J & J Snack Foods Reports Third Quarter Sales and Earnings

PENNSAUKEN, N.J., July 27, 2020 (GLOBE NEWSWIRE) -- J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the third quarter ended June 27, 2020.

Sales decreased 34% to $214.6 million from $326.7 million in last year’s third quarter. A net loss of $12.6 million in this year’s quarter compared to net earnings of $30.9 million in last year’s quarter.  Net loss per diluted share was $.67 for the third quarter this year and net earnings per diluted share were $1.63 last year. Operating loss of $19.4 in the current quarter compared to operating income of $39.0 million in the year ago quarter.

For the nine months ended June 27, 2020, sales decreased 12% to $769.5 million from $874.6 million in last year’s nine months.  Net earnings decreased to $11.7 million in the nine months from $68.8 million last year.  Earnings per diluted share decreased to $.62 from $3.64 last year.  Operating income decreased 85% to $13.2 million this year from $85.9 million last year.

Operating loss for the third quarter this year and operating income for the nine months include the impact of plant shutdown impairment costs of $5.1 million. 

The Company also said that sales for the last 5 weeks of the third quarter (its fiscal June) improved to being down approximately 24% from a year ago as parts of the economy that impact its operations began to open up.  Approximately 2/3 of the Company’s sales are to venues and locations that have shut down or sharply curtailed their foodservice operations so the Company anticipates COVID-19 will continue to have a negative impact on its business.  As the Company has $270 million of cash and marketable securities on its balance sheet, up from $267 million at March 28, 2020, it does not expect to have any liquidity issues, nor does it anticipate a material amount of its assets would be impaired.   

Dan Fachner,  J & J’s President, commented, “Although we had an operating loss this quarter, we progressed nicely with each month improving from the prior month. Our Retail division was strong as that end of the business continues to outperform the previous year. Much of the Foodservice locations are slow to open but we continue to see improvement during our current quarter.  We are monitoring and making necessary adjustments to operations and expenses both for the short term and for the longer term.”

J&J Snack Foods Corp. is a leader and innovator in the snack food industry, providing nutritional and affordable branded niche snack foods and beverages to foodservice and retail supermarket outlets.  Manufactured and distributed nationwide, our principal products include SUPERPRETZEL, BAVARIAN BAKERY and other soft pretzels, ICEE and SLUSH PUPPIE frozen beverages, LUIGI’S, MINUTE MAID* frozen juice bars and ices, WHOLE FRUIT sorbet and frozen fruit bars, MARY B’S biscuits and dumplings, DADDY RAY’S fig and fruit bars, TIO PEPE’S and CALIFORNIA CHURROS, PATIO Burritos and other handheld sandwiches, THE FUNNEL CAKE FACTORY funnel cakes, and several bakery brands within 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



   J & J SNACK FOODS CORP. AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS
 (Unaudited)
   (in thousands, except per share amounts) 
        
   Three months ended   Nine months ended
 June 27, June 29, June 27, June 29,
 2020 2019 2020 2019
        
Net Sales$214,563  $326,701 $769,502  $874,615
        
Cost of goods sold 177,367   225,352  585,002   617,155
  Gross Profit 37,196   101,349  184,500   257,460
        
Operating expenses       
  Marketing 21,952   26,398  68,532   69,792
  Distribution 21,272   24,447  69,648   70,521
  Administrative 8,374   10,668  28,166   29,909
  Plant shutdown impairment costs 5,072   -  5,072   -
  Other general (income) expense (54)  794  (183)  1,343
    Total operating expenses 56,616   62,307  171,235   171,565
        
Operating (loss) income (19,420)  39,042  13,265   85,895
        
Other income (expense)       
  Investment income 1,300   1,953  2,673   5,775
  Interest expense & other (7)  1,972  (60)  1,920
        
