LMNR - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to the Limoneira First Quarter Fiscal Year 2021 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Mills with ICR. you. Thank

begin. may You

John Mills

and fiscal for year everyone, Limoneira’s us first quarter XXXX thank afternoon, joining you for Good conference call.

today Mark X Time. Officer. release, which call Executive p.m. first quarter have Eastern the are out XXXX President the Edwards, On earnings year and access Officer; to and now, today Palamountain, By Financial went fiscal Chief everyone should Harold Chief at approximately

to the view Investor If website the as it’s on a you have call the of not Limoneira’s available and will This Relations limoneira.com. chance portion webcast, a Company’s had at on website being be release, is well. replay available

and underlying period. from these result any the financial or when a filed XX-Ks update can adjusted results, of undertake from to include Before whether Limoneira’s of expressed new adjusted achievements by of could control which remind with risks will on in other today’s its We discussing note release. more required greater and or Important believe your future results the everyone an factors differences obligation statements comparing statements contribute to ongoing that many information, we otherwise. and of cause achievements earnings XX-Qs no Company’s involve facilitate forward-looking known non-GAAP Please Except a forward-looking to mentioned as the or as details and performance additional statements, performance uncertainties, that would particularly to or management contain begin, significantly in we of future to results differ SEC or forward-looking like that may results, results events statements. and prepared response measures such to forward-looking and unknown during cause questions. including are understanding a could risk those such Company’s we operations, we be by period or and call, Such number herein, the complete analysis law, remarks measures, make implied the outside in financial basis. statements

comparable We are adjusted adjusted possible non-GAAP the measure. and Also, the been adjusted most measures have press the earnings XX-Q CEO, that posted which prepared which items And the directly to over included and to with A include we as is turn website. its financial as is an GAAP it Company’s within on is in release Company’s a release, that, EBITDA have pleasure the President much detail financial remarks, basis. Edwards. EBITDA, Harold provided Company’s to in reconciliation call Mr. any on to my and of today’s discussed

Harold Edwards

improvement to compared Thanks, to I’m pleased year John, cash our contributed start first our and we lemon improved volume, and to afternoon, cost everyone. achieved structure solid as last year. specialty fiscal with record revenues, citrus good XXXX flow quarter in

a As have since on pandemic quarter effect reminder, year. XXst, last first our not did a first our quarter ends fiscal the January material

to focus once and achieve and increase was improvement domestic from grocery we believe positioned are very the COVID-XX our distribution. due dining-out to we reason year-over-year a on our foodservice this expand dramatically So, improves retail vaccine exports, well ability to meaningful in

XXXX. strong though fiscal the expect in in we addition, avocado early and results In from oranges is even season, year it

their million crop of expected to XXXX. is million which was to pricing the slower of $XX, $XX to U.S. now $XX of reduced revenue achieved we had per rise price discuss The I’ll quarter, pricing is for as business in fiscal $XX.XX this as first record first offset $XX.X the South district, in also volume $XX.X it Fresh the lemon the quarter $XX approximately the lower approximately we in growers our in per starting season was year the of division’s average fiscal During America, in first and X. industry’s pricing lemon overall affected same District quarter, Orange a of timing higher normal of was lemons to drive coming industry the season. higher springtime. quality performance revenue our export the top-graded of anticipated. price our harvest. quarter quarter, than each was out for the start compared with though $XX.XX compared enter during Agribusiness orange prices during were agribusiness. partially was oranges carton. average first and frequent has temporarily Even XXXX. carton year increased than more the winds period expected This revenue pricing million compared by but million lemon to

expectation our fiscal fiscal dedicated year better period to other is of acres cartons fewer Specialty profitability XXXX prior citrus was on it have and million. However, revenue for oranges. to year similar crop and to $X.X

