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Sales and Earnings Reported by J & J Snack Foods

J&J Snack Foods logo

PENNSAUKEN, N.J., Nov. 7, 2013 (GLOBE NEWSWIRE) -- J & J Snack Foods Corp. (Nasdaq:JJSF) today announced sales and earnings for its fourth quarter and year ended September 28, 2013.

Sales for the fourth quarter (13 weeks) decreased 2% to $237.9 million from $242.2 million in last year's fourth quarter (14 weeks). For the year ended September 28, 2013 (52 weeks), sales increased 4% to $867.7 million from $830.8 million last year (53 weeks). Excluding sales from the extra week in 2012, sales increased approximately 5% for the fourth quarter and 6 1/2% for the year. Net earnings increased 4% to $20.3 million ($1.08 per diluted share) in this year's fourth quarter compared to $19.5 million ($1.03 per diluted share) last year and for the year earnings increased 19% to $64.4 million ($3.41 per diluted share) from $54.1 million ($2.86 per diluted share).

Operating income increased 2% to $30.8 million this year from $30.3 million in the year ago period for the fourth quarter. For the year, operating income increased 15% to $97.4 million from $85.0 million last year.

The Company also said that it purchased and retired 97,302 shares of its common stock at a cost of $7,302,515 in the fourth quarter.

Gerald B. Shreiber, J & J's President and Chief Executive Officer, commented, "For the quarter our food service group performed well with strong growth coming from sales of soft pretzel products including new varieties of our soft pretzels to new and existing customers. Churro sales remained strong but our retail supermarket group had disappointing sales and earnings due in part to cool weather conditions in the northeast that have persisted since early spring."

J&J Snack Foods Corp. is a leader and innovator in the snack food industry, providing nutritional and affordable branded niche snack foods and beverages to foodservice and retail supermarket outlets. Manufactured and distributed nationwide, our principal products include SUPERPRETZEL, PRETZEL FILLERS and other soft pretzels, ICEE and SLUSH PUPPIE frozen beverages, LUIGI'S Italian ice, MINUTE MAID* frozen juice bars and ices, WHOLE FRUIT sorbet, MARY B'S biscuits and dumplings, DADDY RAY'S fig and fruit bars, TIO PEPE'S and CALIFORNIA CHURROS churros, THE FUNNEL CAKE FACTORY funnel cakes, and READI-BAKE cookies. For more information, please visit us at www.jjsnack.com.

*MINUTE MAID is a registered trademark of The Coca-Cola Company.

CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
Quarter Ended Fiscal Year Ended
September 28,
2013
(13 weeks)
September 29,
2012
(14 weeks)
September 28,
2013
(52 weeks)
September 29,
2012
(53 weeks)
Unaudited Unaudited Unaudited
Net Sales $237,913 $242,221 $867,683 $830,796
Cost of goods sold 162,219 164,936 604,381 580,611
Gross Profit 75,694 77,285 263,302 250,185
Operating expenses
Marketing 20,577 21,363 74,076 76,318
Distribution 17,162 17,785 65,025 62,250
Administrative 7,326 7,034 27,448 26,192
Other general (income) expense (171) 763 (651) 458
44,894 46,945 165,898 165,218
Operating Income 30,800 30,340 97,404 84,967
Other income (expenses)
Investment income 916 260 3,492 1,392
Interest expense & other (24) (41) (106) (73)
Earnings before income taxes 31,692 30,559 100,790 86,286
Income taxes 11,369 11,021 36,409 32,168
NET EARNINGS $20,323 $19,538 $64,381 $54,118
Earnings per diluted share $1.08 $1.03 $3.41 $2.86
Weighted average number of diluted shares 18,844 18,919 18,878 18,917
Earnings per basic share $1.09 $1.04 $3.43 $2.87
Weighted average number of basic shares 18,728 18,867 18,785 18,854
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 28,
2013
September 29,
2012
Assets Unaudited
Current assets
Cash and cash equivalents $ 97,345 $ 154,198
Marketable securities held to maturity 256 1,214
Accounts receivable, net 87,545 76,414
Inventories, net 71,785 69,761
Prepaid expenses and other 3,284 2,220
Deferred income taxes 4,502 4,261
Total current assets 264,717 308,068
Property, plant and equipment, at cost 510,442 483,873
Less accumulated depreciation and amortization 363,278 342,329
147,164 141,544
Other assets
Goodwill 76,899 76,899
Other intangible assets, net 44,012 48,464
Marketable securities held to maturity 2,000 24,998
Marketable securities available for sale 107,664 --
Other 3,205 3,071
233,780 153,432
$ 645,661 $ 603,044
Liability and Stockholder's Equity
Current Liabilities
Current obligations under capital leases $ 211 $ 340
Accounts payable 50,906 52,755
Accrued insurance liability 9,954 7,824
Accrued income taxes 1,740 962
Accrued liabilities 3,769 4,027
Accrued compensation expense 13,671 13,151
Dividends payable 2,988 2,446
Total current liabilities 83,239 81,505
Long-term obligations under capital leases 136 347
Deferred income taxes 45,183 44,874
Other long-term liabilities 538 831
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 18,677,000 and 18,780,000 respectively 34,516 43,011
Accumulated other comprehensive loss (5,930) (3,132)
Retained Earnings 487,979 435,608
516,565 475,487
$ 645,661 $ 603,044
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Fiscal Year Ended
September 28,
2013
(52 weeks)
September 29,
2012
(53 weeks)
September 24,
2011
(52 weeks)
Unaudited
Operating activities:
Net earnings $64,381 $54,118 $55,063
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of fixed assets 28,801 26,175 25,046
Amortization of intangibles and deferred costs 4,751 4,762 5,188
Losses (gains) from disposals and impairment of property & equipment 126 (146) 52
Share-based compensation 1,871 1,246 918
Gain on bargain purchase of a business -- -- (6,580)
Deferred income taxes 74 3,108 6,108
Changes in assets and liabilities, net of effects from purchase of companies:
Increase in accounts receivable (11,148) (605) (5,231)
Increase in inventories (1,819) (6,463) (6,262)
(Increase) decrease in prepaid expenses and other (1,067) 1,982 1,870
Increase in accounts payable and accrued liabilities 578 5,248 4,284
Net cash provided by operating activities 86,548 89,425 80,456
Investing activities:
Payments for purchases of companies, net of cash acquired -- (7,900) (8,806)
Purchases of property, plant and equipment (35,821) (42,800) (29,124)
Purchases of marketable securities (111,241) (68,450) (63,293)
Proceeds from redemption and sales of marketable securities 25,307 109,744 37,568
Proceeds from disposal of property and equipment 1,199 1,038 394
Other (281) (950) (644)
Net cash used in investing activities (120,837) (9,318) (63,905)
Financing activities:
Payments to repurchase common stock (14,500) (8,167) --
Proceeds from issuance of common stock 3,948 4,228 5,377
Payments on capitalized lease obligations (340) (312) (244)
Payment of cash dividend (11,468) (9,549) (8,540)
Net cash used in financing activities (22,360) (13,800) (3,407)
Effect of exchange rates on cash and cash equivalents (204) 412 (330)
Net (decrease) increase in cash and cash equivalents (56,853) 66,719 12,814
Cash and cash equivalents at beginning of year 154,198 87,479 74,665
Cash and cash equivalents at end of year $97,345 $154,198 $87,479
Fiscal year ended
September 28,
2013
September 29,
2012
September 24,
2011
(in thousands)
Sales to External Customers:
Food Service
Soft pretzels $ 145,026 $ 118,014 $ 103,943
Frozen juices and ices 48,831 53,813 49,740
Churros 56,099 45,974 41,583
Handhelds 26,488 27,818 8,865
Bakery 274,783 266,192 241,288
Other 9,532 9,451 18,143
$ 560,759 $ 521,262 $ 463,562
Retail Supermarket
Soft pretzels $ 34,597 $ 33,842 $ 32,044
Frozen juices and ices 48,077 53,673 51,940
Handhelds 22,528 24,358 9,424
Coupon redemption (3,681) (3,222) (3,857)
Other 818 1,217 1,548
$ 102,339 $ 109,868 $ 91,099
Frozen Beverages
Beverages $ 132,274 $ 135,436 $ 133,372
Repair and maintenance service 52,813 49,115 42,608
Machines sales 17,376 13,136 11,362
Other 2,122 1,979 2,068
$ 204,585 $ 199,666 $ 189,410
Consolidated Sales $ 867,683 $ 830,796 $ 744,071
Depreciation and Amortization:
Food Service $ 18,999 $ 17,287 $ 16,986
Retail Supermarket 31 23 8
Frozen Beverages 14,522 13,627 13,240
$ 33,552 $ 30,937 $ 30,234
Operating Income:
Food Service $ 65,907 $ 49,770 $ 46,171
Retail Supermarket 8,594 13,316 11,830
Frozen Beverages 22,903 21,881 18,582
$ 97,404 $ 84,967 $ 76,583
Capital Expenditures:
Food Service $ 19,097 $ 28,504 $ 14,905
Retail Supermarket -- -- --
Frozen Beverages 16,724 14,296 14,219
$ 35,821 $ 42,800 $ 29,124
Assets:
Food Service $ 486,015 $ 453,509 $ 405,927
Retail Supermarket 6,067 6,098 3,579
Frozen Beverages 153,579 143,437 141,310
$ 645,661 $ 603,044 $ 550,816

