10-Q 1 d260199d10q.htm 10-Q 10-Q
falseQ3SANFILIPPO JOHN B & SON INC0000880117--06-30Amounts in parenthesis indicate debits to expense. See Note 9 – “Retirement Plan” above for additional details.The number of RSUs vested includes shares that were withheld on behalf of employees to satisfy the statutory income tax withholding requirements. 0000880117 2020-06-26 2021-03-25 0000880117 2021-06-25 2022-03-24 0000880117 2020-12-25 2021-03-25 0000880117 2021-12-24 2022-03-24 0000880117 2022-03-24 0000880117 2021-06-24 0000880117 2021-03-25 0000880117 2021-06-25 2021-09-23 0000880117 2020-06-26 2020-09-24 0000880117 2021-09-24 2021-12-23 0000880117 2020-09-25 2020-12-24 0000880117 2020-06-25 0000880117 2021-12-23 0000880117 2020-09-24 0000880117 2021-09-23 0000880117 2020-12-24 0000880117 us-gaap:RevolvingCreditFacilityMember 2022-03-24 0000880117 jbss:SquirrelBrandMember 2022-03-24 0000880117 us-gaap:CustomerRelationshipsMember 2022-03-24 0000880117 us-gaap:TradeNamesMember 2022-03-24 0000880117 us-gaap:NoncompeteAgreementsMember 2022-03-24 0000880117 jbss:NoncumulativeCommonStockMember 2022-03-24 0000880117 us-gaap:CommonClassAMember 2022-03-24 0000880117 jbss:OperatingLeaseRightOfUseAssetsMember 2022-03-24 0000880117 us-gaap:OtherLiabilitiesMember 2022-03-24 0000880117 jbss:NonCurrentOperatingLeaseLiabilitiesMember 2022-03-24 0000880117 srt:MaximumMember 2022-03-24 0000880117 jbss:OperatingLeaseYetToCommenceMember 2022-03-24 0000880117 srt:MinimumMember 2022-03-24 0000880117 us-gaap:CustomerRelationshipsMember 2021-06-24 0000880117 us-gaap:TradeNamesMember 2021-06-24 0000880117 us-gaap:NoncompeteAgreementsMember 2021-06-24 0000880117 jbss:NoncumulativeCommonStockMember 2021-06-24 0000880117 us-gaap:CommonClassAMember 2021-06-24 0000880117 jbss:OperatingLeaseRightOfUseAssetsMember 2021-06-24 0000880117 us-gaap:OtherLiabilitiesMember 2021-06-24 0000880117 jbss:NonCurrentOperatingLeaseLiabilitiesMember 2021-06-24 0000880117 us-gaap:CustomerRelationshipsMember 2021-03-25 0000880117 us-gaap:TradeNamesMember 2021-03-25 0000880117 us-gaap:NoncompeteAgreementsMember 2021-03-25 0000880117 jbss:NoncumulativeCommonStockMember 2021-03-25 0000880117 us-gaap:CommonClassAMember 2021-03-25 0000880117 jbss:OperatingLeaseRightOfUseAssetsMember 2021-03-25 0000880117 us-gaap:OtherLiabilitiesMember 2021-03-25 0000880117 jbss:NonCurrentOperatingLeaseLiabilitiesMember 2021-03-25 0000880117 us-gaap:RetainedEarningsMember 2021-06-25 2021-09-23 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-25 2021-09-23 0000880117 jbss:NoncumulativeCommonStockMember 2021-06-25 2021-09-23 0000880117 us-gaap:AdditionalPaidInCapitalMember 2021-06-25 2021-09-23 0000880117 us-gaap:RetainedEarningsMember 2021-09-24 2021-12-23 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-24 2021-12-23 0000880117 jbss:NoncumulativeCommonStockMember 2021-09-24 2021-12-23 0000880117 us-gaap:AdditionalPaidInCapitalMember 2021-09-24 2021-12-23 0000880117 us-gaap:RetainedEarningsMember 2020-06-26 2020-09-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-26 2020-09-24 0000880117 jbss:NoncumulativeCommonStockMember 2020-06-26 2020-09-24 0000880117 us-gaap:AdditionalPaidInCapitalMember 2020-06-26 2020-09-24 0000880117 us-gaap:RetainedEarningsMember 2020-09-25 2020-12-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-25 2020-12-24 0000880117 jbss:NoncumulativeCommonStockMember 2020-09-25 2020-12-24 0000880117 us-gaap:AdditionalPaidInCapitalMember 2020-09-25 2020-12-24 0000880117 us-gaap:RevolvingCreditFacilityMember 2020-03-05 0000880117 jbss:NoncumulativeCommonStockMember 2022-04-22 0000880117 us-gaap:CommonClassAMember 2022-04-22 0000880117 us-gaap:GeneralAndAdministrativeExpenseMember 2021-06-25 2022-03-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-25 2022-03-24 0000880117 us-gaap:SalesChannelDirectlyToConsumerMember 2021-06-25 2022-03-24 0000880117 jbss:SalesChannelCommercialIngredientsMember 2021-06-25 2022-03-24 0000880117 jbss:SalesChannelContractPackagingMember 2021-06-25 2022-03-24 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2021-06-25 2022-03-24 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2021-06-25 2022-03-24 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-06-25 2022-03-24 0000880117 us-gaap:RestrictedStockUnitsRSUMember 2021-06-25 2022-03-24 0000880117 us-gaap:PropertyPlantAndEquipmentMember 2021-06-25 2022-03-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-26 2021-03-25 0000880117 us-gaap:SalesChannelDirectlyToConsumerMember 2020-06-26 2021-03-25 0000880117 jbss:SalesChannelCommercialIngredientsMember 2020-06-26 