J&J Snack Foods' Fourth Quarter Net Sales Increase 28%, Driving 187% Rise in Net Earnings

PENNSAUKEN, N.J., Nov. 15, 2021 (GLOBE NEWSWIRE) -- J&J Snack Foods Corp. (NASDAQ: JJSF) today reported financial results for the fourth quarter and full year ended September 25, 2021.

	Fourth Quarter			Full-Year
	Actuals		% v. LY	Actuals		% v. LY
Net Sales	$323.1M		28%	$1,145M		12%
Operating Income	$25.3M		543%	$71.2M		314%
Net Earnings	$18.9M		187%	$55.6M		204%
Earnings per Diluted Share (EPS)	$0.98		180%	$2.91		203%

Dan Fachner, J&J’s President and CEO, commented, “We are pleased with the strong finish to the year and the positive trends we see across our business, including exceeding pre-Covid sales levels in the fourth quarter despite an incredibly challenging operating environment. While fiscal 2019 was one of our strongest years, our net sales for Q4 ’21 increased 4%, compared to the same period in fiscal 2019, driven by a 6% increase in our Food Service segment and 29% growth in our Retail segment as traffic across many of our customers’ venues and outlets continues to rebound. Our Frozen Beverages segment also continues to improve, with sales down 12% in the fourth quarter, compared to fiscal 2019, which also reflects quarterly sequential momentum from this segment relative to the comparison between Q3 ’21 and Q3 ’19. Despite the marked variance between channels experiencing recoveries such as restaurant, amusement, retail and convenience, and slower recovery channels such as theaters, the team is doing a great job balancing initiatives to drive growth and create more effective and efficient operational processes.”

“Our focus on efficiencies, combined with success in managing the business through these challenging times, is reflected in 28% top-line growth, which led to robust year-over-year net earnings growth of 187% and 204% for the fourth quarter and full year, respectively. While the top and bottom line results are strong, we see opportunities for further upside, as at present, we continue to experience margin pressures brought on by rising costs across the supply chain, including commodities, logistics and wages. To offset these inflationary pressures, we have undertaken a number of pricing actions, which in combination with cost savings initiatives, will help drive margin improvements as the impact of these operational pressures and the benefits of our actions align.”

Mr. Fachner added, “As we look to fiscal 2022, we are confident that our unwavering dedication to serve our customers and manage our business in the most effective and efficient way possible will allow us to successfully navigate short-term challenges and further JJSF’s position as a leader in the growing snack foods segment. Our proven business model and long history of results highlights our ability to effectively leverage our core brands, bring further product innovation to market and drive new availability while continuing to focus on the customer experience and creating additional value for our employees, partners and shareholders.”

Total Company Fourth Quarter Highlights

Net sales increased 28% to $323.1 million in Q4 of fiscal 2021, compared to Q4 of fiscal 2020, and by 4%, compared to Q4 of fiscal 2019.

Key highlights include:

• Sales were driven by growth in core products, including soft pretzels, churros, bakery and frozen beverages, as well as the continued success of our chicken bake handheld recently introduced into the Club channel.
• Food Service sales exceeded Q4 ’20 by 35%, and surpassed Q4 ’19 by 6%.
• Retail segment sales were 9% below Q4 ’20 when sales grew 41% benefiting from consumers being home during the pandemic. However, retail sales remained strong compared to pre-pandemic Q4 ’19 levels, growing 29%.
• Frozen Beverage segment sales beat Q4 ’20 sales by 46%, led by frozen beverages growing over 104%; frozen beverage sales improved to just 4% below Q4 ’19 levels led by strong growth across restaurant, convenience, and amusement channels, partially offset by a slower recovery across our theater customers.

Gross profit as a percentage of sales was 28.4% in Q4 ’21, compared to 21.4% in Q4 ’20, reflecting the operating leverage benefit of increased sales, favorable product mix and corresponding margin efficiencies.

Total operating expenses were 20.6% of sales for the quarter, an increase of 80 bps, compared to Q4 ’20. Expenses were negatively impacted by industry-wide freight and distribution cost increases. Distribution costs were 10.1% of sales in the quarter, an increase of 90 bps versus the prior year period, while marketing and selling expenses were 6.5% of sales, or flat, compared to Q4 ‘20. Administrative expenses were 3.6% of sales in Q4 ’21, compared to 3.4% in Q4 ’20.

Operating income was $25.3 million in the fourth quarter of fiscal 2021, compared to $3.9 million in the prior year period, largely reflecting the operating leverage in our model and the aforementioned items. Net earnings in Q4 ‘21 increased to $18.9 million, compared to $6.6 million in Q4 ’20. Our effective tax rate was 26% in Q4 ‘21.

