EX-99.1 2 ex_170432.htm EXHIBIT 99.1 ex_170432.htm

 

Exhibit 99.1

 

IMMEDIATE RELEASE Contact:   Dennis G. Moore
FOR:     Senior Vice President 
      Chief Financial Officer
      (856) 532-6603

  

6000 Central Highway

Pennsauken, NJ 08109

 

J & J SNACK FOODS

REPORTS FIRST QUARTER SALES

AND EARNINGS

 

Pennsauken, NJ, January 27, 2020 - J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the first quarter ended December 28, 2019.

 

Sales increased 4% to $282.9 million from $271.6 million in last year’s first quarter. Net earnings decreased to $17.1 million in the current quarter from $17.5 million last year.  Earnings per diluted share decreased to $.89 for the first quarter from $.93 last year. Operating income decreased 2% to $21.7 million in the current quarter from $22.1 million in the year ago quarter. Operating income was impacted by approximately $1 million of costs related to the relocation of our ICEE company’s headquarters to Tennessee.

 

Net earnings for last year’s quarter benefited from a reduction of approximately $900,000 in tax, or $.05 per diluted share, as the provision for the one time repatriation tax as a result of the Tax Cuts and Job Act of 2017 was reduced as the amount recorded the year prior was an estimate. Excluding the reduction in the provision for the one-time repatriation tax, our effective tax rate was 28.0% in last year’s quarter.

 

Our effective tax rate was 27.3% in this year’s quarter.    

 

Gerald B. Shreiber, J & J’s President and Chief Executive Officer, commented, “We remain committed to long term profitable sales growth.”

 

J&J Snack Foods Corp. (NASDAQ: JJSF) is a leader and innovator in the snack food industry, providing innovative, niche and affordable branded snack foods and beverages to foodservice and retail supermarket outlets. Manufactured and distributed nationwide, our principal products include SUPERPRETZEL, the #1 soft pretzel brand in the world, as well as internationally known ICEE and SLUSH PUPPIE frozen beverages, LUIGI’S Real Italian Ice, MINUTE MAID* frozen ices, WHOLE FRUIT sorbet and frozen fruit bars, SOUR PATCH KIDS** Flavored Ice Pops, Tio Pepe’s & CALIFORNIA CHURROS, and THE FUNNEL CAKE FACTORY funnel cakes and several bakery brands within DADDY RAY’S, COUNTRY HOME BAKERS and HILL & VALLEY. With nearly twenty manufacturing facilities, and more than $1 billion in annual revenue, J&J Snack Foods Corp. has continued to see steady growth as a company, reaching record sales for 48 consecutive years. The company consistently seeks out opportunities to expand its unique niche market product offering while bringing smiles to families worldwide. For more information, please visit http://www.jjsnack.com.

 

 

*MINUTE MAID is a registered trademark of The Coca-Cola Company

**SOUR PATCH KIDS is a registered trademark of Mondelēz International group, used under license.

 

 

 

 

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
(in thousands, except per share amounts)

 

   

Three months ended

 
   

December 28,

   

December 29,

 
   

2019

   

2018

 
                 

Net Sales

  $ 282,897     $ 271,612  
                 

Cost of goods sold

    205,036       194,749  

Gross Profit

    77,861       76,863  
                 

Operating expenses

               

Marketing

    22,732       21,442  

Distribution

    23,542       23,952  

Administrative

    9,618       9,243  

Other general expense

    266       144  

Total Operating Expenses

    56,158       54,781  
                 

Operating Income

    21,703       22,082  
                 

Other income (expense)

               

Investment income

    1,786       1,040  

Interest expense & other

    (26 )     (27 )
                 

Earnings before income taxes

    23,463       23,095  
                 

Income tax expense

    6,404       5,569  
                 

NET EARNINGS

  $ 17,059     $ 17,526  
                 

Earnings per diluted share

  $ 0.89     $ 0.93  
                 

Weighted average number of diluted shares

    19,144       18,897  
                 

Earnings per basic share

  $ 0.90     $ 0.93  
                 

Weighted average number of basic shares

    18,898       18,765  

 

The accompanying notes are an integral part of these statements.

