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

April 29, 2010 | About:
10qk

10qk

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John B. Sanfilippo & Son Inc. (JBSS) filed Quarterly Report for the period ended 2010-03-25.

John B. Sanfilippo & Son Inc. has a market cap of $164.2 million; its shares were traded at around $15.43 with a P/E ratio of 11.4 and P/S ratio of 0.3. JBSS is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Private label consumer sales volume decreased by 1.5%, or $2.2 million in gross sales, in the third quarter of fiscal 2010 compared to the third quarter of fiscal 2009, and increased 10.4%, or $12.6 million in gross sales, in the first thirty-nine weeks of fiscal 2010 compared to the first thirty-nine weeks of fiscal 2009. The quarterly decrease was due primarily to (i) volume representing $2.8 million of gross sales during the third quarter of fiscal 2009 that was lost during early fiscal 2010 and (ii) volume representing a $2.3 million reduction in gross sales at a major customer. These decreases were partially offset by a $4.3 million increase in gross sales, primarily in snack mixes, at a separate major customer. The increase for the thirty-nine week comparison, is primarily due to (i) a $22.6 million increase in gross sales to the same customer referred to in the preceding sentence and (ii) a $6.8 million increase in gross sales to a significant new customer that was added during the last half of fiscal 2009. These increases were partially offset by (i) a $7.0 million decrease in sales to a customer whose business we lost during early fiscal 2010 and (ii) a $4.9 million decrease at a major customer.

Gross profit for the third quarter of fiscal 2010 increased 2.6% to $13.6 million from $13.2 million for the third quarter of fiscal 2009. Gross margin increased to 12.0% of net sales for the third quarter of fiscal 2010 from 11.6% for the third quarter of fiscal 2009. Gross profit for the first thirty-nine weeks of fiscal 2010 increased 35.1% to $70.2 million from $51.9 million for the first thirty-nine weeks of fiscal 2009. Gross margin increased to 16.7% of net sales for the first thirty-nine weeks of fiscal 2010 from 12.2% for the first thirty-nine weeks of fiscal 2009. The gross profit for the third quarter was negatively impacted by the $1.3 million increase in promotional spending to support new Fisher distribution. Gross profit in the third quarter of fiscal 2010 was negatively impacted by $0.4 million for the black pepper recall, while gross profit in the third quarter of fiscal 2009 was negatively impacted by $2.0 million for the pistachio recall after considering the corresponding reductions for incentive compensation expense for both periods. The improvement in the gross profit margin for the quarterly comparison, before considering the impact of the recalls, came mainly from increased gross margins on the sales of all major product types except walnuts, due primarily to higher procurement costs for inshell walnuts. The increase in the gross profit margin for the thirty-nine week comparison, was due primarily to lower commodity costs during the first half of fiscal 2010 and improvements in manufacturing efficiencies. We have experienced some pressure on gross profit margin during the third quarter of fiscal 2010 due to higher tree nut costs because of increasing exports of United States origin nuts resulting from a weaker dollar and increasing demand for tree nuts in China, especially for walnuts.

Selling and administrative expenses for the third quarter of fiscal 2010 increased to 13.2% of net sales from 12.2% of net sales for the third quarter of fiscal 2009. Selling expenses for the third quarter of fiscal 2010 were $8.6 million, an increase of $0.9 million, or 12.2%, from the third quarter of fiscal 2009. This increase is primarily due to (i) a $0.3 million increase in salaries due primarily to the expansion of our sales and marketing teams, (ii) a $0.3 million increase in incentive compensation expense due to improved operating results and a higher number of participants, and (iii) a $0.2 million increase in marketing and advertising expenditures. Administrative expenses for the third quarter of fiscal 2010 were $6.3 million, an increase of $0.1 million, or 2.4%, from the third of fiscal 2009. This increase is primarily due to (i) a $0.3 million increase in compensation expense, (ii) a $0.3 million increase in incentive compensation expense from improved operating results and a higher number of participants, and (iii) a $0.6 million increase in legal and other advisory fees related to the amendment of our Credit Facility and other preparatory acquisition related matters incurred in furtherance of our strategic plan outlined above. These increases were almost fully offset by a $1.0 million decrease in recall costs.

Selling and administrative expenses for the first thirty-nine weeks of fiscal 2010 increased to 11.1% of net sales from 9.8% of net sales for the first thirty-nine weeks of fiscal 2009. Selling expenses for the first thirty-nine weeks of fiscal 2010 were $29.2 million, an increase of $3.1 million, or 12.0%, from the first thirty-nine weeks of fiscal 2009. This increase is primarily due to (i) a $1.6 million increase in marketing and advertising expenditures, (ii) a $0.8 million increase in salaries, and (iii) a $0.7 million increase in incentive compensation expense from improved operating results and a higher number of participants. Administrative expenses for the first thirty-nine weeks of fiscal 2010 were $17.3 million, an increase of $1.4 million, or 8.8%, from the first thirty-nine weeks of fiscal 2009. This increase is primarily due to (i) a $1.2 million increase in incentive compensation expense from improved operating results and a

Net loss was $1.9 million, or ($0.18) per common share (basic and diluted) for the third quarter of fiscal 2010, compared to $2.5 million, or ($0.23) per common share (basic and diluted), for the third quarter of fiscal 2009. Net income was $11.7 million, or $1.10 per common share (basic) and $1.09 per common share (diluted), for the first thirty-nine weeks of fiscal 2010, compared to $3.0 million, or $0.28 per common share (basic and diluted), for the first thirty-nine weeks of fiscal 2009.

Net accounts receivable were $38.6 million at March 25, 2010, an increase of $3.8 million, or 11.0%, from the balance at June 25, 2009, and an increase of $2.0 million, or 5.6%, from the balance at March 26, 2009. The increase in net accounts receivable from June 25, 2009 to March 25, 2010 is due to higher sales in the month of March 2010 compared to June 2009. The increase in net accounts receivable from March 26, 2009 to March 25, 2010 is due to higher sales in the month of March 2010 compared to March 2009. Accounts receivable allowances were $3.1 million, $2.8 million and $2.5 million at March 25, 2010, June 25, 2009 and March 26, 2009, respectively. The increase in accounts receivable allowances at March 25, 2010 is due primarily to an increase in promotional activity.

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