8-K
J&J Snack Foods Corp (JJSF)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 2021
J&J SNACK FOODS CORP.
(Exact name of registrant as specified in its charter)
| New Jersey | 000-14616 | 22-1935537 |
|---|---|---|
| (State or Other | (Commission | (I.R.S. Employer |
| Jurisdiction of<br><br> <br>Organization) | File Number) | Identification No.) |
6000 Central Highway, Pennsauken, New Jersey 08109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (856) 665-9533
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
|---|---|---|
| Common Stock, no par value | JJSF | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
1
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
On July 26, 2021, J & J Snack Foods Corp. issued a press release regarding its earnings for the third quarter of fiscal 2021.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
| Exhibit Number | Description of Document |
|---|---|
| 99.1 | Press Release dated July 26th, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
J & J SNACK FOODS CORP.
By: /s/ Dan Fachner
Dan Fachner
President and
Chief Executive Officer
/s/ Ken A. Plunk
Ken A. Plunk
Chief Financial Officer
Date: July 26th, 2021
3
ex_266908.htm
Exhibit 99.1
| IMMEDIATE RELEASE | Contact: | Ken Plunk |
|---|---|---|
| FOR: | Senior Vice President | |
| Chief Financial Officer | ||
| (615) 587-4374 |
****
6000 Central Highway
Pennsauken, NJ 08109
J & J SNACK FOODS
REPORTS THIRD QUARTER SALES
AND EARNINGS
Pennsauken, NJ, July 26th, 2021 - J & J Snack Foods Corp. (NASDAQ-JJSF) today announced sales and earnings for the third quarter ended June 26th, 2021.
Sales increased 51% to $324.3 million from $214.6 million in last year’s third quarter. Net earnings were $28.9 million in the current quarter compared to a $12.6 million loss last year. Earnings per diluted share was $1.51 for the third quarter, a significant increase compared to the $0.67 loss per diluted share last year. Operating income increased to $38.1 million in the current quarter versus a $19.4 million loss last year.
For the nine months ended June 26, 2021, sales were $821.5 million, a 7% increase from the same period last year when sales were $769.5 million. Net earnings were $36.7 million for the nine months compared to $11.7 million last year. Earnings per diluted share was $1.92 for the nine-month period compared to $0.62 last year. Operating income increased 246% to $46.0 million this year from $13.3 million last year. Operating income was impacted by $2.1 million of Covid-19 related costs during this nine-month period.
The overall sales environment improved significantly this quarter benefiting our business across all three segments. Food service venues are approaching pre-Covid capacity levels and more confident consumers are getting out of the house and spending more as the market normalizes. Our Food Service segment rebounded with 68% growth versus last year and exceeded fiscal 2019 sales by 1% led by strength in soft pretzels, churros, handhelds and bakery. Even as our food service business rebounds, we continue to see strength in our Retail segment where sales were just 6% below last year despite lapping a 38% growth in the prior year. Benchmarked against a pre-Covid fiscal 2019, retail sales grew 29% even as consumer trends shift out of the home. The Frozen Beverages business was 83% above prior year for the quarter which was a significant improvement when compared to Q2 of this year where sales were still 32% below the prior year. This growth was led by the amusement, c-store and mass merchandise channels. While theater attendance continues to lag 2019 levels, traffic and average ticket are improving and should further benefit our business down the road. Improved sales volume, product mix and a strong focus on cost efficiencies helped drive improved gross margins and profitability.
Dan Fachner, J&J’s President, commented, “I am so proud of our employees across the business for helping deliver a strong quarter. Our business performance is starting to benefit from an economy that is moving much closer to pre-Covid activities. The strength of our product and brand portfolio enables us to quickly leverage consumer traffic across multiple food service and retail customers. Consumers are embracing the opportunities they missed over the last year whether that is enjoying a SUPERPRETZEL at the game or sipping on an ICEE at the beach with their family. I remain extremely confident in our business and future growth opportunities.”
J&J Snack Foods Corp. (NASDAQ: JJSF) is a leader and innovator in the snack food industry, providing innovative, niche and affordable branded snack foods and beverages to foodservice and retail supermarket outlets. Manufactured and distributed nationwide, our principal products include SUPERPRETZEL, the #1 soft pretzel brand in the world, as well as internationally known ICEE and SLUSH PUPPIE frozen beverages, LUIGI’S Real Italian Ice, MINUTE MAID* frozen ices, WHOLE FRUIT sorbet and frozen fruit bars, SOUR PATCH KIDS** Flavored Ice Pops, Tio Pepe’s & CALIFORNIA CHURROS, and THE FUNNEL CAKE FACTORY funnel cakes and several bakery brands within DADDY RAY’S, COUNTRY HOME BAKERS and HILL & VALLEY. J&J Snack Foods Corp. has approximately twenty manufacturing facilities and generates more than $1 billion in annual revenue. The Company has a history of strong sales growth and financial performance and remains focused on opportunities to expand its unique niche market product offering while bringing smiles to families worldwide. For more information, please visit http://www.jjsnack.com.
