J & J Snack Foods Reports Second Quarter Sales and Earnings

PENNSAUKEN, N.J., April 26, 2021 (GLOBE NEWSWIRE) -- J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the second quarter ended March 27th, 2021.

Sales decreased 6% to $256.2 million from $272.0 million in last year’s second quarter. Net earnings were $6.1 million in the current quarter down from $7.3 million last year. Earnings per diluted share was $0.32 for the second quarter down from $0.38 last year. Operating income decreased 34% to $7.2 million in the current quarter from $11.0 million last year. Operating income was impacted by approximately $0.7 million of Covid-19 related costs as we remain focused on the safety and protection of our associates.

For the six months ended March 27, 2021, sales were $497.2 million, a 10% decline from the same period last year when sales were $554.9 million. Net earnings decreased 68% to $7.8 million for the six months compared to $24.4 million last year. Earnings per diluted share decreased 68% to $0.41 from $1.28 last year. Operating income decreased 76% to $7.8 million this year from $32.7 million last year. Operating income was impacted by $1.5 million of Covid-19 related costs during this six-month period.

Sales consistently improved throughout the quarter led by venue openings, accessibility to the Covid-19 vaccine, improving consumer confidence and the spring season. This year's Q2 sales decline was only 6% versus the prior year compared to a decline of 15% in our recently reported Q1 results. For the quarter, Food Service fell just 1% below prior year moving closer to pre-Covid sales performance, and Retail remained strong at 17% growth even as our food service business started to rebound. The Frozen Beverages business was 32% below prior year for the quarter which was a significant improvement when compared to Q1 of this year where sales were 41% below the prior year. Improved sales volume and a strong focus on cost efficiencies helped drive improved gross margins and profitability.

Dan Fachner, J&J’s President, commented, “I am starting to see some momentum in our business as key venues like theaters, amusement parks, sports arenas and schools start to open and increase capacity. Consumers are starting to get out of their homes with more confidence and enjoying experiences they have missed over the last year. Our products are well positioned for these encouraging trends, and we are excited about the opportunities ahead of us.”

