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

PART I. FINANCIAL INFORMATION 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 This section presents the unaudited consolidated financial statements, including balance sheets, earnings, comprehensive income, equity, and cash flows, with detailed notes Consolidated Balance Sheets 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 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 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 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] - Net earnings contributed $44,247k in the three months ended June 28, 2025, and $5,143k and $4,824k in the preceding quarters[16] - The company repurchased $5,000k of common stock during the nine months ended June 28, 2025[16] Consolidated Statements of Cash Flows 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] - 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] Notes to the Consolidated Financial Statements This section details accounting policies, significant events, and financial statement line items, including revenue, debt, segments, and share repurchases Note 1 Basis of Presentation 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] - Sales of frozen beverages and frozen novelties are generally higher in the fiscal third and fourth quarters due to warmer weather[24] Note 2 Business Combinations 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] - 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] - Financial results of Thinsters are included in the Food Service segment but were not deemed material for the periods presented[28] Note 3 Revenue Recognition 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] - Variable consideration (sales discounts, promotions, rebates, coupons) is treated as a reduction in revenue[35] - 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] Note 4 Depreciation and Amortization Expense 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] Note 5 Earnings per Share 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][44] Note 6 Share-Based Compensation 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] - 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][51] Note 7 Income Taxes 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] - 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] - The company is evaluating the potential impact of the One Big Beautiful Bill Act (OBBB) enacted on July 4, 2025[58] Note 8 New Accounting Pronouncements and Policies 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] - ASU No. 2023-09 "Income Taxes" enhances transparency around income tax information, effective for fiscal years beginning after December 15, 2024[60] - ASU No. 2024-03 "Expense Disaggregation Disclosures" improves disclosure requirements for expenses, effective for fiscal years beginning after December 15, 2026[61] Note 9 Long-Term Debt 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] - 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] - 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] Note 10 Inventory 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 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] Note 12 Goodwill and Intangible Assets 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] 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] Note 13 Commitments and Contingencies 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] - 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] - 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] Note 14 Accumulated Other Comprehensive Income (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 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] - Weighted-average discount rate of operating leases was 5.4% and finance leases was 4.1% as of June 28, 2025[95] Note 16 Related Parties 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] - 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] Note 18 Share repurchase program 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] - In March 2025, the company repurchased 39,061 shares at an average price of $128.00 per share, totaling $5.0 million[111][112] - As of June 28, 2025, $45.0 million of share repurchase availability remains under the program[112] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, condition, and liquidity, including segment-specific details and capital resources 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] - 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] Business Overview 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] - The company is the largest manufacturer of soft pretzels in the United States[116] - 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][121] RESULTS OF OPERATIONS – Three and nine months ended June 28, 2025 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 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 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] - Net sales increased by $25.0 million, or 2.2%, to $1,173.0 million for the nine months ended June 28, 2025[123] - 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] Gross Profit 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] - Gross Profit decreased by $10.9 million, or 3.1%, to $339.6 million for the nine months ended June 28, 2025[125] - 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][125] Operating Expenses 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] - Operating Expenses decreased $6.1 million, or 2.2%, to $266.8 million for the nine months ended June 28, 2025[127] - 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][127] Other Income and Expense 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] - 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] Income Tax Expense 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] - Income tax expense decreased by $1.3 million, or 5.9%, to $20.3 million for the nine months ended June 28, 2025[130] - 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] Net Earnings 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] - Net earnings decreased by $2.7 million, or 4.7%, for the nine months ended June 28, 2025[132] - 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] Business Segment Discussion 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 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] - 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][141] - 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][141] - 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] - 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] Retail Supermarket Segment Results 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] - 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] - 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][147] Frozen Beverages Segment Results 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] - 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][152] - 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][152] - 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][153] Liquidity and Capital Resources 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] - As of June 28, 2025, the company had $77.4 million of cash and cash equivalents and no long-term debt outstanding[158] - 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] - 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] - 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][161] - 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][162] Critical Accounting Policies, Judgments and Estimates 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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 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] - Despite ineffective disclosure controls, the condensed consolidated financial statements present fairly the company's financial position, results of operations, and cash flows[168] Material Weaknesses in Internal Control Over Financial Reporting 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] - Certain business process controls dependent on or relying on data from impacted systems were also deemed ineffective[169] Management's Remediation Plan and Status 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] - Strengthening change management procedures and expanding management and governance over ITGCs are part of the remediation plan[170] - The company anticipates that these efforts, once implemented and tested, will remediate the material weakness[171] Changes in Internal Control Over Financial Reporting 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] PART II. OTHER INFORMATION 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 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][173] - Management does not expect any such proceedings to have a material adverse effect on the company's financial condition or results of operations[80][173] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - 36 shares were withheld to cover taxes associated with the vesting of certain restricted stock units[175] - As of June 28, 2025, $45.0 million of share repurchase availability remains under the 2025 Share Repurchase Program[175] Item 5. Other Information 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] Item 6. Exhibits 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] - 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] - A Cover Page Interactive Data File (formatted as Inline XBRL) is also included[178]