What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-08-20 compared with 2024-08-21 · 122 added, 105 removed, 165 unchanged (58% of the section changed)

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Our fiscal year ends on the final Thursday of June each year, and typically consists of fifty-two weeks (four thirteen-week quarters).

However, the fiscal year ended June 30, 2022 consisted of fifty-three weeks with our fourth quarter containing fourteen weeks.

Additional information on the comparability of the periods presented is as follows:

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and our wholly-owned subsidiary, JBSS Ventures, LLC.

We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds and other nuts in the United States.

These nuts are sold under our Fisher , Orchard Valley Harvest , Squirrel Brand and Southern Style Nuts brand names and under a variety of private brands.

Additionally, with our acquisition of certain snack bar assets in the second quarter of fiscal 2024, and our internally developed nutrition bar products, we offer our private brand customers a complete portfolio of snack bars.

We market and distribute, and in most cases, manufacture or process, a diverse product line of food and snack products, including nutrition bars, snack bars, peanut butter, almond butter, cashew butter, candy and confections, snack and trail mixes, sunflower kernels, dried fruit, corn snacks, chickpea snacks, sesame sticks, other sesame snack products and baked cheese snack products under our brand names, including Just the Cheese , and under private brands.

We are one of the leading processors and distributors of peanuts, pecans, cashews, walnuts, almonds and other nuts in the United States, and we also manufacture and distribute a complete portfolio of private brand bars.

These nuts are primarily sold under a variety of private brand names, as well as our Fisher , Orchard Valley Harvest , Squirrel Brand and Southern Style Nuts brand names.

We market and distribute, and in most cases, manufacture or process, a diverse product line of food and snack products, including bars, peanut butter, almond butter, cashew butter, candy and confections, snack and trail mixes, granola, sunflower kernels, dried fruit, corn snacks, sesame sticks, other sesame snack products and baked cheese snack products under our brand names, including Just the Cheese , and under private brands.

We distribute our products in the consumer, commercial ingredients and contract manufacturing distribution channels.

Our Long-Range Plan defines our future growth priorities.

The Long-Range Plan focuses on growing our private brand business across key customers, as well as transforming Fisher, Orchard Valley Harvest and Squirrel Brand into leading brands while increasing distribution and diversifying our portfolio into high growth snacking segments.

We will execute on our Long-Range Plan by providing private brand customer value-added solutions based on our extensive industry and consumer expertise with innovative products such as our newly developed product line of private brand nutrition bars which we introduced during fiscal 2023, and expanding our snack bar capabilities.

We will grow our branded business by reaching new consumers via product expansion and packaging innovation, expanding distribution across current and alternative channels, diversifying our product offerings and focusing on new ways for consumers to buy our products, including sales via e-commerce platforms.

Our Long-Range Plan also contemplates increasing our sales through product innovation and targeted, opportunistic acquisitions, such as our acquisition of the Just the Cheese brand completed during fiscal 2023 and our acquisition of certain snack bar assets from Seller in September 2023.

The assets acquired from Seller included inventory, a manufacturing facility and related equipment located in Lakeville, Minnesota, and product formulas (the “Lakeville Acquisition”).

The Lakeville Acquisition expanded our ability to produce private brand snack bars and allows us to provide our private brand customers with a complete snack bar portfolio.

We will continue to focus our promotional and advertising activity to invest in our brands to achieve growth.

We intend to execute on an omnichannel approach to win in key categories including recipe nuts, snack nuts, trail mix, snack bars and other snacking categories.

We continue to see e-commerce growth across our branded portfolio and anticipate taking various actions with the goal of maintaining that growth across a variety of established and emerging e-commerce platforms.

We continue to face the ongoing challenges and/or regulations specific to our business, such as food safety and regulatory matters, the maintenance and growth of our customer base for branded and private brand products and varying consumer demand for nut and nut-related products and snack bars in a challenging snack food environment.

Our Long-Range Plan defines our future growth priorities and focuses on growing our private brand business across key customers, as well as transforming Fishe r and Orchard Valley Harvest into leading brands while increasing distribution and diversifying our portfolio into high growth snacking categories.

We will execute on our Long-Range Plan by providing our private brand customers value-added solutions and innovative products based on our extensive industry and consumer expertise, such as our newly developed product line of private brand nutrition bars.

We will focus on growing our branded business by reaching new consumers via product expansion and packaging innovation, expanding distribution across current and alternative channels, diversifying our product offerings and focusing on new ways for consumers to buy our products, including sales via e-commerce platforms.

Our Long-Range Plan also contemplates increasing our sales through product innovation and targeted, opportunistic acquisitions, such as the acquisition of certain snack bar assets including inventory, product formulas, a manufacturing facility and related equipment located in Lakeville, Minnesota, (the “Lakeville Acquisition”) which we completed the first day of the second quarter of fiscal 2024.