(Loss) earnings before       
  income taxes (18,127)  42,967  15,878   93,590
        
Income taxes (5,480)  12,095  4,157   24,838
        
  NET (LOSS) EARNINGS$(12,647) $30,872 $11,721  $68,752
        
(Loss) earnings per diluted share$(0.67) $1.63 $0.62  $3.64
        
Weighted average number       
  of diluted shares 18,888   18,947  19,036   18,912
        
(Loss) earnings per basic share$(0.67) $1.64 $0.62  $3.66
        
Weighted average number of       
  basic shares 18,888   18,823  18,902   18,794
        

 





     
J & J SNACK FOODS CORP. AND SUBSIDIARIES      
CONSOLIDATED BALANCE SHEETS    
  (in thousands, except share amounts)      
 June 27,    
  2020   September 28,
 (unaudited)   2019 
Assets    
Current assets    
  Cash and cash equivalents$169,961   $192,395 
  Marketable securities held to maturity 58,268    51,091 
  Accounts receivable, net 116,488    140,938 
  Inventories 120,564    116,165 
  Prepaid expenses and other 13,660    5,768 
     Total current assets 478,941    506,357 
     
Property, plant and equipment, at cost    
  Land 2,494    2,494 
  Buildings 26,582    26,582 
  Plant machinery and equipment 331,481    315,360 
  Marketing equipment 253,533    240,681 
  Transportation equipment 9,905    9,725 
  Office equipment 34,935    31,217 
  Improvements 42,291    40,626 
  Construction in progress 16,199    10,039 
     Total Property, plant and equipment, at cost 717,420    676,724 
  Less accumulated depreciation    
  and amortization 452,707    423,276 
     Property, plant and equipment, net 264,713    253,448 
     
Long-term assets    
  Goodwill 123,033    102,511 
  Other intangible assets, net 81,117    54,922 
  Marketable securities held to maturity 28,863    79,360 
  Marketable securities available for sale 13,232    19,903 
  Operating lease right-of-use assets 64,615    - 
  Other 2,772    2,838 
     Total long-term assets 313,632    259,534 
Total Assets$1,057,286   $1,019,339 
     
Liabilities and Stockholders' Equity    
Current Liabilities    
  Current finance lease liabilities$329   $339 
  Accounts payable 68,829    72,029 
  Accrued insurance liability 12,131    10,457 
  Accrued liabilities 6,951    7,808 
  Current operating lease liabilities 13,913    - 
  Accrued compensation expense 14,814    21,154 
  Dividends payable 10,873    9,447 
     Total current liabilities 127,840    121,234 
     
Noncurrent finance lease liabilities 456    718 
Noncurrent operating lease liabilities 56,570    - 
Deferred income taxes 61,348    61,920 
Other long-term liabilities 472    1,716 
     
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    
 18,888,000 and 18,895,000 respectively 46,560    45,744 
Accumulated other comprehensive loss (16,058)   (12,988)
Retained Earnings 780,098    800,995 
     Total stockholders' equity 810,600    833,751 
Total Liabilities and Stockholders' Equity$1,057,286   $1,019,339 
     



J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)                  (in thousands)
     
   Nine months ended 
 June 27, June 29, 
  2020   2019  
Operating activities:    
  Net earnings$11,721  $68,752  
Adjustments to reconcile net    
  earnings to net cash    
  provided by operating activities:    
Depreciation of property, plant and equipment 37,353   33,374  
Amortization of intangibles    
and deferred costs 2,516   2,586  
Share-based compensation 3,421   3,006  
Deferred income taxes (426)  690  
Loss on marketable securities 1,746   410  
Plant shutdown impairment costs 5,072   -  
Other (309)  350  
Changes in assets and liabilities    
net of effects from purchase of companies    
  Decrease (increase) in accounts receivable 24,634   (14,289) 
  Increase in inventories (3,751)  (6,257) 
  (Increase) decrease in prepaid expenses (7,879)  957  
  (Decrease) increase in accounts payable    
     and accrued liabilities (7,478)  11,584  
  Net cash provided by operating activities 66,620   101,163  
Investing activities:    
 Payment for purchases of companies, net of cash acquired (57,197)  (1,155) 
 Purchases of property, plant    
  and equipment (47,637)  (42,136) 
 Purchases of marketable securities (6,103)  (24,056) 
 Proceeds from redemption and sales of    
  marketable securities 54,125   29,721  
 Proceeds from disposal of property, plant and    
  equipment 2,852   1,463  
 Other (72)  (212) 
 Net cash used in investing activities (54,032)  (36,375) 
Financing activities:    
  Payments to repurchase common stock (8,972)  -  
  Proceeds from issuance of stock 6,300   7,426  
  Payments on capitalized lease obligations (272)  (33) 
  Payment of cash dividend (31,193)  (27,230) 
  Net cash used in financing activities (34,137)  (19,837) 
  Effect of exchange rate on cash    
  and cash equivalents (885)  (333) 
  Net (decrease) increase in cash    
  and cash equivalents (22,434)  44,618  
 Cash and cash equivalents at beginning    
  of period 192,395   111,479  
 Cash and cash equivalents at end    
  of period$169,961  $156,097  
     

