J & J Snack Foods(US:JJSF)2025-11-26 21:35Revenue Breakdown - Soft pretzel sales accounted for 18% of the Company's revenue in fiscal year 2025, 18% in fiscal year 2024, and 19% in fiscal year 2023[24]. - Frozen novelties sales represented 16% of the Company's revenue in fiscal year 2025, 17% in fiscal year 2024, and 17% in fiscal year 2023[28]. - Churro sales were 6% of the Company's sales in fiscal year 2025, 7% in fiscal year 2024, and 7% in fiscal year 2023[32]. - Bakery products sales amounted to 27% of the Company's sales in fiscal year 2025, 26% in fiscal year 2024, and 26% in fiscal year 2023[34]. - Frozen beverage sales constituted 14% of the Company's revenue in fiscal year 2025, 15% in fiscal year 2024, and 14% in fiscal year 2023[35]. - The top ten customers accounted for 46% of the Company's sales in fiscal year 2025, 45% in fiscal year 2024, and 43% in fiscal year 2023[40]. - Revenue from equipment sales and repair and maintenance services totaled 9% of the Company's sales in each of the fiscal years 2025, 2024, and 2023[36]. Business Segments and Operations - The Company operates in three business segments: Food Service, Retail Supermarkets, and Frozen Beverages[19]. - The Company has a significant trademark portfolio, including brands such as SUPERPRETZEL, DIPPIN' DOTS, and ICEE[48]. - The Company develops and introduces new products on a routine basis, evaluating success based on sales and profit levels[45]. - Sales from foreign operations were $69.6 million, $73.4 million, and $70.2 million in fiscal years 2025, 2024, and 2023, respectively, with total assets in foreign operations at $79.1 million or 5.7% of total assets as of September 27, 2025[56]. - The top ten customers accounted for 46% of sales in fiscal year 2025, 45% in 2024, and 43% in 2023, with the largest customer representing 10% of sales in 2025[77]. Workforce and Employment - Approximately 4,600 full and part-time employees and 600 staffing agency workers were employed as of September 27, 2025, with about 1,400 production and distribution employees covered by collective bargaining agreements[59]. Safety and Compliance - The Company’s Total Recordable Incident Rate (TRIR) and Days Away, Restricted or Transferred (DART) incident rates were lower than food manufacturing averages, indicating a strong safety performance[60]. - Compliance with government regulations did not materially affect capital expenditures or earnings in fiscal 2025 and is not expected to impact fiscal 2026 significantly[57]. - The Company’s facilities are Global Food Safety Initiative (GFSI) certified, ensuring adherence to stringent safety and quality standards[58]. Economic and Market Risks - The Company competes with larger manufacturers and distributors, which could lead to downward pressure on prices and a decline in market share[79]. - The Company faces risks from economic conditions that could negatively impact consumer demand and affect sales of higher-margin products[66]. - The company faces risks related to manufacturing capacity constraints, which could negatively affect customer service levels and demand for products[82]. - Increased health care costs due to rising health care expenses and legislative changes could adversely impact the company's financial position and results of operations[89]. Operational Changes and Initiatives - The company is pursuing cost productivity initiatives in procurement, manufacturing, and logistics to enhance operating efficiencies and manage costs effectively[99]. - The Company reported a significant increase in operational efficiency through Project Apollo, expected to generate at least $20 million in run-rate operating income by fiscal 2026[125]. - The Company closed three manufacturing facilities, incurring approximately $24 million in plant closure costs, primarily related to non-cash write-downs and severance[125]. - The Company has opened three regional distribution centers, projected to drive cost reductions in warehousing and distribution[126]. - The Company added six new production lines, significantly expanding capacity for core products such as pretzels, churros, and frozen novelties[126]. - The Company launched the Hola! Churro brand in fiscal year 2023 and expanded the SuperPretzel brand with Bavarian Sticks[126]. Financial Performance - Net sales increased by $8.5 million, or 1%, to $1,583.2 million in fiscal 2025, driven by growth in the foodservice segment[132]. - Gross profit decreased by $16.3 million, or 3%, to $469.8 million, with gross profit as a percentage of sales declining to 29.7% from 30.9%[133]. - Total operating expenses rose by $17.0 million, or 5%, to $385.6 million, increasing as a percentage of sales to 24.4%[135]. - Operating income fell by $33.2 million, or 28.3%, to $84.3 million, impacted by rising raw material costs and inflationary pressures[145]. - Net earnings decreased by $21.0 million, or 24%, to $65.6 million, translating to $3.36 per diluted share[139]. - Food service segment sales increased by $16.2 million, or 1.6%, to $1,001.4 million, with soft pretzel sales up 3.5%[147]. - Retail supermarket segment sales declined by $7.5 million, or 3.4%, to $213.8 million, with operating income down 30.6%[150]. - Investment income increased by $0.4 million, or 11%, to $3.6 million due to higher average cash balances[137]. - The effective tax rate decreased to 24.1% from 27.2% primarily due to a change in estimate on blended state tax rate[138]. - New product sales reached approximately $3.9 million in the first twelve months since introduction, mainly from churros added to a major fast-food customer's menu[148]. - Sales of products to retail supermarkets decreased by $7.5 million, or 3%, to $213.8 million in fiscal year 2025[152]. - Operating income in the Retail Supermarkets segment decreased by $5.9 million, or 31%, to $13.3 million in fiscal 2025[154]. - Total frozen beverage segment sales decreased slightly by $0.2 million, to $368.0 million in fiscal 2025[155]. - Beverage-related sales decreased by 5%, or $10.7 million, in fiscal 2025, primarily due to weakness in certain channels[155]. Acquisitions and Investments - The Company completed the acquisition of the Thinsters cookie business for approximately $7.0 million in cash on April 8, 2024[158]. Cash Flow and Financial Position - Cash flows from operating activities provided $165.1 million in fiscal 2025, compared to $173.1 million in fiscal 2024[160]. - As of September 27, 2025, the Company had $105.9 million in cash and cash equivalents[165]. - The Company had approximately $133 million in purchase commitments for raw materials as of September 27, 2025[171]. - As of September 27, 2025, the company had no debt outstanding, indicating a strong balance sheet[198]. Risk Management and Controls - The company minimizes purchasing risk through forward purchasing of raw materials for periods from 1 to 12 months[199]. - The company has not entered into any forward exchange contracts to hedge foreign currency risk, as it does not consider the exposure significant[200]. - Management identified a material weakness in internal controls related to information technology general controls as of September 28, 2024, but concluded that controls were effective as of September 27, 2025[208][211]. - The independent registered public accounting firm expressed an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of September 27, 2025[213].