J & J Snack Foods(JJSF) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales decreased by $18.8 million, or 5.2%, to $343.8 million for the three months ended December 27, 2025, primarily due to declines in the Food Service segment [134]. - Gross profit increased by $2.1 million, or 2.2%, to $96.0 million, with gross profit as a percentage of sales rising from 25.9% to 27.9% [135]. - Operating expenses increased by $7.7 million, or 8.8%, to $95.4 million, with a significant portion attributed to $6.1 million in plant closure expenses [137]. - Net earnings decreased by $4.3 million, or 82.8%, to $0.9 million for the three months ended December 27, 2025 [144]. - Investment income decreased by $0.3 million, or 31.3%, to $0.7 million due to lower interest rates on foreign cash balances [142]. Sales Performance - Net sales for the three months ended December 27, 2025, decreased by $18.8 million, or 5.2%, to $343.8 million compared to $362.6 million for the same period in 2024 [147]. - Food Service sales decreased by $19.7 million, or 8.3%, primarily due to a $18.2 million decline in bakery product sales, attributed to the Project Apollo initiative [148]. - Retail Supermarket sales increased by $1.2 million, or 2.6%, to $45.9 million, driven by a 35% increase in handheld sales [151]. - Frozen Beverages segment sales decreased by $0.3 million, or 0.3%, with operating income declining by $0.6 million, or 13.7%, to $4.0 million due to lower beverage sales volumes [153][154]. Operational Initiatives - The company expects Project Apollo to generate at least $20 million of run-rate operating income by the end of fiscal 2026 [127]. - The company has opened three regional distribution centers, projected to drive cost reductions in warehousing and distribution [130]. - Operating income in the Food Service segment increased by $1.3 million, or 14.6%, to $10.1 million, reflecting manufacturing efficiencies despite volume declines [150]. Cash Flow and Financial Position - Cash flows from operating activities for the three months ended December 27, 2025, increased to $35.9 million from $35.2 million in the prior year [156]. - As of December 27, 2025, the company had $66.8 million in cash and cash equivalents, with no outstanding balance under the Amended Credit Agreement [159][164]. - The company anticipates that future operating cash flow, along with its borrowing capacity, will be sufficient to meet cash requirements and fund growth [155]. Shareholder Actions - The company repurchased 458,467 shares of common stock at an average price of $91.61 per share during the quarter [162]. - The company is in compliance with all financial covenants of the Credit Agreement as of December 27, 2025 [163]. Taxation - The effective tax rate remained consistent at 27% for both the three months ended December 27, 2025, and December 28, 2024 [143]. Marketing Expenses - Selling and marketing expenses increased from 7.9% to 9.2% of net sales, driven by higher commission costs and promotional activities [138]. Plant Closure Costs - Plant closure costs recorded were approximately $24 million in Q4 fiscal 2025 and $6.1 million in Q1 fiscal 2026 [128].