Core Insights - The analyst has a strong background in equity research and investment analysis, with a focus on the U.S. equity market and consumer staples sector, indicating a belief in the resilience of defensive stocks for long-term investment opportunities [1]. Group 1: Analyst Qualifications - The analyst is a certified FMVA and FPWMP, which provides expertise in financial statement analysis, valuation modeling, and investment portfolio construction [1]. - Participation in the CFA Research Challenge has equipped the analyst with practical experience in equity analysis and industry research [1]. - The analyst holds a degree in Finance from Alexandria University, graduating in 2024 with a CGPA of 3.6, showcasing a solid academic foundation [1]. Group 2: Professional Experience - The analyst has worked with a confidential client, preparing investment reports across various sectors, including healthcare, consumer staples, and industrials, enhancing the ability to evaluate companies across diverse industries [1]. - In 2023, the analyst joined AIESEC, further developing leadership, communication, and teamwork skills through global exchange and project collaboration [1].

Core Insights - The consumer staples sector is experiencing significant overselling, presenting potential buying opportunities for undervalued companies [1][2] Company Summaries - **National Beverage Corp (NASDAQ:FIZZ)**: The company reported weaker-than-expected quarterly sales, with a stock decline of approximately 10% over the past month and a 52-week low of $36.27. The RSI value is 28.6, indicating oversold conditions. The stock closed at $36.92, with a momentum score of 15.34 and a value score of 54.79 [7] - **Sprouts Farmers Market Inc (NASDAQ:SFM)**: Announced a $1 billion share repurchase authorization, but the stock fell around 22% over the past month, reaching a 52-week low of $107.65. The RSI value is 13.6, indicating strong oversold conditions. The stock closed at $108.80 [7] - **J&J Snack Foods Corp (NASDAQ:JJSF)**: Reported strong quarterly earnings with net sales of $454.3 million and adjusted EBITDA of $72.0 million. Despite this, the stock fell around 12% over the past month, with a 52-week low of $94.13. The RSI value is 28.4, indicating oversold conditions. The stock closed at $96.09 [7]

Group 1 - J&J Snack Foods Corp (NASDAQ:JJSF) is considered one of the best FMCG stocks to invest in, with a 'Buy' rating and a $150 price target from Benchmark analysts following meetings with senior management [1][2] - The company has shown an improving revenue and margin outlook, leading to raised fiscal year 2026 estimates based on recent performance [2] - In the third quarter, J&J Snack Foods reported earnings per share of $2.00, exceeding consensus estimates of $1.84, with revenue totaling $454.3 million compared to an expected $441.2 million [3] Group 2 - The company manufactures and distributes a diverse range of branded snack foods and beverages for food service and retail outlets across the U.S., including popular items like soft pretzels and frozen drinks [4]

Core Viewpoint - J&J Snack Foods Corp. is conducting its Fiscal 2025 Third Quarter Conference Call to discuss financial performance and future strategies [1][2]. Group 1: Company Overview - The conference call is led by key company executives including Daniel J. Fachner, the President, CEO & Chairman, and Shawn C. Munsell, the Senior VP & CFO [1]. - The call is part of the company's ongoing communication with investors and analysts regarding its financial results and strategic direction [1][2]. Group 2: Financial Performance - The call includes discussions on anticipated financial performance, management's plans, strategies, and goals for the future [2][3]. - Forward-looking statements are made regarding the company's expectations, which are subject to various risks and uncertainties [2][3].

Group 1 - The Relative Strength Index (RSI) is a technical analysis indicator that measures stock momentum on a scale of 0 to 100, with a reading below 30 indicating that a stock is oversold [1] - J&J Snack Foods Corp. (Symbol: JJSF) has an RSI reading of 29.99, indicating it has entered oversold territory, with shares trading as low as $102.46 [2][4] - The current RSI of the S&P 500 ETF (SPY) is 67.8, suggesting a significant difference in market sentiment between JJSF and the broader market [2] Group 2 - JJSF's 52-week low is $102.46, while the 52-week high is $180.80, with the last trade recorded at $102.67 [4]

Core Viewpoint - J&J Snack Foods Corp. has been recognized for its strong dividend yield of 3.1% and a consistent track record of at least two decades of dividend growth, earning a place on the Dividend Channel "S.A.F.E. 25" list [1][3]. Group 1: Dividend Performance - The annualized dividend paid by J&J Snack Foods Corp. is $3.2 per share, distributed quarterly, with the most recent dividend ex-date on September 16, 2025 [4]. - The company has a flawless history of never missing or lowering its dividend payments, contributing to its strong DividendRank characteristics [3]. Group 2: Market Position - J&J Snack Foods Corp. is included in the iShares S&P 1500 Index ETF (ITOT) and represents 0.08% of the SPDR S&P Dividend ETF (SDY), which holds approximately $17.38 million worth of JJSF shares [2]. - The company operates within the Food & Beverage sector, alongside competitors such as Mondelez International Inc. and Kraft Heinz Co. [6].

