Next presenting company is John B. Sanfilippo & Son. Trades under the symbol JBSS on the NASDAQ. The company is a leading manufacturer provider here in the nut category, and we're about 14 months into the bar category as well, which we'll get into further in the presentation. Starting off today, right?
Right.
It's Frank Pellegrino, the company's CFO, and with him today is the company's Chief Operating Officer, Jasper Sanfilippo. Frank?
Yes.
Thank you, John, and thank you, everyone, for listening to our presentation today. Before we start, we will be making some forward-looking statements. These statements represent our present expectations or beliefs concerning future events, are not guarantees. So who is JBSS? Now, we are the largest nut processor in the world with net sales of a little bit over $1 billion in FY 2024. With our recent acquisition in September of last year, we are also a manufacturer of snack bars. So we manufacture a wide variety of snack bars ranging from your chewy granola to your Oats & Honey to your fruit and grain bars. Also, a private label version of a KIND bar and an energy bar, the Clif bars. Now, we operate in three distribution channels: the consumer channel, which is our largest channel, over 80% of our sales.
Now, those are sales to your mass merchandisers, your retail grocery stores. Then our second channel is commercial ingredients, where we sell to food distributors like US Foods, the Sysco's of the world. And our third channel is contract manufacturing, where we manufacture other companies' brands. Our biggest customer in that channel is Frito-Lay, where we manufacture their snack nut program. Now, we are also vertically integrated in three nut types. Now, what I mean by vertically integrated is that we buy nuts in-shell for pecans, walnuts, and peanuts. So we have shelling facilities located in Texas, California, and Georgia, where we go ahead and shell those products and use those for the next nine to 12 months until the next harvest season comes in. We are one of the only nut players that have vertical integration on all three of those nut types.
Some of our competitors have maybe walnuts, and some may have pecans or pecans and walnuts. There isn't any competitor out there that has all three, and then this is the fourth generation running the company. Now, Jasper's the fourth generation. It's still owner-operated. They're actively managing the business, which also makes us unique. Now, we are publicly traded, but family-controlled. Now, let's take a look at our sales by nut type, so we are a nut expert, so you can see from the graph here, we process every nut type there is, from peanuts to pecans to cashews. Now, our biggest part of our business today is trail and snack mixes at 24.8%. If you look at this chart from 10 years ago, that was probably less than 10%. That is a category or a nut type per se that's really growing.
Consumers want that trail mix, that unique, different mixes of nuts, chocolate, dried fruit, so we're seeing that category growing, and you can see also our snack bar business represents 11% of our sales already. Now, this was at the end of FY 2024, so it only represents us owning that asset for nine months, so that was a substantial acquisition, which I will go into more details of. Now, our business model also provides us a competitive advantage and provides a foundation to deliver consistent results. As you can see here, we have delivered strong financial performance over the years. Now, again, these are 10-year comparisons, so you can see our pound sold, that's how we measure our volume and our growth, has grown by our 3.7% CAGR over the last 10 years.
Now, the second chart on top, you can see gross profit gone from 15.8% to 20% and a similar increase in our operating income, which has produced an increase in delivered EPS, again, at an 8.1% CAGR, and we have been rewarded with our stock price now going from $23 in FY14. Now, at the time this presentation was made, the stock price was a little bit over $101, so well-rewarded on Wall Street based on our financial performance. The next chart looks at the impact of our net sales versus our pound sold. So again, we measure our company's performance based on volume, and you can see we've increased volume over the years. Now, again, in FY 2014, we're at $240 million. Now, 2024, we're at $346. A big piece of that growth was the snack bar acquisition we made during 2024.
You can see our selling price per pound does fluctuate depending on the underlying commodity cost. Again, you can see that our volume is the way to measure your success, and it's been growing pretty consistently every year. Now, how does this translate to profitability? Again, similar trends here on our EBITDA and EBITDA per pound sold. Again, EBITDA at the end of 2024, I think that was the third or fourth straight year of over $100 million in EBITDA. You can see our EBITDA per pound sold also has a nice upward trajectory. Now, profitability growth is one of our main objectives, but we also are just as focused on returning value to our shareholders and investing back into the business. In calendar year 2017, we established a dividend policy and our first regular dividend was in 2017 of $0.50.
