John B. Sanfilippo & Son, Inc. recently announced operating results for its fiscal 2013 second quarter. Net income for the second quarter of fiscal 2013 was $8.3 million, or $0.76 per share diluted, compared to net income of $9.4 million, or $0.87 per share diluted, for the second quarter of fiscal 2012. Net income for the first two quarters of fiscal 2013 was $15.8 million, or $1.45 per share diluted, compared to net income of $11.8 million, or $1.09 per share diluted, for the first two quarters of fiscal 2012.
Net sales for the second quarter of fiscal 2013 were $215.6 million compared to net sales of $223.3 million for the second quarter of fiscal 2012. The decline in net sales was attributable to a 9.2 percent decline in sales volume, which is measured as pounds sold to customers. A decline in sales volume for peanut products in the consumer, commercial ingredients and export distribution channels primarily led to the sales volume decline in the quarterly comparison. The decline in sales volume for peanut products in these channels was mainly caused by the impact of high selling prices on demand for these products. Sales volume also declined for fruit and nut mixes in the consumer distribution channel primarily as a result of unit weight downsizing and lower sales to a significant private brand customer. The impact of the sales volume decline on net sales in the quarterly comparison was offset partially by an increase in sales volume to a major customer in the contract packaging distribution channel through additional distribution and new product offerings. The overall sales volume decline was also offset partially by a 14.5 percent increase in Fisher brand baking nut sales volume in the consumer distribution channel.
For the first two quarters of fiscal 2013, net sales increased to $393.1 million from $380.1 million for the first two quarters of fiscal 2012. The increase in net sales in the year to date comparison was primarily attributable to higher selling prices. Sales volume decreased by 5.4 percent in the year to date comparison. The decline in sales volume in the year to date comparison was driven by decreases in the consumer, commercial ingredients and export distribution channels. For the same reasons noted in the quarterly comparison, decreases in sales volume for peanut products and fruit and nut mixes were the primary cause of the sales volume decline in these distribution channels. The decline in sales volume in these distribution channels was partially offset by an increase in sales volume in the contract packaging distribution channel for the same reasons noted in the quarterly comparison. The overall sales volume decline in the year to date comparison was also offset partially by a 20.8 percent increase in Fisher brand baking nut sales volume in the consumer distribution channel.
The gross profit margin, as a percentage of net sales, increased to 17.0 percent for the second quarter of fiscal 2013 from 15.9 percent for the second quarter of fiscal 2012. The gross profit margin, as a percentage of net sales, increased to 17.1 percent for the first two quarters of fiscal 2013 from 15.1 percent for the first two quarters of fiscal 2012. The increase in the gross profit margins in the quarterly and year to date comparisons was attributable to a shift in sales volume to higher margin Fisher brand products and continued improvement in the alignment of selling prices and acquisition costs.
Total operating expenses for the second quarter of fiscal 2013 increased to 10.3 percent of net sales from 8.8 percent of net sales for the second quarter of fiscal 2012. Total operating expenses for the first two quarters of fiscal 2013 increased to 9.9 percent of net sales from 9.5 percent of net sales for the first two quarters of fiscal 2012. The increase in total operating expenses, as a percentage of net sales, in the quarterly and year to date comparisons was mainly attributable to a significant increase in promotional spending and advertising as part of the Company’s strategic initiative to grow the Fisher brand.
Interest expense for the second quarter of fiscal 2013 declined to $1.1 million from $1.3 million for the second quarter of fiscal 2012. Interest expense for the first two quarters of fiscal 2013 was $2.4 million compared to $2.6 million for the first two quarters of fiscal 2012. The decrease in interest expense in both the quarterly and year to date comparisons was attributable primarily to a decrease in average short-term borrowings during the second quarter. The decline in short-term borrowings occurred mainly as a result of significantly lower acquisition costs for pecans during the current second quarter compared to acquisition costs for pecans during last year’s second quarter.
The total value of inventories on hand at the end of the second quarter of fiscal 2013 increased by $12.1 million, or 7.8 percent, as compared to the total value of inventories on hand at the end of the second quarter of fiscal 2012. The quantity of raw nut input stocks on hand at the end of the second quarter of fiscal 2013 increased by 30.4 percent when compared to the quantity of raw nut input stocks on hand at the end of the second quarter of fiscal 2012. The weighted average cost per pound of raw nut input stocks on hand at the end of the second quarter of fiscal 2013 decreased by 11.1 percent as compared to the weighted average cost per pound of raw nut input stocks on hand at the end of the second quarter of fiscal 2012 mainly because of lower per pound acquisition costs for pecans.
“We are pleased with our results for the first two quarters of fiscal 2013, especially in the continued growth of our Fisher brand baking nut business,” explained Jeffrey T. Sanfilippo, chairman and chief executive officer, in a prepared statement. “Our significant increase in promotional spending and advertising, while negatively impacting our current net income, is intended to achieve growth for our higher-margin branded business both now and in the future. Lower acquisition costs for pecans, peanuts and cashews should assist us in achieving our growth initiatives for the Fisher brand in fiscal 2013. Our strong financial results and manageable debt position allowed us to pay a $1.00 per share special cash dividend on December 28, 2012,” Sanfilippo concluded.
