EXHIBIT 99.1
============
JOHN B. SANFILIPPO & SON, INC.
NEWS RELEASE
COMPANY CONTACT: Michael J. Valentine
Chief Financial Officer
847-871-6509
FOR IMMEDIATE RELEASE
FRIDAY, FEBRUARY 2, 2007
Net Income for the Second Quarter was $1.2 million or $.12 Per Share
- --------------------------------------------------------------------
Elk Grove Village, IL, February 2, 2007 -- John B. Sanfilippo & Son, Inc.
(Nasdaq: JBSS)
today announced operating results for its fiscal 2007 second quarter.
Net income for the current quarter was $1.2 million, or $.12 per share
diluted, compared to net loss of approximately $0.1 million, or $.01 per
share diluted, for the second quarter of fiscal 2006. Including the $3.0
million gain related to real estate sales that occurred in the first
quarter, current year to date net loss was $3.6 million, or $.34 per
share diluted, compared to a net loss of $1.2 million, or $.11 per share
diluted, for the first two quarters of fiscal 2006.
Net sales decreased from approximately $191.1 million for the second
quarter of fiscal 2006 to $177.7 million for the second quarter of fiscal
2007. Net sales increases in the export and contract manufacturing
distribution channels were more than offset by decreases in net sales in
the industrial, consumer and food service distribution channels. The net
sales decrease in the quarterly comparison is almost completely
attributable to a decline in the overall average selling price per pound
shipped of 7.3%. The decline in the overall average selling price per
pound was generated mainly from a significant decrease in selling prices
in the industrial channel as a result of lower market prices for most new
crop tree nuts. As a result of lower consumption over the last twelve
months and in some cases larger crop sizes, selling prices declined for
all key commodities except walnuts. The increase in total unit volume
sold, which is measured in pounds shipped, for the industrial and
contract manufacturing channels was slightly higher than the total
decrease in unit volume sold for the consumer, export and food service
channels. The increase in the total unit volume sold for pecans, peanuts
and macadamia nuts was slightly higher than the decrease in the total
unit volume sold for almonds, walnuts and cashews. For the first two
quarters of fiscal 2007, net sales decreased to $311.4 million from
$329.7 million for the first two quarters of fiscal 2006. The decrease in
net sales for the year to date comparison was attributable primarily to
lower average selling prices. Unit volume sold increased by 1.7% in the
year to date comparison.
The gross profit margin, as a percentage of net sales, increased from
8.4% for the second quarter of fiscal 2006 to 10.8% for the current
quarter. The current second quarter gross profit margin increased in the
consumer, industrial and contract manufacturing distribution channels,
while gross profit margins remained unchanged in the food service and
export distribution channels when compared to the gross profit margin for
those channels for the second quarter of fiscal 2006. Mainly as a
result of lower acquisition costs, the current quarter gross profit
margin, as a percentage of net sales, increased on sales of macadamias,
almonds, pecans, cashews and peanuts in comparison to the gross profit
margin for the sales of those commodities in the second quarter of fiscal
2006. The increase in gross profit margin on the sales of those
commodities was partially offset by a decrease in the gross profit margin
on sales of walnuts, because the Company shipped higher cost new crop
walnuts against lower priced old crop sales contracts during the current
quarter. The current year to date gross profit margin, as a percentage of
net sales, decreased from 8.9% for the second quarter of fiscal 2006 to
8.0%. The benefits derived from lower acquisition costs for most new
crop tree nuts in the latter part of the current second quarter were not
sufficient to offset the negative impact of high commodity costs on gross
profit margin for the first five months of fiscal 2007.
Selling and administrative expenses for the current quarter increased to
8.6% of net sales for the current quarter from 7.8% of net sales for the
second quarter of fiscal 2006 primarily as a result of a lower sales base
while certain costs remained relatively fixed. Additionally, the
significant decrease in shipping costs to customers was more than offset
by increases in costs related to the new distribution center and audit
and legal costs. Selling and administrative expenses, as a percentage of
net sales, were relatively unchanged at 8.7% in the year to date
comparison after considering the gains related to the sales of properties
that occurred in the first quarter of fiscal 2007.
For the second quarter of fiscal 2007, operating income was $3.8 million
compared to $1.3 million for the second quarter of fiscal 2006. The
current year to date operating loss was $2.1 million compared to
operating income of $1.2 million for the same year to date period in
fiscal 2006.
Interest expense for the second quarter of fiscal 2007 increased to $1.8
million from $1.1 million for the second quarter of fiscal 2006.
Interest expense for the current year to date period was approximately
$3.5 million compared to $2.7 million for the first two quarters of
fiscal 2006. Increased short-term debt levels and higher interest rates
led to the increase in interest expense in the quarterly comparison. For
the most part, capital expenditures, related primarily to the facility
consolidation project, led to the increase in notes payable. Inventories
on hand at the end of the current second quarter declined by $43.7
million or 20.9% when compared to the value of inventories on hand at the
end of the second quarter of fiscal 2006. Pounds of raw nuts declined by
approximately 17.5 million pounds or 16.8% when compared to the quantity
of raw nuts on hand at the end of the second quarter of fiscal 2006. The
weighted average cost per pound of raw nuts decreased by 20.1% in the
quarterly comparison.
As a result of the improvement in the gross profit margin, the Company
was in compliance with quarterly financial covenants in its Note
Agreement and Bank Credit Facility as of the end of the current second
quarter. Because there continues to be uncertainty as to whether the
Company will comply with financial covenants at the end of the third and
fourth quarters of fiscal 2007, the Company has appropriately classified
the balance due under the Note Agreement as current maturities on its
balance sheet as of December 28, 2006.
"Although net sales declined in the quarter mainly due to lower selling
prices in the industrial channel, net income improved mainly as a result
of lower nut acquisition costs," stated Jeffrey T. Sanfilippo, Chief
Executive Officer. "The Company has cycled through its negative margin
almond contracts, and gross profit margin on December almond sales
improved significantly in comparison to gross profit margin on almonds
sales made earlier in the second quarter. Walnut gross margins should
also improve as the Company begins to ship against higher priced new crop
walnut sales. Margin gains in other nuts may be mitigated by a negative
impact on pecan margins as field prices for inshell pecans have risen in
recent weeks," Mr. Sanfilippo explained. "Net sales in the consumer
channel were negatively impacted by declines in the Company's private
label business as a result of heavy promotional activity from the
national brand and lost business at a major retailer. These declines
were partially offset by sales to new private label customers as well as
new items developed for existing customers. In addition, sales of Fisher
branded products increased by 15% in the quarter as a result of new
distribution and increased promotional activity," Mr. Sanfilippo stated.
"The move to our new corporate headquarters is on schedule, and we are
now manufacturing some products and shipping products to our customers
out of the new Elgin facility. Our corporate offices will move this
February while we continue to relocate production lines from our existing
facilities," Mr. Sanfilippo noted. "The Elgin facility recently was
awarded the highest possible rating from an independent auditing firm in
its first food processing facility audit, and we are now in the process
of obtaining facility approvals from our customers," Mr. Sanfilippo
concluded.
The statement of Jeffrey T. 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) if the Company sustains losses, the ability of the Company to
continue as a going concern, (ii) sales activity for the Company's
products, including a decline in sales to one or more key customers;
(iii) changes in the availability and costs of raw materials and the
impact of fixed price commitments with customers; (iv) fluctuations in
the value and quantity of the Company's nut inventories due to
fluctuations in the market prices of nuts and routine bulk inventory
estimation adjustments, respectively, and decreases in the value of
inventory held for other entities, where the Company is financially
responsible for such losses; (v) the Company's ability to lessen the
negative impact of competitive and pricing pressures; (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; (vii) risks and uncertainties regarding the Company's facility
consolidation project; (viii) sustained losses, which would, among other
things, negatively impact the Company's ability to comply with the
financial covenants in its amended credit agreements; (ix) the ability of
the Company to satisfy its customers' supply needs; (x) the ability of
the Company to retain key personnel; (xi) the potential negative impact
of government regulations, including the 2002 Farm Bill and the Public
Health Security and Bioterrorism Preparedness and Response Act; (xii) the
Company's ability to do business in emerging markets; (xiii) the
Company's ability to properly measure and maintain its inventory; (xiv)
the effect of the group that owns the majority of the Company's voting
securities, including the effect of the agreements pursuant to which such
group has pledged a substantial amount of the Company's securities that
they own; and (xv) 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.