Now, before that, we had several years of a special dividend. And since 2017, we have paid a regular dividend and increased that by a nickel up to $0.85 in FY 2024. And we've supplemented that with a special dividend ranging anywhere from, I believe, $2 all the way up to almost $5 in FY 2021. The management team continues to focus on returning profits to our shareholders, but we also are focused on investing back into the business. You can see our CapEx historically has been in that 15-20. Now, we're trying a little bit upwards now and more in that 25-30 as the snack bar business now requires some CapEx. And as we continue to grow our snack nut business, now we need to keep investing in technology and ways to improve our productivity and our efficiencies and reduce costs in our system.
We have also created a strong foundation for future growth. This looks at our balance sheet. Again, we have a very strong balance sheet. We're not levered at all. Our net working capital is a 23% increase since 2014. Debt to equity is at close to an all-time low. Debt to EBITDA and our return on equity has gone up 61% since FY 2014. Let's look at results for FY 2024. I talked about this briefly before. September 29, now we closed on the acquisition of certain assets, including inventory and a manufacturing facility located in Lakeville, Minnesota. The purchase price was $59 million, of which $35.5 million was inventory. This acquisition accelerated our product diversification strategy and allowed us to offer a full line of snack bars to our private label customers.
So before this asset became available, we internally created a bar line to manufacture a private label equivalent of a KIND bar and a Clif Bar. And we were focused on the next step. Now, we were thinking two or three years after we launched the Clif and the KIND bar, we were getting to these categories. But this asset came on the market a lot sooner than we anticipated and at a price that we couldn't refuse. So we acted on this last year. In FY 2024, we only owned this asset for nine months and sales were approximately $120 million. So this is around a $170-$180 million piece of business. And we paid $59 million for it. It was losing money. It was losing, I think, around $10-$12 million per year.
Now, when we bought the asset, we anticipated around eight to 12 months to turn this to become profitable. We actually made it profitable within six months. So at the end of FY 2024, it was profitable. Now, I think we're at 3 or 4%. And we have plans in place this fiscal year to increase that profitability. The next is a look at our sales by distribution channel. And you can see the difference from FY 2014 to FY 2024. And this wasn't by accident. This is our strategic plan back in 2014. It was to shift more business into the consumer channel, which is the blue piece of the circle. Again, it was 58% in 2014, 82% in 2024. And this is important to us because in that channel, it's more value-added products. More value-added products. Now, you have better control over the margin.
You'll be able to pass along increases in a more timely manner. And you're not dependent on the actual nut commodity cost as much. It's much more value-added. So you have a much better profile and able to get your pricing in faster. The second biggest channel, like I said before, is commercial ingredients. And then contract packaging is our smallest channel. Again, that's more of a capacity utilization channel. If we have excess capacity on some lines, now we use that to absorb that capacity. We're not out there actively looking to grow that channel. So if we look at by channel, the consumer channel, now, $872 million of sales. The biggest growth for that channel was the private label bars that we acquired during the year. We also saw nice growth in e-commerce, especially with Amazon.
Now, Amazon has been a great channel to sell our Fisher R ecipe brand and our OVH. And we saw some success in the club channel with our OVH product. We were able to get some distributions, some rotations at Costco. The next channel is our commercial ingredients channel. Again, this had sales of $110 million. Now, it actually shrunk by 10%. And the main reason was the food service customers had an 8.7% shrink from the year before. And this is all driven by the economy. Now, consumers and people were going out to eat less, and that drove our food service business down. And the decrease in industrial customers, industrials where we sell nuts to other food manufacturers, think of our nuts going into candy companies, ice cream companies, cereal. Now, we're trying to de-emphasize this.
