Q1 2024 John B. Sanfilippo & Son Inc Earnings Call

Okay.

Good day and thank you for standing by welcome to the John B, Sanfilippo, and son, 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.

I'll ask a question during the session you will need to press star one one on your phone you will then hear an automated message advising you had just raised.

Withdraw your question. Please press star one again.

Today's conference is being recorded.

I'd like to handle conference over to your speaker today, the CEO Jeffrey Sanfilippo.

Sir Please go ahead.

Thank you Chris.

Morning, everyone and welcome to towards 'twenty 'twenty, four 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 CEO.

We may make some forward looking statements today.

Or based on our current expectations and 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 the overall corporate performance, we delivered a 12, 7% increase in diluted earnings per share for our fiscal 'twenty for first quarter as the execution of our plan to control costs and invest in growth initiatives was accompanied by a challenging that category.

Softness in consumer confidence, which resulted in a decrease in our sales volume.

We made a significant investment in marketing investments to relaunch the Orchard Valley harvest brand in the first quarter, which resulted in a three 2% year over year sales volume increase for our re imagine Orchard Valley harvest product line.

Although we are in a difficult brand environment and 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.

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.

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.

We entered this year's nut and dried fruit harvest season, we anticipate stable acquisition cost for most ingredients and tree nuts, including almonds, cashews, pecans, pistachios and macadamia nuts.

We expect acquisition costs for peanuts to increase in the 'twenty three 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 continued to invest in our people production capabilities and brands to lay the foundation for future drops.

Our long range plan focuses on growing our non branded business across key customers transforming Fisher Orchard Valley harvest and squirrel, each of leading brands, while increasing distribution and diversifying our product portfolio to higher growth snacking segments.

While we faced 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 plans 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're expanding our product portfolio to 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.

Product line also provides opportunities to get our sales teams in front of new buyers with a differentiated product.

And the acquisition expanded our products and capabilities, we can add cheese, Chris to our savory mixes and solid tapping 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.

You have all these elements of success at GBS.

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'm optimistic our strategic investments and initiatives over the past three years, we 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 Thank you Geoffrey.

As a reminder, we completed our snack bar acquisition at the beginning of the second quarter.

Our first quarter results were not materially impacted by acquisition.

Starting with the income statement.

Net sales for the first quarter of fiscal 2024 decreased seven 3%.

$134 1 million.

Net sales of $252 6 million the first quarter of fiscal 2023.

The decrease in net sales was mainly due to a seven 3% decrease in sales volume.

<unk> is defined as pounds sold to customers.

Sales volume decreased 8% in the consumer distribution channel.

It's a 5% decrease in sales volume for private brand sales driven primarily by fewer promotional programs and lower seasonal sales volumes for snack and trail mixes as well as a decrease in sales volume at two <unk>.

Third mass merchandising jobs.

A 17% sales volume decrease for our branded products, which includes Fisher recipe nuts Fisher snack nuts Orchard Valley harvest and southern style nuts also contribute to the overall decrease in sales volume.

From a distribution channel.

Decline in <unk> sales volume was mainly attributable.

Alright, 39 decrease in sales volume for Fisher snack nuts due to increased competitive pricing pressures.

This continuance of our product line and in mass, which Nike retailer and the timing of holiday sales orders for customer in the non food sector.

Sales volume for Fisher recipe decreased 10, 8%.

Due to a onetime order in existing grocery customer in the same quarter of our prior fiscal year.

Our current our current quarter.

<unk> sales orders for generic grocery customer.

Sales volume for southern style nuts decreased 36, 6%, mainly from reduced distribution and promotion programs.

Upstart customer.

Sales volume decreased five 5% in the commercial ingredients channel.

A 53% decrease in sales volume.

Stop oil produced processors.

Which was due to reduced you're showing in the current fiscal quarter.

Sales volume decreased 19, 4% in the contract packaging distribution channel, primarily due to decreased unit distributions.

The timing of holiday sales orders for a major customer.

Gross profit increased $6 4 million or two.

