SANFILIPPO JOHN B & SON INC

Net Sales

In the first quarter of fiscal 2027, net sales decreased 3.5% to $288.1 million, compared to net sales of $298.7 million for the first quarter of fiscal 2026. The decrease was primarily driven by a 3.6% decrease in weighted average selling price per pound, primarily due to a shift in product mix toward lower priced items and lower selling prices for walnuts, trail and snack mix products and peanuts resulting from lower commodity acquisition costs. These decreases were partially offset by higher selling prices for pecans and almonds due to higher commodity acquisition costs. Sales volume, which is defined as pounds sold to customers, remained essentially flat. Sales volume decreased for all major product types, except for peanuts, walnuts and pecans, all of which experienced volume growth in the quarter.

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):

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Sales of branded products were approximately 14% of total consumer sales for both the first quarter of fiscal 2027 and fiscal 2026. Fisher branded products were approximately 73% and 67% of branded sales during the first quarter of fiscal 2027 and fiscal 2026, respectively, with Orchard Valley Harvest branded products accounting for the majority of the remaining branded product sales.

Net sales in the consumer distribution channel decreased $9.6 million, or 4.0%, and sales volume decreased 6.7% in the first quarter of fiscal 2027, compared to the first quarter of fiscal 2026. The sales volume decrease was driven by a 6.3% decrease in private brand sales volume due to lower nut and trail mix sales volume and, to a lesser extent, lower bar sales volume. Bar sales were impacted by softness in mainstream bars and consumer migration to smaller pack sizes, which was partially offset by the successful launch of a new “better-for-you” bar offering and expanded bar business with an existing customer. Nut and trail mix sales volume was negatively impacted by lower sales to several existing customers driven by category softness in snack and trail mix products along with peanuts, reduced promotional activity and the impact of previously lost business. These declines were partially offset by new business at a grocery retailer and additional recipe nut sales volume at three existing customers.

Net sales in the commercial ingredients distribution channel decreased $0.2 million, or 0.7%, and sales volume increased by 3.7% in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026. The sales volume increase was due to increased sales of peanut crushing stock to peanut oil processors. Foodservice sales increased modestly due to new business, customer growth and favorable order timing. These increases were partially offset by lower Industrial sales resulting from planned business exits, lower customer demand and unfavorable order timing.

Net sales in the contract manufacturing distribution channel decreased $0.7 million, or 2.7%, and sales volume increased 41.3% in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026. The increase in sales volume was driven by increased snack nut sales to an existing customer. A granola sales volume opportunity in the prior year did not repeat which partially offset this sales volume increase.

Gross Profit

Gross profit decreased $5.2 million, or 9.6%, to $48.9 million for the first quarter of fiscal 2027, compared to $54.1 million for the first quarter of fiscal 2026. The decrease in gross profit was primarily due to competitive pricing pressure and timing of pricing actions for peanuts, bars and snack and trail mix products. Additionally, manufacturing expenses increased due to higher freight, equipment repairs and maintenance and rent costs compared to the first quarter of fiscal 2026. Our gross profit margin, as a percentage of net sales, decreased to 17.0% for the first quarter of fiscal 2027 compared to 18.1% for the first quarter of fiscal 2026, mainly due to the factors mentioned previously and an unfavorable shift in product mix.

Operating Expenses

Total operating expenses for the first quarter of fiscal 2027 increased $2.5 million, or 9.2%, to $29.6 million. Operating expenses were 10.3% of net sales for the first quarter of fiscal 2027 and 9.1% of net sales for the first quarter of fiscal 2026.

Selling expenses for the first quarter of fiscal 2027 were $19.5 million, an increase of $1.6 million, or 8.9%, from the first quarter of fiscal 2026. The increase was driven by a $0.6 million increase in freight expense, a $0.5 million increase in rent expense and a $0.4 million increase in salary expenses.

Administrative expenses for the first quarter of fiscal 2027 increased $0.9 million, or 9.8%, to $10.1 million, compared to $9.2 million for the first quarter of fiscal 2026. The increase was due to a $1.2 million increase in consulting expense, a $0.3 million increase in legal expense and a $0.3 million increase in compensation related expenses. The increase was partially offset by a $0.6 million decrease in incentive compensation expense and a $0.4 million decrease in food donations.

Income from Operations

Due to the factors discussed above, income from operations was $19.3 million, or 6.7% of net sales, for the first quarter of fiscal 2027, compared to $27.0 million, or 9.0% of net sales, for the first quarter of fiscal 2026.

Interest Expense

Interest expense was $0.7 million for the first quarter of fiscal 2027, compared to $1.0 million for the first quarter of fiscal 2026 due to lower average revolving borrowings under the credit agreement.

Rental and Miscellaneous Expense, Net

Net rental and miscellaneous expense was $0.7 million for the first quarter of fiscal 2027 and $0.6 million for the first quarter of fiscal 2026.

Pension Expense (Excluding Service Costs)

Pension expense (excluding service costs) was $0.4 million for both the first quarter of fiscal 2027 and fiscal 2026.

Income Tax Expense

Income tax expense was $4.4 million, or 25.1% of income before income taxes, for the first quarter of fiscal 2027, compared to $6.3 million, or 25.3% of income before income taxes, for the first quarter of fiscal 2026.

Net Income

Net income was $13.2 million, or $1.12 per common share basic and $1.11 per common share diluted, for the first quarter of fiscal 2027, compared to $18.7 million, or $1.60 per common share basic and $1.59 per common share diluted, for the first quarter of fiscal 2026.