May 17, 2022

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Simply The Best Food

J & J Snack Foods Reports First Quarter Sales and Earnings

PENNSAUKEN, N.J., Jan. 25, 2021 (GLOBE NEWSWIRE) — J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the first quarter ended December 26, 2020.

Sales decreased 15% to $241 million from $282.9 million in last year’s first quarter. Net earnings were $1.8 million in the current quarter down from $17.1 million last year.  Earnings per diluted share was $.09 for the first quarter down from $.89 last year. Operating income decreased 97% to $578 thousand in the current quarter from $21.7 million last year. Operating income was impacted by approximately $730 thousand of COVID-19 related costs as we remain focused on the safety and protection of our associates. This year’s quarter benefited from a $420,000 tax benefit related to share based compensation contributing to an effective tax rate of 8%.    We are estimating an effective tax rate of 25% for the full year 2021. 

Our sales remain challenged by the lingering impacts of COVID-19 on both our consumers and our customers. Traffic in key food service venues that comprise 2/3 of our sales continue to operate at substantially reduced and limited capacity. This was especially pronounced during the Christmas holiday season where many of these venues rely on seasonally higher traffic and sales. Relative to our 2020 fourth quarter where sales were 19% below last year, we did see improvement in the 2021 first quarter where sales were 15% below last year. Our business remains strong, liquid and well positioned for growth with $285 million in cash and marketable securities up from $278 million on September 26, 2020. We do, however, anticipate that the virus will continue to have a negative impact on the foodservice industry in the short term.

Dan Fachner, J&J’s President, commented, “These are unprecedented times, and I’m so proud of our employees, and their commitment to this Company and serving our customers and consumers each and every day. Consumers continue to stay at home which has driven strong growth in our retail segment, but closures and limited capacity food service venues are challenging sales in other parts of our business. Our balance sheet is strong, and we will continue to focus on driving cost efficiencies across our operations. We continue to be optimistic and remain confident that we are well positioned for future growth.”

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, LUIGI’S Real Italian Ice, MINUTE MAID* frozen ices, WHOLE FRUIT sorbet and frozen fruit bars, SOUR PATCH KIDS** Flavored Ice Pops, Tio Pepe’s & CALIFORNIA CHURROS, and THE FUNNEL CAKE FACTORY funnel cakes and several bakery brands within DADDY RAY’S, COUNTRY HOME BAKERS and HILL & VALLEY. J&J Snack Foods Corp. has approximately twenty manufacturing facilities and generates more than $1 billion in annual revenue. The Company has a history of strong sales growth and financial performance and remains focused on opportunities to expand its unique niche market product offering while bringing smiles to families worldwide. 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.













































 
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
       
  Three months ended
  December 26,   December 28,
  2020   2019
       
Net Sales $ 240,997     $ 282,897  
       
Cost of goods sold   190,872       205,036  
Gross Profit   50,125       77,861  
       
Operating expenses    
Marketing   17,301       22,732  
Distribution   22,889       23,542  
Administrative   9,440       9,618  
Other general expense   (83 )     266  
Total Operating Expenses   49,547       56,158  
       
Operating Income   578       21,703  
       
Other income (expense)    
Investment income   1,370       1,786  
Interest expense & other   (15 )     (26 )
       
Earnings before    
income taxes   1,933       23,463  
       
Income tax expense   155       6,404  
       
NET EARNINGS $ 1,778     $ 17,059  
       
Earnings per diluted share $ 0.09     $ 0.89  
       
Weighted average number    
of diluted shares   19,031       19,144  
       
Earnings per basic share $ 0.09     $ 0.90  
       
Weighted average number of    
basic shares   18,935       18,898  
       




































































 
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
  December 26,    
  2020   September 26,
  (unaudited)   2020
Assets      
Current assets      
Cash and cash equivalents $ 228,335     $ 195,809  
Marketable securities held to maturity   34,286       51,151  
Accounts receivable, net   113,210       126,587  
Inventories   114,882       108,923  
Prepaid expenses and other   17,942       17,087  
Total current assets   508,655       499,557  
       
Property, plant and equipment, at cost    
Land   2,494       2,494  
Buildings   26,582       26,582  
Plant machinery and equipment   331,357       330,168  
Marketing equipment   249,440       250,914  
Transportation equipment   10,251       9,966  
Office equipment   34,095       33,878  
Improvements   43,994       43,264  
Construction in progress   23,874       19,995  
Total Property, plant and equipment, at cost   722,087       717,261  
Less accumulated depreciation      
and amortization   462,873       455,645  
Property, plant and equipment, net   259,214       261,616  
       
