Brokered Lemons and Other Lemon Sales Grew 76%
to $8.8 Million Compared to Prior Year and Company Achieved $5.4
Million in Farm Management Revenue in Third Quarter of Fiscal Year
2023
Company Successfully Capitalized on Water
Fallowing Conservation Program in Yuma, Arizona; Expects to Receive
Approximately $1.3 Million Annually from the Program
Company Achieved Avocado Volume Guidance and
Updates Lemon Volume Guidance for Fiscal Year 2023
Company Anticipates Year-Over-Year Pricing
Improvement in Fresh Lemons in Fourth Quarter of Fiscal Year
2023
Limoneira Company (the “Company” or “Limoneira”) (Nasdaq: LMNR),
a diversified citrus growing, packing, selling and marketing
company with related agribusiness activities and real estate
development operations, today reported financial results for the
third quarter ended July 31, 2023.
Management Comments
Harold Edwards, President and Chief Executive Officer of the
Company, stated, “The success of our strategic shift towards an
“asset-lighter” business model is evident in our third quarter
results with brokered lemons and other lemon sales growing 76%
year-over-year to $8.8 million and achieving farm management
revenue of $5.4 million. Additionally, we continue to make headway
monetizing water assets with the recently announced water fallowing
program in Yuma, Arizona for expected annual proceeds of $1.3
million. We anticipate the sale of our two remaining identified
non-strategic assets in the next nine months. Over the past year,
we have worked to identify and eliminate unproductive or
unprofitable parts of our business including the sale of
non-strategic assets, exiting farming operations in Cadiz and
terminating our long-term pension plan – all of which we expect to
dramatically improve our margins starting in fiscal year 2024.”
Mr. Edwards continued, “Our third quarter results were impacted
by lower lemon pricing and lower fresh utilization rates as a
result of the heavy rains in California throughout December until
May, which delayed a portion of our lemon harvest by two months and
led to an industry-wide pest issue that lowered the grade on
certain fruit. As a result, lemon pricing remained pressured
throughout the quarter. However, as of the beginning of August
lemon pricing has steadily been increasing for all grades and sizes
with prices up compared to the last few years and at the highest
level since 2018. We believe this positions us very well for
expected higher lemon pricing in fiscal year 2024.”
Fiscal Year 2023 Third Quarter Results
For the third quarter of fiscal year 2023, total net revenue was
$52.5 million, compared to total net revenue of $58.9 million in
the third quarter of the previous fiscal year. Agribusiness revenue
was $51.1 million, compared to $57.6 million in the third quarter
of last fiscal year. Other operations revenue was $1.4 million
compared to $1.3 million in the third quarter of fiscal year
2022.
Agribusiness revenue for the third quarter of fiscal year 2023
includes $24.2 million in fresh lemon sales, compared to $27.8
million of fresh lemon sales during the same period of fiscal year
2022. Approximately 1.4 million cartons of U.S. packed fresh lemons
were sold in aggregate during the third quarter of fiscal year 2023
at a $17.92 average price per carton, compared to approximately 1.5
million cartons sold at a $18.39 average price per carton during
the third quarter of fiscal year 2022. Brokered lemons and other
lemon sales were $8.8 million and $5.0 million, for the third
quarter of fiscal years 2023 and 2022, respectively.
The Company recognized $3.5 million of avocado revenue in the
third quarter of fiscal year 2023, compared to $12.6 million in the
same period last fiscal year. Approximately 2.8 million pounds of
avocados were sold in aggregate during the third quarter of fiscal
year 2023 at a $0.99 average price per pound, compared to
approximately 5.7 million pounds sold at a $2.21 average price per
pound during the third quarter of fiscal year 2022.
The Company recognized $1.3 million of orange revenue in the
third quarter of fiscal year 2023, compared to $3.7 million in the
same period of fiscal year 2022. Approximately 71,000 cartons of
oranges were sold during the third quarter of fiscal year 2023 at a
$18.17 average price per carton, compared to approximately 209,000
cartons sold at a $17.88 average price per carton during the third
quarter of fiscal year 2022. The decline in volume was primarily
due to the sale of the Northern Properties in the first quarter of
fiscal year 2023. Specialty citrus and other revenue was $1.9
million for the third quarter of fiscal year 2023, compared to $1.1
million in the same period of fiscal year 2022.