Company Overview - Dippin' Dots is the exclusive frozen treat provider at Urban Air Adventure Park, enhancing the family entertainment experience across all participating locations nationwide [1][2]. - Dippin' Dots has been producing and distributing its unique frozen products since 1988, with a production facility located in Paducah, Kentucky [6]. Partnership Details - The partnership between Dippin' Dots and Urban Air Adventure Park aims to create a fun and memorable experience for families, combining both brands' strengths in family entertainment [3][4]. - Urban Air Adventure Park operates more than 350 locations, making it an ideal partner for Dippin' Dots to expand its presence in the family entertainment sector [4][8]. Brand Positioning - Dippin' Dots is recognized as an iconic brand that complements the action-packed environment of Urban Air, providing a craveable treat that enhances the overall experience [4]. - J&J Snack Foods Corp., the parent company of Dippin' Dots, is a leader in the snack food and frozen beverage industry, with a diverse portfolio of brands [7].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20Financial%20Information) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis for the interim periods [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, earnings, comprehensive income, equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and liabilities increased from September 2024 to June 2025, driven by current assets and property, plant, and equipment | Metric | June 28, 2025 (in thousands) | September 28, 2024 (in thousands) | Change (in thousands) | | :---------------------------------- | :--------------------------- | :-------------------------------- | :-------------------- | | Total Assets | $1,413,929 | $1,365,101 | $48,828 | | Current Assets | $488,449 | $450,414 | $38,035 | | Cash and cash equivalents | $77,377 | $73,394 | $3,983 | | Total Liabilities | $443,934 | $408,129 | $35,805 | | Total Stockholders' Equity | $969,925 | $956,970 | $12,955 | [Consolidated Statements of Earnings](index=6&type=section&id=Consolidated%20Statements%20of%20Earnings) Net sales increased for both periods, but nine-month net earnings decreased due to lower gross profit and operating income Consolidated Statements of Earnings Highlights | Metric | Three months ended June 28, 2025 (in thousands) | Three months ended June 29, 2024 (in thousands) | % Change | | :----------------------- | :-------------------------------- | :-------------------------------- | :------- | | Net sales | $454,293 | $439,957 | 3.3% | | Gross profit | $150,045 | $147,766 | 1.5% | | Operating income | $60,597 | $50,116 | 20.9% | | NET EARNINGS | $44,247 | $36,299 | 21.9% | | Earnings per diluted share | $2.26 | $1.87 | 20.9% | | Metric | Nine months ended June 28, 2025 (in thousands) | Nine months ended June 29, 2024 (in thousands) | % Change | | :----------------------- | :------------------------------- | :------------------------------- | :------- | | Net sales | $1,172,990 | $1,147,999 | 2.2% | | Gross profit | $339,649 | $350,594 | (3.1)% | | Operating income | $72,859 | $77,703 | (6.2)% | | NET EARNINGS | $54,214 | $56,910 | (4.7)% | | Earnings per diluted share | $2.77 | $2.93 | (5.5)% | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income increased for both three and nine months, driven by net earnings and positive foreign currency translation adjustments Consolidated Statements of Comprehensive Income Highlights | Metric | Three months ended June 28, 2025 (in thousands) | Three months ended June 29, 2024 (in thousands) | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net earnings | $44,247 | $36,299 | | Foreign currency translation adjustments | $3,774 | $(4,546) | | Comprehensive income | $48,021 | $31,753 | | Metric | Nine months ended June 28, 2025 (in thousands) | Nine months ended June 29, 2024 (in thousands) | | :---------------------------------- | :------------------------------- | :------------------------------- | | Net earnings | $54,214 | $56,910 | | Foreign currency translation adjustments | $1,629 | $(2,263) | | Comprehensive income | $55,843 | $54,647 | [Consolidated Statements of Changes In Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20In%20Stockholders'%20Equity) Stockholders' equity increased from September 2024 to June 2025, driven by net earnings and share-based compensation, despite repurchases and dividends - Total stockholders' equity increased to **$969,925k** at June 28, 2025, from **$956,970k** at September 28, 2024[10](index=10&type=chunk) - Net earnings contributed **$44,247k** in the three months ended June 28, 2025, and **$5,143k** and **$4,824k** in the preceding quarters[16](index=16&type=chunk) - The company repurchased **$5,000k** of common stock during the nine months ended June 28, 2025[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased, investing cash flow decreased due to insurance proceeds, and financing cash flow remained stable with repurchases and dividends Consolidated Statements of Cash Flows Highlights (Nine months ended) | Metric | June 28, 2025 (in thousands) | June 29, 2024 (in thousands) | | :---------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $98,697 | $126,746 | | Net cash (used in) investing activities | $(48,430) | $(62,901) | | Net cash (used in) financing activities | $(47,653) | $(48,156) | | Net increase in cash and cash equivalents | $3,983 | $14,466 | - Operating activities included a **$10,622k** gain on insurance proceeds received for damage to property, plant, and equipment in the nine months ended June 28, 2025[20](index=20&type=chunk) - Investing activities included **$11,421k** in proceeds from insurance for fixed assets in the nine months ended June 28, 2025, compared to none in the prior year[20](index=20&type=chunk) [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section details accounting policies, significant events, and financial statement line items, including revenue, debt, segments, and share repurchases [Note 1 Basis of Presentation](index=11&type=section&id=Note%201%20Basis%20of%20Presentation) Unaudited interim financial statements are prepared under GAAP, with sales of frozen beverages and novelties typically higher in warmer quarters - Unaudited consolidated financial statements contain only normal recurring adjustments[23](index=23&type=chunk) - Sales of frozen beverages and frozen novelties are