Sanfilippo John B & Son Inc: Form 10-Q for the period ended Dec 25, 2025

OVERVIEW

The following discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements.

Our fiscal year ends on the final Thursday of June each year, and typically consists of fifty-two weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows:

• References herein to fiscal 2026 and fiscal 2025 are to the fiscal year ending June 25, 2026 and the fiscal year ended June 26, 2025, respectively.
• References herein to the second quarter of fiscal 2026 and fiscal 2025 are to the quarters ended December 25, 2025 and December 26, 2024, respectively.
• References herein to the first half or first twenty-six weeks of fiscal 2026 and fiscal 2025 are to the twenty-six weeks ended December 25, 2025 and December 26, 2024, respectively.

As used herein, unless the context otherwise indicates, the terms “we”, “us”, “our” or “Company” collectively refer to John B. Sanfilippo & Son, Inc. and our wholly-owned subsidiary, JBSS Ventures, LLC.

We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds and other nuts in the United States. We also manufacture and distribute a portfolio of snack and nutrition bars (“bars”), and market and distribute, and in most cases, manufacture or process, a diverse product line of other food and snack products, including peanut butter, almond butter, cashew butter, candy and confections, snack and trail mixes, granola, sunflower kernels, dried fruit, corn snacks, sesame sticks, other sesame snack products and baked cheese snack products. We primarily sell our products under a variety of private brand names, as well as under our Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts and Just the Cheese brand names. Our products are sold through three core distribution channels, including food retailers in the consumer channel, commercial ingredient users and contract manufacturing customers.

Our Long-Range Plan defines our future growth priorities, focused on accelerating our private brand business with key customers in high-growth snacking categories, most notably private brand bars, while expanding branded distribution behind Orchard Valley Harvest and Fisher via insight-driven product and packaging innovation. Execution of this plan is anchored in delivering value-added solutions and high-quality, innovative products based on our extensive industry and consumer expertise. Growth in private brand bars will be supported by capacity expansion and a robust innovation pipeline, with continued focus on nutrition bars. For our branded nut & trail mix business, we are focused on attracting new consumers through product innovation, broader distribution across traditional and alternative channels and expanded purchasing occasions, including club stores and e-commerce. Promotional and advertising investments are being prioritized to drive volume growth, supported by an omni-channel strategy across recipe nuts, snack nuts and trail mix. Our Long-Range Plan includes growth through product and packaging innovation and targeted, opportunistic acquisitions. To support these initiatives, beginning in the second quarter of fiscal 2025 and continuing into fiscal 2026, we are making incremental significant capital investments in equipment and infrastructure improvements to expand our production capabilities, improve efficiency and enhance product offerings for our customers.

We continue to face ongoing operational and regulatory challenges, including food safety and compliance requirements, maintaining and expanding our customer base and driving growth across private brand and branded categories. Shifts or declines in consumer demand within a highly competitive snack product environment, combined with macroeconomic uncertainty, could adversely impact our ability to execute our Long-Range Plan.

Additional challenges include, higher food and input costs driven by increasing underlying commodity acquisition costs as well as the actual, potential or threatened U.S. and foreign tariffs on key commodities, raw materials and manufacturing equipment. Ongoing uncertainty around interest rates may further impact economic growth and consumer spending resulting in reduced demand for private brand and branded snack products, including snack nuts, trail mix and bars. We also continue to operate amid intense industry competition, potential economic downturns in the markets in which we operate and ongoing supply chain volatility. To stay compliant with recent changes in employment laws across states where we operate and remain competitive in attracting qualified talent, we expect our labor costs to continue to increase.

Inflation and Consumer Trends

We continue to face changing marketplace trends that are impacting our categories. Retail prices across snack nuts and trail mix have risen due to increased commodity costs and evolving global trade agreements. These higher prices, paired with general economic uncertainty, are causing consumers to purchase fewer snack products. As a result, sales volumes for snack nuts, recipe nuts, trail mix and bars are declining for the Company and the industry overall. Many consumers are shifting to private brands, more affordable nuts or bars or choosing snacks outside these categories altogether. Consumers are also shifting to more value-focused retailers, such as mass merchandising retailers and club stores, not all of which we distribute or sell to. Additionally, emerging health and wellness trends and priorities may also impact consumers' purchasing behavior, including decreased purchasing of snack foods. In response, we are focusing on our strengths by leveraging our expertise in snack nut and trail mix and bars categories, improving efficiency, innovating in product and packaging and carefully managing trade spending and pricing to support our products.

