J & J Snack Foods Q3 2026 Earnings Report

J & J Snack Foods EPS Results

• Actual EPS: $1.96
• Consensus EPS: $1.70
• Beat/Miss: Beat by +$0.26
• One Year Ago EPS: $2.00

J & J Snack Foods Revenue Results

• Actual Revenue: $425.96 million
• Expected Revenue: $427.65 million
• Beat/Miss: Missed by -$1.69 million
• YoY Revenue Growth: -6.30%

J & J Snack Foods Announcement Details

• Quarter: Q3 2026
• Date: 8/5/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 10:00AM ET

J & J Snack Foods (NASDAQ:JJSF) (NASDAQ: JJSF) is a U.S.-based manufacturer and distributor of branded snack foods and frozen beverages. Headquartered in Pennsauken, New Jersey, the company develops, produces and markets a broad array of proprietary and licensed products for retail, concession and foodservice customers. Its offerings span soft pretzels, frozen novelties, real Italian ice, churros and packaged beverages under well-known names such as ICEE, SuperPretzel, Luigi’s and ChurroMan.

Founded in 1971 by Gerald B. Shreiber, J & J Snack Foods has grown through a mix of internal product innovation and strategic acquisitions. The company’s product portfolio serves convenience stores, amusement parks, movie theaters, schools and other foodservice outlets. In addition to its direct-store-delivery network in the United States and Canada, J & J Snack Foods exports select products to international markets, including Europe and parts of Asia.

Under the ongoing leadership of founder and Chairman/CEO Gerald B. Shreiber, the company emphasizes research and development of new flavors, packaging innovations and production efficiency. Its manufacturing footprint comprises multiple facilities across North America, each equipped for cold-chain logistics and stringent quality control. This infrastructure supports rapid fulfillment of customer orders and helps maintain product consistency.

J & J Snack Foods leverages a dual distribution strategy, combining direct sales with partnerships through independent distributors and foodservice brokers. By aligning manufacturing capabilities with market demand, the company aims to strengthen its position in the snack and frozen-beverage industries, expand its product offerings and explore growth opportunities in both domestic and select international channels.

J & J Snack Foods Q3 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Third-quarter sales declined 6.2% to $426 million, while adjusted EBITDA fell 6.4% to $67.4 million, primarily due to $4.7 million in net fuel and freight cost pressures. Foodservice and frozen beverage sales were pressured by bakery SKU reductions, weaker cookies and handhelds, and lower service and machine revenue.
• Positive Sentiment: Transformation efforts continued to protect profitability, with gross margin expanding 240 basis points to 35.5%. Project Apollo’s plant-consolidation savings are now expected to reach at least $20 million annually, raising total program savings to at least $25 million.
• Positive Sentiment: Retail sales increased 1.7%, with underlying growth estimated at 4.8% excluding higher slotting fees, while Dogsters retail units rose about 40% and tracked sales for Dippin’ Dots increased more than 100%. Management also cited strong early performance from new “Better For You” products and continued innovation-driven distribution gains.
• Positive Sentiment: Management expects sales momentum to improve in the fourth quarter and a return to organic sales growth in fiscal 2027, supported by new churro, pretzel, and frozen novelty business, a stronger movie lineup, and a new service contract. However, management indicated the inflection is more likely in fiscal 2027 than in the fourth quarter, with fuel and freight pressures expected to persist near term.
• Positive Sentiment: The company ended the quarter with approximately $35 million of net cash, $182 million of revolver capacity, and $48.8 million of operating cash flow. It returned $25 million to shareholders during the quarter and expects to receive approximately $17 million in insurance proceeds in August.

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the J&J Snack Foods third quarter 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Reed Anderson with ICR. Please go ahead.

[Reed Anderson, Managing Director at ICR]

Thank you, operator. Good morning, everyone. Thank you for joining the J&J Snack Foods fiscal 2026 third quarter conference call. Before getting started, let me take a minute to read the safe harbor language. This call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements. Including statements regarding management's plans, strategies, goals, expectations, and objectives, as well as our anticipated financial performance. This includes, without limitation, our expectations with respect to the success of our cost savings initiatives and customer demand improvements in the sales channels in which we operate.

