John B Sanfilippo And Son Inc (JBSS) Q2 2021 Earnings Call Transcript

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John B Sanfilippo And Son Inc (JBSS -2.33%)
Q2 2021 Earnings Call
Aug 19, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the John B. Sanfilippo & Son Fourth Quarter and Fiscal 2021 Year End Operating Results Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mike Valentine, Chief Financial Officer. Please go ahead.

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

Thank you, Shannon. 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, we 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 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 was offset in large part by a 7.6% decrease in the weighted average selling price per pound. The decline in the weighted average selling price per pound resulted from a decline in commodity acquisition costs for all of the 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 brand 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 the sales volume increase in the consumer distribution channel. Sales volume in the consumer channel accounted for 73.2% of our total sales volume in the current fourth quarter.

Sales volume increased 49.5% in the commercial ingredients distribution channel and that was primarily due to a 117.1% increase in sales volume to food service customers. The increase in food service volume was attributable primarily to the lifting of indoor dining restrictions in restaurants throughout the US.

Now, looking at sales volume for brands in our consumer channel. Fisher recipe nut volume decreased 38.9%, and that was in large part due to lost shelf space in favor of private brand products at one customer and competitive pricing pressure at another customer. The 23.1% increase in sales volume for our Orchard Valley Harvest brand primarily came from increased foot traffic in stores at a major customer in the apparel and home goods sector and also increased promotional activity at another customer. Fisher snack nut volume increased 6.9%, and that was mainly due to increased sales of inshell peanuts to a major customer in preparation for our discontinuance of that product line. Sales volume for Southern Style Nuts decreased 3.6%, and that was as a result of the discontinuance of an item at a major customer.

Fiscal 2021 net sales decreased 2.5% to $858.5 million compared to fiscal 2020 net sales of $880.1 million, while sales volume increased 1.6%. The decline in net sales was attributable to a 4% decline in the weighted average selling price per pound of our products. As was the case in the quarterly comparison, the decline in the weighted average selling price for the fiscal year resulted from a decline in commodity acquisition costs for all of the major tree nuts that we buy.

Sales volume increased 6.4% in the consumer channel. The volume increase was driven by increased sales of private brand trail mixes, snack mixes and snack nuts from new distribution earned at existing customers, also a shift in preference to lower priced private brand products and growth in snacking as many consumers continue to purchase food for consumption at home. Increased sales of Fisher snack nuts also contributed to the sales volume increase in the consumer channel.

Sales volume declined 13.9% in the commercial ingredients channel and that was due to a 13.6% decline in sales volume in our food service business and a decline in sales of peanut crushing stock to peanut oil processors. The decline in food service sales volume was attributable to nationwide restrictions on indoor dining at restaurants and a decline in air travel due to COVID-19, primarily in our first three quarters.

Sales volume decreased 8.2% in the contract packaging channel, primarily as a result of the impact of lower foot traffic in convenience stores on a major customer's business, and again, that was due to COVID-19.

Gross profit increased to $46.8 million in the fourth quarter of fiscal '21 compared to $40.7 million in last year's fourth quarter. And gross profit margin was 22.6% of net sales compared to 20% in the prior year's fourth quarter. The increases in gross profit and gross profit margin were due primarily to lower commodity acquisition costs for all major tree nuts and also increased sales volume.

Gross profit for fiscal '21 increased to $185 million from $175.8 million in fiscal 2020. Gross profit margin increased to 21.5% of net sales from 20% for fiscal '20. The increases in gross profit margin and gross profit were again due to lower commodity acquisition costs for all the major tree nuts that we buy, and also increased sales volume.

Total operating expenses in the quarterly comparison increased $4.3 million and total operating percentages -- I'm sorry, total operating expenses, as a percentage of net sales, increased to 14.2% from 12.3% in the quarterly comparison. The increase in total operating expenses in the quarterly comparison was mainly attributable to increases in freight, incentive compensation and consumer insight research and related consulting expenses. And these expense increases were offset in part by a decrease in advertising expense.

