The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the Notes to Consolidated Financial Statements. Our fiscal year ends on the final Thursday of June each year and typically consists of fifty-two weeks (four thirteen-week quarters). Additional information on the comparability of the periods presented is as follows: •References herein to fiscal 2027 are to the fiscal year ending June 24, 2027. •References herein to fiscal 2026, fiscal 2025 and fiscal 2024 are to the fiscal years ended June 25, 2026, June 26, 2025 and June 27, 2024, respectively. As used herein, unless the context otherwise indicates, the terms “we”, “us”, “our” or “Company” collectively refer to John B. Sanfilippo & Son, Inc. 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. 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 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 25 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. 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. sources. 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 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. 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 26 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 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. Climate change can also result in unfavorable impacts that are unique to our business, especially for normal crop development. Below are some examples of essential weather conditions that must be present for normal development of the crops from which we derive the major raw materials we use in our products. •Almonds, pecans and walnuts require a minimum of approximately 200, 250 and 700 chilling hours, respectively, during the winter to allow for an adequate amount of dormancy time so the trees can rest. •Peanuts require adequate rainfall or access to water for irrigation for the period starting about 7 weeks after planting and ending about 15 weeks after planting. •Cashews require a minimum of approximately 2,000 hours of sunlight per year. Sunlight is especially critical during the flowering period. •Almonds require bees for pollination. For bees to pollinate effectively during the bloom period, temperatures cannot be less than about 55 degrees Fahrenheit, winds cannot exceed about 15 MPH, and there must be little or no rainfall during that period. •Cranberries require adequate snow and ice coverage during the winter to protect vines from freezing. •Raisins require hot days (about 93 – 100 degrees Fahrenheit) and cool nights (about 55 – 65 degrees Fahrenheit) during the growing season for optimum quality and sugar levels. The non-occurrence of these weather conditions and other essential weather conditions can result in smaller crops, crop failures, or quality failures, which can lead to increased acquisition costs and supply shortages. Should climate changes significantly alter weather patterns, some of these needed input products may not be available at all, which would have a material adverse impact on our business. Annual Highlights •Our net sales for fiscal 2026 increased $68.4 million, or 6.2%, to $1,175.7 million compared to fiscal 2025. •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 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). 27 Results of Operations The following table sets forth the percentage relationship of certain items to net sales for the periods indicated and the percentage increase or decrease of such items from fiscal 2026 to fiscal 2025 and from fiscal 2025 to fiscal 2024. Percentage of Net Sales Percentage Change Fiscal 2026 Fiscal 2025 Fiscal 2024 Fiscal 2026 vs. 2025 Fiscal 2025 vs. 2024 Net sales 100.0 % 100.0 % 100.0 % 6.2 % 3.8 % Gross profit 18.0 18.4 20.1 3.8 (5.0 ) Selling expenses 6.7 7.1 7.8 0.0 (4.5 ) Administrative expenses 3.7 3.6 4.5 8.1 (17.9 ) Fiscal 2026 Compared to Fiscal 2025 Net Sales 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 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. The information is based upon gross sales, rather than net sales, because certain adjustments from gross sales to net sales, such as promotional discounts, are not allocable to product type. Product Type Fiscal 2026 Fiscal 2025 Peanuts & Peanut Butter 15.5 % 16.4 % Pecans 9.6 9.4 Cashews & Mixed Nuts 18.8 17.6 Walnuts 6.8 4.9 Almonds 7.5 7.2 Trail & Snack Mixes 23.6 24.2 Bars 12.5 14.0 Other 5.7 6.3 Total 100.0 % 100.0 % The following table shows a comparison of net sales by distribution channel (dollars in thousands): Distribution Channel Fiscal 2026 Fiscal 2026 Percent of Total Fiscal 2025 Fiscal 2025 Percent of Total $ Change Fiscal 2026 to Fiscal 2025 Percent Change Consumer (1) $ 960,474 81.7 % $ 907,222 82.0 % $ 53,252 5.9 % Commercial Ingredients 120,084 10.2 108,941 9.8 11,143 10.2 Contract Manufacturing 95,115 8.1 91,083 8.2 4,032 4.4 Total $ 1,175,673 100.0 % $ 1,107,246 100.0 % $ 68,427 6.2 % (1)Sales of branded products were approximately 15% and 16% of total consumer channel sales during fiscal 2026 and 2025, respectively. 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 $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 28 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 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 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. 