SANFILIPPO JOHN B & SON INC, 10-Q filed on 01 Feb 24
v3.24.0.1
Cover Page - shares
6 Months Ended
Dec. 28, 2023
Jan. 25, 2024
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Dec. 28, 2023  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q2  
Trading Symbol JBSS  
Entity Registrant Name SANFILIPPO JOHN B & SON INC  
Security Exchange Name NASDAQ  
Entity Interactive Data Current Yes  
Entity Central Index Key 0000880117  
Current Fiscal Year End Date --06-29  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Title of 12(b) Security Common Stock  
Entity Address, State or Province IL  
Securities Act File Number 0-19681  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 36-2419677  
Entity Address, Address Line One 1703 North Randall Road  
Entity Address, City or Town Elgin  
Entity Address, Postal Zip Code 60123-7820  
City Area Code 847  
Local Phone Number 289-1800  
Document Quarterly Report true  
Document Transition Report false  
Common Stock, Non-Cumulative Voting Rights of One Vote Per Share [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   9,002,660
Class A Common Stock [Member]    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   2,597,426
v3.24.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 28, 2023
Dec. 29, 2022
Dec. 28, 2023
Dec. 29, 2022
Statement of Comprehensive Income [Abstract]        
Net sales $ 291,222 $ 274,328 $ 525,327 $ 526,929
Cost of sales 233,283 217,826 410,366 419,784
Gross profit 57,939 56,502 114,961 107,145
Operating expenses:        
Selling expenses 21,001 21,830 42,993 39,812
Administrative expenses 11,563 10,208 22,016 20,455
Bargain purchase gain, net (2,226) 0 (2,226) 0
Total operating expenses 30,338 32,038 62,783 60,267
Income from operations 27,601 24,464 52,178 46,878
Other expense:        
Interest expense including $175, $189, $353 and $382 to related parties 1,055 615 1,282 1,276
Rental and miscellaneous expense, net 260 311 616 713
Pension expense (excluding service costs) 350 348 700 697
Total other expense, net 1,665 1,274 2,598 2,686
Income before income taxes 25,936 23,190 49,580 44,192
Income tax expense 6,765 6,283 12,821 11,740
Net income 19,171 16,907 36,759 32,452
Other comprehensive income:        
Amortization of actuarial loss included in net periodic pension cost 0 7 0 14
Income tax expense related to pension adjustments 0 (2) 0 (3)
Other comprehensive income , net of tax 0 5 0 11
Comprehensive income $ 19,171 $ 16,912 $ 36,759 $ 32,463
Net income per common share — basic $ 1.65 $ 1.46 $ 3.17 $ 2.81
Net income per common share — diluted $ 1.64 $ 1.45 $ 3.15 $ 2.79
v3.24.0.1
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
3 Months Ended 6 Months Ended
Dec. 28, 2023
Dec. 29, 2022
Dec. 28, 2023
Dec. 29, 2022
Interest Expense $ 1,055,000 $ 615,000 $ 1,282,000 $ 1,276,000
Related Party [Member]        
Interest Expense $ 175 $ 189 $ 353 $ 382
v3.24.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 28, 2023
Jun. 29, 2023
Dec. 29, 2022
CURRENT ASSETS:      
Cash $ 1,975 $ 1,948 $ 620
Accounts receivable, less allowance for doubtful accounts of $370, $283 and $318 77,416 72,734 72,433
Inventories 197,335 172,936 173,075
Prepaid expenses and other current assets 13,040 6,812 11,693
TOTAL CURRENT ASSETS 289,766 254,430 257,821
PROPERTY, PLANT AND EQUIPMENT:      
Land 13,365 9,150 9,150
Buildings 114,708 104,150 102,840
Machinery and equipment 286,317 261,706 254,013
Furniture and leasehold improvements 5,310 5,275 5,312
Vehicles 790 729 614
Construction in progress 3,960 7,123 9,877
Property, plant and equipment gross 424,450 388,133 381,806
Less: Accumulated depreciation 276,987 267,336 259,597
Property, plant and equipment net 147,463 120,797 122,209
Rental investment property, less accumulated depreciation of $14,843, $14,439 and $14,036 14,280 14,684 15,087
TOTAL PROPERTY, PLANT AND EQUIPMENT 161,743 135,481 137,296
OTHER LONG TERM ASSETS:      
Intangible assets, net 6,584 6,658 7,561
Deferred income taxes 562 3,592 2,608