Total operating expenses for fiscal '21 increased $2.6 million and total operating expenses, as a percentage of net sales, increased to 11.6% from 11% in fiscal '20. The increase in total operating expenses came from increased freight expense and increased spending on consumer insight research and related consulting expenses. Partially offsetting these was a reduction in advertising expense and a gain of $2.3 million from the final insurance recovery that was related to a fire at our Garysburg, North Carolina facility, and that occurred in the second quarter of fiscal '20.

Interest expense decreased to $300,000 for the fourth quarter of fiscal '21 from $500,000 in last year's fourth quarter. And interest expense for the current fiscal year decreased to $1.4 million from $2 million in fiscal '20. The decreases in both comparisons came from lower average debt levels.

Net income was a record $12.3 million or $1.07 per share diluted for the fourth quarter of fiscal '21, and net income for fiscal '21 was a record $59.7 million or $5.17 per share diluted.

Taking a quick look at inventory, the total value of inventories on hand at the end of the current fiscal year decreased $24.1 million or 14% compared to the total value of inventories at the end of fiscal '20. The decrease in the value of total inventories was primarily due to lower commodity acquisition costs for all major tree nuts and lower quantities of peanuts, pecans and finished goods. The weighted average cost per pound of our raw nut and dried fruit input stocks on hand at the end of the current fourth quarter fell by 11.9%. And this decline, again, was due to lower commodity acquisition costs.

Now, before I turn the call over to Jeffrey, I'd like to remind investors that this is my last earnings call as CFO. And Frank Pellegrino, our Executive Vice President of Finance and Administration, will take on that role as CFO. I leave this critical responsibility in very good hands. I'll still be involved in our IR efforts with Frank, and I will remain available for investor calls at any time.

Now, I'll turn the call over to Jeffrey Sanfilippo, our CEO, to provide additional comments on our performance for the current fourth quarter and fiscal year. Jeffrey?

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

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 rebound 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 mark 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 of our exceptional JBSS employees who worked together this past year. I am so proud of the hard work, dedication and leadership of our 1,300 team members throughout the Company. They amaze me with their commitment to service our customers. And they continue to work hard to support their families and support each other. A special thanks to our manufacturing teams who are so focused on operational efficiencies in production to reduce spending per pound produced while still providing best-in-class quality and service levels.

In addition to achieving record results and maintaining best in quality class service levels, we also invested in people and added many new members from large food and beverage companies to our sales, brand marketing, innovation and consumer insights teams, as we start our journey to reinvent and reinvigorate our brands. We also increased our investment in consumer insights, as Mike mentioned, in the current fourth quarter. With these teams largely in place, we plan on making additional investments in consumer insights, consumer research and product innovation and development in fiscal '22.

The increased investment in consumer insights will help fuel our growth and embed insights across the organization. We're investing in people and capabilities to unlock insights that address changing consumer needs and behaviors that will drive growth by enabling our marketing efforts to win the hearts and minds of new and existing customers. Notably, we're increasing our foresight capabilities that will help future-proof JBSS by using AI and social media listening tools to help us capitalize on trends and changes in consumer behavior more quickly. We have witnessed extraordinary shifts in consumption these past 17 months, and the investments we are making will establish a stronger foundation to identify opportunities faster to develop innovative products, build stronger brands and expand consumption with new consumers.

Now, there are headwinds that all companies face now in the coming year as we look at current trends in the world and in this country. Our management team is working hard to execute action plans to mitigate risks to our business. I will share some of the expected challenges and what we are doing.