Tariffs, Supply Chain and Transportation

Global supply chain pressures have eased compared to past fiscal years, but intermittent challenges, delays and extended lead-times still exist for certain raw materials and inputs. Overall packaging and ingredient inflation appears to have moderated into our fiscal 2026, but there is still uncertainty within the supply chain from the U.S. government's tariffs on imports from foreign countries and corresponding retaliatory tariffs from foreign countries. Any incremental import tariffs will increase the cost of certain raw materials we use in our business and our financial performance may be adversely impacted if we cannot pass on the cost increases in the form of price increases to our customers. In November 2025, the U.S. government removed tariffs for several food categories, including cocoa and cashews among others, which have no domestic production. The ultimate impact of tariffs may be difficult to predict as their amount and duration is uncertain, making our planning process more difficult. The threat of tariffs may also have adverse implications to our business and the business of our suppliers and customers. While we do not have direct exposure to suppliers in Venezuela, Russia, Ukraine or Israel, the conflicts and prospects for conflict in these regions could continue to result in volatile commodity markets, supply chain disruptions and increased costs, including shipping costs.

Trucking capacity continues to slowly decline, potentially leading to further instability in the transportation industry. While indicators suggest transportation prices are stabilizing, the overall transportation environment remains unpredictable. Additionally, fuel prices have been unpredictable and may vary depending on the level of economic activity in the areas where we ship and receive shipments and the prevailing price of oil.

Our most significant ingredient requirements include cocoa products, dried fruits, sweeteners, vegetable oils, rolled oats, flour and dairy. Many of these materials and their associated costs are subject to price fluctuations from several factors, including changing commodity markets, other market conditions, demand for raw materials, weather, growing and harvesting conditions, climate change, energy costs, currency fluctuations, supplier capacities, governmental actions, import and export requirements (including tariffs), ongoing political instability and other factors beyond our control.

We focus on remaining agile by identifying risks proactively, modifying inventory and production plans and diversifying our supplier base to mitigate risk of customer order shortages and our supply chain. We continue to proactively manage our business in response to the evolving global economic environment and related uncertainties and intend to take steps to further mitigate impacts to our supply chain as they develop. If unforeseen supply chain pressures emerge or worsen, or we cannot obtain the transportation and labor services needed to obtain raw materials or fulfill customer orders, such shortages and supply chain issues could have an unfavorable impact on net sales and our operations in the remainder of fiscal 2026.

The cocoa supply-demand outlook is showing signs of improvement following three consecutive years of supply deficits, benefiting from recovery in Ivory Coast and Ghana as well as strong exports from Ecuador; however, cocoa prices still remain above long-term averages. Global cocoa supply balances remain historically tight, while consumption data reflects North American demand reductions amid higher prices. Additionally, as costs increase due to these circumstances or due to overall inflationary pressures, there is a further risk we cannot pass (in part or in full) such potential cost increases on to our customers or in a timely manner. If we cannot align our input costs with prices for our products, our financial performance could be impacted adversely.

QUARTERLY HIGHLIGHTS

Our net sales of $314.8 million for the second quarter of fiscal 2026 increased $13.7 million, or 4.6%, from our net sales of $301.1 million for the second quarter of fiscal 2025. Net sales for the first twenty-six weeks of fiscal 2026 increased by $36.2 million, or 6.3%, to $613.5 million compared to the first twenty-six weeks of fiscal 2025.

Sales volume, measured as pounds sold to customers, decreased 9.7% compared to the second quarter of fiscal 2025. Sales volume for the first twenty-six weeks of fiscal 2026 decreased 5.3% compared to the first twenty-six weeks of fiscal 2025.

Gross profit increased $6.9 million, and our gross profit margin, as a percentage of net sales, increased to 18.8% for the second quarter of fiscal 2026, compared to 17.4% for the second quarter of fiscal 2025. Gross profit increased $14.5 million, and our gross profit margin increased to 18.5% from 17.1% for the first twenty-six weeks of fiscal 2026 compared to the first twenty-six weeks of fiscal 2025.

Total operating expenses for the second quarter of fiscal 2026 increased by $0.3 million, or 0.9%, compared to the second quarter of fiscal 2025. As a percentage of net sales, total operating expenses in the second quarter of fiscal 2026 decreased to 10.5% from 10.9% for the second quarter of fiscal 2025. Total operating expenses for the first twenty-six weeks of fiscal 2026 decreased by $2.1 million, or 3.4%, compared to the first twenty-six weeks of fiscal 2025. As a percentage of net sales, total operating expenses for the first twenty-six weeks of fiscal 2026 decreased to 9.8% from 10.8% for the first twenty-six weeks of fiscal 2025.