Turning development now real to our segment. estate

lots perform XXX Our closed XX inception, of at very lot quarter have And XXXX. year in Harvest first real now well. estate new we to development Limoneira, the since fiscal closings including continues project,

in the from over we the six density X years, as next at East as the campus $XX at the medical cash million beginning in Harvest Limoneira in opportunity do not the As well Area expected a upside The distributions Harvest include timing housing of year potential potential Limoneira gain confidence of quarter of expected fiscal our increased each closes, development. XXXX. cash distributions in from at

in to upcoming greater on We the these be position provide a expect transparency in quarters. to opportunities

future, monetize we feet acre rights. acres and land, of of in many expect rights, Our usage housing has selling, the XX,XXX residential acres Company water pumping XXX rights XX,XXX of non-agricultural we over are over prime now to and agricultural additional assets

continue stewards these Company reward believe years of assets and our to to very to continue shareholders We many will long-term for be good come.

we and coming as and stronger vaccines, line back our we our footprint are enter potential expanded quarter to seasons, bars as allowing the achieve for very everyone to receive restaurants begin foodservice reopen. due well to we As results year-over-year on in their confident will growing second improved third to retail as continues

the structure. by and fresh in volume quarter during encouraged our improvement our We’re lemon continued first record the cost

Harvest the over forward to towards coming year I’ll fiscal at on of XXXX agribusiness with look from We cash to our and now months. end the the turn in Mark. and expect call And flow progress updating you that, Limoneira estate real positive

Mark Palamountain

Thank and you, Harold, good afternoon, everyone.

not while second As be are to our periods business our quarters and to we a basis. reminder everyone, first on advise varying seasonal year-to-year. by are that and an third a our with fourth harvest business Therefore, our the softer quarters, Historically, nature there’s driven our revenue stronger. seasonally annual, quarters quarterly viewed from

XXXX total sales of quarter foodservice carton to $XX.XX compared compared lemons during at at revenue price revenue cartons of of total $XX.XX $XX.X lemon last XXXX quarter for fresh the fiscal compared fiscal XXXX. first per fiscal the creating to for reducing COVID-XX of fresh was first cartons oversupply $XX.X in Agribusiness year the of Approximately Other of fiscal X,XXX,XXX in during million XXXX, operations and the sales quarter the first was year the $XX average in year. prior year net million marketplace. million fresh to the an was of revenue same similar pandemic-related price retail due in Pricing year average of was the were fresh of quarter revenue fiscal to approximately demand For Agribusiness sold XXXX. year. quarter first the $XX per first compared period $XX.X million to revenue previous lemon first foodservice in during net lemons the X,XXX,XXX million fiscal $XX.X $X.X the marketplace million lower million. at the includes year quarter fiscal quarter the closures, carton an year in to

first overall in no sold average first at pricing. of XXXX, at $X.XX in the $X.X a first slower fiscal if the in fiscal had offset avocados in year. price recognized of were But, during had in compared revenue compared year XXXX in of year carton. fruit attributable of of average were to per price to fiscal average timing just quarter America the of The of higher period We pounds partially avocado anticipated. the lowering recognized year the last the fiscal Company price season weighted quarter million XXX,XXX revenue in U.S. period same also the year same The fresh first sales the orange to Approximately per pound. look a the quarter fiscal XXXX than XXXX, XXXX orange Company prices $XX.XX quarter by of million $XXX,XXX first oranges, has fiscal of it the you The start $X.X year was of lemons South to quarter the harvest. of

were acreage Specialty similar fewer dedicated at year expectation to XXXX citrus $X.X have other However, the crop and revenues our with it fiscal is cartons prior fiscal oranges. million. to less year better profitability to on for