Total costs and expenses for the third quarter of fiscal year
2023 were $54.0 million, compared to $47.9 million in the third
quarter of last fiscal year. The increase of $6.1 million was
primarily due to increases in growing and packing costs, partially
offset by decreases in third-party grower and supplier costs and
depreciation and amortization.
Operating loss for the third quarter of fiscal year 2023 was
$1.5 million, compared to operating income of $11.1 million in the
third quarter of the previous fiscal year, primarily due to lower
avocado volume and pricing.
Net loss applicable to common stock, after preferred dividends,
for the third quarter of fiscal year 2023 was $1.3 million,
compared to net income applicable to common stock of $7.3 million
in the third quarter of fiscal year 2022. Net loss per diluted
share for the third quarter of fiscal year 2023 was $0.07, compared
to net income per diluted share of $0.40 for the same period of
fiscal year 2022.
Adjusted net income for diluted EPS in the third quarter of
fiscal year 2023 was $0.4 million or $0.02 per diluted share,
compared to the third quarter of fiscal year 2022 of $7.9 million
or $0.43 per diluted share, based on approximately 17.6 million and
18.3 million, respectively, adjusted weighted average diluted
common shares outstanding. A reconciliation of net (loss) income
attributable to Limoneira Company to adjusted net income (loss) for
diluted EPS is provided at the end of this release.
Adjusted EBITDA was $2.8 million in the third quarter of fiscal
year 2023, compared to $14.8 million in the same period of fiscal
year 2022. A reconciliation of net (loss) income attributable to
Limoneira Company to adjusted EBITDA is provided at the end of this
release.
Fiscal Year 2023 First Nine Months Results
For the nine months ended July 31, 2023, revenue was $138.5
million, compared to $144.9 million in the same period last fiscal
year. Operating income for the first nine months of fiscal year
2023 was $20.5 million, compared to operating income of $4.1
million in the same period last fiscal year. Net income applicable
to common stock was $12.5 million for the first nine months of
fiscal year 2023, compared to net income applicable to common stock
of $2.0 million in the same period last fiscal year. Net income per
diluted share for the first nine months of fiscal year 2023 was
$0.69, compared to a net income per diluted share of $0.11 in the
same period of fiscal year 2022.
For the first nine months of fiscal year 2023, adjusted net loss
for diluted EPS was $5.0 million compared to adjusted net income
for diluted EPS of $4.0 million for the same period in fiscal year
2022. In the first nine months of fiscal year 2023, adjusted net
loss per diluted share was $0.28 compared to adjusted net income
per diluted share of $0.23 for the same period in fiscal year 2022,
based on approximately 17.6 million and 17.5 million, respectively,
adjusted weighted average diluted common shares outstanding.
Balance Sheet and Liquidity
During the nine months ended July 31, 2023, net cash used in
operating activities was $12.6 million, compared to net cash
provided by operating activities of $10.9 million in the same
period of the prior fiscal year. Net cash provided by investing
activities was $92.4 million for the nine months ended July 31,
2023, compared to net cash used in investing activities of $5.3
million in the same period last fiscal year. For the nine months
ended July 31, 2023, net cash used in financing activities was
$69.6 million, compared to net cash used in financing activities of
$4.8 million in the prior fiscal year.
On January 31, 2023, the Company sold its Northern Properties,
which resulted in total net proceeds of $98.4 million. The proceeds
were used to pay down all of the Company’s domestic debt except the
AgWest Farm Credit $40.0 million non-revolving line of credit with
an interest rate that is fixed at 3.57% through July 1, 2025.
Long-term debt as of July 31, 2023, was $40.7 million, compared to
$104.1 million at the end of fiscal year 2022. Debt levels as of
July 31, 2023, less $11.0 million of cash on hand, resulted in a
net debt position of $30.2 million at quarter end.
