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J&J Snack Foods Reports Fiscal 2024 First Quarter Revenue of $348.3M and Net Earnings Growth of 9.8%

MOUNT LAUREL, N.J., Feb. 05, 2024 (GLOBE NEWSWIRE) — J&J Snack Foods Corp. (NASDAQ: JJSF) (the “Company”) today reported financial results for the first quarter ended December 30, 2023.

    First Quarter
Actuals $ vs. LY % vs. LY
Net Sales $348.3M ($3.0M) (0.9%)
Operating Income $9.7M $0.4M 3.8%
Net Earnings $7.3M $0.6M 9.8%
Earnings per Diluted Share $0.37 $0.03 8.8%
       
Adjusted Operating Income $13.5M $2.3M 20.6%
Adjusted EBITDA $30.2M $4.9M 19.4%
Adjusted Earnings per Diluted Share $0.52 $0.10 23.8%

This press release contains non-GAAP financial measures. Please refer to the Non-GAAP Financial Measures section below for reconciliations to the most comparable GAAP measures.

Dan Fachner, J&J Snack Foods Chairman, President and CEO, commented, “J&J Snack Foods continues to execute on our long-term strategy while managing through a softer consumer environment. Fiscal first quarter net sales declined approximately 1%, in line with trends in the overall industry. Declines in consumer traffic and consumption at many of our customers impacted our sales in the quarter compared to a strong quarter last year. While we experienced softness across Food Service, we saw resilience in Retail and continued strong growth in Frozen Beverages with sales growing 1.6% and 8.5%, respectively. Despite overall softer sales, our ongoing focus on gross margin expansion resulted in a 130-basis point improvement, reflecting the positive impact of our strategy to grow higher margin core products, as well as continued gains in overall productivity. This resulted in healthy bottom-line growth, including a 20.6% increase in adjusted operating income and a 19.4% increase in adjusted EBITDA.

“Food Service sales decreased 4.1% versus the prior year period, primarily reflecting reduced inventories of pies and cookies among certain customers during the holiday season, as well as a decline in Handhelds sales due to a contractual cost true-up agreement. These declines were partially offset by our Churros category, which grew 8.9%, as we continue to drive growth of this high-margin business. Retail segment sales increased 1.6%, as declines in Frozen Novelties and Biscuit sales were offset by sales growth across Soft Pretzels and Handhelds. Frozen Beverage segment posted an 8.5% increase in sales, driven by growth across all three sub-segments: beverage, maintenance, and machine sales.

“Over the past two years, we have continued to make strategic investments to better support our many growth opportunities and improve our overall operations, including our distribution network and production capabilities. During the quarter, we incurred $2.2 million in one-time expenses reflecting transition costs related to the late October opening of our second regional distribution center in New Jersey. While this one-time transition cost impacted fiscal first quarter operating income and distribution expense, our two new distribution centers are exceeding expectations and will enable us to continue driving productivity improvements in our supply chain.

“Looking ahead, we expect to build momentum through the balance of the fiscal year as we execute our strategy to grow our core brands, cross-sell the portfolio and expand our customer footprint. The diverse nature of our business, along with the power of our brands and the channel diversity of our products is something that we are confident will continue to serve us well in fiscal 2024 and beyond. Our company has never been more aligned in its vision and strategy, and we are excited about the opportunities ahead of us to deliver long-term value to our employees, partners, and shareholders.”

First Quarter Highlights

Net sales decreased 0.9% to $348.3 million in Q1 of fiscal 2024, compared to Q1 of fiscal 2023.

Key highlights include:

Gross profit as a percentage of sales was 27.2% in Q1 ’24, comparing favorably to 25.9% in Q1 ’23, reflecting improved product mix, aligned pricing, productivity improvements, as well as the stabilization of inflationary pressures across the majority of our businesses. We experienced deflation in some raw materials for the quarter led by flour, oils, dairy, and eggs, but this was offset by double-digit inflation in sugar/sweeteners, mixes, chocolates, and meats.

Total operating expenses of $84.9 million represented 24.4% of sales for the quarter, compared to 23.2% in Q1 ’23.

Adjusted operating income was $13.5 million in the first quarter of fiscal 2024, compared to $11.2 million in the prior year period, with the increase driven by improved gross margins and supply chain efficiencies. This led to net earnings in Q1 ’24 of $7.3 million, compared to $6.6 million in Q1 ’23. Our effective tax rate was 26.6% in Q1 ’24.        

