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What changed in J&J SNACK FOODS CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of J&J SNACK FOODS CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+145 added−172 removedSource: 10-K (2024-11-26) vs 10-K (2023-11-28)

Top changes in J&J SNACK FOODS CORP's 2024 10-K

145 paragraphs added · 172 removed · 112 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

58 edited+10 added−4 removed96 unchanged
Biggest changeOther Products Other products sold by the Company include funnel cakes sold under the FUNNEL CAKE FACTORY brand name and smaller amounts of various other food products. These products are sold in the Food Service and Frozen Beverages segments. 4 Customers The Company sells its products to two principal channels: foodservice and retail supermarkets.
Biggest changeThese products are sold in the Food Service and Frozen Beverages segments. Customers The Company sells its products to two principal channels: foodservice and retail supermarkets. The primary products sold to the foodservice channel are soft pretzels, frozen beverages, frozen novelties, churros, handheld products and baked goods.
At food service point-of-sale they are reheated and topped with a cinnamon sugar mixture. The Company also sells chocolate-filled, fruit-filled and crème-filled churros. The Company supplies churro merchandising equipment similar to that used for its soft pretzels. 3 Handheld Products The Company's handheld products are sold primarily under private label names.
At food service point-of-sale they are reheated and topped with a cinnamon sugar mixture. The Company also sells chocolate-filled, fruit-filled, and crème-filled churros. The Company supplies churro merchandising equipment similar to that used for its soft pretzels. Handheld Products The Company's handheld products are sold primarily under private label names.
The Company’s retail supermarket customers are primarily supermarket chains. * Minute Maid is a registered trademark of the Coca-Cola Company 1 The Company was incorporated in 1971 under the laws of the State of New Jersey. The Company operates in three business segments: Food Service, Retail Supermarkets and Frozen Beverages. These segments are described below.
The Company’s retail supermarket customers are primarily supermarket chains. * Minute Maid is a registered trademark of the Coca-Cola Company The Company was incorporated in 1971 under the laws of the State of New Jersey. The Company operates in three business segments: Food Service, Retail Supermarkets and Frozen Beverages. These segments are described below.
The Company’s products are shipped in frozen and other vehicles from the Company’s manufacturing and warehouse facilities on a fleet of Company operated tractor-trailers, trucks and vans, as well as by independent carriers. 5 Seasonality The Company’s sales are seasonal because frozen beverage sales and frozen novelties sales are generally higher during the warmer months.
The Company’s products are shipped in frozen and other vehicles from the Company’s manufacturing and warehouse facilities on a fleet of Company operated tractor-trailers, trucks, and vans, as well as by independent carriers. Seasonality The Company’s sales are seasonal because frozen beverage sales and frozen novelties sales are generally higher during the warmer months.
For its snack food products, the Company maintains warehouse and distribution facilities in Pennsauken, Bellmawr and Bridgeport, New Jersey; Vernon (Los Angeles), Colton and Lancaster, California; Brooklyn, New York; Scranton and Hatfield, Pennsylvania; Carrollton (Dallas) and Terrell, Texas; Atlanta, Georgia; Moscow Mills (St.
For its snack food products, the Company maintains warehouse and distribution facilities in Pennsauken, Bellmawr, Bridgeport, and Woolwich, New Jersey; Vernon (Los Angeles), Colton and Lancaster, California; Brooklyn, New York; Scranton and Hatfield, Pennsylvania; Carrollton (Dallas) and Terrell, Texas; Atlanta, Georgia; Moscow Mills (St.
The information on the website listed above is not and should not be considered part of this annual report on Form 10-K and is not incorporated by reference in this document. 8 Item 1A. Risk Factors Our business is subject to numerous risks and uncertainties.
The information on the website listed above is not and should not be considered part of this annual report on Form 10-K and is not incorporated by reference in this document. Item 1A. Risk Factors Our business is subject to numerous risks and uncertainties.
Pepper, Inc., the Pepsi Cola Company, and Jogue, Inc. Cups. Straws and lids are readily available from various suppliers. Parts for frozen beverage dispensing machines are purchased from several sources. Competition Snack food and bakery products markets are highly competitive.
Pepper, Inc., the Pepsi Cola Company, and Jogue, Inc. Cups. Straws and lids are readily available from various suppliers. Parts for frozen beverage dispensing machines are purchased from several sources. 6 Competition Snack food and bakery products markets are highly competitive.
In addition, we might fail to appropriately target our marketing efforts, anticipate consumer preferences, or invest sufficiently in maintaining our brand image. If we do not maintain the favorable perception of our brands, our results could be adversely impacted.
In addition, we might fail to appropriately target our marketing efforts, anticipate consumer preferences, or invest sufficiently in maintaining our brand image. If we do not maintain the favorable perception of our brands, our financial results could be adversely impacted.
Compensation We believe in equal pay for equal work and that compensation should match talent, experience and skill set of a person. Available Information The Company’s internet address is www.jjsnack.com .
Compensation We believe in equal pay for equal work and that compensation should match talent, experience and skill set of a person. 8 Available Information The Company’s internet address is www.jjsnack.com.
Products sold to retail supermarket customers are primarily soft pretzel products, including SUPERPRETZEL and AUNTIE ANNE’S, frozen novelties including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars, WHOLE FRUIT Sorbet, PHILLY SWIRL cups and sticks, MARY B’S biscuits and dumplings, DADDY RAY’S fig and fruit bars, HILL & VALLEY baked goods, and ICEE Squeeze-Up Tubes.
Products sold to retail supermarket customers are primarily soft pretzel products, including SUPERPRETZEL, frozen novelties including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars, WHOLE FRUIT Sorbet, PHILLY SWIRL cups and sticks, MARY B’S biscuits and dumplings, DADDY RAY’S fig and fruit bars, HILL & VALLEY baked goods, and ICEE Squeeze-Up Tubes.
Provisions of our Amended and Restated Certificate of Incorporation and Bylaws that could delay, deter or prevent a future acquisition include the following: -- a classified Board of Directors; -- the requirement that our shareholders may only remove Directors for cause; -- limitations on share holdings and voting of certain persons who exceed the “Voting Threshold” specified in the Amended and Restated Certificate of Incorporation; -- special Director voting rights are granted to certain “Experienced Directors” only in the event of a “hostile change of Board control,” as such terms are defined in the Amended and Restated Certificate of Incorporation; -- the ability of the Board of Directors to consider the interests of various constituencies, including our employees, customers, suppliers, creditors and the local communities in which we operate; -- shareholders do not generally have the right to call special meetings or to act by written consent; -- our Bylaws contain advance notice procedures for nominations of Directors or submission of shareholder proposals at an annual meeting; and -- our Bylaws contain a forum selection clause providing that certain litigation against the Company can only be brought in New Jersey state or federal courts. 11 Risks Relating to Gerald B.
Provisions of our Amended and Restated Certificate of Incorporation and Bylaws that could delay, deter or prevent a future acquisition include the following: -- a classified Board of Directors; -- the requirement that our shareholders may only remove Directors for cause; -- limitations on share holdings and voting of certain persons who exceed the “Voting Threshold” specified in the Amended and Restated Certificate of Incorporation; -- special Director voting rights are granted to certain “Experienced Directors” only in the event of a “hostile change of Board control,” as such terms are defined in the Amended and Restated Certificate of Incorporation; -- the ability of the Board of Directors to consider the interests of various constituencies, including our employees, customers, suppliers, creditors and the local communities in which we operate; -- shareholders do not generally have the right to call special meetings or to act by written consent; -- our Bylaws contain advance notice procedures for nominations of Directors or submission of shareholder proposals at an annual meeting; and -- our Bylaws contain a forum selection clause providing that certain litigation against the Company can only be brought in New Jersey state or federal courts.
Revenue from equipment sales and repair and maintenance services totaled 9% of the Company’s sales in each of the fiscal years 2023, 2022 and 2021. Each new frozen carbonated customer location requires a frozen beverage dispenser supplied by the Company or by the customer. Company-supplied frozen carbonated dispensers are purchased from outside vendors or rebuilt by the Company.
Revenue from equipment sales and repair and maintenance services totaled 9% of the Company’s sales in each of the fiscal years 2024, 2023, and 2022. Each new frozen carbonated customer location requires a frozen beverage dispenser supplied by the Company or by the customer. Company-supplied frozen carbonated dispensers are purchased from outside vendors or rebuilt by the Company.
These higher costs could have a material adverse effect on our business, results of operations, financial condition and cash flows. 10 Risks Relating to Manufacturing Capacity Constraints Our current manufacturing resources may be inadequate to meet significantly increased demand for some of our products.
These higher costs could have a material adverse effect on our business, results of operations, financial condition, and cash flows. 11 Risks Relating to Manufacturing Capacity Constraints Our current manufacturing resources may be inadequate to meet significantly increased demand for some of our products.
Our Food Safety & Quality (FSQA) personnel within our Compliance Department have broad, diverse academic and experience credentials and oversee all aspects of product safety & quality control across the Company. Our facilities are Global Food Safety Initiative (GFSI) certified and are audited annually by third-party certification bodies.
Our Food Safety & Quality (FSQA) personnel within our Compliance Department have broad, diverse academic and experience credentials and oversee all aspects of product safety & quality assurance across the Company. Our facilities are Global Food Safety Initiative (GFSI) certified and are audited annually by third-party certification bodies.
Any of these events could have a material adverse effect on our business, results of operations, financial condition and cash flows. 12 Risks Associated with our Intellectual Property Rights We consider our intellectual property rights, particularly our trademarks, to be a significant and valuable aspect of our business.
Any of these events could have a material adverse effect on our business, results of operations, financial condition, and cash flows. 14 Risks Associated with our Intellectual Property Rights We consider our intellectual property rights, particularly our trademarks, to be a significant and valuable aspect of our business.
Based upon available information, the cost of compliance with these laws and regulations did not have a material effect upon the level of capital expenditures, earnings or competitive position in fiscal 2023 and is not expected to have a material impact in fiscal 2024.
Based upon available information, the cost of compliance with these laws and regulations did not have a material effect upon the level of capital expenditures, earnings, or competitive position in fiscal 2024 and is not expected to have a material impact in fiscal 2025.
Competitive factors in these markets include product quality, customer service, taste, price, identity and brand name awareness, method of distribution and sales promotions. 6 The Company believes it is the only national distributor of soft pretzels.
Competitive factors in these markets include product quality, innovation, 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.
Our “Food Safety & Quality Plans” are validated and verified to ensure product safety and quality. We have implemented Corporate Standards which are aligned with GFSI and R egulatory standards and routinely conduct audits to ensure compliance. We provide bi-weekly support calls for FSQA and Plant Leadership and annual Food Safety Summit Meetings to develop and strengthen our facility teams.
Our “Food Safety & Quality Plans” are validated and verified to ensure product safety and quality. We have implemented Corporate Standards which are aligned with GFSI and Regulatory standards and routinely conduct audits to ensure compliance. We provide bi-weekly support calls for FSQA and Plant Leadership and annual Food Safety Summit Meetings to develop and strengthen our facility teams.
Five of the ten customers in 2023 are food distributors who sell our product to many end users. The loss of one or more of our large customers could adversely affect our results of operations.