*MINUTE MAID is a registered trademark of The Coca-Cola Company **SOUR PATCH KIDS is a registered trademark of Mondelēz International group, used under license.
| J & J SNACK FOODS CORP. AND SUBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||
| (Unaudited) | ||||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 26, | June 27, | June 26, | June 27, | |||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net Sales | $ | 324,344 | $ | 214,563 | $ | 821,519 | $ | 769,502 | ||||
| Cost of goods sold | 228,170 | 177,367 | 614,324 | 585,002 | ||||||||
| Gross Profit | 96,174 | 37,196 | 207,195 | 184,500 | ||||||||
| Operating expenses | ||||||||||||
| Marketing | 20,502 | 21,952 | 56,995 | 68,532 | ||||||||
| Distribution | 27,311 | 21,272 | 75,643 | 69,648 | ||||||||
| Administrative | 10,348 | 8,374 | 29,004 | 28,166 | ||||||||
| Plant shutdown impairment costs | - | 5,072 | - | 5,072 | ||||||||
| Other general (income) expense | (131 | ) | (54 | ) | (399 | ) | (183 | ) | ||||
| Total Operating Expenses | 58,030 | 56,616 | 161,243 | 171,235 | ||||||||
| Operating Income (loss) | 38,144 | (19,420 | ) | 45,952 | 13,265 | |||||||
| Other (expense)income | ||||||||||||
| Investment income (loss) | 470 | 1,300 | 2,419 | 2,673 | ||||||||
| Interest (expense) & other | (8 | ) | (7 | ) | (19 | ) | (60 | ) | ||||
| Earnings (loss) before income taxes | 38,606 | (18,127 | ) | 48,352 | 15,878 | |||||||
| Income taxes (benefit) | 9,713 | (5,480 | ) | 11,620 | 4,157 | |||||||
| NET EARNINGS (LOSS) | $ | 28,893 | $ | (12,647 | ) | $ | 36,732 | $ | 11,721 | |||
| Earnings (loss) per diluted share | $ | 1.51 | $ | (0.67 | ) | $ | 1.92 | $ | 0.62 | |||
| Weighted average number of diluted shares | 19,185 | 18,888 | 19,116 | 19,036 | ||||||||
| Earnings (loss) per basic share | 1.52 | $ | (0.67 | ) | $ | 1.93 | $ | 0.62 | ||||
| Weighted average number of basic shares | 19,045 | 18,888 | 18,996 | 18,902 | ||||||||
| The accompanying notes are an integral part of these statements. | ||||||||||||
| --- |
| J & J SNACK FOODS CORP. AND SUBSIDIARIES | |||||
|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | |||||
| (in thousands, except share amounts) | |||||
| **** | **** | **** | |||
| --- | --- | --- | --- | --- | --- |
| September 26, | |||||
| 2020 | |||||
| Assets | **** | **** | **** | **** | **** |
| Current assets | |||||
| Cash and cash equivalents | 276,268 | $ | 195,809 | ||
| Marketable securities held to maturity | 9,902 | 51,151 | |||
| Accounts receivable, net | 154,845 | 126,587 | |||
| Inventories | 114,822 | 108,923 | |||
| Prepaid expenses and other | 11,547 | 17,087 | |||
| Total current assets | 567,384 | 499,557 | |||
| Property, plant and equipment, at cost | |||||
| Land | 2,494 | 2,494 | |||
| Buildings | 26,582 | 26,582 | |||
| Plant machinery and equipment | 340,693 | 330,168 | |||
| Marketing equipment | 253,199 | 250,914 | |||
| Transportation equipment | 10,232 | 9,966 | |||
| Office equipment | 34,291 | 33,878 | |||
| Improvements | 45,349 | 43,264 | |||
| Construction in progress | 28,134 | 19,995 | |||
| Total Property, plant and equipment, at cost | 740,974 | 717,261 | |||
| Less accumulated depreciation and amortization | 482,056 | 455,645 | |||
| Property, plant and equipment, net | 258,918 | 261,616 | |||
| Other assets | |||||
| Goodwill | 121,833 | 121,833 | |||
| Other intangible assets, net | 79,676 | 81,622 | |||
| Marketable securities held to maturity | 7,568 | 16,927 | |||
| Marketable securities available for sale | 11,273 | 13,976 | |||
| Operating lease right-of-use assets | 51,811 | 58,110 | |||