[Reed Anderson, Managing Director at ICR]

These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties, and other important factors that may cause results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Risk factors and other items discussed in our annual report on Form 10-K and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on the call today. Any such forward-looking statements represent management's estimates as of the date of the call today, August 5th, 2026. While we may elect to update forward-looking statements at some future point, we disclaim any obligation to do so, even if subsequent events cause expectations to change.

[Reed Anderson, Managing Director at ICR]

In addition, we may also reference certain non-GAAP measures on the call today, including adjusted EBITDA, adjusted operating income, or adjusted earnings per share, all of which are reconciled to the nearest GAAP measure on the company's earnings press release, which can be found in our investor relations section of our website. Joining me on the call today is Dan Fachner, our Chief Executive Officer, along with Shawn Munsell, our Chief Financial Officer. Following management's prepared remarks, we will open the call for a question and answer session. With that, I would now like to turn the call over to Mr. Fachner. Please go ahead, Dan.

[Dan Fachner, CEO at J&J Snack Foods]

Good morning. Thanks, everyone, for joining today's call to discuss our third quarter results. We are proud of the progress we've made implementing our transformation initiatives, which helped to support earnings performance despite material fuel and freight pressures during the quarter. Gross profit improved about $1 million-$151 million, and consistent with the first half of the fiscal year, gross margin continued to expand, rising 240 basis points to 35.5%. Adjusted EBITDA came in at $67.4 million, a decrease of 6.4% from last year, and adjusted earnings per share were $1.96 versus $2 a year ago. The $4.6 million EBITDA decline from the prior year quarter was primarily attributed to freight and fuel cost pressures, which together increased about $4.7 million net of surcharge collections. Net sales were $426 million, down 6.2%, with over half of the decline attributed to anticipated sales reduction in bakery.

[Dan Fachner, CEO at J&J Snack Foods]

About 140 basis points of decline was attributed to our frozen beverage business, where higher beverage sales only partly offset lower service and machine sales. Retail sales improved 1.7% in the quarter as higher levels of promotions lifted volume. Looking ahead, sales momentum is building, and we expect the sales environment to improve in the fourth quarter with our toughest top-line comparison behind us. The impact of the anticipated bakery sales reduction peaked in our third quarter and will diminish in the fourth quarter to about 2.5% of prior year sales. We are shipping against several new meaningful pieces of business in the fourth quarter across our core portfolio that includes churros, pretzels, and frozen novelties. We also expect retail sales to improve further as we realize benefits from innovations and promotions while the slotting fee headwind diminishes. Our innovation rollout continues, and we've been pleased with the results.

[Dan Fachner, CEO at J&J Snack Foods]

Some headwinds in service and machine sales are anticipated in the fourth quarter. We expect beverage volume increases to partly offset those headwinds. Further, we have line of sight to begin closing the service revenue gap in the fourth quarter, with most of it closed by the first quarter of fiscal 2027. We expect the company to return to sales growth in fiscal 2027. The increase in fuel and freight expenses reflects higher oil prices and significant tightening of freight markets during the quarter. Fuel costs were about in line with expectations while freight rates rose sharply as the quarter progressed. The freight increase primarily reflects constrained capacity because of regulatory and legislation changes. We are pursuing steps to mitigate some of the pressure. We expanded our application of fuel surcharges during the quarter and recently increased our minimum order quantities.

[Dan Fachner, CEO at J&J Snack Foods]

While we expect fuel and freight pressures to persist in our fourth quarter, diesel prices have moderated from the highs earlier in the summer. With respect to segment performance, there are several bright spots in the quarter. In food service pretzels, we extended our category leadership, picking up 4.6 points of dollar share. Our retail segment had a solid quarter. Net sales were up 1.7% as higher promotions supported volume. Moreover, we incurred higher slotting fees to support the rollout of new innovation, implying underlying growth in the mid-single-digit range. Syndicated data for the 13 weeks ending July 12th showed retail pretzel sales up about 2% and novelties up 3%. Dogsters continues to perform exceptionally well, with retail sales up over 30% in tracked channels. Over the same period, syndicated data shows Luigi's up over 20%, aided by end cap placements with a major customer.

