US: John B. Sanfilippo Q3 profits slide
- Net profit slides to $342,000
- Operating profit down to $3.3m
- Net sales grow 6.5%
Net sales increased 6.5% in the quarter
US-based nut group John B. Sanfilippo & Son has booked a drop in third-quarter profits on the back of higher commodity costs for almonds and trail mixes.
Earnings in the three months ended 28 March amounted to US$342,000 compared to $1.14m last year. Operating profit dropped to $3.3m from $4m in the year-ago period.
Net sales, however, increased 6.5% to $163.8m in the quarter driven by a 15.6% increase in sales volume.
"We are extremely pleased with our sales growth during the third quarter, particularly for our Fisher brand," CEO Jeffrey Sanfilippo said. "Sales volume grew significantly in all of our distribution channels, which generally suggests that our direct customers and the end-user consumers are reacting positively to lower prices for many of the key products that we sell."
JOHN B. SANFILIPPO & SON, INC.
TUESDAY, APRIL 30, 2013
As a result of a 15.6% increase in sales volume, net sales increased by $10.1 million
Quarterly Comparison Overview:
? Net sales increased by $10.1 million
? Sales volume increased by 15.6%
? Gross profit dollars increased by $0.8 million
? Net income decreased by $1.1 million
Elgin, IL, April 30, 2013 -- John B. Sanfilippo & Son, Inc. (Nasdaq: JBSS) (hereinafter the
“Company”) today announced operating results for its fiscal 2013 third quarter. Net income for the third quarter of fiscal 2013 was $0.3 million, or $0.03 per share diluted, compared to net income of $1.4 million, or $0.13 per share diluted, for the third quarter of fiscal 2012. Net income for the first three quarters of fiscal 2013 was $16.2 million, or $1.47 per share diluted, compared to net income of $13.2 million, or $1.23 per share diluted, for the first three quarters of fiscal 2012.
Net sales increased to $163.8 million for the third quarter of fiscal 2013 from $153.8 million for the third quarter of fiscal 2012. The increase in net sales was attributable to a 15.6% increase in sales volume, which is measured in pounds sold to customers. Sales volume increased by double digits in percentage terms in all distribution channels in the quarterly comparison. Approximately 50% of the total sales volume increase occurred in the consumer distribution channel led by gains in volume of 12% for private brand products, 55% for Fisher snack nuts and 33% for Fisher recipe nuts (formerly referred to as Fisher baking nuts). The increase in sales volume for private brand products was driven mainly by lower peanut and cashew prices and new distribution gained at existing private brand customers. The increase in sales volume for Fisher snack and recipe nuts was driven mainly by distribution gains with new customers and increased advertising and promotional activity. The sales volume increase in the commercial ingredients channel came from increased almond volume to an existing customer and increased peanut volume generated by lower selling prices. The sales volume increase in the contract packaging channel was generated by increased peanut volume from lower selling prices and increased snack mix volume from a new product line launched by a major contract packaging customer. Sales volume increased in the export channel from increased sales of inshell walnuts because most of the inshell walnut export shipments in the current fiscal year were delayed into the current third quarter due to a late harvest whereas most export shipments of inshell walnuts last fiscal year occurred in the second quarter.
Net sales increased to $556.9 million for the first three quarters of fiscal 2013 from $533.9 million for the first three quarters of fiscal 2012. The increase in net sales was primarily attributable to higher selling prices that existed in the first two quarters of fiscal 2013. Sales volume for the first three quarters of fiscal 2013 increased slightly in comparison to sales volume for the first three quarters of fiscal 2012 as the significant increase in sales volume in the current third quarter more than offset the decline in sales volume for the first two quarters of fiscal 2013. Gross profit margin, as a percentage of net sales, declined to 14.0% for the third quarter of fiscal 2013 from 14.4% for the third quarter of fiscal 2012 while gross profit increased by $0.8 million in the quarterly comparison. The decline in gross profit margin occurred primarily because of higher commodity acquisition costs for almonds and trail mixes and a shift in walnuts sales to lower margin sales of inshell walnuts for export. The declines in gross profit margins on sales of these products were offset in large part by lower commodity acquisition costs for pecans and cashews.
Gross profit margin for the first three quarters of fiscal 2013, as a percentage of net sales, increased to 16.2% from 14.9% for the first three quarters of fiscal 2012. This increase in gross profit margin was primarily due to a shift in sales volume to our higher-margin Fisher branded products and improved alignment of selling prices and commodity acquisition costs during the first half of fiscal 2013 compared to the first half of fiscal 2012.
Total operating expenses for the current quarter increased to 11.9% of net sales from 11.7% of net sales for the third quarter of fiscal 2012. The increase in total operating expenses, as a percentage of net sales, in the quarterly comparison was due mainly to increases in compensation expense, shipping costs from increased volume and advertising and marketing spending to support the Fisher brand. Total operating expenses for the first three quarters of fiscal 2013 increased to 10.5% of net sales from 10.1% of net sales for the same year to date period in fiscal 2012. The increase in total operating expenses, as a percentage of net sales in the year to date comparison was primarily attributable to increased advertising and marketing spending to support the Fisher brand.
Interest expense for the third quarter of fiscal 2013 declined to $1.2 million from $1.4 million for the third quarter of fiscal 2012. Interest expense for the current year to date period was $3.5 million compared to $4.0 million for the first three quarters of fiscal 2012. The declines in interest expense in the quarterly and year to date comparisons primarily resulted from lower average short-term borrowings.