2021-03-25 0000880117 jbss:SalesChannelContractPackagingMember 2020-06-26 2021-03-25 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2020-06-26 2021-03-25 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2020-06-26 2021-03-25 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-06-26 2021-03-25 0000880117 us-gaap:GeneralAndAdministrativeExpenseMember 2021-12-24 2022-03-24 0000880117 us-gaap:RetainedEarningsMember 2021-12-24 2022-03-24 0000880117 us-gaap:SalesChannelDirectlyToConsumerMember 2021-12-24 2022-03-24 0000880117 jbss:SalesChannelCommercialIngredientsMember 2021-12-24 2022-03-24 0000880117 jbss:SalesChannelContractPackagingMember 2021-12-24 2022-03-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-24 2022-03-24 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2021-12-24 2022-03-24 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2021-12-24 2022-03-24 0000880117 jbss:NoncumulativeCommonStockMember 2021-12-24 2022-03-24 0000880117 us-gaap:AdditionalPaidInCapitalMember 2021-12-24 2022-03-24 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-12-24 2022-03-24 0000880117 us-gaap:RetainedEarningsMember 2020-12-25 2021-03-25 0000880117 us-gaap:SalesChannelDirectlyToConsumerMember 2020-12-25 2021-03-25 0000880117 jbss:SalesChannelCommercialIngredientsMember 2020-12-25 2021-03-25 0000880117 jbss:SalesChannelContractPackagingMember 2020-12-25 2021-03-25 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-25 2021-03-25 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2020-12-25 2021-03-25 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2020-12-25 2021-03-25 0000880117 jbss:NoncumulativeCommonStockMember 2020-12-25 2021-03-25 0000880117 us-gaap:AdditionalPaidInCapitalMember 2020-12-25 2021-03-25 0000880117 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-12-25 2021-03-25 0000880117 us-gaap:CommonClassAMember 2021-06-24 0000880117 jbss:NoncumulativeCommonStockMember 2021-06-24 0000880117 us-gaap:AdditionalPaidInCapitalMember 2021-06-24 0000880117 us-gaap:RetainedEarningsMember 2021-06-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-24 0000880117 us-gaap:TreasuryStockMember 2021-06-24 0000880117 us-gaap:CommonClassAMember 2021-09-23 0000880117 jbss:NoncumulativeCommonStockMember 2021-09-23 0000880117 us-gaap:AdditionalPaidInCapitalMember 2021-09-23 0000880117 us-gaap:RetainedEarningsMember 2021-09-23 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-23 0000880117 us-gaap:TreasuryStockMember 2021-09-23 0000880117 jbss:NoncumulativeCommonStockMember 2021-12-23 0000880117 us-gaap:AdditionalPaidInCapitalMember 2021-12-23 0000880117 us-gaap:RetainedEarningsMember 2021-12-23 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-23 0000880117 us-gaap:TreasuryStockMember 2021-12-23 0000880117 us-gaap:CommonClassAMember 2021-12-23 0000880117 jbss:NoncumulativeCommonStockMember 2020-06-25 0000880117 us-gaap:AdditionalPaidInCapitalMember 2020-06-25 0000880117 us-gaap:RetainedEarningsMember 2020-06-25 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-25 0000880117 us-gaap:TreasuryStockMember 2020-06-25 0000880117 us-gaap:CommonClassAMember 2020-06-25 0000880117 us-gaap:CommonClassAMember 2020-09-24 0000880117 jbss:NoncumulativeCommonStockMember 2020-09-24 0000880117 us-gaap:AdditionalPaidInCapitalMember 2020-09-24 0000880117 us-gaap:RetainedEarningsMember 2020-09-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-24 0000880117 us-gaap:TreasuryStockMember 2020-09-24 0000880117 us-gaap:CommonClassAMember 2020-12-24 0000880117 jbss:NoncumulativeCommonStockMember 2020-12-24 0000880117 us-gaap:AdditionalPaidInCapitalMember 2020-12-24 0000880117 us-gaap:RetainedEarningsMember 2020-12-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-24 0000880117 us-gaap:TreasuryStockMember 2020-12-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-24 0000880117 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-25 0000880117 us-gaap:CommonClassAMember 2022-03-24 0000880117 jbss:NoncumulativeCommonStockMember 2022-03-24 0000880117 us-gaap:AdditionalPaidInCapitalMember 2022-03-24 0000880117 us-gaap:RetainedEarningsMember 2022-03-24 0000880117 us-gaap:TreasuryStockMember 2022-03-24 0000880117 us-gaap:CommonClassAMember 2021-03-25 0000880117 jbss:NoncumulativeCommonStockMember 2021-03-25 0000880117 us-gaap:AdditionalPaidInCapitalMember 2021-03-25 0000880117 us-gaap:RetainedEarningsMember 2021-03-25 0000880117 us-gaap:TreasuryStockMember 2021-03-25 iso4217:USD xbrli:shares utr:Year xbrli:pure iso4217:USD xbrli:shares jbss:Channel
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-Q
 
