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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