Good afternoon and welcome to the Ollie’s Bargain Outlet Conference Call to discuss Fiscal 2015 Third Quarter Financial Results. At this time, all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from OLLI's. And as a reminder this call is being recorded. On the call today from Management are Mark Butler, Chairman, President and Chief Executive Officer and John Swygert, Executive Vice President and Chief Financial Officer. I will turn the call over to Mr. Swygert to get started. Please go ahead sir.

Thank you and hello everyone. Mark will review our business, and I will discuss the third quarter financial results and our outlook for fiscal 2015. We will then open the call for questions. A press release covering the Company’s third quarter fiscal 2015 results was issued this afternoon and a copy of that press release can be found in the Investor Relations section of the Company’s website. I also want to remind everyone that management’s remarks on this call may contain certain forward-looking statements including predictions, expectations, estimates or other information that might be considered forward-looking and that the actual results could differ materially from those projected on today’s call. Any such items including targeted results for 2015 and details relating to our future performance should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these forward-looking statements, which speak only as of today and the Company undertakes no obligation to update them for any new information or future events. Factors that might affect future results are discussed in our SEC filings and we encourage you to review these filings including the Company’s initial public offering perspective dated July 15, 2015 for a more detailed description of these factors. Please also note that we’ll be referring to certain non-GAAP financial measures on today’s call such as EBITDA, adjusted EBITDA, adjusted operating income and adjusted net income that we believe may be important to investors as metrics to assess the operating performance of our business. Reconciliation of these non-GAAP financial measures to GAAP financial measures are included in our earnings release. I will now turn the call over to Mark.

Thanks John and good afternoon everyone. We had a very strong quarter and we are pleased with our results. All of our key metrics, comparable store sales, gross margin EBITDA and net income increased nicely and we’re seeing some very positive trends across the business. As we indicated on our last earnings call and throughout the IPA or road show, our business is really all about the merchandise and providing great deals on name brand merchandise that we sell at drastically reduced prices. We call it good stuff cheap. The experience of our buying team, combined with our growth and increased visibility in the marketplace is leading to better access to merchandise. It’s allowing our buying team to be even more selective and offer our customers even better bargain on great brands every time they step in one of our stores. It’s making our stores more of a destination for our existing customers, and we believe we’re attracting new customers to our stores every day. Whether it’s North Carolina, Kentucky, Georgia, Connecticut, Alabama or Pennsylvania, our stores are delivering consistent results that are becoming more relevant in the markets we serve. The customers vote each and every day with their wallet and we believe we’re gaining market share as we continue to grow. Comparable store sales increased 3.2% and were driven by increases in both transactions and average basket. Once again, the strength in our comps were broad based, with the majority of our 21 departments delivering a comparable store sales increase in the mid-single-digits or better. Some of our top performing departments were food, pets, clothing, electronics and accessories and books and stationary. Coffee continued to perform well and we experienced strong results in the food category during the quarter. Name brand close out products remain the core of…

Thanks Mark. As Mark indicated, the business continued to perform well in the third quarter and we are very pleased with our results. Net sales increased 16.4% to $174.6 million. Comparable store sales increased 3.2% compared to a 6.2% increase in the third quarter of last year. the increases in comparable store sales was driven by an increase in number of transactions and average basket for the quarter. On the merchandise side, the comp sales increase was driven by strong sales in our food, electronics and accessory business, books and stationary, clothing and pet departments. During the third quarter, we opened 13 new stores in eight different states. We ended the quarter with 200 stores in 17 states versus 173 stores in 16 states last year, an increase of 15.6%. Our new stores continue to perform in line or above our expectations, and we remain pleased with new store productivity. Gross profit increased 17.3% to $69.9 million and gross margin increased 33 basis points to 40.1%. The increased gross margin was driven by higher merchandise margins, partially offset by increased transportation and distribution center cost. As previously discussed, the increased transportation and distribution cost were primarily related to the opening of the second distribution center facility in April 2014. The increase of these costs were slightly favorable to our expectations for the quarter, though we believe it will become less of an impact on gross margins as we move forward. Selling, general and administrative expenses increased 17.5% to $51.8 million during the quarter. The majority of the increase or approximately $6 million was related to higher selling expenses related to the 27 new stores opened during the fiscal year and increased sales volume. The remaining increase in SG&A was primarily related to the Company’s overall G&A growth and expenses related…

[Operator Instructions] Our first question comes from the line of Matthew Boss from JPMorgan. Your question please.