Food Service Segment First Quarter Highlights

Retail Segment First Quarter Highlights

Frozen Beverages Segment First Quarter Highlights      

Conference Call

J&J Snack Foods Corp. will host a conference call to discuss results and business outlook on February 6, 2024, at 10:00 a.m. Eastern Time. Conference call participants should register by clicking on this Registration Link to receive the dial-in number and a personal PIN, which are required to access the conference call. A live audio webcast of the conference call will also be available on the Investors homepage at www.jjsnack.com.

About J & J Snack Foods Corp.

J & J Snack Foods Corp. (NASDAQ: JJSF) is a leader and innovator in the snack food industry, providing innovative, niche, and affordable branded snack foods and beverages to foodservice and retail supermarket outlets. Manufactured and distributed nationwide, our principal products include SUPERPRETZEL, the #1 soft pretzel brand in the world, as well as internationally known ICEE and SLUSH PUPPIE frozen beverages, DIPPIN’ DOTS ice cream, LUIGI’S Real Italian Ice, MINUTE MAID* frozen ices, WHOLE FRUIT sorbet and frozen fruit bars, SOUR PATCH KIDS** Flavored Ice Pops, HOLA! CHURROS, and THE FUNNEL CAKE FACTORY funnel cakes and several bakery brands within DADDY RAY’S, COUNTRY HOME BAKERS and HILL & VALLEY. For more information, please visit http://www.jjsnack.com.

*MINUTE MAID is a registered trademark of The Coca-Cola Company.
**SOUR PATCH KIDS is a registered trademark of Mondelēz International group, used under license.

Cautionary Statement Regarding Forward-Looking Information
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s expected future financial position, results of operations, revenue growth and profit levels, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as “anticipate,” “if,” “believe,” “plan,” “goals,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements. This includes, without limitation, our statements, and expectations regarding any current or future recovery in our industry and the future impact of our operational efficiency projects. Such forward-looking statements are inherently uncertain, and readers must recognize that actual results may differ materially from the expectations of management. We do not undertake a duty to update such forward-looking statements. Factors that may cause actual results to differ materially from those in the forward-looking statements include consumer spending, price competition, acceptance of new products, the pricing and availability of raw materials, transportation costs, changes in the competitive marketplace the uncertainty and ultimate economic impact of the COVID-19 pandemic or similar health outbreaks, and other risks identified in our annual report on Form 10-K, and our other filings with the Securities and Exchange Commission. Many of these factors are outside of the Company’s control.

Non-GAAP Financial Measures
Adjusted EBITDA consists of net earnings adjusted to exclude: income taxes (benefit); investment income; interest expense; depreciation and amortization; share-based compensation expense; net (gain) loss on sale or disposal of assets; impairment charges, restructuring costs, merger and acquisition costs, acquisition related inventory adjustments, strategic business transformation costs, and integration costs.

Adjusted Operating Income consists of operating income adjusted to exclude: impairment charges, restructuring costs, merger and acquisition costs, acquisition related amortization expenses and inventory adjustments, strategic business transformation costs, and integration costs.

Adjusted Earnings per Diluted Share consists of net earnings adjusted to exclude: impairment charges, restructuring costs, merger and acquisition costs, acquisition related amortization expenses and inventory adjustment, strategic business transformation costs, and integration costs. For purposes of comparability, the income tax effect of pre-tax adjustments is determined using statutory tax rates.

This press release contains certain non-GAAP financial measures; Adjusted EBITDA, Adjusted Operating Income, and Adjusted Earnings per Diluted Share. A “non-GAAP financial measure” is a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”) in the statements of income, balance sheets, or statements of cash flow of the company. Pursuant to applicable reporting requirements, the company has provided reconciliations below of non-GAAP financial measures to the most directly comparable GAAP measure.

The non-GAAP financial measures presented within the Company’s earnings release are not indicators of our financial performance under GAAP and should not be considered as an alternative to the applicable GAAP measure. These non-GAAP measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. In addition, in evaluating these non-GAAP measures, you should be aware that in the future we may incur income, expenses, gains and losses, similar to the adjustments in this press release. Our presentation of these non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence to our GAAP results and using non-GAAP measures only as supplemental presentations.

The non-GAAP measures presented are utilized by management to evaluate the Company’s business performance and profitability by excluding certain items that may not be indicative of our recurring core business operating results. The Company believes that these measures provide additional clarity for investors by excluding specific income, expenses, gains, and losses, in an effort to show comparable business operating results for the periods presented. Similarly, Management believes these adjusted measures are useful performance measures because certain items included in the calculations may either mask or exaggerate trends in the Company’s ongoing operating performance. See the reconciliation of Non-GAAP Financial Measures below.