Total Company Fiscal 2021 Highlights
Net sales increased 12% to $1,145 million for full year fiscal 2021, versus full year fiscal 2020, as performance in the last two quarters of the year returned to pre-Covid levels.

Key highlights include:

• Food Service sales grew 17% in fiscal 2021, compared to the prior year, led by soft pretzels, churros, handhelds and bakery.
• Retail sales continued their strong performance growing 4%, following 23% growth in this segment in fiscal 2020. This growth was driven by soft pretzels and our frozen novelties business.
• Frozen Beverages segment sales grew 4% as key amusement, convenience, restaurants, and retail venues returned to pre-Covid capacity in the second half of the year offsetting a slower recovery in the theater channel.
  

Gross profit as a percentage of sales improved to 26.1% for fiscal 2021, compared to 23.3% for the prior year, with the increase largely attributable to the benefit of increased demand, favorable product mix and corresponding margin efficiencies.

Total operating expenses improved to 19.9% of sales, compared to 21.6% for fiscal 2020 reflecting the alignment of expenses with the post-pandemic sales recovery. Expenses were negatively impacted by industry-wide freight and distribution cost increases. Distribution cost were 9.5% of sales for the year, 40 bps higher than the prior year. Marketing and selling expenses were 6.8% of sales, compared to 8.3% last year, driven by effective investment of marketing dollars aligned with sales recovery. Administrative expenses were 3.5% of sales this year, compared to 3.6% last year.

Fiscal 2021 operating income improved to $71.2 million, compared to $17.2 million for fiscal 2020, largely as the result of the aforementioned items.

Fiscal 2021 net earnings increased over 200% to $55.6 million, compared to $18.3 million in fiscal 2020. Our effective tax rate was 25% in fiscal 2021.

Food Service Segment Fourth Quarter Highlights

• Q4 ’21 food service sales exceeded Q4 ’20 by 35% and surpassed Q4 ’19 sales by 6%.
• Customer venues across sports, amusement, convenience, schools and restaurants are experiencing a surge in post pandemic demand driving strong sales in our core products, including 62% increase in soft pretzel sales to $54.6 million, 39% increase in frozen juices and ices sales to $13.8 million, churro sales growth of 121% to $18.6 million led by customer expansion and growing menu penetration, bakery sales growth of 10% to $85.0 million, and, handheld sales growth of 36% led by the recent introduction of chicken bake products.
• Sales of new products increased to $5.5 million led by the introduction of chicken bake items and to a lesser degree by a new cookie product under the Honolulu Cookie Company brand.
• Q4 ’21 operating income increased by $10.6 million to $9.3 million driven by strong sales and improved product mix that helped leverage cost of goods and operating expenses.

Retail Segment Fourth Quarter Highlights

• Q4 ’21 retail sales decreased 9%, compared to Q4 ’20, and grew 29% versus Q4 ’19 sales. Q4 ’20 sales benefited from consumers eating more at home during the throes of the Covid-19 pandemic.
• Soft pretzels declined 1%, compared to Q4 ’20, while sales almost doubled as compared to Q4 ’19 led by our SuperPretzel core product and growing pretzel bites volume. Frozen juices and ices sales decreased 3%, however were 32% higher than the same quarter in fiscal 2019 aided by wider distribution for Luigi’s, Whole Fruit, Dogsters, Icee and Minute Maid brands. Biscuit sales declined 16% in the quarter.
• Operating income declined $3.0 million driven by lower sales, however delivered strong operating margins of 12% as we cycled the peak retail performance in a challenging cost environment during Q4 ’20 when consumers were less mobile. Operating income is $4 million higher than pre-Covid Q4 19.
  

Frozen Beverages Segment Fourth Quarter Highlights

• Frozen beverage segment sales beat Q4 ’20 sales by 46% led by beverage sales.
• Beverage sales grew over 100%, $24.4 million higher than in Q4 ’20 and 4% below Q4 ’19 reflecting the growing momentum across amusement, convenience, and restaurant channels.
• Fiscal 2021 saw the launch with Krystal Hamburgers and innovation through products such as Icee Desserts at Golden Corral helping offset slower recovery in the theater channel.
• Service revenues declined 2% and equipment sales declined 5% driven mainly by the lagging theater industry.
• Operating income increased $13.7 million as strong sales drove leverage across the business.
  

