John B. Sanfilippo & Son(JBSS) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for the quarter ended September 26, 2019, including detailed notes on accounting policies and financial items Consolidated Statements of Comprehensive Income For the quarter ended September 26, 2019, net sales increased 6.6% to $217.8 million, with net income rising 95.7% to $12.9 million and diluted EPS reaching $1.12 Consolidated Statements of Comprehensive Income (Q1 FY20 vs Q1 FY19) | Metric | Q1 2020 (ended Sep 26, 2019) | Q1 2019 (ended Sep 27, 2018) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $217,846 | $204,288 | +6.6% | | Gross Profit | $42,248 | $32,954 | +28.2% | | Income from Operations | $19,062 | $10,052 | +89.6% | | Net Income | $12,926 | $6,606 | +95.7% | | Net Income per Share (Diluted) | $1.12 | $0.57 | +96.5% | Consolidated Balance Sheets As of September 26, 2019, total assets were $393.2 million, total liabilities decreased to $159.2 million, and total stockholders' equity increased to $234.1 million Key Balance Sheet Items (in thousands) | Account | Sep 26, 2019 | June 27, 2019 | Sep 27, 2018 | | :--- | :--- | :--- | :--- | | Total Current Assets | $223,105 | $225,340 | $245,323 | | Inventories | $156,453 | $157,024 | $181,031 | | Total Assets | $393,222 | $391,304 | $415,427 | | Total Current Liabilities | $104,407 | $83,906 | $140,002 | | Revolving credit facility borrowings | $16,042 | $0 | $51,941 | | Total Liabilities | $159,172 | $136,749 | $194,080 | | Total Stockholders' Equity | $234,050 | $254,555 | $221,347 | Consolidated Statements of Cash Flows Net cash provided by operating activities increased to $22.5 million, while investing activities used $3.1 million and financing activities used $20.1 million Cash Flow Summary (in thousands) | Activity | Q1 2020 (ended Sep 26, 2019) | Q1 2019 (ended Sep 27, 2018) | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,468 | $15,675 | | Net cash used in investing activities | ($3,102) | ($4,768) | | Net cash used in financing activities | ($20,070) | ($11,141) | | Net Decrease in Cash | ($704) | ($234) | Notes to Consolidated Financial Statements The notes detail accounting policies, including the adoption of new lease standards, revenue breakdown, and subsequent events like a facility fire and special dividend declaration - The company is a leading processor and distributor of nuts (peanuts, pecans, cashews, etc.) and other snack products, sold under private brands and its own brands like Fisher and Orchard Valley Harvest[26] Revenue by Distribution Channel (in thousands) | Distribution Channel | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Consumer | $157,146 | $139,444 | | Commercial Ingredients | $36,888 | $37,202 | | Contract Packaging | $23,812 | $27,642 | | Total | $217,846 | $204,288 | - The company adopted the new lease standard (Topic 842) on June 28, 2019, recognizing operating lease right-of-use assets of $5.4 million and liabilities of $5.3 million on its Consolidated Balance Sheet[38][40] - Subsequent to the quarter's end, a fire occurred at the Garysburg, NC peanut processing facility, destroying roasting equipment, but is not expected to materially affect FY2020 financial performance due to insurance and alternative supply[76] - On October 29, 2019, the Board of Directors declared a special cash dividend of $2.00 per share, payable on December 10, 2019[77] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong quarterly performance to increased sales volume and lower acquisition costs for key nuts, boosting gross profit margins and improving cash flow from operations Results of Operations Net sales increased 6.6% to $217.8 million driven by a 9.1% rise in sales volume, with gross profit surging 28.2% to $42.2 million due to higher volume and lower commodity costs - Net sales increased 6.6% in Q1 2020, while sales volume (pounds sold) increased 9.1% year-over-year[93] Net Sales by Distribution Channel (in thousands) | Distribution Channel | Q1 2020 | Q1 2019 | % Change | | :--- | :--- | :--- | :--- | | Consumer | $157,146 | $139,444 | +12.7% | | Commercial Ingredients | $36,888 | $37,202 | -0.8% | | Contract Packaging | $23,812 | $27,642 | -13.9% | | Total | $217,846 | $204,288 | +6.6% | - The increase in consumer channel sales was driven by private brand snack nuts and trail mixes, though Fisher recipe nuts sales volume decreased 30.3% due to lost distribution[96] - Gross profit margin increased to 19.4% in Q1 2020 from 16.1% in Q1 2019, mainly due to higher sales volume and lower commodity acquisition costs for cashews, pecans, and walnuts[99] - Net income for Q1 2020 was $12.9 million ($1.12 per diluted share), compared to $6.6 million ($0.57 per diluted share) in Q1 2019[109] Liquidity and Capital Resources The company maintains strong liquidity with $22.5 million in operating cash flow, decreased inventories, and $97.5 million available credit, while forecasting $15.0 million in capital expenditures Cash Flow Summary (in thousands) | Activity | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Operating activities | $22,468 | $15,675 | | Investing activities | ($3,102) | ($4,768) | | Financing activities | ($20,070) | ($11,141) | - Total inventories decreased by $24.6 million (13.6%) compared to the prior year, mainly due to lower acquisition costs for pecans, cashews, and walnuts[114] - The company expects total capital expenditures for fiscal 2020 to be approximately $15.0 million[117] - As of September 26, 2019, the company had $97.5 million of available credit under its Credit Facility and was in compliance with all financial covenants[125] Quantitative and Qualitative Disclosures About Market Risk There has been no material change in the company's assessment of market risk sensitivity since its last Annual Report on Form 10-K - There has been no material change in the company's market risk sensitivity since the last Annual Report on Form 10-K[137] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 26, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of September 26, 2019, the company's disclosure controls and procedures were effective[139] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[140] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings in the ordinary course of business, not expected to materially affect its financial position or results - The company is involved in various legal proceedings in the ordinary course of business, which are not expected to have a material adverse effect on its financial condition[65][142] Risk Factors No significant changes to the risk factors identified in the company's Annual Report on Form 10-K were reported for the first quarter of fiscal 2020 - No significant changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended June 27, 2019 were reported for the first quarter of fiscal 2020[144] Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - This section lists the exhibits filed with the report, including officer certifications and XBRL data[147][151]