Investor Contact:
Joseph Jaffoni, Norberto Aja, or Jennifer Neuman
JCIR
(212) 835-8500
jjsf@jcir.com

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited) (in thousands, except per share amounts)
       
  Three months ended
  December 30,   December 24,
  2023   2022
       
Net Sales $ 348,308     $ 351,343  
       
Cost of goods sold   253,723       260,488  
Gross Profit   94,585       90,855  
       
Operating expenses      
Marketing and selling   27,472       23,699  
Distribution   40,303       42,049  
Administrative   18,199       16,391  
Other general expense (income)   (1,072 )     (612 )
Total Operating Expenses   84,902       81,527  
       
Operating Income   9,683       9,328  
       
Other income (expense)      
Investment income   798       685  
Interest expense   (560 )     (1,049 )
       
Earnings before      
income taxes   9,921       8,964  
       
Income tax expense   2,639       2,331  
       
NET EARNINGS $ 7,282     $ 6,633  
       
Earnings per diluted share $ 0.37     $ 0.34  
       
Weighted average number      
of diluted shares   19,423       19,274  
       
Earnings per basic share $ 0.38     $ 0.35  
       
Weighted average number of      
basic shares   19,344       19,222  
       
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
       
  December 30,    
  2023   September 30,
  (unaudited)   2023
Assets      
Current assets      
Cash and cash equivalents $ 50,020     49,581  
Accounts receivable, net   166,156     198,129  
Inventories   172,724     171,539  
Prepaid expenses and other   8,379     10,963  
Total current assets   397,279     430,212  
       
Property, plant and equipment, at cost   979,314     960,198  
Less accumulated depreciation      
and amortization   588,241     574,295  
Property, plant and equipment, net   391,073     385,903  
       
Other assets      
Goodwill   185,070     185,070  
Other intangible assets, net   181,913     183,529  
Operating lease right-of-use assets   133,715     88,868  
Other   3,507     3,654  
Total other assets   504,205     461,121  
Total Assets $ 1,292,557     1,277,236  
       
Liabilities and Stockholders’ Equity      
Current Liabilities      
Current finance lease liabilities $ 159     201  
Accounts payable   85,293     90,758  
Accrued insurance liability   16,460     15,743  
Accrued liabilities   13,144     14,214  
Current operating lease liabilities   17,934     16,478  
Accrued compensation expense   18,090     23,341  
Dividends payable   14,235     14,209  
Total current liabilities   165,315     174,944  
       
Long-term debt   7,000     27,000  
Noncurrent finance lease liabilities   549     600  
Noncurrent operating lease liabilities   121,626     77,631  
Deferred income taxes   81,085     81,310  
Other long-term liabilities   4,521     4,233  
       
Stockholders’ Equity      
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued        
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,367,000 and 19,332,000 respectively   120,517     114,556  
Accumulated other comprehensive loss   (8,231 )   (10,166 )
Retained Earnings   800,175     807,128  
Total stockholders’ equity   912,461     911,518  
Total Liabilities and Stockholders’ Equity $ 1,292,557     1,277,236  
       
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands)
       
  Three months ended
  December 30,   December 24,
  2023   2022
Operating activities:      
Net earnings $ 7,282     $ 6,633  
Adjustments to reconcile net earnings to net cash provided by operating activities      
Depreciation of fixed assets   15,176       13,476  
Amortization of intangibles and deferred costs   1,616       1,705  
Gains from disposals of property & equipment   (23 )     (711 )
Share-based compensation   1,480       1,239  
Deferred income taxes   (192 )     (526 )
Loss on marketable securities         37  
Other   157       (18 )
Changes in assets and liabilities, net of effects from purchase of companies      
Decrease in accounts receivable   32,407       21,171  
(Increase) in inventories   (971 )     (2,284 )
Decrease in prepaid expenses   2,625       2,343  
(Decrease) in accounts payable and accrued liabilities   (10,604 )     (21,655 )
Net cash provided by operating activities   48,953       21,410  
       
Investing activities:      
Purchases of property, plant and equipment   (19,930 )     (30,910 )
Proceeds from redemption and sales of marketable securities         3,300  
Proceeds from disposal of property and equipment   82       729  
Net cash used in investing activities   (19,848 )     (26,881 )
       
