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Dec 25, 2021
J&J Snack Foods Q1 2022 Earnings Report
J&J Snack Foods' first quarter net sales increased and led to higher EPS.
Key Takeaways
J&J Snack Foods reported a strong first quarter with net sales increasing by 32% to $318.5 million and EPS of $0.58, driven by positive consumer trends and healthy demand for core products.
Net sales increased 32% year-over-year and 17% versus the same period in fiscal 2019.
Food Service segment grew 32%, Retail grew 9%, and Frozen Beverages grew 54%.
Gross margin was 25%, compared to 21% for the prior year.
The company is implementing price increases and focusing on cost reduction initiatives to improve gross margins.
J&J Snack Foods
J&J Snack Foods
Forward Guidance
The company expects gross margins to improve progressively over the second quarter of fiscal 2022 and into the back-half of the fiscal year through cost reduction and price increases.
Positive Outlook
- Specific actions to offset short-term cost challenges.
- Opportunities to reduce expenses across the business, including procurement, R&D, production and distribution.
- Four new production lines scheduled to be activated in fiscal 2022 that will leverage automation to improve efficiencies.
- Implementing additional price increases for products across nearly all categories.
- Strong balance sheet and liquidity position to continue making select return-focused strategic investments in sales, marketing and product innovation.
Challenges Ahead
- Industry continues to experience unprecedented inflationary pressures.
- Higher-than-expected cost increases across many facets of the business, from raw materials and ingredients, to transportation, packaging and labor.
- Expenses were negatively impacted by industry-wide freight and distribution cost increases.
- Distribution costs were 10.5% of sales in the quarter, an increase of 96 bps versus the prior year period.
- Handheld sales declined 54% to $1.3 million driven by proactive discontinuations of margin dilutive products.