John B. Sanfilippo & Son, Inc. Reports Fiscal 2024 Third Quarter Results

Rhea-AI Impact

(Moderate)

Rhea-AI Sentiment

(Neutral)

Insights

John B. Sanfilippo & Son, Inc.'s third-quarter financial report indicates a notable increase in sales volume by 22.6%, primarily attributed to the recent Lakeville Acquisition. The acquisition clearly played a important role in driving the top-line growth, with a net sales increase of 14.0% to $271.9 million. This reflects positively on the company's ability to integrate acquisitions and capitalize on them to expand its market share.

Nevertheless, there's a concern regarding the decrease in gross profit margin to 18.1% and the decrease in diluted EPS by 14.8%. Investors should consider the pressure on profitability, potentially due to higher commodity acquisition costs and increased operating expenses. Moreover, the decline in gross profit despite higher sales volume suggests margin compression, which could be a red flag if the trend continues.

Looking at the inventory valuation, there's an increase of 10.7%, which might reflect the additional assets from the acquisition but could also indicate potential overstocking issues. However, the decrease in inventory value, excluding the acquisition, aligns with lower commodity costs for certain nuts, suggesting efficient inventory management.

Their optimism about the Lakeville Acquisition becoming accretive to operating income sooner than expected is a positive development. Yet, investors should monitor how the synergies are realized and if projected operational improvements translate into bottom-line growth.

Examining John B. Sanfilippo & Son, Inc.'s performance from a market perspective, the company is showing strength in the snack and private brand segments, likely benefiting from changing consumer habits and increased demand for convenient snack options. The diversified product range, highlighted by their nutrition bars, aligns with trending health-conscious consumer preferences.

However, the brand business sales volume decrease raises questions about the company's competitive positioning and brand equity in the nuts and snacks market. This could be a concern if consumer demand shifts or if competition intensifies. The increase in e-commerce sales volume is promising, as it reflects a strategic shift towards channels with higher growth potential.

The report also mentions cautious consumer behavior due to elevated retail prices, which might lead to challenges in maintaining sales momentum. The company's ability to navigate this potential headwind, possibly through pricing strategies or product innovation, will be key to sustaining growth.

The acquisition's impact on John B. Sanfilippo & Son's inventory and supply chain dynamics is multifaceted. The significant increase in inventory levels resulting from the Lakeville Acquisition is of interest, since it suggests that the company has expanded its product offerings and may have greater supply chain complexity to manage.

Moreover, the variations in commodity acquisition costs merit attention. The company has to navigate an environment of fluctuating costs for major inputs like peanuts and walnuts, which directly affect gross margins. Their ability to adapt to these changes through procurement strategies or pricing adjustments will be important in maintaining profitability.

It is also worth noting the decreased sales volume in some channels and products. The mentioned competitive pricing pressure and soft consumer demand indicate a challenging market, which might require the company to reassess its sales strategies in these areas. Inventory management will be key in avoiding overstocking and minimizing potential write-downs.

05/01/2024 - 04:48 PM

Sales Volume Increased 22.6% and Net Sales Increased 14.0% to $271.9M Driven by Snack Bar Sales from the Lakeville Acquisition*

ELGIN, Ill.--(BUSINESS WIRE)-- John B. Sanfilippo & Son, Inc. (NASDAQ: JBSS) (the “Company”) today announced financial results for its fiscal 2024 third quarter ended March 28, 2024.

Third Quarter Summary*

Net sales increased $33.3 million, or 14.0%, to $271.9 million
Sales volume increased 17.0 million pounds, or 22.6%, to 92.0 million pounds
Gross profit decreased 1.2% to $49.2 million
Diluted EPS decreased 14.8% to $1.15 per share

CEO Commentary

“I am pleased to report the Lakeville Acquisition increased quarterly sales volume by 18.1 million pounds, or 24.1% over the third quarter of fiscal 2023, and increased our quarterly net sales by approximately $46.9 million, or 19.7% over the third quarter of fiscal 2023. We have made great progress in optimizing the operations in Lakeville and we currently expect it to become accretive to our operating income during the upcoming fourth quarter, which is significantly ahead of our initial schedule. We also sold in the third quarter approximately $3.2 million of our own internally developed nutrition bars, which complements the snack bars produced in Lakeville. I would like to personally thank all our employees who have worked with passion, dedication, and a sense of urgency to optimize the operations at Lakeville and continue to drive improvements,” stated Jeffrey T. Sanfilippo, Chief Executive Officer.

“Sales volume for the third quarter, excluding the impact of the Lakeville Acquisition, decreased 1.4% mainly due to decreased sales volume in our contract packaging sales channel. Even though we continue to operate in an environment of elevated retail selling prices and cautious consumers, our consumer distribution channel delivered strong results. Our private brand business reversed two consecutive quarters of decreasing sales volume. While our branded business sales volume decreased in the quarter, it represented a significant improvement over the decreases we experienced over the last three quarters as we continue to see strong momentum at a major e-commerce customer for our branded products,” Mr. Sanfilippo stated.

^* 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.

Third Quarter Results

Net Sales

Net sales for the third quarter of fiscal 2024 increased $33.3 million, or 14.0%, to $271.9 million and included approximately $46.9 million of net sales from the Lakeville Acquisition. Excluding the Lakeville Acquisition, net sales decreased $13.6 million, or 5.7%. The decline was due to a 4.3% decrease in the weighted average sales price per pound and a 1.4% decrease in sales volume, which is defined as pounds sold to customers. The decrease in the weighted average selling price primarily resulted from lower commodity acquisition costs for all major tree nuts except walnuts, which was partially offset by higher commodity acquisition costs for peanuts. Sales volume declined for all major nut types in the third quarter.

Sales Volume

Consumer Distribution Channel + 33.1% (+0.3% excluding the impact of the Lakeville Acquisition)

Private Brand + 38.6%

This sales volume increase was driven by the Lakeville Acquisition, which sales volume is almost exclusively private brand bars. Excluding the Lakeville Acquisition, sales volume increased 0.5%. The increase was driven by increased peanut butter and nutrition bar distribution, which was partially offset by a decrease in snack and trail mix volume at a mass merchandising retailer. In addition, new sales distribution of snack and trail mix at a grocery store retailer was partially offset by lost distribution at a drug channel customer.

Branded** - 5.8%

This sales volume decrease was primarily attributable to a 15.8% decrease in the sales volume of Fisher snack nuts due to lost distribution at a mass merchandising retailer and decreased sales volume at several grocery store retailers. These decreases were partially offset by an increase in e-commerce sales volume.

Commercial Ingredients Distribution Channel – 2.4% (- 3.0% excluding the impact of the Lakeville Acquisition)

This sales volume decrease was mainly driven by decreased sales volume due to competitive pricing pressure and non-recurring peanut butter sales at a foodservice distributor that occurred in the third quarter of fiscal 2023. This decrease was partially offset by new peanut butter business at two other foodservice distributors and sales volume of loose granola associated with the Lakeville Acquisition.

Contract Packaging Distribution Channel – 11.3%

This sales volume decrease was due to decreased cashew and mixed nut distribution by a major customer due to soft consumer demand.

^** Includes Fisher recipe nuts, Fisher snack nuts, Orchard Valley Harvest and Southern Style Nuts.

Gross Profit

Gross profit margin decreased to 18.1% of net sales from 20.9% of net sales in the prior comparable quarter mainly related to the higher net sales base from the Lakeville Acquisition. Gross profit, which was positively impacted approximately $3.0 million due to the Lakeville Acquisition, of which approximately $1.7 million was related to the partial release of an inventory valuation reserve initially recorded at the acquisition date, decreased slightly by approximately $0.6 million, or 1.2%. Excluding the Lakeville Acquisition, gross profit margin decreased slightly by 0.3% and gross profit decreased by approximately $3.6 million, or 7.2%. The decrease in gross profit margin and gross profit was due to higher commodity acquisition costs for peanuts and walnuts, reduced production volume and increased expenditures relating to facility repairs and maintenance, noncompliant inventory and incentive compensation.

