Good day. And thank you for standing by. Welcome to John B. Sanfilippo and Son Fourth and Fiscal 2021 Year End Operating Results Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Valentine, Chief Financial Officer. Please go ahead.

Thank you, Shannin. Good morning, everyone, and welcome to our 2021 Fourth Quarter and Fiscal Year Earnings Call. Thank you for joining us today. On the call with me today are Jeffrey Sanfilippo, our Chief Executive Officer and Jasper Sanfilippo, our Chief Operating Officer. Before we start, I want to remind you that we may make some forward-looking statements today. These statements are based on our current expectations, and involve certain risks and uncertainties that are inherent in our business. 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. I'll start the call by covering financial highlights for the 2021 fourth quarter and fiscal year. The current fourth quarter net sales increased 1.2% to $206.7 million, compared to net sales of $204.2 million for the fourth quarter of fiscal 2020. The increase in net sales was due to a 9.6% increase in sales volume, which we define as pounds sold to customers. The increase in net sales from the sales was offset in large part by a 7.6% decrease in the weighted average selling price per pound for. The decline in the weighted average selling price per pound was resulted from a decline in commodity acquisition costs for all major tree nuts that we buy. Sales volume increased in the consumer distribution channel by 2.5%. The volume increase in the consumer channel was primarily driven by increased sales of private brands snack and trail mix products from new distribution earned with existing customers. Sales volume increases for our Orchard Valley Harvest products and Fisher snack nuts also contributed to sales volume increase in the…

Thank you, Mike. Good morning, everyone. As was the case in the previous two quarters, we again reported record net income and diluted earnings per share for the current fourth quarter. The record results were driven primarily by rebounds in our food service business and contract packaging distribution channel. We also experienced sales volume growth in the consumer distribution channel in this quarterly comparison, which built on the significant sales growth we enjoyed in last year's fourth quarter. This growth came from distribution gains at some of our private brand customers, as we demonstrated our ability to maintain superior service and quality levels, while facing challenges related to the pandemic in fiscal 2020 and 2021, and numerous constraints in the global supply chain in the latter half of fiscal '21. This is the third consecutive year JBSS has delivered record net income and record EPS. In addition, we shipped over 294 million pounds to customers, which is another record for the company. The significant operating results we have achieved these past few years demonstrate the underlying strength and resilience of our organization despite competitive pressures and the impact of COVID-19. It is also a testament to the fortitude of our business model, the commitment of our people and the mutual trust and depth of our customer and supplier partnerships. Due to our strong financial results over the last three quarters, we raised our annual regular dividend 7.7% to $0.70 per share, and supplemented that with a special dividend of $2.30 per share, both of which will be paid to our stockholders on August 25, 2021. These most recent dividend payments marked the 10th consecutive year that we have paid dividends, and we are pleased to return cash to our stockholders, and we are paying bonuses to each and every one…

Okay, thank you, Jeff. Pretty exciting there. At this time, we will open the call to questions. Shannon, can you please queue up the first question?

Our first question comes from Chris McGinnis with Sidoti and Company.

Good morning. Thanks for taking my questions. Nice quarter. And Mike thanks for all the help. And I look forward to working with you in internal capacity as well. I guess maybe just starting acquisition costs have been pretty advantageous for you. Can you just talk about your outlook for '22 and purchase pricing of tree nuts for the year your thought process around it?

Sure. So as we pointed out in the last few quarters, we've seen some significantly low commodity acquisition costs, I'd say probably in about all cases, they dip below historical averages, looking forward at new crop, and we don't have complete visibility on that yet. But in most cases, we think many of those crops are going to return to something close to historical averages, with the exception of cashews, which may run a little bit higher than that. And then almonds just because of the droughts that we're seeing in the Central Valley of California maybe above historical averages.

And I guess just thinking about very successful on the consumer side. Can you just talk about the opportunities for growth, when you look out to '22, both on the private label and the branded sides, where your opportunities are?

Sure, Chris, this is Jeff, thanks for the question. Yes, so really the fiscal '22 opportunities looking at private brands, first focusing on our key partners, there are still opportunities to build and work with them on expanding their private brand programs. We touched on the trail mix segment, which continues to grow, especially as states start to open up and people are on the go again. But also just product innovation in general, there's still a shift to plant proteins. And so we're seeing retailers look at other opportunities to expand their nut program as they look at opportunities and changes in consumer behavior. The other thing that we are focused on is bringing new consumers to the categories both for private brands and for our brands. If we get to Gen Z and the millennial population, their -- nuts are not always first top of mind when they go out for, to purchase a snack. And so part of our reason for investing in consumer insights is to truly understand those purchasing dynamics and that behavior to help understand how we can pursue those consumers and bring them to both the snack and recipe category. And the branded side, the team as I talked about, we brought in a lot of new key talent from outside our organization with a great experience at other major CPG companies. And the focus is on really building stronger brands, building better brand positioning statements, better engagement with consumers, stronger product portfolio, because we still see a lot of opportunities in growth, in snack nuts and in recipe and ingredients as well. The last thing I will add is we are expanding our product portfolio. I talked about launching outside of the nut category, we have a chickpea chip under our Orchard Valley Harvest brand, which was launched, and we did some test marketing last year. And you'll see that rollout into first half or second quarter of fiscal '22. You'll start to see that product; you can find it already on Amazon as a test. But you'll see that product rollout nationally in the beginning of second quarter fiscal '22.

Right. I appreciate that. And I guess just thinking about the investment you're making both in personnel, but also the consumer research. What are the early signs that they kind of indications of the opportunity there? Can you maybe just expand on what you've seen? I know it's still early stage. But --

Yes, so I touched on a little bit about the millennials and the Gen Z's and their consumption behavior is one of the first insights that we've seen. Also, the investment in consumer insights allows us to find other gaps. And we've talked a lot about expanding consumption, looking at alternative channels, and we truly understanding where consumers are buying food products. These new technology allows us to tap into places where we didn't realize people were consuming nuts before. The last thing it does is it helps us to really understand trends faster than we've ever been able to. So as we start to develop new product innovation, both for our brands and for private brand customers we will have much better intelligence to develop the right products that consumers are looking for. So very exciting, it's initial stages, but we're building that foundation to have a really strong consumer insights team and have better visibility of future trends and what's happening today.

Great. And just two more, I'll jump back in queue. Maybe just around commercial ingredients, obviously a nice rebound. Can you maybe just discuss where your volumes are versus prior to the pandemic level, and how much more room there for growth there?

Yes, so the team out throughout the pandemic as restaurant started to close, our food service team was working so hard to maintain relationships with our food service account, making sure that we gain new distribution so that when the states did open up, we had our products ready and available for food service customers. And so I really believe that we're starting to see that rebound food service has come back with a roar, our backlog is strong and foodservice customers are ordering the replenishing, consumers are going out to eat. And so I think we're in a much better place at the end of the pandemic with our distribution and our relationships. And where we're focused on to really build a stronger, real, more robust food service channel that we had prior to the pandemic.

Great. And then just one on the CapEx. I think it's $80 million expected for '22, anything specific there in terms of growth versus maintenance to call out.

Yes, Chris, this is Jasper, I would say a good portion of it really is towards automation, and there is quite a bit of maintenance as we have every year. I would not say it's anything more than unusual. There are some upgrades to make lines go quicker. So I guess you could argue that would be going towards growth. But quite a bit of it really is finishing a big CapEx project from last year and continuing to invest in automation.

Our next question comes from Timothy Call with Capital Management.

Thank you, congratulations on another strong quarter end year, good to see. Mike, hand offs this roll from such strength that shows a lot and I was wondering with interest expense falling by 40%. Do you think in the fourth quarter of, in two or three years that you might actually have net interest income? Not net interest expense?

I don't think so. I mean, this year is a little bit unique in respect to low commodity costs. As we return to normal I think you can expect to see normal borrowing levels to accompany that.

And when you sell the Garysburg facility, should that sale be completed in this fiscal year?

Yes, we expect that to be completed in this current first quarter.

