UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 28, 2015 (January 28, 2015)
JOHN B. SANFILIPPO & SON, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware | 0-19681 | 36-2419677 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
1703 North Randall Road, Elgin, Illinois 60123-7820
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (847) 289-1800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
John B. Sanfilippo & Son, Inc. (the Registrant) submits the following information:
ITEM 2.02. Results of Operations and Financial Condition.
The following information is furnished pursuant to Item 2.02, Results of Operations and Financial Condition.
On January 28, 2015, the Registrant issued a press release regarding its financial results for the second quarter and twenty-six weeks ended December 25, 2014. This press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits
The exhibits furnished herewith are listed in the Exhibit Index which follows the signature page of this Current Report on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
JOHN B. SANFILIPPO & SON, INC. | ||||||
January 28, 2015 | By: | /s/ Michael J. Valentine | ||||
Michael J. Valentine | ||||||
Chief Financial Officer, Group President and Secretary |
EXHIBIT INDEX
Exhibits |
Description | |
99.1 | Press Release dated January 28, 2015. |
Exhibit 99.1
JOHN B. SANFILIPPO & SON, INC.
NEWS RELEASE
COMPANY CONTACT: | Michael J. Valentine Chief Financial Officer 847-214-4509 |
FOR IMMEDIATE RELEASE
WEDNESDAY, JANUARY 28, 2015
5.1% sales volume increase helped drive quarterly sales to a record $251.4 million
Quarterly Comparison Overview:
| Net sales increased by 11.7% |
| Sales volume increased by 5.1% |
| Gross profit increased by 0.8% |
| Net income decreased by 8.9% |
Elgin, IL, January 28, 2015 John B. Sanfilippo & Son, Inc. (Nasdaq: JBSS) (the Company) today announced operating results for its fiscal 2015 second quarter. Net income for the second quarter of fiscal 2015 was $8.4 million, or $0.75 per share diluted, compared to net income of $9.2 million, or $0.83 per share diluted, for the second quarter of fiscal 2014. Net income for the first two quarters of fiscal 2015 was $14.3 million, or $1.28 per share diluted, compared to net income of $16.0 million, or $1.44 per share diluted, for the first two quarters of fiscal 2014.
Net sales for the second quarter of fiscal 2015 were $251.4 million compared to net sales of $225.1 million for the second quarter of fiscal 2014. The increase in net sales was primarily attributable to a 5.1% increase in sales volume, which is measured as pounds sold to customers. Higher selling prices for pecans and almonds resulting from higher acquisition costs also contributed to the increase in net sales. Sales volume increased in all distribution channels except the export distribution channel and sales volume increased for all major product types except walnuts and pecans. The increase in sales volume in the consumer distribution channel was attributable to increased sales of private brand snack nuts at existing customers and increased sales of Fisher snack nuts. In the quarterly comparison, the primary drivers of the increase in Fisher snack nut sales volume was the distribution of inshell peanuts we regained at a major Fisher snack nut customer and increased merchandising activity. Sales volume for Fisher recipe nuts was relatively unchanged in the quarterly comparison. The sales volume increase in the commercial ingredients distribution channel resulted from increased sales of almond and peanut
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products to existing customers. The increase in sales volume in the contract packaging channel was generated by increased sales of peanut, trail mix and pecan products to existing customers. Sales volume declined in the export distribution channel mainly due to a lower supply of certain grades of inshell walnuts that are typically sold into the export market.
For the first two quarters of fiscal 2015, net sales increased to $456.4 million from $401.8 million for the first two quarters of fiscal 2014. The increase in net sales in the year to date comparison was primarily attributable to a 6.0% increase in sales volume and higher selling prices for pecans and almonds. The increase in sales volume in the consumer distribution channel was driven by increased sales of private brand snack nut and trail mix products and by increased sales of Fisher recipe and snack nut products. Sales volume was relatively unchanged in the commercial ingredients and contract packaging distribution channels. As was the case in the quarterly comparison, sales volume declined in the export distribution channel due to the lower supply of inshell walnuts for the export market.
Gross profit increased by $0.3 million, and gross profit margin, as a percentage of net sales, declined to 14.8% for the second quarter of fiscal 2015 from 16.4% for the second quarter of fiscal 2014. The increase in gross profit primarily resulted from increased sales volume while the decline in gross profit margin was mainly attributable to a $2.2 million increase in trade spending. In the year to date comparison, gross profit increased by $1.6 million due to increased sales volume while gross profit margin, as a percentage of net sales, decreased to 14.9% for the first two quarters of fiscal 2015 from 16.5% for the first two quarters of fiscal 2014. The decrease in the gross profit margin in the year to date comparison was attributable mainly to higher acquisition costs for certain grades of pecans and almonds during the first quarter of fiscal 2015 and the impact of increased trade spending on selling prices in the second quarter of fiscal 2015.
Total operating expenses for the second quarter of fiscal 2015 declined to 9.0% of net sales from 9.1% of net sales for the second quarter of fiscal 2014 primarily due to the increase in net sales. The $2.0 million increase in total operating expenses occurred primarily because total operating expenses in the second quarter of fiscal 2014 included a $1.6 million gain on the sale of an Elgin, Illinois site formerly owned by the Company (the Old Elgin Site). An increase in advertising expense also contributed to the increase in total operating expenses in the quarterly comparison. Total operating expenses for the first two quarters of fiscal 2015 decreased to 9.0% of net sales from 9.4% of net sales for the first two quarters of fiscal 2014 primarily due to the increase in net sales. The $3.6 million increase in total operating expenses in the year to date comparison was mainly due to the gain on the sale of the Old Elgin Site that was included in total operating expenses in last fiscal years comparable period. Increases in compensation-related and advertising expenses, as well as increases in freight and broker commission expenses, driven by increased sales volume, also contributed to the increase in total operating expenses.
Interest expense was $0.9 million for the second quarter of fiscal 2015 compared to $1.1 million for the second quarter of fiscal 2014. Interest expense for the first two quarters of fiscal 2015 was $1.9 million compared to $2.1 million for the first two quarters of fiscal 2014. The decrease in interest expense in both comparisons was attributable primarily to lower average borrowing levels.
The decline in net income in the quarterly comparison was mainly attributable to increased trade spending in the current second quarter to grow our brands and to the $1.6 million gain on the sale of the Old Elgin Site that favorably impacted operating results in last years second quarter. In addition to the impact of the aforementioned items, the decline in net income in the year to date comparison was also attributable to the $1.4 million increase in repair expenses associated with the office building located on our Elgin, Illinois campus, which we incurred in the first quarter of the current fiscal year.
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The total value of inventories on hand at the end of the second quarter of fiscal 2015 increased by $34.4 million, or 18.3%, as compared to the total value of inventories on hand at the end of the second quarter of fiscal 2014. The increase in the total value of inventories on hand was primarily driven by increased quantities of raw nut input stocks and higher acquisition costs for almonds and pecans. The quantity of raw nut input stocks on hand at the end of the second quarter of fiscal 2015 increased by 20.9% when compared to the quantity of raw nut input stocks on hand at the end of the second quarter of fiscal 2014. The weighted average cost per pound of raw nut input stocks on hand at the end of the second quarter of fiscal 2015 declined by 3.9% compared to the weighted average cost per pound of raw nut input stocks on hand at the end of the second quarter of fiscal 2014 mainly because of a shift in quantities to relatively lower cost peanuts from relatively higher cost almonds and macadamia nuts.
We continue to see strong sales volume growth, especially in our consumer distribution channel, which increased by 9.2% in the quarterly comparison and was generated by significant growth with existing private brand snack nut customers and a 51.6% increase in sales volume for Fisher snack nuts, stated Jeffrey T. Sanfilippo, Chairman and Chief Executive Officer. We also saw considerable growth in sales volume for Orchard Valley Harvest produce products with a 48.5% increase in pounds sold in the quarterly comparison mainly as a result of distribution gains for new variety pack items, Mr. Sanfilippo added. Both the Fisher snack nut and Orchard Valley Harvest brands also performed well at retail in the quarterly comparison with 7% and 36% increases in pound growth, respectively, according to market data from IRI. Though sales volume for Fisher recipe nuts was unchanged in the quarterly comparison, Fisher recipe outperformed the total recipe category in the quarterly comparison at retail as pound volume increased by 6% while the total recipe category declined by 8% according to market data from IRI. The success of Fisher recipe in relation to the overall category performance, as well as the success of Fisher snack and Orchard Valley Harvest, was mainly attributable to a significant increase in trade spending coupled with new distribution gains, and illustrates our continued success in building brands, which is a central pillar of our Strategic Plan, Mr. Sanfilippo concluded.