Five of the ten customers in 2024 are food distributors who sell our product to many end users. The loss of one or more of our large customers could adversely affect our results of operations.
Frozen Novelties The Company’s frozen novelties are marketed primarily under the DIPPIN’DOTS, LUIGI’S, WHOLE FRUIT, DOGSTERS, PHILLY SWIRL, ICEE and MINUTE MAID brand names. Frozen novelties are sold in the Food Service and Retail Supermarkets segments. Frozen novelties sales were 17% of the Company’s revenue in fiscal year 2023, 14% in fiscal year 2022, and 13% in fiscal year 2021.
Frozen Novelties The Company’s frozen novelties are marketed primarily under the DIPPIN’DOTS, LUIGI’S, WHOLE FRUIT, DOGSTERS, PHILLY SWIRL, ICEE and MINUTE MAID brand names. Frozen novelties are sold in the Food Service and Retail Supermarkets segments. Frozen novelties sales were 17% of the Company’s revenue in fiscal year 2024, 17% in fiscal year 2023, and 14% in fiscal year 2022.
About 1,400 production and distribution employees throughout the Company are covered by collective bargaining agreements. The Company considers its culture and employee relations to be positive. 7 Employee Safety We maintain a safety culture grounded on the premise of eliminating workplace incidents, risks and hazards.
About 1,500 production and distribution employees throughout the Company are covered by collective bargaining agreements. The Company considers its culture and employee relations to be positive. Employee Safety We maintain a safety culture grounded on the premise of eliminating workplace incidents, risks and hazards.
Bakery products sales amounted to 26% of the Company’s sales in fiscal year 2023, 29% in fiscal year 2022 and 32% in fiscal year 2021. Frozen Beverages The Company markets frozen beverages primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE which are sold primarily in the United States, Mexico and Canada.
Bakery products sales amounted to 26% of the Company’s sales in fiscal year 2024, 26% in fiscal year 2023, and 29% in fiscal year 2022. Frozen Beverages The Company markets frozen beverages primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE which are sold primarily in the United States, Mexico, and Canada.
Because of seasonal fluctuations, there can be no assurance that the results of any particular quarter will be indicative of results for the full year or for future years. 13
Because of seasonal fluctuations, there can be no assurance that the results of any particular quarter will be indicative of results for the full year or for future years. 15
Such laws and regulations have an important effect on the food processing industry as a whole, requiring substantially all firms in the industry to incur material expenditures for modification of existing processing facilities and for construction of upgraded or new waste treatment facilities.
Such laws and regulations have a substantial effect on the food processing industry as a whole, requiring substantially all firms in the industry to incur material expenditures for modification of existing processing facilities and for construction of upgraded or new waste treatment facilities.
Shreiber Gerald B. Shreiber is the founder and a Director of the Company. He is currently beneficial owner of approximately 20% of its outstanding common stock, held in a trust for his benefit. Our Amended and Restated Certificate of Incorporation provides Mr.
Risks Relating to Gerald B. Shreiber Gerald B. Shreiber is the founder and a Director of the Company. He is currently beneficial owner of approximately 20% of its outstanding common stock, held in a trust for his benefit. Our Amended and Restated Certificate of Incorporation provides Mr.
In addition, an allegation of noncompliance with federal or state food laws and regulations could force us to cease production, stop selling our products or create significant adverse publicity that could harm our credibility and decrease market acceptance of our products.
In addition, an allegation of noncompliance with federal or state food laws and regulations could force us to cease production, stop selling our products or create significant adverse publicity that could harm our credibility and decrease market demand for our products.
The balance of the Company’s frozen novelties products are manufactured from water, sweeteners and fruit juice concentrates in various flavors and packaging including cups, tubes, sticks, M-paks and pints. Several of the products contain ice cream and WHOLE FRUIT bars contains pieces of fruit. Churros The Company’s churros are sold primarily under the ¡HOLA! and CALIFORNIA CHURROS brand names.
The balance of the Company’s frozen novelties products are manufactured from water, sweeteners and fruit juice concentrates in various flavors and packaging including cups, tubes, and sticks. Several of the products contain ice cream and WHOLE FRUIT bars contains pieces of fruit. 3 Churros The Company’s churros are sold primarily under the ¡HOLA! and CALIFORNIA CHURROS brand names.
We can be impacted by both real and unfounded claims regarding the safety of our operations, or concerns regarding mislabeled, adulterated, contaminated or spoiled food products. Any of these circumstances could necessitate a voluntary or mandatory recall due to a substantial product hazard, a need to change a product’s labeling or other consumer safety concerns.
We can be impacted by both real and unfounded claims regarding the safety of our operations, or concerns regarding mislabeled, adulterated, contaminated, or spoiled food products. Any of these circumstances could necessitate a voluntary or mandatory recall, a need to change a product’s labeling or other consumer safety concerns.
Churros are sold to the Food Service and Retail Supermarkets segments. Churro sales were 7% of the Company’s sales in fiscal year 2023 and 6% in both fiscal years 2022 and 2021. Churros are pastries in stick form which the Company produces in several sizes according to a proprietary formula. The churros are deep fried, frozen and packaged.
Churros are sold to the Food Service and Retail Supermarkets segments. Churro sales were 7% of the Company’s sales in fiscal year 2024, 7% in fiscal year 2023, and 6% in fiscal year 2022. Churros are pastries in stick form which the Company produces in several sizes according to a proprietary formula. The churros are deep fried, frozen, and packaged.
Louis), Missouri; Pensacola and Tampa, Florida; Solon, Ohio; Weston, Oregon; Holly Ridge, North Carolina; Rock Island, Illinois; and Paducah, Kentucky. Frozen beverages and machine parts are distributed from 170 Company managed warehouse and distribution facilities located in 44 states, Mexico and Canada, which allow the Company to directly service its customers in the surrounding areas.
Louis), Missouri; Pensacola and Tampa, Florida; Solon, Ohio; Weston, Oregon; Holly Ridge, North Carolina; Rock Island, Illinois; Glendale, Arizona; and Paducah, Kentucky. Frozen beverages and machine parts are distributed from 172 Company managed warehouse and distribution facilities located in 45 states, Mexico, and Canada, which allow the Company to directly service its customers in the surrounding areas.
Handheld products are sold to the Food Service and Retail Supermarket segments. Handheld product sales amounted to 6% of the Company’s sales in fiscal year 2023 and 7% in both fiscal years 2022 and 2021. Bakery Products The Company’s bakery products are marketed under the MRS.
Handheld products are sold to the Food Service and Retail Supermarket segments. Handheld product sales amounted to 7% of the Company’s sales in fiscal year 2024, 6% in fiscal year 2023, and 7% in fiscal year 2022. Bakery Products The Company’s bakery products are marketed under the MRS.
As part of the onboarding process, and throughout their careers, employees are engaged in food safety discussions and trainings to provide safe, high-quality products to customers and consumers. Human Capital Management Employees and Labor Relations The Company has approximately 5,000 full and part-time employees and approximately 800 workers employed by staffing agencies as of September 30, 2023.
As part of the onboarding process, and throughout their careers, employees are engaged in food safety discussions and trainings to provide safe, high-quality products to customers and consumers. 7 Human Capital Management Employees and Labor Relations The Company has approximately 5,000 full and part-time employees and approximately 700 workers employed by staffing agencies as of September 28, 2024.
The primary products sold to the foodservice channel are soft pretzels, frozen beverages, frozen novelties, churros, handheld products and baked goods. The primary products sold to the retail supermarket channel are soft pretzels, frozen novelties and handheld products. We have several large customers that account for a significant portion of our sales.
The primary products sold to the retail supermarket channel are soft pretzels, frozen novelties and handheld products. We have several large customers that account for a significant portion of our sales.
Our top ten customers accounted for 43%, 43% and 43% of our sales during fiscal years 2023, 2022 and 2021, respectively, with our largest customer accounting for 9% of our sales in fiscal 2023, 8% of our sales in fiscal 2022 and 11% of our sales in fiscal 2021.
Our top ten customers accounted for 45%, 43% and 43% of our sales during fiscal years 2024, 2023, and 2022, respectively, with our largest customer accounting for 9% of our sales in fiscal 2024, 9% of our sales in fiscal 2023, and 8% of our sales in fiscal 2022.
Frozen beverages are reported in the Frozen Beverages segment. Frozen beverage sales amounted to 14% of the Company’s revenue in fiscal year 2023, 13% in fiscal year 2022 and 11% in fiscal year 2021.
Frozen beverages are reported in the Frozen Beverages segment. Frozen beverage sales amounted to 15% of the Company’s revenue in fiscal year 2024, 14% in fiscal year 2023, and 13% in fiscal year 2022.
The Company’s Food Service and Frozen Beverages sales are made primarily to foodservice customers including snack bar and food stand locations in leading chain, department, discount, warehouse club and convenience stores; malls and shopping centers; fast food and casual dining restaurants; stadiums and sports arenas; leisure and theme parks; movie theatres; independent retailers; and schools, colleges and other institutions.
The Company’s principal frozen beverage products are the ICEE brand frozen carbonated beverage and the SLUSH PUPPIE brand frozen non-carbonated beverage. 1 The Company’s Food Service and Frozen Beverages sales are made primarily to foodservice customers including snack bar and food stand locations in leading chain, department, discount, warehouse club and convenience stores; malls and shopping centers; fast food and casual dining restaurants; stadiums and sports arenas; leisure and theme parks; movie theatres; independent retailers; and schools, colleges, and other institutions.
Within the retail supermarket channel, our frozen and prepackaged products are purchased by the consumer for consumption at home. Frozen Beverages We sell frozen beverages to the foodservice industry primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE in the United States, Mexico and Canada. We also provide repair and maintenance services to customers for customer-owned equipment.
Within the retail supermarket channel, our frozen and prepackaged products are purchased by the consumer for consumption at home. Frozen Beverages We sell frozen beverages to the foodservice industry primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE in the United States, Mexico, and Canada.
The Company’s ongoing advertising and promotional campaigns for its Retail Supermarket segment’s products include consumer advertising campaigns across traditional and digital channels, and print/digital media with value added shopper offers and promotions. The Company develops and introduces new products on a routine basis. The Company evaluates the success of new product introductions on the basis of sales and profit levels.
The Company’s ongoing advertising and promotional campaigns for its Retail Supermarket segment’s products include consumer advertising campaigns across traditional and digital channels, and print/digital media with value added shopper offers and promotions. 5 The Company develops and introduces new products on a routine basis.
The loss of one or more of our large customers could adversely affect our results of operations. These customers typically do not enter into long-term contracts and make purchase decisions based on a combination of price, product quality, consumer demand and customer service performance.
Five of the ten customers are food distributors who sell our product to many end users. The loss of one or more of our large customers could adversely affect our results of operations. These customers typically do not enter into long-term contracts and make purchase decisions based on a combination of price, product quality, consumer demand and customer service performance.
