SANFILIPPO JOHN B & SON INC

Net Sales

In the second quarter of fiscal 2026, our net sales increased 4.6% to $314.8 million, compared to net sales of $301.1 million for the second quarter of fiscal 2025. The net sales increase was primarily driven by a 15.8% increase in weighted average selling price per pound, which was primarily due to higher commodity acquisition costs for all major tree nuts and peanuts. Sales volume, which is defined as pounds sold to customers, decreased 9.7%. Sales volume decreased for all major product types. Approximately half of the sales volume decline was attributable to granola sold in the contract manufacturing channel, which was offset by increases of sales volume of walnuts, almonds and pecans.

For the first twenty-six weeks of fiscal 2026 our net sales were $613.5 million, an increase of $36.2 million, or 6.3%, compared to the same period of fiscal 2025. The increase in net sales was attributable to a 12.2% increase in the weighted average selling price per pound, which was primarily due to higher commodity acquisition costs for all major tree nuts. Sales volume decreased 5.3% compared to the same period in the prior fiscal year. Sales volume decreased for bars, granola, trail mix and cashews, while sales volume for walnuts, peanuts, pecans and almonds increased.

The following table summarizes sales by product type as a percentage of total gross sales. The information is based upon gross sales, rather than net sales, because certain adjustments, such as promotional discounts, are not allocable to product type.

The following table shows a comparison of net sales by distribution channel (dollars in thousands):

(1)

Sales of branded products were approximately 20% and 21% of total consumer sales during the second quarter of fiscal 2026 and fiscal 2025, respectively. Fisher branded products were approximately 78% and 72% of branded sales during the second quarter of fiscal 2026 and fiscal 2025, respectively, with Orchard Valley Harvest and Southern Style Nuts branded products accounting for the majority of the remaining branded product sales.

The following table shows a comparison of net sales by distribution channel (dollars in thousands):

(1)

Sales of branded products were approximately 17% and 19% of total consumer sales during the first twenty-six weeks of fiscal 2026 and fiscal 2025, respectively. Fisher branded products were approximately 74% and 66% of branded sales during the first twenty-six weeks of fiscal 2026 and fiscal 2025, respectively, with Orchard Valley Harvest and Southern Style Nuts branded products accounting for the majority of the remaining branded product sales.

Net sales in the consumer distribution channel increased $11.8 million, or 4.7%, and sales volume decreased 8.4% in the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025. The sales volume decrease was driven by a 7.9% decrease in private brand sales volume due to lower volume in bars and, to a lesser extent, nuts and trail mix. Nuts and trail mix volume was impacted by higher retail prices, soft demand, including consumer downsizing, and reduced distribution at a major mass merchandiser. These declines were partially offset by new business with an existing customer and improved performance at another mass merchandiser. Bar sales declined as prior year's volumes were elevated by low industry-wide inventory levels and the lingering impact of a national brand recall, which temporarily boosted private label bars demand. A strategic reduction in sales to one grocery retailer also contributed to the bars decline. Branded sales volume decreased 11.2% due to lost distribution of Orchard Valley Harvestat a major non-food customer and the timing of Fisher snack promotions also at a major non-food customer.

In the first twenty-six weeks of fiscal 2026, net sales in the consumer distribution channel increased $24.5 million, or 5.1%, and sales volume decreased 6.8% compared to the same period of fiscal 2025. The sales volume decrease was driven by a 5.5% decrease in private brand sales volume due to lower volume in nuts and trail mix, bars and peanut butter. Nuts and trail mix volume was impacted by higher retail prices, consumer downsizing, soft demand and reduced distribution at a major mass merchandiser. These nuts and trail mix declines were partially offset by new business with an existing customer. Private brand bars declined due the reasons cited in the quarterly comparison, which were partially offset by growth at a current customer. Peanut butter declined due to a product discontinuation at a mass merchandiser. Branded sales volume decreased 14.5% due to lost distribution of Orchard Valley Harvest cited in the quarterly comparison.

Net sales in the commercial ingredients distribution channel increased $1.4 million, or 5.3%, and sales volume decreased by 1.1% in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025.

In the first twenty-six weeks of fiscal 2026, net sales in the commercial ingredients distribution channel increased $5.7 million, or 10.7%, and sales volume increased 5.8% compared to the same period of fiscal 2025. The sales volume increase was mainly driven by increased sales of peanut crushing stock to peanut oil processors, new business at one customer and higher peanut butter volume at existing food service customers.

Net sales in the contract manufacturing distribution channel increased $0.5 million, or 2.2%, and sales volume decreased 26.5% in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. The decrease in sales volume was due to decreased granola processed at the Lakeville facility, which was partially offset by increased snack nut sales to a customer added during the second quarter of the prior year.

In the first twenty-six weeks of fiscal 2026, net sales in the contract manufacturing distribution channel increased $6.0 million, or 13.9%, and sales volume decreased 7.6% compared to the same period of fiscal 2025. The sales volume decrease was due to the reasons cited in the quarterly comparison along with lower peanut and peanut butter to a major customer. This was partially offset by the same increase cited in the quarterly comparison.

Gross Profit

Gross profit increased $6.9 million, or 13.2%, to $59.2 million for the second quarter of fiscal 2026, compared to $52.3 million for the second quarter of fiscal 2025. The increase in gross profit was due primarily to higher net sales and selling prices more closely aligned with commodity acquisition costs compared to the second quarter of fiscal 2025. Additionally, reduced manufacturing spending and operational efficiencies contributed to the overall gross profit increase. Our gross profit margin, as a percentage of net sales, increased to 18.8% for the second quarter of fiscal 2026 compared to 17.4% for the second quarter of fiscal 2025, mainly due to the factors mentioned previously.

Gross profit was $113.3 million for the first twenty-six weeks of fiscal 2026 compared to $98.8 million for the first twenty-six weeks of fiscal 2025 for the same reasons cited in the quarterly comparison. Our gross profit margin, as a percentage of net sales, increased to 18.5% for the first twenty-six weeks of fiscal 2026 compared to 17.1% for the first twenty-six weeks of fiscal 2025 mainly due to the factors mentioned previously and a one time pricing concession in the first quarter of fiscal 2025 for a bars customer which did not recur in fiscal 2026.

Operating Expenses

Total operating expenses for the second quarter of fiscal 2026 increased $0.3 million, or 0.9%, to $33.2 million. Operating expenses decreased to 10.5% of net sales for the second quarter of fiscal 2026, compared to 10.9% of net sales for the second quarter of fiscal 2025.

Selling expenses for the second quarter of fiscal 2026 were $21.1 million, a decrease of $1.5 million, or 6.5%, from the second quarter of fiscal 2025. The decrease was driven by a $0.7 million decrease in third-party warehouse costs, a $0.6 million decrease in advertising and consumer insight research expense, a $0.6 million decrease in freight expense, and a $0.7 million decrease in salary and equity compensation expenses. These were partially offset by a $1.4 million increase in incentive compensation expense.

Administrative expenses for the second quarter of fiscal 2026 increased $1.8 million, or 17.4%, to $12.1 million, compared to $10.3 million for the second quarter of fiscal 2025. The increase was due to a $2.3 million increase in incentive compensation expense slightly offset by a $0.5 million decrease in loss on asset disposals.

Total operating expenses for the first twenty-six weeks of fiscal 2026 decreased by $2.1 million, or 3.4%, to $60.3 million. Operating expenses as a percentage of net sales decreased to 9.8% for the first twenty-six weeks of fiscal 2026, compared to 10.8% for the first twenty-six weeks of fiscal 2025.

Selling expenses for the first twenty-six weeks of fiscal 2026 were $39.0 million, a decrease of $3.4 million, or 8.1%, from the first twenty-six weeks of fiscal 2025. The decrease was driven primarily by a $2.0 million decrease in advertising and consumer insight research expense, a $1.4 million decrease in third-party warehouse costs, a $1.2 million decrease in freight expense and a $1.0 million decrease in salary expense. These were partially offset by a $1.7 million increase in incentive compensation expense and a $0.6 million increase in commissions expense.

Administrative expenses for the first twenty-six weeks of fiscal 2026 increased $1.3 million, or 6.5%, to $21.2 million compared the first twenty-six weeks of fiscal 2025. The increase was primarily due to a $2.9 million increase in incentive compensation expense. This was partially offset by a $0.6 million decrease in personnel and recruitment expenses and a $0.6 million decrease in loss on asset disposals.

Income from Operations

Due to the factors discussed above, income from operations was $26.0 million, or 8.3% of net sales, for the second quarter of fiscal 2026, compared to $19.4 million, or 6.4% of net sales, for the second quarter of fiscal 2025.

Due to the factors discussed above, income from operations was $53.0 million, or 8.6% of net sales, for the first twenty-six weeks of fiscal 2026, compared to $36.4 million, or 6.3% of net sales, for the first twenty-six weeks of fiscal 2025.

Interest Expense

Interest expense was $0.5 million for the second quarter of fiscal 2026, compared to $0.8 million for the second quarter of fiscal 2025 due to lower average debt levels.

Interest expense was $1.5 million for the first twenty-six weeks of fiscal 2026, compared to $1.3 million for the first twenty-six weeks of fiscal 2025.

Rental and Miscellaneous Expense, Net

Net rental and miscellaneous expense was $0.6 million for the second quarter of fiscal 2026, compared to $0.3 million for the second quarter of fiscal 2025, primarily due to the departure of a tenant upon lease expiration at our Elgin Site.

Net rental and miscellaneous expense was $1.2 million for the first twenty-six weeks of fiscal 2026, compared to $0.8 million for the first twenty-six weeks of fiscal 2025.

Pension Expense (Excluding Service Costs)

Pension expense (excluding service costs) was $0.4 million for both the second quarter of fiscal 2026 and fiscal 2025.

Pension expense (excluding service costs) was $0.8 million for the first twenty-six weeks of fiscal 2026, compared to $0.7 million for the first twenty-six weeks of fiscal 2025.

Income Tax Expense

Income tax expense was $6.6 million, or 26.7% of income before income taxes, for the second quarter of fiscal 2026, compared to $4.3 million, or 24.0% of income before income taxes, for the second quarter of fiscal 2025. The increase in the effective tax rate is primarily due to an increase in the disallowed deduction related to officer compensation.

Income tax expense was $12.9 million, or 26.0% of income before income taxes, for the first twenty-six weeks of fiscal 2026 compared to $8.4 million, or 24.9% of income before income taxes, for the first twenty-six weeks of fiscal 2025. The increase in the effective tax rate is primarily due to the reason cited in the quarterly comparison.

Net Income

Net income was $18.0 million, or $1.54 per common share basic and $1.53 per common share diluted, for the second quarter of fiscal 2026, compared to $13.6 million, or $1.17 per common share basic and $1.16 per common share diluted, for the second quarter of fiscal 2025.

Net income was $36.7 million, or $3.14 per common share basic and $3.12 per common share diluted, for the first twenty-six weeks of fiscal 2026, compared to $25.3 million, or $2.17 per common share basic and $2.16 per common share diluted, for the first twenty-six weeks of fiscal 2025.