Second Quarter Diluted EPS Increased 13.1% to $1.64 per
Diluted Share
Sales Volume Increased 11.8% Driven by Increased Snack Bar
Sales from the Lakeville Acquisition*
John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS) (the
“Company”) today announced financial results for its fiscal 2024
second quarter ended December 28, 2023.
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 $28.7 million, or 10.5% over the second quarter of
fiscal 2023. In addition, we delivered a 13.1% increase in diluted
earnings per share, which includes the dilutive impact of the
Lakeville Acquisition. We also sold approximately $1.9 million of
our own internally developed nutrition bars, which compliments the
snack bars produced in Lakeville. Furthermore, at the beginning of
December, we completed key integration steps for the Lakeville
Acquisition and have begun optimizing the facility’s operations.
Finally, I would like to personally thank each member of the
integration team for all of their hard work, personal sacrifices,
and dedication to successfully complete the Lakeville transition in
less than three months,” stated Jeffrey T. Sanfilippo, Chief
Executive Officer.
“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 Orchard
Valley Harvest brand as sales volume in the Consumer channel for
this product line grew over 15% in the quarter. The decrease in
overall sales volume in the quarter, while disappointing,
represents a significant improvement over the decrease we
experienced in the first quarter of fiscal 2024, and I am confident
that we have the right strategy, agility, and team to continue to
deliver strong results,” Mr. Sanfilippo stated.
_____________________
* Results include the impact of the
acquisition of the TreeHouse Foods snack bar business (the
“Lakeville Acquisition”) which was completed on September 29, 2023,
the first day of our second fiscal quarter.
Second Quarter Results
Net Sales
Net sales for the second quarter of fiscal 2024 increased $16.9
million, or 6.2%, to $291.2 million and included approximately
$28.7 million of net sales from the Lakeville Acquisition.
Excluding the Lakeville Acquisition, net sales decreased $11.8
million, or 4.3%. The decline is due to a 2.6% decrease in sales
volume, which is defined as pounds sold to customers, and 1.7%
decrease in the weighted average sales price per pound. Sales
volume for peanuts and all major tree nuts declined in the second
quarter. The decrease in the weighted average selling price
primarily resulted from lower commodity acquisition costs for most
major tree nuts which was partially offset by a higher commodity
acquisition cost for peanuts.
Sales Volume
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 for Orchard 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, Orchard Valley Harvest and Southern Style
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 $2.9 million, of which approximately $1.2
million were one-time expenses. Gross profit increased $1.4 million
due to the higher net sales base. Excluding the Lakeville
Acquisition, gross profit margin increased approximately 2.6%, and
gross profit increased approximately $4.3 million or 7.7%. These
increases were due to lower commodity acquisition costs for most
major tree nuts, increased manufacturing efficiencies, improved
product mix and reduced noncompliant inventory.
Operating Expenses, net
Total operating expenses decreased $1.7 million in the quarterly
comparison mainly due to a one-time $2.2 million bargain purchase
gain associated with the Lakeville Acquisition. This decrease was
partially offset by approximately $1.2 million of operating
expenses associated with the Lakeville Acquisition, of which $0.6
million were one-time expenses. Excluding the Lakeville
Acquisition, total operating expenses decreased $0.7 million mainly
due to decreases in freight and advertising expenses, which were
partially offset by increases in incentive compensation expense,
charitable food donations and insurance expense. Total operating
expenses, as a percentage of net sales, decreased to 10.4% from
11.7% in the prior comparable quarter due to the reasons noted
above and a higher net sales base due to the Lakeville Acquisition.
Excluding the impact of the Lakeville Acquisition, total operating
expenses, as a percentage of net sales, increased slightly to 11.9%
from 11.7%.
Inventory
The value of total inventories on hand at the end of the current
second quarter increased $24.3 million, or 14.0%. The increase was
mainly due to the $36.2 million of inventory associated with the
Lakeville Acquisition. Excluding the Lakeville Acquisition, the
value of total inventories on hand decreased $12.0 million, or
6.9%, year over year. The decrease in the value of total
inventories was primarily due to lower quantities of
work-in-process, raw materials and lower on-hand quantities and
lower commodity acquisition costs for almonds and cashews. This was
offset by higher quantities of pecans and walnuts and higher
commodity acquisition cost for peanuts and walnuts. The weighted
average cost per pound of raw nut and dried fruit input stock on
hand, excluding the impact of the Lakeville Acquisition, decreased
9.8% year over year mainly due to reasons noted above.
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, Mr. Sanfilippo commented, “As we enter the last half
of the fiscal year, we will continue to identify and implement
operational improvements at our Lakeville facility and pursue
additional sales opportunities given our new capabilities. In
addition, we will utilize our best-in-class competencies, including
innovation, category management and customer service, to mitigate
the impact of reduced consumer demand. I believe we have the right
team and strategies to overcome these short-term challenges and
deliver long-term shareholder value.”
Conference Call
The Company will host an investor conference call and webcast on
Thursday, February 1, 2024, at 10:00 a.m. Eastern (9:00 a.m.
Central) to discuss these results. To participate in the call via
telephone, please register using the following Participant
Registration link:
https://register.vevent.com/register/BI097a9b1f23174994a66bb6fa8ef2fc9a.
Once registered, attendees will receive a dial-in number and their
own unique PIN number. This call is also being webcast by Notified
and can be accessed at the Company’s website at
www.jbssinc.com.
About John B. Sanfilippo & Son, Inc.
Based in Elgin, Illinois, John B. Sanfilippo & Son, Inc. is
a processor, packager, marketer and distributor of nut and dried
fruit products, snack bars, and dried cheese snacks, that are sold
under the Company’s Fisher ®, Orchard Valley Harvest ®, Squirrel
Brand ®, Southern Style Nuts ® and Just the Cheese ® brand names
and under a variety of private brands.
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.
JOHN B. SANFILIPPO & SON,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per
share amounts)
For the Quarter Ended
For the Twenty-Six Weeks
Ended
December 28, 2023
December 29, 2022
December 28, 2023
December 29, 2022
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
JOHN B. SANFILIPPO & SON,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in thousands)
December 28, 2023
June 29, 2023
December 29, 2022
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
)
Treasury stock
(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: Frank S. Pellegrino Chief Financial
Officer 847-214-4138
Investor Relations: John Beisler or Steven Hooser
Three Part Advisors, LLC 817-310-8776
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