 
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 24, 2022
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number
0-19681
 
 
JOHN B. SANFILIPPO & SON, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
Delaware
 
36-2419677
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer

Identification No.)
1703 North Randall Road
Elgin, Illinois
 
60123-7820
(Address of Principal Executive Offices)
 
(Zip Code)
(847)
289-1800
(Registrant’s Telephone Number,Including Area Code)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading
Symbol
 
Name of Each Exchange
on Which Registered
Common Stock, $.01 par value per share
 
JBSS
 
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
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
S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No
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)
 
Large accelerated filer      Accelerated filer   
Non-accelerated
filer
     Smaller reporting company   
     Emerging growth company   
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
12b-2
of the Exchange Act).    ☐  Yes      No
As of April 22, 2022, 8,928,520 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 MARCH 24, 2022
INDEX
 
    
Page
 
  
  
     3  
     4  
     6  
     7  
     8  
     17  
     28  
     28  
  
     28  
     28  
     28  
     32  

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)
 
    
For the Quarter Ended
   
For the Thirty-Nine Weeks

Ended
 
    
March 24,

2022
   
March 25,

2021
   
March 24,
2022
   
March 25,

2021
 
Net sales
   $ 218,584     $ 207,892     $ 698,120     $ 651,740  
Cost of sales
     179,175       161,846       554,678       513,567  
    
 
 
   
 
 
   
 
 
   
 
 
 
Gross profit
     39,409       46,046       143,442       138,173  
    
 
 
   
 
 
   
 
 
   
 
 
 
Operating expenses:
                                
Selling expenses
     15,584       15,090       56,896       44,868  
Administrative expenses
     6,401       9,859       25,871       25,539  
Gain on sale of facility, net
                 (2,349      
    
 
 
   
 
 
   
 
 
   
 
 
 
Total operating expenses
     21,985       24,949       80,418       70,407  
    
 
 
   
 
 
   
 
 
   
 
 
 
Income from operations
     17,424       21,097       63,024       67,766  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other expense:
                                
Interest expense including $199, $162, $591 and $494 to related parties
     531       309       1,322       1,135  
Rental and miscellaneous expense, net
     403       379       1,074       1,176  
Other expense
     618       630       1,855       1,889  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other expense, net
     1,552       1,318       4,251       4,200  
    
 
 
   
 
 
   
 
 
   
 
 
 
Income before income taxes
     15,872       19,779       58,773       63,566  
Income tax expense
     3,995       5,078       14,400       16,168  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income
   $ 11,877     $ 14,701     $ 44,373     $ 47,398  
Other comprehensive income:
                                
Amortization of prior service cost and actuarial loss included in net periodic pension cost
     363       416       1,091       1,246  
Income tax expense related to pension adjustments
     (94     (104     (284     (311
    
 
 
   
 
 
   
 
 
   
 
 
 
Other comprehensive income, net of tax
     269       312       807       935  
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive income
   $ 12,146     $ 15,013     $ 45,180     $ 48,333  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income per common share-basic
   $ 1.03     $ 1.28     $ 3.85     $ 4.12  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income per common share-diluted
   $ 1.02     $ 1.27     $ 3.83     $ 4.10  
    
 
 
   
 
 
   
 
 
   
 
 
 
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)
 
    
March 24,

2022
    
June 24,

2021
    
March 25,

2021
 
ASSETS
                          
CURRENT ASSETS:
                          
Cash
   $ 667      $ 672      $ 1,043  
Accounts receivable, less allowance for doubtful accounts of $280, $291 and $291
     68,704        66,334        64,502  
Inventories
     211,127        147,998        151,757  
Prepaid expenses and other current assets
     7,653        8,568        6,481  
Assets held for sale
            1,595         
    
 
 
    
 
 
    
 
 
 
TOTAL CURRENT ASSETS
     288,151        225,167        223,783  
    
 
 
    
 
 
    
 
 
 
PROPERTY, PLANT AND EQUIPMENT:
                          
Land
     9,150        9,150        9,277  
Buildings
     102,810        102,666        110,739  
Machinery and equipment
     230,842        225,529        225,583  
Furniture and leasehold improvements
     5,296        5,287        5,322  
Vehicles
     614        614        604  
Construction in progress
     18,077        12,301        9,662  
    
 
 
    
 
 
    
 
 
 
       366,789        355,547        361,187  
Less: Accumulated depreciation
     249,358        238,471        247,812  
    
 
 
    
 
 
    
 
 
 
     117,431      117,076      113,375  
Rental investment property, less accumulated depreciation of $13,431, $12,825 and $12,623
     15,692        16,298        16,500  
    
 
 
    
 
 
    
 
 
 
TOTAL PROPERTY, PLANT AND EQUIPMENT
     133,123        133,374        129,875  
    
 
 
    
 
 
    
 
 
 
Intangible assets, net
     8,509        9,961        10,464  
Cash surrender value of officers’ life insurance and other assets
     6,472        10,732        9,647  
Deferred income taxes
     5,104        6,087        5,051  
Goodwill
     9,650        9,650        9,650  
Operating lease
right-of-use
assets
     2,570        3,484        3,758  
    
 
 
    
 
 
    
 
 
 
TOTAL ASSETS
   $ 453,579      $ 398,455      $ 392,228  
    
 
 
    
 
 
    
 
 
 
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)
 
    
March 24,

2022
   
June 24,

2021
   
March 25,

2021
 
LIABILITIES & STOCKHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Revolving credit facility borrowings
   $ 65,863     $ 8,653     $ 26,005  
Current maturities of long-term debt, including related party debt of $600, $627 and $616 and net of unamortized debt issuance costs of $7, $15 and $17
     3,961       3,875       3,828  
Accounts payable
     48,918       48,861       43,684  
Bank overdraft
     1,314       1,093       1,509  
Accrued payroll and related benefits
     12,646       24,109       19,224  
Other accrued expenses
     13,113       13,613       12,422  
    
