☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
September 24, 2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(I.R.S. EmployerIdentification No.) (NASDAQ
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||
Emerging growth company | ☐ | |||||||||||||
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For the Quarter Ended | For theTwenty-six Weeks Ended | |||||||||||||||
December 26, 2019 | December 27, 2018 | December 26, 2019 | December 27, 2018 | |||||||||||||
Net sales | $ | 246,423 | $ | 253,317 | $ | 464,269 | $ | 457,605 | ||||||||
Cost of sales | 196,443 | 210,434 | 372,041 | 381,768 | ||||||||||||
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Gross profit | 49,980 | 42,883 | 92,228 | 75,837 | ||||||||||||
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Operating expenses: | ||||||||||||||||
Selling expenses | 16,103 | 18,189 | 30,215 | 32,260 | ||||||||||||
Administrative expenses | 9,411 | 8,054 | 18,485 | 16,885 | ||||||||||||
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Total operating expenses | 25,514 | 26,243 | 48,700 | 49,145 | ||||||||||||
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Income from operations | 24,466 | 16,640 | 43,528 | 26,692 | ||||||||||||
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Other expense: | ||||||||||||||||
Interest expense including $232, $293, $479 and $602 to related parties | 435 | 798 | 956 | 1,677 | ||||||||||||
Rental and miscellaneous expense, net | 274 | 278 | 678 | 567 | ||||||||||||
Other expense | 567 | 486 | 1,133 | 973 | ||||||||||||
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Total other expense, net | 1,276 | 1,562 | 2,767 | 3,217 | ||||||||||||
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Income before income taxes | 23,190 | 15,078 | 40,761 | 23,475 | ||||||||||||
Income tax expense | 5,729 | 3,814 | 10,374 | 5,605 | ||||||||||||
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Net income | $ | 17,461 | $ | 11,264 | $ | 30,387 | $ | 17,870 | ||||||||
Other comprehensive income: | ||||||||||||||||
Amortization of prior service cost and actuarial loss included in net periodic pension cost | 344 | 263 | 687 | 526 | ||||||||||||
Income tax expense related to pension adjustments | (86 | ) | (66 | ) | (172 | ) | (132 | ) | ||||||||
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Other comprehensive income, net of tax | 258 | 197 | 515 | 394 | ||||||||||||
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Comprehensive income | $ | 17,719 | $ | 11,461 | $ | 30,902 | $ | 18,264 | ||||||||
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Net income per common share-basic | $ | 1.52 | $ | 0.99 | $ | 2.65 | $ | 1.57 | ||||||||
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Net income per common share-diluted | $ | 1.52 | $ | 0.98 | $ | 2.64 | $ | 1.56 | ||||||||
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For the Quarter Ended | ||||||||
September 24, 2020 | September 26, 2019 | |||||||
Net sales | $ | 210,273 | $ | 217,846 | ||||
Cost of sales | 170,941 | 175,598 | ||||||
Gross profit | 39,332 | 42,248 | ||||||
Operating expenses: | ||||||||
Selling expenses | 12,084 | 14,112 | ||||||
Administrative expenses | 8,375 | 9,074 | ||||||
Total operating expenses | 20,459 | 23,186 | ||||||
Income from operations | 18,873 | 19,062 | ||||||
Other expense: | ||||||||
Interest expense including $167 and $247 to related parties | 450 | 521 | ||||||
Rental and miscellaneous expense, net | 432 | 404 | ||||||
Other expense | 630 | 566 | ||||||
Total other expense, net | 1,512 | 1,491 | ||||||
Income before income taxes | 17,361 | 17,571 | ||||||
Income tax expense | 4,549 | 4,645 | ||||||
Net income | $ | 12,812 | $ | 12,926 | ||||
Other comprehensive income: | ||||||||
Amortization of prior service cost and actuarial loss included in Other expense | 416 | 343 | ||||||
Income tax expense related to pension adjustments | (104 | ) | (86 | ) | ||||
Other comprehensive income, net of tax: | 312 | 257 | ||||||
Comprehensive income | $ | 13,124 | $ | 13,183 | ||||
Net income per common share-basic | $ | 1.12 | $ | 1.13 | ||||
Net income per common share-diluted | $ | 1.11 | $ | 1.12 | ||||
December 26, 2019 | June 27, 2019 | December 27, 2018 | ||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash | $ | 1,393 | $ | 1,591 | $ | 2,583 | ||||||
Accounts receivable, less allowance for doubtful accounts of $425, $350 and $342 | 52,653 | 60,971 | 62,580 | |||||||||
Inventories | 172,340 | 157,024 | 171,708 | |||||||||
Prepaid expenses and other current assets | 5,992 | 5,754 | 6,943 | |||||||||
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TOTAL CURRENT ASSETS | 232,378 | 225,340 | 243,814 | |||||||||
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PROPERTY, PLANT AND EQUIPMENT: | ||||||||||||
Land | 9,285 | 9,285 | 9,285 | |||||||||
Buildings | 109,671 | 109,955 | 109,380 | |||||||||
Machinery and equipment | 212,532 | 210,962 | 206,663 | |||||||||
Furniture and leasehold improvements | 5,160 | 5,128 | 5,039 | |||||||||
Vehicles | 682 | 673 | 641 | |||||||||
Construction in progress | 3,817 | 1,127 | 2,563 | |||||||||
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341,147 | 337,130 | 333,571 | ||||||||||
Less: Accumulated depreciation | 233,825 | 228,778 | 222,976 | |||||||||
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107,322 | 108,352 | 110,595 | ||||||||||
Rental investment property, less accumulated depreciation of $11,615, $11,212 and $10,827 | 17,508 | 17,831 | 18,066 | |||||||||
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TOTAL PROPERTY, PLANT AND EQUIPMENT | 124,830 | 126,183 | 128,661 | |||||||||
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Intangible assets, net | 13,282 | 14,626 | 15,970 | |||||||||
Cash surrender value of officers’ life insurance and other assets | 9,124 | 9,782 | 8,743 | |||||||||
Deferred income taxes | 5,616 | 5,723 | 4,591 | |||||||||
Goodwill | 9,650 | 9,650 | 9,650 | |||||||||
Operating leaseright-of-use assets | 4,823 | — | — | |||||||||
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TOTAL ASSETS | $ | 399,703 | $ | 391,304 | $ | 411,429 | ||||||
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September 24, 2020 | June 25, 2020 | September 26, 2019 | ||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash | $ | 743 | $ | 1,535 | $ | 887 | ||||||
Accounts receivable, less allowance for doubtful accounts of $371, $391 and 386 | 69,881 | 56,953 | 60,474 | |||||||||
Inventories | 150,371 | 172,068 | 156,453 | |||||||||
Prepaid expenses and other current assets | 6,353 | 8,315 | 5,291 | |||||||||
TOTAL CURRENT ASSETS | 227,348 | 238,871 | 223,105 | |||||||||
PROPERTY, PLANT AND EQUIPMENT: | ||||||||||||
Land | 9,277 | 9,285 | 9,285 | |||||||||
Buildings | 110,397 | 110,294 | 110,440 | |||||||||
Machinery and equipment | 221,545 | 218,021 | 212,403 | |||||||||
Furniture and leasehold improvements | 5,186 | 5,179 | 5,130 | |||||||||
Vehicles | 637 | 682 | 639 | |||||||||
Construction in progress | 4,370 | 2,244 | 2,454 | |||||||||
351,412 | 345,705 | 340,351 | ||||||||||
Less: Accumulated depreciation | 241,987 | 239,013 | 231,944 | |||||||||
109,425 | 106,692 | 108,407 | ||||||||||
Rental investment property, less accumulated depreciation of $12,220, $12,018 and 11,413 | 16,903 | 17,105 | 17,630 | |||||||||
TOTAL PROPERTY, PLANT AND EQUIPMENT | 126,328 | 123,797 | 126,037 | |||||||||
Intangible assets, net | 11,547 | 12,125 | 13,954 | |||||||||
Cash surrender value of officers’ life insurance and other assets | 10,697 | 11,875 | 9,334 | |||||||||
Deferred income taxes | 6,987 | 6,788 | 5,972 | |||||||||
Goodwill | 9,650 | 9,650 | 9,650 | |||||||||
Operating lease right-of-use | 4,201 | 4,351 | 5,170 | |||||||||
TOTAL ASSETS | $ | 396,758 | $ | 407,457 | $ | 393,222 | ||||||
December 26, 2019 | June 27, 2019 | December 27, 2018 | ||||||||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Revolving credit facility borrowings | $ | 13,495 | $ | — | $ | 24,541 | ||||||
Current maturities of long-term debt, including related party debt of $565, $4,375 and $4,359 and net of unamortized debt issuance costs of $30, $35 and $40 | 7,110 | 7,338 | 7,254 | |||||||||
Accounts payable | 70,979 | 42,552 | 69,732 | |||||||||
Bank overdraft | 1,349 | 901 | 3,887 | |||||||||
Accrued payroll and related benefits | 13,429 | 22,101 | 10,293 | |||||||||
Other accrued expenses | 11,374 | 11,014 | 9,808 | |||||||||
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TOTAL CURRENT LIABILITIES | 117,736 | 83,906 | 125,515 | |||||||||
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LONG-TERM LIABILITIES: | ||||||||||||
Long-term debt, less current maturities, including related party debt of $9,244, $11,495 and $13,323 and net of unamortized debt issuance costs of $30, $44 and $60 | 16,597 | 20,381 | 23,707 | |||||||||
Retirement plan | 25,212 | 24,737 | 21,713 | |||||||||
Long-term operating lease liabilities, net of current portion | 3,456 | — | — | |||||||||
Other | 7,786 | 7,725 | 7,121 | |||||||||
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TOTAL LONG-TERM LIABILITIES | 53,051 | 52,843 | 52,541 | |||||||||
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TOTAL LIABILITIES | 170,787 | 136,749 | 178,056 | |||||||||
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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, 8,937,236, 8,909,406 and 8,898,827 shares issued | 89 | 89 | 89 | |||||||||
Capital in excess of par value | 122,984 | 122,257 | 121,133 | |||||||||
Retained earnings | 111,807 | 137,712 | 116,116 | |||||||||
Accumulated other comprehensive loss | (4,786 | ) | (4,325 | ) | (2,787 | ) | ||||||
Treasury stock, at cost; 117,900 shares of Common Stock | (1,204 | ) | (1,204 | ) | (1,204 | ) | ||||||
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TOTAL STOCKHOLDERS’ EQUITY | 228,916 | 254,555 | 233,373 | |||||||||
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TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 399,703 | $ | 391,304 | $ | 411,429 | ||||||
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September 24, 2020 | June 25, 2020 | September 26, 2019 | ||||||||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Revolving credit facility borrowings | $ | 44,168 | $ | 27,008 | $ | 16,042 | ||||||
Current maturities of long-term debt, including related party debt of $595, $585 and $4,388 and net of unamortized debt issuance costs of $22, $25 and $32 | 4,372 | 5,285 | 7,385 | |||||||||
Accounts payable | 41,441 | 36,323 | 52,365 | |||||||||
Bank overdraft | 85 | 2,041 | 1,302 | |||||||||
Accrued payroll and related benefits | 11,511 | 25,641 | 11,546 | |||||||||
Other accrued expenses | 16,058 | 15,870 | 15,767 | |||||||||
TOTAL CURRENT LIABILITIES | 117,635 | 112,168 | 104,407 | |||||||||
LONG-TERM LIABILITIES: | ||||||||||||
Long-term debt, less current maturities, including related party debt of $8,794, $8,947 and $10,028 and net of unamortized debt issuance costs of $15, $19 and $37 | 13,780 | 14,730 | 18,152 | |||||||||
Retirement plan | 31,860 | 31,573 | 24,974 | |||||||||
Long-term operating lease liabilities, net of current portion | 2,807 | 2,990 | 3,774 | |||||||||
Other | 7,377 | 7,758 | 7,865 | |||||||||
TOTAL LONG-TERM LIABILITIES | 55,824 | 57,051 | 54,765 | |||||||||
TOTAL LIABILITIES | 173,459 | 169,219 | 159,172 | |||||||||
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 8,940,111, 8,939,890 and 8,909,406 shares issued | 89 | 89 | 89 | |||||||||
Capital in excess of par value | 124,521 | 123,899 | 122,890 | |||||||||
Retained earnings | 108,185 | 124,058 | 117,293 | |||||||||
Accumulated other comprehensive loss | (8,318 | ) | (8,630 | ) | (5,044 | ) | ||||||
Treasury stock, at cost; 117,900 shares of Common Stock | (1,204 | ) | (1,204 | ) | (1,204 | ) | ||||||
TOTAL STOCKHOLDERS’ EQUITY | 223,299 | 238,238 | 234,050 | |||||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 396,758 | $ | 407,457 | $ | 393,222 | ||||||
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 27, 2019 | 2,597,426 | $ | 26 | 8,909,406 | $ | 89 | $ | 122,257 | $ | 137,712 | $ | (4,325 | ) | $ | (1,204 | ) | $ | 254,555 | ||||||||||||||||||
Net income | 12,926 | 12,926 | ||||||||||||||||||||||||||||||||||
Cash dividends ($3.00 per share) | (34,321 | ) | (34,321 | ) | ||||||||||||||||||||||||||||||||
Pension liability amortization, net of income tax expense of $86 | 257 | 257 | ||||||||||||||||||||||||||||||||||
Impact of adopting ASU2018-02(a) | 976 | (976 | ) | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 633 | 633 | ||||||||||||||||||||||||||||||||||
Balance, September 26, 2019 | 2,597,426 | $ | 26 | 8,909,406 | $ | 89 | $ | 122,890 | $ | 117,293 | $ | (5,044 | ) | $ | (1,204 | ) | $ | 234,050 | ||||||||||||||||||
Net income | 17,461 | 17,461 | ||||||||||||||||||||||||||||||||||
Cash dividends ($2.00 per share) | (22,947 | ) | (22,947 | ) | ||||||||||||||||||||||||||||||||
Pension liability amortization, net of income tax expense of $86 | 258 | 258 | ||||||||||||||||||||||||||||||||||
Equity award exercises , net of shares withheld for employee taxes | 27,830 | — | (761 | ) | (761 | ) | ||||||||||||||||||||||||||||||
Stock-based compensation expense | 855 | 855 | ||||||||||||||||||||||||||||||||||
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Balance, December 26, 2019 | 2,597,426 | $ | 26 | 8,937,236 | $ | 89 | $ | 122,984 | $ | 111,807 | $ | (4,786 | ) | $ | (1,204 | ) | $ | 228,916 | ||||||||||||||||||
