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J & J SNACK FOODS CORP.

(JJSF)
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J & J Snack Foods : Reports Third Quarter Sales and Earnings

07/26/2021 | 04:00pm EDT

PENNSAUKEN, N.J., July 26, 2021 (GLOBE NEWSWIRE) -- 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.

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

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Source: J & J Snack Foods Corp.

2021 GlobeNewswire, Inc., source Press Releases

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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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Mean consensus OUTPERFORM
Number of Analysts 4
Last Close Price 153,96 $
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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