Again, there's only a limited amount of commodities, and the industrial piece was the highest risk because you have to most likely fix your cost for 12 months, and the margin profile isn't the best. So we're trying to use the commodities that went to the industrial channel into the consumer channel, into the food service channel, where you have better margin protection. And the last channel is a contract manufacturing. This, again, shrunk by 8%. Again, this is also driven by retail selling prices. Now, our biggest customer here is Frito-Lay, and they're mainly sold at convenience stores, gas stations. And they did not take a pricing decrease. They actually increased their pricing, and that led to lower volume than the year before. Now, we're working with Frito as we speak to try to convince them that they need to lower their selling prices to pick up some volume.
Again, this chart, it's a kind of eye chart, but it kind of demonstrates the volatility of the nut market. So the lines are the five major nut types that we sell. So you can see over the years there's volatility. And then the bars is our gross margin. And you can see that even though with the volatile nut commodity markets, we've maintained pretty consistent gross margin. And then this last page here looks at the retail nut category in the five-year trend. This is what nut sells at retail. So you can see the price per pound at retail from FY 2020 was at $6.14. Now, FY 2024, it was $6.4 billion. If you look below that, you can see that there is a shrink in the category because of higher selling prices.
So consumers, now, as you can see, as the prices went up, the nut category started shrinking on the pounds side of it. And then you see the corresponding decrease in dollar sales. So we believe this is temporary. Now, as retail selling prices start to get lowered, the category will continue, will start to stabilize and grow. We saw that in the last 13 weeks, the category has stabilized. Now, nut and snack nuts are still a very healthy snack alternative. They're high protein and a very affordable source of protein. And consumers value the health benefits. So this is totally a temporary issue until the selling prices at retail start getting lowered. With that, I'll turn over to Jasper who will talk more about the categories.
Thanks, Frank.
I'd like to spend some time kind of going over what worked, what didn't work in our fiscal 2024, do a little bit of a deeper dive on the bar category acquisition and the category and what it represents for us, and then talk a little bit about what the future could look like. So when we think about how we grow our business, we have three distinct pillars that we look towards. We look to expand consumer reach, get our products in places where they're currently not at, continue to grow with our key customers, and continue to grow our JBS brands. So some of the things that worked throughout 2024 is we continued to expand our offerings in both club and e-commerce. We expanded our core business with pack sizes across the board. What we saw coming out of COVID is consumers kind of moved to the poles.
So they got out of buying stuff in that 12- to 16-ounce, and they started buying into that 4-ounce because they're trying to buy an absolute price point, or they're trying to get into the value packs to get the best value per ounce. And so we had to shift a lot of our branded products as well as our private label customers to kind of have more offerings in the pouches. And then we continue to grow our brand equities across our portfolio and continue to, again, gain distribution in areas where we do not have other distribution, particularly like micro markets, college universities, places like that, vending. So, on creating value with our key customers, we continued to launch a bunch of core nut and trail mixes, particularly with our largest customers, as Frank talked about, as our category volume started going down.
You could imagine the flurry of work that we had to bring out, excuse me, new innovations, the work that we talked about moving our pack sizes to the poles to attract the other customers and make sure that they were getting what they needed to. We also awarded some pretty significant business with a top retailer. We're excited to continue to partner with them. That retailer, we have a lot of runway to grow with them, and we're very excited about that. We're able to get exclusive coverage on our peanut butter to a large supplier in the food service chain, as well as continue to expand our bar business and nutrition bar program. So kind of why the bar business? Well, first, as you've heard from Frank, and I'm going to go back here for a second. So this is our core nut business.
Over the last 18 months, two years, we saw flattening. We saw actually a declining in it. We knew, and we knew this three to five years ago, we needed to diversify out of our core nut. We're a very large supplier. We knew we needed to diversify. We knew we wanted to get sticky with our customers. The more categories that you can provide our retailers, the more sticky you get. We also saw that the categories that our nut procurement, our nut buyers worked at, also buy other categories, particularly snack bars. More of a diversification strategy, but we also felt very comfortable that we'd be able to gain distribution just because of the relationships we had, not only with the retailers, but the specific bars within the category. As you can see, the bar category is $9.6 billion.
