JJSF - Earnings call transcript Q3 2020

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Operator

Welcome to the J & J Snack Foods Third Quarter Earnings Conference Call. My name is Cheryl, and I will be your operator for today's call. [Operator Instructions]. I will now turn the call over to Gerry Shreiber. Sir, you may begin.

Gerald Shreiber

welcome third and conference everybody, morning, to quarter our call. Good Sales; our today Group, Pape, calling President of Dennis President, Moore, are of remote me J&J Vice and Counsel; Senior and Senior Roshkoff, from In-House Secretary in Bob President our Bob With our is Officer; Dan is Radano, Vice Fachner, but and of Vice Dan Operating and Vice Tennessee. President Senior Marjorie Finance; Chief President

everybody. got I think I

obligatory statements. uncertainties me forward-looking I'll actual begin. statements. with the to those and Let herein contained risks results from subject forward-looking that The are in materially begin statements cause the projected to certain differ could

the the publicly reflect events We reliance Sales these XX% a are customers in quarter sales these of the XX% to million of income this for XXXX Food loss for ago. XX% analysis XX% and the decreased and which Service to forward-looking date not revise forward-looking the Without February quarter. of undertake statements that XXXX, statements, operating decreased circumstances from ICEE of an $XX.X for October million two $XX date. management's of to compared the Net operating Food months. year Service. hereof. obligation no or had Results groups place You operations. sales decreased acquisition We cautioned update to for undue nine after arise on reflect or as to quarter. only sales

cake and sales segment and products. employee costs quarter $XX pretzels, operating was of to customers increased COVID-XX, Our $XX.X our ices in frozen an due as as safety sales decreased to loss impact ourselves. COVID-XX and compensation. also included churros, soft million had and Food volumes operating primarily of bakery in This million juices for to and sales $X decrease production and approximately handhelds on quarter million for Service the had of of a a our compared devastating on funnel year's of which sales We due the ago, quarter lower because year income and well

the Additionally, a recorded million. we decided during facility $X.X an close the and charge impairment of Midwest manufacturing quarter to in

costs manufacturing million to million reduce annually were of overhead products as result to $X and unitary Sales and for closure. this Retail distribution to expect bright Supermarkets by of a about quarter. the We Retail $X groceries, the up XX% spot. Supermarkets plant

profit again, of million short-term year, lower of sale operating sales last SLUSH revenue primarily to the beverage-related a and due to of expense though down this for the not last and alone shutdown sales XX%. were were ICEE all were period down the inventory due X% sales and down primarily a year ices volume increased as charge, was in and in employee higher year. in for Frozen since generally part of because XX%. And from income related to ago, sales the the XX.X%. and to pretzel Machine and of our and Soft up of expenses decrease and and The quarter sales $X.X sales percentage Supermarket our three-month last $XX.X down of Service Italian in with to quarter up the as related mix product million an sales. customers. to and to expenses the of Consolidated. up down quarter. this decreased XX%. Frozen year's Gross quarter, quarter. changes to frozen Retail the XX% which lines XX% in from XX% well. overall Food operating others costs reserves $X.X were product fluctuate large impossibility this million Without do increased percentage fell sales. sales in for XX% from sales our Beverage last line our expenses Sales ARCTIC COVID-XX. and compared were PUPPIE. increase and plant for $X.X the million two down was ICEE, Service in due Distributors biscuit the percentage BAMA were relatively projects were ICEE beverage-related XX% XX%. sales XX% of loss decreased including with up that to higher $XX.X percentage had year. segment a Last drop We because Beverage XX% COVID-XX. profit increased volume a business up write-down. higher related because $XX.X $X.X Gross sales down and in had the mid-March was in because supermarkets to Frozen revenue from Beverages, million fixed reduce were year segments, sales up year's inability, held in million, the disruptions juices Frozen Even installation sales million to COVID-XX safety segment all to production significantly because were operating total Beverage income million in Sales of compensation quarter Handheld decrease operating XXXX as million impairment approximately of $X.X not includes increase Operating costs BLAST of $X.X in for

million. – the EBITDA and cash before taxes, XX and $XXX was depreciation flow. past for – earnings that's Capital Our months spending interest, amortization

during to no up investment maturity time. next purchase are X.X%, of with cash years. balance $XXX yield price liquidity $XX strong our was securities our the mature a remains of million this which $XX million as from of of and corporate Our COVID-XX bonds in we investments balance sheet March million within our million issues balance $X two and have

million, the drop preferred the at of stabilized bank value funds, and Our have March. value in stock $XX in mutual end since

to continue our use of acquisitions for We look a as cash.

Our capital was million $XX quarter. in spending the

committed quarter, at ongoing on looking capital to did further we continue business dividend July growing the our paid quarter. invest declared year of was and during A in and We Directors are not and in of cash manufacturing of improve and efficiencies last efficiencies an projects on from down plant Although buyback have to $X.XXX stock any X. the by basis. Board share our our

last to income $X.X decreased primarily this of $X.X million rates. investment as from year million interest year, Our a function lower

are ago. we the where first year from now, sales fourth weeks XX% current for our Regarding net quarter down a of approximately were four

the be income the lower Although, in down be will last improved for the we although the we of same cannot from that for continue than our quarter whether will will expect operating the net materially to estimate be results quarter balance quarter, at our fourth third operating year. rate quarter, sales

strongly have curtailed said, we sales venues food As that and down to our are approximately two-third shut operations. service have their down of locations or

anticipate have a COVID-XX continue on we will negative our impact So, business. to

liquidity As sheet, we have balance we expect have any on $XXX our not million of and marketable do to cash issues. securities

We both during the have operated well. our with business and consideration short-term crisis, as for long-term

priority We keep have for going placed looking our on high while employees ways of distribution business improve continuing safe to network. forward, to our manufacturing reviews a and including

manufacturing customers worked to We and as facility open products the up. significant have our developing close Midwest in sell plans new with we they have to a

will the our I quarter. and audience back for thank about look talking optimistic now of want future to I interest turn and listening you to continued tough again end your during to be our comments. to forward the to continue any for fourth these it at We unusual times. you preguntas

Operator

[Operator you. Thank Instructions].

question Andersen. first Jon Our from comes

now line Your is open.

Gerald Shreiber

Hi, Jon.

Jonathan Andersen

everybody. Hi, Hope well. morning, Gerry. Good everyone is

Gerald Shreiber

industry We schools and leisure are We the movie hope well. get and that just well. sports and

Jonathan Andersen

that. of all miss I all. we Don't Yeah.

that mentioned sales you improved. quarter, least your decline, So, of the at during rate got better the

previously had trending in said you that, sales were down XX%. think I April,

much decline like base, what – Service Beverage your is, in this improve quarter do Sounds guess you to anticipate anticipate the seeing half. Frozen there the in the believe rate but you do your the year? at calendar base in you're Food point, year, trending fiscal sequential June, of question first your to continues I from that trend customer improve second to for and of my the that correspond with that better down, which XX%, half continue given reason cut customer should quarter and of here you're would nearly you Is fourth And that

Gerald Shreiber

optimistic. cautiously are We

that's leisure of our hopeful. The are coming theaters to and and are back significant schools get open to the make part difference. movie are going big sports a a full-time, We business. Once represents back venues that and

Jonathan Andersen

improvement The driven June, have seen from have April improvement? that which to that or venues you segments locations or

Gerald Shreiber

new to Any that of were the secure. closed. This ones were that we is business able

Jonathan Andersen

business. New

Gerald Shreiber

had of theaters. movie a sports hell if of had leisure and We a year not lost our we would all and have

Jonathan Andersen

Okay.

Dennis Moore

that venues shutdown. was There There were initial open venues Dennis. guess, closed. It it was it's in is also, were was to business business, what I shock of But new but new there improvement, the up. than opening now the biggest of lot April. the is a related more because some This there is are

back lot but of a new orders the up, per business se. and whatnot, primary So, we held as reason sales, the over time, distributors why improved it's more not more opened and had their

Jonathan Andersen

Right, right, right.

quarter sales. you is the trough in There the think, that of cautious okay. the is Okay, see June here, improvement terms we sequential in optimism, I is used word the could from that

Dennis Moore

down don't we whether if and but At that this zero to continuing the to increase Yeah. these we somewhere hope – up. in and we to It things that venues between certainly to it's going hope are will continue open we X%. or case. And up, to on we depends till being fact, point, that's XX% where open – are continue what continues, know continues obviously in

Jonathan Andersen

costs I on Fair could profit modest thought expectations? forward? point. profitability Was quarter, kicked that your and neutral of, call, of was for we in steps think we $XX an you be line capacity loss of kind I taking your with the profit think, with to the time to And loss. maintain your in million at with move I you're conference additional same on the trying line costs also this, balancing reduce a you maybe manage to and you it? in expectations Where understand operating side extent the as the need then, prior as other profit to move but capabilities the side, the are you're in to mentioned, through some you your there

Gerald Shreiber

temperature would the primary, wanted the that than wanted – things we the into say higher that lot I guess, went would was quarter, to from the protective and personal that to April, initially, two – or we additional equipment, spacing that yeah, safe anticipated not for expenses keep $X we okay. would that people we we screening all back had One million up what and time. that we setting temperature, I safety in sure terms taking of expense, to accomplish at gear every employees direct accomplish. is they're make say barriers, of of things entailed I having And our many in loss only single – apart, employees to day right,

So, were and would because direct volume, like. but as of also were inefficiencies also plants have of those shutdown actual not screening, all we able because liked, because one, as costs, to often lower there run the

So, costs all that more had we anticipated. than added

goal certain the the wanted we because in bulk. The quarter some that We and orders. additional for not meet at and had with distribution higher was normally sure West on shipping volumes to bottlenecks might business, some make – cost other products had have. to to fill make we in we attained had which instead make entailed we Coast increased example, We we might product of that do Coast requirements things And did individually on have of primary had to to the higher rack that East all of customer extent, We segments the costs. both a would cost. have to meant, our

that, manufacturing said did didn't you down as bunch our extra your reduce XX%, there that when we've want. are costs We not for not out our charge them again, end costs. hard in cut for the two the to. One, operating of reasons. expenses, not come was But business, were down down all and a having come by the as because, impairment they as have XX% we So, backing said to were drop. costs to reduced which we shutdown. one, And out did a much costs of added was it's before, take and that flash that $XX plant our of the the goal, sales But did were million,

a us have to sheet and bite things the want liquidity we cash now on that speak. And We from back come so could storm, weather from enough our that would or six year months we to to balance didn't do now.

So, it of approach kinds making to those semi-cautious took a cuts.

I right? new XX%. the we The strong ICEE's some maybe example, down at, of when ICEE ICEE of And period This gallons gallons year, mix, last other year. is a business were is is drop. the For the – ICEE. that the thing And huge, that look guess, without you huge acquired

you these things, didn't. Obviously, we some of can't just And And overcome. didn't it. we

I tough would say worse your numbers nut we to can tremendously sales were not XX%, would your yes. say, worse. do than question, not So, I crack. anticipated. that's and answer were to – lot Obviously, there's not a The an awful you had down are when

Jonathan Andersen

That's helpful.

Dan Fachner

you July asked said, exactly is number and just want better was Dan One, sure so as Fachner. held this Jon, sure, holds. to what that was than future things. June sales. to far better also up to has of the two than you April, May not I well. we're May, as add about But And that

by bone to. encouraged we're the have to diligent careful we're second But under that rock fact. we we're your don't the we question can, to we said, so every about spot cut we that that that not want that can. to around be then, every and at really into to for best We monitor going looking Dennis So, are look And as prepared to be the we expenses, can. future because, going continue

Jonathan Andersen

in And at additional associated to benefits of facility fourth the closed annualized there in quarter? that? then, the And a you. million Or with you that that fiscal $X Midwest. Thank point? savings mentioned start some helpful. That's that, begin million you that before manufacturing been you are $X the does there Has completed the this in to realize work

Dan Fachner

will was end about Actually, end of question the plan the Dennis, the at of it month. be But at the savings? you completed answer this month. the to the completed want

Dennis Moore

Yeah.

is or said, down week right Dan it shutting actually. now As this

But So, won't but $X bat, beginning they – of at year, be It the the run August. in savings be right million kick should in. rate the $X to will start the to they of won't million fiscal next be. off

Jonathan Andersen

this this you're one mentioned still probably suppose – some Okay, from M&A puts pressure on you Gerry, me. anyone, in environment, deals. looking but companies I wish one Last creates for really great. it environment no – would that on – M&A are you or and comments some – challenging opportunities presents as maybe opportunities. to pick don't you're capitalized some well environment. I know thoughts whether up seeing in that as things and aren't the outlook Any a on

Gerald Shreiber

But we We front. future. very the some make careful the in take are looking a in and approach on the made them I will we've and past we acquisition expect

Jonathan Andersen

it. Great. luck Thank forward. you, Thank you. Appreciate And good going everybody.

Gerald Shreiber

Thank you.

Operator

you. Thank

from Our Todd next comes Brooks. question

now is line Your open.

Todd Brooks

Hey. Good morning, everybody.

Gerald Shreiber

Gerry. This Good is morning, Todd.

Todd Brooks

hanging hope I as well through team of and there our muddle we Gerry, you all the and way are this. kind in

Gerald Shreiber

We're We are. We're strong. and to healthy not this. used

to looking come come So, – to to we're we're swinging. out out going going

Todd Brooks

we've first shifts question. I food when quarters. does some as markets we've of release a leads And kind that quarter, of really, being whatever the picture spikes in lines we in in Well, of of into moved with some my the of can look the There mid-XXs level, retail volumes back grocery get now mid-XXs sales my end can it. this at which profitability the company in result? it's that to forward in is, into and digestion period service profitable If or mind, recovery is But initial about bringing to require quarter the demand, new we this talked was start in of tale it five-week distribution still at we've shifting maybe at down inefficiencies for gotten or before the the end of the it more June a that. to normal digested mid-XXs the back quarter, kind two up in I between looking the kind to down was set further I'm as look demand,

Gerald Shreiber

back I dropped. that has is glean profitability company confident our levels our question. Well, as to early year. and see And have will let been if adjusting part profitability get this in understand me next fiscal we're of we the Yeah, sales the the

Todd Brooks

to as far just level breakeven results than down better mid-XXs back from sales a the as a But get profit… us

Dennis Moore

say, hopefully Yeah. range, would that This be I Dennis. we in there. is would

Todd Brooks

I And second we've sheet and great. – that – past have Okay, had the it's guys you balance the know question I used in the used offensively.

that in I expected into it the bone, at place, resources marketing You in been off talked company the was have because about the you cutting expense playing human And side especially or to wondering would lot be allows line When have could not others balance the quarter, in while kind that talk is I of look if were as, about variable. so? capital offense expense could quarter laying employees. far March the furloughing to expense of one I keeping on marketing sheet that more it as still the do

Gerald Shreiber

we're arenas to those I'm the the fiscal put spending business once rewrite back, of theme little as comes kind as but question. them as our preset I to back and leisure less planned. awfully to spending and bit Well, far whatnot, were the think mind there. gauge a understand have seasons Keep our sports marketing hard programs in cut beginning And and year. we'll on on we're foot the trying and them the than that And started, it's – of the