The total value of inventories on hand at the end of the second quarter of fiscal 2026 increased $29.6 million, or 14.4%, compared to the total value of inventories on hand at the end of the second quarter of fiscal 2025.

We have seen acquisition costs for most major nut types, except for walnuts and peanuts, increase in the 2025 crop year (which falls into our current 2026 fiscal year). We completed procurement of inshell walnuts during the first half of fiscal 2026. During the third quarter, we will determine the final prices to be paid to the walnut growers based upon current market prices and other factors such as crop size and export demand. We have estimated the liability to our walnut growers and our walnut inventory costs using currently available information. Any difference between our estimated liability and the actual payments will be determined during the third quarter of fiscal 2026 and will be recognized in our financial results at that time.

RESULTS OF OPERATIONS

Net Sales

In the second quarter of fiscal 2026, our net sales increased 4.6% to $314.8 million, compared to net sales of $301.1 million for the second quarter of fiscal 2025. The net sales increase was primarily driven by a 15.8% increase in weighted average selling price per pound, which was primarily due to higher commodity acquisition costs for all major tree nuts and peanuts. Sales volume, which is defined as pounds sold to customers, decreased 9.7%. Sales volume decreased for all major product types. Approximately half of the sales volume decline was attributable to granola sold in the contract manufacturing channel, which was offset by increases of sales volume of walnuts, almonds and pecans.

For the first twenty-six weeks of fiscal 2026 our net sales were $613.5 million, an increase of $36.2 million, or 6.3%, compared to the same period of fiscal 2025. The increase in net sales was attributable to a 12.2% increase in the weighted average selling price per pound, which was primarily due to higher commodity acquisition costs for all major tree nuts. Sales volume decreased 5.3% compared to the same period in the prior fiscal year. Sales volume decreased for bars, granola, trail mix and cashews, while sales volume for walnuts, peanuts, pecans and almonds increased.

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):

(1) Sales of branded products were approximately 20% and 21% of total consumer sales during the second quarter of fiscal 2026 and fiscal 2025, respectively. Fisher branded products were approximately 78% and 72% of branded sales during the second quarter of fiscal 2026 and fiscal 2025, respectively, with Orchard Valley Harvest and Southern Style Nuts branded products accounting for the majority of the remaining branded product sales.

The following table shows a comparison of net sales by distribution channel (dollars in thousands):

(1) Sales of branded products were approximately 17% and 19% of total consumer sales during the first twenty-six weeks of fiscal 2026 and fiscal 2025, respectively. Fisher branded products were approximately 74% and 66% of branded sales during the first twenty-six weeks of fiscal 2026 and fiscal 2025, respectively, with Orchard Valley Harvest and Southern Style Nuts branded products accounting for the majority of the remaining branded product sales.

Net sales in the consumer distribution channel increased $11.8 million, or 4.7%, and sales volume decreased 8.4% in the second quarter of fiscal 2026, compared to the second quarter of fiscal 2025. The sales volume decrease was driven by a 7.9% decrease in private brand sales volume due to lower volume in bars and, to a lesser extent, nuts and trail mix. Nuts and trail mix volume was impacted by higher retail prices, soft demand, including consumer downsizing, and reduced distribution at a major mass merchandiser. These declines were partially offset by new business with an existing customer and improved performance at another mass merchandiser. Bar sales declined as prior year's volumes were elevated by low industry-wide inventory levels and the lingering impact of a national brand recall, which temporarily boosted private label bars demand. A strategic reduction in sales to one grocery retailer also contributed to the bars decline. Branded sales volume decreased 11.2% due to lost distribution of Orchard Valley Harvest at a major non-food customer and the timing of Fisher snack promotions also at a major non-food customer.

In the first twenty-six weeks of fiscal 2026, net sales in the consumer distribution channel increased $24.5 million, or 5.1%, and sales volume decreased 6.8% compared to the same period of fiscal 2025. The sales volume decrease was driven by a 5.5% decrease in private brand sales volume due to lower volume in nuts and trail mix, bars and peanut butter. Nuts and trail mix volume was impacted by higher retail prices, consumer downsizing, soft demand and reduced distribution at a major mass merchandiser. These nuts and trail mix declines were partially offset by new business with an existing customer. Private brand bars declined due the reasons cited in the quarterly comparison, which were partially offset by growth at a current customer. Peanut butter declined due to a product discontinuation at a mass merchandiser. Branded sales volume decreased 14.5% due to lost distribution of Orchard Valley Harvest cited in the quarterly comparison.