Real Estate Development and Property Sales
The Company’s joint venture with The Lewis Group of Companies
(“Lewis”) for the residential development of its East Area I real
estate development project, named Harvest at Limoneira, is
currently expected to have approximately 1,500 total residential
units built and sold over the life of the project. At the end of
fiscal year 2022, the joint venture had closed the sales of lots
representing 586 residential units, thus concluding lot sales in
Phase 1 of the development.
In October 2022, the Company contributed 17 acres, known as the
East Area I retained property, to a newly formed development
entity, LLCB II, LLC, to potentially develop additional residential
units and sold a 50% interest to Lewis for approximately $7.9
million in net cash proceeds.
In July 2021, the Company entered into a non-binding letter of
intent to sell approximately 25 acres of its East Area II property
in five staged purchases to an investment company for the purpose
of constructing a medical campus consisting of medical office
buildings and an acute care hospital. Completion of the transaction
is subject to the execution of a purchase and sale agreement and
resolution of certain contingencies.
Updated Guidance
The Company’s food service business and industry logistics
continue to experience slowdown due to supply chain and
inflationary pressures on a global basis.
The Company now expects fresh lemon volumes to be in the range
of 4.7 million to 5.0 million cartons for fiscal year 2023,
compared to previous guidance of 5.0 million to 5.4 million
cartons. The Company achieved avocado volume of approximately 3.8
million pounds in fiscal year 2023 compared to previous guidance of
3.0 million to 4.0 million pounds.
The Company expects to receive total proceeds of $115 million
from Harvest at Limoneira, LLCB II and East Area II spread out over
seven fiscal years, with approximately $8 million received in
fiscal year 2022.
Harvest at Limoneira Cash Flow Projections
Fiscal Year
2022 Actual
2023
2024
2025
2026
2027
2028
Projected Distributions
$8 Million
$5 Million
$8 Million
$17 Million
$25 Million
$30 Million
$22 Million
The Company has 700 acres of non-bearing lemons and avocados
estimated to become full bearing over the next four to five years,
which the Company expects will enable strong organic growth in the
coming years. The Company also expects to have a steady increase in
third-party grower fruit. The foregoing describes organic growth
opportunities and does not include potential acquisition
opportunities for the Company in its highly fragmented
industry.
Conference Call Information
The Company will host a conference call to discuss its financial
results on September 7, 2023, at 1:30 pm Pacific Time (4:30 pm
Eastern Time). Investors interested in participating in the live
call can dial (877) 407-0789 from the U.S. International callers
can dial (201) 689-8562. A telephone replay will be available
approximately two hours after the call concludes and will be
available through September 21, 2023, by dialing (844) 512-2921
from the U.S., or (412) 317-6671 from international locations;
passcode is 13740482.
About Limoneira Company
Limoneira Company, a 130-year-old international agribusiness
headquartered in Santa Paula, California, has grown to become one
of the premier integrated agribusinesses in the world. Limoneira
(lē moñ âra) is a dedicated sustainability company with 11,100
acres of rich agricultural lands, real estate properties, and water
rights in California, Arizona, Chile and Argentina. The Company is
a leading producer of lemons, avocados and other crops that are
enjoyed throughout the world. For more about Limoneira Company,
visit www.limoneira.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are based on Limoneira’s
current expectations about future events and can be identified by
terms such as “expect,” “may,” “anticipate,” “intend,” “should be,”
“will be,” “is likely to,” “strive to,” and similar expressions
referring to future periods.
Limoneira believes the expectations reflected in the
forward-looking statements are reasonable but cannot guarantee
future results, level of activity, performance or achievements.
