J & J Snack Foods Corp. Reports Operating Results (10-Q)
J & J Snack Foods Corp. manufactures nutritional snack foods which it markets nationally to the food service and retail supermarket industries. Its principal snack food products are soft pretzels marketed principally under the brand name SUPERPRETZEL. The Company also markets frozen beverages to the food service industry under the brand names ICEE and ARCTIC BLAST in the United States Mexico and Canada. Other snack products include Italian ice and frozen juice treats and desserts churros (a Hispanic pastry) funnel cake popcorn and bakery products. J & J Snack Foods Corp. has a market cap of $633.25 million; its shares were traded at around $33.04 with a P/E ratio of 22.4 and P/S ratio of 1.01. The dividend yield of J & J Snack Foods Corp. stocks is 1.13%. J & J Snack Foods Corp. had an annual average earning growth of 10.3% over the past 10 years. GuruFocus rated J & J Snack Foods Corp. the business predictability rank of 4.5-star. Highlight of Business Operations:In the three months ended December 27, 2008, we purchased and retired 450,597 shares of our common stock at a cost of $12,510,000 under a million share buyback authorization approved by the Company s Board of Directors in February 2008 leaving 414,279 as the number of shares that may yet be purchased under the share buyback authorization. We purchased and retired 135,124 shares at a cost of $3,539,000 in our fiscal year ended September 27, 2008. Of the shares purchased and retired this quarter, 400,000 shares were purchased at the purchase price of $27.90 per share from Gerald B. Shreiber, Chairman of the Board, Chief Executive Officer and Director of the Company.
In the three months ended December 27, 2008 and December 29, 2007, fluctuations in the valuation of the Mexican and Canadian currencies and the resulting translation of the net assets of our Mexican and Canadian subsidiaries caused an increase of $1,437,000 in accumulated other comprehensive loss in the 2009 first quarter and a decrease of $51,000 in the 2008 first quarter.
Sales to food service customers increased $8,126,000 or 9% in the first quarter to $97,535,000. Soft pretzel sales to the food service market increased $541,000 or 2% from last year to $24,235,000 in this year s quarter on a unit sales decline of approximately 8%. Italian ice and frozen juice treat and dessert sales increased 1% to $8,266,000 in the three months. Churro sales to food service customers increased 33% to $7,356,000 in the quarter with sales to one customer accounting for approximately 2/3 of the increase. Sales of bakery products, excluding Hom/Ade and DADDY RAY S, increased $3,527,000, or 10% for the quarter driven by increased sales to private label customers. Biscuit sales increased 7% for the quarter to $9,692,000 this year and sales of fruit and fig bars increased 25% to $6,858,000 in this year s quarter. The changes in sales throughout the food service segment were from a combination of volume changes and price increases.
Sales of products to retail supermarkets decreased $611,000 to $10,033,000 or 6% in the first quarter. Soft pretzel sales were down 4% to $6,843,000 on a unit volume decline of 19% and sales of frozen juices and ices decreased 9% to $3,582,000 on a unit volume decline of 9%. The case volume declines were partially offset by reduced trade spending and increased selling prices.
Frozen beverage and related product sales increased $2,883,000 or 10% to $33,141,000 in the first quarter. Beverage sales alone were up 4% to $20,075,000 for the quarter. The beverage dollar sales increase resulted from a change in program structure for one customer which resulted in both higher sales and higher cost of sales and operating expenses. Without the change in program structure, beverage sales would have been down 3%. Gallon sales were down 5% in our base ICEE business. Service revenue increased 30% to $10,550,000 in this year s first quarter with 70% of the increase to one customer as we continue to expand our customer base.
Investment income decreased by $353,000 to $461,000 due to a general decline in the level of interest rates and the movement of our investment securities to what we consider to be safer securities. We expect this trend to continue for the foreseeable future.
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