generally higher in the fiscal third and fourth quarters due to warmer weather[24](index=24&type=chunk) [Note 2 Business Combinations](index=11&type=section&id=Note%202%20Business%20Combinations) The company acquired the Thinsters cookie business for $7.0 million in April 2024, allocating the purchase price to inventory and intangible assets - Acquisition of Thinsters cookie business from Hain Celestial Group completed on **April 8, 2024**, for approximately **$7.0 million** in cash[26](index=26&type=chunk) - Purchase price allocation included **$1.1 million** of Inventory and **$5.9 million** of Intangible assets (including **$5.3 million** indefinite-lived Trade name and **$0.7 million** amortizing Customer relationship)[27](index=27&type=chunk) - Financial results of Thinsters are included in the Food Service segment but were not deemed material for the periods presented[28](index=28&type=chunk) [Note 3 Revenue Recognition](index=11&type=section&id=Note%203%20Revenue%20Recognition) Revenue is recognized at a point-in-time for product sales and over time for service contracts, with variable consideration reducing revenue - Revenue is recognized at a point-in-time when product control is transferred to the customer for product and machine sales[30](index=30&type=chunk) - Variable consideration (sales discounts, promotions, rebates, coupons) is treated as a reduction in revenue[35](index=35&type=chunk) - Recorded liability for allowances, end-user pricing adjustments, and trade spending was approximately **$25.3 million** at June 28, 2025, up from **$21.9 million** at September 28, 2024[35](index=35&type=chunk) [Note 4 Depreciation and Amortization Expense](index=13&type=section&id=Note%204%20Depreciation%20and%20Amortization%20Expense) Depreciation and amortization are calculated using the straight-line method over estimated useful lives for various assets Depreciation Expense (in millions) | Period | June 28, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------ | | Three months ended | $16.7 | $16.2 | | Nine months ended | $48.3 | $47.1 | - Amortization of licenses and rights, customer relationships, franchise agreements, technology, and certain trade names ranges from **2 to 20 years**[41](index=41&type=chunk) [Note 5 Earnings per Share](index=13&type=section&id=Note%205%20Earnings%20per%20Share) Basic and diluted EPS calculations consider net earnings and weighted average shares, with diluted EPS reflecting potential share dilution Earnings per Share (Three months ended June 28, 2025) | Metric | Income (Numerator, in thousands) | Shares (Denominator, in thousands) | Per Share Amount | | :---------------------------------- | :------------------------------- | :------------------------------- | :--------------- | | Basic EPS | $44,247 | 19,455 | $2.27 | | Diluted EPS | $44,247 | 19,537 | $2.26 | Earnings per Share (Nine months ended June 28, 2025) | Metric | Income (Numerator, in thousands) | Shares (Denominator, in thousands) | Per Share Amount | | :---------------------------------- | :------------------------------- | :------------------------------- | :--------------- | | Basic EPS | $54,214 | 19,471 | $2.78 | | Diluted EPS | $54,214 | 19,554 | $2.77 | - **230,144** anti-dilutive shares were excluded from the computation of EPS for the three months ended June 28, 2025, and **126,324** for the nine months[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 6 Share-Based Compensation](index=15&type=section&id=Note%206%20Share-Based%20Compensation) Pre-tax share-based compensation expense was recognized for stock options, RSUs, and PSUs, with no stock options granted in either period Total Share-Based Compensation (in thousands) | Period | June 28, 2025 | June 29, 2024 | | :-------------------- | :-------------- | :-------------- | | Three months ended | $1,827 | $1,633 | | Nine months ended | $4,580 | $4,841 | - No stock options were granted during the nine months ended June 28, 2025, or June 29, 2024[49](index=49&type=chunk) - The company issued **21,311 RSUs** and **3,951 PSUs** during the three months ended June 28, 2025. Each PSU may result in the issuance of up to two shares[50](index=50&type=chunk)[51](index=51&type=chunk) [Note 7 Income Taxes](index=17&type=section&id=Note%207%20Income%20Taxes) The effective tax rate for both periods was 27.2%, higher than the statutory rate due to state and foreign taxes, with the OBBB Act under evaluation - Effective tax rate for the three and nine months ended June 28, 2025, was **27.2%**, compared to **27.9%** and **27.4%** for the prior year periods, respectively[57](index=57&type=chunk) - The **27.2%** effective tax rate is higher than the company's **21.0%** statutory tax rate primarily due to state income taxes and the tax effect in foreign jurisdictions[57](index=57&type=chunk) - The company is evaluating the potential impact of the One Big Beautiful Bill Act (OBBB) enacted on July 4, 2025[58](index=58&type=chunk) [Note 8 New Accounting Pronouncements and Policies](index=17&type=section&id=Note%208%20New%20Accounting%20Pronouncements%20and%20Policies) The company is assessing the impact of new FASB ASUs on segment reporting, income tax disclosures, and expense disaggregation - ASU No. 2023-07 "Segment Reporting" requires enhanced disclosures about significant segment expenses, effective for fiscal years beginning after **December 15, 2023**[59](index=59&type=chunk) - ASU No. 2023-09 "Income Taxes" enhances transparency around income tax information, effective for fiscal years beginning after **December 15, 2024**[60](index=60&type=chunk) - ASU No. 2024-03 "Expense Disaggregation Disclosures" improves disclosure requirements for expenses, effective for fiscal years beginning after **December 15, 2026**[61](index=61&type=chunk) [Note 9 Long-Term Debt](index=18&type=section&id=Note%209%20Long-Term%20Debt) The company has a $50 million revolving credit facility, expandable to $225 million, with no outstanding balance and $212.7 million available as of June 28, 2025 - Credit Agreement provides for up to a **$50 million** revolving credit facility, repayable in **December 2026**[62](index=62&type=chunk) - Amended Credit Agreement provided an incremental increase of **$175 million** in available borrowings, with an option to increase further up to **$225 million** or **$50 million** plus Consolidated EBITDA[65](index=65&type=chunk) - As of June 28, 2025, there was no outstanding