J & J Snack Foods(JJSF) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales increased by $14.3 million, or 4.1%, to $362.6 million for the three months ended December 28, 2024, driven by growth in Retail Supermarket and Frozen Beverages segments [118]. - Gross profit decreased by $0.7 million, or 0.7%, to $93.9 million, with gross profit margin declining from 27.2% to 25.9% due to rising raw material costs [119]. - Operating expenses increased by $2.8 million, or 3.3%, to $87.7 million, while as a percentage of sales, they decreased from 24.4% to 24.2% [120]. - Net earnings decreased by $2.1 million, or 29.4%, to $5.1 million for the three months ended December 28, 2024 [123]. Segment Performance - Food Service segment sales increased by $10.3 million, or 4.5%, to $238.9 million, with soft pretzels sales up 4.8% to $52.5 million [127]. - The Frozen Beverages segment reported a sales increase of 4.0% to $79.0 million, with operating income rising by 29.9% to $4.2 million [126]. - Operating income in the Food Service segment decreased by $4.3 million to $1.7 million due to gross margin pressures from rising raw material costs and an unfavorable product mix [130]. - Retail Supermarket sales increased by $1.0 million, or 2.2%, to $44.7 million, with soft pretzel sales decreasing by 7.4% to $17.1 million [131]. - Frozen Beverages sales increased by $3.1 million, or 4.0%, to $79.0 million, with beverage sales rising by 6.4% to $44.7 million [134]. - Operating income in the Frozen Beverages segment increased by $1.0 million to $4.2 million, driven by strong sales and well-managed operating expenses [135]. Operational Developments - The company opened three regional distribution centers, projected to drive significant cost reductions in warehousing and distribution [116]. - Six new production lines were added, significantly expanding capacity for core products like pretzels and churros [116]. - The company launched new products, generating approximately $0.7 million in sales in the first twelve months since their introduction [129]. Cash Flow and Financial Position - Net cash provided by operating activities decreased to $35.2 million from $49.0 million year-over-year [137]. - Cash flows used in investing activities were $18.9 million, slightly down from $19.8 million in the prior year, primarily due to timing of spending [138]. - As of December 28, 2024, the company had $73.6 million in cash and cash equivalents [140]. - The amount available under the Amended Credit Agreement was $212.7 million after accounting for $12.3 million in letters of credit outstanding [144]. - The company is in compliance with all financial covenants of the Credit Agreement as of December 28, 2024 [143]. Tax and Dividends - The effective tax rate remained stable at 27% for both the three months ended December 28, 2024, and December 30, 2023 [122]. - The increase in cash dividends from the prior year was due to a raise in the quarterly dividend during fiscal 2024 [147].