Earnings call transcript: John B. Sanfilippo & Son misses Q2 2025 EPS forecast

John B. Sanfilippo & Son Inc. (JBSS) reported its Q2 2025 earnings, revealing a performance below analyst expectations. The company posted earnings per share (EPS) of $1.16, falling short of the forecasted $1.44. Revenue reached $301.1 million, marking a 3.4% increase from the previous year. Following the announcement, shares dropped 13.61% in after-hours trading, reflecting investor disappointment.

Key Takeaways

• EPS of $1.16 missed the forecast of $1.44, leading to a significant stock decline.
• Revenue increased by 3.4% year-over-year to $301.1 million.
• Sales volume rose by 7.1%, but gross profit margin decreased.
• The company plans to implement price increases in early 2025.

Company Performance

John B. Sanfilippo & Son demonstrated growth in sales volume, which increased by 7.1% compared to the same quarter last year. However, the weighted average sales price per pound decreased by 3.4%, impacting the company’s profitability. Despite achieving the highest net sales and largest quarterly sales volume in its history, the company faced challenges with its gross profit margin, which fell to 17.4% from 19.9%.

Financial Highlights

• Revenue: $301.1 million, up 3.4% from $291.2 million in Q2 2024.
• Earnings per share: $1.16, down from $1.64 in Q2 2024.
• Gross profit margin: 17.4%, a decrease from 19.9% in the previous year.

Earnings vs. Forecast

John B. Sanfilippo & Son’s EPS of $1.16 missed the forecasted $1.44 by approximately 19.4%. This miss is significant compared to previous quarters and may have contributed to the negative market reaction.

Market Reaction

Following the earnings report, JBSS shares fell by 13.61% in after-hours trading, closing at $74.83. This decline positions the stock near its 52-week low of $73.05. The market’s response underscores investor concerns over the earnings miss and declining profit margins.

Outlook & Guidance

Looking ahead, John B. Sanfilippo & Son expressed cautious optimism for the second half of fiscal 2025. The company plans to implement price increases in January and February and aims to achieve a historical gross margin per pound of $0.60. The company’s forward EPS forecasts for FY2025 and FY2026 are $5.74 and $5.85, respectively.

Executive Commentary

CEO Jeffrey Sanfilippo highlighted the company’s achievements, stating, "We are pleased to report our largest quarterly sales volume and highest net sales in our company’s history." He also emphasized the company’s focus on long-term shareholder value through strategic initiatives, saying, "We continue to assess our price pack architecture and focus on retailers such as those in the club channel."

Q&A

During the earnings call, analysts inquired about the competitive pricing environment and margin pressures from commodity costs. The company addressed these concerns, noting the strategic pricing adjustments planned and the impact of potential tariffs on pecan imports.

Risks and Challenges

• Competitive pricing pressures could impact profitability.
• Commodity cost fluctuations may affect margins.
• Potential tariffs on pecan imports pose a risk to cost structures.
• The company’s ability to successfully implement price increases remains uncertain.
• Macroeconomic conditions could influence consumer spending and demand for the company’s products.

Full transcript - John B Sanfilippo & Son Inc (NASDAQ:JBSS) Q2 2025:

Lisa, Conference Call Operator, John B. Sanfilippo and Son: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the John B. Sanfilippo and Son Incorporated Second Quarter Fiscal Year 2025 Operating Results Conference Call. Please be advised that today’s conference is being recorded. I would now like to turn the call over to Jeffrey Sanfilippo, CEO.

Please go ahead.

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Thank you, Lisa. Good morning, everyone, and welcome to our 2025 Q2 earnings conference call. Thank you for joining us. On the call with me today is Jasper Sanfilippo, our COO and Frank Pellegrino, our CFO. We may make some forward looking statements today.

These statements are based on our current expectations and may involve certain risks and uncertainties. The factors that could negatively impact results are explained in the various SEC filings that we have made, including our Forms 10 ks and 10 Q. We encourage you to refer to the filings to learn more about these risks and uncertainties that are inherent in our business. We are pleased to report our largest quarterly sales volume and highest net sales in our company’s history

Frank Pellegrino, CFO, John B. Sanfilippo and Son: in the

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Q2. This achievement was driven by the 2nd consecutive quarter of sales volume increases across all three of our distribution channels as we execute our long range plan. Additionally, our bar sales volume increased by approximately 28% over the prior year quarter. We remain encouraged by the sales line growth across our company and are focused on enhancing profitability through operational efficiencies and optimize pricing strategies. Our Fisher recipe brand had a very successful holiday season in Q2 and performed better than the category.

