John B. Sanfilippo & Son, Inc. Reports Fiscal 2024 Fourth Quarter and Full-Year Results

Rhea-AI Summary

John B. Sanfilippo & Son (NASDAQ: JBSS) reported its fiscal 2024 Q4 and full-year results. Q4 highlights include:

• Sales volume up 23.5% to 91.6M pounds
• Net sales increased 15.1% to $269.6M
• Gross profit down 8.6% to $50.0M
• Diluted EPS decreased 31.7% to $0.86

Full-year highlights:

• Sales volume up 12.3% to 346.6M pounds
• Net sales increased 6.7% to $1.07B
• Gross profit up 1.2% to $214.1M
• Diluted EPS down 4.6% to $5.15

The company's results were significantly impacted by the Lakeville Acquisition, which contributed $120M in net sales for the fiscal year.

Positive

• Annual net sales exceeded $1 billion for the first time in company history
• Lakeville Acquisition integration ahead of schedule, with lower than expected dilution per share ($0.17 vs $0.80-$1.00)
• Annual dividend raised by 6.3% to $0.85 per share, plus special dividend of $1.25 per share
• Q4 sales volume in Consumer Distribution Channel up 31.0% (1.8% excluding Lakeville Acquisition)
• Orchard Valley Harvest brand sales volume increased 21.8% in Q4

Negative

• Q4 gross profit decreased 8.6% to $50.0 million
• Q4 diluted EPS decreased 31.7% to $0.86 per share
• Full-year diluted EPS decreased 4.6% to $5.15 per share
• Gross profit margin decreased from 21.2% to 20.1% for the full year
• Excluding Lakeville Acquisition, full-year net sales decreased 5.3% to $946.9 million

Insights

Financial Analyst

The Q4 and full-year results for John B. Sanfilippo & Son present a mixed picture. While the company achieved a significant milestone by surpassing $1 billion in annual net sales, largely due to the Lakeville Acquisition, there are some concerning trends in the core business.

Q4 net sales increased by 15.1%, but excluding the acquisition, they actually decreased by 3.8%. The 1.9% decrease in weighted average sales price is particularly worrying, as it suggests pricing pressures and potential market share challenges.

The full-year results show a similar pattern, with net sales up 6.7% overall, but down 5.3% excluding Lakeville. The decline in gross profit margin from 21.2% to 20.1% is also a red flag, indicating potential issues with cost management or pricing power.

While the Lakeville Acquisition appears to be performing better than expected, investors should closely monitor the core business performance in the coming quarters.

Market Research Analyst

The results reveal interesting market dynamics in the snack and nut industry. The acquisition of Lakeville's snack bar business demonstrates JBSS's strategic shift towards diversification, potentially in response to changing consumer preferences.

However, the decline in sales volume for peanuts, almonds, pecans and walnuts in the core business is noteworthy. This could indicate a broader shift in consumer snacking habits or increased competition in the nut segment.

The 21.8% increase in Orchard Valley Harvest sales volume is a bright spot, suggesting success in the healthier snack category. The growth in private brand sales also aligns with the trend of consumers seeking value in the current economic climate.

The company's focus on category growth and increased sales volume through customer investments could pay off in the long term, but it's important to monitor whether these efforts translate into sustainable growth in the face of competitive pressures.

Operations Management Expert

JBSS's operational performance shows both strengths and challenges. The integration of the Lakeville Acquisition appears to be ahead of schedule, with better-than-expected financial impact. This demonstrates strong execution capabilities in M&A integration.

However, the core business is facing operational headwinds. The mention of "product mix manufacturing inefficiencies" contributing to gross profit decline is concerning and suggests potential issues in production planning or flexibility.

Inventory management seems mixed. While overall inventory value increased by 13.7%, much of this was due to the Lakeville Acquisition. The 9.2% decrease in weighted average cost per pound of raw nut and dried fruit input stock (excluding Lakeville) could be positive for future margins if it doesn't indicate quality issues.

Looking ahead, the focus on "maximizing operational efficiencies" and "leveraging technology" will be important for improving performance in the core business and fully realizing synergies from the Lakeville Acquisition.

Fourth Quarter Sales Volume Increased 23.5% and Net Sales Increased 15.1% to $269.6M Driven by Snack Bar Sales from the Lakeville Acquisition¹

ELGIN, Ill.--(BUSINESS WIRE)-- John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS) (the “Company”) today announced financial results for its fiscal 2024 fourth quarter and full fiscal year ended June 27, 2024.

