What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-08-19 compared with 2025-08-20 · 138 added, 120 removed, 167 unchanged (61% of the section changed)

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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, 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 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.

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

We also manufacture and distribute a portfolio of snack and nutrition bars (“bars”), and market and distribute, and in most cases, manufacture or process, a diverse product line of other food and snack products, including peanut butter, almond butter, cashew butter, candy and confections, snack and trail mixes, granola, sunflower kernels, dried fruit, corn snacks, sesame sticks and other sesame snack products.

We primarily sell our products under a variety of private brand names, as well as under our Fisher , Orchard Valley Harvest , Squirrel Brand and Southern Style Nuts brand names.

Our products are sold through three core distribution channels, including food retailers in the consumer channel, commercial ingredient users and contract manufacturing customers.

Our Long-Range Plan defines our future growth priorities, including accelerating our private brand business with key customers in high-growth snacking categories, most notably private brand bars.

The Long-Range Plan also emphasizes expanding branded distribution behind Orchard Valley Harvest and Fisher via insight-driven product and packaging innovation in our consumer and commercial ingredients channels, while strategically partnering with leading brands in our contract manufacturing channel.

Execution of the Long-Range 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 our ongoing capacity expansion and a robust innovation pipeline, with continued focus on nutrition and protein 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 and e-commerce.

Promotional and advertising investments are being prioritized to drive branded volume growth, supported by an omni-channel strategy across recipe nuts, snack nuts and trail mix.

Our Long-Range Plan includes growth through product and packaging innovation and targeted, opportunistic acquisitions.

To support these initiatives, we have made significant capital investments in equipment and infrastructure improvements to expand our production capabilities, improve efficiency and enhance product offerings for our customers.

We continue to face ongoing operational and regulatory challenges, including food safety and compliance requirements, maintaining and expanding our customer base and driving growth across private brand and branded categories.

Shifts or declines in consumer demand within a highly competitive snack product environment, combined with macroeconomic uncertainty, could adversely impact our ability to execute our Long-Range Plan.

Additional challenges include higher food and input costs driven by increasing underlying commodity acquisition costs as well as actual, potential or threatened U.S.

and foreign tariffs on key commodities, raw materials and manufacturing equipment.

Ongoing uncertainty around global conflict in the Middle East and interest rates may further impact economic growth and consumer spending resulting in reduced demand for private brand and branded snack products, including snack nuts, trail mix and bars.

We also continue to operate amid intense industry competition, potential economic downturns in the markets in which we operate and ongoing supply chain volatility.

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.

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.

We continue to face changing marketplace trends that impact our categories.

Retail prices across snack nuts and trail mix have generally risen due to increased commodity costs and evolving global trade agreements.

These higher prices, paired with general economic uncertainty, are causing consumers to purchase fewer snack products.

As a result, sales volumes for snack nuts, trail mix and mainstream bars are declining for the Company and the industry overall.

Many consumers are shifting to private brands, more affordable nuts or bars or choosing snacks outside these categories altogether.

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

Additionally, emerging health and wellness trends, use of GLP-1 drugs and other consumer health priorities may also impact consumers' purchasing behavior, including decreased purchasing of snack foods.

In response, we are focusing on our existing products in our portfolio that address these trends, as well as our strengths by leveraging our expertise in snack nut and trail mix and bars categories, development of

additional products that are on-trend, improving efficiency, innovating in product and packaging and carefully managing trade spending and pricing 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.

Global supply chain pressures have eased compared to past fiscal years.

However, intermittent challenges, delays and extended lead-times still exist for certain raw materials and inputs.

Overall packaging and ingredient inflation appears to have moderated during fiscal 2026.

However there is still uncertainty within the supply chain from the U.S.

government's tariffs policy on imports from foreign countries and corresponding retaliatory tariffs from foreign countries.

Any incremental 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.

In November 2025, the U.S.

government removed tariffs for several food categories, including cocoa and cashews among others, which have no domestic production.

In February 2026, the U.S.

Supreme Court ruled that tariffs imposed by executive order under the International Emergency Economic Powers Act (“IEEPA”) exceeded U.S.

Presidential authority.

Subsequently, the Court of International Trade ordered U.S.

Customs and Border Patrol to develop a framework for refunding such tariffs.

Following the Supreme Court ruling, the President implemented a temporary worldwide baseline tariff of 10% under Section 122 of the Trade Act of 1974 (the “Trade Act”).

These tariffs are time limited and expired in early fiscal 2027.

In March 2026, the U.S.

Trade Representative launched several investigations under Section 301 of the Trade Act into the failure of numerous trading partners to prohibit or effectively enforce bans on imports produced with forced labor.

These investigations resulted in country-specific additional tariffs imposed by the U.S.