So can you talk to closeout availability that you're seeing today; any particular categories of opportunity out there, particularly versus what you've seen in the past? And then larger picture, with all the retail disruption out there, what's the best way to think about the lead times that you have for product coming to you today, things you're negotiating and then when -- from that point until the customer actually sees it on the floor?

Yes, Matt, thank you. This is Mark. What we are seeing is just the phone ringing more every day. We're seeing the ability for us to be a little bit more pickier on the goods and the offerings. We're seeing that we're able to buy a little bit better. We're seeing that we're little bit more meaningful as we've continued to scale and things continue to grow. We're able to take bigger, larger deals. We're able to protect sometimes the proprietary rights of that manufacturer by -- maybe he doesn’t want the product or she doesn't want the product in a particular region. We can regionalize it. So because of our scale we're able to do that. As far as the future visibility, we certainly are buying for spring and summer now, but that's probably the extent of it. We're obviously buying seasonal products, things that would go in the pool, the things that would go along, that kind of things now. But it's not much longer than a quarter or two in advance that we're generally purchasing, although the toy merchant is entertaining toy opportunities now. That could happen for next year.

And then just a follow-up, can you talk to your performance of Coffee lapping the tougher competitors out there today and more broadly, what you saw in November. And then Mark, what do you, how do you like your odds of posting a positive comp in the fourth quarter against that tough compare?

Well, the coffee, we're seeing a nice increase in coffee, in food and in more than half of our departments. So we're very pleased with the performance. It was very broad based and food was very strong. The accessory components in the electronic department was very, very strong. Pets continues to be strong. We're most proud of the margin that we're able to attain. As far as where we are and how we're doing, we feel good about where we're at. We think that -- we've got a long way to go. Sunday night is a big night for us. We think the weather patterns are looking pretty good, but we're feeling pretty good, we had a nice Black Friday weekend and we feel good about where we're at.

Thank you. Our next question comes from the line of Dan Binder from Jefferies. Your question please?

My question was around, Ollie's Army. Just curious what kind of progress you made in terms of growing the base this quarter, what percentage of sales it represented, and how it's being received in new stores?

Sure, Dan. This is John. With regards to the Ollie's Army membership, the Ollie's Army membership continues to grow as it has in the past. We've been averaging a CAGR of over 30% a year since 2006 and that continues to be the trend we're seeing. Obviously the newer stores obviously have a lot more opportunity from a signup perspective as its new members coming in each and every day. We are seeing very nice responses from the Ollie's Army membership. The Ollie's Army membership is real close to 60% of our overall business right now. Frequency continues to be the same. They continue to spend significantly more than non-Ollie's Army members. So the trend has been very, very consistent and we've seen very little change in that as we continue to expand to new markets.

And I think you said you saw a comp increase in over half of your departments. I was just curious and in areas that may have been on the weaker side, any particular reason, anything you're doing to correct that?

I'm not sure it's a matter of correction because I can't control the weather, but in our housewares department, we had some product that would have been a little bit more seasonally oriented, that would not sell as well in warm weather, and also deal related issues where we had a big deal in the housewares department that we were up against this year. But I candidly wouldn't say it's that something that we need to correct. I feel good about where we're at.

And then last item for you if you could, you mentioned that traffic and ticket were both strong. I was just curious in terms of the cadence of the quarter, how things -- I think the comparison has got difficult through the quarter. Is that more or less the way the comps performed as well?

Dan, the comps performed pretty well throughout the entire quarter, but they did see a little pressure in the month of October, but more related to the weather side of the business, that the transaction and the basket size have performed both very positively for the quarter, and a little bit heavier on the transaction side than the basket.

Thank you. Our next question comes from the line of Curtis Nagle from Bank of America Merrill Lynch. Your question please?

So just coming back to some of the points that Mark touched on, just curious if you guys are seeing any more deals come in, I guess specifically related to the holiday, given what is looking like a pretty tough season for a lot of retailers out there?

