As producer of the SuperPretzel, ICEE, and now Dippin' Dots, J&J Snack Foods (JJSF -0.69%) just posted its fourth consecutive quarter of record revenue. Closing out fiscal 2022, the snack company reported its best ever quarterly revenue, totaling more than $400 million.

So is it time to buy J&J Snack Foods stock? Let's take a closer look at last quarter's performance and the company's future outlook.

A record quarter and new acquisition

Net sales for J&J reached a record-breaking $400.4 million in the fourth fiscal quarter, up 24% year over year and 28% above Q4 2019 levels. The new quarterly revenue record marks the fourth straight quarter of new revenue records for J&J. It's been a solid sales year for the snack dynasty.

Firing on all cylinders, J&J enjoyed sales growth across its food service product lines. Food service sales grew 29% overall during the quarter, with churro sales jumping 38%, handheld items increasing 44%, and soft pretzels delivering "strong growth" versus the prior-year period. But the most remarkable figure was J&J's frozen novelties segment, which observed a whopping 228% increase for the quarter.

Thanks to the acquisition of world-renowned Dippin' Dots, J&J more than tripled its frozen novelties revenue during the fourth quarter. According to CEO Dan Fachner, the Dippin' Dots brand "aligns perfectly" with J&J Snack Foods' existing portfolio, business model, and financial goals. 

Since purchasing Dippin' Dots, Fachner and his team have pushed to grow the novelty ice cream brand. Targeting under-penetrated markets, J&J has introduced the bead-sized ice cream to new movie theaters and food service venues. So far it's working: Compared to 2019 levels, Dippin' Dots sales grew 18% last quarter.

High sales, low profitability

Along with dipping its toes into new ventures and setting revenue records, J&J faced its share of challenges in Q4. Increasing supply chain costs and higher raw materials pricing due to inflation affected the ICEE maker's bottom line, along with heightened storage and fuel expenses. 

As a result, J&J's net profit of $17.3 million last quarter marked an 8.3% drop from last year's Q4. Considering that sales grew 24% last quarter, it's clear that net profit margin has taken a major hit. For the year, J&J's net margin finished at less than half of its pre-pandemic level.

Addressing margins during the Q4 earnings call, Fachner felt confident that efficiency-improving and cost-reducing initiatives would help to "deliver higher margins" to complement J&J's record-breaking sales. Three rounds of price increases over the past 14 months have also helped prop up J&J's margins. Considering the current operating environment, Fachner said the team feels good about profitability. 

The best is yet to come

Suggesting a strong start to the new year, CFO Ken Plunk commented that J&J's improved efficiencies and upcoming opportunities "will continue to fuel growth in fiscal 2023." Based on his projections for consumer demand, he feels the company is on a positive trajectory toward reaching pre-pandemic gross margin rates.

J&J remains focused on "aggressively" growing top-line revenue in 2023, while reducing supply chain and other costs to better pad the bottom line. With Dippin' Dots as a catalyst for increased profitability, Plunk feels good about 2023's financial outlook. 

Fachner cited "tremendous growth opportunities" in reference to J&J's expansion strategy into new markets, while at the same time growing existing customer business by improving relationships. Aside from company efforts, he believes higher margins will come naturally as inflation eases.

In Fachner's words, "While fiscal 2022 was a record revenue year, the best is yet to come." If J&J Snack Foods can continue crushing sales records while padding margins, watch for this consumer staples stock to reflect the company's all-time high sales performance.