ELGIN, Ill.--(BUSINESS WIRE)--John B. Sanfilippo & Son, Inc. announced operating results for its first quarter of fiscal 2017. Net income for the first quarter of fiscal 2017 was $10.2 million, or $0.89 per share diluted, compared to $8.0 million, or $0.71 per share diluted, for the first quarter of fiscal 2016.
Net sales decreased by 1.5% to $222.3 million for the first quarter of fiscal 2017 from net sales of $225.8 million for the first quarter of fiscal 2016. The decline in net sales primarily resulted from lower selling prices for products containing walnuts and almonds due to lower commodity acquisition costs for those nuts. Sales volume, which is defined as pounds sold to customers, rose by 9.7% in the quarterly comparison. The sales volume increase was driven mainly by increases in sales of peanuts, walnuts, pecans and almonds, and sales volume increased in all distribution channels.
The majority of the total sales volume increase occurred in the consumer distribution channel primarily from increased sales of our branded products. Sales volume for our branded products increased as follows:
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Fisherrecipe nuts |
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44.6% |
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Fishersnack nuts and peanut butter |
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13.2% |
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Orchard Valley HarvestandSunshine Countryproduce products |
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192.5% |
The sales volume increase for Fisher recipe nuts came mainly from distribution gains with new customers, the introduction of a larger package size for walnuts and increased promotional activity. The sales volume increase for Fisher snack nuts and peanut butter primarily was due to distribution gains with new customers and increased product display activity. Increased promotional activity and new item introductions for our Orchard Valley Harvest brand drove the sales volume increase for our produce brands. Partially offsetting the sales volume increases noted above was a significant sales volume decrease for Fisher Nut Exactly snack bites, which was largely due to lost distribution to club stores. The sales volume increase in the consumer distribution channel was also due in part to an 8.2% increase in sales volume with existing private brand customers.
The sales volume increase in the contract packaging channel was due to increased sales of trail mixes, almonds and cashews to existing customers. Sales volume increased in the commercial ingredients channel from increased sales of peanuts to peanut oil stock crushers.
Gross profit increased by 9.8% to $36.5 million for the first quarter of fiscal 2017 compared to $33.2 million for the first quarter of fiscal 2016. The increase in gross profit was mainly attributable to increased sales volume as discussed above. Gross profit margin, as a percentage of net sales, increased to 16.4% for the first quarter of fiscal 2017 compared to 14.7% for the first quarter of fiscal 2016 primarily as a result of lower acquisition costs for walnuts and almonds and improved alignment of selling prices and acquisition costs for pecans.
Total operating expenses, as a percentage of net sales, increased to 9.0% for the first quarter of fiscal 2017 from 8.6% for the first quarter of fiscal 2016 largely as a result of a lower net sales base. Total operating expenses increased to $19.9 million from $19.5 million in the quarterly comparison. The increase in total operating expenses was primarily attributable to increases in shipping expense which resulted primarily from higher sales volume.
Interest expense declined by $0.3 million in the quarterly comparison mainly due to lower debt levels.
The value of total inventories on hand at the end of the first quarter of fiscal 2017 decreased by $40.7 million, or 21.7%, when compared to the value of total inventories on hand at the end of the first quarter of fiscal 2016. The decrease in total inventory value was attributable primarily to lower acquisition costs for walnuts and almonds. For that reason, the weighted average cost per pound of raw nut and dried fruit input stocks on hand at the end of the first quarter of fiscal 2017 decreased by 29.9% compared to the weighted average cost per pound at the end of the first quarter of fiscal 2016.
“Net income and diluted earnings per share reached record levels for a first quarter due to a significant increase in sales volume and improved gross profit margin,” stated Jeffrey T. Sanfilippo, Chief Executive Officer. “Approximately 50% of the total sales volume increase came from increased sales of our branded products. As was the case in fiscal 2016, sales volume growth for our brands continues to outpace sales volume growth for our private brand products,” Mr. Sanfilippo noted. “At retail, both our Fisher recipe nut and our produce brands also performed well in the quarterly comparison according to IRi market data. Fisher recipe nut pound volume increased by approximately 13%, while the total recipe nut category pound volume declined by approximately 10%. Pound volume for our Orchard Valley Harvest and Sunshine Country produce brands increased by approximately 149%, while the total produce category pound volume only increased by approximately 3% according to IRi market data,” Mr. Sanfilippo stated. “We again saw meaningful sales volume growth in our contract packaging channel due to the efforts we made in assisting our customers as they launched new products and gained new distribution,” Mr. Sanfilippo added. “As we noted above, sales volume for our Fisher Nut Exactly brand has declined due to lost distribution to club stores. With the goal of regaining that lost distribution, we will be introducing newly formulated snack bites to retailers in the club channel in the upcoming second quarter,” Mr. Sanfilippo concluded. Full report.
