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J & J SNACK FOODS CORP.

(JJSF)
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J & J SNACK FOODS : REPORTS THIRD QUARTER SALES AND EARNINGS (Form 8-K)

07/26/2021 | 04:08pm EDT

J & J SNACK FOODS

REPORTS THIRD QUARTER SALES

AND EARNINGS

Pennsauken, NJ, July 26th, 2021 - J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the third quarter ended June 26th, 2021.

Sales increased 51% to $324.3 million from $214.6 million in last year's third quarter. Net earnings were $28.9 million in the current quarter compared to a $12.6 million loss last year. Earnings per diluted share was $1.51 for the third quarter, a significant increase compared to the $0.67 loss per diluted share last year. Operating income increased to $38.1 million in the current quarter versus a $19.4 million loss last year.

For the nine months ended June 26, 2021, sales were $821.5 million, a 7% increase from the same period last year when sales were $769.5 million. Net earnings were $36.7 million for the nine months compared to $11.7 million last year. Earnings per diluted share was $1.92 for the nine-month period compared to $0.62 last year. Operating income increased 246% to $46.0 million this year from $13.3 million last year. Operating income was impacted by $2.1 million of Covid-19 related costs during this nine-month period.

The overall sales environment improved significantly this quarter benefiting our business across all three segments. Food service venues are approaching pre-Covid capacity levels and more confident consumers are getting out of the house and spending more as the market normalizes. Our Food Service segment rebounded with 68% growth versus last year and exceeded fiscal 2019 sales by 1% led by strength in soft pretzels, churros, handhelds and bakery. Even as our food service business rebounds, we continue to see strength in our Retail segment where sales were just 6% below last year despite lapping a 38% growth in the prior year. Benchmarked against a pre-Covid fiscal 2019, retail sales grew 29% even as consumer trends shift out of the home. The Frozen Beverages business was 83% above prior year for the quarter which was a significant improvement when compared to Q2 of this year where sales were still 32% below the prior year. This growth was led by the amusement, c-store and mass merchandise channels. While theater attendance continues to lag 2019 levels, traffic and average ticket are improving and should further benefit our business down the road. Improved sales volume, product mix and a strong focus on cost efficiencies helped drive improved gross margins and profitability.

Dan Fachner, J&J's President, commented, 'I am so proud of our employees across the business for helping deliver a strong quarter. Our business performance is starting to benefit from an economy that is moving much closer to pre-Covid activities. The strength of our product and brand portfolio enables us to quickly leverage consumer traffic across multiple food service and retail customers. Consumers are embracing the opportunities they missed over the last year whether that is enjoying a SUPERPRETZEL at the game or sipping on an ICEE at the beach with their family. I remain extremely confident in our business and future growth opportunities.'

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

Nine months ended

June 26,

June 27,

June 26,

June 27,

2021

2020

2021

2020

Net Sales

$ 324,344 $ 214,563 $ 821,519 $ 769,502

Cost of goods sold

228,170 177,367 614,324 585,002

Gross Profit

96,174 37,196 207,195 184,500

Operating expenses

Marketing

20,502 21,952 56,995 68,532

Distribution

27,311 21,272 75,643 69,648

Administrative

10,348 8,374 29,004 28,166

Plant shutdown impairment costs

- 5,072 - 5,072

Other general (income) expense

(131 ) (54 ) (399 ) (183 )

Total Operating Expenses

58,030 56,616 161,243 171,235

Operating Income (loss)

38,144 (19,420 ) 45,952 13,265

Other (expense)income

Investment income (loss)

470 1,300 2,419 2,673

Interest (expense) & other

(8 ) (7 ) (19 ) (60 )

Earnings (loss) before income taxes

38,606 (18,127 ) 48,352 15,878

Income taxes (benefit)

9,713 (5,480 ) 11,620 4,157

NET EARNINGS (LOSS)

$ 28,893 $ (12,647 ) $ 36,732 $ 11,721

Earnings (loss) per diluted share

$ 1.51 $ (0.67 ) $ 1.92 $ 0.62

Weighted average number of diluted shares

19,185 18,888 19,116 19,036

Earnings (loss) per basic share

1.52 $ (0.67 ) $ 1.93 $ 0.62

Weighted average number of basic shares

19,045 18,888 18,996 18,902

The accompanying notes are an integral part of these statements.

