8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2020

J&J SNACK FOODS CORP.

(Exact name of registrant as specified in its charter)

New Jersey	0-14616	22-1935537
(State or Other	(Commission	(I.R.S. Employer
Jurisdiction of Organization)	File Number)	Identification No.)

6000 Central Highway, Pennsauken, New Jersey 08109

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (856) 665-9533

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, no par value	JJSF	The NASDAQ Global Select Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

1

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS

On July 27, 2020, J & J Snack Foods Corp. issued a press release regarding its earnings for the third quarter of fiscal 2020.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits

Exhibit Number	Description of Document
99.1	Press Release dated July 27, 2020
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

J & J SNACK FOODS CORP.
By:	/s/ Gerald B. Shreiber
	Gerald B. Shreiber
	Chief Executive Officer
	/s/ Dennis G. Moore
	Dennis G. Moore
	Chief Financial Officer

Date: July 27, 2020

3

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated July 27, 2020
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

4

EX-99.1

Exhibit 99.1

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

  

6000 Central Highway

Pennsauken, NJ 08109

J & J SNACK FOODS

REPORTS THIRD QUARTER SALES

AND EARNINGS

Pennsauken, NJ, July 27, 2020 - J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the third quarter ended June 27, 2020.

Sales decreased 34% to $214.6 million from $326.7 million in last year’s third quarter. A net loss of $12.6 million in this year’s quarter compared to net earnings of $30.9 million in last year’s quarter. Net loss per diluted share was $.67 for the third quarter this year and net earnings per diluted share were $1.63 last year. Operating loss of $19.4 in the current quarter compared to operating income of $39.0 million in the year ago quarter.

For the nine months ended June 27, 2020, sales decreased 12% to $769.5 million from $874.6 million in last year’s nine months.  Net earnings decreased to $11.7 million in the nine months from $68.8 million last year. Earnings per diluted share decreased to $.62 from $3.64 last year. Operating income decreased 85% to $13.2 million this year from $85.9 million last year.

           Operating loss for the third quarter this year and operating income for the nine months include the impact of plant shutdown impairment costs of $5.1 million.

          The Company also said that sales for the last 5 weeks of the third quarter (its fiscal June) improved to being down approximately 24% from a year ago as parts of the economy that impact its operations began to open up.  Approximately 2/3 of the Company’s sales are to venues and locations that have shut down or sharply curtailed their foodservice operations so the Company anticipates COVID-19 will continue to have a negative impact on its business. As the Company has $270 million of cash and marketable securities on its balance sheet, up from $267 million at March 28, 2020, it does not expect to have any liquidity issues, nor does it anticipate a material amount of its assets would be impaired.   

Dan Fachner, J & J’s President, commented, “Although we had an operating loss this quarter,  we progressed nicely with each month improving from the prior month.  Our Retail division was strong as that end of the business continues to outperform the previous year. Much of the Foodservice locations are slow to open but we continue to see improvement during our current quarter.  We are monitoring and making necessary adjustments to operations and expenses both for the short term and for the longer term.”

J&J Snack Foods Corp. is a leader and innovator in the snack food industry, providing nutritional and affordable branded niche snack foods and beverages to foodservice and retail supermarket outlets.  Manufactured and distributed nationwide, our principal products include SUPERPRETZEL, BAVARIAN BAKERY and other soft pretzels, ICEE and SLUSH PUPPIE frozen beverages, LUIGI’S, MINUTE MAID* frozen juice bars and ices, WHOLE FRUIT sorbet and frozen fruit bars, MARY B’S biscuits and dumplings, DADDY RAY’S fig and fruit bars, TIO PEPE’S and CALIFORNIA CHURROS, PATIO Burritos and other handheld sandwiches, THE FUNNEL CAKE FACTORY funnel cakes, and several bakery brands within COUNTRY HOME BAKERS and HILL & VALLEY. For more information, please visit http://www.jjsnack.com.