Goodwill 11,750 11,750 12,030
Operating Lease, Right-of-Use Asset 6,867 6,427 2,593
Other assets 7,187 6,949 6,021
TOTAL ASSETS 484,459 425,287 425,930
CURRENT LIABILITIES:      
Revolving credit facility borrowings 32,052 0 22,805
Current maturities of long-term debt, net, including related party debt of $704, $672 and $642 704 672 1,497
Accounts payable 62,955 42,680 49,342
Bank overdraft 1,500 285 1,970
Accrued payroll and related benefits 17,479 27,572 14,953
Other accrued expenses 13,601 14,479 13,495
TOTAL CURRENT LIABILITIES 128,291 85,688 104,062
LONG-TERM LIABILITIES:      
Long-term debt, less current maturities, net, including related party debt of $6,742, $7,102 and $7,446 6,742 7,102 7,446
Retirement plan 27,338 26,653 29,132
Long-term operating lease liabilities, net of current portion 5,141 4,771 1,472
Long-term workers' compensation liabilities 7,291 7,321 7,459
Other 2,419 1,545 696
TOTAL LONG-TERM LIABILITIES 48,931 47,392 46,205
TOTAL LIABILITIES 177,222 133,080 150,267
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:      
Capital in excess of par value 133,432 131,986 130,731
Retained earnings 175,096 161,512 148,488
Accumulated other comprehensive loss (204) (204) (2,469)
Treasury stock, at cost; 117,900 shares of Common Stock (1,204) (1,204) (1,204)
TOTAL STOCKHOLDERS' EQUITY 307,237 292,207 275,663
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 484,459 425,287 425,930
Class A Common Stock [Member]      
STOCKHOLDERS' EQUITY:      
Common Stock 26 26 26
Common Stock, Non-Cumulative Voting Rights of One Vote Per Share [Member]      
STOCKHOLDERS' EQUITY:      
Common Stock $ 91 $ 91 $ 91
v3.24.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 28, 2023
Jun. 29, 2023
Dec. 29, 2022
Allowance for doubtful accounts for accounts receivable, current $ 370 $ 283 $ 318
Accumulated depreciation of rental investment property 14,843 14,439 14,036
Due to related party, current 704 672 642
Due to Related Party, Noncurrent $ 6,742 $ 7,102 $ 7,446
Common shares, Treasury stock 117,900 117,900 117,900
Class A Common Stock [Member]      
Common stock, par value $ 0.01 $ 0.01 $ 0.01
Common stock, shares authorized 10,000,000 10,000,000 10,000,000
Common stock, shares issued 2,597,426 2,597,426 2,597,426
Common stock, shares outstanding 2,597,426 2,597,426 2,597,426
Common Stock, Non-Cumulative Voting Rights of One Vote Per Share [Member]      
Common stock, par value $ 0.01 $ 0.01 $ 0.01
Common stock, shares authorized 17,000,000 17,000,000 17,000,000
Common stock, shares issued 9,120,560 9,076,326 9,072,068
v3.24.0.1
Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Total
Common Stock [Member]
Capital in Excess of Par Value [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Treasury Stock [Member]
Class A Common Stock [Member]
Class A Common Stock [Member]
Common Stock [Member]
Balance at Jun. 30, 2022 $ 278,821 $ 90 $ 128,800 $ 153,589 $ (2,480) $ (1,204)   $ 26
Balance, Shares at Jun. 30, 2022   9,047,359           2,597,426
Net Income (Loss) 15,545     15,545        
Cash dividends (25,981)     (25,981)        
Pension liability amortization, net of income tax expense 6       6      
Stock-based compensation expense 772   772          
Balance at Sep. 29, 2022 269,163 $ 90 129,572 143,153 (2,474) (1,204)   $ 26
Balance, Shares at Sep. 29, 2022   9,047,359           2,597,426
Balance at Jun. 30, 2022 278,821 $ 90 128,800 153,589 (2,480) (1,204)   $ 26
Balance, Shares at Jun. 30, 2022   9,047,359           2,597,426
Net Income (Loss) 32,452              
Balance at Dec. 29, 2022 275,663 $ 91 130,731 148,488 (2,469) (1,204)   $ 26
Balance, Shares at Dec. 29, 2022   9,072,068           2,597,426
Balance at Sep. 29, 2022 269,163 $ 90 129,572 143,153 (2,474) (1,204)   $ 26
Balance, Shares at Sep. 29, 2022   9,047,359           2,597,426
Net Income (Loss) 16,907     16,907        
Cash dividends (11,572)     (11,572)        
Pension liability amortization, net of income tax expense 5       5      
Equity award exercises   24,709            
Equity award exercises, net of shares withheld for employee taxes (355) $ 1 (356)          
Stock-based compensation expense 1,515   1,515          
Balance at Dec. 29, 2022 275,663 $ 91 130,731 148,488 (2,469) (1,204)   $ 26
Balance, Shares at Dec. 29, 2022   9,072,068           2,597,426
Balance at Jun. 29, 2023 292,207 $ 91 131,986 161,512 (204) (1,204) $ 26  
Balance, Shares at Jun. 29, 2023   9,076,326         2,597,426  
Net Income (Loss) 17,588     17,588        
Cash dividends (23,175)     (23,175)        
Equity award exercises   14,605            
Equity award exercises, net of shares withheld for employee taxes 0 $ 0 0          
Stock-based compensation expense 747   747          
Balance at Sep. 28, 2023 287,367 $ 91 132,733 155,925 (204) (1,204) $ 26  
Balance, Shares at Sep. 28, 2023   9,090,931         2,597,426  
Balance at Jun. 29, 2023 292,207 $ 91 131,986 161,512 (204) (1,204) $ 26  
Balance, Shares at Jun. 29, 2023   9,076,326         2,597,426  
Net Income (Loss) 36,759              
Balance at Dec. 28, 2023 307,237 $ 91 133,432 175,096 (204) (1,204) $ 26  
Balance, Shares at Dec. 28, 2023   9,120,560         2,597,426  
Balance at Sep. 28, 2023 287,367 $ 91 132,733 155,925 (204) (1,204) $ 26  
Balance, Shares at Sep. 28, 2023   9,090,931         2,597,426  
Net Income (Loss) 19,171     19,171        
Equity award exercises   29,629            
Equity award exercises, net of shares withheld for employee taxes (684) $ 0 (684)          
Stock-based compensation expense 1,383   1,383          
Balance at Dec. 28, 2023 $ 307,237 $ 91 $ 133,432 $ 175,096 $ (204) $ (1,204) $ 26  
Balance, Shares at Dec. 28, 2023   9,120,560         2,597,426  
v3.24.0.1
Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Sep. 28, 2023
Dec. 29, 2022
Sep. 29, 2022
Statement of Stockholders' Equity [Abstract]      
Cash dividends per common share $ 2 $ 1 $ 2.25
Pension liability amortization income tax expense   $ 2 $ 1
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss) Arising During Period, Tax   $ 2  
v3.24.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Dec. 28, 2023
Dec. 29, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:    
Pro forma net income $ 36,759 $ 32,452
Depreciation and amortization 11,715 10,099
Loss on disposition of assets, net 140 19
Deferred income tax expense 2,280 628
Stock-based compensation expense 2,130 2,287
Bargain purchase gain, net (2,226) 0
Change in assets and liabilities:    
Accounts receivable, net (4,542) (2,822)
Inventories 11,101 32,020
Prepaid expenses and other current assets (2,942) (1,885)
Accounts payable 20,557 1,492
Accrued expenses (10,077) (1,794)
Income taxes receivable (4,180) (2,523)
Other long-term assets and liabilities 132 721
Other, net 325 258
Net cash provided by operating activities 61,172 70,952
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property, plant and equipment (10,882) (11,420)
Business acquisitions, net (58,974) (3,500)
Other, net (53) (56)
Net cash used in investing activities (69,909) (14,976)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Net short-term borrowings (repayments) 32,052 (17,634)
Debt issue costs (316) 0
Principal payments on long-term debt (328) (1,984)
Increase in bank overdraft 1,215 1,756
Dividends paid (23,175) (37,553)
Taxes paid related to net share settlement of equity awards (684) (356)
Net cash provided by (used in) financing activities 8,764 (55,771)
NET INCREASE IN CASH AND CASH EQUIVALENTS 27 205
Cash, beginning of period 1,948 415
Cash, end of period $ 1,975 $ 620
v3.24.0.1
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 28, 2023
Sep. 28, 2023
Dec. 29, 2022
Sep. 29, 2022
Dec. 28, 2023
Dec. 29, 2022
Pay vs Performance Disclosure            
Net Income (Loss) $ 19,171 $ 17,588 $ 16,907 $ 15,545 $ 36,759 $ 32,452
v3.24.0.1
Insider Trading Arrangements
3 Months Ended
Dec. 28, 2023
Trading Arrangements, by Individual  
Material Terms of Trading Arrangement

Rule 10b5-1 Trading Arrangement

During the quarter ended December 28, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.0.1
Basis of Presentation and Description of Business
6 Months Ended
Dec. 28, 2023
Accounting Policies [Abstract]  
Basis of Presentation and Description of Business

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 2024 and fiscal 2023 are to the fiscal year ending June 27, 2024 and the fiscal year ended June 29, 2023, respectively.
References herein to the second quarter of fiscal 2024 and fiscal 2023 are to the quarters ended December 28, 2023 and December 29, 2022, respectively.
References herein to the first half or first twenty-six weeks of fiscal 2024 and fiscal 2023 are to the twenty-six weeks ended December 28, 2023 and December 29, 2022, 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 and Southern Style Nuts 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, nutrition bars, snack bars, snack bites, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks, other sesame snack products and baked cheese snack products under our brand names, including Just the Cheese, and under private brands. Finally, with our recent acquisition of assets relating to the snack bars business from TreeHouse Foods. Inc., which was completed in the current second quarter of fiscal 2024, we are able to offer our private brand customers a complete portfolio of snack bars. 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 29, 2023 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 2023 Annual Report on Form 10-K for the fiscal year ended June 29, 2023.

v3.24.0.1
Lakeville Acquisition
6 Months Ended
Dec. 28, 2023
Business Combinations [Abstract]  
Lakeville Acquisition

Note 2 Lakeville Acquisition

On September 29, 2023, we completed the acquisition of certain assets from TreeHouse Foods, Inc. (the “Seller”) relating to its snack bars business. The acquired assets include inventory, a manufacturing facility and related equipment located in Lakeville, Minnesota, and product formulas (the “Lakeville Acquisition”). The initial purchase price was approximately $61,546 in cash, subject to certain post-closing adjustments. Following the closing, we received payment from the Seller of $2,572 for purchase price adjustments related to the actual inventory and fixed assets acquired, for a revised purchase price of $58,974, net. The purchase price for the Lakeville Acquisition was primarily funded from borrowings under the Credit Facility as amended by the Second Amendment (defined below).

The Lakeville Acquisition accelerates our strategy within the growing snack bar category and diversifies our product offerings. It also allows us to offer private brand customers a complete portfolio of snack bars, including fruit and grain, crunchy, protein, sweet and salty and chewy bars that complement internally developed nutrition bars. The Lakeville Acquisition has been accounted for as a business combination in accordance with ASC Topic 805, “Business Combinations”.

The following table summarizes the preliminary amounts allocated to the fair values of certain assets acquired at the acquisition date:

 

Inventories

$

35,500

 

Property, plant and equipment

 

25,600

 

Identifiable intangible assets:

 

 

   Product formulas

 

850

 

   Total assets acquired

$

61,950

 

Property, plant and equipment represent a manufacturing facility and related equipment located in Lakeville, Minnesota. The fair value for the property was primarily determined using a market approach. The fair values for the machinery and equipment were determined using a combination of the direct and indirect cost approaches, along with the market approach. All assets will be depreciated on a straight-line basis over their estimated remaining useful lives as determined in accordance with our accounting policies.

The product formulas asset represents the value of these formulas designed to replicate the taste, texture and appearance of branded snack bars. The fair value of the product formulas was determined using the income approach through a relief from royalty method analysis. We are amortizing formulas over a weighted average life of 5.4 years.

There were no recognized or unrecognized material contingencies associated with the acquired business.

The $61,950 fair value of the identifiable assets acquired exceeded the total purchase price of $58,974. Accordingly, this acquisition resulted in a bargain purchase and we recognized a gain of $2,226, net of taxes, which is reported in the caption “Bargain purchase gain, net” in our consolidated financial results for the quarter and twenty-six weeks ended December 28, 2023. We believe the Lakeville Acquisition resulted in a bargain purchase gain because the Seller was motivated to divest such snack bars business, as its performance no longer supported the Seller's long-term growth targets.