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								Six months ended
	March 27,				March 28,				March 27,				March 28,
	2021				2020				2021				2020
Net Sales	$	256,178			$	272,042			$	497,175			$	554,939
Cost of goods sold	195,282				202,599				386,154				407,635
Gross Profit	60,896				69,443				111,021				147,304
Operating expenses
Marketing	19,192				23,848				36,493				46,580
Distribution	25,443				24,834				48,332				48,376
Administrative	9,216				10,174				18,656				19,792
Other general (income) expense	(185		)		(395		)		(268		)		(129		)
Total Operating Expenses	53,666				58,461				103,213				114,619
Operating Income	7,230				10,982				7,808				32,685
Other (expense) income
Investment (loss) income	579				(413		)		1,949				1,373
Interest (expense) & other	4				(27		)		(11		)		(53		)
Earnings before
income taxes	7,813				10,542				9,746				34,005
Income taxes	1,752				3,233				1,907				9,637
NET EARNINGS	$	6,061			$	7,309			$	7,839			$	24,368
Earnings per diluted share	$	0.32			$	0.38			$	0.41			$	1.28
Weighted average number
of diluted shares	19,130				19,014				19,081				19,079
Earnings per basic share	$	0.32			$	0.39			$	0.41			$	1.29
Weighted average number of
basic shares	19,006				18,921				18,971				18,910
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)
	March 27,
		2021			September 26,
	(unaudited)					2020
Assets
Current assets
Cash and cash equivalents	$	238,386			$	195,809
Marketable securities held to maturity		21,379				51,151
Accounts receivable, net		137,683				126,587
Inventories		115,590				108,923
Prepaid expenses and other		17,231				17,087
Total current assets		530,269				499,557
Property, plant and equipment, at cost
Land		2,494				2,494
Buildings		26,582				26,582
Plant machinery and equipment		337,763				330,168
Marketing equipment		248,461				250,914
Transportation equipment		9,942				9,966
Office equipment		34,186				33,878
Improvements		44,797				43,264
Construction in progress		23,484				19,995
Total Property, plant and equipment, at cost		727,709				717,261
Less accumulated depreciation
and amortization		472,012				455,645
Property, plant and equipment, net		255,697				261,616
Other assets
Goodwill		121,833				121,833
Other intangible assets, net		80,305				81,622
Marketable securities held to maturity		7,580				16,927
Marketable securities available for sale		12,518				13,976
Operating lease right-of-use assets		53,994				58,110
Other		2,719				2,912
Total other assets		278,949				295,380
Total Assets	$	1,064,915			$	1,056,553
Liabilities and Stockholders' Equity
Current Liabilities
Current finance lease liabilities	$	288			$	349
Accounts payable		83,460				73,135
Accrued insurance liability		14,136				13,039
Accrued liabilities		7,272				7,420
Current operating lease liabilities		12,978				13,173
Accrued compensation expense		14,120				16,134
Dividends payable		10,943				10,876
Total current liabilities		143,197				134,126
Noncurrent finance lease liabilities		256				368
Noncurrent operating lease liabilities		43,609				47,688
Deferred income taxes		64,449				64,413
Other long-term liabilities		404				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
19,034,000 and 18,915,000 respectively		65,026				49,268
Accumulated other comprehensive loss		(13,839	)			(15,587	)
Retained Earnings		761,813				775,817
Total stockholders' equity		813,000				809,498
Total Liabilities and Stockholders' Equity	$	1,064,915			$	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)
	Six Months Ended
	March 27,				March 28,
		2021				2020
Operating activities:
Net earnings	$	7,839			$	24,368
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation of fixed assets		24,253				24,810
Amortization of intangibles
and deferred costs		1,457				1,677
Share-based compensation		2,270				2,432
Deferred income taxes		(4	)			(298	)
(Gain) loss on marketable securities		(768	)			2,070
Other		(163	)			(286	)
Changes in assets and liabilities
net of effects from purchase of companies
(Increase) decrease in accounts receivable		(10,884	)			6,343
Increase in inventories		(6,432	)			(11,328	)
Increase in prepaid expenses		(118	)			(1,598	)
Increase (decrease) in accounts payable
and accrued liabilities		9,331				(5,920	)
Net cash provided by operating activities		26,781				42,270
Investing activities:
Payments for purchases of companies,
net of cash acquired		-				(57,197	)
Purchases of property, plant
and equipment		(18,829	)			(36,985	)
Purchases of marketable securities		-				(6,103	)
Proceeds from redemption and sales of
marketable securities		41,337				30,938
Proceeds from disposal of property and
equipment		1,262				1,853
Other		18				(63	)
Net cash provided by (used in) investing activities		23,788				(67,557	)
Financing activities:
Payments to repurchase common stock		-				(8,972	)
Proceeds from issuance of stock		13,582				6,300
Payments on capitalized lease obligations		(173	)			(168	)
Payment of cash dividend		(21,776	)			(20,314	)
Net cash used in financing activities		(8,367	)			(23,154	)
Effect of exchange rate on cash
and cash equivalents		375				(985	)
Net increase (decrease) in cash
and cash equivalents		42,577				(49,426	)
Cash and cash equivalents at beginning
of period		195,809				192,395
Cash and cash equivalents at end
of period	$	238,386			$	142,969
The accompanying notes are an integral part of these statements.

	Three months ended								Six months ended
	March 27,				March 28,				March 27,				March 28,
		2021				2020				2021				2020
Sales to External Customers:
Food Service
Soft pretzels	$	36,776			$	45,660			$	69,463			$	95,601
Frozen juices and ices		10,590				9,491				16,885				16,534
Churros		14,720				14,754				26,262				31,145
Handhelds		19,992				7,447				37,603				14,636
Bakery		82,910				89,407				171,874				185,779
Other		4,336				4,573				7,662				11,085
Total Food Service	$	169,324			$	171,332			$	329,749			$	354,780
Retail Supermarket
Soft pretzels	$	15,789			$	12,332			$	29,677			$	22,158
Frozen juices and ices		19,386				15,864				34,702				25,957
Biscuits		6,495				6,630				14,155				13,608
Handhelds		2,243				3,117				5,023				5,878
Coupon redemption		(608	)			(866	)			(1,683	)			(1,409	)
Other		601				494				1,126				805
Total Retail Supermarket	$	43,906			$	37,571			$	83,000			$	66,997
Frozen Beverages
Beverages	$	18,529			$	31,895			$	34,384			$	67,150
Repair and
maintenance service		18,218				21,779				37,114				44,265
Machines revenue		5,663				8,910				12,152				20,891
Other		538				555				776				856
Total Frozen Beverages	$	42,948			$	63,139			$	84,426			$	133,162
Consolidated Sales	$	256,178			$	272,042			$	497,175			$	554,939
Depreciation and Amortization:
Food Service	$	7,116			$	7,240			$	13,902			$	14,158
Retail Supermarket		384				329				770				688
Frozen Beverages		5,648				6,188				11,424				11,641
Total Depreciation and Amortization	$	13,148			$	13,757			$	26,096			$	26,487
Operating Income :
Food Service	$	6,055			$	7,951			$	12,235			$	25,985
Retail Supermarket		6,364				4,337				11,087				6,554
Frozen Beverages		(5,189	)			(1,306	)			(15,514	)			146
Total Operating Income	$	7,230			$	10,982			$	7,808			$	32,685
Capital Expenditures:
Food Service	$	7,246			$	10,331			$	15,532			$	18,734
Retail Supermarket		80				275				101				1,235
Frozen Beverages		1,827				8,774				3,196				17,016
Total Capital Expenditures	$	9,153			$	19,380			$	18,829			$	36,985
Assets:
Food Service	$	760,557			$	740,318			$	760,557			$	740,318
Retail Supermarket		33,395				31,636				33,395				31,636
Frozen Beverages		270,963				305,983				270,963				305,983
Total Assets	$	1,064,915			$	1,077,937			$	1,064,915			$	1,077,937