[Dan Fachner, CEO at J&J Snack Foods]

Retail Dippin' Dots growth was driven by the launch of the high-temp Dippin' Dots product, as well as two more sundae flavors, with the brand up more than 100% in tracked channels for the 13 weeks ending July 12th, with almost $4 million retail measured sales. Within our frozen beverage segment, beverage volume increased mainly on the strength of theaters and mass merchandising channels, driving a net sales increase for beverage of 5.9%. A slate of solid movies in the quarter more than offset the success of the Minecraft movie in the prior year quarter. We are extremely encouraged by the movie lineup for the fourth quarter and for fiscal 2027, which includes the new record-breaking Spider-Man movie that was released this past weekend. The test with the West Coast QSR operator continues, and we remain optimistic that it will conclude with a positive outcome soon.

[Dan Fachner, CEO at J&J Snack Foods]

We are actively testing and expanding our footprint with both new and existing partners across convenience, theaters, and entertainment venues, and early signs are very encouraging. The more efficient cost structure we built through Project Apollo, along with the improved sales mix, has underpinned much of our gross margin expansion and puts us in a strong position as we look to return to top-line growth in fiscal 2027. Plant consolidation savings are ahead of target, giving us the confidence to raise the plant consolidation component of Apollo to at least $20 million of annualized savings. That would take the full program annualized run rate to at least $25 million. Further, our G&A initiatives were implemented in the quarter, which helped to moderate administrative expenses, which were materially flat in the quarter.

[Dan Fachner, CEO at J&J Snack Foods]

Despite the fuel and freight cost increases, we did realize distribution cost savings in the quarter from Apollo initiatives. Our innovation pipeline keeps gaining traction. We're picking up new distribution across both retail and food service. We are encouraged by the early results of our new Better For You lineup, including our Superpretzel, 10-gram protein pretzel, and the new Luigi's Mini Pops with benefits of hydration and antioxidants, which are generating strong velocities for our retail partners. Dogsters has yielded the most incremental distribution, and we're also optimistic about the rollout of Dogsters to the pet retail channel, which just started in August. Our balance sheet remains in great shape. This quarter, we returned another $25 million of cash to shareholders, including $15 million in dividends and $10 million in share repurchases.

[Dan Fachner, CEO at J&J Snack Foods]

I'll now hand things over to Shawn, who will walk you through the numbers in more detail. Shawn?

[Shawn Munsell, CFO at J&J Snack Foods]

Thanks, Dan. Good morning, everyone. Building on what Dan covered, our third quarter results reflect continued execution on our transformation initiatives, even with some cost headwinds working against us. Foodservice net sales declined $22.9 million, or 8.3%, to $254.3 million, with about $16 million of the decline associated with anticipated reductions in bakery. We saw modest growth in both pretzels and churros. This was more than offset by continued softness in cookies and handhelds, consistent with the pattern we saw in the second quarter. Foodservice segment operating income of $28.1 million was modestly above prior year as higher distribution costs mostly offset continued improvements in gross profit. Retail segment net sales increased $1.1 million, or 1.7%, to $64.9 million. We incurred a $2 million increase in slotting fees in the third quarter to support the rollout of recent innovation.

[Shawn Munsell, CFO at J&J Snack Foods]

Absent slotting increases, retail segment sales would have increased 4.8%. Dogsters continues to perform exceptionally well with units up about 40% in the quarter. Retail segment operating income declined $3.5 million, primarily driven by the increase in slotting fees and distribution costs. Frozen beverage segment net sales decreased $6.5 million, or 5.8%, to $106.7 million. Strong growth in beverage sales of 5.9% was more than offset by lower service and machine sales. Lower service sales were driven by customer insourcing decisions consistent with our fiscal second quarter, while machine sales declines mainly reflect the cyclicality of the machine business. Beverage strength primarily was driven by theater and mass merchandise channels. Convenience channel sales were soft in the quarter. Frozen beverage segment operating income decreased $900,000-$22.8 million, as sales decline and higher distribution costs were partly offset by favorable foreign exchange and cost containment initiatives.