The Lakeville Acquisition expanded our ability to produce private brand bars, increased our overall production capabilities and allows us to provide our private brand customers with a complete bar portfolio.

In addition, we also acquired additional bar production assets in the first quarter of fiscal 2025 that will expand our manufacturing capacity and support further growth in our bar business.

Beginning in the second quarter of fiscal 2025 and continuing into the next fiscal year, we started to invest significant additional capital to purchase new equipment and make infrastructure improvements (and incur related expenses) to further expand our production capabilities, increase our efficiency and enhance our product offerings for our customers.

We focus our promotional and advertising activity to invest in our brands to achieve sales volume growth.

We are executing an omnichannel approach to win in key categories including recipe nuts, snack nuts and trail mix.

We continue to see e-commerce sales volume growth across our branded portfolio and anticipate taking various actions with the goal of maintaining that growth across a variety of established e-commerce platforms for our consumer channel.

We continue to face the ongoing challenges and/or regulations specific to our business, such as food safety and regulatory matters, the maintenance and growth of our customer base and overall category growth for branded and private brand products and varying, decreasing or shifting consumer demand for snack nuts, trail mix and bars in a challenging snack food environment and against an uncertain macroeconomic backdrop.

We face a number of challenges in the future, which include the impacts of higher prices in food, in part due to increasing underlying commodity acquisition costs and the overall impact of tariffs (actual, pending implementation or threatened) by the U.S.

government or other governments on certain commodities, raw materials and equipment to process and manufacture out products.

We continue to see uncertainty over interest rates that may negatively impact economic growth, consumers reducing their branded and private label snack purchases, including snack nuts, trail mix and bars, intense competition in the snack food industry and potential for economic downturn in the markets in which we operate and supply chain challenges.

To stay compliant with recent changes in employment laws across states where we operate and remain competitive in attracting qualified talent, we expect our labor costs to continue to increase.

Inflation and Consumer Trends

We face changing industry trends as consumers' purchasing preferences evolve.

Due to the continued inflationary environment, we have seen higher selling prices at retail which recently have started to moderate for some products and decrease for other products.

These higher prices across our categories and the broader food market, coupled with an actual or potential economic downturn and tightening of consumer finances due to inflation, reduced government support through programs such as SNAP or a variety of other macroeconomic reasons, are causing consumers to purchase fewer snack products.

We have seen this through the decline in the recipe, snack nut and snack bar categories since fiscal 2023 and during fiscal 2024, as consumers shift their preferences to private brands or lower priced nuts or snack bars or purchase snack products outside the snack nut, trail mix and snack bar categories.

With the inflationary environment, we are also seeing signs of consumers shifting to more value-focused retailers, such as mass merchandising retailers, club stores and dollar stores, not all of which we distribute or sell to.

We have responded by focusing on our strengths, including our knowledge of the snack and trail nut categories, product innovation and judicious use of trade spending and pricing actions.

Supply Chain and Transportation

In fiscal 2024 we faced periodic supply chain challenges related to certain raw material shortages, extended lead-times, supplier capacity constraints and inflationary pressures.

While we do not have direct exposure to suppliers in Russia, Ukraine or Israel, the conflicts in these regions could continue to result in volatile commodity markets, supply chain disruptions and increased costs.

Global supply chain pressures have eased compared to fiscal 2023, but we continue to see negative impacts related to macro-economics, geo-political unrest, growing political instability and climate-related events.

Overall packaging and ingredient inflation appears to be leveling off compared to fiscal 2023 but is expected to remain above historical levels.

While we have seen stabilization in truckload capacity and volume at U.S.

ports and improvements with driver hiring, there are still warehouse and dock staff shortages and fuel and energy concerns due to continued unrest abroad coupled with persistent inflation.

Freight rates decreased in fiscal 2024 and fuel costs stabilized.

We have seen continued trucking company bankruptcies which may cause continued instability in the transportation industry in fiscal 2025 as capacity outweighs demand.

While there are indicators of transportation cost improvement, and despite our mitigation of some of the transportation shortages, we may continue to face an unpredictable transportation environment.

There is no guarantee that our mitigation strategies will continue to be effective, that any transportation capacity easing will continue or that transportation prices will return to more normalized levels.

Our most significant ingredient requirements include cocoa products, dried fruits, sweeteners, vegetable oils, oats, flour and dairy.

Many of these materials and costs are subject to price fluctuations from several factors, including fluctuating commodity markets, market conditions, demand for raw materials, weather, growing and harvesting conditions, climate change, energy costs, currency fluctuations, supplier capacities, governmental actions, import and export requirements (including tariffs), and on-going political instability and other factors beyond our control.

We have remained agile by proactively identifying risks, modifying inventory plans and diversifying our supplier base to mitigate risk of customer order shortages and maintain our supply chain.

We continue to proactively manage our business in response to the evolving global economic environment and related uncertainty and intend to take steps to mitigate impacts to our supply chain.