| Other | 3,083 | 2,912 | |||
| Total other assets | 275,244 | 295,380 | |||
| Total Assets | 1,101,546 | $ | 1,056,553 | ||
| Liabilities and Stockholders' Equity | **** | **** | **** | **** | **** |
| Current Liabilities | |||||
| Current finance lease liabilities | 252 | $ | 349 | ||
| Accounts payable | 97,117 | 73,135 | |||
| Accrued insurance liability | 15,764 | 13,039 | |||
| Accrued liabilities | 6,890 | 7,420 | |||
| Current operating lease liabilities | 12,780 | 13,173 | |||
| Accrued compensation expense | 15,000 | 16,134 | |||
| Dividends payable | 12,064 | 10,876 | |||
| Total current liabilities | 159,867 | 134,126 | |||
| Noncurrent finance lease liabilities | 417 | 368 | |||
| Noncurrent operating lease liabilities | 41,573 | 47,688 | |||
| Deferred income taxes | 64,284 | 64,413 | |||
| Other long-term liabilities | 375 | 460 | |||
| Stockholders' Equity | **** | **** | **** | **** | **** |
| Preferred stock, 1 par value; authorized 10,000,000 shares; none issued | - | - | |||
| Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,061,000 and 18,915,000 respectively | 69,572 | 49,268 | |||
| Accumulated other comprehensive loss | (13,182 | ) | (15,587 | ) | |
| Retained Earnings | 778,640 | 775,817 | |||
| Total stockholders' equity | 835,030 | 809,498 | |||
| Total Liabilities and Stockholders' Equity | 1,101,546 | $ | 1,056,553 |
All values are in US Dollars.
| The accompanying notes are an integral part of these statements. |
|---|
| J & J SNACK FOODS CORP. AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (Unaudited) (in thousands) | ||||||
| Nine Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| June 26, | June 27, | |||||
| 2021 | 2020 | |||||
| Operating activities: | ||||||
| Net earnings | $ | 36,732 | $ | 11,721 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||
| Depreciation of fixed assets | 36,278 | 37,353 | ||||
| Amortization of intangibles and deferred costs | 2,096 | 2,516 | ||||
| Share-based compensation | 3,252 | 3,421 | ||||
| Deferred income taxes | (188 | ) | (426 | ) | ||
| (Gain) loss on marketable securities | (926 | ) | 1,746 | |||
| Plant shutdown impairment costs | - | 5,072 | ||||
| Other | (305 | ) | (309 | ) | ||
| Changes in assets and liabilities net of effects from purchase of companies | ||||||
| (Increase) decrease in accounts receivable | (27,940 | ) | 24,634 | |||
| Increase in inventories | (5,964 | ) | (3,751 | ) | ||
| (Increase) decrease in prepaid expenses | 5,710 | (7,879 | ) | |||
| Increase (decrease) in accounts payable and accrued liabilities | 24,823 | (7,478 | ) | |||
| Net cash provided by operating activities | 73,568 | 66,620 | ||||
| Investing activities: | ||||||
| Payments for purchases of companies, net of cash acquired | - | (57,197 | ) | |||
| Purchases of property, plant and equipment | (34,456 | ) | (47,637 | ) | ||
| Purchases of marketable securities | - | (6,103 | ) | |||
| Proceeds from redemption and sales of marketable securities | 54,191 | 54,125 | ||||
| Proceeds from disposal of property and equipment | 2,079 | 2,852 | ||||
| Other | 42 | (72 | ) | |||
| Net cash provided by (used in) investing activities | 21,856 | (54,032 | ) | |||
| Financing activities: | ||||||
| Payments to repurchase common stock | - | (8,972 | ) | |||
| Proceeds from issuance of stock | 17,178 | 6,300 | ||||
| Payments on capitalized lease obligations | (48 | ) | (272 | ) | ||
| Payment of cash dividend | (32,719 | ) | (31,193 | ) | ||
| Net cash used in financing activities | (15,589 | ) | (34,137 | ) | ||
