JBSS

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

Thank you, Rivka, good morning, everyone, and welcome to our 2026 third quarter earnings conference call. Thank you for joining us. On the call with me today is Jasper Sanfilippo, our COO, and Frank Pellegrino, our CFO. We may make some forward-looking statements today. These statements are based on our current expectations, and they involve certain risks and uncertainties. The factors that could negatively impact results are explained in the various SEC filings that we've made, including Forms 10-K and 10-Q. We encourage you to refer to the filings to learn more about these risks and uncertainties that are inherent in our business. We delivered another strong quarter, achieving record top-line sales growth, supported by our continued focus on driving volume across our three of our sales channels.

Total volume was consistent with last year, and the sequential quarter improvement is an early indication that our volume growth initiatives are beginning to gain traction. In particular, we are very encouraged by the improved performance in our commercial ingredients and contract manufacturing channels this quarter. Our diversified multi-channel sales model, serving at-home consumer demand, away-from-home food service customers, and strategic contract manufacturing partnerships continues to be a competitive advantage, positioning us to capture growth opportunities wherever they emerge in the marketplace. This strategic channel mix enables us to quickly adapt to shifting consumption patterns and consistently deliver results across a wide range of end markets. We're actively pursuing new volume-driving opportunities, leveraging our new and existing capabilities and advancing the onboarding of a new strategic customer in the contract manufacturing channel.

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

Our performance underscores our strategic priority to execute on our long-range plan and adapt our strategies to meet evolving consumer needs. Yesterday, our board of directors met at our headquarters in Elgin, Illinois. We spent the morning discussing the investments we are making in our bar manufacturing capabilities, and we took a tour of the new equipment installation in the plant. It is an extraordinary operation, and this investment is transforming our business and will provide enormous growth opportunities for JBSS. Our teams are so proud of what we are building at our headquarters. We plan to host an investor day sometime in October this year. It will be a chance for stockholders to see and experience the transformation of our company. This historic investment in production equipment and infrastructure in our facilities reflects our confidence in investing in domestic manufacturing here. We do have headwinds we continue to face.

Although U.S. Customs launched a new electronic system, CAPE, to handle tariff refund claims, there's no telling how quickly Customs can process the backlog. We're engaging with the 20 suppliers which account for 90% of our total tariff surcharges, and we are monitoring progress. There's still uncertainty as to how our customers will respond. Global events continue to create unfavorable conditions for elevated fuel prices, along with increased costs for other related materials. Our procurement team is doing an exceptional job monitoring this volatile situation, assessing alternative suppliers where possible, and working to mitigate supply chain and cost disruptions. As I've mentioned on previous earnings calls, our business model, the foundation of our company, remains important to our success as we adapt to changing macroeconomic conditions and evolving consumer demand.

Diversification is a key element of that model, both across our business channels and customer base and across our product portfolio. The investments we've made in the snack, energy, and protein-forward bar category expands our reach with existing customers and consumers while also opening opportunities for new demand. This is JBSS executing our long-range growth plan. A second element of our business model that allows us to quickly adapt to changing macroeconomic conditions and evolving consumer demand is our investments in consumer insights and innovation. For example, we know value is a top driver of private label choice. However, different consumers prioritize different value dimensions, from convenience and quality to sustainability, experience, and trust. Our insights team digs deeper to understand consumer behavior in our categories, and the insights guide our R&D and business development efforts.

We are monitoring how wellness, functional, and lifestyle-led innovations are driving private label growth in snacks, and consumers increasingly trust private brands for quality, clean ingredients, and sustainability, especially Gen Z and millennials. As a result, our focus with customers is to continue and accelerate wellness-oriented and premium innovation. We will also strengthen our digital product data and sustainability claims, and we will continue to leverage seasonal and limited time offers that add excitement to the snack category and deepen our collaborative partnerships. A third important factor supporting our business model is our investment in our people. With the fast-paced use of AI technology, we have to adjust workforce skills necessary to be successful. Our human resources and IT departments, along with functional leaders across our organization, are assessing how to optimize our teams and equip them with the tools and skills for a more digital future.

With AI and automation reshaping job roles in our offices and in our manufacturing facilities. I will now turn the call over to Frank to discuss our financial performance.

