Good day and welcome to the Limoneira First Quarter Fiscal 2017 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. John Mills of ICR. Please go ahead, sir.

Good afternoon everyone, and thank you for joining us for Limoneira’s first quarter fiscal year 2017 conference call. On the call today are Harold Edwards, President and Chief Executive Officer; and Joe Rumley, Chief Financial Officer. By now, everyone should have access to the first quarter fiscal year 2017 earnings release, which went out today at approximately 4:00 P.M. Eastern Time. If you have not had a chance to view the release, it’s available on the Investor Relations portion of the Company’s website at limoneira.com. This call is being webcast and a replay will be available on the Limoneira’s website as well. Before we begin, we would like to remind everyone that the prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the Company’s control and could cause its future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks detailed in the Company’s 10-Qs and 10-Ks filed with the SEC and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether a result of new information, future events or otherwise. Please note that during today’s call, we will be discussing non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding about Limoneira’s ongoing results, particularly when comparing underlying results from period to period. We have provided as much detail as possible on any items that are discussed on an adjusted basis. Also within the Company’s earnings release and in today’s prepared remarks, we include EBITDA, which is a non-GAAP financial measure. A reconciliation of EBITDA to the most directly comparable GAAP financial measures is included in the Company's 10-Q and 10-K, and press release which has been posted to its website. And with that, it's my pleasure to turn the call over to the Company's President and CEO, Mr. Harold Edwards.

Thanks John and good afternoon everyone, thank you for joining us. On today's call, I will begin with a brief overview of our financial results for the first quarter of 2017 and provide an update on our progress across all our business areas. Joe will review the financial results in more detail and I will then discuss our positive increase to guidance for fiscal year 2017 and then open up the call for your questions. I'm pleased to announce that fiscal 2017 is off to a strong start driven by a number of factors, which we will discuss today. In the first quarter, revenue increased 12% to $28.1 million, primarily due to higher volume of fresh lemon salt versus the prior-year period. Our operating loss for the first quarter improved to $3.2 million compared to a $6.3 million loss in the prior-year period. Our EBITDA was negative $1.3 million in the first quarter of fiscal year 2017 compared to negative $4.7 million in the same period of fiscal year 2016. As a reminder the first quarter is a seasonally softer quarter for us, and our second and third quarters are usually much stronger than our first and fourth quarter, due to the timing of our crop harvests. As we look towards the remainder for this fiscal year, we believe that Limoneira is well positioned to achieve a better than expected year in our agribusiness division due to improved overall lemon revenue and an improved pricing outlook for avocados. I’d like to - I now like to provide an update on our business segments. Starting with our agribusiness, over the past few years we have made several strategic investments that are beginning to drive our top and bottom line growth. We've expanded our customer base to over 170 customers and increased…

Thank you Harold, good afternoon everyone. I will discuss some of the details of our financial results for the first quarter ended January 31, 2017. Revenue was $28.1 million, an increase of 12% compared to first quarter of 2016. Agribusiness revenue was $26.8 million compared to $23.6 million in the first quarter last year, primarily due to stronger lemon sales. Rental operations revenue was $1.3 million in the first quarter of fiscal year 2017, which compared to $1.4 million in last year's first quarter. There were no real estate development revenues in the first quarter as fiscal year ‘17 or ‘16. Agribusiness revenue for the first quarter of fiscal year 2017 includes $26 million in lemon sales compared to $21.9 million of lemon sales during the same period of fiscal year of 2016, with the increase primarily the result of higher volume of fresh lemons. Approximately 909,000 cartons of fresh lemons were sold during the first quarter of fiscal year 2017 at $23.10, average price per carton compared to approximately 753,000 cartons sold at $23.46, average price per carton during the first quarter of fiscal year 2016. As anticipated, due to the seasonality of the avocado crop, there was no avocado revenue in the first quarter of fiscal year 2017 compared to minimal revenues in last year's first quarter. We recognized $500,000 of orange revenue in the first quarter of fiscal year 2017 compared to 1 million in the same period of 2016. Fiscal quarter 2017 revenue was impacted by increased rainfall which curtailed the available harvest days in January. Citrus, specialty citrus and other crop revenues were similarly impacted by the rainfall and delayed harvest resulting in revenues of $300,000 in the first quarter of fiscal year 2017 compared to $700,000 in the first quarter of fiscal year 2016.…

Thanks, Joe. As I mentioned at the beginning of our call, we are raising our earnings guidance for fiscal year 2017 based on an estimated improvement in total lemon revenues and an improved pricing outlook for avocados. We continue to expect to sell between 3.1 million and 3.5 million cartons of fresh lemons at an average price per carton of approximately $23 per carton. However, we anticipates total lemon revenues, which includes sales of fresh cartons, lemon by-products and shipping and handling revenue to be higher than previously estimated. In addition, we continue to expect to sell approximately 8.5 million to 9 million pounds of avocados, but currently estimate an average price per pound of $1compared to previous expectations of $0.80 per pound. These elements should translate into higher than previously expected operating income, EBITDA and earnings per share for fiscal year 2017 in our initial forecast. We expect earnings per diluted share to be in the range of $0.48 to $0.52 per share compared to our previous guidance range of $0.38 to $0.42 per diluted share. We estimate operating income to be in the range of $14.4 million to $14.9 million compared to our previous estimate of $11.4 million to $11.9 million. We anticipate EBITDA to be in the range of $21.5 million to $22 million compared to our previous estimate of $18.3 million to $18.8 million. The operating results of Pan de Azucar are included in our previously revised earnings estimates. In addition, our estimates do not include any potential revenue from the harvest at Limoneira project or other potential asset sales. We expect to begin development grading on the project in the next few months and lot sales are estimated to begin near the end of calendar year 2017. As you know, our quarterly earnings are typically very considerably quarter-to-quarter due to crop harvest timing and production. Regarding the cadence of how we expect this year’s quarterly earnings to play out, obviously, our first quarter was much stronger than last year and we expect the second quarter to be better than last year also. The third quarter to be similar to last year, excluding last year’s gain on the sale of Calavo shares and the fourth quarter slightly softer than last year. As we are well positioned to capitalize on opportunities we've been cultivating over the past few years, we continue to look for additional opportunities that lie ahead. And with that, I'd like to now open the call up to your questions. Operator?

[Operator Instructions] And we’ll take our first question from Aaron Steele with Feltl and Company. Please go ahead.

Hi, guys. I was hoping you could give us an update as to what you're seeing on the trees right now in San Joaquin and how are those volumes looking relative to last year?

So as it relates to lemons, the lemon crop is comparable to last year and we think the timing should be comparable to last year as well. As it relates to oranges, we believe that the size of the orange crop is a little bigger than last year as well as our specialty citrus and so we expect that the performance of our oranges and our specialties should be slightly better than last year. So we believe that despite the delayed harvesting that was caused by the recent range that we’ll actually wind up in a much better balance between the amount of product that we have and the pricing which we receive for lemons, oranges and specialty citrus.

All right. Excellent. And then can you give us an update on the acreage you expect to become producing this year? I know you have around 200 acres of lemons, but I was just wondering if there was any other acreage out there that will become producing this year.

2017 is pretty close to status quo from last year. You'll begin to see the young non-bearing acreage begin to kick in, in a material way next year. And I think next year includes 700 new acres of production, 500 acres of new production next year.

Okay. And then maybe just one more, if you could give us an update, maybe what you're seeing from Washington, given the temporary stay that was imposed on the import of lemons from Argentina, any color kind of what is happening there and what we can expect maybe at the beginning of April here?

On the first day of President Trump's presidency, he actually pushed a re-evaluation of the ruling to allow Argentine lemons to come into the United States and called for a 60-day review period. We're still under that period today and based on that action and what we foresee in the coming weeks and months, our guess is that Argentine lemons most likely will continue to be evaluated for their safety and the phytosanitary impacts of bringing that fruit into the US. So my guess is that Argentine lemons will not be allowed into the US at least for this coming year and most likely, if they're allowed to eventually come in, that would become a 2018 event, but that’s purely speculative at this point.

[Operator Instructions] Our following question comes from Eric Larson with Buckingham Research Group. Please go ahead.