Net sales of $28,692 and a loss before income taxes of $3,957 from the closing of the Lakeville Acquisition on September 29, 2023 are included in our consolidated financial results as of December 28, 2023. The Company also incurred acquisition-related costs of $161 and $665 for the quarter and twenty-six weeks ended December 28, 2023, respectively. These costs are included in Administrative expenses.

The following reflects the unaudited pro forma results of operations of the Company as if the Lakeville Acquisition had taken place at the beginning of fiscal 2023. This pro forma information does not purport to represent what the Company’s actual results would have been if the Lakeville Acquisition had occurred as of the date indicated or what such results would be for any future periods.

 

 

For the Quarter Ended

 

 

For the Twenty-Six Weeks Ended

 

 

 

December 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

Pro forma net sales

 

$

291,222

 

 

$

313,870

 

 

$

565,640

 

 

$

608,754

 

Pro forma net income

 

 

18,883

 

 

 

16,697

 

 

 

33,335

 

 

 

29,797

 

Pro forma diluted earnings per share

 

$

1.62

 

 

$

1.44

 

 

$

2.86

 

 

$

2.56

 

 

These unaudited pro forma results have been calculated after applying our accounting policies and adjusting the results of the Lakeville Acquisition to reflect elimination of transaction costs and the bargain purchase gain and to record additional interest expense and cost of sales that would have been incurred, assuming the fair value adjustment to inventory had been applied from July 1, 2022, net of related income taxes in respect of pro forma net income and diluted earnings per share performance. The impact to the above pro forma information of incremental depreciation and amortization expense is insignificant and therefore excluded from the calculation of pro forma results.

Since the Lakeville Acquisition, we continue to operate in a single reportable operating segment that consists of selling various nut and nut-related products and snacks through three sales distribution channels. Revenues from the Lakeville Acquisition are primarily in our consumer distribution channel.

v3.24.0.1
Revenue Recognition
6 Months Ended
Dec. 28, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition

Note 3 – 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.

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. This allows the customer to 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 including, but not limited to, promotional allowances, volume and customer rebates, in-store display incentives and marketing allowances 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. It is also 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. There was no contract asset balance for any 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 Twenty-Six Weeks Ended

 

Distribution Channel

 

December 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

Consumer

 

$

241,362

 

 

$

224,513

 

 

$

425,696

 

 

$

421,060

 

Commercial Ingredients

 

 

27,712

 

 

 

28,419

 

 

 

55,847

 

 

 

59,926

 

Contract Packaging

 

 

22,148

 

 

 

21,396

 

 

 

43,784

 

 

 

45,943

 

Total

 

$

291,222

 

 

$

274,328

 

 

$

525,327

 

 

$

526,929

 

v3.24.0.1
Leases
6 Months Ended
Dec. 28, 2023
Leases [Abstract]  
Leases

Note 4 – 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.

Through a review of our contracts, 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 5.5 years.

It is our accounting policy not to 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 Sheets. 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:

 

December 28,
2023

 

 

June 29,
2023

 

 

December 29,
2022

 

 

Affected Line Item in Consolidated Balance Sheets

Assets

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

$

6,867

 

 

$

6,427

 

 

$

2,593

 

 

Operating lease right-of-use assets

Total lease right-of-use assets

$

6,867

 

 

$

6,427

 

 

$

2,593

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

Operating leases

$

1,751

 

 

$

1,729

 

 

$

1,166

 

 

Other accrued expenses

Noncurrent:

 

 

 

 

 

 

 

 

 

 

Operating leases

 

5,141

 

 

 

4,771

 

 

 

1,472

 

 

Long-term operating lease liabilities

Total lease liabilities

$

6,892

 

 

$

6,500

 

 

$

2,638

 

 

 

 

The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:

 

 

For the Quarter Ended

 

 

For the Twenty-Six Weeks Ended

 

 

December 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

Operating lease costs (a)

 

$

719

 

 

$

541

 

 

$

1,389

 

 

$

1,015

 

Variable lease costs (b)

 

 

33

 

 

 

58

 

 

 

(141

)

 

 

115

 

Total lease cost

 

$

752

 

 

$

599

 

 

$

1,248

 

 

$

1,130

 

 

(a)
Includes short-term leases which are immaterial.
(b)
Variable lease costs consist of sales tax and lease overtime charges.

