J & J Snack Foods Corp. (NASDAQ:JJSF) today reported record
sales and earnings for its 2005 fiscal year. Sales for the fiscal
year ended September 24, 2005 increased 10% to $457.1 million from
$416.6 million in the fiscal year ended September 25, 2004. Net
earnings increased 15% to $26.0 million in fiscal 2005 from $22.7
million in fiscal 2004. On a per diluted share basis, earnings
increased 13% to $2.80 from $2.48. Operating income increased 14%
to $40.2 million this year from $35.2 million in the year ago
period. For the fourth quarter ended September 24, 2005, sales
increased 6% to $129.8 million from $122.5 million in the fourth
quarter ended September 25, 2004. Net earnings increased 12% to
$9.9 million in the current year quarter from $8.8 million.
Earnings per diluted share were $1.06 this year compared to $.96
last year. Operating income increased 12% to $15.4 million from
$13.7 million in the year ago period. Gerald B. Shreiber, J &
J's President and Chief Executive Officer, commented, "In achieving
our record year we benefited from solid sales in our 4th quarter
and continued strong performance in our food service group. We also
benefited from warm weather aiding our ICEE and frozen dessert
product line sales. Our Company once again delivered consistent
growth results despite the challenges impacting our product and
distribution costs. Our management team and staff continue to
perform in an exemplary fashion." J & J Snack Foods Corp.'s
principal products include SUPERPRETZEL, PRETZEL FILLERS and other
soft pretzels, ICEE and ARCTIC BLAST frozen beverages, LUIGI'S,
MAMA TISH'S, SHAPE UPS, MINUTE MAID* and BARQ'S** and CHILL frozen
juice bars and ices, TIO PEPE'S churros, THE FUNNEL CAKE FACTORY
funnel cakes, and MRS. GOODCOOKIE, CAMDEN CREEK, COUNTRY HOME and
READI-BAKE cookies. J & J has manufacturing facilities in
Pennsauken, Bridgeport and Bellmawr, New Jersey; Scranton, Hatfield
and Chambersburg, Pennsylvania; Carrollton, Texas; Atlanta, Georgia
and Vernon, (Los Angeles) California. * MINUTE MAID is a registered
trademark of The Coca-Cola Company. ** BARQ'S is a registered
trademark of Barq's Inc. -0- *T Consolidated Statements of
Operations -------------------------------------- Three Months
Ended Fiscal Year Ended ------------------ ------------------ Sept.
24, Sept. 25, Sept. 24, Sept. 25, 2005 2004 2005 2004 ---- ----
---- ---- (in thousands) Net sales $129,789 $122,477 $457,112
$416,588 Cost of goods sold 83,209 79,902 302,065 276,379 --------
-------- -------- -------- Gross profit 46,580 42,575 155,047
140,209 Operating expenses 31,215 28,856 114,798 105,017 --------
-------- -------- -------- Operating income 15,365 13,719 40,249
35,192 Other income & expense, net 513 188 1,553 453 --------
-------- -------- -------- Earnings before income taxes 15,878
13,907 41,802 35,645 Income taxes 5,986 5,069 15,759 12,935
-------- -------- -------- -------- Net earnings $ 9,892 $ 8,838 $
26,043 $ 22,710 ======== ======== ======== ======== Earnings per
diluted share $1.06 $.96 $2.80 $2.48 Earnings per basic share $1.08
$.98 $2.86 $2.55 Weighted average number of diluted shares 9,349
9,206 9,300 9,143 Weighted average number of basic shares 9,154
9,015 9,097 8,909 Consolidated Balance Sheets
--------------------------- September 24, September 25, 2005 2004
---- ---- (in thousands) Cash & cash equivalents $ 15,795 $
19,600 Marketable securities available for sale 54,225 36,500 Other
current assets 84,213 82,312 Property, plant & equipment, net
89,045 89,474 Goodwill 53,622 46,477 Other intangibles, net 7,043
1,804 Other assets 1,981 1,257 -------- -------- Total $305,924
$277,424 ======== ======== Current liabilities $ 52,902 $ 47,646
Deferred income taxes 17,987 19,153 Other long term obligations 273
529 Stockholders' equity 234,762 210,096 -------- -------- Total
$305,924 $277,424 ======== ======== Consolidated Statements of Cash
Flows ------------------------------------- Fiscal Year Ended
----------------- September 24, September 25, 2005 2004 ---- ----
(in thousands) Operating activities: Net earnings $26,043 $22,710
Adjustments to reconcile net earnings to net cash provided by
operating activities: Depreciation and amortization of fixed assets
23,215 23,170 Amortization of intangibles and deferred costs 1,047
898 Losses (gains) from disposals and write-downs of property &
equipment 150 (33) (Decrease) increase in deferred income taxes
