SANFILIPPO JOHN B & SON INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark one)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
December 23, 2021
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number
0-19681
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading
Symbol
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Name of Each Exchange
on Which Registered
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(NASDAQ Global Select Market)
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Yes
☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
Yes
☐ No
S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act. (Check One)
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☒ | Accelerated filer | ☐ | |||
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Non-accelerated
filer
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☐ | Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
☒
No
12b-2
of the Exchange Act). ☐ Yes
As of January 21, 2022,
8,928,322
shares of the Registrant’s Common Stock, $0.01 par value per share and
2,597,426
shares of the Registrant’s Class A Common Stock, $0.01 par value per share, were outstanding.
JOHN B. SANFILIPPO & SON, INC.
FORM
10-Q
FOR THE QUARTER ENDED DECEMBER 23, 2021
INDEX
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Page
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4
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6
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7
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18
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29
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29
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29
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29
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29
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33
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except share and per share amounts)
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For the Quarter Ended
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For the
Twenty-six
Weeks
Ended |
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December 23,
2021
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December 24,
2020
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December 23,
2021 |
December 24,
2020
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Net sales
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$ |
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$ |
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$ |
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$ |
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Cost of sales
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Gross profit
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Operating expenses:
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Selling expenses
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Administrative expenses
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Gain on sale of facility, net
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(
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Total operating expenses
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Income from operations
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Other expense:
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Interest expense including $
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Rental and miscellaneous expense, net
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Other expense
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Total other expense, net
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Income before income taxes
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Income tax expense
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Net income
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income:
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Amortization of prior service cost and actuarial loss included in net periodic pension cost
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Income tax expense related to pension adjustments
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(
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(
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(
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(
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Other comprehensive income, net of tax
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Comprehensive income
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$ |
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$ |
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$ |
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$ |
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Net income per common share-basic
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$ |
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$ |
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$ |
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$ |
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Net income per common share-diluted
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$ |
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$ |
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$ |
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$ |
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The accompanying unaudited notes are an integral part of these consolidated financial statements.
3
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share amounts)
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December 23,
2021
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June 24,
2021
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December 24,
2020
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ASSETS
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CURRENT ASSETS:
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Cash
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$ |
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$ |
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$ |
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Accounts receivable, less allowance for doubtful accounts of $
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Inventories
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Prepaid expenses and other current assets
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Assets held for sale
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TOTAL CURRENT ASSETS
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PROPERTY, PLANT AND EQUIPMENT:
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Land
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Buildings
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Machinery and equipment
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Furniture and leasehold improvements
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Vehicles
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Construction in progress
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Less: Accumulated depreciation
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Rental investment property, less accumulated depreciation of $
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TOTAL PROPERTY, PLANT AND EQUIPMENT
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Intangible assets, net
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Cash surrender value of officers’ life insurance and other assets
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Deferred income taxes
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Goodwill
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Operating lease
right-of-use
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TOTAL ASSETS
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$ |
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$ |
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$ |
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The accompanying unaudited notes are an integral part of these consolidated financial statements.
4
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share amounts)
|
December 23,
2021
|
June 24,
2021
|
December 24,
2020
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LIABILITIES & STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES:
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Revolving credit facility borrowings
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$ |
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$ |
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$ |
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Current maturities of long-term debt, including related party debt of $
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Accounts payable
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Bank overdraft
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Accrued payroll and related benefits
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Other accrued expenses
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Income taxes payable
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TOTAL CURRENT LIABILITIES
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LONG-TERM LIABILITIES:
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Long-term debt, less current maturities, including related party debt of $
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Retirement plan
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Long-term operating lease liabilities, net of current portion
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Other
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TOTAL LONG-TERM LIABILITIES
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TOTAL LIABILITIES
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS’ EQUITY:
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Class A Common Stock, convertible to Common Stock on a per share basis, cumulative voting rights of ten votes per share, $
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Common Stock,
non-cumulative
voting rights of one vote per share, $
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Capital in excess of par value
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Retained earnings
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Accumulated other comprehensive loss
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(
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(
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(
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Treasury stock, at cost;
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(
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(
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(
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TOTAL STOCKHOLDERS’ EQUITY
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TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
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$ |
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$ |
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$ |
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The accompanying unaudited notes are an integral part of these consolidated financial statements.
5
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands, except share and per share amounts)
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Class A Common
Stock |
Common Stock
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Capital in
Excess of Par Value |
Retained
Earnings |
Accumulated
Other Comprehensive Loss |
Treasury
Stock |
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Shares
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Amount
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Shares
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Amount
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Total
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Balance, June 24, 2021
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$ |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
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Net income
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Cash dividends ($
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(
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(
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Pension liability amortization, net of income tax expense of $
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Equity award exercises , net of shares withheld for employee taxes
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(
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(
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Stock-based compensation expense
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Balance, September 23, 2021
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$ |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
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Net income
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Pension liability amortization, net of income tax expense of $
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Equity award exercises, net of shares withheld for employee taxes
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(
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(
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Stock-based compensation expense
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Balance, December 23, 2021
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$ |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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Class A Common
Stock |
Common Stock
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Capital in
Excess of Par Value |
Retained
Earnings |
Accumulated
Other Comprehensive Loss |
Treasury
Stock |
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Shares
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Amount
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Shares
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Amount
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Total
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Balance, June 25, 2020
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$ |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
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Net income
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Cash dividends ($
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(
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) |
(
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) | ||||||||||||||||||||||||||||||||
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Pension liability amortization, net of income tax expense of $
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Equity award exercises
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Stock-based compensation expense
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Balance, September 24, 2020
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$ |
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$ |
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$ |
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$ |
|
$ |
(
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) | $ |
(
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) | $ |
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Net income
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Pension liability amortization, net of income tax expense of $
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Equity award exercises , net of shares withheld for employee taxes
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(
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(
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) | ||||||||||||||||||||||||||||||
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Stock-based compensation expense
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Balance, December 24, 2020
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$ |
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$ |
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$ |
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$ |
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$ |
(
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) | $ |
(
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) | $ |
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The accompanying unaudited notes are an integral part of these consolidated financial statements.
6
JOHN B. SANFILIPPO & SON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
|
For the Twenty-six Weeks Ended
|
||||||||
|
December 23,
2021 |
December 24,
2020 |
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
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|
Net income
|
$ |
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$ |
|
||||
|
Depreciation and amortization
|
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Gain on disposition of assets, net
|
(
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) |
(
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) | ||||
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Deferred income tax expense (benefit)
|
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(
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) | |||||
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Stock-based compensation expense
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|
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Change in assets and liabilities:
|
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|
Accounts receivable, net
|
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(
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) | |||||
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Inventories
|
(
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) |
|
|||||
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Prepaid expenses and other current assets
|
(
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) |
(
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) | ||||
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Accounts payable
|
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|
||||||
|
Accrued expenses
|
(
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) |
(
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) | ||||
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Income taxes payable
|
(
|
) |
|
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Other long-term assets and liabilities
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Other, net
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||||||
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|||||
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Net cash provided by operating activities
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CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchases of property, plant and equipment
|
(
|
) |
(
|
) | ||||
|
Proceeds from dispositions of assets, net
|
|
|
||||||
|
Other
|
(
|
) |
|
|||||
|
|
|
|
|
|||||
|
Net cash used in investing activities
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Net short-term borrowings (repayments)
|
|
(
|
) | |||||
|
Principal payments on long-term debt
|
(
|
) |
(
|
) | ||||
|
Increase (decrease) in bank overdraft
|
|
(
|
) | |||||
|
Dividends paid
|
(
|
) |
(
|
) | ||||
|
Taxes paid related to net share settlement of equity awards
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
Net cash used in financing activities
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
NET INCREASE IN CASH
|
|
|
||||||
|
Cash, beginning of period
|
|
|
||||||
|
|
|
|
|
|||||
|
Cash, end of period
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
The accompanying unaudited notes are an integral part of these consolidated financial statements.
