exv99w1
EXHIBIT 99.1
JOHN B. SANFILIPPO & SON, INC.
NEWS RELEASE
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|
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COMPANY CONTACT: |
|
Michael J. Valentine
Chief Financial Officer
847-214-4509 |
FOR IMMEDIATE RELEASE
THURSDAY APRIL 28, 2011
Quarterly Comparison Overview:
|
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Net sales increased by 21.4% |
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Sales volume increased by 1.1% |
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Gross profit decreased by 26.3% |
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Net loss increased to $5.6 million |
Elgin, IL, April 28, 2011 John B. Sanfilippo & Son, Inc. (Nasdaq: JBSS) (hereinafter the
Company) today announced operating results for its fiscal 2011 third quarter. The net loss for
the current quarter was $5.6 million, or $0.53 per share diluted, compared to a net loss of $1.9
million, or $0.18 per share diluted, for the third quarter of fiscal 2010. Net income for the
first three quarters of fiscal 2011 was $0.6 million, or $0.06 per share diluted, compared to net
income of $11.7 million, or $1.09 per share diluted, for the first three quarters of fiscal 2010.
Including the sales of products of Orchard Valley Harvest, Inc. (OVH) (the acquisition of OVH by
the Company was completed in the fourth quarter of fiscal 2010), net sales increased to $137.4
million for the third quarter of fiscal 2011 from $113.2 million for the third quarter of fiscal
2010. Including sales volume associated with OVH products, sales volume for the current quarter,
measured as pounds shipped to customers, increased by 1.1% in comparison to sales volume for the
third quarter of fiscal 2010. The increase in net sales was primarily attributable to price
increases implemented in the first three quarters of the current fiscal year. The sales volume
increase primarily was driven by a volume increase in the consumer distribution channel, which was
attributable to sales of OVH products. Before considering the sales of OVH products, third quarter
net sales would have increased by 10.8%, and sales volume would have declined by 5.9% in the
quarterly comparison.
Including the sales of OVH products, net sales increased to $507.8 million for the first three
quarters of fiscal 2011 from $420.1 million for the first three quarters of fiscal 2010. Including
sales volume associated with OVH products, sales volume for the first three quarters of fiscal 2011
increased by 4.8% in comparison to sales volume for the first three quarters of fiscal 2010. The
increase in net sales was attributable primarily to price increases. As was the case in the
quarterly comparison, the sales volume increase in the year to date comparison primarily was driven
by a volume increase in the consumer distribution channel. The increase in sales volume in the consumer channel was
attributable to sales of
1
OVH products and increases in sales of all other major products except
peanut products. Before considering the sales of OVH products, net sales would have increased by
11.4%, and sales volume would have declined by 1.6% in the year to date comparison.
The gross profit margin, as a percentage of net sales, decreased from 12.0% for the third quarter
of fiscal 2010 to 7.3% for the current quarter. The gross profit margin for the current quarter
declined in the quarterly comparison primarily because the implementation of price increases was
not completed until the end of February while acquisition costs of tree nuts were significantly
higher throughout the entire current quarter. Increased global demand for tree nuts was the primary
driver for the increase in acquisition costs. The current quarters gross profit also was reduced
by $0.7 million for the relocation of the OVH Modesto, CA facility to the Gustine, CA and Elgin, IL
facilities while the gross profit for last years third quarter was reduced by $0.4 million for a
supplier recall related to black pepper.
The current year to date gross profit margin, as a percentage of net sales, decreased from 16.7%
for the first three quarters of fiscal 2010 to 11.4%. The decrease in the gross profit margins was
almost entirely attributable to significantly higher acquisition costs for tree nuts to the extent
that they were not offset by price increases implemented during those periods.
Total operating expenses for the current quarter decreased to 12.8% of net sales from 13.2% of net
sales for the third quarter of fiscal 2010. Total operating expenses for the current year to date
period decreased to 10.2% of net sales from 11.1% of net sales for the same year to date period in
fiscal 2010. The decline in total operating expenses as a percentage of net sales in both
comparisons was due mainly to a higher sales base. Total operating expenses increased by $2.6
million and by $5.5 million in the quarterly and year to date comparisons, respectively. The
increases in total operating expenses in quarterly and the year to date comparisons were driven in
part by increases in freight, base compensation, brand support and brokerage commission expenses.
