J & J Snack Foods(JJSF) - 2025 Q3 - Quarterly Results

Executive Summary & Business Overview This section summarizes J&J Snack Foods Corp.'s Q3 2025 financial performance and strategic business outlook Third Quarter 2025 Financial Highlights J & J Snack Foods Corp. reported strong financial results for the third quarter ended June 28, 2025, achieving record performance across key metrics including net sales of $454.3 million and adjusted EBITDA of $72.0 million, reflecting resilience despite a cautious consumer environment and weather-related headwinds Third Quarter 2025 Financial Highlights | Metric | Actuals (Q3 2025) | $ vs. LY | % vs. LY | | :--- | :--- | :--- | :--- | | Net Sales | $454.3M | $14.3M | 3% | | Gross Profit | $150.0M | $2.3M | 2% | | Operating Income | $60.6M | $10.5M | 21% | | Net Earnings | $44.2M | $7.9M | 22% | | Earnings per Diluted Share | $2.26 | $0.39 | 21% | | Adjusted Operating Income | $53.4M | $0.4M | 1% | | Adjusted EBITDA | $72.0M | $1.2M | 2% | | Adjusted Earnings per Diluted Share | $2.00 | $0.02 | 1% | CEO Commentary & Business Outlook CEO Dan Fachner reported record Q3 performance driven by Food Service and Frozen Beverage, despite retail declines, with sequential margin expansion and a cautious Q4 outlook focusing on fiscal 2026 innovation - Q3 performance was led by sales growth in Food Service and Frozen Beverage segments, with meaningful growth in core soft pretzel, bakery, and Dippin' Dots businesses[4] - Retail sales declined due to reduced promotional activity for frozen novelties and capacity constraints in handheld sales from a prior year facility fire, with a solution for restoration expected by calendar year-end[4] - Sequential margin expansion was supported by a seasonal mix shift towards higher-margin products and recent pricing initiatives to offset input cost inflation[4] - Outlook for fiscal Q4 remains cautious due to consumer backdrop, tariff-related risks, and projected lower box office sales. For fiscal 2026, the focus is on execution and innovation, including new product launches (pretzels, churros, frozen beverages) and 'better-for-you' options (high protein pretzels, clean-label novelties)[5] Detailed Third Quarter 2025 Performance This section details the company's consolidated and segment-specific financial performance for the third quarter of 2025 Consolidated Financial Highlights Consolidated net sales increased 3.3% to $454.3 million, with gross margin slightly declining and operating income significantly increasing due to non-recurring items - Net sales increased 3.3% to $454.3 million, primarily driven by higher Food Service and Frozen Beverage sales[6] - Gross profit increased to $150.0 million (from $147.8 million YoY), but gross margin declined from 33.6% to 33.0%, mainly due to a higher proportion of lower-margin machine sales in the Frozen Beverage segment and increased ingredient costs (especially chocolates), partially offset by price increases[6] - Total operating expenses were $89.4 million (19.7% of sales), down from 22.2% in the prior year, including a $10.6 million insurance gain and a $1.5 million intangible asset impairment charge. Excluding these, operating expenses increased less than 1%[7] Key Consolidated Financial Metrics (Q3 2025 vs Q3 2024) | Metric | Q3 2025 | Q3 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating Income | $60.6M | $50.1M | $10.5M | 21% | | Adjusted Operating Income | $53.4M | $53.1M | $0.3M | 1% | | Earnings per Diluted Share | $2.26 | $1.87 | $0.39 | 21% | | Adjusted Earnings per Diluted Share | $2.00 | $1.98 | $0.02 | 1% | | Effective Tax Rate | 27.2% | 27.9% | -0.7% | - | Segment Performance Food Service saw robust sales and operating income growth, while Retail Supermarket declined, and Frozen Beverages grew from machine sales Segment Sales Growth (Q3 2025 vs Q3 2024) | Segment | Sales Change (%) | | :--- | :--- | | Food Service | +4.8% | | Retail Supermarket | -7.1% | | Frozen Beverage | +6.1% | Food Service Segment Food Service sales increased 4.8% to $277.2 million, driven by pretzels, with operating income surging 55.7% to $31.5 million, significantly benefiting from an insurance gain - Food Service sales increased 4.8% to $277.2 million[11] - Pretzel sales increased 12.8%, largely due to Bavarian varieties, while Churro sales declined 13.2% due to the wind-down of a prior-year limited-time offer[11] - New products and added placement contributed approximately $8.4 million in sales, driven by frozen novelties, churro products, and new cookie distribution[11] - Operating income increased by $11.3 million (55.7%) to $31.5 million, including a net $9.1 million benefit from non-recurring insurance gain on property, plant, and equipment[12] Retail Supermarket Segment Retail Supermarket sales decreased 7.1% to $63.9 million due to lower promotions and capacity constraints, leading to a 26.3% decline in operating income - Retail sales decreased 7.1% to $63.9 million[17] - Frozen novelties sales decreased 8.5% due to lower promotional activity, though Dogsters and Dippin' Dots Sundaes showed growth. Retail handheld sales declined 21% due to capacity constraints from a prior year facility fire[17] - Soft pretzel sales increased 3.3%. New products and