J & J Snack Foods Q1 Earnings Call Highlights

Key Points

• $343.8 million in sales (down 5.2% YoY) with adjusted EBITDA of $27 million (up 7%) and a 200-basis-point gross-margin improvement to 27.9% driven by early Project Apollo savings and a higher‑margin product mix; adjusted EPS was $0.33 (reported EPS $0.05 after one‑time charges).
• Project Apollo delivered >$3 million of net savings in Q1 and management reiterated a $20 million run‑rate target, with ~$15 million from plant consolidation (to be implemented in Q2) and ~$5 million from distribution/G&A ramping through Q3–Q4; the quarter included $6.1 million of non‑recurring closure costs and about $5 million more expected in FY26.
• Strong liquidity and shareholder returns: the company ended Q1 with $67 million cash, no long‑term debt and ~$210 million revolver capacity, generated $36 million operating cash flow, repurchased ~458,000 shares for $42 million and announced a new $50 million buyback authorization.

J & J Snack Foods NASDAQ: JJSF executives said an earnings recovery is “underway and gaining momentum” during the company’s fiscal first-quarter 2026 conference call, citing early savings from its Project Apollo transformation program and improved gross margin despite lower sales.

For the quarter, the company reported sales of $343.8 million and adjusted EBITDA of $27 million, which management said represented a 7% increase versus the prior year period. CEO Dan Fachner said results included $1 million of unfavorable impact from product disposal costs, which management characterized as a one-time event related to product that went out of specification.

Margin improvement offset by planned portfolio changes

Management highlighted a 200 basis-point improvement in consolidated gross margin to 27.9%, attributing the gain to early Apollo savings, plant consolidation efforts, and a more favorable product mix. CFO Shawn Munsell added that gross margin results also reflected an intentional reduction in lower-margin sales and included the $1 million product disposal expense.

Net sales declined 5.2% year over year, which Fachner said was “mostly” tied to the bakery business as the company focused on higher-margin opportunities. He said about $18 million of the revenue decline came from bakery, including roughly $13 million related to SKU optimization efforts under Project Apollo. The remaining bakery declines were described as lower-margin products consistent with portfolio optimization.

Fachner said the company expects portfolio optimization to represent an approximate 3% decline in sales in fiscal 2026. He also said sales in the quarter were impacted by the government shutdown and a pause in SNAP benefits, noting a dip in retail dollar sales in mid-November that coincided with the pause and was most pronounced in frozen novelties.

Project Apollo savings ramping; $20 million run-rate target reiterated

Fachner said Project Apollo is progressing as planned and delivered more than $3 million of net savings in the first quarter, though he emphasized the program is still in a ramp-up phase and not yet at full run rate. He reiterated confidence in achieving $20 million of run-rate operating income once initiatives are fully activated.

In response to a question about timing and the remaining steps to reach the $20 million goal, management said:

• $15 million of the targeted run-rate benefit is associated with plant consolidation, with consolidation expected to be fully implemented during fiscal second quarter.
• The remaining $5 million is tied to distribution expense and G&A savings, expected to ramp in the third quarter and reach full run rate by the fourth quarter.

Munsell said the quarter included $6.1 million in non-recurring plant closure costs and other non-recurring impacts, and the company expects approximately $5 million of additional non-recurring transformation project costs during fiscal 2026.

Segment performance: pretzels grow, bakery declines, retail handheld rebounds

Food service segment net sales declined $19.7 million, or 8.3%, to $219.2 million, which Munsell said largely reflected the lower-margin bakery business. Handheld sales were down about $5 million, driven by lower comparative volumes and a contractual pricing true-up tied to lower ingredient costs. Soft pretzel sales increased $3.6 million, or about 6.9%, continuing momentum from the second half of fiscal 2025.

In retail, net sales rose $1.2 million, or 2.6%, to $45.9 million. Munsell said retail handheld volume increased $1.8 million as the company lapped prior-year capacity constraints tied to a facility fire. Sales across the rest of the retail portfolio were down about $600,000, as gains in Dogsters and Dippin’ Dots were more than offset by declines in other frozen novelties.

Frozen beverage net sales were “materially flat” at $78.7 million. Beverage sales were up modestly, while service and machine sales combined were down modestly, according to Munsell.

Fachner pointed to syndicated data showing a 1.8% increase in food service share over the 13 weeks ending in December. He also said food service pretzel growth included new business with large distribution customers and the launch of Bavarian Bites and Twists at a major theater chain. Retail pretzel sales were up about 4% over the same period, which management attributed to new formulation and packaging introduced last year.

In frozen novelties, Fachner said Dogsters volume grew over 20% in the quarter, supported by a new item late in Q1 and another planned for Q2. He said Dippin’ Dots sales increased approximately 4%, driven by retail growth, theater expansion, and amusement centers. He also discussed expansion opportunities in convenience and quick-service restaurants, noting a rollout to a large Southwest convenience store operator is complete and a test with a major West Coast QSR operator is continuing with encouraging results.

Earnings, costs, cash flow, and buybacks

Munsell said reported earnings per diluted share were $0.05 versus $0.26 a year earlier, primarily due to one-time charges. On an adjusted basis, earnings per diluted share were $0.33, in line with the prior year. The effective tax rate was 27%. Adjusted operating income was $8 million compared with $8.2 million last year.

On costs, Munsell said tariff-related costs were approximately $600,000 net of pricing offsets, and he expects some tariff impact to subside over the course of fiscal 2026. In response to a question on commodities, management said commodity pricing could be “a little bit” in the company’s favor this year compared to prior-year headwinds from items such as cocoa and eggs.

The company ended the quarter with about $67 million in cash and no long-term debt, as well as approximately $210 million of borrowing capacity under its revolving credit facility. J&J Snack Foods generated about $36 million in operating cash flow and invested $19 million in capital expenditures during the quarter.

Management also emphasized capital returns. During the quarter, the company completed its prior repurchase authorization, buying back just over 458,000 shares for $42 million at an average price of about $91.60 per share. Fachner said the company announced a new $50 million repurchase authorization.

Looking ahead, Fachner said the innovation pipeline remains robust, with planned second-quarter shipments including protein and whole grain pretzels, Luigi’s Mini Pops with hydration and immunity benefits, Dippin’ Dots sundae flavor extensions, and the launch of traditional Dippin’ Dots for retail. He also acknowledged weaker box office performance aligned with the fiscal first quarter—estimated down about 10% year over year—while expressing optimism for the rest of fiscal 2026 and pointing to improved theater trends in January.

About J & J Snack Foods NASDAQ: JJSF

J & J Snack Foods 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.

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