 



         
   Three months ended   Nine months ended 
 June 27, June 29, June 27, June 29, 
  2020   2019   2020   2019  
    
(in thousands)     
Sales to External Customers:        
  Food Service        
  Soft pretzels$21,384  $55,867  $116,985  $154,670  
  Frozen juices and ices 8,688   13,862   25,222   30,336  
  Churros 7,321   18,888   38,466   49,793  
  Handhelds 7,448   8,550   22,084   25,339  
  Bakery 69,237   90,084   255,016   268,735  
  Other 2,543   6,105   13,628   19,576  
  Total Food Service$116,621  $193,356  $471,401  $548,449  
         
  Retail Supermarket        
  Soft pretzels$12,716  $7,294  $34,874  $28,309  
  Frozen juices and ices 33,322   26,515   59,279   52,179  
  Biscuits 8,151   5,215   21,759   19,437  
  Handhelds 3,257   3,063   9,135   8,110  
  Coupon redemption (807)  (962)  (2,216)  (2,163) 
  Other 863   642   1,668   1,341  
  Total Retail Supermarket$57,502  $41,767  $124,499  $107,213  
         
  Frozen Beverages        
  Beverages$16,456  $56,937  $83,606  $121,976  
  Repair and        
  maintenance service 17,259   22,514   61,524   62,291  
  Machines revenue 6,363   11,810   27,254   33,875  
  Other 362   317   1,218   811  
  Total Frozen Beverages$40,440  $91,578  $173,602  $218,953  
         
Consolidated Sales$214,563  $326,701  $769,502  $874,615  
         
Depreciation and Amortization:        
  Food Service$7,050  $6,973  $21,208  $19,911  
  Retail Supermarket 468   335   1,156   990  
  Frozen Beverages 5,864   5,015   17,505   15,059  
Total Depreciation and Amortization$13,382  $12,323  $39,869  $35,960  
         
Operating (Loss) Income:        
  Food Service$(18,242) $21,030  $7,743  $57,909  
  Retail Supermarket 7,910   3,775   14,464   9,025  
  Frozen Beverages (9,088)  14,237   (8,942)  18,961  
Total Operating (Loss) Income$(19,420) $39,042  $13,265  $85,895  
         
Capital Expenditures:        
  Food Service$7,865  $8,665  $26,599  $23,346  
  Retail Supermarket 390   597   1,625   1,730  
  Frozen Beverages 2,397   6,523   19,413   17,060  
Total Capital Expenditures$10,652  $15,785  $47,637  $42,136  
         
Assets:        
  Food Service$729,331  $751,641  $729,331  $751,641  
  Retail Supermarket 33,766   24,825   33,766   24,825  
  Frozen Beverages 294,189   219,224   294,189   219,224  
Total Assets$1,057,286  $995,690  $1,057,286  $995,690  
         

 

Net sales decreased $112,138,000 or 34% to $214,563,000 for the three months and decreased $105,113,000 or 12% to $769,502,000 for the nine months ended June 27, 2020 compared to the three and nine months ended June 29, 2019, respectively.  Excluding sales from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020, sales decreased 35% for the quarter and decreased about 13% for the nine months.

Sales for the last 5 weeks of the third quarter (our fiscal June) improved to being down approximately 24% from a year ago as parts of the economy that impact our operations began to open up.  Approximately 2/3 of the Company’s sales are to venues and locations that have shut down or sharply curtailed their foodservice operations, and therefore we anticipate COVID-19 will continue to have a negative impact on our business.  As we have $270 million of cash and marketable securities on our balance sheet, up from $267 million at March 28, 2020, we do not expect to have any liquidity issues, nor do we anticipate a material amount of our assets would be impaired.   

FOOD SERVICE

Sales to food service customers decreased $76,735,000 or 40% in the third quarter to $116,621,000 and decreased $77,048,000 or 14% to $471,401,000 for the nine months. Soft pretzel sales to the food service market decreased 62% to $21,384,000 in the three months and 24% to $116,985,000 in the nine months. Frozen juices and ices sales decreased 37% to $8,688,000 in the three months and decreased 17% to $25,222,000 in the nine months. Churro sales to food service customers were down 61% in the quarter to $7,321,000 and were down 23% to $38,466,000 in the nine months. Sales of bakery products decreased $20,847,000 or 23% in the third quarter and decreased $13,719,000 or 5% to $255,016,000 for the nine months.  Sales of handhelds decreased $1,102,000 or 13% in the quarter and $3,255,000 or 13% in the nine months. Sales of funnel cake decreased 57%, or $3,181,000, to $2,435,000 in the quarter and $5,311,000, or 29%, to $12,997,000 in the nine months. Sales are down across all product lines as many of the venues and locations where our products are sold have been shut down for some or all of the third quarter due to COVID-19.

Sales of new products in the first twelve months since their introduction were approximately $600,000 in this quarter and $4.7 million in the nine months.
      
We had an operating loss in the quarter in our Food Service segment of $18,242,000 compared to operating income of $21,030,000 last year and operating income decreased to $7,743,000 from $57,909,000 in the nine months primarily because of lower production and sales volume due to COVID-19.  This year’s three months operating loss and nine months operating income were impacted by plant shutdown impairment costs of $5.1 million for the pending shutdown of one of our manufacturing plants. We expect to reduce manufacturing overhead and distribution costs by about $7-8 million annually as a result of this plant closure.  This year’s quarter and nine months also included approximately $5 million of costs for employee safety and increased COVID-19 compensation.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $15,735,000 or 38% to $57,502,000 in the third quarter and increased $17,286,000 or 16% in the nine months.  Soft pretzel sales for the third quarter were up 74% to $12,716,000 and up 23% to $34,874,000 for the nine months. Sales of frozen juices and ices increased $6,807,000 or 26% to $33,322,000 in the third quarter and increased $7,100,000 or 14% in the nine months.  Handheld sales to retail supermarket customers increased 6% to $3,257,000 in the quarter and 13% to $9,135,000 in the nine months. Biscuit sales for the third quarter were up 56% to $8,151,000 and 12% to $21,759,000 for the nine months. Sales were generally higher for all product lines as sales in the year ago periods were impacted by lost volume and placements due the price increases implemented in last year’s first quarter and because of increased sales to supermarkets generally since mid-March 2020 due to COVID-19.

Sales of new products in the third quarter were approximately $500,000 and were approximately $1.0 million for the nine months. 

Operating income in our Retail Supermarkets segment was $7,910,000 in this year’s third quarter compared to $3,775,000 in last year’s quarter, a 110% increase and increased to $14,464,000 in this year’s nine months compared to $9,025,000 in last year’s nine months primarily due to higher volume. 