New Jersey Law and Provisions of Our Amended and Restated Certificate of Incorporation and Bylaws May Inhibit a Change In Control The New Jersey Shareholders' Protection Act, N.J.S.A. 14A:10A-1, et seq. , may delay, deter or prevent a change in control by prohibiting the Company from engaging in a business combination transaction with an interested shareholder for a period of five years after the person becomes an interested stockholder, even if a majority of our shareholders believe a change in control would be in the best interests of the Company and its shareholders.
In situations where acquisitions and divestitures are not successfully implemented or completed, or the expected benefits of such acquisitions or divestitures are not otherwise realized, the Company’s business or financial results could be negatively impacted. 12 New Jersey Law and Provisions of Our Amended and Restated Certificate of Incorporation and Bylaws May Inhibit a Change In Control The New Jersey Shareholders' Protection Act, N.J.S.A. 14A:10A-1, et seq., may delay, deter or prevent a change in control by prohibiting the Company from engaging in a business combination transaction with an interested shareholder for a period of five years after the person becomes an interested stockholder, even if a majority of our shareholders believe a change in control would be in the best interests of the Company and its shareholders.
Products Soft Pretzels The Company’s soft pretzels are sold under many brand names; some of which are: SUPERPRETZEL, SUPERPRETZEL BAVARIAN, NEW YORK PRETZEL AND BRAUHAUS; and, to a lesser extent, under private labels. Soft pretzels are sold in the Food Service and Retail Supermarket segments.
We also provide repair and maintenance services to customers for customer-owned equipment. 2 Products Soft Pretzels The Company’s soft pretzels are sold under many brand names; some of which are: SUPERPRETZEL, SUPERPRETZEL BAVARIAN, NEW YORK PRETZEL, FEDERAL PRETZEL, AND BRAUHAUS; and, to a lesser extent, under private labels. Soft pretzels are sold in the Food Service and Retail Supermarket segments.
Sales of our foreign operations were $70.2 million, $45.2 million and $20.8 million in fiscal years 2023, 2022 and 2021, respectively. At September 30, 2023, the total assets of our foreign operations were approximately $61.5 million or 4.8% of total assets. At September 24, 2022, the total assets of our foreign operations were $42.7 million or 3.5% of total assets.
Sales of our foreign operations were $73.4 million, $70.2 million, and $45.2 million in fiscal years 2024, 2023, and 2022, respectively. At September 28, 2024, the total assets of our foreign operations were approximately $67.6 million or 5.0% of total assets. At September 30, 2023, the total assets of our foreign operations were $61.5 million or 4.8% of total assets.
Sales of our foreign operations were $70.2 million, $45.2 million and $20.8 million in fiscal years 2023, 2022 and 2021, respectively. At September 30, 2023, the total assets of our foreign operations were $61.5 million or 4.8% of total assets. At September 24, 2022, the total assets of our foreign operations were $42.7 million or 3.5% of total assets.
Sales from our foreign operations were $73.4 million, $70.2 million and $45.2 million in fiscal years 2024, 2023, and 2022, respectively. At September 28, 2024, the total assets in our foreign operations were $67.6 million or 5.0% of total assets. At September 30, 2023, the total assets in our foreign operations were $61.5 million or 4.8% of total assets.
General Risks of the Food Industry We are subject to the risks of adverse changes in general economic conditions; evolving consumer preferences and nutritional and health-related concerns; changes in food distribution channels; federal, state and local food processing controls or other mandates; changes in federal, state, local and international laws and regulations, or in the application of such laws and regulations; consumer product liability claims; risks of product tampering and contamination; and negative publicity surrounding actual or perceived product safety deficiencies.
Any economic downturn caused by any pandemic, epidemic, or other disease outbreak may also cause substantial changes in consumer behavior and our supply chain operations, some of which may materially affect our operations and results of operations. 9 General Risks of the Food Industry We are subject to the risks of adverse changes in general economic conditions; evolving consumer preferences and nutritional and health-related concerns; changes in food distribution channels; federal, state and local food processing controls or other mandates; changes in federal, state, local and international laws and regulations, or in the application of such laws and regulations; consumer product labeling and liability claims; risks of product tampering and contamination; and negative publicity surrounding actual or perceived product safety deficiencies.
Additionally, the failure by any one or more of our suppliers to comply with applicable federal, state and local laws and regulations relating to the protection of the environment, or allegations of non-compliance, may disrupt their operations and could result in accompanying disruptions to our operations.
Additionally, the failure by any one or more of our suppliers to comply with applicable federal, state, and local laws and regulations relating to the protection of the environment, or allegations of non-compliance, may disrupt their operations and could result in accompanying disruptions to our operations. 10 Risks Resulting from Customer Concentration We have several large customers that account for a significant portion of our sales.
J & J is the largest manufacturer of soft pretzels in the United States. Other snack food products include funnel cake sold under THE FUNNEL CAKE FACTORY brand and handheld products sold under smaller brands. The Company’s principal frozen beverage products are the ICEE brand frozen carbonated beverage and the SLUSH PUPPIE brand frozen non-carbonated beverage.
We believe we are the largest manufacturer of soft pretzels in the United States. Other snack food products include funnel cake sold under THE FUNNEL CAKE FACTORY brand and handheld products sold under smaller brands.
The Company’s soft pretzels are manufactured according to a proprietary formula. Soft pretzels, ranging in size from one to twenty-four ounces in weight, are shaped and formed by the Company’s twister machines. These soft pretzel tying machines are automated, high-speed machines for twisting dough into the traditional pretzel shape.
Soft pretzels, ranging in size from one to twenty-four ounces in weight, are shaped and formed by the Company’s twister machines. These soft pretzel tying machines are automated, high-speed machines for twisting dough into the traditional pretzel shape. Additionally, we make soft pretzels which are extruded or shaped by hand. Soft pretzels, after baking, are quick-frozen and packaged for delivery.
Risks Associated with Foreign Operations Foreign economies may differ favorably or unfavorably from the United States’ economy in such respects as the level of inflation and debt, which may result in fluctuations in the value of the country’s currency.
We cannot be sure if our new products, product improvements, or packaging initiatives will be accepted by customers. 13 Risks Associated with Foreign Operations Foreign economies may differ favorably or unfavorably from the United States’ economy in such respects as the level of inflation and debt, which may result in fluctuations in the value of the country’s currency.
If we do not continue to effectively manage costs and achieve additional efficiencies, our competitiveness and profitability could decrease. Seasonality and Quarterly Fluctuations Our sales are affected by the seasonal demand for our products. Demand is greater during the summer months primarily as a result of the warm weather demand for our ICEE and frozen novelties products.
Seasonality and Quarterly Fluctuations Our sales are affected by the seasonal demand for our products. Demand is greater during the summer months primarily as a result of the warm weather demand for our ICEE and frozen novelties products.
The Company’s products are sold through a network of food brokers, independent sales distributors and the Company’s own direct sales force.
The Company evaluates the success of new product introductions on the basis of sales and profit levels. The Company’s products are sold through a network of food brokers, independent sales distributors, and the Company’s own direct sales force.
Risk Related to Product Changes There are risks in the marketplace related to trade and consumer acceptance of product improvements, packing initiatives and new product introductions. We cannot be sure if our new products, product improvements, or packaging initiatives will be accepted by customers.
Risk Related to Product Changes There are risks in the marketplace related to trade and consumer acceptance of product improvements, packaging initiatives and new product introductions.
Risks of Shortages or Increased Cost of Raw Materials We are exposed to market risks arising from adverse changes in commodity prices, affecting the cost of our raw materials and energy.
In addition, changes in tax or interest rates, whether due to recession, efforts to combat inflation, financial and credit market disruptions or other reasons, could negatively impact us. Risks of Shortages or Increased Cost of Raw Materials We are exposed to market risks arising from adverse changes in commodity prices, affecting the cost of our raw materials and energy.
The terms and conditions of existing, renegotiated or new collective bargaining agreements could also increase our costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency or adapt to changing business needs or strategy. 9 Environmental Risks The disposal of solid and liquid waste material and the discharge of airborne pollutants resulting from the preparation and processing of foods is subject to various federal, state and local laws and regulations relating to the protection of the environment.
The terms and conditions of existing, renegotiated, or new collective bargaining agreements could also increase our costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency or adapt to changing business needs or strategy.
Our top ten customers accounted for 43% of our sales during fiscal years 2023, 2022 and 2021, respectively, with our largest customer accounting for 9% of our sales in 2023, 8% of our sales in 2022 and 11% of our sales in 2021. Five of the ten customers are food distributors who sell our product to many end users.
Our top ten customers accounted for 45% of our sales during fiscal year 2024 and 43% of our sales during fiscal years 2023 and 2022, with our largest customer accounting for 9% of our sales in 2024, 9% of our sales in 2023, and 8% of our sales in 2022.
Soft pretzel sales amounted to 19% of the Company’s revenue in fiscal year 2023, 19% in fiscal year 2022, and 20% in fiscal year 2021. 2 Certain of the Company’s soft pretzels qualify under USDA regulations as the nutritional equivalent of bread for purposes of the USDA school lunch program, thereby enabling a participating school to obtain partial reimbursement of the cost of the Company’s soft pretzels from the USDA.
Certain of the Company’s soft pretzels qualify under USDA regulations as the nutritional equivalent of grains for purposes of the USDA school nutrition program, thereby enabling a participating school to obtain partial reimbursement for the cost of the Company’s soft pretzels from the USDA. The Company’s soft pretzels are manufactured according to a proprietary formula.
The Company’s school foodservice LUIGI’S and WHOLE FRUIT frozen juice bars and cups are produced in various flavors and contain three to four ounces of 100% juice with no added sugar and 100% of the daily US FDA value of vitamin C.
The Company’s school foodservice LUIGI’S and WHOLE FRUIT frozen juice cups are produced in various flavors and contain one half of a cup of fruit equivalent made of 100% juice with no added sugar and in accordance with USDA guidelines.
The Company provides managed service and/or products to approximately 132,000 Company-owned and customer-owned dispensers. The Company has the rights to market and distribute frozen beverages under the name ICEE and Slush Puppie to the entire continental United States as well as internationally.
The Company has the rights to market and distribute frozen beverages under the name ICEE and Slush Puppie to the entire continental United States as well as internationally. 4 Other Products Other products sold by the Company include funnel cakes sold under the FUNNEL CAKE FACTORY brand name and smaller amounts of various other food products.
In addition, changes in tax or interest rates, whether due to recession, efforts to combat inflation, financial and credit market disruptions or other reasons, could negatively impact us. Risks Relating to Pandemics, Epidemics, or Other Disease Outbreaks Pandemics, epidemics, or other disease outbreaks could significantly change consumption patterns for our products.
These increased costs, if not offset, may have a significant impact on our profits. Risks Relating to Pandemics, Epidemics, or Other Disease Outbreaks Pandemics, epidemics, or other disease outbreaks could significantly change consumption patterns for our products.
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Additionally, we make soft pretzels which are extruded or shaped by hand. Soft pretzels, after processing, are primarily quick-frozen in either raw or baked form and packaged for delivery.
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Soft pretzel sales amounted to 18% of the Company’s revenue in fiscal year 2024, 19% in fiscal year 2023, and 19% in fiscal year 2022.
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Any economc downturn caused by any pandemic, epidemic, or other disease outbreak may also cause substantial changes in consumer behavior and our supply chain operations, some of which may materially affect our operations and results of operations.
