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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 26, 2021

 

 

J&J SNACK FOODS CORP.

 

(Exact name of registrant as specified in its charter)

 

	New Jersey	000-14616	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)

 

 

 

 

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))

 

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

 

 

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. ☐

 

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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS

 

On July 26, 2021, J & J Snack Foods Corp. issued a press release regarding its earnings for the third quarter of fiscal 2021.

 

 

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

 

(d) Exhibits

 

Exhibit Number	Description of Document
99.1	Press Release dated July 26th, 2021
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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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/     Dan Fachner

 

 

 

Dan Fachner

President and

Chief Executive Officer

 

 

/s/     Ken A. Plunk

 

 

 

Ken A. Plunk

Chief Financial Officer

 

Date: July 26th, 2021

 

3

Exhibit 99.1

 

IMMEDIATE RELEASE	Contact:	Ken Plunk
FOR:		Senior Vice President
		Chief Financial Officer
		(615) 587-4374

     

6000 Central Highway

Pennsauken, NJ 08109

 

 

J & J SNACK FOODS

REPORTS THIRD QUARTER SALES

AND EARNINGS

 

Pennsauken, NJ, July 26th, 2021 - J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the third quarter ended June 26th, 2021.

 

Sales increased 51% to $324.3 million from $214.6 million in last year’s third quarter. Net earnings were $28.9 million in the current quarter compared to a $12.6 million loss last year.  Earnings per diluted share was $1.51 for the third quarter, a significant increase compared to the $0.67 loss per diluted share last year. Operating income increased to $38.1 million in the current quarter versus a $19.4 million loss last year.

 

For the nine months ended June 26, 2021, sales were $821.5 million, a 7% increase from the same period last year when sales were $769.5 million. Net earnings were $36.7 million for the nine months compared to $11.7 million last year. Earnings per diluted share was $1.92 for the nine-month period compared to $0.62 last year. Operating income increased 246% to $46.0 million this year from $13.3 million last year. Operating income was impacted by $2.1 million of Covid-19 related costs during this nine-month period.

 

The overall sales environment improved significantly this quarter benefiting our business across all three segments. Food service venues are approaching pre-Covid capacity levels and more confident consumers are getting out of the house and spending more as the market normalizes. Our Food Service segment rebounded with 68% growth versus last year and exceeded fiscal 2019 sales by 1% led by strength in soft pretzels, churros, handhelds and bakery. Even as our food service business rebounds, we continue to see strength in our Retail segment where sales were just 6% below last year despite lapping a 38% growth in the prior year. Benchmarked against a pre-Covid fiscal 2019, retail sales grew 29% even as consumer trends shift out of the home. The Frozen Beverages business was 83% above prior year for the quarter which was a significant improvement when compared to Q2 of this year where sales were still 32% below the prior year. This growth was led by the amusement, c-store and mass merchandise channels. While theater attendance continues to lag 2019 levels, traffic and average ticket are improving and should further benefit our business down the road. Improved sales volume, product mix and a strong focus on cost efficiencies helped drive improved gross margins and profitability.

 

Dan Fachner, J&J’s President, commented, “I am so proud of our employees across the business for helping deliver a strong quarter. Our business performance is starting to benefit from an economy that is moving much closer to pre-Covid activities. The strength of our product and brand portfolio enables us to quickly leverage consumer traffic across multiple food service and retail customers. Consumers are embracing the opportunities they missed over the last year whether that is enjoying a SUPERPRETZEL at the game or sipping on an ICEE at the beach with their family. I remain extremely confident in our business and future growth opportunities.”

 

 