7
JOHN B. SANFILIPPO & SON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except where noted and per share data)
Note 1 – Basis of Presentation and Description of Business
As used herein, unless the context otherwise indicates, the terms “we”, “us”, “our” or “Company” collectively refer to John B. Sanfilippo & Son, Inc. and our wholly-owned subsidiary, JBSS Ventures, LLC. Our fiscal year ends on the final Thursday of June each year, and typically consists of
fifty-two
weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:
| • |
References herein to fiscal 2022 and fiscal 2021 are to the 53 week fiscal year ending June 30, 2022 and the 52 week fiscal year ended June 24, 2021, respectively.
|
| • |
References herein to the second quarter of fiscal 2022 and fiscal 2021 are to the quarters ended December 23, 2021 and December 24, 2020, respectively.
|
| • |
References herein to the first half or first
twenty-six
weeks of fiscal 2022 and fiscal 2021 are to the
twenty-six
weeks ended December 23, 2021 and December 24, 2020, respectively.
|
We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds, and other nuts in the United States. These nuts are sold under our
and
brand names and under a variety of private brands. We also market and distribute, and in most cases, manufacture or process, a diverse product line of food and snack products, including peanut butter, almond butter, cashew butter, candy and confections, snack and trail mixes, snack bites, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks and other sesame snack products under our brand names and under private brands. Our products are sold through
three
primary distribution channels, including food retailers in the consumer channel, commercial ingredient users and contract packaging customers.
Fisher, Orchard Valley Harvest,
Squirrel Brand, Southern Style Nuts
Sunshine Country
The accompanying unaudited financial statements fairly present the consolidated statements of comprehensive income, consolidated balance sheets, consolidated statements of stockholders’ equity and consolidated statements of cash flows, and reflect all adjustments, consisting only of normal recurring adjustments which are necessary for the fair statement of the results of the interim periods. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
The interim results of operations are not necessarily indicative of the results to be expected for a full year. The balance sheet data as of June 24, 2021 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, these unaudited financial statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2021 Annual Report on Form
10-K
for the fiscal year ended June 24, 2021.
Note 2 – Revenue Recognition
We recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. For each customer contract, a five-step process is followed in which we identify the contract, identify performance obligations, determine the transaction price, allocate the contract transaction price to the performance obligations, and recognize the revenue when (or as) the performance obligation is transferred to the customer.
When Performance Obligations Are Satisfied
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are primarily for the delivery of raw and processed recipe and snack nuts, nut butters and trail mixes.
8
Our customer contracts do not include more than
one
performance obligation. If a contract were to contain more than
one
performance obligation, we are required to allocate the contract’s transaction price to each performance obligation based on its relative standalone selling price. The standalone selling price for each distinct good is generally determined by directly observable data.
Revenue recognition is generally completed at a point in time when product control is transferred to the customer. For virtually all of our revenues, control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms, as the customer can then direct the use and obtain substantially all of the remaining benefits from the asset at that point in time. Therefore, the timing of our revenue recognition requires little judgment.
Variable Consideration
Some of our products are sold through specific incentive programs consisting of promotional allowances, volume and customer rebates,
in-store
display incentives and marketing allowances, among others, to consumer and some commercial ingredient customers. The ultimate cost of these programs is dependent on certain factors such as actual purchase volumes or customer activities and is dependent on significant management judgment when determining estimates. The Company accounts for these programs as variable consideration and recognizes a reduction in revenue (and a corresponding reduction in the transaction price) in the same period as the underlying program based upon the terms of the specific arrangements.
Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons, are also offered through various programs to customers and consumers. A provision for estimated trade promotions is recorded as a reduction of revenue (and a reduction in the transaction price) in the same period when the sale is recognized. Revenues are also recorded net of expected customer deductions which are provided for based upon past experiences. Evaluating these estimates requires management judgment.
We generally use the most likely amount method to determine the variable consideration. We believe there will not be significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. The Company reviews and updates its estimates and related accruals of variable consideration and trade promotions at least quarterly based on the terms of the agreements and historical experience. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe, therefore, no additional constraint on the variable consideration is required.
Contract Balances
Contract assets or liabilities result from transactions with revenue recorded over time. If the measure of remaining rights exceeds the measure of the remaining performance obligations the Company records a contract asset. Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, the Company records a contract liability. The contract asset balance at June 24, 2021 was $
74
and was recorded in the caption “Prepaid expenses and other current assets” on the Consolidated Balance Sheets. There was
no
contract asset balance for the other periods presented. The Company generally does not have material deferred revenue or contract liability balances arising from transactions with customers.
Disaggregation of Revenue
Revenue disaggregated by sales channel is as follows:
|
For the Quarter Ended
|
For the Twenty-six Weeks Ended
|
|||||||||||||||
|
Distribution Channel
|
December 23,
2021
|
December 24,
2020
|
December 23,
2021
|
December 24,
2020
|
||||||||||||
|
Consumer
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Commercial Ingredients
|
|
|
|
|
||||||||||||
|
Contract Packaging
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
9
Note 3 – Leases
Description of Leases
We lease equipment used in the transportation of goods in our warehouses, as well as a limited number of automobiles and a small warehouse near our Bainbridge, Georgia facility. Our leases generally do not contain
non-lease
components and do not contain any explicit guarantees of residual value. Our leases for warehouse transportation equipment generally require the equipment to be returned to the lessor in good working order.
We determine if an arrangement is a lease at inception and analyze the lease to determine if it is operating or finance. Operating lease
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease
assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Implicit rates are used when readily determinable. None of our leases currently contain options to extend the term. In the event of an option to extend the term of a lease, the lease term used in measuring the liability would include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the respective lease term. Our leases have remaining terms of up to
4.8
years.
right-of-use
right-of-use
It is our accounting policy to not apply lease recognition requirements to short term leases, defined as leases with an initial term of 12 months or less. As such, leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheet. We have also made the policy election to not separate lease and
non-lease
components for all leases.
The following table provides supplemental information related to operating lease
assets and liabilities:
right-of-use
|
December 23,
2021
|
June 24,
2021
|
December 24,
2020
|
Affected Line Item in
Consolidated Balance Sheet |
|||||||||||
|
Assets
|
||||||||||||||
|
Operating lease
right-of-use
|
$ |
|
$ |
|
$ |
|
Operating lease right-of-use assets
|
|||||||
|
|
|
|
|
|
|
|||||||||
|
Total lease
right-of-use
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|||||||||
|
Liabilities
|
||||||||||||||
|
Current:
|
||||||||||||||
|
Operating leases
|
$ |
|
$ |
|
$ |
|
Other accrued expenses
|
|||||||
|
Noncurrent:
|
||||||||||||||
|
Operating leases
|
|
|
|
Long-term operating lease liabilities
|
||||||||||
|
|
|
|
|
|
|
|||||||||
|
Total lease liabilities
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|||||||||
The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:
|
For the Quarter Ended
|
For the Twenty-six Weeks Ended
|
|||||||||||||||
|
December 23,
2021
|
December 24,
2020
|
December 23,
2021 |
December 24,
2020
|
|||||||||||||
|
Operating lease costs
(a)
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Variable lease costs
(b)
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total Lease Cost
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
(a)
|
Includes short-term leases which are immaterial.
|
|
(b)
|
Variable lease costs consist of sales tax.
|
10
Supplemental cash flow and other information related to leases was as follows:
|
For the Twenty-six Weeks Ended
|
||||||||
|
December 23,
2021 |
December 24,
2020 |
|||||||
|
Operating cash flows information:
|
||||||||
|
Cash paid for amounts included in measurements for lease liabilities
|
$ |
|
$ |
|
||||
|
Non-cash
activity:
|
||||||||
|
Right-of-use assets obtained in exchange for new operating lease obligations
|
$ |
|
$ |
|
||||
|
December 23,
2021 |
June 24,
2021
|
December 24,
2020 |
||||||||||
|
Weighted Average Remaining Lease Term (in years)
|
|
|
|
|||||||||
|
Weighted Average Discount Rate
|
|
% |
|
% |
|
% | ||||||
Maturities of operating lease liabilities as of December 23, 2021 are as follows:
|
Fiscal year ending
|
||||
|
June 30, 2022 (excluding the
twenty-six
weeks ended December 23, 2021)
|
$ |
|
||
|
June 29, 2023
|
|
|||
|
June 27, 2024
|
|
|||
|
June 26, 2025
|
|
|||
|
June 25, 2026
|
|
|||
|
June 24, 2027
|
|
|||
|
Thereafter
|
|
|||
|
|
|
|||
|
Total lease payment
|
|
|||
|
Less imputed interest
|
(
|
) | ||
|
|
|
|||
|
Present value of operating lease liabilities
|
$ |
|
||
|
|
|
Lessor Accounting
We lease office space in our four-story office building located in Elgin, Illinois. As a lessor, we retain substantially all of the risks and benefits of ownership of the investment property and under Topic 842 we continue to account for all of our leases as operating leases. Lease agreements may include options to renew. We accrue fixed lease income on a
straight-line
basis over the terms of the leases. There is generally no variable lease consideration and an immaterial amount of
non-lease
components such as recurring utility and storage fees. Leases between related parties are immaterial.
Leasing revenue is as follows:
|
For the Quarter ended
|
For the Twenty-six weeks ended
|
|||||||||||||||
|
December 23,
2021 |
December 24,
2020 |
December 23,
2021 |
December 24,
2020 |
|||||||||||||
|
Lease income related to lease payments
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
11
The future minimum, undiscounted fixed cash flows under
non-cancelable
tenant operating leases for each of the next five years and thereafter is presented below.
|
Fiscal year ending
|
||||
|
June 30, 2022 (excluding the
twenty-six
weeks ended December 23, 2021)
|
$ |
|
||
|
June 29, 2023
|
|
|||
|
June 27, 2024
|
|
|||
|
June 26, 2025
|
|
|||
|
June 25, 2026
|
|
|||
|
June 24, 2027
|
|
|||
|
Thereafter
|
|
|||
|
|
|
|||
| $ |
|
Note 4 – Inventories
Inventories consist of the following:
|
December 23,
2021
|
June 24,
2021
|
December 24,
2020
|
||||||||||
|
Raw material and supplies
|
$ |
|
$ |
|
$ |
|
||||||
|
Work-in-process
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|||||||
|
Total
|
$ |
|
$ |
|
$ |
|
||||||
|
|
|
|
|
|
|
|||||||
Note 5 – Goodwill and Intangible Assets
Identifiable intangible assets that are subject to amortization consist of the following:
|
December 23,
2021 |
June 24,
2021
|
December 24,
2020 |
||||||||||
|
Customer relationships
|
$ |
|
$ |
|
$ |
|
||||||
|
Brand names
|
|
|
|
|||||||||
|
Non-compete
agreement
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|||||||
|
|
|
|
||||||||||
|
Less accumulated amortization:
|
||||||||||||
|
Customer relationships
|
(
|
) |
(
|
) |
(
|
) | ||||||
|
Brand names
|
(
|
) |
(
|
) |
(
|
) | ||||||
|
Non-compete
agreement
|
(
|
) |
(
|
) |
(
|
) | ||||||
|
|
|
|
|
|
|
|||||||
|
(
|
) |
(
|
) |
(
|
) | |||||||
|
|
|
|
|
|
|
|||||||
|
Net intangible assets
|
$ |
|
$ |
|
$ |
|
||||||
|
|
|
|
|
|
|
|||||||
Customer relationships are being amortized on an accelerated basis. The brand names remaining to be amortized consist of the
and
brand names.
Squirrel Brand
Southern Style Nuts
Total amortization expense related to intangible assets, which is a component of “Administrative expenses” on the Consolidated Statements of Comprehensive Income, was $
504
and $
1,008
for the quarter and
888
and
expected amortization expense the next five fiscal years is as follows:
twenty-six
weeks ended December 23, 2021, respectively. Amortization expense for the remainder of fiscal 2022 is expected to be approximately $
|
Fiscal year ending
|
||||
|
June 29, 2023
|
$ |
|
||
|
June 27, 2024
|
|
|||
|
June 26, 2025
|
|
|||
|
June 25, 2026
|
|
|||
|
June 24, 2027
|
|
|||
Our net goodwill of $
9,650
relates entirely to the Squirrel Brand acquisition completed in the second quarter of fiscal 2018. There was no change in the carrying amount of goodwill during the
twenty-six
weeks ended December 23, 2021.
12
Note 6 – Credit Facility
Our Amended and Restated Credit Agreement dated March 5, 2020 provides for a $
117,500
senior secured revolving credit facility (the “Credit Facility”). The Credit Facility is secured by substantially all our assets other than machinery and equipment, real property and fixtures.
At December 23, 2021, we had $
77,330
of available credit under the Credit Facility which reflects borrowings of $
35,885
and reduced availability as a result of $
4,285
in outstanding letters of credit. As of December 23, 2021, we were in compliance with all financial covenants under the Credit Facility and Mortgage Facility.
Note 7 – Earnings Per Common Share
The following table presents the reconciliation of the weighted average shares outstanding used in computing basic and diluted earnings per share:
|
|
|
For the Quarter Ended
|
|
|
For the Twenty-six Weeks
Ended
|
|
||||||||||
|
|
|
December 23,
2021
|
|
|
December 24,
2020
|
|
|
December 23,
2021
|
|
|
December 24,
2020
|
|
||||
|
Weighted average number of shares outstanding – basic
|
|
|
|
|
||||||||||||
|
Effect of dilutive securities:
|
||||||||||||||||
|
Restricted stock units
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Weighted average number of shares outstanding – diluted
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
There were
no
anti-dilutive awards excluded from the computation of diluted earnings per share for any periods presented.
Note 8 – Stock-Based Compensation Plans
During the second quarter of fiscal 2022, there were
53,524
restricted stock units (“RSUs”) awarded to employees and
three years
for awards to employees and
one year
for awards to
non-employee
members of the Board of Directors. The vesting period is generally
non-employee
directors.
The following is a summary of RSU activity for the first half of fiscal 2022:
|
Restricted Stock Units
|
Shares
|
Weighted
Grant
Date Fair Value |
||||||
|
Outstanding at June 24, 2021
|
|
$ |
|
|||||
|
Activity:
|
||||||||
|
Granted
|
|
|
||||||
|
Vested
(a)
|
(
|
) |
|
|||||
|
Forfeited
|
|
|
||||||
|
|
|
|
|
|||||
|
Outstanding at December 23, 2021
|
|
$ |
|
|||||
|
|
|
|
|
|||||
|
(a)
|
The number of RSUs vested includes shares that were withheld on behalf of employees to satisfy statutory tax withholding requirements.
|
At December 23, 2021, there were
23,356
RSUs outstanding that were vested but deferred.
13
The following table summarizes compensation expense charged to earnings for all equity compensation plans for the periods presented:
|
For the Quarter Ended
|
For the Twenty-six Weeks
Ended
|
|||||||||||||||
|
December 23,
2021
|
December 24,
2020
|
December 23,
2021 |
December 24,
2020
|
|||||||||||||
|
Stock-based compensation expense
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
As of December 23, 2021, there was $
6,064
of total unrecognized compensation expense related to
1.9
years.
non-vested
RSUs granted under our stock-based compensation plans. We expect to recognize that cost over a weighted average period of
Note 9 – Retirement Plan
The Supplemental Employee Retirement Plan is an unfunded,
The components of net periodic benefit cost are as follows:
non-qualified
deferred compensation plan that will provide eligible participants with monthly benefits upon retirement, disability or death, subject to certain conditions. The monthly benefit is based upon each participant’s earnings and his or her number of years of service.
|
For the Quarter Ended
|
For the
Twenty-six
Weeks
Ended
|
|||||||||||||||
|
December 23,
2021
|
December 24,
2020
|
December 23,
2021 |
December 24,
2020 |
|||||||||||||
|
Service cost
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Interest cost
|
|
|
|
|
||||||||||||
|
Amortization of prior service cost
|
|
|
|
|
||||||||||||
|
Amortization of loss
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Net periodic benefit cost
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The components of net periodic benefit cost other than the service cost component are included in the line item “Other expense” in the Consolidated Statements of Comprehensive Income.
