John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS) (the “Company”)
today announced operating results for its first quarter of fiscal 2014.
Net income for the first quarter of fiscal 2014 was $6.8 million, or
$0.61 per share diluted, compared to $7.5 million, or $0.69 per share
diluted, for the first quarter of fiscal 2013. Approximately 50% of the
$0.8 million decline in net income was attributable to the first quarter
of fiscal 2013 containing a pre-tax gain on sale of assets of $0.6
million.
Net sales decreased slightly to $176.7 million in the first quarter of
fiscal 2014 from net sales of $177.5 million for the first quarter of
fiscal 2013 while sales volume, which is defined as pounds sold to
customers, increased by 14.0%. The favorable impact on net sales from
the sales volume increase was offset by lower selling prices. Selling
prices decreased mainly in pecan and peanut products in response to
lower acquisition costs. Competitive pricing pressure at two of our
major private brand customers also contributed to the overall decrease
in selling prices. Sales volume increased in the contract packaging,
commercial ingredients and consumer distribution channels, and sales
volume increased for all major product types except cashews and walnuts,
both of which were relatively unchanged. The sales volume increase in
the contract packaging distribution channel came primarily from new
product launches and increased promotional activity implemented by a
major existing customer. The sales volume increase in the commercial
ingredients distribution channel was due primarily to increases in sales
of (i) lower-priced products such as peanut crushing stock due to a
record peanut harvest, (ii) almond products as a result of distribution
gains achieved by a major existing customer and (iii) pecan products due
to the favorable impact on customer demand from lower selling prices.
The sales volume increase in the consumer distribution channel primarily
came from increased sales of private brand trail mix, snack nut and
peanut butter products. Increased sales of Orchard Valley Harvest
produce products also contributed to the sales volume increase. The
increase in sales volume for these products was partially offset by a
sales volume decrease in Fisher inshell peanut products due to
reduced distribution at a major Fisher snack nut customer as a
result of competitive pricing pressure. Fisher recipe nut sales
volume declined marginally mainly due to reduced merchandising activity
at a major Fisher recipe nut customer.
Gross profit decreased by $1.2 million, and gross profit margin, as a
percentage of net sales, decreased to 16.6% for the first quarter of
fiscal 2014 compared to 17.2% for the first quarter of fiscal 2013. The
decreases in the gross profit and gross profit margin occurred primarily
because of reduced selling prices to two of our major private brand
customers caused by competitive pricing pressure. The decreases in gross
profit and gross profit margin were offset in part by manufacturing
efficiency improvements achieved during the quarter and the increase in
sales volume. The increase in sales volume did not fully offset the
reduction in gross profit and gross profit margin because the sales
volume increase was generated mainly by increases in sales of
lower-priced products.
Total operating expenses for the first quarter of fiscal 2014 increased
to $17.0 million from $16.7 million for the first quarter of fiscal
2013. The increase in total operating expenses in the quarterly
comparison occurred because total operating expenses in the first
quarter of fiscal 2013 included a $0.6 million gain on the sale of
assets.
Interest expense declined by $0.2 million in the quarterly comparison
mainly due to a reduction in short-term and long-term debt.
The value of total inventories on hand at the end of the first quarter
of fiscal 2014 increased by $23.4 million, or 17.4%, when compared to
the value of total inventories on hand at the end of the first quarter
of fiscal 2013. The increase in total inventory value was attributable
primarily to increased quantities of raw nut input stocks and finished
goods to support increasing sales volume. The weighted average cost per
pound of raw nut input stocks on hand at the end of the first quarter of
fiscal 2014 decreased by 15% over the weighted average cost at the end
of the first quarter of fiscal 2013. The decrease in the weighted
average cost per pound in the quarterly comparison was mainly
attributable to lower acquisition costs for peanuts and pecans which
were offset in part by higher acquisition costs for almonds.
“As you may recall, we reported record first quarter net sales and net
income last fiscal year,” stated Jeffrey T. Sanfilippo, Chairman and
Chief Executive Officer. “Notwithstanding the challenges we faced in the
current first quarter, such as competitive pricing pressure with some of
our major customers, we nearly matched those record levels, especially
after factoring out the unfavorable impact on net income from sales of
assets in the quarterly comparison. Significantly lower peanut selling
prices compared to peanut selling prices in last year’s first quarter
also put additional pressure on net sales and gross profit in the
current first quarter,” Mr. Sanfilippo noted. “We recognized these
challenges early on and responded to them by achieving meaningful
efficiency improvements in our operations in continuance of our lean
manufacturing efforts and by gaining new sales volume in our contract
packaging and commercial ingredients distribution channels with existing
key customers. As mentioned above, we were not provided with the
opportunity to merchandise Fisher recipe nuts at a major Fisher
recipe nut customer in the current first quarter that was provided by
that customer in last year’s first quarter. We also saw a sales volume
decline for Fisher recipe nuts at certain government customers
due to the sequester. Despite these challenges at these Fisher
recipe nut customers, Fisher recipe nut share grew in both dollar
and pound terms in the quarterly comparison according to Nielsen data,”
Mr. Sanfilippo stated. “I am especially proud of the efforts of our
employees in meeting these challenges and delivering a strong first
quarter,” Mr. Sanfilippo concluded.