Financing activities:      
Proceeds from issuance of stock   4,481       1,285  
Borrowings under credit facility   15,000       72,000  
Repayment of borrowings under credit facility   (35,000 )     (35,000 )
Payments on finance lease obligations   (85 )     (39 )
Payment of cash dividends   (14,209 )     (13,453 )
Net cash provided by (used in) financing activities   (29,813 )     24,793  
       
Effect of exchange rates on cash and cash equivalents   1,147       363  
Net increase in cash and cash equivalents   439       19,685  
       
Cash and cash equivalents at beginning of period   49,581       35,181  
       
Cash and cash equivalents at end of period $ 50,020     $ 54,866  
       
J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (in thousands)
       
  Three months ended
  December 30,   December 24,
  2023   2022
       
       
Sales to External Customers:      
Food Service      
Soft pretzels $ 50,128     $ 52,223  
Frozen novelties   21,050       21,765  
Churros   28,061       25,757  
Handhelds   22,047       23,572  
Bakery   101,982       108,948  
Other   5,341       6,032  
Total Food Service $ 228,609     $ 238,297  
       
Retail Supermarket      
Soft pretzels $ 18,447     $ 14,485  
Frozen novelties   12,861       17,969  
Biscuits   7,032       7,913  
Handhelds   5,510       2,892  
Coupon redemption   (332 )     (176 )
Other   241       (10 )
Total Retail Supermarket $ 43,759     $ 43,073  
       
Frozen Beverages      
Beverages $ 41,950     $ 38,659  
Repair and maintenance service   24,559       23,827  
Machines revenue   8,889       7,011  
Other   542       476  
Total Frozen Beverages $ 75,940     $ 69,973  
       
Consolidated Sales $ 348,308     $ 351,343  
       
Depreciation and Amortization:      
Food Service $ 10,673     $ 9,458  
Retail Supermarket   527       391  
Frozen Beverages   5,592       5,332  
Total Depreciation and Amortization $ 16,792     $ 15,181  
       
Operating Income:      
Food Service $ 6,016     $ 6,387  
Retail Supermarket   452       1,111  
Frozen Beverages   3,215       1,830  
Total Operating Income $ 9,683     $ 9,328  
       
Capital Expenditures:      
Food Service $ 11,865     $ 24,862  
Retail Supermarket   2       1,374  
Frozen Beverages   8,063       4,674  
Total Capital Expenditures $ 19,930     $ 30,910  
       
Assets:      
Food Service $ 930,533     $ 907,736  
Retail Supermarket   36,219       16,941  
Frozen Beverages   325,805       302,871  
Total Assets $ 1,292,557     $ 1,227,548  
       
J & J SNACK FOODS CORP. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(Unaudited) (in thousands)
         
    Three Months Ended
         
    December 30,
  December 24,
    2023   2022
         
         
Reconciliation of GAAP Net Earnings to Adjusted EBITDA      
         
Net Earnings   $ 7,282     $ 6,633  
Income Taxes     2,639       2,331  
Investment Income     (798 )     (685 )
Interest Expense     560       1,049  
Depreciation and Amortization     16,792       15,181  
Share-Based Compensation     1,480       1,239  
Strategic Business Transformation Costs (2)     2,246        
Net (Gain) Loss on Sale or Disposal of Assets     (23 )     (711 )
Integration Costs           229  
Adjusted EBITDA   $ 30,178     $ 25,266  
         
         
Reconciliation of GAAP Operating Income to Adjusted
Operating Income
       
       
Operating Income   $ 9,683     $ 9,328  
Strategic Business Transformation Costs (2)     2,246        
Acquisition Related Amortization Expenses     1,616       1,679  
Integration Costs           229  
Adjusted Operating Income   $ 13,545     $ 11,236  
         
         
Reconciliation of GAAP Earnings per Diluted Share to
Adjusted Earnings per Diluted Share
       
       
Earnings per Diluted Share   $ 0.37     $ 0.34  
Strategic Business Transformation Costs (2)     0.12        
Acquisition Related Amortization Expenses     0.08       0.09  
Integration Costs           0.01  
         
Tax Effect of Non-GAAP Adjustments (1)     (0.05 )     (0.02 )
         
Adjusted Earnings per Diluted Share   $ 0.52     $ 0.42  
         
(1) Income taxes associated with pre-tax adjustments determined using statutory tax rates
(2) Strategic business transformation costs are start-up costs related to our regional distribution center supply chain transformation.
         

 

 


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