- Adjusted EBITDA: $16.6 million for Q2 2024, more than double the prior year period.
- Total Net Revenue: Decreased 7% to $44.6 million compared to $48.1 million in Q2 2023.
- Agribusiness Revenue: $43.3 million compared to $46.7 million in Q2 2023.
- Other Operations Revenue: $1.3 million compared to $1.4 million in Q2 2023.
- Fresh Packed Lemon Sales: $25.8 million compared to $26.6 million in Q2 2023.
- US Packaged Fresh Lemons Sold: 1,446,000 cartons at $17.85 average price per carton compared to 1,547,000 cartons at $17.23 average price per carton in Q2 2023.
- Brokered Lemons and Other Lemon Sales: $3.8 million, a 52% growth year-over-year.
- Avocado Revenue: $2.3 million compared to $3.6 million in Q2 2023.
- Avocados Sold: 1,595,000 pounds at $1.47 average price per pound compared to 941,000 pounds at $1.30 average price per pound in Q2 2023.
- Orange Revenue: $1.2 million compared to $1.4 million in Q2 2023.
- Oranges Sold: 66,000 cartons at $17.58 average price per carton compared to 88,000 cartons at $15.72 average price per carton in Q2 2023.
- Specialty Citrus and Other Crops Revenue: $800,000 compared to $1 million in Q2 2023.
- Total Costs and Expenses: $49.3 million compared to $59.1 million in Q2 2023.
- Operating Loss: $4.7 million compared to $3.9 million in Q2 2023.
- Net Income Applicable to Common Stock: $6.4 million compared to a net loss of $1.7 million in Q2 2023.
- Net Income Per Diluted Share: $0.35 compared to a net loss per diluted share of $0.1 in Q2 2023.
- Adjusted Net Income Per Diluted Share: $0.44 compared to $0.21 in Q2 2023.
- Long-term Debt: $59.5 million as of April 30, 2024, compared to $40.6 million at the end of fiscal year 2023.
- Net Debt Position: $58.7 million at quarter end.
- Joint Venture Cash and Cash Equivalents: $102.1 million as of April 30, 2024, with Limoneira's share being 50%.
- Joint Venture Distribution: $30 million in June 2024, with Limoneira entitled to $15 million.
Release Date: June 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adjusted EBITDA more than doubled to $16.6 million for the second quarter, highlighting strong performance.
- Significant milestones achieved in the Harvest at Limoneira real estate development project, including the completion of Phase 2 and approval for an increase in residential units.
- Expansion of avocado plantings by 1,000 acres over the next three years, expected to dramatically increase long-term EBITDA.
- Increased cash flow projections by 46%, expecting $180 million in total future proceeds from the Harvest project over the next seven fiscal years.
- Strong financial position with reduced net debt and increased liquidity from joint venture distributions.
Negative Points
- Total net revenue decreased by 7% to $44.6 million compared to the previous fiscal year.
- Agribusiness revenue declined to $43.3 million from $46.7 million in the second quarter last year.
- Increased rainfall in California delayed lemon picking and caused pressure utilization to fall to around 70%.
- Operating loss for the second quarter was $4.7 million, higher than the $3.9 million loss in the previous fiscal year.
- Long-term debt increased to $59.5 million from $40.6 million at the end of fiscal year 2023, driven by working capital needs.
Q & A Highlights
Q: Can you clarify the status of the Harvest project phases and the total number of residential units?
A: Yes, the 1,261 units completed include Phase 1 and Phase 2. The total number of single-family units will be 1,750, with an additional 300 multifamily rental units, bringing the total to 2,050 units.
Q: How does the strategic review relate to the decision to halt the Chilean packing house and expand avocado production?
A: We believe expanding domestic avocado production offers better value creation for shareholders compared to investing in a Chilean packing house. This pivot requires less capital and leverages the strong demand for avocados.
Q: Can you explain the economics of planting 1,000 acres of avocados over three years and its impact on EBITDA?
A: We expect to produce 25-30 million pounds of avocados annually, with prices ranging from $1.20 to $1.70 per pound. This expansion will contribute to increasing EBITDA to $45-55 million by 2030.
Q: What is your outlook on avocado demand and supply dynamics over the next three years?
A: We are bullish on California avocados due to their seasonal niche from May to July, which aligns with a gap in Mexican production. This niche is sustainable and supported by favorable demand trends.
Q: Can you elaborate on the current lemon pricing and its outlook?
A: Lemon pricing is stronger than last year, currently around $19.50 per carton. The market is improving, and we expect better pricing as oversupply issues are addressed.
Q: What are the CapEx and OpEx requirements for the avocado expansion?
A: It costs about $15,000 per acre to plant and manage avocados for the first four years. These costs will be capitalized, and we expect to see revenue from these trees after year four.
Q: What has changed in your avocado expansion plans compared to previous quarters?
A: We have strengthened our confidence in the sustainable niche for California avocados, driven by favorable demand trends and the seasonal gap in Mexican production.
Q: How do you view the long-term demand for California avocados given competition from Mexico?
A: We believe California avocados have a sustainable market niche due to their seasonal availability and high-quality perception, which aligns with consumer preferences.
Q: What are your expectations for lemon pricing in the second half of the fiscal year?
A: We expect lemon pricing to improve, driven by better quality fruit and reduced oversupply. Current pricing trends are already higher than last year.
Q: How will the avocado expansion impact your overall business strategy?
A: The avocado expansion aligns with our shift towards an asset-light business model, focusing on high-value crops and leveraging our expertise in farm management and marketing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
