John B. Sanfilippo & Son, Inc. Reports Fiscal 2024 Second Quarter Results
Second Quarter Diluted EPS Increased 13.1% to
Sales Volume Increased 11.8% Driven by Increased Snack Bar Sales from the Lakeville Acquisition*
Second Quarter Summary*
-
Net sales increased
$16.9 million , or 6.2%, to$291.2 million - Sales volume increased 9.5 million pounds, or 11.8%, to 89.9 million pounds
-
Gross profit increased 2.5% to
$57.9 million -
Diluted EPS increased 13.1% to
$1.64 per share
CEO Commentary
“This was a significant quarter for our Company as it represents the first quarter of financial results that includes our recent Lakeville Acquisition. The Lakeville Acquisition increased our quarterly sales volume by 11.6 million pounds, or 14.4% over the second quarter of fiscal 2023, and increased quarterly net sales by approximately
“Sales volume for the second quarter, excluding the impact of the Lakeville Acquisition, decreased 2.6% as we continue to navigate a challenging operating environment characterized by elevated retail selling prices and cautious consumers. However, we continue to see strong performance from our re-launched
_____________________
*
Results include the impact of the acquisition of the TreeHouse Foods snack bar business (the “Lakeville Acquisition”) which was completed on |
Second Quarter Results
Net sales for the second quarter of fiscal 2024 increased
SalesVolume
Consumer Distribution Channel + 15.3% (-2.8% excluding the impact of the Lakeville Acquisition)
-
Private Brand + 20.2%
This sales volume increase was driven by the Lakeville Acquisition, whose sale volume is almost exclusively private brand bars. Excluding the Lakeville Acquisition, sales volume decreased 2.3%. The decrease was due to soft consumer demand at a mass merchandising retailer along with fewer seasonal items at another mass merchandising retailer. These decreases were partially offset by increased distribution of seasonal items at a grocery retailer. -
Branded** - 10.5%
This sales volume decrease was primarily attributable to a 12.6% decrease in the sales volume of Fisher recipe nuts due to soft consumer demand across mass merchandising and grocery retailers and less merchandising activity at several grocery retailers. Sales volume of Southern Style Nuts decreased 36.7% from reduced distribution and promotional programs at a club store customer. The above decreases were partially offset by a 15.5% increase in sales volume forOrchard Valley Harvest , which was mainly due to increased distribution at a major customer in the non-food sector.
Commercial Ingredients Distribution Channel + 6.5% (+ 2.8% excluding the impact of the Lakeville Acquisition)
This sales volume increase was mainly driven by a one-time sale associated with the Lakeville Acquisition. Excluding the Lakeville Acquisition, sales volume increased 2.8% due to increased peanut butter sales to several existing foodservice and industrial customers. This increase was partially offset by decreased volume at a foodservice distributor due to competitive pricing pressures.
Contract Packaging Distribution Channel - 8.6%
This sales volume decrease was due to fewer seasonal items and reduced promotional activity at a major customer and an item discontinuance at another customer.
_____________________
**
Includes Fisher recipe nuts, Fisher snack nuts, |
Gross Profit
Gross profit margin decreased to 19.9% of net sales from 20.6% of net sales in the prior quarter mainly due to the Lakeville Acquisition, which negatively impacted gross profit by approximately 3.3%, or
Operating Expenses, net
Total operating expenses decreased
Inventory
The value of total inventories on hand at the end of the current second quarter increased
Six Month Results
-
Net sales decreased 0.3% to
$525.3 million . Excluding the impact of the Lakeville Acquisition, net sales decreased 5.7% to$496.6 million . The decrease in net sales was primarily attributable to a 4.9% decline in sales volume and a 0.8% decrease in weighted average selling price per pound. - Sales volume increased 2.3%. Excluding the impact of the Lakeville Acquisition, sales volume decreased 4.9% primarily due to sales volume decreases in the consumer and contract packaging channels.
- Gross profit margin increased 1.6% to 21.9% of net sales. The increase was mainly attributable to lower commodity acquisition costs for all major nut commodities except peanuts and was partially offset by the impact of the Lakeville Acquisition, as noted above.
-
Operating expenses increased
$2.5 million to$62.8 million . The increase in total operating expenses was mainly due to increases in advertising expense, incremental operating expenses associated with the Lakeville Acquisition and charitable food donations. These increases were offset by the one-time bargain purchase gain noted above and a decrease in freight expense. -
Diluted EPS increased 12.9%, or
$0.36 per diluted share, to$3.15 .
In closing,
Conference Call
The Company will host an investor conference call and webcast on
About
Based in
Forward Looking Statements
Some of the statements 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) sales activity for the Company’s products, such as a decline in sales to one or more key customers, or to customers or in the nut category generally, in some or all channels, a change in product mix to lower price products, a decline in sales of private brand products or changing consumer preferences, including a shift from higher margin products to lower margin products; (ii) changes in the availability and costs of raw materials and ingredients and the impact of fixed price commitments with customers; (iii) 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; (iv) 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; (v) the Company’s ability to appropriately respond to, or lessen the negative impact of, competitive and pricing pressures; (vi) 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; (vii) the ability of the Company to control costs (including inflationary costs) and manage shortages in areas such as inputs, transportation and labor; (viii) uncertainty in economic conditions, including the potential for inflation or economic downturn leading to decreased consumer demand; (ix) the timing and occurrence (or nonoccurrence) of other transactions and events which may be subject to circumstances beyond the Company’s control; (x) the adverse effect of labor unrest or disputes, litigation and/or legal settlements, including potential unfavorable outcomes exceeding any amounts accrued; (xi) losses due to significant disruptions at any of our production or processing facilities or employee unavailability due to labor shortages; (xii) the ability to implement our Long-Range Plan, including growing our branded and private brand product sales, diversifying our product offerings (including by the launch of new products) and expanding into alternative sales channels; (xiii) technology disruptions or failures or the occurrence of cybersecurity incidents or breaches; (xiv) the inability to protect the Company’s brand value, intellectual property or avoid intellectual property disputes; (xv) our ability to manage the impacts of changing weather patterns on raw material availability due to climate change; and (xvi) our ability to operate and integrate the acquired snack bar related assets of TreeHouse and realize efficiencies and synergies from such acquisition.
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
(Unaudited) |
||||||||||||||||
(Dollars in thousands, except per share amounts) |
||||||||||||||||
|
||||||||||||||||
|
|
For the Quarter Ended |
|
|
For the Twenty-Six Weeks Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
291,222 |
|
|
$ |
274,328 |
|
|
$ |
525,327 |
|
|
$ |
526,929 |
|
Cost of sales |
|
|
233,283 |
|
|
|
217,826 |
|
|
|
410,366 |
|
|
|
419,784 |
|
Gross profit |
|
|
57,939 |
|
|
|
56,502 |
|
|
|
114,961 |
|
|
|
107,145 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling expenses |
|
|
21,001 |
|
|
|
21,830 |
|
|
|
42,993 |
|
|
|
39,812 |
|
Administrative expenses |
|
|
11,563 |
|
|
|
10,208 |
|
|
|
22,016 |
|
|
|
20,455 |
|
Bargain purchase gain, net |
|
|
(2,226 |
) |
|
|
— |
|
|
|
(2,226 |
) |
|
|
— |
|
Total operating expenses |
|
|
30,338 |
|
|
|
32,038 |
|
|
|
62,783 |
|
|
|
60,267 |
|
Income from operations |
|
|
27,601 |
|
|
|
24,464 |
|
|
|
52,178 |
|
|
|
46,878 |
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
1,055 |
|
|
|
615 |
|
|
|
1,282 |
|
|
|
1,276 |
|
Rental and miscellaneous expense, net |
|
|
260 |
|
|
|
311 |
|
|
|
616 |
|
|
|
713 |
|
Pension expense (excluding service costs) |
|
|