Net sales in the commercial ingredients distribution channel increased $1.4 million, or 5.3%, and sales volume decreased by 1.1% in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025.

In the first twenty-six weeks of fiscal 2026, net sales in the commercial ingredients distribution channel increased $5.7 million, or 10.7%, and sales volume increased 5.8% compared to the same period of fiscal 2025. The sales volume increase was mainly driven by increased sales of peanut crushing stock to peanut oil processors, new business at one customer and higher peanut butter volume at existing food service customers.

Net sales in the contract manufacturing distribution channel increased $0.5 million, or 2.2%, and sales volume decreased 26.5% in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. The decrease in sales volume was due to decreased granola processed at the Lakeville facility, which was partially offset by increased snack nut sales to a customer added during the second quarter of the prior year.

In the first twenty-six weeks of fiscal 2026, net sales in the contract manufacturing distribution channel increased $6.0 million, or 13.9%, and sales volume decreased 7.6% compared to the same period of fiscal 2025. The sales volume decrease was due to the reasons cited in the quarterly comparison along with lower peanut and peanut butter to a major customer. This was partially offset by the same increase cited in the quarterly comparison.

Gross Profit

Gross profit increased $6.9 million, or 13.2%, to $59.2 million for the second quarter of fiscal 2026, compared to $52.3 million for the second quarter of fiscal 2025. The increase in gross profit was due primarily to higher net sales and selling prices more closely aligned with commodity acquisition costs compared to the second quarter of fiscal 2025. Additionally, reduced manufacturing spending and operational efficiencies contributed to the overall gross profit increase. Our gross profit margin, as a percentage of net sales, increased to 18.8% for the second quarter of fiscal 2026 compared to 17.4% for the second quarter of fiscal 2025, mainly due to the factors mentioned previously.

Gross profit was $113.3 million for the first twenty-six weeks of fiscal 2026 compared to $98.8 million for the first twenty-six weeks of fiscal 2025 for the same reasons cited in the quarterly comparison. Our gross profit margin, as a percentage of net sales, increased to 18.5% for the first twenty-six weeks of fiscal 2026 compared to 17.1% for the first twenty-six weeks of fiscal 2025 mainly due to the factors mentioned previously and a one time pricing concession in the first quarter of fiscal 2025 for a bars customer which did not recur in fiscal 2026.

Operating Expenses

Total operating expenses for the second quarter of fiscal 2026 increased $0.3 million, or 0.9%, to $33.2 million. Operating expenses decreased to 10.5% of net sales for the second quarter of fiscal 2026, compared to 10.9% of net sales for the second quarter of fiscal 2025.

Selling expenses for the second quarter of fiscal 2026 were $21.1 million, a decrease of $1.5 million, or 6.5%, from the second quarter of fiscal 2025. The decrease was driven by a $0.7 million decrease in third-party warehouse costs, a $0.6 million decrease in advertising and consumer insight research expense, a $0.6 million decrease in freight expense, and a $0.7 million decrease in salary and equity compensation expenses. These were partially offset by a $1.4 million increase in incentive compensation expense.

Administrative expenses for the second quarter of fiscal 2026 increased $1.8 million, or 17.4%, to $12.1 million, compared to $10.3 million for the second quarter of fiscal 2025. The increase was due to a $2.3 million increase in incentive compensation expense slightly offset by a $0.5 million decrease in loss on asset disposals.

Total operating expenses for the first twenty-six weeks of fiscal 2026 decreased by $2.1 million, or 3.4%, to $60.3 million. Operating expenses as a percentage of net sales decreased to 9.8% for the first twenty-six weeks of fiscal 2026, compared to 10.8% for the first twenty-six weeks of fiscal 2025.

Selling expenses for the first twenty-six weeks of fiscal 2026 were $39.0 million, a decrease of $3.4 million, or 8.1%, from the first twenty-six weeks of fiscal 2025. The decrease was driven primarily by a $2.0 million decrease in advertising and consumer insight research expense, a $1.4 million decrease in third-party warehouse costs, a $1.2 million decrease in freight expense and a $1.0 million decrease in salary expense. These were partially offset by a $1.7 million increase in incentive compensation expense and a $0.6 million increase in commissions expense.