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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 28, 2018 | 2,597,426 | $ | 26 | 8,865,475 | $ | 89 | $ | 119,952 | $ | 127,320 | $ | (3,181 | ) | $ | (1,204 | ) | $ | 243,002 | ||||||||||||||||||
Net income | 6,606 | 6,606 | ||||||||||||||||||||||||||||||||||
Cash dividends ($2.55 per share) | (29,074 | ) | (29,074 | ) | ||||||||||||||||||||||||||||||||
Pension liability amortization, net of income tax expense of $66 | 197 | 197 | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 616 | 616 | ||||||||||||||||||||||||||||||||||
Balance, September 27, 2018 | 2,597,426 | $ | 26 | 8,865,475 | $ | 89 | $ | 120,568 | $ | 104,852 | $ | (2,984 | ) | $ | (1,204 | ) | $ | 221,347 | ||||||||||||||||||
Net income | 11,264 | 11,264 | ||||||||||||||||||||||||||||||||||
Pension liability amortization, net of income tax expense of $66 | 197 | 197 | ||||||||||||||||||||||||||||||||||
Equity award exercises , net of shares withheld for employee taxes | 33,352 | — | (335 | ) | (335 | ) | ||||||||||||||||||||||||||||||
Stock-based compensation expense | 900 | 900 | ||||||||||||||||||||||||||||||||||
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Balance, December 27, 2018 | 2,597,426 | $ | 26 | 8,898,827 | $ | 89 | $ | 121,133 | $ | 116,116 | $ | (2,787 | ) | $ | (1,204 | ) | $ | 233,373 | ||||||||||||||||||
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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 | ||||||||||||||||||
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 27, 2019 | 2,597,426 | $ | 26 | 8,909,406 | $ | 89 | $ | 122,257 | $ | 137,712 | $ | (4,325 | ) | $ | (1,204 | ) | $ | 254,555 | ||||||||||||||||||
Net income | 12,926 | 12,926 | ||||||||||||||||||||||||||||||||||
Cash dividends ($3.00 per share) | (34,321 | ) | (34,321 | ) | ||||||||||||||||||||||||||||||||
Pension liability amortization, net of income tax expense of $86 | 257 | 257 | ||||||||||||||||||||||||||||||||||
Impact of adopting ASU 2018-02 | 976 | (976 | ) | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 633 | 633 | ||||||||||||||||||||||||||||||||||
Balance, September 26, 2019 | 2,597,426 | $ | 26 | 8,909,406 | $ | 89 | $ | 122,890 | $ | 117,293 | $ | (5,044 | ) | $ | (1,204 | ) | $ | 234,050 |
For the Twenty-six Weeks Ended | ||||||||
December 26, 2019 | December 27, 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 30,387 | $ | 17,870 | ||||
Depreciation and amortization | 9,225 | 8,535 | ||||||
(Gain) loss on disposition of assets, net | (33 | ) | 57 | |||||
Deferred income tax expense | 107 | 433 | ||||||
Stock-based compensation expense | 1,488 | 1,516 | ||||||
Change in assets and liabilities: | ||||||||
Accounts receivable, net | 8,316 | 3,041 | ||||||
Inventories | (15,316 | ) | 2,654 | |||||
Prepaid expenses and other current assets | (345 | ) | (1,659 | ) | ||||
Accounts payable | 28,486 | 9,655 | ||||||
Accrued expenses | (8,964 | ) | 2,833 | |||||
Income taxes payable | (640 | ) | 2,285 | |||||
Other long-term assets and liabilities | 582 | 261 | ||||||
Other, net | 992 | 885 | ||||||
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Net cash provided by operating activities | 54,285 | 48,366 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property, plant and equipment | (6,465 | ) | (9,367 | ) | ||||
Proceeds from insurance recoveries | 232 | — | ||||||
Other | 85 | 44 | ||||||
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Net cash used in investing activities | (6,148 | ) | (9,323 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net short-term borrowings (repayments) | 13,495 | (6,737 | ) | |||||
Debt issue costs | (218 | ) | — | |||||
Principal payments on long-term debt | (4,031 | ) | (3,588 | ) | ||||
Increase in bank overdraft | 448 | 1,825 | ||||||
Dividends paid | (57,268 | ) | (29,074 | ) | ||||
Taxes paid related to net share settlement of equity awards | (761 | ) | (335 | ) | ||||
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Net cash used in financing activities | (48,335 | ) | (37,909 | ) | ||||
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| |||||
NET (DECREASE) INCREASE IN CASH | (198 | ) | 1,134 | |||||
Cash, beginning of period | 1,591 | 1,449 | ||||||
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| |||||
Cash, end of period | $ | 1,393 | $ | 2,583 | ||||
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|
| |||||
Supplemental disclosure ofnon-cash activities: | ||||||||
Right-of-use assets recognized at ASUNo. 2016-02 transition, see Note 3 | $ | 5,361 | $ | — |
For the Quarter Ended | ||||||||
September 24, 2020 | September 26, 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 12,812 | $ | 12,926 | ||||
Depreciation and amortization | 4,368 | 4,412 | ||||||
(Gain) loss on disposition of assets, net | (241 | ) | 3 | |||||
Deferred income tax benefit | (199 | ) | (249 | ) | ||||
Stock-based compensation expense | 622 | 633 | ||||||
Change in assets and liabilities: | ||||||||
Accounts receivable, net | (12,928 | ) | 497 | |||||
Inventories | 21,697 | 571 | ||||||
Prepaid expenses and other current assets | 1,962 | 356 | ||||||
Accounts payable | 5,661 | 9,655 | ||||||
Accrued expenses | (13,970 | ) | (10,969 | ) | ||||
Income taxes payable | 28 | 3,839 | ||||||
Other long-term assets and liabilities | 166 | 300 | ||||||
Other, net | 599 | 494 | ||||||
Net cash provided by operating activities | 20,577 | 22,468 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property, plant and equipment | (6,298 | ) | (3,118 | ) | ||||
Other | 280 | 16 | ||||||
Net cash used in investing activities | (6,018 | ) | (3,102 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net short-term borrowings | 17,160 | 16,042 | ||||||
Principal payments on long-term debt | (1,870 | ) | (2,192 | ) | ||||
(Decrease) increase in bank overdraft | (1,956 | ) | 401 | |||||
Dividends paid | (28,685 | ) | (34,321 | ) | ||||
Net cash used in financing activities | (15,351 | ) | (20,070 | ) | ||||
NET DECREASE IN CASH | (792 | ) | (704 | ) | ||||
Cash, beginning of period | 1,535 | 1,591 | ||||||
Cash, end of period | $ | 743 | $ | 887 | ||||
Supplemental disclosure of non-cash activities: | ||||||||
Right-of-use No. 2016-02 transition | $ | — | $ | 5,361 |
References herein to the first half or firsttwenty-six weeks of fiscal 2020 and fiscal 2019 are to thetwenty-six weeks ended December 26, 2019 and December 27, 2018, 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 a variety of private brands and under thethree3 primary distribution channels to significant buyers of nuts, including food retailers in the consumer channel, commercial ingredient users and contract packaging customers.