We have a great branded program that complements our retailer’s private bread recipe program to enhance the baking category. Our sales and marketing teams are sharing the success story with our retail partners to demonstrate how Fisher can build their business and are excited about the opportunities to expand our distribution. To support our growth, the company has successfully moved our warehouse distribution in Elgin to the new facility we are leasing in Huntley, Illinois. It was an enormous task to complete the relocation of our customer shipping activities. And I want to thank the leaders in our administration, customer solutions, demand planning, engineering, logistics, IT, operations and warehouse teams for their hard work and dedication to complete this important initiative.

Now that the warehouse distribution move is complete, we have started to expand our production capabilities in Elgin, utilizing the 300,000 square feet of space we freed up. Over the next 18 months, the company will add additional manufacturing capacity to support our growth plans and to provide new innovative product platforms for our customers and consumers. We expect some of this new equipment to be in production by the end of this fiscal year. As we shared in our earnings release, gross profit and margins have been negatively impacted by several factors. Competitive pricing pressure and strategic pricing decisions to maintain and grow our volume brought down average selling prices.

Despite stabilization and inflation rates, there are input costs in our industry that remain elevated and in some cases continue to increase such as chocolate and now walnuts. This created significant margin compression before price increases could be executed. But we have initiated selling price adjustments for all our brands and private brand customers, which take effect in Q3, majority of which will occur in January February. In addition to pricing, the company is also laser focused on cost optimization and organizing our structure and processes for growth. Key areas of opportunity include efficiencies and operations, supply chain, plate, SG and A, commissions, trade spend and business and formula creation.

There are key leaders across the organization reimagining how we do business and go to market. And I’m excited about the margin enhancement initiatives this team will look at and execute. There are common things among other CPG companies in the food space that are navigating this current environment. Consumer behavior shifts where people are increasingly seeking value influenced by economic uncertainties and inflation. This continues to create a shift to discount retailers and smaller pack sizes or bulk purchases during promotions.

We continue to assess our price pack architecture and focus on retailers such as those in the club channel to grow our business and provide consumers with innovative products. I’ll now turn the call over to Frank Pellegrino, our CFO, to provide additional information on our financial performance for our 1st fiscal second fiscal quarter.

Frank Pellegrino, CFO, John B. Sanfilippo and Son: Thank you, Jeffrey. Starting with the income statement.

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Net sales for the

Frank Pellegrino, CFO, John B. Sanfilippo and Son: Q2 of fiscal 2025 increased 3.4 percent to $301,100,000 compared to net sales of $291,200,000 for the Q2 of fiscal 2024. The increase in net sales was due to a 7.1% increase in sales volume, which is defined as pounds sold to customers, which was partially offset by a 3.4% decrease in the weighted average sales price per pound. Decrease in the weighted average selling price primarily resulted from higher sales volume of lower priced bars for NOLA and private brand recipe nuts. Additionally, strategic pricing decisions and competitive pricing pressures contributed to the overall decrease in the weighted average selling prices and contributed to increased sales volume. Sales volume increased 2.9% in the consumer distribution channel, primarily due to a 4% increase in private brand sales volume.

The private brand volume increase was due to a 27.6 percent growth in bars volume from a mass merchandising retailer returning to normalized inventory levels. Sales volume increased 3.4% for our branded products, which includes Fisher Recipe Nuts, Fisher snack nuts, Archer Valley Harvest and Southern style nuts. The increase in branded sales volume was mainly attributable to a 3.8% increase in sales volume of Fisher recipe nuts due to increased merchandising activity at several customers. Additionally, sales volume of selling style nuts increased 11.8% driven by return to normalized inventory levels and increased sales velocity at a Clubstar customer. Sales volume increased 1.4% in the commercial ingredients distribution channel due to higher sales of peanut crushing stock to peanut oil processors and distribution to a new foodservice customer, which was partially offset by lost business to another customer.

Sales volume increased to 55.6% on the contract manufacturing distribution channel, primarily due to increased granola volume processed in our Lakeville facility. This increase was partially offset by reduced peanut and cashew sales volume to a major customer due to soft consumer demand. Gross profit decreased $5,700,000 or 9.8 percent compared to the Q2 of last year, driven by competitive pricing pressures and strategic pricing decisions as well as higher commodity acquisition costs for most treatments. The decrease was partially offset by improved profitability of bars. 2nd quarter gross profit margin as a percentage of net sales decreased to 17.4% compared to 19.9% for the Q2 of fiscal 2024 due to the reasons previously mentioned.

Total (EPA:TTEF) operating expenses for the 2nd quarter increased $2,500,000 as compared to the prior year quarter due to a one time $2,200,000 bargain purchase gain associated with the Lakeview acquisition, which did not recur in the current quarter. The increase was also driven by higher freight, rent and compensation expenses, which were significantly offset by decreases in incentive compensation, consulting and marketing expense. Total operating expenses for the Q2 of 2025 increased to 10.9 percent net sales from 10.4% for last year’s Q2 due to the reasons previously mentioned and partially offset by a higher net sales base. Interest expense was $800,000 for the Q2 of fiscal 2025 compared to $1,100,000 for the Q2 of fiscal 2024, primarily due to lower average debt levels. Net income for the Q2 of fiscal 2025 was $13,600,000 or $1.16 per diluted share compared to $19,200,000 or $1.64 per diluted share for the Q2 of fiscal 2024.

Now take a look at inventory. The total value of inventories on hand at the end of the current second quarter increased $8,500,000 or 4.3 percent compared to the total value of inventories on hand at the end of the prior year comparable quarter. The increase was mainly due to higher commodity acquisition costs for almost all major tree nuts and chocolate as well as higher on hand quantities of almonds and cashews. The weighted average cost per pound of raw nut and dried fruit increased 33.7% year over year, mainly due to higher commodity acquisition costs for almost all major tree nuts. Moving on to year to date results.

Net sales for the 1st 2 quarters of current year increased 9.9% to $577,300,000 compared to the 1st 2 quarters of fiscal 2024. Excluding the 2025 Q1 impact of the Lakewood acquisition, net sales increased 2.2% to $536,800,000 The increase in net sales was primarily attributed to a 4.1% increase in sales volume, which was partially offset by a 1.9% decrease in the weighted average selling price per pound. Sales volume increased by 14.9% due to increased sales volume in all channels, mainly driven by the impact of the Laicco acquisition. Gross profit margin decreased 4.8% to 17.1% of net sales. The decrease was mainly attributable to lower selling prices due to competitive pricing pressures and strategic pricing decisions along with increased commodity acquisition costs for almost all major nut commodities.

This was partially offset by improved profitability of ours. Total operating expenses for the current year to date remain relatively unchanged at $62,400,000 compared to $62,800,000 for the 1st 2 quarters of fiscal 2024. Interest expense was $1,300,000 for both the first two quarters of fiscal 2025 and fiscal 2024. Net income for the 1st two quarters of fiscal 2025 was $25,300,000 or $2.16 per diluted share compared to net income of $36,800,000 or $3.15 per diluted share for the 1st 2 quarters of fiscal 2024. Please refer to our 10 Q, which was filed yesterday for additional details regarding financial performance for the Q2 of fiscal 2025.

Now I’ll turn the call over back to Jeffrey to provide additional comments on our operating results for Q2 in the Just category.

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Thanks, Frank, for the financial updates. When we continue to navigate a challenging operating environment, I’m proud of the efforts and results from each of our businesses to grow our volume and develop long term business partnerships. I’m confident that we have the right strategy, agility and team to continue to deliver strong results. Now let’s turn to category updates. I will share some category and brand results with you for the quarter.

All the market information I’ll be referring to is Zircona panel data and for today it is the period ending December 29, 2024. When I refer to Q2, I’m referring to 13 weeks of the quarter ending December 29, 2024. References to changes in volume are versus the corresponding period 1 year ago. For pricing commentary, we are using scan data from Surcona, which includes food, drug, mass, Walmart (NYSE:WMT), military and other outlets. We are referring to average price per pound.

We’re using the nut trail mix and bar syndicated views of the category as defined by SIRCONA. In the latest quarter, we continue to see modest growth in the broader snack outlook as defined by SIRCONA. Volume and dollars were up 1.5% and 3.4%, respectively. This is consistent with the performance we saw in Q1 as pricing and inflation continue to stabilize. In Q2, the snack and trail mix category performed similar to the broader snack aisle, up 1% in pounds and 2% in dollars.

This is also consistent with the performance we saw in Q1. We saw prices fall 1% in snack nuts with slightly lower retail prices across all major nut types except for almonds. Trail mixes prices were flat. Fisher snack and trail mix performed on par with the category with pound shipments up 2%. This was driven primarily by growth at a major specialty retailer and e commerce.

Our Southern Style Nuts brand pound shipments increased 12%, driven primarily by velocity growth in club, mass and e commerce. Our Orchard Valley Harvest brand, which primarily plays in trail mix, was relatively flat in pound shipments and on 1% driven by strong growth in club and e commerce, mostly offsetting declines in mass and specialty. Commodity increases, including cocoa and some tree nuts, are resulting in higher prices for Orchard Valley Harvest. We are actively working on innovation and cost savings opportunities to help mitigate this commodity pressure. Our private label consumer and trail shipments performed in line with the category, and pound shipments relatively flat to last year.

Now let me turn to the recipe category. In Q2, the recipe nut category was down 2% in pounds and up 4% in dollars as prices for both walnuts and pecans increased during the prime holiday baking season. This is an improvement in dollar performance, but a decline in volume performance in Q1. Our Fisher recipe pound shipments performed better than the category and were up 4% in Q2 with continued strength in e commerce, grocery and mass. Fisher continued to be the brand recipe leader and had a successful holiday season as I mentioned.

Now we will switch to the bar category. In Q2, the bar category grew 3% in pounds and 6% in dollars as a major player continued to reenter the market after a recall last winter. Private label continues to grow within bars, up 10% in pounds and up 13% in dollars. Our private label bar shipments are up significantly versus year ago, 28% driven primarily by velocity growth. We continue to see positive momentum in private label in this category.

In closing, as we look ahead to the second half of fiscal twenty twenty five, we begin with cautious optimism as we see continued strong consumption of our category and improving volume consumption in the nut and trail mix categories. This is an exciting time for our company as we execute on our future growth strategies and organize the company to improve margins. We are committed to creating long term shareholder value through these strategic initiatives and continued operational excellence. I want to extend my thanks to all our employees for their hard work and dedication, which has been instrumental in achieving our record volume growth in Q2. R and D, insights and tech services teams are designing a pipeline of differentiated and innovative products to bring to market.

Their operations, procurement, administration and continuous improvement teams continue to look at ways to optimize our manufacturing and supply chain to reduce costs. As always, we will continue to respond to challenges, including the current economic and operating environment. I believe we have the right team, initiatives and strategies to overcome these challenges to provide differentiated value to our customers and consumers and deliver long term shareholder value. Our management team and all our associates continue to work hard to expand our business, to build stronger brands, to build more innovative product platforms and to provide higher levels of quality and service to our customers and consumers. We appreciate your participation in the call and thank you for your interest in our company.

We’ll now open the call to questions. Lisa, please queue up the first question.

Lisa, Conference Call Operator, John B. Sanfilippo and Son: Thank And our first question will come from the line of Nick Offen of CWB. Your line is open.

Nick Offen, Analyst, CWB: Hi, guys. I just wanted to start on the pricing environment and what’s going on there. You were talking about it’s becoming really competitive and seem to need to maintain share there. So just some further detail would be great.

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Sure. So obviously, we’ve talked about increased commodity costs, especially in almonds, chocolate, cashews in the last couple of quarters. And now we’re seeing increased costs in walnuts. And we have typically a 6 month pricing review with our retail partners. So it takes time to get those price increases initiated before actually raw material costs flows through our system.

So that’s put margin pressure on the company. But in addition to that, because of the volume declines in some areas such as almonds, for example, we’re seeing competitive price pressure from some of the brands not raising pricing in order to kind of maintain and try to rebuild some of that volume growth. So that puts even more pressure on private brand retailers because we expect a gap between the brand leader and their private brand. So it’s a combination of things that have impacted pricing. As I mentioned, we have taken pricing now at all our brands and our private brand customers.

Most of that goes into effect in January February of this quarter. So a lot of it’s being initiated as we speak.

Nick Offen, Analyst, CWB: And then will that take you back to like a gross margin per pound closer to over $0.60 from the current 50 dollars the last couple of quarters?

Frank Pellegrino, CFO, John B. Sanfilippo and Son: Hey, David, this is Frank. That’s our long term goal when we have a process in place that gets back to those historical averages and they will occur over the next several quarters.

Nick Offen, Analyst, CWB: And then just on the brands, I guess they have been losing share, like is it sustainable on their level? Like I understand you guys are one of the lowest cost of the industry, but can the branded keep up with not increasing price with the commodity environment?

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Yes, it’s tough to say, obviously brands, they have a mind of their own and I expect them to continue to invest in the category to either build their brand equity, market share or just move some of the inventories of raw materials that they have in their system. And so it’s hard to say when they would take price adjustments. I can’t imagine it’s going to be too far out there, but it’s hard to say. And also to add the focus we have on I’m sorry, and the other focus, obviously pricing is a big lever that we have, but also reducing our operating costs, our supply efficiencies is critical to making sure that we streamline our efforts. So we expect a lot of some of that margin enhancement to come from just cost reduction initiatives internally.

Nick Offen, Analyst, CWB: And then starting up the new lines, like you said by the end of the fiscal year, like will there be any costs associated with that that could create additional margin pressure in the next two quarters to come?

Jasper Sanfilippo, COO, John B. Sanfilippo and Son: Yes, Nick, this is Jasper. Most of the costs that we’ll incur with the installation of these new lines will be capitalized. So I wouldn’t imagine other than some moving equipment around and things of that nature, I wouldn’t imagine that it would have, but any impact on margin.

Nick Offen, Analyst, CWB: And then just some more comments around Lakeville, like how this quarter was and everything. Obviously, great quarter, 28% growth there, just after last quarter’s back to school issues and everything.

Jasper Sanfilippo, COO, John B. Sanfilippo and Son: Yes. Lakeville, we had a bunch of one off expenses in Lakeville as we’re moving inventory out of a third party warehouse up there into our Huntley facility. We’re still carrying a bit of a lease payments on that. That has expired at the end of Q2. We also had to temporarily install some equipment we bought in summer into that Lakeville facility to help build inventories for this year’s back to school.

So there was quite a bit of noise up there, I think, from overall operating impact. We are really running that business for service and to build inventory. So we make sure that we hit the back to school numbers. So we are incurring quite a bit of overtime in that facility, but we do anticipate with the installation of the line that we put up there temporarily, coupled with running more production in Elgin, that we’ll see that facility become even more profitable than it is.

Nick Offen, Analyst, CWB: And then any disclosure on just like what the dollar value you talked about, the volume growth and everything like how what was Lakeville’s dollar value in the quarter?

Frank Pellegrino, CFO, John B. Sanfilippo and Son: I think it’s in the 10 Q, I think, but I think it’s around $40,000,000 was the Lakeville related sales for the quarter.

Jasper Sanfilippo, COO, John B. Sanfilippo and Son: All right.

Nick Offen, Analyst, CWB: And then I just final one just on tariffs because in the it’s talked about in your annual report just how you get some of your pecan business from Mexico. So just any thoughts on how it’s going to affect the industry, how it affects you if these tariffs do come in?

Jasper Sanfilippo, COO, John B. Sanfilippo and Son: Well, we’re almost at the tail end of buying this crop. So I don’t think even if the tariffs do occur shortly,

Frank Pellegrino, CFO, John B. Sanfilippo and Son: we would be still buying

Jasper Sanfilippo, COO, John B. Sanfilippo and Son: a lot of product from Mexico.

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: We are working with our public procurement teams really across all the supply chain and make sure that we are aware and ready if tariffs do going to place either in Mexico or Canada or in the past as a whole, just make sure we have the right supply chain in place to overcome any issues that might occur. It is on our radar for sure.

Nick Offen, Analyst, CWB: All right. Thanks guys. That’s it for questions for me.

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Thanks Nick. Thank you.

Lisa, Conference Call Operator, John B. Sanfilippo and Son: Thank you. And at this time, there are no more questions in the queue. I’d like to turn the call back over to Jeffrey for closing remarks. Please go ahead.

Jeffrey Sanfilippo, CEO, John B. Sanfilippo and Son: Thank you, Lisa. Again, I want to thank all of you on the call for your interest in JBSS. This concludes the call for our Q2 fiscal 2025 operating results and have a great day.

Lisa, Conference Call Operator, John B. Sanfilippo and Son: Thank you all for joining today’s conference call. You may now disconnect.

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