J&J Snack Foods Corp. (NASDAQ:JJSF) Q1 2023 Earnings Call Transcript

Page 5 of 10

Ken Plunk: Yes well, on the lines, it is added capacity. So this is not replacing current lines its new lines, but lines that are obviously more modern and with better automation than existing. So we expect to be more efficient in how we move product through those lines. I’m sorry, what was your first question?

Connor Rattigan: Just on the $4 million in incremental savings from the logistics and distribution outsourcing. Is that expected to be fully realized this year or is that more of like fiscal ’24 role?

Ken Plunk: Yes, I think the way we’ve spoken about it before, we really took us until around September, October, to get all of our business on NFI and kind of the key to managing all this is for them to be kind of pulling the strings on how we manage product and distribution across our entire network. Secondarily, their job, get even easier as we execute this RDC strategy so on an annualized basis, yes, if I had to make a guess for 2023, given what we’ve got in motion. Yes, I’d probably say it’s going to carry – some of that $4 million is going to carry into ’24, but I think we should realize a good portion of that in this fiscal period.

Dan Fachner: And Connor, let me just touch on the lines question that you had. They are in addition to the lines that we have today, but it also allows us to do some shifting of where we make some products to become much more efficient in different areas. Our intention is not to shut down the former line, but to be able to use that for more capacity.

Connor Rattigan: All right that’s great guys. Thank you so much. I’ll go ahead and pass it on.

Dan Fachner: Thank you, Connor.

Operator: Thank you. Our next question or comment comes from the line of Jon Anderson from William Blair. Mr. Anderson, your line is now open.

Jon Anderson: Great, thanks. Hi everybody good morning.

Dan Fachner: Good morning, Jon.

Ken Plunk: Good morning.

Jon Anderson: Good morning. Maybe just – I’ll stick with that last question since we’re on it. On the new production lines, how much capacity in aggregate will the seven new lines kind of unlock? And are there also margin benefits associated with it? I guess, that’s second part of the question and gets to some of your comments around shifting or optimization of production. But again, how much capacity, are you unlocking with these seven new lines? And are the productivity benefits as well?

Dan Fachner: I don’t have the exact number to give you on the capacity, but it does allow us to grow our core products, right? So one of the things we really experienced was outgrowing our core, which is our churros and pretzels and frozen novelties and even our pretzel dog side of the business. And so, we have addressed that to be able to have enough capacity to get our sales team back out there and really selling new lines and new opportunities. It does help on the margin side, because we are becoming much more efficient in different areas, even making products like in our novelty side, making products where they’re sold as opposed to maybe making them in one part of the country and shipping across to another side. So there are margin improvements that we think that we can realize as we open these up.

Page 5 of 10