Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son Incorporated First Quarter Fiscal 2022 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. I would now like to hand the conference over to your first speaker today, CFO, Frank Pellegrino. Please go ahead, sir.

Thank you, Charlotte. Good morning everyone, and welcome to our fiscal 2022 first quarter earnings conference call. Thank you for joining us today. On the call with me today is Jeffrey Sanfilippo, our CEO; Jasper Sanfilippo, our COO; and Mike Valentine, our Group President. Before we start, I would like to remind everyone that 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 these filings to learn more about these risks and uncertainties that are inherent in our business. Starting with the income statement. Net sales for the first quarter of fiscal 2022 increased 7.6% to $226.3 million, compared to net sales of $210.3 million for the first quarter of fiscal 2021. The increase in net sales was mainly attributable to a 14% increase in sales volume, which is defined as pounds sold to customers. Increased sales volume was partially offset by a 5.6% decrease in the weighted average selling price per pound, which was caused by a decline in commodity prices for all major tree nuts except cashews. Sales volume increased in the consumer distribution channel by 13%. Due to a 20.4% increase in private brand sales volume for trail and snack mixes. The increase in sales volume for these private brand products came from new distribution at existing customers. The increase in private brand sales volume was partially offset by sales volume decline in our branded products. Sales volume in the consumer distribution channel accounted for 75.1% of total sales volume in the first quarter. Sales volume increased in the commercial ingredients channel by 37.2%, due to a 47.8% increase in sales volume to our food service customers. The increase in foodservice sales volume was attributable to improved conditions in the restaurant industry from the COVID-19 restrictions. Sales volume declined in the contract packaging distribution channel by 3.9%, primarily due to promotional activity by a customer in the first quarter of fiscal 2021 that did not repeat in the current first quarter. Looking at sales volume for our brands and our consumer channel, Fisher recipe nuts decreased 9.7%, primarily as a result of merchandising timing shifts, lost distribution at a customer and lapping increased at-home cooking and baking nut consumption compared to last year's first quarter due to COVID-19. The 6.3% decrease in sales volume for Orchard Valley Harvest was primarily due to a temporary distribution loss at a customer in the club channel. This was partially offset by a 29.1% increase at a major customer in the non-food sector, as this retailer continues to recover from COVID-19 restrictions. Fisher snack nuts sales volume, excluding the impact of our discontinued inshell product line, which occurred in the fourth quarter of fiscal 2021 increased 7% due to new distribution and increased merchandise in existing customers. Including the impact of the discontinued product line, Fisher snack nut volume decreased by 30.3%. Sales volume for Southern Style Nuts decreased 1%, due to reduced merchandising and promotional activity. Gross profit increased by 31.7% to $51.8 million in the first quarter of fiscal 2022 compared to $39.3 million in last year's first quarter. Gross profit margin increased to 22.9% of net sales in the current quarter of fiscal 2022, from 18.7% for the first quarter of fiscal 2021. The increase in gross profit and gross profit margin was attributable primarily to lower commodity acquisition costs for all major tree nuts except cashews and increased sales volume. Total operating expenses for the current first quarter increased to 10.8% of net sales from 9.7% of last year's first quarter. Total operating expenses for the current first quarter increased $4 million in the quarterly comparison. This increase included a gain of approximately $2.3 million from the sale of our Garysburg North Carolina facility. The increase in total operating expenses was due to increased freight expense, an increase in consumer insight research and related consulting, increased advertising and increased compensation expenses. The increase in freight accounted for 60% of the total increase in operating expense. Deferred expense increase resulted mainly from higher freight rates and an increase in sales volume made on a delivered basis. Interest expense for the current first quarter decreased to $371,000 from $450,000 for the first quarter of fiscal 2021, due to lower average debt levels. As a result of what we previously mentioned, net income was $19.2 million or $1.66 per share diluted for the first quarter of fiscal 2022, compared to $12.8 million or $1.11 per share diluted for the first quarter of fiscal 2021. Now, taking a look at inventory. The total value of inventories on hand at the end of the current first quarter increased $2.2 million or 1.5%, compared to total inventory value at the end of the first quarter of fiscal 2021. The increase in value of total inventories were primarily due to higher quantities of almonds, ingredients and packaging. This was partially offset by lower quantities of farmer stock peanuts, pecans and cashews on hand. The weighted average cost per pound of raw nut and dry fruit input stocks on hand at the end of the quarter increased 11.1%, compared to the first quarter of fiscal 2021. This increase in weighted average cost is attributed to the quantity of lower-priced peanuts decreasing much more significantly than the decrease in total quantity of higher-priced tree nut and dried fruit input stocks in the quarterly comparison. The decrease in the quantity of peanuts on hand was due to the closure of our Garysburg facility. I will now turn the call over to Jeffrey Sanfilippo, our CEO, to provide additional comments on our operating results for the first quarter of fiscal 2022.