12, 6% to 57 million and gross profit margin as a percentage of net sales decreased to 24, 4%. The first quarter of fiscal 2024 with 20% the first quarter of fiscal 2023.

The increase in gross profit margin was primarily due to lower commodity acquisition costs for all major treatments, which was partially offset by higher.

Acquisition costs for Peanuts manufacturing efficiencies and decreased sales.

The increase in gross profit was also driven by lower acquisition cost for our major treatments.

By decreased sales volume.

Total operating expenses for the current first quarter increased $4 2 million Alright comparison.

The increase in advertising expenses and turbo food donations.

Partially offset by a decrease in freight.

Acquisition expenses.

Total operating expenses for the current first quarter increased to 38% of net sales from 11, 2% for last year's first quarter due to the reasons I cited before in a lower net sales base.

Yeah.

Interest expense for the current first quarter decreased to 200700, thousands of our first quarter fiscal 2023 due to lower average debt levels.

Net income for the first quarter of this strategy.

2024, or $17 6 million or $1.51 per diluted share compared to.

$50 5 million.

<unk> 34 per diluted share for the first quarter of fiscal 2023.

Now I'll take a look at inventory.

Our value of inventories on hand at the end of the current first quarter decreased $17 3 million or 9%.

At the end of the first quarter of fiscal 2023.

Decrease in value of inventories was primarily due to the early shop in shop coupons.

Lower acquisition cost for all major treatments in lower quantities of finished goods and work in process.

This decrease was partially offset by our cash on hand.

The weighted average cost per pound of raw nut and dried fruit input stocks on hand decreased two 6% year over year, mainly due to lower acquisition costs for all major treatments.

Which was partially offset by higher.

Peter.

Please refer to our 10-Q, 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 29, we completed the acquisition of the Treehouse our units for approximately $61 million in cash.

It was funded from our credit facility.

We also increased the borrowing capacity of our credit facility to account for the short term working capital requirements.

Part of our business.

The acquisition included manufacturing facility, making Minnesota inventory and customer relationships.

Before I turn the call over Jeffrey Sanfilippo. Please note that we will be presenting at the southwest ideas conference in Dallas on November 15th.

Our presentation is scheduled to begin at 230 P M Central standard time.

Now I will turn the coverage offered to discuss category trends.

Great. Thanks, Frank for the financial update.

But as Rick mentioned, we completed the acquisition of the snack bar business from Treehouse Foods.

Transaction significantly accelerates our product diversification strategy and we now have the capabilities to offer our private label retail partners a broader portfolio of snack bars.

New business complements our own internally developed nutrition bar program, which had sales exceeding $1 $5 million in the first quarter.

I am so proud of the Jbs S Department meters, we're managing the integration of the Treehouse bar business. They are working extremely hard and doing an extraordinary job.

If developed strong plans and a clear path to optimize the operation and create efficiencies to make this business accretive by the back half of fiscal 'twenty five.

I had a chance to spend time with the late joining.

Joining our company we are fortunate to have a strong group of dedicated people and the Minnesota facility and we look forward to profitably growing the snack bar business together.

Now I'll turn to category updates for the quarter.

As always market information I'll be referring to us or contact reported data and today. It is for the period ending September 24 2023.

When I refer to Q1, I'm, referring to 13 weeks of the quarter ending September 24 2023.

References to changes in volume or price are versus the corresponding period, one year ago.

Look at the category on <unk> total U S definition, which includes food drug mass Wal Mart military and other outlets.

Otherwise specified and when we discuss pricing we are referring to average price per pound.

Breakouts of the recipe snack and produce nut segments are based on our custom definitions developed in conjunction with Chicago.

The term velocity first the sales per point of distribution.

In the latest quarter, we saw a significant shift in consumer behavior.

And the net and trailed categories, but in the broader snack aisle.

We are seeing volume declines across the entire snack aisle as consumers tightened their budgets in response to stubbornly high food prices.

Covid era, snap and student loan benefits, ending and future economic uncertainty.

The snack aisle declined two 3% in volume and grew three 3% in dollars in Q1.

This is down from one 7% volume declines and a 11% dollar growth rate in fiscal 'twenty three.

The total nut and trail mix category was down 2% in dollars and down three 4% in pound volume in Q1.

This is a decline versus what we saw last quarter.

Overall price increases across the category of moderated with trade per pound up one 4% in Q1 versus the prior year.

Prices have stabilized the price per pound is still close to a five year high.

Now I will cover each segment in more depth, starting with recipe nuts.

The recipe nut segment was down 3% in dollars and up 1% in pounds.

Consistent with the performance we saw in Q4 of 2023.

Prices of recipe nuts were down four 2% versus last year, driven by walnuts and pecans.

Our Fisher brand had another successful quarter growing 6% in dollars and 10% in pounds.

This performance resulted in growing dollar share by one three points and remaining the premiums.

This year's performance was driven primarily by increased distribution and velocity in the mass channel.

Now, let me turn to the snack nuts segment.

In Q1, the snack mix segment was down 3% in dollars and down 4% in pounds.

This is slightly worst than the performance we saw in Q4 of 2023.

Pricing continues to stabilize in the snack nut category with prices up just 1%.

Mr Snack performed worse than the category, 121% in dollars and 25% in pounds.

This was driven by a significant distribution losses in the mass channel combined with velocity softness on peanuts in the grocery channels.

Operator: Good day and thank you for standing by. Welcome to the John B Sanfilippo & Son Inc. First quarter, fiscal 2024, operating results conference call. At this time, all participants are in a listening only mode. After the speaker's presentation, there will be a question and answer the session. To ask a question during that session, you will need to press star 11 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

We've lost distribution of our Fisher snack small pack sizes as consumers are looking towards larger value packs.

In response, we are focused on expanding distribution of our larger sizes and multi packs, but we continue to see strong results in the oven roasted never sideline.

The trail and snack mix segment was up 1% in dollars and down 2% in pounds in Q1 slightly worse than the performance we saw in <unk>.

Q4 of 'twenty three.

Versus a trail mixes were up three 1% slightly less than last quarter.

Operator: Please be advised that today's conference is being recorded, and I would now like to hand a conference over to your speaker today, the CEO, Jeffrey Sanfilippo. Sir, please go ahead. Thank you, Chris.

Our southern style nuts brand declined 14% in dollars and 21% in pounds.

Jeffrey Sanfilippo: Good morning everyone and welcome to our 2024 first quarter earnings conference call. Thank you for joining us.

Lines were primarily driven by the club channel as competitive and pricing pressure has increased resulting in lost distribution.

Jeffrey Sanfilippo: On the call with me today is Frank Pellegrino, our CFO, and Jasper Sanfilippo, our CEO, all. 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 forums 10K and 10Q. We encourage you to refer to the filings to learn more about these risks and uncertainties that are inherent in our business.

The brand continues to grow in mass.

What brands continues to drive the genomics category up 1% in dollars in Q1.

Our last segment produced nuts declined 3% in dollars and 5% in pound volume in Q1 slightly worse than the performance. We saw in Q4 of 'twenty three.

Our produced nut brand Orchard Valley harvest declined 28% in dollar sales and 25% in pounds driven by distribution declines at a mass retailer and overall category softness.

Jeffrey Sanfilippo: Starting with overall corporate performance, we delivered a 12.7% increase in diluted earnings per year for our fiscal 2024 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 may a significantly investment marketing investment to relaunch the Orchard Valley Harvest brand in the first quarter, which resulted in a 3.2% year-over-year sales Wyoming increase for our reimagined Orchard Valley Harvest product line.

We are seeing new product and packaging flow into the market and are focused on driving awareness and trial.

In closing.

Looking ahead to the remainder of the fiscal year. Our key priority is to successfully integrate our recently acquired snack part manufacturing facility and business optimize its operations.

At the same time it is critical that we continue to seek opportunities to profitably grow our branded and private label consumer business.

No doubt, we are facing ongoing headwinds with shifts in consumer behavior competitive pricing pressures and a declining category.

