PENNSAUKEN, N.J. — A strong performance from soft pretzels, a common occurrence for J&J Snack Foods Corp., helped lift the company to increases in net earnings and sales in the second quarter ended March 30. Innovation in soft pretzels, especially in food service, could come in future quarters.
J&J Snack Foods net earnings of $20,354,000, or $1.08 per share on the common stock, were up 14% from $17,833,000, or 95c per share, in the previous year’s second quarter. Net sales increased 4% to $276,302,000 from $266,101,000.
Food service operating income at J&J Snack Foods rose 6% in the second quarter to $19,580,000 from $18,535,000. Sales increased 1% to $181,425,000 from $179,465,000. Within the food service division, sales of bakery products were $90,764,000, virtually unchanged from the previous quarter, while sales of churros rose 3% to $15,770,000, and sales of soft pretzels rose 2% to $49,812,000.
Pennsauken-based J&J Snack Foods about four years ago began focusing on growing soft pretzel sales in fast-food and other restaurant businesses, said Gerald B. Shreiber, president and chief executive officer, in an April 30 earnings call. Sales growth in restaurants increased every year.
“It kind of has stabilized the last six months or so although we are still growing in that sector, and we’re still very, very bullish on this sector going forward, but soft pretzels are not new to that segment anymore,” he said. “They’re in there, and now we have to figure and tickle ways to grow them each quarter.”
In the retail supermarket segment in the second quarter, operating income was $2,641,000, up 4.2% from $2,534,000 in the previous year’s second quarter. Sales fell 1% to $27,809,000 from $28,084,000. Within the retail supermarket segment, sales of soft pretzels rose 7% to $10,829,000, primarily because of sales of Auntie Anne’s soft pretzels. Sales of frozen juices and teas slipped 5% to $14,668,000, and sales of handheld items fell 10% to $2,479,000.
In the frozen beverages segment, operating income in the first quarter rose 3.2% to $2,550,000, and sales increased 15% to $67,068,000 from $58,552,000.
Speaking about potential new products in all segments of the company, Mr. Shreiber said he knew of at least six projects that were “moving along.”
“How many of them will go into our business cycle in the next six months?” he asked. “It would be a guess, but we started out as a tiny soft pretzel company with revenues in the single digits of millions, and now we’re over $1 billion, and a lot of that is new products.”
Companywide, net earnings for the six-month period ended March 30 were $37,880,000, or $2.02 per share on the common stock, which was down 30% from $54,082,000, or $2.90 per share, in the same time of the previous year. Six-month net sales increased 3% to $547,914,000 from $531,311,000.
Net earnings for the first six months of the current fiscal year benefited from a reduction of about $900,000 in tax as the one-time repatriation tax, which resulted from the Tax Cuts and Jobs Act enacted in December of 2017, was recorded on an estimated bases at Dec.30, 2017, and was revised downward in this year’s first quarter. Net earnings for the first six months of the previous fiscal year benefited from a $20.9 million gain on the re-measurement of deferred tax liabilities and were impacted by a $1.2 million provision for the one-time repatriation tax.