John B. Sanfilippo & Son, Inc. Stock

Thank you. Good day and welcome to the John B. Sanfilippo & Sons, Inc. Fourth Quarter and Full Year 2026 Operating Results Conference Call. [Operator Instructions] Please note this call may be recorded. I would like to turn the call over to Jeffrey Sanfilippo, Chief Executive Officer. Please go ahead.

Thank you, Michelle. Good morning, everyone, and welcome to our fiscal 2026 fourth quarter earnings conference call. Thank you for joining us. On the call with me today is Frank Pellegrino, our CFO, and Jasper Sanfilippo, our COO. We may make some forward-looking statements today. These statements are based on our current expectations and they involve certain risks and uncertainties. The 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.

I'll turn to results. I'm pleased to report on a strong fiscal 2026 with net sales reaching a record $1.2 billion and diluted earnings per share increasing 4.6% for the full year. Achieving record net sales and earnings growth in a challenging consumer and cost environment is a testament to the strength of our business, the dedication of our team, and the depth of our customer relationships.

In addition, we remain committed to returning capital to our shareholders. During the 2026 calendar year, we increased our annual dividend by 5.6% to $0.95 per share and declared a special dividend of $1.05 per share, representing a 75% increase. Both dividends will be paid on September 9, 2026, bringing total dividends paid during the 2026 calendar year to $3.50 per share. This year marks our 15th consecutive year of returning capital to shareholders through dividends and the 9th consecutive year of increasing our annual dividend, reflecting the strength of our balance sheet, our consistent cash generation, and our ongoing commitment to creating long-term shareholder value.

While our bottom line results for the most recent fourth quarter did not match last year's results, we were encouraged to see a return to growth in our company-wide sales volume after 5 consecutive quarters of decline. We believe this is a positive signal for our entire portfolio. Fourth quarter profitability was impacted by several challenges, including higher-than-anticipated input and transportation costs, manufacturing inefficiencies associated with the continued onboarding of a large contract manufacturing customer, and certain customer-related charges. We are actively responding to these increased costs, executing mitigation plans to manage unexpected customer charges, and improving operational efficiencies as we move into fiscal 2027.

There are 3 key priorities for JBSS in the coming year. First, we are focused on restoring volume in the snack nut and trail mix categories. Consumer trends indicate that shoppers remain highly value-conscious after several years of elevated prices across the snacking segment. To address this, we're working with an external partner on a consumer study to better understand how we can re-engage [ paid shoppers ] and drive volume growth without sacrificing margin. Insights will help guide our approach to optimizing value propositions, pack price architecture, promotional effectiveness, and selective price adjustments. There continue to be positive tailwinds in the nut category as strong health and wellness trends are having a significant impact on consumer food purchases.

Our priority is to expand our bar portfolio and sell through the significant new manufacturing capacity we have added at our Elgin facility. Our engineering team has done an outstanding job bringing the new high-speed bar lines we purchased online, and we expect them to be fully operational by the second quarter of fiscal 2027. In parallel, our R&D, sales, marketing, procurement, and technical services teams have worked hard together to build a robust pipeline of new products that have been presented to customers. Consumer trends are strong for higher protein and higher fiber products, and our bar portfolio is positioned perfectly to meet this growing demand. We are very optimistic about securing new distribution in the near future, and we estimate over $300 million in potential new growth for JBSS as we sell the capacity on these lines.

Our third priority is to manage cost volatility with a relentless focus on productivity. Like many food manufacturers, we continue to face uncertainty across commodities, packaging, energy, transportation, labor, and tariffs. Teams across our organization are focused on reducing costs where possible while improving productivity and efficiency. Key areas of focus include AI-enabled process enhancements, plant efficiency, SKU rationalization, trade spend effectiveness, procurement savings, and supply chain optimization.

I'll turn the call over to Frank to discuss our financial performance.

Thanks, Jeffrey. Starting with the income statement, net sales for the fourth quarter of fiscal 2026 increased by 4.2% to $280.4 million compared to net sales of $269.1 million for the fourth quarter of fiscal 2025. The increase in net sales was due to a 2.8% increase in the weighted average sales price per pound and a 1.4% increase in sales volume per pound sold to customers. The increase in the weighted average selling price primarily reflected pricing actions taken in response to higher commodity acquisition costs for peanuts and all major tree nuts except walnuts, which was partially offset by a shift in product mix towards lower-priced items in the current quarter.

Sales volume in the consumer distribution channel slightly increased by 0.8% due to a 2.4% increase in private brand sales, with higher volume in private label nuts and trail mix. This was partially offset by decreased bar volume due to our strategic decision to reduce sales to a grocery store retailer. The increase in private label nuts and trail mix volume was positively impacted by initial shipments to a new grocery retailer and expanded distribution to existing grocery retailers, which was partially offset by lost private business at an online retailer. In addition, our branded sales were negatively impacted by decreased Fisher recipe nut sales due to the timing of the Easter holiday and related promotional activity, as well as lower sales of Southern Style Nuts Hunter Mix, which was temporarily withdrawn from the market following a product recall of an externally sourced ingredient contained in that snack mix.

Sales volume decreased 5.4% in the commercial ingredients channel, mainly driven by timing of peanut crushing stock sales, as sales volumes were elevated in the preceding quarter. Food service sales volume remained relatively flat in the quarterly comparison. Sales volume in the contract manufacturing channel increased 12.6% due to increased snack nut sales to a significant new customer that we added during the [ second quarter of the ] year. This increase was partially offset by decreased granola sales volume.

Gross profit decreased by $4.6 million or 9.5% to $44.1 million compared to the fourth quarter of last year, driven by $2.7 million of recall-related costs associated with the dry milk powder supplied by a third-party manufacturer incorporated in our Southern Style Nuts products. Gross profit was also negatively affected by higher customer claims, higher snack bar ingredient costs, manufacturing inefficiencies, and higher freight expense. Gross profit margin decreased to 15.7% of net sales compared to 18.1% for the fourth quarter of fiscal 2025 due to the reasons previously mentioned and partially offset by a higher net sales base.

Total operating expenses increased by $3.1 million compared to the prior year fourth quarter, driven by higher incentive compensation, freight, and marketing insights expenses, which was partially offset by estimated insurance recovery associated with the dry milk powder recall. Total operating expenses as a percentage of net sales for the fourth quarter of fiscal 2026 increased to 11.3% from 10.6% compared to the prior year comparable quarter. Interest expense was $400,000 for the fourth quarter of fiscal 2026, compared to $1.2 million for the fourth quarter of fiscal 2025, due to higher average line of credit levels. Net income for the fourth quarter of fiscal 2026 was $8.4 million, or $0.71 per diluted share, compared to $13.5 million, or $1.15 per diluted share, for the fourth quarter of fiscal 2025.

Now, take a look at inventory. The total value of inventories on hand at the end of the current fourth quarter decreased $8.8 million or 3.4% compared to the prior year comparable quarter. The decrease was driven by lower finished goods inventories for bars, lower walnut acquisition costs, and lower on-hand quantities of pecans and walnuts, which were partially offset by higher pecan and almond acquisition costs. The weighted average cost per pound of raw nut and dried fruit input stock on hand increased 12.1% due to higher pecan and almond acquisition costs, partially offset by lower walnut acquisition costs.

Moving on to year-to-date results. Net sales for fiscal 2026 increased 6.2% to $1.2 billion compared to fiscal 2025. The increase in net sales was primarily attributable to an 8.9% increase in the weighted average selling price per pound, which was partially offset by a 2.5% decrease in sales volume. The sales volume decrease was due to lower sales volume in the consumer channel, partially offset by sales volume increases in the commercial ingredients and contract manufacturing channels. Gross profit margin decreased to 18% of net sales compared to 18.4% in the prior fiscal year, attributable to the factors noted earlier in the quarterly comparison and lower inventory valuation adjustments, which were partially offset by aligning our pricing more closely with our commodity acquisition costs and the absence of a one-time pricing concession recognized in the prior year.

Total operating expenses increased $3.2 million in fiscal 2026 compared to fiscal 2025, primarily due to higher incentive compensation expense. This increase was partially offset by the estimated insurance recovery related to the dry milk powder recall, lower compensation expense, a net gain on disposal of non-core equipment compared to a net loss in the prior year, and reduced marketing and insights spending and lower third-party warehouse costs. Interest expense was $2.4 million for fiscal 2026 compared to $3.6 million for fiscal 2025. Net income for fiscal 2026 was $61.9 million, or $5.26 per diluted share, compared to $58.9 million, or $5.03 per diluted share for fiscal 2025. Please refer to our 10-K for additional details regarding our financial performance for fiscal 2026.

Now I'll turn the call over to Jeffrey to provide additional comments.