the in costs. was a and in in year structure compared preferred of total was share continued to of operating and to to to which year per Adjusted loss $X.XX of first fiscal Company’s quarter loss quarter adjusted We in first diluted dividends the of first a expenses on after third-party to in XXXX, to costs same grower the year include in first Operating cost net costs, the with net for million quarter costs, fiscal stock net our to procured diluted quarter fiscal shares was EBITDA loss at fiscal of compared loss decreases $XX.X outstanding, for fiscal third-party and share fiscal fiscal applicable on A million fiscal quarter previous of first last weighted the in of million quarter and per $X.XX in the approximately Calavo. million the Adjusted XXXX the year. million our $X.X XX.X agribusiness and loss common first adjusted year end the of to amortization release. harvest, to Net first the a million first earnings $X.X quarter expense. $X.X period year loss partially attributable from in growing year million release. $X.X net the year loss XXXX, quarter $X.XX stock the loss reconciliation $X fiscal adjusted of fiscal increased $X.XX was diluted costs, compared adjusted XX.X year quarter to net fruit of loss fiscal with compared Adjusted depreciation loss XXXX our XXXX year loss for of of associated for Net loss of of is share by harvest of stock of average XXXX. the $X.X net operating fiscal million common share for per provided based expenses common million decreased quarter at to million fiscal diluted loss in to earnings the diluted million was the year excludes net XXXX. A quarter from growing loss in is to period was of reconciliation Costs year of compared primarily the to first first for packing decrease of offset XXXX. of net The was net applicable related loss $X.X respectively. packing compared XXXX of million the the per same XXXX. growers, a the improve $XX.X cost XXXX costs, year $X.X of loss the provided end EBITDA of

year at stock our the liquidity. its Board a Company share million program Directors XX, January XXXX. to of XXXX, On Long-term approved to end $XXX.X shares to million compared to up of outstanding through March $XX common XXXX, fiscal was now million sheet balance debt and repurchase March repurchase XX, the of of authorizing the of $XXX.X as XXXX. Turning

During year shares $X.X the for the XXX,XXX fiscal repurchased approximately XXXX, Company million.

of As authorization December program related XX, XXXX, of state we refunds expect to CARES an million. XXXX, million received federal refunds under $X $X.X January Act, remaining the $XXX,XXX California and is approximately the in this fiscal additional we tax of In XXXX.

like to XXXX longer to outlook growth our fiscal Now, Harold I year discuss and to term turn back call the would pipeline.

Harold Edwards

expect temporary see reduce second on uncertainty, for lemons. first to business lemon pandemic Offsetting guidance Company Mark. the drive will time quarter do is some not during vaccine to and in volume XXXX, market and winds higher foodservice revenue but top-grade of of widely foodservice strong provide until The at and consistent we believes COVID-XX you, industry orange fiscal The to also prudent distributed higher frequent is the avocado the to will pricing positive more openings for this and affect global market. basis. this Thank the based a COVID-XX positive The begin continues our initial it on indicators. generate crop we factors quarter

and XXXX cost expect last fourth due also second, slowly quarters during demand markets, fiscal and increasing as the third foodservice We to control export compared from of well measures. improving year to results as improving

an have full growth nonbearing over come. for which become also lemons bearing strong organic The enable We will of the additional next bearing expects acres full four to in many the XXXX. Company achieve X,XXX become us XXX to of year years to estimated years, fiscal acres X,XXX to

acreage. will Beyond intend we plant X.X of additional nonbearing next long-term additional supply XXXX our of planned additional becomes domestic this that these XX% cartons about increase the to acres, an and level XXX,XXX anticipate as acres in to we build from We pipeline acreage or approximately lemons XXX acreage by productive. million fresh believe years the further X,XXX two of productive will lemons our

XXXX generate our steady generate be grower $XX at million generate cash is of believe expect Limoneira, Also, XXXX cash fiscal XXXX to to expected a due as is to XXXX continued is Harvest This million. steady expected the Area These a neutral. generate in as Fiscal campus third-party fruit. in Harvest to to we upside million. $XX of year X in Fiscal to is to will next to include Fiscal we distributions $XX Fiscal XXXX density is as follows. years. $XX potential expected also XXXX million. at from housing in the from harvest improvement year Fiscal Limoneira million. have development. $XX development generate We And will increase to Limoneira. million expected the expected cash six the generate expected year increased East in back to be from medical year of of is opportunity expectations not do potential Harvest well $X

I’d transparency to year. be on the this expect open And a like up questions. opportunities later provide in that, to to your greater call We to position these with Operator?