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The Company provides managed service and/or products to approximately 132,000 Company-owned and customer-owned dispensers.
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Risks Resulting from Customer Concentration We have several large customers that account for a significant portion of our sales.
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Environmental Risks The disposal of solid and liquid waste material and the discharge of airborne pollutants resulting from the preparation and processing of foods is subject to various federal, state, and local laws and regulations relating to the protection of the environment.
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In situations where acquisitions and divestitures are not successfully implemented or completed, or the expected benefits of such acquisitions or divestitures are not otherwise realized, the Company’s business or financial results could be negatively impacted.
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For example, on August 19, 2024, we experienced a fire at our Holly Ridge plant in North Carolina. The building was damaged as a result of the fire, and plant operations were interrupted.
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If we do not continue to effectively manage costs and achieve additional efficiencies, our competitiveness and profitability could decrease.
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Risks Associated with our Identified Material Weakness in our Internal Control over Financial Reporting As described in Part II, Item 9A – Controls and Procedures, of this Annual Report on Form 10-K, we identified a material weakness in our internal control over financial reporting related to ineffective information technology general controls (ITGCs), including certain controls over logical access and change management.
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As a result, certain business process controls that are dependent on the ineffective ITGCs, or rely on the data produced from systems impacted by the ineffective ITGCs, were also deemed ineffective.
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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected in a timely manner.
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We are in the process of developing and implementing a remediation plan to address the material weakness.
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If our remediation efforts are insufficient or if additional material weaknesses in internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to revise or restate our financial results, which could materially and adversely affect our business, results of operations and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weakness, subject us to fines, penalties or judgments, harm our reputation, adversely affect the trading price of our common stock, or otherwise cause a decline in investor confidence.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties The Company’s primary east coast manufacturing facility is located in Pennsauken, New Jersey in a 70,000 square foot building on a two-acre lot. Soft pretzels, churros, and funnel cake are manufactured at this Company-owned facility.
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Item 2. Properties Location Reporting Segment Facility Type Products Manufactured Owned Square Footage Leased Square Footage Total Square Footage Pennsauken, NJ Food Service/Retail Supermarket Manufacturing Soft Pretzels, Churros, Bakery Products 70,000 - 70,000 Pennsauken, NJ Food Service/Retail Supermarket Warehousing/Distribution N/A 171,000 - 171,000 Mt.
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The Company owns a 128,000 square foot building adjacent to this manufacturing facility which contains a large freezer for warehousing and distribution purposes. The Company also owns a 43,000 square foot office and warehouse building in the same complex. Additionally, the Company leases, through July 2025, 30,000 square feet of office space in Mt.
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Laurel, NJ Food Service/Retail Supermarket Office N/A - 30,000 30,000 Bellmawr, NJ Food Service/Retail Supermarket Manufacturing Soft Pretzels, Bakery Products 150,000 - 150,000 Vernon, CA Food Service Manufacturing Soft Pretzels, Churros, Bakery Products - 107,000 107,000 Vernon, CA Food Service Warehousing/Distribution N/A - 30,000 30,000 Vernon, CA Food Service Office/Warehousing N/A - 80,000 80,000 Brooklyn, NY Food Service Manufacturing Soft Pretzels - 20,000 20,000 Colton, CA Food Service Manufacturing Churros, Bakery Products - 45,000 45,000 Atlanta, GA Food Service/Retail Supermarket Manufacturing Bakery Products - 85,000 85,000 Rock Island, IL Food Service Manufacturing Bakery Products - 129,000 129,000 Scranton, PA Food Service/Retail Supermarket Manufacturing Frozen Novelties 46,000 - 46,000 Scranton, PA Food Service/Retail Supermarket Warehousing N/A 42,000 - 42,000 Hatfield, PA Food Service Manufacturing Soft Pretzels - 29,600 29,600 Carrollton, TX Food Service Manufacturing Soft Pretzels - 48,000 48,000 Carrollton, TX Food Service Warehousing N/A - 6,500 6,500 Bridgeport, NJ Food Service Manufacturing Bakery Products - 133,000 133,000 Moscow Mills, MO Food Service Manufacturing Bakery Products 165,000 - 165,000 Holly Ridge, NC Food Service/Retail Supermarket Manufacturing Handheld Products 84,000 - 84,000 Weston, OR Food Service/Retail Supermarket Manufacturing Handheld Products - 70,000 70,000 Weston, OR Food Service/Retail Supermarket Warehousing N/A - 11,300 11,300 Paducah, KY Food Service Manufacturing Frozen Novelties 183,000 - 183,000 Paducah, KY Food Service Office N/A - 34,000 34,000 Lancaster, CA Food Service Warehousing N/A - - - Tampa, FL Retail Supermarket Manufacturing Frozen Novelties - 67,000 67,000 LaVergne, TN Frozen Beverages Office N/A - 84,000 84,000 Terrell, TX Food Service/Retail Supermarket Warehousing N/A - 117,000 117,000 Woolwich, NJ Food Service/Retail Supermarket Warehousing N/A - 201,000 201,000 Glendale, AZ Food Service/Retail Supermarket Warehousing N/A - 87,000 87,000 911,000 1,414,400 2,325,400 17 The Company also leases approximately 172 smaller warehouse and distribution facilities in 45 states, Mexico, Canada, Australia, and China.
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Laurel, New Jersey which serves as the Company’s headquarters. The Company owns a 150,000 square foot building on eight acres in Bellmawr, New Jersey. The facility is used by the Company to manufacture soft pretzels and various lines of baked goods. The Company’s primary west coast manufacturing facility is located in Vernon (Los Angeles), California.
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It consists of a 137,000 square foot facility in which soft pretzels, churros and various lines of baked goods are produced and warehoused. Included in the 137,000 square foot facility is a 30,000 square foot freezer used for warehousing and distribution purposes. The facility is leased through November 2030.
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The Company leases an additional 80,000 square feet of office and warehouse space, adjacent to its manufacturing facility, through November 2030. The Company leases a 22,000 square foot soft pretzel manufacturing facility located in Brooklyn, New York. The lease runs through September 2027.
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The Company leases through June 2030 a 45,000 square foot churros and funnel cake manufacturing facility located in Colton, California. The Company leases an 85,000 square foot bakery manufacturing facility located in Atlanta, Georgia. The lease runs through December 2024 with an option to extend to December 2026.
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The Company leases a 129,000 square foot bakery manufacturing facility located in Rock Island, Illinois. The lease runs through February 2025. The Company owns a 46,000 square foot frozen novelties manufacturing facility and a 42,000 square foot dry storage warehouse located on six acres in Scranton, Pennsylvania.
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The Company leases a 29,600 square foot soft pretzel manufacturing facility located in Hatfield, Pennsylvania. The lease runs through June 2032. The Company leases a 48,000 square foot soft pretzel manufacturing facility located in Carrollton, Texas. The lease runs through April 2026.
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The Company leases an additional property containing a 6,500 square foot storage freezer across the street from the manufacturing facility, which expires March 2030. The Company’s fresh bakery products manufacturing facility and offices are located in Bridgeport, New Jersey in three buildings totaling 133,000 square feet. The buildings are leased through December 2025.
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The Company owns a 165,000 square foot fig and fruit bar manufacturing facility located on 9-1/2 acres in Moscow Mills (St. Louis), Missouri.
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The Company owns an 84,000 square foot handheld products manufacturing facility in Holly Ridge, North Carolina. 14 The Company leases a 70,000 square foot handheld products manufacturing facility in Weston, Oregon which is leased through June 30, 2031. The Company leases an additional 11,300 square foot freezer storage facility in Weston, Oregon which expires May 2024.
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The Company leases 84,000 square feet of office space in LaVergne (Nashville), Tennessee through February 2035 for its ICEE headquarters. The Company leases a 44,000 square foot frozen novelties manufacturing facility in Tampa, Florida which is leased through November 2030.
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The Company owns two industrial buildings totaling 107,000 square feet, as well as a 76,000 square foot parcel of land in Paducah, Kentucky. Additionally, the Company leases three buildings totaling 34,000 square feet in Paducah, Kentucky, with lease end dates ranging from December 2022 through February 2027.
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The Company leases two frozen novelties warehouse facilities in Lancaster, California, totaling 23,000 square feet. These properties are leased through March 2026. The Company also leases approximately 170 smaller warehouse and distribution facilities in 44 states, Mexico, Canada, Australia and China. The Company leases a 117,000 square foot cold storage facility in Terrell, Texas which is leased through November 2043.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeA plan to purchase 500,000 shares was announced on August 4, 2017 with no expiration date. 318,858 shares remain to be purchased under this plan. 15 For information on the Company’s Equity Compensation Plans, please see Item 12 herein.
Biggest changeA plan to purchase 500,000 shares was announced on August 4, 2017 with no expiration date. 318,858 shares remain available to be purchased under this plan.
Item 5. Market For Registrant ’ s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol “JJSF.” As of September 30, 2023, we had approximately 75 stockholders of record of our common stock.
Item 5. Market For Registrant ’ s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol “JJSF.” As of September 28, 2024, we had approximately 71 stockholders of record of our common stock.
The following graph shows a five-year comparison of cumulative total returns for our stock, the Nasdaq Composite Index and our peer group, the Standard & Poor’s (“S&P”) Packaged Foods & Meats Index.
For information on the Company’s Equity Compensation Plans, please see Item 12 herein. 18 The following graph shows a five-year comparison of cumulative total returns for our stock, the Nasdaq Composite Index and our peer group, the Standard & Poor’s (“S&P”) Packaged Foods & Meats Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFiscal 2023 Compared to Fiscal 2022 September 30, September 24, 2023 2022 (in thousands) Cash flows from operating activities Net earnings $ 78,906 $ 47,235 Non-cash items in net income: Depreciation of fixed assets 56,616 49,669 Amortization of intangibles and deferred costs 6,525 3,454 Intangible asset impairment charges 1,678 1,010 (Gains) Losses from disposals of property & equipment (409 ) 220 Share-based compensation 5,318 4,269 Deferred income taxes 10,935 8,829 (Gain) Loss on marketable securities (8 ) 315 Other 323 (95 ) Changes in assets and liabilities, net of effects from purchase of companies 12,395 (88,844 ) Net cash by operating activities $ 172,279 $ 26,062 ● The increase in depreciation of fixed assets was largely due to prior year purchases of property, plant and equipment, as well as depreciation expense related to assets acquired in the fiscal 2022 Dippin’ Dots acquisition. ● The increase in amortization of intangibles and deferred costs was related to intangible assets acquired in the fiscal 2022 Dippin’ Dots acquisition. ● The increase in deferred income taxes was primarily related to increased deferred tax liabilities which arose in connection with overall depreciation related temporary differences in fiscal year 2023. ● Cash flows associated with changes in assets and liabilities, net effects from purchase of companies, generated approximately $12.4 million of cash in fiscal 2023 compared with a usage of $88.8 million of cash in fiscal 2022.