If these supply chain pressures continue, or we cannot obtain the transportation and labor services needed to fulfill customer orders, such shortages and supply chain issues could have an unfavorable impact on net sales and our operations in fiscal 2025.

Furthermore, record cocoa prices have been fueled by speculation of a short crop in calendar 2024.

Unprecedented high cocoa prices have led to a volatile market and will continue in fiscal 2025.

Cocoa production was down significantly in Ghana and Ivory Coast due to a combination of inclement weather and crop disease.

Despite higher cocoa prices, consumption remained strong, leading to predictions of a large production deficit.

Additionally, as costs increase due to these issues or due to overall inflationary pressures, there is an additional risk of not being able to pass (in part or in full) such potential cost increases onto our customers or in a timely manner.

If we cannot align costs with prices for our products, our operating performance could be adversely impacted.

We continue to see higher selling prices at retail across snack nuts and trail mix driven by higher commodity costs.

These higher prices across our categories and the broader market, coupled with a potential economic downturn and tightening of consumer finances due to reduced government support through programs such as SNAP or a variety of other macroeconomic reasons, are causing consumers to purchase fewer branded and private

label snack products.

This declining demand is leading to sales volume declines for snack nuts, recipe nuts, trail mix and bars both for the Company and across the snack food industry.

Consumers continue to shift their preferences to private brands or lower priced nuts or bars or purchase snack products outside the snack nut, trail mix and bar categories.

We have also seen consumers shifting to more value-focused retailers, such as mass merchandising retailers and club stores, not all of which we distribute or sell to.

Additionally, the increased use and/or prevalence of certain weight loss drugs, which may suppress a person’s appetite and/or impact a person's preferences, may impact the demand or consumption patterns of our products.

We have responded by focusing on our strengths, including our knowledge of the snack nut and trail mix and bar categories, product innovation and judicious use of trade spending and pricing actions to support our products.

Tariffs, Supply Chain and Transportation

Global supply chain pressures have eased compared to past fiscal years, but intermittent challenges, delays and extended lead-times still exist for certain raw materials and inputs.

Overall packaging and ingredient inflation appears to have moderated heading into fiscal 2026;

however, there is still uncertainty within the supply chain surrounding near term impacts from the U.S.

government's tariffs on imports from foreign countries.

Approximately 2% of our material costs, primarily pepitas and pine nuts, are currently sourced from China and are currently subject to a combined 55% tariff.

Cashews are also imported and those sourced from Vietnam, which represents the majority of such imports, are currently subject to a 20% tariff.

Any import tariffs will increase the cost of certain raw materials we use in our business and our financial performance may be adversely impacted if we cannot pass on the cost increases in the form of price increases to our customers .

W hile we do not have direct exposure to suppliers in Russia, Ukraine or Israel, the conflicts and prospects for conflict in these regions could continue to result in volatile commodity markets, supply chain disruptions and increased costs, including shipping costs.

In addition, the ultimate impact of tariffs may be difficult to predict as their amount and duration is uncertain, making our planning process more difficult, and the threat of tariffs can also have adverse implications to our business and the business of our suppliers and customers.

Trucking capacity continues to slowly decline, potentially leading to further instability in the transportation industry.

While indicators suggest transportation prices are stabilizing, the overall transportation environment remains unpredictable.

Additionally, fuel prices have been unpredictable and may vary depending on the level of economic activity in the areas where we ship and receive shipments.

Our most significant ingredient requirements include cocoa products, dried fruits, sweeteners, vegetable oils, rolled oats, flour and dairy.

Many of these materials and their associated costs are subject to price fluctuations from several factors, including changing commodity markets, other market conditions, demand for raw materials, weather, growing and harvesting conditions, climate change, energy costs, currency fluctuations, supplier capacities, governmental actions, import and export requirements (including tariffs), and ongoing political instability and other factors beyond our control.

We have remained agile by proactively identifying risks, modifying inventory plans and diversifying our supplier base to mitigate risk to customer order shortages and our supply chain.

We continue to proactively manage our business in response to the evolving global economic environment and related uncertainties and intend to take steps to further mitigate impacts to our supply chain as they develop.

If unforeseen supply chain pressures emerge or worsen, or we cannot obtain the transportation and labor services needed to obtain raw materials or fulfill customer orders, such shortages and supply chain issues could have an unfavorable impact on net sales and our operations into fiscal 2026.

Furthermore, record cocoa prices have been fueled by a three consecutive years of supply deficits, led by significant production declines within the largest producers, Ivory Coast and Ghana.

Despite anticipated supply recovery in the current crop year, cocoa market prices have continued to be volatile and touched new highs in December 2024 while remaining well above long-term average levels throughout fiscal 2025.

Amid higher cocoa prices, consumption data is starting to reflect North American demand reductions, but global supply balances remain historically tight.