Operator

question Ben Stephens Our you. first comes from of Inc. Thank the line Instructions] [Operator Bienvenu with

Ben Bienvenu

it Hey. ask guidance, Good better want And in to your on in you, your sticky quarter COVID. well, the and you channel has to as last the guys. understand I grocery bit this improved afternoon, how midst I in of touched a how want mentioned that any, positioning just positioning grocery? you foodservice channel, was next in Any difference could return is your normal the from profitability or to there is here what, as oscillating would in channel we hopefully that offer color year there over cartons And to versus you traditional be two? if foodservice if there helpful. little

Harold Edwards

Sure.

channel channel, relates it in the to versus the parity roughly As retail in the foodservice there’s pricing and between margins two.

So, differential. great no

of to So, the for some profitable. pivot unknown We will challenge newly that we be sticky. when believe over markets were these the vendor had that relatively Part we the channel be a retail for can equally or foodservice was us to began close either commodity of certified retailers. an

value proven to and proposition of retailers. also our ultimately, these So, took to to a proven, some needs become it but known us while then be

actually instances some with in in the retailers. of needed these we some to use get to So, price door

and proven the we’re we our now us have our was proven and our and that, second we competition we to and really our customers, great at pleased in pretty quarter, finished became with competition. And differential proven, quality first retail we’re parity that selling were chains As between say diminished. stickiness price as much and just our our with quarter supply

can whenever is and a they us. export export reasons much So, as we into that be choose I fancy that’s our we much of fruit the $X premium our thing terms all in The to very at selling of take you, the domestically, $X positive to to typically carton channel, between tell can. receive by But, as channels markets can for tend one differential the parity. into the that Ben, retail one is foodservice we to which sell pretty customers

Ben Bienvenu

more thinking in cost Okay. And more inflation related itself industry in to inflation about as relative the all that prices That’s and manifest industry? just in how cost we specifically costs tightness, lemon are second My the of traditionally higher labor helpful. question freight positioned drivers about key inflation. business broadly the fiscal broadly, in the some you Does ‘XX? to is think

Mark Palamountain

Yes.

that, I’ll So, Ben. take

I that prices think costs a rise oil pleased from of internals to of fortunate starting some the that the that But the we’re I were side attributable were to seen bit, Company. little have our little generally, we highs. So get at to relative boxes. the wage paper a were see and increase think fertilizer We We did XX-week control PPE, COVID with obviously we’ve bit level, cost that minimum into our California very all packing and in that start the to cetera. overall, some minor increases et costs some have and in a carton the low side been to costs,

some seeing inflation this think seen in of kind back a public we’ve of absorption the saw were XXXX company When carry $XX, were to go starting lemon the that be those also anticipate adventure as with those able demand, and $XX, we pari and increases we So, the costs, growth there. passu. historically, we the cost increases I prices industry. moderate sort in but price there’s of From

Operator

of Our Stifel. comes Anderson Vincent the next from question with line

Vincent Anderson

Yes.

lemon is, terms if at the sizing just impacted And you or there’s had impact much in what then this production and if DX scarring then, any America I it’s it weather has in little in to down, America, break just mean, you in District addition Maybe a bit could having few months. guess, South the been fun over overall of I if detail yourself? X, So, of how has specifically stage some South last issues?

Harold Edwards

Yes.

the latter impact really and the California that, on So, Coast. California of is right it’s on winds our I’ll production, the start of with which here part the

of few unusually rubs levels the of thorns, choice against know a of a the the to quality lemon and And it’ll years, we’ve tree, winds. when east those last scar trees from high in fruit seen fruit wind the looking inside thorns. your visit up have as from grade grade And blows, you lemon the and piece downgrade sometimes a perfect-looking, fruit. fruit fancy So,

then in of grade normally upwards at growers, grade XX%, the X, that so, would be closer the that. and total crop a XX% District the to production for being typically lower than we’re estimating where XX% forecasted that And now fancy grade affiliated harvested tree little and what choice our that’s of Limoneira XX% of to fancy

