J & J Snack Foods Corp.

hello thank you for standing by and welcome to the j and j snack foods fiscal 2022 fourth quarter conference call at this time all participants are in a listen-only mode after the speaker presentation there will be a question and answer session to ask a question during the session you'll need to press star 1 1 on your telephone please be advised that today's conference may be recorded i would not like to hand the conference over to your speaker today norberto aja please go ahead

And good morning, everyone. Thank you for joining the J&J Snack Foods Fiscal 2022 Fourth Quarter Conference Call. We'll get started in just a minute with management's comments and your questions. But before doing so, let me take a minute to read the State of Harbor language. This call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management's plans, strategies, goals, and objectives, and our anticipated financial performance, industry-wide supply constraints, and the expected impact of COVID-19 on our business. These statements are neither promises nor guarantees that involve known and unknown risks, uncertainties, and other important factors that may cause results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Factors discussed in our annual report on Form 10-K for the year end of September 24, 2022 and other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on this call today. Any such forward-looking statements represents management's estimates as of the date of this call, November 15, 2022. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. In addition, we may also reference certain non-GAAP metrics, including adjusted EBITDA, operating income, or earnings per share. all of which are reconciled to the nearest gap metric in the company's earnings press release, which can be found in the investor relations section of our website at jasnack.com. Joining me today on the call are Dan Faschner, our chief executive officer, and Ken Plunk, our chief financial officer. Following management's prepared remarks, we will go ahead and open the call for a question and answer session. With that, I would now like to turn the call over to Dan Kaschner, Jane J. Snackfood's Chief Executive Officer. Please go ahead, Dan.