The increases in total operating expenses were offset to a large extent by the reduction in
incentive compensation expense under the Companys economic value added incentive compensation
plan. The reduction in incentive compensation expense includes the estimated forfeiture of
previously accrued for incentive compensation due to current year performance. Total operating
expenses in the current quarter also included $1.5 million accrued for the cost of an anticipated
settlement of a pending legal matter, $0.5 million related to amortization of OVH intangible assets
and $0.3 million for the loss related to the write-off of certain OVH machinery and equipment
resulting from the relocation of the OVH facility. The increases in these total operating expenses
for the current quarter were offset in part by $0.3 million reduction in the accrued liability for
estimated costs related to the pistachio recall that occurred in the third quarter of fiscal 2009.
For the current year to date period, total operating expenses also included $2.6 million accrued
for the cost of an anticipated settlement of a pending legal matter, $1.5 million for an increase
in the projected earn-out payments related to the OVH acquisition, $1.5 million related to
amortization of OVH intangible assets and $0.7 million for the loss related to the write-off of
certain OVH machinery and equipment resulting from the relocation of the OVH facility. The
increases in these total operating expenses for the current year to date period were offset in part
by $1.4 million for a reduction in the liability related to the pistachio recall that occurred in
the third quarter of fiscal 2009 and the receipt of compensation from the pistachio supplier for
the costs associated with that recall.
2
Interest expense for the third quarter of fiscal 2011 increased to $1.7 million from $1.4 million
for the third quarter of fiscal 2010. Interest expense for the current year to date period was
$4.7 million compared to $4.2 million for the first three quarters of fiscal 2010. The increase in
interest expense in the quarterly and year to date comparisons primarily resulted from higher
average short-term debt levels during both periods, which were driven by significantly higher
acquisition costs for tree nuts.
As a result of higher acquisition costs for tree nuts, the value of total inventories on hand at
the end of the current third quarter increased by $33.5 million or 26.9% when compared to the value
of total inventories on hand at the end of the third quarter of fiscal 2010. For the same reason,
the weighted average cost per pound of raw nut input stocks on hand at the end of the current
quarter increased by 46.3% compared to the weighted average cost per pound of raw nut input stocks
on hand at the end of last years third quarter. Pounds of raw nut input stocks at the end of the
current quarter decreased by 7.9 million pounds or 12.3% when compared to the quantity of raw nut
input stocks on hand at the end of the third quarter of fiscal 2010. The decrease in the quantity
of raw nut input stocks occurred despite the need to carry additional raw nut input stocks to
support the production of OVH products.
As we noted above, acquisition costs for tree nuts throughout the entire current quarter were
significantly higher than they were a year ago, stated Jeffrey T. Sanfilippo, Chief Executive
Officer. The decline in gross profit margin in the quarterly comparison occurred because the
process of increasing prices in all distribution channels was not completed until the end of
February, Mr. Sanfilippo noted. March marked the first month since acquisition costs began to
rise earlier in the current fiscal year where our sales prices and acquisition costs were better
aligned, and consequently, March was a profitable month, Mr. Sanfilippo added. Acquisition costs
for pecans and cashews have continued to increase since our price increases were communicated to
our customers in the second quarter of the current fiscal year. If price increases cannot be
implemented to offset these additional cost increases, we anticipate that these higher costs could
result in a corresponding negative impact on margins for products containing these commodities in
the fourth quarter, Mr. Sanfilippo cautioned. We continued to implement numerous cost savings
initiatives throughout our entire organization during the third quarter, and we anticipate that
these initiatives should offset some of the negative impact of high commodity costs on margins in
the fourth quarter of fiscal 2011 and the first quarter of fiscal 2012. To assist our customers
through this challenging time in our industry, we are aggressively managing product portfolios,
pack sizes and promotional opportunities so they remain competitive in this environment, Mr.
Sanfilippo concluded.
