EPS of $1.16 decreased by 29.1% from previous year
Gross margin of 17.4%
Net income of 13.60M
"We are pleased to report our largest quarterly sales volume and highest net sales in our company's history in the second quarter." - Jeffrey Sanfilippo, CEO
John B. Sanfilippo & Son Inc (JBSS) Q2 2025 Results: Record Volume Across Channels, Margin Pressure from Nut Costs, with Path to Margin Restoration Through Pricing, Cost Optimization and Lakeville Capacity Expansion
Executive Summary
John B. Sanfilippo & Son, Inc. (JBSS) reported Q2 2025 net sales of $301.1 million, up 3.4% year over year, marking the company’s largest quarterly sales volume and highest net sales in its history as disclosed by management. The quarter benefited from a 7.1% increase in sales volume across distribution channels, though the weighted average selling price per pound declined 3.4% due to higher volume of lower-priced bars and strategic pricing decisions. Gross profit declined 9.8% to $52.3 million (gross margin 17.4%) as commodity costs for key tree nuts rose and competitive pricing pressures compressed margins; however, profitability was partially offset by stronger performance in bars. Operating income fell 29.8% year over year to $19.4 million, with net income of $13.6 million and diluted EPS of $1.16. Management emphasized pricing actions, cost optimization, and the relocation and expansion of production capabilities as levers to restore margins in the back half of fiscal 2025 and beyond.
Year-to-date, net sales for the first two quarters reached $577.3 million, up 9.9% versus the prior year, with net income of $25.3 million ($2.16 per diluted share). Absent the Lakeville acquisition’s first-quarter effect, net sales rose 2.2% to $536.8 million, underscoring that volume growth across channels is a meaningful driver of top-line progression while price competition and higher input costs continue to weigh on margin. The company also announced a major operational shift, relocating warehouse distribution to Huntley, IL, expanding Elgin production, and planning 18 months of additional capacity expansion to support growth.
Looking ahead, JBSS is guiding incremental price increases across all brands and private-label customers, effective mainly in January–February 2025 (Q3), to help restore gross margins toward historical norms. Management also highlighted ongoing cost optimization across operations, supply chain, freight, SG&A, and trade spend as well as continued investment in new product platforms and productivity improvements to drive long-term shareholder value. The near-term risk remains commodity cost volatility and the pace of price realization, but the company is positioned to leverage its scale, brand portfolio, and manufacturing capabilities to improve margins over the coming quarters.
Cash flow and capex: Net cash provided by operating activities $10.98 million; capex $13.65 million; free cash flow negative $2.67 million.
Financial Highlights
Q2 2025 highlights and YoY/QoQ context:
- Revenue (Net sales): $301.1 million; YoY +3.38%; QoQ +9.00%.
- Gross profit: $52.25 million; YoY -9.82%; QoQ +12.26%; gross margin 17.36% (vs 19.95% in Q2 2024).
- Operating income: $19.37 million; YoY -29.83%; QoQ +13.89%; operating margin 6.43% (vs 6.43% implied prior-year level).
- Net income: $13.60 million; YoY -29.09%; QoQ +16.61%; diluted EPS $1.16 (EPS, diluted).
- Cash flow and capex: Net cash provided by operating activities $10.98 million; capex $13.65 million; free cash flow negative $2.67 million.
- Balance sheet highlights: Total assets $545.25 million; total liabilities $219.62 million; total equity $325.63 million; cash at end of period $0.336 million; current ratio 2.04; quick ratio 0.672; days inventory outstanding ~74.5; days sales outstanding ~24.3; cash conversion cycle ~75.4 days.