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

Sales volume decreased 4.5% in the consumer distribution channel, primarily driven by a 5.3% decline in private brand sales, reflecting lower volume in private label bars, while nuts and trail mix sales volume remained relatively flat. Bar sales were impacted by continued category softness at a mass merchandise retailer, consistent with the trend seen in our most recent second quarter. Our strategic decision to reduce sales to a grocery store retailer also contributed to overall decline in the bar volume. Sales of nuts and trail mix were negatively impacted by elevated retail prices, reduced promotional activity, and discontinuation of underperforming items. These impacts were largely offset by new private branded walnut distribution at an existing grocery retailer and increased sales resulting from promotional pricing on walnuts and peanuts at an online retailer.

Lastly, branded sales benefited from limited opportunistic orders for Orchard Valley Harvest to a customer in the non-food sector. Sales volume increased 14.3% in the commercial ingredients channel, mainly driven by higher food service sales volume at new and existing customers. In addition, increased sales of peanut crushing stock contributed to the overall growth in the quarterly comparison. Sales volume in the contract manufacturing channel increased 16.5% due to increased snack nut sales to a significant customer as we continue onboarding this customer added during the second quarter of the prior year. This increase was partially offset by decreased granola sales volume.

Gross profit decreased by $2.1 million, or 3.8% to $53.8 million compared to the third quarter of last year, driven by significantly lower inventory valuation adjustments compared to the prior year, partially offset by higher net sales. Gross profit margin decreased to 19.1% of net sales, compared to 21.4% for the third quarter of fiscal 2025, due to the reasons previously mentioned. Total operating expenses increased by $2.3 million compared to the prior year's third quarter, driven by higher incentive compensation expenses, partially offset by lower compensation costs, lower rent expense, and a gain on the sale of non-core equipment.

Total operating expenses as a percentage of net sales for the third quarter of fiscal 2026 remained unchanged at 10.6% compared to the prior year comparable quarter. Interest expense was $500,000 for the third quarter of fiscal 2026, compared to $1.1 million for the third quarter of fiscal 2025, due to lower average line of credit levels. Net income for the third quarter of fiscal 2026 was $16.8 million, or $1.43 per diluted share, compared to $20.2 million, or $1.72 per diluted share for the third quarter of fiscal 2025. Now taking a look at inventory.

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

Net sales for the first three quarters of the current year increased 6.8%, $895.2 million, compared to the first three quarters of fiscal 2025. The increase in net sales was primarily attributable to an 11% increase in the average weighted selling price per pound, which was partially offset by a 3.7% decrease in sales volume. The sales volume decrease was due to lower sales volume in the consumer channel, partially offset by year-to-date growth in the commercial ingredients channel. Gross profit increased to 18.7% of net sales, compared to 18.5% in the prior period.

The increase was mainly attributable to aligning our pricing more closely with commodity acquisition costs, the absence of a one-time pricing concession recognized in the prior period, and the factors noted previously. Total operating expenses for the current year-to-date remained substantially flat at $90.3 million compared to the prior year's first three quarters. Interest expense was $2 million for the first three quarters of fiscal 2026, compared to $2.3 million for the first three quarters of fiscal 2025. Net income for the first three quarters of fiscal 2026 was $53.5 million, or $4.55 per diluted share, compared to net income of $45.4 million, or $3.87 per diluted share for the first three quarters of fiscal 2025.

Please refer to our Form 10-Q for additional details regarding our financial performance for our third quarter of fiscal 2026. I'll turn the call over to Jeffrey to provide additional comments.

Thanks, Frank, for the financial updates. We'll turn to category updates. I'll share category and brand results for the quarter. All the market information I'll be referring to is Circana's panel data, and for today it is the period ending March 22nd, 2026. When I refer to Q3, I'm referring to 12 weeks of the quarter ending March 22nd, 2026. References to changes in volume are versus the corresponding period one year ago. For pricing commentary, we are using Circana's MULO scan data, and we are referring to average price per pound. We're using the nut, trail mix, and bar syndicated views of the category as defined by Circana. In the third quarter, we continued to see modest growth in the broader snack aisle as defined by Circana. Volume and dollars were up 0.5% and 5% respectively.

This is consistent with the performance we saw in Q2. In Q3, the snack nut and trail mix category was down 6% in volume and up 1% in dollars, which is an acceleration of the volume softness we saw last quarter. Snack nut prices rose 8% with increases across nearly all nut types. Prices rose 6% for trail mixes. Orchard Valley Harvest brand, which primarily plays in trail mix, was up 33% in pound shipments during Q3. The launch of an innovative platform paired with additional shipments to a specialty retailer drove this healthy increase. Our Southern Style Nuts brand performed similarly to the category, a 6% decrease in pound shipments driven by softness primarily in our e-commerce channel. Fisher Snack Nut and Trail Mix performed worse than the category with pound shipments down 8%.

Fisher's performance was due to less promotional activity paired with the broader category headwinds. Our private label consumer snack and trail shipments performed similar to the category with pound shipments down 4% versus last year. Let me turn to the recipe nut category. In Q3, the recipe nut category was up 5% in pounds and up 17% in dollars, driven by growth in private label and the discount retailers expanding store counts. The recipe category experienced an 11% price increase, driven by increases in both walnuts and pecans. Our Fisher Recipe pound shipments were down 8% in Q3 due to slower velocities among grocery retailers. We'll switch to the bar category. In Q3, the bar category grew by 2% in pounds and 6% in dollars, driven by branded player growth in the protein segment of the category.

Private label was flat in pounds and down 1% in dollars. Our private label bar shipments were down 17% versus a year ago due to softness at a major mass merchandiser. In closing, we remain attentive to category trends and continue to monitor consumer sentiment, which is showing early signs of stabilizing. At the same time, we recognize that rising global tensions in certain key regions and the resulting impact on energy prices and supply chain dynamics are contributing to ongoing uncertainty. I am confident in the strategic investments we have made in our people, our customers, and capabilities to overcome these challenges and deliver strong operating results. Our company will maintain an agile mindset as we move forward. Furthermore, we will continue to rigorously pursue opportunities to enhance internal efficiencies and drive long-term customer and shareholder value.

Our company and our team of dedicated leaders and associates throughout the organization remain steadfast and strong. We have always adapted quickly to overcome headwinds. Our insights, innovation, R&D, marketing, sales, and operation teams are laser focused on consumer behavior and consumption trends to develop new products, pursue new opportunities, and support increased demand from our private brand retail partners. We have the right strategies, talent, and commitment to quality and service to continue to grow and provide exceptional value and innovation to our customers and consumers. We appreciate your participation in the call, and thank you for your interest in our company. I will now turn the call back over to Rivka to open the line for questions.

Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Hamed Khorsand of BWS Financial. Your line is now open.

Hey, good morning. I just wanted to ask you about how you're moving on a standpoint of adding capacity in the bars, and do you need to add capacity in bars right now?

Sure, Hamed. This is Jasper. The installation of the line is 90% done with the processing and the packaging side of it. Currently, the bulk of the work left is building out our kitchens and then auxiliary support like dust collection, bulk liquid storage, as well as bulk life storage. As it relates to the capacity, we do have a pretty large spike for back to school. Currently, I would say nine months out of the year, we don't need to add additional capacity for the mainstream type of bars, which would be fruit and grain and chewy type bars. We're actively working with our protein bar line to gain additional distribution. We do have some kid protein bars will enter the market within the next four to six weeks at a major retailer.

The sales team continues to remain focused on still building out our mainstream bars to fill up some capacity, as well as get our protein platform moving at retailers. As you know, the protein category is growing faster than obviously the mainstream bar category is. It's also a margin accretive relative to the mainstream bar, so the team is laser focused on getting those offerings out into market.

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

It does not. This is Frank. Hamed, it does not.

Okay. You're just moving volumes around then and just pocketing the dollars.

Correct. Again, every customer has a different channel classification.

Got it. Looking out to fiscal 2027, where do you stand as far as new customers go? You know, are they still, you know, on the cusp of coming on?

Yeah. One of our goals, Hamed, is to diversify our customer base. We are, you know, we've got some serious, some important customer concentration that we're looking to diversify. The teams are working hard with retailers across the consumer channel. Also the focus, as we touched on earlier, was the contract manufacturing and the commercial ingredient channel. A lot of opportunities for new customers in those channels as well. The teams are working across channels to diversify, add new customers. In addition, we're looking at retailers that we currently work with, but don't work in every department. For example, pharmaceutical would be one that we do very little business in today, but there are snacks in the pharmaceutical departments. Not only diversifying customers, but also the segments within customers that we already have.

Okay, great. Thank you.

Thank you.

Thank you.

As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. I am showing no further questions at this time. I would now like to turn it back to Jeffrey Sanfilippo for closing remarks.

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

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

Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son Second Quarter Fiscal 2026 Operating Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand it over to your first speaker today, Jeffrey Sanfilippo, Chief Executive Officer. Please go ahead.