Jeffrey Sanfilippo: 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 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 consumer 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 too.

Despite these headwinds I'm confident we have the people the processes the brands the expertise and the financial strength and place to be agile and successfully navigate our company through these volatile times to grow our business.

I would like to thank our amazing and hardworking team for their dedication and welcome our new Lakeville, Minnesota employees to the family as we all work together to deliver long term shareholder value.

All of us have a steadfast commitment to develop business plans that create shareholder value and provide relevant profitable value added products and services to our customers and consumers.

Jeffrey Sanfilippo: But our teams are working harder to expand our retail distribution, especially in the club channel, with innovative products and practices. When 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 sewing traces.

We appreciate your participation in the call and thank you for your interest in our company.

I'll now open the call to questions.

Thank you.

Queue up the first question, yes. Thank you to ask a question. Please press star one one on your phone and wait for your name to be announced to withdraw your question. Please press star one again.

Standby as we compile the Q&A roster.

Okay.

One moment, please our first question.

Jeffrey Sanfilippo: As we know this year is not in dried food harvest season, we anticipate stable acquisition costs for most ingredients and tree nuts, including almonds, cashews, pecans, pistachios, and macadamia. We expect acquisition costs for PETA to increase in the 23 crop year as the market continues to strengthen as a result of continued export demand, poor crop in Argentina, and concerns of the quality of a new crop. And peanut butter usage also remains very strong.

Our first question will come from Nick <unk> of C. WB wealth. Your line is open.

Hi, guys I just had a starting off a question on the acquisition side.

I was wondering once it's fully integrated in let's say 2020 will it have the same kind of margin profile as the overall business.

Thanks, Thanks for your question.

The process of integrating the business, but at this point, our expect the operating margin to be consistent with our overall margin.

Jeffrey Sanfilippo: 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 fissure or tribally 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.

Gross margin may be there.

And then on the <unk>.

This is the potential like how much more revenue you think you can generate off of this business from deepening the relationship with your largest suppliers like Walmart and target going forward.

I think we can grow this business by 20%, 30% over the next three or five years.

Following up just one on the club channel I was just wondering how big of a channel that is for you and you've talked about growing more in there. So just what the opportunity looks like there.

Jeffrey Sanfilippo: 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-to-cheese brand which we acquired in December of last year.

Sure.

It's really not a big channel for US today. It is a competitive channel you have some distribution with.

Orchard Valley harvest at a couple of divisions in their channel and then we have some of the.

Southern style nuts program.

Major retailer.

Huge opportunity as we see consumers shifting to the club channel as a result of.

Such market situations with the economy.

It's such an important channel that we need to participate in should be participating in.

Jeffrey Sanfilippo: It is another example of how we are expanding our product portfolio to 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 any commerce. In 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, we can add cheese crisps to our savory mixes and solid-topping offerings.

We're really working hard to develop the right products the right value proposition for that channel.

To be successful.

It's a small piece of our business today, but.

Focused on trying to build it.

Okay.

And then Hormel foods add their investor day, and one that stood out as I said for the plant there is marketing that changed it and they've seen a forex increase and the ROI for their marketing.

I'm wondering has there been any effect towards your business potential.

Shift changes or market share loss.

So the combo has been extremely competitive with the planners brand actually for almost the entire past year.

Jeffrey Sanfilippo: 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.

Increased their marketing spend either.

<unk> has done a great job.

Brand awareness and marketing programs are strong so we have seen some impact both on our branded product line, but also in the private label space at some point Youre seeing retail prices for planners cheaper than the private label offering for a like item.

Jeffrey Sanfilippo: 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.

We've seen some consumer shift to that.

As a result of that competitive pricing points.

Is is that pricing sustainable for planters or is this like a treehouse.

The situation with <unk>.

And that business.

Good question.

Frank Pellegrino: I will now turn the call over to Frank Pellegrino to provide additional information on our financial performance for our first fiscal quarter. Frank? Thank you, Jeffrey. As a reminder, we completed our snack bar acquisition at the beginning of our second quarter. Therefore, first-core results were not materially impacted by the acquisition. Starting with the income statement, net sales for first quarter is fiscal 2024, G3 is 7.3 percent, 234.1 million, compared to net sales of 252.6 million, for first quarter is fiscal 2023.