RESULTS OF OPERATIONS

Consolidated J&J Snack Foods net sales decreased $15.9 million or 6% to $256.2 million for the three months ended March 27^th, 2021.

FOOD SERVICE

Sales to food service customers decreased $2.0 million or 1% in the second quarter to $169.3 million. Traffic across our food service customers continues to improve as theatres re-open, more schools open their doors, entertainment and amusement venues increase capacity and stronger growth across QSR and casual dining restaurants. Soft pretzel sales to food service decreased 19% to $36.8 million. Frozen juices and ices sales increased 12% to $10.6 million and Churro sales were relatively flat in the quarter at $14.7 million.

Sales of bakery products decreased $6.5 million or 7% in the second quarter to $82.9 million.

Sales of handhelds increased $12.5 million or 168% 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 $14.9 million 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 $1.9 million in the quarter to $6.1 million driven by lower sales. This is an improving trend as profit margins improved throughout the quarter due to improved mix and manufacturing efficiencies.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $6.3 million or 17% to $43.9 million in the second quarter. Our SUPERPRETZEL brand performed well in the quarter driving an increase in soft pretzel sales of 28% to $15.8 million. Sales of frozen juices and ices were up 22% to $19.4 million, and sales of biscuits declined 2% to $6.5 million. Handheld sales to retail supermarket customers decreased 28% in the quarter. Sales from new products were approximately $0.2 million 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 $2.0 million or 47% to $6.4 million in this year’s second quarter driven by sales increases and operating income margins of approaching 15%, approximately 300 basis points better than last year.

FROZEN BEVERAGES

Frozen beverage and related product sales decreased $20.2 million or 32% to $42.9 million in the second quarter. Beverage related sales declined 42% to $18.5 million. Gallon sales were down 40% for the three months which was a significant improvement from the first quarter when gallons were down 56% compared with prior year. This improvement was led by theaters and entertainment/amusement venues which opened across the country, and traffic at mass merchandisers continued to improve as more consumers got out of the house. Service revenue decreased 16% to $18.2 million which was primarily related to the cancellation of a key customer’s planned maintenance program. Machine revenue (primarily sales of frozen beverage machines) was $5.7 million, a decrease of 36% due mainly from slower customer expansion and replacement during the period.

Our Frozen Beverage segment incurred an operating loss for the quarter of $5.2 million compared to an operating loss of $1.3 million last year. Profits improved significantly in comparison to the first quarter’s loss of $10.3 million led by stronger sales and profit margins.

CONSOLIDATED

Gross profit as a percentage of sales was 23.8% in the three-month period this year and 25.5% last year but did improve every month throughout the quarter. Covid-19 is still impacting our business, but we are encouraged by the improving trends in the second quarter.

Total operating expenses decreased $4.8 million in the second quarter as we leveraged expenses by 54 bps. Marketing expenses decreased to 7.5% of sales in this year’s quarter from 8.8% last year. Distribution expenses were 9.9% of sales in this year’s quarter compared to 9.1% of sales last year. Administrative expenses were 3.6% of sales this quarter compared to 3.7% last year.

Operating income decreased $3.8 million or 34% to $7.2 million in the second quarter as a result of the aforementioned items.

Our investments generated before tax income of $0.6 million this quarter, an increase of $1.0 million compared to last year due to improved market conditions.

Net earnings decreased $1.2 million, or 17%, in the current three-month period to $6.1 million. Our effective tax rate was 22% 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