John B. Sanfilippo & Son Reports 6.4 Percent Sales Increase For Fourth Quarter 2013

John B. Sanfilippo & Son, Inc. announced operating results for its fiscal 2013 fourth quarter and fiscal year ended June 27, 2013. Net income for the fourth quarter of fiscal 2013 was $5.6 million, or $0.51 per share diluted, compared to net income of $3.9 million, or $0.36 per share diluted, for the fourth quarter of fiscal 2012. Net income for fiscal 2013 was $21.8 million, or $1.98 per share diluted, compared to net income of $17.1 million, or $1.58 per share diluted, for fiscal 2012.

Fiscal 2013 fourth quarter net sales increased by 6.4 percent to $177.4 million from net sales of $166.7 million for the fourth quarter of fiscal 2012 primarily due to a 16.4 percent increase in sales volume, which is defined as pounds sold to customers. Sales volume increased in all distribution channels and for all major product types except walnuts. Sales volume for walnuts was relatively unchanged in the quarterly comparison. Approximately 50 percent of the total sales volume increase occurred in the consumer distribution channel. The increase in sales volume in the consumer distribution channel came primarily from increased distribution of Fisher and private brand snack nuts and the favorable impact of lower selling prices on consumer demand. The increase in sales volume in the commercial ingredients distribution channel primarily was attributable to increased sales of peanut and pecan products due to lower selling prices and increased almond sales as a result of distribution gains achieved by a major existing customer. The increase in sales volume in the contract packaging distribution channel was attributable to new snack mix product launches and increased promotional activity implemented by a major existing customer.

Fiscal 2013 net sales increased by 4.8 percent to $734.3 million from $700.6 million for fiscal 2012 primarily as a result of a 4.3 percent increase in sales volume. Sales volume increased in all distribution channels except the export channel and increased for all major product types except walnuts. Sales volume for walnuts was relatively unchanged in the yearly comparison. As was the case in the quarterly comparison, the increase in sales volume in the consumer distribution channel came mainly from increased distribution of Fisher and private brand snack nuts in addition to the favorable impact of lower selling prices on consumer demand during the second half of the current fiscal year. An increase in sales volume for Fisher recipe nuts (formerly referred to as baking nuts) in the second and third quarters of the current fiscal year also contributed to the sales volume increase in the yearly comparison. The increases in sales volume in the commercial ingredients and contract packaging channels primarily were attributable to the same reasons noted for the sales volume increases in these two channels in the quarterly comparison above.

Gross profit margin for the fourth quarter of fiscal 2013 increased to 16.8 percent of net sales from 16.6 percent for the fourth quarter of fiscal 2012, and gross profit increased by $2.1 million, or 7.5 percent. The increases in gross profit margin and gross profit were primarily due to manufacturing efficiency improvements achieved in the fourth quarter of fiscal 2013 and increased sales volume.

Gross profit margin for fiscal 2013 increased to 16.3 percent of net sales from 15.3 percent of net sales for fiscal 2012, and gross profit increased by $12.9 million, or 12.1 percent. The increases in gross profit margin and gross profit in the fiscal year comparison were mainly attributable to improved alignment of selling prices and commodity acquisition costs that occurred in the first half of fiscal 2013 and the efficiency improvements and increased sales volume that occurred in the second half of fiscal 2013.

Total operating expenses for the fourth quarter of fiscal 2013 were 11.2 percent of net sales compared to 12.0 percent of net sales for the fourth quarter of fiscal 2012. The decline in total operating expenses, as a percentage of net sales, was mainly attributable to a decline in advertising and marketing spending which was offset in large part by increases in consulting, shipping and compensation expenses. The decline in advertising and marketing spending in the quarterly comparison was due to a timing change in our promotional spending efforts. In fiscal 2013, we focused more of our promotional spending in the third quarter around the Easter Holiday. In 2012, we focused more of our promotional spending in the fourth quarter for the opening of the baseball season.

Total operating expenses for fiscal 2013 were 10.7 percent of net sales compared to 10.6 percent of net sales for fiscal 2012. Total operating expenses increased by $4.3 million, or 5.8 percent. The increase in total operating expenses in the yearly comparison was primarily attributable to increases in expenses for advertising and marketing, consulting and professional services and compensation expenses. The increases in these expenses were partially offset by a decline in broker commissions and a gain on the sale of land and a building where the Company operated a retail store.

Interest expense declined to $1.2 million for the fourth quarter of fiscal 2013 from $1.4 million for the fourth quarter of fiscal 2012. Interest expense declined to $4.8 million for fiscal 2013 from $5.4 million for fiscal 2012. The declines in interest expense in the quarterly and yearly comparisons were primarily attributable to lower average borrowings.

The value of total inventories on hand at the end of fiscal 2013 increased by $12.3 million, or 8.4 percent, when compared to the value of total inventories on hand at the end of fiscal 2012. The increase in total inventory value was primarily attributable to increased quantities of finished goods on hand to support increasing sales volume. The weighted average cost per pound of raw nut input stocks on hand at the end of fiscal 2013 decreased by 18.8 percent over the weighted average cost per pound at the end of fiscal 2012. The decrease in the weighted average cost per pound in the yearly comparison was mainly attributable to lower acquisition costs for peanuts and pecans.

“We are pleased with our results for the fourth quarter and 2013 fiscal year,” stated Jeffrey T. Sanfilippo, chief executive officer, in a prepared statement. “We achieved growth throughout our distribution channels and product lines and improved operational efficiencies to deliver margin and profit growth. I am particularly proud of the performance of our Fisher brand in both the recipe nut and snack nut categories during fiscal 2013. Fisher, the number two brand in national market share for recipe nuts, has narrowed the gap to the market leader considerably during fiscal 2013, and we believe there is great potential for the future. In addition to continued growth with our existing private brand customers and expanded national distribution for our Fisher brand, we are focused on emerging international markets, particularly in Asia. While penetration of the Asian market will likely occur gradually over several years, we believe that developing into a true global company is in the best long-term interests of our stockholders. I would like to recognize the efforts and support of our 1,280 employees and thank them for a very strong fiscal year,” concluded Sanfilippo.