Additionally, as costs increase due to these circumstances or due to overall inflationary pressures, there is a further risk of our not being able to pass (in part or in full) such potential cost increases on to our customers or in a timely manner.

If we cannot align costs with prices for our products, our financial performance could be adversely impacted.

Climate Change Impacts

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Similar to other commodity dependent businesses, extreme weather events from climate change can have an unfavorable impact on our business.

Floods, hurricanes, wildfires, tornadoes, blizzards, droughts, mudslides, poor air quality and extreme temperatures can affect our ability to obtain adequate (or acceptable quality) inputs, including fruit and nut materials, and our ability to manufacture products in our facilities.

Floods, hurricanes, wildfires, tornadoes, blizzards, droughts, mudslides, poor air quality and extreme temperatures can

affect our ability to obtain adequate (or acceptable quality) inputs, including fruit and nut materials, and our ability to manufacture products in our facilities.

These extreme weather events can also have an adverse impact on the transportation industry and supply chains upon which we rely.

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• Our net sales for fiscal 2025 increased $40.5 million, or 3.8%, to $1,107.2 million compared to fiscal 2024.

• Gross profit increased $2.5 million, while our gross profit margin, as a percentage of net sales, decreased to 20.1% in fiscal 2024 from 21.2% in fiscal 2023.

• Total operating expenses for fiscal 2024 increased $7.5 million, or 6.2%, to $129.0 million.

Operating expenses, as a percentage of net sales, was 12.1% of net sales in both fiscal 2024 and fiscal 2023.

• Diluted earnings per share decreased approximately 4.6% compared to last fiscal 2023.

• Our strong financial position allowed us to pay cash dividends totaling $34.8 million during fiscal 2024.

• Gross profit decreased $10.7 million and our gross profit margin, as a percentage of net sales, decreased to 18.4% in fiscal 2025 from 20.1% in fiscal 2024.

• Total operating expenses for fiscal 2025 decreased $10.2 million, or 7.9%, to $118.8 million.

Operating expenses, as a percentage of net sales, was 10.7% of net sales in fiscal 2025 compared to 12.1% of net sales in fiscal 2024.

• Diluted earnings per share decreased approximately 2.3% compared to fiscal 2024.

• Our strong financial position allowed us to invest $50.7 million in property and equipment and pay cash dividends totaling $24.4 million during fiscal 2025.

• The total value of inventories on hand at the end of fiscal 2025 increased $58.0 million, or 29.5%, in comparison to the total value of inventories on hand at the end of fiscal 2024.

This increase is primarily due to $21.8 million of additional inventory associated with the Lakeville acquisition.

We have seen acquisition costs for all major tree nuts except walnuts decrease in the 2023 crop year (which falls into our 2024 fiscal year).

We have seen acquisition costs for walnuts increase significantly and all other tree nut increase modestly in the 2024 crop year (which falls into our 2025 fiscal year).

Results of Operations

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Our net sales increased 3.8% to $1,107.2 million for fiscal 2025 from $1,066.8 million for fiscal 2024.

The increase in net sales was primarily due to the Lakeville Acquisition, which closed on the first day of our second quarter and increased net sales by approximately $119.8 million.

The increase in net sales was primarily due to the Lakeville Acquisition.

Excluding the fiscal 2025 first quarter's impact of the Lakeville Acquisition, net sales remained relatively unchanged.

Sales volume, which is defined as pounds sold to customers, increased 3.4%, also due to the Lakeville Acquisition.

The Lakeville Acquisition increased our sales volume by 48.5 million pounds, or 15.7%, over fiscal 2023.

Excluding the impact of the Lakeville Acquisition, net sales decreased 5.3% to $946.9 million, which was primarily attributable to a 3.3% decline in sales volume.

In addition to the decline in sales volume, a 2.0% decrease in weighted average selling price per pound also contributed to the decline in net sales, primarily from decreased selling prices.

Excluding the impact of the Lakeville Acquisition, sales volume decreased 1.7%.

The following table summarizes sales by product type as a percentage of total gross sales.

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Net sales in the consumer distribution channel increased $34.9 million, or 4.0%, and sales volume increased 1.5% in fiscal 2025 compared to fiscal 2024 primarily due the Lakeville Acquisition.

Excluding the Lakeville Acquisition, net sales decreased $29.7 million, or 3.8%, and sales volume decreased 1.7%.

Private brand sales volume increased 22.0% driven by the Lakeville Acquisition.

Excluding the Lakeville Acquisition, private brand sales volume decreased 1.4% due to decreased consumer spending at two mass merchandising retailers.

These sales volume decreases were partially offset by increased distribution of seasonal items at a grocery store retailer.

Sales volume of Fisher recipe nuts decreased 9.1% due to lower customer demand across mass merchandising and grocery store retailers and less merchandising activity at several grocery store retailers.