 
 
   
 
 
   
 
 
 
TOTAL CURRENT LIABILITIES
     145,815       100,204       106,672  
    
 
 
   
 
 
   
 
 
 
LONG-TERM LIABILITIES:
                        
Long-term debt, less current maturities, including related party debt of $7,933, $8,320 and $8,481and net of unamortized debt issuance costs of $0, $4 and $7
     7,933       10,855       11,842  
Retirement plan
     35,935       34,919       32,433  
Long-term operating lease liabilities, net of current portion
     1,241       2,103       2,359  
Other
     7,876       7,880       8,019  
    
 
 
   
 
 
   
 
 
 
TOTAL LONG-TERM LIABILITIES
     52,985       55,757       54,653  
    
 
 
   
 
 
   
 
 
 
TOTAL LIABILITIES
     198,800       155,961       161,325  
    
 
 
   
 
 
   
 
 
 
COMMITMENTS AND CONTINGENCIES
                        
STOCKHOLDERS’ EQUITY:
                        
Class A Common Stock, convertible to Common Stock on a per share basis, cumulative voting rights of ten votes per share, $.01 par value; 10,000,000 shares authorized, 2,597,426 shares issued and outstanding
     26       26       26  
Common Stock,
non-cumulative
voting rights of one vote per share, $.01 par value; 17,000,000 shares authorized, 9,046,420, 8,988,812 and 8,988,812 shares issued
     90       90       90  
Capital in excess of par value
     127,910       126,271       125,693  
Retained earnings
     136,175       126,336       113,993  
Accumulated other comprehensive loss
     (8,218     (9,025     (7,695
Treasury stock, at cost; 117,900 shares of Common Stock
     (1,204     (1,204     (1,204
    
 
 
   
 
 
   
 
 
 
TOTAL STOCKHOLDERS’ EQUITY
     254,779       242,494       230,903  
    
 
 
   
 
 
   
 
 
 
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY
   $ 453,579     $ 398,455     $ 392,228  
    
 
 
   
 
 
   
 
 
 
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)
 
    
Class A Common
Stock
    
Common Stock
    
Capital in
Excess of
Par Value
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
       
    
Shares
    
Amount
    
Shares
    
Amount
   
Total
 
Balance, June 24, 2021
     2,597,426      $ 26        8,988,812      $ 90      $ 126,271     $ 126,336     $ (9,025   $ (1,204   $ 242,494  
Net income
                                                 19,249                       19,249  
Cash dividends ($3.00 per share)
                                                 (34,534                     (34,534
Pension liability amortization, net of income tax expense of $95
                                                         269               269  
Equity award exercises, net of shares withheld for employee taxes
                       1,168               (16                             (16
Stock-based compensation expense
                                         703                               703  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, September 23, 2021
     2,597,426      $ 26        8,989,980      $ 90      $ 126,958     $ 111,051     $ (8,756   $ (1,204   $ 228,165  
Net income
                                                 13,247                       13,247  
Pension liability amortization, net of income tax expense of $95
                                                         269               269  
Equity award exercises, net of shares withheld for employee taxes
                       54,980               (946                             (946
Stock-based compensation expense
                                         1,068                               1,068  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, December 23, 2021
     2,597,426      $ 26        9,044,960      $ 90      $ 127,080     $ 124,298     $ (8,487   $ (1,204   $ 241,803  
Net income
                                                 11,877                       11,877  
Pension liability amortization, net of income tax expense of $94
                                                         269               269  
Equity award exercises, net of shares withheld for employee taxes
                       1,460               (48                             (48
Stock-based compensation expense
                                         878                               878  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, March 24, 2022
     2,597,426      $ 26        9,046,420      $ 90      $ 127,910     $ 136,175     $ (8,218   $ (1,204   $ 254,779  
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Class A Common
Stock
 
  
Common Stock
 
  
Capital in
Excess of
Par Value
 
 
Retained
Earnings
 
 
Accumulated
Other
Comprehensive
Loss
 
 
Treasury
Stock
 
 
 
 
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
 
Total
 
Balance, June 25, 2020
     2,597,426      $ 26        8,939,890      $ 89      $ 123,899     $ 124,058     $ (8,630   $ (1,204   $ 238,238  
Net income
                                                 12,812                       12,812  
Cash dividends ($2.50 per share)
                                                 (28,685                     (28,685
Pension liability amortization, net of income tax expense of $104
                                                         312               312  
Equity award exercises
                       221                                              
Stock-based compensation expense
                                         622                               622  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, September 24, 2020
     2,597,426      $ 26        8,940,111      $ 89      $ 124,521     $ 108,185     $ (8,318   $ (1,204   $ 223,299  
Net income
                                                 19,885                       19,885  
Pension liability amortization, net of income tax expense of $103
                                                         311               311  
Equity award exercises, net of shares withheld for employee taxes
                       43,477        1        (487                             (486
Stock-based compensation expense
                                         998                               998  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, December 24, 2020
     2,597,426      $ 26        8,983,588      $ 90      $ 125,032     $ 128,070     $ (8,007   $ (1,204   $ 244,007  
Net income
                                                 14,701                       14,701  
Cash dividends ($2.50 per share)
                                                 (28,778                     (28,778
Pension liability amortization, net of income tax expense of $104
                                                         312               312  
Equity award exercises, net of shares withheld for employee taxes
                       5,224               (49                             (49
Stock-based compensation expense
                                         710                               710  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, March 25, 2021
     2,597,426      $ 26        8,988,812      $ 90      $ 125,693     $ 113,993     $ (7,695   $ (1,204   $ 230,903  
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Thirty-Nine Weeks Ended
 