[Shawn Munsell, CFO at J&J Snack Foods]

Consolidated gross margin improved 240 basis points to 35.5%, due primarily to plant consolidation savings and mix improvements. Year to date, gross margin has expanded 200 basis points. We expect gross margin expansion to continue in the fourth quarter. Total operating expenses increased approximately 17.1%, or $15.3 million. Prior year reported results included a $9.1 million non-recurring net gain, driven primarily by receipt of insurance proceeds. Selling and marketing expense increased approximately 2.3%, or $800,000 versus the prior year, representing about 8.1% of sales compared to 7.5% in the prior year. Distribution expenses increased $4.9 million. Accounted for 11.6% of sales, compared to 9.8% in the prior year period, driven by higher freight and fuel costs of approximately $5 million, excluding any offset from fuel surcharges. Administrative expense was approximately flat versus the prior year. Included about $600,000 of non-recurring legal charges.

[Shawn Munsell, CFO at J&J Snack Foods]

Implementation of G&A savings initiatives helped to drive a moderation in administrative expenses. Adjusted operating income was $48.1 million, compared to $53.4 million in the prior year. Adjusted EBITDA was $67.4 million, down 6.4% from $72 million last year. The effective tax rate for the quarter was approximately 23.2% as compared to 27.2% in the prior year. On a reported basis, earnings per diluted share was $1.88 compared to $2.26 last year, with the prior year benefiting from a one-time insurance gain. On an adjusted basis, earnings per share was $1.96 compared to $2 a year ago. Our balance sheet remains strong, with cash net of debt of approximately $35 million. We had approximately $182 million of borrowing capacity under our revolving credit facility. During the quarter, we generated approximately $48.8 million in operating cash flow and invested about $18.1 million in capital expenditures.

[Shawn Munsell, CFO at J&J Snack Foods]

We expect to collect approximately $17 million in insurance proceeds in August, reflecting the final settlement of the fire-related loss at our Holly Ridge plant, which was closed as part of Project Apollo. We repurchased approximately 136,000 shares of common stock for $10 million during the quarter. On a year-to-date basis, we've returned approximately $120 million to shareholders through the first nine months of fiscal 2026 through dividends and share repurchases. That concludes our prepared remarks. We're now ready to take your questions. Operator?

[Operator]

Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from the line of Todd Brooks of Benchmark StoneX. Your line is now open.

[Todd Brooks, Analyst at Benchmark StoneX]

Hey, good morning, guys. Thanks for taking my questions.

[Shawn Munsell, CFO at J&J Snack Foods]

Good morning, Todd.

[Todd Brooks, Analyst at Benchmark StoneX]

Dan, you spoke to headwinds diminishing in Q4 in the earnings release. What are you speaking to specifically that eases in Q4, and what's your visibility into that happening?

[Dan Fachner, CEO at J&J Snack Foods]

Morning, Todd. Thanks for the question. Hey, before we start, I just wanted to say a couple of things. Our late founder, Jerry Shreiber, might have said this was a quarter to crow about, and I feel like there's a few things I want to crow about if I could do that just before we get started. I'm really proud of the team and what they are accomplishing, especially in this quarter. We started out the year with a play that we called to raise margins, reduce expenses, and to really run at the headwinds. This quarter that we were up against last year was a record-breaking quarter, and we ran at it and did pretty well up against it, especially when you consider the fuel and the freight picture that we're up against. Without that headwind, we would have beaten last year's EBITDA.

[Dan Fachner, CEO at J&J Snack Foods]

In short, Todd, Project Apollo is doing exactly what we designed it to do, and it's protecting margins in the quarter despite the pressures that are out there. We're really seeing some great momentum building in our sales heading into the fourth quarter. Some really exciting things and new pieces of business that we have that are shipping this coming quarter. Some great things with pretzels in a QSR, with churros in a club store, and really frozen novelties in a lot of different areas, including some great private label stuff that we're doing.

[Dan Fachner, CEO at J&J Snack Foods]

The last thing I would crow about, we had a headwind with service and the team's gone out there and signed a new deal with a big service organization that will get us back on track in the fourth quarter and really start to get back to normal growth as we see 2027. Really a lot of good things happening. Your question around what are some of those?