Sales volume of Fisher snack nuts decreased 14.0% due to lost distribution as a mass merchandising retailer and decreased sales volume at several grocery store retailers which was partially offset by an increase in e-commerce sales volume.

Sales volume of Southern Style Nuts decreased 20.2% due to reduced distribution and fewer promotional programs at a club store customer.

The above decreases in sales volume were partially offset by a 9.0% increase in sales volume for Orchard Valley Harvest primarily due to enhanced distribution at a major customer in the non-food sector and new rotational distribution at a club store customer.

Net sales in the commercial ingredients distribution channel decreased 10.2% in dollars and sales volume decreased 1.9% in fiscal 2024 compared to fiscal 2023.

Excluding the Lakeville Acquisition, sales volume decreased 3.2% due to competitive pricing pressure coupled with non-recurring peanut butter sales at a foodservice distributor that occurred in fiscal 2023 and a 5.8% decrease in sales volume of peanut crushing stock to peanut oil processors due to reduced peanut shelling.

Net sales in the contract manufacturing distribution channel decreased 7.6% in dollars and sales volume decreased 6.2% in fiscal 2024 compared to fiscal 2023 primarily due to decreased peanut distribution by a major customer due to decreased consumer demand.

Partially offsetting the sales volume decrease was an increase in granola processed in our Lakeville facility for a major customer.

Excluding this granola volume, net sales decreased 10.5% and sales volume decreased 15.1%.

Gross profit increased 1.2% to $214.1 million in fiscal 2024 from $211.6 million in fiscal 2023.

Excluding the Lakeville Acquisition, gross profit decreased approximately 0.4%, or $0.9 million.

The decrease in gross profit was mainly due to decreased selling prices and reduced sales volume.

Our gross profit margin, as a percentage of sales, decreased to 20.1% for fiscal 2024 from 21.2% for fiscal 2023 due to the higher net sales base from the Lakeville Acquisition, which was partially offset by lower commodity acquisition costs for all major tree nuts.

Excluding the fiscal 2025 first quarter's impact of the Lakeville Acquisition, net sales in the consumer distribution channel decreased $2.8 million, or 0.3%, and sales volume decreased 4.0%.

This sales volume decrease was due to soft consumer demand and decreased seasonal nut and trail mix volume at a mass merchandising retailer.

Additionally, sales volume decreased from the discontinuance of peanut butter and decreases in almonds and peanuts caused by increased retail prices at another mass merchandising retailer and these declines were partially mitigated by increased sales of walnuts and pecans at the same mass merchandising retailer.

Private brand sales volume increased 3.0% largely due to the Lakeville Acquisition.

Excluding the fiscal 2025 first quarter's impact of the Lakeville Acquisition, private brand sales volume decreased 3.4% due to the same reasons cited for the consumer distribution channel.

Net sales in the commercial ingredients distribution channel decreased 1.4% in dollars and sales volume increased 0.7% in fiscal 2025 compared to fiscal 2024.

Excluding the fiscal 2025 first quarter's impact of the Lakeville Acquisition, net sales in the commercial ingredients channel decreased $1.8 million, or 1.6%, and sales volume increased 0.3%.

The sales volume increase was due to higher sales from new distribution to a foodservice customer and higher sales of peanut crushing stock to peanut oil processors.

This increase was largely offset by competitive pricing pressures.

Net sales in the contract manufacturing distribution channel increased 8.4% in dollars and sales volume increased 23.3% in fiscal 2025 compared to fiscal 2024 primarily due to increased granola volume.

Excluding the fiscal 2025 first quarter's impact of the Lakeville Acquisition, net sales in the contract manufacturing channel increased $4.6 million, or 5.5%, and sales volume increased 15.4% due to a new customer and an opportunistic sale to a current customer.

These gains were significantly offset by reduced peanut sales volume to a major customer due to soft consumer demand.

Gross profit decreased 5.0% to $203.5 million in fiscal 2025 from $214.1 million in fiscal 2024.

The decrease in gross profit was mainly attributed to increased commodity acquisition costs for substantially all major tree nuts, except pecans, as well as competitive pricing pressures and strategic pricing decisions, which were offset by increased production volume, lower manufacturing spending and improved manufacturing efficiencies, including for bars.

Our gross profit margin, as a percentage of sales, decreased to 18.4% for fiscal 2025 from 20.1% for fiscal 2024 mainly due to factors mentioned previously.

Operating Expenses

Total operating expenses for fiscal 2024 increased $7.5 million to $129.0 million.

Operating expenses as a percent of net sales were 12.1% for both fiscal 2024 and fiscal 2023.

The increase is net of the $2.2 million net gain on bargain purchase that occurred in the second quarter of fiscal 2024 due to the Lakeville Acquisition.

Selling expenses for fiscal 2024 were $82.7 million, an increase of $5.9 million, or 7.7%, over the amount recorded for fiscal 2023.

