GlobeNewswire Inc | Apr 26, 2021 04:00PM EDT

April 26, 2021

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 years 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&Js 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, LUIGIS Real Italian Ice, MINUTE MAID* frozen ices, WHOLE FRUIT sorbet and frozen fruit bars, SOUR PATCH KIDS** Flavored Ice Pops, Tio Pepes & CALIFORNIA CHURROS, and THE FUNNEL CAKE FACTORY funnel cakes and several bakery brands within DADDY RAYS, 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 Mondelz International group, used under license.

J & J SNACK FOODS CORP. AND SUBSIDIARIESCONSOLIDATED 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 (185 ) (395 ) (268 ) (129 )(income) expenseTotal Operating 53,666 58,461 103,213 114,619 Expenses Operating Income 7,230 10,982 7,808 32,685 Other (expense) incomeInvestment (loss) 579 (413 ) 1,949 1,373 incomeInterest (expense) 4 (27 ) (11 ) (53 )& other 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 $ 0.32 $ 0.38 $ 0.41 $ 1.28 diluted share Weighted average numberof diluted shares 19,130 19,014 19,081 19,079 Earnings per basic $ 0.32 $ 0.39 $ 0.41 $ 1.29 share Weighted average number ofbasic shares 19,006 18,921 18,971 18,910 The accompanyingnotes are an integral part ofthese statements.

J & J SNACK FOODS CORP. AND SUBSIDIARIESCONSOLIDATED 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 SUBSIDIARIESCONSOLIDATED 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 23,788 (67,557 )activitiesFinancing 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 toExternal Customers:Food Service Soft pretzels $ 36,776 $ 45,660 $ 69,463 $ 95,601 Frozen juices 10,590 9,491 16,885 16,534 and icesChurros 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 $ 169,324 $ 171,332 $ 329,749 $ 354,780 Service Retail SupermarketSoft pretzels $ 15,789 $ 12,332 $ 29,677 $ 22,158 Frozen juices 19,386 15,864 34,702 25,957 and icesBiscuits 6,495 6,630 14,155 13,608 Handhelds 2,243 3,117 5,023 5,878 Coupon (608 ) (866 ) (1,683 ) (1,409 )redemptionOther 601 494 1,126 805 Total Retail $ 43,906 $ 37,571 $ 83,000 $ 66,997 Supermarket Frozen BeveragesBeverages $ 18,529 $ 31,895 $ 34,384 $ 67,150 Repair and maintenance 18,218 21,779 37,114 44,265 serviceMachines 5,663 8,910 12,152 20,891 revenueOther 538 555 776 856 Total Frozen $ 42,948 $ 63,139 $ 84,426 $ 133,162 Beverages Consolidated $ 256,178 $ 272,042 $ 497,175 $ 554,939 Sales Depreciationand Amortization:Food Service $ 7,116 $ 7,240 $ 13,902 $ 14,158 Retail 384 329 770 688 SupermarketFrozen 5,648 6,188 11,424 11,641 BeveragesTotalDepreciation $ 13,148 $ 13,757 $ 26,096 $ 26,487 andAmortization Operating Income :Food Service $ 6,055 $ 7,951 $ 12,235 $ 25,985 Retail 6,364 4,337 11,087 6,554 SupermarketFrozen (5,189 ) (1,306 ) (15,514 ) 146 BeveragesTotalOperating $ 7,230 $ 10,982 $ 7,808 $ 32,685 Income Capital Expenditures:Food Service $ 7,246 $ 10,331 $ 15,532 $ 18,734 Retail 80 275 101 1,235 SupermarketFrozen 1,827 8,774 3,196 17,016 BeveragesTotal Capital $ 9,153 $ 19,380 $ 18,829 $ 36,985 Expenditures Assets: Food Service $ 760,557 $ 740,318 $ 760,557 $ 740,318 Retail 33,395 31,636 33,395 31,636 SupermarketFrozen 270,963 305,983 270,963 305,983 BeveragesTotal 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 27th, 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 years 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 customers 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 quarters 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 years quarter from 8.8% last year. Distribution expenses were 9.9% of sales in this years 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 years 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 managements 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.

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