[Dan Fachner, CEO at J&J Snack Foods]

We had bakery headwinds that had some declines, and we're still doing that SKU rationalization. We kind of hit the peak of that as you get to Q3, and it starts to taper down as we get to Q4. Q3, it was like 3.5%. Q4, somewhere in that 2.5% range. We're really closing that service gap like we just talked about. Got a great new piece of business. Anxious to share the name of that customer at some point in the future, but we have signed a contract, and that piece of business is coming on board now and will continue to grow into next year. Retail is doing great. You saw that, up 1.7% in the quarter. Really happy with their progress. We've been talking about doing a lot of promoting and that, but we're seeing volumes outpace the promoting, which is really exciting.

[Dan Fachner, CEO at J&J Snack Foods]

Slotting fees, as we've had to pay for a lot of that great new innovation. It is great new innovation, some of that doing extremely well for us. Those slotting fees are starting to diminish as well. Last but not least, really excited to see what the theater is starting to do. I'm sure everybody's been reading about that, and different times people have thought that theater business has been left for dead. It has charged back really, really strong. This past weekend, we had "Spider-Man" that was released, and it was a record-breaker. We're really excited about some of the things that we have going on and are looking forward to Q4 and beyond.

[Todd Brooks, Analyst at Benchmark StoneX]

That's great, Dan. Thanks. If I can extend that question and start to talk about fiscal 2027. J&J has a long history of kind of generating X amount of organic growth, and then there's market-related growth, plus or minus around that. If you look at what you're kind of tasking the teams with or what the outlook is, what do you see for the organic growth outlook for the company in 2027, and what are the big drivers that kind of give you visibility into that controllable growth that you might be able to harvest?

[Dan Fachner, CEO at J&J Snack Foods]

Yeah, we definitely see organic growth returning in 2027. I said this earlier, we've got some really good things happening in our core products, in pretzels, in churros, and frozen novelties. We've talked a little bit about the frozen beverage. We think theaters are coming back strong. We think 2027, the lineup of theaters looks good. I still like the tests that we have going on with the IC business and a QSR that I think that we'll see some positive results that happen in 2027. A couple of other tests that the team is generating beyond that. Our sales team right now is hitting on all cylinders. I like what we have going into 2027. We haven't released what that number will be, but I absolutely believe we'll be back to organic growth.

[Dan Fachner, CEO at J&J Snack Foods]

I think we'll continue to see great results from the innovation that we've had going on and some innovation to come as well.

[Todd Brooks, Analyst at Benchmark StoneX]

Okay, great. Thanks, Dan.

[Dan Fachner, CEO at J&J Snack Foods]

Thank you.

[Operator]

Our next question comes from the line of Scott Marks of Jefferies. Your line is now open.

[Scott Marks, Analyst at Jefferies]

Hey, good morning, Dan, Shawn. Thanks for taking our questions.

[Dan Fachner, CEO at J&J Snack Foods]

Hey, Scott.

[Scott Marks, Analyst at Jefferies]

First thing I wanted to ask about, you talked about the food service segment. I think if we exclude the bakery SKU rationalization, sales were still down a little bit, and you called out some weakness in cookies and handhelds. Just wondering if you can dive into that a little bit, just help us understand what's happening with that part of the business and how you're thinking about maybe operational adjustments or changes to help stabilize that part of the portfolio.

[Dan Fachner, CEO at J&J Snack Foods]

Yeah. Good morning, Scott. Hey, we're proud of what the food service group is doing as well. It's a big group. If you think about our total business, it's still two-thirds of our business. There's a lot of moving parts, and the team is doing really, really well there. When you think about a couple areas that are weaker, meaning the cookies and the handhelds, the cookies is just kind of an offshoot of the buying being down in that area. We have a major customer south of the border that has been a little bit softer this year. We continue to hope that it will come back to its normal self, but it hasn't. The fortunate thing, it's lower margin business, as is the handheld business as well.

[Dan Fachner, CEO at J&J Snack Foods]

Most of our handhelds go to a couple big customers, where there's been some not direct competitor environment, but some other products added to that area that have maybe impacted those sales slightly. The way that we're going to go about fixing that or attacking that, and the team is doing that right now, is to go grow the core, right? We've seen some great churro growth happening. We've got a really nice piece of churro business that we'll be shipping out in the fourth quarter, and it could be backed up by some really strong ones in Q1. We've got a big pretzel opportunity that we'll be hitting here in the fourth quarter, and it's even using our brand Superpretzel along with it, so I'm really excited about that. Just as I talked about, frozen novelty is doing really well.

[Dan Fachner, CEO at J&J Snack Foods]

In addition to doing some great things with private label or co-man around the frozen novelties. That's what we'll do to continue to pull the food service back in line.

[Shawn Munsell, CFO at J&J Snack Foods]

That cookie gap that extended from the second quarter, it did improve a bit in the third quarter, didn't improve by quite as much as we were hoping.

[Dan Fachner, CEO at J&J Snack Foods]

We've even seen it improve a little bit here in the fourth quarter. It's got to continue to grow.

[Scott Marks, Analyst at Jefferies]

Understood. Appreciate the color there. Next question from me, maybe if we could shift over for a second to talk about Project Apollo. You talked about a higher amount of annualized savings from the plant closure portion of that. Just wondering if you can help us understand maybe the drivers behind that, why is that coming in ahead of plan and prior guidance, and then how we should be thinking about the other components of Project Apollo as well. Thanks.

[Dan Fachner, CEO at J&J Snack Foods]

Yeah. That's another one of those things. We talked about things to grow about. When you start a project like Apollo, those are big rocks that you're turning over, maybe even boulders that we're picking up and moving. The team has done a tremendous job with that. If you've ever been involved in consolidation or expense savings, those projects are not fun and not easy, and require a lot of work. Our teams have done a tremendous job with that. Really, really proud of what it's done. We talked about raising our thoughts around what it will accomplish for us this year. Shawn, do you want to touch on some of those things?

[Shawn Munsell, CFO at J&J Snack Foods]

Yeah. Sure. Again, to be clear, we raised the plant consolidation component of Apollo from $15 million-$20 million, which takes the total program from $20 million-$25 million. Largely what we've seen is some of the costs transitioning products have stabilized. That's helping to support the higher number. That $20 million annualized is consistent with what we achieved in the third quarter. I can tell you, too, that our target did have a bit of conservativism built into it. We feel comfortable now that we've got a couple quarters under our belt that the run rate from the third quarter is going to hold for us.

[Scott Marks, Analyst at Jefferies]

Appreciate it. Thanks for the questions. I'll pass it on.

[Dan Fachner, CEO at J&J Snack Foods]

Thank you, Scott.

[Operator]

Thank you. Our next question comes from the line of Jon Andersen of WB. Your line is now open.

[Jon Andersen, Analyst at WB]

Good morning, guys.

[Dan Fachner, CEO at J&J Snack Foods]

Good morning, Jon.

[Jon Andersen, Analyst at WB]

Hey, sticking with the Apollo program for a moment. I think you've always talked about it as kind of in phases, and you're obviously over-delivering on kind of phase I, the plant consolidation. I'm thinking ahead a little bit, as you look forward, is there a second phase to this that could end up yielding additional benefits? If so, is there any way for us to kind of think about at least maybe some of the areas you're looking at and maybe kind of benefits and timing at a high level?

[Dan Fachner, CEO at J&J Snack Foods]

Absolutely. Great question, Jon. Again, I want to say this one more time, proud of what the teams are doing around Apollo. That's not easy work. The teams are doing a great job with it. We are looking at what I would call Apollo '27. There's some real good work around that as well. You saw some of it in this quarter as we talked about G&A expenses and pulling that back in line, and I'm excited about what we see there. We'll continue to look at areas like the plants and where we're making products and where we can make products in the future to get them closer to points of distribution. We'll look at any form of consolidation that can be done there.

[Dan Fachner, CEO at J&J Snack Foods]

We're still working on it, and we'll be talking about that in the next Q and trying to identify exactly what that might mean for us in 2027. But the teams have embraced it and are doing a really, really good job. Again, that's not easy work. But they're doing well with it.