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 Due to the factors discussed above, income from operations was $89.2 million, or 7.6% of net sales, for fiscal 2026, compared to $84.7 million, or 7.7% of net sales, for fiscal 2025. Interest Expense Interest expense was $2.4 million for fiscal 2026 compared to $3.6 million for fiscal 2025. The decrease in interest expense was due to lower average line of credit debt levels. Rental and Miscellaneous Expense, Net Net rental and miscellaneous expense was $2.2 million for fiscal 2026 and $1.8 million for fiscal 2025. Pension Expense (Excluding Service Costs) 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. 29 Net Income 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. Fiscal 2025 Compared to Fiscal 2024 The discussion of our results of operations for the fiscal year ended June 26, 2025 compared to the fiscal year ended June 27, 2024 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended June 26, 2025 and such discussion is incorporated by reference herein. Liquidity and Capital Resources General 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 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. Current market trends in nut prices and crop estimates also impact nut procurement. The following table sets forth certain cash flow information for the last two fiscal years (dollars in thousands): June 25, 2026 June 26, 2025 2026 to 2025 $ Change Operating activities $ 123,837 $ 30,545 $ 93,292 Investing activities (86,169 ) (50,821 ) (35,348 ) Financing activities (37,106 ) 20,377 (57,483 ) Total change in cash $ 562 $ 101 $ 461 Operating Activities. 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 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. 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. 30 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. See Note 3 — “Leases” and Note 14 — “Retirement Plan” of the Notes to Consolidated Financial Statements for additional information and future maturities. Investing Activities. Cash used in investing activities was $86.2 million in fiscal 2026. 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. 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 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 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 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. 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. Credit Facility On March 5, 2020, we entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) which amended and restated our Credit Agreement dated as of February 7, 2008 (the “Former Credit Agreement”). 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 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”). The First Amendment updated the accrued interest rate to a rate based on SOFR plus an applicable margin based upon the borrowing base calculation, ranging from 1.35% to 1.85%. 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). 31 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, 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. All cash received from customers is required to be applied against the Credit Facility. The Bank Lenders have the option to accelerate and demand immediate repayment of our obligations under the Credit Facility in the event of default on the payments required under the Credit Facility, a change in control in the ownership of the Company, non-compliance with the financial covenant or upon the occurrence of other defaults by us under the Credit Facility. As of June 25, 2026, we were in compliance with all covenants under the Credit Facility, and we currently expect to be in compliance with the financial covenant in the Credit Facility for the foreseeable future. At June 25, 2026, we had $110.7 million of available credit under the Credit Facility. If this entire amount were borrowed at June 25, 2026, we would still be in compliance with all restrictive covenants under the Credit Facility. Selma Property In September 2006, we sold our Selma, Texas properties (the “Selma Properties”) to two related party partnerships for $14.3 million and are leasing them back. 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. In September 2015, we exercised two of the five-year renewal options which extended the lease term to September 2026. The lease extension also reduced the monthly lease payment on the Selma Properties, beginning in September 2016, to reflect then current market conditions. 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. 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. As of June 25, 2026, $5.6 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 (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 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 25, 2026, $44.3 million of such loan commitment under the Equipment Loan was outstanding. 