Earnings Call Transcript - JJSF Q2 2020

Operator, Operator

Welcome to the J&J Snack Foods Second Quarter Earnings Conference Call. My name is Richard, 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 the question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Gerry Shreiber, President and CEO. Mr. Shreiber, you may begin.

Gerry Shreiber, President and CEO

Thank you. 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 2% for the quarter, without sales from the acquisition of ICEE Distributor in October 2019 and BAMA ICEE in February 2020; sales also decreased 2% for the quarter. Sales to foodservice customers decreased 2% for the quarter and decreased 1% for the six months. Our sales decrease for the quarter was due to decreased sales of soft pretzels down 8%, churros down 6%, funnel cake down 44%, and handhelds down 7%. Bakery sales were up 6% and frozen juice and ice sales were up 6%. Sales to restaurant chains, which were heavily hit during this period, were down 15% this quarter, while sales to schools were up. Operating income in our food service segment decreased 56% to $11 million from $24.8 million this year, primarily because of higher costs, product exchanges, lower volumes throughout the quarter, and decreased production at quarter ends due to the effects of COVID-19 on demand. Retail supermarkets and grocery: Sales of products to retail supermarkets were up 10% for the quarter. Soft pretzel sales were up 14% for the quarter, sales of frozen juice and Italian ice were up 8%, handheld sales were up 26%, and bakery and biscuit sales were up 4%. Operating income in our retail supermarket segments increased in the quarter to $4.3 million from $3.0 million a year ago. ICEE and frozen beverages: Frozen beverage and related product sales were down 6% in the quarter, and beverage related sales were down 5%. Overall sales were down 10%, and beverage related sales were down 14%. Service revenue for others was up 9%, machine revenue was $8.9 million down from $13.2 million last year, as last year had a large installation project to one quick-service restaurant chain. We had an operating loss in our frozen beverage segment of $1.3 million compared to $2.6 million operating income in last year's quarter, primarily due to relocation costs and expenses related to ICEE headquarters moved to Tennessee of approximately $1.5 million this quarter and lower volume due to COVID-19. In February, we purchased the assets of BAMA ICEE, which does business in Alabama and Georgia, with annual sales of approximately $3.5 million. With this purchase more significantly, we now have distribution rights in the entire United States. Consolidated gross profit as a percentage of sales was 25.53% in the three-month period this year, down from 28.68% last year. Gross profit percentage decreased because of lower unit volume throughout our business, generally higher costs, and unfavorable product mix changes. Total operating expense as a percentage of sales was 21.5% in the quarter, up from 19.7% last year. The percentage increases were due to increased marketing spending in our retail supermarket and frozen beverage segments, largely from ICEE relocation expenses, and higher distribution expenses primarily due to higher freight and storage costs. Our EBITDA, as earnings before interest, taxes, depreciation, and amortization for the past 12 months, was a healthy $163 million. Capital spending and cash flow: Our cash and investment securities balance of $267 million was down $29 million from our December balance, primarily because of the purchase of BAMA ICEE and backing up common stock of $9 million. A $109 million of our investments are in corporate bonds with a purchase price yield to maturity of 2.8%, of which $99 million mature within two years. Our bank preferred stock and mutual funds $13 million dropped in value by about 15% at the end of March. Our capital spending was $19 million in the quarter, as we continue to invest in plant efficiencies and growing our business. Likely our spending for the year will be cut back due to other priorities at the present time. A cash dividend of $0.575 was declared by our Board of Directors and paid on April 7, 2020. This was a 15% increase. As I mentioned earlier, we bought back $9 million of our stock during the quarter. We had an investment loss of $413,000 this year compared to investment income last year of $2.8 million, primarily because of $2.1 million of unrealized losses this year compared to $760,000 of unrealized gains a year ago. Regarding where we are now: Net sales for the first four weeks of our third quarter, which will end in June, are down approximately 45% from a year ago. Although we cannot estimate whether net sales will continue to be down at the same rate for the balance of the quarter, we estimate that we may have an operating loss in the quarter, compared to operating income of $39 million in the year-ago June quarter. Approximately two-thirds of our sales were to venues and locations that have either shut down or sharply curtailed their foodservice operations. We anticipate COVID-19 will continue to have a negative impact on our business. As we have $267 million of cash and marketable securities on our balance sheet, we do not expect to have any liquidity issues. We have good management in place, strong brands, and a broad base of highly respected customers. We continue to monitor and adjust our costs and expenses as we evaluate our business on a daily, weekly, and monthly basis. We are monitoring consumer behavior, customer shifts, and industry needs to adapt our product and marketing mix for the post-pandemic landscape. We are ready to fight our way back to sales growth and business performance as customers begin to reopen this summer. Keep in mind that all of our leisure, theme parks, and sports venues are either shut down or haven't begun their 2020 seasons yet. We are being careful not to reduce our costs so much that we won't be able to service our customers when they return, making sure that we have the proper staffing and resources in place for when business opens up again. At the same time, we are working around the clock updating preventative measures to keep our employees safe. We have always been a company that has been cautious in the way we spend and use our cash. Today, as I mentioned, we have $267 million in cash and securities. We are protecting it and using it to prepare for the future as we monitor what looks like in this changing landscape. I will now introduce Deb Kane, our Director of Food Service Safety and Quality Assurance. Deb has been with the company for about three years, and we recruited her from Campbell’s. Deb?

Deb Kane, Director of Food Service Safety and Quality Assurance

Thank you. So J&J Snacks Corporation is fully committed to maintaining operations amid the COVID-19 pandemic. We started implementing a number of precautionary measures, as Gerry mentioned, and mitigation strategies in all of our facilities as early as late January. We distributed a robust COVID-19 plan to all our facilities, aligning with the latest recommendations of the CDC and local health departments. Our plant teams were very supportive of all our precautionary measures, and because of their early adoption, we are able to continue to operate and meet our customer orders. Our crisis management teams and subcommittees meet anywhere from daily to weekly. We enhanced our hygiene protocols in all facilities and increased frequencies of cleaning and disinfection for all production lines and frequently touched surfaces. We practice social distancing, and when that practice is not feasible in certain production areas, like packing rooms, we've erected physical barriers between personnel. All non-essential manufacturing employees are working remotely; all visitors and travel is limited to critical business only. Procedures such as illness screening and temperature monitoring are being conducted at all doors prior to entering our facilities. Employees are wearing face coverings, including face masks and shields, to further reduce the risk of exposure to COVID-19. In addition to all the measures I just spoke about, we have active communication with our suppliers to monitor our inventory levels, and we've proactively identified alternate suppliers where needed to ensure supply chain continuity. Logistics and transportation schedules are managed by our team to ensure the ability to transport throughout the J&J Snack Foods network. We monitor our employees who test positive for COVID-19 or those who come in close contact with a positive, and we have strict protocols for 14-day quarantines to protect our other employees and keep our workplace safe. We follow our COVID-19 plan for when employees can safely return to work after an illness, and of our positive employees, there has been no direct linkage to workplace exposure. This indicates that the positives are likely due to external community spread from carpools or community interactions outside of the workplace. We've met with the FDA and several local health departments as well as OSHA, and all the agencies are satisfied with our actions and responses to keeping our workplace safe.

Gerry Shreiber, President and CEO

Thank you, Deb, for a very detailed and safe analysis. I also wanted to comment on the announcement you might have seen recently regarding Dennis Moore. Dennis is retiring on July 30, and we are so grateful for all the years of dedication, efforts, and guidance that he has provided us over the years. We are truly sad to see him retire and we'll miss him. However, we wish him all the best for the next chapter of his life. Thank you, Dennis.

Dennis Moore, CFO

Thank you, Gerry.

Gerry Shreiber, President and CEO

I just want to add that this COVID situation is another wrinkle in our life, in our history, which we are confident that we will deal with well, and it will just be a distant memory in years to come. I'll now turn it back to listeners and entertain any questions or comments.

Operator, Operator

Thank you. Our first question online comes from Rob Dickerson. Please go ahead.

Rob Dickerson, Analyst

So, Gerry, I just had a couple of larger, thematic questions here, just kind of around the business model. Obviously, coronavirus has changed a number of different games, and we understand that there's a fair amount of traffic decline. You've heard from the likes of some larger CPG companies like Coke and Pepsi, and there are a lot of questions out there right and there's a lot of answers left within the unknown. So, I guess the question I have for you, because you've been in business for so long, maybe the frozen beverage piece of the business might not change as much; it actually could be better than it has been the past couple of years. But in terms of that frozen beverage business, it’s largely away from home, do you already have to sit down and say, okay, well, maybe the dynamics of that business, the drivers those business have changed and maybe we should start to think about putting them in bottles or selling them through a different channel? Or should we be selling powder other just ways to try to almost very quickly change with market demand?

Gerry Shreiber, President and CEO

That's a big question. However, if you look at our ICEE business, which includes ICEE ARCTIC BLAST and SLUSH PUPPIE, it has been growing nicely year after year.

Deb Kane, Director of Food Service Safety and Quality Assurance

I think Dan Fachner is on the line, if he wants to comment on that.

Gerry Shreiber, President and CEO

Dan, do you want to comment on that?

Dan Fachner, Executive

Sure. Hi, Rob, how are you? I think that's a great question, and we are looking at alternative ways to sell our products. The product, as you mentioned, is being sold in some great locations today that many people would love to be in, like amusement parks, theaters, or wherever there is high foot traffic. Unfortunately, during the pandemic, many of those are shut down. We believe that many of them will open back up, and it will still be a strong business at its core. In addition to that, we are looking at other alternative ways to sell the product—maybe around the take-home section, how to do that properly. It's still a treat; it can be sold in locations and then delivered to the house. We do a lot of different licensing types of things with it, as you mentioned in a powder, how to have it at home, and enjoy it at home more often. So we're looking at several different factors. But we do still feel bullish about the way that the business will come back and still be strong in those locations that we're in as well.

Gerry Shreiber, President and CEO

It's not like we've lost any customers or business. Business is down, that's true, but a lot of it's down because of people's foot traffic.

Dan Fachner, Executive

In addition to that, Rob, our service side of our business has continued to grow, and that has been healthy during this time as well.

Rob Dickerson, Analyst

Okay, so that's a clear positive. And then I guess, just in terms of that the go-forward now you mentioned, what the kind of the sales trends have been upfront in the third quarter, and what operating profit could actually set potentially get through the quarter? It sounds like you're doing the best you can—you need to alleviate some costs potentially in your P&L, but at the same time, you're also trying to hold on to pretty much your very loyal employee base. And that's a sensitive topic. I would feel like a lot of times the moving parts of your P&L obviously contingent upon those venues opening up and then people actually going back to the venues, and pretty much sounds like you're trying to hold back cash to be able to hold on to your cost structure as is as long as you can. Does that make general sense?

Dennis Moore, CFO

This is Dennis, can I comment on that? First of all, I would say, we have had significant reduction in costs during the quarter. But you are correct in that there are some costs that we don't necessarily want to cut right now. For a couple of reasons, one, we have some valuable people that we will need once the business does turn around again, and we also have a sense of loyalty to them as well. We are now saving perhaps another couple of million dollars or whatever of costs during this particular quarter, which will have no impact on our performance and what we deliver considering that we have the chance to do so. We have taken into account a lot of different factors, but I don't want to give the impression that we have not cut costs significantly during this time, because we have, and we are anticipating a drop-off in sales of $150 million in this quarter, so we have to take steps; otherwise, dropping earnings would be a lot worse than what we are anticipating today.

Rob Dickerson, Analyst

Okay, that's a fair answer. Thank you so much. Please stay safe.

Operator, Operator

Thank you. Our next question comes from Ryan Bell. Please go ahead.

Ryan Bell, Analyst

You said that the first four weeks of your June quarter were down about 45%. Can you speak about the differential ways you're seeing disruption impacting different parts of your business, the retail supermarkets, frozen beverages, and food service? And are there any additional details you can provide on the compensation of your on-premise exposure and any differences that we’ve seen in the pockets of the channels and how they're performing?

Gerry Shreiber, President and CEO

Before I turn it over to Bob Pape and Dennis, keep in mind that we started our third quarter, which is traditionally a good upswing, with all of our sports teams inactive for the season being on hold. Additionally, many schools were closed. So, we started off with a sizable mix. We do expect as the quarter heats up, we will get past that quickly. Bob, do you want to add something?

Bob Pape, Executive

Yes, I mean, from the food service aspect of the business. As Gerry mentioned, with many of our partners shut down at this time, right now we're formulating a plan to be able to get back in business with those customers as they start to recover. On the retail side of the business, our at-home consumption has been very strong, which we anticipate continuing to move forward in a positive direction, primarily driven by the stay-at-home orders. So, we're also figuring out how we can continue to grow that aspect of our business. I'll let Dan comment on ICEE as far as moving forward.

Dan Fachner, Executive

Yes. Hi, Ryan. The ICEE company continues to feel good about what will happen in the future. In the third quarter, we're still measuring those accounts that are not open at this point. I mentioned earlier on the call with Rob that our service side of our business continues to grow, and that is operating almost at the same pace that it had been, and we see that growing into the third quarter as we start to open up these locations. More people will need service for that, and even our outside service outside of the ICEE division is growing as well, and we see that continuing to grow in the third quarter, although the core product will be hit during the third quarter.

Ryan Bell, Analyst

Great, thank you. And given your strong balance sheet, it seems like you'll be able to ride out the storm. Are there any changes you might think about in terms of your capital allocation over time? Are there any ideas about what could happen or any opportunities that could arise from the disruption in terms of potential acquisitions as we exit it?

Gerry Shreiber, President and CEO

Well, this is Gerry. We managed our finances well over the years when we didn't have a lot of cash reserves. We will continue to manage our finances and put in cash just as we have in the past.

Dennis Moore, CFO

Thank you, and to just add to that, I think you've commented regarding maybe there will be some acquisitions now that were not available six months ago, because other companies are hurting. As everyone’s hurting, perhaps it will offer additional opportunities to us, and we will be looking at evaluating and hopefully making some acquisitions over the next six months to a year.

Gerry Shreiber, President and CEO

Dennis is right. We have the cash. We have the balance sheet. We have all of the things going forward to continue to build a healthy company and we've made acquisitions in the past. We've turned some down of more recent vintage, but we'll be looking to make acquisitions in the future.

Operator, Operator

Thank you. Our next question on the line comes from Jon Andersen. Please go ahead.

Jon Andersen, Analyst

I want to thank Dennis for all the help over the years and best of luck in your next phase. I guess I wanted to start with the retail business, which was strong in a quarter of the retail supermarket business. Could you comment a little bit on what you're seeing there in terms of overall consumption growth for your supermarket brands? And do you think the growth is kind of sustainable going forward, or was there a large one-time stock-up component to that?

Bob Pape, Executive

Well, John, as far as the business itself, there's obviously been increased consumption. Again in the at-home segment, we saw that in the past couple of months. Our customers, which we're trying to support, are focused on in-stock positions and supply chain, which we are working very diligently to fill as well. We have very strong brands, and I think that as a result of that, we're going to continue to be looked at by our customers as a good partner, and there will be opportunities moving forward. That said, we also have an unknown as far as what the consumer behavior will be, and as mentioned in the conference call notes that Gerry mentioned, we are monitoring consumer behavior, and we will adapt to what the new consumer need is once the new normal is established. This requires some product development and modification of our marketing, and all those processes are in motion now to be able to respond to the changes that the industry is undergoing. We're very positive about the product portfolio and what we can do with that.

Jon Andersen, Analyst

Could you talk a little bit about your ability to meet the demand? How is the supply chain working on the retail side of the business? Have you been able to keep retailers in stock? Are you able to maybe reallocate some production capacity from your food service business into retail to better service retail customers during this kind of demand surge that they're experiencing?

Bob Pape, Executive

I think, again tied into the fact that we took very proactive steps on the COVID-19 sanitary procedures and employee safety that we started back in January, that's allowed us to have a stable supply chain. Honestly, some of the issues are with our customers in terms of their outbound freight to their stores and servicing their stores, and obviously some panic buying on the part of the consumers that seems to have started to abate a bit. We have not really experienced any significant supply chain issues in terms of our manufacturing.

Gerry Shreiber, President and CEO

Where there were issues with some of the retailers, we filled that gap with our own trucks getting product to them, and they appreciate that very much. Somebody said to Bob, 'Your companies make the product. You get it here. You build this. You stock the shelves. You deserve an award.'

Jon Andersen, Analyst

I'm sure if you assist your customers in those ways during challenging times, they are grateful. Absolutely. Could I ask about the trend you mentioned in April? Is it correct to say that the most challenging situation right now is in the food service segment rather than the frozen beverage segment? Given the nature of the locations where food service products are sold, is that where we're seeing the most significant decline at the moment?

Gerry Shreiber, President and CEO

I think it may be across the board. Looking back a year ago, in April, when the spring arrived, the birds were chirping, there was playoff hockey, and playoffs basketball, and all these little sports leagues were ongoing, adding a nice little boost to sales. We were completely shut down; it's not surprising with the current restrictions this year. Now we know that won't continue, but we expect it will be a while until we get back onto the field to enjoy those benefits of sales. We have a team that is dedicated to that and enjoys working with the youth and major sports arenas, and we have been good at it. That business has been growing every year.

Dennis Moore, CFO

But with regards to when you mentioned on the beverages segment, suppose in beverages, product sales are severely impacted by this. I mean a portion of the frozen beverage business is making service components is continuing to perform well, but the beverage side of it is down well over 80%.

Gerry Shreiber, President and CEO

A few years ago, and spearheaded by Dan Fachner, we discovered movie theaters. We started putting equipment in movie theaters all around the country, and we've enjoyed positive sales from that for many years. Now, I understand almost every movie theater is closed or has restricted hours for children's movies on a Saturday morning and what not. But that business will come back. We're confident it will, and we'll start enjoying the benefits of that business hopefully in the not-too-distant future.

Jon Andersen, Analyst

Okay. Just a couple of additional ones if I might. So, you talked about this balance you're trying to strike of keeping the people and the capabilities and the capacity intact as you work through this temporary kind of issue. But how much have you, would you say you've already taken actions? I mean, how much have you kind of done in terms of cost discipline to this point, and do you have a kind of an additional slate of potential actions depending on the timing of some of your customer reopening? Just trying to get a feel for how much you've maybe already done it and how much is potentially yet to come?

Gerry Shreiber, President and CEO

Well, we have 18 facilities across the country and we are really dedicated to our people at our plants and our business. We did have layoffs that affected 221 people a couple of weeks ago. We don't anticipate growing or having another round of layoffs.

Dennis Moore, CFO

There are significant cuts that we've had in payroll reductions in our manufacturing plant.

Dan Fachner, Executive

John, I'll add to that too. This is Dan Fachner. We've looked at it in several different fashions. We've had some layoffs; we've had some salary reductions; we've had some furloughs, and we've had some hour reductions. We are monitoring it really close with some scenario planning based on where the business is today and where we expect it to be, and where it might end up, and we're watching that really closely.

Jon Andersen, Analyst

Okay. And the last one, I guess for me, I mean, would it be fair to assume that you bought some stock back in the quarter, raised the dividend; what should we expect going forward on that front? I'm assuming you're going to go into maybe a defensive posture regarding those uses of capital going forward. And will you—how much would you think of optimizing capital expenditure on a full-year basis at this point?

Gerry Shreiber, President and CEO

Well, I think we spent about $50 million to $60 million last year and probably we're on target for that this year. We may trim that a bit because of need, but right now we have adequate supply of products, and we have adequate cash reserves. We meet regularly on that and pay careful attention to that, because we don't want to go either side of the tracks.

Operator, Operator

Thank you. We have Todd Brooks on the line with a question. Please go ahead.

Todd Brooks, Analyst

A quick question, Gerry. If you talk about the down 45% sales trend that you're seeing quarter-to-date. You pointed out a couple of things. One, schools were widespread closures in April, but I imagine the education business becomes less important as you get into May and June. Additionally, you have a big convenience store business. Outside of the venue closures and event cancellations, that's been the shelter-in-place and people not being free to move around. As you looked out over the course of this quarter, and you're starting to see states open up a bit, and people getting some freedom of movement back, if you could talk about maybe this down 45% that we’ve seen for the first four weeks, if there is an element that could moderate as people are out moving outside of their homes and driving, hitting the convenience stores and the drag year over year should moderate from education over the next two months.

Dennis Moore, CFO

Yes. This is Dennis. I'll answer this. If you look at who we're selling to now in the food service segment and the frozen beverages, the non-service component of the business is basically selling right now for restaurant chains to a limited extent and to convenience stores. There really is not much else that is open and selling our products. Most of these other venues are likely to remain shut throughout the balance of the quarter—amusement parks or baseball stadiums in the U.S., and many of the snack bars we've been selling to have been down so far this quarter. There may be some opening up, and there may be some improvements, but at this point, at least, I don't see anything of significance.

Todd Brooks, Analyst

And then in that environment, Dennis, if you can talk about maybe what we're doing on the marketing spend side and how distribution costs are looking? I mean, tons of distribution costs are going the extra mile for your customers now for just what should we be seeing. I know marketing and distribution were up year-over-year about 10% in aggregate over the prior year, but what's the outlook for marketing and distribution costs in the current environment?

Dennis Moore, CFO

A good portion of that will obviously drop off considerably with the drop off in volume. There are some components of business that are fixed. However, we do continue to work with our customers on projects that we've been working on or that they want to continue to work on for when they open up, and perhaps have menu items inside as well. So, our marketing spend should be done significantly in terms of distribution costs. And we had some changes in our prior distribution as well; we changed how we managed some distribution that had previously been done. We were selling to distributors, and part of that chunk in marketing and distribution costs was an increase of $1.5 million for IP relocation costs. We're also looking at changing perhaps some of the locations where we warehouse our products to reduce our costs related to that. But yes, all I can say is we're looking to drive those costs down as we move forward, and we should be able to to some extent.

Gerry Shreiber, President and CEO

All we need is a little bit of nice weather together with the ball meeting the bat and the fielders fielding the ball. That is going to have a significant change in our business.

Dennis Moore, CFO

Gerry, right, the only question is hopefully it'll be sooner rather than later.

Gerry Shreiber, President and CEO

Do we have a next question?

Operator, Operator

Please go ahead with your question.

Unidentified Analyst, Analyst

Yes. Good morning, gentlemen. Just two quick questions. Dennis, can you just share the composition of finished and raw? Is it released inventory?

Dennis Moore, CFO

Hang on a second.

Unidentified Analyst, Analyst

Sure.

Dennis Moore, CFO

Roughly half of our inventory is a little less than half as finished goods.

Unidentified Analyst, Analyst

Yes.

Dennis Moore, CFO

Most of our inventory consists of raw materials and packaging that we use to manufacture the products in our factories. Business section sizes is about a quarter of the inventory, and then another quarter is for equipment parts, primarily in our ICEE business related to service.

Unidentified Analyst, Analyst

Got it. And just for refreshment, yes. That very consistent with where you've been historically. So when we think about spoilage cost and cost allocation across far fewer units looking into Q2 and potentially Q3, hopefully not, but potentially Q3, how do we think about the potential for spoilage costs in that finished goods inventory in the context of sales data less than 1%?

Dennis Moore, CFO

Yes. Most of our products—around 90% of the finished goods—are frozen, so they have an extended shelf life. At this point at least, we don't see that there would be a large amount of spoilage related to that.

Unidentified Analyst, Analyst

Great, thank you. That's very helpful. And any, as you guys were talking earlier, are there extensions with customers regarding the existing receivable balance? Could you just walk through how we can expect as the year progresses receivables and if we need any bad debt reserves against receivables?

Dennis Moore, CFO

Well, this is Dennis again. At this point, we are sure there’ll be some amount of customers that will end up not being able to pay us, but at this point, and again, it will be our much smaller customers. We haven't seen any of that. Most of our customers, almost all of our customers continue to pay us in the normal course. We do have a handful of customers who are shutdown now; we have asked for extended terms. Again, it's relatively small, surprisingly a small portion of what I would have expected a month ago that have asked for extensions.

Unidentified Analyst, Analyst

Got it. Makes sense. And did you take the bad reserves against those customers that you're anticipating will have problems?

Dennis Moore, CFO

Well, like I said, we did not. When I say that, I'm talking about really small customers. At this point, we are not anticipating anything of significance.

Gerry Shreiber, President and CEO

One of the benefits of having dominant brands is that we have dominant shares. There is a continuous relationship between us and the customer, and everybody realizes that we have an 80% share or whatnot. There are not many alternatives for the other guys; there are certainly not many alternatives of equal value and economy. So we're satisfied with our receivables management and our current positions.

Unidentified Analyst, Analyst

Okay, thank you. Stay safe, and I appreciate the update.

Operator, Operator

Thank you. We have no further questions at this time. I'd like to turn the call over to our presenters for closing comments.

Gerry Shreiber, President and CEO

I want to thank everybody for participating in our second quarter conference call. We're not happy that we have to go through these kinds of adjustments as they are. But long term, our business is in strong condition. We have plenty of cash reserves, and we have popular brands. Some of our brands account for 80% of their respective categories, so the long-term outlook is good, and we expect it will continue to be good or perhaps even get better. Thank you very much.

Operator, Operator

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.