John B. Sanfilippo & Son, Inc.

Good day, and thank you for standing by. Welcome to the John P. Sanfilippo and Son, Inc. Fourth Quarter and Full Year 2023 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jeffrey Sanfilippo, CEO. Please go ahead.

Thank you, Abigail. Good morning, everyone, and welcome to our 2023 Fourth Quarter Earnings Conference Call. Thank you for joining us. On the call with me today is Frank Pellegrino, our CFO. Hello. 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 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. I'm pleased to report our strong financial performance in fiscal 2023 as we navigated through a challenging operating environment and elevated levels of inflation and delivered a record diluted earnings per share for the fiscal year. This is the fifth consecutive year JVSS has delivered record year-end earnings. These results validate the actions taken during the last 12 months to respond to the numerous headwinds we faced and is a testament to the hard work across the organization to execute our strategies. We raised our annual dividend by 6.7% to $0.80 per share and supplemented our annual dividend with a special dividend of $1.20 per share, both of which will be paid on September 13, 2023. This strong performance would not be possible without our talented team members whose conviction, agility, and determination are unrivaled. JBSS also achieved an important milestone towards our goal of diversifying our product offerings during the second half of the fiscal year. We launched a new product line of private brand nutrition bars and sold over $4.2 million of this bar product to a number of our key retail partners. Our nutrition bars have been well received by our retail partners and their customers who enjoy a great product at an attractive price point. We have a great momentum as we expect to continue to grow distribution and gain additional private brand nutrition bar customers in subsequent quarters. I'm so proud of our associates across the company who worked hard on expanding our product portfolio. Their dedication to quality service and innovation and their commitment to our customers and consumers is absolutely remarkable. Despite the supply chain and cost challenges we faced with raw materials, labor, and freight, we still succeeded in maintaining competitive pricing and best in class quality and service levels. These results demonstrate the underlying strength and resiliency of our company. These achievements are also a testament to the fortitude of our business model, the commitment of our people, and the mutual trust and depth of customer and supplier partnerships. In addition to achieving record results and maintaining best-in-class quality and service, we also invested in people, innovation, and new manufacturing capabilities. We invested in our brands to reposition and reinvigorate them. Looking ahead to fiscal 2024, we are focused on accelerating our volume growth by capitalizing on the success of our private brand nutrition bars, also strategically investing in our brands, partnering with our key private brand customers, and exploring strategic acquisition opportunities. We are confident we can continue to deliver strong operating results and create long-term value for our shareholders through the execution of our long-range plan. There are three clear goals on our path to become a $2 billion business. grow our private brand customer business with value-added snack solutions based on our extensive industry and manufacturing expertise. We invested heavily in consumer insights to develop products, pack sizes, and price points that meet changing consumer needs. And we invested in innovation to develop delicious products that differentiate our portfolio and bring excitement to the snack category. Number two, we invigorate our JVSS brand and crack the code on distribution. We are focused on growing our branded business by reaching new consumers and expanding locations that carry our Fisher, Orchard Valley Harvest, Squirrel, and Southern Roasted products across current and alternative channels. One example of this, we allocated significant time and resources to launching our Orchard Valley Harvest brand this past year. The marketing team and our creative partners have developed a new look and new brand position for OVH and recently launched a fun campaign you can see across social media outlets around the country. Another example is our food service team, which worked hard to expand our non-com front-of-house distribution for Fisher and OVH to thousands of locations throughout the United States. Third, diversify the portfolio to accelerate growth. We are focused on expanding our product offerings beyond nuts, as we've done by entering the energy bar business. We're also working on expanding distribution of our OBH chickpea chip product line. And this past year, we acquired the Just the Cheese Company, which spreads our product reach into the cheese snack category and provides amazing tasting cheese crisps for own trail mixes and snack mixes. We are excited to add Just the Cheese to our branded portfolio as it complements our current brand offerings in the snack category. And the acquired production capabilities will help accelerate growth with our private brand and food service customers. Our mission is we are nuts about creating real food that brings joy, nourishes people, and protects the planet. And JVSS is executing on this mission. JVSS is committed to diversity. Human talent is a critical component of our success, and we recognize that our business is stronger and more successful if supported by a diverse workforce. The company continues to recruit, maintain, and promote diversity among our employees and foster an inclusive environment where differences are celebrated. The JBSS Diversity, Equity, and Inclusion Council expanded our employee resource groups, provided training and oversight, and enhanced our DEI initiatives. JVSS is committed to being good stewards of the planet and its resources. Our ESG team established baselines for our environmental goals this year, which include reducing our carbon footprint, preparing for recycling-ready film usage, and reducing our use of composite cans and switching to 100% PET. Lastly, JVSS is committed to social goals to assist in ending food insecurity educate the next generation of farmers on sustainable practices, and support the growth and betterment of our associates. I'll now turn the call over to Frank to discuss our financial performance.