Administrative expenses for the first twenty-six weeks of fiscal 2026 increased $1.3 million, or 6.5%, to $21.2 million compared the first twenty-six weeks of fiscal 2025. The increase was primarily due to a $2.9 million increase in incentive compensation expense. This was partially offset by a $0.6 million decrease in personnel and recruitment expenses and a $0.6 million decrease in loss on asset disposals.

Income from Operations

Due to the factors discussed above, income from operations was $26.0 million, or 8.3% of net sales, for the second quarter of fiscal 2026, compared to $19.4 million, or 6.4% of net sales, for the second quarter of fiscal 2025.

Due to the factors discussed above, income from operations was $53.0 million, or 8.6% of net sales, for the first twenty-six weeks of fiscal 2026, compared to $36.4 million, or 6.3% of net sales, for the first twenty-six weeks of fiscal 2025.

Interest Expense

Interest expense was $0.5 million for the second quarter of fiscal 2026, compared to $0.8 million for the second quarter of fiscal 2025 due to lower average debt levels.

Interest expense was $1.5 million for the first twenty-six weeks of fiscal 2026, compared to $1.3 million for the first twenty-six weeks of fiscal 2025.

Rental and Miscellaneous Expense, Net

Net rental and miscellaneous expense was $0.6 million for the second quarter of fiscal 2026, compared to $0.3 million for the second quarter of fiscal 2025, primarily due to the departure of a tenant upon lease expiration at our Elgin Site.

Net rental and miscellaneous expense was $1.2 million for the first twenty-six weeks of fiscal 2026, compared to $0.8 million for the first twenty-six weeks of fiscal 2025.

Pension Expense (Excluding Service Costs)

Pension expense (excluding service costs) was $0.4 million for both the second quarter of fiscal 2026 and fiscal 2025.

Pension expense (excluding service costs) was $0.8 million for the first twenty-six weeks of fiscal 2026, compared to $0.7 million for the first twenty-six weeks of fiscal 2025.

Income Tax Expense

Income tax expense was $6.6 million, or 26.7% of income before income taxes, for the second quarter of fiscal 2026, compared to $4.3 million, or 24.0% of income before income taxes, for the second quarter of fiscal 2025. The increase in the effective tax rate is primarily due to an increase in the disallowed deduction related to officer compensation.

Income tax expense was $12.9 million, or 26.0% of income before income taxes, for the first twenty-six weeks of fiscal 2026 compared to $8.4 million, or 24.9% of income before income taxes, for the first twenty-six weeks of fiscal 2025. The increase in the effective tax rate is primarily due to the reason cited in the quarterly comparison.

Net Income

Net income was $18.0 million, or $1.54 per common share basic and $1.53 per common share diluted, for the second quarter of fiscal 2026, compared to $13.6 million, or $1.17 per common share basic and $1.16 per common share diluted, for the second quarter of fiscal 2025.

Net income was $36.7 million, or $3.14 per common share basic and $3.12 per common share diluted, for the first twenty-six weeks of fiscal 2026, compared to $25.3 million, or $2.17 per common share basic and $2.16 per common share diluted, for the first twenty-six weeks of fiscal 2025.

LIQUIDITY AND CAPITAL RESOURCES

General

The primary uses of cash are to fund our current operations, fulfill contractual obligations, pursue our Long-Range Plan through growing our branded and private brand nut and bar businesses, consummate and integrate business acquisitions, return cash to our stockholders through dividends, repay indebtedness and pay amounts owed under the Retirement Plan. Also, various uncertainties, including cost uncertainties, could result in additional or unexpected uses of cash. The primary sources of cash are results of operations and availability under our Credit Facility. Beginning in the second quarter of fiscal 2025 and continuing throughout fiscal 2026, we will invest approximately $90.0 million in capital expenditures and related expenses, excluding any applicable tariffs, to acquire and install equipment, and make related infrastructure improvements to expand our production capabilities, increase our efficiency and further enhance our product offerings to our customers. Approximately half of these expenditures are payable to equipment vendors located in Europe, and most of those payments will be denominated in foreign currency. Depending on the level of tariffs in place at the time of delivery, and the potential for unfavorable changes in foreign currency exchange rates, the ultimate cost of such equipment purchases could increase significantly. During the fourth quarter of fiscal 2025, we obtained an equipment loan to finance a portion of this capital investment and intend to fund the remainder with borrowings under our Credit Facility or with available cash generated from our operations. We anticipate that expected net cash flow generated from operations and amounts available pursuant to the Credit Facility and the Equipment Loan (as defined below) will be sufficient to fund our operations and capital expenditures for the next twelve months. Our available credit under our Credit Facility has allowed us to reinvest in the Company through capital expenditures, develop new products, pay cash dividends, consummate strategic investments and business acquisitions and explore other growth strategies outlined in our Long-Range Plan.