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

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

(Unaudited)

(in thousands, except per share amounts)

	Three months ended					Nine months ended
	June 27,			June 29,		June 27,			June 29,
	2020			2019		2020			2019
Net Sales	$	214,563		$	326,701	$	769,502		$	874,615
Cost of goods sold		177,367			225,352		585,002			617,155
Gross Profit		37,196			101,349		184,500			257,460
Operating expenses
Marketing		21,952			26,398		68,532			69,792
Distribution		21,272			24,447		69,648			70,521
Administrative		8,374			10,668		28,166			29,909
Plant shutdown impairment costs		5,072			-		5,072			-
Other general (income) expense		(54	)		794		(183	)		1,343
Total operating expenses		56,616			62,307		171,235			171,565
Operating (loss) income		(19,420	)		39,042		13,265			85,895
Other income (expense)
Investment income		1,300			1,953		2,673			5,775
Interest expense & other		(7	)		1,972		(60	)		1,920
(Loss) earnings before income taxes		(18,127	)		42,967		15,878			93,590
Income taxes		(5,480	)		12,095		4,157			24,838
NET (LOSS) EARNINGS	$	(12,647	)	$	30,872	$	11,721		$	68,752
(Loss) earnings per diluted share	$	(0.67	)	$	1.63	$	0.62		$	3.64
Weighted average number of diluted shares		18,888			18,947		19,036			18,912
(Loss) earnings per basic share	$	(0.67	)	$	1.64	$	0.62		$	3.66
Weighted average number of basic shares		18,888			18,823		18,902			18,794

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	June 27,
	2020			September 28,
	(unaudited)			2019
Assets
Current assets
Cash and cash equivalents	$	169,961		$	192,395
Marketable securities held to maturity		58,268			51,091
Accounts receivable, net		116,488			140,938
Inventories		120,564			116,165
Prepaid expenses and other		13,660			5,768
Total current assets		478,941			506,357
Property, plant and equipment, at cost
Land		2,494			2,494
Buildings		26,582			26,582
Plant machinery and equipment		331,481			315,360
Marketing equipment		253,533			240,681
Transportation equipment		9,905			9,725
Office equipment		34,935			31,217
Improvements		42,291			40,626
Construction in progress		16,199			10,039
Total Property, plant and equipment, at cost		717,420			676,724
Less accumulated depreciation and amortization		452,707			423,276
Property, plant and equipment, net		264,713			253,448
Long-term assets
Goodwill		123,033			102,511
Other intangible assets, net		81,117			54,922
Marketable securities held to maturity		28,863			79,360
Marketable securities available for sale		13,232			19,903
Operating lease right-of-use assets		64,615			-
Other		2,772			2,838
Total long-term assets		313,632			259,534
Total Assets	$	1,057,286		$	1,019,339
Liabilities and Stockholders' Equity
Current Liabilities
Current finance lease liabilities	$	329		$	339
Accounts payable		68,829			72,029
Accrued insurance liability		12,131			10,457
Accrued liabilities		6,951			7,808
Current operating lease liabilities		13,913			-
Accrued compensation expense		14,814			21,154
Dividends payable		10,873			9,447
Total current liabilities		127,840			121,234
Noncurrent finance lease liabilities		456			718
Noncurrent operating lease liabilities		56,570			-
Deferred income taxes		61,348			61,920
Other long-term liabilities		472			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 18,888,000 and 18,895,000 respectively		46,560			45,744
Accumulated other comprehensive loss		(16,058	)		(12,988	)
Retained Earnings		780,098			800,995
Total stockholders' equity		810,600			833,751
Total Liabilities and Stockholders' Equity	$	1,057,286		$	1,019,339

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(in thousands)