During the current third quarter, the Company entered into a Stock Purchase Agreement with a newly-formed entity named ARMA Energy, Inc. (“AEI”) whereby the Company received approximately 71% of the preferred stock of AEI in exchange for past expenses incurred to support the ARMA brand. In addition, the Company sold all of its proprietary and intellectual property rights to the ARMA brand to AEI in exchange for a secured promissory note in the principal amount of $0.5 million payable over five years. The investment in AEI and the sale of the ARMA brand did not result in a gain in the current third quarter for accounting purposes. For tax purposes, the Company has recognized a capital contribution on the investment and a taxable gain on the sale of the ARMA brand. As a result of the investment in AEI and the sale of the ARMA brand, income tax expense increased by $0.8 million in the quarterly comparison.
The value of total inventories on hand at the end of the current third quarter decreased by $10.1 million or 5.7% when compared to the value of total inventories on hand at the end of the third quarter of fiscal 2012 primarily due to lower commodity acquisition costs for pecans, peanuts and cashews. As a result of lower acquisition costs for these nuts, the weighted average cost per pound of raw nut input stocks on hand at the end of the current third quarter decreased by 20.9% compared to the weighted average cost per pound of raw nut input stocks on hand at the end of last year’s third quarter. Similarly, the weighted average cost per pound of finished goods on hand decreased by 12.9% compared to the weighted average cost per pound at the end of the third quarter of fiscal 2012.
“We are extremely pleased with our sales growth during the third quarter, particularly for our Fisher brand,” stated Jeffrey T. Sanfilippo, Chief Executive Officer. “Sales volume grew significantly in all of our distribution channels, which generally suggests that our direct customers and the end-user consumers are reacting positively to lower prices for many of the key products that we sell. The lower prices for peanuts, cashews and pecans are anticipated to continue during our fourth quarter. We will continue our strategic focus on our branded products, including increasing our presence internationally, especially in China,” Mr. Sanfilippo concluded.
The Company will host an investor conference call and webcast on Wednesday, May 1, 2013, at 10:00 a.m. Eastern (9:00 a.m. Central) to discuss these results. To participate in the call via telephone, dial 888-713-4214 from the U.S. or 617-213-4866 internationally and enter the participant passcode of 60717990. 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 forwardlooking 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 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; (xviii) technology disruptions or failures; (xix) the inability to
protect the Company’s intellectual property or avoid intellectual property disputes; and (xx) the
Company’s ability to successfully integrate and/or identify acquisitions and joint ventures.
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
(Dollars in thousands, except earnings per share)
For the Quarter Ended For the Thirty-nine Weeks Ended
Net sales $ 163,815 $ 153,760 $ 556,941 $ 533,869
Cost of sales 140,936 131,666 466,813 454,568
Gross profit 22,879 22,094 90,128 79,301
Selling expenses 11,565 10,948 36,342 33,293
Administrative expenses 7,990 7,113 22,167 20,702
Total operating expenses 19,555 18,061 58,509 53,995
Income from operations 3,324 4,033 31,619 25,306
Interest expense 1,171 1,369 3,521 4,010
Rental and miscellaneous expense, net 364 407 1,183 1,014
Total other expense, net 1,535 1,776 4,704 5,024
Income before income taxes 1,789 2,257 26,915 20,282
Income tax expense 1,447 817 10,738 7,046
Net income $ 342 $ 1,440 $ 16,177 $ 13,236
Basic earnings per common share $ 0.03 $ 0.13 $ 1.49 $ 1.24
Diluted earnings per common share $ 0.03 $ 0.13 $ 1.47 $ 1.23
Weighted average shares outstanding
-- Basic 10,898,304 10,742,881 10,844,341 10,712,319
-- Diluted 11,024,738 10,857,406 10,974,029 10,802,6536
JOHN B. SANFILIPPO & SON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
Cash $ 1,506 $ 2,459 $ 2,675
Accounts receivable, net 51,355 49,867 41,048
Inventories 166,754 146,384 176,868
Deferred income taxes 4,913 4,823 4,882
Prepaid expenses and other current assets 5,558 3,284 4,157
Asset held for sale 6,175 -- --
236,261 206,817 229,630
PROPERTIES, NET: 136,328 146,711 148,709
Intangibles, net 8,643 10,944 11,687
Other 7,945 7,255 6,853
16,588 18,199 18,540
$ 389,177 $ 371,727 $ 396,879
LIABILITIES & STOCKHOLDERS' EQUITY
Revolving credit facility borrowings $ 42,047 $ 45,848 $ 68,856
Current maturities of long-term debt 12,130 12,724 10,185
Accounts payable 42,532 33,044 39,606
Book overdraft 9,112 1,947 4,734
Accrued expenses 24,391 26,144 21,560
Income taxes payable 1,192 -- 110
131,404 119,707 145,051
Long-term debt 34,351 36,206 40,182
Retirement plan 13,531 13,335 10,710
Deferred income taxes 959 460 1,839
Other 923 1,006 1,035
49,764 51,007 53,766
Class A Common Stock 26 26 26
Common Stock 84 83 82
Capital in excess of par value 105,152 103,876 103,368
Retained earnings 107,847 102,559 98,673
Accumulated other comprehensive loss (3,896) (4,327) (2,883)
Treasury stock (1,204) (1,204) (1,204)
208,009 201,013 198,062
$ 389,177 $ 371,727 $ 396,879
Original source: John B. Sanfilippo & Son
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