President of 10% or 12.5% which became effective on July 24, 2026.

These Section 301 tariffs have been challenged as exceeding U.S.

Presidential authority.

The ongoing and ultimate impact of tariffs may be difficult to predict as their amount and duration are uncertain, making our planning process more difficult.

The threat of tariffs may also have adverse implications to our business and the business of our suppliers and customers.

We typically are not the importers of record for commodities that we procure from non-U.S.

It is uncertain when or if, and in what amount, any eventual tariff refunds our vendors receive may be passed onto us.

We are the importers of record for the capital equipment we are purchasing from European vendors and paid approximately $4.0 million in IEEPA tariffs in the third quarter of fiscal 2026.

In the fourth quarter of fiscal 2026, we received a refund of IEEPA tariffs paid of approximately $4.0 million.

While we do not have direct exposure to suppliers in Russia, Ukraine, Iran 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 energy and shipping costs.

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.

Additionally, fuel prices have been unpredictable and may vary depending on economic activity in the areas where we ship and receive goods as well as prevailing oil prices.

We have seen fuel prices increase due to recent military operations in and around Iran, which have led to volatility in the price of crude oil.

Fuel prices could continue to remain volatile as the conflict persists.

Among our most significant ingredient requirements are 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, 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), ongoing political instability and other factors beyond our control.

The cocoa supply-demand outlook is improving following consecutive years of supply deficits, while consumption has declined due to elevated price levels over the past two years.

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

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

We focus on remaining agile by identifying risks proactively, modifying inventory and production plans and diversifying our supplier base to mitigate risk of 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

Climate change may have a long-term adverse impact on our business and results of operations.

Global average temperatures are gradually increasing due to increased concentration of carbon dioxide and other greenhouse gases, which is projected to contribute to significant changes in global weather patterns, an increase in severity of natural disasters, and changes in agricultural productivity adding to price volatility.

Global average temperatures are gradually increasing due to increased concentration of carbon dioxide and other greenhouse gases, which is projected to contribute to

significant changes in global weather patterns, an increase in severity of natural disasters, and changes in agricultural productivity adding to price volatility.

Changing weather patterns may limit the availability or increase the cost of natural resources and commodities, including cocoa, grains, sweeteners, and vegetable oils used to manufacture our products.

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.

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

Floods, hurricanes, wildfires, extreme rainfall, 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 2026 increased $68.4 million, or 6.2%, to $1,175.7 million compared to fiscal 2025.

• 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.

• Gross profit increased $7.7 million and our gross profit margin, as a percentage of net sales, decreased to 18.0% in fiscal 2026 from 18.4% in fiscal 2025.

• Total operating expenses for fiscal 2026 increased $3.2 million, or 2.7%, to $122.0 million.

Operating expenses, as a percentage of net sales, were 10.4% of net sales in fiscal 2026 compared to 10.7% of net sales in fiscal 2025.

• Diluted earnings per share increased approximately 4.6% compared to fiscal 2025.

• Our strong financial position allowed us to invest $88.1 million in property and equipment and pay cash dividends totaling $46.8 million during fiscal 2026.

• 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.

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).

• The total value of inventories on hand at the end of fiscal 2026 decreased $8.8 million, or 3.4%, in comparison to the total value of inventories on hand at the end of fiscal 2025.

We have seen acquisition costs increase for pecans and almonds, while costs of walnuts, peanuts and cashews decreased in the 2025 crop year (which falls into our 2026 fiscal year).

Results of Operations

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Our net sales increased 6.2% to $1,175.7 million for fiscal 2026 from $1,107.2 million for fiscal 2025.

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.

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

The increase in net sales was attributable to an 8.9% increase in weighted average selling price per pound, which was primarily due to pricing actions taken in response to higher commodity acquisition costs for all major tree nuts.

Sales volume, which is defined as pounds sold to customers, decreased 2.5%.

Sales volume declined for substantially all major product types but increased for walnuts, pecans and peanuts.

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

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Fisher branded products were approximately 68% and 63% of branded sales during fiscal 2026 and 2025, respectively, with Orchard Valley Harvest branded products accounting for the majority of the remaining branded product sales.

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 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.

Net sales in the consumer distribution channel increased $53.3 million, or 5.9%, and sales volume decreased 4.5% in fiscal 2026 compared to fiscal 2025.

The sales volume decrease was driven by a 3.6% decrease in private brand sales volume due to lower volume in bars and peanut butter, while nuts and trail mix sales volume remained relatively flat.

Bar sales were impacted by continued category softness at a mass merchandise retailer.

Our strategic decision to reduce sales to a grocery store retailer also contributed to the overall decline in bar volume.

Peanut butter volume declined primarily due to a product discontinuation at a mass merchandiser.