Thank you, Jeffrey. Starting with the income statement, the 2022 fourth quarter fiscal year contained an additional week compared to the same period in our current fiscal 2023. Net sales for the fourth quarter of fiscal 2023 decreased 9.1% $234.2 million compared to net sales of $257.7 million for the fourth quarter of fiscal 2022. The decrease in net sales was mainly due to a 9% decrease in sales volume, which we define as pound sales to customers. Excluding the estimated impact of the actual week, net sales decreased approximately 2.1%. Sales volume decreased in all three distribution channels in the current fourth quarter. Sales volume decreased 6.9% in consumer distribution channel, primarily due to a 4.7% decrease in sales volume for our private brands and a 15.4% decrease in sales volume for our branded products. Excluding the estimated impact of the extra week, sales volume in the consumer distribution channel increased by 0.3%. The sales volume decrease in private brand sales was mainly driven by the extra week, which was partially offset by new peanut butter and nutrition bar business and a mass grocery dieting retailer. Excluding the estimated impact of the extra week, private brand sales volume grew by approximately 2.6%. The sales volume decrease for our branded products, which includes Fisher Recipe Nuts, Fisher Snack Nuts, Orchard Valley Harvest, and Southern Style Nuts was mainly attributable to a 29.1% decrease in the sales volume of fish or snack nuts due to decreased promotional activity at two major customers. Sales volume for southern style nuts decreased 26.5%, predominantly due to reduced promotional activity at a current club store customer and a sales volume associated with the extra week. Excluding the impact of the extra week, branded sales volume decreased by 8.9%. sales volume decreased 9.8% in the commercial ingredients channel, primarily due to the extra week in the fourth quarter, and a 33.1% decrease in sales volume of bulk products to other food manufacturers, which is driven by reduced consumption from softened consumer spending. Excluding the estimated impact of the extra week, sales volume decreased by 2.8%. Sales volume decreased 21% in the contract packaging distribution channel, due to decreased peanut distribution by a major customer in this channel. Excluding the estimated impact of the actual week, sales volume decreased by 15%. Growth profit for the fourth quarter of the current year decreased 1.5 million, or 2.6%, to 54.7 million, due to a lower net sales base, while growth profit margin increased to 23.4% in net sales for the current fourth quarter, compared to 21.8%, in the fourth quarter of fiscal 2022. The increase in gross profit margin was mainly attributable to lower acquisition costs for all major tree nuts, which was partially offset by higher acquisition costs for peanuts. Total operating expenses and employee comparison increased 1.4 million, while total operating expenses as percent of net sales increased to 14.2% from 12.3%. The increase in total operating expenses in quarterly comparison was mainly due to an impairment of minority investment, increase in marketing and related consulting expenses, incentive compensation expense, and loss in asset disposals. These increases were partially offset by decreases in freight and equity compensation expense. The increase in total operating expenses as percent of net sales was due to lower net sales rates. Interest expense decreased to $300,000 for the fourth quarter of fiscal 2023 from $500,000 due to lower average debt levels. Net income was $14.7 million or $1.26 per share diluted for the fourth quarter of fiscal 2023 compared to $17.4 million or $1.50 per diluted share. Now let's take a look at inventory. The total value of inventories on hand at the end of the current fiscal year decreased 31.9 million, or 15.6%, compared to total value of inventories at the end of fiscal 2022. The decrease in the value of total inventories was primarily due to lower commodity acquisition costs for all major tree nuts and lower quantities of work in process and finished visit inventory. This decrease was partially offset by higher acquisition costs for peanuts and other raw materials. As a result of lower commodity acquisition costs, the weighted average cost per pound of raw nut and dry fruit input stocks on hand at the end of the current support quarter decreased 24.3%. Moving to year-to-date results, fiscal 2023 net sales increased 4.6% to $999.7 million compared to fiscal 2022 net sales of $955.9 million. The increase in net sales is primarily attributable to a 6.5% increase in the weighted average selling price per pound, which is partially offset by a 1.8% decrease in sales volume, primarily due to sales volume decreases in the consumer and contract packaging channels. Excluding the estimated impact of the extra week, net sales increased by 6.6%. Sales volume decreased 1.8%, primarily due to sales volume decreases in consumer and contract packaging channels. Excluding the estimated impact of the extra week, sales volume growth will be flat. Gross profit for the current fiscal year increased 6% to $211.6 million, and gross profit margin increased slightly to 21.2% from 20.9%. Total operating expenses for fiscal 2023 increased $9.2 million to $121.4 million, primarily due to reasons cited before, as well as an increase in base compensation, in addition to a non-recurring gain of approximately $2.3 million from the sale of our Garysburg Narconic facility, which occurred in the first quarter of fiscal 2022. These increases are partially offset by decreases in freight expenses. Net income for fiscal 2023 was $62.9 million, or $5.40 per share diluted, compared to $61.8 million, or $5.33 per diluted share. Please refer to our 10-K, which was filed yesterday, for additional details regarding financial performance for the fourth quarter and fiscal 2023. I will now turn the call over back to Jeffrey to provide additional comments on our operating results for fourth quarter and discuss category trends.