The increase was driven primarily by a $2.2 million increase in advertising and consumer insight research expense, a $2.1 million increase in compensation-related expenses, a $1.7 million increase in outside distribution expense, which was primarily due to the Lakeville Acquisition, and an increase in consulting expenses of $0.4 million.

These increases were offset by a $0.5 million decrease in freight expense due to lower freight rates.

Administrative expenses for fiscal 2024 were $48.5 million, an increase of $3.9 million, or 8.7%, from the amount recorded for fiscal 2023.

The increase was due to a $4.3 million increase in compensation-related expenses and an increase in charitable food donations of $0.8 million.

These increases were partially offset by a $1.0 million loss on equity investment in fiscal 2023 that did not recur in fiscal 2024.

Total operating expenses for fiscal 2025 decreased $10.2 million to $118.8 million.

Operating expenses as a percent of net sales were 10.7% for fiscal 2025 compared to 12.1% for fiscal 2024.

The decrease is net of the $2.2 million net gain on bargain purchase that occurred in the second quarter of fiscal 2024 due to the Lakeville Acquisition.

Selling expenses for fiscal 2025 were $78.9 million, a decrease of $3.8 million, or 4.5%, over the amount recorded for fiscal 2024.

The decrease was driven primarily by a $4.6 million decrease in advertising and consumer insight research expense and a $5.2 million decrease in incentive compensation expense.

These decreases were largely offset by a $4.2 million increase in rent expense related to our new Huntley, IL facility lease and a $1.7 million increase in compensation-related expenses.

Administrative expenses for fiscal 2025 were $39.8 million, a decrease of $8.7 million, or 17.9%, from the amount recorded for fiscal 2024.

The decrease was due to a was primarily due to a $9.3 million decrease in incentive compensation expense.

Income from Operations

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Interest expense was $3.6 million for fiscal 2025 compared to $2.5 million for fiscal 2024.

The increase in interest expense was due to higher average debt levels, primarily due to the Lakeville Acquisition.

The increase in interest expense was due to higher average debt levels.

Rental and Miscellaneous Expense, Net

Net rental and miscellaneous expense was $1.3 million for both fiscal 2024 and fiscal 2023.

Net rental and miscellaneous expense was $1.8 million for fiscal 2025 and $1.3 million for fiscal 2024.

Pension Expense (Excluding Service Costs)

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Income Tax Expense

Income tax expense was $19.7 million, or 24.6% of income before income taxes (the "Effective Tax Rate"), for fiscal 2024 compared to $22.5 million, or 26.4% of income before income taxes, for fiscal 2023 due to a decrease in state income tax expense.

Income tax expense was $18.9 million, or 24.3% of income before income taxes, for fiscal 2025 compared to $19.7 million, or 24.6% of income before income taxes, for fiscal 2024.

Net income was $58.9 million, or $5.06 per common share basic and $5.03 per common share diluted, for fiscal 2025, compared to $60.2 million, or $5.19 per common share basic and $5.15 per common share diluted, for fiscal 2024, due to the factors discussed above.

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The primary sources of cash are results of operations and availability under our Credit Facility.

We anticipate that expected net cash flow generated from operations and amounts available pursuant to the Credit Facility will be sufficient to fund our operations for the next twelve months.

Our available credit under our Credit Facility has allowed us to devote more funds to promote our products, increase consumer insight capabilities and promotional efforts, reinvest in the Company through capital expenditures, develop new products, pay cash dividends, consummate strategic investments and business acquisitions, such as the Lakeville Acquisition and the acquisition of the Just the Cheese brand in fiscal 2023, and explore other growth strategies outlined in our Long-Range Plan.

Beginning in the second quarter of fiscal 2025 and continuing into the next fiscal year, we plan to invest approximately $90.0 million in capital expenditures and related expenses, excluding any applicable tariffs, to acquire and install equipment, and make related infrastructure improvements to expand our production capabilities, increase our efficiency and further enhance our product offerings to our customers.

Approximately half of this project expenditure is payable to vendors located in Europe.

Furthermore, the large majority of those payments will be denominated in foreign currency.

Depending on the level of tariffs in place at the time of delivery and unfavorable changes in foreign currency exchange rates, the ultimate cost of such equipment purchases could increase significantly.

We obtained an equipment loan to finance a portion of this capital investment, and intend to fund the remainder with borrowings under our Credit Facility and/or use available cash generated from our operations.

We anticipate that expected net cash flow generated from operations and amounts available pursuant to the Credit Facility and the aforementioned equipment loan will be sufficient to fund our operations and capital expenditures for the next twelve months.

Our available credit under our Credit Facility has allowed us to devote funds to promote our products, increase consumer insight capabilities and promotional efforts, reinvest in the Company through capital expenditures, develop new products, pay cash dividends, consummate strategic investments and business acquisitions, such as the Lakeville Acquisition, and explore other growth strategies outlined in our Long-Range Plan.