Actual results may differ materially from those expressed or
implied in the forward-looking statements. Therefore, Limoneira
cautions you against relying on any of these forward-looking
statements. Factors that may cause future outcomes to differ
materially from those foreseen in forward-looking statements
include, but are not limited to: success in executing the Company’s
business plans and strategies and managing the risks involved in
the foregoing; additional impacts from the current COVID-19
pandemic, changes in laws, regulations, rules, quotas, tariffs and
import laws; weather conditions that affect production,
transportation, storage, import and export of fresh product;
increased pressure from crop disease, insects and other pests;
disruption of water supplies or changes in water allocations;
disruption in the global supply chain; pricing and supply of raw
materials and products; market responses to industry volume
pressures; pricing and supply of energy; changes in interest and
currency exchange rates; availability of financing for land
development activities; political changes and economic crises;
international conflict; acts of terrorism; labor disruptions,
strikes or work stoppages; loss of important intellectual property
rights; inability to pay debt obligations; inability to engage in
certain transactions due to restrictive covenants in debt
instruments; government restrictions on land use; and market and
pricing risks due to concentrated ownership of stock. Other risks
and uncertainties include those that are described in Limoneira’s
SEC filings that are available on the SEC’s website at
http://www.sec.gov. Limoneira undertakes no obligation to
subsequently update or revise the forward-looking statements made
in this press release, except as required by law.
LIMONEIRA COMPANY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share data)
July 31, 2023
October 31, 2022
Assets
Current assets:
Cash
$
11,007
$
857
Accounts receivable, net
18,067
15,651
Cultural costs
2,618
8,643
Prepaid expenses and other current
assets
6,117
8,496
Receivables/other from related parties
5,229
3,888
Total current assets
43,038
37,535
Property, plant and equipment, net
162,836
222,628
Real estate development
9,967
9,706
Equity in investments
73,425
72,855
Goodwill
1,524
1,506
Intangible assets, net
6,996
7,317
Other assets
14,887
16,971
Total assets
$
312,673
$
368,518
Liabilities, Convertible Preferred
Stock and Stockholders' Equity
Current liabilities:
Accounts payable
$
8,985
$
10,663
Growers and suppliers payable
7,604
10,740
Accrued liabilities
8,392
11,060
Payables to related parties
4,704
4,860
Income taxes payable
7,175
219
Current portion of long-term debt
435
1,732
Total current liabilities
37,295
39,274
Long-term liabilities:
Long-term debt, less current portion
40,735
104,076
Deferred income taxes
22,363
23,497
Other long-term liabilities
6,079
9,807
Total liabilities
106,472
176,654
Commitments and contingencies
—
—
Series B Convertible Preferred Stock –
$100.00 par value (50,000 shares authorized: 14,790 shares issued
and outstanding at July 31, 2023 and October 31, 2022) (8.75%
coupon rate)
1,479
1,479
Series B-2 Convertible Preferred Stock –
$100.00 par value (10,000 shares authorized: 9,300 shares issued
and outstanding at July 31, 2023 and October 31, 2022) (4% dividend
rate on liquidation value of $1,000 per share)
9,331
9,331
Stockholders' equity:
Series A Junior Participating Preferred
Stock – $0.01 par value (20,000 shares authorized: zero issued or
outstanding at July 31, 2023 and October 31, 2022)
—
—
Common Stock – $0.01 par value (39,000,000
shares authorized: 18,229,887 and 17,935,292 shares issued and
17,978,910 and 17,684,315 shares outstanding at July 31, 2023 and
October 31, 2022, respectively)
180
177
Additional paid-in capital
167,925
165,169
Retained earnings
23,945
15,500
Accumulated other comprehensive loss
(4,496
)
(7,908
)
Treasury stock, at cost, 250,977 shares at
July 31, 2023 and October 31, 2022