Fiscal Fourth Quarter Conference Call
J&J Snack Foods Corp. will host a conference call at 10:00 a.m. Eastern Time on Tuesday, November 16^th, 2021. Senior management will discuss the financial results and host a question-and-answer session. The dial in number for the audio conference call is +1 (847) 585-4422, confirmation number 9408 458#.

About J&J Snack Foods Corp.
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.

Certain Definitions

Adjusted EBITDA consists of net earnings adjusted to exclude: income taxes (benefit); investment income; interest expense; depreciation and amortization; share-based compensation expense; COVID-19 related expenses; net (gain) loss on sale or disposal of assets; impairment charges, and restructuring costs.

Non-GAAP Financial Measures

It is important to note that Adjusted EBITDA is not a measure of performance calculated in accordance with generally accepted accounting principles (“GAAP”). Management believes that this measure is useful as a way to evaluate the Company and the means for Management to evaluate our performance and operations. Management believes that this measure is useful to an investor in evaluating our performance because it is widely used in the food and beverage industry.

A certain adjusted non-GAAP financial measure is presented in this release. Management believes this adjusted non-GAAP measure provides useful information to Management and investors by excluding certain income, expenses, and gains and losses that may not be indicative of the Company’s core operating and financial results. Similarly, Management believes this adjusted measure is a useful performance measure because certain items included in the calculation of net earnings may either mask or exaggerate trends in the Company’s ongoing operating performance. Further, the reconciliation corresponding to this adjusted measure, by identifying individual adjustments, provides a useful mechanism for investors to consider this adjusted measure with some, or all, of the identified adjustments.

Management uses this non-GAAP financial measure on an ongoing basis to help track and assess the Company’s financial performance. You, however, should not consider non-GAAP measures in isolation or as a substitute for net earnings, operating income, or any other measure for determining our operating performance that is calculated in accordance with generally accepted accounting principles. This non-GAA measure is not necessarily comparable to similarly titled measures employed by other companies. The accompanying financial tables provide reconciliations to the nearest GAAP measure of all non-GAAP measures provided in this release.

Investor Contact:
Joseph Jaffoni, Norberto Aja or Jennifer Neuman
JCIR
(212) 835-8500
jjsf@jcir.com

	J & J SNACK FOODS CORP. AND SUBSIDIARIES
	CONSOLIDATED STATEMENTS OF EARNINGS
	(in thousands, except per share information)
	Quarter Ended								Fiscal Year Ended
	September 25,				September 26,				September 25,				September 26,
		2021				2020				2021				2020
	(13 weeks)				(13 weeks)				(52 weeks)				(52 weeks)
Net Sales	$	323,060			$	252,536			$	1,144,579			$	1,022,038
Cost of goods sold		231,327				198,609				845,651				783,611
Gross Profit		91,733				53,927				298,928				238,427
Operating expenses
Marketing and selling		20,927				16,445				77,922				84,977
Distribution		32,654				23,111				108,297				92,759
Administrative		11,534				8,581				40,538				36,747
Intangible asset impairment charges		1,273				-				1,273				-
Plant shutdown impairment costs		-				1,315				-				6,387
Other general expense (income)		79				546				(320	)			363
Total operating expenses		66,467				49,998				227,710				221,233
Operating Income		25,266				3,929				71,218				17,194
Other income (expenses)
Investment income		396				1,683				2,815				4,356
Interest expense & other		12				(24	)			(7	)			(84	)
Earnings before income taxes		25,674				5,588				74,026				21,466
Income taxes (benefit)		6,799				(996	)			18,419				3,161
NET EARNINGS	$	18,875			$	6,584			$	55,607			$	18,305
Earnings per diluted share	$	0.98			$	0.35			$	2.91			$	0.96
Weighted average number
of diluted shares		19,191				18,955				19,133				19,032
Earnings per basic share	$	0.99			$	0.35			$	2.92			$	0.97
Weighted average number of
basic shares		19,072				18,895				19,013				18,901