Cash flows from operating activities have historically been driven by net income but are also significantly influenced by inventory requirements, which can change based upon fluctuations in both quantities and market prices of the various nuts and nut products we buy and sell. Current market trends in nut prices and crop estimates also impact nut procurement.

The following table sets forth certain cash flow information for the first half of 2026 and 2025, respectively (dollars in thousands):

Operating Activities Net cash provided by operating activities was $94.6 million for the first twenty-six weeks of fiscal 2026 compared to $19.9 million for the comparative period of fiscal 2025. The increase in operating cash flow was due primarily to changes in working capital, primarily decreased inventory and accrued expenses, and a higher net income.

Total inventories were $235.4 million at December 25, 2025, a decrease of $19.2 million, or 7.5%, from the inventory balance at June 26, 2025, and an increase of $29.6 million, or 14.4%, from the inventory balance at December 26, 2024. The decrease in inventories at December 25, 2025 compared to June 26, 2025 was due primarily to lower commodity acquisition costs for walnuts and peanuts and lower on-hand quantities of bars and pecans, partially offset by higher commodity acquisition costs for pecans and almonds and higher on-hand quantities of walnuts and cashews. The increase in inventories at December 25, 2025 compared to December 26, 2024 was due primarily to higher commodity acquisition costs across all major nut types except for peanuts and inshell walnuts, as well as greater on-hand quantities of work in process and finished goods inventory to support forecasted demand.

Raw nut and dried fruit input stocks, some of which are classified as work-in-process, decreased 2.7 million pounds, or 4.5%, at December 25, 2025 compared to December 26, 2024 due to lower quantities of walnuts, almonds and cashews on hand. This reduction was offset partially by higher quantities of peanuts and pecans on hand. The weighted average cost per pound of raw nut input stocks on hand at the end of the second quarter of fiscal 2026 increased 11.8% compared to the end of the second quarter of fiscal 2025 due primarily to higher acquisition costs for all major tree nuts except for inshell walnuts, partially offset by lower acquisition cost of peanuts and lower on-hand quantities of almonds and cashews.

Investing Activities Cash used in investing activities was $46.3 million during the first twenty-six weeks of fiscal 2026, compared to $25.6 million for the same period last year. Capital asset purchases were $47.3 million during the first twenty-six weeks of fiscal 2026, compared to $25.5 million for the first twenty-six weeks of fiscal 2025. Partially offsetting the fiscal 2026 cash outflows for capital asset purchases was $1.1 million of net life insurance proceeds received from existing life insurance contracts. We expect total capital expenditures for equipment purchases and upgrades for fiscal 2026 to be approximately $112.0 million based on current foreign currency exchange rates and tariff expectations. This includes all capital expenditures needed for the planned purchase of equipment to expand our production capabilities and related infrastructure improvements as described above, facility maintenance, food safety enhancements and expansion needs for our bars business. We expect to fund these capital purchases through a combination of borrowings under our existing Credit Facility, use of available cash from our operations and an equipment loan financing arrangement obtained in the fourth quarter of fiscal 2025. Absent any additional material acquisitions or other significant investments, we believe that cash on hand, combined with cash provided by operations, borrowings available under the Credit Facility and our equipment loan financing, will be sufficient to meet the cash requirements for planned capital expenditures.

Financing Activities Cash used in financing activities was $46.5 million during the first twenty-six weeks of fiscal 2026, compared to cash provided of $5.6 million for the same period last year. Net repayments under our Credit Facility were $47.6 million during the first twenty-six weeks of fiscal 2026, compared to net borrowings of $29.3 million for the first twenty-six weeks of fiscal 2025. Equipment loan proceeds received were $16.9 million in the first twenty-six weeks of fiscal 2026. Dividends paid in the first twenty-six weeks of fiscal 2026 were approximately $6.9 million less than dividends paid in the same period last year.