(3,493
)
(3,493
)
Noncontrolling interest
11,330
11,609
Total stockholders' equity
195,391
181,054
Total liabilities, convertible preferred
stock and stockholders' equity
$
312,673
$
368,518
LIMONEIRA COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (in thousands, except per share data)
Three Months Ended
July 31,
Nine Months Ended
July 31,
2023
2022
2023
2022
Net revenues:
Agribusiness
$
51,092
$
57,594
$
134,296
$
141,046
Other operations
1,405
1,329
4,172
3,901
Total net revenues
52,497
58,923
138,468
144,947
Costs and expenses:
Agribusiness
46,845
41,463
126,275
120,306
Other operations
1,034
1,127
3,281
3,294
Loss (gain) on disposal of assets, net
1,545
242
(29,199
)
503
Gain on legal settlement
—
—
(2,269
)
—
Selling, general and administrative
4,622
5,031
19,907
16,756
Total costs and expenses
54,046
47,863
117,995
140,859
Operating (loss) income
(1,549
)
11,060
20,473
4,088
Other (expense) income:
Interest income
178
6
248
54
Interest expense, net of patronage
dividends
(241
)
(772
)
(417
)
(1,253
)
Equity in earnings of investments, net
199
331
514
681
Other (expense) income, net
(215
)
13
(2,627
)
106
Total other expense
(79
)
(422
)
(2,282
)
(412
)
(Loss) income before income tax benefit
(provision)
(1,628
)
10,638
18,191
3,676
Income tax benefit (provision)
378
(3,313
)
(5,537
)
(1,385
)
Net (loss) income
(1,250
)
7,325
12,654
2,291
Net loss attributable to noncontrolling
interest
87
52
201
129
Net (loss) income attributable to
Limoneira Company
(1,163
)
7,377
12,855
2,420
Preferred dividends
(125
)
(125
)
(376
)
(376
)
Net (loss) income applicable to common
stock
$
(1,288
)
$
7,252
$
12,479
$
2,044
Basic net (loss) income per common
share
$
(0.07
)
$
0.41
$
0.70
$
0.11
Diluted net (loss) income per common
share
$
(0.07
)
$
0.40
$
0.69
$
0.11
Weighted-average common shares
outstanding-basic
17,621
17,529
17,597
17,481
Weighted-average common shares
outstanding-diluted
17,621
18,334
18,381
17,481
Non-GAAP Financial Measures
Due to significant depreciable assets associated with the nature
of the Company's operations and interest costs associated with our
capital structure, management believes that earnings before
interest, income taxes, depreciation and amortization ("EBITDA")
and adjusted EBITDA, which excludes stock-based compensation, named
executive officer cash severance, pension settlement cost, loss
(gain) on disposal of assets, net, cash bonus related to the sale
of assets and gain on legal settlement are important measures to
evaluate our results of operations between periods on a more
comparable basis. Adjusted EBITDA in previous periods did not
exclude stock-based compensation which has now been excluded as
management believes this is a better representation of cash
generated by operations and is consistent with peer company
reporting. Adjusted EBITDA for prior periods has been restated to
conform to the current presentation. Such measurements are not
prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") and should not be construed as an alternative
to reported results determined in accordance with GAAP. The
non-GAAP information provided is unique to the Company and may not
be consistent with methodologies used by other companies.
EBITDA and adjusted EBITDA are summarized and reconciled to net
(loss) income attributable to Limoneira Company, which management
considers to be the most directly comparable financial measure
calculated and presented in accordance with GAAP, as follows (in
thousands):
Three Months Ended
July 31,
Nine Months Ended
July 31,
2023
2022
2023
2022
Net (loss) income attributable to
Limoneira Company
$
(1,163
)
$
7,377
$
12,855
$
2,420
Interest income
(178
)
(6
)
(248
)
(54
)
Interest expense, net of patronage
dividends
241
772
417
1,253
Income tax (benefit) provision
(378
)
3,313
5,537
1,385
Depreciation and amortization
2,019
2,469
6,510
7,432
EBITDA
541
13,925
25,071
12,436
Stock-based compensation
756
618
2,785
1,993
Named executive officer cash severance