So, be that because which And tree fruit will be grade down be total industry. an into the the up crop of fruit will down challenge be winds. the the -- up. typically in overall two, will XX% percentage that the foodservice the the then, of choice there’ll first is fruit really terms size grade the is of choice market. as is being its And of in finds way percentage grade The

So, out which potential up slow the challenge and if restaurants channels all and I will build become to bars sell we’re at put fruit there are overcrowded, or us are fruit. pricing choice-grade foodservice guess, on risk the and slow that reopen, looking pressure that could to or is markets that the negative

that part good our we it to Argentina, and And sort production of the production relates production is the Argentina much we that’s the second between And us I the in then, Chile help just guess, drought the northern ability there’ll result severe its of So, in Argentina. way of The fruit supplies as it off are a now, on experiencing as We a in then news because as better is overview be and of also we’ll believe, part up Argentine that’ll to of middle and keep go markets. north, the reporting But, in Argentina, of Chile. find significantly drought pretty going through is right and ultimately, quarters. parts conditions the third a balance to domestically. into drought. have is

shape. good actually is pretty production Our in

fruit. the fruit should see our of decreased of that a take normally out have fancy U.S. its you’ll be So, find that the should favorable. into advantage way we both, to percentage Argentina, of quite that fancy production market in the we coastal grade grade coming Chile you’ll that and the operations order believe fruit have excellent here, And in

all of unlike should our we’ll and So, World Southern part producer we model. in our seen really value of we’ve Company. Citrus this for it is see we Hemisphere of believe significant the that of past, And the XXXX, sort be years believe production benefits One a in

Vincent Anderson

a Excellent. of stretch, try And third-party a a this maybe recruiting. then, your tough to one, and little had you’ve more ramp of bit but up years marketing couple

the think a maybe and necessity has the all keep about pack thought call ability little or you your retain to the where same sacrifices your you help to more, changed really house at exposure, need even margin, third the years the bit recruiting really filled, still sales As juice down to process utilization it in it, growers pitch party? in is if fresh on

Harold Edwards

top admittedly, Yes. that sales result in The returns over challenges same. pitch two at And for the Certainly, we took is of the last were XXXX, still of a as grower hits the we’ve part not the year some years. our that’s the and where is had in the market, and is grower the have we so some of coming oversupply summer. the that of The general news a about there’s and spring -- did attrition. time into good year actually that right that the

be it to tree our XX% will units the though down in XX% districts. line -- the anywhere running of in less is total in of even from crop of negative across and by way, the So, each terms districts all

overall, across and So, California XX%. tree total down I the think is crop Arizona

profit be better with help. the to we volume said, handle. that District actually for up that buildup handle our summer accumulated we’d of So, having also, should But our much X that of is and to With should our all though, Company that sell goal being become the in volume spring should fill fresh do formula fruit not a and in to utilization better. the because the packinghouses the

grower if have utilization, will we’re should more might them of they to be higher years, able we’ll fresh will levels two So, be. been enhance return make competitive, the our to which over greatly growers. maintain our and recruit last business ability retain it bad which outside And and our attract make as more to as it competitive,

to our our years plan and we’ll ultimately, able filling to So, up, to we lemons demand in come, stay recruit of to levels. growers fully as packinghouses of outside be that return and pre-pandemic being market and on expect sell right all their markets continue to able

Mark Palamountain

Vince, just industry year, that as internal of and saw crop given grower of down some this acreage though some up, will crop that even on I’ll those been the we attrition overall And that add XX% there total, we’ve techniques seeing that different our we coming have a fact that be as using. are new

we So, than loss. more that grower of any that offset anticipate to

Operator

next Lake question Mark Markets. Street of with the Smith Our line from comes Capital

Mark Smith

you First that’s just, guys in any seeing from one me your change are business is foodservice yet really impacting yet?