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

June 26,

2021

September 26,

(unaudited)

2020

Assets

Current assets

Cash and cash equivalents

$ 276,268 $ 195,809

Marketable securities held to maturity

9,902 51,151

Accounts receivable, net

154,845 126,587

Inventories

114,822 108,923

Prepaid expenses and other

11,547 17,087

Total current assets

567,384 499,557

Property, plant and equipment, at cost

Land

2,494 2,494

Buildings

26,582 26,582

Plant machinery and equipment

340,693 330,168

Marketing equipment

253,199 250,914

Transportation equipment

10,232 9,966

Office equipment

34,291 33,878

Improvements

45,349 43,264

Construction in progress

28,134 19,995

Total Property, plant and equipment, at cost

740,974 717,261

Less accumulated depreciation and amortization

482,056 455,645

Property, plant and equipment, net

258,918 261,616

Other assets

Goodwill

121,833 121,833

Other intangible assets, net

79,676 81,622

Marketable securities held to maturity

7,568 16,927

Marketable securities available for sale

11,273 13,976

Operating lease right-of-use assets

51,811 58,110

Other

3,083 2,912

Total other assets

275,244 295,380

Total Assets

$ 1,101,546 $ 1,056,553

Liabilities and Stockholders' Equity

Current Liabilities

Current finance lease liabilities

$ 252 $ 349

Accounts payable

97,117 73,135

Accrued insurance liability

15,764 13,039

Accrued liabilities

6,890 7,420

Current operating lease liabilities

12,780 13,173

Accrued compensation expense

15,000 16,134

Dividends payable

12,064 10,876

Total current liabilities

159,867 134,126

Noncurrent finance lease liabilities

417 368

Noncurrent operating lease liabilities

41,573 47,688

Deferred income taxes

64,284 64,413

Other long-term liabilities

375 460

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 19,061,000 and 18,915,000 respectively

69,572 49,268

Accumulated other comprehensive loss

(13,182 ) (15,587 )

Retained Earnings

778,640 775,817

Total stockholders' equity

835,030 809,498

Total Liabilities and Stockholders' Equity

$ 1,101,546 $ 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)

Nine Months Ended

June 26,

June 27,

2021

2020

Operating activities:

Net earnings

$ 36,732 $ 11,721

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation of fixed assets

36,278 37,353

Amortization of intangibles and deferred costs

2,096 2,516

Share-based compensation

3,252 3,421

Deferred income taxes

(188 ) (426 )

(Gain) loss on marketable securities

(926 ) 1,746

Plant shutdown impairment costs

- 5,072

Other

(305 ) (309 )

Changes in assets and liabilities net of effects from purchase of companies

(Increase) decrease in accounts receivable

(27,940 ) 24,634

Increase in inventories

(5,964 ) (3,751 )

(Increase) decrease in prepaid expenses

5,710 (7,879 )

Increase (decrease) in accounts payable and accrued liabilities

24,823 (7,478 )

Net cash provided by operating activities

73,568 66,620

Investing activities:

Payments for purchases of companies, net of cash acquired

- (57,197 )

Purchases of property, plant and equipment

(34,456 ) (47,637 )

Purchases of marketable securities

- (6,103 )

Proceeds from redemption and sales of marketable securities

54,191 54,125

Proceeds from disposal of property and equipment

2,079 2,852

Other

42 (72 )

Net cash provided by (used in) investing activities

21,856 (54,032 )

Financing activities:

Payments to repurchase common stock

- (8,972 )

Proceeds from issuance of stock

17,178 6,300

Payments on capitalized lease obligations

(48 ) (272 )

Payment of cash dividend

(32,719 ) (31,193 )

Net cash used in financing activities

(15,589 ) (34,137 )

Effect of exchange rate on cash and cash equivalents

624 (885 )

Net increase (decrease) in cash and cash equivalents

80,459 (22,434 )

Cash and cash equivalents at beginning of period

195,809 192,395

Cash and cash equivalents at end of period

$ 276,268 $ 169,961

The accompanying notes are an integral part of these statements.