Biggest changeLIQUIDITY AND CAPITAL RESOURCES Although there are many factors that could impact our operating cash flow, most notably net earnings, we believe that our future operating cash flow, along with our borrowing capacity, our current cash and cash equivalent balances and our investment securities is sufficient to satisfy our cash requirements over the next twelve months and beyond, as well as fund future growth and expansion. 26 Fiscal 2024 Compared to Fiscal 2023 September 28, September 30, 2024 2023 (in thousands) Cash flows from operating activities Net earnings $ 86,551 $ 78,906 Non-cash items in net income: Depreciation of fixed assets 63,411 56,616 Amortization of intangibles and deferred costs 7,190 6,525 Intangible asset impairment charges - 1,678 Losses (Gains) from disposals of property & equipment 11 (409 ) Share-based compensation 6,220 5,318 Deferred income taxes 6,434 10,935 (Gain) on marketable securities - (8 ) Other (199 ) 323 Changes in assets and liabilities, net of effects from purchase of companies 3,448 12,395 Net cash provided by operating activities $ 173,066 $ 172,279 ● The increase in depreciation of fixed assets was largely due to prior year purchases of property, plant and equipment. ● The decrease in deferred income taxes was primarily related to higher increased deferred tax liabilities in the prior year which arose in connection with overall depreciation related temporary differences in fiscal year 2023. ● Cash flows associated with changes in assets and liabilities, net effects from purchase of companies, generated approximately $3.4 million of cash in fiscal 2024 compared with $12.4 million of cash in fiscal 2023.
Considering that we have stop loss coverage of $225,000 for each individual plan subscriber, the general consistency of claims payments and the short time lag, we believe that there is not a material exposure for this liability. We self-insure, up to loss limits, workers’ compensation, automobile and general liability claims.
Considering that we have stop loss coverage of $225,000 for each individual plan subscriber, the general consistency of claims payments and the short time lag, we believe that there is not a material exposure for this liability. 31 We self-insure, up to loss limits, workers’ compensation, automobile and general liability claims.
Other than those potential impacts, we do not believe there is a reasonable likelihood that there will be a material change in tax related balances. 30 Business Combinations We use assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination.
Other than those potential impacts, we do not believe there is a reasonable likelihood that there will be a material change in tax related balances. Business Combinations We use assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination.
In addition, the Chief Operating Decision Maker reviews and evaluates depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. 19 The following table is a summary of sales and operating income, which is how we measure segment profit.
In addition, the Chief Operating Decision Maker reviews and evaluates depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. The following table is a summary of sales and operating income, which is how we measure segment profit.
Following are some of the areas requiring significant judgments and estimates: revenue recognition, allowance for estimated credit losses, valuation of goodwill and long-lived and intangible assets, insurance reserves, and income taxes and business combinations. 28 Revenue Recognition The singular performance obligation of our customer contracts for product and machine sales is determined by each individual purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under the terms of the agreement is satisfied and product control is transferred to our customer.
Following are some of the areas requiring significant judgments and estimates: revenue recognition, allowance for estimated credit losses, valuation of goodwill and long-lived and intangible assets, insurance reserves, and income taxes and business combinations. 29 Revenue Recognition The singular performance obligation of our customer contracts for product and machine sales is determined by each individual purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under the terms of the agreement is satisfied and product control is transferred to our customer.
ACQUISITIONS On June 21, 2022, J & J Snack Foods Corp. and its wholly-owned subsidiary, DD Acquisition Holdings, LLC, completed the acquisition of one hundred percent (100%) of the equity interests of Dippin’ Dots Holding, L.L.C. (“Dippin’ Dots”) which, through its wholly-owned subsidiaries, owns and operates the Dippin’ Dots and Doc Popcorn businesses.
ACQUISITIONS Dippin ’ Dots Acquisition On June 21, 2022, J & J Snack Foods Corp. and its wholly-owned subsidiary, DD Acquisition Holdings, LLC, completed the acquisition of one hundred percent (100%) of the equity interests of Dippin’ Dots Holding, L.L.C. (“Dippin’ Dots”) which, through its wholly-owned subsidiaries, owns and operates the Dippin’ Dots and Doc Popcorn businesses.
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to impairment charges that could be material. 31
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to impairment charges that could be material. 32
Our tests at September 30, 2023 show that the fair value of each of our reporting units with goodwill exceeded its carrying value by at least 50%. Therefore, no further analysis was required. The inputs and assumptions used involve considerable management judgment and are based upon assumptions about expected future operating performance.
Our tests at September 28, 2024 show that the fair value of each of our reporting units with goodwill exceeded its carrying value by at least 50%. Therefore, no further analysis was required. The inputs and assumptions used involve considerable management judgment and are based upon assumptions about expected future operating performance.
The Alternate Base Rate is defined in the Credit Agreement. 27 The Credit Agreement requires the Company to comply with various affirmative and negative covenants, including without limitation (i) covenants to maintain a minimum specified interest coverage ratio and maximum specified net leverage ratio, and (ii) subject to certain exceptions, covenants that prevent or restrict the Company’s ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future indebtedness, alter its capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates, or amend its organizational documents.
The Credit Agreement requires the Company to comply with various affirmative and negative covenants, including without limitation (i) covenants to maintain a minimum specified interest coverage ratio and maximum specified net leverage ratio, and (ii) subject to certain exceptions, covenants that prevent or restrict the Company’s ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future indebtedness, alter its capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates, or amend its organizational documents.
Off – Balance Sheet Arrangements The Company has off-balance sheet arrangements for purchase commitments as of September 30, 2023. Critical Accounting Policies, Judgments and Estimates We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America.
Off – Balance Sheet Arrangements The Company has off-balance sheet arrangements for purchase commitments as of September 28, 2024. Critical Accounting Policies, Judgments and Estimates We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America.
Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 2022 for additional information related to the discussion and analysis of our financial condition and results of operations for the fiscal year ended September 24, 2022 compared to the fiscal year ended September 25, 2021. 16 Business Overview The Company manufactures snack foods and distributes frozen beverages which it markets nationally to the foodservice and retail supermarket industries.
Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023 for additional information related to the discussion and analysis of our financial condition and results of operations for the fiscal year ended September 30, 2023 compared to the fiscal year ended September 24, 2022. 19 Business Overview The Company manufactures snack foods and distributes frozen beverages which it markets nationally to the foodservice and retail supermarket industries.
The increase in fiscal 2023 was primarily due to increased spend for new lines at various plants aimed at increasing capacity. ● Proceeds from redemption and sales of marketable securities decreased in fiscal 2023 as in prior years, we strategically chose to no longer re-invest redeemed proceeds into marketable securities given the low interest rate environment.
The decrease in fiscal 2024 was primarily due to increased spend for new lines at various plants aimed at increasing capacity that had occurred in fiscal 2023. ● Proceeds from redemption and sales of marketable securities decreased in fiscal 2024 as in prior years, we strategically chose to no longer re-invest redeemed proceeds into marketable securities given the low interest rate environment.
We attempt to minimize the effect of future price fluctuations related to the purchase of raw materials primarily through forward purchasing to cover future manufacturing requirements, generally for periods from 1 to 12 months. As of September 30, 2023, we have approximately $125 million of such commitments.
We attempt to minimize the effect of future price fluctuations related to the purchase of raw materials primarily through forward purchasing to cover future manufacturing requirements, generally for periods from 1 to 12 months. As of September 28, 2024, we have approximately $122 million of such commitments.
The Company’s fiscal year 2023 spanned 53 weeks, whereas fiscal years 2022 and 2021 spanned 52 weeks each. 17 RESULTS OF OPERATIONS: Fiscal Year 2023 (53 weeks) Compared to Fiscal Year 2022 (52 weeks) Results of Consolidated Operations The following discussion provides a review of results for the fiscal year ended September 30, 2023 as compared with the fiscal year ended September 24, 2022.
The Company’s fiscal years 2024 and 2022 spanned 52 weeks each, whereas fiscal year 2023 spanned 53 weeks. 20 RESULTS OF OPERATIONS: Fiscal Year 2024 (52 weeks) Compared to Fiscal Year 2023 (53 weeks) Results of Consolidated Operations The following discussion provides a review of results for the fiscal year ended September 28, 2024 as compared with the fiscal year ended September 30, 2023.
Liquidity As of September 30, 2023, we had $49.6 million of cash and cash equivalents. In December 2021, the Company entered into an amended and restated loan agreement (the “Credit Agreement”) with our existing banks which provided for up to a $50 million revolving credit facility repayable in December 2026.
Liquidity As of September 28, 2024, we had $73.4 million of cash and cash equivalents. In December 2021, the Company entered into an amended and restated loan agreement (the “Credit Agreement”) with our existing banks which provided for up to a $50 million revolving credit facility repayable in December 2026.
Our operating leases include leases for real estate from some of our office, distribution and manufacturing facilities as well as manufacturing and non-manufacturing equipment used in our business. As of September 30, 2023, we have operating lease payment obligations of $94.1 million, with $16.5 million payable within 12 months.
Our operating leases include leases for real estate from some of our office, distribution and manufacturing facilities as well as manufacturing and non-manufacturing equipment used in our business. As of September 28, 2024, we have operating lease payment obligations of $159.8 million, with $19.1 million payable within 12 months.
Valuation of Goodwill We have three reporting units with goodwill. Goodwill is evaluated annually by the Company for impairment. We perform impairment tests at year end for our reporting units, which are also the operating segment levels with recorded goodwill utilizing primarily the discounted cash flow method.
We perform impairment tests at year end for our reporting units, which are also the operating segment levels with recorded goodwill utilizing primarily the discounted cash flow method.
We have not made any material changes in the accounting methodology used to value goodwill during the past three fiscal years. 29 Valuation of Long-Lived Assets and Other Intangible Assets We record an impairment charge to property, plant and equipment and amortizing intangible assets in accordance with the applicable accounting standards, when, based on certain indicators of impairment, we believe such assets have experienced a decline in value that is other than temporary.
Valuation of Long-Lived Assets and Other Intangible Assets We record an impairment charge to property, plant and equipment and amortizing intangible assets in accordance with the applicable accounting standards, when, based on certain indicators of impairment, we believe such assets have experienced a decline in value that is other than temporary.
The generation of cash in fiscal 2023 was largely the result of an improved collections environment, as well as a strategic push to lower our investment in inventory related working capital balances. In fiscal 2022, the usage of cash was primarily due to the increase in accounts receivable, inventory, and prepaid balances.
The higher generation of cash in fiscal 2023 was largely the result of an improved collections environment in fiscal 2023 as compared with fiscal 2022, as well as a strategic push to lower our investment in inventory related working capital balances.
As a percentage of sales, marketing and selling expenses as a percentage of sales increased from 6.6% in fiscal 2022 to 7.1% in fiscal 2023, with the increase driven by the additional investment in marketing spend associated with new product launches and the promotion of our core brands.
As a percentage of sales, marketing and selling expenses as a percentage of sales increased from 7.1% in fiscal 2023 to 7.5% in fiscal 2024, with the increase driven by the additional investment in marketing spend associated with new product launches and the promotion of our core brands, along with the incremental licensing fees on new churro business during the fiscal year.
Assumptions used in these forecasts are consistent with internal planning. The actual performance of the reporting units could differ from management’s estimates due to changes in business conditions, operating performance, economic conditions, competition, and consumer preferences.
