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| Statement |
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| And I think by the time that we close up the year, we'll have another strong year |
| This strategy is helping us improve bakery gross margins while identifying new selling opportunities |
| That's our churros and it's doing extremely well |
| I am proud of how the J&J team leveraged our iconic brands and incremental customer opportunities to maximize every sales opportunity in the first quarter |
| Our ability to improve cash flow through working capital initiatives and stronger profitability is generating more cash to pay down debt, raise dividends and continue investing in our business |
| Our ongoing focus on gross margin expansion resulted in a 130 basis points improvement to 27.2%, driven by our strategy to grow higher margin core products as well as continued gains in overall productivity |
| We continue to have a healthy balance sheet and overall strong liquidity position with $50 million in cash and approximately $7 million in debt |
| Despite softer sales, we delivered a meaningful year-over-year improvement in the overall profitability of the business, including a 20.6% increase in adjusted operating income and a 19.2% increase in adjusted EBITDA |
| It's a really good size opportunity for us, and it outweighs what we would potentially be losing at Costco, the Subway outweighs that just by the sheer numbers of locations, there's 20,000 to 21,000 Subways out there today |
| Our business is gaining incremental opportunities and is well positioned as consumption trends improve |
| Despite the softer consumer environment in fiscal Q1 '24, we remain confident in our plans to improve profit margins and expect to achieve gross margin of 30% or better for the full year |
| Q1 operating income in the Frozen Beverage segment also improved $3.2 million, a 75.7% increase compared to Q1 of '23 |
| We're still very confident in our long-term strategy and what we're doing, and we're seeing that play out really well |
| However, the team did gain new business, including the launch of a super pretzel field Helapenonot nationwide with a major theater customer and incremental sales gains in Pretzel bites and buns |
| I feel really confident in the new business that we're generating and the play that the team is executing |
| We continue to see strong momentum across the Food Service segment and remain excited about the growth opportunities |
| And we think what we've done in the first quarter is a good sign that we're moving in the right direction on that |
| This rollout began in the first quarter and is already exceeding expectations |
| We also began to roll out up churros with a major food distributor in September of 2023, and they have recently doubled their original order given the strong momentum |
| And I feel very confident about our long-term play still |
| Within our brands like SUPERPRETZEL, we've been able to release some really good new products that are being really well accepted out in the industry |
| Sales for Dippin’ Dots, which is part of the Food Service segment, were slightly positive for the quarter, led by an approximate 3.5% increase in sales of our top 30 customers |
| Machine service revenues increased 3.1% versus the prior year period while equipment sales increased 26.8%, driven by strong growth from the convenience in QSR channels |
| This segment posted an 8.5% increase in sales, led by the continued strength of ICEE |
| Our focus on gross margin expansion through an improved mix of core products, more line pricing and cost of goods efficiencies is clearly benefiting our results |
| The rollout of a new self-serve program for a major club customer is delivering strong results with over 100 locations converted to date with plans to continue rolling out locations in the second quarter |
| We also had a positive impact from our churros marketing campaign at major retail outlets such as Target as well as continued overall C-store channel strength |
| Beverage sales grew 8.5% or $3.3 million higher than Q1 '23, led by solid performance across key channels, including convenience, amusement parks, mass merchants and restaurants |
| We saw our bakery gross margins improved over 100 basis points strong margin performance in ICEE and in Food Service |
| This positions us well for continued growth as the overall consumer environment improves |
| Statement |
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| Sales declined 4%, primarily driven by soft traffic trends in key channels |
| Food Service, our largest segment saw sales decreased 4.1% to $228.6 million, primarily reflecting reduced inventories of pies and cookies among certain customers during the holiday season as well as a decline in handheld sales due to a contractual cost true-up agreement |
| This resulted in a sales decline of just under 1%, largely in line with the trends in the overall industry |
| For the quarter, bakery sales decreased 6.4%, driven entirely by the impact of reduced customer orders for pies and cookies during the holiday season |
| Sales of soft pretzels and frozen novelties declined 4% and 3.3% in the quarter respectively, driven by the previously discussed consumer pressures |
| Overall, theater volume increased for the quarter compared to the prior year, but was below expectations due to lower performing movie releases and softer traffic |
| Frozen novelties and biscuit sales declined 28.4% and 11.1%, respectively, versus the prior year period |
| This resulted in Q1 '24 Retail segment operating income of $0.5 million or a decrease of 59.3% versus the prior year period, driven by product mix, lower gross margin and the onetime costs associated with the opening of the New Jersey distribution center |
| This led to Q1 '24 Food Service segment operating income of $6 million or a decrease of 5.8% versus the prior period |
| Net sales for the quarter totaled $348.3 million, down 0.9% versus the prior year |
| Obviously, the data points to really kind of tough consumer traffic through the month of January here |
| Bakery sales decreased 6.4% and handheld sales declined 6.5% in the quarter |
| But that's a product that once it gets on display and retailers as a shorter shelf life and so as they start to see retailers and grocery stores, concerns about traffic coming into the holidays, they backed down their orders |
| This reflects softer sales and onetime costs associated with the opening of our New Jersey distribution center, which impacted distribution expenses |
| Many of our largest customers experienced lower traffic and moved the tighter management of inventory to manage through softer consumption trends |
| As we look forward on volume, I would just kind of echo what Dan said, we're coming out of a quarter that makes us a bit cautious |
| But if I was looking forward, there might be some slight improvement in volume, but I think we're still cautious about what's out there in front of us |
| As previously mentioned, frozen novelties declined in the quarter as key customers reduced orders and inventory levels in this category |
| For the quarter, we did experience a slight sales decline compared to the prior year, but were in line with overall industry trends |
| We talked about Food Service being affected and really being affected through our pies and cookies |
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