PENNSAUKEN, NJ. — A surge in movie theater attendance combined with an updated logistics system helped drive J&J Snack Foods’ earnings during the third quarter ended June 24. The company’s acquisition of Dippin’ Dots just over one year ago and launch of the Hola! Churro line last winter also have proven to be driving growth factors in a changing retail landscape.

“We have really built a business balanced across multiple products, channels and customer segments, which together helps us adapt to changing consumer and snacking occasions,” said Daniel Fachner, president and chief executive officer of J&J Snack Foods, during an Aug. 1 conference call with analysts. “We manage this portfolio to maximize our growth opportunities across Food Service, Retail and Frozen Beverages segments. This quarter is a great example of our flexible business model and our capabilities to continue driving both sales and growth and profit growth.”

Net income at J&J Snacks in the third quarter ended June 24 totaled $34.98 million, equal to $1.82 per share on the common stock, up 125% from $15.56 million, or 81¢ per share, in the same period a year ago. Net sales increased 12% to $425.77 million from $380.23 million.

Mr. Fachner noted that a partnership with NFI Logistics, which now manages 100% of the company’s transportation network, has improved truck capacity, minimized miles driven, reduced stops and enhanced customer service. In addition, the company has commenced plans to open three geographically positioned regional distribution centers (RDCs) with the completion of its first RDC in Terrell, Texas, in late July. Two more RDC’s are planned to open near the end of this calendar year and in early 2024, Mr. Fachner said.

“Our supply chain transformation initiatives, along with declining diesel prices and carrier costs, are starting to drive improvements in shipping efficiency, cost per truck and cost per pound,” said Ken Allen Plunk, senior vice president, chief financial officer and treasurer for J&J Snack Foods. “Marketing and selling expenses represented 7.4% of sales versus 6.3% in the prior-year period. And 74% in Q2 '23 and were driven primarily by the timing of spend for trade shows and sponsorships.”

While categories such as movie theaters and indoor entertainment centers have had increased traction coming out the pandemic, Mr. Plunk said the company saw a slight traffic shift in the amusement park segment due to the extreme heat seen across the United States this summer.

Foodservice operating income at J&J Snack Foods surged to $20.79 million from $2.64 million. Sales increased 12% to $254.98 million from $227.84 million. Within the foodservice division, sales of bakery products were $87.58 million, down 8% from $95.5 million in the same quarter a year ago, while sales of churros climbed nearly 18% to $30.47million from $25.61 million. Sales of soft pretzels increased 13% to $63.53 million from $55.95 million. Sales of handhelds, meanwhile, decreased significantly to $17 million from $25.74 million in the quarter.

In the retail supermarket segment in the third quarter, operating income was $4.17 million, up 56% from $2.34 million in the previous year’s third quarter. Sales increased slightly to $61.15 million from $61.01 million. Within the retail supermarket segment, sales of soft pretzels fell 13% to $10.27 million. Sales of frozen novelties were virtually unchanged at $41.68 million from $41.87 million, while sales of biscuits fell slightly to $5.14 million, compared with $6.07 million in the same period a year ago. Sales of handheld items rose sharply to $4.45 million from $1.59 million.

“As previously discussed, we are currently launching Superpretzel Bavarian sticks, bites and mini dogs in the retail (segment), supported by strong sales plans and marketing,” Mr. Fachner said. “Frozen novelties continue to be an opportunity, led by Luigi's, Dogsters and Icee stick as the performance of each product continues to outpace the category. Hola! Churros will begin shipping in the Northeast region this month as we bring this growing brand to retail.

“Moving to our third business segment frozen beverages, we saw a record Q3 sales of $109.6 million, reflecting the strong rebound in the theater channel as well as ongoing strength at our Mexico operations. There is a lot of excitement in the theater industry on the heels of stronger movie releases and higher food and beverage consumption per visit. Theater attendance is improving closer to pre-pandemic levels.”

In the frozen beverages segment, J&J Snack posted operating income of $23.34 million, up 36% from $16.28 million in the same period a year ago. Sales increased 23% to $72.88 million.

“Frozen beverages, really excited about what we saw there,” Mr. Plunk said “Beverage sales up 26%. The overall segment of 20% volume up over 9% in the quarter. We talked about the recovering theater industry, so you start to see the consumer come back to theaters, the last few weeks having some of the biggest weekends they’ve had in a long, long time.”