Assumptions used in these forecasts are consistent with internal planning. The actual performance of the reporting units could differ from management’s estimates due to changes in business conditions, operating performance, economic conditions, competition, and consumer preferences. We have not made any material changes in the accounting methodology used to value goodwill during the past three fiscal years.
There are many factors which can impact our net earnings from year to year, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.
NET EARNINGS Net earnings increased $7.6 million, or 10%, in fiscal 2024 to $86.6 million, or $4.45 per diluted share, from $78.9 million or $4.08 per diluted share, in fiscal 2023 as a result of the aforementioned items. 22 There are many factors which can impact our net earnings from year to year, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.
Handheld sales to food service customers decreased 11% to $82.3 million in fiscal 2023, with the decrease largely attributable to pricing declines related to the contractual pricing true-up of costing on certain raw material ingredients, as well as some volume declines amongst certain customers in the product category. Sales of funnel cake increased $4.6 million, or 17%, to $31.5 million.
Handheld sales to food service customers increased 5% to $86.1 million in fiscal 2024, with the increase largely attributable to pricing increases related to the contractual pricing true-up of costing on certain raw material ingredients, as well as some volume increases amongst certain customers in the product category.
The cost of key ingredients including flour, oils, dairy and meats either declined, or remained materially flat, though double-digit increases were seen in sugar/sweeteners and mixes, which continued to negatively impact margins on certain products including frozen novelties and churros.
The cost of key ingredients including flour, oils, cheese and dairy, mixes and eggs either declined, or remained materially flat, though some increases were seen in certain ingredients, with the largest being cocoa, and to a lesser extent, sugar/sweeteners, and meats. The increases in cocoa negatively impact margins on certain products, the largest being baked goods.
We do not believe that there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to value our accounts receivable. Since adoption of the new guidance on September 27, 2020, we have not made any material changes in the accounting methodology used to value accounts receivable.
We do not believe that there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to value our accounts receivable.
OPERATING EXPENSES Total operating expenses increased by $52.5 million, or 17%, to $360.3 million in fiscal 2023 and increased as a percentage of sales to 23.1% in fiscal 2023 compared with 22.3% in fiscal 2022.
OPERATING EXPENSES Total operating expenses increased by $8.2 million, or 2%, to $368.6 million in fiscal 2024 and increased as a percentage of sales to 23.4% in fiscal 2024 compared with 23.1% in fiscal 2023.
Service revenue increased 7% to $95.9 million in fiscal 2023 and machines revenue, primarily sales of frozen beverage machines, increased from $33.6 million in fiscal 2022 to $37.9 million in fiscal 2023 due to growing installations with new customers. The estimated number of Company-owned frozen beverage dispensers was 23,000 and 22,000 at September 30, 2023 and September 24, 2022, respectively.
Service revenue increased 1% to $96.6 million in fiscal 2024 and machines revenue, primarily sales of frozen beverage machines, increased 1% to $38.2 million in fiscal 2024. The estimated number of Company-owned frozen beverage dispensers was 24,000 and 23,000 at September 28, 2024 and September 30, 2023, respectively.
September 30, September 24, 2023 2022 (in thousands) Cash flows from financing activities Proceeds from issuance of stock 15,212 16,160 Borrowings under credit facility 114,000 125,000 Repayment of borrowings under credit facility (142,000 ) (70,000 ) Payments for debt issuance costs - (225 ) Payments on finance lease obligations (180 ) (279 ) Payment of cash dividends (53,877 ) (48,437 ) Net cash (used in) provided by financing activities $ (66,845 ) $ 22,219 ● Borrowings under credit facility and repayment of borrowings under credit facility relate to the Company’s cash draws and repayments made to primarily fund working capital needs, as well as the initial draw made in fiscal 2022 to fund the Dippin’ Dots acquisition. ● Dividends paid during fiscal 2023 increased as our quarterly dividend was raised during fiscal 2023.
September 28, September 30, 2024 2023 (in thousands) Cash flows from financing activities Proceeds from issuance of stock 15,740 15,212 Borrowings under credit facility 71,000 114,000 Repayment of borrowings under credit facility (98,000 ) (142,000 ) Payments on finance lease obligations (151 ) (180 ) Payment of cash dividends (56,957 ) (53,877 ) Net cash (used in) financing activities $ (68,368 ) $ (66,845 ) ● Borrowings under credit facility and repayment of borrowings under credit facility relate to the Company’s cash draws and repayments made to primarily fund working capital needs and represent the continued net pay-down of borrowings outstanding across both fiscal periods. ● Dividends paid during fiscal 2024 increased as our quarterly dividend was raised during fiscal 2024.
The fiscal 2022 prepaid balance increased primarily due to an increase in prepaid income taxes. 26 September 30, September 24, 2023 2022 (in thousands) Cash flows from investing activities Payments for purchases of companies, net of cash acquired - (221,301 ) Purchases of property, plant and equipment (104,737 ) (87,291 ) Proceeds from redemption and sales of marketable securities 9,716 12,026 Proceeds from disposal of property and equipment 1,781 399 Net cash (used in) by investing activities $ (93,240 ) $ (296,167 ) ● In fiscal 2022, the payments for purchases of companies, net of cash acquired, related to the Dippin’ Dots acquisition. ● Purchases of property, plant and equipment include spending for production growth, in addition to acquiring new equipment, infrastructure replacements, and upgrades to maintain competitive standing and position us for future opportunities.
September 28, September 30, 2024 2023 (in thousands) Cash flows from investing activities Payments for purchases of companies, net of cash acquired (7,014 ) - Purchases of property, plant and equipment (73,569 ) (104,737 ) Proceeds from redemption and sales of marketable securities - 9,716 Proceeds from disposal of property and equipment 699 1,781 Proceeds from insurance for fixed assets 2,218 - Net cash (used in) investing activities $ (77,666 ) $ (93,240 ) ● The payments for purchases of companies, net of cash acquired, in fiscal 2024 related to the Thinsters acquisition. 27 ● Purchases of property, plant and equipment include spending for production growth, in addition to acquiring new equipment, infrastructure replacements, and upgrades to maintain competitive standing and position us for future opportunities.
The increase in gross profit as a percentage of sales was driven by enhanced production efficiencies and the benefit of our fiscal 2022 pricing actions and a better product mix, along with the stabilization of inflationary pressures on the back of historic highs in fiscal 2022.
Gross profit as a percentage of sales increased to 30.9% in fiscal 2024 from 30.1% in fiscal 2023. The increase in gross profit as a percentage of sales was driven by enhanced production efficiencies and a better product mix, along with the continued stabilization of inflationary pressures.
As of September 24, 2022, we had $188.2 million of additional borrowing capacity, after giving effect to the $9.8 million of letters of credit outstanding. The Company’s material cash requirements include the following contractual and other obligations: Purchase Commitments Our most significant raw material requirements include flour, packaging, shortening, corn syrup, sugar, juice, cheese, chocolate, and a variety of nuts.
The Company’s material cash requirements include the following contractual and other obligations: Purchase Commitments Our most significant raw material requirements include flour, packaging, shortening, corn syrup, sugar, juice, cheese, chocolate, and a variety of nuts.
FROZEN BEVERAGES SEGMENT RESULTS Fiscal year ended September 30, September 24, 2023 2022 (53 weeks) (52 weeks) % Change (in thousands) Frozen Beverages Beverages $ 224,655 $ 184,063 22.1 % Repair and maintenance service 95,941 89,840 6.8 % Machines revenue 37,933 33,601 12.9 % Other 3,032 2,522 20.2 % Total Frozen Beverages $ 361,561 $ 310,026 16.6 % Frozen Beverages Operating Income $ 50,365 $ 33,800 49.0 % Total frozen beverage segment sales increased $51.5 million or 17% to $361.6 million in fiscal 2023.
FROZEN BEVERAGES SEGMENT RESULTS Fiscal year ended September 28, September 30, 2024 2023 (52 weeks) (53 weeks) % Change (in thousands) Frozen Beverages Beverages $ 230,030 $ 224,655 2.4 % Repair and maintenance service 96,589 95,941 0.7 % Machines revenue 38,188 37,933 0.7 % Other 3,445 3,032 13.6 % Total Frozen Beverages $ 368,252 $ 361,561 1.9 % Frozen Beverages Operating Income $ 51,459 $ 50,365 2.2 % 25 Total frozen beverage segment sales increased $6.7 million or 2% to $368.3 million in fiscal 2024.
Summary of Results Fiscal year ended September 30, September 24, 2023 2022 (53 weeks) (52 weeks) % Change (in thousands) Net Sales $ 1,558,829 $ 1,380,656 12.9 % Cost of goods sold 1,088,964 1,011,014 7.7 % Gross Profit 469,865 369,642 27.1 % Operating expenses Marketing 110,258 91,636 20.3 % Distribution 172,804 159,637 8.2 % Administrative 75,425 55,189 36.7 % Intangible asset impairment charges 1,678 1,010 Other general expense 182 371 (50.9 )% Total Operating Expenses 360,347 307,843 17.1 % Operating Income 109,518 61,799 77.2 % Other income (expense) Investment income 2,743 980 179.9 % Interest expense (4,747 ) (1,025 ) 363.1 % Earnings before income taxes 107,514 61,754 74.1 % Income tax expense 28,608 14,519 97.0 % NET EARNINGS $ 78,906 $ 47,235 67.0 % Comparisons as a Percentage of Net Sales Fiscal year ended September 30, September 24, 2023 2022 Basis Pt Chg Gross profit 30.1 % 26.8 % 330 Marketing 7.1 % 6.6 % 50 Distribution 11.1 % 11.6 % (50 ) Administrative 4.8 % 4.0 % 80 Operating income 7.0 % 4.5 % 250 Earnings before income taxes 6.9 % 4.5 % 240 Net earnings 5.1 % 3.4 % 170 18 NET SALES Net sales increased by $178.2 million, or 13%, to $1,558.8 million in fiscal 2023.
Summary of Results Fiscal year ended September 28, September 30, 2024 2023 (52 weeks) (53 weeks) % Change (in thousands) Net Sales $ 1,574,755 $ 1,558,829 1.0 % Cost of goods sold 1,088,630 1,088,964 0.0 % Gross Profit 486,125 469,865 3.5 % Operating expenses Marketing 118,805 110,258 7.8 % Distribution 175,601 172,804 1.6 % Administrative 74,771 75,425 (0.9 )% Intangible asset impairment charges - 1,678 Other general expense (597 ) 182 (428.0 )% Total Operating Expenses 368,580 360,347 2.3 % Operating Income 117,545 109,518 7.3 % Other income (expense) Investment income 3,228 2,743 17.7 % Interest expense (1,826 ) (4,747 ) (61.5 )% Earnings before income taxes 118,947 107,514 10.6 % Income tax expense 32,396 28,608 13.2 % NET EARNINGS $ 86,551 $ 78,906 9.7 % Comparisons as a Percentage of Net Sales Fiscal year ended September 28, September 30, 2024 2023 Basis Pt Chg Gross profit 30.9 % 30.1 % 80 Marketing 7.5 % 7.1 % 40 Distribution 11.2 % 11.1 % 10 Administrative 4.7 % 4.8 % (10 ) Operating income 7.5 % 7.0 % 50 Earnings before income taxes 7.6 % 6.9 % 70 Net earnings 5.5 % 5.1 % 40 NET SALES Net sales increased by $15.9 million, or 1%, to $1,574.8 million in fiscal 2024.
