John B. Sanfilippo & Son, Inc. — Fiscal 2027 First Quarter Earnings Summary

Financial Performance:

• Net sales decreased 3.5% year-over-year to $288.1 million, driven by a 3.6% decline in weighted average selling price per pound.
• Gross profit decreased 9.6% to $48.9 million, with gross profit margin declining to 17.0% from 18.1% in the prior year's first quarter.
• Diluted earnings per share (EPS) decreased 30.2% to $1.11, compared to $1.59 in the prior year period; however, this represents a more than 50% improvement over the fourth quarter of fiscal 2026.
• Total operating expenses increased $2.5 million to $29.575 million, rising to 10.3% of net sales from 9.1% in the prior year.
• Net income was $13.168 million, down from $18.726 million in the prior year quarter.
• Income from operations decreased to $19.329 million from $27.017 million in the prior year.
• Cash on hand increased to $2.019 million at quarter-end from $1.147 million at the end of the prior fiscal year's first quarter.
• Revolving credit facility borrowings increased to $56.035 million from $33.615 million in the prior quarter.
• Total inventories remained consistent at $235.104 million, though the weighted average cost per pound of raw nut and dried fruit input stock decreased 20.6% year-over-year.

Guidance and Future Outlook:

• Management expects to replace a significant portion of lost Consumer channel volume with incremental Contract Manufacturing volume, noting this shift will result in a less favorable sales mix.
• The company is actively responding to category trends and focusing on initiatives to improve category performance and drive growth in the Consumer business.
• A strategic consulting engagement recently completed has reinforced the long-term growth plan and identified opportunities to accelerate growth.
• Management is evaluating its cost structure to maximize efficiency and prioritize resources in response to evolving market conditions.
• The company anticipates continued strong consumer demand and category growth for protein-forward bar offerings.

Business Segments and Product Lines:

• Consumer Distribution Channel: Sales volume decreased 6.7%, primarily due to a 6.3% reduction in private brand sales volume driven by lower nut, trail mix, and bar volumes.
• Commercial Ingredients Distribution Channel: Sales volume increased 3.7%, driven by increased peanut crushing stock sales to oil processors and modest foodservice growth from new business and favorable order timing.
• Contract Manufacturing Distribution Channel: Sales volume surged 41.3%, mainly driven by increased snack nut sales to a significant new customer added in the prior year's second quarter.
• Product Mix: Weighted average selling prices decreased for walnuts, trail/snack mixes, and peanuts due to lower commodity acquisition costs, while prices for pecans and almonds increased due to higher commodity costs.
• New Initiatives: Successfully launched a new "better for you" bar offering and expanded bar business with an existing customer.

Market and Competitive Landscape:

• The company operates in a difficult economic environment with competitive pricing pressures affecting peanuts, bars, and snack/trail mix products.
• Category softness in snack and trail mix products and peanuts impacted sales to several existing customers.
• Consumer migration to smaller pack sizes and softness in mainstream bars negatively impacted bar sales.
• The company remains aligned with consumer demand for nutritious, "better-for-you" snacks.

Risks and Challenges:

• Gross profit margins were negatively impacted by competitive pricing pressure, timing of pricing actions, higher freight, equipment repairs, maintenance, and rent costs.
• Sales volume declines were driven by reduced promotional activity, previously lost business, and category softness.
• The shift from Consumer to Contract Manufacturing volume is expected to result in a less favorable sales mix.
• Forward-looking statements highlight risks including changes in raw material availability and costs, global conflict, tariffs, and the inability to pass on price increases to customers.
• Potential risks include product recalls, food safety issues, labor unrest, and disruptions from changing weather patterns affecting raw material availability.

Management Commentary and Tone:

• CEO Jasper B. Sanfilippo, Jr. expressed confidence in navigating near-term challenges in the Consumer channel and maintaining financial strength.
• Management highlighted a "solid start" to fiscal 2027 despite a difficult economic environment and a strong prior year comparison.
• The tone emphasized commitment to profitable growth, operational excellence, and disciplined capital allocation.
• Management noted that sales volume remained flat overall, marking the third consecutive quarter of stable or improving volume performance.

Other Key Points:

• The company will host an investor conference call and webcast on October 29, 2026, at 10:00 a.m. Eastern time.
• John B. Sanfilippo & Son, Inc. will present at the Southwest IDEAS conference in Dallas, Texas, on November 18, 2026.
• The company sells products under Fisher®, Orchard Valley Harvest®, Squirrel Brand®, and Southern Style Nuts® brand names, as well as private brands.
• Total assets increased to $673.023 million at the end of the quarter from $658.581 million in the prior quarter.
• Long-term debt (less current maturities) decreased to $42.791 million from $43.567 million in the prior quarter.