14
Note 10 – Accumulated Other Comprehensive Loss
The table below sets forth the changes to accumulated other comprehensive loss (“AOCL”) for the
These changes are all related to our defined benefit pension plan.
twenty-six
weeks ended December 23, 2021 and December 24, 2020.
|
For the Twenty-Six Weeks Ended
|
||||||||
|
Changes to AOCL
(a)
|
December 23,
2021 |
December 24,
2020 |
||||||
|
Balance at beginning of period
|
$ |
(
|
) | $ |
(
|
) | ||
|
Other comprehensive income before reclassifications
|
|
|
||||||
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
||||||
|
Tax effect
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
Net current-period other comprehensive income
|
|
|
||||||
|
|
|
|
|
|||||
|
Balance at end of period
|
$ |
(
|
) | $ |
(
|
) | ||
|
|
|
|
|
|||||
|
(a)
|
Amounts in parenthesis indicate debits/expense.
|
The reclassifications out of AOCL for the quarter and
twenty-six
weeks ended December 23, 2021 and December 24, 2020 were as follows:
|
Affected line
item in the Consolidated Statements of Comprehensive Income |
||||||||||||||||||
|
Reclassifications from AOCL to earnings
(b)
|
For the Quarter Ended
|
For the
Twenty-six
Weeks
Ended |
||||||||||||||||
|
December 23,
2021 |
December 24,
2020 |
December 23,
2021 |
December 24,
2020 |
|||||||||||||||
|
Amortization of defined benefit pension items:
|
||||||||||||||||||
|
Unrecognized prior service cost
|
$ |
|
$ |
(
|
) | $ |
|
$ |
(
|
) | Other expense | |||||||
|
Unrecognized net loss
|
(
|
) |
(
|
) |
(
|
) |
(
|
) | Other expense | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total before tax
|
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||||
|
Tax effect
|
|
|
|
|
Income tax expense | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
Amortization of defined pension items, net of tax
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
(b)
|
Amounts in parenthesis indicate debits to expense. See Note 9 – “Retirement Plan” above for additional details.
|
Note 11 – Commitments and Contingent Liabilities
We are currently a party to various legal proceedings in the ordinary course of business. While management presently believes that the ultimate outcomes of these proceedings, individually and in the aggregate, will not materially affect our Company’s financial position, results of operations or cash flows, legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur. Unfavorable outcomes could include substantial monetary damages in excess of any appropriate accruals, which management has established. Were such unfavorable final outcomes to occur, there exists the possibility of a material adverse effect on our financial position, results of operations and cash flows.
15
Note 12 – Fair Value of Financial Instruments
The Financial Accounting Standards Board (“FASB”) defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels:
|
Level 1
|
|
–
|
|
Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities.
|
|
|
|
|
||
|
Level 2
|
|
–
|
|
Observable inputs other than quoted prices in active markets. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
|
|
|
|
|
||
|
Level 3
|
|
–
|
|
Unobservable inputs for which there is little or no market data available.
|
The carrying values of cash, trade accounts receivable and accounts payable approximate their fair values at each balance sheet date because of the short-term maturities and nature of these balances.
The carrying value of our revolving credit facility borrowings approximates fair value at each balance sheet date because interest rates on this instrument approximate current market rates (Level 2 criteria), and because of the short-term maturity and nature of this balance. In addition, there has been no significant change in our inherent credit risk.
The following table summarizes the carrying value and fair value estimate of our current and long-term debt, excluding unamortized debt issuance costs:
|
December 23,
2021 |
June 24,
2021
|
December 24,
2020
|
||||||||||
|
Carrying value of long-term debt:
|
$ |
|
$ |
|
$ |
|
||||||
|
Fair value of long-term debt:
|
|
|
|
|||||||||
The estimated fair value of our long-term debt was determined using a market approach based upon Level 2 observable inputs, which estimates fair value based on interest rates currently offered on loans with similar terms to borrowers of similar credit quality or broker quotes. In addition, there have been no significant changes in the underlying assets securing our long-term debt.
Note 13 – Garysburg, North Carolina Facility
In October 2019 we experienced a fire at our peanut processing facility located in Garysburg, North Carolina. During fiscal 2020, the building and roof were repaired and brought back to their original condition.
We completed shelling of the 2019 peanut crop during the second quarter of fiscal 2021 and the facility was used to store and ship inshell peanuts through the remainder of fiscal 2021, at which time the Company decided to permanently cease all operations at the Garysburg facility.
During the first quarter of fiscal 2022 we sold the Garysburg property and remaining equipment located at the property to a third party for $
4,000
, subject to customary adjustments to reflect closing costs, which resulted in a $
2,349
gain.
16
Note 14 – Recent Accounting Pronouncements
The following recent accounting pronouncements have been adopted in the current fiscal year:
In December 2019, the FASB issued ASU
. The amendments in this Update were issued as part of FASB’s initiative to reduce complexity in accounting standards. The amendments simplify the accounting for income taxes by removing certain exceptions in Topic 740 and improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU
No. 2019-12
“Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes”
No. 2019-12
was adopted using a prospective method in the first quarter of fiscal 2022 and did not have a material impact on our Consolidated Financial Statements.
In October 2020, the FASB issued ASU
. This ASU was issued to address a wide variety of topics in the Accounting Standard Codification with the intent to make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications. ASU
No. 2020-10
“Codification Improvements”
No. 2020-10
was adopted in the first quarter of fiscal 2022 and did not have a material impact on our Consolidated Financial Statements.
There are no recent accounting pronouncements that have been issued and not yet adopted that are expected to have a material impact on our Consolidated Financial Statements.
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
The following discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements.
Our fiscal year ends on the final Thursday of June each year, and typically consists of
fifty-two
weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:
| • |
References herein to fiscal 2022 and fiscal 2021 are to the fiscal year for the 53 weeks ending June 30, 2022 and the fiscal year for the 52 weeks ended June 24, 2021, respectively.
|
| • |
References herein to the second quarter of fiscal 2022 and fiscal 2021 are to the quarters ended December 23, 2021 and December 24, 2020, respectively.
|
| • |
References herein to the first half or first
twenty-six
weeks of fiscal 2021 and fiscal 2020 are to the
twenty-six
weeks ended December 23, 2021 and December 24, 2020, respectively.
|
As used herein, unless the context otherwise indicates, the terms “we”, “us”, “our” or “Company” collectively refer to John B. Sanfilippo & Son, Inc. and our wholly-owned subsidiary, JBSS Ventures, LLC. Our Company’s Credit Facility and Mortgage Facility, as defined below, are sometimes collectively referred to as “our financing arrangements.”
We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds and other nuts in the United States. These nuts are sold under our
and
brand names and under a variety of private brands. We also market and distribute, and in most cases, manufacture or process, a diverse product line of food and snack products, including peanut butter, almond butter, cashew butter, candy and confections, snacks and trail mixes, snack bites, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks and other sesame snack products under our brand names and under private brands. We distribute our products in the consumer, commercial ingredients and contract packaging distribution channels.
Fisher, Orchard Valley Harvest,
Squirrel Brand, Southern Style Nuts
Sunshine Country
The Company’s long-term objective to drive profitable growth, as identified in our Strategic Plan, includes continuing to grow
and
into leading brands and providing integrated nut solutions to grow
Fisher,
Orchard Valley Harvest, Squirrel Brand
Southern Style Nuts
non-branded
business across key customers. We plan to execute on our Strategic Plan to grow our branded business by reaching new consumers via product and pack innovation, expanding distribution across current and alternative channels, diversifying our product offerings and focusing on new ways for consumers to buy our products, with an emphasis on increasing our sales via
e-commerce
platforms and retailers.
We face a number of challenges in the future, which include intensified competition on pricing and for market share from both private brand and name brand nut products. We face changing industry trends as consumer preferences evolve. We have observed consumers shopping in smaller store formats like grocery, using delivery apps for shopping and generally migrating more of their shopping online. Additionally, in recent months we have faced challenges with shortages and cost increases for shipping pallets, resin-based packaging, imported materials, transportation and shipping availability and labor at our production facilities. We have also experienced supply chain issues related to transportation delays. These shortages and related challenges have impacted our operations and resulted in increased expenses and manufacturing inefficiencies that have adversely impacted (and may continue to impact) our net income. We anticipate pricing relief in some of these areas in the coming quarters if and as shortages decrease, but we expect that some costs may remain elevated or unpredictable for a longer period of time. We are working with our vendors, customers and suppliers to source additional raw materials and packaging supplies and to remain flexible in obtaining the transportation and labor services we need. If these shortages and other supply chain issues continue, and we cannot secure adequate supplies to fulfill customer orders or cannot obtain the transportation and labor services we need, they could have an unfavorable impact on net sales and our operations in the remainder of this fiscal year. In addition, there is an additional risk of not being able to pass (in part or in full) such potential cost increases onto our customers in a timely manner.
18
We will continue to focus our promotional and advertising activity to invest in our brands to achieve growth. We intend to execute an omnichannel approach to win in key categories including recipe nuts, nut flours, snack nuts, trail mix and snacking. We continue to see strong
e-commerce
performance across our branded portfolio and anticipate taking various actions to accelerate that growth across a variety of established and emerging platforms. We will continue to face the ongoing challenges specific to our business, such as food safety and regulatory compliance and the maintenance and growth of our customer base for branded and private label products. See the information referenced in Part II, Item 1A — “Risk Factors” of this report for additional information about our risks, challenges and uncertainties.