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 and expects and are based on
the Companys current expectations or beliefs concerning future events and involve risks and
uncertainties. Consequently, the Companys 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 Companys products, including a decline in sales to one or more key customers; (iii) changes in
the availability and costs of raw materials and the impact of fixed price commitments with
customers; (iv) any negative impact of our increased product prices on the demand for or sales of our products; (v) the
3
ability to measure and estimate bulk inventory, fluctuations in the value and quantity of the
Companys 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 Companys ability
to lessen the negative impact of competitive and pricing pressures; (vii) losses associated with
product recalls or the potential for lost sales or product liability if customers lose confidence
in the safety of the Companys products or in nuts or nut products in general, or are harmed as a
result of using the Companys products; (viii) the ability of the Company to retain key personnel;
(ix) the effect of the group that owns the majority of the Companys voting securities (which may
make a takeover or change in control more difficult), including the effect of the agreements
pursuant to which such group has pledged a substantial amount of the Companys securities that it
owns; (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; (xi) the Companys ability to do business in emerging markets; (xii) uncertainty in
economic conditions, including the potential for another economic downturn; (xiii) the Companys
ability to obtain additional capital, if needed; (xiv) the risk that expected synergies,
operational efficiencies and cost savings from the OVH acquisition may not be fully realized or
realized within the expected timeframe and the risk that unexpected liabilities may arise from the
OVH acquisition; (xv) the timing and occurrence (or nonoccurrence) of other transactions and events
which may be subject to circumstances beyond the Companys control and (xvi) the adverse effect of
increased employment-related legal claims against the Company, which have become more prevalent in
the current economic environment, including potential unfavorable outcomes exceeding amounts
accrued.
John B. Sanfilippo & Son, Inc. is a processor, packager, marketer and distributor of nut based
products that are sold under a variety of private labels and under the Companys Fisher®, Orchard
Valley HarvestTM 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)
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For the Quarter Ended |
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For the Thirty-nine Weeks Ended |
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March 24, |
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March 25, |
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March 24, |
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March 25, |
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2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Net sales |
|
$ |
137,442 |
|
|
$ |
113,194 |
|
|
$ |
507,830 |
|
|
$ |
420,076 |
|
Cost of sales |
|
|
127,456 |
|
|
|
99,641 |
|
|
|
450,067 |
|
|
|
349,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Gross profit |
|
|
9,986 |
|
|
|
13,553 |
|
|
|
57,763 |
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|
|
70,163 |
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Operating expenses: |
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|
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|
|
|
|
|
|
|
|
|
|
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Selling expenses |
|
|
10,985 |
|
|
|
8,629 |
|
|
|
32,972 |
|
|
|
29,176 |
|
Administrative expenses |
|
|
6,602 |
|
|
|
6,324 |
|
|
|
19,019 |
|
|
|
17,295 |
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|
|
|
|
|
|
|
|
|
|
|
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Total operating expenses |
|
|
17,587 |
|
|
|
14,953 |
|
|
|
51,991 |
|
|
|
46,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations |
|
|
(7,601 |
) |
|
|
(1,400 |
) |
|
|
5,772 |
|
|
|
23,692 |
|
|
|
|
|
|
|
|
|
|
|
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Other (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Interest expense |
|
|
(1,657 |
) |
|
|
(1,366 |
) |
|
|
(4,747 |
) |
|
|
(4,152 |
) |
Rental and miscellaneous
(expense), net |
|
|
(277 |
) |
|
|
(285 |
) |
|
|
(784 |
) |
|
|
(926 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense, net |
|