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. J&J Snack Foods Corp. has approximately twenty manufacturing facilities and generates more than $1 billion in annual revenue. The Company has a history of strong sales growth and financial performance and remains focused on 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								Nine months ended
		June 26,				June 27,				June 26,				June 27,
		2021				2020				2021				2020
Net Sales		$	324,344			$	214,563			$	821,519			$	769,502
Cost of goods sold			228,170				177,367				614,324				585,002
Gross Profit			96,174				37,196				207,195				184,500
Operating expenses
Marketing			20,502				21,952				56,995				68,532
Distribution			27,311				21,272				75,643				69,648
Administrative			10,348				8,374				29,004				28,166
Plant shutdown impairment costs			-				5,072				-				5,072
Other general (income) expense			(131	)			(54	)			(399	)			(183	)
Total Operating Expenses			58,030				56,616				161,243				171,235
Operating Income (loss)			38,144				(19,420	)			45,952				13,265
Other (expense)income
Investment income (loss)			470				1,300				2,419				2,673
Interest (expense) & other			(8	)			(7	)			(19	)			(60	)
Earnings (loss) before income taxes			38,606				(18,127	)			48,352				15,878
Income taxes (benefit)			9,713				(5,480	)			11,620				4,157
NET EARNINGS (LOSS)		$	28,893			$	(12,647	)		$	36,732			$	11,721
Earnings (loss) per diluted share		$	1.51			$	(0.67	)		$	1.92			$	0.62
Weighted average number of diluted shares			19,185				18,888				19,116				19,036
Earnings (loss) per basic share			1.52			$	(0.67	)		$	1.93			$	0.62
Weighted average number of basic shares			19,045				18,888				18,996				18,902

 

 

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)

 

		June 26,
		2021				September 26,
		(unaudited)				2020
Assets
Current assets
Cash and cash equivalents		$	276,268			$	195,809
Marketable securities held to maturity			9,902				51,151
Accounts receivable, net			154,845				126,587
Inventories			114,822				108,923
Prepaid expenses and other			11,547				17,087
Total current assets			567,384				499,557
Property, plant and equipment, at cost
Land			2,494				2,494
Buildings			26,582				26,582
Plant machinery and equipment			340,693				330,168
Marketing equipment			253,199				250,914
Transportation equipment			10,232				9,966
Office equipment			34,291				33,878
Improvements			45,349				43,264
Construction in progress			28,134				19,995
Total Property, plant and equipment, at cost			740,974				717,261
Less accumulated depreciation and amortization			482,056				455,645
Property, plant and equipment, net			258,918				261,616
Other assets
Goodwill			121,833				121,833
Other intangible assets, net			79,676				81,622
Marketable securities held to maturity			7,568				16,927
Marketable securities available for sale			11,273				13,976
Operating lease right-of-use assets			51,811				58,110
Other			3,083				2,912
Total other assets			275,244				295,380
Total Assets		$	1,101,546			$	1,056,553
Liabilities and Stockholders' Equity
Current Liabilities
Current finance lease liabilities		$	252			$	349
Accounts payable			97,117				73,135
Accrued insurance liability			15,764				13,039
Accrued liabilities			6,890				7,420
Current operating lease liabilities			12,780				13,173
Accrued compensation expense			15,000				16,134
Dividends payable			12,064				10,876
Total current liabilities			159,867				134,126
Noncurrent finance lease liabilities			417				368
Noncurrent operating lease liabilities			41,573				47,688
Deferred income taxes			64,284				64,413
Other long-term liabilities			375				460
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 19,061,000 and 18,915,000 respectively			69,572				49,268
Accumulated other comprehensive loss			(13,182	)			(15,587	)
Retained Earnings			778,640				775,817
Total stockholders' equity			835,030				809,498
Total Liabilities and Stockholders' Equity		$	1,101,546			$	1,056,553

 

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)

 

		Nine Months Ended
		June 26,				June 27,
		2021				2020
Operating activities:
Net earnings		$	36,732			$	11,721
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of fixed assets			36,278				37,353
Amortization of intangibles and deferred costs			2,096				2,516
Share-based compensation			3,252				3,421
Deferred income taxes			(188	)			(426	)
(Gain) loss on marketable securities			(926	)			1,746
Plant shutdown impairment costs			-				5,072
Other			(305	)			(309	)
Changes in assets and liabilities net of effects from purchase of companies
(Increase) decrease in accounts receivable			(27,940	)			24,634
Increase in inventories			(5,964	)			(3,751	)
(Increase) decrease in prepaid expenses			5,710				(7,879	)
Increase (decrease) in accounts payable and accrued liabilities			24,823				(7,478	)
Net cash provided by operating activities			73,568				66,620
Investing activities:
Payments for purchases of companies, net of cash acquired			-				(57,197	)
Purchases of property, plant and equipment			(34,456	)			(47,637	)
Purchases of marketable securities			-				(6,103	)
Proceeds from redemption and sales of marketable securities			54,191				54,125
Proceeds from disposal of property and equipment			2,079				2,852
Other			42				(72	)
Net cash provided by (used in) investing activities			21,856				(54,032	)
Financing activities:
Payments to repurchase common stock			-				(8,972	)
Proceeds from issuance of stock			17,178				6,300
Payments on capitalized lease obligations			(48	)			(272	)
Payment of cash dividend			(32,719	)			(31,193	)
Net cash used in financing activities			(15,589	)			(34,137	)
Effect of exchange rate on cash and cash equivalents			624				(885	)
Net increase (decrease) in cash and cash equivalents			80,459				(22,434	)
Cash and cash equivalents at beginning of period			195,809				192,395
Cash and cash equivalents at end of period		$	276,268			$	169,961

