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8-K - FORM 8-K - SANFILIPPO JOHN B & SON INCd617923d8k.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

MONDAY, OCTOBER 28, 2013

First Quarter 2014 Net Income was $6.8 Million

Quarterly Overview:

 

Net sales decreased by 0.5%

 

Sales volume increased by 14.0%

 

Gross profit decreased by 3.9%

 

Net income decreased by 10.1%

Elgin, IL, October 28, 2013 — 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

 

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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

 

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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

 

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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.

-more-

 

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JOHN B. SANFILIPPO & SON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except earnings per share)

 

     For the Quarter Ended  
     September 26,
2013
     September 27,
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   
  

 

 

    

 

 

 

 

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JOHN B. SANFILIPPO & SON, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

     September 26,
2013
    June 27,
2013
    September 27,
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   
  

 

 

   

 

 

   

 

 

 

 

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