SANFILIPPO JOHN B & SON INC

Net Sales

In the third quarter of fiscal 2026, our net sales increased 8.0% to $281.8 million, compared to net sales of $260.9 million for the third quarter of fiscal 2025. The net sales increase was primarily driven by an 8.3% increase in weighted average selling price per pound, which was primarily due to pricing actions taken in response to higher commodity acquisition costs for all major tree nuts and peanuts as well as a shift in product mix toward higher priced items in the current quarter. Sales volume, which is defined as pounds sold to customers, remained essentially flat. Sales volume declined for substantially all major product types in the third quarter but increased for walnuts, pecans and mixed nuts.

For the first thirty-nine weeks of fiscal 2026 our net sales were $895.2 million, an increase of $57.1 million, or 6.8%, compared to the same period of fiscal 2025. The increase in net sales was attributable to an 11.0% increase in the weighted average selling price per pound, which was primarily due to pricing actions taken in response to higher commodity acquisition costs for all major tree nuts. Sales volume decreased 3.7% compared to the same period in the prior fiscal year. Sales volume declined for substantially all major product types but increased for walnuts, pecans and peanuts.

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 13% of total consumer sales for both the third quarter of fiscal 2026 and fiscal 2025. Fisher branded products were approximately 53% and 56% of branded sales during the third 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 16% and 17% of total consumer sales during the first thirty-nine weeks of fiscal 2026 and fiscal 2025, respectively. Fisher branded products were approximately 68% and 63% of branded sales during the first thirty-nine 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 $18.2 million, or 8.5%, and sales volume decreased 4.5% in the third quarter of fiscal 2026, compared to the third quarter of fiscal 2025. The sales volume decrease was driven by a 5.3% decrease in private brand sales volume due to lower volume in bars while nuts and trail mix sales volume remained relatively flat. Bar sales were impacted by continued category softness at a mass merchandise retailer. Our strategic decision to reduce sales to a grocery store retailer also contributed to the overall decline in bar volume. Nuts and trail mix volume was impacted by elevated retail prices, reduced promotional activity and discontinuation of underperforming items. These declines were largely offset by new private brand walnut business with an existing customer and increased sales resulting from promotional pricing on walnuts and peanuts at an online retailer. Branded sales volume increased 3.3% due to limited opportunistic orders of Orchard Valley Harvestat a major non-food customer.

In the first thirty-nine weeks of fiscal 2026, net sales in the consumer distribution channel increased $42.7 million, or 6.1%, and sales volume decreased 6.1% 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 bars, nuts and trail mix, and peanut butter. Private brand bars declined due the reasons cited in the quarterly comparison. Nuts and trail mix volume was impacted by the reasons cited in the quarterly comparison. Peanut butter declined primarily due to a product discontinuation at a mass merchandiser. Branded sales volume decreased 10.2% due to lost distribution of Orchard Valley Harvestat a major non-food customer.

Net sales in the commercial ingredients distribution channel increased $3.6 million, or 14.6%, and sales volume increased by 14.3% in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. The sales volume increase was due to higher food services sales at existing customers and sales to two new customers. Increased sales of peanut crushing stock also contributed to the overall growth.

In the first thirty-nine weeks of fiscal 2026, net sales in the commercial ingredients distribution channel increased $9.3 million, or 11.9%, and sales volume increased 8.6% compared to the same period of fiscal 2025. The sales volume increase was due to the reasons cited in the quarterly comparison.

Net sales in the contract manufacturing distribution channel decreased $0.9 million, or 4.1%, and sales volume increased 16.5% in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. The increase in sales volume was primarily driven by increased sales to a customer added during the second quarter of fiscal 2025. This customer currently provides the majority of the raw ingredients for these products, and the Company processes and packages these products. This increase was partially offset by decreased granola sales volume.

In the first thirty-nine weeks of fiscal 2026, net sales in the contract manufacturing distribution channel increased $5.1 million, or 7.9%, and sales volume decreased 1.0% compared to the same period of fiscal 2025. The sales volume decrease was due to decreased granola sales volume and lower peanut butter sales volume to a major customer. This was largely offset by increased snack nut sales cited in the quarterly comparison.

Gross Profit

Gross profit decreased $2.1 million, or 3.8%, to $53.8 million for the third quarter of fiscal 2026, compared to $55.9 million for the third quarter of fiscal 2025. The decrease in gross profit was primarily due to significantly lower inventory valuation adjustments compared to the third quarter of fiscal 2025, which was partially offset by higher net sales. Our gross profit margin, as a percentage of net sales, decreased to 19.1% for the third quarter of fiscal 2026 compared to 21.4% for the third quarter of fiscal 2025, mainly due to the factors mentioned previously.

Gross profit was $167.0 million for the first thirty-nine weeks of fiscal 2026 compared to $154.7 million for the first thirty-nine weeks of fiscal 2025 due to pricing more closely aligned with commodity acquisition costs and a one time pricing concession in the first quarter of fiscal 2025 for a bars customer which did not recur in fiscal 2026. Our gross profit margin, as a percentage of net sales, increased to 18.7% for the first thirty-nine weeks of fiscal 2026 compared to 18.5% for the first thirty-nine weeks of fiscal 2025.

Operating Expenses

Total operating expenses for the third quarter of fiscal 2026 increased $2.3 million, or 8.3%, to $30.0 million. Operating expenses were 10.6% of net sales for both the third quarter of fiscal 2026 and fiscal 2025.

Selling expenses for the third quarter of fiscal 2026 were $19.3 million, an increase of $0.6 million, or 3.4%, from the third quarter of fiscal 2025. The increase was driven by a $1.5 million increase in incentive compensation expense and $0.3 million increase in commissions expense. These increases were largely offset by a $0.6 million decrease in rent expense and a $0.5 million decrease in salary expenses.

Administrative expenses for the third quarter of fiscal 2026 increased $1.7 million, or 18.3%, to $10.7 million, compared to $9.1 million for the third quarter of fiscal 2025. The increase was due to a $2.7 million increase in incentive compensation expense. The increase was slightly offset by a $0.5 million gain on the sale of non-core equipment, a $0.3 million decrease in food donations and a $0.2 million decrease in equity compensation.

Total operating expenses for the first thirty-nine weeks of fiscal 2026 increased slightly to $90.3 million. Operating expenses as a percentage of net sales decreased to 10.1% for the first thirty-nine weeks of fiscal 2026, compared to 10.8% for the first thirty-nine weeks of fiscal 2025.

Selling expenses for the first thirty-nine weeks of fiscal 2026 were $58.3 million, a decrease of $2.8 million, or 4.6%, from the first thirty-nine weeks of fiscal 2025. The decrease was driven primarily by a $2.0 million decrease in advertising and consumer insight research expense, a $1.5 million decrease in salary expense, a $1.4 million decrease in third-party warehouse costs and a $1.0 million decrease in freight expense. These were partially offset by a $3.2 million increase in incentive compensation expense.

Administrative expenses for the first thirty-nine weeks of fiscal 2026 increased $2.9 million, or 10.1%, to $32.0 million compared to the first thirty-nine weeks of fiscal 2025. The increase was primarily due to a $5.6 million increase in incentive compensation expense. This was partially offset by a $1.1 million favorable change in gain/loss on asset disposals, a $0.7 million decrease in personnel and recruitment expenses and a $0.5 million decrease in salary and equity compensation expenses.

Income from Operations

Due to the factors discussed above, income from operations was $23.8 million, or 8.4% of net sales, for the third quarter of fiscal 2026, compared to $28.2 million, or 10.8% of net sales, for the third quarter of fiscal 2025.

Due to the factors discussed above, income from operations was $76.8 million, or 8.6% of net sales, for the first thirty-nine weeks of fiscal 2026, compared to $64.6 million, or 7.7% of net sales, for the first thirty-nine weeks of fiscal 2025.

Interest Expense

Interest expense was $0.5 million for the third quarter of fiscal 2026, compared to $1.1 million for the third quarter of fiscal 2025 due to lower average line of credit debt levels.

Interest expense was $2.0 million for the first thirty-nine weeks of fiscal 2026, compared to $2.3 million for the first thirty-nine weeks of fiscal 2025.

Rental and Miscellaneous Expense, Net

Net rental and miscellaneous expense was $0.6 million for both the third quarter of fiscal 2026 and fiscal 2025.

Net rental and miscellaneous expense was $1.7 million for the first thirty-nine weeks of fiscal 2026, compared to $1.4 million for the first thirty-nine weeks of fiscal 2025, primarily due to the departure of a tenant upon lease expiration at our Elgin Site.

Pension Expense (Excluding Service Costs)

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

Pension expense (excluding service costs) was $1.2 million for the first thirty-nine weeks of fiscal 2026, compared to $1.1 million for the first thirty-nine weeks of fiscal 2025.

Income Tax Expense

Income tax expense was $5.4 million, or 24.4% of income before income taxes, for the third quarter of fiscal 2026, compared to $6.0 million, or 22.9% of income before income taxes, for the third 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 $18.3 million, or 25.5% of income before income taxes, for the first thirty-nine weeks of fiscal 2026 compared to $14.3 million, or 24.0% of income before income taxes, for the first thirty-nine 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 $16.8 million, or $1.44 per common share basic and $1.43 per common share diluted, for the third quarter of fiscal 2026, compared to $20.2 million, or $1.73 per common share basic and $1.72 per common share diluted, for the third quarter of fiscal 2025.

Net income was $53.5 million, or $4.58 per common share basic and $4.55 per common share diluted, for the first thirty-nine weeks of fiscal 2026, compared to $45.4 million, or $3.90 per common share basic and $3.87 per common share diluted, for the first thirty-nine weeks of fiscal 2025.