balance under the Amended Credit Agreement, and **$212.7 million** was available after outstanding letters of credit[66](index=66&type=chunk) [Note 10 Inventory](index=18&type=section&id=Note%2010%20Inventory) Total inventories increased to $194.965 million at June 28, 2025, primarily due to higher finished goods and raw materials Inventories (in thousands) | Category | June 28, 2025 | September 28, 2024 | | :------------------ | :-------------- | :----------------- | | Finished goods | $98,743 | $86,470 | | Raw materials | $40,264 | $29,830 | | Packaging materials | $13,041 | $12,649 | | Equipment parts and other | $42,917 | $44,192 | | **Total inventories** | **$194,965** | **$173,141** | [Note 11 Segment Information](index=18&type=section&id=Note%2011%20Segment%20Information) The company operates in Food Service, Retail Supermarkets, and Frozen Beverages, with sales and operating income trends varying across segments Sales to External Customers by Segment (in thousands) | Segment | Three months ended June 28, 2025 | Three months ended June 29, 2024 | % Change (3M) | Nine months ended June 28, 2025 | Nine months ended June 29, 2024 | % Change (9M) | | :------------------ | :------------------------------- | :------------------------------- | :------------ | :-------------------------------- | :-------------------------------- | :------------ | | Food Service | $277,170 | $264,446 | 4.8% | $742,106 | $723,045 | 2.6% | | Retail Supermarket | $63,860 | $68,723 | (7.1)% | $162,425 | $165,372 | (1.8)% | | Frozen Beverages | $113,263 | $106,788 | 6.1% | $268,459 | $259,582 | 3.4% | | **Consolidated sales** | **$454,293** | **$439,957** | **3.3%** | **$1,172,990** | **$1,147,999** | **2.2%** | Operating Income by Segment (in thousands) | Segment | Three months ended June 28, 2025 | Three months ended June 29, 2024 | % Change (3M) | Nine months ended June 28, 2025 | Nine months ended June 29, 2024 | % Change (9M) | | :------------------ | :------------------------------- | :------------------------------- | :------------ | :-------------------------------- | :-------------------------------- | :------------ | | Food Service | $31,515 | $20,247 | 55.7% | $34,432 | $34,194 | 0.7% | | Retail Supermarket | $5,755 | $7,812 | (26.3)% | $8,919 | $13,374 | (33.3)% | | Frozen Beverages | $23,327 | $22,057 | 5.8% | $29,508 | $30,135 | (2.1)% | | **Total operating income** | **$60,597** | **$50,116** | **20.9%** | **$72,859** | **$77,703** | **(6.2)%** | - Total capital expenditures for the nine months ended June 28, 2025, were **$61,264k**, up from **$56,371k** in the prior year[75](index=75&type=chunk) [Note 12 Goodwill and Intangible Assets](index=22&type=section&id=Note%2012%20Goodwill%20and%20Intangible%20Assets) An intangible asset impairment charge of $1.5 million was recorded in Q3 2025, while total goodwill remained stable - An intangible asset impairment charge of **$1.5 million** was recorded in the third quarter of 2025, related to a trade name in the Food Service segment[76](index=76&type=chunk) Aggregate Amortization Expense of Intangible Assets (in millions) | Period | June 28, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------ | | Three months ended | $1.9 | $2.0 | | Nine months ended | $5.9 | $5.2 | - Total goodwill was **$185,070k** for both June 28, 2025, and September 28, 2024[79](index=79&type=chunk) [Note 13 Commitments and Contingencies](index=24&type=section&id=Note%2013%20Commitments%20and%20Contingencies) Routine litigation is not expected to materially impact financials, and a Holly Ridge plant fire resulted in a net insurance gain - Cumulative fire related costs through June 28, 2025, were **$17.2 million**, with cumulative insurance proceeds of **$28.6 million** received[86](index=86&type=chunk) - A **$10.6 million** gain on insurance proceeds for property, plant, and equipment damage was recognized in the three and nine months ended June 28, 2025[86](index=86&type=chunk) - A gain of **$0.8 million** from insurance proceeds in excess of operating losses was recognized in cost of goods sold for the nine months ended June 28, 2025[86](index=86&type=chunk) [Note 14 Accumulated Other Comprehensive Income (Loss)](index=25&type=section&id=Note%2014%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated other comprehensive loss improved due to positive foreign currency translation adjustments in the current nine-month period Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | June 28, 2025 | September 28, 2024 | | :---------------------------------- | :-------------- | :----------------- | | Ending balance | $(13,670) | $(15,299) | | Foreign currency translation adjustment gain (loss) (YTD) | $1,629 | $(2,263) | [Note 15 Leases](index=25&type=section&id=Note%2015%20Leases) The company holds operating and finance leases for facilities and equipment, with associated right-of-use assets and liabilities recorded Lease Balance Sheet Information (in thousands) | Metric | June 28, 2025 | September 28, 2024 | | :---------------------------------- | :-------------- | :----------------- | | Operating lease right-of-use assets | $156,763 | $152,383 | | Total operating lease liabilities | $165,104 | $159,814 | | Finance lease right-of-use assets | $2,748 | $601 | | Total finance lease liabilities | $2,082 | $688 | - Weighted-average remaining term of operating leases was **14.9 years** and finance leases was **4.3 years** as of June 28, 2025[98](index=98&type=chunk) - Weighted-average discount rate of operating leases was **5.4%** and finance leases was **4.1%** as of June 28, 2025[95](index=95&type=chunk) [Note 16 Related Parties](index=29&type=section&id=Note%2016%20Related%20Parties) Related party transactions with NFI Industries for transportation and labor management totaled $54.6 million for the nine months ended June 28, 2025 Payments to NFI Industries, Inc. (in millions) | Service | Three months ended June 28, 2025 | Three months ended June 29, 2024 | Nine months ended June 28, 2025 | Nine months ended June 29, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Transportation management services | $0.2 | $0.3 | $0.6 | $0.8 | | Labor management services | $4.5 | $3.2 | $12.3 | $6.7 | | Lease payments | $0.5 | $0.5 | $1.4 | $1.4 | | Pass through payments to third parties | $15.1 | $15.9 | $40.3 | $40.4 | | **Total amount distributed to NFI** | **$20.3** | **$19.9** | **$54.6** | **$49.3** | - Related party