SANFILIPPO JOHN B & SON INC

General

The primary uses of cash are to fund our current operations, fulfill contractual obligations, pursue our Long-Range Plan through growing our branded and private brand nut and bar businesses, consummate and integrate business acquisitions, return cash to our stockholders through dividends, repay indebtedness and pay amounts owed under our Supplemental Employee Retirement Plan (“SERP”). Also, various uncertainties, including cost uncertainties and tariff payments, could result in additional or unexpected uses of cash. The primary sources of cash are results of operations and availability under our Credit Facility. Beginning in fiscal 2025 and continuing into fiscal 2027, we will invest approximately $90.0 million in capital expenditures and related expenses, excluding any applicable tariffs, to acquire and install equipment, and make related infrastructure improvements to expand our production capabilities, increase our efficiency and further enhance our product offerings to our customers. In fiscal 2025, we obtained an equipment loan to finance a portion of this capital investment and have funded the remainder with borrowings under our Credit Facility or with available cash generated from our operations. Additionally, there is a potential for incremental fixed costs we could incur until this new equipment reaches its production capacity. We anticipate that expected net cash flow generated from operations and amounts available pursuant to the Credit Facility and the Equipment Loan (as defined below) will be sufficient to fund our operations and capital expenditures for the next twelve months. Our available credit under our Credit Facility has allowed us to reinvest in the Company through capital expenditures, develop new products, pay cash dividends, consummate strategic investments and business acquisitions and explore other growth strategies outlined in our Long-Range Plan.

Cash flows from operating activities have historically been driven by net income but are also significantly influenced by inventory requirements, which can change based upon fluctuations in both quantities and market prices of the various nuts, nut products and other commodities or other input materials we buy and sell. Current market trends in nut prices and crop estimates also impact nut procurement.

The following table sets forth certain cash flow information for the first quarter of 2027 and 2026, respectively (dollars in thousands):

Operating Activities Net cash provided by operating activities was $10.6 million for the first quarter of fiscal 2027, compared to $32.1 million for the comparative period of fiscal 2026. The decrease in operating cash flow was primarily due to changes in working capital, through changes in inventory and a decrease in accrued expenses, and lower net income.

Total inventories were $235.1 million at September 24, 2026, a decrease of $10.7 million, or 4.4%, from the inventory balance at June 25, 2026, and relatively consistent with the inventory balance at September 25, 2025. The decrease in inventories at September 24, 2026 compared to June 25, 2026 was due primarily to lower on hand quantities of pecans and almonds, partially offset by higher commodity acquisition costs for almonds and higher on hand quantities of peanuts (both inshell and meats).

Raw nut and dried fruit input stocks, some of which are classified as work-in-process, increased 12.2 million pounds, or 40.3%, at September 24, 2026 compared to September 25, 2025 due to higher quantities of peanuts and walnuts on hand. This increase was partially offset by lower quantities of pecans on hand. The weighted average cost per pound of raw nut input stocks on hand at the end of the first quarter of fiscal 2027 decreased 20.6% compared to the end of the first quarter of fiscal 2026, primarily due to higher on hand quantities of peanuts (both inshell and meats) purchased at lower costs, partially offset by higher acquisition cost of pecans and almonds.

Investing Activities Cash used in investing activities was $8.7 million during the first quarter of fiscal 2027, compared to $24.9 million for the same period last year. Capital asset purchases were $8.7 million during the first quarter of fiscal 2027, compared to $24.9 million in the first quarter of fiscal 2026. We expect total capital expenditures for equipment purchases and upgrades for fiscal 2027 to be approximately $48.0 million. This includes all capital expenditures needed to complete the purchase and installation of equipment to expand our bar production capabilities, as well as ongoing facility maintenance, food safety enhancements and other expansion needs for our business. We expect to fund these capital purchases through a combination of borrowings under our existing Credit Facility, use of available cash from our operations and the Equipment Loan. Absent any additional material acquisitions or other significant investments, we believe that cash on hand, combined with cash provided by operations, borrowings available under the Credit Facility and the Equipment Loan, will be sufficient to meet the cash requirements for planned capital expenditures.

Financing Activities Cash used in financing activities was $1.0 million during the first quarter of fiscal 2027, compared to $7.1 million for the same period last year. Net borrowings under our Credit Facility were $22.4 million for the first quarter of fiscal 2027, compared to net repayments of $6.5 million for the first quarter of fiscal 2026. Equipment loan proceeds received were $16.9 million in the first quarter of fiscal 2026. Dividends paid in the first quarter of fiscal 2027 were approximately $5.9 million more than dividends paid in the same period last year.

