The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Nick Otton - CWB Wealth - Analyst
: Hi guys, Just wanted to start the questions off on the tariff exposure. So for that 15% to 20% raw materials exposure, do you think you'll be able to
pass off this cost to your customers just in general because it's everyone in the industry affected?
Question: Nick Otton - CWB Wealth - Analyst
: So like if that 46% comes back overall, you'll pass it on for Vietnam, for example.
Question: Nick Otton - CWB Wealth - Analyst
: And then I guess on your cash used business, like just trying to do some rough math last night after your release, like -- it kind of looks like it's a
breakeven business. Is that fair to say? Or is it like what's the kind of earnings in that area overall?
Question: Nick Otton - CWB Wealth - Analyst
: Yeah, your cashews and mixed nuts segment.
Frank Pellegrino - John B Sanfilippo & Son Inc - Chief Financial Officer, Executive Vice President - Finance and Administration, Treasurer
No, it's a profitable segment. I think if the 46% tariffs come across that, that would be a challenge to one, to get those price increases through and
then the impact to consumer demand will be dramatic. But currently, cashews and mixed nuts are consistent with our overall profit.
Question: Nick Otton - CWB Wealth - Analyst
: And then is there -- if you can't pass them on, would you just get out of the cashew business overall?
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MAY 01, 2025 / 2:00PM, JBSS.OQ - Q3 2025 John B Sanfilippo & Son Inc Earnings Call
Question: Nick Otton - CWB Wealth - Analyst
: And then would you just be set up to like you could capture this back though where like you said, consumers buy more peanuts, pecans, walnuts,
something like that as well?
Frank Pellegrino - John B Sanfilippo & Son Inc - Chief Financial Officer, Executive Vice President - Finance and Administration, Treasurer
I guess, would switch to that.
Question: Nick Otton - CWB Wealth - Analyst
: Just for myself, so I have some understanding, just on the inventory transition that you discussed. So do you still expect to be in that $0.60 per
pound gross margin level range in the next quarter and going forward with the price increases that you put in place?
Frank Pellegrino - John B Sanfilippo & Son Inc - Chief Financial Officer, Executive Vice President - Finance and Administration, Treasurer
The price increases went in place during the current quarter. I think, Nick, the best way to look at it is if you look at our gross profit section, if you
just back out the impact of the inventory valuation, which we cited in the release in the Q, and that should be a good indication of what our gross
profit per pound should be going forward.
Question: Nick Otton - CWB Wealth - Analyst
: I was just wondering too, like you're comped on incremental capital at 10%. So I was wondering, is that the hurdle rate? Or what's the underwriting
return that you're expecting on that investment?
Frank Pellegrino - John B Sanfilippo & Son Inc - Chief Financial Officer, Executive Vice President - Finance and Administration, Treasurer
That's correct. 10% is the correct number used.
Question: Nick Otton - CWB Wealth - Analyst
: All right. Thanks guys. Great quarter. Thanks, I don't have any more questions.
Frank Pellegrino - John B Sanfilippo & Son Inc - Chief Financial Officer, Executive Vice President - Finance and Administration, Treasurer
Thanks, Nick.
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