First and foremost is people. We are operating in a very tight labor market. Human capital, health and wellness and overcoming labor shortages are a top priority. To address labor shortages, the Company has increased wages for our manufacturing employees. We also increased shift differentials and starting wages for hard-to-fill positions and we began seeing improvement in our fill rates. We offer referral and sign-on bonuses to our new hires and employees. In addition, we are enhancing our total team performance bonus program by introducing a payout modifier that will allow our employees to double their bonus payouts. Another major project to mitigate labor challenges is our investment in robotics for our packaging lines and material handling positions. And lastly, we expanded our use of temporary labor agencies to source and recruit people to fill positions in our operations.

We also recognize that in order for our Company to be successful, our employees must be healthy, well trained and motivated to do their best every day. We are thus relentlessly focused on attracting, retaining and managing talent across organization. Due to recent surges in COVID-19 in some areas of the country, we are adjusting our safety policies and practices in accordance with guidance from the US Centers for Disease Control, federal, state and local governments and other health authorities.

We also recognize that our business is stronger and more successful if supported by a diverse workforce. Our goal is to be more intentional in hiring, maintaining and promoting diversity among our employees and fostering an inclusive environment where differences are celebrated. In fiscal 2021, we launched our Diversity, Equity and Inclusion Council, consisting of a team of employees from different functional areas to provide oversight and enhance our diversity and inclusion initiatives.

We believe that training, developing and promoting our employees is another important part of our vibrant employee culture. These measures enhance our performance and are important component of employee satisfaction. We offer training to our employees on a variety of subjects related to professional development, workplace fundamentals, business, computer applications and industry-specific subjects. I believe we are doing the right things to retain our team members and mitigate the impact of a tight labor market.

The second headwind we face is challenges with supply chain. Most manufacturers are dealing with raw material and freight cost increases and with deliveries for those materials. Beginning with the summer of 2020, we already started experiencing variability in transportation costs due to additional demand in shipping, a general shortage of drivers, increased fuel costs and federal regulations. In addition to transportation costs, we experienced increased commodity and raw material costs, increased packaging material prices, higher general water, energy and fuel costs, and increased labor costs.

We have worked closely with our domestic and global suppliers to source and maintain a consistent supply of raw materials, ingredients and packaging. To date, none of our manufacturing facilities have been significantly impacted by this pandemic. However, recent surges in COVID-19 cases, especially in Southern Vietnam from where most of our cashews are sourced and extensive lockdowns are in place, could have a negative impact on our operations if shipments of raw materials are delayed. But we have contingency plans in place to help reduce the negative impact if one or more of our manufacturing facilities encounters a partial or full shutdown.

We closely monitor these supply chain costs and challenges and we are very transparent with our key partners about their potential impact. Our sales and marketing leaders are having difficult but necessary conversations now about price increases, lead times and service level expectations. And our operations team is laser-focused on driving cost out of manufacturing in other areas of the supply chain we can control where we can reduce our cost to mitigate price inflation and service level challenges.

Now, I'll shift to consumption activity and category updates. I will share some of the category and brand results with you for the quarter. As always, all the market information I'll be referring to is IRI reported data and for today, it is for the period ending June 20, 2021. When I refer to Q4, I'm referring to 13 weeks of the quarter ending June 20, 2021. References to changes in volume or price are versus the corresponding period one year ago. And when we discuss pricing, we are referring to average price per pound. The term velocity refers to the sales per point of distribution. We look at the category on IRI's total US definition, which includes food, drug, mass, Walmart, military and other outlets, unless otherwise specified. Breakouts of the recipe, snack, trail mix and produce nut categories are based on our custom definitions developed in conjunction with IRI.

As we've mentioned for the past year, COVID-19 had positive and negative impacts upon our results for fiscal '21. In this last quarter, we saw that total nut category grow 1% in both dollars and pounds, with pricing flat. However, different dynamics happened in each of the recipe, snack, trail mix and produce subcategories, which I'll cover now.

