John B. Sanfilippo & Son, Inc.

Good day and welcome to the John B. Sanfilippo & Sons, Inc., fourth quarter and full year, 2026 operating results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question, you will need to press star one one on your touchstone telephone. Please note this call may be recorded. I would like to turn the call over to Jeffrey Sanfilippo, Chief Executive Officer. Please go ahead.

Thank you, Michelle. Good morning, everyone. and welcome to our fiscal 2026 fourth 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. 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. Now I'll turn to results. I'm pleased to report on a strong fiscal 2026 with net sales reaching a record $1.2 billion and diluted earnings per share increasing 4.6% for the full year. Achieving record net sales and earnings growth in a challenging consumer and cost environment is a testament to the strength of our business, the dedication of our team, and the depth of our customer relationships. In addition, we remain committed to returning capital to our shareholders. During the 2026 calendar year, we increased our annual dividend by 5.6% to $0.95 per share and declared a special dividend of $1.05 per share representing a 75% increase with the prior year. Both dividends will be paid on September 9th, 2026, bringing total dividends paid during 2026 calendar year to $3.50 per share. This year marks our 15th consecutive year of returning capital to shareholders through dividends and the ninth consecutive year of increasing our annual dividend reflecting the strength of our balance sheet, our consistent cash generation, and our ongoing commitment to creating long-term shareholder value. While our bottom line results for the most recent fourth quarter did not match last year's results, we were encouraged to see a return to growth in our company-wide sales volume after five consecutive quarters of decline. We believe this is a positive signal for our entire portfolio. Fourth quarter profitability was impacted by several challenges, including higher than anticipated input and transportation costs Manufacturing and efficiencies associated with the continued onboarding of a large contract manufacturing customer and certain customer related charges. We are actively responding to these increased costs, executing mitigation plans to manage unexpected customer charges and improving operational efficiencies as we move into fiscal 2027. There are three key priorities for JBSS in the coming year. We are focused on restoring volume in the snack nut and trail mix categories. Consumer trends indicate that shoppers remain highly value conscious after several years of elevated prices across the snacking segment. To address this, we're working with an external partner on a consumer study to better understand how we can re-engage shoppers and drive volume growth without sacrificing margin. These insights will help guide our approach to optimizing value propositions Pack Price Architecture, Promotional Effectiveness, and Selective Price Adjustments. There continue to be positive tailwinds in the nut category as strong health and wellness trends are having a significant impact on consumer food purchases. Our second priority is to expand our bar portfolio and sell through the significant new manufacturing capacity we have added at our Elgin facility. Our engineering team has done an outstanding job bringing the new high-speed bar lines we purchased online and we expect them to be fully operational by the second quarter of fiscal 2027. In parallel, our R&D, sales, marketing, procurement, and technical services teams have worked hard together to build a robust pipeline of new products that have been presented to customers. Consumer trends are strong for higher protein and higher fiber products, and our bar portfolio is positioned perfectly to meet this growing demand. We are very optimistic about securing new distribution in the near future, and we estimate over $300 million in potential new growth for JBSS as we sell the capacity on these lines. Our third priority is to manage cost volatility with a relentless focus on productivity. Like many food manufacturers, we continue to face uncertainty across commodities, packaging, energy, transportation, labor, and tariffs. Teams across our organization are focused on reducing costs where possible while improving productivity and efficiency. Key areas of focus include AI-enabled process enhancements, plant efficiency, skew rationalization, trade spend effectiveness, Procurement Savings, and Supply Chain Optimization. I'll turn the call over to Frank to discuss our financial performance.

