Good day, ladies and gentlemen, and welcome to the John B. Sanfilippo & Son, Incorporated Third Quarter Fiscal 2015 Operating Results Conference Call. My name is Denise and I'll be the operator for today. At this time, all participants are in listen-only mode. Later we will conduction a question-and-answer session. [Operator Instructions]. I would now turn the conference over to Mr. Mike Valentine, Chief Financial Officer. Please proceed, sir.

Thank you, Denise. Good morning everyone and welcome to our 2015 third quarter earnings conference call. On the call with me today is Jeffrey Sanfilippo, our Chief Executive Officer and Jasper Sanfilippo, Jr., our Chief Operating Officer. Before we start, we may make some forward-looking statements today. These statements are based on our current expectations and they involve certain risks and uncertainties. The factors that could negatively impact results are explained in the various SEC filings that we have made, including Forms 10-K and 10-Q. We encourage you to refer to these filings to learn more about these risks and uncertainties that are inherent in our business. Starting with the income statement, net sales for the third quarter of fiscal 2015 increased by approximately 20% to 209.4 million compared to net sales for the third quarter of fiscal 2014 of 174.3 million. The increase in net sales was attributable to 10.1% increase in selling prices and 9.1% increase in sales volume which we measure as pounds sold. Volume increased for all major product types except pecans. And volume increased in the consumer, contract packaging, and export distribution channels in the quarterly comparison. The volume increase in the consumer channel came from increased sales of private brand snack nut and trail mix products to existing customers. Increased sales of Orchard Valley Harvest brand products also contributed to the net sales increase. Volume declined for Fisher recipe nuts and snack nuts by 4.8% and 10% respectively. The decline in Fisher recipe nut volume was due to reduced merchandizing activity at a major customer. The decline in Fisher snack nut volume was due to a change in the timing of merchandizing activity at a major customer where their promotional activity occurred in the second quarter of this year as opposed to the third…

Thank you Mike. Good morning everyone. We exceeded last year’s record third quarter net income with another record third quarter realizing double-digit percentage growth in net sales, gross profit, and net income. EPS increased by an incredible 76% to a record $0.58 per share diluted. Sales volume also grew a respectable 9.1% or £5 million in Q3 in spite of higher commodity prices and raw material costs. I am very proud of our management team and all our employees for their leadership in executing our strategic growth plans to create value for our customers and our shareholders. We are on track for another record year in performance, as we head into the last quarter of fiscal 2015. Everyone at JBSS continues to be laser focused on the company’s long-term objective to drive profitable growth. Our strategic goals remain consistent, growing Fisher and Orchard Valley Harvest into leading nut brands by focusing on consumers demanding quality nuts in the snacking, recipe, and produce categories. Expanding globally and building our company into a leading international branded and private brand snack nut company, and providing integrated nut solutions to grow non-branded business at existing key customers in each distribution channel. Looking at a snapshot about brand performance, we continue to execute these goals. In the third quarter, we experienced distribution gains for our Orchard Valley Harvest brand. The improved distribution drove a 56% increase in volume, compared to the third of fiscal 2014. According to market data from IRI, Orchard Valley Harvest produced brand also performed well at retail in the quarterly comparison with 52% increase in pound volume compared to 9% decline in pound volume for the entire produced nut category. Although we experienced declines in sales volumes for Fisher recipe and snack nuts, both brands outperformed their respective categories at retail…

Okay thanks Jeff. Denise we will now open the call to questions.

[Operator Instructions]. Our first question comes from Francesco Pellegrino, please proceed.

Hi guys.

Good morning.

Thanks for taking my questions and congrats on a really great quarter. First off it looks as if everything really went well for you guys during the quarter, I am seeing higher volume sales, higher prices being passed along to customers, gross margin expansion, in a difficult commodity cost environment, looking forward as the company looks to keep this momentum going, any color that you guys could maybe give us in regards to where trade spending could be for maybe the remainder of the year and for fiscal 2016 going forward?

Hi Francesco, this is Jeffery. So we increased our trade spending in Q2 as we’ve talked about previously. We did pull back some of this trade spending in Q3. We anticipate Q4 will be pretty consistent with typical trade spend amounts. We still if you looked at our total trade spend as a percent of branded sales, we are still on average a little bit lower than our competitors but again we are going to be consistent with our typical averages of trade spend going into the fourth quarter. We did a lot of investment in new distribution which we are comfortable with now but we anticipate trade spending to level off as far as a percent of sales.