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

Thank you, Jeffrey. Starting with the income statement. Net sales for second quarter of fiscal 2026 increased by 4.6% to $314.8 million compared to net sales of $301.1 million for the second quarter of fiscal 2025. The increase in net sales was due to a 15.8% decrease in the weighted average sales price per pound, which was partially offset by a 9.7% decline in sales volume of pounds sold to customers. The increase in the weighted average sales price primarily resulted from higher commodity acquisition costs across all major tree nuts and peanuts. While our core business of walnuts, almonds and pecans achieved volume growth, overall sales volume decreased during the quarter. This decline was primarily from a reduction of opportunistic granola volumes sold in the contract manufacturing channel. Sales volume decreased 8.4% in the consumer distribution channel, primarily driven by a 7.9% decline in private brand sales due to lower volume in private label bars and, to a lesser extent, nuts and trail mix. Nuts and trail mix sales were impacted by higher retail prices, soft demand including customer downsizing and reduced distribution at a major mass merchandiser. These declines were partially offset by new business with an existing customer and improved performance at another mass merchandiser. Bar sales declined in as prior year's volume were elevated by low industry-wide inventory levels and the lingering impact of a national brand recall, which temporarily boosted private label bars demand. A strategic reduction in sales to one grocery retailer also contributed to the baseline. Branded sales were negatively impacted by lost distribution of Orchard Valley Harvest at a major customer in the nonfood sector and the timing of Fisher snack promotions at a major nonfood customer. Sales volume in the commercial ingredients channel remained relatively unchanged with a decline of 1.1%. Sales volume in the contract manufacturing channel decreased 26.5% due to decreased granola volume processed in our Lakeville facility, which was partially offset by increased snack nut sales to a customer added during the second quarter of the prior year. Gross profit increased by $6.9 million or 13.2% to $59.2 million compared to the second quarter of last year, driven by higher net sales during the quarter with selling prices more closely aligned to commodity acquisition costs compared to the second quarter of the prior year. Additionally, reduced manufacturing spending and operational efficiencies contributed to the overall increase in gross profit. Gross profit margin increased to 18.8% of net sales compared to 17.4% for the second quarter of fiscal 2025 due to the reasons previously mentioned. Total operating expenses were essentially flat compared to prior year's second quarter, increasing by $300,000. The slight increase was primarily driven by higher incentive compensation, which was largely offset by lower marketing, freight, third-party warehouse and compensation costs. Total operating expenses as a percentage of net sales for the second quarter of fiscal 2026 decreased to 10.5% from 10.9% in the prior comparable quarter, reflecting the factors noted previously and a higher net sales base. Interest expense was $500,000 for the second quarter of fiscal 2026 compared to $800,000 for the second quarter of fiscal 2025. Net income for the second quarter of fiscal 2026 was $18 million or $1.53 per diluted share compared to $13.6 million or $1.16 per diluted share for the second quarter of fiscal 2025. Now taking a look at inventory. The total value of inventories on hand at the end of the current second quarter increased $29.6 million or 14.4% compared to total value of inventory on hand in the prior year comparable quarter. The increase was due to higher commodity acquisition costs across all major nut types except for peanuts and inshell walnuts as well as greater on-hand quantities of work in process and finished goods inventory to support forecasted demand. The weighted average cost per pound of raw nut and dried fruit increased 11.8% year-over-year mainly due to higher acquisition costs for all major nut types except for inshell walnuts, partially offset by lower acquisition costs of peanuts and lower on-hand quantities of almonds and cashews. Moving on to year-to-date results. Net sales for the first 2 quarters of the current year increased 6.3% to $613.5 million compared to the first 2 quarters of fiscal 2025. The increase in net sales was primarily attributed to a 12.2% increase in the weighted average selling price per pound, which was partially offset by a 5.3% decrease in sales volume. The sales volume decrease was due to lower sales volume in the consumer and contract manufacturing channels, partially offset by year-to-date growth in the commercial ingredients channel. Gross profit margin increased to 18.5% of net sales compared to 17.1% in the prior period. The increase was mainly attributable to the factors noted previously in the quarterly comparison, along with a onetime pricing concession in the prior year first quarter to a bar customer that did not recur in this fiscal year. Total operating expenses for the current year-to-date decreased $2.1 million to $60.3 million compared to $62.4 million for the first 2 quarters of fiscal 2025. The decrease in total operating expenses was mainly driven by lower marketing and insight spending, reduced third-party warehouse costs, decreased freight expenses, lower compensation and lower third-party recruitment expenses. These savings were partially offset by an increase in incentive compensation. Interest expense was $1.5 million for the first 2 quarters of fiscal 2026 compared to $1.3 million for the first 2 quarters of fiscal 2025. Net income for the first 2 quarters of fiscal 2025 was $36.7 million or $3.12 per diluted share compared to net income of $25.3 million or $2.60 per diluted share for the first 2 quarters of fiscal 2025. Please refer to our Form 10-Q, which is filed yesterday, for additional details regarding our financial performance for the second quarter of fiscal 2026. Now I'll turn the call over to Jeffrey to provide additional comments.

Thanks, Frank, for the financial update. It's important to note how our Long-Range Plan defined our future growth priorities focused on accelerating our private brand business with key customers and high-growth snacking categories with notably private brand bars while expanding branded distribution behind Orchard Valley Harvest and Fisher via insight-driven product and packaging innovation. Execution of this plan is anchored in delivering value-added solutions and high-quality innovative products based on our extensive industry and consumer expertise. Growth in private brand bars will be supported by capacity expansion and a robust innovation pipeline with continued focus on nutrition bars. For our branded nut and trail mix business, we are focused on attracting new consumers through product innovation, broader distribution across traditional and alternative channels and expanded purchasing occasions, including club stores, e-commerce and the noncomp foodservice segment. Promotional and advertising investments are being prioritized to drive volume growth, supported by an omni-channel strategy across recipe nuts, snack nuts and trail mix. Now we'll turn to category updates. I will share some category and brand results with you for our second quarter. All the market information I'll be referring to is Circana panel data, and for today, it is the period ending December 28, 2025. When I refer to Q2, I'm referring to the 13 weeks of the quarter ending December 28, 2025. References to changes in volume are versus the corresponding period 1 year ago. For pricing commentary, we are using Circana's MULO+ scan data and we are referring to average price per pound. We are using the nuts, trail mix and bar syndicated views of the category as defined by Circana. In the second quarter, we continue to see modest growth in the broader snack aisle as defined by Circana. Volume and dollars were up 2% and 4%, respectively. This is consistent with the performance we saw in Q1. In Q2, the snack nut and trail mix category was down 4% in pounds and up 3% in dollars, which is generally consistent with the performance from the last quarter. Snack nuts prices rose 8% with increases across nearly all nut types. Prices rose 6% for trail mixes. Our Southern Style Nuts brand performed better than the category with a 5% increase in pound shipments, driven by an increase in sales in our e-commerce channel. Fisher's snack nut and trail mix performed worse in the category with pound shipments down 15%. This was primarily driven by some lost distribution and less promotional activity. Orchard Valley Harvest brand, which primarily plays in trail mix, was down 42% in pound shipments driven by discontinuation at a national specialty retailer. Commodity increases, including cocoa and some tree nuts, are resulting in higher prices for Orchard Valley Harvest, but we continue to focus on innovation and renovation opportunities to mitigate this commodity pressure. Our private label consumer snack and trail shipments performed generally similar to the category with pound shipments down 5% versus last year. Now let me turn to the recipe nut category. In Q2, the recipe nut category was up 2% in pounds and up 14% in dollars, driven by the seasonality impact of the holiday season paired with higher prices. The recipe category experienced a 13% price increase driven particularly by walnuts, although other nut types experienced price increases. Our Fisher recipe pound shipments were down 3% in Q2 due to some lost distribution, although we performed very well at our current retailers. Now let's look at the bar category. In Q2, the bars category continued to rebound as a major player continued to reenter the market after a major recall in the winter of 2023. The category grew 6% in pounds and dollars driven by branded player growth. Private label was down 1% in pounds and up 2% in dollars. Our private label bar shipments were down 12% versus a year ago due to softness at one major mass merchandiser. In closing, as we look ahead to the second half of fiscal '26, we do so with cautious optimism driven by recent commercial momentum across the organization. Our consumer team has recently secured new and expanded business with several important customers. Our foodservice team is expanding distribution with strategic partners, and our contract manufacturing team continues to build scalable growth platforms for customers. Together, these efforts position us well as we execute our growth strategies and invest in infrastructure to support the next phase of our business transformation. As always, we will continue to respond to challenges, including the current economic and operating environment and the risk of declining demand. But I am confident we have the right team, initiatives and strategies to overcome these challenges to provide differentiated value to our customers and consumers. We are committed to creating long-term shareholder value through these strategic initiatives and continued operational excellence. I want to extend my heartfelt thanks to all our employees for their hard work and dedication, which have been instrumental in achieving these milestones. Our management team and all our associates continue to work hard to expand our business, to build stronger brands, to build more innovative product platforms and to provide higher levels of quality and service. JBSS is positioned well for strong results in the future. We appreciate your participation in the call, and thank you for your interest in our company. We'll now open the call to questions.

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

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

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

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

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

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

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

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

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