The Company will host an investor conference call and webcast on
Tuesday, October 29, 2013, at 10:00 a.m. Eastern (9:00 a.m. Central) to
discuss these results. To participate in the call via telephone, dial
888-680-0878 from the U.S. or 617-213-4855 internationally and enter the
participant passcode of 41569139. This call is being webcast by
Thomson/CCBN and can be accessed at the Company’s website at www.jbssinc.com.
Some of the statements of Jeffrey T. Sanfilippo in this release are
forward-looking. These forward-looking statements may be generally
identified by the use of forward-looking words and phrases such as
“will”, “intends”, “may”, “believes”, “anticipates”, “should” and
“expects” and are based on the Company’s current expectations or beliefs
concerning future events and involve risks and uncertainties.
Consequently, the Company’s actual results could differ materially. The
Company undertakes no obligation to update publicly or otherwise revise
any forward-looking statements, whether as a result of new information,
future events or other factors that affect the subject of these
statements, except where expressly required to do so by law. Among the
factors that could cause results to differ materially from current
expectations are: (i) the risks associated with our vertically
integrated model with respect to pecans, peanuts and walnuts; (ii) sales
activity for the Company’s products, such as a decline in sales to one
or more key customers, a decline in sales of private brand products or
changing consumer preferences; (iii) changes in the availability and
costs of raw materials and the impact of fixed price commitments with
customers; (iv) the ability to pass on price increases to customers if
commodity costs rise and the potential for a negative impact on demand
for, and sales of, our products from price increases; (v) the ability to
measure and estimate bulk inventory, fluctuations in the value and
quantity of the Company’s nut inventories due to fluctuations in the
market prices of nuts and bulk inventory estimation adjustments,
respectively, and decreases in the value of inventory held for other
entities, where the Company is financially responsible for such losses;
(vi) the Company’s ability to appropriately respond to, or lessen the
negative impact of, competitive and pricing pressures; (vii) losses
associated with product recalls, product contamination, food labeling or
other food safety issues, or the potential for lost sales or product
liability if customers lose confidence in the safety of the Company’s
products or in nuts or nut products in general, or are harmed as a
result of using the Company’s products; (viii) the ability of the
Company to retain key personnel; (ix) the effect of the actions and
decisions of the group that has the majority of the voting power with
regard to the Company’s outstanding common equity (which may make a
takeover or change in control more difficult), including the effect of
any agreements pursuant to which such group has pledged a substantial
amount of its securities of the Company; (x) the potential negative
impact of government regulations, including the Public Health Security
and Bioterrorism Preparedness and Response Act and laws and regulations
pertaining to food safety, such as the Food Safety Modernization Act;
(xi) the Company’s ability to do business in emerging markets while
protecting its intellectual property in such markets; (xii) uncertainty
in economic conditions, including the potential for economic downturn;
(xiii) the Company’s ability to obtain additional capital, if needed;
(xiv) the timing and occurrence (or nonoccurrence) of other transactions
and events which may be subject to circumstances beyond the Company’s
control; (xv) the adverse effect of labor unrest or disputes, litigation
and/or legal settlements, including potential unfavorable outcomes
exceeding any amounts accrued; (xvi) losses associated with our status
as a licensed nut warehouse operator under the United States Warehouse
Act; (xvii) the inability to implement our Strategic Plan or realize
other efficiency measures, including controlling medical and personnel
costs; (xviii) technology disruptions or failures; (xix) the inability
to protect the Company’s intellectual property or avoid intellectual
property disputes; (xx) the Company’s ability to manage successfully the
price gap between its private brand products and those of its branded
competitors; and (xxi) potential increased industry-specific regulation
pending the U.S. Food and Drug Administration assessment of the risk of
Salmonella contamination associated with tree nuts.