Obviously, when you start talking about this space and feeling market share it comes down to being able to supply the market with greater volume in sales obviously being vertically integrated, is the company looking to align themselves with more growers and looking to maintain these relationships over the long-term, what can you tell us right now about the environment in regards to long-term relationships with growers that eventually down the supply chain helps you to substantiate higher volume sales growth?

Francesco this is Mike. We’ve had decades long relationships with walnut, pecan growers and peanut farmers. We expect that to continue. We do believe there is an environment out there for increased peanut acreage especially with given the lower corn and cotton cost. And we do expect to expand the amount of peanuts we show as a result of that. There are -- continue to new plantings on walnuts. You know even buy our existing grower base, and just as we witnessed this year we’ll probably see whether permitting increased quantities there.

I know this was a business you guys got out of in regards to being vertically integrated for it in the past and I know it caused some problems historically. Is there any thinking about maybe jumping back into the almond business becoming vertically integrated within almonds and sort of aligning yourself with growers or do you just really feel that this is a type of nut product to sort of I guess be further removed from earlier on in the supply chain.

Well for the most part almond handlers or shellers are now pretty much controlled or owned by growers. They are virtually one and the same. So unless you are a grower it just does not make sense to be a handler of almonds.

And Francesco this is Jeff. I would also add there is such a diverse amount of grower processors and processor specifically in the almond industry and it is still an extremely fragmented industry from a supply chain standpoint. We have enough access to current processors and grower processors that would make sense at this point to pursue that.

Alright I guess switching topics for a bit, the Fisher Nut Exactly line looks as if you guys are getting really strong distribution such as the distribution points right now are really strong. It looks like if they are going to explode within the next couple of weeks. Currently like how many skews are in the Fisher Nut Exactly line and is this something that you think you could add a lot more skews to going forward or is it just going to be a couple of skews with the cluster product.

So it's Jeff again Francesco, good question. So Fisher Nut Exactly just launched in Q3. We did some testing last year. We are currently in the club channel with one package, one skew. We are looking to develop a second skew for the club channel and then the grocery channel which just launched in Q3. It is five items that exist today. Our R&D teams and marketing are in the process of looking at some other labor profiles. Currently the majority of the products are confectionary with chocolate or peanut butter or caramel, and we are starting to do some testing now on some savory products to expand that line.

Alright, only going to ask this question because last time I asked about a new product line it turned out to be the Fisher Nut Exactly line, what’s happening with Sunshine Country. Is this sort of just taking a back seat right now to the Fisher and Fisher Nut Exactly and Orchard Valley Harvest brands, is there anything out there that you could really see maybe jump starting the growth, it’s not really a brand you guys have been talking a lot about over the past couple of quarters?

Yes, so Sunshine Country Francesco is really we consider a control brand now. It used to be a much bigger brand for us before we started really developing Fisher and then our Orchard Valley Harvest produce brand. So it’s really a third tier brand for JBSS and we’ll use it for some produce categories where it might be a lower quality product that they are just looking for a price point to hit. But it is more of a controlled brand at this point so you shouldn’t expect to see much from the Sunshine Country brand. Our big focus is on Fisher, Fisher Nut Exactly, and then our Orchard Valley Harvest brands.

And with looking at those brands, looking at the IRI data, looking at where your sales are, so it looks as if company shipments are lagging IRI data which leads me to believe that retailers are sitting on rather depleted inventory which would speak well to your fourth quarter shipments. I know where Easter falls during a quarter can really impact what happens with your shipment rates, can you give us a little bit of color in regards to just where the IRI data sort of stacks up against the company shipment rates, it seems as if there is going to be a lot of volume that could be sold back to these retailers, as they look to replenish their stock?

Francesco, this is Mike. You are right the math would suggest that their inventories are depleted. We don’t really have visibility on our retailers inventories. We do get some anecdotal information and there is at least with a couple of retailers some indications that their inventories are low. But again that does get a little murky when you consider the timing of our spring religious holidays. Last year they were two weeks later then they were this year, so that may end up explaining it. But we’ll know here shortly.

Alright and I guess just to touch on the financial condition of the company, I guess if we continue with the theory that shipments to retailers are going to be rather attractive during the fourth quarter, look I know in the past some investors sort of get caught up in your inventory number, right now it looks as if you are sitting on a record inventory. Obviously its part of being vertically integrated, I know investors look at that numbers and they are concerned that it might be a little bit too high. When I look at the IRI data, I look at where your shipments are for the past quarter, where your shipments could be this quarter, I almost think that your inventory might not be enough to match fourth quarter and I know this is a problem you guys incurred in the first quarter, sort of being a short-handed with where your inventory numbers were, I know it’s not an accounting. You get too much transparency with for competitive reasons, can you make me a little bit more comfortable in regard to the comments you made earlier about -- with where your inventory sits right now and whether I should be concerned that you might not been sitting on enough inventory going forward?

Well first of all in terms of dollars, more than 50% of the increase in dollars really sits in our finished goods and work-in-process which are built up in anticipation of this volume increase trend continuing. So in that respect we have plenty of finished goods to deal with that. In terms of raw input stocks, the only increase in quantity that’s noteworthy is with walnuts. We had a smaller pecan crop as we noted. As we have mentioned in previous calls, nuts like almonds and cashews which are at historical high prices where our coverage is playing kind of close right now. There doesn’t appear to be a lot of upside risk in those markets and we certainly don’t want to get too long in those but there is plenty of almonds and cashews out there for us to buy and we don’t anticipate any shortages there.

You mentioned that a lot of your finished -- lot of your inventory is finished goods volume, does that mean that you already have buyers for this product?

Yeah, our ongoing customer relationships assure us that this finished goods inventory is going to ship and just kind of frame that up it’s probably not much more than a month on hand. So there is no risk issues there.

So with not more than a month on hand, you are sitting on a high level of finished goods volume, you can almost jump to a conclusion that retailers are sitting on depleted inventory leveled at the store level and that they are committed to replenishing right now into the fourth quarter despite some of the holiday things that you had mentioned, couple of questions earlier, can I make that inference based on where your finished goods inventory is?

Well that -- obviously we wouldn’t have that higher inventory amount -- finished goods inventory amount if we didn’t believe that. But I do want to caution you that believe it or not we don’t get a lot of visibility on what our customers are forecasting and in some cases our customers have difficulty with that. So we can’t say for sure but certainly with the kind of volume increase we experienced in the third quarter of 9% it makes sense for us to have a lot more finished goods and work in process on hand for the fourth quarter needs.

Yeah, alright that makes sense. That's it from me, I will jump back in queue, thanks again guys.

Okay, thank you.

Thanks Francesco.

Our next question comes from Tom Koetz [ph] with Treymel [ph] Partners. Please proceed.

Yes, hey good morning Mike, great numbers. I just had a question regarding Orchard Valley, so can you guys give us anymore color, I mean that seems to be growing very, very strongly in the last several quarters and just as that comes more into the forefront can you give us a little bit more I don’t know whatever you can provide as far as details, as far as how you see that progressing and how big of a component that can become, and what not?

Hey Tom, this is Jeffrey. So, we bought the Orchard Valley Harvest brand back in 2010 and at that point we started to see growth in the produce section of the grocery aisle and we believe that there was our opportunity to build a health and wellness type of snack nut brand. So when we brought the brand we relaunched it, cleaned up the packaging. It is our non-preservative, clean ingredient non-GMO brand and we just continue to see further strength in that category for consumption of that product line. So we are in produce now, we are launched with Mini's is the big product line right now. So the goal and the opportunity is to expand the size of the packaging that we currently do in Orchard Valley Harvest to a bigger bag and get more distribution with that bigger bag. Right now it is two ounce bag is our average size both individual and multipacks. We are also seeing interest outside of the produce category for that product line because it is a clean ingredient act and there is not a lot of snacking nut programs that have the cost that we can put on our packaging and so we are seeing interest in other areas of both grocery and alternative markets for that brand. So very excited about the opportunities for growth there.

Okay, and so -- I mean is this tremendous, 50% growth that you have seen quarter-over-quarter for last several quarters attributable to just greater distributions, greater number of stores, or is it just more of these packages in your existing store base?

Sure, so it is a combination of velocity. So the current distribution we have we are getting more returns per week for that specific pack but also a lot of it is new distribution as well. So it is a combination of both.

And do you see room to continue to grow the distribution the way you have grown it the last year?

We do. Yes, we have got great success stories now with a lot of retailers and again it is trying to get bigger sizes into the categories where we currently had distribution and continue to expand distribution. Also looking at adding to the portfolio, it is a pretty simple product line right now, so R&D teams are working at looking at some new items for that brand as well.

Okay, great. One last question, can you remind me on private label, what is the impact if any positive or negative from the Safeway and Albertsons merger?

They are still going through the process of looking at all their categories so it is hard to say exactly what that impact will be at this point. But I couldn’t give guidance on that right because we just don’t know.

Okay, thanks a lot.

Hey Tom, thank you.

We have no further questions. I will now turn the call back over to Mr. Mike Valentine, Chief Financial Officer for any closing remarks. Please proceed sir.

Thank you everyone again for your interest in JBSS. This concludes our call for the third quarter operating results for fiscal 2015.

This concludes today's conference. You may now disconnect. Have a great day everyone.