Harold Edwards

just it’s starting. So,

opening as different we’re We’re in the of day-to-day basis it. a changing that orders literally starting are increased see seeing is to on pockets It up. country just

areas growing and faster some And are than others. increasing faster

demand. suggests and exactly lift opening enjoying in the that’s optimistic. where the in parts seeing bars. people So, we’ve very and news restaurants certainly, cautiously we’re and And that eating the been certain out everything seeing the and on are and going of reading rapidly, up country, But, we’re areas they’re

Mark Smith

can you that guys? as you storms then, look real point changes fruit primarily to, the at the pricing back that or rolled impacts any damage south, crops And in through that Texas, Perfect. we in any

Harold Edwards

production production weather the fresh there -- see, impact Texas with would see you that which that and of to got we’d business, side. in on affects be that well. begins And fourth Mexican then, know. out on us what is quarter. really we really snow, slightly got And typically would less the our Not hit our part if Mexico, of in as any as August. clobbered I expect is guess, cold coming benefit

and orange there’ll be Texas, it fewer slightly the do impacted some an of market. coming But, U.S. to more lemons production, really that into which business. So, grapefruit our had relates we impact from believe Mexico on the as total less

Mark Smith

update give what that you seeing Okay. can would us on having, there impact are there? great. you any are or And any on then, market, ports export the Any update guys be

Harold Edwards

Yes.

touched insightful just which it with very on question. question, You is a that

for lanes you levels ability compromised has load, caused are the vessels to enjoy significantly due longshoreman to challenges As that in and services. been containerized unload, terms have know, basically, with and shipping their -- port berth, of service pandemic the

And ports so, around of the how a that. the of we’re still impacting up around example business backups And demand there’s market, pandemic-related is A great world. our lot which caught issues. huge our out coming in Japanese of is that’s

about they’re -- to make levels. So, XX% demand probably at I’m up, going pre-pandemic it of XX% or but maybe

improvement their vaccine, port those for openings improvement we’re the be markets, -- we’re markets. the of the now work improve, able in in markets around also the countries hopeful seeing Asian Korea it’s back help deliver market. the to been shipping each our fortunate escalating sort rapidly up finds of us world very of should just which pandemic with of scenarios seeing but and vaccine its the And our we’re for is pricing the service the everybody, going different Korean those the and Korean Different in to the not that we’ve and in chains, demand in spread ports. opportunities market really shipments, at consistently improve, ports. see again, by only but will to as we’ll that in levels. more pretty And to services the but all-in-all, in We’re in people improvement supply markets different the to not and reliable as begin opportunities in open and What more Japan, finding we’re the but to due only driven situation as way port reliable the inability containership because of challenges the at pre-pandemic opening

Mark Smith

that maybe if through the cost one some And us guys as you we me, look not Mark SG&A look expense, give outlook you cuts sure of remainder cutting, on of we more effectiveness great. take and SG&A? can insights of at the I’m to Okay, an for the made, maybe any year wants But, at have as it.

Mark Palamountain

No problem. Yes.

that. take I’ll So,

year-over-year, in that and travel those aren’t lot last efficiencies about less So, at general, whole costs look of inefficiencies taken the this to and there’s $XXX,XXX expenses, first If we are. lower. the a year been the in business kinds really of the Simply, a COVID things. look have And year, costs SG&A. we’ve organization in where really quarter of we’re

to in think, million we for feel trend a we run So, positive any us. typically, I But anywhere month. $X.X $X.X like about million that’s from

hold as where And and expenses we that so, from And conventions the and that see we’ll travel will include go groups more true hosting in sales a pickup probably us for us whatnot. forward. does

Operator

no like the Edwards over Mr. hand There the closing questions I’d other call for are to back remarks. queue. to in

Harold Edwards

you questions day. Have and your Limoneira. Thank in a interest for great

Operator

conclude this gentlemen, your and Thank Ladies participation. does today’s teleconference. for you

lines disconnect a this You have And may time. your wonderful at day.

Limoneira (LMNR) 10 Mar 212021 Q1 Earnings call transcript