Attached files

file filename
8-K - 8-K - SANFILIPPO JOHN B & SON INCd720683d8k.htm
EX-99.2 - EX-99.2 - SANFILIPPO JOHN B & SON INCd720683dex992.htm

Exhibit 99.1

 

LOGO

JOHN B. SANFILIPPO & SON, INC.

NEWS RELEASE

 

COMPANY CONTACT:   

Michael J. Valentine

Chief Financial Officer

847-214-4509

FOR IMMEDIATE RELEASE

WEDNESDAY, APRIL 30, 2014

EPS Rose to a Third Quarter Record $0.33 per Share Diluted

Quarterly Comparison Overview:

 

  Net sales increased by $10.5 million

 

  Sales volume declined by 1.6%

 

  Gross profit was relatively unchanged

 

  Net income increased by $3.3 million

Elgin, IL, April 30, 2014 — John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS) (hereinafter the “Company”) today announced operating results for its fiscal 2014 third quarter. Net income for the third quarter of fiscal 2014 was $3.7 million, or $0.33 per share diluted, compared to net income of $0.3 million, or $0.03 per share diluted, for the third quarter of fiscal 2013. Net income for the first three quarters of fiscal 2014 was $19.7 million, or $1.77 per share diluted, compared to net income of $16.2 million, or $1.47 per share diluted, for the first three quarters of fiscal 2013. Net income for the current third quarter and year to date period included a reduction in income tax expense of $0.6 million, or $0.06 per share diluted. The reduction in income tax expense for both periods was attributable to the tax benefit that resulted from an income tax loss from the divestiture of the Company’s investment in ARMA Energy, Inc. (“AEI”). Even before considering the reduction in income tax expense from the AEI divestiture, both net income and earnings per share diluted were the highest amounts ever reported by the Company for a fiscal quarter ending in March.

Net sales increased to $174.3 million for the third quarter of fiscal 2014 from $163.8 million for the third quarter of fiscal 2013. The increase in net sales was primarily attributable to an 8.1% increase in the weighted average sales price per pound, which was driven mainly by higher selling prices for almonds, mixed nuts (which contain almonds) and walnuts. Sales volume, which is defined as pounds sold to customers, declined by 1.6% in the quarterly comparison. The decline in sales volume was attributable to lower sales of inshell walnuts in the export distribution channel due to

 

1


decreased amounts of inshell walnuts available for export and lower sales of raw bulk peanuts to other peanut processors in the commercial ingredients channel due to a smaller peanut crop. The declines in sales volume in these two channels were largely offset by a 4.2% increase in sales volume in the consumer distribution channel. The increase in volume in the consumer distribution channel was driven by increased sales of private brand snack nuts and a 50.2% sales volume increase for Fisher recipe nuts. The substantial increase in sales volume for Fisher recipe nuts was due to increased in-store merchandising activity and product line expansion to larger package sizes by total weight.

Net sales increased to $576.1 million for the first three quarters of fiscal 2014 from $556.9 million for the first three quarters of fiscal 2013. The increase in net sales was primarily attributable to an 8.0% increase in sales volume. Sales volume increased significantly in the consumer, commercial ingredients and contract packaging channels in the year to date comparison. The volume increase in the consumer channel was driven by increased sales of Fisher recipe nuts and increased sales of private brand snack nuts and trail mixes. The sales volume increase in the commercial ingredients channel mainly came from increased sales of almonds to a major customer and increased sales of pecans due to product line expansion at an existing customer. The contract packaging sales volume increase primarily resulted from increased sales of almonds, trail mixes and chocolate- and yogurt-coated products due to new product launches executed by key customers in this channel.

Gross profit margin declined to 13.1% of net sales for the third quarter of fiscal 2014 from 14.0% for the third quarter of fiscal 2013 while gross profit remained relatively unchanged. The gross profit margin decline occurred because selling price increases for almonds, mixed nuts and walnuts were not fully implemented until the end of January while higher commodity acquisition costs for these products affected the entire month of January.