For the Quarter Ended | For the Twenty-six Weeks Ended | |||||||||||||||
Distribution Channel | December 26, 2019 | December 27, 2018 | December 26, 2019 | December 27, 2018 | ||||||||||||
Consumer | $ | 188,086 | $ | 195,478 | $ | 345,232 | $ | 334,922 | ||||||||
Commercial Ingredients | 34,247 | 31,454 | 71,135 | 68,656 | ||||||||||||
Contract Packaging | 24,090 | 26,385 | 47,902 | 54,027 | ||||||||||||
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|
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|
|
| |||||||||
Total | $ | 246,423 | $ | 253,317 | $ | 464,269 | $ | 457,605 | ||||||||
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|
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|
|
For the Quarter Ended | ||||||||
Distribution Channel | September 24, 2020 | September 26, 2019 | ||||||
Consumer | $ | 166,757 | $ | 157,146 | ||||
Commercial Ingredients | 22,811 | 36,888 | ||||||
Contract Packaging | 20,705 | 23,812 | ||||||
Total | $ | 210,273 | $ | 217,846 | ||||
On June 28, 2019 we adopted ASUNo. 2016-02,Leases (“Topic 842”)using the alternative transition method under ASUNo. 2018-11, which permitted application of the new guidance at the beginning of the period of adoption, with comparative periods continuing to be reported under the previous lease accounting guidance in Topic 840. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. We did not elect the practical expedients regarding hindsight or land easements. See Note 15 – “Recent Accounting Pronouncements” for additional information.
Upon adoption of the new standard, we recognized operating leaseright-of-use assets and liabilities on our Consolidated Balance Sheet of $5,361 and $5,320 respectively. We utilized a portfolio approach to establish discount rates for leases that are similar. Discount rates ranging from 4.2% to 5.8% were used when determining the present value of future lease payments. All of our lessee arrangements that were classified as operating leases under Topic 840 continue to be classified as operating leases since the adoption of Topic 842, and the pattern of lease expense recognition is unchanged. The adoption of Topic 842 did not materially impact our consolidated net earnings and had no impact on cash flows.
Topic 842 allows for the election as an
December 26, 2019 | Affected Line Item in Consolidated Balance Sheet | |||||
Assets | ||||||
Operating leaseright-of-use assets | $ | 4,823 | Operating leaseright-of-use assets | |||
|
| |||||
Total leaseright-of-use assets | $ | 4,823 | ||||
|
| |||||
Liabilities | ||||||
Current: | ||||||
Operating leases | $ | 1,354 | Other accrued expenses | |||
Noncurrent: | ||||||
Operating leases | 3,456 | Long-term operating lease liabilities | ||||
|
| |||||
Total lease liabilities | $ | 4,810 | ||||
|
|
li
September 24, 2020 | June 25, 2020 | September 26, 2019 | Affected Line Item in Consolidated Balance Sheet | ||||||||||||
Assets | |||||||||||||||
Operating lease right-of-use | $ | 4,201 | $ | 4,351 | $ | 5,170 | Operating lease right-of-use assets | ||||||||
Total lease right-of-use | $ | 4,201 | $ | 4,351 | $ | 5,170 | |||||||||
Liabilities | |||||||||||||||
Current: | |||||||||||||||
Operating leases | $ | 1,405 | $ | 1,376 | $ | 1,390 | Other accrued expenses | ||||||||
Noncurrent: | |||||||||||||||
Operating leases | 2,807 | 2,990 | 3,774 | Long-term operating lease liabilities | |||||||||||
Total lease liabilities | $ | 4,212 | $ | 4,366 | $ | 5,164 | |||||||||
For the Quarter ended December 26, 2019 | For the Twenty-six weeks ended December 26, 2019 | |||||||
Operating lease costs(a) | $ | 460 | $ | 834 | ||||
Variable lease costs(b) | 15 | 31 | ||||||
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|
| |||||
Total Lease Cost | $ | 475 | $ | 865 | ||||
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|
|
For the Quarter ended September 24, 2020 | For the Quarter ended September 26, 2019 | |||||||
Operating lease costs (a) | $ | 473 | $ | 374 | ||||
Variable lease costs (b) | 20 | 16 | ||||||
Total Lease Cost | $ | 493 | $ | 390 | ||||
(a) | Includes short-term leases which are immaterial. |
(b) | Variable lease costs consist of sales tax. |
For the Twenty-six weeks ended December 26, 2019 | ||||
Operating cash flows information: | ||||
Cash paid for amounts included in measurements for lease liabilities | $ | 770 | ||
Non-cash activity: | ||||
Right-of-use assets obtained in exchange for new operating lease obligations | $ | 163 | ||
December 26, 2019 | ||||
Weighted Average Remaining Lease Term (in years) | 3.8 | |||
Weighted Average Discount Rate | 4.5 | % |
For the Quarter ended September 24, 2020 | For the Quarter ended September 26, 2019 | |||||||
Operating cash flows information: | ||||||||
Cash paid for amounts included in measurements for lease liabilities | $ | 406 | $ | 365 | ||||
Non-cash activity: | ||||||||
Right-of-use | $ | 206 | $ | 152 |
September 24, 2020 | June 25, 2020 | September 26, 2019 | ||||||||||
Weighted Average Remaining Lease Term (in years) | 3.2 | 3.4 | 4.0 | |||||||||
Weighted Average Discount Rate | 4.3 | % | 4.4 | % | 4.5 | % |
Fiscal year ending | ||||
June 25, 2020 (excluding thetwenty-six weeks ended December 26, 2019) | $ | 792 | ||
June 24, 2021 | 1,439 | |||
June 30, 2022 | 1,316 | |||
June 29, 2023 | 1,065 | |||