Just to be tactful I'm surprised there is as competitive and investing so much at this far along in the program.

It's very deep discounting.

And then.

Last one I had was just around.

Just all that buys around taking other weight loss drugs I'm wondering what you guys have thought about that.

How the relationship with it not industry and just what was that bigger weight loss dragging side do you think will evolve over time.

I mean, we haven't seen an impact yet it's time will tell I think it's going to be a while before we see any specific impact on the nut category.

Frank Pellegrino: The decrease in net sales was mainly due to a 7.3% decrease in sales value, which is defined as pound sold to customers. Sales value decreased 5.8% in the Consumer Distribution Channel due to a 5% decrease in sales value for private grant sales. Given primarily by your promotional programs, the lower seasonal sales value for snack control mixes, as well as a decrease in peanut sales value at two third mass merchandising retailers. A 17% sales value increased for a brand of products, which includes fish or recipe nuts, fish or snack nuts, or to a belly harvest, and Southern style nuts also contribute to the overall decrease in sales value for Consumer Distribution Channel.

<unk>.

It's just too early to see what kind of impact it may have.

At this point.

Have you seen any impact have you seen impact on other categories.

Not so much the one I've only seen for Knutsen every nutritionist is really actually pounding the table for it because of just protein to.

<unk> consumption fell by so I was just wondering if there is maybe even a positive for you guys.

Okay.

Hopefully that's the case, we'll see.

Hi, Thanks, Thanks for taking my questions. Thanks, Nick.

Thank you.

Okay.

Again to ask a question. Please press star one on your phone and wait for your name to be announced soon.

Frank Pellegrino: The client and brand of sales value was mainly attributable to a 30.9 decrease in sales value for fish or snack nuts due to increased competitive pricing pressures. This is a deterrence of a product line and a mask works with a Dyson retailer and a time and of holiday sales orders for a customer in the non-food sector. Sales value for fish or recipe decreased 10.8% due to a one time order and existing grocery costs were in the same quarter of our prior fiscal year, and did not reoccur in the current quarter in time and of holiday sales orders for a neuro grocery customer.

Your question. Please press star one again standby as we compile the Q&A roster.

Okay.

I am not seeing any further questions in the queue I would now like to turn the conference back to Jeffrey Sanfilippo for closing remarks.

Great. Thanks, Chris again, I want to thank everyone for your interest in Jbs S. This concludes the call for our first quarter of fiscal 'twenty four operating results have a great day.

Frank Pellegrino: Sales value for Southern style nuts decreased 36.6% many from reduced distribution and promotion programs and a cost to our customer. Sales value decreased 5.5% in the commercial and grace channel due to a 50.3% decrease in sales value of peanut crushing staff and peanut oil produced processors, which was due to reduced sales in the current fiscal quarter. Sales value decreased 19.4% in the contract packaging distribution channel primarily due to increased peanut distribution in the time and holiday sales orders for a major customer.

This does conclude today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.

Yeah.

[music].

Okay.

[music].

Frank Pellegrino: Gross profit increased at 6.4 million for 12.6% and 57 million in gross profit margin as a percentage of net sales increased to 24.4%. The first quarter of fiscal 2024 for 20% in the first quarter of fiscal 2023. The increase in gross profit margin was primarily due to lower amounting acquisition costs for all major tree nuts, which was partially offset by higher acquisition costs for peanuts, manufacturing efficiencies, and decrease peanut sales value.

Yeah.

[music].

Frank Pellegrino: The increase in gross profits was also due by lower acquisition costs for all major tree nuts and partially offset by decreased sales value. Total operating expenses for the third-first quarter increased 4.2 million in the quarterly comparison due to increasing advertising expenses in terrible food donations, which partially offset by a decrease in freight and set the taxation expenses. Total operating expenses for the third-first quarter increased to 13.9% of net sales from 11.2% per last year's first quarter.