|
(1,934 |
) |
|
|
(1,651 |
) |
|
|
(5,531 |
) |
|
|
(5,078 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes |
|
|
(9,535 |
) |
|
|
(3,051 |
) |
|
|
241 |
|
|
|
18,614 |
|
Income tax (benefit) expense |
|
|
(3,910 |
) |
|
|
(1,151 |
) |
|
|
(385 |
) |
|
|
6,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(5,625 |
) |
|
$ |
(1,900 |
) |
|
$ |
626 |
|
|
$ |
11,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per common share |
|
$ |
(0.53 |
) |
|
$ |
(0.18 |
) |
|
$ |
0.06 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per common
share |
|
$ |
(0.53 |
) |
|
$ |
(0.18 |
) |
|
$ |
0.06 |
|
|
$ |
1.09 |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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|
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Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic |
|
|
10,676,192 |
|
|
|
10,642,304 |
|
|
|
10,667,786 |
|
|
|
10,633,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
10,676,192 |
|
|
|
10,642,304 |
|
|
|
10,766,060 |
|
|
|
10,714,386 |
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|
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JOHN B. SANFILIPPO & SON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 24, |
|
|
June 24, |
|
|
March 25, |
|
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
ASSETS |
|
|
|
|
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|
|
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|
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CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
798 |
|
|
$ |
1,437 |
|
|
$ |
754 |
|
Accounts receivable, net |
|
|
39,925 |
|
|
|
39,894 |
|
|
|
35,088 |
|
Inventories |
|
|
158,048 |
|
|
|
114,360 |
|
|
|
124,574 |
|
Deferred income taxes |
|
|
4,572 |
|
|
|
4,486 |
|
|
|
4,905 |
|
Income taxes receivable |
|
|
1,494 |
|
|
|
104 |
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
3,464 |
|
|
|
4,499 |
|
|
|
4,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
208,301 |
|
|
|
164,780 |
|
|
|
169,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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PROPERTIES, NET: |
|
|
156,132 |
|
|
|
164,203 |
|
|
|
162,123 |
|
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|
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|
|
|
|
|
|
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|
|
|
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OTHER ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
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Intangibles |
|
|
14,432 |
|
|
|
16,121 |
|
|
|
249 |
|
Goodwill |
|
|
5,662 |
|
|
|
5,454 |
|
|
|
|
|
Other |
|
|
7,168 |
|
|
|
7,723 |
|
|
|
7,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,262 |
|
|
|
29,298 |
|
|
|
8,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
391,695 |
|
|
$ |
358,281 |
|
|
$ |
339,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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LIABILITIES & STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
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CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility borrowings |
|
$ |
72,850 |
|
|
$ |
40,437 |
|
|
$ |
24,368 |
|
Current maturities of long-term debt |
|
|
14,835 |
|
|
|
15,549 |
|
|
|
11,297 |
|
Accounts payable |
|
|
35,307 |
|
|
|
29,625 |
|
|
|
30,326 |
|
Book overdraft |
|
|
7,771 |
|
|
|
2,061 |
|
|
|
6,284 |
|
Accrued expenses |
|
|
23,725 |
|
|
|
27,959 |
|
|
|
25,524 |
|
Income taxes payable |
|
|
|
|
|
|
|
|
|
|
1,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
154,488 |
|
|
|
115,631 |
|
|
|
99,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
40,141 |
|
|
|
42,680 |
|
|
|
46,917 |
|
Retirement plan |
|
|
10,055 |
|
|
|
9,951 |
|
|
|
8,150 |
|
Deferred income taxes |
|
|
4,370 |
|
|
|
4,569 |
|
|
|
5,694 |
|
Other |
|
|
1,149 |
|
|
|
5,556 |
|
|
|
1,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,715 |
|
|
|
62,756 |
|
|
|
62,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock |
|
|
26 |
|
|
|
26 |
|
|
|
26 |
|
Common Stock |
|
|
82 |
|
|
|
82 |
|
|
|
82 |
|
Capital in excess of par value |
|
|
102,398 |
|
|
|
101,787 |
|
|
|
101,620 |
|
Retained earnings |
|
|
83,228 |
|
|
|
82,602 |
|
|
|
79,863 |
|
Accumulated other comprehensive loss |
|
|
(3,038 |
) |
|
|
(3,399 |
) |
|
|
(2,395 |
) |
Treasury stock |
|
|
(1,204 |
) |
|
|
(1,204 |
) |
|
|
(1,204 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
181,492 |
|
|
|
179,894 |
|
|
|
177,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
391,695 |
|
|
$ |
358,281 |
|
|
$ |
339,630 |
|
|
|
|
|
|
|
|
|
|
|