June 27, 2024 | 469 | |||
Thereafter | 132 | |||
|
| |||
Total lease payment | 5,213 | |||
Less imputed interest | (403 | ) | ||
|
| |||
Present value of operating lease liabilities | $ | 4,810 | ||
|
|
As of December 26, 2019
Fiscal year ending | ||||
June 24, 2021 (excluding the quarter ended September 24, 2020) | $ | 1,183 | ||
June 30, 2022 | 1,426 | |||
June 29, 2023 | 1,173 | |||
June 27, 2024 | 535 | |||
June 26, 2025 | 177 | |||
Thereafter | 5 | |||
Total lease payment | 4,499 | |||
Less imputed interest | (287 | ) | ||
Present value of operating lease liabilities | $ | 4,212 | ||
Disclosures related to periods prior to adoption
As the Company has not recast prior year information for its adoption of Topic 842, the following presents its future minimum lease payments for operating leases under Topic 840 on June 27, 2019:
Fiscal year ending | ||||
June 25, 2020 | $ | 1,715 | ||
June 24, 2021 | 1,540 | |||
June 30, 2022 | 1,392 | |||
June 29, 2023 | 1,109 | |||
June 27, 2024 | 464 | |||
Thereafter | 133 | |||
|
| |||
$ | 6,353 |
For the Quarter ended December 26, 2019 | For the Twenty-six weeks ended December 26, 2019 | |||||||
Lease income related to lease payments | $ | 462 | $ | 1,005 |
For the Quarter Ended September 24, 2020 | For the Quarter Ended September 26, 2019 | |||||||
Lease income related to lease payments | $ | 451 | $ | 543 |
Fiscal year ending | ||||
June 25, 2020 (excluding thetwenty-six weeks ended December 26, 2019) | $ | 1,082 | ||
June 24, 2021 | 1,948 | |||
June 30, 2022 | 1,707 | |||
June 29, 2023 | 1,737 | |||
June 27, 2024 | 1,766 | |||
Thereafter | 2,512 | |||
|
| |||
$ | 10,752 |
below.
Fiscal year ending | ||||
June 24, 2021 (excluding the quarter ended September 24, 2020) | $ | 1,472 | ||
June 30, 2022 | 1,708 | |||
June 29, 2023 | 1,737 | |||
June 27, 2024 | 1,766 | |||
June 26, 2025 | 1,228 | |||
Thereafter | 1,284 | |||
Total | $ | 9,195 |
December 26, 2019 | June 27, 2019 | December 27, 2018 | ||||||||||
Raw material and supplies | $ | 81,135 | $ | 58,927 | $ | 87,717 | ||||||
Work-in-process and finished goods | 91,205 | 98,097 | 83,991 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 172,340 | $ | 157,024 | $ | 171,708 | ||||||
|
|
|
|
|
|
September 24, 2020 | June 25, 2020 | September 26, 2019 | ||||||||||
Raw material and supplies | $ | 46,518 | $ | 69,276 | $ | 48,989 | ||||||
Work-in-process | 103,853 | 102,792 | 107,464 | |||||||||
Total | $ | 150,371 | $ | 172,068 | $ | 156,453 | ||||||
December 26, 2019 | June 27, 2019 | December 27, 2018 | ||||||||||
Customer relationships | $ | 21,100 | $ | 21,100 | $ | 21,100 | ||||||
Brand names | 16,990 | 16,990 | 16,990 | |||||||||
Non-compete agreement | 270 | 270 | 270 | |||||||||
|
|
|
|
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| |||||||
38,360 | 38,360 | 38,360 | ||||||||||
Less accumulated amortization: | ||||||||||||
Customer relationships | (15,438 | ) | (14,466 | ) | (13,494 | ) | ||||||
Brand names | (9,527 | ) | (9,182 | ) | (8,838 | ) | ||||||
Non-compete agreement | (113 | ) | (86 | ) | (58 | ) | ||||||
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| |||||||
(25,078 | ) | (23,734 | ) | (22,390 | ) | |||||||
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|
|
| |||||||
Net intangible assets | $ | 13,282 | $ | 14,626 | $ | 15,970 | ||||||
|
|
|
|
|
|
September 24, 2020 | June 25, 2020 | September 26, 2019 | ||||||||||
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 | (16,615 | ) | (16,223 | ) | (14,952 | ) | ||||||
Brand names | (10,045 | ) | (9,873 | ) | (9,355 | ) | ||||||
Non-compete agreement | (153 | ) | (139 | ) | (99 | ) | ||||||
(26,813 | ) | (26,235 | ) | (24,406 | ) | |||||||
Net intangible assets | $ | 11,547 | $ | 12,125 | $ | 13,954 | ||||||
Fiscal year ending | ||||
June 24, 2021 | $ | 2,165 | ||
June 30, 2022 | 1,896 | |||
June 29, 2023 | 1,657 | |||
June 27, 2024 | 1,414 | |||
June 26, 2025 | 1,156 |
Fiscal year ending | ||||
June 30, 2022 | $ | 1,896 | ||
June 29, 2023 | 1,657 | |||
June 27, 2024 | 1,414 | |||
June 26, 2025 | 1,156 | |||
June 25, 2026 | 861 |
September 24, 2020.
On February 7, 2008, we entered into a
For the Quarter Ended | For the Twenty-six Weeks Ended | |||||||||||||||
December 26, 2019 | December 27, 2018 | December 26, 2019 | December 27, 2018 | |||||||||||||
Weighted average number of shares outstanding – basic | 11,458,524 | 11,425,566 | 11,451,542 | 11,415,787 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options and restricted stock units | 66,863 | 53,865 | 80,640 | 69,894 | ||||||||||||
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|
|
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|
|
| |||||||||
Weighted average number of shares outstanding – diluted | 11,525,387 | 11,479,431 | 11,532,182 | 11,485,681 | ||||||||||||
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|
|
For the Quarter Ended | ||||||||
September 24, 2020 | September 26, 2019 | |||||||
Weighted average number of shares outstanding – basic | 11,477,287 | 11,444,560 | ||||||
Effect of dilutive securities: | ||||||||
Stock options and restricted stock units | 73,300 | 94,416 | ||||||
Weighted average number of shares outstanding – diluted | 11,550,587 | 11,538,976 | ||||||
There was no stock option activity during the first half of fiscal 2020.