Dennis Moore

Dennis. includes in that kind also well. as other also, the marketing that And misnomer, we part of the This – is name expenses that Todd. that selling is is of Yeah, a

a we'd that marketing/advertising and is of part selling good what expenses. consider So, not

Todd Brooks

Okay.

percentage what was quarter, you the of in spent million $XX the versus variable? at that fixed look we say if would So,

Dennis Moore

cost. half or less now. thinking would half than that is probably so. Little of I'm fixed I Yeah. say

Todd Brooks

more there amount Okay, for the quarter, know this a great. employee expenditures for COVID-related them then, quick to in the safety, wages were I ones. times pandemic. real of tough of two service their employee during kind thank And initial decent incremental of

think to about forward $X in go versus the one-time the expenses? you continuing a startup kind COVID nature quarter, in the the If million what's spend of COVID

Dennis Moore

We would would a this probably that say at that third be ongoing. point of

Dan Fachner

We're providing screening. doing We're still masks.

checkpoint systems. have We

added is there costs that. so, to some And

Todd Brooks

Gerry, you efforts finally, you business Anything secure. post-COVID, then And kind the I'll of with on And great. be product and of the some solutions new after on new great. on that Okay, new touched now, were to new able us that share products that. could by commentary then pipeline up coming switched just would product packaging to any pipeline hop but you

Gerald Shreiber

an that year's have new are products, of array will first service are very and that that quarter single or optimistic the these come food out our next and some and they We for things will base, to growth. add sales fourth in customer quarter either others we're

Todd Brooks

Okay, great. you Thank all very much.

Operator

you. Thank

next question Brian, open. your line now Our from Brian comes is [ph].

Gerald Shreiber

Hi, Brian.

Operator

open. is your Brian, line

Unidentified Participant

Hello.

Gerald Shreiber

can We you. Brian. hear Yes,

Unidentified Participant

Is meaningful facilitate theaters theme anything business about and your should with goes and Great. arenas, schools. parks, of portion to of venues centers, a we that's there thinking sales larger percentage the We respect movie gatherings? shopping through exposed stadiums, know be to malls that

and a So, as allocated things of get be gatherings back we sales come that like, to what of are thinking are a slower larger percentages bit bit towards people back more may to venues to? be type little what normal, – would

Gerald Shreiber

an the are of will all the Well, going as albeit locations that increase venues theaters, and the to on we they movie But venues, and able come Disneys the our the our on all thus impact us. sales. of I them theme, we world, those The be in leisure touched to sports have hopeful slowly, back, so beginning. are

Unidentified Participant

by of driven policies or see so, And government you do consumer lot being by predominantly a behavior? that

Dan Fachner

is This Dan. Hi, Brian.

the of think back quarter good we're as of see is those. maybe up over a have a that and come ball to Gerry quarter and or of food open But to quarters. from service hopeful start But both has next over the so. open two are I starting little the percentage mixture there some to even areas mentioned, now that the theaters the predicting last month over parks and of the suffered up to or next we

Unidentified Participant

and And and in pent-up helpful. how businesses then, year, the were all and parks? about Great. next these of Thank that increased do you. That's your potential lapping as of the demand things interest parts theme thinking of negatively theaters movie like impacted, sports you you're and that pretty see

Gerald Shreiber

the be right Well, clarity we no to quarter more was able we all in were room. little spreading even watch canceled And mixed set COVID-XX project TV though now, I bit it here. hopefully, a the the other but if locker on because get Yankee-Phillies with game But fans, this move of to we'll on as there they bag. it's off, a night.

Unidentified Participant

that come that one shut or Is doesn't Right. And another any there you plant. or next need to? demand to that may plant be over essentially risk need quarter would shut back the all you so down down if is

Gerald Shreiber

few And country. think decision don't locations it as the back. that We plants we there have severance excess I shut and and XX was care the years and and throughout down we the to go plant finally of in a still major made to operating The geographical so. close acquired throughout take whatnot forward. up needs were our it it was was,

and need back. for We So, we're position position in our for good better sales even production distribution.