It's about the same size as the nut category. Actually, it's a little bigger, and it's growing much faster than the bar category. When you look at the category, the universe of the products within the category, you could see nutrition bars make up 49% of the entire category, and then granola at $19, breakfast at $26, and then you kind of have all this other, which is some fruit and other type of offerings. So we were in the process prior to acquiring the bar business. We were in the process of creating our potential offerings for the nutrition set. We started off with energy bar, which is Clif. We started off with the nut bars, which is kind of the KIND. We're in the process of working with the protein bar now. It's also probably the fastest growing subset within nutrition are the protein-forward bars.
So we're working on some innovation there. But what happened was we bought the TreeHouse business. This is what our current bar business looks like. It's predominantly breakfast and granola. So when you look at the category itself, all the big margin dollars, margin percent sits in nutrition. All the lower margin business, but high volume items sit in the breakfast side. So our plan to continue to move forward is to make our current book of business look more like the pie chart to the left. In addition to that, what we found is that the retailers who had the broadest portfolio of offerings, and there really was only one or two within the subset that had really any sort of semblance of a nice broad portfolio, they were the ones that performed the best.
And so we found that in terms of growing the share of private label and bars in the category, it's about making sure you have the right options for the consumers to choose from. And we found that many, many retailers did not provide those options for their customers. Some didn't have fruit and grain offerings. Some didn't have chewy offerings. Some didn't have nut bar offerings. So those retailers that had it, which is a handful, performed better. And so our current process is we have a good portfolio of bars that we can go out that touch all the different subcategories. With the exception of protein, we need to work on a little innovation to get that protein offering.
And it's really going to the retailers now that didn't have these offerings and getting them to accept it and getting it on shelf so they can give their consumers a choice when they walk down the aisle. See there? Okay, so the next couple of slides will show a little bit more about why. So when we look at the core snack and trail mix, when you walk into a grocery store, about 20% of what you'll see in any given aisle is private label. So about 20% of all the SKUs at a retailer should be private label. That's kind of the industry average. So when you look at core nuts and trail, you could see that the share of private label offerings within that aisle is 47%. So it's almost double what the store average is for the entire store.
Now, that also gives us a strong reason to believe that we can build out other private label categories or other private label share in other categories. And this is what private label looks like in the snack bar category. Again, equally large category growing faster than our core nut category. But if you look at it, private label only represents 7%. It's not even half of what the average is for all of retail. It is nowhere close, obviously, to the over-indexing percentage of private label in the nut category. You could see, again, good, robust growth within the category. Private label within the category is actually growing in double digits, some 15%-16%. So really, the reason why, and there's a couple of reasons, the reason why it's only a 7% share is what I talked about before.
Retailers were not offering choices for those consumers when they went down that aisle. They couldn't get a chewy bar at some retailers, like I said before, so the program is to really go in there, let's get the right offerings, let's get them in the retail, let's get them on the shelf, let's get consumers those choices so when they walk down that aisle, and really, for us, this is to kind of be resource light, right? We don't have to throw a lot of innovation at it because it's just about giving them choices when they go down the aisle. They're at a nice discount to the brands, so that's from a financial standpoint, they're very motivated to at least try the product because of the discounting that we do or the retailers do, and so getting the food right was important.
We spent a lot of time on our nutrition side to get the food right. Fortunately, through the acquisition, they have very good food with what we bought in terms of the fruit and grain and chewy. So we feel very good about the product offering that we have. It's really just a function of getting it out and getting in front of the retailers. To go over to our JBS brands, so you can see here's a list of our brands. We'll go over a couple of them. First, now post-acquisition, our branded business continues to get smaller as a portion of our business, mostly diluted by the acquisition. You can see right here, our brands only make up 15% of our business right now, with Fisher Recipe being the largest.