The following is a summary of RSU activity for the first half of fiscal 2020:
Restricted Stock Units | Shares | Weighted Average Grant Date Fair Value | ||||||
Outstanding at June 27, 2019 | 188,992 | $ | 46.79 | |||||
Activity: | ||||||||
Granted | 38,572 | 91.47 | ||||||
Vested(a) | (36,179 | ) | 60.56 | |||||
Forfeited | (7,439 | ) | 63.62 | |||||
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| |||||
Outstanding at December 26, 2019 | 183,946 | $ | 52.77 | |||||
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|
|
At December 26, 2019, there were 58,541 RSUs outstanding that were 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 Twenty-six Weeks Ended | |||||||||||||||
December 26, 2019 | December 27, 2018 | December 26, 2019 | December 27, 2018 | |||||||||||||
Stock-based compensation expense | $ | 855 | $ | 900 | $ | 1,488 | $ | 1,516 |
As of December 26, 2019, there was $5,255$2,685 of total unrecognized compensation expensecost related to RSUs1.7 years.
1.0 year.
For the Quarter Ended | For the Twenty-six Weeks Ended | |||||||||||||||
December 26, 2019 | December 27, 2018 | December 26, 2019 | December 27, 2018 | |||||||||||||
Service cost | $ | 178 | $ | 153 | $ | 356 | $ | 305 | ||||||||
Interest cost | 223 | 223 | 446 | 447 | ||||||||||||
Amortization of prior service cost | 240 | 240 | 479 | 479 | ||||||||||||
Amortization of loss | 104 | 23 | 208 | 47 | ||||||||||||
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|
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|
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|
| |||||||||
Net periodic benefit cost | $ | 745 | $ | 639 | $ | 1,489 | $ | 1,278 | ||||||||
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|
|
|
|
|
|
|
For the Quarter Ended | ||||||||
September 24, 2020 | September 26, 2019 | |||||||
Service cost | $ | 236 | $ | 178 | ||||
Interest cost | 214 | 223 | ||||||
Amortization of prior service cost | 120 | 239 | ||||||
Amortization of loss | 296 | 104 | ||||||
Net periodic benefit cost | $ | 866 | $ | 744 | ||||
Changes to AOCL(a) | For the Twenty-Six Weeks Ended | |||||||
December 26, 2019 | December 27, 2018 | |||||||
Balance at beginning of period | $ | (4,325 | ) | $ | (3,181 | ) | ||
Other comprehensive income before reclassifications | — | — | ||||||
Amounts reclassified from accumulated other comprehensive loss | 687 | 526 | ||||||
Tax effect | (172 | ) | (132 | ) | ||||
|
|
|
| |||||
Net current-period other comprehensive income | 515 | 394 | ||||||
Impact of adopting ASU2018-02(b) | (976 | ) | — | |||||
|
|
|
| |||||
Balance at end of period | $ | (4,786 | ) | $ | (2,787 | ) | ||
|
|
|
|
Changes to AOCL (a) | For the Quarter Ended | |||||||
September 24, 2020 | September 26, 2019 | |||||||
Balance at beginning of period | $ | (8,630 | ) | $ | (4,325 | ) | ||
Other comprehensive income before reclassifications | 0 | — | ||||||
Amounts reclassified from accumulated other comprehensive loss | 416 | 343 | ||||||
Tax effect | (104 | ) | (86 | ) | ||||
Net current-period other comprehensive income | 312 | 257 | ||||||
Impact of adopting ASU 2018-02 | — | (976 | ) | |||||
Balance at end of period | $ | (8,318 | ) | $ | (5,044 | ) | ||
(a) | Amounts in parenthesis indicate debits/expense. |
|
Affected line item in the Consolidated Statements of Comprehensive Income | ||||||||||||||||||||
For the Quarter Ended | For the Twenty-six Weeks Ended | |||||||||||||||||||
Reclassifications from AOCL to earnings(c) | December 26, 2019 | December 27, 2018 | December 26, 2019 | December 27, 2018 | ||||||||||||||||
Amortization of defined benefit pension items: | ||||||||||||||||||||
Unrecognized prior service cost | $ | (240 | ) | $ | (240 | ) | $ | (479 | ) | $ | (479 | ) | Other expense | |||||||
Unrecognized net loss | (104 | ) | (23 | ) | (208 | ) | (47 | ) | Other expense | |||||||||||
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|
|
|
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|
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| |||||||||||||
Total before tax | (344 | ) | (263 | ) | (687 | ) | (526 | ) | ||||||||||||
Tax effect | 86 | 66 | 172 | 132 | Income tax expense | |||||||||||||||
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| |||||||||||||
Amortization of defined pension items, net of tax | $ | (258 | ) | $ | (197 | ) | $ | (515 | ) | $ | (394 | ) | ||||||||
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|
|
Reclassifications from AOCL to earnings (b) | For the Quarter Ended | Affected line item in the Consolidated Comprehensive Income | ||||||||||
September 24, 2020 | September 26, 2019 | |||||||||||
Amortization of defined benefit pension items: | ||||||||||||
Unrecognized prior service cost | $ | (120 | ) | $ | (239 | ) | Other expense | |||||
Unrecognized net loss | (296 | ) | (104 | ) | Other expense | |||||||
Total before tax | (416 | ) | (343 | ) | ||||||||
Tax effect | 104 | 86 | Income tax expense | |||||||||
Amortization of defined pension items, net of tax | $ | (312 | ) | $ | (257 | ) | ||||||
(b) | Amounts in parenthesis indicate debits to expense. See Note 9 – “Retirement Plan” above for additional details. |
Liabilitie
Authoritative guidance issued by the
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. |
December 26, 2019 | June 27, 2019 | December 27, 2018 | ||||||||||
Carrying value of long-term debt: | $ | 23,767 | $ | 27,798 | $ | 31,061 | ||||||
Fair value of long-term debt: | 24,164 | 27,720 | 30,176 |
September 24, 2020 | June 25, 2020 | September 26, 2019 | ||||||||||
Carrying value of long-term debt: | $ | 18,189 | $ | 20,059 | $ | 25,606 | ||||||
Fair value of long-term debt: | 18,489 | 20,186 | 25,710 |
Note 14 – Garysburg, North Carolina Facility
On October 7, 2019 we experienced a fire at our peanut processing facility located in Garysburg, North Carolina. No personnel were injured, and there was no damage to our peanut shelling and inventory storage areas. The fire occurred in our roasting room where all of the roasting equipment was destroyed. The fire also damaged some equipment in our packaging room and a portion of the roof. We have contracted with a third party to roast and salt our inshell peanuts to meet our current production requirements. We do not expect any negative impact on our customer service levels or a material adverse impact on our operating or financial results$70 for the 2020 fiscal year.