Nuts and trail mix volume was impacted by elevated retail prices, reduced promotional activity and discontinuation of underperforming items.

These declines were largely offset by initial shipments to a new grocery retailer, new private brand walnut

business with an existing customer and increased sales resulting from promotional pricing on walnuts and peanuts at an online retailer.

Branded sales volume decreased 10.8% primarily due to lost distribution of Orchard Valley Harvest at a major non-food customer.

Net sales in the commercial ingredients distribution channel increased 10.2% in dollars and sales volume increased 4.7% in fiscal 2026 compared to fiscal 2025.

The sales volume increase was due to higher food services sales at existing customers and sales to one new customer.

Increased sales of peanut crushing stock also contributed to the overall growth.

Net sales in the contract manufacturing distribution channel increased 4.4% in dollars and sales volume increased 2.9% in fiscal 2026 compared to fiscal 2025.

The sales volume increase was due to increased sales to a customer added during the second quarter of fiscal 2025.

This customer currently provides the majority of the raw ingredients for these products, and the Company processes and packages these products.

This increase was largely offset by decreased granola sales volume and lower peanut butter sales volume to a major customer.

Gross profit increased 3.8% to $211.2 million in fiscal 2026, from $203.5 million in fiscal 2025.

The increase in gross profit was due to customer pricing more closely aligned with commodity acquisition costs and a one-time pricing concession in the first quarter of fiscal 2025 for a bars customer which did not recur in fiscal 2026.

The increase was partially offset by $2.7 million of non-recurring recall-related costs associated with dry milk powder supplied by a third-party manufacturer used in the seasoning within certain of our products.

Gross profit was also adversely affected by higher customer claims, higher snack bar ingredient costs, manufacturing inefficiencies, and higher freight expenses.

Our gross profit margin, as a percentage of sales, decreased to 18.0% for fiscal 2026 from 18.4% for fiscal 2025 mainly due to factors mentioned previously, partially offset by a higher net sales base.

Operating Expenses

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

Total operating expenses for fiscal 2026 increased $3.2 million to $122.0 million.

Operating expenses as a percent of net sales were 10.4% for fiscal 2026 compared to 10.7% for fiscal 2025.

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.

Selling expenses for fiscal 2026 were unchanged at $78.9 million compared to fiscal 2025.

Administrative expenses for fiscal 2026 were $43.0 million, an increase of $3.2 million, or 8.1%, from fiscal 2025.

The increase was primarily due to a $8.3 million increase in incentive compensation expense.

This was partially offset by a $2.3 million estimated insurance recovery associated with the dry milk powder recall, a $1.8 million favorable change in gain/loss on asset disposals and a $1.2 million decrease in personnel, recruitment and employee compensation expenses.

Income from Operations

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Interest expense was $2.4 million for fiscal 2026 compared to $3.6 million for fiscal 2025.

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

The decrease in interest expense was due to lower average line of credit debt levels.

Rental and Miscellaneous Expense, Net

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Pension Expense (Excluding Service Costs)

Pension expense (excluding service costs) was $1.4 million for both fiscal 2025 and fiscal 2024.

Pension expense (excluding service costs) was $1.6 million for fiscal 2026 and $1.4 million for fiscal 2025.

Income Tax Expense

Income tax expense was $21.0 million, or 25.4% of income before income taxes, for fiscal 2026 compared to $18.9 million, or 24.3% of income before income taxes, for fiscal 2025.

The increase in the effective tax rate is primarily due to an increase in the disallowed deduction related to officer compensation.

Net income was $61.9 million, or $5.29 per common share basic and $5.26 per common share diluted, for fiscal 2026, compared to $58.9 million, or $5.06 per common share basic and $5.03 per common share diluted, for fiscal 2025, due to the factors discussed above.

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Liquidity and Capital Resources

The primary uses of cash are to fund our current operations, fulfill contractual obligations, pursue our Long-Range Plan through growing our branded and private brand programs, consummate and integrate business acquisitions, return cash to our stockholders through dividends, repay indebtedness and pay amounts owed under the Retirement Plan.

Also, various uncertainties, including cost uncertainties, could result in additional uses of cash.

The primary uses of cash are to fund our current operations, fulfill contractual obligations, pursue our Long-Range Plan through growing our branded and private brand nut and bar businesses, consummate and integrate business acquisitions, return cash to our stockholders through dividends, repay indebtedness and pay amounts owed under our Supplemental Employee Retirement Plan (“SERP”).

Also, various uncertainties, including cost uncertainties and tariff payments, could result in additional or unexpected uses of cash.

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

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.

Beginning in fiscal 2025 and continuing into early fiscal 2027, we will 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.

In fiscal 2025, 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 or with 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 Equipment Loan (as defined below) 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 reinvest in the Company through capital expenditures, develop new products, pay cash dividends, consummate strategic investments and business acquisitions 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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Operating Activities.

Net cash provided by operating activities was $30.5 million in fiscal 2025, a decrease of $71.1 million compared to fiscal 2024.

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

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 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.

Net cash provided by operating activities was $123.8 million in fiscal 2026, an increase of $93.3 million compared to fiscal 2025.

The increase in operating cash flow was due to changes in working capital, primarily for inventory, compared to fiscal 2025.

Total inventories were $245.8 million at June 25, 2026, a decrease of $8.8 million, or 3.4%, from the inventory balance at June 26, 2025.

The decrease was due primarily to 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 commodity acquisition costs for pecans and almonds.

Raw nut and dried fruit input stocks, some of which are classified as work in process, decreased 5.4 million pounds, or 10.1%, at June 25, 2026 compared to June 26, 2025.

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.

This decrease was due to lower quantities of pecans and walnuts on hand.

This reduction was offset partially by higher quantities of peanuts, almonds and cashews on hand.

The weighted average cost per pound of raw nut and dried fruit input stocks on hand at the end of fiscal 2026 increased by 12.1% compared to the end of fiscal 2025, primarily due to higher acquisition costs for pecans and almonds, partially offset by lower acquisition cost of walnuts.

As of June 25, 2026, there are known purchase obligations of $237.9 million which are expected to be settled during fiscal 2027.

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

Additional contractual cash obligations include amounts owed for lease commitments and the payments to former officers under our Supplemental Employee Retirement Plan (“SERP”).

Additional contractual cash obligations include amounts owed for lease commitments and the payments to former officers under the SERP.

We believe 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 all contractual cash obligations.

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Cash used in investing activities was $86.2 million in fiscal 2026.

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

Capital expenditures accounted for an $88.1 million use of cash in fiscal 2026.

Slightly offsetting the fiscal 2026 cash outflows for capital asset purchases was $1.5 million of net life insurance proceeds received from existing life insurance contracts and $0.5 million received on sale of non-core equipment.

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.

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.

We expect total capital expenditures for equipment purchases and upgrades for fiscal 2027 to be approximately $48.0 million.

This includes all capital expenditures needed to complete the purchase and installation of equipment to expand our production capabilities and related infrastructure improvements as described above, as well as ongoing facility maintenance, food safety enhancements and other 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.

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 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.

Cash used in financing activities was $37.1 million during fiscal 2026.

There was a net decrease in borrowings under our Credit Facility of $24.0 million in fiscal 2026 due to improved operating cash flows.

We paid dividends totaling $46.8 million in fiscal 2026.

We repaid $0.8 million of long-term debt during fiscal 2026.

Equipment loan proceeds received were $35.0 million in fiscal 2026.

See Note 6 — “Revolving Credit Facility” and Note 7 — “Long-Term Debt” of the Notes to Consolidated Financial Statements for additional information and future maturities.

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 investments.

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.

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

On February 7, 2008, we entered into the Former Credit Agreement (as defined below) with a bank group (the “Bank Lenders”) providing a $117.5 million revolving loan commitment and letter of credit subfacility.

Also on February 7, 2008, we entered into a Loan Agreement with an insurance company providing us with two term loans for an aggregate amount of $45.0 million (as amended, the “Mortgage Facility”).

The Mortgage Facility was repaid in full in the third quarter of fiscal 2023 and the related mortgages on our owned real property located in Elgin, Illinois and Gustine, California have been released.

Credit Facility

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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.

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 or refinancing of indebtedness (if such prepayment or refinancing, among other things, is of a subordinate debt, including the Equipment Loan).

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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At the end of each five-year renewal option, the base monthly lease amounts are reassessed, and the monthly payments increased to $114,000 beginning in September 2021.

One five-year renewal option remains.

Also, we have an option to purchase the Selma Properties from the owner at 95% (100% in certain circumstances) of the then fair market value, but not less than the original $14.3 million purchase price.

On December 30, 2025 we exercised the final remaining five-year renewal option which extended the lease term to September 2031 and the base monthly lease payment will increase to approximately $121,000 beginning in September 2026.

We currently have an option to purchase the Selma Properties from the owner at 95% (100% in certain circumstances) of the then fair market value, but not less than the original $14.3 million purchase price.

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

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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 Company will be required to make sixty (60) equal monthly payments comprised of principal and interest starting upon distribution of the final loan proceeds which is expected to occur in the first half of fiscal 2027.

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 Equipment Loan contains a graded prepayment penalty if the loan is paid off within thirty-six (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.

As of June 25, 2026, $44.3 million of such loan commitment 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