Gross profit margin for the first three quarters of fiscal 2014 decreased to 15.5% of net sales from 16.2% for the first three quarters of fiscal 2013 while gross profit decreased by $1.0 million. The decrease in gross profit margin was primarily due to competitive pricing pressures that existed in the first two quarters of fiscal 2014 and the delay in implementing selling price increases that was discussed in the quarterly comparison. The decline in gross profit margin was offset in part by manufacturing efficiency improvements that were achieved during the current fiscal year to date.

Total operating expenses for the current quarter decreased to 9.6% of net sales from 11.9% of net sales for the third quarter of fiscal 2013. The decrease in total operating expenses, as a percentage of net sales, in the quarterly comparison was mainly due to reductions in incentive compensation expense and advertising expense. Advertising expense declined in the quarterly comparison primarily due to the later Easter holiday, which falls into our 2014 fiscal fourth quarter this year.

Total operating expenses for the first three quarters of fiscal 2014 decreased to 9.4% of net sales from 10.5% of net sales for the year to date period in fiscal 2013. The decrease in total operating expenses, as a percentage of net sales in the year to date comparison was primarily attributable to decreased incentive compensation expense and advertising expense and a gain on the sale of an Elgin, Illinois site that occurred in the second quarter of fiscal 2014. The Elgin, Illinois site was originally purchased in 2006 for the Company’s facility consolidation project. These drivers in the reduction of total operating expenses were offset in part by increased shipping costs.

Interest expense for the third quarter of fiscal 2014 decreased to $1.1 million from $1.2 million for the third quarter of fiscal 2013. Interest expense for the current year to date period was $3.2 million compared to $3.5 million for the first three quarters of fiscal 2013. The decrease in interest expense in the quarterly and year to date comparisons primarily resulted from lower average total borrowing levels.

 

2


The value of total inventories on hand at the end of the current third quarter increased by $31.3 million or 18.8% when compared to the value of total inventories on hand at the end of the third quarter of fiscal 2013 primarily due to higher commodity acquisition costs for walnuts, almonds and pecans. As a result of higher 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 increased by 23.3% compared to the weighted average cost per pound of raw nut input stocks on hand at the end of last year’s third quarter.

“We are especially pleased with the performance of our Fisher recipe brand during the current quarter as pounds sold increased by 50% over pounds sold in the third quarter of fiscal 2013, and pound and dollar market share also increased significantly in the quarterly comparison,” stated Jeffrey T. Sanfilippo, Chief Executive Officer. “I want to thank our Fisher sales and marketing team for this remarkable accomplishment, especially when considering the later Easter holiday this year,” Mr. Sanfilippo noted. “Our strategy of leveraging our innovation and manufacturing capabilities to grow our business with key non-branded customers also allowed us to realize significant volume gains with many of our major private brand, contract manufacturing and commercial ingredient customers,” Mr. Sanfilippo concluded.

The Company will host an investor conference call and webcast on Thursday, May 1, 2014, at 10:00 a.m. Eastern (9:00 a.m. Central) to discuss these results. To participate in the call via telephone, dial 888-713-4218 from the U.S. or 617-213-4870 internationally and enter the participant passcode of 46148028. 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 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

 

3


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, Fisher® Nut ExactlyTM and Sunshine Country® brand names.

-more-

 

4


JOHN B. SANFILIPPO & SON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except earnings per share)

 

     For the Quarter Ended      For the Thirty-nine Weeks Ended  
     March 27,
2014
     March 28,
2013
     March 27,
2014
    March 28,
2013
 

Net sales

   $ 174,291       $ 163,815       $ 576,102      $ 556,941   

Cost of sales

     151,492         140,936         486,986        466,813   
  

 

 

    

 

 

    

 

 

   

 

 

 

Gross profit

     22,799         22,879         89,116        90,128   
  

 

 

    

 

 

    

 

 

   

 

 

 

Operating expenses:

          

