EPS of $0.86 decreased by 32.3% from previous year
Gross margin of 18.4%
Net income of 10.01M
"I am proud to report a successful and historic fiscal 2024 as we exceeded $1 billion in sales for the first time in our company's history." - Jeffrey Sanfilippo
John B. Sanfilippo & Son, Inc. (JBSS) Q4 2024 Earnings Analysis: Lakeville-driven Growth in a Challenging Snack Environment with Margin Pressure and Long-Term Growth Aspiration toward a $2B Revenue Model
Executive Summary
JBSS reported a strong fourth quarter (Q4’24) with net sales of $269.6 million, up 15.1% year over year driven by the Lakeville acquisition, which contributed approximately $44.2 million of net sales in the quarter. Excluding Lakeville, Q4 net sales declined 3.8% due to a 1.9% drop in pounds sold and a 1.9% reduction in the weighted average selling price per pound, reflecting competitive pricing pressure across major nut types. The quarterly gross profit declined 8.6% to $50.0 million, with the gross margin compressing to 18.5% from 23.4% in the prior-year quarter; excluding Lakeville, gross margin would have been roughly 20.7% (reflecting the mix impact from the acquisition).
Net income for Q4’24 was $10.0 million, or $0.86 per diluted share, down from $14.7 million or $1.26 per diluted share in Q4’23. Management attributed the margin compression and near-term profitability impact to the Lakeville-related base, higher incentive compensation, and strategic investments that are expected to deliver category growth and higher sales volumes in fiscal 2025 and beyond. Net sales for the full year 2024 rose to $1.07 billion, up 6.7% largely due to Lakeville, while excluding the acquisition, 2024 net sales declined 5.3% to $946.9 million, driven by a 3.3% volume decline and a 2% decrease in average selling price per pound.
Management commentary emphasizes a multi-year growth trajectory anchored by private-brand bar expansion, product portfolio diversification, and manufacturing capacity expansion. The company outlined a long-range plan to become a $2 billion business, supported by strategic moves such as relocating and expanding manufacturing capacity, including a 400,000 square foot warehouse at Huntley, Illinois to unlock roughly 250,000 square feet for production expansion. The fiscal 2024 earnings call highlighted ongoing headwinds in the snack category (inflation and demand shifts) and commodity cost pressures (notably chocolate and cashews), while stressing continued focus on cost optimization, brand investments, and category-driven promotions. Overall, the quarter and year set up JBSS for mid-to-long-term growth despite near-term margin compression and higher working-capital needs.
Key Performance Indicators
Revenue
269.57M
QoQ: -0.85% | YoY:15.09%
Gross Profit
49.62M
18.41% margin
QoQ: 1.69% | YoY:-9.32%
Operating Income
14.70M
QoQ: -20.50% | YoY:-31.71%
Net Income
10.01M
QoQ: -25.70% | YoY:-31.76%
EPS
0.86
QoQ: -25.86% | YoY:-32.28%
Revenue Trend
Margin Analysis
Key Insights
Revenue (Q4’24): $269.6 million; YoY increase 15.1%; ex-Lakeville revenue down 3.8% (44.2m Lakeville in quarter).
Net income: $10.0 million; net margin ~3.7%; EPS $0.86 diluted.
Full-year 2024 net sales: $1.07 billion (YoY +6.7%); ex-Lakeville: $946.9 million (−5.3%).
Financial Highlights
- Revenue (Q4’24): $269.6 million; YoY increase 15.1%; ex-Lakeville revenue down 3.8% (44.2m Lakeville in quarter).
- Gross profit: $50.0 million; gross margin 18.5% (vs 23.4% in Q4’23). Excluding Lakeville, gross margin approx 20.7%.
- Operating income: $14.7 million; operating margin ~5.5% (0.0545).
- Net income: $10.0 million; net margin ~3.7%; EPS $0.86 diluted.
- Full-year 2024 net sales: $1.07 billion (YoY +6.7%); ex-Lakeville: $946.9 million (−5.3%).
- EBITDA: $22.5 million; EBITDA margin ≈ 8.3%; interest coverage ~30.5x.