Operating income in our Food Service segment increased from $18.5 million in fiscal 2022 to $49.8 million in fiscal 2023, largely driven by the benefit seen from the incremental Dippin’ Dots sales, as well as by improved gross margin performance and improving distribution expenses. 20 RETAIL SUPERMARKETS SEGMENT RESULTS Fiscal year ended September 30, September 24, 2023 2022 (53 weeks) (52 weeks) % Change (in thousands) Retail Supermarket Sales to External Customers Soft pretzels $ 60,272 $ 61,925 (2.7 )% Frozen novelties 115,807 108,911 6.3 % Biscuits 25,074 24,695 1.5 % Handhelds 16,655 5,640 195.3 % Coupon redemption (2,561 ) (3,713 ) (31.0 )% Other 181 485 (62.7 )% Total Retail Supermarket $ 215,428 $ 197,943 8.8 % Retail Supermarket Operating Income $ 9,375 $ 9,487 (1.2 )% Sales of products to retail supermarkets increased $17.5 million, or 9%, to $215.4 million in fiscal year 2023.
Operating income in our Food Service segment remained relatively flat, with a slight decrease from $49.8 million in fiscal 2023 to $49.5 million in fiscal 2024, driven by the impact of the additional week in fiscal 2023 offsetting some slight improved gross margin performance. 24 RETAIL SUPERMARKETS SEGMENT RESULTS Fiscal year ended September 28, September 30, 2024 2023 (52 weeks) (53 weeks) % Change (in thousands) Retail Supermarket Sales to External Customers Soft pretzels $ 61,744 $ 60,272 2.4 % Frozen novelties 112,192 115,807 (3.1 )% Biscuits 24,229 25,074 (3.4 )% Handhelds 26,253 16,655 57.6 % Coupon redemption (3,162 ) (2,561 ) 23.5 % Other 52 181 (71.3 )% Total Retail Supermarket $ 221,308 $ 215,428 2.7 % Retail Supermarket Operating Income $ 16,632 $ 9,375 77.4 % Sales of products to retail supermarkets increased $5.9 million, or 3%, to $221.3 million in fiscal year 2024.
Interest expense increased by $1.0 million in fiscal 2023 due to the Company’s outstanding borrowings on the Amended Credit Agreement. INCOME TAX EXPENSE Our effective tax rate in fiscal 2022 was 23.5%. Our effective tax rate in fiscal 2021 year was 24.9%.
Interest expense decreased by $2.9 million, or 62%, to $1.8 million in fiscal 2024 due to the reduction in the Company’s average outstanding borrowings under the Amended Credit Agreement throughout the fiscal year. INCOME TAX EXPENSE Our effective tax rate in fiscal 2024 was 27.2%. Our effective tax rate in fiscal 2023 was 26.6%.
As of September 30, 2023, the Company is in compliance with all financial covenants of the Credit Agreement. As of September 30, 2023, we had $27.0 million of outstanding borrowings drawn on the Amended Credit Agreement.
As of September 28, 2024, the Company is in compliance with all financial covenants of the Credit Agreement. 28 As of September 28, 2024, we had no outstanding borrowings drawn on the Amended Credit Agreement. As of September 28, 2024, we had $212.7 million of additional borrowing capacity, after giving effect to the $12.3 million of letters of credit outstanding.
Fiscal year ended September 30, September 24, 2023 2022 (53 weeks) (52 weeks) % Change (in thousands) Net Sales Food Service $ 981,840 $ 872,687 12.5 % Retail Supermarket 215,428 197,943 8.8 % Frozen Beverages 361,561 310,026 16.6 % Total Sales $ 1,558,829 $ 1,380,656 12.9 % Fiscal year ended September 30, September 24, 2023 2022 (53 weeks) (52 weeks) % Change (in thousands) Operating Income Food Service $ 49,778 $ 18,512 168.9 % Retail Supermarket 9,375 9,487 (1.2 )% Frozen Beverages 50,365 33,800 49.0 % Total Operating Income $ 109,518 $ 61,799 77.2 % FOOD SERVICE SEGMENT RESULTS Fiscal year ended September 30, September 24, 2023 2022 (53 weeks) (52 weeks) % Change (in thousands) Food Service Sales to External Customers Soft pretzels $ 235,572 $ 205,752 14.5 % Frozen novelties 145,425 78,183 86.0 % Churros 108,927 88,242 23.4 % Handhelds 82,292 92,130 (10.7 )% Bakery 378,149 381,526 (0.9 )% Other 31,475 26,854 17.2 % Total Food Service $ 981,840 $ 872,687 12.5 % Food Service Operating Income $ 49,778 $ 18,512 168.9 % Sales to food service customers increased $109.2 million, or 13%, to $981.8 million in fiscal 2023, which included an increase of $62.2 million in sales from Dippin’ Dots.
Fiscal year ended September 28, September 30, 2024 2023 (52 weeks) (53 weeks) % Change (in thousands) Net Sales Food Service $ 985,195 $ 981,840 0.3 % Retail Supermarket 221,308 215,428 2.7 % Frozen Beverages 368,252 361,561 1.9 % Total Sales $ 1,574,755 $ 1,558,829 1.0 % Fiscal year ended September 28, September 30, 2024 2023 (52 weeks) (53 weeks) % Change (in thousands) Operating Income Food Service $ 49,454 $ 49,778 (0.7 )% Retail Supermarket 16,632 9,375 77.4 % Frozen Beverages 51,459 50,365 2.2 % Total Operating Income $ 117,545 $ 109,518 7.3 % 23 FOOD SERVICE SEGMENT RESULTS Fiscal year ended September 28, September 30, 2024 2023 (52 weeks) (53 weeks) % Change (in thousands) Food Service Sales to External Customers Soft pretzels $ 222,237 $ 235,572 (5.7 )% Frozen novelties 147,995 145,425 1.8 % Churros 114,306 108,927 4.9 % Handhelds 86,053 82,292 4.6 % Bakery 387,129 378,149 2.4 % Other 27,475 31,475 (12.7 )% Total Food Service $ 985,195 $ 981,840 0.3 % Food Service Operating Income $ 49,454 $ 49,778 (0.7 )% Sales to food service customers increased $3.4 million, or 0.3%, to $985.2 million in fiscal 2024.
Administrative expenses as a percentage of sales increased from 4.0% in fiscal 2022 to 4.8% in fiscal 2023, with the increase largely attributable to higher performance-based bonus payments and continued investments in capability.
Administrative expenses as a percentage of sales decreased slightly from 4.8% in fiscal 2023 to 4.7% in fiscal 2024, with the decrease largely attributable to improved management of expenses, and leverage from higher sales.
Sales of frozen novelties increased $6.9 million, or 6%, to $115.8 million in fiscal 2023. Sales of biscuits and dumplings increased 2% to $25.1 million in fiscal 2023. Handheld sales to retail supermarket customers increased 195% to $16.7 million in fiscal 2023, with the increase largely driven by expansion with a major retailer.
Sales of biscuits and dumplings decreased 3% to $24.2 million in fiscal 2024. Handheld sales to retail supermarket customers increased 58% to $26.3 million in fiscal 2024, with the increase largely driven by expanded placements of product with a major retailer. Sales of new products in retail supermarkets were minimal in fiscal 2024.
Churro sales to food service customers were up 23% to $108.9 million for the year led by customer expansion and growing menu penetration. Sales of bakery products decreased $3.4 million, or 1%, to $378.1 million for the year, with the decrease attributable to the rationalization of certain lower margin Stock Keeping Units (“SKU”)’s.
Churro sales to food service customers were up 5% to $114.3 million for the year led by customer expansion and growing menu penetration.
To help offset these cost headwinds, we implemented a series of pricing actions throughout fiscal 2022. Fiscal Period The Company’s fiscal year is the 52- or 53- week period that ends on the last Saturday of September.
Churros brand. ● Our recent fiscal year 2024 acquisition of Thinsters Fiscal Period The Company’s fiscal year is the 52- or 53- week period that ends on the last Saturday of September.
Sales of new products in the first twelve months since their introduction were approximately $4.6 million for the year. Operating income in our Food Service segment decreased from $39.2 million in fiscal 2021 to $18.5 million in fiscal 2022.
Sales of new products in the first twelve months since their introduction were approximately $24.7 million for the fiscal year, driven primarily by the addition of churros to the menu of a major QSR customer.
Distribution expenses as a percentage of sales decreased to 11.1% in fiscal 2023 from 11.6% in fiscal 2022, with the decrease driven by the benefits of our strategic initiatives to improve logistics management and increase efficiency across our distribution network and supply chain.
Some decreases in distribution expenses driven by the benefits of our strategic initiatives to improve logistics management and increase efficiency across our distribution network and supply chain were more than offset by approximately $5 million of non-recurring start-up costs related to the opening of two additional regional distribution centers in fiscal 2024.
Soft pretzel sales to retail supermarkets were $61.9 million, an increase of $6.9 million, or 13%, from sales in fiscal 2021. Sales of frozen novelties increased $8.9 million, or 9%, to $108.9 million. Sales of biscuits and dumplings increased 2% to $24.7 million for the year. Handheld sales to retail supermarket customers decreased 26% to $5.6 million for the year.
Soft pretzel sales to retail supermarkets were $61.7 million, an increase of $1.5 million, or 2%, from sales in fiscal 2023, with the increase largely attributable to the incremental distribution of our core soft pretzel brands.
OPERATING EXPENSES Total operating expenses increased $80.1 million to $307.8 million in fiscal 2022 and increased as a percentage of sales to 22.3% of sales from 19.9% in fiscal 2021.
Distribution expenses as a percentage of sales increased slightly to 11.2% in fiscal 2024 from 11.1% in fiscal 2023.
Organic sales growth was driven by growth across all three of the Company’s business segments, led by our core products including soft pretzels, churros, frozen novelties and frozen beverages. The organic sales growth was largely driven by improved marketing, new customers, additional product placement, as well as the benefit of our pricing actions that had been taken throughout fiscal 2022.
Despite the headwind of the comparative extra week in fiscal 2023, organic sales growth was driven by growth across all three of the Company’s business segments. The organic sales growth was largely driven by improved marketing, new customers, and additional product placement. 21 GROSS PROFIT Gross profit increased by $16.3 million, or 4%, to $486.1 million in fiscal 2024.
OTHER INCOME AND EXPENSE Investment income increased by $1.8 million, or 180%, to $2.7 million in fiscal 2023 due to the improving interest rate environment in fiscal 2023. Interest expense increased by $3.7 million, or 363%, to $4.7 million in fiscal 2023 due to the Company’s outstanding borrowings under the Amended Credit Agreement.
OTHER INCOME AND EXPENSE Investment income increased by $0.5 million, or 18%, to $3.2 million in fiscal 2024 due to higher average cash balances and higher interest rates on foreign cash balances.