 

The accompanying notes are an integral part of these statements.

 

 

		Three months ended								Nine months ended
		June 26,				June 27,				June 26,				June 27,
		2021				2020				2021				2020
Sales to External Customers:
Food Service
Soft pretzels		$	50,895			$	21,384			$	120,359			$	116,985
Frozen juices and ices			13,927				8,688				30,812				25,222
Churros			20,096				7,321				46,358				38,466
Handhelds			18,971				7,448				56,574				22,084
Bakery			85,706				69,237				257,580				255,016
Other			6,884				2,543				14,546				13,628
Total Food Service		$	196,478			$	116,621			$	526,226			$	471,401
Retail Supermarket
Soft pretzels		$	11,193			$	12,716			$	40,871			$	34,874
Frozen juices and ices			36,898				33,322				71,600				59,279
Biscuits			4,562				8,151				18,717				21,759
Handhelds			1,191				3,257				6,215				9,135
Coupon redemption			(513	)			(807	)			(2,196	)			(2,216	)
Other			526				863				1,652				1,668
Total Retail Supermarket		$	53,857			$	57,502			$	136,859			$	124,499
Frozen Beverages
Beverages		$	42,279			$	16,456			$	76,663			$	83,606
Repair and maintenance service			22,789				17,259				59,903				61,524
Machines revenue			8,404				6,363				20,556				27,254
Other			536				362				1,312				1,218
Total Frozen Beverages		$	74,009			$	40,440			$	158,434			$	173,602
Consolidated Sales		$	324,344			$	214,563			$	821,519			$	769,502
Depreciation and Amortization:
Food Service		$	6,817			$	7,050			$	20,334			$	21,208
Retail Supermarket			378				468				1,147				1,156
Frozen Beverages			5,469				5,864				16,893				17,505
Total Depreciation and Amortization		$	12,664			$	13,382			$	38,374			$	39,869
Operating Income :
Food Service		$	17,644			$	(18,242	)		$	29,879			$	7,743
Retail Supermarket			9,080				7,910				20,167				14,464
Frozen Beverages			11,420				(9,088	)			(4,094	)			(8,942	)
Total Operating Income (Loss)		$	38,144			$	(19,420	)		$	45,952			$	13,265
Capital Expenditures:
Food Service		$	10,383			$	7,865			$	25,915			$	26,599
Retail Supermarket			93				390				194				1,625
Frozen Beverages			5,151				2,397				8,347				19,413
Total Capital Expenditures		$	15,627			$	10,652			$	34,456			$	47,637
Assets:
Food Service		$	779,730			$	729,331			$	779,730			$	729,331
Retail Supermarket			33,405				33,766				33,405				33,766
Frozen Beverages			288,411				294,189				288,411				294,189
Total Assets		$	1,101,546			$	1,057,286			$	1,101,546			$	1,057,286

 

 

RESULTS OF OPERATIONS

 

Consolidated J&J Snack Foods net sales increased $109.8 million or 51% to $324.3 million for the three months ended June 26^th, 2021.

 

FOOD SERVICE

 

Sales to food service customers increased $79.9 million or 68% in the third quarter to $196.5 million. Food service venues are approaching pre-COVID capacity levels and more confident consumers are leaving their homes and spending more as the market normalizes. Sales accelerated throughout our key channels led by schools, amusement/recreation, restaurants, c-stores and theaters. Soft pretzel sales to food service increased 138% to $50.9 million. Frozen juices and ices sales increased 60% to $13.9 million and Churro sales increased 174% in the quarter to $20.1 million.

