Yahoo Finance J&J Snack Foods Corp (JJSF) Q2 2024 Earnings Call Transcript Highlights: Stellar Growth and ...
Net Sales: $360 million, record for fiscal Q2, driven by growth across foodservice, retail, and frozen beverage segments.
Gross Margin: Exceeded 30%, a 330 basis points improvement over last year.
Net Earnings: Increased by more than 90%.
Adjusted Operating Income: Grew 81%.
Adjusted EBITDA: Increased 43.1%.
Foodservice Sales: $230 million, up 5.4%; churros sales up 23.7%.
Retail Sales: $52.9 million, up 14.1%; handhelds grew 75.5%.
Frozen Beverages Sales: $76.9 million, up 5%.
Operating Income: $17.9 million, a 75.6% increase from the previous year.
Net Earnings: $13.3 million, up 94%.
Earnings Per Share: Reported at $0.69, adjusted EPS at $0.84.
Cash and Debt: $43.6 million in cash and $17 million in debt.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Record second-quarter net sales of $360 million, reflecting growth across multiple segments.
Gross margins exceeded 30%, a 330 basis points improvement over the previous year.
Adjusted operating income and adjusted EBITDA growth of 81% and 43.1% respectively.
Strong sales performance in the churros category, with a 23.7% increase to nearly $31 million.
Successful expansion and innovation in the retail segment, including a 75.5% growth in handhelds.
Negative Points
Softness in soft pretzels and handhelds in the foodservice segment.
Relatively flat machine sales in the frozen beverages segment, down 0.4%.
Ongoing challenging consumer environment despite strong quarterly performance.
Increased total operating expenses by $10.1 million or 12.7%, representing 25.1% of sales.
Continued pressure from inflation, although some raw materials are experiencing deflation.
Q & A Highlights
Q: Can you help us quantify the savings that may be achieved with the third distribution center in Arizona that's now up and running? A: Daniel Fachner, President and CEO of J&J Snack Foods, mentioned that the savings from the new distribution centers are expected soon, potentially within six months to a year. Ken Plunk, CFO, added that the integration of all three distribution centers could save around $10 million annually, with significant improvements expected in the next quarters.
Q: What attracted you to acquiring the Thinsters brand? A: Daniel Fachner explained that the acquisition was appealing because J&J Snack Foods already manufactured the product and appreciated its quality and brand. Despite being smaller than typical acquisitions they consider, Thinsters fits well due to its clean label and potential for growth in both retail and foodservice.
Q: How should we think about the gross margin performance in the second half of the year, considering the historical seasonal pattern? A: Ken Plunk discussed that the exceptional Q2 gross margin sets a strong foundation for the year. He anticipates margins similar to the previous year for Q3 and Q4, potentially reaching up to 31% for the year, driven by operational efficiencies and effective pricing strategies.
Q: With the new production lines and success in cross-selling, what is the long-term gross margin target for J&J Snack Foods? A: Daniel Fachner indicated a target to reach mid-30s gross margin percentage over the next four to five years, supported by operational efficiencies, effective sales strategies, and financial management.
Q: Can you provide insights into the inventory build in the quarter and its impact on the top-line growth? A: Ken Plunk acknowledged a beneficial inventory build in Q2, particularly in frozen novelties, as customers prepared for the spring and summer seasons. This, along with improved supply chain metrics, contributed positively to the sales figures.
Q: How is the consumer traffic in foodservice, and has there been any change from last quarter? A: Daniel Fachner noted that while Q1 saw some challenges, Q2 was strong, and they did not observe significant downturns. He emphasized the company's focus on offering indulgent, experiential products that may be less affected by broader consumer cutbacks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