Starting with recipe nuts. The recipe nut category declined 20% in dollars and 14% in pounds in Q4. The decline is due to the lapping of key lockdown months of April to June of 2020, where consumers were cooking and baking more at-home compared to eating out. The Fisher brand continue to be challenge in the recipe category, with declines of 38% in dollars and 33% in pounds in Q4. Fisher not only suffered from the same lapping trend as a category, but was also challenged by distribution declines at two key retailers. While we did see some nice momentum in velocity, these gains were not sufficient to offset the distribution losses. As a result, Fisher pound share decreased by 3.4 points, ending the quarter with a pound share of 11.9%. Fisher continues to be the number one share leader in the recipe nut category.

I'll now move on to the snack and trail mix categories. In Q4, the snack nut category was down 1% in both dollars and pound volume. Fisher snack brand saw declines of 2% in dollars and pound volume during the same period, driven by distribution declines. We did see some nice gains in volume for our Fisher snack Oven Roasted Never Fried product portfolio and PET packaging structure, but it did not offset the losses in other parts of the brand. The trail mix category grew in the fourth quarter with a 10% increase in dollar volume and an 8% increase in pound volume. A large portion of consumer consumption of trail mix is away from home. So as we lap the key lockdown periods last year, this category grew in the fourth quarter, as more people are spending time away from home. Our Southern Style Nuts and trail mix brand increased 3% in dollars and 7% in pounds. While we increased promotional activity at a key retailer, discontinuation of an item at another retailer mitigated the overall performance compared to the category.

Finally, I'll share [Phonetic] the performance for produce nuts. In Q4, produce nuts category increased 9% in dollars and 4% in pound volume sales. Our Orchard Valley Harvest produce brand saw a 6% increase in pound volume with dollar volume being flat. The brand's performance was driven by increased trade and promotional activity across our multi-packs products.

In closing, fiscal '21 was a strong year, especially considering the dynamic changes we've all experienced. This success is possible because we have talented people across our organization and we invest in them to do what matters most to drive results. We are executing our growth strategies, implementing continuous improvement projects throughout the organization to optimize our cost structure and we continue to invest in our people, our brands and our processes to better serve our customers and consumers and create value for our shareholders.

I would like to take this time now to thank Mike Valentine for his many years as our CFO and for guiding our Company through both challenging years and enormously successful years. His leadership and commitment to the Company have been extraordinary. For the past few years, Mike has mentored Frank Pellegrino, who will take on the role as our new CFO, starting at the close of business tomorrow. I look forward to working with Frank on these earnings calls and with investors. And as Mike mentioned, he will continue with the Company and focus on his other important responsibilities with procurement, regulatory compliance, IR and leading our contract manufacturing division.

We appreciate your participation in the call and thank you for your interest in our Company. I will now turn the call back over to Mike one last time.

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

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?

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Chris McGinnis with Sidoti & Company. Your line is open.

Chris McGinnis -- Sidoti & Company -- Analyst

Good morning. Thanks for taking my questions. Nice quarter. And Mike, thanks for all the help and look forward to working with you in different capacity as well.

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

Thank you, Chris. My pleasure.

Chris McGinnis -- Sidoti & Company -- Analyst

Thank you. I guess maybe to start, 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, and your thought process around it?

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

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 dipped 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 costs 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.

Chris McGinnis -- Sidoti & Company -- Analyst

Okay. 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?

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Sure. Chris, this is Jeff. Thanks for the question. So, really fiscal '22 opportunities, looking at private brands first, focusing on our key partners. There's still opportunities to build and work with them on expanding their private brand programs. And 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 the Gen Z and the millennial population, there, 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.

On the branded side, the team is, as I talked about, we brought in a lot of new key talent from outside our organization with 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, a 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. We did some test marketing last year. And you'll see that rollout into first half -- or first -- second quarter of fiscal '22 and 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 of fiscal '22.

Chris McGinnis -- Sidoti & Company -- Analyst

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

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Yes. So, I touched on a little bit about the millennials and the Gen Zs and their consumption behavior, it's one of the first insights that we've seen. Also, the investment in the 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. This 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'll 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.

Chris McGinnis -- Sidoti & Company -- Analyst

Okay. Great. And just two more, and 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 in it for growth there?

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Yeah. So, the team -- throughout the pandemic, as restaurants 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 our food service customers. And so, I really believe that we're starting to see that rebound. Food service has come back with the roar. Our backlog is strong in food service. Customers are ordering. They're 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, more robust food service channel that we had prior to the pandemic.

Chris McGinnis -- Sidoti & Company -- Analyst

Great. And then just one on the capex. I think it's $18 million expected for '22. Anything specific there in terms of growth versus maintenance to call out?

Jasper B. Sanfilippo -- Chief Operating Officer, President and Assistant Secretary

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

Chris McGinnis -- Sidoti & Company -- Analyst

I appreciate the time today. I'll jump back in queue for now. Thanks.

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Thanks, Chris.

Operator

Our next question comes from Timothy Call with Capital Management Corporation. Your line is open.

Timothy Call -- The Capital Management Corporation -- Analyst

Thank you. Congratulations on another strong quarter and year. It's good to see Mike hand of this role 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?

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

I don't think so. I mean, this year is a little bit unique in respect to lower commodity costs. As we return to normal, I think you can expect to see normal borrowing levels through Company there [Phonetic].

Timothy Call -- The Capital Management Corporation -- Analyst

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

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

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

Timothy Call -- The Capital Management Corporation -- Analyst

And with new product launches, do you expect new brand names? Do you expect to use current manufacturing facilities in 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?

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

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 in 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 as our core nut brand. So, 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.

So, we've got good brands. It's really getting new products out there and 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 it Valentine's last year, and we're doing another promotion in the fall of this year. So, possibility for additional brands, but at this point, we're really focused on our current brands.

As far as capabilities, you asked about capex -- manufacturing.

Jasper B. Sanfilippo -- Chief Operating Officer, President and Assistant Secretary

Yeah. So, 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 some of our product for us.

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

And one more thing I didn't touch on, Tim, was our recipe program we've launched a product line of flours, nut flours, almond flour, pecan flour, and almond coconut flour. An 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.

Timothy Call -- The Capital Management Corporation -- Analyst

Thank you. Congratulations again.

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Thanks, Tim.

Operator

Thank you. Our next question is a follow-up from Chris McGinnis with Sidoti & Company. Your line is open.

Chris McGinnis -- Sidoti & Company -- Analyst

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 it was a little bit more than maybe historically I guess. You just maybe -- just talk about what's happening in the marketplace? Thanks.

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Sure. So, on the snack side, obviously, Hormel with its acquisition of Planters makes them extremely strong competitor. The 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, like I said, trying to build our position for Fisher snack and Squirrel and OVH, 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's opportunities in the ingredient category. During the pandemic, we've brought a lot of -- the pandemic brought a lot of new consumers to the recipe category. As I mentioned, people were staying home. They cooked at home. They entertained at home. And so we saw a huge increase in our recipe consumption across the country. And so we feel there's a lot of opportunities there.

Chris McGinnis -- Sidoti & Company -- Analyst

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, enhancement innovation [Phonetic]?

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Yeah. So, M&A, I always talked 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 nothing that we saw today that we really wanted to have.

Chris McGinnis -- Sidoti & Company -- Analyst

Okay. Thanks very much again for taking my questions and good luck in Q1.

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

Thanks, Chris.

Operator

Thank you. [Operator Instructions] 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.

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

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.

Operator

[Operator Closing Remarks]

Duration: 39 minutes

Call participants:

Michael J. Valentine -- Chief Financial Officer, Group President and Secretary

Jeffrey T. Sanfilippo -- Chairman and Chief Executive Officer

Jasper B. Sanfilippo -- Chief Operating Officer, President and Assistant Secretary

Chris McGinnis -- Sidoti & Company -- Analyst

Timothy Call -- The Capital Management Corporation -- Analyst

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