 
  
March 24,
2022
 
 
March 25,
2021
 
CASH FLOWS FROM OPERATING ACTIVITIES:
  
 
Net income
   $ 44,373     $ 47,398  
Depreciation and amortization
     13,619       13,665  
Gain on disposition of assets, net
     (1,754     (2,733
Deferred income tax expense
     983       1,737  
Stock-based compensation expense
     2,649       2,330  
Change in assets and liabilities:
                
Accounts receivable, net
     (2,370     (7,553
Inventories
     (63,129     20,311  
Prepaid expenses and other current assets
     915       1,834  
Accounts payable
     1,767       7,498  
Accrued expenses
     (10,046     (6,138
Income taxes payable
     (1,917     (3,727
Other long-term assets and liabilities
     532       605  
Other, net
     1,823       1,799  
    
 
 
   
 
 
 
Net cash (used in) provided by operating activities
     (12,555     77,026  
    
 
 
   
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property, plant and equipment
     (12,836     (15,769
Proceeds from insurance recoveries
           2,506  
Proceeds from dispositions of assets, net
     3,950       299  
Proceeds from the sale of life insurance policies
     3,225        
Other
     (827     (656
    
 
 
   
 
 
 
Net cash used in investing activities
     (6,488     (13,620
    
 
 
   
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Net short-term borrowings (repayments)
     57,210       (1,003
Principal payments on long-term debt
     (2,849     (4,365
Increase (decrease) in bank overdraft
     221       (532
Dividends paid
     (34,534     (57,463
Taxes paid related to net share settlement of equity awards
     (1,010     (535
    
 
 
   
 
 
 
Net cash provided by (used in) financing activities
     19,038       (63,898
    
 
 
   
 
 
 
NET DECREASE IN CASH
     (5     (492
Cash, beginning of period
     672       1,535  
    
 
 
   
 
 
 
Cash, end of period
   $ 667     $ 1,043  
    
 
 
   
 
 
 
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 third quarter of fiscal 2022 and fiscal 2021 are to the quarters ended March 24, 2022 and March 25, 2021, respectively.
 
   
References herein to the first three quarters or first thirty-nine weeks of fiscal 2022 and fiscal 2021 are to the thirty-nine weeks ended March 24, 2022 and March 25, 2021, 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
Fisher, Orchard Valley Harvest,
Squirrel Brand, Southern Style Nuts
and
Sunshine Country
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.
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 Thirty-Nine
Weeks Ended
 
Distribution Channel
  
March 24,

2022
    
March 25,

2021
    
March 24,

2022
    
March 25,

2021
 
Consumer
   $ 173,648      $ 169,415      $ 556,888      $ 528,201  
Commercial Ingredients
     25,514        21,052        81,426        64,399  
Contract Packaging
     19,422        17,425        59,806        59,140  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 218,584      $ 207,892      $ 698,120      $ 651,740  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
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
right-of-use
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
right-of-use
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 4.9 years.
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
right-of-use
assets and liabilities:
 
 
  
March 24,

2022
 
  
June 24,

2021
 
  
March 25,

2021
 
  
Affected Line Item in
Consolidated Balance Sheet
Assets
  
     
  
     
  
     
  
 
Operating lease
right-of-use
assets
   $ 2,570      $ 3,484      $ 3,758     
Operating lease right-of-use assets
    
 
 
    
 
 
    
 
 
      
Total lease
right-of-use
assets
   $ 2,570      $ 3,484      $ 3,758       
    
 
 
    
 
 
    
 
 
      
Liabilities
                               
Current:
                               
Operating leases
   $ 1,355      $ 1,430      $ 1,449     
Other accrued expenses
Noncurrent:
                               
Operating leases
     1,241        2,103        2,359     
Long-term operating lease liabilities
    
 
 
    
 
 
    
 
 
      
Total lease liabilities
   $ 2,596      $ 3,533      $ 3,808       
    
 
 
    
 
 
    
 
 
      
The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:
 
    
For the Quarter Ended
    
For the Thirty-Nine Weeks Ended
 
    
March 24,

2022
    
March 25,

2021
    
March 24,

2022
    
March 25,

2021
 
Operating lease costs
(a)
   $ 470      $ 437      $ 1,384      $ 1,387  
Variable lease costs
(b)
     15        17        51        54  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total Lease Cost
   $ 485      $ 454      $ 1,435      $ 1,441  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(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 is as follows:
 
    
For the Thirty-Nine Weeks Ended
 
    
March 24, 2022
    
March 25, 2021
 
Operating cash flows information:
                 
Cash paid for amounts included in measurements for lease liabilities
   $ 1,199      $ 1,171  
Non-cash
activity:
                 
Right-of-use assets obtained in exchange for new operating lease obligations
   $ 167      $ 490  
 
    
March 24,
2022
   
June 24,

2021
   
March 25,
2021
 
Weighted Average Remaining Lease Term (in years)
     2.4       2.8       3.0  
Weighted Average Discount Rate
     4.2     4.3     4.3
Maturities of operating lease liabilities as of March 24, 2022 are as follows:
 
Fiscal year ending
        
June 30, 2022 (excluding the thirty-nine weeks ended March 24, 2022)
   $ 373  
June 29, 2023
     1,297  
June 27, 2024
     654  
June 26, 2025
     278  
June 25, 2026
     103  
June 24, 2027
     18  
Thereafter
      