trade payables were approximately **$4.5 million** at June 28, 2025, compared to **$0.6 million** at September 28, 2024[104](index=104&type=chunk) - No expenses were incurred with AMC Global for attitudinal and research services in the nine months ended June 28, 2025, compared to **$76,500** in the prior year period[105](index=105&type=chunk) [Note 18 Share repurchase program](index=30&type=section&id=Note%2018%20Share%20repurchase%20program) The Board authorized a $50.0 million share repurchase program, with $5.0 million executed in March 2025 and $45.0 million remaining - The 2025 Share Repurchase Program authorized the repurchase of up to **$50.0 million** of common stock[109](index=109&type=chunk) - In March 2025, the company repurchased **39,061 shares** at an average price of **$128.00 per share**, totaling **$5.0 million**[111](index=111&type=chunk)[112](index=112&type=chunk) - As of June 28, 2025, **$45.0 million** of share repurchase availability remains under the program[112](index=112&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, condition, and liquidity, including segment-specific details and capital resources [Objective](index=31&type=section&id=Objective) This Management's Discussion and Analysis aims to provide management's narrative on the company's financial condition, results of operations, and liquidity - The objective is to provide management's perspective on financial condition, results of operations, liquidity, and other factors affecting future results[115](index=115&type=chunk) - This discussion should be read in conjunction with the consolidated financial statements and notes in the 10-Q and the Annual Report on Form 10-K[115](index=115&type=chunk) [Business Overview](index=31&type=section&id=Business%20Overview) J&J Snack Foods Corp. manufactures snack foods and distributes frozen beverages, addressing macroeconomic challenges through strategic operational and growth initiatives - The company manufactures and sells snack foods (soft pretzels, frozen novelties, churros, bakery products) and distributes frozen beverages (ICEE, SLUSH PUPPIE) to foodservice and retail supermarket industries[116](index=116&type=chunk) - The company is the largest manufacturer of soft pretzels in the United States[116](index=116&type=chunk) - Strategic initiatives include improving operational efficiencies, expanding growth opportunities, supply chain transformation, adding new production lines, implementing a new ERP system, increasing cross-selling, and recent acquisitions (Dippin' Dots, Thinsters)[119](index=119&type=chunk)[121](index=121&type=chunk) [RESULTS OF OPERATIONS – Three and nine months ended June 28, 2025](index=33&type=section&id=RESULTS%20OF%20OPERATIONS%20%E2%80%93%20Three%20and%20nine%20months%20ended%20June%2028%2C%202025) Net sales increased for both periods, but nine-month net earnings decreased due to gross profit decline, offset by an insurance gain [Summary of Results](index=33&type=section&id=Summary%20of%20Results) Net sales increased for both periods, while net earnings increased for three months but decreased for nine months, with varying gross and operating income percentages Summary of Results (in thousands) | Metric | 3 Months Ended June 28, 2025 | 3 Months Ended June 29, 2024 | % Change (3M) | 9 Months Ended June 28, 2025 | 9 Months Ended June 29, 2024 | % Change (9M) | | :---------------------------------- | :--------------------------- | :--------------------------- | :------------ | :------------------------------- | :------------------------------- | :------------ | | Net sales | $454,293 | $439,957 | 3.3% | $1,172,990 | $1,147,999 | 2.2% | | Gross profit | $150,045 | $147,766 | 1.5% | $339,649 | $350,594 | (3.1)% | | Operating expenses | $89,448 | $97,650 | (8.4)% | $266,790 | $272,891 | (2.2)% | | Operating income | $60,597 | $50,116 | 20.9% | $72,859 | $77,703 | (6.2)% | | NET EARNINGS | $44,247 | $36,299 | 21.9% | $54,214 | $56,910 | (4.7)% | Key Ratios (Basis Pt Change) | Metric | June 28, 2025 (3M) | June 29, 2024 (3M) | Basis Pt Chg (3M) | June 28, 2025 (9M) | June 29, 2024 (9M) | Basis Pt Chg (9M) | | :----------------------- | :----------------- | :----------------- | :---------------- | :----------------- | :----------------- | :---------------- | | Gross profit | 33.0% | 33.6% | (60) | 29.0% | 30.5% | (150) | | Operating income | 13.3% | 11.4% | 190 | 6.2% | 6.8% | (60) | | Net earnings | 9.7% | 8.3% | 140 | 4.6% | 5.0% | (40) | [Net Sales](index=35&type=section&id=Net%20Sales) Net sales increased for both three and nine months, driven by growth in foodservice and frozen beverages, partially offset by retail supermarket declines - Net sales increased by **$14.3 million**, or **3.3%**, to **$454.3 million** for the three months ended June 28, 2025[123](index=123&type=chunk) - Net sales increased by **$25.0 million**, or **2.2%**, to **$1,173.0 million** for the nine months ended June 28, 2025[123](index=123&type=chunk) - The increase was led by sales growth in the foodservice and frozen beverages segments, offset somewhat by a decrease in the retail supermarket segment[123](index=123&type=chunk) [Gross Profit](index=35&type=section&id=Gross%20Profit) Gross profit increased for three months but decreased for nine months, with percentages declining due to lower-margin sales, foreign exchange, and rising costs - Gross Profit increased by **$2.3 million**, or **1.5%**, to **$150.0 million** for the three months ended June 28, 2025[124](index=124&type=chunk) - Gross Profit decreased by **$10.9 million**, or **3.1%**, to **$339.6 million** for the nine months ended June 28, 2025[125](index=125&type=chunk) - As a percentage of sales, gross profit decreased from **33.6% to 33.0%** (three months) and from **30.5% to 29.0%** (nine months), primarily due to higher proportion of lower margin machine sales, foreign exchange headwinds, rising raw material costs, and unfavorable product mix[124](index=124&type=chunk)[125](index=125&type=chunk) [Operating Expenses](index=35&type=section&id=Operating%20Expenses) Operating expenses decreased for both periods, primarily due to a non-recurring insurance gain, partially offset by an intangible asset impairment charge - Operating Expenses decreased **$8.2 million**, or **8.4%**, to **$89.4 million** for the three months ended June 28, 2025[126](index=126&type=chunk) - Operating Expenses decreased **$6.1 million**, or **2.2%**, to **$266.8 