No I don't think that's us. That's not our business. We're now that I think about your question a little deeper, could we be seeing some more offerings because maybe perhaps somebody's not doing quite as well; the phone is ringing and it's ringing a lot more and I think it has more to do with the Company visibility and our ability to take it, but I don't think it's related. That could -- you know what, it could ring a lot more come January and February if manufacturers are stuck with a lot of goods. So I think that would be a better way of answering your question.

Thank you. Our next question comes from the line of Brad Thomas from KeyBanc. Your question please.

I wanted to ask about gross margin and the improvement in merchandize margin and may be you said a little bit more color on what was behind that and maybe the sustainability of that going forward and for how much -- perhaps the magnitude to which you might be able to capitalize on the better inventory availability as we look ahead?

Sure Brad. This is John. With regards to the overall gross margin improvement, we had about a 33 basis point improvement in the gross margin compared to last year for the same quarter. About 80 bps came out of our overall merchandise margin side, and that’s kind of where we start to taking Q2. We’re seeing a lot more opportunistic buys come across the table. We’re actually being able to be a little more selective and get a little bit better margin on the buy side. Obviously part of this has been offset by our increased distribution transportation costs with the startup of the new DC, which was about 57 basis points unfavorable quarter-to-quarter, but definitely a little bit better than we had expected from our current estimate, from a perspective leverage and expense. With regards to the overall future of the margin, I would not expect to see a real expansion in the margins. We're up [indiscernible] right now we're being able to take advantage of it to offset some of our increased distribution expenses, but we would hopefully as we get this a little bit more in line with our historicals, we would see the ability to pass on some better savings or customers as well to leverage our margins and get back to the 40% overall gross margin, unlike we have historically.

That’s very helpful. Thank you, John. And then on the outlook for new stores. Could you give us your latest thoughts on what the cadence of openings may look like next year and perhaps when you’ll start to open those Florida stores?

Brad this is John again. With regards to the 2016 outlook, we’re not giving any real guidance quite yet on 2016. We plan to do that when we report Q4 results. But we would expect to see a comparable cadence to what we have done historically. You would probably expect to see our store growth in the mid-teens as we’ve done historically as well. We would say you’re going to be somewhere around 30 stores, give or take couple of either direction for 2016, but we have not given the real guidance yet on that.

Thank you. [Operator Instructions] Our next question comes from the line of Edward Kelly from Credit Suisse. Your question please.

Hi guys, it’s actually Jude for Ed. I wanted to ask about just kind of the consumer overall. Anything you may see changing, maybe in a low gas price environment, any impact maybe from delayed winter weather that you’re seeing?

Jude, this is Mark. I think John and I have been of the opinion that the gas prices were in the same neck of the woods last year as they were this year. And by the way last year was pretty good. So we feel good about what’s happening. I feel and I’m bullish that America loves a bargain. I think more people are coming into our stores or giving us a crack. They’re liking what they’re getting and we’re saying thanks and they’re coming back in. We’re coupling what I think is a good shopping experience with a really good product assortment offering, and we’re able to get -- sell them and offer main brands at really reduced prices and they’re liking it. So we’re feeling really good about where we're at.

Okay, good. And kind of the winter weather coming later than people might have expected, does that change anything in your buying patterns or maybe what kind of goods you are rolling out that you may have had in warehouses?

Yes. As was previously -- that perhaps could come through, if manufactures might have, and if there is any listening, we'll entertain the calls. But manufactures might have product that they might be stuck with because of seasonally related weather patterns, and we’re generally buying out of season. So with the warm weather at least in the Middle Atlantic State, which is primarily where we’re at, we might see some again after Christmas January, February, where we might be offered. And again we’re not really in the clothing business. So I’m not really talking about jackets and stuff. But any weather related type items. For instance, it hasn’t snowed at all here, but perhaps somebody might have a lot of snow shovels, but we don’t get a lot of snow; that kind of example.

Thank you. Our next question comes from the line of Peter Keith from Piper Jaffray. Your question please.

Mark, it sounds like you’re pretty happy with consistency across the store. I guess -- are you seeing abnormal consistency at this point, or is this typically how the business has run on a historic basis?