    
 
 
 
Total lease payments
     2,723  
Less imputed interest
     (127
    
 
 
 
Present value of operating lease liabilities
   $ 2,596  
    
 
 
 
At March 24, 2022, the Company has additional operating leases of approximately $670 that have not yet commenced and therefore are not reflected in the Consolidated Balance Sheet and tables above. The leases are scheduled to commence in the fourth quarter of fiscal 2022 or early fiscal 2023 with an initial lease term ranging from 3 to 5 years.
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: Leases 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 Thirty-Nine
Weeks Ended
 
  
March 24,
2022
    
March 25,
2021
    
March 24,
2022
    
March 25,
2021
 
Lease income related to lease payments
   $ 402      $ 451      $ 1,220      $ 1,354  
 
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 thirty-nine weeks ended March 24, 2022)
   $ 443  
June 29, 2023
     1,794  
June 27, 2024
     1,818  
June 26, 2025
     1,228  
June 25, 2026
     670  
June 24, 2027
     614  
Thereafter
      
    
 
 
 
     $ 6,567  
    
 
 
 
Note 4 – Inventories
Inventories consist of the following:
 
 
  
March 24, 2022
 
  
June 24, 2021
 
  
March 25, 2021
 
Raw material and supplies
   $ 104,810      $ 64,219      $ 73,068  
Work-in-process
and finished goods
     106,317        83,779        78,689  
    
 
 
    
 
 
    
 
 
 
Total
   $ 211,127      $ 147,998      $ 151,757  
    
 
 
    
 
 
    
 
 
 
Note 5 – Goodwill and Intangible Assets
Identifiable intangible assets that are subject to amortization consist of the following:
 
 
  
March 24, 2022
 
  
June 24, 2021
 
  
March 25, 2021
 
Customer relationships
   $ 21,100      $ 21,100      $ 21,100  
Brand names
     16,990        16,990        16,990  
Non-compete
agreement
     270        270        270  
    
 
 
    
 
 
    
 
 
 
       38,360        38,360        38,360  
Less accumulated amortization:
                          
Customer relationships
     (18,537      (17,643      (17,326
Brand names
     (11,080      (10,562      (10,390
Non-compete
agreement
     (234      (194      (180
    
 
 
    
 
 
    
 
 
 
       (29,851      (28,399      (27,896
    
 
 
    
 
 
    
 
 
 
Net intangible assets
   $ 8,509      $ 9,961      $ 10,464  
    
 
 
    
 
 
    
 
 
 
Customer relationships are being amortized on an accelerated basis. The brand names remaining to be amortized consist of the
Squirrel Brand
and
Southern Style Nuts
brand names.
Total amortization expense related to intangible assets, which is a component of “Administrative expenses” on the Consolidated Statements of Comprehensive Income, was $444 and $1,452 for the quarter and thirty-nine weeks ended March 24, 2022, respectively. Amortization expense for the remainder of fiscal 2022 is expected to be approximately $444 and expected amortization expense the next five fiscal years is as follows:
 
Fiscal year ending
        
June 29, 2023
   $ 1,657  
June 27, 2024
     1,414  
June 26, 2025
     1,156  
June 25, 2026
     861  
June 24, 2027
     690  
Our net goodwill of $9,650 relates entirely to the Squirrel Brand acquisition completed in fiscal 2018. There was no change in the carrying amount of goodwill during the thirty-nine weeks ended March 24, 2022.
 
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 March 24, 2022, we had $47,352 of available credit under the Credit Facility which reflects borrowings of $65,863 and reduced availability as a result of $4,285 in outstanding letters of credit. As of March 24, 2022, 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 Thirty-Nine
Weeks Ended
 
    
March 24,

2022
    
March 25,

2021
    
March 24,

2022
    
March 25,

2021
 
Weighted average number of shares outstanding – basic
     11,548,554        11,515,465        11,533,338        11,495,504  
Effect of dilutive securities:
                                   
Restricted stock units
     53,412        58,552        55,745        57,206  
    
 
 
    
 
 
    
 
 
    
 
 
 
Weighted average number of shares outstanding – diluted
     11,601,966        11,574,017        11,589,083        11,552,710  
    
 
 
    
 
 
    
 
 
    
 
 
 
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
The following is a summary of restricted stock unit (“RSU”) activity for the first thirty-nine weeks of fiscal 2022:
 
Restricted Stock Units
  
Shares
    
Weighted
Average Grant
Date Fair Value
 
Outstanding at June 24, 2021
     159,846      $ 58.05  
Activity:
                 
Granted
     53,524        75.94  
Vested
(a)
     (69,130      46.05  
Forfeited
     (717      75.83  
    
 
 
    
 
 
 
Outstanding at March 24, 2022
     143,523      $ 70.42  
    
 
 
    
 
 
 
 
(a)
The number of RSUs vested includes shares that were withheld on behalf of employees to satisfy the statutory income tax withholding requirements.
At March 24, 2022, there are 23,246 RSUs outstanding that are vested but deferred.
The following table summarizes compensation expense charged to earnings for all equity compensation plans for the periods presented:
 
    
For the Quarter Ended
    
For the Thirty-Nine
Weeks Ended
 
    
March 24,

2022
    
March 25,

2021
    
March 24,

2022
    
March 25,

2021
 
Stock-based compensation expense
   $ 878      $ 710      $ 2,649      $ 2,330  
As of March 24, 2022, there was $5,132 of total unrecognized compensation expense related to
non-vested
RSUs granted under our stock-based compensation plans. We expect to recognize that cost over a weighted average period of 1.6 years.
 