350 |
|
|
|
348 |
|
|
|
700 |
|
|
|
697 |
|
Total other expense, net |
|
|
1,665 |
|
|
|
1,274 |
|
|
|
2,598 |
|
|
|
2,686 |
|
Income before income taxes |
|
|
25,936 |
|
|
|
23,190 |
|
|
|
49,580 |
|
|
|
44,192 |
|
Income tax expense |
|
|
6,765 |
|
|
|
6,283 |
|
|
|
12,821 |
|
|
|
11,740 |
|
Net income |
|
$ |
19,171 |
|
|
$ |
16,907 |
|
|
$ |
36,759 |
|
|
$ |
32,452 |
|
Basic earnings per common share |
|
$ |
1.65 |
|
|
$ |
1.46 |
|
|
$ |
3.17 |
|
|
$ |
2.81 |
|
Diluted earnings per common share |
|
$ |
1.64 |
|
|
$ |
1.45 |
|
|
$ |
3.15 |
|
|
$ |
2.79 |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
— Basic |
|
|
11,611,409 |
|
|
|
11,567,068 |
|
|
|
11,603,185 |
|
|
|
11,560,250 |
|
— Diluted |
|
|
11,667,555 |
|
|
|
11,624,662 |
|
|
|
11,671,149 |
|
|
|
11,620,887 |
|
|
||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||||||
(Unaudited) |
||||||||||||
(Dollars in thousands) |
||||||||||||
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|||
ASSETS |
|
|
|
|
|
|
|
|
|
|||
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
|||
Cash |
|
$ |
1,975 |
|
|
$ |
1,948 |
|
|
$ |
620 |
|
Accounts receivable, net |
|
|
77,416 |
|
|
|
72,734 |
|
|
|
72,433 |
|
Inventories |
|
|
197,335 |
|
|
|
172,936 |
|
|
|
173,075 |
|
Prepaid expenses and other current assets |
|
|
13,040 |
|
|
|
6,812 |
|
|
|
11,693 |
|
|
|
|
289,766 |
|
|
|
254,430 |
|
|
|
257,821 |
|
|
|
|
|
|
|
|
|
|
|
|||
PROPERTIES, NET: |
|
|
161,743 |
|
|
|
135,481 |
|
|
|
137,296 |
|
|
|
|
|
|
|
|
|
|
|
|||
OTHER LONG-TERM ASSETS: |
|
|
|
|
|
|
|
|
|
|||
Intangibles, net |
|
|
18,334 |
|
|
|
18,408 |
|
|
|
19,591 |
|
Deferred income taxes |
|
|
562 |
|
|
|
3,592 |
|
|
|
2,608 |
|
Operating lease right-of-use assets |
|
|
6,867 |
|
|
|
6,427 |
|
|
|
2,593 |
|
Other assets |
|
|
7,187 |
|
|
|
6,949 |
|
|
|
6,021 |
|
|
|
|
32,950 |
|
|
|
35,376 |
|
|
|
30,813 |
|
TOTAL ASSETS |
|
$ |
484,459 |
|
|
$ |
425,287 |
|
|
$ |
425,930 |
|
|
|
|
|
|
|
|
|
|
|
|||
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|||
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
|||
Revolving credit facility borrowings |
|
$ |
32,052 |
|
|
$ |
— |
|
|
$ |
22,805 |
|
Current maturities of long-term debt, net |
|
|
704 |
|
|
|
672 |
|
|
|
1,497 |
|
Accounts payable |
|
|
62,955 |
|
|
|
42,680 |
|
|
|
49,342 |
|
Bank overdraft |
|
|
1,500 |
|
|
|
285 |
|
|
|
1,970 |
|
Accrued expenses |
|
|
31,080 |
|
|
|
42,051 |
|
|
|
28,448 |
|
|
|
|
128,291 |
|
|
|
85,688 |
|
|
|
104,062 |
|
|
|
|
|
|
|
|
|
|
|
|||
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
|
|||
Long-term debt, less current maturities |
|
|
6,742 |
|
|
|
7,102 |
|
|
|
7,446 |
|
Retirement plan |
|
|
27,338 |
|
|
|
26,653 |
|
|
|
29,132 |
|
Long-term operating lease liabilities |
|
|
5,141 |
|
|
|
4,771 |
|
|
|
1,472 |
|
Other |
|
|
9,710 |
|
|
|
8,866 |
|
|
|
8,155 |
|
|
|
|
48,931 |
|
|
|
47,392 |
|
|
|
46,205 |
|
|
|
|
|
|
|
|
|
|
|
|||
STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
|
|||
Class A Common Stock |
|
|
26 |
|
|
|
26 |
|
|
|
26 |
|
Common Stock |
|
|
91 |
|
|
|
91 |
|
|
|
91 |
|
Capital in excess of par value |
|
|
133,432 |
|
|
|
131,986 |
|
|
|
130,731 |
|
Retained earnings |
|
|
175,096 |
|
|
|
161,512 |
|
|
|
148,488 |
|
Accumulated other comprehensive loss |
|
|
(204 |
) |
|
|
(204 |
) |
|
|
(2,469 |
) |
|
|
|
(1,204 |
) |
|
|
(1,204 |
) |
|
|
(1,204 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
|
|
307,237 |
|
|
|
292,207 |
|
|
|
275,663 |
|
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY |
|
$ |
484,459 |
|
|
$ |
425,287 |
|
|
$ |
425,930 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240131497904/en/
Company:
Chief Financial Officer
847-214-4138
Investor Relations:
Three
817-310-8776
Source: