John B. Sanfilippo & Son Inc (JBSS) is one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds, and other nuts in the United States. The company markets and distributes its products under well-known brand names such as Fisher, Orchard Valley Harvest, Squirrel Brand, and Southern Style Nuts, as well as a variety of private labels. JBSS has been in business for over a century, originally founded in 1922 as a small retail nut store in Chicago.
Business Overview JBSS operates in three primary distribution channels: consumer, commercial ingredients, and contract manufacturing. The consumer channel, which accounts for the majority of the company's revenue, includes sales to food retailers. The commercial ingredients channel serves industrial and food service customers, while the contract manufacturing channel produces products for other companies.
The company's product line extends beyond nuts to include nutrition bars, snack bars, peanut butter, almond butter, cashew butter, candy and confections, snack and trail mixes, sunflower kernels, dried fruit, corn snacks, sesame sticks, and baked cheese snack products. This diverse portfolio allows JBSS to cater to a wide range of consumer preferences and dietary needs.
The company's history is marked by steady growth and strategic decisions. In 2006, JBSS sold its Selma, Texas properties and began leasing them back, a transaction that provided additional capital to invest in the business. Around the same time, the company consolidated its Chicago-based facilities into its Elgin, Illinois headquarters, streamlining operations. In the early 2010s, JBSS made several strategic acquisitions, including the Squirrel Brand and Just the Cheese brands, which expanded its branded product portfolio.
JBSS has faced various challenges over the years, including navigating commodity price fluctuations, managing supply chain disruptions, and dealing with increasing competition. The COVID-19 pandemic in 2020 presented new obstacles, as the company had to adapt to changes in consumer demand and purchasing behavior. Despite these challenges, JBSS has remained focused on innovating and growing its business.
A significant milestone in the company's history was the construction of a new production facility in Huntley, Illinois in 2024, which allowed JBSS to increase its manufacturing capacity and efficiency. The company has also continually invested in upgrading its equipment and technology to improve product quality and productivity.
Financials and Operational Performance For the fiscal year ended June 27, 2024, JBSS reported net sales of $1.07 billion, a 6.7% increase from the prior year. Net income for the period was $60.2 million, or $5.15 per diluted share. The company generated $101.7 million in operating cash flow and $73.4 million in free cash flow during the year.
In the first half of fiscal 2025, JBSS has continued to deliver strong top-line growth, with net sales increasing 9.9% year-over-year to $577.3 million. This growth was largely attributed to the company's acquisition of certain snack bar assets in the first quarter of fiscal 2024, which expanded its manufacturing capabilities and allowed it to provide a more comprehensive snack bar portfolio to its private brand customers. Excluding the impact of this acquisition, net sales increased 2.2% in the first half of fiscal 2025, driven by a 4.1% increase in sales volume, partially offset by a 1.9% decrease in the weighted average selling price per pound.
However, the company has faced margin pressures due to a combination of competitive pricing, strategic pricing decisions, and rising commodity costs for key inputs like almonds, cashews, and now walnuts. Gross profit margin declined from 21.9% in the first half of fiscal 2024 to 17.1% in the first half of fiscal 2025. Gross profit for the first half of fiscal 2025 decreased 16.2% to $98.8 million.
For the second quarter of fiscal 2025, JBSS reported net sales of $301.1 million, an increase of 3.4% compared to the same period in the prior year. This increase was primarily driven by a 7.1% increase in sales volume, partially offset by a 3.4% decrease in the weighted average selling price per pound. Gross profit for the quarter decreased 9.8% to $52.3 million, with the gross profit margin declining from 19.9% to 17.4%, due to lower selling prices and higher commodity acquisition costs for most tree nuts. Net income for the quarter was $13.6 million.
To mitigate these margin headwinds, JBSS has implemented pricing increases across its branded and private label products, while also focusing on cost optimization initiatives spanning operations, supply chain, and SG&A. The company expects these actions, along with the benefits of its capacity expansion investments, to help restore profitability over the coming quarters.
Amidst the challenging operating environment, JBSS has continued to grow its sales volumes, with a 14.9% increase in the first half of fiscal 2025 compared to the prior-year period. This volume growth was driven by strong performance across all three of the company's distribution channels, including a 15.0% increase in the consumer channel and a 34.4% increase in the contract manufacturing channel.
Liquidity and Capital Structure As of December 26, 2024, JBSS maintained a solid financial position with a debt-to-equity ratio of 0.0815. The company has a $150 million senior secured revolving credit facility, of which $49.8 million was borrowed and $95.6 million was available. JBSS's current ratio stood at 2.044, indicating strong short-term liquidity, while its quick ratio was 0.672.
Recent Performance Highlights JBSS reported its largest quarterly sales volume and highest net sales in the company's history in the second quarter of fiscal year 2025. The company's bar sales volume increased by approximately 28% over the prior-year quarter. Additionally, JBSS's Fisher recipe brand had a very successful holiday season in Q2 and performed better than the category.
Risks and Outlook JBSS faces several risks that could impact its business, including volatile commodity costs, intense competition, changing consumer preferences, supply chain disruptions, and labor shortages. The company is also closely monitoring the potential for new tariffs on imported products, which could increase its raw material costs.
Despite these challenges, JBSS remains focused on executing its long-term growth strategy. The company plans to invest approximately $90 million in capital expenditures over the next 18 months to expand its production capabilities, increase efficiency, and enhance its product offerings. JBSS is also actively pursuing additional acquisition opportunities to further diversify its business and drive growth.
For the full fiscal year 2025, the company has initiated selling price adjustments for all their brands and private brand customers, which will take effect in Q3, with the majority occurring in January and February. JBSS expects some of the new manufacturing equipment they are adding over the next 18 months to be in production by the end of this fiscal year. The company is focused on cost optimization and organizing their structure and processes for growth, including efficiencies in operations, supply chain, freight, SG&A, commissions, trade spend and business and formula creation.
JBSS remains cautiously optimistic as they see continued strong consumption of their category and improving volume consumption in the nut and trail mix categories. The company continues to focus on executing its Long-Range Plan, which aims to grow its private brand business across key customers, transform its Fisher, Orchard Valley Harvest, and Squirrel Brand into leading brands, and diversify its product portfolio into high-growth snacking segments.
Conclusion John B. Sanfilippo & Son Inc is a well-established industry leader in the nut processing and distribution space, with a diverse portfolio of branded and private label products. While the company faces near-term margin pressures due to a challenging operating environment, JBSS is taking proactive steps to optimize its cost structure and position itself for long-term growth through strategic investments and acquisitions. With a strong brand reputation, innovative product pipeline, and disciplined financial management, JBSS appears well-equipped to navigate the current headwinds and capitalize on the growing consumer demand for nuts and snack products.