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
	September 25,				September 26,
		2021				2020
Assets
Current assets
Cash and cash equivalents	$	283,192			$	195,809
Marketable securities held to maturity		7,980				51,151
Accounts receivable, net		162,939				126,587
Inventories		123,160				108,923
Prepaid expenses and other		7,498				17,087
Total current assets		584,769				499,557
Property, plant and equipment, at cost		757,242				717,261
Less accumulated depreciation
and amortization		490,055				455,645
Property, plant and equipment, net		267,187				261,616
Other assets
Goodwill		121,833				121,833
Other intangible assets, net		77,776				81,622
Marketable securities held to maturity		4,047				16,927
Marketable securities available for sale		10,084				13,976
Operating lease right-of-use assets		54,555				58,110
Other		1,968				2,912
Total other assets		270,263				295,380
Total Assets	$	1,122,219			$	1,056,553
Liabilities and Stockholders' Equity
Current Liabilities
Current finance lease liabilities	$	182			$	349
Accounts payable		96,789				73,135
Accrued insurance liability		16,260				13,039
Accrued liabilities		10,955				7,420
Current operating lease liabilities		13,395				13,173
Accrued compensation expense		17,968				16,134
Dividends payable		12,080				10,876
Total current liabilities		167,629				134,126
Noncurrent finance lease liabilities		392				368
Noncurrent operating lease liabilities		46,557				47,688
Deferred income taxes		61,578				64,413
Other long-term liabilities		409				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
19,084,000 and 18,915,000 respectively		73,597				49,268
Accumulated other comprehensive loss		(13,383	)			(15,587	)
Retained Earnings		785,440				775,817
Total stockholders' equity		845,654				809,498
Total Liabilities and Stockholders' Equity	$	1,122,219			$	1,056,553

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Fiscal Year Ended
	September 25,				September 26,				September 28,
		2021				2020				2019
	(52 weeks)				(52 weeks)				(52 weeks)
Operating activities:
Net earnings	$	55,607			$	18,305			$	94,819
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation of fixed assets		46,781				49,830				45,225
Amortization of intangibles and deferred costs		2,610				3,218				3,385
Intangible asset impairment charges		1,273				-				-
Gains from disposals of property & equipment		(231	)			(303	)			(347	)
Plant shutdown impairment costs		-				6,387				-
Amortization of bond premiums		77				296				730
Share-based compensation		4,199				4,595				4,230
Deferred income taxes		(2,896	)			2,622				9,637
(Gain) Loss on sale of marketable securities		(1,026	)			882				404
Changes in assets and liabilities, net of effects from purchase
of companies:
Decrease (increase) in accounts receivable, net		(35,755	)			14,580				(8,759	)
Decrease (increase) in inventories		(14,155	)			7,877				(3,231	)
Decrease (increase) in prepaid expenses and other		9,629				(11,366	)			(744	)
Increase (decrease) in accounts payable and accrued liabilities		35,386				(4,780	)			2,150
Net cash provided by operating activities		101,499				92,143				147,499
Investing activities:
Payments for purchases of companies, net of cash acquired		-				(57,212	)			(1,156	)
Purchases of property, plant and equipment		(53,578	)			(57,817	)			(57,128	)
Purchases of marketable securities		-				(6,103	)			(26,091	)
Proceeds from redemption and sales of marketable securities		60,891				73,226				39,158
Proceeds from disposal of property, plant and equipment		2,435				3,593				2,050
Other		191				(150	)			(196	)
Net cash provided by (used in) investing activities		9,939				(44,463	)			(43,363	)
Financing activities:
Payments to repurchase common stock		-				(8,972	)			-
Proceeds from issuance of common stock		20,256				7,901				14,174
Payments on finance lease liabilities		(144	)			(340	)			(356	)
Payment of cash dividend		(44,785	)			(42,053	)			(36,644	)
Net cash used in financing activities		(24,673	)			(43,464	)			(22,826	)
Effect of exchange rates on cash and cash equivalents		618				(802	)			(394	)
Net increase in cash and cash equivalents		87,383				3,414				80,916
Cash and cash equivalents at beginning of year		195,809				192,395				111,479
Cash and cash equivalents at end of year	$	283,192			$	195,809			$	192,395