(174) 2,394 Changes in assets and liabilities, net of effects from
purchase of companies: Decrease (increase) in accounts receivable
1,048 (6,887) Increase in inventories (3,465) (2,423) Decrease in
prepaid expenses and other 139 83 Increase in accounts payable and
accrued liabilities 4,641 7,232 --------- --------- Net cash
provided by operating activities 52,644 47,144 --------- ---------
Investing activities: Purchases of property, plant and equipment
(21,632) (21,644) Payments for purchase of companies (16,088)
(12,668) Proceeds from investments held to maturity - 275 Purchase
of available for sale securities (31,725) (45,500) Proceeds from
sales of available for sale securities 14,000 9,000 Proceeds from
disposal of property & equipment 819 1,628 Other (807) (35)
--------- --------- Net cash used in investing activities (55,433)
(68,944) --------- --------- Financing activities: Proceeds from
issuance of common stock 2,241 3,810 Payments of cash dividend
(3,400) - --------- --------- Net cash (used in) provided by
financing activities (1,159) 3,810 Effect of exchange rate on cash
and cash equivalents 143 (104) --------- --------- Net decrease in
cash & cash equivalents (3,805) (18,094) Cash and cash
equivalents at beginning of year 19,600 37,694 --------- ---------
Cash and cash equivalents at end of year $15,795 $19,600 =========
========= Segment Reporting ----------------- Fiscal Year End
--------------- September 24, September 25, 2005 2004 ---- ---- (in
thousands) Sales to external customers: Food Service $280,123
$250,523 Retail Supermarket 42,347 38,843 The Restaurant Group
5,409 7,623 Frozen Beverages 129,233 119,599 -------- --------
$457,112 $416,588 ======== ======== Depreciation and Amortization:
Food Service $ 13,715 $ 13,504 Retail Supermarket - - The
Restaurant Group 209 422 Frozen Beverages 10,338 10,142 --------
-------- $ 24,262 $ 24,068 ======== ======== Operating Income
(Loss): Food Service $ 26,401 $ 21,266 Retail Supermarket 2,918
2,701 The Restaurant Group (314) (988) Frozen Beverages 11,244
12,213 -------- -------- $ 40,249 $ 35,192 ======== ========
Capital Expenditures: Food Service $ 9,832 $ 9,294 Retail
Supermarket - - The Restaurant Group 45 22 Frozen Beverages 11,755
12,328 -------- -------- $ 21,632 $ 21,644 ======== ========
Assets: Food Service $209,734 $183,740 Retail Supermarket - - The
Restaurant Group 1,010 1,461 Frozen Beverages 95,180 92,223
-------- -------- $305,924 $277,424 ======== ======== *T RESULTS OF
OPERATIONS Fiscal 2005 (52 weeks) Compared to Fiscal 2004 (52
weeks) Net sales increased $40,524,000 or 10% to $457,112,000 in
fiscal 2005 from $416,588,000 in fiscal 2004. Adjusting for sales
related to the acquisitions of Country Home Bakers in 2004 and
Snackworks, LLC in 2005, sales increased approximately 5%, or
$22,000,000. We have four reportable segments, as disclosed in the
notes to the consolidated financial statements: Food Service,
Retail Supermarkets, The Restaurant Group and Frozen Beverages. The
Chief Operating Decision Maker for Food Service, Retail
Supermarkets and The Restaurant Group and the Chief Operating
Decision Maker for Frozen Beverages monthly review and evaluate
operating income and sales in order to assess performance and
allocate resources to each individual segment. In addition, the
Chief Operating Decision Makers review and evaluate depreciation,
capital spending and assets of each segment on a quarterly basis to
monitor cash flow and asset needs of each segment. Food Service
Sales to food service customers increased $29,600,000 or 12% to
$280,123,000 in fiscal 2005. Excluding Country Home Bakers and
Snackworks acquisitions' related sales, sales increased
$11,230,000, or 4%. Soft pretzel sales to the food service market
increased $6,585,000, or 8%, to $87,308,000 for the 2005 year due
primarily to the acquisition of Snackworks, LLC. Excluding
Snackworks sales, pretzel sales increased $695,000, or less than
1%. Although there were increases and decreases in sales spread
among many of our customers, two customers by themselves had
increased sales of about $3,000,000. Sales of bakery products
increased $16,048,000, or 14%, for the year. Excluding sales
related to the acquisition of Country Home Bakers, sales of bakery
products increased $3,568,000 or 3%. The increased sales were
primarily to our private label and industrial business customers.