Frank Pellegrino: The increase in gross profit increased to 13.9% of net sales from 11.2% per last year's first quarter, and I refer to Q1 and refering to 13 weeks of the quarter, ending September 24th, 2023. References to changes in volume or price are versus a corresponding period when you're a go. We look at the category of cercana's total U.S, definition, which includes food, drug, maps, walmart, military, and other office. And let's always specified, and when we discuss pricing, we're referring to average price per pound.

Frank Pellegrino: Breakouts of the recipe, snack, and produce nuts segments are based on our custom definitions, developed in conjunction with cercana. It turned velocity first the sales point of distribution. In the latest quarter, we saw a significant shift in consumer behavior, not just in the nut-and-trill categories, but in the broader snack aisle. We're seeing volume declines across the entire snack aisle as consumers tighten their budgets in response to stubbornly high food prices. Povid era SNAP and student loan benefits ending and future economic uncertainty.

Frank Pellegrino: A snack aisle declines 2.3% in volume and grows 3.3% in dollars in Q1. This is down from 1.7% volume declines and 11% dollar growth rate in fiscal 23. The total nut and trill mix category was down 2% in dollars and down 3.4% in pound by in Q1. This is a decline versus what we saw last quarter. Overall, pricing creases across the category have moderated with price per pound up 1.4% in Q1 versus the prior year.

Frank Pellegrino: Prices have stabilized, the price per pound is still close to a five-year high. Now I will cover a segment in more depth starting with recipe nuts. The recipe nuts segment was down 3% in dollars and up 1% in pounds. This is consistent with the performance we saw in Q4 of 2023. Braces of recipe nuts were down 4.2% versus last year, driven by walnuts and pecans. Our first year brand had another successful quarter growing 6% in dollars and 10% in pounds. This is performance resulted in growing dollar share by 1.3 points and remaining the brand. This year's performance was driven primarily by increased distribution and velocity in the mass channel.

Frank Pellegrino: Now let me turn to the snack note segment. If you want, the snack next segment was down 3% in dollars and down 4% in pounds. This is slightly worse than the performance we saw in Q4 of 2023. Pracing continues to stabilize in the snack neck category, prices up just 1.7%. This is snack performed worse than the category, along 21% in dollars and 25% in pounds. This was driven by significant distribution loss in the mass channel, combined with velocity softness and peanuts in the grocery channels.

Frank Pellegrino: We've lost distribution of sister snack small pack sizes as consumers are looking towards larger value pack. In response, we are focused on expanding distribution of our larger sizes and multi-packs, but we continue to see strong results in the oven-roasted, never-flight line. The trail in Snackmix segment was up 1% in dollars and down 2% in pounds in Q1. Slightly worse than the performance we saw in Q4 of 23. This is a trail mix where up 3.1% slightly less than less quarter.

Frank Pellegrino: Our Southern Style Muts brand declined 14% in dollars and 21% in pounds. Declines were primarily driven by the club channel and competitive and pricing pressure has increased resulting in loss distribution. The brand continues to grow in mass, by the brand continues to drive the trail mix category of 1% in dollars in Q1. Our last segment, Produce Nuts, declined 3% in dollars in 5% in pound volume in Q1. Slightly worse than the performance we saw in Q4 of 23.

Frank Pellegrino: Our Produce Nup brand, Orchidly Harvest, declined 28% in dollar sales and 25% in pounds driven by distribution declines and a mass retailer and overall category softness. We are seeing new product and packaging flow into the market and are focused on driving awareness and trial.

Frank Pellegrino: In closing, looking ahead to the remainder of the fiscal year, a keep priority is to successfully integrate our recently acquired Snackmix manufacturing facility and business, optimize its operations. The same time is critical that we continue to seek opportunities to profitably grow our branded and privately able to consumer enough business. No doubt, we are facing ongoing headwinds with shifts in consumer behavior, competitive pricing pressures and a declining net category. Despite these headwinds, I'm confident we have the people, the processes, the brands, the expertise and the financial strength in place to be agile and successfully navigate our company through these volatile times to grow our business.