So we continue to make progress in terms of getting our brands to where they need to be, both at traditional grocery, brick and mortar, and e-commerce. And so you could see from an ACV perspective, we're pretty flat to last year, which is good, particularly in light of how much retailers want to build the private label versus actually growing the brands. Some of the big accomplishments for OVH, which is one of the brands that we focused on in 2024 in terms of relaunching it and growing volume. We're currently maintaining our lead as the leading brand for the recipe nut category. Continue to grow our brand and club. We actually have some pretty decent business now in club in terms of recurring rotations within certain regions. And then obviously continue to kind of support all the other brands as we go forward.
So you're going to hear kind of two stories as it relates to our brands for the most part. We talked about how the category was going down. This is for Fisher Recipe, but you could see that our share didn't go down as fast as the category. And so that's how we measure a lot of our successes. As long as we can beat what the category performance is doing, then we're kind of doing okay. Now, we don't like seeing this, of course. We want to see the category up, and we want to see our volume growth above and beyond whatever the category is. But share is relatively flat, but we outperform the category. Similar with OVH, we continue to see our sales go up, which would be on the left.
You can see our share of total MULO staying flat, but not as declining as much as the category did. And then you have similar stories across Fisher, Squirrel, and Southern Style Nuts, where they went up or stayed flat down, but we performed better than the category. So one of the big things that differentiates us, not only with the core nut, but we found as well with the snack bar business, is our ability and use of consumer insights, category insights. Not only does it lead to more productive conversations with the retailers in terms of price points and moving things around, and what sort of innovation are you missing? What are consumers looking for in the aisle that currently aren't there? But it's a really big differentiating selling point for us.
Now, granted, not all retailers really value this, but the retailers that really do value this do take our recommendations, really perform better than a lot of other retailers do. So it's critical, and it's a very differentiating service that we offer. And obviously, it leads to a lot of new innovation for us. Like I said before, once we get the portfolio correct in the snack bar aisle, and we have everything priced correctly, because there's a lot of price elasticity within the snack bar category that we don't necessarily see with the nut aisle, then I think that category is really right for some other innovation. You think about Make America Healthy again. What does that mean? A lot of those snack bars have a lot of sugar in there. What can we do with respect to maybe making better, more healthy alternatives to that?
And then obviously, our core nut business is inherently healthy because it's all natural. So really good things can come out of our consumer insights and then our capability around product development. So here's kind of our long-term strategy. Again, it's not much different than what we started out with. We want to continue to grow with our customers, either through private label or branded offerings. We're going to continue to stay laser-focused on growing out that snack bar business. We're not going to take our eye off our core nut business because that obviously is very important. And we think that that category, like Frank alluded to, is going to get back to a 1%-2% growth per year. So we want to make sure that we continue down that road.
There are a couple of other customers where we don't have their business that we want to go after that could be significant for us. And then continue to try to reinvent our brand and keep our brands relevant to those consumers. And I think that is the end of the presentation. So I guess we'll have questions. Anyone have questions? Yes.
For the trail mix, how do you determine the component parts of the mix? What kind of mixture that you would put in there and have a series of different offerings?
There's probably a couple of factors that we would look at. If we were just absolutely price engineering something, that would dictate how we would put that mix together.
If we're trying to hit certain nutritional claims, that will also kind of move the percentages around what type of nut types we would put into that particular mix. If you think of like an omega mix, it needs to have a lot of walnuts in it to get the omega claim. If it's more of a candy mix, maybe marketing more towards a younger demographic, you're going to have a lot of M&Ms in there. You're going to have a lot of chocolates. There's a lot of factors that kind of go into why we would select certain components in the ratios within a mix.
Even pricing, for example, even though it's maybe the same mix, same core deluxe mix or nut mix, but we may, based on where the commodity prices are going, we may flip a couple of percentages just to hold the same retail pricing for the consumer. Yes.