Other assets      
Goodwill   121,833       121,833  
Other intangible assets, net   80,947       81,622  
Marketable securities held to maturity   8,595       16,927  
Marketable securities available for sale   13,734       13,976  
Operating lease right-of-use assets   55,989       58,110  
Other   2,876       2,912  
Total other assets   283,974       295,380  
Total Assets $ 1,051,843     $ 1,056,553  
       
Liabilities and Stockholders’ Equity    
Current Liabilities      
Current finance lease liabilities $ 332     $ 349  
Accounts payable   76,325       73,135  
Accrued insurance liability   13,842       13,039  
Accrued liabilities   6,924       7,420  
Current operating lease liabilities   12,981       13,173  
Accrued compensation expense   11,387       16,134  
Dividends payable   10,900       10,876  
Total current liabilities   132,691       134,126  
       
Noncurrent finance lease liabilities   299       368  
Noncurrent operating lease liabilities   45,641       47,688  
Deferred income taxes   64,469       64,413  
Other long-term liabilities   454       460  
       
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    
18,956,000 and 18,915,000 respectively   54,902       49,268  
Accumulated other comprehensive loss   (13,308 )     (15,587 )
Retained Earnings   766,695       775,817  
Total stockholders’ equity   808,289       809,498  
Total Liabilities and Stockholders’ Equity $ 1,051,843     $ 1,056,553  
       
The accompanying notes are an integral part of these statements.
 























































 
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands)
       
  Three months ended
  December 26,   December 28,
  2020   2019
Operating activities:      
Net earnings $ 1,778     $ 17,059  
Adjustments to reconcile net      
earnings to net cash      
provided by operating activities:    
Depreciation of fixed assets   12,269       11,887  
Amortization of intangibles      
and deferred costs   679       843  
Share-based compensation   1,244       1,299  
Deferred income taxes   (8 )     (231 )
Loss on marketable securities   (681 )     9  
Other   (80 )     14  
Changes in assets and liabilities    
net of effects from purchase of companies    
Decrease in accounts receivable   13,701       10,254  
Increase in inventories   (5,641 )     (8,524 )
(Increase) decrease in prepaid expenses   (889 )     1,922  
Decrease in accounts payable and    
accrued liabilities   (1,068 )     (963 )
Net cash provided by operating activities   21,304       33,569  
Investing activities:      
Payments for purchases of companies,    
net of cash acquired   0       (44,970 )
Purchases of property, plant      
and equipment   (9,676 )     (17,605 )
Purchases of marketable securities   0       (4,000 )
Proceeds from redemption and sales of    
marketable securities   26,148       18,782  
Proceeds from disposal of property and    
equipment   880       898  
Other   15       38  
Net cash provided by (used in) investing activities   17,367       (46,857 )
Financing activities:      
Proceeds from issuance of stock   4,390       468  
Payments on finance lease obligations   (86 )     (86 )
Payment of cash dividend   (10,876 )     (9,447 )
Net cash used in financing activities   (6,572 )     (9,065 )
Effect of exchange rate on cash    
and cash equivalents   427       285  
Net increase (decrease) in cash      
and cash equivalents   32,526       (22,068 )
Cash and cash equivalents at beginning    
of period   195,809       192,395  
Cash and cash equivalents at end      
of period $ 228,335     $ 170,327  
       
The accompanying notes are an integral part of these statements.
 





























































   
  Three months ended
  December 26,   December 28,
  2020   2019
       
  (unaudited)
  (in thousands)
Sales to External Customers:      
Food Service      
Soft pretzels $ 32,687     $ 49,941  
Frozen juices and ices   6,295       7,043  
Churros   11,542       16,391  
Handhelds   17,611       7,189  
Bakery   88,964       96,372  
Other   3,326       6,512  
Total Food Service $ 160,425     $ 183,448  
       
Retail Supermarket      
Soft pretzels $ 13,888     $ 9,826  
Frozen juices and ices   15,316       10,093  
Biscuits   7,660       6,978  
Handhelds   2,780       2,761  
Coupon redemption   (1,075 )     (543 )
Other   525       311  
Total Retail Supermarket $ 39,094     $ 29,426  
       
Frozen Beverages      
Beverages $ 15,855     $ 35,255  
Repair and      
maintenance service   18,896       22,486  
Machines revenue   6,489       11,981  
Other   238       301  
Total Frozen Beverages $ 41,478     $ 70,023  
       
Consolidated Sales $ 240,997     $ 282,897  
       
Depreciation and Amortization:      
Food Service $ 6,786     $ 6,918  
Retail Supermarket   386       359  
Frozen Beverages   5,776       5,453  
Total Depreciation and Amortization $ 12,948     $ 12,730  
       
Operating Income :      
Food Service $ 6,180     $ 18,034  
Retail Supermarket   4,723       2,217  
Frozen Beverages   (10,325 )     1,452  
Total Operating Income $ 578     $ 21,703  
       
Capital Expenditures:      
Food Service $ 8,286     $ 8,403  
Retail Supermarket   21       960  
Frozen Beverages   1,369       8,242  
Total Capital Expenditures $ 9,676     $ 17,605  
       
Assets:      
Food Service $ 749,508     $ 760,852  
Retail Supermarket   31,668       30,963  
Frozen Beverages   275,898       304,291  
Total Assets $ 1,057,074     $ 1,096,106  
       

 

RESULTS OF OPERATIONS

Net sales decreased $41,900,000 or 15% to $240,997,000 for the three months ended December 26, 2020. Operating income decreased $21,125,000 or 97% for the quarter to $578,000.