Supplemental cash flow and other information related to leases was as follows:

 

 

For the Twenty-Six Weeks Ended

 

 

December 28,
2023

 

 

December 29,
2022

 

Operating cash flows information:

 

 

 

 

 

 

Cash paid for amounts included in measurements for lease liabilities

 

$

1,210

 

 

$

807

 

 

 

 

 

 

 

 

Non-cash activity:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease obligations

 

$

1,320

 

 

$

1,049

 

 

 

December 28,
2023

 

 

June 29,
2023

 

 

December 29,
2022

 

Weighted average remaining lease term (in years)

 

 

4.2

 

 

 

4.4

 

 

 

3.0

 

Weighted average discount rate

 

 

6.9

%

 

 

6.7

%

 

 

5.2

%

 

Maturities of operating lease liabilities as of December 28, 2023 are as follows:

 

Fiscal Year Ending

 

 

 

June 27, 2024 (excluding the twenty-six weeks ended December 28, 2023)

 

$

1,159

 

June 26, 2025

 

 

1,954

 

June 25, 2026

 

 

1,742

 

June 24, 2027

 

 

1,455

 

June 29, 2028

 

 

1,285

 

June 28, 2029

 

 

346

 

Thereafter

 

 

 

Total lease payment

 

 

7,941

 

Less imputed interest

 

 

(1,049

)

Present value of operating lease liabilities

 

$

6,892

 

 

At December 28, 2023, the Company has additional operating leases of approximately $425 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 third quarter of fiscal 2024 with initial lease terms ranging from 3 to 6 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 Twenty-Six Weeks Ended

 

 

December 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

Lease income related to lease payments

 

$

533

 

 

$

403

 

 

$

977

 

 

$

805

 

 

The future minimum, undiscounted fixed cash flows under non-cancelable tenant operating leases for each of the next five years and thereafter are as follows:

 

Fiscal Year Ending

 

 

 

June 27, 2024 (excluding the twenty-six weeks ended December 28, 2023)

 

$

1,029

 

June 26, 2025

 

 

1,477

 

June 25, 2026

 

 

972

 

June 24, 2027

 

 

930

 

June 29, 2028

 

 

328

 

June 28, 2029

 

 

336

 

Thereafter

 

 

1,478

 

 

$

6,550

 

v3.24.0.1
Inventories
6 Months Ended
Dec. 28, 2023
Inventory Disclosure [Abstract]  
Inventories

Note 5 – Inventories

Inventories consist of the following:

 

 

December 28,
2023

 

 

June 29,
2023

 

 

December 29,
2022

 

Raw material and supplies

 

$

81,564

 

 

$

65,430

 

 

$

75,002

 

Work-in-process and finished goods

 

 

115,771

 

 

 

107,506

 

 

 

98,073

 

Total

 

$

197,335

 

 

$

172,936

 

 

$

173,075

 

v3.24.0.1
Goodwill and Intangible Assets
6 Months Ended
Dec. 28, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets

Note 6 – Goodwill and Intangible Assets

Identifiable intangible assets that are subject to amortization consist of the following:

 

 

December 28,
2023

 

 

June 29,
2023

 

 

December 29,
2022

 

Customer relationships

 

$

21,350

 

 

$

21,350

 

 

$

21,370

 

Brand names

 

 

17,070

 

 

 

17,070

 

 

 

17,070

 

Product formulas

 

 

850

 

 

 

-

 

 

 

-

 

Non-compete agreement

 

 

300

 

 

 

300

 

 

 

300

 

 

 

39,570

 

 

 

38,720

 

 

 

38,740

 

Less accumulated amortization:

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

(20,356

)

 

 

(19,834

)

 

 

(19,311

)

Brand names

 

 

(12,314

)

 

 

(11,955

)

 

 

(11,598

)

Product formulas

 

 

(40

)

 

 

-

 

 

 

-

 

Non-compete agreement

 

 

(276

)

 

 

(273

)

 

 

(270

)

 

 

(32,986

)

 

 

(32,062

)

 

 

(31,179

)

Net intangible assets

 

$

6,584

 

 

$

6,658

 

 

$

7,561

 

 

Customer relationships are being amortized on an accelerated basis. The brand names remaining to be amortized consist of the Squirrel Brand, Southern Style Nuts and Just the Cheese brand names.

Total amortization expense related to intangible assets, which is classified in administrative expense in the Consolidated Statement of Comprehensive Income, was $482 and $924 for the quarter and twenty-six weeks ended December 28, 2023, respectively. Amortization expense for the remainder of fiscal 2024 is expected to be approximately $762 and expected amortization expense the next five fiscal years is as follows:

 

Fiscal Year Ending

 

 

 

June 26, 2025

 

$

1,374

 

June 25, 2026

 

 

1,038

 

June 24, 2027

 

 

863

 

June 29, 2028

 

 

685

 

June 28, 2029

 

 

496

 

 

Our net goodwill at December 28, 2023 was comprised of $9,650 from the Squirrel Brand acquisition completed in fiscal 2018 and $2,100 from the Just the Cheese brand acquisition completed in fiscal 2023. The changes in the carrying amount of goodwill since June 30, 2022 are as follows:

 

Gross goodwill balance at June 30, 2022

 

$

18,416

 

Accumulated impairment losses

 

 

(8,766

)

Net goodwill balance at June 30, 2022

 

 

9,650

 

Goodwill acquired during fiscal 2023

 

 

2,100

 

Net balance at June 29, 2023

 

 

11,750

 

Goodwill acquired during fiscal 2024

 

 

-

 

Net balance at December 28, 2023

 

$

11,750

 

v3.24.0.1
Credit Facility
6 Months Ended
Dec. 28, 2023
Debt Disclosure [Abstract]  
Credit Facility

Note 7 – Credit Facility

Our Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”) dated September 29, 2023 provides for a $150,000 senior secured revolving credit facility (the “Credit Facility”), which was increased from $117,500, to provide extra available capacity for our short-term working capital requirements due to the Lakeville Acquisition. The Second Amendment also extends the maturity of the Credit Facility to September 29, 2028 and allows the Company to pay up to $100,000 in dividends per year, subject to meeting availability tests. The Credit Facility is secured by substantially all our assets other than machinery and equipment, real property and fixtures.

At December 28, 2023, we had $114,155 of available credit under the Credit Facility which reflects borrowings of $32,052 and reduced availability as a result of $3,793 in outstanding letters of credit. As of December 28, 2023, we were in compliance with all financial covenants under the Credit Facility.

v3.24.0.1
Earnings Per Common Share
6 Months Ended
Dec. 28, 2023
Earnings Per Share [Abstract]  
Earnings Per Common Share

Note 8 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 Twenty-Six Weeks Ended

 

 

December 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

Weighted average number of shares outstanding – basic

 

 

11,611,409

 

 

 

11,567,068

 

 

 

11,603,185

 

 

 

11,560,250

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock units

 

 

56,146

 

 

 

57,594

 

 

 

67,964

 

 

 

60,637

 

Weighted average number of shares outstanding – diluted

 

 

11,667,555

 

 

 

11,624,662

 

 

 

11,671,149

 

 

 

11,620,887

 

 

There were no anti-dilutive awards excluded from the computation of diluted earnings per share for any periods presented.

v3.24.0.1
Stock-Based Compensation Plans
6 Months Ended
Dec. 28, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Plans

Note 9 – Stock-Based Compensation Plans

At our annual meeting of stockholders on November 2, 2023, our stockholders approved a new equity incentive plan (the “2023 Omnibus Plan”) under which awards of options and stock-based awards may be made to employees, officers or non-employee directors of our Company. A total of 747,065 shares of Common Stock are authorized for grants of awards thereunder, which may be in the form of options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights (SARs”), performance shares, performance units, Common Stock or dividends and dividend equivalents.

The total number of shares of Common Stock with respect to which options or SARs may be granted in any calendar year to any participant may not exceed 500,000 shares (this limit applies separately with respect to each type of award). Additionally, for awards of restricted stock, RSUs, performance shares or other stock-based awards that are intended to qualify as performance-based compensation: (i) the total number of shares of Common Stock that may be granted in any calendar year to any participant may not exceed 250,000 shares (this limit applies separately to each type of award) and (ii) the maximum amount that may be paid to any participant for awards that are payable in cash or property other than Common Stock in any calendar year is $5,000.

During the second quarter of fiscal 2024, there were 56,168 RSUs awarded to employees and non-employee members of the Board of Directors. The vesting period is generally three years for awards to employees and one year for awards to non-employee directors.

The following is a summary of RSU activity for the first twenty-six weeks of fiscal 2024:

 

Restricted Stock Units

 

Shares

 

 

Weighted Average Grant Date Fair Value

 

Outstanding at June 29, 2023

 

 

155,012

 

 

$

67.87

 

Granted (a)

 

 

56,168

 

 

$

85.55

 

Vested (b)

 

 

(51,707

)

 

$

72.10

 

Forfeited

 

 

(621

)

 

$

72.58

 

Outstanding at December 28, 2023

 

 

158,852

 

 

$

72.73

 

 

(a)
The number of RSUs granted includes 8,031 RSUs with performance conditions for which the performance criteria had yet to be achieved. The final number of shares that will eventually be earned and vest has not yet been determined.
(b)
The number of RSUs vested includes shares that were withheld on behalf of employees to satisfy statutory tax withholding requirements.

At December 28, 2023, there were 26,653 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 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

Stock-based compensation expense

 

$

1,383

 

 

$

1,515

 

 

$

2,130

 

 

$

2,287

 

 

As of December 28, 2023, there was $6,763 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 1.7 years.

v3.24.0.1
Retirement Plan
6 Months Ended
Dec. 28, 2023
Retirement Benefits [Abstract]  
Retirement Plan

Note 10 Retirement Plan

The Supplemental Employee Retirement Plan (“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 Twenty-Six Weeks Ended

 

 

 

December 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

Service cost

 

$

63

 

 

$

201

 

 

$

126

 

 

$

401

 

Interest cost

 

 

350

 

 

 

341

 

 

 

700

 

 

 

683

 

Amortization of loss

 

 

 

 

 

7

 

 

 

 

 

 

14

 

Net periodic benefit cost

 

$

413

 

 

$

549

 

 

$

826

 

 

$

1,098

 

 

The components of net periodic benefit cost other than the service cost component are included in the line item “Pension expense (excluding service costs)” in the Consolidated Statements of Comprehensive Income.

v3.24.0.1
Accumulated Other Comprehensive Loss
6 Months Ended
Dec. 28, 2023
Accumulated Other Comprehensive Loss [Abstract]  
Accumulated Other Comprehensive Loss

Note 11 – Accumulated Other Comprehensive Loss

The table below sets forth the changes to accumulated other comprehensive loss (“AOCL”) for the twenty-six weeks ended December 28, 2023 and December 29, 2022. These changes are all related to our defined benefit pension plan.

 

 

For the Twenty-Six Weeks Ended

 

Changes to AOCL (a)

 

December 28,
2023

 

 

December 29,
2022

 

Balance at beginning of period

 

$

(204

)

 

$

(2,480

)

Other comprehensive income before reclassifications

 

 

 

 

 

 

Amounts reclassified from accumulated other comprehensive loss

 

 

 

 

 

14

 

Tax effect

 

 

 

 

 

(3

)

Net current-period other comprehensive income

 

 

 

 

 

11

 

Balance at end of period

 

$

(204

)

 

$

(2,469

)

 

(a)
Amounts in parenthesis indicate debits/expense.

The reclassifications out of AOCL for the quarter and twenty-six weeks ended December 28, 2023 and December 29, 2022 were as follows:

 

For the Quarter Ended

 

 

For the Twenty-Six Weeks Ended

 

 

Affected Line Item

Reclassifications from AOCL to Earnings (b)

December 28,
2023

 

 

December 29,
2022

 

 

December 28,
2023

 

 

December 29,
2022

 

 

Consolidated Statements of
Comprehensive Income

Amortization of defined benefit pension items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrecognized net loss

$

 

 

$

(7

)

 

$

 

 

$

(14

)

 

Pension expense (excluding service costs)

Tax effect

 

 

 

 

2

 

 

 

 

 

 

3

 

 

Income tax expense

Amortization of defined pension items, net of tax

$

 

 

$

(5

)

 

$

 

 

$

(11

)

 

 

 

(b)
Amounts in parenthesis indicate debits to expense. See Note 10 – “Retirement Plan” above for additional details.
v3.24.0.1
Commitments and Contingent Liabilities
6 Months Ended
Dec. 28, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingent Liabilities

Note 12 – 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.

v3.24.0.1
Fair Value of Financial Instruments
6 Months Ended
Dec. 28, 2023
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

Note 13 – Fair Value of Financial Instruments

The Financial Accounting Standards Board 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