Thanks, Frank, for the financial updates. Now let's shift to consumption activity and category updates. All the market information I'll be referring to is Circana panel data, and for today it is for the period ending June 28, 2026. To refer to Q4, I'm referring to the 13 weeks of the quarter ending June 28, 2026. References to changes in volume are versus the corresponding period 1 year ago. For pricing commentary, we are using Circana MULO scan data, and we're referring to average price per pound. We are using the nut, trail mix, and bar syndicated views of the category as defined by Circana.

In the fourth quarter, we continued to see modest growth in the broader snack aisle, as defined by Circana. Volume and dollars were up 0.7% and 3% respectively, driven by price increases. This is consistent with the performance we saw in Q3. In Q4, the snack nut and trail mix category was down 7% in volume and 3% in dollars, which is a continued acceleration of the volume softness we saw last quarter. Snack nut prices rose 5%, with increases across nearly all nut types. Prices rose 7% for trail mixes.

Our private label consumer snack and trail shipments performed substantially better than the category, with pound shipments up 3% versus last year. This positive momentum was driven by new distribution across several grocery retailers. Fisher snack and trail mix performed better than the category with pound shipments up 15%. Fisher's performance was due to an expanded assortment at a specialty retailer and strength within the e-commerce channel. Our Orchard Valley Harvest brand, which primarily plays in trail mix, was down 26% in pound shipments during Q4. General category softness paired with lapping rotations at a club retailer drove the decline. Our Southern Style Nuts brand experienced a 27% decrease in pound shipments driven by a voluntary recall within the Southern Style portfolio, which Frank already mentioned.

Now let me turn to the recipe nut category. In Q4, the recipe nut category was up 6% in pounds and up 12% in dollars, driven by growth in private label as a discount retailer expanded store counts. The recipe category experienced a 7% price increase driven by pecans. Our Fisher recipe pound shipments were down 12% in Q4 due to slower velocities among grocery retailers.

Now we'll switch to the bar category. In Q4, the bars category grew by 2% in pounds and 5% in dollars, which is consistent with last quarter. Bar category momentum continued to be driven by a branded player's growth in the protein segment of the bar category. Private label was down 5% in pounds and down 4% in dollars as consumer preferences shift to protein bars, which is comprised primarily of branded offerings. Our private label bar shipments were down 3% versus a year ago, which is consistent with private label category trends.

In closing, as we enter fiscal 2027, we have strong momentum and optimism as we continue to execute our strategic plan. We are actively pursuing additional opportunities to grow sales volume across all 3 of our distribution channels, and we are encouraged by early signs of success. At the same time, we remain focused on disciplined cost management and driving further operational efficiencies. That said, we recognize that significant external uncertainties remain, including tariffs, inflation, unpredictable commodity costs, and broader macroeconomic challenges. These factors will require us to stay agile and responsive as the year progresses. We are committed to taking actions to deliver long-term sustainable growth, enhance margins, and continue to create value for our customers, consumers, and shareholders.

As I mentioned last month, I will be stepping down as Chief Executive Officer in October to assume the role of Executive Chairman. My brother Jasper will succeed me as CEO. Over the last several years, we have made significant investments in our people, our capabilities, and our infrastructure that we believe will support long-term sustainable growth. These investments, combined with a disciplined growth strategy focused on continuous improvement, innovation, customer partnership, and operational excellence, should position the company for continued success. Under Jasper's leadership, I'm confident JBSS will continue to execute its strategic plan, strengthen its market position, and capitalize on future growth opportunities.

As I reflect on the past 20 years, I want to sincerely thank our current and former employees for their hard work, dedication, and commitment. Together, we have transformed JBSS into a stronger, more diversified, and more profitable organization while preserving the entrepreneurial and family-oriented culture that has always defined our company. Our ability to remain nimble, adapt to changing market conditions, and work collaboratively to serve our customers has been a key driver of our success and is a big part of our culture. It has been an honor to lead this remarkable organization as CEO, and I'm deeply grateful to our employees, customers, suppliers, and shareholders for their trust, support, and partnership throughout this journey. We appreciate your participation in the call and I thank you for your interest in our company.

I'll now open the call to questions. Michelle, you can open up the lines. [Operator Instructions] Our first question comes from Hamed Khorsand with BWS Financial.

Could you just expand upon the comment that I heard you say about litigation expense and customer charges and what's going on there?

Yes, so this is Jeffrey. So we had some unexpected deductions from a major customer that we are still negotiating with that customer to regain some of those deductions. So something out of our control that occurred in Q4, but we are working actively to try to get some of that money back.

Okay. And my other question was, any update as far as the new equipment being installed and acceptance with any new potential customers?

Sure, Hamed. This is Jasper. We're currently on track for both the high-speed fruit and grain and the chewy bar line. We're expecting the chewy bar line to be up and operational by the end of October, and then the fruit and grain bar shortly thereafter.

And any sampling going on right now or are you still waiting to bring it completely online?

No, we are actively pursuing new customer business. We've created a lot of samples that have gone out to all our key customers. A very positive response from them. But yes, the operation will be up and running, hoping in October to actually produce products. So as soon as we get a new customer online, we will start shipping in the...

...the third quarter?

Yes, actually this week we're testing the functionality of the chewy bar kitchen and then we'll follow that with actually making the bars to run it through packaging. So we are on time and looking in good shape for both lines.

Okay, great. My last topic was, as far as nuts and trail mix is concerned, are you changing production to go towards more small packages in any way, maybe to lower the price to the consumer? Are you seeing that kind of demand right now?

Yes, that's a combination. We're looking at innovation obviously. Protein and fiber is a very important product line that we've recently launched in our Orchard Valley Harvest. That's Go-Go Protein Peanut, and we are launching a Go-Go Protein Almond. So we're really looking at consumer trends. Protein is high, fiber is extremely important. So we're looking not only at the product, also the pack sizes and the price points. So making really selective promotional price points that we feel will help us drive growth in the category.

Thank you. Our next question comes from [ Nick Otten ] with National Bank Financial.

I just had some stuff on the charges and everything. So the higher input costs and transportation, like do you expect that you can pass this on eventually or is this continue going to be something that you're going to have to eat going forward?

No, we will do our best to pass out those costs along. Again, if they keep increasing it becomes more difficult, but those are incurred during the quarter. That was along during our next pricing review.

How much of that was that in the quarter? Is it like a small amount? Is it a couple million dollars?

It was a couple million dollars. It was a couple million dollars, and we are working hard to get those price increases for freight with our customers today.

We should expect to see that in Q2. Nick, it's mainly freight and fuel-related, like surcharges, and also the resin market is up with packaging, which is kind of related to fuel also. So all those things have kind of escalated during the quarter that are kind of out of...

And then on the bar lines, you were just talking about chewy granola, but I thought you guys were also doing some protein going on there, so I was wondering when that's going to get started up because it is one of the bigger markets there.

Correct. Yes, we through Q4 did commercialize both some fig bar offerings as well as some protein bar offerings, and continue to do so. We are running trials currently for other protein bars. We believe that some of those bars will be in the market sometime early Q3. We do continue to add capabilities to our current protein bar line to keep up with the growing brand that Jeff referred to with some of the branded players.

And then how long, like you're talking about this $300 million opportunity, is this like you can achieve it in a year, 2, 3? Like what is the timeline that your expectation for this to really start ramping?

I had a guess somewhere between 3 to 5 years.

And then are there any customers signed up at all? Like is Costco a customer or what's going on just to underwrite these investments overall?

We're actively working with both large retailers as well as some opportunities we've come across in the co-man channel.

Yes, so we're looking at everything from club channel, obviously Sam's and Costco, to grocery, alternative channel, there's opportunities. And as Jasper mentioned, co-man, some of the big brands could be potential customers as well for us. You're right, that fastest growing segment is that protein forward. So you look at Barebells, Built Puff, David's, they're all doing extremely well in the category and retailers see that growth and are looking for private brand options.

And then Frank, we talked about in the past, like are we just finally seeing this like nut price squeeze these smaller players that had stolen share, but you're now, they're coming back your way and everything?

Indirect, yes, we're seeing them because the prices are all available more competitive out there.

And then if like we're having an El Nino year, so are we going to go through this cycle again where nuts are going to get all this rain? We're going to see lower pricing and then more competition or what are your expectations going for next year?

We haven't seen any effects from El Nino yet, but the crops look pretty decent out in California with maybe the exception of the early indications of the almond crop, but all the other crops look like they're in pretty good shape.

Okay, thanks. That's it for my questions for me.

[Operator Instructions] Our next question comes from [ Ron Miturko ] with MCM.

Jeff, thank you so much for your stewardship of the company. And we appreciate your candor and your working so hard for us. I just had a question. I think a lot of my questions were answered by the previous two guys. But just to summarize the bar business, like you are going to be targeting the higher end and the protein and fiber content things but doing it in a private label way so it's not too because the market is it seemingly is growing away from just the real high-priced branded contingent. Is that correct? And you intend to do anything, you know, proprietary in your own branding at some point down the road?

