John B. Sanfilippo & Son, Inc.

Good day and thank you for standing by. Welcome to the John B. Sanfilippo and Son second quarter fiscal 2026 operating results conference call at this time. All participants are in listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. please be advised that today's conference is being recorded. I would now like to hand it over to your first speaker today, Jeffrey Sanfilippo, Chief Executive Officer. Please go ahead.

Thank you, Victor. Good morning, everyone, and welcome to our 2026 Second Quarter 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, Statements are based on our current expectations, and they involve certain risks and uncertainties. Factors that could negatively impact results are explained in the various SEC filings that we have made, including forms 10-K 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. Turning to results, we delivered record-breaking top-line growth. and achieved an approximately 32% increase in diluted earnings per share for the quarter, driven by executing our ongoing strategic initiatives of disciplined cost management, operational efficiencies, and strategic pricing actions. While these results are encouraging, we continue to navigate headwinds from shifting consumer behavior, emerging health and wellness trends, and elevated retail selling prices, which weighed on overall sales volumes. However, we have a strong and diverse set of products that align with these emerging health and wellness trends and priorities. We are further expanding our pipeline with new innovations to capitalize on these trends and growth opportunities. We believe that the recent reduction in trade tariffs on most imported nuts, primarily cashews, should help lower selling prices of certain products over time and support future demand. I'm confident that we have the right team, capabilities, and focus to navigate this dynamic environment successfully and capitalize on growth opportunities. We remain committed to driving growth and profitability to deliver long-term value towards shareholders. At the start of the third quarter, we distributed a special dividend of $1 per share, reflecting our strong financial position and disciplined capital allocation strategies. This return of capital to our shareholders occurred concurrently with one of the largest capital expenditure initiatives in our company's history. These strategic investments position us to enhance operational efficiency, expand production capacity, and capture emerging market opportunities to support sustained growth and profitability. Our management team has set clear priorities as we finish up the back half of fiscal 26. and start to build our financial plan for fiscal 27. One of those growth priorities which we have talked about on previous calls is to accelerate our snack and energy bar business. While the industry is experiencing softness in certain segments of the bar category, including fruit and grain and granola, the protein forward bar segment is very strong. The investments we've made in new bar manufacturing capabilities align well with this shift in consumer behavior to healthier protein-forward snacks. Approximately 85% of the new equipment we have purchased is now on-site or in transit. We are on schedule to begin production in July this year, utilizing our new bar equipment. Our R&D and insights teams have done an extraordinary job building out our bar innovation platforms. Our sales and marketing teams have started engaging with customers. We are already receiving positive interest in our offerings. This is a transformational time for our company. I'm excited about the future growth we will build with our customers, and I'm extremely proud of the hard work, dedication, and tenacity of the team members across our company who are so committed to our success. Common themes are emerging among CPG leaders as they discuss priorities and performance . One is margin and productivity. Many continue to see pressure from inflation, rising input costs, and supply chain complexity. At JVSS, we remain sharply focused on cost optimization while evolving our structure and processes to support sustainable growth. We are driving efficiency improvements across our operations supply chain, pricing, trade spending, and formula development. There are key leaders across the organization working on what we call OFG initiatives, optimized for growth, which impacts how we do business and how we go to market. I'm excited about the margin enhancement projects that these teams are executing. Another key theme is volume stabilization. Volumes have declined or remained flat across many food companies over the last 12 to 24 months. and we have experienced similar softness in our nut and trail mix and bar categories this past fiscal year. Our commercial teams are focused not only on stabilizing the business, but on returning to volume growth. We are allocating resources to strengthen programs with existing partners, while also diversifying our customer base and product portfolio through innovative programs, products, and packagings. Our portfolio is well balanced between everyday snack and higher growth platforms and for those consumers looking for lower cost options in the snack category. I will now turn the call over to Frank Pellegrino, our CFO, to provide additional information on our financial performance for our first quarter.

Thank you, Jeffrey. Starting with the income statement, net sales for second quarter of this month, 2026, increased by 4.6%. to $314.8 million, compared to net sales of $301.1 million in the second quarter of fiscal 2025. The increase in net sales was due to a 15.8% decrease in the weighted average sales price per pound, which was partially offset by a 9.7% decline in sales volume of pounds sold to customers. The increase in the weighted average sales price primarily resulted from higher commodity acquisition costs across all major tree nuts and peanuts. While our poorer business of walnuts, almonds, and pecans achieved volume growth, overall sales volume decreased during the quarter. This decline was primarily from a reduction of opportunistic granola volume sold in the contract manufacturing channel. Sales volume decreased 8.4% in the consumer distribution channel, primarily driven by a 7.9% decline in private brand sales due to lower volume in private label bars and, to a lesser extent, nuts and trail mix. Nuts and trail mix sales were impacted by higher retail prices, soft demand, including customer 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 matched merchandiser. Bar sales declined as per year's volume were elevated by low industry-wide inventory levels and the lingering impact of a national brand recall, which temporarily boosted privately-owned bars' demand. A strategic reduction in sales to one grocery retailer also contributed to the bar's decline. Branded sales were negatively impacted by lost distribution of orchard value harvest at a major customer in a non-food sector and the timing of fish or snack promotions at a major non-food customer. Sales volume in the commercial ingredients channel remained relatively unchanged with a decline of 1.1%. Sales volume in the contract manufacturing channel decreased 26.5% due to decreased granola volume processed at our Lakeville facility, which was partially offset by increased snack nut sales to a customer added their second quarter prior year. Gross profit increased by $6.9 million for a 13.2% to $59.2 million compared to the second quarter of last year, driven by higher net sales during the quarter with selling prices more closely aligned with commodity acquisition costs compared to the second quarter of the prior year. Additionally, reduced manufacturing spending and operational efficiencies contributed to the overall increase in gross profit. Gross profit margin increased to 18.8% of net sales and turned to 17.4% for the second quarter of fiscal 2025 due to the reasons previously mentioned. Total operating expenses were essentially flat compared to prior years of the second quarter, increasing by $300,000. This slight increase was primarily driven by higher incentive compensation, which was largely offset by lower marketing, freight, third-party warehouse, and compensation costs. Total operating expenses as a percentage of net sales for the second quarter of fiscal 2026 decreased to 10.5% from 10.9% in the prior comparable quarter, reflecting the factors noted previously and a higher net sales base. Interest expense was $500,000 for the second quarter of fiscal 2026 compared to $800,000 for the second quarter of fiscal 2025. Net income for the second quarter of fiscal 2026 was $18 million, or $1.53 per diluted share, compared to $13.6 million, or $1.16 per diluted share, for the second quarter of fiscal 2025. Now taking a look at inventory. The total value of inventory on hand at the end of the current second quarter increased $29.6 million, or 43.4%, compared to the total value of inventory on hand. in the prior year comparable report. The increase was due to higher commodity acquisition costs across all major nut types, except for peanuts and in-shell walnuts, as well as greater on-hand quantities of work in process and finished goods inventory to support forecasted demand. The weighted average cost per pound of raw nut and dried fruit increased 11.8% year over year, mainly due to higher acquisition costs for all major nut types, except for in-shell walnuts. partially offset by lower acquisition costs of feedlets and lower on-hand quantities of almonds and cashews. Moving on to year-to-date results. Net sales for the first two quarters of the current year increased 6.3% to $613.5 million compared to the first two quarters of fiscal 2025. The increase in net sales was primarily attributed to a 12.2% increase in the weighted average selling price per pound. which was partially offset by a 5.3% decrease in sales volume. The sales volume decrease was due to lower sales value in the consumer and contract manufacturing channels, partially offset by year-to-date growth in the commercial ingredients. Gross profit margin increased to 18.5% of net sales, according to 17.1% in the prior period. The increase was mainly attributable to the factors noted previously in the quarterly comparison along with a one-time pricing concession in the prior year first quarter to a bar customer that did not recur in this fiscal year. Total operating expenses for the current year to date decreased $2.1 million to $60.3 million, compared to $62.4 million for the first two quarters of fiscal year 2025. The decrease in total operating expenses was mainly driven by lower marketing and inside spending. We reduced third-party warehouse costs, increased freight expenses, lower compensation, and lower third-party recruitment expenses. These savings were partially offset by an increase in incentive compensation. Interest expense was $1.5 million for the first two quarters of fiscal 2026, compared to $1.3 million for the first two quarters of fiscal 2025. Net income for the first two quarters of fiscal 2025 was $36.7 million, or $3.12 per diluted share of net income of $25.3 million, or $2.16 per diluted share, for the first two quarters of fiscal 2025. Please refer to our form 10-Q, which was filed yesterday, for additional details regarding financial performance for the second quarter of fiscal 2026. Now I'll turn it over to Jeffrey to provide additional comments.