Quarterly Comparison Overview:
- Net sales increased by 4.6%
- Sales volume increased by 10.4%
- Gross profit decreased by 2.0%
- Net income decreased by 14.1%
John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS)
(hereinafter the “Company”) today announced operating results for
both its fiscal 2016 fourth quarter and fiscal year ended June 30,
2016. Net income for the fourth quarter of fiscal 2016 was $7.3
million, or $0.64 per share diluted, compared to net income of $8.5
million, or $0.75 per share diluted, for the fourth quarter of
fiscal 2015. Net income for fiscal 2016 was $30.4 million compared
to net income of $29.3 million for fiscal 2015. Diluted earnings
per share for fiscal 2016 was $2.68 compared to $2.61 for fiscal
2015. Both the current fourth quarter and fiscal year contained an
additional week compared to the same periods in fiscal 2015.
Fiscal 2016 fourth quarter net sales increased by 4.6% to $231.5
million from net sales of $221.4 million for the fourth quarter of
fiscal 2015 due to a 10.4% increase in sales volume, which is
defined as pounds sold to customers. The favorable impact upon net
sales from the increase in sales volume was offset in part by a
significant decline in selling prices for walnuts. Sales volume
increased in all distribution channels, and sales volume increased
for all major product types except pecans.
The sales volume increase in the consumer channel was due in
part to a 10.3% increase in sales volume with existing private
brand customers. Sales volume for our branded products in the
consumer channel also increased as follows:
Fisher recipe nuts
14.9%
Fisher snack nuts and peanut butter
28.9%
Orchard Valley Harvest and Sunshine
Country produce products
136.6%
The sales volume increase for Fisher recipe nuts came mainly
from increased sales of walnuts as a result of the introduction of
new large package sizes and from distribution gains with new
customers. The sales volume increase for Fisher snack nuts and
peanut butter was generated mainly by distribution gains with new
and existing customers. The sales volume increases for our Orchard
Valley Harvest and Sunshine Country produce brands came mainly from
product line expansion and increased promotional and merchandising
activities. Partially offsetting the above noted sales volume
increase was a significant sales volume decrease in Fisher Nut
Exactly due to reduced merchandising support from a key customer
and reduced distribution opportunities in the club channel.
The sales volume increase in the contract packaging channel was
primarily due to increased sales with existing customers. The sales
volume increase in the commercial ingredients channel was mainly
due to increased sales of peanut butter to existing food service
customers. The sales volume increase in the export channel came
from increased sales of bulk inshell walnuts.
Fiscal 2016 net sales increased by 7.3% to $952.1 million from
$887.2 million for fiscal 2015 mainly due to a 6.6% increase in
sales volume. Sales volume increased in all distribution channels,
and sales volume increased for all major nut types except almonds
and pecans. The sales volume increase in the consumer channel was
due primarily to significant increases in sales of our branded
products. The increase in sales volume in the contract packaging
channel was primarily attributable to increased sales with existing
customers due in large part to new item introductions and increased
promotional activity implemented by customers in this channel. The
increase in sales volume in the commercial ingredients channel came
mainly from increased sales of peanuts to peanut oil stock crushers
and to other peanut shellers and increased sales of cashew products
to an existing customer. As was the case in the quarterly
comparison, the sales volume increase in the export channel came
primarily from increased sales of bulk inshell walnuts.
Gross profit was $33.7 million in the fourth quarter of fiscal
2016 compared to $34.3 million in the fourth quarter of fiscal
2015. Gross profit margin decreased to 14.5% of net sales in the
fourth quarter of fiscal 2016 from 15.5% for the fourth quarter of
fiscal 2015. The decreases in gross profit and gross profit margin
were due primarily to declines in gross profit margins on sales of
peanuts due to increased processing costs associated with the lower
quality of the 2015 peanut crop and on sales of pecans, cashews and
macadamia nuts as a result of higher acquisition costs.
Gross profit increased by 4.1% to $137.5 million in fiscal 2016
from $132.1 million in fiscal 2015. Gross profit margin decreased
to 14.4% of net sales for fiscal 2016 from 14.9% for fiscal 2015.
The increase in gross profit resulted primarily from increased
sales volume. The decrease in gross profit margin was due primarily
to the decline in gross profit margin on sales of walnuts in the
third quarter.
