• Net Sales (Q4 2024): $269.6 million, a 15.1% increase from Q4 2023.

• Lakeville Acquisition Contribution (Q4 2024): $44.2 million in net sales.

• Net Income (Q4 2024): $10 million or $0.86 per diluted share.

• Gross Profit (Q4 2024): $50 million, a decrease of 8.6%.

• Gross Profit Margin (Q4 2024): 18.5% of net sales, down from 23.4% in Q4 2023.

• Net Sales (Fiscal 2024): $1.07 billion, a 6.7% increase from fiscal 2023.

• Net Income (Fiscal 2024): $60.2 million or $5.15 per diluted share.

• Annual Dividend Increase: 6.3% to $0.85 per share, plus a special dividend of $1.25 per share.

• Inventory Increase: $23.6 million or 13.7% year-over-year.

• Warning! GuruFocus has detected 2 Warning Sign with JBSS.

Release Date: August 21, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• John B Sanfilippo & Son Inc (NASDAQ:JBSS) exceeded $1 billion in sales for the first time in the company's history.

• The company successfully diversified its product offerings through the acquisition and optimization of the Lakeville bar facility.

• Annual dividend was raised by 6.3% to $0.85 per share, with an additional special dividend of $1.25 per share.

• Net sales for the fourth quarter increased by 15.1% compared to the previous year, driven by the Lakeville Acquisition.

• The company is focused on expanding its manufacturing capabilities and has leased a new 400,000 square foot warehouse to support growth.

Negative Points

• Excluding the Lakeville Acquisition, net sales decreased by 3.8% due to a decline in sales volume and competitive pricing pressures.

• Gross profit decreased by 8.6% in the fourth quarter, primarily due to decreased selling prices and manufacturing inefficiencies.

• Sales volume declined for key nut types such as peanuts, almonds, pecans, and walnuts.

• The consumer channel faced significant headwinds with declining consumption due to inflation and other economic factors.

• Net income for the fourth quarter decreased to $10 million from $14.7 million in the previous year.

Q & A Highlights

Q: Can you provide an overview of the financial performance for the fourth quarter of fiscal 2024? A: Frank Pellegrino, CFO, reported that net sales for the fourth quarter increased by 15.1% to $269.6 million, primarily due to the Lakeville Acquisition, which contributed $44.2 million. Excluding this acquisition, net sales decreased by 3.8% due to a decline in sales volume and competitive pricing pressures. Gross profit decreased by 8.6% to $50 million, with a gross profit margin decline to 18.5% from 23.4% in the previous year.

Q: How did the Lakeville Acquisition impact the company's performance? A: CEO Jeffrey Sanfilippo highlighted that the Lakeville Acquisition was a key component of their strategic plan, contributing approximately $120 million in net sales for the fiscal year. The acquisition helped diversify product offerings and optimize operations ahead of schedule, positively impacting future operating results.

Q: What are the company's strategic priorities for fiscal 2025? A: Jeffrey Sanfilippo stated that the focus will be on accelerating volume growth by expanding private brand success, rebuilding the nut and trail business through innovation, and enhancing manufacturing capabilities. The company plans to move warehouse operations to a new facility to expand production capacity.

Q: How did the consumer distribution channel perform in the fourth quarter? A: Frank Pellegrino noted a 31% increase in sales volume in the consumer distribution channel, driven by the Lakeville Acquisition. Excluding this impact, sales volume increased by 1.8%, primarily due to new peanut butter distribution and increased volume of mixed nuts at mass merchandising retailers.

Q: What challenges does the company anticipate in the future? A: Jeffrey Sanfilippo acknowledged challenges such as declining consumption trends in the snack category and higher costs for chocolate and cashew nuts. However, the company is working on solutions to overcome these headwinds and is optimistic about future growth and profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.