------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Dollars in thousands, except earnings per share)
For the Quarter Ended For the Twenty-six Weeks Ended
------------------------- ------------------------------
(Unaudited) (Unaudited)
December 28, December 29, December 28, December 29,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales $177,654 $191,077 $311,447 $329,735
Cost of sales 158,516 174,938 286,586 300,316
----------- ----------- ----------- -----------
Gross profit 19,138 16,139 24,861 29,419
----------- ----------- ----------- -----------
Selling expenses 11,253 11,135 22,071 21,021
Administrative expenses 4,128 3,742 7,961 7,218
Gain related to real estate sales -- -- (3,047) --
----------- ----------- ----------- -----------
15,381 14,877 26,985 28,239
----------- ----------- ----------- -----------
Income (loss) from operations 3,757 1,262 (2,124) 1,180
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (1,784) (1,149) (3,454) (2,664)
Rental and miscellaneous
(expense), net (37) (122) (96) (268)
----------- ----------- ----------- -----------
(1,821) (1,271) (3,550) (2,932)
----------- ----------- ----------- -----------
Income (loss) before income taxes 1,936 (9) (5,674) (1,752)
Income tax expense (benefit) 700 55 (2,089) (560)
----------- ----------- ----------- -----------
Net income (loss) $1,236 ($64) ($3,585) ($1,192)
=========== =========== =========== ===========
Basic and diluted earnings
(loss) per share $0.12 ($0.01) ($0.34) ($0.11)
=========== =========== =========== ===========
Weighted average shares outstanding
-- basic 10,591,955 10,582,562 10,591,790 10,581,365
=========== =========== =========== ===========
-- diluted 10,639,316 10,582,562 10,591,790 10,581,365
=========== =========== =========== ===========
JOHN B. SANFILIPPO & SON, INC.
------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Unaudited)
(Dollars in thousands)
December 28, December 28,
2006 2006 June 29,
(as reported) (as corrected) 2006
------------- -------------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $4,498 $4,498 $2,232
Accounts receivable, net 43,627 43,627 35,481
Inventories 165,784 165,784 164,390
Deferred income taxes 3,022 3,022 2,984
Income taxes receivable 8,847 8,847 6,427
Prepaid expenses and other
current assets 1,631 1,631 2,248
Asset held for sale -- 5,569 --
----------- ----------- ---------
227,409 232,978 213,762
PROPERTIES, NET 169,939 169,939 156,859
OTHER ASSETS 20,999 15,430 20,291
----------- ----------- ---------
$418,347 $418,347 $390,912
=========== =========== =========
December 28, June 29,
2006 2006
------------ ---------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility borrowings $56,755 $64,341
Current maturities of long-term debt 58,535 67,717
Accounts payable 60,408 27,944
Book overdraft 11,700 14,301
Accrued expenses 18,419 16,842
------------ ---------
205,817 191,145
------------ ---------
LONG-TERM LIABILITIES:
Long-term debt 20,368 5,618
Retirement plan 8,318 7,654
Deferred income taxes 6,667 6,385
Other 404 --
------------ ---------
35,757 19,657
------------ ---------
STOCKHOLDERS' EQUITY:
Class A common stock 26 26
Common stock 81 81
Capital in excess of par value 100,068 99,820
Retained earnings 77,802 81,387
Treasury stock (1,204) (1,204)
------------ ---------
176,773 180,110
------------ ---------
$418,347 $390,912
============ =========