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Snack food company J&J Snack Foods (NASDAQ:JJSF) reported results in line with analysts' expectations in Q2 CY2024, with revenue up 3.3% year on year to $440 million. It made a non-GAAP profit of $1.98 per share, improving from its profit of $1.81 per share in the same quarter last year.
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J&J Snack Foods (JJSF) Q2 CY2024 Highlights:
- Revenue: $440 million vs analyst estimates of $440.9 million (small miss)
- Adjusted EBITDA: $70.9 million vs analyst estimates of $69.4 million (2.2% beat)
- EPS (non-GAAP): $1.98 vs analyst expectations of $1.99 (in line)
- Gross Margin (GAAP): 33.6%, in line with the same quarter last year
- Adjusted EBITDA Margin: 16.1%, in line with the same quarter last year
- Free Cash Flow of $94.66 million is up from -$3.95 million in the previous quarter
- Market Capitalization: $3.23 billion
Best known for its SuperPretzel soft pretzels and ICEE frozen drinks, J&J Snack Foods (NASDAQ:JJSF) produces a range of snacks and beverages and distributes them primarily to supermarket and food service customers.
Shelf-Stable FoodAs America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
Sales GrowthJ&J Snack Foods is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.
As you can see below, the company's annualized revenue growth rate of 14% over the last three years was solid for a consumer staples business.
This quarter, J&J Snack Foods's revenue grew 3.3% year on year to $440 million, falling short of Wall Street's estimates.
Cash Is KingAlthough earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can't use accounting profits to pay the bills.
J&J Snack Foods has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company's free cash flow margin averaged 7.1% over the last two years, better than the broader consumer staples sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.
Taking a step back, we can see that J&J Snack Foods's margin expanded by 5.8 percentage points during that time. This is encouraging because its free cash flow profitability rose more than its operating profitability, suggesting it's becoming a less capital-intensive business.
J&J Snack Foods's free cash flow clocked in at $94.66 million in Q2, equivalent to a 21.5% margin. This quarter's result was good as its margin was 11.4 percentage points higher than in the same quarter last year, building on its favorable historical trend.
Key Takeaways from J&J Snack Foods's Q2 Results While J&J Snack Foods missed slightly on revenue, adjusted EBITDA beat. Overall, it was a mixed quarter. The stock remained flat at $159.36 immediately after reporting.