 

 

 

 

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

   

December 28,

         
   

2019

   

September 28,

 
   

(unaudited)

   

2019

 

Assets

               

Current assets

               

Cash and cash equivalents

  $ 170,327     $ 192,395  

Marketable securities held to maturity

    63,594       51,091  

Accounts receivable, net

    131,574       140,938  

Inventories

    125,789       116,165  

Prepaid expenses and other

    3,862       5,768  

Total current assets

    495,146       506,357  
                 

Property, plant and equipment, at cost

               

Land

    2,494       2,494  

Buildings

    26,582       26,582  

Plant machinery and equipment

    324,511       315,360  

Marketing equipment

    250,308       240,681  

Transportation equipment

    10,218       9,725  

Office equipment

    32,072       31,217  

Improvements

    40,750       40,626  

Construction in progress

    8,291       10,039  

Total Property, plant and equipment, at cost

    695,226       676,724  

Less accumulated depreciation and amortization

    431,596       423,276  

Property, plant and equipment, net

    263,630       253,448  
                 

Other assets

               

Goodwill

    119,484       102,511  

Other intangible assets, net

    75,848       54,922  

Marketable securities held to maturity

    55,289       79,360  

Marketable securities available for sale

    16,541       19,903  

Operating lease right-of-use assets

    64,399       -  

Other

    2,698       2,838  

Total other assets

    334,259       259,534  

Total Assets

  $ 1,093,035     $ 1,019,339  
                 

Liabilities and Stockholders' Equity

               

Current Liabilities

               

Current finance lease liabilities

  $ 342     $ 339  

Accounts payable

    71,919       72,029  

Accrued insurance liability

    11,615       10,457  

Accrued liabilities

    13,140       7,808  

Current operating lease liabilities

    13,762       -  

Accrued compensation expense

    12,709       21,154  

Dividends payable

    10,867       9,447  

Total current liabilities

    134,354       121,234  
                 

Noncurrent finance lease liabilities

    628       718  

Noncurrent operating lease liabilities

    53,300       -  

Deferred income taxes

    61,730       61,920  

Other long-term liabilities

    503       1,716  
                 

Stockholders' Equity

               

Preferred stock, $1 par value; authorized 10,000,000 shares; none issued

    -       -  

Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 18,900,000 and 18,895,000 respectively

    47,511       45,744  

Accumulated other comprehensive loss

    (12,178 )     (12,988 )

Retained Earnings

    807,187       800,995  

Total stockholders' equity

    842,520       833,751  

Total Liabilities and Stockholders' Equity

  $ 1,093,035     $ 1,019,339  

 

The accompanying notes are an integral part of these statements.

 

 

 

 

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)     (in thousands)

 

   

Three months ended

 
   

December 28,

   

December 29,

 
   

2019

   

2018

 

Operating activities:

               

Net earnings

  $ 17,059     $ 17,526  

Adjustments to reconcile net earnings to net cash provided by operating activities:

               

Depreciation of fixed assets

    11,887       10,774  

Amortization of intangibles and deferred costs

    843       861  

Share-based compensation

    1,299       972  

Deferred income taxes

    (231 )     689  

Loss on marketable securities

    9       1,027  

Other

    14       82  

Changes in assets and liabilities net of effects from purchase of companies

               

Decrease in accounts receivable

    10,254       14,386  

Increase in inventories

    (8,524 )     (4,974 )

Decrease in prepaid expenses

    1,922       340  

Decrease in accounts payable and accrued liabilities

    (963 )     (8,872 )

Net cash provided by operating activities

    33,569       32,811  

Investing activities:

               

Payments for purchases of companies, net of cash acquired

    (44,970 )     -  

Purchases of property, plant and equipment

    (17,605 )     (11,837 )

Purchases of marketable securities

    (4,000 )     (17,513 )

