J&J Snack Foods Corp. (JJSF) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals. While there are positive elements such as the new share repurchase authorization and improved gross margins, there are also challenges like declining net sales and increased expenses. The Q&A revealed management's lack of clarity on growth specifics, which might concern investors. Although Project Apollo shows promise, immediate financial results are mixed. Given the company's market cap, the stock is likely to remain stable, resulting in a neutral prediction.
Key Financial Performance
Adjusted EBITDA $27 million on sales of $343.8 million in the first quarter, representing a 7% increase compared to the prior year. The increase is attributed to the early benefits of Project Apollo transformation initiatives and operational excellence.
Gross Margin Improved 200 basis points to 27.9% versus the prior year, driven by Apollo savings from plant consolidation and improved product mix.
Net Sales Declined 5.2% to $343.8 million, primarily due to a $18 million decline in the bakery business as part of a focus on higher-margin opportunities. $13 million of this decline was related to SKU optimization efforts under Project Apollo.
Food Service Segment Net Sales Declined $19.7 million or 8.3% to $219.2 million, with $18 million of the decline attributed to lower-margin bakery business reflecting steps to improve product mix.
Retail Segment Net Sales Increased $1.2 million or 2.6% to $45.9 million, driven by a $1.8 million increase in handheld volume due to recovery from last year's capacity constraints caused by a facility fire.
Frozen Beverage Net Sales Materially flat at $78.7 million, with modest increases in beverage sales offset by slight declines in service and machine sales.
Operating Expenses Increased to $95.4 million, including $6.1 million in nonrecurring plant closure costs and other impacts. Selling and marketing expenses rose 9.9% or $2.8 million, driven by higher commissions, brand investments, and depreciation.
Adjusted Operating Income $8 million compared to $8.2 million in the prior year, reflecting stable performance.
Adjusted Earnings Per Share $0.33, in line with the prior year, despite onetime charges impacting reported earnings per share.
Operating Cash Flow Generated approximately $36 million during the quarter, with $19 million invested in capital expenditures.
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Operating Highlights
New product launches: Several new products are set to be shipped in Q2, including protein and whole-grain pretzels, Luigi mini pops with hydration and immunity benefits, Dippin' Dots Sunday flavor extensions, and traditional Dippin' Dots for retail.
Frozen novelties: Dogsters volume grew over 20% in Q1, with a new item launched late in Q1 and another launching in Q2.
Retail and theater expansion: Dippin' Dots sales grew approximately 4% in Q1, driven by retail growth, theater expansion, and amusement centers.
Convenience and QSR expansion: ICEE expanded to a large Southwest convenience store operator and is testing with a major West Coast QSR operator.
Project Apollo transformation: Achieved $3 million in net savings in Q1, with plant consolidation on track for full implementation in Q2. Expected $20 million run rate operating income once fully activated.
Gross margin improvement: Gross margin improved by 200 basis points to 27.9%, driven by Apollo savings and improved product mix.
Portfolio optimization: Focused on higher-margin opportunities, leading to a 5.2% decline in net sales, with $13 million attributed to SKU optimization.
Share repurchase: Completed $42 million share repurchase in Q1 and announced a new $50 million repurchase authorization.
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Risk or Challenges
Net Sales Decline: Net sales declined by 5.2% to $343.8 million, primarily due to a focus on higher-margin opportunities and SKU optimization efforts. This decline is expected to continue, representing an approximate 3% drop in sales for fiscal 2026.
Government Shutdown and SNAP Benefits: Sales were negatively impacted by the government shutdown and the pause in SNAP benefits, particularly affecting frozen novelties.
Product Disposal Costs: The company incurred $1 million in unfavorable product disposal costs during the quarter.
Tariff-Related Costs: Tariff-related costs amounted to approximately $600,000, with some impact expected to persist through fiscal 2026.
Nonrecurring Costs: Operating expenses increased due to $6.1 million in nonrecurring plant closure costs and other impacts, with an additional $5 million in transformation project costs anticipated for fiscal 2026.
Increased Selling and Marketing Expenses: Selling and marketing expenses rose by 9.9%, driven by higher commissions, brand investments, and depreciation costs, which could pressure margins.
Frozen Beverage Segment: Frozen beverage net sales were flat, with modest growth in beverage sales offset by declines in service and machine sales.
Box Office Performance: Disappointing box office performance in the fiscal first quarter, with an estimated 10% decline compared to the prior year, impacted related sales.
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Guidance & Outlook
Portfolio Optimization: The company expects portfolio optimization to result in an approximate 3% decline in sales for fiscal 2026.
Project Apollo: The company remains confident in achieving $20 million of run rate operating income once all initiatives are activated. Plant consolidation is on track to be fully implemented during the fiscal second quarter.