Yes, right now we're focused on just getting the successful brands emulated and give private label offerings in the retail market. I think the co-pack or the co-manufacturing opportunity for some of these brands does allow us to get into other channels where private label wouldn't work. For example, sports stores, gyms, and things of that nature. But yes, at some point we will work with our customers to develop proprietary formulas for them.

I would just add to that. So if you look at the category you've got, the biggest volume would be something like fruit and grain, the chewy granola bars. These high-speed lines will make us more competitive in those categories, but then the bigger focus is on research and development innovation in the forward protein bars, as I mentioned. And that's where the biggest growth is coming from, is those high protein bars in the category. So we have a combination of the volume items with chewy granola and fruit and grain, but then the high margin, high growth in the protein forward bars.

Okay, and from the acquisition, it sounds like you're putting in the new lines are going to be in Elgin, where you guys live, and would that be, like, new technology that you've had to adopt from, like, the bar business that you bought? I know you guys have been in the bar business for a long time, so could you just talk a little bit about that?

Sure, this is Jasper. The 2 high-speed lines are really balancing out our manufacturing capability. Obviously, there are certain SKUs that are high volume, which we will be moving to the high-volume bar lines, but there are a lot of other SKUs that we have, both at large retailers and smaller retailers, that would not warrant running on a very high-speed bar line. And so much like we did for snack nut and trail, we developed our manufacturing capabilities to run low volumes very efficiently as well as high volumes very efficiently. And that's really what this investment represents, is just balancing out our manufacturing capabilities to better fit our customer demands.

Okay, and those lines will be up and running by the end of October.

Q2 and Q3.

Okay. Good, thank you very much.

Thank you. Thanks for your questions.

I'm showing no further questions at this time. I'd like to turn the call back over to Jeffrey Sanfilippo for closing remarks.

Thanks, Michelle. So we appreciate your participation in the call and thank you for interest in our company. I would like to mention that upcoming events, the company will be presenting at the BWS Financial Growth and Value Summer Investor Series Conference in New York City this coming Tuesday, August 25th, and the Midwest IDEAS Conference in Chicago on August 27th. Investors that would like to schedule a meeting with management should contact Three Part Advisors at the phone number below.

Thank you for your interest. Have a great day. Thank you for your participation. You may now disconnect.

Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son, Inc. Third Quarter Fiscal 2026 Operating Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Jeffrey Sanfilippo, Chief Executive Officer. Please go ahead.

Thank you, Rica, and good morning, everyone, and welcome to our 2026 Third 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. These statements are based on our current expectations, and they involve certain risks and uncertainties. The factors that could negatively impact results are explained in the various SEC filings that we've 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.

We delivered another strong quarter, achieving record top line sales growth, supported by our continued focus on driving volume across our 3 of our sales channels. Total volume was consistent with last year and the sequential quarter improvement is an early indication that our volume growth initiatives are beginning to gain traction. In particular, we are very encouraged by the improved performance in our commercial ingredients and contract manufacturing channels this quarter.

Our diversified multi-channel sales model serving at-home consumer demand, away from home food service customers and strategic contract manufacturing partnerships continues to be a competitive advantage, positioning us to capture growth opportunities wherever they emerge in the marketplace. The strategic channel mix enables us to quickly adapt to shifting consumption patterns and consistently deliver results across a wide range of end markets. We're actively pursuing new volume-driving opportunities, leveraging our new and existing capabilities and advancing the onboarding of a new strategic customer in the contract manufacturing channel.

In all my years as CEO, I've never seen a more productive period with our sales, marketing and R&D teams presenting new programs at customers across every channel in our organization, consumer, commercial ingredient and contract manufacturing. The energy among our teams is incredible as they showcase new products and share our growing capabilities. These meetings include important innovation sessions, we are building out a future pipeline of new products for our key partners and our brands. Like other snack food companies, our third quarter performance was impacted by a challenging macroeconomic and consumer environment.

It is important to note that our volume was stable in our third quarter. I'm proud of the efforts of our teams throughout the organization to provide exceptional service to our customers and consumers and provide differentiated products and value solutions. Our performance underscores our strategic priority to execute on our long-range plan and adapt our strategies to meet evolving consumer needs.

Yesterday, our Board of Directors met at our headquarters in Elgin, Illinois. We spent the morning discussing the investments we are making in our bar manufacturing capabilities, and we took a tour of the new equipment installation in the plant. It is an extraordinary operation, and this investment is transforming our business and will provide enormous growth opportunities for JBSS. Our teams are so proud of what we are building at our headquarters. We plan to host an Investor Day sometime in October this year. It will be a chance for stockholders to see and experience a transformation of our company.

This historic investment in production equipment and infrastructure in our facilities reflects our confidence in investing in domestic manufacturing here. We do have headwinds we continue to face. Although U.S. customs launched a new electronic system to handle tariff refund claims, there's no telling how quickly customs can process the backlog. We're engaging with the 20 suppliers, which account for 90% of our total tariff surcharges, and we are monitoring progress. And there's still uncertainty as to how our customers will respond. And global events continue to create unfavorable conditions for elevated fuel prices, along with increased costs for other related materials.

Our procurement team is doing an exceptional job monitoring this volatile situation, assessing alternative suppliers where possible and working to mitigate supply chain and cost disruptions. As I've mentioned on previous earnings calls, our business model, the foundation of our company remains important to our success as we adapt to changing macroeconomic conditions and evolving consumer demand. Diversification is a key element of that model, both across our business channels and customer base and across our product portfolio. The investments we've made in the snack, energy and protein-forward bar category expands our reach with existing customers and consumers, also opening opportunities for new demand. This is JBSS executing our long-range growth plan.

A second element of our business model that allows us to quickly adapt to changing macroeconomic conditions and evolving consumer demand is our investments in consumer insights and innovation. For example, we know value is a top driver of private label choice. However, different consumers prioritize different value dimensions from convenience and quality to sustainability, experience and trust. Our insights team digs deeper to understand consumer behavior in our categories and the insights guide our R&D and business development efforts.

We are monitoring how wellness, functional and lifestyle-led innovations are driving private label growth in snacks and consumers increasingly trust private brands for quality, clean ingredients and sustainability, especially Gen Z and millennials. As a result, our focus with customers is to continue and accelerate wellness-oriented and premium innovation. We will also strengthen our digital product data and sustainability claims. And we will continue to leverage seasonal and limited time offers that add excitement to the snack category and deepen our collaborative partnerships.

A third important factor supporting our business model is our investment in our people. With the fast-paced use of AI technology, we have to adjust workforce skills necessary to be successful. Our human resources and IT departments, along with functional leaders across our organization are assessing how to optimize our teams and equip them with the tools and skills for a more digital future with AI and automation reshaping job roles in our offices and in our manufacturing facilities.

I will now turn the call over to Frank to discuss our financial performance.

Thank you, Jeffrey. Starting with the income statement. Net sales for the third quarter of fiscal 2026 increased by 8% to $281.8 million compared to net sales of $260.9 million for the third quarter of fiscal 2025. The increase in net sales was due to 8.3% increase in the weighted average sales price per pound. Sales volume remained essentially flat. In particular, sales volume declined for substantially all major product types, while sales volume increased for walnuts, pecans and mixed nuts. The increase in the weighted average selling price reflected pricing actions taken in response to higher commodity acquisition costs for all major tree nuts and peanuts as well as a shift in product mix toward higher-priced items in the current third quarter.

Sales volume decreased 4.5% in the consumer distribution channel, primarily driven by a 5.3% decline in private brand sales, reflecting lower volume in private label bars, while nuts and trail mix sales volume remained relatively flat. Bar sales were impacted by continued category softness at a mass merchandise retailer, consistent with the trends seen in our most recent second quarter. Our strategic decision to reduce sales to a grocery store retailer also contributed to the overall decline in bar volume.

Sales of nuts and trail mix were negatively impacted by elevated retail prices, reduced promotional activity and discontinuation of underperforming items. These impacts were largely offset by new private branded walnut distribution at an existing grocery retailer and increased sales resulting from promotional pricing on walnuts and peanuts at an online retailer. Lastly, branded sales benefited from limited opportunistic orders for Orchard Valley Harvest to a customer in the non-food sector.

Sales volume increased 14.3% in the commercial ingredients channel, mainly driven by higher food service sales volume at new and existing customers. In addition, increased sales of peanut crushing stock contributed to the overall growth in the quarterly comparison.

Sales volume in the contract manufacturing channel increased 16.5% due to increased snack nut sales to a significant customer as we continue onboarding this customer added during the second quarter of the prior year. This increase was partially offset by decreased granola sales volume.

Gross profit decreased by $2.1 million or 3.8% to $53.8 million compared to the third quarter of last year, driven by significantly lower inventory valuation adjustments compared to the prior year, partially offset by higher net sales. Gross profit margin decreased to 19.1% of net sales compared to 21.4% for the third quarter of fiscal 2025 due to the reasons previously mentioned.

Total operating expenses increased by $2.3 million compared to the prior year's third quarter, driven by higher incentive compensation expenses, partially offset by lower compensation costs, lower rent expense and a gain on the sale of non-core equipment. Total operating expenses as a percentage of net sales for the third quarter of fiscal 2026 remained unchanged at 10.6% compared to the prior year comparable quarter.

Interest expense was $500,000 for the third quarter of fiscal 2026 compared to $1.1 million for the third quarter of fiscal 2025, due to lower average line of credit levels. Net income for the third quarter of fiscal 2026 was $16.8 million or $1.43 per diluted share compared to $20.2 million or $1.72 per diluted share for the third quarter of fiscal 2025.

Now taking a look at inventory. The total value of inventories on hand at the end of the current third quarter decreased $5.2 million or 2% compared to the total value of inventories on hand at the end of the prior year comparable quarter. The decrease was primarily due to lower commodity acquisition costs for walnuts and peanuts, as well as lower on-hand quantities of pecans, walnuts and almonds. These reductions were partially offset by the impact of higher pecan acquisition costs and increased on-hand quantities of peanuts. The weighted average cost per pound of raw nut and dried fruit input stock on hand increased 10.5% year-over-year, mainly due to the reasons noted previously.

Moving on to year-to-date results. Net sales for the first three quarters of the current year increased 6.8% to $895.2 million compared to first three quarters of fiscal 2025. The increase in net sales was primarily attributable to an 11% increase in the average weighted selling price per pound, which was partially offset by a 3.7% decrease in sales volume.

The sales volume decrease was due to lower sales volume in the consumer channel, partially offset by year-to-date growth in commercial ingredients channel.

Gross profit increased 18.7% of net sales compared to 18.5% in the prior period. The increase was mainly attributable to aligning our pricing more closely with commodity acquisition costs, the absence of a one-time pricing concession recognized in the prior period and the factors noted previously.

Total operating expenses for the current year remained essentially flat at $90.3 million compared to the prior year's first three quarters.

Interest expense was $2 million for the first three quarters of fiscal 2026 compared to $2.3 million for the first three quarters of fiscal 2025. Net income for the first three quarters of fiscal 2026 was $53.5 million or $4.55 per diluted share compared to net income of $45.4 million or $3.87 per diluted share for the first three quarters of fiscal 2025.

Please refer to our Form 10-Q for additional details regarding our financial performance for our third quarter of fiscal 2026.

Now I'll turn the call over to Jeffrey to provide additional comments.

Thanks, Frank, for the financial updates. Now I'll turn to category updates. I'll share category and brand results for the quarter. All the market information I'll be referring to is Circana's panel data, and for today, it is the period ending March 22, 2026. When I refer to Q3, I'm referring to 12 weeks of the quarter ending March 22, 2026. References to changes in volume versus the corresponding period 1 year ago. For pricing commentary, we are using Circana's MULO scan data, and 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 Circana.

In the third quarter, we continue to see modest growth in the broader snack aisle as defined by Circana. Volume and dollars were up 0.5% and 5%, respectively. This is consistent with the performance we saw in Q2. In Q3, the snack nut and trail mix category was down 6% in volume and up 1% in dollars, which is an acceleration of the volume softness we saw last quarter. Snack nut prices rose 8% with increases across nearly all nut types. Prices rose 6% for trail mixes.

Orchard Valley Harvest brand, which primarily plays in trail mix, was up 33% in pound shipments during Q3. The launch of an innovative platform paired with additional shipments to a specialty retailer drove this healthy increase. Our Southern Style Nuts brand performed similarly to the category, a 6% decrease in pound shipments, driven by softness primarily in our e-commerce channel. Fisher's snack nut and trail mix performed worse in the category with pound shipments down 8%. Fisher's performance was due to less promotional activity paired with the broader category headwinds.

Our private label consumer snack and trail shipments performed similar to the category with pound shipments down 4% versus last year.

Now let me turn to the recipe nut category. In Q3, the recipe nut category was up 5% in pounds and up 17% in dollars, driven by growth in private label as a discount retailer is expanding store counts. The recipe category experienced a 11% price increase, driven by increases in both walnuts and pecans. Our Fisher recipe pound shipments were down 8% in Q3 due to slower velocities among grocery retailers.

Now I'll switch to the bar category. In Q3, the bar category grew by 2% in pounds and 6% in dollars, driven by branded player growth in the protein segment of the category. Private label was flat in pounds and down 1% in dollars. Our private label bar shipments were down 17% versus a year ago due to softness at a major mass merchandiser.

In closing, we remain attentive to category trends and continue to monitor consumer sentiment, which is showing early signs of stabilizing. At the same time, we recognize that rising global tensions in certain key regions and the resulting impact on energy prices and supply chain dynamics are contributing to ongoing uncertainty. I am confident in the strategic investments we have made in our people, our customers and capabilities to overcome these challenges and deliver strong operating results.

Our company will maintain an agile mindset as we move forward. Furthermore, we will continue to rigorously pursue opportunities to enhance internal efficiencies and drive long-term customer and shareholder value. Our company and our team of dedicated leaders and associates throughout the organization remains steadfast and strong. We have always adapted quickly to overcome headwinds. And our insights, innovation, R&D, marketing, sales and operations teams are laser-focused on consumer behavior and consumption trends to develop new products, pursue new opportunities and support increased demand from our private brand retail partners.

We have the right strategies, talent and commitment to quality and service to continue to grow and provide exceptional value and innovation to our customers and consumers. We appreciate your participation in the call, and thank you for your interest in our company.

I will now turn the call back over to Rica open the line to open the line for.

[Operator Instructions] Our first question comes from the line of Hamed Khorsand from BWS Financial.

I just wanted to ask you about how you're moving on a standpoint of adding capacity in the bars? And do you need to add capacity in bars right now?

Sure, Hamed. This is Jasper. The installation of the line is 90% done with the processing and the packaging side of it. Currently, the bulk of the work left is building out our kitchens and then auxilliary support like dust collection, both liquid storage as well as bulk life storage. As it relates to the capacity, we do have a pretty large spike for back-to-school.

And so currently, I would say, 9 months out of the year, we don't need to add additional capacity for the mainstream type of bars, which would be fruit and grain and Chewy type of bars. We're actively working with our protein bar line to gain additional distribution. We do have some kit protein bars will enter the market within the next 4 to 6 weeks at a major retailer. And the sales team continues to remain focused on still building out our mainstream bars to fill up some capacity as well as get our protein platform moving at retailers. As you know, the protein category is growing faster than obviously the mainstream bar category is. It's also a margin accretive relative to the mainstream bars. So the team is laser-focused on getting those offerings out into market.

And then as far as this large customer that you were just talking about this quarter ramping for you, does it matter as far as the volume, how it ships for you, if it's between the retail segment or if it's through the contract manufacturing here.

It does not -- this is Frank comment. It does not.

Okay. So you're just -- moving volumes around and just pocketing the dollars

Correct. Okay. And every customer has a different channel classification.

Got it. And then looking out to fiscal '27, where do you stand as far as new customers go? Are they still on the cusp of coming on?

So one of our goals, Hamed, is to diversify our customer base. We are -- got some important customer concentration that we're looking to diversify. So the teams are working hard with retailers across the consumer channel, but also the focus, as we touched on earlier, was the contract manufacturing and the commercial ingredient channel. A lot of opportunities for new customers in those channels as well.

And so the teams are working across channels to diversify, add new customers. In addition, we're looking at retailers that we currently work with, but don't work in every department. For example, pharmaceutical would be one that we do very little business in today, but there are snacks in the pharmaceutical departments. And so not only diversifying customers, but also the segments within customers that we already have.

[Operator Instructions] I am showing no further questions at this time. I would now like to turn it back to Jeffrey Sanfilippo for closing remarks.

Well, thank you, everyone, for participating in the call today and for your support of JBSS. We appreciate your support and look forward to announcing our Q4 in the next couple of months. Have a great day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son Second Quarter Fiscal 2026 Operating Results Conference Call. [Operator Instructions] 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, and 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. These 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 volume. 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 to our 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 strategy. 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 out 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 platform. Our sales and marketing teams have started engaging with customers, and 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 on earnings calls. One is margin and productivity. Many continue to see pressure from inflation, rising input costs and supply chain complexity. At JBSS, 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, optimize 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 packaging. 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 (sic) [ second ] quarter.

Thank you, Jeffrey. Starting with the income statement. Net sales for second quarter of fiscal 2026 increased by 4.6% to $314.8 million compared to net sales of $301.1 million for 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 core 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 volumes 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 mass merchandiser.

Bar sales declined in as prior year's volume were elevated by low industry-wide inventory levels and the lingering impact of a national brand recall, which temporarily boosted private label bars demand. A strategic reduction in sales to one grocery retailer also contributed to the baseline.

Branded sales were negatively impacted by lost distribution of Orchard Valley Harvest at a major customer in the nonfood sector and the timing of Fisher snack promotions at a major nonfood 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 in our Lakeville facility, which was partially offset by increased snack nut sales to a customer added during the second quarter of the prior year.

Gross profit increased by $6.9 million or 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 to 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 compared 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 year's second quarter, increasing by $300,000. The 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 inventories on hand at the end of the current second quarter increased $29.6 million or 14.4% compared to total value of inventory on hand in the prior year comparable quarter. The increase was due to higher commodity acquisition costs across all major nut types except for peanuts and inshell 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 inshell walnuts, partially offset by lower acquisition costs of peanuts and lower on-hand quantities of almonds and cashews.

Moving on to year-to-date results. Net sales for the first 2 quarters of the current year increased 6.3% to $613.5 million compared to the first 2 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 volume in the consumer and contract manufacturing channels, partially offset by year-to-date growth in the commercial ingredients channel.

Gross profit margin increased to 18.5% of net sales compared to 17.1% in the prior period. The increase was mainly attributable to the factors noted previously in the quarterly comparison, along with a onetime 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 2 quarters of fiscal 2025. The decrease in total operating expenses was mainly driven by lower marketing and insight spending, reduced third-party warehouse costs, decreased 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 2 quarters of fiscal 2026 compared to $1.3 million for the first 2 quarters of fiscal 2025. Net income for the first 2 quarters of fiscal 2025 was $36.7 million or $3.12 per diluted share compared to net income of $25.3 million or $2.60 per diluted share for the first 2 quarters of fiscal 2025.

Please refer to our Form 10-Q, which is filed yesterday, for additional details regarding our financial performance for the second quarter of fiscal 2026.

Now I'll turn the call over to Jeffrey to provide additional comments.

Thanks, Frank, for the financial update. It's important to note how our Long-Range Plan defined our future growth priorities focused on accelerating our private brand business with key customers and high-growth snacking categories with notably private brand bars while expanding branded distribution behind Orchard Valley Harvest and Fisher via insight-driven product and packaging innovation.

Execution of this plan is anchored in delivering value-added solutions and high-quality innovative products based on our extensive industry and consumer expertise. Growth in private brand bars will be supported by capacity expansion and a robust innovation pipeline with continued focus on nutrition bars.

For our branded nut and trail mix business, we are focused on attracting new consumers through product innovation, broader distribution across traditional and alternative channels and expanded purchasing occasions, including club stores, e-commerce and the noncomp foodservice segment. Promotional and advertising investments are being prioritized to drive volume growth, supported by an omni-channel strategy across recipe nuts, snack nuts and trail mix.

Now we'll turn to category updates. I will share some category and brand results with you for our second quarter. All the market information I'll be referring to is Circana panel data, and for today, it is the period ending December 28, 2025. When I refer to Q2, I'm referring to the 13 weeks of the quarter ending December 28, 2025. References to changes in volume are versus the corresponding period 1 year ago. For pricing commentary, we are using Circana's MULO+ scan data and we are referring to average price per pound. We are using the nuts, trail mix and bar syndicated views of the category as defined by Circana.

In the second quarter, we continue to see modest growth in the broader snack aisle as defined by Circana. Volume and dollars were up 2% and 4%, respectively. This is consistent with the performance we saw in Q1. In Q2, the snack nut and trail mix category was down 4% in pounds and up 3% in dollars, which is generally consistent with the performance from the last quarter. Snack nuts prices rose 8% with increases across nearly all nut types. Prices rose 6% for trail mixes.

Our Southern Style Nuts brand performed better than the category with a 5% increase in pound shipments, driven by an increase in sales in our e-commerce channel. Fisher's snack nut and trail mix performed worse in the category with pound shipments down 15%. This was primarily driven by some lost distribution and less promotional activity.

Orchard Valley Harvest brand, which primarily plays in trail mix, was down 42% in pound shipments driven by discontinuation at a national specialty retailer. Commodity increases, including cocoa and some tree nuts, are resulting in higher prices for Orchard Valley Harvest, but we continue to focus on innovation and renovation opportunities to mitigate this commodity pressure.

Our private label consumer snack and trail shipments performed generally similar to the category with pound shipments down 5% versus last year.

Now let me turn to the recipe nut category. In Q2, the recipe nut category was up 2% in pounds and up 14% in dollars, driven by the seasonality impact of the holiday season paired with higher prices. The recipe category experienced a 13% price increase driven particularly by walnuts, although other nut types experienced price increases. Our Fisher recipe pound shipments were down 3% in Q2 due to some lost distribution, although we performed very well at our current retailers.

Now let's look at the bar category. In Q2, the bars category continued to rebound as a major player continued to reenter the market after a major recall in the winter of 2023. The category grew 6% in pounds and dollars driven by branded player growth. Private label was down 1% in pounds and up 2% in dollars. Our private label bar shipments were down 12% versus a year ago due to softness at one major mass merchandiser.

In closing, as we look ahead to the second half of fiscal '26, we do so with cautious optimism driven by recent commercial momentum across the organization. Our consumer team has recently secured new and expanded business with several important customers. Our foodservice team is expanding distribution with strategic partners, and our contract manufacturing team continues to build scalable growth platforms for customers. Together, these efforts position us well as we execute our growth strategies and invest in infrastructure to support the next phase of our business transformation.

As always, we will continue to respond to challenges, including the current economic and operating environment and the risk of declining demand. But I am confident we have the right team, initiatives and strategies to overcome these challenges to provide differentiated value to our customers and consumers. We are committed to creating long-term shareholder value through these strategic initiatives and continued operational excellence.

I want to extend my heartfelt thanks to all our employees for their hard work and dedication, which have been instrumental in achieving these milestones. 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. JBSS is positioned well for strong results in the future.

We appreciate your participation in the call, and thank you for your interest in our company. We'll now open the call to questions.

[Operator Instructions] Our first question will come from the line of Hamed Khorsand from BWS Financial.

So first question is where do you stand on this equipment? You're saying it's 85% you're going to be on time for this year. Is it going to be calendar this year or fiscal this year? And then how do you know the quality will be there that you've already started engaging with customers?

Sure, Hamed. This is Jasper. So we already have equipment being delivered now in the building and at our Huntley warehouse. All the other product or equipment from Europe is either on water or getting crated to go come on the water. We are very familiar with the manufacturers that we selected for our processing equipment so we know that the quality, the build and the efficiency of the equipment is really what we're looking for. It's very similar to equipment we already have in terms of size and layout. And so we're very comfortable with the fact that the equipment will perform well. When we're talking about having it installed, we're talking about installing and running in July of '26.

And I would add that Jasper and some of our engineers have been to Europe and visiting the equipment manufacturers several times during the course of this past year. And so they viewed the production of the equipment. They've tested it while they've been there. So we're confident once it gets on the water and installed here that it will be working as we expect.

Okay. And then the other question is just about the pricing. How fast are you able to pass through pricing that you're incurring on the higher cost of nuts?

Sure. So two things. One, typically with most retailers, we have a 6-month price review depending on whether commodities are going up or down. And then once those 6-month price reviews hit, we need to take pricing, for example, on our brands. There's typically a 60- to 90-day timeline to initiate those price changes.

[Operator Instructions] And I'm not showing any further questions in the queue at this time. I would now like to turn it back over to Jeffrey for closing remarks.

Great. Thanks, Victor. I appreciate your support. Again, thank you all for being on the call today and your interest in JBSS. This concludes the call for our second quarter fiscal 2026 operating results. Have a great day.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son, Inc. First Quarter Fiscal 2026 Operating Results Conference Call.

[Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Jeffrey Sanfilippo, Chief Executive Officer. Please go ahead.

Good morning, everyone, and welcome to our 2026 first quarter earnings conference call. Thank you for joining us. On the call with me today is Frank Pellegrino, our CFO; and Jasper Sanfilippo, our COO.

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 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.

We began the fiscal year with strong momentum, continuing to execute our Long-Range Plan with discipline and focus. In this quarter, we delivered a 59% improvement in diluted earnings per share, underscoring the strength of our strategy, improvements in our commercial ingredients and contract manufacturing businesses and our relentless focus on generating operational efficiencies throughout our organization.

We have seen directional improvements in sales volume over the past 3 quarters, signaling progress in stabilizing our overall demand. These results were achieved in a challenging snack food environment as consumer behavior continues to evolve in response to broader macroeconomic shifts. Our achievements reflect the hard work and commitment of our employees whose contributions remain vital to our continued success.

Yesterday, the company's Board of Directors approved a special cash dividend of $1 per share on all issued and outstanding shares of common stock of the company and $1 per share on all issued and outstanding shares of Class A common stock. The special dividend will return approximately $11.7 million to company stockholders and will be paid on December 30, 2025, to stockholders of record as of the close of business on December 1, 2025.

Our financial performance over the last several quarters provided us the opportunity to declare the special dividend, which reinforces our goal of creating long-term stockholder value through the responsible use of cash. The special dividend would not be possible without the hard work and dedication of all JBSS team members during our busy holiday season.

Price inflation and consumer sentiment is a challenge for the snack category today across many food segments. We faced significant nut commodity cost increases over the past year in addition to high prices for cocoa. Our teams have worked hard to mitigate price increases and offered our customers several options to manage costs, which included pack size changes, formula adjustments and alternative ingredient considerations.

Some retailers were proactive and made changes to their portfolio. Our teams also worked hard to drive additional costs out of our operations and supply chain and manage our inventory levels. Demand planning becomes challenging when consumer behavior changes and markets become volatile. So we are prioritizing resources to work with our key retail partners on better forecasting and order planning.

For example, we experienced a soft back-to-school period for the snack bar category in our first quarter. Our insights team and sales and marketing are working with our customers to understand the dynamics of the bar category and adjusting promotional and volume plans based on current trends to manage inventory levels and future production schedules.

This time last year, the company's profitability was impacted by a onetime concession to a snack bar customer due to capacity constraints and service levels. We overcame those constraints and our service levels this quarter exceeded expectations. We have systems in place now to mitigate supply risk for high peak consumption periods. It is the busy season for our nut and trail mix business. Our sales, marketing and operations teams have done a great job building our business for the upcoming holiday season. We are in full swing with shipments to customers.

On our call last year, I mentioned we expanded our manufacturing footprint by leasing a 446,000 square foot facility in Huntley, Illinois. This investment provided the company with additional space in our Elgin facility to install new production lines for our snack and protein bar business. The new lines create extraordinary opportunities to innovate our bar platform and enter new snack, energy and protein bar segments.

Installation is in progress, and we are on schedule to begin manufacturing by the end of this fiscal year. As we have shared on previous calls, the inflationary environment has changed consumer behavior, and we have seen them shift to more value-focused retailers such as club stores. Our teams have worked hard to expand our retail distribution in club and alternative channels with innovative products and pack sizes.

Our OVH brand has gained several rotations at a key club retailer and the rollout of some of our new OVH snack items is gaining traction with retailers across the country. I'm so proud of our R&D team for creating amazing innovative snack products and building a pipeline for future growth and a call out to our sales teams for building collaborative partnerships with several grocery retailers.

Many other food company CEOs have shared on their management calls one of our important priorities is to stay relevant with Gen Z and mainstream consumers. JBSS is doing this by delivering product and portfolio innovation paired with strong value. Our marketing insights team is tracking purchasing trends, price point elasticity, new product launches and consumer sentiment and behavior.

These insights guide our innovation pipeline, category management recommendations and our branded advertising expenditures as we've shifted our investments to more digital marketing.

I'll now turn the call over to Frank Pellegrino, our CFO, to provide additional information on our financial performance for our first fiscal quarter.

Thank you, Jeffrey. Starting with the income statement. Net sales for the first quarter of fiscal 2026 increased by 8.1% to $298.7 million compared to net sales of $276.2 million for the first quarter of fiscal 2025. The increase in net sales was due to an 8.9% increase in weighted average sales price per pound which was partially offset by a 0.7% decline in sales volume, which is defined as pounds sold to customers.

The increase in the weighted average sales price primarily resulted from significantly higher commodity acquisition costs across all major tree nuts. Sales volume declined across all major product types, except for peanuts, walnuts and pecans, all of which experienced volume growth in the quarter.

Sales volume decreased 5.1% in the consumer distribution channel, primarily due to a 3.2% decrease in private brand sales volume. Approximately half of the decrease was due to the discontinuation of peanut butter at a mass merchandiser. The remaining private brand sales volume decrease was nearly evenly split between nut and trail mix and bars.

Nut and trail mix sales volume was negatively impacted by higher retail prices and reduced promotional activity, which was partially offset by new business and expanded distribution with 3 existing customers. Bar sales volume declined due to our strategic decision to reduce sales to one grocery retailer and lost distribution to another, which was partially offset by growth at a mass merchandiser and a current customer.

Lost distribution of Orchard Valley Harvest at a major customer in the nonfood sector also contributed to the overall decline in the consumer distribution channel. Sales volume increased 12.8% in the commercial ingredients distribution channel, mainly driven by new business with 2 customers, increased peanut bar volume at existing foodservice customers and increased sales of peanut crushing stock to peanut oil processors.

Sales volume increased 18.4% in the contract manufacturing distribution channel, primarily due to increased granola sales volume and increased snack nut sales to another customer added during the second quarter of the prior year. These increases were partially offset by lower peanut and peanut butter sales volume to a major customer.

Gross profit increased by $7.6 million or 16.2% to $54.1 million compared to the first 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 first quarter of the prior year. Additionally, the prior year first quarter included a onetime price concession to a bar customer that did not recur this quarter.

Gross profit margin increased to 18.1% of net sales compared to 16.9% for the first quarter of fiscal 2025 due to the reasons previously mentioned. Total operating expenses for first quarter decreased $2.5 million compared to the first quarter of the prior year, primarily driven by lower marketing and insight spending, reduced third-party warehouse costs, lower third-party recruitment expenses and decreased freight costs.

These decreases were partially offset by an increase in incentive compensation expense. Total operating expenses as a percentage of net sales for the first quarter of fiscal 2026 decreased to 9.1% from 10.7% in the prior comparable quarter due to the reasons previously mentioned and a higher net sales base.

Interest expense was $1 million for the first quarter of fiscal 2026 compared to $500,000 for the first quarter of fiscal 2025 due to higher average debt levels. Net income for the first quarter of fiscal 2026 was $18.7 million or $1.59 per diluted share compared to $11.7 million or $1 per diluted share for the first quarter of fiscal 2025.

Now taking a look at inventory. The total value of inventories on hand at the end of the current first quarter increased $40.2 million or 20.6% compared to total value of inventories on hand at the end of the prior year comparable quarter. The increase was due to higher commodity acquisition costs across all major tree nuts as well as greater on-hand quantities of finished goods due to lower than forecasted back-to-school demand for bars and preparation for anticipated holiday seasonal demand.

The weighted average cost per pound of raw nut and dry fruit increased 24.8% year-over-year, mainly due to higher commodity acquisition costs for all major tree nuts. Please refer to our Form 10-Q, which was filed yesterday for additional details regarding our financial performance for the first quarter of fiscal 2026.

Before I turn the call over to Jeffrey, please note that we will be presenting at the Southwest IDEAS Conference in Dallas on November 19. Now I will turn the call over to Jeffrey to discuss category trends.

Thanks, Frank, for the financial updates. Success requires smart strategies and the right business model for sustainable growth. It also requires a talented and committed group of leaders across the organization. We have all those elements of success here at JBSS. I'll now share some category and brand results with you for the quarter. All the market information I'll be referring to is Circana panel data and for today, it is for the period ending September 28, 2025.

When I refer to Q1, I'm referring to 13 weeks of the quarter ending September 28, 2025. References to changes in volume are versus the corresponding period 1 year ago. For pricing commentary, we are using Circana MULO+ scan data, and we're referring to average price per pound. We are using the nut trail mix and bar syndicated views of the category as defined by Circana.

In the first quarter, we continued to see modest growth in the broader snack aisle as defined by Circana. Volume and dollars were up 2% and 5%, respectively. This is consistent with the performance we saw last quarter. In Q1, the snack nut and trail mix category was down 3% in pounds, which is a decline from last quarter.

Dollars in Q1 were up 5%, which is consistent with Q4 performance. Price increases drove the dollar growth. Snack nut prices rose 8% with increases across all nut types. The prices for trail mixes rose 6%. Fisher snack nut and trail mix performed worse than the category with pound shipments down 6%. This was due primarily to some lost distribution and less promotional activity.

Our Southern Style Nuts brand pound shipments decreased by 7%, driven by some reduction in distribution at a national club retailer. Orchard Valley Harvest brand, which primarily plays in trail mix was down 44% in pound shipments, driven by discontinuation at a national specialty retailer. Commodity increases, including cocoa and some tree nuts are resulting in higher prices for Orchard Valley Harvest. We continue to focus on innovation and renovation opportunities to mitigate this commodity pressure.

Our private label consumer snack and trail shipments performed slightly weaker than the category with pound shipments down 4% versus last year due to softness in mass as prices rise due to commodity pressures. We're actively working on cost mitigation solutions with our retail partners.

