John B. Sanfilippo & Son, Inc.

Good day, and thank you for standing by. Welcome to the John B. Sanfilippo and Sun, Inc. First Quarter Fiscal 2024 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 that session, you will need to press star 1-1 on your phone. 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, and I would now like to hand the conference over to your speaker today, the CEO, Jeffrey Sanfilippo. Sir, please go ahead.

Thank you, Chris. Good morning, everyone, and welcome to our 2024 First Quarter Earnings Conference Call. Thank you for joining us. On the call with me today is Frank Pellegrino, our CFO, and Jasper Sanfilippo, our COO. We may make some forward-looking statements today. 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. Starting with overall corporate performance, we delivered a 12.7% increase in diluted earnings per share for our fiscal 24 first quarter, as the execution of our plan to control costs and invest in gross initiatives was accompanied by a challenging nut category and softness in consumer confidence, which resulted in a decrease in our sales volume. We made a significant investment, marketing investment, to relaunch the Orchard Valley Harvest brand in the first quarter, which resulted in a 3.2% year-over-year sales-wide increase for our reimagined Orchard Valley Harvest product line. Although we are in a difficult brand environment in the snack category, our marketing and sales teams are working hard to gain new distribution and differentiate our brand through innovative products and customer programs and creative social media campaigns. We will continue to strategically invest in growth opportunities as we monitor changes in consumer purchasing preferences. With the inflationary environment, we are seeing signs of consumers shifting to more value-focused retailers, such as mass merchandising retailers, club stores, and dollar stores, not all of which we currently distribute or sell to. But our teams are working hard to expand our retail distribution, especially in the club channel with innovative products and pack sizes. and we continue to respond to the challenging and dynamic operating environment that we face today, including the effects of inflation as we approach the holiday season and throughout the balance of this fiscal year. In addition, the company continues to maintain a focus on manufacturing efficiencies, optimizing our supply chain, and aligning our costs with selling prices. As we enter this year's nut and dried food harvest season, We anticipate stable acquisition costs for most ingredients and tree nuts, including almonds, cashews, pecans, pistachios, and macadamias. We expect acquisition costs for peanuts to increase in the 23 crop year as the market continues to strengthen as a result of continued export demand, a poor crop in Argentina, and concerns of the quality of the new crop. And peanut butter usage also remains very strong. In the current first quarter, we continue to invest in our people, production, capabilities, and brands to lay the foundation for future growth. Our long-range plan focuses on growing our non-branded business across key customers, transforming Fisher, Orchard Valley Harvest, and Squirrel into leading brands while increasing distribution and diversifying our product portfolio to high-growth snacking segments. While we face headwinds in this economic time, we are executing our long-range plan by providing our non-branded customers with value-added solutions based on our extensive industry and consumer expertise. Our expansion into the energy and snack bar business and recent acquisition is a great example of how we are executing our long-range growth plan to become a $2 billion company. We will grow our branded business. by reaching new consumers via product and packaging innovation, expanding distribution across current and alternative channels, diversifying our product offerings, and focusing on new ways to reach consumers and engage them to buy our products. In previous calls, I've talked about the Just the Cheese brand, which we acquired in December of last year. It is another example of how we are expanding our product portfolio provide more value to our retail customers and consumers. While it is a small brand, we have grown distribution at a major grocery retailer and expanded in e-commerce. The past quarter, we experienced double-digit growth with the brand. The product line also provides opportunities to get our sales teams in front of new buyers with a differentiated product. And the acquisition expanded our production capabilities where we can add cheese crisps to our savory mixes and solid topping offerings. Success requires smart strategies and the right business model for sustainable growth. It also requires a talented and committed group of leaders across the organization. We have all these elements of success at JVSS. I would like to thank all our team members who have worked tirelessly through this challenging time to maintain our exceptional service levels and quality I am optimistic our strategic investments and initiatives over the past three years will continue to drive strong operating results and create long-term stockholder value. I am proud of every person in our company whose leadership and commitment to our customers and consumers is unwavering. I will now turn the call over to Frank Pellegrino to provide additional information on our financial performance for our first fiscal quarter.

Frank? Thanks, Jeffrey. As a reminder, we completed our snack bar acquisition at the beginning of the second quarter. Therefore, first quarter results were not materially impacted by the acquisition. Starting with the income statement, net sales for first quarter fiscal 2024 decreased 7.3%, $234.1 million, compared to net sales of $252.6 million for first quarter fiscal 2023. The decrease in net sales was mainly due to a 7.3% decrease in sales value, which is defined as pounds sold to customers. Sales volume decreased 5.8% in the consumer distribution channel due to a 5% decrease in sales volume for private brand sales, driven primarily by fewer promotional programs and lower seasonal sales value for snack and trail mixes, as well as a decrease in PN sales volume at two current mass merchandising retailers. A 17% sales volume decrease for our branded products, which include Fisher Recipe Nuts, Fisher Snack Nuts, Orchard Valley Harvest, and Southern Style Nuts also contribute to the overall decrease in sales volume for the consumer distribution channel. The decline in branded sales value was mainly attributable to a 30.9% decrease in sales volume for Fisher Snack Nuts, due to increased competitive pricing pressures, discontinuance of a product line and a mass merchandising retailer, and the timing of holiday sales orders for a customer in the non-food sector. Sales volume for Fisher Recipe decreased 10.8% due to a one-time order at an existing grocery customer in the same quarter of our prior fiscal year that did not reoccur in the current quarter, and timing of holiday sales orders for another grocery customer. Sales volume for selling style nuts decreased 36.6%, many from reduced distribution and promotional programs at a pub store customer. Sales volume decreased 5.5% in the commercial ingredients channel due to a 50.3% decrease in sales volume of peanut crushing stock and peanut oil produced processors, which was due to reduced peanut shelling in the current physical quarter. Sales volume decreased 19.4% in the contract packaging distribution channel, primarily due to increased peanut distribution and the timing of holiday sales orders for a major customer. Gross profit increased to $6.4 million, or 12.6% to $57 million, and gross profit margin as a percentage of net sales increased to 24.4% in the first quarter of fiscal 2024, with 20% in the first quarter of fiscal 2023. The increase in gross profit margin was primarily due to lower commodity acquisition costs for all major tree nuts, which was partially offset by higher acquisition costs for peanuts, manufacturing efficiencies, and decreased peanut sales value. The increase in gross profit was also driven by lower acquisition costs for all major tree nuts and partially offset by decreased sales value. Total operating expenses for the current first quarter increased $4.2 million in the quarterly comparison due to an increase in advertising expenses and terrible food donations, which was partially offset by a decrease in freight and incentive compensation expenses. Total operating expenses for the current first quarter increased to 13.9% of net sales from 11.2% for last year's first quarter due to the reasons I cited before and a lower net sales base. Interest expense for the current first quarter decreased to $200,000 from $700,000 for the first quarter of fiscal 2023 due to lower average debt levels. Then income for the first quarter of fiscal 2024 was $17.6 million, or $1.51 per diluted share, compared to $15.5 million, or $1.34 per diluted share for the first quarter of fiscal 2023. Now take a look at inventory. Total value of inventories on hand at the end of the current first quarter decreased 17.3 million, or 9%, per total value at the end of the first quarter of fiscal 2023. The decrease in value of total inventories was primarily due to the early shell out of in-shell pecans, lower acquisition costs for all major tree nuts, and lower quantities of finished goods and work in process on hand. This decrease was partially offset by higher quantities of pecans on hand. The weighted average cost per pound of raw nut and dried fruit input stock on hand decreased 2.6% year-over-year, mainly due to lower acquisition costs for all major tree nuts, which was partially offset by higher on-hand quantities of pecans. Please refer to our PENQ, which will be filed tomorrow, for additional details regarding financial performance for the first quarter of fiscal 2024. After the end of the quarter on September 29th, we completed the acquisition the treehouse snack bar unit for approximately $61 million in cash, which was funded from our credit facility. We also increased the barring capacity of our credit facility to account for the short-term working capital requirements of this acquired snack bar business. The acquisition included a manufacturing facility in Lakeview, Minnesota, inventory, and customer relationships. Before I take a call over to Jeffrey St. Philippal, please note that we will be presenting at the Southwest Ideas Conference in Dallas on November 15th. Our presentation is scheduled to begin at 2.30 p.m. Central Standard Time. Now I will turn it over to Jeffrey to discuss category trends.