| Effect of exchange rate on cash and cash equivalents | 624 | (885 | ) | |||
| Net increase (decrease) in cash and cash equivalents | 80,459 | (22,434 | ) | |||
| Cash and cash equivalents at beginning of period | 195,809 | 192,395 | ||||
| Cash and cash equivalents at end of period | $ | 276,268 | $ | 169,961 | ||
| The accompanying notes are an integral part of these statements. | ||||||
| --- |
| Three months ended | Nine months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 26, | June 27, | June 26, | June 27, | |||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Sales to External Customers: | ||||||||||||
| Food Service | ||||||||||||
| Soft pretzels | $ | 50,895 | $ | 21,384 | $ | 120,359 | $ | 116,985 | ||||
| Frozen juices and ices | 13,927 | 8,688 | 30,812 | 25,222 | ||||||||
| Churros | 20,096 | 7,321 | 46,358 | 38,466 | ||||||||
| Handhelds | 18,971 | 7,448 | 56,574 | 22,084 | ||||||||
| Bakery | 85,706 | 69,237 | 257,580 | 255,016 | ||||||||
| Other | 6,884 | 2,543 | 14,546 | 13,628 | ||||||||
| Total Food Service | $ | 196,478 | $ | 116,621 | $ | 526,226 | $ | 471,401 | ||||
| Retail Supermarket | ||||||||||||
| Soft pretzels | $ | 11,193 | $ | 12,716 | $ | 40,871 | $ | 34,874 | ||||
| Frozen juices and ices | 36,898 | 33,322 | 71,600 | 59,279 | ||||||||
| Biscuits | 4,562 | 8,151 | 18,717 | 21,759 | ||||||||
| Handhelds | 1,191 | 3,257 | 6,215 | 9,135 | ||||||||
| Coupon redemption | (513 | ) | (807 | ) | (2,196 | ) | (2,216 | ) | ||||
| Other | 526 | 863 | 1,652 | 1,668 | ||||||||
| Total Retail Supermarket | $ | 53,857 | $ | 57,502 | $ | 136,859 | $ | 124,499 | ||||
| Frozen Beverages | ||||||||||||
| Beverages | $ | 42,279 | $ | 16,456 | $ | 76,663 | $ | 83,606 | ||||
| Repair and maintenance service | 22,789 | 17,259 | 59,903 | 61,524 | ||||||||
| Machines revenue | 8,404 | 6,363 | 20,556 | 27,254 | ||||||||
| Other | 536 | 362 | 1,312 | 1,218 | ||||||||
| Total Frozen Beverages | $ | 74,009 | $ | 40,440 | $ | 158,434 | $ | 173,602 | ||||
| Consolidated Sales | $ | 324,344 | $ | 214,563 | $ | 821,519 | $ | 769,502 | ||||
| Depreciation and Amortization: | ||||||||||||
| Food Service | $ | 6,817 | $ | 7,050 | $ | 20,334 | $ | 21,208 | ||||
| Retail Supermarket | 378 | 468 | 1,147 | 1,156 | ||||||||
| Frozen Beverages | 5,469 | 5,864 | 16,893 | 17,505 | ||||||||
| Total Depreciation and Amortization | $ | 12,664 | $ | 13,382 | $ | 38,374 | $ | 39,869 | ||||
| Operating Income : | ||||||||||||
| Food Service | $ | 17,644 | $ | (18,242 | ) | $ | 29,879 | $ | 7,743 | |||
| Retail Supermarket | 9,080 | 7,910 | 20,167 | 14,464 | ||||||||
| Frozen Beverages | 11,420 | (9,088 | ) | (4,094 | ) | (8,942 | ) | |||||
| Total Operating Income (Loss) | $ | 38,144 | $ | (19,420 | ) | $ | 45,952 | $ | 13,265 | |||
| Capital Expenditures: | ||||||||||||
| Food Service | $ | 10,383 | $ | 7,865 | $ | 25,915 | $ | 26,599 | ||||
| Retail Supermarket | 93 | 390 | 194 | 1,625 | ||||||||
| Frozen Beverages | 5,151 | 2,397 | 8,347 | 19,413 | ||||||||
| Total Capital Expenditures | $ | 15,627 | $ | 10,652 | $ | 34,456 | $ | 47,637 | ||||
| Assets: | ||||||||||||
| Food Service | $ | 779,730 | $ | 729,331 | $ | 779,730 | $ | 729,331 | ||||
| Retail Supermarket | 33,405 | 33,766 | 33,405 | 33,766 | ||||||||
| Frozen Beverages | 288,411 | 294,189 | 288,411 | 294,189 | ||||||||
| Total Assets | $ | 1,101,546 | $ | 1,057,286 | $ | 1,101,546 | $ | 1,057,286 |
RESULTS OF OPERATIONS
Consolidated J&J Snack Foods net sales increased $109.8 million or 51% to $324.3 million for the three months ended June 26^th^, 2021.