After evaluating our options with regard to our peanut production operations, the Company is considering strategic alternatives for this facility and currently plans to permanently cease all operations at the Garysburg facility once we have finished shelling the current crop of peanuts at this facility, which is estimated to take approximately sixteen months. We have ceased roasting operations in the current second quarter which resulted in a partial reduction in the workforce at this facility, and recognized an immaterial amount of separation costs in the second quarter of fiscal 2020.
We have adequate property damage and business interruption insurance, subject to applicable deductibles. To date, approximately $1,500 inclean-up costs and damage to capital assets has been incurred. Insurance claims have been filed under our property damage and business interruption policies, and an advance payment of $1,500 was received from the insurance carrier in our current second quarter. Insurance proceeds received for damage to capital equipment were recorded as investing activities on the Consolidated Statements of Cash Flows.
We have implemented processes and information technology tools to assist in our compliance with Topic 842. We have also updated our accounting policies and internal controls that are impacted by the new guidance. We adopted ASUNo. 2016-02 utilizing the modified retrospective transition method and did not recast comparative periods in transition to the new standard. In addition, the new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect theuse-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. The adoption of this standard resulted in the recognition of operating leaseright-of-use assets and liabilities on our Consolidated Balance Sheet of $5,361 and $5,320, respectively, during the first quarter of fiscal 2020. The new standard also provides practical expedients for an entity’s initial and ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. We also elected the practical expedient to not separate lease andnon-lease components for all of our leases. Refer to Note 3 – “Leases” for additional information regarding the Company’s leases.
In February 2018, the FASB issued ASUNo. 2018-02“Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. The amendments in this Update allow a reclassification from accumulated other comprehensive income (loss) (“AOCL”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The amendments in this Update also require certain disclosures about stranded tax effects. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company adopted ASUNo. 2018-02 in the first quarter of fiscal 2020 and reclassified $976 from AOCL to retained earnings. Refer to Note 10 – “Accumulated Other Comprehensive Loss” for additional detail. ASU2018-02 was not applied retrospectively. No other income tax effects related to the application of the Tax Cuts and Jobs Act were reclassified from AOCL to retained earnings.
The following recent accounting pronouncements have not yet been adopted:
In December 2019, the FASB issued ASUNo. 2019-12 “Income Taxes (Topic 740)
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
References herein to the first half or firsttwenty-six weeks of fiscal 2020 and fiscal 2019 are to thetwenty-six weeks ended December 26, 2019 and December 27, 2018, respectively.
product offerings in fiscal 2021.
breaks, installed partitions on production lines and office space where social distancing could not be consistently maintained and installed thermal scanners to measure temperature for all employees upon arrival. We update and enhance these measures as new guidance is provided. In addition, we have extended personal time off for those who are in self quarantine or ill.
2020.
2020.
2020.
2020.
2020.
For the firsttwenty-six weeks of fiscal 2020 our net sales were $464.3 million, an increase of $6.7 million, or 1.5%, compared to the same period of fiscal 2019. The increase in net sales was due to a 6.8% increase in sales volume and was largely offset by lower selling prices resulting primarily for the same reasons citedcustomers, decreased 3.5% in the quarterly comparison.
For the Quarter Ended | For the Twenty-six Weeks Ended | |||||||||||||||
Product Type | December 26, 2019 | December 27, 2018 | December 26, 2019 | December 27, 2018 | ||||||||||||
Peanuts | 15.8 | % | 15.7 | % | 16.8 | % | 17.2 | % | ||||||||
Pecans | 16.2 | 20.5 | 13.0 | 16.5 | ||||||||||||
Cashews & Mixed Nuts | 22.7 | 22.1 | 22.7 | 22.3 | ||||||||||||
Walnuts | 8.7 | 10.5 | 7.9 | 10.3 | ||||||||||||
Almonds | 13.2 | 11.8 | 14.8 | 12.8 | ||||||||||||
Trail & Snack Mixes | 18.3 | 14.5 | 19.3 | 15.6 | ||||||||||||
Other | 5.1 | 4.9 | 5.5 | 5.3 | ||||||||||||
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Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
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For the Quarter Ended | ||||||||
Product Type | September 24, 2020 | September 26, 2019 | ||||||
Peanuts | 19.5 | % | 18.0 | % | ||||
Pecans | 8.6 | 9.4 | ||||||
Cashews & Mixed Nuts | 23.7 | 22.7 | ||||||
Walnuts | 6.6 | 7.0 | ||||||
Almonds | 12.7 | 16.6 | ||||||
Trail & Snack Mixes | 22.8 | 20.5 | ||||||
Other | 6.1 | 5.8 | ||||||
Total | 100.0 | % | 100.0 | % | ||||
For the Quarter Ended | ||||||||||||||||
Distribution Channel | December 26, 2019 | December 27, 2018 | Change | Percent Change | ||||||||||||
Consumer(1) | $ | 188,086 | $ | 195,478 | $ | (7,392 | ) | (3.8 | )% | |||||||
Commercial Ingredients | 34,247 | 31,454 | 2,793 | 8.9 | ||||||||||||
Contract Packaging | 24,090 | 26,385 | (2,295 | ) | (8.7 | ) | ||||||||||
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Total | $ | 246,423 | $ | 253,317 | $ | (6,894 | ) | (2.7 | )% | |||||||
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For the Quarter Ended | ||||||||||||||||||||||||
Distribution Channel | September 24, 2020 | Percentage of Total | September 26, 2019 | Percentage of Total | $ Change | Percent Change | ||||||||||||||||||
Consumer (1) | $ | 166,757 | 79.3 | % | $ | 157,146 | 72.2 | % | $ | 9,611 | 6.1 | % | ||||||||||||
Commercial Ingredients | 22,811 | 10.9 | 36,888 | 16.9 | (14,077 | ) | (38.2 | ) | ||||||||||||||||
Contract Packaging | 20,705 | 9.8 | 23,812 | 10.9 | (3,107 | ) | (13.0 | ) | ||||||||||||||||
Total | $ | 210,273 | 100.0 | % | $ | 217,846 | 100.0 | % | $ | (7,573 | ) | (3.5 | )% | |||||||||||
(1) | Sales of branded products were approximately Fisher |
The following table shows a comparison of net sales by distribution channel (dollars in thousands):
For theTwenty-six Weeks Ended | ||||||||||||||||
Distribution Channel | December 26, 2019 | December 27, 2018 | Change | Percent Change | ||||||||||||
Consumer(1) | $ | 345,232 | $ | 334,922 | $ | 10,310 | 3.1 | % | ||||||||
Commercial Ingredients | 71,135 | 68,656 | 2,479 | 3.6 | ||||||||||||
Contract Packaging | 47,902 | 54,027 | (6,125 | ) | (11.3 | ) | ||||||||||
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Total | $ | 464,269 | $ | 457,605 | $ | 6,664 | 1.5 | % | ||||||||
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Net sales in the consumer distribution channel decreased $7.4increased $9.6 million, or 3.8%6.1%, and sales volume increased 4.2%3.8% in the secondfirst quarter of fiscal 20202021 compared to the secondfirst quarter of fiscal 2019.2020. The sales volume increase was driven by increased sales of private brand snack nuts and trail and snack mixes, from distribution gains with newmixed nuts, cashews and peanuts at existing private brand customers.customers, which was partially offset by a decline in peanut butter sales volume due to a temporary peanut supply shortage during the current quarter. Sales volume fordecreased 6.4%, primarily as a result of reducedincreased 12.6% due to increased promotional activity for inshell peanuts. Sales volume ofFisher recipe nuts decreased 29.8% from lost holiday display distribution at a major customer in favor of their private brand recipe nuts. Sales volumeof Orchard Valley Harvest products increased 6.5% due toand distribution gains at new and existing customers and the introduction of new products.for ourofSouthern Style Nuts increased 42.9% due to increased promotional activity.
