J&J Snack Foods Corp. F2Q10 (Qtr End 03/27/10) Earnings Call Transcript

J&J Snack Foods Corp. F2Q10 (Qtr End 03/27/10) Earnings Call Transcript
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J&J Snack Foods Corp. (JJSF)

F2Q10 (Qtr End 03/27/10) Earnings Call Transcript

April 23, 2010 10:00 am ET

Executives

Gerry Shreiber – Chairman, President and CEO

Vince Melchiorre – EVP, Food Group

Analysts

Akshay Jagdale – KeyBanc Capital Markets

Mitch Pinheiro – Janney Montgomery Scott

Brian Rafn – Morgan Dempsey Capital Management

Robert Costello – Analyst

Presentation

Operator

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Welcome to the J&J Snack Foods second quarter earnings conference call. My name is Sandra, and I’ll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session. Please note that this conference is being recorded.

And I’ll now turn the call over to Mr. Gerry Shreiber. Mr. Schreiber, you may begin.

Gerry Shreiber

Good morning. And I want to thank everyone for attending J&J Snack Foods' second quarter conference call today. I’m Gerry Shreiber. With me today is Dennis Moore, our Senior Vice President and Chief Financial Officer; Vince Melchiorre, our Executive Vice President of Sales and Marketing; and Teddy Shepherd [ph] in charge of Strategic Planning.

Let me begin with the obligatory statements. 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. You’re cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date here. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Results of operations, net sales increased 5% for the quarter and for the six months. This represents 154 quarters of consecutive sales increases. Approximately $4.3 million or 54% for the three months and $7.4 million or 47% for the six months of the increased sales were sales of funnel cake fries to one customer, Burger King, which is carrying the product in virtually all of its domestic locations.

For the quarter our net earnings increased by 24% to $9 million or $0.48 a share, from $7.2 million or $0.39 a share a year ago. For the six months our net earnings increased by 39% to $0.86 a share from $0.62 a share the year ago per. Our EBITDA for the past 12 months was $104.4 million.

Food service, sales to food service customers increased 5% for the quarter and 5% for the six months. Without sales to Burger King, sales increased less than 1% in both periods. Soft pretzel sales were up 2% in the quarter and 1% in the six months. Italian Ice and frozen juice bar and dessert sales decreased 12% for the quarter and 10% for the six months.

Churros sales were down 3% in the quarter and 6% in the six months, up against strong 16% and 24% increases a year ago, primarily due to lower sales to one customer. Bakery sales, excluding biscuit and dumpling sales and fruit and fig bar sales were up 3% in the quarter and 3% for the six months.

Biscuit and dumpling sales were up 13% in the quarter and up 6% for the six months due to increased sales of products introduced over a year ago, and fruit and fig bar sales were down 3% and 2% respectably, caused by lower sales to one customer who discontinued an SKU.

Retail supermarket, sales of products to retail supermarkets were up 12% for the quarter and 18% for the six months. Soft pretzel sales were down less than 1% on a case volume increase of 2% for the quarter and up 5% on a case volume increase of 5% for the six months. Sales of our frozen juice bars and Italian Ices were up 27% on a case volume increase of 21% in the quarter and up 37% on a case volume increase of 32% for the six months.

ICEE and frozen beverages, including ARCTIC BLAST and SLUSH PUPPIE and related product sales were up 4% in the quarter and for the six months. Beverage sales alone were up 14%. That's 14% in the quarter and 13% in the six months, reversing a several year decline in actual beverage sales.

Gallon sales were up 9% in our based ICEE business in the quarter and 8% for the six months, driven by increased sales to three customers, two of which are essentially new. Service revenue for others was down 2% in the quarter and 4% in the six months as we hit a couple of speed bumps in this growing part of our business. Sales of frozen carbonated beverage machines that's the drink machines were down $700,000 in the quarter and for the six months.

Consolidated, gross profit as a percentage of sales in the quarter increased to 31.7% from 30.4% last year and to 31.3% in the six months from 29.6% a year ago. We benefited by about $1 million of lower ingredient and packaging costs in the quarter and by about $4.5 million in the six months. We expect that the benefit of lower ingredient and packaging costs, compared to the prior year has come to an end. However, we cannot project the impact going forward.

Total operating expense as a percentage of sales was 0.2 percentage points lower in the quarter and 0.5 percentage points lower in the six point months, primarily due to higher sales volume and controlled expenses.

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