J&J Snack Foods Corp.

Reported Q3 net sales were $426 million, down 6.2% year over year. Gross profit improved about $1 million to $151 million, and gross margin expanded 240 basis points to 35.5%. Adjusted EBITDA was $67.4 million, down 6.4%, and adjusted EPS was $1.96 versus $2.00 last year; reported EPS was $1.88 versus $2.26, with the prior year benefiting from a one-time insurance gain. By segment, foodservice net sales were $254.3 million, down 8.3%; retail net sales were $64.9 million, up 1.7%; and frozen beverage net sales were $106.7 million, down 5.8%. Management said Q4 bakery headwinds should ease to about 2.5% of prior-year sales, and it expects gross margin expansion to continue in Q4. Full-year/future commentary centered on a return to sales growth in fiscal 2027 and organic growth returning in 2027, rather than formal numerical guidance.

Daniel Fachner’s tone was upbeat and confident, repeatedly emphasizing that the team was ‘proud’ of the quarter and that Project Apollo is doing ‘exactly what we designed it to do.’ He framed fiscal 2026 as a repositioning year and said the company is building momentum from innovation, new distribution, and improving demand in core categories like pretzels, churros, frozen novelties, and frozen beverages. He also pointed to a stronger theater backdrop, a new service deal, and an encouraging QSR test as reasons to expect better sales in Q4 and fiscal 2027.

Shawn C. Munsell focused on the mechanics of margin and cost control. He said consolidated gross margin improved 240 bps to 35.5% primarily from plant consolidation savings and mix, and noted that year-to-date gross margin has expanded 200 bps. He also quantified operating cash flow at about $48.8 million, capex at about $18.1 million, cash net of debt at about $35 million, and borrowing capacity of about $182 million. He said the company expects to collect about $17 million in insurance proceeds in August, and it repurchased about 130 thousand shares for $10 million during the quarter.

Analysts focused on what specifically eases in Q4, the outlook for fiscal 2027 organic growth, the softness in foodservice cookies and handhelds, and whether Apollo has more upside. Management said bakery rationalization is peaking in Q3 and should taper in Q4, service revenue should begin closing the gap in Q4, and retail slotting-fee pressure should ease. On 2027, Daniel Fachner said he absolutely believes the company will be back to organic growth, but he would look more toward Q1 than Q4 for the inflection. On Apollo, Shawn Munsell said plant-consolidation savings were raised from 15 to 20 million annualized because transition costs stabilized and the third-quarter run rate looked durable.