John B Sanfilippo & Son (NasdaqGS:JBSS) Q1 2026 Earnings Call October 30, 2025 10:00 AM ET Speaker2Good morning everyone and welcome to our 2026 first quarter earnings conference call. Thank you for joining us. On the call with me today is Frank Pellegrino, our CFO, and Jasper Sanfilippo, our COO. We may make some forward-looking statements today. Statements are based on our current expectations and they involve certain risks and uncertainties. Factors that could negatively impact results are explained in t ...

Financial Data and Key Metrics Changes - Net sales for Q3 FY2025 decreased by 4% to $260.9 million compared to $271.9 million in Q3 FY2024, driven by a 7.9% decrease in sales volume, partially offset by a 4.2% increase in the weighted average sales price per pound [12][19] - Gross profit increased by $6.7 million or 13.7% to $55.9 million, with gross profit margin rising to 21.4% from 18.1% in the prior year [15][17] - Net income for Q3 FY2025 was $20.2 million or $1.72 per diluted share, compared to $13.5 million or $1.15 per diluted share in Q3 FY2024 [18] Business Line Data and Key Metrics Changes - Sales volume decreased by 9.2% in the consumer distribution channel, primarily due to an 8.3% decrease in private brand volume, with significant declines in bars volume [13] - Sales volume for branded products decreased by 12.9%, mainly due to a 33.8% reduction in Orchard Valley Harvest sales [14] - Sales volume increased by 6% in the contract manufacturing distribution channel, driven by increased granola volume processed [14] Market Data and Key Metrics Changes - The snack, nut, and trail mix category saw a 2% decline in pounds but a 2% increase in dollars, indicating rising prices [24] - Fisher snack and trail mix performed worse than the category with pound shipments down 17%, while Southern Style Nut Brand saw a 10% increase in pound shipments [25][26] - The recipe nut category was down 1% in pounds but up 10% in dollars, reflecting increased prices for walnuts and pecans [27] Company Strategy and Development Direction - The company plans to invest approximately $90 million in equipment to expand domestic production capabilities and improve infrastructure by the end of FY2026 [5][6] - The focus remains on adapting strategies to meet evolving customer needs and managing costs amid rising commodity prices and tariffs [5][10] - The company is committed to innovation and cost-saving opportunities to mitigate commodity pressures [26] Management Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macroeconomic environment impacting demand for nuts and snacks, emphasizing the need for strategic adaptations [5][7] - There is confidence in the strategic investments made in production and infrastructure to drive efficiencies and deliver innovation [6][30] - Management anticipates potential decreases in commodity prices due to demand destruction from high retail prices [55] Other Important Information - The total value of inventories increased by $47.1 million or 22.4% year-over-year, primarily due to higher quantities and costs of finished goods and raw materials [18] - The weighted average cost per pound of raw nuts and dried fruit increased by 33.9% year-over-year [18] Q&A Session Summary Question: Regarding tariff exposure and passing costs to customers - Management indicated that discussions are ongoing with key customers to pass on tariff-related cost increases, particularly for high-value commodities [33][34] Question: On the profitability of the cashew and mixed nuts segment - Management confirmed that the cashew and mixed nuts segment remains profitable, although higher tariffs could impact consumer demand [36][37] Question: Expectations for gross margin levels in the next quarter - Management suggested that gross profit per pound should be assessed by excluding the impact of inventory valuation adjustments [44] Question: Details on the $90 million capital expenditure - The investment will support growth in the bar category and expand production capacity across various business segments [45][46] Question: Strategy for upcoming quarters and market volatility - Management is focused on promotional programs and pricing strategies to navigate market volatility and ensure the right product mix is available [62]