Cash flows from operating activities have historically been driven by net income but are also significantly influenced by inventory requirements, which can change based upon fluctuations in both quantities and market prices of the various nuts and nut products we buy and sell.

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The decrease in operating cash flow was due to changes in working capital, primarily for inventory, compared to fiscal 2024.

Net of the Lakeville Acquisition, inventory decreased $11.9 million in fiscal 2024 compared to a $32.2 million decrease in inventories in fiscal 2023.

Total inventories were $254.6 million at June 26, 2025, an increase of $58.0 million, or 29.5%, from the inventory balance at June 27, 2024.

The increase was primarily due to the $21.8 million of additional inventory associated with the Lakeville Acquisition, higher quantities of inshell pecans and walnuts on hand, and higher commodity acquisition costs for walnuts.

This increase was partially offset by lower quantities of finished goods and pecan meats and lower quantities and commodity acquisition costs for peanuts and cashews.

Raw nut and dried fruit input stocks, some of which are classified as work in process, increased 9.6 million pounds, or 19.4%, at June 27, 2024 compared to June 29, 2023.

This increase was due to higher quantities of walnuts and pecans on hand due to increased procurement from a larger crop combined with softness in demand.

The weighted average cost per pound of raw nut and dried fruit input stocks on hand at the end of fiscal 2024 decreased by 9.2% compared to the end of fiscal 2023, primarily due to higher quantities of inshell walnuts and pecans.

The increase was primarily due to higher commodity acquisition costs across all major tree nuts, as well as higher on-hand quantities of finished goods in preparation for anticipated seasonal demand.

Raw nut and dried fruit input stocks, some of which are classified as work in process, decreased 5.0 million pounds, or 8.4%, at June 26, 2025 compared to June 27, 2024.

This decrease was due to lower quantities of walnuts and pecans on hand due to increased shelling driven by demand of certain sizes and inventory levels.

The weighted average cost per pound of raw nut and dried fruit input stocks on hand at the end of fiscal 2025 increased by 30.4% compared to the end of fiscal 2024, due to higher acquisition costs for almost all major tree nuts.

As of June 26, 2025, there are known purchase obligations of $303.3 million which are expected to be settled during fiscal 2026.

These purchase obligations primarily represent inventory purchase commitments;

These purchase obligations primarily represent inventory and capital equipment purchase commitments;

however, these amounts exclude purchase commitments under walnut purchase agreements due to the uncertainty of pricing and quantity.

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Cash used in investing activities was $50.8 million in fiscal 2025.

The Lakeville Acquisition net purchase price was $59.0 million.

Capital expenditures accounted for a $50.7 million use of cash in fiscal 2025.

Cash used in investing activities was $87.3 million in fiscal 2024.

The Lakeville Acquisition net purchase price was $59.0 million.

Capital expenditures accounted for a $28.3 million use of cash in fiscal 2024.

The $3.5 million purchase price for the acquisition of the Just the Cheese brand also contributed to the increase in cash used for investing activities.

We expect total capital expenditures for equipment purchases and upgrades for fiscal 2025 to be approximately $31.0 million.

This includes all capital expenditures needed for our newly leased facility in Huntley, Illinois, facility maintenance, food safety enhancements and expansion needs for our snack bar business.

Absent any material acquisitions or other significant investments, we believe that cash on hand, combined with cash provided by operations and borrowings available under the Credit Facility, will be sufficient to meet the cash requirements for capital expenditures.

We expect total capital expenditures for equipment purchases and upgrades for fiscal 2026 to be approximately $104.0 million based on current foreign currency and tariff expectations.

This includes all capital expenditures needed for the planned purchase of equipment to expand our production capabilities and related infrastructure improvements as described above, facility maintenance, food safety enhancements and expansion needs for our bar business.

We expect to fund these capital purchases through a combination of borrowings under our existing Credit Facility, use of available cash from our operations and equipment loan financing obtained in the fourth quarter of fiscal 2025.

Absent any additional material acquisitions or other significant investments, we believe that cash on hand, combined with cash provided by operations, borrowings available under the Credit Facility and equipment financing, will be sufficient to meet the cash requirements for planned capital expenditures.

Financing Activities.

Cash used in financing activities was $15.8 million during fiscal 2024.

Cash provided by financing activities was $20.4 million during fiscal 2025.

There was a net increase in borrowings under our Credit Facility of $37.2 million in fiscal 2025 due to increasing commodity acquisition costs and capital investment.

Equipment loan proceeds received were $9.3 million in fiscal 2025.

We paid dividends totaling $24.4 million in fiscal 2025.

We repaid $0.7 million of long-term debt during fiscal 2025.

Partially offsetting this use of cash was a net increase in borrowings outstanding under our Credit Facility of $20.4 million during fiscal 2024 primarily due to the Lakeville Acquisition.