- Balance sheet: Total assets $515.6 million; total liabilities $193.0 million; total stockholders’ equity $322.6 million. Cash and cash equivalents $0.484 million; net debt $52.46 million.
- Cash flow: Net cash from operating activities $35.235 million; capital expenditures $10.844 million; free cash flow $24.391 million.
- Working capital and liquidity: current ratio 2.34; quick ratio 0.774; cash ratio 0.0038; DSO 28.37 days; DIO 80.43 days; DPO 21.87 days; CCC 108.80 days.
- Valuation/multiples (as of period): P/S 4.18x; P/BV 3.49x; P/E 28.13x; Dividend yield ~1.03%; FCF yield ~2.10x per share.
- Inventory: year-end inventory $196.56 million, up 13.7% year over year largely due to Lakeville replenishment and higher inshell pecan/walnut levels.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
269.57M
15.09%
-0.85%
Gross Profit
49.62M
-9.32%
1.69%
Operating Income
14.70M
-31.71%
-20.50%
Net Income
10.01M
-31.76%
-25.70%
EPS
0.86
-32.28%
-25.86%
Key Financial Ratios
currentRatio
2.34
grossProfitMargin
18.4%
operatingProfitMargin
5.45%
netProfitMargin
3.71%
returnOnAssets
1.94%
returnOnEquity
3.1%
debtEquityRatio
0.17
operatingCashFlowPerShare
$3.03
freeCashFlowPerShare
$2.1
dividendPayoutRatio
116.1%
priceToBookRatio
3.49
priceEarningsRatio
28.13
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Themes from the earnings call:
- Strategic progress and financial milestones: Jeffrey Sanfilippo highlighted a historic milestone, stating, I am proud to report a successful and historic fiscal 2024 as we exceeded $1 billion in sales for the first time in our company's history. Lakeville integration was a key strategic component, with $44.2 million of Lakeville net sales in Q4’24 and full-year conversion at the top end of the original range.
- Capital return and balance sheet discipline: The company raised the annual dividend by 6.3% to $0.85 per share and announced a $1.25 per share special dividend, payable on September 11, 2024. This underscores a capital allocation strategy that balances return of capital with investment in growth initiatives.
- Lakeville integration and near-term dilution: Dilution from the Lakeville acquisition was approximately $0.17 per share for the fiscal year, significantly better than the previously anticipated $0.80 to $1.00 per share; Lakeville net sales were at the top end of the original range.
- Growth focus for fiscal 2025: Jeffrey framed 2025 as a year of accelerated volume growth via private-brand bars, price/pack architecture improvements, innovation in nuts/trail, and expanded manufacturing capabilities. A key operational enabler is the Huntley, IL warehouse (400,000 sq ft) to unlock 250,000 sq ft for production expansion.
- Operational headwinds and category dynamics: The management noted macro headwinds including declining snack consumption and higher input costs (e.g., chocolate and cashews). They emphasized ongoing cost optimization, brand investment, and promotional activity as levers to counteract the headwinds.
- Management tone on long-term trajectory: Despite not maintaining five straight years of record earnings in 2024, JBSS executives stressed resilience, a strengthened portfolio, and a plan to reach $2 billion in revenue, supported by long-range growth initiatives and improved cost structures.
I am proud to report a successful and historic fiscal 2024 as we exceeded $1 billion in sales for the first time in our company's history.
— Jeffrey Sanfilippo
We recently leased a new 400,000 square foot warehouse in Huntley, Illinois, just a few miles from our Elgin headquarters. We plan to move our warehouse operations to that facility, which will free up about 250,000 square feet of space to expand production, bars and nut and trail mix packaging.
— Jeffrey Sanfilippo
Forward Guidance
JBSS articulates a clear medium-to-long-term growth framework anchored by Lakeville synergies and a multi-brand strategy. Near-term priorities for fiscal 2025 include accelerating volume growth through private-brand bars, rebuilding the nut and trail business via price optimization, packaging innovations, and expanded distribution; and leveraging new manufacturing capacity, notably the Huntley facility, to support higher bar production and nut/trail packaging. Management expects these initiatives to translate into stronger operating results in fiscal 2025 and beyond, with the Lakeville integration contributing to margin and mix improvements over time. Investors should monitor the following factors:
- Lakeville integration progress and cost synergies: Actual timing and magnitude of cost savings and volume uplift in 2025.
