Consolidations creating efficiencies at J&J Snack Foods

MOUNT LAUREL, NJ. — Transformation initiatives and mix improvements helped drive a 9% gain in adjusted EBITDA at J&J Snack Foods in the second quarter.

Net income at J&J Snack Foods in the second quarter ended March 28 totaled $1.68 million, equal to 9¢ per share on the common stock, down 66% from $4.82 million, or 25¢ per share, in the same period a year ago. The most recent quarter included $4.76 million in expenses related to plant closings.

Meanwhile, adjusted EBITDA in the second quarter totaled $28.68 million, up from $26.2 million in the same period a year ago.

Net sales decreased 3.2% to $344.82 million from $356.1 million.

“Our ability to improve earnings and margins as we reshape the portfolio demonstrates that our transformation initiatives are working,” Dan Fachner, president and chief executive officer, said during a May 6 conference call with analysts. “Our plant consolidations have created significant plant efficiencies. And we’re on track to deliver at least $20 million of annualized Apollo savings once all initiatives are implemented.

“We are now focused on driving administrative and distribution cost reductions.”

Foodservice operating income at J&J Snack Foods increased 45% to $10.86 million from $7.47 million. Sales decreased 5% to $214.67 million from $226.05 million.

Shawn Munsell, chief financial officer, said during the call that the largest driver of the sales decline in foodservice was reductions in the company’s lower margin bakery business of about $8 million.

“Additionally, cookie sales to a large customer declined about $4 million in the quarter due to the customer working through elevated inventory levels,” Munsell said. “We expect their orders to rebound in the third quarter.”

He said churro sales declined about $3 million, while handheld sales declined $3.4 million in the quarter. Partially offsetting the headwinds was continued strength in pretzels, which increased $6.7 million.

In the retail supermarket segment in the second quarter, J&J Snack recorded a loss of $385,000, which compared with operating income of $3.51 million in the previous year’s second quarter. Sales decreased 4.2% to $51.62 million from $53.85 million.

Munsell attributed the loss to slotting fees, trade and mix shift. He said the company will seek to invest in trade and promotion to support its retail business in the second half of 2026.

In the frozen beverages segment, J&J Snack posted operating income of $4.64 million, up 84% from $2.52 million in the same period a year ago. Sales increased narrowly to $78.53 million from $76.2 million.

Fachner said J&J Snack shipped more than $2 million in new products during the second quarter, including about $900,000 of Dippin’ Dots for retail, $900,000 of new Dogsters ice cream products and $200,000 of Luigi’s mini pops.

Overall, net income in the six months ended March 28 was $2.56 million, or 13¢ per share, down 74% from $9.97 million, or 51¢ per share, in the same period a year ago. Net sales were $688.6 million, down 4.2% from $718.7 million.