—
—
—
432
Pension settlement cost
—
—
2,741
—
Loss (gain) on disposal of assets, net
1,545
242
(29,199
)
503
Cash bonus related to sale of assets
—
—
2,000
—
Gain on legal settlement
—
—
(2,269
)
—
Adjusted EBITDA
$
2,842
$
14,785
$
1,129
$
15,364
The following is a reconciliation of net (loss) income
attributable to Limoneira Company to adjusted net income (loss) for
diluted EPS (in thousands, except per share data):
Three Months Ended
July 31,
Nine Months Ended
July 31,
2023
2022
2023
2022
Net (loss) income attributable to
Limoneira Company
$
(1,163
)
$
7,377
$
12,855
$
2,420
Effect of preferred stock and unvested,
restricted stock
(152
)
(79
)
(439
)
(418
)
Stock-based compensation
756
618
2,785
1,993
Named executive officer cash severance
—
—
—
432
Pension settlement cost
—
—
2,741
—
Loss (gain) on disposal of assets, net
1,545
242
(29,199
)
503
Cash bonus related to sale of assets
—
—
2,000
—
Gain on legal settlement
—
—
(2,269
)
—
Tax effect of adjustments at federal and
state rates
(628
)
(251
)
6,539
(853
)
Adjusted net income (loss) for diluted
EPS
$
358
$
7,907
$
(4,987
)
$
4,077
Diluted net (loss) income per common
share
$
(0.07
)
$
0.40
$
0.69
$
0.11
Adjusted diluted net income (loss) per
common share
$
0.02
$
0.43
$
(0.28
)
$
0.23
Weighted-average common shares outstanding
- diluted
17,621
18,334
18,381
17,481
Effect of preferred stock
—
—
(784
)
—
Adjusted weighted-average common shares
outstanding - diluted
17,621
18,334
17,597
17,481
Supplemental Information (in thousands, except acres and
average price amounts):
Agribusiness Segment
Information for the Three Months Ended July 31, 2023
Fresh
Lemons
Lemon
Packing
Eliminations
Avocados
Other
Agribusiness
Total
Agribusiness
Revenues from external customers
$
33,585
$
5,472
$
—
$
3,462
$
8,573
$
51,092
Intersegment revenue
—
9,684
(9,684
)
—
—
—
Total net revenues
33,585
15,156
(9,684
)
3,462
8,573
51,092
Costs and expenses
30,758
13,140
(9,684
)
3,030
7,866
45,110
Depreciation and amortization
—
—
—
—
—
1,735
Operating income (loss)
$
2,827
$
2,016
$
—
$
432
$
707
$
4,247
Agribusiness Segment
Information for the Three Months Ended July 31, 2022
Fresh
Lemons
Lemon
Packing
Eliminations
Avocados
Other
Agribusiness
Total
Agribusiness
Revenues from external customers
$
33,823
$
6,337
$
—
$
12,578
$
4,856
$
57,594
Intersegment revenue
—
9,696
(9,696
)
—
—
—
Total net revenues
33,823
16,033
(9,696
)
12,578
4,856
57,594
Costs and expenses
32,600
11,953
(9,696
)
3,154
1,280
39,291
Depreciation and amortization
—
—
—
—
—
2,172
Operating income (loss)
$
1,223
$
4,080
$
—
$
9,424
$
3,576
$
16,131
Lemons
Q3 2023
Q3 2022
Lemon Packing
Q3 2023
Q3 2022
United States:
Cartons packed and sold
1,352
1,512
Acres harvested
2,300
3,600
Revenue
$
15,156
$
16,033
Limoneira cartons sold
758
817
Direct costs
13,140
11,953
Third-party grower cartons sold
594
695
Operating income
$
2,016
$
4,080
Average price per carton
$
17.92
$
18.39
Avocados
Q3 2023
Q3 2022
Chile:
Pounds sold
2,822
5,694
Lemon revenue
$
500
$
400
Average price per pound
$
0.99
$
2.21
40-pound carton equivalents
292
87
Other Agribusiness
Q3 2023
Q3 2022
Other:
Orange cartons sold
71
209
Lemon shipping and handling
$
5,500
$
6,300
Average price per carton
$
18.17
$
17.88
Lemon by-product sales
$
600
$
1,100
Specialty citrus cartons sold
70
61
Brokered fruit and other lemon sales
$
8,300
$
4,600
Average price per carton
$
25.88
$
18.34
Farm management
$
5,383
$
—
Agribusiness costs and expenses
Q3 2023
Q3 2022
Packing costs
$
13,780
$
12,463
Harvest costs
6,189
6,219
Growing costs
10,566
4,965
Third-party grower and supplier costs
14,575
15,644
Depreciation and amortization
1,735
2,172
Agribusiness costs and expenses
$
46,845
$
41,463
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230907659906/en/
Investors John Mills Managing Partner ICR
646-277-1254
Limoneira (NASDAQ:LMNR)
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Limoneira (NASDAQ:LMNR)
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