The increase also reflects the full year impact of a higher expense Dippin’ Dots business in fiscal 2023 results. Operating expenses included intangible asset impairment charges of $1.7 million in fiscal 2023 and $1.0 million in fiscal 2022.
The slight increase was primarily related to the higher marketing expenses to support our new product launches, along with incremental licensing fees on new churro business during the fiscal year. Operating expenses included intangible asset impairment charges of $1.7 million in fiscal 2023, with no such charges incurred in fiscal 2024.
Removed
The Company’s retail supermarket customers are primarily supermarket chains. Business Trends COVID-19 Dating back to the onset of the COVID-19 pandemic in fiscal 2020, the effects of COVID-19 on consumer behavior have impacted the relevant demand for our Food Service, Retail, and Frozen Beverage segments.
Added
The Company’s retail supermarket customers are primarily supermarket chains. Business Trends and Strategy Our results are impacted by macroeconomic and demographic trends and changes in consumer behavior. The U.S. economy has experienced economic volatility and uncertainty in recent years, which has had, and we expect might continue to have, an impact on consumer behavior.
Removed
In fiscal 2020, we saw a shift in demand towards increased at-home food consumption, which benefited our Retail segment, and away from in-restaurant dining, and experience driven activities, which negatively impacted our Food Service and Frozen Beverage segments. This shift in demand proved inconsistent and volatile over the course of the pandemic.
Added
Consumer spending may continue to be impacted by levels of discretionary income and the impact of that on the consumer’s decision making around their purchases. In addition, inflation continues to impact our business, and fluctuating raw material input costs may continue to impact the costs of our products.
Removed
In fiscal 2021 and fiscal 2022, as part of the pandemic economy that impacted our operations opened, sales in our Food Service and Frozen Beverages segments improved. The aforementioned shift, and overall volatility in demand, has had a significant impact on the operating results of each of our three segments over the past three fiscal years.
Added
To help combat these potential headwinds, we strategically look to improve our operational efficiencies and margins, as well expand our growth opportunities across our various channels and customers.
Removed
Additional impacts from the pandemic have caused us to experience higher hourly wage rates paid to our front-line employees, increased costs for personal protective equipment, increased complexity and uncertainty around production planning and forecasting, and overall lower levels of efficiency in our production and distribution network, all of which has unfavorably impacted our operating results.
Added
Some recent examples of implementing these strategies include: ● Our recently completed strategic supply chain transformation in which we opened three regional distribution centers which is projected to drive significant cost reductions around warehousing and distribution costs. ● The recent addition of six new production lines which has significantly expanded upon our capacity and allowed us to meet growth opportunities across our core products such as pretzels, churros and frozen novelties. ● Implementation of a new ERP system in fiscal 2022 which has helped to create efficiencies and streamline internal processes. ● Many examples of successful cross-selling and leveraging our brands across customer channels, including our recent expansion of the breadth and depth of our Dippin’ Dots brand across the theater channel, as well as looking to penetrate that brand into the retail market. ● Further expansion of our SuperPretzel brand across the retail market through the launch of Bavarian Sticks. ● Our fiscal year 2023 rollout of our new Hola!
Removed
In fiscal 2023, our operating environment became more predictable and stable, and the majority of the volatility and shifts in demand that had been more present in fiscal 2021 and 2022, somewhat subsided.
Added
The slight increase between periods was primarily attributable to a slightly higher blended state tax rate.
Removed
Inflation We continued to experience cost inflation through fiscal 2023, although the impact was significantly less than it had been in fiscal 2022, primarily tied to a smaller group of raw materials and packaging, and materially offset by the benefit of the pricing actions that had been taken in fiscal 2022.
Added
Soft pretzel sales to the food service market decreased 6% to $222.2 million for the year, with the decrease attributable to soft consumer spending in key channels, as well as the impact of the additional week in fiscal 2023.
Removed
The inflationary cost environment we experienced during fiscal 2022 resulted in significantly higher input costs for our business. During fiscal 2022, we experienced unprecedented inflationary pressures on commodities such as flour, oils, eggs, meats and dairy, in addition to notably higher costs for packaging, freight and warehousing, and labor.
Added
Frozen novelties sales increased $2.6 million, or 2%, to $148.0 million for the year, with a strong fiscal year performance seen across multiple brands within our frozen novelties portfolio despite the soft channel performance in amusement and convenience, which are key sales venues for Dippin’ Dots.
Removed
Fiscal 2023 net sales include $96.0 million of net sales from Dippin’ Dots, an increase of $62.2 million from prior fiscal year with the increase primarily attributable to the timing of the acquisition in prior year results.
Added
Sales of bakery products increased $9.0 million, or 2%, to $387.1 million for the year, with the increase attributable to contractual pricing true-up on costing on certain raw material ingredients, as well as, some volume increases amongst certain customers in the product category.
Removed
To a lesser extent, fiscal 2023 net sales were benefited by the extra week in the fiscal year. GROSS PROFIT Gross profit increased by $100.2 million, or 27%, to $469.9 million in fiscal 2023. Gross profit as a percentage of sales increased to 30.1% in fiscal 2023 from 26.8% in fiscal 2022.
Added
The benefit of the wrap of prior year price increases, as well as some current year contractual pricing true-up of costing on certain raw material ingredients had a slight favorable impact on sales in the fiscal year, and more than offset some very slight volume declines that were primarily attributable to the additional week in fiscal 2023.
Removed
The increase reflects the impact of inflationary pressures across the majority of our cost line items including industry-wide freight and distribution cost increases and wage increases that more heavily impacted the Company’s comparative results in the first and second fiscal quarters, offset somewhat by the benefits seen from our strategic initiatives to improve logistics management and increase efficiency across our distribution network and supply chain.
Added
Sales of frozen novelties decreased $3.6 million, or 3%, to $112.2 million in fiscal 2024, with the decrease mostly attributable to the impact of the additional week in fiscal 2023. The favorable impact of very strong fiscal second and fiscal third quarters was mostly offset by a weaker fiscal fourth quarter for a majority of our frozen novelty brands.
Removed
INCOME TAX EXPENSE Our effective tax rate in fiscal 2023 was 26.6%. Our effective tax rate in fiscal 2022 year was 23.5%. NET EARNINGS Net earnings increased $31.7 million, or 67%, in fiscal 2023 to $78.9 million, or $4.08 per diluted share, from $47.2 million or $2.46 per diluted share, in fiscal 2022 as a result of the aforementioned items.
Added
Sales in fiscal 2024 benefitted minimally from the impact of prior fiscal year’s price increases, and more than offset slight decreases in volume that were primarily attributable to the additional week in fiscal 2023.
Removed
Soft pretzel sales to the food service market increased 14% to $235.6 million for the year, led by the continued increase in sales of our core pretzel products. Frozen novelties sales increased $67.2 million, or 86%, to $145.4 million for the year, with the increase largely driven by incremental Dippin’ Dots sales during fiscal 2023.
Added
Operating income in our Retail Supermarkets segment increased $7.3 million in fiscal 2024 to $16.6 million with the increase primarily driven by sales growth as well as improved gross margin performance in most of our retail product categories.
Removed
Sales of new products in the first twelve months since their introduction were approximately $0.3 million for the fiscal year. The benefit of the wrap of prior year price increases favorably impacted sales in the fiscal year, and more than offset some volume declines seen in certain product categories.
Added
Beverage-related sales increased 2%, or $5.4 million, in fiscal 2024. Gallon sales decreased 3% from the prior fiscal year, primarily reflecting a weaker theater performance as the prior year’s actors’ strike impacted the volume and quality of movie releases, although the weakness began to soften in Q4 as some stronger releases began to hit the market.
Removed
Soft pretzel sales to retail supermarkets were $60.3 million, a decrease of $1.7 million, or 3%, from sales in fiscal 2022. Soft pretzel sales to retail supermarkets were impacted by a softer consumer environment as retailers and grocery chains reported lower traffic in stores and smaller baskets at certain points during fiscal 2023.
Added
Operating income in our Frozen Beverage segment increased 2%, or $1.1 million, in fiscal 2024.
Removed
Sales of new products in the first twelve months since their introduction in retail supermarkets were approximately $0.6 million in fiscal 2023. Operating income in our Retail Supermarkets segment remained relatively flat in fiscal 2023 as compared with fiscal 2022, with a decrease of $0.1 million, or 1%.
Added
RESULTS OF OPERATIONS: Fiscal Year 2023 (53 weeks) Compared to Fiscal Year 2022 (52 weeks) The discussion of our results of operations for Fiscal Year 2023 (53 weeks) compared to Fiscal Year 2022 (52 weeks) can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023 and such discussion is incorporated by reference herein.
Removed
The relatively comparative flat operating income was the result of gross margin challenges earlier in fiscal 2023 due to higher promotions and allowances, as well as inflationary pressures on raw material costs, offset by stronger comparative performance in the fiscal third and fourth quarters of 2023, largely driven by improved gross margin and lower distribution expenses.
Added
The acquisition was accounted for under the purchase method of accounting, and its operations are included in the accompanying consolidated financial statements from their respective acquisition dates. Thinsters Acquisition On April 8, 2024, J & J Snack Foods Corp. completed the acquisition of the Thinsters cookie business from Hain Celestial Group.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−1 removed2 unchanged
Biggest changePurchasing Risk The Company’s most significant raw material requirements include flour, shortening, corn syrup, sugar, juice, cheese, chocolate, and a variety of nuts. The Company attempts to minimize the effect of future price fluctuations related to the purchase of raw materials primarily through forward purchasing to cover future manufacturing requirements, generally for periods from 1 to 12 months.
Biggest changeThe Company attempts to minimize the effect of future price fluctuations related to the purchase of raw materials primarily through forward purchasing to cover future manufacturing requirements, generally for periods from 1 to 12 months. Future contracts are not used in combination with forward purchasing of these raw materials.
Foreign Exchange Rate Risk The Company has not entered into any forward exchange contracts to hedge its foreign currency rate risk as of September 30, 2023, because it does not believe its foreign exchange exposure is significant. Item 8.
Foreign Exchange Rate Risk The Company has not entered into any forward exchange contracts to hedge its foreign currency rate risk as of September 28, 2024, because it does not believe its foreign exchange exposure is significant. Item 8.
Future contracts are not used in combination with forward purchasing of these raw materials. The Company’s procurement practices are intended to reduce the risk of future price increases, but also may potentially limit the ability to benefit from possible price decreases.
The Company’s procurement practices are intended to reduce the risk of future price increases, but also may potentially limit the ability to benefit from possible price decreases.
Removed
As of September 30, 2023, the Company had no interest rate swap contracts. Interest Rate Risk At September 30, 2023, the Company had variable rate debt of $27.0 million with a weighted average interest rate of 6.48%. If borrowing rates were to increase 1% above the current rates, it would increase interest expense by $0.3 million on an annual basis.
Added
As of September 28, 2024, the Company had no interest rate swap contracts. Interest Rate Risk At September 28, 2024, the Company had no debt outstanding. Purchasing Risk The Company’s most significant raw material requirements include flour, shortening, corn syrup, sugar, juice, cheese, chocolate, and a variety of nuts.

Other JJSF 10-K year-over-year comparisons