John B. Sanfilippo & Son, Inc. is a processor, packager, marketer and
distributor of nut and dried fruit based products that are sold under a
variety of private brands and under the Company’s Fisher®, Orchard
Valley HarvestTM and Sunshine Country® brand names.
|
JOHN B. SANFILIPPO & SON, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(Dollars in thousands, except earnings per share)
|
|
|
|
For the Quarter Ended
|
|
|
September 26,
|
|
September 27,
|
|
|
2013
|
|
2012
|
Net sales
|
|
$
|
176,697
|
|
$
|
177,507
|
Cost of sales
|
|
147,328
|
|
146,934
|
Gross profit
|
|
29,369
|
|
30,573
|
Operating expenses:
|
|
|
|
|
Selling expenses
|
|
9,899
|
|
10,179
|
Administrative expenses
|
|
7,142
|
|
6,525
|
Total operating expenses
|
|
17,041
|
|
16,704
|
Income from operations
|
|
12,328
|
|
13,869
|
Other expense:
|
|
|
|
|
Interest expense
|
|
1,086
|
|
1,246
|
Rental and miscellaneous expense, net
|
|
513
|
|
530
|
Total other expense, net
|
|
1,599
|
|
1,776
|
Income before income taxes
|
|
10,729
|
|
12,093
|
Income tax expense
|
|
3,954
|
|
4,559
|
Net income
|
|
$
|
6,775
|
|
$
|
7,534
|
Basic earnings per common share
|
|
$
|
0.62
|
|
$
|
0.70
|
Diluted earnings per common share
|
|
$
|
0.61
|
|
$
|
0.69
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
-- Basic
|
|
|
10,960,737
|
|
|
10,796,682
|
-- Diluted
|
|
|
11,096,974
|
|
|
10,956,108
|
|
JOHN B. SANFILIPPO & SON, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(Dollars in thousands, except per share amounts)
|
|
|
|
September 26,
|
|
|
June 27,
|
|
|
September 27,
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,195
|
|
|
$
|
834
|
|
|
$
|
2,471
|
|
Accounts receivable, net
|
|
50,498
|
|
|
49,509
|
|
|
63,927
|
|
Inventories
|
|
158,066
|
|
|
158,706
|
|
|
134,617
|
|
Deferred income taxes
|
|
3,670
|
|
|
3,723
|
|
|
4,823
|
|
Prepaid expenses and other current assets
|
|
2,892
|
|
|
4,843
|
|
|
2,893
|
|
Assets held for sale
|
|
6,175
|
|
|
6,175
|
|
|
--
|
|
|
|
222,496
|
|
|
223,790
|
|
|
208,731
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTIES, NET:
|
|
133,793
|
|
|
133,847
|
|
|
144,595
|
|
|
|
|
|
|
|
|
|
|
|
OTHER LONG-TERM ASSETS:
|
|
|
|
|
|
|
|
|
|
Intangibles, net
|
|
7,218
|
|
|
7,875
|
|
|
10,177
|
|
Deferred income taxes
|
|
1,002
|
|
|
827
|
|
|
--
|
|
Other
|
|
8,752
|
|
|
8,405
|
|
|
7,726
|
|
|
|
16,972
|
|
|
17,107
|
|
|
17,903
|
|
|
|
$
|
373,261
|
|
|
$
|
374,744
|
|
|
$
|
371,229
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Revolving credit facility borrowings
|
|
$
|
27,842
|
|
|
$
|
31,867
|
|
|
$
|
38,067
|
|
Current maturities of long-term debt
|
|
8,539
|
|
|
8,690
|
|
|
12,496
|
|
Accounts payable
|
|
44,502
|
|
|
43,741
|
|
|
38,284
|
|
Book overdraft
|
|
1,914
|
|
|
1,052
|
|
|
932
|
|
Accrued expenses
|
|
14,714
|
|
|
23,448
|
|
|
17,688
|
|
Income taxes payable
|
|
2,797
|
|
|
--
|
|
|
4,120
|
|
|
|
100,308
|
|
|
108,798
|
|
|
111,587
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES:
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
32,980
|
|
|
33,665
|
|
|
35,718
|
|
Retirement plan
|
|
12,692
|
|
|
12,615
|
|
|
13,400
|
|
Deferred income taxes
|
|
--
|
|
|
--
|
|
|
646
|
|
Other
|
|
4,767
|
|
|
4,362
|
|
|
979
|
|
|
|
50,439
|
|
|
50,642
|
|
|
50,743
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|
Class A Common Stock
|
|
26
|
|
|
26
|
|
|
26
|
|
Common Stock
|
|
84
|
|
|
84
|
|
|
83
|
|
Capital in excess of par value
|
|
106,434
|
|
|
106,132
|
|
|
104,084
|
|
Retained earnings
|
|
120,205
|
|
|
113,430
|
|
|
110,093
|
|
Accumulated other comprehensive loss
|
|
(3,031
|
)
|
|
(3,164
|
)
|
|
(4,183
|
)
|
Treasury stock
|
|
(1,204
|
)
|
|
(1,204
|
)
|
|
(1,204
|
)
|
|
|
222,514
|
|
|
215,304
|
|
|
208,899
|
|
|
|
$
|
373,261
|
|
|
$
|
374,744
|
|
|
$
|
371,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copyright Business Wire 2013