PART I [Item 1 — Business](index=3&type=section&id=Item%201%20%E2%80%94%20Business) John B. Sanfilippo & Son, Inc. is a leading U.S. nut processor and distributor, utilizing vertical integration and selling through consumer, commercial, and contract packaging channels with seasonal demand - The company is a major processor and distributor of various nuts, including peanuts, pecans, cashews, walnuts, and almonds, under brands like Fisher, Orchard Valley Harvest, Squirrel Brand, and Southern Style Nuts, as well as private labels[14](index=14&type=chunk) - A key strategy is vertical integration for pecans, peanuts, and walnuts, which involves controlling the process from grower procurement to final marketing, aiming to enhance quality and lower costs[18](index=18&type=chunk) - Products are distributed through three primary channels: consumer (food retailers), commercial ingredients (for other manufacturers), and contract packaging[14](index=14&type=chunk)[24](index=24&type=chunk) - The business experiences seasonality, with the highest demand for nut products occurring in the last four months of the calendar year, and raw material procurement concentrated between September and February[47](index=47&type=chunk) [Principal Products and Raw Materials](index=4&type=section&id=Item%201%20%E2%80%94%20Business_Principal%20Products%20and%20Raw%20Materials) Raw and processed nuts, including various types and mixes, constitute 94% of gross sales, with 32% of nut purchases sourced internationally - Raw and processed nuts, including trail and snack mixes, accounted for approximately **94% of gross sales** in fiscal 2022[21](index=21&type=chunk) - The company sources all its walnuts, almonds, and peanuts domestically, while pecans are sourced from the southern U.S. and Mexico, and cashews are imported from Vietnam and certain West African countries[33](index=33&type=chunk) - In fiscal 2022, approximately **32% of the total dollar value of nut purchases** was from foreign sources[33](index=33&type=chunk) [Customers and Channels](index=4&type=section&id=Item%201%20%E2%80%94%20Business_Customers%20and%20Channels) The company serves 265 customers across three channels, with Wal-Mart and Target collectively accounting for 49% of fiscal 2022 net sales Major Customer Concentration (as % of Net Sales) | Customer | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Wal-Mart Stores, Inc. | 35% | 34% | 33% | | Target Corporation | 14% | 14% | 12% | - No other single customer accounted for more than **10% of net sales** in the presented periods[25](index=25&type=chunk) [Competition](index=5&type=section&id=Item%201%20%E2%80%94%20Business_Competition) Operating in a highly competitive snack food industry, the company faces larger rivals like Hormel (Planters) and competes on price, quality, and brand - The company competes with major players like Hormel Foods Corp. (Planters brand) and the Diamond brand, as well as numerous regional snack food processors[32](index=32&type=chunk) - Key competitive factors are price, product quality, customer service, breadth of product line, brand name awareness, distribution method, sales promotion, and innovation[32](index=32&type=chunk) [Human Capital](index=6&type=section&id=Item%201%20%E2%80%94%20Business_Human%20Capital) As of June 30, 2022, the company employed 1,300 full-time staff, focusing on health, diversity, development, and rewards, including leadership programs and wage adjustments - The company employed approximately **1,300 full-time employees** as of June 30, 2022[40](index=40&type=chunk) - In fiscal 2022, a pilot Leadership Development program resulted in approximately **36% of its 41 participants** moving into higher-level jobs[43](index=43&type=chunk) - Over **38% of employees** received market-based wage adjustments in fiscal 2022, and approximately **16%** received promotions[43](index=43&type=chunk)[45](index=45&type=chunk) - The company offers annual cash bonus opportunities through its SVA (**20% of employees**) and TTP (**80% of employees**) incentive programs[45](index=45&type=chunk) [Item 1A — Risk Factors](index=8&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors) The company faces significant industry, business, regulatory, legal, and financial risks, including pandemic impacts, raw material volatility, customer dependence, and family voting control [Industry Risks](index=8&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors_Industry%20Risks) Industry risks include pandemic disruptions, volatile raw material costs, intense competition, changing consumer preferences, and food safety concerns - The COVID-19 pandemic and similar outbreaks pose risks of decreased demand, supply chain disruption, and economic downturns, which could affect product demand and margins[51](index=51&type=chunk)[53](index=53&type=chunk) - The availability and cost of raw materials (nuts, fruits, oils) are subject to uncontrollable factors like weather, plant diseases, and global demand, and the company cannot hedge against these commodity price fluctuations[58](index=58&type=chunk)[59](index=59&type=chunk) - The company operates in a highly competitive environment against larger companies with greater resources, such as Hormel Foods Corp. (Planters brand), and faces pressure from private label offerings[62](index=62&type=chunk) - Changing consumer preferences, concerns about health and sustainability, and the shift to e-commerce require continuous product innovation and investment, which may not be recovered if new products fail[65](index=65&type=chunk) - Food safety risks, particularly related to nut allergies and cross-contamination, could lead to product recalls, loss of consumer confidence, and significant liabilities[68](index=68&type=chunk) [Business Risks](index=13&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors_Business%20Risks) Business risks include high customer concentration, reliance on key management, limited production facilities, and the potential failure of the Long-Range Plan - The company is highly dependent on a few significant customers, with the five largest customers accounting for approximately **63% of net sales** in fiscal 2022[80](index=80&type=chunk) - Future success is largely dependent on the senior operating management team, who have not entered into employment or non-compete agreements[82](index=82&type=chunk) - Products are processed at a limited number of facilities, and a significant disruption at any one of them could materially impact the availability of products[83](index=83&type=chunk) - Failure to successfully implement the Long-Range Plan, which involves growing branded products and pursuing strategic acquisitions, could adversely affect financial results[84](index=84&type=chunk)[86](index=86&type=chunk) [Regulatory and Legal Risks](index=15&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors_Regulatory%20and%20Legal%20Risks) Regulatory and legal risks include extensive government oversight, costly food safety compliance, international operational hazards, and potential litigation - The business is subject to extensive regulation by the FDA, USDA, and EPA, with compliance, particularly under the Food Safety Modernization Act (FSMA), being costly and critical[87](index=87&type=chunk)[89](index=89&type=chunk) - Approximately **32% of the dollar value of total nut purchases** in fiscal 2022 were from foreign countries, exposing the company to international risks like tariffs, political instability, and supply chain disruptions[91](index=91&type=chunk) - The company faces potential litigation related to product liability, labeling, employment, and other business aspects, which can be expensive to defend[94](index=94&type=chunk) - Protecting intellectual property, especially trademarks like Fisher and Orchard Valley Harvest, is crucial, and failure to do so could diminish competitiveness[95](index=95&type=chunk) [Financial Risks](index=16&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors_Financial%20Risks) Financial risks include majority voting control by founding families, pledged stock collateral, potential impairment of goodwill, and inventory valuation uncertainties - The Sanfilippo Group and Valentine Group control approximately **50.7% and 23.8%** of the company's voting interest, respectively, giving them the ability to direct the election of the majority of the Board and influence corporate actions[97](index=97&type=chunk) - Several stockholders in the Sanfilippo Group have pledged shares of Class A Stock to secure loans, which could lead to a forced sale and a change of control if they default[99](index=99&type=chunk) - The company had goodwill of **$9.6M** and other intangible assets of **$8.1M** as of June 30, 2022, which are subject to impairment risk[101](index=101&type=chunk) - The valuation of bulk-stored nut inventories involves estimates that are subject to periodic adjustments, which directly affect earnings, with the precise amount not known until the entire quantity is depleted[102](index=102&type=chunk) [Item 1B — Unresolved Staff Comments](index=18&type=section&id=Item%201B%20%E2%80%94%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[104](index=104&type=chunk) [Item 2 — Properties](index=18&type=section&id=Item%202%20%E2%80%94%20Properties) The company operates four main production facilities, including Elgin (headquarters), Selma (pecans), Bainbridge (peanuts), and Gustine (walnuts), with varying utilization rates Principal Production Facilities and FY2022 Utilization | Location | Primary Use | Annual Capacity | FY2022 Processed/Shelled | | :--- | :--- | :--- | :--- | | Selma, TX | Pecan Shelling | >90M inshell lbs | ~38M inshell lbs | | Bainbridge, GA | Peanut Shelling | ~120M inshell lbs | ~100M inshell lbs | | Gustine, CA | Walnut Shelling | >60M inshell lbs | ~34M inshell lbs | - The primary processing and distribution facility in Elgin, IL, can accommodate a **15% to 20% increase** in production capacity, but certain production lines and finished goods storage are nearing full capacity[112](index=112&type=chunk) - The Garysburg, North Carolina facility, which ceased operations in fiscal 2021, was sold during the first quarter of fiscal 2022[110](index=110&type=chunk) [Item 3 — Legal Proceedings](index=19&type=section&id=Item%203%20%E2%80%94%20Legal%20Proceedings) Management anticipates that ongoing legal proceedings will not materially adversely affect the company's financial condition, results, or cash flows - Management does not expect current legal proceedings to have a material adverse effect on the company's financials[117](index=117&type=chunk) [Item 4 — Mine Safety Disclosures](index=19&type=section&id=Item%204%20%E2%80%94%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[119](index=119&type=chunk) PART II [Item 5 — Market for Registrant's Common Equity and Related Stockholder Matters](index=22&type=section&id=Item%205%20%E2%80%94%20Market%20for%20Registrant%27s%20Common%20Equity%20and%20Related%20Stockholder%20Matters) The company has dual-class stock (JBSS and Class A), pays annual cash dividends, and declared $3.00 per share in fiscal 2022 - The company has a dual-class stock structure: Common Stock (**1 vote/share**, traded as JBSS) and Class A Stock (**10 votes/share**, not publicly traded)[134](index=134&type=chunk) Recent Dividends Declared Per Share | Declaration Date | Type | Amount | Payment Date | | :--- | :--- | :--- | :--- | | July 8, 2021 | Annual & Special | $3.00 | Aug 25, 2021 | | Jan 27, 2021 | Special | $2.50 | Mar 16, 2021 | | July 9, 2020 | Annual & Special | $2.50 | Aug 21, 2020 | | Post FY2022 | Annual & Special | $2.25 | Aug 31, 2022 | - As of June 30, 2022, there were **593,034 securities** remaining available for future issuance under equity compensation plans approved by stockholders[146](index=146&type=chunk) [Item 6 — Selected Financial Data](index=24&type=section&id=Item%206%20%E2%80%94%20Selected%20Financial%20Data) This section summarizes five years of financial data, reporting fiscal 2022 net sales of $955.9 million, net income of $61.8 million, and total assets of $447.3 million Selected Financial Data (in thousands, except per share data) | Metric | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net sales | $955,868 | $858,482 | $880,092 | | Gross profit | $199,627 | $184,987 | $175,775 | | Income from operations | $87,437 | $85,178 | $78,547 | | Net income | $61,787 | $59,741 | $54,110 | | Diluted EPS | $5.33 | $5.17 | $4.69 | | Total assets | $447,262 | $398,455 | $407,457 | | Total debt | $51,362 | $23,383 | $47,023 | [Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses fiscal 2022 performance, noting an 11.3% net sales increase to $955.9 million, a gross margin decline, and a significant decrease in operating cash flow due to inventory investment [Results of Operations (FY2022 vs. FY2021)](index=27&type=section&id=Item%207%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis_Results%20of%20Operations%20(FY2022%20vs.%20FY2021)) Fiscal 2022 net sales increased 11.3% to $955.9 million, driven by volume and price, though gross margin declined due to higher commodity and input costs FY2022 vs. FY2021 Performance (in millions) | Metric | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $955.9M | $858.5M | 11.3% | | Gross Profit | $199.6M | $185.0M | 7.9% | | Gross Profit Margin | 20.9% | 21.5% | (0.6) p.p. | | Net Income | $61.8M | $59.7M | 3.5% | | Diluted EPS | $5.33 | $5.17 | 3.1% | - The increase in net sales was attributed to a **6.9% increase in sales volume** and a **4.2% increase in the weighted average selling price per pound**[168](index=168&type=chunk) Net Sales by Distribution Channel (FY2022 vs FY2021, in millions) | Distribution Channel | FY 2022 Sales | % Change from FY2021 | | :--- | :--- | :--- | | Consumer | $749.9M | +9.3% | | Commercial Ingredients | $120.6M | +29.8% | | Contract Packaging | $85.4M | +7.4% | [Liquidity and Capital Resources](index=29&type=section&id=Item%207%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis_Liquidity%20and%20Capital%20Resources) Fiscal 2022 operating cash flow significantly decreased to $19.6 million due to increased inventory investment, while the company utilized its credit facility for liquidity Cash Flow Summary (in thousands) | Activity | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,604 | $104,697 | | Net cash used in investing activities | ($11,376) | ($22,950) | | Net cash used in financing activities | ($8,485) | ($82,610) | - The decrease in operating cash flow was primarily due to an **$81.0M higher use of cash for inventory** in FY2022, compared to a **$24.1M decrease** in FY2021[190](index=190&type=chunk) - Total debt stood at **$51.4M** at the end of fiscal 2022, up from **$23.4M** at the end of fiscal 2021[149](index=149&type=chunk) - As of June 30, 2022, the company had **$71.9M of available credit** under its Revolving Credit Facility[203](index=203&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Item%207%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis_Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgment in revenue recognition, impairment assessments for assets and goodwill, and retirement plan accounting estimates - Critical policies involve significant management judgment and estimates[208](index=208&type=chunk) - Key areas of estimation include: customer deductions for revenue recognition, recoverability of long-lived assets and goodwill, quantity of bulk inventories, and assumptions for the retirement plan liability (e.g., discount rates)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[216](index=216&type=chunk) [Item 7A — Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%207A%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces unhedged market risks from interest rates, commodity prices (especially nuts), and foreign exchange, with a 1% material cost increase impacting FY2022 gross profit by $5.9 million - The company does not hedge against commodity price risk, and a hypothetical **1% increase in material costs** would have reduced FY2022 gross profit by about **$5.9M**[223](index=223&type=chunk) - Approximately **32% of the dollar value of total nut purchases** for fiscal 2022 were from foreign countries, creating exposure to foreign currency fluctuations, although purchases are made in U.S. dollars[224](index=224&type=chunk) - A hypothetical **10% adverse change** in weighted-average interest rates on its variable rate debt would have had less than a **$0.1M impact** on net income for fiscal 2022[225](index=225&type=chunk) [Item 8 — Financial Statements and Supplementary Data](index=35&type=section&id=Item%208%20%E2%80%94%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the independent auditor's unqualified opinion and the company's consolidated financial statements, including balance sheets, income statements, and cash flows, with detailed notes - PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of June 30, 2022[228](index=228&type=chunk) - The auditor identified the valuation of the projected benefit obligation for the Supplemental Employee Retirement Plan (SERP) as a critical audit matter, due to the significant management judgment involved in determining the discount rate[235](index=235&type=chunk)[236](index=236&type=chunk) [Consolidated Financial Statements](index=37&type=section&id=Item%208%20%E2%80%94%20Financial%20Statements%20and%20Supplementary%20Data_Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $447.3 million and stockholders' equity of $278.8 million as of June 30, 2022, with fiscal 2022 net sales of $955.9 million Key Balance Sheet Figures (in thousands) | Account | June 30, 2022 | June 24, 2021 | | :--- | :--- | :--- | | Total Current Assets | $283,164 | $225,167 | | Total Assets | $447,262 | $398,455 | | Total Current Liabilities | $122,762 | $100,204 | | Total Liabilities | $168,441 | $155,961 | | Total Stockholders' Equity | $278,821 | $242,494 | Key Income Statement Figures (in thousands) | Account | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Net Sales | $955,868 | $858,482 | $880,092 | | Gross Profit | $199,627 | $184,987 | $175,775 | | Income from Operations | $87,437 | $85,178 | $78,547 | | Net Income | $61,787 | $59,741 | $54,110 | [Notes to Consolidated Financial Statements](index=42&type=section&id=Item%208%20%E2%80%94%20Financial%20Statements%20and%20Supplementary%20Data_Notes%20to%20Consolidated%20Financial%20Statements) Notes to the financial statements provide detailed disclosures on accounting policies, including revenue recognition, inventories, goodwill, debt, and the retirement plan - Note 2 (Revenue Recognition): Revenue is disaggregated by channel, with the Consumer channel representing **$749.9M** of the **$955.9M total net sales** in FY2022[310](index=310&type=chunk) - Note 5 (Goodwill and Intangible Assets): As of June 30, 2022, the company had net goodwill of **$9.65M** and net intangible assets of **$8.07M**[325](index=325&type=chunk)[326](index=326&type=chunk) - Note 14 (Retirement Plan): The projected benefit obligation for the SERP was **$29.5M** at June 30, 2022, a decrease from **$35.5M** at the prior year-end, primarily due to a significant actuarial gain from a higher discount rate (**4.68% vs 2.89%**)[351](index=351&type=chunk)[354](index=354&type=chunk) [Item 9A — Controls and Procedures](index=64&type=section&id=Item%209A%20%E2%80%94%20Controls%20and%20Procedures) Management and the independent auditor concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2022 - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2022[370](index=370&type=chunk) - Management concluded that internal control over financial reporting was effective as of June 30, 2022, a conclusion audited and affirmed by PricewaterhouseCoopers LLP[371](index=371&type=chunk)[372](index=372&type=chunk) PART III [Item 10 — Directors, Executive Officers and Corporate Governance](index=65&type=section&id=Item%2010%20%E2%80%94%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement - This section incorporates information by reference from the definitive Proxy Statement for the Annual Meeting of Stockholders to be held November 3, 2022[376](index=376&type=chunk) [Item 11 — Executive Compensation](index=65&type=section&id=Item%2011%20%E2%80%94%20Executive%20Compensation) Information on executive and director compensation is incorporated by reference from the 2022 Proxy Statement - This section incorporates information by reference from the definitive Proxy Statement for the 2022 Annual Meeting[378](index=378&type=chunk) [Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=65&type=section&id=Item%2012%20%E2%80%94%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the 2022 Proxy Statement - This section incorporates information by reference from the definitive Proxy Statement for the 2022 Annual Meeting[379](index=379&type=chunk) [Item 13 — Certain Relationships and Related Transactions, and Director Independence](index=65&type=section&id=Item%2013%20%E2%80%94%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related party transactions, and director independence is incorporated by reference from the 2022 Proxy Statement - This section incorporates information by reference from the definitive Proxy Statement for the 2022 Annual Meeting[380](index=380&type=chunk) [Item 14 — Principal Accounting Fees and Services](index=65&type=section&id=Item%2014%20%E2%80%94%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2022 Proxy Statement - This section incorporates information by reference from the definitive Proxy Statement for the 2022 Annual Meeting[381](index=381&type=chunk) PART IV [Item 15 — Exhibits, Financial Statement Schedules](index=66&type=section&id=Item%2015%20%E2%80%94%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements included in Item 8, notes the omission of schedules, and refers to the Exhibit Index - The financial statements are included in Part II, Item 8, and all financial statement schedules are omitted[382](index=382&type=chunk)[383](index=383&type=chunk) - A list of exhibits filed with the report is provided in the Exhibit Index[384](index=384&type=chunk) [Item 16 — Form 10-K Summary](index=66&type=section&id=Item%2016%20%E2%80%94%20Form%2010-K%20Summary) The company reports that there is no Form 10-K summary - None[387](index=387&type=chunk)

John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) Q3 2022 Earnings Conference Call April 28, 2022 11:00 AM ET Company Participants Frank Pellegrino - Chief Financial Officer Jeffrey Sanfilippo - Chief Executive Officer Jasper Sanfilippo - Chief Operating Officer Conference Call Participants Chris McGinnis - Sidoti & Company Operator Welcome to the John B. Sanfilippo & Son Incorporated Third Quarter Fiscal 2022 Operating Results Conference Call. My name is James and I will be your operator for today's call. At th ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 24, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-19681 JOHN B. SANFILIPPO & SON, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 36-2419677 (State or Other Jurisdiction of In ...

Financial Data and Key Metrics Changes - Net sales for Q2 fiscal 2022 increased by 8.4% to $253.2 million compared to $233.6 million in Q2 fiscal 2021, driven by a 6% increase in sales volume and a 2.3% increase in the weighted average selling price per pound [4][8] - Gross profit for Q2 decreased by $600,000 or 1.1%, with gross profit margin dropping to 20.6% from 22.6% year-over-year, primarily due to supply chain inefficiencies and inflationary cost increases [9] - Net income for Q2 was $13.2 million or $1.14 per share diluted, down from $19.9 million or $1.72 per share diluted in Q2 fiscal 2021 [11] Business Line Data and Key Metrics Changes - Sales volume in the consumer distribution channel increased by 2.2%, with a 7.6% increase in private brand sales volume, while the commercial ingredients channel saw a 27.1% increase, mainly due to a 42.7% increase in foodservice sales volume [5][8] - Sales volume for Fisher recipe nuts increased by 9.6%, while Fisher snack nuts declined by 45% due to product line discontinuance [6][7] Market Data and Key Metrics Changes - The total nut category was up 1% in dollars but flat in pound volume in Q2, with strong growth in trail mix and produce categories offsetting declines in recipe and snack nut categories [24] - The recipe nut category declined 5% in dollar sales and 4% in pound sales, while the snack category declined 2% in dollar sales and 3% in pound sales [25][26] Company Strategy and Development Direction - The company aims to become a $2 billion business in the future, focusing on brand investment, private brand growth, and potential acquisitions in other snack segments [17][18] - An ESG task force has been created to expand efforts in social and environmental programs, with plans to set ambitious targets and communicate them to stockholders [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from supply chain issues and inflationary costs but expressed confidence in the company's ability to implement pricing actions to offset these costs [15] - The company is focused on continuous improvement projects and optimizing supply chain efficiencies while maintaining high service levels [16][29] Other Important Information - The company celebrated its 100th anniversary in business, marking a significant milestone [30] - The management team is actively engaging with an investor relations firm to enhance outreach efforts to the investor community [19] Q&A Session Summary Question: What are the driving factors for gaining new customers? - The company has reorganized marketing strategies and focused on innovation and consumer insights to better meet market demands [34] Question: Was the increase in foodservice locations due to pandemic closures? - The increase is attributed to gaining distribution in locations that were previously closed during the pandemic, resulting in incremental new business [35] Question: How does the company envision reaching the $2 billion target? - The target will be achieved through a combination of current business growth, private brand expansion, and potential M&A opportunities [39] Question: What changes are being made in labor practices? - The company is increasing labor rates and investing in automation to address labor shortages and improve operational efficiency [45][46] Question: How is the competitive landscape evolving? - The competitive environment remains active, with notable activity from competitors like Hormel, but no significant surprises have been reported [42]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission File Number 0-19681 JOHN B. SANFILIPPO & SON, INC. (Exact Name of Registrant as Specified in Its Charter) Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 23, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 36-2419677 (State or Other Jurisdiction of Incorporation or ...

Financial Performance - Net sales for the first quarter of fiscal 2022 increased by 7.6% to $226.3 million compared to $210.3 million in the first quarter of fiscal 2021[84]. - Sales volume, measured as pounds sold, increased by 14.0% in the first quarter of fiscal 2022 compared to the same period in fiscal 2021[86]. - Gross profit increased by $12.4 million, or 31.7%, to $51.8 million, with a gross profit margin of 22.9% for the first quarter of fiscal 2022, up from 18.7% in the prior year[98]. - Income from operations increased to $27.3 million, representing 12.1% of net sales, compared to $18.9 million, or 9.0% of net sales, in the first quarter of fiscal 2021[103]. - Net income for the first quarter of fiscal 2022 was $19.2 million, or $1.67 per common share basic, compared to $12.8 million, or $1.12 per common share basic, for the same period in fiscal 2021, representing a 50% increase in net income[108]. Operating Expenses - Total operating expenses rose by $4.0 million, or 19.6%, to $24.5 million, increasing as a percentage of net sales from 9.7% to 10.8%[87]. - Selling expenses for the first quarter of fiscal 2022 were $17.7 million, an increase of $5.7 million, or 46.8%, from the first quarter of fiscal 2021[100]. Inventory and Cash Flow - Operating cash flow decreased to $0.9 million in the first quarter of fiscal 2022 from $20.6 million in the same period of fiscal 2021, primarily due to increased working capital for inventory[112]. - Total inventories increased by $4.6 million, or 3.1%, to $152.6 million at September 23, 2021, compared to the previous quarter, driven by higher quantities of almonds and ingredients[113]. Investment and Financing Activities - Cash used in investing activities was $1.2 million in the first quarter of fiscal 2022, a decrease from $6.0 million in the same period last year, due to net proceeds from property dispositions[115]. - Cash provided by financing activities was $0.2 million in the first quarter of fiscal 2022, compared to a cash outflow of $15.4 million in the same period last year, with net short-term borrowings increasing to $36.6 million[116]. Future Outlook and Strategies - The company expects acquisition costs for dried fruit and major tree nuts to increase in the 2021 crop year, impacting future financial results[89]. - The company plans to increase promotional and advertising activity to drive growth across key categories, focusing on e-commerce and new consumer engagement strategies[77]. - The company expects total capital expenditures for fiscal 2022 to be approximately $18.0 million, focusing on new equipment and facility upgrades[115]. - The company anticipates that net cash flow generated from operations will be sufficient to fund operations for the next twelve months[110]. - The company is exploring growth strategies outlined in its Strategic Plan, including expanding branded and private label nut programs[110]. Compliance and Credit Facilities - The weighted average interest rate for the Credit Facility was 2.1% as of September 23, 2021, with $68.0 million of available credit under the facility[122]. - The company has been in compliance with all covenants under its Credit Facility and Mortgage Facility as of September 23, 2021[123].

John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) Q1 2022 Earnings Conference Call October 26, 2021 10:00 AM ET Company Participants Frank Pellegrino - Chief Financial Officer Jeffrey Sanfilippo - Chief Executive Officer Mike Valentine - Group President Conference Call Participants Chris McGinnis - Sidoti & Company Operator Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son Incorporated First Quarter Fiscal 2022 Operating Results Conference Call. At this time, all participants are i ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION JOHN B. SANFILIPPO & SON, INC. WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 24, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-19681 (Exact Name of Registrant as Specified in its Charter) Delaware 36-2419677 (State or Other Jurisdiction o ...

Financial Data and Key Metrics Changes - Net sales for Q3 fiscal 2021 decreased 1.8% to $207.9 million from $211.6 million in Q3 fiscal 2020, primarily due to a 1.2% decrease in sales volume [5][20] - Gross profit increased by $3.2 million, with gross profit margin rising to 22.1% from 20.2% year-over-year, attributed to lower commodity acquisition costs for tree nuts [14][15] - Net income reached $14.7 million or $1.27 per diluted share, compared to $13.5 million or $1.17 per diluted share in the prior year, marking record results for a third quarter [20] Business Line Data and Key Metrics Changes - Sales volume in the consumer distribution channel increased by 9.1%, driven by an 11.8% increase in private brand snack nuts and trail mixes [6] - Sales volume for Fisher recipe nuts fell 6.4% due to loss of distribution at two grocery customers, while Orchard Valley Harvest saw a 21.4% decrease in sales volume [7] - Sales volume in the commercial ingredients channel decreased by 29.8%, primarily due to a 25.7% decline in foodservice sales volume [9][12] Market Data and Key Metrics Changes - The consumer distribution channel accounted for 77.7% of total sales volume in Q3 [6] - Net sales in the consumer distribution channel increased by 6.8% in Q3, benefiting from elevated at-home food demand [33] - Net sales in the commercial ingredient distribution channel decreased by 30.5% due to reduced away-from-home demand [35] Company Strategy and Development Direction - The company is focusing on strengthening brand positioning and product differentiation, particularly for the Fisher and Orchard Valley Harvest brands [34][57] - A major investment is being made to enter a new product category, with benefits expected to materialize in fiscal 2023 [66] - The company is adapting to post-pandemic challenges by enhancing workforce flexibility and addressing supply chain issues [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted a strong recovery in the foodservice channel and expects continued improvement as COVID-19 restrictions ease [23][32] - The company anticipates stable commodity prices in the near term, with potential fluctuations depending on crop yields [50][52] - Management expressed confidence in handling increased demand across various channels, supported by dedicated equipment and ongoing investments [74] Other Important Information - The total value of inventories decreased by $36.8 million or 19.5% compared to the previous year, primarily due to lower commodity acquisition costs [21][22] - The company organized a COVID-19 immunization clinic for employees, reflecting its commitment to employee health and safety [26] Q&A Session Summary Question: Outlook on raw material costs - Management indicated that they are well-covered through the fall and expect stable commodity prices unless crop disasters occur [50][52] Question: Sustainability of margin profile - Management expects at-home demand to continue, with gradual increases in foodservice and contract packaging channels as consumer comfort grows [53] Question: Strategy for lost distribution channels - The company is focusing on building brand equity and product innovation to regain lost distribution, particularly for the Fisher recipe brand [55][56] Question: Growth potential in trail and snack mix - Management noted strong growth in health and wellness trail mixes and expects continued development in this segment [62] Question: Competitive landscape and pricing strategy - Management has not observed significant competitive price changes and is focused on managing promotions effectively during the pandemic [63] Question: M&A opportunities - The company is always looking at M&A opportunities but has focused on core business and brand reimagining this past year [65] Question: Capacity to handle increased demand - Management confirmed that they are well-prepared to meet increased demand with dedicated equipment and ongoing investments [74]

Part I: Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the quarter and thirty-nine weeks ended March 25, 2021, show a decrease in net sales but an increase in net income compared to the prior year period [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the third quarter of fiscal 2021, net sales slightly decreased by **1.8%** year-over-year to **$207.9 million**, while gross profit increased by **7.6%** to **$46.0 million**, leading to a **9.2%** rise in net income to **$14.7 million** and diluted EPS of **$1.27** Quarterly Financial Performance (Q3 FY2021 vs Q3 FY2020) | Financial Metric | Q3 2021 (ended Mar 25) (in thousands) | Q3 2020 (ended Mar 26) (in thousands) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $207,892 K | $211,624 K | -1.8% | | Gross Profit | $46,046 K | $42,805 K | +7.6% | | Income from Operations | $21,097 K | $19,397 K | +8.8% | | Net Income | $14,701 K | $13,466 K | +9.2% | | Diluted EPS | $1.27 | $1.17 | +8.5% | Year-to-Date Financial Performance (39 Weeks Ended) | Financial Metric | 39 Weeks 2021 (in thousands) | 39 Weeks 2020 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $651,740 K | $675,893 K | -3.6% | | Gross Profit | $138,173 K | $135,033 K | +2.3% | | Income from Operations | $67,766 K | $62,925 K | +7.7% | | Net Income | $47,398 K | $43,853 K | +8.1% | | Diluted EPS | $4.10 | $3.80 | +7.9% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 25, 2021, total assets decreased to **$392.2 million** from **$430.7 million** year-over-year, primarily due to a **19.5%** reduction in inventories, while total liabilities also decreased to **$161.3 million** Balance Sheet Summary (in thousands) | Account | March 25, 2021 (in thousands) | March 26, 2020 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $223,783 | $262,798 | -14.8% | | Inventories | $151,757 | $188,514 | -19.5% | | Total Assets | $392,228 | $430,694 | -8.9% | | Total Current Liabilities | $106,672 | $135,209 | -21.1% | | Total Liabilities | $161,325 | $187,426 | -14.0% | | Total Stockholders' Equity | $230,903 | $243,268 | -5.1% | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$77.0 million** for the thirty-nine weeks ended March 25, 2021, primarily driven by a **$20.3 million** positive change in inventories Cash Flow Summary (39 Weeks Ended, in thousands) | Cash Flow Activity | March 25, 2021 (in thousands) | March 26, 2020 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $77,026 | $34,962 | +$42,064 | | Net cash used in investing activities | ($13,620) | ($10,533) | -$3,087 | | Net cash used in financing activities | ($63,898) | ($25,027) | -$38,871 | | Net decrease in cash | ($492) | ($598) | +$106 | - The significant increase in operating cash flow was primarily driven by a positive change in inventories (**$20.3 million** inflow) compared to a large outflow in the prior year (**-$31.5 million**)[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail revenue recognition, lease accounting, inventory, and credit facilities, with revenue recognized upon product control transfer and plans to cease Garysburg facility operations after fire insurance payments - The company is a leading processor and distributor of nuts, sold under brands like Fisher and Orchard Valley Harvest, as well as private labels, through consumer, commercial, and contract packaging channels[24](index=24&type=chunk) Revenue by Distribution Channel (39 Weeks Ended, in thousands) | Distribution Channel | 2021 (in thousands) | 2020 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Consumer | $528,201 | $503,848 | +4.8% | | Commercial Ingredients | $64,399 | $101,447 | -36.5% | | Contract Packaging | $59,140 | $70,598 | -16.2% | | **Total** | **$651,740** | **$675,893** | **-3.6%** | - The company plans to permanently cease all operations at its Garysburg, North Carolina facility, which was damaged by a fire, with final insurance proceeds of **$2.73 million** received in the current third quarter[71](index=71&type=chunk)[72](index=72&type=chunk) [Management's Discussion and Analysis (MD&A)](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **1.8%** Q3 net sales decrease to lower volume in commercial and contract packaging, offset by consumer channel growth, with gross profit margin improving due to lower commodity costs despite rising freight expenses [Overview](index=19&type=section&id=Overview) The company's strategy focuses on brand growth and private label expansion, facing challenges from intense competition, shifting consumer habits, a wooden pallet shortage, and mixed COVID-19 impacts - The company's long-term strategy is to grow its Fisher, Orchard Valley Harvest, Squirrel Brand, and Southern Style Nuts brands and expand its non-branded business with key customers[80](index=80&type=chunk) - The company faces challenges from intense pricing competition, a shift in consumer shopping to smaller store formats and online, and a wooden pallet shortage that has led to cost increases and could impact Q4 net sales[81](index=81&type=chunk) - COVID-19 has had a mixed impact: demand from foodservice and convenience store customers remains suppressed, while at-home consumption trends have positively impacted the consumer business[84](index=84&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q3 FY2021 net sales decreased **1.8%** to **$207.9 million** due to commercial and contract packaging declines, while consumer sales grew **6.8%**, and gross profit margin expanded to **22.1%** from **20.2%** Quarterly Net Sales by Channel (Q3 FY2021 vs Q3 FY2020, in thousands) | Distribution Channel | Q3 2021 (in thousands) | Q3 2020 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Consumer | $169,415 | $158,616 | +6.8% | | Commercial Ingredients | $21,052 | $30,312 | -30.5% | | Contract Packaging | $17,425 | $22,696 | -23.2% | | **Total** | **$207,892** | **$211,624** | **-1.8%** | - The increase in gross profit and margin was mainly attributable to lower commodity acquisition costs for all major tree nuts[110](index=110&type=chunk) - Selling expenses increased by **$1.2 million** (**8.7%**) in Q3, driven by a **$1.5 million** rise in freight expense due to significantly higher freight rates[114](index=114&type=chunk) Quarterly Net Income and EPS | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Net Income | $14.7 million | $13.5 million | | Diluted EPS | $1.27 | $1.17 | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity remains strong, with operating cash flow increasing to **$77.0 million** for the first 39 weeks of FY2021, driven by improved inventory management and significant credit facility availability - Net cash from operating activities increased to **$77.0 million** for the first 39 weeks of FY2021, up from **$35.0 million** in the prior year, primarily due to a decreased use of working capital for inventory[129](index=129&type=chunk) - Total inventories decreased by **$36.8 million** (**19.5%**) from March 2020, mainly due to lower commodity acquisition costs for tree nuts and lower quantities of peanuts, almonds, and pecans[130](index=130&type=chunk) - The company has a **$117.5 million** senior secured revolving credit facility, with **$88.3 million** of available credit as of March 25, 2021[54](index=54&type=chunk)[140](index=140&type=chunk) - The Squirrel Brand acquisition's seller-financed note of **$11.5 million** was repaid in full during the second quarter of fiscal 2021[145](index=145&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material change in its market risk sensitivity since the disclosure in its Annual Report on Form 10-K for the fiscal year ended June 25, 2020 - There has been no material change in the company's market risk sensitivity since the last annual report[152](index=152&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 25, 2021, with no material changes to internal control over financial reporting identified - The CEO and CFO concluded that as of March 25, 2021, the company's disclosure controls and procedures were effective[154](index=154&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[155](index=155&type=chunk) Part II: Other Information [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal proceedings, with management believing the outcomes will not materially affect financial position, results, or cash flows - The company is party to various legal proceedings in the ordinary course of business, which are not expected to have a material adverse effect[65](index=65&type=chunk)[157](index=157&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No significant changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended June 25, 2020, were reported during the third quarter of fiscal 2021 - No significant changes to the risk factors identified in the last Form 10-K were reported for the third quarter of fiscal 2021[159](index=159&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) On April 28, 2021, the Board of Directors expanded to ten members with the appointment of Lisa A. Sanfilippo as a new Class A Director - On April 28, 2021, the Board was expanded from nine to ten members[162](index=162&type=chunk) - Lisa A. Sanfilippo was elected as a new Class A Director, a former employee who served in various roles, including Director of Business Development & Innovation Trends[162](index=162&type=chunk)[163](index=163&type=chunk)