added placement contributed approximately $3.3 million, driven by Dippin' Dots Sundaes and pretzel dogs[17] - Operating income decreased 26.3% to $5.8 million[17] Frozen Beverages Segment Frozen Beverage sales increased 6.1% to $113.3 million, driven by a 73.4% surge in machine sales, resulting in a 5.8% increase in operating income - Frozen beverage segment sales increased 6.1% to $113.3 million[17] - Beverage sales declined 1.5%, impacted by unfavorable foreign exchange rates. Machine Service revenues increased 2.7% on higher call volumes[17] - Machine sales increased 73.4%, primarily due to a major convenience customer upgrading its equipment across its store network[17] - Operating income increased 5.8% to $23.3 million, driven by increased equipment sales and focused expense management[17] Company Information This section provides an overview of J&J Snack Foods Corp. and details regarding its upcoming conference call About J & J Snack Foods Corp. J & J Snack Foods Corp. is a leading innovator in the snack food industry, offering a diverse portfolio of branded snack foods and beverages to foodservice and retail supermarket outlets nationwide. Their principal products include well-known brands like SUPERPRETZEL, ICEE, SLUSH PUPPIE, DIPPIN' DOTS, and various bakery items - J & J Snack Foods Corp. is a leader and innovator in the snack food industry, providing innovative, niche, and affordable branded snack foods and beverages[15] - The company's principal products include SUPERPRETZEL, ICEE, SLUSH PUPPIE, DIPPIN' DOTS, LUIGI'S Real Italian Ice, MINUTE MAID frozen ices, WHOLE FRUIT sorbet, HOLA! CHURROS, THE FUNNEL CAKE FACTORY, and several bakery brands[15] Conference Call Details J&J Snack Foods Corp. will host a conference call on August 5, 2025, at 10:00 a.m. Eastern Time to discuss its third-quarter results and business outlook. Participants are required to register to receive dial-in information, and a live audio webcast will also be available - A conference call to discuss results and business outlook will be held on August 5, 2025, at 10:00 a.m. Eastern Time[14] - Participants must register via a provided link to receive dial-in numbers and a personal PIN. A live audio webcast will also be available on the Investors homepage[14] Financial Disclosures & Non-GAAP Measures This section outlines cautionary statements regarding forward-looking information and defines the company's non-GAAP financial measures Cautionary Statement Regarding Forward-Looking Information This section provides a cautionary statement regarding forward-looking statements, emphasizing that actual results may differ materially from expectations due to inherent uncertainties and various risk factors, including consumer spending, price competition, raw material availability, and market changes. The company does not undertake to update such statements - The press release contains forward-looking statements regarding future financial position, results, strategy, and objectives[18] - Such statements are inherently uncertain, and actual results may differ materially from expectations due to factors like consumer spending, price competition, raw material availability, transportation costs, and market changes[18] - The Company does not undertake a duty to update forward-looking statements[18] Non-GAAP Financial Measures Definitions This section defines the non-GAAP financial measures used by the company: Adjusted EBITDA, Adjusted Operating Income, and Adjusted Earnings per Diluted Share. It clarifies that these measures are supplementary to GAAP results, used by management to evaluate core business performance by excluding certain non-recurring or non-indicative items, and should not be considered in isolation - Adjusted EBITDA consists of net earnings adjusted for income taxes, investment income, interest expense, depreciation and amortization, share-based compensation, net gain/loss on asset disposal, impairment charges, restructuring costs, M&A costs, strategic business transformation costs, integration costs, non-recurring legal fees, and gain on insurance proceeds[19] - Adjusted Operating Income consists of operating income adjusted for impairment charges, restructuring costs, M&A costs, acquisition-related amortization and inventory adjustments, strategic business transformation costs, integration costs, non-recurring legal fees, and gain on insurance proceeds[20] - Adjusted Earnings per Diluted Share consists of net earnings adjusted for similar items as Adjusted Operating Income, with the income tax effect of pre-tax adjustments determined using statutory tax rates[21] - These non-GAAP measures are not indicators of financial performance under GAAP and should not be considered alternatives to GAAP measures. They are used by management to evaluate business performance by excluding items not indicative of recurring core business results, providing additional clarity for investors[23][24] Consolidated Financial Statements This section presents the company's consolidated statements of earnings, balance sheets, and cash flows for the reported periods Consolidated Statements of Earnings The Consolidated Statements of Earnings present the company's financial performance for the three and nine