Q1 2022 John B Sanfilippo & Son Inc Earnings Call
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Good day, and thank you for standing by and welcome to the John B Sanfilippo Ensign incorporated first quarter fiscal 2022 operating results conference call.
At this time all participants are in a listen only mode, Australia speaker's presentation, there will be a question and answer session.
I'll ask a question during the session you will need to press star one on your telephone keypad.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your first speaker today CFO Frank Pellegrino. Please go ahead Sir.
Thank you Charlotte and good morning, everyone and welcome to our fiscal 2022 first quarter earnings Conference call.
Thank you for joining us today on the call with me today is Jeffrey Sanfilippo, our CEO Jasper Sanfilippo, our C O O and Mike Valentine Our group President.
Before we start I would like to remind everyone that we may make some forward looking statements today.
These statements are based on our current expectations and they involve certain risks and uncertainties.
Factors that could negatively impact results are explained in the various SEC filings that we have made including forms 10-K and 10-Q.
We encourage you to refer to these filings to learn more about these risks and uncertainties that are inherent in our business.
Starting with the income statement net.
Net sales for the first quarter of fiscal 2022 increased seven 6% to $226 $3 million compared to net sales of $210 3 million for the first quarter of fiscal 2021.
The increase in net sales was mainly attributable to a 14% increase in sales volume, which is defined as pounds sold to customers.
Increased sales volume was partially offset by a five 6% decrease in the weighted average selling price per pound.
Which was caused by a decline in commodity prices for our major tree nuts, except cashews.
Sales volume increased in consumer distribution channel by 13%.
Due to a 24% increase in private brand sales volume for trail and snack mixes.
The increase in sales volume for these private brand products came from new distribution and existing customers.
The increase in private brand sales volume was partially offset by sales volume decline in our branded products.
Sales volume in the consumer distribution channel accounted for 75, 1% of total sales volume in the first quarter.
Sales volume increased in the commercial ingredients channel by 37, 2% due to a 47, 8% increase in sales volume to our foodservice customers.
The increase in foodservice sales volume was attributable to improved conditions in the restaurant industry from the COVID-19 restrictions.
Sales volume declined in the contract packaging distribution channel by three 9%, primarily due to promotional activity by our customer in the first quarter of fiscal 2021.
Did not repeat in the current first quarter.
Looking at sales volume for our brands and our consumer channel Fisher recipe nuts decreased nine 7%, primarily as a result of merchandising timing shifts loss distribution at a customer and ramping up increased at home cooking and baking nut consumption compared to last year's first quarter due to COVID-19.
The six 3% decrease in sales volume for Orchard Valley harvest was primarily due to a.
Temporary distribution loss at a customer in the club channel. This was partially offset by a 29, 1% increase at a major customer in the non food sector. As this retailer continues to recover from COVID-19 restrictions.
Fisher snack nut sales volume, excluding the impact of our discontinued inshore product line, which occurred in the fourth quarter of fiscal 2021 increased 7% due to new distribution and increased merchandising and existing customers.
Including the impact of the discontinued product line Fisher snack nut volume decreased by 33%.
Sales volume for southern style nuts decreased 1% due to reduced merchandising and promotional activity.
Gross profit increased by 31, 7% to $51 8 million in the first quarter of fiscal 2022 compared to $39 3 million in last year's first quarter.
Gross profit margin increased to 22, 9% of net sales in the current quarter, our fiscal 2022 from 18, 7% for the first quarter of fiscal 2021.
The increase in gross profit and gross profit margin was attributable primarily to lower commodity acquisition cost for all major tree nuts, except cashews and increased sales volume.
Total operating expenses for the current first quarter increased to 10, 8% of net sales from nine from nine 7% for last year's first quarter.
Total operating expenses for the current first quarter increased $4 million in the quarterly comparison.
This increase included a gain of approximately $2 3 million from the sale of our Gary's broke North Carolina facility.
The increase in total operating expenses was due to increase in freight expense and.
An increase in consumer insight research and related consulting increased advertising and increased compensation expenses.
The increase in freight accounted for 60% of total increase in operating expense.
The FERC expense increase resulted mainly from higher freight rates and increase in sales volume maintenance delivered on a delivered basis.
Interest expense for the current first quarter, a decrease of $371000 from $450000 for first quarter of fiscal 2021 due to lower average debt levels.
As a result of what we've previously mentioned net income was $19 $2 million or $1 66 per share diluted for the first quarter of fiscal 2022 compared to $12 8 million or one.
$1 11 per share diluted for the first quarter fiscal 2021.
Now taking a look at inventory.
The total value of inventories on hand at the end of the current first quarter increased $2 $2 million or one 5% compared to total inventory value at the end of the first quarter of fiscal 2021.
The increase in value of inventory inventories were primary due to higher quantities of <unk> ingredients and packaging.
This was partially offset by lower quantities of farmer stock Peanuts, pecans and cashews on hand.
The weighted average cost per pound of raw nut and dried fruit input stocks on hand at the end of the quarter increased 11, 1% compared to the first quarter of fiscal 2021.
This increase increase in weighted average cost is attributed to the quantity of lower priced peanuts decreased and much more significantly than the decrease in total quantity of higher priced tree nut and dried fruit input stocks in the quarterly comparison.
The decrease in the quantity of Peanuts on hand was due to the closure of our <unk> facility.
I will now turn the call over to Jeffrey Sanfilippo, our CEO to provide additional comments on our operating results for the first quarter of fiscal 2022.
Thank you Frank good morning, everyone.
A great start to the current first quarter of fiscal 2022.
Ported record net income and diluted earnings per share for the fourth consecutive quarter. The record results were driven by strong double digit volume growth in our consumer distribution channel. The continued recovery of our foodservice business and our commercial ingredients channel and lower commodity acquisition costs for most major.
Tree nuts the.
The strong sales volume growth in our consumer distribution.