Good day, everyone, and welcome to Fresh Del Monte Produce's Third Quarter 2018 Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes.

For opening remarks and introductions, I would like to turn today's call over to the Assistant Vice President of Investor Relations with Fresh Del Monte Produce, Christine Cannella. Please go ahead, Ms. Cannella..

Thank you, Stephanie. Good morning, everyone, and thank you for joining our third quarter 2018 conference call. As Stephanie mentioned, I'm Christine Cannella, Assistant Vice President of Investor Relations with Fresh Del Monte Produce.

Joining me in today's discussion are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Richard Contreras, Senior Vice President and Chief Financial Officer. I hope that you had a chance to review the press release that was issued earlier this morning via Business Wire.

You may also visit the company's website at freshdelmonte.com for a copy of today's release, as well as to register for future distribution. This conference call is being webcast live in our website and will be available for replay after this call.

Please note that our press release includes reconciliations of non-GAAP financial measures we mention today to their corresponding GAAP measures.

I would like to remind you that much of the information we will be speaking to today, including the answers we give in response to your questions, may include forward-looking statements within the provisions of the federal securities safe harbor laws.

We ask that you review the forward-looking statements information included in the press release we issued this morning and in the company's most recent filings with the SEC. With that I am pleased to turn today's call over to Mohammad..

Thank you, Christine, and good morning, everyone, and thank you for joining us for our earnings call. The third quarter was highlighted by increased sales in our fresh-cut, non-tropical prepared meals and vegetable product lines, driving high volumes through our worldwide distribution and fresh cut centers.

We expanded our product lines with the recent launch of the Monte Honeyglow Pineapple. Limited quantities are being rolled out in Europe and North America. We also deputed a variety of new healthy convenient Nourish Bowl targeting breakfast consumers.

These additional contributions to our diversified portfolio product extents our value added capabilities and allows us to further penetrate distributional channels, strengthening the competitive advantages that have long set Fresh Del Monte apart in the marketplace.

While we experience market improvements from the previously addressed challenges earlier in the year that affected our industry, our profitability during the third quarter continue to be adversely affected by increased fuel and production costs.

We took decisive action to reduce production cost in particular those related to banana and tomato production to reduce our expenses and become more efficient. We made decision to stop our domestic tomato operations replacing our Florida and Virginia production with new grower partnerships in Mexico.

In summary, we continued to be as confident as ever in our component future. We are building momentum in our higher margin value-added business and we are intensely focused on leveraging new opportunities to fortify our leadership positions and drive profitability and shareholder value over the long term.

At this time, I would like to turn the call over to Richard to discuss our financial results in more detail.

Richard?.

Thank you, Mohammad. For the third quarter of 2018, on an adjusted basis. We reported a loss for diluted share of $0.14 compared with earnings per diluted share of $0.24 in 2017. Net sales increased $117 million. Gross profit was $53 million compared with $59 million in 2017. Operating income was $3 million compared with $17.

And we've reported a net loss of $7 million compared with net income of $12 million in the third quarter of 2017. Onto our business segments, in our banana business segment, net sales in the third quarter of 2018 decreased $12 million to $397 million compared with the prior year.

The decrease in banana net sales was primarily due to lower sales volume, partially offset by higher selling prices in the Middle East, Europe and North America. Overall, volume was 6% lower than last year's third quarter. Worldwide pricing increased $0.40 per box to $13.92.

Total worldwide banana unit cost increased 2%, primarily due to higher ocean freight costs and gross profit was $10 million compared with $6 million in the third quarter of 2017. In our other fresh produce business segment for the third quarter, net sales were $585 million compared with $468 million in the prior year.

Gross profit was $38 million compared with $44 million in the third quarter of 2017. In our gold pineapple category, net sales decreased $7 million to $112 million during the quarter, primarily due to lower selling prices. Volume was in line with the prior year period. Unit pricing was 6% lower and unit cost was 9% higher.

In our friend cut category, net sales increased $96 million to $255 million during the quarter. The increase was primarily the result of increased sales volume in all of our regions, driven by increased demand and the acquisition of Mann Packing. Unit pricing decreased 17% and unit cost was 17% lower.

In our avocado category, net sales decreased $6 million to $85 million. Volume increased 37%, pricing was 32% and unit cost was 29% lower. In our non-tropical category, net sales increased to $41 million compared with $38 million last year. Volume was in line with the prior year. Pricing with 6% and unit cost was 3% lower.

In our prepared food segment, net sales were $87 million compared with $76 million in the prior year, principally due to the acquisition of Mann Packing. Gross profit was $5 million compared with $8 million in the prior year attributable to our traditional industrial and prepared pineapple categories.

As for cost for the third quarter, banana fruit cost which includes our own production and procurement from growers was in line with the prior year and represented 25% of our total cost of sales. Cotton cost increased 12% and represented 3% of our cost of sales. Bunker fuel cost per ton increased 43% and represented 2% of our total cost to sales.

And total ocean freight cost during the quarter which includes bunker fuel, third party charters, and fleet operating costs was 8% higher than the prior year and represented 8% of our total cost to sales.

Selling, general and administrative expenses for the third quarter were $49 million compared with $41 million in the third quarter of 2017, as a result of the acquisition of Mann Packing. The $8 million increase includes $4 million of amortization of intangibles assets related to this acquisition.

As to foreign currency, the foreign currency impact at the sales level for the third quarter was favorable by $2 million, and at the gross profit level, it was favorable by $5 million. During the third quarter, we repurchased approximately 512,000 shares for approximately $19.64 million.

Interest expense net for the third quarter was $7 million compared with $1 million in the last year, due to a higher average loan balance as a result of the acquisition along with higher interest rates. At the end of the quarter, our total debt was $630 million.

Income tax expense was $700,000 during the quarter compared with income tax expense of $4 million in the prior year, primarily due to the lower earnings. As for capital spending, we have spent $119 million on capital expenditures in the first nine months of 2018 and we expect to spend approximately $162 million in the full year 2018.

This concludes our financial review. We can now turn the call over to Q&A..

[Operator Instructions] There are no questions. At this time….

I would just like to thank everybody for joining us on this conference call and hope to talk to you on the next quarter. Thank you very much and have a good day..

Thank you. This concludes today's conference call. You may now disconnect..