million** for the nine months ended June 28, 2025[127](index=127&type=chunk) - The main driver of the decrease was the non-recurring net benefit of the **$10.6 million** gain on insurance proceeds received for damage to property, plant and equipment, offset slightly by the **$1.5 million** intangible asset impairment charge[126](index=126&type=chunk)[127](index=127&type=chunk) [Other Income and Expense](index=35&type=section&id=Other%20Income%20and%20Expense) Investment income decreased for three months but increased for nine months, while interest expense decreased due to lower average outstanding borrowings - Investment income decreased by **$0.2 million** to **$0.6 million** for the three months, but increased by **$0.1 million** to **$2.3 million** for the nine months ended June 28, 2025[128](index=128&type=chunk) - Interest expense decreased by **$0.1 million** to **$0.4 million** (three months) and by **$0.8 million** to **$0.7 million** (nine months) due to lower average outstanding borrowings[129](index=129&type=chunk) [Income Tax Expense](index=36&type=section&id=Income%20Tax%20Expense) Income tax expense increased for three months but decreased for nine months, with a consistent effective tax rate of 27.2% for both periods - Income tax expense increased by **$2.5 million**, or **17.6%**, to **$16.5 million** for the three months ended June 28, 2025[130](index=130&type=chunk) - Income tax expense decreased by **$1.3 million**, or **5.9%**, to **$20.3 million** for the nine months ended June 28, 2025[130](index=130&type=chunk) - The effective tax rate was **27.2%** for both the three and nine months ended June 28, 2025, compared to **27.9%** and **27.4%** in the prior year periods, respectively[130](index=130&type=chunk) [Net Earnings](index=36&type=section&id=Net%20Earnings) Net earnings increased for three months but decreased for nine months, influenced by raw material and labor costs, insurance, sales, and other market factors - Net earnings increased by **$7.9 million**, or **21.9%**, for the three months ended June 28, 2025[131](index=131&type=chunk) - Net earnings decreased by **$2.7 million**, or **4.7%**, for the nine months ended June 28, 2025[132](index=132&type=chunk) - Factors impacting net earnings include the supply and cost of raw materials and labor, insurance costs, sales factors, customer consolidation, manufacturing, marketing and distribution activities, acquisitions, and changes in tax laws and interest rates[133](index=133&type=chunk) [Business Segment Discussion](index=36&type=section&id=Business%20Segment%20Discussion) This section reviews the financial performance of Food Service, Retail Supermarket, and Frozen Beverages segments, highlighting sales trends and operating income drivers [Food Service Segment Results](index=36&type=section&id=Food%20Service%20Segment%20Results) Food Service sales increased due to price and volume, with operating income significantly up for three months due to an insurance gain - Food Service sales increased **$12.7 million**, or **4.8%**, to **$277.2 million** for the three months ended June 28, 2025[137](index=137&type=chunk) - Soft pretzels sales increased **12.8%** to **$67.1 million** (three months) and **3.5%** to **$169.7 million** (nine months), driven by strong volume and price increases[138](index=138&type=chunk)[141](index=141&type=chunk) - Churro sales decreased **13.2%** to **$26.3 million** (three months) and **13.9%** to **$76.8 million** (nine months), primarily due to the lapping of prior-year limited-time offer volumes[138](index=138&type=chunk)[141](index=141&type=chunk) - Operating income increased **$11.3 million** (**55.7%**) to **$31.5 million** for the three months, primarily due to the **$10.6 million** gain on insurance proceeds[140](index=140&type=chunk) - Operating income increased **$0.2 million** (**0.7%**) to **$34.4 million** for the nine months. Excluding the net **$9.1 million** benefit from non-recurring charges, operating income decreased **$8.9 million**, reflecting gross margin pressures and unfavorable product mix[143](index=143&type=chunk) [Retail Supermarket Segment Results](index=39&type=section&id=Retail%20Supermarket%20Segment%20Results) Retail Supermarket sales and operating income decreased due to lower frozen novelties volumes and the impact of the Holly Ridge plant fire - Retail Supermarket sales decreased **$4.9 million**, or **7.1%**, to **$63.9 million** for the three months ended June 28, 2025[144](index=144&type=chunk) - Frozen novelties sales decreased **8.5%** (three months) due to lower promotional activity, while handheld sales decreased **21.2%** (three months) due to the Holly Ridge fire and production delays[144](index=144&type=chunk) - Operating income decreased **$2.1 million** (**26.3%**) to **$5.8 million** for the three months and **$4.5 million** (**33.3%**) to **$8.9 million** for the nine months, driven by lower volumes and gross margin performance[145](index=145&type=chunk)[147](index=147&type=chunk) [Frozen Beverages Segment Results](index=39&type=section&id=Frozen%20Beverages%20Segment%20Results) Frozen Beverage sales increased, driven by machine revenue growth, though beverage-related sales slightly decreased due to channel weakness and foreign exchange - Frozen beverage and related product sales increased **$6.5 million**, or **6.1%**, to **$113.3 million** for the three months ended June 28, 2025[150](index=150&type=chunk) - Machine revenue increased **73.4%** to **$16.9 million** (three months) and **36.2%** to **$36.6 million** (nine months), driven by a major convenience customer updating equipment[150](index=150&type=chunk)[152](index=152&type=chunk) - Beverage-related sales decreased **1.5%** (three months) and **1.0%** (nine months) due to channel weakness and unfavorable foreign exchange impacts from a weaker Mexican Peso[150](index=150&type=chunk)[152](index=152&type=chunk) - Operating income increased **$1.3 million** (**5.8%**) to **$23.3 million** for the three months, but decreased **$0.6 million** (**2.1%**) to **$29.5 million** for the nine months, due to unfavorable mix and foreign exchange headwinds[151](index=151&type=chunk)[153](index=153&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with $77.4 million cash and no long-term debt, supported by operating cash flow and borrowing capacity - The company believes its future operating cash flow, borrowing capacity, and current