Now turning to recipe nut category. In Q1, the recipe category was down 2% in pounds and up 19% in dollars, which is similar to Q4's performance. The recipe category experienced a 21% price increase, driven particularly by walnuts, although all nut types have experienced price increases. Our Fisher recipe pound shipments were down 6% in Q1 with volume softness tied to significantly increased costs of our commodities.

In closing, as we look ahead, we will continue to build on the momentum we have generated in this quarter by staying focused on 3 key priorities: growing our sales volume, delivering best-in-class service and value to our customers and driving ongoing improvements in profitability. These efforts are foundational to our strategy and will enable us to deliver long-term value to our shareholders.

Looking forward, other priorities continue to be optimizing commodity acquisition costs and selling price alignment, drive category growth for snack and trail mix and increase our snack and nutrition bar distribution and identify additional operational efficiencies. No doubt, we are facing ongoing headwinds with shifts in consumer behavior, impacts of tariffs and commodity inflation.

Despite these headwinds, I'm confident we have the people, the processes, the brands, the expertise and the financial strength to be agile and successfully navigate our company through these volatile times to grow our business. I'd like to thank our amazing and hard-working team for their dedication.

All of us have a steadfast commitment to develop business plans to create shareholder value and provide relevant, profitable, value-added products and services to our customers and consumers. Our mission is to provide great-tasting, innovative products that bring joy, nourish people and protect the planet.

We appreciate your participation in the call, and thank you for your interest in our company. We will now open the call to questions. Liza, please queue up the first question.

[Operator Instructions] And our first question will be coming from the line of Hamed Khorsand of BWS Financial.

So talking about the snack bar business, the decline you saw, is that because of consumer behavior or because of the customer, the mass merchants and retailers and so forth?

So, thanks for the question. So it really was driven by consumer behavior. So we had a great overall strong back-to-school volume, but we did see some declines in one of the key bar segments, which was fruit and grain that we didn't anticipate. But overall, consumption for the bar category was strong. We had General Mills who came back online with their Quaker Chewy Granola Bars, which did not -- were not in the market last year or in smaller portions of the market due to their previous recall. So they were back in full force this period -- this year. But in addition to that, we did see strong growth with our private brand bar category.

Okay. And as far as the dividend is concerned, are you expected to just pay that out of cash flow? Or so this coming quarter is going to be high in cash flow? Or are you going to be going into debt for it?

It will be mainly from our cash flow.

Okay. And finally, you were talking about some increase in demand in certain nuts. Is that coming from just the consumer preferring because they're cheaper alternatives versus the other nut categories?

Typically, we would see -- if you have price inflation, you'll see a shift from higher cost nuts, for example, cashews or deluxe mixed nuts to something of a cheaper trail mix or peanuts. We've seen a little bit of that shift this year with the kind of macro environment. But we also did see some consumers leaving the snack nut category because of the higher per pound prices versus other cheaper snack alternatives like potato chips, for example.

The good news is, overall, the total snack category, we're seeing it stabilize. We're getting away from some of the declines that we saw in the overall snack category. So we're hopeful that we'll get some of those consumers back into the snack nut category as well.

[Operator Instructions] At this time, I'm not seeing any further questions. And I would like to turn the call over to Jeffrey Sanfilippo, Chief Executive Officer, for closing remarks. Please go ahead.

I want to thank everyone for your interest in JBSS. This concludes the call for our first quarter of fiscal 2026 operating results. Have a great Halloween weekend.

This does conclude today's program. You may all disconnect.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the John B. Sanfilippo & Son, Inc. Fourth Quarter and Full Year 2025 Operating Results Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jeffrey Sanfilippo, CEO. Please go ahead.

Thanks, Latonia. Good morning, everyone, and welcome to our fiscal 2025 fourth quarter earnings conference call. Thank you for joining us. On the call with me today is Frank Pellegrino, our CFO; and Jasper Sanfilippo, our COO.

We may make some forward-looking statements today. These statements are based on our current expectations and they involve certain risks and uncertainties and -- the 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.

Before we begin today's call, I want to take a moment to honor the life and legacy of Matt Ballantine, former President from 1995 to 2006 and member of the JBS Board of Directors who passed away this week, Matt played a pivotal role in shaping the success of our company, working closely alongside our former CEO, Jasper Sanfilippo Senior during some of the company's most formative years. He was more than a leader, who is a mentor, a trusted adviser and a steady president for so many of us. And whether Jasper and I were fortunate to learn from him and his impact continues to resonate throughout organization. We are deeply grateful for Matt's contributions. Our thoughts and prayers are with his Ballantine and Carol families.

Turning to our results. and proud of our team navigated a challenging and constantly evolving operating environment through fiscal 2025. We responded swiftly and decisively to address short-term financial impacts while remaining focused on executing our long-range plan in spite of a challenging macroeconomic and consumer environment.

Although our financial performance fell short of our expectations, we gained positive momentum as the year progressed, highlighted by year-over-year diluted EPS growth of 49.6% and and 33.7% in the third and fourth quarters, respectively, and enhanced spending discipline and increased efficiencies in our operations.

We also increased our net sales to a record $1.11 billion, surpassing the $1 billion mark for 2 years in a row. We continue to make significant investments in our manufacturing capabilities and infrastructure laying the foundation for future profitable growth. In addition, we recently increased our annual dividend by 5.9% to $0.90 per share and declared a special dividend of $0.60 per share. Total dividends will be paid on September 11, 2025. This marks the 14th consecutive year of returning capital through dividends to our shareholders.

I want to sincerely thank all our employees for their dedication, resilience and hard work this year. Their commitment drives our success and positions us for a strong future.

Now beginning a dynamic market landscape. Across recent CPG earnings calls, 3 key themes have consistently emerged each reflecting the evolving challenges and opportunities facing our industry. We recognize the importance of addressing these shifts head on and that we'll share how our teams are actively managing change responding to uncertainty and positioning the company for continued growth and resilience in today's complex marketplace.

First, navigating tariffs and rising costs. In an increasingly volatile global landscape, tariff-related cost pressures continue to challenge manufacturers across the industry. At JBSS, we proactively monitor trade developments, material costs, customer pricing and demand fluctuations through close collaboration among our procurement, demand planning, finance, marketing and sales teams. While the environment remains complex, we've built a resilient framework to assess and manage our supply chain, helping us mitigate risk and maintain continuity.

Our teams are responding with agility, leveraging sourcing flexibility, driving cost savings initiatives and implementing selective price adjustments where appropriate. We remain transparent with our customers, providing regular updates and offering tailored solutions such as reformulations, alternative ingredients and optimized pack sizes to an its cost without compromising value.

Second, adapting to shifts in consumer behavior. In today's environment, consumers remain highly value conscious, making thoughtful decisions about their purchases. At JBSS, we stay closely attuned to these evolving behaviors through continuous monitoring of consumption trends across the nuts, trail mix and snack bar categories. As inflationary pressure persists our consumers' insights play a critical role in shaping our innovation pipeline, ensuring that new offerings resonate with shoppers seeking both quality and value.

Additionally, our advanced price elasticity models help us optimize price pack architecture and promotional strategies, allowing us to deliver compelling value while maintaining profitability. This is an important environment for private label programs, and we are optimistic about expanding product portfolios with several of our transformational customers to meet shifting consumer needs.

Third, driving growth through innovation and portfolio expansion. As evidenced by current market valuations, growth remains a top priority across the consumer packaged goods sector. In our company, we're embracing this imperative with strategic investments designed to unlock new opportunities.

Earlier this year, we announced a significant investment and expansion in our manufacturing capabilities, an initiative that will enable us to broaden our product portfolio and better serve evolving consumer preferences. We're energized by the potential these innovations hold and remain committed to transforming our business for long-term sustainable growth. We will share further details in the coming quarters as we ramp up for production.

Looking ahead to fiscal '26, we are focused on accelerating our volume growth and expanding on the success of our private brand [ VAR ] portfolio, rebuilding our noting trail business through price pack architecture and innovation and expanding our manufacturing capabilities.

We are confident we can continue to deliver strong operating results and create long-term value for our shareholders through the execution of our long-range plan. We are nuts about creating real food that brings joy, nurses people and protect the planet. And JBSS is executing on this mission.

I'll now turn the call over to Frank to discuss our financial performance.

Thank you, Jeffrey. Starting with the income statement. Net sales for the fourth quarter of fiscal 2025 decreased slightly by 0.2% to $169.1 million compared to net sales of $269.6 million for the fourth quarter of fiscal 2024. The slight decline in net sales was due to a 5.9% decrease in sales volume of pounds sold to customers, which was largely offset by a 6% increase in the weighted average sales price per pound.

