J&J Snack Foods' (JJSF) CEO Gerry Shreiber on Q3 2016 Results - Earnings Call Transcript

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J & J Snack Foods Corp. (NASDAQ:JJSF)

Q3 2016 Earnings Conference Call

July 26, 2016 10:00 AM ET

Executives

Gerry Shreiber - President and CEO

Dennis Moore - CFO

Analysts

Francesco Pellegrino - Sidoti & Company

Jonathan Feeney - Consumer Edge Research

Akshay Jagdale - Jefferies & Company

Ryan Sundby - William Blair

Wayne Archambo - Monarch Partners

Operator

Welcome to the J&J Snack Foods Third Quarter Earnings Conference Call. My name is Ellen, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Gerry Schreiber, CEO and President. You may begin, sir.

Gerry Shreiber

Thank you, Ellen, and welcome to the J&J Snack Foods third quarter conference call. I'm Gerry Shreiber; I will be your host. And with me today is Bob Radano, our Senior Vice President and COO; Dennis Moore, our Senior Vice President and CFO; Marjorie Schreiber Rushkoff, our in-house counsel; and Gerry Law, our Senior Vice President and my personal assistant.

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 decreased about quarter of 1% for the quarter and increased 2% for the nine months. For the quarter, our net earnings increased by 10% to $26.8 million or $1.43 a share from $24.5 million or $1.30 a share a year ago.

For the nine months, our net earnings were $55.4 million or $2.95 a share, an increase of 10% from the $50.4 million or $2.68 a share a year ago.

Our EBITDA, that's earnings before interest, taxes, depreciation and amortization for the past 12 months was $157.1 million, another new record.

Food Service. Sales to Food Service customers increased 1% for the quarter, due to increased sales of Handhelds up 20%; Funnel Cakes up over a 100%; Churros, up 6%; and Soft pretzels up 3%. Sales of frozen juice bars and ices were down 4% and bakery sales were down 6%.

For the nine months, Food Service sales were up 2%, with increased sales of handhelds up 27%, and Funnel Cake up 81% leading the way. Sales of Soft pretzels and Churros, 2 of our core products had modest sales increases for the nine months. Frozen juice bars, ices and bakery sales had modest sales decreases for the nine months.

Retail grocery and supermarkets. Sales of products to Retail Supermarkets were down 10% for the quarter. Soft pretzel sales in this sector were down 4% for the quarter and 7% for the nine months. Sales of frozen juice bars and Italian ices were down 11% in the quarter and 8% for the nine months.

Handhelds were down 18% and 21% for the quarter and nine months, respectively. ICEE and Frozen Beverages, which includes Arctic Blast, Slush Puppie, Frozen Beverage and related product sales were up 2% in the quarter and 7% for the nine months.

Beverage-related sales alone were down 1% in the quarter and up 4% for the nine months, with gallon sales flat in the quarter and up 5% in our base ICEE business in the quarter and nine months. Service revenue for Others was up 7% and 10% for the two periods.

Consolidated gross profit as a percentage of sales in the quarter increased to 33.13% from 32.43% last year and from 30.49% to 30.75% for the nine months. A combination of factors contributed to the gross margin improvement, and including lower ingredient costs, increased volume in our handheld business, increased volume in Funnel Cake, pricing and more favorable product mix. These were partially offset by higher costs in our frozen beverage business and approximately $600,000 in the quarter and $1.8 million a year - in the year of added costs related to the introduction of Oreo Churros, Pillsbury mini dessert pies, WHOLE FRUIT Organic juice tubes and new Philly Swirl products. And additionally, it was impacted by lower volume in our Retail Supermarket business.

Total operating expenses as percentage of sales increased from 18.5% to 18.6% in this year's quarter. For the nine months, the percentage decreased from 19.7% to 19.5%.

Capital spending and cash flow. Our cash and investment securities balance increased $20 million in the quarter to $239.6 million. Let me repeat that. Our cash and investment security balance increased by $20 million in the quarter to $239.6 million. A $106 million of our investments are in corporate bonds with a yield to maturity of 2%. We continue to look for acquisitions as a use of our cash. Our capital spending was $13.5 million in the quarter, as we continue to invest in plant efficiencies and growing our business. We're presently estimating capital spending for the year to be between $45 million and $50 million.

