SANFILIPPO JOHN B & SON INC Q1 FY2025 earnings call

• Sales volume increased 24.5% to 91.2 million pounds across all channels.
• Consumer distribution channel had strongest quarterly sales volume growth in 8 quarters excluding Lakeville acquisition impact.
• Profitability impacted by one-time concession to snack bar customer due to Lakeville facility capacity constraints, but constraints resolved; focus on cost savings and operational efficiency.
• Expanded manufacturing footprint with a 446,000 square foot facility in Huntley, IL; already shipping large customers from new distribution center.
• Consumers shifted to value-focused retailers like club stores; teams expanded retail distribution in club channel, OVH brand gained rotations at key club retailer, new innovative snacks in Dec.
• R&D created innovative snack products, sales teams built partnerships with key retailers; focus on operational efficiencies, supply chain optimization, and AI use.

Net sales for the first quarter of fiscal 2025 increased 18% to $276.2 million compared to $234.1 million in fiscal 2024. Net sales included ~$40.5M from the Lakeville acquisition. Excluding the acquisition, net sales increased $1.6M or 0.7% due to slight volume increase and weighted average sales price per pound. Consumer distribution channel: sales volume increased 30.8% with Lakeville, 3.4% excluding; private brand sales volume up 36.1% excluding acquisition. Commercial ingredients channel: sales volume up 1.2% due to Lakeville, 0.6% down excluding. Contract manufacturing distribution channel: up 13.3% due to Lakeville granola, 19.8% down excluding. Gross profit decreased by $10.5M or 18.4% to $46.5M, including $400k positive impact from Lakeville acquisition.

• Continue to focus on operational efficiencies and optimizing supply chain.
• AI projects to be executed in coming fiscal quarters.
• Need to align costs with selling prices due to significant commodity cost increases (chocolate, cashews, almonds, walnuts).
• Main priorities: optimize commodity acquisition costs and selling price alignment, drive category growth for snack and trail mix, increase snack and nutrition bar distribution, identify additional operational efficiencies.

• Category challenged by increasing commodity costs and corresponding selling prices in coming quarters.
• Capacity constraints and increased expenses at Lakeville were issues but resolved, but focus remains on cost savings.
• Competitive pricing pressures and strategic pricing decisions impacted gross profit.
• Soft consumer demand and rotational distribution affected contract manufacturing volume in the channel.