The increase in the weighted average on price primarily resulted from higher commodity acquisition costs for peanuts and all major treatments except for pecans. Sales volume declined for all major product types with the exception of peanuts, walnuts and pecans. Sales volume decreased 11.5% in consumer distribution channel. Primarily due to a 10.7% decrease in private brand sales volume. The private rate volume decrease was due to a 16.7% reduction and borrowers volume, mainly due to reduced sales to a mass merchandising retailer, following a decrease in bar sales from a national brand recall in the fourth quarter of fiscal 2024.

Our strategic decision to reduce sales to a grocery retailer and lost distribution at our grocery retailer far contributed to the decline in borrowers' volume. These decreases were partially offset by new bars distribution at 2 new customers. Additionally, sales volume for other product types decreased 8.5%, mainly due to the discontinuation of peanut bar along with softer demand for snack and trail mix, mix nut and almonds, all at the same mass merchandising retailer driven by higher retail prices. However, these decreases were partially mitigated by increased sales of walnuts and pecans at the same retailer.

Sales volume decreased 19.7% for our brine products, primarily driven by a 42.9% reduction in oral harbor sales, mainly due to lost distribution to a major customer in the non-food sector Sales volume increased 8.7% in the commercial ingredients distribution channel, mainly driven by increased share or volume to existing customers, which was first supplemented by an increase in pent volumes. Sales volume increased 18.7% in the contract manufacturing distribution channel, primarily due to increased Granola volume processed in our Lakeville facility, and snack nut sales to a new customer and increased in peanut sales volume, the major customer also contributed to the overall increase.

Gross profit decreased by $1.2 million or 2.4% to $48.8 million compared to the fourth quarter of last year, driven by higher commodity acquisition costs for all nuts and peanuts. However, the impact was significantly offset by increased production volume, lower manufacturing spending and improved manufacturing efficiency. Fourth quarter gross profit margin as a percentage of net sales decreased to 18.1% compared to 18.5% for the fourth quarter of fiscal 2024 due to the reasons previously mentioned.

Total operating expenses for the fourth quarter decreased $6.7 million compared to prior year quarter, mainly due to lower incentive compensation expenses, along with reduced freight expense, lower third-party warehouse expenses and lower marketing insight spending. These decreases were partially offset by a decrease in rent associated with our new facility in Elgin, Illinois.

Total operating expenses for the fourth quarter of 2025 decreased to 10.6% of net sales from 13.1% for last year's fourth quarter due to the reasons previously mentioned. Interest expense was $1.2 million for the fourth quarter of fiscal 2025 compared to $500,000 for the fourth quarter of fiscal 2024 due to higher average debt levels.

Net income for the fourth quarter of fiscal 2025 was $13.5 million or $1.15 per diluted share to [indiscernible] to $10 million or $0.86 per diluted share for the fourth quarter of fiscal 2024.

Now taking a look at inventory. The total value of inventories on hand at the end of the current fourth quarter increased $58 million or 29.5% compared to the total value of inventories on hand at the end of the prior year's comparable quarter. The increase was due to higher commodity acquisition costs across all major treatments as well as higher on-hand quantities of finished goods in preparation for anticipated seasonal demand.

The weighted average cost per pound of raw nut and dried fruit increased 30.4% year-over-year, mainly due to higher commodity acquisition costs for almost all major treatments.

Moving on to year-to-date results. The 2025 net sales increased 3.8% to $1.11 billion compared to fiscal 2024 net sales of $1.07 billion. Excluding the 20,251st quarter intimate the late acquisition, net sales remained relatively unchanged. Sales volume increased 3.4%, primarily due to the Lakeshore acquisition. Excluding the impact of Lakeville acquisition, sales volume decreased 1.7%, reflecting a 4% decrease in the consumer channel, which was partially offset by a 15.4% increase in the contract manufacturing channel.

Gross profit margin decreased from 20.1% to 18.4% of net sales. The decrease is mainly attributable to increased commodity acquisition costs for substantially all major nosecones as well as competitive pricing pressures in strategic pricing decisions, which were offset by factors side of previously and improved profitability of bars due to manufacturing efficiencies.

Total operating expenses for fiscal 2025 decreased by $10.2 million to $118.8 million compared to fiscal 2024. We -- the decrease in total operating expenses was mainly driven by lower incentive compensation, advertises in consumer insight expenses. These decreases were partially offset by a onetime bargain purchase gain or Lakeville acquisition, which did not repeat in the current fiscal year as well as increases in wage and rent expenses attributable to our upwarehouse.

Interest expense was $3.6 million for fiscal 2020 and and $2.5 million for fiscal 2024. Net income for fiscal 2025 was $58.9 million or $5.03 per diluted share compared net income of $60.2 million or $5.15 per diluted share for fiscal 2024. Please refer to our 10-K for additional details regarding our financial performance for fiscal 2025.

Now I will turn the call over back to Jeffrey to provide additional comments.

Thanks, Frank, for the financial updates. Now let's shift to consumption activity and category updates, I'll share the category and brand results with you for the quarter. All the market information I'll be referring to is Circana panel data, and for today, it is for the period ending June 15, 2025. As I refer to Q4, I'm referring to 13 weeks of the quarter ending June 15, 2025.

References to changes in volume or versus the corresponding period 1 year ago. For pricing commentary, we are using scan data from Circana, which includes food, drug, mass, Walmart, military and other outlets, and we are referring to average price per pound. We are using the nut trail mix and bar syndicated views of the category as defined by sarcoma.

In the latest quarter, we continue to see modest growth in the broader snack out as defined by Circana. Volume in dollars were up 1% and 3%, respectively. This is consistent with the performance we saw in Q3. In Q4, the snack nut and trail mix category was down 1% in pounds, which is consistent with Q3 performance. Dollars in Q4 were up 4% versus 2% in Q3 as prices continue to rise.

Prices rose 5% for snack nuts with increases primarily in cash used mixed and pistachios. Price also rose 4% for trail mixes. Fisher snack nut and trail mix performed worse than the category with pound shipments down 17% and -- this was due primarily to declines in a major specialty retailer, as Frank mentioned, due to inventory changes and not repeating the promotion.

Our Southern Style Nut brand pound shipment increased by 1% and driven primarily by growth in mass and e-commerce. Orchard Valley Harvest brand, which primarily plays in trail mix, was down 43% in power shipments driven by discontinuation at a national specialty retailer despite a strong performance in club, mass and e-commerce. Money increases, including cocoa and some tree nuts are resulting in higher prices for Orchard Valley Harvest.

We continue to focus on innovation and cost savings opportunities to mitigate this commodity pressure. Our private label consumer snack and trail shipments performed weaker than the category with pound shipments down 8% versus last year due to softness in mass as prices rise due to commodity pressures. We're actively working on cost mitigation solutions with our retail partners.

Now let me turn to the recipe nut category. In Q4, recipe nut category was down 1% in pounds and up 18% in dollars as prices for both Walmarts and pecans continue to increase. This is an improvement in both volume and dollar performance versus Q3.

Our Fisher recipe pod shipments were down 7% in Q4, with volume softness tied to increased cost of our commodities and delayed shipments in e-commerce.

Now let's switch to the bar category. In Q4, the bars category continued to rebound as a major player continue to reenter the market after a major recall in winter of 2023. The category grew 7% in pounds and 8% in dollars. Private label was down 4% in pound and 2% in dollars as the previously mentioned national brand we took some of the share loss to private label this past year.

Our private label bar shipments were down 17% versus a year ago as we lap significant growth from the national brand recall.

In closing, as we enter fiscal '26, we have strong momentum and optimism as we continue to execute our strategic plan. We are actively pursuing additional opportunities to grow sales volume across all 3 of our distribution channels, and we're encouraged by early signs of success. At the same time, we remain focused on disciplined cost management and driving further operational efficiencies.

That said, we recognize that significant external uncertainties remain, including tariffs, inflation, unpredictable commodity costs and a broader macroeconomic challenge. These factors will require us to stay agile and responsive as the year progresses. We're committed to taking the necessary actions to deliver long-term sustainable growth enhance our margins and continue to create value for our customers, consumers and shareholders.

And as I said earlier, while the company did not hit some of our financial performance goals in fiscal '25, I am proud of what we did accomplish to transform our company. These achievements are a testament to the fortitude of our business model, the commitment of our people and the mutual trust and depth of our customer and supplier partnerships.

We are executing our growth strategies, implementing continuous improvement projects throughout the company to optimize our cost structure we continue to invest in our brands, our capabilities and our people to better service our customers and consumers and create value for our shareholders. We appreciate your participation in the call, and thank you for your interest in our company.

Latonia, will now open the call to questions.

[Operator Instructions]. And I would now like to hand the call back to Jeffrey for closing remarks.

We thank you for your participation in the call. We will be at next year's -- next week's investor conference in Chicago. We hope you will join us. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.