You talked about a couple of items, one being the success of the brand strategy. I know that you emphasized that a bit more in past presentations. Also in terms of what's been the drag on the shares recently, can you think about what is market? What about is the inflation at this mix shift?
We'll talk about that part. Yeah, I would say for the brands, as they get to a smaller and smaller portion of our business, we still need to keep them around.
We still need to continue to support them, maybe in a lesser way than we're currently doing that. I think the inflation over the last several years, particularly with nuts being very expensive, second highest price item within the snack category, I think really is what affected us the last couple of years. Now, we have some pricing that we need to take going forward because the commodity prices have gone up for certain nut types. And so we'll see what impact, if any, that has on volume going forward, category volume going forward. But from an inflationary standpoint, I can let Frank talk about what effect that had on margins.
So I think if you look at our Q1 performance, I think that had an impact on our share price last month. And my main thought is our real challenge in our gross profit line.
So a year before, the comparable quarter in Q1 of 2023, I believe our gross profit was 24%. And that for us is well above our historical averages. So it was a very tough comparable quarter. And also our snack bar business had a hiccup. We actually turned that around last year. We had some capacity constraints in Q1 where we had a hiccup in the performance. So I think that was the two main drivers. If we looked at our core nut profitability in Q4 of last year compared to Q1 of this year, profitability was pretty similar. I think people just looked at the comparable quarter. And if you guys followed us for a while, that 24% is not a margin profile that's sustainable.
As a follow-up to the strategic acquisition that you recently made, do you feel like you have the assets in place you need in the next phase of growing that would be expected for strategic acquisition within the Q4? As far as the snack bar business?
W e will need to expand our capabilities and capacities on that. There is a lot of room to grow. Like Jasper was saying, it's only 7% private label. If we want to get that 9%, 10%, 11%, there are some CapEx. We have to invest in some new lines over the next several years.
Do you guys mind talking about food safety at all and with the snack bar business and just how you prevent anything like what happened later?
Sure.
Obviously, all of our food that we send out goes through a validated kill step, whether it's at an ingredient supplier or through our own processes. The good thing about the snack bar business is they only use one ingredient that's non-ready-to-eat, which is in the fruit and grain bar, but they have all their ovens validated to get the five-log kill step on that. All of our facilities have very extensive environmental programs. We're constantly swabbing the floors. We're swabbing equipment legs. We swab pretty much everything but non-product contact surfaces to keep a monitor on what is in our environment that we're operating in. When we have either environmental hits, we have aggressive vector swabbing and cleaning procedures in place to make sure that we remedy that and get that particular pathogen out.
The thing that we see the most in our environment is Listeria because obviously it comes in with dirt. But very few times do we see the Listeria that actually is the L. mono, which is the dangerous one to humans. But it's a constant looking at the physical infrastructure. A lot of times with food safety, recalls in the past came from leaking roofs onto the product, either packaging or product contact surfaces itself. And we believe that's a similar situation that happened. So roof repair, maintenance, CapEx, all that stuff is super critical when it comes to food safety. And the key is to document your testing and your inspection because you want to limit the amount of product that's exposed. So you want to say you inspected your roof every 30 days.
So if there is an issue, you only have to have potential recall of 30 days of production, not 60 days or 90 days or 120 days. It's the whole documentation of when you inspect things. Yes.
Can you talk about the role of the family in the business and ownership and roles?
Sure. So my brother, Jeff, is the CEO, and I'm the Chief Operating Officer, and we run the day-to-day operations with Frank. We continue to want to see the business grow and expand, and we're very happy to get into the nut business. So we're very active in the business. I think between our family and the Valentine family, which are the other Class A shareholders, I believe we own 18% of the economic value, but control 70-something% of the voting shares. Anything else? Okay. So thank you again in the interest of our company.
We really appreciate getting up here and meeting with some of you one-on-ones and then obviously doing this presentation. If you'd like, there's some samples in the back of both our bar items, offerings, and as well some of our core snack nut offerings. So thank you again. Appreciate it.