Fourth Quarter Summary¹

• Sales volume increased 17.4 million pounds, or 23.5%, to 91.6 million pounds
• Net sales increased $35.4 million, or 15.1%, to $269.6 million
• Gross profit decreased 8.6% to $50.0 million
• Diluted EPS decreased 31.7% to $0.86 per share

Full Year Summary¹

• Sales volume increased 38.1 million pounds, or 12.3%, to 346.6 million pounds
• Net sales increased $67.1 million, or 6.7%, to $1.07 billion
• Gross profit increased 1.2% to $214.1 million
• Diluted EPS decreased 4.6% to $5.15 per share

CEO Commentary

“I am proud to report a successful and historic fiscal 2024 as we exceeded $1 billion in annual net sales for the first time in our company’s history. We also successfully executed a key component of our strategic plan by further diversifying our product offering through the acquisition, integration and optimization of our Lakeville bar facility and operations. Our snack and nutrition bar offering generated approximately $131.0 million in net sales for the fiscal year, of which $120.0 million was related to the Lakeville Acquisition. In addition, we made substantial progress in optimizing the operations in Lakeville, ahead of schedule, and are excited about the expected impact it will have on our operating results in fiscal 2025 and beyond. Through the hard work of our team, our net sales from Lakeville operations were at the top end of our original range and dilution per share from the Lakeville Acquisition (for the fiscal year) was approximately $0.17 per share, which was significantly better than our original expected per share dilution of $0.80 to $1.00. Lastly, we raised our annual dividend by 6.3% to $0.85 per share and supplemented our annual dividend with an additional special dividend of $1.25 per share, both of which will be paid on September 11, 2024. These results were due to our team’s unyielding perseverance and leadership as we navigated through a challenging operating environment in fiscal 2024,” stated Jeffrey T. Sanfilippo, Chief Executive Officer.

“Our fourth quarter results, although strong, were impacted by investments we made with our customers that we anticipate will deliver future benefits through category growth and increased sales volume. Additionally, we recognized and rewarded our talented team members for their outstanding contributions in executing our strategic plan,” Mr. Sanfilippo concluded.

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1	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.

Fourth Quarter Results

Net Sales

Net sales for the fourth quarter of fiscal 2024 increased $35.4 million, or 15.1%, to $269.6 million and included approximately $44.2 million of net sales from the Lakeville Acquisition. Excluding the Lakeville Acquisition, net sales decreased $8.9 million, or 3.8%. The decline was due to a 1.9% decrease in sales volume, which is defined as pounds sold to customers, and a 1.9% decrease in the weighted average sales price per pound. The decrease in the weighted average selling price primarily resulted from lower selling prices for all major nut types due to competitive pricing pressures and strategic pricing decisions. Sales volume declined for peanuts, almonds, pecans and walnuts, which was partially offset by sales volume increases for cashews and snack and trail mix in the fourth quarter.

Sales Volume

Consumer Distribution Channel + 31.0% (+1.8% excluding the impact of the Lakeville Acquisition)

• Private Brand + 35.4%

The increase in sales volume was primarily driven by the Lakeville Acquisition, which predominately consisted of private brand snack bars. Excluding the impact of the Lakeville Acquisition, sales volume grew by 1.5%. The increase was mainly driven by new peanut butter distribution and increased volume of mixed nuts at a mass merchandising retailer due to retail pricing adjustments which were partially offset by decreased consumer demand for almonds at the same retailer. In addition, distribution of snack and trail mix at a new grocery store retailer and increased distribution of snack and trail mix at a current grocery store retailer was tempered by lower consumer demand for snack and trail mix products at another mass merchandising retailer.

• Branded² + 4.3%

This sales volume increase was primarily attributable to a 21.8% increase in the sales volume of Orchard Valley Harvest due to enhanced promotional activity at a grocery store retailer and new rotational distribution at a club store customer.

Commercial Ingredients Distribution Channel – 5.0% (- 6.3% excluding the impact of the Lakeville Acquisition)

This sales volume decrease was mainly driven by reduced distribution due to competitive pricing pressures at several customers and non-recurring peanut butter sales at a foodservice distributor that occurred in the fourth quarter of fiscal 2023.

_____________________________
2	Includes Fisher recipe nuts, Fisher snack nuts, Orchard Valley Harvest and Southern Style Nuts.

Contract Manufacturing Distribution Channel + 16.9% (-20.7% excluding the impact of the Lakeville Acquisition)

The increase in sales volume was driven by granola volume processed in our Lakeville facility for a major customer in this channel. Excluding this granola volume, sales volume decreased by 20.7%. This sales volume decrease was due to reduced peanut distribution by a major customer due to soft consumer demand. In addition, the prior year comparable quarter was positively impacted by a new product launch at another customer, which did not reoccur in the current quarter.

Gross Profit

Gross profit decreased $4.7 million to $50.0 million. Excluding the $3.3 million in gross profit related to the Lakeville Acquisition, gross profit decreased by approximately $8.0 million. This decrease was mainly attributable to decreased selling prices, reduced sales volume and product mix manufacturing inefficiencies. Gross profit margin decreased to 18.5% of net sales from 23.4% of net sales in the prior comparable quarter mainly due to the higher net sales base from the Lakeville Acquisition. Excluding the Lakeville Acquisition, gross profit margin decreased to 20.7% due to the reasons cited above.

Operating Expenses, net

Total operating expenses increased $2.2 million versus the prior comparable quarter, of which approximately $1.9 million related to operating expenses directly associated with the Lakeville Acquisition. Excluding the Lakeville Acquisition, total operating expenses increased by $0.3 million. This increase was primarily due to an increase in incentive and equity compensation, which was partially offset by a decrease in advertising expenses. In addition, the prior comparable quarter was negatively impacted by a one-time impairment of a minority investment, which did not reoccur in the current quarter. Total operating expenses, as a percentage of net sales, decreased to 13.1% from 14.2% in the prior comparable quarter due to the higher net sales base resulting from the Lakeville Acquisition. Excluding the impact of the Lakeville Acquisition, total operating expenses, as a percentage of net sales, increased to 14.9% from 14.2% due to the reasons noted above and a lower net sales base.

Inventory

The value of total inventories on hand at the end of the current fourth quarter increased $23.6 million, or 13.7%. The increase was mainly due to $21.8 million of additional inventory associated with the Lakeville Acquisition. Excluding the Lakeville Acquisition, the value of total inventories on hand increased $1.8 million, or 1.1%, year over year. The increase in the value of total inventories was primarily due to higher quantities of inshell pecans and walnuts and higher commodity acquisition cost for walnuts. This was offset by lower quantities of finished goods and pecan meats and lower quantities and commodity acquisition cost for peanuts and cashews. The weighted average cost per pound of raw nut and dried fruit input stock on hand, excluding the impact of the Lakeville Acquisition, decreased 9.2% year over year mainly due to higher quantities of inshell pecans and walnuts.

Full Year Results

• Net sales increased 6.7% to $1.07 billion, primarily due to the Lakeville Acquisition. Excluding the impact of the Lakeville Acquisition, net sales decreased 5.3% to $946.9 million. The decrease in net sales was primarily attributable to a 3.3% decline in sales volume and a 2.0% decrease in weighted average selling price per pound.
• Sales volume increased 12.3%, primarily due to the Lakeville Acquisition. Excluding the impact of the Lakeville Acquisition, sales volume decreased 3.3% due to sales volume decreases in all three distribution channels.
• Gross profit margin decreased from 21.2% to 20.1% of net sales. This decrease was mainly due to the Lakeville Acquisition, which was partially offset by lower commodity acquisition costs for all major tree nuts.
• Operating expenses increased $7.5 million to $129.0 million. The increase in total operating expenses was mainly due to increases in incentive compensation, incremental direct operating expenses associated with the Lakeville Acquisition, increased advertising expense and charitable food donations. These increases were partially offset by the one-time bargain purchase gain from the Lakeville Acquisition and a decrease in freight expense due to lower freight costs.
• Diluted EPS decreased 4.6%, or $0.25 per diluted share, to $5.15.

In closing, Mr. Sanfilippo commented, “Looking ahead to fiscal 2025, we will continue to execute on our strategic plan. We will focus on creating volume growth opportunities with our key customers, embracing innovation, capitalizing on opportunities to increase distribution of our private brand snack and nutrition bars, maximizing operational efficiencies, leveraging technology, and investing in our team members. We continue to be cautiously optimistic that the core nut and trail mix categories within our consumer distribution channel will continue to recover as we have experienced positive momentum in both private and branded volume in the fourth quarter. We are confident that we have the right strategies to continue to deliver long term value to our shareholders.”

Conference Call

The Company will host an investor conference call and webcast on Wednesday, August 21, 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/BIa649e2660e6a489689e7e37f2c531bc9

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.

Upcoming Event

The Company will be presenting at the Midwest IDEAS Conference in Chicago on August 29, 2024. Qualified investors that would like to schedule a meeting with management should contact Three Part Advisors at the phone number below.