Churro sales increased 12% to $14,777,000 with three customers
accounting for more than one-half of the increased sales. Frozen
juice bar and ices sales increased $2,682,000 or 7% to $39,693,000
for the year with sales to school food service customers accounting
for virtually all of the increase. Sales of our funnel cake
products increased $2,996,000 due to sales to one customer. The
changes in sales throughout the food service segment were from a
combination of volume changes and price increases. Retail
Supermarkets Sales of products to retail supermarkets increased
$3,504,000 or 9% to $42,347,000 in fiscal 2005. Total soft pretzel
sales to retail supermarkets were $21,839,000, an increase of 19%
from fiscal 2004. Approximately one-half of the increase was due to
the expansion of PRETZELFILS to additional markets with the balance
coming primarily from increased sales of our flagship SUPERPRETZEL
brand in existing markets. Sales of frozen juice bars and ices
increased $1,166,000 or 5% to $23,588,000 in 2005 from $22,422,000
in 2004 due to an extremely strong fourth quarter during which
sales of LUIGI'S Real Italian Ice increased by approximately 50%.
Coupon costs, a reduction of sales, were up $876,000, or 29%, for
the year. The Restaurant Group Sales of our Restaurant Group, which
operates BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET retail stores
in the Mid-Atlantic region, declined by 29%, primarily due to
closings or licensings of 11 stores. At September 24, 2005, we had
19 stores open. Frozen Beverages Frozen beverage and related
product sales increased $9,634,000 or 8% to $129,233,000 in fiscal
2005. Beverage sales alone were up 2% for the year with sales
increases and decreases spread among our customer base. Service
revenue increased $6,130,000, or 34%, to $24,238,000 for the year
as we continue to emphasize growing this part of our business.
Increased service revenue to one customer accounted for over 40% of
the increase with no other customer accounting for more than 10% of
the increase. Machine sales increased $2,568,000 to $13,257,000 for
the year. Sales to two customers accounted for all of the machine
sales increase. 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 percent of
sales, although at 34% of sales for both 2005 and 2004, increased
.26 of a percentage point primarily because of price increases and
efficiencies related to higher volume and a significant improvement
in the gross profit of our restaurant group business. Total
operating expenses increased $9,781,000 to $114,798,000 in fiscal
2005 but as a percentage of sales were essentially the same in both
2005 and 2004. Marketing expenses were 13% of sales in both fiscals
2005 and 2004, although they dropped about 6/10 of one percent of
sales. The decrease in marketing expense as a percent of sales was
the result of controlled spending and higher sales throughout all
our business. Distribution expenses increased about 6/10 of one
percent of sales to 9% of sales from 8% of sales in 2004.
Distribution expenses increased as a percent of sales because of
higher fuel and outside carrier costs. Administrative expenses were
4% in both years even though we incurred approximately $400,000 of
external costs related to compliance with Sarbanes-Oxley. Other
general expense of $430,000 in 2005 was an increase of $401,000
from 2004 which increase resulted primarily from costs relating to
Hurricane Katrina. Operating income increased $5,057,000 or 14% to
$40,249,000 in fiscal 2005 as a result of the aforementioned items.
Operating income was impacted by approximately $700,000 of higher
insurance costs compared to a year ago due to increased claims
under our liability policies. Manufacturing plant utilities costs
were higher by about $1,000,000 for the year compared to last year
with about two-thirds of the increase coming in the second half of
the year. We expect that higher utilities costs will have a
significant impact on our 2006 operating results. Although
commodity costs did not increase as they have in recent years, our
expectations are increases will be significant in fiscal year 2006.
Investment income increased by $1,123,000 to $1,689,000 due to an
increase in the general level of interest rates and higher
investable balances of cash and marketable securities. Interest
expense and other increased $26,000 to $136,000 in 2005. The
effective income tax rate increased to 38% in fiscal year 2005 from
36% in 2004 due to estimated increases in state tax payments and an
increase in the rate applied to deferred tax liabilities. Net
earnings increased $3,333,000 or 15% in fiscal 2005 to $26,043,000
or $2.80 per fully 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. The
forward-looking statements contained herein are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those projected in the forward-looking statements.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis
only as of the date hereof. The Company undertakes no obligation to
publicly revise or update these forward-looking statements to
reflect events or circumstances that arise after the date hereof.
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