months ended June 28, 2025, and June 29, 2024, detailing net sales, cost of goods sold, gross profit, operating expenses, and net earnings Consolidated Statements of Earnings (Selected Data, in thousands) | Metric | Three months ended June 28, 2025 | Three months ended June 29, 2024 | Nine months ended June 28, 2025 | Nine months ended June 29, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $454,293 | $439,957 | $1,172,990 | $1,147,999 | | Cost of goods sold | $304,248 | $292,191 | $833,341 | $797,405 | | Gross profit | $150,045 | $147,766 | $339,649 | $350,594 | | Total operating expenses | $89,448 | $97,650 | $266,790 | $272,891 | | Operating income | $60,597 | $50,116 | $72,859 | $77,703 | | Net earnings | $44,247 | $36,299 | $54,214 | $56,910 | | Earnings per diluted share | $2.26 | $1.87 | $2.77 | $2.93 | Consolidated Balance Sheets The Consolidated Balance Sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of June 28, 2025, compared to September 28, 2024 Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 28, 2025 | September 28, 2024 | | :--- | :--- | :--- | | Total current assets | $488,449 | $450,414 | | Property, plant and equipment, net | $404,983 | $391,185 | | Total other assets | $520,497 | $523,502 | | Total Assets | $1,413,929 | $1,365,101 | | Total current liabilities | $204,822 | $174,073 | | Total stockholders' equity | $969,925 | $956,970 | | Total Liabilities and Stockholders' Equity | $1,413,929 | $1,365,101 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows illustrate the sources and uses of cash for the nine months ended June 28, 2025, and June 29, 2024, categorized into operating, investing, and financing activities Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | Nine months ended June 28, 2025 | Nine months ended June 29, 2024 | | :--- | :--- | :--- | | 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 | | Cash and cash equivalents at end of period | $77,377 | $64,047 | Notes to Consolidated Financial Statements & Non-GAAP Reconciliations This section provides detailed segment reporting and reconciliations of GAAP to non-GAAP financial measures Segment Reporting Details This section provides a detailed breakdown of sales, operating income, capital expenditures, and assets by the company's three operating segments: Food Service, Retail Supermarket, and Frozen Beverages, for both the three and nine months ended June 28, 2025, and June 29, 2024 Sales to External Customers by Segment (Three months ended, in thousands) | Segment | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Food Service | $277,170 | $264,446 | | Retail Supermarket | $63,860 | $68,723 | | Frozen Beverages | $113,263 | $106,788 | | Consolidated sales | $454,293 | $439,957 | Operating Income by Segment (Three months ended, in thousands) | Segment | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Food Service | $31,515 | $20,247 | | Retail Supermarket | $5,755 | $7,812 | | Frozen Beverages | $23,327 | $22,057 | | Total operating income | $60,597 | $50,116 | Capital Expenditures by Segment (Three months ended, in thousands) | Segment | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Food Service | $16,764 | $12,717 | | Retail Supermarket | $44 | $0 | | Frozen Beverages | $5,926 | $7,028 | | Total capital expenditures | $22,734 | $19,745 | Non-GAAP Financial Measures Reconciliations This section provides detailed reconciliations of GAAP financial measures (Net Earnings, Operating Income, and Earnings per Diluted Share) to their corresponding non-GAAP adjusted measures (Adjusted EBITDA, Adjusted Operating Income, and Adjusted Earnings per Diluted Share) for the three and nine months ended June 28, 2025, and June 29, 2024 Reconciliation of GAAP Net Earnings to Adjusted EBITDA (Three months ended, in thousands) | Metric | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Net Earnings | $44,247 | $36,299 | | Income Taxes | $16,531 | $14,057 | | Depreciation and Amortization | $18,657 | $18,193 | | Gain on insurance proceeds received for damage to property, plant, and equipment | $(10,622) | $0 | | Impairment Costs | $1,500 | $0 | | Adjusted EBITDA | $72,032 | $70,870 | Reconciliation of GAAP Operating Income to Adjusted Operating Income (Three months ended, in thousands) | Metric | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Operating Income | $60,597 | $50,116 | | Strategic Business Transformation Costs | $0 | $295 | | Gain on insurance proceeds received for damage to property, plant, and equipment | $(10,622) | $0 | | Acquisition Related Amortization Expenses | $1,946 | $2,012 | | Impairment Costs | $1,500 | $0 | | Adjusted Operating Income | $53,421 | $53,061 | Reconciliation of GAAP Earnings per Diluted Share to Adjusted Earnings per Diluted Share (Three months ended) | Metric | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Earnings per Diluted Share | $2.26 | $1.87 | | Strategic Business Transformation Costs | $0 | $0.02 | | Gain on insurance proceeds received for damage to property, plant, and equipment | $(0.54) | $0 | | Acquisition Related Amortization Expenses | $0.10 | $0.10 | | Impairment Costs | $0.08 | $0 | | Tax Effect of Non-GAAP Adjustments | $0.10 | $(0.04) | | Adjusted Earnings per Diluted Share | $2.00 | $1.98 |