Thank you, Norberto. And good morning, everyone. We appreciate you joining us this morning to discuss our fiscal 2022 fourth quarter and full year results. We had a great fourth quarter and an overall great year, reflecting the strength of our brand and continued execution against our growth strategy. This quarter marks the fourth consecutive quarter of record revenue, leading to our best revenue ever by over 194 million. Our top-line growth has been consistent throughout fiscal 2022, driven by strong gains across all three of our businesses, food service, retail, and frozen beverages. We are laser-focused on driving organic growth of our core brands supported by our investment and production capacity and refreshed marketing strategies. Our market position is strong, led by expanded placements, new customers, better cross-selling across our business, compelling product extensions, and innovation. We also welcome Dippin' Dots to our brand portfolio, which aligns perfectly with our business model and financial goals. Our team did a superb job driving the top-line growth while managing costs and positioning J&J for ongoing future success. I could not be more pleased with our ability to drive sales and gain market share in the current business environment. Like almost every other company this year, our bottom-line results were impacted by the inflationary impact on raw materials and escalating supply chain costs. Throughout the fiscal year, we saw sequential and year-over-year increases in costs associated with ingredients, truck driver wages, outside carriers, storage and fuel. As discussed in prior quarters, we have taken specific actions to offset these pressures and reduce costs across R&D, procurement, plant operations and distribution. We have also instituted three price increases over the last 14 months. Gross margin trends have already improved in the second half of fiscal 2022 because of these actions, and we expect to see continued benefits in fiscal 2023. Going forward, we will continue to focus on improved manufacturing efficiencies, cost reduction initiatives, and product mix. As the inflationary environment stabilizes, and we execute these initiatives, we are confident that our business will deliver higher margins along with continuing strong sales. Taking a look at the fourth quarter, revenue of $400.4 million was an all-time quarterly high, representing 23.9% growth versus the prior year period and over a 5% increase versus our third quarter revenue. On a full year basis, fiscal 2022 revenue was an all-time high of $1.4 billion, representing a 20.6% increase versus fiscal 2021. It is important to note that these fourth quarter results include $31.5 million from our Dippin' Dots business, top-line growth for the quarter excluding Dippin' Dots was still an impressive 14%, driven by strength of our core brands, an 18% increase for the full year if you exclude Dippin' Dots. Starting with food service, we saw continued growth in this segment across every product line, as sales increased by over 29% versus the fourth quarter of fiscal 2021, and by over 20% on a full year basis. Frozen novelties grew 228%, benefiting from the Dippin' Dots acquisition. Churros grew 38% for the quarter, as we continue to focus on market opportunities and repositioning the brand for continued growth. Handhelds grew 44%, and bakery and soft pretzels delivered strong growth in the quarter. The food service segment is really beginning to fire on all cylinders. We are excited about the opportunities in our core categories, including soft pretzels, churros, funnel cakes and fries. We see tremendous growth opportunities in terms of product extension, expanding our relationships with current customers, and bringing new customers on board, and expanding new markets. Churros is one of the fastest growing snack categories in food service, and we couldn't be more excited about our new churro brand, Hola Churros, launching this quarter, supported by a full suite of selling tools and videos. We look forward to reporting on the progress with this new brand in the coming quarters. Let's talk about Dippin' Dots. We have hit the ground running, and I'm so excited about our opportunities to grow this iconic brand. We've already made significant progress introducing the Dippin' Dots sales team to new customers and channels, including under-penetrated markets in theaters and food service. And with Dippin' Dots, we're proud to announce the first cross-brand collaboration the new Icy Cherry and Blue Raz flavors launching in fiscal Q1. We are also starting to explore new product concepts designed to extend Dippin' Dots into the retail channels. This is a great example of how we can leverage our portfolio across business categories to drive growth. As we said in previous comments, we believe the combination of the two companies will be a game changer given the almost seamless alignment of Dippin' Dots with our frozen novelty and frozen beverage businesses. Moving to our retail segment, this segment also enjoyed strong growth, hosting a 53.5 million in sales and growing at 11% compared to the fourth quarter of last year, and by over 7% on a full year basis. Sales were strong across most categories, including handhelds, frozen novelties, and soft pretzels. Our frozen novelty business continues to grow as we gain additional placements in leading retailers led by Luigi's, Dogsters, and Icy. Icy frozen novelties were up over 22%. I want to highlight our Dogsters brand again, which grew over 57% in fiscal Q4, driven by gains in retail availability and increased popularity in the dog treat category. We are also seeing strong momentum in our frozen beverage segment, growing by over 18% in the fourth quarter of fiscal 2022 versus the fourth quarter of fiscal 21, and by over 32% on a full year basis. Various initiatives currently underway should continue to drive this momentum. As an example, we have multiple IC tests in progress with quick serve restaurants. including a multi-store test with a hamburger chain with over 350 locations. We have also onboarded a number of new customers, including a major convenience store customer, a new cinema chain, and Peter Piper Pizza, reflecting our efforts around product extensions. On the brand marketing front, we have a lot going on. Overall, we're making progress in improving our brand health scores on our core brands. including aided awareness and purchase intent metrics as previously mentioned we're also launching our new churro brand hola churros supported by a full suite of selling tools and additional marketing support to follow in 2023 including trade media customer tests and pr support our super pretzel and luigi's media campaigns that started in fiscal q4 will continue in fiscal q1 featuring a combination of digital media, shopper-targeted promotions, and our Super Pretzel outdoor campaign continues in Philadelphia, capitalizing on the high visibility spots during the city's recent frenzy over the Phillies and the Eagles, even though the Eagles lost last night. For Dogsters, our new marketing campaign will kick off in 2023, leading with dog park activation and organic social media content. Followed later in the year with brand messaging in digital and shopper format. And for Icy, we will bring to life the kid in the cup positioning and our curb and marketing strategy. With Dippin' Dots, we recently executed a number of nationwide promotions, including National Ice Cream Day. Regarding product launches and innovation, we are as busy as ever. We launched the new Super Pretzel Buffalo flavored filled bites in Q4. and we'll introduce new super pretzel Bavarian sticks along with pretzel knots in 2023. In our frozen novelty business, we're launching new icy and slush puppy frozen pops to complement the rest of our strong frozen novelty portfolio. In our icy frozen beverage business, we will feature core seasonal offerings including mango, strawberry lemonade, and white cherry. As it relates to M&A, We are focused on fully integrating Dippin' Dots into the J&J system and ways of working and executing plans to grow the business. We will remain optimistic in evaluating potential M&A opportunities that complement our brand portfolios and business models. In summary, while we expect to face ongoing macro headwinds, we will continue to focus on growing the top line, improving margins, innovating, and building our core brands and products, our long-term vision has never been clearer. We have the right team, the right brand portfolio, and the right strategy to win. While fiscal 2022 was a record revenue year, the best is yet to come. I would now like to turn the call over to Ken Plunk, CFO, to view our financial performance. Ken?