J&J Snack Foods Corp.
Q3 2021 Earnings Call Transcript

Published:

  • Operator:
    Welcome to the J&J Snack Foods' Third Quarter Earnings Call. My name is Danielle and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now turn the call over to Dan Fachner. You may begin.
  • Daniel Fachner:
    Good morning. I'm Dan Fachner and welcome to our third quarter earnings call. We are delighted to have you listening in with us. Let me start with some obligatory comments. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.
  • Operator:
    Thank you. We will now begin the question-and-answer session. We have a question from Ryan Bell. Please go ahead.
  • Ryan Bell:
    Hey everyone.
  • Daniel Fachner:
    Hey Ryan.
  • Ryan Bell:
    Hey, congrats on a good quarter. Just had a question around the Frozen Beverage business? Would you just provide a bit of color about how much of the base has reopened? We appreciate that the business has seen more consistent structural pressures than some of your other business units; amusement channels seem to be doing well. The commentary was that traffic was up in mass merchandise, QSR, and theater; at this point, is the primary detractors to getting back to normalized levels just the theater channel?
  • Daniel Fachner:
    Ryan, it really is. Most of all the other channels have come back to normal levels for us. The biggest piece that we are we're waiting on is the theater business. Remember that theater business for FCB or for the ICEE business is about 25%. And so we are waiting on that coming back, but we feel really strong about all the rest of the business. And we've had some great new business that we've added. If you remember a couple quarters ago, we talked about some diversification and we've been able to see some of that diversification into accounts come through. I think we mentioned that we're, we're rolling out a program within Krystal's hamburgers in the south and we're rolling out a program at Golden Corral restaurants and seeing some really great potential new businesses in the pipeline. So, we feel really good about it as the theater business is starting to return.
  • Ryan Bell:
    Thanks. That’s helpful. And then for food service, it actually grew relative to 2019 levels. What's the primary driver of that? Is that amusement as well restaurants, if you can provide a little bit more content?
  • Daniel Fachner:
    Yes, again, the amusement park channel is really strong. In addition to that -- and maybe you picked up this in my comments earlier, the per ticket price is up in a lot of these locations too. So, where we're selling in the theaters, the per ticket prices up; where we're selling in amusement park, the per ticket prices up and even in the ballparks as they come back, we're seeing that average per ticket price up and a lot of new good growth as well in that food service channel.
  • Ryan Bell:
    Great. Thank you. And then if you give the comments on what you're seeing in terms of input cost inflation, and how you can balance that over the coming months, against the huge increases in efficiencies that you're seeing as more of the volumes come back online to the food service and Frozen Beverage business?
  • Daniel Fachner:
    Well, we're working really hard at that. It's certainly like everybody, we've taken on some increases from commodities and things like that. But we've also been busy out there passing on some price increases that we're hoping will offset much of that in the fourth quarter. So, we're working really hard at that. At the same time, we have some great continuous improvement initiatives going on within the plants that we're also hoping will help offset most of that.
  • Ryan Bell:
    Great. Thanks. That's it for me.
  • Daniel Fachner:
    Thank you, Ryan.
  • Operator:
  • Robert Costello:
    Hello. I have a question on the production. You've closed the plant I guess about a year ago and you have a pickup in demand. So, how are you balancing the two? And in lieu of that you -- the -- in the quarter, I saw that the inventories went down by 6 million. So, are you -- with this pickup in business, are you having to increase production beyond your expected sales growth just to make up for this pickup?
  • Daniel Fachner:
    Yes, there's a lot into that question, Robert and good morning. Good talking with you. We did close down that plant in Chicago and are making most of those products internally now in a different plant. And you're right, like a lot of manufacturers out there today were challenged with the labor industry and the way that it is and being able to keep up with the heavy demand. But today, we've been able to do that and so we're continuing to shuffle the different products, the different plants to be able to best produce the way that we can and keep up with the heavy demand out there.
  • Robert Costello:
    Now, is it help -- is -- a lot of manufacturers have been -- how do you think you've been able to stand out from the problems that the other manufacturers have been mentioning repeatedly? Is it because of your flexible workforce that you're not all full-time? Can you give us some idea of what's helped you here?
  • Daniel Fachner:
    Well, I don't know if I have the magic bullet there to give you except that we have a great management team in place who has watched that really closely. We've done a pretty good job with forecasting and working with our plant managers to do the best that we can to keep up with the heavy demand. Like a lot of other manufacturers, that labor shortage, as I mentioned earlier, has been one of those things that we've had to deal with. And so we've had to pass on some salary increases out there to keep up with the labor force. But we meet on that weekly and try to stay ahead of it as the best we can. And I guess if I was going to give it a magic bullet, I think there's some just really good managers in place who are watching that closely for us.
  • Robert Costello:
    Right. One last question. You're big in the doughnut manufacturing here in the Mid-Atlantic, your big customers down -- their larger store base now in Florida than they do in Pennsylvania when I was down there. Is there any possibility in the near-term of building a plant down there or is it still a couple years away?
  • Daniel Fachner:
    Well, it's something that we talk about often and we talk about it with that important customer. And it's something that we've considered, but I wouldn't expect it to happen in the in a real short-term.
  • Robert Costello:
    All right. Thanks.
  • Daniel Fachner:
    Thank you.
  • Operator:
    We have no further questions at this time.
  • Daniel Fachner:
    Well, I want to thank everybody for listening in. We appreciate your interest in J&J Snack Foods and we look forward to getting back together with you at our next earnings call. You have a wonderful day. Thank you very much. Bye. bye.
  • Operator:
    Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.

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