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J & J Snack Foods Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 22, 2010 08:38PM
J & J Snack Foods Corp. (JJSF) filed Quarterly Report for the period ended 2010-06-26. J & J Snack Foods Corp. has a market cap of $789.6 million; its shares were traded at around $42.88 with a P/E ratio of 17.4 and P/S ratio of 1.2. The dividend yield of J & J Snack Foods Corp. stocks is 1%. J & J Snack Foods Corp. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated J & J Snack Foods Corp. the business predictability rank of 4.5-star.JJSF is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Sales to food service customers increased $3,106,000 or 3% in the third quarter to $112,469,000 and increased $12,046,000 or 4% for the nine months. Excluding sales from the acquisition of California Churros, food service sales would have increased 2% for the quarter and 4% for the nine months. Sales of funnel cake fries to Burger King accounted for over 97% of the food service sales increase in the quarter and 86% in the nine months. Soft pretzel sales to the food service market increased 1% to $25,349,000 in the third quarter and increased 1% to $75,117,000 in the nine months. Italian ice and frozen juice treat and dessert sales decreased 3% to $15,949,000 in the three months and 7% to $33,320,000 in the nine months primarily as the result of lower sales to one contract packing customer in the quarter, and to school food service accounts and the contract packing customer in the nine months. We expect these sales to be impacted for the balance of our fiscal year as our sales to school food service accounts continue to be impacted by nutritional concerns. Churro sales to food service customers increased 7% to $8,035,000 in the third quarter and were down 1% to $21,955,000 in the nine months, with all of the decrease in the nine month period coming from sales to one customer who has lower sales due to normal menu fatigue. Without sales from California Churros, churro sales for the quarter would have been essentially unchanged and down 4% for the nine months.
Sales of bakery products, excluding biscuit and dumpling sales and fruit and fig bar sales, increased $733,000 or 2% in the third quarter to $41,857,000 and increased $2,935,000 or 2% for the nine months due primarily to increased sales to private label customers. Biscuit and dumpling sales decreased 7% to $6,667,000 in the quarter and were up 2% to $25,365,000 for the nine months.
Sales of fig and fruit bars decreased 1% in the third quarter to $8,565,000 and decreased 1% in the nine months to $24,571,000 due primarily to lower sales to one customer who discontinued a particular product. Funnel cake sales increased by $2,789,000 to $5,941,000 in the quarter and by $10,797,000 to $16,955,000 in the nine months primarily due to the sales to Burger King.
Operating income in our Food Service segment increased from $14,444,000 to $14,642,000 in the quarter and from $32,571,000 to $37,984,000 for the nine months primarily as a result of increased volume as discussed above for the quarter and nine months and lower ingredients and packaging costs of about $3 million for the nine months. In the quarter, ingredients and packaging costs were about $1 million higher than a year ago.
Sales of products to retail supermarkets increased $3,003,000 or 14% to $23,942,000 in the third quarter and were up 16% to $51,670,000 in the first nine months. Soft pretzel sales for the third quarter were down 5% to $7,176,000 and were up 2% to $23,079,000 for the nine months on a unit volume decrease of 7% for the quarter and an increase of 1% for the nine months. Sales of frozen juices and ices increased $3,009,000 or 21% to $17,347,000 in the third quarter and were up 27% to $30,153,000 in the nine months on a unit volume increase of 16% in the quarter and 22% for the nine months. Reduced trade spending of about $850,000 in the quarter and $1,150,000 in the nine months for the introduction of new frozen novelty items and a shift in product mix increased sales dollars in relation to the overall unit volume increases. Coupon redemption costs, a reduction of sales, decreased 25% or about $255,000 for the quarter and were essentially unchanged in the nine months. Sales of products in the first twelve months since their introduction were approximately $1.2 million in the June quarter and $3.7 million in the nine months. Net volume increases, including new product sales as defined above and net of increased coupon costs and reduced trade spending for new product introductions, accounted for virtually all of the sales increases in the June quarter and in the nine months. Operating income in our Retail Supermarkets segment increased from $2,330,000 to $3,809,000 in the quarter and from $4,419,000 to $7,467,000 in the nine months primarily as a result of volume increases and reduced trade spending for the introduction of new frozen novelty items.
Frozen beverage and related product sales increased 8% to $53,148,000 in the third quarter and increased $7,025,000 or 6% to $124,955,000 in the nine month period. Excluding sales from the acquisition of Parrot Ice, sales would have increased 7% for the quarter and 5% for the nine months. Beverage sales alone increased 12% to $38,812,000 in the third quarter and were up 12% to $86,435,000 in the nine months with increased sales to three customers accounting for approximately 47% of the increase in the quarter and 65% in the nine months. Gallon sales were up 10% for the three months and up 8% for the nine months in our base ICEE business with sales to three customers accounting for all of the increase in the nine months and 80% of the increase for the quarter. Service revenue decreased 6% to $10,490,000 in the third quarter and 5% to $30,058,000 for the nine months. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, were $466,000 higher this year than last in the three month period and for the nine months, sales of machines were lower by $1,169,000. The estimated number of company owned frozen beverage dispensers was 38,100 and 35,700 at June 26, 2010 and September 26, 2009, respectively. Operating income in our Frozen Beverage segment was essentially unchanged in the quarter and for the nine months, operating income increased $833,000. Higher gasoline costs of approximately $281,000 and $826,000 impacted the June quarter and nine months, respectively. We expect higher gasoline costs to impact operating income for at least the balance of our fiscal year.
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