	Nine months ended
	June 27,			June 29,
	2020			2019
Operating activities:
Net earnings	$	11,721		$	68,752
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of property, plant and equipment		37,353			33,374
Amortization of intangibles and deferred costs		2,516			2,586
Share-based compensation		3,421			3,006
Deferred income taxes		(426	)		690
Loss on marketable securities		1,746			410
Plant shutdown impairment costs		5,072			-
Other		(309	)		350
Changes in assets and liabilities net of effects from purchase of companies
Decrease (increase) in accounts receivable		24,634			(14,289	)
Increase in inventories		(3,751	)		(6,257	)
(Increase) decrease in prepaid expenses		(7,879	)		957
(Decrease) increase in accounts payable and accrued liabilities		(7,478	)		11,584
Net cash provided by operating activities		66,620			101,163
Investing activities:
Payment for purchases of companies, net of cash acquired		(57,197	)		(1,155	)
Purchases of property, plant and equipment		(47,637	)		(42,136	)
Purchases of marketable securities		(6,103	)		(24,056	)
Proceeds from redemption and sales of marketable securities		54,125			29,721
Proceeds from disposal of property, plant and equipment		2,852			1,463
Other		(72	)		(212	)
Net cash used in investing activities		(54,032	)		(36,375	)
Financing activities:
Payments to repurchase common stock		(8,972	)		-
Proceeds from issuance of stock		6,300			7,426
Payments on capitalized lease obligations		(272	)		(33	)
Payment of cash dividend		(31,193	)		(27,230	)
Net cash used in financing activities		(34,137	)		(19,837	)
Effect of exchange rate on cash and cash equivalents		(885	)		(333	)
Net (decrease) increase in cash and cash equivalents		(22,434	)		44,618
Cash and cash equivalents at beginning of period		192,395			111,479
Cash and cash equivalents at end of period	$	169,961		$	156,097

	Three months ended						Nine months ended
	June 27,			June 29,			June 27,			June 29,
	2020			2019			2020			2019
(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	21,384		$	55,867		$	116,985		$	154,670
Frozen juices and ices		8,688			13,862			25,222			30,336
Churros		7,321			18,888			38,466			49,793
Handhelds		7,448			8,550			22,084			25,339
Bakery		69,237			90,084			255,016			268,735
Other		2,543			6,105			13,628			19,576
Total Food Service	$	116,621		$	193,356		$	471,401		$	548,449
Retail Supermarket
Soft pretzels	$	12,716		$	7,294		$	34,874		$	28,309
Frozen juices and ices		33,322			26,515			59,279			52,179
Biscuits		8,151			5,215			21,759			19,437
Handhelds		3,257			3,063			9,135			8,110
Coupon redemption		(807	)		(962	)		(2,216	)		(2,163	)
Other		863			642			1,668			1,341
Total Retail Supermarket	$	57,502		$	41,767		$	124,499		$	107,213
Frozen Beverages
Beverages	$	16,456		$	56,937		$	83,606		$	121,976
Repair and maintenance service		17,259			22,514			61,524			62,291
Machines revenue		6,363			11,810			27,254			33,875
Other		362			317			1,218			811
Total Frozen Beverages	$	40,440		$	91,578		$	173,602		$	218,953
Consolidated Sales	$	214,563		$	326,701		$	769,502		$	874,615
Depreciation and Amortization:
Food Service	$	7,050		$	6,973		$	21,208		$	19,911
Retail Supermarket		468			335			1,156			990
Frozen Beverages		5,864			5,015			17,505			15,059
Total Depreciation and Amortization	$	13,382		$	12,323		$	39,869		$	35,960
Operating (Loss)Income:
Food Service	$	(18,242	)	$	21,030		$	7,743		$	57,909
Retail Supermarket		7,910			3,775			14,464			9,025
Frozen Beverages		(9,088	)		14,237			(8,942	)		18,961
Total Operating (Loss) Income	$	(19,420	)	$	39,042		$	13,265		$	85,895
Capital Expenditures:
Food Service	$	7,865		$	8,665		$	26,599		$	23,346
Retail Supermarket		390			597			1,625			1,730
Frozen Beverages		2,397			6,523			19,413			17,060
Total Capital Expenditures	$	10,652		$	15,785		$	47,637		$	42,136
Assets:
Food Service	$	729,331		$	751,641		$	729,331		$	751,641
Retail Supermarket		33,766			24,825			33,766			24,825
Frozen Beverages		294,189			219,224			294,189			219,224
Total Assets	$	1,057,286		$	995,690		$	1,057,286		$	995,690

Net sales decreased $112,138,000 or 34% to $214,563,000 for the three months and decreased $105,113,000 or 12% to $769,502,000 for the nine months ended June 27, 2020 compared to the three and nine months ended June 29, 2019, respectively. Excluding sales from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020, sales decreased 35% for the quarter and decreased about 13% for the nine months.

Sales for the last 5 weeks of the third quarter (our fiscal June) improved to being down approximately 24% from a year ago as parts of the economy that impact our operations began to open up.  Approximately 2/3 of the Company’s sales are to venues and locations that have shut down or sharply curtailed their foodservice operations, and therefore we anticipate COVID-19 will continue to have a negative impact on our business. As we have $270 million of cash and marketable securities on our balance sheet, up from $267 million at March 28, 2020, we do not expect to have any liquidity issues, nor do we anticipate a material amount of our assets would be impaired.   

FOOD SERVICE

Sales to food service customers decreased $76,735,000 or 40% in the third quarter to $116,621,000 and decreased $77,048,000 or 14% to $471,401,000 for the nine months. Soft pretzel sales to the food service market decreased 62% to $21,384,000 in the three months and 24% to $116,985,000 in the nine months. Frozen juices and ices sales decreased 37% to $8,688,000 in the three months and decreased 17% to $25,222,000 in the nine months. Churro sales to food service customers were down 61% in the quarter to $7,321,000 and were down 23% to $38,466,000 in the nine months. Sales of bakery products decreased $20,847,000 or 23% in the third quarter and decreased $13,719,000 or 5% to $255,016,000 for the nine months. Sales of handhelds decreased $1,102,000 or 13% in the quarter and $3,255,000 or 13% in the nine months. Sales of funnel cake decreased 57%, or $3,181,000, to $2,435,000 in the quarter and $5,311,000, or 29%, to $12,997,000 in the nine months. Sales are down across all product lines as many of the venues and locations where our products are sold have been shut down for some or all of the third quarter due to COVID-19.

Sales of new products in the first twelve months since their introduction were approximately $600,000 in this quarter and $4.7 million in the nine months.

We had an operating loss in the quarter in our Food Service segment of $18,242,000 compared to operating income of $21,030,000 last year and operating income decreased to $7,743,000 from $57,909,000 in the nine months primarily because of lower production and sales volume due to COVID-19. This year’s three months operating loss and nine months operating income were impacted by plant shutdown impairment costs of $5.1 million for the pending shutdown of one of our manufacturing plants. We expect to reduce manufacturing overhead and distribution costs by about $7-8 million annually as a result of this plant closure. This year’s quarter and nine months also included approximately $5 million of costs for employee safety and increased COVID-19 compensation.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $15,735,000 or 38% to $57,502,000 in the third quarter and increased $17,286,000 or 16% in the nine months. Soft pretzel sales for the third quarter were up 74% to $12,716,000 and up 23% to $34,874,000 for the nine months. Sales of frozen juices and ices increased $6,807,000 or 26% to $33,322,000 in the third quarter and increased $7,100,000 or 14% in the nine months. Handheld sales to retail supermarket customers increased 6% to $3,257,000 in the quarter and 13% to $9,135,000 in the nine months. Biscuit sales for the third quarter were up 56% to $8,151,000 and 12% to $21,759,000 for the nine months. Sales were generally higher for all product lines as sales in the year ago periods were impacted by lost volume and placements due the price increases implemented in last year’s first quarter and because of increased sales to supermarkets generally since mid-March 2020 due to COVID-19.

Sales of new products in the third quarter were approximately $500,000 and were approximately $1.0 million for the nine months.

Operating income in our Retail Supermarkets segment was $7,910,000 in this year’s third quarter compared to $3,775,000 in last year’s quarter, a 110% increase and increased to $14,464,000 in this year’s nine months compared to $9,025,000 in last year’s nine months primarily due to higher volume.

