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

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But again, there are so many great cross-selling things going on. There are a lot of good things happening on the operational efficiency front, margin catch-ups from pricing, et cetera. Are you kind of – am I thinking about it right that, hey, we’re in a pretty good position exiting Q1 and entering Q2 despite those metrics I mentioned to kind of deliver on a full year expectation?

Ken Plunk: Yes, yes again, we try to explain this a little bit. Two headwinds right off the back in terms of comparing a year ago, EBITDA or even if you went back to ’19, I don’t have this number in my head, but I think the number will be even bigger, but you’ve got roughly $5 million of impact on distribution expenses. If you just – on an equal basis, that would be – that would impact profitability this year versus a year ago. And then I mentioned the impact when we bring on the Dippin’ Dots business that had a loss in the quarter and, again, expected. Then that starts to create a $6 million kind of bogey right there just from two things. And then I do think as we ended quarter, we expect it to do a little bit better than that because we weren’t expecting volumes to tail off in December with some of the weather challenges that we, talked about.

And it’s in a quarter where if you don’t create the sales, then you deleverage pretty quickly. Keep in mind that even for total J&J, 75% of the sales and really profitability for J&J is going to be in Q3 and Q4, and that should play out if you go years back. That’s just kind of the seasonality of the business.

Jon Anderson: Okay. Thanks so much guys. Appreciate it.

Dan Fachner: Thanks Jon.

Operator: Thank you. Our next question or comment comes from the line of Robert Dickerson from Jefferies. Mr. Dickerson, your line is now open.

Robert Dickerson: Great. Thank you so much. Can you hear me okay?

Dan Fachner: We can. Good morning, Rob.

Robert Dickerson: All right. Great. Thanks a lot. I guess, kind of a follow-up to the last question that was asked. I just had to ask a little differently. Ken, to your point, right, there’s a little volume deleverage that comes through input cost inflation is still a little bit high. On the COGS side, it sounds like there could be other pricing offsets. And then as you keep mentioning, good innovation, distribution opportunities as you get through the back half. Q1, understand kind of the drivers behind what happened not just in EBITDA margin, but I’m speaking more specifically to the growth side. If you go back a couple of quarters, right, and kind of the feel is as we kind of got into Q2 this year, maybe more back half-ish we could kind of get back a little bit more of those pre-pandemic margins, and it seems like you’re making pretty decent progress on that goal in the back half of last year, right?

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