Well, I think all -- thanks Peter. I think all boats are going up in the harbor. I think we’re see a more people come into the stores. I think we’re able to excite more people with the product offering and once we get them in, and they like though, and they pick-up the one-time to buy, I think they’re picking up more items or coming back in more often. But I think what we’re most excited about is the consistency across all of the departments, how it's not just one that’s driving sales as perhaps it could have been in the last year or two. We’re seeing -- more than half of our departments really, really performed well. So that generally just means that the consumer is coming in and shopping the entire store and our offerings are strong the bargains are good, and we’re seeing it really across the Board.

Okay, great. You talked a little bit about the warm weather. I know you don’t have a huge exposure there, but you guys do sell some outerwear jackets and since more recently, a bunch of heaters. Do you reach a point at the end of the season that you would have to start marketing some of that stuff down, or that’s pack away inventory to carry over to next year?

Yes, that’s an interesting question and certainly we could, would consider modest markdowns; but the way I've always looked at it is we're probably only about six or nine weeks away from buying it again for next year. So if the product is spot on and maybe it was just a little bit warmer weather and might I have a few extra heaters? I might. But that doesn’t mean we wouldn’t look at perhaps a markdown but I don’t think that it would have a tangible effect on any of our results for the business other than trying to motivate the consumer. But it wouldn’t be a big part of it.

Okay. Lastly for me, just with the -- I guess there was a question around wage inflation. I know you guys have a -- I think it’s a 20% discount to employees but I guess, how can we think about the wage pressure for your store associates going into next year?

Peter this is John. With regards to wage pressures, we have looked at obviously the changes that a couple of other retailers have made. We to-date have not had any pressures on hiring. We believe that our wages are competitive with what’s in the marketplace. Our benefits are very competitive and our associates like working at our Company. So with regards to any potential wage pressures we might see in the future from a hiring perspective, we have looked at the impact of going to the $9 per hour rate. That impact on our business would be very, very immaterial, and something that we would be able to manage through. If and when the wage impacts were to actually go to a $10 rate on overall basis, that would cause a little bit more pain from our perspective. We don’t see that as a 2016 concern that we need to deal with today and I think we'll be able to navigate through that without any disruption in our business.

[Operator Instructions] Our next question comes from the line of Scot Ciccarelli from RBC Capital Markets. Your question please.

Hey guys Scot Ciccarelli. So John, based on the full year guidance that you just provided as well as the third quarter results, have you guys changed your 4Q expectations at all? Because it seems pretty consistent with kind of prior expectations.

Scot, to-date we have not changed our prior Q4 guidance. We are basically holding what we have guided previously with the comps being very slightly negative for the quarter, and we just feel that’s a prudent thing to do with the amount of business left to do in the fourth quarter. While we feel the trends are moving in the right direction and we are happy with business. We just want to be very appropriately conservative here.

Got it. So good momentum, but it let’s be smart about the conservatism. That makes sense. Now specific question on coffee. Is the fourth quarter of this year where coffee starts to pop out just from a comparison standpoint for comps. And on the flip side, is there even the potential to take it the other way where you actually expand that category, either from a footage perspective or from possibly an expansion beyond the existing brand?

Well, to the merchandising question, we're always looking and expanding our opportunities and just most recently did even more premium brand from our private label maker, and testing to see that -- how that would perform. But it’s very, very early. So we're also in -- in the same vein it’s hot chocolate and cappuccino and all of that, which we had last year as well. But we certainly feel as though we have a deeper stock position on that this year than we did last year. But I'm not quite sure it’s going to -- other than -- look I can tell you Scot the customers are -- they are tasting it, they are liking it and they are coming back in and they're buying it. So it’s a premium brand that they really like to taste and I'm happy to have it.

Scot it’s John. With regards to the overall coffee is where we're trying to not really given to the specifics and details about the overall coffee as we move forward, but it is performing very well. It’s lapping its own numbers from last year, which is the first year we had it and we're very comfortable where we sit today and we believe that this trend can continue and we believe we have a nice loyal following of our brand of coffee we sell in our stores.

Thank you. This does conclude the question-and-answer session of today’s program. I would like to hand the program back to management for any further remarks.

Okay, thank you very much everyone. We are pleased with our third quarter results and the trends in the business thus far this holiday season. We look forward to speaking to you again on our fourth quarter and year end call in late March or early April. Thank you very much and have a happy holiday.

Thank you ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.