J&J Snack Foods Corp. Q1 FY2026 earnings call

• Earnings recovery underway: adjusted EBITDA $27M on sales $343.8M, 7% y/y increase. Gross margin up 200bps due to Apollo initiatives and product mix.
• Bakery business net sales down 5.2%, ~$18M due to SKU optimization and lower margin products.
• Project Apollo: over $3M net savings in Q1, plant consolidation to be fully implemented in Q2, aiming for $20M run rate operating income once activated.
• Share repurchase: completed $42M repurchase, announced new $50M authorization.
• Commercial activities: pretzel strong in foodservice and retail; Dogsters growing in frozen novelties; Dippin' Dots up ~4%; ICEE expanding in convenience and QSR.
• Innovation pipeline: new products in Q2 including protein pretzels, Luigi's mini pops, Dippin' Dots extensions.

Foodservice segment net sales declined $19.7 million or 8.3% to $219.2 million, with handheld sales down ~$5 million and soft pretzel sales up $3.6 million or 6.9%. Retail segment net sales increased $1.2 million or 2.6% to $45.9 million, driven by handheld volume growth but other retail portfolio down ~$600,000. Frozen beverage net sales were materially flat at $78.7 million. Adjusted EBITDA was $27 million on sales of $343.8 million, a 7% increase y/y. Gross margin improved 200 basis points to 27.9%.

• Fiscal 2026 sales expected to decline ~3% due to portfolio optimization.
• Full-year growth expected in low single digits despite 3% SKU rationalization headwind.
• Project Apollo aiming for $20M run rate operating income starting Q2.

• Impact of government shutdown and SNAP benefits pause on sales, esp. frozen novelties.
• Commodity price fluctuations (e.g., eggs, cocoa) affecting margins.
• Execution risks related to Project Apollo ramp-up.

Q: Jon Andersen on sales and Project Apollo.

A: Dan and Shawn discuss sales outlook, Project Apollo timeline, and commodity impact.

Q: Follow-up on Project Apollo and margins.

A: Dan and Shawn talk about Q2 target for Project Apollo run rate and commodity headwinds.