Three months ended

Nine months ended

June 26,

June 27,

June 26,

June 27,

2021

2020

2021

2020

Sales to External Customers:

Food Service

Soft pretzels

$ 50,895 $ 21,384 $ 120,359 $ 116,985

Frozen juices and ices

13,927 8,688 30,812 25,222

Churros

20,096 7,321 46,358 38,466

Handhelds

18,971 7,448 56,574 22,084

Bakery

85,706 69,237 257,580 255,016

Other

6,884 2,543 14,546 13,628

Total Food Service

$ 196,478 $ 116,621 $ 526,226 $ 471,401

Retail Supermarket

Soft pretzels

$ 11,193 $ 12,716 $ 40,871 $ 34,874

Frozen juices and ices

36,898 33,322 71,600 59,279

Biscuits

4,562 8,151 18,717 21,759

Handhelds

1,191 3,257 6,215 9,135

Coupon redemption

(513 ) (807 ) (2,196 ) (2,216 )

Other

526 863 1,652 1,668

Total Retail Supermarket

$ 53,857 $ 57,502 $ 136,859 $ 124,499

Frozen Beverages

Beverages

$ 42,279 $ 16,456 $ 76,663 $ 83,606

Repair and maintenance service

22,789 17,259 59,903 61,524

Machines revenue

8,404 6,363 20,556 27,254

Other

536 362 1,312 1,218

Total Frozen Beverages

$ 74,009 $ 40,440 $ 158,434 $ 173,602

Consolidated Sales

$ 324,344 $ 214,563 $ 821,519 $ 769,502

Depreciation and Amortization:

Food Service

$ 6,817 $ 7,050 $ 20,334 $ 21,208

Retail Supermarket

378 468 1,147 1,156

Frozen Beverages

5,469 5,864 16,893 17,505

Total Depreciation and Amortization

$ 12,664 $ 13,382 $ 38,374 $ 39,869

Operating Income :

Food Service

$ 17,644 $ (18,242 ) $ 29,879 $ 7,743

Retail Supermarket

9,080 7,910 20,167 14,464

Frozen Beverages

11,420 (9,088 ) (4,094 ) (8,942 )

Total Operating Income (Loss)

$ 38,144 $ (19,420 ) $ 45,952 $ 13,265

Capital Expenditures:

Food Service

$ 10,383 $ 7,865 $ 25,915 $ 26,599

Retail Supermarket

93 390 194 1,625

Frozen Beverages

5,151 2,397 8,347 19,413

Total Capital Expenditures

$ 15,627 $ 10,652 $ 34,456 $ 47,637

Assets:

Food Service

$ 779,730 $ 729,331 $ 779,730 $ 729,331

Retail Supermarket

33,405 33,766 33,405 33,766

Frozen Beverages

288,411 294,189 288,411 294,189

Total Assets

$ 1,101,546 $ 1,057,286 $ 1,101,546 $ 1,057,286

RESULTS OF OPERATIONS

Consolidated J&J Snack Foods net sales increased $109.8 million or 51% to $324.3 million for the three months ended June 26th, 2021.

FOOD SERVICE

Sales to food service customers increased $79.9 million or 68% in the third quarter to $196.5 million. Food service venues are approaching pre-COVID capacity levels and more confident consumers are leaving their homes and spending more as the market normalizes. Sales accelerated throughout our key channels led by schools, amusement/recreation, restaurants, c-stores and theaters. Soft pretzel sales to food service increased 138% to $50.9 million. Frozen juices and ices sales increased 60% to $13.9 million and Churro sales increased 174% in the quarter to $20.1 million.

Sales of bakery products increased 24% to $85.7 million in the third quarter. Sales of handhelds increased 155% to $19.0 million 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 $11.8 million in the 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 increase compared to last year.