COVID-19
Impacts
We will continue to face challenges in our fiscal 2022 as a result of the
COVID-19
pandemic and the uncertainty of future local, state and federal restrictions aimed to mitigate and control the pandemic. During the fourth quarter of fiscal 2021 and into the first half of fiscal 2022, as various
COVID-19
vaccines became more widely distributed and accepted by the public and indoor dining restrictions were again loosened, we saw a significant improvement in quarterly sales volume with our foodservice, restaurant, convenience store and
non-essential
retail customers. However, demand from these customers could be negatively impacted in the third quarter if conditions deteriorate as a result of the recent surge in
COVID-19
cases due to the Omicron variant, a more contagious strain of
COVID-19.
Our financial results could be adversely impacted if the decrease in sales to foodservice, restaurant, convenience store and
non-essential
retail customers is not offset by an increase in sales in our consumer channel that is driven by customers eating at home.
Also, during fiscal 2021 and into the first half of fiscal 2022, we have experienced the implications from a shortage in capacity in the transportation industry. Compounding this driver shortage is an increase in demand driven by additional spending on consumer goods, which has led to periodic shortages of shipping containers, container chassis, space on container ships and trains and capacity constraints at U.S. ports. This tightening in transportation capacity is expected to continue further into fiscal 2022, and it has led to increased transportation costs and may lead to potential disruptions in service to our customers and from our suppliers. While we have mitigated some of the impact from transportation shortages and increased prices of transportation, we may continue to face an unpredictable transportation environment, and there is no guarantee our mitigation strategies will continue to be effective.
The Company’s
COVID-19
crisis team continues to meet on a regular basis to discuss risks faced by the Company and mitigation strategies. We continue to follow recommendations made by state and federal regulators and health agencies to ensure the safety and health of our employees as those recommendations change and evolve. We update and enhance these measures as new guidance is provided. In addition, we have extended personal time off for those employees who are ill or must self-quarantine and hosted several free, voluntary
on-site
COVID-19
vaccination clinics for our employees and their family members. We highly encourage our employees to get vaccinated (including booster shots) and provide incentives to those who do.
We have worked closely with our domestic and global suppliers to source and maintain a consistent supply of raw materials, ingredients and packaging. To date, none of our manufacturing facilities have been significantly impacted by this pandemic other than from manufacturing inefficiencies due to production scheduling challenges. However, recent surges in
COVID-19
cases due to the Omicron variant could have a negative impact on our plant personnel attendance rates, our suppliers’ ability to maintain supply of key materials and, therefore, our operations. We have contingency plans in place to help reduce the negative impact if one or more of our manufacturing facilities encounters a partial or full shut down.
19
QUARTERLY HIGHLIGHTS
Our net sales of $253.2 million for the second quarter of fiscal 2022 increased 8.4% from our net sales of $233.6 million for the second quarter of fiscal 2021. Net sales for the first
twenty-six
weeks of fiscal 2022 increased by $35.7 million, or 8.0%, to $479.5 million compared to the first
twenty-six
weeks of fiscal 2021.
Sales volume, measured as pounds sold to customers, increased 6.0% for the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021. Sales volume for the first
twenty-six
weeks of fiscal 2022 increased 9.7% compared to the first
twenty-six
weeks of fiscal 2021.
Gross profit decreased by $0.6 million, and our gross profit margin, as a percentage of net sales, decreased to 20.6% for the second quarter of fiscal 2022 compared to 22.6% for the second quarter of fiscal 2021. Gross profit increased $11.9 million and our gross profit margin increased to 21.7% from 20.8% for the first
twenty-six
weeks of fiscal 2022 compared to the first
twenty-six
weeks of fiscal 2021.
Total operating expenses for the second quarter of fiscal 2022 increased by $9.0 million, or 35.9%, compared to the second quarter of fiscal 2021. As a percentage of net sales, total operating expenses in the second quarter of fiscal 2022 increased to 13.4% from 10.7% for the second quarter of fiscal 2021. For the first half of fiscal 2022, total operating expenses increased by $13.0 million, to 12.2% of net sales compared to 10.2% for the first half of fiscal 2021.
The total value of inventories on hand at the end of the second quarter of fiscal 2022 increased by $23.4 million, or 15.0%, in comparison to the total value of inventories on hand at the end of the second quarter of fiscal 2021.
We have seen acquisition costs for dried fruit and most major nut categories increase in the 2021 crop year (which falls into our current 2022 fiscal year). We completed procurement of inshell walnuts during the first half of fiscal 2022. During the third quarter, we will determine the final prices to be paid to the walnut growers based upon current market prices and other factors such as crop size and export demand. We have estimated the liability to our walnut growers and our walnut inventory costs using currently available information. Any difference between our estimated liability and the actual final liability will be determined during the third quarter of fiscal 2022 and will be recognized in our financial results at that time.
20
RESULTS OF OPERATIONS
Net Sales
Our net sales increased 8.4% to $253.2 million in the second quarter of fiscal 2022 compared to net sales of $233.6 million for the second quarter of fiscal 2021. The increase in net sales was primarily attributable to a 6.0% increase in sales volume, which is defined as pounds sold to customers, and a 2.3% increase in the weighted average sales price per pound. The increase in the weighted average selling price per pound came from a shift in product mix from lower priced peanuts to higher priced trail and snack mixes and tree nuts as consumer preferences favored higher priced products in the current second quarter.
For the first
twenty-six
weeks of fiscal 2022 our net sales were $479.5 million, an increase of $35.7 million, or 8.0%, compared to the same period of fiscal 2021. The increase in net sales was primarily attributable to a 9.7% increase in sales volume, which was partially offset by a 1.5% decrease in the weighted average selling price per pound for our products. The decline in the weighted average selling price resulted from a decline in commodity acquisition costs for all major tree nuts except cashews.
The following table summarizes sales by product type as a percentage of total gross sales. The information is based upon gross sales, rather than net sales, because certain adjustments, such as promotional discounts, are not allocable to product type.
|
For the Quarter Ended
|
For the
Twenty-six
Weeks
Ended |
|||||||||||||||
|
Product Type
|
December 23,
2021
|
December 24,
2020 |
December 23,
2021 |
December 24,
2020 |
||||||||||||
|
Peanuts
|
16.6 | % | 18.8 | % | 17.1 | % | 19.1 | % | ||||||||
|
Pecans
|
15.7 | 15.0 | 12.4 | 12.0 | ||||||||||||
|
Cashews & Mixed Nuts
|
20.9 | 23.1 | 21.6 | 23.4 | ||||||||||||
|
Walnuts
|
7.0 | 7.2 | 6.4 | 6.9 | ||||||||||||
|
Almonds
|
9.0 | 9.2 | 9.8 | 10.8 | ||||||||||||
|
Trail & Snack Mixes
|
25.1 | 22.2 | 26.5 | 22.5 | ||||||||||||
|
Other
|
5.7 | 4.5 | 6.2 | 5.3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The following table shows a comparison of net sales by distribution channel (dollars in thousands):
|
For the Quarter Ended
|
||||||||||||||||||||||||
|
Distribution Channel
|
December 23,
2021
|
Percentage
of Total |
December 24,
2020
|
Percentage
of Total |
$
Change
|
Percent
Change
|
||||||||||||||||||
|
Consumer
(1)
|
$ | 203,479 | 80.3 | % | $ | 192,029 | 82.2 | % | $ | 11,450 | 6.0 | % | ||||||||||||
|
Commercial Ingredients
|
27,756 | 11.0 | 20,536 | 8.8 | 7,220 | 35.2 | ||||||||||||||||||
|
Contract Packaging
|
21,972 | 8.7 | 21,010 | 9.0 | 962 | 4.6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Total
|
$ | 253,207 | 100.0 | % | $ | 233,575 | 100.0 | % | $ | 19,632 | 8.4 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
(1)
|
Sales of branded products were approximately 28% and 30% of total consumer sales during each of the second quarter of fiscal 2022 and fiscal 2021, respectively.
Fisher
Orchard Valley Harvest
|
21
The following table shows a comparison of net sales by distribution channel (dollars in thousands):
|
For the
Twenty-six
Weeks Ended
|
||||||||||||||||||||||||
|
Distribution Channel
|
December 23,
2021
|
Percentage
of Total |
December 24,
2020
|
Percentage
of Total |
$
Change
|
Percent
Change
|
||||||||||||||||||
|
Consumer
(1)
|
$ | 383,240 | 79.9 | % | $ | 358,786 | 80.8 | % | $ | 24,454 | 6.8 | % | ||||||||||||
|
Commercial Ingredients
|
55,912 | 11.7 | 43,347 | 9.8 | 12,565 | 29.0 | ||||||||||||||||||
|
Contract Packaging
|
40,384 | 8.4 | 41,715 | 9.4 | (1,331 | ) | (3.2 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Total
|
$ | 479,536 | 100.0 | % | $ | 443,848 | 100.0 | % | $ | 35,688 | 8.0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
(1)
|
Sales of branded products were approximately 24% and 27% of total consumer sales during the first
twenty-six
weeks of fiscal 2022 and fiscal 2021, respectively.
Fisher
twenty-six
weeks of fiscal 2022 and fiscal 2021, respectively, with
Orchard Valley Harvest
|
Net sales in the consumer distribution channel increased $11.5 million, or 6.0%, and sales volume increased 2.2% in the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021. The sales volume increase was driven by increased sales of private brand trail and snack mixes, almonds and mixed nuts mainly from new distribution at existing customers, which was partially offset by a decrease in sales for private brand peanuts and cashews. Sales volume increases for all of our branded products with the exception of
snack nuts also contributed to the sales volume increase. Sales volume of
recipe nuts increased 9.6% as a result of increased distribution and merchandising activity at two existing grocery customers. Sales volume for
snack nuts decreased 45.0%, primarily as a result of the discontinuance of our inshell peanut product line, which occurred in the fourth quarter of fiscal 2021, and a seasonal rotation at a club store that did not repeat in the current second quarter. Sales volume
of
products increased 4.1% due to increased sales at a major customer in the
increased 8.5% due to increased promotional activity at a current club store customer.
Fisher
Fisher
Fisher
Orchard Valley Harvest
non-food
sector, as this retailer continues to recover from
COVID-19
restrictions, and new distribution at an internet retailer. These gains were partially offset by reduced merchandising activity and item discontinuance at a mass merchandising retailer. Sales volume of
Southern Style Nuts
In the first
snack nuts for the same reasons cited in the quarterly comparison.
twenty-six
weeks of fiscal 2022, net sales in the consumer distribution channel increased $24.5 million, or 6.8%, and sales volume increased 7.2% compared to the same period of fiscal 2021. The sales volume increase was driven by increased sales of private brand trail and snack mixes and mixed nuts mainly from new distribution at existing customers, which was partially offset by a decrease in sales volume for private brand peanuts and a sales volume decline for our
Fisher
Net sales in the commercial ingredients distribution channel increased 35.2% in dollars and 27.1% in sales volume in the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021. The increase in sales volume was due to a 42.7% increase in sales volume in our foodservice business. The sales volume increase in our foodservice business was attributable to improved conditions in the restaurant industry from fewer
COVID-19
restrictions.
In the first
twenty-six
weeks of fiscal 2022, net sales in the commercial ingredients distribution channel increased 29.0% in dollars and 32.0% in sales volume compared to the same period of fiscal 2021. The increase in sales volume was due to a 45.2% increase in sales volume in our foodservice business, which occurred for the same reason cited in the quarterly comparison.
Net sales in the contract packaging distribution channel increased 4.6% in dollars and 11.4% in sales volume in the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021. The increase in sales volume was primarily due to increased promotional and merchandising activity and increased distribution by a major customer in this channel.
22
In the first
twenty-six
weeks of fiscal 2022, net sales in the contract packaging distribution channel decreased 3.2% in dollars and sales volume increased 3.8% compared to the first
twenty-six
weeks of fiscal 2021. The increase in sales volume occurred for the same reasons cited in the quarterly comparison, which was partially offset by promotional activity by the same customer that did not recur in the current year first quarter.
Gross Profit
Gross profit decreased by $0.6 million, or 1.1%, to $52.2 million for the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021. Our gross profit margin, as a percentage of net sales, decreased to 20.6% for the second quarter of fiscal 2022 compared to 22.6% for the second quarter of fiscal 2021. The decreases in gross profit and gross profit margin were mainly attributable to manufacturing scheduling inefficiencies due to supply chain issues, and inflationary cost increases including labor, freight and manufacturing supplies, which were partially offset by increased sales volume.
Gross profit was $104.0 million for the first
twenty-six
weeks of fiscal 2022 compared to $92.1 million for the first
twenty-six
weeks of fiscal 2021. Our gross profit margin, as a percentage of sales, increased to 21.7% for the first
twenty-six
weeks of fiscal 2022 compared to 20.8% for the first
twenty-six
weeks of fiscal 2021. The increases in gross profit and gross profit margin in the year to date comparison were primarily attributable to lower commodity acquisition costs for all major tree nuts except cashews and increased sales volume, which were partially offset by the manufacturing inefficiencies and inflationary cost increases cited in the quarterly comparison.
Operating Expenses
Total operating expenses for the second quarter of fiscal 2022 increased by $9.0 million, or 35.9%, to $34.0 million. Operating expenses increased to 13.4% of net sales for the second quarter of fiscal 2022 compared to 10.7% of net sales for the second quarter of fiscal 2021.
Selling expenses for the second quarter of fiscal 2022 were $23.6 million, an increase of $5.9 million, or 33.2%, from the second quarter of fiscal 2021. The increase was driven primarily by a $3.0 million increase in advertising, consumer insight research and related consulting expenses, a $1.9 million increase in freight expense due to higher rates and an increase in sales pounds shipped, a $0.3 million increase in commissions expense and a $0.3 million increase in payroll and payroll-related expenses.
Administrative expenses for the second quarter of fiscal 2022 were $10.4 million compared to $7.3 million for the second quarter of fiscal 2021. The increase was due to a $2.8 million decrease in the gain on asset disposals, primarily driven by an insurance settlement gain of $2.3 million in the second quarter of fiscal 2021 related to the fire that occurred in our Garysburg, North Carolina facility that did not reoccur in the current quarter.
Total operating expenses for the first
twenty-six
weeks of fiscal 2022 increased by $13.0 million, or 28.5%, to $58.4 million. Operating expenses increased to 12.2% of net sales for the first half of fiscal 2022 compared to 10.2% of net sales for the first half of fiscal 2021.
Selling expenses for the first
twenty-six
weeks of fiscal 2022 were $41.3 million, an increase of $11.5 million, or 38.7%, from the amount recorded for the first
twenty-six
weeks of fiscal 2021. The increase was driven primarily by a $5.3 million increase in advertising, consumer insight research and related consulting expenses, a $4.3 million increase in freight expense for the same reasons cited in the quarterly comparison, a $0.8 million increase in payroll and payroll related expenses and a $0.5 million increase in commissions expense.
Administrative expenses for the first
twenty-six
weeks of fiscal 2022 were $19.5 million, an increase of $3.8 million, or 24.2%, compared to the same period of fiscal 2021. The increase was primarily due to a $3.1 million decrease in the gain on asset disposals, mainly resulting from the insurance settlement discussed above combined with losses on current year disposals. A $0.3 million increase in payroll and payroll-related expenses also contributed to the increase.
The $2.3 million gain on sale of facility, net is the result of the sale of our Garysburg, North Carolina facility that occurred in the first quarter of fiscal 2022.
23
Income from Operations
Due to the factors discussed above, income from operations was $18.3 million, or 7.2% of net sales, for the second quarter of fiscal 2022 compared to $27.8 million, or 11.9% of net sales, for the second quarter of fiscal 2021.
Due to the factors discussed above, income from operations was $45.6 million, or 9.5% of net sales, for the first
twenty-six
weeks of fiscal 2022 compared to $46.7 million, or 10.5% of net sales, for the first
twenty-six
weeks of fiscal 2021.
Interest Expense
Interest expense was $0.4 million for both the second quarter of fiscal 2022 and fiscal 2021. Interest expense was $0.8 million for both the first two quarters of fiscal 2022 and fiscal 2021.
Rental and Miscellaneous Expense, Net
Net rental and miscellaneous expense was $0.3 million for the second quarter of fiscal 2022 compared to $0.4 million for the second quarter of fiscal 2021. Net rental and miscellaneous expense was $0.7 million for the first
twenty-six
weeks of fiscal 2022 compared to $0.8 million for the first
twenty-six
weeks of fiscal 2021.
