John B. Sanfilippo & Son, Inc. Q1 FY2026 earnings call

• Began the fiscal year with strong momentum, executing Long-Range Plan with discipline. Delivered 59% improvement in diluted earnings per share. - Declared a special cash dividend of $1 per share. - Addressed nut commodity cost increases and cocoa high prices by offering customer options like pack size changes. - Prioritized resources for better forecasting and order planning with retail partners. - Overcame capacity constraints from last year, service levels exceeded expectations. - Expanded manufacturing footprint in Huntley, Illinois, with new lines for snack and protein bars on track. - Expanded retail distribution in club and alternative channels, OVH brand gaining traction. - Focused on product and portfolio innovation to stay relevant with Gen Z and mainstream consumers, shifted to digital marketing.

Net sales for the first quarter of fiscal 2026 increased by 8.1% to $298.7 million compared to $276.2 million in the prior year period. The increase was due to an 8.9% rise in weighted average sales price per pound, offset by a 0.7% decline in sales volume (pounds sold). Sales volume declined across most product types except peanuts, walnuts, and pecans. Consumer distribution channel sales volume decreased 5.1% mainly due to private brand sales drops. Commercial ingredients distribution channel saw a 12.8% sales volume increase, and contract manufacturing distribution channel had an 18.4% increase. Gross profit increased by $7.6 million or 16.2% to $54.1 million, with gross profit margin rising to 18.1% from 16.9% in the prior year.

• Continue to focus on growing sales volume, delivering best-in-class service and value to customers, and driving ongoing improvements in profitability. - Optimize commodity acquisition costs and align selling prices. - Drive category growth for snack and trail mix. - Increase snack and nutrition bar distribution. - Identify additional operational efficiencies.

• Consumer behavior changes and broader macroeconomic shifts impacting snack food environment. - Significant nut commodity cost increases and high cocoa prices. - Retailer portfolio changes and lost distribution. - Challenging demand planning when markets are volatile.

Q: Talking about the snack bar business, the decline you saw, is that because of consumer behavior or because of the customer, the mass merchants and retailers and so forth?

A: So it really was driven by consumer behavior. Had great overall strong back-to-school volume but saw declines in a key bar segment not anticipated. Also, General Mills came back online with Quaker Chewy Granola Bars, and strong growth in private brand bar category.

Q: And as far as the dividend is concerned, are you expected to just pay that out of cash flow? Or so this coming quarter is going to be high in cash flow? Or are you going to be going into debt for it?

A: It will be mainly from our cash flow.

Q: You were talking about some increase in demand in certain nuts. Is that coming from just the consumer preferring because they're cheaper alternatives versus the other nut categories?

A: Typically, if price inflation, shift from higher cost nuts like cashews to cheaper trail mix or peanuts. Seen some shift this year. Also, some consumers left snack nut category due to higher prices vs cheaper alternatives like potato chips, but total snack category stabilizing, hopeful to get consumers back.