In the firsttwenty-six weeks of fiscal 2020, net sales in the consumer distribution channel increased $10.3 million, or 3.1%, and sales volume increased 10.0% compared to the same period of fiscal 2019. The sales volume increase occurred for the same reason cited in the quarterly comparison. Increased sales for ourOrchard Valley Harvest andSouthern Style Nutbrands also contributed to the sales volume increase in the consumer distribution channel. Sales volume for30.0% in the year to date comparison14.1% as a result of lost distribution at some customers, which was offset in part by increased sales with Internet retailers and increased sales with other existing customers in the grocery sector. Sales volumefavorthe their private brand recipe nuts.
Gross Profit
Gross profit increased by $7.1 million, or 16.5%, to $50.0 million for the second quarter of fiscal 2020 compared to the second quarter of fiscal 2019.2020. Our gross profit margin, as a percentage of net sales, increaseddecreased to 20.3%18.7% for the secondfirst quarter of fiscal 20202021 compared to 16.9%19.4% for the secondfirst quarter of fiscal 2019.2020. The increasesdecreases in gross profit and gross profit margin were mainly attributable to the sales volume increasedecrease discussed above, as well as manufacturing efficiencies, reduced manufacturing spending and lower commodity acquisition costs for pecans and cashews.
Gross profit increased by $16.4 million, or 21.6%, to $92.2 million for the firsttwenty-six weeks of fiscal 2020 compared to the firsttwenty-six weeks of fiscal 2019. Our gross profit margin increased to 19.9% for the firsttwenty-six weeks of fiscal 2020 compared to 16.6% for the firsttwenty-six weeks of fiscal 2019. The increases in gross profit and gross profit margin in the year to date comparison occurred primarily for the same reasons cited in the quarterly comparison.
reductions in advertising, compensation and consulting expenses.
sales pounds shipped.
Total operating expenses for the firsttwenty-six weeks of fiscal 2020 decreased by $0.4 million, or 0.9%, to $48.7 million. Operating expenses decreased to 10.5% of net sales for the first half of fiscal 2020 compared to 10.7% of net sales for the first half of fiscal 2019.
Selling expenses for the firsttwenty-six weeks of fiscal 2020 were $30.2$8.4 million, a decrease of $2.0$0.7 million, or 6.3%7.7%, from the amount recorded for the firsttwenty-six weeks quarter of fiscal 2019.2020. The decrease was driven primarily by a $2.9$0.3 million decrease in advertising expenseconsulting fees and a $1.3$0.3 million decrease in freight expense. These decreases were partially offset by a $1.4 million increase in payroll related and incentive compensation expense and a $0.5 million increase in commission expense.
Administrative expenses for the firsttwenty-six weeks of fiscal 2020 were $18.5 million, an increase of $1.6 million, or 9.5%, compared to the same period of fiscal 2019. The increase was primarily due to $1.5 million increase in compensation related expenses, primarily incentive compensation, and a $0.3 million increase in building repairs and maintenance expense.
compensation.
Due to the factors discussed above, income from operations was $43.5 million, or 9.4% of net sales, for the firsttwenty-six weeks of fiscal 2020 compared to $26.7 million, or 5.8% of net sales, for the firsttwenty-six weeks of fiscal 2019.
2020.
2020.
2020.
fiscal 2020.
Net income was $30.4 million, or $2.65 per common share basic and $2.64$1.12 per share diluted, for the firsttwenty-six weeks quarter of fiscal 2020, compared to net income of $17.9 million, or $1.57 per common share basic and $1.56 per share diluted, for the firsttwenty-six weeks of fiscal 2019.
2020.
December 26, 2019 | December 27, 2018 | $ Change | ||||||||||
Operating activities | $ | 54,285 | $ | 48,366 | $ | 5,919 | ||||||
Investing activities | (6,148 | ) | (9,323 | ) | 3,175 | |||||||
Financing activities | (48,335 | ) | (37,909 | ) | (10,426 | ) | ||||||
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Net increase in cash | $ | (198 | ) | $ | 1,134 | $ | (1,332 | ) | ||||
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September 24, 2020 | September 26, 2019 | $ Change | ||||||||||
Operating activities | $ | 20,577 | $ | 22,468 | $ | (1,891 | ) | |||||
Investing activities | (6,018 | ) | (3,102 | ) | (2,916 | ) | ||||||
Financing activities | (15,351 | ) | (20,070 | ) | 4,719 | |||||||
Net decrease in cash | $ | (792 | ) | $ | (704 | ) | $ | (88 | ) | |||
2020 also contributed to the increase in net accounts receivable at September 24, 2020 compared to June 25, 2020.
almonds and cashews also contributed to the decline in total inventory value.
priced inshell pecans.
2020.
The Credit Facility as most recently amended in November 2017, is secured by substantially all of our assets other than machinery and equipment, real property, and fixtures and matures on July 7, 2021.March 5, 2025. The Mortgage Facility is secured by mortgages on essentially all of our owned real property located in Elgin, Illinois, Gustine, California and Garysburg, North Carolina (the “Encumbered Properties”).
We are currently updating the Credit Facility agreement and expect the term to extend another five years. The legal costs incurred to date have been capitalized and will be amortized over the length of the new agreement.
Facility and a total principal amount of $8.2 million was outstanding.
25, 2020.
2021.
| ||
32.2 | Certification of Michael J. Valentine pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Indicates a management contract or compensatory plan or arrangement. |
JOHN B. SANFILIPPO & SON, INC. | ||
By | ||
/s/ MICHAEL J. VALENTINE | ||
Michael J. Valentine | ||
Chief Financial Officer, Group President and Secretary |
35