[Jon Andersen, Analyst at WB]

Absolutely. You talked about the sales momentum building and that you'd expect a return to organic growth on a fuller basis in fiscal 2027. Do you think you can grow organically in the fourth quarter of 2026, or should we be thinking more about these business wins and launches, et cetera, kind of kicking in and having you kind of inflect early in 2027 versus the fourth quarter?

[Dan Fachner, CEO at J&J Snack Foods]

When you think about Q4, we still have some of the planned obsolescence that we're up against. I think we've talked about that being in that 2.5% range. We're still up against that as we go into Q4. I'm not sure that I would identify that yet there. I do think as we get into Q1 with what our line of sight is right now, that we have a really good chance of seeing that at the end of this calendar year or Q1 for us going into next year. The pipeline, just to touch on that a little bit, the pipeline from the sales team is about as strong as I've ever seen. If some of those hit and some of the bigger ones hit well, I'll feel really good about '27. Of course, there's always headwinds, right?

[Dan Fachner, CEO at J&J Snack Foods]

We'll be facing those, too. But I feel good about what we have going on, and I feel good about what the teams are generating right now. They've been working really, really hard. I would look more towards Q1 than probably Q4.

[Jon Andersen, Analyst at WB]

That's helpful. Given the pipeline as you described it being so strong, are there any kind of capacity considerations here? Are you in a good shape to kind of service that demand and on time and in full, or are there some investments that you might be making or need to make as you think about capacity going forward?

[Dan Fachner, CEO at J&J Snack Foods]

No. Again, kicked it off with things to crow about and what the teams are doing out there. One of the plays that we called and have called for the last couple of years is to grow the core. That's where really most of this growth is coming from is in our core business. Those are areas that we had invested in already to be able to have that type of capacity. What we're looking at right now will not require additional investments around those types of things to get the sales growth that we're looking at.

[Jon Andersen, Analyst at WB]

Okay. I know that you've gone through this process this year, which makes a lot of sense to SKU rationalize some parts of the bakery business, maybe more commodity oriented. Is there more of that to do or maybe bigger or additional moves that you might want to make from a portfolio perspective to reorient around, I guess, what you call kind of your crown jewels or core brands? Or are you kind of happy with the work that's been done and that you kind of move into more of a steady state as you get into next year?

[Dan Fachner, CEO at J&J Snack Foods]

Yeah. It's another really good question. I don't see us at this point in time having any more SKU rationalization or planned obsolescence. We are continuing, though, to assess the portfolio and make sure that what we sell and what we want to sell in the future are good fits for this organization and help us reach those goals like we did this quarter with a 35.5% gross profit margin. We talked about that for a long time, and it was really exciting to see that happen. We'll continue to assess the entire portfolio, but I don't see at this point in time any additional SKU rationalization that needs to be done.

[Jon Andersen, Analyst at WB]

Great. Thank you so much, and congrats.

[Dan Fachner, CEO at J&J Snack Foods]

Thank you, Jon.

[Operator]

Thank you. This concludes the question and answer session. I would now like to turn it back to management for closing remarks.

[Dan Fachner, CEO at J&J Snack Foods]

Great. Thank you very much. Thanks, everyone, for your questions. Stepping back, I think our third quarter results show that the transformation work that we've been doing is holding up. We're protecting margins and profitability, even with some top line and distribution cost pressures working against us. If I had to sum up fiscal 2026, it's really been a year of repositioning the business for the long run. We've stayed disciplined on product development, innovation, and really building the right partnerships. I think it sets us up well heading into fiscal 2027. Our balance sheet gives us great room to keep investing in growth while returning cash to shareholders, and we remain completely confident in Project Apollo and believe that it will continue to pay off. I want to thank you again for your support, and we look forward to catching up with you next quarter.

[Dan Fachner, CEO at J&J Snack Foods]

Thank you very much.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Dan Fachner, CEO

Analysts

• Reed Anderson, Managing Director at ICR
• Shawn Munsell, CFO at J&J Snack Foods
• Todd Brooks, Analyst at Benchmark StoneX
• Scott Marks, Analyst at Jefferies
• Jon Andersen, Analyst at WB