JBSS - Earnings call 2 2024 | John B. Sanfilippo & Son, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son, Inc.

Second Quarter Fiscal 2024 Operating Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jeffrey Sanfilippo, CEO. ahead. go Please

Jeffrey Sanfilippo

Good second Victor. joining and to welcome Thank earnings morning, conference XXXX quarter for call. our you, everyone, Thank us. you

including and our we and forward-looking are various call XX-K is these that to with $XXX current are impact million Forms expectations more in the QX XX-Q. of me delivered results involve CFO. We explained to have filings the factors our Pellegrino, may XXXX. sales SEC million. certain that fiscal they risks refer in negatively business. Starting On net we based $XXX We encourage on previous risks sales you the make The This a record filings to today. statements with learn some made, and These quarter the record uncertainties. that overall statements our are in of about Frank corporate today performance, uncertainties could second and inherent beats

a increase volume Lakeville fiscal over the the business quarter quarter our recent $XX.X by for XX.X% or quarterly quarter approximately of results as very XX.X% This million financial significant the a and increased In impact includes addition, our represents net the was it strong Lakeville or second XX.X fiscal dilutive increased that second quarterly Lakeville earnings pounds we in 'XX per our which sales the million XX.X% of of 'XX. acquisition. The over quarter sales delivered of acquisition. includes share, first diluted company by

December, begun the snack at and internally complements million the integration sold nutrition approximately own bars the we bars, optimizing in have steps key the $X.X acquisition for also produced operations. We completed Lakeville Lakeville. Furthermore, facility's developed beginning of our which of

JBSS JBSS. proven their is of see team so less sacrifices growth we become dedication in I'm our a months. This we our all brands, M&A. billion is choice for $X it to the great we a complete for coming category management nutrition to major our months. track snack given in we first facility will than strategies last high-quality across hard space and omnichannel. capabilities that JBSS to we as latest visiting integration. I and executing private have team focused successfully position business the category integrate acquisition work, and plan proud like personal our business. enter year, the $X The businesses as growth company's can has become the in each excited plant, was value in future billion Lakeville of mentioned personally are The the product to on is are And the and long-term X company bench strategic manufacturing time service portfolio. The here at into leaders we integration white and to the to the section I member thank the customers our Lakeville positioned offerings. in grow And We of quality, snack from for would bar this confident have diversify our strong strength a further now, of for record execute creation transition partner retailer the brand build in to portfolio bar

commercial our want This ingredient quarter, I to highlight channel.

service growth. of While food important component is only net the for the channel approximately XX% represents an sales, our focus

food fiscal key both 'XX, which catalyst branded provided growth ingredient key the across JBSS operators. service mitigate noncommercial for include continues has to partnerships beginning in retail team been growth and points snacks and growth. Since over vending We food a Noncommercial XX,XXX Valley noncommercial over for been placed have to of growth. serve including support distribution, new the strategic and company. a noncommercial Orchard risk and pounds space as Fisher advance continuing And distributors service strategic outlets. back-of-house time. million of area has X.X items, and These Our the sales micro see Harvest partnerships branded supply sustained markets, retail of

strategies investing We executing culture. our growth people in our our and by are

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

work. a our intentional on corporate the We and improving proud communities are progress execute being goals our work to initiatives. we in environment and good live of responsibility the is impact where making stewards hard framework our being the for and in define am and team I

We our over that our will call fiscal quarter. now to are to joy, for financial planet. I Frank and living additional the real on create food mission provide performance our protects Pellegrino, CFO, to our the turn brings nurses information people second

Frank Pellegrino

of income Net sales acquisition. statement. second the net XXXX compared you, million of XXXX $XX.X fiscal the XXXX. Net X.X% million to for sales million Starting include second of Lakeville of with net from increased for second fiscal $XXX.X the to quarter fiscal approximately sales quarter sales Thank Jeffrey. of quarter for $XXX.X

sales acquisition, Lakeville nuts sales the for to which the X.X%. The and combined sales declined is as customers. Sales defined in in net net million lower the selling peanuts. nuts, weighted sold Excluding pound, higher due value whose commodity is commodity in by per a volume, major peanuts was in weighted channel, decrease bars. due in sales The with to $XX.X primarily decrease pounds XX.X% price costs average average all private to volume major costs which resulted consumer decrease acquisition, decreased almost decrease tree Sales volume in acquisition distribution treat offset the partially brand was X.X% for sales a primarily or increased most quarter. second Lakeville from acquisition current X.X% exclusively price the for

in due and increased store at less for for which Valley programs due mass decreases Lakeville which grocery merchandising of XX.X% Fisher soft reduced Orchard Southern distribution to products a was the Fisher sector. Private and volume for a nuts to to XX.X% branded activity consumer demand decreased customer sales volume decrease our attributable volume sales primarily volume above XX.X% a and customer. distribution and consumer by the sales acquisition, recipe retailers. Sales partially mainly sales impact The across Harvest volume channel increased nuts, Nuts major branded in Valley club the channel, Nuts. The the increase in to decreased XX.X% XX.X% due retailers snack a for non-food decrease in to Style due due the distribution distribution include Style grocery the sales a mainly promotional Harvest, was our Lakeville to nuts, at consumer X.X% decrease were for recipe acquisition. branded several volume merchandising Excluding sales volume in brand Fisher in Orchard at offset by products, Southern

seasonal Excluding X.X% sales, at in merchandising consumer a Lakeville a soft acquisition, was along private there demand retailer at the retailer. brand mass with to fewer decrease again, merchandising another items mass due a partially ingredients These in by to channel X.X% due distribution with the acquisition. increased sale were decreases the of increased seasonal offset volume Lakeville commercial at associated retailer. Sales items grocery onetime a

Excluding at a fewer due to distribution customer. in Sales volume the sales reduced pricing distributor activity increase another food X.X% channel, at major competitive existing customers. acquisition, at peanut a customer several items, sales due contract Lakeville by This packaging industrial service increased volume food was increased the seasonal item and to X.X% decreased and pressures. to primarily to promotional volume discontinuance decreased due service offset butter partially

of to quarter million, profit Second by as for net expenses. sales a the profit second X.X% XX.X% fiscal or impacted which gross to the million were XX.X% in mainly XXXX. approximately decreased profit percentage of $X.X of acquisition, which The margin due compared margin negatively quarter was onetime to gross decrease Lakeville gross $X.X

approximately XXX and mainly profit to Excluding major due $X.X the Lakeville lower increased by noncompliant inventory. Gross increased basis increased to efficiencies acquisition, mix points, million product margin manufacturing improved for acquisition or tree and reduced base. X.X%, net costs a sales gross commodity higher profit due nuts, mainly most

gain due profit gross million for Excluding million the second approximately profit operating Lakeville -- $X.X current margin gross decreased the X.X% acquisition, the second reasons quarterly to $X.X quarter cited for to in increased by onetime the expenses same increase. Total million approximately for with or expenses bargain acquisition. partially acquisition, mainly onetime operating $X.X $X.X This a in was offset the million with were $XXX,XXX the which comparison, due decrease Lakeville of purchase expenses. Lakeville associated associated

decreased to charitable in noted quarter expenses of net acquisition. to sales and due base XX.X% increases last offset spend, decreased total from mainly current freight Lakeville incentive year's and above second advertising XX.X% which partially reasons acquisition, Lakeville expenses food second by the donations net decreases $XXX,XXX, higher compensation, insurance the for Total from due and the to sales Excluding due a in to was quarter operating operating expense.

second second the to the due of $X.X fiscal average or due of quarter for of acquisition operating of impact per diluted acquisition, of to to million Lakeville fiscal interest for share the XX.X% higher for rates. Lakeville average million percentage per share sales slightly higher second the a was XXXX. and net second Net expenses to $X.XX the $XX.X weighted as XXXX, fiscal increased quarter total $XXX,XXX the from from XX.X%. Interest for levels expense $X.XX $XX.X increased or to quarter current primarily debt Excluding the diluted million compared XXXX income quarter

the end value Now on hand at to increase on at end quarter mainly the XX% with million the $XX.X of $XX.X inventories of associated current due The second inventory. fiscal The second inventories total look of hand million taking acquisition. or at to the increased value the was quarter the of total of a compared of XXXX. inventory Lakeville the

and million value hand walnuts. Excluding inventories almonds on peanuts to commodity pecans value of higher The in of and $XX and acquisition, offset year-over-year. due and raw was higher of lower or quantities and lower cashews, primarily the work-in-process, acquisition acquisitions decreased decrease for for by costs commodity materials qualities quantities Lakeville total of lower the inventories partially on-hand walnuts X.X% costs and

Lakeville stock cost decreased hand dry pound of was the end and nut end of due Excluding mainly the quarter fruit the average current the and compared second of previously. weighted to XXXX per input average the of pound weighted fiscal cost of mentioned reasons to at acquisition, X.X% the impact raw the per quarter at the on

sales Moving on to current million by quarters for the X of XXXX. quarters $XXX.X decreased X first the to first of year-to-date X.X% results. to compared year Net fiscal

X.X% the $XXX.X decrease selling in sales, volume weighted attributable and excluding net Excluding decrease decreased to sales price million. sales of in a decline average was X.X% X.X%. volume Lakeville, Lakeville per to the X.X% increased in a The impact the net primarily pound. Sales acquisition,

net due which today will for sales volume be were attributable the or food X.X% million increase gross margin operating diluted of fiscal for and or income first associated expense, channels. Gross quarter consumer lower for packaging profit acquisition net Lakeville per fiscal X.X% XXXX. sales freight increases acquisition, regarding bargain mainly was for to commodity of performance and $XX.X decreased previously the costs of acquisition in the The increased contract profit to $X.XX margin XXXX Excluding details in to to fiscal impact XXXX. incremental to sales. gain $XX.X volume quarters with peanuts per million share decrease previously. Total primarily Please current donations. total charitable offset filed million. The income cited quarters and Lakeville of acquisition, purchase for later X onetime the commodities, of the except all share noted due additional of year-to-date XX-Q, was compared was a by major X increases to tree the $X.X and period mainly decrease as increased to expenses was diluted expense. Net first for impact expenses Lakeville refer $X.XX offset our $XX.X of in in the in by expenses increase nut financial second advertising the million operating our partially operating XX.X% These

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

Jeffrey Sanfilippo

the Thanks, financial Frank, for updates.

category characterized retail give We results for consumers. I'll continue challenging to for market prices brand operating a second the and by the a take some to and sale total time quarter. navigate now first cautious -- elevated you

on in to military for XXXX. As the 'XX. References period period XX, the at quarter to When price QX, and consumer continue I'll of mass, outlets. aisle the market point corresponding the refer in ending by shift we Circana the Walmart, pricing, distribution. December year trail otherwise for XX we broader with always, definition, and reported category just on we ago. see per in includes to average X snack ending to as are of December and versus total which U.S. pound. Breakouts in nut a term in quarter, when look changes Circana Circana. referring I'm to saw Unless I categories, food, based defined the Circana's referring volume information but today, recipe, discuss is and definitions price the other In the behavior are developed and the is sales weeks XX, the snack to latest specified are -- custom per not be referring velocity it or produce data, We drug, to in our refers conjunction and

This are QX. offset tighten consumers loan We across the down This prices. COVID by The across stubbornly trail is relatively high dollars uncertainty no response X.X% price in increases X% budgets the volume dollar versus last in volume nut X.X% and per economic ending flat prior to decline category a and their from down volume moderated X.X% QX. declined decline Overall prices is pound behavior. future total saw category seeing and growth was in pound quarter. a student entire have aisle in is the year. volume snack aisle down in The what longer as declines, and we a flat in SNAP snack and versus in dollars impacting X.X% price QX. rate mix ear in consumer food and was benefits with

have high. X-year a prices still stabilized, close the per While pound to price is

cover recipe me QX. decline pound more let down and performance down saw X.X% dollar in in each nuts what nuts. were depth, versus Recipe a sales starting we in is Now in segment X.X% with This sales. in

meal to even of the either very driven consumers versus planning. by shift dollars choose we During entry large walnuts nuts a during their year are This pack we Prices holiday value sizes. saw is holiday X% were season, pack smaller or pecans. down and recipe seeing look common as last sizes stretch consumers

on in brand promotional QX the promotions. to we XX% customer. declined brand XX% customer consumers and declined of dollars engage and are Fisher pounds. ways X the we and pack growth space a nut leader, major Our after still in working right brand price is the years programs as major almost with in grocery and The lost recipe consistent at actively Fisher and architecture promotional mass

X% snack I'll saw category. down QX, In stabilize nut Pricing and is Now continued to in the consistent turn pounds. performance the in dollar were with in we X% sales in the to snack nuts QX. This snack worse mass food. in category distribution velocity relatively performed pounds. down than with prices flat. combined in be in with a significant continues loss category, the This in by Fisher XX% and snack to the channel, dollars XX% softness driven down

find up optimize better our in to X% between X% pricing down to continuing snacks label performing X% the Private and snack we mixes than are slightly worse the strategy right We and in performance balance mix performance. pounds. Trail the and dollars dollars Prices were quarter. are down the than promotional slightly in and pounds of were category, down last QX. only than X% in slightly down saw X% less trail QX, in in

Style by and entirely Southern pounds. Our XX% channel. brand in the club dollars driven Nut Declines were in lost declined XX% in distribution

in trail pounds. the in category, X% in brand share dollars in leader down continues mixes and Brands, worse in mass. the grow X% performed the Private to However, slightly

and declined sales Lastly, in we than QX, in volume nuts X% in saw X% produce worse in pound performance the slightly QX. dollar

in Harvest Orchard and in growth food pounds. brand, nut sales X% by mass XX% is at dollar note, brand produce channel, dollars retailer. sales, XX% and On XX% declines Valley in the significant a in seeing pound driven the growing positive Our in a distribution declined

at We retail. our trial are continuing and of to drive new awareness products and packaging

and to In to snack on categories, given addition category we recent begin nut acquisition. bar trail the our will reporting report on the mix

of ending same for XXXX. we as will weeks XX label report bars snack December the private and XX, the quarter, category by defined performance this bar For Circana snack high-level

right the more with we reporting come We are X.X% bars working and X.X%. pricing X% a X.X%. Snack so of view up calls. In label continue total and segmentation increased category, in X% Private were in continue QX. points can this and bars for rose in grow dollars, more declined in while in defining distribution, up future in category by to stores, Private X.X% performance bar bar picking pounds detailed of expand pounds. QX, to actively in snack dollars on label up prices XX.X% the

the in categories. In closing, category. the as continue our in label and of see At are in fiscal optimism with to half nutrition the we categories headwinds facing the same product positive expand time, snack consumption. and second snack We momentum private start 'XX with bar we offerings bar the nut snack cautious trail declining

and Our entice back hard pack sales efficient price determine and the to working architecture to marketing teams expand sales distribution turn the to category consumers are around and velocity. most

are and a bring to continue chain and and insights our supply designing to look administration optimize operations, R&D, to to and Our And improvement to products services market. of innovative our pipeline teams ways differentiated at teams tech reduce continuous costs. manufacturing procurement,

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

results associates the Our thank well to the all build service. JBSS call, to our you stronger innovative build more management quality team positioned and appreciate We is expand and to for to in levels to participation higher of business and the provide strong our company. your work in product future. your for in brands, platforms interest continue hard and

the now will We questions. to Victor, first the question. call open queue up

Operator

come [Operator Nick CWB the Instructions] from Our Otton line will question first of from Wealth.

Nick Otton

it I did in is core like about $X.XX sustainable. looks And wondering business operating the this that nuts a the in was pound quarter, of Just profit.

Frank Pellegrino

at sure you number. with look up come how do I'm number. not to have Nick, I that that

Nick Otton

the just core nut Lakeville, about I'll like without business. just removing everything

Frank Pellegrino

me. records. I That Go that Yes. to think don't it's low low. our seems to a back little bit

Nick Otton

$X.XX. . operating, sorry. meant EBIT, $X.XX a just like on gross EBITDA profit, or not like mean or it's I I

Frank Pellegrino

Yes.

that I yes, think. make does sense. With clarification, No. that

we switching you As know, commodity acquisition cycle. are

again, So QX and our QX. reset in prices

pound, you per $X.XX consistent if maintaining pound. which is operating pound income go back per to So based should operating income in per high be historical averages, that historical low XXs, we on

Nick Otton

general. for sounds it industry, it just in like then shrinking the And was

to pull back on activity? So plans promotional has their

Frank Pellegrino

They've reallocated their from promotions peanut platform.

Now on their they're cashew more platform. focusing

share just some category. to aggressive they've still of but very their spending, the build they're investment So shifted in

Operator

from line next question come James Global the will Management. Lance of Asset Our from RBC

Lance James

the quarter. on Congratulations

either takeaways been in what early your from on. the wondering anything negative you've early acquisition, Any Just or about so positive surprises surprised far on. Lakeville direction

Jeffrey Sanfilippo

has at the at in is the and there believe a looking out personnel looking what structure operation. the So right done drive great forward that operation, the costs job of team optimizing we to going

I think the increase margin on in opportunities we're pleasantly facility. profile surprised the that to

team is turning around the working hard so that And extremely on fast.

I other and that think a lot samples partners. is and retail opportunity facility had of the a We've that feedback that, from customer the sent our of produces. facility discussions quality lot from positive

and volume in pretty So very that facility growth about the optimistic we're building quickly.

Lance James

other over consistent extensive short-term line the question for any you've positive negative in customer Would that And in demographic with different either data nuts done your the a there cetera, studies base is, or Great. done? is that groups. would with have on there are snacks, demand or and you et you I recent direction? have Or say and studies surprises

Jeffrey Sanfilippo

Sure.

We some the leave studies the to actually X-year first or a we're completely. retail it's of We surprised overall, highs, bit trail on shift recession little and is trail at mix mix. we nut a It's peanuts are the snack same continue snack leave cheaper obviously, prices expensive we tight seeing price we mix. of trail times We're nuts, trail category. category them Typically, mixes. inflation the see And for surprising. At at So consumer. least behavior. product seeing during just we're at and economics, consumers down the pecans We're at which category in the cashews, in seen see time, and not the we've one nuts to declines on little consumer from bit look a and portfolios. looking consumers points, do mix look at

make to we So on right that them back some important, category. that's retail for is consumers prices different get price bring focused understand sense and now the so and point into is we're architecture -- are what

Lance James

Terrific. a Again, it congratulations for questions. on that's quarter and solid my

Operator

[Operator call further questions. Instructions] showing to turn the any over for And back I'm Jeffrey closing I'll remarks. any not

Jeffrey Sanfilippo

the We the have Thank Thank our third second This fiscal appreciate call you, and you JBSS. very of much, your 'XX. our to appreciate for questions quarter in quarter We forward a and great interest Victor. look day. results. concludes

Operator

the program. you. Thank today's your conference. you conclude Thank participation in for This does

may You great a day. have Everyone, now disconnect.

John B. Sanfilippo & Son (JBSS) 1 Feb 242024 Q2 Earnings call transcript