May 01, 2018 • 10:00 am ET

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Q & A
Operator
Operator

Thank you. We'll now begin the question-and-answer session. (Operator Instructions) Our first question is from Mike Gallo. Please go ahead.

Executive
Gerald Shreiber

Good morning, Mike.

Analyst
Mike Gallo

Hi, good morning. Gerry, obviously, our logistics cost have been a significant headwind for this year. I was wondering if you could walk us through some of the steps you are taking to mitigate the impact of that going forward. Thanks.

Executive
Gerald Shreiber

Well, we're reexamining all of our root transfers and whatnot so that we can get the benefit of the lowest cost of distribution. During the year we closed one plant and we shifted some production from that plant to one of our plants in the Midwest and we've been moving some product shipments around. And we had to kind of adjust that halfway through because to make sure we got the benefit of the distribution benefits that we hope to have. We think we're buying large and done that, although I notice that the papers are writing about logistic costs and distribution costs going up everywhere. We are aware of that. We have people on that and we're going to do what we can to moderate that.

Analyst
Mike Gallo

And then also with respect to pricing, I think you put through some pricing here late in the quarter. How is that being accepted and do you expect to get better price realization in the second half?

Executive
Gerald Shreiber

I think somersaults and cheering us on; however, our people are going to be equal to the task. We've put together some modest price increases and because we are merchants and sales merchants in there, we take just a little bit longer to get the impact from it but we expect all the pricing increases to benefit us starting in the third quarter.

Analyst
Mike Gallo

Okay. Thank you very much, Gerry.

Executive
Gerald Shreiber

You're welcome.

Operator
Operator

Our next question is from Francesco Pellegrino, please go ahead.

Analyst
Francesco Pellegrino

Good morning, Gerry.

Executive
Gerald Shreiber

Good morning

Analyst
Francesco Pellegrino

So during the quarter how much of -- first up, your pretzel organic growth in food service, did you say 8%?

Executive
Gerald Shreiber

I believe so.

Analyst
Francesco Pellegrino

Okay. That's a really nice number. The organic growth was really strong too just overall for the business. The $2 million in higher distribution expenses for the quarter, how much of that were you capture and price?

Executive
Gerald Shreiber

Not enough.

Analyst
Francesco Pellegrino

Okay.

Executive
Gerald Shreiber

We remain focused on that to pick that up very soon.

Analyst
Francesco Pellegrino

You incur that so the $2 million higher distribution expense, you incur that on your -- as an operating expense but then it's also sort of offset -- should be offset theoretically if you get pricing as $2 million increase in sales, right just being periodically right now.

Executive
Gerald Shreiber

Okay.

Analyst
Francesco Pellegrino

Is that correct just when I think about modelling it?

Executive
Gerald Shreiber

Is that right, Dennis?

Executive
Dennis Moore

Well, there is a whole bunch of cost increases that need to be offset as well by prices increases. So what I mean is prices were up let's say 1% in the quarter, that may to a large extent offset the distribution expense but it doesn't offset the other