On August 5, 2024, J&J Snack Foods Corp (JJSF, Financial) released its 8-K filing for the third quarter ended June 29, 2024. The company, which manufactures, markets, and distributes snack foods and beverages to foodservice and retail supermarket outlets, reported mixed results for the quarter.
Company Overview
J&J Snack Foods Corp manufactures, markets, and distributes snack foods and beverages to foodservice and retail supermarket outlets. The company's products include frozen beverages, juice, fruit bars, sorbet, cakes, and cookies that are distributed to various consumers, including restaurants, supermarkets, convenience stores, universities, theaters, and theme parks. The company operates in three business segments: food service, retail supermarkets, and frozen beverages.
Performance and Challenges
J&J Snack Foods Corp reported net sales of $440.0 million for Q3 2024, a 3.3% increase compared to the same period last year. However, the company missed the analyst estimate for earnings per share (EPS), reporting $1.87 per diluted share against an estimated $2.00. The revenue, however, slightly missed the estimated $444.05 million.
Despite the revenue growth, the company faced challenges, particularly in the theater channel, which was impacted by a significant year-over-year decline in movie theater attendance due to the 2023 actors strike. This affected sales of frozen beverages, soft pretzels, and churros.
Financial Achievements
J&J Snack Foods Corp achieved a gross margin of 33.6%, consistent with the prior year, despite a less favorable sales mix. The company also reported adjusted operating income of $53.1 million, a 3.9% increase from the previous year, and adjusted EBITDA of $70.9 million, a 6.3% increase.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Sales | $440.0M | $425.8M | 3.3% |
| Operating Income | $50.1M | $48.3M | 3.8% |
| Net Earnings | $36.3M | $35.0M | 3.8% |
| Earnings per Diluted Share | $1.87 | $1.81 | 3.3% |
| Adjusted Operating Income | $53.1M | $51.1M | 3.9% |
| Adjusted EBITDA | $70.9M | $66.7M | 6.3% |
Balance Sheet and Cash Flow Highlights
As of June 29, 2024, J&J Snack Foods Corp reported total assets of $1.38 billion, up from $1.28 billion as of September 30, 2023. The company's cash and cash equivalents stood at $64.0 million, an increase from $49.6 million at the end of the previous fiscal year. Total liabilities were $442.8 million, compared to $365.8 million at the end of September 2023.
Segment Performance
In the Food Service segment, sales increased by 3.7%, driven by strong growth in handhelds, frozen novelties, and bakery products. The Retail segment saw a 12.4% increase in sales, largely due to strong sales of handhelds, frozen novelties, and soft pretzels. However, the Frozen Beverages segment faced challenges due to the decline in movie theater attendance.
Commentary
Dan Fachner, J&J Snack Foods Chairman, President, and CEO, commented, “J&J Snack Foods delivered excellent third quarter financial results, including the second-highest quarterly net sales performance in our Company’s history and record quarterly earnings per diluted share. Top-line growth was driven by higher volumes across most of our core products and brands, as well as strong new business performance in our Food Service and Retail segments, partially offset by temporary challenges in the theater channel.”
Analysis
J&J Snack Foods Corp's performance in Q3 2024 highlights the company's resilience and ability to grow despite challenges in specific segments. The increase in net sales and gross margin stability are positive indicators of the company's operational efficiency and market demand for its products. However, the miss on EPS estimates suggests that there are areas for improvement, particularly in managing costs and navigating external challenges such as the decline in theater attendance.
For more detailed insights and analysis, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from J&J Snack Foods Corp for further details.
