John B. Sanfilippo & Son Q2 Earnings Call Highlights

John B. Sanfilippo & Son (NASDAQ:JBSS) reported second-quarter fiscal 2026 results that management said reflected record top-line growth and a roughly 32% increase in diluted earnings per share, driven by disciplined cost management, operational efficiencies, and strategic pricing actions.

Chief Executive Officer Jeffrey Sanfilippo said the company continues to face headwinds from shifting consumer behavior, emerging health and wellness trends, and elevated retail selling prices that have weighed on overall sales volume. He added that the company’s product portfolio aligns with health and wellness priorities and that it is expanding its innovation pipeline to capture growth opportunities. Sanfilippo also pointed to a recent reduction in trade tariffs on most imported nuts, primarily cashews, which he said should help lower selling prices of certain products over time and support future demand.

Quarterly sales rose on price, offset by volume declines

Chief Financial Officer Frank Pellegrino said net sales increased 4.6% to $314.8 million, compared with $301.1 million in the second quarter of fiscal 2025. The increase was driven by a 15.8% rise in weighted average sales price per pound, partially offset by a 9.7% decline in sales volume (pounds sold).

Pellegrino attributed the higher selling price primarily to higher commodity acquisition costs across all major tree nuts and peanuts. He noted that the company’s “core business of walnuts, almonds, and pecans achieved volume growth,” but overall volume fell due to declines in other areas—especially a reduction in opportunistic granola volume in the contract manufacturing channel.

In the consumer distribution channel, sales volume fell 8.4%, primarily due to a 7.9% drop in private brand sales. The company cited lower private label bar volumes and, to a lesser extent, declines in nuts and trail mix. Nuts and trail mix volumes were affected by higher retail prices and softer demand, including customer downsizing and reduced distribution at a major mass merchandiser, though these declines were partially offset by new business with an existing customer and improved performance at another mass merchandiser.

Bar sales declined as the prior year’s volume benefited from low industry-wide inventory levels and a national brand recall that temporarily increased private label demand. A strategic reduction in sales to one grocery retailer also contributed to the bar volume decline, management said.

On the branded side, Pellegrino said net sales were pressured by lost distribution for Orchard Valley Harvest at a major non-food customer and by the timing of Fisher Snack promotions at another major non-food customer.

Profitability improved on pricing alignment and efficiencies

Gross profit increased $6.9 million, or 13.2%, to $59.2 million versus the year-ago quarter. Management said the improvement was driven by higher net sales, selling prices that were more closely aligned with commodity acquisition costs compared to the prior-year period, and reduced manufacturing spending and operational efficiencies.

Gross margin rose to 18.8% of net sales from 17.4% a year earlier. Operating expenses were “substantially flat,” increasing $300,000, with higher incentive compensation largely offset by lower marketing, freight, third-party warehouse, and compensation costs. As a percentage of sales, operating expenses decreased to 10.5% from 10.9%.

Interest expense declined to $500,000 from $800,000. Net income rose to $18.0 million, or $1.53 per diluted share, compared with $13.6 million, or $1.16 per diluted share, in the second quarter of fiscal 2025.

Inventory levels increased with commodity costs and planned demand

Pellegrino said inventories at quarter-end increased $29.6 million, or 14.4%, versus the prior-year comparable quarter. The increase was attributed to higher commodity acquisition costs across most major nut types (except peanuts and in-shell walnuts) and greater on-hand quantities of work-in-process and finished goods to support forecasted demand.

The weighted average cost per pound of raw nut and dried fruit increased 11.8% year over year, driven mainly by higher acquisition costs for most major nut types, partially offset by lower peanut costs and lower on-hand quantities of almonds and cashews.

Year-to-date results showed higher margins and earnings

For the first two quarters of fiscal 2026, net sales increased 6.3% to $613.5 million, driven by a 12.2% increase in weighted average selling price per pound, partially offset by a 5.3% decline in volume. The volume decline reflected lower sales in consumer and contract manufacturing channels, partly offset by growth in commercial ingredients.

Year-to-date gross margin increased to 18.5% from 17.1% a year earlier. Management said the improvement reflected similar factors to the quarterly results, as well as a one-time pricing concession in the prior year’s first quarter to a bar customer that did not recur.

Net income for the first two quarters of fiscal 2026 was $36.7 million, or $3.12 per diluted share, compared with $25.3 million, or $2.16 per diluted share, in the prior-year period. Interest expense for the first two quarters rose to $1.5 million from $1.3 million.

Strategic initiatives: bar capacity expansion, OFG productivity, and customer wins

Jeffrey Sanfilippo highlighted the company’s focus on accelerating its snack and energy bar business, noting that while certain bar segments are soft, “protein-forward” bars are performing strongly. He said approximately 85% of new bar equipment is on-site or in transit, and the company remains on schedule to begin production using the new equipment in July 2026.

During the Q&A, Chief Operating Officer Jasper Sanfilippo said equipment is already being delivered to company facilities, with remaining equipment from Europe “on water or getting created to come on the water.” He said management is familiar with the selected manufacturers and confident in equipment performance, adding that company engineers have visited and tested equipment during the manufacturing process.

Management also discussed its “Optimize for Growth” (OFG) initiatives to drive cost optimization and efficiency improvements across operations, supply chain, pricing, trade spending, and formula development. The company’s commercial teams are working to stabilize volumes and return to volume growth through stronger programs with existing partners, customer diversification, and product and packaging innovation.

In addition, Jeffrey Sanfilippo said the company paid a special dividend of $1 per share at the start of the third quarter, citing a strong financial position and disciplined capital allocation, while also pursuing one of the largest capital expenditure programs in company history.

On pricing cadence, management said price reviews with most retailers typically occur on a six-month cycle, and once changes are initiated—particularly for branded products—it generally takes 60 to 90 days to implement price changes.

Looking ahead to the second half of fiscal 2026, Jeffrey Sanfilippo said the company is cautiously optimistic, citing recent commercial momentum, new and expanded business wins, expanded distribution in food service, and continued development of contract manufacturing platforms. He also acknowledged ongoing risks from the economic and operating environment and potential demand softness.

About John B. Sanfilippo & Son (NASDAQ:JBSS)

John B. Sanfilippo & Son, Inc is a family‐held processor and marketer of tree nuts and snack nut products. Headquartered in Elgin, Illinois, the company operates manufacturing facilities, processing plants and sales offices across the United States and abroad. It supplies a broad range of channels, including retail, foodservice, industrial and private‐label customers.

The company’s product portfolio spans in‐shell and shelled pecans, walnuts, almonds, cashews, pistachios and peanuts, as well as mixed‐nut blends, chocolate‐covered treats, granolas and specialty snack items.