cash and cash equivalent balances are sufficient to satisfy cash requirements over the next twelve months and beyond[154](index=154&type=chunk) - As of June 28, 2025, the company had **$77.4 million** of cash and cash equivalents and no long-term debt outstanding[158](index=158&type=chunk) - The amount available under the Amended Credit Agreement was **$212.7 million** as of June 28, 2025, after giving effect to **$12.3 million** of outstanding letters of credit[164](index=164&type=chunk) - Net cash provided by operating activities decreased to **$98,697k** for the nine months ended June 28, 2025, from **$126,746k** in the prior year[155](index=155&type=chunk) - Net cash used in investing activities decreased to **$(48,430)k** for the nine months ended June 28, 2025, from **$(62,901)k** in the prior year, primarily due to **$11,421k** in proceeds from insurance for fixed assets and no company acquisitions[156](index=156&type=chunk)[161](index=161&type=chunk) - Net cash used in financing activities was **$(47,653)k** for the nine months ended June 28, 2025, including **$5,000k** in common stock repurchases and increased cash dividends[157](index=157&type=chunk)[162](index=162&type=chunk) [Critical Accounting Policies, Judgments and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%2C%20Judgments%20and%20Estimates) No material changes occurred in critical accounting policies, judgments, and estimates since the latest Annual Report on Form 10-K - No material changes to critical accounting policies, judgments, and estimates since the Annual Report on Form 10-K for the year ended September 28, 2024[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There has been no material change in the company's assessment of market risk sensitivity since the prior fiscal year's Annual Report - No material change in the company's assessment of its sensitivity to market risk since the Annual Report on Form 10-K for the year ended September 28, 2024[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective due to a material weakness in ITGCs, but financial statements are fairly presented [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls were ineffective due to a material weakness, yet consolidated financial statements are fairly presented - Disclosure controls and procedures were not effective as of June 28, 2025, due to a material weakness in internal control over financial reporting[167](index=167&type=chunk) - Despite ineffective disclosure controls, the condensed consolidated financial statements present fairly the company's financial position, results of operations, and cash flows[168](index=168&type=chunk) [Material Weaknesses in Internal Control Over Financial Reporting](index=43&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) A material weakness was identified in ITGCs, specifically concerning logical access and change management, impacting dependent business process controls - A material weakness was identified related to ineffective information technology general controls (ITGCs), including controls over logical access and change management[169](index=169&type=chunk) - Certain business process controls dependent on or relying on data from impacted systems were also deemed ineffective[169](index=169&type=chunk) [Management's Remediation Plan and Status](index=43&type=section&id=Management's%20Remediation%20Plan%20and%20Status) Management is actively implementing a remediation plan to address the material weakness by enhancing ITGCs and access management procedures - Remediation efforts include enhancing processes for reviewing privileged access to key financial systems[170](index=170&type=chunk) - Strengthening change management procedures and expanding management and governance over ITGCs are part of the remediation plan[170](index=170&type=chunk) - The company anticipates that these efforts, once implemented and tested, will remediate the material weakness[171](index=171&type=chunk) [Changes in Internal Control Over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No other material changes in internal control over financial reporting occurred during the quarter, apart from ongoing remediation efforts - No other material changes in internal control over financial reporting occurred during the quarter ended June 28, 2025, beyond ongoing remediation efforts[172](index=172&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=Part%20II.%20Other%20Information) This section includes legal proceedings, risk factors, equity sales, other information, and a list of exhibits filed with the Form 10-Q [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation not expected to materially impact its financial condition or results of operations - The company is a party to litigation arising in the normal course of business[80](index=80&type=chunk)[173](index=173&type=chunk) - Management does not expect any such proceedings to have a material adverse effect on the company's financial condition or results of operations[80](index=80&type=chunk)[173](index=173&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - The risks identified in the Annual Report on Form 10-K for the fiscal year ended September 28, 2024, have not changed in any material respect[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No public repurchases were made in Q3 2025, with $45.0 million remaining under the share repurchase program - No public repurchases of common stock were made under the 2025 Share Repurchase Program during the three months ended June 28, 2025[175](index=175&type=chunk) - **36 shares** were withheld to cover taxes associated with the vesting of certain restricted stock units[175](index=175&type=chunk) - As of June 28, 2025, **$45.0 million** of share repurchase availability remains under the 2025 Share Repurchase Program[175](index=175&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the three months ended June 28, 2025 - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the three months ended June 28, 2025[176](index=176&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists certifications and financial information formatted in Inline XBRL, including the cover page interactive data file - Exhibits include Certifications Pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002[178](index=178&type=chunk) - Financial information from the Quarterly Report on Form 10-Q is formatted in Inline XBRL, including Consolidated Balance Sheets, Statements of Earnings, Comprehensive Income, Cash Flows, and Notes[178](index=178&type=chunk) - A Cover Page Interactive Data File (formatted as Inline XBRL) is also included[178](index=178&type=chunk)