A cash dividend of $0.39 a share was declared by our Board of Directors and paid on July the 6, 2016. We bought back 34,052 shares of our stock during the quarter at a cost of $3.5 million, bringing our total for the nine months to a 141,700 shares at a cost of $15.3 million. And that’s roughly in line with our options awarded annually.

Commentary; sales of Soft pretzels and Food Service improved this quarter, as sales to restaurant chains rebounded, they were up 13%, as we had sales of $1.2 million to one chain under an LTO, limited time offer program.

Sales to schools also improved this quarter. Handheld sales and Food service continue to be strong, led by sales to 2 customers. Churros sales were up 6%, as sales were strong across the board.

Our whole-grain Funnel Cake product has been well received in schools and contributed significantly to our sales growth in this quarter and for the nine months. We also had sales of $3.8 million to our new restaurant chain customer. However, we do not expect additional Funnel Cake sales to this company in the near future.

Bakery sales were down 6%, as sales were down $4.4 million to one customer, as that customer added a secondary supplier. We expect sales to this customer to be down about a $1 million a month through January 2017, and then it should flatten out with decent comps. Additionally, cookie sales to school customers were down this quarter as we shut some low margin business.

Sales of Soft pretzels in our retail supermarket segment continue to be weak, as our SUPERPRETZEL BAVARIAN Bread items were discontinued. They were launched a year ago. However, we did see some improvement this quarter.

Frozen juices and ices were down 11% in the quarter, as we had increased trade spending to introduce the WHOLE FRUIT Organic Juice tubes and new Philly Swirl products. Although, Philly Swirl products decline continued, we expect improvement in the fourth quarter.

Handheld sales in retail supermarket decline, due to decreased volume and increased freight spending for the introduction of the Pillsbury Mini Dessert Pies. Overall, increase trade spending for the introduction of the new retail supermarkets was about $600,000 in the quarter, and $1.8 million for the nine months.

We do however expect significant sales in our fourth quarter of our new products, especially OREO Churros, Whole and Whole Fruit Organic Juice Tubes.

In frozen beverages, the ICEE group, gallons sales were flat and service revenue to others was up 7% in the quarter, as this business continues to grow.

Earnings were down to higher group medical insurance cost and higher payroll cost. Operating income in the quarter increased $1.6 million from a year ago, a 4% increase. Last year in our third quarter, we had a loss of $1.4 million in the sale of marketable securities as we reduced our holdings of income generating mutual funds. The difference between our net investment loss last year and our investment income this year accounted for roughly half our improvement in net earnings.

Our estimated income tax rate was 35.3% this year and 36.8% last year for the quarter, and 34.9% and 36.8% for the nine months. We are estimating a range of about 35.25% to 35.5% in fiscal year 2016.

So in summation. Our company continues to fare well. We are the rarest combination of talent combining wisdom and experience with young liberal ideas. We are conservative in our discipline and liberal in our thinking. And we expect to continue to do well.

I thank you very much for joining us today. And now, I will turn it back to the listeners for any questions and comments.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from Francesco Pellegrino with Sidoti.

Francesco Pellegrino

Good morning, Gerry.

Gerry Shreiber

Good morning.

Francesco Pellegrino

Sounds like you're running for President and you're going to be a unifier, liberal in our ideas.

Gerry Shreiber

Well, I am and has been and I have to put forth all of my effort and talent and energy to continue to drive this business, even though I got tremendous

Francesco Pellegrino

Really interesting quarter. I want to touch on Frozen Beverage sales and the gallons being flat. I was looking at some IMD data, just looking at where box office sales were year-over-year. Had a lot of box office blockbusters last summer; this summer, really not so much. I know in May, box office sales slumped like 30%. Although, gallon sales were flat, do you consider that relatively strong given the lack of traffic at movie theaters? Or what do you think about that number?

Gerry Shreiber

Well, our movie theater business has been good to us for many years, and we expect that to continue to grow. We have some great connections with the largest movie theater operators, not just in this country but in the world. However, there were some other factors that affected our gallon performance. For example, Target closed nearly 100-plus stores, the snack bars, and we literally lost what amounted to 30,000 gallons in there.

Now we're - little by little, we're getting some back because we convinced them to set up a separate beverage bar, and we got the first 30 of them operating and we're quite happy with the results. But every once in a while, we'll have to face the challenge that comes over either the wrong mountain or that wasn't fair, and we do well with it. But ICEE has a lot of things going as far as new business and new service award contracts. So we think that is nothing more than a speed bump, a minor speed bump for ICEE and their continued growth.