13
Note 9 – Retirement Plan
The Supplemental Employee Retirement Plan is an unfunded,
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. The components of net periodic benefit cost are as follows:
 
    
For the Quarter Ended
    
For the Thirty-Nine
Weeks Ended
 
    
March 24,

2022
    
March 25,

2021
    
March 24,

2022
    
March 25,

2021
 
Service cost
   $ 248      $ 236      $ 743      $ 708  
Interest cost
     255        214        764        643  
Amortization of prior service cost
            120               359  
Amortization of loss
     363        296        1,091        887  
    
 
 
    
 
 
    
 
 
    
 
 
 
Net periodic benefit cost
   $ 866      $ 866      $ 2,598      $ 2,597  
    
 
 
    
 
 
    
 
 
    
 
 
 
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.
Note 10 – Accumulated Other Comprehensive Loss
The table below sets forth the changes to accumulated other comprehensive loss (“AOCL”) for the thirty-nine weeks ended March 24, 2022 and March 25, 2021.
These changes are all related to our defined benefit pension plan.
 
Changes to AOCL
(a)
  
For the Thirty-Nine Weeks Ended
 
  
March 24,

2022
 
  
March 25,

2021
 
Balance at beginning of period
   $ (9,025    $ (8,630
Other comprehensive income before reclassifications
             
Amounts reclassified from accumulated other comprehensive loss
     1,091        1,246  
Tax effect
     (284      (311
    
 
 
    
 
 
 
Net current-period other comprehensive income
     807        935  
    
 
 
    
 
 
 
Balance at end of period
   $ (8,218    $ (7,695
    
 
 
    
 
 
 
 
(a)
Amounts in parenthesis indicate debits/expense.
 
14

The reclassifications out of AOCL for the quarter and thirty-nine weeks ended March 24, 2022 and March 25, 2021 were as follows:
 
                            
Affected line

item in

the Consolidated
Statements of
Comprehensive
Income
 
    
For the Quarter Ended
   
For the Thirty-Nine
Weeks Ended
 
Reclassifications from AOCL to earnings
(b)
  
March 24,

2022
   
March 25,

2021
   
March 24,

2022
   
March 25,

2021
 
Amortization of defined benefit pension items:
                                        
Unrecognized prior service cost
   $     $ (120   $     $ (359     Other expense  
Unrecognized net loss
     (363     (296     (1,091     (887     Other expense  
    
 
 
   
 
 
   
 
 
   
 
 
         
Total before tax
     (363     (416     (1,091     (1,246        
Tax effect
     94       104       284       311       Income tax expense  
    
 
 
   
 
 
   
 
 
   
 
 
         
Amortization of defined pension items, net of tax
   $ (269   $ (312   $ (807   $ (935        
    
 
 
   
 
 
   
 
 
   
 
 
         
 
(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.
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.
 
15

The following table summarizes the carrying value and fair value estimate of our current and long-term debt, excluding unamortized debt issuance costs:
 
    
March 24,
2022
    
June 24,

2021
    
March 25,
2021
 
Carrying value of current and long-term debt:
   $ 11,901      $ 14,749      $ 15,694  
Fair value of current and long-term debt:
     12,669        16,210        16,250  
The estimated fair value of our current and 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.
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
No. 2019-12
“Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes”
. 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
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
No. 2020-10
“Codification Improvements”
. 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
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.
 
16

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 third quarter of fiscal 2022 and fiscal 2021 are to the quarters ended March 24, 2022 and March 25, 2021, respectively.
 
   
References herein to the first three quarters or first thirty-nine weeks of fiscal 2022 and fiscal 2021 are to the thirty-nine weeks ended March 24, 2022 and March 25, 2021, 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
Fisher, Orchard Valley Harvest,
Squirrel Brand, Southern Style Nuts
and
Sunshine Country
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.
The Company’s long-term objective to drive profitable growth, as identified in our Strategic Plan, includes continuing to grow
Fisher,
 Orchard Valley Harvest, Squirrel Brand
and
Southern Style Nuts
 into leading brands and providing integrated nut solutions to grow
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 purchasing preferences evolve. Due to the recent widespread inflation and increasing commodity acquisition costs, we have seen higher selling prices at retail. With higher prices across our categories and broader food, consumers may purchase fewer snack products, shift their preferences to private brands or lower priced nuts or purchase snack products outside the nut and trail mix category. With the inflationary environment, we are also seeing signs of consumers shifting to more value-focused channels, such as mass merchandising retailers, club stores and dollar stores. E-commerce platforms are still showing growth but at a lower rate than we saw during the pandemic. Additionally, in recent months we have faced challenges with shortages and cost increases for shipping pallets, packaging, imported ingredients, transportation and shipping availability and labor at our production facilities. The conflict in Ukraine has further exacerbated supply chain disruptions, especially related to sunflower oil used in roasting our nut products and aluminum which is used in certain of our product packaging. We have also experienced supply chain issues related to transportation delays due to congestion at the ports and a general shortage of drivers. 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 and supply chains normalize, but we expect that some costs may remain elevated or unpredictable for a longer period of time. We are working, and will continue to work, 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
 