Financial Data and Key Metrics Changes - Net sales grew 3.3% to a record $454.3 million while adjusted EBITDA increased 1.6% to a record $72 million and adjusted EPS was $2 per share compared to $1.98 last year [6][20] - Gross margin was 33%, reflecting a seasonal mix shift towards higher margin products and progress on pricing initiatives [6][25] - Cost of goods sold increased 4.1% to $304.2 million, with ingredient costs rising, particularly for chocolate [21] Business Line Data and Key Metrics Changes - Food service segment sales increased 4.8%, driven by price increases and volume growth in pretzels, with pretzel sales up 12.8% [9] - Retail segment sales decreased by 7.1%, primarily due to a decline in frozen novelty and handheld sales [11] - Frozen beverage segment sales increased by 6.1%, with higher machine revenue offsetting a modest decline in beverage volume [13] Market Data and Key Metrics Changes - Box office sales during the quarter increased 37% year-over-year, driven by the success of the Minecraft movie [7] - Beverage sales were negatively impacted by foreign exchange headwinds, which affected total frozen beverage segment sales by approximately 270 basis points [13][20] Company Strategy and Development Direction - The company is focused on targeted pricing actions, cost reduction initiatives, and consumer-led innovation across its portfolio [19] - Plans to innovate around better-for-you products to appeal to health-conscious consumers, including high protein and whole grain pretzels [18] - A transformation program is in development to drive enterprise-wide cost savings and efficiencies while modernizing financial systems [18] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the consumer backdrop, tariff-related risks, and projections for box office sales in Q4 [18] - The company is optimistic about growth prospects, including potential permanent menu placements with major QSR customers [10][17] - Management expressed confidence in the ability to drive sustainable growth and deliver long-term value for customers and shareholders [19] Other Important Information - The quarter included a non-recurring gain of $10.6 million from insurance proceeds related to last year's plant fire and a $1.5 million brand impairment charge [20] - The company has approximately $77 million in cash and no long-term debt, with $213 million of borrowing capacity under its revolving credit agreement [26] Q&A Session Summary Question: Retail segment promotional activity pullback - Management acknowledged insufficient promotional depth in the retail segment and plans to correct this in the future [28] Question: Handheld capacity outsourcing plans - Management confirmed that capacity from a shut-down plant has been successfully shifted to another facility, which can now produce more than before [30] Question: Marketing and distribution cost structure - Management noted that marketing expenses increased due to summer promotions, while distribution costs improved through freight optimization and lower fuel expenses [34]

Financial Data and Key Metrics Changes - Net sales grew 3.3% to a record $454.3 million, while adjusted EBITDA increased 1.6% to a record $72 million, and adjusted EPS was $2 per share compared to $1.98 last year [6][21] - Gross margin was 33%, reflecting a seasonal mix shift towards higher margin products and progress on pricing initiatives [6][21] Business Line Data and Key Metrics Changes - Food service segment sales increased 4.8%, driven by price increases and volume growth in pretzels, with pretzel sales up 12.8% [9][21] - Retail segment sales decreased by 7.1%, primarily due to a decline in frozen novelty and handheld sales, although Dogsters and Dipping Dots Sundays continued to grow [11][21] - Frozen beverage segment sales increased by 6.1%, with a modest decline in beverage volume offset by higher machine revenue [13][21] Market Data and Key Metrics Changes - Box office sales increased 37% year-over-year, driven by the success of the Minecraft movie, which helped to compensate for sluggish performance in other channels [7][21] - Beverage sales were negatively impacted by foreign exchange headwinds, which affected total frozen beverage segment sales by approximately 270 basis points [13][21] Company Strategy and Development Direction - The company is focused on targeted pricing actions, cost reduction initiatives, and consumer-led innovation across its portfolio to address near-term challenges [19][20] - Plans to innovate around better-for-you products and eliminate certain artificial ingredients from products served in schools by 2026 [18][21] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the consumer backdrop, tariff-related risks, and projections for box office sales to be down in Q4 [19][20] - The company is optimistic about growth prospects, including potential permanent menu placements with major QSR customers [10][16] Other Important Information - The quarter included a non-recurring gain of $10.6 million from insurance proceeds related to last year's plant fire and a $1.5 million brand impairment charge [21] - The balance sheet remains strong with approximately $77 million in cash and no long-term debt [26] Q&A Session Summary Question: Retail segment promotional activity pullback - Management acknowledged insufficient promotional depth in the retail segment and plans to correct this in the future [30] Question: Handheld capacity outsourcing plans - Management confirmed that capacity from a shut-down plant has been successfully shifted to another facility, which can now produce more than before [31][33] Question: Cost structure around marketing and distribution - Marketing expenses increased due to summer promotions, while distribution costs improved through freight optimization and lower fuel expenses [37][39] Question: Handhelds volume expectations for fiscal 2026 - Management expects a 10% lift in handhelds next year, with capacity in one plant rising about 37% [46] Question: Materiality of new programs with QSR chains - Management indicated that tests with churros and frozen beverages could have a meaningful impact on sales for 2026, with positive indications from ongoing tests [48][49]