Milling & Baking News - August 1, 2017 - 24

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24 / August 1, 2017 XMilling & Baking News

J&J Snack Foods working to turn
around Hill & Valley baking business
PENNSAUKEN, N.J. - Operating
income within the Hill & Valley baking business acquired in January was
"significantly off what was projected"
during the third quarter of fiscal 2017,
said Gerald B. Shreiber, president and
chief executive officer of J&J Snack
Foods Corp. As a result, net income
in the third quarter ended June 24 fell
more than 5% to $25,304,000, equal to
$1.35 per share on the common stock,
down from $26,791,000, or $1.44 per
share, in the same period a year ago.
Net sales increased 6% to $295,415,000
from $277,981,000.
For the nine months ended June 24,
net income was $54,831,000, or $2.91
per share, down from $55,357,000, or
$2.95 per share, in the same period a
year ago. Net sales for the nine months
totaled $767,498,000, up 5% from
$730,541,000.
Challenges at Hill & Valley
In a July 25 conference call with analysts, Mr. Shreiber was peppered with
questions about the performance of
Rock Island, Ill.-based Hill & Valley.
On the one hand, he said J&J Snack
is "extremely confident" in the management group of the business and
believes the fourth quarter is going
to be better, with even better performance expected in the first quarter of
fiscal 2018.
"It is not anywhere ... near panic
time, and we are extremely confident,"
he said.
But just a few moments later in the
call, Gerard G. Law, senior vice-president and assistant to the president,
acknowledged that the Hill & Valley
business has had its challenges.
"Overall, we've been disappointed
with the sales and the mix coming out
of the business," Mr. Law said. "So
the sugar-free mix has been a little
bit lower, and it's contributed a little
bit less than we had planned. We're
working on spinning that around, and
we're confident in the future of Hill &
Valley."
Asked to elaborate on where the
confidence in a potential turnaround is
coming from, Mr. Shreiber said, "One of
(the reasons), I guess it's commitments
- it's not contracts on hand - which
go all the way out until September, October and through Christmas. So that
we can visually see, and knowing what
our costs are and what our production
has been, and we have some products

in storage, so that's helping us add visibility to determine the profitability.
Beyond that, we're just relying, at this
point, on the talent of our management
there and their budgeting factor. And
certainly, they have performed well
in the two years leading up to our acquisition. So we had a natural comfort
level with them."
Hill & Valley makes a variety of prebaked cakes, cookies, pies, muffins and
other desserts for retail in-store bakeries. The company, which is one of the

HILL & VALLEY

top producers of sugar-free and nosugar-added pre-baked in-store bakery
products, also is part of several strategic private labeling partnerships with
retailers nationwide.
Baking products sales soar
Overall, total food service operating
income at J&J Snack Foods decreased
11% in the third quarter to $22,005,000
from $24,619,000 in the same period
a year ago. Within the food service
division, sales of bakery products
totaled $89,712,000, up 20% from
$74,475,000 in the same period a year
ago, while soft pretzel sales increased
to $45,069,000 from $44,410,000, and
churros increased to $17,536,000 from
$15,819,000.
In the retail supermarket segment, total operating income totaled
$4,890,000, up from $4,266,000. Within
the retail supermarket division, sales
of soft pretzels increased narrowly to
$7,496,000 from $7,136,000, handhelds
dipped to $3,548,000 from $3,8133,000,
and frozen juices and teas increased to
$27,317,000 from $26,038,000. MBN
bakingbusiness.com / world-grain.com
http://www.breadpartners.com http://www.bakingbusiness.com http://www.world-grain.com
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