Earnings call transcript Q2 2023

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Jeffrey Sanfilippo

[Call Starts Abruptly] Welcome to our fiscal 2023 second quarter earnings conference call. Thank you for joining us.

On the call with me today is Frank Pellegrino, our CFO; Jasper Sanfilippo, our COO.

We’ll make some forward-looking statements today. These statements are based on our current expectations and they involve certain risks and uncertainties. negatively that are Forms we XX-Q. could various in XX-K that filings SEC have factors impact explained results the and The made including encourage in our to these risks We uncertainties business. refer about and inherent more these filings are that to you learn to

me out start let performance. First, by

$X.XX million XX.X% as quarter, share. During delivered and per $XX increased strong the to our to compared bottom sales net X.X% second growth diluted we increased EPS last a quarter, line over or year's second

Our discretionary strong numerous, efforts improvement selling quarterly as performance resulted continuous increases. our alignment cost year initiatives, from reducing on a operating a inflationary response initiated price spending focus last fiscal costs, to reduced and

brand customers our to channel. in continue strong our see products, private We consumer for demand especially our from

consumer category. grew the customer, compared volume over excluding of private in the decline nut overall in X% the brand channel, a sales snack to grocery loss one-time Our the

execute the to During Long-Range we Plan. quarter continued against our

paid share we our $X.XX per value returning capital reinforcing long-term creating special shareholder a our shareholders. to of by First, goal dividend,

the completed diversify the acquisition offerings. our of to part Just strategic we Second, is product Cheese brand, further of our the which initiative

Just and it foodservice to the customers. offerings brand the to branded portfolio capabilities our will as production acquired excited are the snack We with growth complements private our add brand current And our Cheese in category. help accelerate

at is Cheese and Cheese was It in manufactured Reeseville, Specialty the Wisconsin. Just invented XXXX in in XXXX. relaunched

a our new acquisition will a Just cheese The bars percent us snack the categories. cheese with real and leading baked snacking brands Cheese one hundred snacking product and portfolio offers nation's is of expands the crisps. into that provide cheese

have around bring until a the is new XX% bounced omnichannel the of billion excited tirelessly in weeks. and $X that Post-COVID and over has to into started. over proud bar growth last organization $X.X billion ship pandemic category. multi-outlet to bar enter years brand category IRI bars, dollar decade team and several across to the the members product the in XX I’m is market. with to in last nutrition we for develop snack over began third, our which to sales snack And worked The line back it across private announce size our grew JBSS consistently

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on The management for long-term strategic growth. plan team is focused company's the executing

is the at supply invest activity, and for there work There done, macro innovation future. chain, a resources but consumer and insights, more and manufacturing to time continue JBSS capabilities. retailer the be to trends, to business the competitive in alignment is to path on e-commerce, and $X strategies, billion We look direction become

A few mention. will highlights I

or OV brands example customers. Harvest as call our We to brand growth executing strategies in continuing are and Orchard by A invest we it. great is our Valley our

architecture, new consumer accessible, supports which marketing, food new purpose-led a goal and OVH to our to now and new larger with transformed Over campaign good insights Harvest products, new year, a fight the been more graphics, It is price Valley R&D, innovative our has approachable. make and the it marketing Orchard brand, relaunched appetizing past completely teams social brand. have insecurity. pack

whose to Alliance, with organization called established hunger an child is sales goes And mission tackling We've X% hunger. child OVH stop America. a of Conscious towards partnership across

country. pursuing the new details have I future. and across to distribution hard working forward in are sharing teams sales look actively the Our been more

to and retail important our capabilities success. We're segments partners. to more value partners the business invest to food continuing and food to are by private our growth new brand in company's strategies Both provide executing service safety these

the our snack is expansion plan. capabilities great a of growth significant bar The executing example category into its of long-range JBSS

now which a mentioned, new snack In and opportunities provides new the category we capability addition, customer And are as our in to well, cheese new entered snack have a snacking there portfolio. across cheese strategically, use mixes product ingredients as and I significant segment. base

are in investing strategies one our And executing by last we culture. people and comment, growth our our

team intentional our in workforce diversifying and across are creating leadership being organization. robust and a We inclusive the

in good in impact our on intentional where and and environment the improving stewards the being are being We live work. communities we

committee our a in the goals of for ESG I hard and proud establishing our work framework made am has plans. progress and

to mission joy, the real that planet. our people, living are protects food nourishes brings We create and

turn call the financial this cover to to I'd like performance. Frank our to over At time

Frank Pellegrino

pound, Starting a you, per quarter the price of The sales offset million, $XXX.X a increase defined net Thank weighted Jeffrey. decrease million the to fiscal statement, increased is to sold pound sales XX.X% which increase customers. with for average in for to income due X.X% second XXXX net second in compared of $XXX.X sales sales partially net of volume, in as XXXX. by quarter fiscal X.X% the was sales

decreased volume selling in for a to major nuts Harvest, Fisher Fisher X% and higher commodity for in consumer sales recipe volume nuts, XX.X% second pressures at sales price costs all and our pecans, and lost partially to dried in competitor grocery products due branded peanuts grocery and current branded retailer. tree primarily decreased volume distribution which store peanuts quarter. The volume volume another for Style products, Valley snack in nuts, sales distribution Sales at the pricing declined Southern decrease increase due Fisher two mainly for Sales X% weighted acquisition our retailers channel, The store Nuts. resulted snack Orchard fruit. the nuts, decrease in pecans, include except of the cashews, average from was to attributable

increase in by volume sales private X.X% sales in brand was a The volume partially decreased overall consumer sales. channel distribution the for offset

to and brand Sales in offset increased This bulk consumer manufacturers decrease channel products quarter in to customer fiscal private volume merchandising substantially service XX.X% due sales mass merchandiser was of reduced a New decreased business, softened food of distribution distribution ingredients customers decrease the our X.X% new spending. of at to existing volume grocery or consumption fourth in mass other from a private a with loss retailer XXXX. at the as due sales distribution partially peanut seasonal a volume in butter increase commercial result by customers. offset X.X% by that retailer, a brand food to occurred

this major due distribution volume Sales the primarily channel, to shipments customer of time channel. XX.X% in decreased packaging holiday contract earlier at in a

percentage to gross a remained consistent walnuts, profit depreciation margin and at increased manufacturing expense and physical acquisition profit for of almonds second net offset consistency sales in and a increases inflationary was as supplies, due decrease including labor of the The value. sales compared which XX.X% were margin cost lower gross quarter XXXX. cost in to Second quarter by

Gross partially base Total in loss the profit second offset net expense, compensation, in expenses sales increase by $X.X current quarter mainly advertising freight for higher base. on disposals due million increased $X.X million due or spend, a compensation. were decreased in operating X.X% decreases to which and and equity incentive asset an comparison to quarterly

base. for quarter to and quarter of net from noted XXXX, $XXX,XXX for Interest sales second second Total above decreased second operating net weighted for average current from reasons increased second the higher XX.X% primarily the XX.X% expense interest sales a current $XXX,XXX or quarter to quarter due last expenses fiscal for to the higher due rates.

second diluted $X.XX for fiscal per was per second share compared of or quarter $XX.X million XXXX quarter for XXXX. Net million a or $X.XX share fiscal of the to $XX.X income diluted

taking X.X% value end look at inventory this the compared quarter value to of $X.X total of Now, of fiscal the on at current hand hand or at of quarter end XXXX. on second a million decreased total the inventory, of inventory second the

hand due to the the the due cashews, pound tree quarter fiscal in all all materials, goods decrease for stock costs quantities commodity of and process, offset and lower stock quantities major partially for peanuts. dry average was costs XXXX per input nuts decreased by nuts. end tree lower working and to mainly cost value the was of and and major weighted fruit average higher the cost inventories finished raw weighted pound to acquisition second farmer of of of The The of lower per raw pecans, acquisition of compared quarter current on nut at end XX.X% at primarily

ingredients commercial fiscal of net weighted declines by XXXX. selling compared Moving by The sales in pound, to channel to contract $XXX.X in quarters decline of in on year-to-date first XX.X% packaging results. sales volume X.X% increased the offset first current for two to in offset sales increase year The X.X% volume primarily partially quarters two increase sales to in consumer average the attributable was per sales and was the the Net volume. price channels. increased million

Gross sales. nuts walnuts profit decrease profit cited commodity quarterly major depreciation in for to in all and margin was tree margin and costs the higher comparison decreased mainly Other attributable increased The peanuts. acquisition expense. to costs except increases net of X.X% inflationary XX.X% gross

for to-date which that Garysburg, to total million quarter of approximately $X.X mainly XXXX. year gain facility, first operating $XX.X in a to sale $X.X from current of Total due fiscal the North non-recurring in million was expenses expenses increased operating million. the period occurred increase The Carolina

in overall contributed and were In equity increase compensation addition, offset sales partially decreases freight to increases expense advertising spend and the in base and expense. expenses by but broker

two XXXX. performance Net regarding compared for the which first details or of $XX.X per per refer income fiscal of fiscal fiscal quarter was for or diluted additional Please diluted XXXX. $XX.X $X.XX to first second $X.XX share to share income quarters filed our of the net XX-Q, for quarters financial for two was million XXXX yesterday million of

Jeffrey XXXX to results the Now I'll discuss to call of second and comments the additional operating quarter for fiscal turn our provide category over in trends.

Jeffrey Sanfilippo

Frank. thanks Great,

some you brand the I’ll So for quarter. results with share and category

X, always, year I'll U.S. the quarter volume of IRi to January mass, look which definition, References for in today, military, QX, As includes XX other Walmart, IRi’s period it at are period XXXX. ago. the reported corresponding food, and weeks specified. on price referring to the X. and total information category unless the is January is changes We drug, I otherwise data, I'm or to be to versus ending the refer outlets ending one referring When market

pound. per produce discuss IRi. point term and price the the our Breakouts in refers conjunction the pricing, are are sales distribution. of to And when per to we average based segments snack of developed velocity custom And definitions recipe, on the referring with we

in nut trial the in the X% First, X% in dollars and and quarter. down volume last pound QX, pound was total up rate we saw this same mix is category

in and dollar improvement, trail grew while QX segments showed in volume recipe sales. slight While retail in dollars mix, all nuts pound to continued decline snack

year prior the Overall, the prices versus category increasing. up types X.X% all across with were almost by QX in nut

I better pound down The will This more of in each Starting was increase the cover segment. in recipe depth. X% up X% with in dollar last sales. any sales Prices largest is segment year, slightly were in Now versus nuts. segment Nut Recipe XX.X% than QX. performance nuts up we saw of recipe pricing and dollar

Our channels. by the X.X points successful performance displays, Velocity in XX% and mass including and season performance was the Fisher’s increased by Fisher and growing Fisher’s in by holiday had driven and and resulted and features grew pricing. holiday velocity strategies, dollars grocery remaining leader. X% share pounds. off-shelf brand in branded promotional was a growth driven distribution in focused dollar

head as into are We the New carry to we Year. excited momentum this

the price. to flat QX. in the down segment. Nut competitive promotional decline peanuts, we and brand, Snack saw is and sales. in snack and this the X.X% than dollar seeing segment in turn declined pressure. slightly let’s In pounds. significant in Fisher are increased This the down nuts largest Now type dollar pecan nut was and pound we within X.X% Most sales was On quarter X% nut in better slightly Nut in except down Snack macadamia types XX% QX, the pricing

value. focused continue consumers better velocities snacks We on And line this distribution look continue good we the at build line. in to as our for drive to see across and large to Fried use are sizes Oven Roasted Never for strong against results continuing a

Prices The Trail greater X% of were pounds. was up quarter. XX%, in up slightly dollars and down in the segment retail last QX in than Snack mixes Mix and X%

brands was and in food X% distribution Style continue and dollar Dollar Nut pounds, Private velocity declined up delivered in mix Our growth growth beating increased in drive X% trail XX% category. Southern growth category the driven by the dollars QX. in to channel. brand

QX. worse in last is slightly the than X% saw in Produce in and Our segment performance we Nuts dollars X% in pound declined QX. This volume

nut in produce in dollars offsetting Valley strong pound and declined sales, grocery the Orchard brand by mass, Our declines X% Harvest channel. performance in driven X% distribution in

this mass the new next products the and relaunch have should the several over brand market of and repositioning flow seeing started We start at into months.

we start our begin of of chain, with optimism downward modest product to tree the fiscal stabilization in in In excitement closing, and see journey XXXX and offerings. pressure of nuts half as diversify the second continuation costs to acquisition supply the our we

As continuously the current respond overcome and challenges, the to including strategies economic shareholder the deliver category team, we have always, operating we will continue contraction. to I and continue initiatives environment value. believe – challenges long-term these to and recent right and

well of future. to positioned and stronger to more business, the to our innovative continue Our management for build to build quality higher and levels expand all work team hard platforms JBSS in and service. stronger associates product is our brands, results to provide

participation And questions. We open appreciate the company. I in up now the our you interest in for call thank will your your call. for

Operator

Thank of please. the you. [Operator It Instructions] comes with Please [indiscernible] First UBS. proceed. from question, line

Unidentified Analyst

Hi. Frank. Hi, good Yes. in a job years morning, here. challenging Jeffrey And good couple and

You’ve past paying dividends. kind the I you head been wanted throw and quarters, in in job. how couple just ring a of little a I know few special know about here you you my the bit great done talk have allocation with haven’t guys it. question view a capital very consistent and had to so

But of quarter portfolio just context seems X.Xx credit your Just maybe of your are sales. want Hormel the in acquisition a of the allocation, about I share of And products potentially enough your context about the part capital portfolio. I you’ve giving you market it And what know of for like isn’t know Planters that thought about only private sales. or for branded in label purchases. to that the the

Jeffrey Sanfilippo

question. the for thanks So

we’ve we’ve brand been brands. last the realize investing We Over stronger years, portfolio. our a few really much building quite our in in got that margins

do much have over where launch, control we we more what brands, what we launch. We with the

brands. And capital our as as extremely in so continuing allocation is far important to invest

transformation brand, week. literally on the market I is the Harvest touched of relaunch and just this Orchard our hitting which Valley

portfolio how business is our partners with. see the really are is extremely believe our our brand talked strong important. piece so is And we partners we that very the component It of success, We’ve private biggest value key with still today. about we critical branded work like of and retail we

But to future. see within And a part turn, lot brand as in total a of portfolio brands, equity the to our a brand our as lot as which them opportunities. stronger our see in definitely our a can of brands of stronger we investment we continue and really a We sales. grow percent build build space of white in portfolio

our I returns think improvement some we’ll the of get investments. and in

Frank Pellegrino

shareholders, a your pretty as And volume mainly our return as far special way dividends buybacks, due we is our about low. to trading capital daily question share as prefer to to

and paying probably better dividends there, out shares more special return And price. and for the way capital. for a declaring it’s we our share to beneficial believe think dividends we our So is trading volume

Unidentified Analyst

sense. good That the future. And Great. luck in makes

Frank Pellegrino

Thank you.

Jeffrey Sanfilippo

you. Thank

Operator

don’t you. Instructions] I the will Thank conference in Jeffrey turn remarks. back Sanfilippo any questions [Operator to for All our his queue. the see closing CEO, right. further I

Jeffrey Sanfilippo

company the Great. you XXXX This to for fiscal Thank their your great day. for interest interest call. a concludes and thank our everyone QX in I JBSS. in want have

Operator

call. Thank disconnect. for And you with we you conclude may that, today’s conference now And participating.

Jeffrey Sanfilippo	Chief Executive Officer
Frank Pellegrino	Chief Financial Officer
Jasper Sanfilippo	Chief Operating Officer

John B. Sanfilippo & Son (JBSS) 2 Feb 232023 Q2 Earnings call transcript