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Edited Transcript of JBSS earnings conference call or presentation 30-Jan-20 3:00pm GMT

Q2 2020 John B Sanfilippo & Son Inc Earnings Call

ELGIN Feb 1, 2020 (Thomson StreetEvents) -- Edited Transcript of John B Sanfilippo & Son Inc earnings conference call or presentation Thursday, January 30, 2020 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Howard P. Brandeisky

John B. Sanfilippo & Son, Inc. - SVP of Global Marketing & Customer Solutions

* Jasper B. Sanfilippo

John B. Sanfilippo & Son, Inc. - COO, President, Assistant Secretary & Director

* Jeffrey T. Sanfilippo

John B. Sanfilippo & Son, Inc. - Chairman & CEO

* Michael J. Valentine

John B. Sanfilippo & Son, Inc. - CFO, Group President, Secretary & Director

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Conference Call Participants

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* Christopher Paul McGinnis

Sidoti & Company, LLC - Special Situations Equity Analyst

* Timothy Colin Call

The Capital Management Corporation - President & CIO

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the John B. Sanfilippo & Son Second Quarter Fiscal 2020 Operating Results Conference Call. (Operator Instructions)

I would now like to hand the conference over to your speaker, Mr. Michael Valentine, Chief Financial Officer. Please go ahead, sir.

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Michael J. Valentine, John B. Sanfilippo & Son, Inc. - CFO, Group President, Secretary & Director [2]

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Thank you, Sherry. Good morning, everyone, and welcome to our 2020 second quarter earnings conference call. Thank you for joining us today. On the call with me are Jeffrey Sanfilippo, our CEO; and Jasper Sanfilippo, our COO.

Before we start, we want to alert you to the fact that we may make some forward-looking statements today. These statements are based on our current expectations, and they involve certain risks and uncertainties. The factors that could negatively impact results are explained in the various SEC filings that we have made, including Form 10-K. We encourage you to refer to these filings to learn more about these risks and uncertainties that are inherent in our business.

Starting with the income statement. Net sales for the second quarter of fiscal 2020 decreased by 2.7% to $246.4 million in comparison to net sales for the second quarter of fiscal 2019 of $253.3 million. The decline in net sales was primarily due to lower selling prices, which resulted from a shift in sales volume from higher-priced pecans and walnuts to lower-priced trail and snack mixes, peanuts and cashews.

Lower selling prices for pecans and cashews, which resulted from lower commodity acquisition costs for these nut types, also contributed to the overall reduction in selling prices.

The decline in net sales from lower selling prices was largely offset by a 4.8% increase in sales volume, which we define as pounds sold to customers.

Sales volume increased by 4.2% in our consumer distribution channel, mainly from increased sales of snack nuts and trail and snack mixes from distribution gains with new and existing private brand customers.

Increased sales for our Orchard Valley Harvest and Southern Style Nuts brands also contributed to the sales volume increase in the consumer channel. Sales volume increased in the commercial ingredients channel by 14.5%, and that was mainly due to distribution gains with new food service customers and increased sales of peanut crushing stock to peanut oil processors.

Sales volume declined in the contract packaging channel by 2.5%, primarily from a reduction in promotional and merchandising activity by some of our customers in this channel.

Looking at sales volume for our brands in our consumer channel, Fisher recipe nut volume decreased by 29.8% as a result of lost holiday display distribution at a major customer in favor of their private brand recipe nuts.

The 6.5% increase in sales volume for Orchard Valley Harvest was primarily driven by distribution gains at new and existing customers as well as the introduction of new products.

The 6.4% decrease in sales volume for Fisher snack nuts resulted mainly from reduced promotional activity for inshell peanuts at a customer who does not report to IRI.

The 42.9% increase in sales volume for Southern Style Nuts came from increased promotional activity.

Net sales for the first 2 quarters of the current fiscal year increased to $464.3 million from $457.6 million for the first 2 quarters of last year. The increase in net sales was attributable to a 6.8% increase in sales volume in the year-to-date comparison. The increase in net sales from the sales volume increase was largely offset by lower selling prices, and the reduction in lower selling prices resulted primarily from those factors that led to lower selling prices in the quarterly comparison.

Sales volume increased by 10% in the consumer distribution channel, primarily from increased sales of snack nuts and trail and snack mixes from distribution gains with new and existing private brand customers. The increased sales for Orchard Valley Harvest and Southern Style Nuts brands also contributed to the sales volume increase in the consumer channel.

Sales volume increased by 6.3% in the commercial ingredients channel for the same reasons I noted in the quarterly comparison. And sales volume declined in the contract packaging channel by 7.9%, and that was primarily from a reduction in unit ounce weights implemented by a major customer roughly a year ago for its entire product line and a reduction in promotional and merchandising activity by some customers in this channel.

Second quarter gross profit increased by $7.1 million and gross profit margin as a percentage of net sales increased to 20.3% for the second quarter of fiscal 2020 from 16.9% for the second quarter of fiscal 2019. The increases in gross profit and gross profit margin were mainly due to increased sales volume, manufacturing efficiencies, reduced manufacturing spending and lower acquisition costs for pecans and cashews.

Gross profit for the first 2 quarters of the current year increased by $16.4 million and gross profit margin, again, as a percentage of net sales increased to 19.9% from 16.6% for the same period last year. The increases in gross profit and gross profit margin in the year-to-date comparison occurred primarily for the same reasons I cited in the quarterly comparison.

Total operating expenses for the current second quarter decreased by $700,000 in the quarterly comparison. And as a percentage of net sales, total operating expenses was unchanged at 10.4% compared to last year. The decrease in operating expenses was due to decreases in advertising and freight expenses, which were partially offset by increases in incentive compensation and commissions expenses.

Total operating expenses for the current year-to-date period decreased to 10.5% of net sales from 10.7% for the first 2 quarters of last year. And total operating expenses decreased by $400,000 in the year-to-date comparison. The decrease in total operating expenses for the current year-to-date comparison primarily was attributable to the same factors I cited in the quarterly comparison.

Interest expense was $400,000 for the second quarter of fiscal 2020 compared to $800,000 last year, and interest expense for the first 2 quarters of the current year decreased to $1 million from $1.7 million for the same period last year. In both cases, the decreases in interest expense were attributable primarily to lower total average debt levels.

Net income was $17.5 million or $1.52 per share diluted for the second quarter of fiscal 2020 compared to $11.3 million or $0.98 per share for the second quarter of last year. And both net income and EPS were record amounts for second quarter.

Net income for the first 2 quarters of 2020 was $30.4 million or $2.64 per share diluted compared to net income of $17.9 million or $1.56 per share diluted for the first 2 quarters of fiscal '19.

Now taking a quick look at our inventory numbers. The total value of our inventories on hand at the end of the current second quarter increased slightly compared to the total value of inventories at the end of last year's second quarter. And the weighted average cost per pound of our raw nut and dried fruit input stocks on hand at the end of the second quarter increased by 7.1% compared to the weighted average cost at the end of the second quarter last year for our input stocks. The increase in the weighted average cost per pound of our input stocks was mainly due to higher acquisition costs for walnuts, which was offset in part by lower acquisition costs for pecans, cashews and peanuts.

And now I will turn the call over to Jeffrey Sanfilippo, our CEO, to provide additional comments on our operating results for the second quarter of fiscal 2020. Jeffrey?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [3]

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Thank you, Mike. Good morning, everyone. I'd like to start my comments by acknowledging the passing this week of our former Chairman and CEO, Jasper Sanfilippo, Sr. He led the company from 1963 to 2006, and was a strong mentor to many of us at JBSS. And Jasper Sr. was an amazing father to me and my brother, Jasper. Our dad loved this company and worked hard to build the foundation for a successful business along with family members and a team of talented associates. After he retired, like clockwork, he would call and ask me or Jasper almost every day, how is business, how is the company doing? Tuesday, before he passed away, he asked that question again. The answer was, "Dad, the second quarter of fiscal 2020 marks the fourth consecutive quarter in which we reported record net income and earnings per share." He had a big smile and was so proud of everyone in the company for achieving such strong, consistent results. I will miss those conversations. And we will always remember Jasper Sanfilippo, Sr.'s contributions to JBSS.

It's been a very strong first half of fiscal 2020. We paid a second special dividend during the second quarter of $2 per share, providing value to our stockholders.

As has been the case in recent quarters, we saw strong sales volume growth in our consumer distribution channel from increased sales of private brand snack nuts and trail mixes. We also had significant sales volume growth in the food service sector of our commercial ingredients channel as new relationships with group buying organizations enabled us to expand our product lines into alternative channels.

The entire organization is working hard to drive continuous improvement projects, optimize supply chain efficiencies and enhance JBSS margins. I would like to thank our operations team for generating meaningful savings from the various efficiency initiatives they completed during the current second quarter, which helped drive our increase in gross profit.

Turning to sales review by JBSS channel. Net sales in the consumer distribution channel increased $7.4 million or 3.8% and sales volume increased 4.2% in the second quarter of fiscal 2020.

The company had strong success working with key partners to drive growth -- volume growth within their private brand programs, especially in the snack and trail mix categories.

Sales volume for Fisher snack nuts decreased 6.4%, primarily as a result of reduced promotional activity for inshell peanuts. Sales volume of Fisher recipe nuts decreased 29.8% from lost holiday distribution at a major customer, as Mike mentioned earlier, but our teams mitigated this volume decline with significant volume growth at other retailers. And sales volume of Orchard Valley Harvest products increased 6.5% due to distribution gains at new and existing customers and the introduction of new products. Sales volume of Southern Style Nuts increased 42.9% due to increased promotional activity.

In the commercial ingredient channel, net sales increased by 8.9% in dollars and 14.5% in sales volume. The sales volume increase for the quarterly period was primarily due to distribution gains with new food service customers. The sales and marketing teams have done a great job expanding distribution with noncommercial accounts and winning business with new distributors. And there was also an increased sales volume of peanut crushing stock to peanut oil processors in the second quarter.

Net sales in the contract packaging distribution channel decreased by 8.7% in dollars and 2.5% in volume in the second quarter. The decline in sales volume primarily came from reduction in promotional and merchandising activities, again, as Mike mentioned. But the company was awarded new business in this channel from a major customer, which will start shipping in our third quarter. We anticipate the new business will have a positive impact, overcoming the negative volume trends the company has experienced in this channel the past few years.

Turning to category updates. I'm happy to share category and brand results with you this morning, both for the quarter and for the fiscal year-to-date. As always, all market information I'll be referring to is IRI reported data, and for today it's for the period ending December 29, 2019. When I refer to Q2, I'm referring to 13 weeks of the quarter ending December 29.

References to changes in volume or price are versus the corresponding period 1 year ago. We look at the category on IRI's total U.S. definition, which includes food, drug, mass, Walmart, military and other outlets, unless otherwise specified. And when we discuss pricing, we are referring to average price per pound. Breakouts of the recipe, snack and produce categories are based on our custom definitions developed in conjunction with IRI. The term velocity refers to the sales per point of distribution.

First, let me review some category dynamics. The total nut category decreased in sales dollars and pound volume by 1% in Q2. Overall, prices in Q2 increased 1% versus the prior year.

Now I'll talk about each category in a little more depth. Starting with recipe nuts. In Q2, the recipe nut category decreased 5% in dollar sales, driven by a drop in average price per pound as pound volume sales were flat. Prices decreased on walnuts and pecans by 5% and 7%, respectively.

Our Fisher recipe nuts decreased 32% in dollar sales and pound sales for the quarter versus last year. As a result, Fisher's share in the category decreased 9.5 pound share points versus last year. The decrease in sales volume for Fisher recipe nuts resulted from lost display distribution at a major customer in favor of private brand recipe nuts.

In traditional grocery, which IRI called the U.S. food channel, Fisher recipe increased 21% in pound volume behind an increase of total points of distribution of 21%.

Fisher continues to be the branded share leader in the recipe category when using a broader multioutlet definition or within the U.S. food channel.

Now let me turn to the snack category. In Q2, the snack category increased 2% in dollars and was flat in pound sales, driven by a 2% increase in average cost per pound.

Fisher snack increased 17% in sales dollars and 8% in pound volume sales in Q2. The brand increased in total distribution points by 24%, as Fisher Oven Roast Never Fried expanded beyond the core Fisher geography and increased in pound sales by 122% versus last year.

The Oven Roasted Never Fried subline also increased pound velocity by 12%. In addition to the successful quarter, early reads on trial and repeat are solid. Consumers are purchasing the product, enjoying their experience and repeat purchasing the item, which is a good sign for long-term success.

As we have discussed on previous calls, Fisher Oven Roast Never Fried offers consumers a full line of nuts that are dry roasted, not roasted in oil. These include whole cashews, deluxe mix nuts, mix nuts with peanuts, almonds, pecans and a unique almond/cashew blend as well as straight peanuts.

As we expand into new markets, we continue to support the brand with an integrated marketing plan of in-store merchandising and customer programming, radio, targeted digital and social media marketing as well as FSIs.

In Q2, the produce nut category decreased 5% in dollar sales and 9% in pound volume sales. OVH, our produce nut brand, decreased 22% in dollar sales and pound at OVH share pounds increased -- decreased 0.2 points versus last year. The volume decline was due to lost distribution related to the reduction of shelf space in the produce nut section at a major customer.

In Q2, we continued to build distribution of our Spread 'n Dip line of nut butters by getting shippers out in the market to gain awareness and trial of this new product. Likewise, we gained distribution of our Chickpea Chip line as well as the second -- in the second quarter. It's still early, but initial feedback from retailers on our new products is encouraging.

In closing, we faced a number of challenges in the future, which include, among others, potential acquisition cost volatility for almonds and increasing commodity cost for walnuts as well as intensified competition on pricing and for market share from both private brand and main brand nut products. Our Fisher recipe nut sales have been negatively impacted recently due to this increased competition for market share, but we have strong brands in our portfolio with enormous opportunities for growth.

We have a dedicated team of leaders throughout the company that are doing what matters most to deliver strong financial results. And we have the right strategies to continue to build our business and provide exceptional value and innovation for our customers and consumers.

We appreciate your participation in the call, and thank you for your interest in our company.

I will now turn the call back over to Mike.

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Michael J. Valentine, John B. Sanfilippo & Son, Inc. - CFO, Group President, Secretary & Director [4]

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Thank you, Jeffrey. We will now open the call to questions. Sherry, please queue up the first question.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Chris McGinnis with Sidoti.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [2]

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I just wanted to say sorry for your loss and my condolences.

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [3]

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Thank you, sir.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [4]

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A great quarter, though. I did want to just start to dig in maybe a little bit about -- maybe just on the top -- of the revenue around consumer. Obviously, the snack and trail mix has been pretty successful. Just out of the growth from that, how much of that is maybe newer wins versus, I guess, more recent wins versus prior wins? And I'm just trying to figure out how long of a runway do you have for that product? And are you still gaining new distribution contracts at this point?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [5]

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So Chris, we -- some of it is business that is cycling against new business we picked up a little bit less than a year ago. So some of it has been wins that were earned last year. We're still [expecting] against them because we picked them up prior to Q2, but there is some new business that was built into Q2, that is just starting to ship now. So I don't have the percentage of what that looks like, but it's a combination of both business we picked up last year and business that we just were awarded in Q2.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [6]

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Great. Okay. And maybe just to touch on Fisher. You -- obviously, you ended your comments with a little bit of pressure in that segment. I guess if you look over the next 12 months, is there a way to gain back some of that distribution? And how are you thinking of that in that ability to gain your share back?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [7]

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Yes. So our recipe -- Fisher recipe program is still underdeveloped in some areas. There are some retailers that we have very little to no distribution. Our ACV, although it is strong, there are still opportunities for growth. It has become an extremely competitive category for both the branded side and for private brand recipe program. So it's -- it will be a challenge, I won't deny that. But at the same time, there are still growth opportunities to try to sustain and build that brand in the future.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [8]

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Great. And then maybe just touch on Orchard Valley. I know volumes were up 7% for the quarter. But I think in your -- in the prepared remarks, you talked about a 22% decline in volume from one customer. Can you just maybe dig into that a little bit? And would your growth for the quarter been that much more significant if not for that loss of the customer?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [9]

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And that would be correct. So we don't have control over what retailers -- how they market, how they merchandise, where they put product, how much space they allot. The produce programs in the U.S., a lot of retailers are still trying to figure them out and how to make them successful. And so if we had the same distribution placement that we had the prior year, you would have seen much stronger results with Orchard Valley Harvest. At the same time, we've built a lot of new distribution with the brand. And so in spite of a major retailer not being successful with the produce program, we've got a lot of other new volume that is going to be sitting to make up some of that decline.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [10]

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Okay. And as they figure out, I guess, how to market it, is there possibility that, that volume comes back to you?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [11]

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Yes, it is. Yes. So we're working with retailers to help strengthen their produce departments. And so there are opportunities to regain some of that distribution in volume.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [12]

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Great. Next is maybe just on the commercial side, that increase. Can you just maybe talk a little bit about -- of the increase in the volume? How much of that was from the new distribution points versus the peanut kind of byproduct?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [13]

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Yes. Mike, you probably know that number better than I do, from a percent standpoint.

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Michael J. Valentine, John B. Sanfilippo & Son, Inc. - CFO, Group President, Secretary & Director [14]

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Sure. Yes. Roughly about 75% of the pound growth came from new distribution gains with new food service customers.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [15]

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Great. And so that number is pretty sustainable going forward in terms of kind of the improved environment?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [16]

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Correct. Yes. But we've been very focused strategically on building our noncommercial sales distribution in the commercial ingredient channel, and so we are really just starting to see the success of efforts in the past to build that business within noncommercial. So a lot of this is just beginning now.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [17]

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Okay. And then just 2 more questions. Just one on the contract packaging business. I know it's a small piece of business now, but I guess just how big is that opportunity to turn things around? It sounds like it's obviously pretty near term with these new contract wins.

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Michael J. Valentine, John B. Sanfilippo & Son, Inc. - CFO, Group President, Secretary & Director [18]

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I can take that, Jeff. So the new volume that we picked up with an existing customer is probably going to result in something like maybe a 10% pickup in sales volume for the channel. We also have some other existing customers who have, over a year ago, introduced new products that were not successful, and they're about ready to launch some new products. So hopefully, they'll be successful. And we can get back in the black in that channel.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [19]

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Great. And then just last question around the margin profile. Obviously, I think this year is the strongest gross margin in the last 12 months of your record earnings. Can you maybe just dig in, it sounds like there are some operating efficiencies you gained or manufacturing efficiencies you gained? Can you just talk through a little bit of how sustainable it is versus the prior year, obviously, a pretty big increase?

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Jasper B. Sanfilippo, John B. Sanfilippo & Son, Inc. - COO, President, Assistant Secretary & Director [20]

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So Chris, this is Jasper. I'll answer that. A lot of the operating efficiencies kind of came across broad areas that we focused on, some were software implementations, where we're measuring efficiencies throughout our warehouse which made us, obviously, more efficient in that supply chain handling, which ultimately lowered both overtime and headcount. Some of it was due to CapEx that we invested in, in previous quarters, particularly around automation and removal of headcount. So we're pretty confident that we will continue to see those efficiencies going forward.

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Christopher Paul McGinnis, Sidoti & Company, LLC - Special Situations Equity Analyst [21]

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Okay. And I guess just sustainable -- if you think about a long-term operating margin target that you feel comfortable at, can you maybe just give a little bit of kind of thought process around that?

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Michael J. Valentine, John B. Sanfilippo & Son, Inc. - CFO, Group President, Secretary & Director [22]

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Okay. I'll take that call. This is Mike. So obviously, we've had a great calendar year with some of the highest margins we've experienced in quite some time. And a lot of that, really, the majority of that improvement is coming from substantial sales volume increases. So I think as long as we can continue this pace of growth in respect of pounds sold to customers, we can expect to have higher than historical average gross profit margins.

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Operator [23]

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(Operator Instructions) Our next question comes from Tim Call with Capital Management Corporation.

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Timothy Colin Call, The Capital Management Corporation - President & CIO [24]

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I'm sorry for your loss. He certainly built a great company.

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [25]

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Thank you, Tim.

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Timothy Colin Call, The Capital Management Corporation - President & CIO [26]

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With the Fisher recipe nuts' lost distribution or lost promotion 1 year ago in the second quarter, you lost some distribution from a major customer in the same line. Is this the same major customer?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [27]

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Yes, that would be correct. So they transitioned some of the branded business to private brand last year. And then this calendar year, they transitioned additional SKUs to private brand. So it is the same customer.

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Timothy Colin Call, The Capital Management Corporation - President & CIO [28]

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Are they still a major customer?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [29]

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They are. They are a major customer. But at the same time, our sales and marketing teams have done a great job building other distribution with other retailers and building strong Fisher branded recipe programs with. So at this point, I believe, and I'm not sure if Howard's in the room, our Fisher recipe volume is actually greater with the other customers than they were with this one specific customer.

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Howard P. Brandeisky, John B. Sanfilippo & Son, Inc. - SVP of Global Marketing & Customer Solutions [30]

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Jeffrey, this is Howard. I'm in the room, and that is a correct statement.

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Timothy Colin Call, The Capital Management Corporation - President & CIO [31]

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Okay. Compared to original levels from 3 years ago, I guess, for this customer, are -- what are their relative sales? Have they fallen, for that customer, by 2/3? Or have they fallen by 1/2 or like how far are we through this process?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [32]

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Yes. So we don't anticipate many other changes in their program, although we don't have any control over what retailers do. We believe we have a great success story. You go back to them with our results for this holiday season and we've got great success stories at other retailers that have supported the brand and that have worked with us to work on promotional activity. So we believe we've got a great success story to go back and try to regain some of that market share, market basket that we had with them. And so -- but again, it's difficult to know exactly what retailers will do. The nut category overall -- sorry, go ahead.

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Timothy Colin Call, The Capital Management Corporation - President & CIO [33]

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That was a great explanation. And then Squirrel Brand, you expect that to continue to grow at a high double-digit percentage?

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Jeffrey T. Sanfilippo, John B. Sanfilippo & Son, Inc. - Chairman & CEO [34]

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Yes. Squirrel Brand is another brand. We have strong brands, as I mentioned, in our portfolio. We're really just getting started with Squirrel Brand. The opportunity is there as our indulgent brand are significant. We've created a lot of new products around the brand. We've offered a lot to retailers. And I believe we're really just getting started with building distribution there.

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Operator [35]

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I'm showing no further questions at this time. I will turn the call back over to Mr. Michael Valentine for any further remarks.

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Michael J. Valentine, John B. Sanfilippo & Son, Inc. - CFO, Group President, Secretary & Director [36]

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Okay. Thank you, Sherry. Again, we'd like to thank everyone for your interest in JBSS. And this concludes the call for our second quarter fiscal 2020 operating results. Thank you.

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Operator [37]

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Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.