's more of a - it's not a carbonated product and they have distributors and then Dr. Pepper bought it. We bought it and we integrated it and the last one you mentioned was the Parrot Ice, which has not done well for us. It's a bar mix. It was a company in Texas that was, they had big aspirations. We talked to them a couple of times. We couldn't get a fix on their numbers. It was worse than an episode on Shark Tank. Funny, we went bankrupt, we bought the assets and we added it into our portfolio and our people have done a reasonable and adequate job with it, but it's just tough to compete with the 1000s upon 1000s of little van trucks delivering many brands.

And we have no further questions at this time.

Well, I want to thank you all very much for participating. We know that - we're not happy with the results of the quarter. I can boldly predict we're going to be a lot happier next quarter. Bye now.

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