J & J Snack Foods(JJSF) - 2023 Q1 - Quarterly Report

Financial Performance - Net sales increased by $32.9 million, or 10.3%, to $351.3 million for the three months ended December 24, 2022, driven by growth across all business segments [114]. - Gross profit rose by $11.5 million, or 14.5%, to $90.9 million, with gross profit margin improving from 24.9% to 25.9% [115]. - Operating expenses increased by $17.0 million, or 26.3%, to $81.5 million, leading to an increase in operating expenses as a percentage of sales from 20.3% to 23.2% [116]. - Net earnings decreased by $4.5 million, or 40.2%, to $6.6 million, reflecting the impact of increased operating expenses and inflationary pressures [119]. - Net earnings for the three months ended December 24, 2022, were $6.633 million, a decrease of 40.5% compared to $11.091 million for the same period in 2021 [131]. Segment Performance - The Food Service segment reported a 12.5% increase in sales to $238.3 million, with significant contributions from frozen novelties, which saw a 157% increase [123]. - Retail Supermarket sales increased by $0.4 million, or 0.9%, to $43.1 million, but operating income decreased by 77.7% to $1.1 million due to higher costs [126]. - Frozen Beverages sales increased by $5.9 million, or 9%, to $69.9 million, with beverage-related sales up 15% [128]. Cash Flow and Investments - Net cash provided by operating activities increased significantly to $21.410 million from $5.454 million year-over-year [131]. - Cash flows used in investing activities totaled $26.881 million, up from $8.669 million in the prior year, primarily due to increased purchases of property, plant, and equipment amounting to $30.910 million [133]. - The company believes its future operating cash flow and current cash balances are sufficient to meet cash requirements and fund growth over the next twelve months [130]. Dividends and Borrowings - The company raised its quarterly dividend, resulting in cash dividend payments of $13.453 million, compared to $12.080 million in the previous year, reflecting an increase of 11.4% [134]. - Outstanding borrowings under the Amended Credit Agreement amounted to $92.0 million, with an additional borrowing capacity of $123.2 million as of September 24, 2022 [140]. Tax and Compliance - The effective tax rate for the three months ended December 24, 2022, was 26.0%, compared to 26.5% in the prior year [118]. - The company is in compliance with all financial covenants of the Credit Agreement as of December 24, 2022 [138]. Other Financial Metrics - Investment income rose by $0.4 million to $0.7 million, while interest expense increased by $1.0 million due to outstanding borrowings [117]. - As of December 24, 2022, the company had $54.9 million in cash and cash equivalents and $6.4 million in marketable securities [135]. - The company experienced a $0.7 million gain from disposals of property and equipment, primarily from the sale of a building [132]. - The decrease in proceeds from redemption and sales of marketable securities was due to a strategic decision not to reinvest in a low interest rate environment [136]. - The increase in depreciation of fixed assets was largely due to prior year purchases and assets acquired in the Dippin' Dots acquisition [132].