J & J Snack Foods(JJSF) - 2021 Q2 - Quarterly Report

Part I Item 1. Consolidated Financial Statements Presents J&J Snack Foods Corp.'s unaudited consolidated financial statements for the period ended March 27, 2021, detailing balance sheets, earnings, and cash flows Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | March 27, 2021 | September 26, 2020 | | :--- | :--- | :--- | | Total Current Assets | $530,269 | $499,557 | | Total Assets | $1,064,915 | $1,056,553 | | Total Current Liabilities | $143,197 | $134,126 | | Total Stockholders' Equity | $813,000 | $809,498 | | Total Liabilities and Stockholders' Equity | $1,064,915 | $1,056,553 | Consolidated Statements of Earnings Statements of Earnings Highlights (in thousands, except per share amounts) | Metric | Three Months Ended Mar 27, 2021 | Three Months Ended Mar 28, 2020 | Six Months Ended Mar 27, 2021 | Six Months Ended Mar 28, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $256,178 | $272,042 | $497,175 | $554,939 | | Gross Profit | $60,896 | $69,443 | $111,021 | $147,304 | | Operating Income | $7,230 | $10,982 | $7,808 | $32,685 | | Net Earnings | $6,061 | $7,309 | $7,839 | $24,368 | | Earnings per diluted share | $0.32 | $0.38 | $0.41 | $1.28 | Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended (in thousands) | Cash Flow Activity | March 27, 2021 | March 28, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,781 | $42,270 | | Net cash provided by (used in) investing activities | $23,788 | $(67,557) | | Net cash used in financing activities | $(8,367) | $(23,154) | | Net increase (decrease) in cash | $42,577 | $(49,426) | | Cash and cash equivalents at end of period | $238,386 | $142,969 | Notes to the Consolidated Financial Statements - The company's sales are negatively impacted by COVID-19, affecting approximately two-thirds of sales to venues that have shut down or curtailed operations, with capacity improving towards the end of the second quarter[26] - The company adopted ASU 2016-13 regarding credit loss measurement in Q1 FY2021, which did not materially impact consolidated financial statements[50] Depreciation Expense (in thousands) | Period | Depreciation Expense | | :--- | :--- | | Three months ended Mar 27, 2021 | $11,984 | | Three months ended Mar 28, 2020 | $12,923 | | Six months ended Mar 27, 2021 | $24,253 | | Six months ended Mar 28, 2020 | $24,810 | Earnings Per Share (EPS) | Period | Basic EPS | Diluted EPS | | :--- | :--- | :--- | | Three Months Ended Mar 27, 2021 | $0.32 | $0.32 | | Six Months Ended Mar 27, 2021 | $0.41 | $0.41 | | Three Months Ended Mar 28, 2020 | $0.39 | $0.38 | | Six Months Ended Mar 28, 2020 | $1.29 | $1.28 | - The effective tax rate for the six months ended March 27, 2021, was 20%, down from 28% in the prior year, primarily due to an $866,000 tax benefit from share-based compensation[50] - In fiscal year 2020, the company acquired assets of ICEE Distributors LLC and BAMA ICEE for a total purchase price of $57.2 million[72][73][74] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, liquidity, and operations, highlighting COVID-19's impact on sales and operating income, offset by Retail Supermarkets' growth Liquidity and Capital Resources - Primary sources of liquidity, including cash balances, investments, and future cash from operations, are considered sufficient for future growth[91] - A quarterly cash dividend of $0.575 per share was declared, payable on April 13, 2021[92] - The company has a $50 million revolving credit facility expiring in November 2021, with no outstanding balance as of March 27, 2021[96] - No shares were repurchased in the six months ended March 27, 2021, with 318,858 shares remaining authorized for repurchase[93] Results of Operations Consolidated Sales Performance | Period | Net Sales | Change YoY | | :--- | :--- | :--- | | Q2 FY2021 | $256,178,000 | -6% | | Six Months FY2021 | $497,175,000 | -10% | Segment Sales Performance (Q2 FY2021 vs Q2 FY2020) | Segment | Q2 FY2021 Sales | Change YoY | | :--- | :--- | :--- | | Food Service | $169,324,000 | -1% | | Retail Supermarkets | $43,906,000 | +17% | | Frozen Beverages | $42,948,000 | -32% | Segment Operating Income (Loss) Performance (Q2 FY2021 vs Q2 FY2020, in thousands) | Segment | Q2 FY2021 Operating Income | Q2 FY2020 Operating Income | Change YoY | | :--- | :--- | :--- | | Food Service | $6,055 | $7,951 | -24% | | Retail Supermarkets | $6,364 | $4,337 | +47% | | Frozen Beverages | $(5,189) | $(1,306) | Increased Loss | - Consolidated gross profit margin decreased to 23.8% in Q2 2021 from 25.5% in Q2 2020, due to COVID-19 sales pressure creating margin leverage challenges from lower production volumes[111] - Consolidated operating income decreased by 34% to $7.2 million in Q2 and by 76% to $7.8 million in the six-month period[114] - Net earnings decreased by 17% to $6.1 million in Q2 and by 68% to $7.8 million in the six-month period[116] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material change in the company's market risk assessment since its 2020 annual report - There has been no material change in the Company's assessment of its sensitivity to market risk since its 2020 annual report on Form 10-K[119] Item 4. Controls and Procedures CEO and CFO concluded disclosure controls were effective, with no material changes to internal financial controls - The CEO and CFO concluded that the Company's disclosure controls and procedures are effective as of March 27, 2021[119] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[120] Part II Item 6. Exhibits Lists exhibits filed, including Sarbanes-Oxley Act certifications and iXBRL financial data - Lists exhibits filed with the report, including Sarbanes-Oxley Act certifications (Sections 302 and 906) and financial data in iXBRL format[122][123][124]