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Calavo Growers Inc. Reports Operating Results (10-Q)

September 09, 2010 | About:

Calavo Growers Inc. (NASDAQ:CVGW) filed Quarterly Report for the period ended 2010-07-31.

Calavo Growers Inc. has a market cap of $283.2 million; its shares were traded at around $19.33 with a P/E ratio of 18.3 and P/S ratio of 0.8. The dividend yield of Calavo Growers Inc. stocks is 2.6%. Calavo Growers Inc. had an annual average earning growth of 5.5% over the past 10 years.

Highlight of Business Operations:

In May 2008, we purchased all of the outstanding shares of Hawaiian Sweet (HS) and all ownership interests of Hawaiian Pride (HP) from the Chairman of our Board of Directors, Chief Executive Officer and President. HS and HP engage in tropical-product packing and processing operations in Hawaii. The Acquisition Agreement provides, among other things, that as a result of the Acquisition Agreement, Calavo shall make an initial purchase price payment in the aggregate amount of $3,500,000 for both entities. Calavo made the initial payment on May 20, 2008. Calavo made two additional annual payments, ranging from $2,500,000 to $4,500,000, based on certain operating results (the Earn-Out Payment(s)), as defined. On September 23, 2009, we remitted the first annual Earn-Out payment, totaling approximately $2.4 million. On July 9, 2010, we remitted the final annual Earn-Out payment, totaling approximately $4.5 million.

Cash provided by operating activities was $21.4 million for the nine months ended July 31, 2010, compared to $18.7 million provided by operations for the similar period in fiscal 2009. Operating cash flows for the nine months ended July 31, 2010 reflect our net income of $12.9 million, net non-cash charges (depreciation and amortization, stock compensation expense, interest on deferred consideration, and income from unconsolidated entities) of $2.1 million and a net increase in the noncash components of our operating capital of approximately $6.4 million.

Our operating capital increase includes, an increase in payable to growers of $12.6 million, an increase in income tax payable of $5.3 million, net increase in trade accounts payable and accrued expenses of $2.7 million, a decrease in advances to suppliers of $2.0 million and a decrease in prepaid expenses and other current assets of $0.5 million, partially offset by an increase in accounts receivable of $12.7 million, and an increase in inventory of $4.0 million.

Cash used in investing activities was $6.6 million for the nine months ended July 31, 2010 and related principally to the final contingent consideration payment of $4.5 million related to the acquisition of Hawaiian Sweet and Pride, the purchase of property, plant and equipment items of $3.5 million, the acquisition of Salsa Lisa of $0.4 million and partially offset by loan repayments from Belher of $1.8 million.

Cash used in financing activities was $14.3 million for the nine months ended July 31, 2010, which related principally to the payment of our $7.3 million dividend, repayments on long-term debt of $6.7 million and repayments on our credit facilities totaling $1.7 million, partially offset by exercises of stock options of $1.4 million.

We believe that cash flows from operations and available credit facilities will be sufficient to satisfy our future capital expenditures, grower recruitment efforts, working capital and other financing requirements. We will continue to evaluate grower recruitment opportunities and exclusivity arrangements with food service companies to fuel growth in each of our business segments. Our non-collateralized, revolving credit facilities with Farm Credit West, PCA and Bank of America, N.A. expire in February 2012 and July 2011. Under the terms of these agreements, we are advanced funds for both working capital and long-term productive asset purchases. Total credit available under these combined borrowing agreements was $45 million, with a weighted-average interest rate of 2.2% and 2.4% at July 31, 2010 and October 31, 2009. Under these credit facilities, we had $4.9 million and $12.0 million outstanding as July 31, 2010 and October 31, 2009, of which $1.3 million and $6.5 million was classified as a long-term liability as July 31, 2010 and October 31, 2009. These credit facilities contain various financial covenants, the most significant relating to tangible net worth (as defined), and Funded Debt to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (as defined). We were in compliance with all such covenants at July 31, 2010.

Read the The complete Report

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