- Private-brand bar performance and category mix: Private-label momentum can offset branded softness if promotional inflation remains contained.
- Input costs and chocolate/cashew commodity dynamics: Ongoing volatility in key nut and chocolate costs could compress margins if not offset by price or efficiency gains.
- Capacity expansion and capital deployment: The Huntley facility and other capex should translate into improved throughput and product mix; watch for ramp timing and cost overruns.
- Retail distribution and promotional activity: The strategy to expand shelves and rotational distribution, particularly for Orchard Valley Harvest and private-brand bars, is a key driver of volume growth.
Overall, JBSS appears to be pursuing a gradual margin recovery path supported by growth investments and mix shifts, with a long-range ambition of reaching $2 billion in annual net sales; achievability hinges on successful integration, stable input costs, and sustained demand for value-oriented snacks.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
JBSS Focus
18.41%
5.45%
3.10%
28.13%
BRID
25.40%
-0.90%
-0.51%
-31.09%
CVGW
9.58%
1.77%
-0.07%
-850.99%
IPAR
64.70%
5.74%
1.49%
110.49%
JJSF
31.80%
9.34%
3.10%
27.94%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Positive longer-term investment thesis anchored in Lakeville-driven revenue scale, ongoing private-brand expansion, and capacity investments that enable higher output and product mix improvements. The key to a constructive outlook is the company’s ability to translate mix benefits and operating leverage into margin expansion as Lakeville stabilizes and the 2025 plan deploys. Near-term risks include margin compression from Lakeville-related base, commodity cost volatility, and macro consumer demand weakness in snacks. An investor should monitor Lakeville synergies, private-brand bar performance, 2025 cost controls, and the ramp of the Huntley facility to gauge the pace of the transformation toward the $2 billion revenue target.
Key Investment Factors
Growth Potential
Lakeville-driven revenue scale plus ongoing private-brand bar expansion presents a meaningful growth runway. The Huntley facility enables higher production capacity for bars and nut/trail packaging, supporting a potential uplift in unit volumes and higher-margin private-brand product lines. The company’s long-range plan to reach $2 billion in sales provides a clear growth target.
Profitability Risk
Near-term gross margin pressure due to Lakeville mix and broader pricing discounts in nuts; macro headwinds in the snack category; commodity price volatility (chocolate, cashews); integration risk and potential working-capital strain from higher inventories; reliance on private-brand momentum to offset branded softness.
Financial Position
Solid liquidity indicated by a current ratio of 2.34 and strong interest coverage (~30.5x). However, cash on hand is modest at $0.484 million, with net debt around $52.46 million. Free cash flow generation ($24.39 million in fiscal 2024) supports deleveraging potential and selective capex, including Lakeville-related investments. Management’s dividend actions reflect a robust capital-allocation framework, albeit with elevated payout dynamics including a special dividend in 2024.
SWOT Analysis
Strengths
Scale and diversification: Lakeville acquisition complements a broad nut/snack portfolio and private-brand capability.
Strong brand portfolio in Fisher, Orchard Valley Harvest, and Southern Style Nuts with distribution breadth.
Healthy cash flow generation and a favorable interest-coverage buffer (≈30x).
Operational leverage from manufacturing and cost-optimization programs.
Weaknesses
Near-term gross margin compression due to Lakeville mix and pricing pressures in major nut categories.
Relatively stretched working capital indicators (high inventory levels driven by Lakeville integration).
Low cash balance on hand limiting liquidity cushion for sudden commodity shocks.
Opportunities
Private-brand bar expansion driving volume and margin through higher value mix.
Huntley warehouse and production capacity expansion enabling higher throughput for bars and trail mixes.
Product portfolio optimization and promotions to drive category growth (snack bar, nut, and trail mix subcategories).
Cross-channel distribution gains in grocery and club stores with momentum for Orchard Valley Harvest.
Threats
Macro headwinds in snack category and inflationary pressure on input costs (chocolate, cashews).
Competitive pricing pressures across nuts and snacks could erode gross margins.
Execution risk associated with Lakeville integration and achieving projected synergies."
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