Thank you, Frank. Good morning everyone. We had a strong start to the first quarter of fiscal 2022, reporting record net income and diluted earnings per share for the fourth consecutive quarter. These record results were driven by significant volume growth in our consumer distribution channel, the ongoing recovery of our foodservice business in the commercial ingredients channel, and lower commodity acquisition costs for most major tree nuts. The strong sales volume growth in our consumer distribution channel was largely due to our team's commitment to maintaining high levels of service and quality amidst global supply chain challenges this quarter. The consumer channel represented about 79.4% of total sales dollars in the first quarter. Our dedication to delivering exceptional service, quality, and value to our customers and consumers is a key factor in our success. It takes the effort of a talented group across the organization to achieve these strong results, especially during the pandemic and its impact on economic and social behaviors. I am proud of our team, especially those in manufacturing, shipping, and procurement, for their unwavering commitment to our customers and consumers. As we approach the harvest season, we expect higher acquisition costs for many of our raw nut and dried fruit inputs, particularly for cashews, almonds, and walnuts, where we anticipate significant increases as prices return to historical averages. We are also facing rising costs in freight and labor, a trend we expect to continue. We have started to implement pricing changes across our business to help offset these increasing costs. Our team is actively identifying and pursuing cost-saving initiatives to manage these rising expenses. The current inflationary environment and global supply chain constraints present numerous challenges, but I am confident our management team and dedicated employees will rise to these challenges and maintain exceptional performance for our customers and consumers. In the first quarter, we continued to invest in our people, production capabilities, and brands to support future growth. As mentioned in our last call, we are increasing investments in consumer insights to fuel our growth and incorporate insights throughout the organization. We are dedicated to understanding shifting consumer needs and behaviors to drive growth and enhance our marketing efforts to engage both new and existing consumers. We have seen remarkable changes in consumption over the past 19 months, and these investments will establish a stronger foundation for faster opportunity identification, the development of innovative products, brand building, and increased consumption, especially among Gen Z and millennials. Additionally, we are shifting our promotional and advertising focus towards digital and e-commerce platforms to align with changing consumer behaviors, believing there are further opportunities to connect our brands with consumers' needs for functional snacking, baking, and cooking products. Regarding channel distribution updates, net sales in the consumer channel rose by $13 million or 7.8% in the first quarter. This increase was propelled by higher sales of private brand trail and snack mixes, somewhat offset by a decline in branded product sales. The discontinuation of our inshell peanut product line will negatively affect sales volume for Fisher snacks, but the sales and marketing teams have successfully established new distribution for our Fisher oven roast products to counter this volume decline. The same applies to our Fisher recipe sales. Though we face competition from private and branded products, our teams are making headway in building new distribution and preparing for a strong holiday season in November and December. Net sales in the commercial ingredient channel increased by 23.4% in dollars for the first quarter. The foodservice and industrial teams have done an excellent job during the past 19 months, positioning JBSS for a solid recovery as restaurants reopen and expand operations. This position allows us to benefit from growth in this channel due to their efforts. However, net dollar sales in contract packaging distribution declined by 11.1%, primarily due to reduced promotional activity with a key customer. While we anticipated a stronger performance in this channel, we have not yet observed an increase in convenience store volume, which significantly affects sales for a major customer in this area. Next, I will provide some updates on brand and category results for the quarter. As always, the market information I will refer to is reported data, specifically for the period ending September 19, 2021. When I mention Q1, I refer to the 13-week quarter ending on that date. Changes in volume or price are compared to the corresponding period one year prior. We analyze the total U.S. market, which includes various outlets, unless noted otherwise. Pricing refers to the average price per pound, and specific category breakdowns are based on custom definitions developed with external data providers. The term velocity signifies the sales per distribution point. The total nut category experienced a 1% increase in both sales dollars and pound volume in Q1, matching last year's growth rate. Notable growth occurred in the produce and trail mix categories, counterbalancing declines in the recipe and snack nut categories. Prices across the category remained flat in Q1 compared to last year, with some nut prices rising while others fell. Now, let's delve into the details of each category, starting with recipe nuts. The recipe nut category saw an 11% decline in dollar sales and a 7% decline in pound sales, showing slight improvement compared to Q4 of 2021. All major recipe nut types faced similar declines. This category had enjoyed considerable growth during the pandemic as more consumers cooked and baked at home. Recent data indicates that while some consumers have reduced at-home consumption, levels remain above 2019 figures. Our Fisher brand faced challenges with declining distribution among two key retailers in Q1, resulting in a 70% decline in dollar sales and a 13% decline in pounds for Fisher recipe nuts compared to last year. We did see improvements in velocity across food and mass channels, but this was insufficient to make up for the distribution losses. Consequently, Fisher dollar sales dropped one point from last year, yet Fisher remains the market leader in the recipe category, based on broader definitions or within the U.S. food channel. We are actively working to restore Fisher recipe to growth and have invested in consumer research, innovation, and marketing, with new initiatives set to launch this holiday season. Turning to the snack category, Q1 saw a 2% decline in dollar sales and a 1% decline in pound sales, reflecting similar patterns as Q4 of last year. The snack category has largely retained most gains it saw during the pandemic. We have observed shifts among nut types, with declines in almonds and peanuts offset by growth in cashews and pistachios. Fisher snack continued to gain dollar share in Q1, increasing by 7% in dollar sales driven by strong distribution and velocity growth. Our oven roasted never fried line has performed well as consumers seek healthier snack options at better value. We are focused on expanding distribution and improving velocities in this area. The trail and snack mix category grew 7% in dollar sales and 6% in pound volume during Q1, as it rebounds from modest pandemic performance. Our Southern Style Nuts brand declined by 2% in dollars and remained flat in pounds due to slower velocities in mass and club; however, in grocery, Southern Style Nuts grew by 69%, driven by increased distribution and velocity. Finally, the produce nut category saw an 8% increase in dollar sales and a 5% increase in pound volume, primarily due to a 43% rise in pistachio sales, amounting to nearly $30 million compared to last year. Yet, our produce nut brand Orchard Valley Harvest experienced an 11% decline in dollar sales and a 6% decline in pound sales due to lost distribution and aggressive competition. We are actively creating plans to turn this brand around, including new product updates and communications slated for the end of the fiscal year. In conclusion, success hinges on smart strategies and an effective business model for sustainable growth, as well as a talented and dedicated team of associates. We have all these elements in place, as evidenced by our record results over the past four quarters. We do expect formidable challenges ahead with rising commodity, labor, and freight costs and ongoing supply chain issues, along with uncertainty surrounding COVID-19 and potential restrictions. Despite these obstacles, I am confident that we have the right people, processes, brands, expertise, and financial strength necessary to flexibly navigate these volatile times and continue progressing our business. Our teams are working on exciting new products set for launch in the latter half of fiscal 2022, while also establishing a robust innovation pipeline for fiscal 2023 and beyond. JBSS will maintain its competitive edge by being innovative and delivering valuable partnerships to our customers and consumers. Our management team and dedicated employees are committed to developing business plans that create shareholder value while providing relevant, profitable, value-added products and services. Thank you for participating in the call and for your interest in our company. I will now hand the call back over to Frank.

Thanks, Jeffrey. We will now open the call to questions. Charlotte, please queue up the first question.

Thank you. Your first question comes from the line of Chris McGinnis from Sidoti & Company. Your line is now open.

Hi, good morning. Thank you for taking my questions and congratulations on a solid quarter. I want to start by discussing the current inflationary environment and other external factors that may affect profitability in the near future. Could you elaborate on the expected impact? It's been some time since we've faced an inflationary setting. How might this influence your business model? Thank you.

Well, I'll start it off Chris. Thanks for the question. Obviously, we are in a challenging situation with inflationary pricing not just commodities this time, but it's labor, it's freight. And so we are having those difficult conversations with customers. We've actually started that a few weeks ago. Not easy, but at the same time, it's the right thing for the business and we need to make sure that we keep these customers in supply both being able to procure product for them, package it and ship it. And so difficult conversations, but they're necessary. We are getting back to actually normalized levels with some commodities. So, it's not like we are increasing commodity costs way beyond where they've ever been. So, retail prices should still be very competitive with what consumers have paid for in the past.

Okay. And is there any issue around getting supply at this point?

So, Chris, this is Mike Valentine.

Hey Mike.

So, we see shortages periodically on various different things. For example in packaging. We're seeing lead-times that could be as much as three months where they used to be weeks. Occasionally, we'll see some materials that will get very tight, like for example, recently it's been living stock for our clear cans. We've talked about pallets before and then of course, anything imported can be a little bit dicey just due to the situation on West Coast ports.

And I would add Chris that because of our procurement expertise and our visibility at the supply chain, we anticipated some challenges we've watched how they've extended lead-times on deliveries and our procurement team has done an extraordinary job making sure that we have been kept in stock as best as possible.