Proceeds from redemption and sales of marketable securities

    18,782       17,125  

Proceeds from disposal of property and equipment

    898       577  

Other

    38       (236 )

Net cash used in investing activities

    (46,857 )     (11,884 )

Financing activities:

               

Proceeds from issuance of stock

    468       1,704  

Payments on finance lease obligations

    (86 )     (83 )

Payment of cash dividend

    (9,447 )     (8,438 )

Net cash used in financing activities

    (9,065 )     (6,817 )

Effect of exchange rate on cash and cash equivalents

    285       (875 )

Net (decrease) increase in cash and cash equivalents

    (22,068 )     13,235  

Cash and cash equivalents at beginning of period

    192,395       111,479  

Cash and cash equivalents at end of period

  $ 170,327     $ 124,714  

 

The accompanying notes are an integral part of these statements.

 

 

 

 

 

   

Three months ended

 
   

December 28,

   

December 29,

 
   

2019

   

2018

 
      (unaudited)  
      (in thousands)  

Sales to External Customers:

               

Food Service

               

Soft pretzels

  $ 49,941     $ 48,991  

Frozen juices and ices

    7,043       7,527  

Churros

    16,391       15,135  

Handhelds

    7,189       8,802  

Bakery

    96,372       94,245  

Other

    6,512       5,326  

Total Food Service

  $ 183,448     $ 180,026  
                 

Retail Supermarket

               

Soft pretzels

  $ 9,826     $ 10,186  

Frozen juices and ices

    10,093       10,996  

Biscuits

    6,978       7,864  

Handhelds

    2,761       2,568  

Coupon redemption

    (543 )     (694 )

Other

    311       359  

Total Retail Supermarket

  $ 29,426     $ 31,279  
                 

Frozen Beverages

               

Beverages

  $ 35,255     $ 31,167  

Repair and maintenance service

    22,486       19,915  

Machines revenue

    11,981       8,904  

Other

    301       321  

Total Frozen Beverages

  $ 70,023     $ 60,307  
                 

Consolidated Sales

  $ 282,897     $ 271,612  
                 

Depreciation and Amortization:

               

Food Service

  $ 6,918     $ 6,322  

Retail Supermarket

    359       335  

Frozen Beverages

    5,453       4,978  

Total Depreciation and Amortization

  $ 12,730     $ 11,635  
                 

Operating Income :

               

Food Service

  $ 18,034     $ 17,697  

Retail Supermarket

    2,217       2,211  

Frozen Beverages

    1,452       2,174  

Total Operating Income

  $ 21,703     $ 22,082  
                 

Capital Expenditures:

               

Food Service

  $ 8,403     $ 6,278  

Retail Supermarket

    960       552  

Frozen Beverages

    8,242       5,007  

Total Capital Expenditures

  $ 17,605     $ 11,837  
                 

Assets:

               

Food Service

  $ 757,781     $ 686,192  

Retail Supermarket

    30,963       28,100  

Frozen Beverages

    304,291       219,692  

Total Assets

  $ 1,093,035     $ 933,984  

 

 

 

 

RESULTS OF OPERATIONS

 

Net sales increased $11,285,000 or 4% to $282,897,000 for the three months ended December 28, 2019 compared to the three months ended December 29, 2018. Excluding sales from the acquisition of ICEE Distributors in October 2019, sales increased 3%.

 

FOOD SERVICE

 

Sales to food service customers increased $3,422,000 or 2% in the first quarter to $183,448,000. Soft pretzel sales to food service increased 2% to $49,941,000 as higher sales to convenience store chains more than offset lower sales to schools.

 

Frozen juices and ices sales decreased 6% to $7,043,000 in the three months with sales decreases primarily to school food service customers.

 

Churro sales to food service customers were up 8% in the quarter to $16,391,000 with sales increases to warehouse club stores and generally across our customer base.

 

Sales of bakery products increased $2,127,000 or 2% in the first quarter to $96,372,000 with significant offsetting increases and decreases in sales to particular customers.