Francesco Pellegrino

The business that you lost with Target on a volume base, what does that represent, I guess, as a percentage of total volume sales?

Gerry Shreiber

Total volume, well, 30,000 gallons is a significant amount. I think Target overall was doing some 600,000 gallons, and I might be off on these numbers. But, hey, it happens now and again. We lost a lot of business when Sears went - and we lost a lot of business with - when Kmart closed some stores. But by and large, ICEE has - and particularly in the last 4, 5, 6 years, they've looked at these challenges and they've continued to march up the mountain with both beverage sales, equipment sales and service revenue. So we're looking at that, and Dan Fachner's group is looking at that as a momentary pause.

Francesco Pellegrino

All right. I was trying to back into your total volume sales, but you didn't fall for it by giving me another data point. So I'll move on to just the margin expansion you got during the quarter. Frozen Beverage and Retail Supermarket operating margin contracted. You got operating margin expansion in Food Service of about 240 basis points. You talked about the product mix shift. And when I look at the product mix shift in Food Service, I see frozen juice bar and ice sales down 4% and I see basically the product mix shift to items that could incorporate egg products.

I know we're going to be lapping last year's avian influenza issue, in which I think your costs were about $1 million higher per month, which comes out to $3 million for the quarter. You raised prices to customers. Ultimately, what - how many basis point of margin expansion did you get from maybe price increases that are still out there that you implemented during the fourth quarter fiscal 2015?

Gerry Shreiber

Well, that's a tough question. I'm really not sure. We had last year in a short capital of time, we had to catch up with some of these egg prices and it seems like it has recovered. I'm not sure. Overall, there's no question that we're benefiting from lower or stable commodity costs. And both - so I guess, what I'm really saying is like it is, it's fine. We are - we book sure out - we book out for about six to eight months at a time, and lower commodity cost probably keeps the lid on overall pricing, too. So...

Francesco Pellegrino

And I know - I want to ask this, and Dennis is probably going to be laughing somewhere. But he always says I make a mountain out of a molehill. But I think last year, eggs - the cost of eggs increased to where they were like 3% of your cost of goods sold. And I was just looking at the breaker market, and I saw that liquid egg last year was at $2.30 a dozen and now it's at $0.35 a dozen. So I can almost think that maybe egg - liquid egg is maybe 0.5 percentage point for your total cost of goods sold.

Gerry Shreiber

Well, egg is really used in a few of our products.

Francesco Pellegrino

Well, I know they're not used in ICEE and I know ICEE - the product mix shifts.

Gerry Shreiber

And they're not used in pretzels. Dennis, you want to handle that question?

Francesco Pellegrino

Dennis?

Dennis Moore

I mean, eggs are used in a lot of our bakery products, but they are a relatively small portion of our cost of goods sold.

Gerry Shreiber

$0.35? I think eggs are $0.45 now.

Francesco Pellegrino

All right, a lot better than where they were last year.

Gerry Shreiber

No question about it.

Francesco Pellegrino

Any way to quantify how it helped you out on maybe gross profit?

Gerry Shreiber

Not even - it's a fraction of a fraction of a point.

Francesco Pellegrino

Okay. I’m making a mountain out of a molehill. That’s it from me guys. Thanks again.

Gerry Shreiber

Good talking to you.

Francesco Pellegrino

Same here, Gerry.

Operator

Our next question is from Jonathan Feeney with Consumer Edge Research.

Gerry Shreiber

Hi, Jonathan. How are you?

Jonathan Feeney

Never better, Gerry. How are you, my friend?

Gerry Shreiber

Good. I read your note last night.

Jonathan Feeney

So it’s well, what do you think, anything good?

Gerry Shreiber

Well done. If I was an investor I would have bought in.

Jonathan Feeney

Well, that’s good. That you are. That’s a good thing. A couple of questions for you. First, I noticed a big gap between - one of the things we - these new partners and we have some do a lot of work with retail data. And it seems like there was an unusually large gap this quarter between your tracked IRI takeaway data and what you're reporting to us just through the retail channel, particularly in the ICEE and retail cold. Can you explain why that is or any theories to it?