Real Estate Matters

In August 2008, we completed the consolidation of our Chicago-based facilities into our Elgin headquarters (“Elgin Site”). The Elgin Site includes both an office building and a warehouse. We are currently attempting to find additional tenants for the available space in the office building at the Elgin Site. Until additional tenant(s) are found, we will not receive the benefit of rental income associated with such space. Approximately 81% of the rentable area in the office building is currently vacant. Approximately 29% of the rentable area has not been built-out. There can be no assurance that we will be able to lease the unoccupied space and further capital expenditures will likely be necessary to lease the remaining space.

In April 2024, the Company executed a 7.5 year lease for approximately 445,000 square feet of warehouse space. The warehouse is located in Huntley, IL near the Elgin Site and is primarily utilized to store finished goods inventory and as a distribution center along with light manufacturing.

On January 15, 2026, the Company executed a 10 year lease for the remaining warehouse space of approximately 285,000 square feet at the Huntley location.

Financing Arrangements

Our Amended and Restated Credit Agreement dated March 5, 2020, as most recently amended on June 16, 2025, provides for a $150.0 million revolving loan commitment and letter of credit subfacility. The Credit Facility has an accrued interest rate based on SOFR plus an applicable margin based upon the borrowing base calculation, ranging from 1.35% to 1.85%. The Credit Facility allows the Company to pay up to $100.0 million in dividends per year, subject to meeting availability test, and is secured by a first priority lien over our accounts receivable and inventory.

Credit Facility

At our election, borrowings under the Credit Facility currently accrue interest at either (i) a rate determined pursuant to the administrative agent’s prime rate plus an applicable margin determined by reference to the amount of loans, which may be advanced under the borrowing base calculation, ranging from 0.25% to 0.75% or (ii) a rate based on SOFR plus an applicable margin as noted above.

At December 25, 2025, the weighted average interest rate for the Credit Facility was 6.7%. The terms of the Credit Facility contain covenants that, among other things, require us to restrict investments, indebtedness, acquisitions and certain sales of assets and limit annual cash dividends or distributions, transactions with affiliates, redemptions of capital stock and prepayment and refinancing of indebtedness (if such prepayment or refinancing, among other things, is of indebtedness under the equipment loan or of a subordinate debt). If loan availability under the borrowing base calculation falls below $25.0 million, we will be required to maintain a specified fixed charge coverage ratio, tested on a monthly basis, until loan availability equals or exceeds $25.0 million for three consecutive months. All cash received from customers is required to be applied against the Credit Facility. The lenders under the Credit Facility have the option to accelerate and demand immediate repayment of our obligations under the Credit Facility in the event of default on the payments required under the Credit Facility, a change in control in the ownership of the Company, non-compliance with the financial covenant or upon the occurrence of other defaults by us under the Credit Facility. As of December 25, 2025, we were in compliance with all covenants under the Credit Facility and we currently expect to be in compliance with the financial covenant in the Credit Facility for the foreseeable future. At December 25, 2025, we had $134.7 million of available credit under the Credit Facility. If this entire amount were borrowed at December 25, 2025, we would still be in compliance with all restrictive covenants under the Credit Facility.

Selma Property

In September 2006, we sold our Selma, Texas properties (the “Selma Properties”) to two related party partnerships for $14.3 million and are leasing them back. The selling price was determined by an independent appraiser to be the fair market value which also approximated our carrying value. The lease for the Selma Properties has a ten-year term at a fair market value rent with three five-year renewal options. In September 2015, we exercised two of the five-year renewal options which extended the lease term to September 2026 and the base monthly lease amount increased to approximately $114,000. On December 30, 2025 we exercised the final remaining five-year renewal option which extended the lease term to September 2031. The base monthly lease payment will increase to approximately $121,000 beginning in October 2026. Also, we have an option to purchase the Selma Properties from the owner at 95% (100% in certain circumstances) of the then fair market value, but not less than the original $14.3 million purchase price. The provisions of the arrangement are not eligible for sale-leaseback accounting and the $14.3 million was recorded as a debt obligation. No gain or loss was recorded on the Selma Properties transaction. As of December 25, 2025, $6.0 million of the debt obligation was outstanding.