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 or snack bar categories 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) 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; (vi) the ability of the Company to control costs (including inflationary costs) and manage shortages in areas such as inputs, transportation and labor; (vii) uncertainty in economic conditions, including the potential for inflation or economic downturn leading to decreased consumer demand; (viii) the adverse effect of labor unrest or disputes, litigation and/or legal settlements, including potential unfavorable outcomes exceeding any amounts accrued; (ix) losses due to significant disruptions at any of our production or processing facilities; (x) 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; (xi) technology disruptions or failures or the occurrence of cybersecurity incidents or breaches; (xii) the inability to protect the Company’s brand value, intellectual property or avoid intellectual property disputes; (xiii) our ability to manage the impacts of changing weather patterns on raw material availability due to climate change; and (xiv) 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 Year Ended
		June 27, 2024				June 29, 2023				June 27, 2024				June 29, 2023
Net sales		$	269,572			$	234,222			$	1,066,783			$	999,686
Cost of sales			219,571				179,504				852,644				788,055
Gross profit			50,001				54,718				214,139				211,631
Operating expenses:
Selling expenses			21,047				18,882				82,694				76,803
Administrative expenses			14,297				14,308				48,484				44,604
Bargain purchase gain, net			—				—				(2,226	)			—
Total operating expenses			35,344				33,190				128,952				121,407
Income from operations			14,657				21,528				85,187				90,224
Other expense:
Interest expense			482				331				2,549				2,159
Rental and miscellaneous expense, net			361				237				1,301				1,321
Pension expense (excluding service costs)			350				348				1,400				1,394
Total other expense, net			1,193				916				5,250				4,874
Income before income taxes			13,464				20,612				79,937				85,350
Income tax expense			3,451				5,939				19,688				22,493
Net income		$	10,013			$	14,673			$	60,249			$	62,857
Basic earnings per common share		$	0.86			$	1.27			$	5.19			$	5.43
Diluted earnings per common share		$	0.86			$	1.26			$	5.15			$	5.40
Weighted average shares outstanding
— Basic			11,627,782				11,594,547				11,615,255				11,576,852
— Diluted			11,709,372				11,670,214				11,687,546				11,642,046

JOHN B. SANFILIPPO & SON, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
		June 27, 2024				June 29, 2023
ASSETS
CURRENT ASSETS:
Cash		$	484			$	1,948
Accounts receivable, net			84,960				72,734
Inventories			196,563				172,936
Prepaid expenses and other current assets			12,078				6,812
			294,085				254,430
PROPERTIES, NET:			165,094				135,481
OTHER LONG-TERM ASSETS:
Intangibles, net			17,572				18,408
Deferred income taxes			3,130				3,592
Operating lease right-of-use assets			27,404				6,427
Other assets			8,290				6,949
			56,396				35,376
TOTAL ASSETS		$	515,575			$	425,287
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility borrowings		$	20,420			$	—
Current maturities of long-term debt, net			737				672
Accounts payable			53,436				42,680
Bank overdraft			545				285
Accrued expenses			50,802				42,051
			125,940				85,688
LONG-TERM LIABILITIES:
Long-term debt, less current maturities			6,365				7,102
Retirement plan			26,154				26,653
Long-term operating lease liabilities			24,877				4,771
Other			9,626				8,866
			67,022				47,392
STOCKHOLDERS' EQUITY:
Class A Common Stock			26				26
Common Stock			91				91
Capital in excess of par value			135,691				131,986
Retained earnings			186,965				161,512
Accumulated other comprehensive income (loss)			1,044				(204	)
Treasury stock			(1,204	)			(1,204	)
TOTAL STOCKHOLDERS’ EQUITY			322,613				292,207
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY		$	515,575			$	425,287

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240820344085/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

 

Source: John B. Sanfilippo & Son, Inc.

FAQ

What was John B. Sanfilippo & Son's (JBSS) net sales for fiscal 2024?

John B. Sanfilippo & Son (JBSS) reported net sales of $1.07 billion for fiscal 2024, an increase of 6.7% from the previous year.

How did the Lakeville Acquisition impact JBSS's fiscal 2024 results?

The Lakeville Acquisition contributed approximately $120 million in net sales for JBSS in fiscal 2024 and resulted in a dilution of about $0.17 per share, which was better than initially expected.

What was JBSS's Q4 fiscal 2024 sales volume increase?

JBSS's sales volume increased by 23.5% to 91.6 million pounds in Q4 fiscal 2024 compared to the same quarter last year.

How much did JBSS's diluted EPS change in fiscal 2024?

JBSS's diluted EPS decreased by 4.6% to $5.15 per share for the full fiscal year 2024.

What dividends did JBSS announce for fiscal 2024?

JBSS announced an annual dividend increase of 6.3% to $0.85 per share, plus an additional special dividend of $1.25 per share, both payable on September 11, 2024.