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	September 25,				September 26,				September 28,
		2021				2020				2019
	(52 weeks)				(52 weeks)				(52 weeks)
	(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	174,977			$	150,786			$	209,227
Frozen juices and ices		44,605				35,176				43,672
Churros		64,916				46,881				65,976
Handhelds		75,627				36,088				31,685
Bakery		342,609				332,514				359,020
Other		22,249				17,448				26,407
Total Food Service	$	724,983			$	618,893			$	735,987
Retail Supermarket
Soft pretzels	$	54,990			$	49,157			$	36,264
Frozen juices and ices		100,059				88,743				73,751
Biscuits		24,197				28,317				25,316
Handhelds		7,574				12,303				10,902
Coupon redemption		(3,689	)			(3,569	)			(3,596	)
Other		1,766				2,214				1,955
Total Retail Supermarket	$	184,897			$	177,165			$	144,592
Frozen Beverages
Beverages	$	124,498			$	107,004			$	171,820
Repair and
maintenance service		81,305				83,420				85,834
Machines revenue		26,953				33,986				45,811
Other		1,943				1,570				2,143
Total Frozen Beverages	$	234,699			$	225,980			$	305,608
Consolidated Sales	$	1,144,579			$	1,022,038			$	1,186,187
Depreciation and Amortization:
Food Service	$	26,738			$	28,111			$	26,978
Retail Supermarket		1,671				1,577				1,418
Frozen Beverages		20,982				23,360				20,214
Total Depreciation and Amortization	$	49,391			$	53,048			$	48,610
Operating Income:
Food Service	$	39,172			$	6,458			$	76,546
Retail Supermarket		25,914				23,202				10,460
Frozen Beverages		6,132				(12,466	)			29,950
Total Operating Income	$	71,218			$	17,194			$	116,956
Capital Expenditures:
Food Service	$	38,558			$	34,798			$	29,197
Retail Supermarket		288				1,763				1,979
Frozen Beverages		14,732				21,256				25,952
Total Capital Expenditures	$	53,578			$	57,817			$	57,128
Assets:
Food Service	$	799,149			$	738,033			$	766,081
Retail Supermarket		31,486				31,704				29,369
Frozen Beverages		291,584				286,816				223,889
Total Assets	$	1,122,219			$	1,056,553			$	1,019,339

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	September 25,				September 26,				September 28,
		2021				2020				2019
	(13 weeks)				(13 weeks)				(13 weeks)
	(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	54,618			$	33,801			$	54,557
Frozen juices and ices		13,793				9,954				13,336
Churros		18,558				8,415				16,183
Handhelds		19,053				14,004				6,346
Bakery		85,029				77,498				90,285
Other		7,706				3,820				7,131
Total Food Service	$	198,757			$	147,492			$	187,838
Retail Supermarket
Soft pretzels	$	14,119			$	14,283			$	7,955
Frozen juices and ices		28,459				29,464				21,572
Biscuits		5,480				6,558				5,879
Handhelds		1,359				3,168				2,792
Coupon redemption		(1,493	)			(1,353	)			(1,433	)
Other		114				546				614
Total Retail Supermarket	$	48,038			$	52,666			$	37,379
Frozen Beverages
Beverages	$	47,836			$	23,398			$	49,844
Repair and
maintenance service		21,402				21,896				23,543
Machines revenue		6,397				6,732				11,936
Other		630				352				1,332
Total Frozen Beverages	$	76,265			$	52,378			$	86,655
Consolidated Sales	$	323,060			$	252,536			$	311,872
Depreciation and Amortization:
Food Service	$	6,404			$	6,903			$	7,067
Retail Supermarket		524				421				428
Frozen Beverages		4,089				5,855				5,155
Total Depreciation and Amortization	$	11,017			$	13,179			$	12,650
Operating Income:
Food Service	$	9,294			$	(1,285	)		$	18,637
Retail Supermarket		5,747				8,738				1,435
Frozen Beverages		10,225				(3,524	)			10,989
Total Operating Income	$	25,266			$	3,929			$	31,061
Capital Expenditures:
Food Service	$	12,643			$	8,199			$	5,851
Retail Supermarket		94				138				249
Frozen Beverages		6,385				1,843				8,892
Total Capital Expenditures	$	19,122			$	10,180			$	14,992
Assets:
Food Service	$	799,149			$	738,033			$	766,081
Retail Supermarket		31,486				31,704				29,369
Frozen Beverages		291,584				286,816				223,889
Total Assets	$	1,122,219			$	1,056,553			$	1,019,339

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
	Quarter Ended								Fiscal Year Ended
	September 25,				September 26,				September 25,				September 26,
		2021				2020				2021				2020
	(13 weeks)				(13 weeks)				(52 weeks)				(52 weeks)
Reconciliation of GAAP Net Earnings to Adjusted EBITDA
Net Earnings		18,875				6,584				55,607				18,305
Income Taxes (Benefit)		6,799				(996	)			18,419				3,161
Investment Income		(396	)			(1,683	)			(2,815	)			(4,356	)
Interest Expense		(12	)			24				7				84
Depreciation and Amortization		11,017				13,179				49,391				53,048
Share-Based Compensation		947				1,174				4,199				4,595
COVID-19 Related Expenses		154				2,995				2,102				9,483
Net (Gain) Loss on Sale or Disposal of Assets		(9	)			217				(231	)			(303	)
Impairment Charges		1,273				1,315				1,273				6,387
Adjusted EBITDA		38,648				22,809				127,952				90,404