Yeah. Thanks, everyone. How are you this afternoon? Just a couple of follow-up questions, I actually got on a little bit late. Can you talk a little bit about; your lemon sales were really good in the quarter, what was your realization in the quarter. Is the quality of your fruit better year-over-year as well Harold?

So net-net, we actually did a better job with the mix we believe than last year. The amount of standards that we sold this in the first quarter was actually about comparable to the year before. The pricing year-on-year was pretty close to last year. So net-net, we ended up selling more units and we were very pleased with the performance of the packing house. I'm not sure whether you caught that part of the call, but the packing house is performing at an exceeds expectation level right now and our sales team is doing a tremendous job, selling the value of the pack fruit right now and helping us achieve greater revenues on the various charges that we're able to charge for our marketing and sales services.

Okay. And is that what the difference is the performance of the packing house that allowed you in your guidance to talk about higher revenue number despite the fact you're still looking for the same number of cases and is the same pricing versus the last quarter?

Yeah. I think to summarize all of that, our margins are greater coming out of our packing operations than we anticipated and it's driven by performance to plan on our cost assumptions with greater revenues being achieved because of some of the charges that we're able to initiate and to achieve and so our margins are coming in stronger.

Okay. That was the curious thing in your guidance question. So it’s really performance of your packing plant which is really the key thing that’s allowing you to get that revenue?

I think that’s fair. But it's really the combination of the performance of the packing from an efficiency standpoint, but also the performance of our sales and marketing teams that are allowing us to achieve those revenues.

Got it. Okay. And then obviously, we've seen very strong avocado pricing and so you did raise your guidance what you think will be for the year? Will it be - again I think and you talk about the cadence of your EPS, you said that Q2 will be a little bit better, but are you anticipating that it will be mostly third quarter avocado harvest and sales event again this year? Is that how we should interpret that?

I think that’s how we’ve model it, Eric, although, I think you'll see us going after some volume sooner. The price in the marketplace is very, very strong right now. So you will see higher revenues from avocados in the second quarter than you did a year ago. And, but I think the cadence of most of it coming in the third quarter is probably correct.

Okay. And then just the final comment here on lemons, when you look at, you were, I think you’re 3.1 to 3.5 volume number for the year included an assumption for third-party fruit. Can you give us a little bit of an update where you sit on that, could that be better than you think? I know there was something that you were gradually trying to pursue as you got the efficiencies of the plant. I’m just curious where you stand on implementing more third-party fruit in your operations?

Yeah. So we challenged our team to sign up another 0.5 million cartons last year for running through our system this year and at this time, we believe we've achieved those relationships and that we'll see that fruit running through. So, as you think about where we were last year going at 2.9 million cartons and going to the high end of our guidance range to 3.4 million cartons, 3.5 million cartons, the majority of that is outside growers fruit, which as you know has lower margin implications than if it was our own fruit. However, it is very, very valuable for us, given the enhanced margins that we're realizing in our new packing house.

Yeah. I figured that that was probably the case, but I thought I'd ask anyway. And then Harold, you probably made a few comments early on about your recent acquisition, 210 acres of production and I think you said that that will be accretive relatively soon. Could you just again and I hate to have you repeat, this is something you may have already said, but we literally didn't get on until you were going through your revised outlook?

Yeah. So I'll turn it over to Joe because Joe actually has the pro forma in front of him.

First off, Eric, just to understand, it is already included in our guidance. So it is accretive in that last year, its fiscal year, it made $450,000 and we expect to be somewhat similar. I think we modeled it slightly less just to be conservative for the first year handling the fruit in the ranch and all, but we've got that factored into our earnings guidance and it will be accretive in that, we bought the business, we bought the ranch and it’s going to - we expect it to make money first year. Its harvest season should start in May so you’ll start to see some of that come through around that time frame in the end of - beginning of the third quarter.

It appears there are no further questions at this time. Mr. Harold, I would like to turn the conference back over to you for any additional or closing remarks.

Thank you very much for your questions and interest in Limoneira. We will be at the ROTH investor conference tomorrow. So I hope to see many of you there and look forward to updating you again in June on our second quarter call. Thank you again and have a great day.

That does conclude today's presentation. Thank you for your participation. You may now disconnect.