Gerry Shreiber

Bob Pape, are you on the call? Bob? Bob Pape, who's in charge of retail, I think, is on the call, but he may be on the West Coast. Bob Pape, are you on the call? He may not be. He's in the middle of traveling. I don't know, but that's something, we're certainly going to look into that. And I…

Jonathan Feeney

Okay. I can certainly follow up on that. I guess, as far as - I mean, it just seems like everyone in the world, I know it's larger. I guess it only affects you. But it seems like everyone in the world just talk about M&A activity in the food industry. And I guess, I'm wondering if all this activity and speculated activity could jar loose or has jarred lose any kind of smaller businesses that - I think about that - you did with ConAgra a few years back on the handheld when - now that things get reshuffled around, sometimes profitable little businesses that slide a little bit actually and become available.

What kind of environment is it out there? And does all this activity help or hurt your ability to grow the business the way you have in the past, not only organically but through acquisitions?

Gerry Shreiber

Well, we are obviously looking at things, and I stated almost repeatedly that the best use of our cash, which is growing, regularly would be for acquisitions. There are things that we're looking at, and we have some pretty tough standards. And although we may be looking at 3, 4, even half a dozen things at the same time, these things can take years until they can come to fruition. But we're looking at things like - as we speak.

And the only thing I'd say is be patient. We're not going to do a deal just to do a deal. And we're not going to do something that's going to be so transformational that it's going to shake the timbers of the foundation that we're on. We're going to invest wisely, buy wisely and make sure that it's a proper fit and we can integrate it quickly and effectively.

Jonathan Feeney

The last question, just an update on the schools business. It's been a journey. It seemed to be doing a little bit better as far as rejiggering your portfolio in totality to keep up with the ever-changing standards and other idiosyncrasy to that channel. But is the - are we on a firm footing now where things are going to get better there from here? What would you say?

Gerry Shreiber

We are, and we're looking for things to get better. We've gone through all the heavy lifting with formula, with taking sugars out, taking trans fats out in there, and we think we're in pretty good shape to continue to grow that business.

Jonathan Feeney

Okay. Great. That’s all I had. Thanks, Gerry.

Gerry Shreiber

Thank you.

Operator

The next question is from Akshay Jagdale with Jefferies.

Akshay Jagdale

Good morning. I just wanted to ask you, if you just take a step back a little bit when we think of - first of all, good quarter, so congrats on that. But the composition of the growth in your earnings is a little upside down from how we'd like it to be, right?

So we'd like it to be more sales growth driven. I mean, we're always going to complain as analysts, right? So again, it's a good quarter, but can you just help me understand the top line trends in the context of sort of how you manage the business longer term? I mean, just it seems like there's a lot more restaurant business that is coming on and off of menus.

So there's a little bit more unpredictability than before. It seems like a lot more, actually, unpredictability than before. But overall, the sales growth trends are softer than what we are used to seeing from your company right now. It's a tough environment and so on and so forth, but can you just broadly help me understand where we are relative to where you want to be on top line growth?

Gerry Shreiber

Well, we certainly want to be better than where we are. And you saw my comment in the news release, far be it from me to say, we didn't exactly want to crow about our earnings, which was significant because they were up 10% for the quarter. But I am not happy with and our team is not happy with, with the sales growth in the third quarter.

However, and it's too early to say, sometimes you get into a flat period in here and then sometimes it's ignited. For example, the hot weather that we've really been having, I think that, that has ignited some things on our beverage and our frozen things that we'll look at in the fourth quarter. There's no guarantees, all right? But to answer your question, I share your concern, and we are going to fix it.

Akshay Jagdale

Okay. And then getting into specifics, can you give us a sense of sort of where you are on the Oreo churro rollout? And again, it seems to be taking a little longer than we thought to really gain traction. I know there's some promotional expenses in there that might be impacting that and that might answer Jonathan's question. But help me understand the rollout of Oreo churros, which, for us at least, seemed like a huge opportunity but it's just taking a lot longer to play out.

Gerry Shreiber

That's true. It's taking a little while longer. One of the reasons where we - midway through the launch, we made a change in the design and the filling of the cream, which was really we want to kick ourselves because we couldn't get - and we have a terrific partner, Mondelez, with it. We couldn't get that onboard early. Now the product comes with a cream already inside it, and we're expecting not a strong quarter, a very, very strong quarter in quarter four.