 

Sales of handhelds decreased $1,613,000 or 18% in the quarter with the decrease primarily coming from lower sales to co-pack customers. Sales of funnel cake increased $1,240,000 or 25% in the quarter primarily due to higher sales to one casual dining restaurant chain.

 

Sales of new products in the first twelve months since their introduction were approximately $2.5 million in this quarter. Price increases were approximately $2.7 million for the quarter and net volume increases accounted for approximately $700,000 of sales in the quarter.

 

Operating income in our Food Service segment increased from $17,697,000 to $18,034,000 in the quarter primarily because of higher volume and improved operations at our Hill & Valley bakery.

 

RETAIL SUPERMARKETS

 

Sales of products to retail supermarkets decreased $1,853,000 or 6% to $29,426,000 in the first quarter. Soft pretzel sales for the first quarter were down 4% to $9,826,000, sales of frozen juices and ices were down 8% to $10,093,000 in the first quarter and sales of biscuits were down 11% to $6,978,000 in the first quarter as we lost some volume and placements in all three product categories due to price increases implemented a year ago.  We expect volume to at least stabilize beginning in our second quarter.   Handheld sales to retail supermarket customers increased 8% to $2,761,000 in the quarter.

 

There were virtually no sales of new products in the first quarter. Price increases provided about $1.3 million of sales in the quarter and net volume decreased by about $3.2 million.

 

Operating income in our Retail Supermarkets segment was $2,217,000 in this year’s first quarter compared to $2,211,000 in last year’s quarter as the benefits of higher prices offset the negative impact of lower volume.

 

 

 

 

FROZEN BEVERAGES

 

Frozen beverage and related product sales increased 16% to $70,023,000 in the first quarter. Beverage related sales were up 13% to $35,255,000. Excluding sales from the acquisition of ICEE Distributors in October 2019, frozen beverages and related product sales increased 12% and beverage related sales increased 4%. Gallon sales were up 6% for the three months exclusive of ICEE Distributors’ gallons. Service revenue increased 13% to $22,486,000 in the first quarter with sales increases and decreases spread throughout our customer base.

 

Machines revenue (primarily sales of frozen beverage machines) were $11,981,000, an increase of 35%. Operating income in our Frozen Beverage segment decreased to $1,452,000 in this quarter compared to $2,174,000 last year as a result of generally higher costs, including approximately $1 million of costs for the relocation of ICEE’s headquarters. We expect additional relocation costs of about $800,000 in our second quarter.   

 

CONSOLIDATED

 

Gross profit as a percentage of sales was 27.52% in the three month period this year and 28.30% last year.  Gross profit percentage decreased because of lower volume in our combined food service and retail supermarket segments, product mix changes including higher machines sales in our frozen beverages segment and generally higher costs in our frozen beverages segment.

 

Total operating expenses increased $1,377,000 in the first quarter but as a percentage of sales decreased to 19.9% from 20.2% last year. Marketing expenses increased to 8.04% of sales in this year’s quarter from 7.89% last year. Distribution expenses were 8.32% of sales in this year’s quarter and 8.82% of sales in last year’s quarter primarily because of lower freight rates. Administrative expenses were 3.40% of sales this quarter compared to 3.40% of sales last year.

 

Operating income decreased $379,000 or 2% to $21,703,000 in the first quarter as a result of the aforementioned items.

 

Investment income increased by $746,000 in the first quarter primarily because of recognized unrealized gains of $71,000 this year compared to recognized unrealized losses of $1,027,000 last year.

 

Net earnings decreased $467,000, or 3%, in the current three month period to $17,059,000. Net earnings in last year’s quarter benefitted by a reduction of approximately $900,000 in tax as the provision for the one time repatriation tax as a result of the Tax Cuts and Job Act of 2017 was reduced as the amount recorded the year prior was an estimate. Excluding the reduction in the provision for the one time repatriation tax, our effective tax rate was 28.0% in last year’s quarter. Our effective tax rate was 27.3% in this year’s quarter.    

 

There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.

 

 

 

 

The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

 

 

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