Thanks, Jeffrey. Starting with the income statements, net sales for the fourth quarter of fiscal 2026 increased by 4.2% to $280.4 million, compared to net sales of $269.1 million for the fourth quarter of fiscal 2025. The increase in net sales was due to a 2.8% increase in the weighted average sales price per pound and a 1.4% increase in sales volume per pound sold to customers. The increase in the weighted average selling price primarily reflected pricing actions taken in response to higher commodity acquisition costs for peanuts and all major tree nuts except walnuts, which was partially offset by a shift in product mix towards lower priced items in the current quarter. Sales volume in the consumer distribution channel slightly increased by 0.8% due to a 2.4% increase in private brand sales, reflecting higher volume in private label nuts and trail mix. Flow was partially offset by decreased bars volume due to our strategic decision to reduce sales to our grocery store retailer. The increase in private label nuts and trail mix volume was positively impacted by initial shipments to the new grocery retailer and expanded distribution at two existing grocery retailers, which was partially offset by lost private-level business at an online retailer. In addition, our branded sales were negatively impacted by decreased official recipe nut sales due to the timing of the Easter holiday and related promotional activity, as well as lower sales of Southern Style Nuts Hunter Mix, which was temporarily withdrawn from the market following a product recall of an externally sourced ingredient contained in that snack mix. Sales volume decreased 5.4% in the commercial ingredients channel, mainly driven by timing of a peanut crush in stock sales, and sales volumes were elevated in the preceding quarter. Food service sales volume remained relatively flat in the quarterly comparison. Sales volume in the contract manufacturing channel increased 12.6% due to increased snack nut sales to a significant new customer that we added during the second quarter of the prior year. This increase was partially offset by decreased granola sales volume. Gross profit decreased by $4.6 million, or 9.5%, to $44.1 million compared to the fourth quarter of last year, driven by $2.7 million of recall-related costs associated with the dried milk powder supplied by a third-party manufacturer incorporated in our solid-solid nuts product. Gross profit was also negatively affected by higher customer claims, higher snack bar ingredient costs, manufacturing efficiencies, and higher freight expense. Gross profit margin decreased to 15.7% of net sales compared to 18.1% for the fourth quarter of fiscal 2025 due to the reasons previously mentioned and partially offset by higher net sales base. Total operating expenses increased by $3.1 million compared to the prior year of fourth quarter, driven by higher incentive compensation, freight and marketing insights expenses, which was partially offset by estimated insurance recovery associated with the dry milk powder recall. Total operating expenses as a percentage of net sales for the fourth quarter of fiscal 2026 increased to 11.3% from 10.6% compared to the prior year comparable quarter. Interest expense was $400,000 for the fourth quarter of fiscal 2026 compared to $1.2 million for the fourth quarter of fiscal 2025 due to higher average line of credit levels. Net income for the fourth quarter of fiscal 2026 was $8.4 million, or $0.71 per diluted share, compared to $13.5 million, or $0.15 per diluted share, for the fourth quarter of fiscal 2025. Now let's take a look at inventory. The total value of inventories on hand at the end of the current fourth quarter decreased 8.8 million, or 3.4%, compared to a prior year comparable quarter. The decrease was driven by lower finished goods inventories for bars, lower want acquisition costs, and lower on-hand quantities of pecans and walnuts, which were partially offset by higher pecan and almond acquisition costs. The weighted average cost per pound of raw nut and dried fruit input stock at hand increased 12.1% due to higher pecan and almond acquisition costs, partially offset by lower walnut acquisition costs. Moving on to year-to-date results. Net sales for fiscal 2026 increased 6.2% to $1.2 billion compared to fiscal 2025. The increase in net sales was primarily attributable to an 8.9% increase in the weighted average selling price per pound, which was partially offset by a 2.5% decrease in sales volume. The sales volume decrease was due to lower sales volume in the consumer channel, partially offset by sales volume increases in the commercial ingredients and contract manufacturing channels. Growth profit margin decreased to 18% of net sales compared to 18.4% in the prior fiscal year. mainly attributable to the factors noted earlier in the quarterly comparison and lower inventory valuation adjustments, which were partially offset by aligning our pricing more closely with our commodity acquisition costs and the absence of a one-time pricing concession recognized in the prior year. Total operating expenses increased $3.2 million in fiscal 2026 compared to fiscal 2025, primarily due to higher incentive compensation expense This increase was partially offset by the estimated insurance recovery related to the dry milk powder recall, lower compensation expense, a net gain of disposal of non-core equipment compared to a net loss in a prior year, and reduced marketing and insight spending and lower third-party warehouse costs. Interest expense was $2.4 million for fiscal 2026 compared to $3.6 million for fiscal 2025. Net income for Fiscal 2026 was $61.9 million, or $5.26 per DLT share, compared to $58.9 million, or $5.03 per DLT share for Fiscal 2025. Please refer to our 10-K for additional details regarding our financial performance for Fiscal 2026. Now I'll turn the call over to Jeffrey to provide additional comments.