Total operating expenses increased by $0.6 million, and total
operating expenses, as a percentage of net sales, were relatively
unchanged in the quarterly comparison. Total operating expenses
increased by $6.0 million, and total operating expenses, as a
percentage of net sales, were relatively unchanged for the fiscal
year comparison. For both comparisons, the increases in total
operating expenses were mainly due to increases in compensation and
employee benefit expenses.
Interest expense for the fourth quarter of fiscal 2016 was $0.9
million compared to interest expense $1.1 million for the fourth
quarter of fiscal 2015. Interest expense declined to $3.5 million
for fiscal 2016 from $4.0 million for fiscal 2015. The declines in
interest expense in both comparisons were primarily attributable to
lower debt levels.
The value of total inventories on hand at the end of the current
fourth quarter decreased by $41.4 million, or 20.9%, when compared
to the value of total inventories on hand at the end of the fourth
quarter of fiscal 2015. The decrease in the value of total
inventories was primarily due to lower acquisition costs for
walnuts and lower quantities of finished goods and work-in-process
inventories. Mainly as a result of significantly lower acquisition
costs for walnuts and to a lesser extent almonds, the weighted
average cost per pound of raw nut and dried fruit input stocks on
hand at the end of the current fourth quarter declined by 31.6%
compared to the weighted average cost per pound of input stocks on
hand at the end of last year’s fourth quarter.
“As was the case in the third quarter, our brands continued to
grow significantly in respect to sales volume,” stated Jeffrey T.
Sanfilippo, Chief Executive Officer. “Our consumer channel sales
and marketing teams were very effective in executing our most
important growth strategy, which is grow our brands,” Mr.
Sanfilippo noted. “At retail, our Fisher recipe nuts and our
produce brands also performed well in the quarterly comparison
according to IRI market data. Fisher recipe pound volume increased
by approximately 6%, while the total recipe nut category pound
volume declined by approximately 13%. Pound volume for our Orchard
Valley Harvest and Sunshine Country produce brands increased by
approximately 14%, while the total produce category pound volume
only increased by approximately 2%.” Mr. Sanfilippo stated. “We
again saw meaningful sales volume growth in our contract packaging
channel due to the efforts we made in assisting our customers as
they launched new products and gained new distribution,” Mr.
Sanfilippo added. “While sales volume increased in our commercial
ingredients channel in the quarterly comparison, in August, we were
notified by a significant customer in this channel of its intent to
move some or all of its almond butter requirements to a vertically
integrated almond butter supplier during our second quarter of
fiscal 2017. Almond butter sales to this customer in fiscal 2016
were approximately $90 million, while the gross profit margin on
this business was substantially lower than our total gross profit
margin for fiscal 2016. Demand for almond butter in the commercial
ingredients channel has been increasing considerably in recent
years, and we believe that we will have many opportunities to
secure new almond butter business during fiscal 2017,” Mr.
Sanfilippo noted. “For fiscal 2016, operating activities provided
net cash of $89.2 million, which far surpassed the previous record
of $43.4 million in fiscal 2009. As a result of record cash flow,
we were in a position to pay a $2.50 special dividend in the first
quarter of fiscal 2017. As in past years, our Board of Directors
may consider declaring another special dividend in the second
quarter of our 2017 fiscal year,” Mr. Sanfilippo concluded.
The Company will host an investor conference call and webcast on
Thursday, August 25, 2016, at 10:00 a.m. Eastern (9:00 a.m.
Central) to discuss these results. To participate in the call via
telephone, dial 1-888-713-4215 from the U.S. or 1-617-213-4867
internationally and enter the participant passcode of 42886041.
This call is being webcast by NASDAQ/OMX and can be accessed at the
Company’s website at www.jbssinc.com.
