EXHIBIT 99.1
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JOHN B. SANFILIPPO & SON, INC.
NEWS RELEASE
COMPANY CONTACT: Michael J. Valentine
Executive Vice President Finance
and Chief Financial Officer
847-871-6509
FOR IMMEDIATE RELEASE
TUESDAY, NOVEMBER 1, 2005
Net Sales increase 2.6%
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Unit volume decline leads to a Net of Loss of $1.5 Million
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Elk Grove Village, IL, November 1, 2005 -- John B. Sanfilippo & Son, Inc.
(Nasdaq: JBSS)
today announced operating results for its fiscal 2006 first quarter. Net
loss for the current quarter was approximately $1.5 million or 14 cents
per share diluted in comparison to net income for the first quarter of
fiscal 2005 of $2.6 million, or 24 cents per share diluted.
Net sales for the fiscal 2006 first quarter increased by 2.6% to
approximately $138.1 million from approximately $134.6 million in the
first quarter of fiscal 2005. Net sales increased between 17% and 18% in
the industrial, food service and export channels. Net sales of Fisher
branded products increased by 13%, though overall net sales in the
consumer channel declined by 8% due in large part to the loss of business
in the latter half of fiscal 2005 with private label customers who would
not accept price increases. Net sales remained unchanged in the contract
packaging channel. Pounds shipped in the consumer channel declined by
18%. Pounds shipped in the current quarter declined by 6% in the food
service channel, 4% in the export channel and 2% in the industrial
channel while pounds shipped rose by 4% in the contract packaging channel
when compared to pounds shipped by channel in the first quarter of fiscal
2005.
The gross margin for the first quarter of fiscal 2005 decreased to 9.2%
of net sales from 12.6% of net sales for the first quarter of fiscal
2005. The decrease in gross margin was mainly attributable to a decline
in units produced while overhead expenses increased, an increase in
almond processing costs generated by the low quality of almond input
stocks used during the quarter and a decrease in gross profit dollars
earned on pecan sales. These factors combined to reduce gross profit
dollars by approximately $5.0 million. A shift in sales mix from the
consumer channel to the industrial and contract packaging channels
further contributed to the negative impact on gross margin as a
percentage of net sales. A $0.6 million increase in gross profit dollars
earned on sales of walnuts partially offset the negative impact on gross
profit dollars that was caused by the above factors. Gross margins, as a
percentage of net sales, improved on sales of cashews, mixed nuts,
peanuts and macadamia nuts when compared to the gross margin percentages
for these products in the first quarter of fiscal 2005.
Selling and administrative expenses increased, as a percentage of net
sales, to 9.7% for the first quarter of fiscal 2006 from 9.4% in the
first quarter of fiscal 2005. Selling expense in the current quarter, as
a percentage of net sales, fell slightly. Administrative expense for the
first quarter of fiscal 2006, as a percentage of net sales, increased to
2.5% from 2.0% for the first quarter of fiscal 2005 primarily because of
higher audit and legal expenses and expenses associated with the
retirement plan for certain executive officers that was adopted during
the current quarter. Operating income for the current quarter declined
by approximately $4.9 million. Interest expense in the first quarter of
fiscal 2006 increased to approximately $1.5 million from $0.3 million in
the first quarter of fiscal 2005 as a result of a higher interest rate on
the short-term credit facility and increased debt levels to fund working
capital needs and the facility consolidation project. Primarily as a
result of higher short-term debt levels and the net loss reported in the
current quarter, the company believes that it is probable that it will
violate a financial covenant in both its short-term and long-term credit
facilities in either the second or third quarter of this fiscal year.
The company will seek waivers from its lenders for the potential covenant
violations.
"Unit volume sales of private label consumer products declined
significantly in the current quarter when compared to the first quarter
of the previous year," stated Jasper B. Sanfilippo, Chairman of the Board
and Chief Executive Officer. "Though the decline in private label unit
volume sales had an unfavorable effect on our gross margin, the
completion of shelling the 2004 pecan crop early in the current quarter
while we shelled pecans throughout the first quarter of last year also
contributed to the reduction in units produced in the current quarter.
Pecan shelling operations will commence in early November," Mr.
Sanfilippo explained. "Sales of Fisher products continued to grow in the
current quarter. According to A.C. Nielsen, for the twelve, six and
three month periods ending September 24, 2005, the Fisher brand continued
to outpace the category in unit volume sales growth," noted Mr.
