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SJ

SANFILIPPO JOHN B & SON INC (JBSS)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter on volume and net sales: sales volume reached 96.3M lbs (+7.1% YoY) and net sales hit $301.1M (+3.4% YoY), the highest in company history . Gross margin compressed to 17.4% from 19.9% on competitive pricing and higher tree-nut costs; diluted EPS fell 29.3% to $1.16 .
  • Consumer channel volume rose across private brand (+4.0%) and branded (+3.4%) with bars +27.6% at a mass merchant and Southern Style Nuts +11.8% in club; contract manufacturing volume surged +55.6% on granola at Lakeville .
  • Management initiated price adjustments across brands and private label effective January–February (Q3 timing) and is executing cost optimization and manufacturing capacity expansion to restore margins over “the next several quarters” .
  • Inventory value increased 4.3% with weighted average input cost per pound up 33.7% YoY, reflecting higher acquisition costs for tree nuts and chocolate—near-term margin headwind until pricing catches up .
  • Wall Street consensus EPS and revenue were unavailable via S&P Global at this time; we anchor analysis to reported results and management commentary and will update when accessible (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Record net sales and volume: “largest quarterly sales volume and highest quarterly net sales” in company history; bars volume +~28% YoY; distribution channel volumes grew across consumer, commercial ingredients, and contract manufacturing .
  • Branded performance: Fisher recipe nuts volume +3.8% on increased merchandising; Southern Style Nuts +11.8% with normalized inventory and velocity gains at club; broader snack aisle showed modest growth and JBSS saw strength in several branded and private label lines .
  • Strategic execution: warehouse distribution moved to Huntley; capacity expansion underway with equipment slated to be in production by fiscal year-end; management “laser focused on cost optimization” across operations, supply chain, SG&A and trade spend .

What Went Wrong

  • Margin compression: gross profit down $5.7M and gross margin fell to 17.4% from 19.9% due to competitive pricing and higher commodity costs; diluted EPS down 29.3% to $1.16 .
  • Pricing/commodities mismatch: selling prices lagged input inflation (chocolate, almonds, cashews, walnuts), creating “significant margin compression before price increases could be executed” .
  • Mixed retail dynamics: soft consumer demand and reduced seasonal nut/trail mix volume at certain mass merchants; discontinuation of peanut butter and downsized pack sizes at one retailer weighed on consumer channel mix .

Financial Results

MetricQ2 FY2024Q4 FY2024Q1 FY2025Q2 FY2025
Revenue ($USD Millions)$291.2 $269.6 $276.2 $301.1
Net Income ($USD Millions)$19.2 $10.0 $11.7 $13.6
Diluted EPS ($)$1.64 $0.86 $1.00 $1.16
Gross Profit ($USD Millions)$57.9 $50.0 $46.5 $52.3
Gross Profit Margin (%)19.9% 18.5% 16.9% 17.4%
Operating Expenses (% of Net Sales)10.4% 13.1% 10.7% 10.9%
Consensus Revenue ($)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)
Consensus EPS ($)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)

Note: Consensus estimates unavailable due to S&P Global request limit at time of analysis; we will update when accessible.

Segment breakdown (volume growth YoY):

Segment / Sub-SegmentQ1 FY2025Q2 FY2025
Consumer Channel Total+30.8% (incl. Lakeville); +3.4% ex-Lakeville +2.9%
- Private Brand+36.1% +4.0% (bars +27.6%)
- Branded (Fisher, OVH, SSN)+5.4% +3.4% (Fisher recipe +3.8%, SSN +11.8%)
Commercial Ingredients+1.2% (Lakeville-driven) +1.4%
Contract Manufacturing+13.3% (granola at Lakeville; -19.8% ex-granola) +55.6% (granola at Lakeville)

KPIs and balance sheet highlights:

KPIQ1 FY2025Q2 FY2025
Sales Volume (Million lbs)91.2 96.3
Weighted Avg Selling Price per lb YoYSlight increase (not quantified) -3.4%
Inventory Value ($USD Millions)$194.6 $205.8
Weighted Avg Input Cost per lb YoY“Did not change significantly” (ex-Lakeville) +33.7%
Revolving Credit Facility Borrowings ($USD Millions)$47.2 $49.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Pricing actions (brands & private label)Q3 FY2025 (majority Jan–Feb)Not specifiedPrice increases initiated across all brands and private brand customers Raised prices
Margin trajectoryNext several quartersNot specifiedPlan to return to historical averages over next several quarters via pricing and cost optimization Target improvement
Manufacturing capacity additionsNext 18 months (some by FY2025 YE)Not specifiedAdditional equipment to expand production; some lines in production by fiscal year-end Capacity increase
Distribution consolidationH2 FY2025OngoingMove completed to Huntley; freeing ~300k sq ft in Elgin for production expansion Completed/expansion enabled
Formal revenue/EPS/OpEx/tax rate guidanceFY2025None providedNone providedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2024, Q1 FY2025)Current Period (Q2 FY2025)Trend
Pricing vs input inflationQ4: competitive pricing pressures; higher chocolate/cashews; bars private label momentum . Q1: significant cost increases (chocolate, cashews, almonds; walnuts rising) and need for price alignment Price increases initiated across brands/private label in Jan–Feb; margins compressed before pricing executed Improving pricing alignment starting Q3
Bars and Lakeville operationsQ4: $131M FY bars; Lakeville ahead of schedule; private label bars gaining distribution . Q1: capacity constraints drove one-time concession; shipments up significantly Bars +~28% YoY; Lakeville-related quarterly sales around ~$40M; operational noise diminishing Strengthening with scaling, efficiencies expected
Supply chain/operationsQ4: leased Huntley warehouse to expand packaging and bar lines . Q1: Huntley ramp; distribution center shipping large customers Distribution relocation completed; beginning production expansion; focus on cost optimization across supply chain and SG&A Execution milestone achieved; cost work ongoing
Macro/consumer behaviorQ4: snack category stabilization; consumers trading down; value channels . Q1: broader snack aisle volume growth returning; club/e-commerce gains Continued value-seeking behavior; club/e-commerce strength; category modest growth; Fisher recipe outperformed category Stabilizing demand; value channels favored
Tariffs/regulatoryPrior quarters: limited direct commentaryMonitoring potential Mexico/Canada tariffs; procurement ready to respond; near-term pecan purchases mostly complete Watch item; limited near-term impact
AI/technologyQ1: internal AI team formed; use cases identified Not highlighted in Q2 prepared remarksEarly initiatives; no Q2 update

Management Commentary

  • “We are pleased to report our largest quarterly sales volume and highest quarterly net sales in our company’s history in the second quarter… bars sales volume increased by approximately 28% over the prior year quarter.” – CEO Jeffrey T. Sanfilippo .
  • “We have initiated selling price adjustments for all our brands and private brand customers, which take effect in Q3, the majority of which will occur in January and February.” – CEO .
  • “Gross profit and margins have been negatively impacted… competitive pricing pressure and strategic pricing decisions… input costs… remain elevated… such as chocolate and now walnuts.” – CEO .
  • “That’s our long-term goal, and we have a process in place that gets back up to those historical averages. And that will occur over the next several quarters.” – CFO on margin recovery trajectory .
  • “Over the next 18 months, the company will add additional manufacturing capacity… We expect some of this new equipment to be in production by the end of this fiscal year.” – CEO .

Q&A Highlights

  • Pricing environment: competitive pressures and the need to maintain private brand price gaps; price increases now flowing through Jan–Feb to offset input inflation (almonds, chocolate, cashews, walnuts) .
  • Margin roadmap: management aims to return to historical margin averages over “the next several quarters” through pricing and cost reduction initiatives .
  • Lakeville operations: temporary one-off expenses (third-party warehouse lease expired at end of Q2; overtime for inventory build); facility expected to become more profitable; Q2 Lakeville-related sales “around $40 million” .
  • Capex/product lines: new lines being capitalized; limited margin impact expected near term from installations .
  • Tariffs: monitoring potential Mexico/Canada actions; procurement prepared; near-term pecan buying largely complete .

Estimates Context

  • S&P Global Wall Street consensus for revenue and EPS was unavailable at the time of analysis due to a request limit. As such, we cannot declare a beat/miss versus consensus for Q2 FY2025; we will update when accessible (S&P Global data unavailable).
  • Implications: Consensus models likely need to reflect lower gross margins near term (competitive pricing, commodity costs) and the timing of price realization in Q3, with potential margin recovery thereafter as price actions and cost initiatives take hold .

Key Takeaways for Investors

  • Volume momentum is real, led by bars and distribution channel breadth; JBSS delivered record quarterly net sales and volume despite pricing pressure—constructive for top-line durability .
  • Margin compression should abate starting Q3 as price increases take effect; management targets a return to historical averages over several quarters—watch gross margin trajectory and price realization cadence in Jan–Feb prints .
  • Lakeville scaling is progressing; operational “noise” is declining; with ~$40M quarterly sales and granola throughput, expect incremental profitability as capacity and process efficiencies normalize .
  • Commodity inflation remains a key swing factor (tree nuts, chocolate, walnuts); inventory cost per pound +33.7% YoY underscores urgency of pricing and mix management—monitor procurement and pass-through effectiveness .
  • Channel mix and value focus (club, e-commerce) support volume but pressure pricing; branded Fisher recipe outperformed category in Q2, while private label bars continue to gain—portfolio diversification mitigates category cyclicality .
  • Near-term catalysts: price increases flowing through Q3, operational efficiencies from Huntley consolidation, and initial production from new equipment by fiscal year-end—potential sentiment inflection if margins expand sequentially .
  • Risk checks: competitive pricing intensity, consumer demand softness in certain mass merchants, and any tariff developments—position sizing should reflect margin sensitivity to input costs and pricing lag .