Operating Expenses, net

Total operating expenses increased $2.9 million in the quarterly comparison, of which approximately $1.8 million directly relates to operating expenses associated with the Lakeville Acquisition. Excluding the Lakeville Acquisition, total operating expenses increased $1.1 million mainly due to an increase in incentive compensation, which was partially offset by decreases in freight and advertising expenses. Total operating expenses, as a percentage of net sales, decreased to 11.3% from 11.7% in the prior comparable quarter due to the reasons noted above and a higher net sales base due to the Lakeville Acquisition. Excluding the impact of the Lakeville Acquisition, total operating expenses, as a percentage of net sales, increased to 12.9% from 11.7% 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 third quarter increased $20.3 million, or 10.7%. The increase was mainly due to the additional $24.9 million of inventory associated with the Lakeville Acquisition. Excluding the Lakeville Acquisition, the value of total inventories on hand decreased $4.5 million, or 2.4%, year over year. The decrease in the value of total inventories was primarily due to lower quantities of finished goods and lower quantities and commodity acquisition cost for work-in-process, raw materials, cashews, and almonds. This was offset by higher quantities of pecans and walnuts and higher commodity acquisition cost for walnuts. The weighted average cost per pound of raw nut and dried fruit input stock on hand, excluding the impact of the Lakeville Acquisition, decreased 11.7% year over year mainly due to higher quantities of peanuts and inshell walnuts and pecans.

Nine Month Results

Net sales increased 4.1% to $797.2 million, primarily due to the Lakeville Acquisition. Excluding the impact of the Lakeville Acquisition, net sales decreased 5.7% to $721.6 million. The decrease in net sales was primarily attributable to a 3.8% decline in sales volume and a 2.0% decrease in weighted average selling price per pound.
Sales volume increased 8.8%, primarily due to the Lakeville Acquisition. Excluding the impact of the Lakeville Acquisition, sales volume decreased 3.8% primarily due to sales volume decreases in the consumer and contract packaging channels.
Gross profit margin increased slightly from 20.5% to 20.6% of net sales.
Operating expenses increased $5.4 million to $93.6 million. The increase in total operating expenses was mainly due to increases in incentive compensation, incremental operating expenses associated with the Lakeville Acquisition, 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.
Diluted EPS increased 3.9%, or $0.16 per diluted share, to $4.30.

In closing, Mr. Sanfilippo commented, “Looking ahead to the fourth quarter and fiscal 2025, we are optimistic about the contribution of the Lakeville Acquisition to our operating results based on the current performance and ongoing and expected future operational improvements. We initially estimated the current fiscal year dilution due to the Lakeville Acquisition to range from $0.80 to $1.00 per diluted share, which we have updated to $0.25 to $0.50 per diluted share as a direct result of our team’s excellence in optimizing the operations in Lakeville during the third quarter. In addition, we are working on numerous sales opportunities utilizing our new snack and nutrition bar capabilities. We are also cautiously optimistic that consumer demand will stabilize and slowly begin to recover in the core nut and trail mix categories. As we continue to execute our strategic initiatives, I am confident we can continue to deliver strong operating results and create long-term value for our shareholders.”

Conference Call

The Company will host an investor conference call and webcast on Thursday, May 2, 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/BIebe8c03d89ca44fa82651d9f28ad0afb. 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.

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 category 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) the Company’s ability to appropriately respond to, or lessen the negative impact of, competitive and pricing pressures; (vi) 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; (vii) the ability of the Company to control costs (including inflationary costs) and manage shortages in areas such as inputs, transportation and labor; (viii) uncertainty in economic conditions, including the potential for inflation or economic downturn leading to decreased consumer demand; (ix) the timing and occurrence (or nonoccurrence) of other transactions and events which may be subject to circumstances beyond the Company’s control; (x) the adverse effect of labor unrest or disputes, litigation and/or legal settlements, including potential unfavorable outcomes exceeding any amounts accrued; (xi) losses due to significant disruptions at any of our production or processing facilities or employee unavailability due to labor shortages; (xii) 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; (xiii) technology disruptions or failures or the occurrence of cybersecurity incidents or breaches; (xiv) the inability to protect the Company’s brand value, intellectual property or avoid intellectual property disputes; (xv) our ability to manage the impacts of changing weather patterns on raw material availability due to climate change; and (xvi) 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 Thirty-Nine Weeks Ended
	March 28, 2024		March 30, 2023		March 28, 2024			March 30, 2023
Net sales	$	271,884	$	238,535	$	797,211		$	765,464
Cost of sales		222,707		188,767		633,073			608,551
Gross profit		49,177		49,768		164,138			156,913
Operating expenses:
Selling expenses		18,654		18,109		61,647			57,921
Administrative expenses		12,171		9,841		34,187			30,296
Bargain purchase gain, net		—		—		(2,226	)		—
Total operating expenses		30,825		27,950		93,608			88,217
Income from operations		18,352		21,818		70,530			68,696
Other expense:
Interest expense		785		552		2,067			1,828
Rental and miscellaneous expense, net		324		371		940			1,084
Pension expense (excluding service costs)		350		349		1,050			1,046
Total other expense, net		1,459		1,272		4,057			3,958
Income before income taxes		16,893		20,546		66,473			64,738
Income tax expense		3,416		4,814		16,237			16,554
Net income	$	13,477	$	15,732	$	50,236		$	48,184
Basic earnings per common share	$	1.16	$	1.36	$	4.33		$	4.16
Diluted earnings per common share	$	1.15	$	1.35	$	4.30		$	4.14
Weighted average shares outstanding
— Basic		11,626,886		11,592,362		11,614,388			11,570,954
— Diluted		11,698,531		11,656,194		11,683,579			11,632,656


JOHN B. SANFILIPPO & SON, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)

	March 28, 2024			June 29, 2023			March 30, 2023
ASSETS
CURRENT ASSETS:
Cash	$	377		$	1,948		$	365
Accounts receivable, net		75,638			72,734			74,534
Inventories		210,672			172,936			190,351
Prepaid expenses and other current assets		9,636			6,812			9,325
		296,323			254,430			274,575

PROPERTIES, NET:		162,393			135,481			136,650

OTHER LONG-TERM ASSETS:
Intangibles, net		17,953			18,408			18,850
Deferred income taxes		651			3,592			2,374
Operating lease right-of-use assets		7,409			6,427			6,582
Other assets		7,199			6,949			6,029
		33,212			35,376			33,835
TOTAL ASSETS	$	491,928		$	425,287		$	445,060

LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility borrowings	$	32,093		$	—		$	27,825
Current maturities of long-term debt, net		721			672			657
Accounts payable		51,458			42,680			42,264
Bank overdraft		1,351			285			458
Accrued expenses		34,767			42,051			31,554
		120,390			85,688			102,758

LONG-TERM LIABILITIES:
Long-term debt, less current maturities		6,555			7,102			7,276
Retirement plan		27,570			26,653			29,471
Long-term operating lease liabilities		5,553			4,771			4,905
Other		10,048			8,866			8,332
		49,726			47,392			49,984

STOCKHOLDERS' EQUITY:
Class A Common Stock		26			26			26
Common Stock		91			91			91
Capital in excess of par value		134,530			131,986			131,649
Retained earnings		188,573			161,512			164,220
Accumulated other comprehensive loss		(204	)		(204	)		(2,464	)
Treasury stock		(1,204	)		(1,204	)		(1,204	)
TOTAL STOCKHOLDERS’ EQUITY		321,812			292,207			292,318
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	491,928		$	425,287		$	445,060

View source version on businesswire.com: https://www.businesswire.com/news/home/20240501013738/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 the percentage increase in net sales for John B. Sanfilippo & Son, Inc. in the fiscal 2024 third quarter?

Net sales increased by 14.0% to $271.9 million.

What was the impact of the Lakeville Acquisition on sales volume?

The Lakeville Acquisition drove a 22.6% increase in sales volume.

What happened to gross profit margin for the nine-month period?

Gross profit margin slightly increased from 20.5% to 20.6% of net sales.

Why did total inventories increase?

Total inventories increased mainly due to the additional inventory associated with the Lakeville Acquisition.

What was the change in Diluted EPS for the nine-month period?

Diluted EPS increased by 3.9% to $4.30.

John B. Sanfilippo & Son, Inc. Reports Fiscal 2024 Third Quarter Results

Insights

FAQ

What was the percentage increase in net sales for John B. Sanfilippo & Son, Inc. in the fiscal 2024 third quarter?

What was the impact of the Lakeville Acquisition on sales volume?

What happened to gross profit margin for the nine-month period?

Why did total inventories increase?

What was the change in Diluted EPS for the nine-month period?

NASDAQ:JBSS

JBSS Rankings

JBSS Latest News

JBSS Stock Data

Trending News

John B. Sanfilippo & Son, Inc. Reports Fiscal 2024 Third Quarter Results

Insights

Financial Analyst positive

Market Research Analyst neutral

Supply Chain Analyst neutral

FAQ

What was the percentage increase in net sales for John B. Sanfilippo & Son, Inc. in the fiscal 2024 third quarter?

What was the impact of the Lakeville Acquisition on sales volume?

What happened to gross profit margin for the nine-month period?

Why did total inventories increase?

What was the change in Diluted EPS for the nine-month period?

NASDAQ:JBSS

JBSS Rankings

JBSS Latest News

JBSS Stock Data