Wed Dec 23 2015
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This Snack Foods Company Looks Tasty


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J&J Snack Foods Corp. (NASDAQ:JJSF) is a leader and innovator in the snack foods industry, providing nutritional and affordable branded niche snack foods and beverages to foodservice and retail supermarket outlets.

Manufactured and distributed nationwide, the principal products include Superpretzel, Bavarian Bakery and other soft pretzels, Icee and Slush Puppie frozen beverages, Luigi’s, Philly Swirl, Minute Maid whole fruit sorbets and frozen fruit bars, Whole Fruit sorbet, Tio Pepe’s and California Churros churros, The Funnel Cake Factory funnel cakes and several cookie brands within Country Home Bakers.

J&J Snack Foods reported decent fourth quarter results, and there were operating income and revenue gains. Higher demand for pretzels, juices and frozen beverages should help it to grow business in the future. The recent acquisitions helped the company to widen its portfolio. The company is rolling in new products, and the future looks bright.

Strong fourth quarter

Sales during the fourth quarter increased by 2.5% and were $ 259.8 million (which was $ 253.5 million in the prior year quarter). For the year ending on Sept. 26, sales increased by 6% and were $ 976.3 million (which was $ 919.5 million in the prior year quarter).

Net earnings decreased by 11% and were $ 19.8 million ($ 1.05 per diluted share) during the fourth quarter of 2015, which was ($ 22.2 million in the prior year quarter). For the year, net earnings decreased by 2% and were $ 70.2 million (which was $ 71.8 million in the prior year period).

Operating income during the quarter increased by 2% and was $ 33.7 million (which was $ 32.9 million in the prior year quarter). During the year, operating income increased by 4% and was $ 110.9 million (which was $ 106.8 million in the prior year period).

Quarterly cash dividend

The company declared a regular quarterly cash dividend of 39 cents per share of its common stock payable on Jan. 7, 2016 to shareholders of record as of the close of business on Dec. 22. The cash dividend of 39 cents per share represents an increase of 8.33% from the previous quarterly dividend rate of 36 cents per share.

Competition

Snack food and bakery products markets are highly competitive. The company’s principal products compete against similar and different food products manufactured and sold by numerous other companies, some of which are substantially larger and have greater resources than the company.

As the soft pretzel, frozen juice treat and dessert, bakery products and related markets grow, additional competitors and new competing products may enter the markets. Competitive factors in these markets include product quality, customer service, taste, price, identity and brand name awareness, method of distribution and sales promotions.

The company believes it is the only national distributor of soft pretzels. However, there are numerous regional and local manufacturers of food service and retail supermarket soft pretzels as well as several chains of retail pretzel stores.

In Frozen Beverages the company competes directly with other frozen beverage companies. These include several companies that have the right to use the Icee name in portions of nine states. There are many other regional frozen beverage competitors throughout the country and one large retail chain that uses its own frozen beverage brand.

The company competes with large soft drink manufacturers for counter and floor space for its frozen beverage dispensing machines at retail locations and with products that are more widely known than the Icee, Slush Puppie and Parrot Ice frozen beverages. The company competes with a number of other companies in the frozen juice treat and dessert and bakery products markets.

Positive attributes of the company

  • Acquisition of New York Pretzel helped it to grow.
  • Acquisition of Philly Swirl helped in the growth of the retail supermarket segment.
  • It provides a wide array of products.
  • Robust acquisition strategy.
  • New product developments.

On a concluding note

For more than 42 years, JJSF has been a constant leader in the niche snack food and beverage segment. The company grows its business every year. It is making strategies to strengthen its position in the market. The demand for packaged foods is growing each day since it saves a lot of time. This company has plenty of room to grow, and investors may consider adding it to their portfolios.

Disclosure: I do not hold any position in the company.


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