FROZEN BEVERAGES
    
Total frozen beverage segment sales decreased 56% in the three months to $40,440,000 and 21% to $173,602,000 for the nine months. Beverage sales were down 71% to $16,456,000 in the quarter and down 31% to $83,606,000 in the nine months. Excluding sales from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020, total frozen beverage segment sales decreased 60% in the quarter and were down 25% for the nine months and beverage sales decreased 78% for the quarter and 39% for the nine months. Gallon sales were down 72% in the quarter and down 36% in the nine months exclusive of ICEE Distributors’ gallons.  Service revenue decreased 23% to $17,259,000 in the third quarter and was down 1% at $61,524,000 in the nine months. Machines revenue (primarily sales of frozen beverage machines) were $6,363,000, a decrease of $5,447,000 in the quarter and $27,254,000, a decrease of $6,621,000, in the nine months, with the decrease due to two significant install projects during the prior fiscal year, as well as the slowdown due to COVID-19. Sales are down across all product lines as many of the venues and locations where our products are sold have been shut down for some or all of the third quarter due to COVID-19.

Our Frozen Beverage segment had an operating loss of $9,088,000 compared to operating income of $14,237,000 in last year’s quarter and an operating loss of $8,942,000 for the nine months compared to operating income of $18,961,000 last year primarily as a result of lower sales volume due to COVID-19. This year’s operating income was also impacted by relocation costs of our ICEE’s headquarters of 2.5 million in the nine months.

CONSOLIDATED

Gross profit as a percentage of sales was 17.34% in the third quarter and 31.02% last year.  Gross profit as a percentage of sales was 23.98% in the nine month period this year and 29.44% last year.  Gross profit percentage decreased for both periods because of lower volume in our food service and frozen beverages segments, higher costs related to production disruptions due to volume mix changes, expenses related to employee safety and increased COVID-19 compensation and reserves of approximately $1.5 million for inventory.

Total operating expenses decreased $5,691,000 in the third quarter and as a percentage of sales increased to 26.4% from 19.1% last year.  For the nine months, operating expenses decreased $330,000 and as a percentage of sales increased to 22.3% from 19.6% last year.   Operating expenses for both periods this year included $5.1 million of plant shutdown impairment costs for the pending shutdown of one of our manufacturing plants. Marketing expenses increased to 10.2% of sales in this year’s quarter from 8.1% last year and were 8.9% in the nine months compared to 8.0% of sales in last year’s nine months.  Distribution expenses were 9.9% of sales in the third quarter and 7.5% of sales in last year’s quarter and were 9.1% in this year’s nine months compared to 8.1% in last year’s nine months. Administrative expenses were 3.9% of sales in the third quarter compared to 3.3% of sales last year in the third quarter and were 3.7% in this year’s nine months compared to 3.4% of sales in last year’s nine months. The percentage increases mentioned above were because of the drop in sales (lower denominators) and our inability to reduce expenses in line with the decrease in sales because of fixed costs that do not fluctuate with sales. 

We had an operating loss of $19,420,000 in the three months and operating income of $13,265,000 in the nine months this year compared to operating income of $39,042,000 and $85,895,000 in last year's three and nine months, respectively.

Investment income decreased to $1,300,000 from $1,953,000 in last year’s quarter due primarily to lower interest rates. Investment income decreased to $2,673,000 from $5,775,000 in the nine month period due to lower interest rates and because of an increase in unrealized losses to $1,708,000 this year from $385,000 last year.
    
We had a net loss of $12,647,000 in the current three month period compared to net earnings of $30,872,000 last year and net earnings decreased $57,031,000, or 83%, to $11,721,000 for the nine month period this year compared to $68,752,000 for the nine month period last year. 

Net earnings in last year’s nine months benefitted by a reduction of approximately $900,000 in tax as the provision for the one time repatriation tax as a result of the Tax Cuts and Job Act of 2017 was reduced as the amount recorded the year prior was an estimate.  Excluding the reduction in the provision for the one time repatriation tax, our effective tax rate was 27.5% in last year’s nine months.  Our effective tax rate was 26.2% in this year’s nine months.
      
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: Dennis G. Moore
  Senior Vice President
  Chief Financial Officer
  (856) 532-6603

 

 

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.