Innovation Pipeline: Several new products are planned for Q2, including protein and whole-grain pretzels, Luigi mini pops with hydration and immunity benefits, Dippin' Dots Sunday flavor extensions, and the launch of traditional Dippin' Dots for retail.
Theater Performance: The company is optimistic about theater performance for the balance of fiscal 2026, supported by promising movie titles such as Super Mario Galaxy, Minions 3, and Spider-Man: Brand-new Day.
Tariff Impact: Some tariff-related costs are expected to subside over the course of fiscal 2026.
Nonrecurring Costs: Additional nonrecurring transformation project costs of approximately $5 million are expected in fiscal 2026.
Summer Season Investments: Investments in preparation for the peak summer season are expected to generate growth during that period.
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Shareholder Return Plan
Share Repurchase Authorization Completion: During the quarter, the company completed its share repurchase authorization by purchasing $42 million of stock, demonstrating confidence in the business and commitment to returning cash to shareholders.
New Share Repurchase Authorization: The company announced a new $50 million repurchase authorization, further emphasizing its commitment to shareholder returns.
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Key Q&A
Q:How is the company addressing the 3% headwind from SKU rationalization and what is the expected sales growth for the year?
A:The company is addressing the 3% headwind from SKU rationalization through portfolio optimization and plant consolidations. Despite this, they expect low single-digit growth for the year, supported by new business and innovation.
Q:What progress has been made on Project Apollo and when will the $20 million annual run rate be achieved?
A:Project Apollo has delivered $3 million in cost savings in Q1. The $20 million annual run rate is expected to be achieved in Q2, with $15 million from plant consolidations and the remaining $5 million from distribution and G&A savings by Q4.
Q:What is the current state of the commodity environment and its impact on gross margins?
A:The commodity environment is expected to be more favorable this year compared to last year, particularly for cocoa and eggs. Gross margins improved by 200 basis points in Q1, driven by plant consolidation, new business, and portfolio mix. A $1 million product disposal cost impacted Q1 gross profit but is not expected to recur.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on how the low single-digit growth will be achieved beyond general statements about new business and innovation. Additionally, while they mentioned favorable commodity pricing, they did not provide precise data or projections to substantiate this claim.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Apollo saving
Bavarian Bites
Bites twist
Brand Day
Conference today
Day result
Dots Sunday
Dots retail
Galaxy movie
ICEE opportunity
ICR statement
Ladies gentleman
Man Brand
Mario Galaxy
Minions Spider
Mr recovery
Results product
Risk Factors
SKU
SNAP benefit
bakery
momentum
pause SNAP
plant consolidation
portfolio optimization
repurchase authorization
run rate
saving plant
test
trend
week
JJSF Transcript
J&J Snack Foods Corp. (JJSF) Q1 2026 Earnings Call Transcript
Unknown2-3
The earnings call presents mixed signals. While there are positive elements such as the new share repurchase authorization and improved gross margins, there are also challenges like declining net sales and increased expenses. The Q&A revealed management's lack of clarity on growth specifics, which might concern investors. Although Project Apollo shows promise, immediate financial results are mixed. Given the company's market cap, the stock is likely to remain stable, resulting in a neutral prediction.
J&J Snack Foods Corp. (JJSF) Q4 2025 Earnings Call Transcript
Unknown11-17
The earnings call presents mixed signals: declining sales and profits, increased operating expenses, and cautious consumer sentiment weigh negatively. However, optimism for 2026, expected savings from plant closures, and a focus on share repurchases provide positive aspects. The Q&A reveals management's cautious optimism, but lack of specific guidance and immediate M&A actions limits strong positive sentiment. With a market cap of $3.17 billion, the stock is likely to experience a neutral reaction, fluctuating between -2% to 2% over the next two weeks.
J&J Snack Foods Corp. (JJSF) Q3 2025 Earnings Conference Call Transcript
Unknown9-22
The earnings call reveals mixed signals. While net sales and adjusted EBITDA reached record highs, challenges like foreign exchange headwinds and input cost inflation persist. The cautious consumer backdrop, capacity constraints from a plant fire, and declining retail sales further complicate the outlook. Although promising developments in product expansion and cost savings exist, the overall sentiment remains balanced, reflecting both positive and negative elements. Given the company's mid-sized market cap, the stock price is expected to remain relatively stable, resulting in a neutral prediction for the next two weeks.
J&J Snack Foods Corp. (JJSF) Q2 2025 Earnings Conference Call Transcript
Unknown8-5
The earnings call shows mixed signals: record net sales and adjusted EBITDA are positive, but margin pressure and capacity constraints due to a fire are concerns. The Q&A indicates management is addressing these issues, and new programs could boost future growth. However, the lack of specific guidance and cautious outlook on promotional activities tempers optimism. Given the company's market cap, the overall sentiment is neutral, expecting minor stock fluctuations.
JJSF Report
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