17

need, such shortages and supply chain issues could have an unfavorable impact on net sales and our operations in the remainder of this fiscal year and into fiscal year 2023. In addition, as costs increase due to these issues or due to inflationary pressures in general, there is an additional risk of not being able to pass (in part or in full) such potential cost increases onto our customers or in a timely manner. If we cannot align costs with prices for our products, our operating performance could be adversely impacted.
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 with the goal of accelerating 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. We continued to see improvement during the third quarter of fiscal 2022; however, these gains were offset in part by the impact of the surge in
COVID-19
cases due to the Omicron variant, a more contagious strain of
COVID-19,
during the first part of the current third quarter.
Also, during fiscal 2021 and into the first half of fiscal 2022, we experienced the implications from a shortage in capacity in the transportation industry. Compounding the associated driver shortage was an increase in demand driven by additional spending on consumer goods, which 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 began to ease during the third quarter of fiscal 2022 as inflation resulted in rising costs which drove down demand in the freight market. While we have mitigated some of the transportation shortages and increased prices of transportation, we may continue to face an unpredictable transportation environment and there is no guarantee that our mitigation strategies will continue to be effective, or that any transportation capacity easing will continue.
 
18

QUARTERLY HIGHLIGHTS
Our net sales of $218.6 million for the third quarter of fiscal 2022 increased 5.1% from our net sales of $207.9 million for the third quarter of fiscal 2021. Net sales for the first thirty-nine weeks of fiscal 2022 increased $46.4 million, or 7.1%, to $698.1 million compared to the first thirty-nine weeks of fiscal 2021.
Sales volume, measured as pounds sold to customers, decreased 2.0 million pounds, or 2.8%, in the third quarter of fiscal 2022, compared to the third quarter of fiscal 2021. Sales volume for the first thirty-nine weeks of fiscal 2022 increased 12.3 million pounds, or 5.6%, compared to the first thirty-nine weeks of fiscal 2021.
Gross profit decreased $6.6 million, and our gross profit margin, as a percentage of net sales, decreased to 18.0% for the third quarter of fiscal 2022 compared to 22.1% for the third quarter of fiscal 2021. Gross profit increased $5.3 million and our gross profit margin decreased to 20.5% from 21.2% for the first thirty-nine weeks of fiscal 2022 compared to the first thirty-nine weeks of fiscal 2021.
Total operating expenses for the third quarter of fiscal 2022 decreased $3.0 million, or 11.9%, compared to the third quarter of fiscal 2021. As a percentage of net sales, total operating expenses in the third quarter of fiscal 2022 decreased to 10.1% from 12.0% for the third quarter of fiscal 2021. For the first thirty-nine weeks of fiscal 2022, total operating expenses increased $10.0 million, and total operating expenses as a percentage of net sales increased to 11.5% from 10.8% compared to the first thirty-nine weeks of fiscal 2021.
The total value of inventories on hand at the end of the third quarter of fiscal 2022 increased $59.4 million, or 39.1%, in comparison to the total value of inventories on hand at the end of the third 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 have completed procurement of inshell walnuts during the first half of fiscal 2022, and the final total payments due to our walnut growers were determined in the current quarter. The final prices paid, and remaining to be paid to the walnut growers, were based upon current market prices and other factors, such as crop size and export demand. A large majority of payments to walnut growers were completed in the third quarter of fiscal 2022. Remaining amounts to be paid to walnut growers as of March 24, 2022 are final and are not subject to revision. We decreased our walnut grower liability by approximately $1.3 million during the third quarter of fiscal 2022, as the final payments due to walnut growers are slightly less than the amounts estimated at the end of the second quarter. This decrease is insignificant compared to our total inshell walnut procurement costs for the year, and the portion of the adjustment to cost of sales was immaterial to our results of operations.
 
19

RESULTS OF OPERATIONS
Net Sales
Our net sales increased 5.1% to $218.6 million in the third quarter of fiscal 2022 compared to net sales of $207.9 million for the third quarter of fiscal 2021. The increase in net sales was primarily attributable to an 8.1% increase in the weighted average sales price per pound and was offset in part by a 2.8% decrease in sales pounds, which is defined as pounds sold to customers. The increase in the weighted average selling price per pound was attributable to price increases implemented during the current third quarter in response to higher commodity acquisition costs for all major tree nuts and peanuts and increases in freight, labor and other input costs.
For the first thirty-nine weeks of fiscal 2022 our net sales were $698.1 million, an increase of $46.4 million, or 7.1%, compared to the same period of fiscal 2021. The increase in net sales was primarily attributable to a 5.6% increase in sales volume and a 1.5% increase in the weighted average selling price per pound. The increase in the weighted average selling price resulted mainly from an increase in commodity acquisition costs for peanuts and all major tree nuts except walnuts.
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 Thirty-Nine
Weeks Ended
 
Product Type
  
March 24,

2022
   
March 25,

2021
   
March 24,

2022
   
March 25,

2021
 
Peanuts
     18.8     19.5     17.6     19.2
Pecans
     6.9       7.8       10.7       10.7  
Cashews & Mixed Nuts
     23.8       23.1       22.7       23.3  
Walnuts
     4.6       5.4       5.9       6.4  
Almonds
     10.7       10.5       10.1       10.7  
Trail & Snack Mixes
     28.4       27.8       26.7       24.1  
Other
     6.8       5.9       6.3       5.6  
    
 
 
   
 
 
   
 
 
   
 
 
 
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
  
March 24,

2022
    
Percentage
of Total
   
March 25,

2021
    
Percentage
of Total
   
$

Change
    
Percent

Change
 
Consumer
(1)
   $ 173,648        79.4   $ 169,415        81.5   $ 4,233        2.5
Commercial Ingredients
     25,514        11.7     &