32 Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The accounting policies as disclosed in the Notes to Consolidated Financial Statements are applied in the preparation of our financial statements and accounting for the underlying transactions and balances. The policies discussed below are considered by our management to be critical for an understanding of our financial statements because the application of these policies places the most significant demands on management’s judgment, with financial reporting results relying on estimation regarding the effect of matters that are inherently uncertain. Specific risks, if applicable, for these critical accounting policies are described in the following paragraphs. For a detailed discussion on the application of these and other accounting policies, see Note 1 — “Significant Accounting Policies” of the Notes to Consolidated Financial Statements. Preparation of this Annual Report on Form 10-K requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. See “Forward-Looking Statements” below. Revenue Recognition The Company records revenue based on a five-step model in accordance with Accounting Standards Codification (“ASC”) Topic 606. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services. We sell our products under some arrangements which include customer contracts that fix the sales price for periods, which typically can be up to one year for some commercial ingredient customers. We also sell our products through specific programs consisting of promotion allowances, volume and customer rebates and marketing allowances, among others, to consumer and some commercial ingredient users. We recognize revenue as performance obligations are fulfilled, which occurs when control passes to our customers. We report all amounts billed to a customer in a sale transaction as revenue, including those amounts related to shipping and handling. We reduce revenue for estimated promotion allowances, volume and customer rebates and marketing allowances, among others. These reductions in revenue are considered variable consideration and are recorded in the same period the related sales are recorded. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. See Note 2 — “Revenue Recognition” below for additional information on revenue recognition. Retirement Plan In order to measure the annual expense and calculate the liability associated with our SERP, management must make a variety of estimates including, but not limited to, discount rates, compensation increases and anticipated mortality rates. The estimates used by management are based on our historical experience as well as current facts and circumstances. We use a third-party specialist to assist management in appropriately measuring the expense associated with this employment-related benefit. Different estimates used by management could result in us recognizing different amounts of expense over different periods of time. We recognize net actuarial gains or losses in excess of 10% of the plan’s projected benefit obligation into current period expense over the average remaining expected service period of active participants. The most significant assumption for pension plan accounting is the discount rate. We select a discount rate each year (as of our fiscal year end measurement date) for our plan based upon a hypothetical corporate bond portfolio for which the cash flows match the year-by-year projected benefit cash flows for our pension plan. The hypothetical bond portfolio is comprised of high-quality fixed income debt securities (usually Moody’s Aa3 or higher) available at the measurement date. Based on this information, the discount rate selected by us for determination of pension expense was 5.49% for fiscal 2026, 5.45% for fiscal 2025, and 5.12% for fiscal 2024. A 25-basis point increase or decrease in our discount rate assumption for fiscal 2026 would have resulted in an immaterial change in our pension expense for fiscal 2026. For our year end pension obligation determination, we selected discount rates of 5.59% and 5.49% for fiscal years 2026 and 2025, respectively. 33 Recent Accounting Pronouncements Refer to Note 1 — “Significant Accounting Policies” of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements. Forward-Looking Statements The statements contained in this Annual Report on Form 10-K, and in the Chief Executive Officer’s letter to stockholders accompanying the Annual Report on Form 10-K delivered to stockholders, that are not historical (including statements concerning our expectations regarding market risk) are “forward-looking statements.” These forward-looking statements may be followed (and therefore identified) by a cross reference to Part I, Item 1A — “Risk Factors” or may be otherwise identified by the use of forward-looking words and phrases such as “will”, “anticipates”, “intends”, “may”, “believes”, “should” and “expects”, and they are based on our current expectations or beliefs concerning future events and involve risks and uncertainties. We undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors that affect the subject of these statements, except where expressly required to do so by law. We caution that such statements are qualified by important factors, including the factors described in Part I, Item 1A — “Risk Factors” and other factors, risks and uncertainties that are beyond our control, that could cause results to differ materially from our current expectations and/or those in the forward-looking statements, as well as the timing and occurrence (or nonoccurrence) of transactions and other factors, risk, uncertainties and events which may be further subject to circumstances beyond our control. Consequently, results actually achieved may differ materially from the expected results included in these statements.