Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Farha Aslam with Stephens Inc.
Farha Aslam – Stephens Inc.
You had noted that in the fiscal first half you had a 31% increase in ingredient costs. Would you be willing to share with us what that is for the fiscal second half?
Steve Kinsey
I think looking at the dollars we have told you for the year where we’ll be at roughly 22% on all input costs including packaging. But the back half, obviously the greatest amount came in the first half and we will see some relief in the back half but I’m not sure we’re willing to share the exact number at this point for competitive reasons.
Farha Aslam – Stephens Inc.
George, if you could share with us a little bit more about the Holsum bakery that you’ve acquired. That serves the Nevada and Arizona and California, are they already in California?
George Deese
Yes, let me start back over there. We are excited about this opportunity. A wonderful company, wonderful owner who will continue to run our business. Great market position in Arizona, number one in the marketplace. I know they entered the Nevada market 10 to 15 years ago and it made good progress there, and they’ve always had some presence, for a number of years had a little presence, in Southern California, but when a competitor exited that market, it did give opportunity, some three or four months ago, for them to move in more than they had been before, and as time moves forward, we see that we can help them expand that market even more so than they are today, so we see very good opportunities in Southern California. 0
Farha Aslam – Stephens Inc.
George, how much capacity does Holsum have in their plant? Are they kind of at 100% capacity or do they have a little bit extra capacity that they could leverage?
George Deese
There is some extra capacity. We feel very comfortable that we can now have good market expansion without any added capital at this time.
Farha Aslam – Stephens Inc.
Is there capacity to take the Nature’s Own products in there as well or will you kind of need to build additional capacity because they have their own brands and then you’re going to layer on Nature’s Own on top of that or are you going to maybe switch out and put some Nature’s Own in place of some regional brands?
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