Sanfilippo. "Though this has been a difficult quarter from a volume
standpoint, we did see indications in the quarter that prices for
cashews, pecans and peanuts could decline in the next calendar year,
which typically leads to increased promotional activity of private
label snack nut products by retailers and increased unit volume sales,"
Mr. Sanfilippo concluded.
The statement of Jasper B. Sanfilippo in this release is forward-looking.
This forward-looking statement is based on the Company's current
expectations and involves risks and uncertainties. Consequently, the
Company's actual results could differ materially. Among the factors that
could cause results to differ materially from current expectations are:
(i) sales activity for the Company's products, including a decline in
sales to one or more key customers; (ii) changes in the availability and
costs of raw materials for the production of the Company's products and
the impact of fixed price commitments with customers; (iii) fluctuations
in the value and quantity of the Company's inventories of pecans,
walnuts, almonds, peanuts or other nuts due to fluctuations in the market
prices of these nuts and routine bulk inventory estimation adjustments,
respectively; (iv) the Company's ability to lessen the negative impact
of competitive pressures by reducing its selling prices and increasing
sales volume while at the same time maintaining profit margins by
reducing costs; (v) the outcome of a pending governmental antitrust
investigation of a portion of the peanut shelling industry; (vi) the
potential for lost sales or product liability if our customers lose
confidence in the safety of our products or are harmed as a result of
using our products, particularly due to product adulteration, misbranding
or peanut and tree nut allergy issues; (vii) risks and uncertainties
regarding the Company's facility consolidation project; and (viii) the
timing and occurrence (or nonoccurrence) of other transactions and events
which may be subject to circumstances beyond the Company's control.
John B. Sanfilippo & Son, Inc. is a processor, packager, marketer and
distributor of shelled and in-shell nuts and extruded snacks that are
sold under a variety of private labels and under the Company's Fisher,
Evon's, Snack 'N Serve Nut Bowl, Sunshine Country, Flavor Tree and
Texas Pride brand names. The Company also markets and distributes a
diverse product line of other food and snack items.
JOHN B. SANFILIPPO & SON, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(Dollars in thousands, except earnings per share)
For the Quarter Ended
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(Unaudited)
September 29, September 23,
2005 2004
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Net sales $138,138 $134,645
Cost of sales 125,378 117,719
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Gross profit 12,760 16,926
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Selling expenses 9,886 9,848
Administrative expenses 3,476 2,753
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13,362 12,601
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(Loss) income from operations (602) 4,325
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Other income (expense):
Interest expense (1,515) (311)
Rental (expense) income and
miscellaneous, net (146) 176
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(1,661) (135)
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(Loss) income before income taxes (2,263) 4,190
Income tax (benefit) expense (812) 1,634
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Net (loss) income $(1,451) $2,556
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Basic <loss) earnings per share $(0.14) $0.24
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Diluted <loss> earnings per share $(0.14) $0.24
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Weighted average shares outstanding
-- basic 10,580,183 10,559,224
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-- diluted 10,580,183 10,718,487
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JOHN B. SANFILIPPO & SON, INC.
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CONSOLIDATED BALANCE SHEETS
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(Dollars in thousands)
(Unaudited)
September 29, June 30,
2004 2005
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,977 $1,885
Accounts receivable, net 41,311 39,002
Inventories 198,373 217,624
Deferred income taxes 1,743 1,742
Income taxes receivable 2,264 --
Prepaid expenses and other
current assets 1,573 1,663
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248,241 261,916
PROPERTIES, NET 121,208 117,769
OTHER ASSETS 25,178 14,787
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$394,627 $394,472
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<Unaudited)
September 29, June 30,
2005 2005
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LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility borrowings $35,801 $66,561
Current maturities of long-term debt 10,638 10,611
Accounts payable 44,624 29,908
Book overdraft 9,921 3,047
Accrued expenses 14,398 13,230
Income taxes payable -- 795
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115,382 124,152
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LONG-TERM LIABILITIES:
Long-term debt 66,781 67,002
Retirement plan 10,649 --
Deferred income taxes 6,935 7,143
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84,365 74,145
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STOCKHOLDERS' EQUITY:
Class A common stock 26 26
Common stock 81 81
Capital in excess of par value 99,320 99,164
Retained earnings 96,657 98,108
Treasury stock (1,204) (1,204)
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194,880 196,175
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$394,627 $394,472
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