Financing Arrangements

Credit Facility

Our Amended and Restated Credit Agreement dated March 5, 2020, as most recently amended on June 16, 2025, provides for a $150.0 million revolving loan commitment and letter of credit subfacility. The Credit Facility has an accrued interest rate based on SOFR plus an applicable margin based upon the borrowing base calculation, ranging from 1.35% to 1.85%. The Credit Facility allows the Company to pay up to $100.0 million in dividends per year, subject to meeting availability test, and is secured by a first priority lien over our accounts receivable and inventory.

At our election, borrowings under the Credit Facility currently accrue interest at either (i) a rate determined pursuant to the administrative agent’s prime rate plus an applicable margin determined by reference to the amount of loans, which may be advanced under the borrowing base calculation, ranging from 0.25% to 0.75% or (ii) a rate based on SOFR plus an applicable margin as noted above.

At September 24, 2026, the weighted average interest rate for the Credit Facility was 5.6%. The terms of the Credit Facility contain covenants that, among other things, require us to restrict investments, indebtedness, acquisitions and certain sales of assets and limit annual cash dividends or distributions, transactions with affiliates, redemptions of capital stock and prepayment and refinancing of indebtedness (if such prepayment or refinancing, among other things, is of indebtedness under the equipment loan or of a subordinate debt). If loan availability under the borrowing base calculation falls below $25.0 million, we will be required to maintain a specified fixed charge coverage ratio, tested on a monthly basis, until loan availability equals or exceeds $25.0 million for three consecutive months. All cash received from customers is required to be applied against the Credit Facility. The lenders under the Credit Facility have the option to accelerate and demand immediate repayment of our obligations under the Credit Facility in the event of default on the payments required under the Credit Facility, a change in control in the ownership of the Company, non-compliance with the financial covenant or upon the occurrence of other events of default by us under the Credit Facility. As of September 24, 2026, we were in compliance with all covenants under the Credit Facility and we currently expect to be in compliance with the financial covenant in the Credit Facility for the foreseeable future. At September 24, 2026, we had $88.3 million of available credit under the Credit Facility. If this entire amount were borrowed at September 24, 2026, we would still be in compliance with all restrictive covenants under the Credit Facility.

Selma Property

In September 2006, we sold our Selma, Texas properties (the “Selma Properties”) to two related party partnerships for $14.3 million and are leasing them back. The selling price was determined by an independent appraiser to be the fair market value which also approximated our carrying value. The lease for the Selma Properties has a ten-year term at a fair market value rent with three five-year renewal options. In September 2015, we exercised two of the five-year renewal options which extended the lease term to September 2026 and the base monthly lease amount increased to approximately $114,000. On December 30, 2025 we exercised the final remaining five-year renewal option which extended the lease term to September 2031. The base monthly lease payment increased to approximately $121,000 beginning in September 2026. Also, we have an option to purchase the Selma Properties from the owner at 95% (100% in certain circumstances) of the then fair market value, but not less than the original $14.3 million purchase price. The provisions of the arrangement are not eligible for sale-leaseback accounting and the $14.3 million was recorded as a debt obligation. No gain or loss was recorded on the Selma Properties transaction. As of September 24, 2026, $5.4 million of the debt obligation was outstanding.

Equipment Loan

On June 16, 2025, the Company entered into a financing agreement with Wells Fargo Bank, N.A. which allows the Company to finance up to $50.0 million for the purchase of equipment to further expand our production capabilities, increase our efficiency and further enhance our product offerings to our customers (the “Equipment Loan”). The Equipment Loan is provided under a master loan agreement and related equipment schedule(s) and is secured under a Security Agreement that provides for a first priority lien on all equipment and a second priority lien on our accounts receivable and inventory. The Company will be required to make sixty equal monthly payments comprised of principal and interest starting upon distribution of the final loan proceeds which is expected to occur in the second quarter of fiscal 2027. The fixed interest rate (SOFR plus an applicable margin of 1.49%) will be calculated at that point in time as well. The Equipment Loan contains a graded prepayment penalty if the loan is paid off within 36 months of commencement. The Company will make monthly interest-only payments of SOFR plus an applicable margin of 1.60% prior to the delivery and acceptance of the equipment and distribution of the final loan proceeds, which will be capitalized as part of the equipment acquisition cost. As of September 24, 2026, $44.3 million of the debt obligation under the Equipment Loan was outstanding.

Critical Accounting Policies and Estimates

For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the fiscal year ended June 25, 2026.

Recent Accounting Pronouncements

Refer to Note 14 – “Recent Accounting Pronouncements” of the Notes to Consolidated Financial Statements, contained in Part I, Item 1 of this form 10-Q, for a discussion of recently issued and adopted accounting pronouncements.