Frank Pellegrino: I'd like to think our amazing and hardworking team for their dedication and welcome our new Lake Film Minnesota employees to the family as we all work together to deliver long-term shareholder value. All of us have a steadfast commitment to develop business plans that creates yourholder value and provide relevant, profitable, value-edited products and services to our customers and consumers. We appreciate your participation in the call and thank you for your interest in our company.

Operator: We will not open the call to questions. Thank you. Do you have the first question? Yes, thank you. To ask a question, please press all one one on your phone and wait for your name to be announced. To withdraw your question, please press all one one again. Stand by as we compile the Q&A roster. And one moment please for our first question.

Nick Atten: Our first question will come from Nick Atten of CWB Wells. Your line is open. Hi guys. I just had a shout-out question on the acquisition. So I was wondering once it's fully large and profile as we overall bit. Thanks for your question. We're still in the early process of integrating the business, but this point I would expect the operating margin to be consistent with our overall margin on the close margin may be different.

Nick Atten: And then on this potential, like how much more revenues you think you can generate off this business from decreasing the relationship with your largest suppliers of the Walmart and target going forward. I think we could grow this business by 20 or 30% over next to our buyers. Then following up just one on the club channel, I was wondering how big of a channel that is for you and you talked about growing more in there, so just what the opportunity looks like there.

Nick Atten: So it's really not a big channel for us today. It is a competitive channel. You have some distribution with Portugal harvest and a couple of divisions in their channel and then we have some of the Southern style nut program at one of the major retailers. But it's a huge opportunity. As we see consumers shifting to the club channel as a result of market situations with the economy, it's such an important channel that we need to participate and should be participating in.

Nick Atten: So we are really working hard to develop the right products, the right value proposition for that channel to be successful. But it's a small piece of our business today, but we're focused on trying to build it. And then hormone foods had their investor day and one that stood out as they said for the planter's marketing, they changed it and they've seen a 4X increase in the ROI for their marketing. So I was wondering has there been any effect towards your business with potential shift changes or market share loss?

Nick Atten: Sure. So hormone has been extremely competitive with the planter's brand actually for the almost the entire past year. At least their marketing spend, they've been very creative. They've done a great job making brand awareness and their marketing programs are strong. So we have seen some intact both on our branded product line, but also in the private label space. At some points, you're seeing retail prices for planners cheaper than the private label offering for a light item.

Nick Atten: So some consumers shift to their land as a result of that competitive pricing points. Is that pricing sustainable for planters or is this like a tree house situation with their previous business? Good question. Just to be careful, I'm surprised there is as competitive and investing so much this far along in the program. It's very deep discounting. And then last one I had was just around just all the buzz around ozampec and other weight loss drugs.

Nick Atten: I'm wondering what you guys thought about this and just how the relationship with the net industry and just ozampec and weight loss drugs that you think will evolve. We haven't seen an impact yet and it's time we'll tell. I think it's going to be a while before we see any specific impact on that category. It's just too early to see what kind of impact it may have at this point. Have you seen any impact.

Nick Atten: Have you seen an impact on other categories? Yes? The one I've only seen for nuts is every nutritionist is really actually pounding the table. Or because it was just protein to color consumption. So I was wondering if there's maybe even a positive for you guys. Well, hopefully that's the case. We'll see you. All right. Thanks. Thanks for taking my question. Thank you. Again, to ask a question, please press star 1, 1 on your phone and wait for your name to be announced. To control your questions, please press star 1, 1 again. Stand by as a compile to Q&A roster. I am not seeing any further questions in the queue.

Jeffrey Sanfilippo: I would now like to turn the conference back to Jeffrey Sanfilippo for closing remarks. Great. Thanks, Chris. Again, I want to thank everyone for your interest in JBSS.

Operator: This concludes the call for a quarter of fiscal 24 operating result. Have a great day. This does conclude today's conference call. Thank you all for participating.

Operator: You may now disconnect and have a pleasant day.