 

Sales of bakery products increased 24% to $85.7 million in the third quarter. Sales of handhelds increased 155% to $19.0 million in the quarter led by the continued success of a new product developed for one of our larger wholesale club customers.

 

Sales of new products in the first twelve months since their introduction were approximately $11.8 million in the quarter led by the previously noted handheld item. Price increases had a marginal impact on results in the quarter as traffic and volume drove almost all the sales increase compared to last year.

 

Operating income in our Food Service segment was $17.6 million in the third quarter compared with an operating loss of $18.2 million in the prior year quarter. The increase in operating income was primarily due to the increase in sales which improved margin efficiencies and expense leverage.

 

RETAIL SUPERMARKETS

 

Sales of products to retail supermarkets decreased $3.6 million or 6% to $53.9 million in the third quarter.  The decrease in sales in the current quarter was primarily attributable to the stronger customer demand in the prior year third quarter resulting from the initial responses to the COVID-19 pandemic. During the prior year third quarter, a surge in demand and sales was experienced related to the effects of the rapid changes in consumer purchasing habits.

 

Sales of soft pretzels decreased 12% to $11.2 million in the third quarter. Sales of frozen juices and ices increased 11% to $36.9 million in the third quarter. Sales of biscuits decreased 44% to $4.6 million and Handheld sales to retail supermarket customers decreased 63% to $1.2 million in the third quarter.

 

Price increases and sales of new products had a minimum impact on revenue in the quarter as sales were driven primarily by consumer traffic and volume trends in retail outlets.

 

Operating income in our Retail Supermarkets segment increased $1.2 million or 15% to $9.1 million in this year’s third quarter driven by improving operating income margins which were approximately 300 basis points better than prior year.

 

 

FROZEN BEVERAGES

 

Frozen beverage and related product sales increased $33.6 million or 83% to $74.0 million in the third quarter. Beverage related sales increased 157% to $42.3 million, with the majority of the increase attributable to the increase in gallon sales. The increase was led by the amusement channel that experienced sales above pre-COVID 19 levels and continued traffic increases in the mass merchandise, QSR and theater channels. The theater channel continued to show improvement this quarter, and while current quarter theater channel sales still lagged 2019 sales by over 50%, it represented a significant improvement over the prior year quarter.

 

Service revenue increased 32% to $22.8 million in the third quarter as customers accelerated equipment maintenance in the quarter to support the post COVID-19 recovery. Machine revenue (primarily sales of frozen beverage machines) increased 32% to $8.4 million in the third quarter. Retailers are beginning to re-invest again which helped to accelerate machine revenues in the quarter.

 

Our Frozen Beverage segment generated operating income of $11.4 million in the third quarter compared with an operating loss of $9.1 million in the prior year third quarter. The comparative performance was impacted due to the challenging sales environment in the prior year quarter due to the COVID-19 pandemic.

 

 

CONSOLIDATED

 

Gross profit as a percentage of sales was 29.7% in the three-month period this year and 17.3% last year with the increase largely attributable to the benefit of increased sales, favorable product mix and corresponding margin efficiencies.

 

Total operating expenses increased $1.4 million in the third quarter, however, as a percentage of sales, total operating expenses decreased to 17.9% from 26.4% in the prior year quarter. Marketing expenses decreased to 6.3% of sales in this year’s quarter from 10.2% last year. Distribution expenses were 8.4% of sales in this year’s quarter compared to 9.9% of sales last year. Administrative expenses were 3.2% of sales this quarter compared to 3.9% last year. Operating expenses in the prior year quarter were also impacted by $5.1 million of plant shutdown impairment costs.

 

Operating income was $38.1 million in the third quarter compared with an operating loss of $19.4 million in the prior year quarter, largely the result of the aforementioned items.

 

Our investments generated before tax income of $0.5 million this quarter, a decrease of $0.8 million compared to prior year quarter. The decrease was primarily attributable to the decrease in investments held between periods.

 

Net earnings in the third quarter were $28.9 million compared with a net loss of $12.6 million in the prior year quarter. Our effective tax rate was 25% 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.