With new product launches, do you expect new brand names? Do you expect to use current manufacturing facilities and idle capacity? And you mentioned the launch of the chips; will there be other launches this fiscal year? Or do you expect a new product once a year?

Hey, Tim, good question. So we've invested a lot in innovation and research and development. We've got really good brands, the challenge is we don't have very good distribution and ACV. And so we feel like we've got good brands today that we can focus on the health and wellness with Orchard Valley Harvest, we have our Squirrel Indulgent brand. And then we have Fisher recipe and snack is our core nut brand. So that we've got the brands I think today, I don't know if we would add sub brands at this point, although it's an opportunity. And as we drive further into these consumer insights research that will guide us on whether we should have a whole different brand or not. But so we've got good brands, it's really getting new products out there. And in really engaging consumers, we've had a tough time engaging consumers and getting new distribution. So we've got to put together a better story a more value, benefit type of brand, performance and an opportunity for consumers to pursue. So we've got a lot of good innovation in the pipeline, the chickpea chip, we wanted to get something outside of the nut category, we feel like we can -- we know the salty snack section really well with our nuts, so why not pursue something in salty snacks, and it ties in well with health and wellness and time will tell but we feel like we've got a really great product and we've got a great position. And so we'll see how that goes. I'm very optimistic about that. And then for Squirrel, we're looking at launching a bunch of new things in the back half of fiscal '22. You'll see some things in the market. Ruby Royale is a brand that we launched, that would be considered a sub brand, I guess, that we launched at Valentine's last year. And we're doing another promotion in the fall this year. So possibly for additional brands, but at this point, we're really focused on our current brands. As far as capabilities you asked about manufacturing.

Yes, Tim, in terms of manufacturing, the one to two year old innovation projects that we have will be currently manufactured in house. But as we look to what innovation looks like three to five years, I would highly expect the company will be using co packers to pack some of our products for us.

So what they didn't touch on Tim was -- so our recipe program, we've launched a product line of flowers, nut flowers, almond flour, pecan flour, and almond coconut flour, extremely successful launch, we've got a lot of great distribution, consumers are looking for, again, that plant protein, something that they can use for cooking outside of other items. And so we're really optimistic about the success of that program and expanding it. So a lot of opportunities in the ingredient category as well for Fisher

Our next question is a follow up from Chris McGinnis with Sidoti and Company.

Thanks. I just wanted to maybe just ask about the competitive landscape and how it's shaping up. It seemed like maybe in Fisher recipe where it was a little bit more then maybe, historically, I guess, can you just maybe -- just talk about what's happening in the marketplace. Thanks.

Sure. So on the snack side, obviously Hormel with its acquisition of Planters makes them extremely strong competitor, that transition is still taking place now. We expect to see more investments in the Planters brand in the snack category. So time will tell but we're, I said trying to build our position for Fisher snack and Squirrel and OBH and find that right positioning to compete with Planters. On the recipe side, Diamond is our largest competitor there as well as private brands. Most of our distribution losses came; a lot of it came from private brands building their own private brand recipe programs. But we still feel there are opportunities in the ingredient category. During the pandemic, you brought a lot -- the pandemic brought a lot of new consumers to the recipe categories as I mentioned, people were staying home, they cooked at home, or they entertained at home. And so we saw a huge increase in our recipe consumption across the country. And so we feel there are a lot of opportunities there.

Okay, great, and then just with the strength of the balance sheet can you maybe just discuss any outlook for possible M&A versus I guess in house innovation?

Yes, so M&A, I always talk about M&A, we always look at it, we've looked at a couple of companies even this last quarter, nothing that really made sense for us to pursue. But as we build our path to $2 billion, which is a long range plan that we're working on now, M&A is going to definitely be part of that. So you've got opportunities for small brands, or small company capabilities, or obviously a transformational opportunity that comes up. But it's always part of our strategic plan for growth in M&A just something that we saw today that we really wanted to have.

And I'm currently showing no further questions at this time. I'd like to turn the call back over to Mike Valentine for closing remarks.

Thank you, Shannon. Again, thank you everyone for your interest in JBSS. And this concludes the call for our fourth quarter and fiscal year 2021 operating results. Have a good day.

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