Other Expense
Other expense consists of pension related expenses other than the service cost component and was $0.6 million for both the second quarter of fiscal 2022 and fiscal 2021. Other expense was $1.2 million for the first
twenty-six
weeks of fiscal 2022 compared to $1.3 million for the first
twenty-six
weeks of fiscal 2021.
Income Tax Expense
Income tax expense was $3.7 million, or 21.6% of income before income taxes (the “Effective Tax Rate”), for the second quarter of fiscal 2022 compared to $6.5 million, or 24.8% of income before income taxes, for the second quarter of fiscal 2021. For the first
twenty-six
weeks of fiscal 2022, income tax expense was $10.4 million, or 24.3% of income before income taxes, compared to $11.1 million, or 25.3% of income before income taxes, for the comparable period last year. The decrease in the Effective Tax Rate for both the quarterly and
twenty-six
week periods is mainly due to the favorable impact of $0.7 million of discrete tax benefits recognized in the current second quarter.
Net Income
Net income was $13.2 million, or $1.15 per common share basic and $1.14 per common share diluted, for the second quarter of fiscal 2022, compared to $19.9 million, or $1.73 per common share basic and $1.72 per common share diluted, for the second quarter of fiscal 2021.
Net income was $32.5 million, or $2.82 per common share basic and $2.81 per common share diluted, for the first
twenty-six
weeks of fiscal 2022, compared to net income of $32.7 million, or $2.85 per common share basic and $2.83 per common share diluted, for the first
twenty-six
weeks of fiscal 2021.
LIQUIDITY AND CAPITAL RESOURCES
General
The primary uses of cash are to fund our current operations, fulfill contractual obligations, pursue our Strategic Plan through growing our branded and private label nut programs and repay indebtedness. Also, various uncertainties could result in additional uses of cash. The primary sources of cash are results of operations and availability under our Credit Facility. We anticipate that expected net cash flow generated from operations and amounts available pursuant to the Credit Facility will be sufficient to fund our operations for the next twelve months. Our available credit under our Credit Facility has allowed us to devote more funds to promote our products, increase consumer insight capabilities and promotional efforts, consummate strategic investments and business acquisitions such as the fiscal 2018 acquisition of the Squirrel Brand business, reinvest in the Company through capital expenditures, develop new products, pay cash dividends and explore other growth strategies outlined in our Strategic Plan.
Cash flows from operating activities have historically been driven by net income but are also significantly influenced by inventory requirements, which can change based upon fluctuations in both quantities and market prices of the various nuts and nut products we buy and sell. Current market trends in nut prices and crop estimates also impact nut procurement.
24
The following table sets forth certain cash flow information for the first half of fiscal 2022 and 2021, respectively (dollars in thousands):
|
December 23,
2021 |
December 24,
2020 |
$ Change
|
||||||||||
|
Operating activities
|
$ | 15,820 | $ | 61,935 | $ | (46,115 | ) | |||||
|
Investing activities
|
(5,889 | ) | (10,734 | ) | 4,845 | |||||||
|
Financing activities
|
(9,576 | ) | (50,973 | ) | 41,397 | |||||||
|
|
|
|
|
|
|
|||||||
|
Net increase in cash
|
$ | 355 | $ | 228 | $ | 127 | ||||||
|
|
|
|
|
|
|
|||||||
Operating Activities
twenty-six
weeks of fiscal 2022 compared to $61.9 million for the comparative period of fiscal 2021. The decrease in operating cash flow was primarily due to an increased use of working capital for inventory compared to the first
twenty-six
weeks of fiscal 2021 primarily due to increasing commodity acquisition costs.
Total inventories were $178.7 million at December 23, 2021, an increase of $30.7 million, or 20.8%, from the inventory balance at June 24, 2021, and an increase of $23.4 million, or 15.0%, from the inventory balance at December 24, 2020. The increase in inventory at December 23, 2021 compared to June 24, 2021 was primarily due to higher commodity acquisition costs for almost all tree nuts, peanuts, dried fruit and other raw materials and higher quantities of inshell walnuts on hand, which were partially offset by lower quantities of inshell pecans on hand. The increase in inventories at December 23, 2021 compared to December 24, 2020 was primarily due to higher commodity acquisition costs as noted above, which were partially offset by lower quantities of inshell pecans and cashews on hand.
Raw nut and dried fruit input stocks, some of which are classified as work in process, decreased by 9.9 million pounds, or 16.7%, at December 23, 2021 compared to December 24, 2020 due to lower quantities of inshell pecans, peanuts and cashews on hand. The weighted average cost per pound of raw nut input stocks on hand at the end of the second quarter of fiscal 2022 increased 24.4% compared to the end of the second quarter of fiscal 2021 primarily due to higher commodity acquisition costs for almost all input stock items, which was partially offset by lower quantities of inshell pecans and cashews.
Investing Activities
twenty-six
weeks of fiscal 2022 compared to $10.7 million for the same period last year. Capital asset purchases were $9.5 million during the first half of fiscal 2022 compared to $11.1 million for the first half of fiscal 2021. Partially offsetting the fiscal 2022 cash outflows for capital asset purchases was $4.0 million cash proceeds (subject to customary adjustments to reflect closing costs) resulting from the sale of our Garysburg, North Carolina facility. We expect total capital expenditures for new equipment, facility upgrades, and food safety enhancements for fiscal 2022 to be approximately $18.0 million. Absent any material acquisitions or other significant investments, we believe that cash on hand, combined with cash provided by operations and borrowings available under the Credit Facility, will be sufficient to meet the cash requirements for planned capital expenditures.
Financing Activities
twenty-six
weeks of fiscal 2022 compared to $51.0 million for the same period last year. Net borrowings under our Credit Facility were $27.2 million during the first half of fiscal 2022 compared to net repayments of $17.8 million for the first half of fiscal 2021. The increase in credit facility borrowings was primarily due to increasing commodity acquisition costs. Dividends paid in the first half of fiscal 2022 were approximately $5.8 million higher than dividends paid in the same period last year.
Real Estate Matters
In August 2008, we completed the consolidation of our Chicago-based facilities into the Elgin Site. The Elgin Site includes both an office building and a warehouse. We are currently attempting to find additional tenants for the available space in the office building at the Elgin Site. Until additional tenant(s) are found, we will not receive the benefit of rental income associated with such space. Approximately 70% of the rentable area in the office building is currently vacant. Approximately 29% of the rentable area has not been
built-out.
There can be no assurance that we will be able to lease the unoccupied space and further capital expenditures will likely be necessary to lease the remaining space.
25
Financing Arrangements
On February 7, 2008, we entered into the Former Credit Agreement (as defined below) with a bank group (the “Bank Lenders”) providing a $117.5 million revolving loan commitment and letter of credit subfacility. Also on February 7, 2008, we entered into a Loan Agreement with an insurance company (the “Mortgage Lender”) providing us with two term loans, one in the amount of $36.0 million (“Tranche A”) and the other in the amount of $9.0 million (“Tranche B”), for an aggregate amount of $45.0 million (as amended, the “Mortgage Facility”).
On March 5, 2020, we entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) which amended and restated our Credit Agreement dated as of February 7, 2008 (the “Former Credit Agreement”). The Amended and Restated Credit Agreement provides for a $117.5 million senior secured revolving credit facility with the same borrowing capacity, interest rates and applicable margin as the Former Credit Agreement and extends the term of the Former Credit Agreement from July 7, 2021 to March 5, 2025.
The Amended and Restated Credit Facility is secured by substantially all of our assets other than machinery and equipment, real property, and fixtures and matures on March 5, 2025. The Mortgage Facility is secured by mortgages on essentially all of our owned real property located in Elgin, Illinois and Gustine, California (the “Encumbered Properties”).
Credit Facility
At our election, borrowings under the Credit Facility currently accrue interest at either (i) a rate determined pursuant to the administrative agent’s prime rate plus an applicable margin determined by reference to the amount of loans which may be advanced under the borrowing base calculation, ranging from 0.25% to 0.75% (“Base Rate”) or (ii) a rate based upon the London interbank offered rate (“LIBOR”) plus an applicable margin based upon the borrowing base calculation, ranging from 1.25% to 1.75%.
