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John B. Sanfilippo & Son Inc. Reports Operating Results (10-Q)

January 27, 2010 | About:
10qk

10qk

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John B. Sanfilippo & Son Inc. (JBSS) filed Quarterly Report for the period ended 2009-12-24.

John B. Sanfilippo & Son Inc. has a market cap of $170.2 million; its shares were traded at around $16 with a P/E ratio of 14.7 and P/S ratio of 0.3. JBSS is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.

Highlight of Business Operations:

Our gross profit margin increased from 13.8% for the second quarter of fiscal 2009 to 18.2% for the second quarter of fiscal 2010. The current year to date gross profit margin, as a percentage of net sales, increased from 12.4% for the first twenty-six weeks of fiscal 2009 to 18.4% for the first twenty-six weeks of fiscal 2010. The increase in the gross profit margins in the quarterly and year to date comparisons came mainly from lower commodity costs and improvements in manufacturing efficiencies of approximately $2.0 million and $4.0 million for the quarterly and twenty-six week comparisons, respectively. Our income before income taxes for the second quarter of fiscal 2010 was $13.8 million compared to $6.6 million for the second quarter of fiscal 2009. Our income before income taxes for the first twenty-six weeks of fiscal 2010 was $21.7 million compared to $6.1 million for the first twenty-six weeks of fiscal 2009. The improvements in gross margin described above are primarily responsible for the significant increase in income before income taxes for both the quarterly and year-to-date comparisons. We anticipate that there will be

Gross profit for the second quarter of fiscal 2010 increased 33.4% to $32.7 million from $24.5 million for the second quarter of fiscal 2009. Gross margin increased to 18.2% of net sales for the second quarter of fiscal 2010 from 13.8% for the second quarter of fiscal 2009. Gross profit for the first twenty-six weeks of fiscal 2010 increased 46.2% to $56.6 million from $38.7 million for the first twenty-six weeks of fiscal 2009. Gross margin increased to 18.4% of net sales for the first twenty-six weeks of fiscal 2010 from 12.4% for the first twenty-six weeks of fiscal 2009. The increase in the gross profit margins, for both the quarterly and twenty-six week comparisons, was due primarily to lower commodity costs and improvements in manufacturing efficiencies of approximately $2.0 million and $4.0 million for the quarterly and twenty-six week comparisons, respectively. We anticipate that there will be some pressure on gross profit margin for the last half of fiscal 2010 due to higher tree nut costs because of increasing exports of United States origin nuts due to a weaker dollar and increasing demand for tree nuts in China.

Selling and administrative expenses for the second quarter of fiscal 2010 increased to 9.6% of net sales from 8.7% of net sales for the second quarter of fiscal 2009. Selling expenses for the second quarter of fiscal 2010 were $11.8 million, an increase of $1.4 million, or 13.9%, from the second quarter of fiscal 2009. This increase is primarily due to a $1.2 million increase in promotional expenditures. Administrative expenses for the second quarter of fiscal 2010 were $5.5 million, an increase of $0.4 million, or 8.3%, from the second quarter of fiscal 2009. This increase is primarily due to a $0.3 million increase in incentive compensation expense from improved operating results.

Selling and administrative expenses for the first twenty-six weeks of fiscal 2010 increased to 10.3% of net sales from 9.0% of net sales for the first twenty-six weeks of fiscal 2009. Selling expenses for the first twenty-six weeks of fiscal 2010 were $20.5 million, an increase of $2.2 million, or 11.9%, from the first twenty-six weeks of fiscal 2009. This increase is primarily due to (i) a $1.4 million increase in promotional expenditures, (ii) a $0.5 million increase in salaries, and (iii) a $0.4 million increase in incentive compensation expense from improved operating results. Administrative expenses for the first twenty-six weeks of fiscal 2010 were $11.0 million, an increase of $1.3 million, or 12.9%, from the first twenty-six weeks of fiscal 2009. This increase is primarily due to (i) a $0.9 million increase in incentive compensation expense from improved operating results, and (ii) a $0.3 million increase in salaries.

Net income was $8.8 million, or $0.83 per common share (basic) and $0.82 per common share (diluted), for the second quarter of fiscal 2010, compared to $5.8 million, or $0.55 per common share (basic and diluted), for the second quarter of fiscal 2009. Net income was $13.6 million, or $1.28 per common share (basic) and $1.27 per common share (diluted), for the first twenty-six weeks of fiscal 2010, compared to $5.5 million, or $0.51 per common share (basic and diluted), for the first twenty-six weeks of fiscal 2009.

Net accounts receivable were $40.6 million at December 24, 2009, an increase of $5.9 million, or 16.8%, from the balance at June 25, 2009, and a decrease of $7.7 million, or 16.0%, from the balance at December 25, 2008. The increase in net accounts receivable from June 25, 2009 to December 24, 2009 is due to higher sales in the month of December 2009 compared to June 2009. The decrease in net accounts receivable from December 25, 2008 to December 24, 2009 is due in part to (i) lower sales in December 2009 compared to December 2008, and (ii) a higher percentage of export customer balances in accounts receivable at December 25, 2008 than December 24, 2009. Accounts receivable allowances were $3.7 million, $2.8 million and $2.8 million at December 24, 2009, June 25, 2009 and December 25, 2008, respectively. The increase in accounts receivable allowances at December 24, 2009 is due primarily to an increase in promotional activity.

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