FROZEN BEVERAGES

Total frozen beverage segment sales decreased 56% in the three months to $40,440,000 and 21% to $173,602,000 for the nine months. Beverage sales were down 71% to $16,456,000 in the quarter and down 31% to $83,606,000 in the nine months. Excluding sales from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020, total frozen beverage segment sales decreased 60% in the quarter and were down 25% for the nine months and beverage sales decreased 78% for the quarter and 39% for the nine months. Gallon sales were down 72% in the quarter and down 36% in the nine months exclusive of ICEE Distributors’ gallons.  Service revenue decreased 23% to $17,259,000 in the third quarter and was down 1% at $61,524,000 in the nine months. Machines revenue (primarily sales of frozen beverage machines) were $6,363,000, a decrease of $5,447,000 in the quarter and $27,254,000, a decrease of $6,621,000, in the nine months, with the decrease due to two significant install projects during the prior fiscal year, as well as the slowdown due to COVID-19. Sales are down across all product lines as many of the venues and locations where our products are sold have been shut down for some or all of the third quarter due to COVID-19.

Our Frozen Beverage segment had an operating loss of $9,088,000 compared to operating income of $14,237,000 in last year’s quarter and an operating loss of $8,942,000 for the nine months compared to operating income of $18,961,000 last year primarily as a result of lower sales volume due to COVID-19. This year’s operating income was also impacted by relocation costs of our ICEE’s headquarters of 2.5 million in the nine months.   

CONSOLIDATED

Gross profit as a percentage of sales was 17.34% in the third quarter and 31.02% last year.  Gross profit as a percentage of sales was 23.98% in the nine month period this year and 29.44% last year. Gross profit percentage decreased for both periods because of lower volume in our food service and frozen beverages segments, higher costs related to production disruptions due to volume mix changes, expenses related to employee safety and increased COVID-19 compensation and reserves of approximately $1.5 million for inventory.

Total operating expenses decreased $5,691,000 in the third quarter and as a percentage of sales increased to 26.4% from 19.1% last year. For the nine months, operating expenses decreased $330,000 and as a percentage of sales increased to 22.3% from 19.6% last year. Operating expenses for both periods this year included $5.1 million of plant shutdown impairment costs for the pending shutdown of one of our manufacturing plants. Marketing expenses increased to 10.2% of sales in this year’s quarter from 8.1% last year and were 8.9% in the nine months compared to 8.0% of sales in last year’s nine months. Distribution expenses were 9.9% of sales in the third quarter and 7.5% of sales in last year’s quarter and were 9.1% in this year’s nine months compared to 8.1% in last year’s nine months. Administrative expenses were 3.9% of sales in the third quarter compared to 3.3% of sales last year in the third quarter and were 3.7% in this year’s nine months compared to 3.4% of sales in last year’s nine months. The percentage increases mentioned above were because of the drop in sales (lower denominators) and our inability to reduce expenses in line with the decrease in sales because of fixed costs that do not fluctuate with sales.

We had an operating loss of $19,420,000 in the three months and operating income of $13,265,000 in the nine months this year compared to operating income of $39,042,000 and $85,895,000 in last year's three and nine months, respectively.

Investment income decreased to $1,300,000 from $1,953,000 in last year’s quarter due primarily to lower interest rates. Investment income decreased to $2,673,000 from $5,775,000 in the nine month period due to lower interest rates and because of an increase in unrealized losses to $1,708,000 this year from $385,000 last year.

We had a net loss of $12,647,000 in the current three month period compared to net earnings of $30,872,000 last year and net earnings decreased $57,031,000, or 83%, to $11,721,000 for the nine month period this year compared to $68,752,000 for the nine month period last year.

Net earnings in last year’s nine months 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 27.5% in last year’s nine months. Our effective tax rate was 26.2% in this year’s nine months.    

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.

##

XML

Document And Entity Information	Jul. 27, 2020
Document Information [Line Items]
Entity, Registrant Name	J&J SNACK FOODS CORP.
Document, Type	8-K
Document, Period End Date	Jul. 27, 2020
Entity, Incorporation, State or Country Code	NJ
Entity, File Number	0-14616
Entity, Tax Identification Number	22-1935537
Entity, Address, Address Line One	6000 Central Highway
Entity, Address, City or Town	Pennsauken
Entity, Address, State or Province	NJ
Entity, Address, Postal Zip Code	08109
City Area Code	856
Local Phone Number	665-9533
Title of 12(b) Security	Common Stock
Trading Symbol	JJSF
Security Exchange Name	NASDAQ
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000785956