Can you provide an update on the demand side regarding the snack mix? You've clearly done well in that product line. Is this a new program or an expansion with an existing customer? It sounds like there was a significant pickup this quarter.

Yes. So, you're referring to the Fisher Oven Roast Never Fried program?

I thought it was a branded product or an expansion with a customer regarding the snack nuts or trail mix.

Yes. So, we've seen obviously snack and trail mixes. There's competitive pricing for mixes like that. So, we've seen consumers shift to snack mixes. But it's been a growing category for a long time. We've really expanded our manufacturing of some private brand items with key customers in that trail mix category and snack mix category. So, part of it is new products that we're supplying that we didn't in previous years. Part of it is growth in that segment within the category.

Hey Chris, this is Frank. A big factor in that is also, and now we began to ship some new product to our private brand customers in Q2 of last year. So, the Q1-over-Q1 impact is much more significant in Q1.

Okay. The comp is plays into it. Okay. All right. That makes sense. And it sounds like Fisher recipe you have some holiday you're coming up on the holiday. Can you just talk about it? It sounds like you may approach it differently. Is that correct in terms of how you're looking at the holiday season for Fisher recipe?

Our sales and marketing teams have done an excellent job creating more relevant messaging for the holiday season. We've secured new distribution channels. We are concentrating on speed to market since the holiday season is the most critical period for recipe nuts. Our team has positioned us well in terms of consumer messaging, product placement, and competitive pricing. We are optimistic about having a strong holiday season this year.

Great. And anything you could share from – I know it's still early but just on the consumer side and some of the talent addition? What have they seen about the brands? What are they looking to introduce? Can you just talk a little bit? I know you can't share too much probably on the new product introductions, but whatever you could share would be helpful.

Yeah. We're hopeful at least for the new product. We've made some investments in new technology that we'll discuss probably in the back half of the fiscal year. The consumer insights team has been focusing on just really understanding Gen Z and millennial generation consumers. They don't typically put nuts on their shopping list a lot of times when they go to the store. So we've got to understand that dynamic. They're looking at category trends and the changing consumer behavior as a result of the pandemic. E-commerce is critical. And just the social messaging and how you engage consumers has changed dramatically. So those investments we're making in consumer insights are helping us to understand the consumer where they're shopping, the type of messaging that impacts them. And we'll still have a much better level of intelligence to then look at our brands, position them better, message them better and engage consumers in the future.

Okay, great. And any update on the pea chips or some of the new product introductions and how they're contributing at this point?

We have launched the chickpea chips and Orchard Valley Harvest in e-commerce, specifically on Amazon. Currently, this is a test market, but our objective is to have a full launch in the spring of 2022. By the third quarter of 2022, we expect to fully launch Orchard Valley Harvest chickpea chips. It’s a fantastic product.

Great. Thanks. Looking at the commercial side, as economies begin to reopen, do you believe you are gaining market share? Is there potential for you to capture market share as the economy reopens? Additionally, how does your current performance compare to pre-COVID levels?

We are still working to return to 2019 levels. Not all restaurants have full capacity or are open, and there have been impacts from closures due to the pandemic over the past 19 months. It will take time for the entire foodservice sector to recover fully. However, our foodservice team has made significant efforts to improve distribution, and we currently have better distribution than we did in 2019 before the pandemic. Our product offerings have also improved, and we have strengthened relationships with key players in the market. I am very confident that our team is well-equipped to benefit from the resurgence of dining out and the overall recovery of the foodservice industry, including travel as well.

Hey, Chris this is Frank again. And as far as your second part of that question at Q1, we're approximately 87% pre-COVID levels on volume in foodservice.

Great.

And we expect to get back to pre-COVID levels sometime during the fiscal year.

Great. And then just last question M&A. It sounded like the last time we talked on the last quarter, you're maybe looking into some M&A but just didn't make sense. Can you maybe just update us on the M&A market? Thanks.

Sure Chris. It's a very competitive market out there. Now we are actively looking for potential targets. We have an M&A committee that's actively looking and analyzing any potential targets. So again it's hard to predict when those may materialize but we are looking pretty consistently.

Great. Well, thanks again for taking my questions. Good luck in Q2, and I’ll jump back in the queue.

Thanks Chris.

There are no further questions at this time. Presenters please continue.

Again thank you for your interest in JBSS. Now I'd like to remind everyone that we will be presenting at the Southwest IDEAS Conference in Dallas on November 18, 2021. This concludes the call for our first quarter of fiscal 2022 operating results.

This concludes today's conference call. Thank you everyone for participating. You may now disconnect.