Equipment Loan

On June 16, 2025, the Company entered into a financing agreement with Wells Fargo Bank, N.A. which allows the Company to finance up to $50.0 million for the purchase of equipment to further expand our production capabilities, increase our efficiency and further enhance our product offerings to our customers (the “Equipment Loan”). The Equipment Loan is provided under a master loan agreement and related equipment schedule(s) and is secured under a Security Agreement that provides for a first priority lien on all equipment and a second priority lien on our accounts receivable and inventory. The Company will be required to make sixty equal monthly payments comprised of principal and interest starting upon distribution of the final loan proceeds which is expected to occur in the fourth quarter of fiscal 2026. The fixed interest rate (SOFR plus an applicable margin of 1.49%) will be calculated at that point in time as well. The Equipment Loan contains a graded prepayment penalty if the loan is paid off within 36 months of commencement. The Company will make monthly interest-only payments of SOFR plus an applicable margin of 1.60% prior to the delivery and acceptance of the equipment and distribution of the final loan proceeds, which will be capitalized as part of the equipment acquisition cost. As of December 25, 2025, $26.2 million of the debt obligation under the Equipment Loan was outstanding.

Critical Accounting Policies and Estimates

For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the fiscal year ended June 26, 2025.

Recent Accounting Pronouncements

Refer to Note 14 – “Recent Accounting Pronouncements” of the Notes to Consolidated Financial Statements, contained in Part I, Item 1 of this form 10-Q, for a discussion of recently issued and adopted accounting pronouncements.

FORWARD LOOKING STATEMENTS

Some of the statements in this release are forward-looking. These forward-looking statements may be generally identified by the use of forward-looking words and phrases such as “will”, “intends”, “may”, “believes”, “anticipates”, “should” and “expects” and are based on the Company’s current expectations or beliefs concerning future events and involve risks and uncertainties. Consequently, the Company’s actual results could differ materially. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors that affect the subject of these statements, except where expressly required to do so by law. Among the factors that could cause results to differ materially from current expectations are: (i) sales activity for the Company’s products, such as a decline in sales to one or more key customers, or to customers or in the nut and bars categories generally, in some or all channels, a change in product mix to lower price products, a decline in sales of private brand products or changing consumer preferences, including a shift from higher margin products to lower margin products; (ii) changes in the availability and costs of raw materials and ingredients due to tariffs and other import restrictions and the impact of fixed price commitments with customers; (iii) the ability to pass on price increases to customers if commodity costs rise and the potential for a negative impact on demand for, and sales of, our products from price increases; (iv) the ability to measure and estimate bulk inventory, fluctuations in the value and quantity of the Company’s nut inventories due to fluctuations in the market prices of nuts and bulk inventory estimation adjustments, respectively; (v) the Company’s ability to appropriately respond to, or lessen the negative impact of, competitive and pricing pressures; (vi) losses associated with product recalls, product contamination, food labeling or other food safety issues, or the potential for lost sales or product liability if customers lose confidence in the safety of the Company’s products or in nuts or nut products in general, or are harmed as a result of using the Company’s products; (vii) the ability of the Company to control costs (including inflationary costs) and manage shortages or other disruptions in areas such as inputs, transportation and labor; (viii) uncertainty in economic conditions, including the potential for inflation or economic downturn leading to decreased consumer demand; (ix) the timing and occurrence (or nonoccurrence) of other transactions and events, which may be subject to circumstances beyond the Company’s control; (x) the adverse effect of labor unrest or disputes, litigation and/or legal settlements, including potential unfavorable outcomes exceeding any amounts accrued; (xi) losses due to significant disruptions at any of our production or processing facilities, our inability to meet or fulfill customer orders on a timely basis, if at all, or employee unavailability due to labor shortages; (xii) the ability to implement our Long-Range Plan, including growing our branded and private brand product sales, diversifying our product offerings (including by the launch of new products) and expanding into alternative sales channels; (xiii) technology disruptions or failures or the occurrence of cybersecurity incidents or breaches; (xiv) the inability to protect the Company’s brand value, intellectual property or avoid intellectual property disputes; and (xv) our ability to manage the impacts of changing weather patterns on raw material availability due to climate change.

There has been no material change in our assessment of our sensitivity to market risk since our presentation set forth in Part I - Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended June 26, 2025.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of December 25, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 25, 2025, the Company’s disclosure controls and procedures were effective.

In connection with the evaluation by our management, including our Chief Executive Officer and Chief Financial Officer, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended December 25, 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

In addition to the other information set forth in this report on Form 10-Q, you should also consider the factors, risks and uncertainties that could materially affect our Company’s business, financial condition or future results as discussed in Part I, Item 1A – “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 26, 2025. There were no significant changes to the risk factors identified on the Form 10-K for the fiscal year ended June 26, 2025 or during the first twenty-six weeks of fiscal 2026.

See Part I, Item 2 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in this Form 10-Q, and see Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 26, 2025.