Question-and-Answer Session
Operator
Your first question comes from Greg Badishkanian - Citigroup
Gregory Badishkanian - Citigroup
Congratulations Joe and really nice work over the last several years in turning around the business Mike. Just a few questions here; first you mentioned that EBITDA guidance was basically unchanged although revenue guidance was increased, is that just due to increasing food and transportation costs or is there anything else to that that I’m missing?
David Clark
No, that’s primarily due to the anticipated continued pressures from increasing food cost and transportation.
Gregory Badishkanian - Citigroup
Okay.
Mike Hagan
And Greg, I would mention that you know the price tests that Joe mentioned are factored into the guidance, so if we’re successful in testing some of these price increases like we have in the past that would be added in.
Joseph Redling
We’re also again in our forecast because we’re -- will be in the test mode, in the second half of the year for maintenance and frozen, we also don’t have any forecast for any incremental revenue that comes from that as well.
Gregory Badishkanian - Citigroup
Okay, which leads me to, the margin impact from maintenance and frozen as - I’m assuming that’s lower, but it’s going to add incremental sales, is that kind of how you’re viewing that?
Mike Hagan
Yeah actually, the margin on the maintenance program is actually higher than our core program. So the maintenance program has very little hard costs to us versus our existing inventory. Frozen we’re striving to maintain the margins on the frozen line. The entree costs are relatively in line with what we do. Really the big change in the costs on the frozen line is really the shipping costs, which we’ll be passing through to the consumer. So our goal is to maintain margins as we see and of core shelf stable product with frozen and hopefully improve margins over time as we see the maintenance program.
Gregory Badishkanian - Citigroup
Okay good and then just looking my model, it looks like you beat guidance for the first quarter, 2Q was above where I had, I believe from an EPS perspective above where I was modeling out that you did not raise EBITDA guidance for the year. I’m just wondering that can of implies second half is a little bit on the lighter side, are there some dynamics there that are impacting that?
- To read the full transcript on Seeking Alpha, click here »