Unidentified Participant

that on reason, good person, what your pretty a up for whatever type would business? up Thanks. And opening end number of than schools virtually of impact helpful. if in That's rather have

Gerald Shreiber

get Virtually open K and whatnot they have lunch and does are were like there we during All XX they and they us. not them get We'd lunch when through right? from and there schools breaks help because feeding in breaks. in students

Unidentified Participant

the in there is be impact understand what to And your might to overall that way business were happen? any

Dennis Moore

sales schools overall of roughly to Brian, X% X% our Well, are sales.

Unidentified Participant

Okay.

Dennis Moore

all even a not though not systems may school of be the Brian, continue country the district throughout it's extent, they feed children, lot to some class. having to but lost, – guess I so, And actually because the

Dan Fachner

open. is that and know, you as there also, you're are if is it, schools still And all country, across watching not there some Brian, – open the

but as it's business. total, Dennis finger our it's to it, on X% so, X% said, put hard And to of in a

Unidentified Participant

Perfect. helpful. That's very

think Thank you very it for that's I much. me.

Operator

comes from question next Our Ashish.

now is line Your open.

Ashish Mago

Good This Hi. is. morning.

a questions. Ashish for of Rob. I just had quick couple

Gerald Shreiber

Okay, Ashish.

Ashish Mago

Yeah.

So, the... uptick that improvement you the in of terms saw toward

Gerald Shreiber

you who Ashish, are with?

Ashish Mago

Dickerson. Rob

Gerald Shreiber

Okay.

Ashish Mago

From Jefferies.

Gerald Shreiber

good. Very

Ashish Mago

Okay, sure.

the had on channels where the specific have of up C-stores, terms the the like shaped if you wondering July first in third of Also, the month the month little could was, So, how compared questions seeing one – a the in more improvement, give trends color to I five quarter? last you're QSRs, of of was in weeks the improvement.

Gerald Shreiber

Well, began it's occasionally, our and focusing pretzels, a on happy our ICEE few we're multiple of expect C-store something we of July, that And products. C-stores growth. back, June how not years products really your the question, in But we and other C-store business, to that but with C-stores has we one been were second nicely. part sure have growing and – our now, I'm

to With exception down some C-store our of wrap growth. which happy costs, having for with our slows process everything them, the adds we're and

Ashish Mago

weeks June the like, because mentioned, for trends month sales was trending in the And you of are company, overall of July. up for trends last it. how those of wondering year-over-year, the were five shaping the trends Got in the terms down XX%

Gerald Shreiber

yet. early looking We're Too at to tell still that.

Ashish Mago

little Thank cost you more give a was me, or initiatives control terms from in if are that like, then, it. one changes looking color for on And Got last that. could you you. into of perspective, wondering

Gerald Shreiber

I'm I question. don't the sorry. understand

Ashish Mago

that initiatives cost control terms of what that perspective? of some – controls the into, cost you're from In looking the so were

Gerald Shreiber

to the almost since We've country. labor over an had on all focus appears issue ongoing be an labor

and/or So, working going we've a reduce projects control focus. continued been to on will labor. be labor That's that

Dan Fachner

some of in closure of to improvements we've the working Ashish, that, And had mentioned plant as that's that of the one plants, improvements been the and on. then, addition we've part well. we cost

Ashish Mago

Thank That's me. it you. it. from Got

Operator

Thank no you. in this queue. [Operator at time, I show Instructions]. And speakers, further questions

Gerald Shreiber

the we everybody quarter. thank at talking to being conference Well, to of this thank to you. and want end of call all look fourth you forward on our for I again

Operator

Thank participation. you. you call. this today's your concludes gentlemen, and Thank for conference Ladies

now You disconnect. may

J&J Snack Foods (JJSF) 29 Jul 202020 Q3 Earnings call transcript