RESULTS OF OPERATIONS

Fiscal 2013 (52 weeks) Compared to Fiscal 2012 (53 weeks)

Net sales increased $36,887,000, or 4%, to $867,683,000 in fiscal 2013 from $830,796,000 in fiscal 2012. Excluding sales from the extra week in 2012, sales increased approximately 6 1/2% from 2012 to 2013.

Excluding sales from the acquisition of Kim & Scott's Gourmet Pretzels in June 2012 in the twelve months post acquisition and the extra week in 2012, sales increased approximately 6% for the year.

FOOD SERVICE

Sales to food service customers increased $39,497,000 or 8%, to $560,759,000 in fiscal 2013. Excluding sales from the extra week in 2012, sales increased approximately 10% from 2012 to 2013. Excluding Kim & Scott's sales in the twelve months post acquisition and the extra week in 2012, sales increased approximately 9% for the year. Soft pretzel sales to the food service market increased 23% to $145,026,000 for the year aided by increased sales to restaurant chains, warehouse club stores and throughout our customer base. Increased sales to two customers accounted for approximately 1/3 of the pretzel sales increase. Excluding Kim & Scott's sales, food service soft pretzel sales increased 20% for the year. Frozen juice bar and ices sales decreased $4,982,000 or 9%, to $48,831,000 for the year primarily as the result of lower sales to warehouse club stores due we believe to weather and school food service accounts due to changes in USDA school food programs. We believe the impact of the changes in the USDA school food programs on our frozen juice and ices sales has bottomed out. Churro sales to food service customers increased 22% to $56,099,000 in 2013 with sales to one restaurant chain accounting for all of the sales increase. Sales of bakery products increased $8,591,000, or 3%, for the year as sales increases and decreases were spread throughout our customer base. Handheld sales to food service customers were down 5% to $26,488,000 in 2013 as two customers accounted for all of the decrease in sales. Sales of new products in the first twelve months since their introduction were approximately $11.2 million for the year. Price increases accounted for approximately $11.6 million of sales for the year and net volume increases, including new product sales as defined above and sales resulting from the acquisition of Kim & Scott's, accounted for approximately $27.9 million of sales for the year. Operating income in our Food Service segment increased from $49,770,000 in 2012 to $65,907,000 in 2013. Operating income benefited from increased sales volume, price increases and lower ingredient and packaging costs of approximately $2 million. Operating income was impacted by a product write down of $500,000 and by a $2.1 million increase in liability insurance expense from last year. The increase in insurance expense is due to an increase in claims and estimates for claims incurred but not yet paid.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets decreased $7,529,000 or 7% to $102,339,000 in fiscal year 2013. Excluding sales from the extra week in 2012, sales decreased approximately 5% from 2012 to 2013. Excluding Kim & Scott's sales in the twelve months post acquisition and the extra week in 2012, sales decreased approximately 5% for the year. Soft pretzel sales to retail supermarkets were $34,597,000 compared to $33,842,000 in 2012 on a unit volume increase of 2%. Sales of frozen juices and ices decreased $5,596,000 or 10% to $48,077,000 on a volume decrease of about 9%. Frozen juices and ices sales were impacted by cold weather throughout the second half of the year. Coupon redemption costs, a reduction of sales, increased 14% or about $459,000 for the year. Handheld sales to retail supermarket customers decreased 8% to $22,528,000 in 2013 as two customers accounted for all of the decrease in sales. Sales of products in the first twelve months since their introduction were approximately $1.4 million in fiscal year 2013. Price increases accounted for approximately $2.9 million of sales for the year and net volume decreases, including new product sales as defined above and Kim & Scott's sales and net of increased coupon costs, reduced sales by approximately $10.4 million for the year. Operating income in our Retail Supermarkets segment decreased from $13,316,000 in 2012 to $8,594,000 in 2013 with 84% of the decrease, or $3,982,000, coming in the fourth quarter. The fourth quarter was impacted by sharply lower sales of frozen juices and ices, which were down 26%, and by increased trade spending needed to generate those sales. We believe that the impact of cold weather on frozen novelties' sales was widespread among manufacturers.