The Company will be presenting at the Midwest IDEAS Conference
in Chicago on August 30, 2016 at 4:30 p.m. Central time, and the
presentation webcast can be accessed at the conference website at
www.IDEASConferences.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; (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 and laws and regulations
pertaining to food safety, such as the Food Safety Modernization
Act; (xi) uncertainty in economic conditions, including the
potential for economic downturn; (xii) the timing and occurrence
(or nonoccurrence) of other transactions and events which may be
subject to circumstances beyond the Company’s control; (xiii) the
adverse effect of labor unrest or disputes, litigation and/or legal
settlements, including potential unfavorable outcomes exceeding any
amounts accrued; (xiv) losses due to significant disruptions at any
of our production or processing facilities; (xv) the inability to
implement our Strategic Plan or realize efficiency measures,
including controlling medical and personnel costs; (xvi) technology
disruptions or failures; (xvii) the inability to protect the
Company’s brand value, intellectual property or avoid intellectual
property disputes; (xviii) the Company’s ability to manage
successfully the price gap between its private brand products and
those of its branded competitors; and (xix) potential increased
industry-specific regulation pending the U.S. Food and Drug
Administration assessment of the risk of Salmonella contamination
associated with tree nuts. In addition, there can be no assurance
that a special dividend will be declared by our Board of Directors
in the second quarter of our 2017 fiscal year or if a special
dividend is declared, the amount thereof. The declaration and
payment of any future dividend will depend on many factors,
including, but not limited to, our financial condition and
operating results, and will be declared subject to the discretion
of our Board of Directors.
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 Harvest®, Fisher® Nut Exactly™ and Sunshine
Country® brand names.
JOHN B. SANFILIPPO & SON,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except earnings per
share)
For the Quarter Ended For the Year Ended
June 30, June 25, June 30,
June 25, 2016 2015 2016 2015
(14 weeks) (13 weeks) (53 weeks) (52
weeks) Net sales $ 231,538 $ 221,439 $ 952,059 $ 887,245 Cost
of sales 197,874 187,094 814,591 755,189 Gross profit 33,664 34,345
137,468 132,056 Operating expenses: Selling expenses 12,000 11,748
51,114 49,646 Administrative expenses 9,258 8,906 35,042 30,531
Total operating expenses 21,258 20,654 86,156 80,177 Income from
operations 12,406 13,691 51,312 51,879 Other expense: Interest
expense 876 1,071 3,492 3,966 Rental and miscellaneous expense, net
177 219 1,358 3,049 Total other expense, net 1,053 1,290 4,850
7,015 Income before income taxes 11,353 12,401 46,462 44,864 Income
tax expense 4,076 3,932 16,067 15,559 Net income $ 7,277 $ 8,469 $
30,395 $ 29,305 Basic earnings per common share $ 0.65 $ 0.76 $
2.71 $ 2.63 Diluted earnings per common share $ 0.64 $ 0.75 $ 2.68
$ 2.61 Cash dividends declared per share $ - $ - $ 2.00 $ 1.50
Weighted average shares outstanding -- Basic
11,263,802 11,190,852 11,233,975 11,150,658 --
Diluted 11,362,014 11,298,721 11,332,924
11,248,259
JOHN B. SANFILIPPO & SON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share
amounts)
June 30, June 25, 2016 2015
ASSETS CURRENT ASSETS: Cash $ 2,220 $ 1,946 Accounts
receivable, net 78,088 75,635 Inventories 156,573 197,997 Deferred
income taxes - 4,264 Prepaid expenses and other current assets
5,292 4,468 242,173 284,310 PROPERTIES, NET: 129,803 131,033
OTHER ASSETS: Intangibles, net 1,369 3,079 Deferred income
taxes 8,590 3,181 Other 9,471 10,332 19,430 16,592 $ 391,406 $
431,935
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Revolving credit facility borrowings $ 12,084
$ 61,153 Current maturities of long-term debt 3,407 3,376 Accounts
payable 43,719 45,722 Book overdraft 811 1,037 Accrued expenses
23,238 22,817 83,259 134,105 LONG-TERM LIABILITIES:
Long-term debt 28,883 32,290 Retirement plan 22,137 17,885 Other
5,934 6,377 56,954 56,552 STOCKHOLDERS' EQUITY: Class A
Common Stock 26 26 Common Stock 87 86 Capital in excess of par
value 115,136 111,540 Retained earnings 143,573 135,664 Accumulated
other comprehensive loss (6,425 ) (4,834 ) Treasury stock (1,204 )
(1,204 ) 251,193 241,278 $ 391,406 $ 431,935
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version on businesswire.com: http://www.businesswire.com/news/home/20160824006125/en/
John B. Sanfilippo & Son, Inc.Michael J.
ValentineChief Financial Officer847-214-4509
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