- Debt and liquidity: Total debt $84.26 million; net debt $83.93 million; debt to capitalization ~20.6%; interest coverage ~25.1x; earnings quality supported by moderate leverage and ample liquidity.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
301.07M
3.38%
9.00%
Gross Profit
52.25M
-9.82%
12.26%
Operating Income
19.37M
-29.83%
13.89%
Net Income
13.60M
-29.09%
16.61%
EPS
1.17
-29.09%
17.00%
Key Financial Ratios
currentRatio
2.04
grossProfitMargin
17.4%
operatingProfitMargin
6.43%
netProfitMargin
4.52%
returnOnAssets
2.49%
returnOnEquity
4.17%
debtEquityRatio
0.26
operatingCashFlowPerShare
$0.94
freeCashFlowPerShare
$-0.23
priceToBookRatio
3.06
priceEarningsRatio
18.32
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key takeaways from JBSS management commentary and Q2 earnings call:
- Volume strength and record sales: Jeffrey Sanfilippo highlighted that the quarter featured the largest quarterly sales volume and highest net sales in company history, driven by a second consecutive quarter of sales-volume growth across all distribution channels; bar sales volume rose about 28% year over year.
- Margin pressure from input costs and pricing: Management described margin compression from elevated input costs for chocolate and walnuts and strategic pricing decisions, noting that “competitive pricing pressure” and the need to maintain volume pressured margins prior to price increases. They indicated price adjustments are underway for all brands and private-label customers, effective in Q3 (January–February), as part of margin restoration efforts.
- Operating efficiency and capacity expansion: The company relocated warehouse distribution to Huntley, IL, freeing Elgin space for expansion; over the next 18 months, JBSS plans to add manufacturing capacity to support growth and new product platforms, with some equipment expected to be in production by year-end. Costs associated with new lines are expected to be capitalized and not materially impact margins in the near term.
- Lakeville integration: Frank Pellegrino noted Lakeville-related operating costs included a one-time bargain purchase gain in the prior year (non-recurring), and Lakeville-related sales were about $40 million for the quarter; management expects the Lakeville integration to contribute to improved profitability as additional lines come online.
- Category dynamics and pricing cadence: Jeffrey discussed Circana data illustrating modest snack-category growth and ongoing value-seeking consumer behavior, with a six-month pricing review traditionally used with retailers and most price increases taking effect in Jan–Feb 2025. Management emphasized ongoing cost optimization, supply chain efficiencies, and price-pack architecture optimization to offset commodity and inflationary pressures.
- Currency of focus and risk monitoring: The team underscored readiness to adjust supply chains if tariffs affect certain nut supplies, indicating ongoing vigilance around external risks, including potential tariffs on pecans sourced from Mexico.
We are pleased to report our largest quarterly sales volume and highest net sales in our company's history in the second quarter.
— Jeffrey Sanfilippo, CEO
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.
— Jeffrey Sanfilippo, CEO
Forward Guidance
Management signals a multi-pronged path to margin restoration and growth in H2 2025 and beyond:
- Pricing actions: Implemented price increases across brand portfolios and private-label customers, with the majority effective in January–February 2025. This is intended to offset higher commodity costs (almonds, chocolate, walnuts) and to align margins with pre-inflation levels over the next several quarters.
- Cost optimization and productivity: Ongoing focus on operational efficiencies across manufacturing, supply chain, freight, SG&A, and trade spend to drive margin expansion without sacrificing volume growth. Expect margin improvement to flow through as price increases take hold and as efficiency programs realize benefits.
- Capacity expansion and product platforms: Expanded Elgin capacity and funded new lines with a potential 18-month ramp, with production slated later this fiscal year for some equipment. This should support higher gross margins by enabling better leverage on fixed costs and higher-margin product platforms.
- Category and channel strategy: Continued focus on Fisher, Orchard Valley Harvest, and Southern Style Nuts, with increasing emphasis on club and e-commerce channels and private-label growth (including bars and snacks). Monitor commodity prices (especially nuts) and macro demand trends; key risk factors include persistent commodity inflation and potential competitive pricing pressures.
- Key performance indicators to monitor: gross margin progression post-pricing actions, sequential volume growth across channels, renewable capacity utilization, working capital dynamics (inventory levels vs. receivables/payables), and cash flow trajectory given capex intensity and ongoing Lakeville integration.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
JBSS Focus
17.36%
6.43%
4.17%
18.32%
BRID
21.90%
-6.29%
-3.13%
-4.61%
CVGW
9.49%
4.00%
3.34%
17.96%
IPAR
64.50%
18.90%
5.14%
25.06%
JJSF
26.90%
1.69%
0.52%
131.44%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
JBSS enters the back half of fiscal 2025 with meaningful top-line momentum and material near-term margin pressure from higher input costs. The company’s strategic levers—pricing actions in Q3, focused cost optimization, and capacity expansion from the Lakeville integration—provide a plausible path toward margin restoration and sustainable volume growth. The liquidity position remains solid, but near-term free cash flow is negative as capex and working capital needs are elevated. If price realization accelerates as planned and cost-reduction initiatives materialize, JBSS could re-establish gross margins in the mid-to-upper teens and improve operating leverage in the following quarters. Key catalysts and watchpoints include: the effectiveness and timing of price increases (Jan–Feb 2025), integration progress for Lakeville, ramp utilization of new lines, commodity price trends, and the company’s ability to translate volume growth into sustainable profitability across its channel mix.
Key Investment Factors
Growth Potential
JBSS's growth trajectory hinges on (1) successful price realization and mix shift to higher-margin products (Fisher recipes, private-label and club channels), (2) expansion of manufacturing capacity (Lakeville and Elgin lines) to support volume growth and new product platforms, and (3) ongoing cost optimization across operations and supply chain. The Lakeville integration provides a credible path to higher throughput and improved operating leverage over the next 12–18 months, while category dynamics in snacks, nuts, and bars support continued volume growth in multiple channels, including e-commerce and club retailers.
Profitability Risk
The main downside risks include sustained commodity-price volatility (almonds, walnuts, chocolate) that could pressure gross margins if price realization lags, aggressive pricing competition from brand players or private-labels, execution risks associated with Lakeville integration and the ramp of new lines, potential tariff shocks affecting pecan and other nut inputs, and macro demand weakness that could compress volumes despite pricing actions. Additionally, negative free cash flow in the near term could pressure liquidity if capex and working capital needs outpace cash flow from operations.
Financial Position
JBSS maintains a conservative balance sheet with relatively modest debt (total debt $84.3m; net debt ~$83.9m) and healthy liquidity (cash $0.34m at period end, current ratio 2.04). The company exhibits meaningful gross margins (17.4%) but faced operating deleverage in Q2 due to commodity costs and pricing dynamics. YTD, net income declined versus the prior-year period, albeit top-line growth remained robust. The ongoing capex cadence (capex $13.65m in Q2) and Lakeville-related investments will require disciplined cash management and timely price realization to sustain free cash flow positivity over the medium term.
SWOT Analysis
Strengths
diversified, well-recognized brand portfolio (Fisher, Orchard Valley Harvest, Southern Style Nuts) with leadership in the recipe-nuts and snack-nuts categories
multi-channel distribution (consumer distribution, branded products, contract manufacturing, and private-label), providing resilience across demand scenarios
scale from Lakeville acquisition and relocation to Huntley enabling expanded capacity and improved service levels
solid balance sheet with modest leverage and positive operating cash flow generation potential
Weaknesses
margin compression from rising commodity costs (almonds, chocolate, walnuts) and pricing pressures
near-term negative free cash flow due to working capital needs and capex intensity related to capacity expansion
concentration of nut-based input costs; sensitivity to supply disruptions and tariffs
realized price per pound lagging input-cost inflation in some periods, pressuring margins
Opportunities
price realization and value-based pricing across channels to restore gross margin
accelerated margin expansion through cost-reduction initiatives in operations, freight, SG&A, and trade spend
capacity expansion and product-platform innovation leveraging Lakeville and Elgin facilities
growth in club and e-commerce channels and continued strength in private-label bar and trail-mix segments
Threats
ongoing commodity-price volatility and input-cost inflation
commodity-related tariff risks impacting pecans and other inputs
competitive pricing dynamics that could erode volume and pricing power
execution risk related to large-scale capacity upgrades and integration of Lakeville
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