John B. Sanfilippo & Son, Inc. announced operating results for its first quarter of fiscal 2013. Net income for the first quarter of fiscal 2013 was $7.5 million, or $0.69 per share diluted, compared to $2.4 million, or $0.23 per share diluted, for the first quarter of fiscal 2012.
Net sales increased by $20.7 million, or 13.2 percent, to $177.5 million in the first quarter of fiscal 2013 from net sales of $156.8 million for the first quarter of fiscal 2012. The increase in net sales resulted primarily from higher selling prices generated by pricing actions implemented over the last twelve months and by a shift in sales volume to higher priced consumer products in the consumer distribution channel from lower priced bulk products in the commercial ingredients distribution channel. Sales prices increased in the quarterly comparison for most of the company’s major product types due to higher commodity acquisition costs. Sales volume, which is defined as pounds sold to customers, in the first quarter of fiscal 2013 was virtually unchanged in comparison to sales volume for the first quarter of fiscal 2012. Sales volume increased in the consumer distribution channel from increased sales of Fisher baking and snack nuts at existing customers and with new Fisher baking nut customers, which began shipping early in the first quarter. Sales volume also increased in the contract packaging distribution channel mainly from expanding sales to a major existing customer. Sales volume declined in the commercial ingredients and export distribution channels primarily due to the impact of high peanut, pecan and walnut prices on customer demand.
Gross profit increased by $8.8 million, and gross profit margin, as a percentage of net sales, increased to 17.2 percent for the first quarter of fiscal 2013 compared to 13.9 percent for the first quarter of fiscal 2012. The increase in gross profit and gross profit margin occurred mainly as a result of improved alignment of selling prices with commodity acquisition costs. A partial shift in sales volume away from lower margin bulk business in the commercial ingredients distribution channel to sales of higher margin consumer products in the consumer distribution channel also contributed to the increase in gross profit and gross profit margin.
Total operating expenses for the first quarter of fiscal 2013 increased by $0.4 million to $16.7 million from $16.3 million for the first quarter of fiscal 2012. Total operating expenses for the current first quarter included a net gain of $0.6 million from the sale of assets. The increase in total operating expenses in the quarterly comparison was mainly attributable to increases in advertising, marketing and compensation expenses. Total operating expenses, as a percentage of net sales, declined to 9.4 percent of net sales from 10.4 percent for the first quarter of fiscal 2012 primarily because of a higher net sales base.
Interest expense declined by $0.1 million in the quarterly comparison mainly due to a reduction in long-term debt.
The total value of inventories on hand at the end of the first quarter of fiscal 2013 increased by $21.2 million, or 18.7 percent, in comparison to the total value of inventories on hand at the end of the first quarter of fiscal 2012. The increase in the total value of inventories in the quarterly comparison was driven mainly by increased commodity acquisition costs and increased quantities of raw nut input stocks and finished goods on hand. As a result of higher commodity acquisition costs for most of the major nuts that the company purchases, the weighted average cost per pound of raw nut input stocks on hand increased by 13.0 percent in the quarterly comparison. Raw nut input stocks increased by 2.9 million pounds or 13.8 percent. The increase in raw nut input stock quantities on hand was attributable mainly to the earlier commencement of the walnut harvest and to increases in raw peanut and pecan inventories. The quantities of finished goods on hand increased by 1.7 million pounds, or 11.4 percent, to provide for the continuing growth in Fisher baking and snack nut sales volume that is anticipated to occur in the second quarter of fiscal 2013.
“A shift in sales volume to our Fisher baking and snack nut products in the current first quarter contributed to higher gross profit margin levels,” stated Jeffrey T. Sanfilippo, chairman and chief executive officer, in a prepared statement. “Executing our Fisher growth strategies in our strategic plan by leveraging the advantages associated with our unique packaging for baking nuts and increasing promotional and merchandising support for the Fisher brand was our top priority in the first quarter, and we were successful. In the quarterly comparison, sales volume for Fisher baking and snack nut products in the consumer distribution channel increased by almost 30 percent. The gain in Fisher sales volume came from new baking nut business with new customers and expanding snack and baking nut sales volume with existing customers through line extensions and increased promotional and merchandising activity,” Sanfilippo explained. “We will continue to focus on growing the Fisher brand by aggressively pursuing new distribution opportunities and by increasing our promotional and merchandising support. We believe that these future growth efforts for the Fisher brand will be further aided by anticipated lower new crop market prices for peanuts and for virtually all tree nuts except almonds,” Sanfilippo concluded.