FROZEN BEVERAGES

Frozen beverage and related product sales increased 2% to $204,585,000 in fiscal 2013. Excluding sales from the extra week in 2012, sales increased approximately 4% from 2012 to 2013. Beverage sales alone decreased 2% to $132,274,000 for the year with increases and decreases throughout our customer base. Gallon sales were down 4% in our base ICEE business. Service revenue increased 8% to $52,813,000 for the year with increases and decreases spread across our customer base. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, increased from $13,136,000 in 2012 to $17,376,000 in 2013. The estimated number of Company owned frozen beverage dispensers was 44,700 and 42,500 at September 28, 2013 and September 29, 2012, respectively. Operating income in our Frozen Beverage segment increased from $21,881,000 in 2012 to $22,903,000 in 2013 as a result of increased service revenue and machine sales as discussed above and controlled expenses.

CONSOLIDATED

Other than as commented upon above by segment, there are no material specific reasons for the reported sales increases or decreases. Sales levels can be impacted by the appeal of our products to our customers and consumers and their changing tastes, competitive and pricing pressures, sales execution, marketing programs, seasonal weather, customer stability and general economic conditions.

Gross profit as a percentage of sales increased to 30.35% in 2013 from 30.11% in 2012 primarily due to higher volume in our food service segment, and the margin also benefitted by lower ingredient and packaging costs of about $2.3 million. Gross profit was impacted by about $2.1 million of increased liability insurance expense compared to last year and a product write down of $500,000 related to a new product that was not successful. Ingredient and packaging costs can be extremely volatile and may be significantly different from what we are presently expecting and therefore we cannot project the impact of ingredient and packaging costs on our business going forward.

Total operating expenses increased $680,000 to $165,898,000 in fiscal 2013 but as a percentage of sales decreased .77 percentage points to 19% of sales. Marketing expenses decreased .65 percentage points and remained at 9% of sales as a result of higher sales and lower expenses of which about $800,000 resulted from a management and sales meeting held in 2012 which did not reoccur in 2013. Distribution expenses as a percent of sales were 7.49% in both years. Administrative expenses were 3.16% and 3.15% of sales in 2013 and 2012, respectively. Other general income of $651,000 this year compared to other general expense of $458,000 in 2012. Included in other general income in 2013 is $805,000 of settlement income related to prior acquisitions. Included in other general expense in 2012 is $404,000 of acquisition costs and costs of relocating Kim & Scott's operations.

Operating income increased $12,437,000 or 15% to $97,404,000 in fiscal year 2013 as a result of the aforementioned items.

Investment income increased by $2,100,000 to $3,492,000 due to increased investments in marketable securities. We invested $80 million in the first quarter and $30 million in the third quarter in mutual funds that seek current income with an emphasis on maintaining low volatility and overall moderate duration. We estimate the annual yield from these funds to approximate 3.5 – 3.75%. US Government Agency debt of $23.0 million held at September 29, 2012 which was yielding 2.0% was called in the year ending September 28, 2013.

The effective income tax rate decreased to 36% from 37% last year because actual liability for last year's taxes was less than estimated and the estimate for this year's taxes has been lowered accordingly.

Net earnings increased $10,263,000 or 19%, in fiscal 2013 to $64,381,000, or $3.41 per diluted share as a result of the aforementioned items.

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.

CONTACT: Dennis G. Moore Senior Vice President Chief Financial Officer (856) 532-6603

Source:J & J Snack Foods Corp.