Akshay Jagdale

Great. And just more broadly, Retail Supermarkets in the context of M&A, obviously, if you just look at the sales trends in your Retail Supermarket segment, they leave much to be desired and things seemed to have gone a bit worse this quarter. Why not - have you thought of sort of maybe paying up to buy some brands to really bolster that segment a bit? I mean, I know you traditionally - I would characterize you as a bargain hunter, and that's worked out really well for shareholders. But have you thought of maybe paying up for quality brands and that helping sort of the Retail Supermarket effort?

Gerry Shreiber

To answer your question, yes. All right? Is there anything that I'm ready to - that we're ready to lay on the table? No. But even though we have a talent for finding a small little [indiscernible] losing money in there and fixing it, in the retail novelty section, it is difficult to fix that and establish and maintain a business here. We've looked at some of the bigger possibilities there, and we'll continue to do so. And if something fits our criteria here and there, where it is both interesting, manageable and the pricing is right, we will go ahead.

Akshay Jagdale

Okay. And just one last one. I know there's been quite a few questions about commodity costs, and I know you're a bit hesitant on quantifying exactly what the impact is. But is it fair to say, I mean, broadly speaking, part of the reason why the operating income growth and EPS growth was so strong despite somewhat disappointing sales is because of the unusually - I mean, you have more of a tailwind from commodity costs than you typically would see, right? Is that fair?

Gerry Shreiber

That's a fair statement. But aren't we entitled to once every few years or so?

Akshay Jagdale

Absolutely. No, it was a great - like I said, the quarter was very solid. I'm just trying to understand the sustainability of those gross margin trends that we saw. That's all.

Gerry Shreiber

Well, thank you. But that's a fair statement, Akshay.

Akshay Jagdale

Okay. Perfect. I’ll pass it on. Thanks so much.

Operator

Our next question is from Jon Andersen with William Blair.

Ryan Sundby

Hi, it's actually Ryan Sundby on for Jon today. Thanks for having me. Gerry, I just wanted to see if you can walk us through the rationale you have there for the limited time pretzel offer. This isn't something I recall here and you talked about in the past. Is this something you have done in the past? And if so, is that an effective tool to kind of adding that onto menu items?

Gerry Shreiber

It's the customers - we got over $1 million in sales for a set period of time. And it's a customer, it's a chain and I think it was Hardee's. Dennis, was it?

Dennis Moore

Yes.

Gerry Shreiber

And it's their choice. They put something on there and they're going to run it for six months. Will it come back? We hope so. Is there a guarantee? No. But if we can develop some significant business and it's a product that we excel at making and developing, just like a pretzel, so certainly we're going to go for it.

Ryan Sundby

Got it. Yes, it's a foot on the door there that makes sense. And then I was wondering, can you walk us through the mechanics on the funnel cake products? So it sounds like a $3.8 million, I guess, somewhat pipeline in this quarter and then no additional sales until 2017 on the second quarter. But I thought this was kind of a permanent item on the menu there. So will we see lumpiness like this? Or starting in Q2, will it start to be more of a normal sell-in for this customer?

Gerry Shreiber

Well, we hope it will be more normal. I think what happened here, the customer, and I think you know who it is, probably got a little bit aggressive in their projections. And we satisfied their requirements. As a matter of fact, we geared up another plant in there. Although sales are decent, they're a little bit below their projections. And as a result, they have inventory probably through into our first quarter of next year, which is October to December. But we would just be speculating [indiscernible]. It was supposed to be a permanent item and the customer has assured us that they will be using all of the inventory and then some. And sometimes things are under-projected, sometimes they're over-projecting, and we are flexible enough to work with both and dance with both.

Ryan Sundby

Got it, got it. So as they kind of work through that inventory, we should see more of a kind of normal [indiscernible] after that?

Gerry Shreiber

Product is good. It has an extended shelf life. It's good for over a year. So we're [indiscernible] this next July, all right? And then we'll both have some concern.

Ryan Sundby

Got it. Okay. The $40 million in new product sales for Food Service, I think, is an all-time record. Has there been a step change in kind of the process around innovation and new product development? Or is this just kind of a confluence of several products coming together at once?

Gerry Shreiber

Well, I mentioned a couple of years ago that I assigned the responsibility of both marketing and R&D to Gerry Law. And he's added staff, he's added projects in there, and we're starting to see [ph] this a little it. It takes a while for trees to grow. But if you treat them right, the peaches and the plums will drop every year.

Ryan Sundby

So is it fair to say that we should see - this is, this new elevated level, maybe it's something to expect going forward then?

Gerry Shreiber

Hopefully.

Ryan Sundby

Got it. Okay. And then just last one here on the lost bakery customer, how much lead time do you get when something like this happens? And is there the option to kind of replace that business with someone else?

Gerry Shreiber

Well, you don't get a lot of lead time. This was in the wind, and this is a terrific customer. They've been a customer for years, and we make a cookie product for them and we make it very, very well. And we were the sole customer for it - I'm sorry, the sole supplier. And they put together a project that they didn't want to have a sole supplier on this at all. And finally, they worked with somebody and they wound up taking a sizable portion of the business from us. When I say roughly, 20% to 25%. Our people met with them. And in one of these wonderful meetings, "You guys didn't do anything wrong. We really like you. And we're doing this and we're going with this, but you're going to lose a certain part of this business."

And it took them a year to implement it, all right? But - and now it's affected our sales volume probably a lot more than it affected our bottom line because our margins, our margins were indeed tight and the commodity factor was weighted to any kind of increases, up or down in a couple of critical ingredients and components. The relationship with the customer is still good. I would say very, very good. And yes, we're looking to do what we can to replace that business.

Ryan Sundby

Okay. And then just the $4.4 million impact this quarter is a bit more than $1 million run rate per month. Is there some seasonality there? And then why is this lapped in January? Is that when it started to occur? Or...

Gerry Shreiber

That's when it started, in January. And there is some seasonality and heavy promotional period with this.

Ryan Sundby

Got it. Okay. Thanks a lot, guys.

Gerry Shreiber

Thank you.

Operator

The next question is from Wayne Archambo with Monarch Partners.

Wayne Archambo

Hi, good morning.

Gerry Shreiber

Good morning.

Wayne Archambo

Just on the cash balance. You've said a few times, a couple questions regarding M&A and you've been looking and looking and so forth. And the fact that the net cash balance is pretty significant, if it's a seller's market and not a buyer's market, at some point, would you consider returning that cash to shareholders with respect to either a special dividend or something of that nature? I'd say net earnings 2% at best. And as a shareholder, I think you have an obligation to consider that if there's nothing to buy. And any thoughts?

Gerry Shreiber

Well, Wayne, I hear your point. And we have been increasing our dividend every year since inception [indiscernible] years ago. We've gone 40 straight quarters, maybe 41 straight quarters of paying the dividend and every year increasing it. We're earning 2% on this cash now which is probably, I don't know, 10x what you would in a money market in there. We're not looking to set the market on yield return in there, and we're hopeful of using this for acquisitions.

We have been hesitant to increase dramatically the payback to the shareholders. And one of the reasons is that there's a controlling shareholder here, yours truly, meaning me, and it would be a little bit self-serving. So we're going to continue to look for acquisitions. And if this money builds up too fast too quickly, Dennis and his team will look at the dividend process again.

Wayne Archambo

No, I mean, your dividend yield is 1.2%, not exactly the yield of a REIT or a utility. So it's relatively small by other standards, right?

Gerry Shreiber

We're not a utility and we don't give out 80% of that. And if you look at our - I understand. You're right, it's 1.2%. I was thinking of the money we had invested, I apologize for that. But it is what it is today, and we're not a utility or a real estate investment trust. We are a growing business with great products that is expanding nationally and internationally.

Wayne Archambo

All right. And I commend you for all that. I just hate to see that cash earning nothing. That's my only observation.

Gerry Shreiber

Have you looked at the 10-year treasury bonds lately?

Wayne Archambo

Oh, I'm well aware of that. I'm well aware of that. But I also don't see companies hoarding cash, sitting on what, $10, $12 per share in cash? I mean, that's fairly significant.

Gerry Shreiber

I've never heard of companies going out of business because they have too much cash. I've seen it the other way in my 44 years' experience. But I appreciate your comments.

Wayne Archambo

Thank you.

Gerry Shreiber

Thank you.

Operator

And we have no further questions at this time.

Gerry Shreiber

All right. I want to thank everybody for participating today, and we look - fourth quarter with all of you participating again. Thank you.

Operator

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

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