FOOD SERVICE

Sales to food service customers decreased $23,023,000 or 13% in the first quarter to $160,425,000. Key customer venues and channels like theme parks, schools and theaters continue to operate at limited capacity impacting food service sales. Soft pretzel sales to food service decreased 35% to $32,687,000. Frozen juices and ices sales decreased 11% to $6,295,000 and Churro sales were down 30% in the quarter to $11,542,000. Sales of funnel cake decreased $3,050,000 or 49% in the quarter.

Sales of bakery products decreased $7,408,000 or 8% in the first quarter to $88,964,000, as the virus impacted traffic, purchase choices and frequency in this part of our business.

Sales of handhelds increased $10,422,000 or 145% in the quarter led by the continued success of a new product developed for one of our larger wholesale club customers.

Sales of new products in the first twelve months since their introduction were approximately $12,200,000 in this quarter led by the previously noted handheld item. Price increases had a marginal impact on results in the quarter as traffic and volume drove almost all the sales decline compared to last year.

Operating income in our Food Service segment decreased $11,854,000 in the quarter to $6,180,000 primarily because of sales declines which impacted margin efficiencies and expense leverage.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $9,668,000 or 33% to $39,094,000 in the first quarter.  Our SUPERPRETZEL brand performed well in the quarter driving an increase in soft pretzel sales of 41% to $13,888,000. Sales of frozen juices and ices were up 52% to $15,316,000 in the first quarter and sales of biscuits were up 10% to $7,660,000. Handheld sales to retail supermarket customers increased 1% in the quarter. Sales from new products increased an estimated $400,000 in the quarter driven by frozen novelty items.

Price increases had minimum impact on growth in the quarter as sales were driven by increased consumer traffic and volume in retail outlets.

Operating income in our Retail Supermarkets segment increased $2,506,000 or 113% to $4,723,000 in this year’s first quarter driven by sales increases and operating income margins of 12%, over 400 basis points better than last year.

FROZEN BEVERAGES

Frozen beverage and related product sales decreased $28,545,000 or 41% to $41,478,000 in the first quarter. Beverage related sales declined 55% to $15,855,000. Gallon sales were down 56% for the three months as we continue to see traffic impacted from Covid-19 related concerns in theaters, amusement venues and key retailers. These venues also rely on incremental seasonal sales in December that was impacted from reduced operating capacity and consumers staying home. Service revenue decreased 16% to $18,896,000 in the first quarter driven almost entirely from cancellation of a key customer’s planned maintenance program. Machine revenue (primarily sales of frozen beverage machines) was $6,489,000, a decrease of 46% due mainly from lapping $5,000,000 in non-recurring sales in last year’s quarter.

Our Frozen Beverage segment incurred an operating loss for the quarter of $10,325,000 compared to operating income of $1,452,000 last year due to the challenging COVID-19 sales environment which also impacts our gross margin efficiency and ability to leverage fixed expenses.

CONSOLIDATED

Gross profit as a percentage of sales was 20.8% in the three-month period this year and 27.5% last year.  Gross profit percentage decreased because of continued Covid-19 sales pressure from our food service and frozen beverages segments. This creates margin leverage challenges as we manage lower production volumes on businesses with large-fixed expense bases.

Total operating expenses decreased $6,611,000 in the first quarter but as a percentage of sales increased to 20.6% from 19.9% last year. Marketing expenses decreased to 7.2% of sales in this year’s quarter from 8% last year. Distribution expenses were 9.5% of sales in this year’s quarter compared to 8.3% of sales last year. Administrative expenses were 3.9% of sales this quarter compared to 3.4% last year.

Operating income decreased $21,125,000 or 97% to $578,000 in the first quarter as a result of the aforementioned items.

Our investments generated before tax income of $1,370,000 this quarter, down from $1,760,000 last year due to decreases in the amount of investments and lower interest rates.

Net earnings decreased $15,281,000, or 90%, in the current three-month period to $1,778,000. Our effective tax rate was 8% in this year’s quarter.

There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.

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. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Contact:

Ken Plunk
Senior Vice President
Chief Financial Officer
(615) 587-4374