The Company will host an investor conference call and webcast on Thursday, January 29, 2015, at 10:00 a.m. Eastern (9:00 a.m. Central) to discuss these results. To participate in the call via telephone, dial 1-888-713-4217 from the U.S. or 1-617-213-4869 internationally and enter the participant passcode of 92350649. This call is being webcast by NASDAQ OMX and can be accessed at the Companys website at www.jbssinc.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 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, 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 Companys nut inventories due to fluctuations in the market prices of nuts and bulk inventory estimation adjustments, respectively; (vi) the Companys
3
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 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 actions and decisions of the group that has the majority of the voting power with regard to the Companys 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) the Companys 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 Companys 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 Companys control; (xv) the adverse effect of labor unrest or disputes, litigation and/or legal settlements, including potential unfavorable outcomes exceeding any amounts accrued; (xvi) losses due to significant disruptions at any of our production or processing facilities; (xvii) the inability to implement our Strategic Plan or realize efficiency measures, including controlling medical and personnel costs; (xviii) technology disruptions or failures; (xix) the inability to protect the Companys intellectual property or avoid intellectual property disputes; (xx) the Companys 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 Companys Fisher®, Orchard Valley HarvestTM, Fisher® Nut Exactly 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 | For the Twenty-six Weeks Ended | |||||||||||||||
December 25, 2014 |
December 26, 2013 |
December 25, 2014 |
December 26, 2013 |
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Net sales |
$ | 251,373 | $ | 225,114 | $ | 456,410 | $ | 401,811 | ||||||||
Cost of sales |
214,130 | 188,166 | 388,483 | 335,494 | ||||||||||||
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Gross profit |
37,243 | 36,948 | 67,927 | 66,317 | ||||||||||||
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Operating expenses: |
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Selling expenses |
15,671 | 15,156 | 26,743 | 25,055 | ||||||||||||
Administrative expenses |
6,894 | 7,039 | 14,493 | 14,181 | ||||||||||||
Gain on assets held for sale, net |
| (1,641 | ) | | (1,641 | ) | ||||||||||
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Total operating expenses |
22,565 | 20,554 | 41,236 | 37,595 | ||||||||||||
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Income from operations |
14,678 | 16,394 | 26,691 | 28,722 | ||||||||||||
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Other expense: |
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Interest expense |
877 | 1,062 | 1,867 | 2,148 | ||||||||||||
Rental and miscellaneous expense, net |
548 | 811 | 2,458 | 1,324 | ||||||||||||
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Total other expense, net |
1,425 | 1,873 | 4,325 | 3,472 | ||||||||||||
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Income before income taxes |
13,253 | 14,521 | 22,366 | 25,250 | ||||||||||||
Income tax expense |
4,850 | 5,297 | 8,048 | 9,251 | ||||||||||||
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Net income |
$ | 8,403 | $ | 9,224 | $ | 14,318 | $ | 15,999 | ||||||||
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Basic earnings per common share |
$ | 0.75 | $ | 0.84 | $ | 1.29 | $ | 1.46 | ||||||||
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Diluted earnings per common share |
$ | 0.75 | $ | 0.83 | $ | 1.28 | $ | 1.44 | ||||||||
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Cash dividends declared per share |
$ | 1.50 | $ | 1.50 | $ | 1.50 | $ | 1.50 | ||||||||
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Weighted average shares outstanding |
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Basic |
11,136,143 | 11,016,373 | 11,114,137 | 10,988,555 | ||||||||||||
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Diluted |
11,217,922 | 11,096,271 | 11,209,766 | 11,096,623 | ||||||||||||
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5
JOHN B. SANFILIPPO & SON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
December 25, 2014 |
June 26, 2014 |
December 26, 2013 |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
$ | 4,359 | $ | 1,884 | $ | 9,824 | ||||||
Accounts receivable, net |
64,834 | 55,800 | 56,891 | |||||||||
Inventories |
221,938 | 182,830 | 187,588 | |||||||||
Deferred income taxes |
3,442 | 3,484 | 3,344 | |||||||||
Prepaid expenses and other current assets |
6,319 | 5,376 | 8,314 | |||||||||
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300,892 | 249,374 | 265,961 | ||||||||||
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PROPERTIES, NET: |
132,033 | 130,454 | 133,358 | |||||||||
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OTHER ASSETS: |
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Intangibles, net |
4,161 | 5,246 | 6,561 | |||||||||
Deferred income taxes |
1,390 | 726 | 1,110 | |||||||||
Other |
8,816 | 8,811 | 8,860 | |||||||||
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14,367 | 14,783 | 16,531 | ||||||||||
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$ | 447,292 | $ | 394,611 | $ | 415,850 | |||||||
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LIABILITIES & STOCKHOLDERS EQUITY |
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CURRENT LIABILITIES: |
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Revolving credit facility borrowings |
$ | 29,470 | $ | 40,542 | $ | 24,554 | ||||||
Current maturities of long-term debt |
3,362 | 3,349 | 3,342 | |||||||||
Accounts payable |
112,705 | 44,907 | 95,292 | |||||||||
Book overdraft |
3,809 | 2,414 | 3,615 | |||||||||
Accrued expenses |
17,108 | 21,019 | 16,133 | |||||||||
Income taxes payable |
| | 1,476 | |||||||||
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166,454 | 112,231 | 144,412 | ||||||||||
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LONG-TERM LIABILITIES: |
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Long-term debt |
33,982 | 35,666 | 37,344 | |||||||||
Retirement plan |
14,561 | 14,372 | 12,768 | |||||||||
Other |
5,799 | 5,515 | 5,040 | |||||||||
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54,342 | 55,553 | 55,152 | ||||||||||
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STOCKHOLDERS EQUITY: |
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Class A Common Stock |
26 | 26 | 26 | |||||||||
Common Stock |
86 | 85 | 85 | |||||||||
Capital in excess of par value |
110,127 | 108,305 | 107,447 | |||||||||
Retained earnings |
120,677 | 123,118 | 112,829 | |||||||||
Accumulated other comprehensive loss |
(3,216 | ) | (3,503 | ) | (2,897 | ) | ||||||
Treasury stock |
(1,204 | ) | (1,204 | ) | (1,204 | ) | ||||||
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226,496 | 226,827 | 216,286 | ||||||||||
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$ | 447,292 | $ | 394,611 | $ | 415,850 | |||||||
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