John B. Sanfilippo & Son, Inc. Reports Second Quarter Income Gain

John B. Sanfilippo & Son, Inc. announced operating results for its fiscal 2012 second quarter. Net income for the second quarter of fiscal 2012 was $9.4 million, or $0.87 per share diluted, compared to net income of $5.2 million, or $0.48 per share diluted, for the second quarter of fiscal 2011. Net income for the first two quarters of fiscal 2012 was $11.8 million, or $1.09 per share diluted, compared to net income of $6.3 million, or $0.58 per share diluted, for the first two quarters of fiscal 2011.

Net sales of $223.3 million for the second quarter of fiscal 2012 were virtually unchanged from net sales of $223.6 million for the second quarter of fiscal 2011. Sales volume, which is measured as pounds sold, decreased by 13.0 percent.

Despite the decline in sales volume, net sales remained constant due to price increases that were implemented over the last 12 months for virtually all of the products that the company sells. The decrease in sales volume in the quarterly comparison occurred primarily in the consumer distribution channel and decreased to a lesser extent in all other distribution channels.

Sales volume declined for all major products except fruit and nut mixes. The sales volume decline in the quarterly comparison was mainly attributable to the impact of higher selling prices on consumer demand for the company’s products. The decline in sales volume was also attributable in part to the loss of business with three private label customers who elected not to accept price increases.

The gross profit associated with this lost business was not significant. The sales volume attributable to this lost business accounted for approximately 18 percent of the total sales volume decline. Limited supplies of walnuts and pecans also contributed to the total sales volume decline.

For the first two quarters of fiscal 2012, net sales increased to $380.1 million from $370.4 million for the first two quarters of fiscal 2011. The increase in net sales in the year to date comparison was also attributable to price increases. Sales volume decreased by 10.4 percent. As was the case in the quarterly comparison, the decrease in sales volume in the year to date comparison occurred primarily in the consumer distribution channel and decreased to a lesser extent in all other distribution channels.

Sales volume declined for all major products except almonds. The sales volume decline in the year to date comparison was mainly attributable to the impact of higher selling prices on consumer demand for the company’s products. The decline in sales volume was also attributable in part to the loss of business with three private label customers who elected not to accept price increases. The gross profit associated with this lost business was not significant. The sales volume attributable to this lost business accounted for approximately 29 percent of the total sales volume decline. Limited supplies of walnuts and pecans also contributed to the total sales volume decline.

The gross profit margin, as a percentage of net sales, increased to 15.9 percent for the second quarter of fiscal 2012 from 12.2 percent for the second quarter of fiscal 2011. The gross profit margin, as a percentage of net sales, increased to 15.1 percent. for the first two quarters of fiscal 2012 from 12.9 percent for the first two quarters of fiscal 2011. The increase in the gross profit margins in the quarterly and year-to-date comparisons was almost entirely attributable to an improvement in the alignment of selling prices and acquisition costs.

Total operating expenses for the second quarter of fiscal 2012 increased to 8.8 percent of net sales from 7.8 percent of net sales for the second quarter of fiscal 2011. Total operating expenses for the first two quarters of fiscal 2012 increased to 9.5 percent of net sales from 9.3 percent of net sales for the first two quarters of fiscal 2011. The increase in total operating expenses, as a percentage of net sales, in the quarterly and year to date comparisons was mainly attributable to recording incentive compensation expense, which was not incurred in the same periods in fiscal 2011, and an increase in marketing and promotional expense.