Operating income in our Food Service segment was $17.6 million in the third quarter compared with an operating loss of $18.2 million in the prior year quarter. The increase in operating income was primarily due to the increase in sales which improved margin efficiencies and expense leverage.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets decreased $3.6 million or 6% to $53.9 million in the third quarter. The decrease in sales in the current quarter was primarily attributable to the stronger customer demand in the prior year third quarter resulting from the initial responses to the COVID-19 pandemic. During the prior year third quarter, a surge in demand and sales was experienced related to the effects of the rapid changes in consumer purchasing habits.

Sales of soft pretzels decreased 12% to $11.2 million in the third quarter. Sales of frozen juices and ices increased 11% to $36.9 million in the third quarter. Sales of biscuits decreased 44% to $4.6 million and Handheld sales to retail supermarket customers decreased 63% to $1.2 million in the third quarter.

Price increases and sales of new products had a minimum impact on revenue in the quarter as sales were driven primarily by consumer traffic and volume trends in retail outlets.

Operating income in our Retail Supermarkets segment increased $1.2 million or 15% to $9.1 million in this year's third quarter driven by improving operating income margins which were approximately 300 basis points better than prior year.

FROZEN BEVERAGES

Frozen beverage and related product sales increased $33.6 million or 83% to $74.0 million in the third quarter. Beverage related sales increased 157% to $42.3 million, with the majority of the increase attributable to the increase in gallon sales. The increase was led by the amusement channel that experienced sales above pre-COVID 19 levels and continued traffic increases in the mass merchandise, QSR and theater channels. The theater channel continued to show improvement this quarter, and while current quarter theater channel sales still lagged 2019 sales by over 50%, it represented a significant improvement over the prior year quarter.

Service revenue increased 32% to $22.8 million in the third quarter as customers accelerated equipment maintenance in the quarter to support the post COVID-19 recovery. Machine revenue (primarily sales of frozen beverage machines) increased 32% to $8.4 million in the third quarter. Retailers are beginning to re-invest again which helped to accelerate machine revenues in the quarter.

Our Frozen Beverage segment generated operating income of $11.4 million in the third quarter compared with an operating loss of $9.1 million in the prior year third quarter. The comparative performance was impacted due to the challenging sales environment in the prior year quarter due to the COVID-19 pandemic.

CONSOLIDATED

Gross profit as a percentage of sales was 29.7% in the three-month period this year and 17.3% last year with the increase largely attributable to the benefit of increased sales, favorable product mix and corresponding margin efficiencies.

Total operating expenses increased $1.4 million in the third quarter, however, as a percentage of sales, total operating expenses decreased to 17.9% from 26.4% in the prior year quarter. Marketing expenses decreased to 6.3% of sales in this year's quarter from 10.2% last year. Distribution expenses were 8.4% of sales in this year's quarter compared to 9.9% of sales last year. Administrative expenses were 3.2% of sales this quarter compared to 3.9% last year. Operating expenses in the prior year quarter were also impacted by $5.1 million of plant shutdown impairment costs.

Operating income was $38.1 million in the third quarter compared with an operating loss of $19.4 million in the prior year quarter, largely the result of the aforementioned items.

Our investments generated before tax income of $0.5 million this quarter, a decrease of $0.8 million compared to prior year quarter. The decrease was primarily attributable to the decrease in investments held between periods.

Net earnings in the third quarter were $28.9 million compared with a net loss of $12.6 million in the prior year quarter. Our effective tax rate was 25% 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.

Disclaimer

J&J Snack Foods Corporation published this content on 26 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2021 20:07:15 UTC.


© Publicnow 2021
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Financials (USD)
Sales 2021 1 134 M - -
Net income 2021 59,7 M - -
Net Debt 2021 - - -
P/E ratio 2021 48,3x
Yield 2021 -
Capitalization 2 935 M 2 935 M -
Capi. / Sales 2021 2,59x
Capi. / Sales 2022 2,37x
Nbr of Employees 4 100
Free-Float 58,7%
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Number of Analysts 4
Last Close Price 153,97 $
Average target price 174,00 $
Spread / Average Target 13,0%
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Managers and Directors
Daniel J. Fachner President & Chief Executive Officer
Ken A. Plunk Chief Financial Officer & Senior Vice President
Gerald B. Shreiber Chairman
Peter G. Stanley Independent Director
Sidney R. Brown Independent Director
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