At December 23, 2021, the weighted average interest rate for the Credit Facility was 2.1%. The terms of the Credit Facility contain covenants that, among other things, require us to restrict investments, indebtedness, acquisitions and certain sales of assets and limit annual cash dividends or distributions, transactions with affiliates, redemptions of capital stock and prepayment of indebtedness (if such prepayment, among other things, is of a subordinate debt). If loan availability under the borrowing base calculation falls below $25.0 million, we will be required to maintain a specified fixed charge coverage ratio, tested on a monthly basis, until loan availability equals or exceeds $25.0 million for three consecutive months. All cash received from customers is required to be applied against the Credit Facility. The Bank Lenders have the option to accelerate and demand immediate repayment of our obligations under the Credit Facility in the event of default on the payments required under the Credit Facility, a change in control in the ownership of the Company,
non-compliance
with the financial covenant or upon the occurrence of other defaults by us under the Credit Facility (including a default under the Mortgage Facility). As of December 23, 2021, we were in compliance with all covenants under the Credit Facility and we currently expect to be in compliance with the financial covenant in the Credit Facility for the foreseeable future. At December 23, 2021, we had $77.3 million of available credit under the Credit Facility. If this entire amount were borrowed at December 23, 2021, we would still be in compliance with all restrictive covenants under the Credit Facility.
Mortgage Facility
The Mortgage Facility matures on March 1, 2023. On March 1, 2018 the interest rate on the Mortgage Facility was fixed at 4.25% per annum. Monthly principal payments on the Mortgage Facility in the amount of $0.3 million commenced on June 1, 2008.
The terms of the Mortgage Facility contain covenants that require us to maintain a specified net worth of $110.0 million and maintain the Encumbered Properties. The Mortgage Lender is entitled to require immediate repayment of our obligations under the Mortgage Facility in the event we default in the payments required under the Mortgage Facility,
non-compliance
with the covenants or upon the occurrence of certain other defaults by us under the Mortgage Facility. As of December 23, 2021, we were in compliance with all covenants under the Mortgage Facility and a total principal amount of $4.2 million was outstanding.
26
Selma Property
In September 2006, we sold our Selma, Texas properties (the “Selma Properties”) to two related party partnerships for $14.3 million and are leasing them back. The selling price was determined by an independent appraiser to be the fair market value which also approximated our carrying value. The lease for the Selma Properties has a
ten-year
term at a fair market value rent with three five-year renewal options. In September 2015, we exercised two of the five-year renewal options which extended the lease term to September 2026. The lease extension also reduced the monthly lease payment on the Selma Properties, beginning in September 2016, to reflect then current market conditions. At the end of each five-year renewal option, the base monthly lease amounts are reassessed, and the monthly payments increased to $114 beginning in September 2021. One five-year renewal option remains. Also, we have an option to purchase the Selma Properties from the owner at 95% (100% in certain circumstances) of the then fair market value, but not less than the original $14.3 million purchase price. The provisions of the arrangement are not eligible for sale-leaseback accounting and the $14.3 million was recorded as a debt obligation. No gain or loss was recorded on the Selma Properties transaction. As of December 23, 2021, $8.7 million of the debt obligation was outstanding.
Critical Accounting Policies and Estimates
For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form
10-K
for the fiscal year ended June 24, 2021.
Recent Accounting Pronouncements
Refer to Note 14 – “Recent Accounting Pronouncements” of the Notes to Consolidated Financial Statements, contained in Part I, Item 1 of this form
10-Q,
for a discussion of recently issued and adopted accounting pronouncements.
27
FORWARD LOOKING STATEMENTS
Some of the statements in this report are forward-looking (including statements concerning our expectations regarding market risk and the impact of the purchasing decisions of major customers). These forward-looking statements may be generally identified by the use of forward-looking words and phrases such as “will”, “intends”, “may”, “believes”, “anticipates”, “should” and “expects” and are based on the Company’s current expectations or beliefs concerning future events and involve risks and uncertainties. Consequently, the Company’s actual results could differ materially. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors that affect the subject of these statements, except where expressly required to do so by law. Among the factors that could cause results to differ materially from current expectations are: (i) sales activity for the Company’s products, such as a decline in sales to one or more key customers (of branded products, private label products or otherwise), or to customers generally, in some or all channels, a change in product mix to lower price products, a decline in sales of private brand products or changing consumer preferences, including a shift from higher margin products to lower margin products; (ii) changes in the availability and costs of raw materials and ingredients and the impact of fixed price commitments with customers; (iii) the ability to pass on price increases to customers if commodity costs rise and the potential for a negative impact on demand for, and sales of, our products from price increases; (iv) the ability to measure and estimate bulk inventory, fluctuations in the value and quantity of the Company’s nut inventories due to fluctuations in the market prices of nuts and bulk inventory estimation adjustments, respectively; (v) the Company’s ability to appropriately respond to, or lessen the negative impact of, competitive and pricing pressures, including competition in the recipe nut category; (vi) losses associated with product recalls, product contamination, food labeling or other food safety issues, or the potential for lost sales or product liability if customers lose confidence in the safety of the Company’s products or in nuts or nut products in general, or are harmed as a result of using the Company’s products; (vii) the ability of the Company to control costs (including inflationary costs) and manage shortages in areas such as transportation and labor; (viii) uncertainty in economic conditions, including the potential for inflation or economic downturn, particularly in light of
COVID-19;
(ix) the timing and occurrence (or nonoccurrence) of other transactions and events which may be subject to circumstances beyond the Company’s control; (x) the adverse effect of labor unrest or disputes, litigation and/or legal settlements, including potential unfavorable outcomes exceeding any amounts accrued; (xi) losses due to significant disruptions at any of our production or processing facilities or employee unavailability due to labor shortages, illness or quarantine; (xii) the ability to implement our Strategic Plan, including growing our branded and private brand product sales and expanding into alternative sales channels; (xiii) technology disruptions or failures; (xiv) the inability to protect the Company’s brand value, intellectual property or avoid intellectual property disputes; (xv) our ability to manage the impacts of changing weather patterns on raw material availability due to climate change; and (xvi) the ability of the Company to respond to or manage the outbreak of
COVID-19
or other infectious diseases and the various implications thereof.
28
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in our assessment of our sensitivity to market risk since our presentation set forth in Part I—Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form
10-K
for the fiscal year ended June 24, 2021.
Item 4. Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule
13a-15(e))
as of December 23, 2021. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 23, 2021, the Company’s disclosure controls and procedures were effective.
In connection with the evaluation by our management, including our Chief Executive Officer and Chief Financial Officer, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule
13a-15(f))
during the quarter ended December 23, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of legal proceedings, see Note 11 – “Commitments and Contingent Liabilities” in Part I, Item 1 of this Form
10-Q.
Item 1A. Risk Factors
In addition to the other information set forth in this report on Form
10-Q,
you should also consider the factors, risks and uncertainties which could materially affect our Company’s business, financial condition or future results as discussed in Part I, Item 1A – “Risk Factors” of our Annual Report on Form
10-K
for the fiscal year ended June 24, 2021. There were no significant changes to the risk factors identified on the Form
10-K
for the fiscal year ended June 24, 2021 during the second quarter of fiscal 2022.
See Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in this Form
10-Q,
and see Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in the Company’s Annual Report on Form
10-K
for the fiscal year ended June 24, 2021.
Item 6. Exhibits
The exhibits filed herewith are listed in the exhibit index below.
29
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation
S-K)
30
31
|
Exhibit
No.
|
Description
|
|
| 32.1 | Certification of Jeffrey T. Sanfilippo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended | |
| 32.2 | Certification of Frank S. Pellegrino pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended | |
| 101.INS | Inline eXtensible Business Reporting Language (XBRL) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| * |
Indicates a management contract or compensatory plan or arrangement.
|
32
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on January 27, 2022.
| JOHN B. SANFILIPPO & SON, INC. | ||
| By |
/s/ F
RANK
S. P
ELLEGRINO
|
|
| Frank S. Pellegrino | ||
| Chief Financial Officer, Executive Vice President, Finance and Administration | ||
33
TABLE OF CONTENTS
Part I Financial InformationItem 1. Financial StatementsNote 1 Basis Of Presentation and Description Of BusinessNote 2 Revenue RecognitionNote 3 LeasesNote 4 InventoriesNote 5 Goodwill and Intangible AssetsNote 6 Credit FacilityNote 7 Earnings Per Common ShareNote 8 Stock-based Compensation PlansNote 9 Retirement PlanNote 10 Accumulated Other Comprehensive LossNote 11 Commitments and Contingent LiabilitiesNote 12 Fair Value Of Financial InstrumentsNote 13 Garysburg, North Carolina FacilityNote 14 Recent Accounting PronouncementsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 6. Exhibits