FOOD SERVICE
Sales to food service customers increased $79.9 million or 68% in the third quarter to $196.5 million. Food service venues are approaching pre-COVID capacity levels and more confident consumers are leaving their homes and spending more as the market normalizes. Sales accelerated throughout our key channels led by schools, amusement/recreation, restaurants, c-stores and theaters. Soft pretzel sales to food service increased 138% to $50.9 million. Frozen juices and ices sales increased 60% to $13.9 million and Churro sales increased 174% in the quarter to $20.1 million.
Sales of bakery products increased 24% to $85.7 million in the third quarter. Sales of handhelds increased 155% to $19.0 million in the quarter led by the continued success of a new product developed for one of our larger wholesale club customers.
Sales of new products in the first twelve months since their introduction were approximately $11.8 million in the quarter led by the previously noted handheld item. Price increases had a marginal impact on results in the quarter as traffic and volume drove almost all the sales increase compared to last year.
Operating income in our Food Service segment was $17.6 million in the third quarter compared with an operating loss of $18.2 million in the prior year quarter. The increase in operating income was primarily due to the increase in sales which improved margin efficiencies and expense leverage.
RETAIL SUPERMARKETS
Sales of products to retail supermarkets decreased $3.6 million or 6% to $53.9 million in the third quarter. The decrease in sales in the current quarter was primarily attributable to the stronger customer demand in the prior year third quarter resulting from the initial responses to the COVID-19 pandemic. During the prior year third quarter, a surge in demand and sales was experienced related to the effects of the rapid changes in consumer purchasing habits.
Sales of soft pretzels decreased 12% to $11.2 million in the third quarter. Sales of frozen juices and ices increased 11% to $36.9 million in the third quarter. Sales of biscuits decreased 44% to $4.6 million and Handheld sales to retail supermarket customers decreased 63% to $1.2 million in the third quarter.
Price increases and sales of new products had a minimum impact on revenue in the quarter as sales were driven primarily by consumer traffic and volume trends in retail outlets.
Operating income in our Retail Supermarkets segment increased $1.2 million or 15% to $9.1 million in this year’s third quarter driven by improving operating income margins which were approximately 300 basis points better than prior year.
FROZEN BEVERAGES
Frozen beverage and related product sales increased $33.6 million or 83% to $74.0 million in the third quarter. Beverage related sales increased 157% to $42.3 million, with the majority of the increase attributable to the increase in gallon sales. The increase was led by the amusement channel that experienced sales above pre-COVID 19 levels and continued traffic increases in the mass merchandise, QSR and theater channels. The theater channel continued to show improvement this quarter, and while current quarter theater channel sales still lagged 2019 sales by over 50%, it represented a significant improvement over the prior year quarter.
Service revenue increased 32% to $22.8 million in the third quarter as customers accelerated equipment maintenance in the quarter to support the post COVID-19 recovery. Machine revenue (primarily sales of frozen beverage machines) increased 32% to $8.4 million in the third quarter. Retailers are beginning to re-invest again which helped to accelerate machine revenues in the quarter.
Our Frozen Beverage segment generated operating income of $11.4 million in the third quarter compared with an operating loss of $9.1 million in the prior year third quarter. The comparative performance was impacted due to the challenging sales environment in the prior year quarter due to the COVID-19 pandemic.
CONSOLIDATED
Gross profit as a percentage of sales was 29.7% in the three-month period this year and 17.3% last year with the increase largely attributable to the benefit of increased sales, favorable product mix and corresponding margin efficiencies.
Total operating expenses increased $1.4 million in the third quarter, however, as a percentage of sales, total operating expenses decreased to 17.9% from 26.4% in the prior year quarter. Marketing expenses decreased to 6.3% of sales in this year’s quarter from 10.2% last year. Distribution expenses were 8.4% of sales in this year’s quarter compared to 9.9% of sales last year. Administrative expenses were 3.2% of sales this quarter compared to 3.9% last year. Operating expenses in the prior year quarter were also impacted by $5.1 million of plant shutdown impairment costs.
Operating income was $38.1 million in the third quarter compared with an operating loss of $19.4 million in the prior year quarter, largely the result of the aforementioned items.
Our investments generated before tax income of $0.5 million this quarter, a decrease of $0.8 million compared to prior year quarter. The decrease was primarily attributable to the decrease in investments held between periods.
Net earnings in the third quarter were $28.9 million compared with a net loss of $12.6 million in the prior year quarter. Our effective tax rate was 25% in this year’s quarter.
There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.
The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.