John B Sanfilippo & Son Inc. (NASDAQ:JBSS) Q1 2020 Earnings Conference Call - Final Transcript

Oct 29, 2019 • 10:00 am ET


John B Sanfilippo & Son Inc. (NASDAQ:JBSS) Q1 2020 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the John B. Sanfilippo & Son Inc. First Quarter Fiscal 2020 Operating Results Conference call. At this time, all participants line are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Mike Valentine, Chief Financial Officer. Thank you. Please go ahead, sir.

Michael J. Valentine

Thank you, Margaline. Good morning, everyone, and welcome to our fiscal 2020 first quarter earnings conference call. Thank you for joining us today. On the call with me today is Jeffrey Sanfilippo, our CEO; and Jasper Sanfilippo, our COO.

But before we start, we want to alert you to the fact that we may make some forward-looking statements today. These statements are based on our current expectations and they involve certain risks and uncertainties. The factors that could negatively impact results are explained in the various SEC filings that we have made, including Form 10-K and on occasion Form 10-Q. We encourage you to refer to these filings to learn more about the risks and uncertainties that are inherent in our business.

Starting with the income statement. Net sales for the first quarter of fiscal 2020 increased by 6.6% to $217.8 million in comparison to $204.3 million from last year's first quarter. The increase in net sales resulted from a 9.1% increase in sales volume, which we define as pounds sold to customers. The increase in net sales from volume was offset in part by lower selling prices, primarily for cashews, pecans and walnuts, which in turn resulted from lower commodity acquisition costs.

The increase in sales volume came from a 17.4% increase in sales volume in the consumer distribution channel. This was offset in part by a 13% decline in sales volume in the contract packaging distribution channel, and that was due to a reduction in unit ounce weights implemented by a customer for its entire product line in this channel and reduced promotional activity by another customer in this channel. Sales volume was relatively unchanged in the commercial ingredients channel. The sales volume increase in the consumer distribution channel was mainly due to increased sales of private brands snack nuts and trail mixes from distribution gains with existing and new customers.

Now looking at sales volume for our brands in the consumer channel. Sales volume for Fisher recipe nuts fell by 30.3% as a result of loss of distribution for some items due to the continued expansion of private brand recipe nut offerings at a major customer. Sales volume for Orchard Valley Harvest brand increased by 12.4% and that was mainly from increased sales with existing customers. Fisher snack nut sales volume declined by 8% due to lost airline business and club business. Southern Style Nuts brand sales volume increased by 40.3% due to distribution gains with new grocery customers primarily.

Gross profit increased by 28.2% to $42.2 million in the first quarter of fiscal