Selling expenses

     10,283         11,565         35,338        36,342   

Administrative expenses

     6,378         7,990         20,559        22,167   

Gain on assets held for sale

     —           —           (1,641     —     
  

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses

     16,661         19,555         54,256        58,509   
  

 

 

    

 

 

    

 

 

   

 

 

 

Income from operations

     6,138         3,324         34,860        31,619   
  

 

 

    

 

 

    

 

 

   

 

 

 

Other expense:

          

Interest expense

     1,077         1,171         3,225        3,521   

Rental and miscellaneous expense, net

     453         364         1,777        1,183   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total other expense, net

     1,530         1,535         5,002        4,704   
  

 

 

    

 

 

    

 

 

   

 

 

 

Income before income taxes

     4,608         1,789         29,858        26,915   

Income tax expense

     927         1,447         10,178        10,738   
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 3,681       $ 342       $ 19,680      $ 16,177   
  

 

 

    

 

 

    

 

 

   

 

 

 

Basic earnings per common share

   $ 0.33       $ 0.03       $ 1.79      $ 1.49   
  

 

 

    

 

 

    

 

 

   

 

 

 

Diluted earnings per common share

   $ 0.33       $ 0.03       $ 1.77      $ 1.47   
  

 

 

    

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding

          

— Basic

     11,073,669         10,898,304         11,016,926        10,844,341   
  

 

 

    

 

 

    

 

 

   

 

 

 

— Diluted

     11,156,229         11,024,738         11,116,491        10,974,029   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

5


JOHN B. SANFILIPPO & SON, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

     March 27,
2014
    June 27,
2013
    March 28,
2013
 

ASSETS

      

CURRENT ASSETS:

      

Cash

   $ 1,197      $ 834      $ 1,506   

Accounts receivable, net

     52,446        49,509        51,355   

Inventories

     198,067        158,706        166,754   

Deferred income taxes

     3,496        3,723        4,913   

Prepaid expenses and other current assets

     7,069        4,843        5,558   

Asset held for sale

     —          6,175        6,175   
  

 

 

   

 

 

   

 

 

 
     262,275        223,790        236,261   
  

 

 

   

 

 

   

 

 

 

PROPERTIES, NET:

     132,508        133,847        136,328   
  

 

 

   

 

 

   

 

 

 

OTHER ASSETS:

      

Intangibles, net

     5,903        7,875        8,643   

Other

     9,384        9,232        7,945   
  

 

 

   

 

 

   

 

 

 
     15,287        17,107        16,588   
  

 

 

   

 

 

   

 

 

 
   $ 410,070      $ 374,744      $ 389,177   
  

 

 

   

 

 

   

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

      

CURRENT LIABILITIES:

      

Revolving credit facility borrowings

   $ 55,829      $ 31,867      $ 42,047   

Current maturities of long-term debt

     3,345        8,690        12,130   

Accounts payable

     54,746        43,741        42,532   

Book overdraft

     6,886        1,052        9,112   

Accrued expenses

     14,161        23,448        24,391   

Income taxes payable

     —          —          1,192   
  

 

 

   

 

 

   

 

 

 
     134,967        108,798        131,404   
  

 

 

   

 

 

   

 

 

 

LONG-TERM LIABILITIES:

      

Long-term debt

     36,506        33,665        34,351   

Retirement plan

     12,844        12,615        13,531   

Deferred income taxes

     —          —          959   

Other

     5,220        4,362        923   
  

 

 

   

 

 

   

 

 

 
     54,570        50,642        49,764   
  

 

 

   

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY:

      

Class A Common Stock

     26        26        26   

Common Stock

     85        84        84   

Capital in excess of par value

     107,880        106,132        105,152   

Retained earnings

     116,510        113,430        107,847   

Accumulated other comprehensive loss

     (2,764     (3,164     (3,896

Treasury stock

     (1,204     (1,204     (1,204
  

 

 

   

 

 

   

 

 

 
     220,533        215,304        208,009   
  

 

 

   

 

 

   

 

 

 
   $ 410,070      $ 374,744      $ 389,177   
  

 

 

   

 

 

   

 

 

 

 

6