See Note 7 — “Revolving Credit Facility” and Note 8 — “Long-Term Debt” of the Notes to Consolidated Financial Statements for additional information and future maturities.

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We paid dividends totaling $34.8 million in fiscal 2024.

We repaid $3.2 million of long-term debt during fiscal 2023, $2.5 million of which was related to the Mortgage Facility (as defined below).

There was a net decrease in borrowings outstanding under our Credit Facility of $40.4 million during fiscal 2023 primarily due to decreasing commodity acquisition costs and improved operating cash flows.

We repaid $0.7 million of long-term debt during fiscal 2024.

There was a net increase in borrowings outstanding under our Credit Facility of $20.4 million during fiscal 2024 primarily due to the Lakeville Acquisition.

Financing Arrangements

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The Amended and Restated Credit Agreement provided for a $117.5 million senior secured revolving credit facility with the same borrowing capacity, interest rates and applicable margin as the Former Credit Agreement and extended the term of the Former Credit Agreement from July 7, 2021 to March 5, 2025.

The Amended and Restated Credit Facility is secured by substantially all of our assets other than machinery and equipment, real property and fixtures and matures on March 5, 2025.

The Amended and Restated Credit Facility is secured by substantially all of our assets other than machinery and equipment, real property and fixtures and was to mature on March 5, 2025.

On May 8, 2023, we entered into the First Amendment to our Amended and Restated Credit Agreement (the “First Amendment”), which replaced the London interbank offered rate (“LIBOR”) interest rate option with the Secured Overnight Financing Rate (“SOFR”).

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On September 29, 2023, we entered into the Second Amendment to our Amended and Restated Credit Agreement (the “Second Amendment”), which (among other things) increased the amount available to borrow under the Credit Facility to $150.0 million extended the maturity date to September 29, 2028 and allows the Company to pay up to $100 million in dividends per year, subject to meeting availability tests.

On June 16, 2025, we entered into the Consent and Third Amendment to our Amended and Restated Credit Agreement (the “Third Amendment”), which defined and included the Equipment Loan (as defined below).

At our election, borrowings under the Credit Facility currently accrue interest at either (i) a rate determined pursuant to the administrative agent’s prime rate plus an applicable margin determined by reference to the amount of loans which may be advanced under the borrowing base calculation, ranging from 0.25% to 0.75% or (ii) a rate based upon SOFR plus an applicable margin.

The terms of the Credit Facility contain covenants that, among other things, require us to restrict investments, indebtedness, acquisitions and certain sales of assets and limit annual cash dividends or distributions, transactions with affiliates, redemptions of capital stock and prepayment of indebtedness (if such prepayment, among other things, is of a subordinate debt).

The terms of the Credit Facility contain covenants that, among other things, require us to restrict investments, indebtedness, liens, acquisitions and certain sales of assets and limit annual cash dividends or distributions, transactions with affiliates, redemptions of

capital stock and prepayment of indebtedness (if such prepayment, among other things, is of a subordinate debt).

If loan availability under the borrowing base calculation falls below $25.0 million, we will be required to maintain a specified fixed charge coverage ratio, tested on a monthly basis, until loan availability equals or exceeds $25.0 million for three consecutive months.

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The selling price was determined by an independent appraiser to be the fair market value which also approximated our carrying value.

No gain or loss was recorded on the Selma Properties transaction.

The lease for the Selma Properties has a ten-year term at a fair market value rent with three five-year renewal options.

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The provisions of the arrangement are not eligible for sale-leaseback accounting and the $14.3 million was recorded as a debt obligation.

No gain or loss was recorded on the Selma Properties transaction.

As of June 26, 2025, $6.4 million of the debt obligation was outstanding.

Equipment Loan

On June 16, 2025, the Company entered into a financing agreement with Wells Fargo Bank, N.A.

which allows the Company to finance up to $50 million for the purchase of equipment to further expand our production capabilities, increase our efficiency and further enhance our product offerings to our customers (the “Equipment Loan”).

The Equipment Loan is provided under a master loan agreement and related equipment schedule(s), and is secured under a Security Agreement which provides for a first priority lien on all equipment and a second priority lien on our accounts receivable and inventory.

The Company will be required to make sixty equal monthly payments comprised of principal and interest starting upon distribution of the final loan proceeds which is expected to occur in the fourth quarter of fiscal 2026.

The fixed interest rate (SOFR plus an applicable margin of 1.49%) will be calculated at that point in time as well.

The Equipment Loan contains a graded prepayment penalty if the loan is paid off within 36 months of commencement.

The Company will make monthly interest-only payments of SOFR plus an applicable margin of 1.60% prior to the delivery and acceptance of the equipment and distribution of the final loan proceeds which will be capitalized as part of the equipment acquisition cost.

As of June 26, 2025, $9.3 million of the debt obligation under the Equipment Loan was outstanding.

Critical Accounting Policies and Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis